September 10, 2013

Court of Appeals for the Third Circuit Extends New Source Review "Past Violation" Rulings

Arnold & Porter Advisory

On August 21, the U.S. Court of Appeals for the Third Circuit in the Homer City case joined and extended the consensus holdings of three other U.S. courts of appeals in rulings that failure to obtain a Prevention of Significant Deterioration (PSD) permit is a one-time and past rather than a continuing violation under Clean Air Act regulations. This decision has important implications for companies facing PSD enforcement cases brought by U.S. EPA, states or environmental groups pursuing citizen suits. This decision bolsters the consensus that the 5-year statute of limitations may apply to bar civil penalties for older alleged violations. The decision also breaks new ground by finding that current owners are not liable for past violations occurring on the watch of former owners, and those former owners are also not liable for injunctive relief. The court also suggested that civil penalties even for more recent violations not barred by the statute of limitations could be very low, accruing only for the number of days during which the company began or possibly undertook the construction in question. Finally, the court joined other courts in holding that claims that the company violated Title V permitting regulations by omitting PSD requirements, which claims may not be raised in an enforcement case. The growing consensus also makes the Supreme Court unlikely to grant a request for review.

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