Cases & Deals

EME Homer City secures major appellate victory in important Clean Air Act appeal

Clients EME Homer City Generation L.P.

Jones Day assisted EME Homer City Generation L.P. in securing an appellate victory in a case involving an important question of statutory interpretation under the Clean Air Act ("CAA"). The U.S. Court of Appeals for the Third Circuit enforced the CAA's prevention of significant deterioration ("PSD") provisions as written and, in doing so, rebuffed efforts by the Department of Justice and the States of Pennsylvania, New York, and New Jersey to hold EME Homer City responsible for CAA violations allegedly committed by a different company many years ago.

The case was filed in the U.S. District Court for the Western District of Pennsylvania by the Department of Justice and the States of Pennsylvania, New York, and New Jersey. The suit alleged violations of the Clean Air Act ("CAA"), certain of its implementing regulations, and Pennsylvania state law. The United States alleged that EME had violated the CAA’s Prevention of Significant Deterioration ("PSD") provisions and its operating permit provisions (Title V) by operating a unit or units at a power plant that a prior owner had allegedly modified years before without obtaining PSD permits. The States cumulatively alleged these same federal claims, as well as claims for violations of the Pennsylvania Air Pollution Control Act (“APCA”), and a claim for establishing a public nuisance under Pennsylvania law. The district court (Judge Terrence F. McVerry) dismissed all counts asserted by all plaintiffs with prejudice and without leave to amend. In a memorandum opinion and order dated October 12, 2011, the Court held that because any alleged PSD violation was committed by the prior owner of the plants (if at all), EME could not be held liable now. The Court dismissed the Title V claims as derivative of the dismissed PSD claims and the claims under Pennsylvania’s APCA as similar to (and thus as flawed as) the PSD claims. Finally, the Court held that the CAA and the APCA preempted Pennsylvania’s public nuisance claim.

On behalf of EME Homer City, Jones Day successfully defended an appeal from the District Court's decision. The Third Circuit affirmed. In a unanimous "precedential" opinion, the Court agreed with EME Homer City that the "relief now sought" under the PSD provisions "would require us to distort plain statutory text to shore up what the EPA views as an incomplete remedial scheme," also noting that "lest one be concerned that the EPA's parade of horribles may come to pass, such fears are inflated."  As for the governmental plaintiffs' Title V claims, the Court explained that the "the text does not include as a violation . . . operating in accordance with a facially valid but inadequate Title V permit." Finally, the Court rejected any claims under Pennsylvania law because "Pennsylvania's SIP merely parallels the Clean Air Act's PSD requirements and does nothing to transform the PSD permitting requirements into operating conditions." The Court concluded by explaining that "when Congress's statutory directives are at issue" the courts have "a duty to follow our coordinate branch's commands." Thus, because "[t]hose commands could not be plainer here," the Court affirmed the district court in full.

United States, et al. v. EME Homer City Generation L.P., et al., Case No. 2:11-cv-19 (W.D. Pa.); No. 11-4406 (3d Cir.); United States, et al. v. Midwest Generation, LLC, et al, No. 09-CV-5277 (N.D. Ill.); No. 12-1026 (7th Cir.)

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