Cases & Deals

OG&E obtains important appellate victory related to issue of first impression in environmental law

Clients Oklahoma Gas and Electric Company

Jones Day client Oklahoma Gas and Electric Company ("OG&E") obtained an important appellate victory from the U.S. Court of Appeals for the Tenth Circuit in a case presenting an issue of first impression in environmental law. The action, brought by the Sierra Club, alleged that OG&E violated the Prevention of Significant Deterioration ("PSD") provisions of the Clean Air Act ("CAA") by modifying an electricity generating facility without the proper permit. (See 42 U.S.C. 7475.) The complaint sought civil penalties and declaratory and injunctive relief. On March 8, 2016, the Tenth Circuit issued a 2-1 opinion, holding that the five-year statute of limitations of 28 U.S.C. § 2462 barred Sierra Club's claim for civil penalties, and the concurrent remedy doctrine barred its claims for declaratory and injunctive relief.

The dispute arose from a project at OG&E's Muskogee facility that began in March 2008 but was not completed until mid-April 2008. OG&E and Sierra Club later entered into an agreement tolling the statute of limitations effective April 1, 2013. In its lawsuit filed in the Western District of Oklahoma, Sierra Club alleged that OG&E modified a boiler at the Muskogee facility without first obtaining a PSD permit under the CAA. The district court found that because the boiler project began in March 2008, Sierra Club's claim for civil penalties was time barred under the language of § 2462 because the claim "first accrued" on the date that construction commenced in March 2008—more than five years before the date of the tolling agreement. U.S.C. § 2462 states that an action seeking civil penalties must be brought "within five years from the date when the claim first accrues. Moreover, because the statute of limitations barred the claim for civil penalties, the district court determined that Sierra Club's claims for declaratory and injunctive relief must be dismissed under the concurrent remedy doctrine.

In a 2-1 opinion, the Tenth Circuit affirmed the dismissal of Sierra Club’s claims. The panel majority rejected out of hand Sierra Club’s “repeated violations” argument that a new violation of the CAA’s PSD requirements occurred each day that construction continued without a PSD permit; thus, a new and distinct PSD claim does not accrue each day that construction or modification of a facility continues. Furthermore, although the court determined that Sierra Club forfeited its “continuing violation” argument by failing to raise it before the district court, the court rejected it anyway. The court held that the plain language of § 2462, which begins to run the statute of limitations when the claim “first accrue[s],” would bar Sierra Club’s “continuing violation” theory that the PSD claim accrues when construction is complete. The court reasoned, “Sierra Club could have brought a suit for the PSD permit violation on the first day of modification . . . . Sierra Club’s cause of action accrued prior to April 1, 2008, even if the violation continued until some later date. Any penalties stemming from the alleged violation are therefore time-barred.” (Op. at 11.) Moreover, the court held that because Sierra Club’s claim for civil penalties was time-barred, its claims for declaratory and injunctive relief were likewise barred under the concurrent remedy doctrine “because the equitable claims [we]re based on the same facts supporting the time-barred legal claim.” (Op. at 15.)

Sierra Club v. Oklahoma Gas and Electric Co., No. 14-7065 (10th Cir.)