Cases & Deals

Midwest Generation prevails on appeal of district court decision paring down Clean Air Act claim in DOJ suit

Clients Midwest Generation, LLC

Jones Day assisted Midwest Generation, LLC ("Midwest Gen") and its parent, Edison Mission Energy ("EME"), 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 Seventh 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 State of Illinois to hold Midwest Gen 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 Northern District of Illinois by the Department of Justice and the State of Illinois. The suit alleged violations of the CAA and certain of its implementing regulations. Among the claims asserted were ten counts alleging that Midwest Gen violated the CAA's Prevention of Significant Deterioration ("PSD") provisions by operating six power plants that a prior owner had modified without obtaining PSD permits, as well as several counts alleging that Midwest Gen violated Title V, the CAA's operating-permit provision, premised on the alleged PSD violations. The District Court (Judge John W. Darrah) dismissed nine of the ten PSD counts, holding that, as a subsequent owner, Midwest Gen could not be held liable under the PSD provisions for modifications allegedly made by the prior owner. In a later memorandum opinion and order following an amended complaint, the Court again dismissed all of the challenged PSD counts, reiterating that Midwest Gen could not be liable for modifications allegedly made by the prior owner. It also dismissed all claims that Midwest Gen and EME were liable as successors to the prior owner.

On behalf of Midwest Gen, Jones Day successfully defended an appeal from the District Court's decision. The Seventh Circuit affirmed. The opinion, authored by Chief Judge Frank Easterbrook, agreed with Midwest Gen that "[n]othing in the text of [the CAA] even hints at the possibility that a fresh violation [of the PSD provisions] occurs every day until the end of the universe if an owner that lacks a construction permit operates a completed facility." Therefore, the Court concluded that: "Today’s emissions cannot be called unlawful just because of acts that occurred more than five years before the suit began. . . . [C]onsequences of acts that precede the statute of limitations are not independently wrongful."

The remaining claims were resolved via consent decree entered May 10, 2018.

United States of America et al. v. Midwest Generation, LLC, No. 1-09-cv-05277 (N.D. Ill.); Nos. 12-01026, -01051 (7th Cir.); United States v. EME Homer City Generation L.P., Nos. 11-04406, -04407, -04408 (3d Cir.); No. 2-11-cv-00019 (W.D. Pa.)

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