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United States v. Environmental Defense

United States District Court, M.D. North Carolina

September 17, 2014



WILLIAM L. OSTEEN, Jr., District Judge.

This matter is before the court on Defendant Duke Energy Corporation's Motion for Leave to File Supplemental Motion for Summary Judgment ("Duke's Mot.") (Doc. 457). Duke filed this motion nearly two years after both parties filed cross-motions for summary judgment, asserting three justifications for re-opening summary judgment briefing: (1) that recent developments in case law demonstrate that this court's 2003 decision regarding the applicability of the statute of limitations was incorrect, (2) that Duke's ongoing retirement of certain power plants at issue in this case renders moot the Government's claims for equitable relief, and (3) that recent case law prohibits the Government from obtaining equitable relief for the types of violations at issue, regardless of the mootness issue.[1] (Id. at 2-3.) After careful consideration of the parties' written briefs as well as the oral arguments presented at the April 4, 2014 hearing, the court concludes that Duke's motion should be denied for the reasons set forth below.


As detailed many times over in the various orders, pleadings, and motions spanning its fourteen-year history, this case arises from Duke's alleged failure to obtain required permits prior to making certain statutorily-defined "modifications" to some of its coal-fired power plants. See, e.g., United States v. Duke Energy Corp. ("Duke IV"), No. 1:00CV1262, 2010 WL 3023517, at *1 (M.D. N.C. July 28, 2010). The relevant permitting requirements, which come from the Prevention of Significant Deterioration ("PSD") provisions of the Clean Air Act ("CAA"), "require[] a utility to obtain a pre-construction permit when proposed changes would increase the actual annual emission of a pollutant above the actual average for the two prior years.'" Id . at *5 (quoting Envtl. Def. v. Duke Energy Corp. ("Duke III") , 549 U.S. 561, 570 (2007)).

Because "[t]he CAA does not provide a specific statute of limitations applicable to alleged violations of its provisions[, ]... [t]he general federal statute of limitations for civil enforcement actions applies." United States v. Duke Energy Corp. ("Duke I") , 278 F.Supp.2d 619, 649 (M.D. N.C. 2003), aff'd on other grounds, 411 F.3d 539 (4th Cir. 2005), judgment vacated sub nom. Envtl. Def. v. Duke Energy , 549 U.S. 561 (2007). This statute provides that "an action... for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise, shall not be entertained unless commenced within five years from the date when the claim first accrued." Id . (quoting 28 U.S.C. § 2462 (1994)) (internal quotation marks omitted). Duke, noting that the Government did not file suit until 2000 and that all of the claims based on alleged PSD violations accruing after 1994 have been voluntarily dismissed (see Stipulation of Dismissal of Certain Claims and Defenses (Doc. 418)), argues that this five-year statute of limitations consequently bars any remaining claims. (See Duke's Mot. (Doc. 457) at 3.)[2]

The concern with Duke's argument, however, is that another district court rejected it over ten years ago when Duke raised it for the first time. (See generally Duke's Motions for Partial Judgment on the Pleadings (Docs. 22 and 37); Order and Judgment (Doc. 235).) Duke, emphasizing the language of the statute of limitations that a claim is barred five years from the date it "first accrue[d], " asserted "that violations of [the PSD] preconstruction permitting requirements occur when actual construction is commenced at the facility, and not at some later time." Duke I , 278 F.Supp.2d at 649. Therefore, Duke claimed, "any civil penalties arising from modifications commenced before December 22, 1995 [i.e., more than five years before the filing of the Complaint] are time barred." Id . at 650. The Government disagreed with Duke's characterization of the violations, arguing that Duke's failure to obtain a permit was not a one-time violation, but a continuing violation not encompassed by the statute of limitations. Id . at 649.

The Duke I court sided with the Government, reasoning that the PSD preconstruction permits, had Duke obtained them, would have "set forth emission limitations for [each plant] following the construction activity" and subsequently required Duke to "operate in accordance with the terms of that permit." Id . at 650. The Duke I court further reasoned that:

[B]ecause the PSD permitting provisions provide both preconstruction obligations and subsequent obligations on operations, Duke Energy's alleged violation of failing to undergo the PSD permitting process does not terminate upon the completion of construction activity. The violation continues because each day that Duke Energy operates an allegedly modified plant and emits pollutants into the atmosphere, it may be in violation of the requirement to comply with the operation conditions, i.e., the emission limitations, that would have been contained within a PSD permit had Duke Energy submitted to the permitting process.

Id. at 651. See also United States v. Marine Shale Processors , 81 F.3d 1329, 1355-56 (5th Cir. 1996); United States v. Ohio Edison Co., No. 2:99-cv-1181 , 2003 WL 23415140, at *6 (S.D. Ohio Jan. 17, 2003); United States v. Am. Elec. Power Serv. Corp , 137 F.Supp.2d 1060, 1066 (S.D. Ohio 2001).

As Duke points out, however, four Courts of Appeals have since found that failure to obtain a PSD preconstruction permit is a one-time violation - a conclusion contrary to the Duke I court's opinion. See United States v. EME Homer City Generation , 727 F.3d 274 (3d Cir. 2013); United States v. Midwest Generation, LLC , 720 F.3d 644 (7th Cir. 2013); Sierra Club v. Otter Tail Power, Co. , 615 F.3d 1008 (8th Cir. 2010); Nat'l Parks and Conservation Ass'n v. Tenn. Valley Auth. , 502 F.3d 1316 (11th Cir. 2007). All four of these cases employ substantially the same basic reasoning. First, they note that the plain language of the PSD statute prohibits "construction" or "modification" of a facility without obtaining the required permits, but is silent on the issue of "operation." See, e.g., EME Homer City , 727 F.3d at 284. Additionally, they emphasize that the CAA contains a separate operating permit requirement above and beyond the PSD preconstruction permit requirements, making it unlikely that Congress intended for the preconstruction permit to act as an operating permit, as well. See id. at 285. Finally, they observe that the PSD enforcement mechanisms do not appear to allow a remedy for operation without a preconstruction permit. See id. at 285 ("Nowhere do these [preconstruction permit] provisions authorize enforcement against a person who operates' a source without satisfying applicable PSD requirements."). Suffice it to say that each of these Courts of Appeals considered and rejected reasoning substantially similar to that employed by the district court in its 2003 ruling. See, e.g., id. at 286 ("The [Government's] argument is simple: obtaining a PSD permit is a condition of operating a source because PSD permits impose some operational conditions on the sources they govern.... But Ockham's Razor reminds us that simplicity in argument, without more, is no barometer of merit.").

This court finds the decisions of these Courts of Appeals well-reasoned, and cannot say definitively that the Duke I court would not have been persuaded by them had they existed ten years ago. Nevertheless, this court will decline Duke's invitation to re-address the statute of limitations question because the doctrine of law of the case counsels heavily against such a reconsideration.


Even though "a district court retains the power to reconsider and modify its interlocutory judgments, including partial summary judgments, at any time prior to final judgment when such is warranted[, ]" Am. Canoe Ass'n v. Murphy Farms, Inc. , 326 F.3d 505, 514-15 (4th Cir. 2003) (internal citations omitted), "[t]he law of the case doctrine posits that when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case, '" TFWS, Inc. v. Franchot , 572 F.3d 186, 191 (4th Cir. 2009) (citing United States v. Aramony , 166 F.3d 655, 661 (4th Cir. 1999)). This doctrine "is designed to serve the goals of finality and predictability in the trial court[, ]... [but] is neither absolute nor inflexible; it is a rule of discretion rather than a jurisdictional requirement."[3] Walker v. S.W.I.F.T. SCRL , 517 F.Supp.2d 801, 807-08 (E.D. Va. 2007) (citing Smith v. Bounds , 813 F.2d 1299, 1304 (4th Cir. 1987)). Nevertheless, the rule will apply "unless: (1) a subsequent trial produces substantially different evidence, (2) controlling authority has since made a contrary decision of law applicable to the issue, or (3) the prior decision was clearly erroneous and would work manifest injustice."[4] TFWS , 572 F.3d at 191 (internal citation and quotation marks omitted); accord Sejman v. Warner-Lambert Co. , 845 F.2d 66, 69 (4th Cir. 1988).

In its supplemental briefing, Duke argues that this three-circumstance test applies only "after the court of appeals has [established the law of the case, ]" and does not apply when a district court is asked to reconsider its own prior decision. (Def.'s Supplemental Br. in Supp. of Mot. for Leave to File Supplemental Mot. for Summ. J. ("Duke's Supp. Br.") (Doc. 470) at 4.) Duke then points to general policy statements and other declarations purporting to support a more lenient standard for district courts, but certain of Duke's cited cases actually undermine its argument. Compare Duke's Supp. Br. (Doc. 470) at 5 n.2 ("Thus, the [three-circumstance] standard... relied upon by plaintiffs is controlling only after an appellate decision has narrowed the district court's ordinarily broad discretion to reconsider interlocutory orders.'" (citing Am. Canoe , 326 F.3d at 515)) with Am. Canoe , 326 F.3d at 515 (noting that "doctrines such as law of the case... have evolved as a means of guiding [a district court's] discretion" and listing the three circumstances noted above (citing Sejman v. Warner-Lambert Co. , 845 F.2d 66, 69 (4th Cir. 1988))). Rather than suggesting a different standard for district courts reconsidering their own prior decisions, the cases Duke cites merely confirm what has already been said: that the law of the case doctrine "is a rule of discretion rather than a jurisdictional requirement." Walker , 517 F.Supp.2d at 807-08.

To be sure, the issue often arises after an appellate court establishes the law of the case for both the district court and itself. See, e.g., TFWS , 572 F.3d at 191 ("As a practical matter, then, once the decision of an appellate court establishes the law of the case...."). Significantly, however, in American Canoe the Fourth Circuit spoke of the law of the case doctrine and application of the three circumstances in the context of "a district court retain[ing] the power to reconsider and modify its interlocutory judgments, including partial summary judgment, at any time prior to final judgment when such is warranted." Am. Canoe , 326 F.3d at 514-15 (emphasis added).[5] Thus, this court will rule on Duke's motion by referencing the three circumstances outlined above.

A. New Evidence

Duke's argument that the court should reconsider the Duke I decision rests entirely on intervening developments in case law. Duke does not argue, for instance, that in Duke I, the court had an incomplete picture of the facts relating to the statute of limitations - i.e., the plant modification schedule or the date the Complaint was filed. Therefore, this exception to the law of the case doctrine is inapplicable.[6]

B. Change in Controlling Authority

The parties agree that the Fourth Circuit has yet to consider the question of whether failure to obtain a PSD preconstruction permit under the CAA is a one-time or continuing violation. Therefore, this exception to the law of the case doctrine is also inapplicable.

C. Clear Error or Manifest Injustice

1. Clear Error

Duke urges us to find that "[t]he developments in the case law since 2003 show [the Duke I] decision to be clearly erroneous." (Duke's Mot. (Doc. 457) at 3.) "Clear error occurs when we are left with the definite and firm conviction that a mistake has been committed.'" United States v. Woods, 477 F.Appx. 28, 29 (4th Cir. 2012) cert. denied, ___ U.S. ___ , 133 S.Ct. 965 (2013) (citing United States v. Harvey , 532 F.3d 326, 336 (4th Cir. 2008)).

As discussed supra, this court is impressed with the reasoning employed by the Courts of Appeals who have determined that failure to obtain a PSD preconstruction permit is a one-time violation. The statutory interpretation in those cases is straightforward and typical, and makes intuitive sense. See supra at 5-6. However, this court also finds the Duke I decision to be well-reasoned and defensible, particularly in light of the fact that several other courts have recently recognized or adopted the same reasoning and concluded that failure to obtain a PSD preconstruction permit is a continuing violation. See United States v. Cemex, Inc. , 864 F.Supp.2d 1040, 1048 (D. Colo. 2012) ("Given that the CAA is a statute intended to prevent emission of air pollution, the continued emission of pollutants that would otherwise be limited had the source complied with the PSD and NNSR [Non-attainment New Source Review] programs could be considered a repeated injury."); Sierra Club v. Portland Gen. Elec. Co. , 663 F.Supp.2d 983, 993 (D. Or. 2009) ("Because [the Title V] program contains operational requirements does not mean that the [PSD preconstruction] program must lack similar requirements. As discussed above, the language of both the federal and Oregon PSD programs create ongoing operational requirements."); Sierra Club v. Dayton Power & Light, Inc., No. 2:04 CV 905, 2005 WL 1972549, *3 (S.D. Ohio Aug. 12, 2005) ("[T]he Court finds it illogical to conclude that a defendant may only be held liable for constructing a facility, rather than operating such facility, without complying with the permit requirements."); cf. Nat'l Parks Conservation Ass'n v. Tenn. Valley Auth. , 480 F.3d 410, 419 (6th Cir. 2007) (holding, while interpreting a Tennessee regulation with substantially the same language as the PSD regulations applicable in this case, that failure to obtain a preconstruction permit constitutes a recurrent violation for each day the plant operates without one, even post-construction).

The analysis as to whether operation is a recurring violation is further complicated by the fact that the portion of the CAA requiring preconstruction permits was implemented in 1977, while the portion requiring operating permits was implemented in 1990. In those intervening years,

[C]itizens, regulators, and even the owners and operators of pollution sources had difficulty knowing which of the Clean Air Act's many requirements applied to a particular pollution source.... [T]he only [operational] requirements easily discoverable were those expressly listed in the preconstruction permits issued under the New Source Review program; any other applicable requirements under the Clean Air Act were scattered among separate records, permits, and other documents, if they were recorded at all.

EME Homer City , 727 F.3d at 280 (citing Sierra Club v. Johnson , 541 F.3d 1257, 1261 (11th Cir. 2008)).

There is an argument, therefore, that until the 1990 CAA amendments, the preconstruction permits acted as de facto operation permits, setting forth emissions and operational limits established during the permitting application process. See, e.g., 40 C.F.R. § 51.24(k) (1981) (requiring the owner or operator of a modified plant to "demonstrate that allowable emission increases from the proposed source or modification... would not cause or contribute to air pollution...."); id. § 51.24(m)(2) (obligating an owner or operator to "conduct [post-construction] ambient monitoring... to determine the effect emissions from the... modification may have, or are having, on air quality in any area"); id. § 51.24(n)(2)(i) & 15 N.C. Admin Code 2D.0530(g) (see Doc. 450-1)(permitting North Carolina to require the preconstruction permit application to contain "[a] description of the nature, location, design capacity, and typical operating schedule of the source or modification....").[7]

Because Duke I's conclusion is not only defensible, but has been shared by a number of other courts over the past decade, and because the patchwork history of the CAA offers no definitive answer, this court cannot find that the court in Duke I made a clear error of law in ruling that Duke's alleged failure to obtain a PSD preconstruction permit constitutes a continuing violation.

2. Manifest Injustice

A few courts have defined the term "manifest injustice, " which also appears in Rule 59(e), as "an error by the court that is direct, obvious, and observable." See Smith v. Waverly Partners, LLC, No. 3:10-CV-28, 2011 WL 3564427, at *3 (W.D. N.C. Aug. 12, 2011) ("In the context of a motion to reconsider, manifest injustice is defined as an error by the court that is direct, obvious, and observable.'") (quoting Register v. Cameron & Barkley Co. , 481 F.Supp.2d 479, 480 n.1 (D.S.C. 2007)). Courts have applied the "direct, obvious, and observable" definition to a motion for reconsideration of interlocutory orders. E.g., Harper v. Norfolk S. Ry. Co., 992 F.Supp.2d 795, 810 (S.D. Ohio 2014). The language reflects that found in Black's Law Dictionary, which defines "manifest injustice, " in relevant part, as "[a] direct, obvious, and observable error in a trial court." Black's Law Dictionary 1048 (9th ed. 2009). For all practical purposes in this case, this definition mimics the definition of "clear error, " discussed supra, so this court will apply the same analysis and reach the same conclusion.[8]


This court is well aware that "[t]he ultimate responsibility of the federal courts, at all levels, is to reach the correct judgment under law[, ]" regardless of the applicability of the law of the case doctrine. Am. Canoe , 326 F.3d at 515. However, as outlined above, this court does not find that Judge Bullock's previous ruling on this issue in Duke I has been controverted by subsequent controlling law, that new evidence has emerged to undercut its legitimacy, or that maintaining it would be clear error or work a manifest injustice on any parties to this case.

The court has also been mindful that this obligation is especially true in the context of subject matter jurisdiction issues, "which call into question the very legitimacy of a court's adjudicatory authority." Id . The Court considered Duke's subject matter jurisdiction arguments (Duke's Mot. (Doc. 457) at 4-5) in note 1 above and in determining the application of the three circumstances. Therefore, this court will uphold it as the law of the case and decline Duke's invitation to reopen summary judgment for further briefing.[9]

IT IS HEREBY ORDERED that Defendant's Motion for Leave to File Supplemental Motion for Summary Judgment (Doc. 457) is DENIED.

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