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Purchaser of Emission Units Insulated from Liability for Alleged NSR Violations

04.01.2010

By Larry Kane, Attorney, Bingham Greenebaum Doll LLP

In a novel development, a federal district court has held that the purchaser of six coal-fired power plants bears no liability for alleged PSD violations associated with the power plants that would have occurred prior to the purchaser’s acquisition. See United States of America v. Midwest Generation, LLC, 2010 U.S. Dist. Lexis 22729, (N.D.Ill., March 9, 2010). The court granted a motion to dismiss the claims of plaintiff environmental organizations that the purchaser was legally responsible for the previous owner’s alleged PSD violations for unpermitted major modifications to the power plants. In doing so, the court rejected the plaintiffs’ contentions that the operation of the power plants by the new owner was continuing violations of the Clean Air Act’s PSD requirements. The court held, consistent with the majority of courts to address the issue, that the PSD provisions (42 U.S.C. § 7475) apply only to the failure to permit the construction of a major source and do not apply to subsequent operation. Since the purchaser had not constructed the alleged source modifications, it was not liable under the PSD provisions. Consequently, there is no claim for civil penalties or injunctive relief in regard to alleged violations of § 7475.

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