Petition for Writ of Certiorari — Franklin County County Power Power of of Illinois, LLC v. Sierra Club Club (No. 08-1304)

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Supreme Court, U.S.

a FILED

\ 0, 081304 APR 2 0 2009

No. O80 F FICE OF THE CLERK

IN THE

Supreme Court of the United States

FRANKLIN COUNTY POWER OF ILLINOIS, LLC,

FORMERLY KNOWN AS ENVIROPOWER OF ILLINOIS, LLC;

ENVIROPOWER, LLC; AND

KHANJEE HOLDING (US), INC.,

Petitioners,

SIERRA CLUB,

Respondent.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Seventh Circuit

PETITION FOR A WRIT OF CERTIORARI

STEPHEN M. SOBLE CARTER G. PHILLIPS*

SOBLE INTERNATIONAL JACQUELINE G. COOPER

LAW, PLLC SIDLEY AUSTIN LLP

1201 Pennsylvania 1501 K Street, N.W.

Avenue, N.W. Washington, D.C. 20005

Suite 500 (202) 736-8000

Washington, D.C. 20004

(202) 215-4320

Counsel for Petitioners

April 20, 2009 * Counsel of Record

SNARES RON AEE NG IROL EES NS PLAS, OOO TEER PURE ES EL ESI V ICR IOLEY Ah LEAS DOBLE LEG BY PREEELE PRE EO AELENE

WILSON-EPES PRINTING CO ,INC — (202) 789-0096 -— WaSHINGTON,D C 20001

QUESTION PRESENTED

Whether the Seventh Circuit erred in holding that

an organization has standing under the citizen suit

provision of the Clean Air Act (“CAA”) to seek an

injunction against the construction of a power plant

and, absent any agency determination, effectively to

supplant the jurisdiction vested by Congress in the

agency, without the citizen suit plaintiff establishing

that the emission limitations in the existing permit

pose a realistic threat of injury to its members’

interests and without proving that a new permit

would alleviate its members’ concerns.

(1)

PARTIES TO THE PROCEEDING

All parties to the proceeding are identified in the

caption.

RULE 29.6 STATEMENT

Pursuant to Rule 29.6 of the Rules of this Court,

petitioners state that EnviroPower, LLC is a

Kentucky limited lability company, with no parent

company. No publicly held corporation owns 10

percent or more of its stock.

Franklin County Power of Jllinois, LLC, f/k/a

EnviroPower of Illinois, LIC is an Illinois limited

hability company. EnviroPower, LLC is its parent

company, owning 100 percent of its stock. No

publicly held corporation owns 10 percent or more of

its stock.

Khanjee Holding (US), Inc. has no parent company,

and no publicly held corporation owns 10 percent or

more of its stock.

TABLE OF CONTENTS

QUESTION PRESENTED

PARTIES TO THE PROCEEDING ..................0.5.

RULE 29.6 STATEMENT

JURISDICTION

CONSTITUTIONAL AND STATUTORY PRO-

VISIONS INVOLVED

A. Statutory Background

B. Factual Background

C. Proceedings Below

REASONS FOR GRANTING THE PETITION...

I. THE DECISION BELOW CONFLICTS

WITH DECISIONS OF THIS COURT

Il. THE COURT OF APPEALS’ STANDING

RULING POSES AN ISSUE OF FUNDA-

MENTAL IMPORTANCE

CONCLUSION

APPENDIX A: Sterra Club — v. Franklin

County Power, 546 F.3d 918 (/th Cir. 2008) ..

APPENDIN B: Sierra Club - sv. Franklin

County Power. No. 05-ev-4095 (S.D. Ul. Oct

Neen ne pacaaueccdeansdvabvcces Seren

APPENDIX C: Sierra Club V Frankltn

County Power, No. 06-4045 (7th Cir. Dec. 19.

Ne ineivacenvased’ A Nie PRESS Sac nee ...... OYA

(111)

TABLE OF AUTHORITIES

CASES

Allen v. Wright, 468 U.S. 737 (1984)

City of Los Angeles v. Lyons, 461 U.S. 95

14, 15, 16

DaimlerChrysler Corp. v. Cuno, 547 US.

332 (2006)

EEOC v. Waffle House, Inc., 534 U.S. 279

(2002)

Families Concerned About Nerve Gas

Incineration v. U.S. Dep't of the Army,

380 F. Supp. 2d 1233 (N.D. Ala. 2005)

Friends of the Earth, Inc. v. Laidlaw Env7

Servs. (TOC), Inc., 528 U.S. 167 (2000).. passim

Heckler v. Chaney, 470 U.S. 821 (1985) 17

Larson v. Valente, 456 U.S. 228 (1982) ........ 19

Lujan v. Defenders of Wildlife, 504 U.S.

555 (1992) passim

Mobil Oil Exploration & Prod. Se. Inc. v.

United Distrib. Cos., 498 U.S. 211

Natl Parks Conservation Ass’n v. TVA, 175

F. Supp. 2d 1071 (E.D. Tenn. 2002)

O’Shea v. Littleton, 414 U.S. 488 (1974)

Ogden Projects, Inc. v. New Morgan

Landfill Co., 911 F. Supp. 863 (E.D. Pa.

Sierra Club v. Morton, 405

Bf > SESE Pe OEE MEE PS BORIP RENE OO RPA Scr 15, 16

Summers v. Earth Island Inst., 129 S. Ct.

PE Ue ccc dusnsidudean coder sceceauremanemiinets i3, 20, 21

CONSTITUTION, STATUTES AND REGULATION

AP. Comet, BPE. TEE, BD... sicscececcavsacce, eee 1]

42 U.S.C. § 7401(b)(1)

Pa aiiciaess te esd hoes eee ebes Ss 6

TABLE OF AUTHORITIES -— continued

42 U.S.C. §§ 7470-7492

TAO

§ 7479(2)(A) ;

§ 7661(a)(b)(5)

Poe eRe Eo ks |, re

RULES

Sup. Ct. R. 10(c)

PETITION FOR A WRIT OF CERTIORARI

Petitioners Franklin County Power of Illinois, LLC,

‘formerly known as EnviroPower of Illinois, LLC,

EnviroPower, LLC, and Khanjee Holding (US), Inc.

respectfully petition for a writ of certiorari to review

the judgment and opinion of the United States Court

of Appeals for the Seventh Circuit.

OPINIONS BELOW

The opinion of the court of appeals, Pet. App. la-

32a, is reported at 546 F.3d 918. Its decision denying

the petition for rehearing and rehearing en bane, td.

at 69a-70a, is unreported. The opinion of the district

court, id. at 33a-68a, is unreported.

JURISDICTION

The court of appeals issued its judgment and

opinion on October 27, 2008. Pet. App. la-32a. A

timely petition for rehearing and rehearing en banc

was denied on December 19, 2008. Jd. at 69a-70a.

On February 25, 2009, Justice Stevens extended the

time for filing this petition to and including April 18,

2009, which is a Saturday. Pursuant to Sup. Ct. R.

30.1, the petition is being timely filed on Monday,

April 20, 2009. The jurisdiction of this Court. is

invoked pursuant to 28 U.S.C. § 1254(1).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

Article II], Section 2 of the United States

Constitution, which provides:

The judicial Power shall extend to...Cases...

[and] Controversies... .

42 U.S.C. § 7604, the citizen suit provision of the

Clean Air Act (“CAA”), which provides:

(a)... [A]ny person may commence a civil action

on his own behalf...

(3) against any person who proposes. to

construct or constructs any new or modified

major emitting facility without a permit required

under [42 U.S.C. §§ 7470 et seq.] (relating to

significant deterioration of air quality)... or who

is alleged to have violated (if there is evidence

that the alleged violation has been repeated) or

to be in violation of any condition of such permit.

STATEMENT OF THE CASE

The decision below conflicts with this Court’s

interpretation of Article III of the Constitution, which

requires a plaintiff who seeks injunctive relief to

present concrete proof of a realistic threat of future

injury and to demonstrate that it is likely, and not

merely speculative, that the rehef sought will

redress the specific injury alleged. The court of

appeals diluted these requirements by holding that

respondent has standing to seek an _ injunction

against the construction of a power plant on the

ground that the construction permit has

automatically expired and a new permit must be

obtained, even though the organization has not

established that the emission limitations in_ the

existing permit pose a realistic threat of injury to its

members and it is wholly speculative whether (1) the

emission limitations in a new permit would be more

stringent than those of the existing permit, and (2)

any change in the emission limitations would

alleviate the alleged threat of injury.

This holding represents a sigmificant departure

from this Court’s Article III standing principles in the

citizen suit context. By relying on respondent’s mere

assertion of harm to aesthetic and recreational

interests and a chain of speculation, the court of

appeals ignored and failed to hold respondent to the

specific showings and burdens of proof that this

Court has set forth in its standing decisions. This

analysis is unsound, reflects fundamental confusion

about the application of standing principles in the

citizen suit context, and warrants this Court’s review.

This holding also presents a recurring issue of

national importance because a dilution of the Article

IiI standing requirements in this context will invite

private groups to bring suit any time there is any

conceivable issue with respect to a permit, thereby

clogging the courts with questionable citizen suits

that are calculated to disrupt construction rather

than hold responsible’ actual violators = of

environmental! standards. This will not only prevent

needed and beneficial energy plants from being built,

but will also shift the enforcement of permit

requirements to these groups and away from the

federal and state environmental agencies to whom

Congress and state legislatures have delegated

responsibility to protect the environment.

A. Statutory Background.

Congress enacted the Clean Air Act (“CAA”) in

order “to protect and enhance the quality of the

Nation’s air resources so as to promote the public

health and welfare and the productive capacity of its

population.” 42 U.S.C. § 7401(b)(1). ‘To accomplish

these goals, the CAA includes provisions designed to

prevent significant deterioration of air quality. /d.

§ 7470-7492. Among these, 42 U.S.C. § 7475(a)(1)

provides that no “major emitting facility” can be

constructed after August 7, 1977 unless “a permit has

been issued for such proposed facility in accordance

with this part setting forth emission limitations for

such facility.” The emission limitations set forth in

the permit (called a “PSD permit”) must reflect “the

best available control technology [BACT] for each

pollutant subject to regulation under this chapter

emitted from, or which results from, such facility.”

Id. § 7475(a)(4).

The federal Environmental Protection Agency

(“EPA”) has delegated to the [Illinois Environmental

Protection Agency (“IEPA”) the authority to issue

PSD permits in Tllinois, although EPA retains

ultimate authority over the permits. The permitting

process is lengthy and complex, requiring applicants

to expend significant time and resources to submit

detailed analyses. Interested persons have a full

opportunity to participate in the process through a

required public hearing at which they may appear

and submit written or oral presentations. Id.

§ 7475(a)(2).

Once a PSD permit is issued, EPA regulations

provide that it “become[s] invalid if construction is

not commenced within 18 months after receipt of

such approval, if construction is discontinued for a

period of 18 months or more, or if construction is not

completed within a reasonable time.” 40 C.F.R.

§ 52.21(r)(2). Congress has defined commencement of

construction to mean that the permit-holder has

either “begun, or caused to begin, a continuous

program of physical on-site construction of the

facility” or “entered into binding agreements or

contractual obligations, which cannot be canceled or

modified without substantial loss to the owner or

operator, to undertake a program of construction of

the facility to be completed within a reasonable time.”

42 U.S.C. § 7479(2)(A). The 18-month period may be

extended “upon a satisfactory showing that an

extension is justified.” 40 C.F.R. § 52.21(r)(2).

B. Factual Background.

Petitioners are experienced developers of electric

power plants in the United States and elsewhere.

They have built numerous power plants that are

currently in operation. This case concerns their

efforts to build a coal-fired power plant using state-of-

the-art CFB (circulating fluidized-bed) clean-coal

technology at the site of a former coal mine in

Benton, Illinois. Such power plants are technological-

ly complex projects that require extensive planning

and customized design work.

On August 15, 2000, after conducting a detailed

feasibility study, petitioners filed an application with

the IEPA for a PSD permit to build the Benton power

plant. Pet. App. 37a.!. The IEPA conducted a

comprehensive review of the application and a public

hearing was held on May 8, 2001. Respondent Sierra

Club did not appear at the hearing, file any

submissions with the IEPA, or participate in the

permitting process in any way. Id.

On July 3, 2001, IEPA issued a PSD permit for the

plant. Pet. App. 37a. Petitioners worked toward

completion of the facility by “obtain{ing] an

engineering report and a scoping study,” “working on

a boiler. design” and “procur{ing] necessary

resources.” Id. at 38a. In December 2002, petitioners

entered into an agreement with an engineering and

construction firm concerning construction of the

plant. Id. at 38a-42a.

| These facts are set forth in the district court’s opinion.

On September 30, 2004, an IEPA inspector visited

the plant site and “found that construction had

commenced.” Pet. App. 43a. On November 19, 2004,

however, the IEPA notified petitioners that it had

made a “preliminary finding” that the PSD permit

had expired. Id. at 44a. This notification provided

petitioners with the opportunity to refute the

preliminary finding by submitting documentation

requested by the IEPA. /d.; see 42 U.S.C. § 7414(a)

(authorizing EPA Administrator or authorized

representative to issue formal information requests).

The EPA also requested that petitioners provide it

with information concerning the status of the permit.

Pet. App. 44a. Petitioners disputed the IEPA

preliminary finding and fully complied with the

information requests by timely submitting several

thousand pages of documentation to the IEPA and

EPA. Id.

On January 5, 2005, before petitioners had com-

pleted their responses to the information requests,

respondent notified petitioners and the agencies of its

intent to file suit under the CAA’s citizen suit

provision. Pet. App. 44a; see 42 U.S.C. § 7604(b)

(requiring potential citizen suit plaintiffs to provide

the alleged violator and agencies with 60 days

advance notice of intent to sue). The instant lawsuit

was then filed on May 20, 2005. Pet. App. 44a. The

filing of the Sierra Club suit chilled all further agency

action with respect to the PSD permit. In particular,

the IEPA has never made a fina] determination

concerning the status of the permit. /d.*

2 Pursuant to 42 U.S.C. § 7661la(b(5)(B) & (C), petitioners

were required to file for renewal of their PSD permit after five

years and to update their BACT and air modeling analyses

They submitted a timely application for a renewal permit in

2006, but the IEPA did not act upon it

C. Proceedings Below.

Respondent’s Lawsuit. Respondent’s citizen suit

alleged that petitioners propose to construct a power

plant without a valid PSD permit. See 42 U.S.C.

§ 7604(a)(3) (providing for citizen suit “against any

person who proposes to construct or constructs any

new or modified major emitting facility without a

[PSD] permit”). Respondent sought declaratory

relief, an injunction requiring petitioners to stop

construction until they have a valid PSD permit,

fines, costs, and attorneys’ fees. Pet. App. 33a-34a.

Petitioners filed a motion to dismiss and a motion

for summary judgment, arguing, inter alia, that

respondent lacked standing to sue under Article III of

the Constitution. In response to petitioners’ motion

for summary judgment on the standing issue,

respondent submitted the affidavit of one of its

members, Barbara McKasson, who alleged that she

and her family have taken trips to the Rend Lake

area every other year since 1987 to fish and to engage

in other recreational activities; that she intends to

continue taking trips to the area; and that the Rend

Lake area is less than three miles from the proposed

plant. Affidavit of Barbara McKasson, 4{| 4, 6, 8

(May 2, 2006) (““McKasson Aff.”).2 Ms. McKasson

then set forth the emission limitations contained in

petitioners PSD permit, the emission limitations

contained in two other PSD permits issued by the

IEPA for coal-fired power plants in 2003 and 2005

(which she asserted were “lower than the rates

established by IEPA in the EnviroPower PSD

4 Ms. McKasson’s affidavit is document number 93 in the

district court record. As the district court acknowledged, Ms

McKasson did not even know about respondent's lawsuit until

after it was filed. Pet. App. 52a

permit”), and alleged that “fblecause the [Benton]

Power Plant would be operating under an expired

permit, the [Benton] Power Plant will emit pollutants

in excess of the emission rates now considered

acceptable by the IEPA.” Jd. 4 13-18.

McKasson then alleged in her affidavit that “[ijf the

[Benton] Power Plant is constructed without a valid

PSD permit,” her “use and enjoyment of the Rend

Lake area will be impaired” because of negative

aesthetic effects and her concerns about adverse

health effects, which would “likely reduce, or

eliminate altogether, [her] trips to Rend Lake.” IZd.

{| 19. She also alleged that “[i]f the Power Plant is

constructed as proposed,” she will “reduce the

consumption of fish” from a pond at her home

(approximately 45 miles from the proposed plant) due

to concerns about mercury accumulation. Jd. {| 21.

Finally, she alleged that the requested injunction

would “address{]” her concerns because “[ilf

Defendants then obtained a new PSD Permit

permitted under current standards, [she] and [her]

family would be exposed to less harmful air pollution

at Rend Lake and at [her] home.” /d. 4] 22.

The district court ruled on the dispositive motions

without ever holding an evidentiary hearing or even

permitting oral argument.

District Court Decision. The district court held

that respondent has Article III standing to bring this

suit based on the standards for organizational

standing established in Friends of the Earth, Inc. v.

Laidlaw Environmental Services (TOC), Inc., 528

U.S. 167 (2000), and the standards for individual

standing set out in Lujan v. Defenders of Wildlife, 504

U.S. 555 (1992). See Pet. App. 48a-52a.

With respect to the requirement that respondent

establish “an injury in fact to at least one of its

members,” the district court held that respondent

satisfied this requirement because Ms. McKasson

alleged in her affidavit that “if the defendants build

the Plant without the appropriate permit, the

resulting levels of pollution from the operating Plant

will directly affect her use and enjoyment of the Rend

Lake area.” Pet. App. 50a. No scientific or other

objective evidence was ever introduced to corroborate

Ms. McKasson’s unsupported assertions. Nonethe-

less, the district court further relied on McKasson’s

statement “that the pollution that will be generated

by the Plant constructed without an appropriate

permit will also affect her use and enjoyment of her

own property 45 miles from the proposed Plant site.”

Id. The district court concluded that these state-

ments establish “an injury in fact of a Sierra Club

member that is imminent and not conjectural or

hypothetical.” Id.

With respect to the requirement that respondent

establish “a causal connection between McKasson’s

injury and pollution that will imminently emit from

the Plant,” Pet. App. 50a, the district court held that

respondent’ satisfied this requirement because

“McKasson stated in her affidavit that levels of those

pollutants allowed by the PSD permit the Sierra Club

believes has expired would cause the imminent injury

of which she complains,” td. at 51a. The court found

that these statements establish that “McKasson’s

injury is fairly traceable to the defendants’ construc-

tion of the Plant allegedly without an appropriate

permit.” Jd.

With respect to the requirement that McKasson’s

purported injury be redressable by the remedy that

she seeks, the district court held that respondent

satisfied this requirement because “McKasson stated

that PSD permits for power plants issued after the

defendants’ PSD permit contain lower BACT [best

available control technology] emissivn levels (as they

should since technology tends to make advancements,

not regressions)” and “that if the Court were to halt

construction of the Plant until the defendants

obtained a new PSD permit, the BACT emission

levels for the new PSD permit would be lower and her

exposure to harmful pollutants at Rend Lake and at

her home would be lessened.” Pet. App. 5la. At no

time, however, did Sierra Club or Ms. McKasson ever

specify which pollutant would cause what harm.4

The district court also determined that the PSD

permit had expired and made other rulings that are

not relevant here. It enjoined petitioners “to stop

actual construction of the Plant until they have

obtained a valid PSD _ permit” and_ deferred

consideration of a fine and attorneys’ fees to a later

date. Pet. App. 67a-68a.

Seventh Circuit Decision. The Seventh Circuit

affirmed. With respect to standing, the Seventh

Circuit upheld the district court’s determination that

4 Given its interpretation of the standing requirements and

Ms. McKasson’s subsequent plaintiff status, the district court

did not address the standing claim of Verena Owen, another

Sierra Club member. Pet. App. 5la n.l. Ms. Owen exercised a

similar lack of diligence in supporting her standing claim with

scientific fact and evidence as Ms. McKasson; she merely

asserted that she lives near Chicago (approximately 350 miles

from the proposed plant) and was concerned about the effects of

the plant’s emission on the air quality in the greater Chicago

area. Even Ms. McKasson’s patently insubstantial aesthetic

and recreational interests were stronger than Ms. Owen's, and

Ms. McKasson therefore served as the sole standing plaintiff for

the district court.

respondent has standing through its member, Ms.

McKasson.

The Seventh Circuit agreed that Ms. McKasson

satisfied the injury in fact requirement because she

states in her affidavit “that she will experience

diminished aesthetic and recreational value if the

Company constructs and operates the power plant

under the 2001 PSD permit.” Pet. App. 8a; see also

id. (noting that “fiJf the proposed plant is built,

McKasson will be exposed to emissions from the

plant”). The court of appeals further noted that

McKasson asserted in her affidavit that she will

cease visiting the area “if the Company builds the

plant under the 2001 permit .. . because the

pollutants emitted based on the permit will harm

her.” Zd.

With respect to the causation or traceability

requirement, the Seventh Circuit held that this

requirement was satisfied because “under the 2001

PSD permit the proposed plant will emit airborne

pollutants . . . three miles from Rend Lake” and

McKasson alleges that “these pollutants and the

resulting decrease in visibility will negatively impact

her enjoyment of the lake.” Pet. App. 10a-lla. The

court of appeals acknowledged that “no one knows

the ultimate magnitude of McKasson’s injury,” but

held that this does not matter because “[wle do

know... . that the plant will release some pollutants

and that McKasson believes these pollutants will

ruin her ability to enjoy Rend Lake and taint the

surrounding area.” T/d. at lla: see also id. at 12a

(finding that McKasson’s injury ts “fairly traceable to

the plant” because it “stems from the emissions of the

Company’s proposed plant’).

With respect to redressability, the Seventh Circuit

held that this requirement was satisfied because it 1s

“reasonable to believe that any new permit the

Company obtains will have tougher emission

standards than the 2001 PSD permit.” Pet. App. 13a.

The court of appeals based this “reasonable belief” on

the fact that “pollution contro] technology tends to

improve over time” and that “the record indicates

that the IEPA issued PSD permits in 2003 and 2005

for similar coal-fired power plants with emission

standards that were significantly more stringent

than those in the Company’s 2001 permit.” Jd. at

12a-13a. The court of appeals further held that it

“need not determine exactly how much tougher those

standards will be” because “[iJt is enough that

[McKasson’s] concerns will be addressed if more

stringent emission standards are imposed than those

required under the 2001 permit, even though the

plant will still emit some pollutants if the Company

obtains a new PSD permit.” Jd. at 13a.

The Seventh Circuit denied rehearing and

rehearing en banc.

REASONS FOR GRANTING THE PETITION

I. THE DECISION BELOW CONFLICTS WITH

DECISIONS OF THIS COURT.

The decision below merits review because _ it

conflicts with this Court’s constitutional standing

jurisprudence requiring a plaintiff to allege “personal

injury fairly traceable to the defendant’s allegedly

unlawful conduct and likely to be redressed by the

requested relief.” DaimlerChrysler Corp. v. Cuno,

547 U.S. 332, 342 (2006) (internal quotation omitted).

See Sup. Ct. R. 10(c) (a consideration favoring review

on certiorari is where a federal court of appeals

“decided an important federal question in a way that

conflicts with relevant decisions of this Court”).

Parties seeking to “invoke the power of federal

courts” must satisfy the vhreshold requirement

imposed by Article III of the Constitution that they

“must allege an actual case or controversy.” O’Shea

v. Littleton, 414 U.S. 488, 493 (1974) (citing cases).

This “limitation ‘is founded in concern about the

proper — and properly limited — role of the courts in a

democratic society.” Summers v. Earth Island Inst.,

129 S. Ct. 1142, 1148 (2009) (quoting Warth v. Seldin,

422 U.S. 490, 498 (1975)). Specifically, the case or

controversy requirement restricts the judicial power

“to the traditional role of Anglo-American courts,

which is to redress or prevent actual or imminently

threatened injury to persons caused by private or

official viclation of law.” Id.5

“{(Ajn essential and unchanging part of th[is] case-

or-controversy requirement” is the doctrine of

standing. Lujan v. Defenders of Wildlife. 504 U.S.

555, 560 (1992) (citing Allen v. Wright, 468 U.S. 737,

751 (1984)). This Court has defined the “irreducible

constitutional minimum of standing” as containing

three elements. First, the plaintiff must have

suffered an “injury in fact”: an “invasion of a legally

protected interest which is (a) concrete and

particularized, and (b) actual or imminent, not

conjectural or hypothetical.” Jd. at 560 (internal

citations and quotation marks omstted). Second,

“there must be a causal connection between the

injury and the conduct complained of,” t.e., “the injury

has to be fairly .. . trace[able] to the challenged

action of the defendant.” Jd. (internal quotation

5 Because Article III is so fundamental to a proper separation

of powers under the Constitution, this Court has granted

certioram to address Article III standing questions even in the

absence of a clear conflict among the circuits. See, e.g.,

Summers, 1298S. Ct. 1142.

marks omitted; omission and alteration in original).

Third, “it must be hkely, as opposed to merely

speculative, that the injury will be redressed by a

favorable decision.” Jd. at 561 (internal quotation

marks omitted). Together, these requirements com-

pel plaintiffs to “demonstrate a ‘personal stake in the

outcome’ in order to ‘assure that concrete adverseness

which sharpens the presentation of issues’ necessary

for the proper resolution of’ important questions of

federal law. City of Los Angeles v. Lyons, 461 U.S. 95,

101 (1983) (quoting Baker v. Carr, 369 U.S. 186, 204

(1962)). It is the plaintiffs burden to establish

standing. Lujan, 504 U.S. at 561 (“The party

invoking federal jurisdiction bears the burden of

establishing these elements.”).

An organization has standing to sue if (1) one or

more of its members “would otherwise have standing

to sue in their own right” under the standards set

forth in Lujan; (2) “the interests at stake are germane

to the organization’s purpose”; and (3) “neither the

claim asserted nor the relief requested requires the

participation of individual members in the lawsuit.”

Friends of the Earth, Inc. v. Laidlaw Env’ Servs.

(TOC), Inc., 528 U.S. 167, 181 (2000).

The Seventh Circuit has departed from core

components of this framework. Although the court of

appeals paid lip service to the foregoing principles,

see Pet. App. 6a-7a, it plainly ignored them in

holding that respondent has standing to challenge

the validity of petitioners’ PSD permit and seek an

injunction that will delay construction of the plant.

Before turning to the court of appeals’ flawed

application of the standing requirements, it 1s

important to understand what respondent does not

claim in this lawsuit. Respondent does not claim that

petitioners have violated any environmental law or

any emission limitation of their PSD permit, or that

its members fear, based on evidence, that petitioners

will commit any such violation in the future. Nor has

it challenged any aspect of the IEPA’s actions in

approving the PSD permit, including its establish-

ment of the permit’s emission limitations in accor-

dance with the “hest available control technology”

standard, see 42 U.S.C. § 7475(a)(4). As a result,

respondent makes no claim that a timely constructed

coal-fired power plant built in conformance with the

permit would violate any law or environmental

standard. With this background in mind, it is clear

that the court of appeals’ analysis of the Lujan

factors is unsound.

First, the court of appeals’ determination that

respondent, through its member McKasson, satisfied

the “injury in fact” requirement conflicts with this

Court’s decisions. McKasson’s alleged “injury” is

harm to her aesthetic and recreational interests that

allegedly will occur if petitioners’ plant is built under

the conditions of the PSD permit. To be sure, this

Court has held that harm to the aesthetic and

recreational interests of environmental plaintiffs who

use affected areas can constitute “injury in fact.” See

Laidlaw, 528 U.S. at 183; Sierra Cluo v. Morton, 405

U.S. 727, 734-35 (1972). But it has also held that in

order to serve as the basis for injunctive relief, a

plaintiff must show that she faces a “realistic threat”

of the alleged future injury and that mere “subjective

apprehensions” that such an injury will occur are

insufficient to support standing. Laidlaw, 528 U.S.

at 184; Lyons, 461 U.S. at 107 n.8 (evaluating the

“reasonableness of [the plaintiffs] fear” of future

injury); see also 461 U.S. at 101 (“Abstract injury is

not enough.”).

Here, McKasson’s feared injuries to her aesthetic

and recreational interests are rooted in “subjective

apprehensions” that are neither “realistic” nor

“reasonable.” This is not a case like Laidlaw, where

the defendant has engaged in “continuous and

pervasive illegal discharges of pollutants,” 528 U.S.

at 184, or a case like Morton, where the plaintiff has

asserted under the Administrative Procedure Act

that the approval of the project contravened federal

environmental laws, 405 U.S. at 730 & n.2. As noted,

respondent does not claim that petitioners have

violated any environmental standard, that McKasson

or any of its other members fear that they will do so

in the future, or that the IEPA’s approval of the

permit was in any way improper. Instead,

McKasson’s alleged fears of injury stem from the

emission limitations that the IEPA, after extensive

analysis and public comment, approved for the PSD

permit under the governing standard set by

Congress. In other words, her fears stem from

emission limitations that the federal and _ state

environmental agencies deemed sufficient to protect

air quality under the CAA.

Personal fears of emissions that comply with

federal clean air standards, however, cannot be

credited as a “realistic” or “reasonable” basis for

standing. Such fears are a classic example of fears

based on “subjective apprehensions,” Lyons, 461 U.S.

at 107 n.8, that are — at best — “conjectural” or

“hypothetical,” Lujan, 504 U.S. at 560 (nternal

quotation marks omitted). At the very least, the

court of appeals’ holding that subjective fears based

6 The reasonableness of McKasson’s fears is further undercut

by the petitioners’ representations to the courts below that the

plant has been designed “to produce emissions below permitted

levels.” Pet. App. bla.

on permissible emission levels can support standing

undermines the environmental protection scheme

that Congress has established and permits judicial

second-guessing of the considered judgment of the

expert agencies. See Mobil Oil Exploration & Prod.

Se. Inc. v. United Distrib. Cos., 498 U.S. 211, 231

(1991) (declining to “second-guess” agency’s “reasoned

determination” in a “complex area”); EEOC v. Waffle

House, Inc., 5384 U.S. 279, 297 (2002) (courts cannot

“second-guess” agency judgments “balanc[ing] the

competing policies”); Heckler v. Chaney, 470 U.S. 821,

831-32 (1985) (“The agency 1s far better equipped

than the courts to deal with the many variables

involved in the proper ordering of its priorities.”).

In addition, under the Seventh Circuit’s approach

to analyzing injury in fact, citizen suits can be

predicated on collateral attacks by private interest

groups against the substance of state-issued

permits — a result that several other federal courts

have held impermissible. See, e.g., Natl Parks

Conservation Ass’n, Inc. v. TVA, 175 F. Supp. 2d

1071, 1079 (E.D. Tenn. 2092) (finding “no evidence in

the language of the Clean Air Act to indicate that

Congress intended that citizen suits could be used to

collaterally attack” the emission standards in state

permits); cf. Families Concerned About Nerve Gas

Incineration v. U.S. Dep't of the Army, 380 F. Supp.

2d 1233, 1258 (N.D. Ala. 2005) (citizen suit provision

of the Resource Conservation Recovery Act does not

provide court with “jurisdiction to hear collateral

challenges to the facility's [state-issued] permit”). As

these courts correctly recognized, such collateral

attacks are an improper attempt to disrupt and delay

construction of facilities that the relevant public

officials have deemed compliant with federal

standards. The court of appeals’ holding that

respondent has standing based on alleged injuries

that arise from the emission limitations in the PSD

permit is particularly troubling because respondent

had a full opportunity to participate in the lengthy

IEPA permitting process, but chose not to do so.

Second, even if the Seventh Circuit properly

applied this Court’s decisions in finding that

respondent satisfied the “injury in fact” requirement,

its determination that respondent satisfied the

causation and _ redressability requirements does

serious violence to this Court’s decisions. See Allen v.

Wright, 468 U.S. 737, 753 n.19 (1984) (noting the

frequent overlap between these two requirements).

Because respondent relied on McKasson’s alleged

aesthetic and recreational interests as the Article III

injury, the rest of the standing analysis must be

grounded in that injury. The Seventh Circuit

misapplied this Court’s standing decisions, however,

in finding that the causation and _ redressability

requirements are Satisfied with respect to that

alleged injury.

To satisfy the causation requirement, respondent

must demonstrate “a causal connection between the

injury and the conduct complained of.” Lujan, 504

U.S. at 560. The Seventh Circuit held that this

requirement was satisfied because “under the 2001

PSD permit the proposed plant will emit airborne

pollutants” that McKasson alleged would harm her

aesthetic and recreational interests. Pet. App. 10a-

lla; see also id. at 12a (finding that McKasson’s

injury is “fairly traceable to the plant” because it

“stems from the emissions of the Company’s proposed

plant”). Under this analysis, however, the threatened

harm to McKasson’s aesthetic and_ recreational

interests is traceable to the IEPA’s issuance of the

PSD permit in the first place with the specified

emission limitations, not to the conduct that

respondent complains of here — petitioners’ intent to

build under that permit. In other words, the injury

that McKasson alleges would have arisen even from

timely construction of the plant pursuant to the PSD

permit, and therefore is not fairly traceable to the

allegedly expired permit.

Respondent faces even greater problems with

respect to redressability. The relief it seeks — and

obtained below — was not an absolute injunction

against construction of the plant, but instead an

injunction that prevents petitioners from building the

plant until they obtain a new permit. Pet. App. 67a

(enjoining petitioners “to stop actual construction of

the Plant until they have obtained a valid PSD

permit’). The Seventh Circuit held that the

redressability requirement is satisfied because it is

“reasonable to believe that any new permit the

Company obtains will have tougher’ emission

standards than the 2001 PSD permit.” /d. at 13a; see

also id. (noting that McKasson’s “concerns will be

addressed if more stringent emission standards are

imposed”). In other words, the court of appeals’

finding of redressability is based on the hypothetical

possibility of a difference between the emission

limitations in the PSD permit and a new permit, and

the possible real-world effect of any such incremental]

difference.

This reasoning cannot be squared with this Court's

holdings that “it must be likely, as opposed to merely

speculative, that the injury will be redressed by a

favorable decision.” Lujan, 504 U.S. at 561 (internal

quotation marks omitted; emphases added); see also

Allen, 468 U.S. at 751 (redressability requires that

the plaintiff's alleged injury is “likely to be redressed

by the requested relief’) (emphasis added); Larson vy.

Valente, 456 U.S. 228, 243 n.15 (1982) (the redress-

ability requirement is satisfied when a _ plaintiff

“shows that a favorable decision will relieve a discrete

injury to himself’) (emphasis added). The Seventh

Circuit’s finding that the requested injunction will

redress McKasson’s alleged injury relies on a chain of

speculative inferences — an approach that this Court

has held inconsistent with Article III]. See Summers,

129 S. Ct. at 1150 (rejecting theory of Article III

injury that required multiple assumptions).

The Seventh Circuit’s first speculative inference is

that a new permit for the Benton plant would have

tougher emission standards. It is true, as a broad

generalization, that pollution-control technology is

improving. But coal-fired power plants are very

complex, customized projects with numerous vari-

ables, including different designs, different technolo-

gies, and different types of coal inputs. As a result,

the determination of appropriate emission limitations

for such plants under the governing BACT standard

involves a highly individualized, case-by-case inquiry.

Accordingly, the question of what emission

limitations the IEPA would establish for a new PSD

permit for the Benton plant, and how those would

compare to the limitations in the 2001 permit, is

inherently and hopelessly speculative.

Under this Court’s precedent, however, federal

courts may not speculate that state policymakers will

make a particular decision in the future to establish

standing. DaimlerChrysler, 547 U.S. at 346. Instead,

when an element of standing “depends on _ the

unfettered choices made by independent actors not

before the courts and whose exercise of broad and

legitimate discretion the courts cannot presume

either to contro] or to predict” — as the redressability

element does under the Seventh Circuit's reasoning —

it is the plaintiff's burden “to adduce facts showing

that those choices ... will be made.” Lujan, 504 U.S.

at 562 (quoting ASARCO Inc. v. Kadish, 490 U.S.

605, 615 (1989) (Kennedy, J.)).

Here, no such facts were adduced to establish how

the [IEPA would set the emission limitations in a new

permit for the Benton plant. The Seventh Circuit

based its inference that new emission limitations

would be more stringent (by some unspecified

amount) on the general trend of improving tech-

nology, Pet. App. 12a, but this reliance was improper

under this Court’s recent decision in Summers, 129 S.

Ct. 1142. In Summers, this Court rejected the claim

that the injury in fact element of standing could be

satisfied based on “a statistical probability” that at

least one of an organization’s members suffered an

injury, rather than on individualized proof of injury.

Td. at 1151-52. Here, the Seventh Circuit effectively

relied on a statistical probability that any given PSD

permit issued today would have more stringent

emission lmitations than a permit issued in 2001,

without any individualized proof that this would

likely be true with respect to the Benton permit.

Under Summers, however, elements of standing

cannot be satisfied based on general probabilities;

individualized proof is required.’

Even if a new permit for the Benton plant likely

would contain more stringent emission limitations,

the Seventh Circuit’s further inference that this

——- — — —_ —_— —_ —

’7The Seventh Circuit's apparent reliance on statements in

McKasson's affidavit concerning the emission limitations

contained in two other PSD permits issued by the IEPA in 2003

and 2005, Pet. App. 13a, ignores that each coal-fired power plant

has unique characteristics and that these two permits therefore

shed no light on the [EPA’s application of the BACT standard

over time or to any particular plant

would redress the specific injury in fact that

respondent alleges ~ harm to McKasson’s aesthetic

and recreational interests — is even more speculative.

It is pure conjecture whether any incremental

reduction in emission levels from a new permit would

even be perceptible to McKasson. See Lujan, 504

U.S. at 566 (plaintiff must make “a factual showing of

perceptible harm”) (emphasis added). Even if

perceptible, it is wholly speculative whether any such

reduction would be of sufficient magnitude to

eliminate or even reduce McKasson’s aesthetic and

recreational concerns. Given her categorical concerns

about the effects of the emissions from the Benton

plant, as well as her concerns about the presence of

the plant itself, it is far from “likely” that a new

permit would alleviate her alleged fears that

prompted this lawsuit.

In sum, in contravention of the principles that this

Court set forth in Summers, Lujan, Allen, and other

decisions, the court of appeals improperly relied on a

chain of speculation to conclude that the injunction .

respondent seeks would remedy any alleged injury

that is fairly traceable to the expired permit. See

Lujan, 504 U.S. at 566 (“[s]tanding is not ‘an

ingenious academic exercise in the conceivable”)

(quoting United States v. Students Challenging

Regulatory Agency Procedures (SCRAP), 412 U.S.

669, 688 (1973)); see also Ogden Projects, Inc. v. New

Morgan Landfill Company, Inc., 911 F. Supp. 863,

’ McKasson asserts in her affidavit that her concerns would

be addressed if she and her family were exposed to “less” air

pollution, MeKasson Aff. § 22, but this conclusory assertion

cannot credibly establish that any decrease in an emission

limitation for any pollutant — no matter how minute In absolute

terms or in terms of human perceptibility — would redress her

alleged injuries.

869-70 (E.D. Pa. 1996) (plaintiffs lacked standing to

bring claim alleging that landfill owner constructed

and operated landfill without requisite CAA permit

where they offered “no evidence regarding the

magnitude of the diminished air quality nor the

specific direct effect, if any, that this diminished air

quality will have on their health, environmental and

recreational interests”; plaintiffs “summarily

conclude that their health, environmental and

recreational interests suffer injury, without filling in

the blanks’).

Moreover, the court of appeals’ approach to

redressability fundamentally alters the nature of the

permits that Congress provided for in the CAA.

Power plant builders are willing to undertake the

arduous process of obtaining a permit because once

the permit process is closed, they can proceed with

construction without further regulatory challenges so

long as they follow the terms of the permit. But

under the Seventh Circuit’s approach, private groups

can bring endless challenges to issued permits based

on improvements in pollution control technology.

This wholly undermines the important role that the

permitting process plays in ensuring certainty for

builders and thereby weakens their incentive to make

the necessary investments in the first instance.

Individually and collectively, then, the Seventh

Circuit's rulings on the elements of standing

represent a significant departure from this Court’s

holdings and will have significant adverse conse-

quences. By failing to hold respondent to the specific

showings and burdens of proof that this Court set out

in Lujan and underscored in Summers, and instead

relying on respondent’s mere assertion of harm to

aesthetic and recreational interests and a chain of

speculation, the court of appeals has significantly

diluted the standing requirements in the context of

CAA citizen suits, particularly when those suits do

not allege any violation or threatened violation of an

environmental standard. As demonstrated below,

this dilution of Article IJ] standing principles in the

citizen suit context ignores the legitimate agenda

that Congress has prescribed for citizen suit

plaintiffs, which is to support, not supplant, agency

authority. As a result, builders of complex energy

projects, such as coal-fired power plants, will face the

prospect of unbounded lawsuits by private groups

such as respondent that assert challenges to their

state-issued permits, even when the state and federal

agencies have taken no action to invalidate the

permits. Accordingly, the court of appeals’ misappli-

cation of standing principles established by this

Court warrants this Court’s review.

Il. THE COURT OF APPEALS’ STANDING

RULING POSES AN ISSUE OF FUNDA-

MENTAL IMPORTANCE.

The court of appeals’ dilution of this Court’s

standing principles also presents a recurring and

“important question” of federal law that warrants

this Court’s attention. See Sup. Ct. R. 10(c).

The court of appeals’ decision, if Jeft standing, will

have enormous impact on CAA citizen suits in the

Seventh Circuit as well as nationwide. By relaxing

the Article III standing requirements in the context

of citizen suits seeking injunctions against the

construction of power plants based on challenges to

the validity of the permits, the court of appeals’

decision invites private groups that oppose such

plants to sue any and every time there is any

conceivable issue with respect to a permit, regardless

of whether the issue poses a realistic threat to — or

even has any bearing on — their members’ environ-

mental interests.

Such suits do nothing to hold responsible actual

violators of environmental laws, but they have at

least two significant harmful effects. First, the

prospect of such lawsuits threatens the entire electric

utility industry, which is a cornerstone of the nation’s

economy. As petitioners learned first-hand in this

case, the commencement of litigation is . often

sufficient to stall projects that have been in the works

for years. Indeed, the mere threat of litigation is

often sufficient to do so. As a result, the evisceration

of Article III standing principles in this context

threatens to chill power plant builders from making

the enormous investments that are necessary to

undertake such projects in the first place, to the

detriment of national efforts to develop domestic

energy sources that will reduce dependence on

foreign sources of energy. Faced with the likelihood

of perpetual assaults on their projects arising from

complex permitting regimes, few builders will be

willing to pursue these projects. These projects,

however, are critical to serving our. nation’s

increasing energy needs and without them, the

prospects for continued economic growth for future

generations are uncertain.

Second, the foregoing chilling effect is a predictable

and inevitable consequence of private groups with

self-serving agendas performing an enforcement and

even prosecutorial role with respect to environmental!

permits — a practice that the Seventh Circuit's

relaxed standing standards invite and facilitate. As

Justice Scalia noted in his dissent in Laidlaw, the

relaxation of stancing principles in the context of

citizen suits under the environmental statutes has

the effect of “turn{ing] over to private citizens the

function of enforcing the law.” 528 U.S. at 209; see

also id. at 197 (Kennedy, J., concurring) (“Difficult

and fundamental questions are raised when we ask

whether exactions of public fines by private litigants,

and the delegation of Executive power which might

be inferable from the authorization, are permissible

in view of the responsibilities committed to the

Executive by Article II of the Constitution of the

United States.”). National organizations such as

respondent “need not look long for an injured

member” under the court of appeals’ approach, which

leaves them free to exercise “significant discretion in

choosing enforcement targets” and pursue suits

“without meaningful public control.” Jd. at 209

(Scalia, J., dissenting). Given the threat of civil

penalties and project-ending injunctions, citizen

plaintiffs possess “massive bargaining power” with

which to coerce settlements, id. at 210 (Scalia, J.,

dissenting), including in si‘uations where the public

agencies would not have ¢ve ued their permit claims

worth pursuing or even meritorious.

These concerns about the displacement of public

enforcement with private enforcement are _ not

theoretical or farfetched: this is precisely what

happened here. As noted, neither the IEPA nor the

EPA has ever determined that the PSD permit has

expired. Moreover, both agencies were actively

investigating the validity of the permit at the time

respondent filed suit, having requested that petition-

ers produce thousands of pages of documentation

relating to that issue. Those investigations came to

an abrupt halt once respondent’s suit was filed, as did

any possibility of petitioners moving forward with the

project in which they had invested years of their time

and millions of dollars. Accordingly, this lawsuit is a

case study in private interest-driven litigation that

has proceeded without any meaningful public control,

yet has resulted not only in an injunction prohibiting

the construction of a much-needed and _ environ-

mentally-sound power facility, but also the prospect

of significant civil fines against its proponents.

Under the Seventh Circuit’s decision, such suits

will inevitably proliferate and more power plant

builders will suffer the fate that petitioners have

suffered (assuming that potential builders pursue

such projects at all). Accordingly, the Seventh

Circuit's standing ruling poses a question of

fundamental importance that warrants this Court’s

review. )

CONCLUSION

For the foregoing reasons, the petition for a writ of

certiorari should be granted.

Respectfully submitted,

STEPHEN M. SOBLE CARTER G. PHILLIPS*

SOBLE INTERNATIONAL JACQUELINE G. COOPER

LAW, PLLC SIDLEY AUSTIN LLP

1201 Pennsylvania 1501 K Street, N.W.

Avenue, N.W. Washington, D.C. 20005

Suite 500 (202) 736-8000

Washington, D.C. 20004

(202) 215-4320

Counsel for Petitioners

April 20, 2009 * Counsel of Record

APPENDIX

APPENDIX A

UNITED STATES COURT OF APPEALS,

SEVENTH CIRCUIT

No. 06-4045

—

SIERRA CLUB,

Plaintiff-Appellee,

Vv.

FRANKLIN COUNTY POWER OF ILLINOIS, LLC,

formerly known as EnviroPower of Illinois, LLC,

EnviroPower, LLC, and Khanjee Holding (US), inc.,

Defendants-Appellants.

Argued Oct. 29, 2007.

Decided Oct. 27, 2008.

Rehearing and Rehearing

En Banc Denied Dec. 19, 2008

Before BAUER, RIPPLE, and WILLIAMS, Circuit

Judges.

WILLIAMS, Circuit Judge.

Franklin County Power of Illinois, LLC, wants to

build a coal power plant in southern Illinois. Because

the plant will emit a significant amount of air pollu-

tion, the Company must first obtain a “Prevention

of Significant Deterioration” (PSD) permit from the

Illinois Environmental Protection Agency (IEPA), the

agency that the federal EPA has designated as the

issuer of PSD permits in Illinois. Although the IEPA

granted the Company a PSD permit in 2001, the

IEPA has since made a “preliminary determination”

that the permit has expired.

Sierra Club is a non-profit environmental organiza-

tion that sought to enjoin the Company from building

the power plant by bringing this suit against the

Company, its parent company EnviroPower, LLC,

and Khanjee Holding (US), Inc., under a citizen suit

provision of the Clean Air Act. Sierra Club alleged

that the Company’s 2001 PSD permit had expired

because the Company had neglected to “commence

construction” of the plant within an 18-month win-

dow required under the permit. Sierra Club also

claimed the permit was invalid under EPA regula-

tions because the Company had discontinued con-

struction of the plant for over 18 months. The district

court agreed with Sierra Club on both points and

granted summary judgment in its favor. The court

also permanently enjoined the Company from build-

ing the plant until it obtained a new PSD permit, and

the defendants appealed to this court.

We agree with the district court that Sierra Club

has standing to pursue this lawsuit and that its claim

is ripe and permissible under the Clean Air Act. We

aiso agree that the 2001 PSD permit has expired and

that the district court properly granted permanent

injunctive relief in favor of Sierra Club. Therefore, we

affirm the district court’s grant of summary judgment

in favor of Sierra Club.

1. BACKGROUND

A. Statutory and regulatory framework

Sierra Club brought this suit under 42 U.S.C.

§ 7604(a)(3), a citizen suit provision of the Clean Air

Act, which provides in relevant part:

[Alny person may commence a civil action on his

own behalf...

(3) against any person who proposes to con-

struct or constructs any new or modified

major emitting facility without a permit

required under [42 USCS §§ 7470 et seq.]

(relating to significant deterioration of air

quality) . . . or who is alleged to have

violated (if there is evidence that the

alleged violation has been repeated) or to

be in violation of any condition of such

permit.

The parties agree that the coal power plant that

the Company seeks to build is a “major emitting

facility” that requires a PSD permit. Such a permit

contains an emission limitation that is set by the

IEPA and represents the “best available control

technology” for pollution. See 42 U.S.C. § 7475(a).

Once issued, a PSD permit can expire and become

invalid in three different ways:

fa] [I]f construction is not commenced within 18

months after receipt of such approval,

[b] if construction is discontinued for a period of

18 months or more, or

(c] if construction is not completed within a

reasonable time.

40 C.F.R. § 52.21(r)(2). The IEPA Administrator “may

extend the 18-month period upon a satisfactory

showing that an extension is justified,” zd.; otherwise,

the PSD permit terminates by “automatic expira-

tion.” 40 C.F.R. § 124.5(g)(2) (“PSD permits may be

terminated only by recission under § 52.21(w) or by

automatic expiration under § 52.21(r)(2).”).

B. Factual background

On August 15, 2000, the Company applied to the

IEPA for a PSD permit to build a 600 megawatt’

coal-fired power plant in Benton, Illinois, on land for

which it had a 99-year lease. The IEPA concluded the

project would be a major air pollution source subject

to PSD review. On July 3, 2001, the IEPA issued a

PSD permit for the plant. The permit states it will

become invalid if:

construction of CFB [circulating fluidized bed]

boilers is not commenced within 18 months after

this permit becomes effective, if construction

of these boilers is discontinued for a period of

18 months or more, or if construction of these

boilers is not completed within a reasonable

period of time.

The permit defines “commence” and “construction” in

terms of 40 C.F.R. § 52.21(b)(9) and § 52.21(b)(8),

respectively, which are provisions we will discuss in

more detail later.

On December 2, 2002, the Company entered into

an agreement with Black & Veatch (B & V), an engi-

neering and construction company, that required the

parties to “work together on an exclusive basis... in

order to draft and negotiate the EPC (Engineering,

Procurement and Construction] Contract.” On about

December 18, 2002, the Company contracted with

Alberici Constructors, Inc., for on-site excavation and

foundation work. Alberici was to dig a hole at the site

‘Sierra Club claims the permit only authorized a 500 MW,

not a 600 MW, facility. Because the defendants lost on summary

judgment, we construe all facts in the light most favorable to

them. See Rawoof v. Texor Petroleum Co,, 521 F.3d 750, 755 (7th

Cir.2008).

down to the bedrock and pour concrete to lay part of

the foundation for the plant. On January 3, 2003,

four Alberici employees began delivering equipment

to the site, and five days later, they began excavat-

ing.

On February 14, 2003, Alberici stopped the exca-

vation after a dispute arose regarding payment.

Alberici’s bills after that date include one day where

workers showed up but did no work. All other days

only include a supervisor’s hours spent maintaining a

protective barricade around the site.

In July 2004, the Company’s landlord had the hole

refilled, apparently because the Company did not

make a payment on its lease. In September 2004, the

Company signed another contract for excavation and

concrete work, which began anew on September 29,

2004. An IEPA inspector visited the plant site shortly

thereafter and determined that construction had

commenced.

In the meantime, co-defendant Khanjee Holding

(US), Inc. had obtained an option to buy the Com-

pany and all its assets. In June 2008, Khanjee

affirmed its obligation to adhere to the Company’s

contract with B & V. In January 2004, the Company

secured a mandate letter from its lead financial

arranger indicating that financing for the project was

available.

On November 19, 2004, the TEPA notified the

Company that it had “made a preliminary finding”

that its PSD permit had expired. The Company

challenged this preliminary determination and as far

as we know, that matter remains pending before the

IEPA.

On May 20, 2005, Sierra Club filed this suit,

alleging that the 2001 PSD permit had expired and

was invalid. The defendants moved to dismiss, claim-

ing that the citizen suit provision of the Clean Air Act

did not provide a basis for this suit. They also moved

for summary judgment, claiming that Sierra Club

lacked standing and that the permit was valid. Sierra

Club countered with its own motion for summary

judgment.

The district court denied the defendants’ motions

and found the permit to be invalid. It entered sum-

mary judgment in Sierra Club's favor and perma-

nently enjoined the defendants from building the

plant until they obtained a valid permit. The

defendants then filed this appeal.

Il. ANALYSIS

A. Sierra Club had standing.

An organization has standing to sue if (1) at least

one of its members would otherwise have standing;

(2) the interests at stake in the litigation are

germane to the organization’s purpose; and (3) nei-

ther the claim asserted nor the relief requested

requires an individual member’s participation in the

lawsuit, See Friends of the Earth, Inc. v. Laidlaw

Env'l Servs. (TOC), Inc., 528 U.S. 167, 181, 120 S.Ct.

693, 145 L.Ed.2d 610 (2000) (citing Hunt v.

Washington State Apple Adver. Comm’n, 432 U.S.

333, 343, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977)). The

defendants do not seriously contest that Sierra Club

satisfies prongs (2) and (3). Sierra Club is a nonprofit

organization formed and operated to “preserve, pro-

tect, and enhance the natural environment,” which is

also its stated goal in bringing this lawsuit. The

defendants also do not suggest this proceeding re-

quires an individual Sierra Club member to partici-

pate; rather, they claim that Sierra Club has not

presented an individual member with standing. So

the dispute here turns on prong (1).

To have standing, an individual must satisfy three

requirements. First, she must have suffered an

“injury in fact” that is both (a) concrete and particula-

rized and (b) actual or imminent, not conjectural

or hypothetical. Second, the injury must be fairly

traceable to the challenged action. Third, it must be

likely, not just speculative, that a favorable decision

will redress the injury. Lujan v. Defenders of Wildlife,

504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d

351 (1992). Because these elements “are not mere

pleading requirements but rather an indispensable

part of the ... case, each element must be supported ...

with the manner and degree of evidence required at

the successive stages of the litigation.” Jd. at 561, 112

S.Ct. 2130.

To survive a defendant’s motion for summary judg-

ment (or to win on a cross-motion for summary

judgment), a plaintiff cannot rely on mere allegations

but must support each element by specific facts via

affidavits or other evidence. See id. We review de

novo the district court’s determination that Sierra

Club has standing. See Disability Rights Wis. Inc. v.

Walworth County Bd. of Supervisors, 522 F.3d 796,

800 (7th Cir.2008).

1. Sierra Club member Barbara McKasson will

suffer injury in fact.

Sierra Club relies on one of its members, Barbara

McKasson, to establish standing. “[E]nvironmental]

plaintiffs adequately allege injury in fact when they

aver that they use the affected area and are persons

for whom the aesthetic and recreational values of the

area will be lessened by the challenged activity.”

Laidlaw, 528 U.S. at 183, 120 S.Ct. 693 (internal

quotation marks omitted). McKasson states in an

affidavit that she will experience diminished aes-

thetic and recreational value if the Company con-

structs and operates the power plant under the 2001

PSD permit. She explains that every other year since

1987, McKasson and her family have taken trips to

fish, kayak, camp, and enjoy the natural beauty and

clean environment of Rend Lake, located three miles

from the proposed plant site. She claims if the

Company builds the plant under the 2001 permit, she

will cease her biennial recreational trips because the

pollutants emitted based on the permit will harm her

and diminish her aesthetic enjoyment of Rend Lake.

The defendants claim that McKasson’s injury is

insubstantial, but the “injury-in-fact necessary for

standing ‘need not be large, an identifiable trifle will

suffice.” LaFleur v. Whitman, 300 F.3d 256, 270 (2d

Cir.2002) (quoting Sierra Club v, Cedar Point Oil Co.,

Inc., 73 F.3d 546, 557 (5th Cir.1996)); see also Doe v.

County of Montgomery, 41 F.3d 1156, 1159 (7th

Cir.1994) (“[A]n identifiable trifle is enough for

standing to fight out a question of principle... .”

(quoting United States v. Students Challenging Reg-

ulatory Agency Procedures (SCRAP), 412 U.S. 669,

689 n. 14, 93 S.Ct. 2405, 37 L.Ed.2d 254 (1973))). If

the proposed plant is built, McKasson will be exposed

to emissions from the plant if she continues her

longstanding tradition of visiting Rend Lake with her

family. This “likely exposure” to pollutants is “cer-

tainly something more than an ‘identifiable trifle,’

even if the ambient level of air quality does not

exceed [certain national limits].” LaFleur, 300 F.3d at

270-71; see also Bensman v. United States Forest

Serv., 408 F.3d 945, 962-63 (7th Cir.2005) (individual

had standing to challenge a proposed project in a

national forest when he had visited the project area

six times over 20 years and planned to return soon).

Moreover, if McKasson foregoes her regular visits to

the lake because of these pollutants, that would also

constitute an injury-in-fact. See Laidlaw, 528 U.S. at

183, 120 S.Ct. 693 (individual’s affidavit stating that

he foregoes using a river for recreational purposes

because of pollution concerns was sufficient to show

injury-in-fact); see also Buono v. Norton, 371 F.3d

543, 547 (9th Cir.2004) (“We have repeatedly held

that inability to unreservedly use public land suffices

as injury-in-fact.”). McKasson’s injuries are also ones

that are “concrete and particularized” because they

affect her in a “personal and individual way.” See

Lujan, 504 U.S. at 560 & n. 1, 112 S.Ct. 2130;

Coalition for the Env’t v. Volpe, 504 F.2d 156, 167

(8th Cir.1974) (holding that a proposed development

that would increase pollution and traffic and limit

plaintiffs’ views was a cognizable injury that deprived

plaintiffs of aesthetic and psychological benefit).

The defendants also argue that because the plant

will take years to build, McKasson’s injury is not

“actual or imminent” and does not meet the second

requirement for injury in fact. But the defendants

forget that threatened injury can satisfy Article III

standing requirements. See Babbitt v. United Farm

Workers Nati Union, 442 U.S. 289, 298, 99 S.Ct.

2301, 60 L.Ed.2d 895 (1979) (““[O]ne does not have

to await the consummation of threatened injury to

obtain preventive relief. If the injury is certainly

impending that is enough.”); see also Massachusetts

vu. EPA, 549 U.S. 497, 127 S.Ct. 1438, 1455, 167

L.Ed.2d 248 (2007) (EPA’s refusal to regulate green-

house gas emissions presented an imminent risk of

10a

harm); MainStreet Org. of Realtors v. Calumet City,

505 F.3d 742, 744 (7th Cir.2007) (“[S)tanding in the

Article III sense does not require a certainty or even

a very high probability that the plaintiff is complain-

ing about a real injury, suffered or threatened.”). The

Compan); claims that the PSD permit that it received

is still vad, and it (strenuously) argues that it has

actually begun construction of the plant. As a prac-

tical matter, it makes sense for Sierra Club to

challenge the validity of the Company’s permit now,

rather than waiting until the plant is operational. See

LaFleur, 300 F.3d at 270 (likely exposure to emis-

sions from a proposed but not yet built facility was

“certainly an injury-in-fact”). Moreover, while this

suit has been pending, the Company has again pub-

licly announced its commitment to completing the

plant. So “[(t}his is not a case of some abstract psychic

harm or a one-day-J’ll-be-hurt allegation. ;

MainStreet, 505 F.3d at 745. Injury to McKasson has

been freshly threatened and is not merely hypo-

thetical.

2. The injury is traceable to the proposed

construction under the 2001 permit.

Sierra Club must also demonstrate that McKasson’s

injury is “fairly traceable” to the Company’s construc-

tion of the plant under the 2001 PSD permit. See

Texas Indep. Producers & Royalty Owners Ass’n

v. EPA, 410 F.3d 964, 972 (7th Cir.2005). If tne

“independent action of some third party not before

the court” causes McKasson’s injury, then the com-

plaint fails the traceability test. /d. (quoting Lujan,

504 U.S. at 560, 112 S.Ct. 2130) (internal quotation

marks omitted).

The defendants concede that under the 2001 PSD

permit the proposed plant will emit airborne pollu-

lla

tants, including mercury and particulate matter,

three miles from Rend Lake. McKasson claims these

pollutants and the resulting decrease in visibility will

negatively impact her enjoyment of the lake. We

agree that “[w]here a plaintiff has pointed to a pollut-

ing source as the seed of his injury, and the owner of

the polluting source has supplied no alternative

culprit, the ‘fairly traceable’ requirement can be said

to be fairly met.” Friends of the Earth v. Gaston

Copper Recycling Corp., 204 F.3d 149, 162 (4th

Cir.2000). Here, the defendants point to no other

polluting source that could be the cause of

McKasson’s injury.

Nonetheless, the defendants claim Sierra Club still

cannot show causation because the Company has

designed its plant to produce emissions below permit-

ted levels, so until the plant is built, there remains a

factual question whether McKasson will actually be

injured. This argument is in essence just a varia-

tion on the defendants’ claim (rejected above) that

McKasson has not yet suffered an “actual” or “immi-

nent” injury. We agree that no one knows the ulti-

mate magnitude of McKasson’s injury—for example,

we don’t know if the particulate matter from the

plant will blot out the sky or merely create a thin

haze that’s not visible to the naked eye, or if the

airborne mercury will actually spread 45 miles to

poison fish that McKasson currently consumes from a

pond near her home (which is another harm she

claims she will suffer). We do know, however, that

the plant will release some pollutants and that

McKasson believes these pollutants will ruin her

ability to enjoy Rend Lake and taint the surrounding

area. And her belief is not so irrational that it can

simply be discredited. See Laidlaw, 528 U.S. at 182-

83, 120 S.Ct. 693 (finding that a local citizens group

J 20

member suffered injury in fact because she believed

that discharged pollutants had lowered her home’s

value). Because McKasson’s injury stems from the

emissions of the Company’s proposed plant, we find

that her threatened injury is fairly traceable to the

plant.

3. Enjoining the Company from building based on

its 2001 permit would likely redress McKasson’s

injury.

Finally, a plaintiff must show that a favorable deci-

sion will likely, not just speculatively, relieve her

injury. 7d. at 181, 120 S.Ct. 693. The defendants

contend that the IEPA might not set lower emissions

levels for a new PSD permit and that McKasson’s

concerns might remain even if the plant polluted at

lower emission levels.

The defendants’ argument, of course, presumes

that the Company will actually seek out and receive a

new permit. Despite publicly announcing that it

would seek a new permit after it lost in the district

court, the Company represented at oral argument

that it had not yet begun this process. And even if the

Company applied for and received a new permit,

there would be some delay (the IEPA took almost a

year before granting the 2001 permit) before the

Company could begin construction. A decision in

favor of Sierra Club, therefore, would at least redress

McKasson’s injury during that time.

Moreover, as Sierra Club notes, pollution control

technology tends to improve over time, so it makes

sense that a new permit would have more stringent

emission standards than the 2001 permit. See 42

U.S.C. § 7475(a)(4) (major-emitting facilities must

use the best available control technology to receive

l3a

PSD permits); In re W. Suburban Recycling and

Energy Ctr., L.P., 8 E.A.D. 192 (EPA App. Bd.1999).

Indeed, the record indicates that the IEPA issued

PSD permits in 2003 and 2005 for similar coal-fired

power plants with emission standards that were

significantly -more stringent than those in the

Company’s 2001 permit. It is therefore reasonable to

believe that any new permit the Company obtains

will have tougher emission standards than the 2001

PSD permit. We need not determine exactly how

much tougher those standards will be because

McKasson need not show that a favorable decision

will re: ve her every injury. Massachusetts, 127 S.Ct.

at 1458 (citing Larson v. Valente, 456 U.S. 228, 244 n.

15, 102 S.Ct. 1673, 72 L.Ed.2d 33 (1982)). It is

enough that her concerns will be addressed if more

stringent emission standards are imposed than those

required under the 2001 permit, even though the

plant will still emit some pollutants if the Company

obtains a new PSD permit. See id. at 1458 n. 23

(“{[E]ven a small probability of injury is sufficient to

create a case or controversy ... provided of course

that the relief sought would, if granted, reduce the

probability.” (quoting Vill. of Elk Grove Vill. v. Evans,

997 F.2d 328, 329 (7th Cir.1993))). So it is likely that

a favorable decision here will redress McKasson’s,

and hence Sierra Club’s, injury.

Therefore, we conclude that Sierra Club has orga-

nizational standing to pursue this suit because it has

shown that the Company’s construction under the

expired 2001 PSD permit would cause at least one of

its members‘ to suffer injury in fact that is traceable

* Sierra Club has another “standing plaintiff but like the

distmct court, we find it unnecessary to address her claims

because McKasson has standing to sue.

14a

to the Company and is redressable if Sierra Club

prevails here.

B. Sierra Club’s claim is ripe and permissible under

42 U.S.C. § 7604(a)(3).

The defendants rely on two district court decisions

to argue that Sierra Club’s claim is not ripe. See

United States v. Ill. Power Co., 245 F.Supp.2d 951,

956-57 (S.D.111.2003); New York v. Niagara Mohawk

Power Corp., 263 F.Supp.2d 650, 661 (W.D.N.Y.2003).

The defendants contend that Sierra Club must wait

until the Company actually bezins constructing the

plant before Sierra Club can allege that the Company

has violated its preconstruction PSD permit.

The defendants misread these cases, which specify

when the limitations period begins for claims that a

company has violated a preconstruction permitting

requirement. In that context, it makes sense to con-

clude that the last possible moment at which a

preconstruction violation occurs is “when the actual

construction is commenced, and not at some later

point in time.” J/l. Power Co., 245 F.Supp.2d at 957;

see Niagara Mohawk Power Corp., 263 F.Supp.2d at

661-62. But it does not logically follow (nor do these

cases suggest) that a preconstruction permit violation

cannot occur until actual construction begins.

The defendants also argue that the citizen suit

provision that Sierra Club relies upon, section

7604(a)(3), only allows suits against entities that are

“without a permit,” so Sierra Club cannot bring this

suit because the Company received a permit (albeit

one that may no longer be valid). The defendants cite

no direct support for this position, instead claiming

the matter is not ripe and cannot be adjudicated until

15a

the IEPA issues a final decision whether the Com-

pany’s 2001 permit has expired.

The defendants’ argument ignores the explicit lan-

guage of section 7604(a)(3). That provision states that

“any person may commence a civil action on his own

behalf... against any person... who is alleged... to

be in violation of any condition of [a PSD] permit.”

The Company certainly is a person alleged to be in

violation of a PSD permit—Sierra Club alleges that

the Company violated the terms of its permit by not

commencing construction of its facility in a timely

fashion, which in turn caused the permit to expire.

See 40 C.F.R. § 124.5(g)(2). And the IEPA made the

same allegation when it preliminarily found that the

Company’s permit had expired. Moreover, even if

having an expired permit were akin to having no

permit at all, Sierra Club would still be able to sue

under section 7604(a)(3), which enables citizens to

sue entities like the Company that “propose/ / to con-

struct ... new or modified major emitting facilit[ies]

without a [PSD] permit.” 42 U.S.C. § 7604(a)(3) (em-

phasis added).

It is irrelevant that the IEPA has yet to finish

deciding whether the Company’s permit is invalid

because that’s not what section 7604(a)(3) requires.

In a circuit case referenced by both parties, Grand

Canyon Trust v. Tucson Elec. Power Co., 391 F.3d

979, 986 (9th Cir.2004), the Ninth Circuit held that a

district court had jurisdiction over a citizen suit that

challenged the validity of a permit even though the

EPA had not yet acted to revoke the permit. The

defendants claim Grand Canyon analyzed a different

citizen suit provision than the one at issue here. That

seems doubtful. See id. at 985 (“Unauthorized con-

struction of a power plant violates the Clean Air Act

16a

and provides grounds for a citizen suit under the

Act’s citizen suit provision. See 42 U.S.C. § 7604(a)(3)

... ”). Regardless, Grand Canyon does not suggest

there is a categorical rule requiring a plaintiff to wait

until the relevant agency finishes deciding whether a

permit is valid (at least when, as here, a suit is not

asking us to review an agency action). So in accor-

dance with the plain language of section 7604(a)(3),

we find that Sierra Club has properly brought this

suit under that provision.

C. The Company did not “commence construction” of

the plant.

As noted above, a PSD permit can expire and

become invalid in one of three ways: (1) if construc-

tion is not “commenced” within 18 months after

receipt of the permit, (2) if construction is discontin-

ved for a period of 18 months or more after

construction has begun, or (3) if construction is not

completed within a reasonable time. See 40 C.F.R.

§ 52.21(r)(2). Similarly, the Company’s PSD permit

stated it would become invalid if:

construction of CFB [circulating fluidized bed]

boilers is not commenced within 18 months after

this permit becomes effective, if construction of

these boilers is discontinued for a period of 18

months or more, or if construction of these boi-

lers is not completed within a reasonable period

of time.

The permit issued on July 3, 2001, so its drop-dead

date was January 3, 2003.° The question is whether

° The defendants argued before the district court that the

Company was entitled to various extensions and grace periods,

thereby delaying the deadline to February 10, 2003. While the

district court did not decide whether this was correct, it noted

l7a

the Company “commenced” construction of its plant

by that deadline.

42 U.S.C. § 7479(2)(A) states there are two ways in

which construction can “commence”:

(i) {the owner or operator has} begun, or caused

to begin, a continuous program of physical on-

site construction of the facility or

(ii) [the owner or operator has] entered into

binding agreements or contractual obligations,

which cannot be canceled or modified without

substantial loss to the owner or operator, to

undertake a program of construction of the facil-

ity to be completed within a reasonable time.

See also 40 C.F.R. § 52.21(b)(9) (defining “{c]lommence

as applied to construction” similarly). The district

court concluded the Company had neither com-

menced a program of actual construction nor entered

into a binding agreement to undertake such a pro-

gram. The district court also found that even if the

Company had begun constructing the plant, it had

lapsed in its construction activity for more than 18

months, thereby invalidating the PSD permit.

On appeal, the defendants assert there are genuine -

factual disputes that should have prevented the

district court from granting summary judgment to

Sierra Club. We review the district court’s grant of

summary judgment de novo and construe all facts

in the light most favorable to the defendants. See

Rawoof v. Texor Petroleum Co., 521 F.3d 750, 755

(7th Cir. 2008).

that the defendants lost even under the February 10 date. The

defendants do not re-argue these extensions on appeal, so the

January 3, 2003, deadline is the operative one.

18a

1. No reasonable factfinder could find that the

Company had started a timely program of

actual construction or engaged in construction

activities without an impermissible lapse.

The defendants claim that the Company prevented

its 2001 PSD permit from expiring by beginning

“a continuous program of actua] construction” that

included “conducting engineering studies [and] exca-

vation work.” We disagree.

The EPA defines “begin actual construction” as:

[In general, initiatton of physical on-site con-

struction activities on an emissions unit which

are of a permanent nature. Such activities in-

clude, but are not limited to, installation of

building supports and foundations, laying under-

ground pipework and construction of permanent

storage structures. With respect to a change in

method of operations, this term refers to those

on-site activities other than preparatory activities

which mark the initiation of the change.

40 C.F.R. § 52.21(b\(11) (emphases added); see also 40

C.F.R. § 52.21(b)2) (defining “construction” as “any

physical change or change in the method of operation

(including fabrication, erection, installation, demoli-

tion, or modification of an emissions unit) that would

result in a change in emissions”). We acknowledge (as

the defendants strenuously argue) that beginning

actual construction might be something slightly dif-

ferent than beginning a continuous program of

physical on-site construction, as required under 42

U.S.C. § 7479(2)(A)G). But the Company did not

engage in any kind of permanent construction activ-

ity at all. As of the PSD permit’s expiration date of

January 3, 2003, the Company had laid no founda-

19a

tion and constructed no building supports, under-

ground pipework, or permanent storage structures.

Importantly, the Company had not begun construct-

ing the CFB boilers, which was something that the

PSD permit had explicitly required that the Company

do before January 3. Indeed, the only construction

activity performed by the Company was that it had

directed Alberici Constructors to dig a hole, which

Alberici began to do on January 8. Alberici’s minimal

work hardly heralded the start of a “continuous

program” of actual construction, as Alberici stopped

digging the hole on February 14, 2003, after a pay-

ment dispute. And digging the hole was not construc-

tion activity “of a permanent nature,” as the Com-

pany’s landlord later had the hole refilled.

Our conclusion here is further buttressed by a July

1, 1978, memorandum sent by Edward E. Reich,

Director of Stationary Source Enforcement at the

EPA, and entitled “Commence Construction’ Under

PSD” (the “Reich Memorandum”).* In addressing

what constitutes physical on-site construction, the

* While the EPA did not promulgate the Reich Memorandum

as part of its rulemaking authority, an “agency’s interpretation

{of its own regulations} must be given controlling weight unless

it is plainly erroneous or inconsistent with the regulation.”

Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512, 114 S.Ct.

2381, 129 L.Ed.2d 405 (1994) (internal quotation marks omit-

ted). Indeed, “it can still be apparent from the agency’s gener-

ally conferred authority and other statutory circumstances that

Congress would expect the agency to be able to speak with the

force of law when it addresses ambiguity in the statute or fills a

space in the enacted law, even one about which ‘Congress did

not actually have an intent’ as to a particular result.” United

States v. Mead Corp., 533 U.S. 218, 229, 121 S.Ct. 2164, 150

L.Ed.2d 292 (2001) (quoting Chevron, USA, Inc. v. NRDC, Inc.,

467 U.S. 837, 845, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984)).

20a

Reich Memorandum specifically notes that “{a]ctivities

such as site clearing and excavation work will gener-

ally not satisfy the commence construction require-

ments.” Reich Memorandum (“As stated in the

preamble to the draft regulations, ‘it will not suffice

merely to have begun erection of auxiliary buildings

or construction sheds unless there is clear evidence

(through contracts or otherwise) that construction of

the entire facility will definitely go forward in a

continuous manner’.”). The defendants have provided

no reason why we should ignore the EPA’s guidance

on this issue or why this case is a special one that

merits ignoring this general rule.

Finally, we note that even if the Company had “com-

menced construction” of the plant, it lapsed in con-

struction for over 18 months, thereby invalidating

its PSD permit. After Alberici stopped digging on

February 14, 2003, it performed no more excavation

work at the site. Indeed, the site appears to have lain

dormant for over 19 months until September 29,

2004, when another company began digging a second

hole for the Company. This 19-month lapse in con-

struction activity killed the Company’s PSD permit.

See 40 C.F.R. §§ 52.21(r)(2), 124.5(g)(2).

2. No reasonable factfinder could find that the

Company had timely entered a binding contract

to undertake a program of actual construction.

The defendants alternatively claim that the Com-

pany had “commenced construction” within 18 months

of the permit’s issuance by signing a “construction

memorandum” with B & V in late 2002, thereby

requiring those parties to “work together on an

exclusive basis ... in order to draft and negotiate the

EPC |Engineering, Procurement and Construction]

Contract.” To count as a contract that commenced

2la

construction, the construction memorandum would

have to be one “which [could not] be canceled or

modified without substantial loss to the owner or

operator, to undertake a program of construction of

the facility to be completed within a reasonable time.”

42 U.S.C. § 7479(2)(A\ii).

Even if entering the construction memorandum

counted as “commencing construction” of the power

plant, the Company’s permit expired because of the

19-month lapse between February 2003 and Septem-

ber 2004 in which the Company did no construction

work on the facility. See supra II(C)(1). The Company

would have to argue (which it doesn’t) that the con-

struction memorandum somehow prevented this 19-

month lapse from killing the permit. But such an

interpretation would in effect allow a PSD permittee

to trump the 18-month lapse provision and in-

definitely delay the construction of a facility so long

as the permittee has entered a contract that “com-

mences construction.” We see no basis for reading

the EPA regulations in this manner. See 40 C.F.R.

§ 52.21(r)(2) (noting that a PSD permit expires “if

construction is discontinued for a period of 18 months

or more” or “if construction is not completed within a

reasonable time”); see also 40 C.F.R. § 52.21(b)(8);

Reich Memorandum (“In order to assure that con-

struction proceeds in a continuous manner and is

completed within a reasonable time, the regulations

require that a break in construction of greater than

18 months or failure to commence construction with-

in 18 months of PSD permit issuance will generally

invalidate a source’s PSD permit.”).

At any rate (as we discuss below), the Company’s

signing of the construction memorandum did not

“commence construction” of the power plant. Before

22a

we interpret the memorandum, however, we note

that the parties disagree on which jurisdiction’s law

we should apply. Sierra Club claims we should follow

a choice of law provision in the construction memo-

randum, which specifies that the agreement is to be

interpreted “in accordance with the substantive law

of the State of New York, except for its choice of laws

provisions.” See Am. Fuel Corp. v. Utah Energy Dev.

Co., Inc., 122 F.3d 130, 184 (2d Cir.1997) (“[Wlhere

the parties have agreed to the application of the

forum law, their consent concludes the choice of law

inquiry.”). The defendants counter that an Illinois

statute renders the memorandum’s choice of law

provision void and points us to Illinois law: See 815

Ill. Comp. Stat. Ann. 665/10 (2008) (“A provision con-

tained in or executed in connection with a building

and construction contract to be performed in Illinois

that makes the contract subject to the laws of

another state ... is against public policy. Such a

provision is void and unenforceable.”).

We need not decide who is right because both New

York and Illinois law® would characterize the

° The defendants suggest that a “third alternative” would be

to apply federa) common law in interpreting the contract, but

they don’t explain why that alternative should apply here. The

two primary cases they cite involved contracts in which the

federal government was a party. See United States v. Seckinger,

397 U.S. 208, 209-10, 90 S.Ct. 880, 25 L.Ed.2d 224 (1970)

(“|Flederal law controls the interpretation of [a] contract .. .

entered into pursuant to authority conferred by federal statute

and, ultimately, by the Constitution.”); Funeral Fin. Sys. v.

United States, 234 F.3d 1015, 1018 (7th Cir.2000) (“Interpreting

the meaning of a provision in a federal government contract is a

matter of federal common law... .”). That’s a materially differ-

ent situation from what we have here. The defendants also note

that federal common law can be applied when “necessary to

protect uniquely federal) interests,” but they don’t explain why

23a

construction memorandum as_ a_ preliminary

agreement that required the parties to conduct

further negotiations, not a construction contract to

build a power plant. New York law recognizes that

parties can enter into precisely this kind of

preliminary agreement:

The parties agree on certain major terms, but

leave other terms open for further negotiation... .

(This type of agreement] ‘does not commit the

parties to their ultimate contractual objective but

rather to the obligation to negotiate the open

issues in good faith in an attempt to reach the...

objective within the agreed framework.’ A party

to such a binding preliminary commitment has

no right to demand performance of the transac-

tion.

Adjustrite Sys. v. GAB Bus. Servs., 145 F.3d 543, 548

(2d Cir.1998) (quoting Teachers Ins. & Annuity

Assoc. of Am. v. Tribune Co., 670 F.Supp. 491, 498

(S.D.N.Y.1987)). Similarly, “Ulinois law recognizes

the prerogative to agree to further negotiations, even

after most essential contract terms have been settled,

while remaining free to back out of a pending deal

until the occurrence of some later event.” Venture

Assoc. Corp. v. Zenith Data Systems Corp., 987 F.2d

429, 432 (7th Cir.1993).

Here, the construction memorandum was merely a

preliminary step toward the parties’ ultimate goal-

agreeing on an EPC contract for building the power

plant. Contrary to the defendants’ claim that the

such federal interests are present here, or why we should dis-

regard both the contracting parties’ choice of law (New York

law) and the preference indicated by the Illinois statute (Illinois

law), particularly when both point to the same outcome.

24a

memorandum required the parties to “undertake a

program of construction of the facility,” the memoran-

dum only required the parties to work together to-

ward reaching an actual construction agreement. The

memorandum specified that the parties would “agree

to work with each other in good faith . . . to complete

the drafting and negotiation of the EPC CONTRACT,

with the goal of agreeing and signing such EPC

CONTRACT by September 1, 2005.” The memoran-

dum was clear that it did not enable the Company to

demand that B & V perform construction work:

“The PARTIES agree that upon Termination of the

CONSTRUCTION MEMORANDUM, CONTRACTOR

shall have no liability to perform the EPC Work

Scope for the FCP [Franklin County Power] PROJECT

for the OWNER.” Moreover, the memorandum was

hardly a final agreement for building the plant as it

noted that B & V was “continuing to develop a firm

price and Draft EPC Contract” for the project.

The construction memorandum also listed various

events that could terminate the agreement, but none

of these events was anything like “completing con-

struction of the plant” or “finishing the construction

project,” which would have suggested that the con-

struction memorandum was the contract for building

the plant. Rather, the terminating events included

“(t]he date of signature of the EPC CONTRACT for

the FCP PROJECT” and the “[flailure of the PAR-

TIES to reach agreement on an EPC Contract by

September 1, 2005 or such later date as may be

agreed in writing by the PARTIES,” which again

indicate that the construction memorandum was just

a preliminary agreement en route to an EPC con-

tract.

25a

Even if the language of the construction memoran-

dum was unclear, extrinsic evidence (which the

defendants encourage us to utilize) would support the

same conclusion. As of January 2006, after the con-

struction memorandum had expired, the parties still

had not agreed on a price term——while the term sheet

contemplates a price of $615 million for the EPC

contract, B & V advised the Company on January 10,

2006, that the project would be in the “$710m plus

range.” B & V also told the Company that the project

would require 45 months or more to completion, not

the Company’s target of 32 months, and advised the

latter, “If you can find someone competent who will

do the project for $615m and 32 months you must go

ahead and work with them.” These facts indicate that

the construction memorandum was not a contract to

build the actual plant.

The defendants also claim that the construction

memorandum’s $72 million termination fee (which

they represented at oral argument that they would

have to pay if they lost this suit) indicates that this

was a contract to construct the power plant. This fee

appears to be less than 10% of the total project cost,

which was estimated by the defendants at oral argu-

ment to be between $750 million and $1 billion. See

Reich Memorandum (“A Contractual obligation for

purposes of commencing construction must also be

one which cannot be cancelled or modified without

substantial loss. .. . Whether a loss of less than or

equal to 10% of the total project cost will be consi-

dered substantial will be determined on a case by

case basis.”).

At any rate, the existence of this fee doesn’t affect

our conclusion that the memorandum is just a pre-

liminary agreement requiring the parties to conduct

26a

further negotiations. Cf. id. (“[Cjontracts for non site

specific equipment, such as boilers, will typically not

suffice, regardless of any penalty clauses contained in

the contracts.”). Indeed, we have previously noted

that parties often include these kinds of termination

fees in preliminary agreements:

The process of negotiating multimillion dollar

transactions .. . often is costly and time-consum-

ing. The parties may want assurance that their

investments in time and money and effort will

not be wiped out by the other party’s footdrag-

ging or change of heart or taking advantage of a

vulnerable position created by the negotiation. . . .

[Tlhey might prefer to create [a contractual

remedy] in the form of a deposit or drop fee (what

in publishing is called a “kill fee”), rather than

rely on a vague duty to bargain in good faith... .

Venture Assocs. Corp. v. Zenith Data Systems Corp.,

96 F.3d 275, 278 (7th Cir.1996) (internal citations

omitted). So the presence of this fee does not imply

that the construction memorandum was a contract to

build the power plant.

Damages for breach of an agreement to negotiate

may be, although they are unlikely to be, the

same as the damages for breach of the final

contract that the parties would have signed. .. .

Finally, the defendants contend that the use of the

word “program” in “program of construction” suggests

that we should interpret more broadly which con-

struction contracts count as “commencing construc-

tion” and not limit ourselves to contracts for actual

construction of a facility. We are not so sure. Cf.

Sierra Pac. Power Co. v. EPA, 647 F.2d 60, 67 (9th

Cir.1981) (citing United States v. City of Painesville,

27a

431 F.Supp. 496, 500 n. 5 (N.D.Ohio 1977), affd, 644

F.2d 1186 (6th Cir.1981)) (approving the EPA’s deci-

sion not to read the word “program” broadly to

include planning and design of a unit). But at any

rate, the construction memorandum was not a con-

tract for a “program” of construction activity. As the

Reich Memorandum notes, “In order to satisfy the

commence construction requirements, a contractual

obligation must be for a site specific commitment.

The types of activities which will be considered site

specific for purposes of a contract are identified in

question # 1 [‘placement, assembly, or installation of

materials, equipment, or facilities which will make

up part of the ultimate structure of the source’}.”

Here, the construction memorandum did not require

B & V to do any site-specific construction (or even

any nonsite-specific construction). It was, to reiterate,

just a contract that required the parties to work

toward an EPC agreement. And the Reich Memoran-

dum indicates that entering this kind of contract is

simply not enough to “commence construction.”

This conclusion makes sense. Time limits prevent

companies from sitting on PSD permits for an unrea-

sonably long period of time. Presumably these

requirements help ensure that major emitting facili-

ties comply with up-to-date emissions regulations

and do not construct today’s facilities with yester-

day’s technology. Reading the phrase “program of

construction” so broadly as to encompass the con-

struction memorandum would greatly extend the

time that companies could delay the actual construc-

tion process. We decline to adopt that interpretation

here.

28a

D. The district court did not err in granting

injunctive relief in favor of Sierra Club.

The defendants also challenge on two grounds the

district court’s decision to grant injunctive relief in

favor of Sierra Club. First, the defendants claim the

district court lacked jurisdiction to grant an injunc-

tion because, according to them, a civil penalty is the

sole remedy for the citizen suit here. The defendants

rely on language at the end of 42 U.S.C. § 7604(a)

(emphases added):

The district courts shall have jurisdiction, with-

out regard to the amount in controversy or the

citizenship of the parties, to enforce such an

emission standard or limitation, or such an

order, or to order the Administrator to perform

such act or duty, as the case may be, and to apply

any appropriate civil penalties (except for actions

under paragraph (2)).

The defendants claim the first two remedies em-

phasized above correlate with sections 42 U.S.C.

§§ 7604(a)(1) and (a)(2), respectively, and the third

remedy (i.e., “civil penalties”) applies to 42 U.S.C.

§ 7604(a)(3), the provision at issue in this citizen suit.

Specifically, the defendants contend that the district

court could only award civil penalties and not an

injunction as a remedy for Sierra Club’s section

7604(a)(3) suit here.

The defendants’ argument lacks merit. The statute

does not state that the three remedies listed above

are exclusively available for suits that are brought

under their “corresponding” statutory subsections. In

fact, the statute suggests just the opposite when it

states that the third remedy (“any appropriate civil

penalties”) is not available for “actions under para-

29a

graph (2) [section 7604(a)(2)],” which implies that

this remedy is available for actions under sections

7604(aX(1) and 7604(a)(3).

Moreover, the defendants have not cited (and we

have not found) any case law that has interpreted the

provision in the manner that they propose. Sierra

Club, on the other hand, can point to at least one case

that directly contradicts the defendants’ position. See

United States v. Am. Elec. Power Serv. Corp., 137

F.Supp.2d 1060, 1067 (S.D.Ohio 2001). Although this

district court case is not binding on us, we agree that

“a plain reading of the statute” implies “that the

[injunctive remedies provision] applies to actions

under [section 7604i(a)(3).” Jd.

The defendants also claim the district court erred

by not performing the standard four-part analysis

that precedes an award of injunctive relief. That

analysis generally requires a court to consider (1)

whether the plaintiff has suffered or will suffer

irreparable injury, (2) whether there are inadequate

remedies available at law to compensate for the

injury, (3) the balance of hardships, and (4) the public

interest. eBay Inc. v. MercExchange, L.L.C., 547 U.S.

388, 126 S.Ct. 1837, 1839, 164 L.Ed.2d 641 (2006);

e360 Insight v. The Spamhaus Project, 500 F.3d 594,

604 (7th Cir.2007). We review the district court’s

entry of such an injunction for an abuse of discretion.

e360, 500 F.3d at 603.

Circuit courts have upheld orders granting injunc-

tive relief where a distmct court did not perform a

complete four-part analysis when a plaintiff prevailed

on the merits of his claim, see Fogie v. THORN

Americas, Inc., 95 F.3d 645, 654 (8th Cir.1996), or

when, in an action for a statutory injunction, a viola-

tion was demonstrated and there was a reasonable

30a

likelihood of future violations, see United States v.

Kaun, 827 F.2d 1144, 1148 (7th Cir.1987). Moreover,

“fijt 1s an accepted equitable principle that a court

does not have to balance the equities in a case where

the defendant’s conduct has been willful.” EPA

v. Envutl. Waste Control, 917 F.2d 327, 332 (7th

Cir.1990).

Sierra Club latches on to this last exception,

claiming that the Company has engaged in willful

misconduct by persisting in its “proposal to construct

this Project without a valid permit.” But Sierra Club

cites no authority to explain how the Company’s

persistence constitutes willful misconduct. The Com-

pany need not roll over and concede that its permit is

invalid—indeed, that’s what this litigation is all

about. Unlike cases in which defendants flaunted

environmental laws by, for example, not implement-

ing control systems for hazardous wastes, see United

States v. Bethlehem Steel Corp., 38 F.3d 862, 865,

867-68 (7th Cir.1994), the Company here is simply

defending the validity of its permit in court. And the

Company’s arguments are not so frivolous as to make

us believe that its defense is akin to some kind of

malicious intransigence.

Still, we need not remand this case for the district

court to explicitly analyze the injunctive relief fac-

tors. The court found that the Company did not have

a valid PSD permit when it granted Sierra Club’s

motion for summary judgment. Because EPA regula-

tions require the Company to obtain such a permit

before it can build the facility, 42 U.S.C. § 7475(a)(1),

the court’s decision leaves the Company no option but

to obtain this permit before it can commence con-

struction. So the court’s injunction, which prohibits

the Company from “actual construction of the Plant

3la

until [it has} obtained a valid PSD permit,” is essen-

tially the same as the court’s finding on the merits.

See Fogie, 95 F.3d at 654 (holding that by prevailing

on the merits of its claim, “the plaintiff class has

demonstrated that the four factors of this test

overwhelmingly militate in favor of an injunction”).

Moreover, this is not a case where a plaintiff sued

an already-operational facility and claimed it was

polluting in excess of permissible limits. In such a

situation, a district court would likely need to balance

equities before it granted injunctive relief and shut

down the facility. See Harrison v. Indiana Auto

Shredders Co., 528 F.2d 1107, 1123 (7th Cir.1975).

Here, the only cost to the Company of the injunction

is that it must now obtain a new permit before it can

build, which was already implicit in the court’s

decision granting summary judgment.

Additionally, the record here demonstrates that the

four injunctive relief factors favor Sierra Club. First,

Sierra Club will likely suffer irreparable injury if the

Company builds under its expired PSD permit rather

than a new permit because the former likely includes

more relaxed emission standards. See supra section

II(A)(3); Amoco Prod. Co. v. Vill. of Gambell, 480 U.S.

531, 545, 107 S.Ct. 13896, 94 L.Ed.2d 542 (1987)

(environmental injuries are “often permanent or at

least of long duration, i.e., irreparable”). Second, legal

remedies will not adequately address Sierra Club’s

injury. The record shows that at least one Sierra

Club member will likely suffer a decrease in recrea-

tional and aesthetic enjoyment of Rend Lake if the

plant is built according to the 2001 permit. An

economic award would not sufficiently compensate

for this injury. See Amoco, 480 U.S. at 545, 107 S.Ct.

1396 (“Environmental injury, by its nature, can

32a

seldom be adequately remedied by money dam-

ages. ...”); Envtl. Waste Control, 917 F.2d at 332.

Third, the balance of harms favors issuing an in-

junction. An injunction protects Sierra Club from

irreparable injury while simply requiring the Com-

pany to defer construction until it obtains a permit

that complies with the Clean Air Act. Finally, the

record contains no evidence that the injunction

harms the public interest. In fact, based on the record

before us, we agree with Sierra Club that requiring

the Company to obtain a valid PSD permit would

likely result in decreased emissions and improved

public health, which would further a stated goal of

the Clean Air Act. See 42 U.S.C. § 7401(b)(1) (“to

protect and enhance the quality of the Nation’s air

resources so as to promote the public health and

welfare and the productive capacity of its popula-

tion”).

Although in most instances we would remand a

case when a district court did not clearly explain why

it granted injunctive relief, see e360, 500 F.3d at 604,

we need not remand here because the court’s decision

on the merits essentially embraced the remedy and

the injunctive relief factors favor Sierra Club. A

remand on this issue would merely prolong the case,

result in additional costs, and not change the out-

come. Cf. Books v. Chater, 91 F.3d 972, 978 (7th

Cir.1996); DiLeo v. Ernst & Young, 901 F.2d 624, 626

(7th Cir.1990).

lil. CONCLUSION

The judgment of the district court is AFFIRMED.

33a

APPENDIX B

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF ILLINOIS

Case No. 05-cv-4095-JPG

SIERRA CLUB,

Plaintiff,

VS.

FRANKLIN COUNTY POWER OF ILLINOIS, LLC f/k/a

ENVIROPOWER OF ILLINOIS, LLC; ENVIROPOWER,

LLC; and KHANJEE HOLDING (US) INC.,

Defendants.

MEMORANDUM AND ORDER

This matter comes before the Court on the cross

motions for summary judgment filed by plaintiff the

Sierra Club (Doc. 51) and defendants Franklin

County Power of Illinois, LLC (“FCP”), EnviroPower,

LLC (“EnviroPower”) and Khanjee Holding (US) Inc.

(“Khanjee”) (Doc. 63). The parties have responded to

the respective motions (Docs. 90 & 93), and replied to

the respective responses (Docs. 96 & 97). In conjunc-

tion with the parties’ summary judgment motions,

the Court considers the Sierra Club’s motion to strike

(Doc. 72) and the defendants’ response (Doc. 74), the

defendants’ motion to exclude testimony (Doc. 77)

and the plaintiff's response (Doc. 82), and the defen

dants’ motion to strike (Doc. 78), the plaintiff's re-

sponse (Doc. 83) and the defendants’ reply (Doc. 88).

The Court also considers the defendants’ motion to

dismiss (Doc. 65), to which the Sierra Club has re-

34a

sponded (Doc. 92), and to which the defendants have

replied (Doc. 98).

The Sierra Club believes that the defendants are

proposing to construct a power plant in Benton, Illi-

nois, (“Plant”) without a required permit. They bring

this suit under the citizen suit provision of the Clean

Air Act (“CAA”), 42 U.S.C. § 7604(a), seeking an in-

junction stopping that construction until the defen-

dants obtain a valid permit as well as fines, costs and

attorney’s fees. The defendants contend that the

Court does not have jurisdiction to hear this suit and,

alternatively, that the Sierra Club is barred by the

Constitution and by statute from bringing this suit

and that the defendants possess the required permit.

The Court will briefly review the relevant statutory

and regulatory provisions before addressing the de-

fendants’ jurisdictional argument. If necessary, it will

then proceed to analyze the substantive issues raised

in the pending motions.

1. Statutory and Regulatory Framework

Congress enacted the CAA, 42 U.S.C. § 7401 et seq..,

in part to protect the public from the harmful effects

of air pollution. To this end, the act includes provi-

sions aimed specifically at preventing significant de-

terioration of air quality. 42 U.S.C. §§ 7470-7492.

Among those provisions is one that states:

No major emitting facility on which construction

is commenced after August 7, 1977, may be con-

structed in any area to which this part applies

unless — (1) a permit has been issued for such

proposed facility in accordance with this part set-

ting forth emission limitations for such facility

which conform to the requirements of this part... .

35a

42 U.S.C. § 7475(a). The permit referred to in this

provision is commonly called a “PSD permit.” A PSD

permit contains an emission limitation which the

permit issuer, the Illinois Environmental Protection

Agency (“IEPA”) in Illinois, has determined reflects

the best available pollution control technology (the

“best available contro] technology” or “BACT”). See 42

U.S.C. §§ 7475(a)(4) & 7479(3).

The United States Environmental Protection

Agency (“EPA”), which Congress has charged with

promulgating regulations to implement the CAA, has

promulgated a regulation stating that a PSD permit

becomes invalid:

if construction is not commenced within 18

months after receipt of such approval, if con-

struction is discontinued for a period of 18

months or more, or if construction is not com-

pleted within a reasonable time. The Adminis-

trator may extend the 18-month period upon a

satisfactory showing that an _ extension is

justified.

40 C.F.R. § 52.21(r)(2). The expiration is automatic

and does not rely on any action by any agency to take

effect. See 40 C.F.R. § 124.5(g)(2) (“PSD permits may

be terminated only by rescission under § 52.21(w) or

by automatic expiration under § 52.21(r).”); Grand

Canyon Trust v. Tucson Elec. Power Co., 391 F.3d

979, 983-84 (9th Cir. 2004) (interpreting a nearly

identical prior version of the regulation). Owners or

operators seeking to construct major emitting facili-

ties run the risk that if a PSD permit expires, they

will then be subject to stricter BACT standards when

applying for a new permit because of pollution control

developments since their original permits were

issued.

36a

Congress defines commencement of construction of

a major stationary source of air pollution (like the

Plant) to mean:

that the owner or operator has obtained all ne-

cessary preconstruction approvals or permits re-

quired by Federal, State, or local air pollution

emissions and air quality laws or regulations and

either has (i) begun, or caused to begin, a conti-

nuous program of physical on-site construction of

the facility or (ii) entered into binding agree-

ments or contractual obligations, which cannot

be canceled or modified without substantial loss

to the owner or operator, to undertake a program

of construction of the facility to be completed

within a reasonable time.

A2 U.S.C. § 7479(2)(A). The EPA similarly defines

commencement of construction to mean:

that the owner or operator has all necessary pre-

construction approvals or permits and either has:

(i) Begun, or caused to begin, a continuous

program of actual on-site construction of the

source, to be completed within a reasonable

time; or

(ii) Entered into binding agreements or con-

tractual obligations, which cannot be can-

celled or modified without substantial loss to

the owner or operator, to undertake a pro-

gram of actual construction of the source to

be completed within a reasonable time.

40 C.F.R. § 52.21(b)(9).

The EPA further defines “beginning actual con-

struction” to mean:

in general, initiation of physical on-site construc-

tion activities on an emissions unit which are of

37a

a permanent nature. Such activities include, but

are not limited to, installation of building sup-

ports and foundations, laying underground pipe-

work and construction of permanent storage

structures. With respect to a change in method of

operations, this term refers to those on-site ac-

tivities other than preparatory activities which

mark the initiation of the change.

40 C.F.R. § 52.21(b)(11).

II. Facts

There is no dispute over many of the relevant facts

in this case. The Court sets forth the undisputed facts

in this section and will discuss the disputed facts as

they become relevant to the resolution of the pending

motions.

All parties agree that in December 1999, Enviro-

Power entered into a 99-year lease with Old Ben Coal

Company (a subsidiary of Horizon Natural Re-

sources) for the land on which it intends to build the

Plant and that in December 2000, EnviroPower as-

signed the lease to FCP.

They also agree that in August 2000, FCP re-

quested that the IEPA issue a PSD permit, that the

Sierra Club did not participate in the review process

for issuing the PSD permit, and that on July 3, 2001,

the IEPA issued FCP a PSD permit. On July 9, 2003,

FCP actually received the PSD permit, which con-

tained the following provisions:

19a. This permit shall become invalid as follows,

pursuant to 40 CFR 52.21(r)(2). This condition

supersedes standard Condition 1. The Illinois

EPA is administering these standards in Illinois

on behalf of the United States EPA under a dele-

gation agreement.

38a

This Permit shall become invalid if construction

of CFB {circulating fluidized bed] boilers is not

commenced within 18 months after this permit

becomes effective, if construction of these boilers

is discontinued for a period of 18 months or more,

or if construction of these boilers is not completed

within a reasonable period of time.

b. For purposes of the above provisions, the defi-

nitions of “construction” and “commence” at 40

CFR 52.21(b)(8) and (9) shall apply, which re-

quire that a source must enter into a binding

agreement for on-site construction or begin ac-

tual on-site construction. (Also see the definition

of “begin actual construction,” 40 CFR

52.21(b)(11)).

PSD Permit at 16-17.

Before and after receiving the permit, the defen-

dants worked toward completion of the Plant. They

obtained an engineering report and a scoping study,

began working on a boiler design and procurement of

necessary resources and achieved other tasks essen-

tial to construction of the Plant. In mid-2002, Khan-

jee began to serve as the lead developer of the Piant

project and shortly thereafter hired Acres Interna-

tional, Inc. as a consulting engineer and began to

evaluate engineering companies to serve as the con-

tractor for the Plant project.

All parties agree that sometime between November

21 and December 2, 2002, EnviroPower and Black &

Veatch entered into an agreement entitled “Construc-

tion Memorandum” which had as its subject “Con-

struction Agreement for 534 MW Franklin County

Power of Illinois (FPC) - EPC Contract” and had an

39a

effective date of December 1, 2002. The Construction

Memorandum begins:

The following documents the agreements reached

at meetings held in Cincinnati, Ohio on Novem-

ber 21, 2002 and subsequent discussions con-

cerning the EPC [engineering, procurement and

construction} contract for a 534 MW CFB project

to be executed on behalf of EnviroPower, L.L.C.

under the conditions stipulated in the following.

It also contains the following provisions, among

many others:

Black & Veatch has exclusively been designated

as (“CONTRACTOR”), and been assigned to de-

velop, in conjunction with EnviroPower, LLC as

(“OWNER”), an EPC Consortium for the Project,

along with the EPC Contract.

The Parties agree that this CONSTRUCTION

MEMORANDUM and the accompanying TERM

SHEET form the agreement between the Parties.

The Parties agree to be forthwith legally bound

by the TERMINATION OF CONSTRUCTION

MEMORANDUM, TERM SHEET AND/OR EPC

CONTRACT WITHOUT DEFAULT section of

the accompanying Term Sheet. The remaining

sections of the Term Sheet are agreed by the

Parties and intended to be incorporated into the

EPC Contract.

Contractor may ... enter into a contractual

agreement with one or more parties . . . to design

and furnish the circulating fluidized bed (CFB)

boilers and the steam turbine generator or to

perform portions of the construction work. ....

40a

CONTRACTOR is continuing to develop a firm

price and Draft EPC Contract for the FPC

project, based on the provisions of Article 7 hereof.

* *K *

AGREEMENT TO WORK TOGETHER

The OWNER wishes to awara a contract for the

EPC of the FCP PROJECT (hereinafter referred

to as “EPC CONTRACT”) to CONTRACTOR and

to work exclusively with them as set forth herein

with the good faith intent to complete the draft-

ing and negotiation of said EPC Contract on the

basis of the attached Term Sheet.

The PARTIES agree to work with each other in

good faith in accordance with the terms of this

CONSTRUCTION MEMORANDUM to complete

the drafting and negotiation of the EPC CON-

TRACT, with the goal of agreeing and signing

such EPC CONTRACT by September 1, 2005.

EXCLUSIVITY

The PARTIES agree to work together on an ex-

clusive basis for the term of this CONSTRUC-

TION MEMORANDUM which commences on

December 1, 2002 and ends upon the earlier of

the execution of the EPC Contract or November

30, 2005, or for such longer period as the PAR-

TIES may jointly agree in writing in order to

draft and negotiate the EPC CONTRACT for the

FCP PROJECT. Therefore, the OWNER agrees

that it will not directly or indirectly, alone or

collectively, participate in discussions or negotia-

tions with any other person(s) or entity(ies) other

than CONTRACTOR concerning the EPC CON-

4la

TRACT during the term of the CONSTRUCTION

MEMORANDUM.

In accordance with this CONSTRUCTION ME-

MORANDUM, PARTIES shall further investi-

gate various aspects of the FCP PROJECT in or-

der to finalize the Contract Price and Project

Schedule... .

* KOK

This CONSTRUCTION MEMORANDUM shall

expire upon the occurrence of any one of the fol-

lowing events:

* KK

(v) The date of signature of the EPC

CONTRACT for the FCP PROJECT.

The Term Sheet accompanying the Construction

Memorandum included the following provisions:

PURPOSE The proposed business terms and

conditions contained herein, to-

gether with the documents listed in

Attachment 1 to the CONSTRUC-

TION MEMORANDUM, form the

basis of Owner and Contractor’s

agreement for engineering, pro-

curement and construction (“EPC”)

of the Project.

The Parties agree to use reasonable

diligence to complete a mutually

acceptable final written contract

with respect to the scope of work

and terms and conditions described

in the following Term Sheet.

42a

The Term Sheet then listed numerous obligations

and other terms to be included in the EPC Contract,

including a ceiling for the price to be paid to Black &

Veatch, a time period after construction begins (39

months) in which construction must be substantially

completed and a maximum termination penalty pay-

able if the parties fail to agree on an EPC Contract

($72 million).

The parties agree that on or around December 18,

2002, EnviroPower contracted with Alberici Con-

structors, Inc. for on-site, boiler-house sub-foundation

work. The contract did not specifically call for pour-

ing concrete, but Alberici’s response to the “request

for proposal” that preceded the contract included the

tasks of excavating to competent rock, that is, a rock

surface suitable to support the foundation, and

pouring some concrete that would serve as part of the

foundation. On January 3, 2003, four Alberici em-

ployees began delivering equipment to the proposed

Plant site. On January 8, 2003, Alberici employees

began excavation.

In late January or early February, Alberici unex-

pectedly encountered obstructions in the form of un-

derground reinforced concrete structures. Because

some of these structures would interfere with pouring

concrete for EnviroPower, Alberici began removing

them from the site. At some point after Alberici sub-

mitted its first invoice to EnviroPower on February 5,

2003, a dispute over payment arose. On February 14,

2003, Alberici stopped excavating and stopped re-

moving the underground concrete structures. The Al-

berici employees never completely removed the con-

crete obstacles, dug deep enough to find competent

rock, or poured any concrete. From February 2003 to

June 2003, Alberici billed EnviroPower for work at

43a

the site, although after February 14, no worker billed

time for actual excavation work. The bills after Feb-

ruary 14 included one day where workers showed up

but performed no work; all other days included only

the supervisor’s hours spent maintaining a protective

barricade of the site. The vast majority of the

amounts claimed after February 14 were for equip-

ment rental.

On March 31, 2003, Khanjee and EnviroPower en-

tered into a Development Agreement and Purchase

Agreement, and in August 2003, Khanjee issued an

Offering Memorandum seeking financial support for

the Plant construction. In 2004, the required financ-

ing became available.

In the meantime, FPC failed to make a payment of

approximately $870,000 to Horizon for the lease of

the site, which was due January 1, 2003. After efforts

to negotiate new lease arrangements or FPC’s pur-

chase of the land from Horizon failed, on January 27,

2004, Horizon sent the defendants a termination and

eviction notice for non-payment of rent, effective Feb-

ruary 7, 2004. That summer, the site and any rights

under the lease were transferred to Lexington Coal

Company (“Lexington”) through MHorizon’s_ bank-

ruptcy proceedings, and in July 2004 Lexington filled

the hole dug by Alberici.

In September 2094, FPC contracted with J.M.

Jones, Inc. for more excavation and for pouring con-

crete, and on September 29, 2004, Jones began dig-

ging. The following day, an inspector from the IEPA

visited the proposed Plant site and found that con-

struction had commenced. Jones later poured some

concrete and moved an empty trailer to the site.

44a

In the meantime, the IEPA reconsidered its finding

that construction had commenced and instead made

a preliminary finding that EnviroPower’s PSD permit

had expired and asked it for more information to re-

view the permit status. The EPA also requested more

information from the defendants.

On January 1, 2005, the Sierra Club issued the de-

fendants a Notice of Intent to Sue. Shortly thereafter,

the IEPA and the EPA again requested more infor-

mation from the defendants, and EnviroPower re-

sponded to those requests. Neither agency, however,

made a final determination as to the validity of Envi-

roPower’s PSD permit.

On May 20, 2005, the Sierra Club filed this lawsuit

under the citizen suit provision of the CAA alleging

that the defendants propose to construct the Plant

without a valid PSD permit. As of the date the law-

suit was filed, EnviroPower and Black & Veatch had

not finalized the contract contemplated by the Con-

struction Memorandum.

Ill. Jurisdiction

The iefendants argue that the Court does not have

jurisdiction to hear this suit because the Sierra Club

has not alleged a cause of action under the CAA, be-

cause it is protected by a “permit shield” statute, and

because it lacks standing to sue. They seek dismissal

of this case under Federal Rule of Civil Procedure

12(b)(1) and summary judgment under Federal Rule

of Civil Procedure 56.

A. Failure to State a Claim

The defendants argue that the Court has no juns-

diction to hear this case because the Sierra Club has

failed to allege a CAA violation, which is a prerequi-

45a

site to the Court’s exercising jurisdiction under the

citizen suit provisions of the act, 42 U.S.C. § 7604(a).

They bring this challenge under Rule 12(b)(1).

A defendant can challenge a court’s subject matter

jurisdiction under Rule 12(b)(1) in two ways. He may

make a facial challenge to the sufficiency of the com-

plaint’s jurisdictional allegations as a matter of law,

in which case, as with a Rule 12(b)(6) motion, all

well-pleaded factual allegations are accepted as true

and construed in the light most favorable to the

plaintiff. Garcia v. Copenhaver, Bell & Assocs., 104

F.3d 1256, 1261 (11th Cir. 1997); United States v.

Ritchie, 15 F.3d 592, 598 (6th Cir. 1994); 2 James

Wm. Moore et al., Moore’s Federal Practice, § 12.30{4},

at 12-38 to 12-39 (3d ed.).

A defendant may also challenge the facts on which

the complaint relies to allege jurisdiction, in which

case the plaintiff is not entitled to have his allega-

tions taken as true or to have any inferences drawn

in his favor. Sapperstein v. Hager, 188 F.3d 852, 855-

56 (7th Cir. 1999); 2 James Wm. Moore et al., Moore’s

Federal Practice, § 12.30[4], at 12-38 to 12-40 (3d ed.

2000). To resolve a challenge to the facts, a court may

receive and weigh evidence outside the allegations in

the complaint to determine if it has subject matter

jurisdiction over the case. Sapperstein, 188 F.3d at

855-56. In any case, the plaintiff has the burden of

proving that subject matter jurisdiction exists. Kon-

tos v. United States Dep’t of Labor, 826 F.2d 573, 576

(7th Cir. 1987).

To the extent that the defendants raise a facial

challenge to the Court’s subject matter jurisdiction,

that challenge is without merit. The Sierra Club filed

this lawsuit under the provision of the CAA that

states:

46a

Except as provided in subsection (b) of this sec-

tion, any person may commence a civil action on

his own behalf —

(3) against any person who proposes to con-

struct... [a] new .. . major emitting facility

without a permit required under Part C of

subchapter I of this chapter (relating to sig-

nificant deterioration of air quality) [a PSD

permit]... .

The district courts shall have jurisdiction, with-

out regard to the amount in controversy or the ci-

tizenship of the parties, to enforce such an emis-

sion standard or limitation... and to apply any

appropriate civil penalties. ...

42 U.S.C. § 7604(a). It alleges that the PSD permit

the defendants obtained in July 2001 to build the

Plant expired when it did not commence construction

within 18 months of receiving the permit and that

construction of the Plant in light of that expiration

violates the CAA. The defendants argue that because

no official agency has declared their PSD permit ex-

pired or invalid, the existence of the permit deprives

the Court of jurisdiction to hear suits under this pro-

vision of the CAA.

The defendants’ argument is meritless. The Sierra

Club has clearly alleged in the complaint that the de-

fendants have proposed to construct the Plant, which

all agree is a major emitting facility, after their PSD

permit expired. Thus, it has stated a claim under

§ 7604(a)(3) and has presented a case or controversy

over which the Court has subject matter jurisdiction.

See Grand Canyon Trust v. Tucson Elec. Power Co.,

391 F.3d 979, 986 (9th Cir. 2004); id. at 985 (“Unau-

47a

thorized construction of a power plant violates the

Clean Air Act and provides grounds for a citizen suit

under the Act’s citizen suit provision.”). That no

agency has explicitly found that the defendants’ per-

mit has expired is irrelevant to the Court’s jurisdic-

tion; this lawsuit does not seek to review final agency

action under the Administrative Procedure Act, 5

U.S.C. § 706(2), but is brought as a citizen suit under

the CAA, 42 U.S.C. § 7604(a), which requires no final

agency action. In addition, that the Sierra Club may

not ultimately prevail in its claim does not deprive

the Court of jurisdiction to hear the claim.

To the extent that the defendants have put the

Sierra Club to its proofs to establish the Court’s sub-

ject matter jurisdiction by a preponderance of the

evidence, see McNutt v. General Motors Acceptance

Corp., 298 U.S. 178, 189 (1936); Meridian Sec. Ins.

Co. v. Sadowski, 441 F.3d 536, 541 (7th Cir. 2006), as

the remainder of this order explains, the Sierra Club

has, in fact, carried that burden by proving the de-

fendants’ proposed violation of the CAA.

B. Permit Shield

The defendants also argue that this case must be

dismissed under Rule 12(b)(1) because 42 U.S.C.

§ 7661c(f) gives them “jurisdictional immunity” from

this suit. That statute states, in pertinent part,

“Compliance with a permit issued in accordance with

this subchapter [Subchapter V of the CAA] shall be

deemed compliance with section 7661 a of this title.”

The relevant portion of § 766la(a) states, “[I]t shall

be unlawful for any person to violate any require-

ment of a permit issued under this subchapter, or to

operate ... any other source required to have a per-

mit under [the PSD program] .. . except in com-

48a

pliance with a permit issued by a permitting author-

ity under this subchapter.”

To the extent that § 7661c(f) may limit the jurisdic-

tion given by Congress in § 7604(a), and the Court

expresses no opinion on whether it could, it does not

limit the Court’s jurisdiction in this case. By its

terms, § 7661c(f) shields a facility from being found in

non-compliance with a permit issued under Chapter

V of the CAA, which deals with operating permits, not

construction permits. See Sen. Rep. No. 101-228,

1990 U.S.C.C.A.N. 3385, 3731-32 (Dec. 20, 1989)

(“Title V of the bill imposes a Federal requirement

that major sources of air pollution, and certain other

sources of air pollution, obtain operating permits... .

New and modified major sources are already required

to obtain construction permits under the New Source

Review and Prevention of Significant Deterioration

[PSD] provisions of the current Act.”). Accordingly,

the permit shield law protects a facility only against

being found non-compliant with § 7661la, which

speaks only to operation of facilities. Because § 7661c(f)

is inapplicable to the cause of action alleged in the

case at bar, it does not deprive the Court of juris-

diction.

C. Standing

The defendants also argue that the Sierra Club had

no Article III standing when it filed this suit. They

argue that the grievances of the Sierra Club members

are too generalized, speculative, unfounded and fo-

reclosed by the aforementioned permit shield. They

also argue that the Sierra Club did not even know

about its members’ grievances until after it filed the

lawsuit. They raise these arguments in the context of

summary judgment under Rule 56.

49a

Summary judgment is appropriate where “the

pleadings, depositions, answers to interrogatories,

and admissions on file, together with the affidavits, if

any, show that there is no genuine issue as to any

material fact and that the moving party is entitled to

judgment as a matter of law.” Fed. R. Civ. P. 56(c);

see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986);

Spath v. Hayes Wheels Int’l-Ind., Inc., 211 F.3d 392,

396 (7th Cir. 2000).

The evidence shows that the Sierra Club has Ar-

ticle III standing to bring this suit and that the de-

fendants are not entitled to dismissal for lack of sub-

ject matter jurisdiction as a matter of law. The doc-

trine of standing is a component of the Constitution’s

restriction of federal courts’ jurisdiction to actual

cases or controversies. Lujan v. Defenders of Wildlife,

504 U.S. 555, 560 (1992); see U.S. Const. art. ITI, § 2.

Standing contains three elements.

First, the plaintiff must have suffered an injury

in fact — an invasion of a legally protected inter-

est which is (a) concrete and particularized .. .

and (b) actual or imminent, not conjectural or

hypothetical. . . . Second, there must be a causal

connection between the injury and the conduct

complained of — the injury has to be fairly .. .

tracelable] to the challenged action of the defen-

dant, and not .. . thle] result [of] the indepen-

dent action of some third party not before the

court... . Third, it must be likely, as opposed to

merely speculative, that the injury will be re-

dressed by a favorable decision.

Id. at 560-61 (internal citations, quotations and foot-

notes omitted). An organization has standing to sue

on behalf of its members if “its members would oth-

erwise have standing to sue in their own mght, the

50a

interests at stake are germane to the organization’s

purpose, and neither the claim asserted nor the relief

requested requires the participation of individual

members in the lawsuit.” Friends of the Earth, Inc. v.

Laidlaw Enuvtl. Servs. (TOC), Inc., 528 U.S. 167, 181

(2000).

The Sierra Club has sufficiently established an in-

jury in fact to at least one of its members.

“(E]nvironmental! plaintiffs adequately allege injury

in fact when they aver that they use the affected area

and are persons ‘for whom the aesthetic and recrea-

tional values of the area will be lessened’ by the

challenged activity.” Laidlaw, 528 U.S. at 183 (quot-

ing Sierra Club v. Morton, 405 U.S. 727, 735 (1972)).

In this case, Barbara McKasson (“McKasson”), a

Sierra Club member, has submitted an affidavit

stating just that — that if the defendants build the

Plant without the appropriate permit, the resulting

levels of pollution from the operating Plant will di-

rectly affect her use and enjoyment of the Rend Lake

area, which she visits and plans to continue visiting

at least every other year to fisn, kayak or camp and

which is located less than three miles from the pro-

posed site of the Plant. She also states that the pollu-

tion that will be generated by the Plant constructed

without an appropriate permit will also affect her use

and enjoyment of her own property 45 miles from the

proposed Plant site. This establishes an injury in fact

of a Sierra Club member that is imminent and not

conjectural or hypothetical.

The Sierra Club has also established a causal con-

nection between McKasson’s injury and _ pollution

that will imminently emit from the Plant. “Tracea-

bility does not mean that plaintiffs must show to a

scientific certainty that defendant’s .. . effluent...

5la

caused the precise harm suffered by the plaintiffs... .

Rather, a plaintiff must merely show that a defen-

dant discharges a pollutant that causes or contri-

butes to the kinds of injuries alleged.” Piney Run

Pres. Ass'n v. County Comm’rs of Carroll Co., 268

F.3d 255, 263-64 (4th Cir. 2001) (internal citations

and quotations omitted). It is clear that the Plant

proposes to emit harmful pollutants including par-

ticulate matter, sulfur dioxide, mitrogen oxide and

mercury, that are highly likely to be in the air where

McKasson recreates. McKasson stated in her affida-

vit that levels of those pollutants allowed by the PSD

permit the Sierra Club believes has expired would

cause the imminent injury of which she complains.

Thus, McKasson’s injury is fairly traceable to the de-

fendants’ construction of the Plant allegedly without

an appropriate permit.

Redressability has also been demonstrated. McKas-

son stated that PSD permits for power plants issued

after the defendants’ PSD permit contain lower

BACT emission levels (as they should since technol-

ogy tends to make advancements, not regressions)

and that if the Court were to halt construction of the

Plant until the defendants obtained a new PSD per-

mit, the BACT emission levels for the new PSD per-

mit would be lower and her exposure to harmful pol-

lutants at Rend Lake and at her home would be les-

sened. This is sufficient to establish the third element

of standing, redressability. That the defendants

sought independently to reduce emission levels to

some unspecified level does not render McKasson’s

imminent injury non-redressable by Court action.’

——_—_— ec ee

' Because the Court has found that the Sierra Club has

sufficiently established McKasson’'s standing to sue, it does not

need to address the standing of Varena Owen.

52a

The defendants have not seriously challenged the

Sierra Club’s standing to sue on behalf of its mem-

bers. This is for good reason, because it is clear that

the interests at stake in this lawsuit are directly re-

lated to the Sierra Club’s purpose of preserving and

protecting air quality in the United States and that

this suit does not require the participation of individ-

ual Sierra Club members. Furthermore, that McKas-

son did not know about this lawsuit until after it was

filed does not negate her standing to sue at the time

the lawsuit was filed.

Because the Sierra Club has established its stand-

ing to bring this suit, the Court will not dismiss this

suit for lack of standing.

IV. Analysis

A. Constitutionality

The defendants raise two arguments why the Court

should dismiss this suit pursuant to Federal Rule of

Civil Procedure 12(b)(6). When reviewing a Rule

12(b\(6) motion to dismiss, the Court accepts all alle-

gations as true and draws all reasonable inferences

in favor of the plaintiff. Brown v. Budz, 398 F.3d 904,

908 (7th Cir. 2005); Holman v. Indiana, 211 F.3d 399,

402 (7th Cir. 2000). The Court should not grant a mo-

tion to dismiss unless it appears beyond doubt that

the plaintiff cannot prove his claim under any set of

facts consistent with the complaint. Brown, 398 F.3d

at 908-09; Holman, 211 F.3d at 405. “[I]f it is possible

to hypothesize a set of facts, consistent with the com-

plaint, that would entitle the plaintiff to relief, dis-

missal under Rule 12(b)(6) is inappropriate.” Brown,

398 I.3d at 909 (internal quotations omitted); see Ko-

lupa v. Roselle Park Dist., 438 F.3d 713, 715 (7th Cir.

2006).

53a

1. Due Process

The defendants argue that the Sierra Club cannot

prevail in this action because they have a property

interest in their PSD permit that cannot be termi-

nated absent due process of law. The Sierra Club, on

the other hand, contends that whatever property in-

terest the defendants may have had in their PSD

permit expired automatically by the terms of the

permit and the applicable regulations and that if that

interest has not yet expired, the process afforded in

this legal proceeding suffices to satisfy due process

requirements.

The defendants raise a procedural! due process ar-

gument. The Fourteenth Amendment provides that

no state shall “deprive any person of life, liberty, or

property without due process of law.” U.S. Const.

amend. 14. “Procedural due process claims require a

two-step analysis. The first step requires us to de-

termine whether the plaintiff has been deprived of a

protected interest; the second requires a determina-

tion of what process is due.” Doherty v. City of Chi-

cago, 75 F.3d 318, 322 (7th Cir. 1996).

The defendants’ argument is nonsensical. To the

extent that they have a property right in its PSD

permit because it has not expired and continues to be

valid, they will prevail in this litigation and will not

be deprived of a property interest. On the other hand,

if the Cour: finds that their permit has expired, the

defendants have no protected property mght of which

they could be deprived. The automatic expiration of

the permit pursuant to 40 C.F.R. §52.21(r)(2) would

not be a deprivation of a property right but a !imita-

tion on the property right as it was initially created.

Furthermore, to the extent that the defendants have

a property right, the notice and opportunity to be

54a

heard in this litigation certainly provides adequate

process.

2. Separation of Powers

The defendants also argue that the citizen suit

provision of the CAA violates the doctrine of separa-

tion of powers. The Constitution separates govern-

mental powers in to three coordinate branches —

executive, legislative and judicial. Morrison v. Olson,

487 U.S. 654, 693 (1988). The doctrine of separation

of those three powers is violated when a law imper-

missibly undermines the power of one branch or dis-

rupts the balance between the branches by prevent-

ing one from accomplishing its constitutional func-

tions. Jd. at 695.

The defendants rely on a dissenting opinion in

Friends of the Earth v. Laidlaw Environmental Ser-

vices (TOC) Inc., 528 U.S. 167 (2000), in which Jus-

tice Scalia notes that citizen suit provisions, aimed at

privately-selected law violators, may usurp the Ex-

ecutive Branch’s authority and discretion to target

law violators in a manner consistent with the public

interest. Id. at 209-10; see also id. at 197 (Kennedy,

J., concurring). The defendants then represent, “The

CAA, as currently interpreted, does not run afoul of

Article II... .” Def. Mot. Dism. at 18.

The schizophrenic nature of the defendants’ argu-

ment stems from their fundamental misunderstand-

ing of the Sierra Club’s challenge. The Sierra Club is

not challenging the propriety of the substance of the

defendants’ PSD permit ~s it was originally issued

but the PSD permit’s continuing validity. This is a

perfectly appropriate challenge that falls squarely

within the plain language of the CAA’s citizen suit

provision.

55a

Furthermore, the defendants have not provided the

Court with any binding authority or substantive ar-

gument for finding that the citizen suit provision of

the CAA unconstitutionally usurps Executive Branch

power. The Court agrees with the United States v.

American Elec. Power Service Corp., 1387 F. Supp. 2d

1060, 1065 (S. D. Ohio 2001), ‘hat the CAA’s citizen

suit provision does not imperriissibly intrude on the

Executive Branch’s powers, and to the extent that

higher courts continue to entertain CAA citizen suits

without questioning the citizen suit provision’s con-

stitutionality, see, e.g., Grand Canyon Trust v. Tuc-

son Elec. Power Co., 391 F.3d 979 (9th Cir. 2004), the

Sourt finds no reason to find any unconstitutionality

in this case.

B. Merits

The parties have filed cross-motions for summary

judgment. Summary judgment is appropriate where

“the pleadings, depositions, answers to interrogato-

ries, and admissions on file, together with the affida-

vits, if any, show that there ts no genuine issue as to

any material fact and that the moving party is en-

titled to judgment as a matter of law.” Fed. R. Civ. P.

56(c); see Celotex Corp. v. Catrett, 477 U.S. 317, 322

(1986); Spath v. Hayes Wheels Int’l-Ind., Inc., 211

F.3d 392, 396 (7th Cir. 2000). The reviewing court

must construe the evidence in the light most favora-

ble to the nonmoving party and draw all reasonable

inferences in favor of that party. See Anderson v. Li-

berty Lobby, Inc., 477 U.S. 242, 255 (1986); Spath,

211 F.3d at 396.

The only question in this case is whether the PSD

permit issued to the defendants on July 3, 2001, re-

mains valid. For the following reasons, the Court

finds that it is not.

56a

The PSD permit issued to the defendants expired

automatically if the defendants did not commence

construction within 18 months after receipt of the

approval for the permit, if they discontinued con-

struction for more than 18 months, or if the Plant

was not completed within a reasonable amount of

time. 40 C.F.R. § 52.21(r)(2). The Court need only ad-

dress the first two expiration-triggering events in

this order because the evidence demonstrates that

the defendants did not commence construction within

18 months of obtaining the permit and discontinued

construction for more than 18 months.

In order to have commenced construction, as that

phrase is understood in the CAA context, a permittee

must have either (1) begun a continuous program of

actual physical on-site construction of the facility, to

be completed within a reasonable time or (2) entered

into binding contracts to undertake a program of ac-

tual construction of the source within a reasonable

time that could not be cancelled without substantial

loss. See 42 U.S.C. § 7479(2)(A); 40 C.F.R. § 52.21(b)(9).

The Court will address each of these two avenues of

commencing construction in turn.

1. Commencing a Program of Actual Physical

On-site Construction

There is no evidence from which a reasonable fact-

finder could find that the defendants began a conti-

nuous program of actual on-site construction within

18 months after receipt of the PSD permit.

As a preliminary matter, the Court turns to the ts-

sue of the 18-month period. The defendants make

much of the specific expiration date of the 18-month

period. The Sierra Club claims that the 18 months

expired on January 3, 2003, exactly 18 months from

57a

the date the permit was issued. The defendants want

to account for a 30-day delay in the effective date of

the decision under 40 C.F.R. § 124.15(b), a three-day

extension to allow for service of the permit under 40

C.F.R. § 124.20(d), and a one-day “grace period” un-

der 40 C.F.R. § 124.20(a). They use these extra pe-

riods to argue that the 18-month period ended on

February 10, 2003. While the Court has doubts about

whether the defendants are entitled to all of the addi-

tional time they claim, the Court declines to resolve

the issue because even if they are correct in their cal-

culations, they did not begin a continuous program of

actual on-site construction before February 10, 2003.

The excavation activities of Alberici that began in

January 2003 do not qualify as the beginning of a

continuous program of actual on-site construction. As

noted earlier in this order, the EPA defines “begin-

ning actual construction” to mean:

in general, initiation of physical on-site construc-

tion activities on an emissions unit which are of

a permanent nature. Such activities include, but

are not limited to, installation of building sup-

ports and foundations, laying underground pipe-

work and construction of permanent storage

structures....

40 C.F.R. § 52.21(b)(11). The EPA construes “physical

on-site construction” consistent with a memorandum

issued by the agency which states, in pertinent part:

We have interpreted physical on-site construc-

tion to refer to placement, assembly, or installa-

tion of materials, equipment, or facilities which

will make up part of the ultimate structure of the

source. In order to qualify, these activities must

take place on-site or must be site specific. Place-

58a

ment of footings, pilings and other materials

needed to support the ultimate structures clearly

constitutes on-site construction. As stated in the

preamble to the draft regulations, “it will not suf-

fice merely to have begun erection of auxiliary

buildings or construction sheds unless there is

clear evidence (through contracts or otherwise)

that construction of the entire facility will defi-

nitely go forward in a continuous manner”. Ac-

tivities such as site clearing and excavation work

will generally not satisfy the commence construc-

tion requirements.

Memorandum from Edward E. Reich, Director of Sta-

tionary Source Enforcement, to David Kee, Chief Air

Enforcement Branch Region V, Subject: “Commence

Construction” under PSD, at 2 (July 1, 1978) (“Reich

Memorandum”),

It is true that the Reich Memorandum was not

promulgated in the exercise of authority expressly

delegated by Congress; it was not the result of the

quintessential types of Congressional delegation —

an adversarial proceeding or notice-and-comment

rulemaking. It is therefore not binding on the courts

under Chevron U.S.A. Inc. v. Natural Resources

Defense Council, Inc., 467 U.S. 837 (1984). United

States v. Mead Corp., 533 U.S. 218, 226-27 (2001);

Christenson v. Harris Co., 529 U.S. 576, 587 (2000).

However, it is the sort of informal agency opinion

that is entitled to some respect according to its

persuasiveness. Mead, 533 U.S. at 228; Skidmore v.

Swift & Co., 323 U.S. 134, 140-41 (1944). “The

weight [accorded to an administrative] judgment ina

particular case will depend upon the thoroughness

evident in its consideration, the validity of its rea-

soning, its consistency with earlier and later pro-

59a

nouncements, and all those factors which give it

power to persuade, if lacking power to control.”

Mead, 533 U.S. at 228 (quoting Skidmore, 323 U.S. at

140). Furthermore, an agency’s opinion as to the

proper interpretation of an ambiguous regulation

should be given deference. Auer v. Robbins, 519 U.S.

452, 461 (1997); see Christenson, 529 U.S. at 588.

The Court finds the Reich Memorandum as a whole

persuasive generally as to -the interpretation of 42

U.S.C. § 7479(2)(A); 40 C.F.R. §§ 52.21(b)(9) & (11).

The Reich Memorandum reflects detailed considera-

tion of the question, and provides a relatively tho-

rough analysis with numerous examples to guide ap-

plication of the standards. The author held a position

of knowledge and authority with respect to enforce-

ment decisions and clearly contemplated the docu-

ment to be used as a tool for enforcing the PSD per-

mit requirements. Finally, there is no indication that

the document is inconsistent with earlier or later

EPA pronouncements. Thus, the Court finds the

Reich Memorandum persuasive as to what consti-

tutes “physical on-site construction” and should be

given deference. Aver, 519 U.S. at 461.

The evidence, viewed in the light most favorable to

the defendants, shows that the defendants’ contract

with Alberici in December 2002 may have been for

excavation and for pouring concrete, but the actual

work performed on the site involved only excavation

and related activities. Furthermore, the excavation

work ceased on February 14, 2003, and, with the ex-

ception of one day where workers showed up to work

but did not do any work, from then until June 2008,

an Alberici employee stayed at the job site to monitor

the site but not to conduct any construction activities.

The defendants did not do any more construction

60a

work on the site after June 2003 until Lexington

filled in the hole in the summer of 2004, and the de-

fendants hired another company to do excavation and

foundation work in September 2004.” The Alberici ac-

tivities were simply not the kind of continuous or on-

going construction activities of a permanent nature

such as those listed in 40 C.F.R. § 52.21(b)(11) or in

the Reich Memorandum.

Under the applicable statutes and regulations, and

consistent with the Reich Memorandum, excavation

work alone without any further construction activity

is simply not the type of action that would constitute

“commencement of construction” sufficient to avoid

expiration of the PSD permit. This is so even if the

reason for letting the hole lie dormant is a perfectly

legitimate business reason — the need to change

boiler suppliers and therefore also boiler plans or the

discovery of unexpected underground obstructions. In

any case, there is no evidence that either before or

after the excavation was stopped in February 2003,

the construction of the facility as a whole was antic-

ipated to “definitely go forward in a continuous man-

ner.” Reich Memorandum at 2. As discussed below,

the Construction Memorandum evidenced no such

concrete intentions, and the activity at the Plant site

only amounts to the type of “clearing and excavation

work” which the Reich Memorandum notes is not suf-

ficient to constitute “physical on-site construction ac-

tivities . . . of a permanent nature.” 40 C.F.R.

§ 52.21(b)(11).

* For the purposes of this motion only, the Court assumes

without deciding that the September 2004 activities at the site,

which involved the pouring of concrete, may be the type of

“actual construction” activities contemplated by the regulations

and the Reich Memorandum.

6la

The defendants point to the Construction Memo-

randum, three power purchase agreements entered

into after this litigation began, their $30 million in-

vestment in this project, and their “program of con-

struction,” including the excavation work done by Al-

berici, to argue that they have commenced construc-

tion. They specifically point out the extensive work

they did before February 2003 on engineering and

design for their specialized boilers and the numerous

studies and analyses they did in preparation for

building the Plant. While the Court is certain that

the defendants were diligently working towards

building the plant during the 18-months after re-

ceiving the permit, the bottom line is that the type of

work they did was not “physical on-site construction

activity” and did not avert automatic expiration of

the defendants’ PSD permit pursuant to law, regula-

tion and the permit’s terms.

The defendants advance a confused argument that

40 C.F.R. § 52.21(b)(9) does not provide the appropri-

ate rule of law because it does not use the identical

language of 42 U.S.C. § 7479(2)A) to define “com-

mencement of construction.” The Court finds any dif-

ference in the language to be immaterial to this law-

suit and insufficient to render the regulation in con-

flict with or an unreasonable interpretation of the

statute. The Court further notes that the defendants

have not convincingly explained how 42 U.S.C.

§ 7479(2)’s use of the phrase “a continuous program

of physical on-site construction” does not express a

Congressional intent that the continuous program of

construction be physical and on-site. Finally, the de-

fendants argue that the statutory and regulatory

language cannot possibly mean what it says because

as a practical matter it would foreclose the develop-

ment of coal-fired power plants in Illinois, especially

62a

power plants that rely on the type of financing (non-

recourse financing) the Plant relied on. If true, that is

a matter the defendants should take up with their

legislative representatives; until the law and regula-

tions change, the Court is bound to apply them as

they are written.

Alternatively, no reasonable jury could find that

construction activities were not discontinued from

February 14, 2003, to September 20, 2004, a period

of more than 18 months. Thus, under 40 C.F.R.

§ 52.21(r)(2) and the terms of the permit, the permit

became invalid. The evidence shows that one Alberici

worker stayed at the worksite to monitor the security

of the worksite for approximately the first four

months and that no other actual work was done until

more than 18 months later when Jones began exca-

vation work again in September 2004.

In sum, the Court finds that no reasonable fact-

finder could find that the defendants commenced a

continuous program of actual physical on-site con-

struction on the Plant within 18 months of receiving

the permit or that they did not have a period of at

least 18 months where construction activities were

discontinued. In light of this finding, the Court need

not address whether the Plant could be built within a

reasonable time and will move to an examination of

whether the defendants executed the type of contract

that would prevent their PSD permit from expiring.

2. Binding Contracts

There is no evidence from which a reasonable fact-

finder could find that the defendants entered into

binding agreements to undertake a program of actual

construction of the Plant to be completed within a

reasonable amount of time.

63a

As set forth earlier, a PSD permit will not expire if

within 18 months of receipt of the permit, the permit-

tee enters into “binding agreements or contractual

obligations, which cannot be cancelled or modified

without substantial loss to the owner or operator, to

undertake a program of actual construction of the

source to be completed within a reasonable time.” 40

C.F.R. § 52.21(b)(9)(ii). The Construction Memoran-

dum and Term Sheet do not qualify as the type of

binding contractual obligation that would avert expi-

ration of the PSD permit. Again, the Reich Memo-

randum provides a persuasive interpretation of “a

contractual obligation to undertake a program of con-

struction”:

In order to satisfy the commence construction re-

quirements, a contractual obligation must be a

site specific commitment. The types of activities

which will be considered site specific for purposes

of a contract are identified in question #1 above

[defining what constitutes physical on-site con-

struction]. Contracts for work on footings, pil-

ings, and other site specific materials and

equipment will clearly satisfy the requirement

while contracts for site clearing and excavation

will not. The legislative history clearly indicates

that contracts for non site specific equipment,

such as boilers, will typically not suffice, regard-

less of any penalty clauses contained in the

contracts

A Contractual obligation for purposes of com-

mencing construction must also be one which

cannot be cancelled or modified without substan-

tial loss. The PSD regulations provide guidance

on determining whether a loss should be deemed

“substantial”. A loss which would exceed 10% of

64a

the total project cost will clearly be considered

substantial. Whether a loss of less than or equal

to 10% of the total project cost will be considered

substantial will be determined on a case by case

basis.

Reich Memorandum at 2.

Viewing the evidence in the light most favorable to

the defendants, it is unreasonable to believe that the

Alberici contract for pre-construction and basic foun-

dation activities could not have been cancelled or

modified without a substantial loss. Therefore, if any

contract can be sufficient to constitute “commence-

ment of construction” it must be the Construction

Memorandum and Term Sheet.

It is true that the Construction Memorandum and

Term Sheet constitute a binding agreement. The

plain language of the agreement demonstrates that

both sides have made firm commitments to each

other to conduct certain pre-construction activities,

including working together to reach an agreement on

an EPC contract that contains the obligations and

terms in the Term Sheet. That agreement also con-

tains a termination penalty that binds the parties if

no EPC contract is reached and that survives expira-

tion of the agreement in the Construction Memoran-

dum and Term Sheet.

The Construction Memorandum and Term Sheet

are not, however, an agreement to undertake a pro-

gram of actual construction of the Plant. The plain

terms of the agreement require no more than work-

ing together to reach a further agreement — an EPC

contract — and paying a penalty if no further agree-

ment is reached. It clearly contemplates the execu-

tion of an EPC contract in the future that will contain

65a

definite terms — which had not been decided as of

December 2002 — and that will bind the parties at

that time to undertaking a program of actual

construction. The Construction Memorandum and

Term Sheet themselves contain no commitment to

physically build anything on-site, contain no agreed

upon price and set forth no schedule for any actual,

physical on-site construction. There is no ev

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