IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA
March 28, 2013
STATE OF NEW JERSEY, PLAINTIFF
RRI ENERGY MID-ATLANTIC POWER HOLDINGS, LLC, RRI ENERGY POWER GENERATION, INC., SITHE ENERGIES, INC., NOW KNOWN AS DYNEGY, INC., AND METROPOLITAN EDISON CO., DEFENDANTS AND STATE OF CONNECTICUT, INTERVENOR-PLAINTIFF
RRI ENERGY MID-ATLANTIC POWER HOLDINGS, LLC, RRI ENERGY POWER GENERATION, INC., SITHE ENERGIES, INC., NOW KNOWN AS DYNEGY, INC., AND METROPOLITAN EDISON CO., INTERVENOR-DEFENDANTS
The opinion of the court was delivered by: James Knoll Gardner, United States District Judge
This matter is before the court on Defendant Metropolitan Edison Company's Motion for Summary Judgment filed July 27, 2012.
SUMMARY OF DECISION
For the reasons expressed below, I grant Defendant Metropolitan Edison Company's Motion for Summary Judgment and dismiss plaintiffs claims asserted against defendant Metropolitan Edison Co. ("MetEd").
Specifically, I conclude that the applicable statute of limitations bars all of plaintiffs claims asserted against MetEd. More specifically, I conclude that based on the recent decision of the United States Supreme Court in Gabelli v. Securities and Exchange Commission, 568 U.S. , 133 S.Ct. 1216, L.Ed.2d (2013), the discovery rule does not apply to the applicable statute of limitations set forth in 28 U.S.C. § 2462 for actions seeking civil penalties.
Moreover, I conclude that plaintiffs have failed to provide sufficient evidence to toll the statute of limitations based on the doctrine of equitable tolling because plaintiffs have not produced any evidence that MetEd concealed its allegedly unlawful conduct from plaintiffs.
Finally, I conclude that the continuing violations doctrine, even if generally applicable to violations of the Clean Air Act, does not provide a basis to permit plaintiffs to recover for MetEd's alleged unlawful conduct because all of MetEd's conduct occurred outside the applicable statute of limitations period.
Accordingly, because none of plaintiffs' claims against MetEd were filed within the applicable five-year statute of limitations, and because plaintiffs have not established a basis for tolling the limitations period, I grant MetEd's motion for summary judgment and dismiss plaintiffs' claims against MetEd.
Jurisdiction in this case is based upon federal question jurisdiction pursuant to 28 U.S.C. § 1331.
Venue is proper pursuant to 28 U.S.C. § 1391(b) because the events giving rise to plaintiff's claims allegedly occurred in Northampton County, Pennsylvania, which is located within this judicial district.
Plaintiff, the State of New Jersey, initiated this action on December 18, 2007 by filing an eight-count civil Complaint against Reliant Energy Mid-Atlantic Power Holdings, LLC, Reliant Energy Power Generation, Inc., Reliant Energy, Inc., Centerpoint Energy, Sithe Energies, Inc., Metropolitan Edison Co., and GPU, Inc. The claims arose from defendants' alleged construction or operation of the Portland Generating Station ("Portland Plant" or "the Plant"), a coal-fired power plant located in Upper Mount Bethel Township, Northampton County, Pennsylvania, across the Delaware River from Warren County, New Jersey.
Specifically, New Jersey's claims arose from the construction or operation of the Portland Plant without permits required by the Clean Air Act ("the Act"), 42 U.S.C. §§ 7470-7503, and the Pennsylvania State Implementation Plan, which incorporates the federal program at 40 C.F.R. Part 52, Subpart NN, §§ 52.2020 to 52.2063.
On December 4, 2008, New Jersey filed its First Amended Complaint which asserted eleven-counts against defendants Reliant Energy Mid-Atlantic Power Holdings, LLC., Reliant Energy Power Generation, Inc., Sithe Energies, now known as Dynegy, Inc. (collectively the "GenOn defendants") *fn1 , and Metropolitan Edison Co. ("MetEd").
On February 19, 2009, the GenOn defendants filed a motion to dismiss Counts 1-5 and 7-11 of the First Amended Complaint. That same day, MetEd filed a motion to dismiss New Jersey's entire First Amended Complaint.
On October 31, 2008, the State of Connecticut filed a motion to intervene. By Order dated March 24, 2009, I granted the motion and directed Connecticut to conform its complaint-in-intervention to New Jersey's First Amended Complaint and gave Connecticut until April 3, 2009 to file its complaint-in-intervention.
On April 3, 2009, Connecticut filed its complaint-in-intervention, styled "Amended Complaint", against the GenOn defendants and MetEd. *fn2 New Jersey's First Amended Complaint and Connecticut's First Amended Complaint-in-Intervention sought the same relief based on the same allegations.
On April 23, 2009, MetEd filed a motion to dismiss Connecticut's First Amended Complaint-in-Intervention. On April 27, 2009, the GenOn defendants filed a motion to dismiss Counts 1-5 and 7-11 of the complaint-in-intervention.
MetEd's motions to dismiss sought dismissal of Counts 5, 6 and 11 because the alleged modifications were made after MetEd was no longer the owner of the Portland Plant. MetEd sought dismissal of Counts 1-4 and 7-9 as barred by the applicable statute of limitations.
The GenOn defendants sought dismissal of Counts 1-5 and 7-11 of the complaints. Specifically, the GenOn defendants contended that plaintiffs failed to state a claim in those counts because the GenOn defendants did not own or operate the Portland Plant at the time the modifications to the Plant were made. Additionally, the GenOn defendants contended that those claims were barred by the statute of limitations.
By Order and accompanying Opinion dated September 30, 2009 I granted in part and denied in part MetEd's and the GenOn defendants' motions to dismiss. Specifically, I granted each motion to dismiss to the extent it sought dismissal of Count 11. *fn3
I granted MetEd's motion to dismiss to the extent it sought dismissal of plaintiffs claims for injunctive relief against it. *fn4 I also dismissed as moot MetEd's motion to dismiss Counts 5-6 and 10 of each complaint because plaintiffs indicated that they were not pursuing those claims against MetEd, but rather were only seeking relief in Counts 5, 6 and 10 from the GenOn defendants. *fn5
I denied MetEd's motion to dismiss in all other respects. In doing so, I specifically held that the discovery rule could be applied to toll the statute of limitations applicable to plaintiffs' claims. I concluded that based on the face of plaintiffs' complaints, it was not clear when plaintiffs learned, or should have learned, of the alleged Clean Air Act violations. I also held that dismissal based on the statute of limitations was not appropriate because plaintiffs could present evidence to establish that the statute of limitations was tolled based on the doctrine of equitable tolling.
I granted the GenOn defendants' motions to dismiss to the extent each sought to strike certain paragraphs from New Jersey's First Amended Complaint and Connecticut's First Amended Complaint-in-Intervention. *fn6
However, I denied the GenOn defendants' motions to dismiss in all other respects. In doing so, I concluded, like I had in denying MetEd's motions to dismiss, that the discovery rule could serve to toll the applicable statute of limitations period for plaintiffs' claims against the GenOn defendants. I also held that an owner or operator of a plant could be held liable under the Clean Air Act because the preceding owner of the plant failed to secure the appropriate permit and that the prevention of significant deterioration ("PSD") provisions imposed ongoing obligations on owners and operators. *fn7
On October 28, 2009 defendants answered New Jersey's First Amended Complaint and Connecticut's First Amended Complaint-in-Intervention. After conducting substantial discovery, on June 28, 2011 plaintiffs filed a motion for leave to file a second amended complaint.
By Order dated October 6, 2011 and filed October 11, 2011 I granted plaintiffs' motion. On October 14, 2011 New Jersey filed its Second Amended Complaint and Connecticut filed its Second Amended Complaint-in-Intervention. *fn8
On November 14, 2011 defendants filed their respective answers to the complaints. *fn9 After conducting additional discovery, on July 27, 2012 MetEd filed the within motion for summary judgment asserting that it is entitled to judgment on all of the remaining claims against it.
On August 17, 2012 New Jersey and Connecticut each filed responses in opposition to MetEd's summary judgment motion. On September 17, 2012 MetEd filed a reply brief in support of its motion for summary judgment and on October 2, 2012 New Jersey filed a surreply.
On November 1, 2012 plaintiffs each filed a motion for partial summary judgment, in which they asserted that they were entitled to judgment on Claims 4 and 7. Also on November 1, 2012 the GenOn defendants filed a motion for partial summary judgment, in which they sought judgment on Claims 6, 10, 11 and 12. *fn10
On February 22, 2013 I heard oral argument on all of the summary judgment motions in this case and took each motion under advisement. During oral argument, the GenOn defendants sought to join MetEd's motion for summary judgment. *fn11
On February 27, 2013 the United States Supreme Court issued a decision in Gabelli v. Securities and Exchange Commission, 568 U.S. , 133, S.Ct. 1216, L.Ed.2d (2013). That same day, MetEd sought leave to file a brief in support of its summary judgment motion based on the Gabelli decision.
On March 11, 2013 plaintiffs filed a brief in opposition to MetEd's supplemental brief. On March 14, 2013 MetEd sought leave to file a reply to plaintiffs' brief in opposition to MetEd's brief based on the Gabelli decision.
By Order dated and filed March 22, 2013 I granted MetEd's motions for leave to file the supplemental brief and reply brief and indicated that I would consider MetEd's supplemental brief, and plaintiffs' brief in opposition, and MetEd's reply brief on the Gabelli decision.
STANDARD OF REVIEW
Rule 56(a) of the Federal Rules of Civil Procedure permits a party to seek summary judgment with respect to a claim or defense, or part of a claim or defense. Rule 56(a) provides, in pertinent part, that "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); National Association for the Advancement of Colored People "NAACP" v. North Hudson Regional Fire & Rescue, 665 F.3d 464, 475 (3d Cir. 2012).
For a fact to be considered material, it "must have the potential to alter the outcome of the case." Id. (citing Kaucher v. County of Bucks, 455 F.3d 418, 423 (3d Cir. 2006)). Disputes concerning facts which are irrelevant or unnecessary do not preclude the district court from granting summary judgment. Id.
Where a party asserts that a particular fact is, or cannot be, genuinely disputed, the party must provide support for its assertion. Fed.R.Civ.P. 56(c)(1). Rule 56(c)(1) provides that party may support its factual assertions by
(A) citing particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials; or
(B) showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.
When considering a motion for summary judgment, the district court must view the facts and record evidence presented "in the light most favorable to the non[-]moving party." North Hudson, 665 F.3d at 475 (quoting Scott v. Harris, 550 U.S. 372, 380, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007)).
If the moving party shows that there is no genuine issue of fact for trial, "the non-moving party then bears the burden of identifying evidence that creates a genuine dispute regarding material facts." Id. (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)).
Where a defendant seeks summary judgment, the plaintiff cannot avert summary judgment with speculation, or by resting on the allegations in his pleadings, but rather he must present competent evidence from which a jury could reasonably find in his favor. Ridgewood Board of Education v. N.E. for M.E., 172 F.3d 238, 252 (3d Cir 1999); Woods v. Bentsen, 889 F.Supp. 179, 184 (E.D.Pa. 1995)(Reed, J.).
"Ultimately, [w]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial." Id. (quoting Matsushita Electric Industries Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)) (internal quotations omitted and alteration in original).
REGULATORY FRAMEWORK OF THE CLEAN AIR ACT Congress passed the Clean Air Act ("the Act") to "preserve, protect, and enhance" the nation's air quality and to protect public health from adverse effects associated with air pollution. See 42 U.S.C. § 7470.
The Act requires the United States Environmental Protection Agency ("EPA") to establish national ambient air quality standards ("NAAQS") for designated pollutants that the EPA has determined may cause or contribute to air pollution anticipated to endanger public health or welfare. 42 U.S.C. §§ 7408 and 7409.
The Act also provides for the division of states into air quality control regions and classifying each region as "in attainment", "nonattainment", or "unclassifiable" with respects to NAAQS. 42 U.S.C. § 7407.
Each state is required to submit for EPA approval a State Implementation Plan ("SIP"), which implements, maintains and enforces NAAQS. A SIP must meet certain minimum standards set forth by the Clean Air Act and EPA regulations in order to be approved by the EPA. 42 U.S.C. § 7410.
Additionally, the Act provides that the EPA develop "technology-based performance standards" designed to limit emissions from major sources of pollution. Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 846, 104 S.Ct. 2778, 2783, 81 L.Ed.2d 694, 705 (1984).
The prevention of significant deterioration ("PSD") provisions of the Act govern sources of pollution in areas in attainment with NAAQS. 42 U.S.C. § 7407.
Under the PSD provisions of the Clean Air Act, the owner or operator of an existing major emitting source of pollution must obtain a permit prior to commencing construction on the facility. 42 U.S.C. § 7475(a).
Among the preconditions for obtaining a permit are utilizing the "best available control technology" ("BACT") *fn12.
Additionally, the owner of operator of a major emitting facility, for which a permit is required, must conduct monitoring as may be necessary to determine the effect that emissions from the facility have on air quality in the area. 42 U.S.C. § 7475(a).
As part of its SIP, Pennsylvania has incorporated the federal regulations promulgated by the EPA set forth in 40 C.F.R. Part 52, Subpart NN, §§ 52.2020-52.2063. Under these regulations, an existing source of pollution must obtain a preconstruction permit for any "major modification" to the facility. A major modification is defined as (1) a "physical change in or change in the method of operation" that would (2) cause a "significant emissions increase" of a regulated pollutant. 40 C.F.R. § 52.21(b)(2).
However, a "physical change" or "change in the method of operation" does not include projects which involve "[r]outine maintenance, repair and replacement." Projects which constitute routine maintenance to the facility do not require a preconstruction permit. 40 C.F.R. § 52.21(b)(2)(iii)(a).
Upon consideration of the pleadings, record papers, exhibits, declarations, and depositions, and drawing all reasonable inferences in favor of plaintiffs as required by the forgoing standard of review, the pertinent facts are as follows.
Defendant Metropolitan Edison, Co. owned and operated the Portland Generating Station from the time it was in operation until November 1999. The Portland Plant is a coal-fired power plant located in Upper Mount Bethel Township, Northampton County, Pennsylvania, across the Delaware River from Warren County, New Jersey.
The Portland Plant is upwind and directly across the Delaware River and state line from Warren County, New Jersey. As a byproduct of the production of electricity and as a result of its operations, the Portland plant emits air pollutants including sulfur dioxide (SO2), nitrogen oxides (NOx), and particulate matter. Prevailing winds carry these air pollutants from the Portland plant to New Jersey and Connecticut, where they have caused and continue to cause harm to the air quality, citizens, and environments of both states.
Portland has five electricity-generating units. Only Units 1 and 2 are the subject of this dispute. Both Units 1 and 2 consist of a coal-fired boiler, which burns coal to transform water into steam, and a steam turbine, which uses the steam to generate electricity. Unit 1 began operating in 1958. Unit 2 began operating in 1962.
In November 1999 MetEd sold the Portland Plant to Sithe Energies, Inc. *fn13 However, prior to selling the Plant, MetEd completed multiple construction projects at the Plant, which serve as the basis for plaintiffs' claims against MetEd.
Specifically, between 1983 and 1992 MetEd completed multiple construction projects at Unit 1. *fn14 Between 1982 and 1998 MetEd completed multiple construction projects at Unit 2. *fn15
Each of the projects constituted major modifications within the meaning of 40 C.F.R. § 52.21(b)(2) and therefore required a preconstruction permit. *fn16 MetEd did not seek, or obtain, a permit for any of these projects.
None of the subsequent owners of the Portland Station sought, or obtained, a permit for the major modifications undertaken by MetEd. Units 1 and 2 at the Portland Plant remain in operation and the GenOn defendants continue to operate the Plant without permits for MetEd's major modifications to the Plant.
Prior to commencing this lawsuit, plaintiffs were generally aware that power plants from neighboring states affected the air quality in New Jersey and Connecticut. *fn17
In fact, by 1998 New Jersey was aware that plants in Pennsylvania, including the Portland Plant, may have affected the air quality in New Jersey. *fn18
Although plaintiffs were generally aware that emissions from the Portland Plant potentially affected the air quality of New Jersey and Connecticut, information about specific construction projects undertaken by MetEd was not readily available to plaintiffs.
MetEd submitted limited information about some projects to federal and Pennsylvania regulatory agencies. However, the record is not clear on whether these filings were publically available or otherwise available to plaintiffs. *fn19
Additionally, although MetEd's filings with the regulatory agencies refer to various repair and maintenance projects which were undertaken at the Portland Plant, the information submitted did not indicate that MetEd expected that the future projects would lead to an increase in emissions at Portland. Nor did the documents indicate that previously completed projects led to an increase in emissions at the Plant.
On January 10, 2001, pursuant to Section 114 of the Clean Air Act *fn20 , the EPA requested that Reliant Energy Incorporated (the owner of the Portland Plant at that time) provide the EPA with "a list of all capital projects greater than $100,000 for which physical construction commenced after January 1, 1978", together with specified records pertaining to those projects. *fn21
At some point after that, New Jersey requested to be designated as an authorized representative of the United States pursuant to the Clean Air Act. *fn22
On July 15, 2003 the EPA granted New Jersey's request to be designated as an authorized representative. Once it was designated as an authorized representative, New Jersey was permitted to access the documents and records which MetEd had submitted to the EPA pursuant to the EPA's Section 114 request. *fn23
After reviewing these documents, New Jersey initiated this action on December 18, 2007 against MetEd and the GenOn defendants asserting violations of the PSD provisions of the Clean Air Act.
CONTENTIONS OF THE PARTIES
MetEd contends that all of plaintiffs' claims against MetEd are barred by the applicable statute of limitations. Specifically, MetEd contends that a five-year statute of limitations set forth in 28 U.S.C. § 2462 applies to civil suits brought under the Clean Air Act and that plaintiffs' claims against MetEd were not timely filed. Accordingly, MetEd contends that it is entitled to summary judgment on Claims 1, 2, 4, 7, 8, 9 and 12, the remaining claims asserted against it.
MetEd contends that the decision of the United States Supreme Court in Gabelli v. Securities and Exchange Commission, 568 U.S. , 133, S.Ct. 1216, L.Ed.2d (2013), precludes application of the discovery rule to 28 U.S.C. § 2462, which sets a five-year statute of limitations for actions for civil penalties, such as this one.
However, MetEd also contends that, even if the discovery rule can apply to § 2462, the discovery rule does not apply to toll the statute of limitations in this case because plaintiffs did not exercise reasonable diligence in investigating whether MetEd had violated the Clean Air Act. MetEd asserts that sufficient information was available to plaintiffs to place them on inquiry notice of their potential claims more than five years prior to the filing of this lawsuit.
Additionally, MetEd asserts that the doctrine of equitable tolling does not apply in this case because plaintiffs have not shown that they pursued their rights diligently or that MetEd actively misled them.
Plaintiffs' Contentions *fn24
Plaintiffs contend that summary judgment is not appropriate because their claims are not barred by the statute of limitations. Plaintiffs agree that the five year statute of limitations set forth in 28 U.S.C. § 2462 is applicable to their claims. However, plaintiffs contend that the discovery rule and doctrine of equitable toll the applicable statute of limitations.
Plaintiffs contend that the Gabelli holding is not applicable to this case because unlike Gabelli, which was an enforcement action brought by Securities Exchange Commission, this case involves a citizen suit brought to enforce the Clean Air Act.
Moreover, plaintiffs contend that the damages available under the Clean Air Act, as opposed to the damages available under the Investment Advisers Act, as in Gabelli, favor application of the discovery rule because the Clean Air Act authorizes mitigation projects in addition to civil penalties for violations. Accordingly, plaintiffs contend that the Gabelli decision does not preclude applying the discovery rule to 28 U.S.C. § 2462.
Applying the discovery rule to this case, plaintiffs contend that their claims are timely because MetEd has not established that plaintiffs failed to exercise reasonable diligence in investigating whether a Clean Air Act violation occurred. More specifically, plaintiffs assert that they had no reason to suspect that the Portland Station had undergone physical changes which would result in an increase in the emission of sulfur dioxide or nitrogen dioxide.
Plaintiffs contend that they could not obtain sufficient information to evaluate whether MetEd violated the Clean Air Act until plaintiffs were granted authorized representative status by the EPA in September 2003 and entered into a confidentiality agreement with Reliant Incorporated.
Accordingly, plaintiffs contend that their claims are timely because they were filed within five years of September 2003, the point at which plaintiffs reasonably could have discovered MetEd's Clean Air Act violations.
In addition to the discovery rule, plaintiffs contend that the doctrine of equitable tolling is applicable in this case because MetEd did not fulfill its statutory duty to provide Pennsylvania Department of Environmental Protection and the EPA with information regarding prospective emissions prior to undertaking a physical change to the Plant. Plaintiffs assert that MetEd's failure to report a major modification to the appropriate regulatory agencies prevented plaintiffs from discovering MetEd's Clean Air Act violations and therefore tolled the applicable statute of limitations.
Finally, plaintiffs contend that because the Portland Plant is still in operation, and because PSD permits impose ongoing obligations on owners and operators, plaintiffs are permitted to recover based on MetEd's conduct which occurred outside the statute of limitations pursuant to the continuing violations doctrine.
Accordingly, plaintiffs contend that MetEd's motion for summary judgment should be denied.
Statute of Limitations The Clean Air Act does not specify a limitations period for when an enforcement action must brought. Accordingly, the general federal statute of limitations applies to the Clean Air Act. United States v. Illinois Power Company, 245 F.Supp.2d 951, 954 (S.D. Ill. 2003).
Title 28 of the United States Code Section 2462 provides, in pertinent part:
Except as otherwise provided by Act of Congress, an action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise, shall not be entertained unless commenced within five years from the date when the claim first accrued....
28 U.S.C. § 2462.
By the plain language of § 2462, the statute of limitations begins to run when the claim accrues. As a general matter, a cause of action "accrues" when it has come into existence as an enforceable claim or right." William A. Graham Company v. Haughey, 646 F.3d 138, 146 (3d Cir. 2011) quoting Black's Law Dictionary (9th ed. 2009). In other words, a claim accrues when all elements of the cause of action have objectively come into existence. Id.
Here, MetEd completed the projects without PSD permits allegedly in violation of the Clean Air Act between 1982 and 1998. MetEd ceased operating the Plant in November 1999. New Jersey did not file this lawsuit until 2007, more than five years after MetEd's allegedly unlawful conduct.
However, in certain circumstances the "discovery rule", "doctrine of equitable tolling", or "continuing violations doctrine" permit claims to be brought outside the statute of limitations period.
The discovery rule provides that the limitations period is tolled until "events occur or facts surface which would cause a reasonably prudent person to become aware that she or he has been harmed." William A. Graham Company, 646 F.3d at 150 quoting Epstein v. C.R. Bard, Inc., 460 F.3d 183, 187 (1st Cir. 2006). *fn25
Earlier in this case, I held that the discovery rule could be applied to toll the statute of limitations, as provided by 28 U.S.C. § 2462, to actions brought under the Clean Air Act. See State of New Jersey v. Reliant Energy Mid-Atlantic Power Holdings, LLC, 2009 U.S.Dist. LEXIS 91617 at *36 (E.D.Pa. Sep. 30, 2009) (Gardner, J.). *fn26
Accordingly, I denied MetEd's motion to dismiss and indicated that plaintiffs claims would be timely if plaintiffs could establish that their claims were brought within five years of when they knew, or through the exercise of reasonable diligence, should have known about the facts giving rise to their claims. See Reliant Energy Mid-Atlantic Power Holdings, LLC, 2009 U.S.Dist. LEXIS 91617 at *38.
However, on February 27, 2013 the United States Supreme Court issued a decision in Gabelli v. Securities and Exchange Commission, 568 U.S. , 133 S.Ct. 1216, L.Ed.2d (2013). *fn27
MetEd contends that this decision precludes applying the discovery rule to the statute of limitations, regardless of whether plaintiffs exercised reasonable diligence in investigating their claims. For the following reasons, I agree with MetEd.
In Gabelli, the Securities and Exchange Commission brought a civil enforcement action against Marc Gabelli and Bruce Alpert for violations of the Investment Advisors Act, 15 U.S.C. § 80b-9. 2013 U.S. LEXIS 1861 at *7. As part of such an enforcement action, the Investment Advisors Act provides that the SEC may seek civil penalties for violations, in which the five-year statute of limitations set forth in 28 U.S.C. § 2462 applies. Id. at *6.
The District Court dismissed the SEC's complaint as untimely. However, the United States Court of Appeals for the Second Circuit reversed, concluding that for violations which sound in fraud, "[u]nder the discovery rule, the statute of limitations for a particular claim does not accrue until that claim is discovered, or could have been discovered with reasonable diligence, by the plaintiff." Id. at *9 quoting Securities and Exchange Commission v. Gabelli, 653 F.3d 49, 59 (2d Cir. 2011).
On review, the United States Supreme Court considered whether, under the "general statute of limitations for civil penalty actions,...the five-year clock begins to tick when the fraud is complete or when the fraud is discovered." Gabelli, 2013 U.S. LEXIS 1861 at **5-6.
In reversing the Second Circuit, the Supreme Court held that there was no "textual, historical, or equitable reasons to graft a discovery rule on the statute of limitations of §2462". Id. at *21. Accordingly, the Court held that the discovery rule did not apply to government enforcement actions for civil penalties. Id.
Plaintiffs attempt to distinguish Gabelli from this case. First, plaintiffs contend that the Gabelli decision applies SEC enforcement actions only, and does not preclude application of the discovery rule to actions brought under the Clean Air Act.
However, in Gabelli the Supreme Court made clear that the limitations period provided by 28 U.S.C. § 2462 "is not specific to the Investment Advisers Act, or even to securities law". Instead, § 2462 provided a general statute of limitations which "governs many penalty provisions throughout the U.S. Code." Id. at *7.
Nothing in the Gabelli decision indicated that it was analyzing § 2462 as applied to the SEC specifically. In fact, the Court indicated that applying the discovery rule to any government enforcement action was not practicable because it "is unclear whether and how courts should consider agency priorities and resource constraints in applying that test to Government enforcement actions." Id. at *19 citing 3M Co. v. Browner, 17 F.3d 1453, 1461 (D.C. Cir. 1994) *fn28.
Accordingly, the fact that plaintiffs' action is brought pursuant to the Clean Air Act, rather than the Investment Advisers Act, does not provide a basis to apply the discovery rule.
Next, plaintiffs assert that this case is distinguishable from Gabelli because plaintiffs' are a non-regulating state government seeking relief pursuant to a citizen suit provision of the Clean Air Act, as opposed to a government agency, such as the SEC.
This position has some support within the Gabelli decision. In explaining why applying the discovery rule did not apply to § 2462, the Supreme Court reasoned that the SEC "is not like an individual victim who relies on apparent injury to learn of a wrong", but rather "a central 'mission' of the Commission is to 'investigat[e] potential violations of the federal securities laws.'" Gabelli, 2013 U.S. LEXIS 1861 at *16 quoting SEC, Enforcement Manual 1 (2012).
Plaintiffs contend that because they do not have regulatory authority over defendants or the Portland Plant, plaintiffs are not in the same position as the SEC in Gabelli, or as the EPA or the Pennsylvania Department of Environmental Protection ("PADEP") to discover violations of the Clean Air Act in this case.
However, applying the discovery rule to citizen suits, but not enforcement actions brought by the government would make little sense. The citizen suit provision of the Clean Air Act "created 'private attorneys general' to aid in enforcement. Natural Resources Defense Counsel, Inc. v. Environmental Protection Agency, 484 F.2d 1331, 1337 (1st Cir. 1973); see also Public Interest Research Group of New Jersey, Inc. v. Magnesium Elektron, Inc., 123 F.3d 111, 114 (3d Cir. 1997), which held that "citizen suits supplement government efforts to enforce the [Clean Water] Act." In fact, in previous filings plaintiffs readily admitted that they "stand in the shoes" of the federal government. *fn29
Accordingly, the statute of limitations under 28 U.S.C. § 2462 as applied to citizen suits should not be tolled "beyond that applicable to the government." Public Interest Research Group of New Jersey, Inc. v. Powell Duffryn Terminals, Inc., 913 F.2d 64, 76 (3d Cir. 1990).
Moreover, in "any action" brought pursuant to the Clean Air Act, the EPA, "if not a party, may intervene as a matter of right at any time in the proceeding." 42 U.S.C. § 7604(c). Therefore, applying the discovery rule to citizen suits, but not to the government, would create an untenable scenario in which the statute of limitations would bar the government's claim under the Clean Air Act, but the government could intervene in a citizen suit deemed timely based on the discovery rule. *fn30
Therefore, the fact that plaintiffs' action was brought as a citizen suit does not provide a basis to apply the discovery rule.
Plaintiffs also contend that Gabelli is distinguishable because the Clean Air Act provides for "beneficial mitigation projects" which serve to compensate plaintiffs for unlawful and excessive air pollution, rather than punish violators of the Act.
In Gabelli, in explaining why the discovery rule did not apply, the Supreme Court stated that the government "is not only a different kind of plaintiff, it seeks a different kind of relief." Gabelli, 2013 U.S. LEXIS 1861 at *17. Specifically, the court noted that actions for civil penalties are intended to punish culpable individuals rather than provide compensatory damages. Id.
Plaintiffs contend that the remedies available to plaintiffs are restorative and compensatory in nature and therefore the relief sought is not the same as the relief the SEC sought in Gabelli. Accordingly, plaintiffs contend that the discovery rule should apply to Clean Air Act violations.
However, the discovery rule exists to "preserve the claims of victims who do not know they are injured and who reasonably do not inquire as to any injury". Id. at *15. Its application hinges on the nature of an injury, not on what remedies are available. *fn31
The prevention of significant deterioration (PSD) provisions of the Clean Air Act require sources to obtain a permit prior to commencing a project which qualifies as a major modification. See United States v. Ohio Edison Company, 276 F.Supp.2d 829, 834 (S.D.Ohio 2003). Accordingly, even if the actual emissions after the project do not amount to a "significant increase", a source may nevertheless violate the Clean Air Act if it failed to seek a permit, or analyze projected emissions before undertaking the project. Id.
Therefore, the nature of the violation for failing to obtain a PSD permit under the Clean Air Act is not the type of injury contemplated by the discovery rule. In fact, plaintiffs contend that in certain circumstances actual emissions are not even relevant to determining whether a source violated the PSD provisions of the Clean Air Act. *fn32
Therefore, just like the SEC in Gabelli, plaintiffs are seeking a "different kind of relief". Gabelli, 2013 U.S. LEXIS 1861 at *17. Specifically, they are seeking an "appropriate civil penalty" against MetEd for its "violations of the Act". *fn33
The availability of remedial projects is not relevant to whether the discovery rule is applicable to § 2462 for actions brought under the Clean Air Act.
Accordingly, I conclude that the Gabelli decision precludes applying the discovery rule to § 2462. *fn34
However, plaintiffs contend that even if the discovery rule does not apply, their claims against MetEd are timely because the doctrine of equitable tolling applies and because PSD violations are continuing violations.
My September 30, 2009 Opinion held that the doctrine of equitable tolling could provide a basis to toll the limitations period set forth under 28 U.S.C. § 2462. Unlike the discovery rule, the Gabelli decision does not provide a basis to reconsider that decision. *fn35
In contrast to the discovery rule, which "keys on plaintiff's cognizance, or imputed cognizance, of actual injury", equitable tolling "keys on a plaintiff's cognizance, or imputed cognizance, of the facts supporting the plaintiff's cause of action." Wilson v. King, 2010 WL 1071651 at *5, n.8 (E.D.Pa. Mar. 22, 2010) (Tucker, J.).
Under the doctrine of equitable tolling, a statute of limitations can be tolled when principles of equity would make its rigid application unfair. Such a situation arises if (1) defendant has actively misled plaintiff; (2) plaintiff has in some extraordinary way been prevented from asserting his rights; or (3) plaintiff has timely asserted his rights mistakenly in the wrong forum. Urcinoli v. Cathel, 546 F.3d 269, 272 (3d Cir. 2008).
However, equitable tolling is an "extraordinary remedy which should be extended only sparingly." Hedges v. United States, 404 F.3d 744, 751 (3d Cir. 2005). The plaintiff bears the burden of showing that equitable tolling applies. Id. Moreover, like the discovery rule, the doctrine of equitable tolling requires plaintiff to take reasonable measures to uncover the existence his claim. Wilson v. King, 2010 WL 1071651 at *5, n.8.
Plaintiffs contend that the doctrine of equitable tolling applies to their claims. Specifically, plaintiffs assert that, despite a statutory obligation to the contrary, MetEd failed to conduct a PSD analysis or apply for a permit prior to commencing the projects that provide the basis for plaintiffs' claims. Moreover, plaintiffs contend that MetEd did not report these major modifications to PADEP or the EPA.
However, plaintiffs have not produced any evidence indicating that MetEd "actively misled" them. Therefore, I conclude that plaintiffs' have failed to meet their burden to establish that the doctrine of equitable tolling applies.
Generally, applying the doctrine of equitable tolling based on fraudulent concealment requires affirmative acts of concealment. Accordingly, "mere silence, or one's unwillingness to divulge one's allegedly wrongful activity is not sufficient." United States v. Tillson, 2004 U.S.Dist. LEXIS 22246 at *73 (W.D.Ky. Sep. 29, 2004). However, affirmative acts are not required in cases founded upon fraud or breach of fiduciary duty. Id.
Here, plaintiffs do not cite any evidence in the record, which indicates that MetEd actively misled them. In fact, Gary S. Rose, Connecticut's 30(b)(6) witness, stated that he was not aware of anything MetEd did which prevented Connecticut from bringing its claims earlier. *fn36
In fact, plaintiffs could not identify what led them to seek representative status from the EPA, which was what provided them with sufficient information to determine that PSD violations had occurred. Plaintiffs have not asserted that any actions by MetEd delayed plaintiffs from seeking representative status. *fn37
Additionally, while plaintiffs assert that MetEd failed to self-report major modifications to the EPA and state regulatory agencies, as required by the Clean Air Act, plaintiffs admit that pollution "sources are not required to seek pre-project applicability determinations from the EPA." *fn38
A source that does not seek pre-project applicability determinations from the EPA may do so at the risk of violating the PSD provisions of the Clean Air Act. *fn39 However, "mere silence, or one's unwillingness to divulge one's allegedly wrongful activity is not sufficient" to establish the applicability of the doctrine of equitable tolling. See Tillson, 2004 U.S.Dist. LEXIS 22246 at *73.
Plaintiffs have not provided any authority to support their proposition that the failure to apply for a PSD permit, alone, is sufficient to trigger the doctrine of equitable tolling. *fn40 Moreover, such a position is not consistent with the principle that equitable tolling serves as an "extraordinary remedy which should be extended only sparingly." Hedges, 404 F.3d at 751.
Therefore, MetEd's failure to conduct, and report, a pre-construction PSD analysis of its projects, without evidence that MetEd took actions to conceal its alleged violations, is insufficient to justify applying the doctrine of equitable tolling. *fn41
Although I conclude that plaintiffs have not produced sufficient evidence to invoke the doctrine of equitable tolling, I still must consider whether plaintiffs' claims are timely pursuant to the "continuing violation" doctrine. *fn42
The continuing violations doctrine is an equitable exception to the timely filing requirement. Cowell v. Palmer Township, 263 F.3d 286, 292 (3d Cir. 2001). The doctrine provides that "when a defendant's conduct is part of a continuing practice, an action is timely so long as the last act evidencing the continuing practice falls within the limitations period".
Id. quoting Brenner v. Local 514, United Brotherhood of Carpenters and Joiners of America, 927 F.2d 1283, 1295 (3d Cir. 1991).
Accordingly, when the continuing violations doctrine applies, relief may be granted based on conduct that would otherwise be time barred. Cowell, 263 F.3d at 292.
In order to benefit from the doctrine, a plaintiff must establish that the defendant's conduct is "more than the occurrence of isolated or sporadic acts." Id. In determining the applicability of the continuing violations doctrine, courts should consider (1) subject matter -- whether the violations are of the same type, tending to connect them in a continuing violation; (2) frequency --- whether the acts are recurring or more in the nature of isolated incidents; and (3) degree of permanence --- whether the act had a degree of permanence which should trigger the plaintiff's awareness of and duty to assert his rights. See Id.
Plaintiffs contend that prevention of significant deterioration violations are ongoing and therefore their claims against MetEd are timely under the continuing violations doctrine. To support this contention, plaintiffs contend that, in denying the GenOn defendants' motion to dismiss, my September 30, 2009 Opinion held that PSD violations are ongoing. *fn43
However, plaintiffs overstate the implications of my previous holding. In my September 30, 2009 Opinion I held that "an owner or operator may be held liable for failure to comply with [Clean Air Act] standards simply because its predecessor owner failed to secure the appropriate permit." *fn44 My holding was based on concluding that a PSD permit, which was not obtained by MetEd, would have required utilizing the best available control technology, and that the GenOn defendants continued to operate the Portland Plant without that technology. *fn45
Although I concluded that the PSD provisions impose ongoing obligations on an owner or operator of a plant, I did not conclude that PSD violations were "continuing violations", which would permit plaintiffs to recover for conduct outside the limitations period. *fn46
Here, however I do not need to consider whether violations of the PSD provisions of the Clean Air Act constitute continuing violations because even if the continuing violations doctrine generally applies to Clean Air Act violations, it does not apply to plaintiffs' claims against MetEd in this case.
In November 1999 MetEd sold the Plant to Sithe Energies, Inc. Therefore, even if MetEd's operation of the Plant without a permit was a continuing violation, MetEd's last unlawful act could not have occurred after November 1999. Under the continuing violations doctrine, an action is timely only if "the last act evidencing the continuing practice falls within the limitations period". Cowell, 263 F.3d at 292.
Because MetEd ceased operation of the Plant in 1999 and plaintiffs did not file this action until 2007, the continuing violations doctrine does not provide a basis to permit plaintiffs to obtain relief for MetEd's alleged violations, which occurred outside the statute of limitations.
The conduct, which provides the basis for plaintiffs claims against MetEd, occurred in November 1999 at the latest. This action was not filed until 2007, more than 5 years after the allegedly unlawful conduct.
Because the discovery rule does not apply to the applicable statute of limitations, because plaintiffs have not provided sufficient evidence to invoke the doctrine of equitable tolling, and because even if the continuing violations doctrine were applicable, it would not render plaintiffs' claims timely, plaintiffs' claims against MetEd are barred by the statute of limitations.
Therefore, for all of the foregoing reasons, I grant MetEd's motion for summary judgment and dismiss plaintiffs' claims asserted against MetEd.