In a successive appeal, the Seventh Circuit Court of Appeals has affirmed a district court decision imposing penalties and awarding fees in a case involving an expired air permit at an Illinois power plant. Sierra Club v. Khanjee Holding (US) Inc., No. 09-4008 (7th Cir. 8/24/11).

The Seventh Circuit had previously affirmed a district court’s determination that a prevention of significant deterioration (PS D) permit for the coal-fired power plant had expired and its injunction blocking further construction activities. Sierra Club v. Franklin County Power of Ill. LLC, 546 F.3d 918 (7th Cir. 2008). The district court then assessed a $100,000 civil penalty on three defendants and awarded nearly $376,000 in attorney’s fees and costs to the Sierra Club. One of those defendants, Khanjee Holding, appealed the penalty and fees.  

The appeals court rejected Khanjee’s arguments that the district court lacked subject matter jurisdiction, violated the company’s constitutional rights and erred in weighing statutory factors. According to the court, evidence produced at trial indicated that Khanjee effectively led efforts to build the power plant after the PS D permit expired in early 2003. The court also rejected Khanjee’s argument that CAA penalties can be imposed on owners and operators only, and, since it was a developer, no penalty should have been imposed. Citing United States v. B & W Investment Properties, 38 F.3d 362 (7th Cir. 1994), the court found that those who “lease, operate, control or supervise a stationary source may be liable.” The court ruled that the level of control Khanjee exercised was equivalent to that of an “owner/operator.”