Comply with your air permit and be sued anyway. That is what the Third Circuit has just held in Kristie Bell et al. v. Cheswick Generating Station et al., No.12-4216(3d Cir. Aug. 20, 2013). In brief, the Court held that the federal Clean Air Act does not preempt state common law property damage tort claims—even where the facility is in compliance with its air permit! The Third Circuit is the federal appeals court which covers Pennsylvania, New Jersey, Delaware, and the U.S. Virgin Islands.
The importance of this breathtaking decision to permitted entities cannot be overstated. A clear message has been delivered: the federal Clean Air Act and state Clean Air Acts are no longer in complete control of determining compliance with air emissions.
In short, even if a source is complying with the terms of its permit and meeting emission standards, it can be subject to being sued by environmental groups or those that live near the plant or facility for tort claims that were never anticipated. The protection that was envisioned by compliance with state operating permits by those operating compressor stations or refineries, for example, has been removed for common law tort claims.
This decision affects all air permit holders. A particular target will be companies in the midstream and downstream sectors of the oil and gas industry, refineries, and electric generating units. In the current atmosphere of aggressive litigation tactics by those who seek to oppose continued natural gas development or any use or development of fossil fuels in the Marcellus and Utica shale plays (as well as other shale plays in the United States), this case will be used as a club. This will fuel efforts by environmental advocacy groups and residents living near oil and gas operations to engage in private party and citizens’ group litigation. In other words, those groups can now pursue property damage claims against oil and gas companies even if those entities are complying with their Clean Air Act permits.
The decision revives a class action lawsuit previously dismissed by the U.S. District Court for the Western District of Pennsylvania. That class action commenced in April 2012 when two plaintiffs, Kristie Bell and Joan Luppe, filed nuisance and trespass claims against GenOn, the owner of the Cheswick Generating Station, a 570 megawatt coal-fired-electrical generation plant located in Springdale, Pennsylvania. See Bell vs. Cheswick Generating Station, 903 F. Supp. 2d 314, 314 (W.D. Pa. 2012). This suit was filed on behalf of 1,500 individuals who own or rent property within a mile of the Cheswick Generating Station. The plaintiffs alleged that the generating station emitted various hazardous substances (including arsenic, barium, chromium, copper, lead, and mercury compounds) into their neighborhood, causing substantial damage to the class members’ property and their ability to use and enjoy their homes. Id. at 315. The plaintiffs also charged that GenOn knew not only that the Cheswick Generating Station was improperly constructed to abate pollution, but also that it deliberately failed to use “best available technology” or air pollution control equipment. Id.
In July 2012, the district court dismissed the plaintiffs’ suit, finding that that the Clean Air Act provides a comprehensive regulatory that preempts the class’s tort law claims. Id. at 322. The district court further noted that this finding was necessary to preserve the ability of state regulators to make decisions about air emissions for individual plants in a manner that would be free of interference by third parties that may have differences of opinion about how a specific plant is regulated. Id.
In reversing this decision, the Third Circuit acknowledged that states are primarily responsible for ensuring compliance with the Clean Air Act and meeting the air quality standards set forth in their federally-approved state implementation plans. Bell vs. Cheswick Generating Station, No. 12-4216, slip. op. at 5-6 (3d. Cir. Aug. 20, 2013). But, the Court flatly disagreed with the district court’s view that the Clean Air Act prevents the filing of common law tort claims, noting that the Act explicitly preserves a citizen’s right to file suit regardless of the fact that states have the regulatory authority to determine what sources can emit in permits to operate. The Court was also not swayed by arguments advanced by the regulated community that allowing such tort claims—even where sources are in compliance with emission standards in their permits—would open a floodgate of nuisance claims that would create havoc with the principles of the Clean Air Act. Id. at 20-21.
One has to ask whether this decision creates the Clean Air Act-version of “no good deed goes unpunished.” The floodgates of air litigation are now open in the Third Circuit—even against the good guys.