The Scope of CAAP Application Shields at Issue

By Kristen Gale

On March 22, 2023, the Sierra Club sued the Prairie State Generating Company, LLC, alleging that Prairie State is operating without a Clean Air Act operating permit (or “CAAPP Permit”) under Illinois Law because Illinois EPA had not acted on Prairie State’s permit application. Southern District of Illinois. Sierra Club v. Prairie State Generating Company, LLC, case no. 3:23-cv-00919.

Prairie State submitted an application for a CAAPP Permit to Illinois EPA in 2010 and started operating in 2012. To date, Illinois EPA has not issued a permit. Sierra Club alleges in its complaint that by operation of Section 39.5(5)(j) of the Illinois Environmental Protection Act, Illinois EPA’s failure to issue the permit within 24 months of the application is a final action that constitutes a constructive denial of the permit. Thus, Sierra Club alleges that Prairie State has operated without a CAAPP Permit in violation of Section 39.5 of the Act and Section 502(a) of the Clean Air Act. 415 ILCS 5/39.5; 42 U.S.C. § 7661a(a).

Section 39.5(5)(h) of the Act states that an owner or operator of a CAAPP source that has submitted a timely and complete CAAPP application may operate that source “until the Agency takes final action on the submitted CAAPP application.” 415 ILCS 5/39.5(5)(h). Section 39.5(5)(h) states that the Illinois EPA must issue or deny the CAAPP permit within 18 months after the date of receipt of a complete CAAPP Permit renewal application, or within 24 months after receipt of a new permit application.  “Final permit action” means the … Agency’s failure to act on an application for a permit, permit renewal, or permit revision within the time specified in subsection 13, subsection 14, or paragraph (j) of subsection 5 of this Section. 415 ILCS 5/39.5(1). “Where the Agency does not take final action on the permit within the required time period, the permit shall not be deemed issued; rather, the failure to act shall be treated as a final permit action for purposes of judicial review pursuant to Sections 40.2 and 41 of this Act.” 415 ILCS 5/39.5(5)(j).

Permit applicants have filed appeals under Section 39.5(5)(j) of the Act to compel the Illinois EPA to act on an application.  In PartyLite Worldwide, Inc. v. Illinois EPA.  PartyLite appealed the Illinois EPA’s failure to issue a CAAPP Permit for about three years. PCB08-32 (March 20, 2008) 2008 Ill. ENV LEXIS 70. The Illinois EPA argued that the CAAPP permit process was involved and complicated and ordering it to act more quickly “would require the Agency to ‘run roughshod over’ the process.” Id. at *8. The Board disagreed. Finding that Section 39.5(5)(j) unequivocally requires the Agency to act and that the Agency offered no explanation for its inaction, the Board ordered the Illinois EPA to issue the permit within 120 days. Id. at *12-13.

USEPA has interpreted Section 39.5(5)(j) to mean that Illinois EPA can be sued to take action on a languishing permit application. However, USEPA stated that the permit is not denied after passage of the deadline. Instead, consistent with section 502(b)(7) of the Clean Air Act, Section 39.5(5)(j) is merely intended to prevent unreasonable delay by permitting authorities. Id. at 41. In the Matter of: United States Steel Corp.- Granite City Works, Permit No. V-2009-03, Order Responding to Petitioner’s Request that the Administrator Object to Issuance of State Operating Permit (Jan. 31, 2011), p. 41.

There are likely many CAAPP Permit applications pending with the Illinois EPA and each of the applicants could be subject to a similar lawsuit. If Sierra Club’s lawsuit succeeds, it could force these parties to file appeals with the Illinois Pollution Control Board to compel action on outstanding permit applications or face similar lawsuits.