United States v. U.S. Steel Corp.

Decision Date21 August 2013
Docket NumberNo. 2:12–cv–304.,2:12–cv–304.
Citation966 F.Supp.2d 801
PartiesUNITED STATES of America, et al., Plaintiffs, v. UNITED STATES STEEL CORPORATION, Defendants.
CourtU.S. District Court — Northern District of Indiana


Arnold Stephen Rosenthal, Iva Ziza, U.S. Department of Justice, Washington, DC, Wayne T. Ault, U.S. Attorney's Office, Hammond, IN, Timothy J Junk, Valerie M. Tachtiris, Indianapolis, IN, Neil David Gordon, Michigan Department of Attorney General, Lansing, MI, Rachel R. Medina, Illinois Attorney General's Office, Springfield, IL, for Plaintiffs.

J. Van Carson, Emily Louise Seidman, John D. Lazzaretti, Squire Sanders, Cleveland, OH, David W. Hacker, United States Steel Corporation, Pittsburgh, PA, Terence M. Austgen, Burke Costanza & Carberry LLP, Merrillville, IN, for Defendants.


PHILIP P. SIMON, Chief Judge.

The Environmental Protection Agency and three similar state entities from Indiana, Michigan, and Illinois initiated this action against U.S. Steel in an 18–count complaint. (For simplicity's sake, I will refer to the Plaintiffs in this case collectively as the EPA). The EPA alleges that three of U.S. Steel's plants—one in each of the three states—are and have been violating the Clean Air Act. U.S. Steel says its done no such thing, but the merits of the case will be decided later. The only thing presently before me is whether Count 1 and parts of Count 3 are barred by the applicable statute of limitations and must therefore be immediately dismissed. As explained in detail below, I only buy half of that argument. U.S. Steel's Motion to Dismiss will therefore be granted in part and denied in part.


In 1990, U.S. Steel performed a “reline” of its No. 4 furnace at its Gary Works facility in Gary, Indiana. A reline is the process whereby the furnace is completely shut down and the interior lining is updated. The legal issues raised in U.S. Steel's motion to dismiss all really emanate from this 1990 relining. One might reasonably wonder why a court in the year 2013 is dealing with actions taken by a company some 23 years earlier; U.S. Steel is wondering the same thing. In all events, U.S. Steel believes it could do the relining of the furnace without a permit, but the EPA disagrees. To understand the parameters of this disagreement, we have to dive into obscure world of the Clean Air Act (“CAA”), its regulations, and the myriad of acronyms that flow from them.

Here's a broad outline of the parts of the CAA applicable to this case. The CAA establishes two types of air permits: construction permits and operating permits. Both types of permits are at issue in this case. The construction permitting program emerged from the 1977 amendments to the CAA which required all new “sources”—factories, power plants, refineries, etc.—to undergo a “New Source Review”(NSR). Under the NSR process, all post–1977 sources are required to meet various emission limits for pollutants. NSR consists of two programs—prevention of significant deterioration in air quality (PSD) and non-attainment with air quality standards (NA/NSR). Both of those programs are at issue in this case, but the differences are fairly immaterial to U.S. Steel's motion to dismiss, so to simplify matters I'll just refer to the whole construction permitting process as “NSR.”

Under the NSR program, the new source must obtain a pre-construction permit from the EPA, demonstrate that the construction will not increase emissions above a certain threshold, and show that facility operations are in continuous compliance with the best available control technology (BACT). The NSR permit then specifies what construction is allowed, what emission limits must be met, and how often the emissions source must be operated.

In addition to these construction permits, most sources also have to obtain operating permits, which are known as Title V permits. A Title V permit grants a source permission to operate, and it includes all air pollution requirements that apply to the source, including emissions limits and monitoring, record keeping, and reporting requirements.

Most of this CAA permitting—both NSR and Title V—is actually done at the state level. The EPA establishes the basic requirements for the CAA, and states can then take those minimum thresholds and develop their own unique requirements and procedures in what is called a State Implementation Plan (“SIP”). Indiana has codified its SIP at Titles 326 and 327 of the Indiana Administrative Code. Indiana's SIP generally seems to mirror the federal requirements, including requirements that new sources must obtain a pre-construction NSR permit and install BACT.

All of this applies to new sources, those built after 1977. The Gary Works plant, however, has a lot of dust on it; steel production began there in the early part of the last century. That doesn't take the plant out of the regulatory woods, however, because the CAA says that even pre–1977 plants must comply with the NSR permitting program any time a “major modification” is made to them. Enter the 1990 relining project. U.S. Steel concluded that the reline wasn't a major modification, so it didn't bother seeking a preconstruction NSR permit. Then, in 1996, U.S. Steel applied for a Title V operating permit, which was eventually issued by the state of Indiana. The EPA now argues that the 1990 reline was a major modification, that U.S. Steel thus should have sought a preconstruction NSR permit, and that consequently the Title V permit was improperly granted and should be invalidated. More specifically, the EPA alleges in Count 1 that U.S. Steel performed a major modification, which violated the CAA and Indiana's SIP by operating Gary Works without an NSR permit and without BACT. In Count 3, the EPA alleges that U.S. Steel is operating Gary Works in violation of the Title V permitting program under the CAA and Indiana's SIP.

Whether or not the 1990 reline was a major modification is likely to be a difficult question to answer. See, e.g., U.S. v. Midwest Generation, LLC, 720 F.3d 644, 645 (7th Cir.2013) (“The question ‘how much repair or change requires a permit?’ has been contentious and difficult.”). But that substantive question is not yet at issue here. Instead, the key question in U.S. Steel's motion to dismiss is procedural: Did the EPA blow the statute of limitations by waiting until 2012 to file a lawsuit about the 1990 reline?


A motion to dismiss pursuant to Rule 12(b)(6) “challenges the sufficiency of the complaint to state a claim upon which relief may be granted.” Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir.2009). A plaintiff's failure to adhere to a statute of limitations is an affirmative defense and “is rarely a good reason to dismiss under Rule 12(b)(6).” Reiser v. Residential Funding Corp., 380 F.3d 1027, 1030 (7th Cir.2004). At the motion to dismiss stage, “the question is only whether there is any set of facts that if proven would establish a defense to the statute of limitations[.] Clark v. City of Braidwood, 318 F.3d 764, 768 (7th Cir.2003). A plaintiff need not anticipate affirmative defenses in his complaint in order to survive a motion to dismiss. United States v. Lewis, 411 F.3d 838, 842 (7th Cir.2005) (citing Gomez v. Toledo, 446 U.S. 635, 640, 100 S.Ct. 1920, 64 L.Ed.2d 572 (1980)); see also Indep. Trust Corp. v. Stewart Info. Serv. Corp., 665 F.3d 930, 935 (7th Cir.2012). “The exception occurs where ... the allegations of the complaint itself set forth everything necessary to satisfy the affirmative defense, such as when a complaint plainly reveals that an action is untimely under the governing statute of limitations.” Lewis, 411 F.3d at 842 (citing Leavell v. Kieffer, 189 F.3d 492, 495 (7th Cir.1999)).

The applicable statute of limitations here is 28 U.S.C. § 2462, which states:

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 if, within the same period, the offender or the property is found within the United States in order that proper service may be made thereon.

Count 1 and Count 3 of the Complaint seek both injunctive relief and civil penalties. Section 2462 explicitly applies to the latter remedy, but it is less clear whether it applies to the former. As explained in detail below, I ultimately conclude that Section 2462 does not apply to claims for injunctive relief, but does apply to claims for civil penalties. I'll start by analyzing the question of civil penalties, and then turn to the more difficult issue of injunctive relief.

Before moving to this analysis, however, I need to clear up one issue with respect to how Counts 1 and 3 are interrelated. The EPA argues that the Counts should be independently analyzed: “Regardless of how the Court decides the issue of whether NSR violations are ongoing, as Plaintiffs urge, or one-time past violations, as Defendant argues, the Court should deny Defendant's Motion with regard to Plaintiffs' Third Claim.” [DE 20 at 38.]

I disagree, and will instead analyze both Counts in the same way here. Here's why. The main focus of the motion to dismiss really has to do with Count 1 of the Complaint, which is entirely centered on the NSR permitting process related to the 1990 reline. Count 3 deals with the Title V permitting process. The 1990 reline is only one part of Count 3, and U.S. Steel has only moved to dismiss the paragraphs in Count 3 that deal specifically with the 1990 reline (not all of Count 3). The central conceit of Count 3 is that U.S. Steel's Title V permit has numerous deficiencies, one of which is that U.S. Steel's application for the permit lacked information about the 1990 reline. More specifically, Count 3 asserts that since U.S. Steel did not have an NSR preconstruction permit for...

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