Developer to Pay Up for Abandoned Coal Plant

CHICAGO (CN) - A power plant developer cannot dodge a $100,000 penalty and award of attorneys' fees to the Sierra Club after the environmental group blocked construction of a coal plant in southern Illinois, the 7th Circuit ruled.

Franklin County Power, EnviroPower and Khanjee Holding applied to the Illinois Environmental Protection Agency for a permit to build a coal power plant in 2000. After receiving a permit in 2001, construction began in early 2003.

But the site was abandoned after business disputes brought construction to a standstill. When lease payments stopped, the landlord refilled the excavation site.

EPA permits become invalid if construction is not commenced within 18 months of approval or has been discontinued for more than 18 months.

On Nov. 19, the EPA "made a preliminary finding" that the permit had lapsed.

Six months later, the Sierra Club filed suit, alleging that the permit had expired and seeking to enjoin further construction of the plant until a new permit was obtained. Ruling that construction had never commenced on the site, U.S. District Judge J. Phil Gilbert granted the motion.

The court then imposed a $100,000 civil penalty on all defendants jointly, to be paid to local chapters of Habitat for Humanity. Gilbert also awarded the Sierra Club almost $400,000 in attorneys' fees and costs. Khanjee appealed these awards, but was not joined by Franklin County Power or EnviroPower.

The 7th Circuit rejected Khanjee's various challenges to the ruling, finding that the award was well within the District Court's discretion.

"The Clean Air Act authorizes suits against entities who construct or propose to construct facilities without a permit," Judge Annn Claire Williams wrote for a three-judge panel.

"When a party prevails under [the act] as the Sierra Club did here, the district court is authorized in its discretion to 'apply any appropriate civil penalty,'" she added.

In fact, Khanjee may have gotten off easy, according to the 11-page decision. The company's clean environmental record and failure to profit from the violation prevented a much higher fine.

"Courts generally presume that the maximum penalty under the Clean Air Act should be imposed, and then consider ... what degree of mitigation, if any, is proper," Williams wrote.

"The district court concluded that the maximum penalty it could award was $41,712,500 for the defendants' continued attempts to build the power plant after [the site permit] expired, but imposed a $100,000 [fine] after considering the statutory factors," she added.

"In this case, we are not confronted with a defendant who lacked knowledge of the circumstances surrounding the violation," Williams wrote, noting that the court has "expressed discomfort with the idea that a penalty may be imposed where a defendant is unaware of a violation."

Franklin County Power, EnviroPower and Khanjee Holding currently operate 12 U.S. power plants.

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