In the

United States Court of Appeals

For the Seventh Circuit

No. 06-4045

SIERRA CLUB,

Plaintiff-Appellee,

v.

FRANKLIN COUNTY POWER OF ILLINOIS, LLC,

formerly known as ENVIROPOWER OF ILLINOIS, LLC, 

ENVIROPOWER, LLC, and KHANJEE HOLDING (US), INC.,

Defendants-Appellants.

Appeal from the United States District Court

for the Southern District of Illinois.

No. 05 C 4095—J. Phil Gilbert, Judge.

ARGUED OCTOBER 29, 2007—DECIDED OCTOBER 27, 2008

Before BAUER, RIPPLE, and WILLIAMS, Circuit Judges.

WILLIAMS, Circuit Judge. Franklin County Power of

Illinois, LLC, wants to build a coal power plant in

southern Illinois. Because the plant will emit a significant

amount of air pollution, the Company must first obtain

a “Prevention of Significant Deterioration” (PSD) permit

from the Illinois Environmental Protection Agency (IEPA),
2 No. 06-4045

the agency that the federal EPA has designated as the

issuer of PSD permits in Illinois. Although the IEPA

granted the Company a PSD permit in 2001, the IEPA has

since made a “preliminary determination” that the

permit has expired.

Sierra Club is a non-profit environmental organization

that sought to enjoin the Company from building the

power plant by bringing this suit against the Company, its

parent company EnviroPower, LLC, and Khanjee

Holding (US), Inc., under a citizen suit provision of the

Clean Air Act. Sierra Club alleged that the Company’s

2001 PSD permit had expired because the Company had

neglected to “commence construction” of the plant within

an 18-month window required under the permit. Sierra

Club also claimed the permit was invalid under EPA

regulations because the Company had discontinued

construction of the plant for over 18 months. The district

court agreed with Sierra Club on both points and granted

summary judgment in its favor. The court also permanently enjoined the Company from building the plant

until it obtained a new PSD permit, and the defendants

appealed to this court.

We agree with the district court that Sierra Club has

standing to pursue this lawsuit and that its claim is ripe

and permissible under the Clean Air Act. We also agree

that the 2001 PSD permit has expired and that the

district court properly granted permanent injunctive

relief in favor of Sierra Club. Therefore, we affirm the

district court’s grant of summary judgment in favor of

Sierra Club.
No. 06-4045 3

I. BACKGROUND

A. Statutory and regulatory framework

Sierra Club brought this suit under 42 U.S.C. § 7604(a)(3),

a citizen suit provision of the Clean Air Act, which provides in relevant part:

[A]ny person may commence a civil action on his

own behalf . . .

(3) against any person who proposes to

construct or constructs any new or

modified major emitting facility without a permit required under [42 USCS

§§ 7470 et seq.] (relating to significant

deterioration of air quality) . . . or who

is alleged to have violated (if there is

evidence that the alleged violation has

been repeated) or to be in violation of

any condition of such permit.

The parties agree that the coal power plant that the Company seeks to build is a “major emitting facility” that

requires a PSD permit. Such a permit contains an

emission limitation that is set by the IEPA and represents

the “best available control technology” for pollution. See

42 U.S.C. § 7475(a).

Once issued, a PSD permit can expire and become

invalid in three different ways:

[a] [I]f construction is not commenced within 18

months after receipt of such approval,

[b] if construction is discontinued for a period of

18 months or more, or
4 No. 06-4045

Sierra Club claims the permit only authorized a 500 MW, not

1

a 600 MW, facility. Because the defendants lost on summary

judgment, we construe all facts in the light most favorable to

them. See Rawoof v. Texor Petroleum Co., 521 F.3d 750, 755 (7th

Cir. 2008).

[c] if construction is not completed within a reasonable time.

40 C.F.R. § 52.21(r)(2). The IEPA Administrator “may

extend the 18-month period upon a satisfactory showing

that an extension is justified,” id.; otherwise, the PSD

permit terminates by “automatic expiration.” 40

C.F.R. § 124.5(g)(2) (“PSD permits may be terminated

only by recission under § 52.21(w) or by automatic expiration under § 52.21(r)(2).”).

B. Factual background

On August 15, 2000, the Company applied to the IEPA

for a PSD permit to build a 600 megawatt coal-fired

1

power plant in Benton, Illinois, on land for which it had

a 99-year lease. The IEPA concluded the project would

be a major air pollution source subject to PSD review. On

July 3, 2001, the IEPA issued a PSD permit for the plant.

The permit states it will become invalid if:

construction of CFB [circulating fluidized bed]

boilers is not commenced within 18 months after

this permit becomes effective, if construction of

these boilers is discontinued for a period of 18

months or more, or if construction of these boilers is

not completed within a reasonable period of time.
No. 06-4045 5

The permit defines “commence” and “construction” in

terms of 40 C.F.R. § 52.21(b)(9) and § 52.21(b)(8), respectively, which are provisions we will discuss in more

detail later.

On December 2, 2002, the Company entered into an

agreement with Black & Veatch (B&V), an engineering

and construction company, that required the parties to

“work together on an exclusive basis . . . in order to

draft and negotiate the EPC [Engineering, Procurement

and Construction] Contract.” On about December 18,

2002, the Company contracted with Alberici Constructors,

Inc., for on-site excavation and foundation work. Alberici

was to dig a hole at the site down to the bedrock and pour

concrete to lay part of the foundation for the plant. On

January 3, 2003, four Alberici employees began delivering

equipment to the site, and five days later, they began

excavating.

On February 14, 2003, Alberici stopped the excavation

after a dispute arose regarding payment. Alberici’s bills

after that date include one day where workers showed

up but did no work. All other days only include a supervisor’s hours spent maintaining a protective barricade

around the site.

In July 2004, the Company’s landlord had the hole

refilled, apparently because the Company did not make

a payment on its lease. In September 2004, the Company

signed another contract for excavation and concrete

work, which began anew on September 29, 2004. An

IEPA inspector visited the plant site shortly thereafter and determined that construction had commenced.
6 No. 06-4045

In the meantime, co-defendant Khanjee Holding (US),

Inc. had obtained an option to buy the Company and all

its assets. In June 2003, Khanjee affirmed its obligation to

adhere to the Company’s contract with B&V. In January

2004, the Company secured a mandate letter from its

lead financial arranger indicating that financing for the

project was available.

On November 19, 2004, the IEPA notified the Company

that it had “made a preliminary finding” that its PSD

permit had expired. The Company challenged this preliminary determination and as far as we know, that

matter remains pending before the IEPA.

On May 20, 2005, Sierra Club filed this suit, alleging that

the 2001 PSD permit had expired and was invalid. The

defendants moved to dismiss, claiming that the citizen

suit provision of the Clean Air Act did not provide a

basis for this suit. They also moved for summary judgment, claiming that Sierra Club lacked standing and that

the permit was valid. Sierra Club countered with its

own motion for summary judgment.

The district court denied the defendants’ motions and

found the permit to be invalid. It entered summary judgment in Sierra Club’s favor and permanently enjoined the

defendants from building the plant until they obtained

a valid permit. The defendants then filed this appeal.
No. 06-4045 7

II. ANALYSIS

A. Sierra Club had standing.

An organization has standing to sue if (1) at least one of

its members would otherwise have standing; (2) the

interests at stake in the litigation are germane to the

organization’s purpose; and (3) neither the claim asserted

nor the relief requested requires an individual member’s

participation in the lawsuit. See Friends of the Earth, Inc. v.

Laidlaw Env’l Servs. (TOC), Inc., 528 U.S. 167, 181 (2000)

(citing Hunt v. Washington State Apple Adver. Comm’n, 432

U.S. 333, 343 (1977)). The defendants do not seriously

contest that Sierra Club satisfies prongs (2) and (3). Sierra

Club is a nonprofit organization formed and operated

to “preserve, protect, and enhance the natural environment,” which is also its stated goal in bringing this lawsuit. The defendants also do not suggest this proceeding

requires an individual Sierra Club member to participate;

rather, they claim that Sierra Club has not presented an

individual member with standing. So the dispute here

turns on prong (1).

To have standing, an individual must satisfy three

requirements. First, she must have suffered an “injury in

fact” that is both (a) concrete and particularized and (b)

actual or imminent, not conjectural or hypothetical.

Second, the injury must be fairly traceable to the challenged action. Third, it must be likely, not just speculative,

that a favorable decision will redress the injury. Lujan v.

Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). Because

these elements “are not mere pleading requirements but

rather an indispensable part of the . . . case, each element
8 No. 06-4045

must be supported . . . with the manner and degree of

evidence required at the successive stages of the litigation.” Id. at 561.

To survive a defendant’s motion for summary judgment (or to win on a cross-motion for summary judgment),

a plaintiff cannot rely on mere allegations but must

support each element by specific facts via affidavits or

other evidence. See id. We review de novo the district

court’s determination that Sierra Club has standing. See

Disability Rights Wis. Inc. v. Walworth County Bd. of Supervisors, 522 F.3d 796, 800 (7th Cir. 2008).

1. Sierra Club member Barbara McKasson will

suffer injury in fact.

Sierra Club relies on one of its members, Barbara

McKasson, to establish standing. “[E]nvironmental plaintiffs adequately allege injury in fact when they aver that

they use the affected area and are persons for whom the

aesthetic and recreational values of the area will be lessened by the challenged activity.” Laidlaw, 528 U.S. at 183

(internal quotation marks omitted). McKasson states in

an affidavit that she will experience diminished aesthetic

and recreational value if the Company constructs and

operates the power plant under the 2001 PSD permit. She

explains that every other year since 1987, McKasson and

her family have taken trips to fish, kayak, camp, and enjoy

the natural beauty and clean environment of Rend Lake,

located three miles from the proposed plant site. She

claims if the Company builds the plant under the 2001

permit, she will cease her biennial recreational trips
No. 06-4045 9

because the pollutants emitted based on the permit will

harm her and diminish her aesthetic enjoyment of Rend

Lake.

The defendants claim that McKasson’s injury is insubstantial, but the “injury-in-fact necessary for standing ‘need

not be large, an identifiable trifle will suffice.’ ” Lafleur v.

Whitman, 300 F.3d 256, 270 (2d Cir. 2002) (quoting Sierra

Club v. Cedar Point Oil Co., Inc., 73 F.3d 546, 557 (5th Cir.

1996)); see also Doe v. County of Montgomery, 41 F.3d 1156,

1159 (7th Cir. 1994) (“[A]n identifiable trifle is enough for

standing to fight out a question of principle . . . .” (quoting

United States v. Students Challenging Regulatory Agency

Procedures (SCRAP), 412 U.S. 669, 689 n.14 (1973))). If the

proposed plant is built, McKasson will be exposed to

emissions from the plant if she continues her longstanding tradition of visiting Rend Lake with her family.

This “likely exposure” to pollutants is “certainly something more than an ‘identifiable trifle,’ even if the ambient

level of air quality does not exceed [certain national

limits].” Lafleur, 300 F.3d at 270-71; see also Bensman v.

United States Forest Serv., 408 F.3d 945, 962-63 (7th Cir.

2005) (individual had standing to challenge a proposed

project in a national forest when he had visited the project

area six times over 20 years and planned to return soon).

Moreover, if McKasson foregoes her regular visits to the

lake because of these pollutants, that would also constitute an injury-in-fact. See Laidlaw, 528 U.S. at 183 (individual’s affidavit stating that he foregoes using a river

for recreational purposes because of pollution concerns

was sufficient to show injury-in-fact); see also Buono v.

Norton, 371 F.3d 543, 547 (9th Cir. 2004) (“We have repeat-
10 No. 06-4045

edly held that inability to unreservedly use public land

suffices as injury-in-fact.”). McKasson’s injuries are also

ones that are “concrete and particularized” because they

affect her in a “personal and individual way.” See Lujan,

504 U.S. at 560 & n.1; Coalition for the Env’t v. Volpe, 504

F.2d 156, 167 (8th Cir. 1974) (holding that a proposed

development that would increase pollution and traffic

and limit plaintiffs’ views was a cognizable injury that

deprived plaintiffs of aesthetic and psychological benefit).

The defendants also argue that because the plant will

take years to build, McKasson’s injury is not “actual or

imminent” and does not meet the second requirement

for injury in fact. But the defendants forget that

threatened injury can satisfy Article III standing requirements. See Babbitt v. United Farm Workers Nat’l Union,

442 U.S. 289, 298 (1979) (“[O]ne does not have to await

the consummation of threatened injury to obtain preventive relief. If the injury is certainly impending that is

enough.”); see also Massachusetts v. EPA, 127 S. Ct. 1438,

1455 (2007) (EPA’s refusal to regulate greenhouse gas

emissions presented an imminent risk of harm); Mainstreet

Org. of Realtors v. Calumet City, 505 F.3d 742, 744 (7th Cir.

2007) (“[S]tanding in the Article III sense does not

require a certainty or even a very high probability that

the plaintiff is complaining about a real injury, suffered or

threatened.”). The Company claims that the PSD permit

that it received is still valid, and it (strenuously) argues

that it has actually begun construction of the plant. As a

practical matter, it makes sense for Sierra Club to challenge the validity of the Company’s permit now, rather

than waiting until the plant is operational. See Lafleur, 300
No. 06-4045 11

F.3d at 270 (likely exposure to emissions from a proposed

but not yet built facility was “certainly an injury-in-fact”).

Moreover, while this suit has been pending, the Company

has again publicly announced its commitment to completing the plant. So “[t]his is not a case of some abstract

psychic harm or a one-day-I’ll-be-hurt allegation . . . .”

Mainstreet, 505 F.3d at 745. Injury to McKasson has been

freshly threatened and is not merely hypothetical.

2. The injury is traceable to the proposed construction under the 2001 permit.

Sierra Club must also demonstrate that McKasson’s

injury is “fairly traceable” to the Company’s construction

of the plant under the 2001 PSD permit. See Texas Indep.

Producers & Royalty Owners Ass’n v. EPA, 410 F.3d 964, 972

(7th Cir. 2005). If the “independent action of some third

party not before the court” causes McKasson’s injury, then

the complaint fails the traceability test. Id. (quoting

Lujan, 504 U.S. at 560) (internal quotation marks omitted).

The defendants concede that under the 2001 PSD permit

the proposed plant will emit airborne pollutants, including

mercury and particulate matter, three miles from Rend

Lake. McKasson claims these pollutants and the

resulting decrease in visibility will negatively impact her

enjoyment of the lake. We agree that “[w]here a plaintiff

has pointed to a polluting source as the seed of his injury,

and the owner of the polluting source has supplied no

alternative culprit, the ‘fairly traceable’ requirement can

be said to be fairly met.” Friends of the Earth v. Gaston
12 No. 06-4045

Copper Recycling Corp., 204 F.3d 149, 162 (4th Cir. 2000).

Here, the defendants point to no other polluting source

that could be the cause of McKasson’s injury.

Nonetheless, the defendants claim Sierra Club still

cannot show causation because the Company has

designed its plant to produce emissions below permitted

levels, so until the plant is built, there remains a factual

question whether McKasson will actually be injured. This

argument is in essence just a variation on the defendants’

claim (rejected above) that McKasson has not yet suffered

an “actual” or “imminent” injury. We agree that no

one knows the ultimate magnitude of McKasson’s

injury—for example, we don’t know if the particulate

matter from the plant will blot out the sky or merely create

a thin haze that’s not visible to the naked eye, or if the

airborne mercury will actually spread 45 miles to poison

fish that McKasson currently consumes from a pond near

her home (which is another harm she claims she will

suffer). We do know, however, that the plant will release some pollutants and that McKasson believes these

pollutants will ruin her ability to enjoy Rend Lake and

taint the surrounding area. And her belief is not so irrational that it can simply be discredited. See Laidlaw, 528

U.S. at 182-83 (finding that a local citizens group member

suffered injury in fact because she believed that discharged

pollutants had lowered her home’s value). Because

McKasson’s injury stems from the emissions of the Company’s proposed plant, we find that her threatened

injury is fairly traceable to the plant.
No. 06-4045 13

3. Enjoining the Company from building based on

its 2001 permit would likely redress McKasson’s

injury.

Finally, a plaintiff must show that a favorable decision

will likely, not just speculatively, relieve her injury. Id. at

181. The defendants contend that the IEPA might not set

lower emissions levels for a new PSD permit and that

McKasson’s concerns might remain even if the plant

polluted at lower emission levels.

The defendants’ argument, of course, presumes that the

Company will actually seek out and receive a new permit.

Despite publicly announcing that it would seek a new

permit after it lost in the district court, the Company

represented at oral argument that it had not yet begun

this process. And even if the Company applied for and

received a new permit, there would be some delay (the

IEPA took almost a year before granting the 2001 permit)

before the Company could begin construction. A decision

in favor of Sierra Club, therefore, would at least redress

McKasson’s injury during that time.

Moreover, as Sierra Club notes, pollution control technology tends to improve over time, so it makes sense that

a new permit would have more stringent emission standards than the 2001 permit. See 42 U.S.C. § 7475(a)(4)

(major-emitting facilities must use the best available

control technology to receive PSD permits); In re W.

Suburban Recycling and Energy Ctr., L.P., 8 E.A.D. 192

(EPA App. Bd. 1999). Indeed, the record indicates that

the IEPA issued PSD permits in 2003 and 2005 for similar

coal-fired power plants with emission standards that
14 No. 06-4045

Sierra Club has another “standing plaintiff” but like the 2

district court, we find it unnecessary to address her claims

because McKasson has standing to sue.

were significantly more stringent than those in the Company’s 2001 permit. It is therefore reasonable to believe

that any new permit the Company obtains will have

tougher emission standards than the 2001 PSD permit. We

need not determine exactly how much tougher those

standards will be because McKasson need not show that a

favorable decision will relieve her every injury. Massachusetts, 127 S. Ct. at 1458 (citing Larson v. Valente, 456 U.S. 228,

244 n.15 (1982)). It is enough that her concerns will be

addressed if more stringent emission standards are imposed than those required under the 2001 permit, even

though the plant will still emit some pollutants if the

Company obtains a new PSD permit. See id. at 1458 n.23

(“[E]ven a small probability of injury is sufficient to create

a case or controversy . . . provided of course that the relief

sought would, if granted, reduce the probability.” (quoting

Vill. of Elk Grove Vill. v. Evans, 997 F.2d 328, 329 (7th Cir.

1993))). So it is likely that a favorable decision here

will redress McKasson’s, and hence Sierra Club’s, injury.

Therefore, we conclude that Sierra Club has organizational standing to pursue this suit because it has shown

that the Company’s construction under the expired 2001

PSD permit would cause at least one of its members to 2

suffer injury in fact that is traceable to the Company and

is redressable if Sierra Club prevails here.
No. 06-4045 15

B. Sierra Club’s claim is ripe and permissible under 42

U.S.C. § 7604(a)(3).

The defendants rely on two district court decisions to

argue that Sierra Club’s claim is not ripe. See United States

v. Ill. Power Co., 245 F. Supp. 2d 951, 956-57 (S.D. Ill. 2003);

New York v. Niagara Mohawk Power Corp., 263 F. Supp. 2d

650, 661 (W.D.N.Y. 2003). The defendants contend that

Sierra Club must wait until the Company actually begins

constructing the plant before Sierra Club can allege that

the Company has violated its preconstruction PSD permit.

The defendants misread these cases, which specify

when the limitations period begins for claims that a

company has violated a preconstruction permitting

requirement. In that context, it makes sense to conclude

that the last possible moment at which a preconstruction

violation occurs is “when the actual construction is commenced, and not at some later point in time.” Ill. Power Co.,

245 F. Supp. 2d at 957; see Niagara Mohawk Power Corp.,

263 F. Supp. 2d at 661-62. But it does not logically follow

(nor do these cases suggest) that a preconstruction

permit violation cannot occur until actual construction

begins.

The defendants also argue that the citizen suit provision that Sierra Club relies upon, section 7604(a)(3), only

allows suits against entities that are “without a permit,” so

Sierra Club cannot bring this suit because the Company

received a permit (albeit one that may no longer be valid).

The defendants cite no direct support for this position,

instead claiming the matter is not ripe and cannot be
16 No. 06-4045

adjudicated until the IEPA issues a final decision whether

the Company’s 2001 permit has expired.

The defendants’ argument ignores the explicit language

of section 7604(a)(3). That provision states that “any

person may commence a civil action on his own behalf . . .

against any person . . . who is alleged . . . to be in violation

of any condition of [a PSD] permit.” The Company certainly is a person alleged to be in violation of a PSD

permit—Sierra Club alleges that the Company violated

the terms of its permit by not commencing construction

of its facility in a timely fashion, which in turn caused the

permit to expire. See 40 C.F.R. § 124.5(g)(2). And the IEPA

made the same allegation when it preliminarily found

that the Company’s permit had expired. Moreover, even

if having an expired permit were akin to having no

permit at all, Sierra Club would still be able to sue under

section 7604(a)(3), which enables citizens to sue entities

like the Company that “propose[] to construct . . . new or

modified major emitting facilit[ies] without a [PSD]

permit.” 42 U.S.C. § 7604(a)(3) (emphasis added).

It is irrelevant that the IEPA has yet to finish deciding

whether the Company’s permit is invalid because that’s

not what section 7604(a)(3) requires. In a circuit

case referenced by both parties, Grand Canyon Trust v.

Tucson Elec. Power Co., 391 F.3d 979, 986 (9th Cir. 2004), the

Ninth Circuit held that a district court had jurisdiction

over a citizen suit that challenged the validity of a permit

even though the EPA had not yet acted to revoke the

permit. The defendants claim Grand Canyon analyzed a

different citizen suit provision than the one at issue here.
No. 06-4045 17

That seems doubtful. See id. at 985 (“Unauthorized construction of a power plant violates the Clean Air Act

and provides grounds for a citizen suit under the Act’s

citizen suit provision. See 42 U.S.C. § 7604(a)(3) . . . ”).

Regardless, Grand Canyon does not suggest there is a

categorical rule requiring a plaintiff to wait until the

relevant agency finishes deciding whether a permit is

valid (at least when, as here, a suit is not asking us to

review an agency action). So in accordance with the

plain language of section 7604(a)(3), we find that Sierra

Club has properly brought this suit under that provision.

C. The Company did not “commence construction” of

the plant.

As noted above, a PSD permit can expire and become

invalid in one of three ways: (1) if construction is not

“commenced” within 18 months after receipt of the

permit, (2) if construction is discontinued for a period of

18 months or more after construction has begun, or

(3) if construction is not completed within a reasonable

time. See 40 C.F.R. § 52.21(r)(2). Similarly, the Company’s

PSD permit stated it would become invalid if:

construction of CFB [circulating fluidized bed]

boilers is not commenced within 18 months after

this permit becomes effective, if construction of

these boilers is discontinued for a period of 18

months or more, or if construction of these boilers

is not completed within a reasonable period of

time.
18 No. 06-4045

The defendants argued before the district court that the 3

Company was entitled to various extensions and grace periods,

thereby delaying the deadline to February 10, 2003. While the

district court did not decide whether this was correct, it noted

that the defendants lost even under the February 10 date. The

defendants do not re-argue these extensions on appeal, so the

January 3, 2003, deadline is the operative one.

The permit issued on July 3, 2001, so its drop-dead date

was January 3, 2003. The question is whether the Com- 3

pany “commenced” construction of its plant by that

deadline.

42 U.S.C. § 7479(2)(A) states there are two ways in which

construction can “commence”:

(i) [the owner or operator has] begun, or caused to

begin, a continuous program of physical

on-site construction of the facility or

(ii) [the owner or operator has] entered into binding agreements or contractual obligations,

which cannot be canceled or modified without

substantial loss to the owner or operator, to

undertake a program of construction of the

facility to be completed within a reasonable

time.

See also 40 C.F.R. § 52.21(b)(9) (defining “[c]ommence as

applied to construction” similarly). The district court

concluded the Company had neither commenced a program of actual construction nor entered into a binding

agreement to undertake such a program. The district court

also found that even if the Company had begun con-
No. 06-4045 19

structing the plant, it had lapsed in its construction

activity for more than 18 months, thereby invalidating

the PSD permit.

On appeal, the defendants assert there are genuine

factual disputes that should have prevented the district

court from granting summary judgment to Sierra Club.

We review the district court’s grant of summary judgment de novo and construe all facts in the light most

favorable to the defendants. See Rawoof v. Texor Petroleum

Co., 521 F.3d 750, 755 (7th Cir. 2008).

1. No reasonable factfinder could find that the

Company had started a timely program of actual

construction or engaged in construction activities

without an impermissible lapse.

The defendants claim that the Company prevented its

2001 PSD permit from expiring by beginning “a continuous

program of actual construction” that included “conducting

engineering studies [and] excavation work.” We disagree.

The EPA defines “begin actual construction” as:

[I]n general, initiation of physical on-site construction activities on an emissions unit which are of a

permanent nature. Such activities include, but are

not limited to, installation of building supports and

foundations, laying underground pipework and

construction of permanent storage structures. With

respect to a change in method of operations, this

term refers to those on-site activities other than
20 No. 06-4045

preparatory activities which mark the initiation of

the change.

40 C.F.R. § 52.21(b)(11) (emphases added); see also 40 C.F.R.

§ 52.21(b)(8) (defining “construction” as “any physical

change or change in the method of operation (including

fabrication, erection, installation, demolition, or modification of an emissions unit) that would result in a change

in emissions”). We acknowledge (as the defendants

strenuously argue) that beginning actual construction

might be something slightly different than beginning

a continuous program of physical on-site construction,

as required under 42 U.S.C. § 7479(2)(A)(i). But the Company did not engage in any kind of permanent construction activity at all. As of the PSD permit’s expiration date

of January 3, 2003, the Company had laid no foundation

and constructed no building supports, underground

pipework, or permanent storage structures. Importantly,

the Company had not begun constructing the CFB boilers,

which was something that the PSD permit had explicitly

required that the Company do before January 3. Indeed,

the only construction activity performed by the

Company was that it had directed Alberici Constructors

to dig a hole, which Alberici began to do on January 8.

Alberici’s minimal work hardly heralded the start of a

“continuous program” of actual construction, as Alberici

stopped digging the hole on February 14, 2003, after a

payment dispute. And digging the hole was not construction activity “of a permanent nature,” as the Company’s

landlord later had the hole refilled.

Our conclusion here is further buttressed by a July 1,

1978, memorandum sent by Edward E. Reich, Director of
No. 06-4045 21

While the EPA did not promulgate the Reich Memorandum as 4

part of its rulemaking authority, an “agency’s interpretation [of

its own regulations] must be given controlling weight unless

it is plainly erroneous or inconsistent with the regulation.”

Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994) (internal

quotation marks omitted). Indeed, “it can still be apparent

from the agency’s generally conferred authority and other

statutory circumstances that Congress would expect the

agency to be able to speak with the force of law when it addresses ambiguity in the statute or fills a space in the enacted

law, even one about which ‘Congress did not actually have

an intent’ as to a particular result.” United States v. Mead Corp.,

533 U.S. 218, 229 (2001) (quoting Chevron, USA, Inc. v. NRDC,

Inc., 467 U.S. 837, 845 (1984)).

Stationary Source Enforcement at the EPA, and entitled

“ ‘Commence Construction’ Under PSD” (the “Reich

Memorandum”). In addressing what constitutes physical 4

on-site construction, the Reich Memorandum specifically

notes that “[a]ctivities such as site clearing and excavation work will generally not satisfy the commence construction requirements.” Reich Memorandum (“As stated

in the preamble to the draft regulations, ‘it will not suffice

merely to have begun erection of auxiliary buildings or

construction sheds unless there is clear evidence (through

contracts or otherwise) that construction of the entire

facility will definitely go forward in a continuous manner’.”). The defendants have provided no reason why we

should ignore the EPA’s guidance on this issue or why this

case is a special one that merits ignoring this general rule.

Finally, we note that even if the Company had “commenced construction” of the plant, it lapsed in construc-
22 No. 06-4045

tion for over 18 months, thereby invalidating its PSD

permit. After Alberici stopped digging on February 14,

2003, it performed no more excavation work at the site.

Indeed, the site appears to have lain dormant for over

19 months until September 29, 2004, when another company began digging a second hole for the Company. This

19-month lapse in construction activity killed the Company’s PSD permit. See 40 C.F.R. §§ 52.21(r)(2), 124.5(g)(2).

2. No reasonable factfinder could find that the

Company had timely entered a binding contract

to undertake a program of actual construction.

The defendants alternatively claim that the Company

had “commenced construction” within 18 months of the

permit’s issuance by signing a “construction memorandum” with B&V in late 2002, thereby requiring those

parties to “work together on an exclusive basis . . . in order

to draft and negotiate the EPC [Engineering, Procurement

and Construction] Contract.” To count as a contract that

commenced construction, the construction memorandum

would have to be one “which [could not] be canceled or

modified without substantial loss to the owner or operator,

to undertake a program of construction of the facility

to be completed within a reasonable time.” 42 U.S.C.

§ 7479(2)(A)(ii).

Even if entering the construction memorandum

counted as “commencing construction” of the power

plant, the Company’s permit expired because of the 19-

month lapse between February 2003 and September 2004

in which the Company did no construction work on the
No. 06-4045 23

facility. See supra II(C)(1). The Company would have

to argue (which it doesn’t) that the construction memorandum somehow prevented this 19-month lapse from

killing the permit. But such an interpretation would in

effect allow a PSD permittee to trump the 18-month lapse

provision and indefinitely delay the construction of a

facility so long as the permittee has entered a contract

that “commences construction.” We see no basis for

reading the EPA regulations in this manner. See 40 C.F.R.

§ 52.21(r)(2) (noting that a PSD permit expires “if construction is discontinued for a period of 18 months or more” or

“if construction is not completed within a reasonable

time”); see also 40 C.F.R. § 52.21(b)(8); Reich Memorandum

(“In order to assure that construction proceeds in a continuous manner and is completed within a reasonable

time, the regulations require that a break in construction

of greater than 18 months or failure to commence construction within 18 months of PSD permit issuance will

generally invalidate a source’s PSD permit.”).

At any rate (as we discuss below), the Company’s

signing of the construction memorandum did not “commence construction” of the power plant. Before we interpret the memorandum, however, we note that the

parties disagree on which jurisdiction’s law we should

apply. Sierra Club claims we should follow a choice of

law provision in the construction memorandum, which

specifies that the agreement is to be interpreted “in accordance with the substantive law of the State of New York,

except for its choice of laws provisions.” See Am. Fuel

Corp. v. Utah Energy Dev. Co., Inc., 122 F.3d 130, 134 (2d Cir.

1997) (“[W]here the parties have agreed to the applica-
24 No. 06-4045

The defendants suggest that a “third alternative” would be to 5

apply federal common law in interpreting the contract, but they

don’t explain why that alternative should apply here. The

two primary cases they cite involved contracts in which the

federal government was a party. See United States v. Seckinger,

397 U.S. 203, 209-10 (1970) (“[F]ederal law controls the interpretation of [a] contract . . . entered into pursuant to authority

conferred by federal statute and, ultimately, by the Constitution.”); Funeral Fin. Sys. v. United States, 234 F.3d 1015, 1018 (7th

Cir. 2000) (“Interpreting the meaning of a provision in a federal

government contract is a matter of federal common law . . . .”).

That’s a materially different situation from what we have

here. The defendants also note that federal common law can

be applied when “necessary to protect uniquely federal interests,” but they don’t explain why such federal interests are

present here, or why we should disregard both the contracting parties’ choice of law (New York law) and the preference indicated by the Illinois statute (Illinois law), particularly

when both point to the same outcome.

tion of the forum law, their consent concludes the choice

of law inquiry.”). The defendants counter that an Illinois

statute renders the memorandum’s choice of law

provision void and points us to Illinois law: See 815 Ill.

Comp. Stat. Ann. 665/10 (2008) (“A provision contained

in or executed in connection with a building and construction contract to be performed in Illinois that makes the

contract subject to the laws of another state . . . is against

public policy. Such a provision is void and unenforceable.”).

We need not decide who is right because both New York

and Illinois law would characterize the construction 5

memorandum as a preliminary agreement that required
No. 06-4045 25

the parties to conduct further negotiations, not a construction contract to build a power plant. New York law recognizes that parties can enter into precisely this kind of

preliminary agreement:

The parties agree on certain major terms, but leave

other terms open for further negotiation. . . . [This

type of agreement] ‘does not commit the parties to

their ultimate contractual objective but rather to

the obligation to negotiate the open issues in good

faith in an attempt to reach the . . . objective within

the agreed framework.’ A party to such a binding

preliminary commitment has no right to demand

performance of the transaction.

Adjustrite Sys. v. GAB Bus. Servs., 145 F.3d 543, 548 (2d Cir.

1998) (quoting Teachers Ins. & Annuity Assoc. of Am. v.

Tribune Co., 670 F. Supp. 491, 498 (S.D.N.Y. 1987)). Similarly, “Illinois law recognizes the prerogative to agree to

further negotiations, even after most essential contract

terms have been settled, while remaining free to back out

of a pending deal until the occurrence of some later event.”

Venture Assoc. Corp. v. Zenith Data Systems Corp., 987 F.2d

429, 432 (7th Cir. 1993).

Here, the construction memorandum was merely a

preliminary step toward the parties’ ultimate goal—

agreeing on an EPC contract for building the power plant.

Contrary to the defendants’ claim that the memorandum

required the parties to “undertake a program of construction of the facility,” the memorandum only required the

parties to work together toward reaching an actual construction agreement. The memorandum specified that
26 No. 06-4045

the parties would “agree to work with each other in good

faith . . . to complete the drafting and negotiation of the

EPC CONTRACT, with the goal of agreeing and signing

such EPC CONTRACT by September 1, 2005.” The memorandum was clear that it did not enable the Company to

demand that B&V perform construction work: “The

PARTIES agree that upon Termination of the CONSTRUCTION MEMORANDUM, CONTRACTOR shall have no

liability to perform the EPC Work Scope for the FCP

[Franklin County Power] PROJECT for the OWNER.”

Moreover, the memorandum was hardly a final agreement for building the plant as it noted that B&V was

“continuing to develop a firm price and Draft EPC Contract” for the project.

The construction memorandum also listed various

events that could terminate the agreement, but none of

these events was anything like “completing construction

of the plant” or “finishing the construction project,”

which would have suggested that the construction memorandum was the contract for building the plant. Rather,

the terminating events included “[t]he date of signature

of the EPC CONTRACT for the FCP PROJECT” and the

“[f]ailure of the PARTIES to reach agreement on an EPC

Contract by September 1, 2005 or such later date as may

be agreed in writing by the PARTIES,” which again

indicate that the construction memorandum was just a

preliminary agreement en route to an EPC contract.

Even if the language of the construction memorandum

was unclear, extrinsic evidence (which the defendants

encourage us to utilize) would support the same conclu-
No. 06-4045 27

sion. As of January 2006, after the construction memorandum had expired, the parties still had not agreed on a

price term—while the term sheet contemplates a price

of $615 million for the EPC contract, B&V advised the

Company on January 10, 2006, that the project would be

in the “$710m plus range.” B&V also told the Company

that the project would require 45 months or more to

completion, not the Company’s target of 32 months, and

advised the latter, “If you can find someone competent

who will do the project for $615m and 32 months you

must go ahead and work with them.” These facts indicate

that the construction memorandum was not a contract

to build the actual plant.

The defendants also claim that the construction memorandum’s $72 million termination fee (which they represented at oral argument that they would have to pay if

they lost this suit) indicates that this was a contract to

construct the power plant. This fee appears to be less

than 10% of the total project cost, which was estimated

by the defendants at oral argument to be between

$750 million and $1 billion. See Reich Memorandum (“A

Contractual obligation for purposes of commencing

construction must also be one which cannot be cancelled or

modified without substantial loss. . . . Whether a loss of

less than or equal to 10% of the total project cost will

be considered substantial will be determined on a case

by case basis.”).

At any rate, the existence of this fee doesn’t affect our

conclusion that the memorandum is just a preliminary

agreement requiring the parties to conduct further nego-
28 No. 06-4045

tiations. Cf. id. (“[C]ontracts for non site specific equipment, such as boilers, will typically not suffice, regardless

of any penalty clauses contained in the contracts.”). Indeed,

we have previously noted that parties often include these

kinds of termination fees in preliminary agreements:

The process of negotiating multimillion dollar

transactions . . . often is costly and time-consuming. The parties may want assurance that their

investments in time and money and effort will not

be wiped out by the other party’s footdragging or

change of heart or taking advantage of a vulnerable

position created by the negotiation. . . . [T]hey

might prefer to create [a contractual remedy] in the

form of a deposit or drop fee (what in publishing is

called a “kill fee”), rather than rely on a vague duty

to bargain in good faith. . . .

Damages for breach of an agreement to negotiate

may be, although they are unlikely to be, the same

as the damages for breach of the final contract that

the parties would have signed. . . .

Venture Assocs. Corp. v. Zenith Data Systems Corp., 96 F.3d

275, 278 (7th Cir. 1996) (internal citations omitted). So the

presence of this fee does not imply that the construction

memorandum was a contract to build the power plant.

Finally, the defendants contend that the use of the

word “program” in “program of construction” suggests

that we should interpret more broadly which construction

contracts count as “commencing construction” and not

limit ourselves to contracts for actual construction of a
No. 06-4045 29

facility. We are not so sure. Cf. Sierra Pac. Power Co. v.

EPA, 647 F.2d 60, 67 (9th Cir. 1981) (citing United States v.

City of Painesville, 431 F.Supp. 496, 500 n.5 (N.D. Ohio

1977), aff’d, 644 F.2d 1186 (6th Cir. 1981)) (approving the

EPA’s decision not to read the word “program” broadly to

include planning and design of a unit). But at any rate,

the construction memorandum was not a contract for

a “program” of construction activity. As the Reich Memorandum notes, “In order to satisfy the commence construction requirements, a contractual obligation must be

for a site specific commitment. The types of activities

which will be considered site specific for purposes of a

contract are identified in question #1 [’placement, assembly, or installation of materials, equipment, or facilities

which will make up part of the ultimate structure of the

source’].” Here, the construction memorandum did not

require B&V to do any site-specific construction (or even

any nonsite-specific construction). It was, to reiterate, just

a contract that required the parties to work toward an

EPC agreement. And the Reich Memorandum indicates

that entering this kind of contract is simply not enough

to “commence construction.”

This conclusion makes sense. Time limits prevent

companies from sitting on PSD permits for an unreasonably long period of time. Presumably these requirements

help ensure that major emitting facilities comply with upto-date emissions regulations and do not construct

today’s facilities with yesterday’s technology. Reading the

phrase “program of construction” so broadly as to encompass the construction memorandum would greatly

extend the time that companies could delay the actual
30 No. 06-4045

construction process. We decline to adopt that interpretation here.

D. The district court did not err in granting injunctive

relief in favor of Sierra Club.

The defendants also challenge on two grounds the

district court’s decision to grant injunctive relief in favor

of Sierra Club. First, the defendants claim the district court

lacked jurisdiction to grant an injunction because, according to them, a civil penalty is the sole remedy for the

citizen suit here. The defendants rely on language at the

end of 42 U.S.C. § 7604(a) (emphases added):

The district courts shall have jurisdiction, without

regard to the amount in controversy or the citizenship of the parties, to enforce such an emission

standard or limitation, or such an order, or to order

the Administrator to perform such act or duty, as

the case may be, and to apply any appropriate civil

penalties (except for actions under paragraph (2)).

The defendants claim the first two remedies emphasized

above correlate with sections 42 U.S.C. §§ 7604(a)(1) and

(a)(2), respectively, and the third remedy (i.e., “civil

penalties”) applies to 42 U.S.C. § 7604(a)(3), the provision

at issue in this citizen suit. Specifically, the defendants

contend that the district court could only award civil

penalties and not an injunction as a remedy for Sierra

Club’s section 7604(a)(3) suit here.

The defendants’ argument lacks merit. The statute does

not state that the three remedies listed above are exclu-
No. 06-4045 31

sively available for suits that are brought under their

“corresponding” statutory subsections. In fact, the statute

suggests just the opposite when it states that the third

remedy (“any appropriate civil penalties”) is not available

for “actions under paragraph (2) [section 7604(a)(2)],”

which implies that this remedy is available for actions

under sections 7604(a)(1) and 7604(a)(3).

Moreover, the defendants have not cited (and we have

not found) any case law that has interpreted the provision

in the manner that they propose. Sierra Club, on the

other hand, can point to at least one case that directly

contradicts the defendants’ position. See United States v.

Am. Elec. Power Serv. Corp., 137 F. Supp. 2d 1060, 1067 (S.D.

Ohio 2001). Although this district court case is not binding

on us, we agree that “a plain reading of the statute” implies

“that the [injunctive remedies provision] applies to

actions under [section 7604](a)(3).” Id.

The defendants also claim the district court erred by not

performing the standard four-part analysis that precedes

an award of injunctive relief. That analysis generally

requires a court to consider (1) whether the plaintiff has

suffered or will suffer irreparable injury, (2) whether

there are inadequate remedies available at law to compensate for the injury, (3) the balance of hardships, and (4) the

public interest. eBay Inc. v. MercExchange, L.L.C., 126

S. Ct. 1837, 1839 (2006); e360 Insight v. The Spamhaus Project,

500 F.3d 594, 604 (7th Cir. 2007). We review the district

court’s entry of such an injunction for an abuse of discretion. e360, 500 F.3d at 603.

Circuit courts have upheld orders granting injunctive

relief where a district court did not perform a complete
32 No. 06-4045

four-part analysis when a plaintiff prevailed on the

merits of his claim, see Fogie v. THORN Americas, Inc., 95

F.3d 645, 654 (8th Cir. 1996), or when, in an action for a

statutory injunction, a violation was demonstrated and

there was a reasonable likelihood of future violations, see

United States v. Kaun, 827 F.2d 1144, 1148 (7th Cir. 1987).

Moreover, “[i]t is an accepted equitable principle that a

court does not have to balance the equities in a case

where the defendant’s conduct has been willful.” EPA v.

Envtl. Waste Control, 917 F.2d 327, 332 (7th Cir. 1990).

Sierra Club latches on to this last exception, claiming that

the Company has engaged in willful misconduct by

persisting in its “proposal to construct this Project without

a valid permit.” But Sierra Club cites no authority to

explain how the Company’s persistence constitutes

willful misconduct. The Company need not roll over and

concede that its permit is invalid—indeed, that’s what

this litigation is all about. Unlike cases in which

defendants flaunted environmental laws by, for example, not implementing control systems for hazardous

wastes, see United States v. Bethlehem Steel Corp., 38 F.3d 862,

865, 867-68 (7th Cir. 1994), the Company here is simply

defending the validity of its permit in court. And the

Company’s arguments are not so frivolous as to make us

believe that its defense is akin to some kind of malicious

intransigence.

Still, we need not remand this case for the district court

to explicitly analyze the injunctive relief factors. The court

found that the Company did not have a valid PSD permit

when it granted Sierra Club’s motion for summary judg-
No. 06-4045 33

ment. Because EPA regulations require the Company

to obtain such a permit before it can build the facility,

42 U.S.C. § 7475(a)(1), the court’s decision leaves the

Company no option but to obtain this permit before it can

commence construction. So the court’s injunction, which

prohibits the Company from “actual construction of the

Plant until [it has] obtained a valid PSD permit,” is essentially the same as the court’s finding on the merits. See

Fogie, 95 F.3d at 654 (holding that by prevailing on the

merits of its claim, “the plaintiff class has demonstrated

that the four factors of this test overwhelmingly militate

in favor of an injunction”).

Moreover, this is not a case where a plaintiff sued an

already-operational facility and claimed it was polluting

in excess of permissible limits. In such a situation, a

district court would likely need to balance equities before

it granted injunctive relief and shut down the facility. See

Harrison v. Indiana Auto Shredders Co., 528 F.2d 1107, 1123

(7th Cir. 1975). Here, the only cost to the Company of the

injunction is that it must now obtain a new permit before

it can build, which was already implicit in the court’s

decision granting summary judgment.

Additionally, the record here demonstrates that the

four injunctive relief factors favor Sierra Club. First, Sierra

Club will likely suffer irreparable injury if the Company

builds under its expired PSD permit rather than a new

permit because the former likely includes more relaxed

emission standards. See supra section II(A)(3); Amoco Prod.

Co. v. Vill. of Gambell, 480 U.S. 531, 545 (1987) (environmental injuries are “often permanent or at least of long dura-
34 No. 06-4045

tion, i.e., irreparable”). Second, legal remedies will not

adequately address Sierra Club’s injury. The record shows

that at least one Sierra Club member will likely suffer a

decrease in recreational and aesthetic enjoyment of Rend

Lake if the plant is built according to the 2001 permit. An

economic award would not sufficiently compensate for

this injury. See Amoco, 480 U.S. at 545 (“Environmental

injury, by its nature, can seldom be adequately remedied

by money damages . . . .”); Envtl. Waste Control, 917 F.2d

at 332.

Third, the balance of harms favors issuing an injunction.

An injunction protects Sierra Club from irreparable

injury while simply requiring the Company to defer

construction until it obtains a permit that complies with

the Clean Air Act. Finally, the record contains no

evidence that the injunction harms the public interest. In

fact, based on the record before us, we agree with Sierra

Club that requiring the Company to obtain a valid PSD

permit would likely result in decreased emissions and

improved public health, which would further a stated goal

of the Clean Air Act. See 42 U.S.C. § 7401(b)(1) (“to protect

and enhance the quality of the Nation’s air resources so

as to promote the public health and welfare and the

productive capacity of its population”).

Although in most instances we would remand a case

when a district court did not clearly explain why it

granted injunctive relief, see e360, 500 F.3d at 604, we

need not remand here because the court’s decision on the

merits essentially embraced the remedy and the injunctive relief factors favor Sierra Club. A remand on this

issue would merely prolong the case, result in additional
No. 06-4045 35

costs, and not change the outcome. Cf. Books v. Chater,

91 F.3d 972, 978 (7th Cir. 1996); DiLeo v. Ernst & Young,

901 F.2d 624, 626 (7th Cir. 1990).

III. CONCLUSION

The judgment of the district court is AFFIRMED.

10-27-08