Summary
reviewing affidavits, exhibits, and memorandum of law from all parties in considering a motion to amend
Summary of this case from Sullivan v. County of SuffolkOpinion
No. 02-CV-24S
December 30, 2003
DECISION AND ORDER
I. INTRODUCTION
Presently before this Court is a Motion for Leave to File a Second Amended Complaint filed by Plaintiffs State of New York and Erin M. Crotty ("the State"). Defendant Niagara Mohawk Power Corp. ("Niagara Mohawk") and the nine other defendants (the "NRG Defendants") oppose the State's motion. This Court heard oral argument on July 2, 2003, and accepted supplemental briefing from the State and Niagara Mohawk on July 11 and July 18, 2003, respectively. For the reasons stated below, the State's motion is granted.
In support of its motion, the State filed a Notice of Motion with attached exhibits, a memorandum of law, two reply memoranda of law, and a supplemental memorandum of law.
The other nine defendants are NRG Energy, Inc., NRG Northeast Generation, NRG Dunkirk Operations, Inc., Dunkirk Power, LLC, NRG Huntley Operations, Inc., Huntley Power, LLC, NRG Northeast Generating, LLC, NRG Eastern, LLC, and NRG Operation Services, Inc.
In opposition to the State's motion, Niagara Mohawk filed a memorandum of law, the affidavit of William Holzhauer, and a supplemental memorandum of law. The NRG Defendants filed a memorandum of law with attached exhibits.
II. BACKGROUND
A. Legal Standard
Pursuant to Rule 15(a) of the Federal Rules of Civil Procedure, leave to amend pleadings shall be freely given when justice so requires. See Livingston v. Piskor, 215 F.R.D. 84, 85 (W.D.N.Y. 2003) (Larimer, J.). Nonetheless, the decision of whether to grant leave to amend remains within the court's discretion. John Hancock Mut. Life Ins. Co. v. Amerford Int'l Corp., 22 F.3d 458, 462 (2d Cir. 1994) (citing Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962));cf. Ruffolo v. Oppenheimer Co., 987 F.2d 129, 131 (2d Cir. 1993) (court's decision on whether to allow amendment is reviewed for abuse of discretion).
Refusal to grant a request for leave to amend, however, must be "based on solid ground." Oliver Sch., Inc. v. Foley, 930 F.2d 248, 253 (2d Cir. 1991) (internal citations omitted). Factors such as "undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [and] futility of amendment" have been identified by the Supreme Court as grounds for denial. Foman, 371 U.S. 178, 182; Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 48 (2d Cir. 1991); John Hancock, 22 F.3d at 462.
B. The State's Proposed Amendments
The State seeks to amend its Complaint by adding two new causes of action alleging operating permit violations at each of the Dunkirk and Huntley Plants ("the Facilities"). The first proposed cause of action alleges that the NRG Defendants are violating the Clean Air Act, 42 U.S.C. § 7401 et seq., and the New York State Implementation Plan ("SIP") by violating the conditions of their operating permits. The second proposed cause of action alleges that Niagara Mohawk and the NRG Defendants operated the Facilities with deficient operating permits in violation of § 504(a) of the Clean Air Act and the New York SIP. The NRG Defendants and Niagara Mohawk oppose the State's motion on two principal grounds: futility and undue delay.
1. Futility
a. First Proposed Cause of Action: § 502(a) of the Clean Air Act
As was discussed at length in this Court's prior decision resolving the defendants' motions to dismiss, the State alleges that Niagara Mohawk performed major modifications at the Facilities without obtaining the proper preconstruction permits as required under the Clean Air Act. The State asserts that as a result, various pollutants emitted by the modified sources are not subject to appropriate emissions limitations and do not meet the best available control technology ("BACT").In the proposed thirty-fourth and thirty-sixth claims for relief, the State alleges that the Facilities' Title V operating permits contain conditions requiring the Facilities' unpermitted emission sources to be in compliance with all regulations that were applicable to them at the time of modification. Moreover, the State asserts that the Facilities' Title V operating permits also require the implementation of any subsequent requirements applicable to existing sources or facilities.
The State alleges that the Title V operating permits require the NRG Defendants to obtain operating permits that include emissions limitations that meet all applicable requirements (including BACT), and that the Facilities be operated in compliance with BACT. Because the NRG Defendants have allegedly not done so, the State contends that they have violated their Title V operating permits, and thus, have violated § 502(a) of the Clean Air Act, which makes it unlawful for any person to violate any requirement of a permit issued under Title V, or to operate any source, including a major source, except in compliance with a permit issued by a permitting authority under Title V. See 42 U.S.C. § 7661a(a).
In opposition, the NRG Defendants first argue that permitting the State to add this claim for relief is futile because the law of the case doctrine bars the State's claim. The NRG Defendants contend that this Court previously held that the provisions of 42 U.S.C. § 7475(a) do not apply to them. However, the NRG Defendants' reading of this Court's prior decision is overly broad. In its decision, this Court addressed the State's preconstruction claims brought against the NRG Defendants under the preconstruction provisions of 42 U.S.C. § 7475(a). See March 27, 2003 Decision, at 31-33. In doing so, this Court found that the preconstruction provisions did not impose an ongoing obligation to comply with the preconstruction requirements in 42 U.S.C. § 7475(a). The State's proposed amendment, however, does not rely on the preconstruction provisions; it alleges claims under the operating permit program, which this Court has not previously reviewed. The law of the case doctrine is therefore not applicable and does not bar the State's amendment.
Similarly unpersuasive is the NRG Defendants' second argument, which is that the State's proposed amendment is barred because Title V does not impose additional substantive requirements on sources. Cf. NYPIRG v. Whitman, 321 F.3d 316, 320 (2d Cir. 2003). The State, however, alleges that the Facilities' Title V operating permits incorporate substantive requirements found in the Clean Air Act that were applicable to the Facilities at the time that they were modified. The State does not urge additional substantive requirements on the Facilities through Title V. Rather, the State's proposed claims reference substantive requirements that are found in the Act. Moreover, the NRG Defendants fail to identify the new or additional substantive requirements that the State is allegedly seeking to impose. This argument therefore does not preclude the State's proposed amendment.
Finally, the NRG Defendants argue that the proposed amendment reflects the State's post-hoc interpretation of the Clean Air Act and is simply a litigation strategy designed to circumvent this Court's prior decision. The NRG Defendants further contend that the State has taken inconsistent positions with regard to this issue and should not now be permitted to lodge this claim for relief. As noted above, this Court's prior decision did not address the operating permit claims the State now seeks to allege. Moreover, determining whether the State has taken inconsistent positions or changed its interpretation of the Act requires consideration and resolution of factual issues that are not properly before this Court at this time. As such, these arguments do not bar amendment of the Complaint.
The NRG Defendants also argue that the State's claims against them are premature because there has been no finding that Niagara Mohawk performed unlawful modifications on the Facilities. Assuming for the sake of argument that such a finding is necessary for purposes of establishing liability, at this stage of the proceedings, this Court must assume the truth of the State's allegation. See Ricciuti, 941 F.2d at 123. Accordingly, in that context, the State's claims are not premature.
Having considered the NRG Defendants' arguments as discussed above, this Court finds that permitting the State to file a Second Amended Complaint to add its proposed thirty-fourth and thirty-sixth claims for relief against the NRG Defendants is not futile.
b. Second Proposed Cause of Action: § 504(a) of the Clean Air Act
In the proposed thirty-fifth and thirty-seventh claims for relief, the State alleges that Niagara Mohawk and the NRG Defendants operated the Facilities with deficient operating permits in violation of § 504(a) of the Clean Air Act, 42 U.S.C. § 7661c(a), and 6 NYCRR § 201-6.5(a)(1). Specifically, the State alleges that the defendants operated the Facilities without obtaining a valid operating permit containing emissions limitations for nitrogen dioxide and sulfur dioxide that met BACT, and without operating in compliance with BACT. These allegations stem from Niagara Mohawk's initial failure to obtain preconstruction permits containing BACT, and the subsequent operation of the Facilities by both Niagara Mohawk and the NRG Defendants with allegedly deficient operating permits.
In opposition to the State's motion, Niagara Mohawk and the NRG Defendants argue that the State itself is the entity that issued the operating permits that it now alleges are deficient. Moreover, they argue that the State issued the operating permits with knowledge of Niagara Mohawk's alleged violations of the Clean Air Act's preconstruction provisions. Without resolving this issue, this Court finds that these arguments are more properly directed to the merits of the State's new claims for relief, rather than to the narrower issue of whether amendment should be permitted. Thus, this is not a ground upon which to deny the State's motion.
Niagara Mohawk also argues that allowing the State to amend would be futile because Niagara Mohawk is protected from an enforcement action under 42 U.S.C. § 7661b(d). Forty-two U.S.C. § 7661b(d) provides as follows:
Except for sources required to have a permit before construction or modification under the applicable requirements of this chapter, if an applicant has submitted a timely and complete application for a permit required by this subchapter (including renewals), but final action has not been taken on such application, the source's failure to have a permit shall not be a violation of this chapter, unless the delay in final action was due to the failure of the applicant timely to submit information required or requested to process the application. No source required to have a permit under this subchapter shall be in violation of section 7661a(a) of this title before the date on which the source is required to submit an application under subsection (c) of this section.
This Court finds Niagara Mohawk's argument unpersuasive. First, determining whether § 7661b(d) applies requires resolution of factual issues, which is not properly done in the context of a motion for leave to amend. Second, given the first clause of § 7661b(d), there is a question as to whether this section even applies to Niagara Mohawk. Finally, invocation of § 7661b(d) is more properly considered a defense on the merits, rather than a reason to bar amendment of a pleading. Accordingly, this Court finds that the possible application of § 7661b(d) does not serve as a proper basis to preclude the State from amending its Complaint.
Niagara Mohawk further argues that the State's motion should be denied because it is inconsistent with this Court's prior decision. First, Niagara Mohawk argues that the State has improperly included allegations pertaining to modifications and violations that fall outside the statute of limitations period in defiance of this Court's previous decision. However, this Court's prior decision specifically noted that the statute of limitations findings related only to the State's claims for monetary relief, not to its claims for injunctive relief. See March 27, 2003 Decision, at 21 n. 22. Moreover, the State has set forth authority under the All Writs Act that arguably would permit the award of injunctive relief against Niagara Mohawk, despite the fact that it no longer owns or operates the Facilities.
This Court notes that it takes no position at this stage as to whether the All Writs Act provides a legal basis for injunctive relief against Niagara Mohawk as the State argues. It only finds that the State has come forward with a good faith basis for its position that injunctive relief could be awarded against Niagara Mohawk.
In addition, Niagara Mohawk argues that the State is attempting to bypass the applicable administrative process "endorsed" by this Court in its prior decision. This Court made no such "endorsement" of administrative enforcement or any other mechanism of enforcement, and its decision should not be read to suggest otherwise. Moreover, Niagara Mohawk has not come forward with any legal authority mandating that the State pursue the enforcement strategy that Niagara Mohawk suggests.
The issue of whether the allegations in the proposed Second Amended Complaint "relate back" under Rule 15 of the Federal Rules of Civil Procedure will not be resolved at this time as the issue has not been fully briefed for this Court's review.
Accordingly, having considered the arguments raised by the NRG Defendants and Niagara Mohawk, this Court finds that permitting the State to file a Second Amended Complaint to add its proposed thirty-fifth and thirty-seventh claims for relief against the NRG Defendants and Niagara Mohawk is not futile.
2. Undue Delay
The NRG Defendants contend that the State should be precluded from amending its Complaint because the State intentionally chose not to assert operating permit claims in its initial Complaint. Indeed, this Court noted in its prior decision that the State apparently elected to prosecute this case under the construction permit requirements, rather than the operation permit requirements. See March 26, 2003 Decision and Order, at 20 n. 21. While the presentation of claims seriatim is not favored, the State's actions do not strike this Court as being taken in bad faith for purposes of creating delay or intentionally prejudicing the defendants. Moreover, the State filed its instant motion in a reasonable amount of time after this Court's prior decision and the NRG Defendants have not demonstrated any prejudice. Cf. State Teachers Retirement Bd. v. Fluor Corp., 654 F.2d 843, 856 (2d Cir. 1981) (delay alone is insufficient basis to deny leave to amend). This Court therefore finds no undue delay on the part of the State in seeking leave to amend.
For the sake of completeness, this Court notes that Niagara Mohawk does not include undue delay as a basis upon which the State's motion should be denied.
IV. CONCLUSION
For the reasons discussed above, the State's Motion for Leave to File a Second Amended Complaint is granted. The State shall file its Second Amended Complaint within thirty days of the filing date of this Decision and Order.
The Second Amended Complaint should incorporate the terms of the stipulation that the parties filed on July 21, 2003.
V. ORDERS
IT HEREBY IS ORDERED, that the State's Motion for Leave to File a Second Amended Complaint (Docket No. 67) is GRANTED.FURTHER, that the State shall file its Second Amended Complaint within thirty days of the filing date of this Decision and Order.
SO ORDERED.