Unavoidable Malfunctions to Get Penalties Under EPA's New Proposal
On September 17, 2014, United States Environmental Protection Agency (“USEPA”) released a supplemental notice of proposed rulemaking that significantly modified its proposed revisions to its startup, shutdown and malfunction (“SSM”) policy under the Clean Air Act (“CAA”). In an attempt to ensure that emissions limitations required under the CAA are applied “continuously”, USEPA proposed in February 2013 to eliminate provisions allowing for blanket exemptions from emissions limits during periods of SSM in state implementation plans (“SIPs”). However, in that proposed rule, USEPA allowed for narrowly-crafted affirmative defenses to monetary penalties in SIPs, and even proposed certain conditions that states could use to ensure that their affirmative defense provisions complied with their interpretation of the CAA. However, in this action, EPA has eliminated the affirmative defense altogether. As a result, included in this supplemental proposed rule is a SIP call requiring an additional 17 states (including 23 air districts) to remove affirmative defenses to SSM emissions from their SIPs, and re-submit to EPA for approval within the next 18 months. Ohio’s SIP was not named in the most recent SIP call.
However, this action is important for Ohio businesses, as USEPA will likely scrutinize compliance with emission limitations during malfunction events in enforcement actions going forward.
USEPA’s Reasoning:
USEPA’s basis for this policy change is in response to a recent decision by the D.C. Court of Appeals in NRDC v. EPA.[1] In that case, the court struck down USEPA’s NESHAP rule for Portland Cement Plants, where USEPA permitted an affirmative defense for emissions violations caused by “unavoidable malfunctions,” reasoning that USEPA had no authority to “alter the jurisdiction of federal courts” to impose penalties for violations. On that reasoning, USEPA decided to reinterpret its prior position on affirmative defenses in SIPs, despite the fact that the D.C. Circuit explicitly declined to apply its decision to similar provisions in SIPs in their NRDC v. EPA ruling, and the Fifth Circuit had previously upheld USEPA’s position in Texas’ SIP in Luminant Generation Co. v. EPA.[2]
What USEPA did not do was consider returning to old (unchallenged) rules requiring facilities to prepare site-specific plans to minimize emissions during SSM events, and submit those plans to EPA as enforceable parts of the Title V permit. By eliminating the malfunction defense, USEPA has effectively modified all of its existing standards (which incorporated a malfunction defense), without undertaking the analysis necessary to support such a change, including whether the standards are “achievable.”
Notable Upcoming Issues:
Because of this rule’s impact, controversial timing and shaky legal reasoning, it is likely to be subject to litigation. During this rule’s comment period (which ended November 6, 2014), this rule received a number of challenges from industry and states, and could be modified in its final version. Nevertheless, businesses should take steps to prepare for the impact of this rule, which will increase exposure to enforcement actions and penalties for emissions during all periods of operation, including unforeseen malfunctions.
Helpful Links:
EPA’s Summary Page of SSM Actions can be found HERE
The Fact Sheet for this rule can be found HERE
The Federal Register notice can be found HERE
Citations:
[1] NRDC v. EPA, 749 F.3d 1055 (D.C. Cir. 2014).
[2] Luminant Generation Co. v. EPA, 714 F.3d 841 (5th Cir. 2012), cert. denied, 134 S.Ct. 387 (2013).
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