EPA Moving Forward on SIP Calls to Prevent Excess Emissions During Periods of Startup, Shutdown, and Malfunction

EPA Moving Forward on SIP Calls to Prevent Excess Emissions During Periods of Startup, Shutdown, and Malfunction

The Legal Background

On June 30, 2011, the Sierra Club filed a petition for rulemaking against the EPA, which contained several requests concerning the regulatory treatment of excess emissions that occur during startup, shutdown, and malfunction (SSM) . The Sierra Group asserted that the way those emissions are dealt with in state implementation plan (SIP) provisions must be updated to comply with earlier court decisions involving the Clean Air Act. Among the SIP provisions that the Sierra Club specifically sought to address and eliminate were blanket exemptions and more narrowly prescribed affirmative defenses available under a numbers of states’ SIPs (including New Jersey’s) to violations arising from exceedence of emission standards that occur during startup, shutdown, and malfunction of emissions sources and/or their equipment

The EPA subsequently entered into a consent decree with the Sierra Group in order to resolve the suit. In compliance with the terms of the settlement agreement, the EPA issued a February 2013 proposed rulemaking that articulated a new policy with regard to SSM provisions in SIPs.

The Proposed EPA Rules

The EPA’s final rule determined that the SSM provisions of 36 states (including New Jersey) do not meet the requirements of the Clean Air Act. Under the proposed SIP calls, those states would have to revise their plans to ensure that “all periods of excess emissions, regardless of cause, will be treated as violations subject to EPA enforcement action,” and “no periods of excess emissions can be automatically exempted from emissions limits.”

Pursuant to the final rule, the EPA must make an “inadequacy” finding before calling upon a state to revise and resubmit its plan. Thereafter, the impacted states would have 18 months to correct and submit their state plans to the EPA.

The EPA’s final rule denied the Sierra Group’s request to prohibit SIP provisions that provide affirmative defenses to monetary penalties for violations resulting from exceedences of emission standards that occur during periods of malfunction that are due to circumstances beyond the facilities’ control. Unlike blanket SSM exemptions, such affirmative defenses allow an exemption for certain narrowly defined malfunction events that EPA considers to be unavoidable.

However, a recent appeals court decision may require the EPA to further reconsider its approach. In Natural Resources Defense Council v. EPA, the U.S. Court of Appeals for the District of Columbia ruled that the EPA’s affirmative defense policy, as set forth in emission standards for the cement industry, was overly broad and thus invalid. Most recently, EPA and the Sierra Club agreed to hold the affirmative defense lawsuit in abeyance so EPA can address the issue administratively through rulemaking.

In the meantime, EPA is considering using case-by-case enforcement discretion to guide whether it will pursue suits against industrial facilities for emissions limit violations that occur during facility malfunctions.

What’s Next?

The EPA recently submitted its final rule to the White House Office of Management and Budget (OMB), and it should be published in the Federal Register in the coming weeks. The EPA also renegotiated the final deadline for resolving the Sierra Club’s petition from June 12, 2014 until May 22, 2015. The extension agreement calls for the EPA to issue a supplemental notice of proposed rulemaking (SNPR) on September 5, 2014 to address the abovementioned recent D.C. Circuit court decision invalidating “affirmative defense” provisions.

If you have any questions about the EPA’s regulatory proposal or would like to discuss how it may impact your company, please contact me, William Baker, or the Environmental and Land Use attorney with whom you work.