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Two Court Rulings Bolster EPA Authority to Issue SIP Calls to Revise State Startup, Shutdown, and Malfunction Affirmative Defenses


As reported in the second quarter issue of the Air Quality Letter, the Environmental Protection Agency (EPA) is considering a petition filed by the Sierra Club requesting that EPA find 39 State Implementation Plans (SIPs) to be insufficient because they include provisions exempting certain emissions during startup, shutdown, and malfunction (SSM) events from being considered violations.  Kentucky, Louisville Metropolitan Air Pollution Control District, and Indiana SSM regulations are among the SIP regulations claimed to be violative of the Clean Air Act in the petition.  In essence, the Sierra Club claims that because such SSM provisions may allow sources to cause or contribute to an exceedance of an ambient air quality standard and be shielded from liability, the SIP provisions are inconsistent with the Clean Air Act.  Through an agreement reached with the Sierra Club, EPA has until December 14 to issue a decision on the petition.

Two recent court decisions provide support to EPA to find certain SSM regulations to be inconsistent with the Clean Air Act and to issue SIP calls to states to require changes to those SSM regulations. Under the Clean Air Act, EPA may call for a state to revise its SIP (i.e., a SIP call) where EPA finds the state’s current SIP is substantially inadequate.

In U.S. Magnesium, LLC v. EPA, the United States Court of Appeals for the Tenth Circuit on August 6, 2012 ruled that EPA was authorized to issue a SIP call to Utah to require the state to amend its “unavoidable breakdown rule” that allows operators to avoid enforcement action where excess emissions were caused by an unexpected and unavoidable equipment malfunction.  EPA found Utah’s unavoidable breakdown rule to be inconsistent with the Act for three reasons.  First, EPA found the rule precluded any enforcement when there was an unavoidable breakdown, including enforcement for injunctive relief, which EPA explained is never appropriate.  Second, EPA found the rule could be interpreted to grant exclusive authority to the state control authority to determine if excess emissions constitute a violation, which could preclude independent enforcement by EPA or citizens.  Third, EPA found the rule improperly applies to technology-based standards, such as new source performance standards and national emission standards for hazardous air pollutants that already contain exemptions for malfunctions.  The court held that EPA’s decision was entitled to substantial deference and was not inconsistent with the Act.

On October 12, 2012, the United States Court of Appeals for the Fifth Circuit in Luminant Generating Co., LLC v. EPA upheld EPA’s final rule partially approving and partially disapproving a Texas SIP revision that included an SSM affirmative defense.  The court upheld EPA’s approval of the SIP regulation that created an affirmative defense against civil penalties for unplanned SSM events, but disapproved the portion of the SIP revision providing an affirmative defense against civil penalties for planned SSM events.  As to unplanned SSM events, EPA found that the conditions on the affirmative defense to civil penalties would only excuse penalties where it was clearly infeasible for the source to meet the applicable emission limits and the source demonstrated that it made all reasonable efforts to comply.  EPA also noted that the unplanned SSM provision did not preclude an action for injunctive relief and did not provide a defense to penalties where the emissions contributed to an exceedance of an NAAQS, PSD increments, or otherwise contributed to air pollution.  Thus, EPA found the affirmative defense for unplanned SSM events was narrowly tailored to address unavoidable, excess emissions consistent with EPA’s penalty assessment criteria.  EPA disapproved the affirmative defense for planned SSM activity because it found the defense could apply even where it was not infeasible to meet applicable emission limits.  In this regard, EPA stated that it does not believe that it is infeasible for sources to meet applicable limits during planned maintenance activities since such activities are, by their very nature, predictable and maintenance should be scheduled during shutdown periods.

EPA recently indicated that it was drafting a proposed rulemaking that may include SIP calls in response to the SSM petition for those state provisions that it finds to be inconsistent with its SSM policies.  Based upon EPA’s positions in the U.S. Magnesium and Luminant Generating cases, which were upheld by the courts, it appears highly possible that EPA will take action to require some changes in the Kentucky and Indiana SIP provisions for SSM excess emissions.

To view a complete PDF of the Third Quarter 2012 issue of the Air Quality Letter, click HERE.

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