Cement Kiln Operators Better Hope that Their Control Technology Works: D.C. Circuit Vacates EPA’s Affirmative Defense Rule

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Last week was hazardous air pollutant regulation week at the D.C. Circuit Court of Appeals. First, as we reported, the Court affirmed EPA’s mercury air toxics rule, determining that EPA need not take cost into account in promulgating rules for electric generating units (EGUs) under § 112(n) of the CAA. On Friday, the Court affirmed the substance of EPA’s revised hazardous air pollutant rules for cement kilns, but vacated EPA’s affirmative defense based on unavoidable malfunctions. The decision is notable for two issues that will be of concern even outside the universe of cement kiln operators.

First, on the relevance of cost to EPA’s standard-setting, the decision is a useful bookend to the mercury toxics decision for EGUs. Unlike § 112(n), § 112(d) specifically provides that EPA should take into account “the cost of achieving such emission reduction….” The environmental NGOs argued that EPA may only take cost into account if, as the Curt put it, compliance “would bankrupt the industry.” The court wasn’t buying it. To the Court, this was a simple Chevron question. Given that the statute allows consideration of cost, and that it does not specify how EPA must take cost into account, Chevron requires that the Court defer to EPA’s interpretation.

The second issue of general concern is the Court’s rejection of EPA’s attempt to provide an affirmative defense to civil penalties where violations are based on unavoidable malfunctions. Importantly, the defense does not purport to be a defense to liability, but rather only to the imposition of civil penalties which would otherwise be available under § 304(a) of the CAA. Unfortunately for EPA and cement kiln operators – and other sources who might be looking for similar protection – the court concluded that EPA may not, by rule, eliminate a source of relief specifically authorized by statute.

As the Court noted:

Section 304(a) creates a private right of action, and as the Supreme Court has explained, “the Judiciary, not any executive agency, determines ‘the scope’ – including the available remedies – ‘of judicial power vested by’ statutes establishing private rights of action.”

This aspect of the decision certainly has potential relevance beyond cement kilns. In fact, one of EPA’s arguments in favor of the defense was that:

an affirmative defense for malfunctions is necessary to account for the tension between requirements that emissions limitations be “continuous” and the practical reality that control technology can fail unavoidably.

The Court’s response?

That is a good argument for EPA to make to the courts – and for the courts to then consider – in future civil cases when this issue arises. But it does not suffice to give EPA authority to create an affirmative defense.

As continuous emissions monitors, or CEMS, become more and more routine, the “tension” EPA noted will only become of increasing concern. While the Court noted that EPA could intervene or file an amicus brief in individual cases to oppose imposition of civil penalties, how many of us private practitioners expect that ever to happen?

 

Topics:  Air Pollution, Clean Air Act, Energy, Energy Policy, Environmental Policies, EPA, Power Plants

Published In: Administrative Agency Updates, Civil Procedure Updates, Energy & Utilities Updates, Environmental Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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