Energy, Petrochemical and Natural Resources
Action Item: In response to pressure from environmental groups, EPA has removed Clean Air Act affirmative defenses previously available to the regulated community for startups, shutdowns, or malfunctions (SSM Rule). The result of eliminating the SSM Rule will likely be additional citizen suits and enforcement actions. The regulated community will need to prepare for such litigation as 36 states will be required to revise their state implementation plans to ensure compliance with EPA’s Final Rule.
In response to a petition for final rule making filed by the Sierra Club, the Environmental Protection Agency (“EPA”) last Friday issued Final Action (RIN 2060-AR68) requiring 36 states to revise their State Implementation Plans (“SIPs”) concerning treatment of emissions during periods of startup, shutdown, or malfunction (“SSM”). EPA is issuing an “SIP call” in those states, finding that the SIPs in those states are “substantially inadequate to meet CAA requirements.”
We wrote about the Proposed Rule, and all of its technical and legal flaws, in Blank Rome’s Energy Trends Watch blog at http://energytrendswatch.com/2013/08/19/epas-proposed-startup-shutdown-and-malfunction-ssm-rule-the-emperors-new-clothes/.
The Final Rule goes even further than the flawed Proposed Rule. EPA has now required that all states completely eliminate the SSM defense to a citizens’ suit and/or penalty action. Before, even the EPA had recognized the difficulty of meeting emission limitations 100 percent of the time, particularly in instances of malfunctions beyond the source’s control.
EPA attributes this Draconian action to an intervening court case, NRDC v. EPA, 749 F.3d 1055 (D.C. Cir. 2014), in which the Court struck down EPA’s National Emission Standard for Hazardous Air Pollutants (NESHAP) rule for Portland Cement Plants, a rule that permitted an affirmative defense for emissions violations caused by “unavoidable malfunctions.” That case, though, dealt with a NESHAP MACT, not NAAQS, and it did not involve state SIPs at all. In fact, the NRDC decision expressly held that it does not apply to SIPs. See NRDC, 749 F.3d at 1064 n. 2. So EPA’s being smitten on that case for this purpose is a romance of convenience.
The flaws in the Proposed Rule follow into the Final Rule. First, the process was flawed because the rule was promulgated using a “sue and settle” dynamic rather than the principle of “cooperative federalism” as envisioned by the Clean Air Act. Second, the rule is technically flawed because startup and shutdown events, and in particular malfunction events, are not “planned” and emission control technology does not, and cannot, run at full efficiency during SSM events. Third, the proposed rule was technically flawed because it restricts the states’ discretion on SSM more than is allowed under prevailing case law under the CAA. Finally, any concerns about “environmental justice” are misplaced because there is simply no evidence that SSM events cause any NAAQS exceedances or adverse environmental or public health impacts.
The Final Rule has been imposed with little input from states and seems to continue a trend of abandoning principles of cooperative federalism. Indeed, any state that chooses not to revise its SIP may be subject to a Federal Implementation Plan (FIP). Moreover, there continues to be no evidence of any significant environmental benefit to the public in eliminating the malfunction defense.
In any event, it remains that the Final Rule has no discernable environmental benefit and that facilities, including electric generating units, will likely face increased CAA liability for periodic emissions exceedances that occur during SSM events, even in instances of unavoidable malfunctions. And, such exceedances could lead to liability arising under common law principles such as nuisance, trespass and the like.
