EPA Releases New Guidance on Startup, Shutdown, and Malfunction Provisions in State Regulations

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State strategies for regulating air emissions during periods of startup, shutdown, and malfunction (SSM) have been a controversial topic in recent years. Air emissions can be higher during periods of SSM because emitting units are not in steady-state operation and some pollution control devices cannot be operated effectively or safely during such events. Since most air emission limitations are not crafted to cover periods when emission units are not operating normally, many states have adopted regulations in their Clean Air Act-required State Implementation Plans (SIPs) to provide compliance flexibility for sources during periods of SSM. These regulations typically take the form of either automatic or discretionary exemptions for emissions that exceed otherwise applicable limitations, or affirmative defenses to liability or penalties for violations asserted by enforcement authorities or private citizens.

In 2015, the Obama-administration EPA issued guidance finding that exemptions and affirmative defense provisions for SSM-related exceedances were inconsistent with the Clean Air Act since these provisions prevented emission limitations from applying on a “continuous” basis. EPA grounded its guidance in two D.C. Circuit decisions addressing SSM-related issues arising under Section 112 of the Clean Air Act, extending the court’s reasoning to find that state SSM regulations adopted under Section 110 of the Act were impermissible. Based on the guidance, EPA issued a “SIP call” requiring dozens of states and local jurisdictions to revise their SIPs by either eliminating their SSM provisions or modifying them to be consistent with the Agency’s new policy. The 2015 SIP call was promptly challenged in the D.C. Circuit, but had not yet been decided when the Trump administration took office in 2017 and requested the court to put the case on hold while it reconsidered the SIP call. By this point, many states had taken final action to eliminate their exemptions or affirmative defenses from their SIPs altogether.

Last year, EPA began addressing some of the remaining SIPs on a state-by-state basis, withdrawing the SSM SIP call for Texas and North Carolina, and proposed to do the same for Iowa, expecting the local circuits (the Fifth Circuit for Texas, and the Fourth Circuit for North Carolina) to hear any challenges to those actions. However, these state-by-state actions were challenged in the D.C. Circuit, which agreed to allow briefing to proceed and ordered the cases to be held in abeyance after briefing until EPA completes its reconsideration of the entire 2015 SIP call. At that point, challenges to the 2015 rule and the subsequent state-specific actions will be heard on the same day by the same panel of judges.

EPA’s new SSM guidance, released on October 9, 2020, is the agency’s latest maneuver in what has now become a years-long effort to resolve this highly contentious issue. The new guidance reverses EPA’s 2015 SSM policy, stating that SSM exemptions and affirmative defenses may now be permissible in SIPs under certain circumstances. The guidance also announces EPA’s intent to review each SIP call remaining from the 2015 action and determine whether it should be maintained, modified, or withdrawn in light of the Agency’s new SSM policy. EPA plans to conduct individual notice-and-comment rulemakings for each affected state and anticipates completing its review of all remaining SIPs under the 2015 SIP call by December 31, 2023. While those state-specific rulemakings will constitute final agency action reviewable in the courts, EPA indicates that its new SSM policy is not final agency action and therefore unreviewable.

The practical implications of the new SSM policy will depend on the results of the upcoming election. If the current administration retains office, EPA will stay the course, reevaluating the remaining states on a case-by-case basis. At the end of this effort, it will have effectively dismantled the 2015 SSM SIP call, which could render the lawsuit against that action moot. However, the Agency would still need to defend its state-specific actions, either in the D.C. Circuit or in local circuits if the D.C. Circuit decides to transfer them there, which remains a possibility. If, on the other hand, a Biden administration takes office, the new SSM guidance will presumably be dead on arrival, since the policy it replaces was issued under the Obama administration. If a newly-elected Biden administration wishes to rescind or modify EPA’s new guidance, it will have to contend with a recently signed rule imposing a public notice-and-comment process on the issuance, rescission, or reinstatement of agency guidance, which will continue to leave the fate of the remaining SSM provisions highly uncertain for years to come.

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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