On March 1, 2024, the U.S. Court of Appeals for the District of Columbia Circuit largely vacated EPA's “SIP Call” that required states to remove from their respective air quality plans regulatory waivers for excess air emissions during periods of emission unit startup, shutdown, and malfunction (SSM). The court held that EPA did not make the necessary or appropriate determination required by the Clean Air Act to order states to eliminate automatic SSM exemptions, director's discretion provisions, and affirmative defenses that function as SSM exemptions. The decision resolves, for now, a decades old debate over how the Clean Air Act can recognize elevated emissions associated with SSM events.
By way of background, most accept that mechanical things occasionally break and sometimes do not work as designed despite best maintenance efforts. Also, certain industrial processes and equipment experience elevated emissions during startup and shutdown. Accordingly, many states have developed regulations recognizing that during these “SSM” events, stationary sources might not comply with emission rules that otherwise apply during normal operation. EPA approved these state SSM regulations as part of the state implementation plan (SIP) process.
In June 2021, the Sierra Club filed a petition for rulemaking with EPA identifying thirty-nine state SIPs with approved SSM regulations that the ENGO believed to be illegal. That started in motion a series of EPA guidance memos, rulemakings (including a 2015 SSM SIP call directing thirty-five states to remove SSM provisions from their respective SIPs) and lawsuits. This culminated in the DC Circuit’s decision on March 1, 2024.
Although simplified, here is a summary of the four types of SSM provisions at issue in the case along with the DC Circuit’s decision on each:
- “Automatic exemption” regulations exclude SSM periods from otherwise applicable emission rules. For example, a state regulation may impose a visible emission restriction on combustion sources that applies except during periods of startup or shutdown. The court vacated EPA’s SSM SIP calls that targeted these automatic exemptions.
- “Directors’ discretion” exemptions allow state officials to independently and conclusively decide that otherwise excess emissions are not violations during SSM periods. Often these approvals include conditions. The court vacated EPA’s SSM SIP calls that targeted these directors’ discretion exemptions.
- “Affirmative defense” regulations or statutes allow a source to defend itself in an enforcement action by asserting that excess emissions were related to an unavoidable SSM event. The court held that complete affirmative defenses are permissible and vacated the SSM SIP calls to the extent it targeted such state provisions. However, the court held that the Clean Air Act bars partial affirmative defenses that prohibit certain relief (injunctions or penalties) and upheld those parts of the SSM SIP calls.
- “Overbroad enforcement discretion” provisions allow state officials to excuse emission violations during SSM periods in a manner that forecloses EPA or citizen suit enforcement. I am only aware of Tennessee having such a provision. The court upheld the SSM SIP Call targeting this type of exemption.
The decision is a victory for industry and those states that have SSM automatic exemptions, director’s discretion and general affirmative defense regulations. The decision has direct implications for the thirty-five states targeted in the original SSM SIP Call. This includes Texas, Iowa and North Carolina which are the subject of a February 2023 EPA rule that reinstates their inclusion in the original SSM SIP Call. The decision also affects Maine, North Carolina, Connecticut, Tennessee, Louisiana, and Wisconsin that were each recently added to the SSM SIP Call. The decision may also have a bearing on EPA's broader policy on affirmative defenses in other contexts, such as air permits.
In sum, the court resolved a long-standing dispute between the EPA and states over how to regulate emissions during startup, shutdown, and malfunction events. Industry argued that these events are inevitable and unavoidable realities of modern industrial equipment, and that imposing strict liability for them would be unfair and impractical. The EPA maintained that allowing exemptions or affirmative defenses for these events would undermine the Clean Air Act's goals and standards, and that industry could prevent or minimize them through better design, operation, and maintenance. The court sided against EPA on most counts but left open the possibility of EPA reissuing the vacated SSM SIP Calls. This decision will have far-reaching implications for other EPA rules and policies that address SSM issues.