Proposes SIP call for 39 states

In February 2013, the EPA published a proposal that has the potential to require industry to install and/or implement costly pollution controls to ensure that emissions that occur during periods of equipment start-up, shutdown, and malfunction (SSM) comply with specific limits.  The primary goal of the proposal is to correct provisions in 39 state implementation plans (SIPs) that the Agency says are “substantially inadequate” with parts of the Clean Air Act (CAA) that state that compliance with emissions limits must be continuous.  Ceding to many requests from states, stakeholders, and lawmakers, the EPA extended the original 30-day comment period for this major proposal by 50 days to May 13, 2013. 

According to the EPA, the SIPs exceed the very narrow area in which a limited enforcement concession can be made to a source that violates an emissions limit–that is, when a malfunction occurs beyond the ability of the source to prevent it.  In such cases, the EPA takes the position that a state may allow the source to assert an affirmative defense.  Provided it meets specific conditions, an affirmative defense exempts the source from paying a monetary penalty for a violation.  However, the source is still required to meet injunctive relief requirements such as undertaking work to ensure that the malfunctions do not reoccur.  The core issue addressed in the proposal is that many states have gone beyond this narrow concession and have been providing sources with myriad opportunities to exceed emissions limits during start-up and shutdown as well as during malfunction.

Sierra Club petition

The proposal responds to a June 2011 petition from the Sierra Club.  The petition contends that SIPs may not be written to overlook excess emissions during SSM because this defeats the very purpose of the CAA by causing areas to be in nonattainment with the National Ambient Air Quality Standards (NAAQS).  In addition, if a state includes SSM exemptions in its SIP and if the EPA approves that SIP, both the EPA and citizens lose their right under the CAA to take independent legal action against the alleged violator. 

The EPA concedes that it did in fact approve automatic SSM exemptions from emissions requirements in SIPs in the early 1970s because it did not always recognize the implications of such exemptions.  The EPA adds that the work of meeting other obligations caused it to be inconsistent in bringing those exemptions into conformance with the Agency’s more current thinking on the continuous compliance aspects of the CAA. 

In its proposal, the EPA now emphasizes that the CAA provides the Agency with the authority to evaluate and approve SIP submissions both in the first instance and afterward to address problems in the same SIPs it approved.  That authority is explicitly provided in CAA Section 110(k)(5), which grants the EPA the power to issue a SIP call whenever it finds that a state's existing SIP is “substantially inadequate” to attain or maintain the NAAQS, to adequately mitigate interstate pollutant transport, or to otherwise comply with any requirement of the CAA. 

“The existence of section 110(k)(5) clearly reflects that Congress authorized the EPA to take action to assure that each SIP meets applicable requirements,” says the Agency, “and to do so even after a prior approval of that same provision by the EPA.”  The Agency points to several recent uses of this authority to rectify SIP deficiencies, including issuance of SIP calls in December 2010 to find the SIPs of 13 states substantially inadequate to meet CAA requirements with respect to Prevention of Significant Deterioration (PSD) requirements for GHG-emitting sources. “Thus, EPA promulgated a SIP call to request that states rectify this deficiency, even though EPA had previously determined their SIPs to meet CAA requirements,” says the Agency.  

Guidance documents

With the above perspective, the justification behind the proposed SIP call regarding excess emissions during SSM appears strong.  But the affected states, industry, and members of Congress have raised a number of objections to the Agency’s proposal.  For example, the EPA appears to have lived comfortably with SSM exemptions in many SIPs for over 40 years.  According to critics of the proposal, that duration has underlined the Agency’s longstanding approach to federalism under the CAA–granting each state significant latitude in achieving the NAAQS in a manner that best suits that state’s unique circumstances.  Also, as pointed out by the National Mining Association, EPA’s “significant re-interpretation of longstanding policy” fails to recognize the major difficulties industries face in running pollution control equipment during SSM periods. 

Furthermore, the EPA has not been a model of consistency in how it has approached SSM over the decades.  The Agency has issued four guidance documents on SSM, in 1982, 1983, 1999, and 2001.  While the Agency says it has “consistently recommended the exercise of enforcement discretion for violations due to excess emissions during SSM events,” the 1999 guidance document, which has received the most attention, recommends that states take an approach to SSM that appears to contravene EPA’s current position.  That guidance says that states may address excess emissions during “short and infrequent start-up and shutdown periods” with a “general affirmative defense provision in their SIPs.”  Importantly, guidance documents are used to express policy and inform regulatory decisions; they are not themselves regulations, and they may not bind states to particular actions.  Nonetheless, commenters will likely point to the 1999 guidance in attempts to block regulations that in no circumstances tolerate exceptions to emissions requirements during start-up and shutdown.

Since the guidance documents will be frequently cited in continuing discussions on the proposal, it is worthwhile to use them to track the evolution of EPA’s views on SSM.

• 1982.  The EPA acknowledges here that in the earliest phase of the SIP program, the Agency had not always recognized the implications of SIP provisions that explicitly or implicitly provided automatic exemptions for excess emissions during SSM.  As a result, the EPA stated that it incorrectly approved some provisions of this type that were inconsistent with the requirements of the CAA.  Such exemptions are inappropriate, said the Agency, because “SIPs are ambient-based standards and any emissions above the allowable may cause or contribute to violations of the NAAQS.”  The 1982 guidance also noted that starting in 1977  the EPA took actions to rectify problematic provisions in SIP submissions on a case-by-case basis.  The salient points in the 1982 guidance are that (1) automatic exemptions for emissions above applicable emissions limitations during malfunctions are impermissible; (2) an enforcement discretion approach for violations during malfunctions is permissible; (3) five criteria should be considered in exercising enforcement discretion in the case of malfunctions;  (4) excess emissions during start-up and shutdown are predictable parts of normal operations and should have been planned for; thus enforcement discretion is less warranted; and (5) excess emissions during scheduled maintenance are likewise predictable, and, again, enforcement discretion is less warranted.

• 1983.  The EPA repeated its view that “[i]f a SIP contains a malfunction provision, it cannot be the type that provides for automatic exemption where a malfunction is alleged by a source.”  As in the 1982 guidance, the EPA emphasized that excess emissions during malfunctions “might aggravate air quality so as not to provide for attainment of the ambient air quality standards.”  The 1983 guidance further recommended that states could elect to address such violations via an “enforcement discretion approach” for malfunctions with state regulatory provisions actually incorporated into a SIP.  The EPA recommended five criteria that states should consider in such SIP provisions for determining whether an enforcement action is appropriate.  The criteria include considerations such as the maintenance and operation of the source consistent with good practices to minimize emissions and expedite repairs.  Even if a state elects to provide parameters for its own exercise of enforcement discretion, at no point did the 1983 guidance suggest that SIP provisions providing for enforcement discretion could apply to EPA or citizens who might seek to enforce against the source independent of state actions. 

• 1999.  The EPA reiterated its interpretation that excess emissions during SSM events are violations.  However, the Agency also recommended that, in addition to the exercise of enforcement discretion, a SIP could provide an affirmative defense to monetary penalties in an enforcement action for violations of SIP emissions limitations; the affirmative defense could not apply to injunctive relief.   For affirmative defense provisions for start-up and shutdown events, the guidance recommended that the state give the violator the burden of proof to establish nine enumerated criteria comparable to those for malfunctions, but tailored to apply to start-up and shutdown events.  In the current proposal, the EPA is seeking to revise the view contained in this guidance that affirmative defense provisions would be consistent with the requirements of the CAA during start-up or shutdown.  The proposal is particularly concerned with changing the part of the 1999 guidance that leaves open the possibility that SIP provisions could be written to provide an affirmative defense in the case of emissions limitations applicable to “a source or small group of sources that have the potential to cause an exceedance of the NAAQS or PSD increments.”  The 1999 policy clarifies that the EPA does not intend to approve SIP revisions that would allow a state director’s decision to bar the right of EPA or citizens to enforce applicable requirements.

• 2001.  Here, the EPA emphasized four points.  First, the 1999 guidance was not intended to alter the status of any existing SSM provision in a SIP that has been approved by the EPA.  Second, this interpretation was not intended to affect existing permit terms or conditions regarding SSM that reflect approved SIP provisions, or to alter emergency defense provisions.   Third, EPA’s interpretation was not intended to be legally dispositive with respect to any particular proceedings in which a violation is alleged to have occurred.  Fourth, and most importantly for the recent proposal, the EPA would consider the 1999 guidance and the statutory principles on which it is based when undertaking future rulemaking actions such as the SIP approval process.  Thus, the 2001 guidance indicated that the EPA would undertake rulemaking actions, if necessary, to rectify existing SIP provisions that are inconsistent with the requirements of the CAA.

Four principles

In summary, the EPA states that its SSM policy contains four core principles:

1. Automatic exemptions to excuse excess emissions during SSM events from applicable emissions limitations in SIPs are not permissible because they are inconsistent with the fundamental statutory requirements of the CAA.
2. States may elect to exercise traditional enforcement discretion with respect to violations of applicable SIP emissions limitations during SSM.  However, exercise of enforcement discretion by the state may not foreclose enforcement by the EPA or by others through a citizen suit.
3. There are circumstances where, under conditions that are beyond the control of the source, the source has done all within its power to prevent the violation and to minimize adverse consequences of the violation.  In such cases, the EPA recognizes that it may be appropriate for states to elect to include narrowly drawn affirmative defense provisions in SIPs to provide relief from monetary penalties.  An affirmative defense provision does not negate the fact that excess emissions during a qualifying event are a violation of the applicable emissions limitations of the SIP.
4. The EPA recommends that states adopt a different approach to address emissions that occur during planned start-ups and shutdowns in their SIPs.  For those sources or source categories for which compliance with the otherwise applicable emissions limitations during start-up and/or shutdown is not possible, the state may elect to develop alternative emissions limits or control measures applicable during such events so that emissions during such events could then be accounted for correctly in SIPs for purposes of meeting CAA objectives.

Even though the vast majority of SIP provisions affecting SSM run afoul of EPA’s policy, the Agency emphasizes that “many states” have already worked with the EPA to revise their SIPs to resolve concerns about excess emissions during SSM.  Among these states, the EPA lists Colorado, Wyoming, and North Dakota.  These examples will likely be cited by the Agency in response to contentions that a restrictive SSM policy is not practicable or economically feasible for sources. 

Click here for an EPA memo that discusses the statutory, regulatory, and policy context for the February 2013 SSM proposal.

William C. Schillaci
BSchillaci@blr.com