Death of the Malfunction Affirmative Defense (and Common Sense): Can EPA Actually Expect Facility Operators to Predict Future Malfunctions?

Posted on November 24, 2014 by John Jacus

Last September, EPA proposed to supplement a proposed SIP Call to effect the wholesale elimination of “malfunction” affirmative defense provisions in numerous states’ SIPs under the Clean Air Act (CAA).  This supplemental proposed rulemaking was a direct response to a decision of the D.C. Circuit in NRDC. v. EPAEPA’s alarming reaction to the decision in that case is unwarranted, reverses long-standing policy with regard to startup, shutdown and malfunction (SSM) events that has been affirmed by multiple reviewing courts as rational, and would effectively require facility operators to predict future malfunctions and permit for them or prevent them if they are to avoid civil penalties for malfunction-derived excess emissions.  If unable to do so, operators would incur penalties intended to deter their noncompliance, arising from their failure to predict and account for future malfunctions. 

The portion of the NRDC v. EPA decision that addressed affirmative defenses only considered EPA’s authority to create them in private suits under Section 304(a) of the CAA.  The D.C. Circuit found that federal courts, not EPA, have authority under Section 304(a) to apply affirmative defenses in such private suits, on important separation of powers principles.  The court specifically limited its holding to affirmative defenses in the context of citizen suits, noting that “[w]e do not here confront the question whether an affirmative defense may be appropriate in a State Implementation Plan.”  Of course, the vast majority of enforcement actions alleging violations of emissions limits and seeking penalties for such excess emissions are brought by state permitting authorities with delegated programs established in their SIPs.  Most SIPs contain some SSM affirmative defenses, including in cases of a qualifying “malfunction,” which will insulate the operator from civil penalties (though not injunctive relief) if the affirmative defense is properly invoked.  See prior ACOEL blogs on this important topic for more background (“Partners?,” by Steve McKinney, and “5th Circuit Upholds…” by Karen Crawford). 

EPA has long interpreted the CAA to allow states to include at least a limited affirmative defense for malfunctions in their SIPs, and Circuit Courts reviewing challenges to such affirmative defenses have agreed that this is a permissible interpretation of the statute.  More recent cases have narrowed SSM affirmative defenses in response to environmental group petitions, by (1) requiring continuous compliance with permit limits for scheduled, i.e., foreseeable, startup and shutdown emissions, so as not to result in or contribute to a violation of the NAAQS, and (2) clarifying that the protections of the affirmative defense from the imposition of civil penalties for excess emissions do not preclude regulators from seeking injunctive relief in response to a malfunction.  This balance was struck by EPA in the 2013 proposed SIP Call, although many industry stakeholders and states have opposed the elimination of affirmative defenses for excess emissions during startup and shutdown.

EPA’s sole justification for now completely abandoning SSM accommodations is the conclusion that an affirmative defense for malfunctions renders any and all of the seventeen SIPs containing such provisions “substantially inadequate” in the wake of NRDC v. EPA.  Yet that decision does not extend to affirmative defense provisions in SIPs, as noted above, and is therefore not a good reason for disregarding longstanding agency SSM policy.  Indeed, EPA’s wholesale reversal of its SSM Policy is directly contrary to numerous other federal appellate courts that have squarely addressed the issue and held that SIP and Federal Implementation Plan (“FIP”) affirmative defense provisions for malfunction events are consistent with the CAA.  See Luminant Generation Co. v. EPA; Mont. Sulphur & Chemical v. EPA; Ariz. Public Service Co. v. EPA.

Many facilities requiring air permits to operate have complex mechanical and electronic equipment with countless components that, by their nature, may inevitably fail or malfunction at some point, despite an operator’s best efforts and regular maintenance.  Most remaining affirmative defense provisions, based on EPA’s historical direction (and the efforts of Sierra Club and other environmental groups to eliminate all SSM provisions as somehow being illegal), would now be sufficiently tailored (following the 2013 SIP Call) to balance the practical realities of unforeseen component failure and the responsibility of facility operators to minimize excess emissions through adherence to good air pollution control practices.  Indeed, a malfunction affirmative defense may only be invoked in most states when the excess emissions were caused by a sudden, unavoidable breakdown of equipment, or a sudden, unavoidable failure of a process to operate in the normal or usual manner, beyond the reasonable control of the operator. See, e.g., Colorado Air Quality Control Commission Common Provisions Regulation Sect. II.E.1.  SSM affirmative defenses also typically require that operators make repairs as expeditiously as practicable, minimize the amount and duration of excess emissions, and take all reasonably possible steps to minimize the impact of the excess emissions on ambient air quality.  These important and material qualifying pre-conditions to availing oneself of a malfunction affirmative defense ensure that air quality is being protected to the maximum extent practicable, even during malfunctions, consistent with good air pollution control practice. 

Expecting operators to predict the future and imposing stiff penalties when they can’t defies common sense, and ignores centuries of jurisprudence that recognize the need for exceptions due to circumstances beyond one’s reasonable control, such as the universally understood concept of force majeure.  It is perhaps ironic that an agency that has focused upon the use of improved emerging and available technologies to create Next Generation or “NextGen” Compliance requirements simply doesn’t “get it” when a technology or device fails to operate as designed and intended, and then gets a hammer out to whack the operator, as if that will “deter” future malfunctions…bad machine! 



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