EPA to Limit Startup, Shutdown, and Malfunction Defense

On Feb. 22, 2013, the U.S. Environmental Protection Agency (EPA) proposed a rule, 78 Fed. Reg. 12459, that will require 36 states to eliminate an exemption to Clean Air Act (CAA) emission requirements for exceedances that occur during periods of startup, shutdown, or malfunction (SSM). The proposed rule (SSM rule) will have a significant impact across numerous industries, including electric utilities, oil and gas operations, and industrial and manufacturing facilities where combustion units are used and permitted under the CAA.

Startup Exemption Challenged

For decades, facilities have used the SSM defense in reporting emissions exceedances to permit authorities, and in response to enforcement actions by the EPA, states, and citizen groups. During periods of startup and shutdown, certain factors such as temperature and combustion efficiency can lead to emission exceedances, particularly for opacity, at coal- and oil-fired boilers and other emission units. Similarly, many control devices such as selective catalytic reduction and baghouses require elevated temperature and a supply of steam before they operate properly to “control” emission. During periods of startup or shutdown, the control devices are simply not operable. Given these technical realities, many state implementation plans (SIPs) expressly provide an affirmative defense or some other form of protection for SSM exceedances.

However, citizen groups like Sierra Club kept the pressure on the EPA, and the SSM rule responds to a 2011 petition for rulemaking by Sierra Club and a successful challenge to the EPA’s SSM rules for hazardous air pollutants. (See Sierra Club v. EPA, 551 F.3d 1019, D.C. Cir. 2008.)

If finalized as proposed, the EPA’s SSM rule will require 36 states to revise their SIPs under a “SIP call.” In statutory terms, the EPA’s administrator may issue a “SIP call,” where the EPA determines that a SIP is “substantially inadequate” to meet the requirements of the CAA. Under the SSM rule, the EPA argues that the CAA requires SIPs to contain “emission limitations” to meet the requirements of the act, and that “emission limitations” are defined as “continuous.” The use of an “automatic” exemption for SSM events, the EPA argues, is contrary to a fundamental requirement of the CAA, and any SIP utilizing the automatic SSM exemption is therefore “substantially inadequate.”

The 36 states subject to the SIP call will have 18 months from promulgation of the final rule to remove exemptions for SSM events, remove affirmative defenses for startup and shutdown events, and modify malfunction affirmative defenses so that they are consistent with EPA guidance on malfunctions. An affirmative defense for “malfunctions” can remain in the SIP provided the excess emissions occur when a facility is experiencing “an unplanned event” but not for excess emissions that occur when a facility is operating in a “planned” startup or shutdown mode. (See 78 FR 12469-70 and Luminant Generation v. EPA, 42 ELR 20163. No. 10-60934, 5th Cir., July 30, 2012.)

Ignoring Reality

While the EPA has been cautioning states since 1982 that wholesale affirmative defenses for SSM exceedances are not acceptable, and that SIP submittals containing such express language would be disapproved, some of the guidance has been ambiguous. (See 1982, 1983, 1999, and 2001 EPA SSM Guidance.) Indeed, the 1999 SSM Guidance acknowledged that malfunctions could occur during periods of startup and shutdown, and that SIPs could contain affirmative defenses for such events, even though the startup or shutdown itself was a planned event.

The agency’s SSM rule reverses that interpretation and eliminates any possibility of an affirmative defense during periods of startup and shutdown, regardless of the cause of the exceedance. Instead, because the event itself (startup or shutdown) is planned, any emissions exceedances during the event are considered violations of the CAA. The EPA says it has “reevaluated” its position and “now believes that the ability and obligation of sources to anticipate and to plan for routine events such as startup and shutdown negates the justification for relief from monetary penalties for violations during those events.”

Unfortunately, from a technical perspective, the ability to “plan” for periods of startup or shutdown does not mean that sources now have a panacea against resulting emission exceedances. Respectfully, the EPA’s commentary on this issue gives short shrift to the technical realities many sources face. The agency says that because starting up and shutting down are part of “normal” operation and not “beyond the control” of the operator, sources “should be expected to comply” with the CAA.

The EPA claims that sources can “anticipate” the amount of excess emissions and “take appropriate steps to limit those emissions as needed and maintain continuous compliance.” But how do they do that, EPA? If the unit and its associated control equipment don’t work properly during periods of startup or shutdown, what “appropriate steps” can be taken?

The problem lies in the EPA’s assumption that periods of startup and shutdown are part of “normal” operation. While periods of startup and shutdown may be “regular” events (as in planned outages), they are not periods of “normal” operation because emission control equipment is not operating “normally.” That was the whole point of the SSM defense in the first place.

Karl A. Karg (karl.karg@lw.com) is a partner in the Chicago office of the law firm of Latham & Watkins LLP.