Affirmative defense provisions can no longer insulate generators from monetary penalties for Clean Air Act violations that result from facility startup, shutdown, and equipment malfunction, the Environmental Protection Agency (EPA) has proposed. 

In a supplemental notice of proposed rulemaking (SNPR) published on Sept. 17 in the Federal Register, the agency proposes to revise its February 2013 draft rule that said state implementation plans (SIPs) could provide for an “affirmative defense” to enforcement actions stemming from excess emissions that occur during a period of malfunction.

Facilities have for decades used affirmative defenses in cases where startup, shutdown, and “unavoidable” malfunction had resulted in impermissible levels of emissions.

But, responding to a petition for rulemaking filed by the Sierra Club, the EPA in February 2013 proposed to require states to remove affirmative defenses for startup and shutdown events from their SIPs. At the time, the EPA allowed “narrowly drawn” affirmative defense provisions to shield sources from monetary penalties for excess emissions stemming from  equipment malfunctions, as long as SIP-specified criteria was met.

This April, however, the D.C. Circuit ruled in NRDC v. EPA that affirmative defense provisions cannot be applicable to private party lawsuits alleging violations of Clean Air Act requirements, even if violations resulted from malfunctions.

The EPA’s SNPR only changes the agency’s stance on the malfunction defense provision as required by the court—not any other aspects proposed in its February 2013 notice. The SNPR gives 13 states whose SIPs “are inconsistent with the Clean Air Act because they include affirmative defense provisions” 18 months after the rule is finalized to correct and submit their state plans to the agency.

A settlement agreement with environmental groups the Sierra Club and WildEarth Guardians will now force the EPA to promulgate a final rule by May 22, 2015.

But the rule may face a number of legal challenges and imposes some practical difficulties for the regulated community, Karl Karg, a partner in the Chicago office of the law firm of Latham & Watkins LLP, told POWERnews on Wednesday.

Karg, who noted his firm is still reviewing the proposed revision, said the rule appears “problematic” for a number of reasons. For one, “EPA’s startup, shutdown, and malfunction policy is several decades old, found in dozens of SIPs, consent decrees, and EPA rules, and all of that can’t be reversed overnight,” he said. “EPA originally indicated that it might allow for some limited exceptions for ‘malfunctions’ but the SNPR appears to reverse that statement.”

Also problematically, “the original policy for periods of startup, shutdown, and malfunction was a recognition by EPA of the technical realties associated with operation of combustion-based boilers.  Those same technical realities exist today at many facilities, despite EPA’s change of policy,” he added.

Karg also criticized the EPA’s sue-and-settle approach to policymaking, saying: “This EPA seems willing to adopt arguments [put forth by environmental and citizen groups] wholesale rather defend decades of its own policies.”

Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)