In Response to Environmental Groups’ Lawsuit, EPA Promptly Issues New Policy on Start Up, Shut Down, Malfunction SIP Call

On Sept. 30, 2021, the Biden Administration made the latest move in the startup, shutdown, and malfunction (SSM) saga when the U.S. Environmental Protection Agency (EPA) issued a guidance policy repealing a Trump Administration issued policy (issued Oct. 9, 2020) that allowed states to retain regulatory exemptions for excess emissions that occurred during SSM, and reverting back to the Obama Administration’s policy that required states to remove such waivers from their SIPs.

The memo was issued in response to a Sept. 8, 2021 lawsuit filed by the Sierra Club, together with the Natural Resources Defense Council (NRDC) and the Environmental Integrity Project, against the EPA. The lawsuit seeks to force EPA:

…to fulfill delayed nondiscretionary duties to correct unlawful loopholes in Clean Air Act [CAA] state implementation plans (SIPs). The loopholes at issue cover periods of ‘startup, shutdown, and malfunction’ (SSM) at industrial facilities. The Administrator’s failure to perform these nondiscretionary duties particularly impacts vulnerable environmental justice communities, which often face increased, dangerous exposure to air pollution during SSM events.

The lawsuit alleges that EPA failed to fully remove SSM exemptions from SIPs that are required by the CAA. As discussed below, a federal appeals court deemed the SSM “loopholes” illegal, and in 2015, EPA made a “SIP Call” that directed states to submit SIP revisions that effectively removed the “loopholes.” One example of a “loophole” is a waiver for “force majeure” events, such as extreme weather, that could justify a release of excess emissions. EPA’s deadline to make determinations on state-submitted SIPs was May 22, 2017, but many states and air districts have not submitted a SIP revision in response to the 2015 SSM SIP Call. Under the CAA, if a state has not submitted a SIP revision within six months after the revision is due, EPA must issue a finding of failure to submit. EPA has not yet issued this finding for certain states. In addition, EPA has not yet taken any action on states that have not turned in their SSM SIP revisions.

Environmental groups note that the SSM “loopholes” in many state SIPs allow industrial facilities to exceed their air permit emission limits and do not require any checks on frequency, time, or amount of emissions for these exceedances. The Biden EPA also has prioritized environmental justice issues and has found that the Trump policy did not protect low-income and minority communities, which are disproportionately affected by air pollution. Communities near these facilities are at an increased risk of various cancers, respiratory ailments, and other serious health problems. Low-income and minority communities are frequently closest to industrial facilities and are most at risk.

In the new policy memo, EPA states that it “hereby reinstates its prior policy that SIP provisions that contain exemptions or affirmative defense provisions are not consistent” with CAA requirements and “therefore, generally would not be approvable if contained in a SIP” submitted to EPA for the agency’s approval.” EPA is committing to finally implement the 2015 SIP Call after years of delay, and the new policy will ultimately shape the air plans of many states.

This new policy reverses the guidance issued by Trump’s EPA, which granted exemptions for SIPs in Texas, North Carolina, and Iowa, and stated its intent to take further actions on a regional basis. (Trump’s EPA never revoked the 2015 SIP Call rule, which required 36 states to remove SSM exemptions from their air plans). In the new memo, EPA promises to proceed with a notice-and-comment rulemaking to address the Texas, North Carolina, and Iowa SIPs, and that no other air plans need be immediately changed as a result. This is in response to, for example, environmentalists’ contention that many large industrial sources in Texas use the affirmative defense provisions of the Texas SIP to justify excess air emissions and that the claimed “upsets” are mostly avoidable and should not be justifiable through the affirmative defense provisions.

The new memo further sets forth the position of the Biden EPA, which states that it is following the rulings of the U.S. Court of Appeals for the District of Columbia Circuit precluding EPA from approving SIPs containing SSM provisions. In 2008, the Court found that EPA cannot include SSM exemptions in its own regulations. In 2014, the Court also found that affirmative defenses are impermissible in EPA regulations. In contrast, the Trump EPA viewed the D.C. Circuit rulings as limited to precluding such exemptions in EPA air toxics regulations (National Emissions Standards for Hazardous Air Pollutants (NESHAPs)), but not in SIPs. Accordingly, the now-repealed Trump EPA guidance found that SSM exemptions are permissible where a state has taken a series of actions in its SIP that together are sufficient to ensure attainment and maintenance of the National Ambient Air Quality Standards (NAAQS).

The announcement of this policy change will likely revive dormant lawsuits, such as the suits over the state-specific exemptions for Texas, North Carolina, and Iowa (Sierra Club v. EPA and Committee of the Florida Electric Power Coordinating Group, Inc. v. EPA). Environmental groups frustrated with the slow progress of implementing the 2015 SIP Call also filed a lawsuit in September in the U.S. District Court for the Northern District of California.

Permitted sources should continue to work with their state agencies on any new rulemakings and/or SIP revisions, and any possible revisions to their permit requirements. As EPA starts acting on the SIPs, sources should engage in the rulemaking process to preserve their ability to challenge EPA’s decisions. Please contact your Clark Hill Environmental and Natural Resources attorney with any questions concerning EPA’s new policy and potential to impact your facility.

The views and opinions expressed in the article represent the view of the author and not necessarily the official view of Clark Hill PLC. Nothing in this article constitutes professional legal advice nor is intended to be a substitute for professional legal advice.