Opposition to the Startup, Shutdown & Malfunction Rule Cites EPA’s Breach of Cooperative Federalism Principles and Private Deal-Making with Sierra Club

"…Congress did not authorize EPA to simply adopt limits on emissions as EPA deemed reasonable. Rather, Congress set up a federalism-based system of air pollution control. Under this cooperative federalism approach, both the Federal Government and the States play significant roles. The Federal Government sets air quality standards for pollutants. The States have the primary responsibility for determining how to meet those standards and regulating sources within their borders." EME Homer City v. EPA (D.C. Cir. 2012).1

In the wake of EPA’s proposed rule2 to force 36 states to revise their state implementation plans (SIPs) to control emissions during periods of startup, shutdown and malfunction (SSM Rule)3, a number of states filed comments objecting to EPA’s approach as heavy-handed and contrary to the cooperative federalism scheme of the Clean Air Act (the Act). As the comment period on the SSM Rule closed on May 13, 2013, numerous state attorneys general and state environmental agencies submitted comments arguing that the SSM Rule violates the Act’s cooperative federalism scheme.4

The debate about the extent of state "flexibility" under the Act versus the EPA’s ability to mandate specific controls and emissions limits is nothing new. But given recent case law, the cooperative federalism argument has new life and may serve as a unifying theme for the likely challenges to the final version of the SSM Rule. EPA’s alleged breach of the cooperative federalism scheme has been a consistent line of attack for many challengers of EPA regulatory action under the Act, and the courts, including the Supreme Court, have provided ample ammunition. For example, nearly 40 years ago in Train v. Natural Resources Defense Council, the Supreme Court stated that:

"[EPA] is plainly charged by the Act with the responsibility for setting the national ambient air standards. Just as plainly, however, it is relegated by the Act to a secondary role in the process of determining and enforcing the specific source-by-source emission limitations which are necessary if the national standards it has set are to be met…so long as the ultimate effect of a State’s choice of emission limitations is compliance with the national standards for ambient air, the State is at liberty to adopt whatever mix of emission limitations it deems best suited to its particular situation." Train v. Natural Resources Defense Council, 421 U.S. 60, 79 (1975).

Scope and Definitions in the SSM Rule

The SSM Rule highlights the continuing struggle between the limited powers of the federal government under the Act and the Constitution, and the more expansive and varied powers of the 50 states.

EPA’s legal argument in support of the SSM Rule is essentially as follows:

  1. EPA’s Administrator may issue a "SIP call" when EPA determines that a SIP is "substantially inadequate" to attain or maintain the National Ambient Air Quality Standards (NAAQS) or to otherwise comply with any requirement of the Act. 42 U.S.C. § 7410(k)(5);
  2. SIPs must contain "emission limitations" and other "control measures" to meet the requirements of the Act. 42 U.S.C. § 7410(a)(2)(A);
  3. "emission limitations" must be imposed on a "continuous basis" according to the definition at 42 U.S.C. § 7602(k);
  4. automatic or discretionary exceptions/exemptions from otherwise-applicable emission limitations for SSM events renders the emission limitations non-continuous and, therefore, any SIP containing these exceptions for SSM events is "substantially inadequate" and must be fixed through the SIP call process.

EPA’s notice of rulemaking largely focuses on the inadequacies of the SIPs and the rejection of specific types of SSM exemptions, both automatic and discretionary. EPA spends little time on the important issue of how states can "fix" their SIPs, and the flexibility they may have in doing so. Importantly, however, the term "emission limitation" is defined broadly in the Act as:

"…a requirement established by the State or the Administrator which limits the quantity, rate, or concentration of emissions of air pollutants on a continuous basis, including any requirement relating to the operation or maintenance of a source to assure continuous emission reduction and any design, equipment, work practice or operational standard promulgated under [the Act]."5

Notably, the definition allows for alternatives to numerical emission limits and includes a suite of options, such as design standards and work practice standards, provided that among the options utilized by states, a continuous method of emission reduction results. EPA opens the door slightly for the states on this issue, saying that the definition "leaves room for variations of approach" and that state agencies have "discretion in how to structure or word the emission limitations, so long as the provisions meet fundamental legal requirements."6

The court cases (some of which are cited by EPA) go further in emphasizing state discretion in structuring emission limitations. In 1985, the Ninth Circuit agreed with EPA’s broad articulation of "continuous" under the Act:

"Under [EPA’s] definition…an implementation plan operates continuously so long as some limitation on emissions, although not necessarily the same limitation, is always imposed on the…source. [W]e cannot say that EPA’s definition of ‘continuous’ is unreasonable. In the first place, the requirement of regulation on a continuous basis does not necessarily imply that the source always be subject to precisely the same limitation. Equally important, EPA’s definition is supported by the legislative history…"

The D.C. Circuit agreed in 2008, when considering a Sierra Club challenge to SSM exemptions from certain emissions standards for hazardous air pollutants under Section 112, noting that inclusion of "operation or maintenance" standards as potential "emission limitations" suggests that "continuous emission reduction" can occur "without necessarily continuously applying a single standard."7 These cases—coupled with the myriad rulings affirming state primacy in determining what measures are necessary to assure compliance with air quality standards—suggest that states have far more flexibility in determining appropriate measures (including non-numeric measures) for ensuring emissions are reduced during SSM events than EPA’s proposal would appear to allow. And taken together, they suggest that—should EPA adopt a similarly hardline approach in the final rule—states will have strong grounds on which to mount a challenge to the SSM Rule.

The states ultimately may find that a blend of "good engineering/work practice" type standards during periods of startup or shutdown may suffice, without any numeric limitations, provided that continuous emission reduction occurs. For example, historic work practices like soot blowing and cleaning or scraping of certain boiler elements at startup can cause exceedances for opacity at coal-fired boilers, and typically, these facilities report the exceedances in the permit filings and label them as "SSM." A work practice standard that restricts these activities at startup arguably reduces emissions during the startup period, with numeric limitations applying after the startup period. This would address the legal requirement for "continuous" emissions limitations while allowing for the very real technical constraints upon these units during SSM periods. Facilities would not be held to numerical limits they cannot meet, and they would be penalized only where they fail to follow applicable work practice/good engineering standards.

Controversial Rulemaking Process

Beyond any significant legal infirmities plaguing the SSM Rule, states have also criticized the SSM Rule as an outgrowth of poor public policy-making. Many states reprimanded EPA for making a "private" deal with Sierra Club, which had petitioned and then sued EPA to force the SSM rulemaking. Indeed, the specific terms of the proposed SSM Rule are the product of private settlement negotiations between EPA and Sierra Club. Much has been written in recent days about the "sue and settle" approach utilized by EPA and environmental groups; the SSM Rule is a case in point. As the State of Alabama notes in its comment:

"Rather than defend itself, or the SIPs it had previously approved, EPA entered into ‘confidential settlement discussions’ with Sierra Club behind closed doors. These confidential negotiations improperly excluded the primary parties affected by the consequent rulemakings – States – from participating in a process that should be open and transparent to the public….The ‘sue and settle’ strategy effectively allows environmental groups such as Sierra Club to supplant the States in their partnership role with EPA as primary co-enforcers of the CAA. States are then left to deal with the burdensome and costly outcomes through processes in which they have no say."

The administrative burden on the states will be significant, because EPA’s SSM Rule reverses decades of guidance, SIP approvals, EPA rules, consent decrees and permits. It would be preferable to involve the parties most burdened in the rulemaking process early, as opposed to later, and to give them the maximum amount of lead time, particularly when reversing decades of precedent and practice. Given the reliance of many in industry on the SSM exemption and the absence of any documented adverse air quality impacts from the SSM exceptions, one would think a collective discussion among all interested parties prior to a proposed rule would be appropriate. Instead, savvy environmental groups like Sierra Club sue EPA, seize the initiative, and settle for favorable terms, while the states and regulated community are left out of the process until EPA "proposes" a rule. At that point, these "outsiders" have little time to understand the implications of the rule before public comment ends—and, in any event, the framework of the rule is set and the momentum behind the proposed rule is significant. Ironically, this administration and Sierra Club were both highly critical of the very tactics employed here, lambasting the Bush Administration for "private meetings with energy companies" to shape environmental policy, claiming that a democratic rulemaking process should be transparent and involve all stakeholders.


Unfortunately, given EPA’s approach under the SSM Rule, and the private settlement with Sierra Club, there was no opportunity for the states and the regulated community to shape the SSM Rule and ease the burden it imposes prior to issuance of the proposed rule. EPA may say more when issuing the final rule, providing states with the flexibility that the statute and the case law appear to require. There are thousands of regulated entities and 36 States who would appreciate a more open and democratic process. Instead, in terms of the EPA’s promulgation of the SSM Rule, there appears to be very little change you can believe in, unless you believe that the more things change, the more they stay the same.