After years on the proverbial hunt, the Sierra Club “bagged” a victory, convincing the U.S. Court of Appeals for the District of Columbia to vacate the Startup, Shutdown and Malfunction (SSM) rules that have been used to exempt major sources of hazardous air pollutants (HAPs) from complying with Section 112 Maximum Achievable Control Technology (MACT) requirements during SSM events. See Sierra Club v. Environmental Protection Agency, 2008 WL 5264663 (D.C. Cir., Dec. 19, 2008).

This decision overturns 14 years of air pollution control law, potentially obligating major sources of HAPs to comply with MACT requirements and emission limits during all phases of operations, including SSM events. The problem is this: Many air pollution sources and control devices were designed and are operated in a manner that makes compliance with these emission limits during SSM events uncertain and, in many cases, physically impossible.

Barring a reversal on rehearing or appeal, the D.C. Circuit’s decision will have significant impacts on a large assortment of industrial facilities. Many industrial facilities simply cannot meet the MACT requirements during SSM events. This is no small issue – shutdowns and startups are common in production cycles and product mixes in many industries. In addition, the number of shutdowns and startups likely will increase as a result of the downturn in the economy.

The Origin of the SSM Exemption

The EPA originally adopted the SSM exemption in 1994, to assist in implementation of Section 112 of the Clean Air Act (CAA). National Emission Standards for [HAPs] for Source Categories: General Provisions. See 59 F.R. 12,408 (March 16, 1994) (1994 Rule). Under the 1994 Rule, each source was exempted from the numerical limits set for emission control pursuant to Section 112 MACT standards during SSM events. Instead, sources had a “general duty” to “operate and maintain any effected source … in a manner consistent with safety and good air pollution control practices for minimizing emissions.” 40 C.F.R. §63.6(e)(1)(i).

The 1994 Rule also required each source to develop and implement an SSM plan that “described, in detail, procedures for operating and maintaining the source during periods of [SSM] and a program of corrective action for malfunctioning process and air pollution control equipment used to comply with the relevant standard.” 59 F.R. 12,439. The EPA Administrator could require changes to the SSM plan if it were deemed to be inadequate, and the SSM plan was incorporated into the source’s Title V Permit by reference, thereby subjecting the SSM plan to approval by the state permitting authority. See 59 F.R. 12,439-40 and 58 F.R. 42,760, 42,768 (Aug. 11, 1993). Under the 1994 Rule, the SSM plan was be made available to the public and served as a safe harbor during SSM events, so that sources that had exceedences during an SSM event were not subject to enforcement by the agencies or the public if the procedures in the SSM plan were followed. See 42 U.S.C. § 7661a(b)(8) and § 7661c(f),

In 2002, EPA repealed the requirement for a source’s Title V permit to incorporate the SSM plan, which meant that the source could revise the SSM plan without prior Agency approval (2002 Rule). The Sierra Club filed a petition for review of the 2002 Rule. As part of a settlement agreement, EPA proposed “modest” changes to the SSM plan rules, namely that sources must submit their SSM plans to the permitting authority along with their Title V permit applications. When a final rule was promulgated in 2003, the EPA adopted a standard to limit public access to a source’s SSM plan (2003 Rule). Objecting that any limitation on the public availability of the SSM plans was unlawful, the Sierra Club and the Natural Resources Defense Council (NRDC) each petitioned for reconsideration of the 2003 Rule. Thereafter, EPA agreed to review public comments on the new SSM provisions, and the consolidated cases were held in abeyance pending reconsideration.

In 2006, EPA retracted the requirement for sources to implement their SSM plans during SSM events (2006 Rule) and the Sierra Club again filed a petition for review.

In its consolidated petitions for review, the Sierra Club argued that the original exemption in the 1994 Rule failed to “assure compliance” with the CAA 112 MACT requirements and was both unlawful and arbitrary. In ruling in favor of the Sierra Club, the D.C. Circuit reasoned that, because the “general duty” is the only standard that applies during SSM events, the SSM exemption violates the CAA’s requirement that some Section 112 standard apply continuously. The court also observed that the EPA never purported to justify its authority to promulgate the SSM rules under Section 112 of the CAA, which permits the EPA to relax a MACT standard when “it is not feasible in the judgment of the Administrator to prescribe or enforce an emission standard for control of a [HAP].”

Administrative Finality, the Innocent Bystander

The dissenting judge observed that the Sierra Club’s challenge was untimely since it took no legal action when the SSM Rule was first promulgated in 1994. The Judge also noted that the Sierra Club did not make the argument that the Court actually adopted – that Environmental Practice Group Section 112 of the CAA provides the only basis for the EPA to impose a non-numerical emissions standard and, thus, the 1994 Rule is unlawful because it does not comply with the requirements Section 112.

In view of the observations that were made in the dissenting opinion, it appears likely that the EPA and/or the American Chemistry Council (intervenor) will petition for a rehearing and/or file an appeal. Because this decision was unexpected, the position of the incoming administration is unclear and likely unformed. Ironically, the reasoning of the majority opinion might open the door to new challenges to those MACT standards, which were promulgated using data that excluded emissions that occurred during SSM events. As a result, it can be argued that many of the MACT emission limits were promulgated using data sets that failed to meet the statutory requirement. Alternatively, the EPA might be forced to propose less stringent MACT standards to reflect the limitations of technology in the absence of the SSM exemption. Either way, the chapter is not closed on the SSM issue.