EPA Authority on Affirmative Defense Rule Questioned

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By Patrick Ambrosio

Nov. 16 — Various power industry organizations plan to argue before a federal appeals court that the Environmental Protection Agency lacked authority under the Clean Air Act to require states to remove civil penalty shields from their pollution plans (Se. Legal Found. v. EPA, D.C. Cir., No. 15-1116, statement of issues filed 11/13/15).

Several individual utilities and industry associations said they intend to ask the U.S. Court of Appeals for the District of Columbia Circuit to consider whether the EPA can lawfully issue a rule requiring states to revise deficient state implementation plans without showing that the intended deficiencies interfered with attainment and maintenance with a national ambient air quality standard or other applicable Clean Air Act program.

The rule (RIN 2060-AR68), issued in May, identified deficiencies in 36 state implementation plans for addressing excess emissions during periods of startup, shutdown and malfunction. The EPA is requiring those states to revise their plans to remove affirmative defense provisions that protect power plants, refineries and other industrial facilities from being subject to civil penalties over violations related to unavoidable equipment malfunctions (100 DEN A-3, 5/26/15).

The affirmative defense rule was challenged in 14 separate lawsuits, including petitions filed by Southern Co., Union Electric Co. and Texas. Various industry petitioners Nov. 13 filed nonbinding statements of issues identifying legal issues they intend to raise before the court.

EPA Interpretations Questioned

The Utility Air Regulatory Group, a power plant trade association represented by Hunton & Williams LLP, said in its statement of issues that it plans to ask the court to review whether the EPA improperly interpreted the Clean Air Act.

The trade group said it plans to question whether the EPA can make findings of “substantial inadequacy” and issue a SIP call based on an inconsistency of a plan provision with an EPA policy determination, without making a finding regarding the impact of that inconsistency on compliance with national ambient air quality standards. The National Environmental Development Association's Clean Air Project and the SSM Litigation Group identified a similar legal question in their statements of issues.

The Utility Air Regulatory Group said it intends to ask the court to review whether the EPA had improperly interpreted the Clean Air Act to require states to include a continuous restriction on emissions without exception for all sources regulated under a state implementation plan.

The EPA initially permitted states to include affirmative defense language in their state implementation plans, but the agency changed its view following a 2014 D.C. Circuit decision that found the EPA did not have the authority to include a civil penalty shield in hazardous air pollutant standards covering cement kilns (NRDC v. EPA, 749 F.3d 1055, 78 ERC 1369, 2014 BL 108218 (D.C. Cir. 2014); 76 DEN A-1, 4/21/14).

State Specific Issues Raised

Several industry petitioners raised issues specific to the EPA's findings on individual state plans under the SIP call rule.

The BCCA Appeal Group and the Texas Oil & Gas Association filed a joint statement of issues related to the EPA's finding of substantial inadequacy of Texas's plan. The industry groups said they will ask the court to consider whether it was arbitrary and capricious for the EPA to issue that finding without demonstrating that the affirmative defense provisions are “substantially inadequate” to comply with Clean Air Act requirements.

The Texas-based industry associations, which are represented by Baker Botts LLP, also plan to ask the court whether the EPA's finding on Texas contravenes a 2013 decision by the U.S. Court of Appeals for the Fifth Circuit that upheld the EPA's initial approval of Texas's plan (Luminant Generation Co. v. EPA, 714 F.3d 841, 76 ERC 1575, 2013 BL 799999 (5th Cir. 2013); 59 DEN A-19, 3/27/13).

The Georgia Coalition for Sound Environmental Policy and Georgia Industry Environmental Coalition highlighted several Georgia-specific legal questions in their joint statement of issues, including whether the EPA unlawfully interfered with the state's authority to determine the emissions limits and other pollution control techniques that are necessary and appropriate to comply with the Clean Air Act.

Those Georgia industry groups are represented by Troutman Sanders LLP.

To contact the reporter on this story: Patrick Ambrosio in Washington at pambrosio@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com