D.C. Circuit Vacates U.S. EPA’s SSM SIP Call

On March 1, 2024, the U.S. Court of Appeals for the District of Columbia (D.C.) Circuit decided 2 to 1 to vacate the United States Environmental Protection Agency’s (U.S. EPA’s) State Implementation Plan Call with respect to certain startup, shutdown, and malfunction provisions (SSM SIP Call). The SIP Call was vacated with respect to automatic exemptions, director’s discretion provisions, and certain affirmative defense provisions.

How did we get here?

When the 1970 Clean Air Act (CAA) Amendments were passed and the U.S. EPA was formed, they developed National Ambient Air Quality Standards (NAAQS) and states were required to develop SIPs that protected those standards. Many states recognized that facilities often could not meet certain emissions standards during startup, shutdown and malfunctions, and put various provisions into their SIPs to address those scenarios. U.S. EPA approved these SIPs in the 1970s and 1980s, but U.S. EPA was petitioned by Sierra Club in 2011, who identified 39 SIPs that they believed contained SSM provisions that made the SIPs unlawful. U.S. EPA is allowed to “call” upon a state to revise a SIP if it makes a finding of “substantial inadequacy.” In 2015, U.S. EPA finalized its SSM SIP Call for 35 states and Washington D.C.

The SSM provisions of concern were:

• Automatic exemptions (e.g., provisions stating that a SIP emissions or opacity limit does not apply during periods of startup or shutdown or during a malfunction).
• Director’s discretion provisions (e.g., provisions that allow a facility to ask the state agency Director to determine that excess emissions during SSM events were not a violation).
• Overbroad enforcement discretion provisions (only one SIP, Tennessee’s, was called for this reason, as U.S. EPA thought that the provisions could be read to allow Tennessee officials to foreclose U.S. EPA enforcement actions and citizen suits).
• Affirmative defense provisions (where a state could prevent U.S. EPA and citizens from holding facilities liable for excess emissions during SSM).

Three sets of petitioners sought the court’s review of the SSM SIP Call: Texas and a coalition of Texas companies and trade groups, a group of 18 other states, and a group of industrial companies and organizations. When the Trump administration came into office, U.S. EPA asked the court to hold the case in abeyance as it reconsidered the SIP Call. During the four-year abeyance, U.S. EPA withdrew its SSM SIP Calls for Iowa, North Carolina, and Texas, leaving 16 states and the industry petitioners in the case. In November 2021, U.S. EPA reaffirmed the original SSM SIP Calls and asked the court to move forward. The case was argued in 2022.

What did the D.C. Circuit Court decide?

First, they evaluated U.S. EPA’s authority to make the SSM SIP Call. The D.C. Circuit determined that U.S. EPA did not have to show actual harm had occurred as a result of the offending provisions (i.e., that the SSM provisions were causing violations of the NAAQS), just that they had made a finding that something about the SIP was inconsistent with the requirements of the CAA. U.S. EPA had reasonably determined that a SIP provision could be understood to conflict with the CAA. The D.C. Circuit also found that U.S. EPA did not have to consider cost as part of its SIP Call (noting that the states could remedy their SIPs in a number of ways that could have differing costs and that balancing the benefits and burdens of a particular SIP revision was therefore best left to the states).

Second, the D.C. Circuit analyzed whether U.S. EPA correctly called the four specific categories of SSM provisions. U.S. EPA called the SIPs because they claimed the offending SSM provisions meant that the underlying standards did not meet the definition of “emissions limitation,” which the CAA defines as a requirement that limits emissions “on a continuous basis.” The CAA requires SIPs to include “enforceable emission limitations and other control measures, means, or techniques (including economic incentives such as fees, marketable permits, and auctions of emissions rights), as well as schedules and timetables for compliance, as may be necessary or appropriate to meet the applicable requirements of this chapter.” The court determined that when a standard is coupled with an automatic exemption or director’s discretion provision, even if it does not meet the definition of emissions limitation (which the court did not decide), that alone is not necessarily grounds for U.S. EPA to issue a SIP Call, because the SIP provisions may constitute “other control measures, means, or techniques” that can also be included in a SIP to meet CAA requirements. Therefore, U.S. EPA’s blanket call of automatic exemptions and director’s discretion provisions was set aside because the agency reasoned that every emissions restriction in a SIP had to be continuous to qualify as an emissions limitation, without explaining why that continuity is necessary or appropriate to meet CAA requirements.

With respect to the third category of SSM provisions, the court denied the petition to review the Tennessee SIP Call because the petitioners argued that U.S. EPA could not issue a SIP Call based on ambiguity, and the court rejected this argument. Finally, the D.C. Circuit examined two types of affirmative defense provisions. The first kind provides a complete affirmative defense to an action brought for non-compliance, and the court determined that those provisions were akin to automatic exemption provisions and vacated the SIP Call for those provisions. The second kind precludes certain remedies after a source has violated an emissions standard. The D.C. Circuit held that states cannot limit the relief that Congress empowered federal courts to grant for violations of emissions rules and denied the petition for review of the SIP Call for those types of affirmative defense provisions.

What does this mean?

This decision (which U.S. EPA still has time to attempt to appeal) only directly affects certain states. In Iowa, Texas, and North Carolina, U.S. EPA’s 2023 proposal to reinstate the SSM SIP Calls for those states presumably will have to be reconsidered and a revised rationale offered before SSM SIP Calls are re-issued. For the 16 remaining states that petitioned the court for review of the SSM SIP Call, they do not have to revise the SSM provisions in their SIPs except for the Tennessee provisions that can be read as being overly broad, and the states that have affirmative defense provisions that prohibit citizens and U.S. EPA from seeking certain types of relief (e.g., only monetary penalties) against sources that violate SIP standards. In states where the SIP has already been revised to address the SSM provisions that U.S. EPA called and has been approved by U.S. EPA, sources will be subject to those new provisions unless and until the SIP is revised and approved by U.S. EPA again. For more information about what SIP requirements apply in your state, reach out to your ALL4 project manager or Amy Marshall.

Amy Marshall would like to acknowledge and thank Russ Frye (who argued the case for industry petitioners) for reviewing and editing this article.