On April 18, 2014, the United States Court of Appeals for the D. C. Circuit upheld Environmental Protection Agency (EPA) regulations setting emission standards for hazardous air pollutants from cement kilns but struck down an affirmative defense that protected cement plant operators from civil penalties in private citizen suits if the exceedances resulted from “unavoidable malfunctions.” Natural Resources Defense Council v, EPA, No. 10-1371 (D.C. Cir. 2014) EPA has long recognized that it would be difficult if not impossible for an industrial source to meet its emission limits when unavoidable malfunctions impair the effective operation of pollution control equipment. While the court did not dispute EPA’s rationale, it held that the Clean Air Act vests authority over private suits in the courts, not EPA. Therefore, EPA could not establish regulations setting standards for affirmative defenses in civil cases brought by citizens under the Clean Air Act.

The unavoidable malfunction affirmative defense is intertwined with the startup and shutdown affirmative defenses which collectively refer to “SSM events” which EPA has long recognized through guidance documents can be appropriate circumstances to establish affirmative defenses in enforcement actions. EPA summarized this in a 2013 memo in an SSM rulemaking docket:

This guidance has consistently recommended the exercise of enforcement discretion for violations due to excess emissions during SSM events. Under this approach, state and federal regulators exercise their normal discretion to decide whether a given violation should be subject to an enforcement action. Considerations such as the seriousness of the violation and the culpability of the violator can play a role in this exercise of enforcement discretion. Alternatively, the EPA’s guidance has recommended other approaches, such as SIP provisions that provide an affirmative defense to monetary penalties in enforcement actions under certain limited circumstances.

Memorandum to Docket EPA-HQ-OAR-2012-0322; Statutory, Regulatory, and Policy Context for this Rulemaking (February 4, 2013).

As suggested in the quoted language, EPA has approved State Implementation Plans (SIPs) that recognize SSM events as providing affirmative defenses in enforcement actions. However, the Sierra Club has been pressing EPA to limit use of SSM events as affirmative defenses. In Sierra Club v, Jackson, No. 3:10-cv-04060-CRB (N.D. Cal.), the Sierra Club sued EPA to compel EPA to remove SSM exemptions in SIPs. On November 30, 2011, the parties entered into a settlement agreement that provided a schedule for EPA to finalize the rulemaking. On June 16, 2014, the parties entered into an “Eighth Modification of Settlement Agreement” which extends the deadline for EPA to finalize the SSM rule to May 22, 2015. EPA’s rulemaking will likely be guided by the outcome of a new case before the D.C. Circuit.

On June 17, 2014, the Sierra Club petitioned the D.C. Circuit for review of nine EPA final rules under the Clean Air Act based on the April 18, 2014 court decision striking down EPA’s rulemaking providing for an affirmative defense in citizen suit enforcement cases. The Sierra Club argues that “EPA lacks the authority to promulgate an affirmative defense against civil penalties like the ones challenged here.” In NRDC v. EPA, the D.C. Circuit recognized EPA’s authority to develop administrative rules in a footnote: “The Fifth Circuit recently upheld EPA’s partial approval of an affirmative defense provision in a State Implementation Plan. See Luminant Generation Co. v. EPA, 714 F.3d 841 (5th Cir. 2013). We do not here confront the question whether an affirmative defense may be appropriate in a State Implementation Plan.”

The new Petition for Review by the Sierra Club squarely confronts the issue noted by the court of whether the Clean Air Act authorizes EPA to establish affirmative defenses to liability in State Implementation Plans. It will be interesting to see how the court responds to this latest effort by the Sierra Club to eradicate from EPA rulemaking any opportunity for relief from absolute liability standards for industry under the Clean Air Act.