On July 21, 2023, the EPA published a final rule in the Federal Register that removes the “emergency” affirmative defense provisions from the EPA’s Title V operating permit program regulations.
Title V background
The Title V program requires major sources of air pollutants, and certain other sources, to obtain and operate in compliance with an operating permit. Sources with these permits are required to certify compliance with the applicable requirements of their permits at least annually.
The EPA first promulgated the emergency affirmative defense provisions when it finalized its Title V regulations for state operating permit programs in 1992 and in the regulations for the federal operating permit program in 1996.
In the past, a stationary source could use this affirmative defense in an enforcement case to avoid liability for noncompliance with technology-based emissions limits contained in the source’s Title V permit. To rely on the affirmative defense and avoid liability, the source had to demonstrate that any excess emissions occurred as the result of an “emergency,” as defined in the regulations, and the source was required to make a number of other demonstrations specified in the regulations.
Emergency affirmative defense provisions have never been required elements of state operating permit programs or of individual operating permits. Nonetheless, some state, local, and tribal programs have adopted such provisions and include these affirmative defenses in Title V permits.
In 2014, the U.S. Court of Appeals for the D.C. Circuit issued its NRDC v. EPA decision (749 F.3d 1055).
“In that case, a number of groups challenged, among other things, EPA’s rulemaking to create an affirmative defense against citizen suits for violations of CAA Section 112 [hazardous air pollutant] emissions standards in cases where ‘unavoidable’ malfunctions caused the violation. EPA explained the basis of this provision was to resolve ‘tension’ between the CAA’s requirement that emission standards apply at all times [ ] and the fact that operators may exceed emission limits for reasons beyond their control,” according to an article by Babst, Calland, Clements and Zomnir PC. “The rule also restricted federal district courts hearing the citizen suit from assessing penalties unless the operator failed to meet their burden of proving all requirements in the affirmative defense. The court struck down the unavoidable malfunction affirmative defense provision, finding that the rule served to usurp the courts’ role in determining appropriate remedies in a case, and that CAA Sections 113 and 304 did not otherwise support the EPA’s rule.
“The D.C. Circuit reaffirmed its decision in NRDC two years later in the case U.S. Sugar Corp. v. EPA, 830 F.3d 579 (D.C. Cir. 2016). There, industry groups challenged CAA Section 112 emission standards on the basis that the standards were too onerous because they were developed by EPA without taking malfunction events into account. The court sided with EPA, reiterating its holding in NRDC that had EPA established an affirmative defense provision against citizen suits for violations of the emission standard during malfunctions, it would constitute an ‘impermissible intrusion on the judiciary’s role.’ Instead, the court found EPA’s approach to developing the standard and reserving the right to exercise enforcement discretion during malfunction events as a reasonable interpretation of the CAA.”
The NRDC case led the EPA to reevaluate affirmative defense provisions in Clean Air Act (CAA) programs.
Removal of emergency defense provisions
Formerly located in 40 Code of Federal Reulations (CFR) 70.6(g) and 71.6(g), these provisions protected facilities from liability during emergency situations, which the EPA defined as “any situation arising from sudden and reasonably unforeseeable events beyond the control of the source, including acts of God, which situation requires immediate corrective action to restore normal operation, and that causes the source to exceed a technology-based emission limitation under the permit, due to unavoidable increases in emissions attributable to the emergency.”
The Agency first proposed to remove these provisions in 2016 but didn’t follow through at that time. The Biden administration renewed the proposed repeal in March 2022.
Now that the federal repeal is complete, “the EPA expects that states with part 70 programs containing impermissible affirmative defense provisions will submit to the EPA either a program revision, or a request for an extension of time, within 12 months of the effective date of this final rule—i.e., by August 21, 2024,” states the final rule. “States must also remove title V-based affirmative defense provisions contained in individual operating permits. The EPA encourages states to remove these provisions at their earliest convenience. The EPA expects that any necessary permit changes should occur in the ordinary course of business as states process periodic permit renewals or other unrelated permit modifications. At the latest, states must remove affirmative defense provisions from individual permits during the next permit revision or periodic permit renewal for the source that occurs following either:
- the effective date of this rule (for permit terms based on 40 CFR 70.6(g) or 71.6(g)) or
- the EPA’s approval of state program revisions (for permit terms based on an affirmative defense provision in an EPA-approved title V program).”
The EPA’s reasoning for removing these defenses is that “they are inconsistent with the EPA’s interpretation of the enforcement structure of the [CAA] in light of prior court decisions from the U.S. Court of Appeals for the D.C. Circuit. The removal of these provisions is also consistent with other recent EPA actions involving affirmative defenses and would harmonize the EPA’s treatment of affirmative defenses across different CAA programs,” the final rule says.
Examples of similar stances the EPA has taken regarding emergency defense provisions include New Source Performance Standards (NSPS) and National Emission Standards for Hazardous Air Pollutants (NESHAP).
The bottom line
The EPA doesn’t expect the removal of these defenses from Title V permits to have a significant impact on sources.
The Agency noted in the final rule that “title V emergency affirmative defense provisions have rarely, if ever, been asserted in enforcement proceedings.”
“Instead, sources more often assert affirmative defenses based on malfunctions, which were not addressed in this rule,” notes a Jenner & Block Corporate Environmental Lawyer blog post. “In response to the potential chilling effect the rule may have on sources operating to provide vital services during an emergency, the EPA emphasized the enforcement discretion of oversight authorities, as well as accounting for emergency situations in determining remedies. The EPA further stated that the revisions will not restrict a source’s ‘ability to defend itself in an enforcement action’ and that sources will still be able to seek the reduction or elimination of monetary penalties ‘based on the specific facts and circumstances of the emergency event.’”
The positive side of this final rule is that it “will enable sources to more vigorously seek enforcement discretion in circumstances that do not exactly fit the affirmative defense,” advises Beveridge & Diamond PC. “On the downside, sources are left to the mercy of the agency to exercise its enforcement discretion, which may not be exercised in the manner that the source would like and is not reviewable on appeal.”
Some analysts note that removing these provisions will make compliance with Title V permit regulations more difficult during emergency situations due to excessive emissions.
In response, the Agency noted that “if a source believes it is unable to comply with emissions standards as a result of an emergency, the EPA may use its case-by-case enforcement discretion to determine whether to initiate enforcement, as appropriate.”
It remains to be seen how the Agency and state permitting authorities will actually use their enforcement discretion.
“Nonetheless, the issue of the legality of affirmative defenses more broadly under the [CAA] may not yet be fully settled,” says a JD Supra article by Arent Fox Schiff. “There is currently a pending challenge to the Obama-era policy requiring states to remove similar start-up, shut-down, or malfunction defenses from state implementation plans before the DC Circuit. One core issue in the case is whether EPA’s interpretation that the holding in NRDC on affirmative defenses extends beyond [CAA] Section 112 to other sections of the Act. Oral arguments were heard in that case in March of 2022, and a decision adverse to EPA on their interpretation of NRDC will impact how affirmative defenses are viewed going forward.”
As always, legal challenges to this final rule are to be expected. Meanwhile, sources are advised to closely track actions by local permitting authorities in response to this action by the EPA.