United States: D.C. Circuit Overturns MACT Startup, Shutdown, And Malfunction Exemption

In a decision affecting a broad range of industrial facilities, the United States Court of Appeals, in Sierra Club et. al. v. EPA, overturned the U.S. Environmental Protection Agency's (EPA) long-standing startup, shutdown, and malfunction (SSM) exemption from the hazardous air emission maximum achievable control technology (MACT) standards. Case No. 02-1135, Dec. 19, 2008. The Court held that under the Clean Air Act (CAA), the only exemptions to the MACT emission limits are for "design" or "source-specific" considerations. While the Court vacated the MACT SSM exemption, no order has been entered and, given the pervasive use of the MACT SSM exemption in permits for a large number of facilities, there is likely to be a significant effort mounted to have the Court reconsider vacating the exemption and, instead, leave the existing SSM provisions in place until EPA revises the SSM exemption consistent with the Court's decision.

The Law and Decision

Under the hazardous air provisions of the CAA, EPA established "emission standards" based on MACT. Recognizing that control equipment often requires certain operating conditions to exist (such as sufficient temperature) in order for controls to function fully, EPA, in 1994, imported into MACT the SSM exception from the agency's new source performance standard program. Over the years, the SSM provisions were modified and, in 2006, EPA adopted the position that a facility's SSM plan no longer needed to be approved by EPA or incorporated into the facility's Title V permit. EPA's 2006 change to the SSM exception led to the Sierra Club's challenge of the entire SSM exception and to the Court's ruling.

In its decision, the D.C. Circuit emphasized that, under the CAA, facilities must meet the MACT standards on a "continuous basis," except in two specific instances — where the design of the control equipment could not achieve continuous compliance and for source-specific reasons. EPA's reliance on generic use of the SSM exception, combined with a general duty to minimize hazardous air emissions, did not comport with either of the two exceptions listed in the statutory language, nor did EPA's SSM exception provide for continuous compliance with the MACT standards. Finding the SSM exception to be at odds with the statute, the Court vacated the rule.

Practical Considerations

Assuming the Court follows its opinion and orders "vacatur" of the rule, the order raises significant legal questions for facilities relying on the SSM exemption for MACT compliance. For example, under the statute, "source-specific" exemptions are allowed which, in many cases, can be readily justified. However, important questions remain such as: Are such exemptions to be granted by EPA or by the states? Is this to be done as part of the Title I or Title V air permitting process or through a stand-alone approval that is incorporated into the facility's Title V?

Given the current uncertainties surrounding the SSM exception, facilities may want to consider:

While the Court may ultimately reconsider its decision to vacate the rule and instead allow it to remain in place until EPA crafts a new exception consistent with the ruling, developing a plan for complying with the MACT limits based on source-specific factors as opposed to reliance on the generic SSM exception should be evaluated.

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