A key defense to violations of the Clean Air Act may no longer be available for excess emissions during unavoidable malfunctions. EPA’s current policy is that civil penalties are not appropriate if the violation was unavoidable, so long as the source can prove it did everything possible to manage the situation properly. However, the D.C. Circuit just rejected EPA’s authority to provide an affirmative defense for excess emissions that occur due to a malfunction. The decision, Natural Resources Defense Council v. EPA, largely upheld EPA’s cement MACT standard in the face of numerous challenges, but the court’s decision to eliminate EPA’s affirmative defense for malfunctions may have much broader implications for all facilities regulated under the Clean Air Act.
The environmental groups that initiated the lawsuit claimed, and the court agreed, that EPA did not have the authority to provide an affirmative defense for malfunctions because only courts have the authority to determine whether to assess civil penalties under Section 304 of the Clean Air Act. The court rejected EPA’s argument that an affirmative defense for malfunctions “is necessary to account for the tension between requirements that emission limitations be ‘continuous’ and the practical reality that control technology can fail unavoidably.” Even more surprising, however, was the court’s initial determination that civil penalties might somehow encourage facilities to avoid malfunctions, even though EPA’s affirmative defense policy only applies to unavoidable malfunctions.
Based on this decision, environmental groups will likely argue in the future that, regardless of any “affirmative defense” found in EPA’s regulations, courts may still determine that civil penalties are “appropriate” for unavoidable malfunctions. Facilities may still be able to argue that judges should not award civil penalties when the source is able to meet EPA’s affirmative defense criteria, but a court may now retain the discretion to award civil penalties in any case. In other words, the question of civil penalties will remain an issue for each court to decide on a case-by-case basis, regardless of EPA’s current policy and regulations that confirm penalties are not appropriate for unavoidable malfunctions.
This decision could also affect EPA’s proposal to require all states to replace any state law-based malfunction exemptions with affirmative defenses, known as the “SSM SIP Call.” Given the court’s holding, EPA may have to re-think its pending rule.