EPA Right on Principle, Wrong on Approach with Clean Air Act Affirmative Defense for Malfunctions

DC CircuitGuest Commentary

by Christopher Sisk, a 2014 Judge K.K. Legett Fellow at the Washington Legal Foundation and a student at Texas Tech School of Law.

In his recent dissenting opinion in EPA v. EME Homer City Generation, LP, Justice Scalia lamented, “Too many important decisions of the Federal Government are made nowadays by unelected agency officials exercising broad lawmaking authority, rather than by the people’s representatives in Congress.” He’s right. All too often, American businesses like EME Homer City Generation bear the cost of the Environmental Protection Agency’s regulatory overreach, and the courts’ failure to rein it in. It is quite ironic, then, that one of the few times EPA has lost a court battle lately, it was actually attempting to cut businesses a break.

In that case, Natural Resources Defense Council v. EPA, an environmental activist group asked the D.C. Circuit to strike down a 2013 national emissions standard for cement manufacturers. Judge Kavanaugh, writing for the unanimous panel, upheld all but one part of the standard, rejecting only EPA’s attempt to create an affirmative defense against certain citizen suits under the Clean Air Act (CAA). As we will discuss below, however, the ruling did leave the door open for EPA to authorize such an affirmative defense by approving State Implementation Plans (SIP).

Recognizing the realities of an industrialized America, EPA sought to create an affirmative defense for unavoidable malfunctions that cause a facility to be temporarily out of compliance. While EPA requires facilities to be in continuous compliance with the CAA, it recognizes this expectation is not always possible to meet. Malfunctions happen, and may lead to excess pollution. EPA tried to protect facilities from overzealous environmental groups’ citizen suits in such situations, while retaining its own enforcement capability.

The D.C. Circuit ruled that EPA overstepped its regulatory bounds. In cases involving citizen suits, the court reasoned, Congress vested the authority to apply civil penalties in the courts alone. As a result, EPA lacked any authority to determine the appropriateness of civil penalties, even by creating affirmative defenses. The D.C. Circuit rejected EPA’s attempt to use its “gap-filling” authority to justify creating the affirmative defense saying, “[T]he suggestion implicit in EPA’s argument—that we should ‘presume a delegation of power absent an express withholding of such power’—is ‘plainly out of keeping with Chevron . . . .’”

The court did note how EPA could bring its influence to bear in specific instances where it felt a statutory fine for non-compliance was not warranted. While the appropriateness of civil penalties remains the purview of the courts, EPA may file an amicus brief or even intervene on behalf of a defendant.

In addition, the D.C. Circuit specifically flagged the possibility that similar affirmative defenses may be made available through SIPs. In a footnote at the end of its EME Homer City Generation decision, the D.C. Circuit stated that its ruling did not conflict with a Fifth Circuit decision, Luminant Generation Co. v. EPA. In that case, EPA approved a Texas SIP for the awarding of air emission permits which included an affirmative defense for non-compliance due to unexpected malfunction. The Fifth Circuit rejected environmental activist groups’ efforts to invalidate the SIP due to the affirmative defense.

Regulated entities may—and organizations like WLF certainly do—feel somewhat conflicted about the outcome in NRDC v. EPA. On the one hand, WLF applauds EPA’s acknowledgement that unexpected malfunctions occur and its belief that allowing activist groups to sue in such situations offers no environmental or social benefit. On the other hand, WLF shares Judge Kavanaugh’s separation-of-powers concerns and his opinion that federal agencies like EPA may not “presume a delegation of power absent an express withholding of such power” by Congress.

If EPA’s concern with regulated entities facing Clean Air Act citizen suits for unexpected malfunctions is genuine, as we hope it is, it can weigh in on such cases by intervening or acting as an amicus. In addition, the agency can and should continue approving state SIPs containing affirmative defense provisions similar to the ones the D.C. Circuit rejected in NRDC and the Fifth Circuit upheld in Luminant Generation.

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