D.C. Circuit Reverses EPA, Reinstating the Title V Affirmative Defense for Emergency Emissions Events

Background
The Clean Air Act requires “major sources” of air pollution to obtain a Title V permit. Title V permitted facilities include, among others, chemical manufacturing facilities, waste incinerators, pulp and paper mills, cement and lime kilns, coal and natural gas-fired power plants, and petroleum refineries.

For decades, EPA’s Title V regulations recognized that even well-maintained pollution control systems can fail during emergencies, due to unforeseeable equipment malfunctions, extreme weather or other intervening events. EPA regulations allowed permit holders to invoke the affirmative defense against civil penalties for temporary emission exceedances in cases of emergencies, but only if certain conditions were met, including proof that an emergency occurred, that the facility was being properly operated and that the permittee had taken all reasonable steps to minimize emissions during the emergency.

In 2023, however, EPA rescinded the affirmative defense based on two independent legal arguments. First, EPA argued that the affirmative defense was impermissibly “intrusive on the judiciary’s role” and “limit[ed] a court’s authority or discretion to determine the appropriate remedy in an enforcement action.” 88 Fed. Reg. 47029, 47032 (Jul. 21, 2023). Second, EPA asserted that the defense functioned as an impermissible exemption that rendered applicable emission limitations non-continuous, in violation of the Clean Air Act.

The D.C. Circuit’s View
Writing for the Court, Judge Neomi Rao rejected both of EPA’s arguments. Judge Rao first noted that the D.C. Circuit has previously distinguished “complete defenses” that foreclose liability entirely, which are permissible, from defenses that only preclude certain remedies, which limit the authority of the judiciary and are therefore impermissible. The Court went on to hold that EPA has authority under the Clean Air Act to create complete defenses via rulemaking. Accordingly, the Court concluded that the emergency affirmative defense is a permissible use of EPA’s authority under the Clean Air Act.

In rejecting EPA’s argument that the emergency affirmative defense functions as an impermissible exception to emissions standards, the Court distinguished between an affirmative defense, which allows a defendant to avoid liability but does not alter the underlying emission standard, and an exemption, which suspends the emission standard during certain times. According to the Court, because the Title V affirmative defense for emergencies did not lift applicable standards, such standards apply “on a continuous basis” as required by the Clean Air Act.

Having rejected both of EPA’s legal arguments, the Court reversed EPA’s recission of the emergency affirmative defense. As a result, the affirmative defense will be restored upon the issuance of the Court’s mandate.

Looking Ahead
The D.C. Circuit’s ruling has immediate and significant implications for permitted facilities and permit holders. Title V permit holders should first ensure that they have the affirmative defense listed in their permits. If the defense is already listed, the D.C. Circuit’s decision removes any ambiguity as to whether the permit holder can assert the affirmative defense. If a permit holder’s permit does not currently include the affirmative defense, the permit holder should consider taking steps to amend its permit to add the affirmative defense. Additionally, permit holders should ensure that relevant state regulators are aware of the decision and reforming their state permitting programs to align with the D.C. Circuit’s holding.

Companies should carefully monitor EPA’s response to this decision, particularly as the agency continues to pursue new enforcement and regulatory initiatives under the Clean Air Act.