EPA OVERREACH? GEORGIA’S STARTUP, SHUTDOWN, AND MALFUNCTION RULE

1. EPA OVERREACH?GEORGIA’S STARTUP, SHUTDOWN, AND MALFUNCTION RULE Georgia Environmental Conference Jekyll Island, GA August 22, 2013 PRESENTED BY Randy Brogdon, Partner Troutman Sanders LLP 600 Peachtree Street, NE Suite 5200 Atlanta, GA 30308-2216 404.885.3147 randy.brogdon @troutmansanders.com

2. Background: SSM Provisions • Allow emissions in excess of permit limits during, or resulting from, unit startup, shutdown and malfunctions under certain circumstances • Most have been on the states’ books for decades and were approved by EPA as part of State Implementation Plan (SIP) submittals under the Clean Air Act • Not specific to any particular industry/pollutant

3. Background: SSM Provisions • Why SSM provisions are important: • Sources may not be able to meet applicable emission limits outside of normal source operation • They clarify that excess emissions are not necessarily a violation of the Clean Air Act • They provide a defense to third party lawsuits for excess emissions during SSM conditions

4. The Georgia SSM Rule

5. SSM Cases • Sierra Club v. Georgia Power, 365 F. Supp. 2d 1297 (N.D. Ga. 2004), reversed and remanded by 443 F.3d 1346 (11th Cir. 2006), summary judgment granted for Defendant in No. 02-00151, 2007 U.S. Dist. LEXIS 100219 (N.D. Ga. Jan. 11, 2007) • Illinois v. S. Illinois Power Co., Illinois Pollution Control Board, PCB No. 04-201 (Feb. 16, 2006) • National Parks Conservation Assoc. v. Tennessee Valley Authority, No. 00-00547 (E.D. Tenn. 2000) • Biodiversity Conservation Alliance, et. al. v. Mountain Cement Co., No. 04-00361 (D. Wyo. Nov. 17, 2004) • Sierra Club v. PSC Colo., 894 F. Supp 1455 (D. Colo. 1996) • Sierra Club v. Tri-State Generation and Transmission, PSC of Colo., Salt River Project Agricultural Improvement and Power District, Pacificorp, and Platte River Power Authority, No. 96-02368 (D. Colo. March 19, 2001) • United States v. Exelon Mystic LLC, No. 04-10213 (D. Mass. Jan. 29, 2004) • Grand Canyon Trust v. PSC New Mexico, No. 02-00552 (D.N.M. Mar. 10, 2005) • Sierra Club v. TVA, No. 02-02279 (N.D. Ala. 2002) • Citizens for Pennsylvania’s Future v. Allegheny Energy Supply Co., No. 05-00186 (W.D. Pa. July 13, 2006) • PennFuture v. FirstEnergy Corp., No. 07-01412 (W.D. Penn. Oct. 15, 2007) • Md. Dept. of Env’t v. Constellation Power Source Generation, Inc., No. 02-CV-07122918 (Md. Cir. Ct. Sept. 28, 2007) • Sierra Club and Wyoming Outdoor Council v. PacifiCorp, No. 07-cv-042-J (D. Wyo. Feb. 21, 2007) • Conservation Law Foundation, Inc. and HealthLink, Inc. v. Dominion Energy New England, Inc., No 1:10-cv-11069 (D. Mass. Dec. 21, 2011)

6. Case Study: Plant Wansley • In 2002 Sierra Club brought a citizen suit alleging thousands of violations of the Clean Air Act over a five year period (all resulted from SSM) • Excess opacity – continuously monitored in 6-minute increments • Court held that Georgia SSM Provision, once proven and not challenged by Plaintiffs, provided a complete defense • 11th Circuit Court of Appeals upheld validity of the Georgia SSM Rule

7. The Sierra Club Petition • Filed Petition on June 30, 2011 • Requested that EPA: • Revoke its prior approval of Georgia’s SSM rules; • Issue a “SIP Call” – requiring Georgia to revise its rules and significantly limit the scope of the SSM provisions, and/or; • Issue a “FIP” – an EPA rule that would take the place of the current Georgia SSM rules

8. EPA’s Proposed Rule • Issued on February 22, 2013 • Proposed to grant Sierra Club’s Petition for 36 states, including Georgia • Provided only 30 days for public comment (agreed to extend another 30 days) • Final Rule due September 26, 2013

9. Impact of EPA’s Proposal on Georgia • All excess emissions would be “violations” of applicable emission limits • Excess emissions during planned startup and shutdown would not be exempt • No affirmative defense may be provided for SSM events emissions, making them actionable for civil penalties and injunctive relief (i.e., an order preventing the emissions going forward)

10. Impact of EPA’s Proposal on Georgia • Excess emissions resulting from an unavoidable malfunction would be a violation but EPD may provide a limited affirmative defense to civil penalties • The defense would not apply to injunctive relief • In short, the rule would effectively eliminate the Georgia SSM exemption, particularly as applied to unit startup and shutdown

11. Georgia’s Response • Georgia Power Co. • Oglethorpe Power Corp. • Southeastern Lumber Manufacturers Assoc., Inc. • Martin Marietta Materials • Georgia EPD • Georgia Coalition for Sound Envt’l Policy • Georgia Industry Env’tl Coalition • Georgia Paper & Forest Products Assoc., Inc. • Southern Company • Georgia Association of Manufacturers

12. Objections To EPA’s Proposal • EPA failed to review relevant data regarding improved air quality • Many SSM events are unavoidable due to technical limitations of pollution control equipment • Violates state/federal partnership under CAA • No consultation with states targeted by SIP Call • CAA does not prohibit use of SSM exemptions • Change in EPA’s past position/approvals • EPA still uses SSM exemptions in Federal rulemakings

13. Sue and Settle • Environmental group files friendly lawsuit against EPA • EPA negotiates a settlement that generally includes expected deadlines • Confidential “settlement discussions” ensue • Settlement filed with court via consent decree • Settlement terms/proposal released to public for comment

14. Sue & Settle (Cont’d) • On July 13, 2013, 13 states (including GA), filed suit against EPA for failure to produce records relevant to sue and settle • EPA voluntarily agreed to make notices to sue publicly available

15. What’s Next? • Final Rule due on September 26, 2013 • Proposed SIP Call rulemaking • Subject to public notice and comment • Deadline for state action of 12-24 months • Possible proposed FIP (for states that fail to act by the deadline) • Appeals likely • Stay of the rule pending appeal less likely • States may have to move forward with rule changes

16. QUESTIONS? Randy E. Brogdon Troutman Sanders randy.brogdon@troutmansanders.com www.environmentallawandpolicy.com