Environmental Law Alert: DC Circuit Issues New MACT Decision on Residual Risk

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This morning the DC Circuit issued an opinion on the challenges by industry and Sierra Club to the Secondary Lead Smelting MACT (or National Emission Standard for Hazardous Air Pollutants, aka NESHAP). The Clean Air Act directs EPA to regulate HAPs in two stages. The first stage is through the technology based 112(d) standards, such as the Boiler MACT standards published earlier this year. The second stage is by revisiting the 112(d) standards and determining whether there is unacceptable residual risk remaining after implementation of the technology standards. These residual risk standards are issued pursuant to 112(f) of the Clean Air Act.

In 1995, EPA issued 112(d) MACT standards for the secondary lead smelting industry limiting lead compounds to 2.0 mg/dscm. In 2012, EPA issued residual risk standards for the secondary lead smelting industry reducing the limit at existing facilities to a facility wide limit of 0.20 mg/dscm and an individual stack lead emissions limit of 1.0 mg/dscm. Both industry and the Sierra Club challenged the residual risk standards. In today's decision, the court summarily rejected all of industry's challenges. The holding of greatest concern, related to EPA's regulation of elemental lead. The Clean Air Act prohibits regulation of elemental lead under the NESHAP program. However, in an approach that is becoming hauntingly familiar, the DC Circuit dismissed the challenge as time barred. The court held that EPA had taken a similar approach in 1995 when it issued the 112(d) standard. The standard was not as onerous in 1995 and so the industry had not challenged the approach. Now that an onerous standard was proposed, the court held that by failing to raise a challenge in 1995, industry had forever forfeited its right to challenge the approach. This is akin to saying that if you did not challenge a Warning given for speeding, you can never challenge a future speeding ticket, but must just pay the fine. However, as Stoel Rives has reported in earlier alerts, this is a position that the DC Circuit has recently taken on several other MACT challenges.

Industry unsuccessfully challenged several other factors of the rule, including EPA only giving the industry 2 years to come into compliance instead of 3 (the court held that for residual risk, that is all EPA can grant) and EPA requiring lead CEMS (the court held that industry had to wait until a Performance Specification was issued to challenge that aspect of the rules).

The most interesting part of the decision is the response to Sierra Club's arguments. Sierra Club argued to the court that when EPA reopens a 112(d) standard to address residual risk, it must go back and recalculate the original MACT requirements in light of the current emission rates. Because the pool of sources would already be compliant with the original technology based MACT, this would impose MACT-on-MACT. The court definitively held that this was not a correct read of the statute and that EPA has no obligation to reopen and recalculate the original 112(d) standard when it issued a residual risk standard (the Court did not go so far as to say EPA is prohibited from doing so, just that they are not required to do so). Sierra Club went on to argue that EPA impermissibly considered cost when setting the residual risk standards. The court held again in favor of EPA (and industry), saying that the best read of the statute authorizes EPA to take into account cost when setting residual risk standards (again, the court did not go so far as to say taking cost into account is mandatory).

All sources subject to MACT standards have to be concerned about how EPA implements the residual risk program. With the initial MACT standards issued, EPA is now required to reassess every NESHAP every 8 years for residual risk. While EPA is way behind in doing say, every MACT standard will eventually have to pass through this gauntlet—and more than once. Therefore, the holding about the amount of compliance time allowed, the confirmation that there is no requirement to reopen the original 112(d) standards the confirmation of and EPA's ability to take into account cost in assessing residual risk are all important decisions that will come into play repeatedly in future years.

If you have any questions about the content of this alert, please contact your Stoel Rives attorney or the key contributor.

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Thomas R. Wood
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