Earthjustice litigation succeeded in closing a gaping air pollution loophole known as the startup, shutdown, and malfunction exemption, which allowed industrial facilities to blanket nearby communities with toxic air pollution, all without warning or accountability.

Jim Pew, a staff attorney who has been working on air issues out of Earthjustice’s D.C. office for more than a decade, closed this loophole by exposing it as flatly unlawful. This Q&A was held on December 10, 2010.

What is the startup, shutdown and malfunction (SSM) exemption?

Under the Clean Air Act, EPA sets air pollution limits for industrial facilities like chemical plants and paper mills. That’s generally good news, but in the 1990s the agency created a loophole that said these facilities had to meet their standards at all times except when they were starting up, shutting down, or malfunctioning. The malfunction part swallowed up the standards because it meant polluters could exceed emission limits with impunity by claiming that their excess pollution resulted from malfunctions.

The practical result of the SSM exemption was that many major polluters violated their emission standards routinely, claiming that all their violations resulted from “malfunctions.” One report found that the annual malfunction emissions from a number of facilities were actually greater than the total emissions those facilities reported emitting for the entire year.

Citizens and government agencies were helpless to stop the practice. Virtually any violation of emission standards—other than deliberate ones—could be described as a malfunction, and no plant is going to admit to deliberately breaking the law. And, once a plant claimed that its excess pollution resulted from a malfunction, the Clean Air Act’s simple enforceable standards were converted into an extremely difficult and expensive litigation process. Because such cases were beyond the resources of citizens and even government agencies, people were forced to watch helplessly as plants “accidently” flouted pollution limits on a regular basis.

How do plant malfunctions affect nearby communities?

Jesse Marquez, an Earthjustice client and founder of the Coalition for a Safe Environment who lives in Wilmington, Calif., a community near the port of Los Angeles that’s ringed by refineries, experienced these so-called “accidents” on a semi-weekly basis. During malfunctions, these plants could either flare or directly vent their pollution into the air, releasing large quantities of harmful pollutants over a short time. Clouds of black smoke would envelope the neighborhood and people would get sick from the fumes.

During the L.A. blackouts, the Wilmington refineries vented enormous amounts of pollution because their pollution control equipment ran on city power. When Marquez contacted the local air board to alert them of the problem, the air board said there was nothing they could do because the pollution resulted from a malfunction. In 2007, there was another power outage in Wilmington, and the neighborhood was again blanketed in black smoke. Although the pollution caused by a power loss were plainly foreseeable by that time, the refineries still hadn’t taken any steps to prevent it. When there’s no accountability, why pay for the backup plan?

How was the loophole created?

During the Clinton administration, there was a lot of industry pressure to weaken air pollution standards, as always. Although the Clinton-era EPA sought to appease industry by creating the SSM loophole, it also established requirements to contain that loophole. Major polluters had to develop plans to minimize their emissions during malfunctions, get those plans approved by their state permitting authority in a process open to public participation, and then follow those plans during all malfunction events. A plant’s failure to follow its plan requirements during malfunctions was an enforceable violation of the Clean Air Act.

In a series of obscure regulatory revisions, however, the Bush-era EPA turned the plan requirements into a meaningless paper pushing exercise. Plants didn’t have to follow their plans, the plans weren’t adequately reviewed, and the public was cut out of the process altogether.

What the Bush administration did was clearly illegal, so starting in 2002 Earthjustice filed lawsuits challenging both the removal of the plan requirements and the malfunction exemption itself. After extensive litigation, a federal court found that the malfunction exemption was flatly unlawful. Because the Clean Air Act required compliance with emission standards at all times, without exception, the EPA never had the authority to exempt pollution sources from compliance at any time. By removing the Clinton-era limits on the exemption, the Bush administration overreached. And fortunately we were there to catch them at it.

Since this exemption benefited basically any plant with a smokestack, industry poured in an enormous amount of resources to preserve it. They appealed all the way to the Supreme Court, which declined to hear the case.

What are the next steps?

The court’s decision immediately eliminated the SSM exemption for about 35 different industries. Unfortunately, EPA had written parallel versions of this same exemption into individual rules for more than 60 other industries. The court’s decision makes plain that these exemptions are unlawful, too, and we’re working with EPA to eliminate them. The Obama administration, which has stated emphatically that alleviating toxic pollution’s effects on communities is a top priority, should be willing to help on this point but providing political and popular support for this action will be critical.

Earthjustice is also watching to see if EPA tries to reinstate a less egregious version of the malfunction exemption by creating an affirmative defense for malfunction events. Although the affirmative defense would not exempt polluters from compliance with emission standards during malfunctions, it would exempt them from penalties for violating emission standards if the violation occurred because of a malfunction and the polluter took certain measures to control emissions. This affirmative defense is not as bad as the outright exemption, but still makes the enforcement of Clean Air Act emission standards far more complicated, expensive, and time-consuming than Congress intended. Under the Clean Air Act, initially the idea was that you simply compared two numbers, what the plant was emitting and what it was allowed to emit. If a plant exceeded its allowable emissions, that was a violation.

So there are a few more steps in this case. It’s not the end of the story, but it’s a big improvement.