On June 8, 2007, a three judge panel of the District of Columbia Court of Appeal issued a decision in NRDC v. EPA, vacating both the Commercial and Industrial Solid Waste Incineration (“CISWI”) Unit Rule and the National Emission Standard for Hazardous Air Pollutants Rule for Industrial, Commercial, and Institutional Boilers and Process Heaters (the “Boiler MACT”). The decision will not become effective (meaning the CISWI and Boiler MACT Rules are still effective), until legal delays for rehearing and/or appeal have run. Moreover, two of the three judges wrote concurring opinions which strongly suggest that a stay order, with conditions, is likely to be issued if the parties so request it. With the September 13, 2007, Boiler MACT compliance deadline looming, EPA needs to provide prompt guidance to the thousands of regulated entities on their compliance obligations in light of the decision.

The two rules were addressed in the same appeal, because they are, by statute, mutually exclusive. The CISWI rule was enacted pursuant to Section 129 of the Clean Air Act. Section 129 indicates that any unit regulated under 129 is not to be regulated under Section 112 (i.e., no MACT rule). Section 129 requires EPA to develop rules for CISWI units much like MACT rules – with a “MACT-like” floor approach. However, Section 129 applies to any CISWI unit – not just to such units located at major source of HAPs. Thus, the reach of the CISWI rule is broader. Further, the CISWI rule regulates particulates, NOx and SO2, in addition to certain HAPs. At issue in the case was EPA’s definition of what constitutes a regulated “CISWI unit.” In the rule, EPA defined this term narrowly by excluding any type of unit that burns solid waste for any type of energy recovery. That meant thousands of units were excluded from the CISWI rule but would therefore be regulated under the Boiler MACT instead. In addition, some units burning solid waste for energy recovery would be exempt from regulation altogether as they were not located at a major source of HAP.

The Court struck down the CISWI rule due to its opinion that Section 129 already had an explicit exclusion created by Congress for cogeneration units. The existence of this exemption for just one type of energy recovery indicated to the court that Congress did not intend to exempt all units burning solid waste for energy recovery, but rather only cogeneration units. Thus, the court held that EPA went too far in its exclusion and needs to include such units under the CISWI regulatory program. As issues concerning the “floor” revolve around including these units in the database, the majority found that the CISWI rule should be vacated, not just remanded. Because thousands of CISWI units had been excluded from that rule and included in the database for the Boiler MACT rule, the court vacated the Boiler MACT rule as well.

Much of the decision addressed whether the two rules should be vacated or just remanded. Judge Henderson, the author of the opinion, and concurring Judge Randolph, both indicated vacatur was appropriate, whereas Judge Rogers thought a remand was more appropriate. Judge Randolph’s concurring opinion indicated that although he was voting to vacate the rule, he would entertain a stay order which would stay the court’s decision, at least in part. He indicated that when the court vacates a rule, it can control the remedial process more effectively than it could with a remand order.   He suggested that the court would entertain a stay order with conditions to address the schedule for revising the rules and any issues about what standards should apply in the interim.

It is important to note that the court’s decision to vacate both rules will not be effective until the delays for asking for rehearing have run, or if a rehearing request is filed, until after the court reaches a final decision on rehearing. An appeal to the Supreme Court also has the potential to stay the effectiveness of the court’s decision. Thus, in the meantime both the CISWI Rule and the Boiler MACT rule remain in full effect. Affected parties should pay close attention to the developments following this decision. As has been their practice, it is likely that EPA will provide verbal guidance to state authorities within a short period of time, followed by written guidance at a later date once negotiations with the stakeholders have progressed.

A link to the decision is available at http://www.earthjustice.org/library/legal_docs/court-shuts-down-illegal-epa-incinerator-rule.pdf.