Shifting Winds Ahead

The coming year is likely to see significant developments in air quality management. New Source Review (NSR) reform and hazardous air pollutant (HAP) control likely will have the most immediate impact on industrial facilities. Clean Air Act reauthorization, attainment status and new U.S. Environmental Protection Agency (EPA) initiatives will have a more general impact.

NSR REFORM

EPA's long delayed NSR reform efforts culminated on November 22, 2002. EPA adopted a voluminous final rule that included: (1) plantwide applicability limits (PALs), which are facility wide emissions limits that allow certain changes within the plant so long as overall emissions do not increase, (2), a clean unit exclusion, under which certain units with state of the art technology can be modified as long as allowable emissions do not increase, (3) an exclusion for pollution control and prevention projects that employ environmentally beneficial technology, (4) a past actual to projected future actual applicability methodology for determining when NSR applies, and (5) an improved baseline calculation under which an industrial source may use the highest consecutive 24-month period within the immediately

preceding 10 years to establish past actual emissions. As with any major change to a significant regulatory program, the final rule leaves many questions unanswered. EPA permitting actions in 2003, and the obvious court challenges to the NSR rule, will determine how much "reform" actually occurs.

Further, EPA proposed new regulations that would provide a cost-based threshold for that often elusive concept of routine maintenance, repair and replacement. Under the proposal, EPA would establish an "Annual Maintenance, Repair and Replacement Allowance" for each stationary source on an industry by industry basis. Modifications that do not exceed this cost would be excluded from NSR. EPA also proposed excluding from NSR review replacing equipment with new equipment that serves the same function and does not alter the basic design parameters of the unit.

One new concept has entered the NSR reform debate: state flexibility. Many states have NSR regulations that were adopted as valid state laws and approved by EPA as State Implementation Plan (SIP) amendments: the approved states. Other states do not have NSR packages that have been approved by EPA, they simply operate the federal NSR program at the state level as a delegate of EPA: the delegated states. This makes a significant difference for NSR reform. In delegated states, the final change to the NSR regulations will be implemented immediately, since they are simply implementing federal regulations. Approved states are operating under federally approved state law, so the change to the federal NSR regulations is not immediately effective. Approved states must adopt different state laws that mirror the NSR reform package and have those laws approved by EPA before the change would become effective. Not all states may be interested in "relaxing" the stringency of their NSR programs. EPA is considering initiating a SIP call to require the approved states to adopt the NSR reform package content. Facility managers considering plant expansion, improvements or modifications will want to keep a close eye on this issue in 2003.

Ozone Non-attainment Redesignation

As 2001 came to a close, many states had accumulated enough compliant ambient air quality data to show attainment for certain areas regarding ozone. This even included areas previously designated as severe non-attainment, such a Chicago. States began preparing attainment designations for submission to EPA and states planning for more stringent ozone controls received less attention than they otherwise might have. Unfortunately, the summer of 2002 was not a kind one for air quality. While some areas, such as San Diego, achieved attainment, in other areas ozone levels were high, and the attainment aspirations evaporated. In 2003, many of those states will be pushing hard and fast to adopt more stringent ozone controls.

MACT Standards

HAP control will be very active in 2003 on several fronts -- new regulations, the maximum achievable control technology (MACT) hammer and residual risk. Each presents issues for plant compliance in 2003.

First, EPA has been very active in proposing and adopting final MACT standards during 2002. All facilities affected by those standards should have programs to achieve compliance by the deadline. Remember that proposed MACT rules have a special significance. If you are presently building or modifying equipment subject to a proposed MACT rule, that equipment must comply with the rule on the date the proposed rule is final or upon startup of the affected source, whichever is later. Since you do not know when that rule will become final, that means any such equipment must be built today to comply with the proposed rule as soon as the equipment starts operating. In that respect, for any new equipment or modifications the rule is final and effective on the day it is proposed.

In addition, the MACT hammer provisions are upon us. Section 112(j) of the Clean Air Act provides that in the event that EPA misses its deadline for promulgation of a MACT standard, the owner/operator of that major HAP source must submit an application for a permit to the permitting authority. The application must identify a site-specific MACT for the facility. EPA set a deadline of March 15, 2002, for the Part I initial notification (very simple information about the facility) and March 15, 2004, for the Part II submittal, which includes an identification by the applicant of what it believes is an appropriate site-specific MACT standard and how that facility will achieve the standard. Sierra Club disagreed with EPA and filed a lawsuit. After negotiation, EPA proposed a settlement that set the Part II deadline at March 15, 2003. At least in theory, every major MACT categorical source will have a formal plan for HAP control in place next year.

Compliance with the 112(j) MACT hammer presents problems for several reasons. First, you are required to identify whether you are subject to a regulation that EPA had not written yet.

This may be easy in some circumstances, but many facilities have operations that may or may not fall into a categorical standard depending upon how EPA addresses the issue. Second, even if you do think you have activities that will fall into a categorical standard, what level of control should you propose in your Part II submittal as constituting MACT? By and large, EPA and the states will rely heavily on any "proposed" MACT standard for guidance on these points. If your facility has activities that would be subject to the proposed MACT, you should file a Part I and Part II submittal. If you are subject to the MACT, then the "proposed" MACT control plan is probably the most appropriate solution.

If your facility already complies with an existing MACT standard, you may think your HAP problems are behind you. Not so. The Clean Air Act required EPA to set initial MACT categorical standards, primarily based upon technological considerations. But, under Section 112(f), EPA was required to re-evaluate the residual risk posed by emissions from those categorical sources after MACT had been implemented. EPA has now begun residual risk evaluations for various source categories. Your facility may be receiving EPA requests for information about your operations, HAP emissions and any health risk assessments. If EPA finds risk levels for carcinogens over one in a million for the most exposed individual, additional regulations are likely. Some of these residual risk investigations may be more detailed, or cover more activities, than were covered in the evaluation for EPA's initial MACT standard. In addition, EPA is conducting studies to evaluate the HAP risk levels in certain geographic areas from combined industrial activities.

You still may have significant HAP control problems to face if your facility is a major source of HAP, even if you clearly are not subject to any categorical MACT standard. Section 112(g) establishes requirements for owners or operators who intend to construct, reconstruct or modify a major source of HAP, even when those sources are not subject to regulation as a categorical source. When no emission standard has been promulgated under section 112(d) of the act, determinations concerning such sources must be made on a case by case basis using what is called the new source MACT concept.

Overall, the Clean Air Act's HAP requirements will be a major challenge for any facility that has the potential to emit major source quantities of HAP (10 tons per year of any one HAP or 25 tons per year of all HAP combined). It is important to realize that these thresholds apply to all HAP emissions from your facility, not just the emissions from specific activities subject to a categorical MACT standard. You could have 10 activities at your facility that are covered under various MACT rules, but you may not be subject to any of those rules if your facility's total potential HAP emissions are below the HAP threshold. Conversely, if your facility's total potential HAP emissions exceed the threshold, all 10 activities may be subject to the various MACT standards, even though no single activity has major HAP emissions.

Clearly, the best solution is to reduce your potential to emit HAP to below major source thresholds in a timely manner. EPA, and most states, follow the "once in, always in" theory; if you are a major source by a particular compliance date, you are subject to the MACT, even if you later reduce emissions. You can avoid MACT applicability, as long as you can reduce your HAP potential to emit to less than major source HAP thresholds, with an appropriate federally enforceable permit, before the compliance date.

Clean Air Act Reauthorization

As the new Republican controlled Congress takes over, the likelihood of a significant rewrite of the Clean Air Act increases. Both the House and Senate environmental committee chairs have said they want to make the Clean Air Act reauthorization a priority. Senate Environment and Public Works Chairman, Senator James Inhofe (R-Okla.), has been a vocal critic of the burden the Clean Air Act places on industry. Likely reform topics include "sound science" as a basis for regulation and "cost-benefit analysis."

New EPA Initiatives

EPA has a number of new initiatives under consideration. Many of these initiatives relate to homeland security and potential planning by industrial sectors considered to be at risk. One new aspect has been EPA's announced intention to set indoor air quality risk standards. EPA does not have legal authority to set standards for indoor air quality. However, EPA is charged with the clean up for any terrorist activity, such as the World Trade Center. EPA's position is that it cannot clean up a site, or announce to the public that a site is safe, unless it identifies what a safe level of contaminants might be. Therefore, EPA intends to identify biological and chemical substances for which indoor air reference levels may be needed and develop a process for identifying such levels. EPA's levels may not be legally binding, but they are very likely to be used in many unintended circumstances, such as personal injury tort litigation.

This article originally appeared in the 01/01/2003 issue of Environmental Protection.

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