On the Horizon

Top issues in air quality management in 2004

2004 will prove to be an interesting year for air pollution control. Just as last year, New Source Review (NSR) reform will continue to dominate the landscape with legislative, regulatory and judicial efforts to swing the pendulum in favor of particular viewpoints. Media attention on the NSR issue may overshadow equally important developments in Hazardous Air Pollutant (HAP) control, more stringent Title V permitting, implementation of new National Ambient Air Quality Standards (NAAQS) and enforcement.

NSR Reform
At the end of 2001, the U.S. Environmental Protection Agency (EPA) adopted the first part of NSR reform. That action 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 ten years to establish past actual emissions.

On October 27, 2003, EPA promulgated the second part of the NSR reform effort, the "routine maintenance" rule with an effective date of December 26, 2003. NSR regulations require any major modification at a major source to undergo NSR review. However, EPA excludes from NSR those activities described as "routine maintenance, repair or replacement" (RMRR). This phrase has never previously been defined, past EPA decisions have interpreted the term on a case-by-case basis. EPA made past determinations by weighing the project's nature, extent, purpose, the frequency with which the particular type of project is usually done in that industry and the cost of the work.

Historically, the best generalization regarding RMRR, was that EPA evaluated whether that type of physical change is common in the particular industrial sector. If the industry as a whole made this type of physical change every two or three years, it would likely be declared RMRR, regardless of the cost. If the industry as a whole made this type of expensive change only every 10 years or less, EPA was more likely to call that change a "life extension" activity and subject it to NSR. This changed dramatically in the new final rule.

The new rule goes straight to the point by saying that without regard to other considerations, routine maintenance, repair and replacement includes, but is not limited to, the replacement of any component of a process unit so long as:

  • It is replaced with an identical or functionally equivalent component(s), and maintenance and repair activities that are part of the replacement activity;
  • The fixed capital cost of the replacement component(s) plus the cost of any associated maintenance and repair activities that are part of the replacement do not exceed 20 percent of the replacement value of the process unit, at the time the equipment is replaced;
  • The replacement does not change the basic design parameter(s) of the process unit to which the activity pertains; and
  • The replacement activity does not cause the process unit to exceed any legally enforceable emission limitation, or operational limitation that applies to the process unit and has the effect of constraining emissions.

While many of the fine points remain to be worked out, the new rule provides a degree of clarity and precision that was previously lacking for day-to-day decision making at industrial facilities.

As with the prior NSR reform actions, this rule becomes applicable immediately in jurisdictions that operate the NSR program under delegation from EPA (about a dozen jurisdictions), called the delegated states. Other jurisdictions have adopted valid state or local laws to implement NSR and had those approved by EPA as State Implementation Plans, the approved states. Those approved jurisdictions have three years from EPA's final adoption to either adopt equivalent state or local rules or to demonstrate to EPA that their existing NSR program is no less stringent than the new rules. Proving that one NSR approach is no less stringent than another can be very difficult.

Originally, many states said they would not adopt the final EPA NSR reforms because the states considered the new rules to be a relaxation of existing NSR requirements. EPA has applied significant pressure for approved states to adopt these new rules. Some states have discussed with EPA what would be required for a "no less stringent" NSR demonstration and have concluded they have neither the resources nor enthusiasm for that type of conflict with EPA. STAPPA/ALAPCO, an organization of state and local air pollution control officials, has circulated a generic set of alternative NSR regulatory language for states to consider. STAPPA/ALAPCO believes these alternatives are more stringent than the new EPA final rules, but have a reasonable chance of securing EPA approval as no less stringent. There will be substantial debate in 2004 as the approved states try to see how far from the final EPA language they can stray without significant conflict over the no less stringent demonstration.

No discussion of NSR reform would be complete without at least mentioning the legislative and judicial actions that are pending. At both the federal and state level, legislative actions have been initiated to roll back the EPA final rules on NSR reform. Every final NSR reform rule adopted by EPA has been challenged in the courts. Most commentators believe that Congress will not overturn the NSR reforms, and that state legislative action on that front will prove ineffective. The judicial picture is less clear.

EPA had initiated a series of enforcement actions, primarily against the coal-fired electric utility industry, arguing that the RMRR exception from NSR was a very limited exception that had been used improvidently by the coal-fired power plants. Most of those cases have not yet had formal final judicial opinions on exactly what RMRR means. However, there have been a few lower federal court opinions that say the language Congress adopted in the Clean Air Act regarding RMRR was very narrow, and suggesting that the coal-fired power plants and EPA had applied the exception far too broadly in the past. Neither the few final enforcement opinions, nor the as yet undecided regulatory appeals show a clear future judicial direction. It seems certain the affected interests will try to move these legal cases all the way to the U.S. Supreme Court.

More Stringent Title V Permitting
Despite the importance of NSR reform, there are other significant air issues, including the new Title V permitting paradigm. Initial Title V permits were issued as quickly as possible, largely the permit simply incorporated existing language from previously issued construction and operating permits for that facility into the new Title V document, while adding some standard general permit language the state had negotiated with EPA for all permits in that locale. Now, some of those previously issued Title V permits are up for five-year renewal. Other facilities may need a significant modification for some reason, and their permit is under review also. The issuance of these second generation Title V permits is being managed substantially differently than the initial permits.

Facilities subject to Title V permit renewal are finding a dramatic increase in the permitting agency's scrutiny of facility operations, emission calculation methodologies, recordkeeping and compliance demonstrations. At each stage, the facility is being asked to provide validation for assumptions and being asked to keep records for in-process factors that may influence emissions. These evaluations are far more rigorous than those performed during the initial Title V permit review. Moreover, permitting agencies are demanding more detailed in-process permit limitations, under the theory of "practically enforceable conditions," to prevent any operating conditions that might theoretically cause emissions violations. This not only requires far more disclosure of process technologies than most industries would choose, it also mandates certain interim production restrictions that limit plant flexibility. If you need to change these interim requirements to respond to changing market conditions, the significant permit modification may take a year to process.

In addition, testing and compliance conditions are becoming more restrictive. Historically, a 95 percent destruction requirement for a regenerative thermal oxidizer (RTO) was evaluated under Method 25 as the average of three one-hour test runs. There could be substantial minute-by-minute variation above and below 95 percent destruction, so long as the average of the three one-hour tests was above 95 percent. Now, under the compliance assurance monitoring rules and more recent Title V permits, you may need to meet that 95 percent destruction efficiency every single minute. Clearly, this is a far more stringent standard. Overall, the newer Title V permits are far more detailed, more complex, more stringent and intrude more deeply into plant operations.

MACT Standards
New issues are arising in the hazardous air pollutant area also. Many maximum achievable control technology (MACT) standards have been final for quite some time and EPA is evaluating the residual risk from these industries to see if additional control is warranted. Under Section 112(f), if EPA finds risk levels for carcinogens over one in one million for the most exposed individual, additional regulations are likely. EPA's initial MACT standards were essentially technology based, the 112(f) standards will be risk based. Recently, EPA has increased activity to contact industries for information to assess this risk level. Many industries are finding EPA's information inquiry to extend far beyond issues considered in the original MACT proceeding and the potential control costs could be staggering. Also, some risk-causing activities, such as welding, are generic across industries. Will these activities be evaluated differently in each industrial category? If not, will the first 112(f) standard for such activities be the basis for all future evaluations? These questions will draw a great deal of attention in 2004.

Implementation of the New NAAQS
EPA has increased activity to implement the two new National Ambient Air Quality Standards (NAAQS): the eight-hour ozone standard and the fine particulate (PM-2.5) standard. EPA expects to set the final implementation rule for both in 2004, and to sign the final non-attainment designations for both in 2004. Both new standards will expand the present nationwide areas of non-attainment. By mid-2004 we should know who will be primarily impacted. Then, local jurisdictions will have to evaluate and adopt more stringent controls designed to achieve attainment. Both of these pollutants are heavily affected by pollutant contributions from large regional areas, rather than mostly by local source contributions. Therefore, many states are pushing for a more regional approach to the problem, such as adoption of minimum national standards for critical industrial sectors known to contribute to the problem.

There are two significant developments regarding enforcement. First, stung by criticism of past weak enforcement, Congress has authorized and EPA has expanded its legal staff. Some regions have added as many as 10 new attorneys during late 2003. This federal expansion comes at a time when poor economic conditions are forcing dramatic reductions in state environmental agency staffing. Many states are asking EPA to step up its enforcement efforts to offset any state environmental agency shortfalls due to low staffing.

Second, public enforcement, or at least public pressure for enforcement against specific facilities, is likely to increase due to a new on-line database. EPA has placed the ECHO database (Enforcement and Compliance History Online) on the Internet. This online database allows the public to search by location or facility name and determine the noncompliance and enforcement history of any facility, including inspections, violations, current significant violations and enforcement. From the start, industry expressed significant concerns about the accuracy of the data and the lack of context about the types of violations.

Overall, 2004 promises to be a very interesting year for air pollution control issues.

This article originally appeared in the 05/01/2004 issue of Environmental Protection.

About the Author

Bill S. Forcade, who has written regulatory forecast articles for Environmental Protection since 2002, is a partner in Jenner & Block’s Chicago office. He is a member of the firm’s Environmental, Energy and Natural Resources Law, Climate and Clean Technology Law, Trade Secrets and Unfair Competition, Defense & Aerospace, and Association practices. His primary focus is in the area of air pollution and enforcement. In the last five years alone, he has represented clients in more than 20 rulemaking proceedings at both the federal and state level, prepared or reviewed more than 50 Title V operating permit applications, Title IV Acid Rain permit applications, and Title I New Source Review Construction Permit applications, provided ongoing regulatory and permit compliance counseling to both large and small companies and represented clients in more than 30 noncompliance negotiations and formal enforcement proceedings brought pursuant to the Clean Air Act, in both federal and state forums, at administrative and judicial levels. In 2008, Forcade was selected by the Leading Lawyers Network as one of the Top Ten Environmental Lawyers in Illinois and is named in the 2009 edition of Best Lawyers in America for environmental law. He received his law degree from The John Marshall Law School in 1976 and his bachelor's degree in biology and chemistry from the University of Illinois at Chicago in 1971.

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