Regulatory Climate Changes

Top issues in air quality management in 2005

In prior years one or two major issues have dominated regarding air pollution. This year, there will be a fascinating mix of significant issues, including hazardous air pollutants (HAPs), implementation of the new ambient air quality standards, Title V permitting, New Source Review (NSR), and enforcement.

Hazardous Air Pollutants
The U.S. Environmental Protection Agency (EPA) has been extremely active in the last few years promulgating final regulations for control of HAPs for industrial categories. More than 40 maximum achievable control technology (MACT) standards have final compliance dates of 2005, 2006, or 2007. Industrial facilities in any of those categories should be deep into the planning process for construction, testing, and compliance by now. In addition, EPA has a significant start on regulations for residual risk and for area sources. Potentially impacted facilities may wish to participate in the regulatory development to ensure their concerns are addressed.

Boiler MACT
One of the most extensive HAP regulations was the MACT standard for industrial, commercial, and institutional boilers and process heaters (Boiler MACT standard). EPA estimates that 58,000 existing boilers and process heaters and 40,000 new boilers and process heaters built over the next five years will be subject to this final rule. The nationwide cost for the final rule during the first five years is estimated to be $1.7 billion for capital expenditures alone.

Facilities with an existing affected unit must notify EPA by March 12, 2005, and be in compliance by September 13, 2007. New industrial boilers and process heaters must comply with the final rule when they are brought on line.

The Boiler MACT standard contains a previously used "off-ramp" process that allows facilities to escape the MACT requirements. If the facility can demonstrate that potential adverse health and environmental impacts are low, they may be subject to less stringent controls or escape control entirely. The final boiler MACT standard provides three ways a facility may demonstrate low risk and escape MACT requirements: "look up tables," site-specific modeling, or a similar eligibility test.

MACT Low-Risk Off-Ramp
EPA has used risk-based off-ramp provisions in the recent past to eliminate control technology requirements where little or no public health benefits would have been achieved. EPA used this process to exclude an entire category of emissions in the 2004 Lime Manufacturing MACT standard. In the 2004 Plywood Manufacturing MACT standard, EPA also created a low risk subcategory. Of the 233 affected plywood facilities, approximately 164 may qualify as low risk.

EPA generally allows facilities to demonstrate low-risk status in a number of ways: EPA can provide look-up tables to ease the process for those facilities that clearly are low-risk. If a facility does not qualify as low risk via the table, it may perform a site-specific risk assessment using any scientifically credible method. The facilities must demonstrate low risk for emissions from a variety of HAPs. The risks must be less than 10-6 for carcinogens and less than or equal to a hazard index (HI) of 1.0 noncarcinogens. EPA will review the site-specific risk assessments. If approved, EPA will set emission rates and stack parameters in the permit to ensure the risk assessment levels are not exceeded. Any changes to these permit limits would require a significant permit modification.

Residual Risk
For each MACT category, EPA must evaluate whether any residual risk (RR) remains after the MACT category has been implemented. Where certain risk levels are exceeded, EPA must set additional control requirements. All 20 of the two- and four-year MACT RR standards have been started. Five of the 24 seven-year-old MACT programs have been initiated. EPA has agreed to deadlines for finalizing the first RR standards for coke oven batteries by March 15, 2005, and dry cleaners by April 28, 2006. EPA is negotiating dates to propose RR rules for a particular National Emissions Standards for Hazardous Air Pollutants (NESHA), which will be the Hazardous Organic NESHAP (HON). The agency will also negotiate dates for halogenated solvents, (currently anticipated in 2006), industrial cooling towers, magnetic tape, ethylene oxide sterilizers, and gasoline distribution (approximately the end of 2006).

EPA is also considering a total facility low-risk exemption from the RR determinations, possibly some kind of generic residual risk rule. This would replace marching through residual risk determinations to set a low-risk off-ramp on a category-by-category basis. Facilities that seek a low-risk exemption from residual risk requirements (where MACT standards are already applied) would need to quantify emissions, characterize toxicity, identify release characteristics, and submit the information to EPA for approval and implementation in the permit. This concept is still in the workgroup phase. Even though EPA has not yet released any guidance and there are lots of unknowns, the agency may nonetheless have a regulatory proposal by late 2005.

Area Sources
EPA is developing standards to control toxic air pollutants from area sources. Area sources are those sources that emit less than 10 tons annually of a single HAP or less than 25 tons or more annually of a combination of HAPs. EPA has 70 categories listed. Final regulations have been completed for 15 standards, and EPA is under a consent decree to complete five additional categories by December 2007 (oil and gas production, stationary internal combustion engines, other solid waste incineration, hospital sterilizers, and gasoline Stage I distribution). EPA has ongoing litigation or mediation actions regarding deadlines for additional standards. Approximately 30 area source standards have been started, which include the top 20 that are based upon toxicity weighting.

Implementation of the 8-hour Ozone and PM2.5 Standards
EPA's most recent review of the National Ambient Air Quality Standards (NAAQS) resulted in issuance of two new standards, the 8-hour Ozone Standard and the fine particulate matter (PM2.5) standard. As with every NAAQS, EPA first designates the areas that do not attain the standards, and then requires the states to provide implementation plans that demonstrate how the new NAAQS will be achieved and maintained. Both the designation process and the state implementation plan (SIP) process have immediate and long-term consequences for facilities.

Eight-Hour Ozone
In 1997, EPA adopted the NAAQS for 8-hour ozone and adopted the final designation of attainment and non-attainment areas in April, 2004. Because EPA had a previous ozone regulatory framework in place, implementation of the new NAAQS will be significantly eased. State implementation plans (SIPs) must be submitted to EPA by June 2007. Nonattainment areas must achieve compliance with the NAAQS by dates ranging from 2007 to 2021, depending upon the severity of the nonattainment air quality designation. States will be adopting new regulations to control ozone precursors and to extend controls into areas not previously designated as ozone nonattainment.

For many areas, the previous ozone nonattainment designation mandated Title V permits if the potential to emit ozone precursors was greater than 10, 25, or 50 tons per year. Under the new ozone designation, the threshold for requiring a Title V permits may be increased. EPA is adopting the position that any facility previously required to secure a Title V permit must continue that Title V permit even if the potential to emit is below the new thresholds. However, new facilities, or existing facilities in newly designated areas, will only be required to secure a Title V permit if there potential to emit exceeds the new thresholds.

Because of the previously existing ozone regulatory framework, implementation of PSD and nonattainment NSR should proceed relatively smoothly.

EPA adopted the NAAQS for PM2.5 in 1997, and intended to adopt the final designation of attainment and nonattainment areas by the end of 2004. Because EPA did not have a previous PM2.5 control program in place, implementation of this NAAQS will be significantly more complicated.

PM2.5 may either be directly emitted (primary PM2.5) or maybe formed in the atmosphere by chemical reaction of precursors (secondary PM2.5), which are primarily composed of sulfates, nitrates, organic carbon, and ammonia. PM2.5 results mainly from combustion activities (motor vehicles, power plants, wood burning, etc.) and certain industrial processes. There is a significant debate within EPA as to whether ammonia should be controlled as a PM2.5 precursor. Ammonia emissions come from farms, a politically powerful group that is generally unfamiliar with the complex Title V and NSR permitting process. EPA may leave ammonia control as an option that states can either select or decline.

The lack of a previous PM2.5 program makes the development of SIPs and permitting decisions significantly more complicated. EPA has not yet adopted the list of precursors that must be controlled in a PM2.5 SIP, nor have they adopted the threshold emissions levels that would trigger Title V permitting or permitting under the NSR program. EPA anticipates promulgating a final implementation policy that will answer these questions in the middle of 2005. However, the delay in adopting this policy creates a significant permitting nightmare. New major sources for PM2.5 or major modifications at existing sources cannot be constructed until they have the appropriate permit. States cannot issue such permits until they have the mid-2005 final guidance from EPA. Even when the guidance is final, the permitting process will be cumbersome and lengthy because the program is new. Any facility anticipating constructing a major PM2.5 source prior to 2006 may face substantial permitting delays.

New Source Review Reform Status
NSR reform has settled down somewhat from its turbulent past. As of March 3, 2003, EPA's changes are final for: (1) the actual-to-projected-future-actual applicability test, (2) the determination of baseline actual emissions, (3) plantwide applicability limits, (4) clean unit status, and (4) pollution-control project exclusions. No significant changes are anticipated in these areas until the legal challenges are resolved. These changes are not being implemented in a clear and effective manner in all jurisdictions. First, the changes are only immediately applicable in the limited number of jurisdictions operating under NSR delegation from EPA. State-run NSR programs must change their underlying state laws and regulations to implement these changes. Also, permitting agencies are uncertain about how to implement these changes at the fine level of detail required for individual permits. Therefore, any permit application attempting to take advantage of these changes will likely proceed very slowly.

Changes were proposed for routine maintenance, repair, and replacement (RMRR) but were stayed by a court ruling. These changes will not become effective until EPA completes its reevaluation of the rules or until the judicial challenges are finally resolved

Title V Permit Reissuance
The Title V permit process remains active. Most jurisdictions have issued nearly all of the initial Title V permits. The few that remain are the more complex and controversial facilities, such as coal-fired power plants. States have begun reviewing the renewal applications for facilities previously granted Title V permits. During the initial round of Title V permit issuance, EPA reviewed very few of the state-issued permits. In contrast, now during the renewal round, EPA is reviewing nearly all of the Title V permits and reviewing them in significant detail.

As part of the Title V reissuance process, the compliance assurance monitoring (CAM) rules are applicable. Any Title V source that is subject to an emission limitation, uses a control devise to achieve compliance, and has pre-control emissions greater than the major source threshold is subject to CAM. Facilities undergoing renewal may find significantly increased requirements for monitoring, operational controls, and recordkeeping.

There are several significant developments regarding enforcement. First, during 2003, EPA added a significant number of new attorneys to regional staff. This added capacity, and some media criticism regarding prior inadequate enforcement, have resulted in a growing number of EPA enforcement cases. State enforcement capabilities have been strained by the poor financial condition of most state treasuries. This increases the likelihood that air enforcement will increasingly be brought by EPA rather than the state environmental agencies.

A peer-review panel of the Science Advisory Board is urging EPA to change how it calculates penalties for violations of environmental laws to account for "illegal competitive advantage," situations in which violators' profits may have increased by delayed or avoided compliance costs. The panel also urged EPA to include a penalty factor for the harm caused now that economists have better techniques to measure harm in monetary terms. Finally, the panel urged EPA to increase civil penalties where the probability of detection was low. For example, if a large oil tanker were to have an accident, the probability that the accident would be detected and the firm punished is high and no penalty adjustment would be needed. Where it was less likely that a firm's violation would be detected, the panel urged EPA to boost the penalty to increase deterrence.

Overall, 2005 will be an interesting year in air pollution control. Facilities will need to interact vigorously during permitting and regulatory activity to minimize unnecessary obstacles and insure maximum future flexibility for their operations.

This article originally appeared in the 01/01/2005 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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