Still Hazy After All These Years

The top air quality management issues in 2006

2006 promises to be a contentious and litigious time in the air pollution control area. The U.S. Environmental Protection Agency (EPA) has announced some significant new hazardous and traditional pollutant regulatory programs that will be legally challenged as either too stringent or too lax, depending upon the litigant. Some programs require states to make dramatic emissions reductions in a manner that will place the coal-fired electric power industry in direct conflict with other industrial segments. Also, new emissions-reduction programs are prompting debate on our fundamental approach to securing clean air.

Hazardous Air Pollutants

Residual Risk
Hazardous Air Pollutants (HAPs) are controlled in two ways under the Clean Air Act. First, EPA adopts technology-based controls, such as the maximum achievable control technology (MACT) standards, applicable to particular industrial categories or processes. Not more than eight years after adopting the MACT standard, EPA must evaluate whether the remaining emissions pose an excess risk (including whether the emissions pose a greater than one in 1 million excess lifetime cancer risk). If so, EPA must adopt additional "residual risk" standards for that category of sources. In 2005 EPA took action on the first two residual risk standards: a final rule on coke-oven batteries and a proposed decision on gasoline distribution facilities. In setting the standards, EPA used the same two-step process (determination acceptable risk and then set an ample margin of safety) used in establishing the benzene National Emission Standard for Hazardous Air Pollutants (NESHAP). The approach in those matters sets EPA's most likely course for the additional residual risk decisions in 2006.

In the first step, EPA determined what would be an "acceptable risk," the maximum individual risk (MIR) of excess cancer, for those coke-battery emission points subject to the 1993 MACT standard. EPA selected a 300 in 1 million risk as acceptable after considering the number of exposed people with excess cancer risk levels, the estimate of annual incidence of cancer (0.04), and the projected absence of adverse non-cancer effects.

In the second step, EPA set control requirements at a level providing for "an ample margin of safety" taking into account health information, costs, technology, feasibility, and other factors. EPA set final control requirements that reduced the excess cancer risks identified in the first step. Once residual risk controls are installed, the excess cancer risk will be greater than one in 1 million for 300,000 people, greater than ten in 1 million for 8,000 people, and greater than 100 in 1 million for less than 10 people. The highest post-control MIR was 270 in 1 million.

EPA used the same approach in a decision regarding gasoline distribution facilities. EPA concluded that the MIR of excess cancer from those emissions points subject to the prior MACT standard was less than three in 1 million, and that this risk level was acceptable. EPA then concluded that no additional controls were necessary to ensure an adequate margin of safety. During 2006, EPA will adopt additional residual risk decisions. Subjects likely to be considered include: dry cleaners, the Hazardous Organic NESHAP, halogenated solvents, industrial cooling towers, magnetic tape, and ethylene oxide sterilizers.

EPA is struggling to implement more than 100 pending residual risk standards despite limited resources. To ease that burden, EPA is considering two approaches that would allow it to focus most resources on risk reduction at the high-risk sources, while expending little effort on low-risk sources. EPA is considering a "generic residual risk rule" (GRRR) -- which is still in the discussion stages at the agency -- that would require industry to conduct risk assessments on their emissions. A facility would be considered "low-risk" if it meets criteria that include cancer risk levels below one in 1 million. Appropriate emissions levels would be written into the facility's air permit, and it would then be exempt from any further steps under the residual risk program.

In addition, EPA is scheduled to propose in 2006 a total facility low risk demonstration rule (TFLRD) that would allow industry to conduct risk assessments on a voluntary basis. Any low-risk facilities would then be exempted from future residual risk rules, even if EPA decides to proceed with individual rules rather than a generic regulation. Both GRRR and TFLRD are similar to the controversial approach EPA took in the boiler and plywood MACT rules, in that they provide an off-ramp for low risk facilities.

Clean Air Mercury Rule
In 2005, EPA adopted regulations to control mercury emissions from coal-fired electric power plants, which will set caps on mercury emissions at about 500 power plants having a total of about 1,300 generating units. The regulation limits mercury emissions through an emissions-trading program similar to the acid rain cap-and-trade program. The caps for 2010 represent a 22-percent reduction from the 1999 baseline level, and the 2018 cap represents a 70-percent reduction.

Interestingly, EPA decided to adopt the Clean Air Mercury Rule under authority of the New Source Performance Standards of Section 111 of the Clean Air Act (Act), rather than under the HAP provisions of Section 112. Only those coal-fired utility units constructed, or modified after Jan. 30, 2004, will be affected by the new source provisions of the final rule. EPA interprets Section 111 of the Act to authorize a "standard of performance" that states must apply to existing sources through a SIP. EPA interpreted this standard of performance to include a state budget for emissions as well as a national cap-and-trade program. Each state must limit emissions from affected new and existing sources to the amount of the budget, and they may do so by allowing their sources to participate in the cap-and-trade program.

Controlling Hazardous Air Pollutants in State Implementation Plans
In late 2005, EPA sent a memorandum to Regional Air Directors summarizing past activity and future goals for multi-pollutant control strategies that would address HAP emission controls as part of the SIP process. The multi-pollutant control strategy involves selecting SIP pollutant control options that maximize reductions for multiple pollutants, including HAPs. EPA has identified priority HAPs, including benzene, acrolein, and diesel PM, as the Tier 1 target pollutants. EPA identified 12 additional HAPs as Tier 2 pollutants and the local jurisdictions are free to identify other HAPs as Tier 3 pollutants. Detroit was chosen as a pilot study for the multi-pollutant control strategy; additional guidance on this issue is expected in 2006.

Criteria Pollutants
Clean Air Interstate Rule

In 2005, EPA adopted the Clean Air Interstate Rule (CAIR), affecting 28 eastern states and the District of Columbia under a federal framework requiring states to reduce emissions of sulfur dioxide (SO2) and nitrogen oxide (NOx). States must achieve the emission reductions using one of two compliance options: 1) require power plants to participate in an interstate cap-and-trade system, or 2) through measures of the state's choosing. EPA anticipates that states will achieve this primarily by reducing emissions from the power generation sector. SIPs under the CAIR rule are due in 2006.

EPA proposed a federal implementation plan (FIP) as a backstop to ensure that CAIR emissions reductions are achieved on schedule. The proposed FIP establishes federal emissions cap and trade programs that cover SO2 emissions, annual NOx emissions, and ozone-season NOx emissions.

Fine Particulate Rule
In late 2005, EPA proposed a regulation on how to implement controls to achieve the fine particulate air quality standard. EPA originally adopted the standard in 1997, and in late 2004 it designated 224 counties in 20 states as non-attainment. The proposed "implementation" rule identifies pollutants to be controlled, as well as the timing and guidelines for states to submit SIPs. The pollutants to be controlled are:

  • Fine particle direct emissions (including organic carbon, elemental carbon and crustal material) must be addressed in all non-attainment areas.
  • SO2 must be addressed in all non-attainment areas.
  • NOx must be addressed in all areas unless the state or EPA demonstrates that NOx is not a significant contributor in a specific area.
  • Volatile organic compounds and ammonia need not be addressed in all areas unless the state or EPA demonstrates that either compound is a significant contributor.

State SIPs will be required to implement reasonably available control measures and reasonably available control technology in a manner that achieves attainment of the fine particle standard as expeditiously as practicable. The proposed implementation rule allows power plants not to install additional controls as long as they are located in states that participate in the CAIR cap-and-trade program. The rule also sets New Source Review thresholds for fine particulates.

Conflicts Between Electric Power Generators and Other Industrial Segments
States are expected to make dramatic emissions reductions as a result of CAIR and the fine particulate rules. The reductions will come predominantly from fuel-combustion sources, which are found at coal-fired power plants and a variety of other industrial sources. EPA rules do not mandate what portion of the required reductions should come from each category of source. That decision is left to the individual states and will be based upon a variety of technical, economic, and political factors. Because of the significant costs for such reductions, the 2006 debates in each of the affected states will be quite spirited.

New Source Review
The New Source Review (NSR) regulations EPA promulgated over the last several years have not suffered major setbacks in the courts, although the courts seem more inclined to accept an increase in hourly emissions rates as the NSR trigger rather than an increase in annual emissions. This year should see some preliminary judicial guidance on the routine maintenance and repair rules, which are stayed. The NSR conflicts are significant and will likely lead to a variety of judicial decisions in 2006, possibly including U.S. Supreme Court review. The future course of NSR will remain in doubt until then.

Last year, EPA removed the one-hour ozone non-attainment designation for large areas of the country. Unless prohibited by local rules, facilities in those areas can now have significantly increased emissions thresholds for new sources or major modifications without undergoing NSR permitting.

Generally speaking, the enforcement picture has been stable. Existing enforcement cases have continued under EPA's prior NSR enforcement initiative against coal-fired power plants and the petroleum refining industry, but the scope has not expanded. EPA continues to focus most of its enforcement efforts on complex cases against facilities that dispute whether major future emissions reductions are required, although these consume far more staff time and resources. State enforcement efforts have rebounded somewhat after a period of diminished activity due to poor state economic conditions. State efforts continue to focus on more routine cases where future compliance options are agreed but penalties are disputed.

Broad Policy Issues
The debate about global warming is heating up -- pun intended -- on several fronts. In the aftermath of hurricanes Katrina and Rita, scientific reports are linking increased hurricane intensity with global warming. Nine states sued a variety of public utilities arguing that their emissions are contributing to global warming. In response to shareholder proposals, many electric power companies have agreed to report publicly about how they are addressing greenhouse gas emissions. Twelve states and numerous environmental organizations sued EPA for failing to regulate greenhouse-gas emissions from new motor vehicles. While none of these efforts have secured a national emissions control program, global warming will be the subject of substantial public and political discussion in 2006.

EPA released a draft ozone criteria document last year that showed a higher causal relationship between ozone levels and mortality. This document may prompt calls for lower future ozone air quality standards, as well as more stringent controls. In addition, EPA released an interim guidance document suggesting more stringent controls should be considered for more highly reactive ozone precursors. In other areas, scientific studies have also implied that more stringent air pollution controls are needed to protect public health.

Global warming, the ozone documents, and the prospect of other potential new or more stringent pollution control programs have reignited discussions on the broader issue of how we regulate air contaminants. In the early 1970s our vision was that clean air could be achieved simply by placing reasonable pollution controls on point sources and mobile sources throughout the United States. Since then, we have made dramatic reductions in emissions, and ambient levels of some pollutants are decreasing; however, other factors have shown that the goal of clean air is more difficult to achieve. Science has continued to detect adverse environmental impacts correlated with new pollutants or ever lower levels of existing pollutants. The growth in our major urban centers has significantly increased our need for pollution-creating activities such as electric power, transportation avenues, and consumer goods. Additional emissions reductions are difficult because most of the easy pollution controls have already been implemented.

Faced with these challenges, environmental scholars are again asking whether we are using all the appropriate tools to achieve the clean air goal. This discussion goes far beyond the traditional debate over whether the better pollution-reduction paradigm is cap-and-trade or command-and-control. The discussion includes topics such as land-use controls, greater emphasis on alternative energy generation methods, mechanisms to reduce our dependence on petrochemicals as fuels, and methods to reduce the urban rush-hour commute nightmare. No solutions to these problems are likely to emerge in 2006, but the debate will shape how the increasingly stringent future air pollution control effort in the United States will be implemented.

This article originally appeared in the 01/01/2006 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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