EPA's Consolidated Permitting Regulations: Miracle or Mirage?

Any given major industrial facility often must obtain literally dozens of permits under a variety of pollution control laws in order to operate. A common complaint of plant operators has been that this welter of differing permit requirements and procedures is arcanely confusing, full of redundancies and contradictions, time consuming, and unjustifiably costly. The Environmental Protection Agency (EPA) recently responded to these concerns by issuing "consolidated permitting regulations"¹ that attempt simultaneously to coordinate and streamline the Agency's five major permit programs. The rules are designed to consolidate the procedures for obtaining permits rather than the permits themselves, and separate permitsof essentially unchanged substance must still be obtained to satisfy each applicable statute.

The new regulations are part of EPA's continuing effort to eliminate regulatory dissonance, reduce compliance costs to permittees, and lessen the administrative burdens on the Agency's own limited resources. EPA concedes that the rules are lengthy and replete with numerous cross-references and has apparently adopted a gradualist approach toward consolidation. Nevertheless, the new regulations promise to harmonize and simplify to some degree the plethora of permit requirements and procedures with which dischargers have up to now had to contend.

Genesis of Consolidated Permitting

Unlike some of EPA's other efforts to reform its regulatory programs,² the primary impetus for consolidated permitting came from within the Agency itself rather than from industry. The conceptual premise underlying the scheme is that a facility's discharges and emissions should be viewed by the permitting agency as a whole so that requirements and conditions imposed under various statutory schemes neither work at cross purposes noir overlap unnecessarily.

The substantive criteria upon which permits can be granted, denied, or revoked are set forth in the legislation and "technical" regulations governing each particular permitting program. EPA has not attempted to alter the substance of its preexisting regulations nor to tinker with substantive statutory requirements. It is at other features of these programs over which the Agency has wide discretion, such as processing requirements and decision-making procedures, that the consolidated rules are aimed.

In October 1978 EPA formed a task force to investigate the possibility of coordinating these flexible aspects of the Agency's major permitting programs. EPA's hope was that this effort could lead to streamlining of permit processing, lessening of compliance costs to permittees, facilitation of public participation, and removal of regulatory gaps and inconsistencies. The Agency's further acknowledgement that consolidated permitting procedures could result in a "modest" reduction in its own resource burden in administering these programs indicates that the motive behind formation of the task force was not wholly altruistic.

Proposed Regulations

Building on the task force's work, EPA proposed regulations³ in June 1979 which envisioned a sweeping consolidation of many of the mechanical aspects of permitting across a range of Agency programs. In its proposal, the Agency propounded a single set of permit application forms, compliance reports, state program requirements, and administrative procedures for the Resource Conservation and Recovery Act's (RCRA's)⁴ hazardous waste disposal program, the Safe Drinking Water Act's (SDWA's)⁵ underground injection control (UIC) program, the Clean Water Act's⁶ national pollutant discharge elimination system (NPDES) program, state-administered dredge and fill permit programs under § 404 of the Clean Water Act,⁷ and EPA permitting actions under the Clean Air Act program for the prevention of significant deterioration (PSD) of air quality.⁸

Many commenters worried that the proposed rules might only complicate further an already bewildering tangle of regulatory procedures and requirements. They also expressed concern that consolidation would slow rather that expedite permit issuance and suggested that permit procedures should be consolidated only at the applicant's choice rather than a EPA's option.

Final Consolidated Permitting Regulations

EPA issued final regulations consolidating its permitting procedures on May 5, 1980.⁹ The Agency acknowledged that the rules are lengthy and complex and will not make the substantive requirements of the five affected permit programs any easier to meet. It asserted, however, that the regulations are less complicated and shorter than [10 ELR 10093] five sets of rules developed in isolation from one another.

The new rules basically set forth common permitting procedures and other mechanical requirements and are to work in tandem with the "technical" regulations that prescribe substantive requirements for each of five permit programs. Three sets of these technical rules predated the consolidated regulations,¹⁰ the final portion of the RCRA hazardous waste program rules¹¹ were issued simultaneously with the new consolidated regulations, and final regulations for the UIC program are scheduled to be issued within the next month or two.¹²

Part 122 of the new rules defines a number of key terms and sets out basic program elements such as application requirements, standard permit terms and conditions, and grounds for permit modification and termination. Several provisions of this part are noteworthy either because they have been changed significantly from the version in the proposed regulations or because they were the subject of strong objections at the proposal stage and were made final without substantial revision. Unchanged, for example, is the requirement that a corporate vice-president rather than the plant manager sign the permit application and certify that he is "familiar" with the information in it.¹³ Despite commenters' claims that this requirement would be too burdensome for busy corporate executives, EPA concluded that the provision was necessary to ensure both an adequate degree of corporate liability and that an individual at a high level in the corporate structure is responsible for and familiar with the corporation's compliance with environmental laws. Submissions other than applications, such as compliance reports, may in contrast be signed by an authorized representative of this official.

The signature and certification requirement is intended to emphasize rather than enhance corporate and personal liability for false statements or omissions in the application. This issue is nonetheless certain to be a favorite among corporate counsel in light of legislation now before Congress which would impose stiff criminal sanctions for "knowing" violation of pollution control and health-related laws.¹⁴

A second point of controversy is the final provision authorizing RCRA permits and certain UIC permits to be issued for a maximum term of 10 years;¹⁵ under the proposed regulations such permits were to remain valid for the life of the facility. Industrial commenters had placed great emphasis on the need for the regulatory certainty that lifetime permits could provide to facilitate business and financial decisions regarding the construction of such facilities. Some states and environmental groups, on the other hand, favored a fixed term, particularly for RCRA permits, to ensure that permits are reviewed regularly and updated when necessary. By ultimately choosing the latter approach, EPA has adopted a scheme in which all permits under the RCRA, UIC, NPDES, and § 404 programs can be reissued in regular five or 10 year cycles.

The new regulations contain a "shield" provision specifying that compliance with a permit during its term will be deemed compliance with the appropriate statute for enforcement purposes.¹⁶ As a complement to this provision and in a further effort to provide permittees with regulatory certainty, the regulations state that a change in the standards or regulations governing the permitted activity is not a ground for modifying a fixed-term permit unless the permittee so requests.¹⁷ In other words, tightened general standards will be factored into a permit when it is reissued rather than when the new standards become effective. Similarly, modification of one of a facility's permits does not necessitate a review of all the others.

A third locus of concern is the provision regarding the transfer of permits in conjunction with a change in ownership of the regulated facility.¹⁸ EPA rejected the notion that a permit is a "vested" right that should be freely transferable along with ownership of the facility. The Agency instead views a permit as an authorization that is personal to the permittee and thus not inherently assignable. Modification is required in every case where a RCRA or UIC hazardous waste injection facility changes hands.¹⁹ For other UIC facilities and all NPDES permits, the permit can be automatically transferred with ownership of the facility. A written agreement regarding permit responsibilities and allocation of liability between the parties must be sent to the relevant permitting official, however, who may then determine that modification is necessary.

[10 ELR 10094]

Part 123 establishes minimum requirements for state-administered RCRA, UIC, NPDES, and § 404 programs and sets forth the process by which they are to be approved, revised, and withdrawn. It also contains guidelines for EPA supervision of state implementation of these programs, including particularly the procedures for EPA vetoes of state-proposed NPDES permits.²⁰ The most hotly debated subject in this part is the setting of minimum requirements for state enforcement programs. The regulations establish minimum penalties and fines that states must have the authority to recover in enforcement actions.²¹ These sanctions are less severe than those available to EPA.²² The rules also broaden intervention rights in state enforcement proceedings.²³

Part 124 establishes consolidated decision-making procedures and appeal mechanisms for EPA issuance, denial, modification, and termination of permits. Consolidation can occur in a number of ways and at different points in the permitting process,²⁴ but the regulations leave the relevant permitting official with complete discretion to process applications jointly or individually. Moreover, state adoption of these procedures is not mandatory, and whether consolidation can be accomplished for facilities which require both federal and state permits thus will depend upon whether EPA and the state can agree to coordinate their proceedings.

An applicant can recommend at the outset that processing of two or more permit applications be consolidated. If the EPA Regional Administrator or the state permit program director deems it appropriate, he can then consolidate processing of the newly filed applications for the permits that he has authority to issue.He can also process jointly an application for a new permit and an application for reissuance of an expiring permit under a different statute. If federal and state officials consolidate their efforts, joint processing will begin at the draft permit stage.

The lure of consolidation is that through the use of a multi-part application form, joint issuance of draft permits, joint notice and comment periods, and joint legislative-type public hearings, the issuance of several different permits can be accomplished without having to go through the basic administrative process more than once. It is after the comment period has closed and the public hearing, if any, has been completed, that the procedural pathways for the various permits begin to diverge, however. The regulations provide that although final permits may be issued together at this point, they need not be if the permitting official determines that joint issuance would unreasonably delay one or more of the permits.²⁵

In addition, the post-decision hearing and appeal mechanisms differ in significant respects for the different permits. Interested persons who wish to contest issuance or denial of an NPDES permit for an existing facility, RCRA and UIC permits closely related to it, or termination of a RCRA permit may request a formal evidentiary hearing.²⁶ A PSD permit, in contrast, may never be adjudicated in such a hearing. Those challenging issuance or denial of a new source NPDES permit and any RCRA, UIC, or PSD permits consolidated with it may request only a less formal "panel hearing."²⁷ The initial or recommended decision which follows each of these hearings is then appealable to the EPA Administrator. Persons wishing to contest decisions on RCRA, UIC, and PSD permits that do not fall into the foregoing categories will have to appeal directly to the Administrator without the benefit of an intervening formal hearing.²⁸

The most controversial issue in Part 124 proved to be whether a formal hearing was required for the issuance of a RCRA permit. The views of industrial commenters differed markedly on this point. Some argued that an adjudicatory hearing was mandated either by the statutory language and legislative history or by the requirements of due process, while others contended that no formal hearing of any sort could be imposed. EPA emphatically rejected²⁹ the former position and noted that some of the proposed provisions had been modified in light of the latter comments but that a panel hearing would still be available for certain RCRA permits.

The availability of judicial review for each permit is [10 ELR 10095] governed by provisions in the appropriate statute,³⁰ and the new rules make no overt attempt to tinker with these mechanisms. The use of consolidated procedures may result in a set of permits that stand or fall together, however. If one of several jointly processed and issued permits is judicially invalidated for procedural deficiencies, the legality of its siblings could be very much in doubt.

A final point that bears noting is EPA's refutation³¹ of the charge that consolidated permitting will result in a broader application of the National Environmental Policy Act (NEPA)³² to permitting issues and decisions. The Agency acknowledged that under the relevant case law the environmental impact statement (EIS) for a new source NPDES permit would probably have to discuss RCRA, UIC, or PSD-related impacts where the facility will require those permits as well. Agreeing that this is anomalous given that PSD permits themselves are exempt from NEPA, EPA asserted that this anomaly will exist whether or not the permits are consolidated. Consolidation, in its view, provides a vehicle for avoiding the need to supplement the EIS each time a subsequent permit is issued.

Because the regulations were promulgated under several statutes, the provisions will come into effect at different times for the various permit programs. As to RCRA permits and programs, the rules become effective six months after publication in the Federal Register. The regulations will go into effect for UIC permits and programs when the final technical regulations for that program have been promulgated and become effective. All other provisions become effective 60 days after publication, except for the Part 124 provisions regarding the NPDES program which take effect in 45 days. In keeping with its newly articulated policy,³³ the Agency specified that for the purposes of judicial review under the Clean Water Act, the regulations are to be considered issued at 1:00 p.m. eastern time 14 days after the date of publication.

Conclusion

The new consolidated permitting rules mark the beginning of an ambitious attempt by EPA to coordinate its far-flung and still growing permit programs. The regulations are only the first step, however. The tentative character of the provisions allowing EPA to consolidate or not at its discretion and the decision not to require state program consolidation clearly indicates their experimental nature. The Agency will undoubtedly encounter unforeseen difficulties as it begins to implement the new scheme and revise the rules as necessary to solve these problems.The states are understandably likely to wait and see how the new permitting mechanism works in EPA's hands before adopting it themselves.

There are several key points at which consolidation may prove particularly problematic. When a facility requires permits from both federal and state officials, coordinating their procedures may be quite difficult even if a consolidation agreement between the two levels of government can be obtained. Consolidation may also breakdown at the formal hearing stage if a large number of parties and intervenors raising a host of issues regarding several permits attempt to participate fully in the proceeding, especially the cross-examination of all witnesses. Given the differing hearing and appeal mechanisms, moreover, permits that were jointly issued may in many instances be separately reviewed on appeal.

Implementation of the new rules will admittedly be a learning experience for all concerned. The regulations nonetheless at least hold out the promise of more coordinated permitting decisions as well as significant savings in time and money for both permittees and permitting agencies. As EPA has correctly determined, consolidated permitting is a road well worth exploring.

1. 45 Fed. Reg. 33290 (May 19, 1980), ELR STAT. & REG. 46408, to be codified at 40 C.F.R. pts. 122-124.

2. See, e.g., Air Pollution Control: Recommendation for Alternative Emission Reduction Options Within State Implementation Plans, 44 Fed. Reg. 71780 (Dec. 11, 1979), 10 ELR 30001 ("bubble" policy); Comment, Economic Efficiency in Pollution Control: EPA Issues "Bubble" Policy for Existing Sources Under Clean Air Act, 10 ELR 10014 (Jan. 1980); Emission Offset Interpretive Ruling, 40 C.F.R. pt. 51, app. S, 44 Fed. Reg. 3274 (Jan. 16, 1979).

3. 44 Fed. Reg. 32854 (June 14, 1979).

4. See 42 U.S.C. §§ 6921-6931, ELR STAT. & REG. 41907-09; 45 Fed. Reg. 33066 (May 19, 1980), ELR STAT. & REG. 47301, to be codified at 40 C.F.R. pts 260-266; Comment, The Hazardous Waste Crisis: EPA Struggles to Implement RCRA; Amendments Needed, 9 ELR 10060 (1979).

5. See 42 U.S.C. §§ 300h-300h-3, ELR STAT. & REG. 41108-09.

6. See 33 U.S.C. § 1342, ELR STAT. & REG. 42141; 40 C.F.R. pt. 125, 44 Fed. Reg. 32948 (June 7, 1979), ELR STAT. & REG. 46495.

7. See 33 U.S.C. § 1344, ELR STAT. & REG. 42142; 40 C.F.R. pt. 230, 40 Fed. Reg. 41293 (Sept. 5, 1975).

8. See 42 U.S.C. § 7475, ELR STAT. & REG. 42234; 40 C.F.R. § 52.21, 43 Fed. Reg. 26388 (June 19, 1978), ELR STAT. & REG. 46611.

9. 45 Fed. Reg. 33290 (May 19, 1980), ELR STAT. & REG. 46408, to be codified at 40 C.F.R. pts. 122-124.

10. 40 C.F.R. pt. 230, 40 Fed. Reg. 41293 (Sept. 5, 1975) (dredge and fill permit guidelines); 40 C.F.R. § 52.21, 43 Fed. Reg. 26388 (June 19, 1978), ELR STAT. & REG. 46611 (PSD preconstruction permit program); 40 C.F.R. pt. 125, 44 Fed. Reg. 32948 (June 7, 1979), ELR STAT. & REG. 46495 (NPDES permit program).

11. 45 Fed. Reg. 33066 (May 19, 1980), ELR STAT. & REG. 47301, to be codified at 40 C.F.R. pts. 260-266.

12. When issued, these rules will be codified at 40 C.F.R. pt. 146.

13. 45 Fed. Reg. 33425 (May 19, 1980), ELR STAT. & REG. 46420, to be codified at 40 C.F.R. § 122.6. This familiarity must result from personal examination of the matter and discussions with those persons immediately responsible for obtaining the information. Id. at § 122.6(d).

14. S. 1722, 96th Cong., 2d Sess. (1980).

15. 45 Fed. Reg. 33427 (May 19, 1980), ELR STAT. & REG. 46422, to be codified at 40 C.F.R. § 122.9. UIC permits for Class I wells which inject hazardous wastes are subject to the 10-year limit; permits for Class II and III wells (enhanced oil and gas recovery, hydrocarbon storage, and special process mining such as in situ gasification) can be issued for the life of the facility but must be reviewed every five years.

16. 45 Fed. Reg. 33428 (May 19, 1980), ELR STAT. & REG. 46423, to be codified at 40 C.F.R. § 122.13. Holders of NPDES permits were already statutorily provided with such protection by § 402(k) of the Clean Water Act, 33 U.S.C. § 1342(k), ELR STAT. & REG. 42142. The "shield" provision in the regulations does not provide a defense against actions brought under the imminent hazard provisions in § 7003 of RCRA, 42 U.S.C. § 6973, ELR STAT. & REG. 41916; § 504 of the Clean Water Act, 33 U.S.C. § 1364, ELR STAT. & REG. 42147; or § 1431 of the Safe Drinking Water Act, 42 U.S.C. § 300i, ELR STAT. & REG. 41110.

17. 45 Fed. Reg. 33428 (May 19, 1980), ELR STAT. & REG. 46423, to be codified at 40 C.F.R. § 122.15.

18. 45 Fed. Reg. 33428 (May 19, 1980), ELR STAT. & REG. 46423, to be codified at 40 C.F.R. § 122.14.

19. This requirement is based on EPA's determination that these types of permits contain conditions regarding closure, post closure, contingency plans, and financial responsibility provisions that are personal to each permittee and must necessarily change when the permit is transferred.

20. 45 Fed. Reg. 33470 (May 19, 1980), ELR STAT. & REG. 46464, to be codified at 40 C.F.R. § 123.75.

21. 45 Fed. Reg. 33462 (May 19, 1980), ELR STAT. & REG. 45456, to be codified at 40 C.F.R. § 123.9.

22. State hazardous waste management programs must authorize recovery of civil penalties and criminal fines of at least $10,000 per day and imprisonment of up to six months, as compared to the $25,000 penalty or fine and one-year prison term which can be imposed in an EPA-initiated enforcement action under § 3008 of RCRA, 42 U.S.C. § 6928, ELR STAT. & REG. 41908. Similarly, the minimum civil penalties and criminal fines of $2,500 and $5,000 per day, respectively, for state UIC programs are below the $5,000 and $10,000 levies available in federal enforcement actions under § 1423 of the Safe Drinking Water Act, 42 U.S.C. § 300h-2, ELR STAT. & REG. 41109. Civil penalties of $5,000 and criminal fines of $10,000 per day must be recoverable under state NPDES and § 404 dredge and fill permit programs, whereas EPA can seek up to $10,000 and $25,000 per day or a year's imprisonment for a first offense under § 309 of the Clean Water Act, 33 U.S.C. § 1319, ELR STAT. & REG. 42131.

23. 45 Fed. Reg. 33463 (May 19, 1980), ELR STAT. & REG. 46456, to be codified at 40 C.F.R. § 123.9(d).

24. See 45 Fed. Reg. 33487 (May 19, 1980), ELR STAT. & REG. 46483, to be codified at 40 C.F.R. § 124.4.

25. Id. at § 124.4(a)(2). Because the Clean Air Act requires EPA to grant or deny a PSD permit within one year of the date the completed application was filed, see 42 U.S.C. § 7475(c), ELR STAT. & REG. 42234, the regulations prohibit consolidating the processing of a PSD permit without the applicant's written consent when to do so would delay issuance of the permit beyond the one-year deadline. Id. at § 124.4(e).

26. 45 Fed. Reg. 33498 (May 19, 1980), ELR STAT. & REG. 46494, to be codified at 40 C.F.R. § 124.74.

27. 45 Fed. Reg. 33504-07 (May 19, 1980), ELR STAT. & REG. 46494:6, to be codified at 40 C.F.R. §§ 124.111-124.128. The two notable differences between the panel hearing and the evidentiary hearing are, in the former, (1) the presence of a panel of knowledgeable EPA employees or outsiders who may cross-examine witnesses and consult with or otherwise assist the Presiding Officer and (2) the deferral and fairly drastic limitation of cross-examination by other persons. Cross-examination by the parties will be available only upon the Presiding Officer's approval of a detailed written request, will take place at a supplementary hearing, and will be limited to specific issues, witnesses, and/or time periods.

28. 45 Fed. Reg. 33491 (May 19, 1980), ELR STAT. & REG. 46487, to be codified at 40 C.F.R. § 124.19.

29. 45 Fed. Reg. 33409-33411 (May 19, 1980).

30. See § 7006 of RCRA, 42 U.S.C. § 6976, ELR STAT. & REG. 41916; § 509(b) of the Clean Water Act, 33 U.S.C. § 1369(b), ELR STAT. & REG. 42148; § 1448 of the Safe Drinking Water Act, 42 U.S.C. § 300j-7, ELR STAT. & REG. 41114; and § 307(b) of the Clean Air Act, 42 U.S.C. § 7607(b), ELR STAT. & REG. 42257.

31. 45 Fed. Reg. 33407 (May 19, 1980).

32. 42 U.S.C. §§ 4321-4361, ELR STAT. & REG. 41009.

33. 45 Fed. Reg. 26894 (Apr. 22, 1980).