21 ELR 10511 | Environmental Law Reporter | copyright © 1991 | All rights reserved

EPA's Proposed Air Permit Regulations: Implementing the 1990 Clean Air Act Amendments

Editors' Summary: The permit program was one of the most significant additions of the 1990 Clean Air Act Amendments. The full potential of the Act will not be realized without an effective permit program. In the April 1991 issue of ELR, one of the principal participants in developing the permit and enforcement titles of the Amendments discussed the key elements of those titles. The author of that Article noted that the effectiveness of the permit title will be largely shaped by EPA's implementing regulations, which EPA proposed in early May of 1991. This Article discusses the highlights of EPA's proposed permit regulations. The author, the principal EPA Office of General Counsel attorney responsible for the Clean Air Act permit program, outlines the advantages of a permit program, discusses EPA's development of the proposal, and analyzes the major provisions of EPA's proposal.

David P. Novello is a Senior Attorney with the Office of General Counsel (OGC) of the U.S. Environmental Protection Agency. Since mid-1990, he has been the principal OGC attorney responsible for the Clean Air Act operating permit program. Mr. Novello received his B.A. from Dartmouth College in 1979, and his J.D. from Columbia Law School in 1984. Prior to joining EPA in 1987, he was an associate at Palmer & Dodge in Boston. The views expressed in this Article are those of the author and do not necessarily represent the views of the U.S. Environmental Protection Agency.

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I. Introduction

In early May of this year, the U.S. Environmental Protection [21 ELR 10512] Agency (EPA) issued its closely watched and controversial proposal for a Clean Air Act (CAA or Act)¹ operating permit program.² These proposed regulations are designed to implement the new Title V permit provisions of the Act,³ added by the 1990 CAA Amendments.⁴ The regulations, together with the accompanying preamble, occupy 70 pages in the Federal Register. They will be codified in a new Part 70 of volume 40 of the Code of Federal Regulations.⁵ EPA and many outside observers consider the operating permit program to be one of the most important, if not the most significant, changes to the CAA made by the 1990 Amendments.⁶ It will have a profound effect on how industry complies with air pollution control requirements. It also will fundamentally alter the CAA implementation scheme that has evolved during the 21 years since passage of the Clean Air Act in 1970.

The operating permit program will be critically important to industry because it will implement the myriad and complex requirements of the CAA, both old and new. For example, a permit for a chemical facility that is subject to new source performance standards (NSPS), new source review requirements, toxic emission standards, limitations in the state implementation plan (SIP), and requirements to protect stratospheric ozone must incorporate all of these standards, requirements, and limitations. In some cases, incorporation of these elements will be simple and relatively straightforward. Often, however, the permit writer will have to determine how general requirements apply to that particular source, which will lead to active negotiating over permit terms. Sources also will have to pay permit fees to support the direct and indirect costs of the state permit programs.

The CAA already contains permit requirements for the construction or modification of certain major stationary sources of air pollution.⁷ These provisions, added by the 1977 Amendments to the Act, require such sources to obtain a permit from the state or EPA prior to building. Many states are therefore authorized to issue these "new source review" permits. In addition, a number of states have adopted air pollution operating permit programs of their own, even though such programs previously were not mandated by federal law. These programs vary widely in their scope and requirements. With enactment of the 1990 Amendments, all states will be required to promulgate and implement state operating permit programs that meet the minimum requirements of the CAA and EPA's implementing regulations. These regulations therefore will be the heart of CAA permitting.

The permits proposal has been extraordinarily controversial, with industry generally quietly supporting it and environmentalists, state regulators, and some members of Congress strongly criticizing the proposal. For example, Forbes magazine reported that "industrial groups are cautiously upbeat" about the proposal,⁸ while the Washington, D.C., representative of the Sierra Club alleged that "[t]he EPA has completely broken faith with the American public."⁹ Similarly, David Hawkins of the Natural Resources Defense Council charged: "These proposals would basically gut 20 years of enforcement of clean air legislation and would make the major provisions of the new act virtually unenforceable. The environmental community is outraged."¹⁰ Rep. Henry Waxman (D-CA), chairman of the House Subcommittee on Health and the Environment, used even harsher language to describe the proposed regulations, charging that "[t]he proposal violates so many fundamental statutory requirements that it is best characterized as lawless."¹¹

The White House's involvement in the development of the regulations has also been a matter of some controversy, leading to sharp rebukes from Democratic congressmen, and resulting in front page articles in the national press and a story on a network television news.¹² One week after the proposal was signed, the House Subcommittee on Health and the Environment held a hearing that focused on what the Democrats charged was interference in the regulatory process from the Vice President's Office. EPA witnesses [21 ELR 10513] testified, however, that changes to earlier EPA drafts of the proposal¹³ had been suggested by other Administration offices, not the Vice President's Office or the recently formed Council on Competitiveness (chaired by Dan Quayle).¹⁴

Following a brief overview of EPA's and Congress' aims in adopting CAA Title V, this Article discusses EPA's development of the permit proposal. The Article then discusses the highlights of EPA's proposed CAA permit regulations. EPA hopes to issue the final regulations by the statutory deadline of November 15, 1991.¹⁵

II. Advantages of an Operating Permit Program

The CAA Title V operating permit program is primarily based upon the national pollutant discharge elimination system (NPDES) established by Federal Water Pollution Control Act (FWPCA) § 402.¹⁶ EPA proposed the permit program, and it first appeared in the Administration's 1989 CAA Amendments bill.¹⁷ In supporting the adoption of a permit program similar to the nearly 20-year-old NPDES program, EPA had several aims in mind.¹⁸

First, as noted above, the operating permit program is designed to consolidate in one document all of the applicable air pollution information and control requirements for a source. Bringing all these data and requirements together provides EPA, the state air agency, the public, and the company itself with a much better picture of the types and quantities of pollutants the source is emitting into the air, the effect of those emissions on ambient air quality, and the mandated control technology and requirements necessary to reduce pollution levels. This, in turn, leads to easier enforcement against recalcitrant sources. Currently, control requirements for many sources are scattered throughout the SIP. It is often unclear, for example, whether a specific SIP test method for measuring emissions applies to the particular source or emissions unit. Moreover, SIPs often do not contain adequate monitoring and reporting requirements. This can make enforcement by EPA or the state exceedingly difficult and time-consuming. It also deters the bringing of citizen enforcement actions under CAA § 304.¹⁹ The operating permit system will help make enforcement against noncomplying sources easier and more efficient, as it is under the FWPCA.²⁰

A second major advantage of the new permit provisions is that they could lead to a streamlining of SIPs, thereby allowing for quicker and less cumbersome changes in the control requirements for individual sources. The Administration favored a provision that would have allowed a permit to amend the SIP. This would have eliminated the requirement that all such changes be made through the SIP revision process, which requires rulemaking procedures to be followed at both the state and federal levels. This "double key" rulemaking requirement has been criticized as being overly time-consuming and costly.²¹ Congress refused to adopt provisions allowing a permit to amend the SIP, however; in fact, CAA § 504(a) states that each permit must contain "conditions as are necessary to assure compliance with applicable requirements of this Act, including the requirements of the applicable implementation plan."²² But nothing in the CAA prevents states from making their SIPs somewhat more general over time, and placing more of the particularized monitoring, reporting, and control requirements in only the individual permits.²³ Although one commentator has stated that "[a] permit represents the epitome of command-and-control regulation, expressed as it is in terms of individual duty and susceptible to summary enforcement,"²⁴ a number of economists and industry representatives would like to use the permit program to establish a system of "marketable" permits, in which emission allowances could be freely traded as they will be under the acid rain program in CAA Title IV.²⁵

Third, the permit system will serve as the vehicle for the new acid rain program. The CAA Amendments state that permits for phase I of the program will be issued by EPA, because they must be in place before state permit programs [21 ELR 10514] can be adopted. But states will pick up permitting of sources for the second phase of the acid rain program. Similarly, states will be able to use the operating permit as the implementation vehicle for the nationally applicable CAA § 111 NSPS and § 112 toxics standards.

Finally, the operating permit program will provide states with a steady revenue stream to carry out their numerous new responsibilities under the permit title and associated stationary source air quality provisions of the CAA. EPA estimates that in the early years of the programs, these fees will generate approximately $ 300 million in annual revenue for the states.²⁶

III. Development of the Permits Proposal

In its preamble to the proposed regulations, EPA highlighted a number of implementation principles that it says guided the Agency in developing the rules, and stated that it will also follow these principles in overseeing state programs and issuing permits itself. These implementation principles are: ensure environmental protection; incorporate broad-based perspective for rule development; maintain an effective partnership with state and local governments; minimize redundancy in SIPs and permit programs; encourage early state program development; minimize small business concerns; promote pollution prevention; facilitate use of market-based incentives; allow flexibility in state programs and source permits; establish certainty for permitted sources; enable effective and efficient information transfer; prioritize EPA oversight on overall program implementation; promote possibilities for integrated permit programs; and promote simple and streamlined regulations.²⁷

Two of these goals — maintaining the partnership with state and local governments and allowing flexibility in state government — deserve special mention. Unlike 1972, when Congress passed the FWPCA and called for establishment of the NPDES permit program before effective state water discharge permit systems existed, Congress enacted CAA Title V long after many states already had air permit programs functioning at the state level for a number of years.²⁸ EPA therefore believes that it makes little sense to step in and prescribe exactly how states should design their programs to meet the new requirements in Title V. Instead, EPA intends to write the proposed regulations "to build upon existing operating permit programs and to provide the States with regulatory flexibility wherever possible to maintain existing program elements in implementing Title V."²⁹

The operating permits rulemaking also has been the showcase for a new preproposal consultation process that EPA's Office of Air and Radiation (OAR) decided to employ for selected CAA rulemakings. Beginning shortly after OAR completed its first drafts of the regulations and continuing nearly until the proposal was signed, EPA conducted a series of what it termed "roundtable discussions" with representatives from state and local air pollution control agencies, industry, environmental groups, and other federal agencies.³⁰ In these discussions, OAR solicited the advice and ideas of the participants, and shared the Agency's views on what it planned to propose. EPA also distributed a number of drafts of the proposed regulations and preamble, and endeavored to incorporate certain changes suggested by roundtable participants. In addition, EPA placed these various drafts and comments in the rulemaking docket, along with the comments from other federal offices and departments. Although participants generally praised the open nature of the process and EPA believes that it helped to identify key outside group concerns much earlier than in a typical rulemaking, the Natural Resources Defense Council representative has suggested that environmental groups were not adequately represented in the roundtable discussions.³¹

IV. Applicability

The applicability section of the regulations answers two basic questions — who must obtain a Title V permit and what CAA requirements must the permit include. The first question, which is addressed by proposed § 70.3(a), essentially tracks the statutory language of CAA §§ 501 and 502(a). A permit program is required to provide for the permitting of at least "major" sources, sources subject to a standard or regulation promulgated under CAA § 111 (the NSPS provision) or § 112 (the hazardous air pollutant provision), "affected" sources under the acid rain provisions of the Act, and any other sources in a source category designated by EPA.³² (The proposal does not in any way prevent a state from including additional sources in its permit program.) Major sources constitute the largest of this group — 34,000 facilities by EPA's estimate.³³

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A. Definition of Major Source

The definition of "major source," which has been greatly expanded by various provisions in the 1990 Amendments, references various other parts of the Act. It includes sources of "criteria" air pollutants with much lower tonnage per year (tpy) thresholds for many areas than under the traditional 100 tpy threshold found in CAA § 302(j). It also includes sources that emit or have the potential to emit 10 tpy of any one hazardous air pollutant listed under CAA § 112(b), or 25 tpy of any combination of such hazardous air pollutants (or such lesser quantity that EPA may establish).³⁴ Moreover, the definition of major source is based on the amount of emissions from the source, not whether the source is subject to any existing control requirements. For example, a source that emits over 10 tpy of a hazardous air pollutant must obtain a permit even if EPA is not scheduled to promulgate a CAA § 112 standard for that pollutant for several years. Although the proposal solicits comment "on whether the Agency should exempt from permitting requirements those sources that are 'major' by virtue of the quantity of their emissions of particular pollutants, but whose emissions are not in any way actually regulated by a standard or other requirement under the Act,"³⁵ there appears to be no support for this position in either the text of the statute or the legislative history.

Another important element affecting the determination of what constitutes a "major source" is EPA's decision that it is "any stationary source (or any group of stationary sources that are located on one or more contiguous or adjacent properties, and are under common control of the same person or persons under common control) belonging to a single major industrial grouping" that emits the quantities of pollutants discussed above.³⁶ A source is part of the same industrial grouping if all of the pollutant emitting activities at the source have the same two-digit Standard Industrial Classification (SIC) code.³⁷ As is explained in the preamble, this decision to aggregate units by SIC code is the same method that EPA follows in implementing the new source review permitting provisions of the Act. Furthermore, Congress seems to have intended EPA to define major source in this way.³⁸ Under this approach, two dissimilar sources (such as a power plant and an adjacent coal mine) would not be considered to be the same source merely because they are owned by the same person. The proposal does solicit comment, however, on whether or not to combine sources according to two-digit SIC code to determine if those sources constitute a major source for purposes of CAA Title V.³⁹

Finally, whether a source is major or not depends on how much pollution it has the "potential to emit." This term, which is used for similar purposes to implement other provisions of the Act, is defined in the proposed permit regulations as:

the maximum capacity of a stationary source to emit a pollutant under its physical or operational design. Any physical or operational limitation on the capacity of a source to emit a pollutant, including air pollution control equipment and restrictions on hours of operation or on the type or amount of material combusted, stored or processed, shall be treated as part of its design if the limitation is federally-enforceable.⁴⁰

Thus, even if the source might have an operational capacity giving it the capability to emit more than the tpy thresholds that define a major source, it need not obtain an operating permit if it restricts that capability through some federally enforceable means. As the preamble notes, this creates somewhat of a chicken and egg problem — an operating permit would be an ideal mechanism to restrict in a federally enforceable manner the capability to pollute, yet the source's aim in restricting the capability is to avoid the obligation to obtain a permit. The preamble suggests several solutions to this problem.⁴¹

B. Deferral of Permitting Requirements for Nonmajor Sources

CAA § 502(a) provides that EPA may exempt certain source categories from the requirement to obtain a permit "if the Administrator finds that compliance with such requirements is impracticable, infeasible, or unnecessarily burdensome on such categories, except that the Administrator may not exempt any major source from such requirements."⁴² EPA has proposed to use this authority to defer for five years, from the effective date of a permit program, the requirement for nearly all nonmajor source to obtain a permit.⁴³ At the end of the five-year period the source would have to obtain a permit unless that category had since been exempted from the requirement altogether.⁴⁴

This proposal is based on EPA's finding that without this deferral, compliance would be impracticable, infeasible, and unnecessarily burdensome for sources, as well as impracticable for the states. This finding, in turn, is based on the large number of major sources (34,000) that EPA estimates the states will have to permit in the initial years, the difficulty that EPA anticipates states will have in building their permit programs, and the belief that initially excluding minor sources from permitting requirements poses few risks to air quality progress.⁴⁵ Although state and industry representatives in the permit roundtable process generally favored the five-year deferral, this action has been strongly criticized by Reps. John Dingell (D-Mich.) and Henry Waxman (D-Cal.).⁴⁶

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The proposal suggests several exceptions to this general deferral for nonmajor sources. First, any nonmajor source subject to the acid rain program (if there are any) would have to obtain a permit. Second, for areas that are designated nonattainment for a pollutant under CAA § 107, the state would be required to submit an inventory or quantification of the sources of that pollutant (or precursor) that would be exempted, and a demonstration that the state can assure compliance with the SIP obligations applicable to those sources, without permitting the sources during the period of the deferral. Finally, when CAA § 112 standards are promulgated after issuance of the final permit rules, EPA could decide not to defer the permitting obligation.⁴⁷

The proposal also solicits comment on which source categories might be permanently exempted from permitting requirements. It states that EPA will consider the feasibility of using general permits (see discussion below) rather than exempting sources outright. As the preamble notes, two source categories that often have been mentioned as possibilities for permanent exemption are woodstoves (which are covered by a NSPS) and asbestos demolition and renovation operations (which are covered by a § 112 hazardous air pollutant standard).⁴⁸

C. Applicable Requirements

In addition to describing which sources must obtain a permit, the applicability section of the proposed regulations states that a permit for a major source must include all applicable requirements for all regulated emission units at the source.⁴⁹ In other words, even though a source might be classified as major because its sulfur dioxide emissions exceed 100 tpy, all CAA requirements for all pollutants that apply to that source — such as various national emission standards, Title VI stratospheric ozone measures, and SIP requirements — must be incorporated into the permit. But the permit does not require the source to comply with any new, non-Title V requirements to which it had not already been subject. For a source that is not major and that is required to obtain a permit only because it is regulated under a CAA § 111 or § 112 standard, the proposed regulations require only that the permit include the applicable requirements for the particular units that are covered by the standard. Thus, for a nonmajor source that contains an oil-fired burner subject to a NSPS, the permit would only have to address the burner.⁵⁰

Section 504(a) of the Act states that the permit must assure compliance with applicable CAA requirements, including those in the applicable implementation plan.⁵¹ EPA has taken the position, however, that a NAAQS is not an "applicable requirement," because it does not apply directly to sources. Rather, the NAAQS is implemented through the SIP. A source therefore must comply with all applicable SIP requirements, but need not demonstrate that its emissions have not caused a violation of the NAAQS. EPA takes the position that a violation of a NAAQS should be remedied through a notice of SIP deficiency under CAA § 110(k)(5), followed by a subsequent tightening of emission limitations in the SIP. Once that is done, the permit would have to incorporate the more stringent limitation.⁵² Some environmentalists evidently oppose this position.⁵³

V. State Program Elements and EPA Review of Programs

In many ways, this section forms the heart of the proposed regulations, for it governs what state permit programs must include and how they must operate. Section 70.4, which is based primarily on Congress' recital of minimum permit program elements in CAA § 502(b), contains a large number of these requirements.⁵⁴ Most of the remainder of § 70.4 describes how EPA will review the programs (and program revisions); it also sets forth criteria for partial and interim permit programs.

A. State Program Requirements

Not surprisingly, states will be required to include with their program submission a description of the program, as well as the regulations that make up the program and copies of enabling statutes and regulations. In addition, either the Attorney General or the attorney for the air pollution control agency must submit a legal opinion stating that the state has adequate legal authority to carry out the program.⁵⁵ The Attorney General's statement must demonstrate that the state has authority to carry out a number of requirements — among them, that permits cannot have a fixed term of more than five years (and those with acid rain provisions must have exactly a five-year term); the state must make available to the public all permit applications, compliance plans, permits, and monitoring and compliance reports (except that the source may be able to protect confidential business information in all of these documents except for the permit); the state must not issue a permit if EPA objects to it in a timely manner; and the state must provide an opportunity for judicial review in state court of the final permit by the applicant, any person who participated in the public comment [21 ELR 10517] process for the permit, and any other person who could obtain judicial review under state laws.⁵⁶

The state must demonstrate that it can decide within 30 days whether or not a permit application is complete, and issue or deny a permit within 18 months of receipt of an application. It must also show that it will collect adequate permit fees, that adequate personnel and funding have been made available to develop and administer the program, and that the state has a transition plan for the commencement of its operating permit program. As required by CAA § 503(c), the transition plan must provide that all sources required to have a permit shall submit applications within one year of EPA approval of the program, and the state shall act on at least one third of those applications in each of the years following approval.⁵⁷

One important program requirement is found outside this section — § 70.11 mandates that to receive program approval, a state must have certain enforcement authority, such as the ability to enjoin a violation of a permit or permit condition, authority to recover civil penalties (in a maximum amount of not less than $ 10,000 per day) for specified violations, and authority to recover criminal fines (also in a maximum amount of not less than $ 10,000 per day) for certain knowing violations.⁵⁸ The state also must commit to submit to EPA, on at least an annual basis, information regarding the state's enforcement activities.⁵⁹ Although EPA encourages states to adopt administrative enforcement authority, the regulations do not require such authority for program approval.⁶⁰

Another program element addresses the problem of expiring permits. As the preamble notes, EPA is concerned that an expiring permit "could cause serious enforcement problems and leave the State and EPA without important monitoring information that sources will be required to submit under the terms of the permit."⁶¹ The proposed regulations require that applications be submitted in a timely manner, and that the state issue or deny permits within a specified period of time. But experience under the NPDES program suggests that states often may not be able to issue renewal permits before the preceding ones expire. This is not a problem for permits issued by EPA (or other federal agencies) under the Administrative Procedure Act, because that statute provides that a permit remains in effect after the expiration of its term if a timely and sufficient application for renewal has been submitted.⁶² The proposal requires that states adopt this approach for their Title V program, or, alternatively, provide that the terms and conditions of the expiring permit shall remain in effect.⁶³

B. Implementation Agreements Between EPA and the States

EPA's NPDES regulations require that, for a state that wishes to administer an NPDES program, a state official and the appropriate EPA Regional Administrator must execute a memorandum of agreement (MOA) that governs various matters between the state and EPA.⁶⁴ These NPDES regulations are fairly detailed, and the MOA serves an important function in governing the day-to-day operation of a state-administered NPDES program, including how the state will comply with the certain minimum program requirements specified in EPA's regulations.⁶⁵

EPA's proposed CAA permit regulations strongly encourage the negotiation of such MOAs, but do not require them. The preamble states that the implementation agreement "should establish the policies, responsibilities, and procedures to be followed by the two parties in administering title V."⁶⁶ EPA suggests that the agreement cover topics such as meetings between the state and EPA, accountings to show that the permit program fees are being collected and spent properly, the exchange of documents and other information, information management, priorities for permit processing, enforcement information, and EPA technical support for and assistance to the state. The proposal states that the agreement should be submitted at the same time the state submits its program to EPA for approval.⁶⁷

C. EPA Review of Program Submissions; Partial and Interim Programs

In large part, the proposed regulations on EPA review of state program submissions simply track the applicable parts of § 502(d) of the Act. States must submit their permit programs to EPA by November 15, 1993, three years following enactment of the 1990 Amendments.⁶⁸ Within 30 days of receipt, EPA will determine whether the submission is complete; an incomplete submission will toll the period for EPA review. EPA then is required to approve, disapprove, or partially approve the program within one year of receipt of a complete submission. (Thus, even in the case of a full approval, if a state and EPA use the maximum permissible amount of time to submit and act on the program, the program would not become effective until at least late 1994.) Notice of this action will be published in the Federal Register and a disapproval (or partial disapproval) will be accompanied by a statement of the revisions necessary to obtain approval. In the event of such a disapproval, [21 ELR 10518] the state will be required to make the necessary revisions within 180 days or another specified period of time not to exceed two years.⁶⁹ If the deficiencies were not corrected, EPA would impose sanctions against the state following the procedures set forth in CAA § 179.⁷⁰

The proposal also provides for partial and interim permit programs. It would allow EPA to approve a partial program that is limited in terms of its geographic scope or the types of sources covered, as long as the program ensured compliance with specified provisions of the CAA.⁷¹ For example, EPA takes the position that a permitting program that covers only power plants could be approved as a partial program. Under the proposed regulations, the failure to submit a fully approvable "whole program" would still subject the state to sanctions, however.⁷² Rep. Waxman has criticized this proposed partial program provision as being "in direct conflict with section 502(f),"⁷³ the CAA provision governing partial permit programs.

EPA envisions that the statute's provision for interim program approval will serve as a useful means for allowing states to begin issuing permits and collecting permit fees before they may have the authority and resources to implement a fully approvable program. The proposed regulations partially mirror CAA § 502(g), in that they allow EPA to approve a program on an interim basis (for a period not to exceed two years), if the program "substantially meets" the requirements of Title V. But the regulations add a gloss to this test, specifying that the program must at a minimum provide for collecting adequate fees, assure compliance with all applicable CAA requirements for the sources covered by the program, provide that permits will have a term of the same duration as required for full programs, allow for public notice and an opportunity for public comment on draft proposed permits, allow for EPA review of proposed permits, and ensure that such proposed permits will not be issued if EPA objects. States are free to wait until November 15, 1993, to submit an interim program to EPA, but then must submit a final program by the date specified by EPA.⁷⁴

VI. Permit Applications

The application serves a critical role in the permitting process — it not only forms the basis for the permit writer's development of the permit terms, but also provides valuable information to the state and EPA. Moreover, the proposed regulations require certain sources to submit compliance plans with their applications.Finally, as is discussed immediately below, the filing of a timely and complete application will protect a source if the state delays in issuing the necessary air permit.

A. Timely and Complete Application

Each source subject to a permit program has a duty to submit a timely and complete application to the permitting authority. Failure to do so is a violation of the CAA, and subjects the owner or operator to civil penalties.⁷⁵ For a source applying for a Title V permit for the first time, a timely application is one that is filed 12 months after the source becomes subject to the program. In the case of a permit renewal, the application must be filed 18 months prior to the expiration date of the current permit, or such other period that EPA may approve.⁷⁶

A complete application is defined in the proposed regulations as "one that the permitting authority has determined, consistent with the criteria in § 70.5(c) of this part, to contain all the information needed to begin to process the application [emphasis added]."⁷⁷ The use of the term "begin" is important; the application may be considered complete even if the state has not definitively concluded that it includes all the information necessary to issue or deny the permit. The regulations also provide that unless the state has determined within 30 days whether the application is complete, it shall be deemed to be complete.⁷⁸ This provision has been criticized as creating a presumption of completeness despite the fact that there is no such presumption in the statute.⁷⁹ Even if an application is deemed complete, however, that would in no way relieve the applicant of the requirement to supply any additional information requested by the state in writing. Failure to provide the supplemental information in a timely manner would cause the "application shield" (discussed immediately below) to evaporate.

The relevance of these definitions of "timely" and "complete application" is provided by CAA § 503(d), which states:

Except for sources required to have a permit before construction or modification under the applicable requirements of this Act, if an applicant has submitted a timely and complete application for a permit required by

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this title (including renewals), but final action has not been taken on such application, the source's failure to have a permit shall not be a violation of this Act, unless the delay in final action was due to the failure of the applicant timely to submit information required or requested to process the application. No source required to have a permit under this title shall be in violation of section 502(a) before the date on which the source is required to submit an application under subsection (c).⁸⁰

This protection, embodied in the regulations (with several embellishments) at § 70.7(b), is the "application shield" referred to above.⁸¹ It protects a source that has filed a timely and complete application by allowing it to operate without a permit in two different situations — 1) when the source has applied for a permit for the first time, and 2) when the state has not acted on a renewal application before the current permit has expired. As noted above, a source whose application has been determined (or deemed) to be complete does not receive automatic protection forever; if the source fails to submit any additional information requested by the state in writing, the failure to have a permit will not shield it from a finding of violation of CAA § 502(a).⁸²

B. Content of Applications

Title V does not provide much detail on what a permit application should contain, although § 502(b)(1) mandates that the state have a standard application form, and § 503(b)(1) states that EPA's regulations "shall include a requirement that the applicant submit with the permit application a compliance plan describing how the source will comply with all applicable requirements under this Act." The proposed regulations flesh out these requirements by 1) stating which information must be included in the application, and 2) requiring only sources that are currently out of compliance to file compliance plans. As is discussed more fully below, the former has been criticized by Rep. Dingell (D-Mich.) as overly prescriptive, while the latter has been attacked by several other members of Congress as a violation of the plain meaning of the statute and congressional intent.

The preamble notes that many states already have operating permit programs, and that mandating a national standard application form would be disruptive to state programs and an unwise intrusion upon the states' flexibility in fashioning appropriate application forms. For those reasons, EPA proposed not to adopt such a nationally applicable form, although some industries operating in different states would have preferred it.⁸³ Instead, § 70.5 lists a number of key data elements that EPA believes must be included in the application to allow for meaningful permitting and collection of necessary air quality data. These include such items as information on the company and plant manager; a plant description; various emissions -related information, including emission rates; a description of all emission points and of air pollution control equipment; a description of applicable air pollution control requirements and applicable test methods for determining compliance with each requirement; and information necessary to define reasonably anticipated alternative operating scenarios.⁸⁴ Following review of an interim draft of the proposal, Rep. Dingell criticized EPA's application requirements as being overly detailed;⁸⁵ some of them were made less prescriptive after interagency and White House review.

As noted above, EPA's decision (following interagency and White House review) to reverse its original position that all applicants must file a compliance plan has been severely criticized by those who assert that the statutory language and legislative history compel the result set forth in earlier drafts of the proposal.⁸⁶ The proposal now requires that a compliance plan be submitted only "for sources that are not in compliance with all applicable requirements."⁸⁷ Among other things, the plan must include a "schedule of compliance" (containing "an enforceable sequence of actions with milestones, leading to compliance with all such requirements of the Act");⁸⁸ the statute requires that this schedule be incorporated into the permit. Thus, violations of the schedule subject the source to an enforcement action, as would a violation of any other permit term. The compliance schedule must be as stringent as that contained in any applicable consent decree or administrative order.⁸⁹ A permittee that is not in compliance with all applicable CAA requirements also must submit progress reports to the state at least every six months.⁹⁰

The application, as well as any report or compliance certification submitted by the permittee, must also include a certification by a responsible official of truth, accuracy, andcompleteness. A knowing violation of this requirement would subject a person to criminal penalties.⁹¹

VII. Permit Content

Of course, the content of the permit is of utmost importance to sources, states, and EPA. Section 70.6 of the proposed regulations addresses the various issues associated with permit content. It also allows states to provide a "permit shield" that under most circumstances would protect a [21 ELR 10520] source that complies with the terms of its permit by prohibiting independent enforcement of CAA requirements.

A. Standard Permit Requirements

As discussed in section IV.C. above, the Title V permit must assure compliance with all applicable CAA requirements. The regulations governing what must be included in the permit are critical to meeting this goal, for the terms of the permit translate generally applicable standards and duties into source-specific emission limitations and conditions, as well as monitoring and reporting requirements to ascertain compliance with those limits. Section 70.6(a) states that each permit must include emission limitations and standards,⁹² and sets forth monitoring, recordkeeping, and reporting requirements. The permit shall incorporate all monitoring and analysis procedures (or test methods) promulgated under the Act by EPA. In addition, the permittee is required to retain monitoring records for at least five years, and to submit monitoring reports to the state at least every six months.⁹³

A fairly controversial provision of the proposed regulations states that, while all applicable CAA requirements in the permit are enforceable by the United States and citizens, the state "shall specifically designate as not federally enforceable any State provisions in the permit which are more stringent than the applicable requirements under the Act."⁹⁴ This language, added after interagency and White House review, was included so that more stringent or extensive state air pollution requirements could not be enforced by either EPA or citizens (under CAA § 304, the citizen suit provision) in federal court. Thus, states would have to first decide which air pollution requirements pertaining to the source are based on federal law and which are based on state law; the latter would have to be designated as such, perhaps by placing them in a separate part of the permit. State air pollution officials have strongly opposed this requirement, claiming that these decisions often will be legally complex and time-consuming.

The proposed regulations also require that the permit contain specified inspection and entry requirements.⁹⁵ Furthermore, the permit must include provisions for a certification of compliance by the source, as is required under CAA § 504(c) and amended § 114(a)(3).⁹⁶ This certification must be signed by a "responsible official"; that term is defined so as to make the rules similar to the Clean Water Act NPDES regulations.⁹⁷ But as with the requirement for a compliance plan to accompany the application, the proposed regulations implement the Act's mandate that a permit contain a schedule of compliance by limiting the requirement to permits for sources that are not in compliance with the Act's requirements.⁹⁸ Similarly, progress reports, which must be filed at least semiannually and are required to include such information as whether deadlines were met (and if not, why not), are required only from such sources.⁹⁹

B. General Permits

Section 504(a) of the Act provides that a state may issue a general permit covering numerous similar sources, as long as the general permit complies with all requirements in Title V and the source is required to file an application. A general permit contains terms and conditions just like an individual permit — but in some ways it is more like a rule because it governs the operation of a number of sources. General permits have been used to great benefit in the NPDES program, particularly for permitting smaller, simpler sources. Industry representatives have on numerous occasions stressed the importance of this mechanism for lowering permitting costs, especially for small businesses.

Unlike the fairly detailed NPDES regulations on general permits,¹⁰⁰ the proposed Title V regulations on this subject do little more than parrot the statutory language and state that general permits generally cannot be used for sources under the acid rain program.¹⁰¹ The preamble provides more guidance, however. It notes that the state should provide the public "an opportunity to review the scope of the source category under the permit (but not necessarily a listing of specific source sites that might be covered), the terms and conditions which the permit will impose on that category, and the application process by which individual sources will receive the right to operate under the general permit."¹⁰² Although sources would be required to submit individual applications to the state to utilize the general permit, the preamble notes that EPA expects that these applications typically will be quite simple because the sources using the same general permit will be very similar.¹⁰³

The preamble also provides that the state may permit individual sources under the general permit without additional opportunity for public comment. Similarly, EPA will not directly review (pursuant to its authority under CAA § 505) the state's approval of each application to operate under the general permit — but EPA will review the scope and terms of the general permit when it is first issued. EPA states that it might object to a general permit because it is being issued for an inappropriate source category.¹⁰⁴ Nevertheless, EPA has proposed to allow states to issue general [21 ELR 10521] permits "for categories of numerous, identical emissions units within larger sources."¹⁰⁵

C. Permit Shield

The regulations allow states to provide that, under certain circumstances, compliance with the Title V permit shall be deemed compliance with other applicable CAA provisions. As is discussed below, the FWPCA also provides for a shield for a source that has a NPDES permit, but the statutory and regulatory language for that provision differs from the CAA permit shield. The statutory language upon which the Title V regulatory provisions are based states in part:

Except as otherwise provided by the [EPA] Administrator by rule, the permit may also provide that compliance with the permit shall be deemed compliance with other applicable provisions of this Act that relate to the permittee if —

(1) the permit includes the applicable requirements of such provisions, or

(2) the permitting authority in acting on the permit application makes a determination relating to the permittee that such other provisions (which shall be referred to in such determination) are not applicable and the permit includes the determination or a concise summary thereof.¹⁰⁶

The NPDES permit shield, in contrast, simply states that except for any toxic pollutant standard, "[c]ompliance with a permit issued pursuant to this section shall be deemed compliance, for purposes of [certain sections of the FWPCA]."¹⁰⁷ The first obvious difference is that compliance with a NPDES permit generally shall shield the source; CAA § 504(f) states that the state may provide such protection in a Title V permit.¹⁰⁸ Beyond that, the NPDES provision is far less convoluted. For example, what does "the applicable requirements of such provisions" mean in CAA § 504(f)(1)?

The relevant part of the proposed Part 70 regulations essentially follow the CAA statutory language, and leave further elaboration to the preamble.¹⁰⁹ There, EPA notes that on the important issue of the scope of the shield, § 504(f) can be read narrowly or broadly.¹¹⁰ There is no doubt that where a state has incorrectly translated a general standard (e.g., an NSPS standard) into an erroneous emission limitation in the permit, the permit may shield the source from independent enforcement of the underlying standard. (The remedy would be to reopen the permit for cause, if the state or EPA considers that appropriate.) It is also apparent that if a source completely forgets to incorporate an applicable requirement into the permit, the source cannot be shielded because at the time of issuance the permit would not have included all the applicable requirements.

The more controversial question — pertaining to whether the shield should be read narrowly or broadly — is whether a permit can shield a source from a standard that is promulgated after issuance. For example, if a permit addresses certain CAA § 112 hazardous air pollutant standards, but a new standard for a different chemical is promulgated a year after the permit was issued, could compliance with the permit be considered compliance with the Act? EPA proposed to answer this question in the affirmative. The preamble notes that CAA § 502(b)(9) provides support for this interpretation, because a permit with a term of three or more years (for a major source) must be reopened upon promulgation of a new standard. Thus, the argument goes, Congress provided a mechanism for applying new requirements to sources — one that does not involve the permit shield. Moreover, the preamble notes, "provisions" of the Act can be read to be the statutory provisions, while the "requirements" could be the particular standards. Still, the preamble states that the shield also can be interpreted narrowly, and solicits comment on the issue.¹¹¹ EPA's decision to favor a broad interpretation has been strongly criticized by some observers.¹¹²

The regulations themselves address several other issues regarding the permit shield. First, they implement the sentence in CAA § 504(f) providing that a source may not be shielded from an emergency order under CAA § 303. Second, they implement CAA § 408(h), which states that a source may not be shielded from acid rain requirements under Title IV of the Act. Finally, they provide that a source may not be shielded from an enforcement action brought for a violation that existed at the time of permit issuance.¹¹³

VIII. Permit Issuance, Renewals, Reopenings, Operational Flexibility, and Revisions

The assortment of provisions under this heading range from ones that are relatively straightforward to the most controversial issues in the proposed Title V regulations — those having to do with what has been termed "operational flexibility" and "fast-track" procedures for revising a permit. The generally noncontroversial permit issuance procedures are discussed first.

A. Initial Permit Issuance, Judicial Review, Renewals, and Reopenings

States generally must issue permits within 18 months from the receipt of application.¹¹⁴ The proposed regulations require public participation in permit issuance, including [21 ELR 10522] requirements for public notice (by advertisement in the area affected) of what EPA has labeled the "draft proposed permit." The regulations also require the public availability of all nonconfidential information submitted by the applicant and the state's statement of basis for proposing the permit, a 30-day comment period, and an opportunity for public hearing.¹¹⁵ The proposed regulations and preamble make clear that the state need not hold a hearing in all instances; for example, a hearing request that raises only legal or irrelevant issues might be grounds for a denial.¹¹⁶ In addition, the hearing need not be a trial-type adjudicatory hearing, with such formal procedures as the cross-examination of witnesses.¹¹⁷

Unlike the requirement for NPDES and other permitting programs that a fact sheet be prepared for certain draft permits,¹¹⁸ for a Title V draft proposed permit the state need only write "a statement that sets forth the legal and factual basis for the draft permit conditions (including references to the applicable statutory or regulatory provisions)."¹¹⁹ This statement of basis must be forwarded to EPA and anyone else who requests it.¹²⁰ It undoubtedly will play an important role in EPA review of draft proposed permits, as well as in judicial review of final permits.

Although the proposed regulations do not contain a section governing judicial review, the preamble discusses this matter at some length. Judicial review of a state-issued permit will take place in state court, as is required by CAA § 502(b)(6). The proposal also solicits comment on whether states should be required to bar challenges to permit terms in enforcement proceedings, as well as whether states should be required to allow only a specified time period for judicial review of the permit.¹²¹

An application for renewal of a permit would be processed in the same manner as an application for an initial permit.¹²² The same is true of what the proposal terms a permit "reopening." The proposed regulations provide that a permit for a major source is to be reopened when a new requirement becomes applicable to it and three or more years remain on the original term of the permit; this permit change must be completed within 18 months of promulgation of the new standard or regulation.¹²³ In addition, the state may reopen the permit for cause. As the CAA provides in § 505(e), if EPA determines that cause exists to terminate, modify, or revoke and reissue a permit — but the state refuses to do so — EPA may take such action itself.¹²⁴

B. Operational Flexibility and Permit Revisions

This part of the proposed regulations governs how operational changes may be made to permitted sources and how the permit may or may not have to be revised to reflect such changes. Not surprisingly, these critically important issues have become a battleground, with environmentalists and state air officials lined up on one side and industry on the other. Since early in the legislative process the operational flexibility section — which allows certain changes to a source without the need for a permit revision — had been among the most fought over provisions of the 1990 Amendments. The fast-track procedures for what EPA has proposed to call "minor permit amendments" did not appear in the regulations until midway through the development of the proposal, but they have since elicited fierce opposition and charges of illegality from environmentalists, state officials, and certain members of Congress. At the same time, industry representatives have been fairly pleased with how the proposal handles these issues, and have defended the measures as necessary to allow American business to remain competitive in world markets.

The debate in Congress over the need for operational flexibility resulted in the compromise position reflected in CAA § 502(b)(10). That provision, located in the section on required program elements, says that states must provide:

Provisions to allow changes within a permitted facility … without requiring a permit revision, if the changes are not modifications under any provision of title I and the changes do not exceed the emissions allowable under the permit (whether expressed therein as a rate of emissions or in terms of total emissions): Provided, That the facility provides the Administrator and the permitting authority with written notification in advance of the proposed changes which shall be a minimum of 7 days, unless the permitting authority provides in its regulations a different timeframe for emergencies.¹²⁵

Because this is a required program element, EPA has proposed to require that permits allow changes to take place without a revision under these circumstances.¹²⁶ But the changes must be permitted by the underlying SIP or standards. [21 ELR 10523] In addition, the proposal would require the permit to be updated administratively after the change took place.¹²⁷

The proposal also highlights an important position EPA has taken concerning what types of operations are allowed and not allowed under the permit. The regulations state that "[n]either notification nor permit revision is required for changes at the source … that are not regulated or prohibited by the permit."¹²⁸ The preamble explains further that:

[a]ir permits summarize existing restrictions; a permit change is not affirmatively required to authorize every change in practices which are otherwise legal under the SIP or federal law merely because an existing permit does not address the practice. Thus, changes in industrial practices and procedures that do not run afoul of the terms of a permit can be made without seeking any change to the terms of the permit.¹²⁹

The proposal strongly encourages states and sources to structure permits so that they anticipate all reasonably anticipated operating scenarios (and the preamble suggests a number of ways to do this).¹³⁰ But query as to whether a source would volunteer this information if it could instead include only one or two scenarios in its permit and then, without notifying the state, change to other operations (with different emissions) that are not expressly prohibited by the permit.¹³¹

Other operational changes at a source must be accompanied by a permit change, although EPA's three proposed types of permit revisions differ significantly in terms of administrative procedures and public participation.¹³² The first type of revision — the one that has raised the furor — is what the proposed regulations refer to as a "minor permit amendment." Earlier drafts of the proposal limited these types of changes to situations where emissions would increase by less than specified amounts that EPA considered to be de minimis. The regulations now would allow any change that is not a modification under Title I of the Act and that complies with all applicable CAA requirements to be processed as a minor permit amendment.¹³³ The proposal has been strongly criticized because large emission increases could occur without a triggering a modification under Title I.¹³⁴

The process that would be used for minor permit amendments also has drawn sharp reproach from environmentalists, state air officials, and members of Congress. William Rosenberg, the EPA Assistant Administrator for Air and Radiation, testified that this issue is still open and that the proposed regulations only set forth the minimum process that EPA believed would be required.¹³⁵ The preamble, however, states that "EPA believes that states should be encouraged to implement expedited review procedures for changes that result in emission increases above permit allowables, but that are not title I modifications and do not violate any applicable federal requirements, as long as such procedures include a minimum of 7 days notice."¹³⁶ It further states that "the statute does not mandate specific procedures to be used for making 'revisions' to permits" and that EPA believes that CAA § 502(b)(6) evidences "a pronounced Congressional concern that the procedures used to issue or revise permits should not result in undue delay."¹³⁷

The proposed regulations would allow the source to implement the change (and the revision would take effect) if the state did not object during this notice period, on the basis that the change did not qualify as a minor permit amendment or would not meet all CAA requirements.¹³⁸ Unlike earlier drafts of the proposal, the "permit shield" discussed in section VII.C. above would be available for changes made in this manner.¹³⁹ Neither the preamble nor the regulations state that EPA would require public participation¹⁴⁰ or review of these changes by EPA or neighboring [21 ELR 10524] states; the proposal has also been criticized for these reasons.¹⁴¹

More mundane changes are referred to in the proposal as "administrative permit amendments." The definition of the term in § 70.1(c) outlines which types of changes can be handled using the streamlined procedures set forth in § 70.7(e) of the regulations. In many ways, these types of changes are similar to NPDES "minor modifications."¹⁴² Two differences are worth pointing out, however. First, changes to the operating permit that have already gone through preconstruction permitting under CAA § 165 or § 173 would be treated as administrative permit amendments because substantive review would have already taken place. Second, the proposal allows states to define their own such amendments, if the state determines that they are similar to those set forth in EPA's regulations.¹⁴³ Section 70.7(e) states that "[a]n Administrative permit amendment shall be made by the permitting authority administratively … without being subject to advance notification or the procedural requirements applicable to a permit modification."

The third class of permit revision, known as a "permit modification," generally includes any changes to a facility that would constitute a "modification" as that term is used in various places in Title I. It also includes certain changes in monitoring procedures that could increase emissions at the source, and relaxations of reporting requirements or milestones in the compliance schedule. These types of changes would be subject to the same procedures and requirements for public participation as initial permits.¹⁴⁴

IX. Permit Review, and EPA Oversight Over the Permit Program

A. Review of Individual Permits by EPA and Neighboring States

The provisions in the proposed regulations on this subject generally follow the statutory framework in CAA § 505. States must furnish copies of each permit application, draft proposed permit, and final permit to EPA. In addition, they must transmit copies of a draft proposed permit to states that are within 50 miles of the source, or whose air quality may be affected and are contiguous to the state where the source is located. EPA may waive the furnishing of such documents for categories of sources, but may not waive these requirements for major sources.¹⁴⁵ If the state issuing the permit does not accept all the recommendations made by the affected neighboring state, it must explain to EPA and the other state why it chose not to follow those recommendations.¹⁴⁶

The procedures governing review by EPA are more complex. CAA § 505(b), which was enacted over the protests of state officials, provides that the EPA Administrator shall object to issuance of a permit when it contains provisions that he or she determines are not in compliance with the applicable requirements of the CAA, including the requirements of an applicable implementation plan.¹⁴⁷ This objection (also referred to as the EPA veto) must be made within 45 days of the date the state forwards a permit to EPA for review. If EPA does object, it must provide its reasons for doing so. In this case, the state may not issue the permit as written, and if it fails to correct the problem EPA must issue or deny the permit under its federal permit regulations.¹⁴⁸ If EPA fails to object during the review period, under certain circumstances a person may petition the EPA Administrator to object to it afterwards. An objection following this petition (and thus following the issuance of the permit) would modify or revoke the permit. CAA § 505(b)(2) provides that a decision by the Administrator to deny such a petition is subject to judicial review in the appropriate federal court of appeals.¹⁴⁹

EPA's experience in implementing the NPDES veto provision in § 402(d) of the FWPCA serves as a useful comparison to EPA's veto authority under the Title V operating permits program and how that authority might be exercised. While CAA § 505(b) states that EPA "shall" object to permits it determines are not in compliance with applicable requirements, FWPCA § 402(d) is phrased in more permissive terms.¹⁵⁰ As one commentator has noted, EPA has not exercised its NPDES veto authority often.¹⁵¹ But officials in EPA's Office of Water assert that the threat of a veto [21 ELR 10525] often persuades the state not to issue the permit with terms EPA considers objectionable.

B. EPA Oversight Over State Permit Programs

As discussed above in section V, under § 70.10(a) of the proposed regulations, EPA first must apply sanctions against a state and ultimately must issue Title V permits itself if a state fails to submit an approvable permit program. Section 70.10(b), which implements CAA § 502(i), requires similar action by EPA if EPA determines that the state is not adequately enforcing or implementing its operating permit program. During the period from 90 days until 18 months after making the determination, EPA may impose sanctions or withdraw program approval; after 18 months, EPA must impose sanctions, and six months after that must promulgate and administer a permit program in the state. Section 70.10(c) sets forth criteria for withdrawal of state programs. The proposed regulations do not set out special procedures for withdrawal of programs, as the NPDES regulations do.¹⁵² One commentator has quipped that the extraordinarily detailed program withdrawal procedures in the NPDES regulations "would be suitable for the Nuremberg trials."¹⁵³

X. Permit Fees

CAA § 502(b)(3)(A) requires permitted sources to pay "an annual fee, or the equivalent over some other period, sufficient to cover all reasonable (direct and indirect) costs required to develop and administer the permit program requirements of this title, including section 507 [relating to small business assistance programs]."¹⁵⁴ As the preamble notes, the fee provisions were designed to ensure that the states receive adequate funding to carry out the significant new responsibilities that issuing CAA operating permits will entail. The proposed regulations require that the revenue generated from permit fees be used solely to support the reasonable cost of the development and implementation of the air pollution control program in all areas relevant to the permit program.¹⁵⁵ A number of industry representatives also have expressed interest in making sure that states have adequate resources to carry out the programs, so that there will not be long delays in issuing permits.

Section 70.9(b) and (c) of the regulations, which implement CAA § 502(b)(3)(B), provide the requirements for collecting sufficient fees and adjusting them to track inflation. The regulations set out two tests for determining whether fee schedules are adequate. The first, termed the "program support test," requires a showing by the state that the revenues will cover all direct and indirect costs of developing and implementing the program. As the preamble explains, EPA has construed the scope of program costs quite broadly to include not only activities such as issuing and implementing permits, but also a variety of indirect costs such as those arising from permitted sources for SIP development and the development of SIP regulations to be codified into permits.¹⁵⁶

The second test is the"cost-per-ton test," which generally requires that the revenues, in the aggregate, amount to $ 25 per ton of regulated pollutants. States would be free, however, to vary fees among different types of sources and different pollutants as they see fit — as long as the aggregate amount collected is at least $ 25 per ton. This amount would be adjusted annually to reflect increases in the Consumer Price Index.¹⁵⁷ Although the proposed regulations state at one point that the state "shall establish a fee schedule that meets either of the [two] tests,"¹⁵⁸ the preamble suggests that satisfying the second test will not relieve a state of an obligation to collect enough revenues to support the program.¹⁵⁹ Whatever the case, both the CAA and the regulations provide that a "regulated pollutant" means a volatile organic compound, each pollutant regulated under CAA § 111 or § 112, and each pollutant for which a NAAQS has been established (except for carbon monoxide).¹⁶⁰ The state need not collect fees for emissions of a particular regulated pollutant that exceed 4,000 tons per year.¹⁶¹

EPA's proposed regulations provide that states shall use a source's actual emissions, rather than potential emissions, in calculating permit fees using the cost-per-ton test; the preamble suggests that potential emissions may be used in at least some circumstances, however.¹⁶² State air officials have objected vociferously to this decision because they fear that it often will be very difficult to calculate actual emissions (and, no doubt, because they would prefer the greater revenue that using potential emissions would bring).¹⁶³ But EPA believes that using actual emissions to calculate fees will provide an economic incentive for sources to reduce pollution.¹⁶⁴

[21 ELR 10526]

XI. Relationship of Permits to the SIP, Acid Rain Program, and Hazardous Air Pollutant Provisions

Because all applicable CAA requirements will be implemented through the new operating permits, the creation and development of the permit program raises a host of complex and often bewildering questions regarding the interface between the various titles of the Act. In some cases — particularly concerning the relationship between permits and SIPs — there is also an element of the new confronting the old. This Article will briefly identify some of the questions facing EPA as it wrestles with the permit/SIP relationship, which in this author's opinion will be the most complex interface in the CAA. Beyond that, the Article will provide only a very summary introduction to how the acid rain program and several provisions governing hazardous air pollutants will affect the Title V permit program, even though these relationships are also complicated and raise important questions.¹⁶⁵

A. Relationship of Permits to SIP

Next to the cluster of issues falling under the rubric of operational flexibility, no CAA operating permits topic has generated as much spirited (and often unfocused) debate as the issue of how permits and the SIP will relate to each other. Industry fears that the permit system could create yet another unintegrated bureaucratic layer in the CAA regulatory maze, thus creating "regulatory gridlock" for businesses hoping to make operational changes at their facilities. Environmentalists, on the other hand, are afraid that transferring regulatory requirements in SIPs to permits could cause oversight problems, because EPA is allowed only 45 days to review state-issued permits and environmental groups may have a difficult time monitoring issuance of permits in all states that adopt approvable Title V programs.¹⁶⁶ The Part 70 regulations that EPA hopes to promulgate by November 15, 1991, need not address the relationship between permits and SIPs because it is not a minimum element of state permit programs. Instead, this issue is more a matter of how SIPs may change to make them less redundant with permits. EPA therefore has decided to fully address this matter in guidance that it will issue concerning Title I of the 1990 Amendments (the SIP title). But the operating permit proposal attempted to frame the issues and solicited comment on several possible directions that EPA may take in its upcoming guidance.¹⁶⁷

As was noted above, Congress rejected a provision in the Senate bill that would have allowed permits to modify SIPs. The preamble notes this action and explains the challenge confronting EPA in developing a system that will avoid unnecessary overlap yet not impede attainment and maintenance of the NAAQS:

This limitation on the ability of permits to modify SIPs creates a dilemma for EPA. On one hand, if a SIP sets detailed unit-specific emissions limits that constrain the ability of the source to choose alternatives without submitting them as SIP revisions, then the permit for a source subject to those limits would have to reflect those limits, and each time the source wanted to make a change to its plant that would require a change to those limits, it would first need to obtain a SIP revision and a permit revision. This would essentially add a permit-revision step to an otherwise cumbersome double-step process of obtaining SIP revisions (revision by the State followed by EPA approval of the revision). The resulting regulatory gridlock would be inconsistent with one of the apparent purposes of the permit program: to accomplish air quality management with less reliance on the SIP revision process.

On the other hand, title I of the Act prescribes various minimum requirements that SIPs must meet to ensure attainment and maintenance of the NAAQS. Any effort to introduce into the SIP system enough flexibility to avoid the regulatory gridlock described above will need to respect those title I requirements. Thus, the challenge EPA and the States face in this regard is to explore creative ways of implementing title I so as to meet its requirements for SIPs while minimizing the need for processing SIP revisions to accommodate each and every permit and permit revision.¹⁶⁸

The preamble also solicits comment on three possible ways that EPA might work to avoid redundancy between permits and SIPs. First, it states that EPA will explore ways to implement requirements currently found in SIPs through permits. Second, EPA plans to adopt "equivalency protocols" for reasonably available control technology (RACT) requirements that define equivalent means of meeting the standards. Third, EPA might allow the expanded use of emissions trading and marketable permits to meet SIP objectives.¹⁶⁹ This last approach has long been favored by many economists, and industry and local air officials in Los Angeles are now advocating that a marketable permits system be established there.¹⁷⁰

B. Relationship of Permits to Acid Rain Program

Title IV of the CAA, which establishes the new acid rain program, contains its own permits section.¹⁷¹ Moreover, CAA § 506(b) states that the Title V permitting provisions shall apply to permits implementing the acid rain title "except as modified by that title." Although a relatively small space in the proposal was devoted to acid rain permitting,¹⁷² there are obviously a number of differences between the two titles that must be worked through. For example, compliance plans for acid rain provisions will differ from their [21 ELR 10527] Title V counterparts.¹⁷³ Furthermore, CAA § 408(c) provides that EPA itself will issue permits to implement the first phase of the acid rain program. By May 1992, EPA also must promulgate regulations governing the issuance of acid rain permits.¹⁷⁴ Those regulations will address specific supplemental permitting requirements for acid rain and resolve many of the issues referred to above.

C. Relationship of Permits to Hazardous Air Pollutant Provisions

In the 1990 CAA Amendments, Congress completely rewrote CAA § 112, the hazardous air pollutant section. Several new parts of that section will have a significant effect on Title V permit programs. In brief, new § 112(j) is a "hammer" provision that will require that case-by-case technology standards for sources be set through permits if EPA does not issue its maximum achievable control technology (MACT) standards according to schedule. Section 112(g) will require that MACT be applied to a source under certain circumstances when the source is modified, constructed, or reconstructed; again, the implementation vehicle will be the permit. Section 112(i)(5) uses permits to implement the provisions allowing a source to be temporarily exempted from a MACT standard if it has achieved certain early reductions in toxic emissions. Finally, § 112(l) allows states to develop programs for the implementation and enforcement of § 112 standards and other requirements.¹⁷⁵

XII. Conclusion

As EPA Assistant Administrator for Air and Radiation William Rosenberg recently testified, the Title V operating permit proposed regulations are only that — a proposal.¹⁷⁶ EPA expects to receive a mountain of public comments on the proposal; these comments no doubt will raise many issues not discussed in this Article. There undoubtedly will be spirited debate within the Agency and the Bush Administration over many of these issues. EPA will carefully consider the public and interagency comments before the final rule is published, and will respond to all significant public comments. Although the statutory deadline of November 15, 1991, is only a short time away, EPA hopes to publish the final rule by that date. Regardless of what final form these CAA Title V permit regulations take, they will significantly affect implementation of the nation's air pollutionlaws for years to come.

1. Codified as amended at 42 U.S.C. §§ 7401-7671q, ELR STAT. CAA 1-186.

2. 56 Fed. Reg. 21712 (May 10, 1991). The proposal was actually signed by EPA Deputy Administrator F. Henry Habicht on April 23, 1991, but was not published in the Federal Register until over two weeks later.

3. CAA §§ 501-507, 42 U.S.C. §§ 7661-7661f, ELR STAT. CAA 168-173.

4. Pub. L. No. 101-549, 104 Stat. 2399 (1990). The new CAA permit statutory provisions in Title V and selected implementation issues were examined in detail in a recent article in this journal. Roady, Permitting and Enforcement Under the Clean Air Act Amendments of 1990, 21 ELR 10178 (Apr. 1991). For a briefer and more general primer on the new CAA permit title and how sources will have to comply with it, see Novello, A Brief Overview of the Operating Permits Provisions in the 1990 Clean Air Act Amendments, in COMPLYING WITH THE NEW CLEAN AIR ACT 475, Practising Law Inst. No. 157 (1990).

5. EPA also will promulgate regulations governing a federal permit program, to be codified in a new 40 C.F.R. pt. 71. The federal permit program will be administered by EPA. The Agency will issue permits on Indian lands and in states that fail to adopt or properly administer permit programs. It also will issue permits for the first phase of the acid raid program. The 1990 Amendments require EPA to issue regulations by May 1992 establishing a federal permit program for acid rain. CAA § 408(c)(3), 42 U.S.C. § 7651g(c)(3), ELR STAT. CAA 161.

6. For example, EPA Administrator William K. Reilly stated that "[t]he permit program is not only the most important procedural reform in the new Clean Air Act, but in many ways the key to effective enforcement and implementation of the law." EPA Press Release, EPA Proposes Permit Rules To Increase Industry Accountability Under New Clean Air Act (Apr. 24, 1991). See also 136 CONG. REC. S3188 (daily ed. Mar. 26, 1990) (statement of Sen. Baucus).

7. CAA §§ 165 and 173, 42 U.S.C. §§ 7475, 7503, ELR STAT. CAA 68, 76.

8. Tucker, Green Tape Factory, FORBES, May 27, 1991, at 171-72; see also Operational Flexibility EPA Plan Meets Industry Approval Exceeding State and Environmental Plans, INSIDE EPA's CLEAN AIR REP., May 9, 1991, at 7 [hereinafter Plan Meets Industry Approval]. But see Reactions to Current Permit Proposal Mixed, 22 Env't Rep. Current Developments (BNA) 132 (May 17, 1991).

9. Tucker, supra note 8, at 171. The Sierra Club representative added, "As written now, the regulations are not only illegal — they will allow industries to do just about anything they want." Id.

10. Ross, Proposed Clean Air Act Rules Draw Criticism, Los Angeles Times, Apr. 25, 1991, at A9, col 1.

11. Letter from Rep. Henry Waxman, Chairman, Subcommittee on Health and the Environment, to EPA Administrator William K. Reilly (May 8, 1991) [hereinafter May 8 Waxman letter], at 1.

12. See, e.g., Kranish, Democrats Cry Foul On Clean Air Act, Boston Globe, May 2, 1991, at 1, col.1; "American Agenda" segment on ABC Evening News (May 8, 1991). See also Ross, supra note 10. (" 'The long knives were out at the White House,' charged David Hawkins of the Washington-based Natural Resources Defense Council.").

13. EPA placed in the rulemaking docket all drafts of the proposal that were sent to the Office of Management and Budget, as well as comments on the drafts by various White House offices and Administration departments that were received by EPA. See EPA Docket No. A-90-33.

14. Unpublished transcript from hearing on implementation of the Clean Air Act, before the Subcomm. on Health and the Environment, House Energy and Commerce Committee, 102nd Cong., 1st Sess. (May 1, 1991) [hereinafter May1 Health and Environment Subcomm. hearing]. In his comments accompanying the notice of public hearing, Subcommittee chairman Henry Waxman charged that "White House officials, spearheaded by Vice President Dan Quayle, have sabotaged the most important rulemaking to date under the new Clean Air Act."

15. EPA, OFFICE OF AIR AND RADIATION, IMPLEMENTATION STRATEGY FOR THE CLEAN AIR ACT AMENDMENTS OF 1990 (Jan. 15, 1991), at 22.

16. 33 U.S.C. § 1342, ELR STAT. FWPCA 054. See S. REP. NO. 228, 101st Cong., 1st Sess. 347 (1989) [hereinafter Senate Report].

17. H.R. 3030, Title IV, 101st Cong., 1st Sess. (1989).

18. These aims are summarized in the Senate Report, supra note 16, at 347-49, and in the preamble at 56 Fed. Reg. 21713-14 (1991). The idea that a permit program offers many advantages is not without its critics, however. Many industry representatives argued during the legislative process that the comparison to the NPDES permit program is a poor one, and that a detailed CAA permit system would add confusion and red tape with no compensating environmental benefit. See NATIONAL ENVIRONMENTAL DEVELOPMENT ASSOCIATION/CLEAN AIR ACT PROJECT, FEDERAL AIR PERMITS: REALISTIC HOPE OR REGULATORY QUICKSAND? (1990).

19. 42 U.S.C. § 7604, ELR STAT.CAA 134.

20. See 1 F. GRAD, TREATISE ON ENVIRONMENTAL LAW 3-237 ("The [NPDES] permit system, in effect, operates as a device for the enforcement of most effluent standards under the law"); 2 W. RODGERS, ENVIRONMENTAL LAW: AIR AND WATER 374 n. 18 (1986), quoting from J. BONINE & T. McGARITY, CASES ON THE LAW OF ENVIRONMENTAL PROTECTION 514 (1984):

Permits might be seen (1) as a means of promulgating regulatory requirements in the first place, (2) as a means of translating broad requirements into terms applicable to individual pollution sources, or (3) as an enforcement device that makes it simpler to achieve compliance with regulatory requirements. In the case of NPDES, permits can serve all three functions.

21. See Pedersen, Why the Clean Air Act Works Badly, 120 U. PENN. L. REV. 1059 (1981).

22. 42 U.S.C. § 7661c(a), ELR STAT. CAA 170.

23. EPA's thoughts on how this might be accomplished, as well as a general discussion of the relationship between permits and SIPs, are provided below in section IX.

24. 2 W. RODGERS, supra note 20, at 374.

25. See Noll, The Feasibility of Market Emissions Permits in the United States, in PUBLIC SECTOR ECONOMICS 189 (1983), and NATIONAL ECONOMIC RESEARCH ASSOCIATES, INC., MARKET-BASED APPROACHES TO REDUCE THE COST OF CLEAN AIR IN CALIFORNIA'S SOUTH COAST BASIN (final report prepared for California Council for Environmental and Economic Balance) (1990). John Palmisano, president of AER*X, the largest emissions trading consulting firm in the country, has stated:

A good permitting system is essential to an emissions-credit trading system, which is the best way to deal with most air pollution. The trouble is, it can also be the basis of a command-and-control system, which is substantially inferior. Which way it goes will be pretty much up to the EPA.

Tucker, supra note 8, at 171.

26. EPA, SUMMARY OF EPA PROPOSED OPERATING PERMIT RULE UNDER THE CLEAN AIR ACT (Apr. 24, 1991), at 3.

27. 56 Fed. Reg. at 21714-15.

28. Approximately 35 states have their own operating permit programs for sources of air pollution. Senate Report, supra note 16, at 346-47.

29. 56 Fed. Reg. at 21714.

30. For a brief description of the process and EPA's reasons for employing it, see EPA, OFFICE OF AIR AND RADIATION, SUMMARY OF EPA PROPOSED OPERATING PERMIT RULE UNDER THE CLEAN AIR ACT (Apr. 24, 1991), at 4.

31. Departing Environmentalist Sees New Industry Environmental Protection Ethic, INSIDE EPA, Apr. 26, 1991, at 20. See also CAA Advisory Committee Imbalance May Hamper Implementation, Members Fear, INSIDE EPA, Apr. 26, 1991, at 11. One unnamed environmentalist criticized the roundtable process itself, alleging that "[b]ecause industry didn't get what they wanted, they had a second round where they got OMB to make changes behind-closed-doors." He stated, "That's the real process, while the roundtable process is bogus," adding that if the final rule is not changed substantially, public interest groups will not participate in the process and instead will litigate. Plan Meets Industry Approval, supra note 8, at 9.

32. Proposed 40 C.F.R. § 70.3(a). The requirement in CAA § 502(a) that any source required to have a permit under Parts C or D of CAA Title I must also obtain a Title V permit is covered by the regulations, because any such source is by definition a major source.

33. 56 Fed. Reg. at 21725.

34. Proposed 40 C.F.R. § 70.2(r).

35. 56 Fed. Reg. at 21725.

36. Proposed 40 C.F.R. § 70.2(r).

37. Id.

38. 56 Fed. Reg. at 21724, and H.R. REP. NO. 490, 101st Cong., 2nd Sess. 236-37 (1990).

39. 56 Fed. Reg. at 21724.

40. Proposed 40 C.F.R. § 70.2(y).

41. 56 Fed. Reg. at 21725. For example, the preamble suggests that general permits might be issued to impose capacity limits on a category of sources. EPA also solicited comments on whether an enforceable commitment to restrict a source's potential emissions might be made through some type of vehicle other than an operating permit. Id.

42. 42 U.S.C. § 7661a(a), ELR STAT. CAA 168.

43. Proposed 40 C.F.R. § 70.3(b).

44. 56 Fed. Reg. at 21726.

45. 56 Fed. Reg. at 21725-26. See also Alabama Power Co. v. Costle, 636 F.2d 323, 360 n.86, 10 ELR 20001 (D.C. Cir. 1979) (deferral requires far less justification than an outright exemption).

46. May 1 Health and Environment Subcomm. hearing, supra note 14 (questioning by Rep. Dingell), at 98-103; May 8 Waxman letter, supra note 11, at 9-10. The Congressmen disputed EPA's assertion that it would consider the effect on the states and EPA (rather than just the sources that would need to obtain a permit), and also stated that the statute requires a separate finding to be made for each source category exempted (rather than a general, blanket finding for all categories of nonmajor sources).

47. Proposed 40 C.F.R. § 70.3(b)(2)-(4).

48. 56 Fed. Reg. at 21726.

49. Proposed 40 C.F.R. § 70.3(c)(1).

50. Proposed 40 C.F.R. § 70.3(c); 56 Fed. Reg. at 21727.

51. The term "applicable implementation plan" is defined as "the portion (or portions) of the implementation plan, or most recent revision thereof, which has been approved under section 110, or promulgated under section 110(c), or promulgated or approved pursuant to regulations promulgated under section 301(d) and which implements the relevant requirements of this Act." CAA § 302(q), 42 U.S.C. § 7602(q), ELR STAT. CAA 134. Thus, it includes both state implementation plans approved by EPA and federal implementation plans promulgated by the Agency in the case of a default on the part of the state.

52. 56 Fed. Reg. at 21738.

53. Plan Meets Industry Approval, supra note 8, at 9.

54. CAA § 506(a) provides that a state may adopt additional elements. It states that "[n]othing in this title shall prevent a State, or interstate permitting authority, from establishing additional permitting requirements not inconsistent with this Act." 42 U.S.C. § 7661e(a), ELR STAT. CAA 172.

55. Proposed 40 C.F.R. § 70.4(b)(1)-(3).

56. Proposed 40 C.F.R. § 70.4(3) and accompanying preamble discussion at 56 Fed. Reg. at 21727-28.

57. Proposed 40 C.F.R. § 70.4(b)(6), (7), (8), and (11), and accompanying preamble discussion at 56 Fed. Reg. at 21728-29.

58. This section is similar to the regulations requiring enforcement authority for a state seeking approval of its FWPCA NPDES permit program. See 40 C.F.R. § 123.37.

59. Proposed 40 C.F.R. § 70.4(b)(9), and accompanying preamble discussion at 56 Fed. Reg. at 21723.

60. 56 Fed. Reg. at 21755, and proposed 40 C.F.R. § 70.11.

61. 56 Fed. Reg. at 21723.

62. 5 U.S.C. § 558(c), ELR STAT. APA 006. See also 40 C.F.R. § 122.6 (continuation of expiring permits under thefederal NPDES regulations).

63. Proposed 40 C.F.R. § 70.4(b)(10), and accompanying preamble discussion at 56 Fed. Reg. at 21728-29.

64. 40 C.F.R. § 123.24.

65. For example, a MOA must include provisions on the forwarding of proposed permits, reports, and other information to EPA, and on the state's compliance monitoring and enforcement program. 40 C.F.R. § 123.24(b)(2)-(4).

66. 56 Fed. Reg. at 21756.

67. Id.

68. Proposed 40 C.F.R. § 70.4(a).

69. Proposed 40 C.F.R. § 70.4(e). Although CAA § 502(d)(1) providesthe state only 180 days to remedy the deficiencies in its program, EPA was concerned that some revisions might require legislative changes, and some state legislatures meet only every other year. The proposal therefore would allow EPA to provide a longer time period (not to exceed two years) for state revisions. Rep. Waxman has questioned the legality of this provision. May 8 Waxman letter, supra note 11.

70. Proposed 40 C.F.R. § 70.10(a). These sanctions include a prohibition on the awarding of federal highway grants and a two-to-one emissions offset ratio for the construction of certain new or modified sources. CAA § 179(b), 42 U.S.C. § 7509(b), ELR STAT. CAA 80.

71. Proposed 40 C.F.R. § 70.4(c) and accompanying preamble discussion at 56 Fed. Reg. at 21730.

72. Id.

73. May 8 Waxman letter, supra note 11. Rep. Waxman maintains that a program that covers only one source category cannot possibly implement all the requirements set forth in CAA § 502(f).

74. Proposed 40 C.F.R. § 70.4(d), and accompanying preamble discussion at 56 Fed. Reg. at 21730-31.

75. CAA §§ 503(c), 113(b)(2), and 113(d)(1)(B), 42 U.S.C. §§ 7661b(c), 7413(b)(2), and 7413(d)(1)(B), ELR STAT. CAA 150, 45.; proposed 40 C.F.R. § 70.5(a).

76. Proposed 40 C.F.R. § 70.5(a). CAA § 503(c) provides that states shall issue or deny a permit within 18 months of receiving an application, hence, the presumption that a source should submit its renewal application 18 months before the end of the permit term. But as several industry representatives pointed out, the application may grow stale in 18 months. In addition, for a permit with a short term (such as two years), it makes little sense to submit an application 18 months ahead of expiration. The regulations therefore allow the time to be shortened, but require approval of the shorter time period by EPA. See 56 Fed. Reg. at 21732.

77. Proposed 40 C.F.R. § 70.2(h).

78. Proposed 40 C.F.R. § 70.5(c). The state is required to have adequate, streamlined, and reasonable procedures for expeditiously determining when applications are complete. CAA § 502(b)(6), 42 U.S.C. § 7661a(b)(6), ELR STAT. CAA 169. The proposed regulations require that adequate procedures be in place to make this determination within 30 days of receipt of application. Proposed 40 C.F.R. § 70.4(b)(6).

79. See May 8 Waxman letter, supra note 11, at 10.

80. 42 U.S.C. § 7661b(d), ELR STAT. CAA 170.

81. One of these would extend the application shield — but would not provide an accompanying protection from civil penalties — for applicants who filed up to three months late. Proposed 40 C.F.R. § 70.7(b)(2). The other would extend it to a source that the state has determined to have made a good faith effort in submitting the application, as long as the source cures the defect during an expeditious time period specified by the state. Proposed 40 C.F.R. § 70.7(b)(3). Both of these proposed provisions have been criticized by Rep. Waxman as not authorized by the statute. May 8 Waxman letter, supra note 11, at 10.

82. Proposed 40 C.F.R. § 70.7(b)(1)(i).

83. 56 Fed. Reg. at 21732.

84. See also preamble discussion at 56 Fed. Reg. at 21732-33.

85. Issues and Questions Regarding Some of the Provisions of the Environmental Protection Agency's Draft Permit Proposal of '2-9-91' by Rep. John D. Dingell, Chairman, Subcommittee on Oversight and Investigations of the Committee on Energy and Commerce (Mar. 15, 1991), at 13.

86. May 1 Health and Environment Subcomm. hearing, supra note 14, at 77-84; May 8 Waxman letter, supra note 11, at 6-7.

87. Proposed 40 C.F.R. § 70.5(b)(7). See also preamble discussion at 56 Fed. Reg. at 21734-35.

88. Proposed 40 C.F.R. § 70.5(b)(7)(iii).

89. Id.

90. CAA § 503(b), 42 U.S.C. § 7661b(b), ELR STAT. CAA 170, and proposed 40 C.F.R. § 70.5(b)(7)(iv).

91. Proposed 40 C.F.R. § 70.5(b)(8) and (10); CAA § 113(c)(2)(A), 42 U.S.C. § 7413(c)(2)(A), ELR STAT. CAA 45.

92. Proposed 40 C.F.R. § 70.6(a)(1). But the preamble solicits comment on whether the statutory language in CAA § 504(a) that each permit "shall include enforceable limitations and standards … and such other conditions as are necessary to assure compliance with applicable requirements of this Act" might suggest that not all requirements must be incorporated wholesale into the permit. Instead, the preamble suggests that in some cases, "conditions" that assure compliance might be adequate. For example, the preamble states that EPA is considering not requiring an entire hazardous substance accidental release plan — required for some sources under new § 112(r) — to be included in the permit. 56 Fed. Reg. at 21736.

93. Proposed 40 C.F.R. § 70.6(a)(3), and accompanying preamble discussion at 56 Fed. Reg. at 21736-37.

94. Proposed 40 C.F.R. § 70.6(b).

95. Proposed 40 C.F.R. § 70.6(c)(3). Industry representatives have criticized the provision in this section that would allow contractors to inspect in lieu of EPA officials. Plan Meets Industry Approval, supra note 8, at 7.

96. Proposed 40 C.F.R. § 70.6(c)(2), and accompanying preamble discussion at 56 Fed. Reg. at 21736.

97. Proposed 40 C.F.R. § 70.2(cc). See also 40 C.F.R. § 122.22 (signatories to permit applications and reports under the federal NPDES regulations).

98. Proposed 40 C.F.R. § 70.6(c)(4).

99. Proposed 40 C.F.R. § 70.6(c)(5).

100. 40 C.F.R. § 122.28.

101. Proposed 40 C.F.R. § 70.6(f).

102. 56 Fed. Reg. at 21740.

103. Id.

104. Id.

105. 56 Fed. Reg. at 21739. The preamble goes on to explain:

For example, a general permit for degreasers could specify standard operating conditions or maintenance requirements. A general permit for a large manufacturing operation with numerous permitted emissions units could specify the terms of the model permit for the type of degreaser the facility uses, along with the terms specific to that source.

106. CAA § 504(f), 42 U.S.C. § 7661c(f), ELR STAT. CAA 171.

107. FWPCA § 402(k), 33 U.S.C. § 1342(k), ELR STAT. FWPCA 054. See also 40 C.F.R. § 122.5(a)(1).

108. As the House Report accompanying the 1972 Clean Water Act noted, the purpose of this provision was "to assure that the mere promulgation of any effluent limitation or other limitation, a standard, or a thermal discharge regulation, but itself will not subject a person holding a valid permit to prosecution. However, once such requirement is actually made a condition of the permit, then the permittee will be held to comply with the terms thereof." H.R. REP. No. 911, 92nd Cong., 2d Sess. 128 (1972), quoted in 2 W. RODGERS, supra note 20, at 442.

109. Proposed 40 C.F.R. § 70.6(h)(1).

110. 56 Fed. Reg. at 21744.

111. 56 Fed. Reg. 21744 (1991).

112. See, e.g., May 8 Waxman letter, supra note 11, at 10-12.

113. Proposed 40 C.F.R. § 70.6(h), and accompanying preamble discussion at 56 Fed. Reg. at 21744.

114. CAA § 503(c), 42 U.S.C. § 7661b(c), ELR STAT. CAA 170.

115. Proposed 40 C.F.R. §§ 70.4(b)(3)(vii) and 70.7(i), and accompanying preamble discussion at 56 Fed. Reg. at 21742.

116. Proposed 40 C.F.R. § 70.7(i)(4), and accompanying preamble discussion at 56 Fed. Reg. at 21743. Compare 40 C.F.R. § 124.12(a) (consolidated permit regulations) ("The Director shall hold a public hearing whenever he or she finds, on the basis of requests, a significant degree of public interest in a draft permit(s)").

117. 56 Fed. Reg. at 21742-43. See Chemical Waste Management, Inc. v. U.S. EPA, 873 F.2d 1477, 19 ELR 20868 (D.C. Cir. 1989) (neither the statute nor due process requires that hearings held under § 3008(h) of the Resource Conservation and Recovery Act be formal "on the record" hearings). But see Marathon Oil Co. v. EPA, 564 F.2d 1253 (9th Cir. 1977) and Seacoast Anti-Pollution League v. Costle, 572 F.2d 872, 8 ELR 20207 (1st Cir. 1978) (formal APA adjudicatory hearing must be held for issuance of NPDES permit). For a discussion of the NPDES line of cases, see 1 F. GRAD, supra note 20, at 3-234.6 to 3-237.

118. See 40 C.F.R. § 124.8 (consolidated permit regulations); § 123.25 (NPDES state programs, but only for major sources); § 145.11 (underground injection control state permit programs); § 233.26 (FW-PCA § 404 dredge and fill permits); § 271.14 (RCRA state permit programs).

119. Proposed 40 C.F.R. § 70.7(a)(5). This is similar to the statement of basis required for a draft minor NPDES permit, which does not require the preparation of a fact sheet. 40 C.F.R. § 124.7.

120. Proposed 40 C.F.R. § 70.7(a)(4).

121. 56 Fed. Reg. at 21759-60.

122. Proposed 40 C.F.R. § 70.7(c), and accompanying preamble discussion at 56 Fed. Reg. at 21745.

123. Proposed 40 C.F.R. § 70.7(g)(i). This provision implements CAA § 502(b)(9). As EPA notes in the preamble, although this section of the Act states that this type of reopening would apply to "permits with a term of three or more years for major sources," interpreting this language to refer to all permits with original terms of three or more years would lead to absurd results. Because EPA does not believe that this was the result intended by Congress, the proposal calls for a mandatory reopening when there is three or more years remaining in the life of the permit. 56 Fed. Reg. at 21745.

124. Proposed 40 C.F.R. § 70.7(g) and (h), and accompanying preamble discussion at 56 Fed. Reg. at 21744-45.

125. 42 U.S.C. § 7661a(b)(10), ELR STAT. CAA 169.

126. Proposed 40 C.F.R. § 70.6(d), and accompanying preamble discussion at 56 Fed. Reg. at 21746.

127. Proposed 40 C.F.R. § 70.6(d)(3)(v).

128. Proposed 40 C.F.R. § 70.6(d)(3)(iv).

129. 56 Fed. Reg. at 21746.

130. 56 Fed. Reg. at 21748-49.

131. As the preamble notes, however, one important advantage for the source of including the different operating scenarios in the permit in the first place is that the permit shield (discussed in section V above) would apply if the state chose to include the shield in the permit; i.e., compliance with the permit terms governing those various operating scenarios could be considered to be compliance with the underlying CAA requirements. 56 Fed. Reg. at 21746.

132. Compare the revision procedures for NPDES and RCRA permits. Under the NPDES regulations, almost all changes must be made using the full process utilized for original permit issuance and permit renewals. Only minor, more technical changes to the permit may be made more quickly and with less process. 40 C.F.R. § 122.62 and 122.63 (different procedures for "modifications" and "minor modifications"). Although the RCRA permitting regulations originally adopted a similar scheme, EPA amended those regulations after conducting regulatory negotiations with industry and environmental groups. The new, more flexible (and more complex) system classifies a number of different types of permit changes into three classes, depending on their relative importance and the degree of process and public participation considered appropriate. Fairly detailed procedures are set forth for the three categories of modifications. 40 C.F.R. § 270.41 and 270.42.

133. Proposed 40 C.F.R. § 70.7(f)(1).

134. See May 8 Waxman letter, supra note 11, at 2; Ross, supra note 10 (quoting Rep. Waxman as saying this would create "a massive loophole" and that "pollution sources would be allowed to increase their pollution levels by any amount — double, triple, a hundred fold — once the source initially receives a permit").

135. May 1 Health and Environment Subcomm. hearing, supra note 14, at 37. As Rosenberg noted, the proposal solicits comment on "the appropriate criteria for EPA to use in approving State procedures for revising permits." 56 Fed. Reg. at 21747. The proposal also states: "The basic test is whether a state's procedural system, taken as a whole, can assure that the national ambient air quality standards and other substantive requirements of the Act will be maintained and enforceable. See section 110(a). If a state's procedures can be administered in a way that would provide adequate [sic] mechanism for tracking permit revisions (either ex ante or ex post) to ensure that the substantive standards of the Act are met, EPA should ordinarily approve them, rather than speculate that the procedures might be misapplied." Id.

136. 56 Fed. Reg at 21747.

137. Id.

138. Proposed 40 C.F.R. § 70.7(f)(2)(iii). State air officials also have strongly criticized this proposal, stating that states cannot possibly make such decisions in a short time. See Letter from Bradley Beckham (President of the State and Territorial Air Pollution Program Administrators) and David Jordan (Acting President of the Association of Local Air Pollution Control Officials) to Rep. Henry Waxman (Apr. 30, 1991); Plan Meets Industry Approval, supra note 8, at 8-9.

139. 56 Fed. Reg. at 21744.

140. Industry has been concerned that public participation would unreasonably delay the permit revision process and effectively prohibit them from making changes that they could not have reasonably anticipated when the permit was issued. Cf. Tucker, supra note 8, at 172. But see 2 W. RODGERS, supra note 20, at 375, discussing NPDES permit processing: "[T]he [permitting] process is heavily attended by formalities serving to drive backroom bargaining into the open. There is, first of all, the 'public hearing' requirement that promises to multiply parties and extend agendas to the clear detriment of bargained-for outcomes. There is an emphasis, secondly, on public participation…."

141. See May 8 Waxman letter, supra note 11, at 3.

142. 40 C.F.R. § 122.63.

143. Proposed 40 C.F.R. § 70.1(c)(5) and (6), and accompanying preamble discussion at 56 Fed. Reg. at 21747-48.

144. Proposed 40 C.F.R. § 70.7(d), and accompanying preamble discussion at 56 Fed. Reg. at 21748.

145. See definition of "affected state in proposed 40 C.F.R. § 70.1(e), proposed 40 C.F.R. § 70.8(a), and accompanying preamble discussion at 56 Fed. Reg. at 21749-50.

146. Proposed 40 C.F.R. § 70.8(b)(2).

147. This statutory provision is implemented by proposed 40 C.F.R. § 70.8(c)(1). The preamble states EPA's position that this duty is discretionary, however, because the requirement to object is predicated on a discretionary determination by EPA that the permit does not comply with applicable CAA requirements. 56 Fed. Reg. at 21749. In addition to having a duty to object, the proposed regulations allow EPA to veto a permit if the state has not provided adequate information to allow for meaningful review by EPA. Proposed 40 C.F.R. § 70.8(c)(3), and accompanying preamble discussion at 56 Fed. Reg. at 21750.

148. Proposed 40 C.F.R. § 70.8(c)(1), (2) and (4), and accompanying preamble discussion at 56 Fed. Reg. at 21749 and 21751.

149. The public petition process and judicial review of EPA's decision on such a petition is discussed in the preamble at 56 Fed. Reg. at 21751, 21749-50, and 21760. CAA § 505(b)(2) states that such a petition "shall be based only on objections to the permit that were raised with reasonable specificity during the public comment period provided by the permitting agency (unless the petitioner demonstrates in the petition to the Administrator that it was impracticable to raise such objections within such period or unless the grounds for such objection arose after such period)." 42 U.S.C. § 7661d(b)(2), ELR STAT. CAA 161. See also proposed 40 C.F.R. § 70.8(d) (tracking the statutory language).

150. Several courts have ruled that EPA has discretion in deciding whether or not to veto an NPDES permit. See District of Columbia v. Schramm, 631 F.2d 854, 10 ELR 20520 (D.C. Cir. 1980); Save the Bay, Inc. v. EPA, 556 F.2d 1282, 7 ELR 20674 (5th Cir. 1977), reh'g denied, 560 F.2d 1023 (5th Cir. 1977); Mianus River Preservation Comm. v. EPA, 541 F.2d 899, 6 ELR 20597 (2d Cir. 1976. See also 1 F. GRAD, supra note 20, at 3-242to 3-243, and 2 W. RODGERS, supra note 20, at 383. As noted above at note 147, EPA believes that under CAA § 505(b) the Agency has substantial discretion in determining whether or not a permit complies with all applicable CAA requirements.

151. 2 W. RODGERS, supra note 20, at 384-85. Rodgers sets out several models of federal agency oversight, and concludes that most EPA Regional offices follow a model in which EPA objects to correct only outrageous or preposterous decisions.

152. 40 C.F.R. § 123.64.

153. 2 W. RODGERS, supra note 20, at 379.

154. 42 U.S.C. § 7661a(b)(3)(A), ELR STAT. CAA 168.

155. Proposed 40 C.F.R. § 70.9(a)(2) and 56 Fed. Reg. at 21751.

156. Proposed 40 C.F.R. § 70.9(b)(1) and 56 Fed. Reg. at 21751-52. The regulations and preamble also make clear that overhead costs attributed to these activities are to be included. Id.

157. Proposed 40 C.F.R. § 70.9(c).

158. Proposed 40 C.F.R. § 70.9(b).

159. The preamble states:

The EPA takes the position that [CAA § 502(b)(3)(B)] intended to establish a presumption that a fee program that collected from all subject sources, in the aggregate, the $ 25 amount on an annual basis would meet the requirements of covering the costs of the permit program. Accordingly, if a State submits a fee program that provides for collection of the $ 25 amount, EPA will presume that the fee program meets the Act's requirements, and will propose to approve it. However, if public comment, or other information brought to EPA's attention, reasonably suggests that the $ 25 amount is not adequate to recoup the required costs, then EPA will scrutinize the State's costs to determine whether the $ 25 amount is adequate.

56 Fed. Reg. at 21753.

160. CAA § 502(b)(3)(B)(ii) and proposed 40 C.F.R. § 70.2(aa). (The inclusion of nitrogen oxides in the regulatory definition is merely a clarification because that substance is already regulated under CAA § 111.) The preamble sets forth EPA's proposed position that a pollutant becomes regulated under CAA § 111 or § 112 when EPA first promulgates a standard for that pollutant. 56 Fed. Reg. at 21753.

161. CAA § 502(b)(3)(B)(iii), 42 U.S.C. § 7661a(b)(3)(B)(iii), ELR STAT. CAA 168, and proposed 40 C.F.R. § 70.9(b)(2)(ii)(A).

162. Compare proposed 40 C.F.R. § 70.9(b)(2)(iv) with 56 Fed. Reg. at 21753.

163. Letter from Beckham and Jordan, supra note 138.

164. 56 Fed. Reg. at 21753.

165. A fourth type of relationship — that of the new source review permit to the Title V operating permit — also deserves brief mention. The proposal states that requirements in a new source review permit are "applicable requirements" for purposes of § 70.3(c)(1). See proposed § 70.2(g)(2). The preamble also notes that if a source meets the limits in its new source review permit, the Title V operating permit would incorporate the limits without further review. 56 Fed. Reg. at 21738-39.

166. Conversations with industry representatives and environmentalists. See also Plan Meets Industry Approval, supra note 8, at 8.

167. Industry lawyers were quoted as saying that the proposal contains "no proposed solution" to the permit/SIP interface. Plan Meets Industry Approval, supra note 8, at 8.

168. 56 Fed. Reg. at 21757.

169. 56 Fed. Reg. at 21757-58.

170. See, e.g., Yudelson, Emissions Trading: Who Pays?, CAL. ENVTL. NEWS, June 1991, at 14; Pasternak, AQMD May Trade Strict Rules for "Smog Exchange," Los Angeles Times, May 19, 1991, at A1, col. 1.

171. CAA § 408, 42 U.S.C. § 7651g, ELR STAT. CAA 160.

172. See 56 Fed. Reg. at 21759.

173. Compare CAA § 408(b) with § 503(b).

174. CAA § 408(c)(3), 42 U.S.C. § 7651g(c)(3), ELR STAT. CAA 160.

175. These provisions are discussed in the permit proposal at 56 Fed. Reg. at 21761-63. See also Novello, supra note 4, at 484-86.

176. May 1 Health and Environment Subcomm. hearing, supra note 14, at 31.

21 ELR 10511 | Environmental Law Reporter | copyright © 1991 | All rights reserved