23 ELR 10080 | Environmental Law Reporter | copyright © 1993 | All rights reserved

The New Clean Air Act Operating Permit Program: EPA's Final Rules

Editors' Summary: The Clean Air Act's (CAA's) Title V operating permit program was one of the most significant additions of the 1990 Clean Air Act Amendments. The U.S. Environmental Protection Agency's (EPA's) July 1992 final rules for the Title V program, which are the heart of CAA permitting, set forth the minimum requirements for federally mandated state permit programs. The state operating permit programs will transform the CAA's implementation scheme that has developed since the passage of the CAA in 1970, and change the means by which industry conforms to air pollution control requirements. This Article describes the CAA's Title V operating permit program and EPA's complex final rules for the program. The author details the permitting process and the important differences between EPA's July 1992 final rules and the Agency's May 1991 proposed rules. In doing so, the author examines the rules' distribution of authority between federal and state levels for implementation of the permit program. He concludes that the most important permit program developments will occur at the state level.

David P. Novello is Of Counsel to the Washington, D.C., law firm of Freedman, Levy, Kroll & Simonds. Previously, he was a senior attorney with the U.S. Environmental Protection Agency's Office of General Counsel, where he was the lead agency attorney working on the Title V operating permit regulations during most of their development.

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I. Introduction

Title V of the Clean Air Act (CAA), added by the 1990 Amendments, establishes an operating permit system that will profoundly affect the way industry complies with air pollution control requirements. Federally mandated operating permits will fundamentally alter the CAA implementation scheme that has evolved since passage of the CAA in 1970. Many observers believe that the new permit program is the most significant change to the Act made by the 1990 Amendments.¹

Previously, the CAA contained permit requirements only for certain new or modified major stationary sources of air pollution.² These provisions, still in effect, require a permit from the source's state or the U.S. Environmental Protection Agency (EPA) prior to construction or modification. Many states are authorized to issue these "new source review" (NSR) permits.

In addition, many states have developed and implemented their own operating permit programs for existing sources [23 ELR 10081] of air pollution, even though they were not mandated to do so by federal law.³ These programs vary widely in their scope and requirements. The 1990 Amendments, however, require all states to adopt and to implement state operating permit programs that meet the minimum requirements of CAA Title V and EPA's implementing regulations. A source's operating permit will be the implementation vehicle for the myriad requirements of the CAA, old and new.

As mandated by Title V, EPA has developed rules setting forth the minimum elements of state permit programs. EPA submitted its proposed rules for comment on May 10, 1991,⁴ and issued the final operating permit rules on July 21, 1992.⁵ These final rules are the heart of CAA permitting, because they establish the floor for sufficient state programs.

The EPA rulemaking turned out to be the most controversial CAA implementation issue since the 1990 Amendments were passed. In one of the more bitter and well-publicized environmental disputes in recent years, EPA and other administration offices, including the Vice President's Council on Competitiveness, fought over the proposed scope of these permit rules for well over a year. These disputes delayed promulgation of the rules beyond the statutory deadline by more than seven months.

The most controversial issue — procedural requirements for "minor permit modifications" — ultimately had to be decided by the President. Environmentalists and state officials have angrily criticized these and other provisions of the rules, while industry is unhappy with many other aspects. Both sides have challenged the rules in court.⁶

Another legacy of these "permits wars" is the utterly confusing nature of many critical parts of the rules. The confusion wrought by a number of the highly elaborate provisions suggests that compromises were reached in the wee hours of the morning, with each side taking turns slapping on language it considered necessary. For example, the regulatory provision implementing CAA § 502(b)(10) twists and turns for nearly two full columns of Federal Register fine print, with three completely different interpretations of the statute.

EPA's complicated rules, together with the preamble to them, occupy 63 pages in the Federal Register. The rules are codified in a new part 70 of 40 Code of Federal Regulations (C.F.R.), and thus are sometimes referred to as EPA's Part 70 rules. States must comply with these rules when they adopt their own permit legislation and regulations, which are to be submitted to EPA by November 1993. It should be noted that companies will not be directly regulated under the Part 70 rules; rather, these rules represent the minimum required for state-adopted permit programs which are expected to be in operation by late 1995. Companies then will apply for and receive permits under each state's rules.

EPA Part 70 rules often leave states the option of using their discretion in meeting the minimum elements, and many states with operating permit systems will probably keep many aspects of their existing programs. Moreover, EPA has hinted that it may approve programs with elements that are merely "similar" to the Part 70 rules.⁷ Thus, permit programs will likely vary widely among the states.

In states that fail to adopt approvable programs, EPA itself is required to step in and issue operating permits. To this end, the agency has begun work on a set of federal permit regulations — to be inserted in part 71 of 40 C.F.R. — for its use should it need to serve as the permitting agency in any state. But because state agencies that run their own programs will be able to collect permit fees, it is unlikely that more than a handful of states will relinquish this role.

This Article describes CAA Title V and EPA's Part 70 permit regulations. Where the final rules differ in important ways from EPA's May 1991 proposal, the changes are noted.

II. Goals of the Title V Permit Program

EPA included an operating permits title in the clean air legislation that the Bush administration sent to Congress in 1989.⁸ The Agency advocated the operating permits concept so that all applicable CAA requirements for a source could be consolidated in one document.⁹ Permits issued under the Federal Water Pollution Control Act's (FWPCA's) national pollutant discharge elimination system (NPDES) program — the model for the administration's CAA permits legislation — serve this purpose for water pollution requirements. The operating permit for a chemical plant, for example, would contain all relevant air emissions limitations and monitoring and reporting requirements found in the state implementation plan (SIP), hazardous air pollutant regulations under CAA § 112, new source performance standards (NSPS) under CAA § 111, prevention of signification deterioration (PSD) or nonattainment NSR permits, and any other applicable CAA rules.

Bringing these requirements together would allow EPA, states, and citizens¹⁰ to bring enforcement actions more easily against sources exceeding their emissions limitations.¹¹ In the [23 ELR 10082] past, it has often been unclear whether specific CAA rules (especially SIP rules) apply to a particular source. Moreover, many CAA rules contain only sketchy monitoring and reporting requirements. By including all applicable provisions in the permit, it would be easier to decide which rules apply and whether they are being met.

EPA also hoped that the new permit program would lead to a streamlining of SIPs, thereby allowing quicker changes in requirements for individual sources. However, this goal will be realized only partially at best.¹² Finally, EPA needed an implementation vehicle for the new Title IV acid rain program and favored an operating permit system for this purpose.

Opponents of the new operating permit program for air vigorously contest its purported benefits. They particularly protest the analogy to the NPDES permit system, arguing that the NPDES program grew up with the water program, while EPA is attempting to graft the Title V permit program onto a mature and elaborate system of CAA regulations.¹³ Indeed, EPA's failure to describe meaningfully how Title V will be integrated with existing CAA requirements — particularly the SIP system — demonstrates the problem of dropping a permit program on top of the pre-1990 CAA superstructure. But the critics' major complaint is the program's price. They argue that the benefits are not worth the paperwork and compliance costs.

III. Applicability

The applicability section of EPA's Part 70 regulations, found in § 70.3, answers two basic questions — who must obtain a Title V permit, and what CAA requirements must the permit include. The first question is answered by §§ 70.3(a)-(b), which are based on CAA § 502(a). A state permit program is required to provide for the permitting of, at the least, sources defined as "major" under the Part 70 rules; sources subject to a standard or regulation promulgated under CAA § 111 (the NSPS provision) or § 112 (the hazardous air pollutant provision);¹⁴ "affected" sources under the acid rain provisions of the Act; sources required to have a PSD permit under Title I, Part C, or an NSR permit under Title I, Part D; and any other sources in a category designated by EPA. States may include additional sources as well in their permit programs.

Note that states may issue one permit for the entire source or different permits for the various units,¹⁵ as long as the entire source is permitted. The applicability rules determine if a source needs a permit(s), but do not dictate that the state issue only one permit rather than multiple ones.¹⁶ Under current state operating permit programs for air, many large facilities receive numerous permits. Among other advantages, this allows the company to stagger information gathering, paperwork, and other burdens over several years.

A. Definition of "Major Source"

EPA's complicated definition of "major source"¹⁷ cannot be briefly summarized, for its many details take up two columns of Federal Register fine print. It is sufficient to state that, as required by CAA § 501(2), it includes many new "major source" thresholds of the 1990 Amendments for sources emitting various types of pollutants. For example, a source with the potential to emit 10 tons per year (tpy) of any one hazardous air pollutant listed under CAA § 112(b), or 25 tpy of any combination of such pollutants, is a major source. The "major source" definition is based on the amount of emissions from the source, regardless of whether it is subject to existing requirements for any specific pollutant. Thus, 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 source category for several years.¹⁸

Part of EPA's complicated "major source" definition focuses on whether various emission units will be grouped together to aggregate their emissions in order to determine whether the emissions thresholds noted above are met. The definition states that a major source 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 quantities of pollutants at or above the threshold level.¹⁹

Different units are part of the same industrial grouping if the pollutant-emitting activities at the source have the same two-digit Standard Industrial Classification (SIC) code.²⁰ EPA also aggregates units by SIC code in its PSD and NSR programs, and Congress seems to have intended for EPA to do the same for operating permits.²¹ Under this approach, two dissimilar operations, such as a power plant and an adjacent coal mine, would be treated as different sources even though they are owned by the same person.

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Moreover, whether a source is major depends on its "potential to emit," not actual emissions. EPA defines "potential to emit" in a similar manner to the way it has previously under its PSD and nonattainment NSR permit programs. "Potential to emit" is:

the maximum capacity of a stationary source to emit any air pollutant under its physical and operational design. Any physical or operational limitation on the capacity of a source to emit an air 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 enforceable by the Administrator.²²

Thus, even if the source might have an operational capacity that makes it capable of emitting more than the tpy thresholds found in the definition of "major source," it need not obtain an operating permit if it restricts that capability in a way that EPA can enforce. But this creates a "chicken-and-egg" problem. An operating permit could restrict the capability to pollute in an enforceable manner, but the source's aim in restricting its capability is to obviate the need for a permit.

In the preamble to its final rules, EPA has suggested, but not provided much guidance on, a few possible ways around this problem. Sources of National Ambient Air Quality Standard (NAAQS) pollutants in states with existing operating permit programs may be able to use a non-Part 70 operating permit to limit the potential to emit, and sources of hazardous air pollutants may be able to use state-approved programs under new CAA § 112(l). The first method is available now, but EPA only has suggested the possibility of using § 112(l).²³ Moreover, each method has its own drawbacks for addressing the "chicken-and-egg" problem. A third possible approach with fewer drawbacks is discussed below.²⁴

B. Permanent Exemptions and Deferral for Non-Major Sources

CAA § 502(a) allows EPA to exempt source categories from permitting requirements "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."²⁵ In its final rules, EPA exempted asbestos demolition and renovation projects and wood stoves, both of which otherwise would need permits because they are subject to § 112 and § 111 standards, respectively.²⁶ EPA probably will exempt other source categories in the future, as requirements under § 112 and other parts of the Act begin affecting ever-smaller "area sources" such as gasoline stations. If EPA does not exempt such source categories, the burden on small businesses and state agencies will be enormous.

In a more controversial move, the Agency decided to temporarily exempt, and thus defer permitting obligations for, nearly all non-major sources. States need not permit them until EPA has completed a future rulemaking on "how the program should be structured for non-major sources and the appropriateness of any [additional] permanent exemptions."²⁷ EPA predicts that it will complete this rulemaking within five years after it approves the first state program that defers permitting requirements for non-major sources. It also says it may continue the deferral at that time.²⁸ States remain free not to defer permitting obligations for some or all non-major sources.²⁹

EPA granted this blanket deferral because it believes that the administrative burdens on state agencies would make permitting impracticable and infeasible in the early years, when the state agencies struggle to get their programs underway. In short, states would be swamped by many thousands of applications; EPA estimates there are about 34,000 major sources in the country,³⁰ yet roughly estimates that there may be as many as 350,000 non-major sources.³¹

A second rationale EPA offered for the deferral is that immediate permitting would be a nightmare for non-major sources, a great majority of which are owned by small businesses. These sources will need the most assistance from state agencies and EPA, and assistance likely will not be available if the agencies are overburdened with thousands of permit applications.³² Still, environmentalists and some congressional Democrats have castigated EPA for this action, saying that the statute only allows deferral for specific source categories. In fact, this may be one of the few environmental issues about which Congressmen John Dingell (D-MI) and Henry Waxman (D-CA) have agreed in recent years.³³

There are a handful of exceptions to EPA's general deferral for non-major sources. First, all non-major solid waste incineration units required to obtain a permit under CAA § 129(e) and all non-major acid rain "affected sources" (if there are any) must apply for a permit at the start of the program.³⁴ Second, when EPA promulgates future § 111 or § 112 standards, it can decide at that time not to defer the permitting obligation for non-major sources in those source categories.³⁵

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C. Applicable Requirements

Section 70.3(c)(1) answers the second applicability concern — what CAA requirements the permit must include. It states that a permit for a major source must contain all applicable requirements for each of the source's regulated emission units. In other words, even though a source is classified as major due to, for example, its sulfur dioxide emissions, all relevant CAA requirements for all pollutants — such as § 112 standards and ozone SIP requirements — must be in the permit.³⁶

For a non-major source required to have a permit, EPA's rules require only that the permit include "all applicable requirements applicable to emission units that cause the source to be subject to the part 70 program."³⁷ Thus, for a non-major source that must obtain a permit only because it contains an oil-fired burner that is subject to a CAA § 111 NSPS, the permit would only have to address the burner.³⁸

Section 504(a) of the Act states that the permit must assure compliance with pertinent CAA requirements, including those in the "applicable implementation plan."³⁹ EPA has decided that an NAAQS promulgated under CAA § 109 is not an "applicable requirement," because it does not apply directly to sources. Rather, the NAAQS is a general ambient standard implemented through a state's SIP. A source therefore must comply with all applicable SIP requirements, but need not show that its emissions have not caused a violation of the NAAQS. There is one exception: the statute requires that "temporary sources" assure compliance with "ambient standards … and any applicable increment or visibility requirements under Part C."⁴⁰

EPA takes the position that a violation of an NAAQS caused by a particular source 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.⁴¹

IV. State Permit Programs and EPA Review of Programs

In many ways, § 70.4 forms the heart of the proposed regulations, for it governs what state permit programs must include and how they must operate. Of course, program requirements are scattered throughout EPA's regulations. But many of them are in this section, which is primarily EPA's elaboration on Congress' minimum permit program elements in CAA § 502(b).⁴² Most of the remainder of § 70.4 describes how EPA will review state programs (and program revisions). The section also includes criteria for partial and interim permit programs.

A. State Program Requirements

Each state will be required to submit to EPA by November 15, 1993, its permit rules, a program description, and copies of enabling statutes and regulations. Each state's attorney general, or the attorney for the air pollution control agency, also must sign an opinion stating that the state has legal authority to carry out the program.⁴³ EPA's rules specify several requirements for which a state must demonstrate its capability to implement. Among the most significant requirements are (1) the state cannot issue permits with more than a five-year term (and permits with acid rain provisions must have exactly a five-year term), (2) 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 documents except the permit), (3) the state shall not issue a permit if EPA objects, and (4) the state must allow for judicial review of the final permit in state court.⁴⁴

The state must demonstrate that it can decide within 60 days whether an application is complete, and issue or deny the permit within 18 months.⁴⁵ It also must collect adequate permit fees,⁴⁶ make personnel and funding available to develop and administer the program, and develop a transition plan for program commencement. Under the transition plan, sources must submit applications within one year of EPA's program approval, and the state must act on at least one-third of the applications in each of the three years following approval.⁴⁷

Enforcement authority — both civil and criminal — is also required. States must demonstrate that they can enforce permit terms and bring legal action against sources that operate illegally without a permit. The enforcement mandates are found in § 70.11, which, among other things, requires that states have the power to seek injunctive relief, recover civil penalties in a maximum amount of at least $ 10,000 per day per violation, and recover criminal fines of at least the same amount for knowing CAA or permit violations, or false and material representations.⁴⁸

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Another required program element addresses the problem of expiring permits. In the May 1991 proposal, EPA noted its concern that expiring permits "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."⁴⁹ The rules 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 with the NPDES program suggests that states often will fail to issue renewal applications on time. Nevertheless, this is not a problem for permits issued by EPA under the Administrative Procedure Act (APA), which provides that a permit remains in effect after its term if the permittee has submitted a timely and sufficient application for renewal.⁵⁰ States are required to adopt this approach or, alternatively, provide that the terms and conditions of the expiring permit remain in effect.⁵¹

The program requirements section contains several important provisions concerning a source's ability to make operational changes. EPA moved two of these provisions — one implementing Title V's "operational flexibility" section, § 502(b)(10), and the other governing "off-permit" changes⁵² — from other sections of its May 1991 proposal, and, more importantly, significantly changed them. They will be described in more detail below, because it helps to consider them together with the permit revision provisions so one can decide whether a revision is needed.⁵³ Section 70.4(b)(13) of the program requirements section also addresses revisions. It requires "adequate, streamlined, and reasonable procedures for expeditious review of permit revisions or modifications," but allows states to adopt rules "substantially equivalent" to EPA's controversial "minor permit modification" procedures.⁵⁴

Regarding matters of permit program administration, EPA encourages, but does not require, each state to negotiate a memorandum of agreement (MOA) with the appropriate EPA Regional Administrator. This suggestion, a contrast to the mandate for MOAs found in EPA's NPDES regulations,⁵⁵ arises from the recognition of the significant utility that MOAs provide in the day-to-day operation of a state-administered NPDES program.⁵⁶ The May 1991 proposal, EPA's last word on MOAs, stated that the implementation agreement "should establish the policies, responsibilities, and procedures to be followed by the two parties in administering title V."⁵⁷ EPA suggested that the agreement cover topics such as meetings between the state and EPA, accountings to show that permit fees are collected and spent properly, the exchange of documents and other information, information management, priorities for permit processing, enforcement information, and EPA assistance to the state. The proposal noted that the state should submit its MOA at the same time it submits its permit program to EPA for approval.⁵⁸

B. EPA Review of State Programs

Each state must submit its permit program to EPA by November 15, 1993. Within 60 days of its receipt, EPA is to determine whether the submission is complete; an incomplete submission will toll the period for EPA review. EPA then must approve, disapprove, or partially approve the program within one year of receipt of the complete submission.⁵⁹ Thus, if a state and EPA use the maximum allowed time to submit and then act on the program, the program will not become effective as a matter of federal law until late 1994.

EPA will publish notice of its action in the Federal Register, attaching to both complete and partial disapprovals a statement of the revisions needed to gain approval. If disapproved, the state must make the necessary revisions to its proposed program within 180 days of EPA's disapproval.⁶⁰ If the state does not make the corrections — or if it never submits a program or fails to adequately implement it — EPA must impose statutory sanctions against the state, and ultimately must step in and adopt and carry out a permit program in the state.⁶¹ The sanctions include a bar on the award of highway funds, as well as imposition of a more stringent emissions "offset" ratio for new source review purposes.⁶²

C. Partial and Interim Approvals

The Part 70 rules also provide for partial and interim permit programs. EPA may approve a partial program limited in terms of its geographic scope, such as for a local air pollution agency, as long as the program ensures compliance with specified provisions of the CAA. But the failure to submit an approvable "whole program" still will subject the state to sanctions.⁶³

Several states at first indicated that they would seek interim approval and begin issuing Title V permits as soon as possible in order to collect the much-coveted Title V fees. Under § 502(g), EPA may temporarily approve a program, for no longer than two years, if the state "substantially meets" the Title V requirements. But EPA's final rules define "substantially meets" to require several elements that states almost certainly do not have in their existing programs.⁶⁴

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This hurdle, coupled with EPA's long delay in issuing its rules, makes it unlikely that states will seek interim approval soon after promulgation of the Part 70 rules. Any state that applies for such approval may wait until November 15, 1993, to submit an interim program to EPA, but then must submit a final program by a date that EPA specifies.⁶⁵

V. Permit Applications

The application is the vehicle for the company to supply the permit writer with information needed to craft the permit terms. Title V also mandates that the application include a compliance plan and compliance schedule. The filing of a timely and complete application will protect the source if the state delays in issuing the permit.

A. Timely and Complete Applications

Each source in the permit program needs to submit a timely and complete application to the state agency. Otherwise, the owner or operator is in violation of the CAA and may be assessed civil penalties.⁶⁶ A source applying for a Title V permit for the first time must file its application no later than 12 months after becoming subject to the program. One becomes subject when EPA approves the program or one fits the § 70.3 applicability criteria, whichever is later. The May 1991 proposal was silent on timing for obtaining an operating permit if a source is subject to the Act's PSD or NSR construction permitting requirements, or the new CAA § 112(g) hazardous air pollutant modification provisions; the Part 70 rules allow such sources to submit their Title V permit applications 12 months after they begin operations, although the state may require an earlier filing.⁶⁷

A renewal application must be filed at least six months before the end of the permit term, but in no case may the state require it to be filed more than 18 months prior to expiration.⁶⁸ In the preamble, EPA hints that it will audit state programs to see if applications for permit renewal are being acted on before the permit expires.⁶⁹

A complete application is one that includes information "sufficient to evaluate the subject source and its application and to determine all applicable requirements."⁷⁰ Unless the state decides to the contrary, within 60 days it generally will be deemed complete.⁷¹ But a completeness finding does not relieve the applicant of its duty to supply additional information requested by the state in writing. Failure to do so in a timely manner causes what EPA calls the "application shield"⁷² to evaporate.⁷³

This application shield, which should not be confused with the "permit shield,"⁷⁴ is found in CAA § 503(d). It protects a source that has filed a timely and complete application by allowing it to operate without a permit if the state delays in issuing it.⁷⁵ It provides protection for both initial and renewal permits; such that a source that has never received a permit, or one whose permit has expired, may continue to operate, as long as a complete application for an initial permit or permit renewal has been filed on time.

B. Content of Applications

EPA did not adopt a national standard application form, although many multistate companies would have preferred one. The May 1991 proposal noted that many states already have operating permit programs. EPA said that mandating a national form would disrupt these programs and represent an unnecessary intrusion upon the states' flexibility in designing appropriate forms.⁷⁶ Instead, § 70.5(c) lists data EPA requires to be included in the state's application form. The list includes company information, a plant description, emissions-related data and emission rates, a description of emission points and air pollution control equipment, and a description of applicable CAA requirements and test methods for determining compliance.

In a significant addition to the final rules, EPA decided that it "may approve as part of a State program a list of insignificant activities and emission levels which need not be included in permit applications."⁷⁷ Such exemptions will aid businesses because states will not have to collect absurd amounts of information on the most trivial emissions at facilities. But the rules require the application to list the "insignificant activities" in certain cases. Moreover, a source may not omit information needed to calculate permit fees or determine if a CAA requirement applies.⁷⁸ EPA provides little guidance on how broadly it will construe these "exceptions to the exemption," but it appears possible that the exceptions could nearly swallow the sensible exemption for insignificant activities and exemptions.

Many states and environmental groups criticized the May 1991 proposal's provisions that would have required only sources out of compliance with the CAA to include a compliance plan in their applications. In response, the [23 ELR 10087] final rules instead compel all sources to submit a plan. Nevertheless, requirements for sources in compliance are minimal; the source need only state that it will continue to comply with the requirements. Similarly, for standards on the books but not yet in effect at the time of permit issuance, the plan need only describe in narrative fashion how the source will comply.⁷⁹

The plan must include a "schedule of compliance," which, for sources not in compliance, must contain "an enforceable sequence of actions with milestones, leading to compliance."⁸⁰ Again, requirements are minimal for sources already in compliance and for sources subject to regulations that will become effective during the permit term.⁸¹ Under CAA § 504(a), the schedule is part of the permit. It is therefore enforceable against the source, whereas the plan is not.

The application, as well as reports and required additional periodic compliance certifications, also must include a certification of truth, accuracy, and completeness by a responsible official. A knowing violation of this requirement would subject a person to criminal penalties.⁸² This provision leaves many in the regulated community extremely worried.

VI. Permit Content

The Title V permit must assure compliance with all applicable CAA requirements. The regulations on permit content, found in § 70.6, are critical to realizing this mandate, because the permit terms translate generally applicable standards and duties into source-specific emission limitations.

A. Permit Terms

Among other requirements, each permit needs to include emission limitations and standards, as well as monitoring, recordkeeping, reporting, and inspection and entry requirements to assure compliance with the limitations.⁸³ The monitoring requirements, in § 70.6(a)(3), deserve special attention. They state that if a CAA rule does not require periodic testing or monitoring, then the permit itself must supply "periodic monitoring sufficient to yield reliable data from the relevant time period that are representative of the source's compliance with the permit."⁸⁴ But the rules also provide that recordkeeping provisions may be sufficient to meet this requirement.⁸⁵ Under CAA § 504(b), EPA is conducting a separate, and very important, rulemaking on monitoring methods and procedures for determining compliance with CAA requirements.

The preamble also adds an important element — federal standards promulgated pursuant to the 1990 CAA Amendments are presumed to contain sufficient monitoring provisions. Therefore, the permit need not add independent monitoring requirements for those standards.⁸⁶ The company needs to retain monitoring records for at least five years, submit monitoring reports to the state at least every six months, and report all deviations from permit requirements promptly.⁸⁷

A controversial provision of the rules states that, though all applicable CAA requirements in the permit may be enforced by EPA 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."⁸⁸ This language, added after inter-agency and White House review of the proposal, was included so that EPA and citizens cannot enforce state air pollution controls — to the extent they are more stringent or extensive than necessary to meet federal requirements — in federal court. The purpose of this change was to prevent more stringent state requirements fromessentially becoming "federalized" through the Title V permit. Thus, states will have to decide which requirements that apply to the source are based on CAA requirements and which are based on state law; those based on state law must be so designated, perhaps by placing them in a separate part of the permit. During the rulemaking, state officials argued that these decisions will be legally complex and time-consuming, and they strongly opposed the requirement.⁸⁹

EPA's "Response to Comments" document⁹⁰ on the Part 70 rules states the agency's view that if, within 90 days of permit issuance, a party does not challenge in court the state's determination of whether a limitation is grounded in state law, it may not later challenge that decision.⁹¹ It remains to be seen whether courts will defer to this interpretation.

The permit must include provisions for a "certification of compliance" by the source, as is required under CAA §§ 504(c) and 114(a)(3). This certification will be signed by a "responsible official," which is defined in much the same [23 ELR 10088] way as it is under EPA's NPDES regulations. Sources not in compliance with any of the CAA requirements also need to file semiannual progress reports stating whether they met compliance deadlines, and if not, why not.⁹²

The final rules contain several important provisions on permit content that were not in the May 1991 proposal, including an affirmative defense for companies when they exceed permit limitations during emergencies ("upsets") that meet specified criteria. Under § 70.6(g), companies can qualify for the defense by notifying the state agency within two working days and describing the emergency and corrective actions taken. The rule specifies that exceedances caused by improperly designed equipment, inadequate maintenance, careless operation, and operator error will not qualify as emergencies.⁹³ Moreover, as in the NPDES program, the defense is only available when sources exceed limits founded on technology-based standards.⁹⁴

The permits may also contain state-determined "equivalency determinations." Under § 70.6(a)(1)(iii), states may adopt SIP provisions allowing sources to meet either an emission limitation in the SIP or an equivalent limit determined through the permit process. A permit with an equivalency determination "shall contain provisions to ensure that any resulting emissions limit has been demonstrated to be quantifiable, accountable, enforceable, and based on replicable procedures."⁹⁵ The preamble adds that the source's permit application must make this demonstration.⁹⁶

This equivalency provision could greatly benefit the regulated community. Industry representatives and states have for years argued for, and litigated with EPA over, allowing states to make equivalency determinations for SIP limitations based on "reasonably available control technology" (RACT).⁹⁷ If states include such provisions in their SIPs, companies will be able to make changes in source-specific emission limitations much more quickly than under the slow SIP revision process.

On a related topic, §§ 70.6(a)(8) and (10) are designed to allow for easier emissions trading, if the substantive CAA rules provide for trading. Again, the SIP is the most fertile ground in the CAA for allowing these innovative measures. The permit would serve as the vehicle for individual emissions trades.

Another important provision, § 70.6(a)(9), requires states to include in the permit "reasonably anticipated operating scenarios" that the source identifies in its application. The source therefore can switch among several scenarios without the need for a permit revision, if it was able to foresee the need for the different operating modes and it asked the state to include these various permit terms. This section, along with the three provisions affecting operational flexibility,⁹⁸ will be critical to companies wishing to minimize paperwork and delays when they change or modify their facility operations.

B. General Permits

CAA § 504(d) allows states to issue a general permit covering numerous similar sources, as long as the permit complies with all Title V requirements and the sources apply for it. A general permit contains terms like an individual permit does, but in some ways it more resembles a rule, because it states what a number of sources can and cannot do. EPA and states have benefitted greatly using general permits in the NPDES program, especially for permitting smaller, less complex sources.

The final rules provide more detail as to how CAA general permits will work than did the May 1991 proposal, which did little more than parrot the statute. Section 70.6(d) makes clear that although public participation is required when the general permit is issued, it is not needed when sources apply to be covered by the terms of the permit. The application need not contain all the information required for regular permit applications.

The preamble offers guidance on what types of sources may be covered by a general permit. States should consider whether the sources are (1) "generally homogeneous in terms of operations, processes, and emissions," (2) "subject to case-by-case standards or requirements," and (3) "subject to the same or substantially similar requirements governing operation, emissions, monitoring, reporting, or recordkeeping."⁹⁹ EPA says that it intends to develop "model general permits" for several source categories, including degreasers, dry cleaners, small heating systems, sheet fed printers, and VOC storage tanks. A few of these are not true source categories, but rather discrete emission units located at many types of facilities. The preamble suggests that a general permit covering such units could be incorporated into a source's individual permit, thereby lessening paperwork burdens for the state and the source.¹⁰⁰

In two sentences buried in the preamble, EPA suggests another important use of general permits: to avoid classification as a "major source." If a source's potential to emit exceeds the major source threshold, it would need to obtain a regular permit and might be subject to substantive CAA requirements as well. But the general permit may be used as an enforceable means of restricting the source's emissions so that it will not be classified as a major source, and thus will not have to obtain a regular permit or be subject to the substantive CAA rules. This is complex, but in essence the source would elect coverage under a general permit to guarantee that other rules do not apply.¹⁰¹ The preamble, however, does not indicate what the general permit would have to contain for this approach to prevail, and what information the source would need to give to the state.

C. Permit Shield

Most observers considered the "permit shield" provision in the administration's CAA Amendments bill to be the one [23 ELR 10089] major benefit businesses would derive from the proposed operating permit program. Compliance with the terms of the permit would be considered to be compliance with the terms of the Act, as is generally the case with NPDES permit compliance.¹⁰² The NPDES permit shield, after which the administration's CAA provision was modeled, simply states that except for any toxic pollutant standard, "Compliance with a permit issued pursuant to this section shall be deemed compliance, for purposes of [certain sections of the FWPCA]."¹⁰³ This provides certainty by allowing companies to know their FWPCA obligations for the life of the permit.

But the 1990 CAA Amendments bill passed by Congress made the shield provision optional to the state and contained murky language on its scope, suggesting that the shield did not protect a source from standards promulgated after permit issuance.¹⁰⁴ The Act's convoluted shield provision states in relevant 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.¹⁰⁵

EPA's May 1991 proposal would have provided a "broad" NPDES-style permit shield against future standards. Numerous commentators attacked this interpretation as inconsistent with the statutory language. The final rules mandate compliance with future CAA standards by the standard's effective date.¹⁰⁶ Unfortunately, this will undermine much of the certainty promised to industry at the beginning of the CAA debate.

Some certainty remains, however. A source will be protected if the state incorrectly translates a CAA standard into erroneous, overly lenient emission limitations in the permit. In such a case, neither EPA nor the state could bring an enforcement action based on the standard; only the permit terms could be enforced. Similarly, if the state decides when the permit is issued that standard X applies to the source but standard Y does not, the shield would prevent the state or EPA from arguing in an enforcement action that standard Y did in fact apply. Instead, the agencies' recourse would be to reopen the permit to incorporate standard Y. But even here, the protection is limited. If, during the permitting process, the state did not write in the permit that standard Y was not applicable to the source, the shield would not apply.¹⁰⁷

The rules address several other situations where the permit shield may not apply. First, they implement the sentence in CAA § 504(f) that provides that a source may not be shielded from an emergency order under CAA § 303. Second, they state that there is no shield from the Act's Title IV acid rain requirements. Finally, they clarify that a source may not be shielded from an enforcement action based on a violation that existed when the permit was issued.¹⁰⁸

VII. Permit Issuance, Judicial Review, Renewals, and Reopenings

A. Permit Issuance

EPA's Part 70 rules require public participation for issuance of an applicant's initial permit, including adequate notice of what EPA calls the "draft permit." EPA also requires the public availability of all nonconfidential information submitted by the applicant, a 30-day comment period, and an opportunity for an informal public hearing. The state must provide notice of a hearing at least 30 days in advance.¹⁰⁹

The preambles to both the May 1991 proposal and the final rules make it clear that the state need not hold a hearing in all instances; the request must be germane to the requirements that apply to the source.¹¹⁰ For example, a hearing may not have to be held if the requester only protests the source's location. In contrast to the NPDES program, the hearing need not be a trial-type adjudicatory hearing, with formal procedures such as the cross-examination of witnesses.¹¹¹ Because this type of hearing is extremely time-consuming and expensive, most states probably will elect to hold informal hearings instead — one at least hopes so.

Under the NPDES and other permitting programs, the state must prepare a "fact sheet" on the draft permit.¹¹² The Part 70 regulations do not require this, but the state still needs to provide a statement of the legal and factual basis for the draft permit conditions.¹¹³ This statement can [23 ELR 10090] play an important role if the final permit is challenged by the applicant or another party, because it would be a critical part of the administrative record on the permit.

B. Judicial Review

The few provisions on judicial review of state-issued permits are found in various parts of the rules.¹¹⁴ The most important, § 70.4(b)(3)(x), requires states to provide an opportunity for judicial review in state court for the applicant, any person who participated during the public-comment period, and any other person who could obtain judicial review under state law. Challenges to state-issued permits may not be brought in federal court.

EPA added another significant judicial review provision after the May 1991 proposal. Petitions for judicial review must be filed within 90 days of the state's final action on the permit, or a shorter period that the state may choose. The only exception is where new grounds arise. In such a case, the petition must be filed within 90 days of that time.¹¹⁵ Thus, this abbreviated period for review eliminates the challenge-to-permit-terms defense in an enforcement action.

C. Renewals and Reopenings

Applications for permit renewals and "reopenings" will be processed in the same manner as applications for initial permits.¹¹⁶ A major source's permit must be reopened if EPA or the state issues a new, applicable CAA standard, and three or more years remain in the permit term. The state then must incorporate the standard in the permit within 18 months. In addition, the state, or in some cases EPA, may reopen the permit for other reasons specified in the rules.¹¹⁷

VIII. Provisions Affecting a Source's Operational Flexibility

The greatest concern of businesses since the administration unveiled its CAA Amendments bill was that the permit program could hamper their ability to make operational changes at a facility. In addition to the "alternate scenarios" provisions,¹¹⁸ three parts of EPA's regulations are critical in determining whether a company must obtain a permit revision before changing operations — and, if a revision is needed, what procedures must be followed. These parts are the provisions addressing (1) "operational flexibility," (2) "off-permit" changes, and (3) "minor permit modifications."

The minor permit modification section has always been the most controversial part of the regulations. Environmentalists, state officials, and some congressional Democrats assailed EPA's May 1991 proposal as illegal and continued their attacks as the White House intervened to decide the shape of the final rules. The press closely followed these intra-administration battles, which included dueling legal opinions by EPA's General Counsel and the Department of Justice, as well as rumors that EPA Administrator William Reilly would resign over the issue.¹¹⁹

The other two provisions also elicited contentious debates, although these disputes were not as widely reported by the national press. The three provisions, and the states' elaboration of them in individual permit programs, will play a key role in determining whether a company needs a permit revision when it makes a change at its facility. The first two provisions may help a facility avoid the need for a permit revision altogether.

A. CAA § 502(b)(10): "Operational Flexibility" Changes

The most fought-over section of Title V during the legislative debate was CAA § 502(b)(10), which was included in the 1990 Amendments in order to aid businesses; it allows certain facility changes without a permit revision. Like the "permit shield" provision, however, the congressional compromises used to reach agreement on § 502(b)(10) make its meaning difficult, if not impossible, to decipher. The provision, located in the section on required program elements, says that state programs 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 time frame for emergencies.¹²⁰

Most readers of this provision discover that it takes on different meanings depending upon the angle from which it is viewed. Environmental groups and many states argued that it allows no more than the "reasonably anticipated operating scenarios";¹²¹ that is, if a state includes the various [23 ELR 10091] terms in the permit, the source can switch among different operating scenarios without first obtaining a permit revision. A number of industry groups, on the other hand, said the provision allowed sources to "pool emissions" — trade emissions among various units at the source — regardless of how the permit is written.¹²²

Making the matter more complicated is the provision's location in Title V's section on required program elements, § 502(b). The operational flexibility section is the only such element that would significantly benefit industry. Thus, questions exist as to how this provision relates to CAA § 506(a), which allows states to adopt "additional permitting requirements not inconsistent with this Act," and § 116, which allows states to adopt "any requirement respecting control or abatement of air pollution," as long as it is not less stringent than CAA requirements.

Environmental groups and some states contended that §§ 506(a) and 116 precluded requiring states to build flexibility for companies into their permit programs.¹²³ EPA disagreed, concluding that these two general statutory provisions do not override the specific requirement in § 502(b)(10) that states provide for operational flexibility in their permit programs.¹²⁴ But in the time between the release of the May 1991 proposal and the promulgation of the final rules, the Agency drastically altered its regulatory provisions implementing § 502(b)(10). The lengthy and confusing § 70.4(b)(12) says that states must provide two types of flexibility and may provide a third type. The most important by far is one of the two mandatory types. Under this provision, companies can contravene certain permit terms, as long as the changes do not result in emissions increases that exceed limits in the permit.¹²⁵ But only permit terms not found in the underlying EPA rule may be contravened — a violation of the terms of the SIP or any other EPA rule is not allowed.¹²⁶ EPA has also provided that this flexibility does not extend to changes that would contravene the following types of permit terms: monitoring, recordkeeping, reporting, or compliance certification requirements.¹²⁷

The other required type and the optional type of operational flexibility provide for certain kinds of emissions trading at the facility. But once again, these provisions do not allow a company to exceed specified limits stated in the SIP or other underlying EPA rules.¹²⁸ Before making changes under any of the three operational flexibility provisions, the company must provide advance written notification to the state and EPA.¹²⁹

B. "Off-Permit" Changes

EPA's final rules, like the May 1991 proposal, state that the CAA does not require a permit revision for "changes that are not addressed or prohibited by the permit."¹³⁰ However, the Agency allows the states to decide whether to allow what EPA calls "off-permit" changes.¹³¹ Under this provision, a company might have to obtain a permit revision in order to increase emissions of a particular pollutant covered by its permit, but might not need a revision if it emits a new pollutant not addressed in its permit.

The importance of this concept can hardly be overemphasized. Unfortunately, EPA offers little guidance in the preamble as to exactly what types of "off-permit" changes will not necessitate a permit revision. Thus, future guidance on the subject will be important. For example, EPA could conclude that adding a new unit at a facility does not require a revision.

Three important points on "off-permit" changes are worth noting. First, unlike the proposal, EPA now requires contemporaneous written notification of such changes to the state and EPA. Second, as with the § 502(b)(10) "operational flexibility" provision, any change classified as a "modification" under any provision of CAA Title I, such as those governing NSR, NSPS, or the new hazardous air pollutant standards, is not eligible for "off-permit" treatment. Third, even though states may bar "off-permit" changes, EPA and private citizens generally cannot enforce the prohibition under the CAA, and thus, enforcement of such state prohibitions could be accomplished only under state law.¹³²

C. Minor Permit Modifications and Other Permit Revisions

EPA has kept streamlined permit revision procedures for what it calls "minor permit modifications," but has changed both the criteria and the procedures for revision from the much-criticized provisions in its May 1991 proposal. The extraordinary intra-administration feuding on these procedures centered primarily on three issues: (1) whether public participation is required such that a state must provide an opportunity for public comment or a hearing; (2) the amount of time a state should have to review an application for a revision; and (3) at what point a company can make the change at its facility — for example, before or after the state approves the revision.

The first and third are legal issues and were analyzed at length in EPA and in the U.S. Department of Justice's (DOJ's) legal opinions.¹³³ After the President decided against EPA in the intra-administration dispute, the Agency embraced the reasoning of the DOJ. The preamble to the final rules states that the Act neither requires public participation for minor permit modifications nor precludes a [23 ELR 10092] source from making changes before the state has acted on its application for a modification.¹³⁴

These provisions, found in § 70.7(e), are as lengthy and complicated as they are controversial.¹³⁵ States need not adopt the procedures, though they may add extra requirements. Nevertheless, they are free to allow these streamlined revision procedures for all changes except for those that EPA has specifically excluded. Some of the changes not eligible for the minor modification process are those that (1) are classified as a modification under any provision of CAA Title I, (2) involve significant changes to existing monitoring, reporting, or recordkeeping requirements, or (3) require a case-by-case determination of an emission limitation or other standard. Ineligible changes and revisions that the state determines are significant will be processed via procedures similar to those used for initial permits and permit renewals.¹³⁶

Under the minor modification procedures, the company can make the change as soon as it files its application, and it need not notify the public. While the application is pending, the company must comply with the terms of the proposed modification. EPA has 45 days to review the application and may object. The state should issue or deny the revision within 90 days after receiving the application and need not request public comment or hold a public hearing. The "permit shield" does not apply to terms adopted using these procedures; thus, enforcement actions may be brought based on the SIP or other underlying CAA requirements, even if the proposed modification is approved. Finally, states may group several of a source's applications for minor permit modifications and act on them together, periodically. The rules governing these "group processing" procedures are particularly complicated.¹³⁷

EPA calls the most mundane changes, such as address changes or those incorporating provisions from a PSD orNSR permit, "administrative permit amendments." Section 70.7(d) provides that the state shall act on these revisions within 60 days and need not provide notice to anyone.

An important point, nearly hidden in another part of the preamble, is that emission limits based solely on state law (not CAA requirements) may be revised under whatever procedures the state chooses. EPA states that procedures for such changes need not meet minimum CAA Title V requirements.¹³⁸

IX. Permit Review and EPA Oversight Over State Programs

A. Review of Permits by EPA and Neighboring States

EPA's permit review provisions for all but minor permit modifications track CAA § 505 fairly closely. States must furnish to EPA copies of each permit application, draft proposed permit, and final permit. They also must transmit copies of a draft proposed permit to neighboring states that are within 50 miles of the source, and to contiguous states whose air quality may be affected by the source. EPA may waive these informational requirements for categories of sources, though not major sources. If the issuing state does not accept the neighboring state's recommendations, it must explain why it is rejecting them.¹³⁹

The procedures governing review by EPA are more complex. CAA § 505(b), which was enacted over the protests of state officials, provides that EPA shall object to issuance of a permit that contains provisions that the Agency determines are not in compliance with applicable CAA requirements, including the SIP.¹⁴⁰ EPA must object to — "veto" — the permit within 45 days after receiving it, or the permit may automatically issue. If EPA objects, the state may not issue the permit as written, and a refusal to correct the problem will lead EPA to issue or deny the permit itself. If EPA does not object during the review period, under certain circumstances a person may petition EPA to object to it afterwards. CAA § 502(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.¹⁴¹

EPA's experience in vetoing NPDES permits under FWPCA § 402(d) is useful for speculating how the Agency might exercise its veto authority under Title V. 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.¹⁴² As one commentator has [23 ELR 10093] noted, EPA has not exercised its NPDES veto authority often.¹⁴³ But, officials in EPA's Office of Water say that the threat of a veto often persuades the state not to issue permits that EPA considers objectionable.

B. EPA Oversight Over State Permit Programs

Under § 70.10(a), EPA is required to apply sanctions against a state, and ultimately issue Title V permits itself, if the state fails to submit an approvable permit program.¹⁴⁴ Section 70.10(b), which implements CAA § 502(i), calls for similar action if EPA finds that the state is not adequately enforcing or implementing its program. During the period from 90 days until 18 months after making its determination, EPA may impose sanctions or withdraw program approval. After 18 months, EPA must impose sanctions, and six months after that, EPA must promulgate and administer a permit program in the state.

Section 70.10(c) sets forth criteria for the withdrawal of state programs by EPA. The rules, however, do not set out special program-withdrawal procedures, as the NPDES regulations do.¹⁴⁵ Perhaps this is best, as one commentator has quipped that the very detailed procedures in the NPDES regulations "would be suitable for the Nuremberg trials."¹⁴⁶

X. Permit Fees

The Title V fee provisions were designed to ensure that states receive adequate funding to carry out their new permitting responsibilities. 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]."¹⁴⁷

States need to establish fee schedules and demonstrate that they will be able to collect and retain enough money to meet the permit program costs. EPA retreated from its May 1991 proposal position that permit fees should cover the cost of nearly the entire state air program for stationary sources — a position that, not surprisingly, was heartily endorsed by state air officials. But ambiguous language in both the preamble and the final rules makes unclear the scope of costs that states should recover through fees.¹⁴⁸ EPA's "Response to Comments" document suggests that the Agency still expects a significant fraction of the costs for developing the SIPs to be recouped through permit fees.¹⁴⁹

According to § 70.9(d), "required" fees may be used only for the permit program's direct and indirect costs. A state could not, for example, use fees necessary to run the permit program to fund social services programs instead.¹⁵⁰ Again, however, EPA's "Response to Comments" document provides more insight into the Agency's approach. It states, "The Act does not prohibit a State from assessing greater fees than required by the Act and using those additional fees for purposes other than supporting the permit program."¹⁵¹

The May 1991 proposal allowed states to meet either one of two program-support tests. The final rules essentially merge the two by presuming that a fee schedule will cover program costs if it results in the collection of $ 25 multiplied by the total tons of actual emissions of "regulated pollutant[s] for presumptive fee purposes."¹⁵² The $ 25 figure will be adjusted each year to reflect increases in the Consumer Price Index.¹⁵³

The state does not have to collect $ 25 per ton for each such pollutant. For example, it could charge more for hazardous air pollutant emissions and less for particulate matter. Similarly, states may charge some sources more and others less, and may also rely on charges other than emission fees, such as application fees. Although EPA has encouraged states to base emission fees on actual, rather than allowable emissions, this is not required.¹⁵⁴

XI. Relationship of Permits to the SIP

Because all applicable CAA requirements will be implemented through the new Title V permits, the addition of the permit program raises many complex questions regarding its relation to the various CAA titles. For example, how will operating permit programs be integrated with NSR and PSD permit programs? How will EPA interpret provisions in § 112 that are implemented through the permit program? And, given the acid rain title's own permits provision in CAA § 408, how will the acid rain program be carried out through Title V permits?

The interface between permits and the SIP, however, is far and away the most complicated of these new relationships.¹⁵⁵ Industry fears that the permit system will add yet another unintegrated, bureaucratic layer to the CAA maze — and thus lead to "regulatory gridlock" for businesses needing to make changes at their facilities. Environmentalists, on the other hand, oppose transferring individual emission limitations from the SIPs to permits, because EPA has only 45 days to review state-issued permits, and national environmental groups would find it difficult to monitor permits issued across the country.¹⁵⁶ Currently they can follow [23 ELR 10094] changes to many individual source limitations by reading the Federal Register, because EPA uses notice-and-comment rulemaking to approve and disapprove SIP revisions.

The administration had favored allowing permits to amend individual emission limitations in the SIP. This would have eliminated the need to make source-specific changes by revising the SIP, which requires that rulemaking procedures be followed at both the state and federal levels. This "double key" rulemaking requirement has been criticized as being overly time-consuming and costly.¹⁵⁷

But Congress decided against including provisions that would allow permits to amend SIP limitations. 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."¹⁵⁸ EPA has said it still will encourage states to make the SIP more of a framework document with general control strategies designed to attain the NAAQS. So far, however, the Agency has taken little concrete action to realize that goal.

In its May 1991 proposal, EPA said it would fully address the SIP/permit relationship in guidance issued under Title I of the Amendments, the SIP title. The proposal solicited comments on three possible ways to avoid redundancy between permits and the SIPs. First, it said EPA would explore ways to implement, through permits, requirements currently found in the SIPs. Second, EPA planned to adopt "equivalency protocols" that would define equivalent ways to meet RACT rules. Third, EPA said it might increase the use of emissions trading and "marketable permits" to meet SIP objectives.¹⁵⁹ Many economists favor this last approach, as do industry and local air officials in Los Angeles, who are developing a marketable permits program for several air pollutants.¹⁶⁰

Unfortunately, EPA has made little headway in addressing these important SIP/permit issues. In its April 16, 1992, "General Preamble" guidance on Title I of the 1990 Amendments,¹⁶¹ the Agency repeated much of what it had said nearly a year earlier in the May 1991 proposal. The one major advance was a statement that states "may choose to adopt a SIP provision that would authorize sources to meet either the SIP limit or an equivalent limit to be formulated in the permit system," as long as the permit contains "the equivalency determination, as well as provisions that assure that the resulting emission limit is quantifiable, accountable, enforceable, and, based upon replicable procedures, is equivalent to the SIP limit."¹⁶² The permit rules allow these "equivalency determinations" to be made through the permit.¹⁶³

But on the fundamental question of what types of source-specific rules states may move from the SIPs to permits, EPA has said little. In the preamble to the Part 70 rules, it pledged to issue guidance on how states may revise their SIPs to allow for more flexible implementation of the Act's SIP requirements. The Agency stated that, as part of its efforts to promote market-based regulation, it will encourage states to adopt SIP provisions allowing emissions trading through permits. EPA promised to propose this guidance next year, and issue it by July 1994.¹⁶⁴ By 1994, however, states already will have adopted many SIP rules mandated by the 1990 Amendments. Thus, by the time the regulated community and states are able to make sense of the jagged SIP/permit interface, it will be too late to adopt more flexible implementation measures without first making further complicated and time-consuming SIP revisions.

XII. Conclusion

Now that EPA has issued its Part 70 rules on the minimum elements of state permit programs, it is developing the federal operating permit regulations. These Part 71 rules will be used for permitting on Indian reservations and in any state that fails to adopt or implement an approvable Title V program. In the federal regulations, EPA will have to resolve matters it left to the states' discretion in the Part 70 rules. For example, the Agency will need to write its own application forms and decide how to collect permit fees from sources. EPA is also developing "model permits" for various source categories. The Agency's initial drafts of these models were strongly criticized, because they included example emission limitations even though actual permit limitations generally will vary from area to area.

The D.C. Circuit Court of Appeals will also play an important role in development of the operating permit program. Petitions for judicial review of the Part 70 rules are unlikely to be resolved anytime soon, however. If the D.C. Circuit remands major parts of the regulations to EPA, there will be much confusion in getting state permit programs off the ground.

Regardless of this activity within EPA and the courts, the most important permits developments will take place at the state level. The states, for the most part, will determine the future of the CAA operating permit program. Between now and November 1993, the operating permit program will take shape in the state legislatures and environmental agencies across the country, as states decide how to exercise the considerable discretion left to them by EPA's Part 70 regulations.

1. For example, Environmental Protection Agency (EPA) Administrator William K. Reilly stated, "The 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).

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

3. Approximately 35 states have their own operating permit programs for sources of air pollution. S. REP. NO. 228, 101st Cong., 1st Sess. 346-47 (1989).

4. 56 Fed. Reg. 21712 (1991). The proposed rules will be referred to in this Article as the "May 1991 proposal." The May 1991 proposal is described in David Novello, EPA's Proposed Air Permit Regulations: Implementing the 1990 Clean Air Act Amendments, 21 ELR 10511 (Sept. 1991).

5. 57 Fed. Reg. 32250 (1992) (to be codified at 40 C.F.R. § 70.1).

6. The various petitions for review filed in the U.S. Court of Appeals for the D.C. Circuit have been consolidated, with Clean Air Implementation Project v. EPA, No. 92-103, as lead docket.

7. Letter from William Rosenberg, EPA Assistant Administrator for Air and Radiation, to James Strock, California Secretary of Environmental Protection (July 10, 1992) (on file with author). See also 57 Fed. Reg. at 32265 (EPA "will attempt to be flexible in determining whether a State program meets the required minimum elements.").

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

9. The goals of the permit system are summarized in the S. REP. NO. 228, 101st Cong., 1st Sess. 347-49 and at 57 Fed. Reg. at 32251 (preamble to Part 70 rules).

10. Citizens may bring enforcement actions under the Act's "citizen suit" provision. CAA § 304, 42 U.S.C. § 7604, ELR STAT. CAA 134.

11. See 1 Frank 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 William Rodgers, ENVIRONMENTAL LAW: AIR AND WATER 374 n.18 (1986) (quoting Bonine & 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.

12. See discussion infra part XI.

13. See NATIONAL ENVIRONMENTAL DEVELOPMENT ASSOCIATION/CLEAN AIR ACT PROJECT, FEDERAL AIR PERMITS: REALISTIC HOPE OR REGULATORY QUICKSAND? (1990).

14. But note that "a source is not required to obtain a permit solely because it is subject to regulations or requirements under section 112(r) [pertaining to hazardous air pollutant accidental release plans]." 40 C.F.R. § 70.3(a)(3).

15. The emissions units are subsets of the entire source. For example, a single production line at a manufacturing facility might be considered to be one emissions unit, or it may be comprised of several units.

16. Although EPA suggests that the entire facility should be permitted at the same time where feasible, it does not require this. See the May 1991 proposal, which says,

As long as the collection of individual emissions unit permits assure that all applicable requirements would be met which would be required under a permit for the whole source, and the State permits the entire source according to the Act's schedule, the State may permit each unit individually, or in groups within a source.

56 Fed. Reg. at 21727.

17. EPA's operating permit definitions are listed in alphabetical order in 40 C.F.R. § 70.2.

18. The May 1991 proposal had solicited 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." 56 Fed. Reg. at 21725. In many ways, this approach makes sense, because a permit is of little use if there are no requirements with which to comply. In fact, the Administration favored this approach and tried to persuade Congress not to require issuance of "empty" permits. But CAA § 502(a), as enacted, mandates permitting of all major sources, and EPA's final rules echo this requirement.

19. 40 C.F.R. § 70.2 (first paragraph of "major source" definition).

20. The codes are found in the STANDARD INDUSTRIAL CLASSIFICATION MANUAL (1987).

21. See 56 Fed. Reg. at 21724; H.R. REP. NO. 490, 101st Cong., 2d Sess. 236-37 (1990).

22. 40 C.F.R. § 70.2 ("potential to emit").

23. Id.

24. See discussion infra part VI.B.

25. CAA § 502(a), 42 U.S.C. § 7661a, ELR STAT. CAA 168.

26. 40 C.F.R. § 70.3(b)(4).

27. Id. § 70.3(b)(1).

28. 57 Fed. Reg. at 32263.

29. Id. at 32261, 32263.

30. 56 Fed. Reg. at 21725.

31. 57 Fed. Reg. at 32263.

32. Id. at 32261-62.

33. Hearing on Implementation of the Clean Air Act, Before the Subcomm. on Health and the Environment of the House Energy and Commerce Comm., 102d Cong., 1st Sess. 98-103 (May 1, 1991) (questioning by Rep. Dingell, Chairman, Energy and Commerce Comm.) (unpublished transcript, on file with author); Letter from Rep. Henry Waxman, Chairman, Subcomm. on Health and the Environment, to William K. Reilly, EPA Administrator 9-10 (May 8, 1991) (on file with author). See also Natural Resources Defense Council, NRDC Files Suit Against EPA Polluter Permit Regulations (Aug. 11, 1992) (press release) (on file with author).

34. 40 C.F.R. § 70.3(b)(1)-(2).

35. Id. § 70.3(b)(2). Under the May 1991 proposal, for areas designated nonattainment for a pollutant under CAA § 107, the state would have been required to submit an inventory or quantification of the sources of that pollutant that would be exempted from permitting obligations. It also would have had to demonstrate to EPA that it could assure compliance with the SIP obligations applicable to those sources. Id. (May 1991 proposal). EPA decided that these requirements were impractical and unnecessary, and deleted them from the final rules. 57 Fed. Reg. at 32263.

36. 40 C.F.R. § 70.3(c)(1).

37. Id. § 70.3(c)(2).

38. 56 Fed. Reg. at 21727.

39. 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 (1) state implementation plans approved by EPA, (2) "federal implementation plans" promulgated by EPA for states that have failed to submit an approvable plan and for Indian lands, and (3) "tribal implementation plans" submitted by Indian tribes and approved by EPA.

40. CAA § 504(e), 42 U.S.C. § 7661c, ELR STAT. CAA 170.

41. 56 Fed. Reg. at 21738.

42. CAA § 506(a) provides that a state may adopt additional elements. It states, "Nothing 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.

43. 40 C.F.R. § 70.4(b)(1)-(3).

44. Id. § 70.4(b)(3); 56 Fed. Reg. at 21727-28 (May 1991 proposal preamble discussion).

45. 40 C.F.R. § 70.4(b)(6). The May 1991 proposal had allowed only 30 days for application completeness determinations.

46. See infra text accompanying notes 148-54.

47. 40 C.F.R. § 70.4(b)(7), (8), (11); 56 Fed. Reg. at 21728-29 (May 1991 proposal preamble discussion).

48. 40 C.F.R. §§ 70.4(b)(3)(vii), 70.11. In the preamble to the Part 70 rules, EPA also encourages state and local permitting authorities to have administrative enforcement authority, as well as authority for incarceration in criminal cases. 57 Fed. Reg. at 32293. These are only recommendations, however.

49. 56 Fed. Reg. at 21723.

50. 5 U.S.C. § 558(c), ELR STAT. APA 006. See also 40 C.F.R. § 122.6 (continuation of expiring permits under the federal NPDES regulations).

51. See 40 C.F.R. § 70.4(b)(10); 56 Fed. Reg. at 21728-29 (May 1991 proposal preamble discussion).

52. 40 C.F.R. § 70.4(b)(12), (14)-(15). See infra text accompanying notes 120-32.

53. See discussion infra part VIII.

54. See 57 Fed. Reg. at 32265 ("EPA has provided a model for the State to follow [for permit revision procedures] and will approve different but effective State approaches which accomplish the same statutory and regulatory objectives.").

55. 40 C.F.R. § 123.24 (1992).

56. For example, an 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. Id. § 123.24(b)(2)-(4).

57. 56 Fed. Reg. at 21756.

58. Id.

59. 40 C.F.R. § 70.4(e).

60. Id. §§ 70.4(e), 70.4(f)(1).

61. CAA §§ 502(d), (i), 42 U.S.C. §§ 7661a(d), (i), ELR STAT. CAA 168; 40 C.F.R. § 70.10.

62. CAA §§ 179(b), 502(d), 42 U.S.C. §§ 7509, 7661a, ELR STAT. CAA 80, 168; 40 C.F.R. § 70.10(a).

63. See 40 C.F.R. § 70.4(c); 57 Fed. Reg. at 32270 (preamble discussion).

64. 40 C.F.R. § 70.4(d)(3). For example, interim programs must include "operational flexibility" provisions, under 40 C.F.R. § 70.4(b)(12), and allow EPA to review and object to permits.

65. CAA § 502(g), 42 U.S.C. § 7661a(g), ELR STAT. CAA 168; 40 C.F.R. § 70.4(d).

66. CAA § 503(c), 113(b)(2), 113(d)(1)(B), 42 U.S.C. §§ 7661b(c), 7413(b)(2), 7413(d)(1)(B), ELR STAT. CAA 170, 45; 40 C.F.R. § 70.5(a).

67. Id. § 70.5(a)(1); 57 Fed. Reg. at 32271-72 (preamble discussion).

68. 40 C.F.R. § 70.5(a)(1). EPA's May 1991 proposal stated that renewal applications had to be filed 18 months before the expiration date, unless EPA approved a shorter time period. See 56 Fed. Reg. at 21732. In response to commentators who said this was a recipe for stale applications, EPA shortened the time to six months. But the rules still contemplate a longer lead time (up to 18 months), if needed, to prevent expiration of the current permit before the new one is issued. 40 C.F.R. § 70.5(a)(1)(iii). The upper limit of 18 months is based on CAA § 502(b)(6), which requires states to adopt "[a]dequate, streamlined, and reasonable procedures" for processing applications. 57 Fed. Reg. at 32272.

69. 57 Fed. Reg. at 32272.

70. 40 C.F.R. § 70.5(a)(2).

71. Id. §§ 70.5(a)(2), 70.7(a)(4). States are 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 168.

72. See CAA § 503(d), 42 U.S.C. § 7661b(d), ELR STAT. CAA 170; 40 U.S.C. § 70.7(b) (EPA's regulatory elaboration).

73. 40 C.F.R. § 70.7(b).

74. See infra text accompanying notes 102-08.

75. The May 1991 proposal would have extended the application shield to (1) sources that filed an application up to three months late, and (2) sources the state concluded had made a good faith effort in submitting the application, as long as the source cured the defect. 40 C.F.R. § 70.7(b)(2)-(3) (proposed). Several commentators criticized these provisions as not authorized by the statute. EPA agreed and deleted them in the final rules. See 57 Fed. Reg. at 32275.

76. 56 Fed. Reg. at 21732.

77. 40 C.F.R. § 70.5(c); 57 Fed. Reg. at 32273 (preamble discussion).

78. Id.

79. 40 C.F.R. § 70.5(c)(8). See 57 Fed. Reg. at 32273-74 (preamble discussion).

80. 40 C.F.R. § 70.5(c)(8)(iii)(C).

81. The Natural Resources Defense Council evidently plans to raise this issue in its judicial challenge to EPA's rules. Natural Resources Defense Council, NRDC Files Suit Against EPA Polluter Permit Regulations (Aug. 11, 1992) (press release) (on file with author). See also 40 C.F.R. § 70.5(c)(8)(iii)(A)-(B).

82. 40 C.F.R. §§ 70.5(c)(8)(iv), (iv)(d); CAA § 113(c)(2)(A), 42 U.S.C. § 7413, ELR STAT. CAA 45.

83. 40 C.F.R. § 70.6(a)(1) (emission limitations and standards); id. § 70.6(a)(3) (monitoring, recordkeeping, and reporting); id. § 70.6(c)(2) (inspection and entry).

84. Id. § 70.6(a)(3)(i)(B). This same provision states: "Such monitoring requirements shall assure use of terms, test methods, units, averaging periods, and other statistical conventions consistent with the applicable requirement."

85. Id.

86. 57 Fed. Reg. at 32278.

87. 40 C.F.R. § 70.6(a)(3)(ii)-(iii).

88. Id. § 70.6(b).

89. See EPA Public Hearing on the CAA Operating Permit Proposal, Washington, D.C. (June 4-5, 1991) (testimony of S. William Becker, Executive Director of the State and Territorial Air Pollution Program Administrators and the Association of Local Air Pollution Control Officials, and Richard Valentinetti, on behalf of the Northeast States For Coordinated Air Use Management) (written statements are found in EPA Docket No. A-90-33, documents IV-F-01c (Becker testimony) and IV-F-01u (Valentinetti testimony)).

90. "Response to Comments on the 40 C.F.R. Part 70 Rulemaking," Document V-C-1 in Docket A-90-33 [hereinafter Response to Comments]. Although EPA responds to many public comments in the preamble to the final permits rule, most of the Agency's responses to comments are contained in this document. EPA generally prepares such a document and places it in the docket to meet its obligation to respond to significant comments raised during a rulemaking.

91. Id. at 6-12. This view is based on the requirement in the rules that actions for judicial review of a permit be brought no later than 90 days after issuance. This provision is discussed infra at text accompanying notes 109-15.

92. 40 C.F.R. § 70.6(c)(1), (c)(4), (c)(5); id. § 70.2 ("responsible official"). See also 40 C.F.R. § 122.22 (signatories to permit applications and reports under the federal NPDES regulations).

93. 40 C.F.R. § 70.6(g)(1), (g)(3).

94. Id. § 70.6(g)(3). The preamble to the rules includes EPA's rationale for limiting the defense to exceedances of technology-based standards. 57 Fed. Reg. at 32279. The NPDES upset provision is found in 40 C.F.R. § 122.41 (1992).

95. 40 C.F.R. § 70.6(a)(1)(iii).

96. 57 Fed. Reg. at 32276.

97. See, e.g., United States v. General Motors Corp., 702 F. Supp. 133 (N.D. Tex. 1988) (allowing Texas to make equivalency determination under "alternative methods of control" provision in SIP).

98. See discussion infra part VIII.

99. 57 Fed. Reg. at 32278.

100. Id. at 32279.

101. Id.

102. H.R. 3030, 101st Cong., 1st Sess. § 401 (1989) (adding a new CAA § 404(g)). One exception should be noted: under the Administration's bill, compliance with the permit would not be deemed compliance with certain standards for hazardous air pollutants.

103. Federal Water Pollution Control Act § 402(k), 33 U.S.C. § 1342(k), ELR STAT. FWPCA 054. See also 40 C.F.R. § 122.5(a)(1).

104. As is discussed in the next section, a major source permit with three or more years remaining in its term must "reopen" to incorporate new standards anyway.

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

106. 40 C.F.R. § 70.6(f)(1); 57 Fed. Reg. at 32277 (preamble discussion).

107. 40 C.F.R. § 70.6(f)(1).

108. Id. § 70.6(f)(3).

109. Id. § 70.7(h).

110. 57 Fed Reg. at 32290; 56 Fed. Reg. at 21743 (May 1991 proposal discussion). Compare 40 C.F.R. § 124.12(a) (EPA's 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).").

111. 56 Fed. Reg. at 21742-43. See Chemical Waste Management, Inc. v. EPA, 873 F.2d 1477, 19 ELR 20868 (D.C. Cir. 1989) (neither the statute nor due process require that hearings held under § 3008(h) of the Resource Conservation and Recovery Act (RCRA) be formal "on the record" hearings). Contrast 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 Grad, supra note 11, at 3-234.6 to 3-237.

112. See 40 C.F.R. § 124.8 (1992) (consolidated permit regulations); § 123.25 (NPDES state programs, but only for major sources); § 145.11 (underground injection control state permit programs); § 233.26 (FWPCA § 404 dredge-and-fill permits); id. § 271.14 (RCRA state permit programs).

113. Id. § 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. Id. § 124.7.

114. Most of EPA's description of how judicial review will operate is not in the rules at all, but rather in a preamble discussion in the May 1991 proposal. 56 Fed. Reg. at 21759-60.

115. 40 C.F.R. § 70.4(b)(3)(xii). The preamble warns: "New grounds specifically do not include a government interpretation of a permit of which the source claims in an enforcement action to have been unaware." 57 Fed. Reg. at 32265.

116. 40 C.F.R. § 70.7(h).

117. Id. § 70.7(f). The reopening provision addressing new standards promulgated for major sources implements CAA § 502(b)(9). EPA stated in the proposal that although the Act states that this type of reopening would apply to "permits with a term of three or more years for major sources," interpreting the language to refer to all permits with original terms of three or more years would lead to absurd results. Thus, EPA required the mandatory reopening only when there are three or more years remaining in the life of the permit. 56 Fed. Reg. at 21745.

118. See supra text accompanying note 98.

119. Both EPA's opinion, by then-General Counsel E. Donald Elliott, and the Department of Justice's opinion, by then-Acting Ass't Attorney General Barry M. Hartman, were leaked, and then promptly inserted into the rulemaking docket as attachments to comments by David Hawkins of the NRDC. Docket No. A-90-33, Comment IV-G-26 (Elliott memo) and Comment IV-G-70 (Hartman memo). For a sampling of the press reports, see Bob Davis & Rose Gutfeld, Quayle's Council and Reilly's EPA Star in Pollution Battle That Didn't Happen, WALL ST. J., Apr. 6, 1992, at A18; Ann Devroy & Michael Weisskopf, Bush Curbs Clean Air Provision, WASH. POST, May 17, 1992, at A1; and Keith Schneider, Industries Gaining Broad Flexibility on Air Pollution, N.Y. TIMES, June 26, 1992, at A1.

120. 42 U.S.C. § 7661a(b)(10), ELR STAT. CAA 169.

121. See supra p. 34 (discussion of § 70.6(a)(8), (10)).

122. 57 Fed. Reg. at 32266-67; Response to Comments, supra note 90, at 6-25, 6-27 to 6-28.

123. Response to Comments, supra note 90, at 6-16.

124. Id. at 6-17.

125. EPA's sole example for this provision explains that a facility could switch from one type of coating to another, as long as it did not lead to a violation of the emission limit, even though the permit required use of the first type of coating. 57 Fed. Reg. at 32267.

126. Note that permit terms may include requirements not included in the rule itself.

127. 40 C.F.R. § 70.4(b)(12)(i).

128. Id. § 70.4(b)(12)(ii)-(iii).

129. Id. § 70.4(b)(12).

130. Id. § 70.4(b)(14). The May 1991 proposal provided the rationale:

Air 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.

56 Fed. Reg. at 21746.

131. 40 C.F.R. § 70.4(b)(14).

132. Id. § 70.4(b)(14)-(15); 57 Fed. Reg. at 32269-70 (preamble discussion).

133. See sources cited supra note 119.

134. These provisions are defended at length in the Federal Register. 57 Fed. Reg. at 32281-87.

135. 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-.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 3 classes, depending on their relative importance and the degree of process and public participation considered appropriate. Fairly detailed procedures are set forth for the 3 categories of modifications. Id. § 270.41-.42.

136. Id. § 70.7(e)(1), (e)(2)(i), (e)(4); 57 Fed. Reg. at 32280, 32287-89 (preamble discussion)

137. 40 C.F.R. § 70.7(e)(2).

138. 57 Fed. Reg. at 32268. See also 40 C.F.R. § 70.6(b)(2).

139. See 40 C.F.R. §§ 70.2, 70.8(a)-(b) (definition of "affected states").

140. The May 1991 proposal stated EPA's position that this duty is, in fact, discretionary, 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 12749.

141. 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. The public petition process and judicial review of EPA's decision on such a petition is discussed at 56 Fed. Reg. at 21749-50, 21751, 21760. See also 40 C.F.R. § 70.8(c)-(d). EPA says in the preamble that it also will veto a permit if the state has not provided adequate information to allow for meaningful EPA review, or if the state has not allowed adequate public participation and review by neighboring states. 57 Fed. Reg. at 32290.

142. Several courts have ruled that EPA has discretion to decide whether or not to veto a 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 Grad, supra note 11, at 3-242 to 3-243, and 2 Rodgers, supra note 11, at 383. As noted supra note 139, 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.

143. 2 Rodgers, supra note 11, at 384-85. Rodgers sets out several models of federal agency oversight, and concludes that most EPA Regional offices follow a model in that EPA objects to correct only outrageous or preposterous decisions.

144. See supra text accompanying notes 59-62.

145. See 40 C.F.R. § 123.64.

146. 2 Rodgers, supra note 11, at 379.

147. 42 U.S.C. § 7661a(b)(3)(A), ELR STAT. CAA 168.

148. 40 C.F.R. § 70.9(a)-(c); 57 Fed. Reg. at 32291-92 (preamble discussion).

149. Response to Comments, supra note 90, at 9-2 to 9-4.

150. 40 C.F.R. § 70.9(d); 57 Fed. Reg. at 32291 (preamble discussion).

151. Response to Comments, supra note 90, at 9-5.

152. These pollutants include volatile organic compounds, nitrogen oxides, pollutants regulated under CAA §§ 111 and 112 standards, and, except for carbon monoxide, pollutants for which an NAAQS has been promulgated.

153. 40 C.F.R. §§ 70.9(b)(2), 70.2.

154. 40 C.F.R. § 70.9(b)(2); 57 Fed. Reg. at 32291-92 (preamble discussion).

155. For an excellent discussion of the SIP/permit relationship — and, in particular, how the regulation of single stationary sources might be simplified — see Timothy Williamson, Fitting Title V Into the Clean Air Act: Implementing the New Operating Permit Program, 21 ENVTL. L. 2085, 2097-98, 2120-32 (1991).

156. Several environmental groups also allege that transferring source-specific details from SIPs to permits would be illegal. See Letter from David Hawkins, Senior Attorney, NRDC, to Bradley J. Beckham, Division Director, Colorado Air Pollution Control Division (May 15, 1992) (on file with author).

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

158. 42 U.S.C. § 7661c(a), ELR STAT. CAA 170 (emphasis added).

159. 56 Fed. Reg. at 21758.

160. See Roger Noll, The Feasibility of Market Emissions Permits in the United States, PUB. SEC. ECON. 189 (1983); 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, an emissions trading consulting firm, 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.

William Tucker, Green Tape Factory, FORBES, May 27, 1991, at 171-72.

161. 57 Fed. Reg. 13498.

162. Id. at 13568.

163. See supra text accompanying notes 95-97.

164. Id. at 32268.

23 ELR 10080 | Environmental Law Reporter | copyright © 1993 | All rights reserved