Environmental Law Section Blog: EPA Proposes to Roll Back Longstanding Policy for Hazardous Air Pollutants:

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  • Environmental Law Section Blog
    September
    05
    2019

    EPA Proposes to Roll Back Longstanding Policy for Hazardous Air Pollutants

    James Bridges

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    The EPA recently published a proposed rule to end the longstanding “once in, always in” requirement for sources subject to the most stringent hazardous air pollutants standards. James Bridges discusses the history of the policy, as well as what the future may hold for federal air toxics regulation.

    For the last 25 years, an Environmental Protection Agency (EPA) guidance document force a critical choice when it came to federal hazardous air pollution requirements under the Clean Air Act. The “once in, always in” policy required sources to either restrict their emissions below the major source thresholds before the standards took effect, or to apply more rigorous standards forever – regardless of whether future emissions fell below the major source threshold.

    Last year, the EPA revoked this policy through subsequent guidance, and more recently published a proposed rule codifying the new approach.

    In addition, the proposed rule addresses a longstanding remand from the D.C. Circuit, providing greater certainty to sources and permitting authorities on how a source may limit their potential to emit.

    Section 112 of the Clean Air Act

    The Clean Air Act (Act) regulates toxic air emissions through section 112, which includes a list of 189 hazardous air pollutants (HAPs) as well as various mechanisms for modifying that list in the future.1

    Section 112(c) of the Act directs the EPA to establish emission standards for the industries that produce the majority of HAPs. These national emission standards for hazardous air pollutants (NESHAPs) apply to two broad categories of sources: major sources and area sources. A source is a “major source” under section 112 if it emits or has the potential to emit (PTE) 10 tons per year (tpy) of any single HAP, or 25 tpy of any combination of HAPs from the list.2

    Major sources under section 112 are required to follow maximum achievable control technology (MACT) requirements that are established for like sources in that industry, and thus NESHAP major sources are sometimes referred to as MACT sources.3

    James Bridges com jamesbridges22 gmail James Bridges, U.W. 2016, is a staff attorney with the Wisconsin Department of Natural Resources, Madison, where he focuses on air and hazardous waste issues. Any views presented in this post are strictly the author’s own.

    The EPA estimates that there are currently 7,920 NESHAP major sources across the country.4 “Area sources,” on the other hand, fall below these tpy thresholds and are subject to less stringent generally available control technology (GACT) requirements, where those standards have been promulgated.5

    Although the regulation of air toxics in section 112 was part of the 1970 Clean Air Act, the mechanisms described above were added or significantly modified in the 1990 Amendments to the Act. The most noteworthy addition to the 1990 Amendments was the Title V permitting program, aimed at creating a comprehensive vehicle for air permitting.

    Unsurprisingly, the modifications to section 112 referenced the new permitting program, and thus all NESHAP major sources are required to apply for a Title V (or operating) permit.6 Besides NESHAP major sources, new source review (NSR) major sources (as defined in CAA § 169 (1)) and sources with the potential to emit more than 100 tpy are also required to obtain Title V permits.

    The ‘Once In, Always In’ Policy

    The NESHAP standards typically include phased compliance deadlines, where existing sources are given a few years after the effective date to retrofit processes and institute MACT.

    The compliance dates for sources subject to the Steel Pickling NESHAP, for instance, apply differently to new and existing facilities: for new and newly reconstructed facilities, the rules took effect on the date the rule became effective (June 22, 1999).7 Existing facilities, on the other hand, had until June 22, 2001, to implement MACT for affected processes.8 Because of the lengthy notice-and-comment rulemaking process outlined in the Administrative Procedures Act (APA), even new or newly reconstructed sources have months or years to prepare for new NESHAP standards.9

    Shortly after the EPA rules implementing both the Title V program and the new NESHAPs took effect, the agency began receiving questions about what these deadlines meant.10 Sources that require a Title V permit, solely because of the 100 tpy threshold, may choose to limit their potential to emit to fall out of the federal permitting requirement at any time, either before or after the requirement to obtain a permit.

    In a 1995 memorandum, entitled “Potential to Emit for MACT Standards – Guidance on Timing Issues,” the EPA clarified whether NESHAP major sources could also opt in or out of the MACT requirements by limiting their PTE. The 1995 memo established a policy now known as “once in, always in” (OIAI) – that is, once the first applicable compliance date in a NESHAP standard passes, a source subject to those requirements cannot later opt out of the MACT requirements by limiting their PTE.

    Up until that date, however, sources could limit their PTE in a permit and avoid NESHAP major status, a compromise that the EPA believed was more equitable than using the date the rule was promulgated.

    Finally, the EPA indicated that the policy would be adopted by future rulemaking.

    The 2018 Wehrum Memo

    But the OIAI policy was never promulgated as a rule.

    In 2007, the EPA issued a proposed rule to withdraw the policy in favor of language in 40 C.F.R. part 63 that would allow NESHAP major sources to become area sources at any time, by limiting their PTE for each federal HAP.11 The 2007 proposal relied on a reinterpretation of the definitions of “major source” and “area source” in section 112, noting that there was no temporal component to either.

    Instead, the proposal noted, “major source” is defined as a source that “emits or has the potential to emit” more than the 10/25 tpy thresholds, with no reference to the compliance date of the NESHAP. The proposed rule was also never finalized, however, and for the next 11 years the 1995 OIAI policy remained in place.

    In 2018, EPA Assistant Administrator William Wehrum issued a memorandum, entitled “Reclassification of Major Sources as Area Sources Under Section 112 of the Clean Air Act.”12 This memo relied on the same reading of section 112 as the 2007 proposal, and withdrew the 1995 memo “effective immediately.”

    In its place, the Wehrum memo establishes that a major source that adopts enforceable PTE limits may become an area source at any time, regardless of whether the first compliance date for the NESHAP has passed.

    Besides the obvious benefit for existing major sources, the Wehrum memo also notes that the new policy could actually incentivize sources to take more stringent limits to avoid major source status. This, in turn, could reduce actual HAP emissions at these previously major sources.

    In March and April 2018, several environmental groups and states began filing cases in the D.C. Circuit seeking judicial review of the Wehrum memo. The consolidated case, California Communities Against Toxics, et al. v. EPA, 13 alleged that the EPA acted arbitrarily and capriciously in three different ways:

    • by issuing a “legislative memo” without complying with the public input procedures of the APA;

    • by ignoring references to compliance deadlines elsewhere in section 112; and

    • by failing to provide sufficient justification to overturn the existing OIAI policy.14

    During oral arguments on April 1, 2019, the three-judge panel seemed skeptical of the first issue, particularly since vacating the Wehrum memo would force the EPA to revert back to another memo that also had failed to comply with the APA.

    On Aug. 20, the court filed an opinion dismissing the petitions on the Wehrum memo. In the midst of a treatise on recent finality decisions, the court found that the Wehrum memo failed to meet the “direct and appreciable legal consequences” requirement clarified in the Supreme Court’s decision in the 2016 case, United States Army Corps of Engineers v. Hawkes Co.15

    Because there was no final agency action subject to review under section 307 (b) of the Clean Air Act, the opinion does not address the other two claims raised by petitioners.16

    The EPA’s Proposed 2019 Repeal of ‘Once In, Always In’

    In late June 2019, the EPA made available a prepublication version of the proposed OIAI repeal rule.17 The proposed rule reiterates the logic of the 2007 and 2018 actions, declaring that: “[b]ecause the OIAI policy imposed … a temporal limitation (before the “first compliance date”), the EPA had no authority for the OIAI policy under the plain language of the CAA.”18

    The agency also uses the preamble of the proposed rule to directly respond to several of petitioners’ arguments in California Communities Against Toxics, saying, for instance, that section 112(i)(3) simply requires sources to comply with the applicable standard once it becomes effective, not that sources should always be subject to that standard.

    In Section VI of the proposed rule, the EPA estimates the potential costs and savings of the proposed rule. Most significantly, the agency projects that 49.4% of existing NESHAP major sources could voluntarily become area sources – reducing the number of major sources from 7,920 to 4,008. In terms of tangible monetary benefits, the EPA estimates that permitting authorities and covered sources could save $369.3 million over the first two years of implementation. The costs of the rule do not include environmental or public health impacts – again, because EPA estimates net emissions decreases as sources are incentivized to invest in new control technology.

    The EPA also includes several proposals that are new to the 2019 rule. First, the rule includes amendments to the notification and recordkeeping requirements in part 63. The recordkeeping aspect requires sources that have become area sources by limiting their PTE after the effective date of the NESHAP to maintain a record of this occurrence, so long as the source keeps claiming area source status. The notification proposal would require sources to inform the EPA whenever they become subject to either major or area source requirements, including when a source switches from one to the other.

    All of this new information may be maintained in digital format, and – when submittal to the EPA is required – must be done through the EPA’s electronic Central Data Exchange (CEDRI).

    The benefits of these new requirements, according to the EPA, include greater transparency and the conservation of resources.

    Clarifying the Definition of ‘Potential to Emit’

    More importantly, the EPA proposes to clarify the definition of the term “potential to emit” in part 63.

    The EPA currently defines “potential to emit” for the NESHAP standards in 40 C.F.R. section 63.2 as “the maximum capacity of a stationary source to emit a pollutant under its physical and operational design.”19 The current definition considers limits on a source’s capacity to emit pollutants, so long as they are “federally enforceable.” This definition is critical to the OIAI repeal, since reducing PTE is the mechanism by which sources avoid or opt out of major source status.

    The federally enforceability prong of PTE has been the source of much confusion since its inclusion in 1994.20 In fact, the term was litigated immediately after it was promulgated. In National Mining Association v. EPA, the D.C. Circuit found that the term “federally enforceable” was at odds with the definition of major source in section 112, and that the EPA had not adequately justified reading a federal control requirement into the Act.21 The language was remanded back to the EPA without vacatur, creating a need for a revision of the part 63 definition.

    Two months later, the D.C. Circuit applied the NMA decision to the PTE definition in the NSR rules in remanding that definition back to EPA, this time also vacating the federal enforceability language.22 As an interim measure, the EPA issued a policy memorandum in 1996 that both anticipated forthcoming rulemaking and looked to existing EPA guidance to better define PTE.23 In particular, the agency reinforced the requirement for limits on PTE to be “legally and practically enforceable,” regardless of whether they were directly enforceable by the federal government.

    ‘Legally and Practicably Enforceable’ and the Proposed Rule

    “Legally and practicably enforceable” limits on PTE have had a singular meaning in the NESHAP and NSR contexts for the last 30 years, but this term has never been expressly defined in a rule.24 The 2007 proposal touched on this in a footnote that indicated a forthcoming PTE rule, but that rule languished alongside the attempt to repeal OIAI.

    The EPA’s 2019 rule proposes to amend the PTE in light of NMA by removing references to federal enforceability, and by codifying existing guidance and case law on what constitutes legal and practicable enforceability.

    In the preamble to the rule, the EPA discusses the appropriate vehicles for PTE limits – typically, this means either through conditions in construction or operating permits, but also through general or registration permits in states with those options.

    The new PTE definition considers limits on a source’s capacity to emit pollutants, so long as the effect of those limits “is legally and practicably enforceable as defined in this subpart (i.e., effective).” The rule then goes on to define as “legally enforceable” an emission limit or other standard that both cites the legal authorization for the provision and provides the right for the permitting authority to enforce on that limit.

    In defining “practicably enforceable,” the rule specifically requires that three separate criteria be met:

    • the limit must be written so that it is possible to verify compliance and to document violations as necessary;

    • the limit should specify technically accurate numerical limitations, and identify the processes at a source that would be subject to it;

    • the limit must include specific methods of demonstrating compliance, including appropriate monitoring, recordkeeping, and reporting requirements.

    It is not known at this point whether the EPA will promulgate rules to carry these changes over to NSR.

    What’s Next

    On July 26, 2019, EPA formally published the proposed rule (Docket No. EPA-HQ-OAR-2019-0282), starting a 60-day clock for public comments through Sept. 24, 2019.

    While the first round of litigation has ended, additional challenges to a final rule seem likely, particularly given the history of the OIAI policy. The recent decision may be appealed to the U.S. Supreme Court on the narrow finality issue, but it is almost certain that the petitioners’ other concerns will be raised again in new challenges to a final rule.

    Endnotes

    1 42 U.S.C. § 7412(b).

    2 42 U.S.C. § 7412(a)(1).

    3 42 U.S.C. §§ 7412(d)(2), (g)(2).

    4 84 Fed. Reg. 36304, 36329 (July 26, 2019).

    5 42 U.S.C. § 7412(d)(5).

    6 42 U.S.C. § 7661(2)(a).

    7 40 C.F.R. § 63.1160(a). The cutoff date for determining whether a construction project or facility was “new” was Sept.18, 1997. Id.

    8 40 C.F.R. § 63.1160(a).

    9 5 U.S.C. § 553.

    10 40 C.F.R. parts 70-71 and part 63, respectively; John S. Seitz, “Potential to Emit for MACT Standards – Guidance on Timing Issues,” USEPA 3 (May 16, 1995) (hereinafter referred to as “The Seitz Memo”).

    11 72 Fed. Reg. 69 (Jan. 3, 2007).

    12 William L. Wehrum, “Reclassification of Major Sources as Area Sources Under Section 112 of the Clean Air Act,” USEPA (Jan. 25, 2018) (hereinafter referred to as “The Wehrum Memo”).

    13 D.C. Cir. No. 18-1085.

    14 See 42 U.S.C. § 7412 (i)(3) (“After the effective date of any emissions standard, limitation, or regulation promulgated under this section and applicable to a source, no person may operate such source in violation of such standard.”).

    15 136 S. Ct. 1807 (2016).

    16 42 U.S.C. § 7607(b).

    17 For ease of reference, I’ve cited below to the published proposed rule, which is essentially identical to the prepublication version. 84 Fed. Reg. 36304 (July 26, 2019).

    18 84 Fed. Reg. 36304, 36310 (July 26, 2019).

    19 40 C.F.R. § 63.2.

    20 59 Fed. Reg. 12408 (March 16, 1994).

    21 59 F.3d 1351, 1361-1365 (D.C. Cir. 1995).

    22 Chemical Manufacturers Ass’n v. EPA, 70 F.3d 637 (D.C. Cir. 1995).

    23 John S. Seitz, “Release of Interim Policy an (sic.) Federal Enforceability of Limitations on Potential to Emit”, USEPA (Jan. 22, 1996) (hereinafter referred to as “The PTE Memo”).

    24 See 84 Fed. Reg. at 36318, fn. 22 (collecting guidance and administrative decisions).





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