Air Toxics: State & Federal Programs Update
By Thomas R. Wood
1/1/2003

On December 9, 2002, the US Environmental Protection Agency (EPA) proposed yet another set of revisions to the federal hazardous air pollutant (HAP) regulations (see Light, Insider #292; Wood, Insider #297). At about the same time, the Oregon Department of Environmental Quality (DEQ) began announcing that it was not intending to move forward with the state air toxics program on the original schedule (see Article, Insider #301; Wood, Insider #302). This article examines where both of these programs now stand.

Federal HAP Regulation
The changes proposed to the federal HAP regulations are really two different sets of changes. One set addresses changes in the schedule for when the remaining HAPs control standards (i.e., Maximum Achievable Control Technology or "MACT") must be promulgated and the consequences if EPA fails to meet that schedule. The second set of proposed changes address the requirement that sources subject to the MACT standards prepare startup, shutdown and malfunction plans. Each of the changes is discussed separately below.

MACT HAMMER
The Clean Air Amendments of 1990 required that EPA establish MACT standards for a wide variety of source categories over a ten year time span. As an incentive to ensure that EPA met that schedule, Congress included section 112(j) in the Clean Air Act. Referred to as the "MACT hammer," 112(j) states that if a source is subject to a MACT standard and EPA misses the deadline for publishing that MACT standard, the source must submit an application to the local permitting authority within 18 months of the missed deadline for the purpose of establishing a case-by-case MACT limit. EPA, in fact, missed the deadline for issuing the MACT standards (November 15, 2002). This, in turn, triggered the May 15, 2003 deadline for the 112(j) applications. On April 5, 2002-with the MACT application deadline looming-EPA issued new rules clarifying that by May 15, 2002, sources subject to the 112(j) MACT hammer only needed to file an application with the local permitting authority identifying that they believed they were subject to a MACT standard that had not yet been issued. A more comprehensive application (called the Part 2 application) was only required if an EPA-promulgated MACT standard was not issued by May 15, 2004.

Sierra Club subsequently sued EPA, claiming that the deferral of the full Part 2 application until 2004 was not permissible. EPA reached a settlement with Sierra Club wherein the agency proposed to shorten the MACT deadline from May 15, 2004 to May 15, 2003. At that time, any source subject to that standard which EPA had failed to complete would have to submit a full case-by-case MACT application to its local permitting authority. In late August, EPA put out for public comment the terms of the proposed settlement. Comments flooded in and were virtually unanimous in criticizing the shortened deadline for the Part 2 application. Ultimately, EPA and Sierra Club negotiated a new settlement agreement that allowed for a more pragmatic approach. This new approach is what was proposed by EPA on December 9, 2002.

The new 112(j) proposal includes four staggered deadlines. Each of the yet-to-be finalized MACT standards is assigned to one of each of the categories. The first deadline is May 15, 2003, the second is October 30, 2003, the third is April 28, 2004 and the final deadline is August 13, 2005. Two of the MACT standards with the greatest relevance to Oregon-industrial boilers and plywood/composite wood products-are both subject to the April 2004 deadline. Other locally important standards, however, such as reinforced plastic composites (fiberglassing) and surface coating of wood building products, are in the first group. The revised due dates are listed in the table below.

Section 112(j) Part 2 Application Due Dates
EPA fully recognizes that it makes no sense for individual sources to try and determine case-by-case MACT standards. Developing a case-by-case MACT standard as part of a Part 2 application is a significant undertaking. Developing these customized standards for industry categories as broad as industrial boilers would be a huge waste of time and money. Therefore, it makes sense to extend the MACT hammer schedule to avoid this being required.

Presumably, EPA is very confident that it will be able to issue all of the remaining MACT standards within the schedule outlined in the new proposed rule. If a source is concerned that EPA may not issue a MACT standard by the hammer deadline, it still may not be cause to panic. The 112(j) rules specifically allow a source to defer to the proposed MACT language. So long as EPA at least proposes a standard on or before the hammer deadline, sources should be able to avoid the additional effort of preparing comprehensive Part 2 applications. If a source gets hit by the MACT hammer, a Part 2 application will be required, but there is every reason to believe that the application will not be a difficult one to prepare.

MACT STARTUP, SHUTDOWN & MAINTENANCE PROVISION REVISIONS
In addition to revising the MACT hammer schedule, EPA is also proposing to revise the MACT general provisions. The general provisions are those portions of the MACT rules (40 CFR § 63) that apply to all sources within the program. Individual standards can and do overrule portions of the MACT general provisions, but most elements of the general provisions apply to the majority of MACT affected sources. One of these general provisions relates to startup, shutdown and maintenance (SSM) plans.

EPA proposes to change several aspects of the general provisions as they apply to SSM plans. First, EPA wants to clarify that if a source has not developed an adequate SSM plan, compliance with that plan is not a defense to excess emissions. Second, EPA proposes to change the rules to require sources to submit copies of the SSM plan to the local permitting authority (in Oregon, DEQ or the Lane Regional Air Pollution Authority-"LRAPA") when the plan is first developed and every time that it is revised. EPA is not clear in how it intends to proceed with sources that have already prepared plans, but it is clear that EPA wants those to be turned into the local permitting authority at some point as well.

Another change that EPA has proposed is to delete the requirement that MACT affected sources report and describe all startups, shutdowns and malfunctions. This rule is potentially quite burdensome as many sources routinely startup and shutdown. As long as each event is consistent with the SSM plan, there did not seem to be much benefit to reporting startups and shutdowns. While EPA now agrees it makes sense to delete the startup and shutdown reporting requirement, the agency wants to retain the requirement that every malfunction be reported, even if the SSM plan is followed.

WHITHER THE RULES?
This EPA proposal on the MACT hammer and general provisions is unusual in that no rule language is proposed. EPA appears to believe that it can meet its public notice and comment requirements in this instance by putting what is essentially a MACT white paper out for public comment. The agency then intends to proceed to develop regulatory language that it will issue as final without ever having showed a draft to the public. Whether this approach is responsible-or even legal-seems questionable. Comments are due on EPA's concepts by January 20, 2003.

Oregon Air Toxics Program
Concurrent with EPA moving forward with MACT rules in advance of any regulatory language, DEQ has been proceeding more cautiously on the Oregon air toxics program. The air toxics rules went out for public comment last summer and DEQ initially intended to bring the rule package to the Environmental Quality Commission (EQC) for approval at its December meeting. However, DEQ ultimately pulled the air toxics rules from the EQC's agenda.

Differing opinions have come out of DEQ as to what the agency might to do regarding rulemaking-ranging from moving ahead with the rules early in 2003 to resuming after the legislative session ends. The definitive word at this time appears to be that DEQ is undecided as to how to proceed. DEQ has committed to putting the rules out for public comment again before taking them to the EQC. However, while stating that the air toxics program is a Department priority, Andy Ginsburg, DEQ Air Program Administrator, announced in mid-December that formal rule development has been postponed with no definite schedule for resuming rulemaking having yet been decided. He also noted that, "We are moving forward with work to lay the foundation for benchmark development, doing local scale emission modeling in Portland, and beginning a pilot emission reduction planning effort in Portland."

The delay in finalizing the air toxics program is another consequence of the budget shortfall drama playing out in Salem. DEQ appears to be struggling to determine whether it is fiscally responsible to come forward with a new, discretionary state program at this time. The agency has received a number of comments suggesting that it would be appropriate to postpone implementation of the program until such time as the economy is in better shape. DEQ appears to be assessing whether a new air toxics program is something that the state can currently afford. However, many in the community would prefer a more open discussion as to whether the rules should go before the EQC now, with a delay rider associated with them, or whether they should be set aside as a whole for two years until the next budget cycle comes around. Obviously, the longer this process takes, the longer uncertainty will exist regarding the management of air toxics in Oregon.

FOR ADDITIONAL INFORMATION, CONTACT: Tom Wood, Stoel Rives LLP, 503/ 294-9396
RE: EPA HAP rules: http://www.epa.gov/ttn/oarpg
RE: Oregon Air Toxics Program: Sarah Armitage, DEQ/AC, 503/ 229-5186 or email: armitage.sarah@deq.state.or.us