What to expect from the new Clean Air Act.

New amendments to the Clean Air Act may prove to be the most burdensome regulations that industry has confronted in years.

The Clean Air Act Amendments of 1990, signed by President Bush on November 15, represent the most extensive rewrite of any environmental statute to date and the first changes in the federal Clean Air Act in 13 years. The resulting legislation sets an ambitious plan for air pollution control measures that will affect virtually every citizen. The following summarizes some of the provisions most likely to have a significant impact on American industry and suggests steps which companies may want to take to help cope with these new rules.

Title III: Toxic Air Pollutants 

In this Title, Congress directed EPA to implement an extensive new program for controlling existing and new source emissions of toxic air pollutants, issue regulations designed to minimize the accidental release of extremely hazardous air pollutants, and require new and existing solid waste incinerators to meet emission and operational standards. Some commentators believe that the air toxics provisions will affect the largest number of facilities and have the highest cost of any of the new programs in the 1990 Amendments.

The 1990 Amendments establish an initial list of 189 toxic air pollutants to be regulated by new emission standards. That list includes many commonly used chemicals, such as numerous metal compounds, chlorine, hydrochloric acid, benzene, chloroform, ethylene glycol, formaldehyde, methanol, phenol, styrene, toluene and xylenes.

EPA must establish a list of major source categories that emit listed pollutants and then must promulgate emission standards for new and existing sources in those categories. A "major source" is defined, for purposes of the air toxics provisions, as a source that emits, or has the potential to emit, 10 ton/yr of any listed pollutant or 25 ton/yr of any combination of listed pollutants.

The new standards will require Maximum Achievable Control Technology (MACT), which is generally based on the best-performing existing sources in the source category (or, for new source standards, the single best-controlled similar source). MACT standards for 40% of the identified source categories are to be promulgated within two years, an additional 25% of the source categories within four years, and the remainder in 7-10 years.

Compliance will generally be required within three years after the standards are established. in addition to controlling emissions from major sources, EPA must also issue regulations, based on Generally Available Control Technology (GACT), for emissions from small area sources, such as dry cleaners and gas stations, sufficient to control area sources representing at least 90% of area source emissions of the 30 most hazardous air pollutants.

A state operating permit is required for sources of air toxics, and, once a state permit plan is approved by EPA, major sources will have to meet MACT established on a case-by-case basis, where categorical MACT standards have not been promulgated.

In addition, within eight years after promulgation of MACT standards, EPA must assess whether emissions after compliance with those standards still create a "residual risk" of lifetime excess cancer risk to the maximally exposed individual of more than 1 in 1,000,000. If so, more stringent standards are required to provide an ample margin of safety to protect public health.

All sources are potentially affected by the new provisions on prevention of accidental releases. EPA must identify within two years an initial list of 100 substances, the accidental release of which may be anticipated to cause death, injury or serious adverse effects.

By November 1993, EPA must promulgate regulations for the prevention, detection and correction of accidental releases of these substances. Those regulations, among other things, will require sources to prepare a risk management plan which assesses hazards from accidental releases, provides measures for preventing such releases, and sets forth specific actions to betaken in response to an accidental release.

Softening the Blow

Obviously, it will be important for industrial sources to pay attention to EPA's implementation of the air toxics provisions and, where appropriate, provide input to EPA on such issues as appropriate definitions of categories of air toxic sources and technical achievability and cost of MACT controls.

Sources should also anticipate greater delays in permitting new or modified sources of toxic air pollutants, especially once case-by-case MACT requirements kick in. Sources which burn some solid waste should also look closely at the exemptions contained in the incinerator provisions.

In addition, Title III provides some ways to extend compliance deadlines for MACT which should be considered:

*A source which installed Best Available

Control Technology (BACT) (required

of major new sources or major

modifications in clean air [PSD] areas)

or installed the technology required

to meet the Lowest Achievable

Emission Rate (LAER) (required for

major new sources or major modifications

in nonattainment areas) prior to

promulgation of a MACT standard applicable

to "the same pollutant (or

stream of pollutants)" will not be required

to comply with the MACT

standard until five years after BACT or

LAER has been installed or achieved.

Although MACT for new sources applies

to any new source or modification

commencing construction after

the date of proposal of the MACT

standards, a company can commence

construction before proposal of MACT

and delay MACT compliance substantially,

so long as the

preconstruction permitting for that project

specifies that BACT or LAER is being

established for the pollutant covered

by MACT standards (or for a "stream

of pollutants" including the pollutant

regulated by MACT). This suggests that

sources obtaining preconstruction

permits in the ensuing months will want

to make sure that any technology required

by the permit is described as

controlling as many of the listed toxic

pollutants as possible.

*An existing source that achieves, prior

to proposal of an MACT standard, a

reduction of at least 90% in emissions

of the regulated toxic air pollutant

(95% for pollutants which are particulates)

can postpone compliance with

the MACT standard for six years. This

extension is also available for a source

which "makes an enforceable commitment"

to achieve such a reduction

prior to proposal of an MACT standard

and achieves that reduction by

January 1, 1994.

The reduction is calculated based on

actual emissions in a base year not

earlier than 1987 in most instances.

Sources that anticipate MACT standards

based on more than a 90%

reduction or that anticipate having to

reduce their emissions even before

MACT standards are implemented

(due to a modification of the facility or

Reasonably Achievable Control

Technology (RACT) standards for

ozone, for example) may want to

structure and document that reduction

so that these extensions of the MACT

compliance deadline will be available.

Title V: Permit Requirements

The 1990 Amendments set up an air pollutant source operating permit program, similar to the NPDES program for wastewater dischargers. Companies will have to apply for air permits in about four years in order to continue to operate. Permits will be required for all "major sources" as defined by the different title of the Act, including equipment that emits 10 tons of one of the 189 listed toxic air pollutants (or 25 tons of all such pollutants), and facilities to which the new 10, 25 and 50 ton/year non-attainment area "major source" definitions apply. Affected facilities subject to newsource performance standards and hazardous air pollutant emission standards under CAA 111 and 112 and other federal requirements will also need permits to operate.

There is currently no federal operating permit requirement; approximately 35 states require operating permits for at least some sources. Estimates that 134,000 small businesses will need permits for the first time pale in light of the thousands of pieces of equipment at presently regulated facilities which must now be covered by source-specific or facilitywide permits. (Note that the new operating permit program does not change the existing preconstruction permit requirements in PSD or nonattainment areas, which remain in effect.) Fortunately, the law specifically provides that a single permit may be issued for a facility with multiple sources.

EPA will specify required elements of state permit programs and states will have to submit their permit programs within three years for EPA approval. (If a state fails to submit an approvable state permit program, EPA will administer permit requirements in that state.) Once EPA has approved the state permit program, existing sources will have to apply for an operating permit and new sources will have to obtain an operating permit before commencing operation.

Permits are to be issued over the ensuing three years. Because of the anticipated backlog in permit applications, the new law creates a completeness determination" to assist states in processing permits. A completeness determination will recite that a source has submitted all the necessary information for a state to determine the completeness of its application and that it can operate until a final permit decision is made. This will allow the source to operate while the permit is pending or while it may be challenged by EPA, an adjacent state or a citizen through the permit veto and judicial review procedures in the Act.

Before a state can issue a permit, it will have to seek comments from any state within 50 miles of the source, any contiguous state whose air quality may be affected, and EPA. EPA has 45 days to object in writing to the issuance of a permit, based on EPA's conclusion that the permit contains provisions not in compliance with the Clean Air Act.

Importantly, if EPA does not object, any person can petition EPA within 60 days after the expiration of the 45-day review period, based on objections that were raised during the public comment period. If EPA does not grant that petition within 60 days, the third party can appeal EPA's failure to object to the state permit to the federal court of appeals.

This gives private parties a potentially powerful tool to delay or create uncertainty in the operation or construction of major sources. In any event, the EPA veto authority will create additional uncertainty and will extend the period of uncertainty inherent in obtaining permits.

Permits will include, among other conditions, enforceable compliance schedules and plans for meeting state and federal pollution control requirements, monitoring and reporting requirements, and other emissions limits and conditions. The permit may also include a "permit shield" to insulate a company from enforcement of other requirements of the Clean Air Act if it is operating in compliance with its permit.

The shield would apply only to explicitly stated permit terms and to any express statements that other specific requirements were considered but were found not to be applicable to the source. This provision could, if it is included in the permit, provide some limited protection to a source if disputes about the applicability of certain emissions limits, control requirements or monitoring and reporting requirements arise after the permit has been issued.

Finally, permits with remaining terms of more than three years will have to be reopened for the inclusion of new regulations as they become law. An important provision allows some changes at a facility with only seven days prior notification to the state so long as the annual allowable permitted emissions rate from the entire facility does not increase. This provision places emphasis on the importance of working with states on drafting of the permit to allow companies the greatest flexibility in their future operations.

Congress intended for the operating costs of state agencies to be borne by collection of permit fees of not less than $25 per ton per regulated pollutant (up to a maximum of $100,000 per pollutant). If certain areas fail to meet requirements of the nonattainment program, fees for excess emissions will also be collected through the permit. In addition, self-reporting requirements and the new compliance certification of source operations will be enforced through the permit.

Suggested Responses

It will be several years before these federal operating permit requirements come into effect; in the meantime, companies may want to follow or participate in any rulemaking required by their state in order to gain permit program approval from EPA.

In addition, it is important to begin now to maintain accurate records of emission and operating rates for any equipment for which a permit may be later be required. As deadlines for applying for or obtaining an operating permit approach, other steps may be appropriate, including:

* anticipating even greater delays in

obtaining both preconstruction and

operating permits;

* conducting comprehensive source

emission audits to make sure that

accurate and complete permit applications

are submitted for all sources

required to have permits;

* developing permit applications which

consider use of a plantwide permit

and maximize benefits of the "permit

shield" provisions;

* recognizing that new enforcement

authority and compliance certification

requirements will make continuous

compliance with new permit provisions

a must;

* ensuring that emission limitations or

operating rate restrictions in new

permits will accommodate anticipated

operation during the five-year term of

the permit;

* recognizing the importance of early

discussions with EPA, nearby states

and interested citizens, in light of veto

or permit appeal rights that they will

now be accorded.

Title VII: Expanded Authority

EPA's enforcement authorities are significantly enhanced by the 1990 Amendments. New authorities include EPA administrative penalty orders and field citations. There are also new civil and criminal penalties for reporting, recordkeeping, and filing errors and omissions.

For management, one of the most significant features of the Amendments is a new definition of "operator" and "person" in Title VII. The new definition makes it clear that senior corporate management, and not line operation and maintenance personnel, are to be held civilly and criminally liable for violations. Also important is a new provision that creates a presumption of continuous violation once EPA has demonstrated an incident of noncompliance. This shifts the burden to the company to prove that a violation has ceased or did not occur on a particular day. Finally, the citizen suit provisions are expanded to resemble those in the other environmental statutes, allowing citizens to sue not only to enjoin violations, but also to obtain penalties for past and current violations. A "bounty hunter" provision allows EPA to award up to $10,000 to a person who furnishes information leading to an administrative, judicial or criminal penalty.

EPA will be able to pursue more enforcement actions because it will no longer have to file a court action in order to levy penalties on companies for violations of State Implementation Plan (SIP) or federal requirements. In addition to administrative compliance orders, EPA may now issue administrative penalty orders that cover past or present violations of the law and collect up to $25,000 a day per violation in penalties (maximum of $200,000 per violation).

A company that receives an administrative penalty order may request an administrative hearing before EPA within 30 days of the proposed order. Importantly, EPA can order cessation of construction or modification of a source that has not complied with new source review requirements. The legislative history suggests that EPA can prohibit the operation of such a source.

EPA's inspectors can also issue field citations of up to $5000 per day for "minor" violations. These are intended to cover recordkeeping and other violations, and do not shield the company from further enforcement action by EPA, states or citizens. If the company objects to the field citation, it should request an administrative hearing or appeal to a U.S. district court within 30 days.

Companies should be concerned about the new criminal enforcement provisions of the Act. Not only are violations of the law now felonies, but one- to 15-year jail sentences for corporate environmental managers are now prescribed by the law for an expanded list of occurrences, including violations of SIP and federal requirements, administrative orders, failure to pay fees, and negligent or knowing releases of toxic substances that place an individual in imminent danger of death or serious injury.

While the Conference Report indicates that it was not the conferees' intent that EPA use these provisions to penalize "de minimis" or "technical violations," it should be noted that a provision in the House bill which would have insulated companies f rom criminal enforcement for such minor violations was deleted from the law.

The 1990 Amendments call for the Department of Justice and EPA to issue a policy statement on the implementation of new enforcement authorities in the Act. However, some of the new provisions in Title VII appear to be self-implementing and do not require further rulemaking. These include the new civil and criminal penalties, the presumption of continuing violations, the ability to enforce for past violations and the enhancement of citizens suit provisions.

Minimizing Exposure

Obviously, the extensive new enforcement and citizen suit authorities and the requirement for periodic compliance certification and deviation reporting increase the importance of assuring continuing compliance with Clean Air Act requirements. In particular, companies may want to consider implementing the following measures:

* establish systems for periodic compliance

audits and tracking compliance

with emission limitations and

permit requirements;

* ensure that any monitored or reported

noncompliance is followed up with

reliable documentation to demonstrate

when the period of noncompliance

ceased (to rebut the presumption of

continuing noncompliance);

* make effective use of the new operating

permit as a "shield." Make sure

that permits contain clear statements

of what will be required to demonstrate

compliance and of which Clean

Air Act requirements are incorporated

into the permit or have been considered

for incorporation;

* Consider using the

new authority for facilitywide

permits to reduce the number of

emission points at which compliance must

be demonstrated.

Author's Note: Because the New Clean Air Act was signed in mid-November, there has been little time to analyze all of the information. Companies should consult with counsel before embarking on any specific actions in response to these Amendments.