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Clearing the air on the Clean Air Act.

ENVIRONMENTAL RISK AND LIABILITY ARE DEEPLY ingrained in the psyche of corporate America. The web of federal, state and local regulations, which have typically driven compliance requirements, are being amplified by a consumer environmental movement. This "green" movement has grown well beyond its counter-culture foundations of the 1960s and continues to affect how corporations assess, manage and reduce environmental exposures. This trend is being augmented by government agencies that collect and disseminate environmental statistics to determine a company's environmental report card on emission levels, penalties and recycling practices. Risk managers face a never-ending battle to be good environmental citizens, and, at the same time, boost their company's bottom line. While increasingly driven by public perception, motivation also lies more in the large cost of complying with an ever-increasing body of environmental regulations. This quest comprises a technological spiral that leads to an endless escalation of the standards necessary to achieve compliance. The Clean Air Act Amendments of 1990 places risk managers in such a techno-environmental spiral--a regulatory treadmill characterized by continual ambiguity.

In effect, some critics have argued that the statute's intent is to require the most recent or the best technology to pollution reduction or containment. This quandary is often seen as a moving target by those seeking to plan and allocate long-term resources in hopes of meeting corporate environmental risk management objectives. Technology-based standards that motivate private industry to develop more efficient, effective pollution control advances do have merits. However, they create a constantly moving target of standards which must be met by those regulated under the act.

In light of the president economic recession in the United States, it is possible that the expansion of the environmental movement could be challenged like other grass-roots problems. In other words, unemployment and economic growth become the nation's priorities. This year the strength of the environmental movement will be tested against a backdrop of the upcoming presidential election. Are jobs or a clean environment the priority of a voting public?

History of Clean Air

The federal government's involvement in air pollution control began in 1955 with Public Law 159, which authorized the U.S. Public Health Service to initiate research on air pollution. The Clean Air Act of 1970 broadened and accelerated the nation's earlier air pollution control programs, which were research-oriented and formed the basis for current efforts to abate air pollution. This legislation empowered the Environmental Protection Agency to establish and properly enforce air quality standards to protect public health and welfare.

Since the early 1970s, and in many jurisdictions well before that, operating permits have been required for various industrial and other processes with byproducts that are vented into the air. A thorough review of regulations applicable to each plant site is required to determined what permits are required. In some jurisdictions, the law requires that permits be obtained before a source is constructed or modified. Permits allow the control agency to evaluate the planned emission control equipment and assess proposed compliance with regulations. Agency officials may require changes in the design of the process or installations if compliance is not established.

In 1974, the EPA established prevention of significant deterioration (PSD) requirements, stating that a moderate amount of industrial development should be routinely permitted in all areas, but that industrialization should not be allowed to lower air quality. In addition, an opportunity should be provided for states to designate certain areas where pristine air quality was especially valued; any expansion generating significant emissions of pollutants should be tightly curtailed. The EPA regulations also established the critical concept of increment, which is the amount of additional pollution allowed through the combined effects of all growth in an area.

Another requirement to PSD areas ensured that increments are not to be used hastily; it specified that each new major plant must install the best available control technology (BACT) to limit its emissions. Where new source performance standards had been promulgated, determinations of BACT would be controlled. Where such standards had not been promulgated, an ad hoc determination would be declared in each case. To implement these controls, the EPA requires that each new source undergo a preconstruction review. The Clean Air Amendments of 1977 took air pollution control one step further. While the basic control strategy remained the same, Congress did, however, make numerous changes in critical elements; in virtually every case, the effect broadened the program and tightened its requirements.

The 1990 Amendments

The most recent act, the fifth major effort by Congress to address clean air legislation, will have a significant impact on society, especially in manufacturing. Extensive control requirements target toxic air pollutants, acid rain and areas not in compliance with ozone and carbon monoxide National Ambient Air Quality Standards (NAAQS) for non-attainment areas.

One key concern is the financing of toxic air pollution control. Getting non-attainment areas into attainment goes beyond the cost of technology, extending to the limited growth in certain regions. This, in turn, affects regional and national economies. Compounding the financial impact are stringent vehicle tailpipe standards to reduce emissions contributing to ozone non-attainment. Acid rain control is also a technology issue, but for the first time market mechanisms are incldued to allow individual companies the flexibility of choosing the most economical approach needed to meet regulatory provisions. Thus, "Clean Air" has finally become a commodity.

Air Toxics

Air toxics refer to those pollutants that may pose a potential health risk when emitted into the atmosphere. The regulatory approach to their control has a profound impact on industry. For example, until the 1990 amendments, state and local regulatory agencies had often been forced to take the lead in regulating toxic air emissions because of the narrow language used in the clean air legislation. Now, the control of air toxics may well prove to be the air quality issue of the decade.

The new amendments provide for control of emissions from significant sources of hazardous pollutants; it specifically defines 189 of them, many of which are included in SARA Title III and the federal Community Right-to-Know Statute. They encompass widely used industrial compounds such as xylene, methyl ethyl ketone, 1,1,1-trichloroethane, 1,1,2-trichloroethane, methylene chloride, methanol, trichloroethylene, methyl isobutyl ketone, perchloroethylene, toluene, ammonia, benzene, urethane, ethylene glycol, formaldehyde, naphthalene, phenol and carbon tetrachloride.

Under the amendments, the EPA must establish all categories and subcategories of major toxic sources. The act defines a major source as any industrial facility that emits 10 tons per year (tpy) of any listed air toxic, or 25 tpy of all listed air toxics. Because this criteria is much lower than the current 100 tpy major source definition, it applies to many more industrial sources. Therefore, more industrial sources, including many smaller facilities, will be regulated.

The EPA is required to promulgate emission standards in each category for both new and existing sources. New sources must comply immediately, and existing sources and allowed three years. A required operating permit system, supported by fees and monitored by each state, will implement these standards.

The standards require that maximum achievable control technology (MACT) be implemented. For new sources, MACT is defined as "the maximum emission control achievable in practice by the best controlled similar source." For existing sources, it "may be less stringent than standards for new sources, but must be at least as stringent as emission controls achieved by the most tightly controlled 12 percent of existing facilities." Control technology determination for both new and existing sources would consider energy, environmental and economic impacts, similar to the way current BACT considers these variables. Within this framework, the EPA must establish control levels for each designated emission source category. The EPA's strictness in interpreting these definitions will determine the controll level required and the financial impact at each affected facility.

Much like existing BACT determinations, MACT is likely to vary considerably among pollutants and industrial categories. However, there is significance in the long-term requirement that all industrial sources with an emission potential of greater than 10 tpy must control these emissions. To comply, industry over the next decade is expected to make a substantial investment in process change, product substitution and emission control systems. The amendments also contain a reopener provision after pronouncement of the MACT emission standards for a source category. Within eight or nine years, the EPA is expected to set residual risk standards to protect public health. These standards may dictate even tighter controls.

Finally, the air toxics provisions of the 1990 amendments also contain requirements directed at accidental or catastrophic releases. The EPA is expected to publish at least 100 extremely hazardours air pollutants by November. Plant owners will then be responsible to identify potential hazards and develop risk management plans pursuant to EPA regulations beginning in 1993. Under the act, a Chemical Safety and Hazard Identification Board will be established to investigate accidents and recommend prevention methods.

Acid Rain

Another objective of the 1990 amendments is to curb the threat of acid rain by reducing emissions of nitrogen oxides and sulfur dioxide from power plants. Sulfur dioxide emissions shall be reduced by 10 million tons annually in two phases, the first taking effect in 1995 and the second in 2000. These reductions are to be achieved by a market-based system under which power plants will be allocated "emission allowances." They will require plants to reduce their emissions or acquire (via direct sale or annual auction) allowances from others to achieve compliance. An emissions "cap" is established to maintain the reductions. The target for reduction of nitrogen oxide emissions is two million tons. Energy conservation and pollution prevention are encouraged as long-range strategies for reducing air pollution and other adverse impacts of energy production and use.

The acid rain provisions primarily target emissions from relatively large power plants. The first phase requires reduced sulfur dioxide emissions from 111 plants with a 100 megawatts or greater capacity and a 2.5 pounds per million BTU or more emission rate. The second phase would control emissions so they do not exceed 1.2 pounds per million BTU. To reduce nitrogen oxide emissions, the amendments will rely on conventional emission standards on individual sources. The EPA is expected to promulgate the initial regulations by mid-May.

Geographic Areas

The ozone/carbon monoxide non-attainment area provisions of the amendments rely on a mix of federal and state initiatives to reduce urban air pollution. Particular attention is given to reducing emissions from automobiles and to boosting the use of clean-burning alternative fuels. Only those sources located in non-attainment areas are directly impacted by these provisions. Industry in these areas will experience increased regulatory pressure to reduce volatile organic compound (VOC) emissions (if they haven't already felt this pressure because of air toxic emission control requirements). New control techniques guidelines will be developed by the EPA to define reasonably available control technology (RACT) for existing sources. This information will be used by state regulators to further tighten standards to meet a 15 percent reduction in VOC emissions by November 1996, with an additional 3 percent reduction per year thereafter until attainment is achieved.

In the past, a VOC-emitting source was typically defined as producing 100 tpy. Sources at this level or greater were frequently required to have the highest level of control. Under the new act, however, pollution controls in non-attainment areas apply to a larger realm of sources, since the major source definition has been revised. Five non-attainment areas are defined: marginal, moderate, serious, severe and extreme.

VOC control requirements in ozone non-attainment areas will have a substantial impact on industry located or planning to locate in these areas. Compliance costs will be significant, assuming it is even possible to move into the area. Restrictive offset requirements may make the effort futile. For example, a new source emitting VOCs in a severe non-attainment area would have to find compensating offsets at a rate of 1.3 to 1. The predictable consequence of this effort is that emissions available for use as offsets will eventually dry up. Industrial growth will then be stifled.

Best vs. Maximum

The complex ever-escalating nature of the Clean Air Act focuses on the dilemma faced by risk managers. What is the real meaning of BACT, RACT, MACT, SIP and NAAQS? These standards are directly connected to a competitive marketplace which continually seeks to come up with new ideas to become the technology of choice. In the clean air arena, this is better referred to as the technology of force. The MACT provision in the 1990 amendments presents perhaps the most startling example of the problem. How does one distinguish the "maximum" from the "best" technology?

The provisions which mandate retrofitting in light of new technology even after significant investmnt has been made is a serious concern. For example, if an air scrubbing technology, which removes particulate from stack emissions, is subsequently replaced with a device that can remove more particulate, the emitter could be required to innovate or upgrde its current scrubbers. There may be, in some cases, a basis for delaying implementation or obtaining a waiver from compliance.

This explains the techno-environmental compendium. Given a free marketplace, the risk manager is faced with a constantly changing array of emission containment and reduction tools.

The 1990 Clean Air Act further exacerbates this dilemma. How should the risk manager respond to the compendium? Education is the key. By understanding the complex nature of the act, risk managers can make environmentally sound decisions which can result in the most efficient allocation of their corporation's environmental resources.

Mark J. Bennett is an attorney and president, and Anthony J. Buonicore is chief executive officer of EDR/TOXICHECK, an environmental risk management information firm in Southport, CT.
COPYRIGHT 1992 Risk Management Society Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Title Annotation:includes related article with statistics on ways the environment is deteriorating
Author:Bennett, Mark J.; Buonicore, Anthony J.
Publication:Risk Management
Article Type:Cover Story
Date:Feb 1, 1992
Previous Article:Green technologies of the 1990s.
Next Article:Environmental ghosts.

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