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The Clean Air Act Primer and Planner: Title V Permitting and Other Air Regulation Issues

In 1990, Congress enacted comprehensive changes to the federal Clean Air Act (the Clean Air Act is hereinafter referred to as "CAA" and the 1990 amendments thereto are hereinafter referred to as "1990 CAA Amendments" or "CAA Amendments") intended to impose a state-administered, nationwide air emissions permitting program that aggressively demands national attainment of statutory air quality goals. The implementation of the 1990 CAA Amendments, which will be largely accomplished through the Title V source operating permit program, will cost our nation more than $25 billion per year, require the development of sophisticated technology and take well into the next century to implement. The CAA Amendments' implementation also will require businesses with point source and fugitive air emissions to implement sophisticated compliance assurance programs and carefully plan now to anticipate future expansions and to assure adequate rights to the regulated emissions inventory.

Title V Permits

The linchpin of the CAA Amendments, "Title V permits," is just now being implemented by the states. Companies have completed their technical support preparation and, in many cases, submitted their state-administered permit applications. They are now faced with the daunting task of negotiating their permit terms and conditions. A company's success in tailoring the state/federal regulatory process to create a flexible, compliant permit may well define the limits of its economic growth for the next decade, or longer. Absent such flexibility, future expansion may be delayed or banned by the need for a major permit modification. Therefore, after the technical preparations are complete, a company must gaze into its crystal ball to determine its likely growth and its ability to modify its physical plant, process operations, raw materials and product specifications in order to gain the flexibility necessary to maintain business growth while maintaining compliance with its operating permit. Companies are well advised to undertake the planning required to address available emissions growth under current and recently repromulgated National Ambient Air Quality Standards. Likely, the process will entail a reasoned consideration of the use of facility-wide emissions caps, as well as alternative strategies for assuring the ability to grow, such as pollution prevention and materials/process substitution measures.

Planning considerations also relate to the CAA Amendments' reporting and enforcement provisions. Recently promulgated regulations require Title V permits to incorporate a system of compliance assurance monitoring and reporting. Couple increased information gathering and reporting requirements with the relaxation of the measurement standards methodology required for enforcement, and companies are faced with significantly more enforcement liability exposure; add to this the CAA Amendments' greatly expanded citizen suit and criminal liability provisions, and companies must grapple with a planning complexity unique to this law and its regulations.

Fortunately, there are mechanisms within the CAA Title V permit program that, if crafted into the permit, may provide some protection from unlimited enforcement exposure risks. The ability to take advantage of these mechanisms requires careful planning and negotiations with the permitting authorities.

This article will examine the framework of the CAA, especially with a view toward general manufacturing businesses and other common stationary source air emitters (as opposed to utilities, other specialized industries or mobile sources). Special attention will be given to the Title V federal air emissions operating permitting program and the general enforcement mechanisms available under the Clean Air Act. Finally, this article discusses strategies for implementation of permit flexibility to assure future operational compliance.

Clean Air Act Primer

The federal Clean Air Act, one of our nation's oldest environmental laws, is also one of the most technically and legally complex. Generally, the law establishes National Ambient Air Quality Standards ("NAAQS") for specified air pollutants and requires nationwide ambient air monitoring to measure and characterize an area's air quality in terms of attainment of the NAAQS or degree of nonattainment of the NAAQS. Areas designated as nonattainment must meet deadlines for bringing their air quality within the NAAQS, via State Implementation Plans ("SIPs"). Regardless of an area's attainment designation, business growth involving additional emissions is now highly regulated through state-administered individual air emissions source permits.

NAAQS and Attainment Designations

The Environmental Protection Agency ("EPA") has established NAAQS for the following substances:

  • ozone (not in itself an emission, but caused by emissions of volatile organic compounds ("VOCs") and oxides of nitrogen ("NOx"));
  • nitrogen dioxide ("NO2"); carbon monoxide ("CO") (no secondary NAAQS established);
  • sulfur oxides ("SOx," measured as "SO2");
  • Particulate Matter ("PM," measured as "PM-10 and/or "PM-2.5");
  • hydrocarbons ("HC"); and lead ("Pb"). These pollutants are known as the "criteria pollutants."

The CAA divides the country into approximately 263 "air quality control regions" ("AQCR"). Each state is assigned the primary responsibility for assuring its air quality through a federally approved SIP. Each AQCR, for each criteria pollutant, is designated one of the following:

  1. "nonattainment"--not meeting the standard for a pollutant with an established NAAQS
  2. "attainment"--meeting the standard for a NAAQS pollutant; or
  3. "unclassifiable"--on the basis of available information.

Attainment designations are based upon actual air quality data. For example, the new NAAQS for ozone prescribes an 8-hour standard at a level of 0.08 parts per million ("ppm") with a calculation formula based on the 3-year average of the annual fourth-highest daily maximum 8-hour average ozone concentrations measured at each monitor within an area. The 8-hour primary and secondary ozone ambient air quality standards are met at an ambient air quality monitoring site when the average of the annual fourth-highest daily maximum 8-hour average ozone concentration is less than or equal to 0.08 ppm, as determined in accordance with EPA's test method.

When an area is classified as nonattainment with respect to any NAAQS, the goal is to bring that area into attainment. With respect to any primary NAAQS, the CAA requires nonattainment areas to reach attainment as quickly as possible, within specifically set time limits and milestones. Once designated as nonattainment, redesignation of an AQCR to attainment requires EPA to find not only that the area has attained the NAAQS as a result of permanent and enforceable reductions in emissions, but also that the area is covered by an approved SIP and that the state is in compliance with all CAA requirements, including a demonstration that it will maintain attainment after redesignation.


It is important to understand that an area is designated as nonattainment or attainment for each NAAQS separately. An area may be designated as attainment for one criteria pollutant (a pollutant for which a NAAQS has been established), for example, PM-10, but nonattainment for another criteria pollutant, for example, ozone. The practical effect of this overlap is often to subject a single source to CAA compliance requirements with components of both the nonattainment and attainment programs.

State Implementation Plans (SIPs)

The CAA mandates that each state adopt a State Implementation Plans (SIP) that has as its goal the attainment and maintenance of the NAAQS. Upon each SIP program segment being presented to the EPA and approved, the state will be delegated the right to enforce the CAA SIP requirement (a process known as obtaining "primacy"). However, EPA retains an oversight function, rights for direct enforcement of certain programs and the ability to rescind primacy delegation if the state is not implementing the program in accordance with EPA requirements.

States failing to meet the stringent federal requirements for the SIP program are subject to loss of federal highway funds, stringent new construction emissions offset requirements and forced implementation of an EPA-created "federal implementation plan" ("FIP") which supersedes the state's authority.

Source-Specific Requirements

The CAA requires sources to be regulated in several ways. New major sources of criteria pollutants are required to undergo a preconstruction review and permitting process conforming to federal law and regulations. In attainment areas, the process is called "prevention of significant deterioration" ("PSD") permitting. In nonattainment areas, the process is called "new source review" ("NSR"). Existing "major sources" are also subject to the requirement to comply with certain minimum technical emission reduction requirements and obtain a CAA Title V operating permit.

Major sources of criteria pollutants are classified by different emissions thresholds, depending on the attainment area designation for each particular pollutant. Generally, major sources are sources which have the "potential to emit" ("PTE") certain pollutants in amounts equal to or in excess of set limits.

All regulated sources are required to meet prescribed technical emission control standards. These vary for the size and type of source, its location and other factors. New major sources, regardless of an area's attainment designation, must comply with any applicable "new source performance standards" ("NSPS") promulgated by the EPA. EPA has promulgated approximately 80 NSPS, each of which may have standards for more than one pollutant for the particular source. Any source that is reconstructed (e.g., fixed capital cost of new components replacing old exceeds 50 percent of the cost to build a new facility) must comply with NSPS. Although not mandated as minimum requirements by the CAA, new major sources not covered by NSPS are generally required to be guided by "control technique guidelines" ("CTG") or, for ozone control, "alternative control techniques" ("ACT") issued by the EPA.

New major sources in nonattainment areas are required to implement the "lowest achievable emission rate" ("LAER") possible to be achieved by the source. LAER is the most stringent of either: (1) the most stringent emissions limitation in any SIP for the subject category of source; or (2) the most stringent emissions limitation achieved in practice by the subject class or category of source. New major sources in attainment areas are required to implement the "best available control technology" ("BACT"). BACT is an emission limitation based on the maximum degree of reduction of each criteria pollutant emitted from any major emitting facility which, on a case-by-case basis, taking into account energy, environmental and economic impacts and other costs, is determined to be achievable for such facility through application of production processes and available methods, systems and techniques, including fuel cleaning, use of clean fuels, or treatment or innovative fuel combustion techniques for control of each such pollutant.

Source-Specific: Special Attainment Area Requirements; Prevention of Significant Deterioration of Air Quality

The CAA contains special provisions to assure that areas currently meeting the NAAQS maintain a healthy level of air quality. These provisions, referred to as Prevention of Significant Deterioration ("PSD"), address attainment areas, national parks and other areas of special value. The purpose of the PSD program is to ensure that economic growth will occur in a manner consistent with CAA goals, that emissions from any source in one state will not interfere with another state's SIP PSD program and that any air permit issued in an attainment area considers the consequences of the anticipated increased emissions.

The PSD program establishes three classes of attainment areas. Each SIP must comply with the PSD program by providing that, within each class of area, maximum allowable concentrations of pollutants in the ambient air will not be exceeded. Air quality modeling is necessary in order to obtain PSD permit approval. Thus, emissions increments and ceilings are created for certain pollutants. Currently, pollutants regulated under the PSD program include CO, NOx, SO2, PM-10 and particulate matter, VOCs, Pb, fluorides, asbestos, beryllium, mercury, vinyl chloride, sulfuric acid mist, total reduced sulfur compounds (including H2S) and CFCs 11, 12, 112, 114 and 115.

The PSD program requires preconstruction permits for sources in attainment areas. No "major emitting facility" (one of 28 listed source categories having emissions of, or the potential to emit, 100 tons per year ("TPY") of a regulated pollutant or any source having the ability to release 250 TPY of a regulated pollutant) may be constructed in an attainment area unless:

  1. a PSD permit has been issued;
  2. the proposed permit has undergone public, state and EPA review as required by the CAA;
  3. the operator demonstrates that emissions will not contribute to pollution above the maximum allowable concentration, NAAQS or any other applicable standard;
  4. the facility implements BACT;
  5. an analysis of the impact on air quality has taken place; and
  6. the operator agrees to conduct the necessary monitoring to determine the source's actual air quality impact.

The PSD program requirements are quite complex and guided by regulations and EPA policy as articulated in the PSD Workshop Manual, guidance documents, Office of General Counsel memoranda and administrative decisions.

Source-Specific: Special Nonattainment Area Requirements; New Source Review

The purpose of the New Source Review ("NSR") program is to ensure that new stationary source growth does not interfere with the CAA requirement of annual "reasonable further progress" ("RFP") toward the ultimate goal of attainment of NAAQS. In nonattainment areas, new major stationary sources or major modifications to existing major sources are required to undergo NSR preconstruction permitting. Additionally, in attainment areas that will affect a part of a nonattainment area in excess of specific "significance levels," major sources also must satisfy NSR requirements.

NSR is specific to the relevant nonattainment area criteria pollutant. Thus, for differing pollutants, a source may be subject to both NSR and PSD permitting requirements. Also, as a consequence of being in the area administered by the Northeast Regional Transport Commission ("OTC"), a source may be required to undergo both NSR and PSD for the same criteria pollutant. For example, a major NOx facility located in an attainment area for NO2 may be required to satisfy both NSR (deemed nonattainment for ozone by virtue of being an OTC state) and PSD (on the basis of the actual attainment designation for NO2).

Generally, NSR requires the source to acquire excess Emission Reduction Credit ("ERC") "offsets" or conduct internal ERC netting; implement LAER and applicable NSPS; and include an analysis of alternative sites, sizes, processes and control techniques which demonstrate that the benefits significantly outweigh the environmental, health and social costs of the facility's location and construction.

Pollutant-Specific Requirements

In addition to creating a stringent framework for the control of air emissions, the CAA contains multiple provisions addressing specific pollutants. Many are industry-specific: mobile source, SO2 (acid rain), asbestos and stratospheric ozone (CFCs/HCFCs) requirements, for example. Others are generally applicable, but do not merit specific discussion within the context of this White Paper: CO, SOx, PM, NO2 and Pb, for example. While not all regulated substances are specifically addressed herein, all should be incorporated into a business's CAA compliance planning. Certain substances, however, are particularly significant to this paper and therefore will be discussed below.

Pollutant-Specific Requirements: Ozone (Volatile Organic Compounds ("VOCs") and NOx)

The CAA requires implementation of aggressive measures to control ozone (VOCs and NOx). In addition to nationwide ozone control requirements, the 1990 CAA Amendments establish a mechanism to create interstate transport commissions in order to address the interstate transport of air pollutants. And, because of a well-documented regional interstate ozone problem, the CAA required the creation of the Northeast Regional ("NE") OTC. The NE OTC is emerging as a significant force in air regulatory matters.

More generally, the detail of revisions required for ozone SIP nonattainment plans applicable to states and individual sources depends upon an area's nonattainment designation. The arsenal of control measures addressed includes:

  • individual source VOCs and NOx emission inventory monitoring and reporting;
  • requirements for a state's demonstration of RFP toward attainment, with mandated percentage reductions from actual emissions inventories;
  • NOx and VOCs RACT implementation requirements;
  • stringent NSR requirements for modification of existing sources;
  • vehicle emissions inspection and maintenance ("I/M") programs and other transportation control measures;
  • gasoline vapor recovery requirements for fueling stations;
  • Title V air emissions permit implementation; and
  • implementation of VOCs and NOx offset requirements for emissions increases.

To assure attainment goals, the CAA requires that, every three years, each state must determine whether its ozone nonattainment areas, excluding moderate or marginal areas, have reduced emissions according to its SIP. Further, within 90 days of reaching a milestone date, each state must demonstrate to the EPA that the milestone has been satisfied.

Pollutant-Specific Requirements: NESHAPs and Air Toxics

The 1990 CAA Amendments proposed sweeping changes to the previously existing program regulating "hazardous air pollutants" ("HAPs"). Prior to the 1990 CAA Amendments, in order to regulate a substance as a HAP, EPA had to make detailed technical findings and implement stringent controls. As a result of the statute's stringent standard, fewer than 10 substances were ever designated as HAPs with National Emission Standards for Hazardous Air Pollutants ("NESHAPs"). The 1990 CAA Amendments preserved the prior law with respect to existing NESHAPs and added an ambitious program of regulation of all HAPs, specifically designating 188 substances, of which approximately half are also VOCs, for mandatory program inclusion. The new HAP program avoids the NESHAPs controversy by requiring technology-based standards with a future risk-based review.

The new air toxics program regulates HAPs through a two-phase process. The first phase requires technology-based standards; the second, health-based standards. The law directs EPA to establish categories of sources for each of the enumerated air toxics and standards for each category.

Under the HAP program, a "major source" is any stationary source which emits or has the potential to emit 10 TPY or more of any one HAP or 25 TPY or more of any combination of HAPs. Major sources are subject to permitting and implementation of the applicable standards. Any stationary source of HAPs which is not a major source is an "area source."

The air toxics program requires the EPA to establish and keep current emission standards for each source category of hazardous pollutant. The emission standards must require implementation of the "maximum degree of reduction in emissions of hazardous air pollutants" that is possible given the cost of such reductions and the "non-air quality health and environmental and energy impacts." This concept is referred to as "maximum achievable control technology" ("MACT").

The air toxics program applies to both new and existing sources of HAPs, although the method of determining MACT differs. For new sources, MACT must be at least as strict as "the emission control that is achieved in practice by the best controlled similar source." For existing sources, MACT must not be less (but may be more) stringent than the best-performing 12 percent of existing sources (excluding certain newer sources) or, for categories with fewer than 30 sources, the average emission limitation achieved by the top-five-performing sources.

After the initial round of technology-based standards, which was to be completed by November15, 1996, EPA is required to further assess the residual risk from the remaining health risks attributable to emissions from sources of HAPs and propose ways to address the residual risk. At a minimum, EPA is required to act upon its residual risk findings by promulgating risk-based standards within eight years after its initial MACT standard promulgation for each affected source category.

EPA promulgated final rules establishing general provisions for the HAP regulatory programs, addressing applicability determinations, compliance extensions, equivalent emission limitation criteria, alternative means of compliance and owner/operator compliance requirements. The implementation of MACT standards is to be accomplished in three phases, with standards for listed categories promulgated in roughly equal numbers and in order of health concerns in the years 1992, 1994, 1997 and 2000.

On December 27, 1996, EPA promulgated a rule to limit the applicability of certain MACT provisions relating to new or modified sources of air toxics. The CAA requires these sources to implement controls, on a case-by-case basis, equivalent to MACT for emissions of air toxics that are not yet regulated under existing regulations. This provision of the CAA was intended to be an interim measure for preventing further air toxic emissions prior to promulgation of EPA's MACT standards. Under the rule, EPA will limit the applicability of the law to new construction or major reconstruction of sources. The rule allows facilities to make reasonable modifications without triggering MACT requirements. States must have EPA-approved CAA Section 112(g) programs in place and must begin issuing case-by-case determinations by June29, 1998.

Owners or operators of stationary sources subject to the requirements of 40C.F.R. Part 63 are to develop a written startup, shutdown and malfunction plan that describes the "procedures for operating and maintaining the source during periods of startup, shutdown and malfunction and a program of corrective action for malfunctioning process and air pollution control equipment." This contingency plan is to be incorporated by reference into the Title V permit. However, EPA published a memorandum on January19, 1996 indicating that sources of HAPs do not have to include such contingency plans in their Title V permits.

The main air toxics provisions of the CAA are directed at normal operations which result in anticipated releases. However, the air toxics provisions also contain a program to regulate accidental releases of HAPs. This portion of the program is independent from the standards portion and is similar to the requirements of Title III of the Superfund Amendments and Reauthorization Act of 1986 ("SARA," also known as the Emergency Planning and Community Right to Know Act).

The law creates a "general duty" to prevent accidental releases of "extremely hazardous substances" and to minimize the consequences of such a release. This general duty became the responsibility of plant owners and operators in November of 1990. Under the law, the general duty is to identify hazards which may result from accidental releases, design and maintain a safe facility by taking steps to prevent accidental releases, and minimize the consequences of any accidental release.

In addition to the general duty, the CAA requires certain companies to develop and implement "risk management programs" ("RMP") to protect workers and the general public from accidental releases of hazardous air pollutants. EPA's rule on the subject adopts a three-tiered approach to make planning requirements commensurate with the risk at a site. Tier1 applies to sources that demonstrate that a worst-case accident would not harm people or the environment. These facilities need only submit a brief RMP and a certification of the low risk. Tier2 is the default tier. These sources are required to register, conduct a hazard assessment, develop a five-year accident history, institute prevention and emergency response programs and submit a streamlined RMP. Tier3, industry-specific with a threshold of 100 or more full-time employees, requires compliance with the entire RMP program as initially proposed by EPA in 1993. The rule is expected to impact as many as 68,000 facilities, and plans must be developed and filed by regulated facilities within three years.

A list of the regulated chemicals and use thresholds qualifying a facility for inclusion under the RMP has been promulgated. The list of 114 substances includes 77 acutely toxic substances and 63 flammable gases and liquids. Some commonly used compounds, such as ammonia, chlorine and propane, are among those listed. The threshold for some compounds is a low as 500 pounds.

Brief Overview of Title V Air Permits

Title V of the 1990 CAA Amendments is arguably the most important addition to the Clean Air Act. Prior to the existence of Title V, federal permits were required only for new or modified stationary sources. All existing stationary sources were regulated at the federal level by requirements which existed in SIPs, NSPS or NESHAPs. Although the SIP remains the primary planning document used by states to attain NAAQS, by simplifying the oversight of a source's control requirements, it is anticipated that permits will partially supersede SIPs in importance.

Title V was designed to consolidate all relevant air pollution information for a given source into a single document. The consolidation of this information will provide administrative agencies, operators and the general public with a clear picture of which pollutants the source is emitting, the quantity of such emissions and the applicable emission limitation requirements. In addition, by consolidating applicable requirements into a single document, enforcement agencies will be better able to track a source's compliance.

Under the Title V program, states were required to submit and have their Title V permit programs approved by the fall of 1994. According to the statutory timetable, owners or operators of individual facilities were to have submitted their Title V permit applications by the fall of 1995. In compliance with this timetable, the first permits are now being negotiated and issued.

Title V Permit Applicability

The applicability of the federal permit program is set out in the CAA. Generally, a Title V air permit is required for: "major sources"; sources subject to NSPS; sources subject to HAPs standards; affected sources under the Acid Rain Provisions of CAA Title IV; facilities subject to PSD requirements; sources subject to NSR; and any other sources subject to a requirement promulgated at a later date by EPA or relevant state authorities.

The definition of "major source" is based upon the amount of emissions under common control within a contiguous area (with special consideration given for the treatment of research and development activities). Therefore, if a source is subject to the permit program for a single pollutant, it must apply for a permit for all regulated air pollutants which it emits. Nevertheless, the issue of EPA's authority to regulate sources of unlisted fugitive emissions located near facilities defined as major sources spawned a court challenge that resulted in EPA agreeing to abandon its initial position on the issue unless and until it addresses this particular situation through rulemaking. Resolving a case filed in federal court, the EPA has agreed not to require federal air permits for sources of fugitive emissions located near a fugitive source. The issue arose within the context of EPA's regulation of mining activities. Petitioners argued that EPA could not require Title V permits for fugitive sources not listed at 40 C.F.R. §51.166(b)(1)(iii) without separate rulemaking under Section 302(j) of the CAA. However, EPA has indicated that it will propose rules to control these so-called "co-located" fugitive emissions under the federal permit rule.

As a practical matter, in many states (Pennsylvania, for one), every air emissions source is subject to state preconstruction and operating permit requirements.

General Program Requirements

Title V requires that each state's initial program submission contain certain prescribed basic elements. The permit also will include SIP, air toxic, NSPS, PSD and any other applicable requirements.

Public participation is an important element of the permit program. The CAA mandates that state programs have:

[a]dequate, streamlined, and reasonable procedures for expeditiously determining when applications are complete, for processing such applications, [and] for public notice, including offering an opportunity for public comment and a hearing . . . . "

The CAA provides specific tools which were designed to assist the permitting authority in enforcing the permit program, including authority to: enjoin persons in violation of a permit; seek injunctive relief; and assess civil penalties and criminal fines.

The 1990 CAA Amendments also mandate that states establish a fee system to independently support the Title V permit program. Specifically, the program 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 . . . . "

What is likely to prove an important aspect of the permit for businesses is the statutory "permit shield"; that is, a mechanism whereby compliance with a permit is deemed compliance with all provisions of the CAA addressed in the permit. According to the rules, a permit must expressly state that a permit shield exists in order for the operator to avail itself of the shield. "Only requirements that have been reviewed by the permitting authority and identified as such in the permit can be shielded against."

"Operational flexibility" refers to the ability of a facility to make operational changes without revising its permit to reflect such changes. The CAA states that a revision will not be required if the "changes are not modifications under any provisions of Title I and the changes do not exceed the emissions allowable under the permit." However, seven (7) days' advance written notification to the permitting authority is required before a source can undertake any such modification.

The final rules address operational flexibility in three ways:

  1. Programs must allow certain narrowly defined changes within a permitted facility that contravene specific permit terms without requiring a permit revision, as long as the source does not exceed the emissions allowable under the permit;
  2. The permit program must provide for emissions trading for the purposes of complying with a federally enforceable emissions cap established in the permit independent of or more strict than otherwise applicable requirements; and
  3. The permit program may allow emissions trading at the facility to meet SIP limits where the SIP provides for such trading on seven (7) days' notice in cases where trading is not already provided for in the permit.

Provisions of the federal operating permit program relating to permit revisions have proved controversial. Industry generally viewed the procedural requirements as too onerous. Other entities, including certain states like Pennsylvania, viewed EPA's rule to be more lenient than the CAA requirements and filed suit against implementation of the rule. In response, EPA has attempted to negotiate a settlement and address industry concerns. On August 29, 1994, EPA published a proposal on de minimis permit revisions intended to form a basis for resolution of the issue. EPA also published notice of its revisions to the operating permit proposal in April 1995. Unfortunately, the proposals were not completely accepted by anyone. Therefore, EPA published another proposal in August 1995. The revised proposal addressing permit revisions was intended to build upon each individual state's program and NSR requirements.

EPA has issued several White Papers containing guidance on implementation of the operating permit program. The first guidance, White Paper for Streamlined Development of Part 70 Permit Applications, was issued July 10, 1995. This EPA White Paper sets forth the minimum requirements of EPA's operating permit rules. It is intended to simplify the permitting rules and show how flexibility can be implemented. The second EPA guidance, White Paper Number 2 for Improved Implementation of the Part 70 Operating Permits Program ("White Paper No. 2"), was released on March 5, 1996. The second guidance was intended to enable state and local agencies to take steps to reduce the complexity and preparation costs for businesses of the Title V permit program and to remove certain unintended burdens from business. "In particular, White Paper Number 2 is designed to simplify the treatment of overlapping regulatory requirements and insignificant emission units and to clarify the use of citations and incorporation by reference in the part 70 permitting process." White Paper Number 2 describes how a source may, during the Title V permitting process, meld together multiple overlapping requirements into one set of requirements that will assure compliance with all requirements. Where one emissions limit can be set at least as stringent as the most stringent emissions limit, multiple emissions limits may be "streamlined" into that one limit. Where no one requirement is unambiguously more stringent than the other limits, the Title V applicant may "synthesize" the conditions of all the applicable requirements into a single new permit term that will assure compliance with all requirements. By streamlining and synthesizing, the Title V applicant would be able to craft one set of monitoring, recordkeeping and reporting requirements and not need to set out multiple, overlapping ones. In addition, White Paper Number 2 addresses the SIP updating and approval process, insignificant emissions units and determinations of major source status, and eliminates certain duplicate reporting requirements.

EPA's proposals regarding enhanced source monitoring under Title V permits also have proved contentious. Its initial 1993 proposed rule addressing enhanced monitoring met with widespread criticisms from businesses and some federal legislators as being too stringent and was withdrawn. A draft re-proposal, the "compliance assurance monitoring" ("CAM") rule, has proven equally troublesome and generated criticisms of EPA from all fronts. Section 144(a)(3) of the CAA authorizes EPA to develop regulations requiring facilities to conduct enhanced emissions monitoring and certify compliance with applicable CAA requirements. The CAM rule proposal would require sources to monitor the operation and maintenance of their emissions control equipment. Regulated sources would be required to either:

  1. develop detailed written plans to assure that their emissions control equipment is operating within acceptable ranges that will minimize emissions and assure compliance with applicable regulations; or
  2. upgrade reporting and recordkeeping measures to ensure effective compliance.

Businesses have objected to the CAM proposal as being over-inclusive, affecting too many small sources, requiring overly detailed plans, requiring that the plans be incorporated within the Title V permit (therefore being too difficult to amend) and unlawfully mandating reliance upon test methods other than those specified by EPA rulemaking. Environmental groups have objected to the CAM rule as not providing citizens with evidence to verify whether a source is actually and continually in compliance. Also, environmental groups have objected to EPA's criteria for assigning businesses to the least burdensome category of applicability of the proposed rule. EPA's final CAM rule is anticipated by the end of 1997.

CAA General Enforcement Considerations

Under the CAA, EPA retains a general duty to enforce the law. If EPA determines that any person has violated or is in violation of a SIP or a Title V air permit, it must notify both the person and the state. Then, after 30 days, EPA may issue an order requiring compliance, issue an administrative penalty or bring a civil action. Further, if EPA determines that violations of a SIP or permit program are so widespread as to amount to a failure of a state to effectively implement the SIP or permit program, then EPA must notify the state. If the situation continues beyond 30 days for a SIP or 90 days for a permit program, EPA must give public notice. During the period beginning from public notice and continuing until the state satisfies EPA that it will enforce the SIP or permit program, EPA may enforce the SIP and permit programs directly.

With respect to other programs, EPA may directly respond to violations by issuing an administrative penalty or order, or by bringing a civil enforcement action.

An EPA order takes effect after the person to whom it is issued has had an opportunity to confer with EPA, except that an order under the HAPs provisions may take effect immediately. Any EPA order must state the nature of the violation and specify a time for compliance. The period allowed for coming into compliance with an order cannot be more than one year.

Whenever EPA finds that a state is not acting in compliance with NSR requirements, it may prohibit the construction or modification of any major stationary source, issue administrative penalties or bring a civil enforcement action.

With respect to civil enforcement remedies, EPA may seek a permanent or temporary injunction and a civil penalty of no more than $25,000 per day for each violation. Any federal civil enforcement action may be brought in the judicial district where the alleged violation occurred or where the defendant resides or has a principal place of business, and such court is vested with the authority to provide any appropriate relief. The court also is authorized to award attorneys' fees and costs to a party and against the federal government if the court finds that the government's action was unreasonable.

EPA also has been given certain powers to assess administrative civil penalties. Administrative penalties of up to $25,000 per day can be assessed for violations of certain CAA requirements. This authority is limited to matters where the total penalty sought does not exceed $200,000 and where the first occurrence of the violation is no more than one year old, unless waived by the EPA and the Department of Justice. EPA is required to issue rules for administrative procedures for assessments of civil penalties.

EPA has established "noncompliance penalties" in regulations. Pursuant to the CAA and the regulations, certain entities are subject to noncompliance penalties. EPA may delegate authority to a state to implement noncompliance penalties, but retains oversight authority and the obligation to implement noncompliance penalties in the event a state fails to carry out the program. Noncompliance penalties must be assessed against the owner or operator of: a major stationary source not in compliance with any emission limitation, emission standard or compliance schedule under any SIP; a stationary source not in compliance with NSPS or the air toxics provisions; and a stationary source not in compliance with the acid rain control provisions under Title IV-A, the permit requirements under Title V or the stratospheric ozone protection requirements under Title VI.

Demonstrating emissions noncompliance has proven difficult for governmental authorities and citizen suit plaintiffs in the past. In order to address this hurdle and in conjunction with its enhanced monitoring and compliance assurance monitoring rulemaking, EPA promulgated a rule to allow the use of "any credible evidence" for enforcement purposes. Previously, EPA's regulations were generally interpreted to require that enforcement actions be based upon proof that the source was in noncompliance with the official applicable EPA test reference method. This regulation specifies that the published test reference methods do not preclude the use, including the exclusive use, of any credible evidence or information relevant to whether a source would have been in compliance with applicable requirements if the appropriate performance or compliance test procedures or methods had been performed. In response to the promulgation of the rule, more than 80 groups sued the EPA, alleging that EPA's rule changed the underlying stringency of many air regulations. The petitions have been consolidated for trial. Despite the challenge, EPA is requesting that states amend their SIPS to conform with the rule and require that sources develop operating permits consistent with the rule's requirements.

Penalty assessment criteria include: the size of the business; the economic impact of the penalty on the business; the violator's full compliance history and good-faith efforts to comply; the duration of the violation as established by any credible evidence; payment by the violator of penalties previously assessed for the same violation; the economic benefit of noncompliance; and the seriousness of the violation. There should be no assessment for noncompliance with administrative subpoenas or inspection actions where the violator had sufficient cause to violate or fail or refuse to comply with such subpoena or action.

Also, EPA has been given authority to implement a field citation program through regulations relating to minor violations with penalties not exceeding $5,000 per day of violation. Field citations are appealable to a federal district court. Failure to pay an administrative penalty will result in a collection action and result in assessment of costs of collection, interest and a ten percent penalty per quarter.

The EPA may pay up to a $10,000 bounty for information or services which lead to a criminal conviction or civil penalty for certain violations. EPA proposed a rule to reward tipsters alerting EPA to violations under CAA §113(f).

Federal Criminal Enforcement

The CAA provides for stringent criminal penalties. For "knowing" violation of a SIP (during any period of federal enforcement or after 320 days' notice), an EPA Order, NSPS, HAPs/air toxics provision, inspection requirement, solid waste combustion requirements, preconstruction requirement or an order relating to a preconstruction requirement, emergency order, permit, acid deposition control requirement, stratospheric ozone control requirement or any federal fee, upon conviction, a person shall be punished by a fine pursuant to Title 18 of the United States Code ("U.S.C.") or by imprisonment for a term not to exceed five years, or both. Subsequent convictions double the maximum punishment for both the fine and imprisonment.

Making knowingly false (by commission or omission) statements, filings, reports or applications, or falsifying, tampering or failing to install any monitoring device or method required by the CAA, is punishable by a fine pursuant to Title 18 of the U.S.C. or imprisonment for not more than two years, or both. Subsequent convictions double these criminal sanctions as well. Failure to pay fees can result in penalties as provided by Title18 of the U.S.C. or imprisonment of up to one year, or both, with subsequent convictions doubling the sanction.

Knowing release of a hazardous air pollutant, or extremely hazardous substance listed under SARA, that negligently places another person in imminent danger of death or serious bodily injury shall, upon conviction, be punished by a fine under Title 18 of the U.S.C. or imprisonment for not more than one year, or both. Such knowing release that knowingly places another in imminent danger of death or serious bodily injury shall, upon conviction, be punished by a fine under Title 18 of the U.S.C. or by imprisonment of not more than 15 years, or both. However, if the person committing the latter action is an organization, the fine shall be not more than $1,000,000 for each violation. Subsequent convictions double the criminal sanctions.

Although individuals will only be charged with actual awareness or belief, circumstantial evidence is admissible, including evidence that the individual took affirmative steps to be shielded from relevant information to prove knowledge. Also, it is an affirmative defense that the conduct charged was freely consented to by the person endangered and that the danger and conduct charged were reasonably foreseeable hazards of a business or occupation, or medical treatment or experimentation conducted by professionally approved methods, and such other person had been made aware of the risks and gave consent.

Third-Party Enforcement: Citizen Suits

The 1990 CAA Amendments give private citizens authority to commence a federal district court civil action against any person, including the United States, who violates an emission standard, violates an EPA administrative order or proposes to construct or actually constructs any new or modified major emitting facility without the preconstruction permit required for a nonattainment or an attainment area. EPA may also be sued if it fails to perform any act or duty required by the CAA. A notice of the violation to be alleged must be given at least 60 days before the action commences, and the action cannot begin if either EPA or the state "has commenced and is diligently prosecuting a civil action" in a state or federal court. In such an instance, however, if the action is in federal court, the citizen has the right to intervene. If a citizens' suit is properly initiated, the court may award the costs of litigation to any party if the court decides that such an award is appropriate.

A Clean Air Act Title V Compliance Planner

Many environmental laws are intended to force technological advances upon industry. However, air regulation is probably the most technology-forcing regulatory program of all of them. The CAA regulatory scheme requires EPA to constantly revise air quality goals to reflect the advances in measurement technology and health/environmental impact studies. For example, just when business is adjusting to the multi-billion-dollar requirements of the 1990 CAA Amendments, EPA revises the ozone and PM NAAQS, adding untold additional burdens. The regulatory changes impact the way compliance is measured and mandate reductions well beyond the existing standards. Although preliminary, the analysis of the expected impact indicates that currently 546 AQRs would not comply with the ozone standard and 283 would be classified nonattainment with the new PM-2.5 NAAQS, resulting in roughly a two-fold increase over current nonattainment areas. EPA's implementation strategy requires any existing PM-10 or ozone nonattainment area to first reach attainment with the old standard and then demonstrate attainment with the new. The costs of compliance are estimated by EPA as an added $9.6 billion per year for the ozone rule and $37 billion for the PM-2.5 standard. Businesses operating within several hundred AQRs must now revise their operations plans to anticipate the changes necessary to operate within the new regulatory requirements.

The experience reflected in EPA's revision of the ozone standards is indicative of the overall burdens placed upon business by the Clean Air Act. These burdens cannot be avoided; however, planning may lessen their impact.

Current Title V Planning Considerations

In order to prepare for Title V permit implementation, businesses have been required to engage in an extensive evaluation process that most likely included many of the following tasks: conduct air emissions (fugitive and point source) audits; review current environmental management programs; evaluate existing compliance monitoring and reporting capabilities; evaluate past business expansion projects (modifications) and identify future desired modifications; evaluate current operations, raw materials and output; perform cost-benefit analyses on existing and alternative operations; and evaluate customer requirements in connection with plant capabilities. These efforts enabled businesses to complete their initial Title V permit applications. However, because the Title V programs were still in the process of local regulatory development, it likely will be advantageous to revisit many operations issues before the state begins processing the Title V permits. This pre-processing review will allow a business to make amendments to the application based upon the regulations and revelations that have been identified in the period between completion of the initial application and today. While it may be possible to accomplish the necessary permit application amendments in the short period after a state notifies a business that its permit is being considered, by planning these amendments in advance of the review process, the business will assure better control of the content in the final Title V operating permit.

While all permit applications are source/facility-specific, and therefore require careful individual development, some common concerns and goals can be identified as a guide to businesses. These common items are discussed in the remainder of this White Paper.

First and foremost, a business should strive to achieve optimum operational flexibility in its permit. There are many aspects of the permit process that will augment operational flexibility. As a preliminary matter, prior existing air permits should be reviewed with the express purpose of considering those conditions and requirements that, if changed during the Title V evaluation, could benefit operational flexibility. These types of changes can relate to PSD or NSR permit limits, emissions caps and other substantive items. They also can relate to recordkeeping and reporting requirements. In addition, the review can be used to eliminate obsolete or extraneous existing permit requirements. Whatever the consideration, the Title V process should be used to revise prior existing permits, as required.

After addressing existing permit requirements that may be modified during the Title V review, a business should carefully review and reconsider its Title V permit application. Many Title V applications were compiled in haste and may even predate EPA or state regulatory guidance. Therefore, the business should review the permit application to assure that it accurately identifies only those permit requirements that are applicable to the specific source. To the extent possible, nonfederal (state) requirements and operational practices should not be reflected in the Title V application or permit. If this is not possible, these items should be clearly identified with appropriate limiting language in the application and Title V permit.

Operational flexibility also encompasses the possibility of securing advanced regulatory approval for future facility construction and modifications. This approval of future planned changes may be accomplished via use of alternative operating scenarios incorporated into the final Title V permit. Thus, a permit to construct can result from the Title V process, but construction may be delayed in accordance with applicable state program rules. When the alternative scenario is initiated, usually only notice to the permitting authority is required. By incorporating this type of operational flexibility into a Title V permit, a business can avoid the cost and risk usually associated with NSR. Nevertheless, care must be taken when permitting alternative operating scenarios affecting emissions of HAPs to document that the physical operation is not undergoing substantial modification. Otherwise, the alternative permit scenario may trigger costly MACT requirements applicable to HAPS.

Another opportunity associated with a review of the Title V permit application relates to streamlining multiple or overlapping air quality requirements. When most applications were submitted, states did not yet fully consider ways to ameliorate the complexity of the Title V permit. Subsequently, EPA and most states have adopted guidance to allow streamlining permits. Generally, sources can combine identical emissions units with identical applicable requirements into a group with only one set of applicable requirements. Also, where an emissions unit is subject to overlapping requirements (PSD and BACT, for example), the permit may specify only the most stringent of these or adopt a hybrid requirement as stringent as the most stringent of the requirements.

The Title V process also should be used by businesses to craft the language of the permit to assure that the liability shields available under the law are realized. Remember, a permit shield can trump enforcement actions or cut off a business's exposure to third-party suits. However, the shield applies only to matters that are acknowledged in the permit, even if the acknowledgment is a negative applicability determination. Businesses must be careful how these issues are documented in the application and crafted into the final Title V permit.

Related to liability shields is a business's concern regarding maintaining the confidentiality of business-sensitive information. A recent case under the Clean Water Act underscores the difficulty of keeping certain production-related information confidential. Simply marking emissions reporting data "confidential" does not ensure its nondisclosure. Therefore, before agreeing to a permit condition requiring reporting of data that may reflect confidential material (production rates for instance), businesses are well advised to explore compliance demonstration methods that do not rely upon confidential materials.

The Title V process also provides facilities with an opportunity to review past operational changes that may qualify for the generation of emission credits that may either be banked or may be used for future offsets. Because individual state programs vary with regard to these rules, no one rule may be applied to every source. Nonetheless, businesses are advised to consider this important planning aspect.

The consequences of inadequate planning may be devastating. A business may find itself subject to impossible monitoring and reporting requirements, or it may find itself in the position of providing a road map and invitation to regulatory authorities or citizen groups for costly lawsuits over relatively minor technical noncompliance.


Much like the mythical rulers of the past, businesses today need to consult with seers that model the future. Although planners have replaced soothsayers, there is still an element of crystal ball gazing in setting a facility's agenda for the five-year duration of the Title V permit. By understanding the framework under which the air emissions operating permits exist, businesses can enlist the process to support their future success. Ample opportunity is provided to craft protective permits; a business needs to use the tools of the regulations to its competitive advantage.

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