CHAPTER 8 AIR PERMITTING HURDLES: A PRACTICAL PERSPECTIVE BASED ON THE OREGON PERMITTING EXPERIENCE

• Jurisdiction: United States

Air Quality Regulation For The Natural Resources Industry
(2000)
CHAPTER 8
AIR PERMITTING HURDLES: A PRACTICAL PERSPECTIVE BASED ON THE OREGON PERMITTING EXPERIENCE
Thomas R. Wood
Stoel Rives LLP
Portland, Oregon 97204-1268

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900 SW Fifth Ave; Suite 2600

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Introduction and Scope of Paper

Nearly ten years after Congress passed the 1990 Clean Air Act Amendments, most states are struggling to finish issuing federal operating permits (also referred to as "Title V permits"). Two of the states in EPA Region X, Oregon and Washington, were in the forefront of developing their Title V programs and issuing the permits. Oregon, in particular, led the nation in issuing Title V permits; the last of its Title V permit applications was received in 1995 and many of its sources have already completed their first Title V permit renewal. As a result, EPA Region X developed many seminal positions for implementing Title V. It also resulted in the Oregon major sources having learned many lessons related to the Title V permitting process. This paper outlines several of the key issues that have arisen as a result of permitting sources in EPA Region X, particularly in Oregon, and suggests ways to avoid, or minimize, their impact.

I. Construction Permit v. Operating Permit

In 1990, in an effort to establish himself as "the environmental president," George Bush pushed for a fundamental overhaul of the Clean Air Act ("CAA" or the "Act"), 42 U.S.C. §§ 7401 to 7671q. The results were the 1990 Clean Air Act Amendments. These amendments resulted in the most substantive changes to the Act since 1970 and introduced new concepts relating to issues such as permitting, air toxics and mobile source emissions. For the first time, a wide variety of sources were required to obtain federal operating permits. In states, such as Oregon, that had long had state operating permits, the Title V permits replaced the state permits except to the extent that the state permits served as construction permits.

A. Applicability: Who must get a Title V

The federal rules specify certain source categories that must obtain Title V permits, but allows the states the discretion to defer permitting for some of these categories. Federal regulations state that all "major sources," as defined in 40 CFR § 70.2 , are required to obtain Title V permits. 40 CFR § 70.3(a)(1). In addition, the federal regulations state that all sources, including area sources, that are subject to Clean Air Act section 111 (New Source Performance Standards) or Section 112 (hazardous air pollutant standards), other than § 112(r)

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(accidental release prevention program), must obtain Title V permits.¹40 CFR § 70.3(a)(2) & (3). The federal regulations further state that all Title IV (acid rain program) affected sources must obtain Title V permits. 40 CFR § 70.3(a)(4). However, the federal rules grant states the authority to defer Title V permitting for non-major sources. 40 CFR § 70.3(b).

The states have implemented this authority in varying manners. Some states, such as Oregon, have included within their rules an indeterminate exemption for the non-major sources. OAR 340-218-0020((4)(a)(C). Other states, such as Idaho, have specified a particular date by which time the non-major sources must apply for Title V permits. IDAPA 16.301.02(b). EPA has specifically authorized states to defer area sources subject to one of the five area source NESHAPs until December 9, 2004. 64 Fed. Reg. 69637 (December 14, 1999). The deferral process, however, is not a mandated portion of the program and states may either choose to allow deferral or require area sources to obtain Title V permits.

B. Timing Issues Related to New Source Construction

A critical element of the federal operating permit program is that, as the name implies, they are permits to operate and not permits to construct. The Title V permit was intended to gather together in one document all applicable requirements that apply to a source and document what steps are necessary in order for that source to document compliance with all the requirements. However, the Title V permit program was not intended to supplant, but rather to augment, existing new source review programs. New source review is outside the scope of this paper, but it is critical to note that where a source has a construction permit pursuant to a federally approved new source review program or the hazardous air pollutant preconstruction review program, that source need not file an application for a Title V permit until twelve months after the source commences operation. 40 CFR § 70.5(a)(1)(ii). The important exception to this rule is where an existing Title V permit prohibits construction or operation of the new source, the permit must be modified prior to commencing operation. Id.

Many permits contain limits that result in express limitations on source operations such that it is impossible to operate the modified source in compliance with the existing Title V permit. As a result, a new Title V permit must often be issued before a modified source can commence operations. This can result in significant delay. One of the most frequent reasons for modifying an existing Title V permit is Oregon has been because the permit did not contain adequate periodic monitoring to encompass a new emissions unit. In these situations, all the applicable requirements may be present in the permit, but the monitoring is too specific to allow for the new emissions unit. Administrative permit amendments do not allow for significant changes in monitoring (other than to make it more frequent). 40 CFR § 70.7(d).

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Likewise, 502(b)(10) and off-permit changes do not allow for significant changes to monitoring. 40 CFR §§ 70.3 & 70.4(b)(14); see also 57 Fed. Reg. 32250, 32269-70 (July 21, 1992). Minor permit modifications can revise monitoring, although they must not be "significant changes," whatever that means. 40 CFR § 40 CFR 70.7(e)(2).

Concerns about EPA's predilection for requiring permit modifications support negotiating the Title V permit to allow for broadly worded monitoring and applicable requirement descriptions. EPA has stated:

"In the Agency's view, the best way to assure compliance with each applicable standard, regulation, or requirement of the Act, as section 502(b)(5)(A) requires, is to require that the permit be revised each time a change triggers an applicable requirement, except where the permit already complies with the applicable requirement by containing the terms implementing the requirement or terms providing for advance approval of the change without a permit revision." Draft Preamble Identified in 62 Fed. Reg. 30289 (June 3, 1997).

For this reason, it is important in negotiating the Title V permit monitoring provisions to craft them in such a way that they could include future changes. This could mean writing the conditions broadly, so as not to specify particular emission units or including monitoring measures that are easily expandible to new emission units. Sources should also revisit future construction plans prior to issuance of the final Title V permit to ensure that advance approval is contained in the permit for any changes, thus minimizing the likelihood of a significant permit revision.

It is important to note that the federal rules only limit operation, and not construction. Under most state's programs, so long as the facility has the necessary preconstruction authorization pursuant to the state's new source review program, construction can proceed regardless of the status of the Title V permit modification.

II. Confidential Business Information

One of the first questions from a source as it develops monitoring and recordkeeping requirements for its Title V permit is whether there is any meaningful protection for trade secret information that must be submitted. Likewise, at the application stage, many sources have asked whether they can protect emission factors as trade secrets. These question have led to different answers in different jurisdictions, but EPA's general response suggests that the protection of confidential information may need to rely more on strategy than federal protection.

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Many manufacturing processes are highly proprietary. In addition, many companies expend substantial amounts of money developing information about the emissions from their processes. The Title V applications must contain process descriptions and information about emissions. Compliance certifications also may contain information a source would prefer not to share widely. Under most state's laws, the applications and compliance certifications are public documents that can be accessed by competitors or other members of the public. As a result, many sources must strategically prepare their Title V applications and strategically negotiate their permits to protect the maximum amount of information.

Oregon was perhaps one of the first states to formally address the confidential business information problem in the context of Title V. Several of the first Title V applications submitted to the state requested confidential business information status for emission factors, process information, production information and plant capacities. Over industry objection, the Oregon Department of Justice determined that all of this information was "emissions data," as that term is defined in 40 CFR 2.301(a)(2)(i). Ultimately, the letter concluded that "any information related to the frequency, quantity, or composition of an air emission or information concerning a source's compliance with its permit is `emissions data.'" Letter from Oregon Department of Justice to Mr. Ben Allen (April 24, 1995). Based upon this conclusion, the applicant's requests for confidential status were denied.

The need to protect important business information cannot be denied. Air permit applications and the required compliance reports are...