The Environmental Protection Agency's "major emitting facility" definition and its effect on ethanol facilities: a review of the amended rule and its potential pitfalls and successes in South Dakota.

• Author: Wanderscheid, Karen

Fuel ethanol is seen by many as an environmentally-friendly solution to decreasing America's dependence on foreign oil. The Environmental Protection Agency (EPA) is tasked with implementing federal permitting requirements for the construction of fuel ethanol facilities under the Clean Air Act. (1) Prior to 2007, the EPA treated fuel ethanol facilities unequally in comparison to ethanol facilities for human consumption, despite the fact that production processes at these facilities are substantially similar. In 2007, the EPA promulgated a new rule that placed both fuel ethanol facilities and ethanol facilities for human consumption an equal fruiting for permitting purposes, sing the allotted emission threshold for fuel ethanol facilities to that of ethanol facilities for human consumption. Although the permitting requirements have been implemented on a federal level, it is up to the states to adopt these regulations in their own permitting schemes. Due to the growing role fuel ethanol plays in South Dakota's economic development, South Dakota's adoption of the EPA's most recent changes is of vital importance for increased production of fuel ethanol and decreased American dependence on foreign oil.

1. INTRODUCTION

   In September of 2005, a letter was written to the Environmental Protection Agency (EPA) informing it of what was called the "differential treatment" of ethanol facilities under the Clean Air Act.' At the time, under the Clean Air Act ethanol facilities used for the production of fuel ethanol were considered chemical process plants, whereas ethanol facilities that generate products for human consumption were not. (2) The only difference between the facilities' production processes is that in fuel ethanol facilities, a small amount of gasoline is added to the ethanol at the end of the process rendering it unfit for human consumption. (3) Upon review of the treatment of ethanol facilities under the Clean Air Act, in March of 2006, the EPA requested public comment on a new rule that would remove fuel ethanol facilities from the "major emitting facility" category, thereby altering their emission requirements under the Clean Air Act's Title V, Prevention of Significant Deterioration (PSD), and New Source Review (NSR) programs to that of ethanol facilities for human consumption. (4)

   The EPA reviewed comments submitted by interested groups such as the Office of Air Quality and Planning Standards, and with the support of various members of Congress (5) enacted a new rule that removed fuel ethanol facilities from the "major emitting facility" source category under the Clean Air Act. (6) This rule change gave fuel ethanol facilities the same emission requirements as ethanol facilities used for human consumption. (7) The EPA's rule change in ethanol classifications was a victory for corn growing, ethanol producing states. (8) As the manager of Millennium Ethanol in Marion, South Dakota, explained, "[t]he rule change will offer developing ethanol plants the ability to engage in a streamlined permitting process and expedited construction." (9) One of the motivations for this change in the rule is the goal for this country to have decreased dependence on foreign oil. (10) A second motivation for the EPA is its goal to place fuel ethanol facilities on equal footing with ethanol facilities used for human consumption, which stems from the facilities' production processes being substantially similar. (11)

   Because the rule change has the potential to allow producers to expand existing ethanol facilities, as well as construct new facilities with greater output capacities, some environmentalists are concerned that ethanol producers will abuse the increased emission thresholds by using less environmentally-friendly methods to produce ethanol. (12) Spurred by these concerns for environmental responsibility, the Natural Resource Defense Council (NRDC) recently filed suit against the EPA, claiming that the rule change was based on "faulty analyses" and that the public was not given opportunity to comment on the finalized rule. (13) While one could have predicted the environmentalist's concerns, they overlook the positive effects that increased ethanol production could have on the environment as a whole and on this country's dependence on foreign oil. (14)

   This comment will discuss the background of the Clean Air Act and the various regulatory programs encompassed in the Act, (15) as well as the evolution of the ethanol industry and the regulatory requirements that have been enacted for constructing new ethanol facilities. (16) In addition, this comment will examine the policy issues behind the EPA's rule change and explore arguments made by opposing sides on the effect of the rule change. (17) Finally, this comment will examine the impact the rule change has on the ethanol industry, and the implications this rule has for the future of ethanol facilities in the United States." (18)

2. BACKGROUND

   1. HISTORY OF CLEAN AIR ACT

      Clean air became a concern in the United States during the late 1800s, when larger cities began to experience smoke pollution from the burning of coal and the increased use of automobiles. (19) Clean air legislation was first enacted in the U.S. in 1881 by Chicago and Cincinnati, whose clean air policies served as a remedy to increased smog in their cities. (20) Gradually, additional cities and towns enacted their own clean air legislation. (21) By the late 1940s, two cities, Los Angeles and Commit, Pennsylvania, were experiencing serious smog problems. (22) In reaction to the growing concern over smog in the cities, the federal government resolved to deal with the problem on a national level by enacting the Air Pollution Control Act (APCA) in 1955. (23) The purpose of the APCA was to raise awareness of the growing pollution issue and to "provide Federal technical services and financial aid to State and local government air pollution control agencies and other public or private agencies and institutions in the formulation and execution of their air pollution abatement research programs." (24) The APCA also announced the need to "support and aid technical research to devise and develop methods of preventing and abating such pollution[.]" (25) Its 1963, Congress passed the Clean Air Act due to its finding that the nation's cities were rapidly expanding, which increased the amount of motor vehicle traffic and industrial development, thus increasing air pollution its cities and affecting the public's health and welfare. (26) The Clean Air Act of 1963 was the first action taken on the national level to set emission standards for stationary sources such as power plants and steel mills. (27) There were subsequent amendments to the Clean Air Act in 1965, 1966, and 1967. (28) The 1967 Air Quality Act provided for planning grants to air pollution control agencies and allowed for the establishment of air quality standards for industries. (29) In 1970, President Nixon announced the creation of an agency that would be able to respond to the country's growing concerns of air, water, and land air pollution. (30) As President Nixon explained, "[t]he Government's environmentally-related activities have grown up piecemeal over the years. The time has come to organize them rationally and systematically, (31) President Nixon's solution to the unorganized treatment of environmental problems was the creation of the Environmental Protection Agency (EPA). (32) The purpose of the EPA was to create one agency that could research and monitor environmental conditions and set standards based on their research, and research from other agencies, that would protect the environment and advance the interests of the states and its citizens. (33) The EPA was also tasked with enforcing environmental restrictions that were established to provide support to other agencies in an effort to "arrest[] pollution of the environment." (34)

      Despite the creation of the EPA, whose main focus was the protection of the environment, United States citizens remained concerned about pollution; in response, members of Congress amended the Clean Air Act in December of 1970. (35) This amendment was significant in that it contained a provision for citizen suits (36) and established the National Ambient Air Quality Standards (NAAQS) which required the EPA to set standards for pollutants that are detrimental to the environment and to human health. (37) As President Nixon remarked upon signing the 1970 Clean Air Act amendments into law, "I think that 1970 will be known as the year of the beginning, in which we really began to move on the problems of clean air and clean water and open spaces for the future generations of America." (38)

      1. The New Source Review Program

         In the years following the enactment of the 1970 amendments to the Clean Air Act, many states failed to meet the mandated targets for pollutants set forth by the EPA. (39) In response to the growing number of violations by U.S. factories, the New Source Review (NSR) program was expanded in the 1977 amendments to the Clean Air Act, requiring emission standards for the construction of new facilities or significant modifications to existing facilities. (40) The NSR program is a pre-construction review and permitting program that ensures that air quality is not degraded from the addition or modification of factories. (41) In areas where NAAQS are not being met (known as "nonattainment" areas), NSR assures that new emissions will not slow progress toward cleaner air in the community. (42) In areas where NAAQS are met (areas with clean air, known as "attainment" areas), NSR assures that new emissions from a factory will not significantly worsen air quality. (43)

         There are three areas of NSR permitting requirements, which are based on whether or not the NAAQS have been met. (44) The permitting requirements fall into one of three categories: Prevention of Significant Deterioration (PSD), nonattainment...