Are insignificant emissions significant? Western States Petroleum Ass'n v. EPA: the air operating permit program of the Clean Air Act.

• Author: Westersund, Todd B.
• Position: 1996 Ninth Circuit Environmental Review

1. Introduction

   One of the primary goals of the Clean Air Act (CAA)(1) is to "encourage or otherwise promote reasonable Federal, State, and local governmental actions . . . for pollution prevention."(2) In designing its air operating permit program pursuant to the CAA, the State of Washington acted reasonably when it decided not to require monitoring, reporting, or recordkeeping of air emissions deemed to be insignificant Washington's decision was in harmony with the regulations, policy guidelines, and prior and subsequent approvals of the Environmental Protection Agency (EPA). When the EPA failed to approve Washington's permit program, the United States Court of Appeals for the Ninth Circuit held that EPA abused its discretion in Western States Petroleum Ass'n v. EPA.(3)

   In Title V of the Clean Air Act Amendments of 1990, Congress created a comprehensive air operating permit program for all major stationary sources of air pollution.(4) Title V requires EPA to promulgate regulations implementing the permit program.(5) These regulations, passed in July 1992, establish the minimum requirements of a state's air operating permit program, addressing permits, monitoring and reporting requirements, and fees to cover the cost of the programs.(6) States failing to implement the required permit program by the statutory deadlines are subject to mandatory sanctions, including the loss of federal highway funds.(7)

   While Title V does not add any substantive new requirements, it requires all new and existing major sources to obtain permits from state air pollution control agencies.(8) EPA regulations require that the permit application for a facility list all emission units, except for emission units deemed insignificant as defined by the state permitting authority.(9) The current EPA guidelines for insignificant emission units (IEUs)(10) make it clear that a state has broad discretion in determining permit application and permit requirements for small equipment and activities.(11) The rationale for this EPA policy is the agency's belief that IEUs typically have inconsequential environmental impacts.(12)

   An activity may be categorically defined as an IEU based on the activity's size or production rate.(13) At a facility, these "categorically exempt" activities might include street sweeping, landscaping, or even air escaping from an office building vent(14) Activities with emissions below certain yearly tonnage thresholds may also be defined as IEUs.(15) In an individual facility, there may be thousands of IEUs which account for only a small percentage (less than 5%) of total emissions.(16) Guidance from EPA and permit program approvals in other EPA regions make it clear that a state can exempt IEUs from Title V monitoring, reporting, and recordkeeping requirements.

   Against this regulatory background, the State of Washington created its air operating permit program through notice and comment rulemaking.(17) Washington agreed with public comments that IEU monitoring, reporting, and recordkeeping requirements would result in excessive paperwork and would likely decrease the ability of permitting agencies to effectively enforce Title V permits.(18) In its final rules submitted to EPA for approval, Washington therefore exempted IEUs from Title V monitoring, reporting, and recordkeeping requirements, but not from any substantive CAA requirements.(19) Under Washington's program, an IEU still must comply with generally applicable requirements(20) such as the state opacity rules.(21) Washington continues to rely on periodic agency inspections, public complaints, and industrial audits to identify any future IEU compliance problems.(22)

   EPA then granted interim approval of Washington's program, conditioning final approval upon Washington's amendment of its IEU rules to disqualify any emission unit subject to any applicable requirement, general or specific.(23) This condition would have effectively prevented any emission unit subject to any applicable requirement (e.g., the state opacity rule which applies generally to all emission units) from being designated an IEU,(24) in apparent contradiction with EPA's own regulations and guidance documentation.(25) In Western States Petroleum Ass'n v. EPA,(26) air pollutant emitters and trade associations in Washington petitioned for judicial review of EPA's conditional approval of Washington's permit program.(27) Washington moved to intervene in defense of its program.(28)

   The Ninth Circuit granted EPA's motion to vacate and remand its decision on Washington's IEU rules but retained jurisdiction in the matter.(29) On remand, EPA backed down from its position which would prevent any emission unit subject to any applicable requirement from being an IEU.(30) However, EPA still disapproved of Washington's exemption of IEUs from permit monitoring, reporting, and recordkeeping requirements.(31) Petitioners then renewed their objections to EPA's decision. The Ninth Circuit reviewed EPA's decision under the CAA standard of judicial review,(32) "arbitrary, capricious, abuse of discretion," the same standard of judicial review set forth in the Administrative Procedure Act (APA).(33)

   In Western States the Ninth Circuit held that EPA abused its discretion because its decision on Washington's permit program conflicted significantly with numerous EPA decisions in other states and localities.(34) EPA had approved, both before and after the interim approval of Washington's program, eight air operating permit programs in other EPA regions which omitted IEUs from permit requirements.(35) Instead of remanding the case to the EPA for reconsideration, the court ordered EPA to grant full approval to Washington's Title V program.(36) This unusual step, showing a lack of deference to agency expertise may have been taken because of the mandatory sanctions Washington would have been subject to if it did not have an EPA-approved program by the end of 1996.(37)

   This chapter explores the purposes of the Title V air operating permit program, whether those purposes are in harmony with EPA's IEU regulations and policy guidelines, and how Washington has followed these regulations and guidelines to implement an effective permit program, balancing the concerns of the state, industry, EPA, and the general public. The chapter contends that when an administrative agency seriously considers comments from the general public and industry and develops regulations in response to those comments and in the public interest, as Washington did in developing its IEU program, the result is more effective regulation.

2. CLEAN AIR ACT AMENDMENTS OF 1990

   1. A Need for Legislation

      The declared purpose of the Clean Air Act is "to protect and enhance the quality of the Nation's air resources so as to promote the public health and welfare and the productive capacity of its population.(38) The CAA, originally enacted in 1955(39) and twice amended,(40) was the first of the modern-era federal regulatory environmental statutes.(41) Building upon the expertise states had acquired in regulating air pollution in the past, the 1970 amendments created a unique state federal partnership in which the Environmental Protection Agency (EPA) was given responsibility for establishing national ambient air quality standards (NAAQSs), and in which the states were responsible for enforcing and attaining NAAQSs by establishing state implementation plans (SIPs).(42)

      In 1977, with the deadlines for attaining the NAAQSs fast approaching, Congress once again amended the CAA, requiring more detailed SIPs and establishing new deadlines.(43) In the early 1980s, the Reagan Administration, encouraged by industry, launched an attack to cut back the CAA, including an attempt to eliminate the health-based NAAQSs.(44) Legislation was introduced to weaken the CAA,(45) but the industry coalition supporting its passage fragmented and the legislation never made it out of the House Energy and Commerce Committee.(46) This failure ended the assault on the CAA(47) and commenced years of debate that culminated in President Bush signing the 1990 Amendments into law on November 15, 1990.(48)

   2. The 1990 Amendments

      As the 1980s came to a close, a number of events occurred which influenced the passage of the 1990 CAA Amendments. The accidental release of methyl isocyanate from a Union Carbide chemical plant in Bhopal, India, on December 3, 1984, focused public attention on the dangers of toxic air pollutants.(49) The first National Toxic Release Inventory (NTRI), released in March 1989 as part of the Superfund Amendments and Reauthorization Act of 1986,(50) also attracted a great deal of attention. The NTRI reported that 2.7 billion pounds of toxic air pollutants were released into the air in 1987.(51) High levels of ozone pollution during the summer of 1988, the Exxon Valdez oil spill, and the twentieth anniversary of Earth Day also brought environmental issues to the forefront of policy debates and public attention.(52)

      Changes in congressional leadership and President Bush's arrival in the White House were also critical events leading to the 1990 Amendments. In 1989, Sen. George Mitchell (D-Me.), a major proponent of acid rain regulations, became Senate Majority Leader, replacing Sen. Robert Byrd (D-W. Va), champion of his state's high sulfur coal miners and Midwestern utility companies.(53) President Bush announced in June 1989 that he would introduce new CAA legislation.(54) The bill introduced by the Bush Administration(55) was a complete reversal of the Reagan Administration's position.(56) The heart of the President's bill was the provision pertaining to acid rain control.(57) The acid rain provision established a nationwide cap on sulfur dioxide emissions and implemented a market-based emissions trading system.(58) Acid rain control was politically attractive because the public viewed acid rain as a serious environmental problem. Furthermore, the emissions trading scheme was...