Washington Report - November 1996




            EPA Proposes Revisions To The Ozone and
                 Particulate Matter Standards
                               
On November 27, 1996, the EPA
Administrator signed notices proposing
to revise the National Ambient Air Quality
Standards (NAAQSs) for both ozone and
particulate matter (PM).  61 Fed. Reg. 65,638
and 65,716 (Dec. 13, 1996).  Those revisions
would significantly increase the stringency of
both standards and, in the case of the PM
standard, would result in a new type of
particulate matter being regulated, i.e., particles
with a diameter less than or equal to 2.5
microns.  The proposals are expected to lead to
final revised standards which would have far-reaching consequences for numerous stationary
sources throughout the country.  The more
stringent standards being proposed would be
expected to increase substantially the number of
nonattainment areas in the country for one or
both pollutants.  As a result, states would likely
find it necessary to impose increasingly
stringent levels of control on sources.

     In addition, EPA simultaneously
published three other related notices.  One
notice sets forth the proposed Interim
Implementation Policy, which is to provide
guidance concerning how new or revised 
ozone or PM standards would be implemented
and existing standards would be phased out.  61
Fed. Reg. 65,752 (Dec. 13, 1996). Another
notice is an advance notice of proposed
rulemaking (ANPR) regarding EPA's
implementation strategy for new or revised
standards as well as a regional haze program.  61
Fed. Reg. 65,764.  The remaining notice
proposes ambient air quality monitoring
requirements corresponding to the proposed
revisions in the PM standard.  61 Fed. Reg.
65,780.

     Pursuant to a district court order in a
citizen suit, EPA is scheduled to take final
action on the PM proposal by June 28, 1997. 
The Agency has indicated that it intends to take
final action on the ozone proposal at the same
time.  A 60-day public comment period on the
proposals commences upon publication of the
notices in the Federal Register.

                  Proposed Revisions of Ozone
                           Standards

New Eight-Hour Primary Standard Would
Replace One-Hour Standard.

     Under the proposal, EPA would replace
the current primary (health-based) standard for
ozone   a 1-hour standard of .12 ppm   with an
8-hour standard of .08 ppm.  EPA also requests
comments on other alternatives: an 8-hour
standard of .07 ppm; an 8-hour standard of .09
ppm; or retention of the existing one-hour
standard of .12 ppm.  


     EPA proposes that the .08 ppm standard
be a "concentration-based" standard   a change
from the existing form of the ozone NAAQS. 
The proposal explains that, under the particular
approach selected, an area would be in
attainment when the third highest daily
maximum 8-hour concentration for a calendar
year, when averaged over 3 years, is less than .08
ppm.  This approach contrasts with the existing
approach, which is characterized as the "1-expected-exceedance" approach.  By proposing
to use a somewhat less rigid approach, EPA
explains that it hopes to reduce the likelihood of
areas "flip-flopping" in and out of attainment
because of natural variability in meteorological
conditions.  EPA also indicates that it is
considering a monitoring approach under which
readings from multiple monitors would be
averaged to arrive at a representative reading
rather than using the highest reading from any
single monitor.

The Secondary Standard Would Either Be
Identical to the Primary Standard or Be Based
on a New "Seasonal" Approach.

     The proposal states that EPA believes
that the current secondary (welfare-based) ozone
standard, which is identical to the primary
standard, does not adequately protect
vegetation.  Accordingly, EPA proposes either
to set a revised secondary standard equal to the
proposed .08 ppm primary standard or to
establish a new "seasonal" secondary standard. 
This "seasonal" standard would be based on
summing up certain hourly ozone
concentrations during the 3-month period when
ozone levels are highest and determining
whether a specified total amount (expressed in
hours-ppm) was exceeded.

     Proposed Revisions of PM
                           Standards

New Primary Standards for PM2.5 Would Be
In Addition To Current PM10 Standards.

     The proposal would regulate a new type
of particulate matter -- particles whose diameter
is less than or equal to 2.5 microns -- in addition
to continuing to regulate particles whose
diameter is less than or equal to 10 microns as
under the current PM10 standards.  According
to EPA, studies show that the finer particles
correlate more closely to adverse health effects. 
EPA proposes to establish two new PM2.5
primary standards:

     an annual standard of 15 micrograms
     per cubic meter ( g/m3) and

     a 24-hour standard of 50 g/m3.  

     EPA additionally seeks comments on
two alternative combinations of  primary
PM2.5 standards:

     a "limited" annual standard of 20 g/m3
     with a 24-hour standard of 65 g/m3 or

     a "highly precautionary" annual
     standard of 12 g/m3 with a 24-hour
     standard set in the range of 20 g/m3 to
     50 g/m3 

     In each instance, EPA proposes to
express the standard in a form different from
the current "1-expected-exceedance" form in
which the current PM10 standards are
expressed.  The annual PM2.5 standard would
be based on the 3-year average of the annual
arithmetic mean, when spatially averaged across
designated air quality monitors in an area. 
According to EPA, this new "spatially averaged"
approach is designed to better address area-wide
population exposures.  The 24-hour standard
would be based on the 98th percentile of 24-hour readings in a year, averaged over 3 years,
when measured on the single population-oriented monitor with the highest recorded
values in an area.

     Under the proposal, the existing PM10
standards would remain in effect and would not
be replaced by the PM2.5 standards.  EPA
proposes to retain without change the existing
annual PM10 standard, which is 50  g/m3. 
Although the current 24-hour PM10 standard of
150  g/m3 would be retained, EPA proposes to
replace the current "1-expected-exceedance"
approach with the 98th percentile approach
described above.  In the alternative, EPA
proposes to revoke the 24-hour PM10 standard
because it may not add much to the other
standards being proposed.

               Interim Implementation Policy for
                         Revised NAAQSs

     Along with the proposals to revise the
ozone and PM standards, EPA simultaneously
published a notice setting forth its proposed
Interim Implementation Policy (IIP). The IIP is
intended to provide guidance to the states
regarding the steps they should follow until
revised standards are promulgated and become
fully effective.  According to the notice, the IIP
would itself become effective when revised
standards are promulgated and would remain in
effect until EPA approves SIPs that implement
any new or revised standards.  Although EPA is
requesting public comments on the IIP, it does
not intend that the IIP will constitute a binding
set of requirements.  Instead, EPA explains that
binding requirements for states will be
established through subsequent rulemaking
proceedings, e.g., SIP approvals or the
promulgation of specific implementation
strategies.

     The IIP addresses a wide range of
implementation issues.  For example, it provides
that existing ozone and PM attainment/
nonattainment designations should remain in
effect until EPA establishes new designations
based on revised standards.  EPA also explains
that the IIP is strongly based on the principle
that "no backsliding" should occur.
Accordingly, states are to continue to move
forward to meet existing obligations for ozone
and PM nonattainment areas until new
obligations are imposed.  EPA specifically
proposes to retain the existing one-hour ozone
standard for each area until it determines that
the area has a SIP that provides for achievement
of the new ozone standard.  For "serious,"
"severe," and "extreme" ozone nonattainment
areas, the IIP would, under certain conditions,
allow credit for emissions reductions outside of
the nonattainment areas to satisfy post-1996
rate-of-progress requirements.

                   Advance Notice of Proposed
                 Rulemaking for Implementation
                            Strategy
    
     EPA also published an ANPR regarding
key legal, policy, and scientific issues it plans to
address in developing its strategy to implement
revised ozone or PM standards.  That notice
further addresses EPA's intention to develop a
new regional haze program and specifically
discusses the "linkages" between ozone, PM,
and regional haze.

     According to the notice, EPA plans to
propose the first phase of the strategy in June
1997 and to finalize it in June 1998.  The second
phase of the strategy would be proposed in June
1998 and finalized in June 1999.  

Network Conference
Focuses on Permit Terms to
Address Implications of
"Credible Evidence" Rule

The Fall 1996 Conference of the Clean Air
Act Information Network, which was held
in Washington on November 18 and 19, focused
primarily on issues concerning the Title V
permitting process and EPA's forthcoming
"credible evidence" rule.  Both the plenary
sessions and the workshops emphasized lessons
already learned in the permitting process and
the legal and practical considerations which
should guide sources in navigating the Title V
permitting process.  Among other things, the
discussions addressed the legal and technical
review of Title V permit applications and the
process of negotiating final permits. Experts
from EPA, the states, and industry provided
their insights on all these issues, took part in
question-and-answer sessions, and participated
in workshops focusing on Title V permit
matters.

     The key topic addressed in the
Conference was how, during the Title V
permitting process, sources should address the
implications of the credible evidence rule for
potential enforcement liability.  Because the rule
would authorize state and federal enforcement
agencies, as well as citizens, to rely on any
"credible evidence" under the applicable rules of
evidence to prove Clean Air Act violations, one
effect of the rule would be to change the
existing method for determining compliance
contained in many federal and state standards.  

     The materials provided to Conference
attendees set out specific permit terms which
applicants should seek to have included in final
Title V permits to address the impacts of the
rule.  In each case, the term that was
recommended has already been included in a
draft or final Title V permit.  The terms
included the following: 

     Exclusive Method for Determining
     Compliance.  Expressly provide in the
     permit that the monitoring methods
     specified are the exclusive methods by
     which compliance with numerical
     limits can be determined.

     Use of CEMS Data.  To take into
     account normal emissions variability
     when continuous emissions monitoring
     or continuous opacity monitoring data
     are available, provide that the source is
     deemed to be in compliance if no more
     than 5% of the continuous monitoring
     measurements for a reporting period
     exceed the relevant numerical emission
     limit.

     Establishment of New Averaging
     Period.  To address emissions
     variability, provide that compliance is
     to be determined over a 30-day
     averaging period.

     Data Availability. Provide that
     monitoring and recordkeeping data for
     at least 90% of either the averaging
     periods or the total required data is
     sufficient.  Also, provide that the source
     is not required to monitor during any
     period that the monitoring process does
     not operate, nor during periods of
     monitoring system breakdown,
     malfunction, repairs, calibration checks,
     and acts of God deemed by the
     permitting authority to be unavoidable.

     Emissions Unavoidably in Excess of
     Limits.  Provide that exceedances of
     numerical limits due to unavoidable
     circumstances do not constitute a
     violation of the permit's terms. 
     Alternatively, provide exclusions for
     startups, shutdowns, and malfunctions. 
     For technology-based limits (which
     almost all limits are), the permit must as
     a matter of law included exclusions for
     unavoidable excess emissions.

     An overriding concern is that the need
exists to clarify a source's permit obligations and
to indicate precisely how compliance with each
applicable requirement is to be determined. 
Many workshop participants also discussed the
possible impacts of the credible evidence rule on
such matters as permit shield provisions and
compliance certification requirements.  One
outcome that emerged from these discussions is
that the Clean Air Act Information Network
will begin to function as a "clearinghouse" for
permit terms addressing the implications of the
credible evidence rule. 

     Other Title V topics considered by
Conference participants included: (1) the need
to review and amend already-filed permit
applications to take account of subsequent
developments and to reflect experience gained in
preparing other applications; (2) opportunities
to streamline applicable requirements; (3)
opportunities to purge unnecessary NSR permit
or other terms during the Title V process; (4)
the advisability of developing draft permit
language for submission to the permitting
authority; and (5) strategies for negotiating with
the permitting authority regarding final permit
terms.   



Promulgation of Credible
Evidence Rule To Be
Delayed

Despite previous indications that EPA's
highly controversial "credible evidence"
rule would be published in the Federal Register
by December 13, 1996, EPA has decided to seek
a 60-day extension of that court-imposed
deadline. Because the December 13 deadline is
contained in a consent decree entered in a
citizen suit against EPA, government attorneys
will need to request that the federal district
court modify the consent decree in order to
extend the deadline. 
 
     As discussed in the September
Washington Report (p. WR-82), that rule would
authorize state and federal enforcement
agencies, as well as citizens, to rely on any
"credible evidence" under the applicable rules of
evidence to prove Clean Air Act violations. 
The effect of the rule would be to change the
method for determining compliance and
thereby increase the stringency of many federal
and state standards.

     EPA did not send the final rule to the
Office of Management and Budget (OMB) for
its review until November 27.  OMB normally
expects to have 90 days to review final rules. 
With the extension, OMB would have most of
the time normally afforded for review of such
final rules.  EPA Announces Plans To
Issue SIP Call Rather Than
Await OTAG's
Recommendations

On November 8, 1996, EPA announced at
a meeting of the Ozone Transport
Assessment Group (OTAG) that it intends to
issue a SIP call by the summer of 1997 requiring
numerous states to take additional measures to
achieve attainment of the National Ambient Air
Quality Standard (NAAQS) for ozone.  The
announcement took most industry
representatives and state regulators by surprise
since EPA had not been expected to require
states to take significant additional actions
regarding ozone nonattainment until after
OTAG had made its recommendations to EPA
early next year.

     As discussed in more detail in the
September 1996 Washington Report (p. WR-84),
OTAG was created in response to EPA's
memorandum of March 2, 1995, which called
upon the states "to participate in a consultative
process to address regional transport [of ozone
and ozone precursors]."  In that memorandum,
EPA directed states to enter into a process,
scheduled to be concluded by the end of 1996,
to assess regional control strategies and refine
control approaches for local sources.  Currently,
OTAG is undertaking additional modeling
concerning long range transport of ozone and
ozone precursors, and those results are expected
to be available by February 1997.  OTAG had
indicated that it would be submitting its
recommendations to EPA approximately two
months after that.

     EPA's announcement regarding the SIP
call was set forth in a letter dated November 8,
1996 from Mary Nichols, Assistant
Administrator for Air and Radiation, to Mary
Gade, Chair of OTAG. Ms. Nichols noted that,
under the policy set forth on March 2, 1995,
OTAG's recommendations were to have been
made by the end of 1996. She further stated that
"we are very concerned about the delay [in
OTAG completing its process] because of the
continuing risk to public health posed by the
remaining ozone nonattainment problem." Her
letter set forth the following intended schedule
for EPA's completion of the SIP call:

     In December 1996, EPA will publish an
     Advance Notice of Proposed
     Rulemaking (ANPR) on the SIP call.

     In March 1997, EPA will publish a
     proposed rule to initiate the SIP call. 
     That proposal will set forth "an overall
     amount of NOx and/or VOC emission
     reductions that each State would need
     to achieve."  It will also propose to
     require numerous states to submit SIP
     revisions committing to adopt rules to
     achieve the necessary emission
     reductions.

     In the summer of 1997, EPA will
     issue a final SIP call notice.

     The November 8 letter states that
NOx emissions must be substantially reduced
in broad areas, including areas that are
presently designated as attainment areas for
ozone, in order to meet the ozone standard. 
Accordingly, the letter provides that "EPA is
prepared to establish a NOx cap-and-trade
program for the OTAG regions through
Federal Implementation Plans (FIPs) if some
States are unable or unwilling to act in a timely
manner."  The letter also points out that EPA is
currently in the process of revising the NAAQS
for ozone and that the expected revisions to that
standard will make it even more critical that
"regional reductions in ozone and ozone
precursors" be achieved.

     EPA's announced intention to issue a
SIP call, particularly when coupled with the
likely tightening of the ozone standard, creates
substantial uncertainty for states and regulated
parties with respect to the level of control that
will be required.  It is unclear at this point
exactly how or when OTAG will conclude the
remainder of its ongoing processes.  
     
EPA Is Establishing Future
Enforcement Priorities

Draft documents recently prepared by
EPA's Office of Enforcement and
Compliance Assurance (OECA) provide
insights into EPA's likely enforcement priorities
under the Clean Air Act for the next two or
three years.  Those documents reveal, among
other things, that enforcement of Title V
requirements will likely be the highest priority
and that certain industry sectors -- particularly
the petroleum refining industry -- will likely be
targeted for special attention.  Other EPA
documents indicate that the Agency will
immediately initiate a new program to
determine the extent to which state clean air
enforcement programs are deficient.

     We summarize below the principal
points in the draft documents concerning these
enforcement priorities and initiatives.
                                
     Clean Air Act Program Priorities

     OECA has prepared various draft
memoranda setting forth EPA's expected
enforcement priorities for fiscal years 1998-1999. 
OECA intends to finalize a memorandum
which will serve as the basis for each EPA
Region to enter into a Memorandum of
Agreement (MOA) with OECA regarding the
Agency's enforcement priorities.

     The draft memoranda indicate that
EPA's highest Clean Air Act enforcement
priority will be pursuing violations of Title V
operating permit requirements, specifically
including applicability determinations and
compliance certifications.  One draft
memorandum states as follows:

     Title V operating permits need to
     include all applicable requirements for
     a regulated source.  EPA needs to
     review selected permits to ensure the
     permits are complete and enforceable;
     this will include reviewing CAM plans
     and applicability determinations for
     MACT and NSPS.  EPA will also
     need to review sources that have
     compliance schedules included in their
     permit to ensure that the permitting
     authority took appropriate
     enforcement [action].  Sources will
     also be required to submit annual
     compliance certifications to EPA
     and the permitting authority.  EPA
          must review these certifications and 
     ensure that permitting authorities take
     the appropriate enforcement actions
     when violations are discovered.

     In addition to the Title V matters
mentioned above, the memoranda indicate that
EPA will also focus on sources that have
obtained synthetic minor status so that EPA can
"ensure that synthetic minor permits were
obtained correctly and that the source follows
the terms and conditions to limit its emissions." 
In conjunction with the Title V enforcement
efforts, EPA will likely increase its oversight
over PSD permits and new source review (NSR)
nonattainment permits.  The memoranda
indicate that other leading areas for increased
EPA enforcement attention are MACT
standards and requirements governing ozone-depleting substances under Title VI of the Act.

     Industry Sector Priorities

     EPA's draft memoranda target particular
industry sectors for special enforcement
attention under all environmental statutes in
fiscal years 1998-1999.  Targeted industry sectors
will likely be subject to more compliance
inspections and enforcement actions.  In
addition, EPA may undertake special
compliance assurance projects for those sectors. 
Those projects will typically involve EPA
identifying what it believes are specific
compliance problems within the sector and
holding roundtable discussions with states and
industry sector members to arrive at possible
solutions to those problems. The following
three industry sectors are given the highest
priority and are referred to as "National
Priority Sectors":

     petroleum refining
     dry cleaning
     primary nonferrous metals


     Other industry sectors are classified as
"Significant Sectors."  That group includes,
among others, the following sectors:

     pulp mills
     industrial organic chemicals
     mining
     iron and basic steel products
     plastic materials and synthetics

In addition, the memorandum indicates that
other sectors might be added to the "Significant
Sector" list.  Those possible additions include:

     chemical preparation
     inorganic chemical industry

     State Enforcement Program
                          Initiatives

     EPA has begun a review of the adequacy of
state air enforcement programs.  In a recently
prepared draft report, EPA's Inspector General
(IG) concluded that the Pennsylvania
Department of Environmental Protection
(PADEP) has been under-reporting the number
of "significant violators" of Clean Air Act
requirements within the state. Specifically,
although PADEP had listed 6 significant
violators, an IG audit concluded that there were
at least 64 additional significant violators that
had been omitted. In response to the report,
EPA Region III is taking steps to bring
additional enforcement actions against certain
sources identified as "significant violators" in
Pennsylvania and to evaluate the overall
effectiveness of PADEP's clean air program.

     The report on Pennsylvania's program has
led OECA to undertake an initiative to evaluate
the enforcement programs in other states as
well.  An OECA memorandum provides that
the EPA Regions will immediately contact each
state to discuss OECA's analysis of the
Pennsylvania program and that OECA and the
Regions will review existing data for each state
and identify those states that they believe have
problems in reporting "significant violators." 
Based on these measures, OECA will request
that the IG investigate those state enforcement
programs where it concludes that additional
investigations appear to be warranted.  The
Agency also may take steps to ensure that states
are accurately reporting similar information
under other environmental statutes.  

EPA Revises RCRA
Regulations Governing Air
Emissions From Tanks,
Containers, and Surface
Impoundments

On November 25, 1996, EPA published a
final rule which revised its "Subpart CC"
regulations under the Resource Conservation
and Recovery Act (RCRA) and addressed the
relationship between those regulations and
Clean Air Act requirements.  61 Fed. Reg.
59,932.  The Subpart CC regulations govern
organic air emissions from certain tanks,
containers, and surface impoundments used in
the management of "hazardous wastes" as
defined under RCRA.  The regulations
implement section 3004(n) of RCRA, which
directs EPA to promulgate "regulations for the
monitoring and control of air emissions at
hazardous waste treatment, storage, and disposal
facilities . . . ."

     The final rule expressly addressed the
potential overlaps between the Subpart CC
regulations and regulations promulgated under
section 112 of the Clean Air Act, particularly
the Hazardous Organic NESHAP ("the
HON").  In the preamble, EPA points out that
section 1006(b) of RCRA provides that, in
implementing the statute, EPA is to "avoid
duplication, to the maximum extent practicable,
with the appropriate provisions of the Clean
Air Act . . ." and that section 112(n)(7) of the
Clean Air Act provides that EPA is to ensure
"to the maximum extent practicable" that
RCRA requirements and section 112
requirements are "consistent."  EPA also stated
that the potential for duplication between
RCRA regulations and section 112 MACT
standards was now greater than initially thought
in 1994 when the original Subpart CC
regulations were promulgated. 

     EPA concluded in the final rule that the
best way to avoid duplication was to exempt
from Subpart CC those units that are using air
emission controls in accordance with applicable
Clean Air Act requirements.  Accordingly, the
final rule amended the regulations to include
this exemption.  However, the general
exemption from Subpart CC is limited in three
principal respects:

     The exemption applies only to units that
     actually use air emission controls; it does
     not apply to units that comply with a
     MACT standard through an "emissions
     averaging" or "bubbling" provision but are
     not themselves subject to controls.

     The exemption does not apply to units
     subject to a MACT standard where EPA
     has determined that the appropriate
     requirement for such units is "no control."

     The exemption does not apply to tanks
     that are controlled through the use of an
     enclosure rather than a cover.

     In addition to addressing the relationship
between Subpart CC and Clean Air Act
requirements, the final rule modifies the specific
requirements applicable to tanks, containers,
and surface impoundments in several respects. 
For example, the final rule amends the existing
tank standards to: (1) allow the use of pressure
release devices on certain tanks; (2) make the
internal and external floating roof requirements
for certain tanks consistent with the Off-Site
Waste and Recovery Operations MACT
standard; and (3) reduce inspection, monitoring,
and recordkeeping requirements.  It amends the
surface impoundment standards to: (1) permit
opening of safety devices to avoid unsafe
conditions;  (2) clarify floating membrane cover
design and installation requirements; and (3)
revise requirements for transfers between
surface impoundments and containers to avoid
the need for closed systems.  The final rule also
establishes December 6, 1996 as the effective
date for Subpart CC requirements.