WASHINGTON REPORT - MAY 1998




             Draft of Periodic Monitoring Guidance
                    Raises Numerous Concerns


After months of discussions with EPA
Regional offices, EPA Headquarters recently
circulated for internal and state review a May 11,
1998 draft Periodic Monitoring Guidance for Title
V permits.  State and local permitting agencies and
industry groups have expressed numerous concerns
with the content of the draft, and some industry
groups have requested that the Agency withdraw
the draft document.  Although EPA originally
intended to finalize the document by early June, it
has recently announced that it intends to make
changes that will result in that schedule not being
met.      

     The draft guidance generally provides that
periodic monitoring will be required for each
emission point that is subject to an applicable
requirement.  It also states that the following
monitoring will be presumed sufficient to satisfy
the periodic monitoring requirement:  (1)
monitoring required by section 111 or section 112
standards proposed after November 15, 1990; (2)
"continuous compliance determination methods"
imposed by federal or SIP emission limitations or
standards; and (3) certain monitoring requirements
found in the Title IV acid rain regulations.  

     Under the guidance, if units are not subject
to monitoring in the three categories listed above,
additional monitoring will be required if "the
applicable requirement does not require periodic
testing or instrumental or noninstrumental
monitoring sufficient to yield reliable data from the
relevant time period that are representative of the
source's compliance with the permit." The draft
clarifies that, when an applicable requirement lacks
monitoring or testing, or when it imposes a one-time testing requirement, additional monitoring
will be required to satisfy periodic monitoring. 
EPA also states that additional monitoring "may be
necessary where some monitoring exists . . . but
such monitoring does not provide a reasonable
assurance of compliance." 

     The draft guidance explains that existing
testing and monitoring is inadequate to satisfy the
periodic monitoring requirement "if the data are
not reliable, if data collection frequency is not
specified, or if the data collected are not
representative of the emission unit's compliance
performance." The use of emissions factors is an
example discussed in the draft guidance. The
Agency's current position is that, while AP-42 or
other factors are "helpful for estimating emission
levels, they are generally not appropriate for
determining compliance with an applicable
requirement." 

     Following is a summary of some of the
important issues discussed in the draft guidance.
 
               Definition of Relevant Time Period

     Under the Part 70 regulations, periodic
monitoring is to be "sufficient to yield reliable data
from the relevant time period that are representative
of the source's compliance with the permit."  In the
draft document, EPA defines "the relevant time
period" to mean "the averaging period of the
applicable requirement." As an example, the
Agency states that the relevant time period for
many opacity requirements is six minutes. 
According to the draft guidance, the monitoring
results need to "relate to, that is, to provide an
assurance of compliance during, the relevant time
period." 

                Continuous Emissions Monitoring

     The guidance document encourages
permitting authorities to require sources to use
continuous emissions monitoring.  However, the
Agency provides that even in situations where
continuous emissions monitoring is technically and
economically feasible, another type of periodic
monitoring may be selected instead if it is
consistent with the policy.  
 
                     Parametric Monitoring

     EPA indicates that, under certain
circumstances, parametric monitoring may be
appropriate to satisfy the periodic monitoring
requirement.  When parametric monitoring is used,
the permit is to specify a range that will assure that
the source is in compliance with the underlying
requirement. The Agency states that such a range
"should be supported by documentation indicating
a correlation between the parameter(s) and
compliance with the emission limit."  EPA also
provides that the permit should specify whether an
excursion from an indicator range is a violation of
the permit, or simply a trigger for corrective
action. 

                  Other Periodic Monitoring   
                  Including Records and Permit
                          Limitations

     The draft guidance provides that
recordkeeping (including emissions calculations,
fuel content, or other relevant information) may be
sufficient periodic monitoring for certain devices,
emission units, and applicable requirements.  Also,
enforceable permit limits may satisfy the periodic
monitoring requirement under certain
circumstances.  EPA explains that such a situation
could include an enforceable opacity standard for
a boiler that fires natural gas.  For this
requirement, appropriate periodic monitoring
might "consist of maintaining adequate records of
fuel type and making the fuel type and proper
maintenance of the unit enforceable conditions of
the permit."

              Insignificant Emission Units (IEUs)

     The Agency acknowledges that there is a
small class of IEUs for which no additional
periodic monitoring should be necessary because
the monitoring would not significantly enhance the
ability to assure compliance with applicable
requirements.  However, if an IEU has the
potential to violate the applicable requirement,
EPA states that the permitting authority should
consider adding monitoring. 

             Enforceability of Periodic Monitoring
                           Provisions

     The guidance provides that the monitoring
must result in information that is enforceable as a
practical matter.  EPA indicates that adequate
frequency of the data collection is an important
aspect of practical enforceability.  
                                
EPA's Role 

     The draft indicates that EPA, and the
Regions in particular, will continue to be involved
in approving the adequacy of periodic monitoring. 
EPA would like to ensure that periodic monitoring
is implemented consistently throughout the
country.  According to the draft, because of limited
resources, the Agency's review of periodic
monitoring will focus on the following units:

    those units having uncontrolled or pre-control potential emissions greater than or
     equal to the relevant major source
     thresholds

    other units with control devices 

    units in areas with environmental justice
     concerns 

    units in areas where toxic emissions could
     impose health risks

    units for which monitoring is not
     proposed   

STAPPA And ALAPCO
Point to EPA'S Comments
and Objections as a Major
Factor in the Title V Permit
Issuance Backlog 

In a May 15, 1998 letter to EPA officials, the
State and Territorial Air Pollution Program
Administrators and the Association of Local Air
Pollution Control Officials ("STAPPA/
ALAPCO") expressed serious concerns about the
manner in which EPA is carrying out its review of 
proposed Title V permits.  The two groups cited
EPA's inappropriate comments and objections  
and the time and effort state and local agencies
must expend responding to them    as primary
reasons why the Title V permit issuance process is
far behind schedule. 

     The letter outlines a number of
overarching concerns that state and local agencies
have with EPA's Title V review process.  The
associations state that, in the pursuit of "perfect
permits," EPA is spending far too much time on
review of individual permits.  Insufficient technical
expertise and experience on the part of the
Regional commenters are cited as factors
contributing to this problem. 

     STAPPA/ALAPCO expresses serious
concerns that substantive positions taken by EPA
in objection or comment letters are frequently
contrary to Title V authority or intent.  They are
also troubled because such positions have the
potential to set national precedents on significant
Title V implementation issues.  The state and local
authorities explain that their concerns on this
matter have been exacerbated by statements of
EPA's Office of General Counsel that EPA
objection letters represent agency positions that
should be treated as national guidance for
implementation of the Title V program.  The
associations state that they strongly oppose the
view that permit-specific comments and objections
set binding national precedent.

     In an attachment to the letter,
STAPPA/ALAPCO identifies seven categories of
controversial comment or objection issues, and
provides examples of EPA comment letters in each
of these categories: 

    Requiring New Source Review lookbacks 

    Objecting to BACT or LAER
     determinations

    Objecting to decisions regarding what
     constitutes adequate periodic monitoring

    Requiring the inclusion of prior state/local
     permit terms in Title V permits

    Objecting to Title V permit terms
     superseding or voiding old
     NSR/construction permits

    Requiring greater level of detail in permits 

    Refusing to allow use of the Title V permit
     process to help alleviate SIP-gap issues

     STAPPA/ALAPCO provides a number of 
recommendations designed to improve the Title V
implementation process.  For example, the
organizations state that the Agency should focus on
substantive Title V issues that reflect air quality
concerns and that EPA should restrict comments
to permit errors or omissions that reflect clear
misapplication of substantive air requirements. 
STAPPA/ALAPCO also asks that EPA draft its
comments, objections, and revision requests with
clarity and detail so the permitting authority can
understand the Agency's concerns.  They also
recommend that the Agency take steps to ensure
that "technically savvy supervisory staff" review
draft objection letters and comments.    

     EPA has not yet officially responded to the
STAPPA/ALAPCO letter.   

EPA Issues Its Supplemental
Proposal for the Ozone SIP
Call

On May 11, EPA published a supplement to
its November 1997 proposal calling for 22
states and the District of Columbia to submit
revisions to state implementation plans (SIPs)
aimed at reducing the interstate transport of
ground-level ozone and one of its main precursors,
oxides of nitrogen (NOx).  63 Fed. Reg. 25,902
(May 11, 1998).  EPA targeted these jurisdictions
based on a preliminary determination that they
contribute significantly to downwind states'
inability to attain the National Ambient Air
Quality Standard (NAAQS) for ozone.  See the
November 1997 Washington Report at WR-158.

     The proposed SIP call would establish
NOx emissions caps or budgets for each covered
state. 1/  Those states would then be required by
1999 to develop and submit revisions to their
respective SIPs designed to achieve reductions
meeting the applicable NOx emissions budget for
each ozone season (May 1 - September 30)
beginning in 2007.  According to the preamble to
the supplemental proposal, the SIP call would
require that compliance with emissions reduction
requirements begin on May 1, 2003.  EPA intends
to finalize its November 1997 proposal and recent
supplement in September of this year.

     The main feature of the May 11
supplemental proposal is a proposed model NOx
emissions trading program.  EPA's supplement also
modifies the Agency's initial proposal by including
the following elements:

    proposed rule language for the relevant
     SIP revisions 

    revised statewide emission budgets and
     associated cost analyses 

    proposed state reporting requirements 

    SIP approvability criteria 

    air quality analyses of the proposed
     emissions budgets 

                   The Proposed NOx Emissions
                        Trading Program
                                
     The cornerstone of EPA's proposed SIP
call is a model NOx cap-and-trade rule.  Based
largely on the recommendations of OTAG and the
model rule developed by the Northeast Ozone
Transport Commission (OTC), this program
would focus on fossil fuel-burning electricity utility
units serving a generator with a capacity greater
than 25 megawatts and large non-utility
combustion units (greater than 250 mmBtu/hr heat
input).  The trading program is the principal
approach that EPA indicates states could use to
meet their respective NOx emissions budgets.  

     States choosing to participate in the NOx
trading program would be charged with allocating
NOx allowances to covered sources for each ozone
season.  These sources could install controls or buy
NOx allowances on the market to meet their
individual allocations for that season.  One
allowance would be equal to one ton of NOx
emitted.  States participating in the trading
program would also be responsible for
promulgating supporting state regulations;
submitting NOx allowance allocations to EPA for
inclusion in a newly created National Allowance
Tracking System; and enforcing permitting,
monitoring and excess emissions requirements. 
EPA would be responsible for managing the
emissions data and market functions of the
program, as well as performing an annual
reconciliation of monitored emissions and
allowances. 

     The trading program would include the
requirement for sources to submit a NOx budget
permit application.  The proposal assumes that the
NOx budget permit would be part of a federally
enforceable permit issued to the source (such as a
Title V operating permit).  The program would
entail additional monitoring, recordkeeping, and
reporting requirements.  The program would also
include provisions addressing liability for emissions
in excess of a unit's NOx allocation, along with
provisions addressing knowing violations of the
trading program.  Units with excess emissions
would be subject to deductions from their NOx
allowance accounts equal to three times the
amount of the unit's excess emissions. 

     Under the trading program proposal, EPA
envisions limited or no restrictions on the
geographic reach of allowance trading among
participating states, noting that trading could occur
across participating states free from restrictions
(other than the requirement to comply with
existing emissions limits).  However, EPA solicits
comments on other approaches, including the
establishment of exchange ratios for tons traded
between areas that would reflect the differential
effects of NOx emissions in different geographic
areas.  Alternatively, EPA indicates that it could
consider establishing subregions for trading within
the SIP call area and apply a discount to, or
prohibit, trades between subregions. 

     Comments on EPA's supplemental
proposed rule must be submitted by June 25, 1998. 
 

EPA's Preliminary
Assessment of Section 126
Petitions Finds Upwind
Sources Make Significant
Contributions to
Northeastern States' Ozone
Levels

In an April 30 Federal Register notice, EPA set
forth its preliminary assessment of petitions filed
by eight northeastern states seeking to reduce
interstate transport of ozone and its precursors
pursuant to section 126 of the Clean Air Act.  63
Fed. Reg. 24,057.  The advance notice of proposed
rulemaking indicates that EPA has concluded as a
preliminary matter that hundreds of sources in
upwind states are contributing significantly to the
failure of the petitioning states to attain the
national ambient air quality standard (NAAQS) for
ozone. According to the notice, EPA plans to issue
a proposed decision on the petitions by September
30, 1998 and to take final action by April 30, 1999. 

     Although EPA has indicated that it will
rely principally upon its current SIP call
proceeding to address ozone transport in the
eastern United States, the upcoming section 126
rulemaking proceeding will likely be significant in
terms of providing an alternative or supplementary
approach for addressing transport concerns.  EPA's
publication of the notice is intended to be a step in
carrying out a Memorandum of Agreement (MOA)
previously entered into between EPA and the
petitioning states in connection with the section
126 petitions.  See the January 1998 Washington
Report at WR-169.

     The eight northeastern states had filed
petitions pursuant to section 126(b) in August 1997
requesting that EPA directly impose additional
controls on the sources specified in the petitions. 
Section 126(b) allows any state or political
subdivision to petition EPA for a finding that
sources in another state are "contribut[ing]
significantly to nonattainment" in the petitioning
state with any primary or secondary NAAQS. 
The petitions, which were based in large part on
modeling results obtained by the Ozone Transport
Assessment Group (OTAG), primarily targeted
electric utility sources but also included certain
large industrial sources.

     In the advance notice of proposed
rulemaking under section 126, EPA concluded on
a preliminary basis that sources in 16 midwestern
and eastern states are contributing significantly to
ozone nonattainment in one or more of the
petitioning states.  The notice indicates that, in
analyzing the merits of the petitions, EPA intends
to utilize the same basic approach described in its
November 1997 proposed SIP call.  See November
1997 Washington Report at WR-158.  The notice
also states that, if the petitions are granted, EPA
anticipates exercising its authority under section
126 to require the designated sources to participate
in a NOx emissions trading program that it would
establish.  Such a program would supposedly be
integrated with the voluntary NOx emissions
trading program for affected states described in
EPA's May 11 supplemental SIP call proposal.   


EPA Issues Guidance
Document for Determining
the Potential to Emit of
Sources in Eight Specific
Source Categories

EPA has issued a guidance document intended
to assist state and local permitting agencies in
specifying what constitutes minor source status for
low-emitting sources in eight source categories. 
"Potential to Emit (PTE) Guidance for Specific
Source Categories" (April 14, 1998). 2/  The
guidance provides technical information those
agencies can use in evaluating and limiting the
"potential to emit" of sources in those categories. 
However, as discussed below, the guidance also
contains misleading statements regarding the status
of EPA's PTE definitions.
 
                Guidance Establishes Operational
              Cutoff Levels to be Used by Agencies

     For each category addressed in the
guidance document, the document sets forth
calculated cutoffs that represent levels of operation
that would result in sources emitting minor
amounts of pollutants and thereby be classified as
minor sources.  The eight source categories covered
by the guidance are:

    gasoline service stations
    gasoline bulk plants
    boilers (oil and natural gas-fired boilers
     with a capacity less than 100 million
     BTUs/hr)
    cotton gins
         coating sources
    printing, publishing, and packing
     operations
    degreasers using volatile organic solvents
    hot mix asphalt plants

The guidance indicates that for many sources in
these categories, actual operations fall well below
the specified cutoffs, but "potential" operations
(e.g., operation for 24 hours per day, 7 days per
week) could be above the cutoffs.

     According to the guidance, most state or
local agencies would need to undertake a
rulemaking process to make use of the guidance. 
Under EPA's suggested approach, such rulemaking
at the state or local level would utilize the guidance
to establish a system -- presumably in the form of
general permits or prohibitory rules -- under which
sources in the eight categories could ensure their
status as minor sources by agreeing to limit their
emissions to amounts below the calculated cutoffs. 
For example, with regard to a boiler capable of
combusting only distillate oil (in an area where the
major source thresholds are 100 tpy for NOx and
for SO2), a 12-month rolling limit of 700,000
gallons of oil would ensure that the boiler
constitutes a minor source.

                  Guidance Contains Misleading
               Description of Status of EPA's PTE
                          Definitions

     The initial portion of the guidance
document sets forth a definition of PTE and states
that the definition, which contains a "federal
enforceability" requirement for limits on a source's
PTE, appears in EPA's "current" regulations.  That
portion of the guidance is misleading because, by
stating that the quoted definition is in EPA's
"current regulations," it implies that the definition
is actually in effect for all of EPA's regulatory
programs.  The document fails to state that the
D.C. Circuit in three separate decisions vacated the
PTE definitions for EPA's Part 70 and NSR
programs and remanded the PTE definition for
EPA's section 112 program.  See the July 1996
Washington Report at WR-71.   

     Similarly, footnote 1 of the guidance
document is misleading.  The footnote states that
EPA's January 1995 policy memorandum describes
the ways a state or local limit can achieve "federally
enforceable" status for purposes of determining
PTE.  However, it fails to state that the "federally
enforceable" requirement of that memorandum for
the Part 70 and NSR programs was expressly
superseded by the two 1996 guidance memoranda
cited in the footnote.

     Because of the misleading statements
concerning PTE definitions in the April 14
guidance document as well as in other EPA
pronouncements, the Clean Air Implementation
Project recently sent a letter to EPA officials
requesting that the Agency issue revised guidance
that corrects the problems in the guidance
document and, in particular, explains that the D.C.
Circuit has vacated the PTE definitions under the
Part 70 and NSR programs and has remanded the
PTE definition for the section 112 program.  The
letter also urged that the Agency propose and
finalize a rule establishing a legally sustainable PTE
definition for all federal air programs.   

Court Accepts EPA's
Arguments on Consideration
of Downwind Effects in
Making Ozone Redesignation
Determination

In a decision issued on May 26, the U.S. Court of
Appeals for the Sixth Circuit rejected arguments
that an ozone redesignation determination was
unlawful because EPA had not properly taken into
account the effects on downwind areas from the
interstate transport of ozone and its precursors.
The Court ruled that EPA had properly
redesignated the Cleveland-Akron-Lorain area in
northeastern Ohio from an nonattainment area for
ozone to an attainment area.  Southwestern
Pennsylvania Growth Alliance v. Browner, No. 96-3761 (6th Cir.).  The decision is significant
because
it recognizes that past EPA determinations
regarding the adequacy of a state implementation
plan (SIP) should not be ignored simply because
new programs addressing the interstate impacts of
ozone pollution are being implemented.

     The case involved a challenge to EPA's
decision in May 1996 to redesignate the Cleveland-Akron-Lorain area as an ozone attainment
area
based on the State of Ohio's demonstration that
the ozone standard had been achieved during the
three-year period from 1992 to 1994.  The
petitioner   a coalition of local governments and
manufacturers in Pittsburgh and southwestern
Pennsylvania -- sought review of the decision in the
Sixth Circuit.  The petitioner contended that ozone
nonattainment problems in southwestern
Pennsylvania were caused by emissions of ozone
precursors in Ohio and West Virginia and that the
decision should be overturned because Ohio's SIP
did not adequately address the interstate transport
of pollutants.  Petitioner's argument was based
largely on the fact that the SIP had been approved
prior to passage of the 1990 amendments, which
allegedly had made more stringent the statutory
provisions addressing interstate transport. 
Petitioner also relied on the report of the Ozone
Transport Assessment Group and EPA's
November 1997 SIP call proposal.

     According to the court, the principal issue
was whether EPA erred in approving the
redesignation request because the relevant
provisions of the Ohio SIP, which had been
approved in 1980, did not expressly prohibit
sources within the state from "contribut[ing]
significantly to nonattainment" in other states in
accordance with section 110(a)(2)(D) of the Act, as
amended in 1990.  EPA maintained that its policy
was not to revisit prior SIP approvals when
considering redesignation requests and that, in any
event, the Agency had previously interpreted the
language of the Ohio SIP, which prohibits sources
from "prevent[ing]" nonattainment in other states,
as being consistent with the amended statutory
language.  The court concluded that EPA's
approach to interstate transport issues was
reasonable in this case and that the redesignation
decision should not be vacated.  


Footnotes:

1/   Statewide budgets were developed primarily by applying (1) a uniform NOx emissions
rate of 0.15 lb/mmBtu for electric generating utility units, (ii) a 70% reduction from year 2007
NOx emission levels for large industrial sources, and (iii) reasonably available control
technology (RACT) for most other stationary NOX sources.  The supplement revises the initially
proposed statewide budgets, generally to correct errors found by EPA subsequent to publication
of the initial SIP call proposal in November 1997.

2/   The guidance document can be found on the Network's web site in the Title V, New
Source Review, and Section 112 document categories.