EPA Considering Substantial Revisions 
to Draft CAM Rule

When announced by EPA this spring, the Compliance Assurance Monitoring ("CAM") concept was aimed at
promoting reasonable assurance of compliance by developing a simple approach to determine whether air
pollution control systems are operating properly.  On September 13, EPA issued a draft proposed CAM rule
which would significantly alter this approach, converting CAM into a program oriented heavily toward creating
opportunities for government and citizen enforcement.  Industry representatives voiced strong opposition to this
shift in emphasis at a meeting with EPA and stakeholders on September 22.  Since then, EPA staff have
indicated a general receptivity to the view that the CAM rule should revert back to the Agency's original concept. 
To this end, EPA has decided to simplify the applicability sections of the rule, and is considering several options
to address some of industry's concerns related to enforcement.

Scope Of The Rule

     The September 13 draft rule would have established three tiers of units and corresponding requirements. 
At the stakeholders' meeting on September 22, and in comments submitted on the draft rule, industry
representatives have urged EPA to reduce the extent of coverage of the rule, and to simplify the process for
identifying units subject to CAM.  In response, EPA has announced that it has eliminated its three-tier
applicability approach.  Instead, the proposed rule will identify the types of pollution control systems subject to
CAM.  In addition, EPA has indicated that it will include a size-based exemption in the rule.

Enforcement And Certification Issues

     Perhaps foremost among industry's concerns with the draft rule is that monitoring data generated
through CAM would create opportunities for enforcement against sources for conditions that constitute
compliance with applicable requirements or very insignificant deviations.  Under the draft rule, CAM plans would
be incorporated by reference into Title V permits, and sources would be required to operate in compliance with
each separate provision of their CAM plans.  Failure to comply with each specific provision of a CAM plan
would be separately enforceable.  

     This approach, together with the draft rule's revised role for "trigger levels," would create multiple
opportunities for enforcement actions to be brought against sources that are complying with underlying applicable
requirements.  When EPA initially announced the CAM concept, deviations from operating parameter levels
identified in a CAM plan as corresponding to proper air pollution control practices would only trigger a
requirement for the discrepancies to be investigated and corrective action taken, where appropriate.  However,
under the draft rule, sources would be required to specify the maximum number of discrepancies from an
established range of operating parameter levels.  Although the draft rule sets forth two options for determining
the number of allowable discrepancies, under either option, enforcement actions could be brought once the
specified number of exceedances have occurred.  This would be the case even though the source is in compliance
with applicable requirements.  EPA staff have indicated that they are reevaluating whether exceeding a limit on
the number of discrepancies should result in a permit violation.

     Another area of significant concern to industry is the potential use of CAM data in enforcement actions. 
In recent discussions with the Agency, industry representatives have stressed that the following two principles
must be reflected in a CAM scheme.  First, where a reference test method is the means for determining
compliance with emission limits or standards, enforcement actions may not be brought unless the reference
method has been conducted and it shows a violation.  Second, CAM data cannot be used retrospectively after
a reference test method has been conducted showing a violation for the purpose of demonstrating that the
violation commenced at an earlier time or that penalties should be assessed for prior periods.  It is unclear,
however, whether these two principles will be incorporated into the proposed rule or its preamble.

     Also related to industry's concern about the use of data generated through CAM are the draft rule's
requirements concerning compliance certifications.  Specifically, the September 13 draft rule would require that
certifications be based upon information generated through reference test methods, monitoring plans, and "any
other information."  Because this requirement is so open-ended, it would impose extraordinary burdens on
industry.  Accordingly, stakeholders at the September 22 meeting urged EPA to redraft this provision so that
the sole criteria to certify compliance would be that the source has carried out its CAM plan and there have been
no reference test violations.


Title V Integration

     The September 13 draft rule would not require states to evaluate CAM plans prior to the time that
sources must implement the monitoring requirements.  At the September 22 stakeholders meeting, EPA
appeared to recognize that this approach is untenable because it would require sources to proceed at their own
risk when implementing monitoring plans.  However, thus far, EPA has not announced a revised approach to
address industry's concerns in this regard.

     Also unresolved are a number of other issues related to EPA's approach to implement CAM.  These
include the extent to which CAM plans will be incorporated into Title V permits, the timetable for phasing-in
the submission of monitoring plans to permitting authorities, and the need to clarify and streamline the CAM
plan revision process.  In order to address these and other concerns, EPA's schedule for publishing a proposed
CAM rule in the Federal Register has been extended from December of this year until early 1996.  þ

Further Initiatives for Streamlining Title V Permitting Process Are Likely

EPA officials have informally indicated that the Agency is considering issuing additional guidance designed to
streamline further the Title V permit application and issuance process.  This guidance is likely to be issued in
one or more White Papers modelled on EPA's July 10 White Paper, which addressed numerous permit
application issues.  One issue likely to be addressed in future guidance is the streamlining of applicable
requirements in situations where a source is subject to overlapping and/or duplicative applicable requirements.

     The direction which future guidance might take is partially indicated by a draft "California White Paperþ
being jointly prepared by EPA and California state and local officials and by a letter recently sent to state and
local officials by EPA.  We discuss those two documents below.

California White Paper

     For the past several months, EPA officials have been discussing with state and local officials in California
the preparation of a "white paper" addressing Title V permitting issues in California.  An October 25, 1995 draft
of the California White Paper was recently made publicly available.  That draft explains that the purpose of the
California White Paper is to build upon the flexibility provided by EPA's July 10 White Paper and to provide
further guidance to California sources and regulators in implementing the Title V program in that state.  EPA
staff have indicated that the guidance in the draft California White Paper will be expanded in the next month
and will likely be converted into nationally applicable guidance to be issued in early 1996.  

     One very significant issue discussed in the draft concerns the streamlining of applicable requirements
where a source is subject to overlapping and/or duplicative requirements.  The draft outlines a multi-step process
under which a source may propose in its application to streamline multiple applicable requirements to arrive at
a single set of permit terms and conditions.  Under this process, the source would, among other things, list all
applicable requirements, determine the most stringent emission and/or performance standards, propose one set
of permit terms and conditions to assure compliance with the standards, and certify compliance with the
proposed streamlined requirements. 

     It is also expected that EPA will address the controversial issue of how insignificant emission units that
are subject to "generic" applicable requirements are to be dealt with in Title V permits.  In particular, EPA is
considering the extent to which monitoring and/or compliance certifications are necessary for such units.

EPA Letter to STAPPA/ALAPCO

     On November 6, 1995, Lydia Wegman, Deputy Director of the Office of Air Quality Planning and
Standards, sent a letter to Bill Becker, the Executive Director of STAPPA/ALAPCO, addressing Title V
implementation issues.  That letter stated that "EPA expects permitting authorities to utilize the principles of the
[July 10] White Paper to the maximum extent possible" and strongly encouraged "immediate implementation"
of the White Paper by all state and local agencies.  The letter also stated that EPA believes that states can begin
to implement the new permit revision scheme proposed on August 31 under their existing Title V programs.  

     Copies of the draft California White Paper and the November 6 letter may be obtained upon request
from the Network.  þ

Generally Favorable Comments Submitted on EPA's Proposal to Simplify Title V Permit
Revision Process

Over three hundred sets of comments were submitted on EPA's supplemental proposal to streamline its Title
V operating permit regulations.  The focus of the proposal is to simplify the procedures for revising operating
permits.  (See the September 1995 Washington Report.)  

     Comments submitted by industry and state representatives voiced general support for EPA's proposal,
while at the same time suggesting ways in which it should be improved.  Comments submitted by environmental
groups also endorsed EPA's objective of streamlining the requirements of the permits program.  For example,
the Natural Resources Defense Council ("NRDC") stated that the proposal "in many respects strikes a reasonable
balance between the legitimate interests of the public and permit holders," although NRDC questioned EPA's
legal authority for many of the proposed changes. 

STAPPA/ALAPCO Comments

The comments of the State and Territorial Air Pollution Program Administrators ("STAPPA") and Association
of Local Air Pollution Control Officials ("ALAPCO") stated that they are "very pleased" with the supplemental
proposal because it builds on existing state and local air agencies' new source review ("NSR") and air toxics
programs.  The proposed revisions "address industry's need to respond quickly to economic market forces, while
providing state and local air agencies with a reasonable and streamlined review and public participation process,"
according to the comments.

     STAPPA/ALAPCO expressly supported numerous aspects of the proposed permit revision process. 
These include EPA's decision to limit its opportunity to object to permit revisions, the clarification that "Title
I modifications" do not include changes subject to minor NSR requirements, and EPA's proposal to provide
public process commensurate with the environmental significance of the change.   As for aspects of the proposal
which should be changed, STAPPA/ALAPCO identified several types of permit revisions which EPA should not
classify as "more environmentally significant."  These include the establishment of limits on potential to emit
("PTE") for entire sources, alternative MACT standards established under a section 112(l) program, and the use
of new or alternative monitoring methods.  Regarding PTE revisions, STAPPA/ALAPCO referred to recent
court decisions as indicative that þstate and local permits are acceptable vehicles for limiting PTE."  

     Also of concern to STAPPA/ALAPCO  was EPA's statement in the preamble that, in fulfilling its
review role with respect to permit revisions, EPA would consider þdevelopment of a supporting record."  
STAPPA/ALAPCO strongly disagreed with this statement, stating that EPA should not use the Part 70 process
to "nullify previous BACT and LAER determinations."  The associations also opposed EPA's proposal to
eliminate the off-permit provision in the current Part 70 rule, stating that "[i]f a change is expressly exempted
from minor NSR . . . then the Associations strongly believe such an emissions unit does not need to be included
in the Part 70 permit.þ

NRDC Comments

     NRDC indicated that it is prepared to support as an experiment the proposed three-tier public
participation structure.  However, NRDC urged EPA to include a provision requiring EPA to review each state's
public participation program after five years, and to provide a notice and comment determination whether to
extend the approval or to require changes. 

     Turning to the permit shield, NRDC objected to the proposed provision which would allow a shield for
"less environmentally significant" ("LES") changes for which public and EPA review has occurred.  In particular,
NRDC does not believe that changes for which states provide quarterly after-the-fact notice should be eligible
for a shield.

     The proposed provisions of most concern to NRDC appeared to be those related to EPA's review role
and citizen petitions.  NRDC believes that EPA should retain its objection authority for LES revisions, rather
than exercise this authority only when a citizen petition is filed.  Furthermore, NRDC stated that a citizen
petition should be allowed if it shows only that the permit fails to reflect an applicable requirement, and that the
rule not impose the additional criterion of "significant adverse environmental effect."  NRDC also objected to
EPA's proposal to waive its veto authority for de minimis changes.

Industry Comments

     Comments submitted by industry representatives generally supported EPA's proposed permit revision
process.  Many of the streamlining changes that STAPPA/ALAPCO supported also received favorable comment
from industry.  In addition, industry also suggested improvements to further streamline the permit revision
process, including reducing the types of changes treated as "more environmentally significant" and deferring until
permit renewal the processing of citizen petitions for LES changes.   

     A common concern in several of the industry submissions was that the flexibility provided by the
supplemental proposal may not become available in states for several years.  One suggested approach to
minimize this outcome is for EPA to grant automatic interim approval for revisions to state programs that are
consistent with EPA's streamlined permit revisions approach.

     Industry groups were highly critical of several proposed provisions unrelated to the permit revision
process.  Perhaps foremost among these provisions is EPA's proposal to revise the current certification
requirement to require that responsible officials personally examine all information submitted with permit
applications.  Most commenters stated that this revision would be unduly burdensome, and that the current
certification requirement already ensures an appropriate level of corporate involvement and responsibility in the
permit application process.  

     Another provision frequently objected to in industry comments was EPA's proposal to limit the
emergency defense.  Specifically, commenters opposed EPA's proposal to revise the current emergency defense
to restrict it to Part 70-only technology based limits.  Rather than restrict the defense, commenters urged EPA
to expand it by providing an exemption for startup, shutdown, malfunction, and preventive maintenance for all
standards, and to make the exemption available for exceedances of health-based, as well as technology-based,
emission limitations.

     EPA has indicated that it plans to issue a final rule to streamline the Title V permit regulations by July
1996.  þ

Motion to Enforce Mandate Filed in D.C. Circuit in Section 112 "Potential to Emit" Case

On November 13, 1995, petitioners Chemical Manufacturers Association and American Petroleum Institute took
the unusual step of filing a motion to enforce the mandate of the Court in their challenge to the "potential to
emitþ definition in the General Provisions Rule implementing section 112.  On July 21, 1995, the D.C. Circuit
had ruled that the "federal enforceability" requirement in that definition was invalid and had granted the petition
for review filed by CMA and API.  National Mining Ass'n v. EPA, 59 F.3d 1351 (D.C. Cir. 1995).

     The motion filed by CMA and API requests that the Court issue a special order or writ explicitly
directing EPA to obey the mandate of the Court.  Note: (1).   As the motion explains, such extraordinary relief
is necessary because EPA has taken the position that the Court's opinion did not vacate, i.e., void, the "potential
to emit" definition but instead only remanded it to the Agency for further consideration.  The motion further
explains that the July 21 opinion can only be read as vacating the definition, particularly in light of the Court's
subsequent order in Chemical Manufacturers Ass'n v. EPA, Nos. 89-1514 et al., vacating the essentially identical
definition in EPA's new source review regulations based on that opinion.  Although CMA and API had hoped
that filing such a motion would be unnecessary, discussions with government counsel indicated that EPA did not
plan to change its position.  It is unclear when the Court will rule on the pending motion.

     In a related development, two key House subcommittee chairmen recently sent a letter to Mary Nichols,
EPA Assistant Administrator for Air and Radiation, "to urge that EPA take immediate steps to implement the
recent decisions of the [D.C. Circuit]" which "invalidated EPA's requirement that emission controls must be
'federally enforceable' in order for them to be taken into account in determining a source's potential to emit
(PTE) under section 112 and under Parts C and D of Title I of the Clean Air Act."  The October 25, 1995 letter
from Congressmen Barton and Bilirakis emphasized that "[a]ny attempt to reinstate the federal enforceability
requirement . . . would appear to be both contrary to the abovementioned court opinions and the general intent
of the Clean Air Act."

     Please see this month's Issue Analysis for a fuller discussion of the background of the "potential to emit"
issue and the ramifications of the D.C. Circuit's recent rulings in this area.  þ

D.C. Circuit Increasingly Raises "Standing" as a Potential Bar to Challenging Federal Rules

In a number of recent cases, judges on the U.S. Court of Appeals for the District of Columbia Circuit have, on
their own initiative, questioned whether industry petitioners and environmental group petitioners have standing
to challenge the particular federal rules at issue.  Most recently, in an October 20 oral argument, the three-judge
panel hearing the challenge to EPA's section 112(l) rule (the "Rule") (providing for delegation of authority to
states to implement federal air toxics requirements) focused their questioning almost exclusively on whether the
petitioners had Article III standing to challenge the rule.  Note: (2).   Louisiana Environmental Action Network
v. EPA, Nos. 94-1042 et al.  EPA itself had not challenged the standing of any petitioner.    

     The appellate court panel (Judges Buckley, Sentelle and Randolph) asked a series of questions that
suggested that they had doubts about whether the industry petitioners and environmental group petitioners would
be directly injured by the requirements of the Rule and thus had standing to challenge the Rule.  At the close
of the argument, after petitioners had explained the various ways in which the Rule would directly impact
regulated sources and the public, the judges asked EPA and petitioners to submit supplemental briefs addressing
whether petitioners satisfied the Article III standing prerequisites.  Note: (3).

     Industry petitioners primarily targeted their attack on the portions of the Rule that provide for more
stringent state standards to be substituted for federal standards and made federally enforceable.  Also, they
challenged the compliance deadline scheme under which state standards must be met by the federal deadline
regardless of whether such compliance is impossible.  Finally, they challenged EPA's failure to provide for
equivalency comparisons to be made on a source category basis rather than, as the Rule requires, on an "affected
source" or "emissions point" basis.  A decision on the standing issue and the substantive merits of petitioners'
challenges will not likely be issued for several months.

     D.C. Circuit judges also have recently raised standing issues in other cases before them.  For example,
in a case argued just a few days before the section 112(l) case, the three-judge panel similarly requested that the
parties file supplemental briefs addressing the issue of Article III standing.  National Mining Association v.
Department of the Interior, Nos. 94-5351 et al.  That case involves challenges by industry petitioners and an
association of state agencies to regulations promulgated under the Surface Mining Control and Reclamation Act. 
In another case, the D.C. Circuit has ruled that all 11 judges on the Court will rehear a recently decided case
that involves the standing of environmental groups to challenge the government's decision not to prepare an
Environmental Impact Statement on the effects of a tax credit for a new fuel additive.  Florida Audobon Society
v. Bentsen, 54 F.3d 873 (D.C. Cir. 1995), reh. en banc granted Sept. 11, 1995.  The standing issue in that case is
being briefed again this fall, and the case will be reargued in the next few months.  These actions all show that
the Court is currently focussing on standing questions and may issue some important rulings in this area in the
next few months.  þ

Citizen Suit Results in Ruling That Landfill Must Obtain New Source Review Permit

In a Clean Air Act citizen suit brought by one company against a competitor, a federal district judge in
Pennsylvania has ruled for the plaintiff, finding that a municipal landfill must obtain a nonattainment new source
review (NSR) permit.  Ogden Projects, Inc. v. New Morgan Landfill Co., Civ. No. 94-CV-3048 (E.D. Pa., Sept.
22, 1995).  The case also raises important issues involving the "potential to emit" (PTE) definition in EPA's NSR
regulations and the effect of the D.C. Circuit's September 15 decision in Chemical Manufacturers Association v.
EPA, No. 89-1514, which vacated that PTE definition.

     The citizen suit was brought by Ogden Projects, a resource recovery company, against a competing
municipal solid waste landfill operated by New Morgan.  Ogden Projects maintained in the litigation that New
Morgan should be compelled to cease operations until it obtained a Part D preconstruction permit from the
Commonwealth.  Ogden Projects argued that the landfill, which began operating in January 1994, has the
potential to emit more than 50 tons per year of volatile organic compounds (VOCs) -- the threshold level for
major sources of VOCs in the nonattainment area in question -- and thus triggered major NSR requirements.

     One interesting aspect of this case is that a company successfully relied upon the citizen suit provision
to bring suit against a business competitor.  New Morgan, the defendant, argued that Ogden Projects did not
have standing to bring suit because it allegedly could not show that it was injured by the fact that New Morgan
lacked a Part D permit.  However, the district court ruled that Ogden Projects did have standing to bring suit. 
The court concluded that, because the two companies are located 35 miles apart and compete for business in
the same solid waste disposal market, Ogden Projects has suffered an economic injury due to the fact that it
obtained a Part D permit and New Morgan did not.

     The principal substantive issue was whether the landfill's gas collection and flare system is part of the
facility's "physical and operational design" within the meaning of EPA's PTE definition.  Under that definition,
PTE is "the maximum capacity of a stationary source to emit a pollutant under its physical and operational
design."  A "physical or operational limitation on the capacity of the source to emit a pollutant . . . shall be
treated as part of [the source's] design only if the limitation or the effect it would have on emissions is federally
enforceable."  Thus, if the gas management system was determined to be a separate "physical limitation" on the
facility's capacity to emit pollutants rather than an inherent part of its "physical design," the gas management
system's VOC reductions could be considered in calculating the facility's PTE, under EPA's PTE definition, only
if the requirement to use the system is federally enforceable.

     New Morgan contended that its gas management system, which allegedly removes 99 percent of VOCs
before release into the air, must be considered part of the facility's inherent "physical design."  If the system were
so regarded, annual VOC emissions would unquestionably fall well below the 50-ton threshold. 

     Based on the purposes and functions of the gas management system, the district court concluded that
the system should be considered a "physical limitation" on the facility's capacity to emit VOCs rather than part
of the facility's "physical design."  Because the court found that use of the gas management system was not
"federally enforceable," the court ruled that the facility constituted a major source and thus should have obtained
a preconstruction permit.

     Shortly after the district court issued its decision, New Morgan filed a motion for reconsideration.  New
Morgan argued that, because the D.C. Circuit had invalidated the PTE definition for NSR on September 15 in
the Chemical Manufacturers Association case -- the same definition relied upon by the district court -- the court
must reconsider and withdraw its decision.  New Morgan further argued that, because "physical or operational
limitations" need no longer be federally enforceable to be considered in determining a source's PTE, the court
must rule that the gas management system is part of the facility's "physical design."

     The motion for reconsideration is presently pending before the district court.  þ
     

Notes:
1)  
A mandate is a one-page document which makes an appellate court's opinion effective and officially returns
the matter to the administrative agency or lower court for further action in accordance with the opinion.

2)
"Article III standing" refers to a party's ability to satisfy the "case or controversy" requirement of Article III
of the Constitution so that it may maintain a lawsuit in the federal courts.  In order to have Article III
standing, a party must show that it is or will be injured, that its injury is traceable to the challenged action,
and that the federal court can redress the injury.

3)
Morgan Lewis represented the Clean Air Implementation project and prepared briefs and presented oral
argument in this case on behalf of the Project, the Chemical Manufacturers Association, and the American
Automobile Manufacturers Association.