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EPA’s New Refinery Rule—Next Generation Compliance in Action

The U.S. Environmental Protection Agency (EPA) signed a new air pollution rule in September that illustrates how EPA is implementing its next generation compliance ideas.  The rule governs hazardous air emissions from petroleum refineries, but features several “next gen” tools that are relevant to other types of facilities, especially chemical plants and oil and gas storage facilities.

Next Gen Tools Found in the New Refinery Rule

EPA’s next generation compliance initiative seeks to modernize the agency’s regulations and enforcement efforts.  The initiative encourages the use of new technologies for detecting air emissions, aims to incentivize compliance and emissions reductions, rather than relying primarily on the threat of enforcement, and also encourages greater public disclosure of environmental data.  Many of these ideas are on display in the new refinery rule.

First, the rule requires “fenceline monitoring” of benzene concentrations and corrective action if benzene levels are detected above a baseline level.  This is the first time EPA has required fenceline monitoring and related corrective action measures on such a large scale.

Second, the rule requires electronic reporting of the fenceline monitoring data.  That is important not simply because it will enhance EPA’s ability to bring timely enforcement actions, but also because it is a prelude to public disclosure of the monitoring data.  EPA has explained that it intends to develop a publically accessible database of the fenceline monitoring results.

Third, the rule illustrates EPA’s evolving approach toward so-called “upset” or “malfunction” events.  Historically, many EPA air regulations excused compliance during periods of equipment malfunction.  EPA has begun rolling back those malfunction exceptions and, in the new refinery rule, the agency adopts an approach to malfunction events that it will likely seek to apply to other industrial facilities going forward, especially those that use flares and pressure relief devices (PRDs).  The new rule aims to minimize the use of flares and PRDs, in part because of recent studies suggesting that flares and PRDs can themselves be large sources of air pollution.  The rule limits the number of flaring and PRD events that are permitted, requires refinery operators to develop flare management plans (to reduce flare use) and requires certain corrective actions to be taken after each flaring or PRD event.

Fenceline Monitoring Issues

The rule’s fenceline monitoring and corrective action requirements deserve special attention.  Those features of the rule are intended to improve the control of so-called “fugitive” emissions, emissions that, generally speaking, leak out of industrial equipment rather than being expelled out an exhaust stack where they can be more easily subjected to pollution control devices.  Many other types of facilities experience fugitive emissions, including chemical plants, distilleries, oil and gas storage terminals, and wastewater treatment plants.  Thus, the new refinery rule provides a glimpse of a possible regulatory future for many other industrial activities.

A critical issue in this context is how the fenceline monitoring data will be used.  Do high levels of a hazardous air pollutant, standing alone, establish a violation, or is something more required?  In the [...]

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CSAPR Reinstated, But Some Upwind States May Be Able to Bring As-Applied Challenges

The U.S. Supreme Court today upheld the U.S. Environmental Protection Agency’s Cross State Air Pollution Rule, otherwise known as CSAPR or the “Transport Rule,” reversing a lower court decision that had vacated that rule.  The decision means that large sources of nitrogen oxide and sulfur dioxide emissions in upwind states – especially coal-fired power plants – will be subject to more stringent air pollution control requirements going forward.

Today’s decision is an important victory for EPA and for the downwind states and other entities that supported the Transport Rule.  Indeed, the decision not only reinstates the Transport Rule, but also holds that EPA did not act prematurely in issuing federal implementation plans (FIPs) for that rule.

But the decision does leave room for some state-specific implementation-related challenges on remand.  Most notably, the Supreme Court held that EPA lacks authority to require certain types of “over-control,” meaning that EPA cannot require an upwind state to reduce its emissions beyond (i) the amount needed to achieve attainment with applicable air quality standards in every downwind state to which it is linked or (ii) the point at which the upwind state is no longer contributing more than one percent of the air pollution problem in every downwind state to which it is linked.  Thus, to the extent that the Transport Rule, or an individual FIP, requires such “over-control,” the affected upwind state should be able to challenge that aspect of the rule, or the FIP, on remand.  In the Supreme Court’s words:  “If any upwind State concludes it has been forced to regulate emissions below the one-percent threshold or beyond the point necessary to bring all downwind States into attainment, that State may bring a particularized, as applied challenge to the Transport Rule, along with any other as-applied challenges it may have.”

Nevertheless, the overall takeaway from today’s decision is that the lower court was wrong to vacate the Transport Rule and that EPA is entitled to considerable deference in how it implements the Clean Air Act’s “good neighbor” provision.  The Supreme Court endorsed EPA’s overall approach to reducing interstate air pollution, even if it left open the possibility that some individual states may be able to challenge the state-specific application of that approach.




EPA Proposes to Approve Texas State Implementation Plan

by Ari Peskoe

The U.S. Environmental Protection Agency (EPA) recently proposed to approve revisions to Texas’s air pollution permitting program.  These revisions, which requires EPA’s approval pursuant to the Clean Air Act, would bring Texas’s State Implementation Plan (SIP), in compliance with federal standards and additionally establish a Plant-wide Applicability Limits (PALs) program in the state. 

Under the federal Clean Air Act, states are authorized to develop their own permitting programs, as long as they meet minimum national standards set by Congress and EPA.  The proposed revisions to Texas’s SIP will update its New Source Review (NSR) Program, which requires that entities constructing or modifying major air pollution sources obtain a permit prior to construction.  The state’s proposed revisions include an update to the method for evaluation of ozone standards in NSR applications to bring it into compliance with a 2006 D.C.  Circuit Court decision, an administrative timing change that may change which air quality standards are applied to a permit, and the establishment of a PALs program. 

A PAL establishes a site-wide emissions limit for an existing source. By using a PAL, an owner or operator can make changes that increase an individual units’ pollutant emissions so long as plant-wide actual emissions do not exceed its PAL.  PALs provide increased operating flexibility for owners and operators, and create an incentive for owners and operators to employ innovative control technologies and pollution control measures to reduce emissions and enable economic expansion.  According to the EPA, the the Texas PALs program will reduce emissions because a PAL is based on actual emissions, which are generally less than the emissions allowed under current permits.  EPA concluded that Texas’s new rules were at least as stringent as the applicable federal regulations and should have the same impact as the federal PAL rules. 

Existing major stationary sources that meet certain criteria will be eligible for a PAL. PALs are pollutant-specific and issued for ten-year terms.  Baseline emissions under a PAL are established using any consecutive 24-month period in the last ten years. Emissions calculations include emissions from startups, shutdowns and malfunctions and are adjusted to account for units that have been permanently shut down and potential emissions from units constructed after the baseline period.  To obtain a PAL, a facility owner or operator must submit a permit application to the Texas Commission on Environmental Quality. PAL applications are subject to public notice and comment.

Once EPA’s proposed approval of Texas’s revised SIP is published in the Federal Register, EPA will accept public comments for 30 days. 
 

*Jessica Bayles, a summer associate in the McDermott’s Washington D.C. office, contributed to this article.




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