The Environmental Regulatory Reforms Manufacturers Want Most

Husch Blackwell LLP
Charles E. Merrill

June 14, 2017

U.S. manufacturers and their trade associations have submitted comments to the U. S. Department of Commerce (DOC) on changes they would like to see in environmental regulations. President Trump’s Memorandum of January 24, 2017, “Streamlining Permitting and Reducing Regulatory Burdens for Domestic Manufacturing”[1] directed the DOC to conduct outreach concerning the impact of Federal regulations on domestic manufacturing. This article reviews manufacturers’ responses to DOC on environmental issues.

The DOC sought input on:

The impact of Federal permitting requirements on the construction, expansion, or operation of domestic manufacturing facilities, and possible Federal actions to streamline permitting. Regulations that adversely impact domestic manufacturers, including compliance burdens for facility construction, expansion, or operation.[2]

DOC asked about the number of permits required; the time required to obtain permits; duplication or overlapping of permits; the most onerous features of permits; and suggestions for improvement of the permitting process. DOC received over 170 comments by its March 31, 2017 deadline on a wide range of federal regulations. The comments are available at: https://www.regulations.gov/docketBrowser?rpp=25&so=DESC&sb=commentDueDate&po=0&dct=P S&D=DOC-2017-0001.

Publicly‑traded corporations, small privately-held companies, and numerous trade associations responded. Many individual commenters focused narrowly on regulations specifically targeting their processes, while others echoed broad themes covered in trade association submittals. In the interest of space this article is limited to a review of comments on environmental regulations which appear in multiple submissions by manufacturers’ trade associations or consortiums.

The U.S. EPA Environmental Protection Agency (EPA) has conducted a separate outreach effort under President Trump’s February 24, 2017, Executive Order. By its May 15, 2017 comment deadline, EPA had received over 60,000 submissions, which are available at https://www.regulations.gov/docket?D=EPA-HQ-OA-2017-0190. Many of these comments had a broad political or policy orientation, favoring or opposing environmental regulations in general. A review of this massive administrative record is beyond the scope of this article. The comments submitted to DOC offer a more accessible view of manufacturers’ recommendations with respect to specific environmental regulations.[3]

Comprehensive Comments

Large associations including the National Association of Manufacturers (NAM)[4] and the American Chemistry Council (ACC)[5], discussed both in general terms and in detail the burden that regulations place on manufacturers, particularly smaller businesses that lack economies of scale in dealing with regulations, and the costly delays and uncertainty caused by permitting problems. Many of the environmental comments were very general and aspirational: EPA should streamline its permitting processes, reduce complexity, reduce permitting costs, work more closely with industry, and reach better results. And many of the comments proposed changes that would require action by Congress. But several associations presented comprehensive lists of specific recommended regulatory amendments. For example, the American Forest & Paper Association (AF&PA) submitted a sixty-five page list of recommended revisions to the Clean Air Act regulations,[6] and The National Environmental Development Association’s Clean Air Project (NEDA/CAP)[7] and the Air Permitting Forum[8] offered both general policy recommendations and numerous specific recommendations relating to air permitting.

High-Profile Targeted Regulations

Many manufacturing commenters expressed their support for repealing or revising several regulations that have been challenged in the courts, have already been directly addressed by President Trump’s Executive Orders, and/or have been stayed by EPA. These regulations include:

The definition of “Waters of the United States” for purposes of Clean Water Act jurisdiction. On May 27, 2015, the EPA and Army Corps of Engineers adopted a new definition of the term “waters of the United States,” which would effectively extend federal jurisdiction well beyond traditional navigable waters to ephemeral tributaries, flood plains, adjacent features and “other waters.” NAM commented that: “Its vague definitions subject countless … industrial … activities to new layers of federal requirements …” and that “the uncertainty of whether a wet area near their property is subject to federal CWA permitting requirements” can lead to new upfront costs and project delays. NAM Comments. In an Executive Order issued February 28, 2017, President Trump directed EPA and the Army Corps of Engineers to propose a new rule rescinding or revising the Waters of the U.S. Rule. Challenges to the rule are pending in the federal courts, including a Supreme Court appeal concerning the appropriate federal court to hear challenges to the rule. The D.C. Circuit Court of Appeals has temporarily frozen the litigation, requesting briefing on whether the rule should be remanded back to EPA, or stayed pending further EPA Action.    Clean Power Plan. Manufacturers strongly supported withdrawal and replacement of the Clean Power Plan proposed and final rules. See, e.g., NAM; AF&PA; Fertilizer Institute[9]. On February 8, 2016, the Supreme Court granted a stay of the regulations while challenges are being considered in the D.C. Circuit Court of Appeals. President Trump’s March 28, 2017 Executive Order, “Promoting Energy Independence and Economic Growth,” directed EPA to review the Clean Power Plan and determine whether to revise or withdraw the proposed and final rules. On April 28, 2016, the D.C. Circuit Court of Appeals granted a 60 day stay of the litigation. Social Cost of Carbon and Methane. Commenters critiqued the Obama Administration’s estimates of the social cost of carbon and use of the estimates in rulemaking, and recommended the withdrawal of this guidance. The March 28, 2017 Executive Order withdrew the technical support documents concerning consideration of the social cost of carbon in regulatory impact analysis.

Risk Management Plan Rule Amendments (RMP Rule). In December, 2016, EPA adopted revisions to the Risk Management Program under the Clean Air Act. Manufacturers’ comments widely supported withdrawal or revision of the rule. A Petition for Review of the rule is pending in the D.C. Circuit Court of Appeals. EPA has proposed a stay of the effective date of the rule until February 19, 2019.

Air Pollution – Stationary Sources

By far, the largest number of comments pertained to air pollution regulation, and most of those involved air permitting programs.

National Ambient Air Quality Standards (NAAQS).

Manufacturing commenters generally agreed that National Ambient Air Quality Standards (NAAQS) have become overly stringent, such that marginal health and environmental benefits from further tightening of the standards do not justify the resulting high compliance costs and permitting delays.

NAAQS Review Period. Under Section 109(d) of the Clean Air Act, EPA must review the NAAQS every five years. Commenters advocated a statutory amendment extending the review period to ten years. Air Permitting Forum; U.S. Chamber of Commerce.[10] Absent such an amendment, commenters suggested that, in its five-year reviews, EPA should exercise its discretion not to adjust the standards downward, based on consideration of the economic impacts on manufacturers. AF&PA; Fertilizer Institute; Industrial Energy Consumers of America (IECA)[11].   NAAQS for Ozone. Commenters focused on the NAAQS for ozone. EPA’s 2015 ozone regulation reduced the standard from 75 parts per billion (ppb) to 70 ppb. Commenters urged a delay in implementation of the 2015 standard, which they note would push many counties into non-attainment, preventing new construction. NAM; IECA; American Fuel & Petrochemical Manufacturers (AFPM).[12]

Air Pollution Permitting Programs.

Commenters were highly critical of EPA’s air permitting programs, whether administered by EPA or by authorized states. Commenters noted it can take many months or even years to obtain a Prevention of Significant Deterioration (PSD) permit in a NAAQS attainment area or a New Source Review permit in a non-attainment area, jointly referred to herein as “NSR Permits.” Commenters explained that NSR permitting delays are a major obstacle to construction or expansion of manufacturing facilities. Commenters argued generally that NSR permitting should be streamlined and simplified to reduce the timeframe, cost and overall burden of obtaining construction permits for new and modified facilities. NAM; Air Permitting Forum; IECA; AF&PA. Commenters also offered many specific suggestions for improving the permitting process.

State role in air permitting. As an overarching policy matter, many commenters urged EPA to respect state primacy in air permitting, arguing that EPA interference in permitting causes many delays. Commenters believe that the states should make most air permitting decisions; EPA should conduct programmatic review of state permitting, without micromanaging individual permits. NEDA/CAP; Air Permitting Forum; IECA; see also Flexible Packaging Association (FPA)[13].   Commencement of construction. Emissions sources are not allowed to “begin actual construction” before a NSR permit is issued. Numerous commenters recommended that EPA revise its regulations and/or issue guidance to allow peripheral construction activities such as demolition, construction of building footings, and electrical installation, to occur before issuance of a permit. NAM; NEDA/CAP; Aluminum Association[14]; FPA; IECA; American Petroleum Institute (API)[15].   Misuse of “completeness determinations.” Under Section 165(c) of the Clean Air Act, the permitting agency must grant or deny a PSD construction permit application within one year of filing of a complete permit application. Commenters noted that permit writers may repeatedly request additional information, delaying the completion determination that would start the one year clock running. Inappropriate use of completeness determinations by permit writers to control their workflow can effectively extend the permitting process by months or even years, and require continual updating of applications. NEDA/CAP; FPA; Air Permitting Forum; National Lime Association (NLA).[16]   Major source aggregation policy. Commenters stated that EPA’s policies on whether emission units under common ownership or operation must be “aggregated” to determine if they are part of the same major source or major modification are not applied uniformly. Commenters recommended that EPA replace its current guidance with new rules on NSR applicability. NEDA/CAP; NAM; AF&PA; FPA.  Project aggregation policy. EPA should withdraw older guidance on when individual projects at a manufacturing plant must be aggregated to determine NSR applicability, and revise and finalize its 2009 proposed aggregation rule, which would establish a rebuttable presumption that projects separated by three years or more need not be considered a single project, but no presumption that projects within a three year time frame are a single project. NAM; NEDA/CAP; Air Permitting Forum; FPA; AFPM; AF&PA; see also Fertilizer Institute support for improved aggregation policy.  Pollution Control Projects. EPA should revise its regulations to provide presumptive NSR approval of Pollution Control Projects. Due to a court decision vacating the previous exclusion of such projects from NSR permitting, a statutory amendment may be required. NEDA/CAP; American Iron and Steel Institute (AISI);[17] Council of Industrial Boiler Owners[18]; AF&PA.  “Debottlenecking” Projects. EPA currently requires, in determining NSR applicability to a modification, that emissions increases from non-modified upstream and downstream units (“de-bottlenecked units”) be considered. Commenters argue that EPA’s policies thwart innovation and efficiency. Some commenters favor finalizing EPA’s 2006 proposed rule[19] clarifying when “debottlenecking” projects trigger NSR review (NEDA/CAP; AF&PA); while others favor adoption of a new rule stating that only emissions increases from the modified unit must be considered (Air Permitting Forum).  Project Netting. To determine whether a physical or operational change will require NSR permitting, a source must first determine whether the project will cause a significant emissions increase at the affected unit; if so, the source must conduct a source-wide netting analysis for every project over a five year period to determine whether a significant emissions increase will result from the project. Commenters stated that the second step is a burdensome requirement that discourages equipment replacement. At present, EPA will not allow “project netting” for the first step, by which the source might demonstrate that the combined emissions increases and decreases associated with the project do not result in a significant emissions increase. Commenters favored finalization of EPA’s 2006 proposed rule to allow “project netting”, which would eliminate the need for a source-wide netting analysis if the net effect of the project itself does not result in a significant increase. NEDA/CAP; Air Permitting Forum; Council of Industrial Boiler Owners; AFPM; AF&PA.  BACT Reviews. Manufacturers applying for PSD permits must demonstrate their use of Best Available Control Technology (BACT). Commenters were critical of EPA’s “top down” BACT review policy, which requires applicants to identify the most stringent control technology available, and then either accept it or demonstrate it is not acceptable based on technical, economic, energy or environmental factors. Commenters believe this process is unreasonably onerous, and requires expensive analysis of unrealistic technologies. Commenters suggested that EPA could streamline BACT reviews by adopting guidance that NSPS or MACT controls for an industry segment qualify as “presumptive BACT.” NEDA/CAP; Air Permitting Forum; see also AFPM support for simplifying the BACT process.  Routine Maintenance, Repair, and Replacement (“RMRR”). EPA should adopt a clear definition of “routine maintenance, repair, and replacement” that would be exempted from NSR permitting. Air Permitting Forum; AISA. NEDA/CAP suggested excluding as RMRR activities involving less than 5 percent of the capital cost of brand new equipment.  Atmospheric Dispersion Modeling. PSD permit applicants must conduct atmospheric dispersion modeling, using EPA-approved models, to demonstrate that a new or expanded manufacturing plant will not interfere with attainment of NAAQS. Commenters leveled many criticisms at EPA’s modeling program, arguing that it is overly conservative and not based on real-world conditions. Suggested changes include: Adopt “probabilistic modeling” to reflect variability in actual emissions, meteorology, and background, rather than assuming worst case conditions persist continuously. Modify current policy regarding ambient air to make it consistent with reasonably anticipated human exposures. Eliminate requirements to model fugitive emissions. Remove the EPA Modeling Clearinghouse from the PSD permitting process, because it has become a bottleneck.

NAM; Aluminum Association; NEDA/CAP; Air Permitting Forum; Fertilizer Institute; NLA; FPA; IECA; AISA; Council of Industrial Boiler Owners; API; AFPM; AF&PA.

Emissions offset policies. To obtain an NSR permit in a nonattainment area, an applicant must obtain emissions reductions from other sources within the same air quality control region that are equal to or greater than the potential emissions from the new major source or modification. Commenters noted that emissions offsets are not available for purchase in many parts of the U.S., thus preventing the building or expansion of manufacturing facilities. Commenters recognized that statutory amendments may be needed to address this problem, but also recommended that EPA amend its regulations and change its policies with respect to emission offsets. Specific suggestions included: Allow offsets from anywhere in the region or “upwind” sources, including in adjacent non-attainment areas. Allow offsets from sources that shut down more than 5 years ago. (EPA policy limits offsets to shutdowns in a “contemporaneous” period, defined as two years).  Allow pollutant interchangeability of offsets for NOx and VOC emissions of nitrates and sulfates. Allow use of offsets from small sources. Allow offsets for pollutant decreases incidental to compliance with other federal programs.

NEDA/CAP; NLA; API.

Startup, Shutdown, and Malfunction (SSM) Defenses. On June 14, 2016, EPA proposed to remove SSM affirmative defenses to enforcement under State and Federal operating permit programs.[20] This would make air emission limits applicable during all times of facility operation, without exceptions for SSM events that can be out of the control of the facility. Manufacturers commented that EPA should review the treatment of emissions during SSM events. NAM; Air Permitting Forum; The Aluminum Association; The Fertilizer Institute; IECA; AISI; Steel Institute; AF&PA.

National Emissions Standards for Hazardous Air Pollutants (NESHAP).

“Once In, Always In” NESHAP Applicability Policy. Commenters widely supported revision of EPA’s “once in, always in” policy for applicability of Maximum Achievable Control Technology (MACT) requirements under the NESHAP rules. This policy provides that once a major source becomes subject to a MACT standard, it remains subject to that standard in perpetuity, even if it reduces emissions below the major source threshold. EPA could accomplish this revision by finalizing a 2007 proposed rule. NAM; ACC; Air Permitting Forum; NLA; FPA; AISI; AF&PA.

Regional Haze (RH). Under the Regional Haze Program, states must implement plans to improve visibility, especially in National Parks. Manufacturing facilities potentially affected include sources that emit particulates, sulfur dioxide (SO2), oxides of nitrogen (NOX), volatile organic compounds, and other pollutants that may cause or contribute to visibility impairment. Facilities may be required to implement Best Available Retrofit Technology (BART) to control these emissions. Manufacturers have requested reconsideration of amendments to EPA’s 2016 Regional Haze Rule, recommending that EPA stop imposing stringent limitations providing no visibility improvement, and restore state primacy over the program. NAM; Aluminum Association; IECA; AISI; AF&PA.

Clean Water Act

Stormwater – Benchmark Concentration Levels. Manufacturers typically operate under multi‑sector general stormwater permits that require implementation of best management practices (BMPs) to meet stormwater benchmark concentration levels. If a benchmark level is exceeded, a facility must determine if additional BMPs or other corrective measures must be implemented. Commenters indicated that many of the benchmark concentration levels have been set lower than necessary for stream protection, and cannot realistically be met. Commenters recommended that EPA amend the general stormwater permit to provide for alternative benchmark levels. NAM; The Aluminum Association.

Hazardous Waste

Hazardous Waste Generator Improvements Rule. This rule included a provision that a facility’s failure to meet any one of the conditions for exemption from regulation as a permitted treatment, storage, or disposal facility (TSDF) could subject a generator to multiple violations and substantial penalties. Numerous commenters supported withdrawal or revision of this rule. The rule has been challenged in the courts. AFPM; IPC (The Association Connecting Electronics Industries)[21]; IECA.

Conclusion

Manufacturers generally did not recommend the complete, outright repeal of any environmental regulations or permitting programs, recognizing that regulation is essential to protection of the environment. Rather, manufacturers focused on:

Easing limitations and overly conservative models or assumptions that for all practical purposes prevent construction or modernization of manufacturing facilities; Shortening and simplifying the permitting process so that it does not chill construction or modernization; Eliminating requirements that are not necessary for protection or improvement of air or water quality; Improving cost-benefit analyses to prioritize economic growth and job creation for U.S. manufacturers competing in a global market, consistent with environmental protection.  A few of the requested regulatory changes could be quickly accomplished by revision of EPA policies or guidance, and a few others would simply require finalization of proposed regulations that EPA failed to act on during the previous administration. But many of the requested changes would each require fairly complex rulemaking that would take one or more years to complete, and some would require Congressional action. Although manufacturers have charted a path toward less burdensome environmental regulation and permitting, reaching their goals would require an EPA effort seemingly inconsistent with the Trump Administration’s proposed dramatic reductions of EPA funding. Manufacturers have thoughtfully and comprehensively expressed their views on how environmental regulation and permitting could be improved. The focus now turns back to how the administration will respond to manufacturers’ recommendations.

This article is being provided for informational purposes only and not for the purposes of providing legal advice or creating an attorney-client relationship. You should contact an attorney to obtain advice with respect to any particular issue or problem you may have. In addition, the opinions expressed herein are the opinions of Mr. Merrill  and may not reflect the opinions of Synergy Environmental, Inc., Husch Blackwell LLP or either of those firms’ clients.

 

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