Smaller Bites in EPA Air Chief’s Second Pass at Permitting Update

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By Jennifer Lu

William Wehrum has unfinished business with the EPA’s air pollution permitting program for factories and power plants that want to expand or make major upgrades to their facilities.

In his first stint at the Environmental Protection Agency in an acting capacity, Wehrum tried to address industry criticism over the permitting program, known as new source review, with sweeping rulemaking bundles.

His efforts were either dropped after the George W. Bush administration withdrew his nomination to head the Office of Air and Radiation in 2007, blocked by the courts, or undone by the incoming Obama administration.

“This time around,” Wehrum told Bloomberg Environment in an exclusive April 13 interview, “it’s important to strike a better balance.”

Already, the EPA has issued two industry-coveted tweaks to the permitting program through guidance documents.

The new source review program requires factories and power plants to install costly new air pollution controls when they expand or make modifications that increase their emissions.

Industries have long complained that securing compliance with the permitting program is tedious, time consuming, and confusing. Updating how the EPA administers the program through guidance documents is one way to quickly address those concerns.

“There are a lot of current issues within [new source review] that we can provide clear guidance through guidance,” Wehrum said. “Our strategy is to tell people sooner rather than later how we think the program should be implemented.”

Did You Get the Memo?

The focus on bite-sized updates to EPA programs comes after Wehrum watched a series of ambitious regulations he helped craft—from toxic air pollution rules from the power industry to attempts to set up an emissions trading program for power plants—get overturned by judges during his last go-round at the agency between 2005-2007.

Back then, Wehrum didn’t have the option to quickly update policy through guidance. Only since a 2014 U.S. Supreme Court decision in Perez v. Mortgage Bankers Association have federal agencies like the EPA been allowed to issue guidance such as policy memos without having to go through a lengthy public comment process.

“We have an interest in trying to do some things quickly, and especially in case-specific circumstances where clarity is lacking,” Wehrum said.

However, policy made through guidance memos can be just as easily undone by a new administration, John Walke of the Natural Resources Defense Council, who previously served in the EPA General Counsel’s Office, told Bloomberg Environment.

Environmental groups like Walke’s and some states have already sued the EPA over one of its guidance documents, which eased toxic pollution emissions standards for industry.

“Industry relies upon Bill Wehrum’s guidance at its peril,” Walke said.

Everything Old is New Source Review Again

But updating the permitting program has long been an industry priority. It was repeatedly spotlighted by businesses when the EPA put out a call for regulations that should be revised or eliminated.

After past regulatory efforts to make it industry-friendly fizzled, the fastest way to address business concerns is through guidance, Richard Alonso, environmental attorney at Sidley Austin LLP’s Washington, D.C., office, told Bloomberg Environment.

Already, the EPA has issued two memos on two new source review changes. A December memo told agency staff not to “second-guess” how facilities calculate emissions changes.

That was followed by a March memo on project emissions accounting, also known as project netting, which tells facilities how to calculate whether emissions from their proposed new construction projects would increase pollution. Under the new guidance, facilities can include emissions decreases from their projects to the overall calculations to avoid triggering new source review.

The memo drew inspiration from a 2006 rule changing three aspects of emissions counting under new source review, which lost traction after Wehrum left the agency.

“Finalizing this [2006] rulemaking would help to remove a substantial burden to energy and manufacturing projects,” Louis Renjel, vice president of federal government affairs and strategic policy at Duke Energy, wrote in response to an EPA call for suggestions on reducing regulatory burdens.

The American Chemistry Council also asked the EPA to revisit the reforms proposed during the Bush-era EPA, whether through guidance, regulation, or legislation.

The EPA this summer aims to address project aggregation, another piece of new source review reform from Wehrum’s 2006 rulemaking bundle.

It would define how emissions from separate modifications that take place around the same time should be counted, according to a presentation Anna Marie Wood, director of the EPA’s Air Quality Policy Division, gave at a state air regulators conference April 5.

More Guidance Coming

Three more guidance memos are slated to be issued this spring, according to Wood’s presentation.

One would redefine what counts as “ambient air,” or the air the general public breathes. This definition is important to new source review because facilities must show that their post-construction emissions won’t worsen air quality according to the national standards, Lynn Hutchinson, the EPA new source review project lead in 2002, told Bloomberg Environment.

Another guidance document in the works would change the pollutant modeling used to decide whether emissions would damage air quality. The White House completed its review of the memo April 12.

A third spring guidance document would allow the EPA to revive an attempt to expand the kinds of routine maintenance and repairs excluded from new source review. That 2003 rule was vacated by the U.S. Court of Appeals for the District of Columbia Circuit in New York v. EPA in 2006, which said industries could not write off physical changes that cost below a certain amount as routine maintenance.

“You already have a court on record saying those particular reforms are not allowed, so those might be a heavier lift without notice and comment rulemaking,” Alonso said.

When asked how he will ensure that his current batch of reforms stick beyond the current administration, Wehrum said, “a piece of it is making change that will last, but the bigger piece of it, for me, again, is just from a public policy standpoint.”

“If people can’t look at our rules and know what they need to do to comply, then we’ve got a problem,” he said.

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