The U. S. Department of Commerce (“DOC”) has issued a report on the input it received from manufacturers on changes they would like to see in environmental permitting and regulations. Streamlining Permitting And Reducing Regulatory Burdens For Domestic Manufacturing,

https://www.commerce.gov/sites/commerce.gov/files/streamlining_permitting_and_reducing_regulatory_burdens_for_domestic_manufacturing.pdf, October 6, 2017 (DOC Report). The DOC Report offered three overall recommendations for reducing regulatory burdens, as well as distilling recommendations from trade associations and individual manufacturing commenters into twelve “Priority Areas For Reform,” ten of them in the environmental area. This article outlines environmental recommendations in the DOC Report not previously analyzed in two earlier Law 360 articles reporting on industry comments to DOC,[i] and discusses the processes by which DOC’s priority recommendations for environmental regulations and permitting might be implemented.

Department Of Commerce General Recommendations

DOC made three “broad recommendations” for regulatory reform:

  • Agency “Action Plans.” President Trump’s Executive Order on Enforcing the Regulatory Reform Agenda required each agency to establish a Regulatory Reform Task Force (RRTF).[ii] DOC recommended that each agency RRTF deliver an Action Plan to the President by year end, with particular focus on the “Priority Areas for Reform” listed in the DOC Report. EPA established its RRTF in March, 2017.
  • Annual Regulatory Reduction Forum. DOC “recommends creating an annual, open forum for regulators and industry stakeholders to evaluate progress in reducing regulatory burdens.”[iii] DOC implies that it might be a lead agency in this effort going forward. It should be noted that EPA has held numerous public meetings, industry meetings, forums, and conference calls since creation of its RRTF.[iv].
  • Expand the FAST-41 Process. The Fixing America’s Surface Transportation Act of 2015, Title 41, known as “FAST-41,” includes measures intended to streamline environmental review and permitting for certain infrastructure projects.[v] DOC recommends that projects “resulting in significant, immediate economic benefit to the U.S” should be included in the FAST-41 streamlining process if they meet the statutory definition of a covered project, and also recommended that legislation be enacted to apply FAST-41 procedures to manufacturing projects.[vi]

Department Of Commerce Priority Areas For Reform

The DOC noted that “comments on … EPA rules dominated the responses from industry,” and led to the bulk of DOC’s recommended “Priority Areas for Reform.”[vii]DOC Priority Areas discussed in my previous articles included: improving the New Source Review (NSR) and Prevention of Significant Deterioration (PSD) air permit programs; providing flexibility for emissions during Routine Maintenance, Repair & Replacement (RMRR) activities; improvements to the National Ambient Air Quality Standards (NAAQS) program; improvements to Best Available Control Technology (BACT) analysis; adopting affirmative defenses or exceptions for unforeseeable and uncontrollable emissions during startup, shutdown, and malfunction (SSM); delay in implementing the new 70 parts per billion (ppb) ozone standard; and withdrawal of the Clean Water Act “waters of the U.S.” definitional rule.

DOC “Priority Areas for Reform” not analyzed in my previous articles include: 

  • NSR/PSD Permits: Reducing the statute of limitations on challenges or appeals to one year; “grandfathering” NSR permit applications following revision of a NAAQS.[viii]
  • Clean Air Act Title V Operating Permits: extend the term of Title V Permits from 5 to 10 years.[ix]
  • National Emissions Standards for Hazardous Air Pollutants (NESHAP); reduce costs and duplicative requirements; ensure that requirements under Residual Risk and Technology Reviews are not redundant or unreasonably costly; issue a Unified Coatings Rule to replace eight overlapping NSPS and NESHAP regulations that apply to coatings.[x]
  • NSPS: Add exemptions or streamline permitting for research and development activities.[xi]
  • Clean Water Act Section 404 and National Pollutant Discharge Elimination System (NPDES) Permitting: provide applicants with instructions and tools to assist them in the permitting process.[xii]
  • RCRA – aggressively review lists of hazardous wastes to delist easily recyclable materials.[xiii]

The Path Forward For DOC’s Priority Reforms

Beyond recommending that EPA’s RRTF develop an action plan and confer with industry stakeholders, DOC did not outline the process EPA should follow to implement the DOC priority reforms. Different implementation routes would likely be necessary, depending on the nature of the recommended reform.

 Congressional Action. DOC noted that several of the priority reforms would require statutory amendments by Congress. These include:

  • Expanding the definition of “covered projects” under FAST-41, to cover manufacturing projects which result in immediate economic benefit to the U.S.[xiv]
  • Allowing NSR permittees to pay emission fees in lieu of obtaining emissions credits or offsets for facility construction or expansion.[xv]
  • Reducing to one year the statute of limitations on challenges or appeals of NSR or PSD permits.[xvi]
  • Revising the definition of Routine Maintenance, Repair & Replacement (RMRR) to provide more flexibility.[xvii]
  • Extending the period for NAAQS reviews from 5 to 10 years.[xviii]
  • Providing affirmative defenses or regulatory exceptions for unforeseeable and uncontrollable emissions during periods of startup, shutdown, and malfunction (SSM). DOC noted that litigation is currently pending about whether such exceptions or affirmative defenses can be allowed under existing Clean Air Act provisions.[xix]

Although in 2016 Congress demonstrated its ability to pass bipartisan environmental legislation in enacting the Frank R. Lautenberg Chemical Safety for the 21st Century Act, amending the Toxic Substances Control Act (TSCA)[xx], it is less certain that DOC’s priority reforms to the Clean Air Act would garner the bipartisan support needed to advance in a deadlocked Senate.

Changes in EPA Policies and Guidance. DOC suggested that several of the priority reforms could be accomplished by revisions to EPA policies or guidance documents, not rising to the level of regulatory revisions. These include:

  • Eliminating the “once-in-always-in” policy under the NESHAP program.[xxi]
  • Facilitating use of flexible air permitting mechanisms under the PSD and Title V programs, include plant-wide applicability limits (PALs) and alternative operating scenarios.[xxii]
  • Allowing commencement of non-emitting construction activities before issuance of an NSR or PSD construction permit (although this could require a regulatory revision).[xxiii]
  • Streamlining NSR applicability determinations and/or reducing NSR coverage by addressing aggregation of emissions within a facility or over time, project netting, debottlenecking, and emissions calculations. DOC noted that regulatory changes may be needed in this area as well, and that litigation is pending over EPA’s 2009 aggregation and project netting rule.[xxiv]

Formal Rulemaking by EPA. DOC recognized that many of the DOC Priority Reforms would require formal rulemaking initiatives, of varying complexity.

  • Modernizing antiquated rules. DOC pointed out rules that should be modernized to reflect technological developments. For example, infrared cameras (IR) are now widely used to detect equipment and pipeline leaks, and could replace the current point-by-point monitoring required under the Leak Detection and Repair (LDAR) rules.[xxv]
  • Eliminating overlap. DOC pointed out several regulatory or permit programs with overlapping requirements. Regulatory amendments could harmonize these programs. Examples include: NSR and Title V permits;[xxvi] NESHAP and NSPS requirements, including those applicable to coating operations;[xxvii] and the Stormwater Pollution Prevention Plan (SWPPP) and Spill Prevention, Control and Countermeasure (SPCC) spill prevention and control programs.[xxviii]
  • Reducing monitoring and reporting frequency. DOC identified programs where monitoring and reporting requirements could be relaxed, arguably without any negative impact on the environment. These include: visible emissions monitoring for sandblasting operations[xxix] and annual tune-up requirements for all burners in industrial and commercial boilers and process heaters.[xxx]
  • Rollbacks to previous rules. DOC identified several reforms that could be accomplished by rulemaking reverting regulations to previous versions. Examples include the definition of “waters of the U.S.”;[xxxi] retention of the 75 ppb ozone standard;[xxxii] and restoration of exemptions for Start-up, Shutdown and Malfunction (SSM) emissions (although statutory amendments might be required as well).[xxxiii]
  • Fundamental rule changes. Beyond relatively simple or non-controversial updating and elimination of duplication, most of the DOC Priority Reforms would require formal rulemaking, with varying levels of complexity. Examples include: streamlining the review process for Title V air permits;[xxxiv] adopting NSPS exemptions for research and development activities;[xxxv] and revising NSR coverage rules, including using actual emissions increases versus maximum “potential to emit” in calculations.[xxxvi]

Conclusion

Although DOC recommended significant revisions to environmental regulatory and permit programs, these changes are within the purview and Congress and EPA. It remains to be seen whether EPA will pursue a short list of “easy fixes,” a comprehensive statutory and regulatory recasting of Clean Air Act programs, or something in between. On October 25, 2017, EPA issued a “Final Report on Review of Agency Actions that Potentially Burden the Safe, Efficient Development of Domestic Energy Resources Under Executive Order 13783” (“Final Report”).[xxxvii] Although this report is oriented toward energy policy and energy-related environmental rules, it outlines several EPA regulatory initiatives which may be responsive to the DOC Priority Reforms:

  • Administrator Pruitt will be convening an NSR Reform Task Force;
  • Administrator Pruitt has formed an Ozone Cooperative Compliance Task Force;
  • EPA plans to streamline Clean Air Act State Implementation Plan (“SIP”) approvals and work to eliminate the SIP backlog; and
  • EPA has created a Smart Sectors program under which EPA staff members highly knowledgeable about specific industries will act as liaisons with industry trade associations and companies and other stakeholder groups to plan future policy.

Further indications of EPA’s planning for regulatory reform may be provided by EPA’s next Semiannual Regulatory Agenda, which should be published before year end.