Flexing Muscles to Clear the Air in Texas
Curt Johnson, CPEA, Richmond, TX
There is no doubt about the tension in the air in Texas concerning its State Implementation Plan for air quality. At the center of the controversy is the issue of Texas Flexible Permits.
TCEQ came up with the concept of Texas Flexible Permits to address some of the largest facilities in Texas that due to their age would have been grandfathered from having to obtain Title V Permits under the Clean Air Act. The result for some 120 refineries, chemical manufacturers, pipeline compressor stations and even the UT Health Sciences Center in San Antonio, was that these sites were permitted and subject to the air quality regulations of Texas.
One small problem says USEPA. They contend that certain actions allowed by Texas under the Flexible Permit Program do not comply with the Clean Air Act and USEPA regulations. Therefore, sites are expected to comply with both the Texas regulations and those parts of the USEPA rules that have yet to be delegated to Texas. The Texas Commission for Environmental Quality and Region VI of USEPA have been agreeing to disagree for more than 10 years about Texas Flexible Permits, but as we've all probably heard from our mothers at one time or another, "It's all fun and games until someone gets hurt."
Under a Texas Flexible Permit, a facility can upgrade or modify operations and not have to go through permitting under the requirements for New Source Review, as long as the total facility emissions remains below the facility cap. Consider this simplified example. Say a facility has a Texas Flexible Permit for its 3 sources that each emits 10 tons a year of Pollutant X. If the facility makes changes such that one of those sources now emits 15 or 20 tons of Pollutant X, but the emissions from the other two sources are reduced such that the facility does not emit more than a total of 30 tons of Pollutant X, Texas says "Way to adapt and get creative! That's how we create jobs in Texas and keep America's gas tanks full."
USEPA, however, says "Hold on! That's against the law!" According to their rules and the Clean Air Act, increasing emissions from a single source requires an examination under NSR, regardless of what happened to the total facility emissions. When permitted as a "new source" the facility would then have to assure that the source achieves compliance with the current Best Available Control Technology and Lowest Achievable Emissions Rate. Most businesses in Texas (as elsewhere) want to do the right thing, but complying with NSR can result in some serious money, and few organizations are going to implement such expensive controls unless they have to.
Despite years of meetings and letters and attorneys and amendments to the Texas SIP, USEPA still had not gotten satisfaction about Texas Flexible Permits. Their warning shot in 2007 was to send a letter to all 120+ holders of Texas Flexible Permits, where USEPA told them that while they might be complying with Texas law, they might not be in compliance with federal requirements for NSR because USEPA had never approved the SIP provisions for flexible permits. Pointedly, USEPA said that they should not be operating sources that are not properly permitted, and if they've made certain changes to their facility and didn't get re-permitted as a new source, that that source is not properly permitted and shouldn't be operated.
Fast forward to the summer of 2010 when some of the state's flexible permits are expiring and need to be reissued. It's been fun and games so far, but now someone is getting hurt. In May of this year, USEPA rescinded the authority for Texas to issue a new permit to one of its refineries. No new permit, no authority to operate. Further, USEPA threatened to release Texas from the burden of issuing any Title V air permits.
The response from Austin was "Don't mess with Texas! Don't you know we're in a recession and you're messing with more than 20% of the refining capacity in the United States!" That was quickly followed by a lawsuit saying USEPA had overstepped its authority and did not have the right to take away Texas' authority to permit the refinery. "Oh yeah!" says USEPA as they rescinded Texas' permitting authority for two more refineries. By the end of June USEPA had rescinded authority for Texas to issue any new flexible permits and it looked like Texas and USEPA were lining up in the street for a gunfight. Businesses meanwhile were scrambling for cover trying to figure out what to do. They know that the most dangerous place to be in a gunfight is not behind the gun; it is in-between the two gunfighters. Nobody wants to be between two agencies that are both saying they can enforce the law better than the other can.
Of course, all this could be funny to watch if it wasn't so serious. Business needs certainty in order to plan effectively and USEPA contends that communities around facilities with Texas Flexible Permits are being exposed to more pollutants than they should be. Recently it appears that some adults are stepping in to try to break things up.
USEPA proposed and has since finalized an independent audit program for holders of Texas Flexible Permits, saying that it is businesses' exit strategy from a flawed permit system (see 75 FR 59711, September 28, 2010). Texas submitted a number of amendments to its SIP program (see www.tceq.state.tx.us/implementation/air/sip/Hottop.html), but USEPA has yet to approve or deny these changes. There have been a series of meetings between USEPA, Texas and the Business Coalition for Clean Air (a group of businesses with stakes in the outcome) and Regional Administrator Armendariz spoke to the Texas Chemistry Council about possible solutions. USEPA has proposed a second process for "defexing" Texas Flexible Permits titled the Process for Transitioning Texas Subchapter G Flexible Permits to Subchapter B NSR SIP-Approved Permits.
USEPA's expected outcome of both the independent audit program and the deflex process is for facilities to operate under a permit with each major source having a federally enforceable limit. Neither process will be short or simple. Under the audit program an independent auditor assesses the facility source by source and identifies whether any changes have been put in place since issuance of the flexible permit. If there had been major changes that normally would have been subject to new source review, then the audit report goes on to identify BACT or LAER requirements that would have been imposed at the time of a change. The facility then signs a Consent Agreement and Final Order, agreeing to file for a new permit meeting the NSR obligations. Importantly, the agency agrees to waive the gravity portion of any penalties that might normally be imposed as part of the agreement. Further, the facility must agree to a supplemental environmental project benefitting the community. To participate in the audit program, companies have to declare their desire to use this process by December 27, 2010 and sign an agreement to proceed.
The deflex process is similar in that a report of sources, changes and new source requirements is produced. But instead of the report being produced by an independent auditor, companies select their consultant to produce the report (the companies can even produce it themselves). The flexible permit holder first applies for a minor amendment that commits them to the process and then evaluates the sources, changes and requirements. If there have been changes that would oblige new source review, the facility must then file for an amended permit. In contrast to the independent audit program, however, USEPA does not give up its right to enforcement and imposition of gravity penalties.
The deflex process is still under discussion and the more cynical amongst us are saying that the impasse will suddenly go away after the elections. The incumbent Governor Rick Perry is running against the former Mayor of Houston Bill White, who exposed some serious concerns in control of air toxics near the Houston Ship Channel while in office. Houston-area businesses has been justifiably nervous being in the middle of a three-way gunfight while Texas, USEPA and the City of Houston have all been trying to show how they can do a better job of environmental enforcement.
The reality is that USEPA does not have the resources to manage the air permitting program in Texas, and businesses in Texas need air permits to continue to operate and expand. But as the great political commentator from Texas Molly Ivins said, "You can't ignore politics, no matter how much you'd like to."
The other reality is that the independent audit program for Texas Flexible Permits is out there, and USEPA plans to finalize their deflex procedures. One way or another, USEPA plans to get permits with federally enforceable limits for each source. My experience with disagreements like these that are so politically charged, where the stakes are high and a controlling agency offers a way to resolve the dispute, is that you want to be near the front of the line. Early adopters get to continue to help shape the process and get more of what they ask for while the agency is still in the mood to encourage more players to participate willingly. The further back in the line you are, the less incentive the agency has to make concessions. And those that don't get in line at all may find that they're dealing with a different group entirely (enforcement) and have even fewer options for resolving their flexible permit.
UPDATE: Late Friday, October 22, USEPA Region VI announced that Flint Hills Resources, LP has tentatively agreed to deflex their Texas Flexible Permits at four Texas Refineries. Flint Hills, Texas and USEPA based the agreement on the deflex process announced by Regional Administrator Armendariz in September.
Curt Johnson, CPEA, is a Senior Program Director located in Richmond, TX. He has more than 30 years experience in environmental, health and safety management systems, auditing and agency negotiations. Curt recently prepared comments addressing independence and qualifications of auditors on behalf of the Auditing Roundtable and the Board of Environmental, Health and Safety Auditor Certifications for submittal to USEPA concerning the Audit Program for Texas Flexible Permits.
These comments and the balance of the docket for USEPA's Audit Program can be viewed at: http://www.regulations.gov/search/Regs/home.html#searchResults?Ne=11+8+8053+8098+8074+8066+8084+1&Ntt=EPA-R06-OAR-2010-0510&Ntk=All&Ntx=mode+matchall&N=0
