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OAR Box 1781 

Prepped by Ollie Stewart 

Document Number: 

73) IV-A-6 

Docket Number: 

A-90-37 

Printed 10/29/2008 10:46:21 AM Sheet 73 of 142 
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A-90-37 

IV-A-6 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, D.C. 20460 

NOV I 8 2002 

MEMORANDUM 

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EPA AR DOCKET 

SUBJECT: 

FROM: 

TO: 

EPA Flexible Permit Implementation Review Initiative Report 

Robert Brenner, Deputy Assistant Administrator 

Office of Air and Radiation (6103A) 

Jay Benforado, Deputy Associate Administrator 

Office of Policy, Economics and Innovation (1804A) 

EPA Deputy Regional Administrators 

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Attached is the final report which contains our evaluation of six innovative air permits. We 

would like to thank you for providing comments on the draft report. Special thanks should also be 

extended to Regions 3,4, 5, 6, and 10 for hosting the evaluations and for devoting considerable time and 

effort to the development of the actual permits. The final report, as well as the six individual permit 

reviews (which are also attached) will be posted for the public on the TTN Web at 

http://www.epa.gov/ttn/oarpg/. 

As you know, EPA launched this Flexible Permit Implementation Review in April 2001, to 

evaluate the implementation of innovative permitting techniques developed under pilot permitting efforts. 

This effort was initiated both in response to concerns raised by environmental groups that EPA did not 

have an empirical basis for flexible permit guidance, as well as our own desire to evaluate the outcomes 

of flexible permitting efforts across the country in a way that would help inform future policy and 

guidance directions, including future innovation activities. We are very pleased with the positive 

findings that arose out of this effort. Namely, the report has produced clear objective evidence that 

flexible permits assure compliance with all applicable requirements, can produce valuable benefits to all 

parties (including, in many cases, significant emissions reductions), and are considered to be fully 

enforceable. 

We believe diat the findings from this evaluation highlight significant opportunities for the future 

of air permitting policy in the U.S., and we look forward to working with you further to build on these 

results. If you have any questions concerning this report, please contact Michael Trutna at (919) 541-

5345, or Dave Dellarco at (206) 553-4978. 

Attachments 

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EPA Regional Air Division Directors 

EPA Permit Review Team 

David Beck, OAQPS Roger Powell, OAQPS 

David Bray, Region 10 Gary Rust, OAQPS 

Dave Dellarco, OPEI Mike Sewell, OAQPS 

Barrett Parker, OAQPS Michael Trutna, OAQPS 

Craig Haas, OECA Shirin Venus, OECA 

Mario Jorquera, OECA Anna Wood, OPAR 

Patricia Mott, OECA 

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EPA Review of Flexible Air Permits - Summary 

In 2001, EPA launched its Flexible Permit Review to evaluate the use of innovative 

permitting techniques. EPA conducted in-depth reviews of six pilot permits containing 

flexibility provisions, which include plant-wide emissions caps and advance approvals for 

certain changes. The reviews included detailed analyses of each company and permitting 

authority's experiences developing and implementing the pilot air permits. 

The companies participating in the pilot program include: 3M, DaimlerChrysler, Imation, 

Intel, Lasco Bathware, and Saturn. 

Key Findings of EPA's Flexible Permit Review 

The flexible permits facilitated and encouraged emissions reductions and pollution prevention 

(P2L 

• The plant-wide emissions caps focused companies' attention on reducing the overall level 

of plant-wide emissions. As a result, the companies with flexible permits significantly 

reduced actual plant-wide emissions and/or emissions per unit of production (e.g., those 

sources with at least 5 years of implementation experience under the flexible permits 

achieved from 35% to 85% reductions in annual emissions of volatile organic compounds 

which contribute to the formation of ground-level ozone). 

• Provisions allowing advance approval for certain changes reduced the administrative costs 

associated with P2, making P2 more attractive for companies to undertake. 

• The terms of several flexible permits encouraged P2 through explicit P2 program, 

reporting, and performance requirements. 

The flexible permits worked as intended, assuring appropriate environmental protection under 

all applicable requirements. 

• EPA found that the monitoring, recordkeeping, and reporting approaches established in 

the permits were sufficient to assure compliance with all applicable requirements, including 

those associated with the advance approved changes. EPA independently verified the 

ability to determine compliance with the permits using actual emissions and monitoring 

data and procedures required by the permits. 

• Most of the flexible permits provided equivalent or greater information available to the 

public when compared to conventional permits, although the flexible permits shifted the 

timing, type, and format of information. The flexible permits typically required more 

comprehensive and frequent emissions monitoring, reporting, and recordkeeping. 

Companies and permitting authorities experienced significant benefits from the flexible permits. 

• Companies with flexible permits experienced significant financial benefits. In most cases, 

the flexible permits enabled the companies to respond to new market opportunities and to 

save several hundred hours in staff time needed to negotiate and prepare individual 
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construction permit applications. 

The flexible permits saved state and local permitting authorities staff time associated with 

processing case-by-case construction permit applications, enabling them to reduce 

permitting backlogs and focus resources on higher environmental priorities. All of the 

permitting authorities reported that they "would do it again" and that they hope to use 

flexible permitting approaches again in the future. 

Flexible Permitting Background 

• Since 1993, the U.S. Environmental Protection Agency (EPA) has worked with participating 

state and local permitting authorities and certain companies to develop innovative approaches 

to air permitting. 

• EPA and these states initiated pilot permitting efforts to achieve two goals to: 

• better align air permitting to encourage emissions reductions and pollution prevention 

while maintaining or enhancing environmental protection; and 

• provide U.S. companies with flexibility needed to compete effectively in global 

markets by reducing potential delay and regulatory uncertainty associated with 

operational and equipment changes. 

• Flexible permits accomplish these goals by approving certain categories of changes in advance 

without requiring additional case-by-case reviews at the time changes occur, provided the 

company maintains plant-wide emissions below established caps. 

Contact Michael Trutna at EPA (919) 541-5345 for more information on EPA's Flexible Permit 

Review. 

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EPA's Review of Flexible Air Permits 

Questions and Answers 

1. How many flexible permits did EPA review? 

• EPA reviewed six flexible permits. The six permits represent a significant portion of the 

innovative, "flexible" air permits piloted by EPA thus far. The companies participating in the 

pilot program include: 3M, DaimlerChrysler, Imation, Intel, Lasco Bathware, and Saturn. 

• EPA selected these permits for review because each had sufficient implementation experience 

to assess how well the permit worked in practice. The evaluation of the six permits provides 

information to draw meaningful conclusions that can be used to guide future policy-making, 

rule-making, and innovation initiatives. 

2. Do the flexible permits provide for an adequate opportunity for public participation and 

comment? 

• For each of the six flexible permits, EPA discussed public participation with permitting 

authority representatives and also conducted a detailed review of the public record. The state 

and local permitting authorities did not receive any adverse comments on the pilot permits. 

Moreover, the permits generally increased the availability of information to the public 

regarding emissions performance, pollution prevention activities, and the companies' 

anticipated change needs for the duration of the permit term. 

• The six Permit Review Reports and the Summary Report include detailed accounts of the 

availability, timing, and format of information accessible by the public during permit 

development and implementation. The reports also discuss the focus of any public comments 

and/or complaints received during permit development and implementation, as well as the 

focus of newspaper coverage of the permits. 

3. How does the use of plant-wide emissions caps assure environmental protection? 

• For each of the six permits, the emissions caps were established at levels sufficient to 

safeguard public health and to assure appropriate environmental protection. In all cases, the 

plant-wide emissions limits were consistent with the provisions set in the State 

Implementation Plans, which represent the states' plan for assuring that emissions are 

maintained at a level consistent with the National Ambient Air Quality Standards. 

• In addition to the annual emissions limits, the permits contained short-term (e.g., daily or 

weekly) emissions caps to prevent short-term spikes in plant emissions that could have the 
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potential to adversely affect local air quality. The flexible permits also included provisions 

that reasonably limited the extent of advance approved changes. 

4. How do flexible permitting approaches affect the installation of pollution controls at the 

facility? 

• Each of the companies with flexible permits used very good controls. Under some of the 

permits, pollution prevention was deemed to be an acceptable component of a company's 

pollution control systems and Best Available Control Technology. 

• The plant-wide emissions caps, which are typically set based on past levels of actual emissions 

(sometimes adjusted to address new requirements or approved plant expansions), create 

incentives for the companies to install additional pollution controls and/or to reduce emissions 

through pollution prevention. 

• Companies typically reduced emissions to accommodate production increases rather than 

increasing their plant-wide emissions caps. The plant-wide emissions caps also prevented the 

emissions from increasing in small amounts (e.g., up to 40 tons per year) that can occur under 

the conventional permitting approach. 

5. What effect have the pilot permits had on emissions performance and pollution prevention? 

• The flexibility provisions in the pilot permits encourage and facilitate pollution prevention and 

emissions reductions. While sources are not required to reduce emissions, there are powerful 

incentives to create a margin for growth underneath the cap. This "compliance margin" 

reduces the plants' risk of non-compliance with the cap and creates room to accommodate 

increased production at the facility. The result is less emissions per unit of economic output. 

The permits also facilitate pollution prevention by making it easier for sources to make 

equipment, operational, and raw material changes that reduce emissions. 

6. Did the companies and permitting authorities that used flexible permits realize economic 

benefits from the flexibility provisions? 

• The companies and permitting authorities with the six flexible permits experienced, or expect 

to experience, economic benefits because of the flexible permit provisions. The companies 

indicated that the reduced potential for delay and the increased predictability afforded by the 

flexible permit facilitated certain operational, equipment, and raw material changes to respond 
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quickly to market demands and opportunities. While these economic benefits can be 

somewhat difficult to quantify, the sources provided examples of specific market 

opportunities that were met using the flexibility provisions in the permits. 

• The flexible permit provisions also reduced the number of staff hours needed to determine if 

a permit was required on a case-by-case basis and to prepare permit applications. 

• Permitting authorities reported that the implementation of the flexible permits have, or are 

anticipated to, reduce the staff time necessary to review and process permitting actions for 

the sources. This has helped the permitting authorities to reduce agency permitting backlogs 

and focus permitting resources on higher environmental priorities. 

7. How can EPA and state permitting authorities ensure that flexible permit techniques are 

appropriate for all sources? 

• Flexible permits may not be appropriate for all companies. A company's past compliance 

history can be an important indicator of source capacity and commitment for flexible 

permitting techniques. 

• Permitting authorities are accustomed to matching appropriate permitting techniques with a 

company's unique circumstances, emissions profiles, and monitoring capabilities to ensure 

environmental protection and reduce the likelihood of non-compliance. 

• The permitting authorities stated that the best candidates are those companies that can 

demonstrate a need for operational flexibility. The permitting authorities also stated that good 

candidates should be prepared to demonstrate sufficient technical capacity and commitment 

to operate under the more rigorous emissions and change monitoring, recordkeeping, and 

reporting requirements that flexible permits require. 

8. What does EPA plan to do with findings from the flexible permit review? 

• EPA undertook the Flexible Permit Review for several reasons, including to: 

• evaluate the effectiveness of a key innovation and flexible permits initiative, the 

Pollution Prevention in Permitting Program, 

• identify lessons for improving the effectiveness of future flexible permitting efforts, 

and 

• provide appropriate input into the final development of corresponding EPA policy, 

such as New Source Review (NSR) reform, flexible permitting guidance, and 

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operating permit rule revisions. 

• EPA is currently developing guidance to address flexible permitting techniques. In the 

interim, EPA will continue to work with state and local permitting authorities and companies 

to develop flexible air permits and pioneer additional techniques. 

9. Can states and permitting authorities apply these innovative permitting techniques to 

sources and permits in their own jurisdictions? 

• State and local permitting authorities interested in using these flexible air permitting 

techniques in their jurisdictions should contact Michael Trutna at EPA's Office of Air Quality 

Planning and Standards (919-541-5345; trutna.mike@epa.gov) or Dave Dellarco at EPA's 

Office of Policy, Economics, and Innovation (206-553-4978; dellarco.dave@epa.gov). 

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