The Good, Bad and Ugly of DNR's Air Toxics Rewrite

Robert Fassbender, HFO & Associates

Aug. 26, 2002

© 2002 Hough, Fassbender, Osborne & Associates

Synopsis

This is an overview of the major issues emerging from DNR's sweeping rewrite of its air toxics program, Chapter NR 445, Wis. Admin. Code. HFO & Associates played a significant role in the development of the draft rule. Thus, the views expressed here are generally from industry's (our clients) perspective.

Overall, the existing rule was improved during the 3-year advisory committee process. Key changes include new applicability language that excludes sources subject to federal requirements, a new exemption for sources not expected to emit threshold amounts of hazardous substances, and new due diligence/safe harbor provisions that should limit the scope of inquiry needed to discern whether a source emits a regulated substance. Additional positive changes relate to certain "off-ramps" and clarification on how substances get listed.

Despite these changes, the proposed addition of about 153 new substances (bringing the total to 577) and the lowering of many thresholds, substantially increases the reach of the rule and creates new burdens for sources already regulated under NR 445. In particular, the listing of diesel exhaust and coal dust will generate continued debates as the rule winds through its final stages. 

On the positive side, while DNR continues to propose the listing of wood dust and silica (a component of sand), they propose an exemption to allow for additional studies. Another controversial substance, asphalt fumes, was deleted from the proposal as industry successfully argued its component substances were adequately regulated.

Rule Development Status

The draft rule was developed through an advisory committee process. The NR 445 Technical Advisory Committee (TAG) has been meeting for over 3 years. In addition to formal TAG meeting, there were scores of numerous subcommittee meetings and informal negotiations with DNR over their proposal.

The 17th and final meeting of the TAG was April 16, 2002. The last several meetings for the TAG focused on the latest draft of the rule (Draft 5) and remaining outstanding issues such as coal dust. Most parties agreed that the TAG's work was done and the draft rule is ripe for formal hearings and public comments. Despite this assent, industry continues to have major concerns over the draft rule.

The overall schedule for the rule is as follows:

• Final Green sheet to Natural Resource Board - May 28, 2002
• Authorization for Hearings - June 25 Natural Resources Board meeting
• Hearings - August 2002
• Adoption of final rule - Dec. 4 Natural Resource Board meeting
• Legislative Review - Jan. - Feb. 2003 
• Target Effective date - May 1, 2003

Key Documents
The latest proposal is the March 2002 Draft 5 version of the rule. Since that draft, DNR proposed modifications to language relating to coal dust, the one-in-a million modeling off-ramp, and incidental emitters. DNR also fine-tuned its diesel proposal at the April 2002 TAG meeting. The last edition of the proposed NR 445 list is DNR's October 2001 version. All these documents are provided below. Earlier versions should be disregarded (there were many, most of which are still posted on DNR's web site).

Draft Rule (Board Order AM-34-02) (88 page PDF)http://www.dnr.state.wi.us/org/aw/air/hot/NR445rev/NRBjune02/DRAFT%20RULE.PDF

DNR Background Memo on Draft Rule (40 page PDF)http://www.dnr.state.wi.us/org/aw/air/hot/NR445rev/NRBjune02/BACKGROUND_MEMO.PDF

Latest Draft List of NR 445 Substances (Oct. 2001) (MS Excel Spreadsheet): http://www.dnr.state.wi.us/org/aw/air/hot/NR445rev/finalTAG_NR445list_102001.xls

For a primer on the existing rule, see DNR's Understanding Wisconsin's Hazardous Air Pollutant Rules & Requirements (Feb. 2002): http://www.dnr.state.wi.us/org/aw/air/hot/NR445rev/understandingHAPs.pdf

Other documents can be located on DNR NR 445 TAG Web Site: http://www.dnr.state.wi.us/org/aw/air/hot/NR445rev/NR445rev.htm

Key Issues

Applicability - Reconciling State & Federal Programs (Proposed NR 445.01)
Wis. Stat. §285.27(2) (a) provides that "If an emission standard for a hazardous air contaminant is promulgated under section 112 of the federal Clean Air Act, the department shall promulgate by rule a similar standard but this standard may not be more restrictive in terms of emission limitations than the federal standard . . ." Existing NR 445 has an anti-backsliding provision that states NR 445 continues to apply despite the applicability of federal air toxics standards. NR 445.01(1) (b)). Industry successfully argued that this provision is inconsistent with state law requiring DNR to promulgate similar standards that are no more restrictive than the federal rules.

Under the current proposal (Proposed NR 445.01), DNR would delete the anti-backsliding provision and clarify the relationship between the federal and state programs. The key language states that "the emission limitations and control requirements in [NR 445] do not apply to hazardous air contaminants emitted by the emission units, operations or activities that are subject to an emission standard promulgated under s. 112" of the Clean Air Act. Moreover, if a federal standard such as Maximum Available Control Technology (MACT) indirectly controls a non-federal hazardous air substance (i.e., NR 445-only substances), the exemption still applies. These changes are significant in that they clarify that in most cases duel regulation under the federal and state programs is a thing of the past.

Additional clarification and assurances may be needed on how DNR intends to implement the proposed applicability language relating to non-federal hazardous air contaminants. Under that provision, noted above, non-federal substances will be deemed subject to a federal 112 standard (and thus exempt) if they are regulated by "virtue of regulation of another substance as a surrogate for the contaminant, or by virtue of regulation of a species or category of hazardous air contaminants that addresses the contaminant."

Generally, DNR agrees that if the federal MACT regulates VOCs, then all VOCs are deemed regulated (but not PM, for example). While industry proposed the new "surrogate," "species," and "category" language, there is concern it creates an unnecessary step by industry to get assurance that the exemption applies for certain non-federal substances - a sort of "mother, may I" scenario. Guidance or alternative language may help address these concerns without changing the intended objective.

The fact the Clean Air Act takes a fundamentally different approach to regulating air toxics is not entirely addressed in the draft rule. Industry will continue to argue DNR needs to better avoid duplication and potential inconsistency with the federal program, including reevaluating the relationship between the federal and state air toxics programs in a broader context (e.g., non-section 112 federal programs).

Listing Protocol (Proposed NR 445.12, 445.13)
The current rule requires DNR to review third-party classifications for listing purposes.  (See existing NR 445.06) Under these provisions, DNR reviews two lists to determine if a substance should be regulated as a suspected or known carcinogen: International Agency for Research on Cancer, and the National Toxicology Program. If the substance is on both lists, it is "presumed" to be a carcinogen and added to the carcinogen tables. Similarly, DNR monitors changes in the classifications of the American Conference of Governmental Industrial Hygienists (ACGIH) for acute toxics and EPA classifications for chronic pollutants.

This NR 445 listing protocol was established more than a decade ago and sets the stage for this most unmanageable component of the rule. Industry challenged the listing protocol in court, but lost. Thus, DNR has a court-tested protocol that they continue to use in this latest rule proposal to add hundreds of new substances to NR 445. The total list would now be 666 substances. In comparison, the federal program lists 188 substances.

Our preliminary calculations (using the initial tables, since revised) found the following new substances in the NR 445 tables:

• 90 new suspected carcinogens
• 17 new known carcinogens
• 115 new acute toxics
• 28 new chronic toxics

The total (250) is more than the approximately 170 new substances due to certain existing substances being added to new tables. For example, some existing acute or chronic substances would now be classified as carcinogens. (Use the above link for the latest draft list of NR 445 substances.)

Despite the continued reliance by DNR on third party lists, new language makes it clear this review only results in "candidate" substances for listing. Specific factors for excluding these candidate substances were also added, including adequate regulation by other programs. This factor resulted in asphalt being dropped.

A "special studies" off-ramp was included for when DNR lacks information it believes necessary to establish a risk or to develop compliance alternatives. Important exclusions for silica and wood dust in the latest version of the rule stem from this special studies provision. Although the proposed exemption for silica and wood dust is very helpful, industry still objects to DNR's position to "list first, evaluate later" for these substances. Based on the proposed new protocol, they argue silica and wood dust, as well as coal dust, simply should not be listed pending further evaluation. New language also allows parties to petition DNR for removal of a substance from the NR 445 tables.

Most recently, DNR agreed to make additional refinements of the listing protocol, including adding a provision requiring a specific finding of need. The "presumption" language in the draft rule also will be deleted, as it is inconsistent with the requirement that DNR makes a specific finding of need to regulate a given substance. Also, DNR addressed industry's concern for regulatory certainty by requiring listing updates only every 6 years (they initially proposed every two years). These most recent changes are not reflected in Draft 5.

To no avail so far, industry argues that the scope of NR 445 should be limited to listed substances. For example, existing NR 445.06(4) allows DNR to establish emission limitations for non-listed hazardous air contaminants for sources in permits, or general or special orders issued by the Department.

Although the proposed changes to the listing protocol are helpful, industry will continue to maintain that DNR's reliance on third-party lists is the fundamental defect with NR 445. Other provisions were specifically crafted to mitigate the burdens of such a broad list, including the due diligence clarification and incidental emitter concept discussed below.  Yet, the basic NR 445 charge for manufacturers is to identify whether emissions of the nearly 700 substances are above what are often minute amounts. This is becoming an increasingly improbable and ever changing mandate, as hundreds of substances will continue to be added to the rule under DNR's current policies.

Threshold Levels (NR 445 Tables)
Once a source threshold is triped, additional steps must be undertaken to demonstrate compliance. Using risk-based modeling, DNR has revised most thresholds. This new approach is particularly troubling for carcinogens, which will see significantly reduced regulatory threshold levels at lower stack heights. DNR asserts they are using "generally accepted" EPA air dispersion modeling to establish the new thresholds.

To determine a threshold using modeling, the substance must have an ACC for non-carcinogens, or a Unit Risk Factor for carcinogens. (Modeling is used to assure ACCs are not exceeded at the fence line, and that carcinogens do not pose a risk greater than one in 100,000.) However, many listed carcinogens, such as diesel, have no unit risk factors, which precludes DNR from determining what level would pose a greater than one-in-100,000 risk. As a sort of work-around, DNR used a statistical analysis of NR 445 carcinogens with unit risk factors to set the thresholds for carcinogens without unit risk factors. Using the median risk value (4.3 e-4) from this analysis results in the same thresholds for all carcinogens without a unit risk factor (e.g., 2.43 lbs/year for less than 25 foot stack heights, known as "area" sources).

Despite substantial concerns over the lower thresholds, using risk-based modeling to set thresholds has certain advantages for industry. It provides a tool that allows for higher thresholds under certain circumstances (primarily for higher stack heights), and allows for the risk-based modeling as a compliance demonstration (see below).

Industry is still evaluating potential alternatives to the DNR proposal, with a general proposition that DNR includes too many safety factors in the modeling analysis. Another point that needs to be further discussed is the threshold levels for those carcinogens without unit risk factors. That is, given the absence of any quantifiable risk, DNR's approach may be overly conservative, particularly the 2.43 pounds per year threshold for area sources. The result of DNR's current proposal is to regulate these substances at levels two orders of magnitude less for suspected carcinogens (existing thresholds are generally at 250 lbs/year). Also being evaluated are the practical implications of regulating at low thresholds.

Due Diligence & Safe Harbor (Proposed 400.02(55m), 445.06)
The existing rule applies to anyone that "may emit" hazardous substances. Industry asserts that Wisconsin businesses may be compelled to undertake an exhaustive search for the close to 700 substances listed in proposed NR 445. A WMC cost study found that proving the negative - that a substance is not emitted above regulatory thresholds - is one of the most costly components of the new rule. To address this issue, industry urged DNR to clarify the steps expected of owners/operators to identify sources of hazardous air contaminants.

DNR's current draft rule incorporated industry's proposal and includes both due diligence and safe harbor provisions that could provide regulatory relief for Wisconsin businesses. Due diligence is defined to allow the companies to investigate only those operations they believe "are likely to cause emission of hazardous air containments" above regulated thresholds. Coupled with the due diligence provision is a safe harbor provision providing that a "facility shall be deemed to be in compliance with [NR 445/406/407/438] so long as the owner or operator exercised due diligence." Industry fully supports DNR's proposed language.

Incidental Emitter Exemption (Proposed NR 445.10)
Similar to concerns noted above, industry believes that the sweeping applicability of NR 445 could require companies that emit inconsequential or no hazardous substances to undertake costly investigations. Certain companies, they argued, by the nature of their business, should be spared the burdens of searching for possible emissions.

In response, DNR proposed provisions that narrow the inquiry required of specified business sectors. These "incidental emitters" are primarily non-manufacturers and manufacturers that emit less than 3 tons of VOCs or 5 tons of particulate matter. For those in the specified SIC codes or below the thresholds for VOC/PM, the companies need only review whether they have specified operations (e.g., incinerations), or whether they emit one or more of a "short list" of the 78 or more toxic substances. Should they have a targeted process or substance, their obligations are narrowed to such process or substance.

Industry generally supports this proposal, as it should lessen the burden for those businesses not expected to emit hazardous air contaminants. Industry will evaluate whether the "short list" of substances in fact is limited to only the more toxic chemicals, and assess whether in practice this provision would provide the intended relief.

Diesel Engines (Proposed NR 445.09)
DNR intends to remove the existing NR 445 fossil fuel exemption for diesel exhaust. Under the proposal, diesel would be regulated as a suspected carcinogen. There is significant disagreement regarding the science DNR has used to conclude the existing exemption must be removed to protect public health.  For example, EPA has determined that there is insufficient information to set a Unit Risk Factor for diesel exhaust. Industry argued that it is impossible to quantify the risk associated with diesel exhaust without such a factor. (See WMC Comments on Proposal for Diesel Exhaust.)

As currently drafted, the requirements for diesel deviate from the standard NR 445 approach. For example, NR 445 generally requires all sources exceeding threshold values for suspected carcinogens meet BACT (known carcinogens must meet LAER). For diesel exhaust, DNR targets diesel engines (much like a federal source category). DNR defines this target as "compression ignition internal combustion engines" burning fuel oil, and with a rated brake power of 100 horsepower or greater. Exceptions are provided for engines used for an "essential service" and emergency electric generators.

Six months after the effective date of the rule, all non-exempt diesel engines must burn fuel oil designated for on-road use. (Initially, DNR proposed an ultra-low sulfur fuel requirement.) Any owner or operator who burns 40,000 or more gallons of fuel oil per year at a facility must meet particulate emission rates. For existing sources, those rates are 0.10 g/bhp-hr for 100-750 Hp engines, and 0.03 g/bhp-hr for engines over 750 Hp. New sources must meet BACT, which would be a moving target no less stringent than the emission rates for existing sources. DNR apparently agrees that it lacks jurisdiction over portable sources, but includes requirements for seasonal sources. They also clarify that engine test facilities must meet BACT for the facility, not the engine.

Also unique is DNR's proposed compliance demonstration for the emission rate standards. A source must submit a compliance certification that the control device is certified by the California Air Resources Board, the U.S. EPA, or as approved by DNR using equivalent test methods. DNR asserts that there is proven add-on control technology to meet the proposed standards, and that manufacturers of these devices have provided acceptable certification in the context of California's proposed diesel regulation.

Beyond the use of questionable science over the risks associated with diesel exhaust, industry argues that continued development of federal fuel and engine standards will address DNR's concerns, making the state-only requirement unnecessary. Industry is also still evaluating the merits of the 100 bhp and 40,000 gallon thresholds, as well as the proposed emission rate standards and related certification protocol. A key issue also is the availability and cost of control technology to meet these proposed standards. We expect that diesel engine requirements will be one of the more controversial aspects of the rule when it goes to hearing.

Coal Dust
While the latest coal dust compliance strategy was only recently presented, DNR proposed listing coal dust from the start. As noted above, the existing rule directs DNR to monitor changes in the classifications by the American Conference of Governmental Industrial Hygienists (ACGIH) for acute toxics. The ACGIH revised (2000) Threshold Limit Value (TLV) resulted in a proposed NR 445 ambient air concentration (ACC) of 21.6 ug/M3 for bituminous and 9.6 ug/M3 for anthracite coal dust. These levels were determined under DNR's existing formula of 2.4 percent of the TLV.

The key changes to the listing protocol relating to coal dust were those provisions that prevent listing if the substance is adequately regulated under another state or federal rule, or if there is insufficient information to determine the risk at the time of promulgation. Using these new factors, industry argues that coal dust is adequately regulated under existing NR 415 as a fugitive dust, or in the alternative, there is insufficient information to regulate at this time. DNR rejects both arguments. With respect to NR 415, DNR is using what some consider questionable monitoring data at one source (Great Lake Research Station in Milwaukee) to conclude sources subject to NR 415 exceeded the proposed standard, thus requiring the NR 445 overlay.

DNR's latest effort was to develop compliance demonstration options, including variance language. These provisions are found at proposed NR 445.08 (May 2002 version, above). The current proposal would allow a source to model or monitor compliance with the standard.

Beyond the need to regulate coal dust under NR 445, ongoing debates relate to DNR's under-estimation of the number of affected sources, the over-prediction of the proposed EPA modeling methodology, and the argument the ACGIH classification relates to smaller particle size (4 micron) than DNR's standard.

Air Spills Reporting (Proposed NR 445.15)
Earlier in the TAG process, there was substantial confusion over the regulatory obligations to report hazardous "air spills," which is generally unpermitted releases of NR 445 substances. A subcommittee to the NR 445 advisory group investigated clarifying rule language to be incorporated in the new NR 445. This effort proved fruitless, as industry groups soundly rejected DNR's proposal. For example, Under DNR's proposal, a release of a carcinogen would have to be reported if it exceeded 10 percent of the NR 445 threshold, a level that had no nexus to any real threat considering the short-term aspect of such a release.

With no agreement on clarifying language, DNR issued a Sept. 12, 2001 "clarifying" memo that stated, "if the release is above an applicable de-minimis exemption, or if there is no de-minimis exemption, immediate notification is required." Industry representatives interpreted that statement to mean DNR will require reporting of any release of a NR 445 substance without a federal RQ. Since most of the close to 700 NR 445 substances have no federal RQ, such a reporting obligation would prove overly burdensome.

WMC provided its interpretation of the Spill Law's reporting obligation that rested on the precept that reporting is required only if the release "may pose a substantial presence or potential hazard to human health or the environment because of its quantity, concentration or physical, chemical or infectious characteristics." Consistent with existing NR 706.05, the responsible party using their best judgment makes that determination. DNR provided a letter concurring with this opinion. With some minor clarifying language in NR 445, this issue was resolved to industry's satisfaction.

NR 445 "Off-Ramps"
"One-in-a-million" Risk Compliance Demonstration Option. Existing NR 445 provides sources emitting carcinogens above threshold levels with no option but to meet technology requirements - BACT for suspected, LAER for known carcinogens. DNR is now proposing a one-in-a-million risk modeling compliance demonstration option. (See above link.) This proposal presented industry with a catch 22.

Using risk-based modeling, DNR has revised most thresholds. This new approach is particularly troubling for carcinogens, which will see significantly reduced regulatory threshold levels. Under the existing rule, the thresholds for carcinogens use a "bin" approach; generally 250 lbs/year for suspected and 25 lbs/year for known carcinogens. Using risk-based modeling to set thresholds has certain advantages, however, namely it provides a tool that allows for higher thresholds under certain circumstances and opened the door for the one-in-a-million risk-modeling compliance demonstration option.

Simplified Compliance Modeling. Under existing NR 445 for non-carcinogens, a source has to show that the ambient air concentrations are met at the fence line. This showing was generally met by costly modeling demonstrations.

Under the current proposal, a simplified modeling option (EPA screening or refined dispersion model) is available for demonstrating compliance with the ambient air concentration limits. (See proposed NR 445.08(4)(d))

These are only the major issues relating to the new NR 445 program. We will continue to provide updates in our e-newsletters and web pages as developments occur.

To receive further information on this development, contact Bob Fassbender at fassbender@hamilton-consulting.com or (608) 258-9506.

© 2002 Hough, Fassbender, Osborne & Associates