May 18, 1995

Good Morning. It is a pleasure to be here today to discuss the U.S. Environmental Protection
Agency's (EPA's) efforts to implement the operating permits provisions of the Clean Air Act. Despite the fact
that there have been some growing pains and some controversy associated with such a new program, over
the past five years, states and local agencies have made great progress in implementing the program.
The operating permits provisions -- known as Title V -- were originally proposed by the Bush
Administration as part of what became the Clean Air Act Amendments of 1990. The Bush Administration
and the Congress added the operating permit program to the Act in order to better ensure compliance with
pollution control requirements by having a single permit for individual sources that includes all the source's
applicable air pollution requirements. This allows better tracking of compliance and, ultimately, an improved
environment.
The operating permit program provides for the first time that all the federal and state air pollution
control requirements be incorporated into a single document. The owner of the affected source must then
certify that it is in compliance with the requirements in the permit. By requiring certification by a corporate
official, the program gives company officials the opportunity to be fully knowledgeable about their
compliance obligations and creates strong incentives for assuring that compliance is maintained. At the time
the operating permit program was included in the Clean Air Act, EPA data showed that some state rules
were achieving no more than, and in some cases less than, 80 percent of the expected reductions in
emissions which we believe was due to non-compliance. The operating permit program will substantially
improve compliance with existing regulations, which in turn will result in improved air quality. These
improvements mean that states will not have to adopt new regulations to meet air quality standards to make
up for noncompliance with existing rules.
Our preliminary experience with permit applications has indeed shown that compliance is being
improved at many facilities. Many states have reported to us that in going through the process of
developing permit applications, sources have discovered new emission points and/or other air pollution
requirements that applied to them but of which they were not previously aware. As a result these facilities
are taking steps to comply with those requirements.
Another benefit of the permit program is that it provides opportunities for the public to be informed
about decisions concerning emissions from factories in their neighborhoods. It allows the public to know
what requirements a facility must meet, and allows the public a meaningful opportunity to comment on
significant changes to the permit of a nearby major facility.

Also, by identifying all the requirements a facility must comply with, permits will avoid unnecessary
controversy as to whether a given requirement applies to that facility. This benefits industry by negating the
need for costly litigation to resolve such controversies.
As being developed by EPA, the permit program also offers benefits to industry by allowing creation
of flexible permits that create plant wide caps, include alternate operating scenarios, or provide advance
approval of new units or modifications. This kind of permit design can potentially save substantial time and
money over the previous system where many process changes had to be approved through lengthy
changes to state implementation plans.
One example of facility-wide limits is a permit being developed cooperatively among EPA, the State
of Oregon, and Intel Corporation for an Intel facility in Aloha, Oregon. The facility-wide permit will allow the
plant to make numerous changes to its processes without having to obtain a new permit. We believe this
kind of flexibility will be the hallmark of the permit of the future and we intend to foster this kind of approach
with other industries. In fact, as part of Administrator Browner's Common Sense Initiative, EPA has
established a Permits Improvement Team that is holding meetings with stakeholders across the nation to
discuss permit-related issues. From those meetings it is clear that many industry representatives strongly
support the concept of a single, cross-media permit that would incorporate all of a source's environmental
obligations into a single document. This idea of a single, multi-media permit is also an important part of
President Clinton's regulatory

reinvention initiative. The consolidated permit for air regulations that we are discussing today is an important
step towards meeting that goal.
Another major benefit of the operating permit program is that it greatly facilitates implementation
of market-based trading programs by aiding facilities to use trading as a means of compliance and
eliminating the need for sources to go through time- consuming amendments to their state implementation
plans to make a trade.
In fact, another major reason the permit provisions were included in the 1990 Clean Air Act was to
eliminate many of the time-consuming, administratively burdensome processes that a business is oftentimes
subjected to if it wants to make a process change that would alter its emissions. Under the current state
implementation plan system, the business in question would have to go through a state regulatory process
with public comment and review, and then through a similar process at the federal level. Each of these
processes can takes months and sometimes even years. However, once it is up and running, the permit
program will greatly accelerate this process -- business will only need to go through a single significantly
streamlined permit revision process at the state level.
The permit program is designed as an integral part of the Clean Air Act in that it provides a uniform
vehicle for state and local agencies to administer other titles of the Act, such as the substantially revised
provisions to protect the public from harmful hazardous air pollutants. In fact, the permit provisions were
included in the 1990 Clean Air Act to bring it up to date with other national environmental legislation, such
as the Resource Conservation and Recovery Act and the Clean Water Act that had successfully used permits
as an administrative mechanism for determining compliance.
A final benefit of the operating permits program is that, unlike some federal law, it provides states
and local governments with a specific mechanism for funding their compliance activities. This common
sense funding approach -- based on the polluter pays principle -- will provide sufficient funding to operate
the state or local permit program. This, in turn, enhances the ability of the state and local agencies to be
more responsive to business and the public.
EPA issued the permit rule in July 1992. Upon promulgation of the rule, EPA was immediately sued
by environmental groups, industry and states over certain provisions. The chief area of controversy
concerned the process for revising permits -- not the procedures for initially issuing permits. Industry
concerns include delays caused by the revision process. States and industry were concerned about costs
and the additional paperwork burden associated with a revision process that potentially duplicated existing
state programs. Environmental groups and some states contended that the rule failed to provide adequate
opportunities for public participation in the permit revision process. While no final settlement was reached
with the almost 20 litigants, in August 1994 EPA issued a proposed rule describing a new revision procedure
that attempted to accommodate the litigants' varying concerns. The result, however, was a proposal that
was criticized as being more complicated and administratively burdensome.
After further discussions with a broad group of stakeholders, EPA agreed with many of the criticisms
of the proposed rule. We have committed to issue a supplemental proposed rule that will significantly
simplify and streamline the operating permits revision process, while providing an adequate opportunity for
public review of permit revisions that have a significant environmental impact. In fact, simplifying the
operating permits revision process was one of the commitments made by President Clinton in his March
1995
regulatory reinvention announcement. We hope to issue our supplemental proposed rule next month.
In developing this supplemental proposal, EPA has worked closely with Ohio, Louisiana, Texas,
Minnesota, California and other states (including the National Governors Association, the Environmental
Council of States, and state and local air pollution control administrators) to develop a common sense
proposal that builds on existing successful state permit programs. We have also worked with industry
representatives and environmental groups to attempt to achieve a balance between the need for public
participation and the need for flexibility for industry. We have held several detailed discussions with all key
stakeholders and shared a draft of the rule with them. We have received detailed comments from many of
those stakeholders and are working very hard to respond to them in our supplemental proposal.
The supplemental proposal will include a greatly simplified two-track system for permit revisions.
It will give states much greater flexibility to decide the amount of public review for most permits by matching
the level of review to the environmental significance of the change. A state would not be required to provide
any review for changes that it can show to be de minimis. EPA's supplemental proposal will include other
clarifications that will enable states to build upon their existing permit programs rather than create additional
duplicative processes. For changes that are the most environmentally significant, review by the public, EPA
or other affected states would occur prior to the construction of a project. This is where state review already
occurs and will allow full up front participation when comments are most readily accommodated.
The supplemental proposal will result in significant savings for business.EPA's initial cost estimates
indicate that the cost of an average revision would be sixty percent cheaper for industry under the process
outlined in the supplemental proposal compared with the July 1992 EPA rule. The number of business days
lost to delays in obtaining permit revisions would be reduced by about 30 times over the July 1992 rule.
EPA continues to work with stakeholders on a number of other fronts as well. Industry and states
have raised several concerns about any enhanced monitoring that may be required in association with the
operating permit program. They were concerned that EPA's enhanced monitoring rule would add costly
and unnecessary additional monitoring burdens for affected facilities and make existing rules more stringent.
EPA concluded the controversy surrounding the rule would make it impossible to implement as proposed
and has decided to pursue a different approach from that set out in its proposed rule. We intend to work
with industry, states and other stakeholders to develop a more cost-effective approach to assure compliance
by building on the requirements of existing rules.
Industry and states have also been concerned about smaller sources that have the potential to emit
enough pollution to be regulated as a "major" source, though they do not actually emit that level of pollution.
In January of this year, EPA issued a policy recognizing a two-year grace period for sources actually
emitting less than 50 percent of the major source threshold amount (even though they may have the
potential to emit much more). Such sources would not have to obtain a permit if they keep records of their
operations. In most cases such records will relate to the amount of materials used or processed and should
not require any new record keeping. EPA is giving serious consideration to permanently extending this
provision for sources emitting less than the 50 percent cutoff.
As we continue to work with states, industry and other stakeholders to address issues they raise,
it is important that we not lose sight of the tremendous progress being made at the state and local levels
in implementing the operating permit provisions of the Clean Air Act. The litigation and controversy relate
to a relatively small part of the overall rule; state and local agencies have moved forward to submit their
programs and EPA is reviewing and approving those programs. To date, EPA has received programs from
46 state agencies and 59 local agencies. EPA has published approval notices for 10 state programs and
formally proposed approval for 11 more. EPA has also approved 10 local permitting programs and
proposed approval for 24 more. EPA has published a disapproval notice for one state. We fully expect
almost every remaining state and local agency to submit a permit program by November of this year and
we will continue to make progress in approving the program submissions we receive.
Once EPA approves a state or local program, the next step in the process is for industry and other
affected sources to submit permit applications to the state or local agency for review. The agency then
issues the permit to the source. We are now at the stage where the various sources are spending a good
deal of time and effort pulling together their permit applications. As this has occurred, EPA has become
aware of reports about the burden and cost associated with preparing certain permit applications. In one
respect, it is important to remember that these are one-time costs that are akin to switching from a manual
to an electronic record-keeping system. However, having said that, we are very concerned about some of
the applications we have heard about. While large facilities with hundreds of different emission points, such
as some chemical plants or refineries, could be expected to have sizeable applications, EPA considers some
of the costly, complicated applications we have recently heard about to be massive overkill. We have found
that information being requested in the permit applications sometimes goes far beyond federal requirements.
We have also found in some cases excess and unnecessary information is being included in applications
on the advice of some consultants who are preparing the applications.
In an attempt to address these concerns, EPA has been working with industry and states to develop
a series of guidance documents or "white papers" to clarify areas where the paperwork burden can be
substantially reduced. The white papers will clarify exactly what information is required by the permit rules.
For example, it will address the extent to which an application needs to document emissions, and provide
flexibility in measuring or reporting trace amounts of emissions, and in what must be filed to have a
complete application in cases where a permit may not be issued for a year or two. The first of the white
papers will be issued in draft next month.
Mr. Chairman, before I conclude I would like to make one last point. Criticism from some in industry
about this rule is not surprising. Because this program helps ensure compliance with existing regulations
and makes it easier to determine if a source is in compliance, it was never popular with certain industry
groups -- even before the Act was signed into law. As someone with 25 years of experience in the Clean
Air arena it does not surprise me that some in industry would complain about the prospects of having to
certify compliance with all of the regulations that apply to them. On the other hand, there are some
legitimate concerns that have been raised about issues like flexibility to make industrial process changes
and the paperwork burden associated with permit applications. We are working very closely with state,
industry and other stakeholders to address these issues. I hope that the Committee will support these
efforts.
In summary, despite the difficulties that are always experienced when setting up a new program of
this magnitude, real progress is being made in implementing the programs in the states. We believe these
programs will significantly enhance compliance with air pollution regulations across the nation, improving
air quality and increasing the effectiveness of existing air pollution control programs. EPA is committed to
continue
working with states and industry to streamline and simplify the requirements associated
with the operating permits program and develop a common sense program that works for everyone.
Mr. Chairman, this concludes my written statement. I would be happy to answer any questions you
may have.

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