August 1, 1995

Good afternoon. We are pleased 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. Over the
past five years, states, local agencies and industry have made great progress in implementing these
provisions. Due to the progress being made, the public will receive the benefits intended under the
Clean Air Act, including improved air quality, and public information and participation opportunities.
Known as Title V, the permit provisions 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 of a
company's applicable air pollution control requirements. This allows better accountability for compliance
and, ultimately, an improved environment.
We would like to take a few moments to describe some of the specific benefits of the permits
program, discuss the status of our operating permits rule, and then describe the many steps EPA is
taking to significantly streamline and simplify the operating permits program.
The operating permit program provides for the first time that the federal and state air pollution
control requirements be incorporated into a single document. The owner of the facility 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; we believe this shortfall 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
for the public. 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, companies have discovered new uncontrolled emission points or 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 important benefit of the permit program is public information and participation: it
provides opportunities for the public to be informed about decisions concerning emissions from factories
in their neighborhoods and communities. 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 avoiding the need for costly litigation to resolve such controversies.
As being developed by EPA, the permit program also offers benefits to industry by providing a
vehicle for flexibility by fashioning 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 individually approved through lengthy changes to state implementation plans. One example of
facility-wide limits is a permit that has been developed cooperatively among EPA, the State of Oregon,
and Intel Corporation for a facility in Aloha, Oregon. The facility-wide permit, which has been proposed
and submitted to EPA, 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 are actively marketing this concept with state and local air pollution control agencies.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 essential step towards meeting that goal.
The operating permit program also provides a way to facilitate 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 approval process at the
federal level. Each of these processes can take months and sometimes even years. However, once
they are up and running and state plans are modified appropriately, state and local permit programs 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 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 laws, 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 the public and business.

Status of EPA Operating Permit Rule
In July 1992, EPA issued its regulation outlining the minimum requirements state and local
agencies must meet in designing their operating permit programs. Upon promulgation of this 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 expect to issue our supplemental
proposed rule this month.
In developing this supplemental proposal, EPA has worked closely with a number of individual
states, as well as 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 a series of 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 have worked very hard to respond to them in our supplemental proposal.
In addition to our meetings with stakeholders on the supplemental proposed rule, we have also
held a series of stakeholder meetings to discuss two other issues which have been an immediate
concern: streamlining permit applications and reducing the burden of compliance certifications. Before
discussing the changes to the proposed rule, I would like to describe our progress on these two issues.

Streamlining Permit Applications
Once EPA has approved a state or local program, the next step in the process is for industry or
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 compiling
and beginning to submit their permit applications. As this occurred, EPA became aware of reports
about the burdens and costs 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 were very concerned about the size
and costs of some of the applications we had heard about. While large facilities with hundreds of
emissions points, such as chemical plants or refineries, could be expected to have sizeable applications,
EPA considered some of the applications we had heard about to be unacceptably costly and
complicated. We found that some of the information being requested in the permit applications was
going far beyond federal requirements.
In response, on July 10 EPA issued a "white paper" designed to enable industry and state and
local agencies to take immediate steps to reduce the cost and size of permit applications. In developing
the white paper, EPA worked extensively with industry, state and other stakeholders, providing them
several opportunities for review and comment. Among other things, the white paper gives guidance to
states by clarifying EPA's intent and encouraging the use of:
Emissions descriptions, not estimates, for emissions not regulated at the source;

Checklists, rather than emission descriptions, for insignificant activities;
Exclusions for trivial and short-term activities; and
"Batch" or generalized treatment of certain activities (e.g., space heaters) subject to
certain generally applicable requirements.
In addition, EPA's white paper gives encourages the elimination of environmentally insignificant,
obsolete, and irrelevant terms from existing state permits, so they will not be included in Title V operating
permits.
To date EPA has received very positive feedback about the white paper from representatives
from state and local government and industry.

Simplifying the Burden of Compliance Certifications
As I stated earlier, we have found that the permit application process is serving as an incentive
for companies to identify and come into compliance with requirements that they failed to meet in the
past. We have also become aware, however, that there has been some confusion on the part of many
in industry as to the nature and extent of compliance certification requirements.
As a result, on July 3 we issued a guidance memorandum to the EPA Regional Offices clarifying
the requirements with which companies must certify compliance for their initial permit applications.
Under that policy, in determining which requirements should be addressed in the permit applications,
sources will be required to review current major and minor new source review permits and other permits
containing federal requirements, state implementation plans and other documents, and other federal
requirements. However, EPA will not require companies to reconsider previous applicability
determinations as part of their inquiry in preparing the operating permit applications. The policy makes
it clear that EPA does expect companies to rectify past noncompliance as it is discovered. Also,
companies will remain subject to enforcement actions for any failure to comply with requirements to
obtain a permit or meet air pollution control obligations.
The reaction from industry to this policy has been very positive and we believe it will greatly help
to get permit programs up and running around the country.

Streamlining and Simplifying the Operating Permits Rule
I have already discussed how we intend to issue our supplemental proposed permits rule this
month. The supplemental proposal will include a greatly simplified system for permit revisions. It will
give states much greater flexibility to decide the amount of public review for the vast majority of permits
revisions 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.
The proposal will include a series of other common sense provisions to streamline the permits
process. For example, it will interpret the key concept of Title I modifications in a manner that will allow
companies to design their operating permits to make small changes subject to minor source
preconstruction programs without a Title V permit revision. By interpreting Title I modifications to cover
only changes that are major modifications, and not smaller changes that are covered by a minor new
source review program, companies will have much greater opportunity to take advantage of the
operational flexibility provided by section 502(b)(10) of the statute.
The supplemental proposal will also clarify that EPA will restrict its opportunity to apply its veto
of permit revisions to only the most environmentally significant changes, such as major emission
increases. The proposal will include a waiver of EPA's veto opportunity for less environmentally
significant changes, which constitute the vast majority of changes at facilities, for a five-year period,
during which EPA will audit how well state programs are working. EPA would exercise its veto authority
during the five-year period if a petition were received from a citizen and there is evidence that a
proposed revision would have a significant adverse environmental effect.
In order to ensure that states have greater flexibility to make use of their existing operating
permit programs and avoid duplication of state and federal programs, we will clarify in our supplemental
rule that states can use their current minor source review programs to process most permit changes and
then automatically incorporate those changes into Title V permits. We will revise our rules for minor new
source review programs to clarify that states have discretion to match the amount of public review to the
environmental significance of a change. To the extent that states need to change the public review
provisions of their minor source review programs to meet Title V requirements, states will have flexibility
to make those changes as part of either their Title V or minor source review programs and will have up
to five years to implement those changes.
Finally, we will include regulatory language in our supplemental proposal that will recognize and
promote the flexible "emissions cap" approach that has been successfully developed for the Intel facility
in Aloha, Oregon.
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
have added 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 are working very closely with industry, states and other stakeholders to develop
a more cost-effective approach to assure compliance by building on the requirements of existing rules.
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 53 state and territorial agencies and 59 local agencies. EPA has published approval
notices for 14 state programs and formally proposed approval for 13 more. EPA has also approved 35
local permitting programs and proposed approval for 11 more. EPA has published a disapproval notice
for only 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.
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 benefit the public by significantly enhancing 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.
In addition to the extensive efforts being made to implement the operating permits program, EPA
has made progress in reducing the burden of this and other environmental requirements on small
businesses. During the last year, EPA has issued two enforcement policies that are intended to promote
environmental compliance among small businesses by providing incentives for their participation in
compliance assistance programs and prompt correction of violations. On August 12, 1994, EPA issued
its policy for Clean Air Act Section 507 Small Business Assistance Programs. On June 13, 1995, we
issued a broader policy that sets forth the way in which EPA expects to handle violations in all media
programs by small businesses who participated in compliance assistance programs. This policy will be
used to eliminate or reduce a civil penalty for first-time violators that employ 100 or fewer employees,
who promptly correct violations.
Mr. Chairman, on July 5 you sent us a letter asking a series of 175 questions about some very
complex policy issues related to implementation of the Clean Air Act. You asked that we provide
answers to those questions by July 20. As agreed with your staff, we responded to the questions
pertaining to operating permits by that date and we intend to respond to the remaining questions in
writing by August 10.
Mr. Chairman, this concludes our written statement. We would be happy to answer any
questions you may have.

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