At the urging of industry and the White House Office of Management and Budget, and in apparent violation of the Clean Air Act, EPA is considering whether to offer regulatory exemptions to facilities that emit hazardous air pollutants (HAPs) based on the level of health risks posed to surrounding communities. Such a move signals a desire within the administration to abandon stringent technology-based controls -- successfully employed for more than a decade -- which could significantly weaken clean air standards and result in more pollution over time. Brick and Structural Clay Products (BSCP) Manufacturing The BSCP manufacturing source category includes those facilities that manufacture brick; clay pipe; roof tile; extruded floor and wall tile; and/or other extruded, dimensional clay products. There are a total of 189 domestic BSCP manufacturing facilities in 39 states. BSCP emit a number of air toxics including hydrogen fluoride, which can cause severe respiratory damage in humans, such as severe irritation and pulmonary edema (fluid in the lungs); hydrogen chloride, which can also cause pulmonary edema and respiratory tract irritation and inflammation; as well as and a number of metals, including arsenic, a known human carcinogen. Stationary Combustion Turbines Combustion turbines are used by the electric utility industry and independent power producers to produce electricity; by the gas pipeline industry to maintain pressure in gas pipelines; and by chemical and industrial plants to produce both heat and shaft power. Combustion turbines are also used in standby and emergency modes to provide electric power when the normal electric power is lost at chemical and industrial plants, or hospitals, etc. Stationary Combustion turbines emit a number of hazardous air pollutants including benzene, a known human carcinogen. Plywood and Composite Wood Products (PCWP) Manufacturing PCWP facilities manufacture plywood and veneer; particleboard; medium density fiberboard; hardboard; fiberboard; oriented strandboard; and engineered wood products. EPA estimates there are 220 plywood and composite wood products facilities that are major sources. The HAP emitted by PCWP facilities include, but are not limited to acetaldehyde and formaldehyde, which have been linked with cancer, and acrolein, which at high exposure levels, may result in death. Industrial, Commercial, and Institutional Boilers and Process Heaters Boilers are widely used by almost all segments of U.S. industry to produce hot water and steam for a variety of purposes related to industrial process operations and electricity generation. It is likely that tens of thousands of boilers are currently operating, ranging in size from small residential and commercial units to large electric utility steam generators. Hydrogen chloride emissions represent the predominant HAP emitted by industrial boilers, accounting for 59 percent of the total HAP emissions. Short-term inhalation exposure may cause eye, nose, and respiratory tract irritation and inflammation and pulmonary edema (fluid accumulation in the lungs). Stationary Reciprocating Internal Combustion Engines Stationary reciprocating internal combustion engines are used in a wide variety of applications where mechanical work is performed using shaft power. The smallest of these engines are typically mobile engines converted for stationary application at construction sites, farms, and households. The use of larger engines ranges from large municipal electrical generators to industrial and agricultural applications for mechanical and electrical power production. Although numerous HAP may be emitted from internal combustion engines, the pollutant emitted in the largest quantities is formaldehyde, which has been linked with cancer. Auto and Light-Duty Truck Surface Coating Automobile and light-duty truck surface coating facilities are auto paint shops. The major HAP emitted from the automobile and light-duty truck surface coating source category are toluene, xylene, glycol ethers, methyl ethyl ketone, methyl isobutyl ketone, ethylbenzene, and methanol. The health effects caused by exposure to these air toxics can include cancer, respiratory irritation, and damage to the nervous system. The Industry Blueprint Over the past year, EPA has announced this possible shift in direction with proposals to regulate HAPs from six categories of industrial facilities, listed in the box on the right. Industry representatives met with staff at OMB's Office of Information and Regulatory Affairs (OIRA)(which must approve major agency rules) on numerous occasions last summer as part of a successful effort to shape the substance of these new air standards, known as National Emissions Standards for Hazardous Air Pollutants (NESHAPs), according to OIRA logs. One industry group, the American Forest & Paper Association (AF&PA), provided OIRA with three white papers drafted by the D.C. law firm Latham & Watkins, where EPA's assistant administrator for air and radiation, Jeffrey Holmstead, previously worked. These white papers advocate three types of "risk-based exemptions" from technology-based standards and outline the perceived legal authority for implementing such standards. The AF&PA has argued for years that government should set "emission controls at levels that will not adversely affect the industry." The objective of the industry, as expressed by AF&PA, is to use "risk-based regulatory approaches that tailor the rule to the sources of greatest concern." In doing so, this means some dangers to public health would not be regulated. The three approaches from the white papers include:

• An applicability cutoff for threshold pollutants. "A 'threshold pollutant' is one for which there is a concentration or dose below which adverse effects are not expected to occur over a lifetime of exposure," according to EPA. This contrasts with a "non-threshold pollutant," which is considered dangerous at any concentration. Such an approach would exempt threshold pollutants emitted at purportedly safe levels from technology-based controls, known as Maximum Achievable Control Technology (MACT) standards. This represents a departure from the current categorical approach set forth in the Clean Air Act, which "is particularly problematic because it is clear that Congress legislated with an understanding that carcinogens do not have a safe threshold," according to "/execreport/docs/NRDCbrickcomments.pdf">comments submitted to EPA by the Natural Resources Defense Council (NRDC).
• Sub-categorization and de-listing. Under this approach, EPA would establish a low-risk subcategory of facilities within the larger industrial category, which would then be de-listed, effectively exempting facilities from MACT controls. This approach, which could apply to both threshold and non-threshold pollutants, is particularly disturbing because facilities would study and report their own emissions to prove eligibility for the low-risk subcategory.
• A concentration-based applicability threshold. Under this approach, EPA would provide MACT exemptions to facilities whose exhaust streams are below certain HAP concentration thresholds. This would include both threshold and non-threshold pollutants, and seems to run directly counter to the intent of the Clean Air Act, which does not permit risk-based standards for dangerous toxic emissions. Of course, from industry's perspective, compliance costs should be the paramount consideration.

OIRA's Influence Just days after receiving these white papers, on July 3, 2002, OIRA reportedly forced EPA to withdraw two NESHAP proposals -- addressing stationary internal combustion engines and industrial boilers -- that had been submitted to OIRA for approval, and pressured the agency to insert the industry-backed risk-based exemptions, as OMB Watch previously reported. Almost a week later, OIRA approved two separate NESHAP proposals -- one on plywood and composite wood products and the other on auto-painting facilities -- that included near identical sections seeking public comment on the possibility of adopting risk-based exemptions. These proposals mirrored the industry suggestions to OIRA, and explicitly referenced the white papers from the American Forest & Paper Association as the inspiration. In the plywood draft submitted to OIRA, EPA originally expressed doubt about the legality of the subcategorization and delisting approach, stating the agency was "not convinced that subcategorization based on risk is possible within the statutory constraints of the [Clean Air Act]." But according to agency documents, OIRA struck this statement before approving the proposal for public comment (EPA Docket A-98-44, Document II-F-3). OMB Watch also obtained documentation of changes made by OIRA to the auto-painting proposal. The majority of the section on risk-based exemptions, "Can We Achieve the Goals of the Proposed Rule in a Less Costly Manner?," was rewritten while under review at OIRA (EPA Docket A-2001-22, Document II-F-21). Most notably, the third approach identified in the white papers, the concentration-based applicability threshold, did not appear in EPA's original draft, but was inserted during OIRA's review. Later, EPA resubmitted its proposals on internal combustion engines and industrial boilers, along with another NESHAP on stationary combustion turbines. These three proposals, which OIRA approved mid-November, included the same boilerplate language on risk-based exemptions as the earlier two proposals cleared by OIRA, with each referencing the industry white papers. The public comment period recently closed for all five proposals, and it remains to be seen how OIRA will choose to respond if EPA decides not to include risk-based exemptions in its final versions. Another NESHAP standard on the brick and clay industry, which as a non-major rule (unlike the other NESHAPs discussed above) did not require OIRA approval, may be a harbinger of things to come. In its proposal on July 22, 2002, EPA originally sought comment on the first two risk-based approaches advised by the industry white papers, but stated it did not believe the third option (the use of a concentration-based applicability threshold) was viable. The "http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=2002_register&docid=02-15869-filed">text of the proposed rule also makes clear that EPA had doubts about the legality of the subcategorization and delisting approach: "Although EPA currently is not convinced that subcategorization based on risk is possible within the statutory constraints of the CAA, EPA solicits comment on implementing a risk-based approach for establishing subcategories of brick and structural clay products facilities." As stated above, EPA tried to express the same doubts for the plywood proposal, but this was struck by OIRA. On Feb. 28, EPA issued the final brick and clay rule without any risk-based exemptions, as OMB Watch previously reported. Documenting OIRA Changes Although all indicators suggest that OIRA pushed EPA to include these exemptions in the NESHAP proposals, the exact extent of its influence is still fuzzy. Executive Order 12866 instructs agencies to document substantive changes made to draft proposals submitted to OIRA for review and to "identify for the public those changes in the regulatory action that were made at the suggestion or recommendation of OIRA." Such documentation enables the public to better understand the nature and scope of changes made by OIRA. Unfortunately, as OMB Watch previously explained, agencies frequently do not formally document OIRA changes. This was the case for all but one of EPA's NESHAP proposals -- the auto and light-duty truck rule -- even though all were approved "consistent with change," indicating OIRA made changes during its review. We spoke to EPA employees who were unable to locate documentation of OIRA changes, and in nearly every case, they were unaware that such documentation was actually required. OMB Watch recently submitted a Freedom of Information Act (FOIA) request to EPA asking for documentation of changes made to the original agency proposals. We will report the results of this request when we receive a response. The Advantage of Technology-Based Standards Developing standards generated through risk-assessments -- seen by industry, as a way to avoid regulation -- is a highly subjective and time-consuming process. In a report funded by OMB Watch ("Case Study: Use of Risk Assessment to Set Air Toxics Standards Results in Deadlock at the EPA"), NRDC points out that conducting a risk assessment is never straightforward; determining what to study, how to study it, what conclusions can be made is extremely time consuming and often leads to "paralysis by analysis." Establishing risk-based exemptions for HAPs would require case-by-case assessments of the health risks posed by a facility to the surrounding community. Furthermore, individualized exemptions could result in an uneven playing field, since risk assessments would be based on a facility's unique impact on the surrounding community. A facility located in a densely populated area might be required to install controls while a source emitting the same level of pollutants, in a more sparsely populated area might be exempt from controls. Setting technology-based standards is a much simpler, clear-cut process since emission limits are based on the best performing 12 percent of existing sources. EPA has been more successful in establishing limits using a technology-based approach, having set 45 MACT standards affecting more than 82 categories of industrial sources of air toxics since 1990, (as of August 2000) compared with seven HAP standards -- five of which were forced by court order-- promulgated between 1970 and 1990 under the risk-based approach. Risk-based standards, in addition to being difficult to formulate, have the potential to be much less protective. As previously mentioned, developing a standard based on risk can be a grueling and quite subjective process. High risk thresholds could render standards meaningless, with few facilities exceeding the threshold. Technology-based standards, on the other hand, boast the assurance of technological feasibility since they are based on methods already employed by industry. They are also advantageous since no one technology is specified or required, thereby promoting industry innovation. The best case for a technology-based approach is the real-world benefits that have been achieved over the last decade. As NRDC points out, emissions of toxic air pollutants have been decreasing for some time, but improvements have been steadier since the 1990 changes in regulatory approach. Risk-Based Exemptions Violate the Clean Air Act Congress clearly recognized the superiority of technology-based standards in enacting the Clean Air Act amendments of 1990. It was taking decades to develop risk-based standards and such standards were debated and rejected in favor of clear-cut, technology-based rules. "Congress found... efforts to lower these toxic emissions had been stymied by argument, conflict and litigation concerning risk-based analysis," according to an EPA report on HAP regulation. Congress specified that MACT standards were to be set for categories of polluters -- not individual facilities. "The language of section 112(d)(4)," where EPA claims to find legal authority for implementing risk-based approaches, "plainly does not allow EPA to make facility-by-facility exemptions from MACT standards," according to NRDC attorneys. As previously mentioned, even EPA staff clearly had doubts about the legality of risk-based approaches, but OIRA suppressed such dissent.