Clean-air rules affect small firms - 1990 amendments to Clean Air Act

Nation's Business, July, 1991 by Bradford McKee

You may not think your firm is a major source of air pollution, but the drastically toughened Clean Air Act might put you in that category.

The 1990 amendments to that law greatly lowered the threshold defining "major" emission sources, thereby subjecting thousands of smaller firms to air-quality regulation for the first time.

At the center of the law's provisions to cut pollution and smog are state operating and construction permits, which will be based on the monitoring of emissions at affected firms from various angles.

The U.S. Environmental Protection Agency (EPA) issued its first proposed guidelines for state air-quality permits in May. They are expected to be made final by November. After that, all the states--40 of which already monitor air quality--will prepare to enforce regulations that will be among the most complex that businesses have faced. Here is the expected schedule:

Nov. 1, 1993: Deadline for submission of state plans for establishing programs to issue air permits.

Nov. 1, 1994: Deadline for EPA acceptance or rejection of state air-permit plans. Those accepted take effect immediately.

1995: Within 12 months of the effective date of the state permitting program, all businesses subject to permitting requirements must apply for their air-quality permits.

Also in 1995, the EPA is to release its first emission standards for hazardous air pollutants. All emission standards are to be set by 2000.

1997: The first round of state permits should be in place at about 34,000 major emission sources nationwide.

If your firm will have to comply, you have at least three years to initiate procedures that could delay the arrival of the act's torrent of paperwork and its related costs. Some small companies could obtain a five-year reprieve after that. In addition, firms that cut emissions ahead of schedule may get an early-reduction credit, enabling them to put off full compliance for six years.

Small and midsized companies "should be starting to plan" for the more demanding Clean Air Act by devising less-polluting production methods and by shrinking ordinary emissions, says Mary Bernhard, manager of environmental affairs at the U.S. Chamber of Commerce.

But for many firms, she says, reducing emissions may mean major changes in raw materials or production methods. For example, paint manufacturers are working to reduce heavy metals such as lead and chromium in paints. Makers of fragrances are seeking new active ingredients in perfumes and colognes to replace those deemed harmful to air quality. Printers are getting rid of noxious press-cleaning solvents.

Some businesses, such as bakeries, furniture factories, and automobile paint shops, may need to retrofit plants with pollution-control equipment, such as catalytic converters or incinerators that burn off hydrocarbon emissions.

Many businesses are working to avoid air-quality permit fees, which will be tied to emissions volume. Simply put, says William G. Rosenberg, head of air-quality programs at the EPA, companies that "pollute less pay less fees."

Fees for operating permits, which will be issued by the states and renewed at least every five years, will start at $25 per ton of any targeted air pollutant, up to 4,000 tons each or $100,000 per pollutant. At least 189 substances will be regulated, including many commonly used in smal businesses, such as hydrochloric acid and formaldehyde.

If your company emits 10 tons or more per year--or about 55 pounds a day--of the regulated pollutants, or 25 or more tons--137 or more pounds a day--of any combination of them, it is a "major" source and is subject to the most rigorous operating permits.

Also targeted are the elements of urban smog--carbon monoxide, nitrogen oxides, and particulate matter. Whether your firm's emissions of these element make you a "major" source depends on whether your region's air pollution is rated as moderate, serious, severe, or extreme.

States probably will review a firm's operating permits every six months. If changes in your production process would create additional emissions between permit reviews, you must offset the additional emissions with equal or greater cuts in other emissions volume.

Small firms should start budgeting now for pollution-control equipment and possibly costlier alternative production methods, environmental analysts say. Collecting data for any one set of permits might cost up to $15,000, analysts say, and emissions-monitoring equipment might cost $10,000 to $50,000.

Firms should soon determine if they will be classified as a major source of any pollutants. Those that are not "major" sources will have to follow more generic "area" source rules, under which companies with relatively small emission levels of the same type may get collective air-quality permits.

Before implementing procedures for issuing permits, states are supposed to set up special help for small companies that have to comply with new clean-air regulations. During this easing-in period for the new rules, the EPA's Rosenberg says, the agency intends to smooth out the permit program before enforcing it with small firms.