1. Flexible Air Permitting Innovation Done Right State-EPA Innovations Symposium Denver, CO January 24, 2006

2. 2 What is Flexible Air Permitting? Flexible air permitting techniques: provide a fundamental approach to managing change in a permit address all applicable regulatory requirements reduce administrative “friction” – cost, delay, complexity, uncertainty, and risk

3. 3 What Is Flexible Air Permitting? Enables a facility to make certain types of changes without requiring additional case-by- case permitting or approval, provided the change meets criteria outlined in the permit. Changes can include: Changes to a source’s methods of operation Addition or modification of equipment Changes in raw materials used Changes in emission factors or monitoring parameters Changes to pollution control equipment

4. 4 Business Needs Relevant to Flexible Permitting Short timeframes for bringing new products to market (time-to-market needs) Shifts of product lines, processes, and production levels to optimize asset utilization throughout a company’s network of facilities Lean manufacturing and Six Sigma efforts that require rapid and iterative changes to operations and equipment Upcoming renovation or expansion projects Active P2 programs which include continual process improvements

5. 5 Company Benefits FLEXIBILITY – Improve competitiveness through increased ability to make changes with short lead times (without need for case-by-case permitting); ability to make changes in an iterative manner CERTAINTY – Increase certainty about the applicability of regulatory requirements SIMPLICITY – Eliminate redundancy in permit terms and focus compliance demonstration on overall emissions performance (where possible)

6. 6 Permitting Authority Needs Relevant to Flexible Permitting Improving customer service – streamlining the permitting process Efficient utilization of decreasing resources – focusing permit expertise on changes that need case-by-case review Keeping permit program relevant – using permits as a tool to produce environmental improvements

7. 7 Permitting Authority Benefits ENVIRONMENTAL OUTCOMES – Encourage and facilitate P2 implementation at the permitted facility RESOURCE EFFICIENCIES – Reduce resource demands during permit implementation due to reduced need to issue construction permits or to reopen operating permits INFORMATION FLOW – Provide agency and public with more information on anticipated changes and emissions levels at the facility

8. 8 History and Context History and Context EPA’s Pollution Prevention in Permitting Program (P4) launched in 1993 – collaboration of EPA OAR and OPEI with States Pilot permits at Intel (OR), Imation (OK), Lasco (WA), Merck (PR), Eli Lilly (IN) EPA Project XL pilot projects Flexible permitting also developed under various State innovation initiatives (e.g., CA, DE, GA, MN, TN, TX)

9. 9 History and Context (cont’d) History and Context (cont’d) Major EPA Evaluation of Implementation Experience with 6 Pilot Permits in 2001-2002 EPA continuing to pursue pilot projects with focus on Performance Track facilities 3M Nevada, MO 3M Brownwood, TX Baxter Mountain Home, AR

10. 10 Piloted Flexible Permit Tools Alternative operating scenarios (AOS) Operational changes approved in the permit using specific or categorical descriptions and permit terms that address all potentially applicable requirements that would be triggered by the approved change Approved replicable methodologies (ARMs) Enables compliance value updating and applicability determinations without permit modification

11. 11 Other Tools Plantwide emissions caps NAAQS protection Applicability avoidance (PTE, PAL) StreamliningSimplifies permit by eliminating overlapping and redundant conditions by assuming that the most stringent requirements apply to all relevant operations Pollution prevention (P2) P2 as specific option for pollution control (performance-based RACT standard) Compliance strategy under caps

12. 12 Pilot Benefits Over 5 Year Term Pilot Benefits Over 5 Year Term Source Operational Changes Made VOC tpy Reduction (%) Intel875134 (71%) 3M343,600 (84%) Chrysler90389 (33%)

13. 13 What is EPA Planning to Do? EPA supports expanded use of flexible permitting techniques, where appropriate, to: Encourage and facilitate emissions reductions and P2 Support permitting authority in reducing the burden of permit modifications while ensuring environmental protection Improve timeframes and certainty for selected operational changes at sources

14. 14 History and Context (part 2) History and Context (part 2) EPA released draft White Paper Number Three in August 2000 for public comment EPA conducted in-depth evaluation of pilot permits in 2001/2002, with results informing NSR reform and flexible permitting pilots Final NSR Improvement rulemaking established certain policy directions for flexible permits (e.g., PALs)

15. 15 What is EPA Planning to Do? What is EPA Planning to Do? Pursue modifications to Part 70/71 and 51/52 through rulemaking to support flexible permitting concepts developed through pilots Draft rule undergoing internal EPA review, to be followed by OMB review and proposal Release of proposed rule targeted for Summer 2006 EPA is interested to solicit State input

16. 16 What is EPA Planning to Do? What is EPA Planning to Do? EPA will invest in rule implementation Network of experts / technical assistance Training Materials, resources and tools Other ideas? EPA will target some rule implementation resources to supporting development of flexible permits for Performance Track member facilities

17. 17 Conclusions Conclusions This is innovation done right Strong accountability while providing operational flexibility Encourages pollution prevention and emissions reduction Reduced administrative burden over the long term for permitting authorities and regulated entities Fulfills Congressional mandate