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Fact Sheet for Public Hearing on the New Emissions Banking Plan

What Is It
A public hearing regarding DEQ's latest emission banking regulations. A public hearing will be held on January 24, 2002, at 1:30 p.m. in the Maynard Ketcham Building, Room 326, 7290 Bluebonnet Boulevard, Baton Rouge, LA 70810. Interested persons are invited to attend and submit oral comments.
Read the public notice and proposed regulations.

The Issue
The Clean Air Act (CAA) provides a way for industrial expansion in ozone nonattainment areas that allows for expansion but also improves the air quality (See CAA Section 182(c)(10)). This is done using the "emissions offset" program. The offset program requires that when a facility expands or builds it must first take out more air emissions than it plans to put in.

DEQ chose to let Louisiana be the only state to violate this part of the CAA and was caught by LEAN and the Tulane Environmental Law Clinic. The EPA then forced DEQ to change its emission banking regulations to comply with federal law. DEQ did correct the most flagrant violation in the banking regulations but since it had to change the regulations anyway, it now wants to include other violations in these proposed regulations.

Worst Violations

DEQ wants to reward companies for violating their permits.
The new regulations allow companies who are violating their permits to get offsets if they will kindly quit violating the permit. This means that if a company wants to expand they need only start violating their permit, negotiate with DEQ, promise to quit violating their permit and use the reduction in what were illegal emission, i.e. the permit violations, as the offsets for the plant expansion.

If this sounds a little ridiculous it is. It is also illegal and doesn't conform to the requirements of the Clean Air Act nor the EPA's guidelines. DEQ is going to do this anyway.

DEQ is allowing this by changing the definition of "Surplus" in section 605 of the proposed regulation to allow banking of emissions reductions resulting from state or federal "orders, or requirement". This is coupled with a change to the definition of "Enforceable" to make a complete package.

DEQ Wants to Allow Nitrogen Oxide Emission Reductions in Place of Other Pollution Reductions.
This means that instead of reducing traditional chemical plant pollution, referred to as volatile organic compounds (VOC's), a company can use nitrogen oxide (NOX) redutions instead. This will do little to improve air quality, but is a cheaper solution for the chemical companies.

The EPA calls this inter-pollutant trading, and will allow this if the state follows the EPA guidelines in its Improving Air Quality with Economic Incentive Programs (This is a big file, 656 kb, and slow to load). (Also see the EPA letter to DEQ concerning inter-pollutant trading EPA letter to DEQ.) DEQ didn't follow the requirements in these guidelines but is going to allow inter-pollutant trading anyway. Go figure.

LEAN contends that inter-pollutant trading is not allowed by the Clean Air Act anyway, but at a minimum the DEQ should be following the EPA guidelines.

Other Problems.

1. The proposed regulations make no provision for nor do they attempt to find the invalid offsets that have already been used in existing air permits. There is also no attempt to make any restitution for past permits that used invalid offsets. This will only hurt the pollution problems in Louisiana and keep the Baton Rouge area from attaining the ozone standard, not to mention that the use of invalid offsets is a violation of federal law. We ask that all Title V permits that have been issued in a nonattainment area be examined to ensure that they were issued with valid offsets. Those permits that were issued using invalid offsets should be revoked and the permit process started over.

2. The new regulations make no effort to find bad offsets that are currently in the bank. The regulations will help keep illegal offsets out of the bank in the future, but the illegal offsets currently in the bank get to stay there. We ask that all offsets currently in the bank be examined to ensure that they are valid offsets under the new regulations.

3. The new regulations propose to remove all references to the contingency requirements of the current State Implementation Plan (SIP). Contingency requirements are federal law and are to be implemented if the SIP fails to bring the state into compliance with the national air standards. (CAA 182(c)(9)) The Baton Rouge ozone nonattainment area failed to come into compliance with the national standard by its November 15, 1999 deadline. At that time the contingencies should have been implemented. One of the three contingencies in the Louisiana SIP was to remove approximately half of the offsets from the emissions bank. This has never been done and now DEQ proposes to drop this requirement altogether so they keep all the existing offsets, legal or not, in the bank for future use. We ask that the contingency requirements in the current SIP be implemented immediately. The banked emissions contingency should be implemented only after the bank has been purged of illegal offsets and that no illegal offsets be used to meet the contingency requirement.

4. The new regulations remove the definition of New Source Review from the banking regulations. There is no reason given by DEQ for removing this definition. The New Source Review requirements of the CAA are federal law, and removing the definition from the banking regulations is equivalent to DEQ putting its head in the sand.