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EPA Proposes New Air Program Policies

Spring 1996

The U.S. Environmental Protection Agency ("EPA") recently proposed several policy shifts that should provide additional flexibility and regulatory relief for its air permit program.

Permit Streamlining — White Paper II
On March 5, 1996, EPA issued a guidance document known as "White Paper II" intended to provide important opportunities for state and local agencies to further simplify and streamline Clean Air Act operating permit requirements. Two previous White Papers with this goal were issued in 1995. (In July 1995, EPA issued its first "White Paper" outlining minimum federal requirements under its operating permit regulations for permit applications. In August 1995, EPA issued a supplemental notice proposing revisions to its operating permit regulations, also intending to simplify and streamline the permitting process. The main component of the new proposal is to allow consolidation of requirements on some emission units.

According to the guidance, multiple emission limits may be streamlined into one limit if that limit is at least as stringent as the most stringent limit. If no one requirement is unambiguously more stringent than the other, the applicant may synthesize the conditions of all the applicable requirements into a single new permit term. This permit term must assure compliance with all requirements. Streamlined monitoring, record keeping and reporting requirements would generally be those associated with the most stringent emission limitation. Additional components of the White Paper relate to generically grouping information on insignificant emission units, stipulation (rather than documentation) that a source is major, and referencing of existing information in Part 70 permit applications.

Potential to Emit — EPA’s Response to National Mining
EPA recently clarified its position on the federal enforceability requirement associated with potential-to-emit ("PTE"). PTE is used to determine major source thresholds under the Clean Air Act. In National Mining Association v. EPA, the court held in the context of hazardous air pollutant permitting that "federal enforceability," as defined by EPA is not necessary. The test established by National Mining was that the controls must be "unquestionably" and "demonstrably" effective in order to be taken into account, and must stem from state or local government regulations, and not from "operational restrictions that an owner might voluntarily adopt." A series of court decisions have invalidated EPA’s federal enforceability component in various air program areas, including when permits are required in nonattainment areas.

In a January 31, 1996, "Issues and Options Paper," EPA announced its intention not to enforce the federal enforceability requirement in its rules until it completed new rule-making on the issue. According to EPA, that rule-making will incorporate the notion of "effectiveness" into the regulatory scheme. Non-federally enforceable limits must still be permanent, contain a legal obligation, be technically accurate and quantifiable, allow for monthly compliance checks, as well as certain record keeping, reporting, and monitoring.

New Source Review ("NSR") Reform
The New Source Review program was added to the Clean Air Act in 1977, and generally requires large industrial facilities to obtain permits before they build new facilities or significantly increase emissions at existing ones. For Southeastern Wisconsin’s severe nonattainment areas, the NSR threshold for new "major sources" is 25 tons of volatile organic compound ("VOC") emissions. NSR also requires that new or modified sources of air emissions in nonattainment areas secure emission offsets, which for Southeastern Wisconsin must be 1.3 times the amount of emissions the new source would emit. Existing EPA regulations limit the use as offsets emission reductions achieved by shutting down an existing source or curtailing production or operating hours below baseline levels. Some consider this restriction in effect a construction ban in nonattainment areas.

On March 27, 1996, EPA released a draft of its proposed new source review reform regulations. There are several key components, including new applicability criteria for use of offset credits associated with the shut down or curtailment of emission sources. The draft presents possible alternative approvals to shutdown and curtailment restrictions. In light of EPA’s indecision, sources in Wisconsin cannot be assured whether use of shutdown or curtailment credits will be allowed.

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