Chemical Sector Update – September 2024

The second half of 2024 is progressing with a steady drumbeat of air quality regulatory actions and court proceedings related to the chemical industry. This article discusses updates to relevant litigation, summarizes developments in recently promulgated air quality rules, and provides insight into air quality rules coming down the pipeline that are related to the chemical industry.

Ethylene Oxide Risk Value

On August 13, 2024, the United States Court of Appeals for the District of Columbia denied an industry petition for review of the United States Environmental Protection Agency’s (U.S. EPA’s) use of the 2016 Integrated Risk Information System (IRIS) value for ethylene oxide (EO) in the Agency’s 2020 residual risk and technology review (RTR) of the National Emission Standards for Hazardous Air Pollutants: Miscellaneous Organic Chemical Manufacturing (MON) (Huntsman v. EPA, No. 23-1045). In the MON RTR, U.S. EPA relied on the 2016 IRIS value to promulgate additional emissions control requirements after it determined that EO emissions from MON facilities posed an unacceptable cancer risk. Following promulgation, industry petitioners filed suit against the use of the IRIS value on the basis that U.S. EPA’s risk modeling was arbitrary and capricious, that the Agency had committed procedural errors in the rulemaking process, and that Section 7412(f) of the Clean Air Act (CAA) is an unconstitutional delegation of authority. The Court denied all three claims, setting up the potential of an appeal to the Supreme Court. In the interim, U.S. EPA’s use of the 2016 IRIS value has implications that reach beyond just MON. The IRIS value is being used in RTRs for other chemical industry NESHAPs as discussed below.

SOCMI NESHAPs and NSPS and NESHAPs for Group I and II Polymers and Resins

It has been about three months since U.S. EPA published final revisions to several National Emission Standards for Hazardous Air Pollutants (NESHAP) and New Source Performance Standards (NSPS) applicable to facilities in the Synthetic Organic Chemical Manufacturing Industry (SOCMI) and Group I and II Polymers and Resins (P&R I and II) Industries. Following promulgation, multiple industry organizations filed petitions for review over items such as the use of the 2016 EO IRIS value, U.S. EPA’s authority to conduct multiple risk reviews, and whether the Agency appropriately considered costs of controlling emissions under the risk reviews. Notably, the U.S. Court of Appeals for the 5^th Circuit granted an emergency stay of the 90-day compliance deadline that U.S. EPA imposed on Denka Performance Elastomer while it considers a two-year compliance extension granted by the Louisiana Department of Environmental Quality. All other deadlines remain in effect, including the two-year deadline to comply with the risk-based standards and to begin fenceline monitoring programs. We expect to see additional petitions for reconsideration from stakeholders and impacts from litigation in the future, but in the meantime, U.S. EPA is moving ahead with two additional chemical sector rules.

Looking Ahead – Proposals, Final Rules, and Compliance Deadlines

U.S. EPA is expected to propose changes for two additional chemical sector air rules in the coming months. First, the Agency is under a consent decree to issue a proposed technology review of the NESHAP for Chemical Manufacturing Area Sources (CMAS) by January 15, 2025. The CAA requires U.S. EPA to identify 30 urban air toxics and set standards for area sources that represent 90% of the combined emissions of those toxics. In 2009, the Agency promulgated the CMAS rule which applies to nine chemical manufacturing sectors that emit one or more of 15 urban air toxics. The original 15 urban air toxics addressed by the CMAS rule did not include EO in the applicability provisions; however, U.S. EPA’s response to the May 6, 2021, Office of Inspector General Report recommendation to develop a NESHAP for chemical plant area sources that emit EO indicates that the Agency plans to consider EO emissions and associated risks. We expect U.S. EPA will propose EO provisions similar to those it has added to the other major source chemical sector rules like the MON and Hazardous Organic NESHAP (HON).

In addition to the CMAS updates, U.S. EPA is working on an RTR for the NESHAP for Polyether Polyols (PEPO) Production. The Agency is expected to identify emissions of EO as a driver for unacceptable risk and propose more stringent standards to address those emissions. We also expect to see changes similar to those proposed in other recent chemical rule RTRs, such as work practices for pressure relief devices, new flare requirements, revisions to heat exchange system monitoring, and fenceline monitoring. U.S. EPA is on track to issue a proposed rule by December.

U.S. EPA is also expected to finalize updates to the Standards of Performance for Volatile Organic Liquid Storage Vessels (Including Petroleum Storage Vessels) by the end of September. The proposed rule (40 CFR Part 60, Subpart Kc) included lower applicability thresholds, more stringent controls, and additional monitoring, recordkeeping, and reporting compared to the existing rule (40 CFR Part 60, Subpart Kb). U.S. EPA received several comments on the proposed rule from industry and environmental stakeholders, as well as state agencies. One of the key items raised by commenters was U.S. EPA’s reversal of their long-standing interpretation that a change in the type of material stored was not a modification if the storage vessel could accommodate the new material. We are watching closely to see how the Agency responds to this concern and others. In the interim, facilities should be tracking their storage vessel activity carefully to avoid potential non-compliance with the final rule.

As a reminder to facilities subject to the Risk Management Program (RMP) rule, if you fall into Program Level 2 or 3, your first notification exercise under the 2019 reconsideration amendments [see 84 Fed. Reg. 69,915, 40 CFR §68.96(a)] must be submitted by December 19, 2024. In an update to the March 2024 revisions, a federal appellate court granted a request from U.S. EPA and industry groups to hold litigation brought forth by industry in abeyance for four months in order to allow U.S. EPA time to reconsider the rule. Petitioners are still waiting for an indication whether the Agency will grant their requested 90-day stay of the rule.

Conclusion

As described above, U.S. EPA is continuing to advance new and revised air regulations with wide-ranging impacts on the chemical industry. Although the results of potential litigation and reconsideration may impact final rule requirements, those processes can often take years to complete. In the meantime, facilities are continuing to comply with recent rule revisions like the MON updates and are evaluating compliance options for HON, P&R I/II, and the SOCMI NSPS. If you are responsible for environmental compliance at facilities subject to CMAS or PEPO, you can get a head start on strategic planning by reviewing the recent rule changes for MON, HON, and P&R I/II considering that similar requirements might be implemented at your facilities. We also recommend actively participating in your national and local industry associations as these are great resources for updates on rules affecting your operations. If you have specific questions on the recent or upcoming rule changes or need help implementing the new requirements at your facility, please contact me at pcrawford@all4inc.com, or your ALL4 project manager. We encourage you to also check our Chemical Industry Resources page for blogs, webinars, workshops, and other resources with information on changes impacting the chemical industry.