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Weyerhaeuser Company

Cluster Rule Innovative Technology Program

DISCUSSION DRAFT 2/6/96

Cluster Rule Innovative Technology Program

I. Background

On December 17, 1993, the U.S. Environmental Protection Agency ("EPA") proposed Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards: Pulp, Paper, and Paperboard Category; National Emission Standards for Hazardous Air Pollutants for Source Category: Pulp and Paper Production, 58 Fed. Reg. 66078 (Dec. 17, 1993) (hereinafter"Proposed Cluster Rule").

The purpose of the Proposed Cluster Rule is "to provide greater protection of human health and the environment, reduce the cost of complying with [rules under both the Clean Water and Clean Air Acts], promote and facilitate coordinated compliance planning by industry, promote and facilitate pollution prevention, and emphasize the multimedia nature of pollution control." 58 Fed. Reg. at 66093. Among other things, the Proposed Cluster Rule would redefine best available technology economically achievable, or"BAT," under"" 301(b)(2)(i) and 304(b)(2) of the Clean Water Act, 33 U.S.C."" 1311(b)(2)(i) and 1314(b)(2), for the pulp and paper industry and would define new National Emission Standards for Hazardous Air Pollutants ("NESHAPs") under" 112 of he Clean Air Act, 42 U.S.C." 7412.

The Proposed Cluster Rule identified oxygen delignification ("OD") as one technology constituting BAT for the control of certain water pollutants--including organochlorine compounds and other adsorbable organic halides (jointly referred to as"AOX")--from dissolving kraft, bleached papergrade kraft, papergrade sulfite and dissolving sulfite mills. See 58 Fed. Reg. at 66084. Today EPA is proposing that complete chlorine dioxide substitution is BAT rather than OD because the latter is not, in many existing mills, economically achievable. See the discussion in section II.A.3. of this Preamble. Nevertheless, EPA wants to encourage the development of new, and the perfection of existing, technologies like OD that can achieve pollutant discharge reductions even greater than BAT of AOX and related pollutant parameters.

Because of the significant cost associated with the development, installation and operation of innovative technology to reduce the discharges of pollutants from the wastewater stream, and because encouraging the development and implementation of such technology is important to environmental protection, EPA is proposing specific incentives to recognize and reward the bleached papergrade kraft and papergrade sulfite facilities in the pulp and paper industry for use of innovative efforts under a new pilot program, the Cluster Rule Innovative Technology Program.

The incentives proposed today in the Cluster Rule Innovative Technology Program are designed to serve as a pilot program for determining the effectiveness of regulatory incentives as a means of stimulating development of environmentally beneficial technology for reduction of toxics and other water-borne pollutants. Although this program is being proposed initially for a segment of the pulp and paper industry, EPA will consider expanding this program to innovative technologies in relation to maximum achievable control technology ("MACT") limitations, and will evaluate the effectiveness of this pilot program for use in other industry segments in the interest of encouraging environmentally beneficial technology development.

EPA will consider the repromulgation of this program in 15 years, with appropriate revisions, if it determines at such time that this pilot program has been successful in encouraging the use of new technologies to reduce the discharge of pollutants of concern from wastewater streams at bleached papergrade kraft and papergrade sulfite facilities.

II. Discussion

A. Rationale for Proposing the Innovative Technology Program

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¹Because it is not known what innovative technology will be proposed in this pilot program, EPA has determined that the Innovative Technology Tiers should be defined in terms of reduction of one parameter, AOX, for ease of administration. Adjustments for the other BAT end-of-the-pipe effluent limitation applicable to bleached papergrade kraft and papergrade sulfite mills, i.e., COD, will be determined in each case based upon what the particular innovative technology in question reasonably can achieve. In no case will the COD effluent limitations in an Innovative Technology permit be less stringent than BAT; presumably, in many instances, the COD limits will be more stringent than BAT. For OD technology, EPA already has determined that the appropriate COD limit is presumptively ___ kg/kkg unless a permittee can overcome that presumption by establishing that this limit cannot be achieved feasibly in the special circumstances of the operation being permitted.

A Tier II Innovative Technology would be any technology able to meet an enforceable AOX permit limitation of .2 kg/kkg of production. A Tier III Innovative Technology would be any technology able to meet an enforceable AOX permit limitation of .1 kg/kkg of production.

On many occasions in the past, EPA has stated its commitment to promote the use of innovative technologies to achieve more effective levels of environmental protection. For example, last year EPA initiated its Regulatory Reinvention (XL) Pilot Projects program, which gives regulated sources the flexibility to develop alternative strategies to replace or modify specific regulatory requirements on the condition that they produce greater environmental benefits. See 60 Fed. Reg. 27282 (May 23, 1995). Today's proposed Cluster Rule Innovative Technology Program for the bleached papergrade kraft and papergrade sulfite subcategories of the pulp and paper industry is a logical extension of the XL program concept specifically directed toward the reduction of non-conventional pollutants from bleaching operations in the paper and pulp industry.

With regard to permitting Innovative Technologies, EPA will provide extended compliance schedules to allow more time for piloting Innovative Technologies and to spread the cost of installation over a longer period; extended permit terms to provide assurance that a facility's investment in expensive technology will have some long-term benefits; fast-track permitting for facility expansion once a company has complied with Innovative Technology effluent limitations; and new source review incentives to defray Innovative Technology costs.

Enforcement incentives the Agency will extend to Innovative Technology facilities include reduced inspections, recognition of Innovative Technology projects as"Supplemental Environmental Projects" for offsetting enforcement penalties, and reduced effluent monitoring once the reliability of the Innovative Technology is established. Finally, EPA, through the Office of the Assistant Administrator for Water, will establish a recognition program for Innovative Technology facilities.

In order to ensure that these incentives will be implemented by States operating authorized Clean Water or Clean Air Act permitting programs, EPA will require consistent implementation of this Cluster Rule Innovative Technology Program as a specific condition in State/EPA program MOAs. EPA wants States to implement this Program uniformly because EPA believes that it is in the public interest strongly to encourage companies that are willing to explore and invest in new, more effective means of controlling pollutant discharges. Failure of a State to implement appropriately an Innovative Technology incentive, when EPA and other States are implementing the program in other cases, will bring about inconsistent and unfair results. Inconsistent and unfair treatment may act as a disincentive to others that otherwise might invest in Innovative Technology.

C. Discussion of Specific Incentives

a. Extended Compliance Schedules

(1) Proposal

In order to ensure enforceability, establish interim milestones, and provide assurance to an Innovative Technology facility that it will not be the subject of enforcement during the period prior to final compliance with permit limitations, EPA or an authorized State will enter into either a compliance order or a consent decree subject to court approval under Section 309(a)(3) of the Clean Water Act, 33 U.S.C." 1319(a)(3), that incorporate Tier I, Tier II or Tier III compliance schedules and interim milestones, which may include research schedules, construction schedules, product trials or other interim milestones, as appropriate to the Innovative Technology and the facility at issue. So long as the permittee is in compliance with the interim milestones in the order or decree, the permittee will be deemed by EPA to be in compliance with the Innovative Technology limitations (and, thus, in compliance with BAT requirements) and not be subject to any enforcement action for violation of permit terms relating to those limitations.

(2) Legal Authority for Proposal

EPA has the authority to extend compliance deadlines for facilities that have implemented Innovative Technology through its post-compliance deadline enforcement policy. This policy gives the EPA flexibility, through compliance orders or consent decrees, in enforcing regulations that are promulgated with insufficient time for the permittee to comply. In addition, there is precedent for this concept of extending compliance deadlines for facilities unable to achieve full compliance with newly issued effluent limitations under sections 301(b) and (k) of the Clean Water Act.

Congress has given EPA the authority to be flexible in enforcing permit limitations. See Rybacheck v. U.S. Environmental Protection Agency, 904 F.2d 1276, 1300 (9th Cir. 1990); Chemical Manufacturers Ass'n v. U.S. Environmental Protection Agency, 870 F.2d 177,242 (5th Cir. 1989) cert. denied, 495 U.S. 910 (1990). Sections 309(a)(3) and (5) of the Clean Water Act provide that if a discharge is unable to comply with a final deadline, EPA shall schedule a"reasonable" time for compliance,"taking into account the seriousness of the violation and any good faith efforts to comply with applicable requirements." See 33 U.S.C." 1319(a)(3), 1319(a)(5)(A), (B). It was"Congress' intention that good faith noncompliance [in appropriate instances] would be accommodated by the EPA's post-deadline enforcement policy." Chemical Manufacturers, 870 F.2d at 242.

The Conference Report accompanying the 1987 Amendments to the Clean Water Act further discusses EPA's post-deadline enforcement policy as applied to dischargers in an entire category that are unable to meet the March 31, 1989 deadline due to EPA's failure to promulgate timely effluent limitations.

In addition to specific legal authority to extend compliance deadlines, there is precedent in the Clean Water Act itself for such an approach. Under the Clean Water Act, facilities originally were required to come into compliance with BAT by July 1, 1981. Congress recognized, however, that new effluent limitations would be promulgated over the years, and granted a three-year extension for complying with new limitations. 33 U.S.C." 1311(b)(2). See also id. at" 1311(k). However, because EPA is late in promulgating BAT for this industry segment, there is no period recognized by the statute for a facility to purchase and install equipment needed to comply with new limitations. Id. at" 1311(b)(2)(C). Clearly, facilities need some reasonable time to make the necessary adjustments to meet significantly more stringent limitations.

As noted above, it is EPA's general policy through its post-deadline compliance policy to allow up to three years for NPDES permittees to comply with newly-issued effluent standards. Because policies do not bind the Agency as a matter of law, EPA has discretion to divert from policies in appropriate circumstances. Today EPA proposes to divert from its post-deadline policy to allow companies that are willing to meet more stringent Innovative Technology effluent limitations to have more time in which to comply.

(1) Proposal

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² These permit terms are based upon the current Clean Water Act. 33 U.S.C." 1342(a)(3). If the Clean Water Act is amended to specify ten-year permit terms, each of the Tier I-III time frames will be five years longer.

For a permittee, the presumptive period shall begin running from the time compliance with the Innovative Technology effluent limitations is achieved.
In addition, it will be EPA policy to allow Innovative Technology permits to remain in effect without reissuance for an extra five years beyond the first permit term. Although section 402(a)(3) of the Clean Water Act provides that NPDES permits are to expire by their own terms after five years, 33 U.S.C." 1342(a)(3), those permits often remain in effect for longer periods pursuant to provisions of the Administrative Procedure Act if the permittee applies for reissuance in a timely manner. Assuming timely reapplication is made by the permittee, EPA will allow an Innovative Technology permit to remain in effective for five years beyond its normal expiration date unless there are significant ongoing exceedences above ambient water quality standards that need to be addressed through permit reissuance and will encourage States to do the same.

The presumption that the facility's effluent limitations will not be altered for at least the indicated time periods is based upon (a) the need for assurance that substantial investments in innovative technology will not be nullified within a short time period by even more stringent permit requirements, and (b) the fact that water quality considerations under Section 301(b)(1)(C), 401 and 402 of the Clean Water Act, 33 U.S.C." 1311(b)(1)(C), 1341, 1342, must be fully considered when the first Innovative Technology NPDES permit is issued. Thus, there should not be a need to alter the facility's effluent limitations for at least the applicable presumptive period.

The proposed rule recognizes, however, that a revision of water quality standards could require modification of effluent limitations under" 301(b)(1)(C) of the Clean Water Act, 33 U.S.C." 1311(b)(1)(C). In recognition of the substantial cost and significant environmental benefit to be derived from Innovative Technology, today's proposed rule would establish a presumption against revising the effluent limitations in an Innovative Technology facility's NPDES permit even where water quality standards have been made more stringent. The presumption may be rebutted only if the full implementation of all available pollution control measures by other point and non-point sources will not achieve compliance with water quality standards in the receiving water and the continuing ambient water quality standards violations are attributable to the Innovative Technology facility. In that circumstance alone would the Innovative Technology facility's effluent limitations be made more stringent.

Where there is more than one Innovative Technology facility discharging to a water-quality-limited receiving water, Tier III Innovative Technology Facilities shall have first priority in the effluent limitation allocation process, Tier II facilities second priority, and Tier I facilities third priority. Thus, for example, the effluent limitations of a Tier I facility will be modified to become water-quality-limited before Tier II limitations, etc.

(2) Legal Authority for Proposal

EPA is authorized to promulgate effluent limitation guidelines and regulations under Section 304(b) of the Clean Water Act. 33 U.S.C." 1314(b). Because of the large technology investment those regulations often require, EPA has been careful to modify those industry-specific guidelines and regulations only when absolutely necessary. Technology-based effluent limitations based on national guidelines and Section 304 regulations normally remain in effect through more than one permit cycle. Such long-term effluent limitations are entirely consistent with the provisions of Sections 301, 304, and 402 of the Clean Water Act. 33 U.S.C."" 1311, 1314, and 1342.

Moreover, although Section 402(a)(3) provides that NPDES permits are to expire by their own terms after five years, 33 U.S.C." 1342(a)(3), they often remain in effect pursuant to the provisions of the Administrative Procedure Act if the permittee applies for reissuance in a timely manner. EPA will allow Innovative Technology permits to remain effective for more than five years where there are no significant ambient water quality exceedences that need to be addressed through permit reissuance.

There is nothing in the Clean Water Act that precludes EPA or a State from prioritizing the allocation of water-quality-limited effluent limitations on the basis of the stringency of the technology-based effluent limitations applicable to dischargers on a stream. Indeed, the Clean Water Act in Section 303 supports such a priority scheme.

Section 303(d) of the Clean Water Act establishes a continuous process for States to identify water quality-limited waters, establish priorities and develop water quality protection plans by determining total maximum daily loading, or"TMDLs," that the receiving water can carry. 33 U.S.C." 1313(d). The preamble to the TMDL regulations specifies that, in preparing water-quality-limited effluent limitations based on TMDLs,"States have the flexibility to consider the relative costs of point and nonpoint source controls .... EPA ... encourages point/nonpoint source trading and other market-based approaches to water quality improvement." 57 Fed. Reg. 33040, 33,048 (July 24, 1992). Thus, consistent with the notion of cost and fairness in establishing permit limitation allocations pursuant to TMDLs, States may take into account whether or not a facility has implemented Innovative Technologies in the allocation of water-quality based effluent limitations. For example, the fact that a facility has accepted effluent limitations that are 50% or more stringent than BAT should mean that the facility, relative to other dischargers, should not be subject to tighter water-quality-based effluent limitations.

(1) Proposal

(2) Legal Authority for Proposal

Implementation of a"fast-track" permitting process for Innovative Technology facilities is consistent with the provisions of the Clean Water and Clean Air Act. See, e.g., 40 CFR"" 124.5.

Permit modification procedures for the Clean Water Act indicate that permits can be modified, among other reasons, if"there are material and substantial alterations or additions to the permitted facility or activity" which are different from conditions in the existing permit, or absent from the existing permit. 40 C.F.R."" 124.5. See also 40 C.F.R." 70.7(e) (modifications of Clean Air Act Title V permits). These procedures provide further that once a facility's permit application is complete, the EPA must prepare a draft permit which is publicly noticed and is made available for public comment. See 40 C.F.R. Parts 124, 170 (Clean Water Act) and" 70.7(b) (Clean Air Act). Neither the Clean Water nor the Clean Air Act prescribes a priority system for processing completed and pending permit applications or modifications. The setting of such priorities is left to the discretion of the Agency.

(1) Proposal

(2) Legal Authority for Proposal

The Clean Air Act authorizes EPA to define a"major modification" subject to New Source or PSD Review, which EPA has done in 40 C.F.R."" 51.165(a)(1) and 51.166(b)(2). See generally 40 C.F.R."" 7470 & 7476. In that definition, EPA has exempted certain"pollution control project[s]" from New Source or PSD Review. Moreover, as indicated in a memorandum to EPA regional air program directors from John S. Seitz, Director, Office of Air Quality Planning and Standards, dated July 1, 1994, EPA has had a policy for a number of years of excluding certain pollution control projects from New Source Review requirements on a case-by-case basis. See 57 Fed. Reg. 32320.

The Clean Air Act regulations define a"major modification" for purposes of triggering the New Source Review or PSD requirements as"any physical change in or change in the method of operation of a major stationary source that would result in a significant net emissions increase of any pollutant subject to regulation under the [Clean Air] Act." 40 C.F.R."" 51.165(a)(1)(v)(A); 51.166(b)(2)(i). The regulations further provide, however, that the term"physical change or change in the method of operation" does not include, among other things,"[t]he addition, replacement or use of a pollution control project at an existing electric utility steam generating unit ...." Id. at" 51.165(a)(1)(v)(C)(8); 51.166(b)(2)(iii)(h). EPA today is proposing a similar exemption for Innovative Technologies under this Rule.

2. Enforcement Incentives

a. Reduced Effluent Monitoring Requirements

(1) Proposal

EPA is proposing that once a bleached papergrade kraft or papergrade sulfite facility has installed and made fully operational Innovative Technology, it will be subject to at least six months of monitoring for all parameters required under the final Cluster Rule of all internal bleach plant wastewaters at the same frequency determined by EPA to constitute BAT. If the monitoring data from the bleach plant for a six-month period confirms continuous compliance with applicable limitations, the facility will be required thereafter to provide annual certifications of compliance with such limitations for each bleach plant stream. The six-month monitoring period should include the representative worst case operating scenario for discharges of BAT pollutant parameters to ensure compliance. Additionally, the certification requirement must reflect that the Innovative Technology is operating and maintained and reflective of the operating scenarios during the six-month monitoring period. If a new operating scenario is contemplated, additional monitoring may be required. In addition, once the Innovative Technology is installed and fully operational, a facility also will be required to perform monthly monitoring of end-of-pipe effluent for AOX and COD to ensure compliance with the end-of-the-pipe Innovative Technology limits set forth in this proposal.

(2) Legal Authority for Proposal

Both the Clean Water Act and the regulations promulgated thereunder provide EPA with broad discretion in setting monitoring and other information-gathering requirements. Section 308 of the Clean Water Act provides, in relevant part:

EPA regulations do not dictate monitoring requirements for all NPDES permits. Required monitoring is established on a permit-by-permit basis"with a frequency dependent on the nature and effect of the discharge, but in no case less than once a year." 40 C.F.R." 122.44(I)(2).

The proposed Cluster Rule published on December 13, 1993 contemplated the concept of reduced monitoring as an incentive to develop new technologies. Specifically, for the bleached papergrade kraft and soda; dissolving kraft; dissolving sulfite; and papergrade sulfite subcategories, EPA initially proposed alternative effluent limitations for mills using totally chlorine-free bleaching processes. See 58 Fed. Reg. at 66,111, 66112, 66114, 66115, 66118. These mills would have been required to certify to the applicable permitting authority that their processes are totally chlorine-free, and then they would have limited monitoring requirements for specific toxic organic pollutants, which could be terminated if all analytical results in a series of sampling events are non-detect. Id.

Because EPA has the requisite flexibility to allow for reduced monitoring requirements, EPA has the authority to promulgate a rule that provides for the reduced monitoring requirements set forth in this proposal.

b. Reduced Penalties

(1) Proposal

EPA proposes significant penalty mitigation for violations of the Clean Air Act and the Clean Water Act for bleached papergrade kraft and papergrade sulfite facilities that have installed Innovative Technology. The Agency will apply the costs of installing and operating Innovative Technology to offset on a dollar-for-dollar basis any gravity-based penalty or economic-benefit-based penalty that the facility might face for any activities that occur during the term in which the Innovative Technology effluent limitations are applicable. In essence, the extra pollution control achieved by Innovative Technology is a special Supplemental Environmental Protect ("SEP"), regardless of whether or not the present SEPs policy would allow the Innovative Technology project in the context of the particular enforcement case. See Interim Revised EPA Supplemental Environmental Projects Policy, reprinted at 25 Env't L.Rep. (Admin. Materials) 35613 (May 8, 1995) ("SEPs Policy").

(2) Legal Authority for Proposal

EPA has broad authority to compromise penalty imposition and determine appropriate grounds for settling enforcement cases.

The reduction of penalties for installing Innovative Technology is consistent with EPA's penalty policy guidance. EPA's Policy on Civil Penalties states that the first goal of penalty assessment is"to persuade the violator to take precautions against falling into noncompliance again ... and to dissuade others from violating the law." EPA Policy on Civil Penalties, reprinted at 17 Env't L. Rep. (Admin. Materials) 35083 (Feb. 16, 1994) ("EPA Penalty Policy"). The EPA Penalty Policy also states that penalties should, at a minimum, remove any significant economic benefits resulting from failure to comply with the law. Id. EPA considers specific mitigating factors in reducing a penalty assessment for settlement purposes, including"good faith efforts to comply" and"other unique factors." E.g., EPA RCRA Civil Penalty Policy, 21 Env't L. Rep. (Admin. Materials) 35273 (Oct. 1990).

EPA's penalty policies are consistent with the concept of providing mitigation to facilities that have installed Innovative Technology. Facilities that commit to Innovative Technology demonstrate their willingness to go beyond the normal regulatory requirements to provide increased environmental protection. By doing so, they have committed to larger expenditures for environmental protection than their industrial competitors. Thus, unless their"economic benefit of noncompliance" in a particular case exceeds their increased Innovative Technology costs, it cannot be said that they have derived any economic benefit from noncompliance. Moreover, their willingness to take additional steps to protect the environment demonstrates their good faith, and qualifies as"other unique factors" that EPA is authorized to consider in mitigating any penalties.

Finally, while the EPA's SEPs Policy provides that already expended sums generally do not qualify as a SEP and that there must be a clear nexus between the violation and the SEP, SEPs Policy, 25 Env't L. Rep. at 35,614, EPA has broad discretion to consider other factors, such as a company's willingness to install Innovative Technology, in settling penalty cases. Today, the Agency exercises that discretion in modifying its penalty policies to specify that the costs of Innovative Technology projects shall be applied, on a dollar-for-dollar basis, to offset any civil penalty, whether gravity- or economic-benefit-based.

c. Reduced Inspections

(1) Proposal

EPA and federally-authorized State programs will reduce by 50% routine regulatory inspections of bleached papergrade kraft and papergrade sulfite facilities that are operating pursuant to Innovative Technology effluent limitations and have demonstrated six months of continuous compliance. Such facilities will not be routinely inspected more than once every two years. EPA also will not undertake unannounced multimedia inspections of such facilities. However, EPA is proposing a specific probable cause exception to this reduced monitoring rule for the purpose of facilitating a criminal investigation if the need arises.

(2) Legal Authority for Proposal

Neither the Clean Water Act nor the regulations promuglated thereunder contains any mandatory inspection requirements for facilities.

The Clean Water Act regulations provide that the permittee shall allow the EPA to enter and inspect the permittee's facility, including copy records, monitor and take samples. 40 C.F.R." 122.41(i). The regulations also provide that States wishing to implement the NPDES program must submit a Memorandum of Agreement to the EPA Regional Administrator specifying, among other things, provisions for the coordination of inspection of facilities by EPA and the States. Id. at" 123.24(a)(4). Finally, the regulations provide that State NPDES programs should have their own inspection and surveillance procedures. Id. at" 123.26(b). None of these provisions, however, addresses the mandatory frequency of inspections.

The Voluntary Protection Program initiated by the Occupational Safety and Health Administration ("OSHA") on July 2, 1982, 47 Fed. Reg. 29025 (July 2, 1982) serves as a good analogy for EPA's reduced inspection proposal for Innovative Technology facilities. Under the"VPP," participating companies seek to attain superior compliance with safety programs and to serve as role models for other companies. Companies which qualify for the program view OSHA standards as the minimum level of safety and health performance. "Merit" status is given to above-average companies, and"Star" status is awarded to companies that satisfy even more rigorous requirements for three years. Companies with either Star or Merit status must pass an initial on-site inspection. Thereafter, Merit companies are inspected by OSHA only once a year, and Star companies are inspected only once every three years.

EPA is using this aspect of the OSHA VPP program as a model for its proposal to reduce inspection at bleached papergrade kraft and papergrade sulfite facilities that have demonstrated their commitment to excellence through the acceptance of Innovative Technology permit limitations and a six-month demonstration of the reliability of the technology in meeting the limitations.

3. Public Recognition Incentives

a. Proposal

EPA will provide guidance for a public recognition program for Innovative Technology facilities. EPA is proposing national"Innovative Technology" recognition for accomplishments in reducing pollutants in water through the implementation of technologies not required by law. The Assistant Administrator for Water will set the criteria for the recognition and publish the list of qualifying Innovative Technology facilities on an annual basis. Such criteria shall include whether the facility has accepted, is operating pursuant to, and is in substantial compliance with, Innovative Technology effluent limitations.

b. Legal Authority for Proposal

The Agency has broad discretion to provide public recognition and make awards to stimulate interest in the development of Innovative Technology. Several EPA initiatives contain components which provide close analogies to this public recognition concept. For example, the Environmental Leadership Program, initiated in 1994, publicly recognizes those industrial facilities willing to develop innovative approaches in preventing pollution that will result in moving beyond simple compliance with environmental laws. 59 Fed. Reg. 32062 (June 21, 1994).

Similarly, EPA's 33/50 Program is a voluntary pollution prevention initiative, which targets 17 high priority chemicals for reductions in releases and transfers to off-site locations for treatment and disposal. The 33/50 program is named for its reduction goals: an interim target of 33% in the 1992 reporting year and an ultimate goal of a 50% reduction in the 1995 reporting year, as measured against 1988 Toxic Release Inventory data. Companies that succeed in meeting the goals of the program are recognized at ceremonies which are sponsored in part by EPA. 56 Fed. Reg. 7849 (Feb. 26, 1991).

Finally, OSHA's VPP program recognizes companies that are committed to exceeding OSHA safety standards, by awarding"stars" to those facilities that have achieved extraordinary levels of safety. 47 Fed. Reg. 29025 (July 2, 1982).

Thus, the concept of providing public recognition for facilities that have installed Innovative Technology is consistent with the EPA's (and other agency's) policies to encourage extraordinary compliance measures.

III. Regulatory Language

EPA is proposing to add a section to the Final Cluster Rule entitled"Cluster Rule Innovative Technology Program." The proposed regulations for that Program are, as follows:

"Subpart __ --Cluster Rule Innovative Technology Program.

""__.01 Applicability

"For the purpose of encouraging the development and utilization of innovative technology that will substantially reduce the discharge of waterborne wastes from bleached papergrade kraft and papergrade sulfite pulp and paper operations, as measured by the test for adsorbable organic halides ("AOX"), there is established an Innovative Technology Program. The Program will reward facilities that commit to AOX effluent limitations that are significantly more stringent than applicable BAT limitations with certain permit and enforcement incentives. Facilities that participate in this program will be required to meet the effluent limitations specified herein in lieu of applicable BAT limitations. This is a pilot program, the effectiveness of which will be assessed periodically to determine if it should be extended to other industry segments."

""__.02 Definitions

"(a) 'Tier I Innovative Technology' shall refer in this Subpart to any technology that is able to achieve effluent limitations for AOX of .3 kg/kkg of production for any of the following subcategories: bleached papergrade kraft or papergrade sulfite mills.

"(b) 'Tier II Innovative Technology' shall refer to any technology that is able to achieve effluent limitations for AOX of .2 kg/kkg of production in any of the same subcategories.

"(c) 'Tier III Innovative Technology' shall refer to any technology that is able to achieve effluent limitations for AOX of .1 kg/kkg of production in any of the same subcategories.

"(d) 'Innovative Technology,' when used without reference to Tier, includes all of Tier I, Tier II or Tier III Innovative Technologies."

""__.03 Extended Compliance Schedules

"(a) In the case of any bleached papergrade kraft or papergrade sulfite facility that proposes to meet Tier I Innovative Technology effluent limitations, as defined in subsection __.02 of this Subpart, and if such limitations are incorporated into an NPDES permit issued to the facility, the Administrator will issue a compliance order to the facility under Section 309(a)(3) of the Clean Water Act or enter into a consent decree, with court approval, under Section 309(a)(3) of the Clean Water Act, 33 U.S.C." 1319(a)(3), which will extend the final compliance date for meeting the Tier I Innovative Technology effluent limitations in the permittee's NDPES permit no later than five years after the date of promulgation of BAT limitations ordinarily applicable to the facility. Such compliance order or consent decree shall incorporate reasonable interim compliance milestones applicable to the Innovative Technology and to the individual facility.

"(b) In the same manner, Tier II or Tier III facilities shall be granted up to ten years or fifteen years, respectively, to come into full compliance with Tier II, or Tier III, as applicable, Innovative Technology effluent limitations.

"(c) If a facility is in compliance with Tier I, Tier II or Tier III Innovative Technology limitations prior to applying for an NPDES permit, such limitations shall be incorporated into the facility's NPDES permit when issued, and the facility shall not be subject to a compliance order or consent decree under this provision."

""__.04 Extended Permit Terms

"(a) If any Innovative Technology permittee timely applies for reissuance of its NPDES permit, its current Innovative Technology permit shall continue in effect for five years beyond the permit's normal expiration date, unless there are significant ongoing violations of receiving water quality ambient standards that only can be addressed through permit reissuance.

"(b) There shall be a presumption against modifying any effluent limitations that are incorporated in a duly-issued Innovative Technology permit. The presumptive period shall commence upon compliance with the Innovative Technology effluent limitations specified in the initial NPDES permit that incorporates such effluent limitations, and shall remain in effect for the following time periods, depending upon the status of the permittee:

"(1) For Tier I facilities, five years beyond the prevailing statutory permit term;

"(2) For Tier II facilities, ten years beyond the prevailing statutory permit term;

"(3) For Tier III facilities, fifteen years beyond the prevailing statutory permit term.

"(c) Such presumption may be rebutted only if the permitting authority demonstrates that, despite the implementation of all available pollution control measures by other point and non-point sources, the receiving water can be in compliance with applicable ambient water quality standards only if the Innovative Technology facility meets water-quality-based effluent limitations that are more stringent than are presently applied to the discharge.

"(d) In implementing a water-quality-based effluent limitation allocation scheme involving more than one Innovative Technology facility, a Tier III facility shall have priority over a Tier II facility and a Tier II facility shall have priority over a Tier I facility, such that the technology-based effluent limitations of a higher priority facility shall not be modified unless water quality standards cannot be met despite the imposition of water-quality-based limitations on all lower priority point sources."

""__.05 Fast Track Permitting

"A regulated facility that is in compliance with Innovative Technology effluent limitations in its NPDES permit will be given priority in processing its permit modification requests under the Clean Water Act and the Clean Air Act over permit applicants that do not have an Innovative Technology permit or are not in compliance with the effluent limitations of such a permit. Tier III Innovative Technology permittees will have priority over Tier II Innovative Technology permittees and Tier II permittees will have priority over Tier I permittees. Innovative Technology permittees in the same Tier will have priority on a first-come, first-served, basis."

""__.06 Clean Air Act Incentives

"Subsection (xxv) of 40 C.F.R." 51.165(a)(1) and subsection (31) of 40 C.F.R." 51.166(b)(2) shall be amended to read as follows:

'(1) When the reviewing authority has reason to believe that the pollution control project would result in a significant net increase in representative actual annual emissions of any criteria pollutant over levels used for that source in the most recent air quality impact analysis in the area conducted for the purpose of title I, if any, and

'(2) The reviewing authority determines that the increase will cause or contribute to a violation of any national ambient air quality standard or PSD increment, or visibility limitation.'"

"NPDES permits issued to bleached papergrade kraft and papergrade sulfite facilities that have installed Innovative Technology, as defined in subsection __.02 of this Subpart, shall provide:

"(a) for at least the first six months after the commencement of representative operations of the Innovative Technology system(s), for monitoring on a ____ basis to ensure compliance with applicable effluent limitations for all applicable parameters of the facility's internal bleach plant wastewaters. Thereafter, having established compliance with applicable limitations over a continuous six month period, such permits shall require annual certification of compliance with such effluent limitations for all internal bleach plant wastewaters at such facility;"

"(b) Immediately upon commencement of operations of the Innovative Technology system(s), for monitoring of end-of-pipe effluent for AOX and COD, no less frequently than on a monthly basis, to ensure compliance with the Innovative Technology (BAT) effluent limitations specified in such permits."

""__.08 Penalty Reductions

"Any civil penalties assessed under any federal or federally-authorized state environmental program against an Innovative Technology facility, shall be offset on a dollar-for-dollar basis, up to an amount equal to the costs incurred by the facility in installing and operating the Innovative Technology. This offset may be used regardless of whether a civil penalty was gravity-based or based upon the economic benefit of noncompliance. The offset shall apply only with regard to noncompliance that occurs during the time that Innovative Technology effluent limitations are in effect. More than one penalty can be offset; however, a portion of the Innovative Technology cost used to offset one penalty cannot be used to offset any other penalty."

""__.09 Reduced Inspections

"(a) Any permittee operating pursuant to Innovative Technology effluent limitations and which has demonstrated continuous compliance for six months, as required by"__.07 of this rule, shall be inspected by EPA or an authorized State or representative half as frequently as other pulp and paper facilities that have not implemented such Innovative Technology. In no case shall EPA or an authorized State or representative routinely inspect a bleached papergrade kraft or papergrade sulfite facility that has implemented Innovative Technology more frequently than once every two years; provided, however, that if EPA or a federally-authorized State has probable cause to believe that there is an ongoing violation of a federal environmental law or there has been criminal conduct, EPA or a federally-authorized State or representative may undertake an inspection of the facility immediately.

"(b) In the event of a multimedia inspection at a bleached papergrade kraft or papergrade sulfite facility that has implemented an Innovative Technology, EPA or an authorized State or representative will provide at least 10 days advance notice, in writing, of such inspection to such facility."

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