The Environmental Protection Agency is about to loosen clean air rules with a major expansion of its "bubble" program of air pollution tradeoffs, trying to convert pollution control requirements into a possible source of income for businesses and shift the whole bubble operation to the states.

The regulatory change, which could be announced early next week, is opposed by environmental groups, who see it as a gross relaxation of clean air laws and say it may be illegal. Some state officials are also uneasy, worried about taking on more regulating and enforcement duties at a time of heavy budget cutbacks.

The change comes at a time when congressional action on the Clean Air Act has bogged down completely, killing administration hopes that the law could be rewritten swiftly.

EPA, however, has had this change in the works for months, with strong support from industries that are tired of going through long, expensive approval processes at the local, state and federal levels for every new smokestack they add. The new policy will allow a company to calculate together emissions from all smokestacks, leaky doors, dirt roads and open tanks at all its plants in a state, as if they were all caught in one bubble, for purposes of seeing whether the company meets clean air standards as defined by the state.

The policy will go into effect on an interim basis as soon as EPA administrator Anne M. Gorsuch signs it, with 60 days allowed for comments before it becomes final. Gorsuch was reportedly making "minor changes" in staff recommendations yesterday.

Skip Price of the EPA press office said the new system could save each company $2 million in capital investment costs by allowing the firm to choose which emission sources it corrects to meet the statewide standard. About 90 bubble applications are already pending and most should win approval, he said. "We're making it much easier to get the change through while still not harming air quality," Price said.

The policy is a major change from current rules, which restrict bubbles to one plant already in compliance with the law and to areas where state implementation plans for meeting Clean Air Act requirements have won federal approval. Now bubbles will be permitted at any plant, whether clean or dirty, and whether or not a state plan is in effect.

David Doniger of the National Clean Air Coalition said this means tradeoffs will be made in areas where pollution levels are still uncertain, noting that most heavily polluted areas do not have approved state plans. "It's like the army selling excess boots before it counts the soldiers," he said.

The key feature of the new approach will allow a company that cleans up more than necessary to trade or sell its extra pollution allotment to another firm. Emissions "banks" will be set up to facilitate trading in pollution.

"Pollution control will become a marketable commodity," Price said. "Industry will see it as a source of revenue. This will put an entirely different light on it."

Doniger said the shift raises the danger of fraud. Some state plans now permit emissions above actual levels at a particular plant, which may then claim credit for the difference and either use it or sell it. "The reduction is only on paper but the pollution increase would be real," Doniger said. In addition, limited California experience with a pollution credit bank found widespread exaggeration of control achievements, he said.

States will be encouraged to adopt model rules for measuring techniques, control methods and so on for each major air pollutant, adding the rules to state plans approved by EPA, Price explained. When a company documents that it has followed the rules, its operation will be approved, he said. This eliminates direct federal oversight and passes enforcement to the states.

At a recent briefing for state and industry officials in Philadelphia, some state regulators expressed concern that local industry pressure on them would increase as a result of the new rules, even as funding cuts made it harder for states to take tough action, according to an official who attended. He said EPA people "just pooh-poohed the idea."

In a major concession to the steel industry, the policy will allow plants for the first time to trade off road and dirt pile dust emissions with dust escaping from inside the plant. State monitoring will be done afterward to make sure overall emissions do not change. In general, however, tradeoffs between dissimilar pollutants will continue to be prohibited, Price said.