New Source Review Reform Jim Little U'S' EPA Region 4 404 5629118 little'jamesepa'gov

1
New Source Review Reform Jim LittleU.S. EPA
Region 4(404) 562-9118 little.james_at_epa.gov

• Air Waste Management Association, Mississippi
  Chapter
• 2005 Technical Conference
• Eagle Ridge Conference Center, Richmond,
  Mississippi
• November 8, 2005

2
Outline

• New Source Review (NSR) Reform Background
• Status of State/Local NSR Rule Revisions
• Recent Court Actions on NSR
• Other Recent NSR Actions (Nonattainment Areas)
• Baseline Actual Emissions
• Actual-to-Projected-Actual Applicability Test
• Plantwide Applicability Limitation (PAL)
• Further Discussion

3
Terminology

• Major NSR (for a specific geographic area) 
• prevention of significant deterioration (PSD)
  permitting for regulated NSR pollutants other
  than nonattainment pollutants.
• nonattainment area permitting for nonattainment
  pollutants.
• (Note Mississippi currently does not have any
  nonattainment areas. All major NSR permitting in
  Mississippi is therefore PSD permitting.)

4
Terminology

• 2. EUSGU - electric utility steam generating
  unit
• 3. PTE - potential to emit used interchangeably
  with allowable emissions in this presentation.

5
Terminology

• 4. Regulated NSR Pollutant
• - National ambient air quality standard
  pollutants (carbon monoxide, etc.) and EPA
  designated precursors for such pollutants (e.g,
  volatile organic compounds).
• - Pollutants subject to a Clean Air Act section
  111 standard (new source performance standards).
• - Certain pollutants regulated by title VI of
  the Clean Air Act (stratospheric ozone
  protection).
• - Other pollutants subject to regulation under
  the Clean Air Act EXCEPT excludes section 112
  hazardous air pollutants and pollutants regulated
  by section 112(r) risk management plan
  requirements (e.g., ammonia).

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NSR Reform Background December 2002 Rule
Revisions

• Issued December 31, 2002, and amended November 7,
  2003.
• Applies primarily to modifications of existing
  sources.
• Included five primary components
• baseline actual emissions definition
• actual-to-projected-actual applicability test
• plantwide applicability limitation (PAL)
• Clean Unit
• Pollution control project (PCP) exemption

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NSR Reform Background October 2003 Rule
Revisions

• Issued October 27, 2003.
• Referred to as Equipment Replacement Provision
  (ERP) rules.
• ERP rules specify when a replacement component
  qualifies as a routine replacement and is
  therefore exempt from NSR (i.e., is not a
  physical change or change in the method of
  operation).
• Included 20-percent cost threshold test.

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NSR Reform Background October 2003 Rule
Revisions

• Stayed by U.S. Court of Appeals for the District
  of Columbia Circuit (DC Circuit) on December 24,
  2003. Remains stayed.
• Should not be used by state and local reviewing
  authorities as guidance to make routine
  maintenance, repair, and replacement (RMRR)
  determinations.

9
Status of State/Local NSR Rule Revisions

• All of the 8 state and 10 local reviewing
  authorities in Region 4 with NSR permitting
  authority have SIP-approved programs (with one
  small partial exception). Reviewing authorities
  with SIP-approved programs have until January 2,
  2006, to adopt NSR rule revisions and submit
  proposed SIP changes to EPA.
• Three Region 4 state reviewing authorities have
  adopted revisions Mississippi, Kentucky, South
  Carolina.

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Status of State/Local NSR Rule Revisions

• SIP gap the time from submittal of proposed
  SIP changes until EPA approval. Theoretically,
  permits issued under NSR rule revisions prior to
  EPA approval of revisions into SIP could be
  challenged. If state rules similar to (at least
  as stringent as) federal rules, such challenges
  not likely to prevail.

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Recent Court Actions on NSR - December 2002 NSR
Rule Revisions

• DC Circuit issued opinion on June 24, 2005.
• Vacated the Clean Unit and PCP exemption
  components remanded one portion of the
  actual-to-projected-actual component (related to
  reasonable possibility).

12
Recent Court Actions on NSR - December 2002 NSR
Rule Revisions

• EPA petitioned for rehearing on Clean Unit
  component and asked for clarification on the PCP
  exemption. Clarification sought is whether
  vacating the PCP exemption will apply
  prospectively only or will also require fixing
  past PCP exemptions.
• Because DC Circuit vacated Clean Unit and PCP
  exemption components and because not included in
  Mississippi rules, will not discuss these
  components.

13
Recent Court Actions on NSR Hourly Emissions
NSR Applicability Test 

• U.S. Court of Appeals for the Fourth Circuit
  issued opinion on June 15, 2005, that NSR
  applicability for a modification should conform
  to the new source performance standards (NSPS)
  applicability test for a modification. NSPS
  applicability test based on hourly emissions
  whereas current NSR applicability test based on
  annual emissions.

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Recent Court Actions on NSR Hourly Emissions
NSR Applicability Test 

• Fourth Circuit decision directly affect only two
  states in Region 4 North Carolina, South
  Carolina.
• EPA believes Fourth Circuit decision does not
  affect state rules implemented pursuant to
  December 2002 federal rule revisions because DC
  Circuit upheld these revisions related to the use
  of annual emissions.
• EPA issued proposed rule on October 20, 2005,
  proposing that NSR applicability test be changed
  from an annual emissions basis to an hourly
  emissions basis, but only for electric generating
  units.

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Other Recent NSR Actions (Nonattainment Areas)

• No nonattainment areas in Mississippi.
• Proposed PM2.5 implementation rules, including
  NSR, issued November 1, 2005.
• Final 8-hour ozone implementation rules for NSR
  expected soon.

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New NSR Applicability Test

• Baseline actual emissions
• Actual-to-projected-actual emissions

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• Understanding the New Applicability Test
• A project is a major modification for a regulated
  NSR pollutant if it causes
• A significant emissions increase on its own, and
  
• (2) A significant net emissions increase overall

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Understanding the New Applicability Test Old NSR
Requirements

• Non-EUSGUs Modified Units and New Emissions
  Units Actual to Potential Test -
  Compare past actual emissions to
  future potential emissions.
• Modified EUSGUs The WEPCO Test -
  Compare past actual emissions to
  representative actual annual emissions.

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Understanding the New Applicability Test New
Requirements

• Calculate projected actual emissions.
• Compare project actual emissions to baseline
  actual emissions (actual-to-projected-actual
  test).
• New test can be used for replacement units also.

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Projected or Potential

• Use of projected actual emissions for comparison
  with baseline actual emissions is optional.
• Source owners can continue to use future
  potential emissions compared with baseline actual
  emissions to assess NSR applicability. This
  approach has recordkeeping advantages (discussed
  later).

21
Baseline Actual Emissions
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Baseline Actual Emissions EUSGUs

• Similar to old WEPCO provisions.
• Baseline actual emissions are based on any
  consecutive 24-month period within the 5 years
  immediately preceding the project.
• A baseline period prior to the last 5 years may
  be used if the reviewing authority determines it
  to be more representative of normal operations.

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Baseline Actual Emissions Non-EUSGUs

• Average annual emissions rate based on units
  operation during any consecutive 24-month
  period in the past 10 years.
• Full 10-year look back acceptable if adequate
  data accurately describing units operation are
  available for the selected time period.
• No other period may be used.

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Baseline Actual Emissions Non-EUSGUs

• For a single pollutant, use same 24-month period
  for all emissions units involved in project. But
  may use different 24-month period for each
  pollutant.
• Reduce for any non-compliant emissions, (those
  that exceeded units allowable emission rate).
• Adjust annual emissions rate for
  non-operative portion of 24-month period.

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Adjustment to Baseline Calculation

• For existing emissions unit that did not exist
  during the 24-month baseline period, count the
  emissions rate as zero.
• For existing emissions unit that operated for
  portion of 24-month period, calculate average
  rate using zero for that portion of time when
  unit was not in operation.

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Adjustment to Baseline Calculation

• Adjust average annual rate to reflect current
  emissions control requirements. An adjustment to
  the baseline calculation is required if any
  legally enforceable emissions limitation or
  operating restriction (including but not limited
  to a State or Federal requirement, such as RACT,
  BACT, LAER, NSPS, NESHAP, etc.) currently applies
  to the unit being changed. Not required for
  EUSGUs.

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Adjustment to Baseline Calculation

• An adjustment should also be made for such things
  as a more stringent fuel-use requirement (type or
  amount of fuel), sulfur-in-fuel limit, etc.
• Voluntary reductions resulting in enforceable
  restrictions (e.g., use of clean fuel or
  lower-polluting raw material to acquire
  creditable reductions for netting) also must be
  considered for adjustment of baseline.

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Adjustment to Baseline Calculation

• For a new unit (lt2 yrs old) that will be changed
  by the project, baseline is
• -- zero, if unit has not yet begun operation
• -- PTE, if the unit has begun operation.

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Baseline Actual EmissionsFugitive Emissions
Startup, Shutdown, and Malfunction Emissions

• Calculation of baseline actual emissions shall
  include fugitive emissions to the extent
  quantifiable.
• Calculation of baseline actual emissions shall
  include emissions associated with startups,
  shutdowns, and malfunctions.

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Using Baseline Actual Emissions

• Baseline actual emissions used for
• Determining emissions increase resulting from
  changes at existing units.
• Computing contemporaneous emissions changes for
  netting.
• Establishing a PAL.

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Baseline Actual Emissions EXAMPLE 1
Year
VOC Emissions
1993
75 tpy
1994
85 tpy
New Rule Average annual emissions 90 tpy
1995
95 tpy
1996
80 tpy
Source did not have any more stringent emissions
limitations subsequently imposed thus, no
adjustment necessary.
1997
60 tpy
1998
80 tpy
1999
75 tpy
2000
40 tpy
2001
55 tpy
Old Rule Average annual emissions 65 tpy
2002
75 tpy
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Baseline Actual Emissions EXAMPLE 2
Year
VOC Emissions
1993
75 tpy
1994
50 tpy
1995
55 tpy
1996
60 tpy
1997
60 tpy
1998
65 tpy
1999
60 tpy
2000
40 tpy
2001
55 tpy
Old rule/ New rule Average annual emissions 65
tpy
2002
75 tpy
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Baseline Actual Emissions EXAMPLE 3
Year
VOC Emissions
1993
750 tpy
1994
850 tpy
New Rule Average annual emissions 900
tpy Adjusted baseline 900 x 0.10 90 tpy
1995
950 tpy
1996
800 tpy
Requirement for Thermal Oxidizer controls VOC
emissions by 90
1997
70 tpy
1998
60 tpy
1999
65 tpy
2000
60 tpy
2001
70 tpy
Old Rule Average annual emissions 68 tpy
2002
65 tpy
34
Baseline Actual Emissions EXAMPLE 4
Year
VOC Emissions
1993
750 tpy
1994
850 tpy
Average annual emissions 900 tpy Adjusted
baseline 900 x 0.10 90 tpy
1995
950 tpy
1996
800 tpy
Requirement for Thermal Oxidizer controls VOC
emissions by 90
1997
60 tpy
1998
65 tpy
1999
85 tpy
2000
80 tpy
2001
90 tpy
New/Old Rule Avg. annual emissions 93 tpy
2002
95tpy
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Baseline Actual Emissions EXAMPLE 5 (EUSGU)
Year
SO2 Emissions
1998
150 tpy
1999
165 tpy
Old Rule Avg. annual emissions 170 tpy New
Rule Avg. annual emissions 170 tpy
2000
175 tpy
2001
150 tpy
2002
155 tpy
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Projected Actual Emissions
37
Projected Actual Emissions Projection
Calculations

• Source owner must project changed units maximum
  actual annual emissions for the 5-year
  period after the change,
• OR
• 10-year period after the change if the change
  involves an increase in the emissions units PTE
  or capacity.

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Projected Actual Emissions Projection
Calculations

• Projected actual emissions --The first year
  begins on the day the emissions unit resumes
  regular operation following the change and
  includes the 12 months after this date.

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Projected Actual Emissions Projection Calculations

• A units projected emissions rate is calculated
  as the product of
• (1) The hourly emissions rate -
• - Based on units post-change operational
  capabilities
• - Taking into account the legally enforceable
  restrictions that could affect the hourly rate.
• (2) The projected level of utilization, based on
  
• - Units historical annual utilization rate
• - Available information about units likely
  post-change capacity utilization.

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Projected Actual Emissions Projection
Calculations
The applicant may adjust the projection to
exclude any portion of the emissions increase
that the changed unit -- could have
accommodated during the 24-month baseline
period, AND
-- is unrelated to the change. Includes
increased utilization due to demand growth.
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Projected Actual EmissionsFugitive Emissions
Startup, Shutdown, and Malfunction Emissions

• Calculation of projected actual emissions shall
  include fugitive emissions to the extent
  quantifiable.
• Calculation of projected actual emissions shall
  include emissions associated with startups,
  shutdowns, and malfunctions.

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Notification, Recordkeeping, Reporting
43
Recordkeeping and Reporting

• In Mississippi, all source owners are required to
  keep records if they use the actual-to-projected-a
  ctual test.
• However, sources that show no significant
  emissions increase by using units PTE rather
  than projected actual emissions are not subject
  to recordkeeping.

44
Recordkeeping and Reporting

• Preconstruction notification for EUSGUs includes
  
• Project description
• Emissions units affected by project
• Description of applicability test used (baseline
  emissions, projected emissions, amount of
  excluded emissions and explanation).
• Approval not needed to commence EUSGU project.

45
Recordkeeping and Reporting

• Before beginning actual construction of a
  project, source owner must document
• description of project
• identification of emissions units whose emissions
  of a regulated NSR pollutant could be affected by
  project
• description of the applicability test used to
  determine that project is not a major
  modification (baseline actual emissions,
  projected actual emissions, could have
  accommodated exclusions, netting calculations)

46
Recordkeeping and Reporting

• For any modified unit, source must
• Monitor emissions of any regulated NSR pollutant
  that could increase as a result of project
• Calculate and maintain record of annual emissions
  (tpy) for 5 (or 10) years following resumption
  of units regular operation
• If the project increases the design capacity or
  PTE.

47
Recordkeeping and Reporting

• Owners of EUSGUs must submit an annual report
  within 60 days after end of each year listing
  annual emissions during the calendar year that
  preceded submission of the report.

48
Recordkeeping and Reporting

• Owners of non-EUSGU modified units must submit a
  report if annual emissions from project
• Exceed the baseline actual emissions by
  significant amount and
• Differ from preconstruction projection.
• Is such reporting acknowledgment of a violation?

49
Recordkeeping and Reporting

• For all modified emissions units, source owner
  must make required information available for
  review upon request by reviewing authority or
  general public.

50
Applicability Test EXAMPLE
Modification at Plant ABC Assumptions Existing
Major Source, Attainment Area, VOC Emissions
Plant ABC began operations in late 2000
Year
VOC Actual Emissions
Post-change Potential Emissions 300 tpy VOC
2001
125 tpy
2002
135 tpy
2003
155 tpy (projected)
2004
155 tpy (projected)
2005
160 tpy (projected)
2006
160 tpy (projected)
2007
165 tpy (projected)
51
Applicability Test (Old Rule) EXAMPLE
Modification at Plant ABC Assumptions Existing
Major Source, Attainment Area, VOC Emissions
Plant ABC began operations in late 2000
Future Potential Emissions 300 tpy VOC
Year
VOC Actual Emissions
2001
125 tpy
2002
135 tpy
2003
155 tpy (projected)
Old Rule past actual (130 tpy) vs. future PTE
(300 tpy) Proposed Increase 170 tpy gt40
tpy Net emissions increase 170 tpygt40 tpy
Modification subject to PSD
2004
155 tpy (projected)
2005
160 tpy (projected)
2006
160 tpy (projected)
2007
165 tpy (projected)
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Applicability Test (New Rule) EXAMPLE
Modification at Plant ABC Assumptions Existing
Major Source, Attainment Area, VOC Emissions
Plant ABC began operations in late 2000
Year
VOC Actual Emissions
Future Potential Emissions 300 tpy VOC
2001
125 tpy
2002
135 tpy
New Rule Baseline actual emissions (130 tpy) vs.
projected actual (165 tpy) Projected Increase
35 tpy lt 40 tpy MINOR MODIFICATION
2003
155 tpy (projected)
2004
155 tpy (projected)
2005
160 tpy (projected)
2006
160 tpy (projected)
2007
165 tpy (projected)
53
Plantwide Applicability Limitations (PALs)
54
Plantwide Applicability Limitations

• An alternative approach for determining major NSR
  applicability.
• The new rules address only actuals PALs. EPA
  may consider provisions for allowables PALs at
  a later date.

55
Plantwide Applicability Limitations

• A PAL is an annual (facility-wide) emission
  limitation (12-month total, rolled monthly) under
  which the facility can make any changes without
  triggering NSR review for that pollutant.
• Pollutant-specific
• 10-year term.
• Can be used in nonattainment areas.
• A separate PAL permit is required for each
  pollutant.

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Establishing a PAL

• At the time of setting a PAL, classify all
  emissions units as new or existing.
• Determine baseline actual emissions of all units
• For new units, add the PTE of the units
• For existing units, calculate baseline actual
  emissions as previously described, except
• For existing units constructed after the baseline
  period, add the PTE of the units.

57
Establishing a PAL

• Add the pollutant-specific significant emissions
  rate to the emissions calculated as described
  above
• Subtract any emissions from emissions units that
  operated during the 24-month period and have
  since been permanently shut down and
• Establish a step-down PAL if there are any
  requirements that have an effective date during
  the term of the PAL.

58
Reopening PAL Permits

• Reviewing authority shall reopen the PAL permit
  to
• Correct typographical or calculation errors made
  in setting the PAL.
• Reduce the PAL to create emissions reductions for
  offset purposes.
• Revise the PAL to reflect an increase in the PAL.

59
Reopening PAL Permits

• Reviewing authority may reopen the PAL permit to
• Reduce the PAL to reflect newly applicable
  federal requirements with compliance dates after
  the PAL effective date. (However, PAL must be
  adjusted at title V or PAL permit renewal,
  whichever occurs first.)
• Reduce the PAL consistent with any other
  requirement that the reviewing authority may
  impose under its SIP.
• Reduce the PAL if it determines that a reduction
  is necessary to avoid causing or contributing to
  a NAAQS or PSD increment violation.

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Increasing a PAL

• Allowed if increased emissions can not be
  accommodated under the PAL, even if all
  significant and major emissions units were to
  meet a BACT level of control.
• Emissions units causing the need for an increase
  (modified or new units) must go through major
  NSR.
• New PAL based on sum of
• Baseline actual emissions of small emissions
  units
• Baseline actual emissions of significant and
  major emissions units assuming a BACT level of
  control and,
• Allowable emissions of new or modified emissions
  units.

61
PAL Renewal

• At least 6 months prior to but not earlier than
  18 months from PAL expiration date, the owner
  must submit an application for renewal or
  expiration.
• The reviewing authority shall provide a written
  rationale for the proposed PAL level for public
  comment.
• The new PAL level can not be higher than the
  existing PAL (unless PAL increase provisions are
  met) or the PTE of the source.

62
PAL Renewal

• If baseline actual emissions plus significant
  level are 80 of current PAL, then PAL may be
  renewed at current level.
• If baseline actual emissions plus significant
  level are lt 80 then
• PAL may be established at a level that is more
  representative of baseline actual emissions, or a
  level that is appropriate based on air quality
  needs or other considerations.

63
PAL Expiration

• Within the timeframe specified for PAL renewals,
  the source shall submit a proposed allocation of
  the PAL to each emissions unit.
• The reviewing authority shall decide whether and
  how the PAL will be distributed and issue a
  revised permit incorporating allowable limits for
  each emissions unit.
• Any subsequent physical or operational change at
  the source will be subject to major NSR review.

64
PAL Monitoring Requirements

• PAL permit must contain enforceable requirements
  to determine plantwide emissions (12-month
  total, rolled monthly).
• A source may use any of the following approaches
• Mass balance calculations for activities using
  solvents or coatings.
• Continuous Emissions Monitoring Systems (CEMS).
• Continuous Parameter Monitoring Systems (CPMS) or
  Predictive Emissions Monitoring Systems (PEMS).
• Emissions Factors.

65
PAL Monitoring Requirements

• If no monitoring data exist for an emissions unit
  for a time period, the source owner must report
  the maximum potential emissions without
  considering enforceable or operating emissions
  limitations, unless another method is specified
  in the permit.

66
PAL Monitoring

• Where an owner cannot demonstrate a correlation
  between the monitored parameter(s) and the PAL
  pollutant emissions rate at all operating points
  of an emissions unit, the reviewing authority
  shall at the time of permit issuance
• Establish default value(s) for determining
  compliance with the PAL based on the highest
  potential emissions reasonably estimated at such
  operating points or
• Determine that the operation of the emissions
  unit in the absence of a correlation is a
  violation of the PAL.

67
Recordkeeping/Reporting

• The PAL permit shall require the owner to
  maintain the following records for the duration
  of the PAL effective period plus 5 years
• A copy of the PAL permit application and any
  applications for revisions to the PAL and
• Each annual certification of compliance pursuant
  to title V and the data relied on in certifying
  the compliance.
• The owner shall submit semi-annual monitoring
  reports and prompt deviation reports to the
  reviewing authority in accordance with the
  applicable title V permitting program.

68
PAL EXAMPLE
3 units 50 tpy actual VOC emissions each during
baseline period. 1 unit shutdown since then.
Hence PAL level 150 40 -50 140 tpy. Any
change not subject to major NSR if plantwide
emissions remain below 140 tpy VOC. 40 tpy is
significant emissions rate for VOC
69
Questions?