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PREVENTIONOFSIGNIFICANTDETERIORATIONAND NEWSOURCEREVIEW: APPLICABILITYANDOTHERBASICS

JeffreyN.Hurwitz,Esq. Morgan,Lewis&BockiusLLP 1701MarketStreet Philadelphia,PA 191032921

I.

INTRODUCTION

Sixletters PSD/NSR areoftenthereasonthatmanyenvironmentalattorneysdescribe themselvesasABAlawyers,thatis,anythingbutairlawyers.Thereissomebasisforthis. ThePSD/NSRregulatoryschemeisamongthemostcomplexandconfusingofall environmental programs. Moreover,EPA rules,preambles,interpretations,guidanceandmemoranda addressingPSD/NSRapplicabilityandrelatedissuesfillvolumes,and,seemingly,areever changing. ItisalsoaveritablealphabetsoupofacronymsBACT,LAER,ERCs,PTE, toname butafew. Asaresult,thisareaofthelawoftenseemsunapproachable. Yetcompliancewith PSD/NSRrequirementsforfacilitiesiscritical someofthelargestfinesandmostcostly correctivemeasures(sometimesranginginto thebillions)havebeenassessedorrequiredbyEPA forallegedPSD/NSRviolations,withmanyclaimsbasedonactionsthatoccurredyears,and evendecades,before. Thepurpose ofthispaperistohelpdemystify thisareaforgeneral environmentallaw practitionersandenvironmentalmanagerswithnooronlylimitedexperienceintheseprograms. ItdoesthisbypresentingthebasicconceptsunderpinningPSD/NSR,definingkeyterms,and describingcertain generalprinciplesusedindeterminingprogramapplicability. Itisintendedas ageneralguideonlyactualPSD/NSRapplicabilitydeterminationsare,unfortunately,and notwithstandingreformefforts,complexandhighlyfactsspecific,andmustbemadeonacase bybasebasis. II. TheStartingPointNationalAmbientAirQualityStandards A. TheEstablishmentofNationalAmbientAirQualityStandards

ThestartingpointforunderstandingthePSD/NSRprogramsisthesetofstandards known astheNational AmbientAirQualityStandards,orNAAQS,forshort. The federalCleanAirAct,42U.S.C.7401 etseq.(hereafter,CAA),directsEPA to establishnationwideNAAQSforpollutantsthattheAgencyhaslistedascriteria pollutants,basedontheirlikelihoodofcausingadverseeffectstopublichealthand welfare. SeeCAA108and109. EPAhassetnationalambientairqualitystandards forsixairpollutants:groundlevelozone(orsmog),carbonmonoxide(CO),lead, nitrogendioxide(NO2),sulfurdioxide(SO2),andparticulatematter(PM10)(particulate matterof10micronsorless). See40C.F.R.Part50. EPArecentlysupplementedthe PM10NAAQSbyestablishinganewNAAQSforevensmallerparticles,PM2.5. (Note: Volatileorganiccompounds(orVOCs)andNOx (referringgenerallyto oxidesofnitrogen)areprecursorstoozoneformation.) Thebasicideabehindtheseambientairqualitystandardsisthattheyaretobebasedon scientificdeterminationsofthethresholdlevelsofairpollutionbelowwhichnoadverse effectswillbeexperiencedbyhumansortheenvironment. Morespecifically,foreachof thesesixpollutants,EPAhassethealthbasedorprimarystandardstoprotecthuman health,andsecondarystandardstopreventadverseeffectsonvegetation,propertyor otherelementsoftheenvironment(generallylowerthantheprimarystandards). The standardsalsoreflectthefactthatpeoplecantoleratebriefexposurestohigherlevelsof pollutionandthatprolongedexposuretomuchlowerconcentrationscanalsoleadto

adversehealthimpacts.Asaresult,therearegenerally bothshorttermandlong termNAAQSforthecriteriapollutants. B. Attainmentvs.NonattainmentAreas

AnareaofthecountrywhichhasachievedtheNAAQSforagivencriteriapollutantis referredtoincleanairparlanceasanattainmentareawithrespecttothatpollutant. Conversely,anareathathasnotachievedattainmentoftheNAAQSforagivenpollutant isreferredtoasanonattainmentareawithrespecttothepollutantforwhichthe NAAQShavenotbeenachieved. (Therearesomeareasofthecountrythatcannotbe classifiedasattainmentornonattainment,andaredesignatedbyEPAassocalled unclassifiableareas.However,asapracticalmatter, theseareasareessentiallytreated asattainmentwithrespecttotherelevantpollutant.) Ingeneral,designationsofattainmentvs.nonattainmentaremadeonacountybycounty orotherregionalbasis,predicatedonambientairqualitymonitoringdatacollectedby statesandlocalairpollutioncontrolagencies. TheNAAQSdesignationsforaparticular stateandcounty(orotherregion)arefoundat40C.F.R.Part81. C. TheNAAQSDesignationsforPennsylvania

EPAsspecificNAAQSdesignationsforPennsylvaniaarepublishedat40C.F.R. 81.339. Thestateisgenerally attainmentorunclassifiableforSO2,carbonmonoxide, NO2,andPM10. However,thestatusofthestatewithrespecttoattainmentofthe NAAQSforozoneandparticulatematterismorecomplex. 1. Ozone TheCleanAirActAmendmentsof1990establishedcategoriesofozone nonattainmentareasbasedontheseverityof thenonttainmentproblemin agivenregion,brokendownintomarginal,moderate,serious,severe,and extremenonattainmentareas. (RecentrevisionstotheozoneNAAQS, discussedbrieflybelow,alsoaddedabasicnonattainmentcategory.) Forexample,inPennsylvania,the5CountyPhiladelphiaareawas designatedasasevereozonenonattainmentarea. Furthercomplicating things,theamendmentsestablishedan ozonetransportregion(OTR) extendingfromWashington,D.C.toMaine,whereozonenonattainment problemsareinterconnected.AllareasintheOTR,including Pennsylvania,aretreatedasthoughtheyareatleastmoderate nonattainmentforozone.Thismeansthat,forPennsylvania,theentire state,exceptthePhiladelphiaarea,wasconsideredtobeamoderate nonattainmentareaforozone,regardlessofwhetheragivenlocality actuallymeetstheNAAQSforozone. TheCAAalsomandatesthatEPAreviewtheNAAQSforeachcriteria pollutantonceeveryfiveyearstodeterminewhetherrevisionstothese standardsarenecessary.Asareresult,in1997,EPAadoptedatougher

standardforozonebasedonan8houraveragingperiod,replacingthe former1hour ozonestandard.EffectiveJune15,2005,the1hourozone standardwasrevoked,andattainmentdesignationsunderthenew,8hr standardbecameeffective,includingthroughoutPennsylvania. Underthe newstandard,thestatusofthePhiladelphiaareachanged,fromasevere, toamoderate,ozonenonattainmentarea.Thismeansthat,effectively,all ofPennsylvaniaistreatedasamoderateozonenonattainmentareafor PSD/NSRpurposes,because,again,itisincludedwithintheOTR. Note: BecauseVOCsandNOxareprecursorstoozoneformation,these compoundsarealsononattainmentpollutantsinthestate. 2. ParticulateMatter Untilveryrecently,EPAsNAAQSforparticulatematteraddressedPM 10. However, thesamereviewthatledtoachangeintheozonestandard in1997resultedintheestablishmentofanewPMstandardforeven smallerparticlesPM2.5.ThisnewstandardsupplementsthePM10 standard.NonattainmentdesignationsunderthePM2.5standardbecame effectiveonApril4,2005.Althoughthestateisattainmentor unclassifiableforPM10, thereareanumberofareasinPennsylvania designatedasPM2.5nonattainment. D. TheRelationshipBetweentheNAAQSandPSD/NSR

ThereasontheNAAQSarerelevanttoanunderstandingofPSD/NSRisthatthe underlyingpurposeoftheseprogramsistopreventthedeteriorationofairqualityin attainmentareasortofacilitate theachievementandmaintenanceoftheNAAQSin nontattainmentareas. Thatis,thePSDprogramisintendedtopreventthesignificant deteriorationofairqualityinthoseareaswhichhaveachievedtheNAAQSwithrespect to oneormorecriteriapollutantshencethename,thepreventionofsignificant deterioration,orPSD,program.Theanalogousprograminnonattainmentareasis intendedtohelpensurethatthoseareasofthecountrywhichhavenotachievedthe NAAQSwithrespecttooneormorecriteriapollutantsdoso.Thisiswhytheprogramin nonattainmentareasismoreaccuratelyreferredtoasNonattainmentNewSource Review,orNANSR. Althoughsomewhatconfusing,theterm,NewSource Review,orNSR,issometimesusedtorefertoNANSR,andsometimesusedmore genericallytorefertoboththePSDandNANSRprogramstogether.Tohelpavoid confusion,andtobeclearwhenwearediscussingtheseprograms,thispaperwillusethe term,NANSR,when specifically addressingthenonattainmentprogram,andtheterm, NSR,whenreferringtoboththePSDandtheNANSRprograms. InordertoknowwhichoftheseprogramsthePSDprogramortheNANSRprogram mightapply toyourfacility oraprojectthatyouareundertaking,youmustknowthe attainmentstatusforeachofthepollutantsemittedbyyourfacility.Thiscanbe determinedbyreviewingtheinformationat40C.F.R.81.339,referencedabove.Also, DEPsBureauofAirQualityControlwebsitecontainsgoodstatewidemapsshowingthe designationsunderthenew8hourozoneandPM2.5standards. Note:Becauseallof

Pennsylvaniaisconsideredtobean ozonenonattainmentarea,itsNANSRregulations applystatewidetothetwoprecursorstoozoneformation,VOCsandNOx.Atthesame time,PennsylvaniaisattainmentorunclassifiableforNO2,meaningthatNOx wouldalso needtobeconsideredinaPSDanalysisforagivenproject. Thenextsectionofthispaperprovidesavery basicoverviewofthefactorstobe examinedin determiningwhetheragivenprojectmightactuallytriggerPSDorNANSR applicability. III. PSD/NA NSRAPPLICABILITYBASICS

AlthoughthebasicconceptsunderpinningapplicabilityofthePSDandNANSRprogramsare identicalorsubstantiallyidentical,therearecertaindifferences.Moreover,EPAhasauthorized thePennsylvaniaDepartmentofEnvironmentalProtection(DEP)toadministerthecleanair programsinPennsylvania,andDEPhasincorporatedbyreferencethefederalPSDprogram,but hasadopteditsown,separateNANSRprogram. DEPsNANSRprogramdiffersfromthe federalPSDprograminsomekeyrespects.Therefore,thispaperaddressesPSDandNANSR applicabilityseparately. A. ThePSDProgram:GeneralApproachandKeyDefinitions

DEPhasincorporated thefederalPSDprogram intoitsown rules. Thisincorporationis foundat25Pa.Code127.83,andthefederalPSDprogramiscodifiedat40C.F.R. 52.21. EPAsPSDrules(aswellasitsNANSRrules)underwentsubstantialrevisionin lateDecember2002(effectiveMarch3,2003),whenEPAadoptedsignificantchanges andreformstoitsthenexistingprogram. See67Fed.Reg.80186(Dec.31,2002). However,evenwiththesereforms,thePSDrulesremainhighly complex. Forexample, even thedefinitionalsectionisnotstraightforward thereareover50definedterms,none ofwhicharearrangedalphabetically,andmany ofwhichhavemultiple,imbedded sectionsandsubsections. See40C.F.R.52.21(b). Notwithstandingthiscomplexity,thefundamentaltestofPSDapplicabilitycanlargelybe distilledintoonegeneralstatement: ThePSDprogramappliestotheconstruction ofnewmajorstationarysources ofairpollutants,orthemajormodificationtoexistingmajorstationarysources of airpollutants,inanattainmentarea. Certainofthesetermsareeitherlargelyselfexplanatory,suchasconstruction,orhave alreadybeenaddressed,suchasNAAQSorattainmentarea. Thetwo,keyremaining termsmajorstationarysourceandmajormodification arediscussedbelow. 1. Thedefinitionofmajorstationarysource

Thistermactuallyconsistsoftwodefinitionsstationarysourceandmajor.

a.

First,theterm,stationarysource,isdefinedtomeanany building,structure,facilityorinstallationwhichemitsormayemit aregulatedNSRpollutant.40C.F.R.52.21(b)(5). Thephrase,building,structure,facilityorinstallation,isitself defined,tomeanallofthepollutantemittingactivitieswhich belongtothesameindustrialgrouping,arelocatedononeormore contiguousoradjacentproperties,andareunderthecontrolofthe sameperson(orpersonsundercommoncontrol).... 40C.F.R. 52.21(b)(6). Whetheractivitiesbelongtothesameindustrial groupingisdeterminedbyreferencetothemajorgroupcodesin theStandardIndustrialClassification(SIC)Manual. Althoughthisdefinition,andthedeterminationof thescopeof a stationary sourcepresents(orcanpresent)somecomplexities,as practicalmatter,andforpurposesofthispaper,itgenerally refers toamanufacturingorsimilarfacility undercommonownershipor controlandthatemitscertain pollutantsor theirprecursors. (The basiclistofpollutantssubjecttothePSDprogram isfoundat40 C.F.R.52.21(b)(23)(i),andisincludedinthispaperat AttachmentI.)

b.

c.

Theterm,major,inqualifyingstationarysource,refersto thosestationarysourceswhichemit,orhavethepotentialto emit,100tonsperyear(tpy)or moreof anyregulatedNSR pollutant,ifthesourcefallswithinoneof 28enumeratedindustrial categories. Thesecategoriesarelistedat40C.F.R. 52.21(b)(1)(i)(a),andareincludedinthispaperatAttachmentII. Further,sourceswithinthese28categoriesmusttakeinto considerationfugitiveemissionswhendeterminingwhetherthey reachthe100tpyemissionsthreshold. 40C.F.R. 52.21(b)(1)(iii). Forallothersources,themajorsourcethreshold is250tpyforagivenpollutant(andfugitivesarenotrequiredtobe included). Also,becauseVOCsandNOx contributetowardozone formation,amajorstationarysourcethatismajorforVOCsor NOxisconsideredtobemajorforozone.40C.F.R. 52.21(b)(1)(ii). Asnotedinthelastparagraph,thediscussionofmajorhas introducedyetanothertermthatrequiresdefinition,potentialto emit,orPTE. PTE isdefinedtomeanthemaximumcapacity ofastationarysourcetoemitapollutantunderitsphysicaland operationaldesign.40C.F.R.52.21(b)(4). Thisdefinition,in itself,hasbeenthesubjectof considerablecontroversy,because determiningwhetheremissionsorotherlimitationsshouldbetaken intoconsiderationin calculatingPTEforasourceisnotalways clear.Inbrief,physicalandoperationallimitationsonaunits

d.

capacitytoemit,suchasairpollutioncontrolequipmentor restrictionsonhoursofoperationorthetypeoramountoffuel combusted,aretobeconsideredincalculatingPTE,providedthat theselimitationsareenforceable(throughapermit,forexample). e. Tosimplifythis,ifasourceissubjecttoemissionsorother limitationsthatrelatetoemissions(suchasfueluse), these limitationsaregenerallytobetakenintoaccountindetermining PTE.Also,ifthecapacityofthesourceisinherentlylimitedby physicalordesign constraints,theselimitationsarealsotobe considered. However,PTEanalysescanbelessthan straightforward,andthey mustbeundertaken onacasebycase basis. Examples: Fossilfuelfiredboiler:Oneofthe28PSDsourcecategories subjecttothe100tpythresholdisfossil fuelfiredsteamgenerators withaheatinputofgreaterthan250millionBtu/hr.Therefore,a 300millionBtu/hrboilerthatisdesignedandpermittedtoburna fossilfuelthatemits100tpyormoreofanyregulatedpollutant (suchasNOxorSO2)isamajorstationarysource. Unitwith an enforceabledesignlimitation:Ifaboileridenticalto theabovetakesanenforceabledesignlimitationinapermitthat restrictsheatinputto240millionBtu/hr,thissourcewouldno longerbeclassifiedwithinoneofthe28categoriessubjecttothe 100tpymajorsourcethresholdratherthe250 tpyemissions thresholdwouldapply. Ifthissameoranotherenforceablepermit limitationhadtheeffectoflimitingemissionstolessthan250tpy fromthisunit,thenitwouldnotbeamajorstationarysourcefor PSDpurposes,andthePSDprogramwouldnotapply. Caution EvenifyoursourceisnotcurrentlymajorunderthePSD program,aphysicalchange(suchasconstructionofanew,large emittingunit)thatwould,initself,constitutea majorstationary source(i.e.,thatemitsorhasaPTEatorabove100tpyor250tpy, asapplicable),wouldbesubjecttoPSD. 2. Thedefinitionof majormodification

f.

Thedefinition ofmajormodification hasproventobeparticularlytroublesome, andmuchofthecontroversysurroundingtheNSRprogramhasrevolvedaround thesetwo,seeminglysimple,words. EPAdefinesmajormodificationtomean: anyphysicalchangeinorchangeinthemethodofoperationofa majorstationarysourcethatwouldresultinasignificantemissions

increase...ofaregulatedNSRpollutant.. .andasignificantnet emissionsincreaseofthatpollutantfromthemajorstationary source. 40C.F.R.52.21(b)(2)(i). Thereareanumberofimportantconceptsandkeytermsimbeddedwithinthis definition. Thesearediscussedbelow. a. First, theterm physicalchangeorchangeinthemethod of operationisnotdefined.However, therulesexcludecertain key activities. 40C.F.R.52.21(b)(iii). Theseare(amonganumber of others): (i) (ii) (iii) routinemaintenance,repairorreplacement(RMRR) activities aswitchatasteamgeneratingunittoafuelderivedin wholeorinpartfrommunicipal solidwaste aswitch toafuelorrawmaterialwhichthesourcewas capableofaccommodatingbeforeJanuary 6,1975,solong asthatswitch wouldnotbeprohibitedbyanyfederally enforceablepermitconditionestablishedafterthatdate anincreaseinthehoursorrateofoperationofasource,so longastheincreasewouldnotbeprohibitedbyafederally enforceablepermitconditionestablishedafterJanuary6, 1975 and achangeintheownershipofastationarysource.

(iv)

(v) b.

Second, theterm,significantemissionsincreasemeansan increaseintherateofemissionsofagivenpollutantthatwould equalorexceedtheemissionratessetforthat40C.F.R. 52.21(b)(23).Thesignificantemission thresholdsforafewofthe keypollutantsare:40tpyforeachofNOx,SO2,andozone,25tpy fortotal particulatematter,and15tpy forPM10. SeeAttachment I. Third,andimportantly,evenifagivenphysicaloroperational methodchangeresultsinasignificantemissionsincreaseofa regulatedpollutant,thedefinitionofmajormodificationincludes yetanotherqualifier.Thatis,thechangemustalsoresultina significantnetemissionsincreaseinorderfortheretobeamajor modificationtriggeringPSDrequirements. Inotherwords,thisisa twostepprocess.Statingitaslightlydifferentway,[i]fthe projectcausesasignificantemissionsincrease,thentheprojectisa majormodificationonlyif italsoresultsinasignificantnet

c.

emissionsincrease. 40C.F.R.52.21(a)(2)(iv)(a)(emphasis added).Thisseguesintoacomplexprocessknownasnetting. However,beforewegettonetting,thefirststepindetermining whetheraprojectmaybeamajormodificationmustbeexamined namely,whethertheprojectwillresultinasignificant emissionsincreaseofagivenpollutant. B. ThePSDProgram:DeterminingWhetherThereHasBeen aSignificant EmissionsIncrease 1. Possiblemethodologies EvenwithoutreadingthePSDregulationsordelvingintothestatutoryor regulatoryhistoryofthisprogram,onecouldimagineanumberof differentways(ortests) todeterminethesizeof an emissionsincrease thatmightresultfrom agivenmodification toamajorstationarysource. Forexample Onemightcalculatetheemissionsresultingfromachangeby comparingtheactual levelofemissionsfrom therelevantunitbefore thechange(thebaseline)totheprojectedactual levelofemissions afterthechange.Thisisthemethodology setforthinEPAscurrent rules,adoptedinitsDecember2002NSRreforms. Forshort,itis referredtoastheactualtoprojectedactualtest. (Thiswastherule forelectricutilityunitsevenbeforeEPAsNSRreforms,beginningin 1992.Ithasnowbeenextendedtoallothersourcetypes.) See40 C.F.R.52.21(a)(2)(iv)(c). Onemightalsocalculatetheemissionsresultingfrom achangeby comparingtheactual levelof emissionsfromtherelevantunitbefore thechangetothepotential levelofemissions(i.e.,thePTE)afterthe change. Beginninginthelate1980s,andreachingitsheightduring EPAsNSRenforcementinitiativeinthelate1990s,EPAinterpreted itsthencurrentNSRprogramtorequireuseofthisactualtopotential test. However,nocourtthathasexaminedthisissuehasupheldthe useofthistestunderEPAspriorNSRprogramsin determining emissionschangesresultingfrom modificationstoexistingunits. EPAscurrentrulesmakeclearthat,althoughtheactualtopotential testmaybeusedatthediscretionofthesource,itisnotrequired. (Thereisanexceptionforentirely newunits,forwhichtheactualto potentialteststillmustbeused.) Finally,onemightcalculateemissionsresultingfromachangeby comparingthepotentiallevelofemissionsfromtherelevantunit beforethechangetothepotentiallevelofemissionsafterthechange. Further,onemightbasepotentialemissionsbeforeandafterthe

changeonanhourlyrateofemissions,or,alternatively,onatonsper yearbasis.Knownasthepotentialtopotentialtest,theFourthU.S. CircuitCourtofAppealshasadoptedthistestas thecorrectwayto determinewhetherthereisasignificantemissionsincrease(basedon anhourlyrateofemissions),butthisrulingappliesonlytooperations within theFourthCircuit(MD,W.VA,VA,NC,andSC). SeeU.S.v. DukeEnergyCorp.,411F.3d 539(4thCir.2005). 2. Baselineemissionsundertheactualtoprojectedactualtest Thefirststepintheapplicationoftheactualtoprojectedactualanalysis (again,adoptedby EPAsinitscurrentPSDregulations,and,therefore,by DEP,at25Pa.Code127.83), istodeterminetheprechangeactual emissionsoftheunit(s)proposedtobemodified.Referredtoasthe baselineactualemissions,thistermisdefinedtomean,ingeneral,the emissionsactuallyemittedduringanyconsecutive24month periodwithin the10yearsprecedingthedateactualconstruction oftheproposedproject beginsoracompletepermitapplicationfortheprojectissubmitted, whicheverisearlier. Forelectricutilities,therelevantbaselineperiodis the24monthperiodwithinwhichthe5yearperiodprecedingthedateon whichactualconstructionbegins. See40C.F.R.52.21(b)(48). Thereareafewqualificationsworthbeingawareof here. Forexample Theemissionsaretoincludefugitives,totheextentquantifiable. Emissionsassociatedwithstartups,shutdowns,andmalfunctionsare alsotobeincluded. Baselineemissionscannotincludeanyemissionsinthe24month periodthatwereinexcessofapplicablelimitations. Wherenewemissionslimitationsareestablishedsubsequenttothe24 monthperiodselected,emissionsinthebaselineperiodmustbe adjusteddownwardtoexcludeanyemissionsthatwouldexceedan emissionslimitationwithwhichthesourcemustcurrentlycomply. 3. Applyingtheactualtoprojectedactual emissionstest Aspreviouslyexplained,thedeterminationofwhetheranemissions increaseresultsfromaphysicalchangeorchangeinthemethodof operation(i.e., amodification)istobemadethroughtheactualto projectedactualemissionstest. Ifthedifferencebetweenprojected actualemissionsandthebaselineactualemissionsisatorabovethePSD significancelevelforagivenpollutant,thenthereisasignificant emissionsincreasefromtheproject,andthesecondstepindetermining PSDapplicability(netting)mustbeundertaken.

Conductinganactualtoprojectedactual analysiscanbecomplexandmay requiretheassistanceofan airquality engineer,buthereareafewkey points: Thebasicformulaunderthetestissimple ProjectedActual BaselineActual=EmissionsIncrease Postchangeemissionsforexistingunitsaretobedeterminedby projectinganannualratethatreflectsthemaximumannualemissions ratethatwilloccurduringanyoneofthefive(orundercertain circumstances,10)yearsimmediatelyafterthephysicaloroperational methodchange. Postchangeemissionsaretoincludefugitive emissions(totheextentquantifiable)andemissionsassociatedwith startups,shutdowns,andmalfunctions. Importantly,however,any emissionsthatcouldhavebeenaccommodatedduringthe24month baselineperiodandthatareunrelatedtothechangearetobeexcluded inmakingthepostchangeemissionscalculation. Drillingdownabitfurther,theprojectedactualemissionsarethe productof(1)thehourlyemissionsrate,whichistobebasedonthe emissionunitsoperationalcapabilitiesfollowingthechange(taking intoconsiderationlegallyenforceablerestrictions)and(2)the projectedlevel ofutilization,whichistobebasedontheunitshistoric annualutilizationrateandavailableinformationregardingthe emissionunitslikelypostchangecapacityutilization. Theemissionsfigurederivedfromthestepaboveisthentobeadjusted by subtractingfromthatfiguretheemissionsthatcouldhavebeen accommodatedpriortothechangethatareunrelatedtothechange. Thisisintendedtohelpensurethattheanalysisincludesonly emissionsincreasesthatwillactuallyresultfromtheproject,andnot, forexample,agrowthindemandwhichcouldalreadyhavebeen accommodatedbeforethemodificationduringtheselected24month baseline. 4. Newunits Determiningwhetherasignificantemissionsincreasehasoccurredasthe resultofconstruction ofanentirely newunitata majorstationarysource ismuchsimplerthanformodificationstoexistingunits. Newunits remainsubjecttotheactualtopotentialtest.Thatis,thebaseline emissionsrateforanewunitiszero,and thepotentialtoemitofthenew unitistobeusedasitsprojectedemissions. See40C.F.R. 52.21(a)(2)(iv)(d),(b)(21)(iv),and(b)(48)(iii). Therefore,asapractical matter,thepermittedlimits(oremissionsatmaximumcapacityoftheunit wheretherearenopermitlimits)determinetheemissionsincreasefrom thenewunit,andwhetheritisthen necessarytoproceedtosteptwowith respecttofacilitywidenetting.

C.

ThePSDProgram: DeterminingWhetherThereHasBeenaSignificantNet EmissionsIncreaseConductingaNettingAnalysis Althoughthedetailsandmechanicsofnettingareinvolved,thebasicconceptis not. Emissionsnettingreferstotheprocessofconsideringcertainpriorand prospectiveemissionschangesatanexistingmajorstationarysource todetermine ifanetemissionsincreasewillresultfromaproposedphysicalchangeorchange inthemethodofoperation.Ifthisanalysisshowsthatanetemissionsincrease willresult,PSDwouldapplytoeachpollutantsemissionsforwhichthenet increaseisfoundtobesignificant,asdefinedat40C.F.R.52.21(b)(23)andas summarizedatAttachmentI(i.e.,40tpy foreachofNOx,SO2,ozone,etc.).In otherwords,notonlytheemissionsresultingfromtheproposedchangeitself are tobeexaminedcertain pastandprospectiveemissionsincreasesanddecreases atthemajorsourcemustalsobeconsideredtodetermineiftheproposedchange constitutesamajormodificationtriggeringPSDrequirements. Whichemissionincreasesanddecreasesaretobeconsideredinanetting analysis? Theshortanswertothisquestioncanbereducedtoasimpleformula: Netemissionschange=emissionsincreasesassociatedwiththeproposed modification sourcewidecreditablecontemporaneousemission decreases+sourcewidecreditablecontemporaneousemission increases. Thecontemporaneousperiodreferstotheperiodbetweenthedate fiveyears beforeconstructionontheparticularproposedchangecommencesandthedate thattheincreasefromtheparticularchangeactuallyoccurs. Inotherwords, emissionincreasesanddecreasesthatoccurredduringthe5yearwindowpriorto theproposedprojectaretobeconsideredinthenettingprocess. Theterm, creditable,isalsodefined,andhasanumberof criteria.Atitsmostbasic,it means,ineffect,thattheincreaseordecreasemustberealand,foremission decreases,enforceablebyEPAorastate. See40C.F.R.52.21(b)(3)(iii)(vi). Ifafter,conductingthenettinganalysis,itisdeterminedthattheprojectwillresult inasignificantnetemissionsincrease,thenthereisaPSDtrigger,andthe requirementsunderthisprogram mustbemet(summarizedatSection IVbelow).

D.

TheRoutineMaintenance,RepairandReplacementExclusionfromtheDefinition ofMajorModification Asnotedearlier,thereareanumberoftypesofactivitiesthatEPAhas,byrule, excludedfromthescopeofthedefinitionofmajormodification,andtherefore, from thescopeoftheNSRprogram. Themostimportantofthese,andtheone thathasgeneratedthemostcontroversy,istheroutinemaintenance,repairand replacementexclusion(again,RMRR). BecauseofitssignificanceintheNSR

applicabilityscheme,itisworthspendingatleastsometimeonthisexclusion and itsbackground.However,RMRRcoulditselfbethesubjectofalengthy paper, andonlythebasicswillbepresented. RMRRisnotdefinedintheCAA,anduntilveryrecently,wasnotdefinedor spelledoutunderEPAsNSRrules. Asaresult,historically,adeterminationof whetheranactivityfellwithinthescopeoftheexclusionwasundertakenona casebycasebasis.Often,EPAandstateinterpretationsregardingwhatqualified fortheroutineexclusionwerenotmemorialized,butwerereflectedinpractices acceptedbyEPAandstateagencies. Beginninginthemidtolate1990s,aspartofEPAsNSRenforcementinitiative againstelectricutilities,petroleumrefineriesandotherindustrysectors,EPA begantolimitthescopeoftheRMRRexclusionbynarrowlyapplyingcertain factorstodeterminewhetheragivenprojectwasroutine.Specifically,EPA examinedthenature,extent,frequency(attheplant notwithintheindustrial category),purpose,andthecostofthework,toconcludethatmanyprojectsthat previouslywouldhavebeenconsideredroutine,werenot.Asaresult,EPA claimedthatonlyactivitiesthatwerefrequentortraditional,andwere comparativelyinexpensive,couldqualifyfortheexclusion. EPA proceededto bringnumerousenforcementactionsseekingmultimilliondollarpenalties, primarilyagainstelectricutilitiesandlargeindustrialfacilities,assertingthat repairandreplacementworkthathadoccurredyearsbeforewasnotroutine,and hadtriggeredNSRrequirements.This,inturn,resultedinsignificantlitigation. UndertheBushAdministration,EPAadoptedaruletoclarifyanddefinethe scopeoftheRMRRexclusion.KnownastheEquipmentReplacementRule(or ERP),thisruleprovidesthat, ifactivitiesmeetcertaincriteria,theyare consideredtoconstituteRMRR,which wouldthenexcludetheseactivitiesfrom thescopeoftheNSRprogram.Specifically,undertheERP,anactivitycan qualifyasRMRRifitinvolvesreplacementofanycomponentofaprocessunit (broadlydefined)withanidenticalorfunctionallyequivalentcomponentif(a) thefixedcapitalcostsofthereplacement(plusassociatedmaintenanceandrepair) doesnotexceed20%of thereplacementvalueoftheprocessunit,(b)the replacementdoesnotchangethebasicdesignparametersfortheprocessunit (suchasmaximumfuelorheatinput),and(c) thereplacementdoesnotcausethe processunittoexceedanylegallyenforceableemissionsoroperational limitations. See69Fed.Reg.40278(Jul.1,2004),codifiedat40C.F.R. 52.21(b)(2)(iii)and(cc). EPAsadoptionoftheERPrulewascontroversial,particularlytherules20% costthresholdforreplacementandrelatedwork. Notunexpectedly,therulewas challengedbyanumberofstatesandenvironmentalgroups,andinlateDecember 2004,therulewasstayedbytheU.S.CircuitCourtforDistrictofColumbia, pendingtheoutcomeof thislitigation. OralargumentwasheldinearlyFebruary 2006.AlthoughEPAhasindicatedthatanynewenforcementactionsregarding

RMRRwouldonlybebroughtiftheactivitiesinquestiondidnotconstitute RMRRunderthecriteriaoftheERP (atleastforelectricutilities),theruleisnot ineffect,anditmaynotsurvivethecurrentcourtchallenge.Therefore,what constitutesRMRRremainsuncertain,andfacilitiesneedtobesensitivetothe implicationsofprojectsthat,butfortheirstatusasroutine,mightotherwise triggerNSRrequirements. E. PennsylvaniasNonattainmentNewSourceReviewProgram (NANSR)(25Pa. CodeChapter127,SubchapterE) Most ofthegeneral applicabilityprinciplesestablishedunderthePSDprogram areidenticaltothoseundertheNANSRprogram. Therefore,thediscussion abovegenerally carriesovertoNANSR,aswell. However,therearesome differencesbetweenthePSDandNANSRprograms,particularlyherein Pennsylvania. Thissectionfocuseson thekey differencesthatyouneedtobe 1 awareofforabasicunderstandingofNANSRapplicability. Keydifferencesin applicabilityunderthePSDandNANSRprograms Majorsourcestatus: Thedefinition ofmajorsourcediffersunderthesetwo programs. Unlikethe250tpy/100tpymajorsourcecategoriesforPSD, the definitionofmajorsourceundertheNANSRprogram istiedtothetypeof pollutantatissueandtheseverityofthepollutionproblemintherelevantarea. UnderPADEPscurrentanddraftNANSRprograms,afacility whichemits,or hasthepotentialtoemit,100tpyormoreofaregulatedNSRpollutantisamajor source,exceptthatcertainlowerthresholdsapplytoVOCsandNOx. Forareas designatedaspartoftheOTR,suchasallofPennsylvania(unlessalsoasevereor extremeozonenonattainmentarea),thecutoffis50tpyforVOCand100tpyfor NOx (again,becausethesepollutantsareprecursorstoozoneformation). For severeozonenonattainmentareas,thecutoffis25tpyforeachofthesepollutants. 25Pa.Code127.203. Althoughthe5CountyPhiladelphiaareaisnolongerconsideredtobeasevere ozonenonattainmentareaunder thenew,8hourozonestandard,PADEPs changestoitsNANSRprogramwouldcontinuetoapplythe25tpyVOCand NOxthresholdsinthisarea. For theremainderofthestate,thecutoffformajor

PennsylvaniascurrentNANSRprogram,whichhasbeenineffectsince1994,istoberevisedintheverynear futuretoincorporatecertainprovisionsof EPAsDecember2002NSRreformrules.EPArequiresstatestoadopt theseprovisionsortosubmitanequivalencydemonstration.Asofthedateofthispaper,PADEPsproposed revisionstoitsNANSRprogramareindraftformonly,andhavenotyetbeenformallyproposed.However, publicationinthePennsylvaniaBulletinisanticipatedshortly.ThediscussionofPennsylvaniasNANSRprogram generally focusesontherulesintheircurrentform,althoughdoesincludeafewreferencestocertainofthe anticipatedchangestothisprogramAnumberofthesechangesimposerequirementsmorestringentthanEPAs NSRreformrules.

sourcestatuswithrespecttothesepollutantsiscurrently,andwillbeunder 2 PADEPsanticipatedrevisions,50tpyforVOCsand100tpyforNOx. Significantnetemissionsincrease: Thecutoffsforwhatconstitutesasignificant netemissionsincrease(andhenceamodification)underPennsylvaniasNANSR program aregenerally thesameasthecutoffs underthePSDprogram,withthe principalexceptionbeingforNOxandVOCinareaswithmoreseverepollution. InPennsylvania,forsourceslocatedinthe5CountyPhiladelphiaarea,thecutoff undertheold1hourozonestandardwas(andwillbeunderDEPspending changes)25tpy forVOCsandNOx,insteadofthe40tpythresholdunderthe PSDprogram. See25Pa.Code127.203.AttachmentIIIpresentsabrief summary ofsignificantnetemissionsincreaselevels. Applicabilitytest:ApplicabilityunderPennsylvaniascurrentNANSR determinedbyapplyingapotentialtopotentialtest,comparingPTEbeforeand PTEafteragivenchange,intonsperyear. See25Pa.Code127.203(a)and (b). However,DEPsanticipatedrevisionstoitsNANSRprogramwillchange this,byadoptingaformofEPAsactualtoprojectedactualtest,describedabove forthePSDprogram.Ifadoptedasdrafted,DEPsversionofthistestwillbe tougher thanEPAs. Forexample,baselineactual emissionswouldbedetermined basedona5year,not10year,lookback. Also,ifprojectedactualemissionsare inexcessofbaseline,asourcewillberequiredtoincorporateitsemissions projectionintothepermitfortheprojectasanemissionslimit.Thislimitisto reflectthesumofthreeelementsbaselineactualemissions,emissionsthat couldpreviouslybeaccommodatedpriortotheproposedmodification,andthe projectedactualemissionsincreaseduetotheproposedproject. Further,the sourcemustdemonstratecompliancewiththeestablishedtotalemissionlimitfor aperiodof5years,or10yearswheretherewillbeanincreaseincapacityor PTE.Annualreportingofthiscompliancedemonstration(e.g.,monitoringdata) will bealsorequired. Aggregationofdeminimisemissionincreases: PennsylvaniasNANSRprogram requiresthatanapplicabilityreviewbeundertakenevenforproposedemission increasesofnonattainmentpollutantsthatarelessthanthesignificancelevels discussedabove(socalleddeminimisemissionincreases).Deminimis increasesmustbesummedwithallotheremissionincreasesanddecreases occurringafterJanuary1,1991. 25Pa.Code127.211(b)(1). UnderDEPsdraft revisions,thisaggregationperiodwouldreachbacktoApril5,2005forPM2.5, andwouldbelimitedtoa15yearlookbackperiodforothernonttainment pollutants.

PADEPsdraftrevisions alsoincludelowerthresholdsforsourcesthatemitorhavethepotentialtoemit70tpyof PM10(oritsprecursors)or50tpyofcarbonmonoxide(CO)andthatarelocatedinseriousnonattainmentareasfor thesepollutants.NoportionsofPennsylvania arecurrentlydesignatedasseriousnonattainmentareasforeitherPM 10orCO.

IV.

Key RequirementsIfNSRProgramsAreTriggered

IfitisdeterminedthatyourprojecttriggersPSDorNANSRbecauseitconstitutesconstruction of anewmajorsourceoramajormodificationtoanexistingmajorsource,thentheprojectmust meetanumberoftough,andexpensive,requirements. Atitsmostbasic,theseprogramsare federallymandatedpreconstructionpermittingprograms,andpreconstructionpermitsmustbe obtainedfromDEPbeforeanyprojectsubjecttoNSRcanproceed.Thesepermitsarerequired underbothPSDandNANSR,butthereareimportantdifferencesinthespecificelementsthat theseprogramsimpose. Keyrequirementsareoutlinedbelow. A. PSD BACT: SourcessubjecttothePSDprogram must,amongothermeasures, complywithbestavailablecontroltechnology,or BACTstandards. Inbrief, theBACTrequirementisanemissionslimitationbasedonthemaximumdegree ofreductionforeachPSDpollutantemittedbytheproposedproject,whichthe permittingauthoritydetermines,onacasebycasebasis,isachievable,taking intoconsiderationenergy,environmentalandeconomicimpactsandothercosts . . .. 40C.F.R.52.21(b)(12). ABACTanalysisisundertakenusingatop downapproach.Thisprovidesthatallavailablecontroltechnologiesberanked indescendingorderofcontroleffectiveness.Theapplicantfirstexaminesthe moststringent,ortop,alternative.ThistechnologybecomesBACT,unlessit canbedemonstratedthattechnicalorotherconsiderations(includingeconomic impacts)justifyaconclusionthatitisnotachievable.Ifthetoptechnologyis eliminated,thenthenextmoststringentalternativeisanalyzedinthesameway. EPAmaintainsadatabaseofBACTdeterminationsinitsBACT/RACT/LAER Clearinghouse. Otherrequiredanalyses:InadditiontomeetingBACTrequirements,applicants forPSDpermitsmustmodeltheexpectedimpactoftheprojectonambientair. EmissionsfromtheproposedsourcemustnotcauseaviolationofanyNAAQSor anincreaseinpollutantconcentrationsoverabaselineconcentration abovecertain maximumallowableamounts,knownasincrements. Theapplicantmustalso conductadditionalimpactsanalysis,includingananalysisof any impairmentto visibility,soilsandvegetationthatwouldoccurasaresultofthesourceand generalcommercial,residential,industrial andothergrowthassociatedwiththe source. B. NANSR LAER:LikethePSDprogram,theNANSRprogramrequirestheinstallationof stateoftheartcontroltechnology,exceptthatundertheNANSRprogram,the technologystandardsareeventougher. Therequiredcontrolsmustbedesignedto meetthelowestachievableemissionrate,orLAER,forthepollutantssubjectto NANSR. LAERreflectsthesticterofthemoststringentemissionlimitcontained inastatesfederallyapprovedrulesorthemoststringentemissionlimitachieved inpracticewithintheapplicablesourcecategory. 25Pa. Code121.1,127.205.

UnlikeBACT,theLAERrequirement,bydefinition,doesnotconsidereconomic, energy,orotherenvironmentalfactors.Asapracticalmatter,LAERcostscanbe considered,butonlytothedegreethattheyreflectunusualcircumstanceswhich differentiatethecostsofcontrolfortheapplicantssourcefrom controlcostsfor therestoftherelevantindustrialcategory.AswithBACT,previousagency LAERdeterminationscanbefoundintheBACT/RACT/LAERClearinghouse. Emission offsets:NANSRalsorequiresthatemissionincreasesforanewor modifiedmajorsourcebeoffsetbycreditableemissionreductionsfromthesame orotherfacilities.Thesereductionsmustbegreatenoughtomore thanoffsetthe proposedemissionsincrease.FormostofPennsylvania,theratioofcreditable emissionoffsetsto totalincreasedemissionsforVOCandNOxmustbe1.15to1. See25Pa.Code127.210foralistofotheroffsetratios. CreditableemissionoffsetsinPennsylvaniaareknownasemissionreduction credits,orERCs,andmustmeetcertaincriteriaandbefullyapprovedand certifiedbyDEPinitsERCRegistrysystem beforetheycanbeusedtosatisfy NSRoffsetrequirements. AcceptablemethodsofgeneratingERCsinclude shutdowns,permanentcurtailmentsinproductionoroperatinghours,andnew technology,materialsorchangesinprocessequipmentnototherwiserequiredby law. Caution ERCRegistryapplicationsmustbefiledwithDEPwithin1year ofinitiatingtheemissionsreductionsusedtogeneratetheERCs,ortheERCswill belost. DEPsERCRegistrylistsERCsthatcanbepurchasedfromother facilities,buttheERCtransactionmustbeprocessedthrough theRegistry. See generally25Pa.Code127.207127.209. Otherrequirements:InorderforaNANSRpreconstructionpermittobegranted, allexistingsourcesinPennsylvaniaownedorcontrolledbytheownerofthe proposedsourcemustbeincompliancewithapplicablecleanairrequirements. DEPsNANSRrulesalsorequirethattheapplicationforapreconstructionpermit underthisprogram includeananalysisofalternativesites,sizes,production processesandenvironmentalcontroltechniqueswhichdemonstratesthatthe benefitsoftheproposedfacilitysignificantlyoutweightheenvironmentaland socialcostsimposedasaresultofitslocation,construction,ormodification. See generally25Pa.Code127.205.

ATTACHMENTI PRINCIPALPSDPOLLUTANTSANDSIGNIFICANCELEVELS

Carbonmonoxide(CO):100tpy Nitrogen dioxide(NO2):40tpy Sulfurdioxide(SO2):40tpy Particulatematter: 25tpyforparticulatematter 15tpyforPM10 Ozone:40tpy ofvolatileorganiccompounds(VOCs) orNOx Lead:0.6tpy Sulfuricacidmist:7tpy Hydrogensulfide:10tpy Totalreducedsulfur:10tpy (AcompletelistofPSDpollutantscanbefoundat40C.F.R.52.21(b)(23).)

ATTACHMENTII PSDSOURCECATEGORIESWITH 100tpyMAJORSOURCETHRESHOLDS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. Fossilfuelfiredsteamelectricplantsofmorethan250millionBtu/hrheatinput Coalcleaningplants(withthermaldryers) Kraftpulpmills Portlandcementplants Primaryzincsmelters Ironandsteel mill plants Primaryaluminumorereductionplants Primarycoppersmelters Municipalincineratorscapableofchargingmorethan250tonsofrefuseperday Hydrofluoricacidplants Sulfuricacidplants Nitricacidplants Petroleumrefineries Limeplants Phosphaterockprocessingplants Cokeovenbatteries Sulfurrecoveryplants Carbonblackplants(furnaceplants) Primaryleadsmelters Fuelconversionplants Sinteringplants Secondarymetalproductionplants Chemicalprocessplants Fossilfuelboilers(orcombinationsthereof)totalingmorethan250million Btu/hrheatinput Petroleumstorageandtransferunitswithatotalstoragecapacityexceeding 300,000barrels Taconiteoreprocessingplants Glassfiberprocessingplants Charcoalproductionplants

ATTACHMENTIII SUMMARYOFPRINCIPALNANSRPOLLUTANTS SIGNIFICANCELEVELS

Carbonmonoxide(CO):50tpy(100tpyunderDEPsproposedrevisions,unlessinserious nonattainmentareaanddeterminedtocontributesignificantlytoCOlevels) Nitrogenoxides(NOx):40tpy(25tpyinPhiladelphiaareaunderold1hrozonestandardand DEPsproposedrevisionstoNANSR) Sulfuroxide(SOx):40tpy Ozone:40tpyVOCsorNOx (25tpyinPhiladelphiaareaunderold1hrozonestandardand DEPs proposedrevisionstoNANSR) Lead:0.6tpy Particulatematter 25tpyparticulatematter PM10orPM10precursors:15tpy PM2.5orPM2.5precursors(inproposedrevisionsonly):15tpy