Introducing the Final PM2.5 Rule Revisions

The United States Environmental Protection Agency (U.S. EPA) has issued final rules governing the implementation of the New Source Review (NSR) program for particulate matter less than 2.5 micrometers in diameter (PM2.5).  The final rule was published in the Federal Register on May 16, 2008 and will become effective on July 15, 2008.  This rule finalizes previously proposed NSR program revisions for sources that emit PM2.5 and other pollutants that contribute to the formation of PM2.5 in the atmosphere and will impact air quality permitting under the Prevention of Significant Deterioration (PSD) regulations, Nonattainment NSR (NNSR), and state minor source programs.

What are the PM2.5  Precursor Pollutants?

The emission precursors that have been identified for PM2.5 formation in the atmosphere include sulfur dioxide (SO2), nitrogen oxides (NOX), volatile organic compounds (VOC), and ammonia (NH3).  Under the new PM2.5 NSR rules, SO2 emissions will be regulated as a PM2.5 precursor. NOX emissions will be presumptively regulated as a PM2.5 precursor unless a state can demonstrate that NOX emissions from sources in a particular area are not a significant contributor to PM2.5 formation.  VOC and ammonia are presumed to not be significant contributors to PM2.5 unless a state demonstrates that VOC or ammonia emissions from sources in a particular area are significant contributors to PM2.5 formation.

How Will NSR Applicability Be Determined?

The NSR air permitting programs apply to new major stationary sources and to major modifications at existing major stationary sources. Major stationary sources are defined by the magnitude of their emissions, expressed as potential to emit (PTE) in terms of tons of pollutants per year. The major source emissions thresholds determine when NSR program requirements apply to new facilities. If a new facility will emit PM2.5 or PM2.5 precursors in amounts greater than the major source threshold, the facility is considered a major source of PM2.5 and must obtain permits that specify required emissions controls.   The rule defines a source as major for PSD if it is included as one of the specific twenty eight listed source categories and has a PTE of 100 or more tons per year (tpy) or is not a listed source and has a PTE of 250 or more tpy.  For NNSR PM2.5 permitting, a new facility is major for each individual pollutant if it emits 100 tpy or more of the pollutants PM2.5 or PM2.5 precursors.  Under NNSR, as opposed to PSD, triggering for one pollutant does not trigger the NNSR requirements for the other pollutants unless they are individually 100 tpy or more.

The applicability of NSR to modifications at existing major stationary sources is based on the magnitude of the emissions increase that is associated with the specific modification. Significant emission rates, expressed as tons per year, are used to determine whether a modification is major under both PSD and NNSR. The significant emission rate for PM2.5 emissions at an existing stationary source is 10 tpy.  The significant emission rate for the NOx and SO2 precursors is 40 tpy each.  Under the transitional program pursuant to Appendix S for NNSR permitting, NOx will not be regulated as a precursor pollutant for PM2.5 until a state has an opportunity to make a determination whether NOx is a significant contributor to PM2.5 nonattainment in their state and to revise its NNSR regulations.

Does the Rule Address Condensable PM2.5?

The rule addresses condensable PM2.5 by deferring its inclusion from applicability determinations and permit limits. States are initially not required to account for gaseous emissions from a source that condense to form particulate matter at ambient temperatures when making PM2.5 and PM10 applicability determinations and when establishing their permitted emission limits.  Condensable PM2.5 and PM10 emissions will be counted on and after January 1, 2011 (or on an earlier date if U.S. EPA establishes final testing methods by rulemaking procedures).

How Does the Rule Address PM2.5 and Precursor Emission Offsets?

Emissions increases that are associated with major modifications under NNSR must “offset” the increase. The revised rule establishes an offset ratio for direct emissions of PM2.5 for NNSR permitting of 1-to-1. The 1-to-1 ratio applies to offsets for like precursor emissions as well (i.e., SO2 for SO2, NOX for NOX). The preamble to the rule implies that states may establish more stringent offset ratios at their discretion.  Emissions only need to be offset once. Therefore, if NOx emissions offsets are provided as an ozone precursor, these offsets can also serve as PM2.5 precursor offsets, as necessary.  However, the highest required emission offset ratio would apply.  The final rule also allows for interpollutant emission offset trading and establishes presumptive offset trading ratios for new major stationary sources or major modifications that are located in PM2.5 non-attainment areas.  Interpollutant trading cannot be used for netting purposes under NSR permitting.

Interpollutant offset trading can be used for direct PM2.5 to offset precursor emissions increases, emissions reductions of one precursor to offset emissions increases of another precursor, and reductions in precursor emissions to offset direct PM2.5 emissions increases.  A state may use U.S. EPA’s presumptive interpollutant offset trading ratios or may establish their own through a demonstration to U.S. EPA.  However, an established offset ratio must be for a region or an entire state, and cannot be established on a permit-by-permit basis. The permissible interpollutant offset trading ratios are:

• 200 tons of NOX is equivalent to 1 ton of  PM2.5
• 40 tons of SO2 is equivalent to 1 ton of  PM2.5
• NOX to SO2 or SO2 to NOX – no defined preferred ratios.

Are There Any PSD NSR Program Delegation and Transition Issues?

As with any change to the major NSR rules, there will be transition issues. A state may have a U.S. EPA approved PSD permitting program either through delegation or through a U.S. EPA approved State Implementation Plan (SIP).  U.S. EPA recognized that a state with a SIP approved PSD program will not have the legal authority to regulate PM2.5 precursor emissions.  U.S. EPA has determined that these states will have until the end of their SIP development (no later than July 15, 2011) to regulate SO2 and NOX as precursor emissions and will continue to use the Transition Guidance which specifies the use of PM10 as a surrogate for PM2.5, except that there will be no required demonstration for the PM2.5 NAAQS and no consideration of PM10 condensables.  Delegated states will regulate PM2.5 along with SO2 and NOX as precursor emissions effective July 15, 2008.

U.S. EPA has also determined that permit application “grandfathering” will apply under the PSD rules.  This means that any PSD permit application that the state agency has deemed complete prior to July 15, 2008 can continue to be evaluated under the Transition Guidance using PM10 as a surrogate.

What About the NNSR Program Transition Period under Appendix S?

For nonattainment areas, the ‘transitional’ NSR program provisions contained in Appendix S of 40 CFR 51 will apply effective July 15, 2008 until that state has an approved revised NNSR SIP.  Under Appendix S, PM2.5 and SO2, as a precursor, will be regulated.  However, NOX will not be regulated as a precursor emission.  For states in the Ozone Transport Region, or any area that is nonattainment for ozone, this distinction is not important, as NOX will still be regulated as a nonattainment pollutant for ozone.

Conclusion

The revisions to the NSR programs represent significant rule changes that will impact most, if not all major stationary sources.  It will require a more accurate characterization of facility wide particulate matter emissions and will broaden NSR applicability determinations by the inclusion of PM2.5 precursors. The rule could have a major impact on facilities that are located in PM2.5 nonattainment areas due to the limited availability of significant PM2.5 emission reduction credits (ERCs) for use as offsets.