PM2.5 Emission Reduction Credits – A Lesson in Supply and Demand

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) which are 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. The rule will impact air quality permitting under Prevention of Significant Deterioration (PSD), Nonattainment NSR (NNSR), and state minor source programs.  Facilities that trigger the NNSR permitting requirements for PM2.5 will need to pay particular attention to the emission offset requirements for direct emissions of PM2.5 and the PM2.5 precursors (SOX and NOX).  Sources that trigger the PM2.5 offset requirements under NNSR will need to purchase Emission Reduction Credits (ERCs) or generate their own internal PM2.5 emission reductions in order to obtain a preconstruction permit.

If your major facility is located in an area that is designated as nonattainment for the PM2.5 National Ambient Air Quality Standard (NAAQS), you will need to evaluate the applicability of NNSR for modifications involving direct emissions of PM2.5 and PM2.5 precursors.  Even if you have already submitted an application for a construction permit to the regulatory authority for review, if it is not issued by July 15, 2008, you will need to amend your permit application to address PM2.5 emission offsets or netting.

Finding PM2.5 ERCs has already been a very difficult task for some facilities facing NNSR for PM2.5.  Very few direct PM2.5 ERCs have been submitted for certification, and even fewer have been certified by local air quality control agencies.  ERCs for PM2.5 precursors (NOX and SOX) are available, but the equivalency ratios required for the PM2.5 precursors can make ERC transactions cost prohibitive.

Now is the time to assess where your company stands with regard to PM2.5 emissions.  You know what your PM emissions are, you may know what your PM10 emissions are, but do you actually know what levels of PM2.5 you emit?  Will that new source that is being considered for your next business expansion be adversely impacted by a requirement to obtain PM2.5 emission offsets?

Department of Homeland Security Update

The Department of Homeland Security (DHS) has begun distributing the initial notification letters to those facilities that submitted a Top-Screen analysis.  The initial notification letters identify a preliminary determination of risk-based tiering and establish deadlines to submit the Chemical Security Assessment Tool (CSAT) Security Vulnerability Assessment (SVA).  DHS has identified submittal deadlines of between 90 and 180 days to submit the SVA based on the preliminary tiering determinations.

BREAKING NEWS – Clean Air Interstate Rule Overturned

On Friday July 11th, the U.S. Court of Appeals for the District of Columbia Circuit struck down the Clean Air Interstate Rule (CAIR) and the CAIR Federal Implementation Plan (FIP).  The rule was vacated in its entirety and remanded back to the United States Environmental Protection Agency (U.S. EPA) with direction to promulgate a rule that is consistent with the opinion of the court. The court decided that U.S. EPA’s approach to CAIR using regionwide caps with no state-specific quantitative contribution determinations or emissions requirements was “fundamentally flawed” and directed U.S. EPA to “redo its analysis from the ground up.”  In summary, the court decided that:

• U.S. EPA must reconsider which states are included in CAIR. 
• U.S. EPA must decide what date, whether 2015 or earlier, is as “expeditious as practicable” for states to eliminate their significant contributions to downwind nonattainment. 
• The trading program is unlawful.
• The SO2 regionwide caps are entirely arbitrary.
• The allocation of state budgets from the NOx caps is similarly arbitrary because U.S. EPA distributed allowances simply in the interest of fairness.
• A similar CAIR may emerge after rebuilding (even though the court noted that “CAIR’s flaws are deep”).

In the absence of CAIR, the court stated that the NOx SIP Call trading program will continue and in the court’s opinion, should mitigate any disruption that might result from the vacating of CAIR at least with regard to NOx.  A more detailed analysis of the court’s CAIR decision will be presented in the August 2008 edition of ALL4’s 4 the Record.   A copy of the decision can be veiwed here.