2011 and Beyond: The Critical Air Quality Issues Affecting Industry

The December 2010 “year-end” edition of 4 The Record provides a look ahead into 2011.  Even with the recent “Change in Climate” associated with the national political scene; we still see a very active U.S. EPA moving forward with their Fiscal Year 2011-2015 EPA Strategic Plan (Plan).  Consistent with the direction that U.S. EPA has taken over the past several years regarding national air quality policy, Goal #1 of their Plan identifies climate change and air quality.  Regulatory changes regarding air quality have come at a very rapid pace and include new, more restrictive National Ambient Air Quality Standards (NAAQS) for fine particulate matter (PM2.5), nitrogen dioxide (NO2), and sulfur dioxide (SO2); mandatory reporting of greenhouse gas (GHG) emissions; regulation of GHGs under major New Source Review (NSR) air permitting rules; more expansive and more stringent Standards of Performance for New Stationary Sources (NSPS) for certain source categories; additional sources (major and area) subject to National Emission Standards for Hazardous Air Pollutants (NESHAP); and more stringent standards for certain source categories already subject to NESHAP rules.  The difficult news for regulated entities is that the recent air quality regulatory trend will likely continue into 2011 and beyond.   For the year end issue of 4 The Record, ALL4 staff have compiled a “Critical 10” list of air quality issues that will likely impact our clientele over the next year.  The list is provided below, in no specific order.

1. Affirmative Defense

In 2008, the United States Court of Appeals for the District of Columbia Circuit vacated portions of CAA section 112 regulations (i.e., 40 CFR 63.6(f)(1) and (h)(1)) that governed emissions of hazardous air pollutants (HAP) during periods of startup, shutdown, and malfunction (SSM) (see Sierra Club v. EPA, 2008).  Prior to the vacatur, affected sources were exempt from the requirement to comply with the otherwise applicable emission standard during SSM events, provided that they operated in accordance with their SSM Plan.  Under Sierra Club v. EPA, the court established that MACT standards apply at all times.  Admitting that malfunctions do actually occur at manufacturing facilities, U.S. EPA has begun including an “affirmative defense” provision in MACT standards to address emissions that occur during periods of malfunctions. The affirmative defense provision is applied “after the fact;” that is, it is applied “in the context of an enforcement proceeding,” a key point.  This change represents a significant difference from previous “protection” under the SSM provisions.  Under SSM, sources were, in general, innocent until proven guilty.  With the vacatur of SSM provisions, excess emissions at any time are violations.  A valid affirmative defense only provides mitigating circumstances for consideration in a judicial or administrative proceeding.  To be valid, facilities must prove by a “preponderance of evidence” that the malfunction-related excess emissions meet stringent criteria that are defined in the rule.   As such, routine facility operating records have been elevated, in essence, to legal document status.  For exceedances caused by malfunctions, regulatory authorities will determine an appropriate response (during an enforcement proceeding) based on:

• Good faith efforts to minimize emissions during malfunction periods
• Preventative and corrective actions
• Results of a root cause analysis to ascertain and rectify excess emissions
• Whether the source’s failure to comply was really as a result of a “malfunction”

As new MACT standards are promulgated and existing standards are revised, more and more source categories will be affected by this regulatory shift.  ALL4 recommends that affected facilities evaluate current facility operating and related records (e.g., employee training) and implement plans to ensure that an affirmative defense can be developed in response to excess emissions during malfunction periods.  Please contact Roy Rakiewicz at 610.933.5246 x27 (rrakiewicz@all4inc.com) or John Egan at 610.933.5246 x14 (jegan@all4inc.com) with any questions related to the affirmative defense provisions.

2. Energy Efficiency Provisions

Is using energy more efficiently really a valid pollution control technique?  U.S. EPA thinks so.  During 2010, we’ve seen a number of proposed regulations and guidance documents from the offices of U.S. EPA that make the case for using energy more efficiently as an emission reduction strategy.  For example, in the proposed new major source and area source Maximum Achievable Control Technology (MACT) standards for boilers and process heaters, energy assessments and energy improvements will be required because they are expected to reduce fuel consumption and thus reduce emissions of hazardous air pollutants (HAP).  Likewise, U.S. EPA’s guidance for implementing the Greenhouse Gas (GHG) Tailoring Rule states that energy efficiency activities can be considered to be Best Available Control Technology (BACT) for GHGs.  The argument that using energy more efficiently will reduce GHG emissions is the same as the one made for reducing HAP emissions:  emissions will be reduced by firing less fuel.  This argument can be made for every product of combustion (e.g., SO2, NOX, PM10, PM2.5, etc.).  Now that state agencies have been made aware of U.S. EPA’s acceptance of this potential new emission control strategy, we believe that it is only a matter of time before state agencies require that energy efficiency projects be included in all state and Federal control technology evaluations.  Please contact David Chetkowski at 610.933.5246 x16 (dchetkowski@all4inc.com) with any questions related to energy efficiency as it relates to pollution control.

3. Area Source MACT Standards

U.S. EPA continues to develop standards to control hazardous air pollutants (HAP) from area sources.  “”Area”” sources are those sources that emit less than 10 tons annually of a single HAP or less than 25 tons annually of a combination of HAP.  To date, U.S. EPA has identified a total of 70 area source categories for regulation.  The complete list of area source categories can be found here.  Be on the lookout for some new area source Maximum Achievable Control Technology (MACT) standards which are expected to be proposed in the near future.  On the docket are new area source requirements for boilers, sewage sludge incinerators, and brick and ceramic clay manufacturing.  Please contact David Chetkowski at 610.933.5246 x16 (dchetkowski@all4inc.com) with any questions related to area source MACT standards.

4. Transport Rule

U.S. EPA is presently considering all of the comments received relative to its proposed Rulemaking for the Federal Implementation Plans to Reduce Interstate Transport of Fine Particulate Matter and Ozone, also known as the “Transport Rule.”  This rule is intended to replace the existing Clean Air Interstate Rule (CAIR), as mandated by the Federal D.C. Circuit Court.  The final comment period on the Rule closed on November 26, 2010 with the notice for comment on data which supports U.S. EPA’s proposed action.  With implementation of the Transport Rule, U.S. EPA intends to further limit the interstate transport of emissions of nitrogen oxides (NOX) and sulfur dioxide (SO2), which it

has determined are having a significant impact on the air quality for ozone and fine particulate.  By way of the Transport Rule, U.S. EPA would both identify and limit NOX and SO2 emissions within 32 states in the Eastern United States in order to attain and maintain compliance with the 1997 and 2006 fine particulate matter (PM2.5) National Ambient Air Quality Standards (NAAQS) and the 1997 ozone NAAQS.  U.S. EPA is proposing to limit these emissions through Federal Implementation Plans (FIPs) that would regulate electric generating units (EGUs) in these 32 states.   The final rule is expected in early 2011, and some of the required emissions reductions would begin to take effect very quickly, in 2012, within one (1) year after the rule is finalized.

It is anticipated that the Transport Rule will significantly limit the ability for a facility to comply through the purchase of Allowances.  This, in combination with the new, very low NAAQS for PM2.5, SO2, and NO2, will make for very difficult economic decisions as to the viability of a facility to support the investment of millions of dollars for additional emissions control.  The transport of electricity over multi-state areas is often limited due to transmission line constraints.  The permitting of either fuel switching at existing facilities or the construction of new, cleaner emitting facilities is presently a very long and difficult process under New Source Review Permitting as implemented by U.S. EPA.  The road to compliance with all of these new requirements may prove to be very difficult and costly.  A more detailed discussion of the Transport Rule can be viewed here.  Please contact John Slade at 717.822.0009 (jslade@all4inc.com) with any questions.

5. U.S. EPA Enforcement

U.S. EPA’s 2011 to 2013 National Enforcement priorities include addressing air pollution from the usual suspects: the largest sources of particulate matter (PM), nitrogen oxides (NOX), and sulfur dioxide (SO2).  Continued enforcement actions against coal-fired utilities and cement, glass, and acid production facilities are anticipated.  U.S. EPA will also be targeting to protect the health of communities from toxic air pollution resulting from excess emissions through enforcement of existing MACT rules and with a new enforcement initiative for emissions associated with inadequate leak detection and repair (LDAR) programs and excess emissions associated with facility startup, shutdown, and malfunction (SSM) events.  ALL4 expects increased enforcement actions by U.S. EPA to target many previously identified New Source Review (NSR) permitting violations and events where it determines that excess toxic emissions resulted from non-routine operations.  In addition to the air pollution initiatives directed towards large sources and excess emissions of hazardous air pollutants, U.S. EPA also announced enforcement initiatives that target stormwater and raw sewage discharges, groundwater contamination by confined animal feeding operations (CAFOs), multi-media discharges from mineral processing operations, and multi-media impacts associated with resource extraction operations (e.g., shale gas).  A summary of U.S. EPA’s enforcement goals can be viewed here.  Please contact Roy Rakiewicz at 610.933.5246 x27 (rrakiewicz@all4inc.com) with any questions.

6. MACT Risk and Technology Review Information Collection Requests

U.S. EPA has begun the process of performing Risk and Technology Reviews (RTRs) for MACT Standards under 40 CFR Part 63.  A significant Information Collection Request (ICR) related to the pulp and paper industry is expected as early as January 2011, and it is predicted to be one of the biggest, most comprehensive information requests directed at the pulp and paper industry since the mid 1990s.  The ICR will be received in the form of a Clean Air Act (CAA) Section 114 request.  The purpose of the RTR is to determine if additional standards, above and beyond the applicable Subparts (in this example, Subparts S and MM), are required to reduce residual risks associated with the industrial sector.  Because the Pulp and Paper ICR will request so much information, U.S. EPA has divided it into three (3) parts.  Part I will request general mill information and information pertaining to those operations subject to 40 CFR Part 63, Subpart S, and will be due either 30 or 60 days after receipt of the ICR.  Part II will require each mill to

update its National Emissions Inventory (NEI) and is expected to be due 100 days after receipt of the ICR.  The NEI contains hazardous air pollutant (HAP) emissions data and other source data such as stack locations, stack heights, and stack volumetric flowrates that U.S. EPA uses to conduct air quality modeling to evaluate human health risk and adverse environmental effects.  NEI information is typically based on state-specific emission inventories.   Part III of the ICR will request information pertaining to those operations subject to 40 CFR Part 63, Subpart MM, and is expected to be due 180 days after receipt of the ICR.  While this example pertains to the pulp and paper industry, U.S. EPA will likely, over time, perform an RTR for all MACT Standards.  The Pulp and Paper ICR is another looming air quality-related issue that the industry will need to plan for in 2011.  Other MACT affected industries will likely be asked to provide similar information to U.S. EPA in response to future ICRs.  Please contact Kevin Hickey at 610.933.5246 x11 (khickey@all4inc.com) with any questions regarding the Pulp and Paper ICR or U.S. EPA’s RTR program.

7. The GHG Reporting Rule

The GHG Reporting Rule, 40 CFR Part 98 – Mandatory Reporting of Greenhouse Gases, which was issued by U.S. EPA in the Fall of 2009, requires certain facilities to report annual emissions of Greenhouse Gases (GHG) including, as applicable, carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), sulfur hexafluoride (SF6), hydrofluorocarbons (HFC), perfluorocarbons (PFC), and other fluorinated gases.  Facilities and suppliers that are subject to the GHG Reporting Rule must comply with the General Provisions (40 CFR Part 98, Subpart A) and the provisions of all other applicable subparts of 40 CFR Part 98, which include, but are not limited to, requirements for data monitoring, quality assurance, recordkeeping, and reporting.  Data monitoring and recordkeeping requirements for reporting year 2010 began January 1, 2010.  Requirements for quality assurance of data monitoring generally began April 1, 2010.  Throughout this passing year facilities subject to the GHG Reporting Rule needed to be busy figuring out what information was going to be needed and developing and implementing written plans on how to collect and quality assure that data.  U.S. EPA was also busy during 2010 tinkering with the GHG Reporting Rule by making changes to existing requirements that impact the current year monitoring and reporting, and adding new source categories which will have to report starting next year.  Many of these changes were chronicled previously in 4 The Record editions issued in May, July, September, October, and November of this year.  All of this has been leading up to the first quarter of 2011 when things start to get more serious.  To comply with requirements of the GHG Reporting Rule, all facilities subject to reporting 2010 GHG emissions must have completed registration and filed a Certificate of Representation with U.S. EPA by January 30, 2011.  Then these facilities must take all of their data, calculate their GHG emissions exactly the way the GHG Reporting Rule requires (making sure that anything that U.S. EPA changed during the past year is addressed), and submit their GHG emissions reports to U.S. EPA, all no later than March 31, 2011.  And the required registration, filing of the Certificate of Representation, and submitting of a complete GHG emissions report must be done using U.S. EPA’s web-based Electronic Greenhouse Gas Reporting Tool (e-GGRT) which, by the way, U.S. EPA has not yet made available to those who will have to use it to comply with the GHG Reporting Rule’s requirements.  Additionally, beginning in January 2011, facilities that include any of the new source categories added by U.S. EPA need to have identified what new information is going to be needed, developed/revised their written plans, and started to collect that data, too.  Please contact Neal Lebo at 610.933.5246 x13 (nlebo@all4inc.com) with any questions about the GHG Reporting Rule.

8. The GHG Tailoring Rule – To Be or Not To Be?

The Prevention of Significant Deterioration (PSD) and Title V Greenhouse Gas (GHG) Tailoring Rule (GHG Tailoring Rule) was issued by U.S. EPA with an effective date of August 2, 2010.  This new rule amended 40 CFR Parts 51, 52,

70, and 71 to set the timing and thresholds for addressing GHG emissions from stationary sources under Clean Air Act (CAA) permitting programs.  Implementation of the GHG Tailoring Rule is set to begin in two (2) steps beginning in January 2011.  In Step 1, from January 2 to June 30, 2011, projects and sources that are considered major under PSD and Title V programs due to emissions of pollutants other than GHGs will begin to have their GHG emissions regulated.  In Step 2, from July 1, 2011 to June 30, 2013, projects and facilities with GHG emissions above established thresholds regardless of other pollutants will be considered major and become regulated under the PSD and Title V programs.  Applicability and implementation of the GHG Tailoring Rule was further detailed in the August 2010 edition of 4 The Record.  Also coming in 2011, U.S. EPA will begin rulemaking to establish PSD and Title V requirements for sources that emit GHGs at levels under the Step 2 thresholds.  The requirements of the GHG Tailoring Rule will apply to all permitting actions for which a final permit has not been issued prior to the respective implementation date (i.e., January 2, 2011 for Step 1 and July 1, 2011 for Step 2), which means that pending permit applications may need to be reopened or amended to address the new GHG requirements.  At a minimum, all project permit applications being prepared from now on should quantify related GHG emissions for comparison to the GHG Tailoring Rule thresholds, if only to demonstrate that the project is minor.  Title V renewal applications should explain GHG applicable requirements, if any.  But wait . . . is all of this really going to happen?  Well, the GHG Tailoring Rule is a final rule and U.S. EPA and most state permitting agencies are busy getting ready to start applying it in January.  There have been numerous legal challenges filed against the GHG Tailoring Rule and other GHG rules issued by U.S. EPA in 2010 and, while it appears that these rules will take effect as scheduled as these cases proceed in the courts, the final outcome remains uncertain.  Also, since the mid-term election in November we have been hearing from GOP Congressional leaders about how they are going to take action in early 2011 to block U.S. EPA implementation of these GHG Rules.  So the answer is . . . the GHG Tailoring Rule is real for now . . . but stay tuned.  Please contact Neal Lebo at 610.933.5246 x13 (nlebo@all4inc.com) with any questions about the GHG Tailoring Rule.

9. Boiler MACT/CISWI and the Definition of Solid Waste – What Next?

January 16, 2011 is just around the corner and right now that is the deadline for U.S. EPA to issue final MACT rules for industrial, commercial, and institutional boilers, and for commercial and industrial solid waste incinerators.  But will it actually happen? On December 7, 2010, U.S. EPA filed a motion with the Federal Court seeking an extension to the current court ordered deadline until April 2012.  Anyone familiar with this rulemaking would be hard-pressed to argue that the extension isn’t needed and by the time you read this article we should know if the extension has been granted.  However, setting the extension request issue aside let’s recap where we stand today and how we got here.

The proposed regulations were formally published last June along with the critical new Resource Conservation and Recovery Act (RCRA) regulations that will define whether non-hazardous secondary materials are, or are not, solid wastes when burned as fuel or ingredients in combustion units.  Throw in the proposed area source Boiler MACT rules which were also part of the proposed regulation package and you have the infamous 4-Rules that, as proposed, could directly impact the operation of more sources than any set of U.S. EPA air rules in memory (assuming the GHG Tailoring Rule stays with us).  Depending on who you listen to, the new regulations will save bundles of money by keeping Americans healthy while creating lots of new jobs in pollution control and alternate energy, or will cost the country immensely as our industrial base continues to migrate elsewhere taking jobs with them and incurring additional capital and operating expenses on those left behind.

U.S. EPA received thousands of comments both in support of, and opposed to, the new rules.  There has also been an almost unprecedented political push opposing the regulations from all sorts of entities including those involved in industrial manufacturing, boiler and incinerator manufacturers and operators, and even government agencies that will

be affected by these far reaching rules.  All of this was brought about by the Federal court decision that essentially said that “waste is waste” and if you burn it in anything, regardless of energy recovery, you are incinerating it.  Waste incineration is regulated under Section 129 of the Federal Clean Air Act (CAA), while hazardous air pollutants (HAP) from boilers are regulated with other source categories under Section 112 of the CAA.  If and when the rules go final, we should then be able to figure out if we’re operating boilers or incinerators, or if we need to switch fuels or invest in new emissions control equipment.

Word on the street so far is that the rules will be revised somewhat from the original proposals last summer.  U.S. EPA gathered and sifted through lots of additional data since last June and as a result some of the new emissions standards may not be as stringent as originally proposed.  However, the proposed rules are yet another set of new MACT standards that have been based on the best performing existing and new sources on a pollutant-by-pollutant basis resulting in so-called “Franken-MACTs.”  Whatever the final standards look like, they will surely result in new litigation and additional uncertainty for the regulated community.  For the time being, we will all sit back and wait anxiously to see what the final regulations look like.  Then the real work will begin.  Please contact John Egan at 610.933.5246 x14 (jegan@all4inc.com) with any questions.

10. New National Ambient Air Quality Standards (NAAQS)

U.S. EPA promulgated new 1-hour National Ambient Air Quality Standards (NAAQS) for nitrogen oxides (NOX) and sulfur dioxide (SO2) in 2010.  The NAAQS levels establish acceptable 1-hour NOX and SO2 concentrations that can be present in ambient air.  The new 1-hour NAAQS levels are so stringent that they will dictate the design and feasibility of major air quality permitting projects for years to come.  The stringency of the NAAQS levels is tied not just to the extremely low concentration levels that were established, but to the averaging time as well.  Demonstrating compliance with hourly standards is often difficult, since the “worst-case” meteorological conditions that drive ambient concentrations need to be evaluated.   Looking forward to 2011 and beyond, there are two (2) situations that will require individual facilities to directly demonstrate compliance with the NAAQS levels through air quality modeling:

• Triggering major source Prevention of Significant Deterioration (PSD) air quality permitting requirements for a new project; and
• Mandatory SO2 air quality modeling that U.S. EPA is requiring as part of the implementation process for the 1-hour SO2 NAAQS.

The SO2 air quality modeling requirement is critical since it will be required for any major SO2 emitting facility (and sometimes smaller facilities) even in the absence of a new permitting project, likely within the next year (U.S. EPA is scheduled to release guidance on the SO2 modeling implementation process in January 2011).  Demonstrating compliance with the 1-hour SO2 NAAQS through air quality modeling will prove difficult, and will likely result in tightening of SO2 emission limits across industry.  As a result, the need to evaluate new control technology investments, alternate fuels, and different ways to operate will enter the strategic considerations of environmental and operations managers in 2011.  The same challenges will be present when facilities consider major source permitting projects that trigger NAAQS modeling requirements.

In addition to the newly promulgated NOX and SO2 NAAQS U.S. EPA is currently reviewing Ozone, CO, and PM10 NAAQS.  The proposed NAAQS for Ozone issued on January 19, 2010 was scheduled to be finalized by the end of 2010.  However, on December 8, 2010, U.S. EPA postponed the finalization of the new Ozone NAAQS until July 2011 in order to allow more time for the Clean Air Scientific Advisory Committee (CASAC) to interpret the epidemiological and clinical studies they used to make their recommendations.  The proposed rule would lower the current primar

standard for Ozone from 75 ppb to somewhere between 60 and 70 ppb.  U.S. EPA is also currently reviewing the CO and PM10 NAAQS.  Currently the CO NAAQS are 9 ppm for the 8-hour averaging time and 35 ppm for the 1-hour averaging time.  U.S. EPA’s proposed rule is due out January 28, 2011 per court ordered deadline.  The current PM10 NAAQS is 150 ug/m3, 24-hour average.   U.S. EPA’s proposed rule is projected for February 2011 however isn’t under a court ordered deadline.   The current PM2.5 NAAQS are 35 mg/m3 for the 24-hour average and 15 mg/m3 for the annual average which U.S. EPA will likely propose to lower to between 30 to 35 mg/m3 for the annual average and to between 10 to 13 mg/m3 for the 24 hour average.  New proposed PM2.5 NAAQS are due out February 2011 and are currently scheduled to be finalized in October 2011.   Finally, secondary NOX and SO2 NAAQS are under a court order to be proposed by July 12, 2011 and be finalized by March 20, 2012.  Please contact Dan Dix at 610.933.5246 x18 (ddix@all4inc.com) or Colin McCall at 610.933.5246 x20 (cmccall@all4inc.com) with any questions.