Environmental Permitting and Compliance for New Bourbon Distillers

In the last decade, we’ve seen many new distilleries and the expansion of existing distilleries in Kentucky and other states ─ the Bourbon Boom. Before bottling your new bourbon product, there are many planning steps that have to occur. Environmental permits are required before starting operations and other permits may be required before breaking ground. For development of new distilleries or new bourbon storage warehouses, be aware of the following permitting concerns:

• Air quality permits for volatile emissions from fermentation and stillage processing and particulate emissions from grain handling;
• stormwater discharges during construction and for operations post-construction; raw water usage permits; wastewater permits for stillage discharges to local sewers; and
• waste permits depending on characterization of generated byproduct wastes from the distillation process.

Air Quality Permitting and Planning

Many states, including Kentucky, require an air quality permit before beginning site construction. Distillers should work closely with their design team to understand process controls, especially those related to management of ethanol, which is a volatile organic compound (VOC). Sources of fugitive VOC emissions include fermentation, distilled products storage and transfer, barrel aging in bourbon storage warehouses, and distillation byproducts processing (e.g., drying of stillage). Combustion of fuels for process heat is also a sources of VOC emissions. Additional sources of emissions from combustion could include engines for fire pumps or emergency power generators. Grain handling and conveying is typically the primary source of particulate emissions. Particulate emissions from silo storage or milling can be controlled using dust collectors. Fugitive particulate emissions from truck traffic on facility roads should be considered as part of the effort to quantify potential emissions from site operations.

Water Permits and Planning

One of the key characteristics for site development is the source of available raw water, such as limestone water, which adds minerals and is helpful as a pH buffer to keep pH consistent; this promotes yeast growth during fermentation. Distillers may apply additional treatment to improve the quality of source water if necessary. For raw water usage, the distiller should review state regulations if pumping water from lakes, rivers, or groundwater. Kentucky state regulation requires a permit for withdrawals of 10,000 gallons per day or more.

Permitting through the U.S. Army Corps of Engineers (USACE) CWA Section 404 Program is required if planned development on greenfield sites includes stream crossings or disturbance of ponds, streams, or wetlands. The 404 permit requires the developer to pay an in-lieu mitigation credit fee to offset disturbance. The purpose of the Kentucky Wetland and Stream Mitigation Fund is to restore, create, enhance, or preserve the Commonwealth’s wetlands or streams that may be damaged or destroyed. Distillers should work with contractors or consultants to determine the extent of stream disturbance and whether general nationwide USACE permitting or individual USACE permitting is necessary. Approval of the state’s CWA Section 401 water quality certification is required for any disturbance of the waters of the commonwealth to ensure consistency with Kentucky’s water quality standards.

Management and control of discharges from stormwater runoff is required once site disturbance begins. Permitting for construction activities which disturb greater than one acre is usually the responsibility of the construction contractor as part of the construction bid. Contractors should be aware of which states have primacy to permit discharges to receiving waters; otherwise, federal standards apply. Many states require submission of a Notice-of-Intent to construct which includes detailed site plans with proposed stormwater controls (e.g., silt fencing and rock check dams) and a site-specific management plan. If a construction contractor prepares the Stormwater Pollution Prevention Plan (SWPPP), historically known as a Best Management Plan (BMP), any templates based on the U.S. EPA Construction General Permit (CGP) should be tailored to the site-specific controls proposed and address local and state requirements. Stormwater construction activities could include multiple permits if distilleries construct barrel storage warehouses over a phased schedule. Once construction is complete and operations begin, coverage under either the U.S. EPA Multi-Sector Permit for Industrial Activities or under a state general stormwater permit is required for stormwater runoff from activities exposed to precipitation such as fuel handling and/or transfer, any uncovered grain handling, unloading or conveying, and uncovered transfer and handling of dried distiller’s grain solubles (DDGS). Similar to construction, BMP or SWPPP implementation is required to document operating procedures and management practices to prevent or reduce pollution.

An understanding of local (city or county) ordinances is beneficial for planning purposes, especially with regards to wastewater discharges. Primary wastewater streams come from stillage processes to separate water from the spent grains. Wastewater streams will likely include condensate from evaporation and reject from the centrifuge, which may require pretreatment prior to final discharge to lower the biochemical oxygen demand (BOD). If sewers are not available for discharge of process wastewaters, individual National Pollutant Discharge Elimination System (NPDES) permits are needed for direct discharges of wastewater to rivers or streams. Additional wastewater sources that require permitting in Kentucky may include domestic sanitary flow, boiler water blowdown, air compressor condensate, cooling water, raw water source treatment, and equipment wash down water. Typically, each discharger will maintain one discharge permit for each facility. Therefore, stormwater discharges that could be permitted under a general discharge permit would be rolled into the individual NPDES permit.

Smaller distilleries located near urban areas may choose to discharge wastewaters to the local municipal wastewater treatment plant via available sewers. Although these discharges may or may not require pretreatment based on the strength of the wastewater, a local discharge user permit is required to regulate the discharge to sewer to prevent the discharge from adversely affecting the municipality’s wastewater treatment plant operations.

Waste Considerations

Management of stillage is a concern for distilleries in Kentucky, whether the stillage is managed as a solid waste requiring disposal offsite or as a byproduct for reuse. Historically, farmers have hauled dried distiller grains with solubles (DDGS) from distilleries for use as a supplement for livestock feed. As the ratio of stillage quantity to available farms has increased, there is more consideration for onsite pretreatment and/or alternative offsite transfer options. Not relying on a single solution for stillage treatment or transfer of stillage offsite may be a wise long-term decision regardless of location. Agreements with farmers may change over time and there is potential for additional regulation of stillage from the Kentucky Department of Environmental Protection as distilleries increase production statewide.

Chemical Storage Considerations

Distilleries should be aware of other regulatory compliance plans or permitting beyond air quality and discharges required prior to start up. If total storage of petroleum products (e.g., diesel fuel) is above 1,320 gallons counting only containers greater than 55 gallons, the facility is subject to 40 CFR Part 112 which requires development of a Spill Prevention, Control and Countermeasure (SPCC) Plan to protect surface waters and groundwater. Distilleries may also need to prepare a spill prevention and control plan for their hazardous chemicals inventory to prevent releases and comply with local sewer ordinances. Additionally, many states require permits for installation of storage tanks planned for storage of hazardous chemicals or fuels.

Hazardous chemicals stored on site may be subject to the Emergency Planning and Community Right-to-Know Act (EPCRA) if quantities meet certain thresholds. Under Occupational Safety and Health Administration (OSHA) Hazard Communications (HAZCOM), a hazardous chemical is any chemical requiring hazard communication; essentially any chemical with a safety data sheet for the chemical would meet the definition of hazardous chemical unless specifically exempted in regulation. Distilled spirits are the most common bulk material that distilleries store in tanks on site that would meet the EPCRA definition for hazardous chemicals because of flammability. The trigger for bulk hazardous chemicals is 10,000 pounds. For distilled spirits, this amount is approximately 1,300 gallons. Additional chemicals that surpass threshold triggers could include corrosives (industrial batteries), fuels, or cleaning chemicals. Chemicals categorized as extremely hazardous substances (EHS) have lower thresholds; 500 pounds is a common threshold for most of these chemicals (e.g., sulfuric acid). Once operations begin, distilleries should further review and confirm applicability with Sections 312 and 313 of EPCRA which require annual reporting of chemical inventory and releases of toxic chemicals, as listed by U.S. EPA, to the environment.

Site Development Considerations

Plans for construction of barrel storage warehouses for expansion of larger distillery operations on undeveloped land may trigger additional environmental siting requirements beyond air, water, and waste compliance. If tree removal is necessary, distillers should be aware of regulations for protection of endangered species. Site developers should coordinate with the U.S. Fish and Wildlife early in the site planning process to understand how restrictions may impact timing of construction. For habitat removal greater than 100 acres, the developer can pay a mitigation fee to a conservation trust fund that is used to help fund habitat conservation and restoration projects as an offset for the disturbed acreage. Additional requirements include the prohibition of tree cutting from April 1 through October 14.

ALL4 works with several distilleries and assists them with a broad range of environmental permitting and compliance needs. If you have questions about your requirements or are planning to expand distillery operations to a new location, please contact Dan Hardin at 502-254-0402 or dhardin@all4inc.com.