4 The record articles

Exploring Plantwide Applicability Limit (PAL) Basics

Posted: September 27th, 2012

Author: All4 Staff 

Initiating a project that triggers major new source review (NSR) requirements or an NSR applicability analysis at an existing major stationary source is arguably more difficult now than at any time since the inception of the Clean Air Act (CAA).  Each of the various steps are complicated in their own way, from figuring out what exactly your “project” includes, to documenting baseline actual emissions, projected future actual emissions, emissions that “could have been accommodated,” and excludable emissions, to figuring out what Best Available Control Technology (BACT) really is for your modification.  While we are piling on, let’s add the greenhouse gas (GHG) tailoring rule (and its idiosyncrasies) and national ambient air quality standards (NAAQS) that are changing in form and are becoming uncomfortably close to background levels with each review cycle.  All of the above must be accomplished while working your way through the endless volumes of U.S. EPA and state-specific guidance, policy, interpretive memoranda, and precedence that encompass the prevention of significant deterioration (PSD) regulations.  Heaven forbid that your facility is located in a non-attainment area and you find out that you cannot initiate a project at your facility because there are zero (0) tons of PM2.5 offsets available at any cost to meet applicable nonattainment new source review (NNSR) requirements.  Better yet, you find out that you must now include emissions from a facility that you do not own, and is located several miles from your facility, in your NSR applicability analysis all because a previous interpretive guidance memorandum was rescinded by a new agency official.

Believe it or not, an alternate path exists within the bowels of the PSD and NNSR regulations – the Plantwide Applicability Limit (PAL) provisions.  The PAL provisions that exist in the PSD and NNSR rules and (supposedly) in all state “SIP-approved” permitting programs were part of the NSR Reform package that also brought us the “actual-to-projected-actual” test and the “excludable emissions” concepts which was finalized in December 2002 and implemented by states in the following years. It seems as though the general consensus throughout the regulated community is that PALs are more trouble than they are worth and do not provide any substantial benefits.  However, for many facilities, PAL based permits represent a legitimate means for facilities to avoid the difficulties that are now a routine part of major NSR permitting.  Read on to learn a bit more about PALs in general and how a PAL based permit could help your facility obtain a bit of regulatory flexibility.

What is a PAL?

As indicated earlier, PAL is the acronym for Plantwide Applicability Limit.  A PAL is essentially a facility-wide permit limit for a regulated NSR pollutant or a facility cap for that pollutant. A PAL permit based on past actual emissions establishes a single, facility-wide emission limit for designated regulated NSR pollutants.  PALs can be established for one (1) or more regulated NSR pollutant at an existing major stationary source.  Each PAL level is based on a 12-month rolling total, expressed in tons of pollutant per year. Compliance with PALs must be demonstrated monthly during the term of the PAL permit.  Each limit is generally established based on the average annual (e.g., baseline) emission rate for a 24-month consecutive period during the prior 10 years of facility operation.  In most states, different baselines can be established for different regulated NSR pollutants. The PSD (or NNSR) significant increase threshold for the regulated NSR pollutant that is specified in the rule is then added to the baseline actual emission rate to set the PAL level.  The PAL rule also includes provisions that address emission units that have been added or removed from service at a facility since the baseline period.  Provisions for actual PALs are codified in the Federal regulations at 40 CFR §52.21(aa), §51.165(f), and Appendix S to Part 51 – Emission Offset Interpretative Ruling.  Most SIP approved state NSR programs include PAL provisions.  PAL provisions are included in all delegated state programs.  The PAL is in place for 10 years and at renewal, the limit can be adjusted (downward). While a PAL is established for a 10 year period, it can be reopened during its term for a number of reasons and the limit can be adjusted accordingly – for example for new applicable requirements, or to address issues like NAAQS compliance.  U.S EPA still supports PALs; even the current administration does as evidenced by the recently finalized PAL revisions to clarify the use of PALs for GHGs.

PALs were initially of great benefit to sources where technology (and regulations) was driving emissions lower.  In other words, when facilities wanted to make changes and increase production, technology was pushing emission rates lower per unit of production (e.g., automobile surface coating, glass manufacturing).  For more complicated sources like pulp mills or cement plants, there were always three big concerns.  The first was with the effort associated with developing the PAL application.  The second was developing the methods to demonstrate compliance with the PAL (e.g., developing emission rate data for all units, tracking and demonstrating compliance).  The third is the fact that facilities are perpetually looking at ways to increase production and the PSD rules could work to allow emissions increases to occur at facilities as a result of a modification (with the associated BACT, modeling, etc.).  So why would a facility even consider a PAL that locks into historic baseline actual emission rates?

With regard to the first concern, the development of a PAL for a complicated facility, you must consider the emissions related work that has likely already been completed over the past several years by default through minor NSR permits, enhanced emission inventories for reporting purposes, and completion of information requests for regulatory support.  By now there should not be any emissions units at most major facilities that are not identified in a spreadsheet with associated representative emissions factors.  Therefore, tracking and calculating monthly mass emissions could just be a matter of linking the production rate data of the units to the appropriate spreadsheet cells.

With regard to the second concern regarding being locked into limits that represent historical baseline emissions, we suggest the following analysis.  Review your reported emissions inventories for the past ten years.  Almost every major facility emission inventory that we work with shows a trend of decreasing actual emission rates.  There are multiple contributing factors to this trend, some of which are regulatory driven.  However, the bottom line is that baseline emissions are shrinking and this fact will impact any future PSD permitting endeavor.  Even more importantly, you must consider the impact that the new short-term NAAQS will have on actual facility emissions once PSD is triggered.  Surprisingly, applying best available control technology (BACT) is no longer the primary concern with regards to PSD permitting as post change emissions may need to be controlled to levels that are more stringent than BACT in order to demonstrate compliance with short term NAAQS.  Hence, if you are PSD significant for a project the significant impact levels (SILS) and the NAAQS will now drive the PSD permitting process and you may ultimately find that your project cannot be PSD significant, period.  If your project can’t be permitted through the PSD process, then you will need to build emission reductions into your project in order to avoid PSD.  Ultimately this means that your future actual emissions and future baseline actual emission rates will be lower still for future projects.  A PAL will let you preserve your baseline actual emission rate for at least 10 years and possible longer.

A primary advantage of a PAL permit is that as long as the facility demonstrates compliance with the PAL, physical changes and changes in the method of operation are not major modifications and projects do not require approval under applicable PSD (or NNSR) programs.  Facilities may still need to deal with state construction permitting requirements but the associated NSR applicability analyses for every project and the complications associated with PSD/NNSR for major modifications go away.  Essentially, the facility takes over managing the operations and projects to allow growth while maintaining emissions below the PAL levels.  If emissions reductions are required, it is the facility that makes the decision with regard to what unit(s) is controlled and what control technology is chosen, not the regulatory agencies.  Consequently, regulatory agency review times for modifications are compressed and even eliminated in many instances.  In our opinion, the time saving associated with facility changes represents the greatest advantage of operating under a PAL permit.

Most SIP approved state NSR programs include PAL provisions.  PAL provisions are included in all delegated state programs.  ALL4 suggests initially reviewing the PAL regulations in your state and then initiating contact with the regulatory agency to get a feel for their familiarity with PALs and their receptiveness to their implementation.  Note that some state regulations (i.e., Delaware) may not explicitly address PALs and in such instances, contact with the agency is required to assess how PALs are implemented.  We have found that most state air regulatory agencies are familiar with the PAL concept and are generally supportive.  However, due to the relative scarcity of PAL permits, it is fair to assume that many agency personnel have never seen a PAL application.  The learning curve associated with agency review of a PAL application will likely translate into an extended technical review period.

You will need to compile ten (10) years of baseline actual emission rates and then think about what pollutants you may or may not want a PAL for.  This strategic planning will take time, effort, and money to be done properly.  Once you determine how you would like the PAL structured, it is recommended that you initiate a formal meeting with the regulatory agency to present your plans and work through the details.  They will need to be comfortable with your emissions information and there likely will be issues (think about PM2.5 and condensables) to discuss and work through.  All of the other typical baseline emission inventory issues will be exposed as well (e.g., have the historic emission factors been high or low, good or bad, measured or AP-42?).  You may also need to amend reported actual annual emissions and pay associated fees (and penalties).  Please note that the state agency will need to “buy in” to any initial baseline emissions adjustments needed for this to work.

After agency acceptance, you will need to compile the application and proceed through the formal application submittal process.  The implementing regulations at 40 CFR §52.21(aa), §51.165(f), and Appendix S to Part 51 – Emission Offset Interpretative Ruling as well as any SIP approved state program all lay out the required contents of the application.  Please note that there is no specific requirement in the PAL rules to demonstrate compliance with the NAAQS.  However, as mentioned earlier, a PAL can be reopened to address NAAQS issues so going into a PAL without at least some knowledge of facility-specific NAAQS concerns might be unwise.

The costs associated with developing a PAL application could cover a pretty wide range, likely greater than $35,000 or more depending on the status of the existing facility baseline emission inventory, the complexity of the facility, and the possibility of conducting exploratory NAAQS modeling.  Also note that the longer the process takes for reasons like protracted agency negotiations, the more it’s going to cost.  On the other hand, the cost of a PAL application will likely be comparable to the cost of the next PSD permit at the plant, and that cost would go away under a PAL.

Our take is that facilities have always had enough trouble with the complications of air permitting that they have avoided even investigating the possible benefits of PALs.  The reasons mentioned above with regard to why complex facilities have avoided PALs combined with a fear of “giving up” existing permit limits (some of which may be greatly inflated anyway) for a cap based on actual emissions are likely driving this aversion to PALs.  Also, a common PAL misconception is that all unit-specific requirements are eliminated, which is not the case.  While NSR avoidance limits (e.g., emissions, production, and hours of operation) are eliminated by a PAL, unit-specific applicable requirements (e.g., NSPS, NESHAP, RACT, SIP requirements, technology limits, etc.) remain applicable.

Facilities have also expressed the point that a PAL may need to be exceeded at some future time. Note that a PAL can be increased, but there are requirements for technology evaluations for all of the emissions units, and all of the requirements for NSR/PSD are triggered including the need to demonstrate compliance with the PSD increments and the NAAQS.  Facilities also have concerns regarding how they may exit from a PAL permit should they decide that it is not working for their plant.  PAL termination requirements are included in the implementing and state specific PAL rules. First, every emission unit or group of units under the PAL will end up with an emission limit for that pollutant so that the total from all units is equal to the previous PAL level. The facility would propose the “distribution” of the PAL emissions to the emissions units for the administrator’s approval.  The resulting new permit would require a compliance demonstration for each unit with its new limit on the same 12-month rolling total basis as with the PAL.  Existing and prior BACT, RACT, and other federally applicable requirements would continue to apply.

A PAL May Be a Smart Strategic Decision for Your Facility

In essence, since the PAL level represents an NSR “bright-line,” facilities with PAL permits can evaluate projects and determine how they will comply with the PALs, rather than being required to consider PSD (or NNSR), apply BACT or lowest achievable emission rate (LAER) technology, purchase offsets, and demonstrate NAAQS compliance.  Under a PAL permit, decisions regarding process and air pollution control technology remain with the source, and the facility baseline emissions are preserved for at least ten (10) years.  Most importantly, if a PAL permit makes sense for a facility, the facility can potentially have an economic advantage over competitors that make similar modifications and must go through the time consuming and costly major NSR permitting process.

As indicated above, many facilities have already recognized the advantages that PAL permits provide.  PAL permits represent a key component of the 2002 NSR Reform rule that have not been the subject of subsequent evaluation and re-interpretation by U.S. EPA.  As a result, the advantages that were recognized for facilities where PAL permits are a good fit remain in place.  PAL permits represent a legitimate means for facilities to avoid the difficulties that are now a routine part of air permitting events that trigger the requirements of major NSR.

ALL4 has been involved with the development and implementation of several PAL permits across different industries and we have never had a client, or have spoken to a facility that had a PAL that thought negatively about it.  Just imagine your thought process every time that someone at the plant tells you that they have already made a change, or they plan to have a new project in place with added production and pay back in the next few months.  How many times have you heard, “don’t worry because we will not exceed the permit limit.”  Having a PAL permit in place would virtually eliminate the heartburn caused by such actions, not to mention fears of a CAA 114 letter and the associated repercussions.   Please contact Roy Rakiewicz at (610) 933-5246 x27 or John Egan at (610) 933-5246 x14 if you have any questions related to PALs.


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