PADEP Transition from CAIR to CSAPR

As of January 1, 2015 the U.S. Environmental Protection Agency (U.S. EPA) has been implementing the Cross-State Air Pollution Rule (CSAPR) through a Federal Implementation Plan (FIP) that primarily impacts electric generating units (EGUs). The transition from the Clean Air Interstate Rule (CAIR) and its nitrogen oxide (NOX) and sulfur dioxide (SO2) Allowances to CSAPR Allowances and rules has been fairly smooth so far.  The state and local air pollution control agencies do have the opportunity to adopt their own regulations to implement CSAPR with the accompanying revisions to their State Implementation Plans (SIPs). However, there has been no indication from the Pennsylvania Department of Environmental Protection (PADEP) that they are actively working on such a regulatory revision. For 2015 and 2016 Phase 1 CSAPR Allowance requirements, all indications are that the allowances requirements will easily be met by the EGUs. However, in 2017 the Phase 2 allowance allocations are significantly reduced. For NOX Allowances there is not a dramatic drop in allocations. But for SO2 Allowances, the allocations are cut in half or more in most cases. The present relative surplus of SO2 Allowances will get much tighter with time.

There is another set of facilities that are not EGUs, but are still impacted by the transition from CAIR to CSAPR. They are the facilities that include emission units that will be subject to the requirements of PADEP Pa. Code §§129.201—129.205 (relating to additional NOX requirements), non-EGUs subject to 25 Pa. Code §145.8(d) (relating to transition to CAIR NOX trading programs), stationary internal combustion units subject to 25 Pa. Code §§145.111—145.113 (relating to emissions of NOX from stationary internal combustion engines) and Portland cement kilns subject to 25 Pa. Code §§145.141—145.146 (relating to emissions of NOX from cement manufacturing).  Prior to the 2015 ozone season, the owners and operators of emission units subject to the previously mentioned regulations were able to, for compliance purposes, surrender an annual CAIR NOX allowance and an ozone season CAIR NOX allowance for each ton of NOX their sources emitted in excess of their applicable NOX emission standard at the end of each ozone season as detailed in these regulatory sections.

Beginning January 1, 2015, there were no more CAIR Allowances to be purchased. The state adopted CAIR regulations were replaced by the Federal CSAPR regulation, also known as the Transport Rule (TR), which is codified in 40 CFR Part 97, Subparts AAAAA and BBBBB (relating to TR NOX annual trading program; and TR NOX ozone season trading program).  In light of the fact that CAIR NOX Allowances are no longer be available, PADEP provided notice in the April 4, 2015 Pennsylvania Bulletin that they will accept the surrender of CSAPR NOX allowances as a compliance alternative.  PADEP also provided notice that they intend to pursue regulatory amendments to the existing NOX trading programs in 25 Pa. Code Chapters 129 and 145 to make this change in the regulatory requirements.

Specifically, for each ozone season beginning after January 1, 2015, the Department will accept the surrender of annual and ozone season CSAPR NOX allowances as a compliance alternative to the surrender of annual and ozone season CAIR NOX allowances. Other than the use of CSAPR Allowances in place of CAIR Allowances, everything else is done in exactly the same manner (timing and process) that was previously done for the surrender provisions for CAIR allowances as specified in the applicable regulatory requirements.  While PADEP stopped short of requiring CSAPR Allowances in place of CAIR Allowances, there does not appear to be another alternative that will result in source compliance. So if you are a non-EGU and previously had to provide CAIR allowances to demonstrate compliance with a standard, now is the time to understand how you will demonstrate compliance come next November 1, and if continued purchase of CSAPR Allowances will work for you, especially beginning in 2017 under the CSAPR Phase 2 reduced Allowance allocations.

If you have any questions on CSAPR and its impact on your sources in Pennsylvania, please contact me at jslade@all4inc.com or call me at (717) 822-0009.