Plantwide Applicability Limits: A Legitimate Alternative to Major New Source Review Permitting
Posted: January 19th, 2012Authors: Roy R. John E.
There have been a number of recent developments regarding U.S. EPA’s interpretation of the major New Source Review (NSR) air permitting rules that are related to the NSR Reform provisions of December 2002. When these new interpretations are considered in combination with the promulgation of new, more restrictive National Ambient Air Quality Standards (NAAQS) for fine particulate matter (PM2.5), nitrogen dioxide (NO2), and sulfur dioxide (SO2) and the substantial air quality permitting requirements for projects that trigger Prevention of Significant Deterioration (PSD) and/or Nonattainment New Source Review (NNSR), the results can potentially be problematic.
New restrictions regarding the use of the “actual-to-projected-actual” applicability test and agency interpretations regarding what, if any, emissions can be considered “excludable” during NSR applicability determinations have impacted potential projects. The new NAAQS will likely make it increasingly difficult to obtain agency environmental approval for new or existing facility expansion and modernization projects. Now more than ever, the NAAQS and the associated air dispersion modeling requirements will dictate the viability of new projects and the way that new projects are designed, representing a distinct shift from Best Available Control Technology (BACT) influence. The more stringent NAAQS levels in combination with other regulatory initiatives are also expected to dampen the momentum around the development of combustion-related alternative fuel projects (e.g., biomass combustion). The bottom line is that NSR permitting will become increasingly difficult and triggering NSR could make an otherwise sound facility project infeasible.
ALL4’s RegTech group has been tracking the development of these issues and has been reporting them in our 4 The Record monthly newsletter or as specific 4 the Record Extra publications. Copies of related recent articles can be viewed at:
- Not So Fast – Getting That Air Permit Won’t Be As Easy As You Think (May 2010)
- U.S. EPA Issues First Substantial Guidance on NSR Reform Applicability Analysis (April 2010)
- Tightening the Screws – Lower NAAQS Mean Higher Costs (April 2010)
- New Nitrogen Dioxide Standards Could Pose Challenges (February 2010)
- Have You Reviewed the Proposed Revisions to the Pennsylvania Nonattainment New Source Review Regulations for PM2.5? (February 2010)
- Fine Particulate Matter: What We Learned in 2009 (December 2009)
Recently, the Plantwide Applicability Limit (PAL) provisions of the 2002 NSR Reform rule are experiencing renewed interest by both major stationary sources and regulatory authorities as a direct result of the current NSR-related concerns. A PAL permit based on past actual emissions (hereinafter referred to as a “PAL permit”) establishes a single, facility-wide emission limit for designated regulated NSR pollutants. PALs can be established for one (1) or more regulated NSR pollutants 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 PAL permits 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. There are a number of existing facilities that have recognized the advantages of PAL permits and have been operating in compliance with such permits for many years.
Why consider a PAL?
Both the Federal and most state regulations specify that PAL permits be issued and effective for a 10-year period. The 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. State construction permits may still be required for such projects (e.g., states that require a technology assessment such as Best Available Technology (BAT) review for minor NSR changes). However, the ability to avoid major NSR is a significant advantage for any existing major stationary source. Given the troubling number of uncertainties regarding the implementation of the current PSD and major NSR air permitting rules, the potentially liability for making improperly permitted changes at an existing major stationary source can be substantial. Having a PAL permit in place eliminates the need to consider major NSR applicability for the typical types of facility projects that occur on a regular basis. A PAL permit could also serve as a foundation for a flexible air permit (FAP) at a facility, further enhancing operating flexibility (see: U.S. EPA’s Final Flexible Permit Rule).
Any disadvantages to a PAL?
A PAL permit should not be considered a free pass and all of the potential ramifications for committing a facility to a PAL permit must be carefully evaluated. While there are many advantages to operating under a PAL, there are also disadvantages. All unit-specific applicable requirements (e.g., NSPS, NESHAP, RACT, SIP requirements, technology limits, etc.) remain applicable under a PAL permit except for restrictions (e.g., emissions, production, and hours of operation) that were applied to avoid major NSR in a previous permitting event. Several additional disadvantages of a PAL permit include the need for a 10-year commitment to emission rates that were actually achieved in the past, and the need to monitor and calculate emissions for every unit that emits a PAL-regulated pollutant across the entire source. Also note that once a facility commits to a PAL permit, a return to “pre-PAL” conditions is not possible. There are provisions that allow a PAL to be increased but the requirements associated with increasing a PAL are substantial (e.g., the rule is written in a manner that discourages PAL increases).
A PAL may be a smart strategic decision for your facility.
However, if the regulatory climate and technology for a given industry is anticipated to drive emissions down for key emissions units and will still allow for growth and increased production, a PAL permit makes good sense as beneficial baseline emissions are “preserved.” In essence, since the PAL permit represents a “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 potentially be required to conduct ambient air quality impact evaluations. Under a PAL permit, decisions regarding process and air pollution control technology remain with the source. 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.