U.S. EPA’s Final Flexible Permit Rule

Introduction

On January 13, 2009, U.S. EPA finalized a flexible permitting rule that was initially proposed on September 12, 2007.  The rule revises the Title V regulations to allow for the development of flexible air permits (FAPs).  It should be noted that by U.S. EPA’s own assertion, the final rule is a reaffirmation of “existing regulatory provisions that currently afford reasonable opportunities for operational flexibility…”  In other words, there is really nothing new in the final rule.  On the bright side, U.S. EPA reiterates its support for FAPs and describes how FAPs can currently be obtained under existing individual State Implementation Plans (SIP). Please note that this rule is currently being reviewed by U.S. EPA in response to the memo on regulatory review issued by the White House on January 20, 2009.  As a result, the effective date may be extended for 60 days and the notice-and-comment period reopened for 30 days to allow interested parties to provide comments on the rule.  U.S. EPA will then evaluate any comments received and will consider whether further amendment of the final rule is necessary.

What is a Flexible Air Permit?

In U.S. EPA’s own words, a FAP is a Title V permit that facilitates flexible, market responsive operations at a source through the use of one or more permitting approaches, while ensuring equal or greater environmental protection as achieved by conventional permits.  The flexibility provisions included in the final rule include Alternative Operating Scenarios (AOS) and Approved Replicable Methodologies (ARM). A key flexibility provision that is not included in the rule but is discussed in the preamble to the rule is the advanced approval of minor New Source Review (advanced approvals).  Each of these terms are discussed further below.

In plain language, a flexible permit generally means that the permitted facility is authorized to initiate modifications without the need to prepare, submit, and obtain permitting authority approval for the modifications, albeit within the “bounds” of the flexible permit. Such bounds include the flexible permitting concepts that are discussed and included in the flexible permit rulemaking. There are many examples of FAPs in practice including the permits that were the subject of a U.S. EPA Flexible Permit Pilot Program.  The results of the pilot program are presented in a report titled “Evaluation of the Implementation Experience with Innovative Air Permits”.  Other flexibility concepts are based on existing U.S. EPA guidance documents such as U.S. EPA’s White Paper No. 3 which became available in 2000.

How Does the Final Rule Differ from the Proposed Rule?

In the final rule, U.S. EPA decided not to develop a FAP rule with prescriptive approaches towards operational flexibility since the prescriptive route might prove counter-productive (i.e., in defining operational flexibility, U.S. EPA might actually constrain it).  The actual regulatory changes are somewhat minor and include revisions to the definitions and terms for use of AOSs and ARMs.  The most substantial change between the proposed rule and the final rule is the exclusion of the “green group” provisions from the final rule.  The green group provisions were originally proposed as changes under 40 CFR Parts 51 and 52 and were arguably the provisions in the rule that provided the most flexibility to facilities.  In the proposed rule, a green group was defined as “a group of new or existing emissions activities that is characterized by use of a common, dedicated air pollution control device and that has been designated as a green group by the administrator in a permit issued pursuant to this section (i.e., NSR).”  The green group would have been recognized as a single emissions unit and would have been authorized to include certain changes over the duration of the green group designation (i.e., 10 years).

How is the Final Rule Similar to the Proposed Rule?

The definitions and provisions for the use of AOSs and ARMs are retained in the final rule.  As in the proposed rule, the preamble to the final rule includes a detailed discussion of advanced approvals and how operating permits can be developed that incorporate and allow advanced approved changes.  However, as with the proposed rule, the final rule does not revise any Part 51 requirement to facilitate advanced approvals under minor NSR and allows permitting authorities to decide the merits of granting advanced approval of sources on a case-by-case basis. Inc.

What are Advance Approvals?

Advance approval is a flexibility tool that is available to stationary sources operating under a Title V permit.  Advance approval is typically an authorization for a source to make certain changes or certain categories of changes that would ordinarily require prior approval of the change through minor NSR.  While the final rule does not specifically include language related to advanced approval, the advanced approval concept is discussed in detail in the preamble to the rule and is supported by U.S. EPA.  Without advance approval for minor NSR changes, a permit application must be prepared by the source and be reviewed and approved by the permitting authority before a modification can be made. When using advance approvals, sources must incorporate changes authorized under minor NSR into their operating permits along with conditions that assure compliance with all associated applicable requirements. The changes can then be implemented at a future date under protection of the permit shield without further review or approval by the permitting authority. Several permitting authorities have authorized the use of “generic” advance approvals within a set of boundary conditions or have advance approved certain categories of changes common to a certain source type. These types of advance approvals have proven to be effective flexibility tools where they have been incorporated into Title V permits in combination with emission caps or plantwide applicability limits (PALs).

What are Alternative Operating Scenarios?

The term “alternative operating scenario” (AOS) is proposed to replace the term “operating scenario” as it currently exists in the Part 70 Title V operating permit rules. Both a definition and usage requirements associated with AOSs are proposed. The proposed rule included requirements for facilities to log and report the use of AOSs.  The logging and reporting provisions have been removed in the final rule. It has been ALL4’s experience that opportunities regarding AOSs under Title V would be primarily related to those situations where a change from one allowable operating scenario to another allowable operating scenario for a given emissions unit would result in a change in applicable requirements.  In most instances, Title V permit terms and conditions can be crafted to allow such operational changes without the need for an AOS. However, there may be opportunities for certain facilities to use AOSs to increase operating flexibility. For example, a facility with multiple spray booths, each of which were permitted and installed under minor NSR to paint a specific part with a particular type of coating may wish to use the booths more efficiently (i.e., remove booth-specific part and coating operating limitations).  One or more AOSs could be developed for the booths that allow each booth to be used to coat different parts using different coatings, so long as the regulatory requirements associated with the parts and coatings are recognized, tracked, and compliance is demonstrated.

What are Approved Replicable Methodologies?

The term ARM is being proposed to facilitate the implementation of advanced approvals (described above) and AOSs under a Title V permit and to reduce the need for permit modifications consistent with the Title V regulations. Both a definition and usage requirements associated with ARMs are proposed. The best example of where an ARM could be useful is where parametric values for an air pollution control device are used as a means to demonstrate compliance with an applicable requirement.  In some situations, such parameters are defined directly in a permit term or condition.  If the parameter for the control device changes as a result of a compliance test, then the permit term or condition that specifies the parametric value would need to be formally revised prior to its use.  Under an ARM, the source could specify that parameter measurements recorded during a compliance test can be used to define a new parametric value that assures compliance with the applicable requirement and that the new parametric value replaces the value that was previously used to assure compliance. With an ARM in place, the facility has a defined method to obtain and update information consistent with an applicable requirement while avoiding the need to revise the permit to incorporate the new information.

Conclusions

The final flexible permit rule revisions build upon U.S. EPA’s experience with flexible permits and the PAL rules promulgated in December 2002. They also confirm U.S. EPA’s support of permitting flexibility mechanisms. The proposed revisions provide several implementing tools that can facilitate flexible permit terms and conditions in accordance with existing U.S. EPA guidance. Facilities that desire a flexible operating permit will likely need to continue to rely on existing regulatory programs (i.e., PALs), related U.S. EPA guidance (i.e., White Paper 3), past flexible permit precedence, and actual negotiation of flexible permit terms and conditions with permitting authorities where supported by state implementation plans.