Flexible Permitting James F. Adair, PE Sealed Air Corporation January 25, 2007 Prepared for: Flexible Packaging Association Environmental Summit 1
Background Initial regulations Late 1970s Court ordered changes 1980 In the early 1990s, EPA and stakeholders embarked on an effort to simplify NSR Not until July 23, 1996 did EPA propose NSR changes (61 Fed. Reg. 38250) Reform initiative lay dormant until 2002 What is Flexible Permitting?! Any of the five NSR Reform options! Published December 31, 2002! Applicable in delegated States March 2003 2
Flexible Permitting NSR Reform (67 FR 80186)! Baseline Actual Emissions! Actual-to to-projected Actual Applicability Test! Plantwide Applicability Limitations (PALs( PALs)! Clean Unit Applicability Test - VACATED! Pollution Control Project (PCP) Exclusion - VACATED Proposed Rules! Routine Maintenance, Repair, and Replacement (RMRR) - Vacated by US Court of Appeals! Debottlenecking,, Aggregation, and Allowables PALs 3
Flexible Permitting Major Modification is the centerpiece to both NSR Enforcement and Reforms Historic and still current (in most of U.S.) definition of major modification: Any physical change in or change in the method of operation of an existing major source that would result in a significant net emissions increase of any pollutant subject to regulation under the CAA 4
Reality Check The push from States and industry to reform NSR had been to! Simplify NSR requirements! Remove NSR implications from activities meant to improve operations of a unit. Streamlining was the lofty goal. Industry wanted some certainty or at least some assurances in making regulatory decisions. 5
Reality Check NSR Reform regulations simplify nothing! Determinations of past actuals Choosing the time period Having sufficient records to verify Determining future projected actuals No up front agency review (liability concerns) Verification (monitoring, recordkeeping, etc. sufficient to prove compliance upon request) Certainty now consists of regulatory agencies reviewing industry decisions after the fact. Some of the assurances carry liability issues 6
Reality Check Everything in Reform Regulations addresses Applicability issues. Nothing has changed about requirements once you are in the program. Consultants are the real winners in this. Enforcement Officers have been given lifetime job security. 7
Clean Unit Exemption - VACATED On June 24, 2005, the U.S. Court of Appeals vacated the Clean Unit Exemption of the NSR rule, citing that the US EPA lacked proper Congressional authorization to create an exemption of this type. The Clean Unit Exemption would have let an emission unit with state-of-the-art emission controls to use a permitted allowable-to-permitted allowable emissions test to determine whether a proposed project would be a major modification. A source could rely on Clean Unit Status for 10 years from the date when the unit was determined to have installed or have state-of-the-art control. 8
Exclusion for Pollution Control Projects (PCP) - VACATED On June 24, 2005, the U.S. Court of Appeals also vacated the Pollution Control Project provisions of the NSR Reform Rule, citing that Congress never intended for US EPA to create an exemption of this type. The PCP exclusion would have allowed a project that reduced emission of one or more regulated pollutants to avoid status as a major modification despite a collateral significant emissions increase for other pollutant(s). The PCP exclusion only applied to projects for existing emission units, not to installation of new units. 9
Equipment Replacement Provision The US Court of Appeals unanimously vacated the Equipment Replacement Provision, citing that it is contrary to the plain language of the CAA. An activity (or aggregation of activities) would fall under the Routine Maintenance, Repair, and Replacement (RMR&R) exclusion if:! It involves replacement of any existing component(s) of a process unit with identical or functionally equivalent components;! The fixed capital costs of the replaced component(s) plus the costs of activities that are part of the replacement effort do not exceed 20% of the current replacement value of the process unit; and! The replacement component(s) does not alter the basic design parameters of the process unit or cause the process unit to exceed any legally enforceable emission or emission-constraining operational limitations applicable to the process unit 10
Long Term Status All 3 are worth fighting for: Significant advantages over the current regulations. Additional flexibility that industry otherwise does not have. Additional operational latitude in the case of the RMRR US EPA will have to amend the original proposals to comply with the court s comments, which will probably mean new proposals altogether. 11
Plantwide Applicability Limits (PALs) It sure would be nice to have a PAL 12
Plantwide Applicability Limits What is a PAL? PALs,, as defined in 40 CFR Part 52, are:! Set using actual facility baseline emissions! Pollutant-specific! Issued for a 10-year term (renewal at 5-year) 5! Renewable An annual, facility-wide, pollutant specific, emission limitation under which the facility can make any changes without triggering PSD for that pollutant 13
Plantwide Applicability Limitations A PAL is an annual (facility-wide) emission limitation (12-month total, rolled monthly) under which the facility can make any change without triggering NSR review for that pollutant.! Pollutant-specific! 10-year term Can be used in non-attainment areas. A separate PAL permit is required for each pollutant (e.g., a PAL for combined VOC and NOx emissions is not allowed). EPA is considering Allowables PALs??? 14
PAL Permits Other Features An alternative approach for determining major NSR applicability. A PAL permit provides an emissions cap or caps for an industrial facility. The cap provides a clear method for determining whether changes at a PAL- covered facility trigger NSR permitting requirements.! The need to obtain an NSR permit revision only applies when a facility s emissions increase beyond the PAL cap.! In addition to the cap, a PAL or PAL-type permit can specify certain kinds of facility changes that are pre- approved. A facility with a PAL can undertake a pre- approved change without becoming subject to NSR as long as the facility s emissions remain below the cap(s). 15
PAL Permits Environmental Benefits Enhanced Public Participation / Transparency PAL emissions caps provide certainty regarding the emissions impact of a facility. PAL caps typically entail emission reductions compared to traditional permitting approaches. Emissions caps provide a very powerful incentive for pollution prevention. PALs allow facility environmental engineers to spend more time to concentrate on reducing emissions through pollution prevention. 16
PAL Permits Operational Benefits Facility changes are not dictated by major PSD concerns Operational Flexibility! Construction Permitting! Process Optimization Opportunity! Pollution Prevention / Improved Pollution Control! Relocation Clean Slate Non-Attainment Hedge 17
PAL Permits Operational Benefits Smarter use of control devices. Flexibility to control sources and maximize the capacity of control devices. Example: A little-used press is connected to an oxidizer because of a PSD Avoidance condition. With a PAL, the press could be disconnected and replaced with a much higher use press Flexibility to move or shift sources. 18
PAL Permits How does a facility obtain a PAL?! Existing major stationary sources can submit an application specifically requesting a PAL or PALs! Application requirements include:! Listing of all emissions units regardless of size! All Federal/State applicable requirements! Emission limits/work practice requirements! Baseline actual emissions! Supporting documentation! PAL calculation procedures / methodology! Monitoring requirements! Record retention requirements! Reporting requirements! Other necessary requirements (State and Region) 19
Plantwide Applicability Limits Application Requirements List of Emission Units (cross-referenced referenced to Title V) Baseline Emission Determination with calculations! Includes fugitives estimates Detailed description of the method for calculating emissions Detailed description of the calculation procedures Description of Public Participation CAM Plan or Equivalent! Continuous Parameter Monitoring (CPMS)! Continuous Emission Monitoring (CEMS)! Predictive Emission Monitoring (PEMS) 20
Plantwide Applicability Limits PAL Permit Submission The permitting requirements are extensive.! Supporting documentation required includes most of the information provided for annual emission inventory.! The documentation requirements include absolutely every emission source for the PAL pollutant(s).! Justification for ALL emissions, including insignificant activities and fugitives. The packet that will go to public notice will probably be a couple hundred pages long. 21
Plantwide Applicability Limits Title V Renewal Options Is it a good idea to submit the PAL application with the Title V Renewal?! Benefits to the permittee!many overlapping permitting requirements!terms can coincide!cam Plan serves for both! State agency would prefer to process them simultaneously, if possible.! Suggest to submit them separately but concurrently. 22
Plantwide Applicability Limits Secrets Meet with the State beforehand Understand the EPA Region s position on PALs Understand the EPA Region s relationship with the State Outline the permitting before involving the Region Take a look at the Texas regulations Look at Minnesota s PAL Form! Step-by by-step methodology! Deals with Insignificant Activities! Good examples! Use it if your state has no PAL Form 23
Plantwide Applicability Limits (PALs) Will you be my PAL? 24
Establishing a PAL How are PAL levels established?! Establish baseline emissions - select any consecutive 24-month period within the 10-year period preceding the PAL!Only one 24-month period may be used per pollutant!differing baseline periods may be used for different pollutants! Identify all emission units that were included in the baseline period! Identify any emissions units constructed since the baseline period 25
Establishing a PAL How are PAL levels established? (cont.)!for each emissions unit that existed during the baseline period:!calculate the average rate,, in tons per year, at which each of the emissions units emitted the PAL pollutant!sum the baseline actual PAL pollutant emission rates of each emissions unit at the source 26
Establishing a PAL How are PAL levels established? (cont.)! Subtract baseline PAL pollutant emissions associated with emissions units that have been permanently shut down since the baseline period! Shutdowns of more than 2 years or that have resulted in the removal of the source from the State s inventory are presumed to be permanent! Add potential PAL pollutant emissions from units from which construction began after the baseline period! Add the pollutant-specific significant emissions rate (40 TPY for VOCs) to the emissions calculated as described above 27
Establishing a PAL How are PAL levels established? (cont.)!baseline PAL pollutant emissions cannot exceed emission limits allowed by your permit or newly applicable requirements at the time the PAL is set!adjust baseline PAL pollutants to reflect applicable requirements since the baseline period!ract, NSPS, BACT, LAER, MACT, etc. 28
Establishing a PAL Example 150 150 50 + 40 40 Baseline PAL 3 units 50 tpy actual VOC emissions each during baseline period. 1 unit shutdown since then. Hence PAL level = 150 + 40* - 50 = 140 tpy. Any change not subject to major NSR if plantwide emissions remain below 140 tpy VOC. * 40 tpy is significant emissions rate for VOC 29
Plantwide Applicability Limits (PALs) Take my PAL, please Or When a good PAL goes bad 30
Plantwide Applicability Limits What happens when the facility opts out of the PAL?! The source shall submit a proposed allocation of emission limits for all sources in the facility. The agency will then issue a new permit with individual limits on each source.! Pre-PAL PAL limits will not be considered when making these decisions. Grandfathered sources might have to relinquish their exempt status. For example, during the PAL period, one or more sources may have been tied to pollution control devices. It may benefit the facility to take credit for these controlled sources.! PAL division will and must be a cooperative process. 31
PAL Permits How can PAL levels be increased?! An application for a PAL increase is required that:! Identifies all emissions units contributing to the increase! Demonstrates a PAL exceedance after inclusion of proposed new/modified emissions units and an assumption of current BACT equivalent controls on all units! A major PSD permit is required for emissions units associated with the increase, regardless of the magnitude of the emissions increase! Facility must comply with any resulting BACT/LAER requirements 32
PAL Permits How is the higher PAL determined?! The regulatory authority establishes a higher PAL level based on:! The sum of the allowable emissions from new/modified emissions units - PLUS -! The sum of the baseline actual emissions from all significant/major emissions units assuming BACT control - PLUS -! The sum of baseline actual emissions from small emissions units! The end result - the magnitude of the proposed increase is minimized by the potential PAL decreases by assuming BACT control on significant and major emissions units 33
Reopening PAL Permits Can PALs be re-opened by the regulatory authority?! Yes - mandatory reopening of PAL permits to:!correct typographical or calculation errors made in setting the PAL.!Reduce the PAL to create emissions reductions for offset purposes.!revise the PAL to reflect an increase in the PAL. 34
Reopening PAL Permits Reviewing authority may reopen the PAL permit to: Reduce the PAL to reflect newly applicable federal requirements with compliance dates after the PAL effective date. (However, PAL must be adjusted at title V or PAL permit renewal, whichever occurs first.) Reduce the PAL consistent with any other requirement that the reviewing authority may impose under its SIP. Reduce the PAL if it determines that a reduction is necessary to avoid causing or contributing to a NAAQS or PSD increment violation. 35
Plantwide Applicability Limits (PALs) You re not my PAL anymore 36
Plantwide Applicability Limits PAL Permit Renewal The simplest option would be to renew the PAL! Submit renewal application.! The reviewing authority shall provide a written rationale for the proposed PAL level for public comment. PAL renewal adjustments:! The new PAL may not exceed the facility PTE! New PAL cannot exceed original PAL level unless undergoing PAL modification (increase) procedure! The PAL must reflect all requirements that became applicable during PAL term 37
Plantwide Applicability Limits PAL Permit Renewal Are PALs adjusted when they are renewed?! Yes PALs are evaluated at renewal using the same process used to set the original PALs! If the new PAL level is > or = 80% of existing PAL level, PAL may be reset at original level! The reviewing authority has discretion in setting a new PAL level to :! Be more representative of actual emissions! Be in accordance with local air quality needs! Accommodate anticipated economic growth! Represent advances in air pollution control technology 38
PAL Renewal At least 6 months prior to but not earlier than 18 months from PAL expiration date, the owner must submit an application for renewal or expiration. The reviewing authority shall provide a written rationale for the proposed PAL level for public comment. The new PAL level can not be higher than the existing PAL (unless PAL increase provisions are met) or the PTE of the source. 39
Plantwide Applicability Limits (PALs) I don t want to play with my PAL anymore 40
Plantwide Applicability Limits PAL Permit Expiration Do PALs/PAL permits expire?! Yes PALs/PAL permits not renewed expire at the end of their effective period (10 years) Expiration Option: Exit the PAL! Submit application for PAL expiration! The default position is that the PAL will be distributed evenly among all of the sources.! Within the timeframe specified for PAL renewals, the facility shall submit a proposed allocation of the PAL to each emissions unit. The reviewing authority shall decide whether and how the PAL will be distributed and issue a revised permit incorporating allowable limits l for each emissions unit.! Any subsequent physical or operational change at the source will be subject to major NSR review. 41
Plantwide Applicability Limits PAL Permit Expiration What happens if a PAL is allowed to expire?! New emission limits are established!source proposes distribution of PAL emissions to each emissions unit that existed under the PAL!The reviewing authority decides the ultimate distribution of PAL emissions to emissions units 42
Plantwide Applicability Limits PAL Permit Expiration PAL emissions are distributed to individual emissions units if the PAL expires Emissions Unit A B C D E G PAL Level (tons) 255 Emissions at PAL Expiration (tpy) 61.7 24.5 70.6 25.0 25.5 47.4 1 In this example, emissions were apportioned to individual emissions units at PAL expiration based on the distribution of emissions during the baseline period 43
Plantwide Applicability Limits PAL Permit Expiration PAL Expiration Notes! Compliance with new enforceable tpy limits is based on a 12-month rolling basis! Required monitoring systems may be similar to those under PALs! Compliance with a site-wide emissions cap, equivalent to the previous PAL, is required until a revised permit is issued! Physical changes or changes in the method of operation are subject to major NSR if change is a major modification! State or federal requirements (BACT, LAER, RACT, NSPS, MACT, etc.) remain applicable 44
Plantwide Applicability Limits (PALs) Keeping up with my PAL 45
PAL Monitoring PAL general monitoring requirements specify that:! PAL monitoring systems must be based on sound science! Must meet minimum legal requirements for admissibility in a judicial proceeding to enforce the PAL permit! Emissions must be quantifiable on an ongoing basis 46
PAL Monitoring PAL permit must contain enforceable requirements to determine plantwide emissions (12-month total, rolled monthly). A source may use any of the following approaches:! Mass Balance Calculations! For sources using paints, coatings, and solvents! Continuous Emission Monitoring Systems (CEMS)! Continuous Parameter Monitoring Systems (CPMS)! Predictive Emission Monitoring Systems (PEMS)! Emission Factors! Alternative methods as approved by the administrator 47
PAL Monitoring If no monitoring data exist for an emissions unit for a time period, the source owner must report the maximum potential emissions. Where an owner cannot demonstrate a correlation between the monitored parameter(s) and the PAL pollutant emissions rate at all operating points of an emissions unit, the reviewing authority shall at the time of permit issuance: Establish default value(s) for determining compliance with the PAL based on the highest potential emissions reasonably estimated at such operating points; or Determine that the operation of the emissions unit in the absence of a correlation is a violation of the PAL. 48
Recordkeeping/Reporting The PAL permit shall require the owner to maintain the following records for the duration of the PAL effective period plus 5 years:! A copy of the PAL permit application and any applications for revisions to the PAL; and! Each annual certification of compliance pursuant to title V and the data relied on in certifying the compliance. The owner shall submit semi-annual monitoring reports and prompt deviation reports to the reviewing authority in accordance with the applicable title V permitting program. 49
Plantwide Applicability Limits (PALs) The Secret Life of a PAL 50
Plantwide Applicability Limits Hidden Benefits Do you have an older facility that has numerous PSD Avoidance conditions?! A PAL is a way to simplify or eliminate PSD Avoidance conditions without going through formal PSD! It s comparatively easy when compared to PSD, and there is no construction tied to the permitting. It s an alternative to PSD with added benefits.! These PSD Avoidance conditions can be rolled up into the PAL.! And after the term of the PAL, the old limits are no longer operative. That might have tremendous value. 51
Plantwide Applicability Limits (PALs) Do I really want a PAL? 52
Plantwide Applicability Limits Summary of Considerations Critical decision point rests on future plans for the facility. PALs can give facilities great permitting and operational flexibility. State minor modification permitting rules can affect decision Area Non-attainment status is also an important consideration. 53
Plantwide Applicability Limits Decision Considerations Strategy for setting the PAL level needs to be carefully considered. The future direction of the facility is critically important.! A facility planning to replace grandfathered sources is an ideal candidate for a PAL.! A facility getting smaller is an ideal candidate for a PAL.! A facility planning no additions/expansions is only going to receive limited benefits (simplified permit).! A facility with unknown plans for the future is a questionable candidate.! A facility planning to expand with units that will increase the total pollutant emissions is a poor candidate. 54
Plantwide Applicability Limits When is a PAL bad? When is a PAL a bad idea?! When there is already sufficient flexibility.! If increased data collection, validation, and reporting is going to be unacceptable.! PALs can place severe restrictions on large-scale expansions.! When enforceability is an issue or when emissions cannot be readily estimated.! They will take longer than other types of permits, at least for the foreseeable future.! Permitting time and/or costs are higher. 55
Plantwide Applicability Limits Reality Check Consider monitoring, recordkeeping, reporting, and testing requirements carefully! A PAL has some benefits, but the negatives may actually outweigh the positives.! Unless the facility is adding and/or removing processes frequently, the PAL is probably not worth it. Regions are still trying to figure out how to proceed in a consistent manner.! Permitting (forms, guidelines, etc) may get easier in the near-term. So, waiting a year or two may be a good idea.! Procedures and methodologies are still being developed. 56
Plantwide Applicability Limits (PALs) Questions? 57
Additional Slides 58
Plantwide Applicability Limits The Bright Side You can always go back to doing things the way you used to if it gets too complicated! Caveat But you may pay a price if you opt out, especially if you should have never pursued a PAL in the first place. The PAL may end up delaying a critical capital project. 59
Plantwide Applicability Limits Other Considerations Multiple PAL Determinations A single PAL application can have multiple pollutants with multiple limits and multiple baselines. Multiple baselines mean that limits can be advantageous across the board. PAL can be consolidated with NSR permit Single PAL application for multiple locations? No. A PAL only applies to a single location. It doesn t matter that there might be a number of similar facilities with similar pollutants. One PAL one location. 60
PAL Permits What type of permit is required for a PAL?! PAL permits shall be considered construction permits for purposes of Rule Chapters 62-4, 62-210, 210, 62-212, 212, 62-213 213 and 62-110, F.A.C., but PAL permits shall not authorize any physical change that constitutes a modification under Rule 62-210.200 210.200 F.A.C., or any modification or reconstruction under 40 CFR Part 60, 61 or 63, 6 adopted by reference at Rule 62-204.800, 204.800, F.A.C., to any existing emissions unit, or any addition of any new emissions unit to the facility with the PAL permit. The Department shall authorize such modification or addition through separate normal construction permit processes.! Regulatory authority must provide opportunity for public participation o 30-day public notice o Opportunity for public comment 61
PAL Permits Mass Balance Calculations! Requirements include: o A demonstrated means to validate pollutant content in material(s) o Assumption that emissions unit emits all of a pollutant if the pollutant cannot be accounted for o The use of the highest value of a pollutant where a range of the pollutant content is published! Mass balance calculations are acceptable and are widely used for activities using coatings or solvents 62
PAL Permits Continuous Emission Monitoring Systems (CEMS)! Requirements o Systems must meet applicable Part 60, Appendix B Performance Specifications o Systems must sample, analyze, record data once every 15 minutes of operation 63
PAL Permits Continuous Parameter Monitoring Systems (CPMS) and Predictive Emission Monitoring Systems (PEMS)! Requirements o The CPMS/PEMS system must demonstrate a correlation between monitored parameters and PAL pollutant emissions across the range of unit operation o The CPMS/PEMS system must sample, analyze, record data once every 15 minutes of operation 64
PAL Permits Emission Factors! Requirements o If appropriate, factors must be adjusted for the uncertainty or limitations in the factor s development o Emissions units must operate within the range of the factor s development o If technically practicable, the emission factors for significant units must be re-validated within 6 months of the PAL permit issuance Unless reviewing agency determines that testing is not required 65
PAL Permits How is missing monitoring data handled under a PAL?! Sources must record and report maximum potential emissions without considering enforceable limitations or operating restrictions What happens when a source operates at non- correlated operating ranges?! A default value representing the highest potential emissions must be established and used, or! The source is deemed in violation when the unit is operating outside of a correlated parametric range 66
PAL Permits Do emissions monitoring systems under a PAL ever have to be re-validated?! Yes - data re-validation is required once every 5-years for all methods of monitoring! Re-validation is accomplished by emission testing or or other scientifically valid means! The PAL applicant may want to consider including a re-validation protocol with the PAL application addressing each type of monitoring and the proposed re-validation procedures 67