New EPA Guidance Could Reduce Time and Cost of NSR Air Permitting
For nearly four decades, permitting under the Clean Air Act (CAA) New Source Review (NSR) program has been a challenge for large industrial facilities and power plants alike.
Applicants typically wait more than a year to receive their air permits, while frequently enduring costly challenges to their applications.
Acknowledging the complexity of the process, the Environmental Protection Agency (EPA) recently issued memoranda with clarifying guidance for assessing NSR program applicability, which may prove to be a significant time and cost savings for permit applicants.
Established by Congress as part of the 1977 CAA Amendments, NSR is a complex set of pre-construction permitting rules that has undergone numerous revisions, followed by interpretive policy and guidance from EPA over the years.
In a nutshell, the NSR program requires new “major sources” of air emissions (e.g., most large industrial facilities and power plants) and major modifications at existing major sources to obtain an air quality permit before starting construction.
A modification can be either a physical change or a change in the method of operation.
The NSR program serves two primary purposes:
- To ensure compliance with air quality standards so that emissions from the new or modified source does not adversely impact air quality
- To ensure state-of-the-art control technology is installed on the new or modified source of emissions.
Determining Major Modifications
The method for defining a major source is straightforward and non-controversial: A major source is one where the total annual emissions of any regulated pollutant exceeds either 100 tons per year (tpy) or 250 tpy, depending on the type of source.
A major modification is one where the increase in annual emissions from the proposed change at a major source is “significant”—meaning these emissions exceed their pollutant-specific thresholds.
To calculate this emissions increase, a source subtracts recent past emissions (“baseline actual emissions”) from the emissions after the modification. However, the method for calculating the emissions increase is convoluted and controversial.
Two-Step Determination Process
In December 2002, EPA finalized significant revisions to the NSR rules, which became known as the “NSR Improvement Rules.”
These rules defined the major modification determination procedure as a two-step process:
- Step 1 involved determining the project emission increases. Those pollutants with emission increases above their modification thresholds (i.e., “significant” increases) had to complete Step 2.
- Step 2 involved calculating the “net emissions increase” by accounting for any other emission increases and decreases at the source within the five years preceding the proposed project. If the net emissions increase was still above the modification threshold, there was a significant emissions increase and NSR permitting was triggered for the project.
The NSR Improvement Rules changed the way in which emission increases are calculated for modification projects.
Potential vs. Projected Actual Emissions Calculations
Prior to the 2002 ruling, applicants were required to use the “potential” emissions for new and modified sources. Potential means the maximum annual quantity of emissions—a worst case scenario.
For modification projects, subtracting baseline actual emissions from the potential emissions resulted in a very conservative calculation of the emissions increase. This method triggered NSR for many modification projects.
Under the NSR Improvement Rules, an applicant could use “projected” actual emissions for modified sources. Projected means the anticipated future annual emissions.
This new method resulted in a lower annual emissions increase.
Recent EPA Guidance
EPA recently conducted a review of its NSR permitting requirements and identified various regulations and policies that have created uncertainty and confusion for both companies and regulators.
As a result, EPA issued a series of memoranda in late 2017 and early 2018 clarifying its current understanding of NSR regulations.
Clarification #1: Using Projected Actual Emissions
For a source using projected actual emissions in the NSR analysis to determine if resulting increases are “significant,” EPA clarified that the obligations of the regulations are met as long as:
- The analysis is performed in accordance with the calculation procedures in the regulations, and
- Post-construction emissions monitoring, recordkeeping and notification requirements are followed.
Over the years, EPA frequently challenged the assumptions made by sources in calculating their projected actual emissions. With the current clarification, EPA essentially is saying that it does not intend to second guess a source’s compliant calculation assumptions regarding their emissions.
Clarification #2: Accounting of Emissions Decreases
The Step 1 calculation above was used to determine the project emission increases without consideration of emission decreases. EPA clarified its interpretation to now allow a source to also account for emission decreases in that initial calculation, provided the increases and decreases are part of the same project.
Furthermore, EPA is allowing a source to more broadly define its project, enabling inclusion of multiple activities (and their associated emission changes).
Clarification #3: Definition of “Same Source”
EPA outlined its new policy on determining what entities should be considered part of the “same source” (necessitating that their emissions be combined) for assessing NSR applicability.
NSR rules stipulate that entities may be considered part of the same source if they are under “common control.” EPA focused on this criterion, stating that:
The assessment of “control” for NSR permitting purposes should focus on the power or authority of one entity to dictate decisions of the other that could affect the applicability of, or compliance with, relevant air regulatory requirements.
In other words, if an entity can demonstrate that a second, nearby entity does not affect the former’s compliance with air regulations, then the two could be considered separate sources in the eyes of EPA.
Project Schedule and Budget Impact
The recent EPA guidance is intended to reduce confusion and provide flexibility for companies trying to determine if they need an NSR permit.
EPA emphasizes, however, that the guidance is just that—guidance—and not law. So, state regulators and/or the public could challenge how companies are using this guidance.
Further, EPA said it still intends to review each permitting project on a case-by-case basis.
That said, for companies needing an NSR permit for their major modification, careful application of this new guidance could result in reduced permit review/approval timeframes.
And that could mean a significant savings in overall project schedule and budget.
Want to know more? Download our companion piece with a helpful NSR glossary and timeline.
Lou Corio is a Senior Air Quality Scientist and Project Manager at POWER Engineers.