Revised Rule on Fugitive Emissions for NSR Permitting

U.S. EPA has revised its long-standing policy regarding which existing major stationary sources are required to include fugitive emissions when determining whether emission increases from physical or operational changes result in a major modification under New Source Review (NSR).  U.S. EPA currently requires all source categories to consider fugitive emissions when determining whether an emission increase from a source modification triggers major NSR permitting requirements.  U.S. EPA will now require only those 26 “listed” 100-ton source categories designated through rulemaking pursuant to Section 302(j) of the Clean Air Act (CAA) (i.e., Section 302(j) sources) to consider fugitive emissions when making applicability determinations under NSR.  However, U.S. EPA intends to preserve its existing treatment of fugitive emissions for Plantwide Applicability Limit (PAL) permits.  

To implement its new approach to fugitive emissions, U.S. EPA revised four (4) main portions of the major NSR program regulations: 40 CFR §§51.165, 51.166, 52.21, and Appendix S to Part 51. The revisions are nearly identical for the existing regulations because they contain nearly identical provisions related to major modifications.  In addition, U.S. EPA is also finalizing the following:

1. A minor change in the provisions for PALs to preserve their existing treatment of fugitive emissions.
2. A modification to the paragraph in each section that explains how to calculate whether a significant emissions increase will occur as the result of a physical or operational change.
3. A minor revision in the provisions on monitoring and reporting for physical and operational changes that are found not to be major modifications.
4. A revision to the definitions of ”baseline actual emissions” and ”projected actual emissions” for NSR permitting.

A number of states will continue to include fugitive emissions in their applicability determinations as specified in their state-specific NSR regulations.  However, for PM2.5 Nonattainment NSR (NNSR) rules, the Federal Appendix S provisions control all determinations until states adopt new rules.  This means that fugitive PM2.5 emissions will only be included in an NNSR applicability determination if they are from a Section 302(j) source or category facility.  This could be beneficial for certain NNSR permit applications, but will also limit which fugitive emission reductions can be used for netting or offsetting purposes.

Climate Change News and Notes

The Western Climate Initiative (WCI) released a report that contains the proposed approach for addressing the calculation and reporting of greenhouse gas (GHG) emissions as part of the WCI Regional Cap and Trade Program.  The tracking of GHG emissions will begin in 2010 and reporting will begin in 2011.  Combustion and non-combustion emissions from electrical generation, large industrial facilities, and gas and oil production will be part of the program.  Participation in the allowance portion of the WCI Regional Cap and Trade Program will be phased in by having larger GHG sources begin to participate in January 2012 and smaller GHG sources participating at a later date.  If a facility emits more than 25,000 metric tons of carbon dioxide equivalent (CO2e), it will be included in the WCI Regional Cap and Trade Program.  If a facility emits more than 10,000 metric tons CO2e then the facility will have to report and verify its GHG emissions.  The Climate Registry (TCR) will manage the WCI information and will use a variation of the Climate Registry Information System (CRIS).  The WCI is preparing GHG quantification procedures for more than 30 key industrial sectors using the Climate Leaders Intergovernmental Panel on Climate Change (IPCC) guidance.  Arizona, California, Montana, New Mexico, Oregon, Washington, and Utah participate in the WCI.  Alaska, Colorado, Idaho, Kansas, Nevada, and Wyoming are observing the WCI. 

UPDATE: The Resurrection of CAIR

On December 23, 2008, the U.S. Court of Appeals for the District of Columbia Circuit (Court) reversed its earlier (July 11, 2008) decision to vacate the Federal Clean Air Interstate Rule (CAIR).  The Federal court decided, after considering comments from the appellants to the rule, to allow CAIR to remain in effect while U.S. EPA “fixes” the rule. In the July 11, 2008 decision, the Court had identified where the rule was not consistent with the Clean Air Act (CAA). In its order for a rehearing the Court stated: “Here, we are convinced that, notwithstanding the relative flaws of CAIR, allowing CAIR to remain in effect until it is replaced by a rule consistent with our opinion would at least temporarily preserve the environmental values covered by CAIR.” 

On July 11, 2008, the Court had decided to vacate CAIR in its entirety and remand it to U.S. EPA declaring that the 2005 rule “had more than several fatal flaws.” In September 2008, U.S. EPA petitioned the Court for a rehearing or as an alternative, a remand of CAIR without the Court’s order vacating the rule.  The Court, in its December order, stated that it had considered the appellant parties’ positions in making its determination to remand CAIR to U.S. EPA without vacating it.  The Court did not give U.S. EPA a specific deadline for revising CAIR as some petitioners had requested, but the court warned the Federal agency that it did “not intend to grant an indefinite stay of the effectiveness of this court’s decision.”

Most CAIR-affected sources and state air quality regulatory agencies believe that the recent Court decision is a good move that will benefit the environment and is in the best interest of industry.  However, this action may have caught both regulators and CAIR-affected sources off guard because of the January 1, 2009 effective date of CAIR.  U.S. EPA has indicated that it will issue guidance to address problems that may result from such a quick re-start of the program.  Regardless, CAIR-affected sources now need to review their implementation plans to assure that they are doing everything in accordance with the rules.

The immediate future of CAIR has regained certainty, but now the owners and operators of CAIR-affected sources are left with making long-term decisions about the use of their allowances and construction of additional CAIR controls without the benefit of knowing what the revised final CAIR rule will ultimately look like.  We suggest that CAIR-affected sources track the development of the Court-mandated CAIR revisions very closely.  Considering its past history and the fact that we will now have a new U.S. EPA Administrator, the surprises may not be over.

U.S. EPA Issues Final Flexible Permit Rule

On January 13, 2009, U.S. EPA finalized a flexible permitting rule that was initially proposed on September 12, 2007 (see our February 2008 4 The Record article for an analysis of the proposed rule).  The rule revises the Title V regulations to allow for the development of flexible air permits (FAPs).  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 (1) or more permitting approaches, while ensuring equal or greater environmental protection as achieved by conventional permits.  The flexibility provisions provided in the rule and described in the preamble have been tested and evaluated over a decade through a pilot flexible air permitting program and have been previously described in U.S. EPA White Paper No. 3.

The final flexible permit rule retains the alternative operating scenario (AOS) and approved replicable methodology (ARM) provisions described in the proposed rule.  The now-defined AOS term will replace the term “operating scenario” in the Title V rules.  ARMs are envisioned to facilitate the implementation of advanced approvals and AOS under a Title V permit and to reduce the need for permit modifications consistent with the Title V regulations.  The originally proposed “Green Group” concept has been excluded from the final rule.  The Green Group revisions that were included in the proposed flexible permitting rule were arguably the revisions with the most potential to provide operating flexibility to sources.  The flexible permitting policy discussions included in the preamble to the rule are consistent with the discussion in the proposed rule and affirm U.S. EPA’s support of advanced approvals and other flexible permit concepts that can be supported by State Implementation Plans (SIPs).

Click here to read the final rule.  A more complete analysis of the final flexible permitting rule will be available in ALL4’s February 2009 issue of 4 The Record. 

Pennsylvania Adopts Diesel Anti-Idling Rules

On October 9, 2008, Pennsylvania Governor Ed Rendell signed the Diesel-Powered Motor Vehicle Idling Act No. 124 which provides for idling restrictions on diesel-powered vehicles within the State. The provisions of the law will become effective on February 6, 2009.  At about the same time that the Governor signed Act No. 124, the Pennsylvania Department of Environmental Protection (PADEP) was finalizing a separate anti-idling regulation which would have implemented similar requirements to those specified in Act No. 124.  PADEP withdrew its idling restriction regulations through notice in the Pennsylvania Bulletin on November 15, 2008.  PADEP has no intention of developing new regulations, but intends to enforce Act No. 124.  Under Act No. 124, the owner or operator of the diesel-powered vehicle and the owner or operator of the location where the vehicle is loaded, unloaded, or parked are responsible for compliance with the requirements.     

With the implementation of the restriction literally around the corner, it would be prudent for regulated entities to provide company-employed or contracted diesel vehicle operators with specific training and written guidance regarding the restrictions and how to comply with the law at a specific location.  Of special note is the requirement for owners or operators of affected facilities to post signs where trucks park or wait to unload or load, informing the diesel vehicle operators about these idling restrictions.  Sign specifications have been developed by the Pennsylvania Department of Transportation (PennDOT) in response to the rule.  PennDOT also provides general specifications regarding the locations for posting the signs.