U.S. EPA’s Draft PAL Guidance

This article is part of ALL4’s 4 The Record: Quarantine Series.

In mid-February 2020, the U.S. Environmental Protection Agency (U.S. EPA) released draft guidance for public review and comment on the Plantwide Applicability Limitation (PAL) provisions of the federal major new source review (NSR) air permitting rules.  The PAL regulations are codified in the NSR Prevention of Significant Deterioration (PSD) rules at 40 CFR §52.21 and other NSR regulations including 40 CFR Part 51, §§165, 166, and Appendix S for non-attainment areas.  The PAL regulations were established as part of the 2002 NSR Reform rules and allow facilities that are major stationary sources of air emissions to establish plantwide limits for regulated NSR pollutants.  As long as the facility-wide emissions of the limited pollutant remain below the PAL level, the major NSR rules including PSD and/or non-attainment NSR do not apply when facility changes occur (see guidance document).

The draft guidance stems from U.S. EPA’s review of stakeholder input following 2017 Presidential outreach efforts on regulatory burden and reform.  While a number of facilities have realized the advantages of PAL permits (U.S. EPA Indicates that approximately 70 PAL permits have been issued), others have been reluctant to pursue this permitting alternative primarily due to the lack of specificity in the rule and concern over future unforeseen implications.  The guidance addresses the major concerns raised by the stakeholders regarding how the rules are implemented but, does not change the regulations.  The intent appears to be directed at encouraging more widespread implementation of this permitting alternative.  Some highlights of U.S. EPA’s guidance regarding the issues raised by the stakeholders include the following:

• Concern over the PAL permit reopening provision that gives the reviewing authority discretion to reopen and reduce a PAL to address NAAQS violations or Class I area impacts. Here, U.S. EPA points out that most NAAQS have short-term averaging periods while PALs are ton per year limits.  Therefore, reopening a PAL would not likely be the mechanism to address such issues.  Even if this approach was taken, the process must be open and transparent allowing for both the source and public participation.
• If a PAL permit expires without renewal, the rule includes provisions for distributing the PAL by establishing individual or grouped emissions unit limits for the entire facility. The rule provides no specificity on how the distribution will actually occur, which concerned stakeholders.  S. EPA points out that while not specifying how the PAL will be distributed, the rule does provide a straightforward and flexible approach that begins with the permittee’s application and proposal for distributing the emissions.  U.S. EPA also adds an important point on the PAL expiration issue.  They state that when a PAL expires, none of the limits on capacity to emit covered by §52.21(r)(4) that were eliminated when the PAL was issued are required to be reestablished.
• The permit renewal provisions were another concern raised by stakeholders, specifically a concern that the PAL level would automatically be ratcheted down at the end of the 10-year PAL term. S. EPA reiterates the rule language that specifies that if a source’s baseline emissions (during the 10-year permit term) plus the applicable PSD significant emissions increase level (e.g., 40 ton per year for NO_X) are equal to or greater than 80% of the PAL, the existing limit can be maintained with no change.  U.S. EPA then goes on to point out that the rule does not mandate resetting the PAL to a lower level if the baseline plus significance level are lower than 80% of the PAL, leaving it to the discretion of the reviewing authority on a case-by-case basis.  U.S. EPA provides several examples and concludes by noting that the limit can be reset at levels up to the current PAL if the applicant can provide supporting justification.
• The regulations have no provisions for terminating a PAL. S. EPA indicates that it does not expect requests for PAL termination to be common and maintains its earlier position that handling such requests will be addressed by the source and the reviewing authority on a case-by-case basis.
• The PAL regulations specify that the permits contain enforceable requirements for monitoring systems to accurately determine plantwide emissions for demonstrating compliance. S. EPA notes that while they believe continuous emission monitoring systems (CEMS) and predictive emission monitoring systems (PEMS) may provide the most reliable approach for quantifying emissions, the regulation specifically provides that three other alternatives can also be used including mass balance, continuous parameter monitoring systems (CPMS), and emission factors.  Stakeholders raised concerns that complex and costly continuous monitoring systems would be required.  They also expressed concerns regarding the lack of rule specifics regarding emission factor adjustment, validation testing, and data availability for monitoring systems.  U.S. EPA addressed the concerns with each of these issues.  With regards to emission factor adjustment U.S. EPA notes that baseline factors must also be considered when adjusting a factor for PAL monitoring purposes.  With respect to validation testing U.S. EPA notes that testing for other CAA purposes and testing of similar units could support a reviewing authority’s decision to not require additional validation testing.  U.S. EPA goes on to point out that the regulations do not require a PAL permit to contain alternative procedures to address monitoring data unavailability and that circumstances should be considered when determining the value for establishing such procedures in a permit.  U.S. EPA also includes examples for data substitution from a current PAL permit.
• S. EPA acknowledged that there is confusion regarding how to handle replacement units (as defined in the PSD rules) when determining baseline emission rates and for setting PALs. In this guidance U.S. EPA clarifies that the baseline emissions for the replacement unit are the baseline emissions for the unit it replaced.

U.S. EPA closes out the guidance by highlighting general advantages of PAL permits.  Any major stationary source that regularly struggles with evaluating PSD applicability for facility changes should still consider the possible upside of operating under a PAL.  ALL4 has helped a number of facilities obtain PAL permits and we’re always happy to discuss this alternative compliance approach that we believe, can actually give your facility a competitive advantage.  Please reach out to John Egan at jegan@all4inc.com with any questions about the draft guidance or PALS in general.