PSD Background Presentation May 3rd 2011 John Holmes

Prevention of Significant Deterioration (PSD): Overview Federal preconstruction permitting applies to new major stationary sources and major modifications at existing major sources Preconstruction NSR permitting: Prevention of Significant Deterioration (PSD) in attainment areas Different NSR requirements in nonattainment areas

PSD Program: Overview (cont’d) PSD applies on a pollutant specific basis, depending on local air quality status and the levels of emissions of pollutants covered by PSD.

Key Requirements of PSD Permitting Best Available Control Technology (BACT) Air quality impacts: NAAQS and PSD increments Impacts on Class I areas Impacts on soils, vegetation and visibility Public comment Issuance before construction can begin

PSD Regulations and Guidance Federal Regulations: 40 CFR 51.166 40 CFR 52.21 State versions of the rules may vary. EPA Guidance: Draft 1990 New Source Review Workshop Manual http://www.epa.gov/ttn/nsr/gen/wkshpman.pdf Determining PSD applicability Determining BACT Dated but consistent with agency position on many aspects of PSD permitting

PSD Regulations and Guidance (cont’d) Case specific determinations and policy guidance at agency websites http://www.epa.gov/region07/air/policy/search.html http://www.epa.gov/nsr/guidance.html Environmental Appeals Board decisions http://yosemite.epa.gov/oa/EAB_Web_Docket.nsf/PSD+Permit+Appeals+(CAA)?OpenView Prevention of Significant Deterioration and Title V Permitting Guidance for Greenhouse Gases http://www.epa.gov/nsr/index.html

Regulated NSR Pollutants Certain requirements for “criteria pollutants” covered by NAAQS: PM10, PM2.5 and precursors CO SO2 VOCs and NOx, as precursors for ozone NO2 Lead

Regulated NSR Pollutants (cont’d) Pollutants without NAAQS: GHGs Total PM Fluorides Sulfuric acid mist Reduced sulfur compounds Metals Acid gases MSW landfill emissions MWC organics Ozone-Depleting Substances

PSD Applicability: Defining the Source Stationary source is any building, structure, facility or installation All pollutant-emitting activities: Same industrial grouping Contiguous or adjacent properties Common ownership or control Defining modification All units with physical or operational change No artificial separation of a project Few exclusions Routine maintenance repair or replacement Increases in hours of operation

PSD Major Source Thresholds Major source thresholds depend on the nature of the source Potential to emit of 100 TPY or greater, if source is in 28 source categories Include fugitive emissions All other sources, PTE of 250 TPY or greater Exclude fugitive emissions (new sources only) Include fugitive emissions (modifications) Additional GHG thresholds (to be discussed later)

28 Source Categories Subject to the 100 TPY Threshold Coal cleaning plants (with thermal dryers) Sintering plants Kraft pulp mills Secondary metal production plants Portland cement plants Chemical process plants Primary zinc smelters Fossil-fuel boiler or combination of boilers (total over 250 MMBTU/hr) Iron and steel mills Primary aluminum ore reduction plants Petroleum storage and transfer units (with a total storage capacity exceeding 300,000 barrels) Primary copper smelters Taconite ore processing plants Municipal incinerators (capable of charging more than 250 tons refuse/day) Glass fiber procession plants Hydrofluoric acid plants Charcoal production plants Sulfuric acid plants Fossil fuel fired steam electric plants (total over 250 MMBTU/hr) Nitric acid plants Petroleum refineries Lime plants Phosphate rock processing plants Coke oven batteries Sulfur recovery plants Carbon black plants (furnace process) Primary lead smelters Fuel conversion plants

Determining PSD Applicability for New Stationary Sources Define the source Define applicability emission thresholds for the major source Assess local NAAQS attainment status Define project emissions (potential to emit) Determine if source is major Determine pollutant(s) subject to PSD review

Determining PSD Applicability for Modifications at Existing Stationary Sources Determine if the source is major under PSD Identify all units or activities with a physical change or change in method of operation Determine if there is a "significant net contemporaneous emissions increase" for any PSD pollutant When assessing emissions increases, consider the indirect impact of “debottlenecking” and include quantifiable fugitive emissions

Determining PSD Applicability for Modifications at Existing Stationary Sources (cont’d) “Significant” Emission Rates: CO: 100 TPY Total reduced sulfur or reduced sulfur compounds (including H2S): 10 TPY NOx: 40 TPY SO2: 40 TPY Ozone Depletion Substances (ODS): 0 TPY PM: 25 TPY PM10: 15 TPY GHGs: 0 TPY on mass basis (applicability test for GHGs includes an additional emissions threshold of 75,000 TPY on a CO2e basis) PM2.5: 10 TPY of direct PM2.5 emissions; 40 TPY of SO2; 40 TPY of NOx (unless demonstrated not be a PM2.5 precursor) MWC organics: 3.5x10-6 TPY Ozone: 40 TPY of VOCs or NOx MWC metals: 15 TPY Lead: 0.6 TPY MWC acid gases: 40 TPY Fluorides: 3 TPY MSW landfill NMOC: 50 TPY Sulfuric acid mist: 7 TPY Hydrogen Sulfide (H2S): 10 TPY

Determining PSD Applicability for Modifications of Existing Major Sources Two-Step Process: Step 1: Is modification a significant emissions increase? Adding up increases by unit For new units, use the Potential to Emit (PTE) For modified units, difference between baseline actual vs. future actual emissions (or PTE) No “project netting”, do not include units with emission decreases If total below significance level, PSD does not apply

Determining PSD Applicability for Modifications of Existing Major Sources Step 2: Is modification a significant net emissions increase? Sum increases and decreases Include both the increases and the decreases of the modification and Include creditable increases and decreases during the contemporaneous period. Creditable decreases must be based on actual-to- potential test Creditable increases and decreases must be practically enforceable. Contemporaneous period usually begins 5 years prior to construction

Determining PSD Applicability for Modifications of Existing Major Sources (cont’d) "Actual-to-projected actual" emissions test: Baseline actual emissions: Any consecutive 24-month period in prior 10 years (5 years for electric utility) New unit baseline emissions are zero Projected actual emissions: Maximum annual emissions in the next 5 years (10 years if increase in design capacity or PTE). Excludes any increase that is unrelated to the project and could be accommodated in baseline period, including demand growth. Can use “actual-to-potential” comparison instead

Issues with Projected Actual Emissions Inclusion of controls that are not required in a permit Future maximum operation Demand growth exclusion

Determining PSD Applicability for Modifications of Existing Minor Sources PSD can be triggered at a minor source if modification is major by itself Netting is not allowed at a minor source

Plantwide Applicability Limits (PALs) Mechanism to avoid NSR/PSD in future for an existing source. Plantwide emission limit which is pollutant specific Created in a formal permitting process. So long as total emissions after any modification are below the PAL, PSD not triggered. PAL level is baseline actual emissions plus significant emission rate. GHG PAL would be mass based and significant emission rate is zero. Effective for 10 years.

Legal Ways to Avoid PSD Change the scope of the project to limit emissions increase Take enforceable limits on emissions Add more controls Carry out contemporaneous reductions

PSD Permitting for Sources of GHGs Under EPA rulemaking, GHGs are a single air pollutant defined as the aggregate group of the following six gases: Carbon dioxide (CO2) Methane (CH4) Nitrous oxide (N20) Sulfur hexafluoride (SF6) Hydrofluorocarbons (HFCs) Perflurocarbons (PFCs)

CO2 Equivalency CO2 equivalent (CO2e) aggregate emissions of GHGs based on relative global warming potential (GWP) CO2e = Sum of [(mass of the GHG) x (its GWP)] Current GWPs: CO2: 1 CH4: 21 N20: 310 SF6 : 23,900 HFCs: 140 to over 11,700 PFCs: 5,210 to 9,200 (Ratios may be revised. Set in Table A-1 of the GHG reporting rule. Subpart A of 40 CFR Part 98.)

Introduction to PSD GHG Applicability There are calculations and thresholds for both CO2e and mass. CO2e sum used to determine if emissions are “subject to” the PSD regulations Mass based sum used to determine if major source or major modification

PSD Applicability Criteria for New Sources of GHGs On or after July 1, 2011: Source is otherwise subject to PSD for another pollutant and GHG PTE is: Equal to or greater than 75,000 TPY CO2e, and Greater than 0 TPY mass basis OR Source has GHG PTE equal to or greater than: 100,000 TPY CO2e and 100/250 TPY mass basis

PSD Applicability Criteria for Modified Sources of GHGs “Step 1” (January 2, 2011 to June 30, 2011) Modification is otherwise subject to PSD for another regulated NSR pollutant, and GHG emissions increase and net emissions increase are: Equal to or greater than 75,000 TPY CO2e, and Greater than -0- TPY mass basis

PSD Applicability Criteria for Modified Sources of GHGs Step 2 (On or after July 1, 2011) Modification is subject to PSD under Step 1 of the Tailoring Rule OR BOTH Source PTE for GHGs is equal to or greater than: 100,000 TPY CO2e and 100/250 TPY mass basis Modification GHG emissions increase and net emissions increase: Equal to or greater than 75,000 TPY CO2e, and Greater than -0- TPY mass basis OR Modification alone has GHG emissions equal to or greater than 100,000 TPY CO2e, and

Four Applicability Conditions for Modifications of Major Sources For a modification, four conditions must exist in order to trigger PSD: CO2e emissions increase equals or exceeds 75,000 TPY CO2e “Net emissions increase” of CO2e equals or exceeds 75,000 TPY GHG mass emissions increase exceeds -0- TPY “Net emissions increase” of GHGs (on a mass basis) over the contemporaneous period exceeds -0- TPY

Determining GHG Emissions Determine sum of the 6 GHG pollutants on mass basis Determine sum of 6 GHG pollutants on CO2e basis All emissions of GHGs: Includes wastewater Beyond the reporting rule No consideration of offsite emissions impacts for applicability Use best available data. Traditional data quality hierarchy: Performance tests on similar units; Mass balances; Vendor data and guarantees; Test data from EPA; AP-42 factors; Factors from literature