1 Non-Attainment NSR Program Donald Law EPA Region 8

2 Major Topics Applicability NA NSR Program Requirements Lowest Achievable Emissions Rate (LAER) Offsets Statewide Compliance Certification Alternatives Analysis

3 What is Non-Attainment NSR?  NSR is a Pre-construction review program required for New Major Sources or Major Modifications at existing Major Sources locating in areas designated as not attaining a National Ambient Air Quality Standard (NAAQS). An NSR program must be approved by the Administrator and incorporated into the State Implementation Plan (SIP) - Plan requirements are codified in 40 CFR Part State implementation Plans (SIP) and Tribal Implementation Plans (TIP) must meet these requirements

4 Non-Attainment NSR Applicability Like PSD, follow the 4 steps to determine whether new construction or modification project is subject to non-attainment NSR. Unlike PSD, however, review is only for the non-attainment pollutant. Being major for PSD does not trigger non-attainment NSR review

5 Major Source Thresholds – NA Areas Non-Attainment Area Major Source Thresholds PollutantNonattainment ClassificationMajor Source Threshold Ozone Marginal100 tpy of VOC or NO x Moderate100 tpy of VOC or NO x Serious50 tpy of VOC or NO x Severe25 tpy of VOC or NO x Extreme10 tpy of VOC or NO x PM 10 Moderate100 tpy Serious70 tpy Carbon Monoxide Moderate100 tpy Serious50 tpy SO tpy NO tpy PM tpy Lead tpy

6 Applicability – Example 1 New Age Widgets wants to construct a new widget making plant in a serious Ozone non-attainment area and a moderate PM 10 non-attainment area. All other pollutants are in attainment Widget making is not one of the 28 source categories. Source’s potential to emit is shown on the table below Is this source subject to PSD or Non-attainment NSR? If so, for which pollutants? Widget Plant Potential to Emit PollutantNO x VOCPM 10 PM 2.5 COSO 2 PTE (tpy)

7 Applicability: Example 1 Solution – New Age Widgets Pollutant PTE (tpy) DesignationClassification Subject to PSD? Subject to Non- attainment NSR? NO x 60Non-AttainmentSeriousNoYes VOC80 Non-AttainmentSerious NoYes PM Non-AttainmentModerateNoYes PM Attainment---YesNo CO260Attainment---YesNo SO 2 35Attainment ---No

8 Applicability – Example 2 Old World Skidgets wants to construct a new skidget making plant in a moderate Ozone non-attainment and a serious PM 10 non-attainment area. All other pollutants are in attainment. Skidget making is not one of the 28-source categories Old World Skidgets potential to emit is shown below Is Old World Skidgets subject to PSD, Nonattainment NSR, or both? If so, for which pollutants? Skidget Plant Potential to Emit PollutantNO x VOCPM 10 PM 2.5 COSO 2 PTE (tpy)

9 Applicability: Example 2 Solution – Old World Skidgets Pollutant PTE (tpy) Designation Classificat ion Subject to PSD? Subject to Non- attainme nt NSR? NO x 200 Non- Attainment ModerateNoYes VOC80 Non- Attainment ModerateNo PM Non- attainment SeriousNoYes PM Attainment---No CO300Attainment---YesNo SO 2 35Attainment---No

10 Major Modification (1)Significant emissions increase of a regulated NSR pollutant and (2) A significant net emissions increase of that pollutant from the major stationary source

11 Net Emissions Increase 1.The increase in emissions from a particular physical change or change in the method of operation at a stationary and 1.Any other increases and decreases in actual emissions at the major stationary source that are contemporaneous with the particular change and are otherwise creditable

12 Actual Emissions Actual emissions as of a particular date shall equal the average rate, in tons per year, at which the unit actually emitted the pollutant during a consecutive 24-month period which precedes the particular date and which is representative of normal source operation Reviewing authority shall allow use of a different time period upon a determination that it is more representative of normal source operation (cont.)

13 Actual Emissions (cont.) A different consecutive 24-month period can be used for each regulated NSR pollutant When a project involves multiple emissions units, only one consecutive 24- month period must be used to determine the baseline actual emissions for the emissions units being changed

14 Major Modification Thresholds Non-Attainment Area Major Modification Thresholds Pollutant Nonattainment ClassificationMajor Source Threshold Ozone Marginal40 tpy of VOC or NO x Moderate40 tpy of VOC or NO x Serious25 tpy of VOC or NO x Severe25 tpy of VOC or NO x ExtremeAny increase of VOC or NO x PM 10 Moderate15 tpy Serious15 tpy Carbon Monoxide Moderate100 tpy Serious100 tpy SO tpy NO tpy PM tpy Lead tpy

15 Applicability for Modification Modern Day Smidgets wants to expand by constructing a new Smidget making production line. The plant currently is a major source for NOx, CO and PM10 and is located in a moderate ozone non-attainment area and a moderate PM 10 non-attainment area. All other pollutants are in attainment. Smidget making is not one of the 28 source categories. Source’s potential to emit before and after is shown on the table below. Smidget Plant Potential to Emit Pollutant (TPY)NO x VOCPM 10 PM 2.5 CO PTE Before PTE After

16 Applicability for Modification Solution Pollutant SER (TPY) Increase TPY Subject to PSD? Subject to Non- attainme nt NSR? NO x 40 49NoYes VOC4010No PM NoYes PM No CO1000No

17 Non-Attainment NSR Requirements Program has 4 basic requirements Lowest Achievable Emissions Rate (LAER) Offsets Statewide Compliance Certification Alternatives Analysis

18 LAER- Federal Definition  Lowest achievable emission rate (LAER) means, for any source, the more stringent rate of emissions based on the following; (A) The most stringent emissions limitation which is contained in the implementation plan of any State for such class or category of stationary source, unless the owner or operator of the proposed stationary source demonstrates that such limitations are not achievable; or (B) The most stringent emissions limitation which is achieved in practice by such class or category of stationary sources. This limitation, when applied to a modification, means the lowest achievable emissions rate for the new or modified emissions units within or stationary source. In no event shall the application of the term permit a proposed new or modified stationary source to emit any pollutant in excess of the amount allowable under an applicable new source standard of performance.

19 LAER Basics The most stringent emission limitation contained in the SIP of any State for such class or category or source; or The most stringent emissions limitation achieved in practice by such class or category of source Does not consider: economic, energy, environmental or other factors

20 LAER Achieved in Practice Usually defined as 1 year Ability to be purchased Class or category of source Simple cycle turbine versus a combined cycle turbine Can include process changes or basic equipment LAER changes over time Databases for BACT and LAER Determinations CARB, California Air Districts, Other States U.S. EPA RBLC

21 Offsets Sources must provide emissions reductions that demonstrate the following Must offset the emissions increase from the new source or modification Provide a net air quality benefit

22 Required Offset Ratios Marginal at least 1.1:1 Moderateat least 1.15:1 Seriousat least 1.2:1 Severeat least 1.3:1* ExtremeAt least 1.5:1* *may be 1.2:1 if approved plan requires all major sources to use BACT

23 Milestones for Securing Offsets A complete offset package identified and quantified at the time of submission. Letters of intent signed by the time of public notice. Offsets secured and in place prior to operation of the power plant.* *Some emission trades may include emission reductions that are contemporaneous; that is, occurring within a designated period ending shortly after commencement of operation.

24 Offset Criteria  (Real) Must be emissions that have occurred. Cannot take credit for stopping emissions that never occurred in the first place.  Federally Enforceable The manner in which the offsets are created must be enforceable as a practical matter and legally enforceable. E.g. Conditions on a permit  Permanent The reductions have to be permanent. If they can be emitted again, then they are not permanent. Elastic sources (gas stations, dry cleaners)

25 Offset Criteria (cont.)  Quantifiable Must be able to quantify the emissions. If not quantifiable, then they can not be used to mitigate emissions increases. Requires records to substantiate claims  Surplus Must be reductions that are not already required by an air quality plan, a compliance document, a permit, or have been used elsewhere. Surplus at the time of use versus creation

26 Creating Offsets A.An existing source wants to create emissions reductions that are eligible for offsets. What are the steps? 1.Determine baseline actual emissions 2.Determine new potential to emit 3.Subtract new PTE from baseline actual emissions 4.Subtract reductions that were federally required such as an approved rule, enforcement action, or another permitting action

27 Creating Offsets (cont.) B.Submit Application/Fees to District within required timeframe. C.District analysis including discount factors (if required) D.Public Notice E.Response to comments F.ERC’s are “Banked”

28 Offset Programs SIP approved NSR rules usually contain offsets banking rules. Regulates generation, transfer, use Non-traditional offset generation to be used for a major source requires a SIP approved rule

29 Baseline Actual emission for offsets Average actual emissions in TPY of the last 24 month period prior to actual reduction Another 2-year period within the last 5 may be chosen if justified

30 Statewide Compliance Certification Source must certify to permitting authority that all sources owned or operated within that state are in compliance or on a schedule of compliance

31 Alternatives Analysis Source must submit an analysis of alternative Sites Sizes Production processes Environmental control techniques Source must consider multiple locations and demonstrate that chosen location is best for project, considering its impacts

32 Using the Alternatives Analysis to Raise Potential “Costs” to the Tribe Section 173(a)(5) of the CAA requires the permitting authority to determine whether “an analysis of alternative sites, sizes, production processes, and environmental control techniques … demonstrates that benefits of the proposed source significantly outweigh the environmental and social costs imposed as a result of its location, construction, or modification. This section has been used to successfully to challenge projects

33 Summary NA NSR rules apply to major sources located in non-attainment areas Applicability is based on a source’s emissions of the pollutant for which the area is in nonattainment Major sources must achieve LAER (Lowest Achievable Emission Rate), which is more restrictive than BACT Major sources must get offsets and demonstrate that benefits of the source outweigh costs