New Source Review Reform & the PAL Tom Wood September 18,2003

2 Industry Goals Flexibilility Certainty Compliance Fairness

3 PALs and PSELs Oregon’s history with PSEL –Baseline: 12 month emissions period with last month no later that December 1978 Emissions proved through new source review –Mandatory limits for all pollutants –Emissions increases that do not require a PSEL increase cannot by definition trigger NSR

4 PALs and PSELs Oregon’s history with PSEL –All permits carry compliance demonstration methodology in permit –All permits go through public notice & comment –All permits require emission factor verification for “significant” emission units

5 PAL v. PSEL PAL –Some pollutants –Major sources –No need to determine if net emissions increase –Strong incentive to net –Based on actuals PSEL –All pollutants –All sources –No need to determine if net emissions increase –Strong incentive to net –Based initially on actuals, enhanced on allowables after NSR

6 Federal PAL Baseline Actual Emissions Step 1: Divide plant into new ( 2 years old) Step 2: For existing units, choose 24 consecutive month period in past 10 years Step 3: Determine annual average actuals (tpy) for that period (including fugitives) Step 4: Determine PTE for any EU constructed after the 24 month period –Applies to new or existing EUs

7 Federal PAL Baseline Actual Emissions Step 5: Subtract actuals for any EU included in baseline actuals that has subsequently been permanently shut down or disabled Step 6: Decrease baseline actuals to reflect currently applicable requirements Step 7: Add baseline actual emissions to post-baseline PTE Step 8: Add 1 SER

8 Duration PAL: 10 years PSEL: Indefinite, but permit renewed every 5 years

9 PAL Renewal Determine: –A. PTE of source –B.Baseline actual emissions (anew) + SER + 20 percent If PAL is less than A and B, then it can be renewed as is If PAL is greater than A, but less than B, it cannot be renewed above the PTE level

10 PAL Renewal If PAL is less than A but greater than B, then permitting authority has discretion as to level at which to renew PAL –Dangerous disincentive to take voluntary reductions if there is no certainty as to retaining higher PAL

11 PAL Increases Increases allowed if: –Adding or changing EUs, and –BACT in place for all baseline EUs w/PTE > SER Prior BACT or LAER is a shield if < 10 yrs old BUT any new EUs or existing EUs undergoing a change resulting in any emissions increase, must go through NSR –No carveout for increases < SER

12 PAL Increases Federal Program: Baseline actuals for significant & major EUs will be reduced to reflect BACT –Unclear if that means they need to actually install BACT Oregon program: All EUs that experienced more than a de minimis increase since baseline must install BACT, but only the increase modeled

13 PAL Increases New PAL equals: –1. Allowable emissions of the new or modified EUs, plus –2. Baseline actual emissions of small EUs, plus –3. Baseline actual emissions of significant EUs adjusted to reflect BACT

14 Source Relaxation 52.21(r)(4): Source relaxation rule PAL trumps source relaxation rule This concept has worked well for Oregon as the PSEL is the presiding cap on PTE

15 PAL Monitoring System Quantification of each EU’s emissions on a monthly basis Source test or other direct measurement data required for each EU subject to PAL at application time –Oregon experience shows source testing every EU is neither necessary or appropriate

16 PAL Monitoring System Revalidate emission factors every 5 years –Performance test –“other scientifically valid means” Must operate EU in intended range of operation during source test Alternatives to emission factors –CEMS –Mass balance –Predictive monitoring systems

17 BIG Benefits Debottlenecking goes away –Going away anyway? Flexibility Upfront resource drain, long term decrease in use of agency resources

18 Issues Netting between different source types –Can you net tall hot stack against ground level source Left to agency discretion to require modeling if NAAQS threatened Consequences of finding emission factors were off –Enormous resources consumed recalculating baseline emissions given historic nature –10 year lookback better than 1978 –Public notice for every change? Consequences of data availability gaps

19 Issues Handling of sources that can’t be reliably source tested Concern over uncertainty at renewal Initial fear of PAL –Sophisticated Oregon sources have come to love Difficulty of having patchwork PALs

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21 Pollution Control Projects Existed for years as creature of guidance Local permitting authorities wary No regulatory certainty Many good projects did not happen Changes add certainty But…

22 Pollution Control Projects Local authorities and EPA must allow for it to be self-implementing –Avoids delay –Designated lists allow this There should not be an absolute prohibition on production increases –Allow for evaluation of environmental benefit