1. 1 NSR Rule Review and Guidance 25 Pa. Code, Chapter 121. General Provisions Chapter 127 Subchapter E. New Source Review The Allegheny Mountain Section of the Air & Waste Management Association March 13, 2008 Holiday Inn, Pittsburgh, PA Virendra Trivedi, Chief, NSR/Title V Section Division of Permits, Bureau of Air Quality 717-787-4325 Vtrivedi@state.pa.usVtrivedi@state.pa.us

2. 2 What is New Source Review (NSR)? NSR is a preconstruction permitting program applicable to major new or modified major stationary facilities. NSR permitting has two different components which address increased emissions of criteria pollutants depending on the attainment designation of the area in which the facility is located.  Prevention of Significant Deterioration (PSD)  Nonattainment New Source Review (NSR)

3. 3 NSR Program Federal PSD Reform regulations in 40 CFR 52.21 are adopted and incorporated by reference in their entirety in the Pennsylvania Code.  Title 25, Chapter 127, Subchapter D  Effective in Pennsylvania as of March 3, 2003 NSR regulations at 25 Pa. Code Chapter 127, Subchapter E were amended on May 19, 2007.

4. 4 PADEP’s NSR regulations These amended NSR requirements apply to an owner or operator of a facility to which a plan approval will be issued by the Department after May 19, 2007. The final NSR regulations were submitted to the United States Environmental Protection Agency (EPA) on August 9, 2007, as an equivalency demonstration and revision to the Pennsylvania State Implementation Plan (SIP).

5. 5 PADEP’s NSR regulations (Continued) Before you submit a plan approval application, you must determine whether the NSR regulations apply to the proposed project. The term “project” means a physical change or change in the method of operation of an existing facility, including a new emission unit. The term “emissions unit” is defined at 25 Pa. Code § 121.1. An existing emissions unit is a part of a facility that emits or has the potential to emit a regulated NSR pollutant and has existed for more than 2 years.

6. 6 What is a major facility? The term “major facility” is defined at 25 Pa.Code Section 121.1. A major facility has the potential to emit at least 100 tons per year (tpy) of a regulated NSR pollutant. These thresholds have been lowered to: 50 tpy for volatile organic compounds (VOCs) and 100 tpy for NOx in moderate nonattainment areas 25 tpy for VOCs and NOx in severe nonattainment areas.

7. 7 Ozone Nonattainment Areas Major facilities located in Philadelphia CMSA (counties of Bucks, Chester, Delaware, Montgomery or Philadelphia) are subject to the requirements applicable to severe nonattainment areas for ozone. [25 Pa. Code §127.203(b)] The remainder of the state is treated as a moderate ozone nonattainment area for VOCs and NOx even though the counties are classified as attainment or “basic” since Pennsylvania is included in the Northeast Ozone Transport Region. [25 Pa. Code §127.201(c)]

8. 8 PM-2.5 Nonattainment Areas EPA has indicated that you may continue to use PM-10 as a surrogate of PM-2.5

9. 9 NSR applicability An applicability determination is the process for determining which new source requirements apply to an existing major facility. An applicability determination consists of two steps: Step 1: Emissions increase due to the project Step 2: Net emissions increase calculation The provisions in 25 Pa. Code Sections 127.203 and 127.203(a) outline NSR applicability requirements.

10. 10 Step 1: Emissions increase due to the project The calculation of an emissions increase due to the project depends on whether the project includes new emissions units or existing emissions units. You need to consider only the emissions increases associated with the project, not any emissions reductions.

11. 11 Step 1: Emissions increase due to the project Physical change or change in method of operation at existing emissions units: Baseline actual to projected actual emissions §127.203a(a)(1)(i)(A) Construction of a new emissions unit Potential to emit (PTE) §127.203a(a)(1)(i)(B)

12. 12 Baseline Actual Emissions §127.203a(4) PADEP NSR Approach The average rate, in tpy, during a consecutive 24-month period within the five- year period. The Department may approve a different period within the last 10 years if it is more representative of the normal source operation. Federal NSR Approach The average rate, in tpy, during a consecutive 24- month period selected by the owner or the operator within the ten-year period. (Non- EGU)

13. 13 Baseline Emissions (Continued) PADEP NSR Approach The same consecutive 24-month period shall be used for all regulated NSR pollutants unless the owner or operator demonstrates, that a different consecutive 24-month period is more appropriate. Federal NSR Approach A different consecutive 24- month period is allowed for a different pollutant.

14. 14 Projected actual emissions §127.203a(5) Projected actual emissions is the maximum annual rate in tpy at which an existing emissions unit is projected to emit a regulated NSR pollutant. In projecting the emissions, you should consider both the expected and highest projections of the business activity that could be expected to be achieved.

15. 15 Projected actual emissions (Continued) PADEP NSR Approach The projected actual emissions must be incorporated into the permit as an emission limit. The owner or operator must monitor the emissions and maintain records. Federal NSR Approach The projected actual emissions are not incorporated as a permit limit. The owner or operator must monitor the emissions and maintain records.

16. 16 Product demand growth § 127.203a(a)(1)(i)(A) and § 127.203a(a)(5)(i)(C) When you compare baseline actual emissions to projected actual emissions, you may adjust the projection to exclude any portion of the emissions increase that the changed unit(s) could have accommodated during the 24- month baseline period, AND is unrelated to the change.

17. 17 Final procedure of Step 1 Final procedure of Step 1 of NSR applicability is to compare emissions increase in each regulated NSR pollutant due to the project with the applicable emissions rate listed in the definition of significant. The applicable emissions rate listed in the definition of significant is: 40 tpy of VOCs or NOx (moderate nonattainment areas) 25 tpy of VOCs or NOx (severe nonattainment areas) 15 tpy of PM-10

18. 18 Final procedure for Step 1 (Continued) Emissions increase due to the project ≥ the applicable emissions rate that is significant; use provisions of §127.203a(a)(1)(ii) to calculate net emissions increase. Note: this approach is similar to the Federal NSR provisions. Emissions increase due to the project < the applicable emissions rate that is significant ; use provisions of §127.203a(a)(2) to calculate net emissions increase. De minimis emissions increase calculation.

19. 19 Step 2: NSR Applicability In the second step of a NSR applicability calculate the net emissions increase either using provisions of §127.203a(a)(1)(ii) [similar to Federal NSR] or §127.203a(a)(2) [De minimis emissions increase] ; and then compare it with the applicable emissions rate that is significant The second step of applicability for the facilities located in Philadelphia CMSA is different than the rest of the Pennsylvania. [25 Pa. Code §127.203(b)]

20. 20 Similar to the Federal NSR provisions Step 2: Net Emissions Increase Calculation Provisions of §127.203a(a)(1)(ii) Emissions increase due to the project ≥ the applicable emissions rate that is significant Net emissions increase = Increase in emissions due to the project Plus Other increases in actual emissions occurring within the 5-year period. Minus Other creditable decreases in actual emissions occurring within the 5-year period.  The 5-year period includes 5 years before construction on the project commences and the date that construction on the project is completed

21. 21 Similar to the Federal NSR provisions Step 2: Compare the calculated net emissions increase with the applicable significant rate If the net emissions increase ≥ the applicable emission rate that is significant, the proposed project is subject to the following NSR requirements: Emissions Offset Lowest Achievable Emissions Rate (LAER) Alternative Analysis If the net emissions increase < the applicable emission rate that is significant, the proposed project is not subject to the NSR requirements.

22. 22 De minimis emissions increase Step 2: Net Emissions Increase Calculation Provisions of §127.203a(a)(2) Emissions increase due to the project < the applicable emissions rate that is significant Net emissions increase = Proposed de minimis emissions increase due to the project Plus Other previously determined increases that occurred within 10 years period. Minus Other creditable decreases in actual emissions that occurred within 10 years period.

23. 23 De minimis emissions increase Step 2: Compare the calculated net emissions increase with the applicable significant rate §127.203a(a)(2) If the net emissions increase ≥ the applicable emission rate that is significant only the emissions offset requirements apply to the net emissions increase the proposed project is not subject to the LAER requirements If the net emissions increase < the applicable emission rate that is significant the proposed project is not subject to the NSR requirements.

24. 24 Example (Moderate Area) Existing NOx major facility proposed to construct a new Boiler D in 2008. Facility also proposed to replace Boiler C with Boiler D Potential to emit (PTE) of a new Boiler D = 39 tpy of NOx Average actual emission of Boiler C = 30 tpy of NOx Facility added a Boiler B in 2005 (PTE) = 19 tpy of NOx Facility added a Boiler A in 1999 (PTE) = 20 tpy of NOx Step 1: Emissions increase from the new Boiler D (39 tpy of NOx) is less the applicable emissions rate that is significant (40 tpy of NOx); therefore we will use the provisions of §127.203a(a)(2) to calculate net emissions increase.

25. 25 Example (Continued) Step 2 De minimis emissions increase calculation Net emissions increase = Proposed de minimis emissions increase due to the project [39 tpy (Boiler D)] Plus Other previously determined increases that occurred within 10 years period. [20 tpy (Boiler A) + 19 tpy (Boiler B) = 39 tpy] Minus Other creditable decreases in actual emissions that occurred within 10 years period. [30 tpy (Boiler C)] = 39 tpy + 39 tpy – 30 tpy = 48 tpy

26. 26 Example (continued) Step 2: The net emissions increase (48 tpy of NOx) is greater than the applicable emission rate that is significant (40 tpy of NOx) therefore: the owner or operator of the facility needs to provide 55.2 tpy (48 * 1.15) of NOx ERCs Boiler D is not subject to LAER requirements

27. 27 Creditable emission decreases or ERC Creditable emissions reduction or ERCs shall be: Surplus Permanent Quantifiable and Federally Enforceable [25 Pa. Code Section 127.207(1)]

28. 28 Major or Minor Source ERC Generation Techniques Shutdown of an existing source or a facility Permanent curtailment of production or operating hours. Improved control measures including improved control of fugitive emissions New technology and materials New process equipment Economic Incentive Program, Mobile Emission Reduction Credit Program, Airport Emission Reduction Credit Program [25 Pa. Code Section 127.207(5)]

29. 29 ERC: Amnesty period Expiring on May 19, 2008 Section 127.206 (r) provides a one-year amnesty period for the owner or operator of a facility, which has generated emission reductions for all criteria pollutants after January 1, 2002, to submit ERC registry applications to the Department for approval. Any facility owner or operator that missed the deadline to submit applications is given an opportunity to generate ERCs if the reductions are surplus, permanent, quantifiable and federally enforceable.

30. 30 ERC Registry Application §127.207 (2) ERC registry application shall be submitted to the Department within 2 years of the initiation of an emissions reduction used to generate ERCs. For deactivated sources or facilities, the following shall apply: Submit a written notice within 1 year after the deactivation of a source or facility to request preservation of the emissions in the inventory. Submit a maintenance plan in accordance with §127.11a or §127.215 (relating to reactivation of sources; and reactivation)

31. 31 Use of ERCs ERCs may be used to: satisfy NSR emission offset ratio requirements; “net-out" of NSR at ERC-generating facilities; sell or trade the ERCs for use as emission offsets at new or modified facilities. Pennsylvania has Reciprocity Agreements with New York and Maryland to allow interstate ERC trades.

32. 32 ERCs Status Since 1994, more than 201companies have submitted ERC registry applications. DEP has certified a total of 27,708.9 tpy of NOx, 12,872.3tpy of VOCs, and 1,156.27 tpy of PM10 ERCs. DEP has approved requests for trading of a total 14,596.5 tpy of NOx credits and 7,248.57 tpy of VOCs ERCs. Currently, the ERC registry system has 13,112.4 tpy of NOx, 5,394.73 tpy of VOCs and 357.46 PM- 10 credits available to use.

33. 33 Plantwide Applicability Limit (PAL) §127.218 PAL is an alternative approach for determining major NSR applicability. A PAL is an annual (facility-wide) emission limit (12-month rolling total, rolled monthly) under which the facility can make changes without triggering NSR review for that pollutant. Pollutant-specific 10-year term.

34. 34 Establishing a 10-year PAL §127.218(f) Determine baseline actual emissions for all existing emissions units using the same consecutive 24-month period for all units. A different 24-month period may be used for each different PAL pollutant. Add the pollutant-specific emissions rate that is significant to the baseline actual emissions for the PAL pollutant. Subtract any emissions from emissions units that operated during the 24-month period and have since been permanently shut down. Add the PTE for any emissions unit that was added to the major facility after the selected 24- month period.

35. 35 New sources installed under PAL §127.218(g)(10) Owners or operators of new sources or emission units added under an existing PAL must reduce or control emissions from new sources by using the best available technology (BAT) for new sources, as authorized under section 6.6(c) of the APCA BAT will not be required for sources modified after the PAL is established unless the cost of the modification “… exceeds 50% of the fixed capital costs that would be required to construct a comparable entirely new source.…”

36. 36 PAL Renewal §127.218(k) An owner or Operator may apply for renewal at least 6 months, but not earlier than 18 months before the date of permit expiration. If the emissions level from the facility is “equal to or greater than 80 percent of the PAL level, then PAL may be renewed at current level. If the emissions level from the facility is less than 80 percent then: The PAL may be established at a level that is more representative of baseline actual emissions, or a level that is appropriate based on air quality needs or other considerations.

37. 37 PAL Expiration §127.218(j) Within the timeframe specified for PAL renewals, the facility owner or operator shall submit a proposed allocation of the PAL to each emissions unit. The Department will decide whether and how the PAL will be distributed and issue a revised permit incorporating allowable limits for each emissions unit. Any subsequent physical or operational change at the facility will be subject to major NSR review.

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