RULES AND REGULATIONS
Title 25--ENVIRONMENTAL PROTECTION
ENVIRONMENTAL QUALITY BOARD
[25 PA. CODE CHS. 121 AND 127]
Nonattainment New Source Review
[37 Pa.B. 2365]
[Saturday, May 19, 2007]The Environmental Quality Board (Board) amends § 121.1 (relating to definitions) and Chapter 127 (relating to construction, modification, reactivation and operation of sources) to read as set forth in Annex A. This final-form rulemaking will be submitted to the United States Environmental Protection Agency (EPA) as a revision to the Pennsylvania State Implementation Plan (SIP).
This final-form rulemaking was adopted by the Board at its meeting of February 20, 2007.
A. Effective Date
This final-form rulemaking will be effective upon publication in the Pennsylvania Bulletin.
B. Contact Persons
For further information, contact John Slade, Chief, Division of Permits, Bureau of Air Quality, 12th Floor, Rachel Carson State Office Building, P. O. Box 8468, Harrisburg, PA 17105-8468, (717) 787-4325; or Robert ''Bo'' Reiley, Assistant Counsel, Bureau of Regulatory Counsel, 9th Floor, Rachel Carson State Office Building, P. O. Box 8464, Harrisburg, PA 17105-8464, (717) 787-7060.
C. Statutory Authority
This final-form rulemaking is adopted under section 5(a)(1) of the Air Pollution Control Act (APCA) (35 P. S. § 4005(a)(1)), which grants to the Board the authority to adopt regulations for the prevention, control, reduction and abatement of air pollution in this Commonwealth.
D. Background and Summary
1. Federal Clean Air Act
The primary goal of the Clean Air Act (CAA) (42 U.S.C.A. §§ 7401--7642) is to ensure the attainment and maintenance of air quality under the National Ambient Air Quality Standard (NAAQS) requirements under section 110 of the CAA (42 U.S.C.A. § 7410). The NAAQS are set at a level designed to protect public health and the general welfare. See section 109 of the CAA (42 U.S.C.A. § 7409). Standards have been established for the following six pollutants: sulfur oxides (SOx), nitrogen oxides (NOx), particulate matter (PM-10 and PM-2.5), carbon monoxide (CO), ozone (O3) and lead (Pb).
Section 107 of the CAA (42 U.S.C.A. § 7407) and section 110 of the CAA give each state primary responsibility for assuring that air quality within its borders is maintained at a level consistent with the NAAQS. This responsibility is achieved through the establishment of source-specific requirements in SIPs addressing the NAAQS.
A primary means of achieving the NAAQS is through the New Source Review (NSR) program, which places preconstruction review and permitting requirements on certain new and modified sources of air pollution to protect public health and air quality. The nature of the requirements depends on whether the source is to be located in an area that attains, or does not attain, the NAAQS for the pollutant in question.
In enacting the CAA, Congress expressed a concern that the costs of retrofitting existing sources with state-of-the-art air pollution control technologies could be prohibitively expensive. Congress concluded that it would be more cost-effective to require high levels of technological performance at new and modified sources, because they have more flexibility as to the location and design of control equipment than do existing sources. As a result, new and modified sources are subject to more stringent levels of control, and hence more costly controls, under the CAA than existing sources.
There are two sets of regulatory requirements that subject new and modified sources to more stringent levels of control--the Prevention of Significant Deterioration (PSD) under Title I, Part C of the CAA (42 U.S.C.A. §§ 7470--7479) and the nonattainment NSR requirements under Title I, Part D of the CAA (42 U.S.C.A. §§ 7501--7515) under the NSR preconstruction permitting program.
The NSR program subjects major new or ''modified'' sources of air pollution to preconstruction review and permitting requirements. The PSD program applies to sources that have the potential to emit at least 250 tons per year (TPY) of a regulated pollutant, or at least 100 TPY of a regulated pollutant, if the source falls within a listed source category. See 40 CFR 52.21(b)(1) (relating to prevention of significant deterioration of air quality). SIPs must also contain provisions to prevent significant deterioration of air quality. See 40 CFR 51.166 (relating to prevention of significant deterioration of air quality).
The nonattainment NSR program applies to sources that have the potential to emit at least 100 TPY of a regulated nonattainment pollutant. See section 302(j) of the CAA (42 U.S.C.A. § 7602(j)). These thresholds have been lowered for areas with more acute nonattainment problems--for instance, to 50 TPY for volatile organic compounds (VOCs) and 100 TPY for NOx in moderate areas, to 50 TPY for VOCs and NOx in serious ozone nonattainment areas, to 25 TPY for VOCs and NOx for severe areas and 10 TPY for VOCs and NOx for extreme areas. See section 182 of the CAA (42 U.S.C.A. § 7511a).
The purpose of the NSR program is to ensure that the proposed source meets all applicable air quality requirements before it is constructed. The nature of the NSR preconstruction requirements depends upon whether the source is to be located in an area that meets or fails to meet the applicable ambient air quality standards.
Major stationary sources located in attainment areas are subject to the PSD permit program. Before a person can construct a major source in an attainment area, that person must receive a permit under the PSD program. To receive that permit, a person must show that the proposed source will, among other things, comply with the ambient air quality levels designed to prevent air quality deterioration and will employ the ''best available control technology'' (BACT) for each regulated pollutant. See section 165 of the CAA (42 U.S.C.A. § 7475).
Major stationary sources located in nonattainment areas are subject to the nonattainment NSR area permit program, which the states are responsible for implementing through their SIPs. Before a person can construct a major source in a nonattainment area, that person must receive a permit under the nonattainment permit program. To receive that permit, a person must show that the proposed source will, among other things, offset its potential to emit nonattainment pollutants by securing emission reductions from a nearby facility at a greater than 1:1 ratio and will employ the ''lowest achievable emission rate'' (LAER) for each regulated pollutant. See section 173 of the CAA (42 U.S.C.A. § 7503).
2. NSR Reform at the Federal Level
In 1996, the EPA issued a proposed NSR rule ''to provide States with greater flexibility to customize their own regulations implementing the NSR program.'' 61 FR 38250, 38251 (July 23, 1996). The EPA also decided to ease the burden on industry of complying with NSR requirements by ''significantly reduc[ing] the number and types of activities at sources that would otherwise be subject to major NSR under the existing NSR program regulations.'' 61 FR 38251. The EPA estimated that the changes, if finalized, would result in approximately 50% fewer sources being subject to requirements under the PSD and nonattainment NSR provisions of the CAA. 61 FR 38319. However, the EPA explained that it would not allow environmental benefits to be sacrificed to relieve the alleged burden on industry. 61 FR 38250.
Two years later, the EPA published a Notice of Availability (NOA), in which it presented its preliminary conclusions on certain aspects of the proposed rule and requested additional public comment. 63 FR 39857 (July 24, 1998). The EPA concluded that several of the reforms proposed in 1996 required additional safeguards to protect the environment and ensure accountability on the part of industry. 63 FR 39859--39862.
In June 2002, after completing a review of the NSR program directed by the President's National Energy Policy Development Group, the EPA announced that it would finalize five elements of the proposed rule: (1) a revised methodology for determining whether a change at a source will increase emissions significantly, and thereby be considered a ''modification''; (2) a new way to determine the emissions baseline used in measuring whether a significant emission increase will occur; (3) a plantwide applicability limit (PAL) permit that would allow a source to avoid triggering NSR requirements if it does not exceed an emissions cap; (4) an exclusion from NSR for projects at a source designated as a ''clean unit''; and (5) an exclusion from NSR for changes that are classified as pollution control projects.
On December 31, 2002, the EPA published the NSR rule in the Federal Register which finalized the previous five elements. 67 FR 80186. For the PSD program, the NSR rule went into effect in this Commonwealth on March 3, 2003, because the Commonwealth automatically incorporated the Federal PSD requirements by reference under Chapter 127, Subchapter D (relating to prevention of significant deterioration of air quality). Since the Commonwealth does not incorporate the Federal nonattainment NSR provisions by reference, this final-form rulemaking is to address revisions regarding the Commonwealth's NSR program under Chapter 127, Subchapter E (relating to new source review), and will be submitted to the EPA as a revision to the Pennsylvania SIP.
The final version of the EPA's December 2002 rule contained neither the flexibility for states in implementing the rule provisions advertised in its proposed rule nor the additional accountability discussed in the NOA. Moreover, the regulations were likely to lead to increased air pollution, in turn causing harm to human health and the environment. To address these flaws, the Department of Environmental Protection (Department), together with a number of other states, filed a petition for review in the D.C. Circuit Court of Appeals challenging the rule. See New York et al. v. EPA (D.C. Cir.) (No. 02-1387 and consolidated cases).
On June 24, 2005, the Court of Appeals for the District of Columbia Circuit issued its opinion in New York et al. v. EPA which addressed the challenges of the states and other petitioners to the EPA's December 31, 2002, NSR regulations. See New York et al. v. EPA, 413 F.3d 3 (D.C. Cir. 2005). The Court upheld the NSR regulations in part, vacated them in part and remanded them in part. The Court upheld the EPA's revised methodology for calculating emissions increases, which determines whether those increases are significant thereby triggering the NSR requirements, by comparing prechange actual emission levels to post-change projected actual emission levels or ''actual-to-projected-actual'' calculation methodology. The Court upheld the EPA's 10-year ''look-back'' provision for calculating baseline emissions. This provision allows regulated entities to choose any 2 consecutive years in the preceding 10 (5 years for utilities) as their baseline. The Court also upheld the EPA's newly prescribed use of the 10-year look-back period for purposes of determining baseline emissions levels and for measuring contemporaneous increases and decreases in the context of setting PALs. The Court also upheld the EPA's ''demand growth exclusion'' which excludes from the calculation of emissions increases those increases not related to the change at the facility, but rather are attributable to growth in production as a response to increased product demand, which could have been accommodated by the facility before the change in question.
The Court vacated the clean unit exemption provision, on the grounds that the CAA requires any regulatory provision to evaluate emissions increases based on actual emissions instead of potential or allowable emissions. This provision would have exempted an emissions unit from additional control technology if state-of-the-art controls based on an NSR review had been installed within the preceding 10 years, or employed comparable state-of-the-art technology to comply with permit emission limits that would not violate other air quality requirements, even if any change in the emissions unit had increased the facility's net actual emissions.
The Court also vacated the pollution control project exclusion provision on the grounds that the CAA provided no authority to exempt modifications causing significant emissions increases of a pollutant, even if the modifications are implemented primarily to reduce emissions of other pollutants. This provision would have excluded projects from NSR review that reduced emissions of some pollutants, allowed increases in others, but had a net beneficial environmental effect.
In this same opinion, the Court remanded to the EPA for further consideration its provision that exempted facility owners or operators from recordkeeping requirements if they believed a change had no reasonable possibility of producing a significant emissions increase. The Court found that the EPA had not adequately explained how it would be able to detect and enforce against facilities improperly employing this exemption without adequate records being available.
In addition to the EPA's December 2002 NSR rule, the EPA promulgated a number of other final rules that the Board addresses in this final rule related to when a facility is considered a major facility for the purposes of NSR. On April 30, 2004, the EPA published two final rules related to the 8-hour ozone NAAQS. The first rule is entitled ''Air Quality Designations and Classifications for the 8-Hour Ozone National Ambient Air Quality Standards: Early Action Compact Areas With Deferred Effective Dates.'' 69 FR 23858. Among other things, this rule designated Bucks, Chester, Delaware, Montgomery and Philadelphia Counties as moderate nonattainment with the 8-hour ozone NAAQS. 69 FR 23931.
The second rule that the EPA published on April 30, 2004, is entitled ''Final Rule To Implement the 8-Hour Ozone National Ambient Air Quality Standard--Phase 1.'' 69 FR 23951. In that final action, the EPA addressed certain implementation issues related to the 8-hour standard, including the nonattainment major NSR program mandated by Title I, Part D of the CAA. This rule, among other things, determined that the CAA does not compel the EPA to retain the 1-hour ozone NAAQS major NSR requirements in implementing the 8-hour ozone NAAQS because, it concluded, NSR is not a control measure. The Department viewed this rule and its conclusions as a violation of the CAA's antibacksliding provisions under sections 172(e) and 193 of the CAA (42 U.S.C.A. §§ 7502(e) and 7515). Therefore, on June 29, 2004, the Commonwealth and a number of other states filed a joint petition for review challenging this rule in the Court of Appeals for the District of Columbia Circuit. See Massachusetts v. EPA (D.C. Cir.) (No. 04-1207). The Department believed this EPA final rule provided less air quality protection than the previous regulatory requirements in at least two ways. First, it raised the tonnage thresholds defining major new and modified sources subject to NSR, which meant that fewer sources would be subject to NSR. Second, for those sources that trigger NSR, it reduced the ratio of emission offsets required, which meant that emissions would increase. On December 22, 2006, the Court of Appeals for the District of Columbia Circuit endorsed the Department's position in this case. See South Coast Air Quality Management District v. EPA, et al., 472 F.3d 882 (D.C. Cir 2006). Specifically, the Court found that NSR is a control measure and to weaken its requirements under the SIP would constitute impermissible backsliding under the CAA. As a result, in implementing the 8-hour ozone NAAQS, all 1-hour ozone NAAQS major NSR requirements in this Commonwealth and in the five-county Philadelphia area will remain in place.
On August 3, 2005, the EPA published a final rule entitled ''Identification of Ozone Areas for Which the 1-Hour Standard Has Been Revoked and Technical Correction to Phase 1 Rule.'' 70 FR 44470. This rule codifies the revocation of the 1-hour standard for those areas with effective 8-hour ozone designations. This rule revoked the 1-hour ozone standard effective June 15, 2005, for all areas in this Commonwealth. 70 FR 44477.
3. Final-Form Rulemaking Changes in Response to NSR Reform
Since the Board determined that not all of the EPA's final NSR regulatory provisions are sufficiently protective of the air quality needs of this Commonwealth, the final-form rulemaking incorporates some, but not all, of the changes which survived judicial scrutiny in New York et al. v. EPA. Moreover, the Board determined that to the extent any provisions of the final-form rulemaking are more stringent than those required under the CAA, they are necessary to achieve or maintain the NAAQS, and therefore permissible actions under section 4.2(b)(1) of the APCA (35 P. S. § 4004.2(b)(1)). In addition, the final-form rulemaking is consistent with the Court's decision in the South Coast Air Quality Management District case and the anti-backsliding provisions of sections 172(e) and 193 of the CAA, and the Commonwealth will retain the 1-hour ozone NAAQS major NSR requirements in implementing the 8-hour ozone NAAQS.
One of the areas where this final-form rulemaking is different than the EPA's approach is the ''look back'' provision for calculating baseline emissions. Under the EPA's approach this provision allows regulated entities to choose any 2 consecutive years in the preceding 10 as their baseline, and in the case of utilities, any consecutive 2-year period within the preceding 5 years as their baseline, unless a different time period is more representative of normal operations. Under the Commonwealth's approach in § 127.203a (relating to applicability determination), regulated entities operating in this Commonwealth may choose any consecutive 24-month period in the preceding 5 years as their baseline. However, the Department may allow the use of a different consecutive 24-month period within the last 10 years upon a written determination that is more representative of normal source operations.
Another area where the final-form rulemaking is more protective than the EPA's approach is the installation of emission controls on new emission units under an existing PAL. Under the EPA's approach, the installation of emission controls on new emission units under an existing PAL is not necessary if a facility is able to continue to comply with its PAL. Under the Commonwealth's approach in § 127.218 (relating to PALs), the owners and operators of new emission units added under an existing PAL will need to reduce or control emissions by using the ''best available technology'' (BAT) as authorized under section 6.6(c) of the APCA (35 P. S. § 4006.6(c)). However, a BAT analysis will not be required where existing units are modified under a PAL.
It should be noted that the Commonwealth has an existing regulatory provision similar to a PAL under § 127.448 (relating to emissions trading at facilities with Federally enforceable emissions cap) in which the owner or operator of a facility may trade increases and decreases in emissions between sources with Federally enforceable emissions caps at a permitted facility. This existing regulatory provision may not be construed to allow an emissions cap (for example, a synthetic minor permit limit taken to avoid an applicable requirement) established in an operating permit to be a de facto PAL or interpreted by the Department in any way to circumvent the NSR requirements, except for emission caps that are expressly created to be a PAL under Chapter 127, Subchapters D and E.
Another area of difference between the EPA's approach and the Commonwealth's approach relates to the treatment of projected actual emissions related to a project. Under the EPA's approach, owners or operators of a facility must track their projected actual emissions against the facility's post-change emissions for 5 years following resumption of regular operations. The EPA presumes that any increases that occur after 5 years are not associated with the physical or operational changes. Under the Commonwealth's approach in § 127.203a(a)(5) (iii)(A), the projected actual emissions for the regulated NSR pollutant must be incorporated into the required plan approval or operating permit as an emission limit. This approach ensures that emissions from modifications are legally enforceable. Furthermore, consistent with Federal requirements, under § 127.203a(a)(5)(iii)(B), the owner or operator shall demonstrate compliance with the established total emission limit and for 5 years, or 10 years when there will be a capacity increase, shall also demonstrate compliance with the projected actual emission increase which is due solely to the project.
In addition to the differences between the EPA's approach and the Commonwealth's approach to the general NSR rule provisions, the Board also finalized a provision where facilities located in Bucks, Chester, Delaware, Montgomery or Philadelphia County that emit or have the potential to emit at least 25 TPY of VOCs or NOx will continue to be considered major facilities and will be subject to the requirements applicable to a major facility located in a ''severe'' nonattainment area of ozone. This means that any facility that was major for VOCs or NOx while the region was classified as ''severe'' nonattainment for the 1-hour ozone standard will remain major for those pollutants while the region is classified as moderate nonattainment under the 8-hour ozone standard. Under the EPA's approach, these facilities are major, and therefore subject to NSR, only if they emit 50 TPY for VOCs and 100 TPY for NOx since the area is classified as moderate nonattainment with the 8-hour ozone standard. Moreover, under the EPA's approach, offset requirements change from 1:3 to 1:1.15, while under the Commonwealth's approach, the offset requirements would remain unchanged. As previously noted, the Court in the South Coast Air Quality Management District case endorsed the Department's position that NSR is a control measure and to weaken its provisions under the SIP would constitute impermissible backsliding. Consequently, the finalized major source threshold and offset requirements are consistent with, and no more stringent than, the requirements under Federal law. Moreover, since the 8-hour ozone standard is more stringent than the revoked 1-hour ozone standard, and to ensure that the Philadelphia area achieves and maintains the NAAQS, the final-form rulemaking is reasonably necessary to ensure that these facilities emit no more VOCs and NOx than previously allowed for attaining the 1-hour ozone standard.
As part of this final-form rulemaking, in Chapter 127, Subchapter E, the Department added the terms and definitions ''commence'' and ''begin actual construction.'' These terms and definitions are already part of Pennsylvania law under Chapter 127, Subchapter D, since the PSD requirements in 40 CFR Part 52 (relating to approval and promulgation of implementation plans), which are adopted in their entirety by the Department and incorporated by reference. ''Commence'' is applied to the construction or modification of a facility when the owner or operator has all necessary plan approvals and has either begun or caused to begin a continuous program of actual onsite construction, or has entered into binding contractual arrangements to undertake a program of actual construction. The term ''begin actual construction'' refers to, among other things, the initiation of physical onsite construction activities on an emissions unit that are of a permanent nature. These terms and definitions are in addition to the current definition of ''construction'' under § 121.1, which applies to physical onsite construction only.
Within the context of § 127.11 (relating to plan approval requirements), if a person wishes to lawfully construct, assemble, install or modify a stationary air contamination source in this Commonwealth, he must apply for and receive a written plan approval from the Department. While the term ''construct'' is not defined under the APCA, the definition of ''construction'' in § 121.1 is consistent with the term ''begin actual construction.'' Section 127.11 does not use the term ''commence.'' As these terms and definitions relate to § 127.11, a person would be in violation of the plan approval requirements if actual construction of a source at a nonmajor or State-only facility had taken place prior to receiving a written plan approval. Consequently, the Department does not consider whether a person entered into binding contractual arrangements prior to receiving a written plan approval to determine compliance with § 127.11 as it relates to a nonmajor or State-only facility.
Within the context of § 127.13 (relating to extensions), if construction, modification or installation of an air contamination source is not started within 18 months of the issuance of a plan approval or there is more than an 18-month lapse in construction, modification or installation, a new plan approval is required unless an extension is granted. This provision is applicable to both the nonattainment NSR program for major sources and for nonmajor or State-only facilities. As the terms ''construction'' and ''commence'' relate to § 127.13, a person would be in violation of this provision if neither actual onsite construction had begun nor binding contractual arrangements to undertake a program of actual construction had been entered into. Consequently, the Department does consider whether a person has entered into binding contractual arrangements to determine compliance with § 127.13 as it relates to both major and nonmajor sources.
As previously alluded to, § 127.13(b) has been amended to provide that the Department may extend the 18-month period to construct, modify or install an air contamination source under a valid plan approval upon a satisfactory showing that an extension is justified. This revision has been made to ensure consistency between the Pennsylvania and Federal programs. However, a project that does not commence construction, modification or installation within the original 18-month period will be reevaluated for BACT, LAER and BAT. The Department will require this reevaluation to ensure that the previously established emission rates remain appropriate for the project. When a reevaluation finds that the established emission rates should be updated, the Department will require that the change be reflected in an updated plan approval. This reevaluation is consistent with Federal guidance on this issue.
The Department worked with the Air Quality Technical Advisory Committee (AQTAC) in the development of this final-form rulemaking. The AQTAC requested that the Department consider extending the deadline for the submission of emission reduction credit (ERC) registry applications from 1 year to 3 years from the date of the initiation of the ERC generating emission reductions. The AQTAC also requested that the Department consider decreasing the time frame for the aggregation of the de minimis emission increases from 15 years to 10 years. The Department changed the submittal deadline to 2 years and has changed the aggregation period to 10 years. At its January 4, 2007, meeting, the AQTAC recommended that the Board consider the final amendments at its February 20, 2007, meeting.
E. Summary of Final-Form Rulemaking
The final-form rulemaking adds or amends the following definitions in § 121.1: ''actual emissions,'' ''actual PAL for a major facility,'' ''allowable emissions,'' ''baseline actual emissions,'' ''begin actual construction,'' ''CEMS--continuous emissions monitoring system,'' ''CERMS--continuous emissions rate monitoring system,'' ''CPMS--continuous parameter monitoring system,'' ''commence,'' ''creation,'' ''deactivation,'' ''de minimis emission increase,'' ''electric utility steam generating unit,'' ''emissions unit,'' ''Federally enforceable,'' ''fugitive emissions,'' ''generation,'' ''major facility,'' ''major modification,'' ''necessary preconstruction approvals or permits,'' ''net emissions increase,'' ''PAL--plantwide applicability limit,'' ''PAL effective date,'' ''PAL effective period,'' ''PAL major modification,'' ''PAL permit,'' ''PAL pollutant,'' ''PEMS--predictive emissions monitoring system,'' ''project,'' ''projected actual emissions,'' ''regulated NSR pollutant,'' ''secondary emissions,'' ''significant,'' ''significant emissions unit,'' ''significant net emissions increase'' and ''small emissions unit.''
New definitions were either added or revised between proposed and final-form rulemaking. These definitions include: ''air contamination source,'' ''BACT--best available control technology,'' ''creditable emissions decrease,'' ''major emissions unit,'' ''major NOx emitting facility,'' ''major VOC emitting facility,'' ''replacement unit'' and ''significant emissions increase.'' In addition to these changes between proposed and final-form rulemaking, proposed § 127.201a was deleted and the definitions subject to this final-form rulemaking will remain under § 121.1.
In response to comments submitted by the EPA, the Department added the phrase ''enforceable as a practical matter'' after the term ''Federally enforceable'' in certain definitions of certain terms like ''allowable emissions.'' A requirement is ''legally enforceable'' if the Department, the EPA or some authority has the right to enforce the restriction. Practical enforceability for a source-specific permit is attained if the permit provides for a technically-accurate limitation and the portions of the source subject to the limitation; the time period for the limitation (hourly, daily, monthly and annual limits such as rolling annual limits); and the method to determine compliance, including appropriate monitoring, recordkeeping and reporting. See 67 FR 80191. Consequently, ''enforceable as a practical matter'' is achieved if a requirement is both legally and practically enforceable. See 67 FR 80191.
Section 127.13 has been amended to provide that the Department may extend the 18-month period to construct, modify or install an air contamination source under a valid plan approval upon a satisfactory showing that an extension is justified. This revision has been made to ensure consistency between the Pennsylvania and Federal program. However, the Department will reevaluate a project that does not commence construction, modification or installation within the original 18-month period for BACT, LAER and BAT to ensure that emission rates remain appropriate for the project. This reevaluation is consistent with Federal guidance on this issue.
Section 127.201 (relating to general requirements), which applies to an owner or operator of a facility when an emission increase that is significant would occur, is revised. An additional revision under this section provides that facilities located in Bucks, Chester, Delaware, Montgomery or Philadelphia County that emit or have the potential to emit at least 25 TPY of VOCs or NOx will be considered a major facility and be subject to the requirements applicable to a major facility located in a ''severe'' nonattainment area of ozone. No changes were made to this section between proposed and final-form rulemaking.
Section 127.201a (relating to measurements, abbreviations and acronyms) adds measurements, abbreviations and acronyms. These include ''BAT--best available technology,'' ''CO--carbon monoxide,'' ''lb--pounds,'' ''µg/m3--micrograms per cubic meter,'' ''mg/m3--milligrams per cubic meter,'' ''O2--oxygen,'' ''SOx--sulfur oxides'' and ''TPY--tons per year.''
Section 127.201a was revised between proposed and final-form rulemaking to delete ''CO2--carbon dioxide,'' ''Hg--mercury'' and ''KWH--kilowatt hour (based on electric generation.'' Moreover, this section was renumbered from § 127.201b to § 127.201a because proposed § 127.201a was deleted since the definitions were moved to § 121.1.
Section 127.202 (relating to effective date) was revised between proposed and final-form rulemaking to amend the effective date and to delete, among other things, PM-2.5 and its precursors as pollutants. Minor changes were made to this section between proposed and final-form rulemaking. For instance, PM-2.5 precursors and PM-2.5 were deleted.
Section 127.203 (relating to facilities subject to special permit requirements) was revised and applies to the construction of a new major facility or modification at an existing facility located in a nonattainment area or located in an attainment or unclassified area, which impacts a nonattainment area in excess of certain significance levels. This section also includes provisions that would apply to an owner or operator of a facility located in Bucks, Chester, Delaware, Montgomery or Philadelphia County or an area classified as a serious or severe ozone nonattainment area. Additionally, this section identifies when the NSR requirements apply and do not apply to owners and operators of facilities.
Section 127.203 was revised between proposed and final-form rulemaking to clarify that if the aggregated emissions increase calculated using subsection (b)(1)(ii) meets or exceeds the emission rate that is significant, only the emission offset requirements in § 127.205(3) (relating to special permit requirements) apply to the aggregated emissions. In addition, minor editorial changes were also made to this section between proposed and final-form rulemaking.
Section 127.203a was revised and identifies the provisions to be used by the owner or operator of a facility during the plan approval application process for the construction of a new major facility or modification at an existing major facility to determine if the NSR requirements are applicable to that major facility. The revisions under this section include provisions to determine net emission increases, baseline actual emissions and projected actual emissions.
Section 127.203a was significantly revised between proposed and final-form rulemaking as to form, but not substance. This section still identifies the provisions to be used by the owner or operator of a facility during the plan approval application process, but these provisions have been clarified in response to comments on the readability of this section. Clarifications were also made to those provisions regarding net emission increases, baseline actual emissions and projected actual emissions. Nevertheless, the substance of the applicability determination remains the same. That is, as part of the plan approval application, the owner or operator of the facility shall calculate whether a significant emissions increase and a significant net emissions increase will occur as a result of a physical change or change in the method of operation. The owner or operator of the facility will use the procedures in subsection (a)(1)(i) to calculate the emissions increase in a regulated NSR pollutant due to the project, and the procedures in subsection (a)(2)(ii) to calculate the net emissions increase in a regulated NSR pollutant. A project is a major modification for a regulated NSR pollutant if it causes two types of emissions increases--a significant emissions increase and a significant net emissions increase. If the project causes a significant emissions increase, then the project is a major modification if it also results in a significant net emissions increase.
For instance, to determine emissions increases due to the project for existing units, use § 127.203a(a)(1)(i)(A) when the emissions increases equals projected actual emissions minus baseline actual emissions. To determine emissions increases due to the project for new emissions units, use § 127.203a(a)(1)(i)(B) when emissions increases equal the potential to emit from each new emissions unit. Then compare the emissions increases due to the project with the applicable emissions rate listed in the definition of the term ''significant'' in § 121.1. If the emissions increase due to the project exceeds the applicable emissions rate, then use § 127.203a(a)(1)(ii) to calculate the net emissions increase. If the emissions increase due to the project does not exceed the listed applicable emissions rate, then use § 127.203a(a)(2) to calculate the net emissions increase.
Under § 127.203a(a)(1)(ii), a net emissions increase equals the increase in emissions due to the project, plus other increases in actual emissions occurring within the 5-year period, minus other decreases in actual emissions occurring within the 5-year period. Then compare the net emissions increases with the applicable emissions rate listed in the definition of ''significant'' in § 121.1. If the net emissions increase is equal to or exceeds the applicable emission rate that is significant, the proposal is subject to all of the nonattainment NSR requirements in § 127.205 (relating to special permit requirements).
Under § 127.203a(a)(2), a net emissions increase equals the proposed de minimis emissions increase due to the project, plus other previously determined increases that occurred within 10 years prior to the date of a complete plan approval application, minus other decreases in actual emissions that occurred within 10 years prior to the date of a complete plan approval application. Then compare the aggregated net emissions increase with the applicable emissions rate listed in the definition of ''significant.'' If the net emissions increase equals or exceeds the applicable emissions rate that is significant, only the emissions offset requirements in § 127.205(3) apply to the aggregated emissions. The proposed project is not subject to the LAER requirements.
It should be noted that between proposed and final-form rulemaking, the aggregation period under this section was changed from 15 years to 10 years. As a result, the proposed increases and decreases in emissions are aggregated with other increases and decreases which occurred within 10 years prior to the date of the submission of a complete plan approval application.
Under § 127.203a(a)(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 any of the 5 years following the date the unit resumes regular operations after the project, or in any of the 10 years following that date, if the project involves increasing the emissions unit's design capacity or its potential to emit of that regulated NSR pollutant and full utilization of the unit would result in a significant emissions increase or a significant net emissions increase at the major facility.
Under § 127.203a(a)(5)(iii), if the projected actual emissions for a regulated NSR pollutant are in excess of the baseline actual emissions, among other things, the projected actual emissions for the regulated NSR pollutant must be incorporated into the required plan approval or operating permit as an emission limit.
Section 127.204 (relating to emissions subject to this subchapter) is revised to make minor clarifications to ensure that it is consistent with the other changes made to Chapter 127, Subchapter E. No additional changes were made to this section between proposed and final-form rulemaking.
Section 127.205 was revised to add additional provisions as to when LAER applies to a proposed modification within the contemporaneous period of a proposed emission increase and when emission offsets are required for the entire net emission increase that occurred over the contemporaneous period.
Section 127.205 was revised between proposed and final-form rulemaking. Paragraph (7) was added to provide that the Department may determine that the BAT requirements in Chapter 127 are equivalent to BACT or LAER. This provision has been added to allow the Department the discretion to make this determination only when it has conducted a vigorous and documented BACT or LAER analysis that contains enough information to make a BAT determination. Consequently, the intent of this provision is not to allow the Department to automatically make this determination on each and every BACT or LAER analysis or to treat BACT or LAER as equivalent to BAT. No additional changes were made to this section between proposed and final-form rulemaking.
Section 127.206 (relating to ERC general requirements) was revised to make minor clarifications to ensure that it is consistent with the other changes made to Chapter 127, Subchapter E. This section was revised between proposed and final-form rulemaking to provide that emission reductions occurring at a facility after January 1, 2002, but prior to the effective date of this final-form rulemaking may be used to generate ERCs in accordance with Chapter 127, Subchapter E, if a complete ERC registry application is submitted to the Department within 12 months of the effective date of this final-form rulemaking.
Section 127.207 (relating to creditable emissions decrease or ERC generation and creation) was revised to include that emission reductions necessary to meet BAT and allowance-based programs required by the CAA or APCA may not be used to generate creditable emission decreases or ERCs.
Section 127.207 was revised between proposed and final-form rulemaking to provide that the ERC Registry application deadline may be extended to 2 years from the initiation of an emissions reduction used to generate ERCs if the owner or operator of the source or facility either submits to the Department a maintenance plan in accordance with § 127.11a (relating to reactivation of sources) or a written request within 1 year of deactivation of the source or facility to request preservation of the emissions in the inventory. While the Department has always used the provisions of this section to determine creditable emissions decreases, the term ''creditable emissions decrease'' was added to make this clarification. Other minor clarifying changes were made to this section between proposed and final-form rulemaking.
Section 127.208 (relating to ERC use and transfer requirements) was revised to make minor clarifications to ensure that it is consistent with the other changes made to Chapter 127, Subchapter E. This section was revised between proposed and final-form rulemaking to provide that an owner or operator of a facility that is subject to allowance-based programs may generate, create, transfer and use ERCs in accordance with Chapter 127, Subchapter E and the applicable provisions of Chapter 145 (relating to interstate pollution transport reduction). Moreover, an owner or operator of a facility shall acquire ERCs for use as offsets from an ERC generating facility located within the same nonattainment area, except that the Department may allow the owner or operator to obtain ERCs generated in another nonattainment area if the other area has an equal or higher nonattainment classification than the area in which the facility is located and the emissions from the other area contribute to a violation of the NAAQS in the nonattainment area in which the facility is located.
Section 127.209 (relating to ERC registry system) was revised to make minor clarifications to ensure that it is consistent with the other changes made to Chapter 127, Subchapter E. Additional minor clarifying changes were made to this section between proposed and final-form rulemaking.
Section 127.210 (relating to offset ratios) was revised to make minor clarifications to ensure that it is consistent with the other changes made to Chapter 127, Subchapter E. Minor changes were made to this section between proposed and final-form rulemaking.
Section 127.211 was rescinded and remaining applicable provisions were moved to § 127.203a.
Section 127.212 (relating to portable facilities) was revised to include PM-2.5 and its precursors as pollutants and to make minor clarifications to ensure that it is consistent with the other changes made to Chapter 127, Subchapter E. This section was revised between proposed and final-form rulemaking. References to particulate matter, PM-10 precursors, PM-2.5 precursors and PM-2.5 were deleted.
Section 127.213 (relating to construction and demolition) was revised to make minor clarifications to ensure that it is consistent with the other changes made to Chapter 127, Subchapter E. No additional changes were made to this section between proposed and final-form rulemaking.
Section 127.214 was rescinded.
Proposed § 127.214a would have applied to an owner or operator of a project that uses advanced clean coal generation technology in a new electric utility steam generating unit or to retrofit or repower an existing electric utility steam generation unit. The qualifying electric utility steam generation unit will be deemed to meet the LAER control technology requirements of § 127.205 unless the Department determines that the performance requirements specified are less stringent than LAER.
Proposed § 127.214a was deleted between proposed and final-form rulemaking. As noted in the comment and response section of this preamble, the EPA cannot, under any circumstance, approve any provision regarding a presumptive LAER limit.
Section 127.215 (relating to reactivation) was modified between proposed and final-form rulemaking to provide that a facility, which is deactivated in accordance with subsection (a), may create ERCs only if an ERC registry application is filed within 2 years of deactivation. No additional changes were made to this section between proposed and final-form rulemaking.
Section 127.217 (relating to Clean Air Act Titles III--V applicability) was revised to make minor clarifications to ensure that it is consistent with the other proposed changes made to Chapter 127, Subchapter E. No additional changes were made to this section between proposed and final-form rulemaking.
Section 127.218 was added to include PALs. If a facility follows this section and emissions are kept below a plantwide actual emissions cap, then the regulations allow the facility to avoid the major NSR permitting process when making changes to the facility or individual emissions units. The PAL will impose an annual emissions limitation in TPY for the entire major facility. Each PAL must regulate emissions of only one pollutant. Each PAL will have an effective period of 10 years.
Section 127.218 was revised between proposed and final-form rulemaking. For instance, in setting the 10-year actual PAL level under subsection (f)(2), the owner or operator may use a different consecutive 24-month period for each different PAL pollutant. Similarly, in setting the 10-year actual PAL level under subsection (f)(4) for newly constructed emission units on which actual construction began after the 24-month period, the emissions must be added to the PAL level in the amount equal to the potential to emit of the emission units. Moreover, under subsection (f)(10), only new units would be subject to a BAT review. In addition, minor editorial changes were also made to this section.
F. Comments and Responses
One commentator stated that the Board strikes the appropriate balance to the extent that the Board developed an NSR proposal that differs from the Federal requirements. The Board agrees and believes that the final-form rulemaking strikes the proper balance between environmental protection and economic growth. In the recent decision by the U.S. Court of Appeals for the D.C. Circuit in South Coast Air Quality Management District v. EPA, the court indicated that requirements in place for the 1-hour ozone standard must be retained in accordance with the anti-backsliding provisions of section 172(e) of the CAA. Consequently, the 1-hour NSR applicability thresholds (25 TPY for VOCs/NOx) and emission offset requirements for 1-hour ozone nonattainment areas must continue to be imposed under Federal law. The Court determined that NSR is a ''control'' measure--not a ''growth measure.''
Commentators believed that the Commonwealth should adopt the Federal NSR proposal to ensure that the Commonwealth is not at a disadvantage to surrounding states. The Board does not believe that adoption of the State-specific NSR regulation will put this Commonwealth at an economic disadvantage. Many states in the Ozone Transport Region including Delaware, Maryland, New Jersey, New York and Virginia have chosen to adopt state-specific NSR regulations. It is evident that the Commonwealth is not alone in its belief that the Federal NSR rule is not adequate to protect its citizens. The final-form rulemaking incorporates some, but not all, of the EPA's NSR program changes. The Board believes the final-form rulemaking strikes an appropriate balance that meets the EPA's required NSR program elements while retaining important elements of the existing NSR program.
A commentator found that the term ''significant emissions increase'' is missing from the Commonwealth's definitions, presumably because the Commonwealth is not proposing a two-part applicability test as outlined in 40 CFR 51.165(a)(2) (relating to permit requirements). The Commonwealth must offer information to the EPA describing how a program that omits this minimum program element should be considered equivalent to Federal regulations. The Board agrees and inserted this term into the final-form rulemaking.
A commentator noted that the Commonwealth's definition of ''allowable emissions'' differs from the PAL-specific Federal definition in that it does not reflect the use of potential-to-emit to define allowable emissions. The Federal definition is broader in scope than the Commonwealth's definition. As noted in 40 CFR 51.165(f)(2), the Commonwealth's regulations must use the same definitions in the development of a PAL. Therefore, the EPA recommended that the Commonwealth revise its regulation to be consistent with the Federal definition of ''allowable emissions.'' The Board agrees and has revised this term.
Commentators stated that the proposed rulemaking moved many definitions from § 121.1 to proposed § 127.201a. New definitions were also added to § 127.201a. It is quite convenient and efficient to have all the definitions regarding the air programs in one location, rather than having to switch back and forth looking for definitions throughout various chapters. The Board agreed and all definitions from proposed § 127.201a were moved to § 121.1.
Commentators complained that the lbs/hr and lbs/day emissions rate triggers are burdensome if not impossible to estimate for some processes. Further, these triggers are in addition to the annual triggers that are specified in the Federal program. The Board determined that the retention of the hourly and daily applicability thresholds would require a complex analysis under actual to projected actual emissions test. Therefore, the Board removed lbs/hr and lbs/day requirements from the NSR regulation.
The EPA commented that the Federal term ''stationary source and building, structure, facility or installation'' corresponds with the Department's terms ''facility'' and ''source.'' It would appear that the Department's definition of ''facility'' is more inclusive in terms of defining the boundary of a source because it does not require any demonstration that pollutant-emitting activities be linked by SIC code. However, the Department's definition of ''source'' implies that there have to be actual air contaminant emissions to be considered a ''source,'' whereas the Federal definition of ''stationary source'' includes buildings, structures, facilities or installations that emit, or may emit, any air pollutant regulated by the CAA. The EPA recommended that the Department revise the regulations to include the Federal definitions of ''stationary source'' and ''building, structure, facility or installation'' so that these terms are consistently applied to both nonattainment NSR and PSD. Clarifying language in the preamble to the final-form rulemaking is also recommended.
The Board disagreed about the suggested revisions. The Department added the term ''air contamination source'' and a definition in § 121.1. Modification of the definition, which is identical to the definition of the term ''air contamination source'' in section 3 of the APCA (35 P. S. § 4003), to the form suggested by the EPA would require amendment of State law. The definition of ''facility'' already exists in § 121.1. This definition is used throughout Part I, Subpart C, Article III (relating to air resources) and affects many other regulatory sections; therefore, the definition of ''facility'' will not be changed.
The EPA commented that the Department's definition of ''allowable emissions'' differs from the PAL-specific Federal definition in that it does not reflect the use of potential-to-emit to define allowable emissions. The Federal definition is broader in scope than the Commonwealth's definition. As noted in 40 CFR 51.165(f)(2), the Commonwealth's regulations must use the same definitions in the development of a PAL. Therefore, the EPA recommended that the Board revise its regulation to be consistent with the Federal definition of ''allowable emissions.'' The Board revised the definition of ''allowable emissions'' and incorporated the clause ''for purposes of the PAL requirements in § 127.218, the allowable emissions shall be calculated considering the emission limitations that are enforceable as a practical matter on the emissions unit's potential to emit.''
Several commentators stated that the definition of ''major modification'' as written is imprecise. If conditions (A) and (B) or any combination thereof meet the criteria of the expression major modification, clarification is necessary. The Board agrees that the definition is meant to include both of these conditions under the Federal NSR rule and clarified the definition.
Commentators stated that the proposed definition of ''actual emissions'' differs from the Federal definition. The Federal definition does not require a written determination for a more representative period. The Board changed some of the wording of the definition of ''actual emissions'' to match that of the Federal definition. The Board believes a written determination for a more representative period is required because the determination should be a public record. This public record will consist of that portion of the written plan approval or permit application when the owner or operator justified the use of the different consecutive 24-month time period and the written determination issued by the Department.
The EPA commented that the Department does not have a separate definition of ''replacement unit'' but does address replacement units under ''emissions unit.'' In all cases, a replacement unit must be considered a new unit until it has operated for 2 years. Therefore, the Commonwealth's regulations are inconsistent with one of the minimum required elements (replacement unit) identified in NSR reform and must offer information to the EPA describing how this provision should be considered equivalent to the Federal regulations. The Board revised the definition of ''emissions unit'' to be consistent with the Federal definition and added the definition of ''replacement unit.''
All commentators stated that, for various reasons, the definition of ''actual emissions'' should not be limited to a ''consecutive 2-year period'' but to a ''consecutive 24-month period'' per the Federal NSR rule. The Board agrees that the EPA term of ''consecutive 24-month period'' is appropriate and will replace the proposed term of ''2-year period.''
Many commentators agreed that the lb/hr and lb/day de minimis aggregation thresholds are burdensome and should be eliminated. The EPA does not require a lb/hr or lb/day basis. The Board agrees and removed this provision from the final-form rulemaking.
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