O published its final rule significantly modifications do not - PDF document

G Environmental Alert January 2003 Clean Air Act’s New Source Review Update By Norman W. Spindel, Esq. and Timothy L. Borkowski, Esq. n December 31, 2002, the USEPA operations without undergoing NSR so long as the O published its final rule significantly modifications do not result in emissions that relaxing requirements of the Clean Air violate the plant-wide cap. The cap will apply to Act’s New Source Review program, which provides actual, rather than potential emissions, and is a preconstruction review and permitting of new or subject to recordkeeping, monitoring, and modified major stationary sources of air pollutants reporting requirements. The objective of the PAL (“NSR”). USEPA also proposed to revise the is to provide flexibility to regulated facilities and “routine maintenance, repair and replacement” enable them to make significant changes to their exclusion in the current regulations. According to emissions units without first obtaining a federal the USEPA, the changes are designed to “increase NSR permit. energy efficiency and encourage emissions Pollution Prevention Project Streamlining. The reductions,” and will “offer facilities greater flexibility new rule contains a list of environmentally to improve and modernize their operations in ways beneficial technologies called Pollution Control that will reduce energy use and air pollution.” The Projects (“PCPs”), whose use by otherwise changes will also “remove perverse and unintended regulated facilities would be exempt from major regulatory barriers to investments in energy efficiency modification NSR permitting. Listed PCPs can be and pollution control projects.” implemented upon submittal of a notice instead of The final rule becomes effective March 3, and a complete permit application. Listed PCPs will affect certain power plants, petroleum include add-on control technologies, switching to refineries, chemical manufacturers, pulp and paper less ozone-depleting substances and switching to mills, automobile manufacturers and cleaner fuels. A technology not identified by rule pharmaceutical manufacturers. may also qualify as a PCP if the reviewing authority determines, on a case-by-case basis, that the Final Rule Synopsis project is environmentally beneficial. Allowance for Plantwide Applicability Limits Clean Unit Applicability Test. The new rule (“PALs”). In the future, USEPA will allow provides that changes to emissions units that have regulated facilities to opt for a site-wide emissions undergone NSR within 10 years may not trigger cap, thereby allowing facilities to modify their This document is published by Lowenstein Sandler PC to keep clients and friends informed about current issues. It is intended to provide general information only. L Roseland, New Jersey Telephone 973.597.2500 65 Livingston Avenue www.lowenstein.com 07068-1791 Fax 973.597.2400

G NSR if certain criteria are met. If a unit had trigger regulatory review. Facilities may use any undergone NSR within this period and employed consecutive 24-month period in the past 10 years Best Available Control Technology/ Lowest as a baseline. Under the old rule, facilities were Achievable Emissions Rate (“BACT/ LAER”) required to use the previous 2 years as a baseline. technology, it would be qualified as a “Clean Unit.” (This new flexible baseline option does not apply to For Clean Units, NSR applicability will depend not power plants.) Second, facilities will be able to on a calculation of the emissions increase, but on elect to measure emissions increases of modified the type of change to the Clean Unit. NSR would emission units by the unit’s actual projected be triggered only if the change causes the need for emissions. Under the old rule, increases were revision of emission limitations, affects measured in terms of a unit’s potential to emit. A facility must comply with emissions tracking requirements if it elects to measure increases by the USEPA’s current NSR program unit’s actual emissions. provides an exemption for “routine maintenance, repair and replacement.” Proposed Rule on Routine Maintenance, Repair and Replacement BACT/ LAER work practice requirements, or USEPA’s current NSR program provides an would alter any physical or operational exemption for “routine maintenance, repair and requirements that formed the basis of the replacement.” However, the current rule does not BACT/ LAER determination. define the term, and NSR exemptions are granted For units that did not previously undergo NSR, on a case-by-case basis. The proposed rule sets Clean Unit status is obtainable for units whose forth two categories of activities, defined in terms control technology is comparable to BACT/ LAER of cost, that would automatically constitute routine and whose emissions will not adversely impact maintenance, repair and replacement (“RMRR”). ambient air quality. Activities that do not fall into these categories will continue to be reviewed on a case-by-case basis. The objective of these provisions is to provide a The two categories are as follows: grace period on the imposition of additional controls on facilities who recently implemented state-of-the- Annual Maintenance, Repair and Replacement art technology. USEPA also is planning to increase Allowance. The proposal, if adopted, would the 10-year grace period to 15 years. establish a maintenance, repair and replace allowance in dollars based on either a calendar or Emissions Calculation Test Methodology . The fiscal year. The allowance would equal the new rule contains two significant changes to the replacement cost of the stationary source (i.e., the way emissions increases are calculated. First, a new entire facility) multiplied by an industry-specific definition of “baseline actual emissions” will be percentage. Under this approach, a facility would used to determine whether emissions increases

G Northeastern States Challenge New Rules add up the costs of all maintenance-like activities In Court implemented during the previous year. If these costs are within the allowance, the activities would After publication, nine Northeastern and Mid- be considered RMRR and not subject to NSR. Atlantic states immediately filed a court challenge Facilities would be required to submit an annual of the new regulations (New York v. EPA, D.C. Cir., 1 report of these costs. Note that this approach could No. 02-1387, 12/31/02) . New Jersey Governor result in a facility determining at the end of the year McGreevey said that the new rules “severely that it has triggered NSR and is subject to strict weaken existing clean air protections and sacrifice environmental controls for a project(s) it has the health of all New Jersey’s citizens for the sake of already implemented. The proposed regulations do lawbreakers.” Although states can adopt more not specify compliance steps a facility should take stringent control regulations than the new rules, in this situation or whether the facility would be the concern is over pollution carried into the region considered in non-compliance. Thus it would be by prevailing winds. “About one-third of the prudent for facilities who intend to rely upon the pollution impairing New Jersey’s air quality comes allowance to cost activities before construction and from out-of-state polluters,” said McGreevey, “and determine whether the allowance will be exceeded. these new USEPA rules give those facilities a license to continue polluting our air.” Equipment Replacement Provision. As an additional or alternative approach, the USEPA The suit alleges that the regulations are contrary proposes to establish a percentage of the to the language and intent of the Clean Air Act, replacement value of the process unit as a cost and also violate procedural requirements. threshold. If the replacement component is According to New Jersey Attorney General David functionally equivalent to the replaced component, Samson, the rules were adopted without adequate does not change the basic design parameters of the public comment or a sufficient analysis of their process unit, and does not exceed the cost deleterious health and environmental impacts. threshold, it would constitute RMRR and therefore If you would like more information on this federal be exempt from NSR. USEPA is considering rulemaking or have air pollution issues, contact whether to exclude activities taken to address Norman W. Spindel at 973.597.2514 forced outages or catastrophic events, such as fires (nspindel@ lowenstein.com) or Timothy L. Borkowski and explosion, to avoid disincentives for at 973.597.2458 (tborkowski@ lowenstein.com). maintaining a safe operation. Comments on the proposed rule are due March 3, and USEPA will hold a public hearing if one is requested by January 20. 1 The nine states joined in the suit are New Jersey, New York, Connecticut, Maine, Maryland, Massachusetts, New Hampshire, Rhode Island and Vermont.