CHAPTER 7 FUGUE AND VARIATIONS: PREVENTION OF SIGNIFICANT DETERIORATION AND NEW SOURCE REVIEW

• Jurisdiction: United States

Air Quality Regulation For The Natural Resources Industry
(2000)
CHAPTER 7
FUGUE AND VARIATIONS: PREVENTION OF SIGNIFICANT DETERIORATION AND NEW SOURCE REVIEW
Edward W. Harris
Holland & Hart
Cheyenne, Wyoming 82001

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2515 Warren Avenue, Suite 450

(307) 778-4219

I. Introduction

The Prevention of Significant Deterioration (PSD) program imposes rigorous preconstruction review and permitting requirements on large facilities located in areas of the country where the air is considered relatively clean. The New Source Review (NSR) program imposes similar requirements on large facilities in areas where the air is not so clean. This basic distinction helps explain most of the similarities and differences between the two programs.

The PSD program is meant to "insure that economic growth will occur in a manner consistent with the preservation of existing clean air resources."¹ In other words, PSD aims to preserve air quality in those areas where the air is already clean. The NSR program, in contrast, aims to foster positive improvements in air quality. As the Environmental Protection Agency (EPA) candidly sets forth, facilities receive NSR permits only when "stringent conditions" are met:

These conditions are designed to insure that the new source's emissions will be controlled to the greatest degree possible; that more than equivalent offsetting emissions reductions will be obtained from existing sources; and that there will be progress toward achievement of the NAAQS.²

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Perhaps the best way to understand the requirements of these two programs it to recognize that they are similar in basic structure, but differing details because of their differing purposes. To that end, this paper compares and contrasts the basic components of the PSD and NSR programs. Then, because application of the PSD program can be especially confusing, the paper examines two examples which illustrate the workings of PSD. Finally, the paper reviews some of the more recent developments in the PSD and NSR programs.

II. The basics: Compare and contrast

A. PSD and NSR: Where they apply

1. Attainment and nonattainment areas

Under the federal Clean Air Act (CAA or the Act),³ the Environmental Protection Agency (EPA) identifies air pollutants which "may reasonably be anticipated to endanger public health or welfare," and promulgates National Ambient Air Quality Standards (NAAQS) for those pollutants.⁴ By comparing the EPA's NAAQS to the quality of the ambient air⁵ in a geographical area, the states classify those areas which do not meet the NAAQS as "nonattainment areas,"⁶ and those areas that do meet the NAAQS as "attainment areas.⁷

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The PSD program applies in attainment areas.⁸ As noted at the outset, that means it applies to facilities proposing to locate in areas where the air is considered relatively clean. The NSR program applies in nonattainment areas,⁹ meaning it applies in areas where air quality is lower.

Nonattainment and attainment areas are designated on a pollutant-by-pollutant basis. Thus, for example, an area might be classified as nonattainment for sulfur oxides but attainment for other regulated pollutants. A facility seeking a permit in this area would therefore be subject to NSR permitting with regard to sulfur oxides, but to PSD permitting for other pollutants.

2. Construction of major sources

The facilities subject to permitting under the two programs are very similar. PSD applies to "major emitting facilities,"¹⁰ while NSR applies to "major stationary sources,"¹¹ but these two terms have exactly the same definition: "any stationary facility or source of air pollutants which directly emits, or has the potential to emit, one hundred tons per year or more of any air pollutant.")¹²

The CAA allows the EPA to determine by rule whether or not fugitive emissions must be included in determining whether or not a facility is a major source. For both PSD and NSR, fugitives are included only if the facility belongs to one of 27 listed categories, or was subject to a New Source Performance Standard (NSPS) or a National Emission Standard for Hazardous Air Pollutants (NESHAPS) as of August 7 1980.¹³

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Secondary emissions usually need not be included in determining if a facility is a major source.¹⁴ Secondary emissions are those which "would occur as a result of the construction or operation of a major stationary source or major modification, but do not come from the major stationary source or major modification itself," and include emissions from off-site support facilities which would not be built or increase emissions "except as a result of the construction or operation of the major stationary source or major modification."¹⁵ Emissions from mobile sources, such as from motor vehicles or trains, are not considered secondary emissions. Although secondary emissions are not considered in determining whether or not a source is major, if the primary emissions from a source qualify it as major, then the secondary emissions must be reviewed and are subject to certain standards and requirements.¹⁶

Despite these similarities, there are some differences in the scope of the two programs, differences which may be important to particular projects. For example, the PSD definition of a major source includes facilities which emit or have the potential to emit 250 tons per year or more of any regulated air pollutant.¹⁷ NSR regulations do not include this part of the definition.

In addition, the emissions threshold for major source status under the NSR program can be even lower than the basic 100 tons per year. Pursuant to the 1990 amendments to the CAA, nonattainment areas for ozone are categorized as Marginal, Moderate, Serious, Severe, or Extreme.¹⁸ Nonattainment areas for carbon monoxide and particulate matter are categorized as Moderate or Serious.¹⁹ In an ozone nonattainment area in the Serious category, a major source is one which emits or has the potential to emit at least 50 tons per year of volatile organic compounds.²⁰ In the Extreme category, the threshold drops to 10 tons per year.²¹

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3. Major modifications

Permitting requirements under both PSD and NSR apply to major modifications as well. For both programs, a major modification is "any physical change in or change in the method of operation of a major stationary source that would result in a significant net increase of any pollutant subject to regulation under the Act."²² Net emissions increases are determined through a complex calculation of increases and decreases in actual emissions over a five-year period.²³ Because NSR and PSD both use potential to emit to determine applicability in most situations, this use of actual emissions to calculate net emissions increases can be confusing.²⁴ A net emissions increase is considered significant if it exceeds a specified amount for each regulated pollutant.²⁵ For example, a net increase of 100 tons per year of carbon monoxide or 40 tons per year of nitrogen oxides would be significant under both NSR and PSD.

Increases in certain pollutants (including asbestos, beryllium, mercury, vinyl chloride, sulfuric acid mist, hydrogen sulfide, total reduced sulfur compounds, municipal waste combustor organics and metals, and municipal solid waste landfill emissions) may be considered significant for purposes of PSD permitting, but not for purposes of NSR permitting. This difference makes sense based on the fact that NAAQS have not been established for these pollutants. Without NAAQS, there can be no nonattainment areas in which the NSR program applies.

For both NSR and PSD, an entire facility is treated as one source, so that emissions decreases in one part of the facility may offset increases in other parts to determine if a modification is regulated as major. This "bubble" concept was confirmed for PSD purposes by a 1979 court case.²⁶ Five years later, EPA regulations recognizing the use of the bubble concept for NSR permitting were upheld on judicial review.²⁷ If operators planning to increase emissions from some

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new or modified equipment can reduce emissions from other equipment within a source, they may be able to lower the net emissions increase sufficiently to avoid being considered a major modification.

B. PSD and NSR: Permitting requirements

At first glance, the permitting requirements imposed by the PSD and NSR programs seem very different. Closer comparison of the two sets of requirements suggests they are variations on a theme.

1. Emissions controls and limitations

a. PSD: BACT

A source subject to PSD permitting must demonstrate that it will use the best available control technology (BACT) in controlling air emissions.²⁸ BACT is defined as the maximum degree of reduction which the permitting authority determines is achievable, taking into account energy, environmental, and economic impacts and other costs.²⁹ It is imposed on a pollutant-specific basis, applying only to those pollutants for which a new source is major or for which a modification causes a significant net increase. BACT must be at least as stringent as any applicable NSPS or NESHAPS requirements.³⁰

The definition of BACT requires that economic factors be taken into consideration in determining required controls. Not surprisingly, permitting agencies, environmental groups, and permit applicants and the regulated community have not always agreed on the appropriate weight to be given economic factors. In practice, however, permitting agencies seem to have developed standard BACT requirements for similar types of facilities. Thus, for example, when a natural gas processing plant applies for a PSD permit, it can generally predict what will satisfy BACT requirements by reviewing recent permits for other, similar natural gas processing plants.

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b. NSR: LAER

A source subject to NSR permitting must meet the lowest achievable emissions rate...