Oregon’s New Source Review equivalency demonstration

Introduction

Oregon Department of Environmental Quality (ODEQ) has a long history with an established, mature Major New Source Review (NSR) and Prevention of Significant Deterioration (PSD) permitting program, contained in an approved State Implementation Plan (SIP), that works well to control emissions, provide incentives for facility upgrades and improve air quality. The Oregon Major NSR/PSD program was established in the early 1980’s and its ongoing success and industry acceptance provided one of the models to support the development of the federal NSR reform rules.

Federal NSR Reform

NSR Reform adopted by EPA in December 2002 has five major components or concepts. The five major concepts are: Plant-wide Applicability Limit (PAL), Baseline (2 in 10 years), Pollution Control Project (PCP) exemption, Clean Unit exemption and Baseline Actual to Projected Future Actual emissions. For sources covered by a PAL the other major concepts of NSR Reform, with the possible exception of PCP exemption, do not apply.

Background

The Oregon Plant Site Emission Limit (PSEL) program is unique in the country and provided a benchmark for the new Federal regulations. Oregon uses a fixed baseline year of 1977 or 1978 (or a prior year if more representative of normal operation) and then includes all emissions increases and decreases since baseline when setting the allowable emissions in the PSEL. Increases and decreases since the baseline year do not affect the baseline but are included in the difference between baseline and allowable emissions. If the PSEL is to be set at a level greater than a Significant Emission Rate (SER) over the baseline actual emission rate, an evaluation of the air quality impact and NSR applicability are required. If the PSEL is not greater than the SER over the baseline actual emission rate, the PSEL is set without further review. The PSEL allows a source the flexibility to make changes within the Baseline plus SER range without triggering further air quality modeling analysis or control technology relating to major modifications.

Environmentally Beneficial Pollution Control Projects (PCP’s) are not considered major modifications for NSR applicability by the Oregon SIP approved rules. These SIP approved rules are based on the federal NSR reform PCP concept and not the old federal NSR rules.

Baseline, or as we refer to it Netting Basis, currently has a provision in the Oregon rules to be a declining cap. This is done by reducing the Netting Basis to not more than the source’s potential to emit (PTE) plus the SER. By doing this, old ‘grandfathered’ emissions are removed from a source’s inventory unless they can still be used by the source under the current configuration. The Netting Basis reduction will occur July 1, 2007 and then again at each permit renewal thereafter. This is similar to the PAL which allows for a declining cap upon renewal if actual emissions are below allowable.

Minor new source review is handled though the same process of comparing the Netting Basis with the proposed PSEL. If the difference is greater than the SER, an air quality analysis is required to ensure standards and increments are not exceeded. If a standard or increment were threatened by the minor source, the PSEL rule would require the permittee to reduce the impact, or would limit the emission rate of the source, before the permit is issued.

Oregon PSEL and Federal PAL

EPA states in document titled New Source Review (NSR)Improvements Supplemental Analysis of Environmental Impacts of the 2002 Final NSR Improvement Rules that “The EPA expects that the adoption of PAL provisions will result in net environmental benefit”. The Oregon PSEL, similar to the PAL, has been and remains a mandatory requirement of the Oregon program.

The Oregon PSEL and the federal PAL are very similar in the incentives they provide and the way NSR applicability is determined under the two programs. Each of the concepts allows the flexibility for a source to make changes that they need without triggering NSR as long as they remain below the limit. In the Oregon program when the PSEL is increased the new PSEL level is compared to the Netting Basis (Baseline) to determine if additional analysis is required. If the increase is greater than the significant emission rate for a pollutant, an air quality analysis is required to ensure protection of the NAAQS and PSD increments. If the increase is due to a physical change or change in method of operation, control technology requirements apply to each piece of equipment that was modified and contributes to the increase in emissions (this includes pieces of equipment that were previously permitted and installed). Under the federal reform rules, NSR is triggered if the PAL is to be increased. Under the Oregon PSEL increases may not trigger NSR if the increase is due to a PCP or use of baseline existing capacity (these are not considered physical changes or changes in method of operation). In combination with our Netting Basis, the PSEL provides the same incentives as the PAL and also protects against violation of the NAAQS and PSD increments by looking at all changes in emissions (increases and decreases) since the baseline period (1977 or 1978), including those already permitted, installed and operating.

The PSEL is set at the maximum level of expected emissions (projected future actual) from a source, not necessarily at the Baseline plus the SER. Setting the PSEL in this manner maintains a more realistic emission inventory and keeps the airshed form being tied up by sources that do not intend to emit at that level. The PAL, however similar, ties up airshed capacity by attaching it to a specific source (PAL = Baseline plus SER).

The PSEL is a mandatory element of the Oregon permitting process so concepts like the clean-unit exemption have no impact or meaning under our program. This is the same as for a facility that chooses to have a PAL under the federal program.

Conclusion:

We feel our program is equivalent because:

1)  PSEL provides same incentives and flexibility as PAL.

2)  PSEL and PAL consistently simplify the NSR applicability determination which we believe was one of the major goals of NSR reform.

3)  As we understand it, with a PAL based program, there is no need to address other reform concepts because they are all covered by the PAL.

4)  Oregon maintains a successful, established, demonstrated and mature program that has contributed to the ability to attain and maintain NAAQS.

How the Oregon Major NSR/PSD program works:

A fixed baseline period [OAR 340-200-0020(14)] of 1977 or 1978 (or a year prior if more representative of normal operation) has been established in the Oregon rules. The Baseline Emission Rate[OAR 340-200-0020(13)] is defined as actual emissions during the baseline period. The Netting Basis is established as the Baseline Emission Rate minus any rule required reductions, minus any credits transferred offsite, minus any unassigned emissions reductions [OAR 340-222-0045(5)] due to decreased capacity, plus any increases approved through a major NSR/PSD action. The projected emissions (this would be the PSEL in the permit) at a new or modified source are compared to the Netting Basis[OAR 340-200-0020(71)]. If the difference between the PSEL and the Netting Basis is greater than a Significant Emissions Rate [OAR 340-200-0020(124)], further analysis is required depending on the designation of the area and the size of the new or modified source.

Within a designated Nonattainment or Maintenance area [OAR 340-204-0030 and 340-204-0040, respectively], if a significant increase in emissions over the Netting Basis is due to a new source, or a physical change or change in method of operation of an existing source, NSR [OAR 340-224-0050 or 340-224-0060] applies (including control technology, ambient air quality analysis and net air quality benefit). If the increase is due to use of existing capacity (increased hours of operation), control technology is not required but the other requirements still apply.

Within an attainment or unclassifiable area, only ambient air quality analysis is required unless the source is also a federal major source (100 tpy for sources in a listed category or 250 tpy if not listed). Federal major sources are required to implement the full PSD requirements of our rules including control technology and ambient impact analysis. Sources that are located outside nonattainment or maintenance areas are not allowed to have an effect greater than the significant impact level (OAR 340-200-0020(123)] on any nonattainment or maintenance areas. Offsets may be used to demonstrate reductions in impact levels. [OAR 340-224-0070]

The Oregon program accumulates all increase and decreases in emissions since the baseline year when evaluating if a source is subject to major NSR/PSD. Any source that did not exist during the baseline period has a zero baseline and Netting Basis unless the source goes through full NSR/PSD and establishes a Netting Basis through construction approval.

Baseline and Netting Basis are set and adjusted using the best data available. If a better emission factor or emission estimation method is established, the Baseline and Netting Basis, as well as the PSEL, are adjusted based on this better information.

The following examples demonstrate how the PSEL, Baseline Emission Rate and Netting basis work together in Oregon’s NSR/PSD program.

Example 1:

•  Electric Power Steam Generating unit greater than 250 million Btu/hr existing and operating in 1978 with actual emissions of NOx equal to 150 tons per year(tpy). (Note: this is a Federal Major source at 100 tpy of any criteria pollutant because it is a listed source). Actual emissions in baseline year establish the Baseline Emission Rate and initially the Netting Basis.

•  In 1990 the source owner proposes a physical modification that increases the NOx PSEL to 180 tpy (a 30 tpy increase in the NOx PSEL). This increase is allowed because the PSEL is less than one SER over the Netting Basis.

•  In 2004 the source owner proposes a physical modification that increases the NOx PSEL to 200 tpy (a 20 tpy increase in the NOx PSEL). This increase triggers NSR/PSD because the difference between the proposed PSEL and the Netting Basis (50 typ increase in NOx) is greater than the SER, and the increases are due to physical changes at the facility.

•  Owner is responsible for installing control technology as well as evaluating the ambient air quality impacts on class I and II areas.

•  Once all aspects of the NSR/PSD requirements are met, the Netting Basis is adjusted to the level of approved emissions from the source.

Example 2:

•  Wood Products Particle Board Plant existing and operating in 1978 with actual emissions of NOx equal to 150 tons per year(tpy). (Note: this is not a Federal Major source because it is less than 250 tpy and is not a listed source – assume NOx is the highest emitted pollutant). Actual emissions in baseline year establish the Baseline Emission Rate and initially the Netting Basis.

•  In 1990 the source owner proposes a physical modification that increases the NOx PSEL to 230 tpy (a 80 tpy increase in the NOx PSEL). This increase would trigger the requirements for AQ analysis under the PSEL rules, but would not trigger NSR/PSD because the source is still not a Federal Major..

•  In 2004 the source owner proposes a physical modification that increases the NOx PSEL to 260 tpy (a 30 tpy increase in the NOx PSEL). This increase triggers NSR/PSD because this increase causes the source to become a Federal Major, the difference between the proposed PSEL and the Netting Basis (110 typ increase in NOx) is greater than the SER, and the increases are due to physical changes at the facility.

•  Owner is responsible for installing control technology as well as evaluating the ambient air quality impacts on class I and II areas.

•  Once all aspects of the NSR/PSD requirements are met, the Netting Basis is adjusted to the level of approved emissions from the source.

Example 3:

•  Wood Products Particle Board Plant existing and operating in 1978 with actual emissions of CO equal to 500 tons per year(tpy). (Note: this is a Federal Major source because it is has more than 250 tpy of a criteria pollutant. Actual emissions in baseline year establish the Baseline Emission Rate and initially the Netting Basis.

•  In 1990 the source owner makes a physical modification that decrease the potential emissions of CO to 250 tpy. The new PSEL would be set at 250 tpy and the remaining 250 tpy of CO would be listed as Unassigned Emissions.

•  Beginning July 2007, and each permit renewal thereafter, unassigned emissions will be reduced to not more than one SER. The unassigned emissions may be used to net proposed modifications that increase CO emissions without further analysis. Once the unassigned emissions are reduced, the Netting Basis is also reduced by that same amount and the emissions are no longer available for netting actions.

•  In July 2007 no changes in potential emission have occurred so the Netting Basis is reduced to the source’s potential CO emissions(250 tpy) plus one SER (100 tpy). The Netting Basis is now 350 tpy.

•  In 2008 the source owner proposes a physical modification that increases the CO PSEL to 500 tpy (a 250 tpy increase in the CO PSEL). This increase triggers NSR/PSD because the difference between the Netting Basis and the PSEL exceeds the SER and the source is a Federal Major.

•  Owner is responsible for installing control technology as well as evaluating the ambient air quality impacts on class I and II areas.

•  Once all aspects of the NSR/PSD requirements are met, the Netting Basis is adjusted to the level of approved emissions from the source (the Netting Basis and PSEL for CO would be the same again – 500 tpy).

Example 4:

•  New manufacturing plant built in 1995. The initial Netting Basis for this source is zero because it was not in existence in 1977/78 and has not triggered construction approval under PSD. VOC is the only significant pollutant and is emitted at 175 tons per year. This is not a “Federal Major” source, so it was not subject to PSD for the initial construction and the Netting Basis remains at zero and the PSEL is set at 175 tons per year.

•  In 2000 the facility adds a production line which increases VOC emissions by 60 tons per year. An Air Quality analysis is triggered, but PSD is not triggered because the source is still not a “Federal Major” source. The Netting Basis remains at zero and the PSEL increases to 235 tons per year.

•  In 2005 the source proposes the addition of another production line which increases VOC emissions by 30 tons per year. The source is now a “Federal Major” and subject to PSD for all changes at the facility that increased emissions over the Netting Basis.

•  A BACT analysis will need to include all changes at the facility including the initial construction, the 2000 change and the proposed 2005 change. The initial construction and the 2000 change will be evaluated based on available retrofit technology and the proposed change will be evaluated based on new source technology. Retrofit technology assumes the equipment is already in place and can include the cost to retrofitting controls to existing equipment. New source technology assumes the equipment is not installed yet.

•  Once all of the requirements of PSD are met, the VOC Netting Basis is set considering the BACT level of control and future changes will be compared to this new higher level to determine PSD applicability. The PSEL and Netting Basis for VOC would be the same again.

Example 5:

•  Wood Products Sawmill with boilers existing and operating in 1978 with actual emissions of NOx equal to 200 tons per year(tpy) operating 16hr/day. Actual emissions in baseline year establish the Baseline Emission Rate and initially the Netting Basis.

•  In 1990 the source owner proposes a change in the operating schedule from 16 to 24 hours per day. This causes an increase in the NOx PSEL to 300 tpy (a 100 tpy increase in the NOx PSEL due to increased hours of operation). This increase would trigger the requirements for AQ analysis under the PSEL rules, but would not trigger major NSR/PSD because the there was no physical change at the facility.

•  In 2004 the source owner proposes a physical modification (50 tpy NOx source) and controls on other equipment so the PSEL does not increase from the 1990 level. The 2004 PSEL would remain at 300 tpy, but since the difference from Netting Basis (300-200 = 100 tpy) is greater than the SER, the emissions increase due to the physical modification (50 tpy) is greater than the SER, and the source is now a Federal Major (>250 tpy), NSR/PSD is triggered.

•  Owner is responsible for installing control technology on the device(s) that were physically modified or added that contributed to the emission increase.

•  An evaluation of the ambient air quality impacts on class I and II areas would be required to ensure protection of the NAAQS, PSD increment and AQRV’s.

•  Once all aspects of the NSR/PSD requirements are met, the Netting Basis is adjusted to the level of the Baseline plus the approved increase due to the physical change. In this example, Netting Basis would be set at 250tpy. The Netting Basis is not adjusted to the 300 tpy because changes that do not trigger NSR/PSD (e.g., increases in hours of operation) do not reset the Netting Basis.