Title of Proposed Rulemaking

New Source Review, Particulate Matter and Greenhouse Gas Permitting Requirements and Other Permitting Rule Updates

Statutory Authority or other Legal Authority

Statutes Implemented

ORS 468.020, 468A.025

468.065, 468A.040, 468A.055, 468A.310

Need for the Rule(s)

PM_2.5 New Source Review/Prevention of Significant Deterioration: This proposed rulemaking would adopt NSR/PSD rules for PM_2.5 adopted by a temporary rule on August 19, 2010.

GHG New Source Review/Prevention of Significant Deterioration: DEQ is proposing rules that would update the NSR/PSD program to include greenhouse gases in response to regulations promulgated by EPA. Additional proposed changes clarify requirements based on past implementation of the rules. DEQ is also proposing changes to the NSR/PSD program for small scale renewable energy sources as directed by House Bill 2952. Adoption of the rules will allow DEQ to continue implementing the New Source Review program as EPA intended.

Particulate Matter Permitting Requirements: DEQ is proposing rules to tighten grain loading and opacity standards based on EPA guidance and recently adopted fine particle ambient air quality standards. As a result of EPA’s new standards, there are areas in Oregon where air quality does not meet these human health based standards. Adoption of the rules will reduce emissions statewide and help prevent future problems, especially in light of EPA’s plan to further reduce the standards.

Permitting Rule Updates: In 2007, DEQ did the second phase of streamlining the Air Quality Program’s permitting process. This rulemaking proposes to further streamline and update the permitting process by clarifying requirements, eliminating duplicative and conflicting standards, keeping rules in line with federal requirements and correcting errors while maintaining equivalent environmental protection and stringency. It also repeals rules for which there are no longer sources in the state (e.g., aluminum plants, ferronickel processing plants, and sulfite pulp mills). This third phase of streamlining would make the permitting process more efficient.

Documents Relied Upon for Rulemaking

Federal Register / Vol. 75, No. 28 6827/ Thursday, February 11, 2010/ Implementation of the New Source Review (NSR) Program for Particulate Matter Less Than 2.5 Micrometers (PM2.5); Notice of Proposed Rulemaking To Repeal Grandfathering Provision and End the PM10 Surrogate Policy

http://www.gpo.gov/fdsys/pkg/FR-2010-02-11/pdf/2010-2983.pdf

Federal Register / Vol. 72, No. 183 / Friday, September 21, 2007 /Proposed Rules/ Prevention of Significant Deterioration (PSD) for Particulate Matter Less Than 2.5 Micrometers (PM2.5)—Increments, Significant Impact Levels (SILs) and Significant Monitoring Concentration

(SMC)

http://www.gpo.gov/fdsys/pkg/FR-2007-09-21/pdf/E7-18346.pdf

Interim Implementation for the New Source Review Requirements for PM2.5 (John S. Seitz, EPA, October 23, 1997)

http://www.epa.gov/ttn/nsr/gen/pm25.html

Federal Register / Vol. 75, No. 28 / Thursday, June 3, 2010 / Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule; Final Rule

http://www.gpo.gov/fdsys/pkg/FR-2010-06-03/pdf/2010-11974.pdf

06/06/90 EPA guidance titled “Performance Test Calculation” http://www.epa.gov/ttn/emc/rounding.pdf

Requests for Other Options

Pursuant to ORS 183.335(2)(b)(G), DEQ requests public comment on whether other options should be considered for achieving the rule’s substantive goals while reducing negative economic impact of the rule on business.

Fiscal and Economic Impact, Statement of Cost Compliance

Overview

The proposed rules could have a fiscal and economic impact on approximately 1,256 permitted sources in addition to future applicants:

Business Type

Business Size

Permit Type

Number

City/County Govt

Large

ACDP

42

City/County Govt

Large

Title V

2

State Government

Large

ACDP

22

State Government

Large

Title V

2

Federal Government

Large

ACDP

3

Federal Government

Large

Title V

1

Industrial Business

Large

ACDP

570

Industrial Business

Large

Title V

95

Estimated Number of Large Businesses Potentially Impacted

737

Business Type

Business Size

Permit Type

Number

Industrial Business

Small

ACDP

502

Industrial Business

Small

Title V

17

Estimated Number of Small Businesses Potentially Impacted

519

•  117 facilities in Oregon that are permitted under the Air Quality Division’s Title V Permit Program

•  1139 industrial facilities in Oregon that are permitted under the Air Quality Division’s Air Contaminant Discharge Permit (ACDP) program

PM_2.5 New Source Review/Prevention of Significant Deterioration: DEQ anticipates that there will be a negative fiscal and economic impact on about 386 small and large businesses subject to existing permitting requirements. These businesses will be required to make an initial estimate of PM_2.5 emissions at the time of permit renewal or modification so DEQ can incorporate emission levels into permits. DEQ will develop guidance to help minimize the impact. The other 870 permitted sources are on simpler permits that do not require calculation of emissions.

Greenhouse Gas New Source Review/Prevention of Significant Deterioration: DEQ anticipates that there will be a negative fiscal and economic impact on about 25 to 30 large businesses subject to existing permitting requirements. Businesses will be required to estimate GHG emissions for their permit renewals or modifications, using a process similar to their GHG reporting requirements. DEQ will develop guidance to help minimize the impact.

Particulate Matter Permitting Requirements: DEQ anticipates that there may be a negative fiscal and economic impact on about 5 to 7 large businesses that may not be able to comply with the lower grain loading and opacity standards. Changes in operation, pollution control devices or new equipment may be necessary.

Permitting Rule Updates: DEQ anticipates that there will be a positive fiscal and economic impact on about 1256 sources as a result of the proposed rules. Compliance with permit requirements will be easier since duplicative and conflicting standards will be removed.

Impacts on the General Public

Particulate Matter Permitting Requirements: DEQ does not anticipate any direct fiscal or economic impacts from the proposed rules on the general public because of potential changes due to the lower grain loading and opacity standards. However, indirect fiscal or economic impacts to the public may occur through increased prices for services or products as a result of costs associated with additional control or process equipment that may be required to meet lower particulate matter standards. DEQ expects any such price increases to be small and lacks available information upon which it could accurately estimate potential increases.

Fine particulate matter causes serious health problems ranging from increased respiratory and pulmonary symptoms, hospital admissions and emergency room visits to premature death for people with heart and lung disease. These health problems can have negative economic impacts. The proposed rules could create positive economic benefits and improvements in public health and welfare by reducing fine particulate matter emissions statewide.

Impacts to Small Business

(50 or fewer employees –ORS183.310(10))

PM_2.5 New Source Review/Prevention of Significant Deterioration: The proposed rules would require approximately 269 small businesses with permits to estimate PM_2.5 emissions for their permit renewals or modifications.

Particulate Matter Permitting Requirements: The proposed rules would require all small businesses to comply with lower grain loading and opacity standards. Current compliance information indicates that all small businesses already comply with the proposed standards.

Cost of Compliance on Small Business (50 or fewer employees –ORS183.310(10))

a) Estimated number of small businesses subject to the proposed rule

Currently 17 small businesses are required to hold Title V operating permits. Of the 1,139 industrial facilities holding Air Contaminant Discharge Permits, 502 of them are small businesses.

b) Types of businesses and industries with small businesses subject to the proposed rule

There are several types of businesses and industries with small businesses that will be affected by the proposed rules. These may include asphalt manufacturing; ammonia manufacturing; chemical manufacturing; coffee roasting; commercial bakeries; commercial boilers; crematories; educational institutions; electric power generation; furniture manufacturing; food processing; hospitals; iron and steel; natural gas and oil production and processing; petroleum refining; pipe coaters; printers; sand, rock and gravel operations; seed and grain companies; synthetic resin manufacturing; and wood products manufacturing.

c) Projected reporting, recordkeeping and other administrative activities required by small businesses for compliance with the proposed rule, including costs of professional services

Additional costs for reporting, recordkeeping or other administrative activities are expected for approximately 269 small businesses if the amendments are adopted. These small businesses will be required to make an initial estimate of PM_2.5 emissions. Businesses have the option of assuming that PM_2.5 emissions are the same as PM₁₀ emissions (already included in their permits), eliminating any additional costs for reporting, recordkeeping or other administrative activities.

d) The equipment, supplies, labor, and increased administration required by small businesses for compliance with the proposed rule

No additional costs for equipment, supplies, labor or administration are expected if the amendments are adopted.

e) A description of the manner in which DEQ involved small businesses in the development of this rulemaking

Small businesses are being informed by announcements on the DEQ website, through direct mailings and email lists, notices in the Secretary of State Bulletin, and ads in local papers. Comments are being requested during the Public Comment period and at Public Hearings held in November. DEQ staff will participate in the December Northwest Environmental Conference in Portland informing people about the rulemaking. Attendees at this conference include representatives from large and small businesses.

Impacts on Large Business

(all businesses that are not “small businesses” under ORS183.310(10))

Currently 95 large businesses are required to hold federal Title V Operating Permits. There are also 570 large businesses that hold state Air Contaminant Discharge Permits.

Particulate Matter Permitting Requirements: DEQ has identified 7 large businesses that may not be able to comply with the lower opacity and grain loading standards without process changes, installation of control equipment or replacement of process equipment. Four of the businesses are wood products facilities with hog fuel boilers. Three of the businesses are asphalt plants.

Hog Fuel Boilers: Some large businesses may need to optimize their boiler operations in order to comply with the lower grain loading and opacity standards. Close monitoring of fuel quality may help some boilers comply while others may need tune-ups. According to one vendor contacted by DEQ, a typical boiler controls tune-up, if no parts need to be replaced, is estimated to cost in the range of $5,000-$10,000. A tune-up may include:

•  A visual inspection of the system while operating, looking for obvious things that need repair

•  Review of past performance checks & expected performance data

•  Gathering performance data (O₂ & CO₂ readings, stack temperature, feed water temperature, fuel moisture, steam flow)

•  Making adjustments to furnace air delivery settings

A more comprehensive boiler tune-up ranges in cost from $30,000 to $60,000. A boiler tune-up may or may not allow sources to comply with the new standards over the long run but could provide other benefits such as reduced fuel costs.

However, if optimizing operations does not achieve compliance with the lower grain loading and opacity standards, businesses may need to install pollution control equipment such as multiclones or electrostatic precipitators. Based on vendor information, multiclones range in cost from $60,000 to $80,000 and will remove some particulate matter but may not be successful in removing enough to comply with the new standard. Information from vendors and a business that recently installed an electrostatic precipitator indicates that the cost of a new ESP ranges from $450,000 to $1,500,000.

Although not yet adopted, EPA has proposed National Emission Standards for Hazardous Air Pollutants for Area and Major Sources: Industrial, Commercial, and Institutional Boilers. These regulations contain very stringent carbon monoxide limits that will apply to all boilers. Many boilers in Oregon cannot comply with the proposed carbon monoxide limits without making process changes or installing a new boiler. These regulations are expected to be finalized in December, 2010 and would enable the source to meet the lower DEQ opacity and grain loading standards. A business that recently installed a new wood-fired boiler (100,000 pounds of steam/hour) paid approximately $8 million. DEQ will tie the compliance schedule for grain loading or opacity to the final EPA boiler standards, if possible, reducing the fiscal impact of this proposed rule.

Asphalt Plants: One asphalt plant cannot meet the existing 0.1 grain/dscf limit and has been referred to DEQ’s enforcement division for enforcement action and civil penalties. It is anticipated that changes required to meet the current grain loading limit will also ensure that the business will be able to meet the proposed lower standard.

The two other asphalt plants that may not be able to meet the lower standards are older plants that utilize wet scrubber controls. In general, for asphalt plants that cannot meet particulate matter standards, the equipment is simply worn out, and often too expensive to repair. In other instances the control equipment (usually the water scrubber) is rusted and leaking air, compromising the pressure drop across the nozzles, thus reducing efficiency. Most of the time, companies with stationary asphalt plants will repair/patch together equipment. Making these repairs is usually done in-house. Portable plants have to be more durable due to set-up and break-down cycles. As a result, they are generally replaced with new or better used equipment.

The company that owns the two asphalt plants that may not be able to meet the lower standards, may elect to retire a plant deemed too expensive to meet the new particulate matter standards. The cost of a new wet scrubber is approximately $______ and the cost of a new asphalt plant is approximately $___________.

Impacts on Local Government

PM_2.5/GHG New Source Review/Prevention of Significant Deterioration: Currently 44 county and local government agencies are subject to air permitting regulations. DEQ anticipates that there will be a negative fiscal and economic impact on these sources because they will be required to make an initial estimate of PM_2.5 and GHG emissions at time of permit renewal or modification so DEQ can incorporate emission levels into permits. These government agencies also have the option of assuming that PM_2.5 emissions are the same as PM₁₀ emissions (already included in their permits), eliminating any additional costs for reporting, recordkeeping or other administrative activities. GHG emissions can be estimated using a process similar to their GHG reporting requirements.

Impacts on State Agencies other than DEQ

PM_2.5/GHG New Source Review/Prevention of Significant Deterioration: Currently there are 24 state and 4 federal government agencies subject to air permitting regulations. DEQ anticipates that there will be a negative fiscal and economic impact on these sources because they will be required to make an initial estimate of PM_2.5 and GHG emissions at time of permit renewal or modification so DEQ can incorporate emission levels into permits. State and federal government agencies have the same options available to them as mentioned above for local government agencies.

Impacts on DEQ

PM_2.5/GHG New Source Review/Prevention of Significant Deterioration: Workload for DEQ will increase as a result of incorporating PM_2.5 and greenhouse gases into permits. If the PM_2.5 and GHG thresholds for the New Source Review/Prevention of Significant Deterioration program are not adopted, there would be a significant workload impact on DEQ. This includes an increase in costs associated with issuing NSR/PSD permits.

Permitting Rule Updates: Permits will also need to be modified to remove duplicative and conflicting standards but this will result in time savings once the modified permits are issued. Time savings will occur on compliance inspections and also compliance report reviews.

Assumptions

PM_2.5/GHG New Source Review/Prevention of Significant Deterioration: If the PM_2.5 and GHG thresholds for the New Source Review/Prevention of Significant Deterioration program are not adopted, an indeterminate number of sources would need to evaluate whether they are required to obtain a permit or a permit modification for PM_2.5 or GHG emissions. Several hundred of these permits may need to be issued or modified creating significant workload issues. The majority of these sources are small businesses, which may not have adequate resources to do additional reporting and monitoring.

Housing Costs

DEQ determined that the proposed rule changes may have a negative impact on the

development of a 6,000 square foot parcel and the construction of a 1,200 square

foot detached single family dwelling on that parcel if the costs for additional control or process equipment are passed through by sources providing products and services for such development and construction. The possible impact appears to be minimal. DEQ cannot quantify the impact at this time because the information available to it does not indicate whether the costs would be passed on to consumers and any such estimate would be speculative.

Administrative Rule Advisory Committee

Stakeholder meetings were held to allow people to provide input on the proposed rules and also comment on the August 19 temporary rules. Stakeholders were identified as all permitted facilities and people who had expressed interest in air quality rulemakings. Announcement of the meetings was sent out in postcards to all permitted facilities and also posted on the DEQ website. Stakeholders were also asked to comment on the fiscal and economic impact statement. The stakeholder group concluded that the proposed rule changes could have a fiscal and economic impact in the range of $5,000 to $8,000,000 per affected facility.

An Advisory Committee was not used because of the technical nature and diversity of the rules proposed for change. DEQ thought it would be a more effective use of people’s time to hold stakeholder meetings and let people choose to attend the meeting that discussed topics of interest to them.