Crash Course in PSD Permitting:Key Concepts, Pitfalls, and Strategies

Midwest Environmental Compliance ConferenceMay 13, 2015

Presented by Piyush Srivastav, President

NAQS-Environmental Experts

COMPANY HISTORY• NAQS was established in 2003 in Lincoln, NE• First clients were local municipal power plants• 2005 - First Fortune 500 Client• Emerged as a leader in air quality management

consultancy services• By mid-2008, the majority of applications

processed by the Nebraska Department of Environmental Quality (NDEQ) were submitted by NAQS

• NAQS is growing to serve our expanding client base

ORGANIZATIONAL POSITION• Our Vision: The preeminent leader in air quality, water

quality, risk management plans, and climate change.

• Our Purpose: Partner with clients to provide value added environmental solutions that ensure:– Regulatory Compliance– Increased Operational Flexibility– Successful Project Planning– Liability Identification, Reduction

ORGANIZATIONAL POSITION• Our Mission: Bridge the gap between industry and

regulators by engaging employees with undisputable expertise, excellent critical thinking abilities, and strong communication skills.

SERVICES• Permitting –

– Applications– Strategies– Draft Permits– Permit Reviews

• Compliance Assistance• Regulatory Analysis• Emissions Inventories• Compliance Certifications• Deviation Reports• Stack Testing Assistance

• Litigation Support• Training• Audits• Compliance Management• Executive Training• Risk Management Planning• GHG Inventories and

Management• Strategic Project Planning• Dispersion Modeling

SELECT CLIENTSPartnering with a spectrum of clients ranging from small municipalities to Fortune 500 Companies

Cargill/Polyols

ABENGOA BIOENERGY

New Source Review (NSR)

Key Concepts

New Source Review (NSR)• New Source Review (NSR) is a preconstruction

permit program– requires stationary sources of air pollution to get

permits before construction can start

• There are three types of NSR permitting 1. Prevention of Significant Deterioration (PSD)

Permits2. Nonattainment NSR (NANSR) Permits3. Minor Source Permits

New Source Review (NSR)• What triggers NSR permitting?

– Construct a New “Major” stationary source– Undertake a “Major Modification” at an existing

major stationary source

New Source Review (NSR)• Definitions

– Major stationary source: • One of 28 “listed” major source categories which emits,

or has the potential to emit, 100 tons per year or more of any regulated NSR pollutant (including fugitive emissions)

• Any stationary source (other than the listed 28) which emits, or has the potential to emit, 250 tons per year or more of a regulated NSR pollutant (excluding fugitive emissions)

New Source Review (NSR)• Definitions

– Major modification: • any physical change in or change in the method

of operation of a major stationary source that would result in:

– a significant emissions increase of a regulated NSR pollutant; and

– a significant net emissions increase of that pollutant from the major stationary source

PSD Permits• Prevention of Significant Deterioration (PSD)

applies to new major sources or major modifications at existing sources for pollutants where the area the source is located is in attainment or unclassifiable with the National Ambient Air Quality Standards (NAAQS).

PSD Permits• Requirements

– Installation of the Best Available Control Technology (BACT)

– Air Quality NAAQS Modeling Analysis– Air Quality Increment Analysis– Additional Impacts Analysis– Public Involvement

Nonattainment NSR Permits• For new major sources or major sources making a

major modification in a nonattainment area• Requirements

– Installation of Lowest Achievable Emission Rate (LAER)– Emission Offsets (reduce emissions or buy credits)– Air Quality NAAQS Modeling Analysis– Air Quality Increment Analysis– Additional Impacts Analysis– Opportunity for Public Involvement

Minor NSR Permits• For projects at stationary sources that do not

require PSD or nonattainment NSR permits• Minor NSR permits often contain permit

conditions to limit the sources emissions to avoid PSD or nonattainment NSR– Make sure the facility can live with the permit

conditions

NSR Applicability

Physical or Operational Change?

Proposed Project Emissions Increase Significant?

Can Project Net Out of Major NSR?

YES

YES

NO

NO

YES

STEP 1

STEP 2

STEP 3

NO

No Modification

Project Not Major

Project Not Major

SUBJECT TO MAJOR NSR

STEP 1Physical or Operational Change

• No definition in the rule• Only a few exceptions in the rule• Most useful and often used exceptions are:

– Routine maintenance, repair and replacement– Use of alternate fuel or raw material, if capable of

accommodating prior to 1/6/75 or allowed by PSD permit– Increasing operating hours or production rate (unless

restricted by permit); cannot be the result of a physical or operational change

Step 2

PSD Pollutant Tons per Year

PM10 15

SO2 40

NOx 40

VOC (Ozone) 40

CO 100

Lead 0.6

PM2.5 10

Attainment Areas: Significant increases in PSD pollutants are specified in the rule

Significant Increase

STEP 3Netting

Can the project net out of NSR/PSD?• Netting is the sum of all creditable,

contemporaneous increases and decreases at the source

• If net emissions increase is not significant, the project is not major

• If net emissions increase is significant, the project is major

Strategies

Strategies• Avoid NSR/PSD Permitting

– Use an exemption– Rely on netting calculations– Take a limitation on the project, so that it is not

significant• Obtain an NSR/PSD Permit

Strategies• Reasons to Avoid NSR/PSD Permitting

– Time Delays• Modeling analysis• Application preparation• Issuance of permit

– Additional Expense• Application Preparation• BACT must be installed, if cost effective

– “Cost-effectiveness” is a subjective term

Strategies• Reasons to Avoid NSR/PSD Permitting

– Air Quality Monitoring (preconstruction) if your current regulatory authority doesn’t allow waiver

Strategies• Reasons to Avoid NSR/PSD Permitting

– Impacts of Modeling Analysis• Can change the project scope• Proximity to Class I or Class II areas (Visibility Impacts)• Can be time consuming

Strategies• If Avoiding Major NSR Permitting, Beware of

Pitfalls

Pitfalls

Pitfalls• The NSR Program is extremely complicated

– There are few exemptions– The rule can be interpreted in new, more

restrictive ways and is sometimes applied retroactively

– The significant increase thresholds are low and easy to exceed

Exemption Pitfalls

Pitfalls• Using an Exemption to Avoid NSR Permitting

– Does not require performing complicated calculations, but....

• Determining whether or not the exemption applies can be tricky

• New interpretations of exemptions can be applied retroactively

Pitfalls• “Routine maintenance, repair, and

replacement” is one of the most common exemptions– What determines if a change is routine?

• The nature, extent, frequency, purpose, cost of work, etc.

• There is no regulatory definition of “routine”

Pitfalls– Nature – Will the project significantly enhance the

efficiency or capacity of the plant?– Extent – Are there a number of major components being

repaired/replaced?– Frequency – Are the components being

repaired/replaced original? How often is this change made in their lifetimes? How often is the change made to similar components? Routine for industry?

– Purpose – Will the project extend the life of the plant?– Cost – Is the fixed capital cost, plus maintenance and

repair, greater than 20% of the replacement value?

Pitfalls• Changes that could be considered a physical or

operational change and not “routine”– Reducing downtime, changing catalysts, etc.

Calculation Pitfalls

Pitfalls• Using Netting Calculations to Avoid PSD

Permitting Must be Done Correctly

Pitfalls• Define the Scope of the Project

– The project includes all activities that are technically or economically dependent on each other

– All activities that are part of a single project must be evaluated together

Pitfalls• Determine Project-Affected Emission Units

– Any new emission unit installed as part of the project

– Any emission unit modified as part of the project– Any emission unit that, due to the project,

experiences:• An increase in production or feed rate, a change in fuel

or raw material, etc.

Pitfalls• When Establishing Baseline Actual Emissions

(BAE)– Fugitive emissions must be included if the

emission unit is one of the 28 listed source categories

– For emission units affected by the project that have existed for less than two years, BAE = Potential to emit (PTE)

Pitfalls• Establishing Baseline Actual Emissions (BAE)

– For existing units, not realizing• Look-back period within 5 year period for electric utility

steam generating units (unless another period more representative of normal operations)

• Look-back period is unknown and a moving target• The BAE must be decreased because of non-compliant

emissions or regulatory changes• For a given pollutant, the same baseline period must be

used for all effected emission units– Different baseline period can be used for different pollutants

Pitfalls• Establishing Projected Actual Emissions (PAE)

– Fugitive emissions must be included if the emission unit is one of the 28 listed source categories

– Emissions from startups, shutdowns, and malfunctions must be included

Pitfalls• Contemporaneous period is a moving target

since it is based on the date actual construction begins – Example: You have an emissions decrease that is

four years old at the time the application is submitted. If it takes more than a year to issue the permit, that decrease can no longer be used

Pitfalls• Facility must project post change actual annual

emissions for 5 years (10 years post change if change increases unit’s PTE or capacity)

• Overestimating demand growth emissions when making use of demand growth exclusion

• Facility must maintain records of actual annual emissions for 5 or 10 years, and report to regulatory authority if projection is exceeded

Pitfalls and ConsequencesNSR Violations• Administrative penalties

– Up to $37,500 per day per violation up to $320,000• Civil penalties

– Up to $37,500 per day per violation for up to 5 years, or over $68 million dollars in total

– Injunctive relief: retroactive PSD permit with current BACT• No statute of limitations• No “safe harbor”, even with State agency approval

• Criminal penalties– Usually reserved for the most serious violations, those that are willful, or

knowingly committed – Individual liability– A court conviction can result in fines or imprisonment

Summary

Summary• NSR/PSD Permitting is Very Complicated, Don’t Be

Afraid to Ask for Help!• Work with a Firm that is Knowledgeable and Has

Experience – focus on people• Evaluate the Project• Develop a Strategy• Be Aware of Pitfalls• Obtain or Avoid a Permit• Maintain Proper Documentation

Questions?

NAQS-Environmental Experts

Contact Piyush Srivastav at: 402-310-5321 (cell)

Piyush Srivastav Piyush@naqs.com

402-489-1111 (office)402-310-5321 (cell)