New Source Review. "Controversies, Enforcement and Reform" Flexible Packaging Association Environmental Summit

Transcription

1 New Source Review "Controversies, Enforcement and Reform" Flexible Packaging Association Environmental Summit Tradewinds Resort St. Petersburg, FL January 22-25, th Street, N.W. Washington, D.C /

2 OUTLINE OF PRESENTATION Rule History and NSR Controversies Over 20 Years EPA Enforcement 114 Requests Status of Litigation History of Efforts to Simplify and Reform NSR Rules NSR Reform "Routine Maintenance, Repair and Replacement" Emission Increase Test "Plantwide Applicability Limits" 2

3 NSR PROBLEMS Uncertainty About NSR Applicability Complexity and Expert Disagreement Costly Permitting and Construction Delay Disincentives for Efficiency and Technology Improvements Dual Masters: State and Federal Disagreement 3

4 NSR REGULATIONS - CONTROVERSIAL FEATURES Applicability Issues "source" "physical change or change in the method of operation" exclusions from "pccmo" (e.g., "routine maintenance, repair and replacement") "aggregation" "debottlenecking" "netting" Accounting Issues baseline issues "actuals-to-potentials" / "actuals-to-future actuals" "begin normal operation" "WEPCO" exclusions for pollution control projects 4

5 NSR REGULATIONS - CONTROVERSIAL FEATURES, cont'd. Modeling/Ambient Air Quality Issues collection of ambient air data selection of models adequacy of emissions inventories measuring impacts Class I Issues "air quality related value (AQRV)" "adverse impact" and dispersion modeling relationship between permitting authority & FLM Technology Issues BACT LAER 20 Years of NSR Guidances and Interpretations 5

6 CRITICAL DEVELOPMENTS NSR "Sector" Enforcement Investigations and Cases (widespread use of Section 114 information requests) Detroit Edison Determination on Routine Maintenance EAB TVA Decision on September 15, 2000 Pending Judicial Proceedings Reform Discussions National Energy Policy: 90 Day NSR Report and DOJ Enforcement Case Review Multipollutant Legislation 6

7 NSR ENFORCEMENT CASES 1992 Solid Wood Cases 1998 Utility "Initiative" 1999 Petroleum "Initiative" 1999 Paper "Initiative" 7

8 STATUS OF NSR ENFORCEMENT CASES Settlement With Most Solid Wood Companies "RTO's" and Biofiltration Administrative Order Against TVA EAB Proceeding Eleventh Circuit Proceeding: Jurisdictional Judicial Complaints Against Seven Utility Companies cont'd 8

9 STATUS OF NSR ENFORCEMENT CASES, cont'd 1 Utility Settlement with TECO; 2 "Agreements in Principal" with Cinergy and Dominion Power (VEPCO) 6 Settlements with Refiners (BP Amoco, Marathon Ashland, Clark Oil, 2 Other Independents, Koch Industries); several pending Paper Company Cases Filed in U.S. District Courts Ashcroft Review of NSR Cases Additional 114 Letters Since September

10 EPA/OECA: COMMON NSR VIOLATIONS (1999 EPA OECA "Enforcement Alert") FRONT END (NO NSR/PSD REVIEW) Improper Use Of Exemptions, Such As Routine Maintenance/Repair, Alternate Fuels Failure To Recognize Change As A Modification (Example: Catalyst Changes That Significantly Increase Capacity) Emissions Estimates (Improper Emission Factors; Failure To Consider Debottlenecked Emissions; Wrong Applicability Test Used) Improper Netting (Emission Factors; Increases Not Considered With Decreases; No Enforceable Limits) 10

11 EPA/OECA: COMMON NSR VIOLATIONS (1999 EPA OECA "Enforcement Alert"), cont'd. BACK END Incorrect LAER (Failure To Consider Technology Transfer) Offsets: Underestimation Of Emissions Increases Incorrect BACT (Cost, Technology Issues) 11

12 UTILITY SYSTEM SECTION 114 REQUESTS 12

13 "SECTION 114" INFORMATION REQUESTS Statutory Basis Judicial Interpretation of EPA Authority EPA's Template Approach DOJ/EPA Use in NSR Enforcement Cases 13

14 [SAMPLE] EPA INFORMATION REQUEST 1. Work order records (capital improvement requests) for capital projects identified in Attachment B including but not limited to: a. Work order approvals with authorizing signatures b. Work order project completion reports c. Equipment specifications e. Cost/benefit analyses f. Alternative options analyses 2. Boiler cross-sectional diagrams a. Original b. Current 3. Boiler design ratings (original/current) a. Steam flow rate i. Peak ii. Sustained b. Maximum heat input capacity (based on what coal heat content) c. Gross MW capacity d. Net MW capacity 4. For 20-year period (1978 thru 1998) provide for each unit for each year a. Capacity factor b. Operating hours c. Coal consumption (ton/year) d. Total gross and net generation (MW-hr) e. Heat rate (BTU/KW-hr) f. Annual forced outage rate (principal causes) (MW-hr lost generation) g. Annual planned outage rate h. Derating/lost generation (MW-hr) due to: i. Boiler related components ii. Turbine generator components iii. Environmental control performance iv. Other i. Scheduled/planned retirement dates j. Coal analysis (% sulfur, % ash, heat content) k. Capability test results (MW) l. Monthly peak hourly average generation (MW) 14

15 m. Summary results of all stack tests i. PM ii. SO2 iii. NOx iv. Air Toxics (Pb/Hg/HC1)Other) n. Annual emissions (lb/mmbtu and tons/year) i. PM ii. SO2 iii. NOx iv. Air Toxics (Pb/Hg/HC1)Other) 5. For past 20-year period provide for each year: a. Utility system generation b. Utility system electric consumption c. Utility system electric demand d. Net electric sales e. Net electric purchases 6. Life extension / life optimization studies, evaluations, assessments, reports 7. Total capital expenditures per unit for boilers over life of the unit 8. Dates of all PSD/NSR permit applications submitted with description of modification. Dates of all PSD/NSR permits issued. 9. Copies of all correspondence, memoranda, telephone discussion summaries, etc. regarding PSD/NSR/NSPS applicability determinations for any modification between 1978 and present. 10. Flue gas recirculation (FGR) changes/dates 11. Dates of low-nox burner (LNB) retrofits 12. Balanced draft conversion dates 13. Dates of scrubber retrofits 14. Dates of ESP or baghouse retrofits 15

16 15. Organizational charts (plant and company) showing all managers (current/1995/1990/1985/1980): a. Names b. Phone #s c. Department d. Branches e. Divisions f. Sections 16. Pulverizer and cyclone replacement dates 17. Economizer, reheater and superheater replacement dates 18. Scheduled or planned maintenance outage frequency (current/1995/1990/195/1980) 19. GADs (generating availability data system) reports (1978-present) listing all: a. Forced outages b. Scheduled outages c. Causes d. Duration of outages 16

17 [SAMPLE] Projects of Interest to EPA Under NSR Rules Design changes (e.g., to restore output or to increase reliability): Furnace floors/walls Reheat and superheat tubes Economizer tubes Air heaters Burners Cyclones Boiler draft systems (including fans) Hoppers Pulverizers Volumetric air/gas flow Water and steam flow, including boiler makeup water Coal, bottom ash and fly ash flow ESPs Flue gas conditioning system Coal yard changes All capital projects in excess of $25,000/$100,000 Other specific physical changes with possible emissions consequences: Removal of flue gas recirculation Conversion from forced to balanced draft Fuel conversions 17

18 NSR REFORM 18

19 Clearer Applicability Scheme Easy to Apply Exclusions INDUSTRY NEEDS Apples-to-apples comparison for emission increases Unit by Unit approach to simplify applicability No permitting for modifications unless there is a real emissions increase Notice of Policy Shifts and Ability to Comment Relief from enforcement uncertainty based on revised guidance Fair notice of substantial changes to guidance 19

20 HISTORY OF NSR REFORM EFFORTS 1991 NSR "Simplification" Federal Advisory Committee EPA Rulemakings Stakeholder Discussions Utility "Glidepath" Off-Ramps Complex Manufacturing Proposals December 2000 "Final Draft" NSR Rule 2001 National Energy Policy Multipollutant Legislation NSR Review and Rulemaking 20

21 EPA NSR RULEMAKING PROPOSALS 1996 Notice of Proposed Rulemaking Proposal Does Not Simplify Application of Rules Expansion of FLM Authorities Without Structure Revocation of WEPCO Test for Utilities Good Things: 10 Year Baseline, "Clean Units," PALs 1998 Notice of Proposed Rulemaking Narrows Routine Repair and Replacement Exclusion (Cannot improve efficiency, reliability or utilization) EPA presumes increases in production are related to any physical change made in last 10 years! "Begun normal operations" as it relates to use of "allowables" baseline rendered meaningless 21

22 NOVEMBER 2001 STATUS REPORT "RMRR" Safe Harbor 1-5% Per Project (No Aggregation) Emissions Test "Actuals-to-Future Predictable Actuals" Debottlenecking Aggregation Policy Clean Units PALs 22

23 PALs 23

24 PALs AND CAP-TYPE PERMITS PALs to Avoid NSR Success Stories Comparison to Emission Cap Permits Industry PAL Proposal "Actuals" and "Allowables" Based PAL 10 Years BACT (State BAT) on New Units 24

25 OAQPS RECOMMENDATION FOR PALS Existing Units Actuals PAL: Baseline: Actual PAL baseline determined based on average emissions rate over preceding two years (subtracting emissions from shutdown or permanently curtailed units) plus an increment equal to the applicable significance threshold Major/100 tpy units: BACT is required on all major/100 tpy units, 2/3 of units must meet BACT within 5 years and the remainder within 7 years. Less than significant units: No control requirements Allowable PAL: Major/100 tpy units: BACT is required within 3 years after issuance; performance BACT within 5 years for significant units. Less than significant units: Within 5 years 50% of emissions units must meet performance BACT; no more than 100 tpy of emissions can be exempt from performance BACT requirements. 25

26 OAQPS RECOMMENDATION FOR PALS, cont'd New Units Actuals PAL: Major/100 tpy units: BACT is required for new major/100 tpy units. Performance BACT required for units between the applicable significance threshold and major 100/tpy. PAL permit can include pre-approved BACT determination, but the determination must be reviewed and revised every 3 years. Less than significant units: No control requirements. Allowables PAL: Major/100 tpy units and significant units: Same approach used for new actuals PAL Less than significant units: A mini-cap would be set at the higher of 10% allowables cap or 40 tpy. Performance BACT would be required if the unit does not fit under the mini-cap. If units subsequently meet performance BACT they are taken out from the mini-cap. 26

27 OAQPS RECOMMENDATION FOR PALS, cont'd Expanding PAL Level Allowed if the following conditions are met: All existing units with emission greater than applicable significance thresholds must have BACT 80% of all emissions covered by the PAL must be controlled by BACT The project requiring the PAL expansion must not fit under the existing PAL cap PAL Termination and Renewal PALs would last 10 years and would be reset at renewal using the same method used to set the PAL initially PALs can be terminated at any time at the request of the permittee Open Issues EPA has taken no position on partial PALs States with approved NSR programs must upgrade their programs to be able to issue PALs. However, in states where the federal PSD program applies, PALs would be issued as of the effective date of the NSR reform rule. 27

28 National Energy Policy Group Development Recommendations (May 2001) EPA 90 Day NSR Program Review Department of Justice Review of NSR Enforcement Cases 28

29 "New Source Review: An Analysis of the Consistency of Enforcement Actions with the Clean Air Act and Implementing Regulations" (Jan. 15, 2002) " The Department concludes that the EPA has a reasonable basis for arguing that the enforcement actions are consistent with both the Clean Air Act and the Administrative Procedures Act." * * * "Having concluded that the EPA has a reasonable basis for bringing the enforcement actions, the Department of Justice will continue to prosecute these lawsuits before the federal judiciary." John Ashcroft, Attorney General 29

30 "New Source Review: An Analysis of the Consistency of Enforcement Actions with the Clean Air Act and Implementing Regulations" (Jan. 15, 2002), cont'd "The EPA to date has not issued a regulation that explains which type of construction project it considers 'routine maintenance,' and hence exempt from New Source Review." * * * "Although the New Source Review Program has been in effect since 1977, the EPA did not until recently file enforcement actions alleging that certain facilities' construction projects constitute "modifications." 30