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U.S. EPA’s Final PM2.5 Implementation Rule Brings Changes to New Source Review Permitting

06.01.2008

By Andy Bowman, Attorney, Bingham Greenebaum Doll LLP

On May 8, 2008, the U.S. EPA issued final rules amending the New Source Review (“NSR”) permitting program for particulate matter less than 2.5 micrometers in diameter (“PM2.5”) known as “fine particulates.” The final rule was published at 73Federal Register 28321 on May 16, 2008. The new rules will become effective on July 15, 2008.

This rule, along with a rule issued on April 24, 2007 and another rule proposed on September 21, 2007 comprise the framework for the review and issuance of preconstruction permits to meet the National Ambient Air Quality Standard (“NAAQS”) for PM2.5 which was initially established in 1997 and revised in 2006. PM2.5 attainment and nonattainment designations for specific areas became effective April 5, 2005.

When the PM2.5 NAAQS was established in 1997, the U.S. EPA recognized that technology to calculate, model and monitor PM2.5 emissions was lacking. As a result U.S. EPA issued guidance allowing States to use PM10 as a surrogate for PM2.5 until these difficulties were resolved. U.S. EPA issued further guidance in 2005 confirming that PM10 should continue to serve as a surrogate for PM2.5 until PM2.5 NSR regulations were issued. The May 8, 2008 final rule addresses the use of PM10 as a surrogate for PM2.5 and establishes several key elements needed to implement the PM2.5 NSR program:

  • Major and minor NSR permits must address direct PM2.5 emissions as well as PM2.5 precursor pollutants.

    • Sulfer dioxide (“SO2”) must be regulated as a PM2.5 precursor.
    • Nitrogen oxides (“NOx”) must be regulated as a PM2.5 precursor unless a State demonstrates NOx is not a significant contributor to the formation of PM2.5 for an area.
    • Volatile organic compounds (“VOC”) and ammonia are not regulated as PM2.5 precursors unless a State demonstrates VOC or ammonia is a significant contributor to PM2.5 formation in an area.
  • A new source located in an attainment area is considered a major source for Prevention of Significant Deterioration (“PSD”) permit program purposes if it is one of 28 listed source categories with potential emissions of 100 tons or more per year of a regulated NSR pollutant, including a PM2.5 precursor, or 250 tons or more per year of a regulated NSR pollutant, including a PM2.5 precursor, if it is a non-listed source. A new source in a nonattainment area is a major source if its potential emissions of a regulated NSR pollutant, including a PM2.5 precursor, are 100 tons or more per year.

  • An existing source making modifications is subject to NSR if the modification results in a significant emissions rate, defined as:
    • Direct PM2.5 – 10 tpy
    • SO2 precursor – 40 tpy
    • VOC precursor – 40 tpy (if regulated)
    • Ammonia precursor – as set by State
  • U.S. EPA will not require States to include condensable PM when making applicability determinations or establishing permit emission limits for PM, PM10 or PM2.5 in PSD permits or PM10 or PM2.5 in nonattainment NSR (“NA NSR”) permits during a transition period ending on January 1, 2011 (or an early date established in an upcoming rulemaking on PM2.5 test methods).

    • States are not prohibited from setting permit limits that include condensable PM2.5 if the State has developed supporting technical information and test methods to evaluate condensable PM2.5.
  • Compliance with PM10 or PM2.5 limits in permits issued prior to January 1, 2011 shall not be based on quantification of condensable PM unless specifically required by the permit or State Implementation Plan (“SIP”). 

  • The final rule allows interpollutant trading under nonattainment NA NSR programs on a regional or state-wide basis, but precludes such trading on a permit-by-permit basis.

    • Offset trading allows direct PM2.5 emissions reductions to offset precursor emissions increases; one precursor to offset emissions increases of another precursor; and precursor emissions to offset direct PM2.5 emissions increases.
  • Indiana will have until May 16, 2011 to adopt amendments to its PSD permit rules and submit a revised SIP to U.S. EPA.

    • During the SIP amendment process, Indiana may continue to use PM10 as a surrogate for PM2.5 in its PSD program.

    • Indiana is not required to regulate SO2 or NOx as PM2.5 precursors in its PSD program until the SIP is revised.
  • As of July 15, 2008, Indiana will no longer be allowed to use PM10 as a surrogate for PM2.5 in its NA NSR program. Permits in nonattainment areas will be issued pursuant to 40 CFR Part 51, Appendix S, until Indiana revises its SIP to incorporate the new NA NSR regulations for PM2.5.

    • As of July 15, 2008 SO2 will be regulated as a PM2.5 precursor in all nonattainment areas for PM2.5 (Indiana has 17 PM2.5 nonattainment areas).

    • NOx will not be regulated as a PM2.5 precursor in nonattainment areas until the SIP is revised.

Additional information is available at www.epa.gov/nsr.

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