PM2.5 Implementation Rule Changes NNSR Permit Requirements
On August 24, 2016, EPA published the "Fine Particulate Matter National Ambient Air Quality Standards: State Implementation Plan Requirements" final rule in the Federal Register. 82 Fed. Reg. 58010. The PM2.5 Implementation Rule makes several changes to the NNSR permitting program. The most significant are:
Provides that "sulfur dioxide, nitrogen oxides, volatile organic compounds and ammonia are precursors to PM2.5 in any PM2.5 nonattainment area (new 51.165(a)(1)(xxxvii));
Sets a "major source" level of 70 tons/year for any PM2.5 precursor in any serious PM2.5 nonattainment area (new 51.165(a)(1)(iv)(A)(viii));
Adds a 40 tpy of VOC emissions to the definition of "significant" emissions increases (new 51.165(a)(1)(x)(A)) and provides that if the nonattainment area plan requires controls for ammonia, the nonattainment area plan must also specify a "significant" emission increase for ammonia (subject to Administrator approval) (new 51.165(a)(1)(x)(F); and
Allows a nonattainment area plan to exempt new major sources and major modifications of PM2.5 precursors if the plan demonstrates that such sources do not contribute significantly to PM2.5 levels in accordance with new section 51.1006(a)(3).
Corresponding revisions were also made to the Offset Interpretive Ruling codified in Part 51, Appendix S, except that the volatile organic compound and ammonia provisions do not take effect until April 17, 2017.
EPA interprets CAA section 110(a)(2)(C) to require states to begin regulating sources as of the effective date of an area's designation as nonattainment. States are required to update their implementation plans, including their NNSR programs, to reflect changes in NAAQS implementation. In the interim between when the area is designated nonattainment and the State's NNSR program is approved, EPA takes the position that a State has two options:
Option 1. If the State already has a SIP-approved PM2.5 NNSR program, it may continue to apply that program; or
Option 2. Any state that lacks a SIP-approved NNSR program for PM2.5 may apply the Offset Interpretive Ruling (codified in 40 CFR Part 51, Appendix S) until EPA approves the State's NNSR program.
82 Fed. Reg. at 58107. The balance of the rule addresses the changes that the State must make in its NNSR program (section 51.165 changes) and corresponding changes EPA is making to the Offset Interpretive Ruling or Appendix S.
Precursor decisions. In January 2013, the D.C. Circuit, in NRDC v. EPA, 706 F.3d 428 (D.C. Cir. 2013), held that EPA erred when it issued the 2008 PM2.5 Implementation Rule under Title I, Part D, Subpart 1 of the Clean Air Act instead of Title I, Part D, Subpart 4. Accordingly, because Subpart 4 now applies, EPA determined that CAA section 189(e) requires that all PM2.5 precursors (sulfur dioxide (SO2), nitrogen oxides (NOx), volatile organic compounds (VOCs) and ammonia) be regulated unless a demonstration is made that emissions of the precursor "do not contribute significantly to PM levels that exceed the standards in the nonattainment area." Unless a specific "NNSR demonstration" for a specific precursor is made, new major sources and major modifications must undertake NNSR for "significant" increases of the precursor. 82 Fed. Reg. at 58018. The requirement to address precursors is now found in new section 51.165(a)(13). EPA elected to defer regulation of VOC and ammonia until April 17, 2017, to give States time to demonstrate that controls are not necessary to achieve attainment. 82 Fed. Reg. at 58110.
Major source definition. EPA set the definition of "major source" of PM2.5 and PM2.5 precursors at 70 tons/year in serious nonattainment areas.
Significant Emission Rate (SER) for PM2.5 precursors. The 2008 PM2.5 Implementation Rule set the SER for SO2 and NOx at 40 tons/year and stated that if a State demonstrated that VOC was a precursor for a PM2.5 nonattainment area, the SER for VOCs would be set at 40 tons/year. This rule finalized these decisions and codified the SER as 40 tons/year each for SO2, NOx, and VOC. EPA also changed the definition of "significant" to include a provision that if ammonia is a precursor in a nonattainment area, then the State must submit a definition of significant for that area. See new 40 C.F.R. 51.165(a)(1)(x)(F). EPA believed that this approach was reasonable because ammonia is generally not a significant contributor in many areas and most existing PM2.5 nonattainment areas do not have any existing major sources of ammonia. Unlike the definition of "significant" in the PSD regulations, the definition of "significant" in the NNSR regulations does not make "any increase" in any NSR pollutant "significant"; instead, only stated increases of the nonattainment area pollutant trigger regulation.
The PM2.5 Implementation Rule continues the trend toward increasing the regulation of precursors in both the SIP and PSD/NNSR contexts. While it is possible for a State to demonstrate that precursor regulation is not necessary, the bar is high and we do not anticipate that many states will make the demonstration.
The ammonia provisions may prove an additional complication for sources that use SCR, SNCR and similar controls where ammonia slip can occur. While EPA states it does not know of "very many" sources that are major for ammonia, slip may become an increasing issue.