Anna Marie Wood, Director, Air Quality Policy Division of the Office of Air Quality Planning and Standards issued a June 14, 2018 letter clarifying which units are treated as “new” for purposes of establishing baseline actual emissions (BAE) for a plantwide applicability limit (PAL). The letter was in response to an argument that “new” units should be based on the selected baseline period. EPA demurred, stating that a unit is only “new” for PAL purposes if the unit was built within two years prior to the current PAL action. This letter is important because a “new” unit uses its “potential to emit” (PTE) in lieu of actual emissions for determining BAE.
On March 13, 2018, an attorney wrote EPA requesting a clarification of how the PAL provisions worked. The attorney advanced the argument that "an emissions unit that had commenced operation within two years of the selected baseline period constitutes a ' new source' under the NSR regulations,” contending that since the unit would be “new” relative to the baseline period, the PTE should be used.
EPA roundly rejected this argument, stating that “under the EPA's NSR regulations, for purposes of setting a PAL, the point of reference for determining whether an emissions unit is a ‘new emissions unit’ or an ‘existing emissions unit’ is the date of the PAL permit application.” In support, EPA noted:
First, the regulations divide units into “new” or “existing” emissions unit. A “new emissions unit” is “any emissions unit that is (or will be) newly constructed and that has existed for less than 2 years from the date such emissions unit first operated." 40 C.F.R. § 52.21 (b)(7)(i). EPA further noted that this regulatory language is in the present tense and does not refer to any selected baseline period.
Second, the preamble accompanying the PAL provisions states that before you look at the baseline period, you must first classify units as “new” and “existing.” 67 Fed. Reg. 80208 (Dec. 31, 2002). The preamble thus supports the contention that “new” is based on the date of the PAL permit and not the selected baseline period.
Third, the agency stated in the preamble that "’for any emission unit (currently classified as existing or new) that is constructed after the 24-month period, emissions equal to its PTE must be added to the PAL level.’ This statement buttresses the EPA's position that the classification of a unit as ‘new’ or ‘existing’ is to be based on an emissions unit's status at the time of PAL permit application submittal.” Id.
Fourth, EPA cited the following discussion from the Technical Support Document for the 2002 rulemaking: “We agree with the commenter in the case of a new emissions unit (unit that does not yet have a 2-year operating history) that the baseline emissions rate should be the unit's potential to emit, since a unit with less than 2 years of normal operation at the time of a physical or operational change does not have sufficient operating history to determine its actual emissions.” Nov. 2002 TSD, at 1-2-13 (emphasis added).
EPA summarized the test as follows:
In summary, the EPA's NSR regulations are clear that any emissions unit that has existed and begun operating less than 2 years from the time of PAL permit application submittal is a "new emissions unit." Such a unit contributes to the PAL level at an amount equal to its potential to emit. Equally clear is that all emissions units that have existed and operated for 2 or more years from the time of the PAL permit application are "existing emissions units" that contribute to the PAL level at an amount equal to average rate, in tons per year, at which the unit actually emitted the pollutant during the selected 24-month period.
This letter is a useful clarification of the application of the PAL concept. It adopts the approach both foreshadowed by the preamble and consistent with the underlying rationale for the “new” emissions unit test: the presence or absence of adequate data. It properly refuses an industry request to throw open the doors to use PTE where adequate data for BAE exists.