**FLEXIBLE AIR PERMITS**

**RULEMAKING PROPOSAL**

**MEETING OF THE**

**FAP WORK GROUP**

**OF THE CAAAC PERMITTING SUBCOMMITTEE**

**November 15, 2007**

**Purpose of Meeting**

-   Briefly summarize the Flexible Air Permits (FAP) rulemaking proposal
    and preliminary comments received

-   Engage in further dialogue to explore how the proposal might be
    improved

**Background for Proposal**

-   Over last 12 years, EPA and States worked in partnership to develop
    a limited number of flexible air permits under current rules

-   Draft White Paper Number 3 (WPN3) August 2000 -- proposed guidance
    to allow certain kinds of flexible permit approaches

\$ Detailed evaluation found pilots to be enforceable and to have
substantial benefits

B Achieved equal or greater environmental protection through enforceable
permit terms (e.g., additional emissions reductions between 30 -- 85%
over term of permit)

B Provided greater certainty and operational flexibility relied upon by
pilot companies

B Substantially lower administrative costs incurred after permit
issuance for both permitting authorities and sources

S Equivalent or greater information provided to public

\$ Final NSR Improvement rulemaking established policy directions for
PALs and flexible permits, and these remain after decision from the D.C.
Court of Appeals

\$ Rulemaking needed to facilitate mainstream use of FAPs and to add
"Green Groups" as a complement to PALs

**Overview of Flexible Air Permits Proposal**

\$ Clarifies circumstances under which Advance Approvals may be
appropriate

-   Examples of **advance approvals** implemented in pilots **for Minor
    NSR**

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-   Parts 70/71

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-   Definition and clarifications to current provisions for reasonably
    anticipated **Alternative Operating Scenarios**

-   Definition and clarifications for **Approved Replicable
    Methodologies**

\$ Parts 51/52

-   Addition of provisions for A**Green Groups**@ to Major NSR
    regulations

**Advance Approvals**

-   Cornerstone of Flexible Air Permits --

The specific authorization required to make certain changes under a
particular applicable requirement, particularly Minor NSR

-   Level of detail needed for advance approval of changes depends upon

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-   Applicable requirements

-   Boundary conditions placed on the changes

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-   Title V permit

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-   Incorporates specific advance approvals

-   Contains terms and conditions as necessary to assure compliance with
    other applicable requirements under the changed conditions

**Advance Approval (A2) Pilot Case Example**

-   Existing major source operating a magnetic tape line

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-   Minor source for VOC under PSD due to existing PTE cap

-   Seeks approval for a range of potential changes to the magnetic tape
    line, including:

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-   Change in raw materials

-   Change in emission control technology to another alternative allowed
    under MACT Subpart EE

-   Modification or reconstruction of the line

-   Construction of one or more new magnetic tape lines

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-   Applicable requirements

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-   Minor NSR -- NAAQS protection and State BACT

-   NSPS Subpart SSS

-   MACT Subpart EE

-   State-only toxics rules -- State BACT and impact modeling

**A2 Pilot Case Example (cont.)**

-   Flexible Title V permit features for A2 of potential changes

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-   List of categories of A2 changes (as above)

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-   Minor NSR

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-   NAAQS protection -- existing VOC PTE limit found protective

-   State BACT

    -   Compliance with MACT Subpart EE assures compliance with State
        BACT determination and with NSPS Subpart SSS (streamlining per
        White Paper No. 2)

    -   State BACT determination to be reviewed by source 18 months
        after permit issuance and submitted to State agency

    -   Source may request case-by-case State BACT determination for
        specific changes not subject to MACT or NSPS

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-   State toxics rules

    -   State BACT as above

    -   Impact modeling per prescribed procedures submitted 10 days in
        advance where existing toxic increased or new toxic emitted

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-   Report of A2 changes within 30 days after completion

**A2 Issues**

-   EPA requests feedback in general as to how representative the pilot
    experiences contained in the docket were, and if there are other
    relevant pilots to consider

-   Should EPA propose revisions to State minor NSR regulations, or are
    most State programs (as shown in the pilot experience) already open
    to advance approval to the extent the permitting authority is
    willing to pursue it?

-   How should State BACT be reviewed and updated, and to what extent?

-   As suggested by pilot experience, can public participation be
    enhanced as necessary under existing authority to address issues in
    flexible air permitting?

**Alternative Operating Scenarios (AOSs)**

\$ Definition

B *Alternative Operating Scenario* in a Title V permit authorizes a
physical or operational change to occur at a particular emissions unit,
which subjects the unit to one or more applicable requirements

B Typically involves an existing emissions unit which reversibly shifts
its operations, triggering different regulations at the unit

\$ Application Content

B New or modified emissions units subject to a cap can report aggregate
tpy

B Must have obtained, or have submitted an application to obtain, all
required authorizations (e.g., NSR)

\$ Permit Content

B Description of AOSs, all necessary authorizations, and terms
sufficient to assure compliance with all applicable requirements

\$ Log content

B Includes the emissions unit(s) included under the scenario; the
triggering event; the associated applicable requirement(s); other
applicable permit terms used to assure compliance; and the dates when
the source operated the AOS

\$ Compliance

B Sources cannot use AOSs to circumvent enforcement applicable to prior
scenarios

**AOS Example**

-   Existing boiler with dual fuel capability

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-   Applicable requirements

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-   Different SIP limits when firing natural gas and distillate oil

-   NSPS, MACT, NSR not applicable

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-   Compliance methods

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-   Design of the burners, with proper operation and maintenance, meets
    the SIP limits for both fuels for opacity, PM, NO~X~, and CO

-   For SO~2~, purchase distillate oil at or below 1 percent sulfur

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-   Application for AOS in Title V permit

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-   Identify combustion of natural gas as the baseline operating
    scenario, with all associated applicable requirements

-   Request combustion of distillate oil as an AOS, identifying all
    associated applicable requirements

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-   Title V permit content

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-   Designates baseline operating scenario (firing natural gas) and
    identifies associated applicable requirements

-   Authorizes firing distillate oil as an AOS and identifies associated
    applicable requirements

-   Requires contemporaneous on-site log for AOS

    -   Requires semi-annual report of monitoring data, including data
        associated with AOS

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-   Log content

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-   Affected emissions unit (i.e., the boiler)

-   Reference to applicable requirements for distillate oil

-   Reference to the applicable permit terms that assure compliance

-   Dates the source began and ceased combustion of distillate oil

**AOS Issues**

-   Should switching among MACT compliance options be an AOS?

    -   Need for AOSs to be triggered by "physical or operational"
        changes?

-   Should a future modification authorized for existing EU be an AOS
    (i.e., when the additional required controls are deferred until the
    change is actually made)?

    -   Need for AOSs to be reversible

-   Workability of this FAP approach

**Approved Replicable Methodology**

\$ Proposed new term AApproved Replicable Methodology@ (ARM)

B Permit terms that incorporate a protocol and instructions for its use
in a title V permit to facilitate compliance with an applicable
requirement

B Always provides same results with same input(s)

\$ Function

B Update information for determining compliance without the need for a
permit revision

B Particularly useful in AOSs and advance approvals to avoid secondary
permit revisions

-   Examples:

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-   Updating compliance information (emissions factors, parameters)

-   PTE cap tracking

\$ Rationale

B Consistent with section 502(b)(6) streamlining

B Demonstrated in pilots

Number range CHAPTER**ARM Example 1**

**Updating an Operating Limit**

• Existing source with web-coating operations

-   Subject to the Paper and Other Web Coating MACT standard (subpart
    JJJJ)

-   Meets required 95% control using a thermal oxidizer

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-   Monitoring required under subpart JJJJ

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-   Continuous monitoring of oxidizer combustion temperature

-   Operating limit for this parameter determined during the performance
    test used to demonstrate compliance

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-   ARM placed in permit (instead of the current operating limit) to
    avoid a permit revision after each performance test

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-   Test methods and procedures from subpart JJJJ for determining the
    operating limit

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-   Requirement to use the ARM to determine the operating limit each
    time a performance test (that demonstrates compliance) is performed

-   Requirement to maintain records documenting the current operating
    limit and the use of the ARM

-   Requirement to use the current operating limit for all subpart JJJJ
    compliance monitoring and reporting purposes

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-   MACT General Provisions on testing continue to apply (notification,
    QA, reporting, etc.)

**ARM Example 2**

**Assuring Compliance with a PTE Limit**

-   Existing source renewing title V permit

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-   Seeks PTE limit on VOC of 99 tpy

-   PTE limit will prevent applicability of major NSR for VOC

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-   Source proposes replicable VOC quantification methodology to
    determine total VOC emissions on an ongoing basis

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-   Permitting authority may approve and incorporate into the title V
    permit as an ARM, including:

    -   Instructions for use

    -   Monitoring, as necessary, to ensure the accuracy of the
        quantification methodology (e.g., parameter monitoring)

    -   Appropriate recordkeeping

**ARM Issues**

-   Additional examples of potential ARMs needed?

-   Where necessary, how additional permit terms can focus scope and use
    of ARMs

-   Workability of this FAP approach

**Green Groups**

-   Definition: *Green Group* is a group of emissions activities at a
    major stationary source in which certain changes would be authorized
    in a major NSR process to occur, provided that the new/existing
    emissions activities:

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-   Are ducted to a common air pollution control device which is
    determined to meet BACT/LAER, as applicable; and

-   Meet, in aggregate, an emissions limit determined for these emission
    to assure compliance with all relevant ambient requirements

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-   Additional Requirements for Green Groups

    -   Permit's description of authorized changes must be sufficient to
        distinguish whether a particular change was authorized
        (description of future changes may be relative to baseline)

    -   Baseline actual emissions for Green Groups must be adjusted for
        BACT/LAER

    -   Offsets required in Nonattainment Areas

    -   PAL-equivalent monitoring of Green Group cap

    -   Monitoring to ensure control device capacity not exceeded

    -   BACT/LAER decision effective for 10 years

    -   Option to meet by compliant coatings (pollution prevention)

    -   Semi-annual report includes (among other things) emissions cap
        compliance status for each month (12-month rolling total) and
        list of any emissions activities added during the preceding 6
        months

    -   Removal of a Green Group activity would contemporaneously
        subject the unit to major NSR and the remaining units to a
        downward adjustment

-   Green Groups Would Be A Mandatory Program Element

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-   Due to anticipated environmental benefits

-   States have discretion to grant (or not) on a case-by-case basis

**Pilot Case Example**

-   Flexible PSD/PAL permit issued for automobile manufacturing plant
    (initial Title V permit had not been issued)

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-   Lists fairly expansive "emission sources" with controls

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-   Existing sources with no current plans to modify (34)

-   Existing sources with planned modifications (6)

-   Planned new sources (4)

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-   Sets PALs for VOCs, PM~10~, NOx, SO~2~, and CO to prevent the
    applicability of Major NSR (rolling 12-month totals)

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-   VOC "PAL" level increases with production level, based on a
    combination of historic actual emissions and projected emissions

-   Compliance with PALs is sole method of determining compliance with
    major and minor NSR requirements for each emissions unit (but APCDs
    must be monitored)

-   Compliance with VOC PAL "assures compliance" with NSPS Subpart MM,
    but plant must keep records to demonstrate

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-   Permit no longer valid if plant

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-   Does not begin construction of at least one planned change within 18
    months of permit effective date

-   Discontinues construction for 18 months or more

-   Does not complete construction within 18 months of planned
    completion date

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-   Under the PAL, A2 for other changes not currently planned:

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-   May undertake physical or operational changes to listed emission
    sources (see above) if within PALs and continue to use required
    controls (or approved alternative controls)

-   May add new emission sources with PSD significant PTE (if within
    PAL) by registering new source and applying BACT

-   May add insignificant new emissions sources (if within PAL) by
    registering new source and applying minor source BACT

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-   PSD permit good for 5½ years, but PALs good for 10 years

**Pilot Case Example (cont.)**

-   Permitted paint shop sources and VOC controls

+----+-------------------+------+------------------+-----------------+
| ** | **Emission        | *    | **Controlled     | **BACT VOC Air  |
| ES | Source**          | *No. | Equipment**      | Pollution       |
| RN |                   | of   |                  | Control         |
| N  |                   | Lin  |                  | Device(s)**     |
| o. |                   | es** |                  |                 |
| ** |                   |      |                  |                 |
+====+===================+======+==================+=================+
| 32 | Space Frame and   | 2    | Curing Ovens     | Recuperative    |
|    | Sheet Metal       |      |                  | Thermal         |
|    | E‑Coat System     |      |                  | Oxidizers (TOs) |
+----+-------------------+------+------------------+-----------------+
| 36 | Major Panel Prime | 1    | Curing Oven      | TO              |
|    | System            |      |                  |                 |
+----+-------------------+------+------------------+-----------------+
| 33 | Major Panel       | 3    | Curing Ovens     | TOs             |
|    | Topcoat           |      |                  |                 |
|    | Operations        |      | Clearcoat Spray  | Carbon          |
|    |                   |      | Zones            | Abatement       |
|    |                   |      |                  | System          |
|    |                   |      | Basecoat Heated  |                 |
|    |                   |      | Flash Zones      | Carbon          |
|    |                   |      |                  | Abatement       |
|    |                   |      |                  | System          |
+----+-------------------+------+------------------+-----------------+
| 65 | Fascia Adhesion   | 1    | Booth            | No Control (no  |
|    | Promoter Spray    |      |                  | planned         |
|    | Booth             |      |                  | modifications)  |
+----+-------------------+------+------------------+-----------------+
| 3  | Fascia/Reprocess  | 1    | Curing Oven      | TO              |
| 7/ | Topcoat (Basecoat |      |                  |                 |
| 39 | & Clearcoat)      |      | Clearcoat Spray  | Carbon          |
|    |                   |      | Zones            | Abatement       |
|    |                   |      |                  | System          |
|    |                   |      | Basecoat Heated  |                 |
|    |                   |      | Flash Zones      | Carbon          |
|    |                   |      |                  | Abatement       |
|    |                   |      |                  | System          |
+----+-------------------+------+------------------+-----------------+
| 3  | Fascia/Service    | 1    | Curing Oven      | TO              |
| 8/ | Parts Prime       |      |                  |                 |
| 67 |                   |      |                  |                 |
+----+-------------------+------+------------------+-----------------+
| 3  | Space Frame       | 2    | Curing Ovens     | TOs             |
| 5/ | Underbody         |      |                  |                 |
| 40 | PVC/Seam Seal     |      |                  |                 |
|    | App               |      |                  |                 |
|    | lication/Blackout |      |                  |                 |
+----+-------------------+------+------------------+-----------------+
| 41 | Miscellaneous     |      |                  | Purge Solvent   |
|    | Operations        |      |                  | Recovery System |
+----+-------------------+------+------------------+-----------------+

-   Eleven recuperative thermal oxidizers are used to control VOCs from
    the curing ovens

-   One "carbon abatement system" (hybrid carbon adsorption/ oxidation
    system) controls VOCs from multiple coating spray and flash zones

**Green Group Issues**

-   Whether Green Group should be a mandatory program element

-   Appropriate duration of Green Group

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-   10 or 15 years?

-   Other?

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-   Contemporaneity of BACT

-   How an equivalent P2 approach can be implemented for the Green Group

-   Necessary to limit to one control device?

-   Workability of this FAP approach