RHODE ISLAND DEPARTMENT OF ENVIRONMENTAL MANAGEMENT 235 Promenade Street, Providence, RI 02908-5767

18 September 2013
David B. Conroy, Chief Air Programs Branch EPA-New England, Region 1 5 Post Office Square Boston, MA 02109-3912

DearMr. Conroy: TDD 401-222-4462

This letter is intended to address several questions EPA Region 1has asked RI DEM about its current version ofAir Pollution Control Regulation No. 9 that was submitted to EPA for approval into the State Implementation Plan (SIP) on January 18,2011.
Attached to this letter is a demonstration that the Prevention ofSignificant Deterioration (PSD) program contained in Air Pollution Control Regulation No. 9 is more stringent than or at least as stringent in all respects as the federal progran1 for preconstruction permitting ofgreenhouse gases. ThePSD program is implemented in Rhode Island through AirPollution Control Regulation No.9.
The attached demonstration supplements the SIP submittal in orderto meet the requirements of 40 CFR §5!.166 and to demonstrate that APC Regulation No.9, as amended on January 31, 2011, achieves at least the same level ofemissions reductions that would havebeen achieved had Rhode Island adopted plantwide applicability level requirements found at 40 CFR §51.166(w) and the othernew source review reform provisions promulgatedbyEPA in 2002. Additionally, EPA Region 1has asked a question regarding RI's current regulatory definition of the term "regulated NSR pollutant" as it is used in RI's major new source review preconstruction permitting program. Region 1has asked whether RI requires that the condensable portion ofthe pollutants PM-10 and PM 2.5 be considered for purposes ofmajornew source review permitting applicabilitydetetminations and for establishing source-specific emissions limits in new source review preconstruction permits. The question arosebecause RI's current definition of"regulated NSRpollutant" does not contain the explicit references to condensable portions ofPM-I0 and PM2.5 that appear in EPA's definition of"regulated NSRpollutant" at 40 C.F.R. 51.166(b)( 49)(i)(a).

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### t-4} 30% post-consumer fiberRI DEM offers the following in response to Region 1's question. RI DEM does currentlyrequire consideration ofthe condensableportion ofthepollutants PM-1 0 and PM 2.5 for thepurposes of major new source review applicability determinations and establishingpermit limits, despitethe absence ofan explicit reference to "condensables" in the definition of"regulated NSR pollutant." RI DEM interprets the definitions ofthe terms "PM-10" and "PM2.5" in APC Regulation No.9 to include the condensable portion ofthepollutants PM-10 and PM 2.5 even though the word "condensable" is not expresslyused in that definition. RI DEMbelieves that this is the only reasonable interpretation ofthe two definitions given the defined term refers to measurements of PM-I0 and PM2.5 in relation to ambient monitoring which, as a technical matter, necessarily would include the condensableportions ofPM-10 and PM 2.5. Lastly, on December29, 2005, RI DEM submitted to EPA Region 1 a demonstration that the New Source Review (NSR) programs contained in Rhode Island's existing State Implementation Plan (SIP) are at least as stringent as the revised federal program (including NSR reform). EPA concluded, however, that the State's demonstration did not contain all ofthe elements needed and so could not be accepted for its intended purpose. We understand that EPA is now preparing to conditionally approve the incorporation ofthe current APC Regulation No.9 into the SIP provided RI DEM commits to submitting a revised demonstration no laterthan one year from the date on which EPA finalizes the conditional approval. As required byEPA, RI DEM commits to provide the revised demonstration in the timeframe specified.
Feel free to contact me or Ruth Gold with any questions orto discuss this letter. Sincerely,

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# r-**DougJ~S** L. McVay, Ch Office ofAirResources

### Rhode Island Department ofEnvironmental Management Office ofAir Resources
State Implementation Plan EquivalencyDemonstration ForGreenhouse Gas Emissions underthe PSD Program September 18,2013 

### Executive Summary

In 2002, the United States Environmental Protection Agency (EPA) promulgated amendments to the federal prevention ofsignificant deterioration (PSD) and major nonattainment new sourcereview regulations (NSR Reform). 1 Ifa state's preconstruction permittingprogram for major stationary sources deviates from the federal provisions, it must perform an analysis, pursuant to 40 C.F.R. §51.166, demonstrating that its program is more stringent than or at least as stringent in all respects as the federal program2

In 2010, EPA issued a rule tailoring the applicability criteriathat determine which stationary sources and modification projects become subject to permitting requirements for greenhouse gas emissions under the PSD program. 3 This rulebecameknown as the "TailoringRule." Rhode Island amended Air Pollution Control Regulation No. 9 (APCR No.9) on January 31, 2011 to adopt the applicability criteria. In light ofthose revisions, Rhode Island has prepared this analysis to verify for EPA that APCR No. 9 is more stringent than or at least as stringent in all respects as EPA'sNSR Reform rules and the Tailoring Rule, as these rules applyto the preconstruction permitting ofgreenhouse gases. 

### Background

A. New Source Review Reform
On December 31, 2002, the U.S. Environmental Protection Agency (EPA) revised its regulations governing the New Source Review (NSR) programs, including PSD requirements, under Parts C and D ofTitle I ofthe Clean AirAct.4 Two elements ofthe revisions, the Clean Units provision and the Pollution Control Projects exclusion were vacated bythe U.S. Court ofAppeals for the District ofColumbia. 5 The three remaining elements are as follow:

1 40 CPR §52.21 et seq
.. The 2002 rule changes affect nonattairunentNew Source Review (NSR) as well
as PSD. Forthis discussion the changes are limited to permitting greenhouse gas emissions under the PSD program. 2 40 CFR §51.166 (a)(7)(iv). 3 75 FR 31514 (June 3, 2010). 4 67 Fed. Reg. 80185. 5 State of New York. eta/., v. U.S EnvironmentalProtectionAgency, eta/., 413 F.3d 3 (D.C. Cir 2005)1. Plantwide Applicability Limits (PALs): The rules weremodified to allow
sources to make changes to their operations without triggering PSD review, as long as a source accepts apermit limit requiring it to operate within a strict facility-wide emissions cap, called a PlantwideApplicabilityLimit orPAL.
2. 10-year Look-back for Establishing Emissions Baseline: PSD requirements
are triggered when emissions increases for a new project or modification exceed specified levels. The emissions increase is measured by comparing estimated post-construction emissions to a preconstruction baseline level ofemissions. NSR Reform changed the way in which baseline emissions are calculated. NSR Reform allow a facility otherthan an electricutility to use any24-month period in the I0 years priorto the modification as long as all current control requirements
aretaken into account. (Electric utilityunits must use a consecutive 24-month period within the previous 5 years.)
3. Calculating Emissions Increases: NSR Reform extended an optional method for calculating increases in emissions resulting from facility modifications at nonelectricutility steam generatingunits (non-EGUs). The federal rules allow a source to use either an actual-to-projected actual test or an actual-to-potential test. Ifa source chooses to use the actual-to-projected actual test and there is a reasonable possibility the change will result in a significant emission increase, it is required to maintain certain records demonstrating how it calculated its predicted future actual emissions; and the source must submit reports to the permitting authority ifits post-modification actual emissions turn out to be different from thepre-modification prediction.
B. EPA's Narrowing Rule

In 20I0, EPA promulgated a rule entitled "Limitation ofApproval ofPrevention of Significant Deterioration Provisions Concerning Greenhouse Gas Emitting-Sources in State ImplementationPlans"that changed the threshold for greenhouse gas permitting in several approved state implementations plans, including Rhode Island's. 6 This rule, referred to as the Narrowing Rule, aligned the Rhode Island SIP-approved PSD regulations with EPA's Tailoring Rule.


### C. New Source Review Reform Applies to Greenhouse Gases
Neither the Narrowing Rulenorthe Tailoring Rule adopted an exemption from EPA's NSR Reforms for stationary sources ofgreenhouse gases. In fact, in 2012 EPA extended PALs, part ofthe NSR Reforms promulgated in 2002, to stationary sources ofGHGs. 7

6 75 FR 82536 (December 30, 2010) 777 FR41051 (July 12, 2012) I

### Rhode Island's Equivalency Determination Analysis

NSR Reform allows states to deviate from the NSR Reform regulations, butrequires such states to show that their existing program is more stringent than or at least as stringent in all respects as the NSR Reform provisions.8 The analysis contained in this document fulfills thatrequirement with regard only to thepermitting ofgreenhouse gas emissions under the Clean Air Act's PSD preconstruction permitprogram. This analysis does not address whether Rhode Island's current APCR No. 9 is more stringent than or at least as stringent in all respects as EPA'sNSRReform provisions for all otherregulated NSR pollutants. Rhode Island intends to submit such a demonstration for all otherregulated NSRpollutants in the near future.
Forthis analysis, Rhode Island separately analyzed below each ofthe three elements currently contained in EPA'sNSRReform regulations.
PALs
NSR Reform's environmental impact analysis relies on benefits that result from encouraging facilities to voluntarilyimplement emission controls. However, ifNSR Reform had been adoptedbyRhode Island, there are several factors specificallyrelevant to Rhode Island's GHG sources indicating that such benefits would not occur.
EPA's Supplemental Analysis9 relied heavilyon emissions reductions that would arise from the application ofPALs to six source categories. These results were then extrapolated to assess impacts on volatile organic compounds (VOC) emissions in three otherindustrial categories: pharmaceutical manufacturing, semi-conductor manufacturing, and automobile manufacturing. In addition, EPA provided a separate analysis which assessed the impact ofPALs for thepulp and paper industry within the context ofapproving NSR reform in Wisconsin. 10 Again, EPA's analysis contrasted emissions reductions benefits anticipated to be obtained at sources in thepulp and paper industryifPALs were applied in lieu ofobtaining a traditional NSRpermit.

EPA has stated that the types offacilities in the four source categories referenced above mayneed significant operational flexibility to make quick changes in response to changingmarket conditions. The abilityto make such changes withouthaving to wait for the issuance ofa PSD construction permit is considered, on balance, to bepreferable
even ifadditional emissions reductions are required and maintenance ofadditional records are needed to verif'y compliance with the plant-wide emissions limits. EPA states that bykeeping emissions below the PAL the sourcewill have agreed to lowerits emissions beyond what would havebeenrequired under a PSD preconstructionpermit program without PALs. However, given the type and number ofsources in Rhode Island emitting greenhouse gas emissions at a level that would be subjectto EPA's PSD

840 CFR 51.166(a)(7)(iv) 9U.S. Environmental ProtectionAgency, New Source Review (NSR) Improvements: Supplemental Analysis ofthe Environmental Impact ofthe 2002 Final NSR Improvement Rules, November21, 2002. 10 73 FR 76564, December 17,2008 2requirements, we do not believe there would havebeen any reduction in emissions from current emissions levels ifRhode Island had adopted PALs as part ofits regulatory approach.
Attachment I to this document contains a list of 11 stationary sources ofGHGs in Rhode Island, on a C02e basis, that have reportedto EPA's Greenhouse Gas Reporting Program. Sources with greenhouse gas emissions that in general are over 25,000 metric tons per year, must report their greenhouse gas emissions to EPA. Itis important to notethat the reporting threshold isjust slightly over 25% ofthe major source threshold in EPA's PSD permit rules on a COze basis.

In analyzing the types ofsources listed in Attachment I, we first note thatnone ofthe
sources is in any offour source categories which formed the basis ofEPA's analysis supporting the conclusion that the inclusion ofPALs in the major stationary source preconstruction permittingprogram results in emissions reductions as compared to a program without PALs. The greenhouse gases emitted from 10 ofthe sources in Attachment I result from the combustion offossil fuels. The other source, a landfill, primarily emits the greenhouse gas methane. These 11 sources typicallydo not make quick changes to their facilities in response to changing market conditions, either in their
raw materials or final product, which would require a PSD pennit. Forexample, 5 ofthe
sources generate electricity for wholesale. These five facilities are also subject to other federal and state permittingprograms implemented byfederal and state agencies other than EPA and RI DEM. Consequently, a PALtypically would not provide these sources with the operational and timing flexibility afforded sources not subject to those other permitting programs, because the electric generating facilities would, even with a PAL, need to undergo the various permittingprocesses implementedbyother state and federal regulators before thephysical or operational changes in question could legally occur. These sources are large, stable operations, limited to combusting one ortwo fuels, and so are unlikelyto benefit from a PAL.
Five ofthe other six sources, whose greenhouse gas emissions derive from combustion of fossil fuels, only consist ofone to four main combustionunits, per source. These 5
sources and the size oftheir emission units are listed in Attachment II (which contains
more information for these sources beyond what is contained in Attachment I). These
sources have not made frequent changes to their combustion units in the past which required preconstruction permits, let alone PSD permits. Finally, for the remaining source (ofthe 11 sources), landfills generatemethane (a GHG) and othervolatile organic compounds as a result ofbiodegradation ofthe waste deposited in the landfill. Landfills typically would onlytrigger PSD for GHGs when they construct a large new section or "phase" ofthe landfill. The nature ofthat kind ofland-based footprint construction suggests that it is not somethingthat actually does, or even could, happen frequently overrelatively short periods oftime in response to rapidly changing conditions, either in the market or at the source. Consequently, it is difficult to see how a PALmight be ofuse to a large landfill.

3Actual-To-Projected Actual Test
The emission increase calculation used at non-utility sources for determiningwhether a physical oroperational change at a source triggers the majormodification preconstruction permitting requirements was changed byEPA's NSR Reforms from an actual-to-potential test to an actual-to-projected actual test (with an option to use the former test, however, if
a source so chooses). In the context ofEPA's recent approval ofcertainrevisions to the Wisconsin NSR SIP, EPA stated "itis more difficult to assess the environmental impacts ofthe actual-to- projected-actual test and the '"two-in-ten' baseline provisions." However, we present the following facts to demonstrate that Rhode Island's rules will provide for at least the same emission reductions in greenhouse gases as EPA's rules in relation to the differencebetween the two tests. Although Rhode Island's preconstruction permitting program regulations contain the actual-to-potential test, rather than the NSR Reform's actual-to-projected actual test, there are other aspects ofRhode Island's regulations that operate to achieve a result that is equivalent, as a practical matter, to the federal rules. EPA's NSR Reform requires a source to project its post-modification actual emissions to determine iftheproject meets the definition ofa "majormodification" triggering PSD permitting requirements. Ifthe
source projects that there is a significantpossibility its post-modification emissions will result in either a "significant emissions increase" or a "significant net emissions increase," the source must maintain records ofits actual emissions for either 5 or 10 years after a modification occurs in orderto confinn that its pre-modification emissions projections were correct.
While Rhode Island's preconstruction permittingrules include a different test, the actualto-potential test, a source would have an option that would result in the same operational flexibility to avoid PSD review (as described below). In other words, ifthe concern over theuse ofa different test in Rhode Island arises because the actual-to-potential test does not provide sources with sufficient operational flexibility, Rhode Island's permitting rules
as a whole actually do provide an equivalent level offlexibility through a different mechanism. In Rhode Island, any source that would have, underNSR Refonn, been required to maintain records ofits greenhouse gas emissions for 5 or I0 years to confirm that its projection ofpost-modification emissions was sufficiently accurate, would in any event berequired to obtain a minorsource preconstruction permit

. Although GHGs are not regulated directly under Rhode Island's minorsource permitprogram, the sources located in Rhode Island as identified in Attachment I, which potentially couldbe subject to PSD permitting for GHGs, typically emit other regulated NSRpollutants. A minor
source permit would contain an emission cap that would limit emissions ofallpollutants, including GHG, to less than the PSD applicabilitythresholds. In addition, the minor NSRpermit would contain similar record keeping requirements as EPA's NSR Reform rule to ensure that the source did not violate the emissions cap that kept the source out of majorPSD review. Consequently, a source in Rhode Island that wouldhaveprojected that its post-modification actual emissions would not triggerPSD review (had NSR Reform been adopted by the State), under Rhode Island's current rules would simply need an additional permitrequirement (an emissions cap) to reflect such a projection.

4Another way oflooking at this equivalencybetween the State and federal programs is to note that in Rhode Island, whether the major source PSD rules were to relyon either an actual-to-potential test or an actual-to-projected actual test, that source would still need to obtain aminorNSRpermitpriorto construction. As a practical matter, ifa source were willing to project that its actual post-modification emissions would staybelow major modification thresholds in relation to a particularproject, then it should readilybe able to complywith a minorNSR emissions cap at an equivalent level ofemissions to those projected to occur in the future.

In addition to the above reasoning, Rhode Island maintains that its current definition of majormodification that relies on the actual-to-potential test is broader in scope than the federal definition (i.e. more sources would be subject to review as majormodifications) and therefore APCR No. 9 is more stringent than or at least as stringent as the federal program with respect to the actual to projected actual test.

10 Year Look Back
This provision ofNSRReform changed the allowable time frame used to determine baseline actual emissions as part ofthe calculation ofemissions increases that might trigger PSD review for modifications. The NSR Reform rules revised the allowable time frame to be any consecutive 24 month period during the 10 year period immediately preceding the permit application date for a modification at non-utility sources. Rhode Island's current rules, however, limitthe look-back period to 5 years. Under eitherthe NSR reform rules or Rhode Island's current rules, utility sources are limited to a consecutive 24 month period in the previous 5 years. In EPA's Supplemental Analysis 11 to the Reform Rule EPA stated:
"As described in Appendix F, the rule change will not alter the baseline at all for most sources, including (I) new sources, (2) modifications in the largest-emitting category, coal fired powerplants, (3) modifications at any sourcewhere emissions havebeen highest in recent years, and (4) modifications at any source where emissions have been relatively stable. Togetherthese categories comprise an estimated 90 percent ofemissions benefits from the NSR program."

In analyzing the greenhouse gas emissions in 2011 from the sources listed in Attachment I, five ofthe 11 sources (EntergyRhode Island State Energy, LP, Manchester Street, Ocean StatePower, Pawtucket Power and Tiverton Power) are all utility sources. Baseline emissions therefore would notbe expected to be altered at these five sources by the NSR Reform rule because in each case theywould be limited to abaseline within the previous 5 years.
GHG emissions from three ofthe II sources, Brown University, Algonquin Gas Compressor Station, and Rhode Island Hospital, are expected to be stable overtime. The

11 New Source Review (NSR) Improvements "Supplemental Analysis ofthe Enviromnental Impact ofthe 2002 Final NSR Improvement Rules," November 21, 2002 

### 510 year look backperiod was provided to allow sources to account for variations in their business cycles. None ofthese three sources wouldbe expected to be subject to significant variations in demand for their services from yearto year, and thus the difference between a 5 and a 10 year look-backperiod should make no difference to the calculation.
GHG from one ofthe 11 sources, Rhode Island Resource Recovery Corporation, will eitherremain stable orincrease in the future. This facility receives all municipal trash generated in Rhode Island. Ifmethane emissions from landfills are measured on a graph
over a period ofyears the data would form abell curve due to the nature ofdecomposing wastethat generates gas (including methane). However, the landfill continues to expand and make improvements in collecting and destroying methane gas. These facts support the conclusion that baseline emissions for this particular source would notbe expected to beimpactedbythe differencebetween a five year and a ten year lookbackperiod, because greenhouse gas emissions are expected to remain stable overtime for the entire landfill, i.e., landfill gas emissions decrease overtime in a particular segment ofthe landfill butnew phases or sections are constructed. In addition, landfill gas collection systems are designed under applicable state and federal law to ensure that themethane is collected and controlled- in fact, methane typically is used to fuel power electric generating units. Finally, actual GHG emissions from the two remaining sources, U.S. NavyNaval Station and Toray Plastics, are 50% orless than the major source threshold for GHGs on a C02e basis and therefore could easily complywith a minor sourcepermit emissions cap to avoid having to determine "actual baseline emissions" as the term is used in the PSD permit program.
In addition to the abovereasoning, Rhode Island maintains that its current definition of majormodification that limits the look-back period to five years is broader in scope than the federal definition (i.e. more sources would be subjectto review as major modifications) and therefore APCRNo. 9 is more stringentthan or at least as stringent as the federal program with respect to the look back period.



### Conclusion

In Rhode Island, because ofthe characteristics ofthe specific sources subject to the PSD rules for GHGs as demonstrated bythe analysis ofthose sources' emissions set forth above, RI DEMbelieves that APCRNo. 9 is more stringent than or at least as stringent in all respects as the federal NSR Reform rules atreducing GHG emissions in Rhode Island.

6Attachment I Sources Which Submitted GreenhouseGas Emissions Data Pursuant to 40 CPRPart 98

City/Town GHG Emissions
on a C02ebasis (metrictons in FacilityName 2011)

Brown University Providence 28,810 Algonquin Gas Compressor Station Bunillville 30,049 Entergy Rhode Island State Energy, LP Johnston 1,172,779 Manchester Street Providence 1,085,960 Ocean State Power Hanisville 686,125 Pawtucket PowerAssociates, LP Pawtucket 11,445 Rhode Island Hospital Providence 49,267 Rhode Island Resource Recovery Corporation Johnston 109,135 Toray Plastics ofAmerica North Kingstown 57,460 Tiverton Power Tiverton 627,406 U.S. NavyNaval Station Newport 22,088

7Attachment II Combustion Sources Otherthan Electric Generating Utilities
Source Unit Size based on heatinput Algonquin Gas Compressor Station 2 gas turbines each rated at 58 MMBtu/hr Brown University 1- 93 MMBtu/hrboiler 2- 122 MMBtulhrboilers
Rhode Island Hospital 1 - 80 MMBtu/hrboiler 3 - 66 MMBtulhrboilers Toray Plastics 2 - 40 MMBtu/hrboilers 1 - 98 MMBtulhr boilers U.S. Naval Station 2 - 93 MMBtulhrboiler 1 - 95 MMBtulhrboiler I - 96 MMBtulhrboiler

8