UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION 1 5 POST OFFICE SQUARE, SUITE 100 BOSTON, MA 02109

- 3912

Memorandum

Date: September 20 , 2013

Subject: Technical Support Document ; Review of Rhode Island’s Equivalency

Demonstration for Preconstruction Permitting Requirements Applicable to
Sources of Greenhouse Gas Emissions

From: Donald Dahl Environmental Engineer

To: Files

Background

During 2010, EPA promulgated several regu latory amendments to 40 C.F.R. § 51.166 relating to the P revention of Significant Deterioration (P SD ) preconstruction permitting requirements that state implementation plans (SIP) must contain for major stationary sources of greenhouse gas (GHG) emissions. On January 18, 2011, Rhode Island
submitted to EPA Region 1 a request for a SIP revision that consist ed of regulatory changes to its preconstruction permitting regulations, including changes addressing the
GHG PSD preconstruction permitting requirements at 40 CFR § 51.166. ( EPA is deferring action on the portions of Rhode Island’s SIP submittal that are not necessary for permitting GHG emissions from major new or modified stationary sources. )

In 2002, EPA amended 40 C

. F

. R

. §§ 51.165 and 51.166, nonattai nment new source review and PSD preconstruction permitting requirements, respectively. The 2002
amendments are collectively known as “ NSR Reform. ” 1 States were required to : 1) adopt
the NSR Reform s, or 2) submit a technical demonstration showing that the state’s regulations are more stringent than or at least as stringent in all respects as the NSR
Reform s

. See 40 C.F.R. § 51.166(a)(7)(iv). In 2005

, Rhode Island submitted an equivalency demonstration

, but the demonstration did not contain all of the elements

necessary to make the showing required by EPA’s regulations. Hence, EPA did not approve that 2005 demonstration. Subsequently, h owever, Rhode Island submitted a revised equiva le ncy demonstration on September 18, 2013 . That revised demonstration is limited to an analysis of the State’s preconstruction permitting requirements as they

1 A number of the NSR Reform provisions, not relevant to this technical support document, were later vacated by federal courts.2

apply to sources of GHGs. EPA Region 1 has determined that Rhode Island’s September 18, 2013 demonstration for sources of GHGs m eets federal requirements

, and EPA wi ll
be approving that demonstration along with the relevant SIP provisions that are part of the State’s submittal . A brief analysis of the State’s technical demonstration and the basis of EPA’s determination is described below.

Analysis

As stated abo ve, EPA Region 1 has reviewed Rhode Island’s September 18, 2013 equivalency demonstration, and has concluded that Rhode Island’s regulations addressing preconstruction permitting requirements for GHGs are more stringent than or at least as stringent as EPA ’s NSR Reform s . Thus, EPA has concluded that Rhode Island’s PSD program for GHGs will achieve at least the same level of emission reductions as would
be achieved had Rhode Island adopted EPA’s NSR Reform s . EPA ’s conclusion is based on the following:

1. Rhode Island provided an analysis of specific sources of GHGs in Rhode Island that typically would trigger PSD permit ting requirements under 40 CFR § 51.166 at some point during their operation . The S tate’s analysis clearly show s that the regulatory language contained in the State’s proposed SIP revision will achieve at least an equivalent level of emission s reductions as compared to EPA’s NSR Reform s.

2. Rhode Island’s demonstration provided an analysis for each of the three main components of NSR Reform. These components are known as : 1) Plant

- wide Applicability Limits (PAL s )

, 2) the Actual

- to

- Projected Actual Test, and 3) the Ten
Year Look

- back. Rhode Island’s demonstration showed that for each of the three component s , the S ta te’s preconstruction permitting regulations as to GHG sources would be more stringent than or at least as stringent in all respects as NSR Reform.

3. T he information provided by Rhode Island that EPA Region 1 relied on includes :

a. Plantwide Applicability Limits : The S tate’s demonstration contained a list
of 11 specific stationary sources that report GHG emissions to EPA pursuant to 40 C

. F

. R

. Part 98. The S tate ’s analysi s show ed that these 11

sources would not be expected to apply for , or benefit from, a PAL

, due to the specific nature of their operations and a corresponding lack of a need for the kind of operational flexibility provided by a PAL. See pages 3

- 4 of the State’s demonstration.

b. Actual to Projected Actual Test : When the EPA adopted the revis ions to the NSR program referred to as NSR Reform, an additional applicability test, the Actual

- to

- Projected Actual test (ATPA), was added to the existing test, the Actual

- to

- Potential test. The State’s program retains the Actual

to Potential test withou t adding the ATPA test.3 The EPA analyzed the effects of adding the ATPA test in the Supplemental Environmental Analysis (SEA), prepared for the NSR
Reform Rule. In the SEA, the EPA determined that in cases where hypothetical emissions calculated under the Actual

- to

- Potential test but not under the ATPA test, sources almost always took permit limits to
avoid NSR. This is what is likely to occur in Rhode Island for greenhouse

gases , based on the assertions made in their equivalency determination.
In th e SEA, the EPA determined that in these cases, the addition of the ATPA test is environmentally neutral.

According to the SEA, only “a very small subset” of stationary sources subject to NSR would benefit from the ATPA test (SEA at App. G

- 1).
The scena rio highlighted in the SEA would be a case where a source is operating substantially below its potential emissions that could undertake a physical or operational change that would lower actual emissions but not meaningfully impact potential emissions. Suc h a source would be discouraged from undertaking such a change because it would need to reduce its potential emissions substantially through a minor source permit in order to avoid needing an NSR permit. The SEA notes that, nationally, “current actual emi ssions are generally well below maximum potential emissions” at sources subject to NSR (SEA at App. G

- 2). We were not able to quantify the national benefit of ATPA as part of the SEA, but viewed it as “very small.” (SEA at App. G

- 6).

The stationary sou rces in Rhode Island that would be subject to NSR for greenhouse gases were they to have modifications generally do not operate as substantially below their potential emissions as in other parts of the country. Therefore, the disincentive of “giving up” p otential emissions in a minor source permitting action is less than what is the national case
discussed in the SEA.

As noted in the SEA, the benefit of ATPA nationally is unquantifiable but very small and limited to the very small subset of stationary sources. The conditions necessary to benefit from ATPA do not apply to Rhode Island greenhouse gas sources. The EPA has, therefore, determined that Rhode Island’s program for permitting GHG is at least as stringent as the EPA

program.

c. Ten Year Look

- back : The S tate’s demonstration showed that of the 11 stationary sources analyzed, one is an electric generating facility that

, under the State’s permitting requirements applicable to electric generating facilities, actually would be subject to the same 5

- year look

- back period
f or purposes of new source review permitting requirements. As to the other 10 stationary sources, t he nature of the ir specific operations and business cycles indicates that the distinction between a five year and a ten

year look

- bac k period would not have any practical difference in terms of4 new source review permitting applicability. See Pages 6

- 7 of the State’s
demonstration.

Note: Rhode Island stated in its demonstration that their current definition of major
modification is broader in scope and therefore their rule is more stringent than EPA’s reform rule because more changes would be subject to PSD permitting. EPA’s approval of Rhode Island’s rules being equivalent with regards to GHG permitting does not rely on
this statem ent. In the 2002 reform rule EPA stated that in all cases more PSD permitting does not always result in less emissions. In fact, it is EPA’s position that Reform rules taken as a whole will under most state preconstruction permitting program result in l ower emissions than if that particular state did not adopt NSR reform.

Conclusion

Based on the data and analy se s provided by Rhode Island in its letter dated September 20, 2013, EPA Region 1 has determined that Rhode Island’s preconstruction permitting

r egulations

, as they apply to major stationary sources of GHGs

, is more stringent than

, or is at least as stringent in all respects as

, EPA’s NSR reform provisions contained in 40
CFR § 51.166.