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OAR Box 1802 

Prepped by Charmelle Mathews 

Document Number: 

41) IV-E-36 

Docket Number: 

A-90-37 

Printed 11/4/200811:57:59 AM Sheet 41 of 117 
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A- ^0-3 7 

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MEETING SUMMARY 

EPA/"PAL GROUP" MEETING 

NEW SOURCE REVIEW REFORM 

August 11, 1999 

The meeting was held at the offices of EPA, N.C. Mutual Building, 4l 1 W. Chapel Hill 

Street, Durham, North Carolina. The meeting began at approximately 10:00 am and closed at 

approximately 12:00 noon. Attached is a list of attendees. 

John Seitz opened the meeting by thanking everyone for coming. He said that although 

EPA had indicated at the last meeting with the PAL group that there will be no further meetings 

with the industry groups, there have been a significant number of proposals received since then, 

and that Bob Pereiasepe wants to further discuss the proposals. With respect to the proposal ' 

presented by the PAL group, Mr. Seitz mentioned that there were some issues that EPA would 

like to clarify. Also, Mr. Seitz indicated that there were some differences between the written 

proposal as compared to conversations that EPA has had with the PAL group and David 

Hawkins that EPA would like to resolve. He mentioned that EPA's questions were critical, and 

that the PAL group's responses will be presented to Mr. Pereiasepe for internal discussion. 

Mr. Pat Raher said that the industry group was happy to be at the meeting. With regard 

to EPA's questions, he said that the group will try to provide written responses to EPA before 

Labor Day. Mr. Raher suggested that EPA should look at the whole proposal as one package 

because he felt that some ofthe questions that EPA had asked were too narrowly focussed. 

Mr. Seitz explained that the questions stemmed from the fact that EPA was still confused about 

how the industry proposal fit with the big picture on PAL. Mr. Seitz said that David Hawkins, 

based on his (Hawkins') conversations with the industry, understands the proposal to mean unitto-unit controls in exchange for allowables under the PAL, and if indeed that is the case then 

David Hawkins is "ok with it." 

John Holmes said that the group had presented a paper to EPA on May 17th, and at that 

time, the group had heard two concerns; one, that sources may receive an allowable baseline 

significantly higher than the actuals and, two, there was concern about hybrids. Therefore, the 

industry PAL group was attempting to address these two concerns. Mr. Seitz asked if the group 

was proposing to install good controls in return for allowables. Mr. Holmes replied that the units 

have to have good controls, but the details need to be worked out, e.g., details based on unit's 

size, differences between State programs, etc. Mr. Seitz indicated that some States wanted 

certainty and that the definition of "good control" was critical. According to Mr. Seitz, this was 

a fundamental issue for Mr. Hawkins. Mr. Raher replied that for major units good control meant 

BACT, and for units under the major source level good control would be State BAT. Mr. Raher 

said that EPA could not dictate to the States what the definition of good controls should be for 

the State minor source programs. Therefore, if the State had a definition of BAT included in 

their minor source program then that would be considered good control, otherwise the State 

decides what should be a good control and that it would be subject to public comment. 

Mr. Holmes offered the PAL group's help to EPA in developing a definition of good controls. 
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two factories on one plant, but the factories were never built due to a change in the market 

demand. In this case the actual emissions were zero, and adjustment of PALs to actuals did not 

make sense. Mr. Raher also explained that PALs provided incentive for sources to reduce 

emissions in order to accommodate new units. When asked by Mr. Sewell what the industry 

group's position was with respect to PAL adjustment, Mr. Holmes replied that their position was 

similar to that of Mr. Hawkins, i.e., if the source was well controlled, then there was no need to 

adjust PALs. Mr. Raher said that in order to expand PALs, the expansions would go through 

major NSR and the new units would come in under good technology, but it was not acceptable to 

the industry to both go through major NSR and agree to reducing PAL. Mr. Holmes explained 

that if the industry was providing well-controlled manufacturing, then the assumption should not 

be that the site needs to get smaller. He was opposed to the notion that the site will shrink until it 

dies. 

Mr. Seitz and Anna Wood explained that PAL adjustments may be necessary because of 

the court ruling under the Alabama Power case. Mr. Holmes replied that it was the PAL group's 

position that this was not an Alabama Power issue and that they had filed a lot of comments on 

this subject. 

There were some more discussions regarding declining PALs, time limits on PALs, and 

the option to re-establish PALs at the end ofthe initial time limit. Mr. Sewell mentioned that 

shutdowns were not addressed in the proposal. Mr. Raher replied that the group will address it in 

its written responses to EPA's questions. Mr. Raher reiterated that they intend to provide written 

responses before Labor Day. 

Mr. Seitz thanked the participants for coming to the meeting. He indicated that the 

meeting was helpful. He also reiterated that the PAL group's responses will be provided to 

Mr. Pereiasepe. 

The meeting was then adjourned. 

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ATTENDEES 

EPA/"PAL GROUP" MEETING 

NEW SOURCE REVIEW REFORM 

August 11,1999 

Name 

Mike Babos 

Todd Hyde 

Barbara Bankoff 

Jodie Miner 

Paul Jann 

Bernie Paul 

Jacki Savage 

John Holmes 

Patrick Raher 

Bill Wehram 

Steve Harper 

John Seitz 

Karen Blanchard 

Mike Sewell 

Anna Marie Wood 

Bill Harnett (by phone) 

Carol Holmes (by phone) 

Jon Devine (by phone) 

Dan Toensing (by phone) 

Malay Jindal 

Valerie Everett 

Affiliation 

Merck 

Merck 

for Eli Lilly 

Eli Lilly 

DuPont 

Eli Lilly 

Daimler Chrysler 

for Daimler Chrysler 

Hogan & Hartson 

Latham & Watkins 

Intel 

EPA/OAQPS 

EPA/OAQPS 

EPA/OAQPS 

EPA/OAR 

EPA/OAQPS 

EPA/OECA 

EPA/OGC 

EPA/Region VII 

PES (EPA Contractor) 

PES (EPA Contractor) 

Telephone No. 

(908)423-7812 

(908) 423-3994 

(202)434-4810 

(317)433-3426 

(302) 774-8043 

(317)276-0331 

(248) 576-8054 

(703)516-2444 

(202) 637-5682 

(202) 637-2284 

(202) 626-4399 

(919) 541-5616 

(919)541-5503 

(919) 541-0873 

(202) 260-8772 

(919) 541-4979 

(202) 564-8709 

(202) 260-6984 

(913) 551-7446 

(919)941-0333 

(919) 941-0333 

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' 1 

EPA MEETING WITH PAL INDUSTRY GROUP 

AUGUST 11,1999 

10:00 -12:00 8TM FLOOR CONFERENCE ROOM 

I. OPENING REMARKS 

(~ 5 MINUTES) 

OAQPS 

INDUSTRY GROUP 

II. GENERAL DISCUSSION ON INDUSTRY PAL CONCEPT 

QUESTIONS ARE ATTACHED 

ALLOWABLES PAL (~ 30 minutes) 

PAL ADJUSTMENT (~ 30.minutes) 

OTHER SELECTED ISSUES 

III. NEXT STEPS/CLOSING REMARKS 

(-10 MINUTES) 

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QUESTIONS FOR AUG. 11 PAL MEETING 

Allowables Based PAL Proposal: 

1. In your concept for existing stationary sources allowables may generally be 

used to set PAL provided existing units have a good control determination (such 

as State BAT or better) and there is not adequate room to reach full capacity under 

a PAL based on actuals plus less than the significance level. New major units 

(greater than 100 tpy or lower if major source threshold for area is lower) must 

install BACT. 

- How does this result in "equivalent or better environmental protection" 

compared to "traditional" NSR which results in BACT or LAER on all new 

or modified emissions units that result in a significant net emissions 

increase over source actual emissions? 

For the different industries represented what percentage of new units will be 

major? Seems many more emissions units will meet BACT or LAER under 

"traditional" NSR . Please explain. 

- What size units would have a good control determination? How do you 

define "good controls"? 

- What criteria, if any, should EPA specify for State programs to ensure that 

State reviews produce "good controls"? 

- What opportunity, if any, should EPA have to object to deficient State 

determinations? 

- When you say that the PAL can be "based on" BACT/LAER or good 

controls, do you mean that the PAL will be set at a level that assumes every 

unit is controlled but doesn't actually require each unit to install controls? 

Would the PAL be established assuming maximum operations at each unit? 

2. What if an allowables based PAL is allowed for existing sources provided that 

all existing and new units that are major or significant meet BACT or LAER and 

all units emitting less than the significant threshold meet the State's NSR 

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requirements for new minor sources? 

- Would this type of "allowables" PAL address the concerns of your group? 

If not, please explain why? 

3. For an existing source with an approved expansion that met applicable 

state/federal NSR requirements and recent actuals are lower than the level 

considered in the NSR approval, as proposed the PAL may be based on recent 

actuals plus an increment to accommodate the approved growth or change. 

- Would the growth increment be the allowables for the new units? 

4. For greenfield sources allowables PAL may be set provided applicable state 

and federal NSR requirements are met. New major units (greater than 100 tpy or 

lower if major source threshold for area is lower) added under the PAL must meet 

BACT. 

- If a greenfield source in an ozone attainment area obtains an allowables 

PAL for VOC what control technology requirements would apply to new 

units added under the PAL that emit 99 tpy or less of VOC? 

Does this concept provide equivalent or better environmental protection 

compared to "traditional" NSR? 

- What if a greenfields source could obtain an allowables based PAL 

provided the PAL is adjusted to reflect actual emissions after five years? 

Would this type of "allowables" PAL for greenfield sources address the 

concerns of your group? If not, explain why? 

5. In general, the PAL Proposal includes an allowables based PAL where the 

major emissions units are well controlled. Does industry propose that the 

allowables emissions concept for PAL be extended to the more traditional major 

NSR applicability tests (e.g, netting)? What is the PAL Stakeholders' position on 

whether and how the allowables emissions concept for NSR applicability can be 

limited to PAL? 

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PAL Adjustment Issues: 

The PAL Proposal does not require periodic adjustment ofthe PAL level to 

reflect more contemporaneous levels of actual emissions. 

1. EPA is considering a range of adjustment options, including a declining cap 

and adjustment for actuals every ten years. What is your position on PAL 

adjustment? 

2. How does a PAL that is not adjusted periodically for actual emissions provide 

"equivalent or better environmental protection?" 

3. How does the PAL Proposal meet the contemporaneity requirements of 

Alabama Power? 

- Does the PAL Proposal provide for a PAL adjustment after twenty years? 

How does this adjustment ensure that emissions reductions are 

"contemporaneous" with the emissions increases from new or modified 

units under the PAL? 

4. For certain major units the PAL Proposal states the "the permitting authority 

will have authority, in addition to any current authority, to require that the unit be 

placed on a schedule for control technology upgrade to current best available 

technology performance levels over the first ten years ofthe PAL permit being in 

place." 

- Is the control of these units by the State mandatory (i.e., it must require 

the control of such units) or discretionary (may require such controls)? 

Please explain. 

- Regardless of whether the State's authority is discretionary or 

mandatory...can the PAL source dispute such request and try to avoid 

installing the requested controls? 

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5. What is the PAL Stakeholder's position on the concept that any requirements 

EPA sets for PAL are minimum requirements. 

- Do we agree that the States retain the authority to adopt more stringent 

control and other requirements for existing or new emissions units that are 

under a PAL? 

OTHER PAL ISSUES 

PAL Coverage (Partial PAL Issues): 

Under the PAL Proposal, certain emission units may be excluded from the 

PAL under the following circumstances: (1) emissions units that are minor (such 

as VOCs from fuel combustion); (2) emission units that comprise a separate part 

ofthe facility if the two operations are clearly distinct and the same manufacturing 

activities are not and will not be carried out at parts covered and uncovered by the 

PAL. 

1. Does the PAL Proposal provide for more than one PAL per pollutant per 

stationary source ? If yes, please explain why multiple PAL are needed at the 

same source for the same pollutant. 

2. If the concern is that unrelated operations at a source would need to 

coordinate to ensure compliance with the PAL, could the source take one PAL and 

allocate portions ofthe PAL to its different operations for management purposes? 

If a source must measure emissions from "de minimis" sources for 

netting purposes, please explain why is it harder to measure such 

sources under a PAL? 

Please provide some examples and factors that could be used to 

determine whether operations or portions of a facility are sufficiently 

distinct and separate to qualify for a separate PAL. What if the 

operations share energy, heat generation, or waste treatment? 

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How would the partial PAL concept impact the current definition of 

major stationary source, if at all? 

3. For units outside the PAL, how would a source measure the actuals 

emissions baseline for netting purposes? What units would be included in the 

source's baseline? 

PAL Enforceability: 

Please provide any concerns or questions the PAL Stakeholders have 

concerning emissions quantification, monitoring, reporting, and record keeping 

requirements to be included in PAL permits to ensure practical enforceability? 

Actuals Based PAL: 

Please explain under your concept how a facility would account for a unit 

that has been shutdown since the year selected to set the PAL baseline. 

Flexibility Under A PAL: 

1. BACT for the PAL pollutant is proposed for all new units added under 

the PAL that are considered "major" (i.e., unit emits over 100 tpy or the major 

source threshold for the area, whichever is lower). So that we may consider the 

environmental impact of requiring BACT on new units emitting at these 

thresholds, please provide the following information for both VOC and NOx 

emissions units for the different source categories represented by the PAL 

Stakeholders. 

- For the typical existing stationary source what percentage of existing units 

are "major" for the PAL pollutant? What percentage of total emissions of 

the PAL pollutant from the stationary source come from "major" units? 

2. During a previous meeting the PAL Stakeholders stated that PTE limits, 

including restrictions of hours of operation and pollution control equipment, 

should be considered when determining if a new unit is "major" for purposes of 

BACT/LAER applicability. 

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- Please explain what is meant by this statement. Does it mean that a source 

could install less than BACT/LAER controls on a unit to avoid being 

"major"? 

- Assuming the purpose of PAL is to provide operational flexibility, please 

explain why the use of PTE limits under PAL does not limit this flexibility? 

3. Does the PAL Proposal include the option to permit a PAL to substitute 

and thereby remove limits taken previously to avoid major NSR [i.e., limits 

subject to 40 CFR 52.2100(4)]? 

4. Does the PAL Proposal provide for the installation of LAER instead of 

BACT on all new "major" units added under the PAL for nonattainment 

pollutants? 

Expanding the PAL Level: 

The PAL Proposal permits the PAL level to be increased "by taking the 

change that is associated with the need for the increase through the Federal NSR 

process." Additionally, "to expand the PAL, all major units covered by the PAL 

must have good controls or be on an enforceable schedule to install the controls or 

shutdown within five years". 

Is this option to expand the PAL level available if the units being 

added would fit under the existing PAL? If the source could create 

room under the PAL for the new units by installing additional 

controls on existing units would the option be available? 

Would the PAL be increased by the allowable or actual emissions 

from units that meet major NSR requirements? 

Does the PAL Proposal mean that in order to expand the PAL that the 

major NSR requirements would apply to all units being added, 

including units that are less than the major NSR significance levels 

(e.g., 40 tpy for S02)? Please explain. 

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PAL Termination: 

In the PAL Proposal a PAL is set for a period often years. During the ten 

years at the request ofthe permittee and if approved by the permitting authority 

the PAL can be terminated. Upon termination the PAL limit will be retained as a 

permitted cap. As the end ofthe ten years approaches, renewal can be requested 

for another ten years. At the end of twenty years the PAL must be reevaluated. 

1. Please explain what is meant by the statement that the tpy limit 

representing the PAL would be "retained" at the facility? Would the permitted cap 

be one cap for all units previously 

under the PAL? Would the cap be considered a limit taken to avoid major NSR 

and thus subject to the requirements of 40 CFR 52.21(r)(4)? What happens if the 

source wants to increase the cap? 

2. Is there a proposed minimum time period for the PAL to be in effect 

before the source may apply for PAL termination? Could a source have the PAL 

dissolved and later re-establish the PAL anew? 

3. Please explain the extent ofthe PAL reevaluation at the end of twenty 

years? For example, would the PAL be adjusted for any reason because actual 

emissions under the PAL may have been less than the PAL limit? 

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OAQPS/OPAR's PAL Options: 

This document presents two PAL options that build on the versions currently under consideration 

by OAQPS and other EPA offices. It also incorporates some ofthe concepts set forth in the PAL 

proposal recently submitted by the Intel/Merck/Chrysler stakeholder group. Sections one and two set 

forth options for an actuals and allowables based PAL. The third section addresses the term of a PAL and 

the options for downward adjustments along with several other issues common to all PALs. The final 

section discusses several general principles that should apply to all PALs. The ideas and options 

embodied in this document attempt to develop an effective PAL program, taking into consideration the 

concerns expressed by STAPPA/ALAPCO, environmental groups and industry stakeholders. Taken as a 

whole, OAQPS and OPAR believe this document reflects a common sense approach to structure a 

program that provides relative simplicity and flexibility while ensuring environmental protection. 

Both ofthe following PAL options for actuals and allowables based PALs provide for no 

downward adjustment upon PAL expiration if the facility is well controlled. The ability to avoid a 

downward adjustment in exchange for good controls enables a source to plan future expansions because 

it retains the capacity realized from its emissions reductions. It accommodates economic expansion 

without an increase in baseline emissions. From an environmental policy perspective, this option 

creates a strong incentive for a facility to implement good controls as quickly as possible and provides 

incentives for production to occur at the cleanest and most efficient facilities. 

The concept of a "well controlled" source is used throughout this document. Previously in the 

PAL proposals we stated that "all" units must be well controlled. EPA will need to define what this 

concept means. We believe it would be appropriate to specify a size cutoff and tie that cutoff to a specific 

type of technology standard. For example, through guidance or otherwise, EPA would specify die limits 

associated with a "well controlled" facility (e.g., BACT or LAER on all major and significant emission 

units) or define a process for the permitting authority to follow when making this determination. This 

proposal envisions that EPA's definition of what constitutes a "well controlled" source would be applied 

consistently to the extent used in die options and principles set forth below. 

1. ACTUALS BASED PAL 

What type of source can qualify? 

• Any source willing to perform the record keeping, reporting and monitoring necessary to ensure 

that it is in compliance with its actuals based PAL. 

How is the actuals baseline established? 

• The actuals based PAL is established using the highest one year (consecutive 12 months) of 

actual emissions in the last ten years adjusted to reflect any existing control requirements. 

• Note the adjustment for existing control requirements would not reflect an adjustment 

for reductions achieved through the voluntary implementation of P2. However, if the 

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source implemented P2 to meet or avoid BACT/LAER or some other control technology 

requirement under die Clean Air Act, an adjustment is appropriate. 

2. ALLOWABLES BASED PAL . 

What type of source can qualify? 

• Any source willing to perform the record keeping, reporting and monitoring necessary to ensure 

that it is in compliance with its allowables based PAL and which fits into any one of die 

following three categories: 

1. New major green field sources where die facility satisfied state and federal NSR requirements; or 

2. A facility that satisfied state and Federal NSR requirements for the entire facility within the last 

five years, provided the source can demonstrate that the facility is well controlled; or 

3. A facility where an extensive revamp or expansion has been reviewed and approved consistent 

with applicable state/Federal NSR requirements. Under this scenario die major and significant 

emission units at the facility must be well controlled. 

How is the allowables baseline established? 

• The allowables baseline is set using the permitted allowables associated with the state and 

Federal NSR determinations made by the permitting authority at the sources which qualify for an 

allowables-based PAL. 

3. ISSUES COMMON TO BOTH ACTUALS AND ALLOWABLES 

BASED PALS 

For bow long is the PAL valid? 

• The PAL is valid for a term often years. 

What type of adjustment is required upon PAL renewal? 

• Upon renewal the PAL is adjusted to reflect actual emissions based on the highest one year 

(consecutive 12 months) of actual emissions in the last ten years adjusted for existing control 

requirements. 

OR 

• If the facility can demonstrate that all ofthe emission units under die PAL that exceed a 

predetermined threshold (e.g., greater than major source size or the criteria pollutant significance 

level) are well-controlled...there is no downward adjustment. 

NOTE: Under either PAL adjustment option, a source would be subject to downward adjustment to meet 

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new Clean Air Act requirements or address NAAQS or PSD increment concerns. 

Increasing the PAL: 

• With the exception of Merck, none ofthe PALs issued to date permit a unit to be added outside 

the PAL. Instead, sources with PALs must work within their established PAL levels or increase 

the PAL. We believe the better approach is to require inclusion of all units within the PAL. If 

such a requirement results in the need to increase a PAL, then the following principles would 

apply: 

• All existing major and significant units under the PAL must be well controlled or on a 

schedule to be well controlled within a defined period of time that could run concurrent 

with the expansion ofthe PAL or be tied to the next PAL renewal date. 

• The additional units to be placed under the PAL must be well controlled. 

• The PAL baseline would be increased by the allowable emissions attributable to the new 

units added under the PAL. Subsequent PAL renewals would be subject to the two 

adjustment options noted above. 

• This approach keeps everything under the PAL and avoids die issues associated widi "partial 

PALs". 

Removal of 52.21 (r)(4)/synthetic minor limits: 

• The current major NSR rules at 52.21 (r)(4) require that if limits taken to avoid major NSR 

(referred to as (r)(4) limits) are relaxed, then major NSR applies to the source or modification 

subject to the limit as though construction had not yet commenced. 

• OGC agrees that it is permissible under the Clean Air Act for PALs to substitute for a 52.21(r)(4) 

limit and remove the unit-specific (r)(4) limit. However, the issue is how to treat sources that 

take a PAL, remove (r)(4) limits on existing units and operate under the PAL but subsequently 

decide to terminate the PAL or let the PAL expire. 

• At the option ofthe source, it could elect to: 

*• Remove the (r)(4) limit upon establishing the PAL and agree to a schedule to put those 

units through major NSR to get rid ofthe limits all together; or 

*• Remove the (r)(4) limit upon establishing the PAL and if the source subsequently elects 

to terminate the PAL or let it expire, the (r)(4) limit would apply to those units upon 

PAL termination (assuming the units are still in operation). Thereafter, any increase of 

emissions at the (r)(4) units would be handled in accordance with then-existing 

regulations and guidance; or 

• Leave the (r)(4) units in place under the PAL and abide by such limits for those units. 

9 

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Adjustments for MACT Standards: 

• PAL would not be adjusted to reflect MACT reductions unless the State relies on such reductions 

as part of its NAAQS attainment strategy. 

• This position is consistent with existing NSR guidance on the use of MACT reductions 

for netting purposes under traditional NSR. Because a PAL is adjusted every ten years 

to meet the contemporaneous netting requirement of Alabama Power, it would be 

redundant to require an additional reduction to the PAL baseline to reflect MACT. 

• A MACT standard reflects a control efficiency as opposed to an absolute limit on the amount of 

emissions. A PAL based on either allowables or actuals limits the HAPs that the source can 

emit. A limit on the HAPs via the PAL is more environmentally protective than the traditional 

MACT or NSR requirements. In the absence of a PAL, the source is free to emit whatever 

quantity of HAPs it wishes so long as the MACT is in place. A required decrease in the PAL 

baseline to reflect MACT coupled with the absolute limit on die amount of HAPs die source can 

emit would serve as a double penalty to sources widi PALs. 

PAL termination: 

• PAL may be terminated at the source's request no sooner than ten years after the PAL is 

established. 

• At the point of termination or renewal, adjustments would be handled in accordance with the 

options outlined above. From this point on traditional NSR would apply to the facility. [NOTE, 

this assumes that the source will have data to establish actuals emissions for its major and 

significant units consistent widi its PAL baseline within the last ten years. This data would serve 

as the basis for analyzing traditional NSR applicability on a prospective basis.] 

Some General PAL Principles that should apply to all PALs: 

• With the exception of major units added widiin the PAL, any changes under a PAL mat are 

consistent with the PAL baseline would be in accordance with the State's existing minor NSR 

program. EPA may wish to specify die guidelines for BAT determinations for PALs diat will 

satisfy a "good control" determination upon establishing die PAL or upon renewal. 

• All new major units added under the PAL must have BACT or LAER. 

• A source should be able to meet the "well controlled" requirement through a combination of 

performance -based measures such as P2 and control technologies on emission units. The key 

concept is that the facility must demonstrate that it is operating at a well-controlled level 

(consistent with how EPA defines this through rulemaking) and that this level is enforceable. 

• What level of emissions satisfies the "well controlled" criteria for a PAL should be agreed upon 

at the time the PAL is being negotiated to allow a source that elects to pursue the "wellIff 
P.18 

controlled"/ no adjustment option to consider costs. Through guidance or otherwise, EPA could 

specify the limits associated with a well controlled facility (e.g. BACT or LAER on all major and 

significant emission units) or define a process for the permitting authority to follow when 

making this determination. Initially, this is not necessary widi a green fields PAL since the 

source recently completed NSR. The election for such sources would occur for the ten year term 

following the first renewal ofthe PAL. 

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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

RESEARCH TRIANGLE PARK, NC 27711 

AUG 6 1909 

OFFICE OF 

AIR QUALITY PLANNING 

AND STANDARDS 

Mr. Patrick M. Raher 

Hogan & Hartson, L.L.P. 

Columbia Square 

555 Thirteenth Street, NW 

Washington, D.C. 20004-1109 

Dear Mr. Raher: 

Thank you for your letter dated June 18,1999, in which you provided comments and 

concerns about the analysis by STAPPA /ALAPCO on the NSRTPlantwide Applicability 

Limitations (PAL) concepts proposed by DaimlerChrysler Corporation, Intel Corporation, Eli 

Lilly and Company, Merck & Co., Inc. and Dupont (PAL Stakeholders) on May 17,1999. 

The Environmental Protection Agency (EPA) supports the position that the PAL program 

needs to be a flexible, effective, and environmentally sound option that provides a streamlined 

path for determining major NSR applicability. We appreciate the efforts ofthe PAL 

Stakeholders to date and look forward to continuing our discussions on PAL at the upcoming 

meeting on August 11 in Durham. At this meeting, we intend to first focus on the allowables 

based PAL and periodic PAL adjustment issues. There will also be time allocated so that 

representatives from EPA's Office of General Counsel (OGC) and Office of Enforcement and 

Compliance Assurance (OECA) may ask questions concerning your PAL paper. 

To ensure that we use the time productively, attached are some clarifying questions and 

requests for additional information concerning the PAL concept paper dated May 17,1999. The 

responses to the questions and requested information will facilitate discussions at our August 11 

meeting and ensure that both the stakeholders and EPA have an opportunity to share relevant 

information concerning the PAL Stakeholder's proposal. The responses will also be evaluated 

and considered as we finalize the requirements for a PAL program. Additionally, a copy ofthe 

responses will be placed into the docket for the NSR reform rulemaking. 

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If you have any questions concerning the attached requests, please contact Mike Sewell at 

(919)541-0873. 

Attachment 

cc: William Becker 

John Paul 

Bill O'Sullivan 

Sincerely, 

form S. Seitz 

Director 

Office of Air Quality Planning 

and Standards 

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ATTACHMENT 

PAL Concept Paper Questions and Requests for Additional Information. 

Please note that the following questions and requests follow the order of issues addressed 

in the PAL Stakeholder's concept paper dated May 17,1999 (hereinafter referred to as the "PAL 

Proposal"). 

PAL Proposal Introduction: 

1. The PAL Proposal introduction states that "the PAL structure presented in this paper is 

an integrated approach that compared to "traditional" NSR, provides equivalent or better 

environmental protection." Under the PAL Proposal, BACT is installed on all new "major" units 

added under the PAL. Please provide examples of permitting scenarios that compare the PAL 

Proposal approach to traditional NSR, which in many cases results in BACT or LAER 

technology on units emitting less than "major" amounts. Please include an example situation 

where allowables emissions from existing well-controlled units are used to set the PAL and the 

actual emissions in tons per year from the these units have never exceeded 50% ofthe 

allowables. 

2. The PAL Proposal states that permitting under a PAL provides more incentive for 

pollution prevention than the current Federal NSR system. How is this incentive different 

compared to the current netting system? Doesn't each system reward those that reduce 

emissions by allowing them to offset new increases and avoid major NSR? 

PAL Coverage (Partial PAL Issues): 

Under the PAL Proposal, certain emission units may be excluded from the PAL under the 

following circumstances: (1) emissions units that are minor (such as VOCs from fuel 

combustion); (2) emission units that comprise a separate part ofthe facility if the two operations 

are clearly distinct and the same manufacturing activities are not and will not be carried out at 

pans covered and uncovered by the PAL. 

1. Please clarify whether the PAL Proposal provides for more than one PAL to be 

established at a stationary source per pollutant. If yes, please explain why multiple PAL are 

needed at the same source for the same pollutant. 

2. If the concem is that unrelated operations at a source would need to coordinate tp 

ensure compliance with the PAL, could the source take one PAL and allocate portions ofthe 

PAL to its different operations for management purposes? 

If a source must measure emissions from "de minimis" sources for netting 

purposes, please explain why is it harder to measure such sources under a PAL? 

22-
P.22 

Please provide some examples and factors that could be used to determine 

whether operations or portions of a facility are sufficiently distinct and separate 

to qualify for a separate PAL. What if the operations share energy, heat 

generation, or waste treatment? 

How would the partial PAL concept impact the current definition of major 

stationary source, if at all? 

3. For units outside the PAL, how would a source measure the actuals emissions baseline 

for netting purposes? What units would be included in the source's baseline? 

PAL Enforceability: 

Please provide any concerns or questions the PAL Stakeholders have concerning 

emissions quantification, monitoring, reporting, and record keeping requirements to be included 

in PAL permits to ensure practical enforceability? 

Initial Level of PAL: 

1. For an actuals-based PAL, the proposal suggests using the same definition of "actual 

emissions" as in the current NSR rules. EPA proposed a definition of "actual emissions" that 

would use a unit's highest 12-month level of operations within the last ten years multiplied by a 

current emission factor. How would this definition be used to accommodate plantwide use? For 

example, how would a facility account for a unit that has been shut down since the chosen 

baseline year? 

2. The PAL proposal also indicates that under certain circumstances a PAL baseline may 

be based on allowable emissions. These circumstances include: 

a. "A greenfield facility where the new facility has satisfied the applicable state and 

federal NSR requirements and the facility has not reached full capacity. Under these 

circumstances, the PAL is set on the basis ofthe NSR review. Performance limits reflecting the 

BACT, LAER and State NSR determinations of good controls are retained." 

- To illustrate what is meant by the sentence "the PAL is set on the basis ofthe NSR 

review", please provide a simplified example (in writing) that reflects how a typical 

configuration of emission units would be accounted for and folded into the allowables 

PAL baseline at a greenfield facility. 

- Please explain what is meant by the sentence "Performance limits reflecting the BACT, 

LAER and State NSR determinations of good control technology are retained." 

23 
P.23 

- If a greenfield source in an ozone attainment area obtains an allowables PAL for VOC 

what control technology requirements would apply to new units added under the PAL 

that emit 99 tpy or less of VOC? 

b. " In the case of a facility where an extensive revamp or expansion (which is well 

defined and embodies good control technology on all the new sources) has been reviewed and 

approved consistent with applicable state/Federal NSR requirements, and recent actual emissions 

are lower than the levels considered in the NSR approval ofthe expansion or revamp. The PAL 

may be based on recent actuals plus an increment to accommodate the approved growth or 

change." 

- To illustrate what is meant by this option, please provide a simplified example (in 

writing) that reflects how each ofthe emissions units at a typical facility which underwent 

an extensive revamp or expansion would be accounted for and folded into a PAL 

baseline. 

• Does this option represent a hybrid type of PAL that is based both on actual and 

allowable emissions? 

- How would the "increment to accommodate the approved growth or change" be 

determined? Would the growth increment be the allowables for the new units? 

c. "In the case where the applicant can demonstrate that recent actual emissions plus an 

insignificant increase is not adequate to operate the existing equipment at its full capacity. The 

PAL must be based on BACT or LAER determinations in the previous five years (so long as the 

permitting authority determines that the level of good control has not advanced significantly 

since the determinations) or based on a good control determination (such as the state NSR "best 

available technology" review) made at the time the PAL is set." 

- To illustrate what is meant by this option, please provide a simplified example (in 

writing) that reflects how each ofthe emissions units at a typical facility that is eligible to 

qualify for an allowables based PAL under the conditions set forth in this option would 

be accounted for and folded into the PAL baseline. 

- Does this option represent a hybrid type of PAL that is based both on actual and 

allowable emissions? 

- How do you define "good controls"? Can you provide examples ofthe technology that 

would be minimally acceptable control for some of your more common processes? 

- What criteria, if any, should EPA specify for State programs to ensure that State reviews 

produce "good controls"? What opportunity, if any, should EPA have to object to 

deficient State determinations? 

2S 
P.24 

- What factors are appropriate for the permitting authority and EPA to consider when 

determining whether the level of good control has advanced significantly since the initial 

BACT or LAER determination? 

3. Please provide feedback on an allowables PAL option that is tied to a requirement that 

certain emissions units must be "well controlled". For an allowables-based PAL, EPA believes it 

may be appropriate to specify a size cutoff and tie that cutoff to a specific type of technology 

requirement. For example, an appropriate threshold to require controls is for all emissions units 

that emit in significant amounts or greater of a major NSR regulated pollutant (e.g, 40 tpy for 

S02). What if an allowables based PAL is allowed if such units must meet BACT or LAER and 

all units emitting less than the significant threshold must meet the State's NSR requirements for 

new minor sources. The allowables PAL baseline would be set by summing together the level of 

allowable emissions associated with each ofthe BACT, LAER or State minor NSR 

determinations. Would this type of "allowables" PAL address the concerns of your group? If 

not, please explain why? 

Assuming for discussion purposes that a greenfields source can secure an allowables 

PAL. If an adjustment to reflect actual emissions is required after a fixed period of time (e.g., 

five or ten years), would such a fixed time period before adjustment occurs allow the source to 

reach full production? Would this type of "allowables" PAL for greenfield sources address the 

concerns of your group? If not, explain why? 

4. In general, the PAL Proposal includes an allowables based PAL where the major 

emissions units are well controlled. Does industry propose that the allowables emissions concept 

for PAL be extended to the more traditional major NSR applicability tests (e.g, netting)? What is 

the PAL Stakeholders' position on whether and how the allowables emissions concept for NSR 

applicability can be limited to PAL? 

5. For nonattainment NSR permitting does the PAL Proposal propose that NSR offsets 

be obtained for the full allowables level? 

6. When permitting an allowables PAL for sources obtaining a PSD permit, does the 

PAL Proposal provide for air quality modeling and Class I analysis to be done at the allowables 

level? 

PAL Adjustment Issues: 

The PAL Proposal does not require periodic adjustment ofthe PAL level to reflect more 

contemporaneous levels of actual emissions. 

P.S 
P.25 

1. How does the PAL Proposal meet the contemporaneity requirements of Alabama 

Power? If the PAL Proposal essentially provides for a PAL adjustment after twenty years how 

does this ensure that emissions reductions are "contemporaneous" with the emissions increases 

from new or modified units under the PAL? 

2. The PAL Proposal provides that the PAL may be adjusted to correct "significant" 

errors. What criteria would be used to determine whether or not an error is significant? 

3. For certain major units the PAL Proposal states the "the permitting authority will have 

authority, in addition to any current authority, to require that the unit be placed on a schedule for 

control technology upgrade to current best available technology performance levels over the first 

ten years of the PAL permit being in place." 

- Please explain whether the exercise of this aumority by the State is mandatory (i.e., it 

must require the control of such units) or discretionary (may require such controls). 

- Regardless of whether the State's authority is discretionary or mandatory...can the PAL 

source dispute such request and try to avoid installing the requested controls? 

4. What is the PAL Stakeholder's position on the concept that any requirements EPA 

sets for PAL are minimum requirements. Do we agree that the States retain the authority to 

adopt more stringent control and other requirements for existing or new emissions units that are 

under a PAL? 

Flexibility Under A PAL: 

1. BACT for the PAL pollutant is proposed for all new units added under the PAL that 

are considered "major" (i.e., unit emits over 100 tpy or the major source threshold for the area, 

whichever is lower). So that we may consider the environmental impact of requiring BACT on 

new units emitting at these thresholds, please provide the following information for both VOC 

and NOx emissions units for the different source categories represented by the PAL Stakeholders. 

For the typical existing stationary source what percentage of existing units are "major" 

for the PAL pollutant? What percentage of total emissions ofthe PAL pollutant from the 

stationary source come from "major" units? 

2. During a previous meeting the PAL Stakeholders stated that PTE limits, including 

restrictions of hours of operation and pollution control equipment, should be considered when 

determining if a new unit is "major" for purposes of BACT/LAER applicability. 

Please explain what is meant by this statement. Does it mean that a source could 

install less than BACT/LAER controls on a unit to avoid being "major"? 

2b 
P.26 

Assuming the purpose of PAL is to provide operational flexibility, please explain 

why the use of PTE limits under PAL does not limit this flexibility? 

3. Does the PAL Proposal include the option to permit a PAL to substitute and thereby 

remove limits taken previously to avoid major NSR [i.e., limits subject to 40 CFR 52.21(r)(4)]? 

4. Does the PAL Proposal provide for the installation of LAER instead of BACT on all 

new "major" units added under the PAL for nonattainment pollutants? 

Expanding the PAL Level: 

The PAL Proposal permits the PAL level to be increased "by taking the change that is 

associated with the need for the increase through the Federal NSR process." Additionally, "to 

expand the PAL, all major units covered by the PAL must have good controls or be on an 

enforceable schedule to install the controls or shutdown within five years". 

Is this option to expand the PAL level available if the units being added would fit 

under the existing PAL? If the source could create room under the PAL for the 

new units by installing additional controls on existing units would the option be 

available? 

Would the PAL be increased by the allowable or actual emissions from units that 

meet major NSR requirements? 

Does the PAL Proposal mean that in order to expand the PAL that the major NSR 

requirements would apply to all units being added, including units that are less 

than the major NSR significance levels (e.g., 40 tpy for S02)? Please explain. 

Are there any other ways proposed that the PAL could be expanded? In other 

words could units be added to a PAL source that are not part ofthe PAL? If so, 

under what conditions? 

PAL Termination: 

In the PAL Proposal a PAL is set for a period often years. During the ten years at the 

request ofthe permittee and if approved by the permitting authority the PAL can be terminated. 

Upon termination the PAL limit will be retained as a permitted cap. As the end ofthe ten years 

approaches, renewal can be requested for another ten years. At the end of twenty years the PAL 

must be reevaluated. 

1. Please explain what is meant by the statement that the tpy limit representing the PAL 

would be "retained" at the facility? Would the permitted cap be one cap for all units previously 

11 
P.27 

1 / 

under the PAL? Would the cap be considered a limit taken to avoid major NSR and thus subject 

to the requirements of 40 CFR 52.21(r)(4)? What happens if the source wants to increase me 

cap? 

2. Is there a proposed minimum time period for the PAL to be in effect before the source 

may apply for PAL termination? Could a source have the PAL dissolved and later re-establish 

the PAL anew? 

3. Please explain the extent ofthe PAL reevaluation at the end of twenty years? For 

example, would the PAL be adjusted for any reason because actual emissions under the PAL 

may have been less than the PAL limit? 

•2% 
P.28 

jun-ie-" ir.ttvr, rrom- T-287 P.02/04 F-131 

HOGAN &HAKTSON 

LJ-P. 

June 18,1999 

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FAX ilOt) UTMIO 

John Seitz 

Environmental Protection Agency 

Office of Air Quality Planning and Standards 

Research Triangle Park, NC 27711 

Dear Mi. Seitz: 

Last week, STAPPA and ALAPCO provided you wiih comments on an Industry Group PAL 

Issue Paper. Unfortunate] y, the STAPPA and ALAPCO comments were based on a draft issue 

paper issued in April which did not reflect the latest version of our paper provided to EPA and 

dated May 17,k. The revisions between April and May 17* were made in response to comments 

received from STAPPA and ALAPCO, EPA and other interest groups and addressed most ofthe 

issues raised by STAPPA and ALAPCO. Accordingly, we met with STAPPA and ALAPCO 

representative's this week to discuss their comments in light ofthe May 17 paper and wish to 

report on those discussions. 

AT this week's meeting, one ofthe poinrs we emphasized with STAPPA and AlAPCO is that a 

workable PAL policy will provide significant environmental benefits relative to traditional NSR. 

The PAL proposal set forth in the May 17 paper will: (1) provide greater air quality certainty 

beczuse of the emissions cap feature; (2) ensure that new major units are well controlled: (3) in 

certain circumstances, place existing major units on a schedule to have their controls upgraded; 

and (4) provide a powerful incentive to pollution prevention as the means by which sources can 

grow while remaining under the emissions cap. 

We noted that these environmental benefits will be realized only if sources utilize the PAL 

opiion. Sources will opt to use PALS only if they believe the PAL option is workable and • 

provides sufficient operational flexibility benefits over traditional NSR. The May 17 PAL 

framework was designed to optimize the combination of environmental and flexibility benefits. 

Clearly changes could be made to many ofthe individual aspects of our framework, aimed at 

increasing cither the flexibility or environmental sides of the equation. However, significant 

changes, particularly any made on a piecemeal fashion without regard to the impact on the 

overall program, run the risk of making the overall approach unworkable, thereby making PAL 

usage unlikely. 

In addition io the foregoing review of benefits, we also reviewed with STAPPA and ALAPCO 

thr changes Tiade between April and May snd believe that many ofthe issues raised in the 

STAPPA lener have been resolved. We did, however, identify four areas where differences may 

remain and want TO identify those issues and our position on each of them for your consideration. 

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2*1 
P.29 

Jun-ll-BB 11:2Bair. From- , T-287 P 03/04 F-131 • 

'• Page 2 HOGAN * RABTSO N LL.P. 

J. Seitz 

Juac 18.1999 

1. MAC T AdjnctrppnTc - As the May 17 issue paper states, the Industry Group believes that the 

PAL level should be reduced in the context of a MACT standard going into effect only if the 

* SIP includes a regulation requiring the associated criteria pollutant reductions. We take this 

position for two reasons: (1) MAC T standards regulate HAPs and there is not a one-for-one 

correlation between HAPs and any criteria pollutants. Most MAC T standards have allowed 

multiple compliance approaches and each has a different effect on criteria pollutant 

emissions. As a result, a reduction to the criteria pollutant PA L would be arbitrary in many 

cases and, more importantly, would prejudge the compliance method and preclude a 

subsequent change in the compliance approach. (9) P.^ucing the PAL would treat PA L 

facilities differential]}' and adversely relative to all other sources, because other sources 

currently are not required to accept enforceable limits on their criteria pollutant emissions 

when a MACT standard becomes effective. Finally, we should note that this issue and any 

others should be addressed in the context ofthe overall PAL approach. Our PA L proposal is 

designed to insure that new units brought into the PAL go through a state good technology 

review or BACT, if they are major. We feel, therefore that there should be no bias to 

reducing the PA L level built into the PAL rules. 

2. Puration ofthe PAL - In our paper we indicated that the PAL could be adjusted as frequently 

as every five years. The paper also included a commitment to control major units that have 

never been through NSR within ten years. However, the total reevaluation and revamp ofthe 

PAL would be at the end of twenty years. STAPPA and AlAPCO representatives indicated 

tha: twenty years is too long and suggested that they would like to be able to make some midcourse corrections at five years and have a full reevaluation at ten years. We are sure that a 

policy any shorter than ten years would not be acceptable to industry and are considering our 

position on 20 years. We should note that the issue of PA L duration is linked to the 

mechanisms for terminating the PAL at the end of that period and the mechanisms for 

termination and revamping a PAL more generally. 

3. The Scnpe of Existing Unit Control - The Industry Issue Paper outlines a mechanism to have 

an\ existing major units that have not been through NSR put on a schedule to be upgraded 

during the first ten years of a PAL. The STAPP A and ALAPCO representatives have 

indicated that they are interested in having certain non-major units brought into the same • 

mechanism and that the criteria for major units' performance be BAC T at the time the PA L is 

established. The Industry Group feels that STAPPA/ALAPCO'S proposal to control any 

unmodified units under a PAL is a major commitment to address issues outside the scope of 

the conventional NSR and would result in a PA L policy mat would be unattractive to many 

members ofthe industrial sector. As a result, instead of getting the major units on a schedule 

for control, parties with such exisung units would be reluctant to utili2e the PA L policy. 

Consequently, none of these added benefits ol'PALs would be realized. 

-or • si;?>.i«. «•«••:• ui 

30 
P.30 

««,.-..-.. ..;«.arc rrom- , T.2B7 p.04/04 F-131 

Pages HOGAN * HARTSOM L1.P. 

J. Ssitz ' 

- Juae 16. 1999 

4. Good Technology Detfrminations and Reliance on State NSR Programs - Both STAPPA and 

ALAPCO and the Industry Group are confident mat state and local agencies are capable of 

carrying out the "good technology" determinations called for in the Industry Issue Paper. In 

addition, the "good technology" determinations mat may be associated with the setting ofthe 

initial PA L level and the scope ofthe control of existing major units over the first ten years 

ofthe PAL will be subject to an EPA and public sector full formal comment process. Once 

the P AL is operational, the state and local authority will insure good technology use through 

the available state/local NSR, which will be exercised at the time of a change or through 

advanced review and approval of sprciio: -.ypes of changes. However, we both understand 

that some parties are concemed that a few state and local air agencies may not have a 

technology review built into their NSR program. We feel that if the situation were to arise, 

the technology review aspects of the PAL could be built into the permit itself and that the 

mechanism would be subject to EPA and public review at the time the PA L is initially 

proposed. 

As you can see from this relatively short list we feel that most ofthe concerns registered in the 

STAPPA and ALAPCO lener to you have been addressed is our May 17 issue paper revisions 

and that at this point we have a short list of areas of divergence. 

In their letter to you, STAPPA and A l APCO also indicated that some issues with PALS had not 

been 2ddressed by our issue paper. It is our understanding that this was a reference to issues 

surfaced in the previous EPA documents and that they feel the May 17 paper addressed the issues 

fundamental to PAL policy. 

We have two closing comments. First, wc cannot and do not wish to speak for STAPPA and 

ALAPCO. We did, however, want to sharfc with you our view ofthe recent exchange, as we 

know you are on a ught schedule. We expect you will hear directly from STAPPA and 

ALAPCO. Second, our paper and STAPPA and ALAPCO'S comments are focused on one 

proposed approach to PALS. AS we stated earlier, the workability of a PA L policy must consider 

all aspects ofthe policy in the aggregate. Therefore, we ask that the positions wc have taken in 

our issue paper not be taken out of context and if the agency or other parties come up with other 

fundamental approaches to PAL, WC would like an opportunity to participate in their asscssmem. 

Sincerely, >. 

Patrick M. Raher 

For. DiamlerChrysler Corporation 

Merck & Co., Inc. 

DuPont 

* Intel Corporation 

Eli Lilly and Company 

cc: William Becker 

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May 18.1899 

BY TELECOPY 

John Seitz 

Environmental Protection Agency 

Office of Ai? Quality Planning and Standards 

Research Triangle Park, NC 27711 

Re; NSR/PAL Concepts 

Dear Mr. Seitz: 

On behalf of DaimlerChryeler Corporation, Intel Corporation, Eli Lilly 

and Company, Merck & Co., Inc., and DuPont, I am writing to express the 

Companies' appreciation for the time you and EPA staff took on May 7,1999, to 

meet and discuss the experience and recommendations of these Companies 

regarding the development of the PAL provisions in the upcoming NSR rules. This 

letter includes an attachment that is a revision ofthe concept paper we discussed on 

May 7th. 

As the Companies indicated during the meeting, this concept paper is 

baaed on the experiences of companies that have developed and complied with PAL 

permit* at various types of manufacturing operations and in various states. The 

May 7 concept paper also included several significant regulatory aspects that were 

requested by state and local agency representatives who work with 

STAPPA/ALAPCO and have been working with the companies. 

Following the May 7 meeting, the Companies considered commence 

provided by a representative of NRDC as well as the issues raised by you and EPA 

staff. This led to changes in the May 7 concept paper. These changes, which the 

Companies believe represent practical issues that should be addressed, have been 

incorporated in the attached revised concept paper. We would appreciate your 

reviewing this paper and distributing it to the EPA personnel that were at the May 

7 meeting. 

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Received May-18-99 11:23am *^_~2__, Um * * AEMS pa9e 3 
P.32 

HOGANiHAKTSON LLB 

John Seitz 

May 18.1999 

Page 2 

As the Companies indicted in the meeting, they are continuing to 

consider PAL implementation issues as they are brought to the Companies' 

attention and we will share our thought* with you for inclusion in the docket and 

the final NSR rule. In addition, if you or your staff have any clarifying questions or 

would like the Companies to consider other issues, please do not hesitate to contact 

us. 

Best regards, 

Sincerely, 

PatrickM.Raher *T

 J '''fe"* J 

cc: Jacqueline Savage 

John Holmes 

Steve Harper 

Julie Hatcher/Bill Wehnun 

Bernie Paul 

Mike Babos 

Todd Hyde 

Dorothy Bowers 

Barbara Bankoff 

Jodie Miner 

Paul Jann 

\\\oc.M»?Mo.osire4fcet 

23 
P.33 

S»nt byiPECIS H«3-J8-99 62133m fron 7035244854*9195415509 P»9 » 

Received May-i8-99 11:23am from + •* AEMS page a 

Revised Draft Issue Paper 

May 17,1909 

INTRODUCTION TO THE INDUSTRY GROUP PAL PAPER: 

"Outline for a Regulatory Structure for PAL Permits" 

The concept of a "Plantwide Applicability limit' or PAL as a meana of 

determining Federal NSR applicability was introduced by EPA in the early 1960a 

as a means of reducing the administrative burden of NSR while retaining Its 

environmental benefits. On e pilot basis, several PAL permits were successfully 

negotiated and established. The PAL concept has been a component of EPA's 

NSR reform package, presented in the Federal Register in 1999 and more 

recently in a 1998 notice. Individual companies with direct experience with PAL 

permlta continue to believe that PALs are a very effective tool for NSR reform but 

they ara concerned that EPA may adopt a policy that will make PALs unattractive 

and ineffective in moat instances. The attached outline describes e PAL 

regulatory structure, which make PALs attractive and effective permitting tools, 

for aFegencles, communities, and industry. This document has been prepared 

jointly by the representatives of five manufacturing firms: DaimlerChrysler, Du 

Pont, Eli Lilly. Intel and Merck. 

The PAL structure presented in this paper ie an integrated approach that, 

compared with traditional" NSR, provides equivalent or better environmental 

protection. A combination of air quality analysis and performance commitments 

ensures good overall environmental performance. 

The PAL regulatory structure presented in the attached document is designed to 

achieve eight basic goals: 

1. Avoid any adverse air quality impacts due to changes at a facility covered by 

a PAL. 

2. Insure that new major units are well controlled and, under certain 

circumstances, place existing major units on a schedule to have their controls 

upgraded. 

3. Create a bright line for determining Federal NSR/PSD applicability 

4. Insure that the authority of state and local agencies to implement control 

measures and conduct state level preconstruction reviews is preserved, while 

encouraging the streamlining of their review process. 

6. Avoid delays In equipment and operating changes due to the permitting 

process. 

6. Eliminate the disincentive for pollution prevention that exists with the current 

Federal NSR provisions 

7. Minimize the administrative burden of permitting 

8. Assure that a workable and streamlined approach to NSR/PSD applicability is 

available for Industries that are characterized by the need for rapid and 

frequent change. 

VtVbC • >K-T/I * • erTt«M«l SA-
Gl 

Rtvtod Draft Isaut Paper 

May 17,1999 

OUTLINE FOR A REGULATORY STRUCTURE FOR PAL PERMITS 

Plantwide Applicability Limits or PALs are optional mechanisms to determine 

Federal NSR applicability, ft is important to note that just as the air permits for 

two operations in the same industry sector may vary today, and air permits for 

two operations in different sectors are likely to vary today, the provisions of future 

PALs must also be allowed to vary depending on the type of operation regulated. 

The key to providing flexibility in a PAL is, therefore, to recognize that "one aize 

does not fit all." Each PAL must be designed recognizing the specific relevant 

plant operational factors. A PAL must be enforceable, consistent with other air 

regulatory programs, and subject to public review and comment at the time It la 

created, such as through a Title V permit review. Accordingly, this outline sets 

forth concepts that are meant to address these issues as well as provide NSR 

reform. 

PAL Coverage 

A facility can heve a PAL for one or more criteria pollutants and for all or certain 

specified sources at the site. At the request ofthe applicant and the approval of 

the permitting authority, the PAL can be set to exclude certain minor sources 

(such as VOCs from fuel combustion) or a separate part ofthe facility If the two 

operations are clearly distinct end the same manufacturing activities are not and 

will not be carried out at parts covered and uncovered by the PAL. 

PAL Enforceability 

A PAL permit shall include terms that ensure the PAL amissions limit ia 

practically enforceable. The permit shall Include terms providing for 

replicable procedures to quantify amissions occurring under the PAL. 

Initial Level of the PAL 

At the choice ofthe PAL applicant the PAL level will be based on one ofthe 

following: 

1. Recent actual emissions plus an "insignificant" increase (I.e. 39 tons per 

year in an area where the significance threshold is 40 tons per year). 

^Recent actual emissions will be determined on the same basiB as is done 

under the definitions in the NSR rules. 

\voc-ttjrvic.t>i?;w.gi 

1 

Received May-16-99 11:23am from + -» AEMS Page 6 

35 BI 
B /. 

Rsviaad Draft Issue Paper 

May 17,1999 

2. Emissions levels higher than recent past actual emissions in three 

circumstances:. 

• In the ease of a greenfield facility where the new facility has satisfied 

tne applicable state anq Federal NSR requirements, and the facility 

has not reached full capacity. The PAL is set on the basis of the NSR 

review. Performance Hmits reflecting the BACT, LAER and State NSR 

determinations or good control technology ara retained. 

• In the case of a facility where an extensive revamp or expansion 

(which is well defined and embodies good control technology on ell the 

new eouroes) has been reviewed and epproved consistent with 

applicable state/Federal NSR requirements, and recent aclual 

emissions are lower than the levels considered in the NSR approval of 

the expansion or revamp. Tha PAL may be based on recent actuals 

plus an increment to accommodate the approved growth or change. 

• In the case where the applicant can demonstrate that recent actual 

emissions plus an insignificant increase is not adequate to operate the 

existing equipment at KB full capacity. The PAL must be based on 

BACT or LAER determinations in the previous five years (so long as 

the permitting authority determines that the level of good control has 

not advanced significantly since the determinations) or based on e 

good control determination (such as a state NSR "best available 

technology" review) made at the time the PAL is set. 

In these three circumstances, tha PAL level shall not exceed tha levels 

permissible under existing ruies and current permits or new source 

reviews carried out et the time the PAL is set. The level ofthe PAL shall 

reflect the performance requirements of applicable BACT, LAER or state 

NSR "good technology" determinations. The permitting authority should 

m require an air quality impact analysis ff the use ofthe emissions above 

recent actuals could result in a significant Increase in emissions and the 

air quality Implications have never been analyzed. 

PAL Adjustments 

PAL emissions limitations will be reduced under the following three 

circumstances: 

1. To adjust for any significant error in the setting of a PAL emissions limit 

2, To reflect the effect of a new applicable requirement that applies to 

sources covered by the PAL and that expressly requires a reduction in the 

emissions ofthe criteria pollutant in question. The reduction will occur In 

the year in which the rule reduction requirements go into effect. The 

reduction in the PAL level will reflect the impact the rule would have had 

on the facility's aotual emissions, on average, In the two years prior to the 

V»C • M)11'l« - 0477*44.41 

2(-y 
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.Received Uay-18-99 11:23am from • • AEMS page 7 

Revised Draft Issue Paper 

Msy 17,1996 

year tha reduction is due. Reductions required by "MACT' standards 

established under I 112 of the Clean Air Act will not require a reduction in 

PAL emissions limitations applicable to sources affected by such MACT 

standards unless the SIP includes a regulation requiring the associated 

criteria pollutant reductions. 

3. In the case where the PAL covers a unit with emissions that are over 100 

tons/year or the major source threshold for the area (whichever la lower) 

for the PA L pollutant, and that unit has never been through a Federal or 

etete NSR technology review, the permitting euthority will have authority in 

addition to any current authority to require that the unit be placed on a 

m schedule for control technology upgrade to current best available 

technology performance levels over the first ten years ofthe PAL permit 

being in place. Tha PAL limit would be reduced by the amount reflective 

of the Impact of that upgrade on actual emissions. 

W&C.M1M«>in»tt.0l 

31 
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S.nt byiPEPIS H«*-18-99 82l35rn fron 7835244854*9195415589 **9» ,4/ 5 

Received May-18-99 11:23am from +-» AEMS page 8 

Revised Draft Issus Paper 

Msy 17.1999 

Flexibility Under a PAL 

Under e PAL, the source will not trigger Federal NSR eo long as the PAL level Is 

not exceeded. Federal NSR applicability will be determined solely by 

conformance with the PAL level. A new unit which ia over 100 tons/year or the 

major source threshold for the area (whichever Is lower) for the PAL pollutant 

cannot be added under the PAL unless it meets BACT but construction may 

begin before the BACT determination ia completed ao long as construction doea 

not begin on those aspects ofthe unit which limit the choice of the appropriate 

control method or level. 

PAL permits will be used whenever possible to streamline state NSR and 

amendments to Title V operating permits. The creation of a PAL permit does not 

affect the authority ofthe state/local permitting agency to conduct state NSR 

reviews, however, states will be encouraged to provide advanced approval 

under their minor NSR programs for common types of changes for the sources 

covered by the PAL, for any new units with emissions that are not "significant" 

as the term ia defined for NSR/PSD purposes. 

Such advanced approved ectivities under the state NSR program will not require 

a revision to the Title V permit prior to construction or operation of the chengee 

but recordkeeping for such changes, as appropriate, will ba required and 

notification for certain changes may ba required. In addition, the permitting 

authority and the permit applicant will be encouraged to atreamline the limits in 

existing permits as they are transferred to the PAL permit. Past LAER and 

BACT determinations are retained and cannot be relaxed. 

Expanding the PAL Level 

A PAL level can be Increased by taking the change that la associated with the 

need for the Increase through the applicable Federal NSR process. To expend 

the PAL, ail major units covered by the PAL must have good controls or be on 

an enforceable schedule to have good controls or shutdown within five years. 

No use of exclusions or netting will be allowed. The determination ofthe unit or 

units that will require BACT, or LAER and offsets will be by the same mechanlem 

used^n conventional NSR when making such a determination. 

PAL Termination 

A PAL and Its emissions Hmits will be set for a period often yeara. At the 

discretion of the permitting authority, select provisions, such as the provisions 

covering advanced approvals under the state minor NSR could be reviewed 

every five years. During the ten years, the PAL can be terminated at the request 

of the PAL source owner with the approval ofthe permitting authority and the 

completion of an air quality anatyaie to indicate the impaot of the termination of 

WJIC • Simla . MT7664.0: 

2>S 
P.38 

Sfe t bxiPEiiS 

Wevve d May-16-99 tl: 2 3 an, 

M«*-18-9 9 82i36r n fro n 7835244854*919541558 9 

from + •» AIEMS 

ra9 * 5 / 5 

page 9 

Revised Dmft Issue Psper 

?r £a^ ^ - J J in the PAL. In pe^pJ^U" " 

Incorporated into th. .tatl w r^na»^ ,t,0n I

,

,

w,l ,

 * ^' ^ « * 

of the ten years approach J .S^^^TM" f o r ^ *•*«*• * the end 

period can be approved ^^SSSS^ rftque,ta d ,r * TM*n ten-year 

reevaluated.

 Wmeendoftne20 y«»»,thePALmustbe 

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