North Carolina Department of Environment and Natural Resources 

Division of Air Quality 

Beverly Eaves Perdue Sheila C. Holman 

Governor Director 

August 16,201 1 

Beverly H. Banister 

Director, Air Pesticides and Toxics Management Division 

United States Environmental Protection Agency, Region 4 

61 Forsyth Street 

Atlanta, Georgia 30303-8960 

Dee Freeman 

Secretary 

Re: Shuretape Technologies 

EPA Title V Objection to Proposed Title V Permit 

Requested Record Clarification 

Dear Ms. Banister: 

North Carolina appreciates the EPA's investment of time trying to interpret and apply the 

recently promulgated provisions related to Greenhouse Gasses (GHGs). We also appreciate 

EPA's commitment to implement these new provisions based on their plain language in a manner 

that protects the environment. In EPA's June 27, 201 1 letter objecting to a proposed permit you 

requested clarification of the record in two specific areas. First, you requested regulatory 

clarification for the development of GHG Plantwide Applicability Limit (PAL) based on 

environmental significance, and second you requested clarification as to whether North Carolina's 

interpretation would produce a result that is at least as environmentally stringent as the approach 

outlined in Q&A document appearing on EPA's website. 

As a threshold matter, the June 27, 201 1 letter states that EPA is formally objecting to the 

proposed permit under the authority of section 505(b) of the Clean Air Act (CAA). Under that 

provision EPA is authorized to object to a proposed permit only if it contains provisions that are 

not in compliance with applicable requirements of the Act. It was unclear from the letter precisely 

which applicable requirement of the CAA the GHG PAL was not in compliance with. Lnstead, the 

letter observed that NCDAQ7s rationale for the GHG PAL (rather than the proposed permit itself) 

"incorrectly applied the regulatory interpretation provided by EPA in its guidance document 

["Q&AV]." Whether or not the applicable GHG provisions are ambiguous, we share the common 

belief that these provisions are designed to protect and preserve public health and the environment 

and therefore they must be applied in a manner that will not frustrate their intended purpose. To 

that end "Section One" of this record clarification provides a summary of the relevant regulations. 

If EPA finds that this reading is consistent with the applicable law, then we believe it would be 

appropriate for EPA to withdraw its June 27"' objection letter. "Section Two" of this record 

clarification provides EPA with a demonstration that NCDAQ7s interpretation provides greater 

public health and welfare protection as compared to the interpretation suggested under the "Q&A". 

While such a stringency demonstration is not per se required as part of a Title V process, we 

1641 Mall Service Center. Raleigh. North Carolina 27699-1641 

2728 Capital Blvd.. Raie~gh. NC 27604 

Phone 91 9-733-3340 1 FAX 919-71 5-7175 i Internet: www.ncair.org 

An Equal OpportunityiAffirmat~ve Act~on Employer 
Ms. Banister 

August 16,201 1 

Page 2 

believe that the demonstration may help assure the EPA that NC is continuing to properly 

implement the PSD regulations. 

Section One 

A PAL may be established using actual emissions under the PAL provisions in 40 CFR 

5 1.166(w). Under 40 CFR 5 1.166(w), a PAL level is calculated and established for a source by 

adding the "baseline actual emissions" (BAE) of the PAL pollutant (for each emissions unit at the 

source) to the pollutants' significance level which EPA has defined for C02e as 75,000 tons per 

I 

year. The use of C02e for a GHG PAL is required under the regulations and is consistent with 

the policy of promoting flexibility while encouraging sources to cap GHG emissions. The 

following discussion outlines the salient regulatory language related to setting PALs for GHGs. 

The definition of "Plantwide Applicability Limit" specifically authorizes PALs to be set in 

tons per year "for a pollutant at a major stationary source."' It is important to note here, and 

throughout this conversation, that all of the PAL provisions refer to the term "pollutant" and not 

the more limited term "regulated NSR pollutant" as defined elsewhere in the PSD regulations. 

GHGs have, since the US Supreme Court's decision in 2007, been considered air pollutants under 

the CAA. See Massachusetts v. EPA, 549 U.S. 497 (2007). In 2010 EPA revised the PSD 

regulations and in doing so grouped six air pollutants as a single "pollutant" called GHGS.' 

Although not relevant to our PAL discussion, in this same mlemaking EPA established rules for 

when GHGs would be considered subject to regulation and thus become "regulated NSR 

pollutants.''4 

Greenhouse gases (GHGs), the air pollutant defined in 3 86.1818-12(a) of this 

chapter as the aggregate group of six greenhouse gases: Carbon dioxide, nitrous 

oxide, methane, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride, 

shall not be subject to regulation except as provided in paragraphs (b)(48)(iv) 

through (v) of this section. 

The plain language of the regulation requires the establishment of PALS for "pollutants" and the 

regulation sets out the procedures for establishing an actuals PAL. 

Actuals PAL for a major stationary source means a PAL based on the 

baseline actual emissions (as defined in paragraph (b)(47) of this section) of 

all emissions units (as defined in paragraph (b)(7) of this section) at the 

source, that emit or have the potential to emit the PAL pollutant. 

1 75 Fed. Reg. 3 1606 (June 3, 2010) ("significant" is defined as 75.000 tpy C02e instead of applying the value in 

aranraph (b)(23)(ii) of this section.) [emphasis added] 

'40 CFR 5 l.l66(w). 

NC adopted the relevant GHG Tailoring rule provisions and they were made effective by Executive Order 8 1. 

.l As noted already, the PAL provisions use the more general term "pollutant" and not "regulated NSR pollutant" and 

therefore the establishment of a PAL does not turn on whether GHGs are sub,ject to regulation of regulated NSR 

pollutants. 
Ms. Banister 

August 16,201 1 

Page 3 

The term PAL pollutarzt is then defined as, 

"the pollutant for which a PAL is established at a major stationary source." 

40 CFR 5 1.166(~)(2)(~). Again, the regulation uses the term "pollutant" instead of the term 

"regulated NSR pollutant." Finally, in establishing the baseline for GHGs, the PAL regulation 

says the baseline actual emissions shall be established in accordance with 40 CFR 

5 1.166(b)(48)(ii) and (iii). These provisions 

(ii) For an existing emissions unit (other than an electric utility steam generating 

unit), baseline actual emissions means the average rate, in tons per year, at which 

the emissions unit actually emitted the pollutant . . ." 

Consistent with the discussion above, the BAE is established for "the pollutant" and whether a 

pollutant is a "regulated NSR pollutant" or subject to regulation is not relevant. Having 

established the BAE, the PAL is set at the BAE "plus an amount equal to the applicable significant 

level for the PAL pollutant under paragraph (b)(23) of this section." The EPA established the 

significance value for GHGs as follows, 

For the pollutant GHGs . . . "significant" is defined as 75,000 tpy C02e instead of 

applying the value in paragraph (b)(23)(ii) of this section. 

75 Fed. Reg. 31606 (June 3, 2010). EPA regulations and the preamble both unambiguously 

confirm that the values in (b)(23) do not apply. The regulation at (b)(49) states "'significant' is 

defined as 75,000 tpy C02e instead of applying the value in paragraph (b)(23)(ii) of this section." 

Section Two 

NCDAQ implementation of the PAL provisions for GHGs (as C02e) will result in greater 

public health and environmental benefits as compared to a program that would not provide for 

GHG PALs (measured as C02e) or even as compared to a program that would allow PALS only 

for the mass of regulated NSR pollutants. Our experience to date is that the emissions limits 

found in PAL-type permits result in real emissions reductions, as well as other benefits. As part of 

an overall agency effort to promote more flexible air permits, the NCDAQ has been working with 

sources, the EPA, the public, and other affected parties and has followed with interest the EPA's 

evaluation of flexible and innovative permits. EPA's report entitled "Evaluation of the 

Implementation Experience with Innovative Air Permits" which was included as an Appendix to 

the Supplemental Analysis of the Environmental Impact of the 2002 Final NSR Improvement 

Rules, United States Environmental Protection Agency November 2 1, 2002, included undisputed 

findings that PALS provide superior environment protection as compared to non-PAL programs. 

The NCDAQ concurs with EPA's conclusion that PALs in general will result tens of 

thousands of tons of reductions of pollutants from source categories where frequent operational 

changes are made, where these changes are time-sensitive, and where there are opportunities for 

economical air pollution control measures. As EPA found, "[tlhese reductions occur because of 
Ms. Banister 

August 16,201 1 

Page 4 

the incentives that the PAL creates to control existing and new units in order to provide room 

under the cap to make necessary operational changes over the life of the PAL. It is important to 

note that the incentive for sources to take PALS stems from the more flexible and certain approach 

to NSR applicability that PALS offer, which offers benefits for all sources, even those who may 

not otherwise trigger major NSR. We expect that many sources might seek to obtain PALS because 

of the regulatory certainty they offer, even though they expect to have very few (or no) changes 

over the life of the PAL that would trigger major NSR absent the PAL." The reasons EPA 

determined that these reductions would occur are equally applicable, and perhaps more applicable, 

to GHG PALS (measured as C02e). 

One of the most important environmental benefits of the PAL program is that a PAL 

prohibits serial, small unrelated emission increases above the PAL, which otherwise can occur 

under major NSR. The EPA has interpreted the NSR program to allow sources to make unrelated 

changes that, standing alone, do not result in triggering NSR review and to allow such changes to 

occur without considering whether other contemporaneous emissions increases subject the change 

or changes to NSR review. See, Memorandum from John Calcagni, Director, Air Quality 

Management Division, to William B. Hathaway, Director, Air, Pesticides, and Toxics Division, 

Region VI, at 1-2 (Sept. 18, 1989). While the policy memorandum cited above is based on 

traditional pollutants and their respective significance levels, the rationale is exactly the same for 

the non-traditional pollutant GHG (measured as C02e) and its trigger level of 75,000 tons per 

year. Under North Carolina's interpretation, which is considerably more environmentally stringent 

than EPA's, a GHG PAL would be expressed as a source limit on GHGs measured and tracked as 

C02e. It would be established by adding 75,000 tpy C02e to the baseline actual emissions for the 

PAL pollutant. With the PAL in place the facility could not exceed the limit without making the 

required demonstrations necessary to adjust the limit upward. In the alternative (i.e. without the 

GHG PAL the facility could make an unlimited number of individual unrelated changes each 

resulting in 74,499 tpy increase without subjecting GHGs to PSD review. 

The table below summarizes the environmental benefit of North Carolina's implementation of the 

PSD regulations for GHGs (measured as C02e) as compared with no PAL at all. 

Table 1: Subsequent Serial Modifications 

Even more importantly, a mass based GHG PAL (one consistent with the EPA's Q&A 

interpretation) does not provide the environmental protection and public health benefits of a GHG 

PAL measured as C02e because the mass based approach fails to take into account the GlobalWarming Potential (GWP) of the various pollutants that make up GHGs. GWP is a relative 

measure of how much heat (or climate change potential) a greenhouse gas traps in the atmosphere. 

It compares the amount of heat (or climate change potential) trapped by a certain mass of the gas 

20 12 New Heater 

Total Emissions 

after 2 Years 

PALTPY C02e * 

-~xeline Emissions 295,000 (220,000 + 75,000) 

Non - PAL TPY 

220,000 ‘ 

+70,000 

3 10,000 295,000 
Ms. Banister 

August 16,20 1 1 

Page 5 

in question to the amount of heat trapped by a similar mass of carbon dioxide. Tables 2 and 3 

below demonstrate how a PAL based on C02e is more environmentally protective than a PAL that 

is limited to GHG mass. 

Table 2: GHG Emissions from 3 Natural Gas-Fired 95 mmBtu/hr Boilers (before change) -. r I 

Table 3: GHG Emissions from 3 Biomass-Fired 95 mmBtu/hr Boilers (after switching fuel) 

/ EPA PAL Pollutant I NC PAL Pollutant (TPY C02e) ] 

- -. 

C02 

CH4 

Add to PAL 

PAL Level 

1 After Fuel Switch 

145,914 

3 

0 

145,917 

C02 

CH4 

Total GHG Emissions 

As can be seen above, a switch from natural gas to biomass (servicing the same three 95 mmBtu/hr 

load) results in a increase in the mass of C02 and CH4 but results in a demonstrable decrease in 

GWP from 220,977iTPY C02e) to 1,827 (TPY C02e). Under a mass based GHG PAL 

interpretation the facility would be prohibited from implementing this fuel switch. However, 

under North Carolina's PAL interpretation, the facility would be encouraged to fuel switch to fuels 

with lower GWPs and therefore such an interpretation is more environmentally protective than the 

alternative. 

- 

145,914 

6 3 

75,000 

220,977 

In a similar fashion, a mass based PAL is less environmentally protective than a C02e PAL 

for complex stationary sources that might employ substations, switchgears and other gas-insulated 

equipment who often use compounds with high GWP. For these facilities even small shifts in 

emissions result in significant changes in overall GWP. Tables 4 and 5 provide an example of a 

facility with a mix of GHG pollutants that requests a GHG PAL. 

(Mass TPY) 

258,138 

87 

258,225 

Table 4: PAL Established 

Air Pol lutmt - 

C02 

- 0 

1,827 

1,827 

SF6 

GHG PAL (Mass) 

GHG PAL (C02e) 

1 

49,500 (49,500 + 0) 

148,439 (73,439 + 75,000) 
Ms. Banister 

August 16,201 1 

Page 6 

Table 5: Emissions Subse uent to Establishment of GHG PAL r--I Emissions I Year Subsequent to 

Establishment of GHG PAL 

TPY - - - -- - - 

Under North Carolina's interpretation, the facility would not be allowed to exceed the PAL limit of 

148,439 (as C02e). However, under the EPA mass based PAL, the facility would continue to 

easily comply with the PAL despite an actual increase in GWP emission from 73,439 to 167,941 - 

a 230% increase in Global Warming Potential. 

GHG PAL (Mass) 

GHG PAL iC02e) 

In summary, the NCDAQ believes the GHG Plantwide Applicability Limit contained in the 

proposed permit is consistent with the applicable regulations. NCDAQ looks forward to a 

resolution that preserves the superior environmental protection achieved though this proposed 

permit. If we can provide further assistance to you or your staff please do not hesitate to contact 

Dr. Donald van der Vaart, Chief, Permits Section at (919.715.6253) or John C. Evans, Supervisor, 

NSR Branch at (9 19.7 15.6236). 

48,026 

167,941 

Sincerely, 

Sheila Holman 

cc: Donald van der Vaart 

John C. Evans