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# OAR Box 1796 Prepped by Keeia Richards



### Document

Number: 

# 38 ) IV-H-6 4
Docket Number: 

# A-90-3 7

Printed 10/31/2008 4:20:37

PM Sheet 38 of 107P. 2

* 22-200 2 09:4 6

To :

FGX# ;
From : P.01/0 6

FAX TRANSMISSIO N OFFIC E O F INFORMATIO N AN D ReeuiATOR yAFFAIR S OFFIC E O F MANAGEMEN TAN D BUDGE T NATURA L RESOURCES , ENERs yAN D AGRICULTUR E BRANC H 72 5 17t h Street

. NW , Roo m 10202 Washington , D

C 2050 3 Office : 202-395-3084/Fax : 202-395-728 5

Date : 

### IV
- 

### H-6 H

( ) ArtFraa s ( ) Ric h Therou x ( ) Ji m Lait y ( ) Amanda

Le e ( S X Am yFarrel l r) &ryo n Alle n ( ) Margi e Malanosk i ( ) Davi d Rostke r ( ) Rut h Solomo n ( ) Edmon d Toy

Pages : . , includin g thi s cove rshee t



### N W2 2 200

2

Comments : 

# {oi 11 

# VwCAA^

F*x5Me_rr>* aNOU-22-200 2 09=4 6 P. 3 P.02/0 6

U/jf A V-^v^Si^^

^&fa*f£*-ikj£. ^" 8 PA LComment s



# r^ at

a diffa a/tithe same levelAfthey determine t/tat level is mm u repitentative ujthe baseline actual emissions? of

all thiemissions units at

the source plus the significant level equals to or

is greater than 80%of

the PAL level. If this is not

the case; then, the reviewing authority vu-waj ^ /^tenyf consider adjusting the PAL

level based on several

factors jncluding air

quality planning rieeds. / advances in control

technology'

etc. However, if

the renewed

PAL level is higher than the current PAL, the source must

comply with the PAL

increase provisions in the final rules. I nadoptin g thi s system , w e hav e struck-•wha t w e believ e i s a

nappropriat e balanc e betwee nth e nee dt o kee p PAL s ieasonabl y representativ e o f baselin e actua l emission s an dth e nee d1 0 provid e a nincentiv e for yo u t o reduc e emission s unde r tii e PAL

. W e agre e wit hth e eonnnci-rtei 1 tha t

th e PA Lnee dno t

b e adjuste ddownwar dat renewa l i f

th e utilizatio ni s withi n2 0 pciu.i_t o f th i initia l TAL

. Th e final rules'provid e tha t th e reviewin g authorit y nee dno t adjus t th e PA Lat

al l i f th e emissions-level , compute di nth e exac t maimer use dt o se t

th e leve l uf'th e initia l PAL , i s equa l t o or gieate r tha n8 0 percen t

o f your curren t PAL

. if you do not

meal tiiis 80 peicent tin eshold, the ievicwing atrthoiity ordinal ily will sat your renewed PAL at the level of your baseline actual

emissions with an added updating margin of

20percent

of the. currant. PAL (v> the significant

level of Ota PAL pollutant, ifgieatet). To provide additional flexibility, the: reviewing authority has tha discretion to set the renewed

PAL at uny level (up tv /he level

of OK current PAL) if it believes that

level to be mure representative of your operations. Wu believe that this system will

continue to piovide you with an adequate upciuting mm gin under the renewed PAL, and

avoids any automatic "ratcheting dwm " of the PAL at renewal. We agree with the commenters who believe that a unit-by-unit

review and

adjustment based on capacity utilization would be labor intensive and

inappropriate. We have opted instead for a simpler

and more manageable system based on source-wide baseline actual emissions as the basis for any PAL

adjustment. One commenter

suggested

that sources should

be able to maintain the right lo emit at the level of allowable emissions if

they use controls that

continue to qualify as BACT/LAER. This option is available unit

by unit through the Clean Unit

provisions elsewhere in thefinal rules. We have not

included it in the PAL

rules. We are reserving the issue of allowables PALs for future consideration. We do not agree with the commenter who suggested

that PAL adjustments for

unused capacity be based

on a 3-month period

in the previous 10years. We believe that baseline actual emissions are the appropriate starting point for evaluating potential

PAL adjustments, and

that the PAL program should

be consistent

with the rest

of the major

NSR program in defining baseline actual

emissions. See Volume I, 2.2 for the discussion of

our reasoning

for defining baseline actual

emissions based

on a consecutive 24-month period in the previous 10years. We agree with the commenter who suggested

that a single 12-month period is not appropriate for

evaluating capacity utilization at a source; we havefinalized a 24-month period Draft - D o no t quote , cite , copy , o r distribute . 1-8-4 7 Novembe r 4 , 200 2NOU-22-200 2 09=4 7 FLA

. P.03/0 6

> ' 8-199 8 PA L Comment s

We do not

agree with the commenter who suggested

that PALs be established

and renewed by factoring in a process variability amount above the PAL

pollutant significant

level. You are free to select

your consecutive 24-month baseline period in the last

10years to maximize the baseline actual

emissions that

form the basis

for your PAL. We believe that

process variability has been adequately accounted for by this process. Jf 1 uWe do not agree with the commenter who stated

that the PAL process should

be tied to v ^ the title V

permit program. For

practical enforceability, we believe jbat you must

conduct monitoring tuquantify emisshnToif an ongoing baata? which ufton wpt .squire better

monitoring than that required under title V. (See Volume I, 7.12.) In addition, we believe that the PAL term should be 10years, rather

than the 5years of

the title V

permit, although we suggest that you and your reviewing authority coordinate the two so that the PAL is renewed

concurrently with every other

title Vpermit

renewal. (See Volume I, 8.7.) We agree that the PAL should be reviewed and adjusted at renewal, but

as discussed

above and

in Volume I, 7.8.2, not

as isuggested

by the commenter. In addition, the final rules provide for

the PAL to be opened

and adjusted under certain circumstances. We do not

agree with the commenters who indicated that you should

be able to meet

your PAL with ERCs that

you purchase from other facilities. Use ofERCs would defeat the purpose of PALs, which include capping your source 's emissions and

encouraging you to implement good controls andP2, thereby shifting production over time to less-polluting equipment. 

### 8. 7 Tim e Perio d fo r PA L Revie w Comment : 8.7. 1 Ten-Yea rTim e Perio d fo rPA L Revie w Fou r industr y commenter s (TV-D-210,256,273 , 298 ) an don e regulatory agenc y commente r

(TV-D-253 ) fel t

tha t 1 0 year s i s th e appropriat e tim e perio dfor PA Lreview

. On e industr y commente r

(IV-D-221 ) contende dthat th e 10-yea

r revie w o f

PAL s shoul db e restricte d t o a n administrativ e revie w for th e purpos e o f

ensurin g accurat e accounting

. Th e regulator y agenc y commente r (TV-D-253 ) emphasize dth e following ^ Te nyear s i s generall y a n appropriat e period , a s lon g a s ther e i s recognitio no f th e nee dfor

necessar y adjustment s t o reflec t

an y change s i n environmenta l requirement s tha t canno t b e addresse db y th e curren t term s o f th e PAL , o r

t o reflec t States ' need s t o demonstrat e attainmen t whe nth e curren t term s o f th e PA Lma y obstruc t

suc hademonstration

. Th e commente r claime dtha t

State s mus t
* 3i^— ==== ^^a_E" " m.^tM ""• ' =g__IE_S_____SS^ g hav e th e flexibility t o revisi t PAL s unde r

certai ndefine dcircumstances , whic hwoul dnormall y requir e asource' s permi t t o b e revisite danyway . I n th e absenc e o f suc hevents , tii e commente r claime dtha t

i t woul db e convenien t

t o revie w aPA Levery othe r tim e th e titl e V permi t

i s renewed

. GTh e commente r state dstatjha t

give npossibl e delay s i n processin g titl e V permits , i t Draft - Do no tquote , cite , copy , o rdistribute

. 1-8-3 1 November 4 , 200 2P. 5



# r^ P.04/0 6 NOU-22-200 2 .09=4 7

i&ffi f^-*lJ-^-_

_yt> K r? Cs,, -^^_ S 8-1998 PA L Comment s We believe the final PAL

rules avoid

this inappropriate outcome, by requiring the reviewing authority to ^•"'ftfn '-"Wftr * T^r r PAT ""r f r-"" , f n ~r j f " n TM nn rtn hr y "rrrr^rrtarivr

rf baseline actual

emissions and

of your PTE (if lower than your

baseline actual

emissions) at

the time of PAL permit renewal. Because and

provide a written rationale for public comment

if it determines that

an adjustment

is warranted. As part

of this process^

the reviewing authority must ordinarily adjust

yottrthe PAL

downward

if it is no longei/

eusonabhyour

source's current PTE is below the t

PAL level. We believe that

this adjustment

is important

for air quality planning purposes. AdditionaUv.jhe reviewing puthoritymav renew n the PAL at the same level, without consideration of

any other

factors, if

your source's baseline actual emissions plus the significant level are equal

to or greater than 80 percent of the PAL level. Conversely, ifvour source's baseline actual

emissions plus the significant level .are less than 80percent of the PAL level the reviewing authority may set the PAL at ajevel that it determines to be more representative Ojjhg source's baseline actual

emissions, or

it is no longer

representative of

your current PTE, -a PAL will not pioiide you with an unfettered right lo pollute at

your historical

level of baseline actual emissions:

—Ailhough we firmly believe that apeiiodic review of

the-level of the PAL is necessary, and that this should

iesult in an adjustment

in your PAL to a level that is representative oryoui buseline actual

emissions or

cun cnl PTE-(whichever-is lower), we do not believe that

we should inundate un adjustment

to the PAL

bused on only one piescribed

methodology. Such an approach could

lead to inappropiiate results, as discussed behw. •Instead, we believe that our concerns can be appiopriately addicsscd by providing the Slates the authority to adjust the PAL based on what is repr esentative of

your baseline actual

emissions (or

cm rent PTE). it determines to be appropriate considering air quality needs, advances in control technology,. anticipated

economic growth in the area, desire to reward or encourage the source's voluntary emissions reductions, or

other factors as specifically identified by the reviewing authority in its written rationale. We believe that

some discretion in determining what is representative of

actual emissions is appropriate based, in part, on our experience with the pilot projects previously mentioned. In one instance, a participant voluntarily agreed

to reduce its actual

emissions by 54 percent

in exchange for obtaining a source wide emissions cap. After agreeing to this emissions reduction, the participant

further reduced emissions by increasing capture efficiency and incorporating P2 strategies into its operations. Unexpectedly, the participant also suffered

an unusual

economic downturn that

caused a decrease in the rate of production and

a corresponding decrease in actual emissions. At

the time of

renewal of the source wide emissions cap, the participant's actual emissions were 10percent of its actual emissions before committing to the emissions cap. The participant

chose not

to renew its emissions caps, because renewal required an automatic adjustment

to its current

actual emissions level. Clearly, such a result contravenes the mutual benefits operating under a PAL provides, and

discourages you from undertaking voluntary reductions. Accordingly, although the final iules require the reviewing authority lo consider a downward

adjustment

of the. PAL when your

current actual emissions are lass than 80percent of
Draft - D o no t quote , cite , copy , o r distribute . 1-8-2 7 Novembe r 4 , 200 2P. 6

NOU-22-200 2 0 9 = 4 8 P • 05/0 6

8-199 8 PA L Comment s
or loca l agenc y ca nadop t

rule s requirin g emissio nreduction s which , i nturn , woul dlea dt o adjustmen t

o f th e PAL

. Th e commente r requeste dEPA-shott- drequir e tha t an y Stat e optin g int o th e PA Lus e PA Lemission s i nth e SI Pattainmen t demonstration , an dEP A shoul dchang e it s guidanc e o nth e us e o f

actua l emission s i nattainmen t demonstration s t o reflec t this

. Response ; In our 1998NOA, we expressed three reasons why it

might be appropriate to require PALs to be periodically adjusted. First, we expressed concern that

the allowable-to-allowable applicability system of

the PAL would allow you to indefinitely retain the right to pollute at

an historical level of actual emissions. Second, we were concerned that a PAL may allow you to retain unused

emissions credits that

would otherwise be available

for economic growth in the area. And

third, we were concerned that a PAL may interfere with a State's ability to plan for attainment

if your actual emissions to the atmosphere are, lower during a SIPplanning year than in a subsequent

year. Commenters responded to our request for comments in this area with the comments summarized

above. After reviewing these comments, our concerns related

to unadjusted

PALs remain. We agree with the commenters who noted the potential

for unadjusted

PALs to affect

the environment, economic growth, and attainment

planning. The final PAL rules provide for periodic review and

adjustment

to address these Concerns. (See Volume I, 7.8.2 and 8.6 for additional

detail on this topic) In addition, the final rules provide for both mandatory and discretionary reopenings to adjust the PAL under some circumstances, in part to address these concerns. (See Volume 1, 7.8.1 for more detail

on PAL reopenings.) Because the reviewing authority must ordinarily adjust

your source's PAL

downward

if it is no longer

reasonably representative ojits baseline actual emissions, or

it is no longer urgent PTE, a PAL

will " ^ prmtirlr

vqu with n*innffttPYPd ri&htMx-^^ ((QI^J evel of baseline actual

emissions. Although we firmly believe that a periodic review of

the level of the PAL is necessary, and

thftt fft

. f fhcjtJd result in fm-ndJTtsWtFnt ill your PAL to a level

that is representatiw orfyauzjjyurre '. v hasrlinp acp'

nl g"»>TiV>n<

- <-»_ - ourrcniPTE

(whichever

is lower), 'we do not

believe that

we should

mandate an adjustment

to the PAL based on only one prescribed

methodology. Such an approach could lead to inappropriate results. Instead, we believe that our concerns can be appropriately addressed by providing the States the authority to adjust the PAL based on what is representative of

your source's baseline actual

emissions (or

current PTE). This approach allows reviewing authorities to consider

the effect

of the PAL on the environment, other sources, and

attainment planning. [Needs-to be revised after resolution with OMB] We are providing your

reviewing authority discretion to take into consideration air quality planning needs. For example, although we remain concerned that a PAL may allow you to retain unused

emissions credits that

would otherwise be available

for economic growth in Draft - D o no t quote , cite , copy , o r distribute . 1-8-2 1 Novembe r 4 , 200 2NOU-22-200 2 09=4 9 P. 7 P.06/0 6

4 - Lat e Comment s o n PAL s


### 4.1 2 Othe rComment s o n PAL s Comment : Afew commenter s (TV-D-333 , 370 , 388 , 390 , 397 ) advocatedadeclinin g PAL

. On e of th e commenter s (TV-D-397 ) woul dno t suppor t aPA Ltha t allow s firms to "hold " emission s fo r som e perio do f

time , whichcontrast 5 

### : wit hthe goa l of the PS D program . The commente r instea d suggestedtha

t th e PAL s coul dhav e aspecifiedcap . Th e ca p coul db e reduce ddurin g th e periodi c review , by aset

reduction , o

r ever y 5 year s basedonth e averag e o f the las t 2 year s o r the highes t 2 years . One commenter

(IY-D-370 ) supportedthe implementationo f cap-and-trade program s wit hthe cap s declinin g to th e appropriat e level fo r eac hcriteri apollutant

. PAL s ar e one approachfo

r this

. Th e commente

r believedtha

t the declining ca

p concept coul db e implemented insuc hamanner

a s to achiev e equivalen

t or greate r reduction s tha

nthe existin g NS Rprogram. ^ Response : A.\ nuti.d

abvrve in svctiun S. 4. Notwithstanding the fact that we did not propose or

Seek 

### comments on declining PALs. we do not believe that

a PAL should be a declining emissions cap ^iythat requires BACT/LAER performance levels for the existing unils at

the PAL facility. i r Nevertheless, we believe that a PAL should remain representative ofymtrthe source 's baseline \_ * actual

emissions.AThe

final rules require PAL

review and

adjustment

at each 10-year

renewal. Ay t^TMsreyiSwii^lttmid^'£ baseline actual emissions over

the previous 10years, Walthough the peimittintireviewing authority retains the flexibility to consider

a variety of

factors in setting the level

of the renewed

PAL. See Volume I, 7.8.2 and 8.6 for additional

discussion about periodic PAL

review and

adjustments. States are free to implement

cap-and-trade programs as they see fit to resolve nonattainment

problems. However, we do not believe that

it is appropriate to integrate PALs, which are created

for purposes of

major NSR applicability, with cap-and-trade programs, which have the purpose of

bringing about area-wide reductions in the target pollutant.- Comment : On e commenter

(IV-D-341 ) state dtha

t the y d o no t suppor t the requirement

of offsets i n the settin g of

aPALunles s it

i s bein g establishe dinthe context of the pemiittin g of

achang e tha

t wouldotherwis e trigger

offsets tha

t wa s initiate da

t the tim e the PA Li s being established

. Response :

Draft-D o no t quote , cite , o r distribute . 11/04/200 2

TOTR L P.0 6