Workshop F Air Permitting … How to Determine Whether a Modification Is Triggered Under PTI/PTIO, Title V, PSD, NSPS and/or MACT Rules and Regulations?

Wednesday, July 19, 2017 2:45 p.m. to 4:15 p.m.

Biographical Information

Ron Hansen, Owner/Principal Consultant GT Environmental, Inc., 635 Park Meadow , Suite 112, Westerville, OH 43081 Phone: (614) 794-3570 ext. 21 Fax: (614) 899-9255 [email protected]

Ron Hansen has over twenty-five years of air permitting, regulatory and stack testing consulting experience. Ron is an owner and Principal Consultant with GT Environmental, Inc. (GT). Ron graduated from the of Cincinnati with a B.S. in Civil . Ron is a member of the Air and Waste Association (AWMA).

Ron has extensive experience in preparing Title V permit applications, PSD permit applications, non- attainment NSR permit applications, minor source permit applications, negotiating permit terms and conditions with state agencies, performance testing programs and assisting clients with enforcement resolution. Ron has prepared permit applications for utilities, steel mills, chemical , wood cabinet manufacturers, animal feed manufacturers, municipal solid waste , aggregate and processing facilities, and bulk terminals. Ron has prepared air permit applications for clients located in Ohio, Michigan, Missouri, Kentucky, Indiana, Tennessee, West Virginia, Pennsylvania and Rhode Island.

Amy C. Kesterman, Environmental Compliance Specialist III Southwest Ohio Air Quality Agency 250 William Howard Taft Road, Cincinnati, OH 45219 Phone: (513) 946-7777 Fax: (513) 946-7778 [email protected]

Amy Kesterman is an Environmental Compliance Specialist III in the Permits and Enforcement Section of the Southwest Ohio Air Quality Agency (Agency), a Division of the Hamilton County Department of Environmental Services. Amy has been an Environmental Compliance Specialist with the Agency since 2006. She is responsible for on-site inspections of air sources and control equipment, determining source compliance with air permits and air pollution regulations, assessing source emissions, responding to air quality complaints, and reviewing and processing permit applications for complex source installations and modifications.

Amy serves as a point of contact at the Agency for assisting representatives with navigating Ohio EPA’s electronic tool, Air Services. She periodically serves as an air permit instructor for Cincinnati State Technical and Community College’s Environmental Engineering program and as a guest lecturer for the University of Cincinnati’s Environmental Studies program.

Amy was awarded a Hamilton County Employee of the Year Award in 2013 for her individual effort to go the extra mile in providing excellent in her . In 2014, Amy was awarded her second Hamilton County Employee of the Year Award as a member of an Agency team being recognized for their innovative team approach to processing an air permit for General Electric Aviation.

Amy received a B.S. in Environmental Studies from the University of Cincinnati.

Biographical Information

Kevin J. Kilroy, Safety & Environmental Manager Smithers-Oasis , 919 Marvin Street, P.O. Box 790, Kent, OH 44240 Phone: (330) 676-4426 [email protected]

Kevin Kilroy has almost forty years of experience in environmental, health and safety programs in a setting. He works for Smithers-Oasis, a privately held company headquartered in Kent, Ohio where it has manufacturing and facilities. The company manufactures and markets water-absorbing floral foams, accessories and floral mechanics to the floral market worldwide. They manufacture and market a complete line of post-harvest care products for the floral industry through its Floralife Division. They also manufacture and market products for the grower/ industry.

At Smithers-Oasis, Kevin has responsibility for the safety and environmental programs of the North American and Floralife Divisions in the North America and provides consulting services to other global operations of the company, particularly on product and safety related issues. Prior to joining Smithers-Oasis, Kevin worked nineteen years for an Ohio based Fortune 500 chemical and aerospace company, mostly at a chemical manufacturing facility where he was responsible for managing the ’s environmental program. Over the course of seventeen years at the plant, he also worked on health and safety programs. Prior to this, he worked for two years in the chemical division environmental department conducting permit review and project environmental impact assessments.

Kevin received a B.S. in both Chemical Engineering and Plastic Technology from Lowell Technological Institute and a M.S. in Environmental Studies from the University of Lowell. He is a member of the American Institute of Chemical Engineers (AICHE). He was past chairman of the Akron Section of AICHE.

Eric B. Gallon, Of Counsel Porter Wright, Morris & Arthur LLP, 41 S. High Street, Columbus, OH 43215 Phone: (614) 227-2190 Fax: (614) 227-2100 [email protected]

Eric Gallon’s environmental practice focuses on Clean Air Act compliance and defense. Eric defends manufacturers, utilities, and other companies in administrative and judicial enforcement proceedings; reviews draft and proposed installation and operating permits; appeals permits and other final actions of the Ohio Environmental Protection Agency to the Environmental Review Appeals Commission; analyzes and comments on proposed state and federal rulemakings; and prepares petitions for reinstatement of debarred companies.

Eric also represents electric and companies in rulemaking, ratemaking, and complaint case proceedings before the Public Utilities Commission of Ohio and in appeals before the Supreme Court of Ohio. Separately, his litigation practice encompasses a variety of complex business and corporate matters, including tort class actions and antitrust matters. In addition, he regularly lectures on the application of the attorney-client privilege and work-product doctrines under Ohio and federal law.

Eric earned his B.A. in Political Science from The Ohio State University and his J.D. from the University of Chicago Law School. He has been recognized by Ohio Super Lawyers – Rising Stars Edition five times (in 2010, 2011, 2013-2015). Southwest Ohio Air Quality Agency Cincinnati, Ohio What is a Title V Operating Permit?

 Federal major source permitting program established by the Clean Air Act.

 Umbrella permit that includes all emissions units at a facility.

 Operating permit with a 5‐year renewal cycle. How to incorporate changes into the Title V Operating Permit  There are six methods for addressing changes  Operational Flexibility  Off‐Permit Change  Administrative Permit Amendment  Minor Permit Modification  Significant Permit Modification  Reopening for Cause

 Guidance for Incorporating Facility Changes into a Title V Permit –Ohio EPA Engineering Guide #63 Engineering Guide #63

epa.ohio.gov/dapc/engineer/eguides.aspx Engineering Guide #63

epa.ohio.gov/portals/27/title_v/Visio‐DecisionTreeA2004.pdf Engineering Guide #63

epa.ohio.gov/portals/27/title_v/Visio‐DecisionTreeB2004.pdf Engineering Guide #63

epa.ohio.gov/portals/27/title_v/Visio‐DecisionTreeC2004.pdf Operational Flexibility  When a change is counter to a permit term or condition, but does not require a permit revision or affect the monitoring, record keeping, reporting, or emission limitations.  For example, the Title V permit indicates a specific brand of coating be used. Operational Flexibility can be used to change brands, as long as the new brand complies with any emission limitations.  Notification of the change must be received 7 days prior to the proposed change.  Notification should be made in the form of a certified letter. Off‐Permit Change  When a facility makes a change that is not specifically addressed or prohibited by the Title V permit.  Used to incorporate the terms and conditions of a new PTI, a PTI exempt source without applicable requirements, or a de minimis source.  For example, a facility plans to install a new emissions unit where the potential to emit does not violate any established emission limitation and is not a modification. Off‐Permit Change  If required, a PTI must first be applied for and issued final before of the new unit can begin.  Operation of the new unit may begin immediately, once a PTI is issued.  An Off‐Permit Change request must be submitted in Air Services within the time frame specified in the PTI, but not to exceed one year. Administrative Permit Amendment  Used for making small administrative changes, such as:  Typographical errors to the terms and conditions.  Small administrative changes – names, addresses, etc.  Increases in monitoring or reporting frequency.  Changes in or operational control.  For example, an emission limit was issued as 8 lbs/hr rather than 80 lbs/hr.  Or, it is determined that monitoring should be increased from weekly to daily checks. Minor Permit Modification  Used for making non‐significant changes, such as:  Synthetic minor changes.  Best Available Technology (BAT) changes.  Changes in monitoring, record keeping, or reporting.  For example, an increase in capacity, which will increase emissions, but the change does not qualify as a significant modification.  A modification to the PTI must be applied for when necessary. Significant Permit Modification  Used for making significant changes, such as:  Increase in Hazardous Air Pollutants above major source threshold.  Changes trigger PSD or Nonattainment NSR.  Changes in monitoring, record keeping, or reporting.  Relaxation of reporting or record keeping.  For example, removing a synthetic minor limitation that had been in place to avoid PSD. Now, PSD review is required.  A modification to the PTI must be applied for when necessary. Reopening for Cause  Often these changes are initiated by Ohio EPA.  Used for making changes, such as:  Adding additional requirements that become applicable during the permit cycle.  Correcting mistakes.  For example, a new MACT becomes applicable with more than 3 years remaining in the permit cycle.  Or, a piece of control equipment was mistakenly included in emissions unit terms and must be removed. Air Services Home Page Request Administrative Permit Modification Title V PTO Application Detail Page The Takeaway

 Contact your Ohio EPA District Office or Local Air Agency to discuss proposed changes.

 Review Engineering Guide #63

 A new or modified PTI may be necessary prior to or in conjunction with making changes to the Title V permit. Thank you! Contact info:

Amy Kesterman Environmental Compliance Specialist III amy.kesterman@hamilton‐co.org (513) 946‐7749

www.southwestohioair.org Wednesday, July 19, 2017 2:45 – 4:15 p.m. Workshop F

Presented by Ron Hansen – GT Environmental, Inc. Amy Kesterman – Southwest Ohio Air Quality Agency Eric Gallon – Porter Wright Morris Arthur Kevin Kilroy – Smithers‐Oasis Major Topics

 PTI/PTIO  Title V Modifications  PSD/NNSR Modifications  NSPS Modifications  MACT Modifications  Legal Updates  New Ozone Standard

21 of 28 PTI/PTIO Modifications Definition of “New Source” OAC rule 3745‐31‐01(WWW)  “New source” means any air contaminant source for which an owner or operator undertakes a continuing program of installation or modification or enters into a binding contractual obligation to undertake and complete, within a reasonable time, a continuing program of installation or modification, after January 1, 1974, and that at the time of installation or modification, would have otherwise been subject to the provisions of this chapter. The replacement of an entire air contaminant source is considered a new source.

22 of 28 PTI/PTIO Modifications Definition of “Modification” OAC rule 3745‐31‐01(SSS)

 Sometimes referred to as the “minor modification” definition.  Not to be confused with the “major modification” definition for projects at “major stationary sources”.  Applies to projects at both “minor stationary sources” and “major stationary sources”.  You can trigger a permit requirement under this definition without triggering a PSD or NNSR permitting requirement under the “major modification” definition.  If you trigger a PSD or NNSR permitting requirement under the “major modification” definition, then you automatically trigger a permitting requirement under the “minor modification” definition.

23 of 28 Ohio EPA Air Toxics Modeling Policy

 ORC 3704.03(F)(4)  OAC Rule 3745‐114 (Air Toxics List)  This is not included in the definition of “modification” in OAC Rule 3745‐31‐01 (SSS).  This is not a federally enforceable requirement.  Air Toxics permit terms and conditions should appear in the “state only” section of PTIs/PTIOs/Title V permits.

24 of 28 PTI/PTIO Modifications Definition of “Modification” OAC rule 3745‐31‐01(SSS) Decision Tree

25 of 28 PTI/PTIO Modifications Definition of “Modification” OAC rule 3745‐31‐01(SSS) Decision Tree

26 of 28 PTI/PTIO Modifications Definition of “Modification” OAC rule 3745‐31‐01(SSS) Decision Tree

27 of 28 PTI/PTIO Modifications Definition of “Modification” OAC rule 3745‐31‐01(SSS) Decision Tree

28 of 28 PTI/PTIO Modifications Definition of “Modification” OAC rule 3745‐31‐01(SSS) Decision Tree

29 of 28 PTI/PTIO Modifications Definition of “Modification” OAC rule 3745‐31‐01(SSS) Decision Tree

30 of 28 PTI Modifications Definition of “Major Modification” OAC rule 3745‐31‐01(LLL)  Only applies to “major stationary sources” as defined in OAC rule 3745‐31‐01 (NNN).  Projects that trigger a “major modification” will be issued a PTI not a PTIO because “major stationary sources” will operate under the Title V permitting program (major source operating permit program).  Projects can trigger a “major modification” and a “minor modification”.

31 of 28 PTI Modifications Definition of “Major Modification” OAC rule 3745‐31‐01(LLL) Decision Tree

32 of 28 PTI Modifications Definition of “Major Modification” OAC rule 3745‐31‐01(LLL) Decision Tree

33 of 28 PTI Modifications Definition of “Major Modification” OAC rule 3745‐31‐01(LLL) Decision Tree

34 of 28 PTI Modifications Definition of “Major Modification” OAC rule 3745‐31‐01(LLL) Decision Tree

35 of 28 PTI Modifications Definition of “Major Modification” OAC rule 3745‐31‐01(LLL) Decision Tree

36 of 28 PTI Modifications Definition of “Major Modification” OAC rule 3745‐31‐01(LLL) Decision Tree

37 of 28 PTI Modifications Definition of “Major Modification” OAC rule 3745‐31‐01(LLL) Decision Tree

38 of 28 New Source Performance Standards (NSPS) 40 CFR 60  Regulates emissions of criteria pollutants generated at approximately 97 different source categories.  Applies to new sources installed after rule specific dates.  Applies to existing sources modified after rule specific dates.  Applies to existing sources reconstructed after rule specific dates.

39 of 28 New Source Performance Standards (NSPS) 40 CFR 60 “Modification”  “Modification” is defined in 40 CFR 60.2 and 60.14.  “Modification” means any physical or operational change to an existing facility which results in an increase in the emission rate to the atmosphere of any pollutant to which a standard applies.  Emission rate shall be expressed in kg/hr or lbs/hr. Therefore, an increase in annual emissions without a corresponding increase in hourly emissions is not a modification.  Must achieve compliance with all applicable standards within 180 days of the completion of the modification.

40 of 28 New Source Performance Standards (NSPS) 40 CFR 60 Exclusions from the Definition of “Modification”  Routine maintenance, routine repair and routine replacement are not modifications.  An increase in production rate of an existing facility that can be accomplished without a capital expenditure is not a modification.  An increase in the hours of operation is not a modification.  Use of an alternative fuel or that the facility is designed to accommodate is not a modification.  The addition or use of any system or device designed to reduce air emissions is not a modification.

41 of 28 New Source Performance Standards (NSPS) 40 CFR 60 “Reconstruction”  “Reconstruction” is defined in 40 CFR 60.15.  An existing facility, upon reconstruction, becomes an affected facility even if emissions do not increase.  “Reconstruction” means the replacement of components of an existing facility to such an extent that: (1) The “fixed capital cost” of the new components exceed 50% of the fixed capital cost that would be required to construct a comparable entirely new facility, and (2) It is technologically and economically feasible to meet the applicable standards.  “Fixed Capital Cost” means the capital needed to provide all the depreciable components.  Must notify the Administrator at 60 days prior to commencing construction on the proposed “reconstruction”.

42 of 28 Maximum Achievable Control (MACT) Standards 40 CFR 63  Regulates emissions of 188 hazardous air pollutants (HAPs) generated at approximately 134 different source categories.  May apply to both major sources and area sources of HAPs.  Applies to new sources, reconstructed sources and existing sources.  Requirements for new sources and reconstructed sources are typically more stringent than those for existing sources.  Applies to existing sources reconstructed after rule specific dates.  Modifications that do not satisfy the definition of “reconstruction” are still regulated as “existing affected sources”.  Modifications that meet the definition of “reconstruction” are regulated as “new affected sources”.

43 of 28 Maximum Achievable Control Technologies (MACT) Standards 40 CFR 63 “Reconstruction”  “Reconstruction” is defined in 40 CFR 63.2.  An existing facility, upon reconstruction, becomes a “new affected source”, even if emissions do not increase.  “Reconstruction” means the replacement of components of an existing facility to such an extent that: (1) The “fixed capital cost” of the new components exceed 50% of the fixed capital cost that would be required to construct a comparable entirely new facility, and (2) It is technologically and economically feasible to meet the applicable standards.  “Fixed Capital Cost” means the capital needed to provide all the depreciable components.  Must obtain approval from the Administrator prior to commencing construction on a “new affected source” or “reconstruction” on an “existing affected source”. 44 of 28 Like Kind Replacement

 Can you replace a 500 ton/hr grinder with a smaller less emitting 400 ton/hr grinder without obtaining an air permit? Answer: No – the 400 ton/hr grinder is considered a “new source”  “New Source” means any air contaminant source for which an owner or operator undertakes a continuing program of installation or modification or enters into a binding contractual obligation to undertake and complete, within a reasonable time, a continuing program of installation or modification, after January 1, 1974, and that at the time of installation or modification, would have otherwise been subject to the provisions of this chapter. The replacement of an entire air contaminant source is considered a new source.

45 of 28 How Do You Define the Full Extent of an Air Contaminant Source or Emissions Unit? Example 1 How Many Air Contaminant Sources Do You See?

Answer: 1

46 of 28 How Do You Define the Full Extent of an Air Contaminant Source or Emissions Unit? Example 2 How Many Air Contaminant Sources Do You See?

Answer: 3

47 of 28 Obtaining a Timely Air Permit Modification

Presented by

Kevin Kilroy Safety & Environmental Manager Smithers‐Oasis Company

Smithers-Oasis Company

1 Obtaining a Timely Air Permit Modification

 Current Actions ‐ What you should be doing now

 Handling the Future ‐ Project Management Review System

 Permit Background Work

 Obtaining Flexibility & Operational Uptime

 Permitting ‐ What Has Worked

2 Current Actions What You Should Be Doing Now  Permitting ‐ Not just another activity‐ “its your legal basis to operate”  Understand current permitting status and any restrictions that apply

. Impacts future project options . Communicate current circumstances internally  Pay attention to agency proposals and be prepared to comment or appeal any rules, which may impact your company’s operations

3 Current Actions What You Should Be Doing Now  Become familiar with a more complicated permitting system

 This system ranges from permit exemptions to permits‐by‐rule to general, synthetic minor and/ or major permits

 Understand what constitutes a “permit modification”

 Communicate internally with examples

 A very useful exemption is the Deminimis exemption at OAC 3745‐15‐05

 Summary: Potential or actual emissions < 10 lbs/day with HAP emissions < 1 tpy, and potential emissions from this and similar emission units < 25 tpy. If you use it, remember to keep records of daily and annual emissions

51 Handling the Future Project Management Review System  Need early‐on compliance review for projects

. Impact on scope, costs and ultimately compliance

 Critical to conduct project scope review and analyze permit options . Constraints with project scope and options/alternatives . Impacts of “wants vs. needs” . Communicate in writing –“no surprises” . Be simple, but address key questions on impact to project, such as timing, costs, restrictions, etc.

 Target key internal functions (i.e., Tech., R&D, maintenance, etc.) – both to educate and to projects early on

52 Permit Background Work

 Work with project manager to collect basic project data: . Purpose, scope, and timing . Simple process diagram . Emission estimates – looking at actual and potential . Discuss emission reduction methods, costs, and the emissions

 Develop with project manager a schedule that includes permitting . Establish key data required and timetable to receive it

 Understand proposed project(s) to be able to describe in general terms in the permit application

53 Permit Background Work

 During permit strategy brainstorming sessions, keep in mind: . That some regulated chemicals or source categories have emission reduction and/or monitoring requirements . If possible, restructure emission units for best permitting scenario:

 Separate out operations –by source categories or chemicals  If a regulated chemical emission is minor and grouping applies a control requirement to much larger source

 Maximize in the permit application emissions by regulated pollutant classes up to level of permitting selected keeping in mind BAT and/ or Toxic Modeling requirements

54 Permit Background Work

 Participate proactively in permit data development:

. “You are the company representative who is ultimately responsible for data being complete and accurate.”

 Pay attention to key permitting details associated with each project, including data collection; permit strategy and possible terms and conditions

 Question all emission data and assumptions:

. Add unit emissions together and compare to overall operations mass balance . Document and scrutinize emission assumptions –are they realistic and defendable? . Pay attention to raw material impurities and/or by‐product chemistry –may change emission/ compliance basis!

55 Obtaining Flexibility & Operational Uptime

 Explore all emission reduction approaches in place of installing expensive controls, including pollution prevention alternatives:

. Expand existing in‐process recovery at facility

. Change handling/ work practices

. Set limitations on mixture’s content, material substitution (of HAPs or OEPA Air Toxics), etc.

56 Obtaining Flexibility & Operational Uptime

 During project review and early permit work, make judgment on most likely agency permit requirements

 Keep in mind that “you as the sources must live with any permit Terms and Conditions (T&Cs) and not the agency”

 Provide your own permit T&Cs to minimize restrictive or poor fitting ones:

 To expedite permit processing, and  Gives the agency an idea of your approach for demonstrating compliance, for example monthly averaging versus daily

57 Obtaining Flexibility & Operational Uptime

 Controls: . When controls are required, keep in mind both source economics and operational uptime are variability in agency negotiations. . “Only agree to a level of control which can be met all the time and not most of the time”

capture and collection system(s) to minimize expenditures while maximizing result

. Combine vents to minimize monitoring and control costs . Separate vents with low flow or pollutant concentration . Develop cost analysis for agency discussion

 Maintain source operation by providing equipment to: . Collect . Monitor (i.e., LEL), and . Regulate process discharge surges

58 Obtaining Flexibility & Operational Uptime

 Monitoring:

. If options exist, propose monitoring scheme(s), which are simple, reliable and fit your situation

 Agency personnel tend to think everything can be measured but that may not be true for your circumstances

. Where possible, propose a surrogate monitoring scheme:

 For example, propose operational data as appropriate, such as:

 Equipment hours of operation, or

 Emissions from material usage, for example:  Track hours worked daily,  Inventory solvent usage monthly, and  Back calculate daily solvent emissions

59 Obtaining Flexibility & Operational Uptime

 Monitoring:

. Propose monitoring (& control) schemes, which make sense for your operation using proven, cost effective and reliable technology

 To monitor compliance all the time the source is operating

 For example, propose monitor exit gas temperature instead of VOC concentration

. For compliance demonstration establish period of compliance demonstration which are practical and repeatable:

 Tie compliance monitoring to periods of discharge within process cycle

 Usually, longer time periods are better, particularly for variable or non‐routine operations

13 Permitting – What Has Worked?  Submit complete and accurate application:

. Provide written process/ project description and simplified process flow diagram . Answer all standard PTI application questions as applies . Provide emission activity category form(s) . Provide emission calculations . Make sure numbers are consistent even for different averaging times . Be specific –leave no open‐ended points . Provide listing of applicable requirements from good faith review . Propose T&Cs on monitoring and emission reduction . Answer key questions from your point of view . Have authorized company representative sign application

61 Permitting – What Has Worked?  Make permit reviewer’s job easy:

. Useful to provide narrative describing project and key points . Provide summary of applicable regulatory classification of raw materials

 Meet permit reviewer:

. To submit application . Explain project scope and timing . Review any key points . Request fast track handling if needed . Determine how application will be handled

 How familiar is permit reviewer with facility? Offer tour

62 Permitting – What Has Worked?  Determine extent of permit writer’s discretion and try for best terms . Content of many T&Cs is often negotiable . Keep making your point(s) and you may persuade agency

 Permits are public information and if you claim secrets, provide two versions (one “sanitized”) for agency processing

 Keep in contact with District Office or Local Air Agency during processing . Ask for a copy of the draft permit to review and comment

 Be ready for agency questions when they come . Develop backup materials during preparation of the permit application preparation

63 Permitting – What Has Worked?  Review agency draft or final permit(s) carefully for accuracy and agency written terms and conditions

. Immediately report errors in draft to agency for revision . After permit is issued, it is difficult to get changes made . Simple errors may end up being more than little annoyances

 Provide written comments to unacceptable parts of draft permit within allotted timeframe; establishing possibility of later appeal

 Involve legal counsel on permit comments or to appeal permit to the Environmental Review Appeals Commission

 Be courteous and professional in all dealings with agency personnel

64 of 57 Permitting – What Has Worked?

 Utilize Consultants and/or Legal Counsel as resources:

. Assist in permitting needs assessment . Assist in permit strategy development and possible ways to obtain Deminimis or Minor Permit status . Assist in permit data collection and preparing the application . Usually several options exist on permit T&Cs and research may be needed . Define data needed and critical questions to be answered

 Talk with agency (directly or indirectly)

 If Consultant hired, track and assist with permit data collection by internal personnel

65 RECENT LEGAL DEVELOPMENTS IN MAJOR NSR

Eric B. Gallon July 19, 2017  2017 Porter Wright Morris & Arthur LLP RECENT CHANGES TO OHIO’S MAJOR MODIFICATION DEFINITIONS

 2017 Porter Wright Morris & Arthur LLP PURPOSE OF AMENDMENTS

To comply with EPA’s requirements for state plans (SIPs) to attain and maintain the 2012 national ambient air quality standard

(NAAQS) for fine particulate matter (PM2.5).

81 Fed. Reg. 58,010 (Aug. 24, 2016)  2017 Porter Wright Morris & Arthur LLP MAJOR MODIFICATION

A major modification is a physical change in, or change in the method of operation of, a major stationary source that causes both:

(1) a significant emissions increase and (2) a significant net emissions increase of a regulated NSR pollutant.

Ohio Adm.Code 3745-31-01(LLL)(1)  2017 Porter Wright Morris & Arthur LLP MAJOR STATIONARY SOURCE

Attainment Areas: • Each source with PTE > 100 tpy of a regulated NSR pollutant in the 26 original NSPS categories, e.g.: o boilers w/ > 250 mmBtu/hr heat input o Chemical process plants • All other sources with PTE > 250 tpy of a regulated NSR pollutant • Any change at a non-major source that would itself be a major stationary source

Ohio Adm.Code 3745-31-01(NNN)(2)  2017 Porter Wright Morris & Arthur LLP MAJOR STATIONARY SOURCE

Nonattainment Areas • Each source with PTE > 100 tpy of a regulated NSR pollutant • New lower thresholds for certain nonattainment areas: • 50 tpy VOC in serious ozone nonattainment areas or, generally, in ozone regions (OTR)

• 25 tpy VOC in severe O3 nonattainment areas • 10 tpy VOC in extreme O3 nonattainment areas • 50 tpy CO in serious CO nonattainment areas

• 70 tpy PM10 in serious PM10 nonattainment areas • 70 tpy PM2.5, or any individual precursor for PM2.5, in serious PM2.5 nonattainment areas Ohio Adm.Code 3745-31-01(NNN)(1)

 2017 Porter Wright Morris & Arthur LLP MAJOR STATIONARY SOURCE

• Ohio currently has:

– No O3 nonattainment areas – No CO nonattainment areas

– No PM10 nonattainment areas

– No serious PM2.5 nonattainment areas (Cuyahoga and Lorain Counties are moderate nonattainment)

 2017 Porter Wright Morris & Arthur LLP MAJOR STATIONARY SOURCE

• Ohio is not currently in an OTR, but: – Dec. 2013: Nine NE states petitioned EPA in to expand the OTR to include Ohio – Jan. 2017: Obama EPA proposed denying that petition – < Oct. 27, 2017: Final decision due – The NE states will likely sue if EPA denies the petition – Addition to OTR would require RACT for VOC emissions, enhanced I/M programs in large cities, other measures

 2017 Porter Wright Morris & Arthur LLP REGULATED NSR POLLUTANT

Includes (but is not limited to):

• Criteria pollutants and their precursors

• VOCs and NOx are precursors to O3 • SO2 and NOx are precursors to PM2.5

Ohio Adm.Code 3745-31-01(NNNNN)  2017 Porter Wright Morris & Arthur LLP REGULATED NSR POLLUTANT

The control requirements applicable under plans in effect under this part for major stationary sources of PM–10 shall also apply to major stationary sources of PM–10 precursors, except where the Administrator determines that such sources do not contribute significantly to PM–10 levels which exceed the standard in the area.

42 U.S.C. 7513a(e).

 2017 Porter Wright Morris & Arthur LLP REGULATED NSR POLLUTANT

For Nonattainment New Source Review:

• VOCs and ammonia are PM2.5 precursors for now, although Ohio EPA submitted a demonstration that emissions of those pollutants do not contribute significantly

to PM2.5 concentrations in the Cleveland area

Ohio Adm.Code 3745-31-01(WWWW); http://www.epa.ohio.gov/portals/27/SIP/attain/2012pm25attainDemo- FINAL.pdf  2017 Porter Wright Morris & Arthur LLP REGULATED NSR POLLUTANT

For Prevention of Significant Deterioration:

• VOCs are not PM2.5 precursors, unless Ohio EPA or EPA demonstrates that emissions of those pollutants are a

significant contributor to PM2.5 concentrations in the Cleveland area

Ohio Adm.Code 3745-31-01(NNNNN)(2)(a)(ii)(d)  2017 Porter Wright Morris & Arthur LLP REGULATED NSR POLLUTANT

“Different pollutants, including individual precursors, are not summed to determine applicability of a major stationary source.”

Ohio Adm.Code 3745-31-01(NNN)

“Different pollutants, including individual precursors, are not summed to determine applicability of a major modification.”

Ohio Adm.Code 3745-31-01(LLL)(6)  2017 Porter Wright Morris & Arthur LLP SIGNIFICANT

• Carbon Monoxide: 100 tpy • Nitrogen Oxides: 40 tpy • Dioxide: 40 tpy • Ozone (VOCs/NOx): 40 tpy • Particulate Matter: 25 tpy

• PM10: 15 tpy • PM2.5: 10 tpy (direct) 40 tpy (SO2) 40 tpy (NOx) 40 tpy (VOC)

Ohio Adm.Code 3745-31-01(VVVVV)(1)

 2017 Porter Wright Morris & Arthur LLP PROJECTING POST-PROJECT EMISSIONS AFTER DTE II

 2017 Porter Wright Morris & Arthur LLP SIGNIFICANT EMISSIONS INCREASE For projects involving only existing units, requires comparing:

– the projected actual emissions to – baseline actual emissions for each affected unit, and then adding up the differences.

Ohio Adm.Code 3745-31-01(LLL)(3)(a)

 2017 Porter Wright Morris & Arthur LLP SIGNIFICANT EMISSIONS INCREASE Baseline Actual Emissions: – Existing EUSGUs: Generally high 24/60 – Other existing units: Generally high 24/120 – Includes quantifiable fugitive emissions – Includes SSM emissions – Excludes unlawful emissions – May use different period for each regulated NSR pollutant – Must use same period for each unit Ohio Adm.Code 3745-31-01(O)  2017 Porter Wright Morris & Arthur LLP SIGNIFICANT EMISSIONS INCREASE Projected Actual Emissions (tpy): – High 24/60 after the project, or – High 24/120 after the project, if • Project increases the emissions unit’s design capacity or PTE the regulated NSR pollutant, and • Full utilization of the emissions unit would result in a significant emissions increase or a significant net emissions increase, or – PTE

Ohio Adm.Code 3745-31-01(GGGGG)  2017 Porter Wright Morris & Arthur LLP SIGNIFICANT EMISSIONS INCREASE Projected Actual Emissions (tpy): – Must “consider all relevant information” in projecting actual emission, including: • Historical operational data • Company representations and filings • Expected business activity • Compliance plans – Includes quantifiable fugitive emissions – Includes SSM emissions – Excludes increases the source “could have accommodated” during the baseline that are unrelated to the project  2017 Porter Wright Morris & Arthur LLP NON- MAJOR MODIFICATIONS

Certain major stationary sources, under certain circumstances, must still do some or all of the following: • Document their pre-project emissions calculations • Submit those calculations to Ohio EPA • Monitor their post-project emissions • Report their post-project emissions to Ohio EPA Ohio Adm. Code 3745-31-10  2017 Porter Wright Morris & Arthur LLP NON- MAJOR MODIFICATIONS

What if EPA later determines that your pre- project emissions projections were wrong?

• v. DTE Energy Co., 711 F.3d 643 (6th Cir. 2013) (“DTE I”) • United States v. DTE Energy Co., 845 F.3d 735 (6th Cir. 2017) (“DTE II”)

 2017 Porter Wright Morris & Arthur LLP DTE PROJECT

• Monroe Power Plant, Unit 2 • Began in March 2010 • “Required approximately 83 days, 600 construction workers, and $65 million” • Replaced approx. 2000 sq. ft. of tubes, economizer, large sections of reheater • Installed new exciter • Refurbished boiler feedwater pumps

 2017 Porter Wright Morris & Arthur LLP DTE PROJECT

• Projected significant emissions increases:

– 3,701 tpy SO2 – 4,096 tpy NOx • Excluded all of it under the “demand grown” (capable of accommodating) exclusion • EPA brought enforcement action, said project was really a major modification • NRDC and Sierra Club intervened

 2017 Porter Wright Morris & Arthur LLP DTE I

“The district court in this case appears to have ruled ... that no [enforcement] proceeding is permitted until there is post- construction data [showing a significant emissions increase]. That is not correct.”

 2017 Porter Wright Morris & Arthur LLP DTE I

“While the regulations allow operators to undertake projects without having EPA second-guess their projections, EPA is not categorically prevented from challenging even blatant violations of its regulations until long after modifications are made.”

 2017 Porter Wright Morris & Arthur LLP DTE I

“If operators had to defend every projection to the agency’s satisfaction, companies would hesitate to make any changes ... . On the other hand, if EPA were barred from challenging preconstruction projections that fail to follow regulations, [NSR] would cease to be a preconstruction review program. The ... regulations take a middle road by trusting operators to make projections but giving them specific instructions to follow.”

 2017 Porter Wright Morris & Arthur LLP DTE I

“If there is no projection, or the projection is made in contravention of the regulations guiding how the projection is to be made, then the system is not working. But if the agency can second-guess the making of the projections, then a project-and-report scheme would be transformed into a prior approval scheme.”

 2017 Porter Wright Morris & Arthur LLP DTE II

“On remand, the district court ... focus[ed] on language in our first opinion to the effect that ‘the regulations allow operators to undertake projects without having EPA second-guess their projections.’ The district court apparently (and mistakenly) took this to mean that the EPA had to accept DTE’s projections at face value ... .”

 2017 Porter Wright Morris & Arthur LLP DTE II

“[I]n reviewing an operator's attribution of increased emissions to demand growth, the EPA definitely is not confined to a ‘surface review’ or ‘cursory examination.’”

 2017 Porter Wright Morris & Arthur LLP DTE II

The Sixth Circuit found DTE could not “justify its application of the demand-growth exclusion”: • Superficial calculation (just results) • Couldn’t actually accommodate increase during the baseline: Unit 2 was running at full capacity pre-project, and the project was supposed to reduce outages by at least 12 days per year

 2017 Porter Wright Morris & Arthur LLP DTE I & II TAKE AWAY

EPA may bring enforcement actions for sources not obtaining major NSR permits for at least three reasons: 1) significant post-project emissions increases and net emissions increases; 2) failure to follow the pre-project calculation, recordkeeping, and reporting requirements; 3) faulty pre-project calculations

 2017 Porter Wright Morris & Arthur LLP DTE II

Interesting Panel Decisions: – DTE I: Opinion by Rogers Joined by Daughtrey Dissent by Batchelder – DTE II: Opinion by Daughtrey Concurrence by Batchelder Dissent by Rogers

Status: Mandate stayed pending cert filing

 2017 Porter Wright Morris & Arthur LLP THANK YOU

Eric B. Gallon [email protected] 614.227.2190  2017 Porter Wright Morris & Arthur LLP  2017 Porter Wright Morris & Arthur LLP