Air Permitting Issues I Learned on theWay to the Courthouse

Bill Forcade, Jenner & Block LLP

330 N. Wabash, Chicago, IL 60611

312-923-2964 bforcade@jenner.com

Get the Permit Right the First Time

• My prior experience was mostly air permitting,currently it is mostly air enforcement

• Violation of one permit condition leads to reviewthat may find several violations About 30% of claims – emissions above permit limit

About 30% – construction/modification without a permitdue to magnitude of emissions

Many claims are due to bad original permit decisions

Why Was the Original Permit Bad

• Poor prior emissions estimating

• Failed to account for changes in estimatingtechniques, changes in testing methodology

• Company did not understand the permit

• Potential problems in permit were ignored in orderto get permit quickly If you agree to something in the permit, no matter how

irrational, it is binding on your operations

THE FACULTY OF THE SCHOOL OF EVERYDAY EXPERIENCEcertify to all that

Bill S. Forcadehas been nominated for the title of

Engineer at Law16 November 2007

Current Issuesin Air Permitting

• Calculating Potential to Emit Determines Applicability of Title V, MACT, NSR and

sets permit emissions limits

• Measuring Emissions and Establishing Compliance New methods of quantifying emissions (models or

testing) may indicate increased emissions compared topermits. Could result in enforcement

• What Kind of Facility Do I Want to Build, and When

Potential to Emit

• The maximum capacity of a stationary source to emit a pollutantunder its physical and operational design. 40 CFR. § 52.21(b)(4)

Rule and Implementation Information for Potential to Emit (PTE) is found athttp://www.epa.gov/ttn/atw/pte/ptepg.html

• Critical Issues What is my source

What is maximum capacity at physical and operational design

How are my emissions quantified

What Is My Source

• All activities in the same 2-digit SIC Code• Located one or more contiguous or adjacent properties, and• Under the common control of the same person. 40 CFR 52.21

In the past two facilities had to meet all three parts to be one source.Now…

• “Support facility” means any stationary source (or group of stationary sources)that conveys, stores, or otherwise assists to a significant extent in theproduction of a principal product at another stationary source (or group ofstationary sources). A support facility shall be considered part of the samesource as it supports regardless of the 2‑digit SIC code. 415 ILCS 5/39.5(1)

Support Facility -Embedded Facility• Where a facility conveys, stores, or otherwise assists in the

production of the principal product at another source, it may bedeemed a support facility and treated as part of the same source. Administrator Whitman quoted in LaFleur v. Whitman 300 F.3d 256 (2nd Cir).

• the PSD applicability test requires an evaluation of the facility todetermine if there is a portion of the plant (which EPA calls an'embedded' or 'nested' facility or source) which could be classified aspart of the major source. Id.

• Detroit Automobile Manufacturing

How Far Can Your“Facility” Extend

• Wisconsin has attempted, unsuccessfully, to attribute emissions to amanufacturing facility, from finished products stored in a portion of anindependently owned public warehouse over 7 miles away. October 7, 1998 letter from Robert Miller, USEPA Region V to Lloyd Egan, Wisconsin

Department of Natural Resources).

• The Congress is aware that there have been EPA regulatory determinations andpolicy interpretations, pursuant to [the NSR provisions] defining the term‘contiguous’ broadly. In some cases the term was interpreted to encompassaggregate emissions of minor sources within several miles of one another if theyare under common ownership. This was not the intent of the use of the term‘contiguous’ in this definition. U.S. Senate Committee on Environment and Public Works, A Legislative History of the

Clean Air Act Amendments of 1990, 1990 CAA Leg. Hist. 10726, 10769

Maximum Capacity at Physicaland Operational Design

• Cell phone manufacturer spray booth coated phone with anti-radiation coating for 55 minutes, then sprayed pure solvent for <5minutes to clean heads. Agency wanted PTE calculated on spraying8760 hours of pure solvent.

• Manufacturer of clear plastic zipper food bag inked company logo on<1% of bag surface area. Agency wanted PTE calculated based onopaque 100% ink coverage of bag.

• Off site waste management facility treated oily wastewater fromseveral hundred manufacturers (Average <2% HAP). Agencywanted PTE calculated on receiving 100% HAP waste.

Operational LimitationsMust Be “Reasonable”

• Potential to emit does not refer to the maximum emissionsthat can be generated by a source hypothesizing the worstconceivable operation. Rather, the concept contemplatesthe maximum emissions that can be generated whileoperating the source as it is intended to be operated andas it is normally operated. . . hypothesizing the worstpossible emissions from the worst possible operation is thewrong way to calculate potential to emit. U.S. v. Louisiana-Pacific, 682 F.Supp. 1141

Reasonable Assumptions• Identification of the possible batch production cycles that reasonably

can be undertaken at the facility 8/29/96 John Seitz Memorandum, PTE for Batch Chemical Production

• An estimable and reasonable upper bound which would never beexceeded absent extraordinary circumstances 11/14/95 John Seitz Memorandum, PTE for Grain Handling Facilities

• An upper bound which would never be expected to be exceededabsent extraordinary circumstances 9/5/95 Seitz Memorandum, PTE for Emergency Generators

• U.S. EPA agrees that it is inappropriate to model emissions fromwaste stream scenarios that are conceivable but unrealistic William MacDowell, Chief Air Enforcement, Region V EPA to client 4/10/2003

Annual Assumptions

• Applicability thresholds for NSR, MACT, and Title Vare all “Annual” values, tons per year. The operational limitations should reflect

° while operated as intended to be operated

° for a one year period, not for an hour

° under reasonable conditions

Why Is It Important toQuantify Emissions Accurately

• Estimates Too High – NSR, MACT, Title V

• Estimates Too Low – Future Enforcement USEPA, U.S. Court S. D. Ohio – Civil Penalties, Legal

Fees, SEPs and Costs exceed $5 Million

Illinois EPA, LaSalle County Circuit Court – Penaltydemand of $1.5 Million

How To Quantify Emissions

• Modeling

• Measurement and Testing

• Emissions Factors

• My Personal Opinion Modeling is inaccurate

Measurement and Testing are inaccurate

Emissions Factors are inaccurate

Modeling• Because every model contains simplifications, predictions derived

from the model can never be completely accurate and the model cannever correspond exactly to reality. Additionally, “validated models”(e.g., those that have been shown to correspond to field data), donot necessarily generate accurate predictions of reality for multipleapplications. Thus, some researchers assert that no model is evertruly “validated,” but can only be invalidated for a specific application. Draft Guidance on the Development, Evaluation, and Application of Regulatory Environmental

Models, The Council for Regulatory Environmental Modeling, Office of Science Policy, Office ofResearch and Development, EPA. November 2003. See Also, Review of Agency Draft Guidanceon the Development, Evaluation, and Application of Regulatory Environmental Models andModels Knowledge Base by the Regulatory Environmental Modeling Guidance Review Panel ofthe EPA Science Advisory Board, August 22, 2006.

Model Problems• TNRCC (now TCEQ) evaluated three wastewater treatment plant

emissions estimation models, including WATER8, and concluded,“All three of these programs generally tend to overestimateemissions.” (TCEQ, Standard Exemption Protectiveness Technical Review, Record

# 44372 by Sashi Pinheiro)

• USEPA is using WATER9 for batch operations. The primary authorsays WATER9 cannot be used for batch operations withoutsignificant modification. When appropriately modified, WATER9emissions estimates can be less than 10% of the unmodified values.

• During deposition, the primary author of WATER9 admitted it hadnever been validated for batch operations. When validated forcontinuous operations, none of the validation runs were within 100%of expected values.

Emissions Testing• A California facility relied on manufacturer's data on low

VOC glues to calculate emissions. SCAQMD demanded aMethod 24 test of the VOC content. After a 2 year disputeand expensive research program:

The estimated uncertainties range from 50 to1400%. Therefore, it is recommended that noNOV be issued for these coating materials.

<5%

Plus or minus 25%5 to 10%

Plus or minus 10%>10%

UncertaintyVOC Content

Method 25• If the owner/operator of a source has used only Method 25 or 25A to determine

the applicability of NSR or Title V without appropriate modifications or use of anadditional approved method to determine the “as VOC” mass emissions, then theVOC emissions may be substantially underestimated and the owner/operator maynot be in compliance with those programs.

(12/30/2003 letter from Stephen Page, Director OAQPS to Mary Gade)

• It is clear from Table 3 that in some cases the total speciated emissions (combinedMethods 5 and 18) matched poorly with the total VOC measurement (Method 25A)as carbon or with the ethanol response factor.

Daniel Brady and Gregory C. Pratt, Minnesota Pollution Control Agency, St. Paul, MN,Volatile Organic Compound Emissions from Dry Mill Fuel Ethanol Production, Volume57 September 2007, Journal of the Air & Waste Management Association pg.1091

Method 18 Problems

• Method 18 measurement of speciated VOHAP requires >1ppm level. To demonstrate >1 ppm level at the RTO outletfor 95% DRE, the inlet concentration of each VOHAP mustbe >20 ppm.

• Presence of moisture in the sample also affects theaccurate measurement of VOHAP.

• Significant amounts of non-VOHAP organic compounds inthe RTO fume can interfere with the accuratedetermination of VOHAP using Method 18.

Method 18 v. Method 25

• When the applicable MACT standard specifies Method 18 forquantifying HAP, we will use Method 25 or 25A for compliancepurposes Personal Communication with Minnesota Pollution Control Agency

• “When the provisions of [the MACT Standards] specify that Method18, 40 CFR part 60, appendix A shall be used, Method 18 or Method25A, 40 CFR part 60, appendix A may be used for the purposes ofthis subpart.” Ohio EPA Title V permit for Facility ID: 06-84-02-0001, Chevron Phillips

Management Agency, and Ohio EPA Title V permit for Facility ID: 04-48-02-0007, BP Products North America Inc

Emissions Factors

• Using [AP-42 emissions factors ] for precise calculations ata specific facility may result in a misrepresentation ofactual emissions... As stated in the AP-42 introduction,“Use of these factors as source-specific permit limitsand/or as emission regulation compliance determinationsis not recommended by EPA.” MACTEC Federal Programs, Inc., Contract No. 68-E-01-003 / 4-

03 5-1 805703S607.003 5.0 Using Emissions Factors forPurposes of Other than Emissions Inventories, Final Draft,August 19, 2004

Evidence of Your Emissions

• If emissions quantification is inaccurate, how can Agencyestablish your emissions for enforcement

• Any document you submit to Agency describing emissionsis presumed accurate

• Otherwise, Agency must usually present expert testimonyon emissions Expert testimony must meet certain judicial standards for

scientific accuracy If you submit emissions reports showing violations, you give

away defense of testing/modeling not being accurate.

Judicial Standards forScientific Evidence

• Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579(1993); Frye v. United States, 293 F. 1013 (D.C. 1923) Whether a “theory or technique … can be (and has been)

tested;” Whether it “has been subjected to peer review and publication;” Whether, in respect to a particular technique, there is a high

“known or potential rate of error;” and Whether the theory or technique enjoys “general acceptance”

within the “relevant scientific community.” Scientific validity for one purpose is not necessarily scientific

validity for other, unrelated purposes.

MeasuringCompliance

• The procedures for measuring compliance should be setforth in the permit to avoid future conflicts Method 9 opacity standard, average of 3 minute observations,

replaced by COM, more stringent° If the compliance procedure is not set forth, Agency may use any method

under “credible evidence” rule

• Any “average” compliance test replaced by a continuousmonitor may make compliance more difficult

For Continuous MonitorsWatch the Tails

05101520253035404550556065707580859095100

0 10 20 30 40 50 60 70 80 90

1 Hour

Per

cen

tage

% DestructionEfficiency

Making the Standard MoreStringent by Testing

• It is undisputed that the method of determining compliance with anemission standard can affect the level of performance required bythe standard, even though the standard itself has not changed. Donner Hanna Coke Corp. v. Costle, 464 F. Supp. 1295(D.C. W.D. New York)

[regarding opacity measurements and Method 9]

• Government Agencies may not increase the stringency of acompliance standard by employing different test methodologies thanthose considered when adopting the standard In re CMW Chemical Services, Inc., et. al., No. II-TSCA-PCB-91-0213 (ALJ

Lotis, Mar. 18, 1993)[regarding measurement of PCBs] United States v. Kaiser Steel Corp., No. 82-2623-IH (C.D. Cal) [inappropriate

opacity measurements] Portland Cement Association v. Ruckelshaus, 486 F.2d 375 [particulate

emissions]

What Do You Want to Build and When

• “Redefining the Source” as Part of NSR

• No Permits While Violations are Unresolved

New Source ReviewStrict Controls

• If projects meet NSR thresholds, facility must install maximum degree of reduction of each pollutant …

achievable through application of production processesand available methods. Section 169(3) of the CAA

Does this mean Agency can alter your fundamentalfacility design

Can EPA Redefine Your Source

• In the past, EPA has taken the position that the BACT analysisshould not provide commenters or petitioners an opportunity to“redefine the source” by forcing the applicant to considerconstruction of a facility that is significantly different from the oneproposed. … this position, while reasonable, is not compelled by thestatute. PSD permitting authorities may, through the BACT provisionor other aspects of PSD review, require construction of asignificantly different source or even deny the application altogether. May 21, 1993 Memorandum, EPA Office of General Counsel, Jeffrey B.

Renton, and Gregory B. Foote, “Recent Administrative and Judicial DecisionsRegarding Consideration of Source Separation in Determining Best Availablecontrol Technology Under PSD”

The Current Judicial Position

• The Act is explicit that “clean fuels” is one of the control methodsthat the EPA has to consider. Well, nuclear fuel is clean, and so theimplication, one might think, is that the agency could order PrairieState to redesign its plant as a nuclear plant rather than a coal-firedone, or could order it to explore the possibility of damming theMississippi to generate hydroelectric power, or to replace coal firedboilers with wind turbines. That approach would invite a litigationstrategy that would make seeking a permit for a new power plant aSisyphean labor, for there would always be one more option toconsider. Sierra Club v. EPA, 2006 WL 2846225 (7th Cir., August 2007)

Future Uncertainty

• What must give us pause, however, is thescantiness of the Environmental Appeals Board'sdiscussion of the difference between, on the onehand, adopting a control technology, and, on theother hand, redesigning the proposed plant, in thespecific setting of this case. Sierra Club

What is Redefining the Source

• the Board did not [grant the permit ] because it thinks thatburning low-sulfur coal would require the redesign ofPrairie State's plant (it would not), but because receivingcoal from a distant mine would require Prairie State toreconfigure the plant as one that is not colocated with amine, and this reconfiguration would constitute a redesign.. . .So the Board's ruling on the BACT issue must beupheld” Sierra Club

Redefining the Source• Sierra Club v. EPA, 2007 WL 2406857 (Aug. 24, 2007)

low-sulfur coal for a minemouth power plant located at high-sulfur mine

• Pennsauken County, New Jersey Recovery Facility, 2 E.A.D. 667 (1998) using different fuel mixture at existing facilities rather than building new facility

• Old Dominion Electric Coop., 3 E.A.D. 779 (1992) burning natural gas instead of coal

• Hawaiian Commercial & Sugar Co., 4 E.A.D. 95 (1992) using a combined cycle facility with low sulfur distillate instead of circulating fluidized bed boiler

• Hillman Power Co., 10 E.A.D. 673 (2002) not increasing tire-derived fuel use when that increase is reason for permit application

• Sierra Club v. Environmental and Public Protection Cabinet, 2006 WL 2239491 (Kentucky) (April 11,2006) integrated gasification combined cycle instead of pulverizing coal

• East Kentucky Power Coop. (Aug. 30, 2007) integrated gasification combined cycle instead of pulverizing coal http://www.epa.gov/region07/programs/artd/air/title5/petitiondb/petitions/east_kentucky_spurlock_response2006.pdf

Not - Redefining the Source

• Hibbing Taconite Co., 2 E.A.D. 838 (1989) burning natural gas if facility will continue making same product

• Knauf Fiber Glass, 8 E.A.D. 121 (1999) process modifications to lower emissions that similar facilities

had accomplished

• Sierra Club v. Environmental and Public ProtectionCabinet, 2006 WL 2239491 (Kentucky) (April 11, 2006) circulating fluidized bed boiler

What Does This Mean For You

• No Clear Guidance

• Opens the Door to Process Changes

• Most Likely to Occur with Public Opposition

When Did YouWant to Build

• Significant state budget deficits and hiring freezesincrease time to get a construction permit

• Formal and informal prohibitions on issuing apermit where violations are identified

An NOV StopsPermit Issuance

• We hold that the DEC’s issuance of these NOVs andcommencement of the suit is a sufficient demonstration tothe Administrator of non-compliance [to justify objecting topermit issuance] New York Public Interest Research Group, Inc. v. Johnson, 427

F.3d 172 (CA 2, 2005)

• Many States Have Informal “Permit Hold” on NOV

Summary

• Work Through Permit Issuance Carefully

• Define Compliance and Testing Clearly

• For Problems, Appeal the Permit or Accept theConsequences

• Plan on Delays