&EPA
ABOUT
Enforcement Alert
The Enforcement Alert is
published periodically by
EPA's Office of Regulatory
Enforcement. It informs
and educates the public
and regulated community
of important environmental
enforcement issues, recent
trends and significant
enforcement actions.
This information should
help the regulated
community anticipate and
prevent violations of federal
environmental law that
could otherwise lead to
enforcement action.
See Page 4 for useful EPA
Websites and additional
resources.
ric V. Schaeffer, Director
ffice of Regulatory
Enforcement
Editor: Virginia Bueno,
(202) 564-8684.
bueno.virginia@epamail.epa.gov.
Layout & Design: Tracey L. Homer
iorner.tracey@epamail.epa.gov
United States
Environmental Protection
Agency
Office of Enforcement and
Compliance Assurance
(2201A)
EPA 300-N-99-002
January 1999
Enforcement Alert
Office of Regulatory Enforcement
COMPLIANCE WITH PERMITTING
CRITICAL TO CLEAN AIR ACT GOALS
EPA CONCERNED ABOUT NONCOMPLIANCE WITH NEW
SOURCE REVIEW REQUIREMENTS
Under the Clean Air Act (CAA)
companies must obtain a major
new source review ("major NSR")
permit for new construction or major
modifications that substantially
increase a facility's emissions of
certain regulated air pollutants.
Because air pollution control
requirements in these major NSR
permits reduce emissions of nitrogen
oxides (NOx), particulate matter (PM)
and other pollutants by as much as 95
percent, compliance is key to achieving
the nation's air quality goals. One U.S.
Environmental Protection Agency
(EPA) action to enforce these
requirements reduced NOx emissions
at one facility by more than 400 tons
per year, which is equivalent to
removing about 60,000 cars from the
road. NOx and PM exacerbate
asthma, lower resistance to respiratory
disease and harm vegetation, including
crops and forests.
In addition to excess emissions of
air pollutants, violations of NSR
requirements can result in inequities.
First, noncompliance shifts the burden
of pollution control to law-abiding
facilities, which are effectively forced
to compensate for illegal unpermitted
emissions by meeting more stringent
control standards in State
Implementation Plans. Moreover,
because NOx and other criteria
pollutants can be transported long
http://www. epa.gov/oeca/ore/enfalert
distances, violations in one state can
impact air quality in another state.
Finally, as the State of Iowa has pointed
out in a recent letter to EPA, lax
implementation in some states can make
it more difficult for others to insist that
permit standards be met.
Evidence suggests that violations of
the major NSR requirements are
widespread. Thus, EPA has made
enforcement of the CAA's New Source
Review requirements a priority for the
coming year. EPA encourages
regulated industries to take affirmative
steps to improve compliance by
meeting their obligation to obtain
permits and reduce air emissions.
This issue of 'Enforcement Alert':
• Summarizes the New Source
Review requirements
• Presents evidence that
noncompliance is widespread
• Identifies common types of
violations to be avoided
What is New Source Review?
In areas not meeting the national
ambient air quality standards (NAAQS)
and in the Ozone Transport Region,
NSR requirements are implemented
through the "nonattainment" NSR
program. In areas either meeting the
NAAQS (attainment areas) or for which
there is insufficient information to
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Enforcement Alert
From Page 1
determine whether they meet the
NAAQS (unclassifiable areas), the
prevention of significant
deterioration (PSD) program applies.
Both programs require
preconstruction review and permitting
of new or modified existing major
stationary sources of certain regulated
air pollutants. A new "greenfield"
source in a nonattainment area is
subject to major NSR if its potential
to emit exceeds 100 tons per year
(tpy); the threshold can be as low as
10 tpy for some pollutants in extreme
ozone nonattainment areas. In
attainment areas, the major source
threshold is 250 tpy, except for 28
identified source categories, which
have a threshold of 100 tpy.
In addition, an existing
major source that makes a
modification which increases
emissions above significance
levels (e.g., 15 tpy for PM10)
triggers NSR review . In other
words, if an existing facility
changes or expands its
operations in a manner that
increases its emissions of air
pollution above certain levels,
it must undergo NSR. As the
D.C. Circuit stated, "[t]he
statutory scheme intends to
'grandfather' existing industries; but
the provisions concerning
modifications indicate that this is not
to constitute a perpetual immunity
from all standards under the PSD
program." Alabama Power v.
Costle, 636 F.2d 323, 400 (D.C.
Cir. 1979). A source may "net"
out of NSR, however, if it generates
enough emissions decreases to offset
its emissions increases.
What are NSR Requirements?
The NSR permitting process has
several elements. Generally, there is a
control technology component and an
air quality component. In nonattainment
areas, the control technology
requirement is the application of the
lowest achievable emission rate
(LAER), which is the most stringent
emissions rate limitation required in any
State Implementation Plan (SIP) or
otherwise achievable in practice.
In addition, a new major source or
major modification must offset its
emissions increases, generally at a ratio
of 1:1; for certain ozone nonattainment
areas, however, the ratio can reach
1.5:1. There are some additional
nonattainment NSR requirements
related to alternative site analysis and
company compliance.
The installation and operation of LAER and BACT
can achieve significant emissions reductions.
LAER can achieve emission reductions in excess of:
VOC - 95% SO2 - 90-95%
PM - 99% NOx - 85-90%
BACT controls can achieve emissions reductions in
excess of:
VOCs - 85-95%
PM - 99%
SO2 - 90-95%
NO -85%
In attainment and unclassifiable
areas, the control technology
requirement is the application of best
available control technology (BACT),
which is an emissions limitation based
on the maximum degree of emissions
reduction achievable considering
economic, environmental and energy
factors. In addition, the PSD review
includes an air quality impact analysis
to determine whether the source's
emissions will violate the NAAQS or
any air quality increments. Moreover,
in some instances, a consultation must
occur regarding the impact of
emissions on national parks and other
pristine areas.
What is the Rate of Compliance?
The relatively low numbers of NSR
permits issued per year raises serious
NSR compliance concerns. For
instance, after the 1990 CAA
Amendments tightened the definition
for "major source," EPA anticipated
that approximately 900 NSR permit
applications would be filed per year.
Despite an economy that has been
expanding at an annual rate of about
4.2 percent, applications for major
NSR permits (both new sources and
modifications) have remained
relatively steady at about 200 per year.
When EPA looks closely at
an industry sector, usually it
discovers a high rate of
noncompliance. For example, in
its Wood Products Initiative,
EPA found NSR violations at
approximately 70-80 percent of
the facilities investigated.
Moreover, EPA continues to find
high rates of noncompliance
despite several successful
enforcement actions.
In an EPA Region 3 Pulp &
Paper Initiative, initial results
show a potential 80 percent rate
of noncompliance. In addition, other
databases indicate a substantial
increase in the capacity at existing
facilities, and a series of modifications
that may have triggered NSR permit
and pollution control requirements.
continued on Page 3
JANUARY 1999
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Enforcement Alert
From Page 2
What Types of Violations Has EPA
Found?
Violations may occur at the front
and back of the NSR permitting
process. "Front-end" violations lead
to avoidance of NSR review altogether.
Some common examples of front-end
violations are:
• Improper use of
exemptions: The EPA has seen
sources inappropriately apply certain
exemptions from the NSR regulations.
For example, the "routine
maintenance, repair and replacement"
exemption was meant to cover
frequent, traditional and comparatively
inexpensive repairs to maintain existing
equipment. Some sources, however,
have tried to extend it to activities that
are infrequently performed in the
industry, alter the design or function
of the equipment, or involve a
significant capital cost. In other
instances, sources have failed to
recognize that the alternative fuels
exemption, which allows a source to
switch fuels without triggering NSR
under certain circumstances, requires
that the entire facility, not just the
combustion unit, have been capable of
accommodating the alternative fuel
since approximately 1975. Moreover,
the alternative fuel should have been
contemplated by the facility as a
potential fuel during that time period.
• Failure to recognize a
change as a "modification": The
EPA has discovered that some sources
failed to treat certain activities as
modifications under the NSR
regulations (e.g., removal of flue gas
recirculation at utilities; catalyst
changes that significantly increase
capacity).
• Improper emission
estimates: The EPA has uncovered
permit applications that failed to list all
pollutants emitted at the facility, or
failed to correctly total emissions from
all emission points at the facility (e.g.,
several wood products facilities failed
to report VOC emissions). In other
cases, sources failed to include
"debottlenecked" emissions in their
calculations (i.e., the modification at
Unit A removed a bottleneck at Unit
B). The emissions at all
debottlenecked units should be
considered when determining whether
the emissions from a modification are
significant.
The EPA has also come across
sources that relied on AP-42 factors
to estimate emissions because they
lacked source-specific emissions
information. As EPA cautions,
however, AP-42 factors should not be
used for source-specific permitting
decisions because they can
underestimate emissions. Thus, the
source assumes the risk that its
emissions estimate may be inaccurate.
Some facilities also failed to apply
the "actual-to-potential" test when
measuring the emissions increase
from a modification. Under EPA
regulations, post-change actual
emissions for units that have "not
begun normal operations ... equal the
potential to emit (PTE) of the unit on
that date." (See, e.g., 40 CFR
52.21(b)(21)(iv)). Some sources have
taken the position that a modified unit
has "begun normal operations" and
thus its post-change emissions should
not be based on its potential to emit.
It is EPA's position, however, that
changes to a unit at a major stationary
source that are non-routine or not
subject to one of the other major
source NSR exemptions are deemed
to be of such significance that "normal
Front-End Violations
lead to avoidance of NSR
review altogether.
Back-End Violations
and/or permitting issues
usually involve sources that
go through the NSR process
but provide inaccurate or
insufficient information.
JANUARY 1999
operations" of the modified unit have
not begun and, therefore, post-change
emissions should equal the modified
unit's potential to emit.
• Improper netting: EPA has
discovered netting calculations that
involved emissions decreases already
relied on in an earlier netting exercise;
double counting of emissions decreases
is prohibited. In addition, EPA has seen
netting calculations that used emissions
decreases which were not enforceable
(e.g., permitted), a requirement of the
NSR regulations.
"Back-end" violations and/or
permitting issues usually involve
sources that go through the NSR
process, but provide inaccurate or
insufficient information. Some back-
end violations include applications
that:
• Provided an incorrect LAER
analysis (e.g., failure to consider
technology transfer).
• Failed to obtain sufficient
offsets due to a low estimate of the
emissions increase, perhaps due to
improper reliance on AP-42 factors.
• Provided an inaccurate
BACT analysis. EPA has discovered
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Enforcement Alert
From Page 3
that when performing the economic
feasability portion of the BACT
analysis, sources sometimes use
inflated capital and operating and
maintenance costs, include improper
interest rates, or underestimate the life-
expectancy of the control equipment,
all of which increase the perceived
cost of the controls. Also, some
sources seem to be under the
impression that there are bright line
costs above which BACT is
considered too expensive; this is not
the case. If sources in the same
source category have adopted a control
technology as BACT, there is a general
presumption that the cost is acceptable
unless the source can demonstrate
unique circumstances. Finally, EPA
has seen BACT analyses that failed
to consider all available control
technology alternatives.
What Emissions Reductions
Does EPA Get From NSR
Enforcement?
Correcting NSR violations can
lead to significant emissions
reductions. For example, in the Wood
Products Initiative, emission reductions
were as high as 500 tons of VOCs for
a single facility. Estimated total
emissions reductions from the entire
industry could exceed 100,000 tons of
VOCs.
Other NSR cases have led to
emissions reductions in the thousands
of tons per year. For example:
• California Almond Growers
Exchange (Region 9): Approximately 5750
tpy of CO (which, when uncontrolled,
contributed to NAAQS exceedances)
• Kelco (Region 9): Approximately
1,700 tpy of VOCs in an ozone
nonattainment area
• Pro-Tec (Region 5 - pending): About
400 tpy of NOx
• Region 10 Idaho Panhandle Wo o d
Products Initiative: About 1,400 tpy of PM
and 240 tpy of VOCs
• Arco/Snyder Riverton Dome (Region
8): Approximately 160 tpy of NOx
What's Next?
Given the significance of the excess
emissions that result from NSR non-
compliance, EPA has been increasing
its emphasis on enforcement of NSR
requirements. In particular, EPA has
been looking at industry efforts to ex-
pand capacity and analyzing whether
such activities triggered NSR.
Finally, in a recent NSR
enforcement guidance, EPA clarified
that it will generally be seeking
significant emissions reductions (e.g.,
equivalent to BACT or LAER) from
companies that improperly bypass the
NSR permit process. This guidance
should not only result in significant
environmental benefit, but also ensure
consistency in the resolution of these
important cases.
For more information, contact
Carol S. Holmes, Air Enforcement
Division, (202) 564-8709.
Useful Resources
EPA's Technical Web site for
Information Transfer and Sharing
Related to Air Pollution Topics:
http://www.epa.gov/ttn/
NSR Policy and Guidance Database:
http://www.epa.gov/region07/
programs/artd/air/nsr/nsrpg.htm
EPA Home Page:
http://www.epa.gov/epahome
Small Business Gateway:
http://www.epa/gov/smallbusiness
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Environmental Protection Agency
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