EPA Objection to KY Air Permit Signals PM2.5 Policy Change

On August 12, 2009, EPA created a stir in the regulated community when it issued an Order signaling a significant shift in how the agency desires to regulate PM2.5 emissions.  The Order addresses remaining issues identified in petitions filed in 2006 and 2008 by environmental groups requesting that EPA object to Title V permits issued by the Kentucky Division for Air Quality (KDAQ) to Louisville Gas and Electric Company (LG&E) for a new 750 megawatt supercritical pulverized coal (SPC) boiler (and other associated modifications) at the Trimble County Generating Station located in Bedford (Trimble County), Kentucky.  The Order contains responses to thirteen distinct items ranging in scope from failure to address greenhouse gases in the permit to the inadequacy of the public participation procedures.  Of the issues raised by the Petitioners, EPA only granted the Petition and objected the permit on two issues:  1) the adequacy of BACT for the auxiliary boiler and emergency diesel generator and 2) the failure of the permit to adequately consider particulate matter with a diameter less than 2.5 micrometers (PM2.5).  It is the latter issue that has far-reaching implications.
Petitioners had argued that: 1) LG&E may not meet its obligations for PM2.5 under the Prevention of Significant Deterioration (PSD) Program by using PM10 as a surrogate, 2) the Trimble County permit cannot be lawfully issued without quantification of PM2.5 emissions, 3) the permit failed to contain an air quality analysis for PM2.5, and 4) the permit failed to contain a BACT determination for PM2.5.  EPA's response in the Order is limited to a discussion of the use of PM10 as a surrogate for PM2.5 and does not address any of the other aspects to the PM2.5 issue.  EPA states that case law on the topic of surrogates suggests that "any person attempting to show that PM10 is a reasonable surrogate for PM2 5 would need to address the differences between PM10 and PM2.5" and identifies an example two step approach for conducting an evaluation of these differences (the cited case law is, however, based on litigation of regulations derived from other sections of the CAA and not the CAA section addressing PSD).
First, the permittee or permit authority should establish a strong statistical relationship between PM10 and PM2.5 emissions (both on a controlled and uncontrolled basis) from the proposed unit giving reasonable consideration to the likelihood that the PM2.5:PM10 ratio may vary over the anticipated range of operating conditions for the process and control equipment.  Second, the permittee or permit authority should demonstrate that the degree of control of PM2.5 for the control technology selected as BACT for PM10 would offer an equivalent control effectiveness to the technology that would be selected if a separate PM2.5 BACT analysis were conducted.  After presenting these options for demonstrating the adequacy of PM10 as a surrogate for PM2.5, EPA states that the two identified steps "are not intended to be the exclusive list of possible demonstrations that a source or permitting authority would make to show that PM10 is a reasonable surrogate for PM2.5," and goes on to caution permitting authorities to consider the limitations of the PM10 surrogate policy on a case-by-case basis considering the case law and the information available in the permit record.  The Order fails to clarify how PM10 surrogacy should be addressed with respect to PSD air quality modeling analyses, leaving many questions open about how this demonstration would be completed, or in the alternative, how a PM2.5 modeling analysis would be conducted.  At present, EPA has not promulgated final PSD Increments for PM2.5 nor is there consensus about how to address direct versus condensable PM2.5 emissions and secondary atmospheric reactions that lead to PM2.5 formation in modeling analyses.
Although the scope of this Title V Order is limited to a single project in Kentucky and a Title V Order is not the typical legal avenue for issuing NSR implementation guidance, EPA Region 4 issued guidance to State air agencies on September 1st encouraging them to review the Order and to ensure that the use of the PM10 surrogate policy is explicitly justified by the applicant or by the permitting authority in the Statement of Basis Report for PSD projects triggering review for PM10/PM2.5.  A conference call between EPA and all 50 state agencies was also held on September 8th during which EPA expressed its opinion that the new procedure outlined in the Trimble Order should be followed.  Even more troubling is the fact that this policy is being applied retrospectively to any pending PSD permit action, even if applications had already been submitted prior to the release of the Order.  Given the current lack of quality PM2.5 emissions data and a final unbiased reference test method for condensable PM, conducting a scientific evaluation of the PM2.5 to PM10 ratio for certain emission units under a range of operating conditions would be very difficult making the implementation of EPA's guidance in the Trimble Order unworkable.  In these circumstances, facilities may have no choice but to embark of full PSD review of PM2.5 emissions including a BACT analysis and potentially even a PM2.5 air quality analysis.