10 Strategies for Obtaining a Flexible Permit

In today's competitive environment, seeking out and leveraging available advantages may mean the difference between a thriving manufacturing complex and a shuttered, abandoned industrial property. Applied in an air permitting context, a flexibly constructed permit can offer an important advantage for your operations over those of your competitors. It may allow your facility to undertake process and product changes or introduce new technology, agilely responding to market trends, while your competition remains bogged down under one permitting or regulatory hurdle after another.

So how does a facility obtain a flexible permit? The following 10 strategies are gleaned from the authors' nearly 50 years of combined experience supporting hundreds of facilities in obtaining air permits that provide strategic advantage and operational flexibility.

  1. LOCATION, LOCATION, LOCATION. This oft-repeated mantra in the real-estate business applies equally in an air permitting context. While air permitting considerations in siting a project or facility often take a back seat to transportation, energy, supply chain and tax considerations, and of course political pressures, they should not be overlooked. A state air permitting agency's permitting approach can be the difference in a permit application process taking two years versus four months, depending upon the rigor of the state's air rules and the availability and experience of permit staff reviewing and processing the application. Furthermore, the complexity of the local air rules can significantly impact the associated permitting costs by up to hundreds of thousands of dollars in studies, consulting fees, and expenses.
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    Other location issues (outside of agency-related factors) can also weigh heavily on the permitting flexibility of a proposed project.

    • Constructing and operating in an area designated as a nonattainment area, or formerly designated as a nonattainment area (and now identified as a "maintenance" area), often means having to consider additional State Implementation Plan (SIP) regulatory obligations, including Reasonably Available Control Technology (RACT).
    •  With respect to Prevention of Significant Deterioration (PSD) regulations, major sources or major modifications to major sources in the few remaining states and permitting jurisdictions that have delegated PSD programs (as seen in Figure 1) will trigger more prominent participation by U.S. EPA in the permitting process, including consideration of the Endangered Species Act (ESA) and National Historic Preservation Act (NHPA) obligations.
    • Similarly, for major sources or major modifications to major sources near Class I areas (those within approximately 300 kilometers of the source), a more challenging air quality analysis may be required as a component of the application process. (Note that Class I areas can be federally designated [like those shown in Figure 2], or established by states or tribes.)
    • An increasingly important factor in the permitting process applies to sources or projects locating in or near environmentally overburdened, underserved, and economically distressed communities (environmental justice [EJ] areas). Such projects may be subject to additional technical analysis and public outreach as part of the permitting process.EQ Summer 2015 - 10 Strategies Fig. 1 EQ Summer 2015 - 10 Strategies Fig. 2
  3. AVOID PSD. Construction permits issued by state agencies can provide far more operational flexibility than federal PSD or nonattainment New Source Review (NA NSR) permits. For instance, a state may offer faster permitting timeframes and greater flexibility for permits that limit emissions below the PSD major source threshold before and after a project. These non-PSD, minor NSR permitting pathways can appeal to applicants in terms of permit application complexity (avoidance of Best Available Control Technology [BACT] and dispersion modeling requirements), permit issuance timing, timing of proposed construction, and the complexity of the permit conditions themselves. Some states, such as North Dakota, Wisconsin, and Ohio, can cite numerous examples of allowing permit applicants to initiate construction prior to issuance of a state construction permit for these non-PSD projects. In a PSD/NSR context, U.S. EPA considers the concept of construction before permitting to be an anathema.
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    Faced with a construction project, the shrewd environmental manager will scour applicable state and local rules for the permit exemption, permit by rule (PBR), registration permit, general permit, construction waiver, or combination thereof that offers advantages in permit timing.

    One cautionary note-avoiding PSD through the use of more complex procedures such as emissions netting, or the use of 2002-era New Source Review (NSR) reform techniques such as the demand growth exclusion, can add significant detail and documentation to the issued construction permit.

  5. AVOID OTHER REGULATORY PROGRAMS. Following the logic that a source can enhance its operational flexibility by being subject to fewer regulatory programs (NSPS/NESHAP, state standards of performance), prospective permittees must judge which offers greater flexibility-avoiding the rule requirements themselves, or avoiding the threshold that triggers those requirements. As an example, is it better to stay under 100 tons per year (tpy) of VOCs to avoid the Title V program, or avoid a 100 tpy limitation and thereby enable greater production under the permit? And, is it easier to operate and comply as a major source of hazardous air pollutants (HAPs) and be subject an attendant NESHAP provision, or to operate and comply as a synthetic minor source of HAPs and be subject to compliance obligations that demonstrate that minor source status is maintained? The answer will depend on the situation. While one would expect fewer regulations to lead to more flexibility, sometimes "the cure is worse than the illness."
  7. AVOID PERMIT APPLICATION TIE-BACKS. As possible, seek to avoid permit language that ties a built facility's compliance status to its congruence with the facility design represented in the application. Such language invariably limits design flexibility. Some permitting authorities include this language generically in permits, sometimes as a standard condition, while others include no such language. If a permit condition that requires construction and/or operation in accordance with the permit application shows up in a draft permit, it may be worth the effort to object to that wording if project plans are "in flux."
  9. PROJECT AND EQUIPMENT DESCRIPTIONS - IS LESS MORE?  There are two schools of thought regarding the inclusion of project/equipment description detail. Less detail arguably provides greater flexibility in general, because changes can often be justified if the underlying representations remain valid. However, more descriptive operational scenarios may offer support for flexible "pre-approved changes." Permit language that ties the definition of a physical or operational change (construction permitting applicability trigger language) to a short set of operational conditions can help the facility avoid triggering permitting requirements as long as operational conditions continue to be met.
  11. GRANULARITY OF REGULATORY APPLICABILITY. On this topic, there are again two schools of thought. To illustrate, consider the following example: One permit says "comply with Boiler MACT in 40 CFR 63 Subpart DDDDD." Another permit lists all of the applicable monitoring, recordkeeping, fuel testing, source testing, and reporting requirements in Subpart DDDDD, down to the elective use of a bag leak detector versus a continuous opacity monitoring system (COMS) in 40 CFR 63.7525(c) for compliance with opacity requirements. Which is the better approach? The answer may lie in the sophistication (or lack thereof) of the company's compliance management systems.
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    If a company's environmental resources are thin, and it relies on the agency to specify its applicable requirements, it may favor the latter. In this way it can more easily identify applicable requirements, and as importantly, the non-applicable requirements. On the other hand, if the facility wishes to have flexibility in its compliance demonstration methods, operating scenarios, or even fuels, and if it has the environmental resources to ensure compliance in the aftermath of changes in these areas, it may prefer the broad-brush approach. Regardless of the way the permit identifies applicable requirements, the source should have clarity regarding applicable provisions for a particular regulation in its permit (and the basis for determination of non-applicable provisions in supporting documentation).

  13. "SUPERPAINT" VS FORMULA CONCEPT. Surface coaters frequently desire the flexibility to make paint or solvent changes on the fly, and so have developed the "Superpaint" concept. This approach allows the permittee to spray any paint as long as in-paint pollutant concentrations are less than the corresponding Superpaint concentration (noting that the sum of the individual constituents is often greater than 100%). However, while this creates the flexibility to allow the use of multiple paints, it can also reduce flexibility in that allowable throughput can be sacrificed, as necessary when applying Superpaint composition characteristics to a fixed tpy limit and permitting threshold. Preferable to the Superpaint approach is a compliance demonstration methodology that uses a formula or equation, along with actual paint or solvent characteristics and throughputs to estimate actual emissions in comparison to pound per hour (16/hr) or tpy limits. This allows for a mix of coatings and throughputs with higher throughputs of lower polluting coatings, and/or lower throughputs of higher polluting coatings. Rather than limiting throughput or paint pollutant content individually, the formula concept imposes only the use of a given formula applied to the range of raw materials used, and 16/hr and/or tpy limits.

    The formula concept is not limited to surface coaters, but can be applied to any manufacturer that processes a range of raw materials, each with its own raw material-specific emissions signature (e.g., batch chemical manufacturers).

  15. "GRANULATED" FREQUENCY RELIEF. Is your ability to operate flexibly limited by the frequency of your testing, monitoring, and recordkeeping? Some regulators are sympathetic to operational burdens imposed by permits and may allow a reduction in the frequency of such testing, monitoring, and recordkeeping, if test results routinely show impacts well below allowable levels. For instance, daily opacity checks may be reduced to weekly checks, after a period of successive low or zero opacity readings (and weekly reduced to monthly, to quarterly, etc.). If an agency balks at the concept, point them to NESHAP regulations that offer such graduated compliance frequency. An example of graduated opacity testing can be found in 40 CFR Part 63 Subpart LLL (the portland cement NESHAP).
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  17. PERMIT LIMITS AND AVERAGING PERIODS. In some instances, the format and averaging period of an emission limit is tougher to negotiate in a permit than the numeric limit itself. PSD permits are a good example: A BACT limit for a point source is almost always a short-term limit; likewise limits derived from an air quality analysis will often point to the underlying National Ambient Air Quality Standard (NAAQS) averaging period. Thus, making sure the limits are achievable is the primary consideration.

    Startup, shutdown, and malfunction (SSM) events should be scrutinized, particularly when pollution control equipment is part of the facility design. Many agencies will consider and include an alternative SSM emissions limit in a permit to address known and anticipated events. In fact, the plywood and composite wood products NESHAP (40 CFR Part 63 Subpart DDDD) applies this concept with prescribed allowances for control device bakeouts, washouts, media replacement, and replacement of corroded parts. Facility-specific allowances in a construction permit will be more likely to provide operational flexibility. Be aware that EPA has announced its final SIP call rulemaking to 36 states/ permitting agencies that currently have "blanket" allowances for excess emissions during SSM events, so expect increased scrutiny of these requests in the permitting process.

    It can be difficult to avoid a short-term emission limit even in a non-PSD permit. In the case of particulate matter (PM), for example, many SIPs have broad process weight rate rules that dictate a short-term (hourly) emission limit for PM. "The devil is in the details" regarding the associated compliance technique and determining the appropriate method to demonstrate compliance with an EQ Summer 2015 - 10 Strategies Quote 1hourly emission limit. Other times, the limiting averaging period for a pollutant may be the annual limit restricting major source or major modification applicability. In these cases, EPA has published numerous guidance documents (including a foundational June 13, 1989 document, Guidance on Limiting Potential to Emit in New Source Permitting) that dictate the form and format of the appropriate emission limit, stating, "for limitations to be enforceable as a practical matter, the time over which they extend should be as short as possible and generally not exceed one month."1 An hourly limit may not be at all appropriate or necessary in these instances.

    In the end, every emission limit (and operational limitation) in the construction permit should have a clear and concise method for compliance.

  19. LASTLY, A FEW "WHAT IFS." Often buried in the standard conditions of a permit is the length of the construction permit authorization. Usually, most agencies allow a year for a project to commence construction, and then allow the construction permit to remain active so long as a continuous period of construction is maintained (PSD projects follow their own specific rules on this topic). What if construction is delayed? After all the hard work of getting the construction permit approved, don't let a delay in construction domino into more permitting-related delays. At the least, be aware of the construction start deadlines designated in the permit and publicize these dates internally.

    Next, what if a permit writer inserts into a draft construction permit a source testing condition that is not pursuant to an NSPS or a NESHAP? Scrutinize the language of the condition carefully. Strive for as broad of language as possible in the permit, and leave the testing methodology details to the testing protocol that will be required prior to the test.

    Also, what if a constructed unit is not operating for an extended time period? The best way to avoid an unintended consequence from non-operation is to review each condition that applies during operation and ask yourself, "Would facility personnel grumble if they had to comply with this condition when the unit or facility is not operating?" Adding the italicized text to the following example condition can spell relief, allowing staff flexibility to spend time in more productive ways: "The permittee shall record the opacity of Boiler 3 once per day of boiler operation."

    And finally, what if things go awry, as they nearly always do at some point? Nearly every construction permit will require deviation reporting to the agency when an emission limit or a term or condition of the permit is exceeded/violated. In the broadest sense of operating flexibility, fewer terms and conditions in a permit mean fewer opportunities to deviate.

    While not all the above strategies will work for everyone, applying one or more of these strategies can make you a savvier permit negotiator and increase your ability to operate flexibly, with fewer permit-induced constraints.

1 For other pollutants, like GHGs subject to BACT, EPA goes even further, suggesting a long-term (annual) averaging period might be most appropriate.