See the latest EHS federal and state regulatory updates due to COVID-19


On August 4, 2020, the U.S. Environmental Protection Agency (EPA) finalized the memorandum Guidance on Plantwide Applicability Limitation Provisions Under the New Source Review Regulations. This memorandum is intended to provide additional guidance and respond to stakeholder questions on the Plantwide Applicability Limit (PAL) provisions found in the federal New Source Review (NSR) regulations.

The PAL mechanism was introduced to allow existing stationary sources to accept site-wide emissions limits for NSR regulated pollutants, thus avoiding major NSR permitting through continuous compliance with the PAL. Over the last decade, stakeholders have raised several implementation questions about PALs which EPA attempts to answer with this new guidance.

Background

The PAL regulations were promulgated as part of the 2002 NSR Reform Rule and became effective in 2003. In February 2019, EPA surveyed regional EPA offices on the use of the PAL provisions and estimated that 70 PAL permits had been issued in 20 states and the District of Columbia across a variety of industries.

Based on stakeholder input received as a part of the EPA outreach associated with the Presidential Memorandum Streamlining Permitting and Reducing Regulatory Burdens for Domestic Manufacturing (January 24, 2017), there was confusion and concern among stakeholders on various aspects of the PAL regulations and underlying permits.

On February 13, 2020, EPA proposed a draft memorandum for public comment on PAL guidance and the memorandum was finalized on August 4, 2020. This memorandum is focused on providing additional guidance, discussing the benefits of PAL permits, and stressing that the stakeholder concerns should not prevent using this frequently overlooked permitting option.

What is a Plantwide Applicability Limit (PAL)?

A PAL is an optional permitting mechanism available to existing major sources under the NSR regulations that allows facilities operational flexibility within the bounds of continuous compliance with a site-wide emission limit for a particular NSR regulated pollutant. Like the NSR regulations, PALs are pollutant-specific in nature (i.e., a facility may accept a PAL for a single NSR regulated pollutant or multiple PALs for multiple NSR regulated pollutants). Without a PAL, each non-exempt project at a major stationary source must be reviewed for applicability of major NSR permitting.

PAL equation

With a PAL, a facility can conduct various projects without the risk of assessing or triggering major NSR permitting as long as facility-wide actual emissions remain below the PAL; regardless of the actual or potential emissions changes from a project of the PAL pollutant. This is the clear advantage of PALs.

In the simplest terms, the PAL level equals a source's site-wide annual baseline actual emissions plus the respective NSR significant emissions rate (there are certain required adjustments upward or downward depending on changes at the facility since the baseline actual emissions period). A facility can establish PALs for multiple pollutants or a single pollutant and can request a PAL at the time of a project as a major NSR permitting avoidance strategy or at any time to achieve flexibility for future projects.

PALs can be used for attainment or nonattainment pollutants and are typically available in state permitting regulations. The PAL level is established in a PAL permit issued by the NSR permitting authority and, under federal NSR regulations, the permit term is 10 years.

To ensure the PAL is practically enforceable, the permit will include monitoring, recordkeeping, and reporting of actual facility-wide emissions of the PAL pollutant(s) in total on a 12-month rolling basis.

Stakeholder Comments Addressed by EPA Finalized Memo

PAL Reopening

The first stakeholder issue addressed by EPA in this memorandum is concern over the reopening provisions. Specifically, the ability to reopen a PAL permit to “ reduce the PAL if the reviewing authority determines that a reduction is necessary to avoid causing or contributing to a NAAQS [National Ambient Air Quality Standard] or PSD [Prevention of Significant Deterioration] increment violation, or to an adverse impact on an air quality-related value, that has been identified for a Federal Class I area by a Federal Land Manager and for which information is available to the general public.” 1

EPA's response to this stakeholder concern stresses that this provision is expected to “rarely be invoked” as “EPA does not believe that a PAL permit reopening would be the selected mechanism to address such issues in most cases.” EPA is not aware of any reviewing authority making use of this reopening provision.

PAL Expiration

If a facility with a PAL decides not to renew the PAL and let it expire, the PAL level is to be allocated among existing emission units at the facility. Stakeholders were concerned about the lack of specific criteria for how the PAL emissions would be allocated.

While the memorandum does not provide specific criteria for distributing the PAL, EPA clarifies that the distribution can range from a single emission limit across all emission units to a combination of emission limits on individual emission units, or groups of emission units that add up to the PAL level. 2

The specific distribution must be proposed by the facility in an application to the reviewing authority and “EPA expects that in most cases the reviewing authority will accept the source's proposed distribution.” EPA notes that one issued PAL permit did expire without being renewed, but no details were provided as to the distribution of the PAL level for that facility.

PAL Renewal

Another area of concern was the ability of the reviewing authority to re-evaluate and potentially lower the PAL level during renewal of the PAL permit. This uncertain area of the PAL permit regulations has historically been cited as disadvantageous to those considering PALs. The PAL regulations require the reviewing authority to “consider lowering” the PAL if, at PAL renewal, baseline actual emissions plus the significant emission rate are lower than 80 percent of the PAL level.

While the memorandum supports the rationale for including this provision in the regulations, EPA also stresses that the facility is required to propose and support a new PAL level in the renewal application and that this “provision does not preclude renewing the PAL at the current level or at a level higher than baseline actuals plus the significant level.”

EPA also states that reviewing authorities should exercise restraint in lowering PALs to avoid penalizing sources for reducing emissions. In addition, the memorandum provides examples from the 2002 rule preamble of circumstances in which a PAL adjustment may not be appropriate on a case-by-case basis, showing the use of differing operating scenarios and market conditions to defend the PAL level.

PAL Termination

Stakeholders also questioned the lack of provisions for terminating PAL permits. EPA upholds previous guidance that PAL termination be handled on a case-by-case basis as the circumstances for each termination request are likely specific to the situation.

PAL Monitoring Requirements

The PAL regulations require monitoring of 12-month rolling total emissions of each PAL pollutant. To address stakeholder concerns, EPA states in the memorandum that continuous emission monitoring systems (CEMS) need not be installed for PAL compliance and are typically used for PAL monitoring only when the CEMS is already installed for compliance with other requirements. EPA also provides additional guidance on emission factor adjustment and validation testing which lack clarity in the regulations.

When monitoring data is missing, the PAL regulations require that maximum allowable emissions be used instead unless the facility's PAL permit provides other missing data procedures. This default regulatory position can be highly detrimental to those operating with a PAL.

The memorandum provides examples from a PAL permit issued by EPA Region 3 to demonstrate types of missing data procedures that can be included in PAL permits. Missing data procedures should be proposed by the facility in a PAL application or renewal application.

Baseline Actual Emissions for Replacement Units

The last stakeholder comment addressed by EPA in the memorandum is the inclusion of replacement units in baseline actual emissions calculations. Under NSR reform, a replacement unit has a specific definition ensuring it is akin in design and operation to the unit being replaced. If a unit meets the replacement unit definition then it is treated as an existing emissions unit in determining NSR applicability (i.e., it has baseline actual emissions that could be included in the PAL).

EPA clarifies in the memorandum that the treatment of replacement units in terms of NSR applicability is also applicable to setting or renewing PALs.

Key Takeaways

Overall, EPA's new guidance provides some long-overdue formal clarification regarding some aspects of PAL permits.

If you might be thinking about a PAL, Trinity has assisted several clients with applying for, renewing, and complying with PALs. Our state Air Quality Permitting courses cover state-specific PAL regulations where applicable.

For assistance with PAL permitting or compliance or consultation on the EPA guidance, please contact the author or call 800.229.6655.

1 EPA 40 CFR 52.21(aa)(8)(ii)(b)(3)
2 EPA 40 CFR 52.21(aa)(10)(iv)