Texas Natural Resource Conservation Commission Austin Texas Memorandum To: Permit Engineers From: Lawrence Pewitt, P.E., Permits Program Director Date: August 9, 1990, Updated September 27, 1994 Subject: Prevention of Significant Deterioration (PSD) and Nonattainment Review Implications for Relaxation of Permit conditions This is to alert you to some obscure situations in which EPA may require PSD and nonattainment review. See 40 CFR 52.21 (r)(4), 52.21(b)(2)(iii)(e) and (f) in the PSD rules and 40 CFR 51.165 (a)(5)(ii) and 51.165 (a)(1)(v)(C)(5) and (6) in the nonattainment rules. Generally the issue in these rules is if the facility has the capability to be major, there was a "federally enforceable state permit condition" which resulted in the source being minor and then "relaxation of the standard" (e.g., when removed or changed during a state permit/amendment review) results in the source becoming major then the permit unit is reviewed as if it were originally built major. The areas where the rules are focused are raw material and fuel changes and increases in throughputs or operating hours such as adding an additional shift. For example, 1. A company proposes to build a 10 million standard cubic feet per day (MMSCFD) gas sweetening unit which will emit 220 tons per year (TPY) sulfur dioxide (SO2). The TACB issues a state permit limiting them to 220 TPY SO2. One year later the company wants to process a slightly higher throughput, no construction is required and emissions will increase by 35 TPY to 255 TPY SO2. EPA would consider this a relaxation of a permit limit which if it had not been there the company would have had to get a PSD permit to start the process. So a PSD permit is now required as if the plant was being built as a grassroots plant unless the company limits their increase so that the total plant emission rate is less than 250 TPY after the relaxation. 2. Similarly, the same gas sweetening plant which did not have a throughput increase but had a hydrogen sulfide (H2S) concentration increase (an alternative raw material) resulting in the same increase in emissions would be subject to PSD review. 3. The same thing would be true for nonattainment review. If the company built a plant and represented 20 TPY of VOC in a nonattainment county and then came in with no construction and requested an increase of 10 TPY of VOC emissions, this would be considered as all one project. Nonattainment review and offsets for the entire 30 TPY would be required. This assumes the permit was received and issued after the November 15, 1992 deadline for the new ozone nonattainment requirements of the 1990 Federal Clean Air Act Amendments. 4. An existing major source modifies a plant and increases throughput (with or without construction), which results in an increase of 35 TPY. The TACB issues a state permit or amendment which limits the emissions. Then later the company discovers that they can operate at a slightly higher throughput with no construction and requests a permit amendment to increase emissions another 6 TPY. This will require a PSD permit as a major modification since the total increase would have been 41 TPY if the company had come in for the total allowable at the beginning. This is also the case for nonattainment review in a nonattainment county. 5. If any of these cases required the addition of significant equipment then it would not be an increase solely as a result of a relaxation of a federal permit condition. However, EPA may consider it phased construction and PSD review may be required. We need to proceed very cautiously in these cases. This separate, but related concern arises from construction of related units over a short period of time in separate projects where it may be suspected that a company is trying to circumvent the PSD/nonattainment regulations by keeping each individual project below major. It is difficult to prove circumvention, so it is best to remind permit applicants that phased construction projects have to be evaluated as a single project when determining PSD/nonattainment applicability. Key issues in making these applicability decisions are: 1. Is the only thing that is holding the facility below major a permit condition? In other words is the already permitted equipment capable of emitting at a "major rate" with no physical modifications? 2. Is the proposed change resulting in increased emissions at the previously permitted facility the result of the use of alternate fuel or raw material, increased operating hours, or increased throughput? 3. Does the proposed change not require any significant construction? Changing out a little pipe and a few pumps would not be considered significant construction. 4. After the proposed change will the total permitted facility emissions be increased to above major? If the answers to all of these are yes, then PSD or nonattainment review is probably required for the original and proposed project due to relaxation of a permit condition. There is no official guidance from EPA on a time frame over which the relaxation of a permit condition causes the total increases for all the projects to be added together to determine major status. However, after discussion with Merrit Nicewander and staff at EPA Region 6 on August 1, 1990, we came to the conclusion that clearly we need to be especially alert to any relaxations within two to three years after start of operation of the facilities. But even changes that may occur outside that two to three year boundary may very well be considered a relaxation when looking at all the facts. The final decision on all these situations should be made on a case-by-case basis with your Division Director or myself. cc: Steve Spaw, P.E., Executive Director Bill Campbell, Deputy Executive Director James C. Myers, P.E., Deputy Director, Regulatory Operations Regional Directors