EPA gets ready to regulate greenhouse gas

On September 30, 2009, EPA announced a proposal that is focused on large facilities emitting over 25,000 tons of greenhouse gases a year. These facilities would be required to obtain permits that would demonstrate they are using the best practices and technologies to minimize GHG emissions.

The rule proposes new thresholds for greenhouse gas emissions (GHG) that define when Clean Air Act (CAA) permits under the New Source Review (NSR) and title V operating permits programs would be required for new or existing industrial facilities.  Click here for a copy of EPA’s fact sheet on this latest regulatory proposal.

The NSR will trigger the need for PSD (Prevention of Significant Deterioration) permits for new source or major modification in attainment areas.

Some observers have noted that this EPA step is a strategic move to motivate industries to lobby the Senate for a Climate Change Bill. Many in industry would prefer to be regulated under a new Climate Change Bill than under the Clean Air Act.

Resist the temptation ……don’t do it!

Has this ever  happened to you?

After you tell your VP of production that he cannot install his new equipment because he has to get a pre-construction permit first, he tells you that it is unacceptable and he threatens to call the state senator or the governor. He wants to “bypass” this lengthy permitting process because customers are clamoring for his products. He has orders to fill. He has to make his numbers. 

Situations like this happen a lot more frequently than you think. The production folks somehow get the idea that the sole purpose of the regulatory agency is to assist them in meeting their production quotas. To the contrary, the agency people are there to implement state and federal laws that say you cannot install any new air emission sources without first getting a pre-construction permit. That’s the law of the land.

If your VP calls up the governor’s office and tries to do an end run on the permitting process, two things will likely happen. First, he will get turned down.  The governor’s office will most likely tell your VP to pay an extra fee to get on the “fast permitting track”. Most agencies have that program. He will still have to wait and get his construction permit.

Second, you will have made an enemy in the permit writer once he  finds out that you try to bypass him. Put yourself in the permit writer’s shoes. How would you feel if some one goes over your head to your boss?

The best way to get a permit in a timely manner is to be upfront with the agency. Provide everything the agency needs to process your permit in a timely manner. Try to do it right the first time. Do not play cat-and-mouse game with the permit writer. Be courteous. Be professional. Remember – the permit is simply doing his job – just like you are. He is not your enemy. But if you treat him like one, he will become one. 

On last point. If you hire a consultant to get a permit for you, make sure that the consultant has a good working relationship with the agency and your consultant gets along with the permit writer. You do NOT want an arrogant  consultant representing you before the agency.

When do you need an air permit?

This is a question asked by many people in industry. In almost every state, you are required to obtain a state operating permit if you have an air emission source unlessthat source is specifically exempt by state regulations. An emission source would be any equipment or facility that is capable of emitting air contaminants to the atmosphere.

Different states have different exemptions. For example, in Illinois you are exempt from getting an air permit if your coating operation uses less than 5000 gallons of coating material including thinners (Illinois Title 35, subtitle B, chapter I, section 201.146(g)). If you have a print shop and you use less than 750 gallons of paint a year, you are exempt as well.

In southern California, the Air Quality Management District (AQMD)’s Rule 219 lists all the emission sources that are exempt from getting an air permit. For example, Rule 219(h) exempts printing operations that emit less than 3 lbs of VOC per day or 66 lbs of VOC per calendar month.

By the way, in every state and under the Clean Air Act, you must obtain a construction permit before you are allowed to install any air emission sources.  Sometime they call it a pre-construction permit. If you have purchased a new piece of equipment that is an emission source, you are not allowed to bolt it to the ground or wire it up. You can unwrap it and have it sit on the shop floor while you are waiting for your construction permit to be approved. Many companies have been fined by EPA for installing equipment without a construction permit. The agency may even order you to uninstall the emission source and pay a fine and apply for a construction permit.

This is often a bone of contention between the environmental staff (you) and production staff (them). The production folks may take 3 years to decide on a new piece of equipment. Once they have purchased it, they want to install it and run it right away. This is where you say to them: “No, you can’t do that. We have to apply for a construction permit first and that may take a month or two.”  If they were smart, they would have told you about the new equipment a month earlier before they take delivery of it so that you could start the permitting process.

That would be the ideal situation.

If you need the construction permit in a big hurry, you can pay the agency a fee to get on the “fast track”.

What is your potential to emit?

The term “Potential to Emit” under the Clean Air Act is defined under 40 CFR 70.2 as “the maximum capacity of a stationary source to emit any air pollutant under its physical and operational design”. You use the PTE to calculate your expected air emission when you are applying for a permit.

For example, if you have a piece of equipment that is designed to operate 24 hours a day and 365 days a year, you will have to calculate your air emission based on these maximum of hours. The agency is going to assume you will be running that equipment 24/7 every day of the week.  Now if the equipment requires an hour of down time for maintenance, you can then use 23 hours per day for your PTE.

If you have a paint booth and you need so many hours per day to switch paints and set it up, you can deduct those hours when calculating your PTE. These are operational designs.

If you voluntarily restrict your operating hours in order to apply for a FESOP (federally enforceable state operating permit), you can use your reduced hours to calculate your PTE. In this case, your voluntary restriction on your operating hours is enforceable by EPA (hence federally enforceable). If you exceed those hours, EPA can take enforcement action against you even though you are operating under a state operating permit. So be very careful when you apply for a FESOP. Make sure you can meet your own operational restrictions.

Have you considered FESOP?

If your Potential to Emit (PTE) air emission amount puts you over the threshold for a Title V permit, You should think seriously about getting a FESOP instead.

FESOP stands for Federally Enforceable State Operating Permit. To get a FESOP, you go to your state agency and agree to certain voluntary restrictions on your operation in exchange for opting out of Title V. You basically reduce your PTE level by self-imposing restrictions on your operation. For example, you may tell the state agency that you will only operate two shifts a day and 50 weeks a year. By using this operating scenario to calculate your PTE (instead of the usual 24/7/365 formula for PTE), you may fall below the threshold that would require you to get a federal Title V permit.

Or you may tell the agency that you will only use certain type of solvents or paints that contain much lower levels of VOC in your operation in order to reduce yor PTE to below the Title V threshold.

The state will then issue you a state operating permit with your self-imposed restrictions (hours, usages, products or combination) as conditions. If you violate these conditions, the federal government (EPA) has the right to take enforcement action against you even though what you have is a state operating permit – hence the term “federally enforceable”. The reason is that those restrictions are the underlying reasons why you are able to avoid Title V.

So if you are going to get a FESOP, you want to make sure that you WILL be able to meet your own operating restrictions.

More on the disposal of aerosol spray cans

Many thanks to one of our readers who posted comments about her company’s aerosol spray can puncturing and capturing equipment that has been certified by US EPA and California’s DTSC (Department of Toxic Substances Control). I encourage our readers to visit her website to learn more about her product.

In California, the state legislature’s SB1158 – enacted several years ago - addressed the issue of on-site treatment of aerosol spray cans. The state law re-classified non-empty aerosol cans as universal wastes if they are to be recycled. It allows waste generators to use state certified equipment to puncture spray cans and recover their contents without having to obtain an on-site treatment permit.

The provisions of SB 1158 were codified in the California Health and safety Code HSC 25201.16. Under this code, the users of such equipment must notify their CUPA (Certified Unified Program Agency) in person or in writing prior to ”processing” their non-empty cans. They must also have documented proof that they have trained their employees on how to properly operate such equipment. There are also labeling and storage requirements for the cans and disposal requirements for the recovered contents.

DTSC has produced a fact sheet that addresses all of the regulatory requirements stated above.

Always check with your state agencies. Many states have more stringent requirements.

New development on the air front

Today EPA granted California’s waiver from federal air emission standards for cars and trucks. This waiver means that California can enforce its own tailpipe greenhouse gas emission standards BEFORE the federal emission standards become effective 2012. The same waiver had been denied by the Bush EPA earlier.

This is another example that California and other states can have more stringent environmental standards than the federal standards.

Another development today is the Minnesota Supreme Court’s ruling that Al Franken had won the Senate race. Norm Coleman conceded soon after the ruling came out. What that means is that there will now be 60 Democratic senators and that makes it easier for the Democrats to pass its cap-and-trade law in the Senate.

The House passed its cap-and-trade law (American Clean Energy Security Act) last week.

Greenhouse Gas bill passed!

Breaking News: The House of Representatives passed the Greenhouse Gas Bill tonight by a very close vote of 219 for and 212 against. Now it is the Senate’s turn to enact a similar bill.

Stay tuned.

Cap-and-trade 101

What are greenhouse gases?

 Three forms of naturally occurring greenhouse gases are being affected by industrial activities. These are carbon dioxide, methane and nitrogen oxide. Of these three, carbon dioxide is by far the most prevalent – coming primarily from man-made incineration of fossil fuels. 

 The accompanying chart from EPA shows the changes in greenhouse gas emission since 1990 in absolute terms. The unit MMTCE refers to million of metric tons of carbon equivalent.  

 The idea of regulating carbon dioxide was given a push by the Supreme Court in its 2007 decision (Massachusetts v. EPA) where it affirmed (once again) that EPA has the authority under the Clean Air Act to regulate any pollutant that is found by the agency to be harmful to human health.

 So just what exactly is cap-and-trade?

 First of all, cap-and-trade is not a new concept. It was used in the 80s to control the emission of sulfur dioxide as part of the legislation to reduce acid rain. Cap-and-trade is also being used in California by the South Coast Air Quality Management District to reduce the emission of nitrogen oxides and sulfur dioxide from industries under its Regional Clean Air Incentives Market (RECLAIM) program.

Here is how cap-and-trade works. The regulatory agency places a maximum amount of emission that a facility can emit for a particular pollutant – say carbon dioxide. That’s the cap part. Once this cap is in place, the agency provides an emission allowance to industries that can be applied against the cap. The allowance may be as large as the cap during the first few years of the program. It then decreases gradually over time. This decrease in allowance has the effect of reducing the amount of carbon dioxide that can be emitted each year.

The whole idea of cap-and-trade is to provide a disincentive to industry to continue to emit harmful pollutants such as greenhouse gas (primarily carbon dioxide from coal power plant).

Faced with this decreasing allowance – which is in effect a more restrictive limit on emission over time – the regulated industry has two options to comply with the cap. It can install pollution control equipment to reduce its emission to make up for the decreasing allowance in order to meet the cap. Or it can purchase credit in an open market to make up for any short fall. That’s the trading part of cap-and-trade. Conversely, if a facility comes in below the cap as a result of installing pollution control devices, it may have “surplus allowance” that it can sell in the open market and make money.

That’s the whole idea of cap-and-trade. If you cannot meet the emission limit, you have to go to the open market and purchase emission credits. For those companies that choose to install pollution control equipment, they would not have to pay millions to purchase emission credits. They may even have unused allowances that they can sell in an open market. The underlying intent of the bill is to control emission by creating an incentive to the development and installation of pollution control technology.

There have been a lot of complaints from opponents of the proposed bill that cap-and-trade is a “tax” on industries.

Cap-and-trade is a pollution “tax” in much the same way that regulations that control the disposal of toxic wastes constitute a “tax” because they impose additional costs on industry. Companies that generate hazardous wastes will have to pay more to have them disposed of properly. The incentive there is to either change the manufacturing process to reduce the amount of toxic wastes generated or pay to have the wastes disposed of properly.

Another example of pollution tax is tailpipe emission control from automobiles. The cost of the catalytic converter increases the manufacturing cost of a car and is passed on to the consumers. So are the costs of seat belts and air bags. 

Why should carbon emission control be treated any differently?

A new partnership between industry and Congress?

One of the most striking aspects of the greenhoyse gas bill before the House of Representatives is that it has the support of some of the largest corporations in America such as General Electric, Duke Energy, Dow, Shell, DuPont, ConocoPhillips, BP America and Pepsico.

Twenty three major corporations and 5 environmental groups had formed a coalition known as the U.S. Climate Action Partnership (USCAP) several years ago to provide input in the drafting of the greenhouse gas bill. The corporation that started USCAP is General Electric whose CEO wrote in an op-ed piece in 2005 that environmental “polices that commit to market-based approaches will drive innovation and lead to environmental improvements.”

Membership in USCAP includes the following companies and environmental groups: Alcoa, Boston Scientific,  BP America, Caterpillar, Chrysler, ConocoPhillips, Dow, Duke Energy, DuPont, Environmental Defense Fund,  Exelon,  Ford,  FPL Group, GE,  GM, John Deere, Johnson & Johnson,  Natural Resources Defense Council,  The Nature Conservancy, NRG Energy, PepsiCo, Pew Center on Global Climate Change, PG&E, PNM Resources, RioTinto, Shell, Siemens, World Resources Institute.

Instead of opposing any new laws from Congress, these companies decided to work with major environmental groups to forge a consesus in the drafting of a greenhouse gas bill. In fact, the pending cap-and-trade legislation before the House is based in large part on the recommendations of the USCAP Blueprint for Legislative Action that was issued on January15, 2009.

Corporate America learned its lessions some 20 years ago. When congress proposed regulating a dozen or so hazardous air pollutants (HAPs) back in the 80s, the chemical industry fought back very hard to oppose any changes. The end result was the 1990 Clean Air Act Amendments that mandated much more stringent regulations on 189 HAPs. The program is known as National Emission Standards on Hazardous Air Pollutants (NESHAP) which imposes stringent and costly “maximum achievable control technologies” (MACT) on major industries that emit HAPs.

To prevent history from repeatingitself, industries decided this time around to actively engage in the process to affect a more favorable outcome.