July 01, 2014

Fugitive greenhouse gas emissions and Prevention of Significant Deterioration program applicability

Leslie Cook Wong

Fugitive emissions do not typically present a significant challenge in Prevention of Significant Deterioration (PSD) applicability determinations for a new air emissions source or a modification to an existing air emissions source. However, little in the PSD program has been typical since the 2010 implementation of the PSD and Title V Greenhouse Gas (GHG) Tailoring Rule (the “Tailoring Rule”). 75 Fed. Reg. 106, June 3, 2010. Fugitive emissions are the fraction of emissions that evade a source’s implemented emissions control efforts, and, by definition, they can neither be measured nor controlled. (Fugitive emissions are “those emissions which could not reasonably pass through a stack, chimney, vent or other functionally equivalent opening.” See, 40 C.F.R. §§ 70.2, 70.1, and Memorandum on Interpretation of the Definition of Fugitive Emissions in Parts 70 and 71 from Thomas C. Curran, Director, Information Transfer Program and Integration Division to Judith M. Katz, Director, Air Protection Division, Region III, dated Feb. 10, 1999. Application of a PSD-mandated Best Available Control Technology (BACT) analysis to a form of emissions that, by definition, can be neither measured nor controlled, if not one of the “absurd results” ostensibly avoided by the Tailoring Rule, is certainly a challenge, the response to which strains the definition and implementation of a BACT analysis. While an obscure exemption in the PSD regulations, 40 C.F.R. § 52.21(i)(vii), has prevented this specific absurd result from being implemented, PSD applicability to fugitive GHG emissions is problematic and illustrates the difficulty associated with regulating GHGs under an air program not originally designed to address this class of emissions.

Generally, fugitive emissions are not counted toward the threshold for applying the PSD permitting program (“applicability threshold”) unless either (1) the facility belongs to a category of sources specifically listed in the PSD regulations or (2) the project is proposed for a facility that is already a PSD existing major stationary source for at least one regulated pollutant (see, Letter from Cheryl L. Newton, Chief, Permits and Grants Section (IL/IN/OH) to Paul Dubenetszky, Branch Chief, Office of Air Management, Indiana Department of Environmental Management, July 16, 1998). The U.S. Environmental Protection Agency (EPA) has reconsidered its fugitive emissions policy multiple times since it issued a final rule on December 19, 2008, addressing fugitive emissions under the major New Source Review programs (73 Fed. Reg. 77,882). That rule required fugitive emissions to be included in the calculation of PSD applicability only for categorically listed sources. In April 2009, EPA granted a petition for reconsideration of that rule and issued an interim rule on March 30, 2011, staying its provisions until “EPA completes the reconsideration” (76 Fed. Reg. 17,548), which has yet to occur. But for the interim rule, the current problems presented by permitting GHG fugitives would not have arisen. Prior to the Tailoring Rule, the status quo treatment of fugitive emissions, while not simple, was not particularly problematic. Including fugitive emissions in PSD applicability threshold calculations would result in additional permit application tasks, such as extending the BACT analysis to the additional pollutant, but it has never been the exclusive trigger for PSD applicability, until now.

Before EPA added GHGs (compounds with dramatically different origins, impacts, and emission patterns than criteria pollutants) to the PSD program, virtually any source with fugitive emissions of a pollutant sufficient to independently trigger PSD applicability would already have triggered applicability for that pollutant via its point source emissions. One particular industry has found itself in a major modification scenario in which all criteria pollutants are well below PSD thresholds, but GHG fugitive emissions exceed Tailoring Rule thresholds: municipal solid waste landfills (“Landfills”).

Until the 1990s, Landfills rarely triggered PSD applicability. However, the popularity of landfill-gas-fired energy projects, which tend to emit much more carbon monoxide than landfill gas flares, has brought many Landfills within the scope of the PSD program. Landfills then struggle with the Tailoring Rule applicability threshold for GHGs when fugitive emissions are included in the threshold calculation. The combination of three factors inflates a Landfill’s potential to emit fugitive landfill gas: the very conservative assumptions used to predict landfill gas generation, the modest landfill gas collection efficiency allowed by EPA’s AP-42 standards, and the fact that landfill gas generation is highest very far into the future at the time of landfill closure. This inflation of potential to emit fugitive landfill gas was not a concern until the primary components of landfill gas were brought into the PSD program by the regulation of GHGs.

Landfill gas is approximately half carbon dioxide and half methane (both GHGs), with trace amounts of non-methane-organic-compounds (NMOC) (a criteria pollutant). Even assuming the highest likely fugitive emissions, the NMOC fraction (traditionally subject to the PSD program) will still not meet the applicability threshold. Also, the carbon dioxide fraction is subject to a three-year deferral for GHGs of biogenic origin under the July 2011 amendments to the Tailoring Rule (discussed below). Thus, it is deferred from inclusion in a PSD applicability determination calculation. Only the methane fraction of landfill gas, about half of the total volume, is considered to be anthropogenic and subject to permitting. This fugitive methane GHG fraction associated with a landfill expansion, even an expansion of modest size, will be of sufficient volume to be “subject to regulation” under the Tailoring Rule and exceed the regulatory mass-based thresholds, triggering PSD applicability.

Because landfill-gas-fired power plants are a significant investment, they are typically designed, permitted, and constructed to serve their host Landfill for years without expansion. During these years, however, the Landfill itself may require an expansion to allow it to store more waste. When a Landfill is expanded without adding landfill gas combustion capacity, the only air emissions associated with the expansion (aside from particulate matter from construction activity) come from fugitive landfill gas (carbon dioxide, methane, and NMOC) from the new fill area. The result, absent some type of exemption, is for the expansion project to trigger PSD applicability as a new major stationary source (the landfill with its landfill-gas-fired power plant). The facility is PSD minor for all criteria pollutants (fugitive NMOC and particulate matter from construction activity) but PSD major for GHGs (fugitive methane). The sole subject of the associated PSD major source air permit application would be fugitive methane.

The PSD rules at 40 C.F.R § 52.21(i)(vii) create an exemption from PSD applicability for a source or modification that is made PSD major “only if fugitive emissions, to the extent quantifiable, are considered in calculating the potential to emit of the stationary source or modification and the source does not belong to any of the following categories: [followed by list of 27 categories of source types].” Of the listed 27 categories of source types, 26 are specifically named source types. The 27th source category is: “(aa) Any other stationary source category which, as of August 7, 1980, is being regulated under section 111 or 112 of the [Clean Air] Act.”

Landfills are not among the 26 named source types. They are now regulated under section 111(d) of the Clean Air Act through the New Source Performance Standards (NSPS), Subpart WWW, for Landfills. However, Subpart WWW of the NSPS was not proposed until May 30, 1991, and was not final and effective until March 12, 1996, well after August 7, 1980. Therefore, Landfills were not regulated under section 111 or 112 of the Clean Air Act as of August 7, 1980, and thus are eligible for the PSD exemption found at 40 C.F.R. § 52.21(i)(vii). Some regulators have doubted application of the exemption because of the age of this exemption, the fact that it has been very rarely—if ever—used, and the differences between PSD applicability for criteria pollutants compared to GHGs. After many requests by the regulated community, EPA headquarters finally released a memorandum on December 12, 2013, entitled Counting GHG Fugitive Emissions in Permitting Applicability, validating the applicability of the exemption. Because this was a confirmation of an existing rule, presumably the exemption was applicable from its enactment, not merely after the date of the confirmatory memorandum.

The exemption found at 40 C.F.R. § 52.21(i)(vii) is anything but a cure-all to the ill of subjecting fugitive emissions to the PSD permitting process. While it avoids the patently absurd scenario of a PSD permit for fugitive GHG emissions exclusively, it does not avoid the scenario of a PSD permit for one or more criteria pollutants and GHGs, even when GHGs are overwhelmingly weighted to fugitive origin, because the exemption applies only when fugitive emissions are the exclusive trigger for PSD applicability. While it may appear less awkward, a BACT analysis for fugitive emissions is no less a challenge when mixed with other BACT analyses than when standing alone. To date, only a few Landfills have had to deal with this challenge, primarily because of the current deferral applicable to biogenic emissions. Of course, this deferral is quickly approaching the end of its controversial life. The D.C. Circuit Court vacated the deferral last year. See, Center for Biological Diversity v. EPA, No. 11-1101 (July 12, 2013). Interveners subsequently filed for an extension to re-hear the case, and the D.C. Circuit Court has delayed the re-hearing until the Supreme Court issues a decision in Utility Air Regulatory Group v. EPA, 12-1146, 12-1248, 12-1254, 12-1268, 12-1269, 12-1272 (Consolidated), for which the Supreme Court heard oral arguments on February 24, 2014. The decision could curtail EPA’s ability to regulate GHGs via stationary source permits. The timing of the opinion in Utility Air Regulatory Group v. EPA is likely to correspond closely with the planned expiration of the biogenic deferral on July 21, 2014.

Absent direct action from EPA to extend a deferral for biogenic emissions of landfill methane, direct action by EPA to reconsider, once again, its fugitive emissions policy or Supreme Court action curtailing the Tailoring Rule in a manner exempting fugitive GHGs and/or biogenic GHGs, most landfill expansions at a Landfill that is a PSD existing major stationary source will trigger PSD applicability for fugitive GHGs. Presumably, as more permits focusing on fugitive GHG emissions are processed, the inherent problems associated with applying a BACT analysis to a fugitive emissions source will become more widely discussed and EPA will be challenged to manage these problems. Whether other industries will be affected remains to be seen.

Leslie Cook Wong

Leslie Cook Wong, Golder Associates, Inc.’s Regulatory & Sustainability Director, is a licensed attorney (Texas) and experienced environmental professional in the areas of regulatory analysis, sustainability program development, greenhouse gas management, and advanced air permitting and waste services.