6 NYCRR Parts 200, 201 and 231 Regulatory Impact Statement Summary
Statutory Authority
The statutory authority for these regulations is found in the Environmental Conservation Law (ECL) Sections 1-0101, 3-0301, 3-0303, 19-0103, 19-0105, 19-0107, 19-0301, 19-0302, 19-0303 and 19-0305, and in Sections 160-169 and 171-193 of the Federal Clean Air Act (42 USC Sections 7470-7479; 7501-7515) (Act or CAA).
Legislative Objectives
Articles 1 and 3, of the ECL, set out the overall State policy goal of reducing air pollution and providing clean air for the citizens of New York. They provide general authority to adopt and enforce measures to do so, including the regulation of mobile sources of air pollution. In addition to the general powers and duties of the New York State Department of Environmental Conservation (Department) and Commissioner to prevent and control air pollution found in Articles 1 and 3, Article 19 of the ECL was specifically adopted for the purpose of safeguarding the air 'quality' of New York from pollution. To facilitate this purpose, the Legislature bestowed specific powers and duties on the Department, including the power to formulate, adopt, promulgate, amend and repeal regulations for preventing, controlling and prohibiting air pollution.
The Clean Air Act (Act) requires states to have a preconstruction and operating permit program for new and modified major stationary sources. In 1970, Congress amended the Act "to provide for a more effective program to improve the quality of the Nation's air." The statute directed EPA to adopt National Ambient Air Quality Standards (NAAQS) and required states to develop implementation plans known as State Implementation Plans (SIPs) which prescribed the measures needed to attain the NAAQS. The 1970 Act amendments mandated that SIPs contain "a procedure for review (prior to construction or modification) of the location of any new or modified air pollution source." When it became clear that the goals of the 1970 Act amendments would not be achieved, Congress amended the Act in 1977 to provide additional safeguards to protect the nation's air quality. The 1977 amendments required states to identify areas that did not meet the NAAQS which were then designated as "nonattainment" areas. In particular, the 1977 amendments strengthened the Act by (1) expressly creating a preconstruction review program for new or modified major sources located in "nonattainment" areas (i.e., areas which failed to meet NAAQS) ('see generally' 42 USC Sections 7501-7515); and (2) expressly providing a parallel preconstruction review program for new or modified sources located in "attainment" areas (i.e., areas which met NAAQS or where there was insufficient information to evaluate whether NAAQS were met) ('see generally id.' Sections 7470-7492).
In 1978, EPA promulgated a NSR regulation, followed by multiple sets of regulations including regulations applying to PSD and NNSR in states with and without approved SIPs. In 1996, EPA proposed a NSR rule revision that it described as "the first comprehensive overhaul of the program in 15 years" (61 Fed Reg 38250 [July 23, 1996] [1996 Draft Rule]). The proposed changes were "intended to reduce costs and regulatory burdens for permit applicants" without sacrificing air quality ('id.' at 38251) EPA estimated that the changes, if finalized, would result in approximately 50 percent fewer sources being subject to NSR ('see id.' at 38319). On December 31, 2002, the EPA published a final rule revising the regulations that implement the PSD and NNSR provisions of the Act ('see' 67 Fed Reg 80185 [2002 Federal NSR Rule]). EPA stated that the rule was designed to "reduce burden, maximize operating flexibility, improve environmental quality, provide additional certainty, and promote administrative efficiency" ('id.' at 80189). The 2002 Federal NSR Rule required States with approved PSD and NNSR programs to submit a SIP revision by January 2006. The Department NNSR regulation at 6 NYCRR Part 231 is subject to this SIP submittal requirement. The Department implemented the PSD program on behalf of EPA pursuant to a delegation agreement with EPA that had been in effect since the mid 1980s. The Department could have continued to implement the PSD program as a delegated State but objected to several aspects of EPA's 2002 Federal NSR Rule and determined that it could not implement the 2002 Federal NSR Rule in its entirety and EPA declined to have the Department implement the PSD program on a partial agreement. On May 24, 2004, the Department returned delegation of the PSD program to EPA after failing to reach agreement on a partial implementation of the program. The Department advised EPA that it intended to adopt a State PSD program that would be protective of the State's air resources and submit the regulations to EPA for SIP approval.
Needs and Benefits
The Department is undertaking this rulemaking to comply with the 2002 Federal New Source Review (NSR) Rule EPA promulgated and correct deficiencies that EPA identified in regards to New York's existing Nonattainment New Source Review (NNSR) regulation. The 2002 Federal NSR Rule modified both the NNSR and Prevention of Significant Deterioration (PSD) regulations at 40 CFR 51.165 and 52.21, respectively, and requires states with State Implementation Plan (SIP) approved NSR programs to revise their regulations in accordance with the 2002 Federal NSR Rule and submit the revisions to EPA for approval into the SIP. The Department's existing NNSR program at Part 231 is subject to this requirement. Another purpose of the rulemaking is to adopt a State PSD program for proposed new major facilities and major modifications to existing facilities located in attainment areas. The proposed Part 231 rule incorporates provisions from the federal PSD regulations in significant part with additional provisions to ensure enforceability of the rule and effective monitoring, recordkeeping and reporting.
From the State's perspective, major NSR is a critical tool in meeting the Legislature's air quality objectives. The program ensures that air quality is preserved in areas of the state that meet the NAAQS and does not further degrade, but actually improves, in areas of the State which currently are not in attainment of the NAAQS. The State of New York currently has areas that are designated nonattainment for ozone, PM-10, and particulate matter or particles with an aerodynamic diameter less than or equal to 2.5 micro-meters (PM-2.5). As a result, the Department must have a NNSR program that meets the requirements of Part D of Title I of the Act to adopt permit programs for the construction, modification, and operation of major stationary sources in non-attainment areas.
The proposed regulation is one in a series of programs intended to track pollution, ensure that sources are meeting their regulatory obligations, and maintain permits. These permits contain provisions to limit emissions of ozone precursors (volatile organic compounds and nitrogen oxides), fine particulate matter, sulfur dioxide, carbon monoxide, and lead.
The proposed regulation is being organized to facilitate its implementation. The organization of the new regulation strives to make a more coherent series of requirements and obligations. The existing subparts 231-1 and 231-2 are being retained with only modifications of the applicability dates. The initial subparts, Subpart 231-3 General Provisions and Subpart 231-4 Definitions, specify those provisions and definitions applicable throughout the regulation. The next four subparts address new and modified facilities in nonattainment and attainment areas. These specific subparts are intended to clearly indicate which provisions apply to facilities in different areas of the state. Subpart 231-5 provisions apply to new facilities and existing non-major facilities in nonattainment areas and Subpart 231-6 applies to modifications to existing major facilities in nonattainment areas. Subpart 231-7 applies to new facilities and to existing non-major facilities in attainment areas and Subpart 231-8 applies to existing major facilities in attainment areas of the State. The remaining five subparts specify how various major provisions apply to the four scenarios in Subparts 5 through 8. Subpart 231-9 defines how Plantwide Applicability Limitations can be applied to facilities that choose to undertake them. Subpart 231-10 sets forth requirements for Emission Reduction Credit (ERC) creation and use as emission offsets and for netting. Subpart 231-11 provides specific permit, monitoring, reporting, and recordkeeping requirements. Subpart 231-12 embodies the Ambient Air Quality Impact Analysis requirements for facilities in attainment areas. Subpart 231-13 compiles tables and lists emission thresholds applicable throughout the proposed regulation.
The proposed revisions to Part 231 will change the basis of applicability for modifications and emission reduction credits (ERCs) from an "Emission Unit" basis to an "Emission Source" basis, incorporate various federal requirements, provide clarification of existing requirements, and require comprehensive reporting, monitoring, and recordkeeping that will conform to the requirements of Title V. The revisions are expected to make the regulations less burdensome to the business community without compromising air quality. The revisions are not expected to have any measurable impact on employment opportunities in the State. The proposed regulations will make revisions to the current Part 231 to address deficiencies previously identified by the EPA.
In May 2004, the Department convened a workgroup to discuss the development and adoption of a State NSR rule. Participants included members of the regulated community, State and Federal agencies, and environmental organizations. The Department held meetings in 2004, 2006, and 2007 to discuss the major NSR reform provisions. The Department has also provided outreach through Part 231 rulemaking presentations at the NYS Business Council's 2005 Annual Industry-Environmental Conference held on October 13 & 14, 2005 in Saratoga Springs, NY, and at the Air & Waste Management's Ninth Annual Environmental, Health & Safety Seminar held in Rochester, NY on February 15, 2006.
Costs
NSR reviews are done on a case-by-case basis so the costs of compliance with either the Federal NSR rules or the proposed Part 231 revisions will be very facility specific. Under proposed Part 231, the following types of costs may be incurred by a facility located in a rural area. New facilities or facilities that undertake modifications will have costs associated with determining regulatory applicability in the first instance. Some facilities that undertake minor modifications will only incur the costs associated with maintaining records while others may be also subject to some emission monitoring depending on the other activities at the facility. Facilities that require emission caps will have the costs of preparing permit applications and emissions monitoring, recordkeeping and reporting. Facilities that are subject to NSR in its entirety will have costs associated with preparing permit applications, including control technology and environmental impact assessments, emission offsets for nonattainment areas, and emissions monitoring, recordkeeping, and reporting. The proposed amendments to Part 231, in general, add provisions for increased regulatory flexibility and provide for a coordinated review process for NSR affected projects. The technology assessment requirements of LAER, for facilities subject to the Department's existing Part 231, remain unchanged in the Department's proposed amendments to Part 231. While some aspects of the regulatory applicability determination will be more restrictive for non-attainment NSR than current Part 231, i.e. the baseline actual emissions to projected actual emissions methodology will replace the maximum annual potential (MAP) methodology calculation, other aspects of the proposed regulation will be more flexible than the current regulation. For example, for baseline determinations facilities will have the option to choose any 24 consecutive month period in the past five years while the current Part 231 requires facilities to use the most recent 24 consecutive month period unless they can demonstrate that another period is more representative. It is possible that the proposed revisions to Part 231 will result in more facilities being subject to nonattainment NSR review than under current Part 231 since the Department is eliminating the maximum annual potential (MAP) applicability concept. It is also possible that more facilities will be subject to NSR under revised Part 231 than under the Federal regulations since the Department is proposing to determine baseline actual emissions based on a five-year look back period rather than a 10-year look back as in the Federal NSR rule. Although the Department anticipates that more facilities will be subject than under the federal NSR rule since there will be less opportunity for an emission look back, the Department does not have definitive data to determine for certain that this will be the case. As far as the costs of compliance are concerned the Department does not envision significant increased costs. Since the proposed amendments to Part 231 apply to proposed major facilities and major modifications, annual compliance and administrative costs would remain consistent with those currently incurred to comply with the Department's 6 NYCRR Part 201 Title V requirements.
The proposed regulation requires that for any facility seeking the establishment of a PAL, that the PAL shall be reduced to 75 percent of the initial PAL, commencing with the first day of the sixth year of the PAL, unless the owner or operator demonstrates that a lesser level of reduction is justified. The owner or operator may seek an alternative reduced PAL by demonstrating that the application of BACT and/or LAER, as applicable, on all major PAL emission sources at the facility would not result in a 25 percent reduction in the initial PAL. The capital, operation and maintenance, and monitoring costs associated with the acceptance of a PAL, if any, will vary on a case-by-case basis. The requirement to reduce the PAL may cause an increase in cost to the facility that chooses to use a PAL, if a facility chooses a capital-intensive means of achieving the emission reductions. However, some facilities may meet the 25 percent reduction without incurring any additional costs, such as when a facility already plans to reduce the usage of a less efficient source within the facility, or implements efficiency improvements that reduce emissions and the cost of operation. Since PALs are a new compliance option, no specific cost estimates are available to determine if the PAL provisions will cause a monetary burden on any facility that chooses to use a PAL.
The proposed amendments to Part 231 set forth PM 2.5 applicability requirements for new major facilities and NSR major modifications consistent with new federal PM 2.5 requirements. The Department must include PM 2.5 in its proposed amendments to Part 231 to receive SIP approval. For new major facilities and NSR major modifications for PM 2.5, located in a PM 2.5 nonattainment area, the proposed rule requires the application of LAER and emission offsets of PM 2.5 at a ratio of one to one. For new major facilities and NSR major modifications for PM 2.5, located in a PM 2.5 attainment area, the proposed rule requires the application of BACT and preparation of an ambient air quality impact analysis. Facilities which meet the PM 2.5 applicability criteria will incur additional costs above those in existing Part 231 since PM 2.5 is not a regulated contaminant under existing Part 231 and was not previously a regulated contaminant under federal 40 CFR 52.21 (PSD). The most significant cost increase will be for new facilities and modifications that need to obtain PM 2.5 emission offsets. These costs will, however, vary greatly being dependent on the amount (tons per year) of emission offsets needed and the availability of approved reductions to be used as PM 2.5 offsets.
Paperwork
Most of the proposed amendments to Part 231 are not expected to entail any significant additional paperwork for the Department, industry, or state and local governments beyond that which is already required to comply with the Department's existing permitting program under 6 NYCRR Part 201-6 and existing NSR regulations under 6 NYCRR Part 231, and federal 40 CFR 52.21. Also, while Part 231 may include more specific recordkeeping requirements than the Federal NSR rule, as discussed above, EPA appears to be changing its approach. Another area where revised Part 231 may entail additional paperwork is with the initial PAL review, which is a voluntary program. Applicants that seek to justify a reduction of less than 25 percent in the PAL will have to conduct control technology assessments that will increase the amount of paperwork beyond that required if the applicant chose not to avail itself of the option to agree to a PAL.
State and Local Government Mandates
The adoption of the proposed amendments to Part 231 are not expected to result in any additional burdens on industry, state, or local governments beyond those currently incurred to comply with the requirements of the existing NSR process under 6 NYCRR 201-6, 6 NYCRR 231-2, and 40 CFR 52.21.
Duplication
This proposal is not intended to duplicate any other Federal or State regulations or statutes. The proposed amendments to Part 231 will ultimately conform to the Act. In the short term, some duplication may occur. Currently, EPA Region 2 implements the PSD program for new and modified major facilities in attainment areas of New York State. Once the proposed revisions are in effect, and approved by EPA into the SIP, the Department will have sole responsibility for the PSD provisions, and no duplication will occur.
Alternatives
Adoption of the proposed amendments to Part 231 is necessary to conform to federal requirements. The Department returned delegation of the PSD rules in a letter to EPA dated May 24, 2004, retroactively effective March 3, 2003. As a result, the Department must develop its own regulations in order to implement the PSD program. The Department is taking the opportunity to resolve issues cited by the USEPA and the regulated community, while incorporating the EPA NSR Reform provisions, in modified form. The amendments will provide further clarification of existing rules, coordinate review and requirements in both attainment and nonattainment areas, and make Part 231 less burdensome to the regulated community. The Department believes that no viable alternatives to this rulemaking are available.
The following is a discussion of the available alternatives:
1. Take no action. - This option is not a legitimate option. The State is required to either incorporate the Federal NSR regulations into the SIP or adopt its own program.
2. Adopt the federal NSR Rule - The Department does not believe that adoption of the Federal NSR Rule is consistent with the policy objectives of the State as articulated in the ECL and therefore has determined that this is not a viable option.
3. Adoption a State-specific NSR program - Because neither option discussed above is acceptable, the Department proposes to adopt a State specific NSR program. The program will consist of modifications to the Department's existing Part 231 NNSR program and adoption of a State PSD program. The rulemaking will incorporate some of the provisions of the 2002 Federal NSR Rule as well as other provisions tailored to New York's air quality needs and objectives.
Federal Standards
The proposed amendments are incorporating federal regulatory language, and will align the state regulation with federal standards for the most part, and exceed minimum federal standards for other items.
Provisions of the regulation which exceed federal standards include: use of a uniform baseline period (any consecutive 24 month period over the previous five years) for all facilities; limiting projects to the use of only one baseline period for all NSR regulated pollutants for determining whether a project is subject to the regulation; modifications that would otherwise not be subject to the regulation according to the EPA Rule due to their insignificance are required to keep records of such a modification under the Department regulation; certified emission reduction credits are being required for netting analyses for PSD areas that would not otherwise be required by the EPA Rule; the PAL allowance is being limited to 10 years or less depending on the renewal of the applicable Title V permit, whereas EPA would allow 10 years regardless of permit duration, and the PAL will be required to be reduced up to 25 percent by year six of its duration.
On May 1, 2007 EPA promulgated rule revisions to 40 CFR Parts 51, 52, 70, and 71 Prevention of Significant Deterioration, Nonattainment New Source Review, and Title V: Treatment of Certain Ethanol Production Facilities Under the ''Major Emitting Facility'' definition; Final Rule - with an effective date of July 2, 2007. To remain consistent with this rulemaking, the Department proposes to modify the definition of "Major stationary source or major source or major facility" under Part 201, and Table 9 - Source Category List under Subpart 231-13 to exclude ethanol production facilities that produce ethanol by natural fermentation (included in NAICS codes 325193 or 312140) from chemical process plants.
Compliance Schedule
The proposed amendments do not involve the establishment of any compliance schedules. The regulation will take effect 30 days after publication in the State Register.
