House Energy & Commerce Subcommittee Issues Testimony From American Forest & Paper Association
"My name is
"The
"AF&PA's sustainability initiative - Better Practices, Better Planet 2020 - comprises one of the most extensive quantifiable sets of sustainability goals for a
"
Overview
"
"Recently, this problem has become more acute with substantial tightening of
"Manufacturing is one of the most heavily regulated sectors in the
"In another measure of environmental progress, AF&PA member companies have already met their voluntary Better Practices, Better Planet sustainability goal to reduce greenhouse gas emissions by 15% from a 2005 baseline -- six years ahead of schedule.
"Methanol emissions intensity, expressed in pounds per thousand cubic feet of wood products produced by AWC member companies, has declined 34% from 2008 to 2014. Formaldehyde emissions have dropped almost 60% from 2006 to 2014.
"These and other emission reductions come at a high cost. The forest products industry has invested about
"The NSR permit program was established under the Clean Air Act in 1977 to require new facilities as well as existing facilities that undertake significant modifications to update their pollution control systems to current standards. Unfortunately, some important parts of NSR that are aimed at existing sources, particularly its Prevention of Significant Deterioration (PSD) program, can undermine the laudable goals of the Clean Air Act. Energy efficiency and modernization projects are being delayed or thwarted by NSR interpretations that have evolved over time. The program requires expensive emissions assessments and air modeling that frequently delays projects and can cost
"We believe there are many actions the
"The permitting program under the Clean Air Act needs a substantial re-examination since it has evolved over time in a rather haphazard and incremental manner. First, consistent with the statute,
"As a group, the complicated and burdensome set of air quality rules surrounding NSR and PSD permitting are a deterrent to manufacturing facility modifications and expansions. The current set of air quality permitting requirements even deters implementation of projects that would reduce emissions and/or enhance energy efficiency. Part of what makes implementing these regulations so difficult is the thousands of pages of complex, prescriptive guidance.
New Source Review Problems and Solutions
"
"We have several suggested revisions to the NSR permitting program to address real world problems.
Actual Emissions Increase
"The NSR regulations use a two-step calculation process to determine if a project is subject to NSR. This test, also known as the applicability analysis, consists of determining (1) whether the project itself produces a "significant emission increase," and, if so, (2) whether the project's emission increase, netted with all other emissions increases and decreases occurring at the facility during the "contemporaneous" period, results in a "significant net emissions increase." Only if the project will result in a significant emission increase in Step 1 must the source proceed to Step 2, where the source evaluates its plant-wide emissions over a time period, usually five years preceding the proposed project.
"There is significant ambiguity and confusion regarding
"when the air quality in the
"In recent years,
"
Contemporaneous Project Classification
"Current
"This policy is overly conservative and restrictive. The definition of a "net emissions increase" under PSD requires that an assessment be made of the increases and decreases of contemporaneous "actual emissions"; the plain language of "actual" emissions would suggest that the net emission changes (if any) that have actually occurred are to be the basis of this determination. We recognize that there are some netting assessment instances where a contemporaneous project has not begun normal operations, and in those instances it seems clear that the actual increase in emissions cannot yet be defined. For these situations, the definition of "actual emissions" at 40 CFR 52.21(b)(21)(iv) (i.e., the presumption that a unit's post-change actual emissions are equal to its potential-to-emit) would appropriately apply.
"In most instances, however, the increases in emissions that actually occur as a result of projects are less than what is estimated during preconstruction review. It is overly restrictive and it does not serve any compelling purpose to require an ATP emissions comparison for projects where the actual-to-actual emissions history can be established. Accordingly, we encourage
Project Aggregation
"NSR pre-construction permitting applies to "major modifications" to existing "major sources" that result in "significant" emission increases. Most companies perform dozens of changes/projects at a plant over one to three years. While many of these are exempt from NSR because they are routine maintenance, repair and replacement projects, some do not trigger NSR because they do not individually result in a significant emissions increase.
"For this concern, the agency applies its "project aggregation" policy to determine when emissions increases from multiple projects at the same major source should be aggregated or summed to determine if together they constitute a "significant" emission increase triggering "major modification" NSR. In 1993,
"Thus, aggregation has become a presumption for groups of projects that occur close together in time, even though from a business perspective most decisions and projects are independent of each other. This interpretation that unrelated projects get "aggregated" regardless of their true inter-relatedness places undue permitting burdens on facilities for smaller projects that should be allowed to begin construction without added red tape.
"
Plant-wide Applicability Limits (PALs)
"PAL provisions were established in the 2002 NSR Reform Rules in order to provide facilities with a simplified process for approval of physical or operational changes under the NSR rules, as long as facility-wide actual emissions remain below the PAL after the change.
"The regulated community has not taken advantage of the flexibility afforded by these provisions because of unnecessary requirements that were included in the PAL regulations. Concern exists that PAL caps can be re-opened and reduced at any time. These concerns create huge uncertainty for sources. The PAL expiration and PAL renewal provisions have prevented facilities from utilizing PALs more. Some states issue separate PAL permits making the program more complicated instead of incorporating PAL provisions into the Title V permit and harmonizing monitoring requirements.
"
Streamlining Permitting Programs
"
"Modeling results are relied on as the technical basis for judgments on whether a proposed project will protect or threaten the NAAQS. Separately, facilities must model attainment of the NAAQS through the PSD process or under state-specific programs when making a modification or building a new source that increases emissions in attainment areas. Forest Products Industry (FPI) facilities are located predominantly in attainment areas but are subject to thorough air quality reviews for projects and sometimes upon permit renewal.
"Air emissions from our industry have been regulated for many years and our sources are subject to multiple types of air quality standards that are the backbone of the Clean Air Act and will remain in place. As mentioned previously, industrial boilers are subject to
"For criteria pollutants, New Source Performance Standards (NSPS) for Kraft Pulp Mills and Boilers are in place and reviewed periodically. Many facilities were also subject to the Best Available Retrofit Control Technology (BART) regional haze program that reduced emissions from SO2, NOx, and PM that could impact visibility in nearby parks and wilderness areas. Finally, there are many SIPs that impose Best Available Control Technology (BACT) or Lowest Achievable Emission Rate (LAER) controls on sources as a result of local air quality concerns. Occasionally,
"In the past, when the NAAQS were higher, there was sufficient margin or "headroom" between the NAAQS level vs. the ambient background levels, and the facility's emissions plus those of surrounding sources. With that headroom, and for expediency, the Agency built multiple layers of conservatism into a NAAQS analysis. This approach was not problematic in most cases for decades. Now, however, the headroom has shrunk or disappeared as standards approach background levels (for some pollutants, the ambient background concentration is 75% or more of the NAAQS), so it is critical to carefully consider the overly-conservative assumptions and procedures required in the permitting and modeling processes. And to make matters even worse, emission offsets are limited in the rural areas where forest product mills operate.
"Industry has found that many of the current policy approaches - which were initially formulated and implemented several decades ago - and deterministic, upper-bound computer modeling tools significantly over-predict impacts from their facilities, especially when results of making conservative (and often unrealistic) assumptions are compounded. Thus, the computer modelling results are overly conservative and produce unrealistic predictions of actual local air quality impacts. Let me highlight two areas where modernization of the PSD program is sorely needed.
Realistic Placement of Receptors:
"The current computer modeling guidelines rely on the definition of "ambient air" to determine where in the vicinity of a major source the emissions impact from a project must be evaluated. At these "ambient receptors", computer modeling is conducted to determine if a project will cause or contribute to a predicted violation of a NAAQS or PSD Increment. Neither the NSR regulations nor the modeling guidelines define "ambient air," but instead use the definition in 40 CFR * 50.1(e) - "that portion of the atmosphere, external to buildings, to which the general public has access." Historically,
"
"Although prior
"
"Modeling receptors should not be located where general public exposure at a site is objectively unrealistic, such as, within a plant's fence line or posted property boundary. "Access" should be interpreted such that receptors should not be placed at locations where the general public would become trespassers or would be otherwise unauthorized to be present, such as along right-of-ways. In more unique circumstances, deference should be given to state permitting agencies' authority to determine the areas necessary to include in the ambient air analysis to determine whether a particular project will cause or contribute to a modeled NAAQS or increment exceedance within their regulatory programs.
Unrealistic Modeling Assumptions
"
"Long-standing
"Although the revised 2017 Appendix W requires facilities to address ambient impacts from projects with significant increases in emissions of ozone or PM2.5 precursors,
"Finally, data-driven probabilistic methods have been embraced in other
"There are several policy changes
"The modeling thresholds should be set at a sufficiently high level to exclude projects with minimal impacts.
"Second,
"Third,
"Fourth,
"Finally, permitting decisions made by state agencies that are based on reasonable data and sound analytical techniques should be respected without being second guessed by
Real-World Examples of Problems with NSR and PSD Program
"Many industries and our own have been concerned about the NSR and PSD programs for many years. While some changes have occurred recently, the pace of change has been slow and limited. Full modernization of the air permitting program would create greater certainty to invest in American manufacturing facilities. Here are several examples of projects that would benefit from the reforms previously suggested.
1.
"In order to reduce energy consumption, particulate emissions, and volatile organic compounds (VOC) emissions and comply with the Boiler MACT requirements, a wood products mill proposed to route the exhaust from four thermal oil heaters into dryer burners as combustion air. The emissions from the existing thermal oil heaters were going to older style, electrified filter beds that achieved 70% particulate removal and spare parts were no longer available.
"Because the heater exhaust is hotter than the incoming air used for combustion in the dryer burners, the company would burn less wood to get the same amount of heat to dry the flakes. In addition, the heater exhaust would be combined with the OSB dryer exhaust and be cleaned by a modern wet electrostatic precipitator (WESP) for particulate control and then a go through a regenerative thermal oxidizer (RTO) for VOC/HAP control. The WESP is approximately 98% efficient in removing particulate and the RTO destroys approximately 95% of the VOCs/HAPs.
"Additional particulate removal was estimated to be at least 20 tons per year with no changes in the other criteria pollutants.
"The state claimed that since the facility had previously gone through the PSD permitting process for the heaters and the dryers separately and that BACT levels were established for each and that since a change was being made to where the heater exhaust was routed, BACT had not been established for the heater exhaust going into the dryers. Consequently,
"In addition, the state agency required the facility to aggregate in the PSD evaluation two unrelated dryer RTO replacement projects even though they had previously exempted the projects as "like kind replacements." The RTOs were old and in jeopardy of catastrophic failure. The company provided the information required in the "3M
"In the end, the company decided to go through the burdensome PSD analysis and aggregate the RTO projects with the heater energy efficiency project because of the looming Boiler MACT compliance deadlines and winter weather that would limit construction. The project was delayed approximately 5 months and the company spent an additional
2.
"In response to an emerging market demand for a specific type and quality paper, the mill proposed to restart a paper machine that had previously been taken out of service. An air permit was required since the project involved extensive repairs and various equipment modifications in order to return the machine to working order. Global market conditions combined to create a very narrow time window that had to be met to ensure acceptable financial return and justify the capital investment. To meet the window of opportunity, the mill needed to obtain a permit, complete repairs and modifications and be up and running within 7 months. Since a major NSR permit would require 12-16 months to obtain, emission increases from the project had to be kept below major significance levels and qualify for a minor NSR permit. To constrain emission increases, the scope of the physical and operational changes had to remain very narrow, and production increases had to come solely from recycled fiber in order to demonstrate that virgin pulping processes and chemical recovery operations would not be "debottlenecked" (with possible emissions increase implications) or otherwise affected by the project.
"While this project was successfully permitted and implemented, the company was only able to capture a portion of the financial benefits of the global market expansion. The time needed to obtain a major NSR permit prevented the company from pursuing more substantive modifications that would allow larger increases in production and possibly position the mill to capture a greater share of the expanding market. Expectations to account for emissions from unmodified, but otherwise affected process operations (i.e., "debottlenecking") caused the company to accept new operating constraints that prevents full utilization of existing assets and restricts flexibility to be able to respond to future market opportunities. Finally, this project sets the stage for "project aggregation" discussions that will need to be evaluated and addressed in the future when the mill attempts to get a permit involving virgin pulping or chemical recovery operations, including projects focused on cost, reliability or energy related improvements.
"If
3.
"A paper mill wanted to improve mill operations by shutting down two older, inefficient smaller boilers and upgrading a newer, larger boiler to meet the same steam needs for operations. The changes would use less overall energy and not increase emissions. Rather than being able to undertake the project quickly, the company was forced by
"Specially,
"Compared to new pre-project baseline actual emissions (BAE), the analyses projected an increase above the significance level for the pollutant. However, if only contemporaneous changes were considered, even a conservative "actual to potential to emit" test would have shown no increase and thus a minor NSR project.
"Fortunately, the company and state pressed
4.
"The mill proposed to convert an existing paper machine from producing free sheet using bleached virgin pulp stock to producing new products that involve unbleached pulp stock. The conversion required physical modifications to the machine in addition to the installation of new ancillary equipment. The primary emissions source was the paper machine which involved negligible sources of emissions. Prior to commencing construction, the mill is required to receive authorization from the regulatory agency in the form of a construction permit. In this instance, the long lead time for constructing the new equipment necessitated the need to receive construction authorization within a few months which was not possible under the current permitting system. As a fallback, the company chose to minimize the emission impact of the affected units by committing that virgin pulp production would remain at historic levels.
"This example illustrates the need to streamline the current NAAQS modeling process, which involves submittal of a dispersion modeling protocol and approval of the protocol prior to the submittal of a construction permit application even for units that are not being modified and have been previously evaluated for environmental impacts. These extra steps in the process are one part of what makes triggering major NSR permitting more time consuming than certain projects can tolerate.
"In addition, the primary driver for the timing of this project is the construction lead time of emissions units with negligible emissions rates. Allowing for construction of minor emissions sources that do not trigger NSR permitting obligations (prior to the PSD triggering modifications being approved (i.e., phased permitting)) would pave the way for a more flexible permit that still meets environmental requirements.
"Finally, ambiguity in
5.
"The company wants to replace three existing paper machines with one new, more efficient machine. The emissions inventory and PSD applicability analysis for the project has been unnecessarily complicated given current NSR regulations and guidance. The company has spent several months on the emission analysis, when it should have only taken weeks if emissions assessments were limited to equipment being modified rather than other processes.
"In addition, the company cannot account for the decrease in emissions from shutting down the existing paper machines or from limiting operation of one of the power boilers in "Step 1" of the emission analysis; only emission increases, not decreases, may be counted in Step 1. A proper accounting of the project's net emission impact should include the emission decreases associated with a project.
""Step 2" of the emissions analysis requires that the emission increases associated with contemporaneous projects be calculated using the baseline actual to potential to emit (PTE) method, even when the contemporaneous projects were evaluated using the actual-to-projected actual method, and actual emissions have not exceeded the projections. Instead, the netting analysis should include the actual emission increases from the contemporaneous projects or the actual-to-actual emission projections from the emission analysis conducted for those projects.
"In the end, the project requires a federally enforceable emission limit to restrict operation of an existing power boiler. And as a result, the company cannot begin partial construction due to the need for this federally enforceable limit, delaying the start of the project. If the project had been appropriately classified as "minor" construction would have commenced.10
"In sum, waiting to begin construction of the project while a permit application is under review adds many months to the project's completion and delays the cost savings.
Other Permitting Improvements
"While
Clean Unit Exemption
"As part of the New Source Reform provisions promulgated by
"However, the Clean Unit exemption was vacated by the
"Nonetheless, the Clean Unit concept represents an important development for the regulated community, because when an existing facility that operates such state-of-the-art emission control systems triggers new source review, the permitting process invariably results in minimal (if any) improvements to either existing air quality or the efficiency of the emission control systems installed on the source. A legislative change to the Clean Air Act authorizing the 2002 Clean Unit exclusion would be helpful.
Pollution Control Projects
"The 2002 New Source Reform provisions exempted specific Pollution Control Projects (PCPs) from having to undergo preconstruction NSR permitting in specific situations where installation of controls targeting reduction of a specific type or family of pollutants causes a collateral and significant emission increase of an NSR regulated pollutant. The rule defined a PCP as "...any activity, set of work practices or project undertaken at an existing emissions unit that reduces emissions of air pollutants from the unit."
"The General Provisions to
"The PCP exemption included in the 2002 NSR Reform provisions was intended to codify in the NSR rules a very similar exclusion that
"The PCP exclusion was vacated by the DC Circuit of Appeals in 2005, along with the Clean Unit Exclusion. At that time, the Court reasoned that
"The vacatur of the PCP exclusion discourages prompt implementation of projects whose primary purpose is either the reduction of air emissions or pollution prevention. It also creates an absurd situation for sources that are required to install emission controls in order to comply with other parts of the CAA, such as Maximum Achievable Control Technology (MACT) standards under Title III. Operation of the MACT control causes collateral increase in criteria pollutant emissions regulated under Title I and subject to preconstruction NSR permit requirements. As the regulations are currently configured, such collateral increases are required to be compared against PSD significant emission rates to determine whether the installation of the mandated emission controls constitutes a major modification subject to PSD review. This catch-22 is both counter-productive and burdensome to the regulated community. Given the court decision, a change to the Clean Air Act seems the best way to exclude pollution control projects from NSR.
Conclusion
"In enacting the Clean Air Act, I do not believe that
"To further the twin purposes of the Clean Air Act, our goal should be sustainable regulation - regulation that addresses environmental and economic needs. I believe there is no better place for a robust manufacturing sector than
* * *
Footnotes:
1 Clean Air Act, Sec. 101(b), 42
2 See, e.g.,
3 Id.
4 See
5 In the future,
6 https://www.epa.gov/nsr/nsr-regulatory-actions#general.
7 Letter from
8
9 See memorandum from
10 In addition, the NSR regulations should allow a facility to start, completely at its own risk, construction of a source or project prior to obtaining an NSR permit. Companies would find the risk of constructing an entire source too great since the permit could be denied or costly retrofits required. However, most companies would undertake currently prohibited construction activities to start a project and accelerate project benefits that could be realized.
11 67
12 New York v.
13 "Pollution Control Projects and New Source Review (NSR) Applicability", John.
Rep. Barletta Stands Ready to Help Donald Trump, Paul Ryan End Medicare As We Know It
Tropical Cyclone Gita: Fiji Braces for Category 4 Storm as Clean Up Begins in Samoa and Tonga
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News