Transitional PSD Applicability Scenarios

1. Transitional PSD Applicability Scenarios July 20, 2010 Jay Hofmann President Troutman Sanders/Trinity Consultants PSD and Title V Tailoring Rule Seminar trinityconsultants.com

2. Overview • Six PSD Applicability Transition Scenarios • Scenario A – Existing Minor Source (will become major due to a plant expansion project sometime in the future) • Scenario B – Existing Minor Source (will become major on July 1, 2011 due to GHG emissions and the Tailoring Rule) – Minor modification permit applications pending • Scenario C – Existing Major Source – Pending PSD application • Scenario D – Existing Major Source – Minor modification permit issued and actual construction will begin prior to January 2, 2011 • Scenario E – Existing Major Source – PSD permit issued just prior to January 2, 2011 – Actual Construction will not begin until March, 1, 2012 • Scenario F – Existing Minor Source (will become major on July 1, 2011 due to GHG emissions) – Pending project to be issued authorization to construct prior to July 1, 2011

3. Scenario A • Site is an existing minor source for PSD • Owners currently planning a project that is minor and no permit limits at the source will be changed • After the project, site will be a major source • Will the Tailoring Rule directly impact the planned project for PSD purposes?

4. Scenario A (Cont.) • Minor sources can not trigger PSD unless the project results in the relaxation of an existing synthetic minor limit (a PSD “(r)(4)” limit) or the project is major “in and of” itself • Tailoring rule transition will not impact this project. • After the project, site will be major and future modifications maybe impacted by PSD

5. Scenario B • Site an existing minor source for PSD. • Site will become major due to Tailoring Rule (GHG emissions above thresholds on a mass and GWP basis) as of July 1, 2011. • Any permit applications pending as of July 1, 2011 for plant modifications, will need to be evaluated for PSD applicability • A similar situation is addressed in Scenario F

6. Scenario C • Site is an existing major source for PSD • A PSD application has been submitted and construction authorization/permit modification is pending • Permit application did not address GHG • Permit must be finalized and issued prior to January 2, 2011, else owner must address PSD GHG applicability • What if actual construction has not begun prior to January 2, 2011? Scenario E

7. Scenario D Site is an existing major source for PSD Minor modification permit application submitted and the construction authorization is pending – Authorization will be finalized and permit issued prior to January 2, 2011. GHG not addressed in application Site expects tobegin actual constructionprior to January 2, 2011 Issues?

8. Scenario E • Site is an existing major source for PSD • PSD applicable project construction authorization (without consideration of GHG) issued on December 28, 2010 • Project’s net emissions increase of GHG is more than 75,000 tpy (GWP basis) and more than 0 tpy (mass basis) • Actual construction not expected to begin until March 1, 2012

9. Scenario E (cont.) • Construction authorization contains the following language: “Approval of construction shall become invalid if construction is not commenced within 18 months after receipt of such approval, if construction is discontinued for a period of 18 months or more, or if construction is not completed within a reasonable time.”

10. Tailoring Rule Preamble – Step 1 • EPA’s Step 1 Transitional Guidance – No “Grandfathering” • “We are not promulgating an exemption for PSD permit applications that are pending when Step 1 of the permitting phase-in begins for those sources that would otherwise need to obtain a PSD permit based on emissions of pollutants other than GHGs. Any PSD permits issued to such Step 1 sources on or after January 2, 2011 will need to address GHGs.” • “Final PSD permits issued before January 2, 2011 need not be reopened or amended to incorporate requirements for GHGs that take effect after the permit is issued.” • “A source that is authorized to construct under a PSD permit but has not yet begun actual construction on January 2, 2011 may begin actual construction after that date without having to amend the previously-issued PSD permit to incorporate GHG requirements, provided the permit has not expired.”

11. Scenario E Probably “OK” with respect to GHG

12. Scenario F • Site is an existing minor source for PSD • Site will become a major source for PSD after July 1, 2011, due to existing GHG emissions and the Tailoring Rule (Step 2) • Pending project expects construction authorization to be issued prior to July 1, 2011 • Issues?

13. Tailoring Rule Preamble – Step 2 • EPA’s Step 2 Transitional Guidance – No “Mercy” • “Sources that are not subject to PSD permitting requirements until Step 2 need not obtain a PSD permit addressing GHGs in order to continue any actual construction that begins before July 1, 2011, when such a source was not a major stationary source required to obtain a PSD permit.” • “However, Step 2 sources that begin actual construction in Step 2 may do so only after obtaining a PSD permit.”

14. Tailoring Rule Preamble – Step 2 (cont) • A picture is sometimes worth a thousand words…….

16. “Begin Actual Construction” • Begin actual construction - means, in general, initiation of physical on-site construction activities on an emissions unit which are of a permanent nature. Such activities include, but are not limited to, installation of building supports and foundations, laying underground pipework and construction of permanent storage structures. With respect to a change in method of operations, this term refers to those on-site activities other than preparatory activities which mark the initiation of the change.

17. Scenario F Site will need to begin actual construction prior to July 1 to be certain to avoid GHG requirements

18. Questions? Jay Hofmann jhofmann@trinityconsultants.com