On December 21, 2007, EPA published notice of its adoption of a final rule to “clarify” the recordkeeping and reporting requirements for projects that do not constitute a major modification under the prevention of significant deterioration (“PSD”) and nonattainment new source review (“NNSR”) programs when calculated by the baseline actual emissions to projected actual emissions (“BAE to PAE”) methodology, but which have a “reasonable possibility” to result in a significant emissions increase.  72 Fed. Reg. 72607. The final rule defines “reasonable possibility” as either: 1) where the difference between BAE and PAE is > 50% of the significance level for the regulated pollutant; or 2) where the difference between BAE and PAE prior to subtraction of the emissions excluded from PAE through the “capable of accommodating/demand growth” exclusion is > 50% of the significance level for the regulated pollutant. However, the recordkeeping and reporting requirements differ depending upon whether “reasonable possibility” is triggered by scenario 1) or 2).

Under the existing PSD and NNSR rules, whether a project is a major modification may be calculated by either the BAE to potential to emit (“PTE”) methodology, or the BAE to PAE methodology. The new rule does not affect the BAE to PTE methodology or requirements.

The existing PSD and NNSR rules provide that when the BAE to PAE methodology is used and as a result it is concluded that the project does not trigger the major modification “significance” levels, but where there is a “reasonable possibility” that such levels would be increased, then the source has certain recordkeeping and reporting obligations. These existing requirements are:

(a)       Before beginning construction, the source must maintain a record of a description of the project, identification of affected emissions units, a description of the applicability test used, the BAE, the PAE, the amount of emissions excluded from the PAE due to the capable of accommodating/demand growth exclusion, and any netting calculations, if applicable. [Collectively called “Pre-project Recordkeeping.]

(b)       If the affected emissions unit is an electric utility steam generating units, the information in (a) must be submitted to the administrative authority before the owner/operator begins actual construction.

(c)       The owner/operator must monitor the emissions of any regulated NSR pollutant from an emissions unit, calculate and maintain a record of emissions in TPY for a period of 5 years following completion of the change (10 years if the change increases the design capacity or PTE of the emissions unit).

(d)       If the emissions unit is an existing electric utility steam generating unit, a report of annual emissions is due 60 days after the end of each year.

(e)       For an emissions unit other than an existing electric utility steam generating unit, a report of annual emissions is also due 60 days after the end of each year if the emissions exceed the BAE by more than a significant amount and exceed the pre-project projection calculated by the BAE to PAE method.

[Under Louisiana law, these existing recordkeeping and reporting rules are found in LAC 33:III.504.D.9 for NNSR and LAC 33:III.509.R.6. for PSD.]

Unfortunately, the existing rules did not define when there was a “reasonable possibility” to exceed the major modification significance levels – the trigger for the requirement to comply with such recordkeeping and reporting rules. The new EPA rule addresses this issue by defining “reasonable possibility.”   The new rule provides two ways that a “reasonable possibility” exists and establishes separate recordkeeping/reporting requirements associated with each methodology. Where the difference between BAE and PAE is at least 50% of the significance threshold, then all of the recordkeeping, monitoring and reporting requirements stated in (a) through (e) above are applicable. For example, under NNSR, if the significance value for a major modification is 25 TPY of NOx, then the requirements would become applicable if the source determines pre-project that the difference between BAE and PAE is at least 12.5 TPY of NOx.

The other way that “reasonable possibility” is defined in the new EPA rule is where the difference between BAE and the PAE before exclusion of emissions the unit is capable of accommodating (including demand growth emissions) is at least 50% of the significance value for a major modification. However, if this is the case that triggers reasonable possibility, only the Pre-project Recordkeeping obligations of paragraph (a), above, apply, not all of the monitoring and reporting obligations in (b)-(e). For example, under PSD, if a source determines that the BAE for CO is 800 TPY, and the PAE prior to determination of emissions the unit(s) is capable of accommodating is 1000 TPY, but that the unit is capable of accommodating 180 TPY of increased CO emissions unrelated to the change, then because the difference between BAE and PAE, without consideration of the emissions the unit is capable of accommodating is 200 TPY, and is more than 50% of the CO significance level (100 TPY), there is “reasonable possibility.” The source would be required to maintain records required by LAC 33:III.509.R.6.a.

All states must adopt provisions at least as stringent as the new federal “Reasonable Possibility Rule” into their state implementation plans within 3 years. In Louisiana, the Department of Environmental Quality was already following the proposed EPA rule as guidance on defining what “reasonable possibility” meant under existing LAC 33:III.504 and 509. However, the proposed EPA rule applied the recordkeeping and reporting requirements only when the difference between BAE and PAE was at least 50% of a major modification significance level; it did not include demand growth emissions or other emissions the unit was capable of accommodating into the equation for determining reasonable possibility as does the final rule. Thus, the practical impacts of the final rule in Louisiana are: 1) reasonable possibility is clearly defined; and 2) the Pre-Project Recordkeeping requirements are extended to projects where the difference between BAE and PAE prior to subtraction of the “demand growth/capable of accommodating” exception exceeds the 50% of the major modification level threshold.