Maintain Control of Your Permits and Legally Ease Your Regulatory Requirements

Maintain Control of Your Permits and Legally Ease Your Regulatory Requirements How to Implement US EPA s Policies on Common Control and Disaggregation for Department of Defense Air Pollution Sources 1

OVERVIEW US EPA regulations provide military installations the opportunity to divide their pollutant-emitting activities into multiple stationary sources, thereby potentially avoiding burdensome regulatory requirements for any number of those activities. NSR/PSD Major Stationary Source GHG Reporting Title V Air Toxics 2

OVERVIEW Present a methodology for separating military installations into multiple stationary sources. Provide real-life examples based on the utilities privatization efforts at Fort Wainwright Alaska. Title V Utilities Privatization NSR/PSD Aerospace MACT GHG Reporting Boiler MACT RICE MACT 3

BACKGROUND FORT WAINWRIGHT Fairbanks, AK Fort Wainwright In August 2008, the utility systems at Fort Wainwright were privatized. Reestablished ownership, operation, and maintenance of utility systems and infrastructure: central heat & power plant heat distribution electrical distribution potable water distribution wastewater collection 4

BACKGROUND FORT WAINWRIGHT Permitted owner/operator of significant emission units following privatization: Significant Emission Unit Description CHPP Coal-Fired Boilers (6) CHPP Coal Preparation Plant (Coal Handling) Bassett Hospital Backup Diesel-Fired Boilers (3) Bassett Hospital Backup Diesel-Electric Generator (3) VOC Extraction and Combustion (Restoration Activities) Fort Wainwright Landfill Aerospace Activities (Painting and Degreasing) Paved and Unpaved Roads Army Units Privatized Units 5

MAJOR SOURCE DETERMINATIONS Major stationary source determinations are conducted based on the three-part definition of stationary source: Pollutant-emitting Activities are: 1. Located on one or more contiguous or adjacent properties PSD/ NSR Title V Air Toxics GHG Reporting 2. Under the control of the same person 3. Belong to the same industrial grouping - this part of the stationary source definition applies to the respective CAA program. Pollutant-emitting activities not meeting all of these criteria may be considered separate stationary sources. 6

MAJOR SOURCE DETERMINATIONS Inappropriately aggregating activities at a military installation could result in portions of the installation being subject to requirements that would not otherwise apply. Contiguous & Adjacent? Common Control? YES Same Industrial Group? NSR/ PSD Title V Single Major Stationary Source Air Toxics GHG Reporting Separate Stationary Source 7

CRITERIA FOR CONTIGUOUS AND ADJACENT PROPERTIES Evaluated on a case-by-case basis. Contiguous & Adjacent? Common Control? Single Stationary Source Same Industrial Group? Properties located near each other, but are not actually touching, may be grouped together as single stationary source. Physical separation of property does not in itself constitute separate sources. 8

CRITERIA FOR CONTIGUOUS AND ADJACENT PROPERTIES Contiguous & Adjacent? Common Control? Single Stationary Source Same Industrial Group? Contiguous and adjacent properties at Fort Wainwright. All privatized emission units are located within the cantonment area, therefore meet the definition of located on one or more contiguous or adjacent properties. The US Army Garrison Fort Wainwright Alaska (USAGFWA) owns/operates the Bolio Lakes test facility. This facility is contiguous and adjacent to property owned by USAGFWA. The Alaska Department of Environmental Conservation determined that due to the remoteness of the facility with respect to Forts Wainwright and Greely, the facility should be evaluated as a separate stationary source for permit applicability purposes. 9

CRITERIA FOR COMMON CONTROL TENANTS Contiguous & Adjacent? Common Control? Single Stationary Source Same Industrial Group? Pollutant-emitting activities under the control of different branches of military services are not considered under common control. All pollutant-emitting activities at an installation under the control of the Army could be considered under separate control from those activities "owned or operated" by other military services. 10

CRITERIA FOR COMMON CONTROL LEASES Contiguous & Adjacent? Common Control? Single Stationary Source Same Industrial Group? Leased activities at military installations may be considered under separate control from military-controlled activities CONTRACT-FOR-SERVICE Contract-for-service activities at military installations usually would be considered under the control of the military controlling entity that controls the contract Leased activities that provide goods or services to a military controlling entity (contract-for-service relationship) may be considered under common control 11

CRITERIA FOR COMMON CONTROL PRIVATIZATION FORT WAINWRIGHT Contiguous & Adjacent? Common Control? Single Stationary Source 1. Functional - the current utility infrastructure does not allow for the sale of utility services outside of the Fort Wainwright boundaries Because 100% of the heat and power generated at the CHPP currently is used at Fort Wainwright, a contract-for-service relationship exists. Same Industrial Group? 2. Contractual - a contract-for-service relationship exists as a result of contractual language. The Army will provide coal for the purposes of operating the CHPP. Fort Wainwright reserves the right to postpone work on privatized units that interrupts service if the interruption might adversely affect the Installation s missions and operations. 12

CRITERIA FOR INDUSTRIAL GROUPING Contiguous & Adjacent? Common Control? Same Industrial Group? Single Stationary Source All activities at a military installation do NOT have to be grouped under SIC code 97, National Security and International Affairs. Contiguous and adjacent pollutant-emitting activities under common control at a military installation may be disaggregated under NSR/PSD and Title V based on appropriate industrial groupings. The industrial grouping evaluation must classify each activity into primary or support activities. Support activities are aggregated with their associated primary activity regardless of dissimilar two-digit SIC codes. 13

DISAGGREGATION METHODOLOGY Common Control? Contiguous & Adjacent? YES Single Stationary Source Same Industrial Group? How do I know? Applying a Disaggregation Methodology to classify a military installation by functionally distinct groupings. 14

DISAGGREGATION METHODOLOGY Pollutant-emitting activities under common control can be disaggregated into multiple industrial groupings using the following methodology: Step 1: characterize each pollutant-emitting activity as either a primary or support activity and then assign the appropriate two-digit SIC code to each activity. Step 2: combine all pollutant-emitting activities into their respective twodigit SIC code. Step 3: evaluate permit requirements for each two-digit SIC code with respect to Title V major source applicability thresholds and implications of other regulations, such as NESHAPs and NSPS. 15

DISAGGREGATION METHODOLOGY Pollutant-emitting activities under common control can be disaggregated into multiple industrial groupings using the following methodology: Step 1: characterize each pollutant-emitting activity as either a primary or support activity and then assign the appropriate two-digit SIC code to each activity. Step 2: combine all pollutant-emitting activities into their respective twodigit SIC code. Step 3: evaluate permit requirements for each two-digit SIC code with respect to Title V major source applicability thresholds and implications of other regulations, such as NESHAPs and NSPS. 16

DISAGGREGATION METHODOLOGY Pollutant-emitting activities under common control can be disaggregated into multiple industrial groupings using the following methodology: Step 1: characterize each pollutant-emitting activity as either a primary or support activity and then assign the appropriate two-digit SIC code to each activity. Step 2: combine all pollutant-emitting activities into their respective twodigit SIC code. Step 3: evaluate permit requirements for each two-digit SIC code with respect to Title V major source applicability thresholds and implications of other regulations, such as NESHAPs and NSPS. 17

DISAGGREGATION METHODOLOGY Pollutant-emitting activities under common control can be disaggregated into multiple industrial groupings using the following methodology: Step 1: characterize each pollutant-emitting activity as either a primary or support activity and then assign the appropriate two-digit SIC code to each activity. Step 2: combine all pollutant-emitting activities into their respective twodigit SIC code. Step 3: evaluate permit requirements for each two-digit SIC code group, such as Title V major source applicability thresholds and implications of other regulations (e.g., NESHAP and NSPS). 18

DISAGGREGATION METHODOLOGY Step 1 Primary Or Support Activity Determination SIC code assignment determined by the facility s principal product, group of products, service, or activity. Based on what an activity or product is, rather than on why an activity is performed or why a product is produced. A support facility is aggregated with the primary activity to which it contributes 50 percent or more of its output. If the activity does not support any single other activity with at least 50 percent of its "product" or "service," then the activity should be considered a primary activity instead of a support activity. Activities located on military installations for the convenience of military personnel, their dependents, and DoD civilian employees are considered not to be support facilities to the primary military activities of a base. Examples: residential housing, schools, recreational parks, shopping centers, etc. 19

DISAGGREGATION METHODOLOGY Step 1 Primary Or Support Activity Determination SIC code assignment determined by the facility s principal product, group of products, service, or activity. Based on what an activity or product is, rather than on why an activity is performed or why a product is produced. A support facility is aggregated with the primary activity to which it contributes 50 percent or more of its output. If the activity does not support any single other activity with at least 50 percent of its "product" or "service," then the activity should be considered a primary activity instead of a support activity. Activities located on military installations for the convenience of military personnel, their dependents, and DoD civilian employees are considered not to be support facilities to the primary military activities of a base. Examples: residential housing, schools, recreational parks, shopping centers, etc. 20

DISAGGREGATION METHODOLOGY Step 1 Primary Or Support Activity Determination SIC code assignment determined by the facility s principal product, group of products, service, or activity. Based on what an activity or product is, rather than on why an activity is performed or why a product is produced. A support facility is aggregated with the primary activity to which it contributes 50 percent or more of its output. If the activity does not support any single other activity with at least 50 percent of its "product" or "service," then the activity should be considered a primary activity instead of a support activity. Activities located on military installations for the convenience of military personnel, their dependents, and DoD civilian employees are considered not to be support facilities to the primary military activities of a base. Examples: residential housing, schools, recreational parks, shopping centers, etc. 21

DISAGGREGATION METHODOLOGY Step 1 Primary Or Support Activity Determination To determine whether the CHPP at Fort Wainwright is a primary or support activity, need to determine where energy is consumed. 1. Assigned the two-digit SIC group code that described the product or purpose of the facility. 2. Calculated energy consumption for each facility Building Number CATCD CATCD Description SIC SIC Group Name Area (ft 2 ) CBECS Principal Building Activity Energy Intensity (1,000 Btu/ft 2 ) Energy Consumption (1,000 Btu) 3005 14185 21110 Company HQ Bldg. Aircraft Maint. Hangar 97 National Security and International Affairs 45 Transportation by Air 42,709 9,324 Office 90.7 845,687 Warehouse & Storage 45.7 1,951,801 3. Summed energy consumption for each SIC group to determine if any SIC group consumes more than 50% of the energy. 22

DISAGGREGATION METHODOLOGY Step 1 Primary Or Support Activity Determination SIC SIC Group Name % of Total Energy Consumption by SIC 65 Real Estate 35.9 97 National Security & International Affairs 31.1 80 Health Services 13.0 49 Electric, Gas, & Sanitary Services 3.9 79 Amusement & Recreation Services 3.3 53 General Merchandise Stores 2.2 45 Transportation by Air 1.8 75 Automotive Repair, Services, & Parking 1.6 47 Transportation Services 1.2 82 Educational Services 1.2 95 Admin. of Env. Quality & Housing Programs 1.1 58 Eating & Drinking Places 1 83 Social Services 0.7 48 Communications 0.4 86 Membership Organizations 0.3 92 Justice, Public Order, & Safety 0.3 7 Agricultural Services 0.2 57 Home Furniture, Furnishings, & Equip. Stores 0.2 59 Miscellaneous Retail 0.2 72 Personal Services 0.2 55 Automotive Dealers & Gasoline Service Stations 0.1 56 Apparel & Accessory Stores 0.1 60 Depository Institutions 0.1 43 United States Postal Service 0.0 TOTAL 100 % of Total Energy Consumption by SIC Any SIC code > 50%? 13.0% 20.1% 31.1% SIC 65 - Real Estate 35.9% SIC 97 - National Security & International Affairs SIC 80 - Health Services All other SICs 23

DISAGGREGATION METHODOLOGY Step 2 Combine Emission Units by SIC Group Potential emissions from primary and support activities associated with a specific SIC code must be combined. Example - assuming common control, Army and privatized emission units must be combined by SIC group. SIC SIC Group Name Emission Units in SIC Group Potential Emissions (ton/yr) Army Privatized CO NO x PM 10 PM 2.5 SO x VOC 45 Transportation by Air 70.8 24.4 1.7 1.7 1.6 6.6 0.2 47 Transportation Services 0.3 1.3 0.1 0.1 4.6 0.02 <0.01 49 Electric, Gas, & Sanitary Services 843 783 37.5 32.6 2353 9.5 62.8 53 General Merchandise Stores 0.1 0.3 0.02 0.02 0.02 0.02 <0.01 75 Automotive Repair, Services, & Parking 0.4 1.9 0.1 0.1 0.1 0.2 <0.01 79 Amusement & Recreation Services 6.8 27.2 1.5 1.1 96.7 3.0 0.1 80 Health Services 3.6 15.5 0.6 0.5 14.3 0.6 0.03 92 Justice, Public Order, & Safety 0.1 0.31 0.02 0.02 0.02 <0.01 <0.01 97 National Security & International Affairs 7.2 32.6 2.4 2.3 45.6 54.2 3.4 Title V Major Source Threshold 100 100 100 100 100 100 25 Total HAP 24

DISAGGREGATION METHODOLOGY Step 3 Evaluate Permit Requirements Do SIC group emissions exceed a Title V threshold? Title V Permit Requirement Example Yes Title V permit required for all emission units in SIC group Yes No Do SIC group emission units specifically require a Title V permit? No e.g., NESHAP, NSPS Title V permit is required to include only the applicable source requirements Minor source permit required Minor source permit required for all other sources 25

DISAGGREGATION METHODOLOGY Step 3 Evaluate Permit Requirements Example - Fort Wainwright SIC 45 Permit Requirements SIC SIC Group Name Emission Units in SIC Group Potential Emissions (ton/yr) Army Privatized CO NO x PM 10 PM 2.5 SO x VOC 45 Transportation by Air 70.8 24.4 1.7 1.7 1.6 6.6 0.2 Title V Major Source Threshold 100 100 100 100 100 100 25 Total HAP Yes Title V permit required for all emission units in SIC group Do SIC group emissions exceed a Title V threshold? Yes Title V permit is required to include only the applicable source requirements Minor source permit required for all other sources No Do SIC group emission units specifically require a Title V permit? No Aerospace MACT Minor source permit required Evaluation Conclusions: Emissions less than Title V major source thresholds Subject to Aerospace MACT Army and privatized sources included Requirements: Title V permit - only Aerospace MACT Minor permits (Army and Privatized) - all other sources in SIC group 26

DISAGGREGATION METHODOLOGY Step 3 Evaluate Permit Requirements Example - Fort Wainwright SIC 47 Permit Requirements SIC SIC Group Name Emission Units in SIC Group Potential Emissions (ton/yr) Army Privatized CO NO x PM 10 PM 2.5 SO x VOC 47 Transportation Services 0.3 1.3 0.1 0.1 4.6 0.02 <0.01 Title V Major Source Threshold 100 100 100 100 100 100 25 Total HAP Yes Title V permit required for all emission units in SIC group Do SIC group emissions exceed a Title V threshold? Yes Title V permit is required to include only the applicable source requirements Minor source permit required for all other sources No Do SIC group emission units specifically require a Title V permit? No Minor source permit required Evaluation Conclusions: Emissions less than Title V major source thresholds No NESHAP or NSPS units requiring a Title V permit Army sources only Requirements: Minor permit (Army only) all sources in SIC group 27

DISAGGREGATION METHODOLOGY Step 3 Evaluate Permit Requirements Example - Fort Wainwright SIC 49 Permit Requirements SIC SIC Group Name Emission Units in SIC Group Potential Emissions (ton/yr) Army Privatized CO NO x PM 10 PM 2.5 SO x VOC 49 Electric, Gas, & Sanitary Services 843 783 37.5 32.6 2353 9.5 62.8 Title V Major Source Threshold 100 100 100 100 100 100 25 Total HAP Yes Title V permit required for all emission units in SIC group Do SIC group emissions exceed a Title V threshold? Yes Title V permit is required to include only the applicable source requirements Minor source permit required for all other sources No Do SIC group emission units specifically require a Title V permit? No Minor source permit required Evaluation Conclusions: Emissions exceed Title V major source thresholds Subject to Boiler MACT Only privatized sources included Requirement: Title V permit (Privatized only) - all emission units is SIC group 28

WHEN TO CONSIDER DISAGGREGATION During Title V permit renewals Determining if permit efficiencies are possible Early in construction permitting process Assessing PSD or minor source/modifications During privatization process Assigning operations to contractor GHG Reporting Defining requirements 29

FOR MORE INFORMATION Battelle Contacts: Mike Rectanus rectanusm@battelle.org Kelley Hand handk@battelle.org Joe Carvitti carvittij@battelle.org Fort Wainwright Contacts: Eric Dick eric.michael.dick@us.army.mil David Fish david.d.fish@us.army.mil 30