EPA Issues New Ozone and PM2.5 SILs Guidance, Part 1

On April 17, 2018, Peter Tsirigotis, Director of the Office of Air Quality Planning and Standards (OAQPS) issued a guidance memorandum, “Guidance on Significant Impact Levels for Ozone and Fine Particles in the Prevention of Significant Deterioration Permitting Program,” (Guidance) which establishes EPA’s current approach to significant impact levels” (SILs) used in the Prevention of Significant Deterioration (PSD) modeling program, but which likely may have some broader implications as well. The 112-page Guidance package sets forth EPA’s new approach to setting SILs and also provides the legal and technical rationale supporting the rule. This first installment looks at the policy issues. Later installments will examine the legal and technical issues in more detail.

ANALYSIS

The new Guidance represents EPA’s response to the D.C. Circuit decision in Sierra Club v. EPA, 705 F.3d 458 (D.C. Cir. 2013), which vacated sections 51.166(k)(2) and 52.21(k)(2) of the PM2.5 SIL at EPA’s request because the 2010 SIL rule “did not preserve the discretion of permitting authorities to require additional analysis in certain circumstances,” such as when the SIL was larger than the margin between the design value and the NAAQS. EPA’s response is to issue “non-binding guidance” to the States and permitting authorities in lieu of a binding rule so that EPA can learn “how often and in what types of settings the application of a SIL at the single-source assessment and cumulative assessment stages of the PSD air quality analysis has made a critical difference” and that EPA will then use this information to refine and possibly codify the SILs.

In issuing the Guidance, EPA changed the technical basis for how it sets SILs. The new approach, known as the “air quality variability approach,” looks to a statistical analysis of variability to determine when changes are “well within the inherent variability of observed design values.” EPA then reasons that changes at or below such a level are “indistinguishable from the inherent variability in the measured atmosphere and may be observed even in the absence of the increased emissions from the new or modified source.” Accordingly, EPA finds that such changes are “not meaningful” and “do not contribute to a violation of the NAAQS” or increments.

Using this approach, EPA selected a 50% confidence interval as striking the proper balance between “usefulness of the SIL as a compliance demonstration tool” and “likelihood of a SIL value representing an impact that is not significant.” EPA chose 50% because it represents a change less than a standard deviation. EPA then set the NAAQS SIL values as follows:

The value for PM2.5, 24-hour using the statistical method is actually 1.5 ug/m3, but EPA states it is bound by 40 C.F.R. § 51.165(b)(2) to treat 1.2 ug/m3 as the upper limit until such time as that rule is revised. EPA also notes that these SILs can apply to any airshed, regardless of whether it is Class I, II or III.

Using the same approach, EPA set the PSD increment SIL values as follows:

EPA states that the SILs may be used in the preliminary (single-source) analysis to determine whether cumulative analysis is required, although the permit authority retains discretion to require more. Second, where a cumulative analysis is required, the SILs can be used in a “culpability analysis” to determine whether the new or modified source is contributing to the impact. “EPA believe this will be sufficient in most cases for the permitting authority to conclude that the source does not cause or contribute to (is not culpable for) the predicted violation.” Third, this approach can be used even if the difference between the NAAQS and design value is less than the SIL. Fourth, the culpability analysis may be used for both NAAQS and increments. EPA states, however, that the SILs should not affect air quality related value (AQRV) analyses done by federal land managers.

Consistent with the Pruitt Administration’s cooperative federalism approach, the Guidance makes it clear that “permitting authorities retain discretion to use or not to use these EPA-derived SILs in particular PSD actions.” The memo cautions that the decision to use the SILs must be justified in the administrative value and specifically states that permitting authorities may use alternative confidence intervals or local and regional factors in developing their own SILs, so long as justified in the administrative record. Later, the Guidance specifically encourages incorporating the legal and technical support memoranda included in the Guidance package to help justify the permitting authority’s actions.

While the Guidance states that EPA “believes that the application of these SILs … would be sufficient in most situations for a permitting authority to conclude that a proposed source will not cause or contribute to a violation of an ozone or PM2.5 NAAQS or PM2.5 PSD increments,” the actual determination “can only be made by a permitting authority on a permit-specific basis after consideration of the permit record.”

Future installments will examine the legal and technical bases in more detail.

COMMENTARY

The Guidance represents a major development in EPA’s approach to SILs. The new rationale, which basically redefines a SIL as the “noise” around the design value, is conceptually more robust than the historic approach used in the past and, because it is based on inherent variability, is less sensitive to concerns about its use at levels approaching the NAAQS or an increment. This is a welcome development.

EPA has also been canny in its approach. By releasing the Guidance as a non-binding guidance document, EPA makes it more difficult to challenge directly. And, by encouraging permitting authorities to follow it while incorporating the technical and legal memoranda that are part of the package, EPA makes it more difficult to challenge individual permit decisions because the permitting authority can state that it is following EPA’s approach. This should make challenges to permits issued in reliance on SILs values much more difficult, at least where the permitting authority has properly incorporated the relevant facts and documents into the administrative record.

All in all, the Guidance should help streamline PSD air quality analysis by providing a robust and streamlined approach to determining when cumulative analysis is needed and whether a facility is causing or contributing a NAAQS exceedance (for ozone and PM2.5) or increment violation (for PM2.5).