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3M: Hutchinson, Minnesota
3M: Letter from Jon Kessler to Andrew Ronchak
UNITED STATES ENVIRONMENTAL PROTECTION
AGENCY
WASHINGTON, D.C. 20460
POLICY, PLANNING AND EVALUATION
MEMORANDUM
Subject: Comparable Actions Test
From: Jon Kessler. Director
Emerging Sectors and Strategies Division
To: Andrew Ronchak, Minnesota Pollution Control Agency
Tom Zosel, 3M
Attached please field revised versions of our Comparable Actions Test (CAT) permit language and attachment X. These were revised per your comments of two Fridays ago, and per your concerns about unregulated sources. I have also attached an OAQPS writeup that attempts to explain why we are proposing a rather complex system for treating unregulated sources, one that meets 3M's need to generate credits but not debits under the CAT from these sources, but also meets EPA's need to ensure that if unregulated sources are to be grouped with regulated sources, they should overall be at least as clean as they were prior to XL.
As always, we look forward to discussing these drafts with you. I believe that, apart from revisions per your comments on Magnetic Tape averaging, EPA has provided language on all areas of concern with respect to the proposed MinnesotaXL permit for 3M Hutchinson.
12/11/96 Revised version of CAT-O-NINE TAILS. PERMIT LANGUAGE
II. Environmental Release Limits and Requirements
A. Air Quality
3. Comparable Actions Test (CAT)
Requirement: On a plant wide basis, actual emissions of VOC, CO, PM10, SOx, NOx, other PSD pollutants and HAP shall each during each compliance period be less than the actual emissions that would have occurred absent Project XL. Compliance periods shall be serial one year periods. The first compliance period shall begin on the effective date of this permit.
Compliance: If actual emissions of a pollutant during a compliance period are less than actual emissions that would have occurred absent Project XL, then the requirements of this section are met for that pollutant and compliance period. If actual emissions of a pollutant during a compliance period are not less than actual emissions that would have occurred absent Project XL, the permitee shall comply with the requirements of Section ____ [CAT remedies] for that pollutant and compliance period.
Method of Calculation: Actual emissions shall be calculated under the terms of Attachment 2 of this permit. Actual emissions that would have occurred absent Project XL shall be calculated under the terms of Attachment 2 and Attachment X of this permit.
Reporting: The permittee shall submit to the permitting authority within 60 days of the end of each compliance period a written demonstration of whether the comparable actions test requirement is met, including a list of the actions for which calculations under paragraph A.1(b), A.1(c) and A.2(a) of Attachment X are undertaken. This written demonstration, with the exception of any confidential business information as defined by [cite], shall be made available to the public. Compliance with the comparable actions test, including each action for which calculations under paragraph A.1(b), A.1(c) and A.2(a) of Attachment X are undertaken, shall be discussed at each semi-annual stakeholder meeting held pursuant to Section _____ of this permit,
ATTACHMENT X - COMPARABLE ACTIONS TEST
For purposes of determining compliance with section II.A.3. of this permit for each compliance period, the following procedure shall be used to calculate the actual emissions that would have occurred absent Project XL.
A. General Procedure
1. For each regulated unit, the permitee shall:
a) Calculate actual emissions from the unit during the compliance period under the terms of
Attachment 2. If the unit is in compliance with otherwise applicable requirements and if the permitee does not wish to claim emission reductions from a physical or operational change, calculations under A. I (b) and A. 1 (c) of this attachment are unnecessary.
b) Subtract from the number arrived at in A.1.(a) of this attachment any emissions during the compliance period resulting from control that is less protective (including no control) than compliance with otherwise applicable requirements.
c) Add to the number arrived at in A.1.(b) of this attachment any emissions reductions during the compliance period that are the result of one or more physical or operational changes at the facility since 9/l/96. These shall be calculated as the difference between emissions during the compliance period and:
i) for new units, emissions that would result from compliance with otherwise applicable requirements during the compliance period assuming production comparable to that which actually occurred during the compliance period;
ii) for other units, emissions during the year prior to the initial post-9/l/96 physical or operational change assuming production comparable to that which actually occurred during the compliance period, but in no event higher than would result from compliance with otherwise applicable requirements during the compliance period.
2. For unregulated units as a group, the permitee shall choose whether or not to claim emissions reductions from physical or operational changes.
a) If the permittee chooses to claim emission reductions from the unregulated units, the permittee shall:
i) Calculate actual emissions from each unregulated unit during the compliance period under the terms of Attachment 2, and sum the actual emissions over all unregulated units;
ii) Add to the number arrived at in ~A.2(a)(i) of this attachment the emissions calculated pursuant to the procedures in section C of this attachment.
b) If the permittee chooses not to claim emission reductions from the unregulated units, the permitee shall calculate actual emissions from each unregulated unit during the compliance period under the terms of Attachment 2 and sum the actual emissions over all unregulated units.
3. Sum the numbers arrived at in A.1 and A.2 of this attachment.
B. Specific Conditions
1. With respect to units regulated under the Magnetic Tape NESHAP averaging provisions of
this permit, the permittee shall not conduct the calculations under section A.1(b) or A.1(c) of this attachment for hazardous air pollutants.
2. With respect to the PSD program for VOC and CO, the otherwise applicable requirement is the annual plant-wide emissions limit contained in Section A.II.l. of this permit.
3. With respect to the PSD program for pollutants other than VOC and CO, the otherwise applicable requirement is the actual emissions that would have been achieved if BACT had applied.
4. With respect to the PSD program, the use of netting or the use of Emission Reduction Credits which are allowed absent Project XL may be used in determining the otherwise applicable limit on emissions.
5. In conducting the comparable actions test for a pollutant (including VOC and CO) any otherwise applicable requirements of federal NSPS must be considered as well as any otherwise applicable requirements of the PSD program.
6. If a previously installed control device is bypassed or not used during all or part of the year prior to a voluntary change, the emissions during a the year prior to the voluntary change shall be calculated as if the control device had been operating the full year and no bypass had occurred.
7. If, in the judgment of the permitting authority, the permitee has substantially shifted production within the facility to unregulated units for the purpose of reducing the level of emissions from units covered under section A.1(b) of this attachment, the permitting authority shall adjust the calculations arrived at pursuant to the terms of this attachment to nullify the impact of that production shift (e.g., by assuming, that the production shift did not take place).
C. Procedures for Determining Emissions Reductions from Unregulated Units
1. For each unregulated unit the permittee shall:
a) Calculate adjusted base year emissions as:
i) for units existing in the base year, emissions that would have occurred during the base year assuming production comparable to that which actually occurred during the compliance period, but in no event higher than would result from compliance with otherwise applicable requirements during the compliance period, and;
ii) for units constructed since the beginning or the base year, emissions that would have occurred assuming generally representative industry practice and assuming production comparable to that which actually occurred during the compliance period but in no event higher than would result from compliance with otherwise applicable requirements during the compliance period.
b) Subtract from the number arrived at in C.1(a) of this attachment actual emissions from the unit during the compliance period calculated under the terms of Attachment 2.
c) Sum the numbers calculated under C.1 (b) of this attachment for all unregulated units.
d) Apply the following rules:
i) if the number arrived at in C.1(c) is less than or equal to zero, then the permitee may not claim emissions reductions under section A.2.(a) and shall follow the procedures under section A.2(b) of this attachment;
ii) If the number arrived at in C.1(c) is greater than zero, then the permitee may claim up to the
amount of this value from emission reductions that meet the requirements in C.2. as emissions reductions under section A.2.(a) of this attachment.
2. The permitee shall gain credit under section A.2.(a) of this attachment only for those changes that, in the judgment of the permitting authority, were emission reduction measures taken since 9/l/96. Installation of pollution control devices, reformulation of solvents or adoption of new processes for the purpose of pollution control, and other bona fide pollution prevention measures shall constitute emission reduction measures . Shifts in product mix (or reformulation of solvents for that purpose) resulting from normal business decisions shall not constitute emission reduction measures .
a. For each emission reduction measure meeting the criteria of paragraph C.2 of this attachment,
emission reductions shall be calculated as the difference between the emissions that actuallv occurred during the compliance period, and:
i) for new units, emissions that would have resulted without the emission reduction measure, assuming generally representative industry practice, but in no event higher than would result from compliance with otherwise applicable requirements, during the compliance period and assuming production comparable to that which actually occurred during the compliance period;.
ii) for other units, emissions that would have resulted without the emission reduction measure based on operations during the year prior to the emission reduction measure, assuming production comparable to that which actually occurred during the compliance period , but in no event higher than the emissions that would result from compliance with otherwise applicable requirements during the compliance period.
D. Definitions
1. Regulated unit: Any unit with an otherwise applicable emission limit or control requirement under MACT, NSPS, PSD (i.e. BACT) or RCRA parts AA, BB, and CC, or with an otherwise applicable unit-specific limit under a minor new source review program in an approved SIP. A unit may be a regulated unit for purposes of one pollutant and an unregulated unit for purposes of another.
2. Unregulated unit: Any unit that is not a regulated unit as defined in this attachment.
3. New unit: Any unit that is built during the compliance period or any unit that would be
considered reconstructed under section 111 or 112 of the Clean Air Act where the reconstruction occurs during the compliance period.
4. Otherwise applicable requirements: Any emission limit or requirement enforceable during the compliance period under the Clean Air Act or RCRA that explicitly limits, or has the effect of limiting, emissions of a pollutant subject to the comparable actions test. Where multiple options (e.g., a percent reduction or a VOC content limit) are offered under an emission standard, the permittee may select an option as the otherwise applicable requirement.
5. Comparable production: The actual level of production that occurred during the compliance period.
6. Generally representative industry practice: The processes and control devices that represent generally representative industry practice for more recently constructed new sources, as determined by the permitting authority.
Unregulated Sources Approach
The unregulated sources approach conceptually, outlined below is included as a portion of the Comparable Actions Test. EPA believes that this approach will support the mutual-interest of 3M, MPCA and EPA in being able to state convincingly that the comparative actions test ensures that emissions from the plant under XL are no greater than those that would have occurred without XL. To the extent that our case is not convincing, the project will be vulnerable to significantly greater controversy and legal risk. We do expect that significant comments and concerns will be raised by the NGOs regarding this overall project. However, we believe the unregulated sources approach as we have constructed it, should provide adequate assurance of environmental improvement to all reviewers while still responding to the needs and concerns of 3M and MPCA.
This approach addresses two significant concerns that arise as a result of a no debits approach. The first concern likely to be raised is that in theory, if one unregulated unit got cleaner, and 49 unregulated units got dirtier, 3M would still earn an emissions credit -- because the 49 dirtier units would be ignored. The second concern likely to be raised is that 3M could earn "windfall" credits for market-driven changes in the mix of products being manufactured.
EPA believes it is to our mutual advantage if we can avoid these criticisms by stating that (1) the unregulated portion of the plant cannot get dirtier while earning credits, and (2) the credits earned are real emissions reductions, not windfall credits from product mix changes. This will allow us to argue far more persuasively to a broader range of stakeholders that overall, averaging with unregulated units will not result in greater emissions than would occur without XL.
Our suggested unregulated source approach will set up a two step test. In the initial test, 3M would compare production weighted emissions from all unregulated units for the year at issue against the emissions from unregulated units for a baseline year. If the production is weighted emissions for unregulated units is higher than the baseline year, the plant can generate no credits from unregulated units. On the other hand, since this is an unregulated unit, NO DEBTS WOULD BE CHARGED. If the production weighted emissions for all unregulated units lower than the baseline year (i.e., the environment is better off with XL than without it), the facility can move to the next step.
In the second step, the facility must demonstrate that it has made a physical or operational change at the facility specifically to reduce pollution. Adding or modifying a control device or a reformulation of a product would be examples of a physical or operational change. A product mix change which reduced emissions would not count. The total amount of credits the facility can generate is limited to the lower of 1) the total net credits when compared against the baseline year or 2) the amount of credits it can justify due to physical or operational changes. An example is as follows:
Baseline year produces 1000 square yards of sticky tape @ .075 tons of VOC emissions/sq. yd. The operating year produces 1100 sq. yds. of tape @ .050 tons of VOC emissions/sq. yd. Potential credits would be the .025 tons /sq yd (the difference between the operating year and the baseline year) times 1100 sq. yds. or a total of 27.5 tons. However, let's assume the facility could only justify 20 tons as pollution reduction (perhaps because of a reformulation). Their total credit would be limited to 20 tons. If, on the other hand, the facility could justify 35 tons due to pollution reduction (they added a control device to an unregulated source), their credit would still be limited to 27.5 tons (the difference between the operating year and the baseline year.)
This approach will never penalize 3M by creating debits on unregulated units. It also ensures that the plant must be getting cleaner overall for 3M to earn credits from unregulated sources and that any credits generated are due to real pollution reduction measures.