EPA Announces Proposed Changes to Ethanol Plant Air Permitting

By Howard Gebhart | April 01, 2006
In early March, the U.S. EPA announced proposed changes to federal new source review and operating permit requirements as they apply to ethanol plants. If approved, these changes would have two primary effects: 1) The emissions threshold for "major source" under the Prevention of Significant Deterioration (PSD) permit program would increase from 100 tons per year (tpy) to 250 tpy, and 2) fugitive emissions would no longer be counted when quantifying total emissions for comparison to the major source threshold under federal PSD and the Title V operating permit programs. The EPA's justification for these proposed changes is to equalize the permitting regulations governing food-grade ethanol and fuel ethanol plants.

Air quality regulations for ethanol plants before the proposed changes

Historically, the EPA has regulated most fuel ethanol plants as a "chemical process plant." This is important because "chemical process plant" is one of the listed categories for major sources of emissions in the Clean Air Act. Listed categories have a major source emissions threshold of 100 tpy and are also required to count fugitive emissions when quantifying emissions for comparison to the threshold.

The EPA's policy was based on the Standard Industrial Classification (SIC) code for fuel ethanol production, which is 2869 (Industrial Organic Chemicals, Not Elsewhere Classified). In a 1981 policy memorandum, the EPA ruled that any facility listed in SIC Major Group 28, including fuel ethanol production, would be considered a "chemical process plant." As such, fuel ethanol plants were required to maintain emissions below 100 tpy in order to avoid classification as a major source under federal PSD rules.

On the other hand, wet mills are listed under SIC code 2046 (Wet Corn Milling). Because "wet corn milling" is not a listed category in the Clean Air Act, the major source threshold under the PSD regulations defaults to 250 tpy. In addition, the source is not required to quantify fugitive emissions when determining major source status.

What are the EPA proposed rule changes?

The EPA's proposed rule changes are actually very simple. Where "chemical process plants" are listed in the applicable regulation, the EPA would modify the regulation to read "chemical process plantswhich do not include wet and dry corn milling facilities which produce ethanol fuel." This would exempt wet and dry corn mills from classification as a "chemical process plant," which in turn, would result in the 250 tpy threshold being applied. Also, fugitive emissions would be excluded when quantifying emissions toward the threshold.

It should be noted that the 250 tpy threshold only applies to new and/or modified sources in attainment areas under the federal PSD regulations. If the ethanol plant is located in a non-attainment region or within the northeastern United States ozone transport region, the threshold would remain at 100 tpy (or less, depending on the severity of non-attainment). However, the new rule change would still exempt quantifying fugitive emissions, even in non-attainment areas.

For the Title V operating permit regulations, the major source threshold is 100 tpy for all sources, which would be maintained under the rule changes. However, like the PSD rule, fugitive emissions would not be counted toward the Title V threshold. Please note that it is possible for a source to be classified as a "minor source" for the purposes of PSD, yet be classified a "major source" for the purposes of Title V.

The definition of "major source" under federal hazardous air pollutant (HAP) regulations would not be changed by the EPA's proposed rule changes. The threshold for HAP emissions would remain at 10 tpy for any single HAP and 25 tpy for the combination of all regulated HAPs. At many ethanol plants, the HAP threshold may be more difficult to maintain. The major HAP of concern at ethanol plants is usually acetaldehyde.

Readers should remember that the EPA's proposed changes have not yet become final. After publication in the Federal Register, the proposal will be subject to a 60-day public comment period. the EPA must then review and respond to any comments before promulgating a final rule, which may be somewhat different depending on comments received by the EPA.

The EPA's proposal may also require that similar changes be adopted into state PSD and Title V rules before they become effective in any particular jurisdiction. As such, some delay may occur before these rule changes become fully effective across the country.

How might these changes affect ethanol plant operations?

Assuming that the EPA's proposal becomes effective without significant modification, the result is that it should become easier for new and modified fuel ethanol plants to stay minor sources. This also reduces the risk of plant emissions inadvertently exceeding the major source threshold. Currently, ethanol plants up to around 100 MMgy have been permitted as minor sources. If the threshold increases to 250 tpy, ethanol plants should be able to be sized and/or increase production in the 200 MMgy to 250 MMgy range and still maintain minor source status under PSD. However, plants with production levels above 100 MMgy might need to become major sources under the Title V operating permit program or HAP regulations.

Typically, the major advantage for maintaining minor source status is a shorter agency review time for new and/or modified construction permits. Also, minor sources are not normally subject to Best Available Control Technology (BACT) requirements. However, most modern ethanol plants already employ BACT, so such an exemption is not particularly important to the ethanol industry.

One outcome of the fugitive emissions exemption might be relaxation of certain permit requirements, especially quantifying fugitives for compliance with plant-wide emission limits. Examples of fugitive emission sources include leaks from pumps, valves, flanges, etc.; and emissions from wet cake storage. Also, if plant emissions are significantly below 250 tpy, regulatory agencies may relax emissions-tracking requirements for minor equipment, such as the emergency fire water pump, cooling towers, product storage tanks, etc.

For HAP emissions, the regulatory framework will not change. The federal permit regulations impose Maximum Achievable Control Technology (MACT) as the standard for any new major source of HAP emissions. MACT is generally the most stringent emissions limitation that exists at a similar source, which means that if any other ethanol plant is using a particular control technology (i.e., supplemental control such as an RTO downstream of the CO2 scrubber), these controls would likely define MACT for the industry as a whole. Other requirements for major HAP sources include emission standards for boilers, product storage tanks, reciprocating internal combustion engines, etc.

If an ethanol plant operator chooses to exceed the 100 tpy threshold under PSD, the plant would then become subject to Title V operating permit requirements. Generally, Title V sources should not be subject to any new regulatory requirements, as the Title V permit is supposed to incorporate only otherwise applicable requirements. However, possible disadvantages of Title V are payment of annual emissions fees and more frequent agency compliance inspections. In general, the added obligations of Title V by itself are usually insufficient to warrant keeping emissions below 100 tpy, provided the operator desires the added margin of safety that a higher emissions limit would provide.

The EPA's proposed regulatory changes to increase the major source threshold for new and/or modified permits at fuel ethanol plants should benefit most ethanol producers. However, producers should not expect these changes to become immediately effective. Even after final adoption by the EPA, producers in some states may need to wait for similar regulatory changes to be adopted into state PSD rules before they will be able to take full advantage of these changes to permit requirements.

Comments are due 60 days following official publication by EPA in the Federal Register. When preparing this article, the Federal Register publication date had not been set.

Howard Gebhart is director of environmental compliance for Air Resource Specialists Inc. He can be reached at hgebhart@air-resource.com.