3 comments
Overall, Volvo Group North America fully supports the amendment of each of the four proposed regulations such that Virginia regulations will be equivalent to and no more stringent than the federal requirements. The Volvo Group has a special interest in the amended definition outlined in #1 above for the definition of “baseline actual emissions” to conform to the federal definition.
A major reason that EPA extended the look back period in the federal regulations was the Agency’s acknowledgment that a source’s production activity and associated emissions generally will fluctuate as a result of normal fluctuations in market conditions during a business cycle. The Agency understood a common industry complaint that a plant’s capacity was frequently expected to be surrendered under the original approach that applied only a 2-year look back. Thus, in 1997 EPA contracted a study of business cycles for various major source categories subject to the PSD program and found that a 10-year look-back period would assure that the normal business cycle generally would be captured for any industry. With that extended look back period, EPA sought to provide a source owner or operator with a greater ability to preserve a unit’s historical operating levels and associated emissions. See EPA, Technical Support Document for the Prevention of Significant Deterioration and Nonattainment Area New Source Review Regulations, I-2-2 and I-2-5 (Nov. 2002).
Virginia’s current 5-year look back period adversely affects Volvo Group in the manner which EPA’s 10-year look back period sought to avoid. The plant, which is now considering an expansion in the paint shop, would be handicapped by the low production rates experienced in the Great Recession during the past 5 years and the subsequent slow recovery of the marketplace for heavy trucks.
A ten-year business cycle is more representative of the heavy truck manufacturing industry. However, major financial events, such as the Great Recession, can manifest a business cycle that exceeds the typical truck manufacturing business cycle. Consequently, at this time production levels for the plant are not projected to match the high levels of 2005 and 2006 for several more years or until the end of the decade.
To demonstrate the impact of a five- year look-back period upon a capital investment decision, the Volvo Group would have been required to submit a complete major NSR application by DEC 2009. Completion by this date would have allowed the inclusion of emission rates during the plant’s high production years as part of the baseline calculation. However, this application would have had to be submitted at the depths of the Great Recession, a time when the industry was trying to survive the greatest economic collapse since the Great Depression rather than a time when the industry expected continuing economic growth. On the other hand, with a ten –year look-back period, the plant’s high production rates of 2005 and 2006 can still be considered at this time.
The DuPont Spruance Plant respectfully submits the following in support of the petition submitted to the State Air Pollution Control Board (“the Board”) by the Virginia Manufacturers Association (“VMA”) and published in Volume 30, Issue 9 of the Virginia Register of Regulations, dated December 30, 2013.
DuPont is a member company of the VMA. The DuPont Spruance Plant is facility located in the Commonwealth of Virginia that is owned and operated by DuPont. The address of the DuPont Spruance Plant is 5401 Jefferson Davis Highway, Richmond, Virginia 23234 (tele. 804-383-2000). As a result of its location in the Commonwealth of Virginia, the DuPont Spruance Plant is directly affected by the regulations addressed in this petition.
The currently required 5-year lookback period is unduly restrictive and as VMA stated in their petition has the potential for “confiscation” of our facility’s productive capacity. Business cycles do occur and can vary greatly in duration and intensity. The “Great Recession” is a real case in point. Some of our production units to this day remain below pre-Recession production rates. New capacity expansion projects in such units would be at a distinct disadvantage as a result of the short 5-year lookback period when determining permitting applicability. It should also be noted that as a result of the “Great Recession,” a number of capacity expansion projects have been delayed. If such delays made it necessary to re-visit permitting applicability, the 5-year lookback period would include much of the very slow business cycle period. It could result that permitting of these very same expansion projects could result in subjecting such units to even stricter permit requirements. It’s for these reasons that we believe the 10-year lookback period is more reasonable and would capture an entire business cycle.
As VMA stated in their petition, there is no compelling reason for Virginia’s more restrictive approach by not allowing different baseline periods for each different pollutant. An assumption is being made that all pollutants will increase or decrease in an identical manner (at the same rate) as production increases or decreases. At our facility, this has not always been shown to be the case. For example, we have a section of a production unit that produces a polymer which is shipped to a number of domestic and international facilities. This area is primarily a source of VOC’s. Another area of the same production unit produces a yarn product which is a mainly a source of particulates. Both areas, although considered a part of the same emission unit, can operate independently of one another. For example, the polymer production area can continue to run (in order to supply these other facilities) while the yarn facility is shut down. Thus, the emissions of VOC and particulate could operate in an essentially independent manner. As a result, requiring the same consecutive period for each different regulated NSR pollutant can place this facility at a significant disadvantage with regards to permitting applicability.
The DuPont Spruance facility has not considered applying for a Plantwide Applicability Limit (PAL) due to the elaborate permitting process, recordkeeping and reporting requirements. However, we do recognize that there may be benefits to a facility owner/operator since compliance with a PAL may eliminate recurring major NSR concerns and provide needed certainty to the facility owner/operator over the duration of the PAL. Under the currently more-restrictive Virginia regulations, the duration of the PAL is restricted to only five years (vs. the 10-year PAL duration allowed by the EPA). This short renewal cycle serves as an even greater disincentive to businesses to apply for such a permit. The PAL is based on the past actual emissions of that pollutant. As stated in section “a” above, a 10-year business cycle is more reasonable/realistic since studies have shown (as well as our actual experience) that it may take a considerable period for businesses to recover from significant economic downturn periods such as the last major recession. So, for this reason and also for the certainty businesses need in order to survive in today’s ever increasingly demanding environment, we agree with the “VMA” petition that the Virginia regulations be changed to allow for 10-year PAL duration. The more restrictive Virginia PAL duration also places Virginia manufacturing facilities at a distinct competitive disadvantage in comparison to other states which could have the effect of influencing companies to locate their manufacturing facilities in a less-restrictive state.
The DuPont Spruance facility is in agreement with VMA’s view that a replacement unit that is similar to the unit being replaced should not be considered as a brand new unit but rather as a unit “modification.” It is simply unreasonable and punitive to consider the unit being replaced as having zero emissions. The unit being replaced would likely have relevant historical data that could be used to establish an actual emissions baseline or projection of future actual emissions for such new units. In addition, if Virginia air regulations were left unchanged with regards to the replacement unit provisions, it could likely place our facility at a distinct competitive disadvantage compared to most other states that have adopted the EPA replacement unit provisions as written and thus with less onerous permitting regulations. DuPont Spruance has a number of significant competitors with regards to our various product lines. Thankfully, we have not had to replace any emission units since Virginia adopted the much more restrictive Replacement unit provisions. Without the EPA’s Replacement unit provisions, DuPont Spruance could face a significant loss of business due the expense of required unreasonably high level of emission controls, higher permitting fees, considerable amount of time to obtain a major NSR permit due to the increased permit complexity and required EPA and public comment periods involved.
On December 30, 2013, the Department of Environmental Quality (DEQ) presented notice in the Virginia Register (Volume 30, Issue 9) for public comment a petition filed by the Virginia Manufacturers Association (VMA). The petition requests that DEQ open its Major New Source Review regulations (9 VAC 5-80 Permits for Stationary Sources) for specific changes to amend these regulations to make them no more stringent than companion federal regulations. MeadWestvaco (MWV) supports these changes for the reasons that are outlined within the body of these comments.
MWV operates a major manufacturing facility in Virginia and has been subject to these regulations for many years. Virginia has always been concerned about the environment and sensitive to manufacturing and its economic benefits. Virginia has balanced these interests well and as a result has seen emission levels reduced over the years. Part of this balance has been achieved through adoption of a philosophy to make environmental regulations no more stringent than those required by federal standards without demonstration of good cause for such stringency. MWV believes that the provisions identified in VMA’s petition are ones that go beyond federal standards unnecessarily and should be amended.
The past five years have been extremely difficult for manufacturing as a result of the economy. This has resulted in a longer than normal business cycle and overall production rates have been lower than they were during prior periods. In addition, this period has been longer than other business cycles. Now that the economy is showing signs of recovery, manufacturing will have greater opportunity to grow.
As structured the current regulations will, however, dampen this growth. The first and third provisions of VMA’s petition focus on the current Virginia five year look back period as opposed to the federal ten year look back period. The longer look back period allows businesses and DEQ to have greater flexibility in how production rates and emission rates more naturally change over time. As written the five year look back period will penalize businesses due to the overall economy and not necessarily to a specific business cycle. A ten year look back will allow businesses to compare past actual emissions to whatever future changes might be subject to a permitting assessment more accurately. MWV believes that this will give businesses more flexibility as well as simplifying permitting for DEQ.
MWV obtained a permit during this period and had a ten year look back period been in place, it would have resulted in a much simpler review for DEQ and a less complicated permit. Using the shorter 5-year look back with a period of slower production, the emissions of one particular pollutant showed an increase of emissions and the project was nearly considered a major modification. Using the more realistic 10 year look back which would include more normal production levels, the project evaluation would have shown an overall decrease in emissions.
VMA’s petition also requests that DEQ include the replacement unit provisions, Item 4, within its regulations as adopted by EPA. MWV believes that this will allow for simpler permitting without negative effects on emissions. The current methodology requires that the emissions from a new unit be compared to significance levels. If those levels are exceeded then a facility must consider any other affected units and emissions increases and decreases over the look back period. With respect to a replacement unit in reality, a new unit retiring an older unit will often result in the same or lower emissions. However, the current methodology creates unnecessary permitting efforts due to the described emission accounting exercise without a benefit to the environment. Adoption of the replacement unit provision will allow a facility to compare emissions from the new unit with the emissions of the unit to be retired within the same step.
MWV fully supports the VMA petition and urges DEQ and State Air Pollution Control Board to amend its regulations.