Air Permit Fees to Skyrocket, Time to Consider Re-Permitting?

From the desk of Gavin Biebuyck, Principal, Air Quality Expert

Pennsylvania DEP is expected to finalize a new air quality permit fee package in the near future.  The “Air Quality Fee Schedule Amendments” were proposed in April 2019  Public comments on the proposed fee increases are being reviewed and the agency is in the process of finalizing the fee regulation.  The annual fee for a minor source operating permit is expected to increase from the current rate of $375 to $2,500 per year for a “synthetic minor” and $2,000 for a “natural minor”.  Over the course of a 5-year permit term, this amounts to an increase of $8,000 – $10,000.  The minimum annual fee for major sources holding Title V permits is expected to be $10,000, which is in addition to the emission fees which are currently set at $93.87 per ton.  For some Title V permittees this could more than triple their annual fees.   Other fee increases include:

  • Plan Approval fees increasing from $1,000 to $2,500 per application.
  • Major Source Prevention of Significant Deterioration (PSD) application fees increasing from $22,700 to $32,500.
  • Applications involving air dispersion modeling or risk assessments will be assessed fees ranging from $9,000 – $25,000.
  • Request for Determination (RFD) air permit exemption request fees of $400 proposed. Currently no fee is required for an RFD submittal.

Why are fees increasing so much?

First, air permit fees have not been adjusted for more than 25 years.  Second, emissions-based fees for Title V sources have dropped considerably over the last 10 years as coal-fired power plants have shut down and other large air pollution sources have reduced emissions through installation of air pollution controls and/or switching to less polluting chemicals and fuels.  Finally, the US EPA may withdraw approval of Pennsylvania’s Title V Permit Program if it is inadequately funded and administered and EPA could instead promulgate a federal permit program that would be administered and enforced by the US EPA.  In short, the PA DEP’s “Clean Air Fund” is projected to have a deficit by 2020 if fees are not substantially increased.

In recent years, many State and local air pollution regulatory agencies have experienced similar shortfalls in fee revenues as a result of emission reductions at major facilities.  Revised air permit fee schedules are being proposed in other states including Kentucky and Indiana, both of which have had significant fee reductions due to multiple coal power plant closures.  Note that a typical coal power plant in Pennsylvania would have paid approximately $375,000 per year in emission fees based on annual emissions at or above the fee cap of 4,000 tons/year.  On the other hand, a comparably sized natural gas power plant would only pay about $47,000 per year assuming typical emissions of only 500 tons/year.

Re-Permitting Benefits – Lower Fees, Less Monitoring and Reporting

Liberty Environmental has several clients that have opted to re-permit from Title V to minor sources after significantly reducing VOC emissions by switching to lower-VOC paints or to zero-VOC powder coatings.  Permit holders that have actual emission rates below the Pennsylvania Title V major source thresholds (e.g., 25 tons/year VOC in the 5-county Philadelphia area, 50 tons/year VOC elsewhere in PA) should consider re-permitting as minor sources if projected production and air emission rates for the next 5 years indicates that a minor source operating permit provides sufficient operational flexibility.  In addition to significantly lower fees, benefits of re-permitting from a Title V source to a minor source include less monitoring, recordkeeping and reporting requirements.

For sources that are currently classified as minor sources, those that hold State Only Operating Permits, we recommend developing a potential to emit emissions inventory to evaluate if the facility is a natural minor source which are expected to be subject to lower annual fees than synthetic minor sources.  Natural minor sources are those that cannot exceed the major source thresholds (e.g., 100 tons/year for NOx, 50 tons/year for VOC) even with all air emissions sources operating at full capacity 24 hours/day, 365 days/year.  Synthetic minor sources are those that require operational restrictions (e.g., annual fuel caps, operating hour restrictions) to limit their potential to emit to below the major source thresholds.  PA DEP has recently been requesting these potential to emit inventories as part of the 5-year permit renewal applications.