Title V Fee Engagement
Division of Air Pollution Control to Engage Stakeholders to Develop Sustainable Title V Fee Structure
The Clean Air Act dictates that each state’s Title V program must be self-sustaining. In recent years, Tennessee’s Title V program has undergone significant fee increases to meet this threshold. The Division of Air Pollution Control believes that a more sustainable and diverse fee structure will help alleviate this problem. Its leadership plans to engage the Title V regulated community in 2022 to develop a long-term funding solution.
Tennessee’s Title V program is primarily funded through emissions-based fees. As the regulated community in Tennessee makes major strides in limiting its air pollution emissions, the Title V program has become increasingly underfunded. The Division plans to explore a more diverse fee structure alongside stakeholders to avoid the frequently reoccurring need for the Division of Air Pollution Control to request emission-fee rate increases.
The Division has developed a stakeholder engagement plan, which will include meetings, webinars, and surveys to capture feedback. We look forward to your participation in this process.
Stakeholder Webinar August 23, 2022
- Title V Fee Diversification PowerPoint August 23, 2022
- Stakeholder Webinar Video Link
Current Title V Fee Structure:
- Dollar per ton fee – fees paid based on actual or allowable emissions (facilities may choose). Facilities may also choose to pay based on a mix of actual and allowable emissions. Non-EGUs and EGUs have different rates. TDEC considers this a Variable Fee.
- Base Fee – a flat fee that each facility pays. TDEC considers this a Non-variable Fee.
- Minimum Fee – A facility calculates its dollar per ton fee and adds it to the base fee. If that amount is less than the minimum fee, they pay the minimum fee. TDEC considers this a Non-variable Fee.
- Construction Application Permit Fee (graduated scale based on emissions) – A fee that is due when a facility submits an application to construct a new source of air pollution or modify an existing source of air pollution. The amount of the fee is based on the anticipated maximum emission rate and ranges from $100 to $5000. Prior to July 1, 2022, existing Title V facilities were exempt from construction application fees. After July 1, 2022, Title V facilities will pay this fee. TDEC considers this a Variable Fee.
Re-work Construction Application Permit Fee. TDEC considers this a Variable Fee. It could include:
- Adjust the graduated scale based on emissions – Similar structure as current construction application fee, but with different rates. TDEC considers this a Variable Fee.
- Various fees based on type of permit – This option is to modify or add to the construction application permit fee based on the type of permit (non-PSD construction, PSD construction, and Nonattainment NSR construction)
- Individual services within each construction permit – This would include additional fees for specific work activities associated some construction permit applications (e.g., BACT analyses, air quality modeling).
Fees Amendments or Modifications to Permits – APC currently does not charge fees for modifying air quality permits. TDEC considers this a Variable Fee. This includes:
- Amendments to construction permits
- Modifications and Amendments to Title V Operating permits:
- Administrative Amendments
- Minor Modifications
- Significant Modifications
- Re-Opening for Cause
- Changes at Title V facilities that require notification from the facility but does not require a change to the Title V operating permit. This includes:
- 502(b)(10) and Operational Flexibility Changes
- Insignificant Activities and Insignificant Sources
- Exempt Sources – Title V facilities are not required to notify APC of exempt sources. However, facilities sometime request concurrence from APC that a source qualifies as an exemption. APC’s response to such request is referred to as an Exemption Letter.
PAL (Plant-wide Applicability Limit) permit fee
Fees for establishing and or renewing a PAL emission limit. Since PALs are pollutant-specific, this fee would be per-pollutant. PALs must be renewed every 10 years. TDEC considers this a Variable Fee.
Source Test Review Fee
Some air quality permits and federal regulations require facilities to conduct tests to measure emissions emitted from a source. This is referred to as a “stack test”. Such facilities are required to submit the test results to APC who reviews and approves the test methods and results. Since many source tests are only required once, TDEC considers this a Variable Fee.
Initial Operating Permit Fee
This would be a fee for a new facility to obtain their first Title V operating permit. It would also be required for an existing Conditional Major source that adds or modifies emission units so that allowable emissions exceed the Major Source Thresholds. It is also required for sources that voluntarily relax production or emission limits that had been in place to make the facility a Conditional Major source. These types of facilities would first have to obtain a construction permit. Once the source is constructed or modified, the facility would apply for its initial operating permit. Since an initial operating permit would only happen once during the life of a Title V facility, TDEC considers this a Variable Fee.
Requested Board Variance Fee
For when an entity requests a variance from the Air Pollution Control Board that would allow a facility to permanently or temporarily violate a provision of Tennessee’s Air Quality Rules. TDEC considers this a Variable Fee.
Source-Specific SIP Revision Fee
For when an entity requests a revision to a permit that would be in violation of a provision in Tennessee’s State Implementation Plan (SIP). The difference between this and a Board Variance is that the source-specific SIP revision would require public notification and review and approval by EPA. If a Board Variance allows a facility to violate a rule that is part of Tennessee’s SIP, the facility would still be in violation of the SIP unless a source-specific SIP revision is approved by EPA. TDEC considers this a Variable Fee.
Initial Conditional Major Permit (going from Title V to Conditional Major)
If an existing Title V facility removes emissions sources, reduces production, or otherwise changes its operations so that it can accept voluntary emission or production limits to reduce allowable emissions below major source thresholds, it must apply for a Condition Major Operating permit. Since the transition from Title V to Conditional Major generally occurs once in the life of a facility, TDEC considers this a Variable fee.
An additional annual fee collected to represent the complexity of some sources vs. others within the Title V program based on the chosen factor like applicable federal programs or number of sources at the facility. TDEC considers this a Non-variable fee.
AEAR (Actual Emissions Analysis Required) review fee
Facilities that determine Title V fees based on actual or a mixture of actual or allowable fees must submit an AEAR report each year. APC staff must review these reports to determine if they are correct. TDEC considers this a Non-variable fee.
Acid Rain Permit Fee
Facilities subject to EPA’s Acid Rain permit must obtain a permit that includes the requirement of the Acid Rain program every five years. Note that currently, only TVA facilities are subject to the Acid Rain program. TDEC considers this a Non-variable fee.
Report Review Fees
Title V facilities are required to submit Annual Compliance Certification every year and a Semi-Annual Report every six months. Other regular reports may be submitted on a regular basis in accordance with federal regulations. These reports must be reviewed by APC staff to determine completeness and compliance. TDEC considers this a Non-variable fee.
Emissions Inventory Review Fee
Applies to sources that are major for Criteria Pollutants (see definition of Regulated Pollutant). All must submit an inventory of emissions every three years and higher emitting sources must submit their inventory every year. APC staff must review these reports to ensure that they are correct and enter the information into EPA’s national emissions inventory database. TDEC considers this a Non-variable fee.
502(b)(10) and Operational Flexibility (op-flex) Changes at a Title V source that does not require a change to the Title V operating permit. If, however, the change includes constructing or modifying an emissions source, it would require a construction fee and not qualify for a 502(b)(10) or op-flex.
Acid Rain program An EPA program established in accordance with the federal Clean Air Act that requires reductions of sulfur dioxide and nitrogen oxides, the primary precursors of acid rain, from the power sector.
Actual Actual Emissions (usually expressed in tons per year) that are emitted by a facility. Tons per year are expressed either in a calendar year or state fiscal year (July through June).
Administrative Amendment Simple changes to Title V operating permits, such as name and ownership changes and correcting typographical errors.
AEAR Reports Facilities that determine Title V fees based on actual or a mixture of actual or allowable fees must submit an AEAR report, including how the actual emissions were calculated, each year.
Allowable The emission rate that is allowed by an issued air quality permit. If an air quality permit has yet to be issued, the allowable emission rate is determined by applicable state and federal air quality regulations as well as operational constraints of the facility.
Conditional Major Source A facility whose allowable emissions would make it a major source, but has taken voluntary limits to make it a non-major source.
Construction Application Fee A fee that is due when a facility submits an application to construct a new source of air pollution or modify an existing source of air pollution. This includes applications for PSD permits, nonattainment NSR permits, and non-PSD construction permits (all other applications that are not PSD or nonattainment NSR). A construction permit is also required to establish or change an emission or production limit. However, for Title V sources, the construction or modification of many sources can be done through a minor modification.
CPI Consumer Price Index. A popular measure of inflation (and deflation) published by the federal Bureau of Labor Statistics.
EGU Electric Generating Units, these are power plants. All EGUs in TN are owned by TVA.
Exempt Sources There are three lists of types of exempt emission sources listed in Tennessee Air Pollution Control Rule 391-3-1-.04. If a facility adds a source on any of these lists, no permit is required.
GACT Generally Available Control Technology. This is a common term for a set of federal air quality regulations that apply to non-major sources of HAPs.
Insignificant Activity or Emissions Unit A source that is not included in one of the three exemption lists but whose emissions are below 5 tons per year (or 1000 pounds per year for HAPs).
MACT Maximum Achievable Control Technology. This is a common term for a set of federal air quality regulations that apply to major sources of HAPs.
Major Modification Once a source become a Major Source (see below), projects that increase allowable emissions by a certain amount or greater are major modifications. The major modification threshold differs by pollutant. Common thresholds are 10 tons/year for fine particulate matter, 40 tons per year for NOx, SO2, and VOC, and 100 tons/year for CO. The concept of Major Modification does not apply for HAPs.
Major New Source Review or Major NSR Includes PSD and Nonattainment New NSR, both of which are defined elsewhere.
Major Source Sources that have potential emissions of one or more regulated air pollutant that exceed major source thresholds. The major source thresholds vary by industry type and pollutant, as specified below:
100 tons per year of any regulated air pollutant (other than HAPS) for facilities that are in one of 28 named source categories. The 28 named source categories are specified in state and federal air quality regulations.
250 tons per year of any regulated air pollutant (other than HAPS) for facilities that are NOT in one of 28 named source categories.
10 tons per year of any single HAP (Hazardous Air Pollutants) and 25 tons per year of total HAPs. There are 188 HAPS specified in state and federal air quality regulations.
Minor Modification Changes to Title V permits that do not involve:
- changes to existing monitoring, reporting, or recordkeeping requirements (except changes in monitoring parameter ranges can be done through minor modification)
- require case-by-case determinations (these would normally require a PSD construction permit)
- change a limit that was established to avoid an applicable requirement, such as PSD or MACT
- changes to an existing source that would make that source subject to NSPS, MACT, or PSD
*For Title V sources, a minor modification can be used to install a new emissions source or modify an existing one, as long as it doesn’t involve one of the criteria listed above.
NESHAP National Emissions Standards for Hazardous Air Pollutants. This includes MACT standards, GACT standards, both of which are contained on Title 40 Part 63 of the Code of Federal Regulations (40 CFR 63) and a set of older standards contained in 40 CFR Part 61. Note that some people often (incorrectly) refer to the Part 61 standards as NESHAPs and the Part 63 standards as MACTs and GACTs.
Nonattainment NSR The permitting requirement for new major sources and major modifications in nonattainment areas. Nonattainment NSR only applies for the pollutant for which the area is nonattainment. There is currently only one nonattainment areas in Tennessee (an area around Eastman Chemical in Sullivan County for SO2). Nonattainment NSR is rare.
Non-EGU Any facility that is not an EGU.
Non-Variable An emission fee option that would not significantly change from year to year either for either a specific facility or for the universe of Title V facilities within the state. Currently, the portion of Tennessee’s Title V fee system that are considered non-variable are the base fee (currently $5000 per facility, increasing to $6000 in 2023) and minimum fee (currently $9000, increasing to $10,000 in 2023).
PAL Plant-Wide Applicability Limit. An emission limit established through permitting that sets a maximum “plant-wide” limit for an air pollutant that is established using specific state and federal permitting procedures. PALs are pollutant-specific. Thus, if a permit has 10 facility-wide limits, it has 10 PALs. PALs, by definition, are above the major modification thresholds. A PAL allows facilities to make changes at their facility that would be subject to Major NSR if not for the PAL.
PSD Prevention of Significant Deterioration. The permitting requirement for new major sources and major modifications at existing major sources. PSD permitting have more stringent permitting, public participation, and EPA review requirements than other construction permits and takes at least an order of magnitude more work by APC. TN APC averages 1-2 per year, but have received 12 PSD applications in the past couple of years.
Regulated Air Pollutants For the purpose of Title V fees, this includes:
- Nitrogen Oxides (NOx), Particulate Matter (PM), Sulfur Dioxide (SO2), and Volatile Organic Compounds (VOC), Lead (Pb) – These are considered “Criteria Pollutants” because EPA has National Ambient Air Quality Standards (NAAQS) for them. EPA has also established a NAAQS for Carbon Monoxide (CO), but TDEC is prohibited by statute from charging fees for CO. Note that Pb is usually emitted in relatively small amounts that have little impact on Title V fees.
- Hazardous Air Pollutants or HAPs
- Any pollutant that is subject to federal regulation that is not a Criteria Pollutant or HAP. Examples of pollutants that fit into this category are hydrogen chloride (HCl), hydrogen fluoride (HF), Hydrogen Sulfide (H2S), total reduced sulfur compounds (TRS), carbonyl Sulfide (COS), and carbon disulfide (CS2). Many of these are regulated by federal New Source Performance Standards (NSPS), so we often refer to them as NSPS pollutants.
Note that for the purpose of fees, we don’t double count emissions. For example, if a pollutant is a HAP and a VOC, they only pay for VOC.
Significant Modifications A change to a Title V permit that cannot be done through an Administrative Amendment or Minor Modification. Changes at Title V facilities that require a construction permit are incorporated into the Title V permit through a Significant Modification.
Title V The permit program that applies to major sources of air pollutants or to facilities subject to federal regulations that require applicable facilities to obtain Title V permits. (Note that the primary category of non-major sources that are required to obtain a Title V permit is municipal solid waste landfills.)
TVA Tennessee Valley Authority
Variable An emission fee option that can significantly change from year to year for either a specific facility or for the universe of Title V facilities within the state. Currently, the portion of Tennessee’s Title V fee system that is considered variable is the dollar per ton fee ($/ton). Tennessee has different $/ton rates for EGU’s, non-EGUs, actual emissions, and allowable emissions. All of these go up in 2023. Facilities can change between paying allowable and actual fees, or a mixture of the two, from year to year. This flexibility makes the $/ton fee even more variable.