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OAR Box 1778 

Prepped by Ollie Stewart 

Document Number: 

57) ll-B-32 

Docket Number: 

A-90-06 

Printed 10/28/2008 9:50:54 AM Sheet 57 of 276 
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

Office of Air Quality Planning and Standards 

Research Triangle Park, North Carolina 27711 ' 

7 JUL 1986 

II-B-32 

MEMORANDUM 

SUBJECT: Prevention of Significant Deterioration (PSD) \\"S 

Definition of "Modifi cati on \ -

 UU l 

FROM: Gerald A. Emison, Direct 

Office of Air Quality Planning antT'Standards (MD-1 

TO: Director, Air Management Division 

Regions I, III, V, and IX 

Director, Air and Waste Management Division 

Region II 

Director, A1r, Pesticides, and Toxic Management Division 

Regions IV and VI 

Director, A1r and Toxics Division 

Regions VII, VIII, and X 

The Office of Air Quality Planning and Standards (OAQPS) has recently 

received an inquiry regarding the applicability of PSD review to two 

faciiittes which would replace wet scrubbers with baghouses. The baghouses 

would improve control of particulate matter but allow a significant net 

increase of sulfur dioxide (SO2) emissions. The question is whether the 

proposed change would be subject to PSD review under the Federal PSD regulations as a major modification. For the reasons discussed below, I have 

concluded that this change would constitute a major modification. The 

Office of General Counsel (OGC) has concurred in the conclusions of this 

memorandum. 

The PSD review applies to new major stationary sources and to major 

modifications.! Subject to certain qualifications and exemptions, a 

"major modification" is a "physical change in or change in the method of 

operation of a major stationary source that would result in a significant 

net emissions increase of any pollutant subject to regulation under the 

Act" [40 CFR 51.24(b)(2) and 52.21(b)(2)]. There is general agreement 

1 Note that, although the subject cases involve PSD review, the same 

issue exists with respect to major source nonattainment new source review 

(NSR) permitting pursuant to Part D of the Clean Air Act (Act). Because 

these cases involve PSD, and because nonattainment NSR has basic program 

requirements that make this issue less likely to arise in that area, this 

memorandum focuses on PSD. The conclusions of this memorandum apply 

equally to nonattainment NSR, however. 
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that the proposed change constitutes a major modification within the 

express terms of the PSD regulations.2 For purposes of brevity, I am 

omitting the specific details of that analysis. 

The true area of controversy, and the focus of this memorandum, is 

the relevance of an exemption from review under the new source performance 

standards (NSPS). Specifically, the NSPS regulations provide that the 

following shall not be considered a modification: 

The addition or use of any system or device whose 

primary function is the reduction of air pollutants, 

except where an emission control system is removed 

or replaced by a system which the Administrator 

determines to be less environmentally beneficial 

[40 CFR 60.14(e)(5)]. 

The statutory definition of modification for both PSD and NSPS purposes 

is presented in section 111 of the Act. It has been stated that, for 

this reason, the subject exemption automatically applies to PSD even 1f 

it 1s not expressly part of the PSD regulations (memorandum from Edward 

E. Reich, Director, Stationary Source Compliance Division, OAQPS, and 

William F. Pedersen, Acting Associate General Counsel, OGC, to Allyn M. 

Davis and Paul Seals of EPA Region VI, dated April 21, 1983). 

The better approach, which I am setting forth today, is that the 

subject exemption does not automatically affix itself to the PSD regulations. 

Rather, any such exemptions may be made applicable to PSD only by express 

rulemaking. 

There are several' reasons for concluding that EPA did not intend to 

make the exemption in question here part of the PSD system, beyond the 

obvious Tack of language including it in the regulations. First, the 

program is oriented toward ambient air quality as well as technology 

based controls, in contrast to the NSPS program which addresses only the 

latter. The PSD review is a tool for air quality management and comprehen- " 

sive consideration of increases of any pollutant regulated under the Act. 

The NSPS exemption is inconsistent with this approach. In addition, it 

seems very unlikely that EPA would have imported the "environmentally 

beneficial" test into the PSD applicability calculus, inasmuch as that 

calculus is strongly quantitative and objective in its orientation, yet 

the NSPS test is highly qualitative and judgmental. In any event, the 

overall PSD calculus is simply different from the NSPS approach, and 

hence one would have expected EPA to give express indication of an intention 

to bring the NSPS exemption into the PSD calculus if indeed it had had that 

intention. 

2 The owner of the facilities has argued that this activity constitutes 

routine maintenance, repair, or replacement, thus allowing it to rely on an 

exemption from review [40 CFR 51.24(b)(2)(iii)(a) and 52.21(b)(2)(iii)(a)]. 

1 conclude, however, that this situation does not fall within that exemption. 
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» ' r ,. 

. The fact that both programs use the definition of modification 

contained in section 111 of the Act is not, in itself, sufficient to 

prove that Congress intended that NSPS exemptions then in effect would 

automatically be incorporated into PSD. Congress has, of course, occasionally ratified existing regulatory programs or approaches (e.g., 

40 CFR 51, Appendix S and uncodified section 129 of Public LawT£"95), 

but such is generally done with an express indication of that intent. I 

have found no such indication in this case. Apparently the only legislative history on this subject is the remark that Congress intended to 

conform the meaning of "modification" for PSD purposes to "usage in other 

parts of the Act" [123 Cong. Rec. H11957 (November 1, 1977)]. Given the 

distinct differences between the NSR regulatory processes promulgated in 

response to the 1977 amendments and the preexisting NSPS regulations 

defining "modification," it seems clear that Congress desired to conform 

the usage of that term in only a broad sense. 

Finally, I believe that the Federal Register preamble segment cited 

In the April 21, 1983, memorandum (43 FR 26380, 26396, June 19, 1978) 

should not be read broadly in support of automatic Incorporation of NSPS 

provisions. That preamble, involving review of fuel switches, addressed a 

regulatory reaffirmation of an exemption which had already been promulgated 

into the original 1974 PSD regulations. 

For these reasons, the subject exemption does not apply to PSD and 

the earlier memorandum cited on this topic is withdrawn. 

cc: R. Bauman 

A. Eckert 

T. Helms 

E. Reich 

D. Tyler 

P. Wyckoff