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# OAR Box 1778

Prepped by Ollie Stewart



### Document

Number: 

# 75 ) ll-C-1 7

Docket Number: 

# A-90-0 6

Printed 10/28/20089:50:54 AM Sheet 75of 276P. 2

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# 3»ld o 199 0 

# v a UNITE

D STATE S ENVIRONMENTA

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. CHICAGO , ILLINOIS 6M4 4

I.SM. T TO TH E ATTEHTIO N OF

. 

### Mr

. Timoth y J

. Metho

d Assistan tCaanissicne r Offic e o f

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t Indian aDepartmen

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### 601 5 Indianapolis , Indian a 46206-601 5

Dea r Mr . Method : Th e purpos e o f thi s lette r i s t o oumuai t o nth e permi t propose db y th e Indian a Departmen t o f Bivircnoenta l Managemen t (IDEM ) fo r Norther nIndiana Publi c Servic e Company' s (NIPSCO ) Baill y generatin g station , ih e perai t provide s fo r th e constructio no f a nai r pollutio ncontro l devic e an d directl y relate dinprcvement s unde r th e dea nCoa l Technology (CCT ) program . Th e Environmenta l Protectio nAgenc y (EPA ) agree s wit hth e determinatio nb y IDEM tha t th e Stat e an d EP A rule s fo r preventio no f significan t deterioratio n (PSD ) an d ne w

sourc e performanc e standard s (NSPS ) ar e no t intende dt o appl y t o th e CC T ptujec t a t Bailly . I nothe r words , th e projec t shoul dno t b e considere da "majo r modification 1 1 unde r ne w sourc e review

(MSR ) o r a "modification " a s se t fort hunde r NSP S provide dcertai nrequirement s ar e met . I na separat e bu t relate dissue , ISA als o agree s wit hth e determinatio nb y IDEM tha t th e additio no f a diese l generato r a s a backu ppowe r suppl y t o th e scrubbe r t o b e installe da t Baill y i s no t a majo r modificatio ni f th e limit s o noperatin g th e generato r agree dt o by NIPSO 0 ar e federall y enforceable . Introductio n

Fo r NSP S purposes , a modificatio ni s define da s an y physica l chang e in , o r chang e i nth e metho do f operatio nof , a stationary sourc e whic hincrease s (i nterm s o f hourl y

emission s capacity ) th e amoun t o f an y ai r pollutan t regulate dunde r th e Clea nAi r Ac t (Act ) whic hi s emitte db y suc hsource , o r whic hresult s i nth e emissio no f an y ai r pollutan t no t previousl y emitted . Fo r NS Rpurposes , a majo r modificatio ni s a modificatio nwhic hresult s ina significan t ne t emission s increas e (i nterm s o f actua l annua l emissions) . Th e EP A ha s becom e awar e tha t thes e definition s ca nb e interprete di nsuc ha manne r a s t o subjec t t o NS Ro r NSPS , o r both , certai nenvironmentall y desirabl e activitie s a t existin g stationary source s whic hneithe r Congres s no r EP A intende dt o b e covere db y th e Act' s new

sourc e requirements . Moreover , NS Ro r NSP S coverag e would , i nsom e instances , hav e th e effec t o f discouragin g suc hactivities . Th e EE A believe s tha t suc hactivities , including CC T demonstratio nprojects , ar e no t physica l change s o r change s i n th e metho do f operation , s o long a s the y mee t certai ncriteri a discusse d herei nan i EP A

issue s a napplicabilit y exclusion . Hence, , suc hactivitie s ar e no t "ncdifications " fo r NSP S purposes , o r '•majo r "edifications " fo r NS R purposes .P. 3

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Ove r th e pas t severa l months , EP A ha s hel dnumerou s interna l meeting s t o discus s th e Clea nAi r Ac t regulatory issue s raise db y

th e CC T program . A s a resul t o f thes e discussions , th e EEA ha s decide dt o issu e a ninterpretative rulin g a s sco na s possibl e t o proviti e guidanc e o nth e definitio no f a physica l o r operationa l change * a s i t applie s t o ne w sourc e requirements . I n a lette r date dJanuar y 5 , 1990 , EP A

advise dNIPSC O o f thi s intention . Essentially , thi s rulin g woul dclarif y tha t i f a sourc e solel y add s o r enhance s system s o r device s whos e primar y function s ar e th a reductio no f ai r pollution , an d tha t ar e determine dt o b e no t les s envircrnoantall y

beneficia l (a s determine db y th e Administrator ) tha nan y emissio ncontro l system o r devic e i t replaces , i f any , suc hactivitie s woul d ne t constitut e a physica l o r operationa l chang e triggerin g new sourc e requirements . Consequently , NSP S an d PS D an d nonattainmen t ne w sourc e review woul dno t appl y

t o thes e type s o f activities . Thi s interpretative ruling woul dinclud e permanent , a s wel l a s temporar y project s unde r th e OC T program . However , i t woul dno t extendt o project s tha t primaril y ar e intende dt o exten dth e lif e o f a plan t o r increas e capacity , m addition , an y

changes , permanen t o r temporary , whic har e expecte dt o significantl y increas e emission s t o th e atmosphere , suc ha s change s whic hincreas e a source' s hourl y operatin g capacit y

(e.g. , eliminatin g a bottleneck) , hourl y emission s rat e (e.g. , on e pollutan t decrease s bu t anothe r increases) , o r utilizatio nrat e (e.g. , a nanticipate dincreas e i nhour s pe r yea r o f operatio nresultin g fro m th e installatio no f controls ) woul dstil l b e subjec t t o NS Ran d NSPS . .. . Base do nou r revie w

o f th e draf t permit , w e believe , tha t th e Baill y projec t i s consisten t wit hth e provision s EP A i s developin g fo r it s interpretativ e ruling . O nthi s basis , w e hav e reache dth e conclusio ntha t thi s projec t i n particula r i s no t subjec t t o NSP S o r majo r NS Rrequirements , s o lon g a s i t continue s t o mee t th e criteri a diBcnsB-Pr t herein . , Th e balanc e o f ou r cosnent s outline s th e ground s fo r EPA' s conclusio nan d contain s a discussio no f th e anticipate dterm s o f EPA' s upcomin g interpretativ e rule . Th e EP A i s stil l deliberatin g th e specifi c term s an d provision s o f it s interpretativ e ruling . Whil e today' s cccroent s reflec t EPA' s curren t expectation s o f wha t wil l b e containe di ntha t document , th e actua l term s o f th e rulin g ma y diffe r fro

m thos e dlscus-war

t herein .

Background

A * Ih e NS Ran d NSP S Provision s o f th e Clea nAi r Ac t

Th e NS Ran d NSP S provision s o f th e Ac t appl y t o wholl y

new facilities , and t o modification s a t existin g facilities , whe ncertai ncondition s ar e met . Th e rule s governin g th e applicabilit y o f NS Ran d NSP S t o modification s a t existin g facilitie s ar e describe di ndetai l i nth e EP A regulation s (see 4 0 CF R51.16 5 an d Appendi xS , 52.21 , 60.1 4 an d 60.15) . I ngeneral , th e ncdi f icatien s tha t woul dtrigge r thes e ne w sourc e reo^iirement s ar e thos e involvin g physica l o r operationa l change s whic hincreas e emission s ove r baselin e levels . (I naddition , fo r NSP S purpose s unde r EP A regulations , a reconstructio noccur s and a sourc e i s considere d"new " i f th e physica l o r operationa l chang e cost s mor e tha n5 0 percen t o f th e replacemen t cos t o f th eP. 4

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-3 - affecta dfacility , regardles s o f whethe r a nemission s increas e occurs) . Th e term "physica l o r operationa l (^lanrje" i s -rrinstrn» dbm*rtl y

*rr i i*a y incl'.y1 » th e installation , use , o r dismantlin g o f pollutio ncontro l equiapraant .

1 . - Backgroun do f th e NSP S an d NS RModificatic nProvisions .

Th e 197 0 Amendment s t o th e Ac t require dEP A t o promulgat e technology-base d ne w scurc e performanc e standard s applicabl e t o th a constructio no r modificatio no f stationar y source s tha t caus e o r contribut e significantl y t o ai r pollutio nwhic hma y reasonabl y

b e anticipate dt o endange r publi c healt h c r welfare . 4 2 U.S.C . 7411(b ) (1 ) (A) . Congres s decree dthat , i nadditio nt o wholl y ne w sources , NSP S woul dappl y t o th e modificatio no f a nexistin g source , define dbroadl y as : any

physica l chang e in , o r chang e i nth e metho d o f operatio nof , a stationar y sourc e whic hincrease s th e amoun t o f an y ai r pollutan t emitte db y suc hsourc e o r whic hresult s i nth e emissio no f any ai r pollutan t no t previousl y emitted . Clea nAi r Ac t sectio n111(a ) (4) , 4 2 U.S.C . 7411(a)(4) . Th e NSP S provision s wer e "designe dt o preven t ne w [air ) pollutio nproblems " b y regulatin g bot hnewl y constructe dsource s o f pollutio nan d existin g source s tha t increas e thei r emissions . Nationa l Asphal t Pavemen t Assoc , v . • 2fi6iC

# 53 9 F.2 d 775 , 78 3 (D.C . Cir . 1976 ) fse e als o H.R . Rep . No . 1146 , 91s t Cong. , 2 d Sess . 3 , reprinte di n197 0 U.S . Cod e Cong . & Admin . New s 5356 , 5358] . Th e effec t o f includin g modifie dsource s a s wel l a s newly-constructe d source s unde r th e provision s o f sectio n11 1 wa s t o establis ha curren t leve l o f emission s abov e whic ha nexisting sourc e ma y no t pollut e withou t becomin g subjec t t o th e NSPS . I nAugus t 1977 , Congres s adopte dfurthe r extensiv e change s t o th e Ac t (Pub . L . 95*95) . Thes e include dreview-and-permittin g program s fo r ne w

an d modifie dsource s ocnbinin g th e technology-base dapproac h o f NSP S wit hspecifi c measure s t o insur e tha t ambien t ai r qualit y goal s unde r th e Ac t ar e met . Congres s intendedNS Rt o appl y "wher e industria l change s migh t increas e pollutio ni na narea. " Alabama Fewe r Co . v . Costle . 63 6 F.2 d 323 , 40 0 (D.C . Cir . 1979) . Par t D applie s t o area s whic hhav e no t me t nationa l ambien t ai r qualit y standard s (NAAQS ) unde r sectio n109 . T o receive a permi t i nsuc hareas , majo r ne w and modifie dsource s mus t (among othe r things ) obtai nemission s offset s tha t assur e reasonabl e progres s towar d attainmen t o f th e NAAQ S an d mus t compl y wit hth e "lowes t achievabl e emissio n rate, " whic hca nb e n o les s stringen t tha na napplicabl e NSP S (se e section s 171-173) . Ih e 197 7 amendment s als o adde da ne w Par t C t o th e Ac t including , i nsection s 16 0 - 169 , a nNS Rprogra m fo r th e preventio no f significan t deterioratio no f ai r qualit y (th e "PSD " program ) i narea s whic hhav e attaine d th e NAAQS . It

e receiv e a PS D permit , a prospectiv e majo r ne w o r modifie d sourc e mus t (among othe r things ) sho w tha t i t wil l no t excee dth e availabl e ai r qualit y

"increment " (designedt o preven t pollutan t concentration s fro m deterioratin g beyon dcertai nlevels) , and wil l us e th e "bes t availabl e contro l technology" , whic hmus t b e a t leas t a s stringen t a s an y applicabl e NSPS . Bot hth e Par t D NS Rprogra m applicabl e t o nonattainmen t area s an d th e Par t C NS Rprogram

applicabl e t o attainmen t area s adopte dth e NSP S definitio n o f "modification, " bu t no t al l th e exclusion s t o tha t definitio n[se e section s 171(4 ) an d 169(2)(C)] .P. 5

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I t i s eviden t fro

m th e structur e o f th e NS Ran dNSP S program s tha t Congres s sough t t o focu s ai r pollutio ncontro l effort s a t a nefficien t an dlogica l point : th e makin g o f substantial . capita l investment s in , o r othe r long-ter m decision s regarding , pollution-generatin g facilities . I nadoptin g NS R measure s i nparticular , Congres s sough t t o reconcil e th e legislativ e goa l o f erorircnaenta l protectio nwit ha concurren t desir e fo r continue deconomi c growt h[se e section s 160(l)-(4)] . Consequently , a ke y theme o f th e NS R pxogram i s th e carefu l evaluatio nof , an dpubli c participatio nin , "an y decisio nt o permi t increase dai r pollution " [se a sectio n160(5 ) ] . A s rilflmsaOal below , th e curren t regulation s implementing NSP S an dNS Rwer e designe dt o appl y

thes e yiugiaw s i na manne r consisten t wit hthei r respectiv e statutor y

purposes . Today' s comment s represen t ou r interpretatio no f thes e existin g regulation s unde r tiie fact s presente db y th e Baill y

project . Th e EP A expect s tha t it s upcomin g interpretativ e rulin g wil l furthe r focu s EPA' s positio no nth e basi c legislativ e inten t o f thes e importan t programs .

2 . Th e Two-Sta pTes t fo r Modifications . ih e modificatio nprovision s o f th e NSP S an dNS Rprogram s gro w fro m a singl e statutor y

trunk , th e ver y

broa ddefinitio no f "modification " i nsectio n 111(a ) (4) . Unde r bot hrespectiv e programs , EP A develope da two-ste ptes t fo r determinin g whethe r activitie s a t a nexistin g facilit y constitut e a modificatio nsubjec t t o ne w sourc e requirements . I nth e firs t step , whic hi s . largel y th e sam e fo r NSP S an dNSR , EP A determine s whethe r a physica l o r operationa l chang e ha s occurred . I f so , EP A proceed s i nth e secondste pt o determin e whethe r th e physica l o r operationa l chang e wil l resul t i na n emission s increas e ove r baselin e levels . I nthi s secon dstep , th e applicabl e rule s branc hapart , reflectin g th e fundamenta l distinction s betwee nth e technology-base dpurpose s o f NSP S andth e technology an dai r qualit y

concern s o f NSR . Briefly , th e NSP S program i s concerne dwit hhsud y emission s rates , expresse di nkilogram s o r pound s pa r hour . [A nhourl y emission s rat e i s th e produc t o f th e instantaneou s emission s rate , i.e. , th e amoun t o f pollutio n emitte db y

a source , afte r control , pe r uni t o f fue l ccrrfcuste do r materia l processed , (suc ha s pound s o f sulfu r dioxid e emitte dpe r to no f coa l burned ) time s th e productio nrat e (sucha s ton s o f coa l burne dpe r hour ) ] . Emission s increase s fo r NSP S purpose s ar e determine db y change s i nth e hourl y emission s rate s a t maximu m capacity . Th e NS Ri s concerne dwit htota l annua l emission s t o th e atanosphere , expresse di nton s pe r year . (Annua l emission s ar e th e produc t o f th e hourl y emission s rate , whic hi s th e sol e concer no f NSPS , time s th e utilizatio nrata , expresse da s hour s o f operatio npe r year) . Emission s increase s unde r NS Rar e determine db y change s i nannua l ffnig»iqna t o th e atmosphere .

3 . Hiysica l o r Operationa l Change . Th e ver y

broa ddefinitio no f giysica l o r operationa l chang e i nsectio n 111(a ) (4 ) could , standin g alone , encenpas s th e mos t mundan e activitie s a t a n industria l facilit y

— eve nth e repai r o r replacemen t o f a singl e leak y pip e o r a chang e i nth e wa y tha t pip e i s utilized . Th e definitio ncertainl y i s broa denoug ht o encenpas s th e additio no r enhancemen t o f pollutio ncontro l equipment . However , EP A ha s alway s recognize dtha t Congres s obviousl y di dno t intendt o requir e ever y activit y

t o b e potentiall y

subjec t t o ne w

sourc e requirements , an dtha t i t woul db e administrativel y impracticabl e t o d o so . Accordingly , EP A

ha s substantiall y

narrowe dthi s term

i nit s NSP S an

dNS RP. 6

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### -5 - regulatory

definition s throug hth a adaptio no f cannon-sens e exclusions . Fo r exasple , bot hset s o f regulation s contai nsimila r exclusion s fo r routin e maintenance , repair , and replacement ; fo r certai nincrease s i nth e hour s o f operatio no r i nth e productio nrata ; an d fo r certai ntype s o f fue l switche s [se e 4 0 O R60.14(e) ; se e also , e.g;. , 4 0 CF R52.2 1 (b ) (2 ) (iii ) ] . I n addition , wit hrespec t t o pollutio ncontro l equipment , th e NSP S regulation s contai na nexclusio nfor :

Th e additio no r us e o f any system o r devic e whos e primar y functio n i s th e reductio no f ai r pollutants , excep t whe na nemissio n contro l system

i s remove do r i s replace db y a system

whic hth a Administrato r determine s t o b e les s environmentall y beneficia l [4 0 CF R60.14(e)(5)] .

Th e EP A ha s hel dtha t thi s exclusio ndoe s no t appl y t o a sourc e which , upo n origina l construction , employe dwe t scrubbers , bu t late r (uponrelaxatio no f a Stat e pla nunde r sectio n111(d) ) desiire d t o remove th e contro l equipnent , whic hwoul dhav e resulte di nnuc hhighe r level s o f pollutio ntha nth e plan t ha deve r emitte dfNatiema l Southwir e Aluminu m Qo . v . EPA . 83 8 F.2 d 83 5 (6th Cir.) , cert , denied . 10 9 S.Ct . 390(1988) , herei nafte r Nationa l Southwirel , m th e past , EP A

ha s take nvariou s view s a s t o whethe r th e exclusio ni n sectio n60.14(e ) (5 ) shoul dappl y fo r NS Rpurposes . A s note dearlier , th e NS R statutory

definition s o f modificatio nsispl y adop t th a NSP S definitio ni n sectio nlll(a ) (4) . I naddition , th e legislativ e histor y reflect s that , a s a genera l matter . Congres s intende dt o confor m th e meanin g o f "modification " fo r PS D purpose s t o usag e unde r NSP S [se e 12 3 Cong . Rec . H1195 7 (Nov . 1 , 1977 ) ] . Fa r thi s reason , EP A initiall y

rule dtha t th e NSP S exclusio nfo r additio no f contro l device s applie dautomaticall y t o PS D (Memorandu

m fro m Edwar dE . ReiA , OAQPS , and William F . Pedersen , OGC , t o EP A Regio nVI , Apri l 21 , 1983) . Th e EP A

reverse dcours e i na 198 6 applicabilit y determinatio n issue dfo r bot hPS D an d nonattairmen t NS Rpurposes , notin g tha t th e NSP S exclusio nwa s highl y qualitative , an d faile dt o giv e du e accoun t t o eithe r th e ai r qualit y

managemen t componen t o r th e largel y quantitativ e orientatio n o f th e NS Rapplicabilit y regulations . (Memorandu m fro m Geral dA . .emison , Director , QAQPS , t o Regiona l Ai r Divisio nDirectors , Jul y 7 , 1986) .

Cotroent s o nNSP S Applicabilit y

A nNSP S ncdi f icatlo n.I s any "physica l o r operationa l chang e t o a nexisting facilit y whic hresult s i na nincreas e i nth e emissio nrat e t o th a atmospher e o f an y pollutan t t o whic ha standar dapplies " (4 0 CE R60.2) . Unde r NSPS , emission s increases , fo r applicabilit y purposes , ar e calculate db y comparing th e hourl y

emissio nrat e imowdiatel y befor e an

d afte r th e physica l o r operationa l change . Al l operatin g parameter s whic hma y affec t emission s mus t b e th e sam e t o th e raodmum feasibl e degre e fo r th e befor e an d afte r testing , an dtest s mus t b e conducte dunde r representative conditions . Absen t th e exclusion s from

modification s specifie da t 4 0 CF R60.14(e) , any increas e i n emission s t o th e atoospher e ove r th e previou s emission s rat e wil l subjec t th e modificatie nt o NSP S [se e sectio n60.14(a ) an d (b)] . I naddition , modification s whic hwoul dcos t 5 0 percen t o r mor e o f th e cos t o f a comparabl e new facilit y

ar e classifie da s reconstructio n(see 4 0 CI R60.15 ) an d ar e subjec t t o NSP S a s a new sourc e eve ni f ther e i s n o emission s increase .P. 7

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Thus , unles s th e raoonstructio nprovision s come int o play , i t i s clea r tha t unde r th e existin g regulation s NSP S woul dno t appl y t o th e installatio no r improvemen t o f emissio ncontro l equipmen t whic hreduce s hourl y emission s rates . I f th e reconstructio nprovision s d o apply , the nsuc hchange s woul d trigge r NSPS . Base do nNIPSGO' s permi t applicatio nan d representation s mad e b y NIPSCO' s Septembe r 14 , 198 9 an d Decembe r 4 , 198 9 informatio nsubmittal s t o EPA , NSP S woul dno t appl y

t o th e Baill y

Statio ni f th e ne w

scrubbe r i s no t remove d (i.e. , i f i t i s a permanen t demonstration ) becaus e hourl y emissio nrate s wil l no t increas e a s a resul t o f th a additio no f thes e OC T controls . A s a permanen t CC T demonstratio nproject , i t woul dsatisf y th e requirement s o f th e exnptio ncontaine di n4 0 CF R60.14(e ) (5 ) fo r th e additio no r us e o f any contro l system

o r devic e whos e primary functio ni s th e reductio no f ai r pollution . (The definitio no f "modification " fo r NSP S i s founda t 4 0 CF R 60.14) . I naddition , th e Baill y projec t woul dno t qualif y a s a reconstructio nunde r 4 0 CF R60.15 .

However , th e NSP S provision s coul dals o appl y t o majo r facilitie s wit h temporar y

CC T demonstratio nproject s a t th e end o f th e demonstratio nwhe nth e contro l equipmen t i s remove dand emission s ris e bac k t o th e leve l tha t existe dbefor e th e demonstration . Thus , whil e th e placemen t o f OC T control s a t Baill y

wil l reduc e th e hourl y sulfu r dioxid e (S02 ) emission s rate , i f NIPSC O late r dismantle s th e CC T controls , thi s woul dresul t i na nincreas e i n hourl y S0 2 emission s u p t o pre-demonstratio nlevel s an d th e sourc e coul db e considere dsubjec t t o NSPS . Today' s conment s reflec t EPA' s positio ntha t th e BaUl y plan t woul dno t b e subjec t t o NSP S a t th e conclusio no f th e project, , i f NIPSC O decide s t o mak e i t onl y tenporary , a s th e resul t o f a nincreas e i nemission s rate s bac k u p t o th e level s whic hexiste dbefor e th e change s wer e mad e t o aoccKmodat e th e tenporar y

demonstratio nproject . Th e EP A expect s tha t it s forthcomin g interpretativ e rul e wil l tak e thi s positio nwit hrespec t t o al l tenporary CC T andsimila r demonstratio nproject s whic hreduc e emissio nrates . Unlik e th e situatio npresente di nNationa l Southwire . i t i s clea r tha t th e additio no f pollutio ncontro l i na tenporary CC T demonstratio nwa s neve r intende dt o resul t i npermanen t emission s reductions . I naddition , remova l o f temporar y control s wil l no t resul t i na leve l o f emission s highe r tha ntha t experience d i nth e past . (Reconstructionprovisions , however , coul dsubjec t bot h tenporary

an d permanen t OC T demonstratio nprojects , an d certai nothe r emissio ncontrol system installation s o r improvements , t o NSPS . still , a s indicate db y

th e Baill y

project , th e reconstructio nprovision s o f th e Ac t shoul drarely , i f ever , appl y t o th e typ e o f activit y whic hwoul db e considere dfo r exclusio nfro m th e definitio no f a physica l chang e o r a chang e i nth e metho do f operation . Thus , th e triggerin g o f th e reconstructio n provisio ni s a nirr

i ica t iontha t th e propose dactivitie s ar e mor e extensive tha njus t th e addition , o r replacement , o f a nemissio ncontro l syste m o r device , an d s o ar e no t appropriat e fo r exclusion. )P. 8

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- Conment s o nNS RApplicabilit y Modifie dsource s ar e subjec t t o NS Ri f th e modificatio ni s "najor. " Majo r modification s mus t consis t o f a physica l chang e o r chang e i nth e metho do f operatio no f a majo r stationar y sourc e [4 0 er a 52.21(b ) (l ) ] whic hresult s i n a ne t emission s increas e o f any pollutan t subjec t t o regulatio nunde r th e Ac t tha t i s "significant . Significanc e level s ar e expresse di nton s pe r yea r anddiffe r fo r eac hpollutan t [4 0 CF R52.21(b ) (23 ) ] . Ne t emission s increase s ar e determine d[4 0 CF R52.21(b ) (3) ] b y summing al l contemporaneou s creditabl e actua l emission s increase s an ddecreases , ih e definitic no f "actua l emissions' * i s suc htha t generall y th a compariso nis betwee nactua l emission s befor e th a physica l o r operationa l chang e i nquestio nan d th e potentia l t o emi t o f tb a facilit y afterward s [4 0 CF R52.21(b ) (21 ) ] . I f th e sourc e ha s no t bee noperatin g nea r ful l capacity , eve nth e additio no f a contro l devic e coul db e considere da significan t ne t emission s incraas e wha ncomparin g histori c actua l emission s wit ha ne w potentia l t o emit , eve nthoug hther e ma y b e a substantia l reductio nfro m histori c actua l emissions . Specifically , actua l emission s befor e th e chang e a t a facilit y ar e generall y determine db y

averagin g th e emission s fo r th e 2 year s prio r t o submitta l o f th e permi t applicatio n(or some othe r perio di f th e las t 2 year s ar e no t representativ e o f norma l uni t operation ) [see , e.g. , sectio n 52.21(b ) (2 ) (ii)] . S.lno e th e emission s rat e afte r a physica l o r operationa l chang e canno t b e predicte di nadvance , EE A regulation s assum e tha t a source' s actua l emission s wil l equa l it s maximu m ''potentia l t o emit" , whic his fcased o nconstan t ful l loa doperatio nfo r a nentir e yea r (unles s restricte db y federall y

enforceabl e limitations ) [see , e.g., \ section s 52.21(b ) (21 ) (iv) ; 52.21(b ) (4)] . Thus , a physica l o r operationa l chang e wil l trigge r NS Ri f th e annua l potentia l t o emi t o f th e sourc e i s significantl y greate r afte r th e chang e tha nit s representativ e actua l annua l emission s befor e th e change , unles s th e company

agree s t o federall y enforceabl e operationa l restriction s whic hlimi t it s potentia l t o emi t t o level s no t significantl y greate r tha n it s actua l emission s befor e th e change . Thi s actual-to-potentia l methodology applie s t o physica l o r operationa l change s a t ne w o r "modified " (i.e. , altere do r changed ) emission s unit s [se e 4 5 ra 52676 , 52677 , 5271 8 (1980 ) ] .

A s explaine dbelow , EP A believe s tha t thi s methodology generall y

serve s th e purpose s o f NS Rbecaus e i t subject s t o review project s tha t migh t leadt o a n incraas e i nactua l pollution . However , th e NS Rprovision s i nth e existin g regulation s coul db e interprete dt o appl y t o majo r facilitie s sispl y installin g o r improving contro l equipment , including CC T demonstratio n projects , unde r circumstanoe s wher e a permanen t increas e i npollutio ni s highl y unlikely . Unde r EPA' s prospectiv e interpretative ruling , existin g source s whic hwoul d otherwis e becom e subjec t t o NS Ronl y becaus e the y

decid e t o instal l o r inprov e emissio ncontrols , o r participat e i nth e CC T progra m o r simila r demoretratio nproject s approve db y EPA , woul dinstea db e exclude dfro m NS R coverage , s o lon g a s certai ncriteri a intende dt o ensur e tha t permanen t increase s i nactua l emission s d o no t occu r ar e met . Wit hrespec t t o th e Baill y projec t i nparticular , i t appear s tha t th e plan t ha s bee noperate da t a rathe r hig hleve l o f approximatel y 6 0 percen t o f capacity , reflectin g baseloa dutilizatio no f th e plant . Ther e i s n o—— —S P. 9

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### indicatio ntha t NIPSC O intend s t o incraas e thi s leve l o f usag e a t any time followin g installatio no f th e cc r controls . I naddition , i t appear s tha t th e Baill y projec t wil l mee t th e criteri a EE A expect s t o se t fort hi nit * interpretativ e rulin g fo r bat htapossr y an dpermanen t projects . Th e EP A no w believe s i t i s appropriat e t o devis e an dappl y suc hcriteri a bot hfo r th e Baill y

projec t an dfo r th e upcomin g interpretativ e ruling . Th e EP A ha s iHainnmiiW l th e positio ntake ni nit s 198 6 memorandum , discusse d earlier , regardin g us e o f th a NSP S exclusio ni n4 0 CF R60.14(e ) (5) . Whil e EP A continue s t o believ e tha t thi s exclusio ndoe s no t appl y automaticall y

fo r NS Rpurposes , th e criteri a MJI-TM—• < herei nprovid e du e consideratio no f ai r qualit y managemen t concern s an dth e nee dfo r quantitativ e analyses . Condition s fo r Permanen t Control s o r Device s t o b e Considere dNo t Las s BTvircraentall y

Beneficia l

A s note dabove , EP A

i s preparin g a ninterpretativ e rulin g whic hwil l clarif y tha t i f a sourc e solel y add s o r enhance s system s o r device s whos e primar y function s ar e th e reductio no f ai r pollution , an dwhic har a determine dt o b e no t les s environmentall y beneficial , suc hactivitie s woul dno t constitut e a physica l o r operationa l chang e triggerin g ne w sourc e requirements . A t thi s time , BRA

anticipate s tha t it s rulin g wil l provid e tha t suc hpollutio n control s wil l b e considere dno t les s environmentall y beneficial , wit h respec t t o permanen t controls , i f the y mee t a t leas t th e followin g criteria: (1 ) Th e sourc e wil l continu e t o mee t al l curren t requirenent s an d standard s applicabl e t o existin g source s unde r th e Act . Thi s include s meetin g applicabl e NAAQS , PS D increments , permi t conditions , an dStat e iiiplementatio npla n(SIP ) limitations . (2 ) Ther e i s n o environmenta l har m resultin g fro

m th e propose d activities . Thi s include s condition s tha t th e propose dactivitie s woul dno t caus e th s sourc e to ; (a ) increas e th e maximu m hourl y actua l emission s rat e o f any pollutan t regulate dunde r th e Act ; (b ) increas e th e annua l emission s o f any pollutan t regulate d unde r th e Ac t a s a resul t o f a nincreas e i ncapacit y utilizatio nrate ; (c ) adversel y

ispac t a nai r qualit y relate dvalu e (e.g. , visibility ) i nany

Clas s I area ; o r (d ) allo w

a nincreas e i nemission s o f toxi c pollutant s no t regulate db y

th a Ac t whic hwoul dcaus e a nadvers e healt h o r welfar e Impact . Base do nth e informatio nprovide dby NIPSCO , i t appear s a t thi s time tha t th e BaOl y project , i f i t i s mad e permanent , wil l mee t th e abov e criteria . Accordingly , a s t o th e Baill y projec t i nparticular , EP A believe s tha t majo r NS Rrequirement s clearl y wil l no t appl y

i f th e projec t ia mad e permanent , s o lon g a s thes e criteri a ar e i nfac t met .P.1 0

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-

Tenporar y

OC T Change s

I nit s upcomin g interpretative ruling , p A expect s U > follo

w critari a fo r "tenporary " CC T project s whic hare . somewha t differen t fro m thos e fo r permanen t projects . Th e EP A likel y wil l conside r a projec t t o b e tenporar y i f i t last s les s tha n5 year s fro m th e dat e th a projec t connence s construction . However , th a rulin g probabl y wil l provid e tha t th e Administrato r woul dconside r a nadditiona l perio d o f time , u p t o 5 additiona l years , i ncertai ncases . A t th e en d o f a temporar y project , th e facilit y woul db e returne dt o pre^Semonstratio ncondition s an d hourl y emissio nrate s (o r lower) . I t i s no t dea r i f th e propose dBaill y statio npermi t i s fo r a pauuanen t o r tenporar y CC T project . I t i s ou r understandin g tha t NIPSC O consider s th e firs t 3 year s o f th e C d demonstratio nprojec t t o b e "tenporary " an d wil l vie w th e change s a s "permanent " fa r th e following 1 7 year s i f the y

ar e continue dafte r th e 3 yea r period . Th e EP A expect s tha t it s interpretative rulin g wil l provid e tha t fo r temporar y

demonstratio nprojects , th e condition s relatin g t o actua l emission s increase s an d hour s o f operatio ncriteri a unde r 2a , ban d d abov e woul dno t appl y t o minor , tenporar y variation s fro

m nomina l operatin g conditions . Tenporar y

increase s ma y

occu r du e t o testin g procedure s o r som e failur e i n uniqu e bu t unprove nequipment , bu t shoul dno t willfull y contribut e t o advers e healt ho r welfar e impacts . Th e EE A believe s tha t th e benefit s inheren t i n OC T an d othe r simila r technology demonstratio nproject s counterbalanc e th e limited , tenporar y

ispact s tha t ma y

occu r durin g these tenporar y projects . Unde r th e ruling , tenporary demonstratio nprojec t application s liXel y woul d hav e t o mee t al l o f th a othe r criteri a applicabl e t o th e permanen t project s fi1fmiflr.fi

i above . Thi s interpretatio nwoul dprovid e th e flexibilit y t o encourag e temporar y

demonstratio nproject s whic har e considere dt o b a environmentall y

beneficia l overall , despit e unpredictable , tenporar y increase s i nemission s o f seme pollutant s o r i nth e hour s o f operatio ntha t ma y occu r durin g th e cours e o f a demonstration . Th e EP A expect s th e rulin g t o stat e tha t tenporar y change s woul dbecome pernanen t a t an y

tim e durin g o r a t th e en d o f a demonstratio nperio di f th e owner/operato r seeks a revise dapplicabilit y determinatio naddressin g al l criteri a applicabl e t o permanen t ai r pollutio ncontro l system inprovements . I nsubmittin g thes e conments , EP A i s applyin g th e abov e criteri a i nit s review o f th e Baill y

project . I f NIPSC O ultimatel y decide s tha t th e Baill y CC T projec t i s t o become a permanen t CC T demonstration , th e projec t shoul d mee t al l th e criteri a fUmifm H earlie r fo r permanen t project s a t th e time th e projec t i e t o b e converte dt o permanen t statu s (i.e. , afte r 3 years) .

Procedure s fo r Environmentall y Beneficia l Occlusion s fro m Applicabilit y

Ili a EP A expect s tha t unde r it s forthcoming interpretative rule , a nowne r o r operato r proposin g t o mak e a nenvironmentall y beneficia l chang e i na nai r pollutio ncontro l syste m wil l b e calle dupo nt o reques t a napplicabilit y determinatio nfro

m th e appropriat e NSR/NSP S permi t authority . Th e reques t shoul dinclud e a genera l descriptiono f th e facilit y and th e propose d activity , informatio no nth a curren t and projecte dus e o f th e facility , an dP.1 1

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- sufficien t informatio nt o justif y a nonapplicabilit y

determination . Fo r an y ai r pollutio ncontro l syste m improvement , th e reques t shoul dinclud e a rationcilt

a fo r wh y

th * .ouiaoiu

ncontro l syste

m o r devic e ahuul db e uaiibiutL'u d equa l t o o r mor e efficien t tha nexisting contro l technology a t th e sourws . Th e EP A als o anticipate s tha t it s interpretativ e rulin g wil l stat e tha t i n providin g informatio nt o th e reviewin g authority , a nowne r o r operato r shoul dsubmi t sufficien t modelin g t o demonstrat e tha t any ne w o r increase d emission s o f unregulate dtoxi c pollutant s resultin g fro m th e chang e i n contro l equipmen t wil l no t caus e o r contribut e t o advers e healt ho r welfar e inpacts . ih e owne r o r operato r shoul dals o demonstrat e tha t th e sourc e wil l no t operate a t greate r hourl y emission s rates , o r fo r mor e hours , tha ni t ha s bee ndurin g th e mos t recen t 2 year s (o r some othe r period , i f th e las t 2 yea nar e no t representativ e o f norma l operation) . I nassessin g whethe r actua l emissio nincrease s o f an y pollutan t ar e likel y t o occur , th e reviewin g agenc y shoul dconside r th e economi c incentive s t o increas e productio nrate s o r hour s o f operatio nassociate dwit hth e change . An y chang e whic hcoul d reasonabl y

resul t i nincrease demission s du e t o possibl e increase d utilizatio no f th e facilit y a s a resul t o f th a change s shoul dno t b e considere denvironmentall y beneficial . Th e authorit y reviewin g th e propose d chang e shoul dexplicitl y determine , base do nconsideratio no f thes e an i othe r relevan t criteria , tha t th e ne t effec t wil l no t b e on e o f environmenta l harm .

Operatin g Limit s o nNe w Diese l Generato r Th e EP A considers th e additio no f a backupdiese l generato r a t Baill y no t t o b e a nintegra l par t o f th e OC T demonstration , i ntha t th e generato r coul d serv e nultipl e function s onc e installed , m general , EP A

view s change s t o b e subjec t t o NS Ran d NSP S i f suc hchange s ar e no t strictl y relate dt o th e additio no f th e improve dai r pollutio ncontro l syste m and th e changes hav e any possibl e additiona l application . However , EP A agree s wit hIDE M

tha t th e additio no f a ne w

diese l generato r doe s no t constitut e a "majo r modification " i f th e State' s limit s o nth e generator' s hour s o f operation , preventin g concomitan t increase s i nemission s fro m exceedin g significanc e levels , ar e federall y

enforceable .

I ndosing , EE & agree s wit hth e Stat e tha t NSP S an d NS Rd o no t appl y i f th e condition s outline di nthi s lette r ar e met . I f yo u hav e any furthe r questions , pleas e contac t Mr . Ro nVa nMarsberge nat , (312 ) 886-605 6 o r Mr . Da m Abell a at , (312 ) 886-6543 . Sincerel y

yours , 

## ****~~pf~/Cfch , fit David jiee , Directo r Ai ran d Radiatio n Divisio n