p.1 

OAR Box 1778 

Prepped by Ollie Stewart 

Document Number: 

75) ll-C-17 

Docket Number: 

A-90-06 

Printed 10/28/2008 9:50:54 AM Sheet 75 of 276 
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II-C-17 

3»ldo 1990 

va 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

REGION 5 

231 SOUTH DEARBORN ST. 

CHICAGO, ILLINOIS 6M44 

I.SM.T TO THE ATTEHTION OF. 

Mr. Timothy J. Method 

Assistant Caanissicner 

Office of Air Management 

Indiana Department of Ehvixorontal Management 

105 South Meridian Street 

P.O. BQK 6015 

Indianapolis, Indiana 46206-6015 

Dear Mr. Method: 

The purpose of this letter is to oumuait on the permit proposed by the 

Indiana Department of Bivircnoental Management (IDEM) for Northern Indiana 

Public Service Company's (NIPSCO) Bailly generating station, ihe perait 

provides for the construction of an air pollution control device and directly 

related inprcvements under the dean Coal Technology (CCT) program. The 

Environmental Protection Agency (EPA) agrees with the determination by IDEM 

that the State and EPA rules for prevention of significant deterioration 

(PSD) and new source performance standards (NSPS) are not intended to apply 

to the CCT ptuject at Bailly. In other words, the project should not be 

considered a "major modification11 under new source review (MSR) or a 

"modification" as set forth under NSPS provided certain requirements are met. 

In a separate but related issue, ISA also agrees with the determination by 

IDEM that the addition of a diesel generator as a backup power supply to the 

scrubber to be installed at Bailly is not a major modification if the limits 

on operating the generator agreed to by NIPSO0 are federally enforceable. 

Introduction 

For NSPS purposes, a modification is defined as any physical change in, or 

change in the method of operation of, a stationary source which increases 

(in terms of hourly emissions capacity) the amount of any air pollutant 

regulated under the Clean Air Act (Act) which is emitted by such source, or 

which results in the emission of any air pollutant not previously emitted. 

For NSR purposes, a major modification is a modification which results in a 

significant net emissions increase (in terms of actual annual emissions). 

The EPA has become aware that these definitions can be interpreted in such a 

manner as to subject to NSR or NSPS, or both, certain environmentally 

desirable activities at existing stationary sources which neither Congress 

nor EPA intended to be covered by the Act's new source requirements. 

Moreover, NSR or NSPS coverage would, in some instances, have the effect of 

discouraging such activities. The EEA believes that such activities, 

including CCT demonstration projects, are not physical changes or changes in 

the method of operation, so long as they meet certain criteria discussed 

herein ani EPA issues an applicability exclusion. Hence,, such activities are 

not "ncdifications" for NSPS purposes, or '•major "edifications" for NSR 

purposes. 
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01/31/1990 10;39 10802118 P.03 

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Over the past several months, EPA has held numerous internal meetings to 

discuss the Clean Air Act regulatory issues raised by the CCT program. As a 

result of these discussions, the EEA has decided to issue an interpretative 

ruling as scon as possible to provitie guidance on the definition of a 

physical or operational change* as it applies to new source requirements. In 

a letter dated January 5, 1990, EPA advised NIPSCO of this intention. 

Essentially, this ruling would clarify that if a source solely 

adds or enhances systems or devices whose primary functions are tha 

reduction of air pollution, and that are determined to be not less 

envircrnoantally beneficial (as determined by the Administrator) than any 

emission control system or device it replaces, if any, such activities would 

net constitute a physical or operational change triggering new source 

requirements. Consequently, NSPS and PSD and nonattainment new source review 

would not apply to these types of activities. This interpretative ruling 

would include permanent, as well as temporary projects under the OCT program. 

However, it would not extend to projects that primarily are intended to 

extend the life of a plant or increase capacity, m addition, any changes, 

permanent or temporary, which are expected to significantly increase 

emissions to the atmosphere, such as changes which increase a source's hourly 

operating capacity (e.g., eliminating a bottleneck), hourly emissions rate 

(e.g., one pollutant decreases but another increases), or utilization rate 

(e.g., an anticipated increase in hours per year of operation resulting from 

the installation of controls) would still be subject to NSR and NSPS. ... 

Based on our review of the draft permit, we believe, that the Bailly project 

is consistent with the provisions EPA is developing for its interpretative 

ruling. On this basis, we have reached the conclusion that this project in 

particular is not subject to NSPS or major NSR requirements, so long as it 

continues to meet the criteria diBcnsB-Prt herein. , 

The balance of our cosnents outlines the grounds for EPA's conclusion and 

contains a discussion of the anticipated terms of EPA's upcoming 

interpretative rule. The EPA is still deliberating the specific terms and 

provisions of its interpretative ruling. While today's cccroents reflect 

EPA's current expectations of what will be contained in that document, the 

actual terms of the ruling may differ from those dlscus-wart herein. 

Background 

A* Ihe NSR and NSPS Provisions of the Clean Air Act 

The NSR and NSPS provisions of the Act apply to wholly new facilities, and to 

modifications at existing facilities, when certain conditions are met. The 

rules governing the applicability of NSR and NSPS to modifications at 

existing facilities are described in detail in the EPA regulations (see 40 

CFR 51.165 and Appendix S, 52.21, 60.14 and 60.15). In general, the 

ncdif icatiens that would trigger these new source reo^iirements are those 

involving physical or operational changes which increase emissions over 

baseline levels. (In addition, for NSPS purposes under EPA regulations, a 

reconstruction occurs and a source is considered "new" if the physical or 

operational change costs more than 50 percent of the replacement cost of the 
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01/31/1990 10=39 10802118 P.04 

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affectad facility, regardless of whether an emissions increase occurs). The 

term "physical or operational (^lanrje" is -rrinstrn»d bm*rtly *rri i*ay incl'.y1» 

the installation, use, or dismantling of pollution control equiapraant. 

1. - Background of the NSPS and NSR Modificaticn Provisions. 

The 1970 Amendments to the Act required EPA to promulgate technology-based 

new scurce performance standards applicable to tha construction or 

modification of stationary sources that cause or contribute significantly to 

air pollution which may reasonably be anticipated to endanger public health 

cr welfare. 42 U.S.C. 7411(b) (1) (A). Congress decreed that, in addition to 

wholly new sources, NSPS would apply to the modification of an existing 

source, defined broadly as: any physical change in, or change in the method 

of operation of, a stationary source which increases the amount of any air 

pollutant emitted by such source or which results in the emission of any air 

pollutant not previously emitted. Clean Air Act section 111(a) (4), 42 U.S.C. 

7411(a)(4). 

The NSPS provisions were "designed to prevent new [air) pollution problems" 

by regulating both newly constructed sources of pollution and existing 

sources that increase their emissions. National Asphalt Pavement Assoc, v. • 

2fi6iC# 539 F.2d 775, 783 (D.C. Cir. 1976) fsee also H.R. Rep. No. 1146, 91st 

Cong., 2d Sess. 3, reprinted in 1970 U.S. Code Cong. & Admin. News 5356, 

5358]. The effect of including modified sources as well as newly-constructed 

sources under the provisions of section 111 was to establish a current level 

of emissions above which an existing source may not pollute without becoming 

subject to the NSPS. In August 1977, Congress adopted further extensive 

changes to the Act (Pub. L. 95*95). These included review-and-permitting 

programs for new and modified sources ocnbining the technology-based approach 

of NSPS with specific measures to insure that ambient air quality goals under 

the Act are met. Congress intended NSR to apply "where industrial changes 

might increase pollution in an area." Alabama Fewer Co. v. Costle. 636 F.2d 

323, 400 (D.C. Cir. 1979). Part D applies to areas which have not met 

national ambient air quality standards (NAAQS) under section 109. To receive 

a permit in such areas, major new and modified sources must (among other 

things) obtain emissions offsets that assure reasonable progress toward 

attainment of the NAAQS and must comply with the "lowest achievable emission 

rate," which can be no less stringent than an applicable NSPS (see sections 

171-173). Ihe 1977 amendments also added a new Part C to the Act including, 

in sections 160 - 169, an NSR program for the prevention of significant 

deterioration of air quality (the "PSD" program) in areas which have attained 

the NAAQS. Ite receive a PSD permit, a prospective major new or modified 

source must (among other things) show that it will not exceed the available 

air quality "increment" (designed to prevent pollutant concentrations from 

deteriorating beyond certain levels), and will use the "best available 

control technology", which must be at least as stringent as any applicable 

NSPS. Both the Part D NSR program applicable to nonattainment areas and the 

Part C NSR program applicable to attainment areas adopted the NSPS definition 

of "modification," but not all the exclusions to that definition [see 

sections 171(4) and 169(2)(C)]. 
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It is evident from the structure of the NSR and NSPS programs that Congress 

sought to focus air pollution control efforts at an efficient and logical 

point: the making of substantial. capital investments in, or other long-term 

decisions regarding, pollution-generating facilities. In adopting NSR 

measures in particular, Congress sought to reconcile the legislative goal of 

erorircnaental protection with a concurrent desire for continued economic 

growth [see sections 160(l)-(4)]. Consequently, a key theme of the NSR 

pxogram is the careful evaluation of, and public participation in, "any 

decision to permit increased air pollution" [sea section 160(5) ]. As 

rilflmsaOal below, the current regulations implementing NSPS and NSR were 

designed to apply these yiugiaws in a manner consistent with their respective 

statutory purposes. Today's comments represent our interpretation of these 

existing regulations under tiie facts presented by the Bailly project. The 

EPA expects that its upcoming interpretative ruling will further focus EPA's 

position on the basic legislative intent of these important programs. 

2. The Two-Stap Test for Modifications. 

ihe modification provisions of the NSPS and NSR programs grow from a single 

statutory trunk, the very broad definition of "modification" in section 

111(a) (4). Under both respective programs, EPA developed a two-step test for 

determining whether activities at an existing facility constitute a 

modification subject to new source requirements. In the first step, which is . 

largely the same for NSPS and NSR, EPA determines whether a physical or 

operational change has occurred. If so, EPA proceeds in the second step to 

determine whether the physical or operational change will result in an 

emissions increase over baseline levels. In this second step, the applicable 

rules branch apart, reflecting the fundamental distinctions between the 

technology-based purposes of NSPS and the technology and air quality concerns 

of NSR. Briefly, the NSPS program is concerned with hsudy emissions rates, 

expressed in kilograms or pounds par hour. [An hourly emissions rate is the 

product of the instantaneous emissions rate, i.e., the amount of pollution 

emitted by a source, after control, per unit of fuel ccrrfcusted or material 

processed, (such as pounds of sulfur dioxide emitted per ton of coal burned) 

times the production rate (such as tons of coal burned per hour) ]. Emissions 

increases for NSPS purposes are determined by changes in the hourly 

emissions rates at maximum capacity. The NSR is concerned with total annual 

emissions to the atanosphere, expressed in tons per year. (Annual emissions 

are the product of the hourly emissions rate, which is the sole concern of 

NSPS, times the utilization rata, expressed as hours of operation per year). 

Emissions increases under NSR are determined by changes in annual ffnig»iqna 

to the atmosphere. 

3. Hiysical or Operational Change. 

The very broad definition of giysical or operational change in section 

111(a) (4) could, standing alone, encenpass the most mundane activities at an 

industrial facility — even the repair or replacement of a single leaky pipe 

or a change in the way that pipe is utilized. The definition certainly is 

broad enough to encenpass the addition or enhancement of pollution control 

equipment. However, EPA has always recognized that Congress obviously did not 

intend to require every activity to be potentially subject to new source 

requirements, and that it would be administratively impracticable to do so. 

Accordingly, EPA has substantially narrowed this term in its NSPS and NSR 
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regulatory definitions through tha adaption of cannon-sense exclusions. For 

exasple, both sets of regulations contain similar exclusions for routine 

maintenance, repair, and replacement; for certain increases in the hours of 

operation or in the production rata; and for certain types of fuel switches 

[see 40 O R 60.14(e); see also, e.g;., 40 CFR 52.21 (b) (2) (iii) ]. In 

addition, with respect to pollution control equipment, the NSPS regulations 

contain an exclusion for: 

The addition or use of any system or device whose primary function 

is the reduction of air pollutants, except when an emission 

control system is removed or is replaced by a system which tha 

Administrator determines to be less environmentally beneficial [40 

CFR 60.14(e)(5)]. 

The EPA has held that this exclusion does not apply to a source which, upon 

original construction, employed wet scrubbers, but later (upon relaxation of 

a State plan under section 111(d)) desiired to remove the control equipnent, 

which would have resulted in nuch higher levels of pollution than the plant 

had ever emitted fNatiemal Southwire Aluminum Qo. v. EPA. 838 F.2d 835 (6th 

Cir.), cert, denied. 109 S.Ct. 390(1988), herein after National Southwirel, 

m the past, EPA has taken various views as to whether the exclusion in 

section 60.14(e) (5) should apply for NSR purposes. As noted earlier, the NSR 

statutory definitions of modification sisply adopt tha NSPS definition in 

section lll(a) (4). In addition, the legislative history reflects that, as a 

general matter. Congress intended to conform the meaning of "modification" 

for PSD purposes to usage under NSPS [see 123 Cong. Rec. H11957 (Nov. 1, 

1977) ] . Far this reason, EPA initially ruled that the NSPS exclusion for 

addition of control devices applied automatically to PSD (Memorandum from 

Edward E. ReiA, OAQPS, and William F. Pedersen, OGC, to EPA Region VI, April 

21, 1983). The EPA reversed course in a 1986 applicability determination 

issued for both PSD and nonattairment NSR purposes, noting that the NSPS 

exclusion was highly qualitative, and failed to give due account to either 

the air quality management component or the largely quantitative orientation 

of the NSR applicability regulations. (Memorandum from Gerald A. .emison, 

Director, QAQPS, to Regional Air Division Directors, July 7, 1986). 

Cotroents on NSPS Applicability 

An NSPS ncdif icatlon .Is any "physical or operational change to an existing 

facility which results in an increase in the emission rate to tha atmosphere 

of any pollutant to which a standard applies" (40 CER 60.2). Under NSPS, 

emissions increases, for applicability purposes, are calculated by comparing 

the hourly emission rate imowdiately before and after the physical or 

operational change. All operating parameters which may affect emissions must 

be the same to the raodmum feasible degree for the before and after testing, 

and tests must be conducted under representative conditions. Absent the 

exclusions from modifications specified at 40 CFR 60.14(e), any increase in 

emissions to the atoosphere over the previous emissions rate will subject the 

modificatien to NSPS [see section 60.14(a) and (b)]. In addition, 

modifications which would cost 50 percent or more of the cost of a comparable 

new facility are classified as reconstruction (see 40 CIR 60.15) and are 

subject to NSPS as a new source even if there is no emissions increase. 
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01.-31/1990 10-42 10802118 P. 07 

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Thus, unless the raoonstruction provisions come into play, it is clear that 

under the existing regulations NSPS would not apply to the installation or 

improvement of emission control equipment which reduces hourly emissions 

rates. If the reconstruction provisions do apply, then such changes would 

trigger NSPS. 

Based on NIPSGO's permit application and representations made by NIPSCO's 

September 14, 1989 and December 4, 1989 information submittals to EPA, NSPS 

would not apply to the Bailly Station if the new scrubber is not removed 

(i.e., if it is a permanent demonstration) because hourly emission rates will 

not increase as a result of tha addition of these OCT controls. As a 

permanent CCT demonstration project, it would satisfy the requirements of the 

exnption contained in 40 CFR 60.14(e) (5) for the addition or use of any 

control system or device whose primary function is the reduction of air 

pollution. (The definition of "modification" for NSPS is found at 40 CFR 

60.14). In addition, the Bailly project would not qualify as a 

reconstruction under 40 CFR 60.15. 

However, the NSPS provisions could also apply to major facilities with 

temporary CCT demonstration projects at the end of the demonstration when the 

control equipment is removed and emissions rise back to the level that 

existed before the demonstration. Thus, while the placement of OCT controls 

at Bailly will reduce the hourly sulfur dioxide (S02) emissions rate, if 

NIPSCO later dismantles the CCT controls, this would result in an increase in 

hourly S02 emissions up to pre-demonstration levels and the source could be 

considered subject to NSPS. 

Today's conments reflect EPA's position that the BaUly plant would not be 

subject to NSPS at the conclusion of the project,, if NIPSCO decides to make 

it only tenporary, as the result of an increase in emissions rates back up to 

the levels which existed before the changes were made to aoccKmodate the 

tenporary demonstration project. The EPA expects that its forthcoming 

interpretative rule will take this position with respect to all tenporary CCT 

and similar demonstration projects which reduce emission rates. Unlike the 

situation presented in National Southwire. it is clear that the addition of 

pollution control in a tenporary CCT demonstration was never intended to 

result in permanent emissions reductions. In addition, removal of temporary 

controls will not result in a level of emissions higher than that experienced 

in the past. (Reconstruction provisions, however, could subject both 

tenporary and permanent OCT demonstration projects, and certain other 

emission control system installations or improvements, to NSPS. still, as 

indicated by the Bailly project, the reconstruction provisions of the Act 

should rarely, if ever, apply to the type of activity which would be 

considered for exclusion from the definition of a physical change or a change 

in the method of operation. Thus, the triggering of the reconstruction 

provision is an irri icat ion that the proposed activities are more extensive 

than just the addition, or replacement, of an emission control system or 

device, and so are not appropriate for exclusion.) 
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Conments on NSR Applicability 

Modified sources are subject to NSR if the modification is "najor." Major 

modifications must consist of a physical change or change in the method of 

operation of a major stationary source [40 era 52.21(b) (l) ] which results in 

a net emissions increase of any pollutant subject to regulation under the 

Act that is "significant. Significance levels are expressed in tons per year 

and differ for each pollutant [40 CFR 52.21(b) (23) ]. Net emissions increases 

are determined [40 CFR 52.21(b) (3)] by summing all contemporaneous creditable 

actual emissions increases and decreases, ihe definiticn of "actual 

emissions'* is such that generally tha comparison is between actual emissions 

before tha physical or operational change in question and the potential to 

emit of tba facility afterwards [40 CFR 52.21(b) (21) ]. If the source has 

not been operating near full capacity, even the addition of a control device 

could be considered a significant net emissions incraase whan comparing 

historic actual emissions with a new potential to emit, even though there may 

be a substantial reduction from historic actual emissions. 

Specifically, actual emissions before the change at a facility are generally 

determined by averaging the emissions for the 2 years prior to submittal of 

the permit application (or some other period if the last 2 years are not 

representative of normal unit operation) [see, e.g., section 

52.21(b) (2) (ii)]. S.lnoe the emissions rate after a physical or operational 

change cannot be predicted in advance, EEA regulations assume that a source's 

actual emissions will equal its maximum ''potential to emit", which is fcased 

on constant full load operation for an entire year (unless restricted by 

federally enforceable limitations) [see, e.g.,\sections 52.21(b) (21) (iv); 

52.21(b) (4)]. Thus, a physical or operational change will trigger NS R if the 

annual potential to emit of the source is significantly greater after the 

change than its representative actual annual emissions before the change, 

unless the company agrees to federally enforceable operational restrictions 

which limit its potential to emit to levels not significantly greater than 

its actual emissions before the change. This actual-to-potential methodology 

applies to physical or operational changes at new or "modified" (i.e., 

altered or changed) emissions units [see 45 ra 52676, 52677, 52718 (1980) ]. 

As explained below, EPA believes that this methodology generally serves the 

purposes of NSR because it subjects to review projects that might lead to an 

incraase in actual pollution. However, the NSR provisions in the existing 

regulations could be interpreted to apply to major facilities sisply 

installing or improving control equipment, including CCT demonstration 

projects, under circumstanoes where a permanent increase in pollution is 

highly unlikely. 

Under EPA's prospective interpretative ruling, existing sources which would 

otherwise become subject to NSR only because they decide to install or 

inprove emission controls, or participate in the CCT program or similar 

demoretration projects approved by EPA, would instead be excluded from NSR 

coverage, so long as certain criteria intended to ensure that permanent 

increases in actual emissions do not occur are met. 

With respect to the Bailly project in particular, it appears that the plant 

has been operated at a rather high level of approximately 60 percent of 

capacity, reflecting baseload utilization of the plant. There is no 
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indication that NIPSCO intends to incraase this level of usage at any time 

following installation of the ccr controls. In addition, it appears that the 

Bailly project will meet the criteria EEA expects to set forth in it* 

interpretative ruling for bath tapossry and permanent projects. 

The EPA now believes it is appropriate to devise and apply such criteria 

both for the Bailly project and for the upcoming interpretative ruling. The 

EPA has iHainnmiiWl the position taken in its 1986 memorandum, discussed 

earlier, regarding use of tha NSPS exclusion in 40 CFR 60.14(e) (5). While 

EPA continues to believe that this exclusion does not apply automatically for 

NSR purposes, the criteria MJI-TM—• < herein provide due consideration of air 

quality management concerns and the need for quantitative analyses. 

Conditions for Permanent Controls or Devices to be Considered Not 

Lass BTvircraentally Beneficial 

As noted above, EPA is preparing an interpretative ruling which will clarify 

that if a source solely adds or enhances systems or devices whose primary 

functions are the reduction of air pollution, and which ara determined to be 

not less environmentally beneficial, such activities would not constitute a 

physical or operational change triggering new source requirements. At this 

time, BRA anticipates that its ruling will provide that such pollution 

controls will be considered not less environmentally beneficial, with 

respect to permanent controls, if they meet at least the following criteria: 

(1) The source will continue to meet all current requirenents and 

standards applicable to existing sources under the Act. This 

includes meeting applicable NAAQS, PSD increments, permit conditions, 

and State iiiplementation plan (SIP) limitations. 

(2) There is no environmental harm resulting from the proposed 

activities. This includes conditions that the proposed activities 

would not cause ths source to; 

(a) increase the maximum hourly actual emissions rate of any 

pollutant regulated under the Act; 

(b) increase the annual emissions of any pollutant regulated 

under the Act as a result of an increase in capacity 

utilization rate; 

(c) adversely ispact an air quality related value (e.g., 

visibility) in any Class I area; or 

(d) allow an increase in emissions of toxic pollutants not 

regulated by tha Act which would cause an adverse health 

or welfare Impact. 

Based on the information provided by NIPSCO, it appears at this time that the 

BaOly project, if it is made permanent, will meet the above criteria. 

Accordingly, as to the Bailly project in particular, EPA believes that major 

NSR requirements clearly will not apply if the project ia made permanent, so 

long as these criteria are in fact met. 
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Tenporary OCT Changes 

In its upcoming interpretative ruling, p A expects U> follow critaria for 

"tenporary" CCT projects which are. somewhat different from those for 

permanent projects. The EPA likely will consider a project to be tenporary 

if it lasts less than 5 years from the date tha project connences 

construction. However, tha ruling probably will provide that the 

Administrator would consider an additional period of time, up to 5 additional 

years, in certain cases. At the end of a temporary project, the facility 

would be returned to pre^Semonstration conditions and hourly emission rates 

(or lower). It is not dear if the proposed Bailly station permit is for a 

pauuanent or tenporary CCT project. It is our understanding that NIPSCO 

considers the first 3 years of the C d demonstration project to be 

"tenporary" and will view the changes as "permanent" far the following 17 

years if they are continued after the 3 year period. 

The EPA expects that its interpretative ruling will provide that for 

temporary demonstration projects, the conditions relating to actual emissions 

increases and hours of operation criteria under 2a, b and d above would not 

apply to minor, tenporary variations from nominal operating conditions. 

Tenporary increases may occur due to testing procedures or some failure in 

unique but unproven equipment, but should not willfully contribute to adverse 

health or welfare impacts. The EEA believes that the benefits inherent in 

OCT and other similar technology demonstration projects counterbalance the 

limited, tenporary ispacts that may occur during these tenporary projects. 

Under the ruling, tenporary demonstration project applications liXely would 

have to meet all of tha other criteria applicable to the permanent projects 

fi1fmiflr.fii above. This interpretation would provide the flexibility to 

encourage temporary demonstration projects which are considered to ba 

environmentally beneficial overall, despite unpredictable, tenporary 

increases in emissions of seme pollutants or in the hours of operation that 

may occur during the course of a demonstration. 

The EPA expects the ruling to state that tenporary changes would become 

pernanent at any time during or at the end of a demonstration period if the 

owner/operator seeks a revised applicability determination addressing all 

criteria applicable to permanent air pollution control system inprovements. 

In submitting these conments, EPA is applying the above criteria in its 

review of the Bailly project. If NIPSCO ultimately decides that the Bailly 

CCT project is to become a permanent CCT demonstration, the project should 

meet all the criteria fUmifmH earlier for permanent projects at the time 

the project ie to be converted to permanent status (i.e., after 3 years). 

Procedures for Environmentally Beneficial Occlusions from Applicability 

Ilia EPA expects that under its forthcoming interpretative rule, an owner or 

operator proposing to make an environmentally beneficial change in an air 

pollution control system will be called upon to request an applicability 

determination from the appropriate NSR/NSPS permit authority. The request 

should include a general description of the facility and the proposed 

activity, information on tha current and projected use of the facility, and 
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sufficient information to justify a nonapplicability determination. For any 

air pollution control system improvement, the request should include a 

rationcilta for why th* .ouiaoiun control system or device ahuuld be uaiibiutL'ud 

equal to or more efficient than existing control technology at the sourws. 

The EPA also anticipates that its interpretative ruling will state that in 

providing information to the reviewing authority, an owner or operator 

should submit sufficient modeling to demonstrate that any new or increased 

emissions of unregulated toxic pollutants resulting from the change in 

control equipment will not cause or contribute to adverse health or welfare 

inpacts. ihe owner or operator should also demonstrate that the source will 

not operate at greater hourly emissions rates, or for more hours, than it has 

been during the most recent 2 years (or some other period, if the last 2 

yean are not representative of normal operation). In assessing whether 

actual emission increases of any pollutant are likely to occur, the reviewing 

agency should consider the economic incentives to increase production rates 

or hours of operation associated with the change. Any change which could 

reasonably result in increased emissions due to possible increased 

utilization of the facility as a result of tha changes should not be 

considered environmentally beneficial. The authority reviewing the proposed 

change should explicitly determine, based on consideration of these ani other 

relevant criteria, that the net effect will not be one of environmental 

harm. 

Operating Limits on New Diesel Generator 

The EPA considers the addition of a backup diesel generator at Bailly not to 

be an integral part of the OCT demonstration, in that the generator could 

serve nultiple functions once installed, m general, EPA views changes to be 

subject to NSR and NSPS if such changes are not strictly related to the 

addition of the improved air pollution control system and the changes have 

any possible additional application. However, EPA agrees with IDEM that the 

addition of a new diesel generator does not constitute a "major modification" 

if the State's limits on the generator's hours of operation, preventing 

concomitant increases in emissions from exceeding significance levels, are 

federally enforceable. 

In dosing, EE& agrees with the State that NSPS and NSR do not apply if the 

conditions outlined in this letter are met. If you have any further 

questions, please contact Mr. Ron Van Marsbergen at, (312) 886-6056 or 

Mr. Dam Abella at, (312) 886-6543. 

Sincerely yours, 

****~~pf~/Cfch, fit 

David jiee, Director 

Air and Radiation Division