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OAR Box 1802 

Prepped by Charmelle Mathews 

Document Number: 

66) IV-E-60 

Docket Number: 

A-90-37 

Printed 11/4/200811:57:59 AM Sheet 66 of 117 
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MEETING SUMMARY 

EPA MEETING WITH STAPPA/ALAPCO 

NSR SECTOR-BASED APPROACH AND CLEAN UNIT T 

April 07, 2000 

i 

The meeting was held via a telephone conference. The meeting began at approMmkeiy_„L.. ~-

10:00 am and closed at approximately 12:25 pm. Attached is a list of attendees'.—AlSolittached 

are the meeting agenda and handout. 

Bill Harnett opened the meeting by welcoming everyone. He said that the purpose of the 

meeting was to present some details of the NSR sector-based approach to STAPPA/ALAPCO 

and to solicit their input on that approach. He also said that another purpose of the meeting was 

to briefly discuss and to solicit STAPPA/ALAPCO's input on some recent comments received 

from the complex manufacturer's group regarding the proposed clean unit test. 

Kathy Kaufman presented the concept of the sector-based approach (first page of the 

meeting handout titled "New Source Review Sector-Based Approach"). Praveen Amar pointed 

out that EPA should make it clear that even though the program is voluntary to opt in, it is not 

voluntary once you have opted in, i.e., a source that opts in must meet certain levels and dates. 

Ms. Kaufman agreed. 

John Paul asked what EPA had in mind with respect to rate of decline versus rate of 

increase at certain plants. He was concerned that a plant that opts in could immediately increase 

emissions but may not see decreases until some time later. The consequence would be 

immediate air quality impacts, while benefits may only be realized later. Ms. Kaufman 

acknowledged that it was one of EPA's concerns and said that she will try to bring it up for 

discussion later in today's meeting. 

NOx and S02 LEVELS 

Ms. Kaufman presented target ranges that EPA was considering for NOx and S02, i.e., 

0.1-0.15 lb/MMBtu for NOx and 0.25-0.60 lb/MMBtu for S02. She indicated that the levels 

would have to be met on a company-wide average basis by the end of the program. 

Bill O' Sullivan asked if the end of the program was 10 years. If so, then for NOx there 

should be reductions in the first five years, and then a tougher BACT in the next five years. He 

said that these ranges were ok for the first five years but may not be ok for the second five-year 

period. Mr. Paul commented that whether or not the levels are ok beyond the first five years 

depended on what level is selected. Mr. O'Sullivan said that for S02 the lower end of the range 

was reasonable because it fits well with scrubber levels and 1-3% sulfur content in coal. But for 

NOx, he recommended that EPA reevaluate the levels for the second five-year period. 
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BACKUP LEVELS 

Mr. Paul asked if a target level is set and trading is allowed, whether there should be a 

backup level for individual units, i.e., an average level for overall purposes, and another level 

that each individual unit must not exceed. He was concerned that with averaging some utilities 

may operate individual units at higher rates and increase emissions and local impacts. He said 

that even though there is modeling to assess local impacts, utilities have historically argued 

against modeling. He suggested three options, (1) to have a target that all units must meet after 5 

years, say 0.15 for NOx, (2) a lower target for averaging, say 0.1-0.12 for NOx, and a backup 

level, say 0.20, for individual units, or (3) no backup for individual units, but the average level 

should be as low as possible and the units that increase emissions should be identified. Also, 

sources must commit to modeling to address local air quality impacts. 

Ms. Kaufman clarified if Mr. Paul had indeed said 0.20 as backup for NOx. Mr. Paul 

said that in OTAG states it would be 0.5 and asked Randy Raymond and Ray Menebroker if the 

level was ok west of the Mississippi. Mr. Raymond replied that he agreed with the levels that 

Mr. Paul had mentioned and said that their recent BACT was 0.1. Mr. O'Sullivan said that the 

upper end of the ranges being considered by EPA would be ok for backup, and lower ends would 

be ok for average. Mr. Paul also said that this was a big issue for STAPPA/ALAPCO, and a 

backup level would help get buy-in from membership regarding the sector-based approach. 

Carol Holmes said that some utilities were surprised about the need to model each facility 

at maximum capacity. Ms. Kaufman said that utilities' comment was that if EPA is providing 

this flexibility, then it was not reasonable to have to model any increase in actual emissions. 

Lynn Hutchinson said that the utilities' concern was that a problem may be revealed under this 

approach which may not be revealed under the base NSR program. She also said that there was a 

question about whether to model actual or potential emissions. Mr. O'Sullivan said that he did 

not understand why the utilities were surprised because an air quality analysis is needed to serve 

as a baseline. Mr. Paul said that some utilities have never been modeled and will likely show a 

problem with S02 NAAQS. They may be concerned that ambient violations would mean that 

they cannot have a trading program allowing them to increase emissions. Mr. Raymond said that 

is the basis of NSR program, i.e., maintaining the air quality standards. Therefore, if a source 

cannot show compliance with the standards, then they should not proceed with the offramp. 

PM-10 LEVELS 

Ms. Kaufman presented the range of PM-10 target levels being considered by EPA, i.e., 

0.015-0.30 lb/MMBtu. Mr. O'Sullivan said that the range was reasonable. Ms. Kaufman asked 

how the averaging and tracking would work. Mr. Paul said that it should be easy to model for 

PM-10 and can track easily. He recommended no averaging for PM-10 due to local air quality 

concerns, i.e., all units must meet the level. Mr. O'Sullivan agreed that averaging was ok for 

NOx and S02, but not for PM-10. He also said that testing for PM-10 can be done once a year. 
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Mr. Paul asked what about PM-2.5. He said that the industry may ask for it for certainty 

reasons, and that EPA may have to deal with it in 5 years. Mr. Amar agreed that PM-2.5 should 

be addressed. Ms. Kaufman said that EPA had not thought about that and requested further 

comments on that subject. 

Regarding target levels, Mr. O'Sullivan suggested that 0.3 could be offered now as an 

average, and if the industry cannot meet that level, then go down to 0.015 in the second five-year 

period. Mr. Paul asked what the difference was between 0.015 and 0.03, and whether it was a 

good ESP versus a baghouse. He was thinking about where the sources were today as compared 

to where they will be in future. Mr. O'Sullivan said that generally a baghouse would be needed 

to get down to 0.015. The ESP required to achieve that level would be big and uneconomical. 

Therefore, a lower level may push the industry to install baghouses. Mr. Paul said 

STAPPA/ALAPCO would like to have a target level that would need a baghouse, i.e. sources 

should not be able to meet the level with ESP. Bob Hodanbosi said that some sources would try 

to get mercury controls from S02 scrubbers and not from baghouses. Mr. Amar agreed. 

Mr. O'Sullivan said that for units coming in that need retrofits, he wanted a lower level that 

would require a baghouse. 

Mr. Paul reiterated that STAPPA/ALAPCO would like to see PM-2.5 and mercury 

addressed in this approach. Mr. Amar asked if mercury was completely out of consideration. 

Ms. Kaufman said that EPA had talked about superior environmental performance in general, but 

not about mercury in particular. Ms. Holmes said that EPA could not regulate HAPs under NSR 

legally. Ms. Kaufman clarified that for purposes of superior environmental performance, EPA 

will accept projects that also control mercury. 

CO LEVELS 

For CO, Ms. Kaufman said that EPA was considering good combustion practices on all 

units as the target. Mr. O'Sullivan said that historically CO for utilities has been left at "less than 

10 ppm." It could be sometimes as low as 1-2 ppm. He said that New Jersey has set a cap of 

100 ppm (at 7% oxygen) as RACT. He recommended that EPA set upper limit of 100 ppm or 

less. Mr. Amar asked what would be BACT for CO. Mr. O'Sullivan said that he did not know. 

Ward Burns said that in EPA Region VII the BACT for CO was 0.16 lb/MMBtu. Mr. Amar 

expressed a concern about moving to a higher limit, and suggested a limit much lower than 

100 ppm. Mr. O'Sullivan also suggested that EPA should look at some recent BACT decisions 

and set an upper limit. 

OUTPUT-BASED TARGETS 

Ms. Kaufman asked if the levels could be output based. She said that industry had lots of 

comments regarding output based targets. She also said an advantage of output based targets is 

that it encourages conservation. Mr. Paul said that another advantage is that it will take care of 

shutdowns. Ms. Kaufman agreed. 
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Mr. Paul said that STAPPA/ALAPCO like output based targets. Mr. O'Sullivan agreed. 

He said that a 0.15 lb/MMBtu level converted to 1.5 lb/MWH and that it was not hard to 

calculate. Mr. Amar thought that EPA had done a lot of work in the recent years about how to 

measure output and that EPA could recommend a simple way to calculate output based numbers. 

Mr. Raymond also expressed support for output based targets, but said that the difficulty was that 

industry was reluctant to share details about output. Mr. Amar asked Mr. Menebroker how 

California did it pointing out that California had output based limits. Mr. Menebroker said that 

he did not know how it was done. Ms. Kaufman said there was a need to look at this more. She 

said that the data were available and it can be done, just need to figure out how to do it. 

Ms. Kaufman clarified that everyone agreed that output based targets were preferred. 

TIMEFRAME 

Ms. Kaufman said that EPA was considering a 10-year length of the program. She also 

asked if there should be intermediate targets and what those targets should be. 

Mr. Amar said that timeframe depended on the levels selected. Mr. Paul said that it also 

depended on how many units and which units (especially older units) opt in, and whether there is 

averaging. Mr. O'Sullivan said that if EPA was looking at all units to get controls, then 10 years 

was ambitious and that 15 years may be more reasonable. 

Mr. Harnett said that the intent was to give utilities certainty and not worry about age. 

Even if targets are 0.15 and 0.60, i.e., upper end of ranges, it would represent significant 

reductions compared to base NSR. He also said that an intent was to give utilities flexibility to 

plan where they want to be in 10 years. Mr. O'Sullivan said that the age-based concept came 

from UARG and felt that it was a reasonable concept, i.e., as units get older they are "brought 

in." Older units do need part replacements and should go through BACT. He said that his 

thoughts were to get the units in this program and get them to install BACT in a cleaner way. 

Mr. Harnett said that EPA's concern was that older units may not opt in and younger ones will, 

and furthermore, as younger units become older, they will not opt in either in the next round. 

Mr. Paul said that regarding timeframe he needed to see how the levels were set and how 

many units will actually need controls. Depending upon these numbers it can be decided 

whether 10 years, or another period, is reasonable. 

Ms. Kaufman asked what was the interplay between timeframe and the backup levels. 

Mr. Harnett explained that the acid rain level for S02 was 1.2 lb/MMBtu, while this program 

will get 0.6 lb/MMBtu. Similarly, NOx national average is 0.4 lb/MMBtu, while this program 

will get 0.15 lb/MMBtu. However, he acknowledged that it was hard to predict how many 

sources will opt in. Ms. Kaufman said that a backup number may help identify how many will 

opt in. Mr. Harnett said that even if the sources are required to meet a certain level on average, 

EPA could consider requiring all units above a certain age to put some controls. 

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In conclusion, Mr. Paul said that the States did not clearly know if 10 years was 

reasonable. He asked what the industry had to say. Ms. Kaufman said that the industry had the 

same concerns. Karen Blanchard said that the industry was also concerned about the levels, and 

did not want meet one level now and another lower level after 10 years. Mr. O'Sullivan said if 

the level at the start was higher, say 0.6 lb/MMBtu for NOx, then it would be ok to have the 

sources meet a lower number in 10 years, but setting 0.6 lb/MMBtu for 20 years would not be 

reasonable. 

UNITS COVERED 

Ms. Kaufman said that EPA was considering limiting this approach to coal-fired units. 

She said that industry wanted to include oil and gas units as well, i.e., why penalize clean units. 

EPA is thinking of keeping it simple. 

Mr. Paul said that STAPPA/ALAPCO is consistent in saying that only coal units should 

be included. Mr. Raymond said that it would be complicated to bring in oil and gas units. 

Mr. O'Sullivan said that it would be complicated when averaging for all units. The limits 

would have to be lower. Ms. Kaufinan asked if an algorithm for averaging could be developed to 

include oil and gas units. She indicated that there might be political pressure to include them. 

Mr. Paul said that in an output based system, conversion to oil and gas would be creditable, but it 

would still be generally complex and he would prefer not to include oil and gas units. 

Mr. Raymond said that a separate program should be developed for each fuel, bu that 

would take time. Ms. Kaufman asked if the States would consider a program if EPA includes all 

units. Mr. Raymond cautioned that EPA may not like the target levels for a combined program. 

Mr. Paul said that States would consider it, but will not like it. 

OPTING IN INDIVIDUAL UNITS 

Ms. Kaufinan asked whether individual units should be allowed to opt into the program. 

Mr. O'Sullivan said that a problem with voluntary opt in is that the industry is deregulating, 

ownerships are changing and there is more competition. There could be a scenario where plants 

under same ownership are competing and may decide individually whether to opt in or not. 

Mr. Paul said that individual units should not be allowed to opt in and receive more 

benefits than in the base program. He suggested that if the program has to be voluntary then the 

whole company should opt in. When asked how to define a "company," Mr. Paul suggested to 

make it the "biggest thing you can think of," i.e., the biggest entity in terms of ownership. When 

asked by Ms. Kaufinan of other participants what their thoughts were regarding how to define a 

"company," there were no opinions expressed. 
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Mr. O'Sullivan was concerned about sources "cherry-picking" clean units and leaving out 

dirty ones. Mr. Paul said that the other concern was that the sources could only opt in the dirty 

units and keep operating them more by trading. Ms. Kaufman and Ms. Holmes explained that 

the rate cap would address the latter concern. 

Mr. O'Sullivan said that the States were also somewhat confused with the overall 

ownership issue, but their opinion was that at the least the obligation should stay with the unit. 

Ms. Kaufinan indicated that the industry agreed with that idea. Ms. Hutchinson said that some 

thoughts were that if a unit changes ownership, the unit must install BACT and exit the system or 

the new owner must keep it at the average applicable when the unit was bought. Mr. O'Sullivan 

acknowledged that this was complicated and that the States were not entirely clear about how to 

address this. Mr. Menebroker also acknowledged that it was not easy to go from a rule that 

applies system wide to a rule that busts the system apart. 

GEOGRAPHIC DISTRIBUTION 

Ms. Kaufinan asked if there should be geographic restrictions to protect existing 

programs, regional trading and local air quality. Mr. Paul said that a backup number (backup 

target level) would help in OTAG states. He said that a different backup number may be needed 

for different regions. Mr. O'Sullivan said that he would prefer to set the backup number slightly 

higher than 0.15 lb/MMBtu for NOx, say 0.2 lb/MMBtu. Mr. Paul said that some of the western 

states, such as Colorado, Utah, etc., should also be consulted. 

Mr. O'Sullivan said that some State programs, like SIP and visibility programs, may be 

more stringent than this NSR program. He explained that if this program resulted in an increase 

in emissions of a source as compared to the emissions that were previously modeled, the source 

should be required to model in order to increase their emissions up to their potential to emit. 

Regarding offsets, Mr. O'Sullivan indicated that whether or not a source needs offsets 

would depend on whether or not the source is in a budget, such as the NOx budget. He said that 

this was a sensitive issue and should be considered further. Ms. Kaufman acknowledged 

Mr. O'Sullivan's concern. 

SHUTDOWNS and FUEL SWITCHES 

Ms. Kaufinan asked whether there should be any credit for shutdowns and fuel switching 

(from coal to gas). She conveyed the comment from the industry groups that the two should not 

be treated the same. Mr. Paul suggested not to give credit for shutdowns, but a credit should be 

given for fuel switching. Mr. O'Sullivan agreed that there should be no credit for shutdowns. 

Ms. Kaufinan then asked how much credit should be given for fuel conversion to gas, i.e., 

full or partial credit, indicating that the industry wants full credit. Mr. Paul asked why there 

would not be a full credit. Ms. Hutchinson explained that the environmental groups had raised a 

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concern about leakage, i.e., giving credit would raise emissions elsewhere. Mr. O'Sullivan said 

that currently there was no credit for fuel switching, but that it may be ok to give partial credit. 

He explained that no credit should be given for that portion that is above RACT, e.g., if the coal 

average target was set at 0.15 lb/MMBtu for NOx and gas RACT was 0.1 lb/MMBtu, then there 

would no credit for reduction to a level above this RACT number. 

STATE versus FEDERAL ROLE 

Ms. Kaufman asked as to who would keep track of the sources in the program, e.g., who 

would the source apply to in order to opt in, who would review the application, etc. She sought 

guidance from the STAPPA/ALAPCO participants. She also clarified that the program would 

have to be a Federal program, but that the States could either choose to implement it or not. 

Mr. Paul said that it sounded reasonable and that it could either be a SIP requirement or a Title V 

requirement. Ms. Kaufinan said that it would have to at least be a SIP requirement, but it could 

additionally be a Title V requirement. 

A State representative said that it would be easier to implement if there was no trading. 

Mr. Raymond said that with trading cross-boundary issues will have to be addressed. Mr. Amar 

asked how the trading would work when the unit is already subject to other requirements such as 

the NOx SIP call, section 110 SIP call, acid rain program etc. Mr. Raymond said that it would be 

difficult to implement if the units were subject to other such requirements, but explained that this 

program covers more pollutants and it was doable. He agreed that State-to-State acceptance was 

the way to make it work. Mr. O'Sullivan expressed a concern about mixing other programs and 

then losing the benefit of NSR which is to reduce emissions per unit of product produced. 

TRADING 

Ms. Kaufman explained that trading will be based on annual tons. Beverly Warner asked 

if the sources would be trading allowances. Ms. Hutchinson explained that each facility would 

measure their input and output, and calculate their tonnage. If that tonnage exceeds their limit, 

then they need to go out and get the reductions elsewhere. There would be a reconciliation 

period (30,45,60 days etc.) after the end of the year during which to show compliance for that 

year. Ms. Hutchinson agreed with Ms. Warner that if the tonnage was below the limit, then the 

source would be generating credits. 

Mr. Amar said that it looks like the acid rain program. Ms. Holmes explained that the 

difference is that this is a floating cap depending on amount of electricity produced. Also, she 

said that EPA was still thinking about whether or not a source would be allowed to bank. 

Ms. Kaufman said that EPA was also considering allowing emissions to be banked for one year. 

A question was raised about what would happen if a source exceeded their limit but could not 

find another source that had a credit. Ms. Holmes said that the source would be in violation in 

that case. 

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Mr. O' Sullivan said that this was too complex. Mr. Amar suggested to not make the 

program complicated. He said that this trading was too complicated, and that if the goal was to 

get controls by a certain time, then trading should be kept simple. When asked by 

Ms. Hutchinson as to what a simple program would look like, two State representatives said that 

they would prefer no trading. Several.State representatives suggested to keep the program 

simple. Mr. Paul made the following suggestions about what the program should contain: coal 

only, companies opting in and not units, and output based targets. Mr. O'Sullivan said that not 

allowing banking will also make it simple, i.e., every year the average must be met. 

Ms. Holmes asked how the program would get the units to install controls and meet 

emission rates in lieu of trading. Mr. Paul said that the States' idea was to bring in the units 

based on age. Mr. O'Sullivan explained that if a unit was 30 years old and wanted to operate for 

another 10 years, then it needs to provide a schedule now for putting controls. He said that he 

agreed with David Hawkins of NRDC on this point. 

SUPERIOR ENVIRONMENTAL PERFORMANCE 

Ms. Kaufman said that Bob Perciasepe wanted a superior environmental performance 

project to be defined. She said that EPA is considering how to define it, e.g., should a specific 

type of project be allowed, or should it be case-by-case and the States should review it etc. She 

asked what the States' thoughts were regarding superior environmental performance. 

Mr. Paul suggested that a harmonized approach for mercury controls should be 

acceptable. He said that if levels are low enough then there is no need for a superior performance 

project. Otherwise there may be a need in which case a list of projects should be offered that 

qualify. Mr. O'Sullivan said that he would be satisfied with low BACT numbers as superior 

performance, but nothing more than that. He was concerned that this superior performance may 

derail the program, i.e., it could be a "poison pill." Mr. Amar agreed that if mercury is a 

non-starter, then it should not be brought in. Mr. Paul clarified that States' opinion was that if 

the number was low enough, then that is sufficient. 

END OF PROGRAM 

Ms. Kaufinan asked what would happen at the end of the program. She said that industry 

wanted longer than 10 years of certainty. 

Mr. Paul suggested that a unit that meets the backup number could get the clean unit 

exemption at the end. Mr. O'Sullivan said the he would prefer a new target level at the end, i.e., 

a number that is achievable at that time. Therefore, if a unit that just signs up at the end of the 10 

years, then they must meet the new level, but those that are already in the program should be ok 

for the next 10 years. Mr. Paul agreed that BACT should be re-analyzed at the end of the 

program. He also said that they support the "30-year concept," and anything that supports that 

concept would be preferable. 

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CLEAN UNIT TEST 

The following were discussed: 

• Tom Driscoll said that EPA is evaluating the request from complex manufacturers to refine 

the clean unit test, and is seeking input from STAPPA/ALAPCO. 

• Replacement Units: Mr. Raymond and Mr. O'Sullivan said that the clean unit exemption 

should not apply to replacement units. It could apply to re-built units, but new replacement 

units should be treated as greenfield units and subject to NSR. When asked by Mr. Driscoll 

what if the unit was being replaced after, say, 6 years and the BACT was still the same, 

Mr. O'Sullivan replied that it would then be ok to apply the exemption, but the exemption 

should only be available for 14 more years (20 minus 6) if the original life was 20 years. 

• List of Presumptive Controls: Mr. Driscoll said that EPA was considering developing a list of 

clean technblogies. He also said that the controls listed would not supercede any 

nonattainment area requirements. Mr. Paul said that this makes it a rebuttable presumption, 

i.e., if a State (say, CA) wants to be more stringent, they can. 

Ms. Warner asked if the list would be kept up to date, and whether the list Would contain the 

maximum or the minimum required control. Mr. Amar shared the concern about the list not 

being updated. Mr. Raymond raised concerns about whether the list will be a regulatory list 

or a guidance list, and whether it will go through some review. Mr. Driscoll said that he 

thought of the list as a presumptive list which is rebuttable. Once installed, the control 

technology would get a life, and if there was a change, the source would go through NSR. 

Mr. Paul said that the list must provide timeliness and certainty. He explained that it takes the 

most time to decide what is BACT, and if the list has very good presumptive BACT, then it 

would benefit both the States and the industry. He said that the list would also help in the 

case of a new unit going in under a PAL which must get good controls. Mr. Driscoll agreed 

that the list will help the process very much. Mr. Paul further said that because the list is 

presumptive and rebuttable, the States would reserve the right to say that any given 

technology, even if on the list, is not good enough. At the least, we know that the list has to 

be better than NSPS. Dennis Crumpler said that an improved RBLC could be used a resource 

for this list. 

Ms. Warner asked whether there will be separate lists for BACT and LAER. Mr. Driscoll 

replied that there would probably be separate lists, but the EPA needs to think more about it. 

Mr. O'Sullivan asked why there was a need to make two lists explaining that the presumptive 

BACT could be equivalent to LAER. Ms. Holmes said that LAER may be too stringent for 

BACT. Mr. O'Sullivan argued that LAER was just a number that could be put on the list. He 

was concerned about getting bogged down by two lists. Mr. Raymond indicated that having a 

single presumptive number would also help in the case of source going under a PAL. 

Mr. Driscoll asked whether the numbers used in California would be ok to use for this one 
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stringent number. Two State representatives replied yes. Mr. Driscoll also asked for help 

from the State representatives in preparing this list by suggesting that each State could 

possibly indicate what their respective BACT limits were. 

Mr. O'Sullivan asked if there would be a process involved in establishing this list. He said 

that New Jersey has a non-regulatory published list of state-of-the-art technologies that is 

revised every 2-5 years and is subject to an informal public comment process. He suggested 

that EPA also revise its list at least every 5 years. Mr. Hodanbosi said that 5 years sounds 

reasonable but it should vary by source" category. For example, 5 years may be too long for 

turbines and may need to be shorter. Mr. O'Sullivan replied that for turbines New Jersey had 

used 2 years. 

A question was raised as to what would the list contain, i.e., would it specify the process 

along with the control option, e.g., "rotogravure presses with thermal oxidizer." 

Mr. O'Sullivan said that both should be specified. 

Mr. Driscoll indicated that EPA was "not that far" from compiling the list. 

Other Options: Mr. Driscoll said that EPA would also consider other options for a source to 

get the clean unit exemption. Ms. Warner suggested that pollution prevention (P2) could 

qualify for this exemption. Mr. Driscoll said that technology transfer or BACT 

determinations that do not result in any add-on controls were also being considered. 

Mr. Crumpler clarified that the latter option could result in cases with no controls at all. 

Mr. Raymond agreed that the source should be allowed to meet the presumptive BACT in any 

manner, and although controls are preferable, other means should not be disallowed. 

Mr. Driscoll explained that EPA's thinking was that the source needs to make a capital 

investment to get the exemption. A State representative agreed that this was a good way to 

get other items on the list. 

Offsets/Credits: Ms. Warner asked if the emission reduction credits from a P2 project could 

qualify for the clean unit test. Mr. Driscoll said that EPA's thinking was not to allow 

reductions from clean units to be allowed as offsets or credits, i.e., no double counting. 

Mr. O'Sullivan agreed saying that these reductions would not be considered surplus. 

Mr. Raymond also agreed. Mr. Crumpler explained that if presumptive BACT was 96% 

control and a source achieves 98% control, the extra 2% would not be given a credit to use as 

offsets. Mr. O'Sullivan agreed that the extra 2% would be the source's compliance margin. 

Ms. Warner also agreed. 

Mr. Driscoll indicated that the clean unit test will not supercede any SIP requirements that are 

more stringent, i.e., if a unit has to comply with a SIP requirement that is more stringent, the 

unit would not be allowed to get the clean unit exemption. 

Life of the Exemption: Mr. Driscoll explained that EPA's current thinking was that the clean 

unit will get potential-to-potential test for the life of the control unit. The unit would be 

allowed to do anything so long as the potential to emit is not exceeded. Mr. O'Sullivan asked 
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what kind of life would assigned to units saying that he was opposed to a 30-year life. 

Ms. Warner how the life would be determined. Mr. Driscoll said that the exemption would be 

for the life of the control technology and would depend upon the process. He said that EPA 

would seek input from the States and the manufacturers. When asked by Beverly Warner, 

Ms. Holmes explained that the premise for tying the exemption to the life of the control was 

that if a very effective control is installed initially, then the source would be better able to 

recoup their cost and also any newer control technology would not result in significant 

additional reduction during the life of the installed technology. Ms. Warner also asked 

whether EPA had considered compiling vendor guarantees, to which Mr. Driscoll replied no. 

Mr. Driscoll asked if a control could get exemption for the remainder of the control's life if 

the control was still on the list. Mr. O'Sullivan replied yes, but the exemption would not be 

automatic because the technology may have evolved. Mr. Paul said that the life of the control 

also would need to be considered, e.g., if the control was 10 years old and its life was 10 

years, then no more exemption should be allowed. 

Case bv Case Determinations: Mr. Driscoll said that there may be cases where the source 

may suggest a better way to control than what is on the list. He said that EPA's thinking was 

that the State should work with the source and get approval from the applicable EPA region 

for the exemption. Mr. O'Sullivan said that the option should be on the list. Mr. Driscoll 

agreed that once the new way of control was approved for the exemption, it should be 

included on the list. Mr. O'Sullivan suggested that the new control could go through the 

approval process to get on the list first because timeliness of getting it on the list would be 

important. That way the control would have a number associated with it and if the source 

could meet that number they would get the exemption. Mr. Paul suggested not to hold the 

approval for the exemption waiting to get the control on the list explaining that the exemption 

certificate itself, and the potential-to-potential test would not "kick in" until it was on the list. 

Previous BACT Determinations: Ms. Warner asked what would happen if the source put a 

new way of control a year before the list comes out, i.e., would the source be allowed to 

include it on the list. She said that the States could get inundated with such requests. 

Ms. Holmes asked what would happen if a source has previously installed a control that is 

included in the list, i.e., would the source be allowed to request the exemption even if the unit 

is not being modified. Ms. Warner said that her preference would be that the BACT should be 

"frozen" for sources that have already installed the control, i.e., not to go back in time. She 

explained that the purpose of the list would be to encourage sources to put controls and new 

technology, and not to give exemption to sources that installed controls previously in order to 

meet NSR, e.g., the source should not suddenly get the potential-to-potential test just because 

a list of controls for the clean unit test was released. 

Mr. O'Sullivan said that he prefers to give credit to a source for putting good controls even if 

it is 2 years old, but was concerned with being inundated with such requests. Mr. Paul 

suggested to specify a short look back period. Mr. Crumpler agreed with the idea of a 2-year 

look back period saying that beyond the look back period the source would have to evaluate 

today's BACT to get the exemption. 

il 
P.13 

• Mr. Raymond said that he was still unclear about the whole idea behind the clean unit test. 

He said that he considered BACT to be a clean unit, and was struggling with the idea of a list 

other than the RBLC. Mr. O'Sullivan suggested to hold another conference call to discuss 

further. The next meeting was scheduled for Friday, April 14,2000 at 9:00 am. 

Ms. Blanchard asked the State representatives to provide any further comments within the 

next several days. Geri O'Sullivan agreed to coordinate the STAPPA/ALAPCO comments. 

April 21,2000 was agreed as the deadline for comments. 

The meeting was then adjourned. 

12. 
P.14 

ATTENDEES 

EPA MEETING WITH STAPPA/ALAPCO 

NSR SECTOR-BASED APPROACH AND CLEAN UNIT TEST 

April 7, 2000 

Name 

Bill O'Sullivan 

Geri O'Sullivan 

Bob Hodanbosi 

Praveen Amar 

John Paul 

John Stokes 

Ray Menebroker 

Chris? 

Beverly Warner 

Randy Raymond 

Ward Burns 

Larry Kertcher 

Karen Blanchard 

Dennis Crumpler 

Tom Driscoll 

Greg Foote 

Bill Harnett 

Carol Holmes 

Lynn Hutchinson 

Kathy Kaufman 

Melissa McCullough 

Anna Marie Wood 

Malay Jindal 

Valerie Everette 

Affiliation 

NJDEP 

STAPPA 

STAPPA 

NESCAUM 

RAPCA 

MPCA 

CARB 

CARB 

Clean Air Task Force 

Missouri 

Region VII 

EPA 

EPA/OAQPS 

EPA/OAQPS 

EPA/OAQPS 

EPA/OGC 

EPA/OAQPS 

EPA/OECA 

EPA/OAQPS 

EPA/OAQPS 

EPA/OAQPS 

EPA/OPAR 

PES (EPA Contractor) 

PES (EPA Contractor) 

13 
P.15 

NEW SOURCE REVIEW SECTOR-BASED APPROACH 

DISCUSSION WITH STATE AND LOCAL REPRESENTATIVES 

APRIL 7,2000 

AGENDA 

(Please note: times given for each discussion element are approximate.) 

9:00 - 9:10 Introductions and purpose of meeting 

9:10 - 9:40 Basic program elements and rationale for program goal 

What should be the basis for emission rate targets for NOx, S02, and 

PM10? e.g. (a) bring all sources to BACT/LAER levels? or 

(b) achieve emission reductions equivalent to what NSR/PSD would have 

achieved? How can these levels be estimated? 

Either way, what are the BACT/LAER levels that should be used? Should 

they be input or output based? If output based, how would this be 

measured? 

Emission levels or caps could be reduced annually over the program, or at 

set intervals (e.g. every few years). What are the advantages/ 

disadvantages of each method? 

9:40-10:00 Units covered. 

If the program also covered existing oil- or gas-fired units, how could the 

emission rate targets be set up to accommodate those units? 

What are the pros and cons of allowing individual facilities to opt in? 

10:00 -10:30 Averaging or trading? 

How would allowing trading affect the structure of the program, timing, 

and emission limits? What would be the effect of allowing site to site 

trading, trading across companies, or trading with facilities who opt in? 

If averaging or trading is allowed for PM10, how should compliance be 

determined and demonstrated? 

Restrictions on averaging or trading 

How can a system be set up to accommodate different geographic 

distributions of emissions, and to protect existing trading programs? 

H 
P.16 

If a source increases emissions more than they have previously modeled, 

would it have to ensure that there are no adverse effects on Class I areas, 

or localized adverse ambient impacts? 

How can the system accommodate shutdown units? 

How could facilities which switch to gas be used to meet the caps? 

If a company increased its actual emissions in a nonattainment area, must 

it still obtain offsets? 

10:30 -11:00 State vs. Federal Roles 

To whom does a company apply for entry to the program? What if they are 

located in several states or even several EPA Regions? Who reviews the 

sources's application? Is that separate from individual facility permit 

applications? 

Who manages the tracking system (OAQPS, OAP, OECA...). Do we need 

to add fields to the acid rain tracking system? 

11:00 -11:25 Superior environmental performance 

How do we incorporate the goal of performance superior to the base 

program? 

Require a superior environmental performance project to be proposed on a 

case-by-case basis? or 

Require a specific type of project? If a project could involve non-criteria 

pollutants, what would be the legal rationale? 

What happens at the end of the program? 

Revert to base NSR program, or 

Reset a new declining cap or new emission levels for another xx years, or 

Put off the decision until we assess, sometime later, how well the program 

is working. 

11:25 - 11:30 Wrap-up 

/s 
P.17 

FOR DISCUSSION PURPOSES ONLY 

DOES NOT REPRESENT EPA POLICY OR POSITION 

NEW SOURCE REVIEW SECTOR-BASED APPROACH 

Goal: To develop an approach that would have an end result of ensuring that existing power 

plants are well controlled, while providing maximum flexibility and certainty under NSR for 

existing units. This voluntary off ramp to the NSR program would achieve environmental results 

that are superior to the existing program. 

The Big Picture: 

The program: 

Overall requirements: 

A voluntary program for the utility industry, based on declining average 

emission rates for existing coal-fired units. 

Who is covered: 

Which pollutants: 

New facilities or units, must apply BACT or LAER, and meet other 

normal NSR requirements when they construct. 

All modifications to existing units that trigger a potential to potential 

emissions test must apply BACT or LAER. 

All existing units covered under this approach would be free to make any 

and all physical or operational changes without triggering a PSD or NSR 

review if their potential emissions do not increase. 

However, existing units must, in the aggregate, achieve emission 

reductions equivalent to specific target levels by the program end date. 

There would also be some intermediate target or targets. 

Any utility company with coal-fired units, on an opt-in basis. 

NOx, S02, CO, and PMIO 

Iio 
P.18 

• • < - * " 

FOR DISCUSSION PURPOSES ONLY 

DOES NOT REPRESENT EPA POLICY OR POSITION 

Rationale for program goal 

What would be reasonable targets for NOx and S02? 

The basis for emission rate targets for NOx, and S02 is to bring all sources to 

levels of performance greater than current levels, e.g., average of around 0.1 to 

0.15 lbs/MMBtu NOx and 0.25 to 0.6 lbs/MMBtu S02.1 

What would be a reasonable target for PM10? 

For PM10, our target could be a systemwide average in the range of around 0.03 

lbs/MMBtu, which is the NSPS level, to 0.015 lbs/MMBtu, which represents 

some BACT determinations that have been made. 

What would be a reasonable target for CO? 

We believe good combustion practices represents best control for CO, and would 

be a reasonable target. 

Are output-based targets realistic? How would they be measured? 

We are currently investigating developing output-based targets, but we have not 

developed an understanding of how they would be measured. 

What would be a reasonable time frame in which to expect all units, as a systemwide 

average, to achieve these emission rates? 

Our preliminary thoughts are that perhaps 10 years may be a reasonable 

expectation as a time-frame in which to achieve these emission rates systemwide. 

Should there be intermediate targets over the life of the program? 

We believe there should be one or two intermediate targets. What would be a 

reasonable basis for determining what those targets should be? 

1

 Note that S02 levels in the West perhaps should be lower based on use of low sulfur 

coal. 

n 
P.19 

FOR DISCUSSION PURPOSES ONLY 

DOES NOT REPRESENT EPA POLICY OR POSITION 

Units covered 

Working assumption: all coal-fired units at a company would be covered. 

If the program also covered existing oil- or gas-fired units, how could the emission rate 

targets be set up to accommodate those units while still achieving the overall program 

goal of superior environmental results? 

Likewise, if companies could opt-in individual facilities, how could the emission rate 

targets be set up to accommodate those units as well, and at the same time preserve 

overall reductions across the industry? 

Our current thinking is not to allow companies to opt-in individual units, because 

it would be difficult to allow this and at the same time achieve the overall 

program goal. 

Averaging or trading? 

How would allowing sources to trade affect the structure of the program, timing, and 

emission limits? What would be the effect of allowing: 

- site to site trading 

- trading across companies 

- trading with facilities which opt in 

Our current thinking is to allow trading across sites and across participating companies, 

but not to allow companies to opt-in individual units (as indicated above). 

If averaging or trading is allowed for PMIO, how could compliance be determined and 

demonstrated? 

Restrictions on averaging or trading 

How can a system be set up to accommodate different geographic distributions of 

emissions? 

e.g. We need to protect existing trading programs (OTR/Regional NOx Strategy, 

Grand Canyon Visibility Commission program under development). 

If a source increases emissions more than they have previously modeled, we 

believe it would be appropriate to take steps to protect against adverse effects in 

Class I areas and/or localized adverse ambient impacts. 

\% 
P.20 

FOR DISCUSSION PURPOSES ONLY 

DOES NOT REPRESENT EPA POLICY OR POSITION 

Likewise, if a company increased its actual emissions in a nonattainment area, we 

believe it must still obtain offsets. 

How can the system accommodate shutdown units or facilities which switch to gas ? 

We believe that units which shutdown or switch to gas during the life of the 

program could be counted. What specific emission rate could be assigned to 

them? We could assign each unit an emission rate equivalent to the program 

goal. 

What happens when a participating company sells a facility to a non-participating 

company? 

We believe that the emission rate the facility has been carrying under the program 

should accompany the facility as part of the sale. The selling company would 

then recalculate its cap. 

What are State vs. Federal roles in implementation? Who runs the program? 

To whom does a company apply for entry to the program? What if they are located in 

several states or even several EPA Regions? Who reviews the sources's application? Is 

that separate from individual facility permit applications? 

We believe this would be a Federal program that States could choose to 

implement. Sources opting in would have to have the State's buy-in, however, in 

that the source's SIP requirements would have to change. 

Who manages the tracking system (OAQPS, OAP, OECA...). Do we need to add fields to 

the acid rain tracking system? 

We believe OAP would have to manage the tracking system. 

Superior environmental performance 

Given our plan to make this voluntary offramp to the NSR program something that would 

achieve superior environmental results, how should we incorporate the goal of 

performance superior to the base program? 

Require a superior environmental performance project to be proposed on a case-

\°i 
P.21 

»• 

FOR DISCUSSION PURPOSES ONLY 

DOES NOT REPRESENT EPA POLICY OR POSITION 

by-case basis? or 

Require a specific type of project? If a project could involve non-criteria 

pollutants, how could this be accepted legally? 

What happens at the end of the program? 

Revert to the base NSR program (with availability of clean unit exclusion), or 

Reset a new declining cap or new emission levels for another 10 years based on 

what is achieveable at that time, or 

Delay the decision until we assess, sometime later, how well the program is 

working. 

Ao