P.1 

OAR Box 1802 

Prepped by Charmelle Mathews 

Document Number: 

71) IV-E-65 

Docket Number: 

A-90-37 

Printed 11/4/200811:58:00 AM Sheet 71 of 117 
P.2 

July 31,2000 

SUBJECT: May 20,1999 Meeting with NEDA CARP 

FROM: Dennis Crumpler 

Integrated Implementation Group, ITPID, MD-12 

TO: Air and Radiation Docket # A-90-37 

On May 20,1999 EPA met with representatives ofthe National Environmental 

Development Association Clean Air Regulatory Project (NEDA CARP) in Durham, North 

Carolina. An attendee list is attached. The purpose ofthe meeting was to provide NEDA CARP 

an opportunity to elaborate on a Memorandum that a group of complex manufacturing 

companies had drafted for revising NSR and ostensibly incorporating through the NSR Reform 

rulemaking. A copy is attached. This memorandum had been distributed to the State and 

Territorial Air Pollution Program Administrators (STAPPA) and the Association of Local Air 

Pollution Control Officials (ALAPCO). EPA indicated it would look for a response by STAPPA 

and ALAPCO, and environmental groups and then determine if further dialogue was necessary to 

move forward with the rulemaking. The NEDA CARP members asked EPA to keep the dialogue 

open and identify areas that it feels cannot be incorporated in the NSR Reform Rulemaking. 

They asked that EPA not terminate discussions prematurely. 

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May 11,1999 

By Federal Express 

John Paul, Director 

Dayton RAPCA 

451 West 3rd Street 

Dayton, OH 45402 

William O'Sullivan, Administrator 

Air Division 

New Jersey Dept. of Environmental Protection 

401 East Street 

Trenton. NJ 08625 

Re: Alternative NSR Approach for Complex Manufacturing 

Dear Messrs. Paul and O'Sullivan: 

The attached memorandum outlining an alternative new source review approach for 

complex manufacturing is submitted by the undersigned and the representatives of the utility 

industry £OT review by STAPPA/ALAPCO officials at its semi-annual meeting. In a February 17, 

1999 letter to EPA Assistant Administrator Pereiasepe these sectors committed to a dialogue with 

other stakeholders regarding an alternative NSR approach. We look forward to your comments on 

the elements of this approach, and we are prepared then to seek endorsement of our member 

companies for it based on STAPPA/ALAPCO feedback. Industry representatives are available to 

discuss the proposal by conference call with STAPPA/ALAPCO's Permit Committee on May 20, 1999. 

We very much appreciate STAPPA/ALAPCO's commitment, and that of other 

stakeholders, to exploring alternative NSR reform approaches. We look forward to being able to 

work with you further toward this goal. Tlf you have questions, please feel free to contact any of the 

signatories ofthe groups listed below. 

Sincerely. 

Charles H. Knauss 

Air Permitting Forum 

(202) 424-7644 

American Forest & Paper Association 

r> 

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Association of International 

Automotive Manufacturers 

Amy Lilly 

American Forest & Paper Associati 

Robert C. Kaufmann 

(202) 463-258* 

California Council for Environmental 

and Economic Balance 

Vic Weisser, President 

(contact - Michael R. Barr 

(415) 983-1151) 

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John Paul, Director 

William O'Sullivan. Administrator 

May 11.1999 

Page 2 

Chemical Manufacturers Association 

Rasma Zvaners 

(703) 741-5249 

{i}lLSy*-%kUU** 

Council of Industrial Industrial Boiler Owners ' National 

Robert D. Bessette 

Clean .Air Implementation .Project 

William B. Lewie 

(102)461-1145 

Association of Manufacturers \ 

Ernest Rosenberg 

(202) 857-8051 

National ^n^irtfnJnepial Development 

Association's Clean Air Regulatory Project 

William T. Burkhart 

Leslie Sue Ritts 

(202) 637-6573 

cc: Williffii Becker/David Wallenberg 

Tom Curran 

Lydia Wegman 

Karen Blanchard 

David Hawkins 

Christine Shaver 

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MEMORANDUM 

SIMPLIFYING TEE "NEW SOURCE REVIEW" SYSTEM FOR COMPLEX 

MANUFACTURING SOURCES 

There is widespread agreement that the complexities of the current "new source review" 

system impose unnecessary burdens on States, which must devote scarce resources to evaluating 

the compliance of projects with aa incredibly intricate zegulatoiy system, and on industry, which 

is often deterred from worthwhile new projects fay fear of NSR delay and uncertainty. Proposed 

NSR reforms will make bom these problems worse. Yet at the same time regulators and 

environmental groups have expressed concem about existing sources netting out of controls on 

significant new units under the current system. 

This proposal sets out changes to the existing NSR system that could significantly correct 

each of these defects. It is designed to be consistent with, and complementary to, the approaches 

put forward by the Plantwide Applicability Limit ("PAL") working group and the Utility Air 

Regulatory^Sroup ("UARG"). 

I. NO NETTING OUT OF CONTROL TECHNOLOGY FOR NEW UNITS 

A. Federal NSR Controls Would be Required for All 100 Ton New Units 

1. Each new unit with "potential to emit** ("PTE") that exceeded 100 tons per 

year (measured after accounting for enforceable controls) and located at an 

existing "major source" would be automatically required to install Federal 

NSR control technology. 

2. Units would not be "aggregated" together to determine applicability. 

Technology requirements would apply unit by unit to new units that 

exceeded the threshold. 

3. EPA's "BACT/LAER Clearinghouse" would be adequately funded and 

managed. 

B. State New Source Review Controls Would be Required for AU 

"Significant" New Units 

1. Each new unit at a major source widi PTE that exceeded the current NSR 

"significance" levels and fell below the 100-ton level would be required to 

install State new source review controls. Individual State control decisions 

would not be subject to EPA objection. 

2. The applicability roles foi- individual units would be the same cs in 

paragraph A. 

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C. States Would Have Discretion to Require Controls on Smaller Units 

New units with PTE below the NSR "significance" leveb would be required to install 

control technology at the election of tiie State. 

D. NEW ACCOUNTING RULES FOR CHANGES TO EXISTING UNITS 

A. Federal NSR Controls Would be Required for All Modifications to 

Existing Units that Increased the Unit's PTE by More than the NSR 

"Significance** Levels 

1. Changes to an existing unit at a "major source" that 

increased the unit's PTE by more man the NSR "significance" levels 

would have to install Federal NSR control technology. The definition of 

"physical change or change in the method of operation" would not be 

altered. 

2. In assessing emissions increases at a unit, Ae increase in the unit's 

achievable hourly emissions rate (after accounting for controls) would be 

compared to the contemporaneous past achievable level, and would be 

"annualized" using allowable hours of operation to determine applicability 

thresholds. The rules would be applied so as not to overstate emissions 

increases at batch processors or flexible manufacturing operations. 

3. Emissions changes at individual units would not be added together to 

determine applicability. 

4. Existing Federal law requires the permitting agency to consider retrofit 

costs and feasibility in deciding the exact control level to be required/This 

common-sense rule would continue. 

B. "Reconstruction** as a "Backstop** for State Controls 

We axe also considering a "backstop" to the other elements of this Memorandum under 

which reconstruction of existing major units would trigger a requirement for State new source 

review controls. Section VII below discusses some ofthe issues this raises. 

C.

 m States Would Have Discretion to Require Controls on Smaller 

Modifications 

Modified units with PTE increases below the NSR "significance" levels would be 

required to install technology at the election ofthe State. 

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HI. AIR QUALITY ANALYSIS REQUIREMENTS 

Air quality analysis would be required for changes that increased facility emissions by 

more than the "significance" levels, and would not be required for changes that-increased facility 

emissions by less than the "significance" levels. In other words, owners «vould be allowed to "net 

out" of air quality review for a new or modified umt-byexoissioii-reduetions elsewhere in the 

facility. As described earlier, owners would not be allowed to "net out" of the requirement to 

install good controls on new or modified units. 

In view ofthe simplification ofthe applicability rules outlined in Sections I and TJ, we are 

interested in exploring a further streamlining of air quality analysis requirements. 

IV. TITLE V IMPLICATIONS 

NSR decisions would not be re-examined by EPA in the Title V process and would be 

automatically incorporated in the Title V permit as de minimis amendments. 

V. FORMALIZE GUIDANCE ISSUANCE PROCEDURES 

Guidance cannot clarify ambiguous or debatable legal requirements until the agency has 

authoritatively issued it and the public has been informed of its contents. Conflicting and 

unpublicized guidance from different sources bas increased uncertainty regarding the 

applicability of NSR in fixe past To correct these defects, EPA should assure that: 

A. NSR guidance will be reviewed and approved by a single designated EPA office and 

m

 posted at a single designated address on EPA's Web site; 

B. No such guidance will take effect until 30 days after Web site posting or be applied as 

a "look back" to actions before that effective date; and 

C. Public comment will be allowed on the more significant guidance items, including 

changes in prior guidance. 

VI. INCORPORATE A PAL OPTION 

Facilities or portions of facilities would continue to be allowed to negotiate "Plantwide 

Applicability Limits" ("PALs"). 

VII. CONSIDER "BACKSTOP" MEASURES TO ASSURE GOOD CONTROL 

PERFORMANCE AT EXISTING UNITS 

Ttie measures outlined above will impiove the level of control at existing units over time 

(if other programs such as MACT, the NOx SIP call, or future ozone or PM2,5 SIP calls do not 

improve it first) by assuring the installation of controls on new units as capital stock turns over 

and on significantly changed existing units. We are exploring alternative proposals for a 

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"backstop" to provide -«MiifaMi assurance diat existing units will meet high levels of 

environmental performance in the future. We are also reviewing the likely impact of all the new 

air pollution control programs that will take effect in the next ten years to determine the extent of 

the need for any "backstop" requirement. 

These approaches are modeled on: 

A. An approach based on CAA' 111(d), which would authorize EPA to require States to 

develop control plans for emissions of criteria pollutants from existing sources 

that had not been through any other form of Clean Air Act technology as 

• MACT or NSPS; 

B. The UARG proposal, designed to bring selected industrial sectors to new source 

control leveb starting in 2010; or 

C. Incorporation of a "reconstruction" test in the NSR applicability calculus for major 

units, so that projects that exceeded a certain percentage of replacement cost 

would trigger technology requirements. Designing a workable 

"reconstruction" test raises a number of issues, most notably: 

• Establishing die percentage of replacement cost that would trigger the test; 

• Establishing the period over which costs would be accumulated to 

determine triggering; and 

• Detennining the boundaries ofthe process or production unit across which 

costs would be accumulated. 

We suggest the following regulatory language as a basis for discussion: 

"Reconstruct a major source" means the replacement, at an 

existing major source, of components over months at 

an existing process or production unit that in and of itself 

emits or has that potential to emit 100 tons per year of 

PSD/NSR-regulated pollutant whenever die fixed capital 

cost of the new components exceeds percent of the 

fixed capital cost that would be required to construct a 

comparable process or production unit It does not include 

the like-kind replacement of units made inoperable by 

events such as floods, lightning, tornadoes, or explosions." 

As with the UARG proposal, we envision any "backstop** requirements as starting in 

2010 after the existing generation of control requirements has been implemented. 

9 May 10.1999 

tttDC-frMU/l .017)31101