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* 919-541 - 087 1 COMMENTS : NOTE : Similia r change s fo r 52.2 1 ar e forthcoming . Thi s faxi s divide d i n 3 sectio n fo r eas ytransmission . (1 ) Cover ; page s 15 , 22 , 23 , 24 , 26 , 28 , 33 , 34 , an d 3 9 fl O pages . (2 ) Cover ; page s 41 , 46 , 52 , 59 , 62 , 63 , 79 , 84 , an d 8 5 (1 0 pages ) (3 ) Cover , page s 87 , 90 , 91 , 92 , 93 , 100 , 101 , 102 , cove r pag e o f filename 51165.918 , 4 , 5 , cove r pag e o f filename 511666.29 , 7 , an d 13 . n - *!».**. Numbe ro f Pages (includin

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1 5 Chemica l Manufacturer s Associatio n (CMA ) an d othe r industry petitioner s (Se e sectio n III(H)) . I n th e past , EPAha s essentiall yprovide d a singl e applicabilit ymethodologyfo r State s t o follow . State s coul d o f cours e hav e a mor e stringen t approac hbu t mos t followe d closel y th e EPAprototype . Th e EPAi s proposing t o brea k wit hthi s one size-fits-al l approac ht o applicabilit yb yproposing t o adop t thes e change s a s a menu o f option s fo r State s t o pic k an d choos e fromi n customizing a specifi c approac hfo r thei r State . Thus , i n it s fina l actio n o n thi s rulemaking , EPAwil l conside r placing al l o r some o f th e applicabilit yoption s presente d todaya s permissibl e alternative s i n it s par t 5 1 regulation s governing Stat e NS R program s i n nonattainmen t an d attainment/unclassifie d areas . State s wil l the n b e fre e t o adop t an ycombinatio n o f thes e menu option s int o thei r ow n regulation s an

d SIP s t o offe r source s thes e alternatives . Fo r instance , i f EPAadopt s i n it s fina l rulemaking bot hth e "Clean Unit " exclusio n an d th e PAL option , a Stat e coul d retai n it s curren t Federally-approve d applicabilit yapproac hwithou t making changes , retai n it s existing approac han d ad d a Clea n Uni t Test , o r retai n it s existing approac han d ad d bot ha Clea n Uni t Tes t an d a n optio n fo r plantwid e applicabilit ylimits . Tn e EP Aals o propose s t o includ e thes e applicabilit yapproache s i n the par t 5 2 regul&tlbn i governin g Federa l permittin g program! ! Th e EPAsolicit s commen t
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2 2 operations " following th e change , i t wil l operat e a t it s ful l capacit yyea r round , i.e. , a t it s ful l potentia l t o emit . Thi s i s referre d t o a s th e "actual-to-potential " test . Th e owne r o r operato r i s fre e t o rebu t thi s ||| | presumptio n tha t b yagreeing no t t o increas e th e emission s unit' s leve l o f actua l emission s wil l increas e ove r pre-modificatio n level s b yagreein g t o limit , it s potentia l t o emit , throughth e us e o f federall yenforceabl e restrictions, , t o pre-modificatio n actua l e n emission s level s (plu s a n amoun t tha t i s les s tha n "significant") * Th e effec t o f thi s methodologyi s t o reguir e th e sourc e t o tak e mino r NS R permi t limit s t o ensur e tha t actua l emission s wil l no t increas e (b ymor e tha n a prescribe d "significant 1 * amount , i f any ) abov e baselin e level s following th e physica l o r operationa l change . 2 . Litigatio n ove r th e Actual-to-Potentia l Tes t Industryha s long bee n concerne d tha t mos t physica l o r operationa l change s unde r EPA' s rule s wil l initiall yregiste r a s emission s increase s unde r th e EPA' s actual-to-potentia l tes t becaus e mos t source s ar e operate d a t les s tha n ful l capacit yo n a n annua l basis . A s a result , a chang e a t th e sourc e tha t doe s no t affec t instantaneou s emission s rate s show s up a s a presume d emission s increas e becaus e th e pre-modificatio n actua l utilizatio n i s les s tha n th e projecte d post-modificatio n utilization , whic hi s presume d t o reflec t ful l capacit ya t al l times . Hence , ofte n source s hav e i n orde r t o avoi d majo r NS R
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2 3 aouroo a ofte n noo d t o accept|§ | federall yenforceabl e limit s o n post-modificatio n emission s o r operation s t o overcome th o preoumptio n o f increase d emission s i n orde r t o avoi d majo r NSR. 6 A s a lega l matter , some industryrepresentative s argu e tha t untle r curren t regulation s th e EPA-^- s canno t properl ypresum e prcoumptio n shoul d no t appl yi n everycas e tha t io , th e EPAcanno t properl ypresum e tha t everynonroutin e o r otherwis e nonexclude d chang e t o a n existing emission s uni t canno t toe th e basi s fo r finding tha t th e uni t "ha s no t begu n norma l operations, , r fo r wil l oauo o a n increas e i n omisoion s du o t o th o fac t tha t th o uni t wil l b o use d differently . Theycontend tha t th e fac t tha t a uni t i s propose d t o b e "changed " shoul d no t necessaril ymea n tha t i t ha s no t ye t "begun norma l operations " following th e change .

6 Fo r example , conside r an industria l coal-fire d boiler , constructe d i n th e lat e 1960 s an d therefor e "grandfathered " fro m NSR , whic horiginall yhad a potentia l t o emi t o f 100 0 ton s pe r yea r o f S02 . Sinc e th e mid-1980s , thi s sourc e ha s actuall y operate d a t 50 % o f it s capacit yan d emitte d onl y50 0 ton s pe r yea r du e t o economi c condition s o r becaus e th e boile r became les s efficien t a s i t aged , an d henc e les s economi c t o operat e a t ful l capacity . I f th e boile r wer e t o b e modifie d througha nonroutin e physica l chang e whic hdi d no t affec t th e unit' s hourl yemission s rate , th e owne r o r operato r woul d nee d eithe r t o accep t a cap o n it s post-modificatio n emission s a t 53 9 ton s pe r yea r (i.e. , a leve l les s tha n a significan t increas e ove r it s pas t actua l emissions , wher e th e significan t increas e leve l fo r S0 2 i s 4 0 ton s pe r year) , o r t o obtai n a majo r NS R permi t i f i t desire s t o maintai n th e abilit yt o operat e a t 10 0 percen t o f it s rate d capacity . Th e 50 0 to n "cushion " betwee n actua l an d potentia l emission s tha t existe d prio r t o th e modificatio n woul d n o longe r exist . PRELIMINARY STAF F WORKINGDRAF T FOR OFFIC E O F MANAGEMENT AND BUDGE T REVIE W* DOE S NO T REPRESENT OFFICIAL EPAPOLIC Y ** * Septembe r 18 . 199 5 [fil e name : Master-M-M ] ** * 

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2 4 Tw o case s hav e addresse d th e EPA' s applicatio n o f th e actual-to-potentia l test , an d specifically , th e interpretatio n o f th e phras e "begun norma l operations. " I n Puert o Rica n Cemen t Co . v . EPA . 88 9 F.2 d 29 2 (1s t Cir . 1989) , th e cour t uphel d th e EPA' s applicatio n o f th e actual-to-potentia l methodologyi n a cas e involving renovation s t o conversio n o f a cemen t plan t froma to5ftfc proces s t o a mor e efficien t dryprocess . Th e cour t uphel d th e EPA' s interpretatio n tha t th e word s "emission s uni t tha t ha s no t begun norma l operations " includ e modifie d unit s a s wel l a s ne w units , citing a passag e fromth e 198 0 rulemaking preambl e that , i n th e court' s view , mad e i t clea r tha t th e EPAintende d t o appl y th e actual-to-potentia l tes t t o a "newo r modifie d unit. " 88 9 F.2 d a t 29 8 (4 5 FR 52676 , 52677 ) (emphasi s adde d b ycourt) . O n a relate d issue , th e cour t agree d wit hth e EPA' s positio n tha t th e regulatoryexclusio n fo r certai n increase s i n a source' s productio n rat e o r hour s o f operatio n applie s onl ywhe n suc ha n increas e i s unaccompanie d b yconstructio n o r modificatio n activity . Se e id . a t 916 , n.ll . Th e EPAi s todayproposing t o mak e th e existing exclusio n explicitl yclea r o n thi s poin t b y inserting th e phras e "standing alone " a t th e beginning o f th e exclusion . Se e propose d section s 51.165(a)(1)(v)(C)(6) , 51.166(b)(2)(iii)(F) , an d 52.21(b)(2)(iii)(F) . Th e actual-to-potentia l tes t wa s als o a t th e hear t o f a lega l challeng e brough t b yWisconsi n Electri c Powe r Co . (WEPCO) , PRELIMINARY STAF F WORKIN GDRAF T FOR OFFIC E O F MANAGEMENT AND BUDGE T REVIE W* DOE S NO T REPRESENT OFFICIAL EPAPOLIC Y ** * Septembe r 18 , 199 5 [fil e name : Master*aMk ] ** *2 6

3 . Th e WEPC O Rulemaking I n 1992 , the EPApromulgate d revision s t o it s applicabilit y regulation s creating specia l rule s fo r physica l an d operationa l change s a t electri c utilit ystea mgenerating unit s [see 5 7 FR 32314 , Jul y21 , 1992 ] . 7 I n thi s rule , prompte d b yth e WEPC O litigatio n an d commonl yreferre d t o a s th e "WEPC O Rule, " th e EP Aadopte d a n actual-to-future-actua l methodologyfo r al l change s a t electri c utilit ystea mgenerating unit s excep t th e constructio n o f a ne welectri c generating uni t o r the replacemen t o r reconstructio n o f an existing emission s unit . Unde r thi s methodology , a utilit ycompare s it s actua l annua l emission s befor e th e chang e wit hit s projecte d annua l emission s afte r th e chang e t o determin e i f a physica l o r operationa l chang e woul d resul t i n a significan t increas e i n emissions . T o ensur e tha t th e projectio n i s valid , the rul e require s the sourc e t o trac k it s emission s fo r the nex t five years . Th e EPAi s todayseeking commen t o n th e futur e proposing t o allo wus e o f thi s methodology fo r al l sourc e categorie s a s describe d i n mor e detai l i n sectio n II(G) .

7 Th e regulation s defin e "electri c utilit ystea mgeneratin g units " a s an

ystea melectri c generating uni t tha t i s constructe d fo r th e purpos e o f supplying mor e than one-thir d o f it s potentia l electri c outpu t capacit yan d mor e than 2 5 megawatt s (MW ) o f electrica l outpu t t o an yutilit ypowe r distributio n systemfo r sale . Se e e.g. , existing sectio n 51.165(xx) . PRELIMINARY STAF F WORKINGDRAF T FOR OFFIC E O F MANAGEMENT AN D BUDGE T REVIE W* DOE S NO T REPRESEN T OFFICIA

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2 8 representative s o f Stat e an d loca l regulator s a s wel l a s environmenta l group s expresse d genera l suppor t fo r th e ide a tha t "benign " change s a t existin g emission s unit s d o no t nee d t o underg o th e actua l t o potentia l tea t shoul d no t b e subjec t t o a« d th e complicate d NS R nettin g applicabilit yrule s i n ever yinotanc c ^^^^^^^^^^^^^^^^^^^lifican t ne t emission s increase . Ther e wa s als o suppor t fo r th e propositio n tha t th e NS R applicabilit y tes t shoul d provid e som e deferenc e t o source s tha t hav e alread y undergon e majo r NSR . Th e EPA , afte r carefu l consideratio n o f thes e discussions , believe s tha t th e bes t approac hfo r a ne wexclusio n i s on e tha t focuse s o n th e existin g emission s contro l o f a unit , rathe r tha n th e chang e bein g proposed . Almos t al l stakeholder s identifie d th e goa l o f ensurin g tha t modifie d unit s appl ystate-of-the-ar t control s a s bein g o f paramoun t importance . Accordingly , wher e a n emission s uni t alread ymeet s thi s goal , environmenta l concern s associate d wit hpropose d change s ar e likel yreduced . Fo r example , i t i s th e EPA' s experienc e tha t i n man ycase s wher e a n existin g well-controlle d uni t trigger s majo r NSR , th e permittin g proces s doe s no t necessaril yresul t i n improve d controls . O n th e othe r hand , wher e th e revie wi s focuse d o n unit s whic hhav e no t recentl ybee n require d t o mee t a contro l technolog yrequirement , NS R ca n b e expecte d t o resul t i n mor e stringen t control s an d meaningfu l reduction s i n actua l emissions . PRELIMINAR Y STAF F WORKIN GDRAF T FO R OFFIC E O F MANAGEMEN T AN D BUDGE T REVIE W• DOE S NO T REPRESEN T OFFICIA L EP APOLIC Y •••Septembe r 18 , 199 5 [fil e name : Master9.17 ] •• •P. 9

3 3 limi t i n a currentl yapplicabl e majo r NS R permi t withi n 1 0 year s o f th e propose d chang e unde r consideration . Se e propose d section s 51.165(a)(1)(v)(C)(10)(y)(1) , 51.166(b)(2)(iii)(L)(5)(i ) an d 52.21(b ) (2 ) (iii ) (L ) (5_ ) (i ) . I n othe r words , fo r th e firs t 1 0 year s following issuanc e o f a PS D o r nonattainmen t NS R permit , unit s subjec t t o BAC T o r LAE R se t i n tha t permi t ar e eligibl e fo r th e clea n uni t exclusion . A t leas t some member s o f th e Subcommitte e expresse d concer n tha t th e te n yea r perio d i s to o long give n th e improvemen t i n contro l technologytha t ca n occu r i n some sourc e categories . Fo r thi s reason , EPAsolicit s commen t o n usin g a shorte r perio d suc ha s five year s a s th e lengt ho f th e Clea n Uni t presumptio n derive d fro ma NS R permit . During consideratio n o f th e Clea n Uni t Exclusion , severa l participant s suggeste d tha t unit s subjec t t o maximu machievabl e contro l technology(MACT ) o r reasonabl yachievabl e availabl e contro l technology(RACT ) shoul d als o automaticl yqualif ya s clea n units . Arecentl yrequire d MAC T emission s limit , whil e no t necessaril yequa l t o BAC T o r LAER , i s likel yt o resul t i n significan t emission s control s suc htha t a BAC T o r LAE R revie w woul d no t necessaril yresul t i n significan t additiona l emission s reductions . However , th e EPAi s als o concerne d tha t a MAC T limi t coul d b e significantl yles s effectiv e i n limiting volatil e organi c compound (VOC ) emission s tha n BAC T o r LAE R i n man y circumstances . AMAC T emissio n limi t mayadequatel ycontro l a PRELIMINAR

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3 4 toxi c VO C bu t coul d resul t i n emissio n increase s o f pollutant s subjec t t o NSR . Fo r example , an incinerato r installe d t o reduc e a toxi c VO C wil l increas e nitroge n oxide s (NOx ) emission s emitte d t o th e atmosphere . Th e EP Aals o ha s concern s wit husing Federa l RAC T limit s t o presumptivel yqualif ya uni t a s a clean unit-*—In nonattainmen t areas , Asinc e RAC T emissio n limit§ | i o almos t alway s muc hcan ^ be les s stringen t than curren t LAE R an d 111117—in tho EPA ' o view , ofte n woul d b e lca a stringen t than a BAC T limit . Further , i n some instance s RAC T i s base d o n th e attainmen t need s o f th e are a an d no t a specifi c contro l technolog ystandard . Whil e EP A solicit s commen t o n presumptivel yapplying th e clean uni t exclusio n tes t t o unit s wit hFedera l MAC T o r RAC T limits , th e EPA i s no t incline d t o d o s o acros s the board . Rather , the EP A believe s tha t MAC T o r RAC T limit s shoul d b e foun d t o qualif yfo r th e Clea n Uni t exclusio n using the case-by-cas e optio n describe d i n sectio n II.C.3. C below , b . Stat e TechnologyProgram s Equivalen t t o BAC T o r LAE R Ther e ar e man

yemission s unit s a t stationarysource s tha t wer e permitte d according t o a State' s mino r NS R permitting program . Whil e thes e unit s ar e no t controlle d pursuan t t o a BAC T o r LAE R limit , theystil l mayhav e state-of-the-ar t controls . Fo r instance , severa l jurisdiction s hav e contro l technology review s a s par t o f State , loca l o r triba l mino r NS R programwhic h
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3 9 sourc e i s fre e t o mak e an ychang e a t th e permitte d uni t including thos e whic hcoul d affec t a unit' s efficiency , capacity , availability , longevit yan d utilization . However , change s whic h woul d bring int o questio n compromis e th e origina l emission s unit' s BAC T o r LAE R contro l leve l o r ai r qualit yimpac t (e.g. , modifie d stac k parameter s whic hwoul d caus e o r contribut e t o violatio n o f an

yapplicabl e ambien t standard , replacemen t o f th e uni t wit ha differen t typ e o r siz e o f unit , o r reconstructio n o f th e unit ) woul d no t b e allowed . Also , fo r unit s exclude d from majo r NS R unde r thi s propose d revision , th e physica l o r operationa l chang e mus t stil l compl ywit hal l otherwis e applicabl e Clea n Ai r Ac t an d SI P requirement s including an y federall yenforceabl e limit s o n emission s o r operation s an d mino r NS R requirements . Finally , th e determinatio n tha t a uni t i s "clean " o r "well

controlled " unde r today' s proposa l i s independen t fromth e case by-cas e determinatio n o f BAC T o r LAE R fo r source s subjec t t o majo r NSR . Whil e contro l technolog ywhic hqualifie s a uni t a s "clean " mayb e comparabl e t o BAC T o r LAER , i t i s no t necessaril y equa l t o BAC T o r LAER , an d i n n o wayestablishe s a presumptiv e BAC T o r LAER . Further , a five o r te n yea r presumptio n tha t a uni t i s "clean " doe s no t i n an yway"freeze " BAC T o r LAE R determination s i n permitting actions . Th e Ac t require s tha t BAC T an d LAE R b e curren t case-by-cas e determination s fo r source s PRELIMINAR

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4 1 simila r t o th e "clean " unit . Th e EPAi s proposing tha t th e qualificatio n fo r thi s exclusio n b e simila r t o tha t unde r th e clea n uni t exclusion . A s proposed , a clea n majo r stationary sourc e i s on e tha t underwen t NS R withi n th e las t 1 0 years . EPA als o request s commen t o n whethe r thi s proposa l shoul d no t allo w unit s o r facilitie s t o b e replace d o r reconstructed . Certainly , Th e addiftgitio

n o f ne wemission s unit s no t covere d b yttuf c existing permi t woul d no t b e permitte d unde r th e proposal . becaus e ouc hchange s woul d no t b o consisten t wit hth e existing NS R permit . Similarly , emission s trade s mayno t b e permissibl e wher e a n differen t ai r qualit yimpac t woul d resul t sinc e th e PS D o r NS R permi t migh t limi t suc hdiffering impacts . D . Revisio n t o th e Netting Baselin e Today' s notic e describe s an d solicit s commen t o n a ne w metho d fo r determining a n existing source' s baselin e emission s fo r purpose s o f determining whethe r a physica l o r operationa l chang e wil l caus e a n increas e i n emission s an d trigge r NSR . 1 . Introductio n A s discussed , i n orde r t o determin e whethe r a physica l o r operationa l chang e wil l resul t i n a n increas e i n emissions , i t i s necessaryt o compar e a source' s emission s befor e th e chang e (it s baselin e emissions ) wit hit s emission s afte r th e change . Th e EPA' s existing regulation s generall ydefin e baselin e actua l emission s a s "th e averag e rate , i n ton s pe r year , a t whic hth e
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4 6 regions , however , thes e inventoryan d dat a requirement s ar e no t directl ylinke d t o th e PS D requirements . Therefore , th e EPAsee s n o clea r reaso n wh

yth e us e o f a te n yea r loo k bac k shoul d b e limite d t o afte r Novembe r 15 , 199 0 i n attainment/unclassifiabl e areas . However , EPAsolicit s commen t o n thi s issu e fo r bot h attainment/unclassifiabl e area s an d nonattainmen t areas . I t i s th e EPA' s experienc e tha t man ysource s kee p accurat e record s o n emission s o r operation s fo r onl ythre e t o fiv e years , unles s expressl yrequire d t o d o s o fo r a longe r period . Anumbe r o f Stat e an

d loca l permitting authoritie s hav e simila r experiences . Thus , th e EPAha s reservation s concerning th e us e o f 10-year , an

d longer , baseline s an d solicit s commen t o n whethe r a shorte r (e.g. , 5 year ) perio d woul d b e mor e appropriate . I n addition , i f th e EPAadopt s a 10-yea r loo k bac k period , th e EPA als o propose s tha t suc hperio d b e availabl e onl ywhe n adequate — accurat e an

d complet e emission s and/o r capacit yutilizatio n dat a ar e availabl e fo r th e baselin e calculation . Th e EPAsolicit s commen t o n th e nee d t o conditio n th e us e o f suc hperiod s upo n th e accurac yan

d completenes s o f availabl e data , an d th e nee d t o establis hspecifi c criteria , throughguidanc e o r otherwise , fo r accuracy , completenes s an d recordkeeping whe n usin g olde r data . A s noted , th e EPA' s existing regulation s provid e tha t th e sourc e maysee k t o us e anothe r time perio d outsid e th e tw o preceding year s upo n a finding b yth e permitting authorit ytha t
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5 2 violatio n o f a NAAQ S o r PS D incremen t an d no t adversel yimpac t o n the AQRV s o f Clas s I areas) . Whil e today' s proposa l wa s modele d afte r the WEPC O exclusion , i t contain s severa l significan t change s reflecting the fac t tha t th e WEPC O exclusio n wa s limite d t o a singl e sourc e categoryan

d covere d onl ya small , finit e se t o f pollutio n contro l project s specifi c t o utilit yunits . I n contrast , today' s proposa l reflect s the fa r mor e comple xtas k o f addressing a vas t arrayo f pollutio n contro l an d pollutio n preventio n project s a t a variet yo f source s facing myria d federal , stat e an d loca l environmenta l requirements . Specifically , today' s proposal : o Provide s a muc hbroade r definitio n o f pollutio n contro l projec t than tha t adopte d i n the WEPC O rul e an d includes , unlik e the WEPC O rule , pollutio n preventio n projects ; o Delete s the requiremen t tha t add-o n control s an d fue l switche s b e subjec t t o a n "environmentall ybeneficial " test ; instead onl ypollutio n preventio n project s ar e subjec t t o thi s additiona l safeguard ; o Incorporate s the safeguard tha t n o project , whethe r add-o n controls , fue l switches , o r pollutio n prevention , can resul t i n a n increas e i n actua l emission s tha t wil l caus e o r contribut e t o a violatio n o f a NAAQ S o r PS D increment , an d extend s th e polic yt o protectio n agains t advers e ifnpact s o f AQRV s i n a Clas s I areas. 1 4

1 4 Th e WEPC O rul e refer s specificall yt o "visibilit y limitation " rathe r than "ai r qualit yrelate d values. " However , EPAclearl ystate d i n the preambl e t o the fina l rul e tha t permittin g agencie s hav e the authorit yt o "solici t the view s o f other s i n taking an yothe r appropriat e remedia l step s deeme d necessaryt o protec t Clas s I areas... . EPAemphasize s tha t al l environmenta l impacts , including thos e o n Clas s I areas , ca n b e PRELIMINARYSTAF F WORKIN GDRAFT FOR OFFIC E O F MANAGEMEN T AN D BUDGE T REVIE W• DOE S NO T REPRESEN T OFFICIA

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5 9 contro l project s (e.g. , a physica l o r operationa l chang e fo r th e purpos e o f producing reformulate d gasolin e a t a refineryi s no t a pollutio n contro l projec t unde r th e propose d exclusion) . Th e EPAals o solicit s commen t o n whethe r applicabilit yo f th e pollutio n contro l projec t exemptio n shoul d b e extende d t o "cros s media " pollutio n contro l projects , an d whethe r the yshoul d b e require d t o mee t th e "environmentall ybeneficial " test. 1 8 T o qualif yfo r thi s exemption , a s fo r al l pollutio n contro l projects , a "cros s media " pollutio n contro l projec t coul d no t caus e o r contribut e t o a NAAQ S violation , PS D incremen t violatio n o r advers e impac t AQRV s i n a Clas s I area .

Th e Caus e o r Contribut e Tes t Apropose d pollutio n contro l project , o r an yphysica l o r operationa l change , canno t resul t i n a n emission s increas e tha t wil l caus e o r contribut e t o a violatio n o f a NAAQ S o r PS D increment , o r adversel yimpac t AQRV s (including visibility ) i n Clas s I areas . Se e section s 110(a)(2)(C) , 165 , an d 17 3 o f th e Act ; se e als o 5 7 F R 32322-23 . T o ensur e tha t th e propose d

1 8 A"cros s media " pollutio n contro l projec t coul d b e define d a s eithe r a contro l technologyo r applicatio n t o compl y wit hlimitation s establishe d unde r othe r Federa l environmenta l law s (e.g. , Saf e Drinking Wate r Ac t o r Clea n Wate r Act ) tha t result s i n emission s t o th e atmosphere . Fo r example , t o compl y wit ha n effluen t limitatio n establishe d unde r th e Clea n Wate r Act , a sourc e choose s t o instal l a contro l devic e tha t remove s th e pollutan t from

th e wastewate r strea m an d discharge s i t int o th e atmosphere . Thi s typ e o f pollutio n contro l projec t coul d qualif yfo r th e exclusio n provid e i t i s environmentall y beneficial . PRELIMINAR

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6 2 sourc e woul d b e require d unde r today' s proposa l t o mitigat e (e.g , throughoffset s o r SI P measures ) an ysignifican t increas e i n a nonattainmen t pollutan t resulting fro mth e pollutio n contro l project . Les s tha n significan t collatera l emission s increase s (e.g. , les s tha n 4 0 ton s pe r yea r o f VO C i n a moderat e ozon e nonattainmen t area ) woul d no t trigge r suc hoffse t requirements . However , a less-than-significan t increas e mayb e subjec t t o a State' s mino r NS R requirements . ( 3 j§ ) Determinatio n o f Increas e i n Emission s Th e EPAi s todayproposing t o us e a representativ e actua l annua l emission s approac ht o determining whethe r a pollutio n contro l projec t wil l resul t i n increase d emissions . Se e propose d section s 51.165(a)(1)(v)(C)(8) , 51.166(b)(2)(iii)(H ) an d 52.21(b)(2)(iii)(H) . Thi s i s th e methodologydevelope d i n th e WEPC O rul e an

d i s explaine d i n detai l i n tha t rulemaking . Se e 5 7 FR 32323 . Th e us e o f thi s approac hi s premise d o n th e EPA' s experienc e an

d expectatio n tha t i n mos t circumstance s pollutio n contro l project s wil l no t impac t ho wth e sourc e i s operate d s o tha t th e calculatio n o f whethe r a pollutio n contro l projec t wil l resul t i n a n emission s increas e ca n b e mad e throughth e simpl e compariso n o f pre-chang e an d post-chang e emission s rates . O f cours e wher e th e permitting authorit yexpect s sourc e operation s t o change , thi s methodologyallow s th e post-chang e emission s t o b e projecte d base d o n th e ne woperating levels . I n th e cas e o f a
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6 3 pollutio n contro l projec t tha t wil l no t affec t utilizatio n bu t collaterall yincrease s a non-targete d pollutant , th e actua l increas e (calculate d using th e ne wemission s rat e an d curren t utilizatio n pattern ) woul d nee d t o b e analyze d t o determin e it s ai r qualit yimpac t unde r today' s proposal . Althoughth e EPAi s supportiv e o f pollutio n preventio n project s an

d strategies , specia l car e mus t b e take n i n classifying suc ha projec t a s a pollutio n contro l projec t an d i n evaluating a projec t unde r a pollutio n contro l projec t exclusion . Virtuall yeverymodernizatio n o r upgrad e projec t a t a n existing industria l facilit ywhic hreduce s input s an d lower s uni t cost s ha s th e concurren t effec t o f lowering a n emission s rat e pe r uni t o f fuel , rawmateria l o r output . Nevertheless , i t i s clea r tha t thes e majo r capita l investment s i n industria l equipmen t ar e th e verytype s o f project s tha t Congres s intende d t o addres s i n th e ne wsourc e modificatio n provisions . Se e Wisconsi n Electri c Powe r Co . v . Reilly . 89 3 F.2 d 901 , 907-1 0 (7thCir . 1990 ) (rejecting contentio n tha t utilit ylif e extensio n projec t wa s no t a physica l o r operationa l change) ; Puert o Rica n Cemen t Co. . Inc . v . EPA . 88 9 F.2 d 292 , 296-9 8 (1s t Cir . 1989 ) (majo r NS R applie s t o Wa S found t o be applicabl e t o a modernizatio n projec t tha t decreases] ! emission s pe r uni t o f output) . Moreover , project s whic h significantl yincreas e capacity , decreas e productio n costs , o r improv e produc t marketabilit ymaydramaticall yincreas e sourc e PRELIMINAR

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7 9 proposed , a PAL majo r modificatio n woul d requir e BAC T o r LAE R fo r eac hpollutan t limite d b yth e PAL whic hwil l b e increased . Thus , BAC T o r LAE R woul d appl yt o eac hemission s uni t tha t contribute s t o th e emission s increas e tha t occur s abov e th e lates t PAL . Id . Th e EPArequest s commen t o n ho wt o appl yth e majo r NS R requirement s a s a resul t o f a n increas e no t directl yassociate d wit ha particula r modificatio n o r physica l chang e t o a n emission s unit . Majo r NS R coul d b e applie d to : (1 ) al l modification s tha t hav e occurre d unde r th e PAL ; (2 ) al l modification s tha t hav e occurre d unde r th e PAL sinc e th e las t PAL renewal ; (3 ) al l modification s tha t hav e occurre d unde r th e PAL i n th e las t 5 years ; (4 ) onl ythos e modification s tha t ca n b e associate d wit h th e increase , a s propose d toyth e source , o r (5 ) th e entir e facilit yan

d BAC T o r LAE R ca n appl ywher e mos t appropriate , i.e , an yuncontrolle d unit s o r th e les s controlle d units . I n ligh t o f th e benefit s offere d b ythi s approac han d th e abilit yo f th e State s t o impos e contro l technologyrequirement s i n SIPs , th e EPArequest s commen t o n whether , fo r al l ne wunits , fo r al l ne wunit s whic hne t ou t o f majo r NSR , o r fo r al l ne w unit s adde d unde r a PAL , t o requir e tha t State s impos e some leve l o f contro l technology , o r similarl ywhethe r t o requir e i n th e Federa l regulation s th e applicatio n o f a particula r leve l o f contro l technology . d . PAL Revie wan

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8 4 Ther e remain s th e questio n o f th e "future-actual " methodology whic hallow s a utilit yt o us e a predictio n o f it s post-chang e actua l emission s —excluding an yincrease s i n utilizatio n cause d b ydemand growt h—t o determin e whethe r th e chang e a t issu e wil l increas e emission s ove r actua l baselin e levels . Th e WEPC O rul e wa s challenge d b ybot hindustryan d environmenta l petitioners . Thes e challenge s include d a demand fromsome industrie s tha t EPAexpand th e WEPC O rul e t o al l sourc e categorie s an

d a demand fro

man environmenta l grou p tha t EPA abando n th e rul e o r a t leas t th e demand growt hexclusion . Thi s litigatio n i s no winactiv e pending th e outcome o f thi s rulemaking . Fo r thi s reaso n Today , EPAsolicit s eommont a o n thro e alternative s fo r propose s t o allo wus e o f th e future-actua l methodologyfo r al l sourc e categories * A s discusse d i n sectior i XX«A« r EP Apropose s tha t State s b e give n th e choic e o f whether ^ t o retai n i n thei r SIP s th e curren t actual-to-potentia l test , o r t o adop t th e actual-to-actua l tes t t o al l sourc e categories * Althoug hEP Ai s als o proposin g th e actual-to-futur e actua l tes i fo r th e Federa l permittin g programi n lie u o f th e curren t actuitl

to-potentia l test , EP Asolicit s comment s o n whethe r t o retai n ih e actual-to-potentia l test.-.—(-i)

- I n addition , EPAsolicit s comment s |i | leaving it s §|i § scop e o f th e futur e actua l methodologyth e same —availabl e onl yfo r utilit yunits-;—(-2-)—extendin g th o future-actua l methodologyt o al l oourc o categories ; o r -(--H

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8 5 eliminating th e methodolog ycompletely. 2 3 I n addition , i # optio n l o r 2 i o oclcctcdi n regar d t o us e o f a futur e actual ' methodology , the EPAsolicit s commen t o n wha t change s i f an y shoul d b e mad e t o th e demand growt hexclusio n an d th e five yea r tracking requirement . Se e propose d t o 52.5..1(b ) {21) (vi ) and " 51.3.66(b ) {21) (vi ) and 51.165(a ) (1 ) (xii ) (P ) „ 1 . Background A s noted , the WEPC O rul e create d prescribe d i n EPA' s regulation s a ne wmethodolog yfo r determining whethe r a physica l o r operationa l chang e woul d resul t i n a significan t increas e i n emission s an

d therefor e constitut e a majo r modification . Th e rul e provide d tha t the post-chang e emission s leve l o f a utilit y uni t woul d b e calculate d using a projectio n o f the unit' s "future-actual " emissions . Th e rul e wa s limite d t o existing electri c utilit ystea mgenerating unit s an d di d no t appl yt o th e additio n o f a ne wuni t o r the replacemen t o f a n existing unit. 2 4

2 3 Thi s discussio n o f the us e o f the future-actua l methodologya s an applicabilit ytes t i s separat e fromth e propose d us e o f the methodolog yt o projec t emissio n increase s frompollutio n contro l project s i n sectio n II.E .

2 4 Auni t i s considere d replace d i f i t woul d constitut e a reconstructe d uni t withi n the meaning o f 4 0 CFR 60.1 5 (th e NSP S tes t fo r "reconstruction") . EPAreasone d tha t sinc e ther e i s n o relevan t operating historyfo r wholl yne wunit s an d replace d units , i t i s no t possibl e t o reasonabl yprojec t post-chang e utilizatio n fo r thes e units , an d hence , thei r futur e leve l o f "representativ e annua l emissions. " Fo r othe r changes , pas t operating historyan d othe r relevan t informatio n provide s a basi s fo r reasonabl e projections . Se e 5 7 F R 32323 . PRELIMINARY STAF F WORKIN GDRAF T FOR OFFIC E O F MANAGEMENT AND BUDGE T REVIE W• DOE S NO T REPRESEN T OFFICIAL EPAPOLIC Y •••Septembe r 18 , 199 5 [fil e name : Master9.17 ] •• •P.2 1

8 7 emissions . Wher e th e chang e doe s no t increas e th e unit' s emission s factor , th e utilit ymaysubmi t annua l utilizatio n data , rathe r tha n emission s data , a s a metho d o f trackin g post-chang e emissions . Id . I f during th e 5 year s th e unit' s post-chang e actua l emission s excee d it s pre-chang e baselin e level , i t i s the n subjec t t o NSR . Increase s whic hoccu r afte r th e 5 year s ar e presume d no t t o b e relate d t o th e earlie r change. 2 6 A s discussed , th e NS R regulatoryprovision s requir e tha t th e physica l o r operationa l chang e "resul t in " a n increas e i n actua l emission s i n orde r t o conside r tha t chang e t o b e a modification . I n th e WEPC O rule , EPAadde d a causatio n requiremen t languag e t o implemen t thi s principl e tha t focuse d o n a n "independen t factor " tha t coul d caus e increase s fo r utilities : demand growth . Thus , thi s provisio n exclude d fro mth e calculatio n o f futur e emissions :

tha t portio n o f th e unit' s emission s following th e chang e tha t coul d hav e bee n accommodate d durin g th e representativ e baselin e perio d an d i s attributabl e t o a n increas e i n projecte d capacit yutilizatio n a t th e uni t tha t i s unrelate d t o th e particula r change , including an

yincrease d utilizatio n du e t o th e rat e o f electricit ydemand growt hfo r th e utilit ysystem a s a whole . See , e.g. . existing 51.166(b)(32)(ii) .

2 6 Th e permitting authorit ymayrequir e a longe r period , no t t o excee d 1 0 years , wher e i t determine s tha t n o perio d withi n th e firs t fiv e year s following th e chang e i s representativ e o f norma l sourc e operations . 5 7 FR 32325 . PRELIMINAR

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9 0 als o b e abl e t o provid e th e necessarydocumentatio n o f thei r complianc e wit ha post-chang e emission s prediction . However , utilitie s remai n th e onl ysourc e categorywher e projection s o f demand an d facilit yutilizatio n ar e typicall y assesse d b

ya n independen t regulatoryagency , th e Stat e PUC , an d |i| § availabl e t o th e public . Becaus e o f this , permittin g authoritie s shoul d b e abl e t o fin d independen t dat a an d assessment s regarding curren t operation s an d cost s fo r th e utilit yuni t subjec t t o th e chang e a s wel l a s projecte d dat a fo r th e uni t afte r th e change . Similarly , th e PU C shoul d hav e mad e an assessmen t o f futur e demand growt han d utilit yplan s t o mee t thi s increase d demand s o a permitting authorit yshoul d b e abl e t o secur e independen t corroboratio n o f utilit yclaim s i n thi s are a a s well . Becaus e thi s kind o f informatio n i s typicall yno t availabl e fo r othe r sourc e categories , th e EPAi s concerne d abou t th e basi s permittin g authoritie s woul d hav e t o revie wprojection s fo r othe r sourc e categories . O n th e othe r hand , th e five-yea r tracking provisio n tha t wa s adopte d i n th e fina l WEPC O rul e make s th e accurac yo f th e futur e projectio n subjec t t o a safeguar d tha t shoul d guarante e th e accurac yo f th e predictio n fo r a t leas t fiv e years . Thi s tracking perio d mayb e extende d t o 1 0 year s wher e th e permittin g authorit yi s concerne d tha t th e firs t fiv e year s wil l no t b e representativ e o f norma l sourc e operations . See , e.g. . existing
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9 1 sectio n 51.166(b)(21)(v) . Eve n afte r thi s tim e period , th e permitting authorit ymaystil l conside r whethe r a n increas e tha t occur s i s "caused " b yth e chang e an

d thu s result s i n a n emission s increas e subjecting th e origina l chang e t o majo r NSR . Se e 5 7 F R 32326 . Therefore,I n proposin g t o expand future-actua l methodologyt o al l sourc e categories , th e EPAsolicit s commen t o n th e adequac yo f thes e safeguard s an d whethe r th e future-actua l methodologyshoul d b e (1 ) retaine d fo r th e electri c utilities, ; expande d t o al l oourc o categorie s o r (2 ) eliminate d entirely . 3 . Issue s Regarding Th e Future-Actua l Methodology Th e EPAals o seek s commen t o n tw o additiona l specifi c part s o f th e WEPC O rule . First , th e EPAsolicit s commen t o n whethe r a demand growt hexclusio n shoul d b e included , wit ho r withou t changeSTI I i f EPAadopt s a n actual-to-futuro-actua l methodology fo r oom c o r al l sourc e categories . Second , th e EPAsolicit s commen t o n whethe r th e 5 yea r reporting provisio n i s workin g a s intende d an

d whethe r i t shoul d b e change d i n an yway . A s discussed , th e WEPC O rul e require s th e permittin g authorit yt o exclud e fro mth e post-chang e emission s estimate , an y increas e i n utilizatio n tha t i s unrelate d t o th e particula r change , "including an yincrease d utilizatio n du e t o th e rat e o f electricit ydemand growt hfo r th e utilit ysystema s a whole. " Whil e thi s provisio n "doe s no t amoun t t o a pe r s e exclusio n o f demand growt hfromth e emission s increas e calculation "
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9 2 (5 7 FR 32327) , i t maycreat e confusio n outsid e th e utilit yare a a s t o whe n demand growt hincrease s mayb e excluded . Th e WEPC O preambl e i s veryclea r tha t an yincrease s a t a uni t tha t resul t fro ma chang e tha t significantl yaffect s th e efficienc yo f th e uni t mus t b e include d i n th e future-actua l calculation . Id . Indeed , wher e the propose d chang e wil l increas e reliability , lowe r operating costs , o r improv e othe r operationa l characteristic s o f the unit , increase s i n utilizatio n tha t ar e projecte d t o followcan an d shoul d b e attributabl e t o the change . Thes e factor s ar e the veryfactor s tha t utilitie s us e t o orde r th e productio n dispatc ho f th e variou s unit s i n th e system . Moreover , i t i s clea r fo r othe r sourc e categorie s tha t prediction s o f futur e deman d an d it s impac t o n individua l emission s unit s ar e fa r mor e complicate d an d chaotic . Fo r consumer-drive n industries , fo r instance , demand varie s an d presumption s regarding it s siz e an d sourc e woul d b e #aa? mor e speculativ e tha n i n the utilit yindustry . I n mos t industries , i n othe r words , th e predictio n o f future-actua l emission s ef$hould b e lef t t o th e permitting authorit yfo r a case-by-cas e determinatio n o f whethe r th e propose d chang e wil l caus e an yincreas e i n emission s o r whethe r al l o r par t o f an yprojecte d increase s wil l b e cause d b

yindependen t factors . Fo r thi s reason , EPAseek s

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9 3 specifi c comment s o n th e nee d fo r th e demand growt hexclusio n no t onl ywith§§ | bu t als o outsid e th e utilit yindustry . I n addition , th e EPAsolicit s commen t o n th e fiv e yea r tracking requiremen t whic hmandate s tha t permitting authoritie s trac k future-actua l projection s fo r fiv e year s following th e chang e t o insur e thei r accuracy . Her e th e EPAbelieve s tha t th e mechanis mi s workin g a s intended . However , th e EPAinvite s th e publi c t o commen t o n thi s issu e an d th e experienc e t o dat e o f applicabilit ydetermination s makin g us e o f thi s safeguard . H . Proposa l o f CM A Exhibi t B A s par t o f th e settlemen t o f a challeng e t o th e EPA' s 198 0 NS R regulation s b

yChemica l Manufacturer s Associatio n (CMA ) an d othe r industrypetitioners , th e EPAagree d t o propos e fo r publi c commen t an

d tak e fina l actio n o n a methodologyfo r determinin g whethe r a sourc e ha s undertake n a modificatio n base d o n a source' s potentia l emissions . Th e exac t regulatorylanguag e th e EPAwa s t o propos e wa s se t fort hi n Exhibi t B t o th e Settlemen t Agreemen t whic hi s containe d i n th e docke t fo r thi s rulemaking . Unde r thi s methodology , source s maycalculat e emission s increase s an d decrease s base d o n eithe r th e actua l emission s methodologyi n th e existing rule s o r th e unit' s potentia l emissions , measure d i n term s o f hourl yemission s (i.e. , pound s o f pollutan t pe r hour) . Source s coul d us e thi s potential-to-potentia l tes t fo r bot hNS R

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10 0 ove r th e years . Th e completeness , availabilit yan d accessibilit y o f thei r data , an

d th e mi xo f sourc e categorie s thu s wa s foun d t o represen t mor e typica l difference s betwee n allowabl e an d actua l emissions . From

eac hState , a cros s sectio n o f source s wer e chosen . Allowabl e an d actua l emission s wer e determine d fo r eac h sourc e i n th e sample , base d o n bot hannua l an d hourl yemissio n rates . Fo r th e analysis , thi s informatio n wa s the n segregate d b y pollutan t an

d sourc e type , and , fo r combustio n sources , furthe r segregate d b

yuni t size . Th e result s o f th e Texa s an d Illinoi s analysi s indicat e tha t typica l sourc e operatio n frequentl ydoe s resul t i n actua l emission s tha t ar e substantiall ybelo wallowabl e emission s levels . I n thes e tw o States , actua l emission s represen t from 3 0 t o 8 6 percen t o f th e allowabl e emissions , depending o n sourc e categoryan

d pollutant . Extrapolating thoo o result s nationwide , th e difforonc o betwee n actua l an d allowabl e (potential)—omiaaiona generate d b

yth e propose d potcntial-to-potentia l approac hcoul d

emissions " from

it s inventory . Orego n appear s t o b e unusua l i n it s comprehensiv e applicatio n o f thi s requirement ; consequently , it s dat a coul d no t for mth e basi s o f an

yconclusion s abou t CM A Exhibi t B.Alao,—a t th o tim e o f th o investigation , Nort h Carolina' s historica l dat a wa s determine d t o b e insufficien t t o allo wStatewid e analysis . Revie wo f th o littl e dat a tha t wa s availabl e reveale d troublesome individua l oaooo.—Fo r instance , fo r on e source,—allowabl e emission s wor e foun d t o b e abou t 0 0 timo o th o source' s actua l omissions . PRELIMINAR

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10 1 represen t a ocvera l millio n ton s pe r yoa r incrcao o i n rea l omiooion o t o th e atmoophcrc . Finally , on e o f th e mos t troubling sid e effect s o f th e Exhibi t B proposa l i s tha t i t coul d ultimatel ystymi e majo r ne w sourc e growt hb

yallowing unreviewe d increase s o f emission s from modification s o f existing source s t o consume al l availabl e incremen t i n PS D areas . Afte r th e mino r sourc e baselin e dat e ha s bee n establishe d i n a n area , al l increases , whethe r subjec t t o majo r NS R o r not , consume increment . A s illustrate d i n th e exampl e above , unde r th e CM AExhibi t B tes t a n ol d grandfathere d sourc e coul d experienc e a "significant " ne t increas e i n annua l actua l emissions , ye t i t woul d no t necessaril yb e subjec t t o review . Sinc e incremen t consumptio n afte r th e mino r sourc e baselin e dat e i s calculate d base d o n actua l emission s increases , th e "minor " modificatio n o f th e grandfathere d sourc e woul d stil l consume increment . I f a majo r ne wsourc e wit hstate-of-the-ar t emissio n control s propose s t o locat e i n a n are a i n whic hth e incremen t ha s bee n consume d i n thi s manner , i t woul d b e barre d frombuilding unles s an d unti l th e incremen t problemwa s resolved . A t th e same time , olde r plant s woul d continu e t o b e abl e t o mak e change s resulting i n significan t unreviewed , an d possibl yuncontrolled , actua l emissio n increases . 3 . Th e EPAActio n

PRELIMINAR

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L EP A POLIC Y ** * September 18 , 199 5 [fil e name : MasterWW ] ** * ,9/ 710 2

Accordingly , th o EPAsolicit s commen t o n al l aopcot o o f th e CM AExhibi t B settlemen t A s provide d unde; r th e CM ASettlemen t Agreement , th e EP Apropose s i n th e alternative , th e regulator ^ change s containe d i n Exihibi t B and seek s comment s o n the mand th e EPA' s preliminaryanalysi s describe d above . I f EPAwer e t o promulgat e th e Exhibi t B settlemen t a s fina l rules , th e Exhibi t B rule s woul d nee d t o b e update d t o reflec t othe r rul e change s sinc e 198 0 a s wel l a s provision s o f th e 199 0 Amendments . Therefore , th e EPAals o solicit s commen t o n an yspecia l consideration s i n updating th e Exhibi t B language . III . Revision s t o Contro l TechnologyRevie wRequirement s A . Introductio n Ne wmajo r emitting facilitie s an d majo r modification s t o existing majo r source s propose d i n area s designate d "attainment " o r "unclassifiable " unde r sectio n 10 7 o f th e Ac t mus t appl yth e bes t availabl e contro l technolog y(BACT ) fo r eac hpollutan t subjec t t o regulatio n unde r th e Ac t (in additio n t o othe r preconstructio n revie wrequirements) . Se e section s 165(a)(4 ) an d 169(3 ) o f th e Act . Ne wo r modifie d majo r stationarysource s proposing t o locat e i n a n are a designate d "nonattainment " unde r sectio n 10 7 o f th e Ac t ar e require d t o mee t th e lowes t achievabl e emissio n rat e (LAER) 33

. Se e sectio n 173(a)(2 ) o f th e Act .

3 3 I n seriou s an

d sever e ozon e nonattainmen t areas , sectio n 182(c)(7 ) o f th e Ac t specifie s tha t BAC T mayappl yi n certai n circumstances . PRELIMINARYSTAF F WORKINGDRAF T FOR OFFIC E O F MANAGEMENT AND BUDGE T REVIE W* DOE S NO T REPRESENT OFFICIAL EPAPOLIC Y ** * Septembe r 18 , 199 5 [fil e name : Master**** ] ** * 

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Fo r th e reason s se t fort hi n th e preamble , par t 5 1 o f chapte r I o f titl e 4 0 o f th e Cod e o f Federa l Regulation s i s amende d a s follows : PAR T 51-REQUIREMENT S FO R PREPARATION , ADOPTION , AN D SUBMITTA L O F IMPLEMENTATIO NPLAN S 1 . Th e authorit ycitatio n fo r par t 5 1 i s revise d t o rea d a s follows : Authority : 4 2 U.S.C . section s 7401-7671q . 2 . Sectio n 51.16 5 i s amende d a s follows :
a . Amendin g paragrap h(a)(1)(v)(C)(6 ) introductor y tex t b yinsertin g addin g th e word s "standin g alone, " afte r th e word o "shal l no t includ e a t th e beginnin g o f th e sentence ; b . Deletin g (a ) (1 ) (v ) (C ) (8. ) (j J an d (ii ) , an d revisin g (a ) (1 ) (v ) (C ) (8 ) ; c . Addin g ne wparagraph s (a ) (1 ) (v ) (C ) (IP. ) an d (1JL ) ; d . Revisin g paragrap h(a ) (1 ) (vi ) (E ) (4. ) ; e . Revisin g paragrap h(a)(1)(xii)(B) ; f . Amendin g paragrap h(a)(1)(xii)(C ) b yreplacin g th e wor d "reviewing " t o rea d "permitting" ;

__ . Addin g a ne w(a ) (1 ) (xii ) (F ) ; • g . Amendin g paragrap h(a)(l)(xxii ) b yreplacin g th e wor d "it " t o rea d "th e project" ; h . Revisin g paragrap h(a)(1)(xxv ) introductor ytex t an d (a ) (1 ) (xxv ) (A ) ; i . Deletin g paragrap h(a)(1)(xxv)(B ) an d redesignatin g paragrap h(a)(1)(xxv)(C ) an d (D ) a s newl yredesignate d paragrap h(a)(1)(xxv)(B ) an d (C) ; j . Addin g ne wparagraph s (a)(1)(xxvi ) throug h(xxxi) ; k . Redesignatin g paragrap h(a ) (2 ) a s (a ) (2 ) (i) ; 1 . Addin g ne wparagrap h(a)(2)(ii) ; m . Addin g ne wparagraph s (a)(6 ) throug h(9) . Sectio n 51.16 5 Permi t requirements . (a ) * * * (1 ) * * * (v ) * * * (C ) * * * (8. ) Th e addition , replacemen t o r us e o f a pollutio n contro l projec t a t a n existin g emission s uni t unles s th e pollutio n contro l projec t wil l resul t i n a significan t ne t increas e i n representativ e actua l annua l emission s o f an y pollutan t regulate d unde r th e Ac t an d th e permittin g THI S DOCUMEN T I S APRELIMINAR Y DRAF T FO R OFFIC E O F MANAGEMEN T AN D BUDGE T REVIE WAN D DOE S NO T REPRESEN T OFFICIA L EP APOLIC Y •• • Septembe r 18 , 199 5 - - [filenam e 51165.918 ] •• •P.3 0

conditio n i n a permi t issue d unde r regulation s approve d pursuan t t o sectio n 51.16 0 through51.16 6 o f thi s par t o r a permi t issue d unde r sectio n 52.2 1 o f thi s chapter ; an d (ii ) Th e entir e majo r stationarysourc e wa s permitted , an d receive d the currentl yapplicabl e emissio n limit s fo r al l emission s unit s a t the entir e sourc e issue d unde r thi s section , o r regulation s approve d pursuan t t o sectio n 51.16 6 o f thi s par t o r sectio n 52.2 1 o f thi s chapte r n o mor e tha n 12 0 consecutiv e month s prio r t o the propose d activity .
( v i ) * * * (E ) * * * (4 J I t ha s approximatel ythe sam e qualitativ e significanc e fo r publi c healt han d welfar e a s tha t attribute d t o the increas e fro mthe particula r chang e suc hthat , a t a minimum , the decreas e i s sufficien t t o preven t the propose d increas e fro mcausing o r contributing t o a violatio n o f an ynationa l ambien t ai r qualit ystandar d o r having an advers e impac t o n visibilit yi n accordanc e wit h th e definitio n a t sectio n 51.301(a ) o f thi s part . (xii)(A ) * * * (B ) Actua l emission s shal l b e calculate d using th e unit' s actua l operating hours , productio n rates , an d type s o f material s processed , stored , o r combuste d fo r an y1 2 consecutiv e month s during the 12 0 consecutiv e month s tha t preced e the commencemen t o f constructio n o f a propose d physica l o r operationa l chang e a t the sourc e an d an y current , federall yenforceabl e limitation s o n emission s require d b

ythe Act , including , bu t no t limite d to , bes t availabl e contro l technology , lowes t achievabl e emissio n rate , reasonabl yavailabl e contro l technolog yo r maximu

m achievabl e contro l technology .
(F ) I n lie u o f paragraph s (D ) an d (E ) o f thi s section , th e pla n mayprovid e tha t fo r nayemission s unit;

- actua l emission s o f the uni t following a physica l o r operationa l chang e shal l equa l the representativ e actua l afinyal THI S DOCUMENT I S APRELIMINARY DRAF T FO R OFFIC E O F MANAGEMENT AN D BUDGE T REVIE WAND DOE S NO T REPRESENT OFFICIAL EPAPOLIC Y •• • Septembe r 18 , 199 5 - - [filenam e 51165.918 ] •• •emission s o f the unit , provide d th e sourc e owne r o r operato r

maintain s and submit s t o the reviewing authority, . O h&ti annua l basi s fo r a perio d o f 5 year s fromth e dat e the uni t resume s regula r operation , informatio n demonstratin g tha t th e physica l o r operationa l chang e di d no t resul t i n a n emission s increase . Alonge r period , no t t o excee d 1 0 yk%X$' t ' mayb e require d b

ythe reviewing authorit yi f if c determine s " suc ha perio d t o b e mor e representativ e o f norma l sourc e

(xxv ) Pollutio n contro l projec t means : (A ) An yactivit yo r projec t undertake n a t a n existing emission s uni t which , a s it s primarypurpose , reduce s emission s o f ai r pollutant s fro msuc hunit . Suc hactivitie s o r project s d o no t includ e the replacemen t o f an existing emission s uni t wit ha newe r o r differen t uni t o r the reconstructio n o f an existing emission s uni t an d ar e limite d t o an yo f the following : (i ) Th e installatio n o f conventiona l an d advance d flu e ga s desulfurizatio n an d sorben t injectio n fo r S0 2 ; (2. ) Electrostati c precipitators , baghouses , high efficienc ymulticlones , an d scrubber s fo r particulat e o r othe r pollutants ; (3. ) Flu e ga s recirculation , low-N0 xburners , selectiv e non-catalyti c reductio n an d selective catalyti c reductio n fo r N0 X ; (4. ) Regenerativ e therma l oxidizers , catalyti c oxidizers , condensers , therma l incinerators , flare s an d carbo n absorber s fo r volatil e organi c compound s an d hazardou s ai r pollutants ; (5. ) Activitie s o r project s undertake n t o accommodat e switching t o an inherentl yles s polluting fuel , including bu t no t limite d t o natura l ga s o r coa l reburning , o r the cofiring o f natura l ga s an d othe r inherentl yles s pollutin g fuel s fo r the purpos e o f controlling emissions , an d including an

yactivit ytha t i s necessaryt o accommodat e switching t o a n inherentl yles s polluting fuel ; and (6. ) Pollutio n preventio n project s whic har e determine d byth e permitting agency , througha proces s whic hinclude s THI S DOCUMENT I S APRELIMINARYDRAF T FOR OFFIC E O F MANAGEMEN

T AN D BUDGE T REVIE WAND DOE S NO T REPRESEN T OFFICIAL EP

A POLIC Y •• • Septembe r 18 , 199 5 - - [filenam e 51165.918 ] •• •P.3 2

Fo r th e reason s se t fort hi n th e preamble , par t 5 1 o f chapte r I o f titl e 4 0 o f th e Cod e o f Federa l Regulation s i s amende d a s follows : PAR T 51-REQUIREMENT S FO R PREPARATION , ADOPTION , AND SUBMITTA L O F IMPLEMENTATIO NPLAN S 1 . Th e authorit ycitatio n fo r par t 5 1 i s revise d t o rea d a s follows : Authority : 4 2 U.S.C . section s 7401-7671q . 2 . Paragraph s i n sectio n 51.16 6 ar e redesignate d a s follows : Ol d paragrap h (b ) (1 ) (i ) (a)-(c ) (b ) (1 ) (iii ) (a)-(aa ) (b ) (2 ) (iii ) (a)-(k ) (b ) (3 ) (i ) (a ) an d (b ) (b ) (3 ) (vi ) (a)-(c ) (b ) (13 ) (i ) (a ) an d (b ) (b ) (13 ) (ii ) (a ) an d (b ) (b ) (14 ) (i ) (a ) an d (b ) (b ) (14 ) (ii ) (a ) an d (b ) (b ) (14 ) (iii ) (a ) an d (b ) (b ) (15 ) (ii ) (a ) an d (b ) (f ) (4 ) (iii ) (a ) an d (b ) (i ) (4 ) (ii ) (a ) - (aa ) (i ) (4 ) (iii ) (a)-(d ) (i ) (8 ) (i ) (a)-(m ) (m ) (1 ) (i ) (a ) an d (b ) (s ) (2 ) (iv ) (a ) an d (b ) Ne wparagrap h (b ) (1 ) (i ) (A)-(C ) (b ) (1 ) (iii ) (A)-(AA ) (b ) (2 ) (iii ) (A)-(K ) (b ) (3 ) (i ) (A ) an d (B ) (b ) (3 ) (vi ) (A)-(C ) (b ) (13 ) (i ) (A ) an d (B ) (b ) (13 ) (ii ) (A ) an d (B ) (b ) (14 ) (i ) (A ) an d (B ) (b ) (14 ) (ii ) (A ) an d (B ) (b ) (14 ) (iii ) (A ) an d (B ) (b ) (15 ) (ii ) (A ) an d (B ) (f ) (4 ) (iii ) (A ) an d (B ) (i ) (4 ) (ii ) (A)-(AA ) (i)(4)(iii)(A)-(D ) (i ) (8 ) (i ) (A)-(M ) (m ) (1 ) (i ) (A ) an d (B ) (s ) (2 ) (iv ) (A ) an d (B ) 3 . Sectio n 51.16 6 i s amende d a s follows : a . Amendin g paragrap h(b ) (2 ) (iii ) (F ) introductor ytex t b yiillllililli : addin g th e word s "standin g alone, " afte r th e worHB v ' w '"a'KaTf no t include " a t th e beginnin g o f th e sentence,
- b . Deletin g paragraph s (b ) (2 ) (iii ) (H ) (1) an d (2. ) , an d revisin g newl yredesignate d paragrap h(b ) (2 ) (iii ) (H) ; c . Addin g ne wparagraph s (b ) (2 ) (iii ) (L ) an d (M ) ;

_ . Addin g a ne wparagrap h(b)(21)(vi) ; d . Revisin g newl yredesignate d paragrap h(b)(3)(vi)(C) , an d paragraph s (b ) (19) , (b ) (21 ) (ii) , an d (b ) (22) ; e . Addin g ne wparagraph s (b)(23)(iv ) an d (v) ; f . Amendin g paragrap h(b)(24 ) byaddin g th e word s "(o r th e Secretary' s designee) " afte r th e wor d "lands " a t th e en d o f th e sentence ; g . Revisin g paragrap h(b)(27) ;
THI S DOCUMEN T I S APRELIMINAR Y DRAF T FO R OFFIC E O F MANAGEMEN T AND BUDGE T REVIE WAN D DOE S NO T REPRESEN T OFFICIA L EPA POLIC Y •• • Septembe r 18 , 199 5 - - [filenam e 51_166_6.29 ] •• •(19 ) Undemonstrate d technolog yo r applicatio n mean s an ysystem , process , material , o r treatmen t technology , including pollutio n prevention , tha t ha s no t bee n demonstrate d i n practice , bu t woul d hav e a substantia l likelihoo d to : (i ) Operat e effectively ; an d (ii ) Achiev e eithe r greate r continuou s reduction s o f ai r pollutan t emission s than an ydemonstrate d system , o r comparabl e emissio n reduction s a t lowe r cost , lowe r energy input , o r wit hles s environmenta l impact .
(21 ) * * * (ii ) Actua l emission s shal l b e calculate d usin g th e unit' s actua l operating hours , productio n rates , an d type s o f material s processed , stored , o r combuste d fo r an y1 2 consecutiv e month s during the 12 0 consecutiv e month s tha t preced e th e commencemen t o f constructio n o f a propose d physica l o r operationa l chang e a t the sourc e an d an y current , federall yenforceabl e limitation s o n emission s require d b

ythe Act , including , bu t no t limite d to , bes t availabl e contro l technology , lowes t achievabl e emissio n rate , reasonabl yavailabl e contro l technolog yo r maximu

m achievabl e contro l technology .
**** * (vi ) I n lie u o f paragraph s (iv ) and (v ) o f thi s section , the pla n mayprovid e tha t fo r na yemission s unit V actua l emission s o f th e uni t following a physica l o r operationa l chang e shal l equa l the representativ e actua l annua l emission s o f the unit , provide d the sourc e owne r -.(>-§ operato r maintain s an d submit s t o th e reviewing authority ^ o n a n annua l basi s fo r a perio d o f 5 year s fro mth e date . &1& uni t resume s regula r operation , informatio n demonstrating tha t th e physica l o r operationa l chang e di d no t resul t I n &t t emission s increase . Alonge r period , no t t o excee d 1 0 year© , ma yb e require d b

ythe reviewing authorit yi f i t determine ^ suc ha perio d t o b e mor e representativ e o f norma l sourc e post-chang e operations .

THI S DOCUMENT I S APRELIMINAR YDRAF T FO

R OFFIC E O F MANAGEMENT AN D BUDGE T REVIE W.AN

D DOE S NO T REPRESENT OFFICIAL EPAPOLIC Y •• • Septembe r 18 , 199 5 - - [filenam e 51_166_6.29 ] •• •P.3 4

1 3

(n ) * * * (1 ) Th e pla n shal l provid e tha t th e permittin g authorit yshall-

- (i ) Determin e tha t a permi t applicatio n i s complet e o r deficien t base d o n th e permittin g authority' s consideratio n o f determinations , analyse s an d othe r informatio n containe d i n th e application , an d adequac ythereof , a s specifie d i n paragrap h(n)(2 ) throug h(5 ) o f thi s section ; an d

(2 ) * * * (iii ) Adetaile d descriptio n o f th e syste mo f continuou s emissio n reductio n propose d b yth e sourc e o r modification , an d al l informatio n use d o r consulte d i n eithe r recommendin g th e bes t availabl e contro l technolog y accordin g t o paragrap h(j)(5 ) o f thi s sectio n o r applyin g fo r th e undemonstrate d technolog yo r applicatio n waive r unde r paragrap h(s ) o f thi s section . (iv ) Informatio n an d dat a use d o r consulte d t o perfor m al l require d analyse s o r determination s unde r paragrap h(o) , (p) , (r) , (s ) an d (u ) o f thi s section , a s applicable .

(3 ) Th e pla n shal l provid e tha t upo n reques t o f th e permittin g authority , th e owne r o r operato r shal l provid e an yinformatio n an d dat a use d o r consulte d t o perfor mal l require d analyse s o r determination s unde r paragrap h(k) , (1 ) an d (m ) o f thi s section . (4 ) Th e pla n shal l provid e tha t a n applicatio n shal l no t b e considere d complet e unles s th e permi t applicatio n ha s bee n registere d o n th e applicabl e EP Aelectroni c bulleti n board . T o register , a t a minimum , th e followin g mus t b e provided : (i ) Nam e an d typ e o f source ; (ii ) Natur e o f propose d project , i.e. , ne wfacilit yo r modification ;

THI S DOCUMEN T I S A PRELIMINAR YDRAF T FO ROFFIC E O F MANAGEMEN T AN D BUDGE T REVIE W

AN DDOE S NO T REPRESEN T OFFICIA L EP A POLIC Y •• • Septembe r 18 , 199 5 - - [filenam e 51_166_6.29 ] •• •P-35

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### Not eto: . ArtFrees , OMB/ORI A From : Dou g Carter , DOE/FE- 4 Subject : NS R - Puert o Rica n Cemen t Date : <D-st e> Thi s not eoffer s som eadditiona l languag et o hel p clarifytha tth tPuert o Rica n Cemen t decisio n doe enotconflictwit h th eWEPC o decisio n wit h reepeett o calculatin g emissio n change s fro m "like-kin d replacements" . I recommen d tha tEP Ainclud ethi s language , o rsimila rlanguage , i n thei rdreftrule . Whe n I rea d Sectio n II.B. 2 ofth eNS R Preamble , I go tth eimpressio n tha tEP AI s tryin g t o establis h th enotio n thatcourts hav ecom,. , ou to n bot h side s o fth e"begu n norma l operations " Issue . A s yo u ma yrecall , ifamodifie d sourc et\g»not"begu n norma l operations" , it s futur eemission s {fo rcalculatin g whethe rw\ emissio n Increas eha s oeeured ) ar eIts potentia l emission s - whic h alway s lead s t o apositivefindin g o n th e emission s Increas equestio n unles s th eeourc ecommits t o ane woperationa l constraint . I n th eWEPC o case , th ecour tclearl yfoun d thatfo r"like-kin d replacements" , norma l operation s ha d notbee n Intsrupted , an d futur eemission s shoul d therefor eb ebase d o n futur e"actual " emissions , nottheoreticall ypotentia l emissions . EP Acorrectl y characterize s thi s findin g i n th epreamble . Fo rPuert o Rica n Cement , th enatur eofth echange s a tth esourc ewer edramaticall y differen tfro m th eWEPC o situatio n ( awe tproces s wa s bein g change d t o adry process ) an d th ecourtendorse d EPA' s determinatio n thatth eohange d sourc eha d no t ye tbegu n norma l operation s (s o actual-to-po..entia l wa s use d correctl yb yEPA) . Thi s i s consisten twit h ho wI rea d th edecision . However , EP Adose d discussio n o fPR C to o earl yan d faile d t o not eth ecourt' s comments that , unde rothe rcircumstances , th e cal l woul d hav ebee n mor edifficult . An d th eothe rcircumstance s cite d soun d a grea t dea l likewhatwa s late rcalle d a"like-kin d replacement " unde rWEPCo . Th epoin ti s tha tther ei s notan yseriou s inconsistencybetwee n PR C an d WEPC o o n th eissu eo f ho wt o calculat efutur eemission s fo rlike-kin d replacemen tmodifications . WEPC o i s explici to n th eissue ; PR C i eimplicit . Th eattache d pag ereflect s amodificatio n ofEPA s draftlanguag efro m pag e2 2 ofth e preamble . Th elanguag eI n bol d I s propose d t o b eadded .tn-rr 7 3 FAX-202586739 6 PAG E 3 08/1 2 '9 5 11:3 6 ID.GC-7 3 lW»-?n»w»w»lwnliil iI KWH nm. l ti.

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d th e EPA's applicatio n o ftheactual-to-potenita l test , an d specifically, th e interpretatio n o fth ephras

e "begu n normal operations. " I n Puert o Rica n Cemen t Co . v . EPA . 88 9 F.2 d 29 2 (1st Cir . 1989) , th e cour t uphel d th e EPA' s applicatio n o

fth eectuel-to>potentia l methodiog yi n a case involvin g renovation s t o a cement plant , Th e cour

tuphel d th e EPA's Interpretatio n tha tth ewords "emissions unit tha t has no tbegu n normal operation " include s modifie d unit s as wel l aa ne

wunits , citin g a passage fro m th e 198 0 rulemakin g preambl e that , i n th ecourts view, mad e I t clea rtha t th e EPAintende

d t o applytheactual-to-potentla l tes t to a "ne wo rmodifie

d unit. " 88 9 F.2 d at 29 8 (4 5 fr52676 , 52677) {emphasi s added b ycourt) . Th e court note d tha t It s endontsmtn t torWAfe ue e ofth e "actual-to-potentlal " approac h fo r caieutejlti o a n enHoelo n chang e in thl e cas e wa s simplifie d byth e fact e prseenjsjrl , «nd1h*t , unde rothe rolroumstanees , th e daolelo n coul d have bee n more dffcult . Th e courtatated , "On e ca n Imagin e circumstances tha tmigh t tee t th e reaeonetWensss o fBRA'S regulation , A n electricitycompany , fo rexample , mjjp t wit h t o replac e a pea k loa d generato r- on e thatoperate s onl ya fe wday s pa ryea r- wN h a newpeff k loa d venerato rtha

tth e Ar m eould i bu talmoatcertainl y wM I not , operate ever

yday. " Hence , th e cour tclearl yeupporte d EPA' s "actual-to-potentlal " approac h fo rdramaticall ychanged processes , bu tImplie d tfea t anoGserejproae h mffh t b e neede d fo rlee e significan tproces s changes . Thi s lisjps d SMMB YP rN6n M , n fsmi R Ulai n ITnmiTn t wa s resolve d bya 7t h Clrcultlfcoleto n I n ll m a e l a dlecuea^Iow . O n e related issue , th e cour t agreed with th s EPA's positio n tha tth e regulator

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