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OAR Box 1781 

Prepped by Ollie Stewart 

Document Number: 

49) ll-K-6 

Docket Number: 

A-90-37 

Printed 10/29/2008 10:46:20 AM Sheet 49 of 142 
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BEFORE THE ADMINISTRATOR 

U.S. ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, D.C. 

^ i4\ % b 

In the Matter of: 

Columbia Gulf Transmission Company 

ID No. 105-0640-0021 

Applicant 

*

r*'i1 

PSD Appeal No. 88-11 

ORDER 

By petition dated "November 14, 1988, and pursuant to 40 CFR 

§124.19 (1987), the Regional Administrator, U.S.- Environmental 

Protection Agency, Region IV, Atlanta, Georgia, requested review 

of a determination by the Kentucky Department of Air Quality to 

issue a prevention of significant deterioration (PSD) permit to 

Columbia Gulf Transmission Company. The permit would allow 

Columbia Gulf to construct an 11,864 horsepower (8.9 MW) gas 

turbine to compress gas at its compressor station in 

Clementsville, Kentucky. The Department made its permit determination pursuant to a general delegation of PSD-issuing authority 

from EPA Region IV. Because of the delegation, Kentucky's 

authority to issue PSD permits is subject to the review provisions of 40 CFR §124.19, and any permit it issues will be an EPAissued permit for purposes of federal law. 40 CFR §124.41; 45 

Fed. Reg. 33413 (May 19, 1980). 
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The Regional Administrator claims Kentucky's determination 

of best available control technology (BACT) for the proposed 

facility is clearly erroneous. The proposed permit calls for no 

add-on controls to reduce NOx emissions, relying instead on 

combustor design (so-called "dry controls"), whereas the Region 

believes water injection controls must be added to satisfy BACT 

requirements. Kentucky responds by arguing that dry controls are 

BACT because: (1) the impact of NOx emissions on ambient air 

quality will be negligible if dry controls are used, thus making 

the addition of water injection environmentally unnecessary and 

economically unreasonable; (2) use of water injection will cause 

additional energy to be consumed and it will cause an increase in 

CO emissions; and (3) federal new source performance standards 

(NSPS) do not require water injection for "small" turbines. 

Under the rules governing this proceeding, there is no 

appeal as of right from the permit determination. Ordinarily, a 

petition for review of a PSD permit determination is not granted 

unless it is based on a clearly erroneous finding of fact or 

conclusion of law, or involves an important matter of policy or 

exercise of discretion that warrants review. The preamble to the 

regulations states that "this power of review should be only 

sparingly exercised," and that "most permit conditions should be 

finally determined at the Regional [state] level * * *." 45 Fed. 

Reg. 33,412 (May 19, 1980). The burden of demonstrating that the 

permit conditions should be reviewed is therefore on the petitioner. EPA Region IV has met its burden. 
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The issues raised by Kentucky's contentions are discussed 

below. 

1. Ambient Air Quality and the BACT Determination 

Kentucky argues that the benefits to ambient air quality 

from adding water injection are negligible, and are clearly 

outweighed by the additional economic costs associated with this 

form of NOx control, which it estimates are $2,121.00 for each 

additional ton of NOx removed. According to modelling results, 

ambient concentrations of N02 from all sources (including the 

proposed facility) within 50 kilometers of the proposed facility 

will be 50.67 jig/m3 without use of water injection and 50.65 

/jg/m3 with use of water injection. In other words, the total 

reduction in N02 pollution is a mere 0.02 /xg/m3. This slight 

numerical improvement in air quality, according to Kentucky and 

the applicant, is not statistically significant, for it falls 

within the margin of error employed in the air quality model. 

The Region does not dispute Kentucky's evaluation of "air 

quality impacts as presented; however, according to the Region, 

when the focus is on actual N0X emissions reductions from the 

facility itself, the costs of water injection are reasonable. 

Specifically, by using water injection the facility will emit 

114.08 fewer tons of N0X per year, at a cost of $2,121.00 per ton 

of NOx removed, which is below the range of costs ($3,000 -
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$6,500) normally expended for N0X removal. ^ According to the 

Region, the definition of BACT mandates use of water injection, 

the most effective available technology for N0X removal under 

consideration in this case, -

f

 unless the applicant can demonstrate that the economic, environmental, or energy impacts from 

using this technology make the choice unreasonable. In the 

Region's opinion, Columbia Gulf did not demonstrate that any of 

these considerations made the choice of water injection unreasonable. 

By looking at the modelled impact of the proposed facility's 

N0X emissions, the Department argues that it has identified an 

environmental impact that it may consider for purposes of its 

BACT determination. I disagree. BACT is defined in the Clean 

Air Act as an "emission limitation" set by the permit issuer, 

based on the "maximum degree of reduction" that can be achieved 

for each regulated pollutant, on case-by-case basis, after 

"taking into account energy, environmental, and economic impacts 

y The Region also argues that Kentucky has overestimated the 

incremental costs of NOx removal using water injection. Kentucky 

computed the costs per ton assuming 6,000 hours of operation per 

year. The Region correctly points out that this assumption is 

unwarranted because the permit does not contain any restrictions 

limiting hours of operation to 6,000 hours per year. Unrestricted, the facility could operate 8,760 hours per year (24 

hrs. x 365 days). 

^ The Region has conceded that although a more effective control technology, selective catalytic reduction, has been successfully employed on gas-fired turbines, that technology would be 

technically infeasible in this case due to source-specific 

factors. 
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and other costs." 42 U.S.C. §7479(3).

 v The latter clause is 

in the BACT definition to temper the stringency of the technology 

requirements whenever one or more of the specified "collateral" 

impacts — energy, environmental, or economic — renders use of 

the most effective technology inappropriate. As explained by 

Senator Edmund S. Muskie, the principal architect of the Clean 

Air Act amendments of 1977: 

One objection which has been raised to requiring the 

use of the best available pollution control technology is 

that a technology demonstrated to be applicable in one area 

of the country is not applicable at a new facility in 

another area because of difference [sic] in feedstock 

material, plant configuration or other reasons. For this 

and other reasons, the committee voted to permit emission 

limits based on best available technology on a case-by-case 

judgment at the State level. This flexibility should allow 

, such differences to be accommodated and still maximize the 

: use of improved technology. 

Senate Debate on S.252 (June 8, 1977), reprinted in 3 Senate 

Committee on Environment And Public Works, A Legislative History 

^ The complete text of the statutory definition of BACT states: 

The term "best available control technology" means an 

emission limitation based on the maximum degree of reduction 

of each pollutant subject to regulation under this chapter 

emitted from or which results from any major emitting 

facility, which the permitting authority, on a case-by-case 

basis, taking into account energy, environmental, and 

economic impacts and other costs, determines is achievable 

for such facility through application of production processes and available methods, systems, and techniques, including fuel cleaning or treatment or innovative fuel combustion 

techniques for control of each such pollutant. In no event 

shall application of "best available control technology" 

result in emissions of any pollutants which will exceed the 

emissions allowed by any applicable standard established 

pursuant to section 7411 [new source standards] or 7412 

[hazardous pollutant standards] of this title. « 

42 U.S.C. §7479(3). 
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of the Clean Air Act Amendments of 1977 at 729 (Comm. Print 

August 1978) (Congressional Research Service, Serial No. 95-16). 

In other words, the collateral impacts clause operates primarily 

as a safety valve whenever unusual circumstances specific to the 

facility make it appropriate to use less than the most effective 

technology. The permit applicant must install the most effective 

technology if it fails to demonstrate to the satisfaction of the 

permit issuer that such unusual circumstances exist. ^ 

Here, the Department argues that the modelled negligible 

impact of the proposed facility on overall air quality is an 

environmental impact that can be factored into the BACT analysis 

to justify using less than the most effective technology to 

^ The process of selecting the most effective technology is 

described in Pennsauken County Resource Recovery Facility, PSD 

Appeal No. 88-8 (EPA Administrator, Nov. 10, 1988) (Remand 

Order). Pennsauken cites recent Agency guidance on the subject, 

which refers to the process as the "top-down" approach to BACT 

analysis, and quotes from the guidance as follows: 

The first step in this approach is to determine, for the 

emission source in question, the most stringent control 

available for a similar or identical source or source 

category. If it can be shown that this level of control is 

technically or economically infeasible for the source in 

question, then the next most stringent level of control is 

determined and similarly evaluated. This process continues 

until the BACT level under consideration cannot be eliminated by any substantial or unique technical, environmental or 

economic objections. Thus, the "top-down" approach shifts 

the burden of proof to the applicant to justify why the 

proposed source is unable to apply the best technology 

available. It also differs from other processes in that it 

requires the applicant to analyze a control technology only 

if the applicant opposes that level of control; the other 

processes required a full analysis of all possible types and 

levels of control above the baseline case. 

Id. at 5. 
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control N0X emissions. This argument is without merit. It gives 

no effect to the primary purpose of the collateral impacts 

clause, which, as the legislative history indicates, is to focus 

on local impacts that constrain the source from using the most 

effective technology. For example, if the most effective technology would impose exceptional demands on local water resources, 

so that use of the technology would have adverse impacts on the 

environment, then, under those circumstances, the applicant would 

have a sound basis for foregoing use of the most effective 

technology in favor of some less water-intensive technology. 

This would be a "water resources" equivalent of a "feedstock" or 

"plant configuration" constraint referred to by Senator 

Muskie. ^ 

In the present case, the Department and the applicant have 

not demonstrated the existence of any environmental impacts that 

would constrain or even remotely circumscribe the applicant's 

ability to use the most effective technology. The negligible air 

^ Depending on the factors present in a particular case, consideration of collateral impacts can also result in a more 

stringent BACT determination than would otherwise occur. For 

example, unusually high costs may represent an adverse economic 

impact that could, standing alone, justify rejection of the most 

effective control technology. However, the permitting authority 

could ultimately conclude that such adverse economic impacts are 

outweighed by adverse collateral environmental impacts associated 

with the less effective control option. See North County 

Resource Recovery Associates, PSD Appeal No. 85-2 (EPA June 3, 

1986) (remand order) (environmental impact of pollutants not 

regulated under the Clean Air Act may necessitate a more stringent emission limit for regulated pollutants undergoing BACT 

review). 
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quality impact of the proposed N0X emissions is clearly not a 

constraint on implementing the most effective technology. 

Because it is not a constraint, the modelled impact of the 

proposed facility's N0X emissions on air quality should not be 

considered for purposes of making the BACT determination. 

This conclusion is further confirmed by the statutory scheme 

of the Clean Air Act, which separates issues of overall air 

quality from issues of technology. Section 165(a)(3) of the Act, 

42 USC §7475(a)(3), addresses the direct impact of regulated 

pollutants on ambient air quality by requiring an applicant for a 

PSD permit to demonstrate that the proposed facility will not 

cause or contribute to a violation of national ambient air 

quality standards or PSD increments, whereas section 165(a)(4) of 

the Act, 42 USC §7475(a)(4), is concerned exclusively with BACT, 

which is principally a technology-foreing measure that is intended to foster rapid adoption of improvements in control 

technology. ^ Both of these provisions of the Clean Air Act 

^ Section 165 of the Clean Air Act provides, in relevant part, 

as follows: 

(a) No major emitting facility on which construction is 

commenced after August 7, 1977, may be constructed in any 

area to which this part applies unless — 

(3) the owner or operator of such facility demonstrates 

* * * that emissions from construction or operation of such 

facility will not cause, or contribute to, air pollution in 

excess of any (A) [increment], (B) national ambient air 

quality standard in any air quality control region, or (C) 

(continued...) 
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must be satisfied by an applicant seeking a PSD permit, and 

compliance with one provision does not relieve or lessen an 

applicant's burden of complying fully with the other. Thus, even 

though Columbia Gulf's N0X emissions will not cause a violation 

of ambient air quality standards in contravention of section 

165(a)(3) of the Act, it must still satisfy the BACT technology 

requirements imposed by section 165(a)(4). 

It does not appear to have done so in this instance, for the 

record on appeal does not show that any collateral impacts — in 

particular, environmental impacts — operate as a constraint on 

implementing the most effective technology. 

2. Energy Consumption and Increased CO Emissions From Water 

Injection 

Kentucky also claims that water injection is not BACT 

because it increases fuel consumption by 2.2 percent and carbon 

monoxide (CO) emissions by 4 tons per year (TPY) — from 2 TPY to 

6 TPY. The Region rejected these arguments, because the projected 2.2 percent increase in energy consumption is, in its opinion, 

insignificant, since the increase does not place any substantial 

strain on natural gas demand, and the additional 4 TPY increase 

-'(...continued) 

any other applicable emission standard or standard of 

performance under this chapter; [and] 

(4) the proposed facility is subject to the best available 

control technology [BACT] for each pollutant subject to regulation under this chapter emitted from, or which results from, such 

facility * * *. 
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in CO emissions will be offset by a much greater reduction in NO 

emissions — from 193 TPY to 79 TPY — which, in the Region's 

opinion, represents an environmentally beneficial trade-off. 

I agree completely with the Region about the trade-off 

between the CO and NOx emissions; the increase in CO emissions is 

simply insignificant in light of the reductions that can be 

achieved in NO, emissions. I am less certain about the 2.2 

percent increase in energy consumption and what it implies. 

Nevertheless, it is generally incumbent on the permit issuer and 

the permit applicant to demonstrate in the record the relevance 

or significance of any claimed basis for rejecting the most 

effective technology on energy or other statutory grounds. It is 

not ;enough for them to assert, without substantiation, that 

adoption of the most effective technology will result in an 

energy penalty. They must provide substantiation and they must 

show that the penalty is so substantial or unusual as to merit 

rejection of the most effective technology. They have not done 

so in this instance, for the record does not disclose any substantial information on the impact of the alleged energy penalty. 

3. New Source Performance Standards (NSPS) and BACT 

Kentucky believes that because the emission limitation it 

proposed for Columbia Gulf's NOx emissions (178 ppm) is below the 

level specified by the NSPS (196 ppm),

 1J this fact should serve 

as further proof that its BACT determination is correct. 

-

; See 40 CFR §60.332(d). 
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Kentucky notes in this respect that the NSPS contemplate use of 

dry controls for small gas turbines. Kentucky's reliance on the 

NSPS is misplaced. Simply meeting or exceeding the NSPS does not 

attest to the correctness of a BACT determination. As the 

language of the statute plainly indicates, & the applicable NSPS 

limitation merely serves as a floor for the BACT limitation, 

i.e., the BACT limitation must never fall below the level of 

stringency set by the NSPS. Although the NSPS are developed by 

considering many of the same factors that go into a BACT determination, ^ their utility is limited in any individual case by 

at least two considerations. The first is that BACT determinations are made on a case-by-case basis whereas the NSPS are set 

on ah industry-wide basis. The second is that BACT determinations are made on the basis of currently available information, 

whereas the NSPS, although based on current information when 

promulgated, may not reflect the most current information avail-

§/ See footnote 3 (last sentence). 

^ The similarity between BACT and NSPS is reflected in the 

following definition of a "standard of performance" for new 

sources and by comparing it with the definition of BACT in 

footnote 3 above: 

[A] standard of performance shall reflect the degree of 

emission limitation and the percentage reduction achievable 

through the application of the best technological system of 

continuous emission reduction which (taking into consideration the cost of achieving such emission reduction, any 

non-air quality health and environmental impact and energy 

requirements) the Administrator determines has been 

adequately demonstrated. 

42 U.S.C. §7411(a)(1). 
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able at the time of making an individual BACT determination. 

These two considerations can combine in an individual case to 

create a substantial gap between the two emission levels. That 

appears to be the case here, based on the information in the 

record of this appeal. According to the Region, the applicable 

NSPS is ten years old and thus does not reflect the most current 

technological considerations. It therefore appears that Kentucky 

relied too heavily and, in the final analysis, relied improperly 

on the NSPS in this case. Moreover, I note that the Region cites 

three examples of comparable turbines currently using water 

injection or scheduling it for use — thus effectively removing 

concern about the availability of this technology for small 

turbines. —' Kentucky has not shown that water injection is not 

an available technology for BACT purposes. 

Conclusion 

The Region has met its burden of showing that Kentucky's 

permit determination warrants review. As explained above,. 

Kentucky's reliance on negligible ambient air quality impacts to 

justify using a control technology less effective than water 

injection represents clear error. Kentucky's rejection of water 

injection because of associated increases in CO emissions and 

because of its interpretation of BACT in relationship to the NSPS 

also represents clear error. Kentucky's concerns over increased 

—

; See Letter from Bruce T. Miller, Chief, Air Programs Branch, 

EPA Region IV, to Ronald L. McCallum, Chief Judicial Officer, 

Attachment at 6, dated January 25, 1989. 
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energy consumption fail to establish that the increases are so 

substantial or unusual as to warrant rejection of the most 

effective technology. I therefore conclude that clear error has 

been shown here also. 

According to the procedural rules governing petitions for 

review, a briefing period is supposed to follow the granting of 

review. 40 CFR §124.19(c). In a sense, one has already begun, 

since both Kentucky and the Region, following the filing of the 

petition, have submitted additional statements of their positions 

on the issues. Columbia Gulf, however, did not file any extensive submissions during this post-petition period, nor was it 

reguired to file any at this stage of the proceedings. 

Therefore, to restore balance to the record, I propose to set a 

briefing schedule that takes this background into consideration. 

Specifically, Columbia Gulf (and, as permitted by the rules, 

other interested persons) may submit a brief on the issues discussed in this order within thirty (30) days after public notice 

of the granting of review has been given. See 40 CFR §124.19(c). 

(Kentucky shall give notice of the briefing schedule and this 

order, as provided in 40 CFR §124.10.) Kentucky and the Region 

shall then file their respective responses within twenty (20) 

days after receipt of each brief filed during the first round of 

briefing. Columbia Gulf and, if applicable, other interested 

persons shall then have fifteen (15) days in which to file a 

reply to the responses. 
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Also, on or before the date public notice is given, Kentucky 

shall transmit to the undersigned a complete copy of the 

administrative record on which it made its permit determination, 

accompanied by an index of the contents of the administrative 

record. Copies of the index shall also be sent to the Region and 

Columbia Gulf and, if requested, to other interested persons. 

Thereafter, all persons filing briefs in this matter shall 

support their arguments and factual assertions with appropriate 

citations to the documents listed in the index. 

So ordered. 

William K. Rei 

Administrator 

Dated: JUN 2 I |989 
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CERTIFICATE OP 8BRVTCB 

I hereby certify that copies of the foregoing Order in the 

matter of Columbia Gulf Transmission Company, PSD Appeal No. 88-

11 were sent by First Class Mail to the following persons: 

William C. Eddins, Director 

Division for Air Quality 

Commonwealth of Kentucky 

Dep't. for Environmental Protection 

18 Reilly Road 

Frankfort, KY 40601 

Susan Midyett 

Columbia Gulf Transmission Company 

3805 West Alabama Avenue 

Houston, TX 

Richard D. Baley 

Manager of Design Engineering 

Columbia Gulf Transmission Company 

3805 West Alabama Avenue 

Houston, TX 

Daniel Ransbottom 

Senior Consultant 

Entrix, Inc. 

P. 0. Box 56288 

Houston, TX 77256-6288 

James H. Sargent 

Regional Counsel 

U.S. EPA, Region IV 

345 Courtland Street, NE 

Atlanta, GA 30365 

Bruce P. Miller, Director 

Air Programs Branch 

U.S. EPA, Region IV 

345 Courtland Street, NE 

Atlanta, GA 303 65 

Dated: j ^ 2 | 1989 

Brenda H. Selden, Secretary 

to the Chief Judicial Officer