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OAR Box 1778 

Prepped by Ollie Stewart 

Document Number: 

264) IV-C-9 

Docket Number: 

A-90-06 

Printed 10/28/2008 9:51:04 AM Sheet 264 of 276 
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, D.C. 20460 

DEC 1 0 1991 

OFFICE OF 

AIR AND RADIATION 

Honorable Henry A. Waxman 

Chairman, Subcommittee on Health 

and the Environment 

Committee on Energy and Commerce 

House of Representatives 

Washington, D.C. 20515 

D 1 1 

DEC I 11991 o. 

X 

DOCKET J 

Dear Mr. Chairman: 

Please find enclosed our responses to questions from your 

July 22 hearing regarding WEPCO. Responses to questions in your 

August 12 letter will be answered shortly. If I can be of 

further assistance, please let me know. 

Sincerely, A r< 

William G. Rosenberg 

Assistant Administrator 

for Air and Radiation 

Enclosure 

Printed on Recycled Paper 
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Question: What is the status of the EPA's 184(d) Guidance? 

Answer: In accordance with the statutory deadline, EPA issued 

the guidance required by Section 184(d) of the Clean Air Act 

Amendments of 1990. The guidance document is entitled "Criteria 

for Assessing the Role of Transported Ozone/Precursors in Ozone 

Nonattainment Areas" and was issued in May 1991. The document 

provides a series of modeling analyses appropriate for 

characterizing transport of ozone and its precursors into 

nonattainment areas. Air quality and meteorological measurements 

needed to characterize transport in identified modeling 

techniques are also identified. A copy of the document is 

attached. 

Question: Please provide an analysis of the overall 

environmental consequences that are expected to occur as a result 

of the WEPCO rule. 

Answer: The effects of this rulemaking are linked closely with 

the acid rain program. The requirements of the acid rain program 

will affect the utility industry in such a way that past actions 

cannot accurately predict the future. However, for several 

reasons, EPA does not expect any negative environmental effects 

to occur as a result of this rulemaking. First, the rulemaking 

is intended to help facilitate efficient and timely 

implementation of the acid rain program which will reduce annual 

emissions of S02 and NOx. Second, the proposal does not allow 

for increases in emissions above those allowed in the State 

Implementation Plan or in conditions contained in individual 

Prevention of Significant Deterioration (PSD) or nonattainment 

permits. Finally, the proposal does not allow for violations of 

any air quality standards, including PSD increments. 

The WEPCO proposal is intended to assure that air quality 

will not deteriorate. As mentioned at the July 22 hearing, the 

"environmentally beneficial" test, which is part of the pollution 

control exclusion, is intended to assure that "increases in 

pollutants that would adversely affect the nonattainment areas" 

do not occur. 

Question: Please provide an analysis of the impacts of the 

pollution control exemption. In particular, what is the effect 

on CO, NOx, and particulate matter emissions. 

Answer: The EPA expects that most, if not all, pollution control 

projects will reduce net actual emissions. The "environmentally 

beneficial" test that is part of the pollution control exclusion 

provides the Administrator assurances that these types of 

projects will not contribute to the deterioration of air quality. 

The proposed rulemaking also states that the source must still 
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comply with all applicable SIP requirements, permit conditions, 

and applicable NAAQS and PSD increment limits. 

As stated at the July 22 hearing, EPA will consider, on a 

case-by-case basis, whether a pollution control project renders a 

unit less environmentally beneficial. In making this 

determination, the EPA would not expect the proposed project to 

result in any increase in pollutants that would adversely affect 

nonattainment. Therefore, EPA does not expect any adverse 

environmental effects to occur in these areas as a result of the 

pollution control exclusion. 

The pollution control exclusion is not expected to cause 

significant increases in CO, PM, or NOx at electric utility 

sources. 

Question: Please provide an analysis of the environmental 

effects expected as a result of the NOx BACT presumption. What 

effects will this presumption have on areas such as the 

Chesapeake Bay nonattainment area, the Northeast ozone 

nonattainment areas, and on acid deposition in areas of the west? 

Answer: In general, the EPA believes that there are several 

reasons why NOx emissions will not increase as a result of the 

presumption. First, the presumption is just that — a 

presumption. The permitting authority must still, as part of the 

permit process, evaluate BACT on a case-by-case basis. Moreover, 

the presumption only applies to retrofits, not to new emission 

units. 

Additionally, the ozone nonattainment provisions in Title I 

provide authority and requirements to deal with situations in 

which NOx control is needed to attain/maintain the ozone 

standard. These provisions, in general, would need to be met, in 

addition to the NOx BACT presumption, in those areas where 

increases in NOx emissions would contribute to ozone 

nonattainment. Existing point sources must, at a minimum, 

install RACT in those portions of the Northeast Ozone Transport 

Region where NOx control is needed, unless the EPA determines 

that additional reductions of NOx will not be beneficial to air 

quality in the region. New major sources and major modifications 

in nonattainment areas would be required to install LAER. 

Moreover, to the extent additional NOx controls are found to be 

appropriate by the Northeast Transport Commission, they can be 

required as part of the ozone attainment demonstration plans. 

The EPA would treat those portions of the Northeast region where 

NOx control is beneficial as it would a nonattainment area. In 
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such areas, RACT would be required and major modifications would 

be required to meet the LAER requirements. 

The EPA is concerned about total NOx loadings to the 

Chesapeake Bay. We are working to develop and apply models to 

determine which sources contribute to those loadings. 

Nevertheless, the proposed rule should have little, if any, 

impact on air emissions that reach the Bay. Except for part of 

Virginia, all of the States that are near the Bay are located in 

the Northeast Ozone Transport Region; actions taken to achieve 

the ozone NAAQS in this region and in the State of Virginia will 

also serve to limit emissions from sources affected by the rule. 

With respect to your question about the importance of the 

proposed rulemaking in the West, current utility NOx emissions in 

the west are only about 10% of national utility NOx emissions, 

and an even smaller fraction of total NOx from all sources. As 

such, little impact is expected in the West as a result of this 

rulemaking. 

Question: Can RACT ever be a more stringent control than BACT? 

Answer: Yes. However, in most cases BACT is more stringent than 

RACT, 

RACT is a generic nonattainment area requirement which 

prescribes retrofit control for each existing source within a 

source category to help achieve attainment of a NAAQS within an 

area. Retrofit control of existing sources is generally more 

costly and at times more difficult to implement than controls 

installed at new units (due to the existing plant space 

limitations or the type of equipment). Therefore, BACT, which 

applies to new or modified sources located in attainment areas 

has, in the past, generally been more stringent than RACT. 

There are, however, various situations which could lead to 

controls on existing sources being more stringent than BACT. For 

instance, nonattainment area requirements for some sources are 

often more stringent than those in attainment areas. Thus, a 

situation could occur where RACT for a source category located in 

a nonattainment area, such as Los Angeles, is set at levels more 

stringent than would normally be required by the BACT 

requirements for a similar source in an attainment area. 

Similarly, RACT may be more stringent than BACT due to 

difference in timing. For example, it is possible for RACT 

levels of the 1990's for existing sources to be more stringent 

than BACT determinations made in the 1980's for new sources. 
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Question: Status of section 811. 

Answer: Section 811, of the Miscellaneous Provisions of the 

Clean Air Act, requires the Environmental Protection Agency to 

compare the air quality standards and controls of major trading 

partners of the United States and evaluate the economic effects 

of those controls on the international competitiveness of U.S. 

industries. 

There are two requirements under Section 811, an interim 

report due in mid-August of 1991 and a final report due November 

of 1992. In order to satisfy these requirements, the Office of 

Air and Radiation (OAR) established an interagency task force to 

conduct the study. Represented on the task force is the State 

Department, the Department of Commerce, the Department of Energy, 

Office of US Trade Representative, program offices within Office 

of Air and Radiation, the Office of Policy Planning and 

Evaluation, the Office of General Council, the Office of Research 

and Development. 

The project is being conducted in two phases. Phase I 

addresses the relative stringency of air pollution control 

regulations in selected countries. Phase II integrates the 

economic impacts and trade implications of the regulations. 

We estimate that an interim report will be ready for 

submission to Congress in October. 

Question: Why has EPA canceled review of the CAA section 812 

study by the scientific panel? 

Answer: Unfortunately, there has been some confusion created by 

the media with respect to external review of the section 812 

study. EPA has not, in fact, canceled any of the external review 

efforts. 

Prior to passage of the Clean Air Act Amendments, EPA 

developed plans to establish an Environmental Economics Advisory 

Committee (EEAC) under the auspices of the Science Advisory Board 

(SAB). The initial motivating event was the release of the 

September 1990 SAB Reducing Risk report which specifically 

recommended that the Agency "develop improved methods to value 

natural resources and to account for long-term environmental 

effects in its economic analyses." In addition to addressing this 

specific recommendation, the EEAC is intended to serve as a 

standing panel of experts providing advice to EPA concerning 

economic analysis. 
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It was anticipated, therefore, that this panel would be 

well-suited to review and advise the Agency with respect to the 

section 812 studies of the overall net benefits of the Clean Air 

Act. In fact, EPA explored the possibility of relying on the 

EEAC to serve the purpose of the ad hoc review panel (the 

Advisory Council for Clean Air Act Compliance Analysis, or 

ACCACA) mandated by section 812 of the Clean Air Act. However, a 

review of the relevant statutes led EPA's Office of General 

Counsel to conclude that the two entities must be separately 

chartered. 

Therefore, it was merely this specific strategy of using the 

EEAC to function as the ACCACA which was canceled. EPA still 

fully intends to meet the requirements of section 812 for 

external review by scientific experts. However, it appears 

likely that a separate ad hoc ACCACA will have to be chartered. 

EPA will continue to explore, however, the possibilities for 

cross-membership between the two committees. 

Question: what is EPA's regulatory process for development of 

Conformity provision of the Clean Air Act Amendments of 1990? 

What is the current status of the Conformity rule? 

Answer: The conformity provision contained in Section 176(c) of 

the CAA will be developed using standard Agency operating 

procedures for rulemaking, which are based on the requirements of 

the Administrative Procedures Act. The workgroup is currently 

developing the proposed rule in consultation with DOT. After the 

proposed rulemaking is developed, pursuant to Executive Order 

12291, it will be referred to OMB for review. After the 

Administrator signs the proposal, it will be published in the 

Federal Register and the customary public participation will 

follow, including a public hearing and comment period. The final 

rule will be developed after full consideration of all comments. 

Question: What is EPA doing to respond to assertions that 

contaminated gasoline was used to conduct emission tests for MMT 

fuel additive? 

Answer: Recently, Ethyl Corporation and EPA have been conducting 

testing primarily to determine if MMT in gasoline causes 

increased tailpipe particulate emissions. Previous EPA data 

showed such an effect but Ethyl testing did not. In its most 

recent waiver request for MMT additive, received July 12, 1991, 

Ethyl claims that contaminants in EPA's test fuel, and not MMT, 

caused the particulate increase. The test fuel used in the Ann 

Arbor lab was found to be contaminated by freon which leaked from 
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testing equipment. The freon in the fuel mix is believed to have 

caused the particulate increase found. As a result, the concern 

regarding particulate increases has largely been alleviated. 

Under the law, EPA has 180 days after receipt of a waiver 

request to reach a decision or the waiver is automatically 

granted. Review of Ethyl's request must be completed by January 

8, 1992. There are a number of important issues that must be 

resolved before a decision can be made on the waiver. As part of 

EPA's process of exploring these issues, a public hearing was 

held on September 12 at which EPA received comments on the 

application. 

Question: Was the WEPCO Rule the product of an unusual or 

unprecedented procedure wherein EPA turned the writing of an EPA 

rule over to an inter-agency task force headed up by CEA and 

staffed principally by DOE? (2) Has any prior EPA rule ever 

been written by another agency? (3) Has DOE ever been so 

heavily involved in the drafting of an EPA rule? 

Answer: As I stated at the hearing, the Administration's 

legislative proposal on WEPCO served as the blueprint for the 

WEPCO proposed rule. In preparing this legislative proposal, EPA 

went through extensive internal consultations and reviews in 

order to assure that the legislative proposal served the goal of 

streamlining compliance with the new acid rain provisions while 

not compromising efforts to assure timely attainment of all NAAQS 

and to prevent significant deterioration of clean air regions. 

Thus, the WEPCO policy issues had largely been raised and 

resolved within EPA in the process of developing the 

Administration's legislative proposal. Furthermore, following 

the hearing at which the Administration's position on WEPCO was 

set forth, Senator Ford's subcommittee asked for an evaluation of 

what parts of the Administration's proposal could be implemented 

through regulatory means under the pre-existing statutory 

language. The development of responses to this inquiry resulted 

in the Agency considering internally different rulemaking 

approaches. For these reasons, when the Agency began to develop 

its administrative proposal, it was recognized that the normal 

internal procedures of work groups and wide circulation of draft 

rules were not necessary to ensure full internal review of the 

final product. 

Because of the short deadlines presented by both the 

Administrator's commitment to implement positions (compatible 

with applicable law) reached by the Administration during the 

Clean Air Act debate, and, most importantly, the fast-approaching 

compliance decisions that all phase I sources face under Title 
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IV, EPA also decided to facilitate the OMB review process under 

Executive Order 12291 by inviting interagency review of drafts of 

the proposed rule. The CEA, DOE and DOJ were thus brought into 

the process early on and provided comments and suggestions 

throughout the development of the rule. As you are aware, Dr. 

Schmalensee took the lead in coordinating interagency input. As 

a result of this process, EPA's proposed rule cleared OMB in only 

one day and was proposed for public comment on schedule. 

At the hearing, you seized on some of these interagency 

review documents — which EPA had duly put into the public record 

— and asserted that the WEPCO rule was secretly written by DOE. 

During the drafting of the rule, DOE did provide extensive 

comments on drafts — which were carefully considered by EPA. 

However, the final proposed rule was EPA's product and represents 

EPA's decisions on how to implement through the rulemaking 

process positions the Administration had adopted during the Clean 

Air Debate to the extent these positions were consistent with 

applicable law. Your charge that it was written "word-for-word" 

by DOE is simply wrong. Many provisions requested by DOE were 

rejected by EPA. 

Of course, we do not expect to follow a similar procedure 

with any other rule because the unique factors which led to the 

WEPCO approach will not be present. For instance, while EPA is 

currently drafting a rule on BACT that is the subject of a 

similar interagency working group, EPA does not expect that the 

proposed rule will be published until it has been subject to full 

internal procedures, including work group closure and "red 

border" review. Still, in an effort to shorten the period of 

formal OMB review so as to ensure that Clean Air Act regulations 

are promulgated on time, EPA may on occasion provide OMB or other 

agencies with early drafts for their review and comment. The DOE 

also participates on the Acid Rain Advisory Committee and has 

provided constructive suggestions on a number of Clean Air Act 

implementation issues through this forum and in conjunction with 

EPA's circulation of draft rules. While the two agencies do not 

always agree, EPA continues to find direct communications with 

DOE at the drafting stage to be advantageous. 

Question: Do elements of the WEPCO proposal conflict with 

section 182(e)(2) of the Clean Air Act as amended? 

Answer: Section 182(e) provides that in extreme Ozone 

nonattainment areas (i.e., Los Angeles) any physical or 

operational change "which results in any increase in emissions" 

will be considered a modification, although the source can avoid 

the offset requirements by internally offsetting any increase in 
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emissions at a ratio of 1.3 to 1. The provision also provides 

that the extreme area offset provisions do not apply to a 

modification if such modification consists of the installation of 

equipment required to comply with "the applicable implementation 

plan, permit, or this Act." 

EPA does not take the view that this provision, which 

applies to only one non-attainment region in the country, somehow 

precludes EPA from applying a utility pollution control project 

exclusion consistent with existing law or from codifying for 

utilities the actual-to-actual methodology used in the WEPCO 

case. Moreover, it does not appear that the proposed rule and 

the section are necessarily in conflict, as you suggest. The 

pollution control project exclusion in the proposed rule is not 

precluded by the language eliminating the offset requirements for 

general "compliance" projects. Similarly, this provision still 

requires a causal link between the change and the emissions 

increase. Still, your question has pinpointed a potential area 

of confusion that should be addressed in the final rulemaking. 

Question: Will EPA place in the docket transcripts of all future 

meetings and telephone calls between EPA and other agencies 

regarding the WEPCO rule? 

Answer: As you are aware, section 307(d)(4)(B)(ii) requires EPA 

to place in the docket all drafts of proposed rules submitted to 

OMB for interagency review, as well as written comments received 

from other agencies during the interagency review process. EPA 

has scrupulously followed this requirement in this case. What 

you inquire about, however, goes far further than EPA's statutory 

requirements and internal policies, and would involve information 

protected by the privilege for deliberative communications. In 

addition, EPA does not have the present capacity to produce word 

for word transcripts of these or other informal contacts that 

agency employees may have. Finally, as part of EPA's standard 

procedures, EPA employees create written records of all contacts 

with outside parties where the party provides EPA with 

significant information or data. Given these existing safeguards 

and EPA's limited resources, EPA does not believe that it is 

either necessary or feasible to transcribe every interagency 

contact for inclusion in the docket. 
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Question: Please provide a detailed analysis of emission 

increases resulting from the demand growth provisions of the 

rule. 

Answer: Nothing in the proposed rule allows a utility to 

automatically eliminate demand growth from its projection of its 

post-change utilization. Rather, the rule merely codifies in the 

actual-to-actual methodology a causation requirement that is 

inherent in EPA's existing new source review regulations required 

by the statute itself (see section 111(a)(4)). Because of this, 

EPA does not expect that a causation requirement will result in 

any increase in emissions. EPA will address comments on this 

point in the preamble to its final rule.