### UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

WASHINGTON, D.C. 20460

AUG 23 1977

Henry V. Nickel, Esquire THE ADMINISTRATOR

Hunton & Williams

1730 Pennsylvania Avenue, N. W.

Suite 1060

Washington, D. C. 20006

Dear Mr. Nickel;

You have petitioned me on behalf of the Cincinnati Gas

and Electric Company (CG&E) to review three conditions of a

permit which EPA's Region IV (Atlanta) office issued to CG&E.

The permit was issued pursuant to EPA's regulations for the

prevention of significant air quality deterioration (PSD)

under the Clean Air Act. As explained below, I am granting

your petition in part and denying it in part.

Background

The PSD regulations (40 CFR 52.21) require that large

fossil-fuel electric power plants and other significant

sources of sulfur dioxide and particulate matter obtain a

permit prior to commencement of construction. The purpose of

the permit requirement is essentially two-fold:

(1) To assure, prior to construction, that the new

pollution source will not cause air quality concentrations to

exceed legal limits (frequently referred to as "increments")

for the area (40 CFR 52.21(d)(2)(i)); and

(2) To assure, prior to construction, that the new

source’s contribution to increased pollution concentrations

will be minimized through application of an emission limitation

which represents best available control technology (BACT) (40

CFR 52.21(d)(2)(ii)).

CG&E is planning to construct and operate two new coalfired power units near Rabbit Hash, Kentucky. The PSD permit

was issued by EPA's Region IV Office because the State of

Kentucky had not sought delegation of authority to issue PSD

permits at the time CG&E applied for the permit. (Kentucky has

since been delegated such authority.)

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In seeking PSD permit approval from EPA, CG&E indicated

that it would meet the applicable BACT emission limits* with

electrostatic precipitators for particulate matter, and with

either wet scrubbers, low sulfur coal, or a combination of the

two for sulfur dioxide. CG&E did not provide information

relating to specific pollution control devices because CG&E had

not yet selected the devices.

In issuing its permit to CG&E on November 24, 1976,

Region IV found that if the plant were to meet the BACT

emission limitations, the applicable air quality increments

would not be violated. Region IV could make no finding on the

BACT issue, however, due to the lack of specific information on

control devices. Region IV therefore conditioned the permit to

require CG&E to submit the control information as it becomes

available. The conditions allow Region IV to disapprove the

permit if it finds the devices inadequate to meet BACT.

The permit conditions also require CG&E to provide EPA

written assurances that a legally binding coal purchase

contract has been executed and to specify certain details about

the contract and the type of coal contracted for. The permit

provides that EPA will not approve the control devices until

CG&E provides such information.

CG&E objects to certain elements of these permit conditions (basically those portions which are underscored below)

and has filed several pleadings arguing that I should modify

the permit. The three permit conditions at issue here are as

follows:

"A. For Particulate Emissions from the Boiler:

1. The applicant must submit to EPA, within

twenty working days after it becomes available,

copies of all technical data pertaining to the

selected control device

. . . . EPA must review

the final selected device in order to verify

* Under 40 CFR 52.01(f), BACT is deemed to be the emission

limitation specified in the New Source Performance

Standard (NSPS) set under Section 111 of the Clean Air

Act, if an NSPS for sulfur dioxide or particulate matter

has been issued for the relevant source. Since there is an

NSPS for both sulfur dioxide and particulate matter for

power plants (40 CFR 60.42, 60.43), the NSPS limitations

are the BACT limitations required by the PSD regulations

in this case.

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the emission limit stated in the application.

EPA may, upon review of these data, disapprove

the application if EPA determines the selected

control device to be inadequate to meet the

emission limit specified in this conditional

approval. [Emphasis added.]

"B. For Sulfur Dioxide Emissions from the Boiler:

1. The applicant must submit to EPA within

twenty working days after it becomes available,

copies of all technical data pertaining to the

selected control system

. . . . EPA may,

upon review of these data, disapprove the

application if EPA determines the selected

control device or devices to be inadequate

to meet the emission limits specified in this

conditional approval. [Emphasis added.]

"C. Coal Characteristics:

[T]he applicant must submit to EPA before approval

is granted to purchase control devices under A.1 and

B.1 above, the following information.

1. Copies of contracts to purchase coal

including expected sulfur content, ash content,

and heat content of the coal, or

2. Other information* showing that coal of

the specified quality, or better, will be

available to the applicant upon start-up of

the boiler." [Emphasis added.]

It should be noted that my authority to issue PSD permits

has been delegated to the Regional Administrators and that a

permit issued by the Region may be considered final agency

action. A dissatisfied party need not take any further steps

to exhaust its administrative remedies prior to judicial

review (assuming that issues the party seeks to raise in Court

were raised at the proper time before the Regional Office).

Nevertheless, I have the inherent

____________________ * By letter of January 28, 1977, Region IV informed CG&E

that this condition could be complied with by submitting

an opinion of counsel stating that a legally binding coal

purchase contract had been entered into, and stating

certain relevant facts about the terms of the contract and

the type of coal purchased

.authority as Administrator to review actions of the Regional

Offices. I have decided in this case that the issues are

sufficiently important to warrant my addressing them.

I should also note that this type of review is governed

neither by formal Agency procedures* nor by rulemaking or

adjudication requirements under the Administrative Procedure Act

(5 U.S.C. §551 et seq .). Accordingly, no rules relating to ex

parte contacts, briefing, etc., apply. My Headquarters staff has

held meetings and had telephone conversations with CG&E

representatives and with Region IV personnel in order to assess

more fully the arguments which CG&E has presented in its various

pleadings.

Discussion and Disposition of CC&E's Arguments

I will divide my discussion and disposition of CG&E's

arguments into two basic categories: (1) the conditions requiring

approval of data relating to control devices (conditions A.l..and

B.1. quoted above); and (2) the condition requiring details

relating to coal purchase contracts (condition C quoted above).

Control Devices

a. Authority Under Regulation.

The PSD regulations clearly authorize Region IV to include

these conditions. The regulations basically constitute a

pre construction review procedure. They provide in 40 CFR

52.21(d)(2) that an owner may not "commence" construction unless

EPA determines,among other things, that source "will meet" the

BACT emission limit (40 CFR 52.21(d)(2)(ii)). The regulations also

specifically provide:

In making the determinations required by

paragraph (d)(2) of this section [which includes

BACT], the Administrator shall, as a minimum, require

the owner or operator of the source . . . to submit

[several items] and any other information necessary

to determine that best available control technology

will be applied. 40 CFR 52.21(d)(3) (emphasis added).

The basic purpose of preconstruction review is to prevent

potential environmental problems before they occur in order to

obviate the need for difficult and expensive

________________________ * In contrast To National Pollution Discharge Elimination

System (NPDES) permits issued by Regional offices under

the Federal Water Pollution Control Act. See 40 CFR

125.36(n).5

"after-the-fact" corrective action. The provision of the

PSD regulations requiring EPA to find that BACT will be complied

with at the permitting stage is entirely consistent with this basic

purpose.

b. Compatibility With Congressional Intent.

CG&E cites legislative history which indicates (1) that EPA

is not to make a preconstruction certification for compliance

with Section 111 of the Clean Air Act, and (2) that the

responsibility for selecting methods of meeting emission limits

rests with the source, not EPA. These arguments are inapposite

here.

First, the cited legislative history has no bearing on the

preconstruction review requirements of the PSD regulations.

Whatever Congress may have intended with respect to the narrow

issue of determining compliance with Section 111 standards, the

PSD regulations, which have been upheld by the U.S. Court of

Appeals under other sections of the Act,* clearly require a BACT

determination at the preconstruction review stage.

To the extent CG&E’s arguments are construed as an attack on

the PSD regulations for failing to comply with Congressional

intent, such an argument could only have been brought in a Court

of Appeals under Section 307(b) of the Clean Air Act within

thirty days after the regulations were promulgated. While

numerous challenges were brought which resulted in the Sierra

Club decision cited above, this aspect of the regulations was not

challenged.

Second, the permit condition is fully consistent with the

principle that the source, not EPA, should select the method of

compliance with an emission limitation. CG&E's assertions that

EPA is "dictating" specific pollution control equipment and

systems are plainly incorrect.

CG&E is expected to select, from any number of conceivable

options, the control equipment and systems it desires to meet the

BACT limits. EPA's role is simply to review the relevant data and

information and to reject any equipment or system which EPA

determines inadequate to meet the BACT limits. The fact that EPA

may reject one proposal does not mean that it is "dictating"

specifications. It means that CG&E will be required to select

other systems or devices (or make adjustments to those already

selected) and submit the new information to EPA. While EPA staff

will be available

________________________ * Sierra Club v. EPA, 540 F.2d 1114 (D.C. Cir., 1976).

Certiorari was granted by the Supreme Court on April 4,

1977.6

to discuss these matters with CG&E, and to provide advice and

assistance at CG&E’s request, EPA will leave to CG&E the right and

responsibility to make the selections.

C. Wisdom of Approach.

CG&E also argues that EPA's approach here is unwise, because

once Region IV has approved certain control devices or systems,

the Region would either be precluded from enforcing violations of

the BACT emission limitation or would be impeded from vigorous

enforcement.

The argument is incorrect on at least two grounds. First, the

permit states as an independent condition, both for sulfur dioxide

and particulate matter, that specified emission limitations must

be met. (Permit Conditions A.3. and B.3.) The fact that EPA might

not object to CG&E's plans at the permit stage will not absolve

CG&E from meeting the specified emission limitations.

Second, this argument reflects a misunderstanding of the

basic purpose and effect of such a condition. The condition is not

intended to serve as a substitute for the source's obligation to

meet specified emission limitations. Nor is it intended to

constitute a certification by the Agency that the use of certain

equipment will in all events meet such limitations. Rather, the

condition is basically a screening device through which EPA may

determine whether certain proposals will be inadequate to meet the

limitations:

EPA may, upon review of these data, disapprove the

application if EPA determines the selected control

device or devices to be inadequate to meet the

emission limits specified in this conditional

approval. (Emphasis added).

Thus, EPA's failure to disapprove selected devices merely

means that EPA has found nothing at the design stage which would

warrant rejecting the source's plans. It is still the source's

responsibility to comply with the law, and EPA will stand ready to

enforce against all violations.

d. "Vagueness" of Conditions.

I am also unpersuaded by CG&E’s argument that these

conditions are "impermissibly vague." The determination to be made

is whether a device or system is "inadequate to meet the emission

limits specified in this conditional approval." The emission

limits set in Conditions A.3. and B.3. are quite precise, and

these are what adequacy will be judged against. I do agree,

however, with CG&E that the permit should be modified to require

the Region to set forth the reasons for any disapproval (see

Conclusion below).7

I should note that Region IV is not the only EPA Region

which has imposed PSD conditions requiring EPA approval prior to

the purchase of pollution control equipment. The attached permit

issued by EPA's Region VIII (Denver) office contains virtually

the same language relating to control equipment approval as the

permit at issue in this matter.*

2. Coal Characteristics and Contracts.

CG&E objects to the requirement that it enter into legally

binding coal purchase contracts before it may submit its

information and data on control devices for the Region's approval.

CG&E argues that such a condition would require a firm coal

purchase contract several years before the coal is needed and

would disrupt its normal planning and construction process. CG&E

also argues that such a condition is unnecessary, in that a wide

range of coal will be available which will meet the control

equipment bid specifications which the Region will review.

My staff has discussed this issue with Region IV personnel.

We are in agreement with CG&E’s points. It will be sufficient to

obtain such information as it becomes available in the normal

course of CG&E's planning process.

Conclusion

Consistent with the foregoing discussion, it will be

necessary to amend CG&E's permit in certain respects. By copy

of this letter, I hereby direct the Regional Administrator to

amend the fourth sentence of Condition "C" by

_______________ * Regional Offices which have not in the past taken

necessary steps to review sources' selections of

methods to meet BACT limits under the PSD regulation

will begin doing so in processing future permits. If

there is anything improper with the approach taken by

Regions IV and VIII on this issue, it is that the PSD

regulation seems to contemplate that no permit should

be issued at all until the Region obtains the information

necessary to determine that BACT will be applied.

I have asked my staff to consider whether the Regional

Offices should be provided more explicit Headquarters

direction or whether adjustments in the PSD regulation

are needed. I understand that because of long lead

times for constructing electric power plants, the type

of conditional permit being utilized by Regions IV and

VIII may be the appropriate approach. Therefore, this

approach may continue to be used unless and until we

inform the Regional Offices to the contrary.deleting the phrase "before approval is granted to purchase

control devices under A.1 and B.1 above," and by substituting

therefor the phrase "within twenty working days after it becomes

available."

CG&E has also made certain other suggestions with which I

agree. Therefore, I direct the Regional Administrator to amend

Conditions A.1. and B.1. by adding the following new sentences to

the end of each condition: "EPA shall notify the applicant of

EPA's determination under this Condition within twenty working

days after receipt of all necessary information from the

applicant. In the event EPA disapproves the application pursuant

to this Condition, EPA will state its reasons in writing,

identifying the criteria applied and the factors considered."

I should note that the twenty-working-day period for the

Region to make its determination should be considered an outside

deadline. The Region should make every effort to inform the

applicant of its decision well before this period has expired.

CG&E has also requested that the permit be amended to

provide that any disapproval shall be appealable to me. I do not

agree with this suggestion. As noted earlier, my authority to

issue PSD permits has been delegated to my Regional

Administrators and their actions may be deemed final Agency

actions. While an adversely affected party always has the right

to petition me to review a Regional decision, and I have the

authority to consider such petitions (as I have here) where

important issues are presented, it would be improper to provide

for an automatic right of appeal when any dispute arises under a

permit.

If the Region were to disapprove a proposal by CG&E, I

would hope that the Region could provide CG&E with technical

advice and assistance so that CG&E’s proposal could "be

modified to be approvable. If this cannot be done, CG&E

will have a final Agency action for purposes of judicial

review. CG&E could petition me to review the matter; but I

would want to reserve judgment on agreeing to such a review

until I could assess the importance of the issues.

EnclosureCONDITIONAL PERMIT TO

COMMENCE CONSTRUCTION AND

OPERATE

40 CFR 52.21(d)

(Significant Deterioration of Air Quality-­

Review of New Sources)

MISSOURI BASIN POWER PROJECT/

LARAMIE RIVER STATION

1. INTRODUCTION

The Missouri Basin Power Project (hereinafter "MBPP"),

consisting of Basin Electric Power Cooperative (project manager),

Heartland Consumer Power District, Lincoln Electric System,

Missouri Basin Public Power Financing Corporation, Tri-State

Generation and Transmission Association, Inc., and the Wyoming

Municipal Power Agency, plan to construct a coal-fired steam

electric generating plant approximately five miles northeast of

Wheatland, Wyoming (hereinafter "the Source"). The Source will

consist of three 570 megawatt boilers (600 megawatt gross

capacity), together with on-site support facilities.

On June 23, 1976, the United States Environmental Protection

Agency, Region VIII (hereinafter "EPA"), determined that the Source

was subject to the requirements of 40 CFR 52.21(d) (Significant

deterioration of air quality--Review of new sources). This

determination was made on the basis of the information listed at

Appendix 1.

On July 12, 1976, MBPP, pursuant to this determination,

requested from EPA permission to construct the Source. After

requesting and receiving additional information, MBPP was notified

that its application was complete as of July 24, 1976.

On September 24, 1976, EPA published its preliminary

determination to conditionally approve MBPP's request. EPA has

thoroughly considered public comments received in response to this

notice. All information considered by EPA in its review of MBPP's

request is listed at Appendix 2.

II. FINDINGS

On the basis of the information listed at Appendix 2, EPA has

determined that:

1) MBPP, through application of best available control

technology as defined at 40 CFR 52.01(f), can limit emissions from

the Source as set forth at III(2) below.

2) Such emission limitations, if met, will insure that

applicable air quality increments are met.

These findings are based upon the analyses listed at Appendix 3.

They are further predicated on the assumption that the only additional

sources of air pollution from the Source will be those listed in para-graph 7 of MBPP's permit application filed on November 19, 1975,

with the Wyoming Department of Environmental Quality, and that

emissions from these additional sources will be controlled at

least to the extent set forth in Attachment D of that

application.

On the basis of currently available engineering, design, and

operating data, EPA has no substantial reason to doubt MBPP's

representation that emissions from the Source will remain within

these allowable limits. However, in light of the tentative nature

of this data, this permit to construct (III below) is expressly

conditioned upon the continuing validity of this representation. By

accepting MBPP's claims at this time, EPA does not endorse the

methods chosen by MBPP to reduce air emissions.

III. CONDITIONAL PERMIT TO CONSTRUCT AND OPERATE

On the basis of the findings set forth at II above, and

pursuant to the authority (as delegated by the Administrator) of 40

CFR 52.21 (d)(2), EPA hereby grants approval to MBPP to commence

construction and operate its proposed coal-fired steam electric

generating plant near Wheatland, Wyoming (the Source). This

approval is expressly conditioned as follows:

1) MBPP shall submit to EPA all information and data it may

subsequently receive, including final plans, which relate to the

design, engineering, or operation of the Source's sulfur dioxide

control system. Such information shall be submitted within five

days after MBPP's receipt thereof.

Final plans shall include, at a minimum, a description of

the system's operation, major design parameters, and efficiency or

emission rate guarantees. Such plans should, in addition, be

accompanied by at least one complete copy of all contracts, bids or

proposals MBPP plans to accept for the purchase or construction of

the system.

Should EPA, in its discretion, determine that MBPP's final

plans contain insufficient information to permit an independent

evaluation of this system, it shall so notify MBPP within thirty days

after receiving the plans. MBPP sha11 have thirty days thereafter to

submit further design, engineering, and operating data. If, after

reviewing this further data, EPA determines that there is still

insufficient information, or determines that the system will not

enable MBPP to meet the emission limits set forth at III(2) below,

then this permit to construct and operate shall, upon notification of

MBPP, be deemed denied ab initio . Failure by EPA to take such action

shall not, however, constitute an endorsement of the methods chosen

by MBPP to reduce air emissions; nor shall such failure guarantee

that these methods will, in fact, enable MBPP to meet the conditions

of this permit.

2) MBPP shall limit emissions from the Source as follows-­

a) None of the boilers shall cause to be discharged

into the atmosphere any gases which contain particulate matter in

excess of 66

-2-grams per second or 0.18 gram per million calories heat

input (0.1 pound per million BTU), whichever is less, as measured

by the procedures set forth at 40 CFR 60.46.

b) None of the boilers shall cause to be discharged into the

atmosphere sulfur dioxide at a rate exceeding 132 grams per second or

0.37 gram per million calories heat input (0.2 pound per million BTU),

whichever is less, as measured by the procedures set forth at 40 CFR

60.46.

c) The only additional sources of air pollution from the

Source will be those listed in paragraph 7 of MBPP's permit

application filed with the Wyoming Department of Environmental Quality

on November 19, 1975. Emissions from these additional sources shall

be controlled at least to the extent set forth in Attachment D of that

application.

3) Performance tests of the boilers shall be conducted pursuant

to the provisions of 40 CFR 60.8 and 60.46. Should MBPP fail to

perform these tests, or should the tests indicate that the Source

cannot meet the emission limits set forth at III(2) above, then this

permit to construct and operate shall, upon notification of MBPP, be

deemed denied ab initio

. Performance test results which exceed the

emission limits of III(2) shall constitute, in any proceeding to

enforce the terms of this permit, prima facie evidence that emissions

from the Source exceed these limits.

4) MBPP shall install, calibrate, maintain, and operate

emission and fuel monitoring devises as required by 40 CFR 60.13 and

60.45, except that the following definitions of "excess emissions"

supercede the provisions of 40 CFR 60.45(g)-

(1) Opacity. Excess emissions are defined as any 6-minute

period during which the average opacity of emissions exceeds

20 per cent opacity, except that one 6-minute period per hour

of not more than 27 per cent opacity need not be reported.

(2) Sulfur dioxide. Excess emissions are defined as any three

hour period during which the average emissions (arithmetic

average of three contiguous one-hour periods) of sulfur dioxide

as measured by a continuous monitoring system exceed the

emission level of 0.37 gram of sulfur dioxide per million calories heat input (0.2 pound per million BTU).

5) MBPP shall comply with all notification and record keeping requirements of 40 CFR 60.7, except that (1) the definitions of "excess

emissions" set forth at III(4) above supercede those at 40 CFR

60.45(g), (2) written reports of excess sulfur dioxide emissions

shall include, in addition to the requirements of 40 CFR 60.7,

average hourly coal feed rates and average daily fuel analyses (as

fired) at the time or times the excess emissions were measured, and

(3) during the first year of operation of the Source, excess emission

reports shall be-submitted monthly, not later than 10 days following

the end of each calendar month.

Fuel analyses shall be conducted at least once per day, and

shall be performed in accordance with the following methods of the

American Society for Testing and Materialsa) Mechanical Sampling by Method D2234065.

b) Sample Preparation by Method D2013-65.

c) Sample Analysis by Method D271-68.

-3-MBPP shall maintain records of fuel analyses for a period of at

least two years. Average hourly feed rates for each boiler shall

be recorded and maintained for a period of at least two years.

6) MBPP shall develop coal blending techniques and operating

procedures, prior to start-up of the Source, which shall be used by

Source personnel to ensure that the emission limitations of III(2)

are not exceeded. These procedures shall include, at a minimum,

special blending procedures to be followed in the event that high

sulfur coal is received over an extended period of time, specific

criteria which shall trigger the use of these procedures, and

procedures to be used in stockpiling (and ensuring an adequate

supply of) low sulfur coal.

An up-to-date copy of all such procedures shall be

maintained at the Source headquarters for inspection by EPA

employees or contractors during normal business hours. These

procedures may be modified from time to time, as may be necessary.

EPA shall, however, be notified in writing of all such changes.

MBPP shall maintain records of the sulfur content of all

coal delivered to dead storage piles for a period of at least two

years.

7) Reports of excess sulfur dioxide emissions submitted

pursuant to III(5) above or 40 CFR 60.7 shall constitute, in any

proceeding to enforce the terms of this permit, prima facie

evidence that emissions from the Source exceed the limits set forth

at III(2)(b) above.

MBPP shall conduct a performance test of the Source to

measure particulate emissions, as specified at 40 CFR 60.8 and

60.46, within 60 days after recording any period of excess

opacity emissions as defined at III(4) above. Failure by MBPP to

conduct such test, or test results which exceed the emission

limits of III(2) above, shall constitute, in any proceeding to

enforce the terms of this permit, prima facie evidence that

emissions from the Source exceed the limits set forth at III(2)

above. The Regional Administrator of EPA may, at his discretion,

waive such performance test.

8) No condition herein shall excuse the Source from complying

with all provisions of the Wyoming State Implementation Plan. No

action of EPA taken pursuant to the terms of this permit shall be

deemed a waiver of any of the conditions herein.

IV. GENERAL

This permit is issued in reliance upon the accuracy and

completeness of the information set forth in MBPP's application to

EPA for permission to commence construction. Notwithstanding the

tentative nature of this information, the conditions herein become,

upon the effective date of this permit, enforceable by EPA pursuant

to any remedies it now has, or may in the future have, under the

Clean Air Act. Each and every condition of this permit is a

material part hereof, and is not severable.

-4-MBPP has reviewed the terms of this permit and find them

to be reasonable in light of the information and

representations that have been made available to EPA.

UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY REGION VIII

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