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# OAR Box 1778 Prepped by Ollie Stewart



### Document

Number: 

# 60 ) ll-C- 2

Docket Number: 

# A-90-0 6

Printed 10/28/20089:50:54 AM

Sheet 60of 276P. 2

c r fy 

# 3 2

A A II-C- 2 UNITE D STATE S ENVIRONMENTA L PROTECTIO N AGENC Y WASHINGTON , D.C

. 20460



### 3 

### 199 0 OFFIC E O F AI R AN O RAOIATIO N

»8' v ' y . Honorabl e Richar d G

. Luga r Unite d State s Senat e Washington , D.C

. 2051 0

l__..W.r s - • ' Dea r Senato r Lugar : I appreciat e th e Februar y20 , 199 0 opportunit yfo r ou r staff s t o mee t wit h representative s o f Norther n Indian a Publi c Servic e Compan yt o discus s thei r concern s regardin g th e clea n coa l technology(CCT ) projec t a t th e Baill yGeneratin g Station

. Pleas e fin d enclose d copie s o f th e recen t letter s we . hav e sen t t o th e Indian a Departmen t o f Environmenta l Managemen t providin g th e Environmenta l Protectio n Agency' s (EPA's ) comment s on thi s forthcomin g CC T project

. A s thes e letter s indicate , i t i s EPA' s interpretatio n o f curren t rule s tha t CC T project s demonstratin g retrofi t contro l technologie s whic h reduc e pollution,.includin g th e projec t a t th e Baill yGeneratin g Station , ar e no t subjec t t o ne w sourc e requirement s unde r th e Clea n Ai r Ac t (CAA)

. Th e Agenc ysupport s th e CC T program . I trus t tha t the enclose d letter s resolv e an yconcern s tha t yo u o r you r staf f ma y hav e concernin g th e ne w sourc e requirement s unde r th e CA Aa s the

y appl yt o th e CC T projec t a t th e Baill yGeneratin g Station

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Wiluil^M-'GJ , Roseriber g Assistan t Administrato r fo r Ai r an

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## I Jffi Z J H » SOUTHDEARIOR N ST
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Mr . Tlaoth y J . Matte i Assistan tcemissicris r Offio e o f

Ai rWnrajaaarr

r Indian aDepart_a__n

to f frrvironaantsd Manog»_rr t 10 5 Sout hMeridia nStrae t P.O . BO X601 5 indianapolia , Indian a46206-601 5 Dea rtte. Method : Sh e purpos e o f thi * latte r i s t o aanueu L o nth a parai t i nnum. ! b y

tt e Indian a Daparts_ent o f BivircnaentA l Manageoen t (HS O fo r Nartha m Indian a Publi c Sarvio a Company' s (HXPSOO ) Baill y generatin g atation . Th a permi t provide s fo r th a constructic r o f a nai r pollutio noontro l davie a ar ddirectl y ralata dijqprwacant a wdur th e Clea nCoa l Teehrolog y (OCT ) program . Th a __nyirori_Bntal Protectio nAgenc y (EPA ) agree s wit hth a determinatio nb y us* . tha t th a Stat e an dEP * rule s fa r preventio no f significan t deterioratio n (PSD ) an dra w

aouro a performanc e standard s (NSP8 ) ar e no t intende dt o appl y t o th e OC T projec t a t Bailly . I nothe r words , th e project , ahoul dno t b e ooneidare da "najo r sedificatien " wide r new sourc e review

(NSR ) o r a "aodificaticn " a * se t fort hunde r NSP 6 provide doertai nreqiiiz-aoentj s ar e met . I na eeparat e bu t relate dissue , SW . als o agree s wit hth e dattarminatio nb y ICQ ! tha t th a additio no f a diese l generato r a s a bacJcj ppoue r suppl y t o th e acninhe r t o b a installe da t Baill y i a no t a najo r modificatio ni f th a limit s c noperatin g th e generato r agree dt o by NIPSC O ax e federall y

enforceable . Introductio n
Fo r NSP S purposes , a modificatio ni s define da s an y physica l chang e in , o r chang s i nth a Bathe do f operatio nof , a staticrary aouro a vhic hin__reases (i nters e o f hourl y

saiseien s capacity ) th a anoun t o f any ai r pollutan t regulate dunde r th a aeo nAi r Ac t (Act ) vfcic hi s emitte db y

suc hsource , o r whic hrasult s i nt_b

e •iaeia no f an

y ai r pollutan t no t previousl y emitted . Fo r ,-B * purposes , a najo r sodificatio ni a a Bodificatio nwhic hresult s i na significan t ne t oniaeicn e increas e (i ntarn s o f actua l annua l amissions) . Th e EP A h__ s baooB e awar e tha t thes e definition s ca nb e interprete di n suc ha nama r a t t o subjec t t o 1B Rca r ISPS , e r both , oertai nanvircnoentall y dtosirabl e activitie s a t existin g stationary source s whic hneithe r Congres s no r EP A intende dt o b a covere db y th a Act' a new

aeurc e rsquirwwits . j-ttrecvar , K Ro r _6P 5 coverag e would , i nson a instances , hav e th a effec t o f discouragin g suc hactivities . Th e EP * believe s tha t suc hactivities , includin g OC T deaoewtratio nprojects , ar e no t physica l change s o r change s i n th e Bathe do f operation , s o long a s the y -oas t oertai ncriteri a MwmtMA herei nandS A

issue * a n applicabilit y exclusion . Kenoe , suc hactivitie s ar e ro t "nodificatior* " fo r NSP S purposes , o r "najo r .wdi f lotions " fo r NS RP. 4

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### ove rth e 5«s tsevera l ncrthe , EP A ha s hel d maami s intttrn^mssting s t o JSMUMB 

### t5 * Claa

n Ai rAc tregulatory issue s raise d b y th e OC T progra m A s a ,£-???% ? thes e diaoasioa , th aBE A has decide d t o issu e a n interpretativ e £ £ £ £ ^afSSlTto^S aguidai « o n th e definitio n o f

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y 5 , 1990 , EP

A adviss d NIPSC

O o f thi s intention
. Essentially , thi s rulin g woul d clarif y tha ti f asoire e eolel y add s o renhance

s systss s o rdevice s whos e prisar y functien s ar

e th a rvfcctio n o f

ai rpollution , an

d tha tar s determine

d t o b e no tles s flRvirencsntally beneficia l (a s determine d by th e Ateinistrator ) tha n an y missio n ecntro l systa ao rdevic e i treplaces , i f any , suc h activitie s woul

d no tccrotitut e aphysica l o roperational chang e triggerin g ne

w source requirement*
. Consequently, NSP S an d PS D an d nonattainmen

tne w source revie

w woul d no tapply t o thes e type s o f activities
. Thi s interpretativ e rulin g woul d includ e permanent

, a s wel l a s tssporar y project s unde rth e CC T program

. However , i twoul d no texten

d t o project s tha tprimarily are intended t o extend th e lif e o f

aplan to rincreas e capacity , m addition , an y charges , permanen to rtei-por-ary, whic

h are eaqpertw

l t o significantl y increas e enissic*n_ s t o th aatnosphare , suc h a s change

s whic h increas e aaource- ahc-url y operatin g capacity (e.g. , eliminatin g abottltneclc) , hourl y emission s rat e (e.g. , on e pollutan tdecease s bu tanotherincreases) , oa

rutilizatio n rat s (e.g. , a n anticipate d increas e i n hour s pe ryaa ro f operatio n resultin g fro

m th e installatio n o f

oontrols ) woul

d stil l b e subjec tt o NS R

### an d NSPS
. 

### . . Base d o n ou rreview o f

th e draf tpermit, w

e beiisv e tha tth e Baill y yiojec t i s consisten twit

h th aprovision s EP

A i s developin g fo rit s interpretativ e ruling , o

n thi s basis , w

e hav e reache d th e conclusio n tha tthi s projec ti n particula ri s no tsubjec tt o NSP S o rmajo rNS Rrequix-anents , s o lon g a s i t continue s t o nea tth e criteri a-iinn.aafr l herein
. Th e balance o f

ou roaments outline s th e ground s fo rEPA'

s conclusio n an

d contain s adiscussio n of th e anticipate d tern s o f EPA' s upcomin g interpretativ e rule , th e EP A i s stil l deliberatin g th e specifi c tern s an d prevision s o f

it s interpretativ e ruling , vaiil e today' s carraent s reflec t EPA's curren texpectatio n o f wha tvil l b e contained i n tha tdocument , th e actua l tere s o f

tha i rulin g ma

y diffe rfro

m thos e < U fi n mar therein
.

Background A

_lb s NS Rand NSP S Provision s o f th e Clea nAi r Ac t

''ttm NS Rar dHSP S prevision s o f th e Ac t appl y t o wholl y

new facilities , andt o »dificatiO-- » a t existing facilities , whe ncertai ncondition s ar e met . -tt e rule s gownin g th e amicabilit y o f HS RandNSP S t o modification s a t existin g facilitie s ar m describ e i ndetai l i nth e EP A regulation s (see 4 0 O R51.16 5 an dAppendi xS , 52.21 , 60.1 4 and60.15) . I ngeneral , th e wjdificatio- s tha t woul dtrigge r thes e new eourc e requirement s ar e thos e involving physica l o r operationa l change s whic hincreas e aaasaion s ove r baseli m levels . (I naddition , fo r NSP S P^^J^.?^^* 1 ^ ' a recowtructio noccur s an da eouro a i s oonaidere d"new " i f th s physica l o r operationa l charg e cost s mor e than5 0 percen t o f th e replacemen t cos t of.theP. 5

01/31/139 0 10:3 ? 1080211 3 P.0 4

-3 - affecte dfacility , regardles s o f whethe r a n mission s increas e occurs ) T+* term "physica l o r ftperat..n»v»'t -^VMYW " -l a (mam** brrw.l v

*rr i TM y \rri.tfm th e installation , use , o r dismantlin g o f pollutic ncontro l equipoent .

1 . - Backgroun do f th e NSP S andNS RModificatio nProvisions .

Th e 197 0 AamdaeitL s t o th e Ac t require dEP A t o promulgat e technology-base d new aouro a performanc e standard s applicabl e t o th e constructio no r ncdi f icatio no f stationar y source s tha t caus e o r contribut e significantl y t o ai r pollutio nwhic hma y reasonabl y

b a anticipate dt o endange r publi c healt h o r welfare . 4 2 U.S.C . 7411(b ) (1 ) (A) . Congres s decree dthat , i n *_ditic nt o wholl y ne w sources , NSP S woul dappl y t o th a modificatio no f a n existin g source , define dbroadl y as : any physica l chang e in , o r chang e i n th a metho d o f operatio nof , a stationar y sourc e whic hincrease s th e amoun t o f any ai r pollutan t emitte db y

suc hsourc e o r whic hresult s i n th e emissio no f an y ai r pollutan t no t previousl y emitted . Clea nAi r Ac t sectio n111(a ) (4) , 4 2 U.S.C . 7411(a)(4) . Th e NSP S provision s wer e "designe dt o preven t ne w [air ] pollutio nprcbl<_m " b y regulatin g bot hnewl y constructe dsource s o f pollutio nandexistin g source s tha t inerees e thei r emissions . Nationa l Asphal t Pavangrft , ftse-*-*-*. Y - ' Train . 53 9 F.2 d 775 , 78 3 (D.C . Cir . 1976 ) .se e als o H.R . Rap . No . 1146 , 91s t Osng. , 2 d Sess . 3 , reprintedi n 197 0 U.S . Cod e Gong , fi Atain . New s 5356 , 5358] . Th e effec t c f includin g modifie dsource s a s wel l a s newly-constructe d source s unde r th e provision s o f sectio n11 1 wa s t o establis ha curren t leve l o f emission s abov e whic ha n existing sourc e ma y no t pollut e withou t beoorun g subjec t t o th e NSPS . I nAugus t 1977 , Congres s adopte dfurthe r extensiv e c_hange s t o th e Ac t (Rib . L . 95-95) . Thes e include dreviaw-arxl-pexmittin g program s fo r ne w

an dmodifie dsource s aotbinin g th e technology-base dapproac h o f NSP S wit hspecifi c measure s t o insur e tha t ambien t ai r qualit y goal s unde r th e Ac t ar e met . congres s intende dNS Rt o appl y "wher e industria l ehange s migh t iricreas e pollutio ni n a n area. " Alaban a Powe r Co . v . Costle . 63 6 F.2 d 323 , 40 0 (D.C . Cir . 1979) . Par t 0 applie s t o area s whic hhav e no t ma t naticra l aabien t ai r qualit y standard s (NAAQS ) unde r sectio n109 . T O receive a permi t i n suc hareas , majo r ne w andmodifie dsource s trust (amon g othe r things ) obtai noaissien s offset s tha t assur e reasonabl e progres s towar d attajjnsn t o f th e NAAQ S an dous t ccnpl y wit hth e "lowes t achievabl e emissio n rate, " vhic hca nb e n o lee s stringen t tha na n applicabl e NSP S (se e section s 171-173) . Tn e 197 7 aseentaent s als o adde da ne w Par t C t o th e Ac t including , i nsection s 16 0 - 169 , a nNS Rprogra m fo r th e preventio no f significan t deterioratio no f ai r qaalit y (the "PSD " program ) i n area s whic hhav e attaine d th e NAAQS . T o receiv e a ¥50 permit , a prospectiv e majo r ne w o r modifie d sourc e sus t («on g othe r things ) sho w tha t i t wil l no t excee dth e availabl e ai r qualit y

"increraent " (designedt o preven t pollutan t ocnoentration s fra n deterioratin g beyon dcertai nlevels) , andwil l us e th e "bes t availabl e ocntro l technology" , whic hsus t b e a t leas t a s stringen t a s any applicabl e NSPS . Bot hth e Ar t D NS Rpiugra a applicabl e t o nonattaiimen t area s an dth e per t C NS Rpiogiam

applicabl e t o attainmen t area s adapte dth e NSP S definitio n o f "modification, " bu t no t al l th e exclusion s t o tha t definitio n( i

171(4 ) an d 169(2 ) (OJ ., . P. 6

m*"""""

. a

31 3 i j : I t t rf.'j M RTP-.JQr.E i T 0 v-"if

. 01/31'199 C 13: - 2 1388211 3 P.2 5

- 4 - I t i s eviden t fro

m th e structur e o f th e NS Rar dNSP S program s tha t congnas a sough t t o focu s ai r pollutio ncontro l effort s a t a n efficien t an dlogica l point : th e sstkin

g o f sucstantla i capita l investment s in , o r othe r long-ter m decision s regarding , pollution-generatin g facilities , m adoptin g NS R measure s i npartioular , Oanji.-ea s edtigh t t o reccrcil e th e legislativ e goa l o f envircraenca l protectio nwit ha concurren t desir e fo r continue deoononi e growt h[se e section a 160(i)-(4)}
. Oonaequently , a ke y them e o f th e NS R prujra a i s ttm carefu l evaluatio nof , andpubli c participatio nin , "an y decisio nt o permi t inoaaae dai r pollution " [se e sectio n160(5 ) ] . A s •HsfiTSsar . below , th e curren t regulation s isplsBsnting NSP S an dNS Rwer e designe dt o appl y

thes e y_.umaw s i na manne r consisten t wit hthei r respective statutce y

purposes . Today' s ccnrnent s represen t ou r interpretatio no f thes e existin g regulation s unde r th e fact s yiraeante l b y th e Baill y

project . Th e EP A expect s tha t it s upcomin g i_fiterp_retativ e rulin g wil l furthe r focu s EPA' s positio ne nth e basi c legislativ e inten t o f thes e isportan t programs .

2 . Th e Two-Sta pTes t fo r Modifications . Th a modificatio nprovision s o f th e NSP S an dNS Rurujraua . grow fro m a singl e statutor y

trunk , th e ver y

broa ddefinitio no f "modification " i nsectio n 111(a ) (4) . Unde r bot hrespectiv e programs , EP A develope da tw^-ste ptes t fo r determinin g whethe r activitie s a t a nexisting facilit y constitut e a modificatio nsubjec t t o ne w acuro e requirwents . I nth e firs t step , whic hi s . largel y th e same fo r NSP S an dNSR , EPA determine s whethe r a physica l o r operationa l chang e ha s occurred . I f so , EP A proceed s i nth e seocndste pt o dstarain e whethe r th e physica l o r operationa l chang e wil l resul t i na n emission s increas e ove r baselin e levels . I nthi s seocndstep , th e applicabl e rule s branc hapart , reflectin g th e fundamenta l distinction s betwee nth e technology-base dpurpose s o f NSP S an dth e technology

ar dai r qualit y

ooncem s o f NSR . Briefly , th e NSP S progra m i s concerne dwit hhfi__rl y emission s rates , expresse di n kilogram s o r pound s pe r hour . [A nhourl y anission e rat e i s th a produc t o f th e instantaneou s cnission s rats , i.e. , th e amcun t o f pollutio n emitte db y

a source , afte r oontrol , pe r uni t o f fue l combuste do r materia l processed , (sucha s pound s o f sulfu r dioxid e emitte dpe r to no f coa l burned ) ti_a » th e productio nrat e (sucha s ton s o f coa l burne dpe r hour ) ] . Saissian s increase s fo r NSP S purpose s ar e determine db y change s i nth e hourl y wission s rate s a t maximu m capacity . Th e NS Ri s conoerna dwit htota l annua l snissicr e t o th e attresphers , expresse di nton s pe r year . (Annua l emission s ar e th e produc t o f th e hourl y emission s rate , whic hi s th e sol e oonoer no f NSPS , tine s th e utilisatio nrate , expresse da s hour s o f operatio npe r year) . missio nincrease s unde r NS Rar e determine dby change e i nannua l mission s t o th e ataoephere .

3 . Hjysica l o r Operationa l Change . Th e ver y broa ddefinitio no f physica l o r operationa l chang e i nsectio n 111(a ) (4 ) could , standin g alone , enexspas s th e mos t nundan e activitie s a t a n industria l facilit y

— eve nth e repai r o r raplaomen t o f a singl e leak y pip e o r a chang e i nth e wa y tha t pip e i s utilised , th e definitio ncertainl y i s broa denoug ht o mum-pat A th a additio no r enhancemen t o f pollutio noontro l eauiBBvrt . However , EP A ha s alway s recognize dtha t aoqz-ss s obviousl y di dno t ineandt D requir e ever y activit y

t o b e potentiall y

subjec t t o ne w

sourc e requirements , andtha t i t woul db e edministretivel y irpracticabl e todoso . Aocordinjly , EPA

ha s substantiall y

narrowe dthi s term

i n it s NSP S an

d NS RP. 7

31/31/199 0 10:4 1 1088211 8 P.0 6

regulator y

definition s throug hth e adoptio no f ccason-sera e exclusio nFo r ensple , bot hset s o f regulation e contai neiaila r exclusio nfo r routin e naintanance , repair , andreplacitent; • fo r oertai nincrease s i n th e hour s o f operatio no r i nth e productio nrate * andfo r oertai ntype e o f fue l swit__hes [se e 4 0 a* 60.14(e) ; ee e also , e.g. , 4 0 CF R52.2 1 (b)(2)(iii)] . i n addition , wit h contai na n exclusio nfort t o pollutio ncontro l aquipmct , th a NSP S regulation s

Th e additio no r us e o f any syste m o r devic e whos e pruar y functio n i s th e reductio no f ai r pollutants , excep t whe na n«aissio n oontro l systa ni s remove do r i s replace db y a syste m vhid i th e ta-rinistratotr determine s t o b e les s environwntall y beneficia l [4 0 O R60.14(e ) (5)] .

B_ e s a ha s hel dtha t thi s occlusio ndoe s no t appl y t o a sourc e vhich , upo n origina l construction , employe dva t scrubbers , bu t late r (upo nrelaxatio no f a Stat s pla nunde r sectio n111(d) ) desire dt o mov e th e contro l equipment , vhic hwoul dhav e resulte di nwcti. highe r level s o f pollutio ntha nth e plan t ha deve r emitte d.nationa l Set^Ar^ i^m^im oa , y . flap. 83 8 P.2 d 83 5 (6t h Cir.) , pert , denied . 10 9 S.Ct . 390(1988) , herei nafte r Nationa l Southwirel , I nth e past , EP A

ha s take nvariou s view s a s t o whethe r th e occlusio ni n sectio n60.14(e ) (5 ) shoul dappl y fo r NS Rpurposes . A s note dearlier , th e NS R statutor y

definition s o f modificatio nsispl y adop t tt e NSP S tefinition-in sectio nlll(a ) (4) . i naddition , th e legislative histor y reflects that , a s a genera l matter , congres s intende dt o confor m th e meanin g o f •"•modification " fo r PS O purpose s t o usag e unde r NSP S [ee e 12 3 Cong . Rec . R119S 7 (Nov . l , 1977 ) 1 . Fo r thi s reason , SP A initiall y

rule dtha t th e NSP S exclusio nfo r additio no f oontro l device s applie dautomaticall y t o PS D (?4a_erandUH . fro m Edwar dE . Raich , OAQPS , an dWillia m 7 . Pedersen , OQC , t o EPA Regio nVI , Apr U 21 , 1983) . Th e EP A

reverse dcours e i n a 198 6 applicabilit y determinatio n issue dfo r bot hPS D an dnonattainaen t NS Rpurposes , notin g tha t th e NSP S exclusio nwa s highl y

qualitative , an dfaile dt o giv e du e aoocun t t o eithe r th e ai r qualit y

managemen t oatpcren t o r th e largel y quantitative orientatio n o f th e HS Rapplicabilit y regulations . (Msnorandu m fro m Geral dA . Bsison , Director , C-A&S , t o Regiona l Ai r Divisio nDirectors , Jul y 7 , 1986) . ctaaent s o nNSP S Applicabilit y A nNSP S oodificatia ni s an y "physica l o r operationa l chang e t o a n existin g facilit y whic hresult s i na n increas e i nth e emissio nrat e t o th e ataosphar e o f an y pollutan t t o whic ha standar dapplies " (4 0 O R60.2) . Unde r NSPS , emission s increases , fo r applicabilit y purposes , ar e calculate db y oefiparin

g th e hourl y

emissio nrat e immediatel y befor e andafte r th e physica l o r operationa l change . Al l operatin g pametet s vhic hma y affec t emission s mus t b e th e same t o th e maxim a feasibl e degre e fo r th e befor e andafte r testing , ar dtest s rus t b e conducte dunde r representative conditions . Absen t th e exolusie m

fro m modification s specifie da t 4 0 O R60.14(e) , an y increas e i n __m.____.r_-_ « t o th e st-moeptttr

e ove r th e previou s emission s rat s vil l subjec t th a rwiificatio nt o NSP S [ee e sectio n60.14(a ) an d (b)] . I naddition , modification s whic hwoul dcos t 5 0 percen t o r mor e o f th e oos t o f a co__parabl e new facilit y

ar e classifie da s reoonstructio n(ee e 4 0 CF R60.15 ) andar e sutoj^ t t o NSP S a a a new sourc e eve ni f ther e i s n o emission s increase .5 '9 0 13:1 1 FRO M RTP-HQM D T 0 0ft R

01.'3i.-i99 0 10:4 2 1088211 8 P.0 7

-6 -

Thus , unles s th e reconstructio nprovision s can e int o play , i t i s clea r tha t unde r th e existin g regulation s N8S 5 woul dno t appl y t o th e installatio no r iaprovansn t o f ortissio noontro l equipmen t whic hreduoe e hourl y emission s rates . I f th t reconstructio nprovision s d o apply , the nsuc hchange s woul d trigge r NSPS . Base dc nNIPSCO' s permi t applicatio nan drepresentation s mad e by NIPSCO' s Septenbe r 14 , 198 9 an dDaosabe r 4 , 198 9 informationsubmittal s t o EPA , NSP S woul dno t appl y

t o th e Baill y

Statio ni f th a ne w

scrubbe r i s no t ratcve d (i.e. , i f i t i s a peiwaim t deecnstration ) becaus e hourl y emissio nrate s wil l no t increas e a s a resul t o f th e additio no f thes e C dcontrols . A s a permanen t OC T dencretratic nproject , i t woul dsatisf y th e requirement s o f th e axenptio ncontaine di n 4 0 CT C 60.14(e ) (5 ) fo r th e additio no r us e o f any oontro l syste m

o r devic e whos e primar y functioni s th e reductio no f ai r pollution . (Tha definitio no f "modification- 1 fo r NSF S i s founda t 4 0 CF R 60.14) . I n addition , th e Baill y projec t woul dno t qualif y a s a reconstructio nunde r 4 0 c m 60.15 . However , th e NSP S provision s coul dals o appl y t o majo r facilitie s wit h temporar y

OC T daaonstratic nproject s a t th e endo f th e demonstratio nwhe nth e oontro l equipnsn t i s remove dan dmission s ris e bec k t o th e leve l tha t existe dbefor e th e d_vcnstration . Thus , whil e th e placemen t o f cc r oontrol s a t Baill y

vil l reduo e th e hourl y sulfu r dioxid e (908 ) emission s rate , i f NIPSC O late r disnantle s th e CC T oontrols , thi s woul dresul t i n a n increas e i n hourl y 80 2 emission s u p t o pre-K_e_x_netratio nlevel s an dth a sourc e coul db e considere dsubjec t t o NSPS . Today' s connent s reflec t EPA' s positio ntha t th e Baill y plan t woul dno t b e subjec t t o ISP S a t th e oonclusio no f th e project , i f NIPSC O decide s t o mak a i t onl y temporary , a s th e resul t o f a n increas e i n emission s rate s bac k u p t o th e level s vhic hexiste dbefor e th e Aange e war e mad e t o aocorrnodat e th e tenporar y

demonstratio nproject . Th e EE A expect s tha t it s ferthcaaing interpretativ e rul e vil l tak e thi s positio nwit hrespec t t o al l teitporar y CC T andsimila r deoanstratio nproject s vhid i reduc e emissio nrates , Unlik e th e situatio npresente di nNationa l Scuthwirs . i t i s clea r tha t th e additio no f pollutio noontro l i na temporary OC T doscnstratio nwa s neve r intende dt o resul t i npermanen t emission s reductions . I naddition , renewa l o f temporary oontrol s vil l no t resul t i n a leve l o f mission s highe r tha ntha t experience d i n*tt_ e pest . (Recorwtruetionprovisions , however , coul d_a_bject bot h temporary

an dpermanen t OC T dononstratio nprojects , an dcertai nothe r emissio noontro l system installation s o r iaprovanents , t o NSPS . still , a s indicate db y

t_h e Baill y project , th e reconstructio nprovision s o f th e Ac t shoul drarely , i f ever , appl y t o th a typ e o f activit y whic hwoul db e ooraidere dfo r exclusio nfro a th e definitio no f a physica l chang e o r a chang e i nth a metho do f operation . Thus , th e triggering o f th e reconstructio n provision ; i s a n indicatio ntha t th e propose dactivitie s ar e mor e extensive tha njus t ttm addition , o r replacement , o f a n emissio ncontro l syste m o r device , an ds o ar e no t appropriat e fo r exclusion. ) P. 8P. 9

01/31/199 0 10:4 3 10802U 9 P.0 8

- 7 - Ccmnsnt s o nNS RApplicabilit y Modifie dsource s ar e subjec t t o NS Ri f th e modificatio ni s "major. " Majo r aodi f ication s ous t consis t o f a physica l chang e o r chang e i nth e nette do f operatio no f a sejo r etationary sottro e [4 0 CFR 52.21(b ) (i) ] whic hresult s i n a ne t emission s increas e o f any pollutan t subjec t t o regulatio nunde r th a Ac t tha t i s significant . Significanc e level s ar e m

_ieeeu qi nton s pe r yea r anddiffe r fo r eac hpollutan t (4 0 O R52.21(b ) (23)) . Ne t emission s increase s ar e determine d(4 0 CFR 52.21(b ) (3) ] b y eastin g al l OBntaoporanecu a creditabl e actua l mission s increase s an ddecreases . Th e definitio no f "actua l amissions " i s su__

htha t generall y

th a oc_qariso ni s betwee nactua l emission s befor e th e physica l o r operationa l chang e i nquestio nan dth a potentia l t o m i t o f th a facilit y

afterward s [4 0 O R52.21(b ) (21 ) ] . I f th a sourc e ha s no t bee noperatin g nea r ful l capacity , eve nth e additio no f a contro l devio e oeul db e considere da significan t ne t mission s increas e whe ncooperin g histori c actua l mission s wit ha ne w potentia l t o emit , eve nthoughther e na y b e a substantia l reductio nfro a histori c actua l sals a ions . specifically , actua l mission s befor e th e chang e a t a facilit y ar e generall y determine db y

averagin g th e mission s fo r th e 2 year s prio r t o submitta l o f th e permi t applicatio n(or some othe r perio di f th e las t 2 year s ar e no t representativ e o f norma l uni t operation ) [see , e.g. , sectio n 52.21(b ) (2 ) (ii)] . Sino e th e mission s rat e afte r a physica l o r operationa l chang e canno t b e predicte di nadvance , SP A regulation s assume tha t a souroe' a actua l amission s wil l equa l it s "mnvinT m "potentia l t o emit" , whic hi s base d o nconstan t ful l loa doperatio nfo r a nentir e yea r (unles s restricte db y federall y

enforceabl e limitations ) [see , e.g., : section s 52.21(b ) (21 ) (iv) ; 52.21(b ) (4) ) . Thus , a physica l e r operationa l chang e wil l -trigge r NS Ri f th e annua l potentia l t o emi t o f th e sourc e i s significantl y greate r afte r th e chang e tha nit s representativ e actua l annua l emission s befor e th e change , unles s th e aoapan

y agree s t o federall y

enforceabl e operationa l restriction s vhic hlimi t it s potentia l t o emi t t o level s no t significantl y greate r tha n it s actua l emission s befor e th e change . Thi s actual-to-potentia l methodology applie s t o physica l o r operationa l change s a t ne w o r "modified " (i.e. , altere do r changed ) emission s unit s [se e 4 5 TR 52676 , 52677 , 5271 8 (1980)] . A s explaine dbelow , B & believe s tha t thi s methodology generall y

serve s th e purpose s o f NS Rbecaus e i t subject s t o review project s tha t migh t lea dt o a n increas e i nactua l pollution . However , th e NS Rprovision s i nth e existin g regulation s coul db e interprete dt o appl y t o majo r facilitie s siapl y installin g o r ____provin g contro l equipment , including CC T denonstratic n projects , unde r ciroastanoe s wher e a permanen t increas e i npollutio ni s highl y unlikely . unde r ZPA' s prospectiv e interpretative ruling , existin g soiree s whic hwoul d otherwis e beccn e subjec t t o NS Ronl y becaus e the y

decid e t o instal l o r iaprtv e emissio noontrols , o r participat e i nth e OC T progra m o r simila r danstratio nproject s approve dby S* , woul dinstea db e exclude dfro m NS R coverage , e o lon g a s oertai ncriteri a intende dt o ensur e tha t permanen t incxease s i nactua l mission s d o no t occu r ar e met . wit hrmpec t t o th e Baill y projec t i nparticular , i t appear s tha t th e plan t ha s bee noperate da t a rathe r hig hleve l o f approximatel y 6 0 percen t o f capacity , reflectln j baseloa dutilizatio no f th e plant . Ther e i s n oP.1 0

^ 1 I ^—^^i^^—^^^».M___.___________.^^.^____________________________________^___i_______________________l______________^^^^^ ^ 01/31/199 0 10:4 4 108B211 8 P.0 9

-8 - irdicstio ntha t NIPSC O intend s t o increas e thi s leve l o f usag e a t any time following iflftallsticr i o f th e cc r oontrols * I naddition , i t appear s tha t th e Baill y projec t vil l nes t th e criteri a £ » expect s t o se t fort hi n I U Interpretativ e rulin g fo r bot htmpcsar y andpeiaauew t projects . Th a EP A no w believe s i t i s appropriat e t o devis e an d appl y suc hcriteri a bot hfo r th e Baill y

projec t an d fo r th e upocnin g interpretativ e ruling . Th e EB A tea -raoomende dth e positio ntake ni n it s 198 6 iiamerandum , rtlfOTMerl earlier , regardin g vas

e o f th e NSP S exclusio ni n 4 0 O R60.14(e ) (5) . Util e B & oontinae s t o believ e tha t thi s exclusio ndoe s no t eppl y automaticall y

fo r NS Rpurposes , th e criteri a flisajsser t herei nprovid e du e consideratio no f ai r qualit y i i ijsisn i caxMum an d th e nee dfoe* quantitativ e analyeee . Qonditicn s fo r Psmsusfi t control s o r Device s t o b e CCraidare dNo t

Eftvirorraentall

y Beneficia l

A S note dabove , SE A

i s preparin g a ninterpretative rulin g whic hvil l clarif y tha t i f a aouro a eolel y add s o r enhance s system s o r device s whos e priser y functio nar e th e reductio no f ai r pollution , an d whic har e determine dt o b e no t lea s snviroraentall y beneficial , sud i activitie s woul dno t constitut e a physica l o r operationa l chang e triggerin g ne w sourc e requirements . A t thi s tin , EP A

anticipate s tha t it s rulin g wil l provid e tha t suc hpollutio n oontrol s vil l b e considere dno t les s enviroraantall y beneficial , wit h t o permanen t oontrols , i f the y mee t a t leas t th e following criteria : (1 ) Th e acuro e vil l continu e t o mee t al l curren t requirement e en d standard s applicabl e t o existin g source s unde r th e Act . Thi s include s meetin g applicabl e NAftQS , PS D increments , permi t oonditions , en dStat e implmentatio npla n(SIP ) limitations . (2 ) Ther e i s n o environtenta l harm resultin g fro

m th e propose d activities . Thi s include s condition s tha t th e propose dactivitie s woul dno t caus e th e eourc e to ; (a ) increas e th a maxiau m hourl y actua l emission s rat e o f any pollutan t regulate dunde r th e Act ; (to) increas e th e arnua l mission s o f any pollutan t regulate d unde r th e Ac t a s a resul t o f a n increas e i ncapacit y utilisatio nrate ; (c ) adversel y

ianec t a n ai r qualit y relate dvalu e (e.g. , visibility ) i nan y

Clas s Xarea ; o r (d ) allow

a n increas e i nmission s o f toxi c pollutant s no t regulate db y

tt e Ac t vhic hwoul dcaus e a n advers e healt h o r welfar e upset . fesedo nth e informatio nprovide db y NIPSCO , i t appear s a t thi s tia s tha t th e Baill y project , i f i t i s Bad e permanent , vil l mee t th e abov e criteria . Accordingly , a a t o th a Baill y projec t i nparticular , ES A believe s tha t majo r NS Rrequirement s clearl y vil l no t appl y

i f th e projec t i s mad e permanent , s o leng a e -these criteri a ar e i n fac t met .M>:R

- 8 '9 0 13 : 1 4 Fp 0 M RTP-.flQ n D 31/31/199 0 10:4 4 T O OA R Pft '3E.Ql 0 1282211 8 p,; e
- 9

-



### Teeporar y CC T Change s I nit s upocoin g interpretative ruling , KP A expect s t o follo

w criteri a fn r "teaporary " C d project s vhic har m scnevha t diffsxren

t fro m thos e fo r pernenen t projects . Th e EP A likel y vil l oonside r a projec t t o b e temporary if i t last s las s tha n5 year s from th a dat e th e projec t ooenance s construction . However , th e rulin g probabl y vil l provid e tha t th e AdBinistraitar woul dconside r a nadditiona l perio dof time , u pt o 5 additiona l years , i ncertai ncases . A t th e en do f a temporary project , th e facilit y woul db e returne dt o pre-dsDonstratio ncondition s an dhourl y missio nrate s (o r lower) . I t i s no t clea r i f th e propose dBaill y statio npermi t i s fo r a peacai'wi t c r tecporar y

OC T project . I t i s ou r understanding tha t NtFSC O consider s th e firs t 3 veer s o f th e cc i dmonstratic nprojec t t o b e n 

### t«_posexy> 

### " en dvil l vie w th e change s a s "permanent " fo r th e following 1 7 year s i f the y

ar e continue dafte r th a 3 yea r period . Th e EP A expect s tha t it s interpretative rulin g vil l provid e tha t fo r teeporar y denonstratio nprojects , th e condition s relating t o actua l emissio n increase s an dhour s o f operatio ncriteri a unde r 2a , ban dd abov e woul dno t appl y t o minor , tecporar y

variation s fro

m nomina l operating conditions . Tmporax y increase s ma y

occu r du e t o testin g procedure s o r some failur e i n uniQj e bu t unprovenequipment , bu t shoul dno t willfull y contribut e t o advers e healt ho r -welfare ispacts . Th e EP A believe s tha t th e benefit s inheren t i n CC I an dothe r simila r technology denonstratio nproject s counterbalanc e th e limited , teqparar y

impact s tha t sa y

ooeu r durin g thes e temporary projects , unde r th a ruling , tecporary d_s_cnstratio

nprojec t application s likel y woul d hav e t o mee t al l o f th e othe r criteri a applicabl e t o th e permanen t project s •ilenyms i above . Thi s interpretatio nwoul dprovid e th e flexibilit y t o encourag e tsnpotrar

y dcccnstratio nproject s whic har e considere dt o b e emironaentall y

beneficia l overall , despit e unpredictable , tarporary increase s i nemission s o f some pollutant s o r i nth e hour s o f operatio ntha t na y occu r darin g th e cours e o f a dmonstraticn . Th a EP A expect s th e rulin g t o stat e tha t tarporary change s woul dbecome pesnansn t a t any

tin e durin g o r a t th e en dof a demonstratio nperio di f th e owner/operato r seek s a revise dapplicabilit y determinatio naddressin g al l criteri a applicabl e t o yameuan t ai r pollutio noontro l system improvements . I nsubmittin g thee e ocnments , EP A i s applyin g th e abov e criteri a i nit s review o f th e Baill y

project . I f NIPSC O ultimatel y decide s tha t th a Baill y CC T projec t i s t o becom e a pentenen t OC T dsmsnstration , th e projec t shoul d sas t al l th a criteri a discusse dearlie r fo r permanen t project s a t th e time th e projec t i s t o b e converte dt o pentenen t statu s (i.s. , afte r 3 years) .

fo r Environmentall y

Beneficia l Exclusion s fro m Applicabilit y

Th e EP A expect s the t unde r it s forthcoming interpretative rule , a nowne r or operato r proposin g t o mak e a nenvironmentall y beneficia l chang e i na nai r pollutio ncontro l system wil l b e calle d\_po

nt o reques t a napplicabilit y determinatio nfro

m th e appropriat e NSfcrtSP S permi t authority . Th e reques t shoul dinclud e a genera l descriptio no f th e facilit y an dth a propose d activity , informatio no nth a curren t an dprojecte dus e o f th e facility , andP.1 2

01/31/I99 e 10-4 5 10S02H 9 P.IX

-10 - suffieien t informatio nt o justif y a inapplicabilit y

determination . Fo r an y ai r pollutio noontro l syst m iaprovment , th e reques t staul dinclud e a i-atic«-wl * fo r vh y

th e «i__l_>»iu

i c__i_tro l syst m ut * deviu * whwui a U > uwibAUciw i equa l t o o r mor e efficien t tha nexistin g contro l technology a t th e sourm . Th e EP A als o anticipate s tha t it s interpretativ e rulin g vil l stat e tha t i n providin g infornatic nt o th e reviewin g authority , a nowne r o r operato r shoul dsutai t sufficien t aodelin g t o dencnstrst e tha t any now o r increase d enission s o f unregulate dtcod c pollutant s resultin g fro m th e diang a i n contro l equipaarr t vil l no t caus e o r uuitilbut e t o advers e healt ho r welfar e impacts . Th e owne r o r operato r shoul dals o demonstrat e tha t th e acuro e vil l no t operat e c t greate r hourl y mission s rates , o r fo r mor e hours , tha ni t ha s bee nAirin g th e mos t recen t 2 year s (o r san e othe r period , i f th e las t 2 year s ar e no t npreeentativ e o f norna l operation) . m assessin g whethe r actua l amissio nincrease s o f any pollutan t ar e likel y

t o occur , th e reviewin g agenc y shoul daonsids r th e ernr-arri o incentive s t o increas e productio nrate s o r hour s o f operatio nassociate dwit hth e change . An y chang e vhic hcoul d reasonabl y

resul t i n increase damission s du e t o possibl e increase d utilizatio no f th e facilit y a s a resul t o f th e change s shoul dno t b e considere denvironmentall y beneficial . Th e authorit y reviewin g th e propose d chang e shoul dexplicitl y determine , base do nconsideratio no f thee e an d othe r relevan t criteria , tha t th e ne t effec t vil l no t b e on e o f environmenta l harm .
operatin g Limit s o nNe w Diese l Generato r T*_ e EP A consider s th e additio no f a bacto_ pdiese l generato r a t Baill y no t t o b e a n integra l per t o f th e OC T dar-onstration , i ntha t th e generato r coul d serv e multipl e function s onc e installed . I ngeneral , EP A view s change s t o b e subjec t t o NS Ran d NSP S i f suc hchange s ar e no t strictl y relate dt o th e additio no f th e improve dai r pollutio ncontro l syst m and th e change s hav e an y possibl e additiona l application . However , EP A agree s wit hSS I tha t th e additio no f a ne w

diese l generato r doe s no t constitut e a "majo r Modification " i f th e State' s limit s o n th e generator' s hour s o f operation , preventin g concomitan t increase s i nmission s fro m exceedin g eignificano e levels , ar e federall y

enforceable . Z nclosing , EP A

agree s wit htt e Stat s tha t NSP S and NS Rd o no t appl y i f th e oocdition s outline di nthi s lette r ar e net . I f yo u hav e any furthe r questions , pleas e oontes t Mr . Ro n"Va nMersberge nat , (312 ) 886-605 6 o r Mr . DO B Abell a ct , (312 ) 886-6543 . Sincerel y

yours , 

# jLyA&UH.fi, Devi dJae , Directo r Ai r an d Radiatio nDivisio n

* * TOTA L PHG E . 2 '.P.1 3

MAR-08-199 0 12:1 2 FRO M U^PA-REGIO N U-AR D T O OPA R p > 0 2

* 

### ^Z% V UNITE D STATE S ENVIRONMENTA L PROTECTIO N AGENC Y -JE L \ REGION 5 \A_Z Z 3 23 « SOUT H DEARBOR

N ST
. \^T5 ^ CHICAGO , ILLINOI S 4»6» 4 Marc h 8 , 199 0

Mr

. Timoth yJ

. Metho d Assistan t Carmissione r Offic e o f Ai r Managenen t Indian a Depardien t o f Qivironrnenta l Managenen t 1C 5 Sout n Maridia n stree t Pos t Offic e Bo x 601 5 Indianapolis , H*_dian

a 46206-601 5

~ " De*_

r Mr

. Method : Pleas e b e advise d tha t rr / Januar y30 , 1990 , lette r t o you r regardin g th e Clea n Coa l Technolog y(CCT ) projec t a t MOrther n Indian a Publi c servic e Car-TSTy' s (NIPSCO ) Baill yGeneratin g Station , shoul d b e modified , whil e th e Qr_viror.11e3rtt.a

l Protectio n Agenc y(ZJFA ) continue s t o agre e wit h th e Stat e tha t Clea n Ai r Ac t (CAA ) provision s fo r ne wsourc e performanc e standard s (NSPS ) an d ne wsourc e revie w(NSR ) d o no t appl yi f th e conrtitien s outline d i n sn y Januar y30 , 1990 , lette r ar e net , sem e revision s ar e necessary . O n peq e 8 , th e sectio n o n "CCnCiticn s fo r Per_isnsr. t Control s o r Device s t o 3 e Considere d Ne t Les s _anvirc>rimeritall yBeneficial " shoul d b e change d a s follows :

I n firj t paragraph , secon d sentenc e (chang e underlined ) - "A t thi s tune , Er Aanticipate s tha t it s rulin g wil l InC.M-** * •" ) presumptio n tha t SUCh pollution , control s wil l not-

. rasnH ; i n a n envirerrmentsil harm , vit h respec t t o permanen t controls , i f i-h a swim s d___nonstrate s that: "

mmmI n th e secon d conditio n (chang e underlined ) -

"2. Iher e vil l b e n o envi.-onma._ta l har mresultin g frc mth e propose d activities

. Thi s include s condition s tha t th e propose d flaDSS woul d no t fey itSClf : (a )

.. . (n o change)

... ; (b ) increas e th e annua l emission s c f an ypollutan t regulate d unde r th e CAA; " .delet e th e yfrra M "a s a resul t o f increased caCBClt Y 

### utilizatio nrate )



# €)P.1 4

MAS-08-199 0 / * 12U 3 FRO M USEPA-REGIO

N V-AR D T

O OPA R P.0 3



## - z 

## -
Inser t ne w

paragrap hafte r carxiitio n2 d - -"•Change s vhic har e expecte d t o __f*_reas e mAsnians t o th e atmosphere , suc has chancre s whic hincreas e a snrrc*** hourl y ODerfaf 1 TM * "*"^it v

t».a.
. eliminatin g a bottleneck) . hourl y anission s rat e (e.g. . on e pollutan t decrease s bu t anothe r .nrrpa^fs ) . o r utilizatio nrat e (e.g . . a n anticipate d increas e i n hour s o f opera*in nresuit-ln o frc m th e installatio no f emtmi.. ) vQUi a no t b e affecte d b v thi s i interpretatio

nan d woul d continu e t o c e potentiall y

subjec t t o NS R an d NSPS . "m e EP A wil l taresuma . however , tha t th e additio no f a contro l devic e wil l not , h v it.seif . resul t i n an inrr-v»s e S n rapwrit v

utilization . However , thi s presumptio nwil l b e overcan e i f ther e i s a clea r likelihoo d tha t operatin g hour s o r productio nrate s wil l increas e becaus e o f th e installatio nn f tn e device .
O npag e 10 , a correspondin g chang e shoul d als o b e mad e t o amen d th e firs t ful l paragrap ha s follow s (chang e underlined) : "Th e EEf t als o anticipate s tha t it s interpretativ e rulin g will.. . m assessin g whethe r an y ne t inr^a«-* » -i-

nactua l emission s o f an y pollutant , ove r irrpresentativ

e actua l emissio nrates , i s likel y t o occu r a s a resul t o f th, a »*tttiflon-of control s r th e reviewin g agenc y shoul d conside r th e eccnoni c incentive s t o increas e productio nrate s o r hour s o f operation s associate d wit hth e •

i * ft ' y| -fl. l,'.3tJiQ

nan d us e o f th e contro l device . W&8I 3 increase d emission s du e t o increase d utilizatio no f th e facilit y *"• > nearl y

a nicei v resul t frai . additio no f th e rtev i c * th e chang e shoul d no t b e considere d envilTira._aitall

y beneficial. " (Delet e las t sentenc e o f paraorar hstartin g wit h"Th e aufchoritv...) .
I f yo u hav e an y

furthe r questions , pleas e contac t Mr . (312 ) 886-5056 . Sincerel y

yours , Ro nVa nMersberge na t

Davi d Kee , Directo r Ai r an d Radiatio nDivisio n

cc : Willia m

R . Elliott , NIPSC O Bora s R . Anderson , Sav e th e Dune s Counci l



# Q