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OAR Box 1778 

Prepped by Ollie Stewart 

Document Number: 

245) ll-F-21 

Docket Number: 

A-90-06 

Printed 10/28/2008 9:51:03 AM Sheet 245 of 276 
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UJ 

O 

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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

Office of Air Quality Planning and Standards 

Research Triangle Park, North Carolina 27711 

C ^ 

MEMORANDUM 

TO: Docket 

FROM: Chebryll Edwards 

DATE: June 4, 1991 

SUBJECT: DOE Comments on WEPCO Legislative Rule Draft 

II-F-21 

The revisions marked in this draft legislative rule reflect 

Department of Energy Comments given to EPA in a meeting on May 30, 

1991. 

1 ! >••,

 :i 

JJM i 2 1991 

fpA AlRDOCXo 
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I of the Act, unless they are excluded as pollution control 

projects. 

The installation, operation, cessation, or removal of a 

temporary CCT demonstration project that is operated for 5 years 

or less is exempt from NSPS and both PSD and nonattainment new 

source requirements. See § 415(b)(2). However, the facility 

still must comply with the applicable SIP and other requirements 

necessary to attain and maintain the NAAQS. 

y 

• Finally, in section 415(c), Congress provided an exemption 

from NSPS and PSD for the reactivation of "very clean units" 

otherwise in compliance with the Act that had been shut down for 

at least the two years prior to enactment of the 1990 Amendments 

and that, prior to the shutdown, had been equipped with pollution 

controls with a removal efficiency of at least 85 percent for 

sulfur dioxide and 98 percent for particulates, and had been 

equipped with low-NOx burners. 

III. DISCUSSION 

A. Pollution Control Projects 

1. Proposed Regulatory Changes for Pollution Control 

Proj ects 

EPA proposes to amend its PSD and nonattainment 

regulations as they pertain to utility •changes that oonotit-uto—-

pollution control projects by codifying the Agency's current 

n

 +.hat pu^h projftg^g are not subject to NSR when 

they •^Hpe^^vS^njafiEtaiiy-beneficial. In many inctancos, it io 

•clear tha-»/poiiutlo~n control projects at existing stationary 
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sources are not major modifications subject to new source review 

requirements for the simple reason that they do not result in an 

increase in actual emissions. In addition, EPA has always 

recognized that Congress did not intend that every activity at an 

existing facility be consider^d_-a—pky-sical or operational change 

f or purposes of rtha. new sourceraequliamenta of the PSD— 

•piuyiaiu.1_3r Also, as has been discussed, the new acid rain 

provisions will require most electric utilities to undertake 

pollution control projects within the next few years and their 

decisions regarding (the) a pollution control strategy for Phase I 

of the acid rain program will be made within the next year. At 

the same time, based on the WEPCO decision, utilities are 

concerned that EPA will subject pollution control projects to 

--»ctual-to-pqtcntial evaluation.—In fact, EPA has refrained frotf" 

-applying the actual--to potential melhudulu-jy to sevtjidl IMCMIIL" 

_ pollwtion eonti-ol-pyojects. ^—" 

1 1 For instance, EPA has specifically recognized that 

routine maintenance, repair and replacement, and changes in hours 

of operation or in the production rate are not considered a 

physical change or change in the method of operation. See 40 CFR 

52.21(b)(2)(iii). 

12""~ See, e.g.. letters from David Kee, Director, AirSi 

Radiation Division, EPA, Region V, to Timothy J. Method, 

Assistant Commissioner, Indiana Department of Environmental 

Management (January 30, 1990 and March 8, 1990). 
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" 2 5 • " 

OLciciress ~MJLz. CCTTVCMTV 

To provide utilities with aJJILluiidl m i Id inly, EPA is today 

proposing to adopt revisions to its PSD and nonattainment 

regulations for the addition, replacement or use at an .existing 

electric utility steam generating unit of any system or device 

whose primary function is the reduction of air pollutants 

(including the switching to a less-polluting fuel where the 

primary purpose of the switch is the reduction of air 

pollutants). Under today's proposal, a utility pollution control 

•pkusCceu crerjoe^-echo^ai ckfl-^e. , 

project will not be treated as a/modification-so long as the proj«£T 

J_^c -wof TUrudetr -Ha- Unf"Hfc> Le_ less ' (TTV--

1CK^>

 . ohange ia^environmentally beneficial.x^y 

As indicated above, the key to this addition to the list of 

" exclusions from the terag)physical or operational change is EPA's 

> judgment that Congress did not intend that pollution control 

projects be ""considered the type of activity that coui4. trigger 

A. 

new source review. Rather, the clear focus of the Act's new 

source requirements are, as they relate to modifications, 

physical or operational changes to pollution generating 

equipment. 

As discussed in greater detail in a subsequent section, 

EPA's position in this regard is reflected in the existing 

13 C In general, EPA will consider a pollution control 

project to^ e environmentally beneficial so long as, i 

nonattainment areas, it does not result^in a significant net 

increase/in representative actual annual emissions ox any 

criter^ pollutant and/ in attainment areas, it does not resul 

in an/increase in the/potential hoifrly emissions/of a regulate 

pollutant. However ,/EPA will apply these guidelines with 

flexibility and will deviate fr0m them where the merits of an 

individual proposed pollution control project t.: arrant. 
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regulatory exclusion for pollution control activities under NSPS 

regulations* and in several caso-opccific nonapplicability' 

'determinations under the new source leview piugrams. ' However,.. 

despite the Agency's view that by their nature pollution control 

/ A y 

projects in .general are not within the ambit of new r.nurf!P ~, 

requirements, EPA's pronouncements Ar.acoqnt a c the needfeV=g^ oAy^/^/7 

-99S^^Y^P^~^^^SL7Vt some consideration of the C^^y ^ 

environmental impacts of any pollution control <&o&Iv&%i$jfo • The—-

?G regulatory exclusion empluys an "environmentally beneficial" 

fy~~~~^\ test to QeLeimlne its scope.—See 40 CFR 60.13(e)(5).-- With 

{A£&!^\ res P

e c t t 0 new source review, -EPA has also oonoidered whether a 

&^*7! /pollution control project would Le "env ii oilmen tally benef luldl, " 

-^-and today's proposal wouj.d—eodify that practice by adogt4ft£=_».—-r^ ~ 

regulatory exeiusionAtnat tracks the NSPS exclusiony-^TneiasS^-^^^/^: 

'QKSUJ difference in the NSR exclusion is that it would (consistent with 

EPA's practice under NSR9 apply theJenvironmentally beneficial 

QJi\oL tyu£- / 

test to the addition- as well as the replacement, of a pollution 

control device,, bmuauae Uieie may be clicmm Lances ln which such 

,additionG arc not environmentally beneficial1. <• EPA oolioito • 

comment on whether the Kara tixelUBlcn should bo amended at the 

-timo of final action on today's proposal to apply anenvirnmnpntilly beneficial lest Lu afldlllonu also. -

For the purposes of this proposal, a pollution control 

proj ect iia defined as- any ''physical change or change in tho methodof operation at a utility unit for purposes of reducing emissions 
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from such unit -in ordei Ly comply witii Title IV of the 1000-

prlMeX-a^T-a-aa- a ^ ^ ^ 0- ^ ^ _ 

Amendments.- These^hdngoa are limited to the installation of 

conventional or innovative emissions control equipment, 

including, but not limited to, installation of conventional and 

advanced flue gas desulfurization, sorbent injection for SO, and 

NOx controls and electrostatic precipitators. -Phyotgal changesyl 

Ah&X U T^^cjuuiCLr^ -___&£*& 

gr changes in the method ot OperaLiuny to accommodate switching 

to fuel with a lower sulfur content, including natural gas or 

coal re-burning, co-firing of natural gas and other fuels for the 

purpose of controlling S02 and NOx emissions sh*ll also 

constitute a "pollution control project." 

Ufa*.**/ 

£ny activity that is necessary to accommodate switching to a 

less polluting fuel is considered to be part of the pollution <z 

control project. In some instances, this may involve f&f&tczT^) 

changes to the pollution generating equipment (e.g.. boiler), but 

only if the changes are necessary to maintain the normal , 

project" 

operating capability of the unit at the time of the ibodlrlcdLlolI 

where the capability would otherwise be impaired as a result of 

the fuel switch. For example, an electric utility steam 

generating unit that switches from a higher sulfur bituminous 

coal to a low-sulfur subbituminous coal may need to make certain 

changes to the boiler in order to avoid derating the unit. 

Changes that are intended primarily to resto-re^'original 

capacity or to improve the operatigna4r--e"ff"iciency of the facility 

are not consi:de^ed-_taO--be^part of a pollution control project for 

fed- tt(s tycch/fiOA C^

/L $ °^V a//-&^ w ^ 

Jfl \k fllt^^pt^'O^ of CUM/ ^-CfiOs?^ <^'C£A*LC? C ^ 
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purposes of this proposal. Such changes are addressed elsewhere 

in this proposal. Also, the source still must comply with all 

applicable SIP limits and requirements, permit conditions and 

applicable NAAQS or PSD increment limits. 

As proposed, this pollution control project proposal will 

not extend to source categories other than electric utility steam 

generating units. EPA has so limited this provision for oovegal- r^ ^ 

x*aoons~.—FircU in contrast with a general lack of experience 

with other industries, EPA has extensive experience in addressing 

new source applicability issues regarding pollution control 

projects in the utility industry. That experience has led EPA to 

conclude -in numerous individual cases, that pollution control 

•projects in the utility industry are generally environmentally 

beneficial.--In addition; the acid rain provisions of Titlo IV of. 

•tho Cloan Air Act Amendments of 1090 plaoo a unique burden upon 

-the utility industry to undertake pollution control projects in-

— Lhe near future:— 

Additional Modeling Requirements 

A proposed pollution control project or physical or 

operational change cannot result in an emissions increase that 

will cause or contribute to a violation of a national ambient air 

quality standard, PSD increment, or visibility limitation. See 

CAA/§§ 110(a)(2)(c), 165, 169A(b), 173. Nothing in today's 

notice is intended to authorize any significant net increase in 

emissions that would have this proscribed impact. It is possible 
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that a pollution control project, while not causing any increase 

in maximum hourly emissions, will cause a significant net 

increase in actual emissions, which in turn could threaten a 

NAAQS, increment or visibility limitation. For this reason, 

under today's proposal, the reviewing authority may require a 

source to perform an air quality impact analysis (modeling) 

whenever it appears that a proposed change will result in a 

significant net increase in actual emissions of any criteria 

pollutant over levels used for that source in the most recent air 

quality impact analysis. If this modeling indicates that this 

increase in emissions will cause or contribute to a violation of 

any ambient standard, PSD increment or visibility violation, the 

pollution control exclusion does not apply. 

3.* EPA's Existing Interpretation Regarding Pollution 

Control Projects 

As noted above, ±* <«• nffpn •-••«•>»»• »M-i#jpn»>.>sw control 

projects at existing stationary sources are not major 

modifications subject to new source review because they do not ^ju/aiiMj 

result in an increase in actual emissions. In addition, EPA 

believes that, in general, pollution control projects were not jzfXft "ft** 

intended by Congress to be considered physical or operaticj*a"l *"y -^ 

prograa*—With reopeet to pollution control prop actio j EPA lidb in 

C^-HJ L NSE. "JOnDvUCtnr^ o-f 4^ . Cko-t^ for Acf, Csv^rtss tK.+6*cled 

recent years issued numerous nonapplicability determinations and 

*\\<JX\- --Kfi- MSP-5 excluL«,Ccv^s cew4zulh^d I K EPA\ S mut*. «M*W^W 

''no action" letters to utility sources baood on a finding that *J 

-fe MJU WS&- rucks. * 

pnvlrnnaantally bonoficial pollution control projeoto are not the 

*" ^ 2 F^.I^ . its^t , <U>I.J CvJuc^e. \Hj (ns). 
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physical or operational chance intended to be covered by 

the statute or EPA'b leguiatluns.1* ET^o provide utilities with 

a greater degree of certainty pending adoption of today's 

regulatory ^interpretation 

proposed regulations, EPA/is today, formally «^^W>»*V.^M&^«L__—., -——— ^ 

f/0C M W ?»• exc&/# ^ftfaain^*tufa? (,rv/wA l^nfo f*f>e>**_< 

individual leLLers as well as the provisions of the New Source 

A Performance Standards (NSPS) regulations. This iB&&pff&_f§) ft^/cu 

t-Zf&JCQyfjZjt*- -*y 

, j provides that the addition, or use of any system or device whose 

primary function is the reduction of air pollutants will not 

constitute a physical or operational change that could be deemed 

a major modification and trigger new source review, unless the 

ti*dU£ v^\\ ro^r\p^~\Lc_jjyyr\ Jessy 

Administrator determines that the project*would not be-

*rr¥'v environmentally beneficial. 

%% _ 

In *££*ct, EPA ttgaD-niere-lY iH^S^gS ^ its PSD regulations 

in harmony with its NSPS regulations, which da not attt-oA Ho most 

pollution control acti*iti%s. See 40 CFR 60.14 (e) (5) .^ faring ' 

the first years of the PSD program, EPA interpreted its PSD 

A 

regulations to simply include this NSPS provision.15 This was 

^a.. Lette^/ William 

PA, to Andrew Aitken/Vice 

., March>6, 1991;/£etter, 

Senior Vioer President, Public 

19*0; Letters^ David Kee 

Region V, to Timot 

Dept.^ef Environmen 

JPA 

23, 

Division 

Indi 

Rosenberg, Assistant 

President, New England 

Roseriberg to Patrick 

Service Co. orr 

xector/Air and 

Method, Assistant 

ManagefriaOfflt, .Tannaiy -

Memorandum from Edward Reich, Director, Stationary 

Source Compliance Division and William F. Pedersen, Acting 

Associate General Counsel, Air, Noise, and Radiation Division to 

Allyn M. Davis, Region IV (April 21, 1983). 
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Ortcfc «K* NSPS Tnocltfi<jflch«w Je£l^+.»\j fe'R4 

"^ H.~

 r CrvcTude -H*. USPS -provision 

- in part* ba-sed on the fact that the PSD definition/of modification 

simply adopts the NSPS definition in section 111 (»)(*')- In 

addition, the legislativ e history reflects that, as a general 

matter, Congress intended to conform the meaning/of 

y / "modification" for PSD purposes t o usage under ti e NSPS program. 

(See 123 Cong. Rec. H11957 (November 1, 1977) •») A-EPA has 'oinoaP

 J 

tbvrejc^ut- erf OA Q"PS Cssuje.d a-w. <Xrpp\icjxio\Xjtkd Ae^ejnrtuj^Mis^. {Jj{u.~L. 

voiood concern with ito initia l viow 'that the Hers pollution . , 

rtuudrtA -fkes (ywHSotl Civkrpre^+^n«^ o-f EPA '^ MSZ, r^uWStrni. 

coivtrol language may be incorpogat*d wholesale in the new source . 

rrccyvcqSoics Love. re^lCcd 6v\ -fku de^errrcLK°-T)CK 

•review context, largely because of the ambient air quality . . 

rnmponant of now, source review That io absent from the Nflyi 

•determinations assessing pollution control projects have beenbased on a finding that the proposed project would be— 

Environmentally beneficial. 1 7 T^ fi£ n llyhL ol Uie Titl e IV 

requirements and other provisions of the Clean Air Act Amendments 

•wr (ess 

of 1990, EPA is -today formally adopting the •Jjenvironmentally 

beneficial" test for new source review applicability to pollution 

control projects on an interim basis pending final action on the 

proposed regulatory exclusion for pollution control projects. 

Today's ^environmentally beneficial" approach addreooco the 

• concerns nxyieased in the 10OC Eaioon Memorandum.—First, EPA ib 

-not simply reading in to the new source review regulations tho -

1 See, e.g.. Memorandum from Gerald A. Emison, Director, 

OAQPS, to Regional Division Directors (July 7, 1986) ("Emison 

Memorandum"). 

} ? ^ee /^upr^ note 2& 
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NSPS axolusion iu 40 CfR 9 60.14(e)(5)*—For the reaoona stated 

, J.n the Emioon Memoiaudum,—LlidL would constitute a regulatory, 

•change requiring, notice ana comuieuL rulemaking-.—fiflr»

w^, by, 

focusifie>on whether a pollution control project is a physical or 

operational change within the meaning of the new source review 

regulations, today's m l ing- avoids xjbhe need to undertake a 

quantitative emissions increase calculation in every case, as 

would be necessary if such projects were deemed to be physical or 

operational changes. Especially in light of the provisions of 

this interpretation regarding the calculation of actual emissions 

baselines and projections of future actual emissions, EPA expects 

that most, if not all, pollution control projects will reduce A*2* 

/ 

v 

actual emissions. Nevertheless, the Administrator's authority to 

consider individual pollution control projects provides an 

adequate opportunity to determine that a pollution control 

project would somehow result in an adverse environmental impact 

re*AeTkri-{U-\A*vct- le** 

and thus conclude that the project is not:environmentally, A 

beneficial, -but io inotead'a najor aodifioation that should"be 

Opj-urddjcfrrvux! ckouavxie-. 

subject to now oouree^-hroviewi 

For the purposes of this interpretation, a pollution control 

proj ect refers to the additionAor replacement at a source of an 

emissions control system or device primarily designed to-improve— 

-t&e-control or prevention, crt air pollution emissions. Fuel 

switching where the project is designed primarily to reduce air 

pollution (as described in the prior section) also constitutes a 
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pollution control project. As with the proposed rule, changes 

that are intended primarily to restore original capacity or to 

improve the operational efficiency of the facility are not 

considered to be part of a pollution control project for purposes 

of this 'l-ulinu,.1 

B. Representative Actual Annual Emissions 

In the WEPCO decision, the court found that the units 

in question had begun normal operations, and thus, rejected EPA's 

actual to potential methodology which the court found 

impermissibly ignored the utility's past utilization of the 

units. Since the proposed work consisted of the replacement of 

existing components with "like-kind" equipment — which the court 

apparently believed would not in and of itself lead the utility 

to change its pattern of utilization of the unit — the court 

found the methodology arbitrary as applied in that case. As a 

result, EPA developed a new methodology on remand ~ the socalled actual to future actual emissions test. Today EPA 

proposes modifying its regulations to codify this methodology, 

and apply it to all physical or operational changes at an 

existing electric utility steam generating unit other than the 

addition of a new unit or the replacement of an existing unit. 

Under today's action, EPA proposes to consider a unit to be 

replaced if it would constitute a reconstructed unit within the 

meaning of 40 CFR 60.15. EPA believes that for such "replaced" 

units, as well as wholly new units, it is not possible for the