p.1 

OAR Box 1778 

Prepped by Ollie Stewart 

Document Number: 

248) II-F-13 

Docket Number: 

A-90-06 

Printed 10/28/2008 9:51:03 AM Sheet 248 of 276 
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UNITED STATES ENVIRONMENTAL PROTEu 

WASHINGTON, D.C. 20460 

LEEE 

Ol2J 

II-F-13 

May 31 , 1991 

MEMORANDUM 

SUBJECT: WEPCO Legislativ e Rul e 

TO: 

FROM: William F. Tyndall, Attorney r\Al 

Air and Radiation Division, LE-132A 

See Below 

OFFICE OF 

GENERAL COUNSEL 

Enclosed is a copy of the "WEPCO" legislative rule 

incorporating the changes agreed to yesterday during our meeting. 

(Please note that the word "Administrator", was replaced with 

"reviewing authority" in several places in the Part_,51 

regulations.) r^^lTTT^! %JfV\ 

LL [ijkJy^--^'~ .E i 

'• X'f^^ ^ "a \ 

Enclosure 

Addressees: 

Richard Schmalensee, Council of Ecdnomic^A'dvisors 

Howard Gruenspecht, Council of Economic Advisors 

Teresa Gorman, White House Staff 

Art Fraas, Office of Management & Budget 

Jeff Holmstead, White House Counsel's Office 

Jonathan Wiener, Dept. of Justice 

Paul Bailey, Dept. of Energy 

David Rivkin, Dept. of Energy 
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ENVIRONMENTAL PROTECTION AGENCY 

40 CFR Parts 51, 52, and 60 

[FRL •] 

Requirements for Preparation, Adoption, 

and Submittal of Implementation Plans; 

Approval and Promulgation of 

Implementation Plans; Standards of 

Performance for New Stationary Sources. 

AGENCY: Environmental Protection Agency (EPA). 

ACTION: Notice of Proposed Rule 

SUMMARY: The applicability of the new source requirements of 

Title I of the Clean Air Act (CAA) to physical or operational 

changes at electric utility generating units is an issue of 

considerable interest at this time because of the recent passage 

of the 1990 Clean Air Act Amendments (CAAA). Many utilities 

will be undertaking major pollution control projects at their 

units in the next few years. In enacting Title IV, Congress did 

not suspend any Title I requirements for this work. However, the 

massive industry-wide undertakings of pollution control projects 

warrants a clarification of the new source review requirements of 

Title I. In particular, New Source Review (NSR) provisions should 

not inadvertently bias a utility towards or against any means of 

complying with the acid rain provisions. The EPA believes the 

amendments proposed today and the clarification of its current 

policy under its present NSR regulations provide adequate 

assurances that utilities can undertake Title IV pollution 

control projects without uncertainty as to the applicability of 

the various Title I new source requirements. At the same time, 
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the applicability of existing new source regulations to 

modifications has been the source of two recent federal appellate 

decisions, Wisconsin Electric Power Co. v. Reillv. (WEPCO), 893 

F.2d 901 (7th Cir. 1990), and Puerto Rican Cement Co. v. EPA, 889 

F.2d 292 (1st Cir. 1989). As a result, EPA is today proposing 

clarifying amendments to these regulations and confirming its 

policies regarding of some of these provisions as they apply to 

utility projects pending adoption of the proposed amendments. 

The EPA today proposes to adopt a broad NSR exclusion for 

utility pollution control projects and, until these proposed 

regulations are adopted in final form, to adhere to its policy 

that new source regulations already generally exclude coverage of 

pollution control projects undertaken at electric utility units. 

Similarly, EPA today proposes to adopt an "actual to future 

actual" methodology for determining whether all other nonroutine 

physical or operational changes *at utilities (other than the 

replacement of a unit' or addition of a new unit) are subject to 

new source review under either prevention of significant 

deterioration (PSD) or nonattainment provisions and to maintain 

in the interim that this methodology is applied where the unit 

has "begun normal operations." For those utility projects which 

undergo PSD new source review, today's notice proposes a 

presumption that for EPA-issued permits, "low-NOx burners" can 

satisfy the best available control technology (BACT) 

requirements. 
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In addition, EPA also proposes to modify its regulations 

implementing the modification provisions of the Title I new 

source performance standards (NSPS) program to provide that a 

utility may use for its pre-change baseline the highest hourly 

emissions rate achievable at any time during the 5 years prior to 

the physical or operational change. The EPA also proposes to 

modify its regulations to reflect changes made by Congress in the 

1990 Amendments to the applicability of new source requirements 

to clean coal technology (CCT) and repowering projects, and to 

"very clean" units. 

DATES: Comments. Comments on the revisions proposed today 

must be received on or before . (60 days after publication in 

the Federal Register). 

Public Hearing. A public hearing is scheduled for 10:00 a.m., 

July , 1991, at the U.S. Environmental Protection Agency, 401 M 

Street, S.W., Washington, D.C. 204,60. The hearing may be 

canceled if no speakers have requested time to present their 

comments 15 days prior to the scheduled hearing date. Written 

comments in lieu of testimony are encouraged. 

ADDRESSES: Supporting information used in developing this 

proposed rule is contained in docket A-90-06. This docket is 

available for public inspection and copying between 8:30 a.m. and 

3:30 p.m., weekdays at EPA's Air Docket (LE-131), Room M-1500, 

401 M Street S.W., Washington, D.C. 20460. A reasonable fee may 

be charged for copying. 
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FOR FURTHER INFORMATION CONTACT: Chebryll Edwards, New Source 

Review Section (MD-15), Office of Air Quality Planning and 

Standards, Research Triangle Park, North Carolina 27711, (919) 

541-2343. 

SUPPLEMENTARY INFORMATION: 

I. INTRODUCTION 

The EPA today proposes to amend its regulations implementing 

the various Title I new source requirements governing physical or 

operational changes at electric utility generating units. 

Specifically, these proposed changes are being issued to clarify 

the coverage of the NSPS, PSD and nonattainment preconstruction 

review requirements of Title I of the Clean Air Act to projects 

undertaken at electric utility steam generating units.1 _-~ 

The EPA proposes to amend the definition of "major 

modification" in 40 CFR Parts 51 and 52 to set forth the 

conditions under which the addition, replacement or use at 

existing electric utility generating units 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) 

will or will not subject the source to preconstruction review. 

1 The proposed regulations define electric utility steam 

generating units as any steam electric generating unit that is 

constructed for the purpose of supplying more than one-third of 

its potential electric output capacity and more than 25 MW of 

electrical output to any utility power distribution system for 

sale. See, e.g. , proposed 40 CFR 51.165(.xx). 
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Specifically, EPA proposes in PSD and nonattainment areas to 

adopt a regulatory exclusion explicating its authority under the 

statutory definition of modification and confirming EPA's current 

practice that pollution control projects which "do not render the 

unit less environmentally beneficial" are not "physical or 

operational changes," and hence, are not modifications for the 

purposes of Parts C and D of Title I and are not "major 

modifications" for the purposes of EPA's regulations implementing 

those provisions. The EPA is today also proposing to amend its . 

PSD and nonattainment new source review regulations (40 CFR Parts 

51 and 52)2 as they apply to utilities to (1) clarify the NSR 

baseline for determining whether a proposed physical or 

operational change will subject a utility to the preconstruction 

review requirements of these provisions; (2) set forth an actual 

to future actual methodology for determining whether a physical 

or operational change is subject to NSR; (3) provide further 

clarification of the existing regulatory requirement that only 

those increases in emissions that actually result from the 

physical change or change in the method of operation can be 

considered in determining whether the proposed change subjects 

the utility to NSR requirements; and (4) implement sections 4 09 

and 415 of Title IV of the Clean Air Act Amendments of 1990 which 

2 For the purposes of this notice, references to "new 

source review" (or "NSR") refer to the preconstruction review 

requirements of both Part C (PSD) and Part D (nonattainment) of 

the Clean Air Act, unless otherwise indicated. 
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create special NSPS treatment for certain repowering projects and 

limited NSR exemptions for temporary and permanent CCT projects, 

and for certain "very clean" units. Finally, EPA is also 

proposing to amend its NSPS regulations (40 CFR Part 60) to allow 

a utility to use as its pre-change baseline its highest hourly 

emissions rate achievable during the 5 years prior to the 

proposed physical or operational change. To the extent the 

proposed amendments implement existing EPA policies, EPA will 

continue to administer its regulations in a manner consistent 

with these policies pending adoption of the regulations proposed 

today. 

Today's proposal addressing pollution control projects and 

other non-routine physical and operational changes at electric 

utility units is timely for several reasons. First, the 1990 

Clean Air Act amendments establish, in Title IV, a new control 

scheme for addressing the acid rain problem which focuses 

exclusively and immedia-tely on utility power plants. Title IV 

will force most electric utility steam generating units to 

undertake pollution control projects and provides full 

flexibility to achieve compliance without a bias towards or 

against any particular pollution control method. Second, the 

Agency believes its extensive experience with other non-routine 

physical and operational changes at such units and the unique 

characteristics of the electric utility industry (e.g., the 

general similarity of equipment within the category and the 
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extent of publicly available information) support a revision to 

the new source review applicability criteria for this source 

category. Further, while Congress did not make significant 

changes in the NSR and NSPS statutory language in 1990, the 

conference committee provided the following guidance to EPA in 

its Joint Explanatory Statement: 

"[T]he deletion of most provisions relating 

to the WEPCO decision is not intended to 

affect or prejudice in any way the issues or 

resolution of the WEPCO matter. At the same 

time, the conferees urge a quick resolution 

of the WEPCO matter by EPA as appropriate." 

Conference Comm., Joint Explanatory Statement of the Committee of 

the Conference to Accompany S. 1630, Rep. 101-952, 101st. Cong., 

2nd Sess. (1990) pp. 344-45. In passing Title IV, Congress did 

not suspend any requirements of title I. However Title I and 

Title IV are clearly intended to work in concert, not conflict, 

and today's ruling is intended to ensure that harmony. Portions 

of the preamble of today's proposal set forth EPA's present 

policies under its current regulations, and may be relied on as 

such pending final action on today's proposal. 

II. BACKGROUND 

A. The New Source Performance Standards, Prevention of 

Significant Deterioration and Nonattainment Programs of 

Title I 

Title I of the Clean Air Act has three programs specifically 

designed to ensure that no new air pollution — whether from new 

sources or from modifications to existing sources — can be 

emitted unless the source complies with new source requirements. 
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The 1970 Clean Air Act required EPA to promulgate 

technology-based new source performance standards applicable to 

the construction or modification of stationary sources that cause 

or contribute significantly to air pollution which may reasonably 

be anticipated to endanger public health or welfare. Clean Air 

Act ("CAA") § 111(b)(1)(A), 42 U.S.C. 7411(b)(1)(A). The NSPS 

provisions were "designed to prevent new air pollution problems" 

by regulating newly-constructed sources and changes occurring at 

existing sources that result in emissions increases. See 

National Asphalt Pavement Assoc, v. Train. 539 F.2d 775, 783 

(D.C. Cir. 1976); see also H.R. Rep. No. 1146, 91st Cong., 2d 

Sess. 3, reprinted in 1970 U.S. Code Cong. & Admin. News 5356, 

5358. Congress defined the term "modification" as "any physical 

change in, or change in the method of operation of, a stationary 

source which increases the amount of any air pollutant emitted by 

such source or which results in the emission of any air pollutant 

not previously emitted." See CAA § 111(a)(4), 42 U.S.C. 

7411(a)(4). 

In 1977, Congress adopted additional amendments to the Clean 

Air Act. These changes included preconstruction permitting 

requirements for major new and modified sources under two 

programs, prevention of significant deterioration (PSD) and 

nonattainment new source review (respectively, Parts C and D of 

the Clean Air Act). Congress intended these programs to apply 

generally where industrial changes might increase pollution in an 
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area. Alabama Power Co. v. Costle. 636 F.2d 323, 400 (D.C. Cir. 

1979). Congress incorporated in Parts C and D the same 

definition of the term "modification" set forth in the NSPS 

provisions. See CAA § 111(a)(4), 169(2)(C), and 171(4). 

The NSR program for PSD (CAA §§ 160-169) applies in 

attainment areas, i.e., those areas which have attained the 

national ambient air quality standards (NAAQS). To receive a PSD 

permit, a prospective major new source or major modification must 

(among other things) show that (1) it will not cause or 

contribute to a violation of the available air quality 

"increment" (designed to prevent ambient air quality from 

deteriorating by more than certain specified levels), (2) it will 

not cause or contribute to a violation of a NAAQS, and (3) it 

will use the "best available control technology (BACT)," which 

must be at least as stringent as any applicable NSPS or hazardous 

pollutant standard under section 112 of the Act. 

Part D of the 1977 Amendments applies to nonattainment 

areas, i.e., those areas which have not met the NAAQS under 

section 109. To receive a permit in such areas, major new and 

modified sources must (among other things) (1) obtain emissions 

offsets, thereby assuring that reasonable progress toward 
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attainment of the NAAQS will occur, and (2) comply with the 

"lowest achievable emission rate (LAER)." See CAA § 171-173.3 

B. The Two-Step Test for Modifications 

The modification provisions of the NSPS and NSR programs are 

based on the broad NSPS definition of "modification" in section 

111(a)(4) of the Act. That section contemplates a two-step test 

for determining whether activities at an existing facility 

constitute a modification subject to new source requirements. In 

the first step, which is largely the same for NSPS and NSR, the 

reviewing authority determines whether a physical or operational 

change will occur.4 If so, the reviewing authority proceeds in 

the second step to determine whether the physical or operational 

change will result in an emissions increase over baseline levels. 

In this second step, the applicable rules branch apart, 

reflecting the fundamental distinctions between the technologybased provisions of NSPS and the air quality-based provisions of 

NSR. 

The 1970 Clean Air Act also included a provision 

applicable to construction or modification of any stationary 

source. This provision is presently set forth in section 

110(a)(2)(C). Today's notice does not propose to change the 

scope of the regulations implementing this provision. See 4 0 CFR 

51.160-164. 

This is further described in section III.H below. 
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Briefly, the NSPS program examines maximum hourly emissions 

rates, expressed in kilograms per hour.5 Emissions increases 

for NSPS purposes are determined by changes in the hourly 

emissions rates at maximum physical capacity. On the other hand, 

the NSR regulations examine total emissions to the atmosphere. 

For applicability determination purposes, emissions increases 

under NSR are determined by changes in annual emissions as 

expressed in tons per year (tpy).6 

C. Step One: Physical or Operational Change 

The EPA has always recognized that the definition of 

physical or operational change in section 111(a)(4) could, 

standing alone, encompass the most mundane activities at an 

industrial facility (even the repair or replacement of a single 

leaky pipe, or a change in the way that pipe is utilized). 

However, EPA has always recognized that Congress obviously did 

An hourly emissions rate may be determined by a stack 

test or calculated from the product of the instantaneous 

emissions rate, i.e., the amount of pollution emitted by a 

source, after control, per unit of fuel combusted or material 

processed (such as pounds of sulfur dioxide emitted per ton of 

coal burned) times the production rate (such as tons of coal 

burned per hour). See section 60.14. 

6 Annual emissions may be calculated as the product of 

the hourly emissions rate times the utilization rate, expressed 

as hours of operation per year, or as the product of an emissions 

factor (e.g., from Compilation of Air Pollutant Emission Factors. 

AP-42, 4th Ed. and subsequent supplements) in units of mass 

emitted per unit of process throughput times the annual 

throughput. See 40 CFR 52.21(b)(21). 
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not intend to make every activity at a source subject to new 

source requirements. 

As a result, EPA has defined "modification" in the NSPS and 

NSR regulations to include common-sense exclusions from the 

"physical or operational change" component of the definition. 

For example, both sets of regulations contain similar exclusions 

for routine maintenance, repair, and replacement; for increases 

in the hours of operation or in the production rate; and for 

certain types of fuel switches. See e.g., 52.21(b)(2)(iii) and 

60.14(e). In addition, with respect to pollution control 

equipment, the NSPS regulations contain an exclusion for: 

The addition or use of any system or device 

whose primary function is the reduction of 

air pollutants, except when an emissions 

control system is removed or is replaced by a 

system which the Administrator determines to 

be less environmentally beneficial. 

40 CFR 60.14(e)(5). As will be discussed, in recent individual 

applicability determinations EPA has excluded pollution control 

projects from NSR following a similar "environmentally 

beneficial" test. 

D. Step Two: Emissions Increases for NSPS Applicability 

The EPA's NSPS regulations define the term "modification" as 

any "physical or operational change to an existing facility which 

results in an increase in the emission rate to the atmosphere of 

any pollutant to which a standard applies." See 4 0 CFR 60.2 and 

60.14. Under current NSPS regulations, emissions increases, for 

applicability purposes, are calculated by comparing the hourly 
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emission rate, at maximum physical capacity, before and after the 

physical or operational change. That is, to determine whether a 

change to an existing facility will increase the emissions rate, 

the existing NSPS regulations authorize the use of an "emissions 

factor analysis," or a materials balance, continuous monitoring, 

or manual emissions test to evaluate emissions before and after 

the change. 40 CFR 60.14(b)(2). 

Absent the exclusions from modifications specified at 40 CFR 

60.14(e), any increase in emissions to the atmosphere over the 

previous emissions rate will subject the unit to NSPS. See 40 

CFR 60.14(a) and (b). In addition, under the "reconstruction 

rules," physical or operational changes which would cost 50 

percent or more of the total cost of a comparable new facility ---

may be classified as reconstructions (see 40 CFR 60.15) and are 

subject to NSPS as a new source, even if there is no 

emissions increase. 

E. Step Two: Emissions Increases Under NSR Requirements 

1. Existing Regulations 

The EPA's regulations implementing the PSD and 

nonattainment programs require preconstruction review for sources 

undertaking a "major modification," i.e., a physical change or 

change in the method of operations "that would result in a 

significant net emissions increase of any pollutant subject to 

regulation under the Act." 40 CFR 52.21(b)(2)(i) and (3)(i); 
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52.24(f)(5).7 A "net emissions increase" is defined as the 

increase in "actual emissions" from the particular physical or 

operational change together with any other "contemporaneous" 

increases or decreases in actual emissions. 4 0 CFR 

52.21(b)(3)(i).8 

Applicability of the Act's new source review provisions must 

be determined in advance of construction and is pollutant 

specific. In cases involving existing sources, this requires a 

pollutant-by-pollutant projection of the emissions increases, if 

any, that will result from the physical or operational change. 

Specifically, to determine whether a proposed physical or 

The current PSD program is set forth in two sets of 

regulations. One of the regulations cited'(40 CFR 52.21) is part 

of the federal PSD permit program which applies as part of a 

Federal implementation plan for States that have not submitted a 

PSD program meeting the regulatory requirements of 40 CFR 51.166 

(standards for PSD provisions in State implementation plans). In 

most States where the federal requirements apply, EPA has 

delegated the authority to implement the PSD program back to the 

State. Roughly two-thirds of the States are implementing their 

own PSD program pursuant to an EPA-approved state implementation 

plan. Sections 52.21 and 51.166 have identical modification 

provisions. 

EPA's regulations for nonattainment areas are set forth at 

40 CFR § 51.165, 52.24 and in Part 51, Appendix S. These 

sections contain applicability provisions regarding modification 

that are largely identical to those in the PSD provisions. 

8 Roughly speaking, "contemporaneous" emissions increases 

or decreases are those which have occurred between the date five 

years preceding the proposed physical or operational change and 

the date that the increase from the change occurs. 4 0 CFR 

52.21(b)(3)(ii). Once a modification is determined to be major, 

the PSD requirements apply only to those specific pollutants for 

which there would be a significant net emissions increase. E.g., 

40 CFR 52.21(j)(3) (best available control technology); 40 CFR 

52.21(m)(l)(b) (air quality analysis). 
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operational change will result in an emissions increase, the 

source must first determine a baseline level of actual emissions. 

The regulations define actual emissions on a particular date as 

"the average rate, in tons per year, at which the unit actually 

emitted the pollutant during a 2-year period which precedes the 

particular date and which is representative of normal source 

operation." The Administrator "shall" allow use of a different 

time period "upon a determination that it is more representative 

of normal source operation." Id. The EPA has typically used the 

2 years immediately preceding the physical or operational change 

to establish the baseline. See 45 Fed. Reg. 52676, 52705, 52718 

(1980). However, it can allow the use of an earlier 2-year 

period that is more representative of normal source operations. 

For example, in WEPCO, EPA found the fourth and fifth years prior 

to the modification more representative of WEPCO's normal 

operations. . 

Because the applicability determination must be made in 

advance of construction, EPA's NSR regulations provide that when 

an emissions unit "has not begun normal operations," actual 

emissions equal the "potential to emit of the unit." 40 CFR 

52.21(b)(21)(iv). This approach is referred to as the actual to 

potential methodology. This regulatory provision may be overcome 

— and new source review will not apply — if the source owner 

agrees, in a federally enforceable instrument — not to increase 
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its actual emissions above baseline levels. See e.g.f 40 CFR 

52.21(b)(4). 

2. The WEPCO and Puerto Rican Cement Decisions 

As noted above, to calculate whether a physical or 

operational change "increases" emissions, EPA regulations require 

it to find an increase in actual emissions. 40 CFR 

52.21(b)(3)(i)(a). Where the emissions unit has not "begun 

normal operations," EPA regulations recognize that future actual 

emissions are difficult to predict and employ future "potential" 

emissions as a proxy. 40 CFR 52.21(b)(21)(iv). The linchpin 

under the current regulations for predicting future emissions 

after a modification is thus whether the unit has "begun normal 

operations." 

Two recent federal appellate court decisions have 

addressed EPA's interpretation of the phrase "begun normal 

operations." These decisions, Puerto Rican Cement Co., Inc. v. 

US EPA, 889 F.2d 292 (1st Cir. 1989) and Wisconsin Elec. Power 

Co. v. Reillv. 893 F.2d 901 (7th cir. 1990) ("WEPCO"). occasion a 

reexamination of EPA's interpretation of the phrase, and of the 

usefulness of the regulatory language itself. The meaning of the 

phrase is highly fact-dependent, and these decisions have created 

uncertainty regarding its application; thus, as described later 

in this notice, EPA today proposes to change its regulations for 

electric utility steam generating units to employ more useful 

criterion. 
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Both cases involved physical changes to existing 

emissions units, but changes of differing extent, nature and 

result. In Puerto Rican Cement, the owner of a cement plant9 

with several kilns sought to convert one "wet" kiln into a "dry" 

kiln, and to combine that kiln with another kiln. 889 F.2d at 

293. The court observed that the total production capacity of 

the renovated single kiln would exceed the combined production 

capacity of the previous two separate kilns by "about 35%." Id. 

It noted that the renovated single kiln would employ a different 

"cement-making process" that the original kiln from which it was 

"converted," id. And it said that the new kiln would be "more 

efficient [and] may lead the firm to decide to increase the level 

of-production." id. at 297 (emphasis in original). In reviewing 

EPA's interpretation of "begun normal operations," the court 

applied a highly deferential standard of review, since an 

agency's interpretation of its own regulatory language is 

typically given "'controlling weight unless it is plainly 

erroneous or inconsistent with the regulation.'" 889 F.2d at 

297, quoting Udall v. Tallman. 380 U.S. 1, 16-17 (1965) (citation 

omitted). The court concluded that on the facts of the case, 

EPA's interpretation that "normal operations" had not begun was 

not "arbitrary or irrational," id. at 298, and hence EPA's 

9 Puerto Rican Cement involved a cement plant, not an 

electric utility, but the court's legal analysis of the phrase 

"begun normal operations" in the current regulations is relevant 

to all facilities. 
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application of the actual-to-potential test to predict future 

emissions was permissible. 

In WEPCO. 893 F.2d 901, the Seventh Circuit was faced 

with a different kind of modification. There renovations were 

proposed for several older (35 to 50 year old) coal-fired 

electric utility boilers. The physical changes involved repair 

and replacement of turbine-generators, steam drums and other 

major components. The EPA contended, as it had in Puerto Rican 

Cement, that these changes went beyond "normal operations" and 

thus warranted use of future potential emissions as the test for 

an emissions increase over past actual emissions. Here the court 

disagreed with EPA's interpretation that "normal operations" had 

not begun. The court coined the phrase "like-kind replacement" 

to describe the type of renovation occurring at the WEPCo plant. 

Id. at 917. The court described a "like-kind replacement" as one 

that "does not 'change or alter' the design or nature of the 

facility. Rather, it merely allows the facility to operate again 

as it had before the specific equipment deteriorated." Id. at 

908. In determining whether such a "like-kind replacement" had 

"begun normal operations," id. at 917, the court considered 

whether a "realistic assessment of [the] impact [of the change] 

on ambient air quality levels is possible.'" J_d. at 917 (quoting 

Alabama Power Co. v. Costle. 636 F.2d 323, 379 (D.C. Cir. 1979). 

The court said that where the renovations were "like-kind 

replacements," EPA could not reasonably interpret its regulations 
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to say that such a unit was so different that it has not "begun 

normal operations." Thus, it concluded that the "actual-topotential" test could not be applied, under EPA's regulations, to 

units simply undergoing "like-kind replacements."10 

Neither of these decisions specified the threshold for 

when a unit has "begun normal operations." Based on these 

decisions, under its current regulations, EPA must consider the 

facts of each case and apply the actual-to-potential test only 

where the change is sufficiently significant to support a finding 

that "normal operations" have not "begun." At least for changes 

that are "like kind replacements," "normal operations" have 

begun, and the actual-to-potential test is impermissible. 

Because the "begun normal operations" criterion is 

highly fact-dependent and its application is inherently case-bycase, it may be an uncertain indicator of what emissions test 

will be applied in a given instance. However, EPA's extensive 

experience with electric utilities, and the generally similar 

nature of operations within this source category, provide EPA an 

adequate basis on which to predict future actual emissions from 

such units in most cases. Consequently, as explained below, EPA 

is today proposing to revise its regulations to apply the actualto-actual test on all physical or operational changes at electric 

10 On remand, EPA employed an actual-to-future actual 

test, comparing WEPCo's representative actual emissions for the 

baseline period to estimated future actual emissions based on all 

the available facts in the record. 
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utility steam generating units save those that are an addition of 

a new unit or constitute a replacement of an existing units.11 

Pending final adoption of this new rule, EPA will continue to 

apply an actual-to-actual test to units that undertake "like-kind 

replacements" and other units which are found to have "begun 

normal operations." 

F. The Clean Air Act Amendments of 1990 

1. New Source Review and the Acid Rain Provisions 

The Clean Air Act Amendments of 1990 made numerous changes 

in the nonattainment provisions of the Clean Air Act and added n 

new title to address the problem of acid rain. The amendments 

attack nonattainment problems with a broad array of new 

requirements all designed to bring all areas of the country into 

attainment with the national ambient air quality standards for 

all pollutants. These requirements include traffic reduction 

strategies, use of alternative clean fuels, increased offset 

requirements for stationary sources, and changes in the threshold 

size of stationary sources subject to new source review. A 

principal theme of the legislation is the establishment of 

categories of nonattainment areas based on the severity of the 

pollution problem. The more severe the area, the more controls 

Congress required be imposed. 

11 As an illustration, had this new test governed the 

facts in WEPCo or the facts in Puerto Rican Cement (where it an 

electric unity), EPA would have applied the actual-to-actual 

test. 
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The Amendments also establish, in Title IV, a new control 

scheme for addressing the acid rain problem. The exclusive focus 

of this program is on utility power plant emissions of sulfur 

dioxide and nitrogen oxides. The 1990 Amendments require sulfur 

dioxide emissions from utilities to be reduced by approximately 

10 million tons annually in two phases — the first to take 

effect in 1995, the second in 2000. A total of 111 specific 

plants are targeted in Phase I, and, will be required to reduce 

their S02 emissions to specified emissions limits. In Phase II, 

these plants, and almost all others, are subject to even lower 

S02 emissions limits. This reduction program is to be 

implemented through a new market-based system under which 

emissions allowances reflecting the required reduction in current 

emissions are allocated to existing utility plants. Plant 

owners, who are required to hold allowances equal to their actual 

emissions, are then free to trade these allowances. Thus, the 

emissions of individual units may vary from the initial 

allocation of allowances, but aggregate emissions are always held 

to the program's cverall target level. This program will provide 

powerful incentives to sources to undertake pollution control 

projects. 

Because of these requirements, many of the plants subject to 

Phase I controls must make compliance decisions within the next 

year in order to assure that the complicated control equipment 
P.24 

- 22 -

that may be necessary to meet Phase I standards is in place by 

the 1995 deadline. 

2. Repowering and CCT Projects 

In Title IV of the 1990 Amendments, which creates the acid 

rain program, Congress made changes in the applicability of new 

source requirements to changes involving repowering and CCT 

projects. 

Section 409 grants an extension of the acid rain controls 

deadline to sources that seek to comply with the acid rain 

reductions by repowering a unit with qualifying clean coal 

technology. Section 402(12) defines repowering as: 

[The] replacement of an existing coal-fired 

boiler with one of the following clean coal 

technologies:atmospheric or pressurized ~~ 

fluidized bed combustion, integrated 

gasification combined cycle, 

magnethohydrodynamics, direct and indirect 

coal-fired turbines, integrated gasification 

fuel cells, or as determined by the 

Administrator, in consultation with the 

Secretary of Energy, a derivative of one or 

more of these technologies, and any other 

technology capable of controlling multiple 

combustion emissions simultaneously with 

improved boiler or generation efficiency and 

with significantly greater waste reduction 

relative to the performance of technology in 

widespread commercial use as of the date of 

enactment of the Clean Air Act Amendments of 

1990. Notwithstanding the provisions of 

§409(a), for the purpose of this title, the 

term 'repowering' shall also include any oil 

and/or gas-fired unit which has been awarded 

clean coal technology demonstration funding 

as of January 1, 1991, by the Department of 

Energy. 

See CAA, §§ 402(12) and 409(a). 
P.25 

- 23 -

Congress provided that repowering projects that qualify for 

a Phase II compliance extension would also be exempt from NSPS 

requirements, so long as the repowering "does not increase actual 

hourly emissions for any pollutant regulated under the Act." See 

CAA, § 409(d). An operator can qualify for the 3-year extension 

of the Phase II emissions limitation by demonstrating (by 

December 31, 1997) to the permitting authority that one or more 

units will be repowered with a qualifying clean coal technology 

to meet the Title IV restrictions. The operator must provide, no 

later than January 1, 2 000, additional documentation of the 

repowering project including a preliminary design and engineering 

effort for the project and a binding contract for the majority of 

the equipment needed, as well as any additional information the 

reviewing authority requires. 

Today's proposal also implements an exemption from new 

source requirements for CCT demonstration projects created by 

Congress in section 415 of Title IV of the 1990 Amendments. In 

these provisions, CCT is defined as any technology not in 

widespread use on the date of enactment that achieves significant 

reductions in S02 or nitrogen oxides (N0x) emissions associated 

with burning coal in the generation of electricity, process 

steam, or industrial products. See § 415(a). A CCT 
P.26 

- 24 -

"demonstration project" is a project funded under DOE's CCT 

program or a similar project funded by EPA.12 

Repowering projects that are awarded funding from the 

Department of Energy (DOE) as permanent CCT demonstration 

projects (or similar projects funded by EPA) are exempt from NSPS 

and PSD requirements so long as potential emissions (see 

52.21(b)(4)) from the unit do not increase as a result of the 

project. Id. § 415(b). These funded projects may still be 

required to comply with the nonattainment NSR provisions of Title 

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. 

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 

12 Section 415(b)(1) defines a CCT project as a 

a project "using funds appropriated under the heading 'Department 

of Energy-Clean Coal Technology', up to a total amount of 

$2,500,000,000 for commercial demonstration of clean coal 

technology, or similar projects funded through appropriations for 

the EPA." 
P.27 

- 25 -

at least the 2 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 

Projects 

The EPA proposes to amend its PSD and nonattainment 

regulations as they pertain to utility pollution control projects 

by exercising its authority under the statutory definition of 

"modification" and confirming the Agency's current policy that 

such projects are not subject to NSR unless they render the unit 

less environmentally beneficial. Generally, pollution control 

projects at existing stationary 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 

considered a physical or operational change for purposes of the 

new source review.13 

13 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 4 0 CFR 

52.21(b)(2)(iii), 52.24(f)(5)(iii). 
P.28 

- 26 -

To address this concern, 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 project will not be treated 

as a physical or operational change unless the project renders 

the unit less environmentally beneficial. 

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

exclusions from the term physical or operational change is EPA's 

judgment that Congress did not intend that pollution control 

projects be considered the type of activity that should trigger 

NSR. The EPA is today issuing regulatory language to explicate 

and formalize its statutory authority to exclude pollution 

control projects under the NSR provisions. In 1977, when 

Congress enacted the NSR provisions of the Act, it provided that 

the term "modification" in NSR shall have the same meaning as the 

term "modification" under NSPS. See §§. 169(2)(c), 171(4). At 

the time, regulations promulgated under the NSPS provisions 

defining "modification," § 111, provided that the term 

"modification" does not include: 

The addition or use of any system or device 

whose primary function is the reduction of 

air pollutants, except when an emissions 

control system is removed or is replaced by a 
- 27 -

system which the Administrator determines to 

be less environmentally beneficial. 

40 CFR 60.14(e)(5). In 1978, EPA noted that "in adding section 

169(2)(c) to the Act, Congress indicated that it intended to 

conform the meaning of 'modification' to 'usage in other parts of 

the Act.' 123 Congr. Rec. H11955, 11957 (Nov. 1, 1977)." 43 

Fed. Reg. 26396 (June 19, 1978). Thus, just as EPA had the 

statutory authority to exclude pollution control projects by 

regulation from NSPS, the statutory authority exists for EPA to 

explicate by regulation an exclusion for pollution control 

projects from Parts C and D of Title I. 

As discussed in greater detail in a subsequent section, this 

exclusion under NSR reflects the existing regulatory exclusion 

for pollution control activities under NSPS regulations, and 

several recent case-specific nonapplicability determinations 

under the new source review programs. The NSPS regulatory 

exclusion contains the proviso that the replacement of a 

pollution control system or device cannot be less 

"environmentally beneficial" to qualify for the exclusion. See 

40 CFR 60.15(e)(5). With respect to new source review, today's 

proposal adopts a similar regulatory exclusion for pollution 

control projects in the PSD and nonattainment context. The major 

difference in the proposed NSR exclusion is that it would apply 

the "not less environmentally beneficial" test to the addition 

and use, as well as the replacement, of a pollution control 

system or device. This change reflects the distinct air quality 
P.30 

- 28 -

component of the PSD and nonattainment programs. By focusing on 

whether a pollution control project is a physical or operational 

change within the meaning of the new source review regulations, 

today's ruling avoids the 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. The EPA expects that most, if not all, 

pollution control projects will reduce net 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 and thus 

conclude that the project renders the unit less environmentally 

beneficial, and is therefore a physical or operational change 

that may be subject to NSR. 

For the purposes of this proposal, a pollution control 

project refers to a project undertaken at a utility unit for 

purposes of reducing emissions from such unit. These changes 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 S02 and NOx controls, 

electrostatic precipitators, and projects undertaken to 

accommodate switching to a less polluting fuel, including natural 
- 29 -

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

for the purpose of controlling S02 and NOx emissions. 

Likewise, any activity that is necessary to accommodate 

switching to a less polluting fuel is considered to be part of 

the pollution control project. In some instances, this may 

involve changes to the pollution generating equipment (e.g.. 

boiler), but only if the changes are necessary to maintain the 

normal operating capability of the unit at the time of the 

project, 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 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 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. The EPA has so limited this provision because, 

in contrast with a general lack of experience with other 
P.32 

- 30 -

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 that 

pollution control projects in the utility industry are generally 

environmentally beneficial. 

2. 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. The pollution control 

projects exclusion does not authorize any significant net 

increase in emissions that would have this proscribed impact. It 

is possible 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 

cause or contribute to the violation of a National Ambient Air 

Quality Standards (NAAQS), increment or visibility limitation. 

For this reason, under today's proposal, the reviewing authority 

may reguire a source to perform an air quality impact analysis 

(modeling) whenever it has reason to believe 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 
P.33 

- 31 -

contribute to a violation of any ambient standard, PSD increment 

or visibility violation, the pollution control exclusion does not 

apply. 

3. The EPA's Existing Policy Regarding Pollution 

Control Projects 

As noted above, generally pollution control projects at 

existing stationary sources are not major modifications subject 

to new source review because they do not usually result in an 

increase in actual emissions, and EPA believes that, in general, 

pollution control projects were not intended by Congress to be 

considered physical or operational changes for purposes of NSR. 

The EPA currently applies its PSD regulations in harmony 

with its NSPS regulations, which exclude most pollution control 

projects. See 40 CFR 60.14(e)(5). In 1977, Congress 

incorporated the NSPS definition of modification into the PSD and 

nonattainment statutes. CAA §§ 111(a)(4), 169(a)(c), 171(4). In 

addition, the legislative history reflects that, as a general 

matter, Congress intended to conform the meaning of 

"modification" for PSD purposes to the usage under the NSPS 

program. See 123 Cong. Rec. H11957 (November 1, 1977). The EPA 

reiterated this view in 1978. See 43 FR 26396, June 19, 1978. 

Subsequently, EPA interpreted its NSR regulations to incorporate 

the NSPS pollution control project exclusion.14 The EPA later 

14 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). 
P.34 

- 32 -

voiced concern about incorporating the precise NSPS pollution 

control language in the NSR context absent explication through 

notice-and-comment rulemaking largely because of the ambient air 

quality component of NSR that is absent from the NSPS program.15 

In recent years however, EPA has consistently excluded pollution 

control projects from NSR provided that the proposed project 

would be environmentally beneficial, taking into account ambient 

air quality.16 In light of the Title IV requirements and otherprovisions of the Clean Air Act Amendments of 1990-, EPA confirms 

that it will continue to consider the overall environmental 

consequences of pollution control projects for NSR applicability 

on an interim basis pending final action on the proposed 

regulatory exclusion for pollution control projects. 

B. Representative Actual Annual Emissions 

As described above, EPA proposed to revise its 

methodology for calculating emissions increases at electric 

utility steam generating sources. The EPA proposes to compare 

actual emissions before and after changes for all physical or 

operational changes at an existing electric utility steam 

15 See, Memorandum from Gerald A. Emison, Director, 

OAQPS, to Regional Division Directors (July 7, 1986). 

16 See, Letter, William G. Rosenberg Assistant 

Administrator, EPA, to Andrew Aitken, Vice President, New England 

Power Service Co., March 26, 1991; Letter, Rosenberg to Patrick 

M. McCarter, Senior Vice President, Public Service Co. of 

Colorado, July 23, 1990; Letters, David Kee, Director, Air and 

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

Commissioner, Indiana Dept. of Environmental Management, January 

30, 1990 and March 8., 1990. 
P.35 

- 33 -

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. Since 

there is no relevant operating history for wholly new units and 

replaced units, it is not possible to reasonably project postchange utilization for these units, and hence, their future level 

of "representative annual actual emissions." For other changes, 

past operating history, and other relevant information, provides 

a basis for reasonable projections. 

As proposed today, the "representative actual annual 

emissions" methodology requires the utility to compare its 

baseline emissions with its future actual emissions to determine 

if the proposed change will increase actual emissions. The EPA's 

existing regulations define baseline emissions as "the average 

rate, in tons per year, at which the unit actually emitted the 

pollutant during a 2-year period which precedes the particular 

date and which is representative of normal source operation." 

See, e.g., 40 CFR 52.21. The Administrator "shall" allow use of 

a different time period "upon a determination that it is more 

representative of normal source operation." J_d. Although not 

required by the regulations, EPA has historically used the 2 

years immediately preceding the proposed change to establish the 

baseline. (See 45 Fed. Reg. 52676, 52705, 52718 (1980).) 

However, in some cases it has allowed the use of earlier periods. 
P.36 

- 34 -

For example, in WEPCO, EPA found the fourth and fifth years prior 

to the modification more representative of WEPCO's normal 

operations since the source's capacity was reduced due to 

physical problems. The EPA proposes today to retain this 

regulatory language, but to adopt a new presumption regarding its 

implementation. 

Under today's action, the Administrator will presume that 

any 2 consecutive years within the 5 years prior to the proposed 

change is representative of normal source operations for a 

utility. This presumption is consistent with the 5-year period 

for "contemporaneous" emissions increases and decreases in 4 0 CFR 

52.21(b)(3)(i)(b).17 Source owners or operators desiring to use 

other than a 2-year period or a baseline period prior to the last 

5 years may seek the Administrator's specific determination that 

such period is more representative of normal operations.18 

17 This presumption does not apply to past modifications 

at an emissions unit for the purpose of determining 

contemporaneous emission changes at a source and cannot be used 

to extend the five year period specified in that provision. See 

40 CFR 52.21(b)(3)(1)(b). 

18 The level of baseline emissions selected must be 

consistent with current assumptions regarding the source's 

emissions that are used under the state implementation plans 

(SIP) for planning or permitting purposes. Thus, the source may 

not select a level of baseline emissions higher than that used by 

the permitting authority in issuing a PSD or other construction 

permit to a source in the area, if such higher level would result 

in a NAAQS or increment violation, or violate a visibility 

limitation. 
- 35 -

The future actual projection is the product of: (l) the 

hourly emissions rate, which is based on the unit's physical and 

operational capabilities following the change and federallyenforceable operational restrictions that would affect the hourly 

emissions rate following this change; and (2) projected capacity 

utilization, which is based on (a) the unit's historical annual 

utilization, and (b) all available information regarding the 

unit's likely post-change capacity utilization.19 The 

projection of post-change capacity utilization for applicability 

purposes should be based on a projection of utilization for a 

period after the physical or operational change. Specifically, 

EPA today proposes to allow sources to base the projection of 

utilization on the 2 years after the change, or a different 

consecutive 2-year period within the 10 years after the change, 

where the Administrator determines that such period is more 

representative of normal source operations. 

C. The Causation Requirement 

The NSR regulatory provisions require that the physical or 

operational change "result in" an increase in actual emissions in 

order to consider that change to be a modification. See e.g. 40 

CFR 52.21(2)(i). In other words, NSR will not apply unless EPA 

19 In projecting future utilization and emissions 

factors, the permitting authority may consider the company's 

historical operational data, its own representations, filings 

with Federal, State or local regulatory authorities, and 

compliance plans developed under Title IV of the 1990 Amendments. 
P.38 

- 36 -

finds that there is a causal link between the proposed change and 

any post-change increase in emissions. The EPA today proposes to 

amend its rules to clarify this provision in the context of 

modifications at electric utility steam generating units. 

Under these proposed regulations, any emissions increase 

attributable to a physical or operational change, such as a 

physical or operational change that significantly alters the 

efficiency of the plant, (see, Puerto Rican Cement. 889 F.2d at 

297-8), must continue to be included in the post-change emissions 

calculation. Today's proposal makes clear that where increased 

operations are in response to independent factors, such as 

system-wide demand growth, which would have occurred and affected 

the unit's operations even in the absence of the physical or 

operational change, such increases do not result from the change 

and shall be excluded from the projection of future actual 

emissions. Thus, in assessing whether the proposed change will 

result in an increase in actual emissions, utilities need not 

include in their projection of post-change utilization that 

portion of the increased rate of utilization, if any, due to 

factors unrelated to the physical or operational change, such as 

an increase in projected capacity utilization due to the rate of 

electricity demand growth for the utility system (of which that 

source is a member) as a whole. 

Under this proposal, during a representative baseline period 

(see supra), the plant must have been able to accommodate the 
P.39 

- 37 -

projected demand growth physically and legally even absent the 

particular change. Increased operations (and resultant increases 

in actual emissions) that could not physically and legally be 

accommodated but for the proposed physical or operational change 

should be considered to result from the change. 

D. Repowering 

As previously mentioned, Title IV of the 1990 Amendments 

grants special treatment to utilities that seek to comply with 

the mandated acid rain reductions by repowering a unit with 

qualifying clean coal technology. 1990 Amendments §§ 402(12), 

409(a). Specifically, repowering projects that qualify for a 

Phase II compliance extension will also be exempt from NSPS 

requirements, so long as the repowering "does not increase actual 

hourly emissions for any pollutant regulated under the Act." 

§ 409(d). The EPA interprets the requirement that the repowering 

not lead to an increase in "actual hourly emissions" as an 

expression of Congressional intent that with respect to 

repowering projects, EPA should use the same general approach to 

determining applicability as it has for other physical or 

operational changes, discussed above. Accordingly, EPA today 

proposes rules that provide that a repowering project which 

results in an increase over baseline in a unit's postmodification hourly emissions will not be eligible for this 

limited NSPS exemption. 
P.40 

- 38 -

The proposed NSPS exemption applies to repowering of 

existing units at existing sources, so long as the project 

qualifies for the Phase II extension and satisfies the "actual 

hourly emissions" increase test. Because of this provision, the 

reconstruction limitations specified in 40 CFR 60.15 are not 

applicable to qualifying repowering projects. However, no 

special treatment can be afforded to a new unit which is located 

at a different site than the existing unit it replaces. See CAA 

§ 409(d). 

Pursuant to section 409(e), EPA will provide expedited NSR 

processing for repowering projects and will encourage State 

permitting authorities to do the same. 

E. Clean Coal Technology Demonstration Projects 

Today's notice also proposes rules implementing the new CCT 

exemption created by the 1990 Amendments. For the purposes of 

this proposal, temporary CCT demonstration projects are defined 

as those CCT demonstration projects lasting 5 years or less. 

Title IV gives these projects an exemption from NSPS, PSD and 

nonattainment requirements. Id., § 415(b)(2). However, the 

facility would still be subject to any applicable SIP and must 

comply with any other requirements necessary to attain and 

maintain NAAQS. This ruling proposes to implement this provision 

and clarifies that EPA considers the 5 year period as starting on 

the date of startup (as defined in 40 CFR 60.2). A temporary, 

demonstration project may be converted to a permanent status at 
- 39 -

any time, provided it meets all the requirements that apply to a 

permanent CCT project criteria at the time of conversion. 

Further, EPA proposes that at the end of a temporary 

project, the facility must be returned to pre-demonstration 

conditions and hourly emission rates (or lower). The return of 

the facility to its pre-demonstration physical and operational 

condition would not result in the loss of the actual emissions 

margin between pre-demonstration actual emissions rate and SIPallowable emissions rates for that facility. Rather, the 

facility would be treated as if the temporary demonstration 

project had never occurred.20 

This proposal does not extend to emissions increases that 

are unrelated to the conduct of temporary demonstration projects. 

The EPA considers emissions increases (above the predemonstration levels) that are attributable to physical or 

operational changes, other than those necessary to restore that 

unit to its pre-demonstration condition, to be beyond the scope 

of the Congressional exemption. 

20 This would be the case even if there were small 

differences in the post-demonstration physical and operational 

conditions due to a technical inability to restore the unit to 

its precise pre-demonstration condition, or due to normal 

variability in the coal used. Thus, EPA would not seek to apply 

NSPS or NSR because of a post-demonstration emissions increase 

attributable solely to an increase in the hours of operation or 

production rate of the unit (subject to the NSPS limitation that 

the production rate increase must be accomplished without a 

capital expenditure). 
P.42 

- 40 -

Today's action also proposes to implement an exemption from 

NSPS and PSD requirements for repowering projects which are 

awarded funding' from the DOE as permanent CCT demonstration 

projects (or similar projects funded by EPA) so long as potential 

emissions (see 52.21(b)(4)) from the unit do not increase as a 

result of the project. § 415(b)(3). However, repowering projects 

that qualify as pollution control projects will be treated as . 

other pollution control projects for the purposes of the 

nonattainment provisions of Title I of the Act. 

Finally, today's proposal would implement the statutory 

exemptions in section 415(c). In that section, 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 2 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. This exemption appears 

to have been narrowly tailored and is not expected to have 

widespread applicability. 

Because these proposed rules merely implement straightforward statutory exemptions that were immediately effective upon 

passage of the 1990 Amendments, EPA intends, as a matter of 

statutory interpretation, to follow the policies set forth in 

today's proposal pending final action. 
- 41 -

F. Calculation of NSPS Baseline 

As discussed in section II of this notice, "any physical or 

operational change to an existing facility which results in an 

increase in the emission rate to the atmosphere of any pollutant 

to which a standard applies" is a modification for NSPS 

applicability purposes See 40 CFR § 60.14(a). The NSPS 

regulations implementing this general definition focus on 

increases in hourly emissions, expressed in kilograms of 

pollutant discharged per hour. To determine if an increase in 

hourly emissions has occurred at a unit, a pre-change baseline 

must be established. Under current regulations, 

the emissions rate before and after a physical or operational 

change is evaluated at each unit by comparing the current hourly 

potential emissions at maximum operating capacity to hourly 

emissions at maximum capacity after the change. In this 

calculation, the reviewing authority disregards the unit's 

maximum design capacity.21 The original design capacity of a 

unit, to the extent it differs from actual maximum capacity at 

the time that the baseline is established due to physical 

deterioration of the facility, is immaterial to this calculation. 

21 See 39 Fed. Reg. 36,948 col. 1 (proposed rule). In 

WEPCO, the utility contended that baseline capacity for the 

purpose of determining whether an increase in emission rate 

occurs for purposes of an NSPS modification is the original 

design capacity of the facility. However, the court rejected 

WEPCO's argument that original design capacity or past 

"representative" capacity, no longer achievable at the plant, 

had to be used for the baseline emissions rate. 
P.44 

- 42 -

Today EPA is proposing that, for an existing electric 

utility steam generating unit, the pre-change baseline for NSPS 

applicability purposes shall be calculated using the highest 

hourly emissions rate achievable at any time during the 5 years 

prior to the change. This proposal retains the key concept in 

existing regulations that the baseline be determined during a 

period that is roughly contemporaneous with the proposed change 

at the affected facility. The EPA believes that this proposed 

revision, while modest, is still necessary to avoid the current 

regulation's undue emphasis on the physical condition of the 

affected facility immediately prior to the change. Today's more 

flexible provision enables units to establish a baseline that is 

representative of its physical and operational capacity in recent 

years, while still precluding the use of a baseline tied to 

original design capacity, which as noted above may bear no 

relationship to the facility's capacity in recent years. 

Without this revision, the NSPS regulations may unduly 

burden utilities undertaking physical or operational changes in 

conjunction with the acid rain program. For instance, if a unit 

has broken down and is in need of repairs, the utility's baseline 

will be artificially low. The proposed change will allow 

utilities to demonstrate that an earlier, higher capacity was 

more representative of the unit's maximum hourly emissions rate. 
- 43 -

G. Utility BACT Presumption for NOx 

In today's notice, EPA proposes to adopt a presumption that, 

in the case of PSD permits issued by EPA under 4 0 CFR 52.21, best 

available control technology (BACT) for emissions of nitrogen 

oxides from existing coal-fired electric utility steam generating 

units undergoing a modification i: the technology required under 

section 407 of the Clean Air Act. In general, this will call for 

the use of combustion modification and/or low-NOx burners or 

similar, cost-effective technologies by those utilities required 

to obtain PSD permits for NOx emissions following final action on 

today's proposal. 

In brief, section 407 requires most utility units subject to 

phase I and phase II to meet NOx emission limitations on the.same 

date as the phase I or phase II S02 emission limitations become 

effective. The Administrator must establish annual emission 

limitations (based on rates listed in the section) for 

tangentially-fixed boilers and dry bottom wall-fired boilers 

within 18 months of enactment. These limitations must be 

achievable with low-NOx burner t-chnology. CAA § 407(b)(1). The 

Administrator must promulgate annual emission limitations for all 

other boilers by January 1, 1997, based on a "best system of 

continuous emission reduction . . . which is comparable to the 

cost of" low-NOx burners. By the same date, the Administrator 

may make the rates for boiler types identified in section 
P.46 

- 44 -

407(b)(1) more stringent if more effective low-NOx burner 

technology is available. CAA § 407(b)(2). 

Low-NOx burners are commercially available and can be 

retrofitted on many boiler types, providing a high degree of 

emissions reduction at relatively low costs. Depending on boiler 

type, low-NOx burners can reduce emissions of NOx by 

approximately 20 to 60 percent. Again depending on boiler type 

and other factors, the cost of replacing conventional burners 

with these controls is in the range of $8.00 to $16.00 per 

kilowatt. 

Other NOx control technologies are being developed for 

retrofitted use on at least some coal-fired electric utility 

units, and thus can provide a much greater degree of emissions 

reductions. These include selective noncatalytic reduction (SNCR 

or "thermal de-NOx") and selective catalytic reduction (SCR). 

(In addition, DOE has funded two new technologies under its CCT 

demonstration program which are designed for the simultaneous 

removal of S02, NOx and particulate matter that may become 

commercially "available" in the future.)22 However, SNR and 

SNCR are not in use in this country as retrofit technologies for 

coal-fired boilers, and the DOE sponsored projects have not yet 

been demonstrated. Current estimates of control costs for these 

22 One technology — low NOx/SOx Burner Retrofit — is 

designed specifically for cyclone boilers which cannot be 

retrofit with low NOx burners while the other — the Advanced 

Slagging Combustor — is applicable to a number of boiler types 
- 45 -

technologies are much higher than for low-NOx burners, especially 

when considered in the context of retrofitting existing units. 

The EPA has in the past issued guidance documents 

effectively creating presumptions that certain technologies 

constituted BACT for certain source categories. See Memorandum, 

Operation Guidance on Control Technology for New and Modified 

Municipal Waste Combustors, from Gerald A. Emison, Director, 

Office of Air Quality Planning and Standards, EPA, June 26, 1987, 

p. 5. The EPA believes it is appropriate to p..- jse to do so 

here as well in the case of low-NOx burners for modified coalfired utility boilers in light of the strong congressional policy 

judgment favoring use of that technology for acid rain control 

reflected in section 407. 

Section 169(3) of the Act, 42 U.S.C. 7479(3) defines BACT 

as: 

an emissions limitation based on the maximum 

degree of reduction of each pollutant subject 

to regulation under the Clean Air Act emitted 

from or which results from any major emitting 

facility, which the permitting authority, on 

a case-by-case basis, taking into account 

energy, environmental, and economic impacts 

and other costs, determines is achievable for 

such facility through application of 

production processes and available methods, 

systems, and techniques, including fuel 

cleaning, clean fuels, or treatment or 

innovative fuel combustion techniques for 

control of each such pollutant. In no event 

shall application of "best available control 

technology" result in emissions of any 

pollutants which will exceed the emissions 

allowed by an applicable standard established 

pursuant to section 7411 or 7412 of this 

title. Emissions from any source utilizing 
P.48 

- 46 -

clean fuels, or any other means, to comply 

with this paragraph shall not be allowed to 

increase above levels that would have been 

required under this paragraph as it existed 

prior to enactment of the Clean Air Act 

Amendments of 1990. 

The BACT provision reflects congressional intent both to 

grant permitting authorities broad discretion to weigh the 

statutory factors as they see fit in reaching a final substantive 

determination on BACT and to create a procedural methodology that 

would provide a mechanism for stimulating the widespread use of 

effective pollution control technologies.23 

The EPA believes that today's proposed presumption is 

consistent with BACT requirements because it does not purport to 

relieve the permitting authority of the obligation to consider a 

representative set of available technologies and to weigh the 

statutory factors in reaching BACT determinations. Rather, it 

reflects an exercise of policy judgment by EPA where it is the 

permitting authority that in most cases a BACT analysis of 

currently demonstrated technologies for retrofitting existing 

utility boilers would lead to the selection of low NOx burners 

and/or combustion modifications identified in section 407(b)(1). 

Although EPA has authority under the present regulations to 

create this presumption regarding BACT for NOx, EPA is soliciting 

comment prior to adopting such a presumption in order to obtain 

23 See S. Rep. No. 95-217, 95th Cong., 1st. Sess. 31 

(1977); Statement of Senator Muskie, 12 3 Cong. Rec. 59171 

(June 8, 1977). 
- 47 -

the views of the public on the policy conclusions discussed 

above. 

This proposed presumption would not apply in States with PSD 

programs that have been incorporated into state implementation 

plans under regulations promulgated at 40 CFR 51.166. However, 

such States are encouraged to adopt this presumption as a matter 

of state policy. 

H. Applicability Determinations 

In most instances, source owners or operators are able to 

readily ascertain whether new source review requirements apply to 

them. Consequently, in administering these requirements, EPA 

does not require sources to obtain a formal applicability 

determination before proceeding with construction. In keeping 

with that practice, EPA will not require utilities to seek 

applicability determinations under either the revised regulations 

proposed today or the interpretations of existing regulations 

contained in this preamble. Utilities in most cases can readily 

ascertain how this notice will affect them. The EPA anticipates, 

however, that questions will arise regarding certain aspects of 

this proposal. Because some instances involve discrete 

judgments, utilities may wish to obtain determinations of 

applicability. The EPA will provide such determinations upon 

request. Such requests should be submitted together with 

appropriate documentation to the appropriate permitting 

authority. 
P.50 

- 48 -

IV. ADMINISTRATIVE REQUIREMENTS 

A. Docket 

A docket has been established for this action under section 

307(d)(1)(I) and (N) of the Clean Air Act, 42 U.S.C. 

7607(d)(1)(I) and (N). The docket is an organized and complete 

file of all information considered in the development of this 

ruling. The docket is intended to allow the public to identify 

and locate documents related to this ruling. The docket number 

for this ruling is A-90-06. 

B. Paperwork Reduction Act 

No additional public reporting burden will result from this 

ruling. All information collection requirements of the Federal 

NSR and NSPS regulations have been approved by the Office of 

Management and Budget (OMB) under the provisions of the Paperwork 

Reduction Act, 44 U.S.C. 3501, et. seq., and have been assigned 

OMB control numbers 2060-0003 for NSR, and 2060-0023, 2060-0026 

and 2060-0072 for NSPS. The effect of this rule would be a 

reduction in paperwork related to complying with NSR and NSPS 

requirements, since this ruling provides additional clarification 

as to modifications that may be excluded from these reguirements. 

C. OMB Review 

Under Executive Order 12291 (E.O. 12291), EPA must judge 

whether a rule is "major" and therefore subject to the 

requirement of a regulatory impact analysis (RIA). This ruling 

is a major rule. However, EPA has not prepared an RIA because it 
P.51 

- 49 -

will not result in any signification adverse environmental 

effects and will reduce the economic costs of meeting the 

requirements of the CAA. This ruling was submitted to the OMB 

for review as required by E.O. 12291. Any written comments from 

OMB to EPA and any EPA response to those comments are included in 

Docket A-90-06. 

D. Effective Date 

Section 4(d) of the Administrative Procedures Act (APA), 5 

U.S.C. 553(d), requires a 30-day waiting period before making a 

substantive rule effective. Since the regulatory revisions being 

proposed today are considered substantive, they are subject to 

the notice-and-comment requirements of the APA and will become 

effective only after public comments have been received and 

considered, and final action has been taken. The portions of 

this notice that merely confirm EPA policy are effective 

immediately. 

E. Regulatory Flexibility Act 

This action is not subject to the certification provisions 

of section 605(b) of the Regulatory Flexibility Act (RFA) because 

this rule will result in a reduction of administrative costs and 

no increase in control costs, therefore having no significant 

impact on industry. 
P.52 

- 50 -

List of Subjects 

40 CFR Part 51 

Administrative procedure and practices, intergovernmental 

relations, air pollution control, NSR, CCT demonstrations, sulfur 

oxides, nitrogen dioxide, particulate matter, carbon monoxide, 

hydrocarbons, lead. 

40 CFR Part 52 

Air pollution control, NSR, CCT demonstrations, sulfur oxides, 

particulate matter, nitrogen dioxide, carbon monoxide, 

hydrocarbons, lead. 

40 CFR Part 60 

Air pollution control, NSPS, CCT demonstrations, sulfur 

oxides, particulate matter, nitrogen dioxide, carbon monoxide, 

hydrocarbons, lead. 

Dated: June 3, 1991 

William K. Reilly, 

Administrator 
P.53 

For the reasons set forth in the preamble, Part 51 of Chapter I 

of Title 40 of the code of Federal Regulations is proposed to be 

amended as follows: 

Part 51 - REQUIREMENTS FOR PREPARATION, ADOPTION, AND SUBMITTAL 

OF IMPLEMENTATION PLANS. 

1. The authority citation for Part 51 is amended to read 

as follows: 

(To be added) 

2. Section 51.165 is proposed to be amended to read as 

follows: 

51.165 Permit requirements. 

(a) * * * 

(1) * * * 

(v) * * * 

(C) A physical change or a change in the method of 

operation shall not include: 

**** * 

(8) the addition, replacement or use of a 

pollution control project at an existing electric 

utility steam generating unit, unless the 

reviewing authority determines that such addition, 

replacement, or use renders the unit less 

environmentally beneficial, and except: 

(i) when the reviewing authority has reason to 

believe that the pollution control project would 

result in a significant net increase in 

representative actual annual emissions of any 

criteria pollutant over levels used for that 

source in the most recent air quality impact 

analysis in the area conducted for the purpose of 

Title I, if any, and 

(ii) the reviewing authority determines that the 

increase will cause or contribute to a violation 

of any ambient standard, PSD increment, or 

visibility limitation. 

(9) The installation, operation, cessation, or removal 

of a temporary clean coal technology demonstration 

project, provided that the project complies with: 

(i) the State implementation plan for the State in 

which the project is located, and 
P.54 

- 2 -

(ii) other requirements necessary to attain and 

maintain the national ambient air quality standards 

during the project and after it is terminated. 

(10) The reactivation of a very clean coalfired electric utility steam generating unit. 

(xii) * * * 

(D) For any emissions unit (other than an electric 

utility steam generating unit specified in paragraph 

(E) of this subsection) that has not begun normal 

operations on a particular date, actual emissions shall 

equal the potential to emit of the unit on that date. 

(E) For an electric utility steam generating unit 

(other than a new unit or the replacement of an 

existing unit) actual emissions of the unit following 

the physical or operational change shall equal the 

representative actual annual emissions of the unit. 

(xx) "Electric utility steam generating unit" means any 

steam electric generating unit that is constructed for the 

purpose of supplying more than one-third of its potential 

electric output capacity and more than 25 MW electrical output to 

any utility power distribution system for sale. Any steam 

supplied to a steam distribution system for the purpose of 

providing steam to a steam-electric generator that would produce 

electrical energy for sale is also considered in determining the 

electrical energy output capacity of the affected facility. 

(xxi) "Representative actual annual emissions" means the 

average rate, in tons per year, at which the source is projected 

to emit a pollutant for the two-year period after a physical 

change or change in the method of operation of a unit, (or a 

different consecutive two-year period within 10 years after that 

change, where the permitting authority determines that such 

period is more representative of normal source operations), 

considering the effect any such change will have on increasing or 

decreasing the hourly emissions rate and on projected capacity 

utilization. In projecting future emissions the permitting 

authority shall: 

(A) consider all relevant information, including but 

not limited to, historical operational data, the 

company's own representations, filings with the State 

or Federal regulatory authorities, and compliance plans 

under Title IV of the Clean Air Act; and 
P.55 

- 3 -

(B) exclude, in calculating any increase in emissions 

that results from the particular physical change or 

change in the method of operation at an electric 

utility steam generating unit, that portion of the 

unit's emissions following the change that is 

attributable to an increase in projected capacity 

utilization at the unit that is unrelated to the 

particular change, including any increased utilization 

due to the rate of electricity demand growth for the 

utility system as a whole. 

(xxii) "Temporary clean coal technology demonstration 

project" means a clean coal technology demonstration project that 

is operated for a period of five years or less, and which 

complies with the State implementation plan for the State in 

which the project is located and other requirements necessary to 

attain and maintain the national ambient air quality standards 

during the project and after it is terminated. 

(xxiii) "Clean coal technology" means any technology, 

including technologies applied at the precombustion, combustion, 

or post combustion stage, at a new or existing facility which 

will achieve significant reductions in air emissions of sulfur 

dioxide or oxides of nitrogen associated with the utilization of 

coal in the generation of electricity, or process steam which was 

not in widespread use as of November 15, 1990. 

(xxiv) "Clean coal technology demonstration project" means 

a project using funds (1) appropriated under the heading 

•Department of Energy-Clean Coal Technology,' up to a total 

amount of $2,500,000,000 for commercial demonstration of clean 

coal technology, or (2) similar projects funded through 

appropriations for the Environmental Protection Agency. The 

Federal contribution for a qualifying project ^shall be at least 

20 percent of the total cost of the demonstration project. 

(xxv) "Reactivation of a very clean coal-fired electric 

utility steam generating unit" means any physical change or 

change in the method of operation associated with the 

commencement of commercial operations by a coal-fired utility 

unit after a period of discontinued operation where the unit: 

(i) has not been in operation for the two-year period 

prior to the enactment of the Clean Air Act Amendments 

of 1990, and the emissions from such unit continue to 

be carried in the permitting authority's emissions 

inventory at the time of enactment; 

(ii) was equipped prior to shut-down with a continuous 

system of emissions control that achieves a removal 
P.56 

_ 4 _ 

efficiency for sulfur dioxide of no less than 85 

percent and a removal efficiency for particulates of no 

less than 98 percent; 

(iii) is equipped with low-NOx burners prior to the 

time of commencement of operations following 

reactivation; and 

(iv) is otherwise in compliance with the requirements 

of the Clean Air Act. 

(xxvi)"Pollution control project" means any physical change 

or change in the method of operation, at an existing electric 

utility steam generating unit for purposes of reducing emissions 

from such unit. Such changes are limited to: 

(i) the installation of conventional or innovative pollution 

control technology, including but not limited to advanced 

flue gas desulfurization, sorbent injection for sulfur 

dioxide and nitrogen oxides controls and electrostatic 

precipitators; 

(ii) a physical change, or change in the method of 

operation, to accommodate switching to a fuel which is less 

polluting than the fuel in use prior to the change 

including, but not limited to natural gas or coal reburning, co-firing of natural gas and other fuels for the 

purpose of controlling emissions; 

(iii) a permanent clean coal technology demonstration 

project conducted under Title II, section 101(d) of the 

Further Continuing Appropriations Act of 1985 (section 

5903(d) of title 42 of the United States Code), or 

subsequent appropriations, up to a total amount of 

$2,500,000,000 for commercial demonstration of clean coal 

technology, or similar projects funded through 

appropriations for the Environmental Protection Agency; or 

(iv) a permanent clean coal technology demonstration project 

that constitutes a repowering project. 
P.57 

- 5 -

3. Section 51.166 is proposed to be amended to read as 

follows: 

51.166 Prevention of significant deterioration of air 

quality. 

**** * 

(b) * * * 

(2) * * * 

(iii) A physical change or change in the method of 

operation shall not include: 

* * * * 

(h) the addition, replacement or use of a 

pollution control project at an existing 

electric utility steam generating unit, 

unless the reviewing authority determines 

that such addition, replacement, or use 

renders the unit less environmentally 

beneficial and except: 

(a) when the reviewing authority has reason 

to believe pollution control project would 

result in a significant net increase in 

representative actual annual emissions of any 

criteria pollutant over levels used for that 

source in the most recent air quality impact 

analysis in the area conducted for the 

purpose of Title I, if any, and 

(b) the reviewing authority determines that the 

increase will cause or contribute to a violation 

of any ambient standard, PSD increment, or 

visibility limitation. 

(i) any physical change or change in the method of 

operation at an existing electric utility generating 

unit (other than the addition of a new unit or the 

replacement of an existing unit) that would not result 

in a significant net increase in representative actual 

annual emissions of a regulated pollutant at the unit. 

(j) The installation, operation, cessation, or removal 

of a temporary clean coal technology demonstration 

project, provided that the project complies with: 

(i) the State implementation plan for the State 

in which the project is located; and 

(ii) other requirements necessary to attain and 

maintain the national ambient air quality 
P.58 

- 6 -

standards during the project and after it is 

terminated. 

(k) The installation or operation of a 

permanent clean coal technology demonstration 

project that constitutes repowering, provided 

that the project does not result in an 

increase in the potential to emit of any 

regulated pollutant emitted by the unit. 

This exemption shall apply on a pollutant-bypollutant basis. 

(1) The reactivation of a very clean coalfired electric utility steam generating unit. 

(21) * * * 

(iv) For any emissions unit (other than an electric 

utility steam generating unit specified in paragraph 

(v) of this subsection) that has not begun normal 

operations on a particular date, actual emissions shall 

equal the potential to emit of the unit on that date. 

(v) For an electric utility steam generating unit 

(other than a new unit or the replacement of an 

existing unit) actual emissions of the unit following 

the physical or operational change shall equal the 

representative actual annual emissions of the unit 

following the physical or operational change. 

(30) "Electric utility steam generating unit" means any steam 

electric generating unit that is constructed for the purpose 

of supplying more than one-third of its potential electric 

output capacity and more than 25 MW electrical output to any 

utility power distribution system for sale. Any steam 

supplied to a steam distribution system for the purpose of 

providing steam to a steam-electric generator that would 

produce electrical energy for sale is also considered in 

determining the electrical energy output capacity of the 

affected facility. 

(31) "Pollution control project" means any physical change or 

change in the method of operation at an existing electric 

utility steam generating unit for purposes of reducing 

emissions from such unit. Such changes are limited to: 

(i) the installation of conventional or innovative 

pollution control technology, including but not limited 
P.59 

"1 

- 7 -

to advanced flue gas desulfurization, sorbent injection 

for sulfur dioxide and nitrogen oxides controls and 

electrostatic precipitators; 

(ii) a physical change, or change in the method of 

operation, to accommodate switching to a fuel which is 

less polluting than the fuel in use prior to the 

change, including but not limited to natural gas or 

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

fuels for the purpose of controlling emissions; 

(iii) a permanent clean coal technology demonstration 

project conducted under Title II, section 101(d) of the 

Further Continuing Appropriations Act of 1985 (section 

5903(d) of title 42 of the United States Code), or 

subsequent appropriations, up to a total amount of 

$2,500,000,000 for commercial demonstration of clean 

coal technology, or similar projects funded through 

appropriations for the Environmental Protection Agency, 

or 

(iv) a permanent clean coal technology demonstration 

project that constitutes a repowering project 

(32) "Representative actual annual emissions" means the 

average rate, in tons per year, at which the source is 

projected to emit a pollutant for the two-year period 

after a physical change or change in the method of 

operation of a unit, (or a different consecutive twoyear period within 10 years after that change, where 

the reviewing authority determines that such period is 

more representative of normal source operations), 

considering the effect any such change will have on 

increasing or decreasing the hourly emissions rate and 

on projected capacity utilization. In projecting 

future emissions the reviewing authority shall: 

(A) consider all relevant information, including but 

not limited to, historical operational data, the 

company's own representations, filings with the State 

or Federal regulatory authorities, and compliance plans 

under Title IV of the Clean Air Act; and 

(B) exclude, in calculating any increase in emissions 

that results from the particular physical change or 

change in the method of operation at an electric 

utility steam generating unit, that portion of the 

unit's emissions following the change that is 

attributable to an increase in projected capacity 

utilization at the unit that is unrelated to the 
P.60 

- 8 -

particular change, including any increased utilization 

due to the rate of electricity demand growth for the 

utility system as a whole. 

(33) "Clean coal technology" means any technology, including 

technologies applied at the precoinbustion, combustion, or 

post combustion stage, at a new or existing facility which 

will achieve significant reductions in air emissions of 

sulfur dioxide or oxides of nitrogen associated with the 

utilization of coal in the generation of electricity, or 

process steam which was not in widespread use as of November 

15, 1990. 

(34) "Clean coal technology demonstration project" means a 

project using funds (1) appropriated under the heading 

'Department of Energy-Clean Coal Technology', up to a total 

amount of $2,500,000,000 for commercial demonstration of 

clean coal technology, or (2) similar projects funded 

through appropriations for the Environmental Protection 

Agency. The Federal contribution for a qualifying project 

shall be at least 20 percent of the total cost of the 

demonstration project. 

(35) "Temporary clean coal technology demonstration project" 

means a clean coal technology demonstration project that is 

operated for a period of five years or less, and which 

complies with the State implementation plan for the state in 

which the project is located and other requirements 

necessary to attain and maintain the nation ambient air 

quality standards* during and after the project is 

terminated. 

(3 6)(i) "Repowering" means replacement of an existing coalfired boiler with one of the following clean coal 

technologies: atmospheric or pressurized fluidized bed 

combustion, integrated gasification combined cycle, 

magnetohydrodynamics, direct and indirect coal-fired 

turbines, integrated gasification fuel cells, or as 

determined by the Administrator, in consultation with 

the Secretary of Energy, a derivative of one or more of 

these technologies, and any other technology capable of 

controlling multiple combustion emissions 

simultaneously with improved boiler or generation 

efficiency and with significantly greater waste 

reduction relative to the performance of technology in 

widespread commercial use as of November 15, 1990. 

(ii) Repowering shall also include any oil and/or gas-fired 

unit which as been awarded clean coal technology 
- 9 -

demonstration funding as of January 1, 1991, by the 

Department of Energy. 

(iii) The reviewing authority shall give expedited 

consideration to permit applications for any source 

that satisfies the reguirements of this subsection and 

is granted an extension under § 409 of the Clean Air 

Act. 

(37) "Reactivation of a very clean coal-fired electric utility 

steam generating unit" means any physical change or change in the 

method of operation associated with the commencement of 

commercial operations by a coal-fired utility unit after a period 

of discontinued operation where the unit: 

(i) has not been in operation for the two-year period 

prior to the enactment of the Clean Air Act Amendments 

of 1990, and the emissions from such unit continue to 

be carried in the permitting authority's emissions 

inventory at the time of enactment; 

(ii) was equipped prior to shut-down with a continuous 

system of emissions control that achieves a removal 

efficiency for sulfur dioxide of no less than 85 

percent and a removal efficiency for particulates of no 

less than 98 percent; 

(iii) is equipped with low-NOx burners prior to the 

time of commencement of operations following 

reactivation; and -

(iv) is otherwise in compliance with the requirements 

of the Clean Air Act. 
P.62 

- 10 -

For the reasons set forth in the preamble, Part 52 of Chapter I 

of Title 40 of the Code of Federal Regulations is proposed to be 

amended as follows: 

Part 52-APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS 

1. The authority citation for Part 52 is amended to read as 

follows: 

(TO BE ADDED) 

2. Section 52.21 is proposed to be amended to read as 

follows: 

52.21 Prevention of significant deterioration of air 

quality. 

(b) 

(2) 

* 

* 

(iii) A physical change or a change in the method of 

operation shall not include: 

**** * 

(h) the addition, replacement or use of a pollution 

control project at an existing electric utility steam 

generating unit, unless the Administrator determines 

that such addition, replacement, or use renders the 

unit less environmentally beneficial, and except: 

(a) when the Administrator has reason to believe 

that the pollution control project would result in 

a significant net increase in representative 

actual annual emissions of any criteria pollutant 

over levels used for that source in the most 

recent air quality impact analysis in the area 

conducted for the purpose of Title I, if any, and 

(b) the Administrator determines that the increase 

will cause or contribute to a violation of any 

ambient standard, PSD increment, or visibility 

limitation. 

(i) The installation, operation, cessation, or 

removal of a temporary clean coal technology 

demonstration project, provided that the project 

complies with: 
P.63 

- 11 " 

(i) the State implementation plan for the 

State in which the project is located, and 

(ii) other requirements necessary to attain 

and maintain the national ambient air quality 

standards during the project and after it is 

terminated. 

(j) The installation or operation of a 

permanent clean coal technology demonstration 

project that constitutes repowering, provided 

that the project does not result in an 

increase in the potential to emit of any 

regulated pollutant emitted by the unit. 

This exemption shall apply on a pollutant-bypollutant basis. 

(k) The reactivation of a very clean coalfired electric utility steam generating unit. 

(21) * * * 

(iv) For any emissions unit (other than an electric 

utility steam generating unit specified in paragraph 

(v) of this subsection) that has not begun normal 

operations on a particular date, actual emissions shall 

equal the potential to emit of the unit on that date. 

(v) For an electric utility steam generating unit 

(other than a new unit or the replacement of an 

existing unit) actual emissions of the unit following 

the physical or operational change shall equal the 

representative actual annual emissions of the unit. 

(31) "Electric utility steam generating unit" means any steam 

electric generating unit that is constructed for the purpose 

of supplying more than one-third of its potential electric 

output capacity and more than 25 MW electrical output to any 

utility power distribution system for sale. Any steam 

supplied to a steam distribution system for the purpose of 

providing steam to a steam-electric generator that would 

produce electrical energy for sale is also considered in 

determining the electrical energy output capacity of the 

affected facility. 

(32) "Pollution control project" means any physical change or 

change in the method of operation, at an existing electric 
P.64 

- 12 -

utility steam generating unit for purposes of reducing 

emissions from such unit. Such changes are limited to: 

(i) the installation of conventional or innovative 

pollution control technology, including but not limited 

to advanced flue gas desulfurization, sorbent injection 

for sulfur dioxide and nitrogen oxides controls and 

electrostatic precipitators; 

(ii) a physical change, or change in the method of 

operation, to accommodate switching to a fuel which is 

less polluting than the fuel in use prior to the change 

including, but not limited to natural gas or coal reburning, co-firing of natural gas and other fuels for 

the purpose of controlling emissions; 

(iii) a permanent clean coal technology demonstration 

project conducted under Title II, section 101(d) of the 

Further Continuing Appropriations Act of 1985 (section 

5903(d) of title 42 of the United States Code), or 

subsequent appropriations, up to a total amount of 

$2,500,000,000 for commercial demonstration of clean 

coal technology, or similar projects funded through 

appropriations for the Environmental Protection Agency; 

or 

(iv) a permanent clean coal technology demonstration 

project that constitutes a repowering project. 

(33) "Representative actual annual emissions" means the average 

rate, in tons per year, at which the source is projected to 

emit a pollutant for the two-year period after a physical 

change or change in the method of operation of a unit, (or a 

different consecutive two-year period within 10 years after 

that change, where the Administrator determines that such 

period is more representative of normal source operations), 

considering the effect any such change will have on 

increasing or decreasing the hourly emissions rate and on 

projected capacity utilization. In projecting future 

emissions the Administrator shall: 

(i) consider all relevant information, including but 

not limited to, historical operational data, the 

company's own representations, filings with the State 

or Federal regulatory authorities, and compliance plans 

under Title IV of the Clean Air Act; and 

(ii) exclude, in calculating any increase in emissions 

that results from the particular physical change or 

change in the method of operation at an electric 
P.65 1 

- 13 -

utility steam generating unit, that portion of the 

unit's emissions following the change that is 

attributable to an increase in projected capacity 

utilization at the unit that is unrelated to the 

particular change, including any increased utilization 

due to the rate of electricity demand growth for the 

utility system as a whole. 

(34) "Clean coal technology" means any technology, including 

technologies applied at the precombustion, combustion, or 

post combustion stage, at a new or existing facility which 

will achieve significant reductions in air emissions of 

sulfur dioxide or oxides of nitrogen associated with the 

utilization of coal in the generation of electricity, or 

process steam which was not in widespread use as of November 

15, 1990. 

(35) "Clean coal technology demonstration project" means a 

project using funds (1) appropriated under the heading 

•Department of Energy-Clean Coal Technology', up to a total 

amount of $2,500,000,000 for commercial demonstration of 

clean coal technology, or (2) similar projects funded 

through appropriations for the Environmental Protection 

Agency. The Federal contribution for a qualifying project 

shall be at least 2 0 percent of the total cost of the 

demonstration project. 

(36) "Temporary clean coal technology demonstration project" 

means a clean coal technology demonstration project that is 

operated for a period of five years or less, and which 

complies with the State implementation plans for the State 

in which the project is located and other requirements 

necessary to attain and maintain the national ambient air 

quality standards during the project and after it is 

terminated. 

(37)(i) "Repowering" means replacement of an existing coalfired boiler with one of the following clean coal 

technologies: atmospheric or pressurized fluidized bed 

combustion, integrated gasification combined cycle, 

magnetohydrodynamics, direct and indirect coal-fired 

turbines, integrated gasification fuel cells, or as 

determined by the Administrator, in consultation with 

the Secretary of Energy, a derivative of one or more of 

these technologies, and any other technology capable of 

controlling multiple combustion emissions 

simultaneously with improved boiler or generation 

efficiency and with significantly greater waste 

reduction relative to the performance of technology in 

widespread commercial use as of November 15, 1990. 
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(ii) Repowering shall also include any oil and/or gas-fired 

unit which has been awarded clean coal technology 

demonstration funding as of January 1, 1991, by the 

Department of Energy. 

(iii) The Administrator shall give expedited 

consideration to permit applications for any 

source that satisfies the requirements of 

this subsection and is granted an extension 

under §409 of the Clean Air Act. 

(38) "Reactivation of a very clean coal-fired electric 

utility steam generating unit" means any physical 

change or change in the method of operation associated 

with the commencement of commercial operations by a 

coal-fired utility unit after a period of discontinued 

operation where the unit: 

(i) has not been in operation for the two-year period 

prior to the enactment of the Clean Air Act Amendments 

of 1990, and the emissions from such unit continue to 

be carried in the permitting authority's emissions 

inventory at the time of enactment; 

(ii) was equipped prior to shut-down with a continuous 

system of emissions control that achieves a removal 

efficiency for sulfur dioxide of no less than 85 

percent and a removal efficiency for particulates of no 

less than 98 percent; 

(iii) is equipped with low-NOx burners prior to the 

time of commencement of operations following 

reactivation; and 

(iv) is otherwise in compliance with the requirements 

of the Clean Air Act. 
P.67 

- 15 -

3. Section 52.24 is proposed to be amended to read as 

follows: 

52.24 Statutory restriction on new sources. 

**** * 

(f) * * * 

(5) * * * 

(iii) A physical change or change in the method of 

operation shall not include: 

(h) the addition, replacement or use of a pollution 

control project at an existing electric utility steam 

generating unit, unless the Administrator determines 

that such addition, replacement, or use renders the 

unit less environmentally beneficial, and except: 

(1) when the Administrator has reason to believe 

that the pollution control project would result in 

an significant net increase in representative 

actual annual emissions of any criteria pollutant 

over levels used for that source in the most 

recent air quality impact analysis in the area 

conducted for the purpose of Title I, if any, and 

(2) the Administrator determines that the increase will 

cause or contribute to a violation of any ambient 

standard, PSD increment, or visibility 

limitation. 

(i) The installation, operation, cessation, or removal 

of a temporary clean coal technology demonstration 

project, provided that the project complies with: 

(1) the State implementation plan for the State in 

which the project is located, and 

(2) other reguirements necessary to attain and maintain 

the national ambient air quality standards during the 

project and after it is terminated. 

(j) The reactivation of a very clean coal-fired 

electric utility steam generating unit. 
P.68 

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(13) * * * 

(iv) For any emissions unit (other than an electric 

utility steam generating unit specified in paragraph 

(v) of this subsection) that has not begun normal 

operations on a particular date, actual emissions shall 

equal the potential to emit of the unit on that date. 

(v) For an electric utility steam generating unit 

(other than a new unit or the replacement of an 

existing unit) actual emissions of the unit following 

the physical or operational change shall equal the 

representative actual annual emissions of the unit. 

(18) "Electric utility steam generating unit" means any steam 

electric generating unit that is constructed for the purpose of 

supplying more than one-third of its potential electric output 

capacity and more than 25 MW electrical output to any utility 

power distribution system for sale. Any steam supplied to a 

steam distribution system for the purpose of providing steam to a 

steam-electric generator that would produce electrical energy for 

sale is also considered in determining the electrical energy 

output capacity of the affected facility. 

(19) "Representative actual annual emissions" means the average 

rate, in tons per year, at which the source is projected to emit 

a pollutant for the two-year period after a physical change or 

change in the method of operation of a unit, (or a different 

consecutive two-year period within 10 years after that change, 

where the Administrator determines that such period is more 

representative of normal source operations), considering the 

effect any such change will have on increasing or decreasing the 

hourly emissions rate and on projected capacity utilization. In 

projecting future emissions the Administrator shall: 

(i) consider all relevant information, including but not 

limited to, historical operational data, the company's own 

representations, filings with the State or Federal 

regulatory authorities, and compliance plans under Title IV 

of the Clean Air Act; and 

(ii) exclude, in calculating any increase in emissions that 

results from the particular physical change or change in the 

method of operation at an electric utility steam generating 

unit, that portion of the unit's emissions following the 

change that is attributable to an increase in projected 

capacity utilization at the unit that is unrelated to the 

particular change, including any increased utilization due 
P.69 

~ 17 ~ 

to the rate of electricity demand growth for the utility 

system as a whole. 

(20) "Temporary clean coal technology demonstration project" 

means a clean coal technology demonstration project that is 

operated for a period of five years or less, and which complies 

with the State implementation plans for the State in which the 

project is located and other requirements necessary to attain and 

maintain the national ambient air quality standards during the 

project and after it is terminated. 

(21) "Clean coal technology" means any technology, including 

technologies applied at the precombustion, combustion, or post 

combustion stage, at a new or existing facility which will 

achieve significant reductions in air emissions of sulfur dioxide 

or oxides of nitrogen associated with the utilization of coal in 

the generation of electricity, or process steam which was not in 

widespread use. as of November 15, 1990. 

(22) "Clean coal technology demonstration project" means a 

project using funds (1) appropriated under the heading 

'Department of Energy-Clean Coal Technology', up to a total 

amount of $2,500,000,000 for commercial demonstration of clean 

coal technology, or (2) similar projects funded through 

appropriations for the Environmental Protection Agency. The 

Federal contribution for a qualifying project shall be at least 

2 0 percent of the total cost of the demonstration project. 

(23) "Reactivation of a very clean coal-fired electric 

utility steam generating unit" means any physical change or 

change in the method of operation associated with the 

commencement of commercial operations by a coal-fired utility 

unit after a period of discontinued operation where the unit: 

(i) has not been in operation for the two-year period 

prior to the enactment of the Clean Air Act Amendments 

of 1990, and the emissions from such unit continue to 

be carried in the permitting authority's emissions 

inventory at the time of enactment; 

(ii) was equipped prior to shut-down with a continuous 

system of emissions control that achieves a removal 

efficiency for sulfur dioxide of no less than 85 

percent and a removal efficiency for particulates of no 

less than 98 percent; 

(iii) is equipped with low-NOx burners prior to the 

time of commencement of operations following 

reactivation; and 
P.70 

- 18 -

(iv) is otherwise in compliance with the requirements 

of the Clean Air Act. 

(24) "Pollution control project" means any physical change or 

change in the method of operation, at an existing electric 

utility steam generating unit for purposes of reducing emissions 

from such unit. Such changes are limited to: 

(i) the installation of conventional or innovative pollution 

control technology, including but not limited to advanced 

flue gas desulfurization, sorbent injection for sulfur 

dioxide and nitrogen oxides controls and electrostatic 

precipitators; 

(ii) a physical change, or change in the method of 

operation, to accommodate switching to a fuel which is less 

polluting than the fuel in use prior to the change 

including, but not limited to natural gas or coal reburning, co-firing of natural gas and other fuels for the 

purpose of controlling emissions; 

(iii) a permanent clean coal technology demonstration 

project conducted under Title II, section 101(d) of the 

Further Continuing Appropriations Act of 1985 (section 

5903(d) of title 42 of the United States Code), or 

subsequent appropriations, up to a total amount of 

$2,500,000,000 for commercial demonstration of clean coal 

technology, or similar projects funded through 

appropriations for the Environmental Protection Agency; or 

(iv) a permanent clean coal technology demonstration project 

that constitutes a repowering project. 
P.71 

- 19 -

For the reasons set forth in the preamble, Part 60 of Chapter I 

of Title 40 of the Code of Federal Regulations is proposed to be 

amended as follows: 

PART 60-STANDARDS OF PERFORMANCE FOR NEW STATIONARY SOURCES 

1. The authority citation for Part 60 is amended to read as 

follows: 

(TO BE ADDED) 

2. Section 60.2 is proposed to be amended by adding the 

following definitions: 

"Clean coal technology demonstration project" means a project 

using funds appropriated under the heading 'Department of EnergyClean Coal Technology', up to a total amount of $2,500,000,000 

for commercial demonstrations of clean coal technology, or 

similar projects funded through appropriations for the 

Environmental Protection Agency. 

"Electric utility steam generating unit" means any steam electric 

generating unit that is constructed for the purpose of supplying 

more than one-third of its potential electric output capacity and 

more than 25 MW electrical output to any utility power 

distribution system for sale. Any steam supplied to a steam 

distribution system for the purpose of providing steam to a 

steam-electric generator that would produce electrical energy for 

sale is also considered in determining the electrical energy 

output capacity of the affected facility. 

"Repowering" means replacement of an existing coal-fired boiler 

with one of the following clean coal technologies: atmospheric 

or pressurized fluidized bed combustion, integrated gasification 

combined cycle, magnetohydrodynamics, direct and indirect coalfired turbines, integrated gasification fuel cells, or as 

determined by the Administrator, in consultation with the 

Secretary of Energy, a derivative of one or more of these 

technologies, and any other technology capable of controlling 

multiple combustion emissions simultaneously with improved boiler 

or generation efficiency and with significantly greater waste 

reduction relative to the performance of technology in widespread 

commercial use as of November 15, 1990. Repowering shall also 

include any oil and/or gas-fired unit which has been awarded 

clean coal technology demonstration funding as of January 1, 

1991, by the Department of Energy. 

"Reactivation of a very clean coal-fired electric utility steam 

generating unit" means any physical change or change in the 

method of operation associated with the commencement of 
P.72 

- 20 -

commercial operations by a coal-fired utility unit after a period 

of discontinued operation where the unit: 

(i) has not been in operation for the two-year period 

prior to the enactment of the Clean Air Act Amendments 

of 1990, and the emissions from such unit continue to 

be carried in the permitting authority's emissions 

inventory at the time of enactment; 

(ii) was equipped prior to shut-down with a continuous 

system of emissions control that achieves a removal 

efficiency for sulfur dioxide of no less than 85 

percent and a removal efficiency for particulates of no 

less than 98 percent; 

(iii) is equipped with low-NOx burners prior to the 

time of commencement of operations following 

reactivation; and 

(iv) is otherwise in compliance with the requirements 

of the Clean Air Act. 

3. Section 60.14 is proposed to be amended to read as follows: 

60.14 MODIFICATION. 

**** * 

(h) No physical change, or change in the method of 

operation, at an existing electric utility steam generating unit 

shall be treated as a modification for the purposes of this 

section provided that such change does not increase the maximum 

hourly emissions of any pollutant regulated under this section 

above the maximum hourly emissions achievable at that unit during 

the five years prior to the change. 

(i) Repowering projects that are awarded funding from the 

Department of Energy as permanent clean coal technology 

demonstration projects (or similar projects funded by EPA) are 

exempt from the requirements of this section provided that such 

change does not increase the maximum hourly emissions of any 

pollutant regulated under this section above the maximum hourly 

emissions achievable at that unit during the five years prior to 

the change. 

(j)(l) Repowering projects that qualify for an extension 

under § 409(b) of the Clean Air Act are exempt from the 

requirements of this section, provided that such change does not 

increase the actual hourly emissions of any pollutant regulated 

under this section above the maximum hourly emissions achievable 

at that unit during the five years prior to the change.