May 23, 2000

R-19J 

Henry Nickel

Counsel for the Detroit Edison Company

Hunton & Williams

1900 K Street, N.W.

Washington D.C. 20006-1109

Dear Mr. Nickel:

I am responding to your request on behalf of the Detroit Edison

Company for an applicability determination regarding the proposed

replacement and reconfiguration of the high pressure section of

two steam turbines at the company’s Monroe Power Plant, referred

to as the Dense Pack project. Specifically, you requested that

the United States Environmental Protection Agency (EPA) determine

whether the Dense Pack project at the Monroe Power Plant would be

considered a major modification that would subject the project to

pollution control requirements under the Prevention of

Significant Deterioration (PSD) program. 

We have reviewed your original request, dated June 8, 1999, and

the supplemental information you submitted on December 10, 1999,

and March 16, 2000. We provisionally conclude that the Dense

Pack project would not be a major modification. Thus, Detroit

Edison may proceed with the project without first obtaining a PSD

permit. Although the Dense Pack project would constitute a

nonroutine physical change to the facility that might well result

in a significant increase in air pollution, Detroit Edison

asserts that emissions will not in fact increase due to the

construction activity, and EPA has no information to dispute that

assertion.

As you know, nonroutine changes of any type, purpose, or

magnitude at an electric utility steam generating unit -- ranging

from projects to increase production efficiency to even the

complete replacement of entire major components -- are excluded

from PSD coverage as long as they do not significantly increase

emissions from the source. Thus, Detroit Edison has been free to

proceed at any time with the Dense Pack project without first

obtaining a PSD permit as long as it adheres to its stated

intention to not increase emissions as a result of the project. 

Indeed, EPA encourages the company to proceed with the project on

this basis, since it appears to both reduce emissions per unit of

output and not increase actual air pollution.
2

As you are also aware, under the applicable new source review

regulations, in determining if a physical change will result in a

significant emissions increase at an electric utility plant,

companies may use an “actual” to “representative actual annual

emissions” test for emissions from the electric utility steam

generating unit, under which a calculation of baseline emissions

and a projection of future emissions after the change is needed. 

Our determination of nonapplicability is provisional because

Detroit Edison has not, to our knowledge, provided a calculation

of baseline emissions or projected future emissions to the

permitting agency, and this should be done prior to the start of

construction. The basis for this determination is summarized

below and is set forth in full in the enclosed detailed analysis.

In determining whether an activity triggers PSD, the Clean Air

Act and EPA’s regulations specify a two-step test. The first

step is to determine if such activity is a physical or

operational change, and if it is, the second step is to determine

whether emissions will increase because of the change. The

statute admits of no exception from its sweeping scope, but EPA’s

regulations contain some narrow exceptions to the definition of

physical or operational change. In particular, Detroit Edison

claims that the Dense Pack project is eligible for the exclusion

for routine maintenance, repair, and replacement. The

determination of whether a proposed physical change is “routine”

is a case-specific determination which takes into consideration

the nature, extent, purpose, frequency, and cost of the work, as

well as other relevant factors. After carefully reviewing all

the information you submitted in light of the relevant factors,

EPA has determined that the proposed project is not “routine.”

The purpose of the Dense Pack project, to significantly enhance

the present efficiency of the high pressure section of the steam

turbine, signifies that the project is not routine. An upgrade

of this nature is markedly different from the frequent,

inexpensive, necessary, and incremental maintenance and

replacement of deteriorated blades that is commonly practiced in

the utility industry. For instance, past blade maintenance and

replacement of only the deteriorated blades at Detroit Edison has

never increased efficiency over the original design. 

Accordingly, because increasing turbine efficiency by a total

redesign of a major component is a defining feature of the

proposed Dense Pack project, it clearly goes significantly beyond

both historic turbine work at Detroit Edison, and what would

otherwise be considered a regular, customary, or standard

undertaking for the purpose of maintaining the existing steam

turbine units. The project also goes well beyond routine turbine
3

maintenance, repair, and replacement activities for the utility

industry in general. 

The nature and extent of the work in question -- replacement of

the entire high pressure sections of the steam turbines for Units

1 and 4 at Monroe -- suggests that the Dense Pack project is not

routine. It would result in greater efficiency above the level

that can be reached by simply replacing deteriorated blades with

ones of the same design and, in addition, will substantially

increase efficiency over the original design. Specifically, the

Dense Pack upgrade would not only restore the 7 percent of the

efficiency rating lost over the years at each unit but would

improve the unit’s efficiency by an additional 5 percent over its

original design capacity. Accordingly, the proposed project

represents a significant and major redesign and replacement of

the entire high pressure sections of the steam turbines at Units

1 and 4 at the Monroe facility. 

The frequency with which utilities have undertaken turbine

upgrades like the Dense Pack project also indicates the

nonroutine nature of the changes. The information provided by

Detroit Edison, regarding past history at the Monroe facility,

describes what is characterized as necessary maintenance, repair,

and replacement of deteriorated turbine blades approximately

every 4 years. During these overhaul periods, it is not uncommon

for the company to replace up to several turbine blades at one

time. It is common among other utilities to also perform similar

turbine maintenance. However, Detroit Edison has not provided

any information to suggest that a complete replacement and

redesign of the high pressure section of a steam turbine is

conducted frequently at Monroe or at any other individual

utility. Instead, Detroit Edison relies on its claim that

projects “similar” to the Dense Pack project have been performed

at a number of utilities. This information does not indicate

that the replacement of the high pressure section of the steam

turbine is frequent at the typical utility source; to the

contrary, the only available information reflects that projects

like the Dense Pack project have been performed only one time, if

ever, at individual sources. 

The cost of the Dense Pack project is significant and tends to

indicate that this project is nonroutine. Detroit Edison expects

the Dense Pack replacement to cost approximately $6 million for

each turbine unit, for a total of $12 million. The EPA has

rejected claims of routineness in past cases where the cost was

substantially less than this figure. Moreover, Detroit Edison

intends to capitalize the entire cost of this project, and EPA

believes that a $12 million project that is 100 percent capital

improvement indicates that it is a major undertaking.
4

Beyond the clearly significant absolute cost of this project,

available information suggests that this expenditure far exceeds

the cost typically associated with turbine blade maintenance

activity. Detroit Edison provided only a summary of the total

project costs for past maintenance and inspections at the

facility, the total costs of which ranged from less than

$1 million to a little more than $6 million. Although Detroit

Edison did not provide any detail regarding what specific

activities comprise these aggregated amounts, it acknowledges

that it spent only $18,700, $33,100, and $7,900 to replace highpressure rotors in three turbine projects in 1981 and 1982. 

Further, the project is significantly more costly than simply

replacing deteriorated blades today; Detroit Edison acknowledges

that the Dense Pack upgrade would cost three times more than its

alternative blade repair and replacement project. Accordingly,

it appears that the costs associated with the Dense Pack project

greatly exceed the amounts spent previously by Detroit Edison or

that it would spend presently for the replacement of deteriorated

turbine blades or rotors. 

For the reasons delineated above, we conclude that the changes

proposed by Detroit Edison are not routine. Detroit Edison’s

submissions do not demonstrate that projects such as the Dense

Pack project are frequent, inexpensive, or done for the purpose

of maintaining the facility in its present condition. Instead,

the source relies on two principal arguments: (1) it claims that

this project is less significant in scope than was the activity

in question in the 1988 applicability determination for the

Wisconsin Electric Power Company (WEPCO); and (2) it alleges that

EPA has interpreted the exclusion for routine activity

expansively to exempt all projects that do not increase a unit’s

emission rate. EPA rejects both of these arguments, the former

because both EPA and the U.S. Court of Appeals for the Seventh

Circuit viewed WEPCO’s activity as “far from” routine and thus

this attempted comparison to WEPCO is unsuitable, and the latter

because it is demonstrably incorrect. The attached analysis

addresses these points in significant detail. 

When nonroutine physical or operational changes significantly

increase emissions to the atmosphere, they are properly

characterized as major modifications and are subject to the PSD

program. In general, a physical change in the nature of the

Dense Pack project, which provides for the more economical

production of electricity, would be expected to result in the

increased utilization of the affected units, and thus, increased

emissions. Notwithstanding the fact the Monroe units may be high

on the dispatch order, the Dense Pack project would allow Detroit

Edison to produce electricity more cheaply per unit of output,

thereby creating an incentive to run Units 1 and 4 above current
5

levels. Even a small increase over current normal levels in the

utilization of the affected units would result in a significant

increase in actual emissions of criteria pollutants. For

example, in 1997, at the Monroe facility Unit 1 emitted

approximately 14,000 tons of nitrogen oxides (NOx) and 41,000

tons of sulfur dioxide (SO2), and Unit 2 emitted 12,000 tons of

NOx and 35,000 tons of SO2. Based on this information, if a one

to five percent increase in operation were to result from the

Dense Pack project, increases on the order of 160-800 tons of NOx

and 400-2000 tons of SO2 would occur. 

Detroit Edison, however, maintains that emissions will not

increase as a result of the Dense Pack project. Specifically,

the company contends that representative actual annual emissions

following the change will not be greater than its pre-change

actual emissions, because the Dense Pack upgrade will not result

in increased utilization of the units. As you are aware, the PSD

regulations (under the provisions commonly known as the “WEPCO

rule”) allow a source undertaking a nonroutine change that could

affect emissions at an electric utility steam generating unit to

lawfully avoid the major source permitting process by using the

unit’s representative actual annual emissions to calculate

emissions following the change if the source submits information

for 5 years following the change to confirm its pre-change

projection. In projecting post-change emissions, Detroit Edison

does not have to include that portion of the unit’s emissions

which could have been accommodated before the change and is

unrelated to the change, such as demand growth.

Under the WEPCO rule, Detroit Edison must compute baseline actual

emissions and must project the future actual emissions from the

modified unit for the 2-year period after the physical change (or

another 2-year period that is more representative of normal

operation in the unit’s modified state). As noted above, Detroit

Edison has not provided these figures to verify its projection of

no increase in actual emissions, and should submit them to the

Michigan Department of Environmental Quality prior to beginning

construction. In addition, Detroit Edison must maintain and

submit to the permitting agency on an annual basis for a period

of at least 5 years (or a longer period not to exceed 10 years,

if such a period is more representative of the modified unit’s

normal post-change operations) from the date the units at the

Monroe Plant resume regular operation, information demonstrating

that the renovation did not result in a significant emissions

increase. If Detroit Edison fails to comply with the reporting

requirements of the WEPCO rule or if the submitted information

indicates that emissions have increased as a consequence of the

change, it will be required to obtain a PSD permit for the Dense

Pack project.
6

Finally, regardless of whether PSD review is triggered due to the

Dense Pack project, Detroit Edison must meet all other applicable

federal, state, and local air pollution requirements.

This determination will be final in 30 days unless, during that

time, Detroit Edison seeks to confer with or appeal to the

Administrator or her designee regarding it. If you have any

questions regarding this determination, please contact

Laura Hartman, Environmental Engineer, at (312) 353-5703, or

Jane Woolums, Associate Regional Counsel, at (312) 886-6720.

Sincerely,

/s/

Francis X. Lyons

Regional Administrator

Enclosure
cc: Peter Marquardt, Esq., Special Counsel

Detroit Edison Company

2000 Second Avenue - 688 WCB

Detroit, Michigan 48336

Russell Harding, Director

Michigan Department of Environmental Quality

ARD:APB:PGS:HARTMAN:5/22/00 

DISKETTE/FILE: C:\EPAWORK\LHARTMAN\MI\NSR\DETROIT

EDISON\TURBINEREP\LETTERFINAL3.WPD
ENCLOSURE

DETROIT EDISON APPLICABILITY DETERMINATION

DETAILED ANALYSIS

I. Introduction ............................................................. 2

II. Summary of Request and Brief Conclusion ...................................... 2

III. Factual Background ...................................................... 3

A. Current Conditions .................................................. 3

B. Proposed Dense Pack Project .......................................... 4

IV. Physical Change/Change in the Method of Operation ............................. 5

A. Statutory and Regulatory Requirements .................................. 5

1. Overview .................................................... 5

2. Scope of Exclusion for Routine Activity ............................ 6

a. Statutory and Regulatory Text .............................. 6

b. Applicability Determinations and Other EPA Actions Construing

Routineness ......................................... 8

3. Analysis of Detroit Edison’s Objections to EPA’s Longstanding, Narrow

Interpretation of the Exclusion for Routine Activity ............... 11

a. Claim that Construction that Does Not Increase Unit’s Emission Rate Is

Routine ........................................... 12

b. Mary Nichols Representation that “Restoration” Activity Can Be

Routine ........................................... 12

c. Assertion that EPA Expects No Change to Trigger NSPS Modification

Provision .......................................... 13

d. Assertion that Industry Practice Defines Routineness ............ 15

B. Analysis of “Routine” Maintenance, Repair or Replacement at the Monroe Plant .. 15

V. Emissions Increase ....................................................... 18

A. Regulatory Requirements ............................................ 18

B. Analysis of Significant Net Emissions Increase at the Monroe Plant ............ 20

VI. Conclusion ............................................................ 22

1
I. Introduction 

If a company intends to construct a major source or a major modification at a source, that 

source is required to obtain a major new source review permit before beginning construction. If a 

source questions whether a change is subject to major new source review, the source can request 

an applicability determination. In this case, Detroit Edison Company has requested an 

applicability determination from the United States Environmental Protection Agency (EPA). This 

analysis outlines EPA’s decision on the applicability determination for Detroit Edison’s proposed 

project. 

II. Summary of Request and Brief Conclusion 

Detroit Edison Company is proposing to replace and reconfigure the high pressure portion 

of two steam turbines at its Monroe Power Plant. The company refers to this project as the 

“Dense Pack” project. In general, the Dense Pack project would consist of replacing and 

reconfiguring all of the blades in the high-pressure section of two turbines to substantially increase 

plant efficiency and reduce maintenance costs. On June 8, 1999, Henry Nickel, Hunton & 

Williams, submitted on behalf of Detroit Edison a request that EPA determine whether the Dense 

Pack project would be a “major modification” to the Monroe source, subject to the Prevention of 

Significant Deterioration (PSD) requirements of the New Source Review (NSR) program. An 

activity is a major modification and requires a PSD permit if it constitutes a nonexempt physical 

or operational change and if it results in a significant net increase in emissions. Detroit Edison 

claimed that the proposed Dense Pack project at two units in Detroit Edison’s Monroe Power 

Plant would not be a “physical change,” as the PSD regulations use that term, but instead would 

qualify for an exemption from the definition of “physical change” under the exclusion for routine 

maintenance, repair, and replacement. In the alternative, Detroit Edison maintained that the 

change would not result in an emissions increase that would trigger PSD. 

In a letter dated June 25, 1999, EPA wrote Mr. Nickel acknowledging receipt of the 

request. In another letter to Mr. Nickel dated July 12, 1999, EPA requested more information 

regarding the proposed Dense Pack project and Detroit Edison’s arguments in order to proceed 

with the review. On December 10, 1999, Mr. Nickel submitted information in response to EPA’s 

July 12th request. In addition, on March 16, 2000, Detroit Edison submitted another letter, along 

with additional supporting materials. The following summarizes EPA’s review of the proposed 

Dense Pack project based upon these submissions. 

EPA has provisionally determined that PSD would not apply at this time if Detroit Edison 

were to construct the Dense Pack upgrade as described. The project would entail substantial, 

infrequently performed, and costly construction for the purpose of increasing the source’s 

generating capacity both beyond its prior design and its current capacity. Accordingly, EPA finds 

that the upgrade is a “physical change,” as that term is used in the Clean Air Act (CAA) and its 

implementing regulations. The Agency rejects Detroit Edison’s claim that the project qualifies for 

the exemption for routine maintenance, repair, and replacement, because our analysis of the 

2
nature, extent, purpose, frequency, and cost of the work, as well as other relevant factors, leads 

us to conclude that the project is not “routine” as EPA has historically interpreted that regulatory 

term. In addition, because the Dense Pack project will substantially increase the operational and 

economic efficiency of the Monroe facility, EPA finds that the project provides an incentive to 

significantly increase utilization, and thus, emissions. Detroit Edison has stated, however, that 

emissions at the plant will not in fact increase as a result of the Dense Pack upgrade, and EPA has 

no specific information to dispute that assertion. Accordingly, EPA provisionally accepts Detroit 

Edison’s assertion of no emissions increase. However, to establish that no emissions increase will 

result and that PSD does not apply, the regulations applicable to electric utility steam generating 

units call for a calculation of baseline actual emissions and a projection of future actual emissions. 

Thus, before beginning construction on the project, Detroit Edison should provide this calculation 

and projection to the permitting agency to affirm its assertion of no emissions increase. 

III. Factual Background 

A. Current Conditions 

Detroit Edison’s Monroe Power Plant contains four coal-fired boilers, along with four 

associated steam turbines. The turbines convert the steam generated in the boilers into electric 

energy, using a system of blades or buckets to convert the energy stored in the steam from the 

boilers into mechanical energy. This mechanical energy is then transferred to an electric 

generator. The Dense Pack project is being proposed for two of the four turbines, Units 1 and 4. 

Units 1 and 4 began operating in 1971 and 1974, respectively. Both units have nominal ratings of 

750 megawatts. Currently, the units at Detroit Edison’s Monroe Plant, along with those at its 

Belle River Power Plant, are very high in the loading order for fossil fuel generation in the Detroit 

Edison system. Detroit Edison claims that, as a result, it has operated Units 1 and 4 at or near 

maximum capacity over the past five years. Specifically, between 1995 and 1998, the capacity 

factors for Unit 1 and Unit 4 have been 82.8%, 62.7%, 87.8%, 83.5%, and 63.0%, 82.2%, 

79.6%, 87.4%, respectively. 

According to submitted information, Detroit Edison shuts down the electric generating 

units and performs inspections approximately every four years. In addition to other work on 

other portions of the facility, Detroit Edison performs necessary maintenance, repair, and 

replacement of individual deteriorated turbine blades at that time. Historically, the source has not 

had to repair or replace blades in the high pressure section of the turbines every time it inspected 

them, but such maintenance, including piecemeal repair or replacement, occurs periodically. 

Detroit Edison states that these scheduled outages typically last a minimum of six weeks, but does 

not specify how much of this time is devoted to the repair and replacement of worn blades. In 

general, repair or replacement of the turbine blades could be to maintain fuel efficiency, reliability, 

safety, or generating capacity, or to comply with regulatory requirements, insurance company 

requirements, corporate practices, or other reasons. It appears from individual inspection reports 

that maintaining efficiency was the stated reason for most inspections and maintenance. 

3
According to Detroit Edison, the turbines at Units 1 and 4 currently are operating at 7% 

below their original efficiency ratings due to accumulated deterioration in the high-pressure 

turbine blades. Replacement of the deteriorated blades with blades of the same design would 

replace only 2% of the lost efficiency, leaving the units 5% below their original efficiency rating. 

Detroit Edison estimates the cost of replacing only the currently deteriorated blades to be 

approximately $2 million per unit. Detroit Edison provided only a summary of the project costs 

for past maintenance and inspections at the facility, the total costs of which ranged from less than 

$1 million to a little more than $6 million. Detroit Edison spent $18,700, $33,100, and $7,900 to 

replace high-pressure rotors in three projects in 1981 and 1982. Detroit Edison has not provided 

other specific cost information regarding the cost of on-site blade repair and replacement or 

similar information for the utility industry as a whole. 

B. Proposed Dense Pack Project 

Detroit Edison is proposing to replace the entire high-pressure sections of two turbines to 

allow for the use of a new type of turbine blade and to reconfigure the design in order to improve 

efficiency and reduce maintenance costs. To install the Dense Pack, Detroit Edison must shut 

down the units. Detroit Edison expects the installation to take approximately 44 days, and plans 

to complete the installation during the time normally allotted for turbine outages. Installation of 

the Dense Pack would involve replacement and reconfiguration of blades in the high-pressure 

sections of the two units, using rotors and casings to support the new blade configuration. In 

addition, the Dense Pack would use a newer, substantially improved type of blade than is 

currently in use at the Monroe facility. 

As noted above, Detroit Edison states that the high pressure sections of the turbines at 

Units 1 and 4 are operating at 7% below their original efficiency ratings due to accumulated 

deterioration in the high-pressure section of the turbines. The Dense Pack project would increase 

efficiency of the high-pressure sections of the turbines over current levels by 12%, restoring the 

7% lost efficiency at the high pressure section and improving the efficiency of the high-pressure 

section by 5% over the original design. This increased efficiency in the high-pressure sections 

would increase the overall efficiency of each of the turbines by 4.5%. In addition, the new Dense 

Pack configuration could reduce efficiency deterioration by 70%. Therefore, Detroit Edison 

expects the inspections and needed repair or replacements to occur once every 10 years, instead 

of once every 4 years. 

Detroit Edison expects the Dense Pack project to cost approximately $12 million. Detroit 

Edison plans to capitalize 100% of the cost of the Dense Pack project. 

4
IV. Physical Change/Change in the Method of Operation 

Before providing its analysis of whether the Dense Pack project would constitute a 

physical or operational change, EPA believes it would be useful to review what the statute and 

regulations require and how they have been applied historically. Thus, the following discussion 

provides a context for the analysis of the project that follows. 

A. Statutory and Regulatory Requirements 

1. Overview 

Both the CAA and the NSR regulations require a physical or operational change to occur 

before any particular activity is considered a “modification” which triggers new source 

requirements. The applicable provisions do not, however, define what constitutes a physical or 

operational change. EPA historically has acknowledged -- in view of these undefined broad 

statutory and regulatory terms -- that they could “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).” 57 Fed. Reg. 32314, 32316 (July 21, 1992). Recognizing that Congress 

did not intend everything undertaken at a stationary source to be subject to new source 

requirements, id., EPA has long exempted certain narrow classes of activities from being 

considered physical or operational changes. Accord Alabama Power Co. v. Costle, 636 F.2d 323, 

400 (D.C. Cir. 1980) (although “the term ‘modification’ is nowhere limited to physical changes 

exceeding a certain magnitude,” EPA possesses the authority to provide exemptions from the 

definition where they are of de minimis benefit or where administratively necessary). There are 

several such exclusions, but only one is at issue in the present case1

 – the exclusion for “routine” 

1. Detroit Edison suggests that the Dense Pack replacement project is also exempt from 

PSD as a pollution control project, see, e.g., 40 C.F.R. § 52.21(b)(2)(iii)(h), because the source 

anticipates that the project will decrease the units’ emissions on a per-unit-of-output basis. 

December 10 Letter at 2; March 16 Letter at 3. This claim is not substantiated in any of Detroit 

Edison’s correspondence with the Agency. Our analysis above accordingly focuses on Detroit 

Edison’s primary claim -- that its activity is routine. At the same time, however, EPA does not 

want to give the impression that it tacitly agrees with Detroit Edison’s claimed exemption; to the 

contrary, the Dense Pack replacement project does not meet the definition of “pollution control 

project” in the regulations. See 40 C.F.R. §52.21(b)(2)(iii)(h), (b)(32). Moreover, virtually any 

major capital improvement project at an existing source is designed in part to increase efficiency 

of production, and this will in turn almost always have the collateral effect of reducing emissions 

per unit of production, even though it may provide an economic incentive to increase total 

production, with the net result that actual emissions of air pollution to the atmosphere could 

increase significantly. There is nothing in the statutory terms or structure or in EPA’s regulations 

which suggests that such major changes should be accorded exempt status under the NSR 

program. To the contrary, major capital investments in industrial equipment, where they could 

(continued...) 

5 
activity. 

2. Scope of Exclusion for Routine Activity 

a. Statutory and Regulatory Text 

The starting point for analysis of any exemption is the language of the statute and 

governing regulations. Section 111(a)(4) of the CAA reads as follows: 

The term “modification” means 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. 

CAA § 111(a)(4). The CAA requires a PSD permit prior to “construction” of a major stationary 

source of any pollutant for which the area in which the source is located is designated attainment 

or unclassifiable, id. § 165(a), and it defines “construction” as including modifications (as defined 

in section 111) to existing facilities. Id. § 169(2)(C). EPA’s regulations generally track the 

statute: 

(2)(i) Major modification means any physical change in or change in the method of 

operation of a major stationary source that would result in a significant net 

emissions increase. . . . 

E.G., 40 C.F.R. §52.21(b)(2).2 The plain language of these statutory and regulatory requirements 

1. (...continued) 

result in an increase in emissions, appear to be precisely the type of change at an existing source 

that Congress intended should be subject to PSD and nonattainment area NSR permitting. See 

Prevention of Significant Deterioration and Nonattainment New Source Review; Proposed Rule, 

61 Fed. Reg. 38250, 38262 (July 23, 1996) (“NSR Reform” proposed rulemaking). See also 

Puerto Rican Cement Co. v. EPA, 889 F.2d 292, 297-98 (1st Cir. 1989) (modification of 

emissions unit that decreases emissions per unit of output, but may result in sufficient production 

increase such that actual emissions will increase, is subject to PSD). Conversely, nonroutine and 

otherwise nonexcluded changes of any type, regardless of whether they are projects such as the 

Dense Pack intended to increase production efficiency, or even the complete replacement of an 

entire industrial plant, are excluded from PSD coverage so long as they do not result in significant 

emissions increases. See infra note 4. 

2. In this determination, EPA refers interchangeably to the “PSD” and “NSR” programs. 

There are multiple sets of PSD and NSR regulations, governing the general (or “minor”) program 

(continued...) 

6 
indicates their sweeping scope. Both the CAA and its implementing regulations define 

“modification” as including any physical or operational change. See 42 U.S.C. § 7411(a)(4), 

CAA § 111(a)(4); see also, e.g., 40 C.F.R. § 52.21(b)(2)(i). In light of that breadth, any 

regulatory exemption from the statutory and regulatory requirements should be interpreted in a 

limited way. See Wisconsin Electric Power Co. v. Reilly, 893 F.2d 901, 908-09 (7th Cir. 1990) 

(“WEPCO”) (“courts considering the modification provisions of NSPS and PSD have assumed 

that ‘any physical change’ means precisely that”).3 

2. (...continued) 

and the programs for major sources in attainment and nonattainment areas, and governing those 

programs where EPA is the permitting authority and those where the state is the permitting 

authority. For ease of use, this document refers to only the applicable requirements here, 40 

C.F.R. § 52.21. Those requirements apply where, as here, the state does not have an approved 

PSD program in its state implementation plan and the federal PSD program regulations apply 

instead. See id. § 52.1180. EPA has delegated implementation of the PSD program to Michigan, 

which issues federal PSD permits on EPA’s behalf. See id. § 52.21(u). It bears noting, however, 

that EPA regulations governing approved PSD programs and NSR programs for nonattainment 

areas also contain an identically worded exclusion for routine activity. In addition, the regulations 

governing EPA’s new source performance standards (NSPS) contain a similar exemption for 

routine activity. Accordingly, the discussion below does not differentiate between the two 

programs, and relies upon relevant NSPS precedents as instructive in the NSR program. See 57 

Fed. Reg. at 32316 (noting that physical/operational change step “is largely the same for NSPS 

and NSR”). The most significant difference between the programs’ definition of “physical 

change” is that the NSR regulations do not require a source to affirmatively seek an applicability 

determination to be exempt as a routine change, id. at 32332, but the NSPS regulations plainly 

do. 40 C.F.R. § 60.14(e)(1) (activity is exempt if it is “[m]aintenance, repair, and replacement 

which the Administrator determines to be routine for a source category”). In all respects relevant 

to this determination, however, the regulations are identical. 

3. There is a rule of law that exclusions from generally applicable regulations should be 

construed narrowly. See Auer v. Robbins, 519 U.S. 452, 462-63 (1986) (recognizing general rule 

of construction for regulations); see also O’Neal v. Barrow County, 980 F.2d 674, 677 (11th Cir. 

1993) (where statute does not provide for exemption, regulations providing for one should be 

narrowly construed). Similarly, regulatory provisions should be read in conjunction with the 

statutes from which they are derived and with other similar provisions. Thus, just as other 

exclusions from the new source provisions are limited to narrow circumstances, one should read 

the exclusion for routine activity similarly. See, e.g., 40 C.F.R. §§ 52.21(b)(2)(iii)(b)-(e) 

(governing the use of alternative fuels when the source is ordered to do so pursuant to certain 

federal laws, when the fuel is derived from municipal solid waste, when allowed by existing 

permit, or when the source was capable of accommodating it before January 6, 1975 and is not 

prohibited from using it by a subsequent federally enforceable permit term); 52.21(b)(2)(iii)(g) 

(excluding changes in ownership of the stationary source). 

7 
The requirement that a source both make a physical or operational change and increase 

emissions to be considered a modification further suggests that the physical or operational change 

prong of the test should be broadly construed. The statute grandfathers existing facilities from the 

expense of state-of-the-art controls, but not permanently. Rather, the CAA effected a balance of 

concerns; if plants were modified – i.e., physically or operationally changed in a manner that 

increased emissions – the grandfather status would be lost, and NSR would apply. The 

requirement that there be a net increase in emissions at a source before a modification is deemed 

to have occurred, however, makes the grandfather provision potentially quite broad.4 Indeed, this 

limitation on the modification rule has been viewed by EPA as open-ended – the grandfather 

status can be permanent so long as emissions do not increase – and environmental groups have 

long complained of this NSR “loophole.”5 

It is against that statutory and regulatory backdrop that EPA adopted the exclusion for 

routine activity. It provides: 

(iii) A physical change or change in the method of operation shall not include: 

(a) Routine maintenance, repair, and replacement. . . . 

40 C.F.R. § 52.21(b)(2). The text of the routineness exclusion itself conveys the narrowly limited 

scope of the exemption. Because the regulations provide no definition of “routine,” nor does the 

preamble of the notice promulgating the exclusion contain a discussion that would give the 

exemption a particular meaning for the NSR program, the regulatory term should be used in its 

ordinary sense. Webster’s defines “routine” as “of a commonplace or repetitious character”; “of, 

relating to, or being in accordance with established procedure.” These definitions suggest that 

determining routineness appropriately involves considering whether the activity is frequent (is it 

“repetitious”), whether it is of significant scope (is it “commonplace”), and whether it is for a 

customary purpose or is being accomplished in a customary fashion (is it “in accordance with 

established procedure”). 

b. Applicability Determinations and Other EPA Actions Construing Routineness 

In formal NSR applicability determinations, EPA has consistently interpreted the exclusion 

for “routine” activities narrowly. The Agency’s most comprehensive discussion of the exclusion 

came as part of an applicability determination for WEPCO’s Port Washington utility life extension 

4. See, e.g., Alabama Power Co. v. Costle, 636 F.2d 323, 401 (D.C. Cir. 1979) (requiring 

EPA to allow replacement of depreciated capital goods without a PSD permit where no increase 

in emissions at the source would result, due to offsetting decreases, because “Congress wished to 

apply the permit process . . . only where industrial changes might increase pollution in an area, not 

where an existing plant changed its operations in ways that produced no pollution increase).” 

5. See, e.g., Comments of NRDC on NSR Reform proposed rulemaking (63 Fed. Reg. 

39857, Notice of Availability, July 24, 1998), EPA Docket No. A-90-37, Oct. 8, 1998. 

8 
project, which was upheld by the United States Court of Appeals for the Seventh Circuit. As in 

the present case, EPA’s analysis began with the breadth of the modification provision, turning 

next to “the very narrow exclusion provided in the regulations,” that is, the exclusion for 

“routine” activity. See Memorandum from Don R. Clay, Acting Assistant Administrator for Air 

and Radiation, to David A. Kee, Air and Radiation Division, Region V, at 3 (Sept. 9, 1988) (Clay 

Memo). EPA then described the core test for meeting this exclusion: “In determining whether 

proposed work at an existing facility is ‘routine,’ EPA makes a case-by-case determination by 

weighing the nature, extent, purpose, frequency, and cost of the work, as well as other relevant 

factors, to arrive at a common-sense finding.” Id. Applying these commonsense factors, the 

Agency concluded that the WEPCO project was “far from being a regular, customary, or standard 

undertaking for the purpose of maintaining the plant in its present condition.” Id. 6 

The WEPCO determination and subsequent court case led to significant national attention, 

Congressional hearings, and statutory and regulatory changes, but neither the provisions regarding 

routine activity nor EPA’s interpretation of those provisions were affected. 

Beyond the WEPCO decisions, EPA has given further guidance in other NSR and NSPS 

applicability determinations and related actions which elaborate on the preceding factors.7 For 

example, in a 1987 applicability determination regarding the reactivation of a roaster/leach/acid 

plant at the Cyprus Casa Grande Corporation’s copper mining and processing facilities, EPA 

determined that the proposed project would constitute a “major modification,” and did not fall 

into the “narrow and limited set of exclusions” from PSD, including the exclusion for routine 

activity. See Letter from David P. Howekamp, Director, Air Quality Management Division, 

Region IX, to Robert T. Connery, Esq., at 3-4 (Nov. 6, 1987). In particular, EPA concluded that 

because the project called for the replacement of integral components and would entail significant 

6. Specifically, WEPCO proposed to modify its facility in a way that would replace 

numerous major components of the facility (including the steam drums), would require 

pre-approval from the state utility commission, would significantly enhance the efficiency and 

current production capacity of the plant and extend its useful life, would rarely be repeated during 

a unit’s life, and would cost a substantial amount of money, over half of which was designated as 

capital costs. Id. at 4-6. On review, the Seventh Circuit upheld this portion of EPA’s 

determination in its entirety. See WEPCO, 893 F.2d at 910-13. 

7. In addition to the guidance discussed above, EPA’s narrow interpretation of the 

exclusion for routine activity is evident from a passage in its brief to the Seventh Circuit in 

WEPCO. That brief generally reiterates the points addressed in the applicability determination 

that was the subject of the litigation, but elaborates with a helpful example. EPA analogized 

industrial facilities to automobiles, emphasizing that the “regulatory exception for routine, 

maintenance, repair and replacement was meant to cover such things as an oil change, replacing a 

broken headlamp or worn-out tires, changing the sparkplugs, or other similar activities,” rather 

than permitting the replacement of such items as the engine or transmission. Respondent’s Brief 

at 51, WEPCO v. Reilly, 893 F.2d 901 (7th Cir. 1990) (Nos. 88-3264 & 89-1339). 

9 
time (4 months) and cost (an absolute cost of $905,000, which constituted 10 percent of the cost 

of replacing the repaired unit), it was not routine. Id. at 5-6. The agency also noted that certain 

activities, although they would be routine “if performed regularly as part of standard maintenance 

procedure while the plant was functioning or in full working order,” were being performed as part 

of an extensive rehabilitation project and, thus, were properly considered non-routine. Id. at 6; 

see also In re: Monroe Electric Generating Plant, Petition No. 6-99-2 at 11, 19 & n. 19 (Adm’r 

1999) (in grant of CAA § 505(b)(2) veto petition, stating principle that a non-routine collection of 

activities, considered ‘as a whole,’ is not exempt under routine exclusion, even if individual 

activities could be characterized as routine). In another case, in 1975, EPA Region X determined 

that the upgrade of boilers at a pulp mill was non-routine under NSPS, in that it called for the 

addition of additional pressure parts previously not included in the boilers to increase the 

superheater surface of the boilers, even though the additional parts were contemplated under the 

original boiler design. Request for Ruling Regarding Modification of Weyerhaeuser’s Springfield 

Operations, Reg. Counsel, Reg. X (Aug. 18, 1975). When reviewing whether a project was 

routine, other applicability determinations have considered whether the project involved: (1) the 

addition of certain parts previously not included in the units; (2) the expansion of parts of a unit; 

or (3) the replacement of an entire emissions unit. For copies of these actions and other 

applicability determinations and guidance documents, please see EPA’s publicly-available 

databases, available at: http://www.epa.gov/ttn; 

http://www.epa.gov/region07/programs/artd/air/nsr/nsrpg.htm; and 

http://www.epa.gov/oeca/eptdd/adi.html, or contact the staff members named in the cover letter. 

In sum, in these actions and elsewhere, EPA has assessed routineness by considering the 

following factors: 

Nature 

• Whether major components of a facility are being modified or replaced; specifically, 

whether the units are of considerable size, function, or importance to the operation of the 

facility, considering the type of industry involved 

• Whether the change requires pre-approval of a state commission, in the case of utilities 

• Whether the source itself has characterized the change as non-routine in any of its own 

documents 

• Whether the change could be performed during full functioning of the facility or while it 

was in full working order 

• Whether the materials, equipment and resources necessary to carry out the planned 

activity are already on site 

Extent 

• Whether an entire emissions unit will be replaced 

• Whether the change will take a significant time to perform 

• Whether the collection of activities, taken as a whole, constitutes a non-routine effort, 

notwithstanding that individual elements could be routine 

• Whether the change requires the addition of parts to existing equipment 

10
Purpose 

• Whether the purpose of the effort is to extend the useful life of the unit; similarly, whether 

the source proposes to replace a unit at the end of its useful life 

• Whether the modification will keep the unit operating in its present condition, or whether 

it will allow enhanced operation (e.g., will it permit increased capacity, operating rate, 

utilization, or fuel adaptability) 

Frequency 

• Whether the change is performed frequently in a typical unit’s life 

Cost 

• Whether the change will be costly, both in absolute terms and relative to the cost of 

replacing the unit 

• Whether a significant amount of the cost of the change is included in the source’s capital 

expenses, or whether the change can be paid for out of the operating budget (i.e., whether 

the costs are reasonably reflective of the costs originally projected during the source's or 

unit's design phase as necessary to maintain the day-to-day operation of the source) 

These categories are interrelated. Many facts could be relevant to both nature and extent, 

while others could overlap with purpose. Moreover, none of these factors -- standing alone --

conclusively determines a project to be routine or not. Instead, a permitting authority should take 

account of how each of these factors might apply in a particular circumstance to arrive at a 

conclusion considering the project as a whole. 

3. Analysis of Detroit Edison’s Objections to EPA’s Longstanding, Narrow Interpretation 

of the Exclusion for Routine Activity 

In support of its request, Detroit Edison has submitted a number of documents in which 

members of the electric utility industry claim that EPA has recently changed its interpretation of 

the routineness exclusion by narrowing it and that EPA’s prior interpretation was expansive. See, 

e.g., Supplemental Comments of the Utility Air Regulatory Group, EPA Air Docket No. A-90-37 

(Oct. 8, 1999) (UARG Comments).8 As discussed below these arguments lack merit. Moreover, 

it bears noting that if companies have specific questions about the scope of the exclusion, EPA 

has long encouraged sources to seek guidance from their permitting authorities, see New Source 

Review Workshop Manual at A.33-34 (Draft Oct. 1990). 

8. The UARG comments submitted by Detroit Edison in support of its applicability 

determination request pertain to the ongoing “NSR Reform” rulemaking. See 61 Fed. Reg. 

38250 (1996). The views expressed here regarding the UARG Comments pertain only to this 

applicability determination and are without prejudice to the ultimate outcome of the pending 

rulemaking. 

11 
a. Claim that Construction that Does Not Increase Unit’s Emission Rate Is Routine 

Among Detroit Edison’s contentions is the assertion that the routine activity exclusion is 

properly read (and historically has been read by EPA) to cover all “capital projects to replace 

degraded components without increasing the design capacity or maximum achievable hourly 

emission rates.” See UARG Comments at 43. This interpretation would leave NSR to cover only 

“those activities that would create ‘new air pollution’ by significantly increasing the pollutant 

emitting capabilities of the source as designed and built.” Id. at 13. In essence, this argument 

holds that extensive construction activity at a source is exempt from new source requirements, 

even if actual emissions to the atmosphere increase, where the source’s potential to emit does not 

increase. This contention does not withstand scrutiny. EPA’s regulations have since 1980 

explicitly required keying NSR applicability for modifications to the actual emissions 

consequences of a particular change. See, e.g., 40 C.F.R. §§ 52.21(b)(2)(i) (defining “major 

modification” as a change resulting in a significant “net emissions increase”); 52.21(b)(3)(i) 

(defining “net emissions increase” based on “actual emissions”); see also 45 Fed. Reg. 52676, 

52700 (Aug. 7, 1980) (explaining EPA’s adoption of actual emissions baseline for modifications). 

Industry has understood this facet of the NSR program from the outset; indeed, it was one of the 

central points on which industry sought review of the 1980 regulations. See Brief for Industry 

Petitioners on Actual Emissions Definition of Net Increase, Chemical Mfrs. Ass’n v. EPA (D.C. 

Cir.) (No. 79-1112). Accepting Detroit Edison’s proffered interpretation of the routine activity 

exemption, however, would moot this longstanding and contentious quarrel and would make 

meaningless the provisions in the regulations governing the actual emissions baseline for 

modifications. This runs counter to the general presumption that interpretations that render part 

of a regulation superfluous are to be avoided. See, e.g., U.S. v. Larson, 110 F.3d 620, 626 (8th 

Cir. 1997); accord WEPCO, 893 F.2d at 909 (rejecting WEPCO’s proffered definition of 

“physical change,” because it “would open vistas of indefinite immunity from the provisions of 

NSPS and PSD”).9 

b. Mary Nichols Representation that “Restoration” Activity Can Be Routine 

9. The argument that only changes that increase a unit’s emissions rate can trigger the 

NSR modification provisions has been rejected by two courts of appeals. As noted, see supra 

note 1, in Puerto Rican Cement, the First Circuit rejected a claim that modifications to a cement 

kiln, which made production more efficient and decreased the hourly emissions rate but could 

increase the plant’s utilization rate, such that actual emissions to the atmosphere might increase, 

were exempt from PSD. The company argued that the project fell under the PSD regulatory 

exclusion for changes that result in an “increase in the hours of operation or in the production 

rate.” See 889 F.2d at 298. Similarly, in WEPCO, where the company was making “like-kind” 

replacements of components to restore the original design capacity of the plant, there was no 

increase in emissions per unit of output; rather, for PSD purposes, the emissions increase was 

attributable to increased utilization. The Seventh Circuit rejected the company’s reliance on the 

exclusion for increased hours of operation/rates of production. See 893 F.2d at 916 n. 11. 

12 
In the submitted materials, utility representatives claim that EPA has previously indicated 

that the utilities may undertake facility restorations without considering NSR. In 1995, industry 

encouraged EPA to propose to amend the NSR rules to include a “restoration” exclusion for any 

change that enabled a deteriorated unit to increase its emissions, as long as the unit did not exceed 

its highest recent (i.e., in the last 5 years) achievable capacity. EPA responded by saying that it 

intended to propose a number of flexible mechanisms to allow sources to make changes without 

triggering NSR. The Agency also said, “EPA believes that the routine maintenance exclusion 

already included in the existing NSR regulations also has the effect of excluding ‘routine 

restorations.’” Letter from Mary D. Nichols, Assistant Administrator for Air and Radiation, to 

William R. Lewis, Morgan, Lewis and Bockius, attachment at 19 (May 31, 1995). Some in 

industry quarters suggest that this sentence indicates EPA’s interpretation that restoration 

activities are, by definition, exempt. See UARG Comments at 17 (“In 1995, [EPA] confirmed 

that no special rule was needed for industrial ‘restoration’ projects because such projects were 

covered already under the ‘routine maintenance’ exclusion.”). These claims are incorrect. 

Rather, EPA’s statement says merely that “routine restorations,” not all “restorations,” are 

exempt. Thus, EPA’s remark simply is tautological; it says that to the extent the restoration is 

itself “routine,” the current exclusion for “routine” activity will exempt it from review.10 

c. Assertion that EPA Expects No Change to Trigger NSPS Modification Provision 

Detroit Edison also maintains that several EPA documents indicate that the Agency 

believed until recently that utility modifications would generally avoid NSR, and that these 

documents therefore reveal an expansive understanding of the exemption for routine activity. In 

particular, the UARG Comments highlight a General Accounting Office (GAO) report created 

when Congress was considering the acid rain program,11 a letter to Senator Byrd from EPA 

regarding a proposed NSPS, and the preamble to the proposed NSPS.12 Although none of these 

documents discuss the scope of the routine maintenance, repair, and replacement exemption, 

10. For example, past piecemeal repairs and replacement of individual rotor blades at 

Monroe presumably restored some portion of the efficiency lost since the last scheduled outage. 

While not the subject of this determination, it appears that those activities – which as explained 

above were far different from the proposed Dense Pack upgrade – are more likely to be properly 

characterized as excluded “routine restorations.” 

11. UNITED STATES GENERAL ACCOUNTING OFFICE, PUB. NO. GAO/RCED-90-200, 

ELECTRICITY SUPPLY: OLDER PLANTS’ IMPACT ON RELIABILITY AND AIR QUALITY (1990). 

12. The submissions also refer to an article written by EPA staff. This document warrants 

no discussion; it does not represent Agency opinion, as noted in the cited article. See James 

DeMocker et. al, Extended Lifetimes for Coal-fired Power Plants: Effect Upon Air Quality, 

PUBLIC UTILITIES FORTNIGHTLY at 30 n.* (Mar. 20, 1986). Moreover, the article is silent on the 

question at issue here -- when certain activity is routine -- and therefore would not be relevant 

even if it did speak for EPA. 

13 
industry points to them as evidence that EPA believed that NSR would apply to electric utilities 

only rarely. 

The cited documents do not remotely suggest a broad EPA interpretation of the 

routineness exemption. First, although the GAO report contains a number of statements that 

suggest that EPA did not expect many utilities to trigger the NSPS or PSD modification rules, it 

does not suggest how broadly or narrowly the exclusion for routine activity has been interpreted; 

further, some statements in the report are best read as reflecting a narrow scope to the exclusion. 

GAO Report at 28, 30 (acknowledging that “life extension projects involve physical or 

operational changes to power plants” and distinguishing between projects aimed at restoring 

generating capacity and those which prevent plant deterioration). In addition, as noted above, the 

PSD regulations provide broad leeway for sources to avoid new source requirements by making 

offsetting emissions reductions at the source even when undertaking extensive physical or 

operational changes that, standing alone, would result in emissions increases. In many 

circumstances, such “netting out” of review is a more cost-effective strategy than obtaining a PSD 

permit. Moreover, at the time of the 1990 CAA Amendments, any statement or assumption EPA 

made regarding whether electric utilities could trigger NSR was based on information provided by 

industry at that time. The power plant undertaking a physical or operational change is responsible 

for obtaining the necessary regulatory approvals from each agency that regulates it. State and 

federal environmental agencies do not regularly review submissions to public utility commissions, 

the Federal Energy Regulatory Commission, a pipeline authority or a local zoning board; nor are 

those agencies charged with the authority to require CAA permits. As a result, EPA, as well as 

states, were unaware that activities that were under way at utilities would in fact increase 

emissions and thus trigger NSR. Although EPA's conclusions were reasonable based on the 

information EPA had at the time, EPA’s statements might have been different based on more 

complete information, including information from facilities requesting applicability determinations. 

Second, the utilities point to a letter to Senator Byrd from OAQPS Director John Seitz 

regarding potential revisions to the NSPS for steam generating units and to the preamble to a 

1997 proposed rule on the same topic. Both documents indicate that EPA expected few, if any, 

existing units to become subject to the proposed NSPS as a result of being modified. Again, these 

documents do not suggest that the reason EPA had such an expectation was because of a broad 

interpretation of the exemption for routine activity. Indeed, the preamble to which industry refers 

has a lengthy discussion of the reasons why existing units would avoid the NSPS for 

modifications, but notably omits the “routine” exclusion. See 62 Fed. Reg. 36947, 36957 (July 9, 

1997).13 

13. In addition, the UARG Comments claim that a “key” factor in the D.C. Circuit’s 

recent vacatur of the fossil-fuel boiler NSPS for modified units was that some EPA offices viewed 

quite a bit of “maintenance” activity as potentially covered by the modification provision and 

others thought that few, if any, changes would trigger the NSPS. UARG Comments at 3 n.8. 

Research has revealed no support for this assertion. The court’s order in the case is brief and 

(continued...) 

14 
d. Assertion that Industry Practice Defines Routineness 

The submitted materials also seem to contend that if a particular industry sector has an 

established practice of undertaking certain construction activity, no matter how infrequent, costly, 

or major, that industry practice is “routine.” See UARG Comments at 37 (“[E]lectric utilities 

undertake maintenance, repair and replacement activities pursuant to their legal obligation to 

provide a safe and reliable source of electricity. This defines what is ‘routine’ for this industry.”) 

It is true that EPA has stated that the “determination of whether the repair or replacement of a 

particular item of equipment is ‘routine’ under the NSR regulations, while made on a case-by-case 

basis, must be based on the evaluation of whether that type of equipment has been repaired or 

replaced by sources within the relevant industrial category.” 57 Fed. Reg. at 32326. However, 

this statement merely recognizes that a piece of equipment may be more integral, costly, or less 

frequently replaced at one kind of facility than at another. Accordingly, although it may not be 

routine for one industry to replace or repair certain equipment or undertake certain maintenance 

activity, similar construction might be routine in a different industry. As a result, EPA has 

historically considered whether a typical source in the relevant industry undertakes the proposed 

activity as a routine matter. See, e.g., 40 C.F.R. §60.14(e)(1) (NSPS regulations require EPA 

determination that activity is “routine for a source category” to be exempt). This does not mean, 

however, that whatever activity members of a particular industry have done – no matter how 

infrequent, costly, sizable, or capable of expanding the source’s operations or extending its useful 

life – is necessarily routine. 

B. Analysis of “Routine” Maintenance, Repair or Replacement at the Monroe Plant 

Looking at the nature, extent, purpose, frequency and cost of the project, along with other 

relevant factors in light of the framework discussed above, EPA concludes that the proposed 

Dense Pack project is a non-routine physical change. In sum, although utilities typically perform 

maintenance, repair and replacement of individual deteriorated turbine blades about once every 

four years, the reconfiguration and upgrade of a turbine’s entire high-pressure section (including 

all of the blades) is a significant departure from necessary maintenance operations aimed at 

keeping the turbine in ordinary working condition, and is rarely performed at a typical utility. 

Detroit Edison expects the new Dense Pack configuration to substantially increase the unit’s 

ability to convert steam to electricity over its original design and the project will reduce the rate of 

blade efficiency deterioration by 70%. Moreover, the new blades will alter the inspection and 

replacement program of worn blades, allowing inspection and replacement to occur every 10 

years instead of 4 years. Finally, the project requires a significant capital expenditure of $12 

13. (...continued) 

does not suggest a reason for its disposition of the matter, except that the court believed that the 

NSPS for modified boilers was “seriously deficient.” Lignite Energy Council v. EPA, No. 

98-1525 (D.C. Cir. Sept. 21, 1999). 

15 
million, which Detroit Edison states is triple the cost of replacing the worn blades with ones of the 

same design, and which vastly exceeds prior blade and rotor maintenance costs. A more detailed 

application of the relevant factors to the information that Detroit Edison has submitted regarding 

the Dense Pack project follows. 

Nature and Extent 

Detroit Edison seeks to replace the entire high-pressure section of two turbines to allow 

for use of a new type of turbine blade and to reconfigure the design to improve efficiency. This 

includes reconfiguration of blades in the high-pressure sections of the two units, including new 

parts and additional stages. The turbine – in particular the high-pressure section – is an integral 

and major component of an electric generating facility. Furthermore, the proposed change will be 

of considerable importance to the operation of the facility because, among other options, it will 

enable the units to produce more electricity with the same coal usage, boiler heat input and steam 

flow, and allows operation of the units with less maintenance. In addition, by making operation of 

the affected units more efficient, the Dense Pack upgrade will provide an economic incentive to 

increase operations at the plant. 

Several other facts that EPA has found telling in past decisions and guidance also indicate 

that the Dense Pack upgrade would not be routine. First, the project cannot be performed during 

the full functioning of the plant and instead would require the affected units to be shut down. 

Second, the project would involve the addition of parts not previously used. Third, the project 

could not be completed with parts typically stored on site. Finally, Detroit Edison plans to 

capitalize 100% of the cost of the project. 

Purpose 

Replacement of currently deteriorated blades with blades of the same design would restore 

only 2% of the efficiency that has been lost as the equipment has aged, leaving the units 5% below 

their original efficiency rating. The Dense Pack project, however, would increase efficiency of the 

high-pressure sections of the turbines over current levels by 12%, and overall efficiency of the 

turbines by 4.5%. The new configuration could reduce efficiency deterioration by 70%. 

Thus, the Dense Pack project will not simply maintain the equipment at the current state, 

but will enhance the operation of the Monroe Power plant by recovering the accumulated lost 

efficiency, increasing the efficiency over the original design, and decreasing the rate of turbine 

blade deterioration in the high pressure section. This efficiency enhancement and decrease in 

deterioration rate would in turn substantially enhance the operational capabilities of the affected 

units, by providing an economic basis for increased utilization. As discussed below, Detroit 

Edison claims that it does not intend to use the unit more in the future as a result of the Dense 

Pack project, but that does not change the fact that the project would enable it to do so. 

Frequency 

16
Turbine upgrades like the Dense Pack project are performed rarely, if ever, in the course 

of a utility source’s life. Detroit Edison has not provided any information to suggest that 

individual facilities in the industry frequently conduct a complete replacement of the high pressure 

section of a utility steam turbine, relying instead on two claims: (1) that utilities commonly 

perform turbine maintenance activity; and (2) that it estimates that projects “similar” to the Dense 

Pack have been performed at a number of utilities. Neither of these claims addresses the central 

question – whether it is industry practice that a typical facility will frequently conduct the project 

in question. The only available information -- Detroit Edison’s experience – suggests that 

projects like the Dense Pack are performed infrequently at individual sources; this project has 

never been performed previously at Monroe and will greatly increase the time between 

“overhauls” of the high pressure section. 

Cost 

Detroit Edison expects the Dense Pack project to cost approximately $12 million. Detroit 

Edison has estimated that replacement of the current blades with blades of the same design would 

cost approximately $2 million per unit. Generally speaking, a new plant costs approximately 

$2,000 per kilowatt. Therefore, a new 750 megawatt unit would cost about $1.5 billion. 

An absolute cost of $12 million constitutes a significant cost, which tends to make this 

project non-routine. Detroit Edison argues that the cost of the Dense Pack project is significantly 

less than the cost of the Port Washington project at issue in the WEPCO case. In WEPCO, the 

estimated cost of the life extension project was $87.5 million, at least $45.6 million of which was 

capital costs. Clay Memo at 6. EPA acknowledges that this cost is well in excess of the 

proposed Dense Pack project, especially considering inflation. However, as the Agency noted in 

1988, WEPCO’s activity was “far from” routine, id. at 3, and the facts of that case should be 

considered in that context. By contrast, EPA has determined that a proposed project costing 

$905,000 was non-routine. Letter from Howekamp to Connery at 5. Considering these two 

precedents, EPA believes that the $12 million expenditure in this case, all of which is capital in 

nature, supports a determination that the proposed project is non-routine. 

Although the relative cost of the Dense Pack project, when compared with replacing the 

entire electric generating facility, is small, it is orders of magnitude larger than other blade 

maintenance activity Detroit Edison has conducted in the past. For instance, it appears that the 

company spent $18,700, $33,100, and $7,900 to replace high-pressure rotors in three projects in 

1981 and 1982. Further, the project is significantly more costly than simply replacing deteriorated 

blades today; Detroit Edison acknowledges that the Dense Pack upgrade would cost three times 

more than its alternative blade repair and replacement project. 

17
V. Emissions Increase 

Since the Dense Pack project constitutes a physical change, EPA must consider whether it 

would result in a significant net emissions increase. Before providing its analysis, once again EPA 

will review what the regulations require. Thus, the following discussion provides a context for 

the analysis of the project that follows. 

A. Regulatory Requirements 

If a physical change or change in the method of operation is not “routine,” it still does not 

trigger PSD unless it results in a significant net emissions increase. This involves comparing 

recent pre-change, or “baseline”, actual emissions to a projection of future actual emissions 

following the change. A source’s pre-change level of actual emissions from a given unit is “the 

average rate, in tons per year, at which the unit actually emitted the pollutant during a two-year 

period which precedes the [date of the change] and which is representative of normal source 

operation.” Id. § 52.21(b)(21)(ii). This figure must be compared to the source’s post-change 

emissions; however, because NSR is a preconstruction program, one must project the unit’s 

future emissions. For units that are not “electric utility steam generating units,” EPA’s rules 

require that for units that have “not begun normal operations,” i.e., units that will undertake a 

non-excluded physical or operational change, the post-change emissions “shall equal the potential 

to emit of the unit,” which is the “maximum capacity of a stationary source to emit a pollutant 

under its physical and operational design,” but which also accounts for pollution controls and 

permit restrictions that limit lawful emissions to a level below the maximum physical capacity. Id. 

§ 52.21(b)(4).14 If a particular change would, standing alone, increase actual emissions by more 

than a “significant” amount, see id. § 52.21(b)(23), the change is subject to PSD, unless other 

activity at the source renders the net emissions effect of the change insignificant when considered 

together with contemporaneous (generally within the past five years) emissions increases and 

decreases at the source. See id. § 52.21(b)(3) (defining “net emissions increase”). 

For electric utility steam generating units, the post-change emission increase calculation is 

14. Under current regulations, changes to a unit that are not routine nor subject to one of 

the other NSR exemptions are considered to be of such significance that pre-change emissions 

should not be relied on in projecting post-change emissions. For such units, “normal 

operations”refers to operations after the change, and are deemed not to have begun. The 

regulations initially presume that such units will operate year-round at full capacity, but a source 

owner is free to overcome the presumption by agreeing to limit its potential to emit to any level 

desired through enforceable restrictions on operations or the use of pollution controls. For 

example, if limiting the potential to emit results in an insignificant change in emissions, the source 

can avoid PSD applicability. See 63 Fed. Reg. 39858 (July 24, 1998) (Notice of Availability); see 

also 45 Fed. Reg. 52676, 52688-89. If business plans later change and the owner desires to relax 

those restrictions and obtain a PSD permit at that later time, it may do so. See 45 FR 52689; 54 

FR 27274, 27280. 

18 
governed by regulations adopted in 1992 (57 Fed. Reg. 32314, July 21, 1992), commonly referred 

to as the “WEPCO rule.” Although the WEPCO rule did not change the regulatory provision that 

establishes a unit’s pre-change emissions, EPA announced that it would view any consecutive 

two-year period during the preceding five years as presumptively reflective of “normal source 

operations.” See 57 Fed. Reg. at 32324-25. In addition, EPA amended the regulations regarding 

a utility unit’s post-change emissions in two ways. First, the rules allow utilities to project future 

emissions resulting from a particular change without committing to a permit restriction limiting 

the unit’s potential to emit to a level below its maximum capacity to emit a pollutant,15 and they 

provide that emissions increases independent of the physical or operational change may be 

discounted from the post-change emissions of the unit. A utility making a particular change, 

instead of accepting permit restrictions on the potential of the changed unit to emit a particular 

pollutant, may avoid PSD if its projection of “representative actual annual emissions” following 

the change is not significantly greater than its pre-change emissions, but only if the source 

“maintains and submits to the Administrator [or relevant state permitting authority] on an annual 

basis for a period of 5 years from the date the unit resumes regular operation, information 

demonstrating that the physical or operational change did not result in an emissions increase.” 

E.g., 40 C.F.R. § 52.21(b)(21)(v). Second, in evaluating the source’s claimed exemption from 

PSD, the permitting authority must “[c]onsider 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. . . .” Id. 

§ 52.21(b)(33)(i). The permitting authority must discount any increase “that could have been 

accommodated during the representative baseline period and 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.” Id. § 52.21(b)(33)(ii). Nevertheless, if an emissions increase could not have occurred 

“but for the physical or operational change,” the increase must be considered to result from the 

change. See 57 Fed. Reg. at 32327. 

Where the end result of an emissions increase analysis for electric utilities is a projection 

accepted by the permitting authority that emissions would not increase as a consequence of a 

particular change, the rules call for an initial determination that the change would not be a major 

modification subject to PSD. See Letter from David P. Howekamp, Air Division, Reg. IX, to 

15. We are aware, as Detroit Edison states in its initial applicability determination request, 

that EPA Region VII previously has suggested that a utility undertaking a change to a part of the 

source other than the boiler may not be entitled to take advantage of the provision that allows for 

a forecast of future emissions without committing to a present limitation on the source’s potential 

to emit. We have reviewed Region VII’s discussion of the matter and the applicable regulations, 

and we conclude that Detroit Edison may use this provision to calculate future emissions from the 

boilers, even though it is making changes at the turbines. The plain language of the regulation is 

categorical; irrespective of where a change takes place, the post-change emissions of the electric 

utility steam generating unit – which certainly includes the boiler – must be determined using the 

“representative actual annual emissions” approach. See 40 C.F.R. § 52.21(b)(21)(v). 

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Richard K. McQuain, HEI Power Corp., at 1-2 (undated) (describing WEPCO rule as conferring 

conditional exemption from PSD where projected emissions increase is insignificant). However, if 

the information that the source must submit for the requisite number of years following the 

change demonstrates that emissions have in fact increased as a result of the change, the source 

becomes subject to PSD at that time. See 40 C.F.R. § 52.21(b)(21)(v); 57 Fed. Reg. at 32325 

(“If . . . the reviewing authority determines that the source’s emissions have in fact increased 

significantly over baseline levels as a result of the change, the source would become subject to 

PSD requirements at that time.”) 

B. Analysis of Significant Net Emissions Increase at the Monroe Plant 

Because the Dense Pack project would be a physical change to a major stationary source, 

Detroit Edison must estimate whether the change would result in a significant net emissions 

increase to determine whether it must undergo PSD review. 40 C.F.R. § 52.21(b)(2)(i). 

According to the submission, Detroit Edison asserts that emissions will not increase as a result of 

the project. As discussed below, EPA accepts for purposes of this determination Detroit Edison’s 

representation that emissions will not increase as a result of the project, and concludes that the 

Dense Pack upgrade will not trigger PSD, provided that, prior to beginning construction, the 

company validates its representation by developing and submitting to the permitting agency a 

calculation of “baseline” actual emissions and a projection of future actual emissions following the 

project. 

Detroit Edison maintains that emissions will not increase as a result of this project because 

it concludes that one of two consequences will follow the upgrade. First, Detroit Edison claims 

that because the change would increase efficiency, it would allow increased electricity generation 

using the same amount of coal, boiler heat input and steam flow while producing the same level of 

emissions as currently emitted. Alternatively, Detroit Edison claims the project would enable it to 

generate the same amount of electricity it currently generates using less coal, boiler heat input and 

steam flow, resulting in reduced emissions. Detroit Edison rejects the third possibility -- that it 

would use the units more, and increase emissions at the plant, as a result of the blade replacement. 

Detroit Edison states that these units already are at the top of the loading order and had a capacity 

factor of approximately 85% for 1998. Thus, the company asserts, any increase in use would be 

the result of demand or unforeseen outages, which could and would have occurred regardless of 

whether or not Detroit Edison proceeds with the Dense Pack project. The company has not, 

however, provided any specific projections of future operations and emissions to EPA to support 

its claims regarding emissions levels. 

EPA disagrees that the dispatch position of the Monroe plant necessarily means that the 

Dense Pack project would not result in increased use, and hence, increased emissions. Given the 

information provided by the company showing that there is some fluctuation in annual use and 

that Units 1 and 4 are not operated at their maximum physical capacity, the fact that Monroe is at 

the top of the loading order is insufficient to demonstrate that the significant increase in efficiency 

associated with the Dense Pack project, and the corresponding decrease in the cost of producing 

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electricity, would not result in increased use and emissions. The possibility that Detroit Edison 

would take advantage of Monroe’s increased efficiency to sell additional power in deregulated 

utility markets beyond its regular service area is an additional reason that the Dense Pack project 

may well lead to increased emissions. Accordingly, based on the information provided, EPA 

cannot agree at this time that any future increased emissions at the Monroe plant due to increased 

use should be attributed to demand growth (as that term is used in the PSD regulations) or other 

factors not causally related to the Dense Pack project. 

EPA notes in this regard that the large size of the Monroe units means that only a small 

increase in use could result in emissions increases that are significant for PSD purposes. For 

example, if Detroit Edison decides to run the Monroe plant even 1% more due to the improved 

efficiency, the resulting increase in emissions would be well above the significance threshold. If a 

one to five percent increase in operation were to result from the Dense Pack project, increases on 

the order of 160-800 tons of NOx and 400-2000 tons of SO2 would occur, each of which would 

be considered “significant,” and trigger PSD absent sufficient offsetting contemporaneous 

emission reductions. See 40 C.F.R. § 52.21(b)(23)(i) (defining 40 tons per year emission 

increases for sulfur dioxide and nitrogen oxides as “significant”). 

In determining whether a nonexempt physical or operational change at an electric utility 

steam generating unit will result in a significant net emissions increase, the applicable PSD 

regulations at 40 C.F.R. § 52.21(b)(21)(v) and (b)(33) call for a calculation of pre-change 

“baseline” actual emissions and a projection of future actual emissions for the two year period 

after the change (or another two year period that is more representative of normal post-change 

operations). Detroit Edison has not supplied such a projection, perhaps in reliance on its position 

that the Dense Pack project would be exempted as routine. The company has represented, 

however, that “the Dense Pack would not result in an increase in the number of hours these units 

are expected to be operated.” EPA has no specific information disputing that assertion, and so is 

willing to accept Detroit Edison’s representation. Nevertheless, until the company provides the 

calculation and projection called for by the regulations to verify its projection of no increase in 

actual emissions, our determination is provisional. Detroit Edison should submit these figures to 

the Michigan Department of Environmental Quality prior to the beginning of construction. 

The PSD regulations also require Detroit Edison to maintain and submit to the delegated 

permitting agency, for a period of 5 years from the date the units resume regular operation 

following completion of the Dense Pack project, information demonstrating that the project did 

not result in an emissions increase. To adequately track post-change emissions, EPA expects that 

this information must include records on annual fuel use, hours of operation, and fuel sulfur 

content. In making these calculations, Detroit Edison may exclude emissions increases that are 

caused by other factors, for example, emissions increases that it demonstrates are due to 

variability in control technology performance or coal characteristics. In addition, when 

calculating emission increases, under current regulations Detroit Edison may exclude that portion 

of its emissions attributable to increased use at the unit due to the growth in electrical demand for 

the utility system as a whole since the baseline period. See 40 C.F.R. § 52.21(b)(33)(ii). 

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Finally, EPA notes that regardless of whether PSD review is triggered due to the Dense 

Pack project, Detroit Edison remains responsible for compliance with all other applicable federal, 

state, and local air pollution regulations. 

VI. Conclusion 

For the reasons delineated above, EPA concludes that the changes proposed by Detroit 

Edison would not be routine. Detroit Edison’s submissions do not demonstrate that projects such 

as the Dense Pack are frequent, inexpensive, or done for the purpose of maintaining the facility in 

its present condition. Therefore, the Agency determines that the Dense Pack upgrade would be a 

“physical change,” as that term is used in the NSR regulations. EPA disagrees with Detroit 

Edison’s claims that the Dense Pack project is eligible for the exclusion from PSD permitting for 

routine maintenance, repair, and replacement. The determination of whether a proposed physical 

change is “routine” is a case-specific determination which takes into consideration the nature, 

extent, purpose, frequency, cost of the work, as well as other relevant factors. After carefully 

reviewing all the available information, in light of the relevant factors, EPA has determined that 

the proposed project would not be “routine.” 

The PSD regulations (under the provisions commonly known as the “WEPCO rule”) 

allow a source undertaking a nonroutine change that could affect emissions at an electric utility 

steam generating unit to lawfully avoid the major source permitting process by using the unit’s 

representative actual annual emissions to calculate emissions following the change. Detroit 

Edison contends that representative actual annual emissions following the Dense Pack project will 

not be greater than its pre-change actual emissions, because the project will not result in increased 

use of the units. Therefore, Detroit Edison may avoid major PSD permitting to the extent it 

documents its pre-change baseline emissions and submits information following the change to 

confirm its pre-change projection. If Detroit Edison fails to comply with the reporting 

requirements of the WEPCO rule or if the submitted information indicates that emissions have 

increased as a consequence of the change, it will be required to obtain a PSD permit for the Dense 

Pack project. 

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