4APT-ARB UNf j STATESENVIRONMENTALPROTECT,,,,.;AGENCY REGION4 ATLANTAFEDERALCENTER

61 FORSYTHSTREET.SW ATlANTA.GEORG/A30303-8909

JAN 1 51998 

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Mr. RonaldW. Gore Chief Air Division Alabama Dept. of Environmental Management 1751 Congressman W.L. Dickinson Dr. Montgomery, Alabama 36109-2608

SUBJ: PSD Permit forAlabama Power, Olin Cogeneration Facility, McIntosh, Alabama (PSD-AL-187)

DearMr. Gore:

We have received the final permits and discussion of the final determination regarding the·above referenced facility, whichwere submittedby a December 19, 1997, letter fromMs. Marilyn B11iott. Due to the potential problems associatedwith the use of an ammonia containing exhaust gas in Olin's carbonation system, we consider the use of selective catalytic reduction (SCR) to be technically infeasible for the proposed project. This technical issue was first brought to our attention byAlabama Power in theirNovember 12, 1997, correspondence. While such technical infeasibility was not raised during the 30- daypublic comment period concerning the State's**~Preliminary** Determination andDraft permit," the State's."Final Determination and Response to Conunents" provides an adequate basis in the BACT analysis to address our earlier concerns regarding the use of SCR.

In further clarification on this proposedproject, as indicated in the State's**~Final** Determination and Response to Conunents," the use of Olin's existing coal-firedboiler is expectedto cease upon start-up of the cogeneration facility. As stated in the public notice (published on October 1, 1997) for the preliminary determination and draft permit,**~when** the cogeneration facility is operational, Olin will shut down an existing 249**MMBt~/hr** coal fired boiler that is**u~ed** to provide process steam." AlthoughNOx emissions from the coal-fired boiler were not available for use in the application for the cogeneration facility as a contemporaneousemission reduction, it is acknowledged that these emission reductions were;considered in the State's permitting determination for the Olin Cpgeneration Facility. As stated in the PSD regulations at 40 CPR §S1.166, "an increase or decrease in actual emissions·is creditable only if the reviewing authority has not relied on it in issuing a permit for the source under regulations-approvedpursuant to this section, whichpermit is in effect when the increase in actual emissions from the particular change occurs." Since the Olin Chemical Plant and the Alabama Power/Olin Cogeneration Facility2

are separate sources, credit for emission reductions front the coal-firedboilermay not be consideredby both sources. Since the State has already given consideration to, or relied on, the emission reductions in the issuance of a PSD permit to the Alabama Power/Olin Cogeneration Facility, emission reductions from the shut down of the coal-firedboilermay not be considered again (or double counted) at a later date in PSDpermitting determinations for the Olin Chemical Plant.

While we now agree that the BACT determination concerning the Olin cogenerationproject is sufficient due to the technical issues, we would like to take this opportunity to raise the following concerns with the State's overall BACT reviewprocess. First, although we agree that it is appropriate to discuss general permittingprocedures and requirements with an applicant prior to the submittal of an application and to include the regulatoryprocedural requirements, discussion of internal criteria (i.e., a range of acceptable control costs) whichwill be usedby the State to make its final permitting decision is not acceptable to EPA for an approved PSDprogram. Suchdiscussions and informal agreements with an applicant may in some instances adversely affect the content and accuracy_of a permit application. Any discussions ornegotiations regarding the State's final permitting decision shouldnot take place until the State has hadan opportunity to review a complete application.

Second, we continue to find the State's use ofa predeterminedquantity (i.e., $4,000/tonremoval cost) as a method ofdetermining acceptability of cost·effectiveness to be arbitrary and inappropriate. The appropriate use of economics in the BACT analysis is basedon the reouttable presumption that if

sources within a specific industry are utilizing a control device, then the.cost of that control is reasonable for that industry. The economic analysis providedby the applicant should focus on those costs whichwoulddifferentiate an individual

source from similar sources. In cases where use of a particular technically feasible control is limited in that industry or similar industries, anothermethod for utilizing economic information is to compare the cost of control ofa particular pollutant withother cases of the pollutant being controlled. In any case, the use of an arbitrary "bright line" cut.-off for determining what is economically reasonable conflicts with the statutory requirement that a determination ofBACT for a particular source be done on a case-by-case basis. This is why the Agency has not specified anymaximumcost which shouldbe consideredunacceptable or framed any such range orcosts for making such determinations. Althoughwe have indicated inpast correspondence that $4,000 to $5,000/ton is generally considered to be an acceptable cost for the control ofNOx emissions, we have not specified anymaximumcost**whi~h** shouldbe considered to be unacceptable andhave no intention of doing so.3
Third,· the State's use of incremental costs alone to analyze economic cost effectiveness is inappropriate and arbitrary in most cases: Although an incremental cost analysis is the same as
a total cost analysis for the Olin Cogeneration project (i.e., a comparison of the dry low-NO
x burner (DLNB) option with the DLNB plus SCRoption), the·economic analysis portion of a BACT review, inmost cases, includes a separate consideration of both incremental and total control costs. Relying solely on the incremental cost effectiveness for all proposed projects does not allow an equitable comparison of control costs with other similar sourCes in an industry.

If you have any questions regarding our review of the permit application package, please contact Keith Goff of my staff at (404)562-9137. Sincerely yours, 

# Wo«r

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R. Douglas Neeley Chief Air and Radiation Technology Branch Air, Pesticides, and Toxics Management Division