4APT-ARB

UNf j STATES ENVIRONMENTAL PROTECT,,,,.; AGENCY

REGION 4

ATLANTA FEDERAL CENTER

61 FORSYTH STREET. SW

ATlANTA. GEORG/A30303-8909

JAN 1 5 1998

•

Mr. Ronald W. Gore

Chief

Air Division

Alabama Dept. of Environmental

Management

1751 Congressman W.L. Dickinson Dr.

Montgomery, Alabama 36109-2608

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

Dear Mr. Gore:

We have received the final permits and discussion of the

final determination regarding the·above referenced facility,

which were submitted by a December 19, 1997, letter from Ms.

Marilyn B11iott. Due to the potential problems associated with

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

by Alabama Power in their November 12, 1997, correspondence.

While such technical infeasibility was not raised during the 30-

day public comment period concerning the State's ~Preliminary

Determination and Draft 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 proposed project, as

indicated in the State's ~Final Determination and Response to

Conunents," the use of Olin's existing coal-fired boiler is

expected to 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." Although NOx emissions from the coal-fired

boiler were not available for use in the application for the

cogeneration facility as a contemporaneous emission 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- approved pursuant to this

section, which permit 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 Facility
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are separate sources, credit for emission reductions front the

coal-fired boiler may not be considered by 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-fired boiler may not be considered

again (or double counted) at a later date in PSD permitting determinations for the Olin Chemical Plant.

While we now agree that the BACT determination concerning the Olin cogeneration project 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 review process. First, although we agree that it is appropriate to discuss

general permitting procedures and requirements with an applicant

prior to the submittal of an application and to include the

regulatory procedural requirements, discussion of internal

criteria (i.e., a range of acceptable control costs) which will

be used by the State to make its final permitting decision is not

acceptable to EPA for an approved PSD program. Such discussions

and informal agreements with an applicant may in some instances

adversely affect the content and accuracy_of a permit application. Any discussions or negotiations regarding the

State's final permitting decision should not take place until the

State has had an opportunity to review a complete application.

Second, we continue to find the State's use of a

predetermined quantity (i.e., $4,000/ton removal cost) as a

method of determining acceptability of cost ·effectiveness to be

arbitrary and inappropriate. The appropriate use of economics in

the BACT analysis is based on 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 provided by the applicant should

focus on those costs which would differentiate an individual

source from similar sources. In cases where use of a particular

technically feasible control is limited in that industry or

similar industries, another method for utilizing economic

information is to compare the cost of control of a particular

pollutant with other 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 of BACT for a

particular source be done on a case-by-case basis. This is why the Agency has not specified any maximum cost which should be

considered unacceptable or framed any such range or costs for

making such determinations. Although we have indicated in past

correspondence that $4,000 to $5,000/ton is generally considered

to be an acceptable cost for the control of NOx emissions, we

have not specified any maximum cost whi~h should be considered to

be unacceptable and have no intention of doing so.
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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-NOx burner (DLNB) option with the DLNB

plus SCR option), the· economic analysis portion of a BACT review,

in most 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«riLdP;r

R. Douglas Neeley

Chief

Air and Radiation Technology Branch

Air, Pesticides, and Toxics

Management Division