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# A-90-0 6

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## A * $ UNITE D STATE S ENVIRONMENTA LPROTECTIO N AGENC Y Offic e ofAi rQualityPlannin g an d Standard s Research Triangl e Park , Nort h Carolin a 2771 1 

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J MEMORANDU

M TO : Docke t FROM : Chebryl l Edward s CLUM^M- &boa^dL+ DATE : Jun e 4 , 199 1 SUBJECT : WEPC O Legislativ e Rul e Draf t The revision s marke d i nthi s draf t legislativ e rul e reflec t the consensu s reache d betwee n EPA , the Departmen t o f Energy , an d the Counci l o f Economi c Advisor s during a May30 , 199 1 meeting . Atyped versio n o f thes e revision s can be foun d i nthe draf t date d May31 , 1991 .



# JP. 3 4. ''

WEPC O LEGISLATIV E RUL E DRAF T MA Y28 , 199 1 ENVIRONMENTA LPROTECTIO N AGENC Y 4 0 CF RPart s 51 , 52 , an d6 0 [FR L] Requirement s fo r Preparation , Adoption , an dSubmitta l o f Implementatio nPlans ; Approva l an dPromulgatio no f Implementatio nPlans ; Standard s o f Performanc e fo r Ne w stationar y

sources . AGENCY : Environmenta l Protectio nAgency . ACTION : Notic e o f Propose dRul e SUMMARY : Th e applicabilit yo f th e ne wsourc e requirement s o f Titl e I o f th e Clea nAi r Ac t t o physica l o r operationa l change s a t electri c utilit ygeneratin g unit s i s a n issu e o f considerabl e *.••* • re-res t a ~ *Wi. < hma, a * ecu , A * • <A f^. vtiyu * p/.-.*_Sf-^ e •- L A^J*Trf\ , cunce^n-and * coTTtri_)Versy"at~t"hi s time . The-uti-l*it*y-industry , bee£tttse—_rt~l s ^"primar ysource-o f sulfu r dioxid e emissions , mus t ca^r yLli e fuUr-gconoirfi-C " burde nu_r~reducing-emission s linke dto - .acid-xain*

- Man yutilitie s wil l b e undertakin g majo r pollutio n /AAdr^rri,A • li

> contro l project s a t thei r unit s i n th e nex t fe wyears."^i^ t th e sam e time , th e applicabilit yo f existin g ne wsourc e regulation s t o modification s ha s bee nth e sourc e o f tw o recen t federa l appellat e decisions , Wisconsi nElectri c Powe r Co . v . Reilly , 89 3 F.2 d90 1 (7t hCir . 1990) , an dPuert o Rica nCemen t Co . v . EPA , 88 9 F.2 d29 2 (1s t Cir . 1989) . A s a result , EP Ai s toda yproposin g clarifyin g amendment s t o thes e regulation s an dconfirmin g it s Pol . •;.. < £_ > itn.'.n l .i..i i •current—inLerpretations-o f som e o f thes e provision s a s the yappl y t o utilit yproject s pendin g adoptio no f th e propose damendments .P. 4

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- 2 - EP Atoda ypropose s t o adop t a broa d ne wsourc e revie w (••NSR" ) exclusio n fo r utilit ymodifications^-that-constitut e • pollutio n contro l project s and , unti l thes e propose d regulation s ,- o ' : C x, ar e adopte d i n fina l form , t o adher e t o it s -_-n*begpgetat>ion tha t .....-.-i'C.' H —it_sv-exi*5tTRq ' ne wsourc e regulation s already^exclud e coverag e o f —fflos t pollutio n contro l projects,,a t -existin g electri c utilities. " Similarly , EP Atoda ypropose s t o adop t a n "actua l t o futur e actual " methodolog yfo r determinin g whethe r al l othe r .physica l o r operationa l change s a t utilitie s (othe r tha n th e replacemen t o f a uni t o r additio n o f a ne wunit ) ar e subjec t t o ne wsourc e revie w unde r eithe r PS D o r nonattainmen t provision s an d t o maintai n i n th e interi mrtrs^^nte'rpretat'ibn

- tha t thi s methodolog ycaar-be- . applie d wher e th e uni t ha s "begu n norma l operations. " Fo r thos e utilit yproject s whic hunderg o PS D ne wsourc e review , today' s notic e propose s a presumptio n tha t fo r EPA-issue d permits , "low

NO xburners " ca n satisf yth e bes t availabl e contro l technolog y (BACT ) requirements . I n addition , EP Aals o propose s t o modif yit s regulation s implementin g th e modificatio n provision s o f th e Titl e I ne w sourc e performanc e standard s (NSPS ) progra mt o provid e tha t a utilit yma yus e fo r it s pre-chang e baselin e th e highes t hourl y emission s rat e achievabl e a t an ytim e durin g th e fiv e year s prio r

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H fir-a-Hop . EP Aals o propose s t o modif yit s regulation s t o reflec t change s mad e b yCongres s i n th e 199 0 Amendment s t o th eP. 5

- 3 - applicabilit yo f ne wsourc e requirement s t o Clea nCoa l Technology (CCT ) an

d repowering projects , an d t o "ver

yclean " units . DATES : Comments . Comment s o n th e revision s propose d today mus t b e receive d o n o r befor e (6 0 day s afte r publicatio n i n th e Federa l Register) . Publi c Hearing . Apubli c hearing i s schedule d fo r 10:0 0 a.m. , Jul y, 1991 , a t th e U.S . Environmenta l Protectio n Agency , 40 1 M Street , S.W. , Washington , D.C . 20460 . Th e hearin g mayb e cancele d i f n o speaker s hav e requeste d time t o presen t thei r comment s 1 5 day s prio r t o th e schedule d hearing date . Writte n comment s i n lie u o f testimon yar e encouraged . ADDRESSES : Supporting informatio n use d i ndevelopin g thi s propose d rul e i s containe d i ndocke t A-90-06 . Thi s docke t i s availabl e fo r publi c inspectio nan d copying betwee n8:3 0 a.m . an d 3:3 0 p.m. , weekday s a t EPA' s Ai r Docke t (LE-131) , RoomM-1500 , 40 1 MStree t S.W. , Washington , D.C . 20460 . Areasonabl e fe e may b e charge d fo r copying . FO RFURTHE

RINFORMATIO

N CONTACT : Chebryl l Edwards , Ne wSourc e Revie wSectio n (MD-15) , Offic e o f Ai r Qualit yPlanning an d Standards , Researc hTriangl e Park , N.C . 27711 , (919 ) 541-2343 . SUPPLEMENTAR

YINFORMATION : I . INTRODUCTION EPAtodaypropose s t o amen d it s regulation s implementing th e variou s Titl e I ne wsourc e requirement s arrd~6r_§ bannounce s cggfeaii't-^interi

minterpretAfciogs—O/f

- the-se/prefvisiop.s~ as*"applied

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- 4 - "modifications.a t electri c utilit ygeneratin g units . Specifically , thes e propose d change s and-interpretations

- ar e bein g issue d t o clarif yth e coverag e o f th e NSPS , PS D an d nonattainmen t preconstructio n revie wrequirement s o f Titl e I o f th e Clea n Ai r Ac t t o project s undertake n a t electric"stea m utiU_4itJ5 . generatin g units. 1 EP Apropose s t o amen d th e definitio n o f "majo r modification " i n 4 0 CF RPart s 5 1 an d 5 2 t o se t fort hth e condition s unde r whic h th e addition , replacemen t o r us e a t existin g electri c utilit y generatin g unit s o f anysyste mo r devic e whos e primar yfunctio n i s th e reductio n o f ai r pollutant s (includin g th e switchin g t o a les s pollutin g fue l wher e th e primar ypurpos e o f th e switc hi s th e reductio n o f ai r pollutants ) wil l o r wil l no t subjec t th e sourc e t o preconstructio n review . Specifically , EP Apropose s i n PS D an d nonattainmen t area s t o adop t a regulator yexclusio n -.-•v. - :c;T,.*v

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- tegulati"Smsv"*tha t pollutio n contro l project s whic h^_ca\ . ' '•* ,: ' ~ '•-•-••• ' -.Vm***

- , . environmentall ybeneficia l ar e no t "physica l o r operationa l changes, " an d hence , no t "ma4ia*»s=»Qd^_T^ations'* ^ NS Rpnrpn.«*.<*••=• • EP Ai s toda yals o proposin g t o amen d it s PS D an d nonattainmen t ne wsourc e revie wregulation s (4 0 CF RPart s 5 1 an d in, ' ''"' •

1 Th e propose d regulation s defin e electri c utilit ystea m generatin g unit s a s an ystea melectri c generatin g uni t tha t i s constructe d fo r th e purpos e o f supplyin g mor e tha n one-thir d o f it s potentia l electri c outpu t capacit yan d mor e tha n 2 5 M Wo f electrica l outpu t t o an yutilit ypowe r distributio n syste mfo r sale . See , e.g. , propose d 4 0 CF R51.165(xx) . ,>-..•< / • • • A AS

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- 5 - 52) 2 a s theyappl yt o utilitie s t o (1 ) clarif yth e NS Rbaselin e fo r determining whethe r a propose d physica l o r operationa l chang e wil l subjec t a utilit yt o th e preconstructio nrevie wrequirement s Ar *'-.---H-\ o f thes e provisions ; (2 ) cb-&__ r -£y- > a n actua l t o futur e actua l methodologyfo r determinin g whethe r a physica l o r operationa l chang e i s subjec t t o NSR ; (3 ) provid e furthe r clarificatio n o f the existing regulatoryrequiremen t tha t onl ythos e increase s i n emission s tha t actuall yresul t fro mth e physica l chang e o r chang e i n th e metho d o f operatio nca n b e considere d i ndetermining whethe r th e propose d chang e subject s th e utilit yt o NS R requirements ; an

d (4 ) implemen t section s 40 9 an d 41 5 o f Titl e IV o f th e Clea n Ai r Ac t Amendment s o f 199 0 whic hcreat e specia l NSP S treatmen t fo r certai n repowering project s an d limite d NS R exemption s fo r temporaryan d permanen t CC T projects , an d fo r certai n "veryclean " units . Finally , EPAi s als o proposing t o amend it s NSP S regulation s (4 0 CFRPar t 60 ) t o allo wa utilit yt o us e a s it s pre-chang e baselin e it s highes t hourl yemission s rat e -frfifCSit Vr ^

-~••'J-' ' ''' achievabl e during th e fiv e year s prio r t o the'modification . T o th e exten t th e propose d amendment s c6ddi.f# \ existing EPA

r *6i.^ > * .A*interpretations^jEPAwil l continu e t o administe r it s regulation s

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- i n a manne r consisten t wit hthes e interpretation s pendin g adoptio n o f th e regulation s propose d today .

2 Fo r th e purpose s o f thi s notice , reference s t o "new sourc e review " (or "NSR" ) refe r t o th e preconstructio nrevie w requirement s o f bot hPar t C (PSD ) an d Par t D (nonattainment ) o f th e Clea n Ai r Act , unles s otherwis e indicated .P. 8

v ^ seJ .^.« .

: A s a genera l matter , today' s proposa l is-intende d t o conform t o th e Administration' s legislativ e proposa l o n WEPCO. 3 EPAhad previousl yindicate d tha t i t woul d bot hissu e a n interpretativ e ruling an

d conduc t legislativ e rulemaking throughth e notice-and

commen t proces s t o addres s th e WEPC O matter . Th e passag e of,time ha s largel yvitiate d th e usefulnes s o f a separat e interpretativ e ruling . .Accordingly , EPAi s proceeding wit htoday' s propose d reguxatory^revision s withou t issuing a prio r interpretativ e ruling.^jHowever.^portion s o f th e preambl e o f today' s proposa l ^liU ; ,..YAA,-- - se t forth . EPA' s presen t -inter^r-etation-o f th e curren t A v- 1 '!'regulations , and mayb e relie d o n a s suc hpendin g fina l actio no n

ii-vy •*sfr*<< toda Y s Proposal . / .^v^n ) ^

< ^ Th e interpretation s o f curren t regulation s se t ou t i n thi s £>o-/

- ^- V K A K J- notic e ar e intende d solel ya s guidance , d o no t represen t fina l r- ° CJU.

''^. agenc yaction , an d ar e np t rip e fo r judicia l review . The yar e no t intended , no r can/the yb e relie d upon , t o creat e an yright s enforceabl e b

yany/part yi nlitigatio nwit hth e Unite d States . EPAofficial s maydecid e t o followthes e interpretations , o r t o ac t a t varianc e wit hthem , base d o nan analysi s o f specifi c

3 Se e letter s date d Jul y2 3 an d Septembe r 11 , 199 0 fro mDr . Richar d Schmalensee , Member , Counci l o f Economi c Advisors , t o Senato r Wendel l H . Ford , Chairman , Subcommitte e o n Energy Researc hand Development , Committe e o n Energyand Natura l Resources , and i n testimon ypresente d b

yDr . Schmalense e t o th e Committe e o n May8 , 199 0 an d Marc h18 , 1991 .P. 9



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- 7 - A circumstances . Th e Agenc yals o maychang e thes e interpretation s A a t an ytime withou t publi c notice . f .EP Abelieve s tha t eac ho f th e interpretation s i n question s represent s a reasonabl e constructio no f existing regulations , fo r whic hn o prio r notic e and opportunit yfo r commen t i s require d b y law . Se e Clea n Ai r Ac t sectio n307(d)(1) , 4 2 U.S.C . 7607(d)(1 ) (Clean Ai r Ac t rulemakin g procedur e requirement s incorporat e th e exemptio n fromnotice-and-commen t requirement s fo r interpretativ e ruling s se t fort hi n sectio n 553(b)(A ) o f th e Administrativ e Procedur e Act , 5 U.S.C . 553(b)(A)) . However , th e Agenc yretain s an ope n mind o n thes e issues . Accordingly , EPAwil l payclos e attentio n t o th e comment s receive d i nrespons e t o today' s notic e an d may , upo n furthe r consideration , decid e no t t o mak e th e change s proposed , bu t instea d retai nth e curren t regulation s o r adop t othe r change s emergin g fromth e publi c comment s o r furthe r consideratio n o f th e issue s b yEPA . Thi s proces s mayals o resul t i n revision s t o th e interpretation s se t fort hi nth e preambl e portio n o f thi s notice . II . BACKGROUND A . Th e Ne wSourc e Performanc e Standards , Preventio no f Significan t Deterioratio nand Nonattainmen t Program s o f Titl e I Titl e I o f th e Clea n Ai r Ac t ha s thre e program s specificall y designe d t o ensur e tha t n o ne wai r pollutio n—whethe r fro mnew source s o r frommodification s t o existin g source s —ca nb e emitte d unles s th e sourc e complie s wit hne wsourc e requirements .P.1 2



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Th e 197 0 Clea n Ai r Ac t require d EPAt o promulgat e technology-base d ne wsourc e performanc e standard s applicabl e t o th e constructio n o r modificatio no f stationarysource s tha t caus e o r contribut e significantl yt o ai r pollutio nwhic hmayreasonabl y b e anticipate d t o endange r publi c healt ho r welfare . Clea nAi r Ac t ("CAA" ) § 111(b)(1)(A) , 4 2 U.S.C . 7411(b)(1)(A) . Th e NSP S provision s wer e "designe d t o preven t ne wai r pollutio nproblems " b yregulating newly-constructe d source s an d change s occurring a t existing source s tha t resul t i nemission s increases . Se e Nationa l Asphal t Pavemen t Assoc , v . Train . 53 9 F.2 d 775 , 78 3 (D.C . Cir . 1976) ; se e als o H.R . Rep . No . 1146 , 91s t Cong. , 2 d Sess . 3 , reprinte d i n 197 0 U.S . Cod e Cong . & Admin . New s 5356 , 5358 . Congres s define d th e term "modification " a s "an yphysica l chang e in , o r chang e i n th e metho d o f operatio nof , a stationary sourc e whic hincrease s th e amoun t o f an yai r pollutan t emitte d b y suc hsourc e o r whic hresult s i nth e emissio no f an yai r pollutan t no t previousl yemitted. " Se e CA A§ 111(a)(4) , 4 2 U.S.C . 7411(a)(4) . I n 1977 , Congres s adopte d additiona l amendment s t o th e Clea n Ai r Act . Thes e change s include d preconstructio npermittin g requirement s fo r majo r ne wan d modifie d source s unde r tw o programs , preventio n o f significan t deterioratio n (PSD ) an d nonattainmen t ne wsourc e revie w(respectively , Part s C an d D o f th e Clea n Ai r Act) . Congres s intende d thes e program s t o appl y~w.v.er*-'. u .P.1 4

- 9 - wher e '^-industrial change s migh t increas e pollutio ni n a n area.-! ! Alabama Powe r Co . v . Costle , 63 6 F.2 d 323 , 40 0 (D.C . Cir . 1979 ) Th e NS Rprogramfo r PS D (CA A§ § 160-169 ) applie s i n attainmen t areas , i.e. , thos e area s whic hhav e attaine d th e nationa l ambien t ai r qualit ystandard s (NAAQS) . T o receiv e a PS D permit , a prospectiv e majo r ne wsourc e o r majo r modificatio nmus t (among othe r things ) sho wtha t (1 ) i t wil l no t caus e o r contribut e t o a violatio n o f th e availabl e ai r qualit y "increment " (designe d t o preven t ambien t ai r qualit yfrom deterioratin g b

ymor e tha n certai n specifie d levels) , (2 ) i t wil l no t caus e o r contribut e t o a violatio no f a NAAQS r and (3 ) i t

• , \ i .•,./ / ) wil l us e th e bes t availabl e contro l technology , whic hmus t b e a t leas t a s stringen t a s an yapplicabl e NSP S o r hazardou s pollutan t standar d unde r sectio n 11 2 o f th e Act . Par t D o f th e 197 7 Amendment s applie s t o nonattainmen t areas , i.e. , thos e area s whic hhav e no t me t th e NAAQ S unde r sectio n 109 . T o receiv e a permi t i nsuc hareas , majo r ne wan d modifie d source s mus t (amon g othe r things ) (1 ) obtai nemission s offsets , thereb

yassuring tha t reasonabl e progres s towar d attainmen t o f th e NAAQ S wil l occur , an d (2 ) compl ywit hth e "lowes t achievabl e emissio nrat e (LAER). " Se e CA A§ 171-173. 4 

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i n u pv/igT-^m—appi . r-aVi i o t o constructio no r modificatio n o f an ystationarysource . Thi s provisio ni s presentl yse t fort h i n sectio n 110(a)(2)(C) . ©at^ef-tyT'i't

- "requires-any-new-o r modi^j^d-soi__rCTe-tc>-demonstrat e tha t i t will " no t violat e an y *.AAQS_.~. . Se e 4 0 CF R5l/l6d"^..^"^Today' s notic e doe s no t propos e

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- 1 0 - B . Th e Two-Ste p Tes t fo r Modification s Th e modificatio n provision s o f th e NSP S an d NS Rprogram s ar e base d o n th e broa d NSP S definitio n o f "modification " i n sectio n 111(a)(4 ) o f th e Act . Tha t sectio n contemplate s a two-ste p tes t fo r determinin g whethe r activitie s a t a n existin g facilit y constitut e a modificatio n subjec t t o ne wsourc e requirements . I n th e firs t step , whic hi s largel yth e sam e fo r NSP S an d NSR , th e reviewin g authorit ydetermine s whethe r ai'physica l o r operationa l

•—\ . . ... . * chang e wil l occur**-*-

- I f so , th e reviewin g authorit yproceed s i n th e secon d ste p t o determin e whethe r th e physica l o r operationa l chang e wil l resul t i n a n emission s increas e ove r baselin e levels . I n thi s secon d step , th e applicabl e rule s branc hapart , reflectin g th e fundamenta l distinction s betwee n th e technology

base d provision s o f NSP S an d th e ai r quality-base d provision s o f NSR . Briefly , th e NSP S progra mexamine s maximu mhourl yemission s rates , expresse d i n kilogram s pe r hour. 5 Emission s increase s

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d p, . pursuant—to / today- j s /proposal / an d th e , interprptations^discussed—herein' . *

5 A n hourl yemission s rat e ma yb e determine d b ya stac k tes t o r calculate d fro mth e produc t o f th e instantaneou s emission s rate , i.e. , th e amoun t o f pollutio n emitte d bya source , afte r control , pe r uni t o f fue l combuste d o r materia l processe d (suc ha s pound s o f sulfu r dioxid e emitte d pe r to no f coa l burned ) time s th e productio n rat e (suc ha s ton s o f coa l burne d pe r hour) . Se e sectio n 60.14 .

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- 1 1 - fo r NSP S purpose s ar e determine d b ychange s i n th e hourl y emission s rate s a t maximu mphysica l capacity . O nth e othe r hand , th e NS Rregulation s e_camin e tota l .a^D-tyia. 1 emission s t o th e atmosphere . Fo r applicabilit ydeterminatio n purposes , emission s increase s unde r NS Rar e determine d b ychange s i nannua l emission s a s expresse d i n ton s pe r yea r (tpy). 6 C . Ste p One : Physica l o r Operationa l Chang e EPAha s alway s recognize d tha t th e definitio n o f physica l o r operationa l chang e i n sectio n111(a)(4 ) could , standing alone , encompas s th e mos t mundan e activitie s a t anindustria l facilit y (even th e repai r o r replacemen t o f a singl e leak ypipe , o r a chang e i n th e waytha t pip e i s utilized) . However , EPAha s alway s recognize d tha t Congres s obviousl ydi d no t intend t o mak e everyactivit ya t a sourc e subjec t t o ne wsourc e requirements . A s a result , EPAha s define d "modification " i n th e NSP S an d NS Rregulation s t o includ e common-sens e exclusion s fromth e "physica l o r operationa l change " componen t o f th e definition . Fo r example , bot hset s o f regulation s contai n simila r exclusion s fo r routin e maintenance , repair , an d replacement ; fo r increase s i n th e hour s o f operatio no r i n th e productio nrate ; an d fo r

Annua l emission s mayb e calculate d a s th e produc t o f th e hourl yemission s rat e time s th e utilizatio n rate , expresse d a s hour s o f operatio n pe r year , o r a s th e produc t o f an emission s facto r (e.g. . fromCompilatio no f Ai r Pollutan t Emissio nFactors . AP-42 , 4t hEd . an

d subsequen t supplements ) i nunit s o f mas s emitte d pe r uni t o f proces s throughpu t time s th e annua l throughput . Se e 4 0 CF R52.21(b)(21) .P.1 7

- 1 2 - certai n type s o f fue l switches . Se e e.g. , 52.21(b)(2)(iii ) an d 60.14(e) . I n addition , wit hrespec t t o pollutio n contro l equipment , th e NSP S regulation s contai n a n exclusio nfor :

Th e additio n o r us e o f an ysystemo r devic e whos e primaryfunctio n i s th e reductio n o f ai r pollutants , excep t whe na nemission s contro l systemi s remove d o r i s replace d b ya systemwhic hth e Administrato r determine s t o b e les s environmentall ybeneficial . 4 0 CFR60.14(e)(5) . A s wil l b e discussedxHgi : A-^a--^-Lliiuu^<wHP . ^J-'1 '^' .rp- > '-v-v i •.ACUi'i.-v- . j>

. -.•--.•..-.'••-individua

l applicabilit ydeterminations , f•**_•!ewodil a simrra r p c Prrv-n --Ai** . "environmentall ybeneficial " test. - jjrUletjeortiningv^SR . applicabilit ytp_.pollution contra ! p£*ojeots-* . D . Step Two : Emission s Increase s fo r NSP S Applicabilit y EPA' s NSP S regulation s defin e th e term"modification " a s an y "physica l o r operationa l chang e t o a n existing facilit ywhic h result s i n a n increas e i nth e emissio n rat e t o th e atmospher e o f an ypollutan t t o whic ha standar d applies. " Se e 4 0 CFR60. 2 an d 60.14 . Unde r curren t NSP S regulations , emission s increases , fo r applicabilit ypurposes , ar e calculate d b ycomparing th e hourl y emissio n rate , a t maximu m physica l capacity , befor e an d afte r th e physica l o r operationa l change . Tha t is , t o determin e whethe r a chang e t o an existing facilit ywil l increas e th e emission s rate , th e existing NSP S regulation s authoriz e th e us e o f an "emission s facto r analysis, " o r a material s balance , continuou s monitoring , o r manua l emission s tes t t o evaluat e emission s befor e an d afte r th e change . 4 0 CF R60.14(b)(2) .P.1 8

- 1 3 - Absen t th e exclusion s fro mmodification s specifie d a t 4 0 CFR 60.14(e) , an

yincreas e i n emission s t o th e atmospher e ove r th e previou s emission s rat e wil l subjec t th e modi'fi<iia*tixi mt o NSPS . Se e 4 0 CF R60.14(a ) an d (b) . I naddition , unde r th e "reconstructio n rules, " physica l o r operationa l change s whic h woul d cos t 5 0 percent , o r mor e o f th e tota l cos t o f a comparabl e

• A'.Ui rti. ne wfacilityA?B«_*Jclassified a s reconstruction s (se e 4 0 CF R60.15 ) an d ar e subjec t t o NSP S a s a ne wsource , eve ni f ther e i s n o emission s increase . E . Ste p Two : Emission s Increase s Unde r NS RRequirement s 1 . Existing Regulation s EPA' s regulation s implementing th e PS D and nonattainmen t program s requir e preconstructio nrevie wfo r source s undertakin g a "majo r modification, " i.e. , a physica l chang e o r chang e i n th e metho a o f operation s "tha t woul d resul t i n a significan t ne t emission s increas e o f an ypollutan t subjec t t o regulatio n unde r th e Act. " 4 0 CF R52.21(b)(2)(i ) and (3)(i) ; 52.24(f)(5). 7 A"ne t emission s increase " i s define d a s th e

7 Th e curren t PS D programi s se t fort hi ntw o set s o f regulations . On e o f th e regulation s cite d (4 0 CF R52.21 ) i s par t of.th e federa l PS D permi t program whic happlie s a s par t o f a Federa l implementatio n pla n fo r State s tha t hav e no t submitte d a PS D programmeetin g th e regulatoryrequirement s o f 4 0 CF R51.16 6 (standard s fo r PS D provision s i n Stat e implementatio n plans) . I n mos t State s wher e th e federa l requirement s apply , EPAha s delegate d th e authorit yt o implemen t th e PS D programbac k t o th e State . Roughl ytwo-third s o f th e State s ar e implementin g thei r ow n PS D programpursuan t t o a nEPA-approve d stat e implementatio n plan . Section s 52.2 1 an d 51.16 6 hav e identica l modificatio n provisions . (continued... )P.1 9

- 1 4 - increas e i n "actua l emissions " fro mth e particula r physica l o r operationa l chang e togethe r wit han yothe r "contemporaneous " increase s o r decrease s i nactua l emissions . 4 0 CFR 52.21(b)(3)(i). 8 Applicabilit yo f th e Act' s ne wsourc e revie wprovision s mus t b e determine d i n advanc e o f constructio nan d i s pollutan t specific . I n case s involving existing sources , thi s require s a pollutant-by-pollutan t projectio no f th e emission s increases , i f any , tha t wil l resul t fro mth e physica l o r operationa l change . Specifically , t o determin e whethe r a propose d physica l o r operationa l chang e wil l resul t i nanemission s increase , th e sourc e mus t firs t determin e a baselin e leve l o f actua l emissions . Th e regulation s defin e actua l emission s o na particula r dat e a s "th e averag e rate , i n ton s pe r year , a t whic hth e uni t actuall y emitte d th e pollutan t during a two-yea r perio d whic hprecede s th e particula r dat e an d whic hi s representativ e o f norma l sourc e

7 (...continued ) EPA' s regulation s fo r nonattainmen t area s ar e se t fort ha t 4 0 CF R§ 51.165 , 52.2 4 an d i nPar t 51 , Appendi xS . Thes e section s contai n applicabilit yprovision s regarding modificatio n tha t ar e largel yidentica l t o thos e i nth e PS D provisions .

8 Roughl yspeaking , "contemporaneous " emission s increase s o r decrease s ar e thos e whic hhav e occurre d betwee nth e dat e fiv e year s precedin g th e propose d physica l o r operationa l chang e an d th e dat e tha t th e increas e from th e chang e occurs . 4 0 CF R 52.21(b)(3)(ii) . Onc e a modificatio n i s determine d t o b e major , th e PS D requirement s appl yonl yt o thos e specifi c pollutant s fo r whic hther e woul d b e a significan t ne t emission s increase . E.g. . 4 0 CF R52.21(j)(3 ) (bes t availabl e contro l technology) ; 4 0 CF R 52.21(m)(1)(b ) (ai r qualit yanalysis) .- 1 5 -

operation. " Th e Administrato r "shall " allo wus e o f a differen t tim e perio d"upo na determinatio ntha t i t i s mor e representativ e o f norma l sourc e operation. " Id . EP Aha s typicall yuse dth e tw o year s immediatel yprecedin g th e physica l o r operationa l chang e t o establis hth e baseline . Se e 4 5 Fed . Req . 52676 , 52705 , 5271 8 (1980) . However , i t ca nallo wth e us e o f a n earlie r two-yea r perio dtha t i s mor e representativ e o f norma l sourc e operations . Fo r example , i n WEPCO . EP Afoun dth e fourt han d fift hyear s prio r t o th e modificatio nmor e representativ e o f WEPCO' s norma l operations .

Becaus e th e applicabilit ydeterminatio nmus t b e mad e i n advanc e o f construction , EPA' s NS Rregulation s provid e tha t whe n a nemission s uni t "ha s no t begu nnorma l operations, " actua l emission s equa l th e "potentia l t o emi t o f th e unit. " 4 0 CF R 52.21(b)(21)(iv) . Thi s approac hi s referre dt o a s th e actua l t o potentia l methodology . Thi s regulator yprovisio nma yb e overcom e

—an d ne wsourc e revie wwil l no t appl y—i f th e sourc e owne r agrees , i n a federall yenforceabl e instrumen t — no t t o increas e it s actua l emission s abov e baselin e levels . Se e e.g. . 4 0 CF R 52.21(b)(4) . A--f ••"*•'•- • r*f-

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T * i e WEPC 0 an dPuert o Rica nCemen t Decision s ^'^V^vj ? EPA' s modificatio n provision s hav e bee n th e subjec t o f tw o recen t federa l appellat e decisions . Bot hdecision s involve d physica l change s a t existing unit s an d addresse d whethe r EPA' s actua l t o potentia l methodologyapplied . I nPuert o Rica nCemen tP.2 1

- 1 6 - v . EPA . 88 9 F.2 d 29 2 (1s t cir . 1989) , th e Firs t Circui t foun d tha t wher e norma l operation s a t a uni t hav e no t begun , i t i s permissibl e t o us e th e actua l t o potentia l methodology . I n th e case , th e owne r o f a cemen t plan t sough t t o conver t a "wet " cemen t kil n t o a

\ "dry " kil nan

d t o combin e tha t kil n wit hanothe r kiln . 88 9 F.2 d a t 293 . Th e modernize d productio nfacilitie s woul d b e mor e efficien t an d thu s woul d provid e a neconomi c incentiv e t o increas e utilizatio n—an d actua l emission s — abov e baselin e levels . Se e id . a t 297 . Sinc e th e compan ywoul d no t agre e t o limi t it s actua l post-modificatio n emission s t o baselin e levels , EPAargue d tha t th e kil n a s modifie d ha d no t begun norma l operation s an d th e Agenc ywa s required , pursuan t t o sectio n 52.21(b)(21)(iv) , t o measur e th e plant' s post modificatio n emission s b yth e plant' s potentia l t o emit . Th e petitione r argue d tha t thi s reading o f EPA' s regulation s wa s improper , arbitraryan d contradicte d b

yearlie r EPAdecisions . Th e cour t rejecte d al l attack s an d uphel d EPA' s methodology , pointing out , amon g othe r things , tha t i n th e preambl e t o it s regulations , EPAha d state d tha t th e actua l t o potentia l methodologygenerall ywoul d appl yt o a "newo r modifie d unit. " Id . a t 29 7 (citing .4 5 Fed . Reg . 52677 ) . I n Wisconsi n Elec . Powe r Co . v . Reilly . 89 3 F.2 d 90 1 (7thCir . 1990) , th e cour t reviewe d EPA' s determinatio ntha t "life-extension " renovation s planne d fo r severa l olde r (3 5 t o 5 0 years ) electri c utilit yboiler s (specifically , repai r an dP.2 2

- 1 7 - replacemen t o f turbine-generators , stea mdrum s an

d othe r majo r components ) brough t th e unit s withi nth e PS D ne wsourc e revie w provisions . A s i n Puert o Rica nCement , EPAcontende d tha t th e unit s a s modifie d ha d no t begun "norma l operations " and wer e thu s subjec t t o th e actua l t o potentia l test . Sinc e th e compan ywoul d no t agre e t o limi t it s post-modificatio n actua l emission s t o baselin e levels , EPAfoun d th e plan t subjec t t o PSD . Se e WEPCO , 89 3 F.2 d a t 906 .

Th e Sevent hCircui t foun d tha t wher e norma l operation s a t a uni t hav e begun , i t i s impermissibl e t o us e th e actua l t o potentia l methodology . Th e cour t the nrejecte d EPA' s us e o f th e actua l t o potentia l tes t unde r th e circumstance s o f tha t case . Th e cour t foun

d instead tha t EPA' s existing regulation s d o no t suppor t "EPA' s decisio n [to ] wholl ydisregar d pas t operatin g condition s a t th e plant, " i n tha t cas e involving "like-kind replacement. " Id . a t 917 , 918 . Onremand , EPAdetermine d PS D applicabilit yb

ycomparin g WEPCO' s representativ e actua l emission s fo r th e baselin e perio d t o estimate d futur e actua l emission s base d o n al l th e availabl e fact s i nth e record. 9 EPA continue s t o appl ythi s approac ht o "like-kind " changes . Today' s propose d regulation s woul d mak e thi s actua l t o futur e actua l methodologyavailabl e t o al l utilitie s undertakin g

9 Se e lette r fromWilliamG . Rosenberg , Assistan t Administrator , EPA , t o JohnBoston , President , WEPC O (June 18 , 1990 ) .P.2 3

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d Puert o Rica nCemen t Decision s A s note d above , t o calculat e whethe r a physica l lor JA operationa l chang e // increases " emissions , EP Aregulations-H^afitrl*-

- :6_03£***-*e>=-^Qa*pas*4sQiwbetw e • * >___i.i s s i c-»gr»-L_. 4 O_^GER- 5 2'±2 1 (*>)-(<? ) { 4 j . •* . ' • If , heweve^jfrofremission s uni t ha s no t "begu nnorma l operations, " EP Aregulation s recogniz e tha t futur e actua l emission s ar e difficul t t o predic t an d s o emplo yfutur e "potential " emission s a s a proxy . 4 0 CF R 52.21(b)(21)(iv) . Th e linchpi nunde r th e curren t regulation s fo r predictin g futur e emission s afte r a modificatio n*^-^^hetfte**r-t"b : appl y-tfre**-a<_rtaal-to-actua l or-the-actual-to-potemtial \ tes*V»-»

- i s thu s whethe r th e uni t ha s "begu nnorma l operations. "

T w o recen t federa l appellat e cour t decision s hav e addresse dEPA' s interpretatio no f th e phras e "begu nnorma l operations. " Thes e decisions , Puert o Rica nCemen t Co. . Inc . v . U S EPA . 88 9 F.2 d 29 2 (1s t Cir . 1989 ) an d Wisconsi nElec . Powe r C o . v . Reillv . 89 3 F.2 d 90 1 (7t hCir . 1990 ) ("WEPCo". . occasio na reexaminatio no f EPA' s interpretatio no f th e phrase , an d o f th e usefulnes s o f th e regulator ylanguag e itself . Th e meanin g o f th e phras e i s highl yfact-dependent , • frpd, htisvpr^vftdAambigvUotts-'-'and ^ •trtmb-ie&eme/vi-i vapplication ; thus/ , as'describe dlate r in^t^is^ ^ notice , EP Atoda ypropose s t o ofiang e it s regulations*'-€jOr ''ren.o-**e

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_ remov e iJn> > the-.J / begtm. . .nor_tta__-ope_-*a t -ions-'-V'fc-est ~z : Y^,v.-- . ^usefu l criterion . ^ uM ^.A^.ryi- WXA^^J .jAce-r+r-.AH , rta.- rv_:-c - " "- ' ' -t i

Bot hcase s involve d physica l change s t o existing emission s units , bu t change s o f differing extent , natur e an d result . I n Puert o Rica nCement , th e owne r o f a cemen t plant 1 wit hsevera l kiln s sough t t o conver t on e "wet " kil n int o a "dry " kiln , an

d t o combin e tha t kil nwit hanothe r kiln . 88 9 F.2 d a t 293 . Th e cour t observe d tha t th e tota l productio ncapacit yo f th e renovate d singl e kil n woul d excee d th e combine d productio n capacit yo f th e previou s tw o separat e kiln s b y"abou t 35%. " Id . I t note d tha t th e renovate d singl e kil n woul d employa differen t "cement-making process " tha nth e origina l kil n fromwhic hi t wa s "converted, " id . And i t sai d tha t th e ne wkil nwoul d b e "mor e efficien t [and ] maylead th e fir mt o decid e t o increas e th e leve l o f production, " id . a t 29 7 (emphasi s i n original) . I nreviewing EPA' s interpretatio n o f "begunnorma l operations, " th e cour t

1 Puert o Rica n Cemen t involve d a cemen t plant , no t a n electri c utility , bu t th e court' s lega l analysi s o f th e phras e "begun norma l operations " i nth e curren t regulation s i s relevan t t o al l facilities .

# I > rapplie d a highl ydeferentia l standar d o f review , sinc e a n agency' s interpretatio no f it s ow nregulatorylanguag e i s typicall ygive n "'controlling weigh t unles s i t i s plainl y erroneou s o r inconsisten t wit hth e regulation.' " 88 9 F.2 d a t 297 , quotin g Udal l v . Tallman . 38 0 U.S . 1 , 16-1 7 (1965 ) (citatio n omitted) . Th e cour t conclude d tha t o nth e fact s o f th e case , EPA' s interpretatio n tha t "norma l operations " ha d no t begu nwa s no t "arbitraryo r irrational, " id . a t 298 , an d henc e EPA' s applicatio n o f th e actual-to-potentia l tes t t o predic t fututr e emission s wa s permissible .



# T. . ' I n WEPCo , 89 3 F.2 d 901 , th e Sevent hCircui t wa s face d wit ha differen t kind o f modification . Ther e renovation s wer e propose d fo r severa l olde r (3 5 t o 5 0 yea r old ) coal-fire d electri c utilit yboilers . Th e physica l change s involve d repai r an d replacemen t o f turbine-generators , stea mdrum s an

d othe r majo r components . EPAcontended , a s i t had i nPuert o Rica n Cement , tha t thes e change s wen t beyond "norma l operations " an d thu s warrante d us e o f futur e potentia l emission s a s th e tes t fo r an emission s increas e ove r pas t actua l emissions . Her e th e cour t disagree d wit hEPA' s interpretatio ntha t "norma l operations " ha d no t begun . -Th

o cour t note d tha t non e o f th e repair s or — /^"""roplaoofflfciiiL. . wuul d hav e "change d o r alteie d Lht- t Uesiy n o f tho — -fa-e-ility , " idi a t 908.-f t Th e metho d of-prodttetioft-and-design--. . capacity*-wo-a^^eiiidii i uircrtanged* . Th e cour t coine d th e phras e "like-kind replacement " t o describ e th e typ e o f renovatio n occurrin g a t th e WEPC o plant . Id . a t 917 . /j&j-'sai d tha t Whe r th e renovation s wer e "like-kind replacements, " EP Acoul d no t reasonabl yinterpre t it s regulation s t o sa ytha t suc ha uni t wa s s o differen t tha t i t ha d no t "begunnorma l operations. " Thus , i t conclude d tha t th e "actual-to-potential " tes t coul d no t b e applied , unde r EPA' s regulations , t o unit s simpl yundergoin g "like-kind replacements." 2 •-""-. *r JA'i-^J ^"^Ai\si_ioc- •^•jAse-Xfe-w

o decisions ^ (y_j_pod-OH«~^sia__-fe''B / unde r it s curren t regulation , EPAmus t conside r th e fact s o f eac hcas e an d appl yth e actual-to-potentia l tes t onl ywher e th e chang e i s sufficientl ysignifican t t o suppor t a finding tha t "norma l operations " hav e no t "begun. " A t leas t fo r change s tha t ar e "lik e kind replacements, " "norma l operations " hav e begun , an d th e actual-to-potentia l tes t i s impermissible . j.-"'"" '

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2 O n remand , EPAemploye d a nactual-to-futur e actua l test , comparin g WEPCo' s representativ e actua l emission s fo r th e baselin e perio d t o estimate d futur e actua l emission s base d o n al l th e availabl e fact s i n th e record .P.2 5

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s wa s th e onl yreasonable/interpretatio n of , the.se facts , no r wha t th e threshol d i s fo r futur e cases. '

•T o clarif ythi s stat e o f affairs , EPAcoul d expressl y interpret ' ther'phraser ' "begur r norma l operations ^ tr i explain , wha t facts/will^satisf yo r depar t fro mthis/criterion . Th e phrase , however , ha s /lot . proved , adequat e t o inform ' industryand ' th e public , o r t o giv e EPA - reliabl e indicators , o f whe n futur e / emission s are - insufficientl ypredictabl e fo r an/actual-to-acjzua l tes t an d thu s warran t an actual-to-potentia l t/sst^^GoRserqTiently , a s explaine d below , EPAi s todayproposin g t o revis e it s regulation s t o appl yth e actual-to-actua l tes t t o al l •dkx-.ic. i A <.:.•*• . • ;v

r ^r ; modifications , sav e thos e tha t ar e a n additio n o f a ne wuni t o r .constitut e a replacemen t o f an existing unit. 3 Pending fina l adoptio n o f thi s ne wrule , EPAwil l continu e t o appl yan actual

to-actua l tes t t o unit s that , haye^B'e-gQiT

- normal—opoEations- , '•!- -suc h as,.t_he-^*14-ke^k-i.nd-replacemejits / ' considered-r.b.y...the—court_i n WEPCo .

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3 A s a n illustration , ha d thi s ne wtes t governe d th e fact s i n WEPC o o r th e fact s i n Puert o Rica nCemen t (wer e i t a n electri c utility) , EPAwoul d hav e applie d th e actual-to-actua l test .P.2 7

- 1 8 - physica l o r operationa l change s - othe r tha n th e additio n o f a ne w uni t o r th e replacemen t o f a nexisting unit . F . Th e Clea n Ai r Ac t Amendment s o f 199 0 1 . Ne wSourc e Revie wan d th e Aci d Rai nProvision s Th e Clea n Ai r Ac t Amendment s o f 199 0 mad e numerou s change s i n th e nonattainmen t provision s o f th e Clea nAi r Ac t an d adde d a ne wtitl e t o addres s th e problemo f aci d rain . Th e amendment s attac k nonattainmen t problem s wit ha broa d arrayo f ne w requirement s al l designe d t o brin g al l area s o f th e countryint o attainmen t wit hth e nationa l ambien t ai r qualit ystandard s fo r al l pollutants . Thes e requirement s includ e traffi c reductio n strategies , us e o f alternativ e clea nfuels , increase d offse t requirement s fo r stationarysources , an d change s i n th e threshol d siz e o f stationarysource s subjec t t o ne wsourc e review . A principa l them e o f th e legislatio ni s th e establishmen t o f categorie s o f nonattainmen t area s base d o n th e severit yo f th e pollutio n problem . Th e mor e sever e th e area , th e mor e control s Congres s require d b e imposed . Th e Amendment s als o establish , i n Titl e IV , a ne wcontro l scheme fo r addressing th e aci d rai nproblem . Th e exclusiv e focu s o f thi s programi s o n utilit ypowe r plan t emission s o f sulfu r dioxid e an

d nitroge n oxides . Th e 199 0 Amendment s requir e sulfu r dioxid e emission s fro mutilitie s t o b e reduce d b yapproximatel y 1 0 millio n ton s annuall yi n tw o phase s —th e firs t t o tak e effec t i n 1995 , th e second i n2000 . Atota l o f 11 1 specifi cP.2 8



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• / \ ! plant s ar e targete d i n Please I , an d wil l b e require d t o reduc e

• ' A : . .- ni r _ . thei r S0 2 emission s t o ^ jSlpecif ied emission s i_c*ate . I n Phas e II , _/ ' OA^AAA A: thes e plant s an

d al-mostalfl . others*\*qj^lE<Tj*eda_vce--theirv-S0 2 "ei^issions^tQ^a^ . eve n lowe r emission s wste&i. Thi s reductio n programi s t o b e implemente d througha ne wmarket-base d system under , whicl ypov^fe

r plant s ar e to/b e allocate d S0 2 "emissions * )\\r .allowances " tha t .wil l require d plant s t o reduc e their * emissions.-o r 

### /rA\^f/ 7 / / / / / , • ' . • / - • \ ^A acquir e allowance s fromother s t o achiev e compliance *

Becaus e o f thes e requirements , man yo f the . plant s subjec t t o Phas e I control s mus t mak e complianc e decision s withi n th e nex t yea r i n orde r t o assur e tha t th e complicate d contro l equipmen t tha t mayb e necessaryt o mee t Phas e I standard s i s i nplac e b y j r? . e-.v--i**"**-• " th e 199 5 deadline. ! $iM£*!p&Gfiq¥&§s~ m &Qno t suspend an yTitl e I requirement s fo r thi^/work * th e massiv yindustry-wid e undertaking s o f pollutio ncontro l p*?Oject s warrant s a

. . . '; , // clarificatio n o f th e \he wsourc e revie wrequirement s o f Titl e I I n particular , NS Rprovr^i^ns___sJj<Jul d no t inadvertentl ybia s a utilit ytoward s o r agains t an ymean s o f complying wit hth e aci d rai n provisions . EPAbelieve s th e amendment s propose d todayand -.-xdi'-.v j jJriMs" th e clarificatio n o f it s curren t ifiterpretation s *a£^it s presen t NS Rregulation s provid e adequat e assurance s tha t utilitie s ca n undertak e Titl e IV pollutio n contro l project s withou t uncertaint y a s t o th e applicabilit yo f th e variou s Titl e I\newsourc e requirements . I -CiiA A"V c 1 K& cy

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- 2 0 - Finally , asid e fro

m provision s addressing utilit yrepowering an d CC T projects , th e 199 0 Amendment s mad e n o significan t change s i n th e ne wsourc e revie wan d NSP S modificatio n provisions . Whil e :/ l Congres s considere d severa l amendment s whic hwoul d hav e addresse d Lf l/ ' industryconcern s relating t o th e WEPC O an d Puert o Rica nCemen t ^^i.'*** 1
. & cases , onl yth e CC T an d repowering proposal s wer e include d i n th e fina l versio n o f th e Act . Instead , th e Conferenc e Committe e ^ ', ; provide d th e following guidanc e t o EPAi nit s Join t Explanatory Statement : /

"[TJTi e deletio n o f mos t provision s relating t o th e WEPC O decisio n i s no t intende d t o affec t o r prejudic e i n an ywayth e issue s o r resolutio n o f th e WEPC O matter . A t th e same time / th e conferee s urg e a quic k resolutio n of.th e WEPC O matte r b yEPAa s appropriate. " Conferenc e Comm. , Join t ExplanatoryStatemen t o f th e Committe e o f th e Conferenc e t o Accompan yS . 1630 , Rep . 101-952 , 101st . Cong. , 2n d Sess . (1990 ) pp . 344-45 .

2 . Repowering an

d CC T Project s I n Titl e IV

o f th e 199 0 Amendments , whic hcreate s th e aci d

nrvux€_ , rai n program , Congres s &icK*ma_k e change s i n th e applicabilit yo f ne wsourc e requirement s t o change s involving repowerin g an d CC T projects . Sectio n 40 9 grant s a nextensio n o f th e aci d rai ncontrol s deadlin e t o source s tha t see k t o compl ywit hth e aci d rai n reduction s b

yrepowering a uni t wit hqualifyin g clea n coa l technology . Sectio n 402(12 ) define s repowering as :P.3 2

- 2 1 - [The ] replacemen t o f an existing coal-fire d boile r wit hon e o f th e following clea n coa l technologies:atmospheri c o r pressurize d fluidize d be d combustion , integrate d gasificatio n combine d cycle , magnethohydrodynamics , direc t an d indirec t coal-fire d turbines , integrate d gasificatio n fue l cells , o r a s determine d b yth e Administrator , i n consultatio nwit hth e Secretaryo f Energy , a derivativ e o f on e o r mor e o f thes e technologies , an d an yothe r technologycapabl e o f controlling multipl e combustio n emission s simultaneousl ywit h improve d boile r o r generatio nefficienc yan d wit hsignificantl ygreate r wast e reductio n relativ e t o th e performanc e o f technologyi n widesprea d commercia l us e a s o f th e dat e o f enactmen t o f th e Clea n Ai r Ac t Amendment s o f 1990 . Notwithstandin g th e provision s o f §409(a) , fo r th e purpos e o f thi s title , th e term'repowering ' shal l als o includ e an yoi l and/o r gas-fire d uni t whic hha s bee nawarde d clea n coa l technologydemonstratio nfunding a s o f January1 , 1991 , b yth e Departmen t o f Energy . Se e CAA , § § 402(12 ) an d 409(a) . Congres s provide d tha t repowering project s tha t qualif yfo r a Phas e I I complianc e extensio n woul d als o b e exemp t from NSP S requirements , s o long a s th e repowering "doe s no t increas e actua l hourl yemission s fo r an ypollutan t regulate d unde r th e Act. " Se e CAA , § 409(d) . An operato r ca n qualif yfo r th e 3-yea r extensio n o f th e Phas e I I emission s limitatio nb ydemonstratin g (b y Decembe r 31 , 1997 ) t o th e permitting authorit ytha t on e o r mor e unit s wil l b e repowere d wit ha qualifying clea ncoa l technology t o mee t th e Titl e IV restrictions . Th e operato r mus t provide , n o late r tha n Januar y1 , 2 000 , additiona l documentatio no f th e repowering projec t including a preliminarydesig nan d engineerin gP.3 3

- 2 2 - effor t fo r th e projec t an d a bindin g contrac t fo r th e majorit yo f th e equipmen t needed , a s wel l a s an yadditiona l informatio n th e reviewing authorit yrequires . Today' s proposa l als o implement s a n exemptio nfromne w sourc e requirement s fo r CC T demonstratio n project s create d b y Congres s i n sectio n 41 5 o f Titl e IV o f th e 199 0 Amendments . I n thes e provisions , CC T i s define d a s an ytechnologyno t i n widesprea d us e o n th e dat e o f enactmen t tha t achieve s significan t reduction s i n S0 2 o r nitroge n oxide s (NOJ emission s associate d wit hburning coa l i n th e generatio n o f electricity , proces s steam , o r industria l products . Se e § 415(a) . ACC T "demonstratio n project " i s a projec t funde d unde r DOE' s CC T programo r a simila r projec t funde d b yEPA. 1 0 Repowerin g project s tha t ar e awarde d funding fro m th e Departmen t o f Energy(DOE ) a s permanen t CC T demonstratio n project s (or simila r project s funde d b yEPA ) ar e exemp t fromNSP S an d PS D requirement s s o long a s potentia l emission s (se e 52.21(b)(4) ) fro

mth e uni t d o no t increas e a s a resul t o f th e project . Id . § 415(b) . Thes e funde d project s maystil l b e require d t o compl ywit hth e nonattainmen t NS Rprovision s o f Titl e

1 0 Sectio n 415(b)(1 ) define s a CC T projec t a s a a projec t "using fund s appropriate d unde r th e heading 'Departmen t o f Energy-Clea n Coa l Technology' , up t o a tota l amoun t o f $2,500,000,00 0 fo r commercia l demonstratio no f clea ncoa l technology , o r simila r project s funde d throughappropriation s fo r th e EPA. "- 2 3 -

I o f th e Act , unles s the yar e exclude d a s pollutio n contro l projects . Th e installation , operation , cessation , o r remova l o f a temporaryCC T demonstratio n projec t tha t i s operate d fo r 5 year s o r les s i s exemp t fromNSP S an d bot hPS D an

d nonattainmen t ne w sourc e requirements . Se e § 415(b)(2) . However , th e facilit y stil l mus t compl ywit hth e applicabl e SI P an d othe r requirement s necessaryt o attai n and maintai n th e NAAQS . Finally , i n sectio n415(c) , Congres s provide d a nexemptio n fro mNSP S and PS D fo r th e reactivatio no f "ver yclea n units " otherwis e i n complianc e wit hth e Ac t tha t had bee n shu t downfo r a t leas t th e tw o year s prio r t o enactmen t o f th e 199 0 Amendment s an d that , prio r t o th e shutdown , ha d bee nequippe d wit hpollutio n control s wit ha remova l efficienc yo f a t leas t 8 5 percen t fo r sulfu r dioxid e an

d 9 8 percen t fo r particulates , an d ha d bee n equippe d wit hlow-NOxburners . III . DISCUSSION A . Pollutio n Contro l Project s 1 . Propose d RegulatoryChange s fo r Pollutio nContro l Project s EPApropose s t o amend it s PS D an d nonattainmen t regulation s a s the ypertai nt o utj j i ty--JC^aWe's\^th*at^Qonstitu?t*iL ^ l 'itfi.Xl'Si'V, , | r-j ' r.0<W* l K i -m,\Aizf HAJU - *"*

; *"*•*-••""' : "*-"<" Ut '. < •' . -_-", < """* , -.TV . .-n.<-.d pollutio n contro l prbyeoC- T by u cadn-sa^Sg th e Agency' s curren t ""•_, , interpgsJjfttii-ei

n tha t suc hproject s ar e no t subjec t t o NS Rjdieo . they/_« e environmentall ybeneficial . I*-*many—instances , i t i s c l ea r •• • t hat" , >

p o 1 1 u t f o ncontro l project s a t existing stationary ' ."/W • 1 1P.3 5

- 2 4 - source s ar e no t majo r modification s subjec t t o ne wsourc e revie w requirement s fo r th e simpl e reaso ntha t the yd o no t resul t i na n increas e i nactua l emissions . I naddition , EP Aha s alway s recognize dtha t Congres s di dno t inten dtha t ever yactivit ya t a n existin g facilit yb e considere da physica l o r operationa l chang e

, *I 1 r^tu-Jt*/ « fo r purpose s o f th e ne wsource^^equirement s o f th e PS D program. 1 1 Also , a s has/bee n.discussed , th e ne waci drai n provisions-'wil l requir e mos t electri c utilitie s t o undertak e pollutio ncontro l project s withi nth e nex t fe wyear s an dthei r decision s regardin g th e a pollutio ncontro l strateg yfo r Phas e . 1 o f th e aci drai nprogra mwil l b e mad e withi nth e nex t year . A t th e sam e time* , base do nth e WEPC O decision , utilities- * ar e /' concerned.tha t EP Awil l subjec t pollutio ncontro l project s t o a n actual-to-potentia l evaluation . I nfact , EP Aha s refraine dfro m applyin g th e actual-to-potentia l methodolog yt o severa l recen t pollutio ncontro l project s an dha s instea duse da nactual-to

actua l methodology. 1 2

_ _ 1 1 Fo r instance , EP Aha s specificall yrecognize dtha t routin e maintenance , repai r an dreplacement , an dchange s i nhour s o f operatio no r i nth e productio nrat e ar e no t considere da physica l chang e o r chang e i nth e metho do f operation . Se e 4 0 CF R 52.21(b ) (2 ) (iii), . .

' • — z'*xXmiA OA ' •- i M.-!• ' '<

• - C-—<- ' 1 2 ' See , e.g . . letters , fro mDavi dKee , Director , Ai r an d Radiatio nDivision , EPA , Regio nV , t o Timoth yJ...Method , Assistant . Commissioner , Indian a Departmen t o f Environmenta l / Managemen t (Januar y30 , 199 0 an dMarc h8 , 1990) .P.3 6

•:.<< :

-

2 5 - T o p»ev4de-utilitie s wit hadditiona l certainty , EPAi s today proposin g t o adop t revision s t o it s PS D an d nonattainmen t regulation s fo r th e addition , replacemen t o r us e a t a n existing electri c utilit ystea mgenerating uni t o f an ysystemo r devic e whos e primaryfunctio n i s th e reductio n o f ai r pollutant s (including th e switching t o a less-polluting fue l wher e th e primarypurpos e o f th e switc hi s th e reductio no f ai r pollutants) . Unde r today' s proposal , a utilit ypollutio n contro l .->•«_._,_- i .'•'.--•(im,v;>l?J' * '''""**-- • -• v . , .**t

^ rvyutt;** * f projec t wil l no t b e treate d a s a^medificafeion aer-tong a s the " ..*. . ; '.s

s __"

_... ^ . . change—i s environmentall ybeneficia l J2T ' A s indicate d above , th e keyt o thi s additio nt o th e lis t o f •-'.___ . exclusion s from

th e terms/physica l o r operationa l chang e i s EPA' s judgmen t tha t Congres s di d no t inten d tha t pollutio ncontro l

A\rv£ 0 1 d project s b e considere d th e typ e o f activit ytha t -could

- trigge r ne wsourc e review . /Rather/the/clea r focu s of/th e A6t' s ne w 

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. - A s discusse d i n greate r detai l i na subsequen t section , -•v-v.- . y>Kj, e.u*,!^ .j ,AKf> r AJi ^ rtJ\-e<o.As EPAr'- s positio n i n thX s regar d is--reflected i_ r th e existin g V3 I n general , EPAwil l consider*- a pollutio n contro r projec t t o b e environmentall ybeneficia l "s o long as , i n v nonattainmen t areas , i t doe s no t resul t i n a significan t ne t increas e i n representativ e actua l annua l emission s o f an y criteri a pollutan t and , i n attainmen t areas , i t doe s no t resul t i n an increas e i n th e potentia l hourl yemission s o f a regulate d pollutant . However , EPAwil l appl ythes e guideline s wit h flexibilit yand wil l deviat e fro mthemwher e th e merit s o f an ' individua l propose d pollutio ncontro l projec t s o warrant .* %•• - 1

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- 2 6 - regulatoryexclusio n fo r pollutio ncontro l activitie s unde r NSP S

AJJ' ~- ' X\^A regulations ^ an

d i%%several , case-specifi c nonapplicabilit y

__________ • . m. \ ! V. determination s unde r th e ne wsourc e revie wprograms . However , despit e th e .Agency' s vie wthat,b ythei r natur e ..pollutio n contro l project s i n genera l ar e no t withi n th e ambi t o f ne wsourc e requirements , EPA' s pronouncement s recogniz e th e nee d fo r a safet yvalv e i n th e for mo f some consideratio no f th e environmenta l impact s o f anypollutio ncontro l exclusionT ? Th e NSP S regulatoryexclusion^empjuaijia a n "environmentall ybeneficial \x•••'<'• " testebB^nULmijin ' if " HIHIIII I Se e 4 0 CF R60.15(e ) (5 ) . Wit h respec t t o ne wsourc e review , ^PAV4tas -also—considere d whether , a p^^ution^c'bnt'roJ—pro j ect f "would b e "environmentall y1_-eneficial,'. ' / - i rx.<0u-^Ax A 0i,Y^JLA ^idV-v-ir-ir^^;, ^ A^*pc ^ ' •" » ' antiLKtoday' s proposa l w,ould-cedjrfy^*-±hat^-praf.tic.e

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_v. / / EPAr^-praetiee—unde r NSK f apply /j *bi»* ,i fenvironmentall ybeneficia l tes t t o th eaddition, , a s wel la s th ereplacement , o f apollutio n -..^W-'"-** " "TV.: , r . ; \6..v^ji^l-fr-Urir- aI'M . .-'-^hrO . i

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yb ecircumstance s 'i nwhic hsuc hAv^nz'fi L * addition s ar e no t envio^pnmentallybeneficial . EPAsolicit s , -^- j | <y.- comment* * o n whethe r th e NSPS^^xclusio n shoul d be--amended a t th e ^' ,yv '." * time o f fina l actio n o n today' s proposa l t o appl ya n environmentall ybeneficia l tes t t o additiohs-a_ls£ . Fo r th e purpose s o f thi s proposal , a pollutio ncontro l .-

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- chang e or - chang e in-th e metho d o f operation—a t a utilit yuni t fo r purpose s o f reducing emission sP.4 0

- 2 7 - fro msuc hunit , in~.order_-t o compl ywit hTitl e I V o f th e 1990

- Amendments*- . Thes e change s ar e limite d t o th e installatio n o f conventiona l o r innovativ e emission s contro l equipment , including , bu t no t limite d to , installatio n o f conventiona l an d advance d flu e ga s desulfurization , sorben t injectio n fo r S0 2 an d r^/vf- rJ>xz\t;Crr

'. A.Ar^.K-i\y NO xcontrols . amA electrostati c precipitators * nTplftf-il—h-.-*i*jnr_ . "•r_2JTn*nTjn JrH*-hi—rrmfhr i " i -);~rn*-**hT_r_m

_•*•*••• • accommodat e switchin g t o ftm i wUrh_

_ imirp-r sulfu r r-pnt-pni-. f includin g natura l ga s o r coa l re-burning , co-firin g o f natura l ga s an d othe r fuel s fo r th e purpos e o f controllin g S0 2 an d NO xemissions«siia^_s"!-___±s_ o conat>jaria'*!'--__a^!^&j^^*H**fe^Q " gontjjol^B^o'ij^auL. " •-i&g activit ytha t i s necessar yt o accommodat e switchin g t o a les s pollutin g fue l i s considere d t o b e par t o f th e pollutio n contro l project . I n som e instances , thi s ma yinvolv e J^/KBSGS^- change s t o th e pollutio n generatin g equipmen t (e.g. . boiler) , bu t onl yi f th e change s ar e necessar yt o maintai n th e norma l

-• . XAA~ operatin g capabilit yo f th e uni t a t th e tim e o f th e iri__u_U.riL.vUJ.ui t wher e th e capabilit ywoul d otherwis e b e impaire d a s a resul t o f th e fue l switch . Fo r example , a n electri c utilit ystea m generatin g uni t tha t switche s fro ma highe r sulfu r bituminou s coa l t o a low-sulfu r subbituminou s coa l ma ynee d t o mak e certai n change s t o th e boile r i n orde r t o avoi d deratin g th e unit . Change s tha t ar e intende d primaril yt o restor e origina l capacit yo r t o improv e th e operationa l efficienc yo f th e facilit y ar e no t considere d t o b e par t o f a pollutio n contro l projec t fo rP.4 1

- 2 8 - purpose s o f thi s proposal . Suc hchange s ar e addresse d elsewher e i n thi s proposal . Also , th e sourc e stil l mus t compl ywit hal l applicabl e SI P limit s an d requirements , permi t condition s an d applicabl e NAAQ S o r PS D incremen t limits . A s proposed , thi s pollutio n contro l projec t proposa l wil l no t exten d t o sourc e categorie s othe r tha n electri c utilit ystea m generatin g units . EP Aha s s o limite d thi s provisio n -for severa l re^saaawBefii«o*^

- i n contras t wit ha genera l lac k o f experienc e wit hothe r industries , EP Aha s extensiv e experienc e i n addressin g ne wsource , applicabilit yissue s regardin g pollutio n contro l project s i n th e utilit yindustry . Tha t experienc e ha s le d EP At o conclud e i n ! i iumLiroud~"ihQrvidUd__^u-u^e s tha t pollutio n contro l project s i n th e utilit yindustr yar e generall yenvironmentall y beneficial . JlA addition , the/aci d rai n provision s o f Titl e I V /of . 

# . . r, 

# *.. / , / / - . / v/ th e ClearvAi r Ac t Amendment s o f 199 0 place/ a uniqu e burde n upon /

' / / • ' / ' th e utilit yindustr yt o undertak e pollutio n contro l project s i n th e nea r future—

-

2 . Additiona l Modelin g Requirement s Apropose d pollutio n contro l projec t o r physica l o r operationa l chang e canno t resul t i n a n emission s increas e tha t wil l caus e o r contribut e t o a violatio n o f a nationa l ambien t ai r qualit ystandard , PS D increment , o r visibilit ylimitation . Se e \_

_,, . - w ' CAA§ § 110(a)(2)(c) , 165 , 169A(b ) , 173 . N iiM iimj il lIM.0d£_.S „ * i <•••_• . •.--.•cr''* - C^.Ctrf- - "*\C t ______-;^_-—•_

• i n i 1 11 n i ni l I I. I H I i l I n u i i anysignifican t ne t increas e i n emission s tha t woul d hav e thi s proscribe d impact . I t i s possibl eP.4 2

- 2 9 - tha t a pollutio n contro l project , whil e no t causin g an yincreas e i n maximu

m hourl yemissions , wil l caus e a significan t ne t increas e i n actua l emissions , whic hi ntur ncoul d tytjas-eataivv a x r "-v-ojgAAQS, incremen t o r visibilit ylimitation . Fo r thi s reason , unde r today' s proposal, , fcfoe reviewing authorit ymayrequir e a

_ _ . 2 !*-•"• ' - sourc e t o performa n ai r qualit yimpac t analysi s (modeling )

wrr I-,-.: * riuJC." ! -* " '••'*• • • fit . wheneve r i^appe^E S tha t a propose d chang e wil l resul t i n a significan t ne t increas e i n actua l emission s o f an ycriteri a pollutan t ove r level s use d fo r tha t sourc e i n th e mos t recen t ai r qualit yimpac t analysis . I f thi s modelin g indicate s tha t thi s increas e i n emission s wil l caus e o r contribut e t o a violatio no f an yambien t standard , PS D incremen t o r visibilit yviolation , th e pollutio n contro l exclusio n doe s no t apply .

3 . EPA' s Existing I-uteiipL'ii.'ba'ft'iui i Regardin g Pollutio n Contro l Project s A s note d above , i t i s ofte nclaa_ . tha t pollutio n contro l project s a t existing stationarysource s ar e no t majo r modification s subjec t t o ne wsourc e revie wbecaus e the yd o no t ';3u-*..-'.„• resul t i n a n increas e i n actua l emission s A-.Jflut&a&iY&i&fr} EP A believe s that , i n general , pollutio n contro l project s wer e no t intende d b

yCongres s t o b e considere d physica l o r operationa l change s fo r purpose s o f ttoto . ne wsourc e re l q^a'*'ej__ei3(C^

^ program. , Wit hrespec t t o pollutio n contro l projects , EPAhas*i n recen t year s issue d numerou s nonapplicabilit ydetermination s an d "no action " letter s t o utilit ysource s base d -.:< ~ finding that , environmentall ybeneficia l pollutio n contro l project s ar e no t th e- 3 0 -

typ e o f physica l o r operationa l chang e intende d t o b e covere d b y th e statut e o r EPA' s regulations. 1 4 T o provid e utilitie s wit ha greate r degre e o f certaint ypendin g adoptio n o f today' s propose d regulations , EP Ai s toda yformall yannouncin g a regulator y interpretatio n tha t i s consisten t wit hthes e individua l letter s a s wel l a s th e provision s o f th e Ne wSourc e Performanc e Standard s (NSPS ) regulations . Thi s interpretatio n provide s tha t th e addition , o r us e o f an ysyste mo r devic e whos e primar yfunctio n i s th e reductio n o f ai r pollutant s wil l no t constitut e a physica l o r operationa l chang e tha t coul d b e deeme d a majo r modificatio n an d trigge r ne wsourc e review , unles s th e Administrato r determine s tha t the-projec t woul d no t b e environmentall y beneficial . C C .'".'••v-vvH/i/ ' -"MA P >Aii " ^i^f^n 1 ^EPAha s mai-ol yinterprete d it s PS D regulation s •CALOU_'0_<. _ i n harmon

ywit hit s NSP S regulations , whic h-do—not 1 e-fbew d t o mos t p . " C * t.( l f ^ _/,_•

- - r * " pollutio n contro l -aeteivlLibiS . Se e 4 0 CF R60.1 4 (e ) (5 ) .T - •Dar-ing ' th'e^fiirst^yecars'^o f vtl^^PSp^prcigrak^-.ES Ainterpreted

- its-PS-D— • regfulationst . ^o_S!^mgly ^ mdludes-thish-NSPS--proMision^Ip...T.hls___w.as_ _ 1 4 See , e.g. . Letter , WilliamG . Rosenberg , Assistan t Administrator , EPA , t o Andre wAitken. , Vic e President , Ne wEngland Powe r Servic e Co. , Marc h26 , 1991 ; Letter , Rosenber g t o Patric k M . McCarter , Senio r Vic e President , Publi c Servic e Co . o f Colorado , Jul y23 , 1990 ; Letters , Davi d Kee , Director , Ai r an d Radiatio n Division , EPA.Regio n V , t o Timoth

yJ. . Method , Assistan t Commissioner , Indiana Dept . o f Environmenta l Management , January JO , 199 0 an

d March . 8 , 1990 . --"•"A! 5 ' Memorandu mfro mEdward Reich , Director , Stationary Sourc e Complianc e Divisio n an d WilliamF . Pedersen , Actin g Associat e Genera l Counsel , Air , Noise , an d Radiatio n Divisio n t o Ally n M . Davis , Regio n I V (Apri l 21 , 1983) . >.-./\c-..^s. * -.•-

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# / ° i npar t based;o nth e fac t tha t th e PS D definition / of . modifieatior r s'lnpiy^adoptsrthe^/N^S_definition-(i nsection__ i 1 1 (a).(,4j_; . I n addition , th e legislativ e histor yreflect s that , a s a genera l matter , Congres s intende dt o confor mth e meanin g o f -'Vii-" "modification " fo r PS D purpose s tO/,usag e unde r th e NSP S program . 1 -"~" ,__• ' ia*r * (Se e 12 3 Cong . Rec . H1195 7 (Novembe r 1 , 1977) J) J yrEPA .ha

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R§ 60.14(e)(5) . Po^-th*e—rea"son s "stated— in-thH^EmTsb n MemorandumT - tha t would - Constitut e a regulator y c__a~ng e requirin g notic , i_r~jf-5 =z c^mm^€~rulema]cl'7Tg**;—Second, ! fj y focusin g o n whethe r a pollutio n contro l projec t i s a physica l o r operationa l chang e withi n th e meanin g o f th e ne wsourc e revie w regulations , today' s rulin g avoid s th e nee d t o undertak e a quantitativ e emission s increas e calculatio n i n ever ycase , a s woul d b e necessar yi f suc hproject s wer e deeme d t o b e physica l o r operationa l changes . B-__pwcjial± yi n liyliLau i th e .piuvirion s <_**-£

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u calculatio n o f -actua l emission s base4?±Tre 5 an d projection s of-future-aetuajr-emiasiona ^ EP Aexpect s tha t most , i f no t all , pollutio n contro l project s wil l reduc e 4^ B v^.-ZA actua l emissions . Nevertheless , th e Administrator' s authorit yt o conside r individua l pollutio n contro l project s provide s a n adequat e opportunit yt o determin e tha t a pollutio n contro l projec t woul d someho wresul t i n a n advers e environmenta l impac t /-•'t'y-i- nfi'vic . _A , -i

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an d thu s conclud e tha t th e projec t 1 a . wcit environmentall y OimiAzi. •- ~'r\u.rKi-iA<~ ••_<_ . _>.-\>- \ 1 . \ . ( . cA '—

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- fWA . , y\c.-\ J^A^p^<^A ._<-_ , AlSt-^? . " ^ Fo r th e purpose s o f thi s interpretation , a pollutio n contro l projec t refer s t o th e additio n o r replacemen t a t a sourc e o f a n emission s contro l syste mo r devic e primaril ydesigne d t o improv e th e contro l o r preventio n o f ai r pollutio n emissions . Fue l switchin g wher e th e projec t i s designe d primaril yt o reduc e ai r pollutio n (a s describe d i n th e prio r section ) als o constitute s aP.4 6

- 3 3 - pollutio n contro l project . As*-wit hth e propose d rule. , change s tha t ar e intende d primaril yt o restor e origina l capacit yo r t o improv e th e operationa l efficienc yo f the \ facilit yar e no t considere d to,b e par t o f a pollutio n contro l projec t fo r purpose s o f thi s ruling . B . Representativ e Actua l Annua l Emission s f }J\ th e WEPC O decision , th e cour t foun d tha t th e unit s i n questio n ha d begun norma l operations , an d thus , rejecte d EPA' s actua l t o potentia l methodologywhic hth e cour t foun d impermissibl yignore d th e utility' s pas t utilizatio no f th e units . Sinc e th e propose d wor k consiste d o f th e replacemen t o f existing component s wit h"like-kind " equipmen t —whic hth e cour t apparentl ybelieve d woul d no t i n an d o f itsel f lead th e utilit y t o chang e it s patter n o f utilizatio no f th e uni t —th e cour t foun d th e methodologyarbitrarya s applie d i n tha t case . A s a result , EPAdevelope d a ne wmethodologyo nremand —th e so calle d actua l .to futur e actua l emissions'test . TodayEPA propose s modifyin g it s regulationsM: o codif ythi s methodology , A'—yyk. '' VU? - r r an d appl y*u

t jtoj^il l physica l o r operationa l change s a t a n existing electri c utilit ystea m generatin g uni t othe r tha n th e additio n o f a ne wuni t o r th e replacemen t o f a nexistin g unit . Unde r today' s action , EPApropose s t o conside r a uni t t o b e replace d i f i t woul d constitut e a reconstructe d uni t withi n th e meanin g o f 4 0 CF R60.15 . ETA ' Uu__'iiB.VU J LliuLT[E^HW^mlrtt^iBBf^^^_^ r

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l hence , thei r futur e leve l o f "representativ e • •* • i" J " nt * annua l actua l emissions. " r

- . . . ' r ;• - ' :-••--.i- - —../ - ;'<_i^(_r ,'v«.*oU-.' > -^."C " t(.-"i.-,-i ; • A s propose d today , th e "representativ e actua l annua l emissions " methodologyrequire s th e utilit yt o compar e it s baselin e emission s wit hit s futur e actua l emission s t o determin e i f th e vHiic3?^^a_-__a___±onKwil l increas e actua l emissions . EPA' s existing regulation s defin e baselin e emission s a s "the averag e rate , i n ton s pe r year , a t whic hth e uni t actuall yemitte d th e pollutan t during a two-yea r perio d whic hprecede s th e particula r dat e an d whic hi s representativ e o f norma l sourc e operation. " See , e.g. , 4 0 CF R52.21 . Th e Administrato r "shall " allo wus e o f a differen t tim e perio d "upo n a determinatio ntha t i t i s mor e representativ e o f norma l sourc e operation. " Jd . Althoughno t require d b

yth e regulations , EPAha s historicall yuse d th e tw o P;"c-pc*--«it i Ol a IA?*-" year s immediatel yprecedin g th e modificatio n t o establis hth e baseline . (Se e 4 5 Fed . Reg . 52676 , 52705 , 5271 8 (1980). ) However , i n some case s i t ha s allowe d th e us e o f earlie r periods . Fo r example , i n WEPCO . EPAfoun d th e fourt han

d fift hyear s prio r t o th e modificatio n mor e representativ e o f WEPCO' s norma l operation s sinc e th e source' s capacit ywa s reduce d du e t o physica l problems . EPApropose s todayt o retai nthi s regulatory language , bu t t o adop t a ne wpresumptio nregarding it s implementation .P.4 8

- 3 5 - Unde r today' s action , th e Administrato r wil l presum e tha t an ytwo./vyear

s withi n th e five year s prio r t o th e propose d chang e i s representativ e o f norma l sourc e operation s fo r a utility . Thi s presumptio n i s consisten t wit hth e five-yea r perio d fo r "contemporaneous " emission s increase s an d decrease s i n 4 0 CF R 52.21(b)(3)(i)(b). 1 8 Sourc e owner s o r operator s desirin g t o us e othe r tha n a two-yea r perio d o r a baselin e perio d prio r t o th e las t five year s maysee k th e Administrator' s specifi c determinatio n tha t suc hperio d i s mor e representativ e o f norma l

Fr^iOAAA; operations. yV< Prio r t o final/actio n o n today' s proposal , sourc e owner s desiring t o us e a/baselin e perio d prio r t o th e tw o year s preceding * th e modificatio n shoul d continu e t o see k th e reviewing * authority' s specifi c determinatio n tha t suc hperiod,i s mor e / / representativ e o f norma l operations . Th e EPAwil l appl y,thi s standar d liberall yan d encourage s State s t o d o likewise . 1 9

1 8 Thi s presumptio ndoe s no t appl yt o pas t modification s a t a n emission s uni t fo r th e purpos e o f determinin g contemporaneou s emissio nchange s a t a sourc e and canno t b e use d t o extend th e fiv e yea r perio d specifie d i ntha t provision . Se e 4 0 CF R52.21(b)(3)(1)(b) .

1 9 TThrfnT

T n u i mr r li " mi n Inrrr i nr nftr r thr rrapfflinr . •"fh e leve l o f baselin e emission s selecte d mus t b e consisten t wit hcurren t assumption s regardin g th e source' s emission s tha t ar e use d unde r th e stat e implementatio n plan s (SIP ) fo r plannin g o r permitting purposes . Thus , th e sourc e mayno t selec t a leve l o f baselin e emission s highe r tha n tha t use d b

yth e permittin g authorit yi nissuing a PS D o r othe r constructio n permi t t o a sourc e i nth e area , i f suc hhighe r leve l woul d resul t i n a NAAQ S o r incremen t violation , o r violat e a visibilit ylimitation *P.4 9

- 3 6 - Th e futur e actua l projectio n i s th e produc t of : (1 ) th e hourl yemission s rate , whic hi s base d o nth e unit' s physica l an d

.'.;•Y.- , >'•~<\" , — • operationa l capabilitie s following th e modificatio n an d federally-enforceabl e operationa l restriction s tha t woul d affec t

- : . \ i j > ' •v^r^\i-' th e hourl yemission s rat e following tfee^renovation ; an d (2 ) projecte d capacit yutilization , whic hi s base d o n(a ) th e unit' s historica l annua l utilization , an d (b ) al l availabl e informatio n ,,.; v ^**-^--- ' regarding th e unit' s likel ypost-renovatio ncapacit y utilization . Th e projectio n o f post-modificatio ncapacit y utilizatio n fo r applicabilit ypurpose s shoul d b e base d o na projectio n o f utilizatio nfo r a perio d afte r th e physica l o r operationa l change . Specifically , EPAtodaypropose s t o allo w source s t o bas e th e projectio n o f utilizatio n o n th e tw o year s afte r th e modification , o r a differen t consecutiv e two-yea r '.' ; I\_V\\. i / v ^ perio d withi n th e te n year s afte r th e wtxlification , wher e th e Administrato r determine s tha t suc hperio d i s mor e representativ e o f norma l sourc e operations . Th e principa l effec t o f usin g a nactual/t o futur e actua l methodologyrathe r tha n anactua l t o potentia l methodologyi s t o shift , fro

mth e sourc e owne r t o EPA , the . burde no f accuratel y projecting a source' s post-chang e capacit yutilization . A s

2 0 I n projecting futur e utilizatio nan d emission s factors , th e permitting authorit ymayconside r th e company' s historica l operationa l data , it s ow n representations , filing s wit hFederal , Stat e o r loca l regulatoryauthorities , an d complianc e plan s develope d unde r Titl e IV o f th e 199 0 Amendments .P.5 0

- 3 7 - discusse d above , unde r th e actua l t o potentia l methodology , th e sourc e ca n avoi d ne wsourc e revie wb yphysicall yo r legall y limiting an

yincreas e i nactua l emissions . However , thi s approac hmayrestric t utilit yflexibilit yt o expand operation s a t a late r date , becaus e i t mayrequir e th e utilit yt o agre e t o a federall yenforceabl e emission s cap . Historically , sourc e owner s hav e frequentl yaccepte d suc hcap s t o avoi d ne wsourc e review . However , i f th e source' s projectio ntha t i t wil l no t significantl yincreas e actua l emission s abov e baselin e level s turn s ou t t o b e wrong , th e sourc e mus t underg o ne wsourc e revie w t o increas e it s emissions . See , e.g. . 4 0 CFR52.21(r)(4) . I n contrast , unde r th e actua l t o futur e actua l methodology , i f th e source' s projecte d leve l o f post-chang e capacit yutilizatio n woul d no t resul t i n a n increas e i nactua l emission s abov e baselin e levels , i t woul d no t nee d t o accep t a n annua l emission s cap o r restriction s o n hour s o f operatio ni n orde r t o avoi d ne w sourc e revie w(unles s th e reviewing authorit yaffirmativel y rejecte d th e sourc e owner' s projection). 2 1 Thus , although

2 1 Th e sourc e may , however , b e require d t o obtai na federall yenforceabl e permi t o r othe r instrumen t tha t limit s it s hourl yemission s rat e t o level s tha t wil l not , whe n multiplie d b y th e projecte d capacit yutilization , resul t i na significan t increas e i n actua l emissions . Thi s wa s done , fo r instance , i n EPA' s decisio n o n remand i nth e WEPC O case . Th e company' s projectio n o f futur e actua l emission s wa s base d i n par t o nit s assumption s regardin g th e sulfu r conten t o f th e coa l i t intende d t o bur n and contro l technologyperformanc e levels. . Sinc e thos e assumption s wer e mor e stringen t tha nth e applicabl e lega l restraint s o n th e source' s operation s unde r th e stat e implementatio n plan , EPAdetermine d tha t theymus t b e mad e (continued... )P.5 1

- 3 8 - unanticipate d increase s i n utilizatio nabov e th e leve l projecte d b yth e sourc e maystil l occur , an d mayresul t i na nincreas e i n actua l emission s abov e th e pre-modificatio nbaselin e level , NS R woul d no t apply . EPAdoe s no t expec t tha t unanticipate d utilizatio n increase s wil l b e a majo r problem , becaus e futur e utilizatio n projection s ar e commo n an d subjec t t o publi c scrutin y i n th e utilit yindustry . Suc hi s no t th e cas e i nothe r industries , however . Fo r thi s reason , EPAdoe s no t a t thi s time propos e t o extend us e o f th e actua l t o actua l methodologyt o 'othe r industries . Pending adoptio n o f thi s proposal , EPAwil l continu e t o followWEPC O an

d appl yth e actua l t o futur e actua l methodologyt o "like-kind " utilit ymodifications . EPAview s a "like-kind " replacemen t a s th e non-routin e replacement 2 2 o f a componen t o f an electri c utilit yemission s uni t wit ha functionall yequivalen t component . Areplacemen t componen t doe s no t hav e t o b e identica l o r o f th e same design a s th e componen t i t replaces , bu t i t mus t b e functionall yequivalen t i nth e sens e tha t i t serve s th e same

2 1 (. . .continued ) federall yenforceabl e (in tha t case , througha state-issuedTnlno r sourc e constructio n permi t unde r 4 0 CFR51.160-164)

- t o b e considere d fo r NS Rapplicabilit ypurposes . Today' s proposa l an d interpretatio n jretain s thi s approach .

2 2 ."Routin e maintenance , repai r an d replacement " i s alread yexclude d fro

mth e modification " test . Se e 4 0 CF R 52.21(b)(2)iii)(a) . EPAplan s t o provid e additiona l guidanc e o n thi s exclusio n b

yNovembe r 1992 .P.5 2

- 3 9 - purpose . I n addition , a "like-kind " replacemen t canno t alte r th e original^desig n capacity , increas e potentia l emission s o r fundamentall yalte r th e metho d o f operatio no f th e source . Th e chang e als o cannot ' consis t o f a replacemen t o r reconstructio no f th e emission s uni t i n it s entirety .

C . Th e Causatio n Requiremen t Th e NS Rregulatoryprovision s requir e tha t th e physica l o r operationa l chang e "resul t in " anincreas e i n actua l emission s i n orde r t o conside r tha t chang e t o b e a modification . Se e e.g . 4 0 CF R52.21(2)(i) . I n othe r words , NS Rwil l no t appl yunles s EPA find s tha t ther e i s a causa l link betwee n th e propose d chang e an d an ypost-chang e increas e i nemissions . EPAtodaypropose s t o amend it s rule s t o clarif ythi s -^n yst*TM***$3z2 •-••pr^.rp'---]tinn -i n th e contex t o f modification s a t electri c utilit ysteamgeneratin g units . -v ^ l -'Yy*?

- , ""^ . -<'.A •'-••'•• "*J I V. <.yi-> : '-*- - '•- ' H•_'""-ur.-IT)'(.' , s . • • Hu; . V/.-

v Unde r thes e propose dregulations , an yemission s increas e : . ' . r •.„ k. J —1_ . I

' ' attributabl e t o a physica l o r operationa l ch._._*_- . ..i.ii t continu e t o - — b e include di n th e post-chang e emission s calculation .

oday' s proposa l .codifie c HDA' c intoi'prcta-trt- t ~111 m n11 \ *n**TTnT**_**rt*Ti*TTn r ¥ hi nP—"-j^^ ^ -jhi t wher e increase d operation s ar e i n respons e t o independen t factors , suc ha s system-wid e deman dgrowth , whic hwoul dhav e occurre dan d - ; _a» - th e unit' s operation s eve ni n th e absenc e o f th e physica l o r operationa l change , suc hincrease s d o no t resul t fro mth e chang e an dshal l b e exclude dfro mth e projectio no f futur e actua l <0A-0A,^P.5 3

- 4 0 - emissions . Thus , i n assessing whethe r th e propose d chang e wil l resul t i n a n increas e i n actua l emissions , utilitie s nee d no t includ e i n thei r projectio n o f post-chang e utilizatio ntha t portio n o f th e increase d rat e o f utilization , i f any , du e t o factor s unrelate d t o th e physica l o r operation^change , suc ha s an " ^XAOmincreas e i n projecte d capacit yutilizatio natfc-WLbu i fea_>-l €t o th e rat e o f electricit ydemand growt hfo r th e utilit ysystem (o f whic htha t sourc e i s a member ) a s a whole . Unde r thi s proposal , during a representativ e baselin e perio d (se e supra) , th e plan t mus t hav e bee n abl e t o accommodat e th e projecte d demand growt hphysicall yan d legall yeve n absen t th e / ;.c. n?£-.,<. TVJ - inCV... ^ , ,- , .AAct-.l ' •>•• ~ particula r change . Increase d operations*tha t coul d no t ."ii-,".•"- • 'Ufl i Hu_ - physicall yan

d legall yb e accommodate d bu t fo r th e propose d -Ui*^>-".* * physica l o r operationa l chang e shoul d b e considere d c-wMP-Sy CKA-YU*. ^

I n addition , th e utilit ygenerall ymus t stil l tak e int o accoun t physica l o r operationa l change s whic hsignificantl yalte r th e efficienc yo f th e plant . Se e Puert o Rica nCement . 88 9 F.2 d a t 297-8 . Specifically , i f th e chang e result s i n (a ) removin g bottlenecks , a n outrigh t increas e i n capacit yo r reliability , o r (b ) les s expensiv e powe r production , whic hlead s t o greate r dispatching , the n th e portio no f capacit yutilizatio n attributabl e t o thes e result s fro mth e chang e shoul d b e include d .i n calculatio n o f emission s increases . D . Repowerin g

XA.\HC-\>A0-- 0 — ^ AP.5 4

- 4 1 - A s previousl ymentioned , Titl e IV o f th e 199 0 Amendment s grant s specia l treatmen t t o utilitie s tha t see k t o compl ywit h th e mandate d aci d rai n reduction s b yrepowerin g a uni t wit h qualifyin g clea n coa l technology . 199 0 Amendment s § § 402(12) , 409(a) . Specifically , repowering project s tha t qualif yfo r a Phas e I I complianc e extensio n wil l als o b e exemp t fromNSP S requirements , s o long a s th e repowering "doe s no t increas e actua l hourl yemission s fo r an ypollutan t regulate d unde r th e Act. " § 409(d) . Th e EPAinterpret s th e requiremen t tha t th e repowering no t lead t o a n increas e i n "actua l hourl yemissions " a s an expressio n o f Congressiona l inten t tha t wit hrespec t t o repowerin g projects , EPAshoul d us e th e same genera l approac ht o determinin g applicabilit ya s i t ha s fo r othe r physica l o r operationa l changes , discusse d above . Accordingly , EPAtoday propose s rule s tha t provid e tha t a repowerin g projec t whic h result s i n a n increas e ove r baselin e i na unit' s post modificatio n hourl yemission s wil l no t b e eligibl e fo r thi s limite d NSP S exemption . Th e propose d NSP S exemptio napplie s t o repowerin g o f existin g unit s a t existing sources , s o long a s th e projec t qualifie s fo r th e Phas e I I extensio nan d satisfie s th e "actua l hourl yemissions " increas e test . Becaus e o f thi s provision , th e reconstructio n limitation s specifie d i n 4 0 CF R60.1 5 ar e no t applicabl e t o qualifying repowering projects . However , n o specia l treatmen t can b e afforde d t o a ne wuni t whic hi s locate d- 4 2 -

a t a differen t sit e tha nth e existing uni t i t replaces . Se e CA A § 409(d) . Pursuan t t o sectio n 409(e) , EPAwil l provid e expedite d NS R processing fo r repowering project s an d wil l encourag e Stat e permitting authoritie s t o d o th e same . E . Clea n Coa l TechnologyDemonstratio n Project s Today' s notic e als o propose s rule s implementing th e ne wCC T exemptio n create d b yth e 199 0 Amendments . Fo r th e purpose s o f thi s proposal , temporaryCC T demonstratio n project s ar e define d a s thos e CC T demonstratio n project s lasting fiv e year s o r less . Titl e IV

give s thes e project s an exemptio n fro mNSPS , PS D an

d nonattainmen t requirements . Id. , § 415(b)(2) . However , th e facilit ywoul d stil l b e subjec t t o an yapplicabl e SI P an d mus t compl ywit han

yothe r requirement s necessaryt o attai nan d maintai n NAAQS . Thi s ruling propose s t o implemen t thi s provisio n an d clarifie s tha t EPAconsider s th e fiv e yea r perio d a s starting on th e dat e o f startu p (a s define d i n 4 0 CFR60.2) . Atemporary demonstratio n projec t mayb e converte d t o a permanen t statu s a t an ytime , provide d i t meet s al l th e requirement s tha t appl yt o a permanen t CC T projec t criteri a a t th e time o f conversion . Further , EPApropose s tha t a t th e en d o f a temporary project , th e facilit ymus t b e returne d t o pre-demonstratio n condition s an

d hourl yemissio nrate s (or lower) . Th e retur no f th e facilit yt o it s pre-demonstratio n physica l an d operationa l conditio n woul d no t resul t i n th e los s o f th e actua l emission sP.5 6 _

- 4 3 - margi n betwee n pre-demonstratio n actua l emission s rat e an d SIP allowabl e emission s rate s fo r tha t facility . Rather , th e facilit ywoul d b e treate d a s i f th e temporar ydemonstratio n projec t ha d neve r occurred. 2 3 Thi s proposa l doe s no t exten d t o emission s increase s tha t ar e unrelate d t o th e conduc t o f temporar ydemonstratio n projects . EP Aconsider s emission s increase s (abov e th e pre-demonstratio n levels ) tha t ar e attributabl e t o physica l o r operationa l changes , othe r tha n thos e necessar yt o restor e tha t uni t t o it s pre demonstratio n condition , t o b e beyon d th e scop e o f th e Congressiona l exemption . Today' s actio n als o propose s t o implemen t a n exemptio nfro m NSP S an d PS D requirement s fo r repowerin g project s whic har e awarde d fundin g fro mth e DO E a s permanen t CC T demonstratio n project s (o r simila r project s funde d b yEPA ) s o lon g a s potentia l emission s (se e 52.21(b)(4) ) fro mth e uni t d o no t increas e a s a r. pc,_-tr i rv- . iV-wua

- -''v-

r A'"

J ' resul t o f th e project . § 415(b)(3) . However , tJum. H '; n ...j-.-nir.i--.inn._n>*

- a ,.- • .-

_A^.MX C_ S i.r^AA~ ,x.rr

Ar -H-«_ . ^orfd-^ Cf

- ~A'\*v

- ' std^_b****eg___trryB_firhAth e nonattainmen t provision s o f Titl e I o f th e Act .

2 3 Thi s woul d b e th e cas e eve n i f ther e wer e smal l difference s i n th e post-demonstratio n physica l an d operationa l condition s du e t o a technica l inabilit yt o restor e th e uni t t o it s precis e pre-demonstratio n condition , o r du e t o norma l variabilit yi n th e coa l used . Thus , EP Awoul d no t see k t o appl y NSP S o r NS Rbecaus e o f a post-demonstratio n emission s increas e attributabl e solel yt o a n increas e i n th e hour s o f operatio n o r productio n rat e o f th e uni t (subjec t t o th e NSP S limitatio n tha t th e productio n rat e increas e mus t b e accomplishe d withou t a capita l expenditure) .P.5 7

- 4 4 - Finally , today' s proposa l woul d implemen t th e statutory exemption s i n sectio n 415(c) . I n tha t section , Congres s provide d an exemptio n fromNSP S an d PS D fo r th e reactivatio no f "very clea n units " otherwis e i n complianc e wit hth e Ac t tha t had bee n shu t dow

n fo r a t leas t th e tw o year s prio r t o enactmen t o f th e 199 0 Amendment s an

d that , prio r t o th e shutdown , ha d bee n equippe d wit hpollutio n control s wit ha remova l efficienc yo f a t leas t 8 5 percen t fo r sulfu r dioxid e an d 9 8 percen t fo r particulates , an

d had bee n equippe d wit hlow-NOxburners . Thi s nzX'A.)--•''<- ^ exemptio n appear s t o hav e been^tailore d t o c t __tpir*ii

f i i " =*fd_a»*f e an d i s no t expecte d t o hav e widesprea d applicability . Becaus e thes e propose d rule s merel yimplemen t straight

forward statutoryexemption s tha t wer e immediatel yeffectiv e upo n passag e o f th e 199 0 Amendments , EPAintends , a s a matte r o f statutoryinterpretation , t o followth e policie s se t fort hi n today' s proposa l pendin g fina l action .P.5 8 .

- 4 5 - F . Calculatio n o f NSP S Baselin e A s discusse d i n sectio nI I o f thi s notice , "an yphysica l o r operationa l chang e t o a nexisting facilit ywhic hresult s i na n increas e i n th e emissio n rat e t o th e atmospher e o f an ypollutan t t o whic ha standar d applies " i s a modificatio nfo r NSP S applicabilit ypurpose s Se e 4 0 CFR§ 60.14(a) . Th e NSP S regulation s implementing thi s genera l definitio n focu s o n increase s i n hourl yemissions , expresse d i nkilogram s o f pollutan t discharge d pe r hour . T o determin e i f a n increas e i n hourl yemission s ha s occurre d a t a unit , a pre-chang e baselin e mus t b e established . Unde r curren t regulations , th e emission s rat e befor e an d afte r a physica l o r operationa l chang e i s evaluate d a t eac huni t b ycomparing th e curren t hourl y potentia l emission s a t maximu moperating capacit yt o hourl y emission s a t maximu mcapacit yafte r th e change . I nthi s calculation , th e reviewing authorit ydisregard s th e unit' s maximu mdesig n capacity. 2 4 Th e origina l desig ncapacit yo f a unit , t o th e exten t i t differ s fro mactua l maximu

mcapacit ya t th e tim e tha t th e baselin e i s establishe d du e t o physica l deterioratio n o f th e facility , i s immateria l t o thi s calculation .

2 4 Se e 3 9 Fed . Reg . 36,94 8 col . 1 (propose d rule) . I n WEPCO . th e utilit ycontende d tha t baselin e capacit yfo r th e purpos e o f determinin g whethe r a n increas e i n emissio n rat e occur s fo r purpose s o f a nNSP S modificatio n i s th e origina l desig n capacit yo f th e facility . However , th e cour t rejecte d WEPCO' s argumen t tha t origina l designcapacit yo r pas t "representative " capacity , n o longe r achievabl e a t th e plant , e_au33_. b e use d fo r th e baselin e emission s rate .P.5 9

- 4 6 - TodayEPAi s proposing that , fo r anexisting electri c utilit ystea

mgeneratin g unit , th e pre-chang e baselin e fo r NSP S applicabilit ypurpose s shal l b e calculate d usin g th e highes t hourl yemission s rat e achievabl e a t an ytime durin g th e 5 year s prio r t o th e change . Thi s proposa l retain s th e ke yconcep t i n existing regulation s tha t th e baselin e b e determine d durin g a perio d tha t i s roughl ycontemporaneou s wit hth e propose d chang e a t th e affecte d facility . EPAbelieve s tha t thi s propose d revision , whil e modest , i s stil l necessaryt o avoi d th e curren t regulation' s undu e emphasi s o n th e physica l conditio n o f th e affecte d facilit yimmediatel yprio r t o th e change . Today' s mor e flexibl e provisio n enable s unit s t o establis ha baselin e tha t i s representativ e o f it s physica l an d operationa l capacit yi nrecen t years , whil e stil l precludin g th e us e o f a baselin e tie d t o origina l desig n capacity , whic ha s note d abov e maybea r n o relationshi p t o th e facility' s capacit yi nrecen t years . Withou t thi s revision , th e NSP S regulation s ma yundul y burde n utilitie s undertakin g physica l o r operationa l change s i n conjunctio n wit hth e aci d rai n program . Fo r instance , i f a uni t ha s broke n down an d i s i nnee d o f repairs , th e utility' s baselin e wil l b e artificiall ylow . Th e propose d chang e wil l allo w utilitie s t o demonstrat e tha t anearlier , highe r capacit ywa s mor e representativ e o f th e unit' s maximu mhourl yemission s rate .P.6 0

- 4 7 - G . Utilit yBAC T Presumptio nfo r NO x I n today' s notice , EPApropose s t o adop t a presumptio nthat , i n th e cas e o f PS D permit s issue d b yEPAunde r 4 0 CF R52.21 , bes t availabl e contro l technology(BACT ) fo r emission s o f nitroge n oxide s fro

mexisting coal-fire d electri c utilit ysteamgeneratin g unit s undergoin g a modificatio n i s th e technologyrequire d unde r sectio n 40 7 o f th e Clea n Ai r Act . I ngeneral , thi s wil l cal l fo r th e us e o f combustio n modificatio n and/o r low-NOxburner s o r similar , cost-effectiv e technologie s b ythos e utilitie s require d t o obtai n PS D permit s fo r NO xemission s following fina l actio n o n today' s proposal . I n brief , sectio n 4 0 7 require s mos t utilit yunit s subjec t t o phas e I an

d phas e I I t o mee t NO xemissio nlimitation s o n th e same dat e a s th e phas e I o r phas e I I S0 2 emissio nlimitation s becom e effective . Th e Administrato r mus t establis hannua l emissio n limitation s (based o n rate s liste d i nth e section ) fo r tangentially-fixe d boiler s an d drybottomwall-fire d boiler s withi n 1 8 month s o f enactment . Thes e limitation s mus t b e achievabl e wit hlow-NOxburne r technology . CA A§ 407(b)(1) . Th e Administrato r mus t promulgat e annua l emissio nlimitation s fo r al l othe r boiler s b

yJanuar y1 , 1997 , base d o na "bes t systemo f continuou s emissio n reductio n. . . whic hi s comparabl e t o th e cos t of " low-NOxburners . B yth e same date , th e Administrato r maymak e th e rate s fo r boile r type s identifie d i nsectio nP.6 1

- 4 8 - 407(b)(1 ) mor e stringen t i f mor e effectiv e low-NOxburne r technologyi s available . CA A§ 407(b)(2) . Low-NOxburner s ar e commerciall yavailabl e an d ca nb e retrofitte d o n man

yboile r types , providin g a highdegre e o f emission s reductio n a t relativel ylo wcosts . Depending o nboile r type , low-NOxburner s ca nreduc e emission s o f NO xb y approximatel y2 0 t o 6 0 percent . Agai ndepending o nboile r typ e an d othe r factors , th e cos t o f replacing conventiona l burner s wit hthes e control s i s i n th e rang e o f $8.0 0 t o $16.0 0 pe r kilowatt , -hour, . , 

### J ^A'>A -J^AzA^ Othe r NO xcontro l technologie s tha t ar e ,availabl e and-can-be

u f >0->~^+ 'zzO'^-y. uw j r W retrofitte d £&£*us e on^coal-fire d electri c utilit yunits / ca n J * provid e a muc hgreate r degre e o f emission s reductions . Thes e includ e selectiv e noncatalyti c reductio n(SNC Ro r "therma l de

NOx" ) an

d selectiv e catalyti c reductio n(SCR) . (In addition , DO E ha s funde d tw o ne wtechnologie s unde r it s CC T demonstratio n programwhic har e designe d fo r th e simultaneou s remova l o f S0 2 , NOxan d particulat e matte r tha t maybecom e commerciall y "available " i n th e future.) 2 5 However , SN Ran d SNC Rar e no t i n -widespread-us e i n thi s countrya s retrofi t technologie s fo r coal

fired boilers , an

d th e DO E sponsore d project s hav e no t ye t bee n demonstrated . Althoug hthe-cos t o f thes e alternativ e

2 5 On e technology—lowNOx/SOxBurne r Retrofi t —i s designe d specificall yfo r cyclon e boiler s whic hcanno t b e retrofi t wit hlowNOxburner s whil e th e othe r —th e Advance d Slagging Combusto r — i s applicabl e t o a numbe r o f boile r types .P.6 2

- ~i_, v -. . -oA*<

- 4 9 - Z xCA ' . , , te<__hnologies-i s no t unreasonabl epe r

se f IThei r nnsiv-Mrrtwai-.tronocc ^j . .-v .

- .*AN_.<_

- - *i_5_mnr* hJ-P<._ . TT.'. HI'll 1- *

- -r>4a_-^* in- . h1 Pnoft4H^g:~ lnw-NO xburners , especiall ywhe n considere d i nth e contex t o f retrofittin g existing units . . t - ^ EPAha s i n th e pas t issue d guidanc e document s effectivel y creating presumption s tha t certai ntechnologie s constitute d BAC T fo r certai n sourc e categories . Se e Memorandum , Operatio n Guidanc e o n Contro l Technologyfo r Ne wan d Modifie d Municipa l Wast e Combustors , fro m Geral d A . Emison , Director , Offic e o f Ai r Qualit yPlannin g an d Standards , EPA , Jun e 26 , 1987 , p . 5 . EPA believe s i t i s appropriat e t o propos e t o d o s o her e a s wel l i n th e cas e o f low-NO xburner s fo r modifie d coal-fire d utilit y boiler s i n ligh t o f th e strong congressiona l polic yjudgmen t favoring us e o f tha t technologyfo r aci d rai n contro l reflecte d i n sectio n 407 . Sectio n 169(3 ) o f th e Act , 4 2 U.S.C . 7479(3 ) define s BAC T as : a n emission s limitatio n base d o n th e maximu m degre e o f reductio no f eac hpollutan t subjec t t o regulatio n unde r th e Clea nAi r Ac t emitte d fromo r whic hresult s froman ymajo r emitting facility , whic hth e permittin g authority , o n a case-by-cas e basis , taking int o accoun t energy , environmental , an d economi c impact s an d othe r costs , determine s i s achievabl e fo r suc hfacilit ythroughapplicatio no f productio n processe s an d availabl e methods , systems , an

d techniques , including fue l cleaning , clea nfuels , o r treatmen t o r innovativ e fue l combustio n technique s fo r contro l o f eac hsuc hpollutant . I nn o even t shal l applicatio no f "bes t availabl e contro l technology " resul t i nemission s o f an yP.6 3

- 5 0 - pollutant s whic hwil l excee d th e emission s allowe d b

ya n applicabl e standar d establishe d pursuan t t o sectio n741 1 o r 741 2 o f thi s title . Emission s fro man ysourc e utilizing clea n fuels , o r an yothe r means , t o compl y wit hthi s paragrap hshal l no t b e allowe d t o increas e abov e level s tha t woul d hav e bee n require d unde r thi s paragrap ha s i t existe d prio r t o enactmen t o f th e Clea n Ai r Ac t Amendment s o f 1990 . Th e BAC T provisio n reflect s congressiona l inten t bothVt o creat e a procedura l methodologytha t woul d provid e a mechanis m fo r stimulating th e widesprea d us e o f effectiv e pollutio ncontro l technologies__a«d/t o gran t permitting authoritie s broa d discretio n t o weighth e statutoryfactor s a s theyse e fi t i n i reaching a fina l substantiv e determinatio no n BACT. 2 6 EPAbelieve s tha t today' s propose d presumptio ni s consisten t Cb . •;<-•* - ^CO\Ji~-*-*'***S+± wit hthis—Congressional

- inten t becaus e i t doe s no t purpor t t o reliev e th e permittin g authorit yo f th e obligatio nt o conside r availabl e technologies,that-woul d provid e a greate r degre e o f -<;•-£ * *•»

> ^u<L\<-,\J& -"- w-,*^-+.J•**•£ • , "* 7 ^(-i-t , c . y*-e^(_i> ; control-o f NOx - emission s tha n ca nb e obtaine d us_ing_low-NO x- _

_ 

### " " *

* 3 A ' burnora » Rather , i t reflect s anexercis e o f polic yjudgmen t b y-i e .-4 c -.t,' „ EP Awher e i t i s th e permittin g authorit ytha t i nmos t case s a BAC T analysi s o f currentl ydemonstrate d technologie s fo r retrofitting existing utilit yboiler s woul d lead t o th e selectio n o f lowNOxburner s and/o r combustio n modification s identifie d i n sectio n 407(b)(1) .

2 6 Se e S . Rep . No . 95-217 , 95t hCong. , 1st . Sess . 3 1 (1977) ; Statemen t o f Senato r Muskie , 12 3 Cong . Rec . 5917 1 (June 8 , 1977) .P.6 4

- 5 1 - AlthoughEPAha s authorit yunde r th e presen t regulation s t o creat e thi s presumptio nregarding BAC T fo r NOx , EPAi s solicitin g commen t prio r t o adopting suc ha presumptio ni norde r t o obtai n th e view s o f th e publi c o nth e polic yconclusion s discusse d above . Thi s propose d presumptio n woul d no t appl yi nState s wit hPS D program s tha t hav e bee n incorporate d int o stat e implementatio n plan s unde r regulation s promulgate d a t 4 0 CF R51.166 . However , suc hState s ar e encourage d t o adop t thi s presumptio na s a matte r o f stat e policy . H . Applicabilit yDetermination s I n mos t instances , sourc e owner s o r operator s ar e abl e t o readil yascertai n whethe r ne wsourc e revie wrequirement s appl yt o them . Consequently , i n administering thes e requirements , EPA doe s no t requir e source s t o obtai n a forma l applicabilit y determinatio n befor e proceeding wit hconstruction . I nkeepin g wit htha t practice , EPAwil l no t requir e utilitie s t o see k applicabilit ydetermination s unde r eithe r th e revise d regulation s propose d todayo r th e interpretation s o f existin g regulation s containe d i n thi s preamble . Utilitie s i nmos t case s ca nreadil y ascertai n ho wthi s notic e wil l affec t them . EPAanticipates , however , tha t question s wil l aris e regarding certai n aspect s o f thi s proposal . Becaus e some instance s involv e discret e judgments , utilitie s maywis ht o obtai n determination s o f applicability . EPAwil l provid e suc hdetermination s upo nP.6 5

- 5 2 - request . Suc hrequest s shoul d b e submitte d togethe r wit h appropriat e documentatio nt o th e appropriat e permittin g authority . IV . ADMINISTRATIVE REQUIREMENT S A . Docke t Adocke t ha s bee n establishe d fo r thi s actio n unde r sectio n 307(d)(1)(I ) an

d (N ) o f th e Clea nAi r Act , 4 2 U.S.C . 7607(d)(l)(I ) an

d (N) . Th e docke t i s a norganize d and complet e fil e o f al l informatio n considere d i n th e developmen t o f thi s ruling . Th e docke t i s intende d t o allo wth e publi c t o identif y an d locat e document s relate d t o thi s ruling . Th e docke t numbe r fo r thi s ruling i s A-90-06 . B . Paperwor k Reductio n Ac t N o additiona l publi c reporting burde nwil l resul t fromthi s ruling . Al l informatio n collectio nrequirement s o f th e Federa l NS Ran d NSP S regulation s hav e bee napprove d b yth e Offic e o f Managemen t an

d Budge t (OMB ) unde r th e provision s o f th e Paperwor k Reductio n Act , 4 4 U.S.C . 3501 , et . seq. , an d hav e bee nassigne d OMB contro l number s 2060-000 3 fo r NSR , and 2060-0023 , 2060-002 6 an d 2060-007 2 fo r NSPS . Th e effec t o f thi s rul e woul d b e a reductio n i n paperwor k relate d t o complying wit hNS Ran d NSP S requirements , sinc e thi s ruling provide s additiona l clarificatio n a s t o modification s tha t mayb e exclude d fro mthes e requirements . C . OM B Revie wP.6 6

- 5 3 - Unde r Executiv e Orde r 1229 1 (E.O . 12291) , EP Amus t judg e whethe r a rul e i s "major " an d therefor e subjec t t o th e requiremen t o f a regulator yimpac t analysis/ ' Thi s rulin g i s no t a majo r rule.ibecaus e i t wil l no t resul t i n anv.advers e eeenomi c

. , * • "* * 'iW.. iAf_c AT effectvse t fort hi n sectio n 1 o f E.O . 1229 1 a s ground s fo r

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- \(-. „•_. , _W i A 'i** a " • findin g a n actio n t o b e major . Thi s rulin g wa s submitte d t o th e OM B fo r revie wa s require d b yE.O . 12291 . An ywritte n comment s fro mOM B t o EP Aan d an yEP Arespons e t o thos e comment s ar e include d i n Docke t A-90-06 . D . Effectiv e Dat e Sectio n 4(d ) o f th e Administrativ e Procedure s Ac t (APA) , 5 U.S.C . 553(d) , require s a 30-da ywaitin g perio d befor e makin g a substantiv e rul e effective . Sinc e th e regulator yrevision s bein g propose d toda yar e considere d substantive , the yar e subjec t t o th e notice-and-commen t requirement s o f th e AP Aan d wil l becom e effectiv e onl yafte r publi c comment s hav e bee n receive d an d considered , an d fina l actio n ha s bee n taken . Th e portion s o f

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a ar e effectiv e immediately . -•._*"- • 

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- 5 4 - E . RegulatoryFlexibilit yAc t Thi s actio n i s no t subjec t t o th e certificatio n provision s o f sectio n 605(b ) o f th e RegulatoryFlexibilit yAc t (RFA ) becaus e thi s rul e wil l resul t i na reductio n o f administrativ e cost s an d n o increas e i n contro l costs , therefor e havin g n o significan t impac t o n industry . Lis t o f Subject s 4 0 CFRPar t 5 1 Administrativ e procedur e an d practices , intergovernmenta l relations , ai r pollutio ncontrol , NSR , CC T demonstrations , sulfu r oxides , nitroge n dioxide , particulat e matter , carbo nmonoxide , hydrocarbons , lead . 4 0 CFRPar t 5 2 Ai r pollutio n control , NSR , CC T demonstrations , sulfu r oxides , particulat e matter , nitroge n dioxide , carbo n monoxide , hydrocarbons , lead . 4 0 CFRPar t 6 0 Ai r pollutio n control , NSPS , CC T demonstrations , sulfu r oxides , particulat e matter , nitroge n dioxide , carbo n monoxide , hydrocarbons , lead .

v^-i-* ) 3 * Dated : .Jahf

r •»• , 199 1 WilliamK . Reilly , Administrato r