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OAR Box 1787 

Prepped by Ollie Stewart 

Document Number: 

36) ll-B-21 

Docket Number: 

A-90-37 

Printed 11/4/200810:22:19 AM Sheet 36 of 147 
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\ - ^ 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

Office of Air Quality Planning and Standards 

Research Triangle Park, North Carolina 27711 

/f- 10-3 7 

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1 3 JUN 1539 

MEMORANDUM 

SUBJECT: Transmittal of Bakk 

Control,? Teph'no 

FROM: J^TT'*" 

Qual ity Manageme. 

TO: 

nd Statement on "Top-Down" Best Available 

/See Below 

In a number of recent meetings, it has become clear that a significant 

amount of confusion exists regarding the basis for top-down BACT. To assist 

you and your staff in answering questions in this regard, I asked my staff to 

prepare a paper which discusses the origins of and rationale for the policy 

initiative. 

The paper, which was prepared in coordination with the Office of General 

Counsel, also explains why the Environmental Protection Agency (EPA) has 

adopted its current policy on BACT and clarifies EPA's view that this policy 

is consistent with current statutory and regulatory requirements. 

If you have any questions about the background statement, please contact 

David Solomon of the New Source Review Section at FTS 629-5375. 

Attachment 

Addressees: 

Director, Air Management Division, Regions I, III, and IX 

Director, Air & Waste Management Division, Region II 

Director, Air, Pesticides, & Toxics Management Division, Region IV 

Director, Air & Radiation Division, Region V 

Director, Air, Pesticides, & Toxics Division, Region VI 

Director, Air & Toxics Division, Regions VII, VIII, and X 
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BACKGROUND STATEMENT 

ON THE 

ENVIRONMENTAL PROTECTION AGENCY'S (EPA'S) 

TOP-DOWN POLICY 

I. INTRODUCTION 

On December 1, 1987, former Assistant Administrator J. Craig Potter 

issued a memorandum establishing several program initiatives designed to 

improve the effectiveness of the Clean Air Act's (CAA's) new source review 

programs within the constraints of existing regulations. Among these 

initiatives was the "top-down" process for determining best available control 

technology (BACT) under the prevention of significant deterioration (PSD) 

provisions of the CAA. In brief, the top-down process requires that all 

available control technologies be ranked in descending order of effectiveness. 

The PSD applicant first examines the most stringent -- or "top" --

alternative. That alternative is established as BACT unless the applicant can 

demonstrate, and the permitting authority in its informed judgment agrees, 

that technical considerations, or energy, environmental, or economic impacts 

justify a conclusion that the most stringent technology is not "achievable"..in 

that case. If the most stringent technology is eliminated in this fashion, 

then the next most stringent alternative is considered, and so on. 

The December 1, 1987 memorandum directed the Office of Air Quality 

Planning and Standards (OAQPS) to implement many of these program initiatives, 

and specifically called upon OAQPS to develop guidance on the top-down 

process. As a consequence, that office has received numerous inquiries 

regarding the basis for and proper implementation of the top-down process. 

The OAQPS is preparing a separate summary of the top-down process. A draft of 

the summary is presently under review. Therefore, this statement focuses on a 

background discussion explaining why EPA has adopted its current policy on 

BACT, and clarifying EPA's view that this policy is consistent with current 

statutory and regulatory requirements. 
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II. ADMINISTRATIVE HISTORY 

BACT is defined as 

[t]he maximum degree of reduction for each pollutant *** 

which the [permitting authority], on a case-by-case basis, 

taking into account energy, environmental, and economic 

impacts and other costs, determines is achievable *** . 

Clean Air Act section 169(3), 42 U.S.C. 7479(3); 40 C.F.R. 52.21(b)(12); 

40 C.F.R. 51.166(b)(12). In January 1979, EPA had disseminated "Guidelines 

for Determining BACT Under PSD" (OAQPS, December 1978) and in October 1980 had 

issued a "PSD Workshop Manual" (OAQPS, October 1980) that included more 

detailed guidance on BACT. Those documents described a so-called "bottom-up" 

approach to BACT determinations. The applicant was to propose a base case as 

BACT, present more stringent control alternatives, and defend its BACT 

selection by "demonstrating that each alternative control system ... would 

cause unreasonable adverse energy, environmental, or economic impacts." See 

1978 BACT Guidelines at 5-6. 

In June 1986, Craig Potter established a task force to address growing 

concerns about the effectiveness of EPA's new source review programs in 

carrying out their statutory responsibilities. One of the task force's 

findings, based upon a comprehensive review of numerous PSD permits issued 

during the previous several years, was that PSD applicants and States 

frequently were conducting inadequate BACT determinations using the "bottomup" approach of the 1978 guidelines and the 1980 workshop manual. In numerous 

instances, applicants would propose an emission limitation at or near an 

applicable new source performance standard (NSPS) under section 111 of the CAA 

as the base case, and provide little or no consideration of the more stringent 

control options before settling on the proposed level as BACT. It also 

appeared that States typically would accept these determinations with little 

or no independent analysis, thereby possibly failing to fulfill their 
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responsibilities.under the Act. The task force pointed out two basic 

solutions to the" problem of inadequate BACT analyses. One was to focus on 

improving implementation of the bottom-up approach so that in practice as well 

as in theory, the statutory requirements would be observed. The other option 

was to call for a top-down approach to the BACT analysis in the expectation 

that its internal dynamics would, in practice, achieve more effective 

implementation of the BACT requirements. See generally, "New Source Review 

Task Force Report," Final Draft, December 1986, at 25-28. 

In the meantime, in an adjudicative decision on appeal of a PSD permit 

for a municipal waste combustor (MWC), the Administrator held that a PSD 

applicant has the "burden of demonstrating that significant technical defects, 

or substantial local economic, energy, or environmental factors or other costs 

warrant a control technology less efficient than [the most stringent 

technology available]." Honolulu Resource Recoverv Facility ("H-Power"). PSD 

Appeal No. 86-8, at 7 (Remand Order, June 22, 1987). Shortly thereafter, EPA 

issued guidance calling for application of the H-Power holding to all BACT 

determinations for MWCs. "Operational Guidance on Control Technology for New 

and Modified Municipal Waste Combustors (MWCs)," June 26, 1987. 

In light of these events, EPA decided in the December 1, 1987 Potter 

memorandum that as a matter of Agency policy it would adopt the top-down BACT 

approach for all categories of PSD sources. Mr. Potter instructed EPA 

Regional Offices to use the top-down approach in their own BACT 

determinations, and to strongly encourage State and local PSD permitting 

authorities to do so as well. The Potter memorandum further directed Regional 

Offices to conduct timely reviews of PSD applications, and to comment 

adversely on proposed PSD permits that failed to adequately consider the more 

stringent control options, as would be required as a matter of course under a 

top-down approach. If final State and local permits still failed to reflect 

adequate consideration of the relevant BACT factors, the Regions were to 

consider such permits deficient. An additional point related to the Potter 

memorandum was that the top-down process should in practice lessen 

administrative burdens in the conduct of BACT determinations because it does 
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not require a full analysis of all control alternatives that are more 

stringent than the NSPS or other base case, as would be required under a 

proper bottom-up analysis. 

III. THE TOP-DOWN APPROACH AS PART OF THE EXISTING BACT DETERMINATION PROCESS 

A. The Top-Down Approach Does Not Alter Existing BACT Requirements. 

In calling for use of the top-down approach, EPA has not effected a 

change in existing PSD regulations, and has not altered the BACT requirements 

for any source. The definition of BACT in the statute, EPA regulations, and 

State implementation plans remains the same. 

Regardless of the specific methodology used for determining BACT, be it 

"top-down," "bottom-up," or otherwise, the same core criteria apply to any 

BACT analysis: the applicant must consider all available alternatives, and 

demonstrate why the most stringent should not be adopted. Recall, however, 

the New Source Review Task Force's finding that in many instances the bottomup methodology was applied inadequately. In response, EPA has developed the 

top-down methodology in order to improve administration of these basic BACT 

selection requirements already provided for in the CAA, current PSD 

regulations, State implementation plans, and EPA guidance. However, the topdown methodology does not involve any change in the substance of, or 

fundamental procedures for, a BACT determination. 

What is different about the top-down policy is the emphasis upon 

considering the most stringent control options first. But this does not 

represent a radical shift in the burden of proof from permitting authorities 

to PSD applicants. Instead it is intended to make more effective the core 

policies that appear in the 1978 guidelines. That is, the top-down approach 

explicitly recognizes the self-evident presumption that technologies already 

shown to be "available" can be used by the prospective source under 

consideration, and the fact that the PSD applicant is in the best position to 

provide an initial justification why an available technology is not 
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1. 

"achievable" for.that particular source as well. In explicitly calling upon 

PSD applicants to consider the most stringent controls first, and either adopt 

those controls or explain why they are not achievable, EPA is only seeking to 

improve the administration of an existing requirement. The permitting 

authority after public review and comment remains responsible for exercising 

informed judgment in determining achievability in accordance with this 

requirement. 

B. The Top-Down Process Is Consistent With the CAA. 

The EPA believes that the top-down approach to BACT is supported by the 

statutory definition in section 169(3) of the CAA. The legislative history is 

clear that Congress intended BACT to perform a technology-forcing function. 

See S. Rep. No. 95-252, 95th Cong., 1st Sess. 31 (1977), reprinted in 

3 A Legislative History of the CAA Amendments of 1977 at 1405; 123 Cong. Rec. 

S9171, 3 Legislative History at 729 (remarks of Sen. Edmund G. Muskie, 

principal author of 1977 Amendments). This construction was reinforced in 

H-Power and in a later PSD appeal decision, Pennsauken County. New Jersey 

Resource Recoverv Facility. PSD Appeal No. 88-8 (Remand Order, Nov. 10, 1988). 

In those cases the Administrator interpreted the BACT definition as requiring 

the PSD applicant to demonstrate to the permitting authority why the most 

stringent control technology "available" is not "achievable" in that case. It 

is also clear that in adopting BACT, Congress intended PSD permitting 

authorities to exercise informed discretion to weigh energy, environmental, 

and economic impacts in determining BACT for a particular source. 

S. Rep. No 95-252 at 31, 3 Legislative History at 1405. In addition, in 

section 160 of the CAA, Congress emphasized that public participation and a 

careful assessment of relevant factors is crucial to all decisionmaking under 

the CAA's PSD provisions. 

In theory, these statutory goals can be fulfilled by either a top-down or 

bottom-up approach to BACT determinations. However, as discussed previously, 

EPA's experience has been that, as implemented in practice, the bottom-up 

approach is deficient in actually achieving these goals, and the Agency now 
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believes they can best be served by the top-down BACT methodology. The EPA's 

policy furthers the spread of effective pollution control technologies by 

focusing attention first on the most stringent control options. At the same 

time, it provides a full opportunity for meaningful public participation, and 

allows permitting authorities to give informed consideration to energy, 

environmental, and economic impacts before reaching a final BACT decision. 

C. Under The Top-Down Process, Important Distinctions Between BACT 

and Lowest Achievable Emission Rate (LAER) are Maintained, and 

States Still Weigh the Relevant Factors. 

The top-down appro.ach maintains the statutory distinctions between BACT 

and the LAER requirement under section 171(3) of the CAA (which major new 

sources and major modifications locating in nonattainment areas are required 

to meet). The LAER requirement provides that all affected sources must comply 

with either the most stringent limit contained in a State implementation plan, 

or the most stringent emission limitation achieved in practice, whichever is 

more stringent. In contrast, under BACT, consideration of energy, 

environmental, or economic impacts may justify a lesser degree of control in 

the particular case. The EPA's policy regarding the top-down process does not 

alter this sharp statutory distinction. 

The EPA believes it is appropriate to consider LAER determinations in 

establishing the most stringent technology "available" -- i.e., the "top" 

control option -- for purposes of BACT analyses under the top-down 

methodology. The statute requires PSD applicants to consider the most 

stringent controls that are "available," and availability should be given a 

straightforward, practical meaning. See Pennsauken at 8. Any emission limit 

that has been required for LAER purposes must be "actually, not 

theoretically," possible. 3 Legislative History at 537. Thus, a limit 

contained in a LAER determination is presumably "available" for BACT purposes 

by any source in the same category, and is not merely experimental or 

otherwise beyond the bounds of consideration. This is so regardless of 

whether a top-down or a bottom-up approach to consideration of the control 
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technology in question is used. Accordingly, the fact that, to date, a 

technology has been required only under LAER determinations, or has not yet 

been applied to many sources, does not render it unavailable for BACT 

consideration. See Pennsauken at 8. 

The top-down policy (and in particular, the use of LAER determinations to 

determine available BACT alternatives), does not establish a national BACT 

standard. The statute provides that technical considerations may, alone or in 

conjunction with energy, environmental, or economic factors, render a given 

control technology or associated emission limitation not "achievable" in a 

given PSD case. It is precisely the purpose of the BACT analysis to weigh 

these factors in determining whether an "available" technology or emission 

limit is "achievable" in the given case. Adoption of a top-down methodology 

does not change this requirement. 

The EPA's policy regarding the top-down process does not prejudge the 

weight that permitting authorities must give to the relevant statutory 

factors. Instead, the purpose of EPA's policy is to insure that the relevant 

factors are weighed in the well-considered manner called for by Congress, and 

that the weighing process is properly informed by resort to objective data 

where appropriate. Thus, as the Administrator has held in H-Power and 

Pennsauken. it is not sufficient to reject a control technology by merely 

asserting that it is "too costly." Rather, claims that economic (or other) 

factors render a technology or emission limit not achievable must be supported 

by an analysis utilizing readily available objective indicators of adverse 

impacts. However, the final weighing of those factors, and the final BACT 

decision, are made by the permitting authority. Rejection of a control 

technology by a reviewing agency must have a rationale arrived at after full 

consideration of data determined in a consistent and sound manner. Such 

decisions may not be arbitrary, capricious, or contrary to law. 
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D. It Is Appropriate to Implement the Top-Down Process Through BACT 

Guidance and Adjudication. 

The EPA believes it is appropriate to continue implementing its BACT 

policies through policy statements, and any relevant adjudicative decisions of 

the Administrator, rather than through rulemaking. The EPA has followed a 

consistent practice of issuing BACT guidance since passage of the PSD program 

and promulgation of BACT regulations. With respect to the top-down policy in 

particular, EPA's statements of policy have been informed in part by the 

adjudicative decisions in H-Power. Pennsauken. and North County Resource 

Recoverv Associates. PSD Appeal No. 85-2 (Remand Order, June 3, 1986). 

However, like EPA's top-down policy statements, those decisions do not change 

the law, but at most interpret existing law. In any event, it is clear that 

EPA, like other regulatory agencies, has authority to create binding precedent 

through adjudication. See, e.g., NLRB v. Wvman-Gordon Co.. 394 U.S. 759 

(1969). It is also clear that, absent an explicit statutory constraint, EPA 

has broad discretion to employ those procedures and methods it feels are best 

suited to discharging its numerous and varied duties. See, e.g., Vermont 

Yankee Nuclear Power Corp. v. NRDC. 435 U.S. 519, 543 (1978). 

IV. SUMMARY 

In summary, for the reasons discussed above, the top-down process is 

consistent with existing statutory and regulatory requirements. The EPA does 

not believe that its policy views on the top-down process create any new legal 

rights or duties which must be implemented through rulemaking.