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\ - ^ UNITE D STATE S ENVIRONMENTA LPROTECTIO N AGENC Y Offic e o fAi rQualit yPlannin g an d Standard s Researc h Triangl e Park , Nort h Carolin a 2771 1 

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1 3 JU N 153

9
MEMORANDU

M SUBJECT : Transmitta l of Bak k Control, ? Teph'n o FROM : J^TT'* "

Qua l ity Manageme . TO : n d Statemen to n "Top-Down " Bes tAvailabl e

/Se e Belo w

Ina numbe r o f recen t meetings , it ha s become clea r tha t a significan t amoun t o f confusio nexist s regardin gth e basi s fo r top-dow nBACT . T o assis t yo uan dyou r staf f i

nanswerin gquestion s i nthi s regard , I aske dm y staf f t o prepar e a pape r whic hdiscusse s th e origin s o f an drational e fo r th e polic y initiative . Th e paper , whic hwa s prepare di ncoordinatio nwit hth e Offic e o f Genera l Counsel , als o explain s why th e Environmenta l Protectio nAgenc y (EPA ) ha s adopte dit s curren t polic y onBAC T an

dclarifie s EPA' s vie w tha t thi s polic y i s consisten t wit hcurren t statutor y an dregulator y

requirements . I f yo uhav e an

y question s abou t th e backgroun dstatement , pleas e contac t Davi dSolomo no f th e New Sourc e Review

Sectio na t FT S 629-5375 . Attachmen t Addressees : Director , Ai r Managemen t Division , Region s I , III , an dI X Director , Ai r & Wast e Managemen t Division , Regio nI I Director , Air , Pesticides , & Toxic s Managemen t Division , Regio nI V Director , Ai r & Radiatio nDivision , Regio nV Director , Air , Pesticides , & Toxic s Division , Regio nV I Director , Ai r & Toxic s Division , Region s VII , VIII , an dXP. 3

BACKGROUNDSTATEMEN T ON TH E ENVIRONMENTAL PROTECTION AGENCY' S (EPA'S ) TOP-DOW N POLIC Y
I . INTRODUCTION
O n Decembe r 1 , 1987 , forme r Assistan t Administrato r J . Crai g Potte r issue d a memorandumestablishin g severa l progra minitiative s designe d t o improv e th e effectivenes s o f th e Clea n Ai r Act' s (CAA's ) ne wsourc e revie w program s withi n th e constraint s o f existin g regulations
. Amon g thes e initiative s wa s th e "top-down " proces s fo r determinin g bes t availabl e contro l technolog y(BACT ) unde r th e preventio n o f significan t deterioratio n (PSD ) provision s o f th e CAA . I n brief , th e top-dow n proces s require s tha t al l availabl e contro l technologie s b e ranke d in descendin g orde r o f effectiveness
. Th e PS D applican t firs t examine s th e mos t stringen t - - o r "top " - - alternative
. Tha t alternativ e i s establishe d a s BAC T unles s th e applican t ca n demonstrate , and th e permittin g authorit yin it s informe d judgmen t agrees , tha t technica l considerations , o r energy , environmental , o r economi c impact s justif ya conclusio n tha t th e mos t stringen t technolog yi s no t "achievable"..i n tha t case . I f th e mos t stringen t technolog yi s eliminate d in thi s fashion , the n th e nex t mos t stringen t alternativ e i s considered , and s o on .
Th e Decembe r 1 , 198 7 memorandu mdirecte d th e Offic e o f Ai r Qualit y Plannin g and Standard s (OAQPS ) t o implemen t man yo f thes e progra minitiatives , and specificall ycalle d upo n OAQP S t o develo p guidanc e o n th e top-dow n process . A s a consequence , tha t offic e ha s receive d numerou s inquirie s regardin g th e basi s fo r and prope r implementatio n o f th e top-dow n process . Th e OAQP S i s preparin g a separat e summar yo f th e top-dow n process . Adraf t o f th e summar yi s presentl yunde r review
. Therefore , thi s statemen t focuse s o n a backgroun d discussio n explainin g wh yEP Aha s adopte d it s curren t polic yo n BACT , and clarifyin g EPA' s vie wtha t thi s polic yi s consisten t wit hcurren t statutor yand regulator yrequirements
.P. 4

II . ADMINISTRATIVE HISTORY
BAC T i s define d a s [t]h e maximum

degre e o f reductio n fo r eac hpollutan t ** * whic hth e [permittin g authority] , o n a case-by-cas e basis , takin g int o accoun t energy , environmental , and economi c impact s and othe r costs , determine s i s achievabl e ** * . Clea n Ai r Ac t sectio n 169(3) , 4 2 U.S.C . 7479(3) ; 4 0 C.F.R . 52.21(b)(12) ; 4 0 C.F.R . 51.166(b)(12)
. I n Januar y1979 , EPAha d disseminate d "Guideline s fo r Determinin g BAC T Unde r PSD " (OAQPS , Decembe r 1978 ) and in Octobe r 198 0 ha d issue d a "PS D Worksho p Manual " (OAQPS , Octobe r 1980 ) tha t include d mor e detaile d guidanc e o n BACT . Thos e document s describe d a so-calle d "bottom-up " approac ht o BAC T determinations
. Th e applican t wa s t o propos e a bas e cas e a s BACT , presen t mor e stringen t contro l alternatives , and defen d it s BAC T selectio n b

y"demonstratin g tha t eac halternativ e contro l syste m.. . woul d caus e unreasonabl e advers e energy , environmental , o r economi c impacts. " Se e 197 8 BAC T Guideline s a t 5-6 .
I n Jun e 1986 , Crai g Potte r establishe d a tas k forc e t o addres s growin g concern s abou t th e effectivenes s o f EPA' s ne wsourc e revie wprogram s in carryin g ou t thei r statutor yresponsibilities
. On e o f th e tas k force' s findings , base d upo n a comprehensiv e revie wo f numerou s PS D permit s issue d durin g th e previou s severa l years , wa s tha t PS D applicant s and State s frequentl ywer e conductin g inadequat e BAC T determination s usin g th e "bottom

up " approac ho f th e 197 8 guideline s and th e 198 0 worksho p manual
. I n numerou s instances , applicant s woul d propos e an emissio n limitatio n a t o r nea r an applicabl e ne wsourc e performanc e standar d (NSPS ) unde r sectio n 11 1 o f th e CA A a s th e bas e case , an

d provid e littl e o r n o consideratio n o f th e mor e stringen t contro l option s befor e settlin g o n th e propose d leve l a s BACT . I t als o appeare d tha t State s typicall ywoul d accep t thes e determination s wit hlittl e o r n o independen t analysis , therebypossibl yfailin g t o fulfil l thei rP. 5

responsibilities.unde r the Act . Th e tas kforc e pointe dou t two basi c solution s t o the " problem o f inadequat e BAC T analyses . On e wa s t o focu s on improvingimplementatio no f th e bottom-u papproac hs o tha t i npractic e a s wel l a s i ntheory , th e statutory requirement s woul db e observed . Th e other optio n wa s t o cal l fo r a top-dow napproac ht o th e BAC T analysi s i nth e expectatio n tha t it s interna l dynamic s would , i npractice , achiev e mor e effectiv e implementatio no f th e BAC T requirements . Se e generally , "New Sourc e Review Tas kForc e Report, " Fina l Draft , Decembe r 1986 , a t 25-28 .
I nth e meantime , i

na nadjudicativ e decisio nonappea l o f a PS Dpermi t fo r a municipa l wast e combusto r (MWC) , th e Administrato r hel dtha t a PS D applican t ha s th e "burde no f demonstratin gtha t significan t technica l defects , o r substantia l loca l economic , energy , o r environmenta l factor s o r other cost s warran t a contro l technology les s efficien t tha n[the mos t stringen t technology

available]. " Honolul uResourc e Recover v Facilit y

("H-Power") . PS D Appea l No . 86-8 , a t 7 (RemandOrder , Jun e 22 , 1987) . Shortl y thereafter , EPA issuedguidanc e callin gfo r applicatio no f th e H-Powe r holdin gt o al l BAC T determination s fo r MWCs . "Operationa l Guidanc e onContro l Technolog y fo r Ne w an dModifie dMunicipa l Wast e Combustor s (MWCs), " Jun e 26 , 1987 .
I nligh t o f thes e events , EPA decide di

nth e Decembe r 1 , 198 7 Potte r memorandu

m tha t a s a matte r o f Agenc y polic y i t woul dadop t th e top-dow nBAC T approac hfo r al l categorie s o f PS Dsources . Mr . Potte r instructe dEPA Regiona l Office s t o us e th e top-dow napproac hi

ntheir ow

nBAC T determinations , an

dt o strongl y

encourag e Stat e an

dloca l PS Dpermittin g authoritie s t o d o s o a s well . Th e Potte r memorandum furthe r directe dRegiona l Office s t o conduc t timel y review s o f PS Dapplications , an dt o commen t adversel y

onpropose dPS Dpermit s tha t faile dt o adequatel y conside r th e mor e stringen t contro l options , a s woul db e require da s a matte r o f cours e unde r a top-dow napproach . I f fina l Stat e an dloca l permit s stil l faile dt o reflec t adequat e consideratio no f th e relevan t BAC T factors , th e Region s wer e t o conside r suchpermit s deficient . A nadditiona l poin t relate dt o th e Potte r memorandu

m wa s tha t th e top-dow nproces s shoul di

npractic e lesse n administrativ e burden s i nth e conduc t o f BAC T determination s becaus e i t doe sP. 6

no t requir e a ful l analysi s o f al l contro l alternative s tha t ar e mor e stringen t tha n th e NSP S o r othe r bas e case , a s woul d b e require d unde r a prope r bottom-u p analysis
.
III . TH E TOP-DOW

N APPROAC HA S PAR T OF TH E EXISTINGBAC T DETERMINATION PROCES S

A . Th e Top-Dow

nApproac hDoe s No t Alte r ExistingBAC T Requirements .
I n callin g fo r us e o f th e top-dow n approach , EP Aha s no t effecte d a chang e in existin g PS D regulations , and ha s no t altere d th e BAC T requirement s fo r anysource . Th e definitio n o f BAC T i n th e statute , EP Aregulations , and Stat e implementatio n plan s remain s th e same . Regardles s o f th e specifi c methodolog yuse d fo r determinin g BACT , b e i t "top-down, " "bottom-up, " o r otherwise , th e sam e cor e criteri a appl yt o any BAC T analysis : th e applican t mus t conside r al l availabl e alternatives , and demonstrat e wh yth e mos t stringen t shoul d no t b e adopted
. Recall , however , th e Ne wSourc e Revie wTas k Force' s findin g tha t in man yinstance s th e bottom

u p methodolog ywa s applie d inadequately
. I n response , EP Aha s develope d th e top-down methodolog yin orde r t o improv e administratio n o f thes e basi c BAC T selectio n requirement s alreadyprovide d fo r in th e CAA , curren t PS D regulations , Stat e implementatio n plans , and EP Aguidance
. However , th e top
dow n methodolog ydoe s no t involv e anychang e in th e substanc e of , o r fundamenta l procedure s for , a BAC T determination
. Wha t i s differen t abou t th e top-dow n polic yi s th e emphasi s upo n considerin g th e mos t stringen t contro l option s first
. Bu t thi s doe s no t represen t a radica l shif t i n th e burde n o f proo f fro mpermittin g authoritie s t o PS D applicants
. Instea d i t i s intende d t o mak e mor e effectiv e th e cor e policie s tha t appea r in th e 197 8 guidelines
. Tha t is , th e top-dow n approac h explicitl yrecognize s th e self-eviden t presumptio n tha t technologie s alread y shown t o b e "available " ca n b e use d byth e prospectiv e sourc e unde r consideration , and th e fac t tha t th e PS D applican t i s i n th e bes t positio n t o provid e an initia l justificatio n whyan availabl e technolog yi s no tP. 7 1.

"achievable " for.tha t particula r sourc e a s well
. In explicitl ycallin g upo n

PS D applicant s t o conside r th e mos t stringen t control s first , and eithe r adop t thos e control s o r explai n wh ythe yar e no t achievable , EP Ai s onl yseekin g t o improv e th e administratio n o f an existin g requirement
. Th e permittin g authorit yafte r publi c revie wand commen t remain s responsibl e fo r exercisin g informe d judgmen t i n determinin g achievabilit yin accordanc e wit hthi s requirement
.
B . Th e Top-Dow n Proces s I s Consisten t Wit hth e CAA . Th e EP Abelieve s tha t th e top-down approac ht o BAC T i s supporte d byth e statutor ydefinitio n in sectio n 169(3 ) o f th e CAA . Th e legislativ e histor yi s clea r tha t Congres s intende d BAC T t o perfor ma technology-forcin g function
. Se e S . Rep . No . 95-252 , 95t hCong. , 1s t Sess . 3 1 (1977) , reprinte d in 3 ALegislativ e Histor yo f th e CA AAmendment s o f 197 7 a t 1405 ; 12 3 Cong . Rec . S9171 , 3 Legislativ e Histor ya t 72 9 (remark s o f Sen . Edmun d G . Muskie , principa l autho r o f 197 7 Amendments)
. Thi s constructio n wa s reinforce d in H-Powe r and in a late r PS D appea l decision , Pennsauke n County . Ne wJerse y Resourc e Recover vFacility
. PS D Appea l No . 88- 8 (Remand Order , Nov . 10 , 1988) . I n thos e case s th e Administrato r interprete d th e BAC T definitio n a s requirin g th e PS D applican t t o demonstrat e t o th e permittin g authorit ywh yth e mos t stringen t contro l technolog y"available " i s no t "achievable " in tha t case . I t i s als o clea r tha t in adoptin g BACT , Congres s intende d PS D permittin g authoritie s t o exercis e informe d discretio n t o weig henergy , environmental , and economi c impact s in determinin g BAC T fo r a particula r source . S . Rep . N o 95-25 2 a t 31 , 3 Legislativ e Histor ya t 1405 . I n addition , in sectio n 16 0 o f th e CAA , Congres s emphasize d tha t publi c participatio n and a carefu l assessmen t o f relevan t factor s i s crucia l t o al l decisionmakin g unde r th e CAA' s PS D provisions
.
I n theory , thes e statutor ygoal s ca n b e fulfille d byeithe r a top-dow n o r bottom-u p approac ht o BAC T determinations
. However , a s discusse d previously , EPA' s experienc e ha s bee n that , a s implemente d in practice , th e bottom-u p approac hi s deficien t in actuall yachievin g thes e goals , and th e Agenc yno wP. 8

believe s the yca n bes t b e serve d byth e top-dow n BAC T methodology
. Th e EPA' s polic yfurther s th e sprea d o f effectiv e pollutio n contro l technologie s by focusin g attentio n firs t o n th e mos t stringen t contro l options
. A t th e sam e time , i t provide s a ful l opportunit yfo r meaningfu l publi c participation , and allow s permittin g authoritie s t o giv e informe d consideratio n t o energy , environmental , and economi c impact s befor e reachin g a fina l BAC T decision
.
C . Unde r Th e Top-Dow nProcess , Importan t Distinction s Betwee nBAC T an dLowes t Achievabl e Emissio nRat e (LAER ) ar e Maintained , an d State s Stil l Weighth e Relevan t Factors . Th e top-down appro.achmaintain s th e statutor ydistinction s betwee n BAC T and th e LAE Rrequiremen t unde r sectio n 171(3 ) o f th e CA A(whic hmajo r ne w source s an

d majo r modification s locatin g in nonattainmen t area s ar e require d t o meet) . Th e LAE Rrequiremen t provide s tha t al l affecte d source s mus t compl y wit heithe r th e mos t stringen t limi t containe d in a Stat e implementatio n plan , o r th e mos t stringen t emissio n limitatio n achieve d in practice , whicheve r i s mor e stringent
. I n contrast , unde r BACT , consideratio n o f energy , environmental , o r economi c impact s ma yjustif ya lesse r degre e o f contro l i n th e particula r case . Th e EPA' s polic yregardin g th e top-dow n proces s doe s no t alte r thi s shar p statutor ydistinction
. Th e EP Abelieve s i t i s appropriat e t o conside r LAE Rdetermination s in establishin g th e mos t stringen t technology"available " - - i.e. , th e "top " contro l optio n - - fo r purpose s o f BAC T analyse s unde r th e top-dow n methodology
. Th e statut e require s PS D applicant s t o conside r th e mos t stringen t control s tha t ar e "available, " and availabilit yshoul d b e give n a straightforward , practica l meaning
. Se e Pennsauke n a t 8 . An yemissio n limi t tha t ha s bee n require d fo r LAE Rpurpose s mus t b e "actually , no t theoretically, " possible
. 3 Legislativ e Histor ya t 537 . Thus , a limi t containe d in a LAE Rdeterminatio n i s presumabl y"available " fo r BAC T purpose s byanysourc e in th e sam e category , and i s no t merel yexperimenta l o r otherwis e beyon d th e bound s o f consideration
. Thi s i s s o regardles s o f whethe r a top-down o r a bottom-u p approac ht o consideratio n o f th e contro lP. 9

technology

i nquestio ni s used . Accordingly , th e fac t that , t o date , a technology

ha s bee nrequire donl y unde r LAERdeterminations , o r ha s no t ye t bee napplie dt o many

sources , doe s no t rende r it unavailabl e fo r BAC T consideration . Se e Pennsauke na t 8 .
Th e top-dow

npolic y

(an di nparticular , th e us e o f LAERdetermination s t o determin e availabl e BAC T alternatives) , doe s no t establis ha nationa l BAC T standard . Th e statut e provide s tha t technica l consideration s may , alon e o r i n conjunctio nwit henergy , environmental , o r economi c factors , rende r a give n contro l technolog y

o r associate demissio nlimitatio nno t "achievable " i na give nPS Dcase . I t i s precisel y th e purpos e o f th e BAC T analysi s t o weig h thes e factor s i

ndeterminin gwhethe r an"available " technolog y o r emissio n limi t i s "achievable " i nth e give ncase . Adoptio no f a top-dow nmethodolog y doe s no t chang e thi s requirement .
Th e EPA' s polic y

regardin gth e top-dow nproces s doe s no t prejudg e th e weigh t tha t permittin gauthoritie s mus t giv e t o th e relevan t statutor y factors . Instead , th e purpos e o f EPA' s polic y i s t o insur e tha t th e relevan t factor s ar e weighe di nth e well-considere dmanne r calle dfo r by Congress , an

d tha t the weighin gproces s i s properl y informe db

y resor t t o objectiv e dat a wher e appropriate . Thus , a s th e Administrato r ha s hel di nH-Powe r an

d Pennsauken . it i s no t sufficien t t o rejec t a contro l technology b y merel y assertin gtha t i t i s "to o costly. " Rather , claim s tha t economi c (o r other ) factor s rende r a technolog y o r emissio nlimi t no t achievabl e mus t b e supporte d b y a nanalysi s utilizin greadil y availabl e objectiv e indicator s o f advers e impacts . However , th e fina l weighin go f thos e factors , an dth e fina l BAC T decision , ar e mad e by th e permittin gauthority . Rejectio no f a contro l technology

b y a reviewin gagenc y

mus t hav e a rational e arrive da t afte r ful l consideratio no f dat a determine di na consisten t an

dsoundmanner . Suc h decision s ma y

no t b e arbitrary , capricious , o r contrar y t o law .p.m _

8 D . I t I s Appropriat e t o Implemen t th e Top-Dow nProces s ThroughBAC T Guidanc e an

dAdjudication . Th e EP Abelieve s i t i s appropriat e t o continu e implementin g it s BAC T policie s throug hpolic ystatements , and anyrelevan t adjudicativ e decision s o f th e Administrator , rathe r tha n throug hrulemaking
. Th e EP Aha s followe d a consisten t practic e o f issuin g BAC T guidanc e sinc e passag e o f th e PS D progra m and promulgatio n o f BAC T regulations
. Wit hrespec t t o th e top-dow n polic yi n particular , EPA' s statement s o f polic yhav e bee n informe d i n par t byth e adjudicativ e decision s in H-Power . Pennsauken
. and Nort hCount yResourc e Recover vAssociates
. PS D Appea l No . 85- 2 (Remand Order , Jun e 3 , 1986) . However , lik e EPA' s top-down polic ystatements , thos e decision s d o no t chang e th e law , bu t a t mos t interpre t existin g law
. I n anyevent , i t i s clea r tha t EPA , lik e othe r regulator yagencies , ha s authorit yt o creat e bindin g preceden t throug hadjudication
. See , e.g. , NLR B v . Wvman-Gordo n Co. . 39 4 U.S . 75 9 (1969) . I t i s als o clea r that , absen t a n explici t statutor yconstraint , EP A ha s broa d discretio n t o emplo ythos e procedure s and method s i t feel s ar e bes t suite d t o dischargin g it s numerou s and varie d duties
. See , e.g. , Vermon t Yanke e Nuclea r Powe r Corp . v . NRDC . 43 5 U.S . 519 , 54 3 (1978) .
IV . SUMMAR

Y

I n summary , fo r th e reason s discusse d above , th e top-dow n proces s i s consisten t wit hexistin g statutor yand regulator yrequirements
. Th e EP Adoe s no t believ e tha t it s polic yview s o n th e top-dow n proces s creat e anyne wlega l right s o r dutie s whic hmus t b e implemente d throug hrulemaking
.