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OAR Box 1802 

Prepped by Charmelle Mathews 

Document Number: 

44) IV-E-39 

Docket Number: 

A-90-37 

Printed 11/4/200811:57:59 AM Sheet 44 of 117 
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MEETING SUMMARY 

EPA/UARG MEETING 

NEW SOURCE REVIEW REFORM 

September 14, 1999 

The meeting was held at the offices of EPA, N.C. Mutual Building, 411 W. Chapel Hill 

Street, Durham, North Carolina. The meeting began at approximately 1:00 pm and closed at 

approximately 3:00 pm. Attached is a list of attendees. 

John Seitz welcomed the participants. He said that EPA was reviewing the industry's 

NSR reform proposals seriously. He also said that EPA was not prepared to issue another 

proposal in October, but that Bob Perciasepe wants to resolve matters quickly. He mentioned 

that there were three proposals, i.e., the basic reform proposal, the PAL group proposal and the 

UARG proposal, and that he understood that these were not competing proposals. He also said 

that today's meeting will be docketed. 

Bill Harnett asked if the industry participants had received EPA's questions regarding the 

UARG proposal, to which Henry Nickel replied yes. Mr. Harnett said that EPA wants to discuss 

how the UARG proposal addresses those questions. 

Henry Nickel expressed appreciation for Mr. Seitz's comments and reiterated UARG's 

commitment to the reform process. Mr. Nickel indicated that there were two elements to the 

UARG proposal; one, the basic NSR changes for which all of industry including utilities was 

making a singular proposal, and two, the "backstop" program that involves clarification in the 

current program and is similar to what the EPA calls as "sector" approach. He said that UARG 

will respond to EPA's questions in writing by the end of September. When asked by Mr. Seitz, 

Mr. Nickel clarified that the utilities were working together with the complex manufacturers on 

the basic reform proposal. 

Mr. Harnett explained that while the NSR reform package will cover all industry, the 

"sector" approach is an optional path that individual companies could choose. He asked for 

clarification that the UARG proposal would apply to all companies with no option for companies 

that did not like it. Mr. Nickel explained that because the regular NSR program applied only to 

new and modified sources, it was not designed to control existing sources. He further explained 

that the "backstop" program was designed to address concerns that existing sources may 

perpetuate themselves, and agreed that it would be mandatory for all industry. There was a brief 

discussion on "sector" approach including how this approach could be PAL-based. Mr. Harnett 

also said that EPA would likely maintain some form of regular NSR trigger and that an approach 

similar to the UARG proposal could be considered under specific circumstances. 

With respect to presumptive BACT, Mr. Harnett asked about how much lead time would 

be ok, i.e., the desirable length of time between when the presumptive BACT is set and when the 
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sources come into compliance with that limit. Mr. Nickel replied that considering the case of 

Alabama Power, adequate planning horizon would be desirable, and that UARG was open to 

EPA proposals. When asked by Mr. Harnett about a more specific time frame, Mr. Nickel said 

that UARG will discuss it further. John McManus said that the time frame also depended on 

what the initial limit was set at and how long that limit would be valid. Mr. Harnett pointed out 

that if the end date was earlier than the year 2030, then there may not be a need to change the 

limit in between because technologies generally do not evolve significantly in a short time. 

(????) Jerry Golden said that sources (units??) that are the most difficult to control will likely be 

brought in the program later than others, and in case of mid-course correction will present the 

toughest hurdle. 

Mr. Harnett said that one of the key components was averaging across facilities and 

trading. He said that while Bob Perciasepe was receptive to that concept, the OGC was not 

receptive, and that EPA was currently reviewing how the concept will work under NSR. He also 

said that Class I area impacts and Title IV acid rain issues need to be considered. Mr. Harnett 

also said that compliance with NAAQS must be considered when emissions are increased to 

levels higher that the levels previously modeled. Mr. Nickel replied that the idea of air quality 

impacts was "curious" and that any problems with respect to ambient impacts were beyond NSR 

and should not influence BACT determinations. He said that long term air quality impacts were 

generally not a problem, and the short term air quality standards would be protected by not 

increasing the hourly emissions. There was a brief discussion on how to address Class I area 

impacts. A question was raised as to how frequently the Class I problem was encountered. 

Mr. Harnett replied that it was likely to be more frequent in the western United States because of 

the larger number of Class I areas as compared to eastern United States. Mr. McManus argued 

that the Class I areas were a regional issue, and that the analysis would be different for a source 

that is located close to a Class I area and has a direct impact as compared to a regional analysis. 

When asked by Mr. Harnett whether the suggestion was to use a geographic location-based 

analysis, Mr. McManus replied yes and further said that it would not be desirable to tie up the 

trading program based on Class I area impacts. Rob Brubaker explained that according to the 

proposal, if the emissions increase was above the maximum hourly rate, then no trading would 

be allowed and the unit would go through regular NSR. When asked by David Solomon whether 

the test was a potential-to-potential test, Mr. Brubaker replied yes. Mr. Solomon said that the 

effects of a potential-to-potential test on local air quality could be severe, e.g., in the case of an 

inoperative power plant that wishes to start continuous full-time operation. Mr. Nickel 

acknowledged that the concerns regarding ambient air quality impacts need to be addressed, but 

did not think that they are a problem and indicated that they could be resolved. 

Talking about regional impacts, Mr. Harnett said that the trading must be unfettered and 

have flexibility. He asked at what point in the process does the public see and understand the 

implications for them. He also asked if there was any possibility for a public review. Mr. Nickel 

replied that the proposal did not address public review, but agreed that there must be some 

criteria that will have to be met by the participating sources. Mr. Harnett indicated that the 

program could work in two ways; one, some minimum criteria could be specified in the rule 

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. s. 

which will have to be met at the time a source opts into the program and the EPA could serve as 

an arbiter, and two, there could be more detailed up-front questioning. There was a brief 

discussion about how the trading would work. 

Mr. Solomon asked what the remedy would be in case the emissions exceeded the cap. 

Mr. Harnett also asked how compliance would be evaluated when averaging, i.e., if any 

emissions increase would be attributed to one facility or to all facilities. Mr. McManus replied 

that this was a deterrence and not a compliance issue. He indicated that Title IV would be a good 

model. 

When asked by Mr. Harnett if company-wide averaging would lead to a company cap, 

Mr. Nickel replied that the details of a comprehensive mandatory program as compared to a 

voluntary program could be important. He did not support a voluntary program that would be 

limited to individual companies and expressed interest in broader trading. Mr. Harnett explained 

that if the program was limited to companies opting in, the trading with non-participating 

companies would be difficult. When asked by Mr. Harnett if the tracking would work in a 

manner similar to the Title IV acid rain program, Mr. Nickel agreed that the program should use 

mechanisms that are already in place. 

Mr. Solomon asked if the program would track changes such that it could be determined 

whether a change triggers NSR, e.g., increase in hourly emissions. Mr. McManus replied that if 

a change that triggers NSR could occur then the industry would either not make that change or 

go through NSR. Mr. Solomon asked that in case of changes that trigger NSPS, how the agency 

would know about them. Mr. Golden replied that Title V required the industry to report that 

information. Mr. Nickel explained that it would be a self-policing program like the NSPS 

program. Mr. Solomon said that if NSPS-type test was used to trigger NSR, then there needs to 

be a safeguard to ensure that when such a change occurs, it is reviewed for NSR-applicability. 

Mr. Solomon also reiterated EPA's concern about the use of maximum hourly emission rates to 

determine NSR applicability. Mr. Nickel understood that this concern needed to be addressed, 

but that it involved all industry, not just utilities. 

Mr. Harnett asked how easy it would be to establish the age of the existing units. 

Mr. McManus replied that the commence-operation date can be found in the record. 

Mr. Solomon asked whether the age should be based on the permit-issuance date instead of the 

commence-operation date noting that some plants may have had long construction schedules. 

Mr. Nickel pointed out that the construction had to be completed within a reasonable time 

otherwise a new BACT review would have been required. Mr. Brubaker suggested to keep this 

matter simple and avoid complexities. 

In the context of opting in by companies, Mr. Harnett asked how to define a "company" 

for the purpose of this program. Mr. Nickel replied that it was hard to predict what today's 

companies will look like in 10 years, e.g., companies are bought and sold, etc. He suggested that 

ground rules be set to allow broader trading instead of establishing corporate identities. 

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Mr. Harnett asked how the shutdowns would be handled, i.e., whether they would be 

subtracted from the cap or whether they would be used as credits to stay within the caps. 

Mr. Nickel replied that shutdowns could be used as a means to demonstrate compliance. Giving 

the example of NOx, Mr. Nickel replied that under an emission rate-based program there would 

be no credit for shutdowns, while in a cap-and-trade program the shutdowns would be used as 

credits. When asked by Mr. Solomon if the industry envisioned using an emission rate-based 

program, Mr. Nickel replied that for S02 the rate-based program would be desirable because it 

was less stringent and allows growth. Mr. McManus indicated that not allowing credits would be 

a disincentive. Mr. Solomon pointed out that allowing credits would be a disincentive for early 

shutdowns, i.e., shutdowns would then occur only when there was an increase, which may help 

avoid good controls on new units. 

Mr. Harnett said that the industry proposal had led the EPA to think about NSPS-type 

issues. He indicated that the end time of the program, i.e., year 2030, was an issue and that a 

shorter time would mean no mid-stream changes to emission limits. He also said that there were 

other issues to consider such as fuel switching, how to calculate caps up front, whether there 

would be any double counting of emission reductions required under other programs etc. 

Mr. Nickel said that he did not want other issues to delay this process. There was a brief 

discussion about C02 and mercury. Mr. Harnett requested feedback regarding C02 and mercury. 

Mr. Nickel expressed concern about having to resolve C02 and mercury issues. 

Dan Steen said that the definitions of modification and maximum achievable hourly 

emission rate were essential. Mr. Solomon asked if the potential-to-potential test would 

supersede the WEPCO test. Mr. Nickel replied yes. Mr. Solomon asked if the industry still 

needed the pollution control project (PCP) exclusion. Mr. Nickel replied that the industry would 

like to keep the PCP exclusion, e.g., for CO. Mr. Golden said that NOx retrofits can increase CO 

emissions, and it would not be desirable to go through NSR for CO. Mr. Nickel said that the 

industry would also like to keep the routine maintenance and repair/replacement exclusion. 

However, Mr. Nickel indicated that the fuel switching exclusion may or may not be important 

over the next 15-20 years. He stressed that the hourly potential emission test would result in a 

real benefit. 

Mr. Harnett requested a feedback from UARG on the issues discussed. He indicated that 

Bob Perciasepe was committed to the process. He also indicated that the complex 

manufacturer's group was coming to meet with EPA again, and said that more discussions with 

UARG were also expected. Mr. Nickel said that the meeting was productive. He indicated that 

UARG will meet with other companies next week, and will respond to all or most of EPA's 

questions by the end of September. Mr. Harnett thanked everyone for coming. 

The meeting was then adjourned. 

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P.6 

ATTENDEES 

EPA/UARG MEETING 

NEW SOURCE REVIEW REFORM 

September 14, 1999 

Name 

Henry Nickel 

Bill Brownell 

Jerry Golden 

Janet Watts 

Richard Chastain 

Gene Marshall 

Bernie Huff 

Barb Gambill 

Rob Brubaker 

Dan Steen 

Michael Cashin 

John McManus 

Kris Knudsen 

N.N. Dharmarajan 

Paul Bailey 

Mike Kennedy 

John Seitz 

Bill Harnett 

Karen Blanchard 

Mike Sewell 

David Solomon 

Dan DeRoeck 

David Svendsgaard 

Lynn Hutchinson 

Kathy Kaufman 

Sam Napolitano 

Greg Foote (via phone) 

Anna Wood (via phone) 

Malay Jindal 

Valerie Everette 

Affiliation 

Hunton & Williams 

Hunton & Williams 

TVA 

TVA 

Southern Co. 

PacifiCorp 

Cinergy 

Cinergy 

Porter Wright 

First Energy 

Minnesota Power 

AEP 

Duke Power 

Central & South West 

EEI 

Florida Power Corp. 

EPA/OAQPS 

EPA/OAQPS 

EPA/OAQPS 

EPA/OAQPS 

EPA/OAQPS 

EPA/OAQPS 

EPA/OAQPS 

EPA/OAQPS 

EPA/OAQPS 

EPA/OAP 

EPA/OGC 

EPA/OPAR 

PES (EPA Contractor) 

PES (EPA Contractor) 

Telephone No. 

(202)955-1561 

(202)955-1555 

(423)751-6779 

(423)751-7292 

(205)257-6664 

(801)220-2235 

(513)287-3884 

(513)287-2641 

(614) 227-2033 

(330) 384-3704 

(218) 722-5642 (x3339) 

(614)223-1268 

(704)373-3225 

(214) 777-1373 

(202) 508-5640 

(727) 826-4334 

(919)541-561.6 

(919)541-4979 

(919)541-5503 

(919)541-0873 

(919)541-5375 

(919)541-5593 

(919)541-2380 

(919)541-5795 

(919)541-0102 

(202)564-9751 

(202) 260-7620 

(202) 260-8772 

(919)941-0333 

(919)941-0333 

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