p.1 

OAR Box 1787 

Prepped by Ollie Stewart 

Document Number: 

81) ll-C-39 

Docket Number: 

A-90-37 

Printed 11/4/2008 10:22:20 AM Sheet 81 of 147 
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* >".*osr«>. 

5 ^K 4 1 L.N ITED STATES ENVIRONiMF.NTAL PROTECTION AGENCY ^ ' 

\4W.»; WASHINGTON", O.C. 20460 lf-i " ? ^ 

"t <*0 ^ 

JUL 1 2 1990 

V P f: 

Mr. Michael c. Farrar 

Vice President i \.' \-. 7 

American Paper institute/National :». ,i; AIRANO»*OIATIO>. 

Forest Products Association 

1250 Connecticut Avenue, N.W., Suite 210 

Washington, D.C. 20036 jf 

125SS2: ¥ 

Dear Mr. Farrar: 

This is in response to your May 21, 1990 letter setting forth the 

concerns that the American Paper Institute/National Forest Products 

Association (API/NFPA) expressed verbally at our meeting on May 4. Your 

letter asserts that the Bivironmental Protection Agency (EPA) is acting 

illegally in its use of guidance to interpret EPA regulations. You refer 

specifically to four areas under the Clean Air Act (CAA) in which API/NFPA 

maintains that EPA has acted improperly in its use of guidanoe: top-down best 

available control technology (BACT) guidance under the CAA's prevention of 

significant deterioration (PSD) provisions, State implementation plan (SIP) 

interpretation, new scuroe performance standard (NSPS) applicability 

determinations, and the Wisconsin Electric Power Oarapany (WEPCO) decision. 

At the cutset, I Trust take issue with the suggestion in your letter that 

EPA is attempting to revise duly promulgated regulations by "internal 

memorandum." I oanpletely agree that EPA must use established informal 

rulemaking procedures, including Federal Register notice and the opportunity 

for public ocnment, to revise regulations. However, EPA also has the 

authority and the obligation to provide clarification and guidance under the 

regulations it has already promulgated and to apply those regulations to 

specific cases. I ackncwledge that the distinction between new regulations 

and interpretation of existing regulations is not always clear cut. The 

Agency believes, hcwever, that it properly limits the use of these devioes to 

interpretations of existing statutory and regulatory law. in particular, as 

discussed belcw, the Agency believes it acted appropriately in the four cases 

cited in your letter. 

lfte ERA'S Too-Dcwn BACT Policy 

With respect to the top-dcwn BAC T process, EPA sees r» cccpelling 

reason to depart fran the position taken in the letters of May 12, 1989, fran 

William K. Reilly to you, and June 13, 1989, fran John Calcagni to your 

counsel, Michael K. Glenn, responding to API/NFPA's petition requesting that 

EPA rescind its top-dcwn policy. Neither the December l, 1987 roenorandum from 

former Assistant Administrator J. Craig Fotter that you mentioned in our 

meeting nor any other EPA documents implementing the top-down BACT analysis 

charge existing regulations. In particular, the Potter memorandum sinply 

directs EPA Regional Offices, as a matter of Agency policy, to follow the 

top-dcwn approach in administering the current PSD regulations. That 

memorandum was issued following an adjudicative decision of the Administrator 

interpreting the statutory and regulatory definition of BACT, [see Honolulu 
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Resource Recovery Facility, PSD Appeal No. 86-8 (remand order, June 22, 1987) 

("H-Fwer") ], and to facilitate consistency in the BACT determination process. 

In essence, the Administrator's H-Power decision interpreted the statutory 

BACT analysis requirement as containing two core criteria: consideration of 

all available pollution oontrol technologies, and a reasoned explanation based 

on consideration of energy, environmental, and economic ircpacts of any 

decision not to require use of the most stringent control technologies as 

BACT. [The Administrator has affirmed this view in other decisions as well, 

see Pennsauken County, New Jersey Resource Recovery Facility, PSD Appeal No. 

88*8 (remand order, Nov. 10, 1988).] The EPA's views regarding these core 

criteria are not new. Indeed, they are reflected in the Agency's earliest 

BACT guidance document [see Guidelines for Determining Best Available Control 

Technology (OAQPS, Dec. 1978), pp. 5-6]. Thus, the Potter memorandum reflects 

EPA's judgment that, in general, the top-dcwn prooess is the best approach to 

fulfilling the BACT requirements that are set forth in the statute and 

corresponding regulations. 

The EPA shares your concern over inconsistencies in BACT determinations. 

As noted above, EPA adopted the top-down BACT approach in part to address 

prior inconsistencies in the states' implementation of this important CAA 

requirement. The Agency is developing detailed guidance to assist the States 

and EPA Regional Offices in using the top-down approach. Mr. Glenn has been 

furnished a copy of the most recent draft of this guidance. 

In our meeting, you indicated that permit applicants have claimed that 

the tcp-dcwn approach generally results in more stringent BACT determinations 

than those made in the past. The EPA has not conducted any quantitative 

analyses to confirm or rebut such claims. However, if this conclusion is 

indeed true, it would simply be a reflection of more thorough BACT 

determinations being made consistent with CAA requirements. It would not 

result from any new substantive or procedural requirement associated with the 

top-dcwn approach because there is none. 

The SIP Interpretation 

The EPA has recently acted to satisfy your concern with SIP 

interpretation which appears to focus on EPA'S 1989 approval of Kentucky's PSD 

program. As you may be aware, on June ll, 1990, EPA published a notice in the 

Federal Register (55 FR 23547) clarifying the Agency's position on SIP 

interpretation in the Kentucky SIP action. I enclose a copy for your 

reference. This notice makes it clear that IPA's guidance and policies have 

no binding regulatory effect of their own. At the same time, also as stated 

in the notiae, EPA maintains that the ififaianoc. of new source review permits 

and other actions by a State in the administration of the Federal CAA nust 

conform to the requirements of the CAA and the SIP. In making judgments as to 

what constitutes carpiiance with the CAA and regulations issued thereunder, 

E PA looks to (among other sources) its policy statements and interpretative 

rulings. Congress assigned EPA the duty to oversee proper implementation of 

the Federal CAA, and the approach described in the enclosed clarification 

notice is an appropriate, and certainly legal, way for the Agency to meet that 

obligation. 
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Maine NSPS Determination 

Based on our meeting, it appears that your concern about NSPS 

applicability determinations resulted fran a misunderstanding concerning an 

applicability determination that EPA's stationary Source Conpliance Division 

made for a recovery boiler in Maine. Mr. Seitz, Director of that division, is 

working with you to provide a clarification of this determination which should 

resolve the problem. 

The EPA's WEPOO Decision 

The EPA disagrees with your assertion that the Agency's initial WEPOO 

decision represents a change in the way EP A makes applicability determinations 

under the PSD and NSPS programs. The EPA did not alter any regulations in 

making this applicability determination, nor did it expand the scope of these 

new source programs. Rather, as with all PSD and NSPS applicability 

determinations, EPA applied existing regulations to the facts of a particular 

case through an informal adjudicative proceeding. The EPA has reoently issued 

a new decision regarding the one issue remanded to the Agency by the court. A 

copy of that revised determination is enclosed. 

Applicability determinations, such as those involving WEPOO, decide only 

the specific matter before the Agency. At the same time, such determinations 

may serve as useful guideposts for both EFA and the regulated oaimunity 

regarding future cases that may involve similar factual and legal issues. T 

agree that EPA should strive to iirprove its communications efforts in this 

area1. 

We would be happy to discuss the details of the WEPCO determinations with 

you at a mutually convenient time. Please contact Mr. Gary McCutchen at the 

Office of Air Quality Planning and Standards in Durham, North Carolina, 

(919-541-5592), to arrange for a meeting on this issue, and to discuss access 

to EPA's new source review electronic bulletin board which is now available to 

the public. 

I hope this letter clarifies our position on the issues you have raised. 

Although, as noted above, the Agency continues to disagree with your position 

an a number if issues, I appreciate the opportunity to meet with ycu. I hope 

that we can continue to have fruitful dialogue on Clean Air Act issues in the 

months ahead. 

Sinoerely yours, 

Michael H. Shapiro 

Deputy Assistant Administrator 

for Air and Radiation 

Enclosures 
For enclosure to docket item II-C-11, July 12, 1990 letter from Michael Shapiro to Michael 

Farrar, see docket item indicated. 

II-J-1 Clarification notice on publication of Kentucky PSD rules in June 11, 1990 

Federal Register (55 FR 23547).