p. 1



# OAR Box 1787 Prepped by Ollie Stewart



### Document

Number: 

# 37 ) ll-B-2 2 Docket Number: 

# A-90-3 7

Printed 11/4/200810:22:19AM

Sheet 37 of 147/ • ' I . P. 2

^ ' 0 S '-U , 

# US2

'**• < PflO^ 0 / UNITE D STATE S ENVIRONMENTA LPROTECTIO N AGENC Y REGIO N

I V w««#-- » - .-« , MEMORANDUM DATE : MA

RI I W O 3 4 5 COURTLAN O STREET . N.E . ATLANTA . GEORGI A3036 5 ( ' ; i . a •?.- ; SUBJECT : Propose d Regio n I V Initiative s fo r Improving Ne wSourc e Revie w(NSR ) Implementatio n , FROM : Winsto n A . Smith , Directoz^-^^-^-g T & r Air , Pesticides , an d Toxic s " - / - * 

## "/o Managemen t Divisio n TO : Geral d A . Emison , Directo r (MD-10 ) Offic e o f Ai r Qualit yPlanning an d Standard s 

# n 

# ~e> 3 7

During ou r February8 , 199 0 discussion s wit hyo u and Mik e Shapir o i n th e Atlant a Regiona l Office , w e briefl ydiscusse d Regio n IV s recen t initiative s fo r improving Ne wSourc e Revie w(NSR ) implementatio n throughjoin t EP Aand State/Loca l efforts . Thes e initiative s wer e deeme d necessar ybyRegio n I V and th e permittin g agencie s t o brin g some degre e o f consistenc yt o NS Rpermitting a s wel l a s t o impar t a sens e o f suret yt o th e agencie s i n thei r permitting decisions . Amon g ou r initiative s ar e tw o (2 ) mai n proposals : Th e creatio n o f a Regio n I V NS Rdat a bas e t o trac k basi c informatio n use d i n th e Preventio n o f Significan t Deterioratio n (PSD ) nnnt-ro i technology(BACT ) decision

makin g process , and secondly , th e devej I g^Be.njL-imd^c^pncordan.t_..accept

anc e o f NS Rmemorandum s o f understanding (MOUs),.betwee n Regio n I V

an d the"State/Loca l permittin g agencies . BAC T Dat a Bas e Sinc e th e issuanc e o f th e Decembe r 1 , 1987 , memorandu mfromJ . Crai g Potte r o n improving ne wsourc e revie wimplementation , Regio n I V ha s bee n mire d i n continue d controvers yan d disagreemen t wit hstat e permittin g agencie s and industryi n ou r Regio n regarding th e implementatio n o f th e "top-down " BAC T concep t a s wel l a s othe r generi c PS D principles . Th e mai n controvers ystemming fromth e "top-down " concep t wa s th e economi c demonstration s necessaryto r a n applican t t o rejec t a particula r contro l option . Prio r t o th e "top-down " guidance , mos t agencie s relie d almos t exclusivel yo n a n incrementa l cos t analysi s t o demonstrat e tha t a particula r contro l optio n woul d b e inappropriate . Withou t explici t guidanc e o n th e procedure s t o b e utilized r Regio n I V

ha s attempte d t o implemen t th e Decembe r 1 memorandu mbyrequiring industryt o demonstrat e tha t th e "top " contro l optio n i s clearl yernnoTm'rfj l lyinf^flsiMQ wjigr i suc ha n assertio n i s made . I n mos t cases , thi s demonstratio n entaile d a n in-dept heconomi c analysi s portraying detaile d (an d i n some cases ,r —, p. 3

-2

- confidential ) economi c informatio n t o sho wtha t th e leve l o f contro l i s beyond wha t shoul d b e considere d reasonabl e an d affordabl e fo r th e company . Thi s proces s i s surel yresourc e intensiv e an d flawe d i n manyrespects , bu t withou t additiona l guidance , thi s proces s wa s though t t o b e th e inten t o f th e Decembe r 1 guidance . Th e mor e recen t draf t Headquarter s positio n o n th e economi c aspect s o f BAC T ha s see n a shif t fromth e economi c unaffordabilit yapproach , t o a comparativ e economi c analysi s betwee n th e sourc e i n questio n an d simila r source s wh o hav e bee n require d t o instal l control s fo r th e pollutant s unde r review . I n th e comparativ e analysi s approach , i f a n applican t i s considerin g a particula r MAC T technologyand tha t technologyha s bee n require d a s BAC T i n pas t determination s fo r simila r source s (regardles s i f th e technologyha s bee n demonstrate d o r jus t agree d t o i n a PS D permit) , ;th e initia l presumptio n i s tha t thi s technology shoul d represen t BAC T fo r th e sourc e unde r review . I n orde r t o rejec t thi s tecnnoiogya s BACT , th e applican t woul d b e require d t o sho wtha t site-specifi c economi c factors , suc ha s loca l labo r costs , ar e suc htha t th e overal l cost s (i n dollar s pe r to n o f pollutan t removed ) clearl yexcee d th e rang e o f cost s incurre d byth e previou s source s whic hwer e require d t o instal l tha t technology . T o effectivel yutiliz e a comparativ e approac hi n a BAC T economi c analysis , i t i s crucia l t o th e propose d applicants, , th e state/loca l permittin g agencies , an d EP Atha t economi c informatio n relating t o th e "normal " expenditure s fo r pollutio n contro l b e known and " available, . Unfortunately , ther e i s currentl yn o nationa l sourc e o f informatio n fo r determing th e "normal " rang e o t pollutio n contro l cost s fo r a particula r sourc e category . During ou r pas t annua l Ne w Sourc e Revie wConferenc e i n Denver , th e Region s rejecte d th e additio n o f economi c intormatio n t o th e nationa l BACT/LAE RInformatio n System (BLIS) . Regio n I V

ha s therefor e decide d t o creat e a mor e usefu l PS D \ dat a system' , designe d especiall yt o trac k thf > Rrnnomir : aspect s o f 1 BAC T determinations . Th e Regio n I V

systemwil l b e designe d t o trac k economi c dat a from pas t and futur e BAC T determination s i n th e nation . I t wil l als o includ e actua l emission s dat a fromPS D source s whe n the ytes t fo r complianc e and tha t dat a become s available . Th e dat a bas e wil l b e designe d suc htha t a t leas t th e pas t tw o year s o f representativ e PS D dat a fromal l Region s ca n b e tracked . Thi s wil l b e accomplishe d throughcontractua l assistance . Regio n I V state s wil l updat e th e systemafte r eac hne wBAC T determinatio n fo r thei r respectiv e sources . Althoug hRegio n I V ma yb e abl e t o updat e th e system wit h ne wdeterminatio"n s mad e elsewher e i n th p natinn ( j t i s hope d that~~ Headquarter s and/o r othe r Regiona l Office s wil l recogniz e th eP. 4

-3

- importanc e o f suc ha systeman d ai d i n it s implementation . Onc e i n | ( ]51~ace , Regio n I V

state/loca l agencie s wil l b e require d t o analyz e the economi c feasibilit yo f a contro l optio n fo r a permi t unde r revie wb y comparing th e contro l cos t fo r th e propose d ne wsourc e t o th e cos t range s containe d i n th e ne wdat a base . EPA/Stat e MOU s Regio n I V

ha s als o face d a numbe r o f othe r generi c argument s mad e b y permitting agencie s and applicant s i n th e cours e o f selecting a n appropriat e BACT . I t i s extremel yfrustrating an d time consuming fo r u s t o hav e t o continuall yaddres s eac ho f thes e generi c argument s o n a permit-by-permi t basis . Amon g thes e argument s i s th e assertio n b y a n applican t (o r State ) tha t becaus e a n emissio n limitatio n ha s no t ye t bee n "demonstrate d i n practice " an d ha s onl ybee n agree d t o somewher e i n a permit , tha t contro l optio n shoul d no t b e considere d a s "available" . Anothe r frequentl yhear d argumen t i s th e assertio n tha t th e us e o f th e mos t effectiv e contro l optio n onl yresult s i n a "smal l ambien t impact " a s compare d t o th e nex t mos t stringen t contro l option ; thus , th e mor e effectiv e contro l shoul d b e dismissed . Stil l anothe r commonl yhear d argumen t i s tha t i f a particula r contro l devic e o r proces s desig n exceed s th e applicabl e NSP S limitations , a n eve n mor e effectiv e contro l devic e nee d no t b e considered , o r ma yb e give n ver ylittl e consideration . Finally , man yargument s sugges t tha t becaus e th e us e o f a particula r contro l devic e ma yresul t i n th e trade-of f o f emissions , th e contro l i s inappropriate . Thi s i s especiall ytru e fo r add-o n control s fo r nitroge n oxide s wher e th e additio n o f selectiv e catalyti c reductio n mayresul t i n ammoni a emission s o r th e us e o f wate r injectio n ma yslightl yincreas e carbo n monoxid e emissions . Th e MOU s ar e designe d t o layth e basi c ground rule s fo r NS R permitting , including th e type s o f demonstration s necessaryand . appropriat e fo r makin g BAC T determinations . Th e MOU s wil l als o cle f in e th e appropriat e us e o f th e Regio n I V dat a bas e and delineat e EPA' s rol e i n th e overvie wprocess . Obviously , th e negotiatio n o f MOU s wit hou r permittin g agencie s i s a jjive-and-take

_situation . Tfr

e permitting agencie s mus t agre e no t t o us e th e previousl ydescribe d argument s i n th e BAC T selectio n process . I n return , EP Awil l no t requir e applicant s t o performth e detaile d economi c model s t o sho w whethe r a particula r contro l devic e i s "affordable" . EP Awil l als o agre e no t t o surpris e th e permitting agencie s with ' ne wguidanc e GE~~ polic ydecision s durin g th e middl e o f a fisca l yea r withou t thei r acceptanc e o f thes e ne wprocedures.O f course , an ysignifican t policie s o r rulemaking , e.g. , th e Nort hCount yRemand , woul d b e exception s t o thi s agreement . .Also , EPA-wil l no t "second-guess " a_ _ permitting agency„on a particula r BAC T determinatio n i f tha — cjOterence . i n _th ^ remove d betwee n th e contro l selecte d and " the - nextlnoststringen t contro l i s les s tha n . '•sjm n f icant"T ~ Regio n ivi s ais o proposing t o phas e down it sP. 5

-4

- overvie wo f permit s submitte d byth e state/loca l programs . Th e MOU s wil l discus s ho wth e phas e down work s an d th e criteri a tha t a n Agenc y mus t mee t t o avoi d bein g resubjecte d t o th e presen t systemo f tota l overview . Regio n I V

Oversigh t Phas e Down A t present , Regio n I V i s conducting a thorough , comprehensiv e revie w o f eac hand ever yPS D packag e submitte d byou r state/loca l permitting agencies . Thi s procedur e ha s bee n employe d sinc e th e issuanc e o f th e Decembe r 1 memorandum . Th e Regio n I V phas e dow

n wil l b e initiate d upo n th e consummatio n ojTeac hagency' s MOU ^ I n deciding a n appropriat e phas e down procedure , i t i s appropriat e t o loo k a t th e overal l purpos e o f an ysuc hphas e down o f EPAoversight . Obviously , th e end resul t o f a phas e down mus t stil l ensur e tha t consistent , qualit ydetermination s ar e bein g mad e byth e permitting agencies . Also , fo r a phas e down t o b e viewe d a s beneficia l byth e permitting agencies , EP Amus t relinquis hmuc ho f it s independen t revie wt o minimiz e duplicatio n o f effor t an d reduc e "second-guessing" . Th e phas e down propose d byRegio n I V i s no t a ne wconcept , bu t wa s develope d i n 198 2 and addresse d EP Apermi t overview s i n al l media . Unde r thi s phas e down approach , Regio n I V review s thre e perjmi t package s or . i o percen t o t tn e to-tTa l numbe r Ol ! pfeiwit s issue d (whicheve r i s greater ) to r eac n stat e permitting agenc yduring a .fisca l year. . Thes e ar e th e thorough , comprehensiv e overview s an d Regio n I V

ma yselec t thes e review s fo r anypermi t issue d byth e Stat e during th e fisca l year . Th e remainde r o f th e permi t package s submitte d bya Stat e ar e reviewe d i n a mor e cursorymanner . A s explainec T i n ou r January19 , 1988 , memorandu mt o J . Crai g Potte r (attached) , th e Regio n I V phas e down o f NS Rovervie winvolve s a cursoryrevie wo f al l portion s o f eac hpreliminaryan d fina l determinatio n submitte d byou r state/loca l agencies . A"cursory " revie wi s use d primaril yt o scree n incoming NS Rdetermination s fo r decidin g i f a mor e comprehensiv e revie wi s warrante d fo r tha t submittal . A t a minimum , th e cursoryrevie winclude s th e completio n o f th e Form3 checklis t (fro mNAA S audi t guidelines ) o r th e ne w Headquarter' s checklis t transmitte d t o u s b yJoh n Calcagn i o n May18 , 1989 . Th e February10 , 198 8 memorandu m fromJ . Crai g Potte r t o u s (attached ) agree s tha t th e Regio n I V "cursory " revie wo f al l preliminaryand fina l determination s satisfie s th e leve l o f revie w envisione d i n hi s Decembe r 1 , 1987 , memorandum . I n summary , w e appreciat e th e opportunit yt o discus s thes e NS Rissue s wit hyo u and Mik e Shapir o during ou r February8 meetin g an d i n mor e detai l here . W e trul ybeliev e tha t th e effort s being mad e i n ou r Regio n bybot hEP Aand th e State/Loca l agencie s ar e improving NS R consisten t wit hth e initiative s containe d i n th e Potte r memorandum . I f yo u hav e an

yfurthe r question s o r comments , pleas e contac t Bruc e Mille r a t (FTS ) 257-2864 . Attachment sP. 6 ,>liO ST.\ ?: Y-

* 1 ___0^_t_. • s , _wmo

4APT-AE B MEMORANDU

M DATE : SUBJECT : (

UNITE D STATE S ENVIRONMENTA LPROTECTIO N AGENC Y REGIO N I V 34 5 COURTLA.N D STREET

. N.E

. ATLANTA

. GEORGI A3036 5

Jun e10 , 199 1 

# fi--fO-3 9-

"Top-Down " Bes t Availabl e Contro l Technology(BACT ) Rulemaking sX^ ^f' cyfX^u-a-^JJ~ <£< r FROM : Winsto n A . Smith , Directo r Air , Pesticides , an d Toxic s Managemen t Divisio n TO : John S . Seitz , Directo r Offic e o f Ai r Qualit yPlanning an d Standard s (MD-10 )

' **" A•' > 

### i aDOCKET.

. A s yo u ma yknow , th e rulemaking packag e concerning BAC T i s moving forward . I t i s m

yunderstanding tha t thi s packag e wil l no t propos e t o incorporat e th e "top-down " metho d o f BAC T analysi s a s ha s bee n implemente d i n al l o f th e Regiona l Office s sinc e th e Decembe r 7 , 198 7 guidanc e memorandu

mfromJ . Crai g Potte r o n improving Ne wSourc e Revie wprocedures . A s sub-lead Regio n fo r permitting , Region I V woul d lik e t o conveya synthesi s o f th e opinion s expresse d b yth e Region s o n "top-down " BACT . Th e "top-down " metho d ha s bee n critica l i n establishing consistenc yi n th e permi t revie wproces s betwee n state s withi n eac h Regio n and betwee n th e Region s themselves . Sinc e it s inception , th e "top-down " proces s ha s resulte d i n ver yrea l an

d quantifiabl e benefit s t o th e permitting programs . Thes e range-fromth e obvious , . . suc ha s obtainin g th e mos t stringen t emissio n rat e tha t i s technicall yand economicall yfeasible , t o th e mor e subtle , sucha s th e muc himprove d qualit yo f th e application s whic har e being submitted . Thi s ha s resulte d i n th e leve l o f informatio n o n variou s ' contro l technologie s bein g increase d an d disseminate d throughou t th e country , thereb

yelevating th e qualit yo f permi t review s being performe d byeac hfederal , stat e an d loca l permitting agency . A dismantling o f th e "top-down " proces s wil l almos t certainl yresul t i n a curtailing o f thi s flo wo f information whic hwil l i n turn dramaticall yincreas e th e workloa d o f alread yhard-presse d permitting staffs .

Printed on Recycled

Pap.P. 7

-2

-
Th e "top-down " metho d o f analysi s i s full yconsisten t wit hthe statutoryrequirement s fo r BAC T foun d i n th e Clea n Ai r Act . I t i s als o consisten t wit hindustria l growt hpolicie s i n tha t th e "top-down " proces s maximize s the ai r qualit yincrement s availabl e fo r consumptio n whil e ensuring tha t th e NAAQ S ar e maintaine d suc htha t mor e stringen t nonattainmen t provision s woul d no t apply . I n closing , le t m e emphasiz e tha t the Regiona l Office s strongl y suppor t th e curren t "top-down " policyo f BAC T analysi s and w e woul d appreciat e th e opportunit yt o participat e i n establishing th e BAC T polic yfo r th e future .

cc : Regiona l Ai r Divisio n Director s