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* l PRO"* 0 UNITE D STATE S ENVIRONMENTA L PROTECTIO N AGENC Y Offic e o f Ai rQualityPlannin g an d Standard s Researc h Triangl e Park , Nort h Carolin a 2771 1

MEMORANDU

M TO : Docke t FROM : DATE : JUN E 4 , 199 1 SUBJECT : Draf t Preambl e WEPC O Interpretiv e Rul e Chebryl l Edward s

Th e attache d draf t preambl e o f th e WEPC O interpretiv e rul e (date d Apri l 18 , 1991 ) wa s submitte d fo r interagenc yrevie w t o th e Counci l o f Economi c Advisors , Departmen t o f Energy , an d Departmen t o f Justice . 

# tJISS5A]x

».'• • i lP. 3

Draft : Apri l 18 , 199 1 WEPC O INTERPRETIV E RUL E DRAF T PREAMBL E Thi s interpretiv e rul e clarifie s th e coverag e o f th e ne w sourc e provision s of Par tC o f Titl e I of th e Clea n Ai r

Ac t for modification s a t

electri c utility generatin g unit s i n ligh t o f tw o recen t

federa l appellat e decisions . Wisconsi n Elec . Powe r Co . v . Reilly

T89 3 F.2 d90 1 (7t h Cir . 1990 ) ("WEPCO" ) an dPuert o Rica n Cemen t Co . v . EPA . 88 9 F.2 d29 2 (1s t Or . 1989 ) ("Puert o Rica n Cement".. Whil e today' s interpretiv e rulin g provide s immediai C answer s t o som e o

f th e question s tha t

hav e bee n raise di n th e wak e o f th e WEPC O an d Puert o Rica n Cemen t

decisions , th e Environmenta l Protectio n Agenc y (EPA ) als o intend s t o propose , for

publi c notic e an dcomment , revision s to it s ne w sourc e revie w regulation s which will provid e amor e comprehensiv e resolutio n o f th e variou s issues. 1 Thi s rulin g als o implement s certai n change s i n th e treatmen t o f repowerin g an dclea n coal technolog y project s mandate dby Congres s i n th e Clea n Ai r Ac t Amendment s o

f 1990 . I . Modification s Unde r Existin g La

w Th e ne w sourc e revie w provision s o f th e preventio n of

significant

deterioratio n ("PSD" ) program 2 provide , amon g othe r things , tha t

"[n] o majo r

emittin g facility.. . ma

y b e constructe di n any [PSD ] area " withou t takin g certai n step s includin g securin g aconstructio n permi t an daddin g emission s contro l technology . (CA A § 111(a)(4) , 169(2)(c) , 4 2 U.S.C . § §

1 Fo r severa l reasons , toda

y • s interpretiv e rulin g i s limite dt o electri c utiht y generatin g sources . First , th e ne w aci drai n programi n Titl e I V o f th e Clea n Ai r Ac t Amendment s o

f 1990 ("199 0 Amendments" ) singl e ou t utilitie s t o pla

y amajor rol e in reducin g sulfu

r oxid e emissions . Sinc e man

y utilitie s mus t

decid e upo n thei r complianc e strateg y withi n th e nex t fe w months , EP A believe s that clarificatio n o

f th e NS Rprovisio n which affec t th e utiht y industr y i s neede dwithout

delay . Second , bot

h WEPC O an dPuert o Rica n Cement hav e directl y o r indirectly mandate dchange s in EPA ' s treatmen t o f modificatio n project s at

utilities . Finally , utilitie s ar e semi

publi c i n natur e and , i n contras t t o othe r industries , man

y detail s o f thei r past , presen t

an dfutur e operation s ~ includin g thei r

output , fue

l consumption , operatin g schedules , emission s data , an dprojecte dfutur e utilizatio n rates-ar e generall y accessibl e t o th e pubhc . Thi s wil l facihtate corroboratio n by EP A an dth e pubh c o f utiht y modification s undertake n pursuan t t o thi s ruling . EP A wil

l consider expandin g th e apphcabiht y o f portion s o

f thi s rulin g t o othe r

industrie s a s part

o f afutur e notic e andcomment

rulemaking . 2 Th e PS D provision s ar e foundin sectio n 16 0 throug h 16

9 o f th e Clea n Ai r Ac t ("CAA") , 4 2 U.S . C . 7470

- 79 . Sectio n 165 , 4 2 U.S.C . 7475 , set s fort h th e preconstructio n review requirements .P. 4

- 2 7411(a)(4) , 7479(2)(C) . EPA' s regulation s implementin g thes e statutory provision s requir e preconstruction revie w for source s undertakin g a"majo r modification, " i£ „ aphysical chang e o r chang e i n th e metho dof

operation s "that

woul dresul t

i n asignificant

ne t emission s increas e of

any pollutan t subjec t t o regulatio n unde r

th e Act. " 4 0 CF R52.21(b)(2)(i ) an d(3)(i). 3 A "net emission s increase " i s define da s th e increas e i n "actual emissions " fro mth e particular physica l o r operationa l chang e togethe r wit h any othe r

"contemporaneous " increase s o r decrease s i n actua l emissions . 4 0 CF R52.21(b)(3)(i). 4 Applicability o

f th e Act' s ne w sourc e revie w provision s mus t b e determine di n advanc e of

construction . I n case s involvin g modifications , thi s require s apollutant-by

pollutan t projectio n o

f th e emission s increases , i f any , tha t will resul t

fro mth e physical o r operationa l change . EPA' s PS D regulation s addres s thi s proble mby providin g tha t whe n a n emission s uni t

"ha s no t begu n norma l operations, " actua l emission s equa l th e "potentia l t o emi t o f th e unit. " 4 0 CF R52.2 1 (b)(2)(iv) . Thi s regulatory provisio n ma y b e overcome an dne w sourc e revie w will no t apply~i f th e sourc e owne r

agrees , i n afederall y enforceabl e instrument , no t

t o increas e it s actua l emission s abov e baselin e levels . Se e 4 0 CF R 52.21(b)(4) . Thi s i s referre dt o a s th e actua l t o potentia l test . II . Treatmen t

o f "Like-Kind " Modification s After WEPC O I n WEPCO . supra , th e cour t reviewe dEPA' s determinatio n tha t th e "life-extension "

3 Th e curren t

PS D progra

mi s set fort h i n tw o set s o

f regulations . Th e regulatio n cite di s part o f th e federa

l PS D permi t

program(4 0 CF

R52.21 ) whic

h apphe s a s part

o f th e stat e implementatio n pla n fo r State s that

hav e no t submitte daPS D programmeetin g th e regulator y requirement s of

4 0 CFR51.16 6 for

EP A approval o

f Stat e PS D programs . I n mos t

State s where th e federa

l requirement s apply , EP A ha ddelegate dth e authorit y t o implement

th e PS D progra

mback t o th e State . Roughly two-third s o f th e State s ar e implementin g thei r ow n PS D programpursuan t

t o an EPA-approve dPS D permittin g program . Section s 52.2 1 an d51.1.66 6 hav e identical modificatio n provisions . Fo r thos e State s wit

h approve dPS D new sourc e review programs , today ' s interpretiv e rulin g i s no t

legall y binding , bu t

merel y advise s intereste dpartie s concernin g ho w EP A read s thes e regulation s in ligh t o f th e WEPC O an dPuert o Rica n Cement decisions . [Ad

dDisclaimer

Language. ] 4 Generall y speaking , "contemporaneous " emission s increase s o r decrease s ar e thos e whic

h wil l eithe r occu r prio r t o th e operatio n o

f th e propose dmodificatio n o r hav e occurre dwithin th e fiv e year s precedin g th e propose dmodification . 40 CF R52.21(b)(3)(ii) . Onc e amodificatio n i s determine dt o b e major , th e PS D requirement s apply only t o thos e specifi c pollutant s fo r whic h ther e woul db e asignifican t ne t emission s increase . E.g. . 40 CF R52.2 1 G)(3 ) (bes t availabl e contro l technology) ; 40 CFR52.2 1 (m)(l)(b ) (ai r quaht y analysis) .P. 5

- 3 renovation s planne dfor

severa l olde r

electri c generatin g unit s (specifically , repai r an d replacemen t

o f turbine-generators , stea mdrum s an dothe r majo r components ) brough t

th e unit s withi n th e PS D new sourc e revie w provisions . EP A contente dtha t th e unit s u s modifie dha dno t

begu n "normal operations " an dwer e thu s subjec t t o th e actua l t o potentia l test . EP A the n determine dtha t th e projec t

a s propose dwoul dresul t i n a n increas e abov e pre-modificatio n baselin e level s i n th e unit' s actua l emissions . Sinc e th e compan y woul dno t agre e t o limi t

it s post-modificatio n emission s t o baselin e levels , EP A foun dth e plan t subjec t t o PSD . Se e WEPCO . 89 3 F.2 da t 906 . Th e cour t rejecte dEPA' s us e o

f th e actua l t o potentia l tes t unde r th e circumstance s o f tha t case , however . Th e court foun dinstea dtha t

EPA' s existin g regulation s d o no t support "EPA' s decisionfto ] wholly disregar dpos t operatin g condition s a t

th e plant, " becaus e th e modificatio n i n th e cas e involve d"like-kin dreplacement. " Id ; a t 917 , 918 . O n remand , EP A determine dPS D applicability by comparin g WEPCO' s "representativ e actua l emission s fo r th e baselin e perio dt o estimate dfutur e actua l emission s base do n al l th e availabl e fact s i n th e record." 5 Today EP A i s confirmin g th e interpretatio n o f it s regulation s whic h i t

announce di n th e wak e o f th e WEPC O decision . EP A will no w allo w th e compariso n o f "representativ e actual " baselin e emission s t o an destimate d projectio n of

"futur e actual " emission s fo

r al l "like-kind " utilit

y modification s subjec t

t o PS D applicability determinations . Thi s rulin g define s a"like-kind " replacemen t a s th e non-routin e replacement 6 of a componen t

o f a n electri c utility emission s uni t wit h afunctionall y equivalen t component . A replacemen t

componen t

doe s no t

hav e t o b e identica l o r of th e sam e desig n a s th e componen t

i t replaces , bu t

i t mus t b e functionall y equivalen t i n th e sens e tha t

i t serve s th e sam e purpose . I n addition , a"like-kind " replacemen t canno t alte r th e origina l desig n capacity o r fundamentall y alte r

th e metho do

f operatio n o

f th e source . Th e chang e als o canno t

5 Lette r fromWillia

mG . Rosenberg , Assistant Administrator , EPA , t o Joh n Boston , President , WEPCO , Jun e 8 , 1990 at

5 . 6 "Routin e maintenance , repai r andreplacement " i s already excludedfro mth e modificatio n test . Se e 4 0 CFR52.21(b)(2)(iii)(a) . EP A plan s t o provide additional guidanc e o n thi s exclusio n in th e future .P. 6

consis t o f areplacemen t

o f th e emission s uni t

i n it s entirety . III . Non-Like-Kin dModification s I n th e Puert o Rica n Cemen t decision , supra , th e Firs t Circui t uphel dth e us e o f EPA' s actua l t o potentia l methodolog y i n th e circumstance s presented . I n th e case , th e owne r o f acemen t

plan t sough t t o convert

a"wet " cemen t

kil n t o a"dry " kil n an dt o combin e tha t

kil n wit h anothe r kiln . 88 9 F.2 da t

293 . [Th e modifie dkil n woul db e mor e efficient an dthu s woul dprovid e a n economi c incentiv e t o increas e utilizatio n and , hence , actua l emission s abov e baselin e levels . k L a t . ] EP A argue dtha t sinc e th e kil n a s reconstructe dha dno t

begu n norma l operations , th e Agenc y wa s required , pursuan t t o sectio n 52.21(b)(21)(iv) , t o measur e th e plant' s post-modificatio n emission s by th e plant' s potentia l t o emit , unles s th e compan y agree dno t t o increas e it s actua l emission s abov e baselin e levels . Th e petitione r argue dtha t

thi s readin g of

EPA' s regulation s wa s improper , arbitrar y an dcontradicte dby earlie r EP A decisions . Th e court rejecte dal l attack s an d uphel dth e methodology . I n ligh t o f EPA' s prio r

interpretatio n whic h wa s uphel di n Puert o Rica n Cemen t EP A i s no t

prepare dt o abando n it s actua l t o potentia l tes t for "non-like-kind " replacement s withou t considerin g th e matte r

i n notic e an dcommen t

rulemaking . Fo r

thi s reason , EP A i s limitin g th e actua l t o futur e actua l methodolog y describe di n th e followin g section s t o "like-kind " modifications . "Non-like-kind " modification s will stil l b e subjec t t o a n actua l t o potentia l test. 7 EP A intend s t o reconside r th e methodolog y for

ai l type s o f

modifications , includin g distinction s betwee n "like-kind " an d"non-like-kind " physical changes , a s par t of a future notic e an dcommen t rulemaking. 8

7 Unde r th e actual t o potential methodology , th e sourc e ca n avoidnew sourc e review i f i t agree s t o an enforceabl e emission s ca

p equal t o it s existing emissions . I n thi s sense , th e burde n o f accuratel y projectin g future emission s i s o n th e source . If it s projectio n that

i t wil l no t increas e emission s turn s ou t t o b e wrong , i t

mus t g o throug h ne w sourc e review t o increas e emissions . Wit h th e actual t o futur

e actual methodology , unanticipate d increase s abov e thos e projecte db y th e sourc e ma y occur . Fo r

thi s reason , EP A i s ver

y concerne dabou t expandin g thi s systembeyon dth e utiht y industry , in whic

h future utilizatio n projection s ar e common . 8 Part D o f th e Clean Ai r

Ac t (whic h govern s nonattainmen t

areas ) als o impose s ne w sourc e requirements . Se e CAA § § 172,173 , 4 2 U.S.C . § § 7502,7503 . Th e relevant regulation s fo

r thes e section s contai n modificatio n provisio n simila

r t o th e PS D provisions . EP A wil l consider makin g paralle l change s t o th e non-attainmen t provision s i n afuture notic e an dcomment rulemaking .P. 7

- 5

- IV . Th e Actua l t o Futur e Actua l Methodolog y A. Calculatin g Baselin e Emission s T o determin e whethe r

apropose dmodificatio n will resul t i n a n emission s increase , th e sourc e mus t

first determin e abaselin e actua l emission s level . Sectio n 52.21(b)(21)ii ) define s actua l emission s o n aparticula r dat e a s "th e averag e rate , i n ton s pe r year , a t whic h th e uni t actuall y emitte dth e pollutan t durin g atwo-yea

r perio dwhic h precede s th e particular dat e an dwhic h i s representativ e o f norma l sourc e operation. " Th e Administrato r "shall " allo w us e o

f adifferent

tim e perio d"upo n adeterminatio n tha t i t i s mor e representativ e o

f norma l sourc e operation. " Id L Althoug h no t

require dby th e regulations , EP A ha s historicall y use dth e tw o year s immediatel y precedin g th e modificatio n t o establis h th e baseline . (££ £4 5 Fed . Reg . 52676,52705,5271 8 (1980). ) However , i n som e case s i t ha s allowe dth e us e o

f earlie r periods . Fo r

example , i n WEPCO . EP A foun dth e fourt h an d fift h year s prio r

t o th e modificatio n mor e representativ e o f WEPCO' s norma l operation s sinc e th e source' s capacity wa s reduce ddu e t o physical problems . Thi s rulin g provide s furthe r clarificatio n of

whe n som e othe r

tim e perio dma

y b e used . Unde r thi s interpretiv e rule , EP A intend s t o giv e th e ter m"normal sourc e operations " a s broa dareadin g a s i s compatibl e wit h th e regulatio n an dstatute . Th e utility ma y calculat e it s baselin e emission s usin g it s averag e annua l emission s fro many consecutiv e tw o year perio dtha t

is , base do n th e source' s operatin g history , representativ e of historica l operatin g levels . I n keepin g wit h it s pas t practice , an dconsisten t

wit h th e five-yea

r perio d for "contemporaneous " emission s increase s an ddecrease s i n 4 0 CF R52.21(b)(3)(i)(b) , EP A will presum e tha t

any representativ e two-yea r perio dwithi n th e five year s precedin g th e modificatio n i s adequat e fo r baselin e purposes. 9 Sourc e owner s desirin g t o us e othe r th.a n atwo-yea

r perio do r

abaselin e perio dprio r t o th e las t

fiv e year s mus t

see k th e Administrator' s specifi c determinatio n tha t suc h perio di s mor e representativ e o f norma l

9 Thi s rulin g doe s no t

apply t o pas t

modification s a

t a n emission s uni t

for th e purpos e o

f determinin g contemporaneou s emissio n change s at asourc e an dcanno t

b e use dt o exten dth e fiv e yea r perio dspecifie di n that provision . Sg

£4 0 CFR52.21(b)(3)(l)(b) .P. 8

- 6 operations. 1 0 EP A ma

y conside r

adifferent

tim e perio dthroug h notic e an dcommen t rulemaking . B . Futur e Actua l Emission s A s discussed , t o determin e whethe r a"like-kind : modificatio n will resul t i n a n increas e i n actua l emissions , autility ma y no w compar e it s actua l baselin e emission s (Calculate di n accordanc e wit h th e prio r

section ) wit

h it s projecte dfutur e actua l emissions . Th e futur e actua l projectio n i s th e produc t o f (1 ) th e hourl y emission s rate , whic h i s base d o n th e unit' s physical an doperationa l capabilitie s following th e modificatio n an dfederally

enforceabl e operationa l restriction s tha t woul daffect

th e hourl y emission s rat e followin g th e renovation ; an d(2 ) projecte dcapacity utilization , whic h i s base do n (a ) th e unit' s historica l annua l utilization , an d(b ) availabl e informatio n regardin g th e unit' s likel y post-renovatio n capacity utilization. 1 1 Withou t extenuatin g circumstances , th e projectio n of post modificatio n capacity utilizatio n for applicability purpose s shoul dno t b e les s tha n th e source' s highes t

pas t utilizatio n rat e (base do n atw o consecutiv e year average ) o r

th e highes t projecte dus e o

f th e sourc e durin g aconsecutiv e two-yea r perio dfollowing th e modification . C . Th e Causatio n Requiremen t B y thei r expres s terms , th e PS D regulatory modificatio n provision s requir e tha t i n orde r for ther e t o b e a"modification, " th e physica l o r operationa l chang e mus t "resul t in " a n increas e i n th e emission s rate . Se e 4 9 CF R52.21(2)(i) . Any emission s increas e attributabl e t o aphysical o r operationa l chang e must , therefore , b e include di n th e post modificatio n emission s calculation . Conversely , wher e increase doperation s ar e i n respons e t o independen t

factors , suc h a s system-wide deman dgrowth , whic h woul dhav e occurre d

1 0 I n addition , th e leve

l o f baselin e emission s selecte dmus t b e consistent

wit h curren t assumption s regardin g th e source ' s emission s that ar e use dunde r

th e stat e implementatio n plan s (SIP ) for plannin g o r

permittin g purposes . Thus , th e sourc e ma y no t selec t aleve l o f baselin e emission s higher than that use db y th e permittin g authority i n issuin g aPS D o r othe r constructio n permi t

t o asourc e i n th e area , i

f suc h higher

level woul dresul t i n aNAAQ S o r

incremen t

violation , o r

violate avisibilit

y limitation . 1 1 I n projectin g futur

e utilizatio n an demission s factors , th e compan y shoul drel y o n it s historical operationa l data , filings wit

h stat e o r loca l pubh c utiht

y commission s o r

othe r regulator y authorities , an dcomphanc e plan s develope dunde r

Titl e IV o

f th e 199 0 Clean Ai r

Ac t Amendments .P. 9

eve n i n th e absenc e of

th e physical o r

operationa l change , suc h increase s d o no t resul t fro m th e chang e an dma

y b e exclude dfro mth e projectio n of future actua l emissions . Thus , i n assessin g whethe r

th e propose dmodificatio n will resul t i n a n increas e i n actua l emissions , utilitie s nee dno t

includ e i n thei r

calculation s o

f post-modificatio n projecte dus e tha t portio n o f th e increase drate do

f utilization , i

f any , du e t o factor s unrelate dt o th e physical o r operatio n change , suc h a s a n increas e i n projecte dcapacity utilizatio n equa l t o th e rat e o f electricity deman dgrowth . Of course , durin g arepresentativ e baselin e perio d(se e supra) , th e plan t mus t hav e bee n abl e t o accommodat e th e projecte ddeman dgrowt h physically an dlegall y withou t th e modification . Increase doperation s tha t coul dno t

physically an dlegall y b e accommodate d bu t for th e propose dphysica

l o r operationa l chang e ar e causall y linke dt o any projecte d increas e i n actua l emissions . I n addition , th e utilit

y shoul dtak e int o accoun t physical o r

operationa l change s whic h significantly alte r

th e efficiency o

f th e plant . S!e_

e Puert o Rica n Cement . 88 9 F.2 da t 292 . I n th e cas e of

suc h modifications , th e utilit y woul dhav e th e burde n of provin g t o EP A o r t o th e permittin g authority tha t th e increas e i n utilizatio n du e t o deman dgrowt h o r othe r "independent " factor s woul dhav e occurre da t tha t plan t eve n withou t

th e propose d modification . EP A wil l conside r

creatin g othe r

guideline s o r

presumption s regardin g th e causatio n requiremen t

i n aseparat e legislativ e rule . V . Utility Pollutio n Contro l Project s Thi s rulin g als o clarifie s EPA' s treatmen t of utilit y modification s tha t

consis t solel y o f th e installatio n of

pollutio n contro l equipment . I t ha s lon g bee n EPA' s vie w tha t pollutio n contro l project s a t existin g stationary source s shoul dno t b e uniforml y subjec t

t o ne w sourc e revie w for

th e simpl e reason s tha t

the y normall y d o no t

resul t i n a n increas e i n actua l emissions . Utilitie s hav e raise dth e concern tha t EP A will subjec t

legitimat e pollutio n contro l project s t o a n actua l t o potentia l evaluation . I n fact , EP A ha s refraine dfro mP.1 0

applyin g contro l project s an dintend s t o continu e wit h thi s practice. 1 2 A s wit h like-lan d replacements , i t

generall y i s appropriat e for utilitie s undertakin g pollutio n contro l project s t o rel y o n pas t

operatin g histor

y i n projectin g futur e capacity utilization . Accordingly , for th e reason s articulate dby th e court i n WEPCO . today' s rulin g clarifie s tha t pendin g adoptio n o

f apollutio n contro l projec t provisio n se t

fort h i n alegislativ e rule , pollutio n contro l project s shoul dreceiv e (wit h th e differenc e note dbelow) , th e sam e actua l t o futur e actua l tes t

describe di n th e precedin g sections . Fo r purpose s o

f thi s ruling , apollutio n contro l projec t refer s t o th e additio n o r replacemen t

a t asourc e o

f an emission s contro l syste mo r devic e primaril y designe dt o improv e th e contro l o r

preventio n o

f ai r pollutio n emissions . Example s includ e fabri c filters , scrubbers , catalysts , an dtherma l reduction/oxidation . Physica l change s attendan t

t o switchin g t o ales s pollutin g fue l wher e th e projec t

i s designe dprimaril y t o reduc e ai r pollutio n woul dals o b e considere dapollutio n contro l project . Th e actual-to-futur e actua l methodolog y mus t b e applie do n apollutant-b y pollutan t basis . Also , th e sourc e stil l mus t comply wit

h al l applicabl e SI P limit s an drequirements , permi t conditions , an dapplicabl e NAAQ S o r PS D incremen t

limits . I n contras t

t o th e projectio n o

f estimate dfutur e emission s for like-kin dreplacements , i n makin g PS D applicability determination s for pollutio n contro l projects , EP A will presum e tha t th e projec t

wil l no t resul t i n a n increas e i n capacity utilization . Thi s presumptio n ma y b e overcome , however , i

f availabl e informatio n clearl y demonstrate s tha t capacity utilizatio n will increas e a s aresul t

of th e pollutio n contro l project . VI . Change s Mandate dby th e Clea n Ai r Ac t Amendment s of

199 0 A Repowerin g Project s Titl e I V of

th e 199 0 Amendment s grant s specia l treatmen t t o utilitie s tha t

see k t o comply wit

h th e mandate daci drai n reduction s by repowerin g auni t wit h qualifyin g clea n coal technology . CA A § 402(12) , 409(a) . Specifically , repowerin g project s tha t qualif y for aPhas e I I complianc e extensio n will als o b e exemp t fromNSP S requirements , s o lon g a s

1 2 [Cite pollutio n contro l an dCC T non-applicabilit y letters ]P.1 1

- 9 th e repowerin g "doe s no t

increas e actua l hourl y emission s for any pollutan t

regulate dunde r th e Act. " C_A

A § 409(d) . A n operatio n ca n qualif y for th e three-yea r

extensio n o

f th e Phas e I I emission s limitatio n b y demonstratin g (b y Decembe r 31,1997 ) t o th e permittin g authorit y tha t on e o r mor e unit s will b e repowere dwit h aqualifyin g clea n coal technolog y t o mee t th e Titl e I V restrictions . CA A § 409(a) , (b) . Th e operato r mus t provide , n o late r

tha n Januar y 1,2000 , additiona l documentatio n o f th e repowerin g projec t

includin g apreUminar

y desig n an dengineerin g effor t for th e projec t

an dabindin g contrac t

for th e majorit

y of th e equipmen t

needed , a s wel l a s any additiona l informatio n th e reviewin g authorit y requires . CA A § 409(a) . Th e EP A interpret s th e requiremen t tha t th e repowerin g no t

lea dt o an increas e i n "actual hourl y emissions " a s specifying a n actual-to-actua l methodology . Tha t is , a repowerin g modificatio n whic h result s i n an increas e i n aunit' s post-modificatio n actua l hourl y emission s wil l no t

b e eligibl e fo

r thi s limite dNSP S exemption . "Repowering " i s define di n sectio n 402(12 ) a s certai n grandfathere doi l o r gas-fire d unit s an dth e replacemen t o f a n existin g coal-fire dboile r wit h certai n specifie dclea n coal technologies , o r

wit h an y derivativ e technologie s o r wit h any othe r

technolog y offerin g greate r efficienc y an dwast e reductio n over technologie s i n widesprea dcommercia l us e a t th e tim e o

f enactment . Th e NSP S exemptio n applie s both t o repowerin g of existin g unit s an dt o replacemen t o f ol dunit s a t

existin g sources , s o lon g a s th e projec t qualifie s for

th e Phas e I I extensio n an d satisfie s th e "actual hourl y emissions " test . However , n o special treatmen t can b e afforde d t o ane w uni t

whic h i s locate da t

adifferent

sit e tha n th e existin g uni t i t replace s [se e 199 0 Amendments , § 409(d)] . Becaus e of

thi s provision , th e reconstructio n limitation s specifie di n 4 0 CF R60.1 5 ar e n o longe r

applicabl e t o repowerin g projects . B . Clea n Coa l Technolog y Demonstratio n Project s Thi s rulin g als o implement s a n exemptio n for CC T demonstratio n project s create d b y Congres s i n Titl e I V o f th e 199 0 Amendments . I n thes e provisions , CC T i s define da s an y technolog y no t

i n widesprea dus e o n th e dat e of enactmen t

tha t achieve s significantP.1 2

- 10

- reduction s i n S0 2 o r

nitroge n oxide s (NO x ) emission s associate dwit h burnin g coal i n th e generatio n o

f electricity , proces s steam , o r industria l products . CA A § 415(a) . A CC T "demonstratio n project " i s aprojec t funde dunde r

DOE' s CC T progra mo r asimila r projec t funde dby EP4A

. CA A § 415(b)(1) . Repowerin g project s whic h ar e awarde dfundin g fromth e Departmen t of Energ y (DOE ) a s permanen t

CCT demonstratio n project s (o r simila r project s funde dby EPA ) ar e exemp t fromNSP S an dPS D requirement s s o lon g a s potentia l emission s (se e 52.21(b)(4) ) fromth e uni t

d o no t increas e a s aresul t

o f th e project ; CA A § 415(b)(3) . Thes e project s stil l mus t comply wit

h th e nonattainmen t

provision s of

Titl e I of

th e Act , however . Th e installation , operation , cessation , o r remova l of

atemporar y CC T demonstratio n projec t tha t i s operate dfor

fiv e year s o r les s i s exemp t

fromNSPS , PS D an dno n attainmen t requirements . Id . § 415(b)(2) . However , th e facilit y stil l subjec t

t o any applicabl e stat e implementatio n pla n an dmus t comply wit

h an y othe r requirement s necessary t o attai n an d maintai n NAAQS . Thi s rulin g implement s thi s provisio n an dclarifie s tha t EP A consider s th e five year

perio da s startin g o n th e dat e o f startu p (a s define di n 4 0 CF R60.2) . Further , EP A interpret s th e statut e a s presumin g that , a t th e en dof

atemporar y project , th e facilit

y mus t b e returne dt o pre-demonstratio n condition s an dhourl y emissio n rate s (o r lower) . Th e retur n o

f th e facilit y t o it s pre-demonstratio n physical an doperationa l conditio n woul dno t

resul t i n th e los s o

f th e actua l emission s margi n betwee n pre demonstratio n actua l emission s rat e an dStat e implementatio n pla n (SlP)-allowabl e emission s rate s for

tha t facility . Rather , th e facilit y woul db e treate da s i

f th e temporar y demonstratio n projec t

ha dneve r

occurred . 1 3 Thi s rulin g doe s no t

exten dt o emission s increase s whic h ar e unrelate dt o th e conduc t o f temporar y demonstratio n projects . Emission s increase s (abov e th e pre-demonstratio n

1 3 Thi s wouldb e th e cas e even i f ther e wer

e smal l difference s in th e post-demonstratio n physica l an d operationa l condition s du e t o atechnical inabilit y t o restor e th e uni t

t o it s precis e pre-demonstratio n condition , o r du e t o normal variabilit

y in th e coa

l used . Thus , EP A wouldno t seek t o apply NSP S o r

NS Rbecaus e o

f a post-demonstratio n emission s increas e attributabl e solel y t o a n increas e i

n th e hour s o

f operatio n o r

productio n rat e o f th e uni t (subjec t t o th e NSPS limitatio n tha t th e productio n rat e increas e mus t b e accomplishe dwithout acapital expenditure) .P.1 3

' * ' • • « . 1 1

levels ) tha t

ar e attributabl e t o physical o r operationa l changes , othe r tha n thos e necessar

y t o restor e tha t

uni t t o it s pre-demonstratio n conditio n ar e beyon dth e scop e o f thi s interpretativ e ruling . A temporar y demonstratio n projec t ma y b e converte dt o apermanen t statu s a t any time , provide di t

meet s al l th e permanen t CC T projec t

criteri aa t

th e tim e o

f conversion . Thus , fo r example , i

f hourl y o r

annua l emission s ha dincrease dbecaus e o f th e temporar y demonstration , afte r

th e chang e t o permanen t status , thes e emission s ca n b e n o greate r tha n thos e whic h existe dprio r t o initiatio n o

f th e temporar y demonstratio n project . VII . Applicability Determination s I n mos t instances , sourc e owner s o r operator s ar e abl e t o readil y ascertai n whethe r ne w sourc e revie w requirement s appl y t o them . Consequently , i f administerin g thes e requirement s EP A doe s no t requir e source s t o obtai n aformal applicability determinatio n befor e proceedin g wit

h construction . I n keepin g wit h tha t practice , EP A wil l no t

requir e utilitie s t o see k

applicability determination s unde r thi s ruling . Utilitie s i n mos t case s ca n readil y ascertai n ho w thi s rulin g wil l affec t them . EP A anticipates , however , tha t many clos e question s wil l aris e regardin g certai n aspect s o f thi s ruling , suc h a s whethe r aparticula r renovatio n projec t

involve s "like-kind " replacements , an dwhethe r agive n perio do

f pas t actua l emission s i s representativ e o f norma l operations . Becaus e suc h instance s involv e discret e judgment s unde r thi s ruling , utilitie s ar e strongl y encourage dt o obtai n determination s o

f applicability . EP A will provid e suc h determination s upo n request . Such request s shoul db e submitte dtogethe r wit h appropriat e documentatio n t o th e appropriat e EP A Regiona l Office .