p.1 

OAR Box 1840 

Prepped by Ollie Stewart 

Document Number: 

26) IV-H-32 

Docket Number: 

A-90-37 

Printed 11/14/2008 1:25:30 PM Sheet 26 of 27 
I f ' '•>'**• ~ 

P.2 

A-90-37 

IV-H-32 

\ * 

dAL0> 

P ^ 
P.3 

NOU-06-2002 15=52 P.02/20 

Draft: deliberative and privileged; do not cite, quote, or distribute. 

October 23,2002 

ylM^^^^^lillodav we are soliciting comment on an 

additional .approach to be used in the future for determining 

tiwrtypes of replacement activities khiat- <w__H qualify as 

RMR&R.—The piopO-cd regul at ury lawjuage- lui thi's appiudU'i 

is L-uatarii-d in Alternative1 B. Under this approach, EPA 

would establish a percentage of the replacement value of a 

process unit as a pov projcirrc threshold for applying- LLK 

__SiS£S__3__Sg!ffi__$ii$SS^^ 

j «£> 0jjfc&^*streamline the RMR&R analysis and make this determinati 

This approach should enable you to 

ion 

0 

more readily and should fHf palleviat.e some of the 

problems noted above-;—liafawlllibta^diuy—the availability of 

the anno'-l luainLunariLe alluwauce.— We are soliciting comment 

on whether this approach would serve to streamline, the RMR&R 

determination process in the Xuture for projects that 

involve the replacement of existing equipment with identical 

new equipment and the replacement of existing equipment with 

•ImgatTv,,^ functionally equivalent equipment. We are also 

soliciting comment on whether this approach should be 

adopted along with the annual/maintenance/ a 11 nfrnfr;i<3h 

33 
P.4 

NUY-06-2002 15:52 

P. 03^20 

process unit. 
_E5_ 

NOU-06-2002 15:53 

iKy*4\m_tif4A 

P.04/20 

Draft: deliberative-and privileged; do nfecite, quote, or distribute. 

October 23, 2002 

Vic 

aum*yi/ 

situatio n of implementing a preconstructio n review program 

for a projec t tha t was begun or completed more than a year 

prio r t o th e applicabilit y determination.! Tt nln mlrl lin C 

noted thgfa civaiagin&i umjT" lWiijg'l puiud j of liima i.n 111 n<*£2 

aliminat o th a j.mu 3UJL'l'l'Cy u l fcJAie_iUuy Lhi oogt .U>rooJ*o_-»^-

HT-rTT'nrVJJH* • ^ ^ increas e the difficult y in resolvin g 

issue s relate d t o exceedence of th e cost threshold , because 

i t could resul t in case-by-cas e review of much olde r 

projects. 

Ijwhile usin g a singl e year as the time perio d wil l 

reduce th e flexibilit y for some stationar y sources, we 

believ e i t wil l hel p t o reduce the likelihoo d tha t an afterthe-fac t NSR review wil l be required . We bylieve|__i 

Mmmmimmmmmmm. tha t th e time period for the 

annual maintenance.%rfl5MMiilli^^feiiSt^ i allowance should 

be a l.m^ui^/ii^_iimmm_mmmm_\m^ year, if the 

owner/operator of a major stationary source uses a fiscal 

year that differs from a calendar year for accounting 

43 
P.6 

INU^-0b-2002 15=12 

P.02/22 

IfcJOUO 

Draft: deliberative and privileged; do oot cite, quote, or distribute. 

October 23,2002 

Approach 

JJe recognize that there are numerous occasions when, to 

facilitate, restore, or improve efficiency, reliability, 

availability, or safety within normal facility operations, 

facilities replace existing equipment with either identical 

equipment or equipment that serves the same functional 

¥aseB>«*8*<4MaB*w»* «. »•. SiiiL i * __ '&t&f____WSlil_\ 

puj.puba|piMM> Of tea, •ajguch replacements arg^Hi M 

conducted immediately afte r component failur e JilJ^^Mi ^ 

_^M^B^__memm^^^^^w^.a.nd aie fund-d uut uf the plant's 

i5>SSSei juaiaLenaii-e acJ.uui'tl_li___M__iH 

W£ believ e tha t such replacements _huuxdj iw^^S^i^TOSSs 

111111 be considered RMR&R activities. However, ,there must 

also be some reasonable bound to tt£»RMR&R exemption. 

Allowing replacement of equipment with "funct^nally 

equivalent" or "identical" equipmentVas RMR&R, if unbounded, 

could theoretically allow replacement of an entire 

production line or utility boiler. 

The following discussion addresses key considerations 

in determining the appropriate boundary for the types of r 

freplacement activities that should be excluded under the 

MR^iR exclusion. / " 

&SE£ A. Replacement of. Existing Equipment with Identical New^g 

66 
P.7 

NOU-06-2002 15=12 P.03/22 

.Draft: deliberative and privileged; do not cite, quote, or distribute. 

October 23,2002 

Our proposal to implement new approaches to determine 

the types of existing equipment that can be replaced with 

identical nt ^HMEl^^^^^^B^^M^ p equipment and 

qualify as RMR&R is based on our view that most replacements 

of existing equipment that are necessary for the safe, 

efficient, and reliable operation of practically all 

industrial operations are not of regulatory concern.—Ferr 

example,—if a pump abboivi-atrwJ v/iLh a-dJs.-till.aLiuii-culLH.uj 

fails and- -is -n^laied wiLh an identical new-pump,—we belike 

that- huuh a imiuitun project ia> and bliuuld be cuiibldeitad an 

excluded iepl-acement. industrial facilities are constructed 

with the understanding that equipment failures are common 

and ongoing maintenance programs are routine. Delaying or 

foregoing maintenance could lead to failure of the Ajvdtt*** 

production uniyvaswmay create or add to safety concerns/ AJU^AAJ 

When such equipment replacement occurs and the ^MT^ -

replacement is identical, the replacement is inherent to the 

original design and purposes of the facility and ordinarily 

will not increase 
NOU-06-2002 15:13 P.04/22 a 

Draft: deliberative and privileged; do not cite, qt pteyor distribute. 

October 23,2002 

we believe that activities like such pum > replacements are 

routine and jshould not trigger NSR permit:ing requirements. 

Jfaken to the extreme, howoyo:^'even Jan identical/ zjut 

replacement project can/go beyond the bounds of the routine 

maintenance, repair, and replacement exclusion. For 

example, instead of replacing a pump, what if a chemical 

manufacturing facility replaced an entire production unit? 

Even if the replacement was identical, we likely would not 

consider the project to be an excluded replacement. Such a 

project effectively constitutes construction of a new 

process unit in much the same way the construction of an 

entirely new process unit at an existing stationary source 

could not constitute routine maintenance. 

l,i addiLiun, there is no ijuestiuti that fci aa identical 

xerplaceitt-r.it picrj-gcL tu 'ba curisidered RMR&R,—the1 _5f_ct_d 

f&ciliLy iuu_t continue Lo comply with ali 'Clean Air Act 

emissiutw1 1 inti-ttrtiuna-'dizd sLaiidaidh '-fLta 'Lhe piujtict i_ 

implciu-rifced—(i.e;—an idcnLical- leplamment RMftsR p_ovi-iun 

Wt7 a i d nu t excus e ca.mpli-.m-- wit h Clenu Ai i AcL Bjjplic^blH 

lequil'tfineuts) .' 

aL68 
P.9 

NOU-06-2002 15:13 

P.05/22 

Draft: deliberative and privileged; do not cite, quote, or distribute. 

October 23,2002 

We recognize that it may sometimes be difficult to 

determine where to draw thp lina-fffl -whemn .th .thee ldgnfcicaJ -dentlea r5^w ' A » 

f replacement of equipment/involves a.large portion of an ji^utp****^ 

I existing unlt/V1,31 othor worrir, urban pjipu.'fi? a project/ 

treated as an excluded replacement project and wJ*^/_nould rrt*t 

&Tbe viewed as a phVsical change that might constitute a ^ . -

major modif ication? Ag) / ^^^N^Q^^^H4^W/dJ_^cV^/^ /UU4«5 

rCU*4*4+*&, 'ifiZ ^ a 

Ijle ar e sfil'iciting comment on a pi"CQ oat ecng£~ approach, ____. 

based on th e New Source Performance Standard (TNSPS")/ /Ui^f 

program t o de t ermine, whether identicaiYceplacement* ( Z*. At?/iJ£f^ 

-Qtivati^nfeTqualify as RMR&R. Under th e NSPS program, a 

projec t a t an existin g affecte d -burraw triggers any 

applicabl e NSPS when th e cost of the projec t exceeds 50 

percen t of th e fi-ftd-cap4.tal cuafc Lhat would bo gaquicod 

fjf-fp<_->»^/-» g. pppp-u.l . 1 n»Hrnl y r.r.i.1 IIH^ , t-1 I--' | I ) f l •— 

current capital replacement value of the existing affected . . 

o-_go4>' 40 CFR 60.15(b). In essence, such a • fcuu£u*i 

%

reconstruction" is tantamount to a^r construction/and, 

therefore, triggers any applicable NSPS even if the project 

would otherwise be excluded. 

We recognize that, in some\respects, a <pr»j_-t• •eeytr*"" 

threshold such as the NSPS reconstruction test may be viewed 
P.10 

NOU-06-2002 15=14 

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»e_ v v *» 

Draft: deliberative and privileged; do not cite, quote, or distribute 

October 23,2002 

as the proper tool to be used in the future for 

distinguishing between routine and non-routine identicaLl" 

replacements under the NSR program. As noted above, we do 

not believe it is reasonable to exclude from NSR projects 

that involve the total _„ullca_ replacement of an existing 

entire process unit. By extension, it is therefore logical 

and consistent to conclude that projects which, based on 

their cost, effectively constitute replacement of the A 

process unit should .SiimAlarly bra ffYff-Aneel £_mm nuu.ldtJiabi&nr 

Thus, we believe that the 50 percent capital 

replacement threshold used under the NSPS might constitute 

^____m_____) 1 

uppc_ X. imitation on the concept of identica l 

£±*Kurtkj>k 

&_$§!_ other 

an appropriate 

replacement?. 

We also recognize, however, that fiuu|f 

rw&ptJcLb i t iu_y bu viewed ab necebScuy to 

_-_«rl3__iflri^ a threshold lower 

than the 50 percent reconstruction threshold i.i oxdejthe i wuid'b,—sin_-IIU^.» 

fpital replacement 

tifflffiffiSfflffl appropri, 

replacement exclusionX -rrr 

f of the 

existing affect? 

construction of 

percentage 

new unit,HH__H_fl 

the 50 percent 

ue of an 

y constitutes 

_-JH__i some 

uction threshold 

70 
P.11 

NOU-06-2002 15=14 

JP 

P.07/22 

iiijt-JnJL. 

•Brit ^_a» replacement activities reach a certain collective level, even one that stops short of 

construction of a new unit, they may still constitute major renovations or rehabilitations that 

warrant treatment as major modifications rather than routine maintenance. See WEPCO, 893 

F.Zd ggl^Jn ohort, our nhjmii-Pi tn set the replacement percentage threshold at a level that, in the 

:, would continue to require! scrutiny of activities of that magnitude while still also in the 

future allowing the replacement of components that are typically replaced within an industrial 

source category in order to maintain the source's safe, reliable and efficient operation, whether 

these components are typically replaced multiple times a year or only once over a period of many 

years. Wc-bclicy^uhat figwd-eould be as low as 25% ofthe replacement value ofthe process 

unit. Accordingly, we are proposing to set the threshold for like-kind replacements at between 25 

and 50 percerft ofthe replacement vnluc-ofthe process unit (wiiilo notiiffthat like-kind 

replacements that exceed the threshold may still qualify for treatment as jbutine under our four-

/1&C0&**' "T* **]M- " 

/7 It rr-'J\ ^ " 
P.12 

NOU-06-2002 15:15 P.08/22 

Draft: deliberative and privileged; do not cite, quote, or distribute. 

October 23,2002 

might be 

whether an 

modificati 

tabJ»€ line of 

ical replacem 

an existing un 

determining 

ect constitutes a 

We hg\»c nut yet' ieached*a cuuclu&iuij at, tu wh-thci—tc 

•uae tliib1 prujuct cu-t concept-ami,—iff-bir,—what p_iM..,n Lairg uf 

capital- seplacement value would be an appiupiiatc boundary 

£ux the IdenLical replacement provision.—We~are soliciting 

comment on whether Una M_t>fl_____iBffi____» approach is 

workable, whether the capital replacement jDercentage should 

be 50 percent/dr -iingiuhcL1 le-aaaL1 pcpoentagQ and whether 

different percentages should apply to different industrial 

groupings or different types of industrial processes., For 

example, it may be appropriate to set a higher percentage 

for project operations that involve heat and corrosive 

compounds. Such processes may require more expensive 

replacements, and a greater degree of maintenance activities 

than other types of processes. We also solicit comment on 

whether this approach should be implemented^ 

bcf-ifc,—ary iL- i-s under—the NSFfl-pi 

implemented/Dn a pei p^^'jecL 

jruijiair., ux owlsoitieother 

reasoned basis such as applying the percentage! (collective] 

to ^±^\^L*Mmmmm that are i_tul*uciii.e-«fl»pover a 

fixed period of time. -Finally, 

C ^ . 

n»»w,yir _ti •*__ > <?i<;<:w. :c < ci-:% ? K&M£&4J<-i ,s>r>S 

•.•v^-^-^^g^^MBffiaiWg^ 

71 

w__W_Sm^MmaJs 
P.13 

NOU-06-2002 15:15 P.09/22 

Draft: deliberative and privileged; do not cite, quote, or distribute. 

October,-, 2002 ' -^fc^fe/i ^ 

K

4_ 

-The oceond typq-uf ruplucciucnt ootay-i-tie.3 cui mrhiali wer**^. 

ara Elicitin g oommfait i^.»the rcplacciu-uL uf -idLutiii,^ 

*equip»ont wifeh impipucd, fmi.Llumll y uijuiuuliuil cquipiucuU 

In <ur cupe-icnoOrV when equipment •wfe»as* out o r breaks down, 

r*-*-~ rr ^ * 

lit often is replaced with equipment that .senses the same 

equipment that is removed. For example, when worn out pipes 

, _Wf^M^umi^r* 

purpose or function but is/improved in some way f 

are replaced in a chemical process plant, the replacement 

pipes sometimes are constructed of new or different 

materials to help reduce corrosion, erosion, or chemical 

compatibility problems. 

Moreover, the technology employed in certain types of 

equipment is constantly changing and evolving. When 

equipment of this sort needs to be replaced, it often is 

simply not. possible to find the old-style technology. 

Comftaniacymay have no choice but to purchase and install 

equipment reflecting current design innovations. Even if it 

is possible to find old-style equipment, s strip an I<oa have 

obvious incentives for wanting to use the best equipment 

that suits the given need when replacements must be 

installed. 

72 
P.14 

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4SJUXO 

Draft: deliberative and privileged; do not cite, quote, or distribute. 

October 23,2002 

A good example was presented to us by the forest 

products industry during our review of the NSR program's 

impacts on the energy sector. A company in that sector 

decided it needed to replace outdated analog controllers at 

a series of six batch digesters. The original controllers 

were no longer manufactured, although new digital 

controllers-, costing approximately $50,000, are capable of 

receiving inputs from the digester vessel temperature, 

pressure, and chemical/steam flow. The new controllers 

would have more precisely filled and pressurized digesters 

with chips, chemical5, and steam, thus bringing a batch 

digester on line faster. The source, determined that under1 

Lhe-hrSft pruyiam this project sJou_3b*not be considered routine 

under todayf spill rules and decided notto Prc!P?^

 w*-*-h the 

£M6

^ tifau^rft WtfutA*!Zt k>*MX4#? M 

projec r

1 

iie C dedll « 

elicitin g conaueuL on wha/. p^uvisi-uub1 are *^^y**T_!^. 

Sf^^^^^^f^^^^^^^^^^^^!S^S^^i^t^tm!mm»^^^_______^^^^S^^MJ 

M««5_a_t?^*W(«fi^m^!S^ ^ 

i&AXWilfW'.IS.Z 

73 
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Draft: deliberative and privileged; dp not cite, quote, or distribute. 

uAj&VtlA. W*AHK October 23,2002 

_g_g__S__famMM^ 

1

 ' —••••I I II -• > ^^| * » -innr-HEM ,-, ,.., . , '" '.MUl.'" J %FfS^mmk 

^mtmssysztm ••YYtV^'*'•*>*•. <n *y*fl',;*»>: K. VM 4. SiM-KlIiiV 

<»? jgiiftflpuana««* gw» WCTIIWMI* . v. 

74 
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Draft: deliberative and privileged; do not cite, quote, or distribute. 

^s October 23, 2002 

percentage-—Sl.uuld such a projec t be dutamat-i-ca-lly 

ccn-idere d a uuii-ruutine ev.nL/ ui should th e sourc e and 

permitting ' autfiiiry appi-y—the—fotit—facLui. describe d in tht? 

EAB Pinai'-'Order—.Tid'the Detroit -Edison D.tcimin.LiuJU Lu 

e^aluaLe whelhel i t is tuntrue or non-routv.Tig?pi^ji 

We nefewthat ther e ar e widely divergen t views as to how 

expansive the rev tin g mnintanarrPtr exclusion should be . From 

our perspective / the most important thin g we can do t o ;_ j » 

improve ai r qualit y in the United States/is t o make <wCtA__$-

substantia l reduction s i n NOx and SO, emissions from 

uricjntiulle d facilitie s in the utilit y secto r When 

lllfliiMili^ 

t h e curren t 

t h e wsn pluyian.,!! i>UhU\f 

m_m8_m__m_^mBMg®_w_mma__^^ 

wil l not achieve significan t reductions i n NOx or SOj||||| | 

likel y avoid the stric t limitaLiunb imposed bv WflR^^^S^SB 

ilg^^^^^^M i through one of severa l waysjUMI i 

A 

75 
P.17 

NOU-06-2002 15=18 P.13/22 

4*-"*^ 

. Draft: deliberative and privileged; do not cite, quote, or distribute. 

October 23,2002 I rsMiJUjUL 

For example, when a power plant .operator plana to flt&tfS*--^ 

a/sti***^-6 and is assessing its compliance alternatives, that finft/s 

operator is faced with three options: (1) proceed with the 

project pursuant to an NSR permit, which could require more 

than $100 million to be spent on air pollution controls; (2) 

forego the project, which likely would result in a permanent 

reduction in capacity or utilization of the facility!!! 

the project, but-t-afee an enforceable--emis.iuua limit—farr,—rrr 

_ * WEPCO" - TUTTbdictiun, take steps to limit future 

emissions-)- such that the project would not result in a 

significant net emissions increase. 

We believe that only a small number of operators would 

choose the first option. This option would make economic 

sense only in circumstances where the current capacity and 

utilization of the facility are so low that the major 

investment in air pollution controls would provide an 

incrementally better payback than the option of investing 

the same money in other.assets or in the development of a 

new power olant. d . 

Wefbelieve that JU equally &mall number ufjf|||jV 

operators would elect the second option. It makes no sense 

76 
P.18 

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. Draft: deliberative and privileged; do not cite, quote, or distribute. 

October 23,2002 

in most cases for owners of costly power plants to let these 

assets significantly deteriorate over time, because the 

value of the asset will eventually be lost. 

___fbelieve that most operators would fe_2_rthe third 

option. We note that industry commenters during our review 

of the impact of NSR on the energy sector argued that this 

option would, over time, result in a substantial reduction 

in the capacity of their facilities. For example, the 

Tennessee Valley Authority reported that, over the last 20 

years, it would have lost 32 percent of its coal system's 

energy capability if it had capped emissions under a 

'narrow" routine- maintenance exclusion. In similar 

analyses, Southern Company estimated that it would have 

experienced an energy shortfall of 57.5 million MW-hr, and 

First Energy estimated that it would have lost 39 percent of 

its coal-fired generating capacity between 1981 and 2000. 

West Associates,- the Western System Coordinating Council, 

and the National Rural Electric Cooperative reported similar 

results. ^^JCAJfffk^LN*1-_^_^ . j frhstansbTffi thes e assessments, we believ e tha t most 

77 
P.19 

NOU-06-2002 15:19 P.15/22 

•__ VS. w 

. Draft; deliberative and privileged; do not cite, quote, or distribute. 

October 23,2002 / 

operators would proceed with projects^, ovon '^ jfc'i 

taki*^ emissions limitations. To the extent that such 

limitations might curtail full utilization of the facility, 

incremental control measures of modest cost would likely be 

taken to recover the Most" utilization. For example, use 

of a slightly lower sulfur coal could produce the marginally 

lower S02 emissions that would be needed to recapture 

capacity. Likewise, various types of relatively low-cost 

combustion or process control modifications could be 

to achieve significant-reductions in historic emiss 

levels/biwciufra jnost facilities would take steps to avoid 

strict limitations imposed by an NSR permit, even when 

r 

prujecta. arej 

\WmmWBBKm non-routine/} 

4 trt*. We have attempted to quantitatively 

possible emissions consequences of the range 

-T1 1 nfmant- optiong^deacribed above to verify if our policy 

conclusions arje^correct. Our analysis w&s conducted using 

/r** />.W\ SVfcW 

78 

IAA&*** 

J 
P.20 

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FoR If. 7^'^2-

Draft: deliberative and privileged,; do not cite, quote, or distribute. 

October 23,2002 

conclusions are correct. Our analysis was conducted using 

a n ^ Integrated Planning Model (IPM) . This model and 

technical information describing it can be found in the 

docket. The analysis included two|Jll||p|| relevant 

scenarios. In the first scenario, we assumed that 

aLili-aLiuii, efficiency^- and capacity of relevant units 

modestly decreases-over time. This scenario was intended to 

reflect the consequences of a yicw £$•* wibh a tfclo^ iwely^ -

'"narrow* definition of ^y^np^-mjii'rvfcpriiinrr^i* under which we 

would assume that there would be slow and steady 

deterioration of relevant generating assets. As explained 

above, we do not actually believe that such a trend would 

occur under such a««w definition, because plants would take 

steps to limit emissions and perhaps implement incremental 

controls to recapture lost capacity. Ngyer^ieless, we 

believe that this -rrnnri _fii__.. nr 11 1 .MI -fnTnfr^jfc ami nninnn 

S±^jadpoi£fe^because the deterioration would be made up in our 

model by well control/ed and highly efficient new generating 

assets rather than nfecaptured capacity from incrementally 

better controlled existing units. 

In the «-ctr>iujiRIii scenario!, we assumed that 

utilization, effi iency, andfmm p capacity of relevant units 

modestly increase; over.time. Thia^Pil scenario-war^^S 
P.21 

NOU-06-2002 15:20 P.17/22 

Draft: deliberative and privileged; do not cite, quote, or distribute. 

October 23,2002 

intendedAo reflec t the consequences of a new rul e with a 

*broadi_f' definition of routine maintenance, which would 

allow/facilit y availabilit y snd^BM output to be.*** 

•.iyniric-uLly iuipi-wdTover time without triggering NSR. 

Thlb .cKi'iariu It, LLc

 1"wuist" case" snei'iarro irrLci'iub u£ 

canissiuns because '-geneiaticm—(-end,—therefore,—eiui-tiuna) 

fium n.levanL facilitie s wuuid be aliowed-"t-" l-ncreas-e1 tu the 

levels.—Lhat are thc-mu-L Lcclruically aud ecul'iuuric-l-ly 

______ .__^jm&«OSi®S$__Si__£_SaS_£_ ^ 

e £ £r c r en L„tftB&iiB&l^ 

m__m____________m£_j__mmm mm 11 'J""*""" " 111 —^^^^M.^^^^^^^^^^^^^^^^^^^—^^^^^MF—^^MW i,--" —r'1'1 "TfflBW^TTJwjnvilllHftllflTVT**? 

a+pA++tlu tP-Un ktikt tk&XAi*.. 

: on, aari i T , nfil the 

The IPM analyses of these scenarios proves the point 

made above, that the breadth of/a nsn.fr rhi 

exclusion uound hs'wfc no practical impact 

A. 

controlling factor in determining, the emissions reductions 

that will be achieved in the future under the NSR program. 

The analysis show that emissions of S02 are essentially the 

same under brrtssElll scenarios. This stands to reason because 

nationwide emissions of S02 from the power sector are capped 

by the title IV Acid Rain Program. Emissions of NOX uniter 

the"ggcund scenaiiu wuuld be--about 140,000 tons1 per year 

(tpy)—higher—than under the first scenario. This68 
P.22 

NOU-06-2002 15:21 P.18/22 

. Draft* deliberative and privileged; do not cite, quote, or distribute, 

October 23,2002 

fraction of nationwide NOx emissions from the power sector, 

which hovers- around 4."5jj§ million tpy. —Moreover;—this 

estimate -ref-1-ects •^••scenario where plant uperatiuns aie 

ebbe„tially unconstrained by the NSR piuyxam. --Because all 

o-f—hhe options ptc-sen-ted in today's proposal wuuld establish 

significant cuu-trainLb un - the types of acti-vitiebb LliaL 

cc_-_d-be iiaplectented-withcut - triggering NSR, we believe this 

-btiiualed increase ii, WO A amissions -isritruch inflated uv.r 

the1 li"ue"""CDn5,eqgence--of enacting1 •_»UL\I a fteL vL mlgb^i^^ffi 

'fiMr 

___3^^^___i)d_pl_^s^^_i. **i 

Data regarding the emissions reductions that are 

achieved under other Clean Air Act programs further 

illustrate the relative limits of the NSR program as a tool 

for achieving significant emissions reductions. For 

example, the title IV Acid Rain Program has reduced S02 

C**u. 

y*W<, 

69 
P.23 

NOU-06-2002 15:21 P.19/22 

3$ 

<*7 

• Draft: deliberative and privileged; do not cite, quote, or distribute. 

October 23,2002 

emissions from the electric utility industry by more than 7 

million tpy and will ultimately result in reductions of 

approximately 10 million tpy. The Tier 2 motor vehicle 

emissions standards and gasoline sulfur control requirements 

will ultimately achieve NOx reductions of 2,8 million tpy. 

Standards for highway heavy-duty vehicles and engines will 

reduce NOx emissions by 2.6 million tpy. Standards for nonroad diesel engines' are anticipated to reduce NOx emissions 

by about 1.5 million tpy. The NOx ""SIP call" will reduce 

NOx emissions by over 1 million tpy. Altogether, these and 

other similar programs achieve emissions reductions that far 

exceed those attributable to the NSR program and dwarf any 

possible emissions consequences attributable to future 

promulgation of a rule based on today's proposal. 

A copy of our IPM analysis is included in the docket 

for this rulemaking. We ask for comment on all aspects of 

this analysis and on the policy discussion provided above. 

Mute that in Lhe following section, we diacua& huw the 

nrrbixrri-xrf identical replacement' cou-id-be ex-tended to 

functionally equivalent replacements..—We belitrve- that-the 

IPM analyslb AUII pulley audlyblb apply equally tu buth the 

identical r eplaceme;iL' piupuhfll1 and—the" prc;pcjsa-i - f ux 

fttmrtri-ona 1-1 y-equivalent equipment.- • You t>huuxd--c:onsi-der—btrth 

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debiyn paiameLei& uf thwaff-cLgd procebb unit—(fur exaiuple, 

ftrr- electric utility -team ycngratiuy units,—thia wuu'id ureaii 

ttictximum heaL input and fuel cut'ibUmptrou bpeciricati.n.) . fn 

uLher wc-ds,—if an identical replacement' wuuld be ruutiue, 

repl.cerr.eut projecta- that resulL i.i—the InbLallaLiun ^rf 

bvtLei equipment1 would b e viewed as•RMR&R under Lhg NSR 

pruyram uniebb the tusw equipment is functiunally different. 

ui impact a—the bas'ic dg&iyn-paraiuetgib of the unit. rr-uccss 

-Ificieuey,—hownuei";—ib nut .—babic d.&itjn parameter-,—ab BPA 

doeb nut want 'NSR tu impede industry in making eneryy and 

prucw&s efficiency iupi.cvenienLb . This shuuld 'addrebb the 

.uncgrtt" arid pgicepLiun that the NSR pruyram berves aa a 

barrier—tu-projects- under Laken Lu f-cill-tabe,—rebture,—err 

iiuuruvtr efficiency,—reliability;—avail abi li ty,—or safeLy 

within nuuual facility •jperat-iuub. 

We nute1 Lhat, db1 with-identical replacement pixjecLb, 

our apprua.h lui replacement prujecLvinvul»/iny functionally 

gquivalcnt but itupruved equipment mu_t be reaaunably 

buunded'. Ab above, wg'-a:e- -bollcitiny cjnirnent un whethgr 

pie.cribing a per1 pruject peicentaye of replacement uf a 

process unit that qualiflgb 1 JI- RMR_R treatment bliuuld- wl-bu 

apply to thib category uf replacement acLivitiab and,—if __>-

wheLher the • per cent ciyt^ bhuuld-be JO pwicent or—auii.e bmaile-r 

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pgrcentage. 

jdbso a& abcve, there is no question that,—for a 

functionally equivalent replacement project—l:u"be-T:..n&idered 

RMR&R,—ther-a-ff-ecteU facility must continue to -comply with 

ali Glean- Air Act ei^rgsi-ons- -limit-tiunb aiid stun Jar ds after 

the prujg-L i&—implemented—(i.e,—aa-RMR&R pruvisiun fur' 

functionally' equivalent replacemenLb wuuld JIUL KMUS K 

compliance witn Clean Air Act ^^mmf^MmmMm^& 

applicable requirementSTr|§§ 

tf. frit 

In additio n t o solicitin g comment on the approaches 

describe d above, we ar e als o solicitin g comment on whether 

thgs e approaches should "be-adopted'-a-I^ang with—the1 annual 

maintenance aiftrwanrje1 -opti-o-n-dtfscribed -earlier•• in-thi-s 

preamble.— Morc'Spgcifxc-l'Iy,—should ai l approaches apply or 

bhoul'd ••' tngy • be • entirel y independent?—For e?:amplefeeg»i|te 

84 
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>ifct»*+*<^<^^ 

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October 23,2002 

_iii___§___i_____i__i__ii_ii______________l_l_ii_ii 

ij^iiii^i , if we assume tha t the urujecL cubt Lb&lllill 

approach-i^^^^ K adopted, how should suchr <xn approach- wurk 

i n tonUeiu with the aimual maintenance ollucatio n optiuu|j||| | 

mmmmmmM? Should an RMR&R activit y tha t i s excluded . 

under th e mo'iecL cusL LebL appruaclJ^^ilillMl^B ^ Wikk 

als o count against your annual maintenance allocation ? We 

ar e solicitin g comment on whether t o adopt any or al l of 

thes e approaches and how they might fi t together. 

Lastly , EPA strongl y supports efforts t o improve energy 

efficienc y a t existin g power plants. These activitie s ngt C 

.LL__l____i-j*11 hii'i. Un. ifliliiinit, nf grmmnhnn"!* ga__?c pm1't-^M ppr "*-£<_., 

r?f n. lart-.iri iri t y prnrinrpdi hvA als ^ reduce th e amount of 

criteri a pollutants—J§|S0 I Per 2 and NOx- '""•'' ":

' |s_«! pe r 

'" ^X4r ** ' 

unit of electricity generated/ During our study of the *** . 

impact of NSR on the energy sector, we received information 

concerning a number of instances where projects that would 

have improved energy efficiency were not implemented because 

they would have resulted in significant annual emission 

increases that would have triggered NSR. Some have 

commented that any project that produces any improvement in 

energy efficiency should be exempt from NSR. However, given 

the continuing improvement in materials and design, almost 

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any component replacement can be expected to have some 

beneficial -impact on the energy efficiency of the unit and, 

left unbounded/ this approach could result in the 

replacement of an entire boiler with a new, more efficient 

boiler without state of the art pollution controls. §§ 

Q& 

^c 

#__fc&ift&s^_8#5^ 

-;A&M|^2J___S____J_ _____ 

These issues prompt EPA to solicit comment in several 

_ • , ___.___.___.*___._ + . . &:_fc!fc#&i^&'&k'&^^ 

areas. To the extent that L-nebe- proie^t-&|4%||^^^ffeiiMg^lM 

.'fS^*S?ti&tM$Ktr? functional purpos^'gl^llUff as the components they replace 

grrtt_j__^^^Ma^^^!:Wl do g not alter the basic design 

parameters of the unit, they would aupgar—Lu be eKempt 

underifilpiilll our proposed, per project cost test, described 

B S *ssg ___§_ Is there a need f\r a separate *stand-alone" 

for projects that imprWe eneie,y ef ficiency|ffi|§ 

IMIllili ? If so, should there b \ grryggjjgl limitation ! on 

86 

MSti 

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the scope of mmmMfflfflffiBBffi&LS cr-J-.u.? IT.,U. ..i,,,m,v 

em^4*v_3 

BPA-treat- proj-fct&g_gf__ffl that result in a minor 

improvement in efficiency but a very large increase in 

annual emissions? P^gj^SW^^^ii^^gW^S^ P 

^^i^ii^fi^iii^fp^MMIife^ Today we solicit comment broadly 

on the impact of the NSR program on decisions to proceed 

with projects that produce net benefits to human health and 

the environment,, including but, not limited to energy 

efficiency projects, /^e also solicit comment/ on the extent 

to which our proposals can promote energy efficiency while 

we 

(/ 

preservin g the benefits of the NSR program. /.aLnjjjJjrj" w 

r) .differ enfc___ •• U a 

•fcv#^'_ft_I(''X:ijyy f ' •! 

solici t comments on whether wre nee^^g_^_§^ to^e^ineT-Tdrbh 

specificity , basi c design parameters fA 

industries. /yhc^AgdBfflfr bo-liovoii thatWajgx 

Ip'approachoc for estabL.i vhiTiij •ji.^j.k.- a 

deaiyn par ame. te r a, • but we acrliciL cummonti.on fehoc5^Qiid uLh_j5p 

tha t i-Ts^provide the necessary certaint y t o / 

.Defining "Process Unit" for Evaluating Projec t Cost 

Percentage 

^Process -unit" is not a tgnu currentl y used under Lhe 

NSR r-ggu-i-ati-oms-. The-N3R--regulations dc provide a 

87 
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definitio n of 'cmib-ru^h uniL" 

, huwgvai.,—Lhia, tenn ia. nuL bruad enough JJoiW^t^^^^^^^X 

__$3$f€3i_B%_£g3@^ , , . , 

^^L^^is^^m^^^^^tm^^^^mk the equipment replacement 

approach proposed here.— Changes, tu nuii-aiul-tLXng units may 

resul t i n cullatera l .mi-biun . l^creabes -at»-utfa.i emitting . 

units a t a facility;—therefore , a- tes:m—that wuuld"include 

both auritt-iriy-arid—i run-giuit tin g uni Lb is_ beirTg-'Cori.iderisd.— 

Th. definitiu n tha t we al e relyin g on is tha t uf "process 

t^^^mm^^^m^&m ^u UK QJ.-M. W_ hUuU mm uuuu 

J:hat _de£anlti__}, tn accommodate chc intended oovorage^ 

( f^fV " *"'

 nr" "v"*lial i <m'I-IIJII i|».i.iWT*..i M|.l J.I un._..fc • f p •• • • \£jf^1 ~ i 

th'vft. pi^p^fcrc -u~"iibe the- foli-Wing definitiun fur this-rule: 

Process unit means any collection of structures and/or 

88 
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equipment that processes, assembles, applies, blends, 

or otherwise uses material inputs to produce or store 

an -ntermedraLe or txnal^^msm^m product. A single 

facility may contain more than one process unit.. 

EndOf-Mosed Text ' ""^^fJ^L ^ 

We intend fefjj^lti_#ll_^^ this term jg_fto £&&+kL 

•focus--on thei^i^P^I^ integrated manufacturing operations 

that produce an-intermediate en- •& final product.—We- do not 

intend, to split--up intggg-ytwd •pfuu^b-grgb",—and du nuL prupusw 

to distinguish amuny pruceas units that-pr-oduce final 

products-that "are sold-irr-c'CTfln.gi eta vwi_u_ prucebb uni La that 

produce "intermediates" which may bu ustrd-aL uLligr pruccss 

uiTit-s--wTth-rrr-the same plant-or—fcyans far rwd- J?OT—fuithgj. 

processing to another caramon ly uwned plant.—A SOCMI plant? 

ftn—g.iample,—mdry-prvrahree--several intermedi-ates—„t—-dr-pi-tni-fc 

site,—sctrvc—cl" which aie piucebbed f ur Lher at the plant "and 

uLhe-b—LhaL are sold ab inLeriimdiate products-. -If the 

intermediates remained at the SOCMI plant for processing;-we 

wuuld apply cuumun s.Ubc Lu gv>aludte n»heLlierM,the continued 

prucessinu .o.f "thirst; chemicals -constituted the same piuceas 

unit JX whgLhwr—thgy should be walled olf ab a bepaiaLe 

process.—A key determining factor is whether the yiven 

ope r a t-i-on- i s a s in gl e,—integrated uiodaction -uni'tTJI 

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i_030 

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October 23,2002 

To help illustrate these concepts, we tried to ^JLCU^~ 

I ifitiMtfiWfti1 

JeLeiatiTng how tliis|__^_j_MJPEii__^_i caea-specific 

...."»_— — «. .............. ._ • 'imi.il • * 

f 

trvaluatioiv-would play uut dn defining what equipment and 

a few selected industry categories*- electric utilities, 

refineries, cement manufacturers, pulp and paper producers, 

and incinerators. These examples, provided belrmr,—drr not 

p.ovi.g absuluLe answers, but offer reasonable guidav.ee in 

deLermining what upci_Lions would represent the process 

unit (-S1—for—Lhube laeiliticb. In each cas»e, fmB 

associated pollution control equipment 

woni'd^^BP typically not be considered part of the process 

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j ' 

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For a steam electric generating facility, the process 

unit would most likelyconsist of those portions of the 

plant which contribute directly to the production of 

electricity. For example, at a pulverized coal-fired 

facility, the process unit would generally be the 

combination of those systems from the coal receiving 

equipment through the emission stack, including the 

coal handling equipment, pulverizers or coal crushers, 

feedwater heaters, boiler, burners/ turbine-generator 

set, air preheaters, and operating control systems. 

Each separate generating unit would be considered a 

separate process unit. Components shared between two 

or more process units would be proportionately 

allocated based on capacity. 

For a pMgPl^refinery, each-of the key 'operating 

units—(e:'g",—FCCl, iefurn.gr, alkyl plant, MTBE plant, 

riydr-ocrackcr, dihLillaLiuii unit,—cuker,—etc. )—and-its 

associ-Led supporting units—(e.g.,—furnaces, pipinu, 

cuinprebsou-S," cooling;—etc- )—xould Lypically be 

considered a process uuiLJ_S^j^^^^gi^SI^^^^ | 

mmmmmmusam' 

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'

i

^^^^__^_^^^^i^_tW_W_^^^^^^^^_^^^^^^^^^^^^^ 

For a cement plant, the process unit would generally 

include '^^__^^^^^^^^^_^__l^_l^__^^^^^_W^^_^_W^_W^^^^ 

l^^^^^^all components that process or store raw 

materials, preheaters, kilns1,- and processes that 

process or store products fromlipi kilns, and 

associated emission stacks. 

For a pulp and paper mill, there are typically 

twc^ttg^ffl-waa-M»ag^^| s process units. Tue firs Lfii is the 

system that processes wood products, -f 

|H the digester and its associated heat exchanger, blow 

tank, pulp filter, accumulator, oxidation tower, and 

evaporators. The -gcond^^^Hi is the chemical 

recovery system, which includes the recovery furnace, 

lime kiln, storage vessels, and associated oxidation 

processes feeding regenerated chemicals to the 

digester. 

For an incinerator, the process unit would include all 

components from-the feed pit or refuse pit to the 

stack, including conveyors, combustion devices, heat 

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exchangers and steam generators, quench tanks', and 

fans. 

We solici t comment on wheLJUgii this -general definiLiun 

crf__H * process unit" is "a" ifea A unable «uppruaefljr cr lfjfi&i 

A 

another approach ifl more effective given tl^at a 'routine" 

determination could new hinue un how broadly oi narrowly the 

prucess unit is defined. We also solicit comment on whether 

this approach wmuld present any unique problems for 

LuplKinenliug these new prupusais; ii" so,—what ac.Liunb should 

we take---to1 minimize Lhe uccur renee-or -erTecL uf these 

ptoblentb? 

Te.iL Mu'Jgd Here:—2 

l^Mi S today's proposed- approaches for replacement of 

existing equipment with, identical, or functionally equivalent 

equipment rely on the concept of a process unit, these 

approaches may nuL bu suitable "for determining whether a 

change made aL a.^^^^^^^^^^&^^mmm^^m^^ 

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#9 

iitli forthcoming proposed NSR rules for future projects 

involving aggregation and debottlenecking will alleviate 

L_„i.grjjh--wiLh reboect Lo^mUm^si^^m^d'^em^M. changes made at 

non-emitting units that affect emissions at other process 

units at Lhui'_ _cij»i_yr However, we request comment on 

limiting today's proposed approaches to changes made at 

prucesallillSiil units-: -fr-EPA-decides Lu extend today's 

approaches to^l^||^^_iiil^i^g^ig^gi ^ 

JMli^^^l^»^ilij^^r^M»ffi^^ i non-emitting unitsT 

how should EPA Je-ting the" entity-from which the percentaye 

of leplacemenL cusL ih d-teiu.in-d? 

Snd Qf Moved Textf| 

^ v£l:i.. Othe Otherr Option Optionss Considere Co^s d 

*Tft* 

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In addition to the cost based approach discussed above, 

we are considering two additional options for addressing 

RMR&R. These options are discussed below, and we are 

requesting comment on these options. We are also interested 

in other possible alternatives. 

A. Capacity—^Based Option 

We have considered the alternative option of developing 

an RMR&R exclusion based on capacity of a process.unit. 

Under such an approach, an owner/operator could undertake 

any activity that did not increase the capacity of the 

process unit. Such an approach would require safeguards 

similar to those in the proposed cost-i§jbaseji approach in 

order to ensure that puuJti5N*Ahat should be subject to the 

NSR program are not inappropriately excluded. These 

safeguards would exclude the installation of a new process 

unit, the replacement of an entire process unit, and 

§§ emission rates of a 

regulated 

ffrom use of the exclusion. 

Basing RMR&R on capacity is appealing for. several 

reasons. The primary objective of RMR&R is to keep a unit 

operating at uu 1 ci ffifcapacity and/or availability-,1 -not to 

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October 23,2002 

ineyggse the cunent capacity and/or availability of a uniL. 

In addition, the linkage between capacity and environmental 

impact is more apparent than cost and environmental impact. 

Finally, unlike the proposed coat based-approaeli,—this type 

of approach reould al-l*uw" for ai&ife^ll^ 

^__H_i preconstruction deteuuination ul applicability. 

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BBa_BBflffl«fffl«iSflM 

The difficulty\(ith using a capacity based approach is 

\ 

defining the capacity of a process unit. Capacity may be 

defined based on i^put or output. Nameplate capacity of a 

process unit may vaiy greatly from the capacity at which the 

process unit may be able to operate. It may be more 

appropriate in some industries to measure capacity based on 

input while in others OB. output. As an example, in a review 

of promulgated and proposed Maximum Achievable Control 

V 

Technology standards, sixVpf eleven standards measured 

capacity based on unit outpfait while five based capacity on 

input. In fact, the NSPS exclusion for increases in 

production rate at 40 CFR 60.14(e) originally was dependent 

upon the "operating design capacity" of an affected unit. 

In proposed revisions to the N^fS program published on 

October 15, .1974, we state (39 j__ 36948) : 

The exemption of increases In production rate is no 

longer dependent upon the "operating design capacity." 

This term is not easily definVd, and for certain 

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indu^iries the *design capacity" bears little 

relationship to the actual operating capacity of the 

f a ci 1 i t y •^Q- * ^* 

We are requesting comment on this capacity based option 

as well as comments on possible methods to address any of 

the issues relating to implementation of such an option. 

B. Aged Based option 

Under an age based approach, any process unit under a 

specified age could undergo any activity that does not 

increase the capacity of a process unit on a maximum hourly 

basis without triggering the requirements of the NSR 

program. However, the changes could not constitute 

reconstruction as, defined at 40 Crfl G0.1_fflfflS_W&%B_W8_W 

^pi^^S.^S^^^ISi^iSl^^_iii^P^ii_iii^^SI^H 

^^^___i^^i^^_p% mmmmmm. The age of the 

process unit would likely be in the range of 25-50 year&,-•-• ui 

in1 the cabg-of electric utility bLectin1 •generating unitb, 

Lypically 30'40 years. An owner/operator would have the 

choice of returning to the current case-by-case approach for 

each physical or. operational change or of becoming.a Clean 

Unit as defined at 40 CFR 51.165(c)(3), 51.166 (t) (3), and 

52.21(x)(3), once the age of a process unit exceeds the age 

threshold. 

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October 23,2002 

Such an approach would provide an owner/operator a 

clear understanding of RMR&R for an extended period of time. 

It also may provide the owner/operator greater flexibilit y 

than under the current system for a limited period of time. 

Like the capacity based approach, this approach wouldltlS 

HHI S ^low for BmMUmm preconstruction 

determination of applicability . 

We see three marn,t;%^^|i difficultie s m developing 

this type of approach. . The first is defining capacity. The 

second is establishing the age cut-off for the exclusion. 

The useful lif e of equipment is difficult to establish and 

may vary greatly. irarra*lr7l» » the 

Lvuet. ox • chanaesPi^i@Siil tha t would be excluded ab RMR&R 

befure the aye threshold cuuld far—exceed' the seupe uf 

changes we cuii-^tl y believe bhuuthJ-b^; (.^Jfj si digged m ^MJ.-MAJJ 

We are requesting comment on this age based option as 

99 

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