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# OAR Box 1787 Prepped byOllie Stewart



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# 97 ) ll-C-5 5
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\mt ^ UNITE D STATE S ENVIRONMENTA L PROTECTIO N AGENC Y REGIO N I J.F
. KENNED YFEDERA L BUILDING , BOSTON
. MASSACHUSETT S 02203-221 1 

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Marc h1 , 199 4

Denni s Keschl , Directo r Bureau o f Ai r QualityContro l Departmen t o f Environmenta l Protectio n Stat e House , Statio n No
. 1 7 Augusta , Main e 04333-474 6 

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. f^i-->^= > Thi s lette r i s i n respons e t o a Main e Departmen t o f Environmenta l Protectio n (DEP ) proposa l outline d i na Decembe r 12 , 199 3 lette r regarding allocatio n o f surplu s nitroge n oxid e (NO x ) emissio n reduction s generate d b yMaine' s enhance d Inspectio nan d Maintenanc e (I/M ) progra mt o th e Louisiana-Pacifi c (L-P ) Corporation
. I n general , EPAsupport s th e DEP' s extensio no f it s I/Mprogra

mprovide d tha t specifi c requirement s ar e satisfie d b y L- P an d the DEP
. Th e following paragraph s wil l furthe r explai n EPA' s positio n o n th e DEP' s proposal
.
BACKGROUN

D A s describe d i n you r letter , L- P i s proposing t o construc t an expansio n t o it s oriente d strandboard facilityi nNe wLimerick , Main e i n Aroostoo k County
. Aroostoo k countyi s par t o f th e Ozon e Transpor t regio n (OTR)
. Pursuan t t o th e newsourc e review requirement s applicabl e i nth e OTR , L- P mus t secur e sufficien t emissio n reduction s o f NO xfo r licensing approval
. Your lette r state s tha t L- P wil l nee d approximatel y20 0 ton s o f NO t o offse t the increas e resulting fro mth e expansion
. Th e DE P indicate s tha t 20 0 ton s o f N0 Xcredit s ar e no t availabl e i nMaine' s inventory
. According t o L-P , th e company' s timetabl e fo r constructio n an

d commencemen t o f operation s necessitate s tha t surplu s NO xreduction s become availabl e shortly
. L- P i s currentl yschedule d t o begi nconstructio no n th e propose d facilityi n th e Spring o f 199 4 an d t o commenc e operation s b y Apri l o f 1995
.

PRINTE D O N RECYCLE D PAPE RP. 3

Th e DE P intend s t o resolv e L-P' s need fo r N0 Xoffset s b yrelying o n surplu s NO reduction s (i.e. , reduction s no t otherwis e require d b

yth e Clean Ai r Act ) fro mMaine' s enhance d I/ M program , whic hMain e i s extending t o al l moderat e nonattainmen t area s i n th e State
. Surplu s N0 xreduction s expecte d t o b e generate d b

ythi s progra

mwoul d b e utilize d a s offset s fo r ne w sourc e emission s i n th e state , includin g th e ne wemissio n increase s expecte d fro mth e expande d L- P facility
. Th e Decembe r 12 , 199 3 lette r indicate s tha t Maine' s enhance d I/ Mprogra m woul d generat e approximatel y200 0 ton s o f N0 xreductions , o f whic h abou t 120 0 ton s woul d b e considere d surplus
. Th e DE P submitte d it s enhance d I/ Mprogra m t o EP Ai nNovember , 199 3 a s a stat e implementatio n plan (SIP ) revision
. Th e DE P plan s t o allocat e a portio n o f th e surplu s reduction s (20 0 tons ) t o L- P a s offset s fo r th e propose d expansion
. I n previou s guidanc e o n emissio ntrading , EPAse t fort hth e minimu mrequirement s fo r th e creatio n an d us e o f emissio n reductio n credits
. EPArequire s tha t emissio n reduction s b e surplus , quantifiable , permanent , an d federall yenforceabl e fo r us e a s emissio n offsets
. Emissio nTrading Policy , 5 1 FR4381 2 (Decembe r 4 , 1986)
. I n it s NO Supplemen t t o th e Titl e I Genera l Preamble , th e agencyrecite d thes e minimu mcriteri a fo r th e creatio n an

d us e o f NO xemissio n reduction s i nemissio ntrades
. 5 7 FR55620 , 5562 5 (Nov
. 25 , 1992)
. EP Aha s evaluate d th e DEP' s Decembe r 12 , 199 3 proposa l i n ligh t o f thes e criteria
. Th e following sectio n o f thi s lette r evaluate s th e requirement s fo r Maine' s NO xemissio n reduction s t o b e surplus , quantifiabl e an d permanent
. Thereafter , th e lette r discusse s th e requiremen t tha t thes e reduction s b e federall yenforceable
.
SURPLUS , QUANTIFIABL E AN DPERMANEN

T REDUCTION S I n orde r t o creat e an d us e emission reduction s fro mit s enhance d I/ Mprogram , th e reduction s mus t b e surplus , quantifiabl e an d permanent
. Th e firs t questio n fo r th e DE P i s whethe r o r no t NO x emissio n reduction s generate d b ythe implementatio no f Maine' s enhance d I/ Mprogra m ar e surplus
. Th e 199 0 Amendment s t o th e Clea n Ai r Ac t codifie d EPA' s longstandin g polic ytha t offset s mus t b e surplus
. Se e sectio n 173(c)(2 ) o f th e Clea nAi r Act , whic hprovide s tha t "emissio nreduction s otherwis e require d b y th e Ac t shal l no t b e creditable " a s offsets
. EPAha s interprete d thi s provisio n flexibly
. Consequently , wher e appropriate , a bloc k o f emissio n reduction s mus t b e discounte d t o reflec t reasonabl yavailabl e contro l technolog y(RACT) , ne wsourc e performanc e standards , I/ Mrul e requirements , o r an yothe r requiremen t applicabl e t o o r reasonabl yforeseeabl e a t th e sourc e o f th e emissio n reduction s a t the tim e o f th e us e o f th e emissio n reduction s a s offsets
. EPA' s fina l I/Mrul e states , i n part ,P. 4

"emissio n reductio n benefit s fro mexpandin

g coverag e beyon

d th e minimu murba n are a boundarie s can.. . b e used fo r offsets... " 4 0 CFR51.35 0 (b)(3)
. Afte r reviewing th e populatio ndensit y criteri a identifie d i n EPA' s I/Mrul e an d th e nonattainmen t statu s o f area s i n Maine , EPARegio nI ha s determine d tha t Cumberlan

d Count yi s th e onl yare a i nMain e wher e enhance d I/ Mi s required
. Th e DE P intend s t o implemen t enhance d I/ Mi nth e seve n countie s currentl ydesignate d a s moderat e nonattainmen t (i.e. , Androscoggin , Cumberland , Kennebec , Knox , Lincoln , Sagadahoc , an d York)
. Emissio n reduction s o f NO xdu e t o implementatio n o f enhance d I/ Mi n al l countie s excep t fo r Cumberlan d Count ywoul d thu s b e surplu s an

d availabl e fo r generating N0 Xemissio n reductio n credits. 1 Th e DEP' s intentio n t o allocat e the Volatil e Organi c Compoun d (VOC ) emissio n reduction s achieve d fro mimplementing enhance d I/ M i n thes e si xcountie s toward it s 15 % Reasonabl e Forward Progres s (RFP ) reductio n requiremen t doe s no t prohibi t th e treatmen t o f th e N0 Xreduction s a s surplus
. Th e N0 Xemissio n reduction s fro m Maine' s enhance d I/ Mprogra mwil l no t an

d canno t b e use d toward s th e 15 % reductio n requirement
. Thus , a s note d above , th e NO x reduction s fro

menhance d I/Mtha t ar e being se t asid e fo r offset s ar e surplu s provide d tha t theyar e no t necessaryfor , an d wil l no t b e use d in , an

yrelevan t attainmen t demonstratio n plan
. Th e DE P committe d i n it s Decembe r 12 , 199 3 lette r no t t o rel yo n an y o f th e 20 0 ton s o f NO xtha t i t plan s t o allocat e t o L- P a s offset s i n it s attainmen t demonstration
. Th e DE P shoul d recogniz e tha t i f furthe r reduction s ar e necessaryt o reac h attainmen t o f th e ozon e NAAQS , th e DE P wil l nee d t o implemen t additiona l contro l programs . I n orde r t o allocat e th e NO xreduction s fro mth e enhance d I/ M progra mt o L-P , th e DE P mus t als o showtha t th e reduction s ar e quantifiabl e an

d permanent
. Th e DE P mus t demonstrat e tha t i t wil l secur e sufficien t emissio nreduction s (20 0 tons ) fro m implementatio n o f it s enhance d I/Mprogra mi n th e si xcounties
. Thi s coul d b e don e using estimate s o f Maine' s vehicl e mile s travelle d (VMT ) an

d EPA' s MOBIL E model
. EPAha s no t ye t provide d guidanc e o n calculation s o f exces s N0 Xcredit s generate d b yan enhance d I/ Mprogram . I nth e absenc e o f suc hguidance , EPA suggest s tha t th e DE P calculate ' th e credi t conservativel yi n orde r t o ensur e whethe r th e trad e wil l b e approved
. A conservativ e wayt o calculat e th e amoun t o f exces s NO xcredit s

1 Pleas e not e tha t basi c I/Mi s required i n th e Lewisto n Aubur n Nonattainmen t area . No NO reductions , however , ar e predicte d fro

mth e basi c I/ Mrequirements
. Therefore , th e NOx reduction s fro

mMaine' s enhance d I/Mprogra mi nthi s are a woul d b e surplus
.P. 5

availabl e woul d b e t o multipl y199 0 estimate s o f VM T time s th e emission s differenc e (in gram s pe r mile ) betwee nn o I/ Mprogra m an d Maine' s progra

m i n th e yea r 202 0 a s predicte d b yEPA' s MOBILE5 a model
. Th e EPArecommend s th e yea r 202 0 becaus e enhance d I/ Mbenefit s ar e lowes t i nth e ou t year s an d th e MOBIL E mode l doe s no t presentl ypredic t beyon d 2020
. Maine' s presen t progra mmayhav e lowe r complianc e rates , o r waive r rates , becaus e o f th e lowmileag e waive r presentl yauthorize d unde r Main e stat e law
. Nevertheless , EP Acurrentl yexpect s tha t th e leve l o f credi t generate d throughthi s calculatio nshoul d b e adequat e fo r th e immediat e nee d t o se t asid e a poo l o f credit s fo r offset s i n th e near-term
. EP

Awil l b e glad t o wor k wit hyo u t o defin e appropriat e modeling assumption s fo r determining th e exac t leve l o f credit s availabl e fro myea r t o year . EPAsuggest s tha t th e DE P revis e it s enhance d I/ MSI P submitta l (November , 1993 ) t o articulat e it s inten t t o se t asid e credit s an d t o mak e th e demonstratio ndiscusse d above
. I naddition , Main e shoul d specif yexactl yhowmuc hcredi t i t intend s t o se t asid e fo r th e L- P permit
. I nadditio nt o quantifying thes e reduction s an

d ensuring tha t theyar e surplus , th e DE P mus t als o ensur e tha t th e offset s occur no late r than th e dat e o nwhic hth e ne wsourc e o r modificatio ncommence s operation
. Prio r t o L- P beginning operation , th e DE P shoul d submi t a demonstratio n acceptabl e t o EPAwhic hshow s tha t th e stat e i s implementing it s enhance d I/ Mprogra mon schedul e an

d tha t th e enhance d I/ M progra mha s secure d enoughemissio nreduction s o f NO xt o mee t th e offse t requirement s fo r L-P
. Thi s wil l demonstrat e t o EPAtha t th e emissio n reduction s hav e occurre d befor e th e modificatio n commence s operation
. I n addition , L- P shoul d includ e documentatio n i n it s applicatio n fo r a newsourc e reviewpermit
. L-P' s applicatio nshoul d quantif yth e amoun t o f offset s neede d b yth e compan

yt o expan

d it s plan t an

d describ e ho wi t plan s t o mee t th e offse t
. requirements
. Th e DE P shoul d als o includ e simila r documentatio n i n th e propose d Finding s o f Fac t an d Orde r Ai r Emissio nLicens e fo r thi s majo r modification
. Thi s wil l ensur e tha t L- P submit s a complet e applicatio n an d tha t th e publi c ha s a nopportunit yt o commen t o n th e propose d offsets
. FEDERALL

YENFORCEABLE REDUCTIONS Maine' s enhance d I/Mprogra mtha t wil l generat e th e offsetting NO xemissio n reduction s mus t als o b e federall yenforceabl e prio r t o L-P' s commencemen t o f operation s a t it s expansion
.P. 6

Sectio n 173(a)(1 ) o f th e Clean Ai r Ac t provide s tha t "permit s t o construc t an

d operat e mayb e issued i f
.. . b yth e time th e sourc e i s t o commenc e operation , sufficien t offsetting emission s reduction s hav e bee n obtained. " Subsectio n (a ) goe s ont o provid e tha t offset s o n whic ha permi t t o construc t an d operat e i s conditione d unde r paragraph(1 ) "shal l b e federall y enforceabl e befor e suchpermi t mayb e issued. " Thi s augment s th e languag e o f sectio n 17 3 prio r t o th e 199 0 amendment s tha t provide d tha t offset s mus t b e "legall ybinding " befor e a permi t t o construc t an

d operat e mayb e issued
. Finally , sectio n17 3 (c)(1 ) provide s tha t offset s "shal l be , b yth e tim e a new modifie d sourc e commence s operation , i neffec t an d enforceable. " A s note d above , EPA' s polic yha s long bee n tha t emissio n reduction s mus t b e federall yenforceabl e fo r us e a s emissio n offsets
. Se e Emissio n Trading PolicyStatement , 5 1 F R4381 2 (Dec
. 4 , 1986)
. I n th e Genera l Preambl e fo r Implementatio no f titl e I , EPAinterprete d change s t o section17 3 i n th e 199 0 Amendment s a s clarifying tha t offset s mus t b e federall y enforceabl e befor e th e permi t t o construc t an d operat e i s issued
. 5 7 FR13498 , 1355 3 (Apri l 16 , 1992)
. Further , EPAexplaine d that , "whil e i t i s possibl e fo r a stat e t o issu e a permi t t o construc t onc e sufficien t emission s offset s hav e bee nidentifie d an d mad e federall yenforceabl e (generallythrougha permi t conditio n mad e t o th e permi t o f th e existing source) , th e Stat e mus t als o ensur e tha t th e require d emission s reduction s actuall y occu r n o late r than th e dat e o nwhic hth e ne wsourc e o r modifie d sourc e woul d commenc e operation. " Id
. Nevertheless , unde r th e circumstance s o f thi s case , EPAwil l no t objec t i f th e DE P issue s L-P' s permi t t o construc t prio r t o EPA approva l o f Maine' s enhance d I/Mprogra mtha t wil l generat e th e offsetting N0 Xreductions , a s lon g a s L-P' s permi t contain s a federall yenforceabl e conditio ntha t expressl yprohibit s th e commencemen t o f an

yactua l operation s unti l EPA' s approva l o f th e Maine' s enhance d I/MSI P submitta l tha t wil l generat e th e offsets
. EPAbelieve s thi s positio n i s appropriat e fo r severa l reasons . EPArecognize s th e concer n tha t source s o f offsetting NO x emissio n reduction s ar e scarc e i n Maine
. Base d ondiscussion s wit hyo u an

d you r staff , i t doe s appea r tha t onl ya fewpotentia l source s o f N0 Xreduction s exis t i n Maine , an d yo u indicate d a t th e Novembe r 29 , 199 3 meeting betwee nRegio nI an d th e DE P tha t eve n thos e fewsource s combine d woul d b e insufficien t t o satisf y L-P' s needs
. Further , Main e ha s no t ye t adopte d N0 XRAC T regulatio n fo r existing stationar ysources , an

d uncertaint y regarding N0 XRAC T rule s coul d hinde r effort s b yne wo r modifie d source s t o secur e N0 Xoffsets
. Thi s i s becaus e th e uncertaint y coul d lea

d existing N0 xsource s t o retai npotentiall ysurplu s N0 XP. 7

emissio n reduction s fo r thei r ow n use . Th e offset s i n thi s cas e hav e bee n identifie d an d ar e t o b e achieve d b ya n adopte d Stat e progra mtha t ha s alread

ybee n submitte d t o EPAa s a SI P revision
. Maine' s programinvolve s extensio n o f it s enhance d I/ Mprogra mt o area s wher e i t i s no t otherwis e require d t o achiev e NO x reductions , an

d EPAdoe s no t forese e substantia l obstacle s t o promptl yapproving th e N0 xelement s o f th e progra mfo r suc h areas . Moreover , th e DE P intend s t o rel yo nth e enhance d I/ M progra mt o achiev e VO C reduction s neede d fo r it s SI P planning obligations
. Unde r thes e circumstances , EP Acanb e particularl y confiden t tha t Main e wil l actuall yimplemen t it s enhance d I/ M progra mt o achiev e th e offsetting N0 Xemissio nreduction s b yth e tim e L- P i s t o commenc e operations
. I nshort , EPAdoe s no t believ e i t i s necessaryt o hol d up L-P' s permi t pending th e longe r perio d neede d t o reviewMaine' s SI P submittal , especiall y sinc e th e offset s hav e bee n identified , appea r reliable , an d becaus e th e SI P submitta l provide s particularl ygrea t securit y tha t th e offset s wil l b e achieved
. I n recognitio n o f L-P' s plan t o commenc e operation s i n Apri l 1995 , EPAwil l expedit e it s reviewo f Maine' s enhance d I/ M program . Sectio n 110(k)(2 ) provide s tha t EPAmus t tak e fina l actio n o n a SI P submitta l withi n 1 2 month s o f determining tha t th e submitta l i s complete
. EP Adetermine d tha t Maine' s enhance d I/ Msubmitta l wa s complet e o nJanuary24 , 1994
. T o spee d up EPA' s processing o f thi s submittal , EPArecommend s tha t th e Stat e o f Main e reques t a n expedite d EPAapprova l o f th e portio n o f th e I/ Mprogra

mno t mandate d a s par t o f th e federa l I/ Mregulation
. Thi s wil l allo wEPAt o approv e th e progra mi n thos e "surplus " area s eve n i f Maine' s progra mdoe s no t completel ymee t al l o f th e requirement s establishe d b yEPA' s enhance d I/ Mrule
. Becaus e th e progra mi n thos e area s goe s beyon d th e requirement s o f th e Clean Ai r Act , i t doe s no t need t o mee t al l o f th e requirement s o f th e enhance d I/ Mrule. 2

2 I t shoul d b e noted that , t o th e exten t tha t th e progra m doe s no t mee t th e requirement s o f EPA' s enhance d I/Mrule , Main e mayneed t o reduc e the amoun t o f emissionreduction s creditabl e t o it s I/ Mprogram .

«•. 'P. 8

I f yo u o r staf f have an yquestion s regarding thi s determination , pleas e contac t Brendan McCahil l a t (617 ) 565-326 2 fo r ne wsourc e reviewissue s o r Rober t Judg e a t (617 ) 565-323 3 fo r mobil e sourc e issues
. Thank yo u fo r you r assistanc e i nthi s matter
. Sincerely , 

# uC-ic/Fh/}^Y/f Linda M
. Murphy , Directo r Air , Pesticide s an

d Toxi c Managemen t Divisio n cc : Dea n Marriot t - Main e DE P Denni s Kesch l - Main e DE P Bryc e Sprou l - Main e DE P John Chandle r - Main e DE P Mar c Con e - Main e DE P Pete r Chas e - Operation s Manager , L- P Danie l Boxe r - Pierce , Atwood , Scribner , Allen , Smit h& Lancaste r Georg e Mitchel l - U S Senator , Main e Michae l Michau

d - Stat e Rep. , Main e



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