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OAR Box 1790 

Prepped by Keeia Richards 

Document Number: 

215) ll-F-4 

Docket Number: 

A-90-37 

Printed 10/31/2008 12:43:16 PM Sheet 215 of 250 
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

Office of Air Quality Planning and Standards 

Research Triangle Park, North Carolina 27711 

?0'3 7 

MEMORANDUM 

DATE: October 23, 1992 

SUBJECT: Proposed Rulemaking on Best Available Control 

Technology (BACT-) L 

FROM: 

TO: Air Docket A-91-3 0 

David Solomor 

New Source Re'view Section (MD-15) 

The attached hand-written markup was received from the 

Office of Management and Budget (OMB) and reflects their comments 

to EPA on the draft proposed rulemaking on BACT which was 

submitted to OMB for interagency review on October 2, 1992. In 

addition, attached are two pages of typed inserts that were 

dictated to Mr. Greg Foote of EPA's Office of General Counsel 

during discussions on the rulemaking between Mr. Foote and 

Mike Shapiro of EPA's Office of Air and Radiation, and Bob Rainey 

of the Department of Energy, Ray Squitieri of the Council of 

Economic Advisors, and David Rivkin of the Council on 

Competitiveness on October 14, 1992. 

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13 

assign each of these factors in deciding among options.' Second, 

it is also clear that Congress believed that one of the 

advantages of State flexibility vould be to speed up the adoption 

of advances in control technology.4 

The exercise of discretion vithin these bounds can be 

fulfilled by aore than one aethod of determining BACT. 

Regardless of the specific methodology used for determining BACT, 

be it top-down, the method embodied in the 1979 guidance, or 

otherwise, EPA interprets the relevant Act provisions as 

embodying tvo core legal criteria that must be satisfied in any 

3wThe decision regarding the actual implementation of BACT 

is a key one, and the committee places this responsibility vith 

the State, to be determined in a case-by-case judgment. It is 

recognized that the phrase has broad flexibility in hov it should 

and can be interpreted, depending on site. 

In making this key decision on the technology to be used, 

the State is to take into account energy,'environmental, and 

economic impacts and other costs ofthe application of BACT. The 

veight assigned to such factors is to be determined by the State. 

Such a flexible approach allows the adoption of improvements in 

technology to become widespread far more rapidly than vould occur 

vith a uniform Federal standard. The only Federal guidelines are 

the EPA nev source performance and hazardous emissions standards, 

vhich represent a floor for the State1s decision. 

This directive enables the state to consider the size of the 

plant, the increment of air quality vhich.vill be absorbed by any 

particular major emitting facility, and such other considerations 

as anticipated and desired economic grovth for the area. This 

allows the States and local communities to judge 'hov much of the 

defined increment of significant deterioration vill be devoted to 

any major emitting facility. If, under the design vhich a major 

facility propose, the percentage of the increment vould 

effectively prevent grovth after the proposed major facility vas 

completed, the State or community could refuse to permit 

construction, or limit its size. This is strictly a State and 

local decislonH<ft[see_ Sen. Rep. No. 95-217, 95th Cong., 

1st Sess. 21 (l§7Tn> A* c*u ***<**, iv% *Mfv*vtW,}MX,,*W*«* eleA-L MAA-XCM'S-^ 

*-#* *M>dLcf 4* _._f\u«I WJ*UU*^ tf t^fyj^x- CUMADAJV* TVCM hi <LxtUmi 4>aJL *uuL 4See also statement of Senator Muskie, 123 Cong. Rec. S917l7d_^» 

(Junes, 1977). £fip 
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14 

BACT analysis.5 First, the permit applicant must consider a 

representative group of available control technologies [i.e., 

technologies that are representative of the range of available 

controls that are at leaat as effective as the minimum 

permissible (NSPS limit, S 112 limit, or SIP limit)]. Second, 

selection of a particular control system as BACT must be 

justified by a comparison of the candidate control systems in 

terms of the statutory criteria and supported by the record in 

such a vay that the basis for the choice of BACT from among the 

other candidate systems is apparent' and consistent vith statutory 

.criteria.* 

The EPA is today proposing guidance consistent vith the PSD 

regulations. The EPA continues to recognize that the Act and 

>ex\sting regulations for BACT mandate application of the tvo core 

^Application of EPA's earlier top-down guidance may have had 

the unintended effect of constraining State discretion in making 

BACT determinations. Also the Administrator's decision in Vnion 

County Resource Paeovery Facility. PSD Appeal No. 90-1 (Nov. 28, 

1990) at \, could be improperly construed as -precluding any 

comparisonN^f candidate control technologies in light of the 

applicable statutory factors.i Together, this may have created an 

unduly strongpresumption thatNthe_most stringent level of 

control is BACT., 

'in this regard, to the extent that a rationale for the 

rejection of the next more stringent alternative than the one 

proposed also provides the basis for rejection of other more 

stringent alternatives, there is no need to conduct a separate, 

detailed analysis for each aore stringent option. To give an 

example, assume that after examining a control option in detail, 

the permitting authority accepts an applicant's proposal to 

reject a control option due to an adverse economic impact after 

considering the energy, environmental, and other economic impacts\ 

of that option. The permitting authority need not consider the 

other more stringent control options1in detail, if it concludes 

that their associated energy, environmental,.and economic impacts 

do not differ meaningfully from the control option rejected. 
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controls UBing an incremental impact analysis and applying other 

statutory criteria, those decisions no longer reflect EPA policy. 

As stated above, the primary benefit to the top-down methodology 

vas that it vould ensure application of the BACT core criteria, 

^ by permitting authorities. Hovever, 

earlier efforts had the potential to chill the full exercise of a 

State's discretion lij^ Mini Ml iiii|i|Tr**rrTTT>-»fpv there yer an t^TJ 

unduly strong presumption in favor of the most stringent 

pollution control alternative available. By proposing to 

promulgate the core criteria (as/formulated today) by regulation, 

EPA believes it haB adequately implemented the Act, including the 

congressional intent that broad discretion remain vith the 

permitting authority. 

In the context of earlier appeals to the Administrator, 

questions have arisen over State discretion to consider the 

incremental ambient and cost impacts associated vith certain 

pollution control options, relative to the other available 

options, in determining BACT [see Columbia Gulf Transmission Co.. 

PSD Appeal No. 88-11 (Order, June 21 1989); World Color PreBS. 

Inc.. PSD Appeal No. 88-4 (Remand Order,.December 13, 1990)]. In 

those decisions, the Administrator determined that the v+ C^wK^r no Aii-Hw 

environmental impacts prong of the BACT analysis precluded A»t Qt*ftto P$_) 

analysis as to vhether use of the more stringent control U^^ W N^wo*^ 

alternative vould benefit ambient air quality, or vhether the 

additional benefit vas vorth the expense. However, the 

Administrator did recognize that, under certain circumstances, 
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such considerations may be appropriate under the economic impacts 

prong of the BACT analysis.Underlying these decisions vas the 

viev that, under the Act, there is a distinction betveen BACT, 

vhich is concerned vith pollution control technology, and ambient 

impacts, vhich relates to overall air quality [see 42 U.S.C. 

7475(a)(3) and (4)]?| 

While the EPA continues to recognize that BACT is primarily 

directed to technology selection, and that this is somewhat 

distinct from impacts upon ambient air quality, EPA does not 

believe the Act or implementing regulations mandate absolute i */ 

separation of the tvo concepts. Rather,

 <the selection cf anf e W^W^M ? 

appropriate technology as BACT is sufficiently related to the' ywnvtxj 

Act's overriding concern vith air quality that a permitting 

authority may, in its discretion and as part of its overall BACT 

analysis,, consider the relative ambient impacts of the available 

control alternatives. Although this type of analysis may occur 

under either the economic or environmental prong of the BACT 

analysis (thus SfejS^frfeJS ? 1^.^ ^

 <W * **>>>**) 

.-ftdmlnlfltraLog), the permitting authority must continue to 

consider the full range of statutory factors before issuing the ^„. 

final permit. This shift in policy is cqfrslstent vith the 

overall recognition that Congress intended that the States retain 
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maximum discretion and flexibility in making BACT 

determinations.7 Even though States have discretion to consider 

incremental ambient and economic impacts, they must also consider! jL/1 

all of the other statutory factors in the BACT analysis. These i^rjC/O1^^' 

can, for example, include consideration of source specific C2- VTM 

factors, such as locally sensitive environmental resources; fW«' tjfj 

proximity to Class I areas; overall increment management; -md- /Lk^T 

_^rmtttActr"gf- Bcoondary pelIntants,-nuiJh ua photnr-hnmic._ fiuatf, Pfo \)J 

hiiwoj ITIII otphrr firms nf v1 nihility impairment.* Thus, a State 

may not rely solely upon pre-set ambient impact or costeffectiveness levels in selecting BACT, but must justify its 

selection in terms of all the statutory factors (although such 

levels may be utilized by a State to assist it in making its 

determination). 

In a BACT analysis, the representative group of control 

atechnologies initially considered shall include the most 

7In such cases, the analysis should rely on the model and 

model inputs used in conducting the requisite PSD ambient air 

quality analysis (i.e., the determination "that nev emissions vill 

not cause or contribute to a violation of the applicable NAAQS or 

PSD increments). 

*In some cases, the lack of comprehensive information or 

modeling tools limits the application of such analyses. Hovever, 

in making its final BACT determination, the state is not 

constrained by limitations to modeling technology or the 

difficulty in assessing environmental impacts, if a State lacks 

the ability to definitively quantify the impacts upon air quality 

or air quality related values, or prefers to not rely upon such 

measures, it nevertheless retains discration to manage 

its air resources through reliance upon qualitative determination 

or reasonable approximation in making its final BACT selection. 
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25 

cases, because energy penalties or benefits can usually be 

quantified in terms of additional cost or income to the source, 

the energy impacts analysis can be converted into dollar costs 

and, vhere appropriate, be factored into the economic impacts 

analysis. 

Indirect energy impacts (such as energy to produce rav 

materials for construction of control equipment) are usually not 

considered. Hovever, if the permit authority determines, either 

independently or based on a shoving by the applicant, that an 

indirect energy impact is unusual or significant, the indirect 

impact may be considered. The energy impact should still, 

hovever, relate to the application of the control alternative and 

not to a concern over energy impacts associated vith the project 

in general. 

The energy impact analysis may^also a'ddress the concern over 

the use of locally-scarce fuels. The designation of a scarce 

fuel may vary from region to region, but in general a scarce fuel 

is one vhich is in short supply locally and can be better used 

for alternative purposes, or one vhich may not be reasonably 

available to the source either at the present time or in the near 

future. 

B. Environmental Impacts. 

The environmental impacts analysis in the BACT evaluation 

process concentrates on collateral environmental impacts due to 

control of emissions of the pollutant in question, such as solid 

or hazardous vaste generation, discharges of polluted vater from 
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26 

a control device, visibility impacts (e.g. visible steam plume), 

O M 4 tu. -tl, U^a4v^A^vWL (J^WuT A^^UfiiLtM iwwW"6;f-fS- CAA,h_L «M^* -

or emissions of toxic pollutants. The applicant should Identify ^vJ«/* 

any environmental impacts associated vith a control alternative &U\Vfc'*'*M • 

that have the potential to affect the selection or rejection of 

that control alternative. Potentially significant, secondary 

environmental impacts must also be evaluated. Scrubber effluent, 

for example, may affect vater quality and land use, and, 

similarly, technologies using cooling tover's may affect 

visibility. 

Other examples of secondary environmental impacts could 

include hazardous vaste discharges, such as spent catalysts or 

contaminated carbon. Generally, these types of environmental 

concerns become important vhen sensitive site-specific receptors 

exist or vhen the incremental emissions reduction potential of 

one control option is only marginally greater than the next aost 

effective option. 

The BACT decision can consider state policy decisions 

regarding use of the available air quality increment for future 

grovth and the veighing of this factor. As discussed above, the 

direct impact of the controls on ambient-concentrations OTI also 

be identified and considered in the BACT-'analysis.-

The procedure for conjJu£fcin^r--_Tr"5halysis of environmental 

impacts should^b^rmade based on consideration of site-specific 

cirCriam^Cances. In general, the analysis of environmental impacts 

starts vith the identification and quantification of the solid, 

liquid, and gaseous discharges from the control device (or .. . 

-_'..a,.*.j«j i^ i-J^m.. Mmt-n. *W_L <&£**w\ /A*ft_ AJvctftM. f\ ^uflAwuWi m^oJuA*. 

 
P.11 

27 

devices) under reviev. Regarding secondary effects, a 

qualitative or semi-quantitative screening can be performed to 

narrov the analysis to discharges vith potential for causing 

adverse environmental effects. Next, the mass and composition of 

any such discharges should be assessed and quantified to the 

extent possible, based on readily-available information. As 

previously aentioned, the analysis need only address those 

control alternatives vith any environmental impacts that have the 

potential to affect the selection OE rejection of a control 

alternative* /Pertinent information about t 

environmental consequences of releasing these materials s 

also be assembled. Thus, the relative environmental impacts 

(both positive and negative) of the various alternatives can be 

compared vith each other. 

Also the generation or reduction of toxic and hazardous 

emissions using the various BACT alternatives, including 

compounds not regulated under the Act or the PSD program, are 

considered as part of the environmental impacts analysis. 

Pursuant to the EPA Administrator's decision in North County 

Resource Recovery Associates, PSD Appeal No.85-2 (Remand Order, 

June 3,1986), a PSD permitting authority,should take into account 

the ability of a given control alternative for regulated 

pollutants to affect emissions of pollutants not subject to 

regulation under the Act or the PSD program in making BACT 

decisions. Consequently, the affect of a given control 

rvJ*. 
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28 

alternative upon the emission of toxic or hazardous air 

contaminants must be evaluated in conducting the BACT analysis. 

C. Economic Impacts 

This analysis should address the economic impacts associated 

vith the.costs of installing and operating alternative control 

systems. Normally the submittal of very detailed and 

comprehensive project cost data is not necessary. -

In the economic impacts analysis, consideration should be 

given first to quantifying the cost cf the various control 

options. The reviev should include a complete explanation of 

procedures for assessing economic impacts and any supporting 

data " y«aAutfwUi O^amW^ icu^v^vuAjs, 

Once the control technology alternatives^ and emissions 

performance levels have been identified, capital and annual costs 

are developed. The djrec_ cost for^each control alternative 

should be presented both on an incremental and an overall basis. 

investment costs, operation and maintenance costs, and annualized 

costa should be presented separately. Annualized costs are 

operation and maintenance costs plus depreciation and interest 

charges on the investment. Costs should be itemized and 

4 

explained. Credit for tax incentives should bo included along 

vith credits fog product recovery costs and by-product sales 

generated from the use of control systems, including the sale of 

sulfur dioxide allowances under the acid rain program and other 

emission reduction credits. The lifetime of the investment 

should be stated. Where possible, costs should be broken down 
* f* \ CXH^OT^J-KOK^**^-^ C* s-

 ct ^- f****^*%H J^*jtsT*<rv*>~+*<:& of- &Cs /9/tCT 

29 

into process change costs (costs of less polluting production 

process) and direct pollution abatement costs (cost of pollution 

control equipment)• The costs of air treatment, vater treatment, 

and solid vaste disposal should be presented separately. The 

objective of the analysis is to provide a realistic estimate of 

the costs of the alternative technologies. 

As a guide in determining vhen control costs become 

excessive, alternative control systems can be compared in terms 

of the incremental cost effectiveness of the available 

alternatlvesTl^liwevei^-a PACT option cannot automat ica-lly be» 

—rejected simply because it is mere, oHponolva-cr less "eost 

offactivc" than another candidato vhich reins voc more pollu.antTI 

States can evaluate whether the incremental cost effectiveness of 

a more stringent option is appropriate in light/of i,ecmrt"BAOT 

T-detcrminatioiku awf] other factors involved in the BACT decision 

and the State's veighing "'of these factors. Incremental, costeffectiveness calculations are generally performed on the basis 

€Lr^4JjtCey4.aJy ' 

of incremental dollars per ton of pollutant removed. 

A 

In addition to the types of economic impacts discussed 

above, EPA is today soliciting comment on vhether the economic 

impactB analysis should consider as impacts.the affordability of 

controls by the firm in response to alternative levels of 

control. For example, a more costly BACT alternative could be 

presented as altering the economics of a project to the point 

vhere a decision vould be made to cancel the construction or 

expansion of a facility, to relocate a plant,,to reduce the scale 

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30 

of operation, or to change the production mix. In such cases, 

the local economic impacts of such decisions (e.g., local 

employment effects, including number of jobs, dollars paid in 

salaries, and changes in employee skill levels required) vould be 

evaluated and factored into the economic analysis. Comments 

should address the reasonableness and practicality of includingA -ft. 

such considerations in the BACT analysis. 

IV. Purpose of the Proposed Change 

The approaches set forth in the various EPA final and draft 

guidance documents have been intended to guide permit applicants 

and permitting officials in those areas subject to the Federal 

PSD regulations at 40 CFR 52.21. They have not established 

binding regulatory requirements, i hich are contained in the 

Federal regulations and SIP's. Rather than specifying a precise 

approach to the BACT analysis, EP,* is proposing today to clarify 

tvo core legal requirements that are necessary for an adequate 

BACT analysis under existing lav. In revieving nev or revised 

State PSD rules submitted for SIP approval, the Agency vill deem 

the program to be adequate if it specifies that these tvo 

t 

requirements are necessary.for an adequate BACT analysis. 

Likevise, in fulfilling-its oversight and enforcement 

responsibilities, the Agency vill continue its policy of 

revieving specific permitting actions for conformity vith the 

core criteria. So long as the State has carefully evaluated each 

candidate system, justified the choice of one over each of the 
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others in terms of the statutory criteria, othervise folloved the 

procedural norms embodied in the core criteria, and ensured the 

decision vould not violate any objective standards that may apply 

(such as NSPS or SIP limits), EPA vill consider a State's BACT 

analysis to be adequate and vill not second-guess the State's 

substantive BACT decision. Thus, under today's proposal, 

adherence to any specific BACT approach, such as top-down or 

bottom-up, is not required. Rather, today's proposal is intended 

to ensure adherence to the core criteria such that States aake 

reasoned and informed BACT determinations in a publiclyaccountable manner. Further, the States have vide discretion in 

setting the veight assigned to each statutory factor (energy, 

environmental, economic and other costs) in comparing and 

balancing the relative effects of the various BACT options. 

Whichever approach is selected, the BACT.analysis should include 

a complete explanation of the procedures v.sed by the State to 

assess the energy, environmental, and economic impacts and any 

supporting data. Permits containing BACT determinations that do 

not conform to the PSD requirements of the Act, EPA regulations, 

and applicable SIP's, as reflected in the core criteria, vill be 

r' 

considered deficient by EPA. Instances of procedural 

/" 

irregularities or arbitrary decision making vill remain grounds 

for/EPft-sofcioj?*, as appropriate. 

The EPA is today soliciting comment on the proposed 

clarification to the BACT definition for the purpose of 

clarifying and delineating the regulatory standard by vhich the 

-
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INSERT FOOTNOTE ON P.17 

EPA's 1979 guidance discussed the use of affordability analysis. During the early 

1980% this was permitted in some cases and not others. However, in 1987, EPA 

adopted a uniform national policy that affordability should not be a factor in BACT 

analyses. EPA is now revisiting this issue. 
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INSERT AS PART OF FOOTNOTE ON P. 26 

In today's rulemaking, EPA affirms that any applicant may provide an inaemental 

ambient analysis as part of its BACT submission, and if so, the state should consider 

it in making a BACT determination. Likewise, a state may request such an analysis 

of any applicant as a part of its BACT process. Moreover, EPA intends to provide 

further guidance on how tiiese issues may be addressed by states and applicants.'