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# OAR Box 

# 1787 Prepped byOllie Stewart



## Document

Number: 

# 35 ) ll-B-2 0 Docket Number: 

# A-90-3 7

Printed 11/4/200810:22:19 AM

Sheet 35of 147P. 2 

# '.-.- - .^ * A- 70 -37

„^" s '«- . I X\?Z 2 ? UNITE D STATE S ENVIRONMENTA L PROTECTIO N AGENC Y %ono^° vREGIO N I V 34 5 COURTLAN D STREE T ATLANTA , GEORGI A3036 5 

### MEMORANDUM 

## DATE : FE B 1 0 i SUBJECT : Issue s Raise db yAlabam a Concernin g th e Implementatio no f "Top-Down "

BAC T (} ^
.. - \
. ,, , 

### FROM : Bruc e P . Miller , Chie f JD>-^-*-*-

- \ •- V^Oifv * . : • ' *,'
_ Ai r Program s Branch , Regio nI V \ "

' z. - '" " ;' • , L 

### ,EI ' 

## ' TO : E d Lillis , Chie f / ^ 2 bId J \\t Non-Criteri a Pollutan t • Program s Branc h' -yT"

_ i , _ . i 

### A s portraye ddurin g Regio nIV s presentatio na t th e Ne wSourc e Revie w conferenc e i n Denver , Colorado , thi s year , w e hav e bee nliterall ybombarde d wit hquestion s arisin g ou t o f th e "top-down " BAC T implementation . Althoug hw e certainl ysuppor t th e "top-down " BAC T procedur e and concepts , w e als o believ e tha t man yo f th e question s raise dbystate s ar e german e issue s whic hclearl y mus t b e addresse dt o successfull yimplemen t th e "top-down " approach . Severa l o f thes e question s relat e directl yt o th e BAC T procedure s themselve s whil e other s questio nEPA' s authorit yt o implemen t thi s ne wconcept . Regio nI V

ha s bee naccuse db you r Stat e Agencie s a s bein g inconsisten t wit h othe r Regiona l Office s i n it s overvie wo f state-issue dPS D permits . Base do n 'ou r discussion s wit hth e othe r Regiona l Office s an d Gar yMcCutche ndurin g th e I Denve r conference , i t doe s appea r tha t Regio nI V ma yb e interpretin g and implementin g th e Decembe r 1 , 1987 , Crai g Potte r memorandum("Improving Ne w Sourc e Revie wImplementation" ) differentl ytha nothe r Regions . Thi s fac t i s extremel ydisconcertin g i n tha t th e goa l o f th e "top-down " approac hi s t o ensur e consistenc yan d certaint yi n PS D permits . W e realiz e tha t forma l EP Aguidanc e o n implementin g th e "top-down " approac hi s severa l month s away . I t i s imperative , however , tha t th e state s b e give nmor e specifi c guidanc e i n th e interi mi f th e "top-down " proces s i s t o b e meaningfu l andrealize di n th e near-term . T o thi s end , w e as k tha t yo u revie wth e attache dissue s raise dbyth e Alabam a Departmen t o f Environmenta l Managemen t (ADEM ) an d respon dt o u s accordingly . W e hav e receive dfou r (4 ) letter s fro n ADE Mregardin g "top-down " BAC T whic har e attache dfo r you r consideration : tw o (2 ) letter s date dDecembe r 16 , 1988 , t o Bruc e Miller ; on e (1 ) lette r date d Januar y20 , 1989 , t o Gree r Tidwell ; an d on e (1 ) lette r date dJanuar y24 , 1989 , t o Winsto nSmith . T o th e exten t o f avoidin g duplicat e questions , w e as k tha t Regio nI V

b e give na respons e t o each . W e hav e formulate da Regiona l respons e t o man yo f th e issue s raise db yADEM , and thes e position s ar e outline di n th e attache dbriefin g documents . O n Januar y10 , 1989 , a meetin g wa s hel di n Atlant a betwee nADEM , th e Regiona l Administrato r and Regiona l progra mstaf f t o discus s som e o f thes e issues . Pleas e fee l fre e t o carnrten t o n thes e document s a s well .P. 3

» J i 

### -2-

Furthermore , i n th e January24 , 1989 , lette r fromADE Ma meetin g wa s requeste d betwee n Alabama , Regio n I V and Headquarter s t o discus s thes e issues . W e wis h t o arrang e thi s meetin g a t you r earlies t possibl e convenience . Pleas e contac t m e upo n you r receip t o f thi s memorandu ms o tha t a meetin g time an d plac e ma yb e established . Attachment sP. 4 /
. - K <">B<Ot >

III*I ' •'. 

## ALABAM A^-^~ > DEPARTMEN TO F ENVIRONMENTA L MANAGEMEN T^^ V
Leig h Pegues , Directo r 

### Januar y 24 , 198 9 Gu yHun t Governo r
175 1 Cong . W . L

. Dickinso n Driv e Montgomery , A

L .3613 0 205/271-770 0

Fiel d Offices : Uni t 806 . Buildin g 8 22 5 Oxmoo rCircl e Birmingham , AL 3520 9 205/942-616 8 P.O . Bo x95 3 Decatur , A L 3560 2 205/353-171 3 220 4 Perimete rRoa d Mobile . A L 3661 5 205/479-233 6 Mr . Winsto n A . Smith , Directo r

Air , Pesticides , and Toxic s Managemen t Divisio n U . S . Environmenta l Protectio n Agenc y Regio n IV 34 5 Courtland Stree t Atlanta , G

A3036 5 Dea r Mr . Smith : 

# ll ! • t f ^ "i n iy-\ ?T7— : B ; .V;;;.I;,:.:.: V 

### ATLANTA , GA . i •• ; - ' • I

. * • x : •,.,..5i„"E"_- *

Thi s lette r i s intende d t o rais e additiona l issue s dealing wit h EPA' s significan t chang e i n expectation s regarding th e procedure s fo r determining Bes t Availabl e Contro l Technology(BACT ) pursuan t t o th e Preventio n o f Significan t Deterioratio n (PSD ; regulations . Whil e I hav e previousl ysen t letter s t o th e Regiona l Offic e identifying ADEM' s concerns , I wil l attemp t t o summariz e and expand upo n them i n thi s letter . Alabama' s concern s ca n b e suttmarize d i n fou r basi c questions : 1 . Wh yi s a rul e chang e no t necessaryt o implemen t suc h a basi c chang e i n ho wa regulatio n i s implemented ? 2 . Absen t a rul e chang e (wit hequivalen t change s i n stat e regulations) , wh

yshoul d a n interna l EPAmemorandu mchang e th e states ' long standing interpretation s o f thei r regulation s whic har e adopte d pursuan t t o stat e authority ? 3 . Give n th e absenc e o f an ymeaningfu l EPAguidance , wha t ar e th e criteri a EPAwil l us e t o identif yacceptabl e stat e reviews ? 4 . Wh yi s affordability/profitabilit ya legitimat e criteri a fo r routinel ydeciding th e appropriat e leve l o f contro l fo r ai r emissions ? I hav e attache d a copyo f m yDecembe r 1 6 lette r whic hdiscusse s i n greate r detai l th e issue s identifie d i n item s 1 , 2 , and 3 above . Ther e ar e severa l aspect s o f th e "affordability " issu e howeve r whic hI als o thin

k warran t consideration . 1 . Sinc e som e corporation s operat e mor e efficientl ythan other s and affordabilit yi s essentiall yth e onl ycriteri a fo r rejecting th e "top " leve l o f BACT , won' t th e les s efficien t plant s b e "rewarded " byhavin g t o spend les s fo r controls ?P. 5



### Mr . Winsto n A . Smith , Directo r . - 2 - Januar y24 , 198 9

2 . I f th e "top " control s shoul d b e require d unles s the yar e no t affordable , wha t criteri a shoul d b e use d i n determinin g affordability ? I s ther e a certai n percentag e o f a plant s profit s tha t defin e affordabilit yo r a profi t margi n tha t i s acceptabl e t o EPA ? 3 . Assum e a greenfiel d kraf t pul p mil l i s propose d wit hth e multipl e emissio n point s normall yassociate d wit hsuc h a n operatio n an d th e norma l profi t margin . Acalculatio n coul d b e performe d whic hidentifie s th e tota l dollar s whic har e "affordable " fo r ai r pollutio n controls . a . Wha t factor s shoul d b e considere d i n allocatin g thes e affordabl e cost s amon g th e variou s emissio n point s regulated ? Shoul d thes e includ e ai r qualit y Einipacts i n th e vicinit yo f th e plant , contributio n t o aci d rain , ozon e formation , o r th e greenhous e effect ? b . Wha t factor s shoul d b e considere d i n allocatin g thes e affordabl e cost s amon g th e variou s pollutant s emitte d byth e sources ? Woul d i t b e acceptabl e t o EP Afo r a stat e t o requir e mor e tha n "top " BAC T fo r TR S source s i n exchang e fo r les s tha n "top " BAC T fo r N O sinc e th e primar ypubli c concer n i s odor s fro mluc hoperations ? 4 . Assum e a n existin g mil l wit hth e sam e profi t margi n a s th e previou s exampl e propose d t o replac e it s recover y boiler . Th e tota l dollar s whic har e "affordable " woul d b e th e sam e a s th e previou s example . I f a highe r leve l o f contro l wa s rejecte d i n th e previou s exampl e becaus e o f "affordabilit ywoul d i t b e expecte d a t thi s plan t sinc e i t woul d b e affordable . 5 . Wha t approache s woul d EP Asugges t i n determinin g affordabilit y fo r utilitie s whos e rate s ar e regulate d byth e state ? 6 . Shoul d expenditure s bya plan t whic har e clearl ybeyon d th e nor mfo r controllin g wast e wate r discharge s o r solid/hazardou s wast e generatio n (whic hma yaffec t affordability ) b e considere d i n th e BAC T analysi s i f thes e control s addres s a n environmenta l impac t o f greate r significance ? Th e attempt s byEP At o implemen t "to p down " BAC T absen t meaningfu l guidanc e hav e eliminate d ou r abilit yt o proces s permi t application s wit hanyconfidenc e tha t EP Awil l no t object . „I_Ask

_thajt_yoLL_arrange a_meetin g wj.th_ADEM , you r staff , an d appropriat e headquarter s personne l t o discus s thes e issue s in~tHe^nex t severa l weeks .P. 6



### Mr . Winsto n A . Smith , Directo r - 3 - Januar y24 , 198 9

I appreciat e you r willingnes s t o continu e t o wor k wit hu s t o resolv e thi s issue . I f anyo f th e informatio n containe d i n thi s lette r o r attachmen t require s clarification , pleas e contac t m e a t 205/271-7861 . Sincerely , / / ^



### cd E . Grusnick , Chie f Ai r Divisio n REG:u n Enclosur e cc : SESAR MState sP. 7

.Ft . 

## ALABAM A

DEPARTMEN TO F ENVIRONMENTA L MANAGEMEN T Gu yHun t Leig h Pegues , Directo rJanuar y20,-. . 198 9 . Governo r 175 1 Cong . W . L

. Dickinso n Driv e Montgomery , AL 3613 0 

### 205/271-770

0 TV

- '•

'
. :..-abl eGree r

C
. Tidwel l 

### •'.-: : "iiiistr ate r L:iv^_..-.i.,-ir_ta

lProtectio nAgenc

y Fiel doffices : Regio nIV

32. 5 Courtlan dStree t uni t 806
. Buildin g 8 Atlanta,
. G

A3036 5 22 5 Oxmoo rCircl e y-'^L<.t < • 

### Birmingham , A LDear

Mrr-TiaweTI : 3520 9 

### 205/942-6168 Thi s i s a follow-upt o ou r meetin go f Januar y 10 , i nyou r offic e regardin gth e attempt s b y EPA t o implemen t th e "to pdown " p.o . Bo x953 approac ht o makin gBes t Availabl e Contro l Technolog y (BACT ) Decatur, ALjudgement s unde r th e Preventio no f Signifigcan t Deterioratio n(PSD ) 3 560 2 

### regulations . I appreciat e the tim e yo uandyou r staf f devote d 205/353-1713 t o meetin gwit hu s o nthi s issu e o f significan t importanc e t o th e

Region , an da t th e ris ko f bein gslightl y repetitious , I woul d 220 4 Perimete

r Roa dlik e t o summariz e the situatio nfro m ou r perspective . Mobile . A L 366, 5 

### I hav e enclose dflow chart s whic hsutmariz e th e tw o approache s 205/479-2336 identifie db y EP A fo r makin gBAC T decisions . EPA' s "origina l BACT " approac hemphasize dth e rol e o f th e stat e i nbalancin gth e contro l costs , an denvironmental/energy cost s an dbenefit s i ndecidin g th e leve l o f contro l whic hrepresent s BACT . Thi s approac hha s bee nuse db y

EP A andmos t state s t o mak e BAC T decision s fo r nin e years . EPA' s "to pdown " BAC T approach , however , focuse s almos t exclusivel y

on"affordability " o f th e controls . I hav e include d excerpt s fro

m EPA' s guidanc e o nth e two technique s whic hclearl y identifie s th e contrast s i nth e approaches . EPA' s chang e t o th e "to pdown " BAC T approac hdisregard s th e approac huse dfo r nin e year s by EP A an dmos t state s i nmakin gthes e judgements . Suc ha radica l chang e shoul dno t (andprobabl y cannot ) b e implemente dthrougha ninterna l EP A polic y memorandum . Th e difficultie s engendere db y EPA' s propose dchang e ar e exacerbate d b y th e lac ko f any

meaningfu l guidanc e fo r th e crucia l decision s necessary

t o implemen t th e approach . A review o f th e flow

diagram fo r '*To pDow nBACT " indicate s ther e ar e thre e decision s whic har e crucia l t o thi s process . Thes e are : 1 . Wha t i s "top " leve l o f contro l whic hshoul db e considered ? 2 . Wha t contro l cost s ar e "reasonable" ? 3 . Wha t contro l cost s ar e "affordable " (i.e. , wha t leve l o f profit s ar e acceptabl e t o EPA) ?P. 8



### Th e Honorabl e Gree r C . Tidwel l

- 2 - Januar y20 , 198 9

hav e EP Aha s provide d n o meaningfu l guidanc e fo r state s o r applicant s t o us e i n identifyin g anyo f thes e thre e crucia l parameters . Thi s ambiguit yresult s i n second guessin g o f stat e permittin g decision s whic hwer e acceptabl e si xmonth s ag o an d a n inabilit yo n th e par t o f th e stat e t o proces s application s wit hanycertaint ytha t EP A vil l no t object . Especiall ytroublin g i s th e fac t tha t severa l recen t applicant s indicate d t o u s tha t Regio n IV' s expectation s fo r includin g "affordability " i n th e BAC T justificatio n exceed s th e expectation s fi r similar , recen t project s i n ethe r EP ARegie-:::: . Thes e conment s hav e com e fro msevera l divers e industria l categorie s an d ou r contac t wit hsevera l state s i n othe r Region s see mt o confir m thi s allegation . I n sunmary , I as k that : 1 . Yo u encourag e headquarter s t o implemen t suc ha basi c chang e i n makin g BAC T decision s throug ha rul e change ; 2 . Regio n I V

implementatio n o f ne wBAC T procedure s b e initiate d upo n receip t o f meaningfu l guidanc e fro m headquarter s whic h identifie s th e criteri a EP Awil l us e i n it s oversigh t an d tha t informatio n ha s bee n provide d th e states ; an d 3 . I n orde r t o provid e additiona l background , I as k tha t you r staf f determin e whethe r Regio n IV' s implementatio n o f wha t a t thi s tim e mus t b e categorize d a s nebulou s guidanc e fro mheadquarter s ha s bee n consisten t wit hit s implementatio n i n othe r EP ARegions . A s always , I appreciat e you r willingnes s t o wor k wit hu s i n seekin g a reasonabl e solution . I f anyo f th e informatio n containe d i n thi s lette r require s clarification , pleas e contac t Richar d Grusnick , Chie f o f th e Department' s Ai r Divisio n o r mysel f a t 205/271-7700 . Sincerely ,

LP/RG:u n Enclosure s cc : Stat e Director s es , Directo r

### i/8 9 ORIGINA L BAC T (12/7 8 - 12/87 )

Requir e Previou s Leve l o f Contro l 

## N o

Evaluat e Nex t highe r Leve l o f Contro l Calculat e Incrementa l Annua l Dollars/To n Contro l Cost s Identif y Incremental : 1 . Envirormenta l Improvement/Co s t s 2 . Energy

Costs/Saving s 3 . Othe r Cost s D o Benefit s 'GainedJustif y

the ^ Additiona l Costs?* .



## Ye s

•Primaril y

a stat e judgemen t base do na balancingo f th e factor s require dt o b e considere db y

th e regulations .

C O

### T O PDOW NBAC T (Potte rMem

o o f 12/1/87 ) 1/8 9

Requir e Control s

Identif y Maxinun Leve l o f Contro l Calculate

Annua l Contro l Costs . (dollars/ton ) Evaluate Nex t Lowes t Contro l Leve l

*I f control s ar e technicall y infeasible , the optio ni s als o rejected .P.1 1 

### buiueu.itf s ro r ueierftnmn gB6S t Availabl e

Contro l Technology

(BACT )
Th e attache dpage s consis t o f direc t quote s fro m fou r EPA document s tha t presen t guideline s fo r determinin gBes t Availabl e Contro l Technology

(BACT) . Thes e fou r document s are : 1 . Guideline s fo r Determinin gBes t Availabl e Contro l Technology , (BACT) , Decembe r 1978 . Th e document , publishe d b y the Offic e o f Air , Noise , andRadiatio no f th e Offic e o f Ai r Qualit y

Plannin gandStandard s o f th e EPA , wa s a par t o f the worksho pmanua l use dinthe EPA' s 198 0 PS D workshops . Thi s worksho pmanua l 1 s stil l par t o f EPA' s Sel f Instructiona l Cours e No . 453 , Overview o f PS D Regulations . Thi s guidelin e i s the onl y forma l guidelin e publishe db

y EPA for determinin gBACT . r « 

### 2 . Bes t Availabl e Contro l Technology Guidanc e Document , EPA Region9 , New

Sourc e Section , Apri l 1987 , DRAFT . Thi s guidanc e document , althoughpresente da s a DRAF T document , wa s include dInthe Novembe r 198 7 EPA Regio nIYNew

Sourc e Review Workshop . 3 . J . Crai gPotter , Assistan t Administrato r fo r Ai r and Radiation , EPA ; Decembe r 1 , 1987 , Memorandu m onImprovin g New Source Review

(NSR ) Implementation . Thi s 1 s th e "Potte r Memo " whic hIntroduce s guidanc e o nth e us e o f th e "top-down " approac ht o BACT . 4 . Suggeste dApproache s fo r Determinin gBes t Availabl e Contro l Technology

(BACT ) andLowes t Achievabl e Emissio nRate s (LAER ) (DRAFT) , Januar y 1986 , prepare db

y Radia nCorp . fo r New Sourc e Review

Sectio nContro l Program Developmen t Division , U . S . EPA , RTP , N.C . Thi s guidelin e document , althoughpresente da s a DRAF T documen t wa s include dI nth e Jul y 198 6 EPA

RegionI

V New Source Review

Workshop .
Item s 1- 3 ar e presente donth e attache dtable , whil e item 4 i s presente donthe las t page .

### Guideline s fo r Determinin gBes t Availabl e Contro l Technology

(BACT )
198 0 PS DWorksho pManua l "Fo r eac hpollutant , th e BAC T permi t applicatio nshoul dpresen t contro l alternative s whic hhave greate r contro l capabilitie s tha n th e syste

m propose da s BAC T an d whic hhave bee nuse do r propose d fo r the sam

e o r simila r applications. " (p . S ) 198 7 Guidanc e Documen t 198 7 Potte r Memorandu m "...th e selectio nandjustificatio n o f a contro l alternativ e a s BAC T shoul dbegi nwit hth e mos t stringen t contro l alternative , generall y represente db

y LAER. " (p . 7 ) "LAERwil l be th e startin gpoin t I n an y BAC T analysi s andBAC T wil l b e presume dt o be equa l t o LAE R unles s circumstance s uniqu e t o th e propose dprojec t are...justified , (p . 15 ) "The firs t ste pi nthi s approac hI s t o determine , fo r the emissio nsourc e I n question , th e mos t stringen t contro l availabl e fo r a simila r o r Identica l sourc e o r sourc e category. "

2 . "Unrealisti c alternative s need"...no technicall y feasibl e no t be presente dsucha s placingalternativ e shoul db e rule dou t a s a I nserie s contro l equipmen t whic hpossibl e BAC T candidate. " (p . 7 ) I s normall y

use dalon e (e.g. , a n ES P followe db

y a baghouse). " (p . 6 )
3 . "I t I s th e clea r Inten t o f EP A no t t o requir e ananalysi s o f th e ful l proportio ndescribe dherei n fo r smal l sources... . Inshort , the BAC T analysi s shoul db e hel d t o a minimu

m wit hthe dept ho f analysi s beingdependen t o nthe difficult y

o f the decision. " (p . 2 & 3 ) " A char t shoul db e prepare dfo r eac h pollutan t an

dfo r eac hemission s unit , o r smal l grou po f unit s i nthe BAC T analysis. " (p . 10 ) "I f a napplican t select s th e mos t stringen t contro l alternativ e availabl e (LAER) , the nno furthe r analysi s I s necessar y fo r th e regulate dpollutants. " (p . 15 ) "I t (top-dow nBACT ) als o differ s fro m othe r processe s I ntha t I t require s th e applican t t o analyz e a contro l technology

onl y I f the applican t oppose s tha t leve l o f control ; the othe r processe s require da ful l analysi s o f ^ npossibl e type s an d level s o f c o ' o

l above the baselin e case. "

### 198 0 PS DWorksho pManua l

"Thi s analysi s shoul daddres s the economi c impacts"associate dwit h the incrementa l cost s o f Installin gandoperatin g alternativ e contro l system s abov e th e economi c impac t associate d wit hthe system

propose da s BACT. " (p . 13 ) "The guidelin e doe s no t impl y tha t the BAC T decisio nshoul d forc e new

project s t o th e brink o f cancellation. " (p . 15 ) "As a guid e I ndeterminin gwhe n contro l cost s become excessive , alternativ e contro l system s ca n be compare dI nterm s o f certai n cos t effectivenes s ratios . Suc h ratio s ma y

Includ e the following : 4 

### rati o o f tota l contro l cost s t o tota l Investmen t costs . ° cos t pe r uni t o f pollutio n remove d(dollars/ton )

° cos t versu s additiona l portio no f remainingPS D Incremen t preserve dfo r futur e growth . ° uni t productio ncost s (mlll/kw-hr , dollar s pe r ton o f steel , etc.). " (p . 14 ) 198 7 Guidanc e Documen t 198 7 Potte r Memorandu m "I nevaluatin gthe economic s o f variou s BAC T contro l options , primary consideratio nshoul dbe give nt o th e cos t effectivenes s o f anoptio nandno t the economi c situatio no f the sourc e applleant....a napplicant' s abilit y t o affor da contro l optio nshoul d no t greatl y

Influenc e the choic e o f a contro l optio na s BACT , especiall y wher e thes e contro l option s hav e bee napplie dt o tha t sourc e category. " (p . 12 ) "A nanalysi s o f th e cos t o f contro l option s onthe basi s o f dollar s pe r tono f pollutan t controlle dshoul d als o be conducte dfor eac hpollutan t subjec t t o BACT . A

compariso n shoul dbe mad e t o the cost s o f control s fo r othe r sourc e categorie s andothe r Industries . A complet e economi c analysi s shoul dcompar e cost s o f control s bot hwithi nthe specifi c sourc e category unde r review anda s a compariso no f costs , onthe basi s o f dollar s pe r tono f pollutan t removed , for othe r Industries. " (p . 13 ) "I f 1t.ca,n,b e shovntha t thi s leve l o f contro l i s technicall y o r economicall y Infeasibl e fo r tho sourc e I nquestion , the nthe nex t mos t stringen t leve l o f contro l I s determine dandsimilarl y evaluated. "

"Thi s proces s continue s unti l the BAC T leve l unde r consideratio ncanno t b e eliminate db

y an y substantia l o r uniqu e technical , environmental , o r economi c objections. "

C O

### 198 0 PS DWorksho pManua l

6 . " A critica l decisio ni nth e BAC T analysi s i s the relativ e weigh t assigne dt o the energy , environmental , andeconomi c Impacts . Congres s Implie dtha t thi s decisio nshoul db e mad e b y the State , thu s allowin gsom e flexibilit y

I nemissio ncontro l requirement s dependin go nloca l energy , environmental , and economi c condition s andloca l ' preferences . Thi s flexibl e approac hallow s th e permittin g authorit y

t o conside r a numbe r o f loca l factor s (— , the amoun t o f th e ai r qualit y

Incremen t tha t woul dbe consumed,—)—I n decidin go na weightin gscheme. " (p . 4 ) "The primary

purpos e o f BAC T I s t o optimiz e consumptio no f PS D ai r qualit y

Increment s thereb

y enlargin gthe potentia l fo r futur e economi c growt hwithou t significantl y

degradin gai r quality . Th e Ac t place s th e responsibilit y

o f determinin g BAC T wit hth e Stat e onc e a PS D SI P revisio ni s approved. " (p . 3 ) 198 7 Guidanc e Documen t 198 7 P'-tte r Memorandu

m

" A stringen t BAC T wil l no t b e dismisse dbecaus e o f a low Impac t o n ambien t ai r quality. " (p . 17 )

T l

### 198 0 PS D Worksho p Manua l

7 . "Th e BAC T decisio n shoul d reflec t polic ydecision s "t o conserv e th e availabl e ai r qualit yIncremen t fo r futur e growth. " (p . 15 ) "...th e leve l o f contro l required fo r a proces s undergoin g modificatio n o r reconstructio n ma yno t b e a s stringen t a s tha t

, whic hwoul d b e require d I f the sam e proces s wer e bein g constructe d a t a grass-root s facility. " (p . 8 ) "Th e ne t environmenta l Impac t associate d wit heac halternativ e emissio n contro l syste m shoul d b e determined,— . Th e analysi s shoul d b e presente d I n th e for m o f th e Incrementa l Impac t o f alternativ e contro l system s relativ e t o th e system s propose d as.BAC T i n th e permi t application. " (p . 11 ) "Thi s analysi s shoul d addres s th e economi c Impact s associate d wit h th e Incrementa l cost s o f Installin g and operatin g alternativ e contro l system s above th e economi c Impac t associate d wit hth e syste mpropose d a s BACT. " (p . 13 ) "Th e direc t cos t fo r eac hcontro l alternativ e shoul d b e presente d bot ho n a n incrementa l and o n a n overal l basis. " p . 14 ) 198 7 Guidanc e Documen t "Fo r ne wmajo r sources , eac hemissio n poin t wit hanyemissio n rat e o f th e applicabl e pollutan t I s subjec t t o th e BAC T requirement . Fo r majo r modifications , eac hemissio n poin t a t whic ha n Increas e i n th e applicabl e pollutan t occur s I s subjec t t o BACT. " (p . 6 ) 198 7 Potte r Memorandum

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T l EEr iP.1 6 * I 

### Guideline s fo r Determinin gBes t Availabl e Contro l Technology

(BACT ) January 198 6 Suggeste dApproache s 198 6 BAC T Guidanc e - 2 Approache s

"Tw o simila r ye t slightl y differen t approache s ar e availabl e for determinin gBAC T andLAER : the "bottom-up " andthe "topdown " approach. " p . 3- 1 Bottom-upApproac h

' "The bottom-upapproac hfo r determinin gBAC T (an dLAER ) i s

. discusse dI ndetai l i nthe PS Dworksho pManua l Issue d1 nOctobe r 1980. " p . 3- 2

"Eachcontro l i s thenevaluate dfo r It s economic , energy , andenvironmenta l Impacts " p . 3- 4

"Incrementa l cost-effectivenes s calculate db y dividin g differenc e Inannua l cost s b y differenc e i nemission s reduction. " p . 3- 8 "The nex t stepinvolve s estimatin gth e energy impact s o f eac hPM contro l alternative...Onl y direc t energy

consumptio nI s considered. " p . 3- 4

"The environmenta l Impact s o f eac halternativ e mus t als o b e considered . Th e applican t mus t asses s the relativ e ambien t ai r impact s o f PM

emission s b

y estimatin gstac kparameter s fo r eac h alternativ e i norde r t o creat e inpu t fo r a dispersio nmodel. " p . 3-1 0 "To determin e BACT , the economic , energy andenvironmenta l Impact s ar e evaluate dagains t eac hother " p . 3-1 0 Top-dow nApproac h "I f I t ca nbe prove ntha t the chose nBAC T I s no t applicabl e o r I s technicall y

o r economicall y

Infeasibl e fo r the sourc e I n question , the nex t mos t stringen t BAC T I s chosen. " p . 3-1 0OM N9 IDU! )

ISSUE : Som e state s i n Regio n I V hav e questione d EPA' s implementatio n o f th e "top-down " approac h fo r determining Bes t Availabl e Contro l Tectuiolog y(IJACT ) i n Preventio n o f Significan t Deterioratio n (PSD ) permi t reviews . Severa l r.tates hiv e indicate d tha t the ylik e th e ol d BAC T proces s tha t ha s bee n i n plac e fo r th e pas t severa l year s and di d no t se e a nee d t o chang e it . EPA' s implementatio n o f a "top-down " BAC T approac hwithou t adequat e stat e acceptanc e and suppor t ha s th e potentia l t o caus e deterioratio n o f Si.ate/EP Arelationship s whj.c hcoul d destro y th e overal l succes s o f £h e ne wsourc e revie wpermitting process . Thi s i s especiall ytru e sinc e EP Ai s pushin g th e "top-down " BAC T approac hwithou t adequat e guidanc e o n ho wt o implemen t o r performa "top-down " BAC T analysis . Thi s briefin g pape r wil l addres s some o f th e question s raise d byAlabama and EPA' s positio n o n each . SIGNIFICANC E O F TH E AGENCY ; Major . Th e determinatio n o f BAC T i s a critica l aspec t o f al l PS D reviews . Furthermore , EPA' s relationshi p wit hth e State s i s ke yt o a positiv e workin g partnershi p fo r achieving ou r mutua l goal s i n protecting th e environment . NEX T CRITICA L DATE ; NA CURRENT AGENC Y POSITION ; Th e Regio n believe s tha t th e "top-down " BAC r procedur e conceptuall y agree s wit hth e intention s o f Congres s i n defining PS D objectives . W e als o believ e tha t th e Region' s implementatio n o f th e "top-down " BAC T procedur e i s consisten t wit hothe r Regiona l Office s a s wel l a s wit hnationa l EP Adirectives . Tli e Regio n doe s recognize , however , tha t guidanc e i n implementing th e "top-down " BAC T procedur e i s currentl ylimited , and man yquestion s hav e bee n raise d byStat e agencie s whic hclearl yshoul d b e addresse d byEPA . BACKGROUND ; A s note d i n th e Decembe r 1 , 1987 , polic ymemorandu mfro mJ . Crai g Potter , entitle d ''Improvin

g Ne wSourc e Revie w(NSR ) Implementation" , BAC T (an d LAER ) determination s ar e perhap s th e mos t misunderstoo d and th e leas t correctl yapplie d o f al l th e NS R processes . Tlie BAC T alternatives , i f presente d byth e applican t a t all , ar e ofte n poorl ydocumente d o r biase d t o achiev e th e decisio n th e applican t desires . T o bring consistenc yt o th e BAC T process , EP Ai s currentl yrequiring th e us e o f th e "top-down " approac ht o BACT . Tli e firs t ste p i n thi s approac hi s t o determine , fo r th e emissio n sourc e i n question , th e mos t stringen t contro l availabl e fo r a simila r o r identica l sourc e o r sourc e category . I f i t ca n b e shown tha t thi s leve l o f contro l i s technicall yo r economicall yinfeasibl e fo r th e sourc e question , the n th e nex t mos t stringen t leve l o f contro l i s determine d an d similarl yevaluated . Thi s proces s continue s unti l th e BAC T leve l unde r consideratio n canno t b e eliminate d b yan ysubstantia l o r uniqu e technical , environmental , o r economica l objections . Thus , th e "top-down " BAC T approac h shift s th e burde n o f proo f t o th e applican t t o justif ywhyth e propose d sourc e i s unabl e t o-2-

appl yth e bes t technolog yavailable . I t als o differ s fro mpreviou s procedure s employe d t o determin e appropriat e BAC T level s o f contro l i n tha t i t require s th e applican t t o analyz e a contro l technolog

yonl yi f th e applican t oppose s tha t leve l o f control . EPA' s requiremen t t o employa "top-down " BAC T analysi s ha s prompte d severa l question s bystat e agencies . Th e question s raise d b yAlabama and ou r Regiona l response s ar e a s follows : 1 . Whyi s a regulatorychang e no t necessaryt o implemen t suc ha basi c chang e i n policy ? EPAResponse : Th e definitio n o f BAC T a s containe d i n th e Clea n Ai r Ac t ha s no t changed . Th e "top-down " approac hi s merel ythough t t o b e a bette r procedur e fo r arrivin g a t a n appropriat e leve l o f BACT . EPA , therefore , believe s a regulatorychang e i s no t required . Ther e hav e bee n some lega l issue s raise d byoutsid e partie s a s t o whethe r EP Aca n legall y requir e thi s "top-down " approac hwithou t goin g throughprope r rulemaking . W e don' t believ e thi s i s th e case , however , thi s issu e rrw yb e resolve d a t som e late r dat e a s a resul t o f a cour t decision . 2 . Ho wconstraining doe s EP Avie wthi s guidanc e fo r state s whic hhav e adopte d regulation s pursuan t t o stat e authority ? EP AResponse : State s hav e argue d th e positio n tha t onc e a stat e ha s bee n delegate d th e exclusiv e authorit yt o issu e PS D permit s (throughSIP-approve d regulations ) the n EP A shoul d no t second gues s th e state' s judgemen t i n issuing thos e PS D permit s a s long a s th e stat e implemente d th e prope r procedure s and requirement s o f th e Clea n Ai r Act . EP Aha s alway s hel d th e positio n tha t i t ha d authority , unde r th e Clea n Ai r Act , t o overvie wth e PS D permittin g decision s mad e bySIP-approve d stat e program s t o insur e the yhav e full y considere d th e appropriat e level s o f contro l i n makin g thei r BAC T determination s leadin g t o th e issuanc e o f th e PS D permit . Admittedly , thi s issu e mayultimatel yb e resolve d throughfutur e cour t decisions . Sinc e w e hav e alway s maintaine d a positio n o f overvie w authorit yo f stat e issue d PS D permits , w e think i t i s appropriat e fo r th e stat e t o switc h ove r t o th e "top-down " BAC T approac hwithou t rulemaking . 3 . I/ha

t urgenc yrequire d EPAt o implemen t th e "top-down " BAC T approac hbefor e developin g guidanc e fo r it s implementation ?

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EP AResponse : On e o f the mai n factor s prompting tli e "top-down " BAC T approac hstemme d from the Agency' s concer n o f consistenc yan d certaint yi n PS D permits . Thi s cam e t o th e attentio n o f EPAthroughit s Nationa l Ai r Audi t Syste m(NAAS ) whic hstarte d i n F Y 84 . Th e NAA S wa s a join t effor t o f the STAPPA , ALAPCO , an d EPAt o develo p audi t guideline s an d question s tha t woul d b e use d consistentl yo n a nationa l basi s fo r reviewing State/Loca l ai r programs . O n th e result s o f thes e audits , i t became apparen t tha t BAC P determination s wer e no t being don e consistentl ythroughou t the country . BAC T determinati'-n s wer e sometime s incomplete , al l contro l option s availabl e wer e no t alway s considered , an d severa l permittin g authoritie s defaulte d t o the Ne wSourc e Performanc e Standard s (NSPS ) fo r establishin g BAC f limitations . Du e t o thes e majo r deficiencie s whic hwer e occurrin g i n BAC r determinations , th e Administrato r clearl yindicate d i n the H-Powe r and Nort h Count yPS D remand s a nee d fo r th e "top-down " approac ht o BAC T determination:; . Thus , in hi s Decembe r 1 , 1987 , guidanc e memo , Crai g Potte r note d tha t the Regio n sli ; iL d immediatel y requir e tha t th e "top-down " approac hb e implemente d b yal l permitting aq< ••'•• < i-:s . Th e requiremen t fo r al l permitting agencie s t o immediatel yadop t thi s approac' 1 ' 3 designe d t o promot e nationa l consistenc ya s wel l a s t o preven t th e issuanc e o f anyfuLi " permit s containing obviousl ydeficien t BAC r determinations . I t certainl yi s tru e t ! i

_everything being equa l i t woul d hav e bee n beneficia l fo r permitting agencie s t o hav e r.i:cifi c EPA guidanc e o n ho wt o implemen t the "top-down " approac ht o BAC T befor e makin g i t a requirement . However , EPAbelieve d tha t th e nee d t o preven t the futur e i fianc e o f clearl ydeficien t BAC r determination s i n th e nea r ter moutweighe d th e ad^ Lag e o f delaying the implementing o f "top-down " BAC T unti l fina l guidanc e ha d bet.- ' leveloped . I t shoul d b e note d tha t i n th e absenc e o f fina l guidance , EPAha s give n broa' i flexibilit yt o permitting agencie s BAC T determination s s o lon g a s th e "top-down " approacl i wa s employe d an d th e agenc ypresente d a plausibl e rational e fo r no t requiring a certai n leve l o f contro l technology . 4 . Wh yi s incrementa l cos t analyse s no t th e mos t appropriat e basi s fo r makin g BAC F decisions ? EPAResponse : Whil e certainl yconsidered , the us e o f a n incrementa l cos t analyse s i n making BAC1 ' decision s ca n b e ver ydeceiving an

d usuall ytend s t o influenc e th e selectio n o f th e leas t effectiv e contro l option . Th e us e o f a n incrementa l cos t analysi s doe s no t adequatel yreflec t th e fac t tha t th e "top " leve l o f contro l ma yb e reasonabl yaffordabl e despit e a highincrementa l cos t o r tha t othe r source s hav e bee n require d t o instal l th e "top " control . Fo r thes e reasons , an d fo r nationa l consistency , th e Agenc yi s currentl y advocating a cos t analysi s whic hi s base d o n th e overal l cost s fo r removing a particula r pollutant . Fo r a mor e comprehensiv e discussio n o f thi s procedure , pleas e refe r t o th e attache d briefing document .

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5 . Wha t dollars/to n figur e i s s o hightha t i t shoul d generall yresul t i n th e rejectio n o f a contro l optio n a s BACT ? Wha t i s th e reasonabl e rang e fo r a dollars/to n figur e tha t shoul d resul t i n requiring th e contro l optio n absen t a demonstratio n of : uniqu e economi c considerations ? Wha t dollar/to n figur e i s s o lo wtha t th e contro l optio n shoul d b e require d eve n i f the cost s mak e constructio n o f th e tota l projec t uneconomical . EPAResponse : Ther e currentl yar e n o se t dollars/to n figure s in makin g th e appropriat e BAC T decision . Rather , th e agenc yha s bee n requiring th e applicant s t o presen t dat a t o suppor t argument s o f economi c infeasibilit yo f a project . Specifically , tha t th e cos t o f the contro l optio n i s clearl ybeyon d the rang e o f recen t cost s normall yassociate d wit h BAC T fo r th e typ e o f facilit yi n questio n and BAC r contro l cost s i n genera l fo r th e pollutan t an

d tha t the additiona l cost s woul d b e inappropriat e fo r th e source . Man yagencie s hav e indicate d tha t eve n i f theywer e t o emplo yth e "top-down " BAC T approach , theyd o no t kno wwha t th e "benc hmark " contro l cost s ar e o n eithe r a pollutan t o r sourc e categorybasi s whic hwoul d trigge r th e nee d fo r a n applican t t o develo p a ful l scal e economi c analysi s i n orde r t o rejec t a n otherwis e availabl e contro l option . EP A believe s expansio n o f th e BACT/LAE R clearinghous e dat a bas e t o includ e cos t analysi s dat a wil l minimiz e stat e concerns . 6 . Sinc e EPA' s polic ywil l requir e manydecision s t o b e base d o n specifi c plan t economic s and muc ho f thi s informatio n i s require d t o b e kep t confidentia l (i f requeste d b yth e source ) ho wwil l th e publi c b e allowe d t o meaningfull yparticipat e i n th e BAC r decisions ? EPAResponse : A t present , w e ar e no t awar e tha t thi s issu e ha s surfaced . Som e o f thi s informatio n ma yb e th e sam e informatio n whic hi s alread ybeing submitte d t o financia l institution s fo r getting appropriat e funding fo r th e project . W e ca n speculate , however , o f othe r alternative s i n providing convincing argument s t o justif yrejectio n o f a contro l optio n base d o n economics . On e exampl e ma yb e t o us e percentage s rathe r tha n firm financia l data . Th e Regio n wil l b e requesting Headquarter s t o addres s thi s question .7 . Wh yshoul d th e environmenta l impac t o f th e variou s contro l option s b e ignore d in making the BAC1 ' decisions ? EPAResponse : Environmenta l impact s relating t o a particula r optio n shoul d alway s b e considered . A s indicate d i n th e Nort hCount yRemand , th e permitting authorit yshoul d conside r th e effec t o f controlling unregulate d (ai r toxics ) pollutant s whe n makin g a BAC T determinatio n fo r a regulate d pollutant . Also , othe r environmenta l impact s whic hshoul d b e considere d in making a BACI ' determinatio n migh t b e the impac t o f a certai n contro l technolog

yo n generating toxic s waste s o r polLuting ground water , etc . Al l o f I hes e impact s shoul d b e considered . However , some state s an d applicant s ar e taking a differen t interpretatio n o f wha t environmenta l impact s mean i n th e definitio n o f BACT . Som e state' s an d applicant s tak e the positio n tha t "i f goin g froma lesse r degre e o f contro l t o a mor e effectiv e contro l doe s no t sho wa modele d differenc e i n ambien t impact s (o r littl e difference) , the n th e mor e effectiv e contro l devic e mayb e rejecte d regardles s o f it s affordability , additiona l pollutan t removal , etc . EPA' s positio n i s tha t i f th e mor e effectiv e contro l devic e i s clearl yaffordable , th e fac t tha t th e modele d ambien t concentratio n difference s ar e smal l canno t b e used a s th e sol e basi s fo r rejecting th e "top " option . I f state s wer e allowe d t o justif ythe rejectio n o f a contro l optio n base d o n merel ya n "insignificant " ambien t impact , suc hne wsourc e growt hi n rapidl yexpandin g area s woul d undoubtedl ystil l consum e significan t amount s o f availabl e increment . Suc h incremen t consumption , whic hcoul d hav e bee n economicall yavoided , wil l b e a t th e expens e o f futur e growt han d developmen t o f th e area .

T l h oISSUE ; Th e criteri a tha t EP Arelie s upo n to r determining whethe r a pollutio n contro l optio n i s feasibl e fo r a particula r industryar e no t containe d i n concis e writte n terms . Rather , th e Agenc yrelie s upo n case-by-cas e evaluatio n using previou s determinations , relate d lega l actions , and genera l guideline s a s a backdrop fo r determining the appropriatenes s ot " pollutio n controls . Althoughinexplicit , w e believ e tha t the criteri a an

d rational e employe d b ytli e Regio n i n thes e evaluation s ar e sound and reasonabl e i n th e absenc e o f specifi c Agenc yguidance . SIGNIFICANC E T O REGION ; Th e issue i s no t onl ysignifican t t o the Region , bu t als o o f concer n t o industry , stat e an

d loca l agencies , an d EP Aa s a whole . Ih e issu e bear s strongl yupo n th e public' s perceptio n o f EPA , it s consistencyan d it s impartia l natur e o f regulating industryuniforml ythroughou t th e nation . Environmenta l benefi t throughth e us e o f pollutio n control s mus t remai n i n a balance , a s intende d by Congresss , wit heconomic , energy , an d othe r environmenta l concerns . CURRENT REGIO

NPOSITION : Ihe primar yassertion s mad e b ya facilit yi n determinin g a n appropriat e leve l o f pollutio n contro l relyupo n an analysi s o f cos t effectivenes s and ambien t impacts . Th e Regio n believe s tha t our overvie wcriteri a employe d i n PS D review s i s fai r and equitable , and consisten t wit hAgenc y initiatives . BACKGROUND : A s note d in the Decembe r 1 , 1987 , policymemorandu mfromJ . Crai g Potter , entitle d "Improvin g Ne wSourc e Revie w(NSR ) Implementation" , BAC T (an d LAER ) determination s ar e perhap s th e mos t misunderstoo d and the leas t correctl yapplie d o f al l the NS R processes . Th e BAC T alternatives , i f presente d b yth e applican t a t all , ar e ofte n poorl ydocumente d o r biase d t o achiev e th e decisio n th e applican t desires . T o brin g consistencyt o the BAC T process , EPAi s currentl ydevelopin g specifi c guidanc e o n th e us e o f the "top-down " approac ht o BACT . Ih e firs t ste p i n thi s approac hi s t o determine , fo r th e emissio n sourc e i n question , th e mos t stringen t contro l availabl e fo r a simila r o r identica l sourc e o r sourc e category . I f i t can b e show

n tha t thi s leve l o f contro l i s technicall yo r economicall yinfeasibl e fo r th e sourc e i n question , the n th e nex t mos t stringen t leve l o f contro l i s determine d and similarl yevaluated . Thi s proces s continue s unti l th e BAC T leve l unde r consideratio n canno t b e eliminate d b yan ysubstantia l o r uniqu e technical , envirormental , o r economic l objections . Thus , th e "top-down " approac hshift s th e burde n o f proo f t o th e applican t t o justif ywh ythe propose d sourc e i s unabl e t o appl yth e bes t technology available . I t als o differ s fro mothe r processe s in tha t i t require s th e applican t t o analyz e a contro l technolog

yonl yi f th e applican t oppose s tha t leve l o f control ; th e othe r processe s require d a ful l analysi s o f al l possibl e type s an d level s o f contro l abov e th e baselin e case . Tli e questio n o f th e affordabilit yo f a "top " contro l optio n i s probabl yth e mos t comple xand subjectiv e aspec t i n a BAC T analysis . I t i s th e Agency' s positio n tha t i f a "top " contro l alternativ e i s technicall y feasibl e an

d affordable , i t make s littl e o r n o differenc e wha t th e aiibien t impact s o f th e contro l ma ybe . Also , i f th e "top " contro l optio n i s otherwis e affordable , th e incrementa l cos t effectivens s whe n compare d t o the nex t bes t leve l o f contro l shoul d no t b e used a s a basi s fo r rejectio n o f th e "top " contro l alternative . Conside r th e following hypothetica l examples . Assum e tha t a particula r sourc e categorygenerall yexpend s abou t $3,UO O pe r ton o f pollutan t remove d t o contro l a pollutan t subjec t t o BACT . I f suc ha sourc e wer e t o mak e applicatio n fo r a PS D permi t i n Regio n IV , and i f th eapplicatio n indicate s tha t the "top " leve l o f pollutio n contro l woul d cos t unde r $3,00 0 pe r to n o f pol

lutan t remove d th e Regio n woul d requir e a n extensiv e justificatio n byth e applican t t o sho wwhythi s leve l o f contro l i s inappropriate . Argument s presente d b yth e applican t t o indicat e tha t th e ambien t impact s betwee n the "top " contro l optio n an d th e nex t bes t leve l o f contro l ar e insignifican t woul d no t b e accepte d a s a basi s fo r rejectio n o f the "top " control . Similarly , argument s presente d b ya n applican t t o sho wtha t th e incrementa l cos t effectivenes s betwee n th e tw o level s o f contro l i s excessiv e woul d no t b e accepte d sinc e th e "top " contro l optio n mayb e otherwis e affordabl e an d ha s bee n accepte d b yothe r facilities . I n orde r t o rejec t the "top " contro l optio n a s BAC T fo r economi c reasons , th e applican t mus t clearl ypresen t uniqu e an

d convincing argument s t o prov e wh yth e "top " contro l optio n woul d no t b e affordabl e i n thei r instance . Thi s ma yb e shown , i n some cases , b ydemonstrating tha t th e cost s o f th e "top " contro l optio n woul d substantiall yincreas e produc t cost s abov e tha t whic hi s acceptabl e fo r competitiv e industry . I f th e applican t ca n demonstrat e tha t thes e cost s wil l mak e themnoncompetitiv e i n th e marketplac e o r woul d mak e the projec t infeasibl e fo r economi c reasons , Regio n IV woul d normall yaccep t thes e argument s and no t requir e the control . A s th e cost s fo r th e "top " leve l o f contro l increas e abov e th e amoun t normall yaccepte d by the particula r industry , i.e. , abov e $3,00 0 pe r to n o f pollutan t remove d i n thi s example , Regio n I V generall y require s increasingl yles s o f a demonstratio n byth e applican t t o sho wwh yth e contro l i s unaffordnblo . I n man ycases , th e cos t o f th e "top " pollutio n contro l i s suc htha t n o furthe r demonstratio n o f affordabilit y i s require d a t all . KE Y CONTAC T PERSON : Bruc e P . Miller , Chie f Ai r Program s Branc h Air , Pesticides , ad Toxic s Managemen t Divisio n FTS : 257-286 4 Commercial : (404 ) 347-286 4Leig h Pegues , Directo r 

## ALABAM A DEPARTMEN TO F ENVIRONMENTA L MANAGEMEN T December 16 , 198 8 

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. Regio n IV 34 5 Courtland Stree t Atlanta , G

A3036 5 Dea r Mr . Miller : W e hav e ha d numerou s conversation s i n th e pas t si xweek s regarding wha t EPAmean s b y"to p down " bes t availabl e contro l technolog

y(BACT ) unde r th e federa l Preventio n o f Significan t Deterioratio n (PSD ) regulations . I hav e seriou s misgiving s tha t continu e t o increas e a s EPA' s polic yevolutio n proceeds . Alabama adopte d PS D regulation s pursuan t t o stat e authorit y i n Januaryo f 198 1 whic hwer e subsequentl yapprove d b yEPA . Th e EPAguidanc e whic hexiste d a t th e time o f ou r adoptio n indicate d "Stat e judgemen t and th e Federa l emissio n standard s ar e th e foundatio n fo r th e BAC T determination" . Thi s approac hha s worke d wel l ove r the year s and resulte d i n improve d control s o n man yne wai r pollutio n sources . EPAha s bee n satisfie d wit hAlabama' s implementatio n o f it s regulations . Th e creatio n o f th e "to p down " BAC T approac hand it s recen t implementation , however , ha s drasticall yaltere d th e process . EPAi s attempting t o substitut e it s judgemen t fo r th e states ' b y establishing criteri a whic har e s o enigmati c tha t th e interpretatio n change s fromwee k t o week . I hav e seriou s concern s abou t bot hth e directio n thi s polic y i s taking and th e lac k o f a coheren t systemfo r implementing th e change . I hav e identifie d m ymisgiving s i n th e for mo f th e following questions . I suspec t tha t a respons e t o thes e question s wil l requir e inpu t fromheadquarters . 1 . Wh yi s a regulatorychang e no t necessaryt o implemen t suc h a basi c chang e i n policy ? Comment ; Suc ha majo r reversa l o f previou s interpretation s whic hwer e th e basi s fo r issuing thousand s o f permit s woul d appea r t o warran t rulemaking . Wer e thes e permit s improperl y issued ? I f not , whe n di d th e "grandfathering " end ?P.2 5

Mr . Bruc e P . Miller , Chie f - 2 - Decembe r 16 , 198 8

2 . Ho wconstraining doe s EPAvie wthi s guidanc e fo r state s whic h hav e adopte d regulation s pursuan t t o stat e authority ? Comment ; Th e regulation s provid e grea t flexibilit yi n identifying the emissio n limi t whic hrepresent s BACT . EPAi s i n th e proces s o f broadl yinterpreting regulation s i t adopte d pursuan t t o federa l statutes . State s woul d anpea r t o hav e th e same broa d flexibilit y c f i-:;-.—racin

g szz.tz. - = _;•_._.__.ion s adopte d pursuan t t o stat e authority . 3 . Wha t urgenc yrequire d EPAt o implemen t th e "to p down " BAC T approac hbefor e developing guidanc e fo r it s implementation ? Comment : Th e chao s cause d b yattempting t o implemen t th e presen t guidanc e ha s resulte d i n a highleve l o f frustration . W e receiv e differen t interpretation s fromdifferen t individual s withi n th e regiona l offic e an d fromconversation s wit hothe r regions . W e hav e als o receive d revise d interpretation s fro m th e sam e individua l a s time progresses . Th e presen t approac ht o implementing th e polic ychange s mad e suc hconfusio n inevitable . 4 . Wh yi s incrementa l cos t analyse s no t th e mos t appropriat e basi s fo r makin g BAC T decisions ? Comment : M

yunderstanding o f th e presen t approac hpreferre d b yEPAi s t o identif yth e mos t stringen t control s possibl e and divid e th e tota l ton s pe r yea r controlle d b yth e annualize d cos t o f control s t o determin e a dollar s pe r to n figure . I f thi s dollar s pe r to n figur e i s to o great , the n th e control s shoul d b e rejecte d a s BACT . I f thi s figur e i s withi n a n acceptabl e range , th e control s shoul d b e require d unles s the plan t ca n demonstrat e tha t uniqu e economi c consideration s shoul d eliminat e th e option . Ther e i s als o a minimu n dollars/to n figur e tha t shoul d b e require d eve n i f th e cos t make s th e constructio n o f th e tota l projec t uneconomical . On e recen t PS D revie ww e performe d illustrate s th e differenc e thi s approac hwoul d make . Th e BAC T leve l chose n resulte d i n a 18 1 to n pe r yea r emissio n reductio n a t a n annua l cos t o f $159,00 0 fo r a remova l cos t o f $877/ton . Th e nex t leve l woul d hav e resulte d i n a tota l reductio n o f 18 3 tons/yea r ( 2 ton s mor e tha n th e previou s example ) wit ha tota l annua l cos t o f $227,00 0 fo r a n incrementa l remova l cos t o f $63,784/ton . Th e tota l remova l cos t fo r th e second option , however , wa s $l,512/to n whic hi s wha t I understand t o b e th e acceptabl e range . Fro manothe r perspective , w e recentl ypermitte d a ne wrecovery boile r wit ha n uncontrolle d particulat e emissio n rat e o f greate r than 62,00 0 ton s pe r year . Assuming a n annualize d "reasonabl e cost " criterio n o f $2,000/ton , contro l cost s approaching $12 4 MM/yea r woul d b e viewe d a s reasonable .P.2 6

Mr . Bruc e P . Miller , Chie f - 3 - Decembe r 16 , 198 8

5 . Wha t dollars/to n figur e i s s o hightha t i t shoul d generall y resul t i n th e rejectio n o f a contro l optio n a s BACT ? Wha t i s th e reasonabl e rang e fo r a dollars/to n figur e tha t shoul d resul t i n requiring the contro l optio n absen t a demonstratio n o f uniqu e economi c considerations ? Wha t dollars/to n figur e ar e s o lowtha t the contro l optio n shoul d b e require d eve n i f th e cost s mak e constructio n o f th e tota l projec t uneconomical . Comment : Th e curren t EPApolicyo f "to p down " BAC T focuse s exclusivel yo n economics . I t woul d appea r tha t thi s basi c informatio n shoul d b e availabl e fo r E? At o performth e detaile d oversigh t expecte d b yheadquarters . I t seem s appropriat e tha t everyon e understand th e guideline s upfront . Thi s woul d als o appea r essentia l fo r achieving the increase d consistenc y desire d b

yEPA . 6 . Ar e th e economi c criteri a use d i n developing th e NSP S applicabl e t o BAC T decision s fo r th e same sourc e types ? Comment : EPAha s indicate d tha t th e emissio n limit s establishe d b yNSP S ar e irrelevan t t o the case-by-cas e BAC T decisions , othe r than t o establis ha minimun leve l o f control . Man yo f th e NSPS , however , contai n judgement s o f feasibl e dollars/to n o f pollutan t removed , costs/to n o f product , etc . I t woul d appea r thes e woul d hav e some relevanc e t o the BAC T decision . 7 . Sinc e EPA' s polic ywil l requir e man ydecision s t o b e base d o n specifi c plan t economic s and muc ho f thi s informatio n i s require d t o b e kep t confidentia l (i f requeste d b yth e source ) ho wwil l th e publi c b e allowe d t o meaningfull yparticipat e i n th e BAC T decisions ? Comment : I presun e tha t uniqu e plan t economic s includ e suc h thing s a s profi t margins , produc t costs , sale s volunes , and othe r informatio n tha t envirormenta l statute s generall yrequir e t o b e hel d confidentia l (i f requeste d b yth e source ) woul d b e necessaryt o mak e thes e judgements . EPA' s approac hwoul d requir e th e regulatoryagencyt o kee p th e informatio n mos t crucia l t o makin g it s BAC T decisio n fro mmember s o f th e publi c wishin g t o participat e i n the decision . 8 . Wh yshoul d th e environmenta l impac t o f th e variou s contro l option s b e ignore d i n making th e BAC T decision ? Comment : Th e PS D regulation s requir e th e consideratio n o f ".. . energy , environmenta l and economi c impact s and othe r costs... " i n determining BACT . I t woul d appea r th e regulation s authorize , and perhap s require , tha t th e ai r qualit yimpac t o f th e variou s contro l option s b e give n some consideration . Thi s als o appear s rational .P.2 7

Mr . Bruc e P . Miller , Chie f - 4 - Decembe r 16 , 198 8

I a mlooking forward t o you r respons e t o thes e question s wit h appropriat e inpu t fromheadquarters . I trus t thi s exchang e o f view s and informatio n wil l resul t i n a reduce d leve l o f frustratio n i n th e future . I f thi s lette r require s an yclarification , pleas e giv e m e a cal l a t 205/271-7861 . I woul d als o b e willing t o mee t and discus s th e issue s raise d i n thi s lette r i f yo u fee l thi s woul d b e productive . 

# rr> Richar d E . Grusnick , Chie f Ai r Divisio n REG:un
cc : SESAR

MState sP.2 8


## ALABAM A DEPARTMEN TO F ENVIRONMENTA L MANAGEMEN T
Leig h Pegues, Directo r 175 1 Cong.W . L

. Dickinso n Driv e Montgomery , A

L 3613 0 205/271-77C 0 Gu yHun t Governo r 

### Decembe r 16 , 198 8

Fiel d Orfic-3s : Uni t806 , Buildin g 8 22 5 Oxmoo rCircl e Birmingham , A

L 3520 9 205/942-616 8 P.O . Bo x95 3 Decatur , AL 3560 2 205/353-171 3 220 4 Perimete rRoa d Mobile , AL 3661 5 205/479-233 6 i /" i ) ' r 

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. i;____ii^.^ti . ..w* . L , ___• * <9 ±Sj*Zii,* U . S . Environmenta l Protectio n Agenc y Regio n IV 34 5 Courtland Stree t Atlanta , G

A3036 5 Dea r Mr . 

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Thi s i s i n respons e t o ou r recen t conversatio n regarding th e evolving EPAinterpretatio n o f wha t i s mean t b y"to p down " bes t availabl e contro l technolog y(BACT ) unde r th e Preventio n o f Significan t Deterioratio n (PSD ) regulations . Man yo f m yconversation s wit hyo u ove r th e pas t si xweek s ha s resulte d i n a significan t chang e i n m y perceptio n o f wha t EPAmean s b y"to p down " BACT . I understand tha t th e presen t approac hpreferre d b yEPAi s t o identif yth e mos t stringen t contro l possibl e and divid e th e tota l ton s pe r yea r controlle d b yth e annualize d cost s o f th e controls . I f thi s cos t i s i n th e $2,000-$3,000/to n remove d range , the n thes e control s shoul d b e require d absen t a showing tha t th e economic s o f th e plan t coul d no t suppor t thi s leve l o f control . I f thes e annualize d cost s ar e muc hles s than $1,000/ton , the n plan t economic s ar e irrelevan t and th e projec t probabl yshoul d no t b e permitted . Thi s i s a dramati c chang e fromth e approac htha t ha s bee n use d fo r everyPS D revie wperforme d b yAlabama and accepte d b y EPA . Th e approac hw e hav e use d considere d incrementa l cos t o f increasingl ystringen t control s and wa s base d o n earlie r EPA guidance . Yo u indicate d tha t i t wa s you r understanding tha t fo r th e pas t yea r o r s o tha t th e preferre d EPAapproac hwa s bein g implemente d an d tha t an

yanalysi s performe d byth e stat e whic hdi d no t us e thi s approac hwa s eithe r evaluate d b yEPAusin g thi s approac ho r wa s approve d base d o n incorrec t assessmen t b yEPA . I hav e enclose d a sunmaryo f th e mos t recen t PS D review s performe d b yAlabama whic h analyze s th e cost s usin g bot hth e incrementa l cost s an d tota l costs . I as k tha t yo u provid e a n explanatio n o f EPA' s basi s fo r concurring wit heac ho f thes e review s give n th e criteri a yo u identifie d i n ou r discussion .P.2 9

* v'- 1



### Mr . Bruc e P . Miller , Chie f - 2 - Decembe r 16 , 198 8

I woul d als o appreciat e seein g example s o f review s don e b y othe r state s i n th e Regio n whic hus e th e approac hpresentl yi n favo r wit hEPA . I t i s interestin g t o not e tha t usin g th e $2,000/to n criteri a th e annualize d contro l cost s whic hwoul d b e presume d reasonabl e fo r eac ho f th e plant s identifie d i n th e attacLnan t woul d be :

Plan t Contro l Cost s MOEPS I $4MM/Yea r Ciba-Geig y$ .4MM/Yea r Exxo n $28MM/Yea r Mead e 1 $52MM/Yea r Mead e 2 $13 4 MM/Yea r Champio n $ 2 MM/Yea r I s i t EPA' s revie wtha t thes e cost s ca n reasonabl yb e incurre d i n complyin g wit hth e BAC T requirement ? I hav e seriou s concern s abou t th e directio n EP Ai s takin g i n th e implementatio n o f th e "top'down " BAC T regulation s whic hI wil l addres s i n a separat e letter . I als o hav e concern s abou t Regio n IV' s overl yaggressiv e implementatio n o f thi s nebulou s concept . I woul d appreciat e you r respons e t o th e question s raise d i n thi s letter . I f anyo f th e informatio n require s clarification , pleas e giv e m e a cal l a t 205/271-7861 . Sincerely ,
Richar d E . Grusnick , Chie f Ai r Divisio n 

### REG:u nP.3 0



### BAC T Determination s i nAlabam a MOEPSI ; Permit s issue d Marc h11 , 1988 . I nthi s project , BAC T wa s determine d fo r a tai l ga s sulfu r recover ycomplex . Th e contro l technolog y selecte d a s BAC T wa s a SRU/SCO T unit . Thi s woul d provid e 99.86 % sulfu r recover ya t a cos t o f $l,000/to nSO2 . Th e nex t ieve l o f contro l wa s th e additio no f a AG E unit , whic hwoul d provid e 99.87 % sulfu r recovery . Fo r this , th e incrementa l cos t fo r removin g 1 4 additiona l ton s o f SO 2 wa s $35,500/to nSO2 , and gav e a tota l cos t o f $1,251/to nSO2 .
CONTROL/OPTIO N SRU/SCO T plu s AG E POLLUTAN T

REMOVE D TONS/YEAR 1,95 6 1,97 0 ANNUA L

COS T $1,00 0 1,96 7 2,46 4 INCREMENTA L

REMOVA L COS T $/T0 N 1,00 5 35,50 0 TOTA L

REMOVA L COS T $/T0 N 1,00 5 1,25 1

CIBA-GEIGY ; Permit s issue d Novembe r 7 , 1988 . I nthi s project , proces s ven t emission s o f VOC' s wer e t o b e controlled . Tw o contro l technologie s wer e examined , a flar e and a nincinerator . Th e flar e wa s determine d t o b e BAC T fo r thi s process , and woul d contro l VO C emission s a t a cos t o f $877/ton . Th e us e o f a

nincinerato r woul d contro l 1.8 5 additiona l ton s o f VO C a t an incrementa l cos t o f $67,784/to nVOC . Th e tota l cos t fo r th e incinerato r wa s $l,512/to no f VOC .
CONTROL/OPTIO N Flar e Incinerato r POLLUTAN T

REMOVE D TONS/YEAR 181. 3 183.1 5 ANNUA L

COS T $1,00 0 15 9 27 7 INCREMENTA L

REMOVA L COS T $/T0 N 87 7 63,78 4 TOTA L

REMOVA L COS T $/T0 N 87 7 1,51 2

EXXON ; Permit s issue d Marc h8 , 1988 . I nthi s project , BAC T wa s determine d fo r a tai l ga s sulfu r recover ycomplex . Th e contro l technolog yselecte d a s BAC T wa s a SCO T unit . Thi s woul d provid e 99.7 % sulfu r recover ya t a cos t o f $216/to nSO2 . Th e nex t leve l o f contro l wa s a SCO T uni t operatin g a t a sulfu r recover yrat e o f 99.8% . Fo r this , th e incrementa l cos t fo r removin g 37 0 additiona l ton s o f SO 2 wa s $l,730/to nSO2 , and gav e a tota l cos t o f $255/to nSO2 . % S RECOVERE D CONTROL/OPTIO N SCO T 99.7 % SCO T 99.8 % WELLMA N99.9 % POLLUTAN T

REMOVE D TONS/YEAR 13,76 0 14,13 0 14,50 0 ANNUA L

COS T $1,00 0 2,97 0 3,61 0 6,49 0 INCREMENTA L

REMOVA L COS T $/T0 N 21 6 1,73 0 7,78 4 TOTAL

REMOVA L COS T $/T0 N 215. 8 255. 5 447. 6P.3 1

t..— ? ,—•"*.' '



### HEA DCOATE DBOARD ; Permit s issue d Septembe r 15 , 1988 . I n thi s project , BAC T wa s determine d fo r th e No . 3 Woo d Wast e Boiler . Th e contro l technolog yselecte d a s BAC T wa s a scrubbe r tha t provide d a n exi t concentratio no f 0.10 0 gr/dsc f particulates . Thi s woul d b e accomplishe d a t a :os t o f $49.90/to nparticulat e removed . Th e nex t highe r leve l o f contro l wc. - a scrubbe r tha t woul d remov e a n additiona l 4 5 tons/year . Thi s woul d b e a c ..->.iiplishe

d a t a n incrementa l cos t o f $5,756/ton , o r a tota l cos t o f $59.85/ton . (gr/dscf ) CONTROL/OPTIO N Scrubbe r 0.10 0 Scrubbe r 0.08 9 ES P 0.07 5 ES P 0.03 6 POLLUTAN T

REMOVE D TONS/YEAR 25,77 0 25,81 5 25,87 0 26,02 6 ANNUA L

COS T $1,00 0 1,28 6 1,545 2,66 6 2,86 3 INCREMENTA L

REMOVA L COS T $/T0 N 5 0 5,75 6 20,38 2 1,26 3 TOTA L

REMOVA L COS T $/T0 N 49.9 0 59.8 5 103.0 5 110.0 0

HEAP COATE DBOARD ; Permit s issue d Septembe r 15 , 1988 . I n thi s project , BAC T wa s determine d fo r th e No . 2 Recover yBoiler . Th e contro l technolog y selecte d a s BAC T wa s a n ES P tha t provide d a n exi t concentratio no f 0.04 4 gr/dsc f particulates . Thi s woul d b e accomplishe d a t a cos t o f $38.09/to n particulat e removed . Th e nex t highe r leve l o f contro l wa s a n ES P tha t woul d remov e a n additiona l 4 2 tons/year . Thi s woul d b e accomplishe d a t a n incrementa l cos t o f $l,930/ton , o r a tota l cos t o f $39.36/ton . (gr/dscf ) CONTROL/OPTIO N ES P 0.04 4 ES P 0.04 0 ES P 0.03 3 ES P 0.03 0 ES P 0.02 7 POLLUTAN T

REMOVE D TONS/YEAR 62,45 7 62,49 9 62,57 2 62,60 4 62,63 5 ANNUA L

COS T $1,00 0 2,37 9 2,46 0 2,61 4 2,69 9 2,80 8 INCREMENTA L

REMOVA L J/TON 

## 3 8 1,92 9 2,10 9 2,65 6 3,51 6 COS T TOTA L

REMOVA L COS T J/TON 38.0 9 39.3 6 41.7 8 43.1 1 44.8 3

CHAMPIO N INTERNATIONAL ; Permit s issue d Novembe r 30 , 1988 . I n thi s project , NOxemission s fro ma ga s turbin e wer e t o b e controlled . Th e contro l technolog yselecte d a s BAC T wa s steaminjection . Thi s woul d b e accomplishe d a t a cos t o f $825/to nNO xno t created . Th e nex t highe r leve l o f contro l wa s a n add-o ncatalyti c reductio nuni t tha t woul d remov e a n additiona l 31 1 tons/year . Thi s woul d b e accomplishe d a t a n incrementa l cos t o f $5,780/ton , o r a tota l cos t o f $2,456/ton .
CONTROL/OPTIO N SteamInjectio n SC R POLLUTAN T

REMOVE D TONS/YEAR 63 4 94 5 ANNUA L

COS T $1,00 0 52 3 2,32 0 INCREMENTA L

REMOVA L COS T $/T0 N 82 5 5,78 0 TOTAL

REMOVA L COS T $/T0 N 82 5 2,45 6 

# J