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# OAR Box 

# 1778 Prepped byOllie Stewart



### Document

Number: 

# 177 ) ll-F- 4 Docket Number: 

# A-90-0 6

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* tPRO* * UNITE D STATE S ENVIRONMENTA LPROTECTIO N AGENC Y Offic e ofAi rQualityPlannin g an d Standard s Research Triangl e Park , Nort h Carolin a 2771 1 

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### II-F- 4 MEMORANDU

M TO : Docke t FROM : Chebryl l Edward s DATE : Jun e 4 , 199 1 SUBJECT : Draf t Interpretativ e Rul e - WEPC O



# .^WttL , BLtoJuLJ

The attache d i s a draf t o f the interpretativ e rul e prepare d on Marc h3 , 1991 .



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- STAFF DRAFT -

THI S DOCUMEN

T REPRESENTS PREDECISIONA L MATERIAL . TH

E VIEWS EXPRESSED WITHIN AR E NOT NECESSARIL

YTHOS E OF EP

AO RAN YOTHEROFFICE . 1 6560-5 0 2 ENVIRONMENTA L PROTECTIO NAGENC Y 3 4 0 CF RPart s 51 , 5 2 an d 6 0 4 [AD-FRL

- ] 5 APPLICABILIT YO F NE WSOURC E REVIE WAN D NE WSOURC E 6 PERFORMANC E STANDARD S REQUIREMENT S 7 8 AGENCY : Environmenta l Protectio nAgenc y(EPA) . 9 ACTION : Interpretativ e Rulin g 1 0 SUMMARY : Thi s rulin g clarifie s th e applicabilit yo f bot hne w 1 1 sourc e revie w(NSR ) requirement s i n4 0 CF RPart s 5 1 an d 5 2 an d 1 2 ne wsourc e performanc e standard s (NSPS ) requirement s i n 1 3 4 0 CF RPar t 6 0 wit hrespec t t o certai nmodifications . Thi s 1 4 rulin g deal s primaril ywit hmodification s a t electri c utilit y 1 5 generatin g unit s (generatin g units) ; however , som e provision s 1 6 appl ymor e broadl yt o othe r stationar ysources . 1 7 Specifically , th e rulin g (1 ) clarifie s th e definitio n o f 1 8 "majo r modification " i n4 0 CF RPart s 5 1 an d 52 , an d 1 9 "modification " i n 4 0 CF RPar t 60 , i ntha t pollutio ncontro l 2 0 project s a t existin g stationar ysource s ar e no t "physica l 2 1 changes " o r "change s i nth e metho d o f operation " an d ar e thu s no t 2 2 subjec t t o NS Ro r NSPS , a s lon g a s the ymee t certai ncriteria ; 2 3 (2 ) indicate s tha t th e remova l o f ai r pollutio ncontro l 2 4 demonstratio n project s a t electri c utilitie s i s no t subjec t t o

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- STAFF DRAFT THI S DOCUMEN

T REPRESENTS PREDECISIONA L MATERIAL . TH

E VIEWS EXPRESSED WITHIN ARE NOT NECESSARIL

YTHOS E OF EP

AO RAN YOTHEROFFICE . 1 NS Ro r NSPS ; (3 ) define s th e metho d tha t EP Awil l us e t o 2 determin e "baselin e emissions " fo r a physica l o r operationa l 3 chang e a t a nelectri c utilit ygeneratin g uni t fo r th e purpos e o f 4 determinin g i f th e chang e i s a majo r modificatio nsubjec t t o NSR ; 5 (4 ) confirm s tha t "like-kind " modification s a t a generatin g uni t 6 wil l no t trigge r NS Ri f th e "projecte d futur e actua l emissions " 7 o f th e uni t afte r a chang e d o no t increas e ove r "baselin e 8 emissions" ; and , (5 ) implement s ne w§ 40 7 an d 415 o f Titl e I V o f 9 th e Clea n Ai r Ac t (Act ) Amendment s o f 199 0 (199 0 Amendments ) 1 0 whic hprovid e tha t Clea nCoa l Technolog y(CCT ) demonstration s an d 1 1 certai n repowerin g project s undertake nb ygeneratin g unit s ar e 1 2 no t subjec t t o NS Ran d NSP S i f specifi c condition s ar e met . 1 3 Fo r thos e State s wit happrove d NS Rprogram s i nthei r Stat e 1 4 implementatio n plan s (SIP's) , today' s interpretativ e rulin g i s 1 5 onl yadvisor yi nnatur e a s i t applie s t o th e NS Rprogram . 1 6 However , State s ar e encourage d t o follo wEPA' s lea d i nallowin g 1 7 thes e change s becaus e o f th e environmenta l benefit s an d 1 8 adjudicativ e decision s associate d wit hthem . 1 9 DATES : Thi s rulin g i s effectiv e [inser t dat e o f publicatio n i n 2 0 FEDERA L REGISTER] . 2 1 ADDRESSES : Supportin g informatio nuse d i ndevelopin g thi s 2 2 interpretativ e rulin g i s containe d i nDocke t No . A-90-06 . Thi s 2 3 docke t i s availabl e fo r publi c inspectio nan d copyin g betwee n 2 4 8:3 0 a.m . an d 3:3 0 p.m. , weekday s a t EPA' s Ai r Docke t (LE-131) ,

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TREPRESENT S PREDECISIONA LMATERIAL
. TH EVIEWS EXPRESSED WITHIN AR ENO TNECESSARIL YTHOS EOFEPAO RAN YOTHE ROFFICE
. 1 RoomM-1500 , 40 1 MStree tS.W. , Washington , D.C . 20460 . A 

### 2reasonabl efe ema yb echarge dfo rcopying . 3 FO

RFURTHE

RINFORMATIO

NCONTACT : Chebryl lEdwards , NewSourc e 

### 4Revie wSection , a tMai lDro p 15 , U.S . Environmenta lProtectio n 5 Agency , Researc hTriangl ePark , Nort hCarolin a27711 , telephone : 6 (919 ) 541-234 3 o r (FT S 629-2343) . 7 SUPPLEMENTAR YINFORMATION : 8 I . Summar yo f Today' s Actio n 9 Thi s rulin g consist s o f a numbe r o f differen t actions . I t 1 0 provide s interpretation s o f existin g NS Rregulation s a s affecte d 1 1 b ybot hth e Sevent hCircui t Court' s decisio ni nWEPC O vs . Reill y 1 2 [89 3 F.2 d 90 1 (7t hcir . 1990)](WEPCO ) an d th e 199 0 Amendments . 1 3 Th e purpos e o f today' s rulin g i s t o clarif yNS Ran d NSP S 1 4 applicabilit yfo r certai n modifications , primaril yinvolvin g th e 1 5 additio n o f pollutio n contro l equipmen t a t existin g electrica l 1 6 utilit ysources . Th e rulin g als o provide s a napproac hfo r 1 7 determinin g "baselin e emissions".fo r utilit ysources . 1 8 Th e NS Rregulation s defin e a "majo r modification " a s a 1 9 physica l chang e o r chang e i n th e metho d o f operatio n( a "change" ) 2 0 a t a majo r stationar ysourc e whic hresult s i na significan t ne t 2 1 emission s increas e [se e 4 0 CF R51.165 , 51.166 , 52.21 , 52.24 , 2 2 Appendi xS , 60. 2 an d 60.14] , T o determin e i f a chang e wil l 2 3 resul t i na n emission s increase , th e sourc e mus t firs t establis h 2 4 a pre-modificatio n emission s leve l (als o calle d "baselin e

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### STAF F DRAF T THI S DOCUMEN

T REPRESENT S PREDECISIONAL MATERIAL . TH E VIEW S EXPRESSE D WITHI N AR E NO T NECESSARIL YTHOS E O F EP AORANYOTHE ROFFICE . 1 emissions") . Thes e Baselin e emission s ar e define da s th e averag e 2 annua l emission s release dfro mth e sourc e durin g th e 2-yea r 3 perio dprecedin g th e chang e (unles s th e reviewin g authorit y 4 determine s tha t a differen t tim e perio di s mor e representativ e o f 5 norma l sourc e operations) . Thi s rulin g clarifie s that.,-

- f€ r th e 6 emission s baseline*.a nelectri c utilit ysourc e undergoin g a 7 phy^f-a i n r ~ r i M 1 

### i i iihi V change , th e reviewin g authorit ywil l 8 allo wth e us e o f th e averag e emission s rat e (i n ton s pe r year^fAi) ) 9fro man yconsecutiv e 2-yea r perio d(whic hth e sourc e certifies , 1 0 base do n it s operatin g history , i s representativ e o f norma l 1 1 operations ) withi nth e 5 year s precedin g th e propose dchang e t o 1 2 tha t unit/—

- 1 3 Thi s rulin g als o clarifie s tha t th e determinatio no f post
1 4 modificatio nemission s a t electri c utilit ysource s fo r "like

1 5 kind " modification s i s consisten t wit hEPA' s implementatio no f 1 6 th e WEPC O decision , whic hallowe dth e compariso no f pre 1 7 modificatio nactua l emission s wit ha projectio no f post
1 8 modificatio n"future-actual " emission s fo r electri c utilit y 1 9 source s whic hpropos e "like-kind " modifications . Prio r t o th e 2 0 WEPC O decision , EP Ause da projectio no f th e source s futur e 2 1 potentia l t o emi t t o estimat e futur e emission s resultin g fro mal l 2 2 modifications , includin g "like-kind " modifications , unles s th e 2 3 sourc e owne r o r operato r provide denforceabl e assurance s tha t

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T THI S DOCUMEN

TREPRESENT S PREDECISIONA LMATERIAL
. TH EVIEW S EXPRESSED WITHIN AR ENO TNECESSARIL YTHOS EOFEP AO RAN YOTHE ROFFICE
. 

### 1 post-modificatio nemission s woul db elimite dt o thei r actua lpre 2 modificatio nlevels . 3 Thi s rulin g als o clarifie s EPA' s interpretatio no f th e 4 definitio n o f "majo r modification " i n4 0 .CF R51.165 , 51.166 , 5 52.21 , 52.24 an d Par t 5 1 Appendi xS , an d "modification " i n 6 4 0 CF R60. 2 an d 60.1 4 fo r al l sourc e types . Thes e change s 7 respon d t o concern s tha t thes e definition s ca nb e interprete d t o 8 cove r certai n environmentall ybeneficia l change s a t existin g 9 stationar ysources . Th e EP Aneve r intende d (no r doe s i t believ e 1 0 tha t Congres s eve r intended ) fo r environmentall ybeneficia l 1 1 change s t o b e covere d b yth e NS Ro r NSP S requirement s o f th e Act . 1 2 Thes e beneficia l activitie s includ e th e additio no r improvemen t 1 3 o f a devic e o r us e o f a syste mtha t reduce s ai r pollutio n 1 4 emissions . I n allowin g thi s interpretation , th e Administrato r 1 5 (o r fo r delegate d programs , th e State ) reserve s th e righ t t o 1 6 determin e whethe r th e syste mo r devic e i s less , o r more , 1 7 environmentall ybeneficia l tha nth e emission s contro l syste mo r 1 8 devic e i t replaces . 1 9 Today' s rulin g explain s EPA' s positio ntha t suc hdesirabl e 2 0 activitie s ar e no t physica l change s o r change s i nth e metho d o f 2 1 operatio n i f the ymee t th e criteri a discusse d herei nan d th e 2 2 reviewin g authorit yissue s a determinatio no f applicabilit y 2 3 exclusion . Whil e suc hactivitie s ar e no t considere d 2 4 modification s fo r NS Ro r NSP S purposes , the yar e stil l subjec t t o
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F EP AO RAN YOTHEROFFICE . otherwis e applicabl e Stat e o r loca l agenc ysourc e permittin g 2 requirements . 3 Thi s interpretativ e rulin g als o implement s an d explain s th e 4 provision s o f Titl e I V o f th e 199 0 Amendment s whic hmodif yth e 5 applicabilit yrequirement s fo r NS Ran d NSP S i nth e cas e o f 6 repowerin qproject s an d CC T demonstratio nprojects . I n certai n 7 cases , th e 199 0 Amendment s provid e exemption s fro mNSP S an d NS R 8 provision s fo r thes e environmentall ybeneficia l electri c utilit y 9 projects . I nthi s interpretativ e ruling , EP Ai s limitin g it s 1 0 action s t o th e exac t parameter s o f th e ne wstatutor yprovisions . 1 1 1 2 II . BACKGROUN D 1 3 Th e NS Ran d NSP S provision s o f th e Ac t appl yt o ne w 1 4 facilitie s an d t o modification s a t existin g facilitie s whe n 1 5 certai n condition s ar e met . Th e rule s governin g th e 1 6 applicabilit yo f NS Ran d NSP S t o modification s a t existin g 1 7 facilitie s ar e describe d i n detai l i nth e EP Aregulation s (se e 1 8 4 0 CF R51.16 5 an d Par t 5 1 Appendi xS , 52.21 , 60.1 4 an d 60.15) . 1 9 I n general , a modificatio ntha t woul d trigge r thes e ne wsourc e 2 0 requirement s woul d involv e a physica l o r operationa l chang e whic h 2 1 increase s emission s ove r baselin e levels . 2 2 Fo r NSP S purposes , a reconstructio noccur s an d a uni t i s 2 3 considere d "new " i f th e physica l o r operationa l chang e cost s mor e 2 4 tha n 5 0 percen t o f th e replacemen t cos t o f th e affecte d facility ,

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AO RAN YOTHEROFFICE . 1 regardles s o f whethe r a nemission s increas e occurs . Th e cos t o f 2 th e reconstructio ngenerall yexclude s ai r pollutio ncontro l 3 system s no t integra l t o proces s equipment . Th e followin g 4 discussio nprovide s backgroun d informatio ntha t wil l enhanc e th e 5 reader' s understandin g o f th e actio nEP Ai s announcin g today . 6 A . Backgroun d o f th e NSP S an d NS RModificatio nProvision s 7 Th e 197 0 Ac t require d EP At o promulgat e technology-base d 8 NSP S applicabl e t o th e constructio no r modificatio no f stationar y 9 source s tha t caus e o r contribut e significantl yt o ai r pollutio n 1 0 whic hma yreasonabl yb e anticipate d t o endange r publi c healt ho r 1 1 welfar e [se e 4 2 U.S.C . 7411(b)(1)(A)] . Th e NSP S provision s wer e 1 2 "designe d t o preven t ne wai r pollutio nproblems " byregulatin g 1 3 newly-constructe d source s an d change s occurrin g a t existin g 1 4 source s tha t resul t i nemission s increase s [se e Nationa l Asphal t 1 5 Pavemen t Assoc , v . Train r 53 9 F.2 d 775 , 78 3 (D.C . Cir . 1976) ; se e 1 6 als o H.R . Rep . No . 1146 , 91s t Cong. , 2 d Sess . 3 , reprinte d i n 1 7 197 0 U.S . Cod e Cong . & Admin . New s 5356 , 5358] . Congres s define d 1 8 a modificatio n broadl ya s "anyphysica l chang e in , o r chang e i n 1 9 th e metho d o f operatio nof , a stationar ysourc e whic hincrease s 2 0 th e amoun t o f an yai r pollutan t emitte d bysuc hsourc e o r whic h 2 1 result s i n th e emissio n o f an yai r pollutan t no t previousl y 2 2 emitted " [se e § 111(a)(4) , 4 2 U.S.C . 7411(a)(4)] . 2 3 I nAugus t 1977 , Congres s adopte d furthe r extensiv e change s 2 4 t o th e Ac t (Pub . L . 95-95) . Thes e include d NS Rpermittin g 7 Fila : "**EPCO_I

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AO RAN YOTHEROFFICE . 1 requirement s fo r ne wan d modifie d source s unde r tw o programs , 2 preventio no f significan t deterioratio n(PSD ) an d nonattainment . 3 Congres s intende d thes e program s t o appl y"wher e industria l 4 change s migh t increas e pollutio ni na narea " [se e Alabam a Powe r 5 Co . v . Costle . 63 6 F . 2 d 323 , 40 0 (D.C . Cir . 1979)] . 6 Th e NS Rprogra mfo r PS D wa s containe d i na ne wPar t C . t o 7 th e Ac t i n th e 197 7 Amendment s ( § 160-169 ) t o b e applie d i n 8 attainmen t areas , i.e. , thos e area s whic hhav e attaine d th e 9 nationa l ambien t ai r qualit ystandard s (NAAQS) . T o receiv e a PS D 1 0 permit , a prospectiv e majo r ne wsourc e o r majo r modificatio n mus t 1 1 (amon g othe r things ) sho wtha t (1 ) i t wil l no t excee d th e 1 2 availabl e ai r qualit y"increment " (designe d t o preven t ambien t 1 3 ai r qualit yfro mdeterioratin g b ymor e tha ncertai nspecifie d 1 4 levels) , (2 ) tha t i t wil l no t excee d a NAAQS , an d 1 5 (3 ) tha t i t wil l us e th e bes t availabl e contro l technolog y 1 6 (BACT) , whic hmus t b e a t leas t a s stringen t a s an yapplicabl e 1 7 NSP S o r Nationa l Emission s Standard s fo r Hazardou s Pollutant s 1 8 (NESHAP) . Par t D o f th e 197 7 Amendment s applie s t o nonattainmen t 1 9 areas , i.e. , thos e area s whic hhav e no t me t th e NAAQ S unde r 2 0 § 109 . T o receiv e a permi t i n suc hareas , majo r ne wan d modifie d 2 1 source s mus t (amon g othe r things ) (1 ) obtai nemission s offsets , 2 2 thereb yassurin g tha t reasonabl e progres s towar d attainmen t o f 2 3 th e NAAQ S wil l occur , an d (2 ) compl ywit hth e "lowes t achievabl e 2 4 emissio n rat e (LAER) " [se e § 171-173] .

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AO RAN YOTHEROFFICE . 1 I t i s eviden t fro mth e structur e o f th e NS Ran d NSP S 2 program s tha t Congres s sough t t o focu s th e applicatio no f ai r 3 pollutio ncontro l effort s a t a nefficien t an d logica l point , 4 i.e. , a t th e tim e substantia l capita l investment s in , o r other- * 5 long-ter m

decision s regarding , pollution-generatin g facilitie s 6 wer e made . I nadoptin g NS Rmeasure s i nparticular , Congres s 7 sough t t o reconcil e th e legislativ e goa l o f environmenta l 8 protectio nwit ha concurren t desir e fo r continue d economi c growt h 9 [se e § 160(l)-(4)] . Consequently , a ke ythem e o f th e NS Rprogra m 1 0 i s th e carefu l evaluatio no f "anydecisio nt o permi t increase d 1 1 ai r pollution " [se e § 160(5)] . Bot hth e Par t C an d Par t D NS R 1 2 program s adopte d th e NSP S definitio no f "modification " [se e 1 3 § 169(2)(C ) an d 171(4)] . A s discusse d below , th e curren t 1 4 regulation s implementin g NSP S an d NS Rwer e designe d t o appl y 1 5 thes e program s i n a manne r consisten t wit hthes e statutor y 1 6 purposes . 1 7 B . Th e Two-Ste p Tes t fo r Modification s 1 8 Th e modificatio n provision s o f th e NSP S an d NS Rprogram s 1 9 gro wfro m

a singl e statutor ybasis , th e ver ybroa d definitio n o f 2 0 "modification " i n§ 111(a)(4 ) o f th e Act . Unde r bot hth e NS Ran d 2 1 NSP S programs , EP Adevelope d a two-ste p tes t fo r determinin g 2 2 whethe r activitie s a t a nexistin g facilit yconstitut e a 2 3 modificatio n subjec t t o ne wsourc e requirements . I nth e firs t 2 4 step , whic hi s largel yth e sam e fo r NSP S an d NSR , th e reviewin g 9 Flla i HEPCO_I B (Marc h3 , 199 1 - 3:16pa > • *P.1 2

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TREPRESENT S PREDECISIONA LMATERIAL
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. 

### 1 authorit ydetermine s whethe r aphysica lo r

operationa lchang e 2wil loccur . I f so , th ereviewin g authorit yproceed s i nth e 3 secon dste p t o determin ewhethe r th ephysica lo r

operationa l 4 chang ewil lresul t i na nemission s increas eove r baselin elevels
. 5 I nthi s secon dstep , th eapplicabl erule s branc hapart , 6 reflectin g th efundamenta ldistinction s betwee nth e 7 technology-base dprovision s o f NSP S an dth eai r

quality-base d 8 provision s o f

NSR
. 9 Briefly , th eNSP S progra mi s concerne dwit hmaximu mhourl y 10emission s rates , expresse di nkilogram s pe r hour
. Emission s 1 1 increase s fo r

NSP S purpose s ar edetermine db ychange s i nth e 1 2hourl yemission s rate s a t maximu mphysica lcapacity
. O nth e 1 3 othe r

hand , th eNS

Rregulation s ar econcerne dwit htota lannua l 14 emission s t o th eatmosphere , expresse di nton s pe r yea r (tpy)
. 1 5 Emission s increase s unde r NS Rar edetermine db ychange s i nannua l 1 6 emission s t o th eatmosphere
.

1 7 A

nhourl yemission s rat ema yb edetermine db yastac k tes t o r 1 8 calculate dfro mth eproduc t o f th einstantaneou s emission s rate , i.e. , th e 1 9 amoun t

o f pollutio nemitte db yasource , afte r control , pe r

uni t o f fue l 2 0combuste do r materia lprocesse d[suc ha s pound s o f sulfu r dioxid eemitte dpe r 2 1 to no f

coa lburned) , time s th eproductio nrat e(suc ha s ton s o f coa lburne d 2 2pe r

hour)]
. Se esectio n60.14
. 2 2 3 Annua l emission s maybe calculate d fromthe produc t o f the hourl y 2 4 emission s rat e time s the utilizatio n rate , (expresse d a s hour s o f operatio n 2 5 pe r yea r o r fromthe produc t o f a n emission s facto r (e.g. , fromCompilatio n o f 2 6 Ai r Pollutan t Emissio n Factors . AP-42 , 4t hEd . an d subsequen t supplements ) i n 2 7 unit s o f mas s emitte d pe r uni t o f proces s throughpu t time s the annua l 2 8 throughput . Se e 4 0 CF R52.21(b)(21) .

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AO RAN YOTHEROFFICE . 1 C . Physica l o r Operationa l Chang e 2 Th e ver ybroa d definitio n o f physica l o r operationa l chang e 3 i n § 111(a)(4 ) could , standin g alone , encompas s th e mos t mundan e 4 activitie s a t a n industria l facilit y(eve nth e repai r o r 5 replacemen t o f a singl e leak ypipe , o r a chang e i nth e wa ytha t 6 pip e i s utilized) . However , EP Aha s alway s recognize d tha t 7 Congres s obviousl ydi d no t inten d t o requir e ever yactivit yt o b e 8 potentiall ysubjec t t o ne wsourc e requirements , an d tha t i t woul d 9 b e administrativel yimpractica l t o d o so . 1 0 I npractice , EP Aha s clarifie d th e definitio no f 1 1 "modification " i n th e NSP S an d NS Rregulation s throug hth e 1 2 adoptio no f common-sens e exclusions . Fo r example , bot hset s o f 1 3 regulation s contai n simila r exclusion s fo r routin e maintenance , 1 4 repair , an d replacement ; fo r certai nchange s i nth e hour s o f 1 5 operatio n o r i n th e productio nrate ; an d fo r certai ntype s o f 1 6 fue l switche s [se e 4 0 CF R60.14(e) ; se e also , e.g. , 4 0 CF R 1 7 52.21(b)(2)(iii)] . I n addition , wit hrespec t t o pollutio ncontro l 1 8 equipment , th e NSP S regulation s contai na nexclusio nfor : 1 9 Th e additio no r us e o f an ysyste mo r devic e 2 0 whos e primar yfunctio ni s th e reductio no f 2 1 ai r pollutants , excep t whe na nemission s 2 2 contro l syste mi s remove d o r i s replace d b ya 2 3 syste mwhic hth e Administrato r determine s t o 2 4 b e les s environmentall ybeneficial . [Se e 2 5 4 0 CF R60.14(e)(5)] . 2 6 2 7 Th e EP Aha s hel d tha t thi s exclusio ndoe s no t appl yt o a sourc e 2 8 which , upo n origina l construction , employe d we t scrubbers , bu t

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F EP AO RAN YOTHEROFFICE . 1 late r [upo n relaxatio n o f a Stat e pla nunde r § 111(d) ] desire d t o 2 remov e th e contro l equipment , whic hwoul d hav e resulte d i nmuc h 3 highe r level s o f pollutio ntha nth e plan t ha d eve r emitte d [se e 4 Nationa l Southwir e Aluminu mCompan yv . EPA . 83 8 F . 2 d 835 5 (6t hCir.) , cert , denied . 10 9 S . Ct . 39 0 (1988)] . 6 I n th e past , EP Aha s take nvariou s view s a s t o whethe r th e 7 exclusio ni n § 60.14(e)(5 ) shoul d appl yfo r NS Rpurposes . A s 8 note d earlier , th e NS Rstatutor ydefinitio no f modificatio n 9 simpl yadopt s th e NSP S definitio ni n§ 111(a)(4) . I naddition , 1 0 th e legislativ e histor yreflect s that , a s a genera l matter , 1 1 Congres s intende d t o confor mth e meanin g o f "modification " fo r 1 2 PS D purpose s t o usag e unde r NSP S [se e 12 3 Cong . Rec . H1195 7 1 3 (Nov . l , 1977)] . Fo r thi s reason , EP Ainitiall yrule d tha t th e 1 4 NSP S exclusio n fo r additio no f contro l device s applie d 1 5 automaticall yt o PS D (se e memorandu mfro mEdwar d E . Reic han d 1 6 Willia m

F . Pederse n t o EP ARegio nVI , Apri l 21 , 1983) . Th e EP A 1 7 reverse d cours e i n a 198 6 applicabilit ydetermination , issue d fo r 1 8 bot hPS D an d nonattainmen t NS Rpurposes , notin g tha t th e NSP S 1 9 exclusio n wa s highl yqualitativ e an d faile d t o giv e du e accoun t 2 0 t o eithe r th e ai r qualit ymanagemen t componen t o r th e ^ 6 v * ^. ^\ 2 1 quantitativ e natur e o f th e NS Rapplicabilit yregulations.(se e i 2 2 memorandu m

fro mGeral d A . Emiso nt o Regiona l Ai r Divisio n 2 3 Directors , Jul y7 , 1986) . 

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AO RAN YOTHEROFFICE . 1 D . NSP S Applicabilit y 2 A nNSP S modificatio n i s an y"physica l o r operationa l chang e 3 t o a n existin g facilit ywhic hresult s i na nincreas e i nth e 4 emissio n rat e t o th e atmospher e o f an ypollutan t t o whic ha 5 standar d applies " (se e 4 0 CF R60. 2 an d 60.14) . Unde r NSPS , 6 emission s increases , fo r applicabilit ypurposes , ar e calculate d 7 b ycomparin g th e hourl yemissio nrate , a t maximu mphysica l 8 capacity , immediatel ybefor e an d afte r th e physica l o r 9 operationa l change . Al l operatin g parameter s whic hma yaffec t 1 0 emission s mus t b e th e sam e durin g bot hth e befor e an d afte r 1 1 testin g t o th e maximu mexten t feasibl e [se e 4 0 CF R60.14(b)(2)] . 1 2 Absen t th e exclusion s fro mmodification s specifie d a t 1 3 4 0 CF R60.14(e) , an yincreas e i nemission s t o th e atmospher e ove r 1 4 th e previou s emission s rat e wil l subjec t th e modificatio nt o NSP S 1 5 [se e 4 0 CF R60.14(a ) an d (b)] . I naddition , unde r th e 1 6 reconstructio n rules , physica l o r operationa l change s whic hwoul d 1 7 cos t 5 0 percen t o r mor e o f th e cos t o f a comparabl e ne wfacilit y 1 8 (generall yexcludin g th e cos t o f ai r pollutio ncontro l system s 1 9 no t integra l t o proces s equipment ) ar e classifie d a s 2 0 reconstruction s (se e 4 0 CF R60.15 ) an d ar e subjec t t o NSP S a s a 2 1 ne wsource , eve n i f ther e i s n o emission s increase . 2 2 Thus , unde r th e existin g regulations , NSP S woul d no t appl y 2 3 t o th e installatio n o r improvemen t o f emission s contro l equipmen t 2 4 whic hreduce s hourl yemission s rate s becaus e o f th e explici t

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AO RAN YOTHEROFFICE . 1 provision s o f 4 0 CF R60.14(e) , unles s th e reconstructio n 2 provision s com e int o play . I nth e unlikel yeven t tha t th e 3 reconstructio n provision s d o apply , the nsuc hchange s woul d 4 trigge r NSPS . 5 Prio r t o th e 199 0 Amendments , th e NSP S provision s coul d hav e
o bee n interprete d t o appl yt o majo r facilitie s whic hparticipate d 7 i n temporar yCC T demonstratio nprojects , althoug hsuc hwa s no t 8 EPA' s intent . Thi s interpretatio nwoul d allo wNSP S applicabilit y 9 requirement s t o appl ya t th e en d o f th e demonstration , whe n th e 1 0 contro l equipmen t wa s remove d an d th e emission s ros e bac k t o th e 1 1 leve l tha t existe d befor e th e demonstration. 3 However , th e 1 2 statutor ychange s include d i n§ 41 3 o f th e 199 0 Amendment s clearl yexclud e suc hproject s fro mNSP S applicabilit yan d today' s 1 4 interpretativ e rulin g implement s tha t statute . 1 5 E . NS RApplicability : Th e "Actual-to-Potential " Methodolog y 1 6 Modifie d majo r source s ar e subjec t t o NS Runde r Part s C o r D 1 7 o f th e Ac t i f th e modificatio n i s "major" . Amajo r modificatio n 1 8 consist s o f a physica l chang e o r chang e i nth e metho d o f 1 9 operatio no f a majo r stationar ysourc e whic hresult s i na

2 0 Fo r example , th e installatio no f temporar yCC T controls , 2 1 whic hreduc e th e hourl ysulfu r dioxid e (SO, ) emission s rat e a t a 2 2 source , woul d no t b e a n NSP S modificatio n(assumin g th e cost s o f 2 3 th e modificatio n ar e unde r 5 0 percent) . However , th e dismantlin g 2 4 o f thos e CC T control s a t th e conclusio no f th e demonstratio n 2 5 projec t woul d resul t i n a n increas e i nhourl ySO , emission s (up 2 6 t o pre-demonstratio n levels ) an d th e sourc e coul d b e considere d 2 7 subjec t t o NSPS .

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AO RAN YOTHEROFFICE . 1 "significant " ne t emission s increas e o f an ypollutan t subjec t t o 2 regulatio n unde r th e Ac t [se e 4 0 CF R52.21(b)(1)] . Significanc e 3 level s ar e expresse d i n ton s pe r yea r (tpy) 4 an d diffe r b y 4 pollutan t [se e 4 0 CF R52.21(b)(23)] . Ne t emission s increase s ar e 5 determine d b ysummin g al l contemporaneou s creditabl e actua l 6 emission s increase s an d decrease s a t th e sourc e [se e 4 0 CF R 7 52.21(b)(3)] . Actua l emission s befor e th e modificatio nt o a n 8 affecte d emission s uni t a t a sourc e ar e generall ydetermine d b y 9 averagin g th e emission s fo r th e 2 year s prio r t o th e chang e (o r 1 0 som e othe r period , i f th e sourc e owne r o r operato r demonstrate s 1 1 t o th e reviewin g authorit ytha t th e prio r 2 year s ar e no t 1 2 representativ e o f norma l sourc e operation ) [see , e.g. , 4 0 CF R 1 3 52.21(b)(21)(ii)] . 1 4 I nth e past , th e EP Agenerall ydecide d whethe r emission s a t 1 5 a sourc e ha d significantl yincrease d b ycomparin g th e differenc e 1 6 betwee nactua l emission s befor e modificatio nan d th e potentia l t o 1 7 emi t afte r modification . 1 8 Fo r an yemission s uni t whic hha s no t begu n 1 9 norma l operation s o n th e particula r date , 2 0 actua l emission s shal l equa l th e potentia l t o 2 1 emi t o f th e uni t o n tha t date . [Se e 2 2 4 0 CF R52.21(b)(21)(iv)] . 2 3 4 Th e determinatio n o f "significan t ne t emission s 2 4 increase " als o include s an ysourc e whic hwoul d "construc t 2 5 withi n1 0 kilometer s o f a Clas s I area , an d hav e a nimpac t o n 2 6 suc hare a equa l t o o r greate r tha n1 microgra mpe r cubi c mete r 2 7 (maximum24-hou r average) " regardles s o f emissio nrat e [se e 2 8 4 0 CF R52.21(b)(23)(iii)] .

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### 1 Thi s us eo f

potentia lemission s a s th epost-modificatio n 2emission s rat e(th e"actual-to-potential " test ) stem s fromth e 3 proble mo f

estimatin g what

th eunit' s emission s rat ewil lb e 4 afte r

aphysica lo r

operationa lchange , sinc eth eemission s rat e 5 canno t

b emeasure da t

th etim eof

th epermi t

revie w (i t

ca nonl y 6 b epredicted)
. Historically , EPA' s regulator yschemeassume d 7 tha t

aunit' s actua lemission s afte r modificatio nwer eequivalen t 8 t o th eunit' s maximu m"potentia lt o emit, " whic hi s base don 9 constan t

ful lloa doperation , 24-hour s pe r day , fo r

anentir e 10year . Thebasi s fo r thi s assumptio nwas tha t amodificatio ni s 1 1 likel yt o increas eutilizatio nof asourc ei norde r

t o recove r 12th ecapita lcost s o f th echang eo r

becaus eth echang eimprove s 1 3 th eeconomic s o f th eprocess , thu s makin g i t morelikel ytha t

th e 1 4 sourc ewoul doperat ea t it s ful lpotentia ltha na t it s pre-chang e 1 5 rate . 1 6 However , usin g thes e procedure s eve nth e additio no f a 1 7 contro l devic e coul d resul t i na significan t ne t emission s 1 8 increas e a t a unit , particularl yfo r a pollutan t tha t wa s no t 1 9 affecte d b yth e contro l equipment . I npractice , wher e th e

2 0 Asourc e ca n escap e thi s presumptio ni f i t agree s t o 2 1 federally-enforceabl e emission s limit s o r utilizatio nlimits , 2 2 thereb yguaranteein g tha t it s annua l emission s wil l no t increas e 2 3 [see , e.g. , 4 0 CF R52.21(b)(21)(iv) ; 52.21(b)(4)] . Shoul d a 2 4 sourc e decid e t o increas e productio no r annua l emission s ove r th e 2 5 condition s i t agree d to , i t woul d hav e t o obtai na NS Rpermi t a t 2 6 tha t tim e [see , e.g. , 4 0 CF R52.21(r)(4)] .

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F EP AO RAN YOTHEROFFICE . 1 emissio nprojection s showe d a significan t increas e ove r pre 2 modificatio n(baseline ) emission s wa s likel yt o occur , th e sourc e 3 woul d typicall yengag e i na "netting " exercis e wher e i t wa s mor e 4 cost-effectiv e t o d o so . Tha t is , th e sourc e woul d choos e t o 5 reduc e it s emission s increas e t o les s tha nsignifican t level s 6 (throug hadd-o n controls , cleane r fuels , retiremen t o f ol d units , 7 utilizatio nlimits , etc. ) i n orde r t o avoi d NS Rrequirement s 8 (e.g. , offsets , state-of-the-ar t controls , etc.) . I f a sourc e 9 owne r faile d t o avoi d a n emission s increase , h e woul d the n b e 1 0 require d t o obtai n a NS Rpermi t fro mth e outset , i f sufficien t 1 1 nettin g opportunitie s ar e no t availabl e withi nth e plant . 1 2 I n Puert o Rica n Cemen t Co . v . EPA . 88 9 F.2 d 29 2 (1s t Cir . 1 3 1989) , th e Firs t Circui t uphel d EPA' s "actual-to-potential " 1 4 methodolog yfo r calculatin g emission s increase s i nth e cas e o f a 1 5 renovatio n project . I n thi s case , th e owne r sough t t o conver t a 1 6 we t kil nt o a dr ykil n cement-makin g proces s [se e 88 9 F.2 d 1 7 a t 293] . Th e EP Aargue d tha t § 52.21(b)(21)(iv ) require s th e us e 1 8 o f a unit' s "potential-to-emit " wher e a sourc e ha s no t "begu n 1 9 norma l operations " a s o f th e dat e o f th e applicabilit y 2 0 determination . Th e EP Aargued , an d th e cour t agreed , tha t us e o f 2 1 th e source' s potentia l t o emi t wa s appropriat e [se e Puert o Rica n 2 2 Cement . 88 9 F.2 d a t 296-297] , 2 3 A s explaine d below , EP Abelieve s tha t thi s methodolog y 2 4 generall yserve s th e purpose s o f PS D becaus e i t subject s t o 1 7 Files WEPCO_I H(Marc h3 , 199 1 - 8:11pm ) •*- 'P.2 0



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T REPRESENT S PREDECISIONA L MATERIAL . THE VIEWS EXPRESSE D WITHI N ARE NOT NECESSARILYTHOS E OF EP AO RAN YOTHE ROFFICE . 1 revie windustria l chanqe s tha t migh t lea dt o a nincreas e i n 2 actua l pollutio n[se e Alabam a Powe r Co . v . Costle . 63 6 F.2 d 323 , 3 40 1 (D.C . Cir . 1979)] . However , th e PS D provision s i nth e 4 existin g regulation s coul db e interprete dt o appl yt o majo r 5 facilitie s simpl yinstallin g o r improvin g pollutio ncontro l 6 equipmen t unde r circumstance s wher e a permanen t increas e i n 7 pollutio ni s highl yunlikel ya s a resul t o f tha t action . Suc ha n 8 interpretatio ncoul dactuall yb e a nimpedimen t fo r som e source s 9 t o voluntaril yupgrad e pollutio ncontro l equipmen t sinc e i t woul d 1 0 requir e th e sourc e t o underg o th e PS D permi t revie wprocess. 6 

### 1 1 Unde r today' s interpretativ e ruling , existin g source s whic h 1 2 woul dotherwis e becom e subjec t t o NS Ronl ybecaus e the ydecid e t o 1 3 instal l o r improv e emissio ncontrols , o r participat e i nth e CC T

1 4 6 

### Suppose , fo r example , tha t a nexistin g sourc e ha s a 1 5 potentia l t o emi t o f 500 0 tp yo f S0 2 

### bu t i t ha s actuall yoperate d 1 6 a t 3 0 percen t capacit yfo r th e las t 2 years . A s such , it s actua l 1 7 annua l emission s ar e 150 0 tp yo f S0 2 

### - I t the nelect s t o instal l 1 8 pollutio ncontrol s whic hwil l reduc e th e hourl ySO , emission s 1 9 rat e b y6 0 percent . 2 

### 0 Fo r NS Rapplicabilit ypurposes , absen t today' s ruling , 2 1 actua l S0 2 

### emission s befor e th e installatio no f ai r pollutio n 2 2 control s woul db e compare dt o it s potentia l t o emi t afte r th e 2 3 chang e t o determin e th e ne t emission s increase . Potentia l S0 2 

### 2 4 emission s a t ful l capacit yoperatio nafte r th e chang e woul db e 2 5 200 0 tp y(i.e. , 500 0 tp yminu s th e 6 0 percen t decrease) . Thus , 2 6 th e prio r actua l emission s o f 150 0 tp ywoul db e compare dt o th e 2 7 futur e potentia l emission s o f 200 0 tpy , resultin g i na ne t 2 8 increas e o f 50 0 tpy . Unde r NS Rregulations , thi s i s a 2 9 significan t increas e ( a significan t ne t S0 2 

### emission s increas e i s 3 0 define da s 4 0 tp yo r more ) an d woul dmak e a modificatio n"major" , 3 1 s o th e sourc e woul db e considere dsubjec t t o NS Rrequirements . 3 2

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### 1 programo rsimila rdemonstratio nproject s approve db yEPA , woul d 2instea db eexclude dfro mNS Rcoverage , s olon ga s th eappropriat e 3 reviewin gauthorit ydetermine s tha tth ecriteri adiscusse dherei n 4ar emet . Thecentra lpremis eo f thi s rulin gi s tha tth eadditio n 5 o f acontro ldevic ewil lnot , b yitself , resul ti na nincreas ei n 6capacit yutilizatio nand , hence , anincreas ei nannua lactua l 7 emissions . 8 F . Th e WEPC O Decisio n 9 I na serie s o f applicabilit ydetermination s i n198 8 an d 1 0 1989 , EP Arule d tha t a chang e propose d a t th e Wisconsi nElectri c 1 1 Powe r Company' s (WEPCO's ) Por t Washingto nplan t constitute d a 1 2 modificatio n unde r § 11 1 an d wa s subjec t t o NS Ran d NSP S 1 3 requirement s [se e letter s date d Septembe r 9 , 1988 , fro mDo n R . 1 4 Clay , EP AAssistan t Administrato r fo r Ai r an d Radiation , t o Davi d 1 5 A . Kee , EP ARegio n V ; Octobe r 14 , 198 8 fro mLe e Thomas , EP A 1 6 Administrator , t o Joh n W . Boston , V.P. , WEPCO ; an d Februar y15 , 1 7 198 9 fro m

Do n R . Cla yt o Joh n W . Boston] . Th e WEPC O appeale d 1 8 thes e determination s t o th e cour t o f appeals , whic hlargel y 1 9 uphel d EPA' s determination s [se e WEPCO . 89 3 F.2 d 90 1 2 0 (7t hCir . 1990)] . However , th e cour t rejecte d EPA' s us e o f th e 2 1 "actual-to-potential " tes t fo r wha t th e cour t terme d a "like

2 2 kind " replacement . O n remand , EP Aapplie d a n"actual-to-futur e 2 3 actual " tes t i nth e sam e situatio n(se e lette r date d

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F EP AO RAN YOTHEROFFICE . 1 Jun e 8 , 1990 , fro mWillia mRosenberg , EP AAssistan t Administrato r 2 fo r Ai r an d Radiation , t o Joh nBoston , President , WEPCO) . Th e 3 followin g discussio n present s backgroun d informatio no nth e WEPC O 4 decision , focusin g o n th e distinctio nbetwee n"like-kind " 5 replacement s an d othe r modifications . 6 Th e WEPC O projec t woul d hav e increase d pollutan t emission s 7 ove r th e NS Ran d NSP S baselin e emission s a s a resul t o f th e 8 replacemen t o f stea mdrums , ai r heaters , an d othe r majo r 9 component s tha t ar e integra l t o th e continue d economi c viabilit y 1 0 (and , i npart , th e physica l operability ) o f th e emission s unit' s 1 1 a t th e source . Th e propose d wor k woul d no t hav e simpl y 1 2 maintaine d th e emission s unit s i nthei r curren t stat e bu t woul d 1 3 significantl yan d permanentl yenhanc e thei r presen t physica l 1 4 capacity , an d substantiall yexten d thei r usefu l economi c lif e u p 1 5 t o 2 0 year s beyon d th e previou s planne d retiremen t date . I n 1 6 addition , becaus e o f th e highe r efficienc yprojecte d fo r th e 1 7 renovate d facility , WEPC O planne d t o increas e capacit y 1 8 utilizatio na t th e facilit yfro mabou t 1 0 percen t t o a s hig ha s 1 9 5 0 percent . Accordingly , EP Aconclude d tha t WEPCO' s projec t wa s 2 0 precisel yth e sor t o f long-ter minvestmen t i npollution

2 1 generatin g equipmen t whic hCongres s intende d shoul d b e subjec t t o 2 2 NS Ran d NSPS . 2 3 I nreviewin g EPA' s decisio nregardin g WEPCO , th e Sevent h 2 4 Circui t distinguishe d th e "like-kind " replacement s a t th e WEPC O

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### 1 plan t

i ntha t

cas efro mth echang ei nproductio nproces s involve d 2i nPuert o Rica nCement
. Th ecour t hel dtha t

EP Ashoul dno t 3 assume , fo r

PS D purposes , tha t

th ecompanywoul doperat ea t ful l 4 capacit yfollowin g suc h"like-kind " replacement s give nth efac t 5 tha t

ther ewa s somehistorica lrecor davailabl ewhic hcoul db e 6 use dt o projec t futur eemissions
. Hence , th ecour t remande d 7 EPA' s initia lmethodolog yfo r calculatin g PS

D emission s increase s 8 fo r WEPCO's "like-kind " replacement s t o th eAgenc yfo r furthe r 9 action. 7 i o O n remand , EP Ai npar t considere d pas t operatin g condition s 1 1 whe n predictin g futur e emission s i norde r t o determin e whethe r 1 2 WEPCO' s "like-kind " replacement s shoul d b e subjec t t o PSD . 1 3 However , EP Adecline d t o onl yus e WEPCO' s pre-constructio n 1 4 "presen t hour s an d conditions " t o calculat e post-modificatio n 1 5 utilizatio n sinc e WEPC O ha d utilize d th e sourc e a t highe r level s 1 6 i n th e pas t an d submitte d informatio nindicatin g it s intention s 1 7 t o greatl yincreas e us e o f th e plan t onc e th e renovation s wer e

1 8 7 I nal l othe r respects , EPA' s NSP S an d PS D applicabilit y 1 9 determination s wer e upheld . Th e cour t unequivocall yagree d wit h 2 0 EP Atha t th e replacemen t o f stea mdrums , ai r heaters , an d othe r 2 1 majo r component s wa s a nonroutin e "physica l change " [se e WEPC O 2 2 a t 907] . Th e cour t als o foun d tha t ther e woul d b e a nincreas e i n 2 3 hourl yemission s a t thre e o f th e emission s units , an d thu s fo r 2 4 thos e thre e units , WEPC O me t th e applicabilit ystandard s fo r 2 5 NSPS . I nreachin g thi s secon d conclusion , th e cour t rejecte d 2 6 WEPCO' s contentio n tha t th e origina l desig ncapacit yo r pas t 2 7 representativ e capacit yn o longe r achievabl e a t th e plan t shoul d 2 8 b e use d fo r th e NSP S baselin e emission s rate . fid , a t 914-915] . 2 1 File : WEPOO_I R(Marc h3 , 199 1 - 8:08pa ) •- •P.2 4

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### 1 complete d[se eRosenber gletter , p . 5] . Instead , EP A conclude d 2tha tfo rWEPCO' s "like-kind " replacements , "EP A wil lcompar e 3 representativ eactua lemission s fo rth ebaselin eperio dt o 4estimate dfutur eactua lemission s base donal lth eavailabl e 5 fact s i nth erecord " fid.1 . Today' s rulin gannounce s EPA' s 6decisio nt oappl yth eWEPC O approac ht oal l"like-kind " utilit y 7modifications . Sectio nIII. A o r..oday' s rulin gprovide s ~enera l 8 guidanc eo nth efactor s tha tEP A wil lus et oestimat e"future 9 actual " emission s i nth econtex to f "like-kind " replacement s a t 1 0 utilities . 1 1 III . NS RApplicabilit yfo r Electri c Utilit yProject s 1 2 Th e applicabilit yo f thi s portio no f today' s ruling , whic h 1 3 change s th e procedur e fo r comparin g pre-an d post-modificatio n 1 4 emissions , i s limite d t o electri c utilit ysources . Fo r purpose s 1 5 o f today' s ruling , "electri c utility " source s ar e define d a s 1 6 fossi l fuel-fire d stea melectri c plants , ga s turbines , o r 1 7 cogeneratio n system s whic h(1 ) principall ysuppl yelectricit yt o 1 8 a syste mfo r widesprea d distributio nan d use , an d (2 ) ar e subjec t 1 9 to , o r regulate d by , a publi c utilit ycommissio n(PUC ) o r 2 0 equivalen t bod ysuc htha t record s o f th e source' s pas t an d 2 1 estimate d futur e utilizatio nar e readil yavailabl e an d subjec t t o 2 2 publi c review . 2 3 Whil e EP Ama yconside r extendin g thi s procedur e t o othe r 2 4 industr ysources , severa l factor s militat e agains t a nacross-the

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AO RAN YOTHEROFFICE . 1 boar d applicatio n a t thi s time . Electri c utilities , unlik e mos t 2 sources , ar e semi-publi c i nnatur e an d mos t detail s o f thei r pas t 3 an d presen t operations , includin g thei r output , fue l consumption , 4 operatin g schedules , emission s data , an d emissio nreductio n 5 strategies , ar e generall yavailabl e i npubli c documents . Thes e 6 document s ar e usuall yavailabl e fro mth e appropriat e publi c 7 utilit ycommissio n (PUC) . I n orde r t o justif yrat e requests , 8 publi c utilitie s als o mak e extensiv e filing s regardin g thei r 9 expecte d futur e operations , includin g projecte d utilizatio n o f 1 0 thei r facilities . A s such , permittin g agencie s ca nverif y 1 1 statement s regardin g pas t emission s pattern s o r projection s o f 1 2 futur e use . Fo r instance , EP Awa s abl e t o determin e fro mWEPCO' s 1 3 PU C filing s tha t th e compan yexpecte d t o significantl yincreas e 1 4 utilizatio no f it s Por t Washingto nplan t afte r th e planne d 1 5 refurbishment . I n contrast , record s an d plan s fro mmos t othe r 1 6 industrie s ar e no t s o detaile d an d readil yavailabl e t o th e 1 7 publi c an d ma yrequir e explici t investigatio no f eac hsourc e b y 1 8 th e permittin g authorit yo r EP Aunde r § 11 4 o f th e Act . 1 9 I naddition , Congres s ha s single d ou t utilitie s t o pla ya 2 0 majo r rol e i n reducin g sulfu r oxide s (SO x ) emission s unde r 2 1 Titl e IV . Man yfacilitie s wil l b e makin g change s ove r th e nex t 2 2 fe wyear s t o compl ywit hth e ne wTitl e I V provisions . Therefore , 2 3 EP Abelieve s tha t clarificatio n o f NS Rprovision s whic haffec t 2 4 th e utilit yindustr yi s neede d withou t delay . Today' s

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AO RAN YOTHEROFFICE . 1 interpretativ e rulin g i s th e mos t appropriat e mean s o f clarifyin g 2 thes e provision s i n a timel yfashion . 3 A . Like-Kin d Replacement s 4 I n respons e t o th e WEPC O decision , EP Ai s announcin g a ne w 5 treatmen t fo r "like-kind " replacement s fo r electri c utilit y 6 emission s units . Today' s rulin g define s a "like-kind " 7 replacemen t a s th e nonroutin e replacemen t ( a "routine " 8 replacemen t i s no t a "change " unde r th e curren t rules ) o f a 9 componen t o f a nelectri c utilit yemission s uni t wit hth e sam e 1 0 component . Areplacemen t componen t doe s no t hav e t o b e identica l 1 1 t o th e componen t i t replaces , bu t i t mus t b e "functionall y 1 2 equivalent" . A"like-kind " replacemen t canno t alte r th e origina l 1 3 desig n capacit yo r th e metho d o f operatio no f th e operatin g unit , 1 4 th e component , o r th e source . 1 5 Throug hthi s interpretativ e ruling , th e distinctio nbetwee n 1 6 routin e an d nonroutin e physica l an d operationa l change s t o 1 7 electri c utilit yemission s unit s ha s bee nretained . Unde r 1 8 curren t law , routin e repair , maintenance , an d replacemen t o f 1 9 equipment , a s wel l a s increase d utilizatio n(unles s prohibite d b y 2 0 a federally-enforceabl e permi t an d provide d i t i s no t accompanie d 2 1 b yphysica l o r operationa l changes ) o f existin g source s woul d no t 2 2 b e considere d a physica l o r operationa l chang e an d woul d thu s no t 2 3 trigge r ne wsourc e review . Fo r example , periodi c replacemen t o f 2 4 boile r tube s an d turbin e blade s i s typicall yconsidere d routine ,

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AO RAN YOTHEROFFICE . whil e replacemen t o f stea mdrum s i s not . Th e EP Ai s considerin g 2 whethe r t o codif ya cleare r definitio no f "routine" , wit hothe r 3 change s t o th e NS Rrules , i na futur e notice-and-commen t 4 rulemaking . 5 A s a resul t o f th e WEPC O decision , utilit ymodification s 6 involvin g "like-kind " replacements , suc ha s th e WEPC O project , 7 wil l no wb e abl e t o compar e "actual " baselin e emission s t o a n 8 estimate d projectio no f "futur e actual " emission s fo r NS R 9 applicabilit ypurposes . I nestimatin g th e "futur e actual " i o emission s value , th e utilit ywil l b e responsibl e fo r accuratel y 1 1 projectin g a n emission s unit' s (and th e source's ) futur e actua l 1 2 emission s followin g a modificatio nt o determin e whethe r a 1 3 significan t increas e i nemission s wil l occu r (therebytriggerin g 1 4 NS Rrequirements ) an d fo r providin g adequat e documentatio n o f th e 1 5 projecte d utilizatio n an d emission s estimate s t o th e reviewin g 1 6 authority . 1 7 Consequently , fo r al l "like-kind " replacement s a t electri c 1 8 utilit yplants , actua l emission s fo r th e baselin e perio d wil l b e 1 9 compare d t o estimate d futur e actua l emission s base d o nal l th e 2 0 availabl e fact s i n th e record . Specifically , i ncalculatin g 2 1 post-renovatio n actua l emissions , thi s approac hwil l tak e int o 2 2 accoun t 1 ) physica l change s an d federally-enforceabl e operatio n 2 3 restriction s tha t woul d affec t th e hourl yemission s rat e 2 4 followin g th e renovation , 2 ) th e powe r plant' s historica l pea k 2 5 Pile ! WEPOO_I R(Maro h3 , 199 1 - 8:06pa> -"*- "P.2 8

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AO RAN YOTHEROFFICE . 1 annua l pre-renovatio n capacit yutilization , an d 3 ) availabl e 2 informatio nan d factor s affectin g likel ypea k annua l post
3 renovatio ncapacit yutilizatio no f th e source . 4 T o quantif yth e estimate d futur e actua l emission s afte r th e 5 propose d changes , th e sourc e owne r o r operato r ma yrel yo n 6 historica l pea k an d projecte d operationa l sourc e dat a (e.g. , fue l 7 consumption , MMBt u consumed , PU C filings , etc.) . Specifically , 8 th e owne r o r operato r ca n determin e a nappropriat e utilizatio n 9 facto r fo r futur e operation s an d combin e thi s wit hpost-chang e 1 0 emission s factor s t o estimat e a futur e leve l o f annua l emission s 1 1 fo r th e purpos e o f determinin g whethe r th e propose d chang e woul d 1 2 b e considere d a majo r modificatio nfo r NS Rpurposes . A s i n 1 3 WEPCO . th e emission s factor s use d t o calculat e estimate d "futur e 1 4 actual " emission s mus t b e federally-enforceabl e prio r t o 1 5 commencin g constructio no nth e modifie d unit . 1 6 A n increas e i n representativ e actua l annua l emission s woul d 1 7 b e base d o n a compariso no f 1 ) th e annua l averag e rat e i nton s 1 8 pe r yea r a t whic hth e sourc e actuall yemitte d durin g an y2 yea r 1 9 perio d withi n th e 5 year s precedin g th e chang e a s calculate d i n 2 0 th e manne r describe d i nth e followin g section , an d 2 ) th e 2 1 projecte d averag e rat e i nton s pe r yea r a t whic hth e sourc e wil l 2 2 emi t a pollutant , base d o n eithe r th e historica l pea k 2 3 ( 2 consecutiv e yea r average ) capacit yutilizatio no r th e 2 4 projecte d futur e capacit yutilizatio nfo r th e highes t consecutiv e

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F EP AO RAN YOTHEROFFICE . 1 2-yea r perio d i n th e 1 0 year s followin g th e chang e (o r anyothe r 2 2-yea r perio d followin g th e chang e tha t th e reviewin g authorit y 3 determine s t o b e mor e representativ e o f th e highes t consecutiv e 4 futur e 2-yea r period) , whicheve r i s higher . 5 I nprojectin g futur e capacit yutilization , th e reviewin g 6 authorit yshoul d conside r suc hinformatio na s historica l 7 operationa l data , th e company' s ow nrepresentations , filing s wit h 8 Stat e o r Federa l regulator yauthorities , an d complianc e plan s 9 unde r Titl e I V o f th e 199 0 Amendments . 1 0 Uncertaint yha s bee n expresse d byth e electri c utilit y 1 1 industr ya s t o whethe r anticipate d increase s i nemission s du e t o 1 2 syste m

growt har e relevan t whe ncalculatin g futur e actua l 1 3 emission s a s par t o f a NS Rapplicabilit ydetermination. 8 1 4 Certainly , th e existin g regulation s d o no t exclud e post
1 5 modificatio nemissio nincrease s linke d t o increase d deman d growt h 1 6 i nth e utilit ysystem . Moreover , ther e i s n o indicatio ni n th e 1 7 statute , th e existin g regulations , o r th e preamble s t o thes e 1 8 regulation s t o sugges t tha t Congres s o r th e EP Aconsidere d th e 1 9 underlyin g motivatio n fo r a modificatio nprojec t t o b e relevan t 2 0 i n determinin g whethe r th e projec t woul d resul t i na nemission s 2 1 increase . Rather , a s th e cour t foun d i nWEPCO . EPA' s curren t

Q 2 2 I n othe r words , shoul d increase d emission s tha t occu r a s 2 3 a resul t o f increase d deman d fo r electricit yb e factore d ou t o f 2 4 th e post-modificatio n futur e emission s projection ?

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### 1 regulation s governin gmodification s hing eo nwhethe ranemission s 2increas ei s attributabl et osignifican tconstructio nactivit ya s 3 oppose dt otemporar yfluctuation s i nmarke tcondition s [se e 4WEPCO

. 89 3 F.2 da t91 6n . 11 ; se eals o 5 4 5 F R52701] . 6 Further , eve n i f a n exclusio nfo r syste mgrowt hha d merit > 7 th e EP Adoe s no t thin k tha t a nadministrativ e chang e t o exclud e 8 syste mdeman d growt hwoul d surviv e judicia l revie wbecaus e o f th e 9 stron g indication s tha t th e modificatio nprovision s o f th e 1 0 statut e wer e intende d t o addres s capacit ychange s leadin g t o 1 1 emission s increases . Th e NS Rprovision s see k "t o assur e tha t an y 1 2 decisio n t o permi t increase d ai r pollutio ni nan yarea...i s mad e 1 3 onl yafte r carefu l evaluatio n o f al l th e consequence s o f suc ha 1 4 decisio nan d afte r adequat e procedura l opportunitie s fo r informe d 1 5 publi c participation " [se e 4 U.S.C . 7450(5)] . Base d o nthi s 1 6 provisio n an d othe r evidenc e o f congressiona l intent , th e cour t 1 7 i n Alabam a Powe r Co . v . Costle . 63 6 F.2 d 33 , 40 1 (D.D.C . 1979) , 1 8 note d tha t "Congres s wishe d t o appl yth e permi t proces s [o f Par t 1 9 C]....wher e industria l change s migh t increas e pollutio ni n a n 2 0 area" . 2 1 A t most , th e existin g regulator ystructur e i s indifferen t t o 2 2 whethe r th e roo t purpos e fo r a projec t i s t o respon d t o long-ter m 2 3 marke t demand . Indeed , th e bette r readin g o f th e regulation s an d 2 4 congressiona l inten t i s tha t i t i s precisel ysuc hpermanen t

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. 1 increase s i nai rpollutio ntha tth eNS Rprogra mi s intende dt o 2 cover . 3 B . Determinin g PS D Baselin e fo r Electri c Utilit yProject s 4 Toda yth e EP Ai s als o announcin g it s interpretatio no f wha t 5 constitute s pre-modificatio n "actua l emissions " (baselin e 6 emissions ) fo r determinin g whethe r a chang e a t a nelectri c 7 utilit ygeneratin g uni t wil l resul t i na nemission s increas e and , 8 i f th e increas e i s significant , trigge r NS Rapplicability . 9 Today' s rulin g clarifie s th e provision s i nth e curren t 1 0 regulation s t o allo wa n electri c utilit yt o us e som e perio d othe r 1 1 tha n th e mos t recen t 2 year s a s bein g "mor e representativ e o f 1 2 norma l sourc e operation " whe ndeterminin g PS D baselin e emission s 1 3 [see , e.g. , 4 0 CF R52.21(b)(1)(ii) ; 52.24(13)] . Specifically , 1 4 unde r thi s interpretativ e ruling , EP Awil l allo wbaselin e 1 5 emission s a t a generatin g uni t whic hwil l b e undergoin g a 1 6 physica l modificatio n t o b e calculate d usin g an yconsecutiv e 2

- 1 7 yea r perio d withi nth e 5 year s precedin g th e propose d chang e t o 1 8 tha t uni t whic hth e sourc e owne r o r operato r certifie s t o th e 1 9 reviewin g authority , base d o nit s operatio nhistory , i s 2 0 representativ e o f norma l sourc e operation . Th e baselin e 2 1 emission s ar e the n compare d t o post-modificatio nemission s t o 2 2 determin e i f a significan t emission s increas e woul d occur . Thi s 2 3 rulin g doe s not , however , appl yt o pas t modification s a t a n

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F EP AO RAN YOTHEROFFICE . emission s uni t fo r th e purpos e o f determinin g contemporaneou s 2 emission s change s a t a source . 3 Th e rational e fo r thi s interpretatio ni s base d o nth e 4 recognitio n tha t th e mos t recen t 2 yea r perio d ma yno t b e 5 representativ e o f deman d a t electri c utilities . B yit s nature , 6 th e electri c utilit yindustr ymus t provid e energ yupo ndeman d an d 7 tha t deman d ca n eithe r increas e o r decreas e a s th e economyo r 8 othe r factor s affec t industr yan d th e public' s deman d fo r energy . 9 Electri c utilitie s mus t mee t electrica l deman d an d cannot , lik e 1 0 othe r sources , agre e t o limi t capacit yt o curren t level s o r stor e 1 1 thei r product . Th e 2 ou t o f 5 yea r interpretatio nprovide s thes e 1 2 source s som e o f th e flexibilit ythe ylack . Thi s interpretatio n 1 3 i n n o wa yalter s th e interpretatio no r th e definitio no f 1 4 "allowabl e emissions " foun d i n4 0 CF Rsection s 51.165 , 51.166 , 1 5 an d 52.21 . Th e EP Ama yconside r extendin g thi s interpretatio n 1 6 (an d methodology ) t o othe r sourc e categorie s unde r notice-and

1 7 commen t rulemakin g whic hwil l b e undertake na t a late r date . 1 8 C . Repowerin g Project s 1 9 Titl e I V o f th e 199 0 Amendment s grant s specia l treatmen t t o 2 0 source s tha t see k t o compl ywit hth e aci d rai nreduction s b y 2 1 repowerin g a uni t wit hqualifyin g clea ncoa l technology : 2 2 ...repowerin g mean s replacemen t o f a n 2 3 existin g coal-fire d boile r wit hon e o f th e 2 4 followin g clea ncoa l technologies : 2 5 atmospheri c o r pressurize d fluidize d be d 2 6 combustion , integrate d gasificatio ncombine d

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AO RAN YOTHEROFFICE . 1 cycle , magnetohydrodynamics , direc t an d 2 indirec t coal-fire d turbines , integrate d 3 gasificatio n fue l cells , o r a s determine d b y 4 th e Administrator , i nconsultatio nwit hth e 5 Secretar yo f Energy , a derivativ e o f on e o r 6 mor e o f thes e technologies , an d an yothe r 7 technolog ycapabl e o f controllin g multipl e 8 combustio n emission s simultaneousl ywit h 9 improve d boile r o r generatio nefficienc yan d 1 0 wit hsignificantl ygreate r wast e reductio n 1 1 relativ e t o th e performanc e o f technolog yi n 1 2 widesprea d commercia l us e a s o f th e dat e o f 1 3 enactmen t o f th e Clea nAi r Ac t Amendment s o f 1 4 1990 . Notwithstandin g th e provision s o f § 1 5 409(a) , fo r th e purpos e o f thi s title , th e 1 6 ter m'repowering ' shal l als o includ e an yoi l 1 7 and/o r gas-fire d uni t whic hha s bee nawarde d 1 8 clea n coa l technolog ydemonstratio nfundin g 1 9 a s o f Januar yl , 1991 , b yth e Departmen t o f 2 0 Energy " [se e 199 0 Amendments , § 402(12 ) an d 2 1 409(a)] . 2 2 2 3 Congres s provide d tha t repowerin g project s tha t qualifie d fo r a 2 4 Phas e I I complianc e extensio n woul d als o b e exemp t fro mNSP S 2 5 requirements , s o lon g a s th e repowerin g "doe s no t increas e actua l 2 6 hourl yemission s fo r an ypollutan t regulate d unde r th e Act " [se e 2 7 199 0 Amendments , § 409(d)] . A noperato r ca nqualif yfo r th e 2 8 3-yea r extensio n o f th e Phas e I I emission s limitatio nby 2 9 demonstratin g (b yDecembe r 31 , 1997 ) t o th e permittin g authorit y 3 0 tha t on e o r mor e unit s wil l b e repowere d wit ha qualifyin g clea n 3 1 coa l technolog yt o mee t th e Titl e I V restrictions . Th e operato r 3 2 mus t provide , n o late r tha nJanuar y1 , 2000 , additiona l 3 3 documentatio n o f th e repowerin g projec t includin g a preliminar y 3 4 desig n an d engineerin g effor t fo r th e projec t an d a bindin g

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### 1 contrac tfo rth emajorit yo f th eequipmen tneeded , a s wel la s an y 2additiona linformatio nth ereviewin gauthorit yrequires . 3 TheEP

A interpret s th erequiremen ttha tth erepowerin gno t 4lea dt oanincreas ei n"actua lhourl yemissions " a s specifyin gan 5 actual-to-actua lmethodology . Tha tis , arepowerin gmodificatio n 6whic hresult s i nanincreas ei naunit' s post-modificatio nactua l 7hourl yemission s wil lno tb eeligibl efo rthi s limite dNSP S 8 exemption . 9 Th e NSP S exemptio napplie s bot ht o modification s o f existin g 1 0 unit s an d t o replacemen t o f ol d unit s a t existin g sources . Ne w 1 1 unit s whic hreplac e old , on-sit e unit s ar e no wexemp t fro mNSP S 1 2 s o lon g a s th e projec t qualifie s fo r th e Phas e I I extensio n an d 1 3 satisfie s th e "actua l hourl yemissions " test . However , n o 1 4 specia l treatmen t ca nb e afforde d t o a ne wuni t whic hi s locate d 1 5 a t a differen t sit e tha n th e existin g uni t i t replaces . 1 6 "Anyuni t qualifyin g fo r a nextensio nunde r thi s 1 7 sectio n tha t doe s no t increas e actua l hourl yemission s 1 8 fo r an ypollutan t regulate d unde r th e Ac t shal l no t b e 1 9 subjec t t o an ystandar d o f performanc e unde r sectio n 2 0 11 1 o f thi s Act . Notwithstandin g th e provision s o f 2 1 thi s subsection , n o ne wuni t (1 ) designate d a s a 2 2 replacemen t fo r a nexistin g unit , (2 ) qualifyin g fo r 2 3 th e extensio n unde r subsectio n(b) , an d (3 ) locate d a t 2 4 a differen t sit e tha nth e existin g uni t shal l receiv e 2 5 a n exemptio n fro mth e requirement s impose d unde r 2 6 sectio n ill " [se e 199 0 Amendments , § 409(d)] . 2 7 2 8 Furthermore , th e reconstructio nprovision s specifie d i n 2 9 4 0 CF R60.1 5 ar e n o longe r applicabl e t o repowerin g projects .

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AO RAN YOTHEROFFICE . 1 Specifically , repowerin g project s ar e no t subjec t t o th e "5 0 2 percen t reconstructio n test " sinc e ne wunit s tha t ar e considere d 3 repowerin g ar e exemp t fro mNSPS . 4 D . Clea n Coa l Technolog yDemonstratio nProject s 5 Today' s rulin g als o implement s a nexemptio nfo r CC T 6 demonstratio n project s whic hwa s create d b yCongres s i nTitl e I V 7 o f th e 199 0 Amendments . I nthes e provisions , CC T i s define d a s 8 an ytechnolog yno t i n widesprea d us e o nth e dat e o f enactmen t tha t achieve s significan t reduction s i nS0 2 o r nitroge noxide s (NO x ) emission s associate d wit hburnin g coa l i nth e generatio n o f 1 1 electricity , proces s steam , o r industria l product s [se e 199 0 1 2 Amendments , 415(a)] . ACC T "demonstratio nproject " i s a projec t 1 3 funde d unde r DOE' s CC T progra mo r a simila r projec t funde d b y 1 4 EPA . 1 5 "... a clea n coa l technolog ydemonstratio n 1 6 projec t shal l mea na projec t usin g fund s 1 7 appropriate d unde r th e headin g 'Departmen t o f 1 8 Energy-Clea n Coa l Technology' , u p t o a tota l 1 9 amoun t o f $2,500,000,00 0 fo r commercia l 2 0 demonstratio n o f clea ncoa l technology , o r 2 1 simila r project s funde d throug h 2 2 appropriation s fo r th e EPA " [se e 199 0 2 3 Amendments , § 415(b)(1)] . 2 4 2 5 Aver ynarro wdistinctio nexist s betwee nth e applicabilit y 2 6 requirement s fo r genera l repowerin g project s an d repowerin g 2 7 project s whic har e funde d a s permanen t CC T demonstratio n 2 8 projects . Genera l repowerin g projects , a s describe d abov e an d i n 2 9 § 402(12 ) o f th e revise d Act , ar e exemp t fro mNSP S requirement s

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F EP AO RAN YOTHEROFFICE . 1 a s lon g a s actua l hourl yemission s fro mth e sourc e d o no t 2 increas e a s a resul t o f th e repowering . O nth e othe r hand , 3 repowerin g project s whic har e awarde d fundin g fro mth e Departmen t 4 o f Energ y(DOE ) a s permanen t CC T demonstratio nproject s (o r 5 simila r project s funde d b yEPA ) ar e exemp t fro mNSP S an d PS D 6 requirement s s o lon g a s potentia l emission s (se e 52.21(b)(4) ) 7 fro mth e uni t d o no t increas e a s a resul t o f th e project . 8 Id . § 415(b) . Althoug hthes e funde d project s ar e exemp t fro m 9 NSP S an d PS D requirements , the ymus t stil l compl ywit hth e 1 0 nonattainmen t provision s o f Titl e I o f th e Act . 1 1 Th e installation , operation , cessation , o r remova l o f a 1 2 temporar yCC T demonstratio n projec t tha t i s operate d fo r 1 3 5 year s o r les s i s exemp t fro mNSP S an d PS D an d nonattainmen t 1 4 requirements . ID . § 415(b)(2) . However , th e facilit ystil l mus t 1 5 compl ywit hth e applicabl e SI P an d othe r requirement s necessar y 1 6 t o attai n an d maintai n NAAQS . Today' s rulin g implement s thi s 1 7 provisio n an d clarifie s tha t EP Aconsider s th e 5 yea r perio d a s 1 8 startin g o nth e dat e o f startu p (a s define d i n4 0 CF R60.2) . 1 9 Further , EP Ainterpret s th e statut e a s presumin g that , a t 2 0 th e en d o f a temporar yproject , th e facilit ymus t b e returne d t o 2 1 pre-demonstratio n condition s an d hourl yemissio nrate s (o r 2 2 lower) . Th e retur n o f th e facilit yt o it s 2 3 pre-demonstratio n physica l an d operationa l conditio nwoul d no t 2 4 resul t i nth e los s o f th e actua l emission s margi nbetwee n

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F EP AO RAN YOTHEROFFICE . 1 pre-demonstratio nactua l emission s rat e an d Stat e implementatio n 2 pla n (SIP)-allowabl e emission s rate s fo r tha t facility . Rather , 3 th e facilit ywoul d b e treate d a s i f th e temporar ydemonstratio n 4 projec t ha d neve r occurred . Thi s woul d b e th e cas e eve ni f ther e 5 wer e smal l bu t negligibl e difference s i nth e post-demonstratio n 6 physica l an d operationa l condition s du e t o a technica l inabilit y 7 t o restor e th e uni t t o it s precis e pre-demonstratio ncondition , 8 o r du e t o norma l variabilit yi nth e coa l used . Thus , EP Awoul d 9 no t see k t o appl yNSP S o r NS Rdu e t o a post-demonstratio n i o emission s increas e attributabl e solel yt o a nincreas e i nth e 1 1 hour s o f operatio n o r productio nrat e o f th e uni t (subjec t t o th e 1 2 NSP S limitatio n tha t th e productio nrat e increas e mus t b e 1 3 accomplishe d withou t a capita l expenditure) . 1 4 Today' s rulin g doe s no t exten d t o emission s increase s whic h 1 5 ar e unrelate d t o th e conduc t o f temporar ydemonstratio nprojects . 1 6 Emission s increase s (abov e th e pre-demonstratio nlevels ) tha t ar e 1 7 attributabl e t o physica l o r operationa l changes , othe r tha n thos e 1 8 necessar yt o restor e tha t uni t t o it s pre-demonstratio n 1 9 condition , ma yrende r th e facilit ysubjec t t o NSP S o r NS Ran d ar e 2 0 beyon d th e scop e o f thi s interpretativ e ruling . 2 1 Atemporar ydemonstratio n projec t ma yb e converte d t o a 2 2 permanen t statu s a t an ytime , provide d i t meet s al l o f th e 2 3 permanen t chang e criteri a a t th e tim e o f conversion . Thus , fo r 2 4 example , i f hourl yo r annua l emission s ha d increase d becaus e o f

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### 1 th etemporar ydemonstration , afte r th echang et o permanen t 2status , thes eemission s ca nb eno greate r tha nthos ewhic h 3 existe dprio r

t o initiatio no f

th etemporar ydemonstratio n 4 project . 5 IV . NS RAN D NSP S APPLICABILIT YFO RPOLLUTIO N 6 CONTRO L PROJECT S A T AL L SOURCE S 7 A . Definition s 8 Fo r purpose s o f thi s ruling , th e ter m"emission s contro l 9 syste m

o r device " mean s add-o ntype s o f emission s contro l 1 0 equipment , suc ha s fabri c filters , scrubbers , absorbers , 1 1 catalysts , an d therma l reduction/oxidation , includin g th e us e o f 1 2 a les s pollutin g fue l wher e th e appropriat e reviewin g authorit y 1 3 determine s fro mal l availabl e informatio ntha t th e projec t i s 1 4 designe d primaril yt o reduc e ai r pollutio nan d tha t ther e i s n o 1 5 reasonabl e caus e t o expec t a nincreas e i nutilizatio no f th e 1 6 sourc e solel ydu e t o th e projec t o r fue l switch . Fo r example , 1 7 som e physica l change s t o accommodat e a ne wfue l coul d b e properl y 1 8 characterize d a s pollutio n contro l system s [e.g. , a CC T 1 9 demonstratio n o f NO xreburnin g technolog yusin g natura l ga s o n a 2 0 coal-fire d utilit yboiler ; o r project s t o conver t t o natura l ga s 2 1 o r t o gas/coa l co-firin g implemente d t o compl ywit ha n

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### 1 environmenta lregulator yrequirement]. 9 

### Suc hdetermination s 2wil lb emadeb yth eappropriat ereviewin g authorit yo nacase-by

3 cas ebasis
. 4 Change s whic hrestor e origina l capacity , o r ar e mad e 5 primaril yt o improv e th e operationa l efficienc yo f th e facility , 0 6 ar e no t considere d t o b e th e installatio no r improvemen t o f a n 7 "emission s contro l syste mo r device " fo r purpose s o f thi s ruling , 8 eve n i f suc hchange s als o involv e th e installatio no r improvemen t 9 o f a n emission s contro l system . Specifically , thi s portio n o f 1 0 th e interpretativ e rulin g doe s no t appl yt o project s whic h 1 1 involv e extensiv e change s t o th e pollutio ngeneratin g equipmen t 1 2 a t a stationar ysource , an d ar e intende d primaril yt o improv e 1 3 operatin g capability , capacity , o r efficiency , rathe r tha n reduc e 1 4 emissions . Thes e type s o f project s implicat e th e cor e concern s 1 5 o f th e statutor yne wsourc e requirement s an d provid e a direc t 1 6 incentiv e t o increas e capacit yutilizatio nove r curren t levels . 1 7 A s such , EP Abelieve s the yar e fundamentall ydifferen t fro mth e 1 8 additio n o f a pollutio n contro l device . 1 9 B . Condition s fo r Exclusio no f Ai r Pollutio nContro l 2 0 Project s fro mNS Ran d NSP S requirement s

2 1 9 Se e lette r fro mPatric k W . McCarter , Colorad o Publi c 2 2 Servic e Co . t o Willia mK . Reilly , Administrator , U S EPA , 2 3 regardin g CC T project s a t th e Arapaho e an d Cheroke e generatin g 2 4 stations , Ma y9 , 1990 .

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F EP AO RAN YOTHEROFFICE . 1 Thi s interpretativ e rulin g i s intende d t o b e a narro w 2 interpretatio n applyin g onl yt o activitie s whic har e considere d 3 environmentall ybeneficial . O nth e othe r hand , ther e ar e man y 4 activitie s tha t tak e plac e a t existin g source s wher e th e inten t 5 o f bot hth e Ac t an d EPA' s regulation s i s t o requir e a ful l an d 6 rigorou s NS Ranalysi s [includin g applicatio no f BAC T o r LAER ] o r 7 adherenc e t o NSPS . Th e EP Arealize s tha t certai nCC T (and othe r 8 demonstrations ) an d compliance-relate d project s coul d decreas e 9 th e emission s o f th e specifi c pollutan t o f interes t whil e 1 0 increasin g th e emission s o f othe r pollutants . Th e exclusio n o f 1 1 suc hproject s fro mNS Ran d NSPS , regardles s o f thei r partia l 1 2 benefits , i s clearl yi n conflic t wit hth e regulation s an d beyon d 1 3 th e scop e o f a n interpretativ e ruling . 1 4 A nowne r o r operato r proposin g t o conduc t activitie s t o 1 5 whic hthi s interpretativ e rulin g ma yappl ymus t reques t an d 1 6 receiv e a non-applicabilit ydeterminatio nfro mEP A(o r th e agenc y 1 7 t o whic hsuc hauthorit yha s bee ntransferred ) prio r t o commencin g 1 8 on-sit e constructio n activitie s relate d t o th e project . Th e 1 9 reques t mus t contai n a genera l descriptio no f th e facilit yan d 2 0 th e propose d environmentall ybeneficia l activity , informatio n o n 2 1 curren t an d projecte d usag e o f th e unit , an d sufficien t othe r 2 2 informatio n t o justif ytha t th e exclusio napplie s t o th e source . 2 3 I n addition , th e reques t mus t mee t tw o criteria :

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F EP AO RAN YOTHEROFFICE . 1 (1 ) tha t th e sourc e will , durin g an d afte r th e propose d change , 2 continu e t o mee t al l curren t requirement s an d standard s 3 applicabl e t o existin g source s unde r th e Act , includin g 4 demonstration s tha t th e sourc e wil l continu e t o mee t al l 5 applicabl e NAAQS , PS D increments , permi t conditions , an d SI P 6 limitations ; and , 7 (2 ) tha t ther e i s a positiv e environmenta l benefi t resultin g 8 fro mth e propose d change . 9 Th e firs t criterion , tha t th e sourc e continu e t o mee t al l 1 0 curren t requirement s an d standard s fo r existin g sources , i s 1 1 intende d t o clarif ytha t EP Acanno t waive , throug ha n 1 2 interpretativ e ruling , NS Ran d NSP S (o r other ) requirement s whic h 1 3 ar e clearl yapplicabl e t o existin g source s unde r provision s o f 

### 1 4 

### th e 

### Act . 1 5 Th e secon d criterion , tha t ther e i s a positiv e environmenta l 1 6 benefi t resultin g fro mth e propose d change , mean s tha t th e 1 7 propose d change , b yitself , wil l not : 1 8 (a ) increas e th e actua l maximu mhourl yemission s rat e o f any 1 9 pollutan t regulate d unde r Par t C o r D o f th e Act ; 2 0 (b ) increas e th e annua l emission s o f an ypollutan t regulate d 2 1 unde r Par t C o r D o f th e Act ; 2 2 (c ) adversel yimpac t a n ai r qualit yrelate d valu e (e.g. , 2 3 visibility ) i n an yClas s I area ; o r

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AO RAN YOTHEROFFICE . (d ) increas e emission s o f an ypollutan t no t regulate d unde r Par t 2 C o r D o f th e Ac t whic hma ycaus e a healt ho r welfar e 3 impact . I n makin g suc ha finding , th e permittin g authorit yresponsibl e 5 fo r reviewin g th e propose d activitie s mus t explicitl ydetermine , base d o n consideratio n o f thes e an d othe r relevan t criteria , tha t th e ne t effec t wil l b e environmentall ybeneficial . 8 Th e inten t o f thes e criteri a i s t o ensur e tha t activitie s 9 whic himplicat e th e cor e concern s o f NS Ran d NSP S remai nsubjec t t o ne wsourc e requirements . T o tha t end , th e interpretativ e 1 1 rulin g doe s no t exten d t o chance s whic har e likel yt o increas e 1 2 emission s t o th e atmosphere , suc ha s change s whic hincreas e a 1 3 plant' s overal l hourl yoperatin g capacit y(e.g. , eliminatin g a 1 4 productio n bottleneck) , increas e a nhourl yemission s rat e (e.g. , 1 5 on e pollutan t decrease s bu t anothe r increases) , increas e ground

1 6 leve l concentration s o f pollutant s (e.g. , change s t o effectiv e

. 7 stac k height ) o r increas e th e source' s utilizatio nrat e (e.g. , a n anticipate d increas e i n hour s pe r yea r o f operation ) 1 9 Thes e constraint s ar e intende d t o preven t annua l emission s increase s tha t ca nb e readil yattribute d t o th e propose d change . 2 1 I t doe s no t preclud e increase s whic hmigh t resul t solel yfro m cycli c fluctuation s i nproduc t demand . Thus , th e EP Awil l presum e tha t th e additio n o f a contro l devic e wil l not , by itself , resul t i na nincreas e i n capacit yutilization . However , File : WEPOO_r s (Marc h3 , 199 1 - 7:37pa ) 4 0P.4 3

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AO RAN YOTHEROFFICE . 1 thi s presumptio n ma yb e overcom e if , base d o nth e informatio n 2 submitted , EP Aconclude s tha t ther e i s a reasonabl e likelihoo d 3 tha t operatin g hour s o r productio nrate s wil l increas e becaus e o f 4 th e installatio n o f th e device . I nassessin g whethe r an yne t 5 increas e i nactua l emission s o f an ypollutant , ove r 6 representativ e actua l emission s rates , i s likel yt o occu r a s a 7 resul t o f th e additio n o f controls , th e reviewin g agenc yshoul d 8 conside r th e economi c incentive s t o increas e productio n rate s o r 9 hour s o f operatio n associate d wit hth e installatio nan d us e o f 1 0 th e contro l device . Wher e increase d emission s du e t o increase d 1 1 utilizatio no f th e facilit yar e clearl ya likel yresul t fro m 1 2 additio n o f th e device , th e chang e shoul d no t b e considere d 1 3 environmentally-beneficial . Th e owne r o r operato r must , 1 4 therefore , explai n whethe r ther e i s an yinten t t o operat e th e 1 5 sourc e a t greate r hourl yemission s rates , o r fo r mor e hours , tha n 1 6 durin g th e mos t recen t 2 year s (o r som e othe r period , i f th e las t 1 7 2 year s ar e no t representativ e o f norma l operation ) and , i f so , 1 8 th e reaso n fo r suc hintent . 1 9 I nprovidin g informatio n t o th e reviewin g authority , a n 2 0 owne r o r operato r shoul d als o conduc t sufficien t modelin g t o 2 1 ensur e tha t an yne wo r increase d emission s o f unregulate d toxi c 2 2 pollutant s resultin g fro mth e additio no r replacemen t o f contro l 2 3 equipmen t wil l no t caus e o r contribut e t o advers e healt ho r 2 4 welfar e impacts . Thi s i s t o ensur e tha t th e contro l system , i f d i File : WBPOO_I R(Marc h3, 199 1 - 7:36pa ) ^ •* •- STAFF DRAFT

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F EP AO RAN YOTHEROFFICE . j , 1 i t result s i nth e emission s o f som e a s ye t unregulate d pollutant , 2 woul d no t inadvertentl ycaus e a healt ho r welfar e impac t tha t 3 woul d b e unacceptable . 4 C . Provision s i nth e Ac t prio r t o th e 199 0 Amendment s 5 fo r Innovativ e Contro l Technologie s 6 I f a n existin g sourc e undertake s a ninnovativ e additio n o r 7 improvemen t o f a nemission s contro l syste mo r devic e i ngoo d 8 faith , bu t doe s no t obtai na napplicabilit yexclusio nfro mNS R 9 an d NSP S unde r thi s interpretativ e ruling , i t ma ystil l appl yfo r 1 0 us e o f on e o r mor e innovativ e contro l technolog yprovision s i n 1 1 th e Act . Sectio n lll(j ) o f th e Ac t allow s a waive r t o b e grante d 1 2 fo r a ne wo r modifie d sourc e tha t wishe s t o us e innovativ e 1 3 contro l technolog ytha t i s likel yt o produc e greate r emission s 1 4 reductions , o r achiev e a t leas t equivalen t emission s reduction s 1 5 a t les s cos t i n term s o f energy , economic , o r environmenta l 1 6 impact s (othe r tha n ai r quality) . Thi s sectio nprovide s u p t o 4 1 7 year s fro mstartu p o r 7 year s fro mgrantin g o f th e waive r 1 8 (whicheve r i s earlier ) fo r th e sourc e t o compl ywit happlicabl e 1 9 NSP S emission s limits . I f th e innovativ e technolog yfails , th e 2 0 sourc e ma yhav e u p t o 3 mor e year s t o instal l conventiona l 2 1 technolog yt o mee t th e standards . 2 2 Th e PS D innovativ e contro l technolog yregulation s [e.g. , 2 3 4 0 CF R51.166(s) ] ar e essentiall ysimila r t o § lll(j ) o f th e Act . 2 4 However , befor e th e PS D waive r approva l ca nb e granted , th e

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F EP AO RAN YOTHEROFFICE . 1 consen t o f th e governor s o f th e othe r affecte d State s mus t als o 2 b e obtained . Othe r provision s i nth e curren t NSP S regulation s 3 ar e designe d t o encourag e th e us e o f innovativ e contro l 4 technology . Commercia l Demonstratio nPermit s (Subpar t Da , 4 0 CF R 5 60.45a ) provid e relaxe d NSP S emissio nlimits , bu t th e sam e 6 complianc e tim e (18 0 day s fro mstartup ) fo r a limite d numbe r o f 7 demonstration s o f fou r liste d contro l technologies . Th e liste d 8 technologie s are : solven t refine d coal , 8 0 percen t S0 2 9 reduction ; coa l liquefaction , 0.7 0 l bNOx/millio nBritis htherma l unit s (MMBtu) ; atmospheri c fluidize d bed , 8 5 percen t S0 2 1 1 reduction ; an d pressurize d fluidize d bed , 1 2 8 5 percen t S0 2 reduction . 1 3 Thes e provision s ma yb e usefu l t o CC T participants . Fo r 1 4 example , a permanen t add-o n projec t t o demonstrat e S0 2 contro l 1 5 coul d resul t i n a n increas e i nparticulat e matte r emissions . Fo r 1 6 purpose s o f NSPS , thi s coul d b e exempte d fro mbecomin g a 1 7 modificatio nbyth e provision s o f 4 0 CF R60.14(e)(5) . 1 8 V . Lega l Rational e fo r Today' s Interpretativ e Rulin g 1 9 Today' s rulin g contain s EPA' s lega l interpretatio no f 2 0 certai n existin g regulator yprovision s tha t gover nNS Ran d NSP S 2 1 applicability , an d set s fort hcriteri a tha t EP Aintend s t o us e i n 2 2 issuin g specifi c NS Ran d NSP S applicabilit ydetermination s an d 2 3 advisor yopinion s t o State s havin g authorit yt o mak e suc h 2 4 determinations . Consequently , EP Abelieve s tha t today' s rulin g

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AO RAN YOTHEROFFICE . 1 doe s no t constitut e a fina l Agenc yactio ntha t i s rip e fo r 2 judicia l revie wunde r § 307(b)(1 ) o f th e Act . Rather , th e impac t 3 o f th e view s embodie d i n thi s ruling , i f any , ca nonl yb e 4 measure d i n th e factua l contex t o f a specifi c applicabilit y 5 determinatio n o r relate d fina l Agenc yaction , an d EP Abelieve s 6 tha t i t i s onl yi n suc hcircumstance s tha t judicia l revie wo f th e 7 matter s addresse d i n thi s rulin g woul d b e appropriate . 8 VI . Administrativ e 9 A . Docke t 1 0 Th e docke t fo r thi s interpretativ e rulin g i s A-90-06 . I t i s 1 1 a n organize d an d complet e fil e o f al l informatio nconsidere d i n 1 2 th e developmen t o f thi s ruling . Th e docke t i s intende d t o allo w 1 3 th e publi c t o identif yan d locat e document s relate d t o thi s 1 4 ruling . 1 5 B . Paperwor k Reductio nAc t 1 6 N o additiona l publi c reportin g burde nwil l resul t fro mthi s 1 7 interpretativ e ruling . Al l informatio ncollectio nrequirement s 1 8 o f th e Federa l NS Ran d NSP S regulation s hav e bee napprove d b yth e 1 9 Offic e o f Managemen t an d Budge t (OMB ) unde r th e provision s o f th e 2 0 Paperwor k Reductio n Act , 4 4 U.S.C . 3501 , et . seq. , and , hav e bee n 2 1 assigne d OM B contro l number s 060-000 3 fo r NSR , an d 060-003 , 2 2 060-00 6 an d 060-00 7 fo r NSPS . Th e effec t o f th e interpretativ e 2 3 rulin g woul d b e a reductio n i npaperwor k relate d t o complyin g 2 4 wit hNS Ran d NSP S requirements , sinc e thi s rulin g provide s

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### 1 additiona lclarificatio na s t o modification s tha t ma yb eexclude d 2fro mthes erequirements
. 3 C
. OM B Revie w 4 Unde r Executiv e Orde r (E.O. ) 12291 , EP Amus t judg e whethe r a 5 rul e i s "major " an d therefor e subjec t t o th e requiremen t o f a 6 regulator yimpac t analysis . Thi s interpretativ e rulin g i s no t a 7 majo r rule , becaus e i t wil l no t resul t i na nadvers e economi c 8 effec t se t fort hi n sectio nl o f E.O . 1229 1 a s ground s fo r 9 findin g a nactio nt o b e major . Thi s interpretativ e rulin g wa s 1 0 submitte d t o th e OM B fo r revie wa s reguire d b yE.O . 12291 . An y 1 1 writte n comment s fro mOM B t o EP Aan d an yEP Arespons e t o thos e 1 2 comment s ar e include d i nDocke t A-90-06 . 1 3 D . Effectiv e Dat e 1 4 Thi s interpretativ e rulin g i s effectiv e upo npublicatio n i n 1 5 th e FEDERA L REGISTER . Th e EP Aha s conclude d tha t th e 1 6 requirement s o f § 4(d ) o f th e Administrativ e Procedure s Ac t 1 7 (APA) , 5 U.S.C . 553(d) , fo r a 30-da ywaitin g perio d befor e makin g 1 8 a substantiv e rul e effectiv e i s no t applicable , becaus e thi s i s 1 9 a n interpretativ e rulin g no t subjec t t o th e notice-and-commen t 2 0 rulemakin g requirement s o f th e AP A[se e 5 U.S.C . § 533(b)(A)] . 2 1 E . Regulator yFlexibilit yAc t 2 2 Thi s actio ni s no t subjec t t o th e provision s o f 2 3 5 U.S.C . 605(b) , becaus e interpretativ e ruling s ar e exemp t fro m 2 4 notice-and-commen t requirement s o f 5 U.S.C . 553 . 4 •* » File : WBPOO_l R(Marc h3 , 199 1 - 7:s4pa ) *- *P.4 8

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F EP AO RAN YOTHEROFFICE . 1 2 Lis t o f Subject s 3 4 0 CF RPar t 5 1 4 Administrativ e procedur e an d practices , intergovernmenta l 5 relations , ai r pollutio ncontrol , ne wsourc e review , electri c 6 utilities , repowering , clea ncoa l technolog ydemonstrations , 7 sulfu r oxides , particulat e matter , nitroge ndioxide , carbo n 8 monoxide , hydrocarbons , lead . 9 4 0 CF RPar t 5 2 1 0 Ai r pollutio n control , ne wsourc e review , electri c 1 1 utilities , repowering , clea ncoa l technolog ydemonstrations , 1 2 sulfu r oxides , particulat e matter , nitroge ndioxide , carbo n 1 3 monoxide , hydrocarbons , lead . 1 4 4 0 CF RPar t 6 0 1 5 Ai r pollutio n control , ne wsourc e performanc e standards , 1 6 clea n coa l technolog ydemonstrations , sulfu r oxides , particulat e 1 7 matter , nitroge n dioxide , carbo nmonoxide , hydrocarbons , lead . 1 8 1 9 2 0
_ 2 1 Dat e Willia mK . Reill y 2 2 Administrato r 2 3 2 4 2 5

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fort hi nth epreamble , Part s 51 , 52 , an d6 0 2o f Chapte r

1 o f Titl e4 0ar eamende da s follows : 3 4 Par t

5 1 - REQUIREMENT S FO RTH EPREPARATION , ADOPTION , 5 AN D SUBMITTA LO FIMPLEMENTATIO NPLAN S 6 7 New appendice s ar eadde da t th een do f

Par t 5 1 a s follows : 8 APPENDI XV- • NE WSOURC EREVIE WREQUIREMENT S 9 FO RTH EINSTALLATIO NORIMPROVEMEN TO F 1 0EMISSION S CONTRO LSYSTEM S 1 1 Thi s appendi xset s fort hth e EPA' s interpretativ e rulin g o n 1 2 th e definitio n o f "majo r modification " i n4 0 CF R51.165 , 51.16 6 1 3 an d Appendi xS . Thi s rulin g describe s a numbe r o f activitie s 1 4 regardin g emission s contro l system s o r device s whic har e no t 1 5 considere d byEP At o b e a "physica l change " o r "chang e i nth e 1 6 metho d o f operation " o f a majo r stationar ysourc e withi nth e 1 7 meanin g o f § 51.16 5 an d 51.16 6 an d Appendi xS . 1 8 Thi s rulin g als o clarifie s EPA' s interpretatio ntha t th e 1 9 installatio n an d us e o f clea ncoa l technolog y(CCT ) an d othe r 2 0 EPA-approve d contro l technolog ydemonstratio nprojects , th e 2 1 remova l o f temporar ydemonstratio nemission s contro l system s o r 2 2 devices , an d th e additio no r improvemen t o f a nemission s contro l 2 3 syste m

o r devic e o n a voluntar ybasi s o r fo r compliance-relate d 2 4 purposes , i s no t a "majo r modification " subjec t t o th e NS R 2 5 provision s o f § 51.165 , 51.166 , o r Appendi xS , provide d suc h 2 6 installatio n an d us e meet s th e condition s specifie d belo wan d th e

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. TH EVIEW S EXPRESSED WITHI N AR ENO TNECESSARIL YTHOS EO FEP AO RAN YOTHE ROFFICE
. 

### 1 appropriat ereviewin g authorit yissue s anapplicabilit y 2exclusion
. 3 Th e principa l conditio nfo r th e exclusio ni s tha t th e 4 installatio n o r operatio no f th e emission s contro l syste mo r 5 devic e mus t b e designe d primaril yt o improv e th e contro l o r 6 preventio n o f ai r pollutio n emissions . I f th e installatio n o f a n 7 emission s contro l syste mo r approve d contro l technolog y 8 demonstratio n projec t bya sourc e woul d otherwis e trigge r ne w 9 sourc e revie wbecaus e an yapplicabl e "significant " ne t emission s 1 0 increas e threshol d woul d b e exceede d [a s define d a t 4 0 CF R 1 1 51.166(b)(23)] , th e sourc e ca nno t commenc e installatio no f th e 1 2 contro l syste mo r demonstratio nprojec t unti l th e reviewin g 1 3 authorit ynotifie s th e sourc e tha t i t qualifie s fo r a nexclusio n 1 4 an d suc hexclusio n i s granted . 1 5 Fo r purpose s o f thi s ruling , th e ter m"emission s contro l 1 6 syste mo r device " mean s add-o ntype s o f emission s contro l 1 7 equipment , suc ha s fabri c filters , scrubbers , absorbers , 1 8 catalysts , an d therma l reduction/oxidation , includin g th e us e o f 1 9 a les s pollutin g fue l i f suc hchang e i s determine d b yth e 2 0 reviewin g authorit yt o b e a pollutio ncontro l system . Th e 2 1 appropriat e reviewin g authorit ywil l determine , o na case-by-cas e 2 2 basis , i f th e chang e i s t o b e considere d a pollutio ncontro l 2 3 system . Fo r example , som e physica l change s t o accommodat e a ne w 2 4 fue l coul d b e properl ycharacterize d a s pollutio ncontro l system s

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STAFF DRAFT THI S DOCUMEN

T REPRESENTS PREDECISIONA L MATERIAL . THE VIEW S EXPRESSED WITHIN ARE NOT NECESSARIL

YTHOS E O

F EP AO RAN YOTHEROFFICE . 1 (e.g. , a CC T demonstratio no f NO xreburnin g technolog yusin g 2 natura l ga s o n a coal-fire d utilit yboiler ; o r project s t o 3 conver t t o natura l ga s o r t o gas/coa l co-firin g implemente d t o 4 compl ywit ha nenvironmenta l regulator yrequirement) . 5 Man ychanges , suc ha s proces s change s whic hd o no t reduc e 6 emissions , d o no t qualif ya s emission s contro l system s o r 7 devices . Th e EP Awil l exclud e fro mrevie wonl yth e typ e o f 8 chang e specifie d a s a n "emission s contro l syste mo r device" ; 9 othe r changes , eve n i f planne d i nconjunctio nwit ha nexclude d 1 0 change , ar e no t exclude d fro mth e definitio no f a physica l chang e 1 1 o r chang e i nth e metho d o f operation . Th e appropriat e reviewin g 1 2 authorit ywil l mak e th e determinatio no f nonapplicability , o n a 1 3 case-by-cas e basis , bu t withi nth e genera l framewor k o f thi s 1 4 ruling , applyin g th e principa l tes t tha t th e syste mi s primaril y 1 5 designe d an d installe d t o reduc e ai r pollutio nan d i s 1 6 environmentall ybeneficial . 1 7 Th e rulin g i s applicabl e t o bot htemporar yemission s contro l 1 8 syste mo r devic e demonstratio nproject s an d permanen t emission s 1 9 contro l syste mo r devic e changes . Owner s o r operator s ar e t o 2 0 provid e th e permittin g agenc ywit ha descriptio no f th e propose d 2 1 chang e an d a justificatio n fo r wh yth e chang e shoul d qualif yfo r 2 2 a n exclusio nfro mth e definition s o f a "physica l change " o r a 2 3 "chang e i nth e metho d o f operation " o f a sourc e unde r thi s 2 4 interpretativ e ruling . Th e owne r o r operato r mus t demonstrat e t o

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- STAFF DRAFT THI S DOCUMEN

T REPRESENTS PREDECISIONA L MATERIAL . THE VIEWS EXPRESSED WITHIN AR E NOT NECESSARIL

YTHOS E O

F EP AO RAN YOTHEROFFICE . 1 th e reviewin g authorit ytha t th e propose d emission s contro l 2 syste mo r devic e wil l consis t o f th e replacemen t o f a nexistin g 3 emission s contro l syste mo r devic e wit ha nimprove d o r upgrade d 4 emission s contro l syste mo r device , o r th e installatio no f a ne w 5 emission s contro l syste mo r devic e a t a nexistin g uncontrolle d 6 source . Physica l o r operationa l change s whic hrestor e a n 7 emission s unit' s origina l capacity , o r ar e mad e t o improv e th e 8 operatio no r efficienc yo f th e source , ar e no t considere d a n 9 emission s contro l syste mo r devic e installatio no r improvement , 1 0 eve n i f conducte d i nconjunctio nwit hth e installatio no r 1 1 improvemen t o f a nemission s contro l system . Apropose d change , 1 2 fo r purpose s o f thi s appendix , i s considere d a n"emission s 1 3 contro l syste mo r device " onl yi f th e owne r o r operato r 1 4 demonstrate s t o th e reviewin g authorit ytha t i t meet s th e 1 5 followin g conditions : 1 6 Conditio n 1 . Th e replacemen t o r additio no f th e emission s 1 7 contro l syste mwil l no t caus e o r contribut e t o a 1 8 violatio no f an yo f th e following : (1 ) a SI P 1 9 limi t o r requirement , (2 ) a conditio ni na permi t 2 0 issue d pursuan t t o regulation s approve d o r 2 1 promulgate d unde r th e CAA , o r (3 ) an yapplicabl e 2 2 NAAQ S o r PS D increment .

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STAFFDRAF

T THI S DOCUMEN

TREPRESENT S PREDECISIONA LMATERIAL
. TH EVIEWS EXPRESSED WITHIN AR ENO TNECESSARIL YTHOS EOFEP AO RAN YOTHE ROFFICE
. 

### 1 Conditio n2
. Th ereplacemen t o r additio no f

th eemission s 2contro lsyste mwil lresul t i na nenvironmenta l 3 benefit
. Thi s include s th efollowin g criteria : 4 A
. Ther ewil lb en o increas ei nth ehourl y 5 emission s rat eo f an ypollutan t

subjec t

t o 6 regulatio nunde r th eCAA

, a s determine db y40 7 CF R60.14(b)
. Thi s include s no t onl yth e 8 emission s uni t directl yaffected , bu t als o 9 th eentir esource , i f th ereplacemen t

o r i o additio nwoul dcaus esuc hincreas eelsewher e 1 1 withi n th e source . 1 2 B . Ther e wil l b e n o .increas e i nannua l emission s 1 3 o f an ypollutan t subjec t t o regulatio n unde r 1 4 Par t C o r D o f th e CAAa s a resul t o f th e 1 5 activities . Th e EP Awil l presum e tha t th e 1 6 additio no f a contro l devic e wil l not , b y 1 7 itself , resul t i na nincreas e i ncapacit y 1 8 utilization . However , thi s presumptio n ca n 1 9 b e overcom e wher e a nincreas e i nannua l 2 0 emission s o f on e o r mor e pollutant s (no t 2 1 necessaril ythos e fo r whic hth e contro l 2 2 syste mo r devic e ha s bee ninstalled ) whe n 2 3 ther e i s a clea r likelihoo d tha t th e additio n 2 4 o f th e contro l syste mo r devic e woul d

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STAFFDRAF

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TREPRESENT S PREDECISIONA LMATERIAL
. TH EVIEWS EXPRESSED WITHIN AR ENO TNECESSARIL YTHOS EOFEP AO RAN YOTHE ROFFICE
. 

### 1 increas eth eutilizatio no f th esourc e(e.g. , 2mor ehour s o f operatio npe r

yea r o r 3 utilizatio na t ahighe r

capacity) , an dwhen 4 suc hincrease dutilizatio ni s no t offse t b ya 5 correspondin g decreas ei nhourl yemission s 6 rate(s)
. I napplyin g fo r th eexemption , th e 7 owne r o r operato r

mus t certif ywhethe r

ther e 8 i s an yinten t t o increas eutilizatio no f th e 9 source . 1 0 C . Ther e wil l b e n o advers e impac t o na nai r 1 1 qualit yrelate d valu e (e.g. , visibility ) i n 1 2 an yClas s I area . 1 3 D . Ther e wil l b e n o increas e i nth e source' s 1 4 maximu mground-leve l ambien t ai r 1 5 concentratio na s a resul t o f th e chang e in , 1 6 o r additio nof , th e contro l syste mo r device . 1 7 E . Ther e wil l b e n o advers e healt ho r welfar e 1 8 impact s a s a resul t o f increase d emission s o f 1 9 an ya s ye t unregulate d toxi c o r hazardou s ai r 2 0 pollutant . 2 1 Fo r temporar ycontro l technolog ydemonstratio nprojects , 2 2 condition s 2. Aan d 2. B abov e ma yb e waived , i nwhol e o r part , i f 2 3 th e reviewin g authorit ydetermine s that , i nspit e o f th e waive r 2 4 o f suc hconditions , th e demonstratio nprojec t i s stil l

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YTHOS E O

F EP AO RAN YOTHEROFFICE . 1 environmentall ybeneficial . Temporar ydemonstratio nproject s ar e 2 project s whic hwil l las t n o mor e tha n5 year s (includin g th e tim e 3 require d t o restor e th e sourc e t o it s origina l condition ) fro m 4 th e dat e o n whic hstartu p o f th e projec t begin s (a s define d a t 4 0 5 CF R60.2) . However , a propose d temporar ychange , fo r purpose s o f 6 thi s appendix , i s considere d a "contro l technolog ydemonstratio n 7 project " onl yi f th e owne r o r operato r demonstrate s tha t i t meet s 8 th e followin g tw o conditions : 9 Conditio n3 . Th e projec t i s a temporar yprojec t t o demonstrat e i o a nemission s contro l syste mo r device , an d th e 1 1 projec t i s eithe r a ) federally-funde d o r 1 2 b ) approve d b yEP Aa s a usefu l contro l technolog y 1 3 demonstratio nproject . 1 4 Conditio n4 . Th e sourc e wil l b e returne d t o it s pre-projec t 1 5 physica l an d operationa l conditions , an d hourl y 1 6 emission s rat e (i nkilogram s pe r hou r o r 1 7 equivalent ) an d annua l emission s rate , o r t o a n 1 8 eve n lowe r emission s rate , whe nth e demonstratio n 1 9 i s completed , o r a t th e en d o f th e "temporary " 2 0 tim e perio d approve d b yEPA , whicheve r i s earlies t 2 1 (allowin g fo r smal l difference s i npost
2 2 demonstratio nphysica l an d operationa l condition s 2 3 du e t o a technica l inabilit yt o restor e th e uni t

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TREPRESENT S PREDECISIONA LMATERIAL
. TH EVIEW S EXPRESSED WITHI N AR ENO TNECESSARIL YTHOS EO FEPAO RAN YOTHE ROFFICE
. 

### 1 t o it s precis epre-demonstratio nconditions , o r 2du et o norma lvariabilit yi nth ecoa lused)
. 3

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- STAFFDRAF T THI S DOCUMEN

TREPRESENT S PREDECISIONA LMATERIAL
. TH EVIEW S EXPRESSED WITHI N AR ENO TNECESSARIL YTHOS EOFEP AO RAN YOTHE ROFFICE
.
1 APPENDI XW- NE WSOURC E REVIE WREQUIREMENT S 2FORELECTRI C UTILIT YPROJECT S 3 Thi s appendi xset s fort hth e EPA' s interpretativ e rulin g o n 4 applicabilit yrequirement s a t electri c utilit ygeneratin g 5 sources . Fo r purpose s o f thi s ruling , "electri c utility " source s 6 ar e define d a s fossi l fuel-fire d stea melectri c plants , ga s 7 turbines , o r cogeneratio n system s whic h(1 ) principall ysuppl y 8 electricit yt o a syste mfo r widesprea d distributio nan d use , an d 9 (2 ) ar e subjec t to , o r regulate d by , a publi c utilit ycommissio n i o (PUC ) o r equivalen t bod ysuc htha t record s o f th e source' s pas t 1 1 an d estimate d futur e utilizatio nar e readil yavailabl e an d 1 2 subjec t t o publi c review.Thi s rulin g clarifie s existin g 1 3 regulation s tha t compar e pre - t o post-modificatio nemission s t o 1 4 determin e i f a chang e a t a nelectri c utilit ywil l increas e 1 5 emission s an d subjec t th e sourc e t o th e ne wsourc e revie w(NSR ) 1 6 requirement s o f 4 0 CF R51.165 , 51.166 , o r Appendi xS . Th e rulin g 1 7 als o describe s exemption s fo r repowering . 1 8 Determinatio n o f Pre-Modificatio n Actua l Emission s (Baselin e 1 9 Emissions ) 2 0 Today' s rulin g interpret s wha t constitute s pre-modificatio n 2 1 "actua l emissions " fo r determinin g whethe r a chang e a t a n 2 2 electri c utilit ygeneratin g uni t wil l resul t i na nemission s 2 3 increas e and , i f th e increas e i s significant , trigge r NS R 2 4 applicability . Th e curren t NS Rregulation s allo wa sourc e t o us e

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T REPRESENTS PREDECISIONA L MATERIAL . THE VIEWS EXPRESSE D WITHIN ARE NOT NECESSARIL

YTHOS E O

F EP AO RAN YOTHEROFFICE . 1 a 2 yea r perio d o f emission s tha t i s representativ e o f norma l 2 sourc e operatio nwhe n determinin g it s baselin e emissions . I n th e 3 past , EP Aha s presume d tha t th e mos t recen t 2 year s o f operatio n 4 i s ususall yrepresentativ e o f norma l operation s an d shoul d b e 5 use d barrin g a stron g showin g otherwise . Unde r thi s 6 interpretativ e ruling , th e reviewin g authorit ywil l allo w 7 baselin e emission s a t a nelectri c utilit yemission s uni t whic h 8 wil l b e undergoin g a physica l modificatio nt o b e calculate d usin g 9 an yconsecutiv e 2-yea r perio d withi nth e 5 year s precedin g th e 1 0 propose d chang e t o tha t uni t s o lon g a s th e 2 yea r perio d i s 1 1 representativ e o f historica l sourc e operatin g levels . Th e pre 1 2 modificatio n emission s level s ar e the ncompare d t o post
1 3 modificatio n emission s t o determin e i f a significan t emission s 1 4 increas e woul d occur . Thi s rulin g doe s no t appl yt o pas t 1 5 modification s a t a n emission s uni t fo r th e purpos e o f determinin g 1 6 contemporaneou s emission s change s a t a source . 1 7 Estimatio n o f "Futur e Actual " Emission s fo r "Like-kind " 1 8 Replacement s 1 9 "Like-kind " replacement s ar e define d i nthi s rulin g a s 2 0 nonroutin e change s t o a n electri c utilit ywhic hinvolve s th e 2 1 replacemen t o f on e o r mor e o f a nemission s unit' s component s wit h 2 2 "functionally-equivalent " equipment . "Like-kind " replacement s 2 3 mus t mee t th e followin g criteria :

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STAFFDRAF

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TREPRESENT S PREDECISIONA LMATERIAL
. TH EVIEWS EXPRESSED WITHI N AR ENO TNECESSARIL YTHOS EOFEPAO RAN YOTHE ROFFICE
. 

### 1 1 ) Th echang ecanno t increas eth ecapacit yo f th e 2operatin g uni t abov eth eorigina ldesig ncapacity
. Th e 3 chang emay , however , restor ecapacit ywhic hha s bee n 4 los t

b yth euni t

(u p t o th eorigina ldesig ncapacity)
. 5 2 ) Th echang ecanno t alte r th emetho do f

operatio no f

th e 6 component , emission s unit , o r sourc ea s originall y 7 configured . 8 3 ) Th e chang e canno t includ e o r consis t o f replacemen t o f 9 th e emission s uni t itsel f sinc e thi s woul d constitut e a 1 0 ne wsource . 1 1 Throug hthi s interpretativ e ruling , th e distinctio nbetwee n 1 2 routin e an d nonroutin e physica l an d operationa l change s t o 1 3 electri c utilit ystea melectri c generatin g unit s ha s bee n 1 4 retained . A s unde r curren t law , routin e maintenance , repai r an d 1 5 replacement , a s wel l a s increase d utilizatio no f existin g source s 1 6 (unles s restricte d b yfederally-enforceabl e conditions ) tha t i s 1 7 no t accompanie d b yphysica l o r operationa l change s woul d no t b e 1 8 considere d a "modification " an d woul d thu s no t trigge r th e ne w 1 9 sourc e revie wprovision s o f § 51.16 5 o r 51.166 , o r Appendi xS . 2 0 Nonroutin e "like-kind " replacement s a t utilities , althoug h 2 1 stil l considere d a physica l o r operationa l change , ma yno wus e a n 2 2 "actual " t o "futur e actual " tes t fo r NS Rapplicabilit ypurposes . 2 3 I n establishin g th e "future-actual " value , th e utilit yi s 2 4 responsibl e fo r accuratel yprojectin g a plant' s maximu m"futur e

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YTHOS E OF EP

AO RAN YOTHEROFFICE . 1 actual " emission s followin g a modificatio nt o determin e whethe r 2 a n increas e i n emission s wil l trigge r NS Rrequirement s an d fo r 3 providin g adequat e documentatio no f th e projecte d utilizatio n t o 4 th e reviewin g authority . 5 Th e calculate d post-renovatio n"futur e actual " emission s fo r 6 "lik e kind " change s a t a utility , shoul d tak e int o accoun t 1 ) 7 physica l change s an d federally-enforceabl e operatio nrestriction s 8 tha t woul d affec t th e hourl yemission s rat e followin g th e 9 renovation , 2 ) th e powe r plant' s historica l pea k annua l pre 1 0 renovatio n capacit yutilization , an d 3 ) availabl e informatio n an d 1 1 factor s affectin g likel ypea k annua l post-renovatio ncapacit y 1 2 utilizatio n o f th e source . I n projectin g futur e capacit y 1 3 utilization , th e reviewin g authorit yshoul d conside r suc h 1 4 informatio n a s historica l operationa l data , th e company' s ow n 1 5 representations , filing s wit hStat e o r Federa l regulator y 1 6 authorities , an d complianc e plan s unde r Titl e I V o f th e 199 0 1 7 Amendments . 1 8 T o guantif y"futur e actual " emission s afte r th e propose d 1 9 changes , th e sourc e owne r o r operato r ma yrel yo nrepresentativ e 2 0 projecte d operationa l sourc e dat a (e.g. , fue l consumption , MMBt u 2 1 consumed , PU C filings , etc.) . Specifically , th e owne r o r 2 2 operato r ca n determin e a nappropriat e utilizatio nfacto r fo r 2 3 futur e operations , base d o n projecte d futur e capacit yutilizatio n 2 4 fo r th e highes t consecutiv e 2-yea r perio d i nth e 1 0 year s

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T REPRESENTS PREDECISIONA L MATERIAL . TH

E VIEWS EXPRESSED'WITHIN AR E NO T NECESSARIL

YTHOS E O

F EP AO RAN YOTHEROFFICE .

. 1 followin g th e chang e (o r an yothe r 2-yea r perio d followin g th e 2 chang e tha t th e reviewin g authorit ydetermine s t o b e mor e 3 representativ e o f th e highes t consecutiv e futur e 2-yea r period) , 4 whicheve r i s higher , an d combin e thi s wit hpost-chang e emission s 5 factor s t o estimat e a futur e leve l o f annua l emission s fo r th e 6 purpos e o f determinin g whethe r th e propose d chang e woul d b e 7 considere d a majo r modificatio nfo r NS Rpurposes . Th e emission s 8 factor s use d t o calculat e estimate d "futur e actual " emission s 9 mus t b e federally-enforceabl e prio r t o commencin g constructio n o n 1 0 th e modifie d unit , bu t th e projecte d utilizatio nfactor s fo r 1 1 futur e operation s ar e no t require d t o b e federall yenforceable . 1 2 Th e maximu m2-yea r averag e futur e actua l emission s estimat e 1 3 constitute s estimate d "futur e actual " emissions . 1 4 Repowerin g Project s 1 5 Repowerin g project s whic har e awarde d fundin g fro mth e 1 6 Departmen t o f Energ y(DOE ) a s permanen t CC T demonstratio n 1 7 project s (o r simila r project s funde d b yEPA ) ar e exemp t fro mPS D 1 8 (and NSPS ) requirement s s o lon g a s potentia l emission s 1 9 fro mth e uni t d o no t increas e a s a resul t o f th e project . Thi s 2 0 rulin g interpret s "potentia l emissions " t o mea n"potentia l t o 2 1 emit " a s define d i n 4 0 CF R52.21(b)(4) . Althoug hthes e funde d 2 2 project s ar e exemp t fro mPS D (and NSPS ) requirements , the yar e 2 3 stil l subjec t to , an d mus t with , th e nonattainmen t provision s o f 2 4 Titl e I o f th e Clea n Ai r Act .

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E VIEWS EXPRESSED WITHIN AR E NO T NECESSARIL

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F EP AO RAN YOTHEROFFICE . 1 Par t 5 2 - APPROVA L AN D PROMULGATIO NO F IMPLEMENTATIO NPLAN S 2 Ne wappendice s ar e adde d a t th e en d o f Par t 5 1 a s follows : 3 APPENDI XF - NE WSOURC E REVIE WREQUIREMENT S 4 FO RTH E INSTALLATIO NO RIMPROVEMEN T O F 5 EMISSION S CONTRO L SYSTEM S 6 Thi s appendi xset s fort hth e EPA' s interpretativ e rulin g o n 7 th e definitio n o f "majo r modification " i n4 0 CF R52.2 1 an d 52.24 . 8 Thi s rulin g describe s a numbe r o f activitie s regardin g emission s 9 contro l system s o r device s whic har e no t considere d byEP At o b e 1 0 a "physica l change " o r "chang e i n th e metho d o f operation " o f a 1 1 majo r stationar ysourc e withi n th e meanin g o f § 52.2 1 an d 52.24 . 1 2 Thi s rulin g als o clarifie s EPA' s interpretatio ntha t th e 1 3 installatio n an d us e o f clea ncoa l technolog y(CCT ) an d othe r 1 4 EPA-approve d contro l technolog ydemonstratio nprojects , th e 1 5 remova l o f temporar ydemonstratio nemission s contro l system s o r 1 6 devices , an d th e additio n o r improvemen t o f a nemission s contro l 1 7 syste m

o r devic e o na voluntar ybasi s o r fo r compliance-relate d 1 8 purposes , i s no t a "majo r modification " subjec t t o th e NS R 1 9 provision s o f § 52.2 1 an d 52.24 , provide d suc hinstallatio n an d 2 0 us e meet s th e condition s specifie d belo wan d th e appropriat e 2 1 reviewin g authorit yissue s a n applicabilit yexclusion . 2 2 Th e principa l conditio nfo r th e exclusio ni s tha t th e 2 3 installatio n o r operatio no f th e emission s contro l syste mo r 2 4 devic e mus t b e designe d primaril yt o improv e th e contro l o r

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E VIEWS EXPRESSED WITHIN AR E NO T NECESSARIL

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F EP AO RAN YOTHEROFFICE . 1 preventio no f ai r pollutio n emissions . I f th e installatio n o f a n 2 emission s contro l syste mo r approve d contro l technolog y 3 demonstratio n projec t bya sourc e woul d otherwis e trigge r ne w 4 sourc e revie wbecaus e an yapplicabl e "significant " ne t emission s 5 increas e threshol d woul d b e exceede d [a s define d a t 4 0 CF R 6 52.21(b)(23)] , th e sourc e ca n no t commenc e installatio no f th e 7 contro l syste mo r demonstratio n projec t unti l th e reviewin g 8 authorit ynotifie s th e sourc e tha t i t qualifie s fo r a nexclusio n 9 an d suc hexclusio n i s granted . 1 0 Fo r purpose s o f thi s ruling , th e ter m"emission s contro l 1 1 syste mo r device " mean s add-o ntype s o f emission s contro l 1 2 equipment , suc ha s fabri c filters , scrubbers , absorbers , 1 3 catalysts , an d therma l reduction/oxidation , includin g th e us e o f 1 4 a les s pollutin g fue l i f suc hchang e i s determine d b yth e 1 5 reviewin g authorit yt o b e a pollutio ncontro l system . Th e 1 6 appropriat e reviewin g authorit ywil l determine , o na case-by-cas e 1 7 basis , i f th e chang e i s t o b e considere d a pollutio ncontro l 1 8 system . Fo r example , som e physica l change s t o accommodat e a ne w 1 9 fue l coul d b e properl ycharacterize d a s pollutio ncontro l system s 2 0 (e.g. , a CC T demonstratio no f NO xreburnin g technolog yusin g 2 1 natura l ga s o n a coal-fire d utilit yboiler ; o r project s t o 2 2 conver t t o natura l ga s o r t o gas/coa l co-firin g implemente d t o 2 3 compl ywit ha n environmenta l regulator yrequirement) .

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F EP AO RAN YOTHEROFFICE . 1 Man ychanges , suc ha s proces s change s whic hd o no t reduc e 2 emissions , d o no t qualif ya s emission s contro l system s o r 3 devices . Th e EP Awil l exclud e fro mrevie wonl yth e typ e o f 4 chang e specifie d a s a n "emission s contro l syste mo r device" ; 5 othe r changes , eve n i f planne d i nconjunctio n wit ha nexclude d 6 change , ar e no t exclude d fro mth e definitio no f a physica l chang e 7 o r chang e i n th e metho d o f operation . Th e appropriat e reviewin g 8 authorit ywil l mak e th e determinatio no f nonapplicability , o n a 9 case-by-cas e basis , bu t withi nth e genera l framewor k o f thi s 1 0 ruling , applyin g th e principa l tes t tha t th e syste mi s primaril y 1 1 designe d an d installe d t o reduc e ai r pollutio nan d i s 1 2 environmentall ybeneficial . 1 3 Th e rulin g i s applicabl e t o bot htemporar yemission s contro l 1 4 syste m

o r devic e demonstratio n project s an d permanen t emission s 1 5 contro l syste mo r devic e changes . Owner s o r operator s ar e t o 1 6 provid e th e permittin g agenc ywit ha descriptio no f th e propose d 1 7 chang e an d a justificatio n fo r wh yth e chang e shoul d gualif yfo r 1 8 a nexclusio n fro mth e definition s o f a "physica l change " o r a 1 9 "chang e i nth e metho d o f operation " o f a sourc e unde r thi s 2 0 interpretativ e ruling . Th e owne r o r operato r mus t demonstrat e t o 2 1 th e reviewin g authorit ytha t th e propose d emission s contro l 2 2 syste mo r devic e wil l consis t o f th e replacemen t o f a nexistin g 2 3 emission s contro l syste mo r devic e wit ha nimprove d o r upgrade d 2 4 emission s contro l syste mo r device , o r th e installatio no f a ne w

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F EP AO RAN YOTHEROFFICE . 1 emission s contro l syste mo r devic e a t a nexistin g uncontrolle d 2 source . Physica l o r operationa l change s whic hrestor e a n 3 emission s unit' s origina l capacity , o r ar e mad e t o improv e th e 4 operatio n o r efficienc yo f th e source , ar e no t considere d a n 5 emission s contro l syste mo r devic e installatio no r improvement , 6 eve n i f conducte d i n conjunctio nwit hth e installatio no r 7 improvemen t o f a n emission s contro l system . Apropose d change , 8 fo r purpose s o f thi s appendix , i s considere d a n"emission s 9 contro l syste m o r device " onl yi f th e owne r o r operato r 1 0 demonstrate s t o th e reviewin g authorit ytha t i t meet s th e 1 1 followin g conditions : 1 2 Conditio n 1 . Th e replacemen t o r additio no f th e emission s 1 3 contro l syste mwil l no t caus e o r contribut e t o a 1 4 violatio n o f an yo f th e following : (1 ) a SI P 1 5 limi t o r requirement , (2) ' a conditio ni na permi t 1 6 issue d pursuan t t o regulation s approve d o r 1 7 promulgate d unde r th e CAA , o r (3 ) an yapplicabl e 1 8 NAAQ S o r PS D increment . 1 9 Conditio n 2 . Th e replacemen t o r additio no f th e emission s 2 0 contro l syste mwil l resul t i na nenvironmenta l 2 1 benefit . Thi s include s th e followin g criteria : 2 2 A . Ther e wil l b e n o increas e i nth e hourl y 2 3 emission s rat e o f an ypollutan t subjec t t o 2 4 regulatio nunde r th e CAA , a s determine d b y4 0

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F EP AO RAN YOTHEROFFICE . CF R60.14(b) . Thi s include s no t onl yth e 2 emission s uni t directl yaffected , bu t als o 3 th e entir e source , i f th e replacemen t o r 4 additio nwoul d caus e suc hincreas e elsewher e 5 withi nth e source . 6 B . Ther e wil l b e n o increas e i nannua l emission s 7 o f anypollutan t subjec t t o regulatio n unde r 8 Par t C o r D o f th e CAAa s a resul t o f th e 9 activities . Th e EP Awil l presum e tha t th e 1 0 additio n o f a contro l devic e wil l not , b y 1 1 itself , resul t i na nincreas e i ncapacit y 1 2 utilization . However , thi s presumptio n ca n 1 3 b e overcom e wher e a nincreas e i nannua l 1 4 emission s o f on e o r mor e pollutant s (no t 1 5 necessaril ythos e fo r whic hth e contro l 1 6 syste mo r devic e ha s bee ninstalled ) whe n 1 7 ther e i s a clea r likelihoo d tha t th e additio n 1 8 o f th e contro l syste mo r devic e woul d 1 9 increas e th e utilizatio no f th e sourc e (e.g. , 2 0 mor e hour s o f operatio npe r yea r o r 2 1 utilizatio na t a highe r capacity) , an d whe n 2 2 suc hincrease d utilizatio ni s no t offse t b ya 2 3 correspondin g decreas e i nhourl yemission s 2 4 rate(s) . I napplyin g fo r th e exemption , th e

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### 1 owner o r operato r

mus t certif ywhethe r

ther e 2i s anyinten t t o increas eutilizatio no f th e 3 source . 4 C . Ther e wil l b e n o advers e impac t o na nai r 5 qualit yrelate d valu e (e.g. , visibility ) i n 6 an yClas s I area . 7 D . Ther e wil l b e n o increas e i nth e source' s 8 maximu mground-leve l ambien t ai r 9 concentratio na s a resul t o f th e chang e in , 1 0 o r additio nof , th e contro l syste mo r device . 1 1 E . Ther e wil l b e n o advers e healt ho r welfar e 1 2 impact s a s a resul t o f increase d emission s o f 1 3 an ya s ye t unregulate d toxi c o r hazardou s ai r 1 4 pollutant . 1 5 Fo r temporar ycontro l technolog ydemonstratio nprojects , 1 6 condition s 2. Aan d 2. B abov e ma yb e waived , i nwhol e o r part , i f 1 7 th e reviewin g authorit ydetermine s that , i nspit e o f th e waive r 1 8 o f suc hconditions , th e demonstratio nprojec t i s stil l 1 9 environmentall ybeneficial . Temporar ydemonstratio nproject s ar e 2 0 project s whic hwil l las t n o mor e tha n5 year s (includin g th e tim e 2 1 require d t o restor e th e sourc e t o it s origina l condition ) fro m 2 2 th e dat e o n whic hstartu p o f th e projec t begin s (a s define d a t 4 0 2 3 CF R60.2) . However , a propose d temporar ychange , fo r purpose s o f 2 4 thi s appendix , i s considere d a "contro l technolog ydemonstratio n

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### 1 project " onl y i f th eowne r

o r operato r

demonstrate s tha t i t meet s 2 th efollowin g tw o conditions : 3 Conditio n3
. Th eprojec t i s atemporar y projec t t o demonstrat e 4 a nemission s contro lsyste mo r device , an dth e 5 projec t i s eithe r

a ) federally-funde do r 6 b ) approve db y EP Aa s ausefu lcontro ltechnolog y 7 demonstratio nproject
. 8 Conditio n 4 . Th e sourc e wil l b e returne d t o it s pre-projec t 9 physica l an d operationa l conditions , and hourl y 1 0 emission s rat e (i n kilogram s pe r hou r o r 11 equivalent ) an d annua l emission s rate , o r t o an 1 2 eve n lowe r emission s rate , whe nth e demonstratio n 1 3 i s completed , o r a t th e end o f th e "temporary " 1 4 time perio d approve d b yEPA , whicheve r i s earlies t 1 5 (allowing fo r smal l difference s i n post
1 6 demonstratio n physica l an d operationa l condition s 1 7 du e t o a technica l inabilit yt o restor e th e uni t 1 8 t o it s precis e pre-demonstratio nconditions , o r 1 9 du e t o norma l variabilit yi n th e coa l used) . 2 0

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F EP AO RAN YOTHEROFFICE . 1 APPENDI XG- NE WSOURC E REVIE WREQUIREMENT S 2 FO RELECTRI C UTILIT YPROJECT S 3 Thi s appendi xset s fort hth e EPA' s interpretativ e rulin g o n 4 applicabilit yrequirement s a t electri c utilit ygeneratin g 5 sources . Fo r purpose s o f thi s ruling , "electri c utility " source s 6 ar e define d a s fossi l fuel-fire d stea melectri c plants , ga s 7 turbines , o r cogeneratio nsystem s whic h(1 ) principall ysuppl y 8 electricit yt o a syste mfo r widesprea d distributio nan d use , an d 9 (2 ) ar e subjec t to , o r regulate d by , a publi c utilit ycommissio n 1 0 (PUC ) o r equivalen t bod ysuc htha t record s o f th e source' s pas t 1 1 an d estimate d futur e utilizatio nar e readil yavailabl e an d 1 2 subjec t t o publi c review . Thi s rulin g clarifie s existin g 1 3 regulation s tha t compar e pre - t o post-modificatio n emission s t o 1 4 determin e i f a chang e a t a n electri c utilit ywil l increas e 1 5 emission s an d subjec t th e sourc e t o th e ne wsourc e revie w(NSR ) 1 6 requirement s o f 4 0 CF R52.2 1 an d 52.24 . Th e rulin g als o 1 7 describe s exemption s fo r repowering . 1 8 Determinatio n o f Pre-Modificatio n Actua l Emission s (Baselin e 1 9 Emissions ) 2 0 Today' s rulin g interpret s wha t constitute s pre-modificatio n 2 1 "actua l emissions " fo r determinin g whethe r a chang e a t a n 2 2 electri c utilit ygeneratin g uni t wil l resul t i na nemission s 2 3 increas e and , i f th e increas e i s significant , trigge r NS R 2 4 applicability . Th e curren t NS Rregulation s allo wa sourc e t o us e

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F EP AO RAN YOTHEROFFICE . 1 a 2 yea r perio d o f emission s tha t i s representativ e o f norma l 2 sourc e operatio nwhe ndeterminin g it s baselin e emissions . I n th e 3 past , EP Aha s presume d tha t th e mos t recen t 2 year s o f operatio n 4 i s ususall yrepresentativ e o f norma l operation s an d shoul d b e 5 use d barrin g a stron g showin g otherwise . Unde r thi s 6 interpretativ e ruling , th e reviewin g authorit ywil l allo w 7 baselin e emission s a t a n electri c utilit yemission s uni t whic h 8 wil l b e undergoin g a physica l modificatio nt o b e calculate d usin g 9 anyconsecutiv e 2-yea r perio d withi nth e 5 year s precedin g th e 1 0 propose d chang e t o tha t uni t s o lon g a s th e 2 yea r perio d i s 1 1 representativ e o f historica l sourc e operatin g levels . Th e pre 1 2 modificatio nemission s level s ar e the ncompare d t o post
1 3 modificatio n emission s t o determin e i f a significan t emission s 1 4 increas e woul d occur . Thi s rulin g doe s no t appl yt o pas t 1 5 modification s a t a n emission s uni t fo r th e purpos e o f determinin g 1 6 contemporaneou s emission s change s a t a source . 1 7 Estimatio n o f "Futur e Actual " Emission s fo r "Like-kind " 1 8 Replacement s 1 9 "Like-kind " replacement s ar e define d i nthi s rulin g a s 2 0 nonroutin e change s t o a n electri c utilit ywhic hinvolve s th e 2 1 replacemen t o f on e o r mor e o f a nemission s unit' s component s wit h 2 2 "functionally-equivalent " equipment . "Like-kind " replacement s 2 3 mus t mee t th e followin g criteria :

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### 1 1 ) Th echang ecanno t increas eth ecapacit yo f th e 2operatin g uni t abov eth eorigina ldesig ncapacity
. Th e 3 chang emay , however , restor ecapacit ywhic hha s bee n 4 los t

b yth euni t

(u p t o th eorigina ldesig ncapacity)
. 5 2 ) Th echang ecanno t alte r th emetho do f

operatio no f

th e 6 component , emission s unit , o r sourc ea s originall y 7 configured . 8 3 ) Th e chang e canno t includ e o r consis t o f replacemen t o f 9 th e emission s uni t itsel f sinc e thi s woul d constitut e a 1 0 ne wsource . 1 1 Throug hthi s interpretativ e ruling , th e distinctio nbetwee n 1 2 routin e an d nonroutin e physica l an d operationa l change s t o 1 3 electri c utilit ystea melectri c generatin g unit s ha s bee n 1 4 retained . A s unde r curren t law , routin e maintenance , repai r an d 1 5 replacement , a s wel l a s increase d utilizatio no f existin g source s 1 6 (unles s restricte d b yfederally-enforceabl e conditions ) tha t i s 1 7 no t accompanie d byphysica l o r operationa l change s woul d no t b e 1 8 considere d a "modification " an d woul d thu s no t trigge r th e ne w 1 9 sourc e revie wprovision s o f § 52.2 1 o r 52.24 . 2 0 Nonroutin e "like-kind " replacement s a t utilities , althoug h 2 1 stil l considere d a physica l o r operationa l change , ma yno wus e a n 2 2 "actual " t o "futur e actual " tes t fo r NS Rapplicabilit ypurposes . 2 3 I nestablishin g th e "future-actual " value , th e utilit yi s 2 4 responsibl e fo r accuratel yprojectin g a plant' s maximu m"futur e 7 0 File : IR. 7 (March9 , 199 1 - 12:32pa ) ' uP.7 3

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F EP AO RAN YOTHEROFFICE . 1 actual " emission s followin g a modificatio nt o determin e whethe r 2 a n increas e i n emission s wil l trigge r NS Rrequirement s an d fo r 3 providin g adequat e documentatio no f th e projecte d utilizatio n t o 4 th e reviewin g authority . 5 Th e calculate d post-renovatio n"futur e actual " emission s fo r 6 "lik e kind " change s a t a utility , shoul d tak e int o accoun t 1 ) 7 physica l change s an d federally-enforceabl e operatio nrestriction s 8 tha t woul d affec t th e hourl yemission s rat e followin g th e 9 renovation , 2 ) th e powe r plant' s historica l pea k annua l pre 1 0 renovatio n capacit yutilization , an d 3 ) availabl e informatio n an d 1 1 factor s affectin g likel ypea k annua l post-renovatio ncapacit y 1 2 utilizatio n o f th e source . I nprojectin g futur e capacit y 1 3 utilization , th e reviewin g authorit yshoul d conside r suc h 1 4 informatio n a s historica l operationa l data , th e company' s ow n 1 5 representations , filing s wit hStat e o r Federa l regulator y 1 6 authorities , an d complianc e plan s unde r Titl e I V o f th e 199 0 1 7 Amendments . 1 8 T o guantif y"futur e actual " emission s afte r th e propose d 1 9 changes , th e sourc e owne r o r operato r ma yrel yo nrepresentativ e 2 0 projecte d operationa l sourc e dat a (e.g. , fue l consumption , MMBt u 2 1 consumed , PU C filings , etc.) . Specifically , th e owne r o r 2 2 operato r ca n determin e a nappropriat e utilizatio nfacto r fo r 2 3 futur e operations , base d o n projecte d futur e capacit yutilizatio n 2 4 fo r th e highes t consecutiv e 2-yea r perio d i nth e 1 0 year s 7 1 Fil m IR. 7 (Marc

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F EP AO RAN YOTHEROFFICE . 1 followin g th e chang e (o r an yothe r 2-yea r perio d followin g th e 2 chang e tha t th e reviewin g authorit ydetermine s t o b e mor e 3 representativ e o f th e highes t consecutiv e futur e 2-yea r period) , 4 whicheve r i s higher , an d combin e thi s wit hpost-chang e emission s 5 factor s t o estimat e a futur e leve l o f annua l emission s fo r th e 6 purpos e o f determinin g whethe r th e propose d chang e woul d b e 7 considere d a majo r modificatio n fo r NS Rpurposes . Th e emission s 8 factor s use d t o calculat e estimate d "futur e actual " emission s 9 mus t b e federally-enforceabl e prio r t o commencin g constructio n o n 1 0 th e modifie d unit , bu t th e projecte d utilizatio nfactor s fo r 1 1 futur e operation s ar e no t require d t o b e federall yenforceable . 1 2 Th e maximu m

2-yea r averag e futur e actua l emission s estimat e 1 3 constitute s estimate d "futur e actual " emissions . 1 4 Repowerin g Project s 1 5 Repowerin g project s whic har e awarde d fundin g fro mth e 1 6 Departmen t o f Energ y(DOE ) a s permanen t CC T demonstratio n 1 7 project s (o r simila r project s funde d b yEPA ) ar e exemp t fro mPS D 1 8 (and NSPS ) requirement s s o lon g a s potentia l emission s 1 9 fro mth e uni t d o no t increas e a s a resul t o f th e project . Thi s 2 0 rulin g interpret s "potentia l emissions " t o mea n"potentia l t o 2 1 emit " a s define d i n 4 0 CF R52.21(b)(4) . Althoug hthes e funde d 2 2 project s ar e exemp t fro mPS D (and NSPS ) requirements , the yar e

" 3 stil l subjec t to , an d mus t with , th e nonattainmen t provision s o f 2 4 Titl e I o f th e Clea n Ai r Act .

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AO R AN YOTHER OFFICE . 1 Par t6 0- STANDARD S OF PERFORMANC E FO RNE WSTATIONARYSOURCE S 2 3 Ane wappendi xi s adde d a t th e en d o f Par t 6 0 a s follows : 4 5 APPENDI XJ - TEMPORAR YCONTRO L TECHNOLOG YAN D REPOWERIN GPROJECT S 6 Temporar yContro l Technolog y 7 Thi s appendi xset s fort hth e EPA' s interpretativ e rulin g o n . 8 th e definitio n o f "modification " i n4 0 CF R60.14 . Th e definitio n 9 list s a numbe r o f emission s contro l syste mchange s whic har e no t 1 0 considere d b yEP At o b e "physica l changes " o r "change s i nth e 1 1 metho d of f operation " o f stationar ysources , an d therefor e ar e 1 2 no t considere d modifications . Thi s rulin g clarifie s EPA' s 1 3 interpretatio n tha t temporar yclea ncoa l technolog ydemonstratio n 1 4 project s an d othe r approve d temporar ycontro l technolog y 1 5 demonstratio nproject s ar e no t subjec t t o § 60.1 4 (subjec t t o th e 1 6 condition s specifie d below) . 1 7 Temporar ycontro l technolog ydemonstration s ar e project s 1 8 whic hwil l las t les s tha n 5 year s (includin g th e tim e require d t o 1 9 restor e th e sourc e t o it s origina l condition ) fro mth e dat e o n 2 0 whic hstartu p o f th e projec t begin s (a s define d i n4 0 CF R60.2) . 2 1 Suc htemporar ycontro l technolog ydemonstratio nproject s mus t b e 2 2 approve d b yEP Aprio r t o th e demonstration . 2 3 A s applie d t o th e definitio n o f modificatio n i n

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YTHOS E O F EP AO RAN YOTHE ROFFICE . 1 4 0 CF R60.14 , th e following shal l not , b yitself , b e considere d a 2 modificatio n unde r thi s part : 3 a physica l chang e to , o r chang e i nth e metho d o f operatio n 4 of , an existing facilit yfo r th e sol e purpos e o f cessation , 5 o r removal , o f a n ai r pollutio n contro l technology 6 demonstratio n projec t tha t result s i nanemission s increas e 7 o f an

ypollutan t t o whic ha standar d applies , up t o th e 8 pre-demonstratio n level . 9 1 0 Repowerin g Project s 11 Thi s ruling implement s th e 199 0 CA AAmendment s whic hgiv e 1 2 repowering project s a t electri c utilitie s a limite d exemptio n 1 3 fromNSP S reguirements . Specifically , today' s ruling , base d o n 1 4 th e 199 0 Amendments , clarifie s tha t repowerin g project s tha t 1 5 qualifie d fo r a Phas e I I complianc e extensio nar e no t subjec t t o 1 6 NSP S requirements , s o long a s th e repowerin g doe s no t increas e 1 7 hourl yemission s fo r an ypollutan t regulate d unde r th e Act , a s 1 8 determine d b

y4 0 CF R60.14(b) .

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