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. UNITE D STATE S ENVIRONMENTA L PROTECTIO N AGENCY RESEARC H TRIANGL E PARK. N C 2771 1 

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Februar y9 , 199 4 OFFIC E O F AI R QUALIT

YPLANNIN G AN O STANDARD S
NOT E
TO : Ne wSourc e Revie w(NSR ) Refor mSubcommitte e Member s and Participatin g Federa l Official s
A s yo u ar e aware , a t th e Januar y199 4 meetin g o f th e NS RRefor m Subcommittee , th e grou p wa s informe dtha t EP Awa s in th e proces s o f preparin g a memorandum

concernin g th e applicabilit yo f majo r NS Rrevie wt o pollutio n contro l project s a t existin g sources . Th e inten t o f th e memorandumi s t o provid e interi mguidanc e fo r permittin g authoritie s o n th e approvabilit yo f thes e project s pendin g EPA' s fina l actio no n a formal.regulator yexclusion . Th e Ne wSourc e Revie wSectio nha s prepare da n initia l staf f draf t memorandum o nth e issue . A s th e Agenc ymor e full ydevelop s it s fina l positio no n th e issue , w e woul dappreciat e anycomment s o r suggestion s yo u hav e o n th e position s discusse di n th e draft . Pleas e not e tha t th e attache ddraf t documen t ha s no t bee nreviewe dby EPAmanagement . I t i s a "staf f workin g draft " and doe s not , no r i s i t intende dto , represen t officia l EP Apolic yo n the.issue s discusse dtherein . I f yo u hav e an yquestions , pleas e fee l fre e t o contac t m e a t (919 ) 541-537 5 o r Denni s Crumple r o f mystaf f a t (919 ) 541-0871 . I woul d appreciat e receivin g you r comment s (i n writing ) b y Marc h4 , 1994 . Than k yo u agai nfo r you r continue dparticipatio nin , and suppor t of , th e NS Rrefor meffort .

Attachmen t
cc : L . Wegma n IJ/ ^^^

c yyuV] Davi dSolomo n Chie f ^^Ne wSourc e Revie wSectio n < * % 

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February8 , 199 4 <PCP.11 >

MEMORANDU

M SUBJECT : Pollutio n Contro l Project s an d Ne wSourc e Revie w(NSR ) Applicabilit y FROM : John S . Seitz , Directo r

Offic e o f Ai r Qualit yPlanning an d Standard s (MD-10 ) TO : Addressee s Thi s memorandu

man d attachmen t addres s issue s involving th e Environmenta l Protectio n Agency' s (£PA's ) ne wsourc e revie w(NSR ) rule s an

d guidanc e concerning th e applicabilit yo f majo r NS R revie wt o pollutio n contro l project s a t existing sources . Th e attachmen t provide s a ful l discussio n o f th e issue s an d thi s policy , including illustrativ e examples . Fo r severa l years , EPAha s ha d a policyo f excluding certai n pollutio n contro l project s fromth e NS Rrequirement s o f Part s C an d D o f Titl e I o f th e Clea n Ai r Ac t o n a case-by-cas e basis . I n 1992 , EPAadopte d a n explici t pollutio n contro l projec t exclusio n fo r electri c utilit ygenerating unit s [se e 5 7 F R3231 4 (the "WEPC O rule " o r th e "WEPC O rulemaking")] . A t th e time , EPA indicate d tha t i t would , i n a subsequen t rulemaking , conside r adopting a forma l pollutio n contro l projec t exclusio n fo r othe r sourc e categorie s [se e 5 7 F R32332] . I n th e interim , EPAstate d tha t individua l pollutio n contro l project s involving sourc e categorie s othe r tha n utilitie s coul d continu e t o b e exclude d fromne wsourc e revie wb ypermitting authoritie s o n a case-by

cas e basi s [se e 5 7 FRa t 32320] . A t thi s time , EPAexpect s t o complet e a rulemaking o n extending th e pollutio n contro l projec t exclusio n b

yJanuary15 , 1996 . Thi s memorandu m an d attachmen t provid e interi mguidanc e fo r permitting authoritie s o n th e approvabilit yo f thes e project s pending EPA' s fina l actio n o n a forma l regulatoryexclusion .P. 4

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ON THE ISSUES DISCUSSED Th e attachmen t t o thi s memorandu moutline s i n greate r detai l th e typ e o f project s tha t mayqualif yfo r a n exclusio n from NS R a s a pollutio n contro l project , th e safeguard s tha t ar e t o b e applied , an

d th e procedura l step s tha t permitting authoritie s shoul d followi n issuing a n exclusion . Pollutio n contro l project s eligibl e fo r an exclusio n includ e th e installatio n o f conventiona l o r innovativ e emission s contro l equipmen t and project s undertake n t o accommodat e switching t o an inherentl y les s polluting fuel , suc ha s natura l gas . Unde r thi s guidance , State s mayals o exclud e a s pollutio n contro l project s som e materia l an

d proces s change s (e.g. , the switc ht o a les s polluting coating , solvent , o r refrigerant ) an d some othe r type s o f pollutio n preventio n projects . However , th e replacemen t o f a n existing emission s uni t wit ha newe r o r differen t on e (albei t mor e efficien t and les s polluting ) o r th e reconstructio n o f a n existing emission s uni t woul d no t qualif ya s a pollutio n contro l project . I t i s EPA' s experienc e tha t mos t bona fid e pollutio n contro l project s ar e no t subjec t t o majo r NS Rrequirement s fo r th e simpl e reaso n tha t the yresul t i n a reductio n i n annua l emission s a t th e source . I n thi s way , mos t pollutio n contro l project s ar e outsid e majo r NS Rcoverag e i n accordanc e wit hth e genera l rule s fo r determining applicabilit yo f NS Rt o modification s a t existin g sources . However , som e pollutio n contro l project s coul d resul t i n significan t potentia l o r actua l increase s o f some pollutant s eve n though , o n balance , the yar e environmentall ybeneficial . Th e EPAbelieve s tha t suc hproject s shoul d b e exclude d from a t leas t some o f th e NS Rrequirement s tha t woul d otherwis e apply . I t i s thi s subcategoryo f pollutio n contro l project s tha t ca n benefi t fromthi s guidance . However , i n orde r t o assur e tha t ai r qualit yconcern s wit hthes e type s o f project s ar e adequatel y addressed , ther e ar e tw o safeguard s whic hshoul d b e followe d by permitting authoritie s reviewing project s propose d fo r exclusion . First , th e permitting authorit ymus t determin e tha t th e propose d pollutio n contro l project , afte r consideratio n o f th e reductio n i n th e targete d pollutan t an d an ycollatera l effects , wil l b e environmentall ybeneficial . A t a minimum , thi s "environmenta l beneficial " standar d require s tha t th e permittin g authorit yensur e tha t an yadvers e collatera l environmenta l impact s fro

mth e projec t ar e identified , minimized , an d wher e appropriat e mitigated . Fo r example , th e sourc e o r th e Stat e mus t secur e offsetting reduction s i n th e cas e o f a projec t whic hwil l resul t i n a significan t increas e i n a nonattainmen t pollutant . Second , nothing i n thi s guidanc e authorize s an yemission s increas e tha t woul d caus e o r contribut e t o a violatio n o f a Nationa l Ambien t Ai r Qualit yStandar d (NAAQS) , PS D incremen t o r ai r qualit yrelate d valu e (AQRV ) i n a Clas s I area . Therefore ,P. 5

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ON THE ISSUES DISCUSSED wher e a significan t collatera l increas e i n actua l emission s i s expecte d t o resul t from a pollutio n contro l project , th e permitting authorit ymus t als o asses s whethe r th e increas e coul d adversel yaffec t an ynationa l ambien t ai r qualit ystandard , PS D incremen t o r Clas s I AQRV . I n additio n t o thes e substantiv e safeguards , EPAi s als o specifying tw o procedura l safeguard s whic har e t o b e followed . First , sinc e thi s interi mexclusio n i s onl yavailabl e o n a case by-cas e basis , source s seeking exclusio n from majo r NS R requirement s i n accordanc e wit hthi s guidanc e must , prio r t o beginning construction , obtai n a determinatio n b yth e permittin g authorit ytha t a propose d projec t qualifie s a s a pollutio n contro l project . Second , i n considerin g tha t request , th e permitting authorit ymus t affor d th e publi c a n opportunit yt o revie wan

d commen t o n th e source' s applicatio n fo r thi s exclusio n an d th e permitting authority' s propose d dispositio n o f th e application . I t i s als o importan t t o not e tha t an yprojec t exclude d frommajo r ne wsourc e revie wa s a pollutio n contro l projec t mus t stil l compl ywit hal l otherwis e applicabl e requirement s o f th e stat e Implementatio n Pla n (SIP) , including mino r sourc e permitting . Thi s guidanc e documen t doe s no t supersed e existing Federa l o r Stat e regulation s o r approve d SIPs . Th e policie s se t ou t i n thi s memorandu

mand attachmen t ar e intende d solel ya s guidanc e during th e interi mperio d unti l EPAtake s actio n t o revis e it s NS Rrule s an

d d o no t represen t fina l Agenc yaction . Thi s polic y statemen t i s no t rip e fo r judicia l review . Moreover , i t i s no t intended , no r ca n i t b e relie d upon , t o creat e an yright s enforceabl e b

yan ypart yi n litigatio n wit hth e Unite d States . Agenc yofficial s maydecid e t o follo wth e guidanc e provide d i n thi s memorandum , o r t o ac t a t varianc e wit hth e guidance , base d o n an analysi s o f specifi c circumstances . Th e EPAals o ma y chang e thi s guidanc e a t an ytime withou t publi c notice . Th e EPA presentl yintend s t o addres s furthe r th e matter s discusse d i n thi s documen t i n a forthcoming NS Rrulemakin g regarding propose d change s t o th e programresulting form th e NS RRefor

m proces s an

d wil l tak e commen t o n thes e matter s a s par t o f tha t rulemaking . A s note d above , a ful l discussio n o f th e type s o f project s eligibl e fo r a n exclusio n fromNS Ra s a pollutio n contro l projec t a s wel l a s th e safeguard s suc hproject s mus t mee t t o qualif yfo r th e exclusio n ar e discusse d i n detai l i n th e attachmen t t o thi s memorandum . Th e Regiona l Office s shoul d sen d thi s memorandu

m wit hth e attachmen t t o State s withi n thei r jurisdiction . Question s concerning specifi c issue s an d case s shoul d b e directe d t o th e appropriat e EPARegiona l Office . Regiona l Offic e staf fP. 6

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maycontac t Mr . Davi d Solomon , Chief , Ne wSourc e Revie wSection , a t (919 ) 541-5375 , i f the yhav e an yquestions . Attachmen t Addressee s Director , Air , Pesticide s an d Toxics , Region s I , IV an d V I Director , Ai r and Wast e Management , Regio n I I Director , Air , Radiatio n an d Toxic s Division , Regio n II I Director , Ai r an

d Radiatio n Division , Regio n V Director , Ai r and Toxic s Division , Region s VII , VIII , I Xand X cc : Ai r Branc hChief , Region s I-X bcc : NS RContact s L . Wegma n K . Berry S . Hitt e E . Lilli s D . Solomo n NSR S Sectio n fil eP. 7

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ON THE ISSUES DISCUSSED Attachmen t GUIDANC E ONEXCLUDIN GPOLLUTIONCONTRO L PROJECT S FROMNE WSOURC E REVIE W(NSR ) I . Purpos e A t thi s time , EPAexpect s t o complet e a rulemaking o n a n exclusio n frommajo r NS Rfo r pollutio n contro l project s b y January15 , 1996 . I n th e interim , certai n type s o f project s (involving sourc e categorie s othe r tha n utilities ) mayqualify , on a case-by-cas e basis , fo r a n exclusio n frommajo r NS Rrevie w a s pollutio n contro l projects . Pending EPA' s fina l actio n o n a forma l regulatoryexclusion , thi s attachmen t provide s interi m guidanc e fo r permitting authoritie s o n th e type s o f project s tha t mayb e exclude d o n a case-by-cas e basi s fromNS Ra s pollutio n contro l projects , including th e substantiv e and procedura l safeguard s whic happly . II . Background Th e ne wsourc e revie w(NSR ) provision s o f part s C [(Preventio n o f Significan t Deterioratio n (PSD) ] an d Par t D (Nonattainmen t Requirements ) o f titl e I o f th e Clea n Ai r Ac t appl yt o bot hth e constructio n o f majo r ne wsource s an d th e modificatio n o f existing majo r sources. 1 Th e modificatio n provision s o f th e NS Rprogram s i n part s C an d D ar e base d o n th e broa d definitio n o f modificatio n i n sectio n 111(a)(4 ) o f th e CAA . Tha t sectio n contemplate s a two-ste p tes t fo r determinin g whethe r activitie s a t a n existing facilit yconstitut e a modificatio n subjec t t o ne wsourc e requirements . I n th e firs t step , th e reviewing authorit ydetermine s whethe r a physica l o r operationa l chang e wil l occur . I n th e second step , th e questio n i s whethe r

1 Th e EPA' s regulation s fo r nonattainmen t area s ar e se t fort ha t 4 0 CF R51.165 , 52.2 4 and i n par t 51 , Appendi xS . Th e curren t PS D programi s se t fort hi n tw o set s o f regulations . On e se t o f regulation s (4 0 CF R52.21 ) i s par t o f th e Federa l PS D permi t programwhic happlie s a s par t o f a Federa l implementatio n pla n fo r State s tha t hav e no t submitte d a PS D programmeetin g th e regulatoryrequirement s o f 4 0 CF R51.16 6 [standard s fo r PS D provision s i n Stat e implementatio n plan s (SIP)] . Roughl ytwo
third s o f th e State s ar e implementing thei r ow n PS D progra

m pursuan t t o an EPA-approve d SIP . I n mos t o f th e remaining States , EPAha s delegate d th e authorit yt o implemen t th e PS D progra mbac k t o th e individua l States . Section s 52.2 1 an d 51.16 6 hav e identica l modificatio n provisions .P. 8

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ON THE ISSUES DISCUSSED th e physica l o r operationa l chang e wil l resul t i n an yincreas e i n emission s o f an

ypollutant . Th e definitio n o f physica l o r operationa l chang e i n sectio n 111(a)(4 ) could , standing alone , encompas s th e mos t mundan e activitie s a t a n industria l facilit y(even th e repai r o r replacemen t o f a singl e leak ypipe , o r a chang e i n th e waytha t pip e i s utilized) . However , EPAha s recognize d tha t Congres s di d no t intend t o mak e everyactivit ya t a sourc e subjec t t o ne w sourc e requirement s unde r part s C an d D . A s a result , EPAha s b y regulatio n limite d th e reac ho f th e modificatio n provision s o f part s C an

d D t o onl ymajo r modifications . Unde r NSR , a "majo r modification " i s generall ya physica l chang e o r chang e i n th e metho d o f operatio n o f a majo r stationarysourc e whic hwoul d resul t i n a significan t ne t emission s increas e i n th e emission s o f an ypollutan t regulate d unde r th e Clea n Ai r Ac t [see , e.g. , 4 0 CF R52.21(b)(2)(i)] . A"ne t emission s increase " i s define d a s th e increas e i n "actua l emissions " fromth e particula r physica l o r operationa l chang e togethe r wit han yothe r contemporaneou s increase s o r decrease s i n actua l emissions . Se e 4 0 CF R 52.21(b)(3)(i) . I n orde r t o trigge r majo r ne wsourc e review , th e ne t emission s increas e mus t excee d specifie d "significance " levels . Se e 4 0 CF R52.21(b)(2)(i ) an d 4 0 CF R52.21(b)(23) . EPA ha s als o adopte d common-sens e exclusions * fromth e "physica l o r operationa l change " componen t o f th e definitio n o f "majo r modification. " Fo r example , EPA' s regulation s contai n exclusion s fo r routin e maintenance , repair , an d replacement ; fo r increase s i n th e hour s o f operatio n o r i n th e productio n rate ; an d fo r certai n type s o f fue l switche s [see , e.g. , 4 0 CF R 52.21(b)(2)(iii)] . I n th e 199 2 "WEPCO " rulemakin g (se e 5 7 F R32314) , EPA amende d it s PS D and nonattainmen t regulation s a s the ypertai n t o utilitie s b

yadding pollutio n contro l project s t o th e lis t o f activitie s exclude d from th e definitio n o f physica l o r operationa l changes . I n taking tha t action , EPAstate d i t wa s largel yformalizing a n existing polic yunde r whic hi t had bee n excluding individua l pollutio n contro l project s wher e i t wa s found tha t th e projec t "woul d b e environmentall ybeneficial , takin g int o accoun t ambien t ai r quality. " [5 7 F Ra t 32320 ; se e als o id. , n . 15] . Becaus e th e WEPC O rulemaking wa s aime d a t th e utilit y industrywhic hface d "massiv e industry-wid e undertaking s o f pollutio n contro l projects " t o compl ywit hth e aci d rai n provision s o f th e Clea n Ai r Ac t (5 7 F R32314) , EP Alimite d th e type s o f project s eligibl e fo r th e exclusio n t o add-o n control s an d fue l switche s a t utilities . Thus , pollutio n contro l project s unde r th e rul e ar e define d as :P. 9

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"an yactivit yo r projec t undertake n a t a n existing electri c utilit ystea mgenerating uni t fo r purpose s o f reducing emission s fro m suc hunit . Suc hactivitie s o r project s ar e limite d to : (i ) Th e installatio n o f conventiona l o r innovativ e pollutio n contro l technology , including bu t no t limite d to[, ] advance d flu e ga s desulfurization , sorben t injectio n fo r sulfu r dioxid e an

d nitroge n oxide s control s an d electrostati c precipitators ; (ii ) An activit yo r projec t t o accommodat e switching t o a fue l whic hi s les s polluting than th e fue l i n us e prio r t o th e activit yo r projec t . . .. " [4 0 CF R51.165(a)(1)(xxv ) (emphasi s added)] . Th e exclusio n als o applie s t o permanen t clea n coa l technology demonstratio n and repowering projects . Id . Th e EPAbuil t tw o safeguard s int o th e exclusio n i n th e rulemaking . First , a projec t tha t meets * th e definitio n o f pollutio n contro l projec t wil l no t qualif yfo r th e exclusio n wher e th e "reviewing authorit ydetermine s tha t (the propose d project ) render s th e uni t les s environmentall ybeneficia l . . .. " [see , e.g. , 51.165(a)(1)(v)(C)(8)] . I n th e WEPC O rule , EPAdi d no t provid e an

yspecifi c definitio n o f th e environmentall y beneficia l standard , althoughi t di d indicat e tha t th e pollutio n contro l projec t provisio n "provide s fo r a case-by-cas e assessmen t o f th e pollutio n contro l project' s ne t emission s an d overal l impac t o n th e environment " [5 7 F R32321] . Also , thi s provisio n i s buttresse d b

ya second safeguar d tha t require s permitting authoritie s t o evaluat e th e ai r qualit yimpact s o f pollutio n contro l project s tha t coul d —throughcollatera l emission s increase s o r change s i n utilizatio n pattern s —adversel yimpac t loca l ai r qualit y[se e 5 7 F R32322] . Thi s provisio n generall y require s source s t o mode l emission s increase s associate d wit ha pollutio n contro l project . Id . Mor e fundamentally , i t explicitl ystate s tha t n o pollutio n contro l projec t unde r an y circumstance s ca n caus e o r contribut e t o violatio n o f a NAAQS , PS D increment , o r ai r qualit yrelate d valu e i n a Clas s I area . Id. 2

2 Th e WEPC O rulemaking mention s "visibilit ylimitation " rathe r tha n "ai r qualit yrelate d values. " However , th e statutory protection s i n sectio n 165(d ) plainl yar e intende d t o protec tP.1 0

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A s noted , th e WEPC O rulemaking wa s explicitl ylimite d t o existin g electri c utilit ystea mgenerating unit s [see , e.g. , 4 0 CF R51.165(a)(l)(v)(C)(8 ) an d 51.165(a)(1)(xx)] . Th e EPA indicate d i t woul d conside r adopting a forma l NS Rpollutio n contro l projec t exclusio n fo r othe r sourc e categorie s a s par t o f a separat e NS Rrulemaking . Th e rulemaking i n questio n i s no w expecte d t o b e finalize d b yJanuary15 , 1996 . O n th e othe r hand , th e WEPC O rulemakin g als o note d tha t EPA' s existing polic ywas , an d woul d continu e t o be , t o allo wpermitting authoritie s t o exclud e pollutio n contro l project s i n othe r sourc e categorie s o n a case-by-cas e basis . III . Case-By-Cas e Pollutio n Contro l Projec t Determination s Th e following section s describ e th e typ e o f project s tha t mayb e considere d b ypermitting authoritie s fo r exclusio n a s pollutio n contro l project s an d tw o safeguard s tha t permittin g authoritie s shoul d us e i n evaluating qualifying project s —th e environmentall ybeneficia l tes t an d an ai r qualit yimpac t assessmen t requirement . T o a larg e extent , thes e requirement s ar e drawn from

th e WEPC O rulemaking . However , becaus e th e WEPC O rul e wa s designe d fo r a singl e sourc e category , electri c utilities , i t canno t serv e a s a complet e templat e fo r thi s guidance . Therefore , th e following description s expand upo n th e WEPC O rul e i n th e scop e o f qualifying project s an d i n th e specifi c requirement s inheren t i n th e safeguards . Thes e change s reflec t th e fa r mor e complicate d tas k o f identifying an d facilitating pollutio n contro l project s a t a variet yo f source s facing a myria d o f Federal , Stat e an d loca l clea n ai r requirements . A . Type s o f Project s Covere d 1 . Add-O n Control s an d Fue l Switche s I n th e WEPC O rulemaking , EPAfoun d tha t bot hadd-o n emission s contro l project s an d fue l switche s t o les s pollutin g fuel s coul d b e considere d t o b e pollutio n contro l projects . Fo r th e purpose s o f today' s guidance , EPAagree s tha t thes e type s o f project s ar e appropriatel yinclude d a s candidate s fo r a case-by

cas e exclusion . Thes e type s o f project s include : agains t an

y"advers e impac t o n th e ai r qualit yrelate d value s o f suc h[Clas s I ] land s (including visibility). " Becaus e o f thi s provision , EPAbelieve s tha t th e prope r focu s o f an yai r qualit y assessmen t neede d fo r a pollutio n contro l projec t shoul d b e o n visibilit yan

d an yothe r relevan t ai r qualit yrelate d value s fo r an yClas s I area s tha t mayb e affecte d b yth e facility .P.1 1

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- th e installatio n o f conventiona l an d advance d flu e ga s desulfurizatio n an

d sorben t injectio n fo r sulfu r dioxid e (S0 2 ) ;

- electrostati c precipitators , baghouses , highefficienc y multiclones , an

d scrubber s fo r particulate ;

- flu e ga s recirculation , low-NO „ burners , selectiv e non catalyti c reductio n an d selectiv e catalyti c reductio n fo r N0 X ; an d

- regenerativ e therma l oxidizers , condensers , therma l incinerator s and carbo n adsorber s fo r VO C an d toxi c ai r pollutants . Project s undertake n t o accommodat e switching t o an inherentl yles s polluting fue l suc ha s natura l ga s ca n als o qualif ya s a pollutio n contro l project . An yactivit ytha t i s necessaryt o accommodat e switching t o a inherentl yles s pollutin g fue l i s considere d t o b e par t o f th e pollutio n contro l project . I n some instances , wher e th e emission s unit' s capabilit ywoul d otherwis e b e impaire d a s a resul t o f th e fue l switch , thi s ma y involv e certai n necessarychange s t o th e pollutio n generating equipmen t (e.g. , boiler ) i n orde r t o maintai n th e norma l operating capabilit yo f th e uni t a t th e time o f th e project . Thes e type s o f accompanying changes*ca n b e considere d par t o f th e pollutio n contro l projec t bu t onl yt o th e exten t theyar e undertake n t o maintai n th e currentl yuse d capacit yo f th e uni t a t th e tim e th e fue l switc hi s implemented .

2 . Pollutio n Preventio n Project s I t i s EPA' s polic yt o promot e pollutio n preventio n approache s an

d t o remov e regulatorybarrier s t o source s seekin g t o develo p an

d implemen t pollutio n preventio n solution s t o th e exten t allowe d unde r th e Clea n Ai r Act . Fo r thi s reason , beside s add-o n control s an

d fue l switche s t o les s polluting fuels , permitting authoritie s mayappl ythi s exclusio n t o switche s t o inherentl yles s polluting ra wmaterial s o r processe s an d othe r type s o f "pollutio n prevention " projects. 3 Fo r instance , many VO C user s wil l b e makin g switche s t o water-base d o r powde r pain t

3

. Fo r purpose s o f thi s guidance , pollutio n preventio n project s ar e project s tha t throughproces s change s o r produc t recoveryimprovement s eliminat e o r reduc e th e formatio n o f ai r contaminant s an

d othe r pollutants , leading t o inherentl ylowe r "smokestack " emission s [se e Pollutio n Preventio n Ac t o f 199 0 sectio n 6602(b ) an

d sectio n 6603(5)(A ) an d (B) ]P.1 2

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ON THE ISSUES DISCUSSED applicatio n system s a s a strategyfo r meeting reasonabl y availabl e contro l technology(RACT ) o r switching t o a non-toxi c VO C t o compl ywit hmaximu machievabl e contro l technology(MACT ) requirements . Accordingly , unde r today' s guidance , permitting authoritie s mayconside r excludin g rawmateria l substitutions , proces s change s an

d othe r pollutio n preventio n strategie s wher e th e pollutio n contro l aspect s o f th e projec t ar e clearl yeviden t an d wil l resul t i n substantia l emission s reduction s pe r uni t o f outpu t fo r on e o r mor e pollutants . I n judging whethe r a projec t ca n b e considere d a pollutio n preventio n project , permittin g authoritie s mayals o conside r whethe r a projec t i s being undertake n t o brin g a sourc e int o complianc e wit ha MACT , RAC T o r othe r Clea n Ai r Ac t requirement . AlthoughEPAi s supportiv e o f pollutio n contro l and preventio n project s and strategies , specia l car e mus t b e take n i n classifyin g project s a s a pollutio n contro l projec t an d i n evaluating project s unde r a pollutio n contro l projec t exclusion . Virtuall yeverymodernizatio n o r upgrad e projec t a t a n existin g industria l facilit ywhic hreduce s input s and lower s uni t costs , ha s th e concurren t effec t o f lowerin g emission s rat e pe r uni t o f fuel , ra wmateria l o r output . Nevertheless , i t i s clea r tha t thes e majo r capita l investment s i n industria l equipmen t ar e th e verytype s o f project s tha t Congres s intende d t o addres s wit hth e ne wsourc e modificatio n provisions . [se e Wisconsi n Electri c Powe r Co . v . Reilly . 89 3 F.2 d 901 , (7t hCir . 1990 ) (rejecting contentio n tha t utilit ylif e extensio n projec t wa s no t a physica l o r operationa l change) ; Puert o Rica n Cemen t Co. . Inc . v . EPA ; 88 9 F.2 d 292 , (1s t Cir . 1989 ) (NS Rapplie s t o modernizatio n projec t tha t decrease s emission s pe r uni t o f output , bu t increase s economi c efficienc ysuc htha t utilizatio n mayincreas e an

d resul t i n ne t increas e i n actua l emissions)] . Likewise , th e replacemen t o f a n existing emission s uni t wit ha newe r o r differen t on e (albei t mor e efficien t an d les s polluting ) o r th e reconstructio n o f a n existin g emission s uni t woul d no t qualif ya s a pollutio n contro l project . Adoptin g a polic ytha t automaticall yexclude s fromNS Ran yprojec t that , whil e lowerin g operating cost s o r improving performance , coincidentall ylower s a unit' s emission s rate , woul d exclud e almos t al l modification s t o existing emission s units , including thos e tha t ar e likel yt o increas e utilizatio n an d therefor e resul t i n overal l highe r level s o f emissions . I n orde r t o limi t thi s exclusio n onl yt o thos e subse t o f pollutio n preventio n project s tha t wil l i n fac t lowe r annua l emission s a t a source , permittin g authoritie s shoul d no t exclud e a s pollutio n contro l project s an ypollutio n preventio n projec tP.1 3

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ON THE ISSUES DISCUSSED tha t ca n reasonabl yb e expecte d t o increas e th e utilizatio n o f th e affecte d emission s unit(s) . Fo r exampl e project s whic h significantl yincreas e capacity , decreas e productio n costs , o r improv e produc t marketabilit yca n b e expecte d t o affec t utilizatio n patterns . Wit hthes e changes , th e environmen t mayo r mayno t se e a reductio n i n overal l sourc e emissions ; i t al l depend s o n th e source' s operation s afte r th e chang e whic hEPA doe s no t believ e ca n b e predicte d wit han ycertainty. 4 Thi s i s no t t o saytha t thes e type s o f project s ar e necessaril ysubjec t t o federa l ne wsourc e revie wrequirements , onl ytha t the yshoul d no t b e exclude d a s pollutio n contro l projects . B . Safeguard s 1 . Environmentall yBeneficia l Tes t Eve n project s tha t mee t th e definitio n o f a pollutio n contro l projec t outline d abov e maycaus e collatera l emission s increase s o r hav e othe r advers e impacts . Fo r instance , a larg e VO C incinerator , whil e substantiall yeliminating VO C emissions , maygenerat e sizeabl e NO xemission s wel l i n exces s o f significanc e levels . T o protec t agains t thes e sort s o f problems , EPAi n th e WEPC O rul e require d a n assessmen t o f th e overal l environmenta l impac t o f th e projec t an d th e specifi c impact , i f any , o n ai r quality . Again , EPAbelieve s tha t thi s safeguar d i s appropriat e her e a s well . I n making a determinatio n a s t o whethe r a projec t i s environmentall ybeneficial , th e permitting authorit ymus t conside r th e overal l emission s befor e an d afte r th e project , a s wel l a s an

yothe r relevan t environmenta l factors . Whil e i t i s no t possibl e t o lis t al l factor s whic hshoul d b e considere d i n an yparticula r case , severa l concern s ca n b e noted . First , pollutio n contro l project s whic hresul t i n increase s i n non-targete d pollutant s shoul d b e reviewe d t o determin e tha t th e collatera l increase s hav e bee n minimize d an d wil l no t resul t i n environmenta l harm . Thi s coul d mean , fo r instance , tha t a low-NOxburne r projec t i s subjec t t o temperatur e an d othe r appropriat e combustio n standard s s o tha t C O emission s ar e kep t t o a minimum .

4 Thi s i s i n marke d contras t t o th e additio n o f pollutio n contro l equipmen t whic htypicall ydoe s not , i n EPA' s experience , resul t i n an

yincreas e i n th e source' s utilizatio n o f th e emissio n uni t i n question . I n th e fewinstance s wher e thi s presumptio n i s no t true , th e safeguard s discusse d i n th e nex t sectio n shoul d provid e adequat e environmenta l protections .P.1 4

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ON THE ISSUES DISCUSSED Second , nothing i n thi s guidanc e countenance s a pollutio n contro l projec t whic hcause s o r contribute s t o a NAAQ S violatio n [se e 5 7 FR32322] . Thus , i n th e cas e o f nonattainmen t areas , th e Stat e o r th e sourc e mus t provid e offsetting emission s reduction s fo r an ysignifican t increas e i n a nonattainmen t pollutan t from th e pollutio n contro l project . I n othe r words , i f a significan t collatera l increas e o f a nonattainmen t pollutan t resulting froma pollutio n contro l projec t i s no t offse t (o n a t leas t a one-to-on e basis ) the n th e pollutio n contro l projec t woul d no t qualif ya s environmentall ybeneficial . Finally , a projec t whic hwoul d resul t i n a n unacceptabl e increase d ris k du e t o th e releas e o f ai r toxic s shoul d no t b e considere d environmentall ybeneficial . 2 . Additiona l Ai r Qualit yImpact s Assessment s (a ) Genera l Nothing i n th e Clea n Ai r Ac t o r EPA' s implementing regulation s woul d allo wa permittin g authorit yt o approv e a pollutio n contro l projec t whic hresult s i n a n emission s increas e tha t wil l caus e o r contribut e t o a violatio n o f a NAAQS , PS D increment , o r adversel yaffec t visibilit yo r othe r ai r qualit y relate d valu e (AQRV ) i n a Clas s I are a [se e CA A section s 110(a)(2)(c) , 165 , 169A(b)* , 173] . Thi s being th e case , thi s guidanc e i s no t intende d t o allo wan yprojec t t o violat e an y o f thes e ai r qualit ystandards . A s discusse d above , i t i s possibl e tha t a pollutio n contro l projec t —eithe r throughincrease s i n emission s rate s o f collatera l pollutant s o r throughchange s i n utilizatio n —wil l caus e a n increas e i n actua l emissions , whic hi n tur n coul d caus e o r contribut e t o th e violatio n o f a NAAQS , incremen t o r ai r qualit yrelate d valu e (AQRV) . Fo r thi s reason , th e WEPC O rul e require d a sourc e t o analyz e ai r qualit yimpact s wheneve r 1 ) th e propose d chang e woul d resul t i n a significan t ne t increas e i n actua l emission s o f an ycriteri a pollutan t ove r level s use d fo r tha t sourc e i n th e mos t recen t ai r qualit yimpac t analysi s and 2 ) th e permitting authorit yha s reaso n t o believ e tha t suc ha n increas e woul d caus e o r contribut e t o a violatio n o f a NAAQS , incremen t o r visibilit ylimitation. 5 I f thi s analysi s indicate s

5 Generally , unles s th e reviewing authorit yha s specificall yanalyze d th e ai r qualit yimpact s o f simila r change s t o th e emission s profil e o f th e source , th e permitting authorit y shoul d requir e a sourc e t o provid e dat a o n th e ai r qualit y impact s o f an

ypollutio n contro l projec t tha t wil l resul t i n aP.1 5

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ON THE ISSUES DISCUSSED tha t th e increas e i n emission s wil l caus e o r contribut e t o a violatio n o f an

yambien t standard , PS D incremen t o r AQRV , th e pollutio n contro l exclusio n doe s no t apply . EPAbelieve s tha t thi s safeguar d shoul d b e applie d her e a s well . Thus , wher e a pollutio n contro l projec t wil l resul t i n a significan t increas e i n emission s an d tha t increase d leve l ha s no t bee n previousl yanalyze d and raise s th e possibilit yo f a NAAQS , incremen t o r AQR V violation , th e permitting authorit y shoul d requir e th e sourc e t o provid e an ai r qualit yanalysi s sufficien t t o demonstrat e th e impac t o f th e project . Th e EPA wil l no t necessaril yrequir e tha t th e increas e b e modele d (a s i s th e cas e wit ha significan t ne t emission s increas e unde r th e WEPC O rule) , bu t th e sourc e mus t provid e sufficien t dat a t o satisf yth e permitting authorit ytha t th e ne wlevel s o f emission s wil l no t caus e a NAAQ S o r incremen t violatio n an d wil l no t adversel yimpac t th e AQRV s o f nearb yClas s I areas . (b ) Determinatio n o f Increas e i n Emission s Th e questio n o f whethe r a propose d projec t wil l resul t i n an emission s increas e i s bot hcomplicate d an d contentious . I t i s a questio n tha t i s currentl ybein g debate d byth e Ne wSourc e Revie w ReformSubcommitte e o f th e Clea n Ai r Act * AdvisoryCommitte e an d i s expecte d t o b e revisite d b yEPAi n th e same rulemaking tha t wil l conside r adoptin g a pollutio n contro l projec t exclusion . Becaus e o f this , i n th e interi m EPAi s adopting a simplifie d approac ht o determining whethe r a pollutio n contro l projec t wil l resul t i n increase d emissions . Th e approac hi s premise d o n th e fac t tha t EPAdoe s no t expec t th e vas t majorit yo f thes e project s t o chang e establishe d utilizatio n pattern s a t th e source . A s discusse d i n th e previou s section , i t i s EPA' s experienc e tha t add-o n control s d o no t impac t utilizatio n and pollutio n preventio n project s tha t coul d hav e thi s affec t mayno t b e exclude d a s pollutio n preventio n project s unde r thi s guidance . Therefore , i n mos t case s i t wil l b e veryeas yt o calculat e th e emission s afte r th e change : i t i s th e produc t o f th e ne wemission s rat e time s th e existing utilizatio n rate . I n th e cas e o f a pollutio n contro l projec t tha t collaterall yincrease s a non-targete d pollutant , th e actua l increas e (calculate d usin g th e ne wemission s rat e an d curren t utilizatio n pattern ) woul d nee d t o b e analyze d t o determin e it s ai r qualit yimpact .

significan t emission s increase .P.1 6

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ON THE ISSUES DISCUSSED Th e permitting authorit ymaypresume tha t project s meetin g th e definitio n outline d i n sectio n 111(A)(1 ) wil l no t chang e utilizatio n patterns . However , th e permittin g authorit yi s t o rejec t thi s presumptio n wher e ther e i s evidenc e tha t th e projec t coul d resul t i n debottlenecking , loadshifting t o tak e advantag e o f th e contro l equipmen t o r caus e othe r meaningfu l deviation s fromth e pas t patter n o f us e o f th e emission s uni t a t issue . I n thos e case s wher e th e pollutio n contro l projec t i s reasonabl y likel yt o lead t o a n increase d utilizatio n o f th e source , th e permitting authorit yshoul d requir e th e sourc e t o provid e fo r th e recor d a creditabl e demonstratio n o f th e leve l o f utilizatio n tha t i s projecte d t o b e maintaine d following th e change . Wher e th e projec t wil l increas e utilizatio n an d emissions , th e associate d emission s increase s ar e calculate d base d o n a reasonabl e estimat e o f th e source' s actua l operationa l leve l following th e pollutio n contro l project . I n suc hcase s th e permittin g agenc yshoul d conside r th e projecte d increas e i n emission s a s collatera l t o th e projec t an d confirmthat , notwithstanding th e emission s increases , th e projec t i s stil l considere d environmentall ybeneficia l an d meet s al l othe r applicabl e safeguards . III . Procedura l Safeguard s * Becaus e thi s pollutio n contro l projec t exclusio n mus t b e grante d o n a case-by-cas e basis , th e exclusio n canno t b e self

executing . Instead , source s mus t receiv e individua l approva l fo r project s fromth e permitting authorit ypursuan t t o a mino r ne w sourc e revie wpermittin g process , Stat e non-applicabilit y determinatio n o r simila r process . (Nothing i n thi s guidanc e shoul d b e see n a s voidin g an yapplicabl e mino r sourc e preconstructio n revie wrequiremen t i n an ySI P tha t ha s bee n approve d pursuan t t o th e requirement s o f sectio n 110(a)(2)(C ) an d 4 0 CF R51.160-164. ) Thi s proces s shoul d als o requir e tha t th e applicatio n fo r th e exclusio n an d th e permittin g agency' s propose d decisio n thereon , mus t b e subjec t t o publi c notic e and th e opportunit yfo r publi c an d EPAwritte n comment . IV . Illustrativ e Example s Th e following example s illustrat e some o f th e guiding principle s an

d safeguard s discusse d abov e i n reviewing propose d pollutio n contro l project s fo r a n NS Rexclusion . Exampl e 1 PROJEC T DESCRIPTION : Achemica l manufacturin g facilit yi n a n attainmen t are a fo r al l pollutant s i s proposin g t o instal l a regenerativ e therma l oxidize r t o reduc e VO C emission s (includingP.1 7

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ON THE ISSUES DISCUSSED emission s o f some hazardou s pollutants ) a t th e plan t b yabou t 300 0 ton s pe r year . Th e emission s reduction s from th e RT O ar e currentl yvoluntary , bu t mayb e necessarysome time i n th e futur e fo r titl e II I MAC T compliance . Althoughth e RT O ha s bee n designe d t o minimiz e NOxemissions , i t wil l produc e 20 0 ton s pe r yea r o f ne wNOxemissions . Asid e fromth e NOxincreas e ther e ar e n o othe r environmenta l impact s know n t o b e associate d wit hth e project . EVALUATION : A s a qualifying add-o n contro l device , th e projec t mayb e considere d a pollutio n contro l projec t and mayb e considere d fo r a n exclusion . Th e permitting agencyshoul d verif y tha t th e NO xincreas e ha s bee n minimize d t o th e exten t practicable , 2 ) confirm(throug hmodeling o r othe r appropriat e means ) tha t th e actua l significan t increas e i n NOxemission s wil l no t violat e th e applicabl e Nationa l Ambien t Ai r Qualit y Standard 6 , PS D increment , o r adversel yimpac t an yai r quality

relate d valu e an

d 3 ) appl yal l otherwis e applicabl e SI P and requisit e mino r sourc e permitting requirements , including opportunit yfo r publi c notic e and commen t requirements . Exampl e 2 PROJEC T DESCRIPTION : Asourc e propose s t o replac e a n existing coa l fire d boile r wit ha gas-fire d turbin e a s par t o f a cogeneratio n project . Th e ne wturbin e i s a n exac t replacemen t fo r th e energyneed s supplie d b yth e existing boile r and wil l emi t les s o f al l pollutant s o n a n hourl ybasi s tha n th e boile r did . EVALUATION : Th e replacemen t o f an existing emission s uni t wit ha ne wuni t (albei t mor e efficien t and les s polluting ) doe s no t qualif ya s a PCP . Th e compan ycan , however , us e an y otherwis e applicabl e netting credit s fromth e remova l o f th e existing boile r t o ne t th e ne wuni t ou t o f review . Exampl e 3 PROJEC T DESCRIPTION : Asourc e plan s t o physicall yrenovat e an d upgrad e a n existing proces s lin e b ymakin g certai n change s t o th e existing process , including emission s units . Th e resultan t change s wil l increas e th e efficienc yo f th e lin e an d expand it s abilit yt o manufactur e an d marke t ne wo r improve d products . Th e

6 I f th e sourc e ha d bee n locate d i n a are a i n whic h nonattainmen t revie wapplie d t o NO xemission s increases , 20 0 ton s o f NOxoffset s credit s woul d b e require d t o allo wfo r a n exclusion .P.1 8

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ON THE ISSUES DISCUSSED
renovate d lin e wil l b e les s polluting o n a pe r produc t basi s than th e origina l configuration . EVALUATION : Th e chang e i s no t a pollutio n contro l project . Th e resultan t decreas e i n th e pe r produc t emission s rat e (o r factor ) i s incidenta l t o th e projec t an d no t th e primary objective . Rathe r i t i s a physica l chang e o r chang e i n th e metho d o f operatio n fo r th e purpos e o f increasing efficienc yan d productivity . Exampl e 4 PROJEC T DESCRIPTION : I n respons e t o th e phaseou t o f CFC s unde r titl e V I o f th e Clea n Ai r Act , a sourc e i s proposing t o substitut e a les s ozone-depleting substance s (e.g . HCFC-141b ) fo r on e tha t ha s a greate r ozon e depleting potentia l (e.g. , CFC-11) . N o othe r change s ar e proposed . EVALUATION : Th e projec t mayb e considere d a pollutio n contro l projec t and mayb e considere d fo r a n exclusion . Th e permitting agenc yshoul d verif ytha t 1 ) emission s o f HCFC-141 b afte r th e propose d switc hwil l caus e les s stratospheri c ozon e depletio n tha n curren t annua l emission s o f CFC-11 , 2 ) th e propose d switc hwil l no t chang e utilizatio n pattern s o r increas e emission s o f an

yothe r pollutan t whic hwoul d impac t a Nationa l Ambien t Ai r Qualit yStandard , PS D increment , o r ai r quality

relate d valu e and tha t th e propose d switc hwil l no t caus e any cross-medi a harm , including an yunacceptabl e increase d ris k associate d wit htoxi c ai r pollutant s an d 3 ) appl yal l otherwis e SI P and requisit e mino r sourc e permitting requirements , including opportunit yfo r publi c notic e an d commen t requirements .P.1 9

Industr y 1

. Erni e Rosenber g 2

. Michae l Bar r
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Knaus s 15

. LarryFeldcam p 16

. Willia m Bumper s 17

. Richar d Zbu r Representin g Occidenta l Petroleu m / Chemica l Manufacturer s Assoc

. Piilsbury , Madiso n &Sutro 7 Nationa l Associatio n o f Manufacturer s Eastma n Chemica l Co

. Chadbornn e &Parke / NEDA-CAR P Genera l Motor s Perkin s Coi e /

Counci l fo rClea n Ai rImplementatio n Morgan , Lewi s &Bockiu s Hunto n &William s /

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Environmenta l Oraanization s 18

. Davi d Hawkin s 19

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. Pravee n Ama r 22

. Joh n Pau l
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. Willia m Becke r 24

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. Donal d Thiele r 26

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. Joh n Ruscign o 28

. To m Mica i
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. Ra yMenebroke r 30

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Federa l Aqencie s 31

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. Kare n Malki n 33

. Joh n Bunya k 34

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. Christophe rWol z ReDresentin a Natura l Resource s Defens e Counci l Environmenta l Defens e Fun d Souther n Environmenta l La wCente r
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. Davi d Solomo n 40

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. LarryElmor e 42

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. Lyn n Hamjia n 53

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. Bruc e Mille r 56

. Ro n Va n Mersberge n 57

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