p.1 

OAR Box 1778 

Prepped by Ollie Stewart 

Document Number: 

217) ll-F-26 

Docket Number: 

A-90-06 

Printed 10/28/2008 9:51:01 AM Sheet 217 of 276 
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/1-<70-0_\ 

AL-F-2& 

ENVIRONMENTAL PROTECTION AGENCY 

40 CFR Parts 51, 52 and 60 

[AD-FRL- ] 

APPLICABILITY OF NEW SOURCE REVIEW AND NEW SOURCE 

PERFORMANCE STANDARDS REQUIREMENTS 

AGENCY: Environmental Protection Agency (EPA) 

ACTION: Proposed Rules 

Ifu 

i fe a 

14 iiii 

EPA AiR DOCKET 

SUMMARY: EPA is proposing a rule that clarifies the meaning of 

current new source review (NSR) regulations regarding "major 

modifications," and further defines the application of those 

regulations to electric utility generating units. The first of 

these proposals relates to pollution control projects. 

Traditionally, EPA has viewed such projects as an activity that 

would not be considered a modification for new source review 

purposes, unless the new control system is "less environmentally 

beneficial" than its predecessor system. Accordingly, the proposed 

rule would add pollution control projects to the list of exclusions 

in the NSR rules. The proposal also would provide specific 

guidance regarding the application of this exclusion to electric 

utility generating units. 

The second proposal relates to the statutory requirement, 

embodied in the NSR "major modification" rules, that, for the 

purpose of calculating post-modification emissions, there must be 
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a demonstrable causal link between a physical change and a 

projected future actual emissions increase. In the case of 

electric utility generating facilities, this means that any 

increase in their utilization, due either to economic or 

environmental changes in the loading order of units or to an 

increase in system-wide demand growth, must be excluded from the 

computation of future utilization levels utilized by the Agency in 

projecting future annual emissions. Today's proposal would add 

regulatory language that identifies, for electric utility 

generating units, load growth and loading order changes as factors 

that presumptively require EPA to adjust, projections of postchange emissions. 

EPA is also proposing today to change its NSR rules to 

implement a settlement agreement in litigation involving EPA's 1980 

NSR rules. This proposal reflects EPA's view that, in ascertaining 

the impact of a modification, a source owner should be allowed to 

make an election between either a comparison of "past potential 

emissions and future potential emissions" or a comparison of "past 

representative actual annual emissions and future representative 

actual annual emissions." EPA believes this change, which requires 

an appropriate mode of comparison of pre- and post-change emissions 

in all cases, is consistent with the NSR provisions of the Act. 

However, to preserve administrative continuity the Agency intends, 

prior to taking final action on this proposal, that units which 

have not begun normal operations will continue to be subject to the 

"past actual-future potential" test of current rules. 
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Finally, EPA is proposing to revise its New Source Performance 

Standards (NSPS) rules to establish, as the NSPS baseline, the 

maximum hourly emission rate achievable during the past five years 

of operation of an affected facility. This proposal will resolve 

uncertainties created by past interpretations of EPA's NSPS rules. 

Prior to final promulgation of any of today's proposals, the 

current provisions of EPA's NSR and NSPS rules, as construed in the 

SUPPLEMENTARY INFORMATION section below, will continue to govern 

EPA's applicability determinations regarding NSPS and NSR 

modifications. 

SUPPLEMENTARY INFORMATION: 

i. Background 

The Clean Air Act of 1970, as modified by the 1977 and 1990 

amendments (the Act or CAA), contains a number of provisions that 

establish stringent pollution control requirements that must be met 

by "new" industrial facilities, which include existing facilities 

that undertake a "modification." The term "modification" is 

defined in § 111 of the Act. Specifically, section 111(a)(2) 

defines "modification" as: 

any physical change in, or change in the 

method of operation of, a stationary 

source which increases the amount of any 

air pollutant emitted by such source or 

which results in the emission of any air 
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pollutant not previously emitted. 

The NSR provisions cover sources that commence construction after 

January 6, 1975, and construction "includes the modification (as 

defined in section 111(a)) of any source or facility." CAA 

§ 169(2)(C). 

Modification is a statutory term of art that has been given 

content by EPA through rules implementing § 111 and the NSR 

provisions of the Act. These rules carry out the congressional 

intent that existing facilities be grandfathered unless they are 

changed in a way that creates "new pollution" — i.e.f pollution 

that the unit was not capable of producing when it was built.1 

They were developed with the objective of establishing a 

modification rule "which minimizes . . . [the] impact [of new 

source requirements] on existing sources."2 

A. EPA's Rules 

In the early 1970s, EPA promulgated NSPS rules defining the 

term "modification." Under those rules, a "modified" facility is 

one that has been subjected to "any physical or operational 

change," which "results in an increase in the emission rate of any 

pollutant to which a standard applies."3 Whether an increase 

occurs is determined by using the facility's emission rate (in 

National Asphalt Pavement Association v. Train, 539 F.2d 775, 

783 (D.C. Cir. 1976) (§ 111 is "designed to prevent new pollution 

problems"). 

2ASARCO v. EPA. 578 F.2d 319, 327 n.24 (D.C. Cir. 1978). 

340 C.F.R. § 60.14 (1990); ss& 36 Fed. Reg. 24877, col. 2 

(1971); 40 Fed. Reg. 58419, col. 1 (1975). 
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kilograms per hour) at maximum production levels during periods of 

"representative performance."4 

To clarify further the scope of this definition and to 

minimize its impact on existing sources undertaking projects that 

are consistent with maintaining normal operations, EPA provided 

examples of activities that do not constitute a "modification," 

including, inter alia, "routine" maintenance, repair or 

replacement, "increases" in production rate or hours of operation, 

and installation of a pollution control system, unless the system 

is "less environmentally beneficial" than the system it is 

replacing. In other words, these activities could result in an 

increase in emissions, but would not be considered a physical or 

operational change under the modification rule.5 

Because the NSR program incorporates the NSPS definition of 

modification, EPA was required to use the NSPS approach to define 

modification in the NSR program. Thus, in 1978 and 1980, EPA 

defined a modification for NSR purposes as a "physical change" or 

a "change in the method of operation" that "would result in" an 

"emissions increase."6 

Similar to the NSPS modification rule, EPA provided that "a 

physical change or change in the method of operation" does not 

440 C.F.R. § 60.14(b) (1990); 40 Fed. Reg. 58419, col. 1 

(1975). 

=40 C.F.R. § 60.14(e) (1990). 

*Id. § 52.21(b)(2) (1990); see. 45 Fed. Reg. 52735, col. 3 

(1980). 
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"include" activities that are not directed at creating "new 

pollution" such as "routine" maintenance, repair of replacement or 

"an increase in the hours of operation or in the production rate" 

(unless a federally enforceable permit limits hours of operation or 

production rate).7 While EPA did not list pollution control 

projects among the examples of things that are not "physical or 

operational" changes, the language of the rule (i.e.r "includes") 

indicates that the exclusions listed therein should be construed 

only as illustrative and the enumeration thereof is not meant to be 

exhaustive. 

In the 1980 rules, EPA defined an "emissions increase" for NSR 

purposes in terms of total annual emissions (i.e.f tons of a 

pollutant emitted per year), instead of in terms of kilograms per 

hour.8 EPA's NSR rules currently require a comparison of past 

"actual" emissions with future "actual" emissions.9 Past and 

future "actual" emissions can be based on "allowable" emissions of 

an existing unit,10 or on past measured emissions and future 

projected emissions, or where a unit has not "begun normal 

operations," on the "potential to emit" (i.e.f operations 365 days 

a year, 24 hours a day, at maximum capacity)11 of that new 

740 C.F.R. § 52.21(b)(2)(iii)(a) and (f) (1990). 

8Id.. §§ 52.21(b)(3), 52.21(b)(21) (1990). 

9£fi£ 40 C.F.R. § 52.21(b)(3) (1990). 

10Id. at (b)(21)(iii). 

"Id. at (b)(b) (definition of "potential to emit") 
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emissions unit.12 

While the NSR modification rules, adopted under the 1977 

amendments, focus not on increases in hourly emission rate, but on 

increases in annual emissions, they, like the NSPS rules, authorize 

emissions increases resulting from activities that are not 

"physical or operational" changes. Thus, as noted above, under the 

NSR rules, an existing unit is authorized to increase its hours of 

operation and production rate, and thereby increase its annual 

emissions, without triggering NSR. As a result, for years, 

industrial facilities throughout the country have, been able to 

increase annual emissions through increases in utilization, without 

those increases ever being viewed as triggering NSR review. 

Under the NSR rules, the kind of conduct that could trigger 

NSR review is (1) installation of new units; (2) enlargement of an 

existing unit that would allow greater production, and (3) a change 

that increases the emission rate of a unit above design levels 

(i.e.r switching from gas to coal at a unit not capable of burning 

coal). In each of these cases, past actual annual emissions at a 

source are to be compared with future annual emissions based on the 

new unit's potential to emit.13 This comparison always produces a 

projected increase in annual emissions because no unit operates at 

a maximum capacity, 365 days a year. 

12Hi. at (b)(21)(iv). 

1340 C.F.R. § 52.21(b)(21)(iv). 
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B. The CMA Settlement 

Pursuant to a settlement agreement entered into on February 

22, 1982, in Chemical Manufacturers Association v. EPAr No. 79-1113 

(D.C. Cir. 1982), EPA obligated itself to propose a "potential-topotential" system for calculating emissions increases under the NSR 

program. As described below, today's proposed rule provides for 

the implementation of that settlement agreement by allowing source 

owners the option of electing a comparison of "past potential 

emissions and future potential emissions." 

C. The WEPCo NSR Interpretations 

Wisconsin Electric Power Company (WEPCo), an owner of a power 

plant in Port Washington, Wisconsin, proposed certain repairs and 

replacements of equipment at its Port Washington units, the first 

of which began operation in 1938. The Port Washington project was 

characterized by WEPCo as a "life extension" project and involved 

a "like-kind" replacement of equipment that physically constrained 

maximum unit operations in the case of two units and that required 

the shut-down of a third unit for safety reasons.14 

In October 1988, EPA determined that this project would 

trigger NSR requirements. According to this determination, because 

the "life extension" replacements were not found to be "routine," 

EPA's NSR rules required a comparison between past actual emissions 

and future "potential" emissions. The determination was based on 

14 The youngest of these units began operation in 1950, 
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the assumption that, unless the project fell within an exception to 

"physical or operational change" enumerated in the rule, the "past 

actual - future potential" test was required. 

EPA also found that NSPS was triggered by comparing 

deteriorated operations (and zero operations, in the case of the 

unit shut down for safety reasons) with full capacity hourly 

emissions after the repairs. While two of the units had 

constrained operations for several years and the third had been 

shut down for several years, EPA did not rely on these operations 

as being "representative," but ruled instead that its NSPS rules 

required comparison of constrained emissions immediately before a 

repair with emissions immediately after the repair removing the 

constraint. 

Subsequently, EPA, applying its WEPCo approach to NSR 

determinations, found that a conversion of an existing power plant 

from higher polluting oil to lower polluting natural gas would 

trigger NSR for nitrogen oxides (NOx) because non-routine changes 

were involved and, using EPA's "past actual-future potential" 

approach, annual emissions of NOx would be predicted to increase 

(While the NOx emissions rate of natural gas was substantially less 

then oil, in the past, the units had only operated at a very low 

capacity factor and, assuming 100 percent operations on natural 

gas, there would be an increase in annual NOx emissions.)15 

"Letter from Don R. Clay, Acting Assistant Administrator, U.S. 

EPA, to Walter McCarthy, Jr., Detroit Edison Company (May 8, 1989); 

Letter from David Kee, Air and Radiation Division, U.S. EPA to 

Morton Sterling, Detroit Edison Company (Dec. 20, 1988). 
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EPA also found, subsequent to the WEPCo approach to NSR 

determinations that installation of pollution controls — which 

clearly is not a "routine" repair or replacement — would trigger 

the "past actual-future potential" comparison if annual utilization 

of the unit would increase in the future.16 Since control 

equipment might only reduce emissions of one pollutant, this 

qualifier — expressed as a "rebuttable presumption" that annual 

utilization would not increase — meant that many sources would be 

subject to NSR review before installing control equipment, because 

electricity demand or other factors, including environmental 

dispatch to meet the new acid rain requirements, would increase 

annual utilization of the unit.17 

Subsequent to the WEPCo decision, EPA determined that removal 

of temporary pollution control demonstration projects would not 

trigger NSPS, even though such removal would not be "routine" and 

even though emissions before removal would be less than emissions 

after removal. EPA indicated that the appropriate comparison would 

"Letter from David Kee, EPA Region V, Air and Radiation 

Division, To Timothy Method, Indiana Department of Environmental 

Management (Jan. 30, 1990). 

17It should be noted that this interpretation, which required 

NSR of control projects whenever an increase in annual utilization 

increased annual emissions, was inconsistent with EPA's original 

interpretation of its NSR rules set forth in the 1983 Pedersen 

memorandum discussed below, which excludes pollution control 

projects without regard to whether annual emissions increase. Supra 

note 16. By this notice, EPA is returning to its original 

understanding of its NSR rules which recognizes that 

"environmentally beneficial" pollution control projects are 

excluded from the activities that could be considered a 

"modification." See. supra, note 19. 
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be between emissions before the temporary project with emissions 

after its removal. This determination clarified that the 

"representative performance" language in its rules allowed EPA, 

where emissions immediately before a change were clearly not 

representative of historical operations of the unit involved, to 

look back to a time before the occasion that the unit had 

temporarily reduced emissions. 

D. Case Law 

WEPCo challenged EPA's NSPS and NSR determinations in the 

Seventh Circuit. Wisconsin Electric Power Company v. Reilly, 893 

F.2d 901 (7th Cir. 1990). The court affirmed EPA's NSPS 

determination, holding that the kind of nonroutine "like kind 

replacements" before the court were "physical changes" and EPA 

could, under the facts of the case, compare hourly emissions 

immediately before the replacement with hourly emissions after the 

changes. Id., at 913-15. The court, however, reversed EPA's NSR 

determination, holding that a "past actual-future potential" 

comparison was not authorized at an existing unit that had begun 

normal operations. The court also noted that EPA would have to 

revise its rules if it wanted to require such comparisons at 

operating units which, like WEPCo, undertook nonroutine "like-kind 

replacements." Iii. at 915-18. 

Prior to the Seventh Circuit WEPCo decision, the First Circuit 

decided a case involving the NSR modification rules. Puerto Rican 

Cement Co. v. EPA. 889 F.2d 292 (1st Cir. 1989). In that case, the 
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court affirmed EPA's use of a "past actual-future potential" 

comparison at a facility that constructed "new [wet] kilns" that 

had much greater capacity than the "two older [dry] kilns" that had 

been in operation for some time. Iii. at 293. Consistent with 

EPA's current rules, the court affirmed the use of this comparison 

for new emission units that had not begun normal operations. 

ii. Today's Action 

Today EPA is proposing revisions to its NSR and NSPS rules to 

resolve uncertainties and questions raised by EPA's recent NSR 

approaches and the interplay of WEPCo and Puerto Rican Cement 

cases. The proposed NSR rules incorporate the NSPS exclusion for 

pollution control projects and identify, for electric utility 

generating units, pollution control projects that EPA views as 

presumptively "environmentally beneficial." The proposed NSR rules 

also identify, for electric utility generating units, factors that 

could result in a projected increase in annual emissions, but 

presumptively should not be considered to "result" from a physical 

or operational change. Today's proposal would specify that any 

projected increases due to such factors must be discounted in 

determining future projected annual emissions under EPA's NSR 

rules. Finally, the proposal incorporates new regulatory language 

in the NSPS rules which defines a 5-year baseline for determining 

past maximum hourly emissions. 

EPA also is proposing today NSR rule changes to implement the 
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CMA settlement agreement. This proposal would add an optional 

"potential to potential" test for determining "major 

modifications." 

A. Pollution Control Projects 

In implementing the statutory definition of "modification," 

EPA has, since 1974, explicitly excluded the addition or use of any 

pollution control system or device unless the new system or device 

was "less environmentally beneficial" than the system it replaced. 

40 C.F.R. § 60.14(e)(5). Since EPA has historically viewed 

environmentally beneficial pollution control projects as an 

activity that is not a "physical or operational change" for NSR 

purposes, the proposed regulation would explicitly incorporate that 

exclusion into the NSR rules, which list exclusions from "physical 

or operational" changes. 

When Congress amended the Clean Air Act in 1977, it adopted 

the pre-existing NSPS definition of "modification" for the new NSR 

program. 42 U.S.C. § 7479(2)(C). EPA has previously recognized 

that, except to the extent that the NSR rules have specifically 

modified certain provisions of this NSPS-based definition (e.g.r 

the exclusions provided for (1) an increase in the hours of 

operation or in the production rate, and (2) fuel switching), the 

NSPS definition of "modification" should govern the Agency's 

interpretation of its NSR rules. Accordingly, the exclusions to 

the terms "physical change in" and "change in the method of 

operation" listed in the NSR rules are merely examples of 
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activities that were never intended to be considered physical or 

operational changes. The language introducing these exclusions 

(i.e.f "includes") reflects EPA's original recognition that they 

are not an exclusive list of those activities that are beyond the 

scope of the modification rules. 

This construction of the NSR rules is consistent with EPA's 

original understanding of those rules. This fact is reflected in 

a 1983 memorandum, prepared by former Deputy General Counsel of EPA 

and then Acting Associate General Counsel for Air William F. 

Pedersen.18 In this memorandum, EPA stated that it "agree[d] with 

the rationale" that, "since the NSPS regulations provide an 

exemption from the modification provisions for replacement of 

control equipment, the NSR regulations must provide this exemption 

as well." Pedersen Memorandum at 2. This is because: 

the Clean Air Act provides in Section 

169(l)(c) that for NSR purposes the term 

modification shall be defined as that term is 

defined in Section 111(a) of the Act relating 

to NSPS. EPA has interpreted this to mean 

that for NSR purposes Congress intended the 

term modification to include all exemptions 

included in the NSPS regulations promulgated 

under Section 111 of the Act prior to the date 

of the enactment of Section 169. See 43 FR 

26396. The control equipment exemption was 

promulgated prior to Section 169. Therefore, 

the term modification in the NSR regulations 

inherently encompasses the control equipment 

18See Memorandum from Edward Reich, Director, Stationary Source 

Compliance Division and William F. Pedersen, Acting Associate 

General Counsel, Air, Noise and Radiation Division to Allyn M. 

Davis, Region IV (April 21, 1983)(hereinafter referred to as 

"Pedersen Memorandum"). 
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exemption. liL.19 

Today's proposal would add to the list of exclusions in EPA's 

NSR rules language identical to the "pollution control" exclusion 

in EPA's NSPS rules. See 40 C.F.R. § 60.14(e)(5)(1990). In 

addition, today's proposal would also establish a presumption that 

installation at an electric utility generating unit of the 

following pollution control systems are presumptively 

"environmentally beneficial," even though the utilization of the 

unit may well increase after the change, thereby giving rise to an 

increase in the annual emissions of certain pollutants, regardless 

of the units future utilization: 

1. Flue gas desulfurization technology; 

2. Low NOx burners or other NOx reduction 

technology determined by EPA or a state as 

Best Available Control Technology; 

3. Sorbent or S03 injection technology; 

4. Electrostatic precipitators or fabric filters; 

5. Use of an alternative fuel that will reduce 

one or more regulated pollutants, including 

physical or operational changes required to 

accommodate conversions to natural gas or cofiring natural gas and other fuels, or 

switches from higher sulfur to lower sulfur 

19Three years later, the Director of the Office of Air Quality 

Planning and Standards disagreed with Mr. Pedersen's legal analysis 

and re-interpreted the NSR rules as requiring legislative 

rulemaking to incorporate a pollution control exception. See 

Memorandum from Gerald A. Emison, Director OAQPS, to Regional 

Division Directors (July 7, 1986). This re-interpretation of the 

NSR rules led to the WEPCo "pollution control" determination 

discussed above. Supra note 15. EPA is today announcing that it 

is returning to its original interpretation of the NSR provisions. 

See note 16 supra. 
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content coals;20 and 

6. Clean coal technologies approved by the 

Department of Energy. 

EPA bases this presumption on its long-standing familiarity 

with these utility pollution control systems and the fact that 

changes to accommodate them will promote their more frequent usage. 

Since this approach will reduce emissions, it is therefore 

environmentally beneficial. EPA also believes that a rule 

establishing this presumption will avoid delay in utility decisions 

in implementing actions required to comply with the 1990 Amendments 

to the Act. 

B. Projection of Future Annual Emissions at Existing 

Electric Utility Generating Units 

By their express terms, both EPA's NSPS and NSR regulations 

require that, in order for there to be a "modification" (or, in the 

case of NSR, a "major modification"), the physical or operational 

change at issue must "result in" an increase in emissions. Compare 

40 C.F.R. § 60.14(a) with 40 C.F.R. § 52.21(b)(2)(i). Accordingly, 

if a projected emissions increase is not triggered by the physical 

or operational change (e.g.r are caused by economic, regulatory or 

market forces), new source review would not be triggered. Today's 

proposal adds regulatory language to the NSR rules addressing how 

this "casual link" requirement applies to electric utility 

20It should be noted that coal switching at existing units, 

that were capable of accommodating coal on January 5, 1975, would 

also fall within the exclusion in the NSR rules. See 40 C.F.R. § 

52.21(b)(2)(iii)(3)(l). 
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generating units. 

The proposed revision provides that, in the case of electric 

utility generating facilities, an increased utilization due to 

economic or environmental changes in the loading order of units or 

an increased utilization due to an increase in system-wide demand 

growth, is to be excluded from the amount of future utilization 

utilized by the Agency in projecting future annual emissions. 

As discussed below, EPA is proposing today to amend its NSR 

rules to allow a source owner the option of electing between a 

comparison of "past potential emissions and future potential 

emissions" or a comparison of "past representative actual annual 

emissions and future representative actual annual emissions." Until 

such a rule is adopted, however, the holdings of the First and 

Seventh Circuits in Puerto Rican Cement and WEPCo will continue to 

govern NSR applicability determinations. Thus, units that have not 

begun normal operations will continue to be subject to the "past 

actual-future potential" comparison of the current rules. 

For units that have begun normal operations, EPA's use of the 

"past actual-future potential" approach is inappropriate. Where 

like kind replacements (or other repairs) do not alter the original 

design capacity of an existing unit, EPA, pending final adoption of 

the revisions discussed below, will use the past actual-future 

actual comparison contemplated by current rules and the WEPCo 

decision. 

C. Implementation of CMA Settlement 

In today's action, EPA also proposes to modify its NSR rules 
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to implement the settlement agreement reached in 1982 in Chemical 

Manufacturers Association v. EPAr No. 79-1113 (D.C. Cir. 1982). 

Under this proposal, a source owner would be allowed the option of 

electing between either a comparison of "past potential emissions 

and future potential emissions" or a comparison of "past 

representative actual annual emissions and future representative 

actual annual emissions." 

EPA believes that the proposed change, which provides in all 

cases for an appropriate mode of comparison of pre- and post-change 

emissions, is consistent with the Act, which does not mandate the 

use of any particular test for determining annual emission 

increases. The "potential-to-potential" approach will assure that, 

where hourly emission rates will not increase and therefore 

projected maximum potential annual emissions will not increase, NSR 

review will not be triggered. This approach is consistent with 

EPA's existing NSPS rules, which contemplate that a modification 

will not occur where there is no increase in hourly emission 

rates.21 The alternative "actual-to-actual" test is consistent 

with the intent of the Act's NSR provisions that, where there is no 

actual increase in annual emissions, no major modification is 

involved. 

D. Establishing Baseline for NSPS Calculations 

Today, EPA proposes to modify its NSPS rules to establish, as 

21As discussed earlier, the statutory provisions governing NSR 

review contemplate that the NSR modification rules be consistent 

with the NSPS definition. 
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the baseline for NSPS, the maximum hourly emission rate achievable 

during the past five years of operation of an affected facility. 

In the WEPCo case, EPA compared the Port Washington unit's 

hourly emissions at its maximum capacity immediately before the 

proposed change (i.e.f the unit's maximum capacity in its current 

deteriorated condition) with the unit's emissions at maximum 

capacity after the change. Since the WEPCo units had been 

operating under constrained conditions for several years, EPA 

rejected WEPCo's assertion that the Agency should have used the 

original design capacities of the units in setting the pre-change 

baseline. 

Today's proposed rule would reaffirm EPA's position in WEPCo 

that EPA is not required to use a unit's original design capacity 

in determining emission increases. At the same time, EPA 

recognizes that the use of nonrepresentative emissions (e.g. r rates 

reflecting recently deteriorated equipment or rates resulting from 

the use of temporary pollution control projects) is not an 

appropriate method of establishing the pre-change baseline. 

Accordingly, as was proposed by the Administration in draft 

legislation during deliberations over the Clean Air Act Amendments 

of 1990, EPA is proposing today that the maximum hourly rate 

achievable by the unit over its previous five years of operations 

be used in determining the NSPS baseline. 

Today's proposal is consistent with the approach EPA has taken 

with respect to the removal of temporary controls at the conclusion 
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of clean coal technology (CCT) demonstration projects. In a letter 

dated January 30, 1990, from David Roe, EPA Director, Air and 

Pollution Division, to Timothy J. Method, Assistant Commissioner, 

Office of Air Management, Indiana Department of Environmental 

Management (IDEM), EPA noted its agreement with IDEM's 

determination that NSPS standards were not intended to apply to 

Northern Indiana Public Service Company's CCT project at its Bailly 

power plant. Specifically, EPA confirmed that the Bailly plant 

"would not be subject to NSPS at the conclusion of the project . . 

. as the result of an increase in emissions rates back up to the 

levels which existed before the changes were made to accommodate 

the temporary demonstration project." EPA recognized that the 

"removal of temporary controls will not result in a level of 

emissions higher than that experienced in the past." Accordingly, 

notwithstanding the NSPS baseline discussion in the WEPCo case, 

subsequent EPA determinations confirm that representative past 

performance is an essential consideration in properly determining 

the pre-change NSPS baseline. 

Pending adoption of today's proposal, EPA will use the maximum 

hourly emission rate demonstrated immediately prior to the change, 

or, where operations immediately before the change do not reflect 

past representative operations, the maximum emission rate 

achievable during some prior period of operation. Consistent with 

this proposal, any period greater than five years will be presumed 

to be unrepresentative. 
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E . Addltrional Rulemakings 

EPA will be providing, through a separate rulemaking, guidance 

on the meaning of "routine" maintenance, repair, and replacement 

activities at existing electric utility generating units, as those 

activities are exempted from EPA's regulatory definition of 

"modification." 40 C.F.R. §§ 52.21(b)(2); 60.14(e). Such guidance 

will follow the principle that "routine" maintenance, repair, and 

replacement includes those activities that, in standard industry 

practice, are to be expected throughout the useful life of an 

emissions units. For electric utility units, such activities would 

include repairs and replacements typically required at a unit that 

will operate 55 to 65 years, the useful life for utility units that 

was assumed by EPA in all its analyses of the Clean Air Act 

legislative proposals. 

Finally, in response to continuing concern over so-called 

"life extension" projects within the utility industry, EPA will 

also be evaluating the amount of repair and replacement activity 

undertaken at older utility units. EPA solicits comments on 

whether changes in its NSPS and NSR rules are required to prevent 

utilities from perpetuating the life of their units indefinitely, 

thereby avoiding the pollution control requirements that apply to 

new sources.