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# OAR Box 1778 Prepped by Ollie Stewart



### Document

Number: 

# 228 ) 11-1- 8 Docket Number: 

# A-90-0 6

Printed 10/28/20089:51:02 AM Sheet 228of 276A.. . f P. 2

INTH E UNITE D STATE S COUR T O F APPEAL S FO R TH E SEVENT H CIRCUI T

Nos . 88-3264 , 89-133 9 

# fo l l a II-I- 8

WISCONSI NELECTRI C POWE R COMPANY ,

Petitioner , 

### v . WILLIA M K . REILLY , Administrator , Unite d State s Environmenta l Protectio n Agency , e t al. .

Respondents .

O NPETITION S T O REVIE W FINAL ACTIO NO F TH E UNITE D STATE S ENVIRONMENTAL PROTECTIO NAGENC Y

BRIE F O F AMIC I CURIA E ALABAM APOWE R COMPANY , E T AL. , TH E ALUMINUM ASSOCIATION , INC. , AMERICA NIRO NAND STEE L INSTITUTE , AMERICA NPETROLEUM INSTITUTE , NATIONA L COA L ASSOCIATION , BECHTE L POWE R CORPORATION , GENERA L ELECTRI C COMPANY , an d WESTINGHOUS E ELECTRI C CORPORATIO N

May22 , 198 9P. 3

TABL E O F CONTENT S Pag e TABL E O F AUTHORITIE S i INTERES T O F AMIC I 1 INTRODUCTION1 STATEMENT O F TH E CAS E 3
I . Th e Historica l Approac h t o Clea n Ai r Ac t Regulatio n 3 A . Reconstructio n 4 B . Modificatio n 6 1 . NSP S 6 2 . PS D 7 II . Th e Por t Washingto n Decisio n 8 ARGUMENT 1 0
I . Th e Por t Washingto n Decisio n Change s th e Scop e o f EPA' s NSP S an d PS D Program s Withou t Notic e o r Opportunit yfo r Commen t 1 1 II . Th e Expande d Scop e o f EPA' s Ne wSourc e Program s a s Reflecte d in the Por t Washingto n Decisio n Wil l Hav e a Substantial , Advers e Impac t o n Thi s Nation' s Basi c Industryan

d o n th e Publi c 1 5 CONCLUSION2 0P. 4

V * TABL E O F AUTHORITIE S

CASES : pag e St . Jame s Hospita l v . Heckler , 76 0 F.2 d 146 0 (7th Cir . 1985 ) 1 5 STATUTES : Clea n Ai r Act , 4 2 U.S.C . S S 7401 , e t seg . (1982 ) S 110 , 4 2 U.S.C . S 741 0 3 S 111(a)(1) , 4 2 U.S.C . S 7411(a)(1 ) 1 8 S 111(a)(4) , 4 2 U.S.C . S 7411(a)(4 ) 6 S 111(b)(1) , 4 2 U.S.C . S 7411(b)(1 ) 4 S 111(b)(6) , 4 2 U.S.C . S 7411(b)(6 ) 3 , 4 S 161 , 4 2 U.S.C . S 747 1 4 S 165(c) , 4 2 U.S.C . § 7475(c ) 1 6 S 168(b) , 4 2 U.S.C . S 7478(b ) 3 , 4 LEGISLATIVE HISTORY : H.R . Rep . No . 294 , 95t h Cong. , 1s t Sess . (1977) , reprinte d i n 197 7 U.S . Cod e Cong . & Admin . New s 126 4 4 REGULATIONS : 4 0 C.F.R . S 52.2 1 (1988 ) 3 4 0 C.F.R . S 52.21(b)(2 ) (1988 ) 7 4 0 C.F.R . S 52.21(b)(2)(iii)(f ) (1988 ) 1 1 4 0 C.F.R . S 52.21(i)-(o ) (1988 ) 1 6 4 0 C.F.R . S 52.21(r ) (1988 ) 1 6

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### V vr Pag e

4 0 C.F.R . S 60.14(e)(1 ) (1988 ) 7 , 1 1 4 0 C.F.R . S 60.14(e)(2 ) (1988 ) 1 1 4 0 C.F.R . S 60.1 5 (1988 ) 7 4 0 C.F.R . S 60.15(f ) (1988 ) 5 4C-C.F.R . S 60.15(f)(2 ) (1988 ) 5 4 0 C.F.R . Par t 6 0 (1988 ) 3 4 0 C.F.R . S 124. 3 (1988 ) 1 6
FEDERAL REGISTER : 3 9 Fed . Reg . 3694 8 (1974 ) 4 , 1 1 4 0 Fed . Reg . 5841 6 (1975) ' 4 4 0 Fed . Reg . 5841 7 (1975 ) 5 4 0 Fed . Reg . 5841 8 (1975 ) 5 4 4 Fed . Reg . 3359 1 (1979 ) 1 6 4 4 Fed . Reg . 5195 3 (1979 ) 6 4 5 Fed . Reg . 5267 6 (1980 ) 7 4 5 Fed . Reg . 5270 3 (1980 ) 6 4 5 Fed . Reg . 5270 4 (1980 ) 7

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INTERES T O F AMIC I Thi s brie f amic i curia e i s file d o n behal f o f Alabama Powe r Company , et , a_l . (6 3 individua l utilit ycompanies , the Ediso n Electri c Institute , th e Nationa l Rura l Electri c Cooperativ e Association , an d th e America n Publi c Powe r Association) ; the Aluminu mAssociation , Inc. ; th e America n Iron an d Stee l Institute ; th e America n Petroleu m Institute ; the Nationa l Coa l Association ; Bechte l Powe r Corporation ; the Genera l Electri c Company ; an d Westinghous e Electri c Corporation . Thes e organization s an

d companie s an

d thei r interest s i n thi s proceedin g ar e describe d in th e Motio n fo r Leav e T o Fil e a Brie f Amic i Curiae . INTRODUCTION

A n industria l facilit yi s designe d wit h a give n productio n capacit yt o mee t expecte d demand . Th e facilit yi s expecte d t o operat e a s designe d fo r a s long a s i t function s i n a n economi c fashion .

Th e lif e o f an

yindustria l facilit yi s characterize d b ya continuou s proces s o f equipmen t deterioration , in way s tha t ar e in som e case s anticipate d an d i n other s unanticipated . Whe n equipmen t breaks , i t i s repaire d o r replace d t o allo wcontinue d norma l operatio n o f th e facility . Th e economi c lif e o f a facilit yma yultimatel yb e limite d b yth e physica l lif e o f th e material s use d in buildin g th e facilit yo r b yadvance s in technologytha t rende r it s equipmen t obsolete . Absen t suc h developments , repai r o r replacemen t o f deteriorate d equipmen t t o maintai n o r t o restor e origina l desig n capacit yi s a fac t o fP. 7

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- industria l life , and'i s essentia l t o preservin g thi s country' s economi c positio n in competitiv e worl d markets .

Th e schedul e followe d a t industria l facilitie s t o repai r o r t o replac e deteriorate d equipmen t varie s widel yan d depend s o n manyfactors . Repair s neede d t o maintai n th e productiv e capacit y o f a facilit ymayb e mad e immediatel yo r deferre d depending on , inte r alia . (1 ) produc t demand (e.g. , i f the facilit yi s critica l t o mee t deman d in th e nea r term , i t ma yb e necessaryt o continu e t o operat e i t wit h deteriorate d equipmen t a t a lowe r capacity) , (2 ) financia l an

d economi c consideration s (e.g. , the availabilit y o f credi t no wversu s i n th e future) , an d (3 ) th e company' s overal l maintenanc e schedul e (e.g. , whe n th e nex t "outage " o f the facilit yi s scheduled) .

A s discusse d below , wit h the sol e exceptio n o f the Environmenta l Protectio n Agency' s ("EPA " o r "Agency" ) rul e o n "reconstruction " o f existin g facilitie s ( a rul e tha t i s no t a t issu e here) , EPAha s neve r befor e regulate d th e lif e o f existin g facilitie s o r th e schedul e fo r equipmen t repai r an d replacemen t a t thos e facilities . I n it s decisio n o n th e Por t Washingto n projec t o f th e Wisconsi n Electri c Powe r Company("WEPCo") , however , EP Aseek s t o regulat e repai r an d replacemen t project s designe d t o restor e los t capacit yan d t o maintai n efficien t an d reliabl e facilit yoperation . EPA' s decisio n represent s a fundamenta l chang e i n th e environmenta l regulatio n o f existin gP. 8



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sources , a chang e tha t i s contrar yt o th e Clea n Ai r Ac t ("CAA " o r "Act"),

- it s implementin g regulations , an d prio r Agenc y decisions . STATEMEN T O F TH E CAS E I . Th e Historica l Approac ht o Clea n Ai r Ac t Regulatio n Unde r S 11 0 o f th e Act , ne wand existin g source s ar e subjec t t o control s necessar yt o ensure , a t a minimum , attainmen t and maintenanc e o f th e "nationa l ambien t ai r qualit ystandards " (NAAQS) . I n addition , ne wsources , and existin g source s tha t hav e bee n "modified " t o a n exten t tha t the yar e considere d ne w sources , ar e subjec t t o stringen t technology-base d ai r qualit y 2 / control s unde r "new.sourc e performanc e standards " ("NSPS")

- an d 3 / th e "preventio n o f significan t deterioration " ("PSD" ) program. - 1/ 4 2 U.S.C . S 7401 , e t seg . (1982) . Fo r convenience , al l citation s t o th e Ac t wil l b e t o section s o f th e Act . Paralle l citation s t o th e U.S . Cod e ar e provide d i n th e Tabl e o f Authorities . 2/ Fo r purpose s o f th e NSP S program , "ne wsources " ar e thos e source s o r "modifications " o f existin g source s o n whic h constructio n bega n afte r th e dat e o f proposa l o f NSP S fo r th e sourc e category . Se e CAAS 111(b)(6) . Durin g th e 1970 s and 1980s , SP Aestablishe d NSP S fo r man yindustria l sourc e categories , includin g electri c utilities , industria l boilers , petroleu mrefineries , petroleu mstorag e vessels , variou s categorie s o f chemica l plants , smelters , steelmakin g facilities , coa l preparatio n plants , automobil e surfac e coatin g operations , and others . Se e 4 0 C.F.R . Par t 6 0 (1988) . 3 / Th e PS D progra m applie s t o newl yconstructe d majo r source s o r "majo r modifications " o f existin g source s o n whic h constructio n commence d afte r Januar y1 , 1975 . Se e CA AS 168(b) . Th e PS D progra mrequire s case-by-cas e permittin g o f ne wsource s and "majo r modifications " o f existin g sources , includin g installatio n o f stringen t "bes t availabl e contro l technology " (BACT ) standard s an d demonstratio n o f complianc e wit hstringen t ambien t ai r qualit y"increments. " Se e generall y4 0 C.F.R . S 52.2 1 (1988) .P. 9



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- Th e Ac t provide s tha t NSP S an d PS D requirement s appl y prospectively , t o source s o n whic h constructio n commence s afte r 4 / thos e requirement s becom e effective.

- Th e Ac t require s EPAt o implemen t through rulemakin g thi s congressiona l distinctio n betwee n ne w(o r "modified" ) an d existing sources. - A . Reconstructio n Wit h respec t t o th e NSP S program , EPAi n 197 4 propose d rule s t o addres s it s concer n tha t companie s migh t avoi d applicatio n o f NSP S b y"perpetuati[ng ] . . . [the lif e o f an existing ] facilit y[e.g. , b yreconstructin g tha t facility] , instead o f replacing i t a t th e en d o f it s usefu l lif e wit ha newl yconstructe d affecte d facility."

- EPApromulgate d thi s 7 / NSP S "reconstruction " rul e in 1975.

- I n doin g so , EPA

4 / CA

AS S 111(b)(6) , 168(b) . I n addressin g th e NSP S program , fo r example , Congres s emphasize d tha t "[b]uildin g contro l technologyint o ne wplant s a t [the ] time o f constructio n wil l plainl yb e les s costl yth[a] n requirin g retrofit " o f existing facilitie s wit h thes e controls . H.R . Rep . No . 294 , 95t h Cong. , 1s t Sess . 18 5 (1977) , reprinte d i n 197 7 U.S . Cod e Cong . S. Admin . New s 1264 . 15/ CA

AS 111(b)(1 ) (requirin g tha t th e EPAAdministrato r implemen t NSP S b

yregulation) ; id . S 16 1 (requirin g tha t th e Administrato r implemen t th e PS D program b yregulation) . 6 / 3 9 Fed . Reg . 3694 8 (1974) . In proposin g thi s rule , EPA note d tha t i t wa s concerne d wit h effort s "t o reconstruc t [a n ol d existin g facility ] b yusin g a mino r par t o f i t an d replacing the remainin g portion. " Id . Sinc e thi s wa s no t "generall yth e practic e o f th e industrie s currentl ycovere d b ystandard s o f performance, " EPAindicate d tha t i t expecte d thi s provisio n t o "hav e little , i f an yimpac t o n industrie s . . . covered. " Id . EPAindicate d tha t an yadditiona l "replacement s whic h wil l b e considere d reconstructio n wil l b e identifie d in th e subparts " fo r individua l industries , a s ne wNSP S ar e promulgate d an d ol d NSP S revised . Id . 7 / 4 0 Fed . Reg . 5841 6 (1975) .P.1 0

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- "recogniz[ed ] tha t replacemen t o f manyo f th e component s o f a facilit ycan b e substantiall yequivalen t t o totall yreplacing i t a t th e en

d o f it s usefu l lif e wit h a newl yconstructe d . . . facility." ^

I n th e reconstructio n rule , EPAspecifie d "criteri a whic h tii e Administrato r [would ] . . . us e in makin g hi s determination " a s t o whethe r a n existin g facilit yha d bee n "reconstructed."- ' Thes e criteri a include : (1 ) whethe r th e component s replace d woul d cos t mor e tha n 5 0 percen t o f th e valu e o f a comparabl e ne w facility , (2 ) whethe r th e remainin g usefu l lif e o f the facilit y afte r th e replacement s woul d approac h tha t o f a comparabl e ne w facility,

—(3 ) the effec t o f th e replacement s o n emissions , an d (4 ) whethe r i t woul d b e economicall yan d technologicall yfeasibl e fo r th e facilit yt o mee t NSP S afte r th e replacements. —

A s a result , unde r the reconstructio n rule , a substantiall yrebuil t existin g facilit ycoul d b e considere d a ne w facilit ysubjec t t o NSPS . EPAmad e clear , however , tha t eve n i f a facilit yha d replace d it s majo r components , NSP S woul d no t appl yi f i t wa s no t feasibl e t o mee t NSPS , o r i f th e additiona l

8 / ld^a t 58417 . 9 / Id ^ a t 58418 . 10 / EPAobserve d tha t "i f th e estimate d lif e o f the facilit y afte r th e replacement[ ] i s significantl yles s tha n th e estimate d lif e o f a ne wfacility , the replacemen t mayno t b e considere d reconstruction. " Id^; se e 4 0 C.F.R . S 60.15(f)(2 ) (1988) . n / 4 0 Fed . Reg . a t 58418 ; 4 0 C.F.R . S 60.15(f ) (1988) .P.1 1



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- facilit ylif e obtaine d a s a resul t o f th e projec t wa s significantl yles s tha n tha t o f a comparabl e ne wfacility .

Whe n EP Alate r undertoo k rulemakin g t o implemen t th e PS D program , i t propose d t o appl ythi s reconstructio n rul e t o tha t

12 / program. —Man yo f th e amic i objecte d t o thi s proposa l i n thei r rulemakin g comments . EP Aagreed , an d include d n o reconstructio n 13 / rul e in th e fina l PS D regulations. —

B . Modificatio n 1 . NSP S Congres s specifie d i n S 11 1 o f th e Ac t tha t a sourc e tha t wa s "modified " woul d becom e a ne wsourc e subjec t t o NSP S an d PS D requirements . Fo r NSPS , Congres s define d "modification " i n th e 197 0 Ac t a s "anyphysica l chanq e in , o r chang e i n th e metho d o f operatio n of , a stationar ysourc e whic hincrease s th e amoun t o f anyai r pollutan t emitte d b ysuc hsourc e o r whic hresult s in th e 14 / emissio n o f an yai r pollutan t no t previousl yemitted." —

I n th e 1974-7 5 rulemakin g t o implemen t th e S 11 1 NSP S modificatio n provision , EP Aindicate d tha t activit ytha t di d no t significantl ychang e th e design o r physica l characteristic s o f a sourc e woul d no t b e a "modification " o f a n existin g source . EP A provided , fo r example , tha t "routine " repair , replacement , and maintenanc e woul d no t trigge r NSP S applicability , "subjec t t o th e \2/ 4 4 Fed . Reg . 5195 3 (1979) . L3 / 4 5 Fed . Reg . 527.0 3 (1980) . U / CA

AS 111(a)(4 ) (emphasi s added) .P.1 2

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- 15 / provisions " o f th e reconstructio n rule.— ' A s EPAdescribe d the rule' s effec t i n a subsequen t NSP S rulemaking ,

[replacemen t o f [a ] . . . syste mwit h a simila r syste mo r replacemen t o f componen t part s . . . wit h simila r part s woul d no t b e considere d a modification . However , replacemen t o r redesign o f [a ] . . . system , whic h woul d substantiall ychang e th e physica l characteristic s o f th e [system ] . . . mayb e a chang e wher e modificatio n regulation s apply . . . . Majo r redesig n . . . woul d caus e a sourc e t o b e evaluate d t o determin e i f modificatio n regulation s shoul d apply.il / 2 . PS D In 1980 , EPAadopted , a s require d b yS 169(2)(c ) o f the Act , thi s sam e basi c definitio n o f modificatio n fo r purpose s o f the ?S D program.—Th e Agenc yprovide d tha t "routine " repai r o r replacemen t woul d no t constitut e a chang e tha t woul d resul t i n a modification . Moreover , i t specifie d tha t an increas e in productio n rat e o r hour s o f operation , wher e no t limite d b ya 18 / permi t condition , woul d no t trigge r PS D review. —

15 / 4 0 C.F.R . S 60.14(e)(1 ) (1988) . I f "routine " replacemen t resulte d i n expenditure s o f mor e than 5 0 percen t o f the cos t o f a comparabl e ne wfacility , however , th e existin g facilit ymigh t nonetheles s b e considere d a "new " facilit yunde r the reconstructio n rule . Ld . S 60.15 . 16 / EPA , Electri c Utilit yStea mGeneratin g Unit s Background Informatio n fo r Propose d Particulat e Matte r Standard s a t 5- 4 t o 5- 5 (Jul y1978 ) (emphasi s added ) (Recor d 3.19) . 17 / 4 5 Fed . Reg . 5267 6 (1980) ; 4 0 C.F.R . S 52.21(b)(2 ) (1988) . Th e fe wdifference s betwee n th e NSP S an d PS D modificatio n rule s ar e discusse d in th e Brie f o f Petitioner . L8 / Se e 4 5 Fed . Reg . 5270 4 (1980 ) ("Congres s coul d no t hav e intende d a compan

yt o hav e t o ge t a [PSD ] . . . permi t befor e i t (Footnot e con't. )P.1 3

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- II . Th e Por t Washingto n Decisio n

I n the cas e o f Por t Washington , EPAfoun d tha t "age
relate d degradatio n o f the physica l plant " led t o deterioratio n 19 / in th e performanc e o f th e facility.

—O n thi s basis , according t o EPA , the compan

yestablishe d a program t o undertak e "renovatio n wor k . . . [to ] restor e th e physica l an d operationa l capabilit yo f eac h uni t t o it s origina l . . . nameplat e

20 / capacity. "— '

Th e Por t Washingto n projec t doe s no t involv e substantia l redesig n o f th e facilit yresulting in ne wemission s o r a ne w sourc e o f pollution . Rather , i t merel yinvolve s like-kind replacemen t o f deteriorate d equipmen t t o allo wthe facilit yt o operat e a s i t ha d in th e past , wit h emission s n o greate r than

21 / pas t levels.—

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EPArecognize d tha t the propose d like-kind replacemen t 22 / woul d fal l far shor t o f sourc e "reconstruction."

— I t nevertheles s conclude d tha t the like-kind replacemen t woul d mak e (Footnot e cont'd , frompreviou s page. ) coul d lawfull ychang e hour s o r rat e o f operation . Plainly , suc h a requiremen t woul d severel yan d undul yhampe r th e abilit yo f an y compan yt o tak e advantag e o f favorabl e marke t conditions.") . 19 / Memorandu

mfromActin g Assistan t Administrato r Cla yt o Ke e (Cla

yMemorandum ) a t 2 (Septembe r 9 , 1988) . 20/ ld±

a t 3 . 21 / Th e projec t i s discusse d in th e Brie f o f Petitioner . 22 / ClayMemoranduma t 11-1 2 (Septembe r 9 , 1988) .P.1 4

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- thi s existing source' a ne wsourc e unde r the "modification " rules , triggerin g NSP S an

d PS D review . Accordin g t o EPA , Congres s intende d tha t th e NSP S an d PS D program s woul d appl yt o existin g facilitie s a t th e time o f "long

ter mdecision s regarding th e creatio n o r renewa l o f majo r

23 / stationar ysources."— ' EPAconclude d tha t NSP S an d PS D woul d appl yt o thi s projec t eve n thoug h the projec t i s no t a "reconstruction, " becaus e th e projec t woul d "no t simpl ymaintai n th e facilitie s in thei r curren t [deteriorated ] state , bu t rathe r [would ] . . . significantl yenhanc e thei r presen t efficienc yan d capacit y[i.e. , u

p t o origina l desig n capacity] , an d 24 / substantiall yexten d thei r usefu l economi c life."

—Moreover , EPAemphasize d tha t PS D requirement s woul d appl yeve n wher e th e projec t merel yimprove d th e availabilit yan d reliabilit yo f th e

25 / facility , an

d wa s no t neede d t o restor e los t capacity. —

23 / Id . a t 12 . EPAcite d nothin g t o suppor t thi s statement . 24 / Lette r fro mAdministrato r Thoma s t o Joh n Boston , WEPC o (Thoma s Letter ) a t 3 (Octobe r 14 , 1988 ) (emphasi s added) . WEPC o ha d estimate d that , wit h th e repair s in question , the Por t Washingto n unit s coul d continu e t o operat e u p t o 1 1 t o 1 7 year s beyond an earlier , nonbindin g projecte d retiremen t dat e containe d in a filing wit h the stat e publi c utilit ycommission . Se e Cla y Memoranduma t 4 (Septembe r 9 , 1988) . B ycontrast , a newfossi l fue l fire d electri c utilit ystatio n woul d hav e a usefu l lif e o f 4 0 year s o r more . EPRI , "Longe r Lif e fo r Fossi l Fue l Plants " a t 1 (Recor d 3.10 ) ("Give n carefu l operatio n an d maintenance , a plan t ca n continu e t o generat e powe r safel yan d reliabl yfo r 5 0 t o 6 0 years , o r longer.") . 25 / EP Afoun

d tha t tw o o f th e unit s a t th e Por t Washingto n statio n coul d b e "operate d a t thei r origina l desig n capacit yo n a sustaine d basis. " Se e Lette r fromClayt o Bosto n (Cla yLetter ) (Footnot e con't. )P.1 5

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- A s a result,"thi s decisio n raise s substantia l question s a s t o whethe r repai r o r replacemen t activit yca n b e undertake n wit h respec t t o deteriorate d equipmen t tha t affect s an existin g facility' s efficiency , availability , and reliability , o r tha t restore s it s operatin g capacity , withou t triggerin g ne wsourc e requirements . ARGUMENT

Amic i hav e operate d olde r existing facilitie s sinc e Congres s passe d th e Act . Amic i hav e continuousl yconducte d repai r an

d replacemen t activitie s a s neede d t o enabl e thes e olde r facilities , a s wel l a s newe r facilities , t o continu e norma l operation s i n accordanc e wit h thei r desig n capacit yan d acceptabl e level s o f availability . Thes e activitie s hav e neve r triggere d NSP S o r PS D review .

Amic i hav e als o participate d in manyEPArulemaking s concernin g NSP S an d PSD . Neve r ha s EPAsuggeste d tha t th e "modification " rule s (a s oppose d t o the NSP S "reconstruction " rule ) cove r repai r an d replacemen t activit yundertake n t o maintai n o r restor e norma l sourc e operations , change s tha t i n al l case s exten d th e usefu l lif e o f a source . (Footnot e cont'd , fro mpreviou s page. ) a t 8 (February15 , 1989) . Wit h respec t t o thes e units , the propose d replacemen t projec t wa s no t neede d t o restor e los t capacity . EP Anevertheles s foun d tha t th e propose d projec t woul d trigge r PS D revie wbase d o n an assume d increas e i n productio n rat e an d hour s o f operatio n (i.e. , in th e effienc yan d availabilit yo f th e plant ) afte r completio n o f th e replacemen t project . Cla yLette r a t 9 (February15 , 1989) .P.1 6

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- Th e Por t Washingto n decisio n i s a shar p reversa l o f the standard s tha t hav e alway s governe d th e scop e o f EPA' s existin g an d newsourc e contro l programs . Moreover , th e Agenc yha s faile d t o addres s the uncertaint ytha t ma yb e create d b ythi s decisio n an d the cost s tha t ma yb e impose d b ythi s uncertainty . I . TH E POR T WASHINGTONDECISIONCHANGE S

TH E SCOP E O F EPA' S NSP S AND PS D PROGRAM S WITHOU T NOTIC E OR OPPORTUNIT Y FOR COMMENT . EPAadopte d th e "reconstruction " rul e fo r th e NSP S program"t o discourag e the perpetuati[on ] o f a facility , instead o f replacing i t a t th e en d o f it s usefu l lif e wit h a newl y 26 / constructe d affecte d facility."

—B ycontrast , EPAwrot e th e NSP S an d PS D "modification " rule s in a waytha t make s the m 27 / inapplicabl e t o routin e repai r o r replacement.

—EP Aals o provide d tha t an increas e i n hour s o f operatio n o r productio n 28 / rat e woul d no t generall ytrigge r NSP S o r PS D review.—A s EPA explained , onl y"[m]ajo r redesign, " no t "[r]eplacemen t . . . wit h 29 / a simila r system, " migh t trigge r th e modificatio n rule. —

2£ / 3 9 Fed . Reg . 3694 8 (1974) ; s^ e supr a pp . 4-5 . 27 / 4 0 C.F.R . S 60.14(e)(1 ) (1988) . I n th e NSP S context , routin e repai r o r replacemen t wa s specificall ymad e subjec t t o th e 5 0 percen t cos t criterio n o f th e reconstructio n rule . Se e supr a not e 15 . 28 / Onl ywher e th e productio n capacit ypreviousl yachieve d b y a facilit ywoul d b e increase d throug h a "capita l expenditure " (fo r NSP S purposes ) o r wher e a permi t conditio n limite d hour s o f operatio n o r productio n rat e (fo r PS D purposes ) migh t ne wsourc e control s apply . Se e 4 0 C.F.R . S S 60.14(e)(2 ) (NSPS) ; 52.21(b)(2)(iii)(f ) (PSD ) (1988) . 29 / Se e supr a not e 16 .P.1 7

-12

- Th e intended"scop e o f th e "modification " rule s therefor e i s limite d t o majo r alteration s i n facilit ysiz e o r design tha t increas e th e origina l desig n capacit yo f th e facilit yt o emi t pollution . Change s tha t enhanc e the facility' s reliabilit yo r efficiency , and tha t allo wincrease s in hour s o f operatio n o r productio n rat e u

p t o origina l desig n capacity , hav e no t bee n considere d modifications. —

Thes e principle s ar e reflecte d i n pas t EP Adecision s a s t o the applicabilit yo f the NSP S an d PS D rules . A s discusse d in the 3rie f o f Petitioner , EP Aha s no t foun

d a "modification " wher e a facilit ytha t had lon g bee n close d underwen t repai r an d replacemen t t o retur n t o it s forme r operatin g condition , o r wher e repai r an

d replacemen t wer e neede d t o allo wa facilit yt o continu e norma l operations.

—Wher e a facilit yundertoo k a
30/ Se e supr a note s 1 8 S < 28 . 31 / Se e e.g. , Memorandu mfromMichae l A . James , Attorney , Ai r Qualit yan

d Radiatio n Division , U.S . EPA , t o Jac k R . Farmer , Chief , Standard s Developmen t Branch , U.S . EPA(February14 , 1973 ) (Record 2.1 ) (step s necessar yt o retur n a sourc e t o it s forme r operating conditio n no t a modification) ; Memorandum fro m Director , Divisio n o f Stationar ySourc e Enforcement , U.S . EPA , t o Sandr a S . Gardebring , Director , Enforcemen t Division , U.S . EPA Regio n V

(Octobe r 3 , 1980 ) (Recor d 2.11 ) ( a facilit ywa s permanentl yshu t down an d remove d fro

mth e state' s emissio n inventory , ye t EP Afound tha t restartin g th e facilit yafte r four year s woul d no t trigge r NSPS , sinc e th e facilit ywa s a n "existing " source) ; Memorandu mfromEdwar d Reich , Director , Divisio n o f Stationar ySourc e Enforcement , U.S . EPA , t o William N . Sawyer , Attorney , Genera l Enforcemen t Branch , EP ARegio n I I (Septembe r 16 , 1980 ) (Recor d 2.10 ) ("Resumption o f operation s wil l no t increas e emission s ove r th e source' s previou s operatin g emissions") ; Lette r fromKennet h Eng , Chief , Ai r Complianc e Branch , U.S . EP ARegio n II , t o Dal e E . Choate , Mobi l Oi l Corp . (Septembe r 7 , 1988 ) (Recor d 2.21 ) (replacemen t o f deteriorate d equipmen t no t a modification) .P.1 8

-13

- substantia l replacemen t projec t tha t woul d enabl e "2 0 additiona l year s o f operation, " EP Adi d no t eve n addres s the NSP S an d PS D modificatio n rules , bu t analyze d th e projec t solel yunde r the 32 / "reconstruction " rule , and foun d n o reconstruc t ion.— ' Sinc e EPA ha s previousl yanalyze d suc h projects , i f a t all , unde r th e NSP S reconstructio n rule , i t i s no t surprisin g in thi s cas e tha t "EP A coul d fin

d n o example s i n whic h th e Agenc yha d analyze d an d issue d a

n applicabilit ydeterminatio n [unde r th e modificatio n rules ] fo r a 'lif e extensio n project 1 fo r an ycategor yo f majo r source. n —

In contras t t o it s pas t applicabilit ydeterminations , EP A in th e Por t Washingto n decisio n ha s define d a "physica l change " triggerin g NSP S an d PS D revie wbroadly , t o includ e "virtuall yan y
• . 34 / significan t alteratio n t o an existin g plant."

—Moreover , EPA ha s foun

d tha t an "emission s increase " wil l occu r virtuall yan y time repai r o r replacemen t wor k i s don e t o enabl e a facilit yt o continu e t o operat e u p t o it s origina l desig n capacity , o r simpl y 35 / t o operat e mor e efficientl yan d reliably.

—EPAals o ha s 32 / Se e MemorandumfromDirector , Divisio n o f Stationar y Sourc e Enforcement , U.S . EPA , t o Ear l J . Stephenson , Director , Enforcemen t Division , U.S . EPARegio n VI I (Decembe r 8 , 1977 ) (Recor d 2.5) . 33 / Thoma s Lette r a t 4 (Octobe r 14 , 1988 ) (emphasi s added) . 24 / ClayMemoranduma t 3 (Septembe r 9 , 1988) . 35 / Unde r th e NSP S program , EP Areache d thi s resul t b y requiring tha t an "emission s increase " b e calculate d base d o n a compariso n o f operation s wit h deteriorate d equipmen t and (Footnot e con't. )r/ - . * P.1 9 

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. ___ . __ . . _»___*

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y M . Pric a Assistan t Administrato r for Enforcemen t an dComplianc e Monitorin g TO : Assistan t Administrator s ,

Regiona l Administrator s Genera l Counse l inspecto r Genera l Thi s memorandu

m reaffirms EP

A policy agains t givin

g definitive assurance s (writte nor oral ) outside th e context o f a forma l enforcemen t proceedin g tha t EP

A wil l no t proeee

dwit n anenforcemen t respons e fo r a specifi c individua l violatio no f anenvironmenta l protectionstatute * regulation , or othe r lega l requirement . "N o action " promise s ma y erode th

e credibility

o f EPA' s enforcemen t progra m b y creatin

g rea l o r perceivedInequitie s i nth e Agency' s treatmen t o f th e regulatedcommunity * Thi s credibilit y

i s vita l a s a continuing incentiv e for regulated partie s t o compl y

wit henvironmenta l protectionrequirements . I naddition , an

y commitmen t no t t o enforc e a lega l requiremen t agains t a particula r regulatedparty ma y severel y hampe r late r enforcemen t effort s agains t tha t party , wh o may clai m good-fait hrelianc e ontha t assurance , o r agains t othe r partie s wh o clai m

t o be similarl y

situated . Thi s polic y

against ' definitive n o aotlonpromise s t o partie s outsid e th e .Agenc y applie s i nal l contexts , includin g assurance s requested : * bot hprio r to an dafte r a violationhaa bee ncommitted j

* o nth

e basi s tha t a Stat s o r loca l governmen t i s responding t o th

e violation ;1

1 P.2 0

- 2 - 

### EP A believe s a"n

o action " assuranc e i s appropriat e i nthi s cas e becaus e th e projec twoul d appea rt o b e "clearl y necessar y t o carv e th e publi cinterest " an d i ti s expecte d t o provid e "importan tinformatio nfo rresearc h purposes " an d ther e i s a nee d "whic

h n o othe rmechanism ca naddres s adequately. " Base d o nth e representation s S2.d e i nyou rletter * EP

A wil l no tenforc e HSP S and PS D requirensnt s tha tma y apply , pursuan tt o 4 0 CF

R60.1 4 and 52.21(b)(2) * a s aresul tof •missio nincrease s whic h ma y occu rafte rth e completio no f th e Rebur

ntechnolog y demonstratio na tNila s Uni t#1 * specifically /

whe nth e uni ti s returne d t o it s pre-demonstratio n condition . Fo rpurpose s o f advisin gal l partie at o th e -pro;ect * th e pre-demonstratio ncondition s should * prio rt o th ademonstration * b e establishe d t o avoi d afutur e dispute . I d o no tanticipat e ar y proble m i ndeterminin gpre-demon stratio nlevels .

... . ' *

.. . * •T ' ' «

•.4 ^ t 

### Thi s assuranc e doe s no - appl y t o -sessio nincrease s abov e th e pre-demonstratio nlevel s an d als o doe s no tappl y t o emissio nincrease s whic h resul tfro achange s tha tar e unrelate d t o th e conduc tof

th e demonstratio nproject , whethe rthes e change s ar e mad

e before * durin go rafte rth e project . O f course * Ohi o Kdiso nmustcompl y wit h al l pre-demonstratio n EP A an d Stat e emissio nlimit s an d permi tcondition s durin g and afte rth e desonscration , unles s thes e ar e formall y revised . Sincerely *
Do nR . CXa y Actin gAssistan tAdministrato r fo rAi ran d Radiatio n

/ iP.2 1



### -14

- determine d tha t repai r o r replacemen t wor k i s "routine " onl ywhe n undertake n "fo r the purpos e o f maintainin g the plan t i n it s presen t [i.e. , deteriorated ] condition." —

I n short , th e Por t Washingto n decisio n represent s an abrup t an

d fundamenta l expansio n o f th e NSP S an d PS D program s t o cove r repai r an

d replacemen t project s designe d solel yt o restor e los t capacity , and/o r t o improv e th e efficienc yand reliabilit y o f industria l facilities . A s explaine d above , EPAha s mad e n o (Footnot e cont'd , fro mpreviou s page. ) operation s wit h repaire d equipment , a compariso n tha t wil l virtuall yalway s resul t in a n emission s increas e finding . Se e Thoma s Lette r a t 5 (Octobe r 14 , 1988 ) ("A s t o NSPS , ther e i s n o representativ e emission s concep t unde r tha t program.") ; Cla y Memorandu

ma t 9 (Septembe r 9 , 1988 ) (emission s increas e i s compute d b

ycomparin g "hourl ypotentia l emission s unde r curren t [deteriorated ] maximu m capacit yt o emission s a t maximumcapacit y afte r the change") . B ycontrast , EPAha s historicall ybase d the emission s increas e calculatio n o n norma l sourc e operation , unaffecte d b

yequipmen t deterioration . Se e supr a note s 3 1 & 32 . Unde r th e PS D program , EP Areache d thi s resul t b y comparin g pas t "actual " emission s wit h futur e emission s base d o n "assume d . . . increase s in productio n rat e o r hour s o f operation " du e t o increase d sourc e reliabilit yan d availability . Se e Cla yLette r a t 9-1 0 (February15 , 1989) . Base d in par t o n thi s ne wreading o f th e PS D rule , EPARegio n V ha s recentl y conclude d tha t a fue l conversio n fromoi l t o natura l ga s a t an electri c generatin g uni t — a chang e tha t woul d dramaticall y reduc e th e facility' s emissio n rat e —woul d trigge r PS D revie w base d o n th e compariso n o f futur e "potential " emissions , assumin g increase d hour s o f operation , wit h pas t "actual " emissions . Lette r fromDo n R . Clay , Actin g Assistan t Administrato r fo r Ai r an d Radiation , U.S . EPA , t o Walte r McCarthy , Jr. , Chairma n an d Chie f Executiv e Officer , Detroi t Ediso n Compan y(Ma y8 , 1989) ; Lette r fro

mDavi d Kee , Ai r an d Radiatio n Division , U.S . EPA , t o Morto n Sterling , Detroi t Ediso n Company(Decembe r 20 , 1988 ) (letter s attache d heret o in the Appendix) ; se e supr a not e 25 . 36 / ClayMemorandum a t 3-4 ; se e als o id . a t 5-7 .P.2 2



### -15

- attemp t i n anyrulemakin g t o justif ysuc ha change.— ' Amic i therefor e agre e wit hPetitione r tha t thi s EP Adecisio n shoul d b e se t aside . II . TH E EXPANDE D SCOP E O F EPA' S NE WSOURC E

PROGRAM S A S REFLECTE D I NTH E POR T WASHINGTO NDECISIO NWIL L HAV E ASUBSTANTIAL , ADVERS E IMPAC T O NTHI S NATION' S INDUSTRIE S AN D O NTH E PUBLIC . Mos t o f th e nation' s industrie s rel yheavil yo n olde r facilitie s t o satisf yconsume r demand . Unde r th e Por t Washingto n decision , repai r wor k tha t wil l "enhanc e the[ ] presen t [i.e. , 38 / deteriorated ] efficienc yand capacity"

—o f a n industria l facilit yi s no t routin e and ma ytrigge r stringen t ne wsourc e requirements .

Unde r th e Por t Washingto n decision , therefore , companie s wit hfacilitie s experiencin g equipmen t deterioratio n tha t affect s operatin g capacit yo r th e reliabilit yo f sourc e operation s wil l fac e difficul t choices . Becaus e suc hrepai r an d replacemen t project s ma ytrigge r NSP S an d PS D review , facilitie s tha t nee d t o replac e deteriorate d equipmen t i n orde r t o operat e reliabl yan d efficientl yu p t o desig n capacit yma yb e force d eithe r (1 ) t o continu e t o operat e indefinitel ya t a lowe r (and deteriorating ) capacity , (2 ) t o dela yth e repai r o r replacemen t projec t unti l
21/ Cf_j . St . Jame s Hospita l v . Heckler . 76 0 F.2 d 1460 , 147 2 (7t hCir . 1985 ) ("Althougha n agenc yi s no t rigidl yboun d t o it s own precedent , th e presumptio n i s agains t change s i n establishe d polic ytha t ar e no t justifie d b yth e rulemakin g record.") . 18 / Thoma s Lette r a t 3 (Octobe r 14 , 1988) .P.2 3

-16

-

newsourc e permittin g i s complete d an d expensiv e ne wsourc e control s ar e installe d a t th e existing facility , o r (3 ) t o shu t down . An

yo f thes e alternative s woul d hav e substantia l advers e effect s o n industry , o n th e communit yi n whic h th e industryi s located , an

d o n the natio n a s a whole.— ' EPA' s decisio n therefor e wil l creat e enormou s uncertaint y fo r al l industrya s t o whether , an d unde r wha t conditions , norma l repai r an

d replacemen t activit ya t existin g facilitie s t o restor e capacit yo r maintai n reliabl e an d efficien t operatio n ca n g o forward . Th e example s o f repai r an d replacemen t project s tha t thi s decisio n coul d affec t ar e numerous .
39 / Program s o f contro l technolog y"retrofit " woul d impos e substantia l economic , energy , an d environmenta l costs . Fo r example , a t utilit yplants , retrofi t o f a flu e ga s desulfurizatio n unit , o r "scrubber, " reduce s plan t electrica l output , decrease s fue l efficiency , consume s million s o f gallon s o f fres h wate r annually , an d generate s thousand s o f ton s o f wast e eac h year . Se e generall y4 4 Fed . Reg . 33591 , 33602-0 7 (1979 ) (takin g suc h factor s int o accoun t in revisin g NSP S fo r ne w utilit ygeneratin g stations , an d observin g tha t "[f]ew , i f any , existing steamgenerator s . . . ar e expecte d t o qualif yunde r th e modification/reconstructio n provision!]") .

Eve n i f installatio n o f the necessar ycontro l equipmen t woul d b e economicall yan d technicall yfeasible , existin g facilitie s woul d hav e t o procee d firs t wit h time-consumin g ne w sourc e permittin g befor e bein g allowe d t o begi n th e repai r an d replacemen t project , forcin g a delayo f potentiall ysevera l years . Befor e a PS D permi t applicatio n ca n b e filed , fo r example , th e permi t applican t mus t undertak e extensiv e ai r qualit yan

d contro l technologyanalyse s an d mus t collec t a t leas t on e yea r o f ai r qualit ymonitorin g data . Se e generall yid . S 52.2Ki)-(o) . Onc e thi s informatio n i s assemble d in a permi t application , th e permittin g authorit ymus t revie wth e applicatio n t o determin e whethe r i t i s "complete. " Se e id . S 124.3 . Afte r issuin g a "completeness " determination , th e permittin g authorit y ha s u p t o on e yea r t o conduc t necessaryhearing s an d mak e a fina l determination . Se e CA AS 165(c) . Constructio n canno t begi n o n a projec t subjec t t o PS D revie wunti l a permi t i s issued . 4 0 C.F.R . S 52.21(r ) (1988) .P.2 4 •

-17

- Stee l plants ; oi l refineries , chemica l plants , an d othe r facilitie s tha t proces s rawmaterial s ar e subjec t t o extreme s o f temperature , pressure , an d corrosiv e conditions , an d requir e repair s an

d replacement s o f component s in orde r t o operat e efficientl yan

d reliabl yin a manne r consisten t wit h th e origina l desig n capacit yo f th e facility . I n th e cas e o f th e oi l industry , fo r example , th e fractionator s in natura l ga s liquid s productio n operation s deteriorat e ove r time , limitin g operatin g capacit yan

d reducing reliability . Component s o f steam generator s use d in th e utilit yindustry , the oi l industry , an d othe r industrie s (including pumps , fans , ai r heaters , burners , pulverizers , an

d othe r majo r components) , deteriorat e ove r time an d limi t sourc e capacit yan d reliability . Extraordinar y failure s occu r a t refinerie s wit h respec t t o pumps , compressors , motors , an

d othe r component s tha t ar e critica l t o efficien t an d reliabl e operatio n u p t o desig n capacity . Failur e o f majo r component s doe s no t occu r frequentl y durin g th e lif e o f a facility . Repai r o r replacemen t o f majo r component s i s expensive , an d wil l invariabl yexten d the economi c lif e o f a facility . I n al l o f thes e industries , however , replacemen t o f keycomponent s i s undertake n whe n necessar yt o restor e origina l desig n capacit yan d t o maintai n reliabl e an d efficien t facilit yoperations .

B yfrustratin g effort s t o maintai n existin g industria l capacity , th e Por t Washingto n decisio n pose s a seriou s threa t t o the continue d vitalit yan d competitivenes s o f thi s nation' s basi cP.2 5

-18

- industries . Wit h respec t t o th e electri c utilit yindustry , fo r example , thi s decisio n wil l inhibi t the industry' s effort s t o maintai n th e availabilit yan d reliabilit yo f smaller , olde r utilit yplant s —plant s tha t ar e critica l t o th e adequac yo f thi s nation' s electricit ysuppl yove r th e nex t decade.

— Thi s decisio n wil l adversel yaffec t companie s tha t operat e existin g industria l boiler s t o generat e steam an d electricity , furthe r limiting electricit ysupplie s an d increasing produc t cost s a t a tim e o f intens e internationa l competition . Fo r companie s tha t als o performrepai r an d replacemen t wor k a t industria l facilities , suc h a s the Genera l Electri c Company , th e Westinghous e Electri c Corporation , an d Bechte l Powe r Corporation , the uncertaint ycreate d b ythi s decisio n wil l resul t in postponemen t an

d cancellatio n o f project s aime d a t preservin g th e efficienc yan

d competitivenes s o f basi c America n industry . Unde r S 11 1 o f the Act , EP Amus t bas e NSP S o n th e "best " adequatel ydemonstrate d contro l technology , reflectin g a balanc e 41 / o f economic , energy , an d environmenta l considerations.

—EPA

40 / Thi s i s s o becaus e fewutilit ycompanie s currentl yhav e plan s t o construc t new , larg e generatin g capacity , an d th e design , permitting , an d constructio n o f suc h capacit ytake s man y years . EnergyInformatio n Administration , Estimatin g th e Capita l Cost s o f Lif e Extensio n fo r Fossil-Fue l SteamPlant s a t 1- 2 (July , 1988 ) [Recor d 3.15) .

Th e Nationa l Coa l Associatio n (NCA ) i s concerne d wit h th e potentia l advers e effect s o f EPA' s decisio n o n th e nation' s coal

fire d electrica l generatin g capacity . Moreover , NC Amember s operat e coa l preparatio n plant s tha t ar e subjec t t o NSP S and PS D requirement s an

d tha t coul d b e affecte d b ythi s decision . 41 / CA

AS 111(a)(1) .P.2 6

-19

- ha s considere d non e o f thes e factors , however , in decidin g t o expan d th e scop e o f it s NSP S program . Moreover , t o the bes t o f amici' s knowledge , EPAi n it s earlie r NSP S an d PS D rulemaking s neve r considere d th e advers e impact s o n existing source s tha t coul d resul t fro

m th e Por t Washingto n decision.— / I n short , EPA' s recen t Por t Washingto n decisio n ha s substantia l and potentiall ywidesprea d implications , implication s tha t EP Aha s faile d t o consider . I f EP Awant s t o chang e th e

42 / See , e.g. , supr a not e 39 . Indeed , the U.S . Departmen t o f Energ y("DOE" ) in Octobe r 198 8 registere d it s seriou s concer n wit h the abrup t chang e i n EPA' s polic yreflecte d in the Por t Washingto n decision . Th e DO E Assistan t Secretar yfo r Fossi l Energ ywrot e t o EPAexpressin g hi s concer n tha t EPA' s decisio n "woul d establis h a fa r reaching preceden t whic h coul d hav e seriou s advers e impact s o n energypolicy, " an d "strongl yurg[ed] " th e Agenc yt o "full yevaluate[] " th e decision' s energ yimpact s t o compl ywit h S 11 1 o f th e Ac t befor e makin g th e decisio n final . Lette r fromJ . Alle n Wampler , Assistan t Secretar yfo r Fossi l Energy , DOE , t o Do n R . Clay , Actin g Assistan t Administrato r fo r Ai r an d Radiation , U.S . EPA(Oct . 12 , 1988 ) (Supplementa l Recor d S.4) . Counse l fo r EP Aha s state d tha t thi s informatio n wa s no t considere d i n th e Por t Washingto n decision . EPARespons e t o Petitioner' s Motio n t o Supplemen t the Recor d a t 4 (Marc h 16 , 1989) . EP Atherefor e mad e th e Por t Washingto n decisio n withou t conductin g th e energyanalysi s tha t DO E strongl yurge d an d tha t S 11 1 requires .

Recently , EP Aha s applie d it s ne wreading o f the modificatio n rule s t o discourag e companie s fro mundertakin g project s t o demonstrat e promisin g ne wcontro l technologie s pursuan t t o th e Clea n Coa l Technologie s Program . Thus , EP Aha s suggeste d tha t terminatin g a contro l technologydemonstratio n projec t "coul d constitut e a modificatio n o r majo r modificatio n

. . . an

d coul d trigge r NSP S o r PSD. " Lette r fromDo n R . Clay , Actin g Assistan t Administrato r fo r Ai r an d Radiation , U.S . EPA , t o Davi d L . Feltner , Senio r Attorney , Ohi o Ediso n Compan y (February22 , 1989 ) (attache d heret o i n th e Appendix) . Applicatio n o f ne wsourc e requirement s a s a resul t o f contro l technologydemonstratio n project s a t existin g facilitie s was , a s fa r a s amic i know , neve r contemplate d i n earlie r NSP S rulemakings .P.2 7



### -20

- coverag e o f it s ne wsourc e programs , i t mus t d o s o throug h rulemaking , afte r ful l consideratio n o f th e kind s o f effect s discusse d above . CONCLUSIO N

Fo r th e foregoin g reasons , amic i suppor t Petitioner' s reques t tha t th e Por t Washingto n decisio n b e se t aside . Respectfull ysubmitted ,



### J . HiruJU. I

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A& GOUL D 155 0 M Street , N.W . Washington , D.C . 2000 6 (202 ) 822-932 0 COUNSE L FO R GENERA L ELECTRI C COMPANY 

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_______3_df » WilliamE . Hyna' n / In**} Caro l L . Dalcanto n Attorne y NATIONAL COA L ASSOCIATIO N 113 0 17t h Street , N.W . 9t h Floo r Washington , D.C . 2000 6 (202 ) 463-262 5 Caro l L . Dalcanto n IrTAsg Assistan t Genera l Counse l WESTINGHOUS E ELECTRI C CORPORATIO N 1 1 Stanwic k Stree t Pittsburgh , Pennsylvani a 1522 2 (412 ) 642-567 6
May22 , 198 9P.2 9

.APPENDI

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/ J_TM L \ UNITE D STATE S ENVIRONMENTAL. PROTECTIO N AGENC Y i55:2_ r* WASHINGTON . O.C. 2046 0 

### FE S 

### 2 2 !Si 5 OMIC IOl * Al * AN O KA0IATI O Mr . Davi d L . Feltne r Senio rAttorne y Ohi o lidiso n 7 6 Sout h Mai nStree t Akron * Ohi o 4430 6 Dea rMr. Feltner : Th e Administrato rha s aske d a s t o respon d t o you r Decembe r22 * 198 8 lette ras'-cih gwhethe rNe wSourc e Performanc e Sta.ida.rd s (NSPS ) o rPreventio no f Significan tDeterioratio n. (PSD) ' regulation s wil l aopl y t o Uni t$ 1 .a tth e Mile s Generatin g Statio ni nNilas , Ohio * whanaRebur ntechnolog y demonstratio n projec ti s complete d an d Uni t# 1 i s returne d t o it s pre-demon stratio n"physica l an d operatin gcondition. " Thi s projec twil l tes tRebur ntechnolog y fo rreducin g nitroge noxide s from flu agas . Accordin gto.you rletter * th e R e bar ntechnolog y demonstratio ncoul d als o resul ti nreduce d levels , o f

sulfu rdioxide , particulate s an d othe rpollutants . Thi s projec ti s bein gfunde l b y £_?A , th e stat e o f

Ohio , th e Electri cpowe rResearc h Institute , an d th e Ga s Researc h Institute . Ohi o Zdiso n&n d th cothe rparticipant s i nthis . demonstratio nprojec tar e coaoands d fo rthai reffort s t o attai ngreate remissio nreductions . SP A support s thi s demonstratio no f

Rebur ntechnolog y an d generall y encourage s demonstration s o f

othe rinnovativ e contro l technologies . EP A wil l evaluat e othe rinnovativ e contro l technologie s o na• casa-by-cas e basis . I f th e projec ti s successfu l an d emissio n reduction s ar e demonstrated , th econtinue d us e o f th e technolog y woul d b e strongl y encourage d b y EPA. A nincreas e i nemissions * a s aresul to f returnin gth e uni t bad e t o pre-demonstratio ncondition s afte rth e Rebur nprojecc * coul d constitut e amodificatio no rnajo rmodificatio npursuan t t o 4 0 CP

E 60.14-o r52.21(b)(2 ) an d coul d trigge rNSP S o rPSD . ZP A ha s evaluate d th e merit s o f Ohi o Edison' s Nile s Uni t1 projec twit h regar d t o applicabilit y o f th e Agency' s Novembe r 16 * 198 4 Polic y Agains t"N o Action " Assurances . A s aresult ,

# V P.3 1

* onth

e basi s tha t revision s to th e underlyin

g lega l requirement ar e bein g considered; *
* onth

e baei s tha t th

e Agency

ha s determinedtha t th e party i s no t liabl e o r ha s a vali ddefense . * o nth e basi s tha t th

e violatio

nalread

y ha s been correcte

d(o r tha t a party

ha s promisedtha t i t wil l correc t th

e violation) ) or * o nth e basi s tha t th

e violatio

ni s no t o f sufficien t priority

t o meri t Agency

action * The .Agenc

y particularl y

mus t avoi dn

o actionpromise s relatin g eithe r to violation s o f judicia l orders , for whic ha cour t ha s independen t enforcemen t authority * o r t o potentia l crimina l violations * for whic hprosecutoria l discretionrest s wit hth

e UnitedState s Attorney General . A s e genera l rule * exception s to thi s policy ar e warranted onl y * wher e expressl y providedb

y applicabl e etatut e o r regulatio

n(e.g. * certai nupse t o r bypas s situations ) * inextremel y

unusua l case s i

nwhic ha no action assuranc e i s clearl y neccessar

y t o serve th

a publi c interes t (e.g. * t o allo w actio nt o avoi dextrem

e risk s t o publi c healt ho r safety * or t o obtai nimportant informatio

nfor researchpurposes ) an dwhic hn

o othe r mechanism

canaddres s adequately * O f course * an

y exception s whic hBP A grant a mus t b

a in*\n area i nwhic hBP

A ha s diacratlonno t t o ac t unde r applicabl e law . Thi s policy

I nn o way

i a intendedt o constrai nth a way i n whic hEP A

dlacuaaa a an

dcoordinate s enforcemen t plan s wit h atat a o r loca l enforcemen t authoritie e consisten t wit hnorma l working relationships . T o th a extan t tha t a statemen t o f BPA* a enforcemen t intent i s necessar y to hel psuppor t o r conclude a n effective atat a enforcemen t effort * BP A canemplo

y languag e suc ha s th

a following t "CP A encourage s Stat e actionto resolv e violation s o f the _^___

_Ac t an dsupport s th

a sction s whic h(State ) i s takin

g t o addree a th

e violation s a t issue * T o th s exten t tha t th e Stat e actiondoe s not satisfactoril y resolv

e th e violations * BP

A ma y pursu e it s ow

nenforcemen t action. *P.3 2

Xa m requestin

g tha t an

y definitiv

e writtenor ora l n o actioncommitment receive th e advanc e concurrenc e o f m y office . Thi s wa s a difficul t decisiont o reac hi nlight o f th

e vali d concern s raise

di ncomments.onthi s polic y statement ; neverthe less * we

* concludedtha t Headquarter s concurrenc e i a important becaua a th

e precedentia l implication s o f providin g no . action commitment s ca

nexten dbeyon de singl e Region . He wil l attemp t t o conaul t wit hth e relevan t progra

m offic e an

drespon

dt o an y forma l requee t fo

r concurrenc e withi n1 0 workin g day s fro

m th e dat e w e receiv

e th e request . Naturally , emergency sltuatione canbe handledorall y ona nexpeditedbasis . Al l instance s i

nwhic ha

nEP A officia l give a a n o action promis e mus t b

a documente dir

i th e appropriat e cas e file . The documentationmus t include a nexplenationo f th e reaaon

a justifyin

g th e n o actionaaaurance . Finally * thi s policy agains t n

o actio nassurance s doe s not preclud e BP

A fro m full y discussin

g Internall y

th e prosecutoria l meri t o f individua l case s o r fro m exercisin

g th e discretioni t ha s unde r applicabl e la w to decide whenan dho w to respon

dor no t respon

dto a givenviolation * basedo nth e Agency 1 * norma l enforcamen t priorities . cc : Associat e Enforcemen t Counsel s OEC M Offic e Director s Progra m Complianc e Offic e Director s Regiona l Enforcemen t Contact sP.3 3

UNITE © STATE S ENVIRONMENTA L PROTECTIO N AGENC Y WAiHINGTON

, D.C. 2046 0 'Jir. iG5 9


### Mr . Walte r McCarthy , Jr . aww.net Chairma nan

dChief Executiv e office r v******TM Detroi t Ediso n 200 0 SecondAvenu e Detroit , Michiga n4822 6 Dea r Mr . McCarthy : Thi s i s i nregar dt o you r Marc h13 , 198 9 letter , i nwhic hyo u aske dth e Administrato r t o revie w a preventio no f significan t deterioratio n(PSD ) applicabilit y determinatio nb

y the Environmenta l Protectio nAgenc y (EPA ) Regio nV . O nDecembe r 20 , 1988 , Regio nV

rule dtha t th e propose dconversio no f your oil firedGreenwoo dUni t I Powe r Plan t t o dua l capabilit y for oi l an

d ga s woul drende r th e sourc e subjec t t o review unde r Federa l PS D regulation s du e t o anincreas e innitroge noxide s (N O ) emissions . Tw o definition s gover napplicabilit y i nthi s case : (1 ) "ne t emission s increase, " whic hessentiall y i s th e differenc e betwee n actua l emission s andth e potentia l t o emi t o f th e sourc e afte r th e chang e occurs ; and(2 ) "majo r modification, " whic hi s a physica l chang e o r chang e i noperatio ntha t result s i na significan t ne t emission s increase . I nyou r Marc h1 3 letter , yo uprovide ddat a tha t illustrate d larg e decrease s i nth e source' s "potentia l t o emit " for sulfu r dioxide , particulate , particulat e matte r nominall y 1 0 micrometer s an dless , an

dNO ¥

### a s a resul t o f the conversion . Youals o mentione dtha t additiona l dat a ar e bein g compile dan dtha t you r compan y woul dlik e t o mee t wit hth e EP A t o discus s the result s o f thi s study . Ou r revie w

o f th e availabl e informatio nsuggest s tha t Regio nV s conclusio ntha t th e sourc e appear s t o b e subjec t t o PS D review unde r th e existin g rule s i s correct . Th e fact s associate d wit hthi s source' s circumstance s ar e no t typical , however , an dw e believ e a meetin g ma y b e appropriat e t o discus s furthe r the issue s yo uhave raised . Pleas e contac t Gary McCutchen , Chie f o f th e Ne w Sourc e Revie w

Section , t o arrang e th e meetin g time an dplace . Hi s telephon e numbe r i s (919 ) 541-5592 . Sincerely ,

Do n(R . Clay , Actin g Assistanf^Administrato r fo r Ai r an

dRadiatio n

TOTA L P.0 2*tn.V T O TU B AlTtNTtO N P.3 4 

### M
. STcrUN G 

### DE C 2I 

### W W ^fJ**- UNITE D STATE S ENVIRONMENTA L PROTECTIO N AGENC Y / S^

- %REGIO N5 | ^^^ Z * 23 0 SOUT H DEARBOR

N ST . %A r<? CHICACO , ILLINOI S 6040 4 Qg Q 2 0 1S8

8 Morto n Sterling , Directo r Environmenta l Protectio n Detroi t Ediso n Compan y 20 0 Secon d Avenue , 48 2 WC B ' Detroit , Michiga n 4822 6 Dea rMr

. Sterling : Thi s lette ri s intende d t o summariz e ou rfinding s wit h respec t t o Detroi t Edison' s projec t o faddin g natura l ga s firin g capabilit yt o it s Greenwoo d Plan : Durin g th e discussio n i n m yoffic e o n Novembe r15 , 1988 , tw o issue s emerge d as paramoun t i n th e applicabilit ydeterminatio n o fth e preventio n o fsignifican t deterioratio n (PSD ) regulations

. Thes e issue s wer e (1 ) whethe ro rno t th e Greenwoo d plan t ha d natura l ga s firin g capabilit ybefor e Januar y6 , 1975 , an d (2 ) whethe ro rno t w e coul d facto rint o th e PS D nettin g transactio n th e fac t tha t th e maximu m potentia l t o emi t nitroge n oxide s (N0 X ) durin g oi l firin g woul d no t b e change d b yth e project

. Yo u raise d a numbe ro fothe rinformativ e issue s relate d t o th e environmenta l advantag e o fth e plant s havin g ga s firin g capability , th e rat e o fN0 Xincremen t consumption , an d th e utilizatio n rat e o fth e plant

. W e coul d not , however , fin d a wa

yt o incorporat e thes e issue s int o th e PS O applicabilit ydeterminatio r Wit h respec t t o th e natura l ga s firin g capability , w e mus t loo k

a t th e tota l plan t o rsource . I n makin g applicabilit ydetermination s wit h respec t t o fue l accommodatio n capability , th e whol e plan t i s considere d becaus e th e PS D regulation s addres s th e tota l source . Thi s i s contraste d wit h th e ne wsourc e performanc e standard s wher e applicabilit yi s don e o n a n affecte d facilit ybasi s whic h i n thi s cas e coul d b e a boiler

. Althoug h i n you rjudgemen t th e boile r structur e itsel fcoul d withstan d natura l ga s bein g combuste d withi n it , th e pipin g an d equipmen t necessar yt o fire natura l ga s wer e no t presen t o n Januar y 1975 , and , i n fact , ther e wa s n o natura l ga s servic e availabl e t o th e plant

. (Th e opinio n tha t th e boile rcoul d accommodat e natura l ga s firing , however , wa s no t share d b yth e Foste rWheele rEnerg yCorporatio n unles s th e boile rwoul d b e derated. ) Furthermore , th e plan t di d no t begi n operatio n unti l fou ryear s aft e Januar y6 , 1975

. We , therefore , hav e conclude d tha t th e Greenwoo d plan t doe s no t qualif yunde rth e exemptio n provide d fo ri n 4 0 CF R 52.2 1 (b)(2)(11i)(e)(l)

. Wit h respec t t o th e issu e o fn o increas e i n th e potentia l t o emi t N0 X > w e con tacte d th e technica l staf fi n th e Offic e o fAi rQualit yPlannin g an d Standard s i n Nort h Carolina

. W e ar e informe d tha t th e nettin g calculation s i n 4 0 CF R 52.21(b)(2 ) an d (3 ) refer t o th e emissio n increas e resultin g fro m th e physica l chang e o rchang e i n th e metho d o foperatio n tha t i s unde rpermi t consideration

.P.3 5

-2 - Th e nettin yformul a foun d i n 40 CF R 52.21(b)(3)(i ) ha

s tw o terms : emissio n increase s from th e physica l chang e o rchange i n operatio n unde rconsideration , subparagrap h (3)(i)(a) ; and othe rpreviou s o rfutur e emissio n increase s o r decreases , subparagrap h (3)(i)(b) . Th e ter m "increase " referre d t o i n subparagrap h (3)(i)(a ) mean s tha t th e emission s fro m th e physica l chang e are t o b e include d a

s a positiv e ite m i n th e formula . Th e ter m increas e i s no t relate d t u th e sourc e fo ra baselin e bu t t o th e physica l change itself . Th e baselin e i s zero . Thi s mean s tha t th e potentia l N0 Xemission s from th e physica l chang e t o ga s firin g i s adde

d (algebraically ) t o an ycontemporaneou s federall y enforceabl e emissio n reductions , an d i fth e su

m exceed s 4

0 ton s pe ryear , th e modificatio n i s a majo rmodificatio n and i s subjec t t o th e PS O regulations . Detroi t Ediso n di d not offe ran ycontemporaneou s federall yenforceabl e anissio n reduction s i n thi s case . Therefore , w

e conclud e tha t th e Greenwoo d plan t woul d b

e subjec t t o th e PS

O regulatio n fo rNO

xi fi t make

s th e proposed physica l change s t o accomodate natura l ga

s a s a fue l . I fyou nee

d furthe rexplanatio n o fth e determination , pleas e contac t Ro n Va n Mersoerge n o fm

ystaf fa t (312 ) 886-6056 . Sincerely , javi d Kee , Oirecto r Ai ran d Radiatio n Divisio n (5AR-26 ) cc : Rober

t P Miller , Chie f Ai rQua l it yDivisio n Michiga n Departmen t o fNatura l ResourcesP.3 6



### -v. ' "

CERTIFICAT E OF SERVIC E
I hereb y certif y

tha t o

nthi s 22n

dda y of May , 1989 , tw

o copie s of th

e foregoin

g Motionfo

r Leav e To Fil e Brie f Amic i Curiae . Certificate s o f Interes t of Amici , an dBrie f Amic i Curia e wer e servedb

y firs t clas s mail , postag e prepaid , upo nth e following :

Gregor y B . Foot e Offic e o f Genera l Counse l U.S . Environmenta l ProtectionAgency 40 1 M Street , S.W . Washington , D.C . 2046 0 EileenT . McDonoug h UnitedState s Departmen t of Justic e Divisiono f Land s an dNatura l Resource s P . 0 . Bo

x2398 6 Washington , D.C . 20026-398 6 Walte r T . Woelfl e Wisconsi nElectri c Powe r Compan y 23 1 W . Michiga nStree t Milwaukee , Wisconsi n5320 3



# AbJ'^A. F . Willia

m Brownel l