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# OAR Box 1778 Prepped byOllie Stewart



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# 89 ) ll-C-3 1 Docket Number: 

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OFFIC E o r GENERAICOUNSE L Mr . Do n Sant a ,„^

- T " ' Counse l T'• , s \ \ '.•. _ Subcommitte e o n Minera l Resources , Developmen t an d Productio n 36 4 Dirkse n Senat e Offic e Buildin g Washington , D.C . 2051 0 \ U—-T^Tt^nr.iC^ ^ Dea r Mr . Santa : Thi s i s i n referenc e t o ou r recen t telephon e conversatio n regardin g EPA' s upcomin g interpretativ e rulin g unde r th e ne w sourc e performanc e standard s (NSPS ) an d ne wsourc e revie w(NSR ) provision s o f th e Clea n Ai r Act . I hav e enclose d th e material s w e discussed , whic haccuratel ysummariz e th e anticipate d term s of . th e ruling . Yo u indicate d tha t yo u wer e particularl yintereste d i n treatmen t o f project s involvin g th e retrofi t o f pollutio n contro l equipment . I n short , th e rulin g wil l clarif ytha t neithe r Congres s no r EP Aintende d retrofi t project s t o b e treate d a s "modifications " subjec t t o ne wsourc e requirement s unles s emission s woul d someho wincreas e a s a resul t o f th e retrofit . Thi s positio n i s state d i n EPA' s enclose d Januar y30 , 199 0 lette r t o th e Stat e o f Indiana . Page s 6 an d 8 o f tha t lette r relat e tha t th e interpretativ e rulin g wil l provid e that , regardles s o f whethe r the yoccu r a s par t o f th e Departmen t o f Energy' s Clea n Coa l Technolog ydemonstratio n program , al l temporar yan d permanen t retrofi t project s wil l b e exclude d fro mNSP S an d NS R coverag e s o lon g aft-the yar e no * environmentall yharmful . A s t o NSR , th e Marc h8 , 199 0 lette r t o Indian a furthe r clarifie s tha t EPAwil l pruus e tha t increase s in . capacit yutilizatio n following a retrofit'"*%..<an

d associate d increase s i n annua l emission s — ar e no t attributabl e t o th e retrofit . Thi s presumptio n woul d b e overcom e onl yi f th e fact s sho wa clea r likelihoo d tha t utilizatio n wil l increas e becaus e o f the retrofit .P. 4

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r * - 2 - EPAdoe s no t a t presen t pla n t o extend the interpretativ e ruling t o fue l switche s tha t d o no t constitut e the additio n o f retrofi t pollutio n contro l technology . I hav e enclose d fo r you r informatio n a recen t lette r involving Detroi t Ediso n whic h explain s EPA' s curren t positio n o n fue l switches . Tha t cas e involve d an economically-drive n switc hfrom oi l burnin g t o dua l oil-ga s capabilit ya t a peakin g unit , apparentl yt o tak e advantag e o f lowe r fue l price s fo r gas . Precisel yfo r thi s reason , however , EPAhad reaso n t o believ e tha t th e companywoul d substantiall yincreas e it s utilizatio n o f th e facility . I f tha t occurred , ther e woul d b e a correspondin g increas e i n NO x emission s ove r curren t actua l level s o f emissions . EP Aadvise d th e compan

ytha t th e additio n o f gas-burnin g capabilit ywoul d constitut e a "physica l change " fo r th e sourc e a s a whole , an d woul d requir e a n ai r qualit yanalysi s unde r a PS D permit . However , i t appeare d tha t ther e woul d b e onl ymino r change s a t th e emission s uni t itself . I f thi s i s indee d th e case , th e compan ywoul d hav e n o obligatio n t o instal l bes t availabl e contro l technology(BACT ) a t th e unit . Consequently , ther e would , b e n o additiona l contro l cost s a t th e source . EPAals o advise d th e compan

ytha t i f the fact s shoul d sho wa physica l chang e a t " ? th e boile r itself , the extr a cos t o f retrofittin g pollutio n 'A-
- control s woul d b e considere d i n determinin g whethe r an y additiona l control s wer e necessaryt o mee t th e BAC T requirement . Absen t legislativ e changes , EPApresumabl ywoul d follo wth e sam e cours e wit hrespec t t o fue l switche s a t coal-fire d boiler s involvin g th e additio n o f ga s co-firin g capability . I f th e sourc e a s a whol e woul d underg o a physics3 1 chang e t o accommodat e gas , a PS D permit , including an ai r quaiit yimpac t analysis , may b e necessary . However , i f th e emission s uni t itsel f woul d no t underg o a "physica l change, " ther e woul d b e n o BAC T requirement . I f the fact s showe d a physica l chang e a t th e boile r and th e nee d fo r BACT , retrofittin g cost s woul d b e carefull yconsidered . Whil e a BAC T analysi s woul d b e needed , i t woul d appea r highl y unlikel ytha t scrubber s woul d b e require d a s BAC T unde r suc ha scenario . Yo u showllrals o b e awar e tha t EPA' s interpretativ e rulin g wil l no t addre* * project s suc ha s tha t involvin g th e Wisconsi n Electric ^ Co^any' s Por t Washingto n plan t ("WEPCO") . Th e WEPC O cas e di d not " involve th e retrofi t o f pollutio n controls , boile r repowering , o r Clea nCoa l Technology . Rather , tha t cas e involve d a utilit y"lif e extension " program , i n whic hth e companyplanne d t o replac e steamdrums , ai r heaters , and othe r majo r plan t components , i n orde r t o restor e generatin g capacit ytha t ha d bee n los t du e t o age-relate d deterioration , improv e plan t capacit yan d efficiency , and extend th e lif e o f th e generatin g units . Th e compan yplanne d t o increas e utilizatio n substantiall yfollowin g th e modifications . EPAcontinue s t o believ e tha t suc hlif e extensio n project s shoul d b e subjec t t o ne wsourc e requirement sP. 5

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y wil l resul t ina

nemission s increas e over baseline levels . The cour t decisioninvolvin gWEPCO , Wisconsi nElectri c Co . v . Reilly , Nos . 88-326 4 an d89-133 9 (7t

hCir. , sli pop . Jan . 19 , 1990 ) strongl y

endorsedthi s treatment unde r current law . I n on e respect , regardin gth e calculationof post-modification emission s increase s for PS Dpurposes , th e cour t foun

dtha t EP

A shoul dloo

kto pas t operatinghistor y a s a predicto r o f futur e utilizationlevels . EP A intend s to follo

w sucha

napproachin respondin

gto th

e court' s reman

do ntha t point . Sincerely , 

## C4lA A Gregory o. Attorney Ai r an dRadiationDivision (LE-132A ) Enclosure s cc : Joa

nLaRock Ro bBrenne r Sta nMeiberg Nanc y Ket e