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# OAR Box 1778 Prepped by Ollie Stewart



### Document

Number: 

# 240 ) ll-F-1 6

Docket Number: 

# A-90-0 6

Printed 10/28/2008 9:51:03 AM Sheet 240 of 276P. 2



### Departmen t o f Ener g Washington , D C 2058 5 2 2 y - \ - .'\ 

### U2 i ';- :


### - S

# LEEII-F-16

Ma y 21 , 199 1

MEMORANDUM ; ••* " TO : Don Elliot t PROM : ^Dayi d B . Rivkin , Jr . SUBJECT : EPA' s Lates t WEPC o Draf t 

# 22 

# - - l \0? l

0 -^ii= » '^.^j-

.

The purpos e o f thi s memorandu m i s t o shar e som

e lega l 

### concern s w e hav e wit hEPA' S 

### lates t WEPC O 

### draft . Thes e ar e a s follows :
1

. PjSll.it_.ipr

. eontro l rvrrHftote

. Xbelieve tha t everyon e agree s tha t the onl y legall y defensibl e justificationfor excludin g pollutioncontro l project s i e readin

g the NSP S exclusio na s bein

g implici t l n the NS Rrules . Indeed , EPA' S lates t legislativ e rul e recognize s thi s fact . Regrettably , i t als o take s th e positiontha t pollutioncontro l project s ar e no t "environmentall y beneficial, " i f annua l emissions , generated b

y the utilitie s involved , increase . T o b e sure , th e preambl e goe s ont o propos e a "potentia l t o potential " rule , tha t woul d trea t project s tha t increas e "annua l emissions " a s bein g environmentall y

beneficial . t

nm y view , thes e contradictor y statement s mea n eithe r tha t EP A i s construin

g curren t la

w i na mor e restrictiv

e fashio

n thani s required , o r tha t i t i s proposin g a rul e tha t allows utilitie s t o instal l control s tha t ar e no t reall y "environmentall y

beneficial. "
A brigh t lin e "annual " increas e tes t (or even * "potential " increas e test ) for determinin g th e applicabilit y

o f the pollution contro l exclusion ha s n o basi s i npre-WEPC o determinations . Arguably , the whol e poin t o f recognizin g an y modification exclusion l a t o authoriz e emission increase s caused b y the excluded activity . X n the cas e o f pollutioncontrols , the exclusionapplie s wheneve r th e contro l i s no t "Iflaa " environmentall y beneficia l tha

nth e contro l i t replaces . Thi s exclusioncan , an d shoul d be , rea

d t o exclude project s tha t migh t increas e hourl y or annua l emission s o f a regulated pollutan t — bu t no t the emission s rat s o f tha t pollutant , defined a s pound s pe r millionBTU s - - wher e the overal l reduction s ar e clearl y environmentall y

beneficial . I naddition t o thes e lega l deficiencie s o f EPA' s positionon

son © 

## a ...!••-C I T6/C6/S 0P. 3

pollution contro l projects , i t als o oreate s som e very rea l policy problems . Fo r example , ove r the pas t 2 0 years , numerou s utilitie s have converted lo w NOxburners , an

d man y mer e ar e require d t o conver t t o tha t technolog y unde r Titl e I

V o f th e 199 0 CA A Amendments . Signifioantly , a s the lates t draf t preambl e discloses , thes e conversion s may-resul t i n increase s i ncarbonmonoxid e (CO ) an d particulat e emissions . I believe tha t EP A ha s neve r suggested l n the pas t tha t suchincrease s rendered the substantia l reduction s i n NO x"less " environmentall y beneficia l thanhighe r NO xemission s i n existenc e befor e installation o f controls . No r a m I awar e tha t the Administrationraised an y euo hoonoern s wit hCongress , whe n thes e control s wer e mandated unde r the Administration' s legislative proposal . However , i nvie

w o f EPA' s statemen t l nth e propose d legislative rul e regardin g C O an d particulat e matte r Increases , i t i s clea r tha t the promulgationo f eve n"potential-to-potential " proposa l fo r pollution contro l project s woul d provid e n o meaningfu l relief , an

d woul d preclud e many , i f no t most , source s fro m meeting thei r Titl e I

V Phas e I (Januar

y 1 , 1995 ) deadline , i n othe r words , rathe r then providing relief , th e EPA' s legislativ

e proposa l woul d establis ha mor e stringen t standard tha ni s availabl e unde r curren t law . Thi s can b e hardl y construed a s the faithfu l implementation o f the Administration' s WEPC O proposal . And , a s describe d above , applyin g an y emissio n test s t o pollutioncontro l project s i s legall y problematic . I n summary , the spiri t an d th e purpos e o f the Administration' s pollution contro l proposa l canb e effected throug ha reasonabl e interpretation o f curren t rules . I nvie w o f the fact e recited i n the preambl e regardin g NO xreductiontechnology , an y attemp t t o follo w suc ha interpretationwit h"potentia l t o potential " restriction woul d b e contrar y t o the policie s motivating th e Administration' s wfiPC o proposal . And , a s described above , applyin g an y emissiontest s t o pollutioncontro l project s i s legall y problematic .

2 . Applyin g -h.h w pollutJn n «V>r.+.yn l fiKnlualan onl y •• * Pfif t

I a m als o highl y

troubled b

y th e fac t tha t th e propose d legislativ

e rul e woul d hav

e on e pollutioncontro l rul e appl y i nPS D area s an

d anothe r on e i n non-attainmen t areas . A s EP A recognizes , curren t la

w doe s no t requir e sucha distinction. 1 Th e proposition tha t the sam

e pollution contro l projec t i s "environmentall y

* Th e mer e fac t tha t tn e Administration' s Inglalfttivf propoaal s woul d have mad e sucha distinction , doe s no t mea n tha t EP A

can ftflfftnifttrfttiveiy establis hdifferen t exclusion s fo r attainmen t an d nonattainmen t areas .



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# W

_ V>- '

beneficial " unde r th a PS D program , bu t no t unde r th e non-attainmen t program , may

strik e on e dependin g o nhi s policy

predilections , a s eithe r a reasonabl e approacho r an absur d one . Xwoul d leav e t o th e policy

peopl e t o argu e th e merit s o f thei r respective position . M y primar

y concerni s EP A

i s actin

g a s i f thi s distinctionwa s alread y l n plac e unde r the curren t law . This , o f course , l a no t the case * i f EP

A wishe s t o distinguis hbetwee n attainmen t an d PS D areas , i t mus t d o s o throug hlegislative rulemaking . 3 . Restrictio n o f Inruml * o Actua l Mftthnflolocr v t o T.lk A Kind " ReplacemnntB . Th e proposed legislativ e rul e interpret s curren t la w a s onl y allowin g BR A t o us e th e actua l t o actua l methodolog y fo r "like kind " replacements . Thi s restrictioni s based onEPA' s interpretationo f th e _£E_a an d Puert o Rittft

n can-ant , decision s aa compellin

g thi s restriction . Xbeliev e tha t yo u ar e wel l familia r wit hou r position o n thi s issue . Simpl y put , we believe that , whil e EP

A may constru e WEPC Q an d Puert o Rinft

p earner^ : a r standin g fo r th e propositiontha t "like kind " an d "non-like replacements " shoul d b e treated different , th e better , an d certainl y

les s strained , interpretation o f thes e case s i s tha t the y recogniz e no suchdistinction , i n an y case , we al l can , hopefully , agre e tha t EP A i s no t compelle

d b y thes e case s t o establis hthe like kind/non like kin

d regulator

y matrix . Xbeliev e tha t thi s vie

w i s full y shared b

y othe r concerned agencies . Specifically , th

e Departmen t o f Justic e (DOJ) , i nit s Marc h 26 , 199 1 memorandum , mad e clea r tha t neithe r HEEC Q no r Puert o Rioa n Cemsp t provide s a basi s for distinguishin g betwee n "like-kin d replacements " an

d al l othe r projects. ' Instead , th e memorandu m indicated tha t EP

A mus t focu s onwhethe r th e uni t ha s "not begu n norma l operations." ' The DO J memorandu

m wen t o nt o rejeot , wha t i t understoo

d t o b e the DOE' s mor e extrem e position , namel y tha t al l project s undertaken b y existin

g utilit y

unit s shoul d b e subjec t t o an "actua l t o actual " test, 4

T o clarify , DO E doe s no t no w argue , no r ha s i t eve r argued ,

DO J Memo , a t 3 . Accordin g t o th e memorandum : [Th e cour t l nKEECa

J simpl y

rejected EPA' a approac hfo r like-kin

d replacement s l ntha t case . Althoug hth e cour t i n Puert o Rlna n Ce-mmn* . . . uphel d BPA' 8 approac hi na 

### cas e no tinvolvin g like-kin d replacements , neithe r decisio n state s tha tthi s distinctio n wa s th e basi s fo r eac h court' s conclusion . Id . Id . a t4 .

root a © SI-.C T T6/ZS/S 0P. 5

X v tha t th e "actua l t o actual " tea t applie s t o al l project s undertake n a t a n exiatln

g source- , instead , th e "actua l t o actual " tes t onl y applie s t o projects , lik e thos e befor e th e cour t l nWEPCo , tha t d o no t increas e th e design capacit y o f th e unit. " i n othe r words , Sinc e th e design capacit y i s th e sam

e befor e an

d afte r th e project , EP A mus t recogniz e tha t th e uni t ha s begun norma l operations . On the othe r hand , the'"actua l t o potential " tes t woul d continu e t o eppl y t o project s o f th e kin d befor e th e cour t i n Puert o Rlca o Cemen t —

i^. , project s tha t conver t a uni t t o a differen t proces s wit ha muc hgreate r designoutpu t capacity. 0 Stated differently , a uni t tha t Increase s it s design capacit y woul d hav e neve r operated a t tha t he

w capacity , an

d thu s woul d becom e a uni t tha t had no t begu n norma l operations . A s EP A wel l knows , repair s Involvin g th e Installation o f ne w component s ar e undertake n a t existin g unit s t o addres s operatin g problems , sucha s reduced availability o r deteriorate d capacity . Like-kin

d replacement s ar e undertake n for precisel y the sam

e reasons . i n othe r words , repair s ar e indistinguishable? * fro m replacement s i n terms o f thei r effec t o n uni t operations . And , s o lon g a s thes e change s d o no t Increas e desig ncapacity , the "actua l t o actual " tes t shoul d appl y t o bot hrepair s an d replacements . Therefore , EP

A shoul d no t interpre t the "actua l t o actual " tes t l n it s curren t rul e a s onl y applyin

g t o like-kin

d replacements . Finally , i n subsequen t discussion s wit hDOJ , DOE , an d EPA , l t wa s agreed tha t EPA , a s a policy matter , ough t t o interpre t th e "actua l t o actual " tes t a s applyin g t o project s tha t ar e no t like kin d replacements . Consisten t wit hthe Administration' s proposa l t o exten

d "actua l t o actual " t o al l non-pollutioncontro l projects , EP A shoul d exercis e it s discretion t o provid e th e broades t possibl e interpretiv

e relie f tha t i s legall y justified .
cc : Steve Wakefiel d Lind a Stunt s

S&f tWlBBnnfti n Elftgf.arl g Pr»wa r Co

. v . HA-tlly

. 89 3 F.2 d 901 , 90 8 (7thCir . 1990 ) (th e replacement s befor e the cour t di d "no t 'change o r alter * th e design. . . o f th e facility") . Sfi & Ptiftr ^ ploa n camon * v . EPA . 88 9 F.2 d 292 , 29 3 (1s t Cir . 1989 ) (th

e uni t involve

d increase d desig

ncapacit y b y "abou t 3 5 percent") .

SOOi aS SJ--C T T6/ZZ/SQ