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OAR Box 1796 

Prepped by Keeia Richards 

Document Number: 

44) IV-H-70 

Docket Number: 

A-90-37 

Printed 10/31/2008 4:20:37 PM Sheet 44 of 107 
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Internal and Deliberative Draft- Do not quote, cite, copy, or distribute. 

November 19, 2002 

existing procedure under the pre-existing definition of 

"actual emissions" at §52.21(b)(21(ii), which generally 

requires the use of an average annual emissions rate based 

on the 2-year period immediately preceding a particular 

•date. The latter procedure is designed to estimate a 

source's actual emissions at a particular time and continues 

to be appropriate for such things as estimating a source's 

impact on air quality for PSD increment consumption. 

On the other hand, the new baseline procedure is 

specifically designed to allow a source to consider a full 

business cycle in determining whether there will be an 

emissions increase from a physical or operational change. 

Generally, a source's operations over a business cycle 

covers a range of operating (and emissions) levels—-not 

simply a single level of utilization. The new procedure 

recognizes that market fluctuations are a normal occurrence 

in most industries, and that a source's operating level (and 

emissions) dee^ not remain constant throughout a source's 

business cycle. The use of a 24-month period within the 

past 10 years to establish an average annual rate is 

intended to adjust for unusually high short-term peaks in 

utilization. 

Consequently, the new procedure ensures that a source 

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seeking to make changes at its facility at a time when • 

utilization may not be at its highest can use a normal 

business cycle baseline by allowing the source to identify 

capacity actually used (-and t-ha-t—reTtra"__TTs usable-) in order to 

determine an average annual emissions rate from which to 

calculate any projected actual emissions resulting from the 

change. 

With respect to the commenters' general concerns that a 

10-year look back period is too long, we sought to better 

understand what time period best- represents an industry's 

normal business cycle. Therefore, we contracted for a study 

of several industries in 1997.24 This study found that, for 

the industries analyzed, business cycles differ markedly by 

industry, and may vary greatly both in duration and 

intensity even within a particular industry. Nevertheless, 

we concluded from the study that 10 years of data is 

reasonable to capture an entire industry cycle. Comments 

24 "Business Cycles in Major Emitting Source Industries." 

Eastern Research Group; September 25, 1997. This study 

examined the business fluctuations for nine source 

categories described as Clean Air Act major emitting 

sources. Industry business cycles were examined using 

industry output data for the years 1982 to 1994 inclusive^ 

based on the Office of Management and Budget's Standard 

Industrial Classification (SIC) codei for individual 

industries-(OMB, 1987). 

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f o r EUSGUs. However, fo r consistenc y wit h th e baselin e 

perio d fo r othe r existin g emission s units , we have specifie d 

tha t th e 2-yea r perio d i s the a consecutiv e 24-month period . 

End Of Moved Text 

2. Why do th e new requirements no t provid e discretio n fo r 

t h e reviewin g authorit y t o conside r anothe r time perio d more 

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Several commenters oppose our proposed elimination of 

the reviewing authority's discretion to allow a different 

representative period (outside of the 10-year period), 

because they argue certain sources (for example, emissions 

units placed in cold reserve due to reduced demand) require 

this flexibility. Some commenters say the discretion should 

be given to the reviewing authority, while other commenters 

wanted the discretion given directly to source owners and 

operators. Instead of the discretion to use an alternate 

period, one commenter prefers that all sources should be 

required to show that they have selected a•representative 

period that precedes the most recent 2-year period. 

We believe that use of a fixed 10-year look back 

period provides the desired clarity and certainty to the 

process of selecting an appropriate utilization/emissions 

level^ tr_*a^r-"±"S representative of a source' _» uomid-r-Ofierat-ioR .• 

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emissions. Some commenters say these provisions would 

penalize sources that complied with other regulatory 

requirements or chose to implement pollution prevention 

programs. Commenters are particularly concerned that 

sources be given credit for voluntary reductions. However, 

other commenters support including all of these factors'in 

the baseline to better represent actual emissions and avoid 

inconsistencies between emissions units that have permits 

and those that do not. Commenters also raise specific 

questions about how the calculation would include the effect 

of other emission limitations. 

As described earlier, we have decided to require the 

use of a consecutive 24-month period within the 10-year look 

back instead of the proposed 12-month period to calculate 

the baseline actual emissions for any emissions unit that 

undergoes a physical or operational change, or is affected 

by such change. The longer 24-month period allows you to 

reference levels of utilization achieved in the past, but 

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also eliminates the potential problem associated with]shortterm peaks LhaL do~not~1-~ri-fly represent the unit's normal" 

op-er_atjL_on. In this respect, the use of a 24-month period is 

consistent with the pre-existing approach for calculating 

actual emissions. 

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_5&gri1 1 y—enforceable limitations currently exist that would 

prevent the affected unit from emitting a pollutant at they ^>c~'~ 

levels calculated from the 24-month baseline period/ The MAOAapproach that we have adopted allows you to reference plant 

capacity that has actually been used, but not pollution 

levels that are not legally allowed at the time the 

modification is to occur. You will be required to make 

adjustments for voluntary reductions that you may have taken 

only to the extent that the reductions resulted -rrrfrom 

conditions that are -J ^g^'l-jry enforceable limitations. 

5. How does the change in the baseline period affect 

related requirements regarding protection of air quality? 

a. How does the extended baseline period conform with the 

special modification provisions under sections 182 (c) and 

(e) of the Act? 

Most commenters feel the proposed extension of the look 

back period fits within the design and intent of the special 

modification procedures set forth in sections 182(c) .and (e) 

of the Act, applicable in serious, severe^ and extreme ozone 

nonattainment areas. However, one commenter representing 

State and local air pollution control agencies considers the 

new requirements to be in significant conflict with the 

special modification procedures contained in those sections 

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proposed demand growth exclusion simply makes that principle 

explicit and eliminates confusion as to how emissions should 

be calculated. The same commenters who support retaining 

demand growth provisions for utilities also believed these 

provisions should be extended to non-utilities. 

Under today's new requirements, you_will be allowed to 

apply the causation provision as originally contained in the 

WEPCO amendments. Both the statute and implementing 

regulations indicate that there should be a causal link 

between the proposed change and any post-change increase in 

emissions, that is, "...any physical change or change in the 

method of operation that would result In a significant net 

emissions increase..." [emphasis added]. -f-See, for example, 

existing §52.21 (b) (2) (i) .-] — Consequently, under today's new 

rules, when a projected increase in equipment utilization is 

in response to a factor such as growth in market demand, you 

may subtract the emissions increases from the unit's 

projected actual emissions if yon r-an ^how th-aH- • —(1) the 

unit could have achieved the necessary level of utilization 

during the consecutive 24-month period you selected to 

establish the baseline^actual emissions; and (2) the , ___. 

increase is not -Tfcjlal-^1 to the physical or operational ^kACytfltt^fy 

change (s) made to the unit. -f-See for example, new ^.iAi-^S) 

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§52.21(b)(41)(ii)(c).± 

On the other hand, demand growth can only be excluded 

to the extent that the physical or operational change is not 

related to the emissions increase. Thus, even if the 

operation of an emissions unit to meet a particular level of 

demand could have been accomplished during the 

representative baseline .period, but d.-L ctan bcr'Hihown theft the 

increase is related to the changes made to the unit, then 

the emissions increases resulting from the increased 

operation must be attributed to the modificatioi-, project, 

and cannot be subtracted from the projection of projected 

actual, emissions. 

8. Should increases in plant utilization be reviewed as 

potential major modifications? 

Many commenters argue that emissions increases 

resulting from increased utilization should not be subjected 

to review as major modifications. They insist that EPA's 

policy and rules have always allowed increases in capacity 

utilization without triggering a modification^ and not 

allowing utilization increases will limit new capacity to 

new emissions units instead of promoting increased 

efficiency at existing emissions units. One commenter 

arguedji that these sorts of changes do not require any sort 

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information for 10 years following the completion of the 

mudif ii_.ci Liu.i project to track the actual annual emissions 

from the units associated with the modification project. 

This represents a special condition that supersedes the 

normal 5-year period for the recordkeeping requirements 

being adopted today. During the 10-year period, you must 

report to your reviewing authority within 60 days after any 

calendar year if the annual emissions, in turns pei—yeartpy, 

from the project exceed the baseline actual emissions by a 

significant amount for the regulated NSR pollutant and if 

such emissions differ from the preconstruction projection./ ^ <$'-'' 

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10. Does the actual-to-projected-actual applicability tes/t ^f>A~~ 

apply to netting? / ^^'u^ 

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We did not specifically request comment on this issue ^o-JL, 

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in the 1996 proposal. Nonetheless, we received several 1 

comments that assert that use of different methods to \ c^Ptc, 

compute an emissions increase and determine a net emissions 

increase would result in "absurd results" and require two 

separate accounting records. Other commenters oppose using 

the actual-to-future-actual test for netting. One commenter 

says that the sole purpose of the actual-to-future-actual 

test was to determine if an emissions increase will occur. 

One commenter sairdys we should go further and revise the 

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definition of "contemporaneous" to limit it to project 

activities (vs. plantwide) and reduce credits for shutdowns 

and curtailments. J<^ J^ ^ « ' ^ ^^4*4. fod / 

/ As stated previously, we did not specifically request 

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mervE" on this issu e and/we have no plans—to apply feh-rs- A", 

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test—Lo netting—a-fc—this—bimrrgrule does not alte r existin g '**• ^vt>s 

practices. 

11. Should we impose an enforceable projected actual 

emissions level? 

Some commenters on our 1996 proposal support the 

establishment of an enforceable limitation on the modified 

source's projected future emissions level. Other commenters 

support our specific proposal in the 1998 NOA to use the 

projected actual emissions as a temporary cap for the 

emissions units involved in the modification project, that 

is, an enforceable 10-year emissions level. 

On the other hand, many other commenters oppose the 

concept, citing various reasons for their opposition. These 

included concerns that it would become a d_e facto baseline 

for any additional permitting and create additional 

enforcement liability, usurp State prerogatives, be 

inconsistent with the Clean Air Act, and require enforceable 

restrictions for too long. A few State and local air 

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We also considered requiring you to submit an up^front 

notification to your reviewing authority, but concluded that 

this would result in an unnecessary paperwork burden, (e-xc-ept 

EUSGUa^ . We anticipate that a large majority of the ty—- t-*j.^.-

projects that are not major modifications may nonetheless be o~jfx_.ii 

required to undergo a permit action through States' minor 

NSR permit programs. In such cases, the minor NSR 

permitting procedures could provide an opportunity to ensure 

that-you and your reviewing authority agrees with your 

emission projections. Requiring a separate notification 

would not provide the reviewing authority with any 

additional information in such circumstances. Accordingly, 

we believe today's requirements provide reviewing agencies 

with the ability to obtain all the information necessary to 

ensure compliance. 

13. Why are we promulgating a—different reporting 

requirements for existing emissions units than for EUSGUs? 

Today we are finalizing slightly different requirements 

for EUSGUs than other industries. In 2000, boilers and 

turbines with greater than 25 MWe or 250 rnmB-t-TrTU/hr of 

generating capacity represented 76 percent of this nation's 

emissions of nitrogen oxides (NOx_) and 85 percent of this 

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