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## tt \ UNITE D STATE S ENVIRONMENTA L PROTECTIO N AGENC Y Offic e o fAi rQualit yPlannin g an d Standard s Researc h Triangl e Park , Nort h Carolin a 2771 1 

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.., . —J l i 7' } ^ " t / » a . k £* < «.'\ ' 'W- ; Mr

. Joh n Paul ' Supervisor , Regiona l Ai r Pollutio n Contro l Agenc y Pos t Offic e Box97 2 Dayton , Ohi o 4542 2
Dea r Mr . Paul : Th e purpos e o f thi s lette r i s t o provid e th e STAPPA/ALAPC O New Sourc e Revie w Subcommitte e wit ha copy o f a backgroun dstatemen t onth e Environmenta l Protectio nAgency' s (EPA's ) "top-down " bes t availabl e contro l technolog y (BACT ) policy . Th e pape r contain s a discussio nonth e origin s o f and rational e fo r th e polic y initiative . I f yo uhav e an

y question s abou t th e backgroun dstatement , pleas e contac t me a t (919 ) 541-562 1 o r Mr . Davi dSolomo no f th e New Sourc e Review

Sectio na t (919 ) 541-5375 . Sincerely ; •eiy r



### John y72* Calcagn i / Directo r / Air\Qualit y

Managemen t Divisio n Enclosur e

cc : G . Emiso n(w/ o enclosure ) W . Becke r (w/enclosure ) Ai r Divisio nDirector , Region s I-X , (w/ o enclosure )P. 3

BACKGROUN DSTATEMEN T ON TH E ENVIRONMENTA L PROTECTIO N AGENCY' S (EPA'S ) TOP-DOWN POLIC Y

I . INTRODUCTION

OnDecembe r 1 , 1987 , forme r Assistan t Administrato r J . Crai g Potte r issue da memorandu

m establishin g severa l program initiative s designe dt o improve th e effectivenes s o f th e Clea nAi r Act' s (CAA's ) new sourc e revie w program s withi nth e constraint s o f existin g regulations . Among thes e initiative s wa s th e "top-down " proces s fo r determinin g bes t availabl e contro l technolog y

(BACT ) unde r th e preventio no f significan t deterioratio n(PSD ) provision s o f th e CAA . Inbrief , th e top-dow nproces s require s tha t al l availabl e contro l technologie s b e ranke di ndescendin g orde r o f effectiveness . Th e PS Dapplican t firs t examine s th e mos t stringen t - - o r "top " - - alternative . Tha t alternativ e i s establishe da s BAC T unles s th e applican t ca n demonstrate , an

dth e permittin g authorit y i nit s informe djudgmen t agrees , tha t technica l considerations , o r energy , environmental , o r economi c impact s justif y a conclusio ntha t th e mos t stringen t technology i s no t "achievable'7i n tha t case . I f th e mos t stringen t technolog y i s eliminate di

nthi s fashion , the nth e nex t mos t stringen t alternativ e i s considered , an ds o on .

Th e Decembe r 1 , 198 7 memorandu m directe dth e Offic e o f Ai r Qualit y Plannin g an

dStandard s (OAQPS ) t o implemen t many o f thes e program

initiatives , an dspecificall y

calle dupo nOAQP S t o develo pguidanc e onth e top-down process . A s a consequence , tha t offic e ha s receive dnumerou s inquirie s regardin g th e basi s fo r an dprope r implementatio no f th e top-dow nprocess . Th e OAQP S i s preparin g a separat e summar y o f th e top-dow

nprocess . A

draf t o f th e summar y

i s presentl y

unde r review . Therefore , thi s statemen t focuse s ona backgroun ddiscussio nexplainin g why EPA ha s adopte dit s curren t polic y o n BACT , an

dclarifyin g EPA' s view tha t thi s polic y

i s consisten t wit hcurren t statutor y

an dregulator y

requirements .P. 4



### II . ADMINISTRATIV E HISTOR Y

BAC T i s define da s
[t]he maximu

m degre e o f reductio nfo r eac hpollutan t ** * whic hth e [permitting authority] , ona case-by-cas e basis , takin g int o accoun t energy , environmental , andeconomi c impact s an

dothe r costs , determine s i s achievable ** * .
Clea nAi r Ac t sectio n169(3) , 4 2 U.S.C . 7479(3) ; 4 0 C.F.R . 52.21(b)(12) ; 4 0 C.F.R . 51.166(b)(12) . I nJanuar y

1979 , EP

A haddisseminate d"Guideline s fo r Determinin g BAC T Unde r PSD " (OAQPS , Decembe r 1978 ) an di nOctobe r 198 0 had issue da "PS DWorksho pManual " (OAQPS , Octobe r 1980 ) tha t include dmor e detaile dguidanc e o

nBACT . Those document s describe da so-calle d"bottom-up " approac ht o BAC T determinations . Th e applican t wa s t o propos e a bas e cas e a s BACT , presen t mor e stringen t contro l alternatives , an ddefendit s BAC T selectio nb

y "demonstratin g tha t eac halternativ e contro l syste m .. . woul d" cause unreasonabl e advers e energy , environmental , o r economi c impacts. " Se e 197 8 BAC T Guideline s a t 5-6 .

InJun e 1986 , Crai g Potte r establishe da tas kforc e t o addres s growin g concern s abou t the effectivenes s o f EPA' s new sourc e review

program s i

n carryin g ou t thei r statutor y responsibilities . On e o f th e tas kforce' s findings , base dupona comprehensiv e review o f numerou s PS Dpermit s issued durin g th e previou s severa l years , wa s tha t PS Dapplicant s an dState s frequentl y

wer e conductin g inadequat e BAC T determination s using th e "bottom up " approac ho f th e 197 8 guideline s an dth e 198 0 worksho pmanual . Innumerou s instances, applicant s woul dpropos e anemissio nlimitatio na t o r nea r a n applicabl e new

sourc e performanc e standar d(NSPS ) unde r sectio n11 1 o f th e CA A a s th e bas e case , an

dprovid e littl e o r n o consideratio no f th e mor e stringen t contro l option s befor e settling o nth e propose dleve l a s BACT . I t als o appeare dtha t State s typicall y woul daccep t these determination s wit hlittl e o r n o independen t analysis , thereby possibl y

failin g t o fulfil l thei rP. 5

responsibilities_unde r th e Act . Th e tas kforc e pointe dou t tw o basi c solution s t o the ' problem o f inadequat e BAC T analyses . On e wa s t o focu s o n improving implementatio no f th e bottom-u papproac hs o tha t i npractic e a s wel l
a s i ntheory , th e statutor y requirement s woul db e observed . Th e othe r optio n wa s t o cal l fo r a top-dow napproac ht o th e BAC T analysi s i nth e expectatio n tha t it s interna l dynamic s would , i npractice , achiev e mor e effectiv e implementatio no f th e BAC T requirements . Se e generally , "Ne w Sourc e Revie w Tas kForc e Report, " Fina l Draft , Decembe r 1986 , a t 25-28 .

Inth e meantime , i

nanadjudicativ e decisio no nappea l o f a PS Dpermi t fo r a municipa l wast e combusto r (MWC) , th e Administrato r hel dtha t a PS D applican t ha s th e "burde no f demonstratin g tha t significan t technica l defects , o r substantia l loca l economic , energy , o r environmenta l factor s o r othe r cost s warran t a contro l technolog y les s efficien t tha n[the mos t stringen t technolog y

available]. " Honolul uResourc e Recover y Facilit y

("H-Power") . PS D Appea l No . 86-8 , a t 7 (RemandOrder , Jun e 22 , 1987) . Shortl y thereafter , EPA issuedguidanc e callin g fo r applicatio no f th e H-Powe r holdin g t o al l BAC T determination s fo r MWCs . "Operationa l Guidanc e onContro l Technolog y fo r New an dModifie dMunicipa l Wast e Combustor s (MWCs), " Jun e 26 , 1987 .

Inligh t o f thes e events , EPA decide di

nth e Decembe r 1 , 198 7 Potte r memorandu

m tha t a s a matte r o f Agenc y polic y i t woul dadop t th e top-dow nBAC T approac hfo r al l categorie s o f PS Dsources . Mr . Potte r instructe dEP A Regiona l Office s t o us e th e top-dow napproac hi

nthei r ow

nBAC T determinations , an

dt o strongl y

encourag e Stat e an

dloca l PS Dpermittin g authoritie s t o d o s o a s well . Th e Potte r memorandu m furthe r directe dRegiona l Office s t o conduc t timel y review s o f PS Dapplications , an dt o commen t adversel y

onpropose dPS Dpermit s tha t faile dt o adequatel y conside r th e mor e stringen t contro l options , a s woul db e require da s a matte r o f cours e unde r a top-dow napproach . I f fina l Stat e an dloca l permit s stil l faile dt o reflec t adequat e consideratio no f th e relevan t BAC T factors , th e Region s wer e t o conside r suchpermit s deficient . A nadditiona l poin t relate dt o th e Potte r memorandu

m wa s tha t th e top-dow nproces s shoul di

npractic e lesse n administrativ e burden s i nth e conduc t o f BAC T determination s becaus e i t doe sP. 6

no t requir e a ful l analysi s o f al l contro l alternative s tha t ar e mor e stringen t tha n th e NSP S o r othe r bas e case , a s woul d b e require d unde r a prope r bottom-u p analysis

.

III . TH E TOP-DOW

N APPROAC HA S PAR T O F TH E EXISTINGBAC T DETERMINATION PROCES S

A . Th e Top-Dow

nApproac hDoe s No t Alte r Existing BAC T Requireaents .

I n callin g fo r us e o f th e top-dow n approach , EP Aha s no t effecte d a chang e in existin g PS D regulations , an d ha s no t altere d th e BAC T requirement s fo r anysource . Th e definitio n o f BAC T i n th e statute , EP Aregulations , and Stat e implementatio n plan s remain s th e same . Regardles s o f th e specifi c methodolog yuse d fo r determinin g BACT , b e i t "top-down, " "bottom-up, " o r otherwise , th e sam e cor e criteri a appl yt o any BAC T analysis : th e applican t mus t conside r al l availabl e alternatives , and demonstrat e wh yth e mos t stringen t shoul d no t b e adopted
. Recall , however , th e Ne wSourc e Revie wTas k Force' s findin g tha t i n man yinstance s th e bottom

up methodolog ywa s applie d inadequately

. I n response , EP Aha s develope d th e top-dow n methodolog yi n orde r t o improv e administratio n o f thes e basi c BAC T selectio n requirement s alreadyprovide d fo r in th e CAA , curren t PS D regulations , Stat e implementatio n plans , an d EP Aguidance

. However , th e top

dow n methodolog ydoe s no t involv e anychang e in th e substanc e of , o r fundamenta l procedure s for , a BAC T determination

.
Wha t i s differen t abou t th e top-dow n polic yi s th e emphasi s upo n considerin g th e mos t stringen t contro l option s first

. Bu t thi s doe s no t represen t a radica l shif t in th e burde n o f proo f fro mpermittin g authoritie s t o PS D applicants

. Instea d i t i s intende d t o mak e mor e effectiv e th e cor e policie s tha t appea r i n th e 197 8 guidelines

. Tha t is , th e top-dow n approac h explicitl yrecognize s th e self-eviden t presumptio n tha t technologie s alread y shown t o b e "available " ca n b e use d b yth e prospectiv e sourc e unde r consideration , and th e fac t tha t th e PS D applican t i s i n th e bes t positio n t o provid e an initia l justificatio n wh ya n availabl e technolog yi s no tP. 7

"achievable " for.tha t particula r sourc e a s well
. I n explicitl ycallin g upo n PS D applicant s t o conside r th e mos t stringen t control s first , and eithe r adop t thos e control s o r explai n wh ythe yar e no t achievable , EP Ai s onl yseekin g t o improv e th e administratio n o f an existin g requirement

. Th e permittin g authorit yafte r publi c revie wand commen t remain s responsibl e fo r exercisin g informe d judgmen t i n determinin g achievabilit yin accordanc e wit hthi s requirement

.

B . Th e Top-Dow

nProces s I s Consisten t Wit hth e CAA .
Th e EP Abelieve s tha t th e top-dow n approac ht o BAC T i s supporte d byth e statutor ydefinitio n in sectio n 169(3 ) o f th e CAA
. Th e legislativ e histor yi s clea r tha t Congres s intende d BAC T t o perfor ma technology-forcin g function

. Se e S
. Rep
. No
. 95-252 , 95t hCong. , 1s t Sess
. 3 1 (1977) , reprinte d i n 3 ALegislativ e Histor yo f th e CA AAmendment s o f 197 7 a t 1405 ; 12 3 Cong
. Rec
. S9171 , 3 Legislativ e Histor ya t 72 9 (remark s o f Sen
. Edmun d G
. Muskie , principa l autho r o f 197 7 Amendments)
. Thi s constructio n wa s reinforce d i n H-Powe r and in a late r PS D appea l decision , Pennsauke n County
. Ne wJerse y Resourc e Recover yFacility

. PS D Appea l No
. 88- 8 (Reman d Order , Nov
. 10 , 1988)
. I n thos e case s th e Administrato r interprete d th e BAC T definitio n a s requirin g th e PS D applican t t o demonstrat e t o th e permittin g authorit ywh yth e mos t stringen t contro l technolog y"available " i s no t "achievable " in tha t case . I t i s als o clea r tha t in adoptin g BACT , Congres s intende d PS D permittin g authoritie s t o exercis e informe d discretio n t o weig henergy , environmental , and economi c impact s in determinin g BAC T fo r a particula r source . S
. Rep
. N o 95-25 2 a t 31 , 3 Legislativ e Histor ya t 1405
. I n addition , in sectio n 16 0 o f th e CAA , Congres s emphasize d tha t publi c participatio n and a carefu l assessmen t o f relevan t ^factor s i s crucia l t o al l decisionmakin g unde r th e CAA' s PS D provisions

.

I n theory , thes e statutor ygoal s ca n b e fulfille d b yeithe r a top-dow n o r bottom-u p approac ht o BAC T determinations

. However , a s discusse d previously , EPA' s experienc e ha s bee n that , a s implemente d in practice , th e bottom-u p approac hi s deficien t in actuall yachievin g thes e goals , and th e Agenc yno wP. 8

believe s the yca n bes t b e serve d byth e top-dow n BAC T methodology
. Th e EPA' s polic yfurther s th e sprea d o f effectiv e pollutio n contro l technologie s by focusin g attentio n firs t o n th e mos t stringen t contro l options

. A t th e sam e time , i t provide s a ful l opportunit yfo r meaningfu l publi c participation, an d allow s permittin g authoritie s t o giv e informe d consideratio n t o energy , environmental , and economi c impact s befor e reachin g a fina l BAC T decision

.

C . Unde r Th e Top-Dow nProcess , Inportan t Distinction s Betwee nBAC T
an dLowes t Achievabl e Eaissio nRat e (LAER ) ar e Maintained , an d State s Stil l Weig hth e Relevan t Factors .
Th e top-dow n approac hmaintain s th e statutor ydistinction s betwee n BAC T
an d th e LAE R requiremen t unde r sectio n 171(3 ) o f th e CAA(whic hmajo r ne w source s and majo r modification s locatin g i n nonattainmen t area s ar e require d t o meet)
. Th e LAE R requiremen t provide s tha t al l affecte d source s mus t compl y wit heithe r th e mos t stringen t limi t containe d i n a Stat e implementatio n plan , o r th e mos t stringen t emissio n limitatio n achieve d in practice , whicheve r i s mor e stringent

. I n contrast , unde r BACT , consideratio n o f energy , environmental , o r economi c impact s ma yjustif ya lesse r degre e o f contro l i n th e particula r case . Th e EPA' s polic yregardin g th e top-dow n proces s doe s no t alte r thi s shar p statutor ydistinction

.
Th e EP Abelieve s i t i s appropriat e t o conside r LAE R determination s i n establishin g th e mos t stringen t technolog y"available " - - i.e.,.th e "top " contro l optio n - - fo r purpose s o f BAC T analyse s unde r th e top-dow n methodology
. Th e statut e require s PS D applicant s t o conside r th e mos t stringen t control s tha t ar e "available, " and availabilit yshoul d b e give n a straightforward , practica l meaning

. Se e Pennsauke n a t 8
. An yemissio n limi t tha t ha s bee n require d fo r LAE R purpose s mus t b e "actually , no t theoretically, " possible

. 3 Legislativ e Histor ya t 537
. Thus , a limi t containe d in a LAE R determinatio n i s presumabl y"available " fo r BAC T purpose s byanysourc e in th e sam e category , and i s no t merel yexperimenta l o r otherwis e beyon d th e bound s o f consideration

. Thi s i s s o regardles s o f whethe r a top-dow n o r a bottom-u p approac ht o consideratio n o f th e contro l

### technolog y i nquestio ni s used . Accordingly , th e fac t that , t o date , a technolog y

ha s bee nrequire donl y unde r LAERdeterminations , o r ha s no t ye t bee napplie dt o man y

sources , doe s no t rende r i t unavailabl e fo r BAC T consideration . Se e Pennsauke na t 8 .
Th e top-dow

npolic y (an di nparticular , th e us e o f LAERdetermination s t o determin e availabl e BAC T alternatives) , doe s no t establis ha nationa l BAC T standard . Th e statut e provide s tha t technica l consideration s may , alon e o r i n conjunctio nwit henergy , environmental , o r economi c factors , rende r a give n contro l technolog y

o r associate demissio nlimitatio nno t "achievable " i na give nPS Dcase . I t i s precisel y th e purpos e o f th e BAC T analysi s t o weig h thes e factor s i

ndeterminin g whethe r a n"available " technolog y o r emissio n limi t i s "achievable " 1 nth e give ncase . Adoptio no f a top-dow nmethodolog y doe s no t change thi s requirement .
Th e EPA' s polic y

regardin g th e top-dow nproces s doe s no t prejudg e th e weigh t tha t permittin g authoritie s mus t giv e t o th e relevan t statutor y factors . Instead , th e purpos e o f EPA' s polic y i s t o insur e tha t th e relevan t factor s ar e weighe di

nth e well-considere dmanne r calle dfo r b y Congress , an

d tha t th e weighin g proces s i s properl y informe dby

resor t t o objectiv e dat a wher e appropriate . Thus , a s th e Administrato r ha s hel di nH-Powe r an

d Pennsauken . i t i s no t sufficien t t o rejec t a contro l technolog y by merel y assertin g tha t i t i s "to o costly. " Rather , claim s tha t economi c (o r other ) factor s rende r a technolog y o r emissio nlimi t no t achievabl e mus t b e supporte d b y a nanalysi s utilizin g readil y availabl e objectiv e indicator s o f advers e impacts . However , th e fina l weighin g o f thos e factors , an dth e fina l BAC T decision , ar e mad e by

th e permittin g authority . Rejectio no f a contro l technolog y

b y a reviewin g agenc y

mus t hav e a rational e arrive da t afte r ful l consideratio no f dat a determine di na consisten t an

dsoundmanner . Suc h decision s ma y

no t b e arbitrary , capricious , o r contrar y t o law .P.1 0

8
D . I t I s Appropriat e t o Iopleoen t th e Top-Dow nProces s ThroughBAC T Guidanc e an

dAdjudication .
Th e EP Abelieve s i t i s appropriat e t o continu e implementin g it s BAC T policie s throug hpolic ystatements , and anyrelevan t adjudicativ e decision s o f th e Administrator , rathe r tha n throug hrulemaking

. Th e EP Aha s followe d a consisten t practic e o f issuin g BAC T guidanc e sinc e passag e o f th e PS D progra m and promulgatio n o f BAC T regulations

. Wit hrespec t t o th e top-dow n polic yi n particular , EPA' s statement s o f polic yhav e bee n informe d in par t byth e adjudicativ e decision s i n H-Power
. Pennsauken
. and Nort hCount yResourc e Recover yAssociates

. PS D Appea l No
. 85- 2 (Remand Order , Jun e 3 , 1986)
. However , lik e EPA' s top-dow n polic ystatements , thos e decision s d o no t chang e th e law , bu t a t mos t interpre t existin g law
. I n anyevent , i t i s clea r tha t EPA , lik e othe r regulator yagencies , ha s authorit yt o creat e bindin g preceden t throug hadjudication

. See , e.g. , NLR B v . Wvman-Gordo n Co.
. 39 4 U.S
. 75 9 (1969)
. I t i s als o clea r that , absen t a n explici t statutor yconstraint , EP A ha s broa d discretio n t o emplo ythos e procedure s and method s i t feel s ar e bes t suite d t o dischargin g it s numerou s and varie d duties

. See , e.g. , Vermon t Yanke e Nuclea r Powe r Corp
. v . NRDC
. 43 5 U.S
. 519 , 54 3 (1978)
.

IV . SUMMAR

Y

I n summary , fo r th e reason s discusse d above , th e top-dow n proces s i s consisten t wit hexistin g statutor yand regulator yrequirements

. Th e EP Adoe s no t believ e tha t it s polic yview s o n th e top-dow n proces s creat e anyne wlega l right s o r dutie s whic hmus t b e implemente d throug hrulemaking

.