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OAR Box 1802 

Prepped by Charmelle Mathews 

Document Number: 

28) IV-E-23 

Docket Number: 

A-90-37 

Printed 11/4/200811:57:59 AM Sheet 28 of 117 
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MEETING SUMMARY A- °. O - 5 -7 

EPAAVEPCO LITIGANTS MEETING 

NEW SOURCE REVIEW REFORM 

September 3, 1998 

The meeting was held in Washington, DC. Attached is a list of attendees. 

Jon Devine opened the meeting by stating that the purpose of the meeting was to discuss 

the schedule for promulgating changes to the NSR rules, to gain industry's input on the Notice of 

Availability (NOA), and to discuss the related issues in the NSR Reform Rule. The purpose was 

not to conduct litigation settlement discussions. 

Mr. Devine indicated that the expected date for promulgating the NSR Reform rule is 

June 30,1999. However, this date has not been discussed with David Hawkins of the NRDC. 

When asked by Chuck Knauss, David Solomon indicated that the promulgation package would 

cover all outstanding issues that have been raised concerning the NSR Reform package. The 

Transitional Area Rule will be proposed separately, and would address NSR regulations in areas 

that are in attainment of the one-hour NAAQS, but not the eight-hour NAAQS. 

Summary of NOA 

Mr. Solomon summarized the major concepts in the NOA. He also indicated that the 

EPA had concerns whether demand growth is a viable concept for the utility or any other 

industry, whether demand growth could be tracked under the restructured utility industry, and 

whether a 5-year period for tracking emissions due to a physical or operational change was 

sufficient. Mr. Solomon indicated that the actual-to-enforceable-future-actual concept was 

developed after considering comments from the industry, States and the environmental groups, 

and that it could be applied to all types of facilities. 

Regulatory Language 

Industry representatives requested that the EPA provide proposed regulatory language 

implementing the NOA concepts, and cited examples where regulatory language would clarify 

EPA's intent. When indicated by Mr. Solomon that EPA did not intend to circulate specific 

provisions beyond those included in the Reform rule proposal, the industry representatives 

mentioned specific areas of concern that they would like EPA to clarify, e.g., would the 

definition of PTE be modified or how would the offsets be determined. When indicated by 

Michael Barr that examples provided in the NOA were helpful, Mr. Solomon agreed that specific 

examples of the actual-to-future-actual test would be good. 

Debottlenecking 

Mr. Solomon explained that enforceable emission limits would be required for any units 
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whose emissions may increase as a result of a physical or operational change occurring 

elsewhere in the facility (i.e., debottlenecking). He indicated that this concept is not a deviation 

from current EPA policy. Bill Peterson and Leslie Ritts maintained that the EPA's current policy 

on this matter is ambiguous. 

It was discussed and agreed that any limits on an upstream unit may limit a downstream 

unit. However, an increase in the utilization of an upstream unit could translate into increased 

utilization of the downstream unit, thus requiring limits on both units. It was explained that the 

proposed rule limits emission increases and not operational capacity. When asked by Ms. Ritts 

whether monitoring of both the upstream and the downstream units would be required, 

Mr. Solomon explained that in cases where a single parameter controlled all associated 

emissions, only the momtoring of the changed upstream unit may be sufficient while, in other 

cases, enforceable limits and monitoring may be required for downstream units. 

Henry Nickel maintained that EPA had never capped emissions resulting from 

debottlenecking, and that BACT review was not required for downstream units despite an 

increase in emissions. However, Carol Holmes and Mr. Devine explained, that debottlenecked 

emissions must be included in the applicability analysis, i.e., the increase in emissions at both the 

changed unit and any other affected units must be considered. However, the source may take an 

enforceable 10-year limit to avoid NSR review, which is a relief from the current policy that 

requires a permanent limit. When asked for clarification by Mr. Knauss (based on the language 

in 63 FR 39861), Mr. Solomon agreed that a physical or operational change at a unit which is 

already covered by an enforceable 10-year limit would not need to be evaluated when calculating 

increase in emissions. 

Major Modifications 

Mr. Nickel was concerned that the EPA was suggesting that emission increases due to 

increased utilization would be limited, e.g., the higher utilization of a boiler, without any 

physical or operational change, to produce more steam than what the emission limits were based 

on. Mike Sewell explained that indeed for a source that took limits to avoid NSR applicability, 

the emissions must be limited. Mr. Sewell and Mr. Solomon explained that this was not a 

change in the current policy. 

Mr. Nickel then contended that there was a difference between changes to the industrial 

facility and changes to the support facility. Suppose, he stated, that the example facility put in all 

of the support facilities in Phase I of the project and planned to put in the manufacturing facilities 

over a 10-year period as Phase II of the project. If the support facilities were required to have an 

enforceable limit before going to Phase II, Phase II would not occur. Mr. Solomon 

acknowledged that Mr. Nickel had a concern regarding emissions capping. 

Several industry representatives were concerned that the proposed policy would subject 

"everything that is done to a source" to NSR. They also commented that small changes, i.e., 

changes with less than a significant net emissions increase, should not require review, especially 
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for units which began normal operations years ago. When asked why a physical or operational 

change that decreases emissions needs to be reviewed, Mr. Solomon responded that a review 

may be necessary due to an overall increase in emissions to the atmosphere despite a decrease at 

the changed unit. Mr. Solomon and Greg Foote explained that the proposal is not changing the 

current policy that requires a review of all emissions increases due to physical or operational 

change. 

When suggested by Mr. Nickel that EPA should consider an increase in both the hourly 

and the annual emission rates before a source is deemed to be modified, i.e., similar to NSPS, 

Mr. Solomon explained that such a consideration would ignore the statutory language pertaining 

to physical or operational change. 

Mr. Nickel explained that EPA should follow the precedent of the WEPCO rule 

(57 FR 32314) and exclude from the definition of physical or operational change any activities, 

such as pump replacement, that would restore the capability of a unit to the level at which it was 

capable of operating in the representative baseline year, regardless of how it actually operated 

during that year. Mr. Solomon agreed that routine replacement was an important exception to 

the definition of physical or operational change and that EPA needs to do more work on the 

definition of'routine repair and replacement." 

10-Year Baseline and 10-Year Enforceable Emission Limit 

When asked by Mr. Peterson whether the proposed 10-year enforceable limit would be 

set at baseline emissions level or at a level less than a significant increase above the baseline, 

Mr. Solomon answered that the regulations allowed an increase up to the significance level. 

When asked by Mr. Ban* whether the 10-year limit would set the baseline emissions level in 

perpetuity for all units included in a netting analysis, Mr. Foote said that it was yet unresolved 

and solicited specific written comments on the issue. It was also discussed that there was no 

difference in the 10-year and the permanent emission limits except the period for which they 

applied. 

Mr. Devine emphasized that the EPA believed the emission limit and the baseline period 

should each be 10 years, as both should cover representative utilization periods. However, he 

indicated that David Hawkins of NRDC considered a 10-year emission limit to be far too short 

due to longer life cycles of utilities. Also, Mr. Hawkins believed and that there should not be 10-

year look back period. Instead, Mr. Hawkins proposed that utilities be subject to a declining 

emissions cap, because utilization decreases over time unless capital improvements are made to 

upgrade aging equipment. Mr. Peterson maintained that a 10-year emission limit was too long, 

and that 2- or 3-year limit would be reasonable to judge whether a change causes an emissions 

increase. Mr. Knauss and Mr. Nickel insisted that the 10-year baseline period should not 

translate into a 10-year emission limit because the two are unrelated. When asked by Anna 

Wood, Ms. Ritts and Mr. Knauss endorsed a 10-year baseline period and a shorter emission limit. 

Ms. Wood noted that the proposed 10-year limit was a compromise relative to a 20- or 40-year 

lifecycle. When asked by Mr. Nickel, Mr. Devine explained that EPA's RIA (Regulatory Impact 
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Analysis) covered the entire NSR Reform rule, and that the 10-year emissions limit was not 

separately analyzed. Mr. Devine solicited comments as to why a 10-year limit would be too 

long. 

Mr. Nickel asked whether the proposed 10-year baseline would replace the current 

provisions, i.e., 2-year baseline or "another representative period." Mr. Solomon replied that it 

would, and that the contemporaneous period would be 5 years for any unit not included under the 

PAL. Mr. Nickel provided an example of how the current provisions provide greater flexibility. 

Plantwide Applicability Limits 

Mr. Sewell summarized the PAL concepts included in the NOA, and requested input on 

two issues: (1) whether the contemporaneous period concept under Alabama Power [636 F.2d 

323,400 (D.C. Cir. 1979)] should apply to PAL's, and (2) whether PAL's are more 

environmentally beneficial than the current netting procedures. Mr. Devine and Ms. Wood also 

showed interest in receiving evidence on whether PAL's result in less emissions than netting. 

The industry representatives stated that the requirements for contemporaneous netting period 

under Alabama Power should not be a consideration in developing the PAL provisions. Mr. Barr 

noted that a contemporaneous period was not required under the NOx budget rule. Ms. Wood 

noted that the NOx budget rule is a market-based rule, which the NSR rule is not. Mr. Peterson 

stated that banked emission reduction credits, which could be used for NSR at any time, are not 

required to be contemporaneous. 

When asked by Mr. Sewell whether the downward adjustment of PAL due to underutilization would be attractive to the industry, Mr. Barr replied that they would not be attractive. 

David Hawkins's Comments on PAL's 

Mr. Sewell briefly summarized David Hawkins' verbal comments made to the EPA on 

September 2,1998. Mr. Hawkins did not support the proposed PAL provisions in general, and 

had specific concerns regarding their application to the utility industry. He preferred that the 

EPA propose an emissions cap for utilities that would decrease over time until all units under the 

PAL met the utility NSPS. At that time, the PAL limit would stop declining. The PAL would be 

in force for 30 years. 

E. Discussion of NSR Reform Rule 

Several aspects of the NSR Reform Rule were briefly discussed. These included the 

Innovative Control Technology Waivers, Clean Unit Test, and Pollution Control Projects. 

Dennis Crumpler indicated that comments on the Innovative Control Technology provisions 

were favorable. Mr. Foote indicated that EPA is still deliberating its position on the Clean Unit 

test. Mr. Barr requested a written overview of the major comments on the Clean Unit test. 

The meeting was then adjourned. 

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ATTENDEES 

EPA/INDUSTRY MEETING 

NEW SOURCE REVIEW REFORM 

September 3, 1998 

Name 

Michael Barr 

Julie Becker 

Russell Frye 

Chuck Knauss 

Bill Lewis 

Henry Nickel 

Bill Peterson 

John Reese 

Leslie Ritts 

Lea Anderson 

Jocelyn deGrandpre 

Jon Devine 

Greg Foote 

Carol Holmes 

Anna Marie Wood 

David Solomon 

Dennis Crumpler 

Karen Blanchard 

Mike Sewell 

Stephen Edgerton 

Janet McDonald 

Affiliation 

Pillsbury, Madison & Sutro 

American Automobile Manufacturer's Association 

(AAMA) 

Chadbourne and Parke, representing American Forest 

and Products Association (AFPA) 

Swidler and Berlin, representing AAMA 

Morgan, Lewis, and Brockius, representing the 

Chemical Manufacturers' Association (CMA) 

Hunton and Williams, representing Utilities 

Association Regulatory Group (UARG) 

Shaw and Pittman, representing APFA 

American Petroleum Institute (API) 

Hogan & Hartson, representing API 

EPA/OGC 

EPA/OGC 

EPA/OGC 

EPA/OGC 

EPA/OECA 

EPA/OPAR 

EPA/OAQPS 

EPA/OAQPS 

EPA/OAQPS 

EPA/OAQPS 

EC/R Incorporated (EPA Contractor Support) 

EC/R Incorporated (EPA Contractor Support)