p.1 

OAR Box 1787 

Prepped by Ollie Stewart 

Document Number: 

80) ll-C-38 

Docket Number: 

A-90-37 

Printed 11/4/200810:22:20 AM Sheet 80 of 147 
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^ ^ •'? gfc.\\ UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

I ^*#7 3 0ffic e o f Ai r Qualit v Plannin 9 a"d Standards /? * 70S 7 

\^rr ^ Research Triangle Park. North Carolina 27711 n~t -sx 

FIL E COX>Y 

JUN 2 5 1990 

Mr. James B. MacRae, Jr. • 

Acting Administrator and Deputy Administrator J^W 2517 7 ', 

Office of Information and Regulatory Affairs jf | 

Office of Management and Budget fj 

Washington, D.C. 20503 ---». ; :; 

Dear Mr. MacRae: 

This letter responds to your March 5, 1990 inquiry concerning the 

Environmental Protection Agency's (EPA's) "top-down" approach for determining 

best available control technology (BACT). In your letter, you asked EPA to 

notify its Regional Offices that the top-down guidance is in draft form and 

has not received final Agency approval. In addition, you requested that 

EPA submit to the Office of Management and Budget (OMB), for review under 

Executive Order 12291, all proposed and final actions that apply to the draft 

top-down approach. You also indicated that the information requirements 

associated with the top-down approach do not have a valid OMB control number; 

hence, EPA's efforts to collect such information represent a violation 

of the Paperwork Reduction Act (PRA). 

As mentioned 1n my August 16, 1989 letter to you, we do not agree that 

EPA's development and implementation of the top-down approach constitute a 

rule as defined in Executive Order 12291. The top-down approach is an 

analytical procedure (not a rule) for States and sources to use to ensure that 

the statutory requirements of BACT are met. No State has been asked by EPA, 

as a result of the top-down approach, to change either its rules for -

implementing or its regulatory definition of BACT since no such rule changes 

should be necessary; rather, the top-down approach is, if anything, an 

elaboration of EPA's existing rules and guidance. 

Your request may perhaps stem from an apparent misunderstanding regarding 

EPA's top-down approach. Our position that the top-down approach does not 

reflect any basic shift 1n the regulatory requirements under the prevention of 

significant deterioration (PSD) program, nor does it impose new or additional 

burdens on Industry, is therefore explained in greater detail below. 

Section 165(a)(4) of the Clean Air Act (Act) requires all sources subject 

to PSD to apply BACT. Section 169(3) of the Act defines BACT as: 

"the maximum degree of reduction of each pollutant ... which the 

permitting authority, on a case-by-case basis, taking Into account 

energy, environmental, and economic impacts and other costs, determines 

Is achievable." 
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.. 'TA 

Since the inception of the PSD program, EPA has Interpreted the statutory 

BACT definition as containing two core criteria: consideration of the most 

stringent control technologies available, and a reasoned justification, 

considering "energy, environmental and economic Impacts and other costs," of 

any decision to require less than the "maximum degree of reduction" 

in emissions. This definition and approach are reflected in the Guidelines 

for Determining Best Available Control Technology (OAQPS, Dec. 1978), pp. 5-6. 

A task force convened by EPA in 1987 found several deficiencies in the 

administration of the PSD program. These included a finding that the PSD 

rules were not being effectively implemented in many cases, because applicants 

were not considering all options, and States were not adequately explaining 

the basis for their decisions. To correct the deficiencies, EPA instituted 

many program improvements involving closer coordination with and oversight of 

State permitting agencies. Among the remedies chosen by EPA was a decision to 

adopt a top-down approach to BACT analyses. Neither that decision nor the 

other administrative improvements instituted in 1987 altered existing 

regulatory requirements. 

Turning to the specific points raised in your letter, it appears that you 

have confused EPA's general top-down approach regarding BACT analyses, which 

has been in place for over 2 years, with a pending guidance document 

discussing the specific details of that approach. The EPA's decision to use a 

top-down approach was stated in a December 1987 memorandum from the Assistant 

Administrator for Air and Radiation. (We have provided a copy of that 

memorandum to your staff.) Since that time, the approach has been widely 

applied by EPA and the States, and has been specifically endorsed in several 

adjudicative decisions by the Administrator. 

With respect to EPA's implementation of the top-down approach, the first 

example you quote, from a December 23, 1989 Federal Register notice 

(54 FR 52825), relates primarily to the core BACT criteria. As discussed 

above, those criteria are not new and are not altered in any way by the 

top-down approach. Your second example pertains to an amendment to a PSD 

delegation agreement between EPA's Region V and the State of Indiana. In 

Indiana and approximately 20 other States which lack an approved PSD program 

as part of the State implementation plan (SIP), EPA is the PSD permitting 

authority. In most of those cases, EPA has delegated the permitting function 

to the State, which is expected to follow EPA policies. Accordingly, the 

delegated States, including Indiana, are to follow EPA's top-down approach. I 

believe that this application of the existing general policy is appropriate as 

well. 

What remains in draft form is a detailed guidance document providing 

additional information to States and the regulated community on the 

implementation of EPA's existing top-down approach. This draft, which 

reflects EPA Regional Office comments, was recently sent to the State and 

Territorial Air Pollution Program Administrators and Association of Local Air 

Pollution Control Officials New Source Review (NSR) Subcommittee for review 

prior to finalization. A copy was delivered recently to Mr. Art Fraas of your 

office. While we continue to disagree on whether the top-down approach is 
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covered by Executive Order 12291, we will be happy to discuss the draft 

detailed guidance with you or your staff before Issuing 1t 1n final form. 

Your request to review all proposed and final actions that involve the 

top-down approach 1s troubling, however, not only 1n light of the SIP reforms 

our offices have implemented to expedite the process, but because of 

federalism implications. Again, EPA has not required any rule changes to 

implement the top-down approach, so SIP actions involving top-down would be 

generally those initiated by the States. It would be unlikely that EPA 

would propose to disapprove these SIP revisions, so your request to review 

these actions would undo the SIP reforms we have agreed upon. 

With respect to information requirements of the top-down approach, I must 

disagree with your assertion that efforts to collect any such information 

represent a violation of the PRA. First of all, under OMB regulations the PRA 

applies only to collections of information (1) conducted or (2) sponsored by 

Federal agencies (see 5 CFR Sec. 1320.3). Information submitted under the 

top-down approach is, with few exceptions, submitted to States and not to the 

Federal government, so that the Federal government itself is not "conducting" 

any collection of information. Moreover, the top-down approach does not 

require an applicant to submit any additional information to obtain a permit 

(although an applicant may, by choice, submit information for the State's use 

in an attempt to demonstrate that the most stringent pollution control 

technology available is not appropriate in its particular case). Therefore 

the Federal government is not causing or requiring the States to collect 

information under the top-down approach, and so is not "sponsoring" the 

collection of information according to the OMB definition of "sponsor" 

[see 5 CFR Sec. 1320.7(r); see also Dole v. United Steelworkers of America. 

No. 88-1434 (U.S. February 21, 1990)] (interpreting the PRA as applying only 

to information collections by or for the use of Federal agencies). 

Secondly, the information requirements for EPA's NSR and PSD program 

include information needs for BACT purposes, and these information 

requirements have already been approved under OMB Control No. 2060-0003. 

Moreover, EPA was already recommending a top-down approach at the time that 

OMB approved the information requirements for EPA's NSR and PSD program. 

The sole basis you cite in support of your assertion of a violation of 

the PRA is the absence of an identification by EPA of any information 

collection burden resulting from the top-down approach in the documents 

submitted by EPA in support of the information request mentioned above. The 

EPA's emphasis on the top-down approach does not, however, add any additional 

information requirements. Section 165(e)(3)(B) of the Act and EPA's PSD 

regulations at 40 CFR 51.166 and 52.21 explicitly require a BACT analysis. 

Accordingly, EPA's regulations have always required that permit applicants 

"shall submit all information necessary to perform any analysis" required 

under the PSD provisions of the Act. As discussed above, EPA guidance has, 

since 1978, called upon permit applicants to evaluate all available control 

options to meet the statutory BACT requirement (i.e., that the source apply 

the most stringent level of control considering energy, economic, cost, and 

environmental concerns). As such, a top-down BACT analysis calls for the same 
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information as the previously-employed "bottom-up" analysis, and no new 

authorization or control number should be required. 

For these reasons, I ask that you reconsider your assertion that EPA's 

efforts to collect such Information represent a violation of the PRA. 

If you wish to discuss these matters further, please contact my office 

• inc^ly , 

Assistant Administrator 

for Air and Radiation 

; 

0AQPS:AQMD:NPPB:NSRS:Solomon/Allman(541-5375/MU)05/15/90 

Disk:Solomon#4:Email.70 

bcc: J. Grant 

R. Campbell 

J. Calcagni 

E. Lillis 

: G. McCutchen 

D. Solomon 

Sect, file