1Defining and Redefiningthe “Source”for the PSD BACT AnalysisBrian DosterAir and Radiation Law OfficeEPA Office of General CounselFebruary 3, 2010NOTE: This summary of legal authorities and prior EPA statements is forinformational purposes only and does not constitute legal advice orestablish any interpretive orpolicy positions of the EPA.2Goals of Presentation• To highlight relevant– Provisions of the Clean Air Act and EPA regulations.– Court decisions interpreting those provisions.– Statements by EPA applying those provisions invarious contexts.• To assist the workgroup in identifying– Scope of permitting authority discretion.– Procedural steps that may be warranted toimplement specific recommendations.3Two Questions Relating to the“Definition” of the Source• What is the “source” to which a BACT analysisapplies?– The entire facility or– Individual emissions units at a facility• When do potentially “available” options forBACT “redefine the source”?– EPA has not considered options that fundamentallyredefine a source to be “available” at Step 1.– EPA has acknowledged permitting authoritydiscretion to consider options that “redefine.”4Step 1: Top-Down Process“The first step in the BACT selection processinvolves identifying and listing all ‘available’control options. NSR Manual at B.5. The termavailable is used in its broadest sense underthe first step and refers to control options witha ‘practicalpotentialfor application to theemissions unit’ under evaluation.Id.(emphasisadded). The goal of this step is to develop acomprehensive list of control options.”In Re Knauf Fiber Glass, GMBH, 8 EAD 121, 129-30 (EAB 1999)5Clean Air Act“No major emitting facility ... may beconstructed in any area to which this partapplies unless – ... (4) the proposedfacilityis subject to best available controltechnology for each pollutant subject toregulation under this chapter emittedfrom, or which results from, such facility.”§ 165(a) (emphasis added)6Clean Air Act“The term ‘best available control technology’ means anemission limitation based on the maximum degree ofreduction of each pollutant subject to regulation underthis Act emitted from or which results from any majoremitting facility, which the permitting authority, on acase-by-case basis, taking into account energy,environmental, and economic impacts and other costsdetermines is achievable for such facility throughapplication of production processes andavailablemethods, systems, and techniques, including fuelcleaning, clean fuels, or treatment or innovative fuelcombustion techniques for control of such pollutant.”§ 169(3) (emphasis added)7Definition of the Source• BACT provisions in CAA and EPA regulationsoften use the term “facility” or “source,” butregulations use “emissions unit” in somecontexts.• In policy and interpretive documents, EPA hasgenerally called for a separate BACT analysisfor each emissions unit at a facility.• EPA has supported a logical grouping ofemissions units and considered controlsavailable for individual pollutants whenevaluating the merits of grouping.8EPA Regulations“Best available control technologymeans an emissionslimitation (including a visible emission standard) basedon the maximum degree of reduction for eachpollutant subject to regulation under Act which wouldbe emitted from any proposed major stationary sourceor major modificationwhich the Administrator, on acase-by-case basis, taking into account energy,environmental, and economic impacts and other costs,determines is achievable for such source ormodificationthrough application of productionprocesses or available methods, systems, andtechniques, including fuel cleaning or treatment orinnovative fuel combustion techniques for control ofsuch pollutant. ...”40 C.F.R. § 52.21(b)(12) (emphasis added)9EPA Regulations“... If the Administrator determines thattechnological or economic limitations on theapplication of measurement methodology to aparticular emissions unitwould make theimposition of an emissions standard infeasible,a design, equipment, work practice, operationalstandard, or combination thereof, may beprescribed instead to satisfy the requirementfor the application of best available controltechnology. ...”40 C.F.R. § 52.21(b)(12) (emphasis added)10EPA Regulations“(2) A new major stationary sourceshall apply bestavailable control technology for each regulated NSRpollutant that it would have the potential to emit insignificant amounts.”“(3) A major modification shall apply best availablecontrol technology to each regulated NSR pollutant forwhich it would result in a significant net emissionsincrease at the source. The requirement applies toeach proposed emissions unitat which a net emissionsincrease in the pollutant would occur as a result of aphysical change or change in the method of operationof the unit.”40 C.F.R. § 52.21(j) (emphasis added)11EPA Regulations“(5)Stationary sourcemeans any building, structure,facility, or installation which emits or may emit aregulated NSR pollutant.”“(7)Emissions unitmeans any part of a stationarysource that emits or would have the potential to emitany regulated NSR pollutant and includes an electricutility steam generating unit as defined in paragraph(b)(31) of this section. ...”40 C.F.R. § 52.21(b)12EPA Guidance“The BACT requirement applies to each individual newor modified affected emission unit and pollutantemitting activity at which a net emissions increasewould occur. Individual BACT determinations areperformed for each pollutant subject to a PSD reviewemitted from the same emissions unit. Consequently,the BACT determination must separately address, foreach regulated pollutant with a significant emissionsincrease at the source, air pollution controls for eachemissions unit or pollutant emitting activity subject toreview.”Draft NSR Workshop Manual at B.4. (1990)13EAB Decisions“As reflected by Draft NSR Manual, the current EPApolicy is that ‘each new or modified emission unit (orlogical grouping of new or modified emissions units)subject to PSD is required to undergo BACT review.’Draft NSR Manual at B.10. Permitting authorities areencouraged by the Draft Manual to evaluate ‘logicalgrouping’ of emission units in each industry on areasonable case-by-case basis, focused on analysis oftechnical feasibility and control effectiveness.See id.”In re: General Motors, Inc., 10 EAD 360, 382 (EAB 2002)14EAB Decisions“In a BACT determination, the Region must give consideration toeach individual emissions unitor pollutant emitting activitysubject to review. New Source Review Workshop Manual at B.4.We agree with the Region that the Grain Line and the Press Lineare properly treated as separatepollutant-emitting activities. Asnoted above, the Press Line emits PM10, but the Grain Line doesnot, and this difference means that some technologies availablefor controlling emissions from theGrain Line will not be availablefor controlling emissions fromthe Press Line. Moreover, eventhough both lines emit VOCs, thetechnologies for controlling VOCemissions from the Grain Line are not necessarily available forcontrolling VOC emissions fromthe Press Line. Because the twolines are separate pollutant emitting activities for which theavailable control technologies aredifferent, the Region's decisionto perform separate BACT analyses for the two lines does notstrike us as clearly erroneous.”In Re Masonite Corporation, 5 EAD 551, 557-8 (EAB 1994) (footnote omitted)15EPA Legal Briefs• EPA has argued that BACT for a new electric-generatingunit at a larger facility cannot be less stringent basedon improved control at other EGUs at the same site (azinc mine) that were not subject BACT.• “The plain terms of the Clean Air Act require that aState determine and apply the best available controltechnology for each ‘major emitting facility’ that is‘constructed,’ 42 U.S.C. 7475(a)(1). Neither a facilityowner nor a State may avoid the BACT requirement fora new facility by arguing that some other controltechnology will be used on some other facility.”EPA Brief in Alaska DEC v. EPA, 124 S.Ct 983 (2004)16Redefining the Source• Since 1988, EPA has recognized that BACT options thatfundamentally redefine the proposed source may beexcluded at Step 1 of the analysis.• EPA has also said that redefinition is not whollyprohibited, so it has been a question of degree withinthe discretion of the permitting authority.• Recent EAB decisions emphasize the need for a strongrecord showing that the excluded option would disruptthe applicant's basic business purpose for theproposed facility.• One U.S. Court of Appeals has upheld EPA’s discretionto exclude options that “redefine the source” whileidentifying some limitations.17Step 1: Available Control Options• Three types of options that should be considered– Inherently Lower-Emitting Processes/Practices– Add-on Controls– Combinations of Inherently Lower Emitting Processes and Addon ControlsNSR Workshop Manual at B.10(emphasis in the original).• The “redefining the source” rationale is onlyappropriate for excluding inherently lower-emittingprocesses, not add-on controls.In re: Prairie State Generating Company, PSDAppeal No. 05-05, Slip. Op. at 33 (EAB 2006).18Origin of “Redefining the Source”“The permit conditions that define these [control]systems are imposed on the source as the applicanthas defined it. Although imposition of the conditionsmay, among other things, have a profound effect onthe viability of the proposed facility as conceived by theapplicant, the conditions themselves are not intendedto redefine the source.”In re Pennsauken, 2 E.A.D. 667 (1988) [Administrator]19NSR Workshop Manual“Historically, EPA has not considered the BACTrequirement as a means to redefine the designof the source when considering availablecontrol alternatives. ... However, this is anaspect of the PSD permitting process in whichstates have the discretion to engage in abroader analysis if they so desire. ”NSR Workshop Manual at B.13.20EAB’s Current ApproachDoes the option “so substantially alter thepurpose or basic design of [the] proposedfacility that it should be considered aredefinition of the source?”In re: Desert Rock Energy Company, LLC, PSD Appeal No. 08-03 et al., Slip. Op. at64 (EAB Sept. 24, 2009).21EAB’s Current Approach“[T]he permit applicant initially defines the proposed facility's end,object, aim, or purpose — that is the facility's basic design,although the applicant's definition must be for reasonsindependent of air permitting.”“The permit issuer ... should takea ‘hard look’ at the applicant'sdetermination in order to discern which design elements areinherent for the applicant's purpose and which design elementsmay be changed to achieve pollutant emissions reductionswithout disrupting the applicant's basic business purpose for theproposed facility, while keeping inmind that BACT, in most cases,should not be applied to regulate the applicant's purpose orobjective for the proposed facility.”Desert Rockat 64 (internal quotations from Prairie Stateopinion omitted)22EAB Emphasis on the Record“[T]he Board first looks at the administrative record to see how theapplicant defined its ‘goal, objectives, purpose, or basic design’ forthe proposed Facility in its application. “Desert Rockat 65.“The Board's analysis inPrairie State, NMU, and today's decisionemphasize that such an analysisof the underlying administrativerecord is an essential componentof a supportable BACT decisionthat a proposed control technology redefines the source.”Desert Rockat 76.23EAB Criteria“[W]hen evaluating an applicant'sassertion that a design elementis fundamental, the permit issuershould consider whether thefacts underlying that assertion are better considered within theframework of steps 2 through 5 ofthe top-down method, ratherthan grounds for excluding redesign at step 1.”– Cost savings is not a basic orfundamental design element(considered at Step 4)– Avoiding risk of new or innovative technology is not a basicdesign element (considered at Step 2).In re: Prairie StateGenerating Company, PSD Appeal No. 05-05, Slip. Op. at 30n. 23 (EAB Aug. 24, 2006).24U.S. Courts“ EPA ... distinguishes between ‘control technology’ as a means ofreducing emissions from a power plant or other source of pollutionand redesigning the ‘proposed facility’ (the plant or other source) -changing its ‘fundamental scope.’ The agency consigns the latterpossibility to the ‘alternatives’ section of the Clean Air Act, whichas we said is not involved in this case. Refining the statutorydefinition of ‘control technology’ - ‘production processes andavailable methods, systems, and techniques, including fuelcleaning, clean fuels, or treatment of innovative fuel combustiontechniques’-to exclude redesign is the kind of judgment by anadministrative agency to whicha reviewing court should defer.”Sierra Club v. EPA, 499 F.3d 653, 655-6 (7thCir. 2007) (on appeal of EAB’s PrairieStatedecision)25U.S. Courts• An interpretation that would completely read astatutory term, such as “clean fuels,” out of theBACT definition would be questionable.See, Sierra Club, 499 F.3d at 656.• EAB has acknowledged this potential limitationon the redefining the source policy.– Northern Michigan University(“clean fuels” and low sulfur coal)– Desert Rock Energy Company(“innovative fuel combustiontechniques” and coal gasification)26Coal-Fired Power Plants• Desert Rock Energy Company, PSD Appeal No. 08-03et al. (EAB Sept. 24, 2009).– Remanded permit that excludedcoal gasification (IGCC)option from BACT analysis for proposed coal-fired boilers.– Application listed IGCC as one of four potential technologiesfor a new large coal-fired power plant.– No distinction of this permitfrom two previous federal PSDpermits where IGCC was considered an available option.– In footnote, EAB observed thatdiscretion to exclude IGCC maybe limited because “innovative fuel combustion techniques”language in Act appears intended to generally call forconsideration of coal gasification(citing legislative history and7thCircuit).27Coal-Fired Power Plants• Northern Michigan University, PSD Appeal No. 08—02(EAB Feb. 18, 2009).– Remanded permit for small coaland wood-fired boiler due toinsufficient record to support exclusion of low-sulfur coal onredefining the source grounds.– Permit application said design allows burning of bituminousand subbituminous Powder River Basin coal.– “Clean fuels may not be ‘readout’ of the Act merely becausetheir use requires ‘some adjustment’ to the proposedtechnology. ... If the only required adjustment were that adirtier fuel be “switched” to acleaner fuel, ... then low sulfurcoal should be the BACT choiceover high sulfur coal.” Slip. Op.at 27 (citing 7thCircuit).28Coal-Fired Power Plants• Prairie State Generating Company, PSD Appeal No. 05-05 (EAB Aug. 24, 2006).– No error in excluding low-sulfurcoal option where applicantproposed to build a mine-mouthpower plant for the purpose ofutilizing a dedicated 30-year supply of coal.– Rejected argument that purpose of power plant must beviewed as broadly as the production of electricity from coal.• May consider how the functionof a unit as a baseload orpeaking unit affects the design and available controls.• Some fuel choices may be integral to design.– Rejected argument that the coaltype inherently defines thedesign of a power plant.29Coal-Fired Power Plants• NSR Workshop Manual(page B.13)– “[A]pplicants proposing to construct a coal-fired electricgenerator, have not been required by EPA as part of a BACTanalysis to consider building a natural gas-fired electric turbinealthough the turbine may be inherently less polluting per unitproduct (in this case electricity). ...”– “Thus, a gas turbine normally would not be included in the listof control alternatives for a coal-fired boiler.”30Coal-Fired Power Plants• Old Dominion, 3 E.A.D. 779 (1992) [Administrator]– No error in state determinationthat it could not require newcoal-fired steam electric generatingstation to fire natural gas.– “Traditionally, EPA does not require a PSD applicant to changethe fundamental scope of the project.”– But also said “the BACT analysis should include considerationof cleaner forms of the fuelproposed by the source.”31Coal-Fired Power Plants• Hawaiian Commercial & Sugar Co., 4 E.A.D. 95 (1992).– No error in permitting new coal-fired, circulating fluidized bedboiler at sugar mill instead of combined cycle facility fired withlow sulfur distillate oil.– “EPA’s PSD permit conditions regulations do not mandate thatthe permitting authority redefine the source in order to reduceemissions. . . . Petitioner’s preference as to the type of boilerand fuel to be used in this instance would in effect redefinethe source.”32Coal-Fired Power Plants• SEI Birchwood Inc., 5 E.A.D. 25 (1994).– No error in permitting new coal-fired plant rather than naturalgas facility.– “It is clear that permits issued by delegated states underfederal PSD permitting regulations are not subject tochallenge because the permit issuer refused to redefine thesource.”33Waste Incinerators• In re Pennsauken, 2 E.A.D. 667 (1988) [Administrator]– No error in permitting new municipal waste incinerator despiteavailability of power plants inarea that could burn waste.– “The permit conditions that define these [control] systems areimposed on the source as the applicant has defined it.Although imposition of theconditions may, among otherthings, have a profound effect onthe viability of the proposedfacility as conceived by the applicant, the conditionsthemselves are not intendedto redefine the source.”34Waste Incinerators• Spokane Regional Waste-to-Energy Facility, PSDAppeal No. 88-12 (June 9, 1989) [Administrator]– No error in permitting new municipal waste incinerator atlandfill without fuel cleaning and source separation becauseevidence did not show theseoptions resulted in betteremissions reductions.– Technology is not “available”in any meaningful sense ifknowledge about its effect onemissions, in the particularconfiguration in which it wouldbe employed, is so incompleteas to be unusable.35Waste Incinerators• Brooklyn Navy Yard Resource Recovery Facility,3 E.A.D. 867 (1992) [Administrator]– Remanded permit for new municipal waste incinerator in orderto consider viability of a source separation program fornitrogen-containing materials.– Contrary to Spokane, information now showed that fuelcleaning and separation in combination with pollution controlequipment could reduce emissions and were thus availabletechnologies for purposes of a BACT determination.36Waste Incinerators• Hillman Power Co., 2002 EPA App. LEXIS 15 (July 31,2002).– No error in permitting modification of existing waste-fired (tireand wood) electric generating facility to increase the amountof tire-derived fuel (TDF) burned.– “In this case, limiting TDF burning to the amount authorizedunder Hillman Power’s existingpermit, as advocated by MEC,would necessarily operate tothe exclusion of the processmodification Hillman Power seeks.”37Other Facilities• Hibbing Taconite Co., 2 E.A.D. 838 (1989) [Administr.]– Remanded permit to modify taconite ore pellet facility to burnpetroleum coke in place of natural gas and fuel oil becausenatural gas fuel not considered in BACT analysis.– “Hibbing will continue to manufacture the same product (i.e.taconite pellets) regardless ofwhether it burns natural gas orpetroleum coke.”– “... because Hibbing is alreadyequipped to burn natural gas,this alternative would not require a fundamental change to thefacility.”38Other Facilities• Knauf Fiber Glass, 8 E.A.D 121 (1998).– Remanded permit for new rotary spin fiberglassmanufacturing facility because of failure to consideralternative rotary spin manufacturing process employed bycompetitor who achieved lower PM10 emissions.– “Although it is not EPA’s policyto require a source to employ adifferent design, redefinitionof the source is not alwaysprohibited. This is a matterfor the permitting authority’sdiscretion. The permitting authority may require considerationof alternative production processes in the BACT analysis whenappropriate.”