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- £ - 5 & MEETIN G SUMMAR Y EP A MEETIN G WIT H UTILIT Y INDUSTR Y j ._^^- ^ SECTOR-BASE D APPROAC H \ 

### March 28, 20001 £*

_2' t 230 0 I EP A AI RDOCKE T Th e meetin g wa s hel d at

th e office s o f

EPA , N.C . Mutua l Building , 41 U W;-€hapgTTBiii Street , Durham , Nort h Carolina . Th e meetin g bega n at approximatel y 10:0 0 a man d close d a t approximatel y 2:3 0 pm . Attachmen t I o f thi s summary contain s th e EPA' s invitatio n lette r fo r thi s meeting , Attachmen t I I contain s th e meetin g agenda , an d Attachmen t II I contain s th e meetin g handou t

o n th e sector-base d approach . A lis t o f attendee s i s als o attached . INTRODUCTIO N Kare n Blanchar d opene d th e meetin g b y welcomin g everyone . Sh e sai d tha t EP A ha s bee n considerin g th e sector-base d approac h an d wante d t o continu e th e dialogu e wit h th e industry . Sh e sai d tha t

EP A wante d t o presen t

som e preliminar y idea s at today' s meetin g an d solici t comment s fromth e industr y o n thos e ideas . Sh e indicate d th e EP A wa s als o plannin g t o mee t wit h th e publi c interes t

group s (environmenta l groups ) an d wit h STAPPA/ALAPC O ove r th e nex t tw o week s regardin g th e sector-base d approach. Sh e als o indicate d tha t Joh n Seit z an d Bil l Harnet t

ha d wante d t o atten d thi s meetin g bu t wer e travelin g out

o f tow n o n busines s an d therefor e wer e no t

abl e t o attend . Henr y Nicke l aske d i f

EP A ha d mad e an y decision s regardin g th e bas e NS Rprogra man d i f EP A wil l hol d mor e meeting s o n that . Ms . Blanchar d replied tha t EP A ha d me t

wit h th e comple x manufacturer s an d ha d som e fruitfu l discussion s wit h them , an d tha t EP A wa s no w i n th e proces s o f

meetin g wit h othe r

stakeholder s tha t

wer e no t par t ofth e previou s meeting s (e.g. , States) . Afte r

tha t the y wil l tal k

t o Bo b Pereiasepe . Sh e indicate d tha t n o mor e meeting s wer e planne d wit h th e comple x manufacturer s o n th e bas e NS Rprogram . Ms . Blanchar d the n turne d t o Kath y Kaufman fo r aquic k ru n throug h ofth e first

pag e o f th e handou t

o n th e sector-base d approach . Ms . Kaufman presente d a n overvie w ofth e progra m alon g wit h it s goal , th e bi g picture , overal l requirements , an d th e pollutant s an d source s tha t woul d b e covered . 

### NO x AN D S0 2 TARGE T LEVEL S Ms . Kaufina n the n opene d th e discussio n ofth e rational e for th e progra m(secon d pag e o f th e handout) . Sh e starte d b y discussin g th e targe t level s for NO x an d S0 2 an d indicate d tha t EP A wa s thinkin g o f

settin g target s i n th e rang e o f 0.1-0.1 5 lb/MMBt u fo r

NO x an d Pag e 1_P-3_

0.25-0.6 0 lb/MMbt

u fo r S02 . Fo r S02 , sh e mentione d tha

t thes e level s ca

n b e achieve d assumin g a90-95 % contro l fo r scrubbing an

d us e of coa l wit h a n averag e sulfu

r content of 1- 3 percent . Bo b Wyma n asked i f asingle targe t

fo r eac h pollutant

woul d appl

y to everyon e or

woul d th e target s b e set

o n aregiona

l basis . Ms . Kaufma

n replie d tha

t th e issu e wa s up fo

r discussio n and tha t EP A woul d lik

e to get feedbac k fromth e industry . On

e ofth e factor s EP

A wa s considerin g wa s tha

t th e coa l used in th e wes t

generally ha

d alowe r sulfu r content . Joel Bluestei n sai d tha

t th e level s should depend on whethe r they ar e se t plant-by-plant

or regiona l level etc. , and whethe

r th e progra mi s atradin g program . He indicate d suppor t fo r atradin g program . Ro n Litzinge

r als o indicate d suppor

t fo r trading , bu t

sai d tha t target s that

ar e set b y takin g th e minimum , o

r th e averag e ofth e minimum , ar e har d t o compl y wit h an d therefor e no t muc h tradin g ca n happen a

t thos e levels . Richar

d Chastai n als o agree d tha

t additiona l control s ma

y limi t th e abilit y t o trade . Mr . Nicke l sai d tha

t BAC T fo r existin g unit s tha

t underg o modification s i s no t th e sam e a s BAC T fo

r ne w sources . Thes e level s (the one s bein g considere d b y EPA) , e.g. , 0.1 5 fo r NOx , ma y b e ver y aggressive . Wit h respec t to adifferenc e in percen

t sulfu r in coa l between eas t

and west , Mik

e Cashi n sai d tha t there wa s n o reaso n to penaliz e source s tha t switc h to lowe

r sulfu r coal . Mr . Litzinger supporte d Mr . Cashin' s commen t an d sai d tha t there shoul d b e arang e fo

r targe t levels . Sa mWolf e aske d wha

t the rational e wa s fo

r limitin g participatio n to only th e coal-fire d units . Ms . Kaufina

n replie d tha

t EP A wa s tryin g t o ge

t emissio n reduction s fromexistin g coal

fired units . Coverin g of

othe r units , i.e. , oil

- and gas-fire d units , woul d b e afollow-u p question . For example , wha

t happen s whe

n auni t switche s fromcoa

l t o gas . Mr . Nicke l sai d tha t th e answe r to Mr . Wolfe' s questio n depend s on wha t th e bas e progra

mlook s like . H e explaine d tha t UARG' s proposa

l wa s base d on UARG' s understandin g ofth e bas e program , and th e proposa l include d amandator

y offramp . Ms . Kaufma

n asked i f coverag e fo

r othe r unit s wa s desire d the n ho w th e progra

mwoul d wor

k whil e stil l ensurin g tha

t th e result wa s well-controlle d units , and ho w th e targe t

level s woul d b e affected . Mr . Nicke l pointe d out tha t oi l and ga s unit s wil l no t generat e enoug h allowance s a s compared to coa l units . Mr . Wolf

e sai d tha t amor e fundamenta

l question s i s shoul d there b e aseparat e set of targe t rate s depending o n fuel , bu t tha t woul d mak

e i t confusing when switchin g fuel . A bette r approach woul d b e to hav e anationa l target level . Mr . Bluestei n pointe d out

tha t ther e wa s aneed t o recogniz e tha t th e goa l i s emissio n reduction , no t

necessaril y installatio n o f

contro l technology . He explaine d tha t a n effective tradin g progra

mca n achiev e tha

t goal . H e acknowledge d tha

t loca l ai r qualit y concern s mus t

b e Pag e 2P. 4

addressed , but

explaine d tha

t emission reduction s ca

n b e achieved by anumbe

r o f means , i.e. , fue l switching , re-powering , installatio n of controls , etc . Mr . Wyma

n asked whethe

r th e progra mshoul d b e technology-base d or ai r quality-based . Pointin g to th e bi g pictur

e explaine d b

y Ms . Kaufman , h e suggeste d tha t i n orde r to b e cos t effective th e target s should b e se t a t th e highe r end ofth e rang e being considere d b y EPA , and tha t an y uni t tha t ca n mee t tha t level shoul d b e allowe d t o participate . Ms . Blanchar d replie d tha

t EP A wa s awar

e ofth e bi g pictur

e an d reminde d everyon e tha

t thi s approach wa s avoluntar y offramp . DebraJezouit

agreed wit

h Mr . Bluestein' s comment , an d said tha t th e progra

mshoul d b e broa d based , i.e. , all coal , oi l an d ga s unit s shoul d b e covered . Sh e sai d tha t their (Clas s o f 85's ) member s woul d hav e aproble mwit h coverin g onl

y th e coa l units . Mr . Chastai n said tha

t th e above comment s fromth e industr y wer e jus t th e initia l reactio n and tha t there wil l b e mor

e comment s late

r on . Ms . Blanchar

d asked th e industr

y participant s to provide their

writte n comment s t o EP

A withi n tw o weeks . 

### PM-1 0 AN D C O TARGE T LEVEL S Regardin g PM-1 0 target

levels , Ms . Kaufma

n sai d th e EP

A wa s considerin g th e rang e of 0.015-0.0 3 lb/MMBtu . Sh

e explained tha

t 0.0 3 level wa s th e curren

t NSP S level , an

d th e 0.01 5 level wa s base d o n som

e recen t BAC T determinations . For

CO , sh e sai d tha t EP A wa s simply considerin g goo d combustio n practices , an d no t an y specifi c levels . Mr . Nicke l said tha

t th e particulat

e matte r level s tha t EP A wa s considerin g talke d about PM-1 0 whil e th e NSP S wa s se t fo r TSP . Afte

r abrie f discussion , Ms . Blanchar

d sai d tha t EP A wil l hav e t o discus s th e matte r furthe r and get back t o th e participant s a

t alate r time . Bil l Brownell said tha

t thes e target

level s neede d to b e looked a t i n term s of

existin g unit s whic h ma y alread y hav e controls , an

d tha t i t wa s no t reasonabl e t

o "ri p out " olde

r control s and put i n new controls . Davi d Solomon argued tha t th e PM-1 0 control s ha

d no t changed ove

r time , i.e. , th e onl

y choice s ar

e ES P and baghouse . Mr . Brownell an d anothe r industr y representativ e argue d tha t there ma y stil l b e aneed t

o "scrap " a

n ES P an d instal l abaghouse . Mr . Cashi n explaine d tha

t no t all type s of

coa l ca n accomplis h th e sam

e thing , e.g , Powdere d River

Basin coa l performanc e wa s no t

th e sam e a s othe r coal . Ms . Blanchar

d aske d th e industr y representative s to provide an y availabl e costin g information abou t specifi c facilitie s an d achievabl e levels . Pag e 3P. 5

OUTPUT-BASE

D TARGET S Ms . Kaufma

n solicite d industr

y comment s on whethe

r th e target s shoul d b e input

- or output-based , an d i f

output-base d the n ho w woul d they b e measured . Mr . Bluestei n sai d that h e wa s astron g supporte

r of output-base d targets , an

d tha t h e woul d b e happ y to wor

k wit h EP A o n this . Ms . Blanchar

d aske d ho w th e output

woul d b e measured . Ms . Bluestei n explaine d that th e outpu t ca n b e measure d ver

y accurately , an

d tha t ther e wa s a n output-base d targe t

"ou t there" . H e als o mentione d tha

t there wa s alread

y infrastructur

e withi n EP

A to se t output-base d target s and tha t som e guidanc e fromEP

A o n tha t ma y b e coming . Mr . Chastai n explaine d tha t measurin g electri c output

i s no t s o straightforward . Another industr y representativ e mentione d tha t som e companie s ma

y conside r MW H outpu t confidentia

l an d therefor e ma y no t b e willin g to shar

e tha t information . Ther

e wa s abrie f

discussio n o n output-base d approach . The industr y representative s generall

y di d no t suppor t th e output-base d targets . INTERMEDIATE TARGET S Ms . Kaufina

n solicite d industry' s comment s o n whethe r ther e shoul d b e intermediate target s fo r participatin g source s t o meet durin g th e program . She sai d tha t EPA' s opinio n wa s tha t there shoul d b e som

e intermediat

e targets , but

asked wha

t th e basi s woul d b e fo

r settin g thos e targets . Mr . Bluestei n sai d tha

t h e woul d prefe

r aglide pat

h a s oppose d to step s durin g th e program . Ms . Blanchar

d asked ho w tha

t would wor

k i n th e absenc e of

intermediat

e targets . Mr . Bluestei n explaine d tha t th e target s would b e in th e fonn of apercent reductio n ever

y year . Mr . Wyma

n als o indicate d suppor

t fo r th e glide path . Mr . Solomo n aske d i f

unde r aglidepat h th e sourc e woul d alway s measur e reduction s i n emission s agains t

areduce d level each year . He als o asked i f it woul d ad d to th e certaint

y t o hav e specifi c target s to mee t along th e way . Mr . Bluestei n argue d tha t i n th e cas e o f

step s ther e woul d b e n o enforcemen

t unti l th e time fo

r showing complianc e wit

h agiven ste

p i s reached . Ann aWoo d explaine d that th e tim e between step s woul d b e th e source' s windo w fo r reachin g compliance . Mr . Nicke l sai d tha

t Mr . Solomon' s point

i s wel l taken fo

r aprogra mtha t start s 1 0 year s fromno w and goe s o n fo

r 10-1 5 year s fromth e star

t dat e becaus e i n tha

t cas e th e intermediat

e step s coul d b e better

defined .

Pag e 4P. 6

Mr . Wyma

n sai d tha t consideratio n ofth e baselin e wa s als o important , i.e. , i f th e startin g baselin e wa s lo w then tha

t would b e aproblem . Mr . Solomo n explaine d tha t th e progra

mwa s rate-based , no t

tonnage-based . Mr . Wyma n sai d tha t i n tha t case , it wa s ok . 10-YEARTIMEFRAM

E Ms . Kaufina

n asked wha

t areasonabl e timefram

e woul d b e to achiev e th e targe t levels . Sh e sai d tha t EP A wa s currently thinkin g of a10-yea r timeframe . Mr . Cashi n said tha

t 1 0 year s wa s to o short . Mr . Brownell sai d tha t 1 0 year s woul d b e to o aggressiv e fo

r som e companies , e.g. , fo

r retrofits . H e aske d whe

n th e 1 0 year s woul d star

t and i f ther e woul d b e aplanning perio d prior to th e star t ofth e program . H e indicate d tha t a plannin g perio d would b e beneficia l becaus e it

woul d allo w source s to decide on th e mos t cost effective approach . Ms . Blanchar

d said tha t EP A wa s in th e proces s of

discussin g this , but

th e current thinkin g wa s fo

r th e yea r 201 0 a s th e en

d date . Mr . Solomo n asked everyon e t o kee p i n mind tha t i n th e cas e o f

alate r star t date , whil e waitin g fo

r thi s progra

mto start , all change s wil l trigge r NS Rbecaus e thi s offram

p will no t b e available . Mr . Nickel responde d by sayin g tha t in tha t cas e oi l and ga s unit s ar

e bein g penalize d fo

r bein g oi l an

d ga s unit s becaus e the

y wil l continu e t o b e subject

to NS Runti l aprogra

mtha t include s themca

n b e developed . Caro l Holme s sai d tha

t ther e wa s aneed to star

t somewher

e an d tha t EPA' s thinkin g wa s to star t wit h coal , then ad

d oi l an d gas , an d then brin g i n othe

r industry . Severa

l industr y representative s fel

t tha t i f oi l and ga s unit s wer

e no t included , som

e ofth e source s will b e a

t adisadvantage . UNIT S COVERE

D Ms . Kaufina

n presente d EPA' s curren

t thinkin g tha

t onl y th e coal-fire d unit s woul d b e covered . Sh

e aske d fo r industr y comment s o n th e covere d units . Pet e Jonke r sai d tha t thi s sector-base d approach i s agoo d program . He sai d tha t hi s compan y wa s agas-base d compan

y an d woul d als o lik

e to joi n thi s program . The progra m shoul d no t b e limite d t

o coa l unit s only . He furthe

r sai d tha t th e bas e progra

mi s no t goo d fo r hi s compan y and tha t h e supporte d Mr . Nickel' s opinio n o f it , i.e. , "progra

mfromhell. " Therefore , hi s compan

y woul d lik

e to b e abl e to opt-i n into thi s program . Mr . Wolf e sai d tha t h e i s worried tha

t thi s discussio n wa s no t

fruitful becaus e peopl e wer e talkin g point-by-point . If an y one variabl e changes , the n othe r variable s chang e along wit h it . For example , timefram

e an d target level s ar e tie d together . Mr . Solomon acknowledge d tha t severa l factor s playe d arol e togethe r i n thi s program . H e explaine d tha t EP A wa s tryin g to Pag e 5P. 7

provide certaint

y t o coa l unit s and onc e tha

t progra mwa s i n place , i t

woul d b e easier

fo r other unit s t o joi n in . He sai d tha t it woul d b e to o much to tr

y to se t u p aprogra mcoverin g al l unit s fromth e beginning , and tha t i t woul d b e better

t o conside

r option s fo r other units , i.e. , timeframes , targe t

levels , etc. , afte

r th e cor e progra mwa s i n place . Mr . Wolf e argued tha

t i f oi l an d ga s unit s wer

e lef t out the n there woul d b e asmalle r numbe r of unit s in th e progra

mresultin g in les s trading . AVERAGING/TRADIN G Ms . Kaufina

n mentione d th e thre e option s fromth e handout tha t wer e bein g considere d fo r tradin g and solicite d comment s on thos e options . Sh e sai d tha t EPA' s current

thinkin g wa s to allo w site-to-site trading . Sh e als o asked if

tradin g shoul d b e allowe d acros s companies . She pointe d out

tha t EP A wa s currently no t

thinkin g of

allowin g individua

l unit s t o op t

i n into th e program , i.e. , al l unit s a

t acompan y mus t opt in . For tradin g between companies , Mr . Wyma n asked if th e tradin g woul d b e tonnage-base d o r wil l there b e som

e kind of adynami c averaging . Ms . Blanchar d sai d tha t EP A neede d t o thin

k mor e abou t it . Ms . Kaufina

n sai d tha t EPA' s curren

t thinkin g wa s to hav e atonnage-base d trading . Regardin g optin g i n o f

units , Mr . Cronmille

r asked if auni t coul d op t i n afte r th e star t of th e program . Ms . Kaufina

n replie d tha

t i t wa s stil l unde

r consideratio n withi n EPA . Mr . Bluestei n sai d tha

t adiscret e tonnage-base d progra

mwoul d mea

n tha t there wil l no w b e tw o separate , paralle l tradin g program s fo r bot h S0 2 an d NOx . Ms . Kaufma

n explaine d tha

t th e trackin g system s woul d b e simila r between th e tw o program s fo r S0 2 and NOx , bu t

th e emission s fromth e tw o program s woul d b e treate d a s separat e commodities . Mr . Wyma n suggeste d to combine th e tradin g programs . He acknowledged tha t i t ma y requir e legislatio n to combin e th e tradin g programs , bu t fel t tha t combinin g themwa s agoo d idea . Mr . Brownell sai d tha

t basin g thi s tradin g progra

mo n th e othe

r tradin g program s wa s anothe r reaso n t o thin

k about th e star t date , becaus e alate

r star t dat e woul d giv e tim e fo

r th e othe r program s t o wor

k out . Regardin g NO x target s bein g considere d b y EPA , Ms . Watt s sai d tha t a t 0.1-0.1 5 lb/MMBt

u level , ther

e woul d b e no trading . In orde r to achiev e thos e levels , source s woul d hav e to put

SCRo n ever

y unit . Mr . Solomo n said tha t tradin g coul d occu

r i f som e ofth e unit s overperformed . Ms . Watt s argued tha t a t such alo w level , sa

y 0.1 2 lb/MMBtu , there wa s n o roo mto overperfonn . Mr . Solomon sai d tha t ther e wer e way s to achiev e level s belo w Pag e 6P. 8

0. 1 lb/MMBtu . H e als o commente d tha t thes e target s wer e onl y strawma n number s an d subjec t t o mor e discussion . Ms . Kaufina n solicite d further comment s o n th e tradin g program . Sh e aske d ho w thi s tradin g progra mwoul d b e integrate d wit h th e othe r tradin g programs . Sh e sai d tha t ther e wa s a nee d t o tak e int o accoun t

loca l ai r qualit y concern s an d Clas s I areas . Sh e als o sai d tha t ther e ma y stil l b e anee d t o obtai n offset s i n nonattainmen t areas . Mr . Wyma n reiterate d hi s preferenc e t o hav e one , an d not two , tradin g programs . Fo r loca l ai r qualit y needs , h e suggeste d tha t tradin g ratio s coul d b e considered , o r tha t ther e coul d b e restriction s o n th e directio n ofth e trades . H e recommende d agains t restrictin g th e tradin g progra mbased o n worst-cas e assumption s abou t ai r qualit y concern s suc h a s visibility . H e sai d tha t th e industr y fel t

tha t acomplet e tradin g progra mwoul d b e best . Mr . Nicke l sai d tha t

th e preferenc e woul d b e t o selec t th e optio n tha t

produce s th e broades t tradin g program . H e aske d i f NS Rshoul d b e allowe d t o driv e al l othe r programs . H e expresse d hi s opinio n tha t n o progra mshoul d b e allowe d t o overrid e ai r qualit y concerns , an d agree d wit h Mr . Wyman' s commen t tha t al l program s shoul d b e coordinate d wit h eac h other . H e sai d tha t thi s tradin g progra mshoul d not overrid e aregiona l tradin g program . Ms . Blanchar d explaine d tha t

thi s woul d b e an alternativ e t o NSR , an d tha t an y replacemen t

progra mt o NS R shoul d hav e th e sam e environmenta l protectio n a s NSR . Sh e furthe r sai d tha t thi s wa s tru e for bot h ai r qualit y concern s a s wel l a s for Clas s I areas . Mr . Bluestei n argue d tha t i t wa s har d t o forese e al l problem s an d complicate d t o dea l wit h al l "wha t ifs. " H e sai d tha t

ther e shoul d b e som e roo mfor

case-by-cas e determinations , e.g. , i f aparticular

sourc e i s causin g aproblem , the n dea l wit h tha t

on e source . Ms . Blanchar d explaine d tha t EP A fel t th e nee d t o prepar e fo r

th e situatio n whe n loca l concern s ar e aproblem . Offset s Ms . Watt s aske d for

purpose s o f

offset s i n non-attainmen t areas , ho w th e emission s increas e woul d b e measured . Mr . Wyma n explaine d ho w th e agenc y di d i t i n California' s SCAQMD , RECLAI M program , i.e. , th e approac h wa s t o us e adeclinin g cap ; th e surplu s generate d fromthi s approac h wa s enoug h t o mee t offse t ratios . Mr . Bluestei n asked whe n offset s wer e neede d for a n existin g sources . Ms . Holme s explaine d tha t

unde r NS Roffset s wer e require d a t modification , bu t

unde r thi s progra mth e sourc e coul d bu y allowances . Ther e was abrie f discussio n o n offsets . Mr . Nicke l fel t tha t b y requirin g offsets , complexitie s ofth e bas e NS Rprogra mwer e bein g brough t int o thi s offramp , e.g. , baseline , etc . H e mentione d tha t i n ozon e nonattainmen t

areas , ther e were , seasona l control s tha t addresse d thi s issue . Mr . Bluestei n mentione d tha t tonnag e ca p shoul d addres s thi s issu e a s i n th e RECLAI M program . Ms . Kaufina n acknowledge d th e nee d t o addres s thi s issu e an d asked th e industry t o submi t

thei r comment s t o EPA .

Pag e 7P. 9

Modelin g Ther e wa s abrie f

discussio n o n th e need fo

r modelin g an

y emissio n increase . Ms . Kaufma

n mentione d tha

t i f th e facility' s previou s modelin g wa s base d o n potentia l emissions , and ther

e i s a n increas e in potentia

l emissions , the n there woul d b e anee d to re-model . If

th e facilit y ha d neve r previously modeled , the n i t woul d hav e to model i n orde r t o joi n th e program . Mr . Wolf e asked wha

t th e purpos e ofth e modelin g woul d be . Ms . Woo d replie d tha t th e purpos e woul d b e to determine attainmen t status . Mr . Nicke l explaine d th e relativ e importanc e of

short-ter mversu s annua

l ambien t ai r qualit y standards . Ms . Blanchar d acknowledge d tha

t EP A neede d t o thin

k abou t thi s further . Sh e sai d tha

t EP A wil l als o tal k

t o STAPPA/ALAPC O abou

t modeling . Sh

e asked th e industr

y t o submit

thei r comment s o n modelin g t o EPA . "Company " /

Sellin g Facilit

y to aNon-Participatin g Compan y Ther e wa s brie f

discussio n o n how to defin e a"company " fo

r th e purpose s of

determinin g who ca n op t in . Th e industr

y representative s wer

e concerne d tha

t i t wa s hard t o determin e ownershi p becaus e individua

l plant s an d unit s coul d b e owned by severa l parties . Ms . Jezoui t presente d a

n exampl e of

afacilit y in Orland

o tha t i s jointl y owned b y differen t parties . Also , companie s tha

t ar e differen t toda y could merg e later . Furthermore , individua l unit s coul d b e sol d t o adifferen

t company ; even t o acompan y tha t ma y no t hav e opte d int

o thi s program . Som

e companie s ar

e set u p i n awa

y wher e each of their plant s i s aseparat

e subsidiary . For

thes e reasons , severa

l industr y representative s expresse d thei r preferenc e of

allowin g unit-by-uni t

op t in . One o f EPA' s concern s wa s tha

t companie s ma

y only op t i n thei r clea n unit s and no t

th e dirt y ones . Ther

e wa s abrie f

discussio n abou

t wha t happen s i n acas e when afacilit y tha t i s par t o f thi s progra

mi s sol d to anon-participatin g company . Ms . Kaufma n presente d th e ide atha

t onc e auni t

i s in , it shoul d sta y in , an d it s emissio n rate shoul d transfe r to th e ne w owner . Afte

r th e sale , th e sellin g compan y woul d adjust

it s cap . Sh

e solicite d furthe

r feedback fromth e industr y representative s on ownershi p and sellin g issues . SHUTDOWN S Ms . Kaufina

n asked ho w would thos e unit s b e accommodate d in thi s progra mtha t either shutdow n o r

switc h fuels , e.g. , fromcoa l to gas . She asked wha

t emissio n rat

e shoul d b e assigne d to such units . On e possibilit y wa s to assig n arate equa

l to th e progra

mgoal . Sh

e indicate d that EPA' s current

thinkin g wa s t o assig n zero . Mr . Chastai n sai d tha

t assigning zer

o woul d remov e th e incentiv e to mak e afue l switch . Mr . Bluestei n argue d tha

t it seem s tha t installin g a

n SC Rwoul d ge

t acredi t unde r thi s program , but acombine d coal-ga s cycle , which ma y ge t simila r reductions , would ge

t n o credit . H e furthe r sai d tha t hi s positio n wa s based o n th e fac t tha t it wa s har d to justif y tha t aheavily Pag e 8P.1 0

controlle d coa

l unit i s environmentall

y bette r tha n aga s unit . Mr . Nicke l echoe d th e commen t tha t givin g zer o credit would remove th e incentive . H e als o sai d tha t switch to ga s shoul d b e treate d a s amean s of

contro l simila

r to add-on contro l lik

e SCR . Ms . Jezoui t

als o echoe d thes e comments . Mr . Nicke l sai d tha

t handling o

f shutdown s wa s alittl e mor e difficul t unde r thi s program , but di d no t wan t aprogra mtha t discourage s shutdowns . H e sai d tha t h e will develop apositio n on thi s matte

r an d conve y it to EPA . Mr . Wyma

n sai d tha t handling of

shutdown s bring s u

p th e issu e of

allocation . H e sai d tha t atonnage-base d syste

mca n addres s tha

t issue . SUPERIO RENVIRONMENTAL PERFORMANCE Ms . Kaufma

n refeire d t o th e handou

t to explai n tha

t EPA' s pla

n fo r thi s program , whic h woul d b e a

n offram p t o NSR , wa s to achiev e superior environmenta

l performanc e and aske d ho w such agoa l shoul d b e incorporated . Ther e wa s abrie f

discussio n on thi s topic . Mr . Chastai n sai d tha t without knowin g wha

t th e bas e progra

mi s it wa s har d to understan d wha

t i s mean t b y performanc e superior

t o th e bas e program . Also , he wondere d ho w thi s woul d wor k o n a case-by-cas e basi s and wanted t o know al l th e rules . Mr . Miakis z wondere d ho w superior performanc e woul d b e defined becaus e eve n i f a n SCRi s used , ther

e coul d b e additiona

l requirement s i n th e futur

e regardin g mercur

y an d carbo n dioxide which , i f

know n u p front, coul d b e addresse d a

t th e outset . Ms . Kaufma

n asked th e industr

y representative s to submit thei r comment s i n writin g to EPA . WHA T HAPPEN S A T TH E EN D O F TH E PROGRAM ? Ms . Kaufina

n asked whethe

r a t th e end ofth e progra

mth e sourc e shoul d rever

t back to th e bas e NS Ro

r whethe r it shoul d continu e wit

h thi s approach unde

r anew set of targe t level s tha t ar e set base d on wha

t i s achievabl e a

t tha t time . Sh e als o asked whethe

r th e ne w level s shoul d b e establishe d a

t th e en d ofth e progra

m(sa y 1 0 years , i f

1 0 year s i s th e lif

e ofth e program) o

r shoul d the

y b e establishe d 6 o

r 7 year s into th e program . Ms . Jezoui t

supporte d EPA' s thir

d optio n in th e handout , i.e. , to dela y th e decisio n unti l sometim e later . Mr . Wolf e sai d tha t th e unit s should rever

t back to th e bas e program . He als o sai d tha t 1 0 year s o f regulator y certaint y i s no t enough an

d tha t aperio d longe

r tha n 1 0 year s i s needed . Pag e 9P.1 1

Mr . Nicke l supporte d Mr . Wolfe' s commen t sayin g tha

t source s nee d tim e t o reclai m their investment , i.e. , mor

e tha n 1 0 years . I f

ne w targe t

level s ar e establishe d at

1 0 years , i t woul d no t b e reasonabl e t o expec t

source s t o mee

t tha t new target s s o soo n afte

r meetin g th e first target levels . Ther e wer e brie f discussion s o n severa

l aspect s such a s 10-yea

r cycl e fo r retrofits , plannin g horizo n fo

r capita l expenditure s (10-yea

r plans , 15-yea

r forecast s etc.) , book/tax depreciation , an

d ho w thing s woul d b e differen t in th e deregulate d community . GENERAL DISCUSSION S Jo e Miakis z sai d tha

t atechnology-base d progra mto improv e air

qualit y i s no t good , and tha t aperformance-base d progra mwa s preferable . Talkin g abou t th e proposa

l submitte d b y th e Clea n Energ y Group , he offere

d th e following comments :

- th e grou

p share s th e concer

n tha t lowe r end s ofth e target

range s "g o to o far "

- th e C O targe t

i s fine. For

others , sugges t

output-base d levels .

- th e grou

p advocate s output-base d progra m

- atimefram

e of 1 0 year s i s ok , an

d afte r 1 0 year s individua

l unit s rever

t bac k t o th e bas e progra mor b e subject t o arevise d targe t

- NO x SIP cal l shoul d for mth e basi s fo

r phase-i n Ra e Cronmille

r mad e th e following thre e comment s fo r smalle r source s scattere d al l ove

r th e country :

- arate-base d progra

mi s achalleng e fo

r cyclones , an

d mayb e arate-base d progra mshoul d b e base d o n percent

reductions ;

- al l o f thei r unit s ar e par t D or D aunits , i.e. , they alread

y mee t 0.20 lb/MMBt

u NOx . To requir e arecen t (say , 7-yea

r old ) uni t to instal l SC

Rin 1 0 year s i s no t

cos t advantageous . Ms . Blanchar

d reminde d hi mtha

t thi s wa s avoluntar

y program . Mr . Cronmiller sai d tha t compare d to th e bas e program , thi s wa s apreferred option . a n output-base d progra

mi s constructive , but

alo t of unit s ar e no t designe d fo

r output base d and therefor

e woul d b e a

t adisadvantage . Janet Watt s sai d it

wa s har d to evaluat

e thi s sector-base d approach withou t knowin g wha

t th e bas e progra

mlook s like . Sh

e als o sai d tha

t som e ofth e idea s bein g discusse d a t today' s meetin g neede d t o hav e apractica l element , such a s cos t

an d manpowe

r issues . Sh

e sai d tha t TVA wa s tryin g t o instal l 1 0 SCR s withi n 5 years , an d wa s finding i t ver y hard t o do . Regardin g th e matter o f output-base d targets , sh

e sai d tha t thi s doesn' t

see mlik e th e right plac e t o b e addressin g it . Sh

e indicate d tha

t she wil l submit

he r comment s i n writing . Mr . Chastai n asked i f

thi s offram

p woul d b e added to th e bas e progra mand offered in th e final rul e a s apackage . Ms . Blanchar d replie d tha

t thi s sector-base d approac h woul d hav e to b e Pag e 1 0P.1 2

propose d first

an d subjecte d t o apubli c revie w an d commen t process . EP A ma y stil l tr y t o combin e thi s wit h th e bas e program , bu t woul d likel y b e har d t o d o that . EP A i s hopin g t o promulgat e th e bas e progra mthi s year , an d i t i s likel y tha t

th e sector-base d approac h ma y no t b e read y i n tim e for

promulgatio n wit h th e bas e program . Mr . Bluestei n commente d tha t aunit-by-uni t

technology-forcin g progra mi s muc h les s valuable t o source s an d als o les s valuabl e t o th e environment . I t shoul d b e technology-flexibl e becaus e ther e wer e als o othe r way s t o achiev e emissio n reductions , suc h a s marke t base d approaches . Mr . Nicke l supporte d thi s comment . H e sai d tha t abroa d tradin g progra mca n achiev e reduction s at

existin g sources . H e als o sai d tha t ther e wa s anee d t o conside r th e fac t tha t i t i s har d t o retrofi t

a n existin g uni t

whic h migh t

b e th e cas e wit h PM-1 0 becaus e PM-1 0 involve s unit-by-unit

prescription . H e gav e an exampl e o f afacility i n Ohi o tha t

ha d t o buil d abridg e o n to p o f a n existin g uni t

t o support

aretrofi t control . Ms . Holme s asked th e industr y representative s t o provid e mor e example s o f thi s typ e becaus e i f

thi s wa s an isolate d example , the n i t woul d b e hard t o justif

y consideratio n o f

on e instanc e whe n designin g abroa d base d program . Mr . Cashi n sai d tha t thei r facilitie s wer e 90 % we t

scrubbed . I n orde r

t o achiev e th e particulat e matte r

targe t level s bein g considere d b y EPA , the y woul d hav e t o "scrap " th e we t scrubber s an d star t

out agai n becaus e the y woul d b e har d t o retrofit . Ms . Blanchar d asked Mr . Cashi n t o provid e example s i n hi s comments . Mr . Cashi n sai d tha t h e wil l provid e examples . CLOSIN G REMARK S Befor e adjourning , Ms . Blanchar d aske d for brie f closin g comment s fromal l industr y representative s presen t

at th e meeting . Th e followin g comment s wer e offered : Mr . Miakisz : Losin g enthusias mfor thi s offram

p becaus e o f

wha t wa s sai d at

today' s meeting . Canno t shoehor n thi s progra mint o aNS Rprogram . Mr . Jonker : Urg e EP A t o no t mak e th e mistak e o f

buildin g thi s int o aNS Rprogra mwhic h i s "tops y turvy, " work s agains t ai r quality , an d encourage s dirt y systems . Thi s approac h ha s alo t

o f promise . D o i t

righ t thi s time . Al l source s acros s th e country shoul d b e abl e t o participate . Mr . Wolfe : W e ar e no t startin g afres h here ; ther e i s som e histor y behin d thi s approach . D o not hav e muc h windo w o n wha t EP A i s thinkin g o n th e UARG , CE G proposals . Utilit y industr y i s changing ; thin k forward . B e carefu l o f

blendin g incentiv e progra mwit h NSR . Ms . Jezouit : Ou r

member s ar e not

goin g t o lik e it . No t

muc h flexibility . Progra mi s limited , i.e. , oil/ga s unit s ar e no t

allowe d t o participate , an d stil l hav e t o ge t offsets . Pag e 1 1P.1 3

Mr . Cashin : Thi s approach ma y need to b e roote d i n som

e legislation , or

hav e enough consensus . I t

i s difficul t t o accomplish ; hard t o define on e pla n fo r everyone . EP A need s to recogniz e ai

r qualit y benefit s fromwha

t w e do . Continu e th e dialogue . Mr . Cronmiller : Appreciat e EPA' s effor

t an d thi s meeting . Concerne d tha t i f thi s approac h i s no t properl y constructed , ther

e ma y b e cos t detriment t o smalle r utilities . Har

d t o analyz e offram

p whe n bas e cas e i s no t

clear . Nee d t o explai n thi s progra m clearly . The 10-yea

r horizo n i s to o short ; canno t accomplis h al l goal s i n 1 0 years . Mr . Jakubowics : Appreciat e th e dialogue . Concerne d about gettin g i t piecemeal , i.e. , aseparat

e rulemakin g fo

r bas e cas e thi s yea

r an d aseparat e proposa l fo r sector-base d approach . Woul d lik

e asingl e complet

e program . Suppor

t UAR G proposa

l and lik e to hav e tha

t addresse d here . D o no t

wan t a n overly burdensom

e program . Mr . Brownell : UAR

G proposa l wa s submitte d t o EP

A i n Apri l o f

1999 . Encourage d tha

t thi s dialogu e i s going o n an

d tha t EP A i s tryin g to find asolution . Lot s of issue s t o grappl e with . I t

i s importan

t t o clarif y th e bas e progra

mi n conjunctio n wit

h thi s program . Har

d to d o on e without th e other . Ms . Watts : Agre e wit

h others ' comments . I f

a t 1 0 years , i.e. , a

t en d o f program , th e unit s rever t to bas e case , then 1 0 year s i s no t enough fo r certaint y purposes . Mr . Chastain : Encourage d to se e EPA' s idea s i n writin g today . Hopin g t o wor k out awin-wi n situation , but

optimis mha s gon

e up an d down . I t

i s goin g to b e hard . Mr . Nickel : Feel tha

t thes e meeting s ar

e lik e th e movi e "Groundho g Day, " i.e. , repetitive . Gla d to talk som e specifics ; foun

d thing s encouragin g today . Thi s approac h i s threatene d b y finalizing th e bas e progra mseparately . Sector-base d approac h shoul d b e structure d togethe r wit h th e bas e progra

mand shoul d involv e al l o f industry . Mr . Wyman : Encouraged . Lik e th e potential-to-potentia

l test . Lik e averaging/trading . Prefe

r t o no t se e thi s progra

munde r NSR , rathe

r mor e holistically . Concerne d about targets ; to o lo w an

d unrealisti c to offe

r thema s practica

l alternativ e to NS Rwhen NS Rcanno t

delive r thos e levels . Nee d somethin g industr y ca n support . Overall , today' s meetin g wa s aste

p forward . Mr . Litzinger : Gla

d EP A i s lookin g a

t market-base d an

d ai r quality-base d programs . Discourage d about

technology-forcin g program . Encourag e EP A t o loo k a t performance-base d program . Shoul d allo w variou s option s fo r emissio n reductions , such a s fue

l switching . Pag e 1 2P.1 4

Mr . Bluestein : Sam

e concern s a s others . Would b e grea t t o offe r flexibility. No t

encourage d by reinventin g of

thing s tha t ar e alread y there . Shoul d ask

environmenta

l group s how muc h the y would b e willin g to giv e u p in retur n fo r environmenta

l security , e.g. , giv e u

p technology-forcing fo

r technology-prescriptive . Ms . Blanchar

d thanke d everyone fo

r coming . Sh

e sai d tha t it wa s helpfu

l t o hea r everyone' s views , an

d tha t sh e learne d alot

today . Ms . Kaufina

n als o sai d tha

t i t wa s goo d to hea r all comment s a

t one time i n th e sam e room . Ms . Wood asked Ms . Watt s to provid e som e dataregardin g amoun

t of tim e tha t make s doing certai n thing s worthwhile . Ms . Holme s aske d th e participant s to submit

actua l dataand state d tha

t all datawoul d b e take n int o consideration . Ms . Blanchar

d aske d everyone t o provide thei r writte n comment s t o Ms . Kaufma n withi n tw o weeks . Th e meetin g wa s then adjourned .

Pag e 1 3P.1 5

ATTENDEE S EP A MEETING WITH UTILITY INDUSTR Y SECTOR-BASE

D APPROAC H March 28, 2000 Nam e Jame s Barret t Joe l Bluestei n Bil l Brownel l Michae l Cashi n Richar d Chastai n Ra e Cronmille r Michell e Golde n Crai g Jakubowic s Debr aJezoui t Pet e Jonke r Ro n Litzinge r Jo e Miakis z Henrr y Nicke l SamWolf

e Bo b Wyma n To mCurra n Kare n Blanchar d Davi d Solomo n Kath y Kaufma n Lyn n Hutchinso n Affiliatio n

Latha m& Watkin s (Cinergy ) EEA/Trige n Hunto n & William s (UARG ) Minnesot aPowe r Souther n Companie s NREC A PG& E Generatin g Co . Ediso n Electri c Institut e Bake r Bott s SEMPR A 10 1 As h St. , Sa

n Diego , C A 9210 1 Ediso n Missio n Energ y M J Bradle y & Associate s Hunto n an d William s PSE G Latha m& Watkin s EPA/OAQP S EPA/OAQP S EPA/OAQP S EPA/OAQP S EPA/OAQP S Phon e 202-637-226 5 703-528-190 0 202-955-155 5 218-722-564 2 x333 9 205-257-666 4 703-907-579 1 301-280-697 3 202-508-562 0 202-639-772 8 619-696-241 0 949-798-791 2 978-369-553 3 202-955-156 1 973-430-370 9 213-891-833 4 919-541-555 9 919-541-550 3 919-541-537 5 919-541-010 2 919-541-579 5 e-Mai l Addres s

jbarrett@lw.co m jbluestein@eea-inc.co m bbrownell@hunton.co m mcashin@mnpower.co m rhchasta@southernco.co m rae.cronmiller@nreca.or g michelle.golden@gen.pge.co m c j akubowics@eei.or g debra j ezouit@bakerbott s .co m pjonker@sempra.co m ronald_litzinger@edisonmission.co m jmiakisz@mjbradley.co m hnickel@himtom.co m samuel.wolfe@pseg.co m robert.wyman@lw.co m curran.tom@epa . go v blanchard.karen@epa.go v solomon.david@epa.go v kaufinan.kathy@epa.go v hutchinson . lynn@epa . go v Pag e 1 4P.1 6

Name Meliss aMcCulloug

h Pa mSmit h Ann aMari e Wood Caro l Holme s Mala y Jinda l Valeri e Everett

e Affiliation EPA/OAQPS EPA/OAQPS . EPA/O P A R EPA/OECA PE S PE S Phone 919-541-564 6 919-541-064 1 202-564-1664 202-564-870 9 919-941-033 3 919-941-033 3 e-Mai

l Addres s mccullough.melissa@epa.go v smith.pam@epa . gov wood.anna@epa.go v holmes.carol@epa.go v malay.jindal@pes.co m valerie.everette@pes.co m

Pag e 1 5

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O DP.1 9

ATTACHMEN T I EPA' s Invitatio n Lette

r



# l «P.2 0

^-° s ^lf. % UNITE D STATE S ENVIRONMENTA L PROTECTIO N AGENC Y g tjg 7 | RESEARC H TRIANGL E PARK , N C 2771 1 SA^*^£

OFFIC E O F Marc h 10,200 0 AI R QUALIT Y PLANNIN G

' AN D STANDARD S NOT E TO : ADDRESSEE S W e appreciat

e th e hig h level o f

interes t man y o f you hav e expresse d in participatin g i n th e developmen

t o f apossibl e alternativ e t

o NS Rfo r th e utilit y sector , an

d woul d lik

e t o than k yo u fo r you r helpful participatio n i

n th e Januar

y 13,200 0 publi c meeting . W e ar e no w read

y to schedule som

e follow-u p meeting s wit

h smalle r group s o f stakeholder s t

o discus s structura

l issue s i n greate

r detail . Therefor

e w e hav e selected , a s atentativ e date , t o hav e ameetin g fo r industr y stakeholder s o n Tuesday , March 21 , from10:00 a.m . ti l 3:00 p.m . in Classroo m1 ofth e EPA' s Environmenta

l Researc h Center , locate d on th e corne r o f Highwa y 5 4 an d Alexande

r Driv e in Researc h Triangl e Park , NC . If you ar e ver y intereste d i n attending , an d tha t dat e pose s acritica l schedulin g conflic t

fo r you , pleas e let

u s kno w a s soon a s possible . Sinc e th e roomha s limite d seating , an

d i n orde r to facilitat e discussion , pleas e pla

n to brin g n o mor

e tha n 2 additiona l colleague s each . A first-come, first-serve call-i n telephon e lin e wil l als o b e available . Durin g th e meetin g w e wil l discus s possibl e approache s to th e majo r structura l issue s upon which w e bega

n discussio n on Januar

y 13 . Pleas e begi n thinkin g abou t thes e issues . W

e will forwar

d adetaile d agend at

o yo u afe w day s befor

e th e meeting . Pleas e E-mai l or

cal l Pa mJ . Smith , a

t E-mail addres s smith.pam@epa.go v or telephone numbe r (919 ) 541-0641 , or

Kath y Kaufinan , a

t E-mail addres s kaufman.kathy@epa.go v or telephone numbe

r (919 ) 541-0102 , b y CO

B Thursday , March 16 , wit h you r nam e an d th e name s of an y colleague s who woul d b e accompanying you . Than k you an d w e look forwar d to meetin g wit

h you o n Marc h 21 . / Sincerely , Karen Blanchar

d Grou p Leade r Integrate d Implementatio n Grou p OAQP S 

## 1 ^ Recycled/Recyclabl e •Printe d wit h Vegetabl e Oi l Base d Ink s o n 100 % Recycle d Pape r(40 % Postconsumer )P.2 1

NEW SOURC E REVIE

W SECTOR-BASE

D APPROAC H DISCUSSIO N WIT

H INDUSTR

Y REPRESENTATIVE S MARC H 28,200 0 AGEND A (Pleas e note : time s given fo r each discussio n elemen

t ar e approximate. ) 10:00-10:1 5 Introduction s an d purpos e o f

meetin g 10:1 5 -11:1 5 Basi c progra melement s an

d rational e fo

r progra mgoal Wha t shoul d b e th e basi s fo

r emissio n rate target s fo

r NOx , S02 , an d PM10 ? e.g . (a ) brin g all source s to BACT/LAE Rlevels ? o r (b ) achiev e emissio n reduction s equivalen t t o wha t NSR/PS D woul d hav e achieved ? How ca

n thes e level s b e estimated ? Either way , wha t ar e th e BACT/LAE

Rlevel s tha

t shoul d b e used ? Shoul d the y b e input

or output based ? I f output based , ho w woul d thi s b e ; measured ?

Emissio n level s o r

cap s coul d b e reduce d annually ove r th e program , o r

a t set interval s (e.g . ever

y fe w years) . Wha

t are th e advantages / disadvantage s ofeac h method ? 11:15-11:3 0 Unit s covere d

I f th e progra mals o covere d existin g oil

- o r gas-fire d units , ho w coul d th e emissio n rate target s b e set

u p t o accommodat

e thos e units ? Wha t ar e th e pro s an

d con s o f allowin g individua

l facilitie s to op t

in ? 11:3 0 -12:1 5 Averagin g o r trading ? Ho w woul d allowin g tradin g affec t th e structur

e ofth e program , timing , and emissio n limits ? Wha

t would b e th e effec

t o f allowin g sit

e to site trading , tradin g acros s companies , or tradin g wit

h facilitie s who op t

in ? I f averagin g or

tradin g i s allowed fo

r PM10 , ho w shoul d complianc e b e determine d an

d demonstrated ? 12:1 5 - 1:1 5 Lunc h



## a iP.2 2

1:1 5 -2:0 0 Restriction s o n averagin g o r trading

Ho w ca n a syste m b e se tup t o accommodat e differentgeographi c distribution s o f

emissions , an

d t o protectexistin g tradin g programs ? I f a sourc e increase s emission s more tha n the y hav e previousl y modeled , woul d i thav e t o ensur

e tha tther e ar e n o advers e effect s o n Clas s I areas , o r localize d advers e ambientimpacts ? Ho w ca n th e syste m accommodat e shutdown units ? Ho w coul d facilitie s whic h switc h t o ga s b e use d t o mee tth e caps ? I f a compan y increase d it s actua l emission s i n a nonattainmentarea, mus t i tstil l obtai n offsets ? 2:0 0 - 2:3 0 Superio r environmenta l performance Ho w d o w e incorporat

e th e goa l o f

performance superio r t o th e bas e program ? Require a superio r environmenta l performance projectt o b e propose d o n a case-by-cas e basis ? o r Require a specifi c typ e o f project ? I f

a projectcoul d involv e non-criteri a pollutants , whatwoul d b e th e lega l rationale ? 2:3 0 -2:5 0 Wha thappen s a

tth e end ofth e program ? Revertt o bas e NS Rprogram , o r Rese ta ne w declinin g ca p o r ne w emissio n level s fo r anothe r x x years , o r Pu toff th e decisio n unti l w e assess , sometim e later , ho w wel l th e progra m i s working . 2:5 0 - 3:0 0 Wrap-u p



### 2 2P.2 3

ATTACHMEN T II I Meeting Handou

t 'Ne w Sourc e Review Sector-Base d Approach' '



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FOR DISCUSSION

PURPOSES

ONLY DOES NOT REPRESENT

EPA POLICY

OR POSITION NEW SOURCE REVIE

W SECTOR-BASE

D APPROAC H Goal : T o develo p a

n approac h tha

t would hav e a

n end resul t

o f ensurin g that

existin g power plant s ar e well controlled , whil e providin g maximu mflexibility and certaint

y under NS Rfo r existin g units . Thi s voluntar y offram p t o th e NS Rprogra

mwoul d achiev e environmenta l result s tha t ar e superior t o th e existin g program . The Bi g Picture : The program : Overall requirements : A voluntar y progra mfo r th e utilit y industry , base d o n declinin g averag e emissio n rate s fo

r existin g coal-fired units .

Wh o i s covered : Which pollutants : Ne w facilitie s or units , mus t

appl y BAC T o r

LAER , an d mee t

other norma l NS Rrequirement s whe

n they construct . Al l modification s t o existin g unit s tha t trigger apotential t o potential emission s tes t

mus t apply BAC T or

LAER . Al l existin g unit s covere d under thi s approac h woul d b e free t o mak e an y and all physica

l or operationa

l change s without

triggerin g aPS D o r

NS R revie w i f thei r potentia l emission s d o no t

increase . However , existin g unit s must , i n th e aggregate , achiev e emissio n reduction s equivalen

t t o specifi c target

level s b y th e progra

mend date . Ther e woul d als o b e som

e intermediat

e targe t o r targets . An y utilit y compan y wit h coal-fire d units , o n a

n opt-i n basis . NOx , S02 , CO , and PMIO



# «a* fFOR DISCUSSION PURPOSES

ONLY DOES NOT REPRESENT

EPA POLICY

OR POSITION Rationale for progra

m goa l Wha t woul d b e reasonabl e target s fo r NO x an d S02 ? Th e basi s fo

r emissio n rat

e target s fo

r NOx , an d S0 2 i s to brin g all source s to level s o f performanc e greate

r tha n curren t levels , e.g. , averag e o f

aroun d 0. 1 t o 0.1 5 lbs/MMBt

u NO x an d 0.2 5 to 0. 6 lbs/MMBt

u S02. 1 Wha t woul d b e areasonabl e target fo r P M 10 ? For PM10 , ou r target could b e asystemwid

e averag e i n th e rang e o f

around 0.0 3 lbs/MMBtu , which i s th e NSP S level , t o 0.01 5 lbs/MMBtu , which represent s som e BAC T determination s tha t hav e been made . Wha t woul d b e areasonabl e targe t fo r CO ? W e believ e goo d combustio n practice s represent s bes t contro l fo r CO , an d woul d b e areasonabl e target . Ar e output-base d target s realistic ? How would they b e measured ? W e ar e currently investigatin g developing output-base d targets , but w e hav e no t develope d a

n understandin g o f

ho w they would b e measured . Wha t would b e areasonabl e time frame i n which to expec t all units , a s asystemwid

e average , t o achiev e thes e emissio n rates ? Ou r preliminar

y thought s ar

e tha t perhap s 1 0 year s ma

y b e areasonabl e expectatio n a s atime-fram

e in which t

o achiev e thes e emissio n rate s systemwide . Should ther

e b e intermediat

e target s ove

r th e lif e ofth e program ? W e believ e ther

e should b e one o

r tw o intermediat

e targets . Wha

t would b e a reasonabl e basi s fo

r determining wha

t thos e target s shoul d be ?

coal . 1 Not

e tha t S0 2 level s i n th e Wes t

perhap s shoul d b e lowe

r base d o n us e o f

lo w sulfu r 

# a<7P.2 6

FOR DISCUSSION

PURPOSES

ONLY DOES NOT REPRESENT

EPA POLICY

OR POSITION Unit s covered Workin g assumption : all coal-fired unit s a t acompan y woul d b e covered . I f th e progra mals o covere d existin g oil

- o r gas-fired units , ho w coul d th e emissio n rat e target s b e se t

u p t o accommodat

e thos e unit s whil e stil l achievin g th e overal l progra m goa l o f superior environmenta

l results ? Likewise , i f

companie s coul d opt-i n individua l facilities , ho w coul d th e emissio n rate target s b e set

u p to accommodat

e thos e unit s a s well , an

d a t th e sam e time preserv e overall reduction s acros s th e industry ? Ou r current thinkin g i s no t

t o allo w companie s t o opt-i n individua l units , becaus e i t woul d b e difficul

t t o allo w thi s an d a

t th e sam e tim e achiev e th e overal l progra mgoal . Averagin g o r trading ? Ho w woul d allowin g source s t o trad e affec t th e structur

e ofth e program , timing , and emissio n limits ? Wha

t woul d b e th e effec

t o f allowing :

- site t o site tradin g

- tradin g acros s companie s tradin g wit

h facilitie s whic h op t

i n Ou r curren t thinkin g i s t o allo w tradin g acros s site s an d acros s participatin g companies , but no t t o allo w companie s t o opt-i n individua l unit s (a s indicate d above) . I f averagin g o r

tradin g i s allowe d fo

r PMIO , ho w coul d complianc e b e determine d and demonstrated ? Restriction s o n averagin g o r tradin g How ca n asystemb e set

u p to accommodat

e differen t geographi c distribution s o f emissions ? e.g . W e need t o protec t

existin g tradin g program s (OTR/Regiona l NO x Strategy , Grand Canyon Visibilit

y Commissio n progra

munder development) . I f asourc e increase s emission s mor e tha n they hav e previousl y modeled , w e believ e it woul d b e appropriat

e t o tak e step s to protec t

agains t advers e effects i n Clas s I area s and/or

localize d advers e ambien

t impacts .FOR DISCUSSION PURPOSES

ONLY DOES NOT REPRESENT

EPA POLICY

OR POSITION Likewise , i f

acompan y increase d it s actua

l emission s i n anonattainmen t area , w e believ e i t mus t stil l obtai n offsets . How ca n th e systemaccommodat

e shutdown unit s or

facilitie s which switc h t o ga s ? W e believ e tha

t unit s which shutdown o r

switch t o ga s durin g th e lif e ofth e progra mcoul d b e counted . Wha

t specifi c emissio n rate coul d b e assigne d t o them ? W

e could assig n each uni t

a n emissio n rate equivalent

t o th e progra

m goal . Wha t happen s when aparticipatin g compan y sell s afacilit

y t o anon-participatin g company ? W e believ e tha

t th e emissio n rat

e th e facilit

y ha s been carryin g unde

r th e progra m shoul d accompan

y th e facilit

y a s par t ofth e sale . The sellin g compan y woul d the n recalculat

e it s cap . Superio r environmenta

l performanc

e Give n ou r pla n t o mak e thi s voluntar

y offram p t o th e NS Rprogra

msomethin g tha

t woul d achiev e superior

environmenta

l results , ho w shoul d w e incorporat e th e goa l o f performanc e superior

to th e bas e program ? Requir e asuperio r environmenta

l performanc e projec t

t o b e propose d o n acase by-cas e basis ? o r Requir e aspecifi c typ e o f

project ? I f

aprojec t coul d involv e non-criteri a pollutants , ho w could thi s b e accepte d legally ? Wha t happen s a

tth e en d ofth e program ? Rever t to th e bas e NS Rprogra

m(wit h availabilit

y o f clea n unit exclusion) , o r Rese t ane w declinin g ca

p or new emissio n level s fo

r anothe r 1 0 year s base d o n wha t i s achieveabl e a

t tha t time , o r Dela y th e decisio n unti l w e assess , sometim e later , ho w well th e progra mi s working . 

# Z&