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OAR Box 1802 

Prepped by Charmelle Mathews 

Document Number: 

64) IV-E-58 

Docket Number: 

A-90-37 

Printed 11/4/200811:57:59 AM Sheet 64 of 117 
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J5T- £ - 5& 

MEETING SUMMARY 

EPA MEETING WITH UTILITY INDUSTRY j ._^^- ^ 

SECTOR-BASED APPROACH \ 

March 28, 2000 1 £*_ 2't 2300 

I EPA AIR DOCKET 

The meeting was held at the offices of EPA, N.C. Mutual Building, 41U W;-€hapgTTBiii 

Street, Durham, North Carolina. The meeting began at approximately 10:00 am and closed at 

approximately 2:30 pm. Attachment I of this summary contains the EPA's invitation letter for 

this meeting, Attachment II contains the meeting agenda, and Attachment III contains the 

meeting handout on the sector-based approach. A list of attendees is also attached. 

INTRODUCTION 

Karen Blanchard opened the meeting by welcoming everyone. She said that EPA has 

been considering the sector-based approach and wanted to continue the dialogue with the 

industry. She said that EPA wanted to present some preliminary ideas at today's meeting and 

solicit comments from the industry on those ideas. She indicated the EPA was also planning to 

meet with the public interest groups (environmental groups) and with STAPPA/ALAPCO over 

the next two weeks regarding the sector-based approach. She also indicated that John Seitz and 

Bill Harnett had wanted to attend this meeting but were traveling out of town on business and 

therefore were not able to attend. 

Henry Nickel asked if EPA had made any decisions regarding the base NSR program and 

if EPA will hold more meetings on that. Ms. Blanchard replied that EPA had met with the 

complex manufacturers and had some fruitful discussions with them, and that EPA was now in 

the process of meeting with other stakeholders that were not part ofthe previous meetings 

(e.g., States). After that they will talk to Bob Pereiasepe. She indicated that no more meetings 

were planned with the complex manufacturers on the base NSR program. 

Ms. Blanchard then turned to Kathy Kaufman for a quick run through ofthe first page of 

the handout on the sector-based approach. Ms. Kaufman presented an overview ofthe program 

along with its goal, the big picture, overall requirements, and the pollutants and sources that 

would be covered. 

NOx AND S02 TARGET LEVELS 

Ms. Kaufinan then opened the discussion ofthe rationale for the program (second page of 

the handout). She started by discussing the target levels for NOx and S02 and indicated that 

EPA was thinking of setting targets in the range of 0.1-0.15 lb/MMBtu for NOx and 

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0.25-0.60 lb/MMbtu for S02. For S02, she mentioned that these levels can be achieved 

assuming a 90-95% control for scrubbing and use of coal with an average sulfur content of 

1-3 percent. 

Bob Wyman asked if a single target for each pollutant would apply to everyone or would 

the targets be set on a regional basis. Ms. Kaufman replied that the issue was up for discussion 

and that EPA would like to get feedback from the industry. One ofthe factors EPA was 

considering was that the coal used in the west generally had a lower sulfur content. Joel 

Bluestein said that the levels should depend on whether they are set plant-by-plant or regional 

level etc., and whether the program is a trading program. He indicated support for a trading 

program. 

Ron Litzinger also indicated support for trading, but said that targets that are set by taking 

the minimum, or the average ofthe minimum, are hard to comply with and therefore not much 

trading can happen at those levels. Richard Chastain also agreed that additional controls may 

limit the ability to trade. 

Mr. Nickel said that BACT for existing units that undergo modifications is not the same 

as BACT for new sources. These levels (the ones being considered by EPA), e.g., 0.15 for NOx, 

may be very aggressive. 

With respect to a difference in percent sulfur in coal between east and west, Mike Cashin 

said that there was no reason to penalize sources that switch to lower sulfur coal. Mr. Litzinger 

supported Mr. Cashin's comment and said that there should be a range for target levels. 

Sam Wolfe asked what the rationale was for limiting participation to only the coal-fired 

units. Ms. Kaufinan replied that EPA was trying to get emission reductions from existing coalfired units. Covering of other units, i.e., oil- and gas-fired units, would be a follow-up question. 

For example, what happens when a unit switches from coal to gas. Mr. Nickel said that the 

answer to Mr. Wolfe's question depends on what the base program looks like. He explained that 

UARG's proposal was based on UARG's understanding ofthe base program, and the proposal 

included a mandatory offramp. Ms. Kaufman asked if coverage for other units was desired then 

how the program would work while still ensuring that the result was well-controlled units, and 

how the target levels would be affected. Mr. Nickel pointed out that oil and gas units will not 

generate enough allowances as compared to coal units. Mr. Wolfe said that a more fundamental 

questions is should there be a separate set of target rates depending on fuel, but that would make 

it confusing when switching fuel. A better approach would be to have a national target level. 

Mr. Bluestein pointed out that there was a need to recognize that the goal is emission 

reduction, not necessarily installation of control technology. He explained that an effective 

trading program can achieve that goal. He acknowledged that local air quality concerns must be 

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addressed, but explained that emission reductions can be achieved by a number of means, i.e., 

fuel switching, re-powering, installation of controls, etc. 

Mr. Wyman asked whether the program should be technology-based or air quality-based. 

Pointing to the big picture explained by Ms. Kaufman, he suggested that in order to be cost 

effective the targets should be set at the higher end ofthe range being considered by EPA, and 

that any unit that can meet that level should be allowed to participate. Ms. Blanchard replied that 

EPA was aware ofthe big picture and reminded everyone that this approach was a voluntary 

offramp. 

Debra Jezouit agreed with Mr. Bluestein's comment, and said that the program should be 

broad based, i.e., all coal, oil and gas units should be covered. She said that their (Class of 85's) 

members would have a problem with covering only the coal units. 

Mr. Chastain said that the above comments from the industry were just the initial reaction 

and that there will be more comments later on. Ms. Blanchard asked the industry participants to 

provide their written comments to EPA within two weeks. 

PM-10 AND CO TARGET LEVELS 

Regarding PM-10 target levels, Ms. Kaufman said the EPA was considering the range of 

0.015-0.03 lb/MMBtu. She explained that 0.03 level was the current NSPS level, and the 0.015 

level was based on some recent BACT determinations. For CO, she said that EPA was simply 

considering good combustion practices, and not any specific levels. 

Mr. Nickel said that the particulate matter levels that EPA was considering talked about 

PM-10 while the NSPS was set for TSP. After a brief discussion, Ms. Blanchard said that EPA 

will have to discuss the matter further and get back to the participants at a later time. 

Bill Brownell said that these target levels needed to be looked at in terms of existing units 

which may already have controls, and that it was not reasonable to "rip out" older controls and 

put in new controls. David Solomon argued that the PM-10 controls had not changed over time, 

i.e., the only choices are ESP and baghouse. Mr. Brownell and another industry representative 

argued that there may still be a need to "scrap" an ESP and install a baghouse. 

Mr. Cashin explained that not all types of coal can accomplish the same thing, e.g, 

Powdered River Basin coal performance was not the same as other coal. Ms. Blanchard asked 

the industry representatives to provide any available costing information about specific facilities 

and achievable levels. 

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OUTPUT-BASED TARGETS 

Ms. Kaufman solicited industry comments on whether the targets should be input- or 

output-based, and if output-based then how would they be measured. Mr. Bluestein said that he 

was a strong supporter of output-based targets, and that he would be happy to work with EPA on 

this. Ms. Blanchard asked how the output would be measured. Ms. Bluestein explained that the 

output can be measured very accurately, and that there was an output-based target "out there". 

He also mentioned that there was already infrastructure within EPA to set output-based targets 

and that some guidance from EPA on that may be coming. 

Mr. Chastain explained that measuring electric output is not so straightforward. Another 

industry representative mentioned that some companies may consider MWH output confidential 

and therefore may not be willing to share that information. There was a brief discussion on 

output-based approach. The industry representatives generally did not support the output-based 

targets. 

INTERMEDIATE TARGETS 

Ms. Kaufinan solicited industry's comments on whether there should be intermediate 

targets for participating sources to meet during the program. She said that EPA's opinion was 

that there should be some intermediate targets, but asked what the basis would be for setting 

those targets. 

Mr. Bluestein said that he would prefer a glide path as opposed to steps during the 

program. Ms. Blanchard asked how that would work in the absence of intermediate targets. 

Mr. Bluestein explained that the targets would be in the fonn of a percent reduction every year. 

Mr. Wyman also indicated support for the glide path. 

Mr. Solomon asked if under a glidepath the source would always measure reductions in 

emissions against a reduced level each year. He also asked if it would add to the certainty to 

have specific targets to meet along the way. Mr. Bluestein argued that in the case of steps there 

would be no enforcement until the time for showing compliance with a given step is reached. 

Anna Wood explained that the time between steps would be the source's window for reaching 

compliance. 

Mr. Nickel said that Mr. Solomon's point is well taken for a program that starts 10 years 

from now and goes on for 10-15 years from the start date because in that case the intermediate 

steps could be better defined. 

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Mr. Wyman said that consideration ofthe baseline was also important, i.e., if the starting 

baseline was low then that would be a problem. Mr. Solomon explained that the program was 

rate-based, not tonnage-based. Mr. Wyman said that in that case, it was ok. 

10-YEAR TIMEFRAME 

Ms. Kaufinan asked what a reasonable timeframe would be to achieve the target levels. 

She said that EPA was currently thinking of a 10-year timeframe. 

Mr. Cashin said that 10 years was too short. Mr. Brownell said that 10 years would be 

too aggressive for some companies, e.g., for retrofits. He asked when the 10 years would start 

and if there would be a planning period prior to the start ofthe program. He indicated that a 

planning period would be beneficial because it would allow sources to decide on the most costeffective approach. 

Ms. Blanchard said that EPA was in the process of discussing this, but the current 

thinking was for the year 2010 as the end date. Mr. Solomon asked everyone to keep in mind 

that in the case of a later start date, while waiting for this program to start, all changes will 

trigger NSR because this offramp will not be available. Mr. Nickel responded by saying that in 

that case oil and gas units are being penalized for being oil and gas units because they will 

continue to be subject to NSR until a program that includes them can be developed. Carol 

Holmes said that there was a need to start somewhere and that EPA's thinking was to start with 

coal, then add oil and gas, and then bring in other industry. Several industry representatives felt 

that if oil and gas units were not included, some ofthe sources will be at a disadvantage. 

UNITS COVERED 

Ms. Kaufinan presented EPA's current thinking that only the coal-fired units would be 

covered. She asked for industry comments on the covered units. 

Pete Jonker said that this sector-based approach is a good program. He said that his 

company was a gas-based company and would also like to join this program. The program 

should not be limited to coal units only. He further said that the base program is not good for his 

company and that he supported Mr. Nickel's opinion of it, i.e., "program from hell." Therefore, 

his company would like to be able to opt-in into this program. 

Mr. Wolfe said that he is worried that this discussion was not fruitful because people 

were talking point-by-point. If any one variable changes, then other variables change along with 

it. For example, timeframe and target levels are tied together. Mr. Solomon acknowledged that 

several factors played a role together in this program. He explained that EPA was trying to 

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provide certainty to coal units and once that program was in place, it would be easier for other 

units to join in. He said that it would be too much to try to set up a program covering all units 

from the beginning, and that it would be better to consider options for other units, i.e., 

timeframes, target levels, etc., after the core program was in place. 

Mr. Wolfe argued that if oil and gas units were left out then there would be a smaller 

number of units in the program resulting in less trading. 

AVERAGING/TRADING 

Ms. Kaufinan mentioned the three options from the handout that were being considered 

for trading and solicited comments on those options. She said that EPA's current thinking was to 

allow site-to-site trading. She also asked if trading should be allowed across companies. She 

pointed out that EPA was currently not thinking of allowing individual units to opt in into the 

program, i.e., all units at a company must opt in. 

For trading between companies, Mr. Wyman asked if the trading would be tonnage-based 

or will there be some kind of a dynamic averaging. Ms. Blanchard said that EPA needed to think 

more about it. Ms. Kaufinan said that EPA's current thinking was to have a tonnage-based 

trading. 

Regarding opting in of units, Mr. Cronmiller asked if a unit could opt in after the start of 

the program. Ms. Kaufinan replied that it was still under consideration within EPA. 

Mr. Bluestein said that a discrete tonnage-based program would mean that there will now 

be two separate, parallel trading programs for both S02 and NOx. Ms. Kaufman explained that 

the tracking systems would be similar between the two programs for S02 and NOx, but the 

emissions from the two programs would be treated as separate commodities. Mr. Wyman 

suggested to combine the trading programs. He acknowledged that it may require legislation to 

combine the trading programs, but felt that combining them was a good idea. 

Mr. Brownell said that basing this trading program on the other trading programs was 

another reason to think about the start date, because a later start date would give time for the 

other programs to work out. 

Regarding NOx targets being considered by EPA, Ms. Watts said that at 

0.1-0.15 lb/MMBtu level, there would be no trading. In order to achieve those levels, sources 

would have to put SCR on every unit. Mr. Solomon said that trading could occur if some ofthe 

units overperformed. Ms. Watts argued that at such a low level, say 0.12 lb/MMBtu, there was 

no room to overperfonn. Mr. Solomon said that there were ways to achieve levels below 

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0.1 lb/MMBtu. He also commented that these targets were only strawman numbers and subject 

to more discussion. 

Ms. Kaufinan solicited further comments on the trading program. She asked how this 

trading program would be integrated with the other trading programs. She said that there was a 

need to take into account local air quality concerns and Class I areas. She also said that there 

may still be a need to obtain offsets in nonattainment areas. 

Mr. Wyman reiterated his preference to have one, and not two, trading programs. For 

local air quality needs, he suggested that trading ratios could be considered, or that there could be 

restrictions on the direction ofthe trades. He recommended against restricting the trading 

program based on worst-case assumptions about air quality concerns such as visibility. He said 

that the industry felt that a complete trading program would be best. 

Mr. Nickel said that the preference would be to select the option that produces the 

broadest trading program. He asked if NSR should be allowed to drive all other programs. He 

expressed his opinion that no program should be allowed to override air quality concerns, and 

agreed with Mr. Wyman's comment that all programs should be coordinated with each other. He 

said that this trading program should not override a regional trading program. Ms. Blanchard 

explained that this would be an alternative to NSR, and that any replacement program to NSR 

should have the same environmental protection as NSR. She further said that this was true for 

both air quality concerns as well as for Class I areas. Mr. Bluestein argued that it was hard to 

foresee all problems and complicated to deal with all "what ifs." He said that there should be 

some room for case-by-case determinations, e.g., if a particular source is causing a problem, then 

deal with that one source. Ms. Blanchard explained that EPA felt the need to prepare for the 

situation when local concerns are a problem. 

Offsets 

Ms. Watts asked for purposes of offsets in non-attainment areas, how the emissions 

increase would be measured. Mr. Wyman explained how the agency did it in California's 

SCAQMD, RECLAIM program, i.e., the approach was to use a declining cap; the surplus 

generated from this approach was enough to meet offset ratios. 

Mr. Bluestein asked when offsets were needed for an existing sources. Ms. Holmes 

explained that under NSR offsets were required at modification, but under this program the 

source could buy allowances. There was a brief discussion on offsets. Mr. Nickel felt that by 

requiring offsets, complexities ofthe base NSR program were being brought into this offramp, 

e.g., baseline, etc. He mentioned that in ozone nonattainment areas, there were, seasonal controls 

that addressed this issue. Mr. Bluestein mentioned that tonnage cap should address this issue as 

in the RECLAIM program. Ms. Kaufinan acknowledged the need to address this issue and asked 

the industry to submit their comments to EPA. 

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Modeling 

There was a brief discussion on the need for modeling any emission increase. 

Ms. Kaufman mentioned that if the facility's previous modeling was based on potential 

emissions, and there is an increase in potential emissions, then there would be a need to 

re-model. If the facility had never previously modeled, then it would have to model in order to 

join the program. Mr. Wolfe asked what the purpose ofthe modeling would be. Ms. Wood 

replied that the purpose would be to determine attainment status. Mr. Nickel explained the 

relative importance of short-term versus annual ambient air quality standards. Ms. Blanchard 

acknowledged that EPA needed to think about this further. She said that EPA will also talk to 

STAPPA/ALAPCO about modeling. She asked the industry to submit their comments on 

modeling to EPA. 

"Company" / Selling Facility to a Non-Participating Company 

There was brief discussion on how to define a "company" for the purposes of determining 

who can opt in. The industry representatives were concerned that it was hard to determine 

ownership because individual plants and units could be owned by several parties. Ms. Jezouit 

presented an example of a facility in Orlando that is jointly owned by different parties. Also, 

companies that are different today could merge later. Furthermore, individual units could be sold 

to a different company; even to a company that may not have opted into this program. Some 

companies are set up in a way where each of their plants is a separate subsidiary. For these 

reasons, several industry representatives expressed their preference of allowing unit-by-unit opt 

in. One of EPA's concerns was that companies may only opt in their clean units and not the 

dirty ones. There was a brief discussion about what happens in a case when a facility that is part 

of this program is sold to a non-participating company. Ms. Kaufman presented the idea that 

once a unit is in, it should stay in, and its emission rate should transfer to the new owner. After 

the sale, the selling company would adjust its cap. She solicited further feedback from the 

industry representatives on ownership and selling issues. 

SHUTDOWNS 

Ms. Kaufinan asked how would those units be accommodated in this program that either 

shutdown or switch fuels, e.g., from coal to gas. She asked what emission rate should be assigned 

to such units. One possibility was to assign a rate equal to the program goal. She indicated that 

EPA's current thinking was to assign zero. 

Mr. Chastain said that assigning zero would remove the incentive to make a fuel switch. 

Mr. Bluestein argued that it seems that installing an SCR would get a credit under this program, 

but a combined coal-gas cycle, which may get similar reductions, would get no credit. He 

further said that his position was based on the fact that it was hard to justify that a heavily 

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controlled coal unit is environmentally better than a gas unit. Mr. Nickel echoed the comment 

that giving zero credit would remove the incentive. He also said that switch to gas should be 

treated as a means of control similar to add-on control like SCR. Ms. Jezouit also echoed these 

comments. 

Mr. Nickel said that handling of shutdowns was a little more difficult under this program, 

but did not want a program that discourages shutdowns. He said that he will develop a position 

on this matter and convey it to EPA. 

Mr. Wyman said that handling of shutdowns brings up the issue of allocation. He said 

that a tonnage-based system can address that issue. 

SUPERIOR ENVIRONMENTAL PERFORMANCE 

Ms. Kaufman refeired to the handout to explain that EPA's plan for this program, which 

would be an offramp to NSR, was to achieve superior environmental performance and asked how 

such a goal should be incorporated. There was a brief discussion on this topic. Mr. Chastain said 

that without knowing what the base program is it was hard to understand what is meant by 

performance superior to the base program. Also, he wondered how this would work on a 

case-by-case basis and wanted to know all the rules. Mr. Miakisz wondered how superior 

performance would be defined because even if an SCR is used, there could be additional 

requirements in the future regarding mercury and carbon dioxide which, if known up front, could 

be addressed at the outset. Ms. Kaufman asked the industry representatives to submit their 

comments in writing to EPA. 

WHAT HAPPENS AT THE END OF THE PROGRAM? 

Ms. Kaufinan asked whether at the end ofthe program the source should revert back to 

the base NSR or whether it should continue with this approach under a new set of target levels 

that are set based on what is achievable at that time. She also asked whether the new levels 

should be established at the end ofthe program (say 10 years, if 10 years is the life ofthe 

program) or should they be established 6 or 7 years into the program. 

Ms. Jezouit supported EPA's third option in the handout, i.e., to delay the decision until 

sometime later. 

Mr. Wolfe said that the units should revert back to the base program. He also said that 10 

years of regulatory certainty is not enough and that a period longer than 10 years is needed. 

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Mr. Nickel supported Mr. Wolfe's comment saying that sources need time to reclaim 

their investment, i.e., more than 10 years. If new target levels are established at 10 years, it 

would not be reasonable to expect sources to meet that new targets so soon after meeting the first 

target levels. 

There were brief discussions on several aspects such as 10-year cycle for retrofits, 

planning horizon for capital expenditures (10-year plans, 15-year forecasts etc.), book/tax 

depreciation, and how things would be different in the deregulated community. 

GENERAL DISCUSSIONS 

Joe Miakisz said that a technology-based program to improve air quality is not good, and 

that a performance-based program was preferable. Talking about the proposal submitted by the 

Clean Energy Group, he offered the following comments: 

- the group shares the concern that lower ends ofthe target ranges "go too far" 

- the CO target is fine. For others, suggest output-based levels. 

- the group advocates output-based program 

- a timeframe of 10 years is ok, and after 10 years individual units revert back to the base 

program or be subject to a revised target 

- NOx SIP call should form the basis for phase-in 

Rae Cronmiller made the following three comments for smaller sources scattered all over 

the country: 

- a rate-based program is a challenge for cyclones, and maybe a rate-based program should 

be based on percent reductions; 

- all of their units are part D or Da units, i.e., they already meet 0.20 lb/MMBtu NOx. To 

require a recent (say, 7-year old) unit to install SCR in 10 years is not cost advantageous. 

Ms. Blanchard reminded him that this was a voluntary program. Mr. Cronmiller said that 

compared to the base program, this was a preferred option. 

an output-based program is constructive, but a lot of units are not designed for outputbased and therefore would be at a disadvantage. 

Janet Watts said it was hard to evaluate this sector-based approach without knowing what 

the base program looks like. She also said that some ofthe ideas being discussed at today's 

meeting needed to have a practical element, such as cost and manpower issues. She said that 

TVA was trying to install 10 SCRs within 5 years, and was finding it very hard to do. Regarding 

the matter of output-based targets, she said that this doesn't seem like the right place to be 

addressing it. She indicated that she will submit her comments in writing. 

Mr. Chastain asked if this offramp would be added to the base program and offered in the 

final rule as a package. Ms. Blanchard replied that this sector-based approach would have to be 

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proposed first and subjected to a public review and comment process. EPA may still try to 

combine this with the base program, but would likely be hard to do that. EPA is hoping to 

promulgate the base program this year, and it is likely that the sector-based approach may not be 

ready in time for promulgation with the base program. 

Mr. Bluestein commented that a unit-by-unit technology-forcing program is much less 

valuable to sources and also less valuable to the environment. It should be technology-flexible 

because there were also other ways to achieve emission reductions, such as market based 

approaches. Mr. Nickel supported this comment. He said that a broad trading program can 

achieve reductions at existing sources. He also said that there was a need to consider the fact that 

it is hard to retrofit an existing unit which might be the case with PM-10 because PM-10 involves 

unit-by-unit prescription. He gave an example of a facility in Ohio that had to build a bridge on 

top of an existing unit to support a retrofit control. Ms. Holmes asked the industry 

representatives to provide more examples of this type because if this was an isolated example, 

then it would be hard to justify consideration of one instance when designing a broad based 

program. Mr. Cashin said that their facilities were 90% wet scrubbed. In order to achieve the 

particulate matter target levels being considered by EPA, they would have to "scrap" the wet 

scrubbers and start out again because they would be hard to retrofit. Ms. Blanchard asked 

Mr. Cashin to provide examples in his comments. Mr. Cashin said that he will provide 

examples. 

CLOSING REMARKS 

Before adjourning, Ms. Blanchard asked for brief closing comments from all industry 

representatives present at the meeting. The following comments were offered: 

Mr. Miakisz: Losing enthusiasm for this offramp because of what was said at today's meeting. 

Cannot shoehorn this program into a NSR program. 

Mr. Jonker: Urge EPA to not make the mistake of building this into a NSR program which is 

"topsy turvy," works against air quality, and encourages dirty systems. This 

approach has a lot of promise. Do it right this time. All sources across the 

country should be able to participate. 

Mr. Wolfe: We are not starting afresh here; there is some history behind this approach. Do 

not have much window on what EPA is thinking on the UARG, CEG proposals. 

Utility industry is changing; think forward. Be careful of blending incentive 

program with NSR. 

Ms. Jezouit: Our members are not going to like it. Not much flexibility. Program is limited, 

i.e., oil/gas units are not allowed to participate, and still have to get offsets. 

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Mr. Cashin: This approach may need to be rooted in some legislation, or have enough 

consensus. It is difficult to accomplish; hard to define one plan for everyone. 

EPA needs to recognize air quality benefits from what we do. Continue the 

dialogue. 

Mr. Cronmiller: Appreciate EPA's effort and this meeting. Concerned that if this approach is 

not properly constructed, there may be cost detriment to smaller utilities. Hard to 

analyze offramp when base case is not clear. Need to explain this program 

clearly. The 10-year horizon is too short; cannot accomplish all goals in 10 years. 

Mr. Jakubowics: Appreciate the dialogue. Concerned about getting it piecemeal, i.e., a separate 

rulemaking for base case this year and a separate proposal for sector-based 

approach. Would like a single complete program. Support UARG proposal and 

like to have that addressed here. Do not want an overly burdensome program. 

Mr. Brownell: UARG proposal was submitted to EPA in April of 1999. Encouraged that this 

dialogue is going on and that EPA is trying to find a solution. Lots of issues to 

grapple with. It is important to clarify the base program in conjunction with this 

program. Hard to do one without the other. 

Ms. Watts: Agree with others' comments. If at 10 years, i.e., at end of program, the units 

revert to base case, then 10 years is not enough for certainty purposes. 

Mr. Chastain: Encouraged to see EPA's ideas in writing today. Hoping to work out a win-win 

situation, but optimism has gone up and down. It is going to be hard. 

Mr. Nickel: Feel that these meetings are like the movie "Groundhog Day," i.e., repetitive. 

Glad to talk some specifics; found things encouraging today. This approach is 

threatened by finalizing the base program separately. Sector-based approach 

should be structured together with the base program and should involve all of 

industry. 

Mr. Wyman: Encouraged. Like the potential-to-potential test. Like averaging/trading. Prefer 

to not see this program under NSR, rather more holistically. Concerned about 

targets; too low and unrealistic to offer them as practical alternative to NSR when 

NSR cannot deliver those levels. Need something industry can support. Overall, 

today's meeting was a step forward. 

Mr. Litzinger: Glad EPA is looking at market-based and air quality-based programs. 

Discouraged about technology-forcing program. Encourage EPA to look at 

performance-based program. Should allow various options for emission 

reductions, such as fuel switching. 

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Mr. Bluestein: Same concerns as others. Would be great to offer flexibility. Not encouraged 

by reinventing of things that are already there. Should ask environmental groups 

how much they would be willing to give up in return for environmental security, 

e.g., give up technology-forcing for technology-prescriptive. 

Ms. Blanchard thanked everyone for coming. She said that it was helpful to hear 

everyone's views, and that she learned a lot today. Ms. Kaufinan also said that it was good to 

hear all comments at one time in the same room. Ms. Wood asked Ms. Watts to provide some 

data regarding amount of time that makes doing certain things worthwhile. Ms. Holmes asked 

the participants to submit actual data and stated that all data would be taken into consideration. 

Ms. Blanchard asked everyone to provide their written comments to Ms. Kaufman within two 

weeks. 

The meeting was then adjourned. 

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ATTENDEES 

EPA MEETING WITH UTILITY INDUSTRY 

SECTOR-BASED APPROACH 

March 28, 2000 

Name 

James Barrett 

Joel Bluestein 

Bill Brownell 

Michael Cashin 

Richard Chastain 

Rae Cronmiller 

Michelle Golden 

Craig Jakubowics 

Debra Jezouit 

Pete Jonker 

Ron Litzinger 

Joe Miakisz 

Henrry Nickel 

Sam Wolfe 

Bob Wyman 

Tom Curran 

Karen Blanchard 

David Solomon 

Kathy Kaufman 

Lynn Hutchinson 

Affiliation 

Latham & Watkins (Cinergy) 

EEA/Trigen 

Hunton & Williams (UARG) 

Minnesota Power 

Southern Companies 

NRECA 

PG&E Generating Co. 

Edison Electric Institute 

Baker Botts 

SEMPRA 

101 Ash St., San Diego, CA 92101 

Edison Mission Energy 

MJ Bradley & Associates 

Hunton and Williams 

PSEG 

Latham & Watkins 

EPA/OAQPS 

EPA/OAQPS 

EPA/OAQPS 

EPA/OAQPS 

EPA/OAQPS 

Phone 

202-637-2265 

703-528-1900 

202-955-1555 

218-722-5642 

x3339 

205-257-6664 

703-907-5791 

301-280-6973 

202-508-5620 

202-639-7728 

619-696-2410 

949-798-7912 

978-369-5533 

202-955-1561 

973-430-3709 

213-891-8334 

919-541-5559 

919-541-5503 

919-541-5375 

919-541-0102 

919-541-5795 

e-Mail Address 

jbarrett@lw.com 

jbluestein@eea-inc.com 

bbrownell@hunton.com 

mcashin@mnpower.com 

rhchasta@southernco.com 

rae.cronmiller@nreca.org 

michelle.golden@gen.pge.com 

cj akubowics@eei.org 

debraj ezouit@bakerbotts .com 

pjonker@sempra.com 

ronald_litzinger@edisonmission.com 

jmiakisz@mjbradley.com 

hnickel@himtom.com 

samuel.wolfe@pseg.com 

robert.wyman@lw.com 

curran.tom@epa. gov 

blanchard.karen@epa.gov 

solomon.david@epa.gov 

kaufinan.kathy@epa.gov 

hutchinson. lynn@epa. gov 

Page 14 
P.16 

Name 

Melissa McCullough 

Pam Smith 

Anna Marie Wood 

Carol Holmes 

Malay Jindal 

Valerie Everette 

Affiliation 

EPA/OAQPS 

EPA/OAQPS . 

EPA/OP AR 

EPA/OECA 

PES 

PES 

Phone 

919-541-5646 

919-541-0641 

202-564-1664 

202-564-8709 

919-941-0333 

919-941-0333 

e-Mail Address 

mccullough.melissa@epa.gov 

smith.pam@epa. gov 

wood.anna@epa.gov 

holmes.carol@epa.gov 

malay.jindal@pes.com 

valerie.everette@pes.com 

Page 15 
New Source Review Sector-Based Approach Stakeholder Meeting - Industrv (3/28/00) 

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P.19 

ATTACHMENT I 

EPA's Invitation Letter 

l« 
P.20 

^-° s^lf. 

% 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

g tjg 7 | RESEARCH TRIANGLE PARK, NC 27711 

SA^*^£ 

OFFICE OF 

March 10,2000

 AIR QUALITY

 PLANNING 

' AND STANDARDS 

NOTE TO: ADDRESSEES 

We appreciate the high level of interest many of you have expressed in participating in 

the development of a possible alternative to NSR for the utility sector, and would like to thank 

you for your helpful participation in the January 13,2000 public meeting. We are now ready to 

schedule some follow-up meetings with smaller groups of stakeholders to discuss structural 

issues in greater detail. Therefore we have selected, as a tentative date, to have a meeting for 

industry stakeholders on Tuesday, March 21, from 10:00 a.m. til 3:00 p.m. in Classroom 1 ofthe 

EPA's Environmental Research Center, located on the corner of Highway 54 and Alexander 

Drive in Research Triangle Park, NC. If you are very interested in attending, and that date poses 

a critical scheduling conflict for you, please let us know as soon as possible. Since the room has 

limited seating, and in order to facilitate discussion, please plan to bring no more than 2 

additional colleagues each. A first-come, first-serve call-in telephone line will also be available. 

During the meeting we will discuss possible approaches to the major structural issues 

upon which we began discussion on January 13. Please begin thinking about these issues. We 

will forward a detailed agenda to you a few days before the meeting. 

Please E-mail or call Pam J. Smith, at E-mail address smith.pam@epa.gov or telephone 

number (919) 541-0641, or Kathy Kaufinan, at E-mail address kaufman.kathy@epa.gov or 

telephone number (919) 541-0102, by COB Thursday, March 16, with your name and the names 

of any colleagues who would be accompanying you. 

Thank you and we look forward to meeting with you on March 21. 

/ 

Sincerely, 

Karen Blanchard 

Group Leader 

Integrated Implementation Group 

OAQPS 

1^ 

Recycled/Recyclable •Printed with Vegetable Oil Based Inks on 100% Recycled Paper (40% Postconsumer) 
P.21 

NEW SOURCE REVIEW SECTOR-BASED APPROACH 

DISCUSSION WITH INDUSTRY REPRESENTATIVES 

MARCH 28,2000 

AGENDA 

(Please note: times given for each discussion element are approximate.) 

10:00-10:15 Introductions and purpose of meeting 

10:15 -11:15 Basic program elements and rationale for program goal 

What should be the basis for emission rate targets for NOx, S02, and 

PM10? e.g. (a) bring all sources to BACT/LAER levels? or 

(b) achieve emission reductions equivalent to what NSR/PSD would have 

achieved? How can these levels be estimated? 

Either way, what are the BACT/LAER levels that should be used? Should 

they be input or output based? If output based, how would this be 

; measured? 

Emission levels or caps could be reduced annually over the program, or at 

set intervals (e.g. every few years). What are the advantages/ 

disadvantages ofeach method? 

11:15-11:30 Units covered 

If the program also covered existing oil- or gas-fired units, how could the 

emission rate targets be set up to accommodate those units? 

What are the pros and cons of allowing individual facilities to opt in? 

11:30 -12:15 Averaging or trading? 

How would allowing trading affect the structure ofthe program, timing, 

and emission limits? What would be the effect of allowing site to site 

trading, trading across companies, or trading with facilities who opt in? 

If averaging or trading is allowed for PM10, how should compliance be 

determined and demonstrated? 

12:15 - 1:15 Lunch 

ai 
P.22 

1:15 -2:00 Restrictions on averaging or trading 

How can a system be set up to accommodate different geographic 

distributions of emissions, and to protect existing trading programs? 

If a source increases emissions more than they have previously modeled, 

would it have to ensure that there are no adverse effects on Class I areas, 

or localized adverse ambient impacts? 

How can the system accommodate shutdown units? 

How could facilities which switch to gas be used to meet the caps? 

If a company increased its actual emissions in a nonattainment area, must 

it still obtain offsets? 

2:00 - 2:30 Superior environmental performance 

How do we incorporate the goal of performance superior to the base 

program? 

Require a superior environmental performance project to be proposed on a 

case-by-case basis? or 

Require a specific type of project? If a project could involve non-criteria 

pollutants, what would be the legal rationale? 

2:30 -2:50 What happens at the end ofthe program? 

Revert to base NSR program, or 

Reset a new declining cap or new emission levels for another xx years, or 

Put off the decision until we assess, sometime later, how well the program 

is working. 

2:50 - 3:00 Wrap-up 

22 
P.23 

ATTACHMENT III 

Meeting Handout 

'New Source Review Sector-Based Approach'' 

^3 
P.24 

FOR DISCUSSION PURPOSES ONLY 

DOES NOT REPRESENT EPA POLICY OR POSITION 

NEW SOURCE REVIEW SECTOR-BASED APPROACH 

Goal: To develop an approach that would have an end result of ensuring that existing power 

plants are well controlled, while providing maximum flexibility and certainty under NSR for 

existing units. This voluntary offramp to the NSR program would achieve environmental results 

that are superior to the existing program. 

The Big Picture: 

The program: 

Overall requirements: 

A voluntary program for the utility industry, based on declining average 

emission rates for existing coal-fired units. 

Who is covered: 

Which pollutants: 

New facilities or units, must apply BACT or LAER, and meet other 

normal NSR requirements when they construct. 

All modifications to existing units that trigger a potential to potential 

emissions test must apply BACT or LAER. 

All existing units covered under this approach would be free to make any 

and all physical or operational changes without triggering a PSD or NSR 

review if their potential emissions do not increase. 

However, existing units must, in the aggregate, achieve emission 

reductions equivalent to specific target levels by the program end date. 

There would also be some intermediate target or targets. 

Any utility company with coal-fired units, on an opt-in basis. 

NOx, S02, CO, and PMIO 

«a*f 
FOR DISCUSSION PURPOSES ONLY 

DOES NOT REPRESENT EPA POLICY OR POSITION 

Rationale for program goal 

What would be reasonable targets for NOx and S02? 

The basis for emission rate targets for NOx, and S02 is to bring all sources to 

levels of performance greater than current levels, e.g., average of around 0.1 to 

0.15 lbs/MMBtu NOx and 0.25 to 0.6 lbs/MMBtu S02.1 

What would be a reasonable target for PM 10? 

For PM10, our target could be a systemwide average in the range of around 0.03 

lbs/MMBtu, which is the NSPS level, to 0.015 lbs/MMBtu, which represents 

some BACT determinations that have been made. 

What would be a reasonable target for CO? 

We believe good combustion practices represents best control for CO, and would 

be a reasonable target. 

Are output-based targets realistic? How would they be measured? 

We are currently investigating developing output-based targets, but we have not 

developed an understanding of how they would be measured. 

What would be a reasonable time frame in which to expect all units, as a systemwide 

average, to achieve these emission rates? 

Our preliminary thoughts are that perhaps 10 years may be a reasonable 

expectation as a time-frame in which to achieve these emission rates systemwide. 

Should there be intermediate targets over the life ofthe program? 

We believe there should be one or two intermediate targets. What would be a 

reasonable basis for determining what those targets should be? 

coal. 

1

 Note that S02 levels in the West perhaps should be lower based on use of low sulfur 

a<7 
P.26 

FOR DISCUSSION PURPOSES ONLY 

DOES NOT REPRESENT EPA POLICY OR POSITION 

Units covered 

Working assumption: all coal-fired units at a company would be covered. 

If the program also covered existing oil- or gas-fired units, how could the emission rate 

targets be set up to accommodate those units while still achieving the overall program 

goal of superior environmental results? 

Likewise, if companies could opt-in individual facilities, how could the emission rate 

targets be set up to accommodate those units as well, and at the same time preserve 

overall reductions across the industry? 

Our current thinking is not to allow companies to opt-in individual units, because 

it would be difficult to allow this and at the same time achieve the overall 

program goal. 

Averaging or trading? 

How would allowing sources to trade affect the structure ofthe program, timing, and 

emission limits? What would be the effect of allowing: 

- site to site trading 

- trading across companies 

trading with facilities which opt in 

Our current thinking is to allow trading across sites and across participating companies, 

but not to allow companies to opt-in individual units (as indicated above). 

If averaging or trading is allowed for PMIO, how could compliance be determined and 

demonstrated? 

Restrictions on averaging or trading 

How can a system be set up to accommodate different geographic distributions of 

emissions? 

e.g. We need to protect existing trading programs (OTR/Regional NOx Strategy, 

Grand Canyon Visibility Commission program under development). 

If a source increases emissions more than they have previously modeled, we 

believe it would be appropriate to take steps to protect against adverse effects in 

Class I areas and/or localized adverse ambient impacts. 
FOR DISCUSSION PURPOSES ONLY 

DOES NOT REPRESENT EPA POLICY OR POSITION 

Likewise, if a company increased its actual emissions in a nonattainment area, we 

believe it must still obtain offsets. 

How can the system accommodate shutdown units or facilities which switch to gas ? 

We believe that units which shutdown or switch to gas during the life ofthe 

program could be counted. What specific emission rate could be assigned to 

them? We could assign each unit an emission rate equivalent to the program 

goal. 

What happens when a participating company sells a facility to a non-participating 

company? 

We believe that the emission rate the facility has been carrying under the program 

should accompany the facility as part ofthe sale. The selling company would 

then recalculate its cap. 

Superior environmental performance 

Given our plan to make this voluntary offramp to the NSR program something that would 

achieve superior environmental results, how should we incorporate the goal of 

performance superior to the base program? 

Require a superior environmental performance project to be proposed on a caseby-case basis? or 

Require a specific type of project? If a project could involve non-criteria 

pollutants, how could this be accepted legally? 

What happens at the end ofthe program? 

Revert to the base NSR program (with availability of clean unit exclusion), or 

Reset a new declining cap or new emission levels for another 10 years based on 

what is achieveable at that time, or 

Delay the decision until we assess, sometime later, how well the program is 

working. 

Z&