Source: https://www.bhklawpgh.com/news-articles/plant-modifications-under-air-act-rules/
Timestamp: 2020-08-11 00:23:03
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Matched Legal Cases: ['§ 60', '§ 60', '§ 60', '§ 51', '§ 52', '§ 51', '§ 52', '§ 112', '§ 60', '§ 60', '§ 7607', '§51', '§7411', '§7479']

Plant Modifications Under Air Act Rules | Klodowski Law LLC |
Author’s note: The following article was published in the Proceedings of “Environmental Innovation in the Metals Industry” A&WMA, March 1998. The NSPS rules discussed in this article have not changed, and most of the discussion of NSR rules is still accurate after the 2006 federal changes. HFK October 2008
Plant Modifications Under Air Act Rules
©Harry F. Klodowski, Jr.
Efforts to increase productivity may be “modifications” regulated under air pollution rules. “Modifications” are broadly defined as any physical or operational change that could increase emissions. A modification can result in new emission limits, place an older unit under the operational requirements of the NSPS rules, or trigger a PSD permit. The definition of a regulated modification is not identical under NSPS and PSD rules. Each program has different exceptions, exclusions and consequences. Understanding the practical impact of the regulation of modifications under air pollution rules is necessary to modernize plants, meet legal requirements, and avoid enforcement actions.
1. INTRODUCTION: WHY ARE MODIFICATIONS IMPORTANT?
Modifications to equipment that emits some type of air pollution are regulated under two sets of federal air pollution rules – the construction permit requirements of the New Source Review (“NSR”) and Prevention of Significant Deterioration (“PSD”) program, and the operational restrictions imposed under the New Source Performance Standard (NSPS) rules. Both of these programs are usually administered by state or local air pollution agencies as well as the federal government, and both regulatory programs are important in the “Title V” operating permit system for major sources created by the 1990 Clean Air Act Amendments. Although Title V permits are not supposed to create emission limits where none existed before, both NSR/PSD permitting rules and NSPS operational limits are federally enforceable applicable requirements that must be evaluated in Title V permitting.
Both the PSD and NSPS programs can create emission limits for pollutants, and perhaps impose restrictions on emissions of new pollutants. Before the 1990 CAA amendments, an emission limit on a source was usually imposed by a state or local agency pursuant to a state or local rule, unless the source triggered PSD review or was covered by a NSPS standard. For example, most states had smoke opacity rules, and many had particulate emission limits in grains per cubic foot for boilers and industrial furnaces. However, many plants missed PSD and NSPS issues in the past, and have uncovered old problems when preparing Title V permit applications.
Regulation of modifications is important because modifications may result in emissions limits. Emission limits may in turn trigger the need to change processes, raw materials, or build end of pipe pollution controls to meet the emissions limit. Any of these measures can result in increased capital and operational costs.
Modifications that trigger permit requirements can create other costs. Emissions that exceed limits imposed by a NSPS standard are violations of the Clean Air Act. Penalties of up to $25,000 per day for each violation can be recovered by EPA or in citizen suits. Emitting without a permit is a violation of air act rules and presumably is an intentional violation, a felony criminal offense. EPA’s 1991 Stationary Source Penalty Policy tells EPA to calculate penalties for each month the source operated without a permit. EPA has collected penalties above 5 million dollars for violations of the NSR/PSD program rules.
2. OVERVIEW: MODIFICATIONS UNDER THE NSPS
The New Source Performance Standards are a series of federal regulations imposed under authority of section 111 of the CAA enacted in 1970. These rules apply to industry emission source types, such as Electric Arc Furnaces for steelmaking, and are intended to assure that new or modified sources use the best demonstrated system of emission reduction uniformly throughout the country and that pollution controls are improved when production equipment is improved. From 1971 through 1996, EPA published NSPS for about 73 industries or emission sources. In general, a NSPS rule creates specific notification, record keeping and reporting obligations. It also establishes 1) operational limits in the form of emission limits for specified pollutants, 2) process operational requirements, 3) requirements for a formal demonstration of compliance on start up, 4) routine compliance monitoring requirements (such as CEM or daily opacity monitoring), and 5) periodic reports to EPA.
The NSPS apply to “affected facilities” which are sources “that commenced construction, modification, or reconstruction” after dates set in each rule. Construction is “fabrication, erection or installation of an affected facility.” 40 C.F.R. 60.2. The NSPS are organized into “General Provisions” which apply to any source, unless the source specific rule provides otherwise, and “Subparts” pertaining to specific source categories. The general provisions are essentially twenty year old language with some modifications; the source category rules were written between 1971 and 1996.
While we have become accustomed to confusing environmental regulations, the NSPS rules deserve special recognition. The NSPS rules contain two definition sections, and in some instances define the terms differently. In 40 C.F.R. § 60.2, “Modification” is defined similarly to NSR/PSD modifications except it does not require a significant emissions increase:
Modification means any physical change in, or change in the method of operation of, an existing facility which increases the amount of any air pollutant (to which a standard applies) emitted into the atmosphere by that facility or which results in the emission of any air pollutant (to which a standard applies) into the atmosphere not previously emitted.
40 C.F.R. § 60.2. This definition does not contain exceptions. Apparently because EPA did not want to review permit applications for any change at any plant in the country, EPA created exemptions. Therefore, there is also an entire section of the NSPS General rule giving a different definition of Modification. 40 C.F.R. § 60.14(a), “Modification”, begins as follows:
(1) Maintenance, repair, and replacement which the Administrator determines to be routine for a source category. . . .
(a) Except as provided under paragraphs (e) and (f) of this section, any physical or operational change to an existing facility which results in an increase in the emission rate to the atmosphere of any pollutant to which a standard applies shall be considered a modification within the meaning of Section 111 of the Act. Upon modification, an existing facility shall become an affected facility for each pollutant to which a standard applies and for which there is an increase in the emission rate to the atmosphere. ***(e) The following shall not, by themselves, be considered modifications under this part: (f) Special provisions set forth under an applicable subpart of this part shall supersede any conflicting provisions of this section.
Impact of NSPS Modifications
In addition to the notification, record keeping and reporting obligations, NSPS rules additionally impose operational restrictions. A performance or compliance test is required within 180 days after the startup of an affected facility. In some standards, the performance emission test is done under baseline operational conditions, operational records are required, and the operator is required to notify EPA if the source is operated outside of baseline parameters. The owner/operator is required to provide adequate and safe emission testing facilities. Opacity limits apply except during startup, shutdown, and malfunction 40 C.F.R. 60.11(c). Emissions controls must be maintained and the source must be operated consistent with good air pollution control practices to minimize emissions.
3. OVERVIEW: MODIFICATIONS UNDER THE
Since the 1977 amendments to the federal Clean Air Act, any new major sources of air pollution have been required to obtain an air pollution permit before beginning construction. A major source is defined by emissions above a regulatory level, defined on a pollutant by pollutant basis. For each criteria air pollutant, a new source is either located in an area that meets the national ambient air quality standard (“attainment area”) or does not meet the ambient air standard (a “nonattainment area”). The purpose of the NSR/PSD construction permit are to balance economic growth with healthy air. In attainment areas, prevention of significant deterioration (PSD) review was to assure that a new pollution source is equipped with Best Available Control Technology (BACT) and did not cause an area with “good” air to violate the ambient air quality standards. In nonattainment areas, a new source of air pollution would be allowed to operate where the air was “bad” if it used Lowest Achievable Emission Rate (LAER) Controls and offset the new emissions by reducing emissions from a nearby existing source. The PSD program also has special provisions to protect air quality near national parks and wilderness areas.
NSR modifications can be major (regulated) or minor (not federally regulated). Modification is broadly defined in the statute and EPA rules on SIP plans as “any physical change in or change in the method of operation of a major stationary source that would result in a significant net emissions increase of any pollutant subject to regulation under the Act,” 40 C.F.R. § 51.166(b) 2. The definition is at the same time so broad it covers anything, yet is very limited in other respects. It is broad because “any physical change” could mean changing lightbulbs (if it resulted in a production increase, and presumably an emission increase) and a “change in method of operation” could mean moving an employee from daylight shift to midnight shift if it resulted in increased production. The definition is limited in that a major modification must be a change to a “major” source, and the change must lead to a net increase in air emissions above PSD significance levels.
The definition also goes on to say that certain changes are not modifications. The major exclusions are “routine maintenance, repair and replacement”, and:
An increase in the hours of operation or in the production rate, unless such change is prohibited under any federally enforceable permit condition which was established after July 1, 1979 pursuant to 40 C.F.R. § 52.21 [SIP Plans] or under regulations approved pursuant to 40 C.F.R. 51.18 or 40 C.F.R. 51.24 [statutory restriction on new sources].
40 C.F. R. § 51.166(f).
There is not much interpretation of the exception for increase in operating hours, or increases in production rate. EPA interpretations do not seem to put any meaning to this language. Furthermore, EPA’s standard method of calculating the net emission increase (past actual to future potential), penalizes plants that operate at less than full capacity. EPA has explained that the “increase in hours” and “increase in production rate” exemptions were intended to compensate for fluctuations in the business cycle due to market conditions, as opposed to increased emissions from construction. This is a valid concern. The calculations of emissions increases for NSR/PSD and NSPS “past actual” emissions should be based on what the plant was capable of emitting, not limited to emissions from operating at half of capacity because you could not sell the product you could make. The NSR/PSD rules should not penalize a source for operating below capacity. The increase in hours or production rate exemption was intended to allow this adjustment. In a Seventh Circuit Court of Appeals decision regarding modification at the Wisconsin Electric Power Company (WEPCO), the leading interpretation of these rules, the Court generally sustained EPA’s position but rejected EPA’s method of calculating emission increases as past actual to future potential.1
EPA’s 1990 Draft “New Source Review Workshop Manual” is the leading reference in this area. This book has been widely published as a statement of EPA’s regulatory interpretation. This manual tells EPA to compare past actual to future actual when evaluating the emissions increase from a modification. At page A.37, the manual tells permit writers to calculate the net emissions increase by considering “any increases in actual emissions from a particular physical change or change in method of operation . . . .”
Impact of NSR/PSD Modification
A plant modification that could be a new source modification results in a number of impacts. The source must evaluate the emissions increase in a PSD applicability determination comparing past actual emissions of the criteria pollutants to the future potential emissions. If the net emissions change is above the “significance levels” shown on Table 1, the source must perform a control technology evaluation, demonstrate there is no significant deterioration through an “Increment Analysis”, and show there is no exceedance of ambient air quality standards. This impact analysis requires air quality modeling, and may require ambient air monitoring. The permit application process can cost more than $100,000, take two years, and require unusual control technology. In addition to these costs and delays, it is possible the modification cannot be permitted at the proposed location, for example, if it is near a national park.
4. ALL EMISSIONS INCREASES ARE NOT REGULATED MODIFICATIONS
A quick review of the NSPS and PSD rules would indicate that the definition of modification is identical. This conclusion is incorrect, because there are significant differences in the definitions. Both rules start off by covering any physical or operational change resulting in an increase in emissions to the atmosphere, but the pollutants referred to differ between the regulations. For an EAF, a NSPS modification results from a change that increases particulate emissions after controls. The NSPS is not triggered by an increase in any other pollutant such as CO or NOX. A PSD modification looks at increases in emissions of more pollutants (all criteria pollutants and some others) but the increase resulting from the modification must be more than an allowable level of increase called “PSD significance levels”. For example, an increase in PM-10 emissions resulting from a physical change at an EAF shop is not a regulated modification unless the increase from actual to future potential emissions is more than 15 tons per year, calculated according to an EPA formula.
5. WHAT SOURCES ARE REGULATED?
Under PSD rules, the emissions increase evaluated is sometimes defined as any increase from an entire facility; and at other times defined as the increase from a particular change. In contrast, NSPS requirements do not apply to plants that are not “affected facilities.” An affected facility is defined in time and by type of emission source. Each NSPS rule has an effective date. Older plants are not regulated until they are modified after the effective date of the rules. The effective date of the rules varies by the industry type but are usually after 1971.
The NSPS rules apply to certain defined “affected facilities”, not all existing facilities as is sometimes stated in the rule. Each NSPS standard describes the equipment regulated. For example, Subpart AA applies to “electric arc furnaces and dust handling systems”, while Subpart AAA covering EAFs built or modified after 1984 covers EAFs and AODs, and dust collection systems. In this later regulation, EAF is further defined as “the furnace shell and roof and transformer.” It appears that a sidewall burner or lance could be part of the EAF regulated under Subpart AA, but is not part of the “affected facility” as defined in Part AAA because the burner or lance is not the shell, roof or transformer! If the sidewall burner is not part of the affected facility as defined by EPA, it can be changed at any time outside of the NSPS rules. Changing a burner perhaps could bring an older unregulated or “grandfathered” source into Part AA, but could not move a Subpart AA furnace into Subpart AAA. The point here is that EPA defines the scope of NSPS regulations, and physical or operational changes to nonaffected sources – such as a LRS or continuous caster – are not NSPS modifications. Since the NSR/PSD rules operate independently of NSPS rules, a change to a nonaffected source might still be covered by PSD rules.
Both versions of the NSPS for EAFs define dust “capture system” and “dust handling system”. The dust handling system is the equipment after collection of the dust. For an EAF, the handling system is the hoppers, conveyors, storage, processing, and load out operations, and is defined to be part of the affected facility. The capture system, or hoods, ducts, baghouse and fans is not defined to be part of the affected facility and a change to these units may not be regulated under the NSPS rules.
6. WHAT ARE EMISSIONS “TO THE ATMOSPHERE”?
A physical or operational change must increase emissions to the outside air, and it is fairly well settled that the emissions increase must be evaluated after control equipment. It is common to avoid both PSD and NSPS regulation by improving control equipment with a change to production equipment so that there is no increase in emissions to the outside air.
A NSPS modification is “an increase in the emission rate to the atmosphere of any pollutant to which a standard applies”, meaning a NSPS standard. The only pollutant regulated under the NSPS for EAFs is particulate matter, measured as TSP. The rule further provides emission rate means “kg/hr of any pollutant for which a standard is applicable.” EPA is required to use AP-42 emission factors, which are rarely expressed in terms of hourly emissions. If AP-42 does not “clearly” show whether there is an increase, which seems likely in most cases, EPA may use other emission factors, mass balances, CEM results or stack testing. The rule provides the owner can stack test, according to an EPA approved method, before and after the physical or operational change to show there was no emissions increase. In the NSPS program, the emissions comparison is actual emissions before the change to actual emissions after the change.
The pollutants that may trigger a PSD modification are much broader, and include any criteria pollutant, and certain other pollutants. The NSR/PSD rules list significance levels for the criteria pollutants and certain other pollutants. The regulation provides that any increase of a pollutant not on the list is a significant increase for NSR/PSD. 40 C.F.R. § 52.21(b) 23(ii). However, Congress also exempted HAPS from the PSD program in the new air toxics regulatory program, 42 U.S.C. § 112(b) (6). Therefore, increases of pollutants now regulated as HAPS are not significant increases for PSD purposes.
7. NSPS MODIFICATIONS MUST BE A CAPITAL EXPENSE
The definition of Modifications between PSD and NSPS programs also differs in terms of whether the cost of the physical or operational change is relevant. The PSD rules do not consider cost, but the NSPS modification rules do. Perhaps this is because the NSPS rules apply to any increase in emissions to the air, and does not exempt emissions increases below the PSD significance threshold. EPA decided that it would regulate significant improvements, not any improvements, under NSPS rules.
In the NSPS program, an increase in production rate or emissions modification is not a modification unless sufficient money is spent on the change. The NSPS rules define capital expense as follows:
Capital Expenditure means an expenditure for a physical or operational change to an existing facility which exceeds the product of the applicable “annual asset guideline repair allowance percentage” specified in the latest edition of Internal Revenue Service (IRS) Publication 534 and the existing facility’s basis , as defined by section 1012 of the Internal Revenue Code. However, the total expenditure for a physical or operational change to an existing facility must not be reduced by any “excluded additions” as defined in IRS Publication 534, as would be done for tax purposes.
40 C.F.R. 60.2
In the early 1970’s EPA borrowed an IRS concept of what cost of an improvement was a “capital” or significant improvement as opposed to an insignificant improvement (closer to routine repair or replacement) which would not be regulated. In the 1970’s the IRS used a method of depreciation called The Asset Depreciation Range Class Life System. Since the IRS had a way of differentiating between small and large expenditures for various industries in the asset class depreciation rules, EPA borrowed the IRS rules. In essence, the 1970 IRS rules provided that a change that cost less than a specified percentage of the total cost of the original plant (roughly, the “Basis”) was an expense (or repair) that could be deducted immediately, as opposed to a capital expenditure that must be depreciated over a number of years. Therefore, the EPA definition of capital expenditure in the NSPS rules, 40 C.F.R. § 60.2, reflected the common tax accounting practice in the 1970’s.
Unfortunately for those trying to understand the NSPS rules, the IRS abandoned the ADR depreciation system and replaced the depreciation calculation with the Accelerated Cost Recovery System in 1980. In the intervening years, EPA never changed the NSPS definition. You can look for “annual asset guideline repair allowance percentages” in the latest edition of IRS publication 534 forever and not find them because the IRS has not used these repair percentages for a long time. You can find the percentages in IRS Revenue Procedure 83-35. Table 2 lists the asset repair allowance percentages for a number of industries.
8. PERCENTAGE OF WHAT?
It is easier to find the percentage than figure out what you are supposed to multiply it by. The NSPS definition of Capital Expenditure tells you to multiply the repair percentage by the “existing facility’s basis as defined by Section 1012 of the Internal Revenue Code, less ‘excluded additions’ in IRS Publication 534.” Again, the current version of publication 534 will not be helpful because the IRS has changed its method. Most engineers and environmental professionals are not experts in accounting methods that have not been used in 20 years.
Internal Revenue Code Section 1012 will tell you “basis” is “cost”, but this simple equation is not simple in practice. The concept of basis keeps an army of accountants and tax lawyers busy. Most times basis will be construction cost or the price paid. However, there may be a large difference in the cost of a melt shop when built in 1960 dollars, and the current replacement cost of a similar facility due to inflation. The NSPS rule says basis, not adjusted basis which would account for the depreciation of the facility over the years, and perhaps for improvements over the years.
This definition would be confusing if you happened to be a tax accountant, and not surprisingly, most agency personnel are not experts in depreciation accounting. However, the agencies have to make decisions based on their best understanding of the rule. You should be aware that decisions in this area appear to have been made without any guidance on the IRS terms which EPA references. EPA’s decisions under this rule are not within their area of expertise and might not receive any deference in court. According to the preamble to the rules, EPA intended to regulate, substantial long term additions or improvements. For example, a 1987 EPA determination letter said the basis was the current replacement cost of an EAF, multiplied by 18%, and determined that new oxyfuel sidewall burners were not a NSPS modification. A 1989 memo says EPA should use the original basis, apparently not compensating for inflation. A 1997 EPA letter seems to say EPA will use the original purchase or construction cost, not adjusted for inflation, and subtracting depreciation taken over the years. This last approach would tend to result in any change becoming a capital expense and thus a modification. This issue is more complicated than it should be, and EPA is working on a clarification of the issue as part of a regulatory reform effort. The clarification is expected late this year.
The clarification in the works may not address another problem in this area, which is defining the basis of what piece of equipment. In NSPS Subpart AAA, EPA defines the furnace as the NSPS affected facility, and defines the furnace as the shell, roof and transformer. Some EPA letters examine the basis of the furnace only, but no steel mill operates a shell, roof and transformer only – without computer controls, electrodes, hydraulic systems, scrap and alloy addition systems, air pollution controls, cranes, ladles, etc. I do not believe any EAF in the country is not inside a building, and no one runs an EAF to dump the steel on the ground. EPA occasionally suggests the basis is the cost of the furnace only, without considering the fact that the furnace is part of an integrated meltshop operation. The Internal Revenue Code sections EPA tells us to apply requires evaluation of the cost of entire facility, including the real estate, building, and other parts of the operation, not just the cost of the shell and roof.
9. WHAT IS ROUTINE REPAIR & REPLACEMENT?
The exception for routine repair and replacement does not appear in statutory language, is not defined in either the NSR/PSD or NSPS regulations, and is not particularly well defined in EPA’s applicability letters. The 1990 EPA NSR Workshop manual notes that “physical change” and “change in method of operation” are not defined, but do not include “routine maintenance repair and replacement” which also are undefined.
Where regulations use terms without specific definitions, it is reasonable to look at common usage. Webster’s Dictionary tells us routine is “a regular, more or less unvarying procedure, customary, prescribed or habitual;” maintenance is “the work of keeping a building, or machinery in good repair;” repair means “to put back in good condition after damage, decay, etc., mend; fix” and a replacement is a thing that takes the place of another.
EPA maintains it will make a case by case determination based on the nature, extent, purpose, frequency and cost of the work to arrive at a common sense decision. It is fair to say that replacing a unit with an identical unit is within the exemption. The scope of this exemption is discussed in the WEPCO letters and Court Opinion, and the Court focused on the “routine” element of the exception, upholding EPA’s determination that a replacement of a component that had never been replaced in 50 years was not within the exception. However, most elements in the melt shop are consumable and are designed to be replaced, ranging from ladle linings to furnace roofs. Replacement parts often incorporate new materials or technology that make them “better” in the sense they will last longer, even if functional performance is identical. The lack of a definition of what replacements are exempt from PSD or NSPS regulation leads to wasted time and arbitrary decisions.
One way to resolve these questions is to ask EPA for a determination. The NSPS rules provide that EPA must make a determination on whether a change is a NSPS regulated construction, reconstruction, or modification within 30 days. 40 C.F.R. § 60.5. EPA maintains a collection of applicability determination letters available in the OAQPS TTN database or website, and many of these letters are contained in A&WMA’s 5 volume New Source Review publication. An applicability determination is a final agency action, and under the Clean Air Act, 42 U.S.C. § 7607(b), it can be appealed directly to the U.S. Court of Appeals for Circuit in which the source is located. Each state also provides for review of Agency actions.
Physical and operational changes occur every day in manufacturing plants. Evaluating whether the change results in an increase in emissions is difficult. The result of misunderstanding the permit rules on modification of emission sources can be costly delays in starting a process improvement, increased control expense, and in the case of PSD permitting, extraordinarily lengthy and costly engineering for permit applications. Failure to get a permit for a regulated modification can result in an enforcement case.
Most modification questions are resolved in negotiations between the facility engineers and local permit writers. Agency personnel are quick to remember that “every physical or operational change requires a permit” without considering the exceptions and limitations that are also in the rules. As shown in this paper (and EPA references), a physical change without an emissions increase is never a regulated modification. Each program has other specific exceptions. Furthermore, the NSR/PSD and NSPS rules are similar but not identical, and the similarity often leads to confusion.
Plant personnel are used to the permitting agency telling them that the plant has the “burden of proof” on any close questions. The only place the modification rules specifically place the burden on the plant is in the NSPS program, where the plant must show no increase in actual hourly emissions before and after the change. In negotiations, it is often helpful to know that the agency usually has the burden of proving its decisions are rational and based on the facts when the decision is appealed.
If you face an enforcement action for failure to have obtained the appropriate permit for a modification, and you determine the change really was a regulated modification, it is easy to loose track of the purpose of these rules in the ritual dance between the enforcement staff and the defense attorneys. The fundamental purpose of these rules is to install good emissions control technology, or, even better, install an improved process that uses less energy and emits less pollution. Many, perhaps most, equipment changes are more efficient and less polluting. The evidence that there was an emissions increase may be less than compelling – is it based on a “E” rated AP-42 factor that is not accurate to an order of magnitude? Is there any control technology that could reduce these emissions?
We are all familiar with the legal maxim that ignorance of the law is no excuse. Of course there is another legal principle saying the opposite that is not so well known, and is highly relevant to 20 year old, badly written and unintelligible regulations: that government regulations must give the person of ordinary intelligence fair notice of what conduct is regulated before imposing a civil or criminal penalty. As recently explained by the U.S. District Court in United States v. Hoechst Celanese Corp:
When an agency has provided no pre-enforcement warning of its interpretation, the question facing a reviewing court is “whether the regulated party received, or should have received, notice of the agency’s interpretation in the most obvious way of all: by reading the regulations.” General Electric Co., 53 F.3d at 1329. Fair notice is not provided unless a regulated party acting in good faith is able to identify with “ascertainable certainty,” on the face of regulations and other public statements issued by the agency, the standard to which the regulating agency expects it to conform. Id. Without such fair notice, the regulated entity does not commit a wrong when it fails to meet the regulatory standard. Unclear or ambiguous regulations do not provide the requisite notice. If a violation of a regulation subjects private parties to criminal or civil sanctions, a regulation cannot be construed to mean what an agency intended but did not adequately express.
Finally, many plant managers ask why the government makes it so difficult to modernize plants, which results in energy efficiency, less pollution, and improved ability to compete in the global economy. This a good question, and should be brought to the attention of policymakers in Congress and at the Agency. If U.S. environmental policy to reduce emissions of greenhouse gasses has any hope of reaching its targets, new and less polluting technology must be installed on a massive scale and time frame. The current rules on regulation of modifications penalize attempts to modernize. This is not what was intended, but it is the practical result. The NSR/PSD and NSPS rules need to be overhauled. Overall reform of the construction permit program is being discussed in the NSR Reform rulemaking, and in the FACA meetings held by the agency. This is an area where innovation will be required in the near future. The Metals Industry should support these reforms.
(1) Wisconsin Electric Power Company v. U.S. EPA, 893 F.2d 901 (7th Cir. 1990).
(2) United States v. Hoechst Celanese Corp., 964 F. Supp. 967, 979 (D.S.C. 1996); modified, ___ F.3d ___ (4th Cir. 1997).
New Source Review, Prevention of Significant Deterioration and Nonattainment Guidance Notebook, vols. I-V, Air & Waste Management Association, Pittsburgh PA, 1988-1996.
New Source Review Manual, Prevention of Significant Deterioration and Nonattainment Area Permitting, United States Environmental Protection Agency, Washington D.C., 1990.
EPA Applicability Determination Index, United States Environmental Protection Agency, http://www.epa.gov/, 1998.
The definition of “major modification” found in the PSD rules is found at 40 CFR §§51.165(v), 51.166(2), 52.21 and 52.24(f)(5), and is based on statutory language from 42 U.S.C. §7411(a)(4) (NSPS), which is referenced in 42 U.S.C. §7479(1)(c) (PSD/NSR).
PSD SIGNIFICANCE LEVELS
VOC (ozone)
Sulfur Compounds Rate (tpy)
NSPS MODIFICATIONS
REPAIR ALLOWANCE PERCENTAGES
Assets Used in Manufacture of:Industrial Steam & Electric Generation
Primary Steel Mill Products
Machinery & Mechanical Products
Motor Vehicles Percentage
Source: IRS Revenue Procedure 83-85
COMPARISON OF MODIFICATION PROVISIONS
Cost of Change NSR/PSD
Criteria (plus a few)
Above Significance Levels
Past Actual to Future Potential???
5 Year Netting
Not Considered NSPS
Defined “affected source”
Any regulated by NSPS source standard
Past Actual to Future Actual
Hourly Emissions Rate
“Capital Expense”