NEW SOURCE REVIEW REFORM/SIMPLIFICATION JOHN A. PAUL STAPPA/ALAPCO MAY, 2002

RESOURCES  AUGUST, 1992 EPA WORKSHOP  FACA PROCESS  JULY, 1994 PRELIMINARY STAFF PROPOSAL  1996 FEDERAL REGISTER PROPOSAL  1998 NOTICE OF AVAILABILITY  STAKEHOLDER MEETINGS

NSR TOPICS  PLANTWIDE APPLICABILITY LIMITS  BASELINE EMISSIONS  CLEAN UNIT EXEMPTION  DEBOTTLENECKING  ROUTINE MAINTENANCE, REPAIR, AND REPLACEMENT

PURPOSE  It is my intent to present the history and reasoning behind the STAPPA/ALAPCO positions.  This is not meant to be a legal review of the NSR reform effort.  It also is not my intent to present the positions of other stakeholders.

AUGUST, 1992 EPA WORKSHOP  The EPA outlined the following Agency goals for the NSR program: (1) to ensure that an increase in emissions due to a greenfield source or modification to an existing source does not exacerbate or significantly deteriorate air quality, (2) to ensure that source emissions are consistent with the State's attainment plan, (3) to ensure that air quality related values are not negatively impacted in Class I areas, and (4) to establish control technology requirements that maximize productive capacity while minimizing impacts on air quality.

AUGUST, 1992 EPA WORKSHOP  The EPA acknowledged a need for NSR program simplification consistent with statutory intent. The NSR program should increase certainty and consistency, improve permit processing time, conserve personnel and financial resources for all parties, remove market distortions and encourage pollution prevention. While no effort was made to reach a consensus on additional NSR goals, the invitees identified other desirable goals: (1) minimize disincentives for sources to modernize or improve operations; (2) include special consideration for process changes that do not negatively impact the environment, but look like major increases when compared on the basis of overtime and capacity; and (3) reduce permit delays to encourage building new, cleaner facilities instead of modifying existing sources.

APPLICABILITY OPTIONS  Option 1 - Chemical Manufacturers Association (CMA) Exhibit B Settlement Agreement (Potential-to-Potential),  Option 2 -WEPCO Remand or Rule,  Option 3 - NSPS-Type Test without Netting,  Option 4 - NSPS-Type Test with Netting, and  Option 5 - Plantwide Emissions Limit.

FACA PROCESS  APPLICABILITY  PRECONSTRUCTION ACTIVITIES  PALs  CLASS I AREA ISSUES  POLLUTION CONTROL PROJECTS  BACT ISSUES

STAPPA/ALAPCO PRINCIPLES  BEST TIME TO CONTROL IS AT THE TIME OF SOURCE INSTALLATION OR MODIFICATION  SUPPORT TOP DOWN BACK PROCESS  AIR QUALITY ANALYSIS OF INCREASED EMISSIONS  NO NETTING OUT OF CONTROL  SUPPORT BACT/LAER CLEARINGHOUSE  PALs ARE SUPPORTABLE

STAPPA/ALAPCO PRINCIPLES  WE FAVOR A SIMPLIFICATION PROCESS WHICH GIVES INDUSTRY TIMELINESS AND CERTAINTY, BUT RETAINS A STRONG TECHNOLOGY REQUIREMENT FOR ALL NEW OR MODIFIED SOURCES.  REWARD GOOD CONTROLS WITH INCREASED SIMPLICITY AND FLEXIBILITY

PLANTWIDE APPLICABILITY LIMIT  CONCEPT “BORN” IN EPA SHIFT FROM DUAL-SOURCE DEFINITION TO PLANTWIDE  ORIGINAL PROPOSAL WAS FOR MANDATORY AND AREA-WIDE PALs  BASED ON CURRENT ACTUALS

PALs—1996 PROPOSAL  VOLUNTARY PALs  ACTUALS BASED ON LAST 2 YEARS  ALLOWABLES IF NEW PLANT IN LAST 5 YEARS  LOTS OF ISSUES FOR COMMENT

PALs—ISSUES  COMPLIANCE VERIFICATION  ACTUALS VS ALLOWABLES  NEW UNITS AND CONTROLS  POLLUTANTS COVERED  INTERACTION WITH TITLE V  MACT AND HAPs  PERIODIC ADJUSTMENTS

STAPPA/ALAPCO RECOMMENDATIONS  ACTUALS BASED ON LAST 2 YEARS  ALLOWABLES--DECLINING CAPS BASED ON BACT  SIGNIFICANT NEW UNITS MEET BACT  TITLE V ENFORCEMENT  REVIEWED PERIODICALLY

BASELINE EMISSIONS  DESIRE FOR A COMMON, PREDICTABLE, AND USEFUL BASELINE  CURRENTLY AVERAGE OVER LAST TWO YEARS  ADMINISTRATOR HAS DISCRETION TO CONSIDER SOME OTHER TIME PERIOD  WEPCO ALLOWS A FIVE YEAR LOOKBACK  1996 PROPOSAL FOR HIGHEST PRODUCTION LEVEL IN PAST TEN YEARS BUT KEEPS FIVE YEAR CONTEMPORANEOUS RULE

BASELINE EMISSIONS ISSUES  TWO, FIVE, OR TEN YEAR LOOKBACK  HOURLY OR ANNUAL EMISSIONS  ACTUAL/POTENTIAL/ALLOWABLE AND IN WHAT COMBINATION?  RESOURCES AND RECORDS

STAPPA/ALAPCO RECOMMENDATIONS  MAINTAIN CURRENT TWO YEAR BASELINE WITH ADMINISTRATOR’S DISCRETION TO CONSIDER A MORE REPRESENTATIVE PERIOD  ALTERNATIVE FOR ALLOWABLES BASED PALs

CLEAN UNIT  GREW OUT OF FACA DISCUSSION OF AN ALLOWABLE-TO-ALLOWABLE TEST FOR PREVIOUSLY REVIEWED UNITS  APPEARED IN 1994 PRELIMINARY STAFF PROPOSAL

CLEAN UNIT—1996 PROPOSAL  EXPANDED TO INCLUDE CLEAN FACILITIES  TEN YEAR TIME PERIOD  REJECTED MACT AND RACT AS “CLEAN”  USE OF TITLE V

STAPPA/ALAPCO RECOMMENDATIONS  TEN YEAR TIME PERIOD IS EXCESSIVE  ONLY “TODAY’S” BACT/LAER QUALIFY AS CLEAN  USE TITLE V FOR ENFORCEMENT  FIVE YEAR RENEWAL

DEBOTTLENECKING  … where there is reason to believe that the project will result in debottlenecking…………..or other meaningful increase in the use of the unit above current levels. Where the project will increase utilization and emissions, the associated emissions increases are calculated based on the post-modification potential to emit of the unit considering the application of the proposed controls (i.e., the "actual-to-potential" test). In such cases the permitting agency would consider the projected increase in emissions as collateral to the project

DEBOTTLENECKING  NO CURRENT EPA PROPOSAL  SHOULD BE “COVERED” UNDER TITLE V PERMITS  SHOULD ALSO BE “COVERED” UNDER PALs  POSSIBLE TIE TO POLLUTION CONTROL PROJECTS

ROUTINE MAINTENANCE, REPAIR, AND REPLACEMENT  EPA RULES STATE:  A physical change or change in the method of operation shall not include: (a) routine maintenance, repair, and replacement

ROUTINE MAINTENANCE, REPAIR, AND REPLACEMENT  NO DEFINITION BUT LOTS OF HISTORY  WEPCO COURT CASE  LIFE EXTENSION PROJECTS/ REFURBISHMENTS  CAPITAL COSTS VS MAINTENANCE COSTS

1994 PRELIMINARY STAFF PROPOSAL  (B) Routine maintenance, repair and replacement does not include: (1) An activity that either increases or affects: emissions of any pollutant, the present efficiency, capacity, operating rate, utilization, or fuel adaptability of the source or any emission unit; (2) An activity that substantially extends the useful economic life of the emission unit; or (3) A reconstruction as defined in 40 CFR

STAPPA/ALAPCO RECOMMENDATIONS  EPA DEFINITION COULD HELP  INDUSTRY SPECIFIC LISTS COULD HELP  OPPOSED TO INVESTMENT TEST  OPPOSED TO LIKE-KIND REPLACEMENT EXEMPTION

BOTTOM LINE PRINCIPLES  REWARD GOOD CONTROLS WITH INCREASED SIMPLICITY AND FLEXIBILITY  GREATLY STREAMLINE THE NSR PROGRAM FOR WELL-CONTROLLED (CLEAN UNIT) SOURCES  STRESS THE APPLICATION OF BACT