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June 7,1991
Summary of Proposed Rule on Applicability
of New Source Review and New Source Performance
Standards at Electric Utility Sources
- As a result of the Wisconsin Electric Power Company v. Reilly
(WEPCO) court decision, owners and operators of utilities have
been concerned that pollution control projects could subject their
units to preconstruction permit requirements. The proposal deals
with whether pollution control projects and other physical and
operational changes at existing utilities are considered "modifications"
under the Clean Air Act (the Act).
- Electric utility sources will play a major role in reducing
sulfur oxide emissions as part of the new acid rain program called
for in Title IV of the Act Amendments of 1990 (1990 Amendments).
- Many existing electric utility sources will be undertaking
pollution control projects, and other modifications, in the near
future to comply with Title IV. In order for these sources to
comply with those provisions in a timely and efficient manner,
clarification of the new source review (NSR) regulations and confirmation
of EPA policies regarding some of these provisions which affect
the utility industry is needed.
- The proposal provides the following:
- Pollution control projects at utility sources are excluded
from NSR requirements, unless the reviewing authority determines
that the project will render the unit less environmentally
beneficial than before the change.
- It modifies EPA regulations to reflect changes made by
Congress in the 1990 Amendments to the applicability of new
source requirements to clean coal technology (CCT), repowering
projects, and to "very clean" units.
- It proposes a presumption that low-NOx burners represent
best available control technology (BACT) for existing coal-fired
electric utility steam generating units undergoing a modification.
- It proposes a methodology for calculating emissions changes
from non-routine physical or operational changes at electric
utility units (other than the total replacement of a unit
or addition of an wholly new unit).
BACKGROUND
The 1977 Clean Air Act Amendments established two new source review
programs that were designed to apply to construction of new sources
and to modifications at existing sources which might increase pollution
in an area. These are the prevention of significant deterioration
(PSD) program for clean air areas and the nonattainment new source
review program for areas that are not meeting established air quality
standards. The EPA recognized that Congress did not intend for every
modification to be potentially subject to NSR requirements (for
instance, installation of projects that are solely designed and
intended to reduce emissions at a source). In practice, EPA has
generally excluded pollution control projects at electric utility
units form NSR requirements. Today's ruling formally proposes to
adopt a formal regulatory exclusion, reinforces EPA's support for
use of environmentally-beneficial technology, and interprets existing
EPA regulations related to these and other modifications at existing
electric utility sources.
The 1990 WEPCO court decision also led to a change to the NSR
program. The Seventh Circuit ruled that certain types of modifications
at electric utilities should receive different treatment under the
NSR regulations. This proposal describes how such modifications
at electric utilities will be handled in the future.
Today's proposal is timely for a number of reasons. First, Title
IV of the 1990 Amendments addresses the acid rain problem in a way
which will cause many utility power plants to undertake pollution
control projects. Second, EPA believes its extensive experience
with other physical and operational changes at utility sources,
the general similarity of equipment within the utility source category,
and the extent of publicly available information from such sources
support a revision to the NSR applicability criteria. Finally, in
passing Title IV, Congress did not suspend any requirements of Title
I. However Title I and Title IV are clearly intended to work in
concert, not conflict, and today's ruling is intended to ensure
that harmony.
Today's proposal implements and explains the provisions of Sections
409 and 415 of Title IV of the 1990 Amendments which provide limited
exemptions from new source performance standards (NSPS) and NSR
requirements for repowering projects and CCT demonstration projects.
Repowering is defined in the proposal as "the replacement of an
existing coal-fired boiler with one of the following clean coal
technologies: atmospheric or pressurized fluidized bed combustion,
integrated gasification combined cycle, magnethohydrodynamics, direct
and indirect coal-fired turbines, integrated gasification fuel cells,
or as determined by the Administrator, in consultation with the
Secretary of Energy, a derivative of one or more of these technologies,
and any other technology capable of controlling multiple combustion
emissions simultaneously with improved boiler or generation efficiency
and with significantly greater waste reduction relative to the performance
of technology in widespread commercial use as of the date of enactment
of the 1990 Amendments." Repowering also includes any oil and/or
gas-fired unit which has been awarded CCT demonstration funding
as of January 1, 1991, by the Department of Energy (DOE). Clean
coal technology demonstration projects are projects funded under
DOE's CCT program or a similar project funded by EPA that utilize
any technology not in widespread use as of November 15, 1990. The
demonstration projects must achieve significant reductions in SO2
or NOx emissions associated with burning coal in the generation
of electricity, process steam, or industrial products.
When the proposal becomes final, the changes will be applicable
to federal NSPS and NSR requirements promulgated by EPA. In some
States where the federal requirements apply, EPA has delegated the
authority to implement the PSD program to the State. For those States
with approved PSD NSR programs, the changes are advisory in nature
and are recommended to be included as part of State implementation
plans (SIPs) approved by EPA.
THE PROPOSED RULE
Pollution Control Projects
The proposal would revise EPA's PSD and nonattainment NSR regulations
for the addition, replacement or use of pollution control projects
at existing electric utility steam generating units. Under this
proposal, pollution control projects would not be treated as modifications,
subjecting the utility to NSR requirements, unless the reviewing
authority determines that the project will render the unit less
environmentally beneficial. Until the proposal is adopted in final
form, EPA will continue its current policy of determining if pollution
control projects are excluded from NSR on a case-by-case basis.
In the proposal, a pollution control project is defined as a project
undertaken at a utility unit to reduce emissions. These projects
are limited to the installation of conventional or innovative emissions
control equipment (including, but not limited to, installation of
conventional and advanced flue gas desulfurization, sorbent injection
for SO2 and NOx controls, electrostatic precipitators) and projects
undertaken to accommodate switching to a less polluting fuel (including
natural gas or coal re-burning, co-firing of natural gas and other
fuels for the purpose of controlling SO2 and NOx emissions).
Changes that are intended primarily to restore original capacity
or to improve the operational efficiency of the facility are not
considered to be part of a pollution control project for purposes
of the proposal. Also, the source must still comply with all applicable
State implementation plan (SIP) limits and requirements, permit
conditions and applicable national ambient air quality standards
(NAAQS) or PSD increment limits.
Method for Determining Emissions Increases
For non-routine changes at electric utility units, the proposal
establishes a methodology for determining whether the change would
result in an emissions increase. To calculate whether a change would
result in an emissions increase, the EPA proposes to compare "actual"
emissions before and after a physical or operational changes at
an existing utility unit. Under the proposal, the source owner or
operator is given more flexibility in choosing which consecutive
2-year time periods will be used to determine pre- and post-change
emissions levels which are representative of normal source operations.
This methodology does not apply to the addition of a wholly new
unit or the total replacement of an existing unit. Until the proposal
is adopted in final form, this methodology is to be applied only
where the unit has "begun normal operations," as in the case of
a "like-kind replacement."
The proposal proposes EPA's interpretation of its current regulations
for utilities, which provides that where increased operations are
in response to independent factors which would have occurred even
in the absence of the physical or operational change (such as growth
of the system to accommodate demand for greater electricity production),
such increases may be excluded from the projection of future actual
emissions. However, any emissions increase attributable to a physical
or operational change must continue to be included in the post-change
emissions calculation. Further, the proposal provides that during
a representative baseline period, the plant must have been able
to accommodate the projected demand growth physically and legally
even absent the particular change.
Repowering Projects
Repowering projects that qualify for a compliance extension under
Section 409 of the Act will be exempt from NSPS requirements if
the project does not cause an increase in actual hourly emissions
for any pollutant regulated under the Act. This exemption will not
apply to a new unit which is located at a different site than the
existing unit it replaces.
Clean Coal Technology
The notice also proposes rules implementing the new clean coal
technology (CCT) exemption created by the 1990 Amendments. For the
purposes of this proposal, temporary CCT demonstration projects
are defined as those CCT demonstration projects lasting 5 years
or less. Title IV gives these projects an exemption from NSPS, PSD
and nonattainment NSR requirements. Further, EPA proposes that at
the end of a temporary project, the facility must be returned to
pre-demonstration conditions and hourly emission rates (or lower).
Repowering as a Permanent CCT Demonstration Project
The proposal also implements a provision contained in the 1990
Amendments which exempts repowering projects which are awarded funding
from the DOE as permanent CCT demonstration projects (or similar
projects funded by EPA) from NSPS and PSD requirements so long as
potential emissions from the unit do not increase as a result of
the project.
Best Available Control Technology (BACT) Presumption
The EPA proposes to adopt a presumption that, in the case of PSD
permits issued by EPA under 40 CFR 52.21, BACT for emissions of
nitrogen oxides from coal-fired electric utility steam generating
units is the technology required under section 407 of the Clean
Air Act. In general, this will call for the use of combustion modification
and/or low-NOx burners or similar, cost- effective technologies
by those utilities required to obtain PSD permits for NOx emissions.
The proposed presumption is consistent with BACT requirements
because it does not purport to relieve the permitting authority
of the obligation to weigh the statutory factors in reaching BACT
determinations. Rather, it reflects an exercise of policy judgment
by the permitting authority that in most cases a BACT analysis of
currently demonstrated technologies for retrofitting existing utility
boilers would lead to the selection of low NOx burners and/or combustion
modifications identified in section 407(b)(1).
NSPS Baseline Calculation
The EPA is proposing that, for an existing electric utility steam
generating unit, the pre-modification baseline for NSPS applicability
purposes shall be calculated using the highest hourly emissions
rate achievable at any time during the 5 years prior to the modification.
Applicability Determinations
Generally, the proposal provides adequate assurances for owners
and operators of utility sources to make modifications without uncertainty
as to the applicability of the various NSR requirements. In most
instances, source owners or operators can readily ascertain whether
new source review requirements apply to them. Consequently, in administering
these requirements, EPA does not require sources to obtain a formal
applicability determination before proceeding with construction.
In keeping with that practice, EPA will not require utilities to
seek applicability determinations under either the revised regulations
proposed today or the interpretations of existing regulations contained
in this preamble.
CONCLUSION
The proposal will help to achieve the goals of the acid rain provisions
of the 1990 Amendments in an effective and timely manner. The implementation
of the regulations being proposed should not cause any negative
environmental effects. As a matter of fact, the proposed exclusion
for pollution control projects should encourage owners and operators
of utility sources to install pollution control projects, which
should inherently lead to positive environmental impacts.
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