o June 2002 Reform Package [8L] - Items o Press release and talking points o Report to the President o Recommended Improvements to the NSR Program - Rulemaking would be final for improvements previously proposed and would be a proposal for new improvements - Recommended improvements o Plantwide applicability limits (PALs) - Conduct final rulemaking allowing PALs based on actual emissions (highest consecutive 24 month period within the immediately preceding 10 years, taking into account the current emissions factor (which would reflect emissions limitation and other reductions since the baseline period) in combination with the utilization level from the 24-month time period selected). - Valid 10 years - Source could make any change without triggering NSR as long as actual emissions did not exceed PAL - Renewal " Emissions levels may be reevaluated by agency to determine need for an adjustment " Need can be based on air quality needs, advances in technology and control cost effectiveness considerations - PAL can be increased if criteria are met: " Nonattainment area criteria: Opportunity for public participation; modeling of increase as appropriate; application of control technology to the changed or new emissions unit; and securing necessary offsets. " Attainment area criteria: Opportunity for public participation; modeling the increase; apply control technology to the changed or new emissions unit; and undertake any mitigation measures that might be required. - EPA plans to develop an alternative that would give a source the option of obtaining a PAL based on allowable emissions. o Clean Unit Exclusion - Finalize the 1996 proposal - Unit "clean" if underwent a review process that resulted in BACT/LAER or equivalent (State minor NSR BACT) within last 10-15 years from date the control was installed or the project was implemented - NSR triggered only if the permitted allowable emissions are increased - Inherently clean or lower emitting processes could also qualify, as well as MACT and RACT if equivalent to BACT/LAER o Pollution Control and Prevention Projects - Finalize the 1996 proposal - Would exclude from NSR the addition, replacement or use at an existing emissions unit of any system, process, control or device whose overall net impact on the environment is beneficial (subject to certain conditions). The conditions are: " Project cannot result in an emissions increase that causes a violation of NAAQS or PSD increment, or result in an adverse impact on Class I areas " Complete replacement or reconstruction of an existing emissions unit will not qualify for the exclusion - EPA will provide a list of environmentally beneficial technologies presumptively eligible for the exclusion, including: " WEPCO rule list (40 CFR 52.21(b)(32) " List in 1996 proposal - Projects not on list must be determined environmentally beneficial before such project can qualify for the exclusion " Projects can qualify case-by-case " Projects can be added to list - Process " Source provides prior notice to agency " Source maintains records supporting source's determination on site " Source can seek determination from agency prior to implementing the exclusion o Actual to Projected Future Actual Methodology - Finalize 1996 rulemaking - Would apply to all industry sectors - Used for all physical or operational changes except " Addition of a new unit " Complete replacement of an existing unit - Source must keep on site records " Supporting its determination and " Of actual emissions for the following five years - Actual emissions baseline " For all sources except electric utility steam generating units, actual emissions are based on the highest consecutive 24 month period within the immediately preceding 10 years, calculated using the current emission factor and the utilization level from the 24-month time period selected " {Note: this is a combination of the current factor and the past high utilization, so likely does not reflect "true" actual emissions.} - Future actual emissions calculation (causation link or "demand growth" exclusion) " Only emissions increases caused by a given change are considered in measuring the emissions increase associated with the change " This means that EPA will apply the causation test in the WEPCO rule and exclude from the calculation that portion of the post-change emissions that both: " (1) Could have been accommodated before the change within the representative baseline period; and " (2) Is attributable to an increase in projected capacity utilization at the unit that is unrelated to the particular change. o Routine Maintenance, Repair and Replacement (RMR&R) - EPA will propose cost-based thresholds using "well-established" precedents from NSPS - Projects whose aggregated costs are below the threshold would automatically be considered RMR&R - Projects whose aggregated costs exceed the threshold would remain eligible for RMR&R treatment if they otherwise qualify, without any presumption that they did not qualify by virtue of their being outside the cost-based "safe harbor" - Two different provisions in the NSPS that could be used " Reconstruction (50% or more of the cost of a new unit), and " Capital expenditure exclusion (projects below the "annual asset guideline repair allowance" percentage thresholds of 1.5 to 15%) - These provisions would be adapted to operate in the NSR context " For example, annual dollar cost thresholds, average on a rolling basis over a 5-year period (or some other period) might be appropriate " If the aggregate cost of maintenance expenses and capital repair and replacement projects for the relevant unit do not exceed the specified dollar threshold then the activities would be deemed to be RMR&R and not subject to NSR - The cost threshold would be set to cover RMR&R capital and non-capital costs incurred to facilitate the safety, efficiency, and reliability of the operation of the unit " In the context of the NSPS, these would be set by reference to historical invested basis " However, for RMR&R, a more appropriate comparison point might be capital replacement cost or another measure that sets a consistent threshold for all facilities in a given industry " EPA would take comment on the most appropriate approach - Excluded costs " Any costs incurred for installing and maintaining pollution control technology " Also, EPA will consider excluding certain costs associated with forced outages involving the unanticipated failure of one or more major components - Expenses beyond the safe harbor would not be presumed to be non-routine (but could still otherwise qualify as RMR&R) - Other considerations " EPA may identify specific types of projects that cannot be excluded from review by virtue of the thresholds " However, EPA feels that the better approach may be to utilize maximum achievable hourly emissions rate as the mechanism for addressing this concern - Definitional issues: " EPA will propose that the replacement of existing equipment with equipment that serves the same function and that does not alter the basic design parameters of the unit (e.g., maximum heat input and fuel consumption specifications for utilities) typically would be considered RMR&R " EPA will consider provisions identifying the types of projects that are undertaken as RMR&R activities in particular industrial sectors. Absence of a project from such a list would not disqualify it from being considered RMR&R, but would simply result in its being evaluated on a case-by-case basis. " For the utility sector, equipment that is maintained, repaired and replaced can be categorized along functional lines (e.g., boiler tube assemblies, air heaters, coal handling equipment, pumps, etc.). Projects where the consequences of delaying or foregoing the work could lead to lower availability or the failure of the generating unit and create or add to safety concerns would generally be considered routine, perhaps using maintenance, repair and replacement activities identified as common practice by the North American Electric Reliability Council. " Similarly, EPA could identify routine maintenance, repair and replacement undertaken by refineries during turnarounds. " Energy efficiency projects. EPA will affirm that existing NSR rules are not intended to discourage activities that increase efficiency and will propose that such improvements undertaken through RMR&R activities will be considered RMR&R. Energy efficiency projects will be considered routine IF the improvements results from the replacement of existing equipment with equipment that serves the same function and that does not alter the original design parameters of the unit. " EPA will take steps to "provide additional certainty about RMR&R activities during the pendency of this rulemaking." o Debottlenecking - EPA will propose a clarification that, when calculating actual emissions associated with a physical or operational change, sources generally should look only at the unit undergoing the change. - Emissions from units upstream and downstream of the unit being changed should be considered only when the permitted emissions limit of the upstream or downstream unit would be exceeded or increased as a result of the change. o Aggregation - EPA would propose clarification of its nonaggregation policy by indicating that a project would be considered separate and independent from any other project at a major stationary source unless: " The project is dependent upon another project to be economically or technically viable, or " The project is intentionally split from other projects to avoid NSR. - Also, EPA generally would defer to the States to implement the Agency's aggregation rule.

 

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June 2002 Reform Package

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