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3M: Hutchinson, Minnesota

3M: 3M Project Negotiations Memo from Jon Kessler





Subject: Review of the history of interaction between EPA, MPCA and 3M on the issue of superior environmental performance and equivalence baseline for the 3M-Hutchinson XL project.

From: Jon Kessler, Director
Emerging Sectors and Strategies Division

This memo compares and summarizes the positions taken by MPCA/3M and EPA at four key points in the history of our discussions on superior environmental performance and baseline equivalence in the 3M-Hutchinson XL project. Those points are: the June 1, 1996, draft permit/FPA let for comment by MPCA; EPA's July 2, 1996, comments on that FPA/permit; changes proposed by 3M to address those comments on August 13, 1996; and modifications to the August 13 language proposed by EPA on August 16, 1996. 3M/MPCA's points are in regular text. EPA's points are in intalics.

This is clearly the central issue separating the parties at this time. Other issues discussed in these documents are addressed elsewhere.

CONCLUSION: Based on this summary, I conclude that, at this point, the parties can move forward if the can reach a meeting of the minds on the treatment of pre-XL voluntary controls in a periodic comparison of actual emissions from the facility as a whole against what actual emissions would have been absent XL. EPA has shown a willingness to depart from its basic view that pre-XL voluntary controls are part of the baseline for specific circumstances presented by 3M with respect to its magnetic tape coaters. 3M/MPCA have shown a willingness to come to agreement if enough pre-XL voluntary controls are excluded from the baseline to provide 3M with a reasonable compliance cushion as a reward for its past good works.

DETAIL: The draft permit let for comment by MPCA on about June 1, 19996, included environmental release limits (caps) for six categories of pollutants (HAPs, VOCs, NOx, CO, PM-10 SO2). The limits were characterized as "based on" or "beyond" current regulations because the proposed limits are at or below what the facility could emit, its maximum allowables at full production given its current configuration under existing rules and permits. (The June 1 draft contained additional requirements for acute and chronic non-carcinogenic and carcinogenic risk limits, and for specific pollution control of all units > 100 tons of VOC and all new units > 40 tons of VOC).

The June 1 draft supplemented the emissions limits with a requirement that an analysis be performed to compare these limits to "what the maximum allowable emissions of each pollutant would be on a facility-wide basis under state and federal regulations at the time of the analysis." This language was meant to assure that the limits would be periodically adjusted in the unlikely event that they exceeded maximum allowable emissions under otherwise applicable rules

However, EPA stressed in its July 2 comments the need to augment these limits with "periodic bench marking of the real measured impact of the site as a whole to ensure that actual emissions are below what actual emissions would have been under otherwise applicable requirements." In determining what actual emissions would have been, EPA commented that the bench mark should assume "that the plant would have continued to operate voluntary control emissions devices, procedures, or other actions not required by any otherwise applicable... requirement." EPA thus took the position that pre-XL voluntary controls should be part of the baseline. EPA went a step further, insisting that the requirement for 'superior environmental performance' meant that the facility would have to exceed this actuals to actuals test by at least 10%.

On July 2, EPA also commented on the need to make plain the consequences of failure to meet the proposed emissions limits or the actuals to actuals test. "EPA believes that violation of these caps would constitute a violation of the permit/FPA, subject to enforcement action under the authorities of Minnesota Law and the Clean Air Act... [and] unilateral termination of the permitlFPA" EPA also commented that the permit should be modified so that "emissions of any pollutant greater than what actual emissions would have been... could result in terminatio of the permitlFPA and in a hasty return to otherwise applicable requirements."

3M's August 13 language attempted to address the concerns that EPA had, albeit awkwardly, laid out in its July 2 comments. The August 13 language did this by codifying a set of 'tests' in the permit, as follows.

First, the August 13 language retained from the June 1 permit and clarified a test to see that a limit would be lowered if it became less protective than maximum full-production allowable emissions under otherwise applicable rules, the outer boundary of protection offered under the Clean Air Act. However, any level of emissions that would, under any hypothetical scenario, be permitted under the Act would clear this hurdle.

EPA's August 16 language made no changes here.

Second, the August 13 language added to the permit a test meant to compare actual emissions under the permit to what emissions would have been at the actual level of production, but assuming only the minimum level of control required by otherwise applicable rules. If the facility is doing better, by at least 10%, than what it would have been with the minimum level of control that would be permitted under otherwise applicable rules, it would clear this hurdle. The facility is, like most in compliance, already doing much more than the minimum level of control permitted under law, so this hurdle would be cleared easily.

EPA's August 16 language made only minor clarifications. It clarified that this test applied to each of the air pollutants regulated under this permit, and that the "otherwise applicable rules" included all applicable requirements, not just state and federal regulations.

Third, the August 13 language added to the permit a more limiting test for VOC and HAP emissions from new (9/1/96) sources at the facility. This test compares actual performance of these sources as a group to what those emissions would have been with the minimum level of control permitted under law. There is also a clause, the meaning of which is unclear, that says "[t]his analysis will account for voluntary pollution control or pollution prevention measures incorporated after 9/1/96, for existing and new sources." Perhaps this language was meant to say that emissions reductions from voluntary measures incorporated in existing sources after 9/1/96, but not those incorporated before hand, can be 'deducted' from actual performance of the new sources. Given this interpretation, this test compares emissions from new sources less voluntary reductions from other sources to what emissions from new sources would have been with the minimum level of control permitted under law. This language does not define what "voluntary reductions" mean or how to compute them.

EPA's August 16 language made a number of changes that expand and more clearly define this test. First, EPA's language expands this test to the other pollutants regulated under this permit, S02, NOX, CO, and PM, emitted from boilers and other combustion units. Second, EPA's language expanded this test to include not just new sources, but any other sources operating with less control than the minimum permitted under otherwise applicable rules. Third, EPA's language assured that the discussion of voluntary controls would mean what was suggested above. Fourth, EPA's language defined the size of offsets that could be generated from voluntary controls as the difference between emissions from actual performance of each unit and the lesser of performance without the additional voluntary control and typical performance prior to XL (9/1/96).

The August 13 language is extremely vague concerning the implications of any failure to achieve a positive result in any of these comparisons. Doing so is clearly not, under this language, a condition of the permit enforceable, voluntary other otherwise. It only suggests that "the MPCA will decide whether it needs to amend this permit" either to keep the pollutant limits "at or below state and federal regulatory requirements" or to "ensure air quality superior environmental performance."

EPA's August 16 language clarifies that meeting these tests is a condition of the permit.

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