This document was prepared by a subgroup of members of the Base Programs Analyses and Policies Work Group as part of the Federal Advisory Committee Act (FACA) Subcommittee process. It is not an EPA document. It is subject to work group discussion. Interested people should forward their comments to a member of the Base Programs Analyses and Policies Work Group or to the contact persons shown below.

Contacts:	Vince Brisini 814/533-8811

Greg Schaefer 303/293-7953

Date:	July 10, 1996

Issue No:	3

REGULATION OF EMISSIONS FROM NEW AND MODIFIED STATIONARY SOURCES

Background

The Clean Air Act has two programs for controlling emissions from new or modified stationary sources.

The Clean Air Act of 1970 established the first regulatory program to control emissions from new stationary sources, the so-called New Source Performance Standard (NSPS) program. The Act required the U.S. Environmental Protection Agency (EPA) to establish technology-based national emission limits for various categories of sources. To date, standards have been established for 74 categories of sources.

The Clean Air Act Amendments of 1977 adopted a sweeping set of new requirements, including the New Source Review (NSR) preconstruction permitting program which included provisions for Best Available Control Technology (BACT) and the Lowest Achievable Emission Rate (LAER). In addition, the 1977 Amendments set up a process for reasonable progress in improving visibility in protected areas (e.g., national parks).

The Clean Air Act Amendments of 1990 (CAAA) did little to modify the basic structure of these programs and instead established several new programs, including the Title V Operating Permit Program and Title IV Acid Rain Program. However, Title I of the CAAA of 1990 authorized the EPA to establish visibility transport regions and commissions, as well as ozone transport regions and commissions. In addition, the CAAA of 1990 required EPA to establish a visibility transport commission for the Grand Canyon and, by operation of law, established an ozone transport region in the Northeastern United States. The concept of the Northeast ozone transport region has now been expanded beyond the original 12 states to a total of 37 states (the Ozone Transport Assessment Group (OTAG)).

This issue paper serves to review the efficacy of the older programs and to discuss options for implementation of new ozone and particulate matter standards, as well as promulgation of regional haze rules.

New Source Performance Standards

This program authorizes EPA to establish national emission limits for source categories that cause or contribute significantly to air pollution which may reasonably be anticipated to endanger public health or welfare. EPA was required to review and, if appropriate, revise the standards at least every four years (the CAAA of 1990 increased the review period to eight years). The original purpose was to establish national limits so that sources could not "shop" individual states looking for the most favorable (or lenient) location to site a source. In the absence of any other air quality regulatory program, the NSPS program has served a useful purpose. However, in conjunction with the NSR program, the NSPS program is largely a relic of the Clean Air Act in many instances. The NSPS program will be further discussed relative to the NSR program.

New Source Review

The NSR program established preconstruction permitting requirements for major new or modified stationary sources in attainment and non-attainment areas. The NSR program for prevention of significant deterioration (PSD) review applies in attainment areas. PSD review requires a source to demonstrate that, among other things: (1) it will not cause or contribute to a violation of a NAAQS or an increment, which represents the maximum allowable increase in pollutant concentration before significant air quality deterioration would occur; and (2) it will use BACT. Sources in non-attainment areas must, among other things: (1) comply with LAER; and (2) obtain emission offsets. For LAER, the cost of controls is not generally a factor, while cost is a factor for determining BACT.

The review and mandate of environmental controls under the NSR program is done on a case-by-case basis. However, to make the program more uniform throughout the country, EPA has established a national BACT/RACT/LAER Clearinghouse for use by state regulatory agencies, EPA Regional Offices, Federal Land Managers, the regulated community and the public. This Clearinghouse provides specific examples of the type, extent and emission rate limitations imposed on individual sources. State regulators are then able to judge what should be required of new or modified sources.

It can be argued that the NSR program is one of the most successful programs under the Clean Air Act. The program has resulted in a steady advance of technology and emissions reductions over the years, far surpassing the reductions that would have been achieved under the NSPS program alone. Following are several examples of the success of the NSR program for NOx limits (an ozone precursor) on coal-fired power generation:

1.	Two pulverized coal power plants in New Jersey. These plants were sited and constructed in severe ozone non-attainment areas and have NOx emission limits of 0.17 lbs. of NO2/mmBtu, with a regulatory goal of 0.10 lbs. of NO2/mmBtu.

2.	A pulverized coal power plant in Florida, permitted and constructed in an ozone maintenance area, was assigned a maximum NOx emission rate of 0.17 lbs. of NO2/mmBtu.

3.	A pulverized coal power plant in northern Wyoming was permitted and constructed in an ozone attainment area. The NOx emission limit was set at 0.23 lbs. of NO2/mmBtu with a regulatory goal of 0.17 lbs. of NO2/mmBtu.

In contrast, the NSPS for each of these sources would have been 0.5 lbs. NO2/mmBtu. As can be seen, the NSPS program would not have advanced the state of the science or controls. In addition, it can be argued that updating the NSPS is an expensive and inefficient use of EPA resources, as the NSPS will be current for only a short time.

For new or modified sources, the following options could be considered:

1.	Do not change the NSPS and NSR programs. New or modified sources in regulated source categories must comply with the applicable NSPS. A new or modified major stationary source located in an attainment area must, among other things, i) show that it will not cause or contribute to a violation of a NAAQS or PSD increment, and ii) apply BACT, which must be at least as stringent as any applicable NSPS. A major new or modified source located in a nonattainment area must, among other things, (i) comply with LAER, and (ii) obtain emission offsets. Modifications are subject to NSR only if the resulting emissions increase exceeds a "significant" threshold.

1a.	Continue the NSPS and NSR programs, but also require sources subject to NSPS or PSD to offset any increase in emissions of any regulated pollutant at a 1:1 ratio.

1b.	Continue the NSPS and NSR programs, but also require sources subject to NSPS or PSD to offset significant increases of all regulated pollutants at a 1:1 ratio. Offsets would be required only for emissions increases above the existing "significant" thresholds (e.g., emissions that equal or exceed the following: CO - 100 tpy; NOx, VOC and SO2- 40 tpy; PM - 25 tpy; PM10 - 15 tpy; etc.).

2.	Do not change the NSPS and NSR programs but treat VOC, NOx and SO2 as precursors for PM2.5.

3.	Continue the NSPS and NSR programs, but allow new or modified sources located in attainment areas to comply with the NSPS and/or PSD BACT requirement by offsetting their increase in potential emissions at a 1:1 ratio, as long as they do not cause or contribute to a violation of the applicable NAAQS or PSD increment. For example, a new source with an uncontrolled potential to emit 500 tpy of NOx could either meet BACT or obtain 500 tons of NOx offsets.

4.	Continue the NSPS and NSR programs, but lower the emissions thresholds in the PSD definitions of "major stationary source" and/or "significant" emissions increase, thereby expanding PSD applicability and BACT requirements to smaller sources. For example, define major source for PSD purposes as any source with the potential to emit 50 tpy of any pollutant subject to regulation or lower the significant threshold for NOx to 25 tpy.

4a.	Lower the emissions thresholds in the PSD definitions of "major stationary source" and/or "significant" emissions increase and also require all PSD sources (including the newly captured sources) to offset their increase in emissions at a 1:1 ratio.

4b.	Lower the emissions thresholds in the PSD definitions of "major stationary source" and/or "significant" emissions increase but only require these newly captured sources to offset their increase in emissions at a 1:1 ratio (i.e., they would not be subject to BACT; only large sources would be subject to BACT).

5.	Require all new or modified sources located in nonattainment areas to offset increases in potential emissions of the pollutant or its precursors for which the area is designated nonattainment at the applicable ratios established in the Clean Air Act for NOx and VOCs in ozone nonattainment areas and greater than a 1:1 ratio for other pollutants.

6.	Combine any of the above options (or parts thereof).

PM10/PM2.5 Issues

The current PSD PM10 increments are as follows:

Class I	Class II

PM10 Annual	4 ug/m3	17 ug/m3

PM10 24-Hour	8 ug/m3	30 ug/m3

While this program has been successful in some areas, it does have some significant shortcomings. This process is based solely on a modeling demonstration, and does not necessarily rely on monitored data. There are several source categories for which the current PSD program does not adequately or fairly work, including area sources that generate coarse crustal material (such as mining operations). While the models/emission factors do an adequate job on an annual basis, they are lacking for some sources when used to demonstrate compliance with the 24-hour PSD increment (for PM10). Litigation on this issue has been stayed pending the outcome of the NAAQS review process. There are several options to address this significant problem:

1.	Retain the current PM10 annual and 24-hour increments, and continue to administer as before.

2.	If the PM10 24-hour standard is eliminated, then the problem is resolved, as there will no longer be a corresponding PM10 24-hour PSD increment.

3.	Eliminate the compliance demonstration for the 24-hour PM10 PSD increment for those sources for which the models/emission factors do not work. In its place, sources would be required to commit to the following:

a.	Operate and maintain an approved PM10 monitoring network to monitor compliance with the appropriate PM NAAQS.

b.	Incorporate BACT requirements in the permit(s) to control coarse crustal emissions (for those sources in attainment areas).

c.	The State regulatory agency must have an adequate enforcement program.

d.	There can be no monitored exceedances of the federal PM NAAQS.

In the event that an exceedance is monitored, then all bets are off and modeling may be required. Note that this procedure is current Region VIII EPA policy, and has been successfully used in the Powder River Basin of Wyoming. Also note that this policy has had the side benefit of encouraging additional monitoring.

4.	Modify the existing PM10 models/emission factors, and demonstrate that they do not overpredict concentrations.

With the promulgation of a PM2.5 standard, EPA will need to consider PM2.5 increments for the PSD program. As has been discussed in other issue papers, find particulate modeling is in its infancy and emission factors for PM2.5 are lacking. Sufficient resources must be dedicated to the effort of developing and validating the model and emission factors before they can successfully be used as a permitting and regulatory tool. In addition, while ozone modeling has become more sophisticated over the past couple of years, there is still a significant gap in the knowledge of atmospheric chemistry and conversion to secondary fine particulates. If PM2.5 increments are proposed and promulgated, they would most likely be very small. Using the ranges proposed for the PM2.5 standard in the EPA Staff Paper, the increments might look as follows (based on a PM2.5/PM10 ratio).

Class I	Class II

PM2.5 Annual	1-1.6 ug/m3	4.25-6.3 ug/m3

PM2.5 24-hour	1-3.5 ug/m3	3.6-13 ug/m3

Options for consideration:

1.	Do not propose or promulgate PM2.5 increments.

2.	Do not propose or promulgate PM2.5 increments until such time as accurate models and emission factors are developed and validated.

3.	Propose and promulgate PM2.5 increments. Commit up front the necessary resources to develop and validate accurate models and emission factors.

The previous discussion has addressed PSD increments for PM10 and PM2.5 separately. This discussion was based on the assumption that PM2.5 and PM10 are separate pollutants. The whole discussion of the PSD program should also be considered in the overall context of current and upcoming regulatory programs. Some options for consideration:

1.	Retain the PSD program in its current form.

2.	Eliminate the PSD program recognizing that upcoming regulatory programs and standards will not allow for the degradation of air quality. These programs include potentially a new PM fine standard and a regional haze program. Others include the potential for a cap and trading program for various pollutants such as NOx and VOC for Ozone control.

Permitting

The adoption of new ozone and particulate standards (particularly a PM2.5 standard), as well as the potential promulgation of regional haze rules raises many questions about how new or modified sources will be permitted. Some options:

1.	Each source will be required to conduct a modeling demonstration for each pollutant (i.e., ozone, PM10, PM2.5, regional haze). This permitting requirement would apply to all sources.

2.	The permitting requirement discussed in (1) would only be required for sources that exceed existing thresholds for "significant" emissions.

2a.	The permitting requirement discussed in (1) would only be required for sources that exceed newly-established thresholds.

3.	Allow for parametric quantification/engineering analyses in lieu of full source/receptor modeling. This option could apply to all sources, or to those sources under a certain threshold.

4.	Request that the Modeling Subcommittee identify areas for consolidation of modeling demonstrations. For example, can a single model be developed that incorporates several pollutants, thereby decreasing the overall complexity of the permitting process. Guidance should also be sought on how to handle transport in the permitting process. For example, how should background be handled? Are the models accurate enough to use in this process? Does monitoring data support the numbers generated by the models? With regard to the western United States, how should prescribed and natural fires be handled?

Fine Versus Coarse Particles

The EPA Staff Paper states PM2.5 does have some potential for intrusion of the "tall" of the coarse mode during episodes of fugitive dust. Staff recommends a sharp inlet for the FRM to minimize this potential intrusion of coarse model particles. Such intrusions into PM2.5 measurements are not anticipated to be significant in most situations; nevertheless, if subsequent data reveal problems in this regard, this issue can and should be addressed on a case-by-case basis in the monitoring and implementation programs. Some considerations:

1.	Do nothing and ignore coarse particle intrusion.

2.	Recommend that EPA truly consider "coarse" and "fine" particles. For example, EPA states that coarse and fine particles should be considered as separate pollutants. One is comprised of crustal materials, while the other derives from combustion. Yet, a PM10 standard would include both coarse and fine particles. Consideration should be given to looking at PM2.5-PM10 as a better measure of a coarse particle.

3.	Consider adoption of a policy that adjusts the coarse particles in the PM2.5 fraction. Dr. Dale Lundgren with the University of Florida has developed a statistical approach to making this adjustment, based upon data collected from PM1/PM2.5/PM10 trichotomous samplers.

Other Issues

Should the following issues also be discussed in the context of the New Source Review program:

1.	NOx waivers.

2.	Transportation conformity.

3.	Bubble/offsets (i.e., will all pollutants be considered for bubble/offset purposes).