UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

REGION I

MEMORANDUM

DATE: September 5, 1996

SUB.: "Double Counting" in the proposed "Substitution Policy" allowing

Post-1996 RFP Plans to use reductions outside of the

nonattainment area

FROM: Robert C. Judge

Air Quality Planning Unit

TO: Tom Helms

Ozone Policy and Strategies Group

Pursuant to recent discussions with David Sanders of your staff, I have been asked to put forward a brief on what has been characterized as "double counting" for post-96 reasonable further progress plans (RFP) under the FACA "Substitution Policy." As you know, David Conroy has previously articulated our position on this issue last winter. It is relevant again today, and for the FACA subgroup on Science and Technology, because of the potential conflict between the often articulated policy under the FACA process of "no backsliding" versus the agreement of the FACA "ad hoc" committee to allow substitutions of reductions from outside the nonattainment area to substitute for RFP reductions within the nonattainment area.

Our concern addresses condition number 6 of the "ad hoc" committee recommendation which allows for these substitutions to occur subject to "the same 'ground rules' for these credits as apply to credits obtained within the nonattainment area boundary." The following is a real example which will demonstrate that this policy will result in fewer overall emission reductions than would occur if either substitution were not allowed or subject to a different set of ground rules than those that apply for the nonattainment area. It is important to note that Region I fully supports the concept of looking outside of nonattainment areas to "areas of influence" for additional controls. In order to alleviate the "double counting" that occurs as a result of the "ad hoc" committee's recommendation, the substitution allowed to occur from outside of the nonattainment area should simply be limited to those reductions that are not prescribed by the Clean Air Act.

Example:

A cyclone boiler at a large utility in Bow, New Hampshire emitted 75 tons per typical summer day of NOx before implementing any controls. It is located about 10 miles from a serious ozone nonattainment area. The utility is located in the Manchester, NH marginal nonattainment area, which is part of the Ozone Transport Region (OTR). Because it is in the OTR, it is subject to NOx RACT requirements under the CAA. NOx RACT controls as imposed by the state require the facility to emit no more than 35 tons per day of NOx from the boiler after May 31, 1995. The 40 TPD reductions to meet RACT (75 TPD to 35 TPD) meet all of the conditions envisioned by the "ad hoc" committee.

If the full 40 TPD were allowed to be substituted to the NH serious nonattainment area for the 3% per year requirement, the 3% per year requirement would be fully met and more pollution would be emitted than if substitution were not allowed. Under the scenario where substitution is not allowed, NH would need to achieve reductions to meet the 9% requirement from within the nonattainment area, and the utility would be still required to reduce its emissions from 75 TPD to 35 TPD to meet RACT. If any of this 40 TPD increment was allowed to be substituted for the Post-96 RFP, fewer reductions will occur. This is "double counting" and would represent backsliding.

This example is real because the State of New Hampshire has proposed to rely on the reductions from this boiler to meet the 3% per year requirement applicable in the serious nonattainment area. The State of New Hampshire has, however, negotiated an agreement with the source to install selective catalytic reduction on the boiler and limit the boilers emissions to emit no more than 15 tons per day by 1999. The 20 TPD reductions achieved by the SCR (i.e., going from 35 TPD to 15 TPD) are beyond what was specifically prescribed under the CAA and this is what New Hampshire would like to substitute for the post-96 reductions. It would be reasonable to allow/reward the state for controlling beyond what the CAA prescribes. If only the increment beyond what was prescribed by the CAA (i.e., going from 35 TPD to 15 TPD) were used in the substitution, no "double counting" or "backsliding" would occur.

If prescribed CAA controls are allowed to be substituted for post-96 RFP reductions, there are numerous examples of CAA- prescribed controls that will be occurring outside of nonattainment areas and presumably would be substituted. These include, but are not limited to, NOx reductions from acid rain controls, VOC reductions from MACT standards, VOC reductions from federal measures such as consumer/commercial product rules and architectural coating rules, and both VOC and NOx reductions from RACT in the OTR, Tier I vehicle standards, and new non-road engine standards. It is my guess that this laundry list of CAA controls alone would be sufficient to address the post-96 requirements of virtually every serious and above nonattainment outside of California (which might not have a lot of "upwind" reductions to point to). To avoid double-counting and to insure that a real environmental gain is achieved by the post-96 RFP requirements, the substitution of Post-96 reductions from sources near, but outside the area subject to the RFP requirement, must be further constrained to those reductions that are not prescribed by the Clean Air Act.

If you have any questions, please contact me at (617) 565-4874.

cc: David Conroy