New Source Review Reform: Background

New Source Review (NSR) Reform for Prevention of Significant Deterioration (PSD) and Non-Attainment NSR Permitting Programs

Introduction

U.S. EPA has published federal new source review (NSR) reform amendments containing the Prevention of Significant Deterioration (PSD) and non-attainment NSR permitting requirements. The first phase of NSR Reform amendments were published in the December 31, 2002 Federal Register [PDF]. Indiana has completed its rulemaking to incorporate these amendments into the current SIP approved PSD and non-attainment NSR permitting programs.

The second phase of federal NSR reform proposed in the December 31, 2002 Federal Register [PDF] addressed Routine Maintenance, Repair and Replacement. When the final amendments were published in the October 27, 2003 Federal Register [PDF] the scope was narrowed to Equipment Replacement Provisions. U.S. EPA has indicated there may be a future rule addressing the maintenance and repair portions.

NSR Reform: Phase 1

U.S. EPA published the first phase of federal new source review (NSR) reform amendments in the December 31, 2002 Federal Register [PDF]. These amendments have been incorporated into Indiana rules and went into effect on September 9, 2004. The final state rulemaking was published in the September 1, 2004 Indiana Register [PDF].

The significant rule amendments can be put in four categories:

• New actual-to-projected-actual (ATPA) applicability test for determining whether there will be an emission increase that triggers the need for a modification.
• New optional Clean Unit (CU) Designation for emission units that are considered "clean" i.e., a unit that has installed emissions controls that are equivalent or comparable to the best available control technology or the lowest achievable emissions rate. Vacated.
• The rule also provides procedures for exempting pollution control projects (PCP) that might otherwise trigger major NSR requirements. Vacated.
• New optional program for sources covered by a plantwide applicability limit (PAL).

On June 2, 2005, the U.S. Court of Appeals for the District of Columbia, in New York v. EPA No 02-1387 vacated the Clean Unit Designation, vacated the pollution control projects exclusion, and remanded the "reasonable possibility" provision of the recordkeeping requirement.

Training Materials

IDEM-OAQ provided training to more than 300 people representing regulated sources, consultants, attorneys, and citizens during the summer of 2004. Slides and training materials include:

• Overview and Status [ZIP]
• Actual-To-Projected Actual (ATPA) [PPT]
• Plantwide Applicability Limitations (PAL) [PPT]
• Indiana NSR Reform Training Manual

State Implementation Plan (SIP) Submittal

IDEM worked closely with U.S. EPA staff through the entire rulemaking process. On September 2, 2004 Indiana formally submitted a request to U.S. EPA to amend the SIP to include the NSR Reform rulemaking. IDEM submitted a clarification to the SIP submittal on December 6, 2004 [PDF] committing to follow the federal definition of "replacement" and address it in a future state rulemaking.

NSR Reform: Phase 2

The second phase of NSR Reform added Equipment Replacement Provisions to the PSD and non-attainment NSR air permitting requirements in the October 27, 2003 Federal Register [PDF].

The U.S. Court of Appeals for the D.C. Circuit issued a December 24, 2003 stay order [PDF] regarding U.S. EPA's Equipment Replacement Rule (ERP).

Due to the stay order "routine maintenance" will continue to be reviewed under the current guidance from U.S. EPA. U.S. EPA's September 9, 1998 memo on WEPCO [PDF] established four factors that should be evaluated in determining whether a project should be considered "routine maintenance."

The four factors established by U.S. EPA are:

1. Nature and extent of the project
2. Historical practices of the industry
3. Repetitive Maintenance
4. Cost of the project

U.S. EPA further elaborated on the four factors to determine "routine maintenance" in a May 23, 2000 letter from U.S. EPA Region 5 [ZIP] Administrator Francis Lyons, to Henry Nickel, Counsel for the Detroit Edison Company. (see pages 8-11.)

The Wisconsin Electric Power Company (WEPCO) v. Reilly case is one of the pivotal decisions regarding routine maintenance in a court of law. The Legal Citations for WEPCO and Recent RMRR Cases [PDF] are available.