THE PROJECTED ACTUAL
EMISSIONS TEST & THE “COULD HAVE
ACCOMMODATED”/ “DEMAND GROWTH”
EXCLUSION
DAVID LLOYD, STATES/LOCAL PROGRAMS/EPA ENFORCEMENT WORKSHOP
OCTOBER 6, 2016
“EPA believes it is possible to distinguish
between emissions increases that are related to
a physical or operational change from those
that are not.” (1992 NSR Rule Preamble)

Existing major sources must go through NSR permitting if they are
changed in such a way that increases emissions.

The regulations require a projection of future emissions:
“Projected Actual Emissions”

The “change” must cause the increase (generally referred to as
“causation”).
BACKGROUND: NSR AND EXISTING
SOURCES
CAUSATION HAS ALWAYS BEEN A
PART OF NSR
 It is in the Clean Air Act: The term “modification” means any
physical change in, or change in the method of operation of, a
stationary source which increases the amount of any air
pollutant…
 It is in the regs: Major Modification means any physical
change in or change in the method of operation of a major
stationary source that would result in a significant net
emissions increase…40 C.F.R. 52.21(b)(2)(i).
A BIT OF HISTORY…
 1980
Regs: Actual to Potential
 1992
Regs: Representative Actual Annual Emissions
 2002
Regs: Projected Actual Emissions (not that
different from 1992 regs)
41)(i) Projected actual emissions means ….
(ii) In determining the projected actual emissions under
paragraph (b)(41)(i) of this section (before beginning actual
construction), the owner or operator of the major stationary
source:
(a) Shall consider all relevant information…
(c) Shall exclude, in calculating any increase in emissions that
results from the particular project, that portion of the unit's
emissions following the project that an existing unit could have
accommodated during the consecutive 24-month period used to
establish the baseline actual emissions under paragraph (b)(48) of
this section and that are also unrelated to the particular
project, including any increased utilization due to product
demand growth;…
THE PREAMBLES PROVIDE FURTHER
DIRECTION
“From the initial calculation, you may then make the
appropriate adjustment to subtract out any portion of
the emissions increase that could have been
accommodated during the unit’s 24 – month baseline
period and is unrelated to the change” (2002
preamble).

1. The increase must have been able to be accommodated during
the baseline period (this is where demand growth is considered),
AND

2. The increase must be unrelated to the change.
SO…THE INCREASE SHOULD BE
ANALYZED IN TWO WAYS
THE SOURCE HAS THE “BURDEN” TO
DEMONSTRATE THAT EMISSIONS CAN BE
EXCLUDED
COMMENTS ON GEORGIA PACIFIC
DETERMINATION (3/18/10 EPA LETTER)

Georgia Pacific claimed that the Could Have Accommodated
(CHA) amount is “the highest amount that the unit could have
legally and physically emitted during the baseline”. EPA expressly
disagreed with that statement.

The analysis is based on source-specific facts

Even if Georgia Pacific had demonstrated that the facility could
have accommodated emissions above future actual levels, the
increase resulting from the vortex chamber project still could not be
excluded.

There can be overlap between CHA emissions and emission
increases that are related to the project. If this is the case, then such
CHA emissions cannot be excluded.
IN SUMMARY…

The exclusion is about “causation,” which has always
been a part of NSR

Not a potential to actual test or any variation thereof

The analysis focuses on the INCREASE over baseline
emissions (preambles clarify this)

DO NOT IGNORE THE “AND.” It is a separate analysis

DO NOT IGNORE THE “AND” (really…this is where
causation needs to be evaluated)

Case by case determination &, the facility has the
burden to demonstrate that it is properly projecting and
excluding any emissions (the source “shall consider all
relevant information…”)

The larger the change the higher the bar to demonstrate
that emissions can be excluded
THE ROUTINE MAINTENANCE,
REPAIR & REPLACEMENT
EXCLUSION UNDER NEW
SOURCE REVIEW
DAVID LLOYD, STATES/LOCAL PROGRAMS/EPA ENFORCEMENT WORKSHOP
OCTOBER 6, 2016
The “30,000 Foot” Version

Existing major sources must go through NSR permitting if they are
changed in such a way that increases emissions.

“A physical change or change in method of operation shall not
include: (a) Routine maintenance, repair and replacement…”
(52.21 (2)(iii)(a)).
BACKGROUND: NSR AND EXISTING
SOURCES
RMRR: THE BIG PICTURE
 RMRR
is not defined or even mentioned in the CAA. It
is only found in the regulations (the CAA only says
“any” change)
 RMRR
not defined in the regulations
RMRR APPLICABILITY DETERMINATIONS
 EPA
has provided a significant number of applicability
determinations that serve as guidance for RMRR
determinations
 One
such determination in the 1988 time frame is was
made regarding a proposed project at the Wisconsin
Electric Power & Light Port Washington facility
(the“WEPCO determination”)
WEPCO DETERMINATION

Four documents make up the WEPCO determination, the
most important of which is a September 9, 1988 EPA Memo
(known as the “Clay Memorandum”)

Provides a structure for evaluating the RMRR exclusion
consisting of a case specific analysis of the nature, extent,
purpose, frequency and cost of a change, to arrive at a
common sense finding

EPA concluded that the Port Washington was “…far from
being a regular, customary, or standard undertaking for the
purpose of maintaining the plant in its present condition”
SOME ADDITIONAL EPA DETERMINATIONS
 November
 August
6, 1987 Casa Grande Determination
28, 1998 Sunflower Electric Determination
 June
11, 1999 Monroe Electric Petition
 May
23, 2000 Detroit Edison Determination
 May
2, 2011 TVA Petition
 Numerous
EPA enforcement actions
IN 2003 EPA PROPOSED THE EQUIPMENT REPLACEMENT
RULE (ERP) WHICH WOULD CHANGE THE AGENCY’S
LONGSTANDING NARROW APPLICATION OF THE RMRR
EXCLUSION
 Before
promulgation of today’s rule, we interpreted the
phrase “routine maintenance, repair and
replacement” to be limited to the day-to-day
maintenance and repair of equipment and the
replacement of relatively small parts of a plant that
frequently require replacement. Today we are
expanding the former definition of RMRR… (F.R. Vol.
68, No. 207, October 27, 2003, pg. 61270)
THE D.C. CIRCUIT STAYED THE ERP IN 2003 &
OVERTURNED IT IN 2006 CONCLUDING THAT:
 EPA
offered no reason to conclude that the structure of
the Act supports the conclusion that 'any physical
change' does not means what it says.
 EPA’s
attempt to define “any physical change” as not
including physical changes costing up to 20% of a
new process unit is based on “Humpty Dumpty” logic.
 EPA
had historically applied the RMRR exclusion as
being limited to de minimis circumstances.
SO WHERE ARE WE NOW?
 Since
the language used by Congress - “Any physical
change…” - must be construed broadly, the RMRR
exclusion must be limited to narrow or de-minimis
circumstances.
 The
RMRR determination is case specific and based on
an analysis of the nature, extent, purpose, frequency
and cost of a project as well as any other relevant
information.
 Some
disagreement among the courts
EXAMPLES OF IMPROPER APPLICATION OF THE
RMRR EXCLUSION
 Using
the work at WEPCO’s Port Washington facility as
a ceiling below which all else of lesser magnitude is
RMRR
 Over
emphasis of-, or relying solely on a single factor
(or sub factor)
 “Common
in the industry” argument
EXAMPLES OF IMPROPER APPLICATION OF THE
RMRR EXCLUSION (CONTINUED)
 Concluding
that a project is RMRR if it is “functionally
equivalent” or the design parameters do not change
 Concluding
that projects that do not increase hourly
emission or PTE are routine
 Improper
category
comparisons of projects within an industrial
GENERAL ADVICE TO SOURCES
 Research
any relevant applicability determinations

Be careful not to misapply them

Determinations with both state and federal input rather than only state
input are better
 Document
the basis for any exclusions used before the
work begins
 Reach
 Make
out to the regulators
plans to keep emissions from increasing
THANK YOU!