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84 - 65.2
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MODELING CRITERIA: |- • ;
THE KEY TO MAJOR REFORMS FOR EMISSIONS TRADES
u s.
pit! code 320^
1200 Pennsylvania Ave • " "'vv*
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Leonard J. Fleckenstein P
U.S. Environmental Protection Agency
Leonard Fleckenstein is currently the Environmental
Auditing Project 'Manager (arid previously worked on
the Emissions Trading Project) in the Regulato.ry Reform
Staff, Office of Policy, Planning and Evaluation,
U.S. EPA, Washington, D.C. ";
For Presentation at I
the Air Pollution Control Association AnnualfMeeting
SAN FRANCISCO, CA
JUNE 28, 1984 -
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84 - 65.2 .
Modeling Criteria:
The Keyto Major Reforms forEmissionsTrades
In April 1982 the Environmental Protection Agency published
its interim Emissions Trading Policy Statement (ETPS) and
accompanying Technical Issues Document ]_/ which proposed
revised policies and streamlined procedures for approving
"bubbles" and other emissions trades. This paper discusses
the policies and procedures applicable to ambient air quality
modeling requirements for emissions trades and traces
recent changes and trends in applicable decision rules since
the interim policy was issued.
Under ETPS provisions EPA requires bubble trades to demonstrate
ambient equivalence, while offset transactions must demonstrate
ambient improvement. The ambient equivalence demonstration
generally must be met by conformance with decision rules
which require air quality dispersion modeling. Although the
interim ETPS provided only broad, general guidance on applicable
modeling techniques, EPA has subsequently clarified its
position on appropriate ET modeling.
Modeling Requirements Jin the Interim Eraisions Trading Policy
\
The interim ETPS authorized exemption of trades of volatile
organic compounds (VOC) and nitrogen oxides (NOx) from any
air quality modeling because of the area-wide (rather than
localized) ambient impact of these pollutants. The appropriate
modeling techniques do not exist for predicting the area-wide
ambient impact of a VOC or NOx source. Instead, for VOC and
NOx trades an equivalent quantity of emissions reduction is
required for each emissions increase.
Ambient modeling is more practical for trades involving
particulate matter (PM), carbon monoxide (CO) or sulfur
dioxide (S0£). For trades of these pollutants the degree
of required modeling is linked to the likely ambient impact
of the proposed trade. Certain trades may be exempt from
modeling; some may require only limited modeling; and others
would need full-scale dispersion modeling.
Trades would generally be exempt from modeling under the
original ETPS if they conformed to the following "Level I"
criteria:
- there is no net increase in applicable baseline emissions; •
- the trading sources are within 250 meters of each other; and
- no increase in emissions occurs at the source with the lower
effective plume height.
NOTE: The views expressed in this paper are thb's~e': of "the", author-•
and not those of EPA or any other government e'ntityV
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84 - 65.2
For Level I transactions EPA has assumed that "pound for pound"
trades will produce ambient effects equivalent to those which
would exist with current baseline emission levels.
Trades could alternatively be based on "Level II" criteria
requiring only limited modeling, i.e., modeling limited to
only the sources involved in the trade, without considering
background concentrations or emissions from other sources in
the area. Under the original ETPS these trades could be
approved without further modeling if there were no net increase
in applicable baseline emissions and the modeling results
demonstrated no significant ambient impact at the post-trade
receptor of maximum predicted concentration. A significant
impact was defined as an increase of more than 10 ug/m3
over a 24 hour period for PM, 13 ug/m3 (24 hour) for S02,
or 575 ug/m3 (8 hour) for CO.
If modeled changes in concentrations were less than the relevant
significance value, the trade could have been approved. If
any modeled changes were greater than the significance value,
then more sophisticated modeling -- generally full-scale,
site-specific modeling, looking at the impacts on ambient
concentration of all sources in the area and not just those
involved in the trade -- was required to be carried out to
determine whether the trade would create new ambient violations
or prevent the planned removal of existing violations.
Likewise, if applicable baseline emissions would have increased
as a result of the trade or if the trade did not meet Level II
criteria or fall into any other exemption category (e.g.,
VOC/NOx trades or Level I trades), then full-scale dispersion
modeling would have been required.
The considerations indicated above applied to EPA evaluation
of trades processed as site-specific State Implementation Plan
(SIP) revisions. Additional considerations (regarding
"replicability") applied to Level II trades proposed to be
approved without case-by-case EPA evaluation under state
generic emissions trading rules. Emission points involved
in a trade under a generic rule must be modeled in a pre-
described replicable manner. To limit variability in modeling
results, the generic rule must specify the models and modeling
techniques that will be used in particular situations as
well as procedures for selecting input data. The models,
techniques and procedures must be sufficiently defined to
assure that trades which meet the terms of the generic rule
will not create new ambient violations or interfere with the
removal of existing violations.
The modeling criteria for both EPA-approved trades and state
generic rules have been modified since the interim ETPS was
issued in April 1982. These modifications will be addressed
below -- after a brief explanation of the rationale for Level
II significance values.
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84 - 65.2
Rationale forLevel IISignificance Values
The general reationale for this three-tiered modeling approach
is that where a change in SIP emission limits is likely to
produce changes in ambient concentrations which are so small
as to be irrelevant for air quality planning purposes, the
source should be exempted from otherwise applicable full-scale
air quality modeling requirements. The Court in Alabama
Power £/ expressly confirmed EPA's authority to identify
de minimis changes in emission levels or ambient concentrations
below which there is no practical value in conducting detailed,
site-specific, full-scale modeling of the effects of all
sources in the area. This logic was incorporated in the de
minimis provisions of the Prevention of Significant Deterioration
(PSD) and New Source Review (NSR) regulations promulgated by
EPA on August 7, 1980. I/
The Level II significance values are nearly equivalent to
(but even lower than) the ambient "design values" used by EPA
to derive de minimis emissions levels (25 tons per year PM
and 40 tpy SC>2) under the NSR regulations, providing a
threshold level below which there is no practical value in
conducting an extensive PSD review. A/ The "design values"
-- or the comparable Level II significance values -- can be
considered de minimis ambient values analagous to the NSR
de minimis emission levels which in fact were derived from
those ambient values. JL/
To be internally consistent, an air pollution control policy
or regulation which includes de minimis emissions levels of
25 and 40 tpy probably should include de minimis ambient
levels equivalent to the Level II values. Although lower
significance values are used under the Emissions Offset Ruling,
SL/ there is no better empirical justification for use of
those values than for the ETPS Level II values. Moreover,
the lower Offset Ruling values are used in conjunction with
new sources (or major modifications) which will increase overall
emissions. In contrast, Level II review for emissions trades
pertains only to trades between existing sources which will
not produce any increase in baseline emissions.
Subsequent Changes in ET Modeling Requirements
The interim ETPS was a proposal, but was made immediately
effective. This seeming contradiction was intended to allow
firms and states to submit bubbles and generic rules to EPA
for review and approval while the Agency continued to accept
public comment on the ETPS provisions. Based on EPA experience
with bubble applications, and in response to comments and
questions on the interim ETPS, EPA decided on a mid-course
correction to revise and clarify various ET modeling requirements,
An EPA headquarters memorandum in February 1983 Z/ identified
and requested immediate implementation of these changes in
order to ensure continued air quality equivalence of trades.
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84 - 65.2
Specifically, EPA refined the three-tiered modeling screen to
make clear that Level I trades (i.e., no modeling required)
would be prohibited: (1) in complex terrain, (2) for open
dust sources, and (3) if stacks with increasing emissions
are not at least of good engineering practice (GEP) to prevent
downwash, since the Level I assumption -- that overall emission
equivalence equalled ambient equivalence -- was questionable
in these circumstances.
However, trades between fugitive process and stack sources --
as well as more conventional trades between stacks -- could
still be evaluated under Level I as long as the maximum
distance between any emitting sources was less than 250
meters and all other Level I criteria were met.
The Level II procedures were revised in two ways. First,
EPA would require Level II tests for all averaging periods
consistent with appropriate air quality standards, not just
the short-term standards. The following significance values
were set for these averaging periods:
10 ug/m3 for any 24 hour period for PM
5 " " annual " PM
13 " 24 hour " S02
46 " " 3 hour " S02
3 " " annual " SC»2
575 " " 8 hour " CO
2300 " " 1 hour " CO
Table 1 compares these significance levels to National Ambient
Air Quality Standards (NAAQS), PSD increments and other analogous
increments.
Second, EPA would require that Level II trades demonstrate
no significant air quality impact at any receptor on ajiy day.
A refined model (e.g., CRSTER or ISC) must be used with a full
year's worth of meteorological data. This "daily, temporal,
spatial delta analysis", i.e., looking at daily concentration
changes at every receptor, must be done for each relevant
time period noted above. This requirement was adopted even
though EPA modeling experience had shown there was a very
low statistical probability that the date and location of a
maximum ambient change from a .bubble trade would coincide
with the time and place of the maximum ambient air quality
impact of other sources in the area.
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84 - 65.2
The Agency also identified a new alternative modeling approach
in lieu of full-scale modeling. If a trade "failed" the Level
II test at some receptors, EPA could still approve a trade
which used, limited Level III modeling, looking only at the
geographical area containing those receptors, but would
require that all sources contributing to ambient concentrations
at those receptors (not all receptors in the area) be modeled.
These changes to the ET modeling requirements, especially for
Level II, were made to avoid confusion in policy interpretation
by identifying clear decision rules for trade approvals. While
they made the Level II test more stringent than the interim
ETPS, undoubtedly causing many more trades to require additional
modeling analysis, they were also felt to reflect-ambient air
quality impacts more accurately and therefore to conform better
to the rationale for the three-tiered modeling screen. Incidental
stringency was felt to be somewhat mitigated both by the new
availability of limited Level III modeling for receptor days
which exceeded the significance levels, and by the fact that
the Level II "net modeling" techniques could be readily carried
out using refined air quality models, thus easing and expediting
the development and review of emissions trades. (See "Appropriately
Determining the Net Air Quality Impact of Emission Alterations
in a Regulatory Context", JAPCA, April 1982). !/
Potential New Modeling Requirements and Exemptions
In response to comments received on the interim ETPS and in
light of experience reviewing actual bubble applications, EPA
is currently considering additional changes to ET modeling
requirements and exemptions.
The final ETPS will incorporate the changes identified above
made in February 1983. It also appears the final ETPS will say
that if a Level II analysis predicts any increase in ambient
concentrations in a PSD Class I area/ then full-scale dispersion
modeling must be carried out at least for the Class'I receptors,
since Level II significance levels are not sufficient to assure
a Class I increment will not be breached.
In addition there may well be a new modeling exemption category
based on de minimis emission rates. If a trade did not increase
actual emissions, the trade could be exempt from modeling if the
emissions increases, looking only at the increasing sources (and
recognizing that there would be counter-balancing emissions
.decreases), are less than 25 tpy PM, 40 tpy SC>2 or 100 tpy CO.
The exemption rationale is that: trades shifting less than de
minimis emission amounts are unlikely to have ambient effects
greater than the Level II significance values.
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84 - 65.2
Bubble Modeling Experience
Prior to the interim ETPS all bubble trades were essentially
reviewed by EPA as individual SIP revisions. EPA was able to
exercise considerable discretion in determining whether an
alternative emission limit should be approved.
For many "pre-ETPS" bubbles, i.e., bubbles submitted to EPA
prior to April 1982, a net decrease in emissions was reflected
in modeled predictions of improved ambient air quality at all
receptors. In other cases, model results predicted improve-
ments at some receptors and degradations at other receptors.
In nearly all cases predicted degradations were small (less
than 5 ug/m^) and were greatly outweighed by predicted
improvements in air quality at other receptors. In one
case, there was a very large predicted increase (57 ug/m^)
at one receptor, but there also were simultaneous improvements
at other receptors, (including a 129 ug/ra^ improvement),
and there were no predicted NAAQS violations.
The interim ETPS set forth more specific categories of trades
and criteria for bubble approvals. Later EPA policy clarifi-
cations and revisions served to further define the appropriate
decision rules. Table 2 identifies the modeling and principal
criteria applied to EPA-approved bubble trades for S02 and
PM from 1981 through 1983. 2/ (the VOC bubble trades approved
by EPA did not require modeling.)
Summary information on models used for EPA-approved bubbles
is presented in Table 3. Half (six of eleven) of the SC>2
trades and one-quarter (four of sixteen) of the PM trades
met Level I criteria and did not require modeling. CRSTER
was used for seven of sixteen modeled trades, ISC for four
of the sixteen, and RAM for two trades. Three other models
were used for the three remaining modeled trades.
Of the four Level II trades (two for PM & two for 803) •; two were
approved based on the original ETPS criteria (looking only at
the point of maximum concentration, after the trade). The other
two were approved based on the revised criteria (looking at
daily changes at all receptors). The ISC model was used for
three of these four trades; CRSTER has. not yet been used for
any of the trades meeting the revised Level II criteria.
Clearly the bubble approval criteria have evolved toward
greater specificity and consistency, affording firms and
control agencies greater certainty about the approvability
of a trade while ensuring the public that air quality remains
protected.
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84 - 65.2
Table 2
Air Quality Modelingfor SO? and PM Bubbles *
(In order of EPA approval)
Company
Principal
Pollutant Model Used Approval Criteria
Narragansett Elec. S02
Providence, RI
Kentucky Utilities SC>2
Muhlenberg, KY
Armco Inc.
Middletown, OH
Corning Glass
Danville, KY
PM
Andre's Greenhouse S02
Doyleston, PA
ITT Rayonier PM
Jesup, GA
Nat1 1 Distillers PM
Woodford Co., KY
3M PM"
Guin, AL
Uni royal ' SC>2
Naugatuck, CT
General Motors PM
Defiance Co., OH
Shenango PM
Allegheny Co. , PA
PM
CRSTER Modeled concentrations
predicted to be
below NAAQS
CRSTER Modeled concentrations
predicted to be
below NAAQS
COM Full scale modeled
demonstration of attain-
ment where none
previously existed
none Pre-ETPS Level I
CRSTER Predicted concentrations
were below NAAQS, with
a net allowable
emissions decrease
CRSTER Reduction in max. annual
& 24 hr. concentrations;
no NAAQS violation
PTMAX Predicted maxima less
than NAAQS
none "Pre-ETPS" Level I
RAM Predicted maxima less
than NAAQS; and overall
net concentration decrease
ISC Demonstration of attain-
ment where none
previously existed
CRSTER Predicted maxima less
than NAAQS; and reduction
in concentration at
max. point
* As of March 1 , 1984
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Table 2 (cont'd)
84 - 65.2
Owens-Corning PM
Newark, OH
Burlington Elec. S02
Burlington, VT
Progressive Foundry PM
Perry , IA
Tampa Electric S02
Tampa, FL
General Portland PM
Tampa, Fl
National Steel PM
Weirton, WV
US Steel PM
Fairless Hills, PA
US Steel
Homestead, PA
Scott .Paper
Chester, PA
S02
S02
Arbogast & Bastian S0£
Allentown, PA
J.H. Thompson S02
Kennett Square, PA
Bethlehem Steel PM
Bethlehem, PA
US Steel S02
Fairless Hills, PA
Toledo Edison PM
Toledo, OH
DuPont PM
Kins ton, NC
RAM
none
none
CRSTER
CRSTER
ISC
none
Valley/
LONGZ
none
none
none
none
ISC
none
ISC
Predicted improvements
in annual maxima at
all receptors
Level I
Level I
Predicted conc'ns
less than NAAQS
Predicted improvement
in ambient conc'ns
Level II; looking
only at the point of
maximum concentration
Level I
Level II -- looking
only at the point of
maximum concentration
Level I
Level I
Level I
Level I
Level II — looking
at all receptors
Level I
Level II — looking
at all receptors
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84 - 65.2
Table 3
Summary of Models Used for EPA-Approved Bubble Trades
Number of bubbles for which a particular model was used:
CRSTER ISC RAH COM Valley PTMAX None
PM
S02
4
3
3
1
2
0
1
0
0
1
1
0
4
' 6
15
11
Number of Level II bubble trades conforming to:
PM
S02
Original ETPS Criteria
(No significant impact
at maximum point)
1 - ISC
1 - Valley
Revised Criteria
(No significant impact
at any receptor)
1 - ISC
»«
1 - ISC
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84 - 65.2
Modeling Requirements Under Generic ET Rules
While pre-ETPS bubbles were all SIP revisions, more recent
ones have often been approved under state generic ET rules.
Once the generic rules are approved by EPA, the individual
bubbles do not require EPA review. In general, under the
April 1982 ETPS the same modeling requirements and exemptions
apply to trades evaluated under state generic ET rules as
to trades reviewed by EPA as revisions to the SIP. As
indicated above, any ambient air quality review procedures
under generic rules must be replicable, with "replicability"
generally meaning that in the state regulation "specific
modeling procedures are prescribed and that states have
appropriately defined their choice of models, model inputs,
and modeling techniques in applying these procedures to
specific trades." IP./
The interim ETPS identified a de minirais emission category
under which trades of PM, SC>2, or CO could be exempt from
SIP revisions under EPA-approved generic rules. For these
trades there must be no net increase in baseline emissions
and the sum of the emissions increases, looking only at the
increasing sources, must total less than 100 tpy.
In a footnote the ETPS stated that "these trades are still
subject to ambient tests. They should accordingly be evaluated
by the state under the modeling screen or an equivalent
approach." jj_/ The final ETPS appears likely to conform
these requirements to NSR de minirais levels of 25 tpy for
PM, 40 tpy for S0£, and 100 tpy for CO. Using these values
would also ensure internal consistency in the ETPS by including
de minirais emission levels that correspond to the "de rainimis"
ambient values under Level II. [See above discussion on the
rationale for Level II significance values.]
Since the de minimis emission limits for PM and S02 are likely
to be more stringent (i.e., changing from 100 tpy to 25 and
40 tpy respectively), the ETPS (footnote #7) requirement for
modeling de minimis trades will probably be dropped.
Other generic ET modeling provisions can be approved (as part
of the SIP), where they can be demonstrated to protect ambient
standards and PSD increments with sufficient replicability to
satisfy Section 110 (i) of the Clean Air Act.
The experience to date with air quality modeling requirements
under generic ET rules is limited but growing. Of eleven
generic bubble rules approved or proposed for approval by EPA
as of March 1984, seven are limited to VOC and therefore have
no modeling requirements. Some states are first developing
VOC (non-modeling) trading rules before tackling PM and 803
modeling requirements.
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84 - 65.2
Table 4
EPA-Approved or
State
NJ
NJ
CT
MA
MA
PA
KY
NC
SC
OR
RI
EPA
Approval
Status
Approved
4/6/81
Approved
7/8/83
Approved
6/7/82
Approved
3/29/82
Proposed
Approved
1/19/83
Proposed
6/28/82
Approved
7/26/82
Approved
9/3/82
Approved
8/13/82
Approved
7/6/83
(As of
Pollutant
VOC
S02
VOC
VOC
VOC
VOC
VOC.PM
S02 ,CO
NOx.Pb
VOC
VOC , PM
S02
VOC , PM
S02
VOC
March 1984)
V-I-.H-IUUL.L *"* .,-, ,„„',„,
Exemptions Level II
from EPA
Review
All VOC trades
"Level I"
All VOC trades
VOC surface
coating trades
All VOC trades
Two VOC source
types
All VOC, NOx,
De minirais ,
Level I & II
trades
All VOC trades
All VOC, &
Level I trades
Trades under
100 tpy
VOC surface
coating trades
in Rule?
N/A
No
•
N/A
N/A
N/A
N/A
Yes*
N/A
No
,»*
Yes **
N/A
. * Final rule being reviewed by EPA, which may disapprove
Kentucky's Level II modeling as a generic rule provision.
** Level II reviews would not be exempt from EPA review
unless under 100 tpy.
Note: EPA has proposed to approve a generic rule for Maine,
but the State has decided not to adopt a final rule.
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84 - 65.2
All other generic rules include modeling exemptions at least
comparable to Level I. Table A summarizes these generic
rules' categories for trades exempt from EPA review.
New Jersey has adopted and EPA has approved 1 2/ generic
rules for both VOC and SC>2, the latter being a creative
alternative to the ETPS criteria. Instead of adopting Level
I criteria, New Jersey provides a graphical relationship
between emissions, flow rates, and stack separation to determine
if a potential trade can be exempt from modeling (and thereby
exempt from a SIP revision).
Only one generic bubble rule (Kentucky's) includes a Level
II category that would potentially exempt those trades from
EPA review as SIP revisions. Kentucky's generic rule has
been proposed but not yet approved by EPA 1A/, and EPA is
not likely to approve the rule unless Kentucky identifies
and adopts specific, replicable ET modeling procedures.
Some other states are developing generic ET rules with a
Level II category, but generally would still require that
those trades be submitted to EPA for review and approval.
Interestingly, some of these rules use different, more stringent,
Level II significance values than those in EPA's policy.
In June 1983 Illinois adopted a generic ET rule which includes
Level II modeling (using the Offset Ruling significance levels).
EPA has not yet taken any proposal or approval action on the
Illinois rule.
Pennsylvania is developing a multi-pollutant generic rule in
addition to its current VOC bubble rule (which is limited to
only two source categories). Although less advanced than
Kentucky in adopting its new generic rule, Pennsylvania is
farther advanced in including Level II modeling methods which
EPA is likely to approve. EPA has also been assisting Georgia
to identify replicable Level II modeling methodology, in order
for the Georgia generic ET rule to be approvable.
Finally, certain other trades can not be approved under generic
rules. EPA's February 1983 "Technical Clarifications" memo
noted that trades involving open dust sources or trades in
complex terrain are very difficult to model in a replicable
manner because of the numerous case-specific judgments regarding
emission factors or terrain effects, and therefore cannot be
exempted from SIP revisions.
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84 - 65.2
Conclusions
1. In implementing its Emissions Trading Policy Statement,
EPA for the first time has focused on certain decision
rules for emissions trades. Previously vague requirements
have been clarified, so that Level II criteria for approving
trades now provide clear decision rules for determining
"ambient equivalence".
2. Because Level II modeling must now predict changes in
concentration at all receptors for all averaging times
(even though the predicted concentration changes are
unlikely to occur at the same time when other sources are
contributing to the highest ambient concentrations), the
revised Level II decision rules are very conservative,
i.e., air quality protective.
3. Clear, consistent decision rules let companies know whether
specific emissions trades are approvable, and companies
have been able to develop approvable bubbles under the
revised Level I and II criteria.
4. Clear, consistent decision rules also let states know what
kinds of generic emissions trading rules can be approved
by EPA, thereby exempting certain trades from EPA review.
Generic rules limited to VOC or to modeling exemption
categories for other pollutants have been roost readily
adopted.
5. The current criteria and decision rules still do not get
to the issue of whether a "significant" predicted degradation
at a receptor should sometimes be tolerated -- if on
balance there is a net air quality improvement. There
are many ways to define and to determine a net air quality
benefit, including use of the daily, spatial and temporal
analysis currently required under Level II. Opportunities
to develop alternative decision criteria should be investigated,
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Footnotes
1. 47 Federal Register 15076, April 7, 1982
2. Alabama Power Co. v. Costle. 636 F.2d 323 (1979)
3. 45 Federal Register 52676, August 7, 1980
4. 45 Federal Register 52733, August 7, 1980. The Level II significance
valuesare the same as the air quality significance values used
for determining whether pre-construction monitoring should be
required for New Source Review in PSD areas. EPA does not require
a source to generate pre-construction monitoring data if the
modeled, i.e., predicted, changes in concentration it will produce
are less than the significance values.
5. The first step in developing NSR de tninirais emission rates was the
establishment of air quality "design values." The Administrator
decided to use 4% of the 24-hour primary NAAQS as -a design value
for PM and S02. According to the preamble to the August 7, 1980
NSR regulations, the design value for PM would be 10.4 ug/m^ and
the value for SC>2 would be 14.6 ug/ra .
6. 40 CFR 50, Appendix S
7. February 17, 1983 memorandum from Sheldon Meyers, Director, Office
of Air Quality Planning and Standards to EPA Regional Air Division
Directors, "Emissions Trading -- Technical Clarifications"'
8. Youngblood, Phillip L., "Appropriately Determining the Net Air
Quality Impact of Emission Alterations in a Regulatory Context",
Journal oftheAir Pollution Control Association, April 1982,
Vol. 32, No. 4, p. 385.
9. The information was obtained from state submittal of bubble requests,
and Fejderal Register approval notices prepared by EPA.
10. See the Emissions Trading Policy Statement and Technical Issues
Document, especially 47 FR 15084, April 7, 1982.
11. 47 FR 15085, April 7, 1982, footnote #7.
12. 48 FR 31398, July 8, 1983
13. 47 FR 27871, June 28, 1982
U.S. Environmental Protection Agency
Librarv. Poom 2404 PM-211-A
401 M Street, S.W.
V7ashington, DC 20460 ......'
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