FROM:  EPA Clean Air Markets Division

TO:  Docket OAR-2009-0430

SUBJECT:  EPA Response to Objection from Cleco Corporation Regarding
August 6, 2009 NODA

DATE:  October 21, 2009

Objection Summary

Cleco Corporation (Cleco) argues that EPA used the wrong average annual
NOX emission rate for 2006 for Unit 7-1 at the Evangeline Power Station
(Evangeline) and that the unit actually had an average annual NOX
emission rate of 0.04 lb/mmBtu in 2006, not the 0.03 lb/mmBtu rate on
which EPA relied and which served as the basis for denying Cleco’s
request for 2007 and 2008 CAIR Compliance Supplement Pool (CSP)
allowance allocations for Unit 7-1.  According to Cleco, the 0.04
lb/mmBtu NOX rate is the correct rate, not 0.03 lb/mmBtu, because: (1)
the 0.04 lb/mmBtu NOX emission rate was certified and reported by Cleco
in Unit 7-1’s 2006 fourth quarter emission report in accordance with
under 40 CFR part 75; (2) EPA had stated in the August 6, 2009 NODA that
it is using emissions data certified and reported under part 75 to
determine the CAIR CSP allowance allocations and denials of allocations;
and (3) EPA is therefore obliged to use the 0.04 lb/mmBtu rate, rather
than the 0.03 lb/mmBtu rate.

Response

	Under CAIR, a State may issue credit from its portion of the CSP to
sources that are required by the State’s CAIR State Implementation
Plan (SIP) to make emission reductions and that “implement NOX
emission reductions in 2007 and 2008 that are not necessary to comply
with any [applicable] State or federal emission limitation”.  40 CFR
51.123((e)(4)(iii)(A).  In the CAIR Federal Implementation Plan (FIP),
EPA implemented this distribution of the CSP by using an average annual
NOX emission rate of 0.25 lb/mmBtu as a proxy for the level of emissions
that CAIR units were required by State or federal law to meet in 2007
and 2008.  See 71 Fed. Reg. 25328, 25361-62 (Apr. 28, 2006).
Specifically, 40 CFR 97.143 provides that a CAIR unit that has an
average annual NOX emission rate in 2007 and 2008 lower than 0.25
lb/mmBtu and achieves emission reductions in those years is eligible to
receive allowances, from the applicable State portion of the CSP, based
on the difference between 0.25 lb/ mmBtu and the unit’s emission rates
in those years.  In short, for two of the three purposes for which EPA
uses a unit’s 2007 and 2008 average annual NOX emission rates (i.e.,
for application of the ceiling on those rates and for calculation of the
amounts of a unit’s emission reductions and thus the unit’s eligible
amount of CSP allowances), the emission rates must be rounded to the
hundredths place.  EPA maintains that consistent 2007 and 2008 average
annual NOX emission rates should be used for all purposes in the
application of 40 CFR 97.143 and that therefore the third purpose for
which there rates are used (i.e., for determining whether a unit had any
emission reductions) should be interpreted also to require rounding of
the 2007 and 2008 average annual NOX emission rates to the hundredths
place.  EPA took this approach in the technical support document
referenced in the August 6, 2009 NODA, setting forth the detailed
unit-by-unit data, determinations, and calculations for the CAIR CSP
allocations.  See 74 Fed. Reg. 39315, 39320 (Aug. 6, 2009)  (referring
to “CAIR FIP CSP Allocations Data”, Docket ID No.
EPA-HQ-OAR-2009-0430-0004 or http://www.epa.gov/airmarkets/cair/csp). 
No commenter, including CLECO, objected to EPA’s consistent use, in
applying 40 CFR 97.143, of units’ 2007 and 2008 average annual NOX
emission rates rounded to the hundredths place.

However, in objecting that EPA should have used a value of 0.04 lb/mmBtu
for Evangeline Unit 7-1’s 2006 average annual NOX emission rate
(rather than 0.03 lb/mmBtu), Cleco is essentially contesting how EPA
rounded that unit’s rate to the hundredths place.  In order to
calculate a unit’s average annual NOX emission rate, EPA summed the
unit’s hourly NOX emission rates (as reported in accordance with 40
CFR part 75) for all hours in which the unit operated during the year
and divided that sum by the total number of the unit’s hours of
operation during the year.  Under 40 CFR part 75, owners and operators
report hourly NOX emission rates, and average annual NOX emission rates,
rounded to the thousandths place.  See, e.g., 40 CFR part 75, appendix
F, section 3.5.  For Evangeline Unit 7-1, the sum of the reported hourly
NOX emission rates for operating hours in 2006 was 193.959 lb/mmBtu and
the total number of operating hours in that year was 5,576, resulting in
an average annual NOX emission rate of 0.0348 lb/mmBtu.  (The actual
calculated value is 0.0347946… .)   EPA rounded the calculated value
to the hundredths place -- consistent with its interpretation that 2007
and 2008 average annual NOX emission rates rounded to the hundredths
place should be used throughout 40 CFR 97.143 -- to yield 0.03 lb/mmBtu.
 EPA conducted this rounding by using the conventional approach of
selecting the nearest value expressed to the hundredths place: 0.03 is
obviously closer to 0.0348 than 0.04.

Cleco’s objection fails to explain how the 0.04 lb/mmBtu value that
Cleco supports is calculated.  However, it appears that such value would
have to be the result of rounding 0.0348 lb/mmBtu twice, first to the
thousandths place to yield 0.035 lb/mmBtu and then to the hundredths
place to yield 0.04 lb/mmBtu.  EPA maintains that this approach would be
mathematically incorrect.  The 0.0348 lb/mmBtu value falls, obviously,
between 0.03 and 0.04.  While 0.0348 is obviously closer to 0.03 than
0.04, Cleco’s apparent rounding approach would round to the number
from which 0.0348 is farther.  In short, EPA’s approach yields a value
that is a better approximation of the calculated average annual NOX
emission rate than Cleco’s apparent approach.  EPA therefore rejects
the 0.04 lb/mmBtu value supported by Cleco and adopts the 0.03 lb/mmBtu
value used in the technical support document for Evangeline Unit 7-1.  

Cleco supports the use of the 0.04 lb/mmBtu value by pointing out that
this value appears in emissions data for Unit 7-1 that “have been
certified and accepted by EPA”.  However, Cleco ignores the fact that,
while owners and operators certify and submit emissions data to EPA in
quarterly emission reports, EPA audits such reports electronically and
provides feedback reports that correct emissions data that are not in
accordance with 40 CFR part 75 or are otherwise incorrect.  In the
feedback reports, corrected data are labeled as “EPA-accepted”
values and are identified as the “official value[s]”.   See Docket
ID EPA-HQ-OAR-2009-0430-0004 (attached feedback report at 3).  In the
case of Unit 7-1’s fourth quarter 2006 report, EPA’s feedback report
correctly showed an “EPA Accepted” value of 0.03 lb/mmBtu for the
unit’s cumulative (i.e., average) average annual NOX emission rate. 
See id. 

EPA notes that the feedback report also shows a value of 0.04 lb/mmBtu
of “Cumulative Annual or Cumulative Ozone Season”, which reflects
EPA’s rounding of the average annual NOX emission rate reported to the
thousandths place (in accordance with 40 CFR part 75, appendix F,
equation F-10) by Cleco in Record Type (RT) 301 and which was used in
“Data & Maps” on the EPA Website.  Through “Data & Maps” EPA
provides information to the general public, but “Data and Maps” does
not necessarily use the EPA-accepted data and is not used for
determining compliance with regulatory requirements.  In any event, as
discussed above, EPA maintains that the mathematically correct method
for rounding the calculated value of 0.0348 to the hundredths place for
use in applying 40 CFR 97.143 yields a value of 0.03 lb/mmBtu, not 0.04
lb/mmBtu. 

For the reasons discussed above, EPA rejects Cleco’s objection and
concludes that the 2006 average annual NOX emission rate for Evangeline
Unit 7-1 is 0.03 lb/mmBtu and that the unit did not have emissions
reductions in either 2007 or 2008 as required to be eligible for CSP
allowances under 40 CFR 97.143.  

  To do otherwise would have the anomalous result that different 2007
and 2008 NOX rates would be used in determining whether a unit had any
emission reductions and then, if so, in determining the magnitude of
such reductions. 

  EPA notes that it has been using this conventional rounding approach
-- albeit for another purpose, i.e., in the Acid Rain Program -- since
1995 to determine average annual NOX emission rates expressed to the
hundredths place.  Under the Acid Rain Program, EPA set limitations
(some effective in 1995 and others effective in 2000) on certain
existing coal-fired units’ average annual NOX emission rates and
expressed those limitations as average annual NOX emission rates to the
hundredths place.  See 40 CFR 76.5, 76.6, and 76.7, and 76.11 (setting
such NOX emission rate limitations for specified types of coal-fired
boilers and allowing groups of boilers to meet the limitations on a
group-wide basis).  In applying those NOX emission rate limitations, EPA
used conventional rounding -- analogous to the approach EPA is taking
here in implementing 40 CFR 97.143 -- to round all reported
individual-unit average annual emission rates and all calculated
group-wide average annual emission rates (whether they were expressed to
the thousandths place or even more precisely) to the hundredths place.

 Docket ID EPA-HQ-OAR-2009-0430-0004 (at 1) suggests, incorrectly, in
one place that the 0.04 value was reported by Cleco; instead, the value
is EPA’s rounding of the 0.035 value reported by Cleco.  In addition,
this docket item (at 2) states, incorrectly, that the 0.03 value is
calculated “in accordance with formula F-10 of Appendix F of 40 CFR
part 75”.  Actually, Appendix F requires rounding all NOX emission
rates to the thousandths place and does not state how any rounding
(whether to the thousandths or hundredths place) is to be conducted.   

 

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