DEQ-CFW_00087438

A T-
NCDENR
North Carolina Department of Environment and Natural
Michael F. Easley, Govemor Division of Air Quality
July 27, 2004
Mr. Barry L. Hudson
Plant Manager
E.T. du Pont de Nemours & Co., LLC
DBA, DuPont Company - Fayetteville Works
22828 NC Highway 87 W
Fayetteville, NC 28306
Subject: DuPont Company — Fayetteville Works
Air Quality Permit No. 03735T26
Facility ID: 0900009
Request for PSD Applicability Determination
Boiler No. 1(ID No. PS-1) Maintenance Project
Dear Mr. Hudson:
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Resources
William G. Ross, Jr., Secretary
B. Keith Overcash, P.E., Director
This letter is in response to DuPont's letter from Mr. Michael E. Johnson dated June 25, 2004 for an applicability request for the
maintenance project on the Boiler No.1 (ID No. PS-1). Specifically, the letter requested that the North Carolina Division of Air
Quality (NCDAQ) determine whether the repair and replacement work detailed therein would be considered a major modification
pursuant to the Prevention of Significant Deterioration (PSD) permitting program. We have reviewed the request and concluded that
the project, as described in the letter, would not be considered a major modification. The basis for this determination is set forth
below.
Questions concerning the applicability of PSD under 40 CFR 51.166 require a case -by -case consideration of the term "major
modification." As a starting point, the Clean Air Act (CAA) statutory provisions define "modification" as,
"Any physical change in, or change in the method of operation of, a stationary source which increases the amount of air pollution
emitted by such source or which results in the emission of any air pollutant not previously emitted."'
Under this broad statutory provision, EPA and the courts have recognized that this definition could encompass even the most trivial
activity at a facility, such as the repair of a leaky pipe. With an understanding that Congress did not intend to make every activity at a
major source subject to PSD, the EPA defined "major modification" in its PSD implementing regulations to include commonsense
exclusions from the physical or operational change component of the statutory term.2 Hence, the EPA specified a number of activities
that are not to be considered a "physical change or change in the method of operation." In pertinent part, the PSD regulations provide:
(iii) A physical change or change in the method of operation shall not include:
(a) Routine maintenance, repair, and replacement;
' CAA § 111(a)(4).
Z See 57 Fed. Reg. 32,314 at 32,316.
Permitting Section
1641 Mail Service Center, Raleigh, North Carolina 27699-1641
2728 Capital Blvd., Raleigh, North Carolina 27604
Phone: [phone] / FAX [phone] / Internet: http://dao.state.nc.us/
An Equal Opportunity/Affirmative Action Employer — 50% Recycled/10% Post Consumer Paper
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DEQ-CFW 00087438

Mr. Barry L. Hudson
July 27, 2004
Page 2 of 4
40 CFR 51.166(b)(2)(iii)(a). In determining whether a proposed activity constitutes "Routine maintenance, repair
and replacement" the NCDAQ must make a case -by -case evaluation to arrive at a commonsense finding. In making
this decision the NCDAQ must balance competing interests of allowing facilities to maintain emission sources but
not interpret the exclusion so broadly as to swallow the modification provision entirely. To this end, the NCDAQ is
not without guidance.
The case of Wisconsin Electric Power Co. v. Reilly ("WEPCO") shed light on the line between routine maintenance
exempted under the PSD regulations and non -routine activities subject to review. 3 In this case the EPA classified a
proposal by WEPCO to replace steam drums, air heaters, and other equipment at its Port Washington generating
facility as non -routine changes subject to NSR requirements.4 In making this determination the EPA weighed the
nature, extent, purpose, frequency, and cost the work, as well as other relevant factors, to arrive at a common sense
finding.5 EPA concluded that the WEPCO project was not routine because: (i) the project involved the
replacement of "numerous major components," (ii) the purpose of the project was to extend the life of the facility
beyond its originally planned retirement date as an alternative to building new capacity, (iii) the work was "highly
unusual," and (iv) the project was costly, estimated at $87.5 mullion dollars or 15% of the cost of new facility.6 On
appeal, the Seventh Circuit affirmed EPA's determination and the use of the factored analysis for determining that
the project was not routine.
In addition to the WEPCO case, the EPA Environmental Appeals Board (EAB) recently upheld the Agency's use of
a multi -factor analysis to determine whether an activity is routine. In the case In Re: Tennessee Valley Authority,
CAA Docket No. 00-6, the EAB reviewed the issuance of an administrative order issued under the CAA §§ 113 and
167 to the Tennessee Valley Authority (TVA). The order alleged that TVA had violated PSD requirements when it
made certain physical changes at numerous TVA facilities. The central issue the Board addressed was whether the
EPA had erred when concluding that these physical changes were not routine maintenance, repair and replacement.
The Board upheld EPA's use of a case -by -case determination weighing (1) the nature and extent, (2) purpose, (3)
frequency, and (4) cost of the work, as well as other relevant factors to arrive at a common sense finding. The Board
held that this approach "reasonably implements the statutory objectives and the regulatory text in question." 7
Accordingly, the NCDAQ has adopted this multi -factor test as the analytical framework for determining what
activities constitute routine maintenance, repair, and replacement. The analysis of the DuPont request is presented
below.
Nature and Extent of the Project
According to the letter, DuPont intends to replace all 1,200 water tubes, and the steel exterior shell and the
refractory/insulating materials surrounding the tubes on the Boiler No. 1. The replacement parts of the boiler are an
provided to be in -kind replacements, resulting in no additional steam generation capacity. Dupont provides that the
replacement of the exterior shell and refractory are required due to their destructive removal as the means of
accessing the water tubes. Further, the original steam and mud drums, and all ancillary equipment required for this
boiler, are not involved in this project. Following this project, DuPont will be able to operate the boiler at its
original design specification.
3 Wisconsin Elec. Power Co. v. Reilly, 893 F.2d 901 (7t6 Cir. 1990).
4 See Memorandum from Ron R. Clay, Acting Assistant Administrator for Air and Radiation, EPA to David A. Kee,
Director, Air and Radiation Division, Region V, EPA Sep. 9,1988.
5 See Clay memorandum at 3.
6 Id at 4-6.
7 In Re: Tennessee Valley Authority, EPA Appeals Board Docket No. 00-6, p.53. ty'
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DEQ-CFW 00087439

Mr. Barry L. Hudson
July 27, 2004
Page 3 of 4
Purpose of the Project
The stated purpose of the boiler maintenance project is to restore the steam production capacity of the Boiler No. 1
to its nameplate design capacity of 139.4 MM-BTU per hour. According to DuPont's statements the changes will
have no effect on the unit's original maximum hourly capacity and should in effect be considered "like -kind
replacement" of deteriorating parts. The fact that this project may restore lost efficiency, in and of itself, does not
prohibit it from being considered as routine maintenance. In fact, in 1995 EPA Assistant Administrator for Air,
Mary Nichols, confirmed that no special rule was need for industrial "restoration" projects, because such projects
were covered already under the "routine maintenance" exclusions In addition, in the 1992 WEPCO rulemaking
preamble, the EPA confirmed that what constitutes routine maintenance, repair, and replacement does not exclude
activities that restore production capacity consistent with unit design.9
Frequency of the Project
In considering frequency it is important to understand the industry practice within the specific source category.
While industry practice alone does not determine whether an activity is routine, the EPA has stated, "determination
of whether the repair or replacement of a particular item of equipment is `routine' under the NSR regulations, while
made on a case -by -case basis, must be based on an evaluation of whether that type of equipment has been repaired
or replaced by sources within the relevant industrial category.s10 According to the information provided, the
planned maintenance activities have been performed several times in the past on the 1969 vintage boiler. In recent
history, the boiler was completely retubed in 1992, and again in 1998. The subject maintenance project again calls
for the complete retubing of this boiler. The boiler has been recently retubed at a frequency of once every six years
and is described as a function of actual, corrosive service conditions in combination with practical design
constraints. The boiler has been operating for approximately 34 years and has an expected useful life expectancy of
50 year given proper operation and maintenance.
This proposed maintenance project at DuPont should be contrasted with the WEPCO decision and with EPA actions
regarding utility boilers. In those cases the primary consideration appeared to be whether the physical changes made
at these facilities were sufficient in scope and magnitude to extend the life of an emission unit beyond that useful life
for which the unit was designed. According to the EPA, WEPCO's purpose, essentially, was "... to completely
rehabilitate aging power generating units whose capacity had significantly deteriorated over a period of year ... as an
alternative to retiring them as they approached the end of their useful physical and economic life."" Similarly, in the
brief submitted to the EPA Appeals Board in support of the administrative order issued to TVA, the EPA
emphasized, "the projects were intended to extend the life of the units."12
As discussed above, there is no evidence to suggest that this maintenance project is intended to extend the useful life
of the boiler.
:7
s Letter from Mary D. Nichols, Assistant Administrator for Air and Radiation, to William R. Lewis, Morgan, Lewismpd
Bockius, May 31,1995, at 19.
-71
9 57 Fed. Reg. at 32,326 t
10 57 Fed. Reg. at 32,327
n WEPCO, 893 F.2d at 911 (internal quotations omitted); see also 893 F.2d at 912 ("WEPCO admits that the plaftfor _
extensive renovations represent a life extension of the units from their planned retirement dates." (internal quotat 6n—s
omitted; emphasis in original).
lz Initial Brief of EPA Enforcement; In Re Tennessee Valley Authority, CAA Docket No. 00-6, p.34.
DEQ-CFW 00087440

Mr. Barry L. Hudson
s July27, 2004
Page 4 of 4
Cost of the Project
In considering the cost of a proposed project there is no bright line that determines whether it is routine
maintenance, repair, or replacement. Simply by way of comparison, however, the proposed project is expected to
cost approximately 9.3% of the cost of a new boiler system, which was provided to be approximately $6.4 million.
In WEPCO, the proposed project represented a cost of approximately 15% of the replacement cost of new unit. In
another determination made by the EPA in 1987, the agency determined that a proposed project at the Cyprus Casa
Grande Corporation's copper mining and process facilities was not routine. The EPA stated that the reactivation of
this facility was not routine because it called for the replacement of integral components and would entail significant
time (4 months) and cost (an absolute cost of $900,000) which constituted 10 percent of the cost of replacing the
unit.13 Additionally, EPA concluded that a $12 million proposed turbine upgrade at Detroit Edison's Monroe Power
Plant would not be routine, again citing the four factors discussed above. While none of these cases should be
viewed as setting a determinable threshold for making a decision as to what constitutes routine maintenance, it is
clear that cost as a percentage of replacement cost is an important consideration. In this case the replacement cost
percentage is below the cost associated with other non -routine projects.
Based on the statements made in DuPont's letter and the multi -factor analysis presented above, the NCDAQ
concludes that this maintenance and tube replacement project can be considered routine "maintenance, repair, and
replacement." Therefore, pursuant to 40 CFR 51.166(b)(2)(iii)(a), this project does not constitute a "physical
change or change in the method of operation" and thus is not subject to PSD review. Please note that this
determination is limited to the items detailed above.
If y9;LAeYe*q questions regarding this determination please contact me at [phone] or Jay W. Evans at
Evan der Vaart, P.E.
Supervisor
Permitting Branch
Enclosure — June 25, 2004 letter from Michael E. Johnson
cc: Steven Vozzo - Fayetteville Regional Office
Laura S. Butler — RCO
Central Files— Company — Fayetteville Works, Bladen County
"Michael Johnson — DuPont Company — Fayetteville Works
13 See Letter form David P. Howecamp, Director, Air Quality Management Division, Region IX, to Robert T. Connery, Esq.
(November 6,1987). `ZY
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DEQ-CFW 00087441