December 8, 1999

Mr. Ed Cancilla

Ajax Boiler Inc.

2701 S. Harbor Blvd.

Santa Ana, CA 92704

Dear Ed:

Thank you for your letters of November 1 and November 12, 1999 in which you have posed a number of questions regarding Boiler BACT determinations by AQMD staff. I would like to take this opportunity to answer your questions and provide a status update regarding on-going staff investigations. The response below is grouped into three areas: General BACT Criteria; Transfer of Technology; and Boiler BACT Guidance.

The AQMD BACT Guidelines are advisory and intended to help determine BACT for specific permitting situations, which may be more or less stringent than the examples contained in the BACT Guidelines. However, such deviations must be justified on a technical basis, and must follow certain legal requirements imposed by state or federal law. BACT Guidance memos are sent to staff periodically, to help interpret the data. The BACT decision for a permit, however, may deviate from all of these documents, and is a case-by-case determination based on the specific permitting situation consistent with applicable rules, law, and statutes.

You are correct in pointing out that BACT determinations in permits must follow emission standards that are either contained in any State Implementation Plan or determined to be Achieved-in-Practice. The Achieved-in-Practice criteria that is found on Page 9 of the BACT Guidelines, Part A: Policy & Procedures, was intended for new control equipment that is setting a lower emission level than any previously permitted emission standard. A few examples may illustrate the past situation, in this respect.

The Alta-Dena Dairy boiler, which has a permit limit of 40 ppm NOx, was equipped with a Cannon Low Temperature Oxidation system to demonstrate that a lower level of NOx emissions can be achieved (i.e. 5 ppm). Since there is no enforceable permit limit or rule limit at 5 ppm, the criteria stated on Page 9 of the BACT Guidelines, Part A, were followed to verify these data. In this particular case, the Cannon LTO data did not pass this test, and AQMD does not consider the 5 ppm standard as BACT at this time. On the other hand, the SCONOX catalytic system was analyzed under the same set of criteria, and was found to set a new level for achieved in practice BACT for gas turbines that was far below its permit limit.

If an equipment is operated with a control technology to meet an emissions limit in a valid permit, the Achieved-in-Practice analysis has not been required in the past. U.S. EPA’s proposed NSR Reform rule also does not provide for analysis of permits previously issued by a state or local air pollution control agency. The previously permitted emission level was imposed on new permit applications as LAER or BACT, since the permit condition is enforceable and must be met during equipment operation. Of course, failed technology or invalid applications of technology were always considerations for infeasibility relative to new permit applications undergoing BACT review. It is our understanding that all local and state permitting agencies use this procedure to evaluate BACT for new permit applications. The basis for this approach may lie in the fact that permits are part of many State Implementation Plans, explicitly or by reference.

However, as you have suggested, we would like to investigate if the Achieved-in-Practice criteria should also be followed formally when AQMD staff analyzes emission limits previously imposed in valid permits. Since AQMD BACT must be at least as stringent as federal LAER, we are discussing this issue with U.S. Environmental Protection Agency (U.S. EPA) and California Air Resources Board (CARB) representatives, and the BACT Scientific Review Committee (SRC). We hope to resolve this matter in the near future, and will clarify the BACT Guidelines with more details, at that time.

One of the important issues that affect the boiler BACT determinations is the transfer of control technology from large boilers to small boilers, among other issues such as transient load following, fuel switching from natural gas, etc. The examples of the most stringent NOx emission limits for boilers, imposed in valid permits in the BACT Guidelines, are generally for large boilers at sophisticated operations, such as refineries, etc. They are not necessarily representative of small boiler usage due to a several reasons. Therefore, staff agrees that large boiler limits should not be automatically representative of potential small boiler BACT standards. We are investigating the size issue for transfer of technology, and again hope to resolve this through discussions in future with all affected parties, including the U.S. EPA and CARB. The U.S. EPA has informed us in the past that transfer of technology is an important factor in LAER determinations, subject to feasibility analysis. We believe that some guidance regarding boiler sizes is critical to manufacturers and users for knowing the BACT emission level that may be required for obtaining an AQMD permit.

The AQMD staff has reevaluated the Boiler BACT Guidance dated October 5, 1999, based on input from many affected parties such as yourself, the SRC members, and equipment manufacturers and suppliers. As a result, the AQMD Executive Officer, Dr. Barry Wallerstein has directed staff to rescind the previous October 5, 1999 Boiler Guidance Memorandum, and develop a new Guidance that addresses the issues raised at public forums. This new Guidance is under development, and will be discussed with you and other impacted parties at future

meetings, prior to finalization. Public review and feedback is essential to help the AQMD staff understand the impacts of these requirements on the regulated public. Meanwhile, staff will continue to investigate the issues discussed above, and conduct case-by-case BACT determinations for permit applications subject to BACT.

In addition to the Boiler BACT Guidance, staff has also been directed to prepare permitting advisories and a pamphlet to help permit applicants understand the requirements and utilize the resources available to them. We hope to resolve the issues raised by you and others in a workable manner, consistent with AQMD rules, and state and federal laws.

In closing, I would like to thank you for bringing these matters to our attention, and look forward to discussing these issues with you in the future. Meanwhile, please call me at (909) 396-3185 or e-mail me at aganguli@aqmd.gov if I can be of further help.

Sincerely,

Anupom Ganguli, Ph.D.

Planning & Rules Manager

AG:pgm

cc: Barry Wallerstein, D.Env.

Jack Broadbent

Peter Greenwald

Barbara Baird

Mohsen Nazemi

Matt Haber, U.S. EPA, Region IX

Ray Menebroker, CARB