# Joint Appendix — Environmental Defense v. Duke Energy Corporation > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0237%3A10 ## Record - **Collection:** Supreme Court brief - **Document type:** Joint Appendix - **Published:** January 1, 2007 - **Citation:** 549 U.S. 561 ## Text Supreme Court, U S. FILE COPY 43 FILED Hts __ No. 05-848 JUL 2 1 2006 SSS SS — In The OFFICE OF THE CLERK | Supreme Court of the Gnited States ENVIRONMENTAL DEFENSE, et ai., Petitioners, v. DUKE ENERGY CORPORATION, et al., Respondents. + On Writ Of Certiorari To The United States Court Of Appeals For The Fourth Circuit + JOINT APPENDIX VOLUME II, Pages 266 to 509 = a ° - 25 ” . cae SEAN H. DONAHUE CarTeRG. PHLPS = = 3 > Counsel of Record Counsel of Record [9 "2c 2000 L St., NW Mark D. Hopson SOS Suite 808 KATHRYN B. THOMSON BD SAH STEVEN M. NICKELSBUR@; == Washington, DC 20036 (202) 466-2234 (202) 315-3582 Fax SIDLEY AUSTINLLP mm e 1501 K St., NW Pos an Washington, DC 20005 - se ounsel for Petitioners 45) 736-8000 (202) 736-8711 Fax Counsel for Respondent Duke Energy Corporation PAUL D. CLEMENT Solicitor General Counsel of Record Department of Justice Washington, DC 20530 (202) 514-2217 (202) 514-8844 Fax : Counsel for Respondent The United States {Additional Counsel Listed On Inside Cover] Petition For Certiorari Filed December 28, 2005 Certiorari Granted May 15, 2006 COCKLE LAW BRIEF PRINTING CO. (800) 225-6964 OR CALL COLLECT (402) 342-2831 | RS Ti es BP Courisel } For Petitioners:. ik ‘Counset fae Respondentyz* ee , hs JEFFREY M. GLEASON: a. es WDuke’ ' Energy) erg ; J. BLANDING -HOLMAN; IVS LHESWYGV: ICKEL : ” err ‘CALEB JAFFE — Oe Fo * “EPAWILLIABROWSFLIS ‘SOUTHERN ENVIRON MENTAL, -MaArK-B. ‘BEERBOWER | Law CENTER °° ‘-MAKRAM BSJABERS® | we a] 200 W. Franklin; Saits 330: HUNTON. & WILT. Laas LLP: © = Chapel Hill, NC 27516 * -*!-1900 K Street?NW3.°)2 °" ( oT 967- 1450. ‘eh a a oj Washington, DC 20006: ENv1 IRONMENTAL DEvESSE. “om Tisoiead bosteiotiin: Il: 2334 North Broadway. ~ {NASH'E: LONG. HIce cen Boulder, CO,80304 | HUNTON & Wititans LLP”: (303) 447- 7215: ‘is 3101 South Tryon Street ect ‘Suite 3500 ve! os, Davib'T. GOLDBERG © ae 99 Hudson’St.,-8th Flos i Chatrlotte «a00 New York: NY 10013 ° 318-47 .(212) 334-8813°. * {atic E. MANLY‘... oh H : Executive Vice: President +: x: ~and:Chief Legal: Officer +‘ : Car HARINE S. STEMPIENE:: A AssociateGenéral Counsel! iGARIY S. RICK ger 1 eS +e Associate: General Counsel : “Dur ENERGY Corvors: CON - “Legal Department *" ory : "526 South Church Stredt: “ECO38T ! : Charlotte,’ NC 28242, ;(704) 382- 8111" “DEAN M. “MOESSER: : “DUKE ENERGY. CORPORA’ TION ‘5400 Westheimer Court’: » 4 ‘Houston, TX! ‘T7056: 5 = on (713). 627-5298 6% BEST AVAILABLE COPY TABLE OF CONTENTS VOLUME I District Court Decknot Eimtries........00cccccccscsisccccccsssccccsescscscees 1 Court of Appeals Docket Entries....................ccccsseeseeeeseeeeees 9 Order Granting Intervention (Sept. 6, 2001) (CR [District Court Docket Number] 25) ............ccccccceeeeeeeeees Exhibits in Support of Duke’s Motion for Summary Judgment (Jan. 31, 2003) (CR 129) Letter from Administrator Lee M. Thomas to Congressman John D. Dingell (May 9, 1986) (DX [Defendant’s Exhibit Number] 9)................ccccceseeeeeeeenees Expert Report of Walter C. Barber (August 15, Ne, TE FIED setieteprciiccnatevestinngutipetnteiennwets Memorandum from Edward E. Reich, et al., EPA to Allyn M. Davis, et al., EPA Region VI (April REIS ape eee te ere Letter from Edward E. Reich, Director, Division of Stationary Source Enforcement, EPA, to Amas- jit S. Gill, General Electric - Gas Turbine Divi- sion (June 24, 1961) (DIX BB) ........cccccccccccscccsesessersesseeses Letter from Edward E. Reich, EPA, to Charles Whitmore, EPA Region VII (Jan. 22, 1981) (DX EY Serine arene: Sed SeaBE ra ALM AE e enene Letter from Administrator Lee M. Thomas to John W. Boston, Vice President, WEPCO. (Oct. REE FRE RNa ney ton Een Memorandum from David Kee, EPA, to Gerald A. Emison, EPA (Mar. 25, 1988) (DX 31)....................0. Deposition of Walter Stevenson (Sept. 10, 2002) a, Fh Gy Ga i vresccccinnciensisiiontaninneimninsnniitinientsieite TABLE OF CONTENTS - Continued Page Letter from William G. Rosenberg, Assistant Administrator for Air and Radiation, to John Boston, President, WEPCO. (June 8, 1990) (DX RE RR Oe eae eae nee Ts EERE TONS ee ET 57 Affidavit of Gregory B. Foote (Jan. 26, 1990) (DX EERE A oS Sb PR SD OE OD NT LER OEY He EDO 80 EPA Office of Air Quality Planning and Stan- dards, Proceedings of Acid Rain Conference, April 8-9, 1990 (Aug. 1980) (DX 36)...............0ccccssersserreseseerees 84 Acid Rain and Nonattainment Issues, Hearing Before the Senate Subcommittee on Environ- mental Protection of the Committee on Environ- ment and Public Works, 100th Congress (statement of Administrator Lee Thomas) (Apr. eis. UE IIIS Ei kcniscincsceencinieetetincnaitiiebinibintiapoipiintiinbntiitanebenel 89 Expert Report of Kenneth Schweers (Aug. 15, TEE Ui iecuintentinsinicbeiadplitasiennatenisenpeepinteatiiitnnsuisitesioiie 96 1989 EPA Base Case Forecasts, prepared for EPA by ICF Resources, Inc. (May 1989) (DX 40)................ 105 Letter from Kenneth A. Schweers, ICF, to Robert A. Beck, Edison Electric Institute (July 26, 1989) RARER enna vr ce COE Re PNT aa nS TO ETO 126 Electricity Supply: Older Power Plants’ Impact on Reliability and Air Quality, GAO Report to the Uhairman, House Subcommittee on Oversight and Investigations, Committee on Energy and Commerce (Sept. 1990) (DX 42) ...........cecceeseeeeeseeeceneees 130 Deposition of Steven Tiber (May 15, 2002) (pp. 1, Pe in ssicccnsibscsinnsininanciiighaipaiatdiaginteiinsiniiniednisiniins 141 iii TABLE OF CONTENTS - Continued Letter from William G. Rosenberg, EPA to Congressman John D. Dingell (June 19, 1991) GERD ccancesascessconcosconsesnstisnnsnnsenesesennanserseqnnenasnassennsasiancnesent Declaration of Kris W. Knudsen (Jan. 30, 2003) i le Deposition of Ranajit Sahu (Nov. 25, 2002) (DX iii ichicateaheiatishicaieeachpesietiiaeaierisenbitaanttmneteriantdniapinuieddentninetiinien Deposition of David A. Lloyd under Fed. R. Civ. P. 30(b)(6) (Oct. 4, 2001) (DX 72)...........::cccesserereeserseeeeeess Memorandum from Jack R. Farmer, EPA (May 10, 1989) (DX 89).......... nsbiidnicntesiniieadahaneneattaitadiianitanedin Letter from Ronald V. Shearin, Duke Power Co., to Robert F. Helms, NCDNR (Aug. 17, 1983) (DX aici a iia sancaitliliadniciaiaitataidi aint Letter from Ronald V. Shearin, Duke Power Co., to Roger E. Davis, SCDHEC (Aug. 17, 1983) (DX RRIF SETS ae errr en ee we eo ae Ce Letter from William W. Culler, SCDHEC, to Ronald V. Shearin, Duke Power Co. (Aug. 23, PE, SIE cncasshjusitiechcsipuanthitininenniesingineedeninniedasaninmesiicad Letter from Robert V. Helms, NCDNR, to Ronald V. Shearin, Duke Power Co (Sept. 15, 1983) (DX EES CRS roe eae me Ny CONSE eT EID Letter from B. Keith Sipe to Ray M. Davis (Apr. ee, re I SD cenetictsnastrcinriresnccctcneccsascctcscenimansatess Certified Inspection Reports, Air Quality Action Request, Duke Power Co., Buck Steam Station OS , eer iv TABLE OF CONTENTS -— Continued Page Exhibits in Support of United States’ Motion for Partial Summary Judgment (Jan. 31, 2003) (CR 133) Direct Testimony of William S. Lee, Chairman of the Board and CEO, Duke Power Co., Before South Carolina Public Service Commission (July 30, 1985) (USX [United States’ Summary Judg- ment Exhibit Number] 13).............:ssccressessssscsssessecesesee Redirect Testimony of William S. Lee, Chairman of the Board and CEO, Duke Power Co., Before North Carolina. Utilities Commission (July 16, ET GITIIEE TE exiccncescsieijcetiiniasinssadeiuiintdiiisiadiiiinma melee. Duke Power Co., Proposed Order Granting Rate Increase, Before the North Carolina Utilities Commission (Aug. 27, 1985) (USX 19)..........cceeeee cece eee Direct Testimony of William S. Lee, Chairman of the Board and CEO, Duke Power Co., Before North Carolina Utilities Commission (Sept. 3, ey IIE, TEED ciincciscrctecssectitinicie itisniinaatamianitsnaaiiianieae Nid Memorandum to File re: Fossil Units — Extended Cold Shutdown (Feb. 1, 1985) (USX 22) ..................... Plant Modernization Project, Project Review (Baek SE, TSG GP GD cocacccnninshinnsicermanatiineia Memorandum of William O. Parker re: Plant Modernization Program Strategy Statement ees Direct Testimony of William S. Lee, Chairman of the Board and CEO, Duke Power Co., Before North Carolina Utilities Commission (April 12, SE Gaeees GED setccnrccecstincadatniissniinivicaniivigiadaiaalaiiaeiian Project Outage Table (USX 40) ..........cccccessesseeseeeeeeerees TABLE OF CONTENTS — Continued Duke Training and Reference Guide, Fossil Environmental Compliance, Volume 2 —- Air Quality (Sept/Oct. 1991) (USX 57) ..........cccceeceeeeeees 239 Memorandum of Don Clay, Acting Assistant Administrator, EPA, to David Kee, Director of Air and Radiation Division, EPA Region V (Sept. 9, ERE EST EE SURAT LS ee 245 VOLUME II Letter from Henry Nickel, Hunton & Williams, to Polly Gault, U.S. Dept. of Energy (June 5, 1989) EERIE CES SES SSI To 266 Memorandum from J.O. Fayssoux to W.O. Parker, Jr. re: EE] Prime Movers — WEPCo. (Feb. EE 276 Memorandum re: NSPS/PSD Implications of Plant Modifications (USX 93A)...................cccccccceeeeeees 279 Letter from Don R. Clay, Acting Administrator for Air and Radiation, EPA, to John W. Boston ceria riaenmriemeenntnonmnaatt 281 Letter from Francis X. Lyons, Regional Adminis- trator, EPA Region V, to Henry Nickel, Counsel for Detroit Edison Co. (May 23, 2000) (USX 101)....... 299 In re Monroe Electric Generating Plant Proposed Operating Permit, Petition No. 6-99-2 (EPA 1999) EES A en 308 vi TABLE OF CONTENTS - Continued Page Exhibits in Support of United States’ Response to Duke’s Motion for Summary Judgment (Mar. 31, 2003) (CR 152) Deposition of Laura Butler (Dec. 10, 2002) (USX EP hdeneansteesaiengtiatenainsestddentiniaieiieb aieretaiilanepienidiipsbiiaiibaialitiedaeainbes 311 Deposition of Michael Parkin (Dec. 10, 2002) PEE Uitte ivanscirsincsiatenbiitnneibatrcatilidattntetinsgaapatetnpaniitinieaiies 314 Deposition of Michael Landis (Dec. 11, 2002) NE ee iccrsierercicincceinisnitadadnsitnatiatineniicinaninstarinmnionss 338 Deposition of Thomas McManus (Dec. 11, 2002) STII issstdinteneetuntnintinaiibenetdeineneiepeebenitiaeaeaeen! 353 Memo re: Key Regulations and Issues Impacting Alternative Fuels, Fuel Additives, and Facility Modifications (Feb. 13, 1995) (USX 146) .................... 366 Duke Energy 1995 Training Materials (USX 147) ..... 371 Memo from Bobby McManus re: MSS 3&4 Mill Replacement and PSD/NSPS Meeting (May 23, EE Stee hcrwreitnincscccteassticindiecbenndtitiannitsniniigiedininnmenhen 372 Duke Internal Emails (Nov. 1990) (USX 149)............. 375 Deposition of William T. Horton (Dec. 4, 2002) SUITE aan hiicistatiieidpeeinicietiderbdimenaiapiceaininamsnmiammmaitiamantianias 385 Expert Report, Ranajit Sahu (Aug. 1, 2002) (USX UII ciansallbhicincineenapsanrctnntentanientinnannintinnteniiadiicinaiatantasinn 388 Statement of Henry V. Nickel, EPA Docket No. A- TEIN SITET ns sesiesienninaitbiemethinndinnniahiniasnieinetameninteeneniatbiis 453 Vii TABLE OF CONTENTS -— Continued Supplemental Exhibits in Support of Duke’s Motion for Summary Judgment (March 31, 2003) (CR 158) Energy Resource Consultants, Inc., Report to the Public Staff, North Carolina Public Utilities Commission — The Duke Power Company’s Plant Modernization Program and Catawba Unit 2 (Volume II: Analysis of Life Extension) (DX 114) (pp. internal cover page, II-1-4, II-2-21) ..................... 460 Memorandum from Edward E. Reich, Director, Stationary Source Compliance Division, EPA Office of Air Quality Planning and Standards, to Harley Laing, EPA Region I re: Bridgeport Har- bor Coal Conversion (July 28, 1983) (DX 129)............ 464 Deposition of Ranajit Sahu (Nov. 26, 2002) (DX ere Naan Oe Ee NOE 473 Memorandum from Edward A. Reich, Director, DSSE, to Thomas W. Devine, Chief, Air Branch, EPA Region I (Feb. 13, 1978) (DX 143)...................... 477 Deposition of John Hewson, pp. 1, 64-65, 69-70 FN Ce aiecsnnsceninnccenennnnesiinerniatinmmmemminmenmen 484 Memorandum from Gerald A. Emison, EPA, to William G. Rosenberg, EPA (May 25, 1990) (DX 189)..... 489 Exhibits in Support of United States’ Response to Duke’s Proposed Supplemental Memorandum in Support of Its Motion for Reconsideration (Oct. 8, 2003) (CR 240) Analysis of Potential Cost, Environmental and Energy Implications of EPA’s Recent WEPCO and Greenwood Decisions, prepared by ICF Re- sources for UARG (Jan. 1990) (Exhibit 1) .................. 492 viii TABLE OF CONTENTS - Continued Page Order (Feb. 23, 2004) (CR 294) .....ccccccccsssssesrseseeseeveeeeeen 499 Stipulations (April 13, 2004) (CR 311).........ccc0ssces0eseees 503 The following opinions, judgments, and orders have been omitted in printing this Joint Appendix because they appear on the following pages in the appendix to the petition for certiorari: United States District Court for the Middle District of North Carolina: Memorandum Opinion (August 26, IEEE conssnycensencqnsnssastenscnagenesmmsmnenssensenanen Pet. App. 22a-84a Order and Judgment (August 26, SUITE acisshivinisataiecitiniciaensiuntinpaiabiniapdaeatanidinitiibationets Pet. App. 85a-86a Order and Final Judgment (April 14, SEIN ccrenesicaszsasssnstmanseceumamienmnnnaenens Pet. App. 87a-95a United States Court of Appeals for the Fourth Circuit: Order Requesting Supplemental Briefing ils SIE hrcranscnnsenienumscsepunidenistcimpimeniane Pet. App. 2la Opinion (June 15, 2005) .................2....06. Pet. App. la-19a Order Denying Petitions for Rehearing and Rehearing En Banc (Aug. 30, 2005)..... Pet. App. 20a 266 EXHIBIT 76 HUNTON & WILLIAMS 2000 PENNSYLVANIA AVENUE, N.W. P.O. Box 19230 WASHINGTON, D.C. 20036 TELEPHONE 202-955-1500 Fax 202-778-2201 [Addresses Omitted In Printing] June 5, 1989 Ms. Polly Gault Chief of Staff to the Secretary United States Department of Energy 1000 Independence Avenue, S.W. Room 7A257 Washington, D.C. 20585 Dear Polly: I appreciated the opportunity to meet with you and discuss the so-called WEPCo case and its progeny. En- closed is a briefing paper which explains the problem and outlines how EPA could easily solve it administratively. As discussed in the enclosure, the consequences of these decisions are far reaching. Among other things, 1. WEPCo will wholly undermine any “acid rain” legislation designed to allow reduc- tions in the most cost-effective way; 2. WEPCo is presently causing utilities to defer needed major maintenance, repair and re- placement projects required for maintaining a reliable electric supply; 3. Utilities and others that want to reduce emissions by converting to natural gas are barred from doing so without a PSD new 267 source permit unless they were capable of burning gas in 1975; and 4. If the WEPCo rationale is not qualified, utilities face substantial risks in undertak- ing a “clean coal” demonstration project. As I mentioned at our meeting, we have asked Admin- istrator Reilly to reconsider the WEPCo interpretations. We know that the EPA staff will oppose our request. This steadfast refusal to back down is best illustrated by a May 5 letter to Detroit Edison where Acting Assistant Adminis- trator Don Clay stated: In your March 13 letter, you provided data that illustrated large decreases in the source’s “poten- tial to emit” sulfur dioxide, particulate matter ... and NOx as a result of the conversion. [Nev- ertheless,] [o]ur review of the available informa- tion suggests that Region V’s conclusion that the source appears to be subject to PSD review ... is correct. We hope the Department and others in the Admini- stration will urge Administrator Reilly to overrule his staff on this important issue. I am sending Linda Stuntz, under separate cover, more detailed information on the WEPCo case, including an amici brief supporting Wisconsin Electric in the Seventh circuit litigation. That brief, joined in by the aluminum, steel, utility, petroleum, and coal industries, underscores the broad and adverse impact WEPCo will have on energy policy and on our economy. If I can provide any additional information, please let me know. We would appreciate the opportunity to meet with you and others in the Department within the next 268 few weeks to discuss analyses we are preparing on the impact of WEPCo on the utility industry. Sincerely yours, /s/ Henry Henry V. Nickel Enclosure ce: Linda Stuntz, Esquire (w/enclosure) Mr. Walker Nolan (w/enclosure) Ms. Lynn LeMaster (w/enclosure) June 5, 1989 THE WEPCO, DETROIT EDISON, AND OHIO EDISON DECISIONS In October 1988, Administrator Thomas affirmed a determination of then Acting Assistant Administrator Don Clay finding that new source performance standards (NSPS) (i.e., SO2 scrubbers) and prevention of significant deterioration (PSD) new source permitting requirements would apply if a maintenance, repair, and replacement project (called a “life extension” project) planned at a five unit coal-fired electric generating plant owned by Wiscon- sin Electric Power Company (WEPCo) went forward. WEPCo was seeking to replace equipment that posed safety concerns at four of the units and required shutdown of one of those units. In addition, replacement of defective equipment was required at two units to allow those units to operate again at design capacity. The remainder of the repairs and replacements in the project were needed to improve efficiency and reliability without having any impact on emission rates. 269 On February 15, 1989, Acting Assistant Administrator Clay resolved additional issues posed by WEPCo. Among other things, he determined that WEPCo could not avoid NSPS by switching to as lower sulfur coal, but rather would need to install scrubbers or similar controls. He also found that PSD review would be required even though the units were not increasing their emission rate. In the Detroit Edison case, EPA Region V determined that a project to allow natural gas-firing at an oil-fired plant could not be undertaken without a PSD permit. In a May 5 letter, Don Clay observed that the project would substantially reduce emissions, but he nevertheless tentatively concluded that Region V’s PSD determination appears to be “correct. In the Ohio Edison case, EPA determined that remov- ing a clean coal technology demonstration project after the demonstration concluded would trigger PSD and NSPS requirements. Although EPA Acting Assistant Administra- tor Clay promised “no action” in terms of EPA civil en- forcement, “clean coal” participants would still potentially face criminal penalties for “knowing” violations of the Clean Air Act and would be subject to citizen suits under the Act. In other words, EPA has made clear that removing a clean coal demonstration project is unlawful (in EPA’s view) and has informed those undertaking these demon- stration projects that, at most, EPA will not initiate a civil action. Citizens and a local U.S. Attorney can do what they want. 270 The Utility Air Regulatory Group’ has requested that Administrator Reilly reconsider these decisions. Detroit Edison is separately seeking review of the Region V decision concerning its natural gas project. EPA’s New Interpretation of the NS P ireme New Source Performance Standards (NSPS) require new sources to meet a 70-90% scrubbing requirement and other stringent emission limitations. The Prevention of Significant Deterioration (PSD) permit program imposes numerous monitoring and modeling requirements on new sources, as well as technology-based emission limits that are potentially more stringent than NSPS. Existing sources are subject to NSPS and PSD if they are “modi- fied,” that is, if they undergo physical or operational changes that increase emissions. The WEPCo, Detroit Edison, and Ohio Edison deci- sions substantially expand the previous understanding of what is a “modified” source for NSPS purposes. Under these decisions, if emissions immediately before a “non- routine” (as determined by EPA staff) change are greater than emissions after the change, NSPS is triggered. This is the case notwithstanding the fact that the emissions * The Utility Air Regulatory Group (UARG) is a voluntary, 1onprofit, unincorporated, ad hoc group of 65 electric utilities, the Zdison Electric Institute, the National Rural Electric Cooperative Association, and the American Public Power Association. UARG’s purpose is to participate on behalf of its members collectively in federal air pollution control regulatory activities and in related litigation. Since 1977, UARG has been involved in all major Environmental Protection Agency Clean Air Act rulemaking and in numerous judicial proceedings related to these rulemakings. 271 immediately before the change are not representative of normal source operations. EPA similarly expanded the “modification” require- ments that apply to the PSD program. Under these deci- sions, if EPA finds a change to be “non-routine,” EPA will always conclude that the change causes an emissions increase since EPA compares actual annual emissions before the change with the emissions projected from operating 100 percent of the time, at 100 percent capacity, for 365 days. This approach, which allows projects an emission increase, conflicts with the plain language of EPA’s rules. EPA’s decisions acknowledge that “routine” repairs and replacements are not subject to the NSPS and PSD modification rules. However, the Agency has arbitrarily redefined what repair and replacement activities are “routine,” such that “routine” activities include only those that (1) are frequently done at that plant, (2) involve no major equipment, (3) are inexpensive, and (4) do not extend the life of a plant. This new interpretation is vastly different from past implementation of the “routine” rule, which included any repair and replacement activity that is normal business practice. It gives EPA staff virtually unlimited discretion to find that any major repair or replacement project is “non-routine.” Direct Impacts of the WEPCo, Detroit Edison, and Ohio Edison Decisions Under these decisions: 1. A unit that discovers safety problems due to an unanticipated defect in equipment and shuts down pending repairs cannot resume operations without 272 meeting stringent new source standards and receiv- ing a new source prevention of significant deteriora- tion (“PSD”) permit. This occurs whenever EPA determines the repair or replacement is not “routine.” WEPCo, Port Washington Unit 5, October 14 letter. A unit, under the WEPCo decision, cannot repair or replace deteriorated or defective equipment needed to return to past maximum operating levels, unless the repairs or replacements are “routine.” WEPCo. A unit cannot avoid an emissions increase that would trigger new source standards by switching to a lower sulfur coal oil, or to natural gas. It must install con- trol technology (e.g., scrubbers). WEPCo, February 15 letter. A utility experiencing increased forced outages at its units due to equipment problems cannot undertake repairs needed to avoid serious electric reliability problems without applying for and receiving a PSD permit, even though these repairs will only improve reliability and efficiency and will not increase the emission rate of the units. This occurs whenever EPA determines these “emissions neutral” or even “emis- sions beneficial” repairs or replacements are not “rou- tine.” WEPCo, Detroit Edison. A unit that was not able to burn a lower polluting fuel (e.g., natural gas) in the past cannot be converted to burn that fuel without first applying for and receiving a PSD permit. Detroit Edison. A unit that has undertaken a “clean coal” demonstra- tion project must meet new source standards and ob- tain a PSD permit if it wishes to remove the experimental technology at the end of the demonstra- tion period. EPA may issue a “no action” assurance to such a project. Ohio Edison. A“no action” assurance is a promise by the EPA signato~y — (in the case of Ohio 273 Edison, an Acting Assistant Administrator) that EPA will not bring a civil enforcement action. This does not insulate the company from a “citizen suit” under the Clean Air Act. Also, as the attachment to the EPA Ohio Edison letter makes clear, a U.S. Attorney can still bring-a criminal prosecution. Broader Consequences of the WEPCo, Detroit Edison Ohi ison isio WEPCo will wholly undermine any “acid rain” legisla- tion designed to allow reductions in the most cost- effective way. For example, it subjects many older, smaller units to scrubbers when these units are the logical candidates for fuel switching. WEPCo is presently causing utilities to defer needed major maintenance, repair and replacement projects required for electric system reliability. The conse- quence of such deferrals is that utilities must risk in- terruption of service in the very near future or costly expenditures on short-term solutions (e.g., unplanned installation of combustion turbines). Given the time required to obtain a PSD permit to undertake a repair program at an existing unit or to install a new com- bustion turbine, a substantial deterioration in electric reliability in the near future — with serious health and environmental consquences — is likely unless WEPCo is revisited. For other industries, WEPCo says: you may not undertake major repairs or replacements that restore a plant to its past levels of production unless someone in an EPA region or EPA headquarters finds that the project is “routine.” Given EPA’s restrictive interpre- tation of “routine,” the WEPCo decision means that such projects cannot be undertaken without assuming 274 substantial risks or seeking a determination from EPA that could take 6 to 12 months. 4. Even more troublesome is the WEPCo determination that major repairs and replacements that improve “reliability” and “efficiency” but do not increase (and may even reduce) emission rates can require a PSD permit unless EPA determines that the project is “routine. This aspect of the WEPCo decision is hostile to improving the productivity of our basic industries. 5 Utilities and others that want to reduce emissions by converting to natural gas are barred from doing so without a PSD permit unless they were capable of burning gas in 1975. This will cause companies to abandon such conversions in many cases and delay them (due to PSU permitting requirements) whenever a company decides to proceed. 6. If the WEPCo rationale is not qualified, utilities face substantial risks undertaking a “clean coal” demon- stration project. If new source requirements apply upon removal of the experimental controls, a unit will have to be shut down or, face very costly retrofit con- trols. The price may be too great for many companies, thereby discouraging participation in the program. Adminsitrative Solution to the WEPCo, Detroit Edison, and Ohio Edison Cases In the WEPCo, Detroit Edison, and Ohio Edison decisions, EPA interpreted its new source performance standards (NSPS) and prevention of significant deteriora- tion (PSD) requirements in an unprecedented manner. While the rules governing these EPA programs are com- plex, the EPA determinations in these cases could be easily overcome with the follawinge internretations’ 275 For NSPS purposes; EPA can, and should, recognize that, in determining an emissions increase, represen- tative operations of the unit should be used in com- paring past emissions to future emissions after a change. Nothing on the face of EPA’s regulations or their regulatory history precludes such a declaration by the new EPA Administrator. Such a “clarification” would mean that “clean coal” technologies could be removed at the end of the demonstration period, without triggering NSPS. It would also allow utilities and other industries to make necessary repairs to re- turn plants to past maximum production levels. For PSD purposes, EPA can, and should, recognize that any emission increase predicted to occur as a re- sult of an increase in hours of operation or production rate up to original design capacity (unless limited by a federally enforceable restriction on production or hours) is an exempt emission increase, as § 52.21(b)(2)iii)(f) of EPA’s rules explicitly and unam- bigiously provides. This reconsideration of the WEPCo, Detroit Edison, and Ohio Edison decisions would allow “clean coal” projects to proceed without having to receive a PSD permit. It would also allow industry to convert to lower-emitting natural gas without a PSD permit. 276 EXHIBIT 82 February 9, 1989 W. O. Parker, Jr. Subject: EEI Prime Movers - WEPCO The following is a summation of the discussion with WEPCO and other utilities about the WEPCO case. I have shared this information with the review committee and FPD GO managers. We may want to add this to the managers’ meeting agenda as a 30 minute update item. Feel free to use this report as you see fit in updating others in management about what we learned. Major points from the WEPCO discussion: o WEPCO must send a letter notifying thier commis- sion of plans to do work costing more than $1,000,000. o WEPCO must get a certificate from the commission for any work over $2,000,000. o WEPCO filed for certificate with the Commission to do $71,000,000 of repair and upgrade work. © Commission ask State environmental group to review work in relationship to PSD and NSPS standards. © Wisconsin like NC has a state operated program approved by EPA. o W.E.C. requested EPA Region 5 to review. o Region 5 responded that PSD was triggered and NSPS applied because modification work: © Increased efficiency (rebuilt preheater). o Increased capacity (corrected drum). 277 o Increased emission above the level emitted for the prior two years. © Resulted in significant spending, $71 M or 20% of replacement generation cost. WEPCO requested review by Washington. Washington supported Region 5 decision. WEPCO has filed suit against EPA. Lawyers estimate 11 to 23 months. Florida Power Corporation — Port Everglades plant is under going similiar work. AEP - Has taken no units out but is doing the same type of work that we are doing. Court case should clear interpretation of cost (50% vs. less) and increased emissions time frame (prior 2 years) standard. NC Environmental Air is acting like they are not aware of WEPCO. WEPCO Recommended that others SHOULD NOT: + a * Derateunits. Remove from servicefor extended periods. Do large major repairs as one project (WEPCO less the $1 M increments) Project retirement datesfor units as this establishes the useful end point or life of a particular unit. 278 J. O. Fayssoux Fossil Production Department JOF:mmp 279 EXHIBIT 93A NSPS/PSD Implications of Plant Modifications New Source Performance Standards: [For Boiler Only] Apply to new facilities or modifications to existing facili- ties. For NSPS, modification is defined as: * any physical or operational change which: * results in an increase in maximum hourly emis- sions. Maximum hourly emissions are determined by the maxi- mum which can be demonstrated over the past five years. This should be compared to what the maiximum emissions will be after the change. NSPS does not apply to any action which can be classified as routine maintenance, repair, or replacement, or to work which can be accomplished without a capital investment. The federal court ruled in WEPCO that EPA was correct in saying that WEPCO’s decision to forego repairs and allow the unit to deteriorate over a long period of time was evidence that the planned work was not routine. Based on that ruling, the five year test was put into the regulation. Prevention of Significant Deterioration: [Total emissions over a year] Similar criteria to NSPS, but considers emissions over an annual period and applies whether or not the project is a capital expense. Increased production which could not otherwise be achieved without the modification will trigger PSD requirements. 280 ‘Last (five) 5 years maximum hourly emission routine naint. (capacity) replacement Gross MW 1. 5% \P42 calculated emissions based on fuel input allow 3 ID. “an — max capacity test] 281 EXHIBIT 98 [SEAL] UNITED STATES ENVIRONMENTAL PROTECTION AGENCY WASHINGTON D C 20460 Mr. John W. Boston Vice President 2 Wisconsin Electric Power Company Post Office Box 2046 Milwaukee, Wisconsin 52301 Dear Mr. Boston: This is a revised final determination, on reconsidera- tion, regarding the applicability of the Clean Air Act’s New Source Performance Standards (NSPS) and Prevention of Significant Deterioration (PSD) provisions to the proposed life extension project at the Port Washington steam electric generating station, which is owned and operated by Wisconsin Electric Power Company (WEPCO). This determination supplements the determination set forth in an October 14, 1988 letter to you from Lee M. Thomas, which in turn incorporated my September 9, 1988 memo- randum. I find it necessary to reconsider EPA’s original determination and issue this revised determination in part to address matters raised by, and new information submit- ted by, WEPCO representatives since, the October 14 letter. WEPCO believes that these new aspects call into question the accuracy of EPA’s prior determination. For the following reasons, EPA today reaffirms, with limited exceptions detailed below, its earlier findings regarding the Port Washington life extension project. I hereby incorporate by reference the October 14 letter and 282 the September 9 memorandum. and reaffirm the findings and conclusions in those two documents except where they are specifically superseded below. This action constitutes final agency action for pur- poses of judicial review under section 307(b) of the Clean Air Act, 42 U.S.C. § 7607(b), I. CAPITAL EXPENDITURE EPA explained in its earlier determination that under the General Provisions of the NSPS regulations, a physical or operational change which increases emissions at an affected facility is a modification subject to NSPS. See 40 CFR 60.14(a). However, 40 CFR 60.14(e) provides certain exceptions to that general rule. In particular, section 60.14(e)(2) provides that an increase in production rate, at an affected facility would not, by itself, be considered a modification if that increase is accomplished without a capital expenditure. As has been discussed in recent meetings between WEPCO and EPA, the October 14, 1988 letter from Lee M. Thomas was based in part on information supplied by WEPCO in a letter dated October 11, 1988 which indicated that the increase in Production rate at each of the five units would be accomplished with a capital expenditure. On October 13, 1988, and November 22, 1988 WEPCO submitted revised capital expenditure calculations. EPA has C y reconsidered its earlier determination based on those two additional submissions.’ However, as explained » * The October 13, 1988 submission was not received in time to be ‘Onsidered in issuing EPA's letter of October 14, 1988. BEST AVAILABLE COPY 283 below, they provide no grounds on which to alter EPA’s earlier finding on capital expenditure. The modification provisions are designed in part to subject to NSPS these emissions increases caused by an increase in production rate that is in turn attributable to a significant investment in improvements to the capital stock. Consistent with this intent capital expenditure calculations employ the total, as opposed to annual, cost of a given project at each affected facility. Thus, the December 16, 1975 preamble to the promul- gated definition of capital expenditure states that “... the total cost of increasing the production or operating rate must be determined. A// expenditures necessary to in- creasing the facility's operating rate must be included in this total” (40 FR 58416) (emphasis added). The total cost of the planned work at each facility is then compared to the product of the existing facility’s basis and the annual asset guideline repair allowance percentage used by the Internal Revenue Service for taxation purposes. If the total project cost for each facility exceeds the product of the basis and repair percentage for each facility, there is a capital expenditure at that facility. See 40 CFR 60.2. It is appropriate to accumulate, for capital expendi- ture purposes, the cost of the renovations necessary to increase the facility's production rate, because the overall work necessary to increase a facilitys production rate pursuant to a particular renovation project is the same whether the work is performed in one calendar year or during two (or more) years. The use of annual costs could encourage sources to distort normal business planning by artificially stretching out costs over time as a means of 284 evading a finding of capital expenditure and consequent NSPS coverage.” Rather, the purpose of the exemption in 40 CFR 60.14(e)(2) is to exclude from NSPS coverage increases in production rate that are accomplished without “an expen- diture for long-term additions or improvement.” See 39 FR 36948 (preamble to proposed NSPS regulations). Where the economic realities of the case are that increased production and, hence, emissions, are due to normal fluctuations in the business cycle rather than a considered decision to invest in substantial capital improvements, the NSPS do not apply. The letter submitted on October 13 from Neil Chil- dress of your staff to Gary McCutchen of EPA presented updated basis figures (determined by multiplying the original capital investment in the facility by a coefficient representing the inflation in construction costs between the year of the investment and the year in which the capital expenditure calculation is made) for each of the emissions units at Port Washington. These figures in- cluded costs of repair or replacement of equipment, such as steam turbines, that is not part of the existing affected * Indeed, it appears that WEPCO may have extended the planned length of the Port Washington life extension project for precisely this purpose after being informed by EPA in the October 14, 1988 letter that there would be a capital expenditure using the original schedule. The unit 1 renovations have been extended from four years to five; unit 2 has been extended from four years to six; unit 3 has been extended from three years to six; unit 4 has been extended from two years to four. (Compare Telecopier Transmission, Neil Childress, WEPCO, to Gary Question No. 4) with Letter, Neil Childress, WEPCO, to Walt Steven- son, EPA, November 22, 1988, at page 2.) 285 facility for NSPS purposes. Since applicability determina- tions under the NSPS modification provisions are based on the existing affecting facility, capital expenditure determi- nations likewise are limited to costs associated with the affected facility. For NSPS Subpart Da, the affected facility is the steam generating unit as defined at 40 CFR 60.40a. Therefore, EPA staff requested WEPCO to limit the basis figures to the steam generating unit. The November 22, 1988 letter from Neil Childress to Walt Stevenson of EPA presented revised cost figures on the renovation work on steam generating units 1 - 4 related to the capital expenditure calculations. These November 22 basis figures are understood to be limited to costs associated with the affected facility. The November 22 letter also presented a revised and extended schedule for the renovation work, under which the costs of repairs in any one year would not exceed the product of the annual asset guideline repair allowance percentage, which is 5% for electric utility steam generating units, and the basis of each unit. Mr. Childress’ letter concluded that since 5% of each unit’s updated basis is not exceeded by the cost of renovation werk in any one year, there would not be a capital expenditure at any of the units. The revised figures also show that the total costs for each unit over the entire renovation period would exceed the 5% basis figure by 50% to 325%. As explained above, it is the total cost, not the annual cost of a renovation project that determines whether a capital expenditure has occurred. Accordingly, based on the calculations and total project costs in WEPCO’s No- vember 22, 1988 letter, the proposed project would result in a capital expenditure at each of the five Port Washington units, and those units would not qualify for the exemption in 286 the NSPS modification provisions at 40 CFR 60.14(e)(2).° As to unit 5, WEPCO did not submit cost data limited to the affected facility. Thus, I have no reason to alter EPA’s original determination that WEPCO has not demonstrated that the increase in production rate at unit 5 can be accomplished without a capital expenditure. In addition, I have determined that it is more appro- priate to utilize the original basis of each affected facility (as adjusted to reflect past capital improvements), ex- pressed in nominal dollars, rather that the updated basis, expressed in current dollars, in determining NSPS appli- cability. Thus, even if WEPCO were correct that annual renovation costs, rather than total costs, should be used in capital expenditure calculations, in this case a comparison of annual renovation costs and the (adjusted) original basis of each affected facility shows that a capital expendi- ture would still occur.* * WEPCO has argued that since the definition of capital expendi- ture at 40 CFR 60.2 refers to the IRS “annual asset guideline repair allowance percentage” (emphasis added), EPA is bound by the literal language of its own regulations to use annual rather than total project costs in making capital expenditure calculations. However, the regula- tions do not dictate such a result. Instead, on their face they call for a comparison between total renovation costs and the annual asset guideline. Had EPA intended the result suggested by WEPCO, it would have explicitly called for comparison of annual costs of the change for projects exceeding one year with the annual asset guideline. This it did not do. In addition, as indicated above, the purpose of the capital expenditure provision would not be served by annualizing project costs for capital expenditure purposes. _ * It is worth noting in this regard that if EPA were to adhere to a literal reading of IRS guidelines as urged by WEPCO, it would have no - choice but to use original basis as well as annualized costs in making capital expenditure calculations for Port Washington. Using this (Continued on following page) 287 In making a more detailed inquiry into the capital expenditure matter in response to WEPCO’s request, I have found that neither the NSPS General Provisions nor the preamble thereto contain any discussion of the matter of original versus updated basis, and that EPA has rarely been called upon to address this issue. However, upon review of EPA’s past practice in this area. I have found that in developing performance standards for particular industries, EPA has provided the regulated community a mechanism to calculate the original basis in making capital expenditure calculations. See, e.g., “Equipment Leaks of VOC in Petroleum Refining Industry — Back- ground Information for Promulgated Standards,” EPA- 450/3-81-015b, December 7, 1983.° This suggests that EPA intended the original basis to be utilized to determine whether a capital expenditure is going to be made. Moreover, I believe that the use of original basis is consistent with the overall purpose of the NSPS modifica- tion regulations in general, and the capital expenditure provisions in particular. The effect of using original basis is that the greater the age of an affected facility, the more likely it is that a given investment resulting in increased production will be deemed a capital expenditure and trigger NSPS. This is consistent with Congress’ intent in adopting new source performance standards. Older facili- ties are most likely to use outdated equipment which does formula, WEPCO would exceed the repair allowance percentage at units 1 — 5 for most years, and NSPS would still apply. * This Background Information Document provides an alternative to the method prescribed in the General Provision when it is difficult to determine original costs. The formula uses replacement costs and an inflation index to “approximate the original cost basis of the affected facility.” 288 not reduce pollution to the extent more current technology does. Congress included modified sources within the new source performance standards of section 111 to ensure the use of new technology on such sources. See CAA §§ 111(a)(2), 111(a)(4). II. AIR HEATER RENOVATIONS AT UNIT 1 In January 1989, WEPCO asked EPA to determine whether replacement of the heat transfer surface elements on the unit 1 air heater would trigger PSD or NSPS applicability. However, in a letter dated February 3, 1989, WEPCO withdrew this request, asserting that it could not receive approval in the time necessary, while reserving the right to renew it at a later time as to unit 1 or any other unit at Port Washington. Because this issue may arise again, and because | believe it bears upon the project as a whole, I find it appropriate to address the matter of air heater element replacement. Based on the information enh ‘tted regarding this new plan, as well as the earlier tation submitted regarding air heater replacement I conclude that if WEPCO were to proceed under its i and now withdrawn plan, it would not alter EPA’s finding that PSD and NSPS would apply. In order ain this finding, it is useful to first summarize the it facts. iginally, WEPCO advised EPA that it planned to the air heaters at unit 1 — 4 in their entirety. As ) explained: Air heaters are subject to the erosive and rosive effects of the flue gas passing through m and require regular maintenance of the it transfer surfaces. 289 The plate-type air heaters on Units 1 - 4 do not lend themselves to replacement of the indi- vidual elements. Worn sections have been patched and blocked, where accessible, over the years. Now, however overall corrosion and perfo- ration has passed beyond the practical point of repair, and replacement of the air heaters is the economical way to maintain the air preheater system. The air heaters on Port Washington Unit 5 and the other units on the Wisconsin Electric System [other than Port Washington units 1 — 4] are of the Ljungstrom basket design, which al- lows the heat transfer surfaces (baskets) to be replaced easily *** See, e.g., List of Port Washington Projects, p. 6 (Attach- ment to April 22, 1988) Letter from John W. Boston, WEPCO, to Gary McCutchen , EPA. On January 11, 1989, WEPCO informed the State of Wisconsin that it was considering replacing all the plate elements at unit 1. In a letter to the State of Wisconsin, WEPCO described this project as routine repair work, “necessary to halt the continuing decrease in the capabil- ity of Unit 1,” and submitted a list of 40 generating units where significant portions of the air heater have been replaced. See Letter, with attachment, from Mark P. Steinberg, WEPCO, to Dale Ziege, Wisconsin Department of Natural Resources, January 11, 1989. In a telephone conversation with EPA staff the next day, WEPCO indicated that it desired to perform the unit 1 plate replacement work during a current unit outage; that intended to replace only half, not all, of the elements, at a cost of approximately $500,000; that it intended to 290 later scrap this work and replace the entire air heater as described in the original scope of work at a cost of $2,600,000; and that it was considering performing the same work at unit 4 also. See Record of Telephone Conver- sation between David Schulz, EPA, and Mark Steinberg, Neil Childress, and Walter Woelfle, WEPCO, January 12, 1939. In a meeting on January 17, 1989, WEPCO related that if it replaced half of the plate elements now, it proba- bly would replace the remainder as part of the total renovation project at a later date and not replace the air heater in whole. WEPCO also related that complete replacement of the plate elements should increase unit 1’s capability to the original design capacity. Finally, WEPCO stated in response to questions from EPA staff. that none of the air heaters or plate elements at units 1-4 had ever been replaced in the past. See Memorandum, Meeting with WEPCO regarding the Port Washington Generating Station, from David Schulz, EPA, to Files, January 27, 1989. In addition to the above information, I note that WEPCO’s list of 40 units at which air heater element replacements have occurred include no units containing plate elements such as those on units 1-4 at Port Washing- ton: Instead, all of the examples submitted are of the Ljungstrom basket type or the tubular type. I conclude that those examples are too dissimilar to the plate-type elements in use at units 1-4 to support WEPCO’s conten- tion that the work in question is routine.‘ ; . Further, even the list of air heater replacement work submitted by WEPCO did not establish this as routine repair work. Those 40 units (Continued on following page) 291 Based on all of the foregoing, I find no reason to depart from EPA's earlier conclusion that PSD and NSPS would apply to the air heater work on unit 1. It appears that despite WEPCO’s recent recharacterization of this work as a separate project, it is properly viewed as an integral part of the overall Port Washington life extension project. WEPCO cannot evade PSD and NSPS applicabil- ity by carving out, and seeking separate treatment of significant portions of an otherwise integrated renovation Program. Such piecemeal! actions, if allowed to go unchal- lenged, could readily eviscerate the clear intent of the Clean Air Act’s new source provisions. Accordingly, if seen as part of WEPCO’s previously proposed renovation project, the recent recharacterization of the unit 1 air heater work does nothing to alter the factors determina- tive of PSD and NSPS coverage. Ill. CAPACTY TESTING FOR UNITS 1-4 A. Impact of Test Results on NSPS Applicability. In Lee Thomas’ October 14, 1988 letter, EPA stated that baseline emissions for NSPS purposes are determined by hourly maximum capacity just prior to the renovations. EPA relied on actual operating data to determine that current maximum capacity at units 1-4 has significantly deteriorated, such that the restoration of original design capacity through the lift extension project would result in corresponding emissions increases. As to unit 5, EPA stated that current capacity at unit 5 is zero because it is comprise only a small fraction of total operating utility units, and even at the 40 units, air heater repair or replacement appears to have been a one-time occurrence, not routine repair. 292 physically inoperable. EPA rejected WEPCO’s unsupported assertions that all five units could be operated at high capacities, but held open the possibility of further discus- sions on that point. Subsequently, in November and December of 1988, following discussions with EPA, WEPCO conducted capacity tests to determine current actual capacity. Based on its review and analysis of the test data, EPA finds that the tests adequately. demonstrate that units 2 and 3 can be operated at their original design capacity on a sustained basis. Accordingly, I hereby supersede EPA’s earlier determination and find that NSPS would not apply to units 2 and 3 by virtue of the proposed renovations so long as the capacity of these units after completion of the work is no higher than demonstrated in the recent tests (694,000 and 690,000 pounds of steam per hour, respec- tively). As discussed in more detail below, this revised NSPS determination does not affect our determination that the PSD provisions would be applicable to the pro- posed work on these two units. During the tests on units 1 and 4, WEPCO was able to operate these units at 497,000 and 586,000 pounds of steam per hour, respectively, representing 72% and 89% of these units’ respective original design capacities. These tests are adequate to confirm EPA’s original determination that units 1 and 4 are not capable of operating at their original design capacities, and that restoration of the lost capacity through the life extension will trigger NSPS coverage. EPA today also determines that these tests are not adequate to show that current actual capacity for - purposes of establishing the NSPS baseline is as high as ‘the levels achieved during the recent tests. Rather, I reaffirm that baseline for those units is determined by the 293 lower capacities reflected in recent actual operating data as set forth in Lee Thomas’ October 14 letter. EPA must reject the tests for purposes of establishing actual NSPS baselines because during the testing discussed above, there were significant mezsured exceedances of the appli- cable particulate mass emission limit and several meas- ured exceedances of the applicable opacity limit contained in the Wisconsin State Implementation Plan. One of the purposes of these tests was to determine the maximum actual capacity of the Port Washington units that can be achieved in a lawful manner. As a consequence of the measured exceedances, WEPCO’s tests cannot be relied on to demonstrate that the company could lawfully sustain the levels achieved during the testing. Regarding unit 5, I find that by declining to conduct or schedule capacity tests, WEPCO has effectively conceded that unit 5 is at present inoperable. Therefore, I reaffirm that its baseline for NSPS purposes is zero. B. Impact of Test Results on PSD Applicability. In its February 3, 1989 letter, WEPCO asserted that EPA’s October 14, 1988 determination assumed that the emission rate of each unit would increase following the renovations. Thus, WEPCO claims, EPA did not address the question whether units that are not increasing their emission rates following renovation can be deemed to trigger PSD. WEPCO is incorrect on both counts. EPA’s prior determination explained that under the PSD program, unlike NSPS, baseline emissions are determined by representative actual emissions prior to the physical or operational change. Accordingly, the results of testing conducted by WEPCO, intended to determine’ 294 current maximum hourly capacity, have no impact on the existence of a significant net emissions increase for PSD purposes. Hence, those test results provide no reason to alter EPA’s prior determination regarding PSD applicabil- ity. Actual emissions are the product of the emission rate (amount of pollution per unit of production or throughout, e.g., pounds of sulfur dioxide per ton of coal combusted), the production «ate or capacity utilization (amount of production or th.. oughout per hour, e.g., tons of coal com- busted per hour), and the hours of operation (e.g., hours per year). In its prior determination, EPA explained that an increase in any one of these three factors, if attribut- able to a physical or operational change, can trigger an emissions increase for PSD purposes, and rejected WEPCO’s contention that only increases in the emission rate were determinative. In so doing, EPA explicitly assumed that emissions increases at Port Washington ‘would come not from an increase in emission rate, but rather from increases in production rate or hours of ,Operation. See Memorandum from Don R. Clay, September “. yanee at 8. 9 WEPCO further implies in its February 3, 1989 letter | that’ the demonstration that units 2 and 3 can operate now at it-maximum design capacity means that there will be no increase in production rate for PSD purposes following the renovations. This is not the case because PSD baseline issions are determined by representative actual emis- Tate, production rate, and hours of operation prior to > Physical change. Representative actual emissions are ined by examining “the actual emissions during a ntative two year period, (See 40 CFR 52.21(b)(21)(ii)) ‘in this case the Administrator determined to be BEST AVAILABLE COPY 295 1983 and 1984 (See Lee Thomas’ Oct. 14 letter, at 5). The hourly capacity demonstration for NSPS purposes is not relevant to the PSD analysis. IV. NSPS OPERATIONAL LIMITATIONS In my September 9, 1988 memorandum, I pointed out that an affected facility cannot avoid NSPS applicability by offsetting, through the use of fuel with a lower sulfur content, an increase in the emission rate that would otherwise occur due to a physical or operational change. As I explained at that time, 40 CFR 60.14(e) provides that use of an alternative fuel or raw material — such as higher- sulfur coal - which an existing facility was designed to accommodate before a physical or operational change does not constitute a modification for NSPS purposes. It follows that the facility cannot avoid NSPS by switching to lower- sulfur fuel to counteract a prospective increase in emission rate because, under the regulations, the facility would always have to option to switch back to a higher-sulfur fuel at a later date without triggering NSPS. Subsequent to the issuance of EPA’s October 14, 1988 letter, WEPCO inquired whether it might be able to utilize lower-sulfur coal to avoid NSPS at Port Washington, notwithstanding the regulatory provision explained above, by agreeing to federally enforceable permit conditions that would bar the company from switching back to higher sulfur coal in the future. Restrictions of this nature are acceptable for netting transactions under the Act’s PSD provisions. However, the statute reflects a basic political decision that fossil fuel-fired sources not rely only on natural occurring less-polluting fuels to comply with the NSPS. Instead, Congress declared that compliance must 296 depend in part upon the application of flue gas treatment or other pollution control technologies. Thus, section 111(a)(1XA)(ii) defines “standard of performance” for fossil fuel-fired sources as requiring the achievement of a percentage reduc- tion in the emissions from such category of sources from the emissions which would have re- sulted from the use of fuels which are not subject to treatment prior to combustion... . Congress further clarified this point in a later paragraph of section 111(a) by adding: For the purpose of subparagraph (1)(A\ii), any cleaning of the fuel or reduction in the pollution characteristics of the fuel after extraction and prior to combustion may be credited ... to @ source which burns such fuel. This core policy judgment is reflected as well in the legislative history of the 1977 Clean Air Act amendments. For example, the Conference Report states: The Senate concurs in the House provision with minor amendments. The agreement re- quires (1) that the standards of performance for fossil fuel-fired boilers be substantially upgraded to require the use of the best technological sys- tem of continuous emission reduction and to pre- clude use of untreated low sulfur coal alone as 4 means of compliance; .. . (3) that for fossil fuel- fired sources, the new source performance stan- dards must be comprised of both a standard of performance for emissions and an enforceable requirement for a percentage reduction in pollu- . tion from untreated fuel. LR. Rep. No. 95-564, 95th Cong., ist Sess. 130. 297 Because the will of Congress is so clear that lower- sulfur fuels alone will not suffice to comply with NSPS, it would be inconsistent with the legislative intent for EPA to allow sources to use lower-sulfur fuel to avoid coverage of NSPS in the first instance in the manner suggested by WEPCO. If EPA were to follow such a course, numerous modifications to existing facilities could escape coverage in a manner contrary to the statutory purpose. V. O I N In discussions with EPA, WEPCO has challenged, on grounds of timing, EPA’s position on baseline emissions for NSPS purposes. In its prior determination, EPA explained that under the NSPS regulations, baseline emissions are determined by hourly maximum capacity just prior to the renovations. Thus, the baseline for unit 5 at Port Washing- ton is zero because the unit has been shut down for several years due to safety concerns. In response, WEPCO has presented the hypothetical question whether EPA would still have found a zero baseline if unit 5 had been shut down on a Friday due to some unexpected or catastrophic failure of a major component previously in good working order, and WEPCO had sougt to replace that component on the following Monday. WEPCO asserts that in such circumstances, EPA should have established baseline emissions using the emissions rate just prior to the break- down. I. find it unnecessary to engage in speculation by addressing the hypothetical situation presented by WEPCO, because it is far removed from the true circum- stances surrounding the proposed Port Washington life extension project. In fact, unit 5 has been shut down for 298 over four years, not a weekend, and that is the foundation of EPA’s analysis and determination. In conclusion, with limited exceptions, EPA today reaffirms the decisions reached in the October 14 determi- nation. In addition, EPA has concluded that the work on each unit constitutes a capital expenditure and that the proposed air heater plate replacement work on unit 1. would trigger PSD and NSPS. As a result of the capacity test demonstration, however, I find that units 2 and 3 at Port Washington can be operated at their design capacity on a sustained basis. Therefore EPA’s earlier determina- tion with respect to NSPS applicability is superseded and NSPS would not apply to units 2 and 3 by virtue of the proposed renovations so long as the capacity of these units after the completion of this work is no higher than demon- strated in the recent tests. This determination does not affect PSD applicability for these two units. If you should have any questions about the foregoing, please feel free to contact me. Thank you for your cooperation in this matter. Sincerely, /s/ Don R. Clay Acting Assistant Administrator for Air & Radiation 299 EXHIBIT 101 [LOGO] UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION 5 77 WEST JACKSON BOULEVARD CHICAGO, IL 60604-3590 MAY 23 2000 REPLY TO THE ATTENTION OF R-19J Henry Nickel Counsel for the Detroit Edison Company Hunton & Williams 1900 K Street, N.W. Washington D.C. 20006-1109 Dear Mr. Nickel: I am responding to your request on behalf of the Detroit Edison Company for an applicability determination regarding the proposed replacement and reconfiguration of the high pressure section of two steam turbines at the company’s Monroe Power Plant, referred to as the Dense Pack project. Specifically, you requested that the United States Environmental Protection Agency (EPA) determine whether the Dense Pack project at the Monroe Power Plant would be considered a major modification that would subject the project to pollution control requirements under the Prevention of Significant Deterioration (PSD) pro- gram. We have reviewed your original request, dated June 8, 1999, and the supplemental information you submitted on December 10, 1999, and March 16, 2000. We provisionally conclude that the Dense Pack project would not be a major modification. Thus, Detroit Edison may proceed with the 300 project without first obtaining a PSD permit. Although the Dense Pack project would constitute a nonroutine physical change to the facility that might well result in a signifi- cant increase in air pollution, Detroit Edison asserts that emissions will not in fact increase due to the construction activity, and EPA has no information to dispute that assertion. As you know, nonroutine changes of any type, purpose, or magnitude at an electric utility steam generating unit — ranging from projects to increase productions efficiency to even the complete replacement of entire major components ~ are excluded from PSD coverage as long as they do not significantly increase emissions from the source. Thus, Detroit Edison has been free to proceed at any time with the Dense Pack project without first obtaining a PSD permit as long as it adheres to its stated intention to not increase emissions as a result of the project. Indeed, EPA encourages the company to proceed with the project on this basis, since it appears to both reduce emissions per unit of output and not increase actual air pollution. As you are also aware, under the applicable new source review regulations, in determining if a physical change will result in a significant emissions increase at an electric utility plant, companies may use an “actual” to “represen- tative actual annual emissions” test for emissions from the électric utility steam generating unit, under which a calculation of baseline emissions and a projection of future emissions after the change is needed. Our determination of ‘nonapplicability is provisional because Detroit Edison has not, to our knowledge, provided a calculation of baseline emissions or projected future emissions to the permitting agency, and this should be done prior to the Start: of construction. The basis for this determination is 301 summarized below and is set forth in full in the enclosed detailed analysis. In determining whether an activity triggers PSD, the Clean Air Act and EPA’s regulations specify a two-step test. The first step is to dete iine if such activity is a physical or operational change, and if it is, the second step is to determine whether emissions will increase because of the change. The statute admits of no exception from its sweeping scope, but EPA’s regulations contain some narrow exceptions to the definition of physical or opera- tional change. In particular, Detroit Edison claims that the Dense Pack project is eligible for the exclusion for routine maintenance, repair, and replacement. The determination of whether a proposed physical change is “routine” is a case-specific determination which takes into consideration the nature, extent, purpose, frequency, and cost of the work, as well as other relevant factors. After carefully reviewing all the information you submitted in light of the relevant factors, EPA has determined that the proposed project is not “routine.” The purpose of the Dense Pack project, to significantly enhance the present efficiency of the high pressure section of the steam turbine, signifies that the project is not routine. An upgrade of this nature is markedly different from the frequent, inexpensive, necessary, and incre- mental maintenance and replacement of deteriorated blades that is commonly practiced in the utility industry. For instance, past blade maintenance and replacement oi only the deteriorated blades at Detroit Edison has never increased efficiency over the original design. Accordingly, because increasing turbine efficiency by a total redesign of a major component is a defining feature of the proposed Dense Pack project, it clearly goes significantly beyond 302 both historic turbine work at Detroit Edison, and what would otherwise be considered a regular, customary, or standard undertaking for the purpose of maintaining the existing steam turbine units. The project also goes well beyond routine turbine maintenance, repair, and replace- ment activities for the utility industry in general. The nature and extent of the work in question — replace- ment of the entire high pressure sections of the steam turbines for Units 1 and 4 at Monroe — suggests that the Dense Pack project is not routine. It would result in greater efficiency above the level that can be reached by simply replacing deteriorated blades with ones of the same design and, in addition, will substantially increase effi- ciency over the original design. Specifically, the Dense Pack upgrade would not only restore the 7 percent of the efficiency rating lost over the years at each unit but would improve the unit’s efficiency by an additional 5 percent over its original design capacity. Accordingly, the proposed project represents a significant and major redesign and replacement of the entire high pressure sections of the steam turbines at Units 1 and 4 at the Monroe facility. The frequency with which utilities have undertaken turbine upgrades like the Dense Pack project also indi- _ cates the nonroutine nature of the changes. The informa- _ tion provided by Detroit Edison, regarding past history at the Monroe facility, describes what is characterized as * Mecessary maintenance, repair, and replacement of dete- ‘ riorated turbine blades approximately every 4 years. _ During these overhaul periods, it is not uncommon for the company to replace up to several turbine blades at one time: ‘It is common among other utilities to also perform 4 similar turbine maintenance. However, Detroit Edison has not’provided any information to suggest that a complete 303 replacement and redesign of the high pressure section of a steam turbine is conducted frequently at Monroe or at any other individual utility. Instead, Detroit Edison relies on its claim that projects “similar” to the Dense Pack project have been performed at a number of utilities. This infor- mation does not indicate that the replacement of the high pressure section of the steam turbine is frequent at the typical utility source; to the contrary, the only available information reflects that projects like the Dense Pack project have been performed only one time, if ever, at individual sources. The cost of the Dense Pack project is significant and tends to indicate that this project is nonroutine. Detroit Edison expects the Dense Pack replacement to cost approximately $6 million for each turbine unit, for a total of $12 million. The EPA has rejected claims of routineness in past cases where the cost was substantially less than this figure. Moreover, Detroit Edison intends to capitalize the entire cost of this project, and EPA believes that a $12 million project that is 100 percent capital improvement indicates that it is a major undertaking. Beyond the clearly significant absolute cost of this project, available information suggests that this expenditure far exceeds the cost typically associated with turbine blade maintenance activity. Detroit Edison provided only a summary of the total project costs for past maintenance and inspections at the facility, the total costs of which ranged from less than $1 million to a little more than $6 million. Although Detroit Edison did not provide any detail regarding what specific activities comprise these aggre- gated amounts, it acknowledges that it spent only $18,700, $33,100, and $7,900 to replace high-pressure rotors in three turbine projects in 1981 and 1982. Further, the 304 project is significantly more costly than simply replacing deteriorated blades today; Detroit Edison acknowledges that the Dense Pack upgrade would cost three times more than its alternative blade repair and replacement project. Accordingly, it appears that the costs associated with the Dense Pack project greatly exceed the amounts spent previously by Detroit Edison or that it would spend pres- ently for the replacement of deteriorated turbine blades or rotors. For the reasons delineated above, we conclude that the changes proposed by Detroit Edison are not routine. Detroit Edison’s submissions do not demonstrate that project such as the Dense Pack project are frequent, inexpensive, or done for the purpose of maintaining the facility in its present condition. Instead, the source relies on two principal arguments: (1) It claims that this project is less significant in scope than was the activity in ques- tion in the 1988 applicability determination for the Wis- consin Electric Power Company (WEPCO); and (2) it alleges that EPA has interpreted the exclusion for routine activity expansively to exempt all projects that do not increase a unit’s emission rate. EPA rejects both of these arguments, the former because both EPA and the U.S. Court of Appeals for the Seventh Circuit viewed WEPCO’s activity as “far from” routine and thus this attempted comparison to WEPCO is unsuitable, and the latter because it is demonstrably incorrect. The attached analy- sis addresses these points in significant detail. by . When nonroutine physical or operational changes signifi- cantly: increase emissions to the atmosphere, they are properly characterized as major modifications and are sup to the PSD program. In general, a physical change in the’ ature af the Denece Pack nrniart which nravidec far BEST AVAILABLE COPY 305 the more economical production of electricity, would be expected to result in the increased utilization of the affected units, and thus, increased emissions. Notwith- standing the fact the Monroe units may be high on the dispatch order, the Dense Pack project would allow Detroit Edison to produce electricity more cheaply per unit of output, thereby creating an incentive to run Units 1 and 4 above current levels. Even a small increase over current normal levels in the utilization of the affected units would result in a significant increase in actual emissions of criteria pollutants. For example, in 1997, at the Monroe facility Unit 1 emitted approximately 14,000 tons of nitrogen oxides (NO,.) and 41,000 tons of sulfur dioxide (SO,), and Unit 2 emitted 12,000 tons of NO, and 35,000 tons of SO,. Based on this information, if a one to five percent increase in operation were to result from the Dense Pack project, increases on the order of 160-800 tons of NO, and 400-2000 tons of SO, would occur. Detroit Edison, however, maintains that emissions will not increase as a result of the Dense Pack project. Specifically, the company contends that representative actual annual emissions following the change will not be greater than its pre-change actual emissions, because the Dense Pack upgrade will not result in increased utilization of the units. As you are aware, the PSD regulations (under the provisions commonly known as the “WEPCO rule”) allow a source undertaking a nonroutine change that could affect emissions at an electric utility steam generating unit to lawfully avoid the major source permitting process by using the unit’s representative actual annual emissions to calculate emissions following the change if the source submits information for 5 years following the change to confirm its pre-change projection. In projecting post-change 306 emissions, Detroit Edison does not have to include that portion of the unit’s emissions which could have been accommodated before the change and is unrelated to the change, such as demand growth. Under the WEPCO rule, Detroit Edison must compute baseline actual emissions and must project the future actual emissions from the modified unit for the 2-year period after the physical change (or another 2-year period that is more representative of normal operation in the unit’s modified state). As noted above, Detroit Edison has ro provided these figures to verify its projection of no increase in actual emissions, and should submit them to the Michigan Department of Environmental Quality prior to beginning construction. In addition, Detroit Edison must maintain and submit to the permitting agency on an annual basis for a period of at least 5 years (or a longer period not to exceed 10 years, if such a period is more representative of the modified unit’s normal post-change operations) from the date the units at the Monroe Plant ‘ resume regular operation, information demonstrating that the renovation did not result in a significant emissions increase. If Detroit Edison fails to comply with the report- ing requirements of the WEPCO rule or if the submitted ‘information indicates that emissions have increased as a consequence of the change, it will be required to obtain a “PSD permit for the Dense Pack project. Finally, regardless of whether PSD review is triggered due ‘te the Dense Pack project, Detroit Edison must meet all other applicable federal, state, and local air pollution ‘Teauirements. ‘This determination will be final in 30 days unless, during ‘tat time, Detroit Edison seeks to confer with or appeal to 307 the Administrator or her designee regarding it. If you have any questions regarding this determination, please contact Laura Hartman, Environmental Engineer, at (312) 353- 5703, or Jane Woolums, Associate Regional Counsel, at (312) 886-6720. Sincerely, /s/ original signed by Francis X. Lyons Francis X. Lyons Regional Administrator Enclosure 308 EXHIBIT 116 BEFORE THE ADMINISTRATOR UNITED STATES ENVIRONMENTAL PROTECTION AGENCY IN THE MATTER OF ) MONROE ELECTRIC ) PETITION NO. 6-99-2 GENERATING PLANT ORDER RESPONDING ENTERGY LOUISIANA, INC. ) TO PETITIONER'S PROPOSED OPERATING REQUEST THAT THE PERMIT ADMINISTRATOR , OBJECT TO ISSUANCE Proposed by the Louisiana ) OF A STATE Department of Environmental ) OPERATING PERMIT Quality ORDER PARTIALLY GRANTING AND PARTIALLY DENYING PETITION FOR OBJECTION TO PERMIT On February 9, 1999, Ms. Merrijane Yerger, Managing Director of the Citizens for Clean Air & Water (“CCAW” or “Petitioner”), petitioned the Environmental Protection Agency (“EPA”), pursuant to section 505(b) of the Clean Air Act (““CAA” or “the Act”), to object to issuance of a proposed State operating permit to Entergy Louisiana, _Inc.’s Monroe Electric Generating Plant in Monroe, Lou- -isiana (“Monroe plant”). The proposed operating permit for _the Monroe plant was proposed for issuance by the Louisi- ana Department of Environmental Quality (“LDEQ”) ‘,pursuant to title V of the Act, CAA §§ 501-507, the federal , implementing regulations, 40 CFR Part 70, and the State + of Louisiana regulations, Louisiana Administrative Code Se, A.C.”), Title 33, Part III, Chapter 5, sections 507 et seq. Petitioner has requested that EPA review, investigate, ‘and make an administrative determination on the entire 309 matter of the proposed operating permit and planned restart of the Monroe plant, pursuant to section 505(b) of the Act and 40 CFR § 70.8(c). Petitioner alleges that the proposed operating permit is not in compliance with applicable requirements of the Act including Prevention of Significant Deterioration (“PSD”) permitting requirements and New Source Performance Standards (“NSPS”). Peti- tioner also alleges that Entergy’s operating permit appli- cation fails to adequately demonstrate compliance with hazardous waste disposal requirements under the Re- source Conservation and Recovery Act (“RCRA”). * * cd condition which was established after January 6, 1975, pursuant to 40 CFR 52.21 or under regulations approved pursuant to 40 CFR subpart I or 40 CFR 51.166.” 40 CFR § 51.166(b)(2)(iii)(); see also L.A.C. 33:I11.509(B). The purpose of this “increase in hours” exception was to avoid undue disruption by allowing routine increases in production during the normal course of business in order to respond to market conditions. In the preamble to the PSD rulemaking, EPA explained: While EPA has concluded that as a general rule Congress intended any significant net increase in such emissions to undergo PSD or nonattain- ment review, it is also convinced that Congress could not have intended a company to have to get an NSR permit before it could lawfully change hours or rate of operation. Plainly, such a re- quirement would severely and unduly hamper the ability of any company to take advantage of favorable market conditions. 310 45 Fed. Reg. 52676, 52704 (Aug. 7, 1980). The court in WEPCO explained further, “This exclusion ...was pro- vided to allow facilities to take advantage of fluctuating market conditions, not construction or modification.” 893 F. 2d at 916 n. 11. Analysis of whether restart of a facility constitutes a mere increase in the hours of operation or production rate must consider whether the proposed activity is of the kind intended to be covered by the provision. Specifically, EPA will look at whether the proposed change requires en- hanced flexibility to avoid hampering a company’s ability to respond to market fluctuations. In general, reactivation after long periods of shutdown, though obviously moti- _ vated by long-term changes in the market, is not a re- sponse to the same type of market fluctuations and does “not merit the same permitting flexibility envisioned by the ‘regulations. Restart of a long-dormant facility also may not be ; entitled to coverage under the “increase in hours” exemp- _ tion if it would disturb a prior assessment of the environ- ‘mental impact of the source. In the preamble for the 1980 * PSD rulemaking, after expressing its belief that Congress _ intended to allow certain facilities flexibility to respond to market fluctuations, EPA * * * pata: - » aap.” § os ® an’? Prog 2 oe” _— "faa * e all o> ar” ww. Ete a ae IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF NORTH CAROLINA UNITED STATES OF AMERICA, ) ) Plaintiff, v. ) CIVIL NO. 1:00CV1262 ) ) ) ) DUKE ENERGY CORPORATION, Defendant. EXHIBITS IN SUPPORT OF UNITED STATES RESPONSE TO DUKE’S MOTION FOR SUMMARY JUDGMENT (Filed Mar. 31, 2003) * * * } . ; : Sake . 4 a ot (> " hon Pou Je sma Ne Pe ener feet ra Fes es wd . ADR ea ad Mie Se a a tT eM ara otis. we ats : Sa a Pg ee Sage Ay Acree TS lay rain nN td A= od ay he” gh ; ao os Lane oF on oe “> © ae >>> gw, ae. * ay Oak em ee an NSS | a \ . : a - 4 7 « - se uAs wi i a * A 2 ‘ ¥ . } ; a FS ee A 1 SS & : “a = aa i)? ae (* F] 4 “) an neve : iy ~ x 18 a ae ee a arya ie Panda BOY y Pow’ GP U1 aa Sey ees a . ~ im i. _ y = = ‘ ry Pur pt 71 Bt re 3 a ae ee) a ; ° , ray os aia a ‘ bug aa aoe = : - Zz 7 i ; i eater LA rs CY ey Py a Sak ee 7 oar st Pat's Sat = ioe yas, : - 4 OY ed 5A ' res - ¥ . ’ 7 re ; Pani %s eer a Aig Tr £ oe Cth 4a ‘ ? 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Only to the extent I knew it was part of bringing these units back online. Q. Did you evaluate the work you saw for PSD applicability? A. No. Q. Okay, focusing on Exhibit 694, do you see Number 6, the last sentence at the bottom of that exhibit? A. Yes. Q. What does that sentence mean in relation to PSD regulations? A. Nothing. That regulation is not addressed in that. {17} Q. Are other regulations addressed in that statement? A. Pardon? Q. Are other regulations addressed in that? A. Yeah, the ones specifically listed on there. But that was, like I said, that’s to the best of my knowledge they were in compliance and I wouldn’t call it a definitive statement of compliance either, at least based — | did not see anything on the inspection that would lead me to believe they were out of compliance anyway with those regulations listed. 323 Q. But this wasn’t even meant to be a definitive statement that they were in compliance with these regula- tions? MR. COTTINGHAM: Object to the form. BY MS. BEHLES: Q. Is that what you just stated? A. I cannot just by looking at it definitively say they were in compliance. Q. And when you say in compliance, you mean with the regulations listed on Number 6; is that right? A. That’s correct, with the possible exception of say the physical regulation which I can look at and make an evaluation of. Q. Can you look at a boiler and make a PSD evalua- tion as an inspector? [18] MR. COTTINGHAM: Object to the form. THE WITNESS: No. Q. Why not? A. It is just there is not enough information to. I mean, it requires a lot of, I would say, document review of files and documents and things like that to make a PSD evaluation. Q. Earlier you mentioned that you inspect a large number of industries; is that right? A. Yes, that’s correct. 324 Q. Is that true for other inspectors? A. Yes. /~x * * _ {28)Q. Have you always had a good relationship with the people at Cliffside? A. Yes. Q. Who do you report to at your regional office? A. Paul Mueller. Q. Is he the regional supervisor? A. Yes, that’s correct. Q. Who did you report to in 1992 when you did this first inspection that’s marked indicated by Exhibit 694? A. That would also be Paul Mueller. Q. Has he been the regional supervisor the entire time? A. Yes. Q. When you go to a facility like Cliffside to do an inspection, do you generally show up without any prior contact? A. At that time, yes. Q. And by “that time” you mean of the ’92, ’93 time frame? A. Yes. Q. And do you now more frequently notify them you're coming? 325 A. More frequently now. That’s across the board just [29] records review we do and we need appropriate per- sonnel there to be able to do it. Q. The main reason you started notifying facilities that you’re coming is so that they can get all the records together you want to look at and have somebody there to help you go through them? ’ A. Yes, exactly. Q. When you do an inspection, do they make all the records available to you that you want to look at? A. Yes. Q. If you called Cliffside in advance or show up by surprise and say I want to look at all the records on this subject they make them available to you? A. Yes. MS. BEHLES: Object to form. Q. You were asking questions or answering ques- tions of the lawyer about how to evaluate PSD applicabil- ity, and you said it would take a lot of documents review but the documents you would review, and if you wanted to and needed to do that, would be documents that they would have to make available to you? MS. BEHLES: Object to form. Q. Correct? A. Yes. Q. When you go through your inspection, and let’s just [30] focus now on Cliffside, the Duke Energy facility 326 as opposed to something general. Let’s be specific about that. When you go through those and do inspections there, if boilers are shut down that’s actually a time when you can go inside the boiler if you wanted to do that, isn’t it? A. Icouldn’t answer that question. Q. Well, you don’t go inside them if they are operat- ing? A. Oh, certainly no. Q. So if there was any time you wanted to go inside them it would have to be when they were shut down? A. It would be when they were shut down, but whole set of issues there. Q. You're just saying — are you saying you've never actually done that? A. No, I have not. Q. Are you saying there are a whole set of issues? Is there any reason why you couldn't have done that if that’s what you, wanted to do? A. There may be as far as confined space entry and that kind of thing. I don’t know what sort of OSHA regula- tions might apply in that scenario. Q. But assuming you got all the correct safety training and had the right equipment and had somebody there to guide you, you don’t know of any reason why you couldn’t (31) go? A. Conceivably I could. MS. BEHLES: Object to form. 327 Q. You said in the 92, 93 time frame some of the boilers at Cliffside were shut down. Do you remember which ones they were? A. Couldn't tell you specifically unless it is men- tioned in the record. Q. This first exhibit says Units 3 and 4 went offline, and I’m reading paragraph 2 of Exhibit 694, says Units 3 and 4 went offline and remained offline at the time of the inspection. And you said you saw the work being done on some of the units at some time, and I just want to be more specific. Did you see work being done, at Units 3 and 4 at the time of this inspection in 1992? A. Do not recall. Q. But you do recall see being work done on those units? A. Yes, there are four boilers right there together and there was work being done in that area. I can’t recall specifically which boilers were being worked on when I was there. Q. Just so we will all understand, Cliffside 5 is a large unit on one side of the river, Cliffside 1 through 4 are smaller units that are on the opposite side of the river? [32] A. I think they are on the same side of the river, but - Q. I thought they were on different sides. A. I would say different sides of the large coal storage pile there. 328 Q. Okay, close enough. So you can go to Cliffside 5 and then takes a little time to get over to the other? A. Yes. Q. Cliffside 1 through 4. But you said that you knew that work was being done on Cliffside Units 1 through 4 in the ’92 ’93, 94 time frame when you were going — A. Yes. Q. And there was nothing to keep you from going to look and see exactly what that work was, was there? MS. BEHLES: Object to form. THE WITNESS: No. Q. In fact you saw the work being done, didn’t you? A. That’s correct. Q. Did you see parts of the boiler disassembled and large components being replaced in the boilers? A. I could recall seeing parts laying around. I don’t remember specifically anything else other than there was, there was quite a bit of activity there. Q. And this is on Units I through 4? A. Yeah, some of them. As I mentioned I don’t [33] specifically remember which ones. Q. If you saw something that you thought might trigger PSD, then your normal process was to, I think you said, to follow up or investigate it further; is that right? A. That’s correct. 329 Q. And if you actually found something that you thought constituted a violation, you could issue a notice of violation or an NOV, couldn't you? MS. BEHLES: Object to form. A. That’s correct. Q. In fact you issued an NOV at Cliffside, haven't A. I don’t recall if I have or not. Q. But, you know that’s something you could do? A. Yes. Q. Now when you prepare your inspection reports, has Mr. Mueller reviewed the inspection reports? A. He’s reviewed some of them. I would not know if he reviewed these reports specifically. * - * [36] Q. So following up what we said earlier, when ‘new people came on board at Cliffside for Duke Energy you would go and get to know them? A. Yes. Q. And then at the same time you inspected Units 1 through 4 it looks like. Just looking at the last sentence of that paragraph? A. Yes. Q. Now turn to the second page of that exhibit and there’s a paragraph which starts near the top right after the list of people of Kim Kelley, Mike Hager, Marty Beam 330 and Sam Sojourner. It says they are expecting to begin firing low Nox burners in Units 3 and 4 in the next few months. Do you see that paragraph? A. Yes. Q. And that paragraph ends by saying, “A three week outage is scheduled for Unit 5 during 1997 and eleven week outage is scheduled for Unit 5 in 2001.” Do you remember a discussion about what work was going to occur during that time? A. No, I do not. Q. And then it says, “Units 1 through 4 we're essen- tially rebuilt before they were brought online over the past five years.” That appears to be information they gave you at the time of this inspection if you didn’t know it [37] already? A. Yeah. I cannot recall. Q. It was either something that Duke Energy people told you or something you learned from seeing the work or something you learned from looking at the documents or some combination of that? Correct? A. I think that’s a fair assessment. Q. As of November 12, 1996, if you didn’t know earlier you knew then, that Units 1 through 4 had essen- tially been rebuilt over the past five years, correct? A. Yes. MS. BEHLES: Object to form. 331 Q. Look at the next inspection report. It is March 12, 1997 is the next one in the stack. Do you see that? Has Bates numbers 11795? A. Yes, I see that. Q. Let me just direct your attention to the first paragraph. This time it says, “On March 12, 1997 Troy Harrison and I visited the Duke Power plant to observe a source test for particulate emissions from Unit Number 5.” Who was Troy Harrison? A. Troy Harrison is, at least at that time, was an Environmental Technician 5. He was responsible for doing small source inspections and complaint investigations in Rutherford County. * * ~ [41] Q. Did anyone at EPA ever communicate with you about any interest or concern about what had occurred or was occurring at Duke’s facility at Cliffside? A. Not with me. Q. Look at the last inspection report that’s dated July 29, 1999 that ends in Bates numbers 11788. The conclusion of that report in paragraph 6 is, and this is talking about the Cliffside facility, the facility appeared to be operating in compliance with applicable requirements. Correct? MS. BEHLES: Object to form. BY MR. COTTINGHAM: | Q. That's what you wrote? A. That’s what the sentence states. 552 MR. COTTINGHAM: Thank you. That's all the questions I have. MS. BEHLES: Okay. I just have a few more questions for you. RE-EXAMINATION BY MS. BEHLES: Q. When you said you saw work being done at Cliffside, did you say you saw — how did you know work was being done at Cliffside? A. There were crews of people. The significant [42] project I guess at that time there wasn’t really as a formal a process for initiating the inspection as it become later when I met with the corporate folks and all that. There were times when I showed up to Units 1 through 4 and went to — I didn’t go through the reception process in this case. | went and tried first would try to locate Steve Porter in his office; and there are times when I went out to the area where all this work was going on to try and find or see if I could finds someone who knew where he was. And so during this process I was out where Units 1 through 4 were and could see the work going on. Q. Can you identify all the parts of a boiler by looking at a boiler? A. Not all the parts but some of the parts, yes. Q. Are you required to go into boilers that are not, that are shut down? MR. COTTINGHAM: Object to the form. THE WITNESS: No. 333 Q. Are you encouraged to go into boilers that are shut down? MR. COTTINGHAM: Object to the form. THE WITNESS: We are basically told not to go into confined spaces. Q. Referring back to what Mr. Cottingham has identified as Exhibit 901. Can I first have you turn to — [43] A. 901? Q. You got it okay? A. I got it. Q. To the last page of that exhibit. It ends in the Bates number on the corner is 1790. A. I got it. Q. Did you mean for that sentence to be a PSD applicability determination? MR. COTTINGHAM: Object to the form. THE WITNESS: When I write that sentence in my mind I’m referring to the list of applicable regulations that are in the air permit. 5; @. When you write the sentence why do you include the word “appeared”? A. As I mentioned before, in the business of air quality, without doing rather extensive and complex testing you really can’t make definitive statements as to whether a facility is in compliance. So I would not write and guarantee that everything was in compliance just from looking at it. 334 Q. When you were discussing the file review that you do in inspections, do you perform that file review as part of inspections to determine if boiler rehabilitation work triggers PSD? MR. COTTINGHAM: Object to the form. [44] THE WITNESS: No. Q. And why not? —_—_— A. This is the context of now or in 1992 or 93? Q. First let’s start with 1992-93 and then we can discuss now. A. One thing, there’s probably not much in the files on what was done. And I would say as far as really to modifications at the facility are normally reviewed in the context of an air permit application. And at that time I guess I just didn’t think to inquire more about what was going on. Q. Do you know whether or not if you — well, strike that. And what do you do now? When we were talking the file review. Is it any different now? A. In what way? Q. Do you perform that file review as the file review that you perform as part of inspections, do you do that to determine if boiler rehabilitation work triggers PSD? MR. COTTINGHAM: Object to the form. THE WITNESS: I would say now if I was looking at a similar or project for somebody that was rebuilding the first, first thing that would pop into my head is get information on how much it was costing and 335 whether emissions, there would be the bottlenecking quote in any way or something of that nature. [45] Q. How long has that been your understanding or your practice? A. I couldn’t state specifically. | was probably more regulatorally aware of the NSPS requirements as far as reconstruction if I recall around ‘94 or so. That’s just guessing though. Q. How about for PSD requirements? Would you perform a file review as part of your inspection to deter- mine if that boiler work triggered PSD? A. As part - MR. COTTINGHAM: Objection to form. THE WITNESS: As part of inspection, no. Q. Would you do that currently? MR. COTTINGHAM: Object to the form. THE WITNESS: That’s a difficult question. It would have to be the scenario. I might. Q. If I could have you look at Exhibit 694, the first page of Exhibit 901? A. Which one are we talking again? 8-26-92. Q. Yes. A. Okay. Q. And in reference to paragraph number 5, was it Duke's duty or obligation to tell about that violation? MR. COTTINGHAM: Object to the form. 336 THE WITNESS: In essence, yes, because they are [46] required to report their annual average capacities, which is reviewed under in the stationery source compli- ance branch as reports. Q. Is it the source’s duties to go to the state for a PSD applicability determination? MR. COTTINGHAM: Object to the form. THE WITNESS: It is a difficult question. It would be my opinion if they suspect there is a PSD issue it is their duty to come to the state. Q. Have you ever given any indication to Duke that the boiler work that you saw did not trigger PSD? MR. COTTINGHAM: Object to the form. A. No. MS. BEHLES: I think that’s all. Thank, you for your time. 337 RE-EXAMINATION BY MR. COTTINGHAM: Q. Mr. Parkin, you never went back after you came to understand that you might look at cost and other factors in connection with work that had been performed, you never went back and tried to collect that information on Cliffside 1 through 4, did you? A. No, I did not. MR. COTTINGHAM: Thank you. * * * 338 EXHIBIT 141 IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF NORTH CAROLINA Civil Action No. 1:00 CV 1262 UNITED STATES OF AMERICA, Plaintiff, v. ) ) ) ) ENVIRONMENTAL DEFENSE, ? NORTH CAROLINA SIERRA iO? CLUB, NORTH CAROLINA ) PUBLIC INTEREST ) RESEARCH GROUP Plaintiff-Intervenors ) Vv. ) ) ) ) DUKE ENERGY CORPORATION Defendant. DEPOSITION OF MICHAEL LANDIS (Taken on behalf of the Defendant) Raleigh, North Carolina December 11, 2002 * * o {15} Q. Did the people you had contact with at Duke Energy during all the years you inspected there, did they always seem interested and sincerely interested in comply- ing with environmental] regulations and rules? MS. BEHLES: Object to form. THE WITNESS: To the best I could tell, yes. Like I say, I never have any problem getting the informa- tion I needed. And generally the information I needed was 339 for compliance issues anyway, and it was always made available. 902 and those are inspection reports for the Riverbend facility that you prepared? A. Okay. Okay, yeah, all these except for the things by Therman Horne are mine, yes, that’s correct. Q. And they start —~ the first one is dated August 16, 1978? A. That’s correct. Q. And the last one is dated, looks like, February 20, 1991. A. Yes, it appears to be 1991, yes. Q. Let me ask you to look at the one that’s dated — we will start here at June 5, 1989? A. Do you have a page? Q. It has a Bates stamp number of 7129 at the bottom and since it is a 1989 it is near the back. A. What's the date of the thing again? Q. June 5, 1989. You signed it on June 14? A. June 5, 1989, yes, I’m at the one. BEST AVAILABLE COPY 340 Q. That’s an inspection that you conducted on June 5, 1989 at the Riverbend facility? A. Yes, sir. Q. It says, “This facility is an electricity generating plant. There are four boilers at the plants, 6, 7, 8 and 9.” Is that the way you remember Riverbend? A. Yes, sir. [18] Q. And then you say, “only boiler number 8 was in operation during this inspection.” A. Uh-hum. Q. “The other three boilers are in the plant moderni- zation program.” A. Yes, sir. Q. Tell us what you saw or knew about the Duke Energy plant modernization program? A. I really don’t recall what I saw. I just really don’t remember a whole lot about ~ my understanding of the plant modernization program was that Duke Power was to increase, was trying to increase the efficiency of the boilers. And my understanding of that, whether incorrect or correct, my understanding of that was to try to get more generation capacity out of the same amount of coal. And also my understanding was that there would be no in- crease in BTU heat input. It was just a matter of however you get more power, I don’t know. But that was my under- standing of the plant modernization program. 341 Q. Did you have an understanding that that pro- gram had been approved in some way by headquarters in Raleigh? A. Well, I hadn’t really thought about that until during the interviews Keith mentioned that there was headquarters that said that was, headquarters being down here in Raleigh, and the division or the department had said [19] that that was okay, and that said it was okay to do that. That’s about all I know about that memo. I don’t recall seeing the memo specifically. And so and I’m sure Keith, and I don’t recall Keith ever saying it but I’m sure he did at some time, that said it was okay. And I never gave it any more thought. Q. Keith Overcash was your supervisor at the time of this inspection? A. Yes, sir. He was regional supervisor at the time yes, sir. Q. And now is Director of Division of Air Quality? A. Yes, sir. Q. When you saw the plant modernization work at the three boilers, did you see activity and see tubes and parts on the ground or around or being installed? A. Yes. There was a lot of stuff on the ground. I think in part 2 I think they were trying to get rid of asbestos at the same time. It was kind of concurrent sort of thing. There was a lot of stuff laying around on the floors, tubes and things. But like I say, once in my impression was it was okay to do that, I really didn’t pay a lot of attention to it. It wasn’t something | needed to be concerned about. 342 [21] Q. But at least appears from these inspection reports that Mr. Cheng’s the one who did the inspections at Riverbend during that time? A. Like I say, all I can tell you, that’s his signature and at least that’s the way I recall his signature. Q. And he’s dated each inspection beside his signa- ture? A. Yes. Q. Let me just ask you to look at the first one which is November 24, 1986 in the first paragraph. It says, “None of the units of this power plant were in operation during my visit. Unit Number 6 and 7 had been put into the plant modernization project in 1989.” Is that what he wrote then? A. That’s what it says, yes, sir. Q. And if you look at the very next report, the one dated May 4, 1987, he dated it when he signed it May 13, 1987. Again in paragraph 1 it says, “Units Number 6 and 7 have been put into the plant modernization plan until 1991 and 1992.” A. That’s what it says. Q. The next report, which is dated looks like June 5, 1987 is when he signed it. In the second paragraph he says, (22) “Units 6 and 7 are currently in the plant mod- ernization program and not expected to be in operation until 1991 and 1992.” A. That’s what it says. | 343 Q. And the next report, which looks like February 25, 1988, he says there, “Units 4, 6 and 7 have been put into the plant modernization plan until 1991 and 1992.” A. That’s what it says. Q. And then the final report by Mr. Cheng dated October 12, 1988 says “Units 4, 5 and 7 have been put into the plant modernization plan until 1991, ’92.” A. That's what it says. Q. Look also just one more minute at his reports. All of them have a paragraph that conclude with a sentence that says either the facility is considered to be in compli- ance with the applicable regulations or it says in some cases “PSD NSR, and NESHAP do not apply.” MS. BEHLES: Object to the form. THE WITNESS: That’s what it says. Q. You also inspected at the Bucks station | think we said? A. Yes, sir. baad ~ - [33] EXAMINATION BY MS. BEHLES: Q. Mr. Landis, my name is Deborah Behles. I am hear representing the Department of Justice. I have a few . follow up questions for you this morning. A. Yes, ma’am. Q. When you would go on inspections of Duke facilities, did you ever talk about PSD issues? 344 A. Not that I recall, no, ma’am. Q. Did Duke ever talk about PSD issues on these inspections? A. Not that I recall, no, ma’am. Q. Do you know whether any other inspectors ever discussed PSD issues on their inspections? A. No, I don’t know whether they did or not. Q. Do you know what happened on inspections that you did not attend such as the ones by — the ones that we have that you've seen in these exhibits? A. No, I wouldn’t know. The only thing I would know is what was in the report itself. That’s the only thing I could tel] you because it is generally what you wrote your report from, the notes that you took during the inspection itself. Q. Did you ever do any emission calculations when you went on an inspection? (34) A. No. Q. Did you ever inquire about the cost of the work that was being done when you went on an inspection? A. No, I did not. I don’t recall doing that. I may have asked a question but I just don’t recall that. Q. Did you ever ask about the frequency of the components, of how frequent the components were re- placed in the boiler that were being worked on? A. No, ma’am, I didn’t. 345 Q. Did you ever ask about the nature of the work in your inspections? A. I may have talked about it to like during the stack test, you’re standing up on the roof and just watching the test go on and you just talk; and I may have talked with plant people about what they were doing and that sort of thing. But that wus just kind of general conversation with maybe one of the welders or something, just to have something to talk about. Other than that, that’s about all I remember. Q. Did you ever do any netting analysis on any of these inspections? A. No, ma’am, I did not. Q. Earlier you mentioned that on these inspections your contact was generally the precipitator, is a precipita- tor engineer? A. He would have been one of the contacts, one of the [35] contacts. Generally when we did an inspection we would say hello to the plant manager, and then one of the plant engineers, and generally the engineer that was assigned to supervise the operation of the precipitators, would go along with us because we eventually wind up there anyway. Rather than trying to run him down 30 minutes after we started, it is easier to take him with us. And that’s generally - and then when we have a closing interview and let the plant manager know if we observed any problems and what those problems might have been. And if not, we say everything looked like it was okay to us. That’s kind of a quick overview of an inspection. Q. On the inspections that you went on that Mr. Cottingham showed you in these exhibits up in front of 346 you, was the focus of these inspections to look at particu- late matter related issues? MR. COTTINGHAM: Object to the form. THE WITNESS: Well, like I said, a lot of these are stack test observations. But generally the inspections, whenever we would do inspection, generally yes, I would say that it was related to particulate, because ESP doesn’t control sulphur dioxide or gaseous emissions. And that’s what we looked at in general was to make sure the opera- tion of the precipitators was within what they should have been. And we looked at visible emissions, too, and that again is in [36] general of particulate emissions. Q. You mentioned that you saw some work being done at some of the inspections that you went on. Did you know the specifics of all the work that was being done? A. No, I did not know the specifics, un-unh. Q. When you're on an inspection, can you determine whether a facility is in compliance with the visible emis- sions limit by looking at the stack? A. Yes, sir. Yes, ma’am, I’m sorry. I apologize. Yes, ma’am. I’m certified to read visible emissions, and I was during the time that I was performing these inspections as well. Q. Can you determine if a boiler is in compliance with PSD by looking at the boiler? A. By — can you define that a little more? Do you mean by just — I really don’t understand what you mean. If you could define that a little better for me, appreciate it. 347 Q. By just looking at the boiler and the work that is being done, can you determine on an inspection the PSD is triggered? A. No. MR. COTTINGHAM: Object to the form. A. lam sorry. I should have waited. No, you can't. Q. And why not? A. PSD is not a regulation that is easy to interpret. [37] You got to do some calculations and that sort of stuff. You got to do a lot of stuff to determine generally whether a facility is subject to PSD or not. And during inspections we didn’t do calculations and those kinds of things. During an inspection in general, just from the inspection and looking at a boiler, you couldn't say it is subject to PSD or not. Q. Earlier when you were talking to Mr. Cottingham you mentioned that you had an understanding of the PMP program, that they were trying to use the same amount of coal to increase the efficiency? A. That's just my impression. If someone says they are trying to increase the efficiency of a boiler or whatever, I Just kind of maybe made an assumption that that’s what they were trying to do. I never really talked about it. But it” just seemed like you’re increasing the efficiency of something that seems like a good idea at least from the . ace. ss ed Q. And where did you get that understanding? beaioi “A. Oh, just, you know, in talking with the plant ‘people during inspections and asking a few questions 2. 348 about the PMP program, there was the understanding I got. Q. Earlier you also mentioned that you thought Keith Overcash had okayed — A. No, it wasn’t Keith. It was | think the Director of Air Quality probably had some input. And this is using {38] Keith’s words from the interviews that we had previ- ously. I didn’t directly recall that until he started mention- ing that and | thought, oh, yeah, that is right. That the department secretary, I don’t remember who that was, said that it was okay. And so, like I say, those guys say it’s okay, it is fine with me. Q. What interviews are you referring to? A. The interviews that we had, | had with — I apolo- gize. I've forgotten your name. MR. COTTINGHAM: ‘Tom Cottingham. THE WITNESS: And the other fellow that was on at the Winston-Salem office. That was during the interview and Keith mentioned, Keith was there and he mentioned that particular memo from, | think it is, Paul Williams. I don’t remember. But that’s the one he men- tioned. And I thought, yeah, we wouldn't have said - we would probably questioned it a lot more if we had not had something like that from the departments. And that would have made sense. If you go do an inspection and something is going on like that, you’re going to ask a lot of questions. I don’t ever recall asking any questions about why are you doing this, that sort of thing. When he said that was — yeah, that made a lot of sense that I didn’t ask any ques- tions about what was going on and why they were doing it until — that’s the reason I didn’t ask those kind of 349 questions during inspection. Because I would [39] ask those kinds of questions, I would have asked those kinds of questions if something hadn’t been cleared or I felt like it was okay. Q. If I could show you what’s been previously marked as Exhibit Number 6. Take your time to look through it and let me know when you're ready for some questions on that exhibit. I just want to note for the record, the copy that I handed him actually had a notation that says “Evans” on the bottom left-head corner. And that was written by my co-counsel. Not part of the document. A. Okay. I've read the, I guess it is a, letter to Mr. Helms from Duke Power. Q. Okay. And can you read the second letter as well? A. Qh, okay. I’m sorry. Q. Oh, no. A. Okay. Q. Is the correspondence in Exhibit Number 6 the correspondence you were referring to that was discussed during this interview you had with — A. Well, Keith mentioned this memo. I don’t ever recall seeing it. It is kind of one of those things that headquarters says it is okay, and Keith would say it is okay. And I don’t recall seeing the memos specifically. I really don’t. _ Q. But is this Exhibit Number 6 the memo that _ Keith [40] was referring to? MR. COTTINGHAM: Object to the form. 350 THE WITNESS: I would assume it is. That’s all I can tell you. I would assume that it is. Q. Do you know whether Duke ever informed North Carolina about any work being done to the units during the PMP projects after this letter? MR. COTTINGHAM: Object to the form. THE WITNESS: I don’t know. I really don't. Q. Do you know whether Ying Pong Cheng ever did a PSD evaluation when he went on inspections? MR. COTTINGHAM: Object to the form. THE WITNESS: I am sorry. MR. COTTINGHAM: - That’s okay, go ahead. THE WITNESS: I don’t know. You asked if we did one during an inspection? Q. Uh-hum. A. Like I said, PSD is too complicated to sit down and do that during an inspection. You have to sit down and do a lot of calculations and that sort of stuff and look at a lot of information to make the determination on PSD. That’s not something that we would do in general during an inspection, just too complicated. MS. BEHLES: I have no further questions. 351 RE-EXAMINATION (41) BY MR. COTTINGHAM: Q. Mr. Landis, if you saw something during an inspection which you thought might trigger PSD, you would then investigate that further outside the inspection period but you would go back to your office and do other things to investigate that further? A. Well, even during an inspection I don’t know that just — what we generally look for is stuff that’s not in the permit; and if it is not in the permit, we ask questions about it and we investigate further. And it is really diffi- cult to say when you go out and do an inspection that might be a PSD probiem. You say, well, that’s unusual and different, but you can’t say during the inspection whether PSD applies or not; and you would have to go back and gather more information to make the determination. Just can’t do that. Q. And that was my point. If you see something that raises a question about whether — A. You do further investigation, that’s correct. Yes, sir. Q. And if you wanted to, with the Duke Energy facilities in particular, if you wanted to find out informa- tion like the cost, frequency, nature, extent and purpose of work that you saw going on, there were documents that you could get from Duke Energy and people you could talk {42] to at Duke Energy who would give you that informa- tion, correct? MS. BEHLES: Object to form. Q. If that’s what you wanted to find out? 352 MS. BEHLES: Objection. THE WITNESS: Yes. My experience has been if we need more information, we ask for it. And most compa- nies are generally forthcoming in giving us the informa- tion we need so we can make a proper determination. And we always — if we don’t get enough information the first time, we keep asking until we get the right amount of information to make that determination. We don’t want to do a PSD applicability determination without all the information. You got to have all the information to be able to do it right. Q. That’s right. Whenever you asked for information from Duke Energy for purpose, they have always been forthcoming and given it to you? A. Yes, sir, they have. MS. BEHLES: I was going to object to form. THE WITNESS: But yes, they have. MR. COTTINGHAM: That’s all the questions I have. 353 EXHIBIT 142 IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF NORTH CAROLINA Civil Action No. 1:00 CV 1262 UNITED STATES OF AMERICA, Plaintiff, v. ENVIRONMENTAL DEFENSE, NORTH CAROLINA SIERRA CLUB, NORTH CAROLINA PUBLIC INTEREST RESEARCH GROUP Plaintiff-Intervenors v. DUKE ENERGY CORPORATION Defendant. A DEPOSITION OF THOMAS McMANUS (Taken on behalf of the Defendant) Raleigh, North Carolina December 11, 2002 * x * [7] Q. So you've been in Air Quality since 91 or 92? A. Yes, sir, somewhere in that neighborhood. Q. Have you been conducting inspections during that entire time you’ve been in Air Quality? A. Yes, sir. 354 Q. And that includes compliance inspections that you've conducted at the Duke facilities at the Allen, Buck, Marshal and Riverbend? A. Yes, sir, it does. Q. I’m going to ask you about those inspections in a minute, but first let’s talk more generally and just focusing on those Duke Power plants. Do you get to know the Duke employees in the course of doing those inspections? A. Yes, sir. Q. And get to know people who supervise the em- ployees [8] at the plants? A. Yes, sir. Q. Tell us just in your own words what appears to you to be the attitude of the Duke employees towards complying with environmental rules and regulations. A. It’s been my experience that the environmental coordinators who are located at the site who is responsible for all environmental programs at each plant as well as their supervisor and also their support group have been very open and forthcoming and not only accommodating our . spections but providing answers or information that we had regarding any operations or regarding to air permit at that facility. Q. Have they always seemed seriously interested in understanding what they had to do to comply with the law? A. Yes, sir. MS. BEHLES: Objection to form. 355 Q. And seriously interested in trying to comply? MS. BEHLES: Objection to form. THE WITNESS: Yes. Q. Have you had occasions when you had to ask them for more information about something or try to get more documents or just more information orally from them? A. Yes, sir. Q. Have they always provided you whatever docu- ments and information you asked for? {9} A. Yes, sir. Q. Let me ask you something more specific. When you’ve seen work being performed at Duke facilities and let’s talk about work that’s maintenance, repair or re- placement work, if you wanted more information about the nature or extent or purpose or frequency or cost of that work, is that something that would be available to you from Duke Energy that you could get? MS. BEHLES: Objection to form. THE WITNESS: Yes, sir. Q. I’m going to show you what we marked as Exhibit 909, Mr. McManus. I want you to look at that for a minute and see if those appear to be inspection reports that you signed in connection with inspections at the Duke Power Allen plant starting in 1994 and going through April 19, 2000? A. I’ve had this cold a while. These appear to be copies of the inspections and reports that I prepared. 356 Q. Let me ask you to just look at one first that’s dated July 14, 1995. I think i [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0237%3A10. Public record. Not legal advice.