NEW SOURCE REVIEW FOR STATIONARY SOURCES OF AIR POLLUTION

Committee on Changes in New Source Review Programs for Stationary Sources of Air Pollutants

Board on Environmental Studies and Toxicology

Division on Earth and Life Studies

NATIONAL RESEARCH COUNCIL OF THE NATIONAL ACADEMIES

THE NATIONAL ACADEMIES PRESS

Washington, D.C.
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New Source Review for Stationary Sources of Air Pollution NEW SOURCE REVIEW FOR STATIONARY SOURCES OF AIR POLLUTION Committee on Changes in New Source Review Programs for Stationary Sources of Air Pollutants Board on Environmental Studies and Toxicology Division on Earth and Life Studies NATIONAL RESEARCH COUNCIL OF THE NATIONAL ACADEMIES THE NATIONAL ACADEMIES PRESS Washington, D.C. www.nap.edu

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New Source Review for Stationary Sources of Air Pollution THE NATIONAL ACADEMIES PRESS 500 Fifth Street, NW Washington, DC 20001 NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance. This project was supported by Cooperative Agreement No. XA-83152301 between the National Academy of Sciences and U.S. Environmental Protection Agency. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the organizations or agencies that provided support for this project. Library of Congress Control Number 2006934961 International Standard Book Number-10: 0-309-10277-4 (Book) International Standard Book Number-13: 978-0-309-10277-3 (Book) International Standard Book Number-10: 0-309-66333-4 (PDF) International Standard Book Number-13: 978-0-309-66333-5 (PDF) Additional copies of this report are available from The National Academies Press 500 Fifth Street, NW Box 285 Washington, DC 20055 800-624-6242 202-334-3313 (in the Washington metropolitan area) http://www.nap.edu Copyright 2006 by the National Academy of Sciences. All rights reserved. Printed in the United States of America

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New Source Review for Stationary Sources of Air Pollution THE NATIONAL ACADEMIES Advisers to the Nation on Science, Engineering, and Medicine The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Wm. A. Wulf is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. Wm. A. Wulf are chair and vice chair, respectively, of the National Research Council. www.national-academies.org

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New Source Review for Stationary Sources of Air Pollution COMMITTEE ON CHANGES IN NEW SOURCE REVIEW PROGRAMS FOR STATIONARY SOURCES OF AIR POLLUTANTS Members CHARLES F. STEVENS (Chair), Salk Institute for Biological Studies, La Jolla, CA JEAN M. ANDINO, University of Florida, Gainesville LYLE R. CHINKIN, Sonoma Technology, Inc., Petaluma, CA HEREK L. CLACK, Illinois Institute of Technology, Chicago JOHN C. CRITTENDEN, Arizona State University, Tempe H. CHRISTOPHER FREY, North Carolina State University, Raleigh WAYNE B. GRAY, Clark University, Worcester, MA BENJAMIN F. HOBBS, Johns Hopkins University, Baltimore, MD JONATHAN I. LEVY, Harvard University, Boston, MA THOMAS A. LOUIS, Johns Hopkins University, Baltimore, MD JOE L. MAUDERLY, Lovelace Respiratory Research Institute, Albuquerque, NM CRAIG N. OREN, Rutgers University, Camden, NJ KAREN L. PALMER, Resources for the Future, Washington, DC LYNN M. RUSSELL, University of California at San Diego, La Jolla MITCHELL J. SMALL, Carnegie Mellon University, Pittsburgh, PA IRA B. TAGER, University of California, Berkeley JOHN G. WATSON, Desert Research Institute, Reno, NV Staff RAYMOND A. WASSEL, Project Director NORMAN GROSSBLATT, Editor MIRSADA KARALIC-LONCAREVIC, Research Associate LEAH PROBST, Research Associate JOHN H. BROWN, JR., Program Associate ALEXANDRA STUPPLE, Senior Editorial Assistant SAMMY BARDLEY, Librarian Sponsor U.S. ENVIRONMENTAL PROTECTION AGENCY

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New Source Review for Stationary Sources of Air Pollution BOARD ON ENVIRONMENTAL STUDIES AND TOXICOLOGY1 Members JONATHAN M. SAMET (Chair), Johns Hopkins University, Baltimore, MD RAMÓN ALVAREZ, Environmental Defense, Austin, TX JOHN M. BALBUS, Environmental Defense, Washington, DC THOMAS BURKE, Johns Hopkins University, Baltimore, MD DALLAS BURTRAW, Resources for the Future, Washington, DC JAMES S. BUS, Dow Chemical Company, Midland, MI COSTEL D. DENSON, University of Delaware, Newark E. DONALD ELLIOTT, Willkie Farr & Gallagher LLP, Washington, DC J. PAUL GILMAN, Oak Ridge National Laboratory, Oak Ridge, TN SHERRI W. GOODMAN, Center for Naval Analyses, Alexandria, VA JUDITH A. GRAHAM, American Chemistry Council, Arlington, VA DANIEL S. GREENBAUM, Health Effects Institute, Cambridge, MA WILLIAM P. HORN, Birch, Horton, Bittner and Cherot, Washington, DC ROBERT HUGGETT, Michigan State University, East Lansing JAMES H. JOHNSON JR., Howard University, Washington, DC JUDITH L. MEYER, University of Georgia, Athens PATRICK Y. O’BRIEN, ChevronTexaco Energy Technology Company, Richmond, CA DOROTHY E. PATTON, International Life Sciences Institute, Washington, DC STEWARD T.A. PICKETT, Institute of Ecosystem Studies, Millbrook, NY DANNY D. REIBLE, University of Texas, Austin JOSEPH V. RODRICKS, ENVIRON International Corporation, Arlington, VA ARMISTEAD G. RUSSELL, Georgia Institute of Technology, Atlanta ROBERT F. SAWYER, University of California, Berkeley LISA SPEER, Natural Resources Defense Council, New York, NY KIMBERLY M. THOMPSON, Massachusetts Institute of Technology, Cambridge MONICA G. TURNER, University of Wisconsin, Madison MARK J. UTELL, University of Rochester Medical Center, Rochester, NY CHRIS G. WHIPPLE, ENVIRON International Corporation, Emeryville, CA LAUREN ZEISE, California Environmental Protection Agency, Oakland Senior Staff JAMES J. REISA, Director DAVID J. POLICANSKY, Scholar 1 This study was planned, overseen, and supported by the Board on Environmental Studies and Toxicology.

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New Source Review for Stationary Sources of Air Pollution RAYMOND A. WASSEL, Senior Program Officer for Environmental Sciences and Engineering KULBIR BAKSHI, Senior Program Officer for Toxicology EILEEN N. ABT, Senior Program Officer for Risk Analysis KARL GUSTAVSON, Senior Program Officer K. JOHN HOLMES, Senior Program Officer ELLEN K. MANTUS, Senior Program Officer SUSAN N.J. MARTEL, Senior Program Officer SUZANNE VAN DRUNICK, Senior Program Officer RUTH E. CROSSGROVE, Senior Editor

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New Source Review for Stationary Sources of Air Pollution OTHER REPORTS OF THE BOARD ON ENVIRONMENTAL STUDIES AND TOXICOLOGY Assessing the Human Health Risks of Trichloroethylene: Key Scientific Issues (2006) Human Biomonitoring for Environmental Chemicals (2006) Health Risks from Dioxin and Related Compounds: Evaluation of the EPA Reassessment (2006) Fluoride in Drinking Water: A Scientific Review of EPA’s Standards (2006) State and Federal Standards for Mobile-Source Emissions (2006) Superfund and Mining Megasites—Lessons from the Coeur d’Alene River Basin (2005) Health Implications of Perchlorate Ingestion (2005) Air Quality Management in the United States (2004) Endangered and Threatened Species of the Platte River (2004) Atlantic Salmon in Maine (2004) Endangered and Threatened Fishes in the Klamath River Basin (2004) Cumulative Environmental Effects of Alaska North Slope Oil and Gas Development (2003) Estimating the Public Health Benefits of Proposed Air Pollution Regulations (2002) Biosolids Applied to Land: Advancing Standards and Practices (2002) The Airliner Cabin Environment and Health of Passengers and Crew (2002) Arsenic in Drinking Water: 2001 Update (2001) Evaluating Vehicle Emissions Inspection and Maintenance Programs (2001) Compensating for Wetland Losses Under the Clean Water Act (2001) A Risk-Management Strategy for PCB-Contaminated Sediments (2001) Acute Exposure Guideline Levels for Selected Airborne Chemicals (4 volumes, 2000-2004) Toxicological Effects of Methylmercury (2000) Strengthening Science at the U.S. Environmental Protection Agency (2000) Scientific Frontiers in Developmental Toxicology and Risk Assessment (2000) Ecological Indicators for the Nation (2000) Waste Incineration and Public Health (1999) Hormonally Active Agents in the Environment (1999) Research Priorities for Airborne Particulate Matter (4 volumes, 1998-2004) The National Research Council’s Committee on Toxicology: The First 50 Years (1997) Carcinogens and Anticarcinogens in the Human Diet (1996)

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New Source Review for Stationary Sources of Air Pollution Upstream: Salmon and Society in the Pacific Northwest (1996) Science and the Endangered Species Act (1995) Wetlands: Characteristics and Boundaries (1995) Biologic Markers (5 volumes, 1989-1995) Review of EPA’s Environmental Monitoring and Assessment Program (3 volumes, 1994-1995) Science and Judgment in Risk Assessment (1994) Pesticides in the Diets of Infants and Children (1993) Dolphins and the Tuna Industry (1992) Science and the National Parks (1992) Human Exposure Assessment for Airborne Pollutants (1991) Rethinking the Ozone Problem in Urban and Regional Air Pollution (1991) Decline of the Sea Turtles (1990) Copies of these reports may be ordered from the National Academies Press (800) 624-6242 or (202) 334-3313 www.nap.edu

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New Source Review for Stationary Sources of Air Pollution Preface The United States Congress asked the U.S. Environmental Protection Agency (EPA) to arrange for an independent study by the National Research Council (NRC) to evaluate air quality, public health, and other impacts of EPA’s final rules of December 31, 2002, and October 27, 2003, relating to the New Source Review (NSR) programs that are part of the Clean Air Act. In response, the National Research Council established the Committee on Changes in New Source Review Programs for Stationary Sources of Air Pollutants. Biographical information on the committee members is presented in Appendix A. In response to Congress, the committee produced an interim report in January 2005 and is providing its final report at this time. In the course of preparing this report, the committee met six times. At three of the meetings, which were held in Washington, DC, officials from local, state, and federal agencies and representatives from the private sector and nongovernmental organizations, including regulated industries and advocacy groups, were invited to meet with the committee and present their views on changes to the NSR programs. Interested members of the public at large were also given an opportunity to speak on these occasions. The committee received oral and written presentations from the following individuals: William Becker, State and Territorial Air Pollution Program Administrators (STAPPA) and the Association of Local Air Pollution Control Officials (ALAPCO); Robert Bessette, Council of Industrial Boiler Owners; F. William Brownell, Hunton and Williams; Norbert Dee, National Petrochemical & Refiners Association; John Dege, DuPont Company; Peggy Duxbury, Calpine; Jerry Golden, while at the Tennessee Valley Authority (now a private consultant); John Bachmann, Kevin Culligan,

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New Source Review for Stationary Sources of Air Pollution Acknowledgment of Review Participants This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the NRC’s Report Review Committee. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process. We wish to thank the following individuals for their review of this report: Andrew Bodnarik, New Hamsphire Department of Environmental Services; Linda Bui, Brandeis University; Wayne Davis, University of Tennessee, Knoxville; Daniel Farber, University of California, Berkeley; Arlene Fiore, Princeton University; Jerry Golden, private consultant; Jay Hofmann, Trinity Consultants, Inc.; Nino Kuenzli, University of Southern California; Jana Milford, Environmental Defense and University of Colorado, Boulder; Frederic Murphy, Temple University; James Schauer, University of Wisconsin, Madison; Paul Sotkiewicz, University of Florida; Sarah Wade, AJW, Inc.; Tammy Wyles, Georgia-Pacific Corporation; and Stephan Zervas, Michigan Department of Environmental Quality. Although the reviewers listed above have provided many constructive comments and suggestions, they were not asked to endorse the conclusions or recommendations, nor did they see the final draft of the report before its release. The review of this report was overseen by Richard Conway, Union Carbide Corporation (retired), and Spyros Pandis, Carnegie Mellon Univer-

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New Source Review for Stationary Sources of Air Pollution sity. Appointed by the NRC, they were responsible for making certain that an independent examination of this report was carried out in accordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of this report rests entirely with the authoring committee and the institution.

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New Source Review for Stationary Sources of Air Pollution Contents     SUMMARY   1 1   INTRODUCTION   15      Charge to the Committee,   16 2   REGULATORY OVERVIEW   20      Introduction,   20      New Source Review Programs,   22      New Source Review in the Framework of the Clean Air Act,   29      New Source Review Reform Project,   39      Closing Comments,   56 3   EMISSION SOURCES SUBJECT TO NEW SOURCE REVIEW AND TECHNOLOGY OPTIONS   57      Introduction,   57      Overview of New Source Review Permits,   58      State Permitting Programs—Status of New Source Review Implementation,   75      Process Technologies of Emission Sources: Process Description, Repairs and Replacement, and Pollution-Prevention and -Control Approaches,   77      Technological Change,   102      Summary,   107

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New Source Review for Stationary Sources of Air Pollution            4   ANALYTIC FRAMEWORK FOR ASSESSING EFFECTS OF NEW SOURCE REVIEW RULE CHANGES   110      Introduction,   110      Econometric Methods,   116      Process-Engineering Models,   123      Assessment of Sectorwide Response,   126      A Retrospective Statistical Analysis of Relative Emission Changes,   132 5   ECONOMETRIC ANALYSIS   140      Introduction,   140      Identifying Variations in Policy,   141      Uncertainty and Statistical Power,   154      Conclusions and Recommendations,   156 6   ASSESSING POTENTIAL EFFECTS ON THE ELECTRICITY-GENERATING SECTOR   158      Introduction,   158      Definition of Scenarios,   160      Results,   170      Model Assumptions and Limitations,   196      Conclusions,   203 7   EMISSIONS, AIR QUALITY, AND HUMAN HEALTH   209      Introduction,   209      Review of Past Findings,   210      Emissions,   211      Estimating Effects of Emissions on Ambient Concentrations,   228      Ambient Concentrations,   232      Health Effects,   236      Conclusions,   247 8   OVERALL CONCLUSIONS AND RECOMMENDATIONS   249      Potential Effects of the New Source Review Rule Changes,   252      Long-Term Collection of Data and Improved Modeling Techniques Needed to Carry Out the Recommended Approaches,   259     REFERENCES   262     TERMS AND ABBREVIATIONS   276

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New Source Review for Stationary Sources of Air Pollution               APPENDIXES     A   BIOGRAPHICAL INFORMATION ON COMMITTEE   279 B   CONGRESSIONAL MANDATE   285 C   STATEMENT OF TASK   286 D   PERMIT AND PERMITTED EMISSION DATA   288 E   REPAIR AND REPLACEMENT ACTIVITIES IN SELECTED INDUSTRIES   294 FIGURES 3-1   Simplified flowsheet for generic pulverized coal-fired electricity-generating power plant with postcombustion controls for NOx, PM, and SO2,   79 3-2   Simplified schematic of typical natural-gas-fired gas turbine combined-cycle system,   82 3-3   Simplified process flow diagram for typical petroleum-refinery operation,   93 3-4   Schematic of major processes in Kraft mill,   98 4-1   Relative emission change (REC) for carbon monoxide (CO) for the period 1987-1989,   135 4-2   Relative emission change (REC) for nitrogen oxide (NOx) for the period 1987-1989,   135 4-3   Relative emission change (REC) for particulate matter (PM) for the period 1987-1989,   136 4-4   Relative emission change (REC) for sulfur dioxide (SO2) for the period 1987-1989,   136 4-5   Relative emission change (REC) for carbon monoxide (CO) for the period 1996-1998,   137 4-6   Relative emission change (REC) for nitrogen oxides (NOx) for the period 1996-1998,   137 4-7   Relative emission change (REC) for particulate matter with an aerodynamic diameter less than 10 µm (PM10) for the period 1996-1998,   138 4-8   Relative emission change (REC) for sulfur dioxide (SO2) for the period 1996-1998,   138 6-1   National SO2 and NOx emissions under R/R/R and base case scenarios, under Title IV and SIP caps (no CAIR-CAMR),   172 6-2   National SO2 and NOx emissions under R/R/R and base case scenarios, under CAIR-CAMR emissions caps,   173 6-3   Difference in national SO2 and NOx emissions under title IV NOx SIP call emission caps (comparison of prerevision NSR RMRR with the ERP base case in Figure 6-1),   174

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New Source Review for Stationary Sources of Air Pollution     6-4   Difference in national SO2 and NOx emissions under CAIR-CAMR emission caps (comparison of prerevision NSR RMRR with the ERP base case in Figure 6-2),   175 6-5   Cumulative FGD retrofits since 2007 for base case and prerevision NSR RMRR solutions under Title IV-NOx SIP call and CAIR-CAMR-BART,   177 7-1   Fraction of total 1999 emissions by state from emitters that are potentially subject to NSR,   214 7-2   Nationwide 1999 top 10 point-source emission categories for (a) VOC, (b) PM2.5, (c) NOx, and (d) SO2,   216 7-3   1999 emissions exceeding 100 tons/year by source category in each state for (a) VOCs, (b) PM2.5, (c) NOx, and (d) SO2,   219 7-4   2002 emissions from utility-scale coal-fired generators that operated in 2002 for (a) SO2 and (b) NOx,   227 7-5   Criteria-pollutant emission trends for point sources,   228 7-6   Chemical links between O3 and PM formation,   229 7-7   (a) O3 nonattainment areas for 2004 based on the 8-hour NAAQS, (b) PM2.5 nonattainment areas for annual average PM2.5 NAAQS,   234 7-8   2002 annual average PM2.5 chemical composition at (a) urban sites in EPA’s Speciation Trends Network (STN) and (b) EPA’s Interagency Monitoring of Protected Visual Environments (IMPROVE) network,   235 TABLES 2-1   National Ambient Air Quality Standards,   21 2-2   Pending NSR Enforcement Actions Against Coal-Fired Power Plants (as of August 2005) by Date of Filing,   42 2-3   Summary of Expenditures and Emission Reductions Resulting from Settled NSR Enforcement Actions,   44 3-1   NSR Permit Activity Pollutant, 1997-2002, Manufacturing vs Electricity Generation,   62 3-2   NSR Permit Activity by Pollutant, 1997-2002, Selected Manufacturing Industries,   68 3-3   Typical Uncontrolled NOx Emissions by Furnace Type for Coal-Fired Electricity-Generating Plants in the United States,   86 3-4   Example of Average Cost-Effectiveness Estimates for Electricity-Generating Boiler NOx Control for Generic Tangentially Fired Furnace: Comparison of Average Cost Effectiveness for Different Sizes and Capacity Factors,   87 3-5   National Emissions Inventory of Typical Petroleum-Refining Processes, tons per year,   92

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New Source Review for Stationary Sources of Air Pollution     3-6   Typical Air-Pollutant Compositions and Emission-Control Equipment Used in Each Subprocess in Kraft Mills,   100 4-1   Possible Indicators for Assessing Outcomes of Interest,   111 4-2   Key Uncertainties in Assessing Effects of NSR Rules Changes,   113 4-3   Statistical Summary of RECi, j(t) Values,   139 5-1   Timing of NSR Rule Changes,   142 5-2   Legal Challenges to 2002 NSR Rule Changes by States,   145 5-3   Permit Data by State (1997-2002),   148 5-4   Types of Outcome Data for Manufacturing Sector,   151 6-1   Installed Emission Controls, U.S. Coal-Fired Generation Plants, 2004,   160 6-2   Summary of NSR Cases Simulated and Assumptions,   162 6-3   Year of Installation of Emission-Control Retrofits or Repowering Committed to as a Result of Existing EPA NSR Settlements,   164 6-4   Combinations of NSR ERP Cases and “Other” Air Regulations Simulated,   166 6-5   Summary of SO2 and NOx Emission Effects of Prerevision NSR RMRR Relative to ERP (Base Case) Under Base Case Economic and Technology Assumptions (Rounded to Nearest Percent),   171 6-6a   Detailed Results of IPM Simulations for Year 2007,   178 6-6b   Detailed Results of IPM Simulations for Year 2010,   180 6-6c   Detailed Results of IPM Simulations for Year 2015,   182 6-6d   Detailed Results of IPM Simulations for Year 2020,   184 6-7   Sensitivity Analyses of R/R/R Case: Lower Capital Costs for Renewables and IGCC and Lower Natural Gas Prices,   190 6-8   Cost Effectiveness of Emission Reductions for Various Cases Compared to Base Cases,   192 6-9   Comparison of R/R/R “High” Solution (prerevision NSR RMRR) with Minimal-Cost Solution That Achieves Same Emissions,   195 6-10   Limitations and Key Assumptions of the Integrated Planning Model,   198 7-1a   2002 NOx Emissions and Share of Generation of Coal-Fired Capacity by Vintage,   224 7-1b   2002 SO2 Emissions and Performance of Coal-Fired Capacity by Vintage,   224 7-1c   2002 NOx Emissions and Share of Generation of Coal-Fired Capacity by NSPS,   224 7-1d   2002 SO2 Emissions and Performance of Coal-Fired Capacity by NSPS,   225 7-2   Urban Air Toxics,   244

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New Source Review for Stationary Sources of Air Pollution     D-1   Summary of Estimated Number of Permits and Permitted Emissions Under New Source Review for Greenfield Facilities, New Facilities at Existing Locations, and Modifications, During 1997-1999,   289 E-1   Summary of Common Repair and Replacement Activities, Frequencies, and Cost for Coal-Fired Electricity-Generating Facilities,   296 E-2   Projected Repair and Replacement Frequencies and Relative Costs in Petroleum-Refinery Industry,   302 E-3   Pulp and Paper Industry: Repair and Replacement Activities,   306 BOXES 2-1   Section 160 of the Clean Air Act,   24 2-2   Major Requirements for Obtaining a PSD Permit,   25 2-3   EPA Significance Levels of Emission of Criteria Pollutants,   25 2-4   PSD Increments,   27 2-5   Part D NSR Permit Requirements,   29 3-1   Example of an Emerging Technology: IGCC,   108

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New Source Review for Stationary Sources of Air Pollution     NEW SOURCE REVIEW FOR STATIONARY SOURCES OF AIR POLLUTION

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