![](media/image1.png){width="0.84375in" height="0.8548611111111111in"}

Implementation of the New Source Review

(NSR) Program for Particulate Matter Less

Than 2.5 Micrometers in Diameter (PM~2.5~)

Response to Comments

Implementation of the New Source Review (NSR) Program for Particulate
Matter Less Than 2.5 Micrometers in Diameter (PM~2.5~)

Response to Comments

New Source Review Group

Air Quality Policy Division

Office of Air Quality Policy and Standards

U. S. Environmental Protection Agency

Research Triangle Park, NC 27711

March 2008

TABLE OF CONTENTS

[**LIST OF ACRONYMS AND ABBREVIATIONS
iii**](#__RefHeading___Toc198031117)

[LIST OF UNITS iv](#list-of-units)

[1 Introduction 1](#introduction)

[1.1 Background 1](#background)

[1.2 The Commenters 1](#the-commenters)

[1.3 Organization of This Document 1](#organization-of-this-document)

[2 Comments on the Regulation of Precursors to PM~2.5~ under Major NSR
6](#comments-on-the-regulation-of-precursors-to-pm2.5-under-major-nsr)

[2.1 General Comments on the Regulation of Precursors
6](#general-comments-on-the-regulation-of-precursors)

[2.2 Comments on EPA's Authority to Regulate PM~2.5~ Precursors
7](#comments-on-epas-authority-to-regulate-pm2.5-precursors)

[2.3 Comments Specific to Regulating SO~2~ as a Precursor
12](#comments-specific-to-regulating-so2-as-a-precursor)

[2.4 Comments Specific to Regulating NO~x~ as a Presumed-in Precursor
13](#comments-specific-to-regulating-nox-as-a-presumed-in-precursor)

[2.5 Comments Specific to Regulating VOC as a Presumed-out Precursor
16](#comments-specific-to-regulating-voc-as-a-presumed-out-precursor)

[2.6 Comments Specific to Regulating Ammonia as a Presumed-out Precursor
18](#comments-specific-to-regulating-ammonia-as-a-presumed-out-precursor)

[2.7 Other Comments on Precursors 21](#other-comments-on-precursors)

[3 Comments on Major Source Thresholds for Direct PM~2.5~ and Precursor
Emissions under Major NSR
22](#comments-on-major-source-thresholds-for-direct-pm2.5-and-precursor-emissions-under-major-nsr)

[3.1 Comments on EPA's Authority to Deviate from the Statutory
Definitions of Major Source
22](#comments-on-epas-authority-to-deviate-from-the-statutory-definitions-of-major-source)

[3.1.1 Definition of Major Source for the PSD Program
22](#definition-of-major-source-for-the-psd-program)

[3.1.2 Definition of Major Source for the NA NSR Program
23](#definition-of-major-source-for-the-na-nsr-program)

[3.2 Comments on the Appropriate Major Source Thresholds for Direct
PM~2.5~ Emissions
27](#comments-on-the-appropriate-major-source-thresholds-for-direct-pm2.5-emissions)

[3.2.1 Prevention of Significant Deterioration Major Source Threshold
27](#prevention-of-significant-deterioration-major-source-threshold)

[3.2.2 Nonattainment NSR Major Source Threshold
28](#nonattainment-nsr-major-source-threshold)

[3.2.3 Comments on Relationship of the NSR Major Source Threshold to
RACT Thresholds
34](#comments-on-relationship-of-the-nsr-major-source-threshold-to-ract-thresholds)

[3.3 Comments on the Appropriate Major Source Thresholds for Precursor
Emissions
35](#comments-on-the-appropriate-major-source-thresholds-for-precursor-emissions)

[3.4 Comments on the Supplementary Role of Minor NSR
35](#comments-on-the-supplementary-role-of-minor-nsr)

[3.5 Comments on Establishing Independent Thresholds for LAER and
Offsets
37](#comments-on-establishing-independent-thresholds-for-laer-and-offsets)

[3.6 Other Comments on Major Source Thresholds
38](#other-comments-on-major-source-thresholds)

[4 Comments on Significant Emissions Rates (SERs) for Direct PM~2.5~ and
Precursor Emissions
39](#comments-on-significant-emissions-rates-sers-for-direct-pm2.5-and-precursor-emissions)

[4.1 Comments on the SER for Direct PM~2.5~ Emissions
39](#comments-on-the-ser-for-direct-pm2.5-emissions)

[4.2 Comments on the SERs for PM~2.5~ Precursors (SO~2~, NO~x~, and VOC)
44](#comments-on-the-sers-for-pm2.5-precursors-so2-nox-and-voc)

[4.3 Comments on the SER for Ammonia as a PM~2.5~ Precursor
47](#comments-on-the-ser-for-ammonia-as-a-pm2.5-precursor)

[5 Comments on Including the Condensable Fraction of Direct PM~2.5~
Emissions for Purposes of Major NSR
48](#comments-on-including-the-condensable-fraction-of-direct-pm2.5-emissions-for-purposes-of-major-nsr)

[6 Comments on PM~2.5~ Increments, Significant Impact Levels (SILs), and
Significant Monitoring Concentration (SMC)
53](#comments-on-pm2.5-increments-significant-impact-levels-sils-and-significant-monitoring-concentration-smc)

[7 Comments on PSD Pre-Construction Monitoring (PCM) Requirements for
PM~2.5~ 54](#__RefHeading___Toc198031149)

[7.1 Option 1 -- Require PCM but Allow Use of Existing Data on a
Case-By-Case Basis
54](#option-1-require-pcm-but-allow-use-of-existing-data-on-a-case-by-case-basis)

[7.2 Option 2 -- Exempt All Sources from PCM
56](#option-2-exempt-all-sources-from-pcm)

[7.3 Option 3 -- Use an SMC to Exempt Sources from PMC
58](#option-3-use-an-smc-to-exempt-sources-from-pmc)

[7.4 Option 4 -- Use Existing PM~10~ Data
59](#option-4-use-existing-pm10-data)

[7.5 Option 5 -- Exempt Sources from PCM if No SMC Is Established
60](#option-5-exempt-sources-from-pcm-if-no-smc-is-established)

[7.6 Other Comments on PCM 61](#other-comments-on-pcm)

[8 Comments on Offset Requirements for NA NSR
62](#comments-on-offset-requirements-for-na-nsr)

[8.1 Comments on the Proposed 1:1 Offset Ratio for PM~2.5~ Direct
Emissions
62](#comments-on-the-proposed-11-offset-ratio-for-pm2.5-direct-emissions)

[8.2 Comments on Which Precursors Should Be Subject to the Offset
Requirements
65](#comments-on-which-precursors-should-be-subject-to-the-offset-requirements)

[8.3 Comments on the Offset Ratio for Precursors
65](#comments-on-the-offset-ratio-for-precursors)

[8.4 Comments on Interpollutant and Interprecursor Trading for Offsets
67](#comments-on-interpollutant-and-interprecursor-trading-for-offsets)

[8.5 Other Comments on Offsets 74](#other-comments-on-offsets)

[9 Comments on Transition Issues 76](#comments-on-transition-issues)

[9.1 Comments on PSD Transition Issues
76](#comments-on-psd-transition-issues)

[9.1.1 Option 1 -- Continue Implementing the 1997 Guidance to Use the
PM~10~ Program as a Surrogate for PM~2.5~
76](#option-1-continue-implementing-the-1997-guidance-to-use-the-pm10-program-as-a-surrogate-for-pm2.5)

[9.1.2 Option 2 -- Update the 1997 NSR Guidance to Include Proposed
Provisions of this Rule or Amend 40 CFR Part 51, Appendix S to Indicate
that 40 CFR 52.21 Would Apply
78](#option-2-update-the-1997-nsr-guidance-to-include-proposed-provisions-of-this-rule-or-amend-40-cfr-part-51-appendix-s-to-indicate-that-40-cfr-52.21-would-apply)

[9.1.3 Option 3 -- State Requests Delegation of 40 CFR 52.21
80](#option-3-state-requests-delegation-of-40-cfr-52.21)

[9.1.4 Other PSD Transition Comments 81](#other-psd-transition-comments)

[9.2 Comments on NA NSR Transition Issues
83](#comments-on-na-nsr-transition-issues)

[9.3 Comments on NSR Transition for PM~2.5~ Precursors
85](#comments-on-nsr-transition-for-pm2.5-precursors)

[9.4 Other Comments on NSR Transition
87](#other-comments-on-nsr-transition)

[10 Comments on Minor NSR Programs for PM~2.5~
89](#comments-on-minor-nsr-programs-for-pm2.5)

[11 Other Comments on Major NSR for PM~2.5~
90](#other-comments-on-major-nsr-for-pm2.5)

  -----------------------------------------------------------------------------------------------
  []{#__RefHeading___Toc198031117   
  .anchor}**LIST OF ACRONYMS AND    
  ABBREVIATIONS**                   
  --------------------------------- -------------------------------------------------------------
  Act                               Clean Air Act (42 U.S.C. 7401 - 7671q)

  BACT                              Best Available Control Technology

  CAA                               Clean Air Act (42 U.S.C. 7401 - 7671q)

  CAIR                              Clean Air Interstate Rule

  CFR                               Code of Federal Regulations

  CMAQ                              Community Multi-Scale Air Quality

  CTM                               Conditional Test Method

  D.C. Cir.                         D.C. Circuit Court of Appeals

  ERC                               Emission Reduction Credit

  FR                                Federal Register

  LAER                              Lowest Achievable Emission Rate

  NAAQS                             National Ambient Air Quality Standards

  NACAA                             National Association of Clean Air Agencies

  NA NSR                            Nonattainment Major New Source Review

  NO~x~                             Nitrogen Oxides

  NSR                               New Source Review

  PCM                               Pre-Construction Monitoring

  PM                                Particulate Matter

  PM~10~                            Particulate Matter with an aerodynamic diameter less than or
                                    equal to a nominal 10 m

  PM~2.5~                           Particulate Matter with an aerodynamic diameter less than or
                                    equal to a nominal 2.5 m

  PSD                               Prevention of Significant Deterioration

  PTE                               Potential To Emit

  RACT                              Reasonably Available Control Technology

  RFP                               Reasonable Further Progress

  SER                               Significant Emissions Rate

  SIL                               Significant Impact Level

  SIP                               State Implementation Plan

  SMC                               Significant Monitoring Concentration

  SNCR                              Selective Non-Catalytic Reduction

  SO~2~                             Sulfur Dioxide

  SOA                               Secondary Organic Aerosol

  TSP                               Total Suspended Particulate

  U.S.C.                            United States Code

  VOC                               Volatile Organic Compound
  -----------------------------------------------------------------------------------------------

+--------+-------------------------------------------------------------+
| #      |                                                             |
| LIST O |                                                             |
| F UNIT |                                                             |
| S {#li |                                                             |
| st-of- |                                                             |
| units  |                                                             |
| .unnum |                                                             |
| bered} |                                                             |
+--------+-------------------------------------------------------------+
| tpy    | Tons per year                                               |
+--------+-------------------------------------------------------------+
| m     | Micrometer (one-millionth of a meter)                       |
+--------+-------------------------------------------------------------+
|       | Microgram per cubic meter                                   |
| g/m^3^ |                                                             |
+--------+-------------------------------------------------------------+

# Introduction 

## Background 

"Particulate matter" (PM) is the general term used to describe a mixture
of solid particles and liquid droplets found in air. The term "PM~2.5~"
describes "fine particles" that are less than or equal to 2.5
micrometers (m) in diameter.

In 1997, EPA (we) set National Ambient Air Quality Standards (NAAQS) for
PM~2.5~. After delays related to litigation over the NAAQS, we issued
the "Proposed Rule to Implement the Fine Particle National Ambient Air
Quality Standards" (70 FR 65984) on November 1, 2005. The proposal
package included a preamble section describing our proposal (and
proposed options) for revising the major New Source Review (NSR) program
to address PM~2.5~, as well as proposed revisions to the major NSR
rules.

After proposal, we decided to separate the elements of the rulemaking
related to major NSR from the rest of the PM~2.5~ implementation rule.
The non-NSR portions of the rulemaking were finalized on April 25, 2007
in the "Clean Air Fine Particle Implementation Rule" (72 FR 20586).

This document presents a summary of the public comments related to NSR
that we received on the November 1, 2005 proposal, along with our
responses to those comments. The document supports the "Final Rule for
Implementation of the New Source Review (NSR) Program for Particulate
Matter Less Than 2.5 Micrometers (PM~2.5~)." We refer to this rulemaking
as the "PM~2.5~ NSR Implementation Rule" in the remainder of this
document.

## The Commenters 

The public comment period ended on January 31, 2006, and we received a
total of 46 unique comments (i.e., not including duplicates) specific to
the NSR program revisions. The NSR commenters can be broken down by
general type as follows: 24 state/local regulatory agencies or
regulatory agency associations, 16 industry or industry group
commenters, 3 environmental advocacy groups, 2 Federal government
agencies, and 1 private citizen.  The commenters are listed in Table 1,
which appears at the end of this section. 

## Organization of This Document

After this introductory section, this document is divided into 10
additional sections that group the comments primarily by the major
topics addressed in the proposal preamble.  The sections address the
following topics:

> •     Section 2 -- PM~2.5 ~Precursors.
>
> •     Section 3 -- Major Source Thresholds.
>
> •     Section 4 -- Significant Emissions Rates (SERs).
>
> •     Section 5 -- Condensable Fraction.
>
> •     Section 6 -- PM~2.5~ Increments, Significant Impact Levels
> (SILs), and Significant Monitoring Concentration (SMC).
>
> •     Section 7 -- Prevention of Significant Deterioration (PSD)
> Pre-Construction Monitoring (PCM) Requirements.
>
> •     Section 8 -- Offset Requirements for Nonattainment Major NSR (NA
> NSR).
>
> •     Section 9 -- Transition Issues.
>
> •     Section 10 -- Minor NSR Programs for PM~2.5.~
>
> •     Section 11 -- Additional PM~2.5~ Comments.

+-------+--------------------------------------------------+-----------+
|       | **Table 1. List of Commenters**                  |           |
+=======+==================================================+===========+
| **D   | **COMMENT DESCRIPTION**                          | **TYPE OF |
| OCKET |                                                  | CO        |
| ID    |                                                  | MMENTER** |
| ^a,\  |                                                  |           |
|  b^** |                                                  |           |
+-------+--------------------------------------------------+-----------+
| 0062  | Comment submitted by S. Bear                     | Private   |
|       |                                                  | Citizen   |
+-------+--------------------------------------------------+-----------+
| 0068  | Comment submitted by Christine Shaver, Chief,    | Federal   |
|       | Air Resources Division, U.S. Department of the   | Agency    |
|       | Interior National Park Service                   |           |
+-------+--------------------------------------------------+-----------+
| 0074  | Comment and attachment submitted by John         | Industry  |
|       | McManus, Vice President of Environmental         |           |
|       | Services, American Electric Power Service        |           |
|       | Corporation                                      |           |
+-------+--------------------------------------------------+-----------+
| 0077  | Comment and attachment submitted by Ali          | St        |
|       | Mirzakhalili, P.E., Administrator, State of      | ate/Local |
|       | Delaware, Department of Natural Resources and    |           |
|       | Environmental Control - Air Quality Management   |           |
|       | Section                                          |           |
+-------+--------------------------------------------------+-----------+
| 0078  | Comment and attachment submitted by Ali          | St        |
|       | Mirzakhalili, Administrator, State of Delaware,  | ate/Local |
| (Dupl | Department of Natural Resources & Environmental  |           |
| icate | Control, Division of Air and Waste Management    |           |
| of    |                                                  |           |
| 0077) |                                                  |           |
+-------+--------------------------------------------------+-----------+
| 0079  | Comment and attachment submitted by J. David     | St        |
|       | Thornton, Minnesota Pollution Control Agency     | ate/Local |
+-------+--------------------------------------------------+-----------+
| 0080  | Comment and attachment submitted by Regional Air | St        |
|       | Pollution Control Agency                         | ate/Local |
+-------+--------------------------------------------------+-----------+
| 0081  | Comment and attachment submitted by Kathleen     | St        |
|       | McGinty, Secretary, Pennsylvania Department of   | ate/Local |
|       | Environmental Protection                         |           |
+-------+--------------------------------------------------+-----------+
| 0083  | Comment and attachment submitted by Terrance     | Industry  |
|       | Rucker, Assistant, Broadband Services, American  |           |
|       | Public Power Association (APPA)                  |           |
+-------+--------------------------------------------------+-----------+
| 0084  | Comment and attachment submitted by Anne R.      | St        |
|       | Gobin, Chief, Bureau of Air Management, the      | ate/Local |
|       | Connecticut Department of Environmental          |           |
|       | Protection (CTDEP)                               |           |
+-------+--------------------------------------------------+-----------+
| 0087  | Comment and attachment submitted by Steven E.    | St        |
|       | Chester, Director, Michigan Department of        | ate/Local |
|       | Environmental Quality (MDEQ)                     |           |
+-------+--------------------------------------------------+-----------+
| 0095  | Comment and attachment submitted by Timothy P.   | Industry  |
|       | Mallan Chairman, Air Subcommittee, Environment   |           |
|       | Committee, West Virginia Chamber of Commerce     |           |
+-------+--------------------------------------------------+-----------+
| 0096  | Comment and attachment submitted by The PM Group | Industry  |
+-------+--------------------------------------------------+-----------+
| 0100  | Comment and attachment submitted by Robert D.    | Industry  |
|       | Bessette, President, The Council of Industrial   |           |
|       | Boiler Owners (CIBO)                             |           |
+-------+--------------------------------------------------+-----------+
| 0103  | Comment and attachment submitted by Joanne M.    | St        |
|       | Alexandrovich, Vanderburgh County Ozone Officer, | ate/Local |
|       | Vanderburgh County Department of Health          |           |
+-------+--------------------------------------------------+-----------+
| 0105  | Comment and attachment submitted by Norbert Dee, | Industry  |
|       | Director, Environment & Safety, National         |           |
|       | Petrochemical & Refiners Association             |           |
+-------+--------------------------------------------------+-----------+
| 0106  | Comment and attachment submitted by Marily       | Envi      |
|       | Nixon, Senior Attorney, Southern Environmental   | ronmental |
|       | Law Center                                       |           |
+-------+--------------------------------------------------+-----------+
| 0107  | Comment and attachment submitted by Ted          | Industry  |
|       | Michaels, President, Integrated Waste Services   |           |
|       | Association                                      |           |
+-------+--------------------------------------------------+-----------+
| 0108  | Comment and attachment submitted by Jonathan     | Envi      |
|       | Lewis, Clean Air Task Force on behalf of         | ronmental |
| (Dupl | American Bottom Conservancy et.al                |           |
| icate |                                                  |           |
| of    |                                                  |           |
| 0154) |                                                  |           |
+-------+--------------------------------------------------+-----------+
| 0109  | Comment and attachment submitted by Leslie S.    | Industry  |
|       | Ritts, Counsel, National Environmental           |           |
|       | Development Association\'s Clean Air Project     |           |
|       | (NEDA/CAP)                                       |           |
+-------+--------------------------------------------------+-----------+
| 0111  | Comment and attachment submitted by Robert M.    | Industry  |
|       | Nolan, ExxonMobil                                |           |
+-------+--------------------------------------------------+-----------+
| 0113  | Comment and attachment submitted by Brent        | Envi      |
|       | Newell, Staff Attorney, Center on Race, Poverty, | ronmental |
|       | & the Environment on behalf of the Association   |           |
|       | of Irritated Residents (AIR)                     |           |
+-------+--------------------------------------------------+-----------+
| 0116  | Comment and attachment submitted by Richard      | St        |
|       | Sprott, State of Utah, Department of             | ate/Local |
|       | Environmental Quality, Division of Air Quality   |           |
+-------+--------------------------------------------------+-----------+
| 0117  | Comment and attachment submitted by Laurel L.    | St        |
|       | Kroack, Chief, Bureau of Air, Illinois           | ate/Local |
|       | Environmental Protection Agency                  |           |
+-------+--------------------------------------------------+-----------+
| 0118  | Comment and attachment submitted by Marc D.      | St        |
|       | Machlin, Attorney, Pepper Hamilton LLP, on       | ate/Local |
| (Dupl | behalf of Oakland County, Michigan               |           |
| icate |                                                  |           |
| of    |                                                  |           |
| 0159) |                                                  |           |
+-------+--------------------------------------------------+-----------+
| 0119  | Comment and attachment submitted by Douglas A.   | Industry  |
|       | McWilliams, Counsel, Squire Sanders & Dempsey    |           |
|       | LLP, on behalf of Ohio Steel Group               |           |
+-------+--------------------------------------------------+-----------+
| 0124  | Comment submitted by Tom Chapple, Director,      | St        |
|       | Alaska Department of Environmental Conservation  | ate/Local |
|       | (ADEC)                                           |           |
+-------+--------------------------------------------------+-----------+
| 0125  | Comment and attachment submitted by Leonard      | Industry  |
|       | Dupuis, Manager, Environmental Policy, Dominion  |           |
+-------+--------------------------------------------------+-----------+
| 0126  | Comment submitted by Mark Dopp. Senior Vice      | Industry  |
|       | President, Regulatory Affairs and General        |           |
|       | Counsel, American Meat Institute (AMI)           |           |
+-------+--------------------------------------------------+-----------+
| 0127  | Comment and attachment submitted by American     | Industry  |
|       | Petroleum Institute (API)                        |           |
+-------+--------------------------------------------------+-----------+
| 0131  | Comment attachment submitted by James D. Warner, | Industry  |
|       | Executive Director, Lancaster County Solid Waste | (publicly |
|       | Management (LCSWMA)                              | owned)    |
+-------+--------------------------------------------------+-----------+
| 0136  | Comment and attachment submitted by Eddie        | St        |
|       | Terrill, President, STAPPA and John A. Paul,     | ate/Local |
|       | President, ALAPCO                                |           |
+-------+--------------------------------------------------+-----------+
| 0137  | Comment and attachment submitted by Stuart A.    | St        |
|       | Clark, Air Quality Program, State of Washington  | ate/Local |
|       | Department of Ecology                            |           |
+-------+--------------------------------------------------+-----------+
| 0140  | Comment submitted by Amy J. Blankenbiller,       | Industry  |
|       | Washington Representative, American Foundry      |           |
|       | Society (AFS)                                    |           |
+-------+--------------------------------------------------+-----------+
| 0142  | Comment submitted by Lisa P. Jackson, Acting     | St        |
|       | Commissioner, State of New Jersey Department of  | ate/Local |
|       | Environmental Protection                         |           |
+-------+--------------------------------------------------+-----------+
| 0144  | Comment submitted by Barry R. Wallerstein,       | St        |
|       | Executive Officer, South Coast Air Quality       | ate/Local |
|       | Management District (SCAQMD)                     |           |
+-------+--------------------------------------------------+-----------+
| 0145  | Comment submitted by B. Keith Overcash, P.E.,    | St        |
|       | North Carolina Department of Environment and     | ate/Local |
|       | Natural Resources Division of Air Quality        |           |
+-------+--------------------------------------------------+-----------+
| 0147  | Comment submitted by Timothy P. Mallan,          | Industry  |
|       | Chairman, Air SubCommittee, Environment          |           |
| (Dupl | Committee, West Virginia chamber of Commerce     |           |
| icate |                                                  |           |
| of    |                                                  |           |
| 0095) |                                                  |           |
+-------+--------------------------------------------------+-----------+
| 0150  | Comment and attachment submitted by Kendl P.     | St        |
|       | Philbrick, Secretary, Maryland Department of the | ate/Local |
|       | Environment (MDE)                                |           |
+-------+--------------------------------------------------+-----------+
| 0151  | Comment submitted by Ron Heavner, Natural        | Federal   |
|       | Resources Conservation Service, United States    | Agency    |
|       | Department of Agriculture (USDA/NRCS)            |           |
+-------+--------------------------------------------------+-----------+
| 0152  | Comment submitted by Clean Air Task Force,       | Envi      |
| (Dupl | Earthjustice and Environmental Defense on behalf | ronmental |
| icate | of American Bottom Conservancy                   |           |
| of    |                                                  |           |
| 0154) |                                                  |           |
+-------+--------------------------------------------------+-----------+
| 0153  | Comment submitted by James L. Kavanaugh,         | St        |
|       | Director, State of Missouri Department of        | ate/Local |
|       | Natural Resources                                |           |
+-------+--------------------------------------------------+-----------+
| 0154  | Comment and attachment submitted by Jonathan     | Envi      |
|       | Lewis, Staff Attorney, Clean Air Task Force et   | ronmental |
|       | al.                                              |           |
+-------+--------------------------------------------------+-----------+
| 0156  | Comment submitted by Anne R. Gobin, Chief,       | St        |
|       | Bureau of Air Management, State of Connecticut   | ate/Local |
| (Dupl | Department of Environmental Protection           |           |
| icate |                                                  |           |
| of    |                                                  |           |
| 0084) |                                                  |           |
+-------+--------------------------------------------------+-----------+
| 0157  | Comment submitted by Joseph P. Koncelik,         | St        |
|       | Director, Ohio EPA                               | ate/Local |
+-------+--------------------------------------------------+-----------+
| 0158  | Comment and attachment submitted by David        | St        |
|       | Schanbacher, P.E., Chief Engineer, Texas         | ate/Local |
|       | Commission on Environmental Quality (TCEQ)       |           |
+-------+--------------------------------------------------+-----------+
| 0159  | Comment submitted by Pepper Hamilton LLP on      | St        |
|       | behalf of Oakland County, Michigan               | ate/Local |
+-------+--------------------------------------------------+-----------+
| 0161  | Comment submitted by Brian Bahor, Director,      | Industry  |
|       | Environmental Engineering, Covanta Energy        |           |
|       | Corporation                                      |           |
+-------+--------------------------------------------------+-----------+
| 0164  | Comment submitted by Barbara A. Lee, President,  | St        |
|       | California Air Pollution Control Officers        | ate/Local |
|       | Association (CAPCOA)                             |           |
+-------+--------------------------------------------------+-----------+
| 0165  | Comment submitted by Arthur N. Marin, Executive  | St        |
|       | Director, Northeast States for Coordinated Air   | ate/Local |
|       | Use Management (NESCAUM)                         |           |
+-------+--------------------------------------------------+-----------+
| 0166  | Comment and attachment submitted by Arthur N.    | St        |
|       | Marin, Executive Director, Northeast States for  | ate/Local |
| (Dupl | Coordinated Air Use Management (NESCAUM)         |           |
| icate |                                                  |           |
| of    |                                                  |           |
| 0165) |                                                  |           |
+-------+--------------------------------------------------+-----------+
| 0167  | Comment submitted by Margie Perkins, Director,   | St        |
|       | Air Pollution Control Division, Colorado         | ate/Local |
|       | Department of Public Health and Environment,     |           |
|       | State of Colorado                                |           |
+-------+--------------------------------------------------+-----------+
| 0168  | Comment submitted by David J. Shaw, Director,    | St        |
|       | Division of Air Resources, New York State        | ate/Local |
|       | Department of Environmental Conservation         |           |
+-------+--------------------------------------------------+-----------+
| 0169  | Comment submitted by Joseph P. Koncelik,         | St        |
|       | Director, Ohio EPA                               | ate/Local |
| (Dupl |                                                  |           |
| icate |                                                  |           |
| of    |                                                  |           |
| 0157) |                                                  |           |
+-------+--------------------------------------------------+-----------+

^a^ Docket ID identifies comments found in Docket No.
EPA-HQ-OAR-2003-0062 by document number.

^b^ Documents submitted to the docket together appear in the docket as
multiple documents with the same 4-digit "root number" followed by a
unique extension. For example, comments received via email are generally
assigned two numbers. First, the email message itself is assigned the
root number (e.g., 0137). Second, the attached comment document is
assigned an extended number based on the root number (e.g., 0137.1).
Additional attachments, if any, would follow the same pattern (e.g.,
0137.2, 0137.3, etc.). For the purposes of this table, we list all
related documents under the root number (e.g., 0137). In the text of the
comment summary, we identify the source by the entire document number
(e.g., 0137.1).

# Comments on the Regulation of Precursors to PM~2.5~ under Major NSR

## General Comments on the Regulation of Precursors

**[Supporting Comments]{.underline}**:

Fourteen commenters (0077.1, 0080.1, 0087.1, 0103.1, 0113.1, 0117.1,
0125.1, 0136.2, 0142, 0145, 0154.1, 0153, 0158.2, 0168) expressed
general support of the proposal to regulate precursors in addition to
direct PM~2.5~ emissions under the NSR program.

One state/local agency commenter (0168) provided that the ability of
states to achieve the PM~2.5~ standards would be greatly hampered if
precursors of PM~2.5~ formation are not strictly controlled by NSR.  The
commenter believes that this is especially the case in the Northeast
States, which are downwind from major emitters of PM~2.5~ precursors. 
The commenter went on to say that EPA's own information in the proposal
preamble demonstrates that precursor formation is a significant fraction
of observed PM~2.5~ levels in many parts of the Northeast and the
country

One state/local agency commenter (0153) opposed excluding a pollutant as
a precursor under the NSR program when the pollutant is identified as a
precursor under other programs.  The commenter explained that it would
create a serious discontinuity between other provisions of the Clean Air
Act ("CAA" or "the Act") and the permitting provisions. 

Another state/local agency commenter (0142) stated that the scientific
data support the importance of PM~2.5~ precursors in contributing to
ambient PM~2.5~ concentrations.

**[Opposing Comments]{.underline}:**

Four industry commenters (0109.1, 0111.1, 0119.1, 0127.2) opposed the
regulation of precursors under major NSR at this time, or in the future.

One of the industry commenters (0109.1) asserted that regulating
precursors will cause hardship and would be a significant deterrent for
new projects. The commenter supported applying the 1997 and 2005 PM~2.5~
PSD/NSR policies until reliable measurement and modeling protocols can
be developed.  This commenter also stated that the regional nature and
atmospheric chemistry of the formation of precursors to PM~2.5~ are
difficult to predict due to atmospheric variables and residence times,
making predictive analysis of short range or long range impacts of new
sources of PM~2.5~ invalid.

Another industry commenter (0127.2) stated that we should establish a
PSD program only for direct PM~2.5~ emissions, and not for PM~2.5~
precursors.  The commenter argued that establishment of a PSD program
for PM~2.5~ precursors would accomplish almost no benefit and would
create significant implementation problems.  The commenter noted that
either the NA NSR or PSD programs in all areas of the country currently
regulate sulfur dioxide (SO~2~) and nitrogen oxides (NO~x~), and
asserted that extending the PSD program to PM~2.5~ precursors would
result in problems in conducting necessary pre-construction monitoring
and pre- and post-construction modeling.

**[Other Comments:]{.underline}**

One state/local agency association commenter (0164) did not specifically
support or oppose the regulation of precursors under NSR but
acknowledged that the complex relationship of precursors to PM~2.5~
concentration is a difficult determination to make.

One industry commenter (0074.1) and one state/local agency commenter
(0116.1) supported allowing states and/or Tribes to determine whether to
regulate precursors under major NSR.  The industry commenter (0074.1)
recommended that the final PM~2.5~ NSR Implementation Rule presumptively
exclude precursors from major NSR and that states be afforded the option
of determining if and how to address precursor emissions in their
individual state implementation plans (SIPs).

**[Response]{.underline}**:

*As discussed further below, we have decided to regulate PM~2.5~
precursors as proposed, with some changes.  Our position regarding EPA's
authority to regulate precursors, as well as our rationale for the
treatment of each pollutant under the NSR program, are discussed
individually in the following sections. Additional support for our
decisions with respect to precursors can be found on pages 25-75 of the
Response to Comments document for the Clean Air Fine Particle
Implementation Rule (EPA-HQ-OAR-2003-0062-251).*

## Comments on EPA's Authority to Regulate PM~2.5~ Precursors

We received multiple comments on the subject of EPA's authority to
regulate precursors.  In the proposal preamble, we discussed our
interpretation of the Act as regards our authority to regulate
precursors and our discretion under that authority.  Specifically, we
interpreted the Act to provide EPA with the authority to regulate
precursors and to grant the Administrator discretion to determine how to
address precursors for particular regulatory purposes.  Further, we
explained our view that EPA may treat precursors of the same pollutant
(in this case PM~2.5~) differently under the same program.  See 70 FR
65998, 66035-36.

**[Supporting Comments:]{.underline}**

We did not receive any comments arguing that we lack the authority under
the Act to regulate PM~2.5~ precursors, but we did receive comments both
supporting and disputing our interpretation of the Act to provide us
with the discretion to regulate precursors for particular regulatory
purposes.  Comments disputing our authority in this regard are
summarized below under "Opposing Comments."

One state/local agency (0142) agreed that we have the authority to
regulate precursor emissions of PM~2.5~ and that the scientific data
support the importance of precursors in contributing to ambient PM~2.5~
concentrations.  This commenter did not address the issue of EPA's
authority to exercise discretion in this context.

One industry commenter (0111.1) asserted that section 302(g) of the Act
supports excluding a pollutant based on practical considerations such as
measurement uncertainty, or staying NSR provisions for precursors until
modeling and measurement tools can reasonably and accurately predict a
pollutant's impact on ambient PM~2.5~ concentration.  The commenter
suggested that we define the term "air pollutant" in a manner consistent
with what can be measured and implemented "for the purposes of the NSR
program."

Another industry group commenter (0127.2) asserted that we have the
authority to exempt precursors from the PSD program under the [Alabama
Power]{.underline} *de minimis* doctrine because there would be a
"trivial gain" from their inclusion.

**[Opposing Comments:]{.underline}**

We received three comments (0103.1, 0113.1, 0154.1) arguing that PM~2.5~
precursors, once identified, must be regulated under the NSR program. 
One state/local agency (0103.1) did not concur with our interpretation
of the Congressional intent as it relates to the definition of "air
pollutant" in section 302(g) of the Act.  The commenter argued that we
used "\... to the extent the Administrator has identified such precursor
or precursors for the particular purpose for which the term 'air
pollutant' is used" and specific regulatory exemptions in other portions
of the Act to avoid regulating known precursors.  The commenter
interpreted the definition of "air pollutant" to require the regulation
of identified precursors and stated that the second clause of the
definition was added specifically to insure that precursors would be
regulated under the Act. The commenter believed that if precursors were
meant to be exempt, these exceptions would be spelled out in the law. 
The commenter pointed out that we have not denied that certain
condensable, gaseous organic compounds, ammonia, and NO~x~ (as well as
SO~2~) are precursors to the criteria pollutant PM~2.5~.  In addition,
the commenter argued that we have not supplied conclusive evidence nor
proposed adequate tests of proof to show that the emission of these
precursors from various sources do not contribute to violations of the
NAAQS.  Therefore, the commenter concluded that these precursor
emissions must be addressed in plans and programs designed to mitigate
the health and environmental effects of PM~2.5~.

One environmental group (0113.1) provided that section 302(g) of the Act
does not allow EPA unfettered discretion to abandon regulation of
PM~2.5~ precursors in nonattainment area plans or for NSR.  The
commenter asserted that section 189(e) of the Act should govern PM~2.5~
regulation because PM~2.5~, by definition, is a subset of PM~10~.  The
commenter stated that the plain language of section 189(e) requires
states to control sources of PM~10~ precursors except where EPA
"determines that such sources \[of precursors\] do not significantly
contribute to PM-10 levels which exceed the standard in the area."  The
commenter argued that this default language requires EPA to regulate
particulate matter precursors [unless]{.underline} we find that a given
precursor is not part of the problem (emphasis in the original). 

One group of environmental commenters (0154.1) argued that we do not
have the legal authority to presumptively exclude precursors from NSR
requirements.  They noted that large stationary sources are important
sources of precursor emissions (including ammonia) and they are all
contributors to a host of other air pollution problems, in addition to
their contribution to PM~2.5~ emissions.  The commenters further stated
that our concerns regarding the "complexity in assessing the role of
volatile organic compound (VOC) in PM~2.5~ formation" and "evolving"
understanding of ammonia emissions and their role are not dispositive as
VOCs and ammonia are known precursors of PM~2.5~.

**[Response]{.underline}**:

*Scientific research shows that precursors may contribute significantly
to ambient PM~2.5~ concentrations, producing approximately half of the
concentration and that in most areas of the country PM~2.5~ precursor
emissions are the major contributors to ambient PM~2.5~ concentrations. 
For these reasons, EPA believes precursors warrant regulation, as a
general matter.  However, because it is technically difficult to
determine impacts of source-specific precursor emissions on ambient air
quality levels, and also because the relative contribution to ambient
PM~2.5~ concentrations from each of the pollutants addressed in the rule
varies by area, we do not believe a one-size-fits-all approach is
appropriate.  We note, however, that some commenters disagree with this
view and assert that EPA does not have the discretion to regulate some,
but not all, identified precursors.  After carefully considering these
comments, we are not persuaded that our interpretation of the Act is
incorrect.  Rather, we stand by our interpretation as set forth in the
proposed rule and below.*

*As explained in the proposed rule, we interpret the Act to not only
provide explicit authority for EPA to regulate precursors, but also to
grant us discretion to determine how to address precursors for
particular regulatory purposes. This reading is based on section 302(g)
of the Act, which defines the term "air pollutant" to include "any
precursors to the formation of any air pollutant, to the extent the
Administrator has identified such precursor or precursors for the
particular purpose for which the term 'air pollutant' is used."  The
first clause of this second sentence in section 302(g) explicitly
authorizes the Administrator to identify and regulate precursors as air
pollutants under other parts of the Act.  In addition, the second clause
of the sentence indicates that the Administrator has discretion to
identify which pollutants should be classified as precursors for
particular regulatory purposes.  Thus, we do not necessarily construe
the Act to require that EPA identify a particular precursor as an air
pollutant for all regulatory purposes where it can be demonstrated that
various programs under the Act address different aspects of the air
pollutant problem.  Likewise, we do not interpret the Act to require
that EPA treat all precursors of a particular pollutant the same under
any one program when there is a basis to distinguish between such
precursors within that program.  For example, in a recent rule
addressing PM~2.5~ precursors for purposes of the transportation
conformity program, we chose to adopt a different approach for one
precursor based on the limited emissions of that precursor from onroad
mobile sources and the degree to which it contributes to PM~2.5~
concentrations.  (70 FR 24280; May 6, 2005).  For the reasons identified
above, we are not persuaded by the assertion by some commenters that we
do not have the authority to determine how to address precursors for
particular regulatory purposes. *

*Furthermore, other provisions of the Act reinforce our interpretation
of section 302(g) that Congress intended precursors to NAAQS pollutants
to be subject to the air quality planning and control requirements of
the Act, but also recognized that there may be circumstances where it is
not appropriate to subject precursors to certain requirements of the
Act.  Section 182 of the Act provides for the regulation of NO~x~ and
VOCs as precursors to ozone in ozone nonattainment areas, but also
provides in section 182(f) that major stationary sources of NO~x~ (an
ozone precursor) are not subject to emission reductions requirements for
ozone where the state shows through modeling that NO~x~ reductions do
not decrease ozone.  Section 189(e) provides for the regulation of
PM~10~ precursors in PM~10~ nonattainment areas, but also recognizes
that there may be certain circumstances (e.g., if precursor emission
sources do not significantly contribute to PM~10~ levels) where it is
not appropriate to apply control requirements to PM~10~ precursors.  The
legislative history of section 189(e) recognized the complexity behind
the science of precursor transformation into PM~10~ ambient
concentrations and the need to harmonize the regulation of PM~10~
precursors with other provisions of the Act:*

> *The Committee notes that some of these precursors may well be
> controlled under other provisions of the CAA.  The Committee intends
> that . . . the Administrator will develop models, mechanisms, and
> other methodology to assess the significance of the PM~10~ precursors
> in improving air quality and reducing PM~10~.  Additionally, the
> Administrator should consider the impact on ozone levels of PM~10~
> precursor controls.  The Committee expects the Administrator to
> harmonize the PM~10~ reduction objective of this section with other
> applicable regulations of this CAA regarding PM~10~ precursors, such
> as NO~x~.  [See]{.underline} H. Rpt. 101-490, Pt. 1, at 268 (May 17,
> 1990), reprinted in S. Prt. 103-38, Vol. II, at 3292.*

*In summary, section 302(g) of the Act clearly calls for the regulation
of precursor pollutants, but also identifies circumstances when it may
not be appropriate to regulate precursors and gives the Administrator
discretion to determine how to address particular precursors under
various programs required by the Act.  To interpret otherwise and apply
a blanket approach, as suggested by one commenter (i.e., to regulate all
identified precursors in all cases), would be contrary to the language
and intent of the Act.  Further, due to the complexities associated with
precursor emissions and their variability from location to location, we
believe that in some situations it may not be effective or appropriate
to control a certain precursor under a particular regulatory program or
for EPA to require similar control of a particular precursor in all
areas of the country.  For these reasons, we do not agree with the
comment that the Act does not give us discretion to presumptively
exclude a designated PM~2.5~ precursor from NSR requirements.  As stated
above, we believe that section 302(g) allows the Administrator to
presumptively not require certain precursors to be addressed in PM~2.5~
NSR programs, generally, while allowing the state or EPA to make a
finding for a specific area to override the general presumption. 
Further, given the term "air pollutant," as defined in section 302(g),
is incorporated into the NSR provisions for various purposes, we
interpret section 302(g) of the Act to require us to consider how to
address precursors under the NSR program. *

*With regard to PSD, section 165(a)(3) of the Act states that new or
modified major sources must demonstrate that emissions "will not cause,
or contribute to, air pollution in excess of any . . . NAAQS in any air
quality control region."  A source could not reasonably make this
demonstration without considering precursors that EPA has identified for
this purpose.  Section 165(a)(4) of the Act states that a new or
modified source must apply best achievable control technology (BACT)
"for each pollutant subject to regulation under this Act emitted from,
or which results from, such facility."  The phrase "emitted from, or
which results from" indicates that the statute is not limited to direct
emissions, but rather extends to precursors as well.*

*Additionally, with regard to NA NSR, sections 172(c)(4) and 173 require
states to demonstrate, among other things, that emissions from new or
modified major sources are consistent with the achievement of
"reasonable further progress (RFP)."  Reasonable further progress is
further defined as reductions of the relevant air pollutant, which is
defined in section 302(g) to include precursors identified by EPA as
subject to regulation for that purpose.*

*Generally, where the scientific data and modeling analyses provide
reasonable certainty that a pollutant's emissions are a significant
contributor to ambient PM~2.5~ concentrations, we believe that such a
pollutant should be identified as a "regulated NSR pollutant" and
subject to the PM~2.5~ NSR provisions.  Conversely, where the effect of
a pollutant's emissions on ambient PM~2.5~ concentrations is subject to
substantial uncertainty, such that in some circumstances the pollutant
may not result in formation of PM~2.5~, or control of the pollutant may
have no effect or may even aggravate air quality, we generally believe
it is unreasonable to establish a nationally-applicable presumption that
the pollutant is a regulated NSR pollutant subject to the requirements
of NSR for PM~2.5~.  For these reasons, we believe it appropriate to
adopt differing approaches (i.e., presumed-in and presumed-out) for
different precursors.*

*In response to comments asserting, in effect, that the presumed-in and
presumed-out approaches for NO~x~, ammonia, and VOCs, are not
sufficiently protective from a PM~2.5~ contribution perspective, it is
important to understand that a state program need [not]{.underline}
exclude a precursor under the presumed-out approach if it can show that
the precursor at issue is, in fact, a "significant contributor" to
PM~2.5~ concentrations in the subject area.  Likewise, a state need
[not]{.underline} include a precursor, where the presumed-in approach is
applicable, when it can demonstrate that the precursor at issue is not a
significant contributor to PM~2.5~ in the subject area.  This being the
case, the presumed-in and presumed-out approaches are intended to
provide for the regulation of NO~x~, ammonia, and VOCs as the specific
circumstances in a particular area warrant.  Further, states must
consider any relevant information brought forward by interested parties
in the SIP planning and development process and, therefore, if a
commenter provides information suggesting or demonstrating that NO~x~,
ammonia, or VOC emissions are not a significant contributor to PM~2.5~
concentrations, then the state will need to respond to this information
in its rulemaking action.*

*It is also important to recognize that "significant contribution" in
this context is a different concept than that in section 110(a)(2)(D) of
the Act.  Section 110(a)(2)(D) of the Act prohibits states from emitting
air pollutants in amounts which significantly contribute to
nonattainment or other air quality problems in other states.  Consistent
with the discussion of sections 189(e) and 302(g) above, we clarify that
the use in the PM~2.5~ NSR Implementation Rule of the term "significant
contribution" to an area's PM~2.5~ concentration means that a
significant change in emissions of the precursor from sources in that
area would be projected to provide a significant change in PM~2.5~
concentrations in the area.  For example, if modeling were to indicate
that a reduction in an area's NO~x~ emissions would reduce ambient
PM~2.5~ levels in that area, but that a reduction in ammonia emissions
would result in virtually no change in ambient PM~2.5~ levels in that
same area, then this would suggest that NO~x~ is a significant
contributor while ammonia is not.  Note that we are not proposing the
establishment of a quantitative test for determining whether PM~2.5~
levels in an area change significantly in response to reductions in
precursor emissions in the area.  However, when contemplating this
question, we do believe it is relevant to consider whether relatively
small reductions in PM~2.5~ levels are estimated to result in worthwhile
public health benefits.*

*This approach to identifying a precursor as a regulated NSR pollutant
is designed to reflect both the atmospheric chemistry conditions in an
area as well as the magnitude of emissions of the precursor in that same
area.  Assessments of whether particular emissions units at a source are
technically feasible and cost effective to control should be part of the
later BACT or lowest achievable emission rate (LAER) determination
within a permit action, to occur after the basic assessment as to which
precursors are to be regulated NSR pollutants in an area is completed. 
For these and the other reasons previously articulated, we continue to
believe that the Act provides us the authority not only to identify and
regulate precursors to PM~2.5~, but also to treat precursors of the same
pollutant differently under the same program, contrary to the assertions
of some commenters.  Also, while EPA agrees that, pursuant to the
[Alabama Power]{.underline}* de minimis *doctrine we would have the
authority to exempt precursors from the PSD program if we believed that
regulating them would result in "trivial gain," we do not believe that
the doctrine applies here given scientific research sufficiently shows
that certain precursors "significantly contribute" to  ambient PM~2.5~
concentrations.  This being the case, we disagree with the commenter who
asserts that the [Alabama Power]{.underline}* de minimis *exception
applies in this context.*

## Comments Specific to Regulating SO~2~ as a Precursor

We proposed to regulate SO~2~ as a precursor for PM~2.5~ for purposes of
NSR in all areas designated attainment, unclassifiable, and
nonattainment for PM~2.5~. 

**[Supporting Comments]{.underline}**:

Four state/local agency commenters ((0077.1, 0142, 0153, 0168), two
industry commenters (0111.1, 0127.2), and one state/local agency
association (0136.2) agreed that SO~2~ should be regulated as a PM~2.5~
precursor.  However, one of these commenters (0127.2) only supported
regulation of SO~2~ as a precursor in NA NSR, and not under PSD. 

One of the state/local agency commenters (0077.1) who supported
regulating SO~2~ as a precursor stated that receptor modeling and STN
data confirm sulfate as the largest PM~2.5~ component and provided a
supporting document.

**[Opposing Comments]{.underline}**:

One industry commenter (0109.1) believes it was ill-advised to regulate
SO~2~ as a precursor given our inability to directly correlate these
emissions to the formation of PM~2.5~.  The commenter believes that
without this certainty, we would be establishing a requirement for NSR
impact analysis that would potentially impede projects, without any
environmental benefit.  The commenter added that even without the
proposed rule, the permitting authority would be capable of looking at
fine particle formation under general environmental and ecological
effects requirements required by section 172 of the Act until the tools
for predicting and measuring fine particulate accurately are available.
In addition, the commenter argued that there is no reason to regulate
SO~2~ and NO~x~ as PSD/NA NSR pollutants because they are already
defined as "regulated pollutants" under other NAAQS.

One state/local agency commenter (0116.1) disagreed with our proposed
position that SO~2~ acts as a precursor to PM~2.5~ in all cases. The
commenter stated that any conclusions in that regard should be left to
the states and Tribes, to be addressed in individual implementation
plans.

**[Response]{.underline}**:

*Sulfate is a significant contributor (e.g., ranging from 9 percent to
40 percent) to PM~2.5~ concentrations in all areas and to other air
quality problems in all regions of the country.  This being the case, we
proposed that states be required to treat SO~2~ as a PM~2.5~ precursor
in all areas.  After carefully considering the comments received on this
subject, we continue to support this approach which is consistent with
past EPA regulations, such as the Clean Air Interstate Rule (CAIR), the
Clean Air Visibility Rule, the Acid Rain rules, and the Regional Haze
rule, that require SO~2~ reductions to address fine particle pollution
and related air quality problems.  Although large SO~2~ reductions are
projected from electric generating units with the implementation of the
CAIR, sulfate is still projected to be a key contributor to PM~2.5~
concentrations in the future.*

*We find the commenters' arguments for not regulating SO~2~ as a
precursor unpersuasive.  As explained in the preamble to the proposed
rule, there exist three pathways by which sulfuric acid is formed in the
atmosphere through the oxidation of SO~2~.  The sulfuric acid then
typically reacts with ammonia to form ammonium sulfate or ammonium
bisulfate. Emissions of SO~2~ lead to sulfate formation on both regional
and local scales.  These processes are well known and there is little
uncertainty regarding their contribution to PM~2.5~ emissions.  Thus,
the comment that we should delay regulating SO~2~ as a precursor because
of an inability to correlate SO~2~ emissions to the formation of PM~2.5~
is unfounded.*

*We also find unpersuasive the argument that SO~2~ should not be
regulated as a precursor because it is a regulated pollutant under other
NAAQS. As detailed above, there is sufficient scientific certainty that
SO~2~ significantly contributes to PM~2.5~ formation. *

## Comments Specific to Regulating NO~x~ as a Presumed-in Precursor 

We proposed to regulate NO~x~ as a "presumed-in" precursor to PM~2.5~
for purposes of NSR in all attainment, unclassifiable, and nonattainment
areas.  That is, NO~x~ would be a regulated NSR pollutant in all areas
unless a state demonstrated to the Administrator's satisfaction that
NO~x~ emissions from stationary sources in that area do not contribute
significantly to that area's ambient PM~2.5~ concentrations.

**[Supporting Comments]{.underline}**:

A number of commenters supported some or all of our proposed approach to
NO~x~, although some had reservations about some aspects.  One
state/local agency (0142), one industry commenter (0111.1), and one
state/local agency association (0136.2) supported the approach as
proposed.  The state/local agency association (0136.2) added that for
NO~x~ to be removed in an area, the state or EPA should be required to
include an assessment of the impact of this action on other
nonattainment areas, and that downwind states should have the
opportunity to comment on removing NO~x~ (as well as the opportunity to
request an upwind state to add a precursor).

One industry commenter (0127.2) supported the proposed approach for NA
NSR, but does not believe that NO~x~ should be a regulated pollutant for
purposes of PSD.  The commenter asserted that extending the PSD program
to NO~x~ and other PM~2.5~ precursors would result in problems
conducting necessary pre-construction monitoring and pre- and
post-construction modeling.  The commenter also noted that either NA NSR
or PSD programs in all areas of the country already regulate NO~x~.

One state/local agency (0077.1) asserted that NO~x~ should be a
regulated NSR pollutant, but was silent about whether exemptions should
be available.  This commenter stated that receptor modeling and STN data
confirm nitrates as the second largest PM~2.5~ component and provided a
supporting document.

One state/local agency commenter (0153) believes that allowing states to
demonstrate that NO~x~ emissions are not significant early on in the SIP
preparation process is a mistake.  This commenter noted that this
demonstration would need to be extremely thorough in any state to allow
EPA to make a favorable finding.  The commenter added that any
demonstration, by its very nature, is time sensitive, so that what may
be determined insignificant today may be significant tomorrow.

Two state/local agency commenters (0117.1, 0168) did not agree that
states should be allowed to receive an exemption for NO~x~ based on a
demonstration that NO~x~ emissions are not a significant contributor to
the area's ambient PM~2.5~ concentration, because NO~x~ emissions
contribute to regional emissions and nonattainment in other areas.  One
of these commenters (0117.1) believes that a waiver for exclusion of
NO~x~ as a precursor should be allowed only if it is approved by
downwind states.  The second commenter (0168) indicated that if NO~x~
exemptions are allowed, they should be subject to strict requirements,
which consider the regional interaction and contribution of emissions
from other states.

**[Opposing Comments:]{.underline}**

One industry commenter (0109.1) believes it would be ill-advised to
regulate NO~x~ as a presumptive precursor given our inability to
directly correlate these emissions to the formation of PM~2.5~.  The
commenter believes that without this certainty, we would be establishing
the requirement for NSR impact analysis that would potentially impede
projects without any environmental benefit.  The commenter added that
even without the proposed rule the permitting authority would be capable
of looking at fine particle formation under general environmental and
ecological effects requirements required by section 172 of the Act until
such time that the tools for predicting and measuring fine particulate
accurately are available.  In addition, the commenter argued that there
is no reason to regulate NO~x~ as a PSD/NA NSR pollutant as it is
already defined as a "regulated pollutant" under other NAAQS.

One state/local agency commenter (0116.1) disagreed with our proposed
position that NO~x~ acts as a precursor to PM~2.5~ in all cases.  The
commenter stated that any conclusions in that regard should be left to
the states and Tribes, to be addressed in individual implementation
plans.

**[Response]{.underline}**:

*We are not persuaded by the argument that NO~x~ should not be regulated
as a precursor because it is a regulated pollutant under other NAAQS. 
We do not find the degree of scientific uncertainty regarding PM~2.5~
formation from NO~x~ to be great enough to preclude regulation of NO~x~
as a precursor with an opportunity for a case-by-case demonstration that
NO~x~ is not a significant contributor.  Furthermore, the fact that we
regulate NO~x~ for other NAAQS under the NSR program does not by itself
justify declining to regulate NO~x~ as PM~2.5~ precursor in
circumstances where NO~x~ also significantly contributes to PM~2.5~
formation.  We note, however, that the regulation of NO~x~ as precursor
for PM~2.5~ is not expected to add a major burden to regulated sources
that are already required to limit NO~x~ emission to meet other
standards. *

*We also disagree with the commenters who believe that emissions of
NO~x~ cannot be correlated to PM~2.5~ formation, or that it is unclear
when NO~x~ acts as a precursor.  In the preamble to the proposed rule,
we explained that our decision to regulate NO~x~ as a precursor to
PM~2.5~ was based on the well-known transformation of NO~x~ into
nitrates.  Nitrates are formed from the oxidation of NO~x~ into nitric
acid either during the daytime (reaction with OH) or during the night
(reaction with ozone and water) and are a significant component of
PM~2.5~ mass in northern regions, such as the Midwest and East Coast,
and are a major contributor to urban PM~2.5~ in California. *

*Nevertheless, speciated data monitoring analyses indicate that nitrate
concentrations vary significantly across the country.  For example, in
some southeastern locations, annual average nitrate levels are in the
range of 6 to 8 percent of total PM~2.5~ mass, whereas nitrate comprises
40 percent or more of PM~2.5~ mass in certain California locations. 
Reductions in NO~x~ emissions are expected to reduce PM~2.5~
concentrations in most areas.  However, it has been suggested that in a
limited number of areas, NO~x~ control would result in increased PM~2.5~
mass by disrupting the ozone cycle and leading to increased oxidation of
SO~2~ to form sulfate particles, which are heavier than nitrate
particles. *

*Given the factors detailed above, we continue to support the
"presumed-in" approach for NO~x~ set forth in the proposed rule.  Under
this approach, NO~x~ is presumed to be a significant contributor to
ambient PM~2.5~ concentrations in all PSD and NA NSR areas.  However, a
state may rebut this presumption for a specific area by demonstrating to
the Administrator's satisfaction that NO~x~ emissions in that area are
not a significant contributor to that area's ambient PM~2.5~
concentrations.  If a state makes such a demonstration, NO~x~ would not
be considered a PM~2.5~ precursor under the NSR program for that area. 
If a state does not make such a demonstration, NO~x~ must be regulated
as a precursor under the PSD, NA NSR, and minor source programs for
PM~2.5~.  This approach is consistent with other recent EPA regulations
requiring NO~x~ reductions to reduce fine particle pollution, such as
the CAIR and a number of rules targeting onroad and nonroad engine
emissions.*

*While we recognize that NO~x~ emissions can affect PM~2.5~
concentrations in downwind areas, we disagree that approval from
downwind states should be required for a state to exclude NO~x~ as a
PM~2.5~ precursor for a particular area since states that contribute to
downwind nonattainment for PM~2.5~ are otherwise required to address
transported NO~x~ emissions under the CAIR rule.*

*We had proposed that NO~x~ be presumed to be a precursor in any state
that EPA has identified as a source of the PM~2.5~ interstate transport
problem. In the final rule, we have dropped this requirement to be
consistent with EPA's Clean Air Fine Particle Implementation Rule
published on April 25, 2007. 72 FR 20586. Such a requirement is not
necessary in this rule because, as indicated above, states that
contribute to downwind nonattainment for PM~2.5~ are otherwise required
to address transported NO~x~ emissions under the CAIR.*

## Comments Specific to Regulating VOC as a Presumed-out Precursor

We proposed, in general, not to regulate VOC as a precursor to PM~2.5~
for purposes of NSR.  However, VOC could be designated as a regulated
NSR pollutant under PSD or NA NSR where a state demonstrates to the
satisfaction of the Administrator that VOC emissions from stationary
sources in a specific area contribute significantly to that area's
ambient PM~2.5~ concentrations.

**[Supporting Comments]{.underline}**:

Seven commenters (0077.1, 0109.1, 0111.1, 0117, 0127.2, 0142, 0168)
specifically agreed with our proposal not to regulate VOCs as PM~2.5~
precursors under NSR.

One state/local agency commenter (0117) concurred with our proposal to
regulate VOC as a precursor to PM~2.5~ under the NSR program only if a
state/local agency explicitly includes VOC emissions from stationary
sources as part of a control program within the PM~2.5~ attainment
demonstration. An industry commenter (0127.2) agreed that VOC should be
regulated only if a state makes a determination of need on a
case-by-case basis.

One state/local agency commenter (0142) believes that the atmospheric
chemistry involved in the PM~2.5~ formation from VOC emissions is not as
well understood as the SO~2~ and NO~x~ chemistry.  The commenter stated
that unless demonstrated otherwise by the state, VOC should not be
regulated as a precursor under PM~2.5~ NSR.  Another state/local agency
commenter (0168) believes that it is reasonable not to regulate certain
VOCs as PM~2.5~ precursors as long as portions of the condensable VOC
are required to be accounted for in the determination of direct PM~2.5~
emissions. 

**[Opposing Comment:]{.underline}**

One state commenter (0153) said that the role of VOC in the formation of
PM~2.5~ is sufficiently understood to recommend a "waiver" approach for
this pollutant in the same way as NO~x~ is treated for PM~2.5~ in the
proposed rule. 

**[Response]{.underline}:**

*Volatile organic compounds are key precursors in the formation of
secondary organic aerosol (SOA).  However, despite significant advances
in understanding the origins and properties of SOA, VOCs remain probably
the least understood component of PM~2.5~.  The reactions forming
secondary organics are complex, and the number of intermediate and final
compounds formed is voluminous.  Some of the best efforts to unravel the
chemical composition of ambient organic aerosol matter have been able to
quantify the concentrations of hundreds of organic compounds
representing only 10 to 20 percent of the total organic aerosol mass. 
For this reason, SOA continues to be a significant topic of research and
investigation.*

*Current scientific and technical information shows that carbonaceous
material is a significant fraction of total PM~2.5~ mass in most areas,
that certain VOC emissions are precursors to the formation of SOA, and
that a considerable fraction of the total carbonaceous material is
likely from local as opposed to regional sources.  However, while
significant progress has been made in understanding the role of gaseous
organic material in the formation of organic PM, this relationship is
complex and is yet to be fully understood.  We recognize that further
research and technical tools are needed to better characterize emissions
inventories for specific VOC compounds, and to determine the extent of
the contribution of specific VOC compounds to organic PM mass.*

*As proposed, EPA believes that a "presumed-out" approach is appropriate
to address VOCs as a precursor to PM~2.5~ for the NSR program.  Pursuant
to this approach, a state may demonstrate to the Administrator's
satisfaction that VOC emissions in a specific area contribute
significantly to that area's ambient PM~2.5~ concentrations.  After
making such a demonstration, the state may then regulate VOC (or a
subset of VOC) as a PM~2.5~ precursor for the NSR program in that area. 
That is, the state would need to regulate construction and modification
of stationary sources that increase emissions of VOC in that area to
assure that these emissions do not interfere with RFP or the ability of
that area to attain or maintain the PM~2.5~ NAAQS.*

*We believe that this "presumed-out" approach is appropriate for VOC
because of the complexity of assessing the role of VOC in PM~2.5~
formation and, therefore, are not persuaded by the commenter who
suggested that a "waiver" or "presumed-in" approach for VOCs would be
appropriate.  Where the effect of a pollutant's emissions on ambient
PM~2.5~ concentrations are subject to such a degree of uncertainty, we
do not have justification to establish a nationally-applicable
presumption that the pollutant is a regulated NSR pollutant subject to
the requirements of NSR for PM~2.5~. Under the circumstances, we believe
the best policy is to continue to regulate VOCs under NSR as a precursor
to ozone in all areas, which will potentially provide a co-benefit for
PM~2.5~ concentrations despite the uncertainty in PM~2.5~ formation from
VOCs. As discussed above, we do not find it appropriate to utilize the
same approach for NO~x~ because the scientific data and modeling
analyses provide more certainty that NO~x~ emissions are a significant
contributor to ambient PM~2.5~ concentrations.*

*Note that we intend to regulate high molecular weight VOC (with 25
carbon atoms or more and low vapor pressure) as direct PM~2.5~ emissions
because they are emitted directly as primary organic particles and exist
primarily in the condensed phase at ambient temperatures. *

## Comments Specific to Regulating Ammonia as a Presumed-out Precursor

For purposes of NA NSR, we proposed that ammonia would only be
identified as a precursor on a case-by-case basis, that is, when a
state/local agency demonstrates to the Administrator's satisfaction that
ammonia emissions from stationary sources in a specific nonattainment
area are a significant contributor to that area's ambient PM~2.5~
concentrations.

**[Supporting Comments]{.underline}**:

Nine commenters (0077.1, 0107.1, 0117.1, 0111.1, 0142, 0151, 0158.2,
0161, 0168) supported our proposal for ammonia.

One state/local agency commenter (0077.1) believes that ammonia has an
uncertain impact on the formation of PM~2.5~ and did not recommend it be
considering it as a regulated NSR pollutant. Another state/local agency
commenter (0117.1) concurred that we should not regulate ammonia as a
precursor to PM~2.5~ for the NSR program unless the state explicitly
includes emissions of ammonia from stationary sources as part of a
control program within the PM~2.5~ attainment demonstration.

One state/local agency commenter (0142) stated that the atmospheric
chemistry involved in the PM~2.5~ formation from ammonia emissions is
not as well understood as the SO~2~ and NO~x~ chemistry.  The commenter
believes that unless demonstrated otherwise by the state, ammonia
emissions should not be regulated as a precursor under PM~2.5~ NSR.

One state/local agency commenter (0168), although they support not
regulating ammonia as a "default" precursor at this time, urged us to
continue research on PM~2.5~ formation from ammonia since ammonia has
already been demonstrated by current research to be a precursor to
PM~2.5~ concentrations.  The commenter recommended that we recognize the
role ammonia plays in PM~2.5~ formation and develop a policy to require
the minimization and mitigation of known emissions of ammonia.

**[Opposing Comments]{.underline}**:

One environmental group commenter (0113.1) believes that we improperly
delegated our authority to regulate ammonia as a PM~2.5~ precursor by
requiring a "technical demonstration that ammonia emissions from sources
in the state significantly contribute to the PM~2.5~ problem in a given
nonattainment area or to other downwind air quality concerns."  The
commenter asserts that such an approach reverses Congress' requirement
to regulate particulate matter precursors unless the emissions are
[not]{.underline} part of the problem, and instead takes the approach
that we will "not regulate unless proven to be part of the problem."

One state/local agency commenter (0080.1) preferred that we treat
ammonia precursor emissions the same as NO~x~ precursor emissions.  The
commenter's concern was based on the growing number of concentrated
animal feed operations and the corresponding ammonia emissions, which
the commenter believes should be addressed in the NSR process if they
are above a certain emissions cutoff.

One state/local agency commenter (0153) agreed that the role of ammonia
in PM~2.5~ formation is not well understood.  However, the commenter
believes that instead of disregarding the role of ammonia, we should
require states to initiate comprehensive ambient air monitoring networks
to determine the extent of local affects of ammonia. The commenter
recommended that we revisit designating ammonia as a regulated air
pollutant (precursor) after sufficient data are collected.

**[Other Comments:]{.underline}**

Three commenters (0107.1, 0131.1, 0161) stated that if we permit states
to demonstrate that ammonia should be regulated as a PM~2.5~ precursor
for NSR purposes, we should make clear that ammonia emissions from the
operation of an air pollution control system to control NO~x~ should not
factor into such a demonstration.  The commenters based this view on our
focus on NO~x~ as one of the two principal PM~2.5~ precursors and the
role of significant non-catalytic reduction (SNCR) and similar systems
in avoiding significant NO~x~ emissions.  One commenter (0131.1)
indicated that the amount of NO~x~ reduced versus ammonia emitted is
approximately 50:1.  

**[Response]{.underline}**:

*We agree with the commenters who noted that the formation of particles
related to ammonia emissions is not well understood.  Though recent
studies have improved our understanding of the role of ammonia in
aerosol formation, ongoing research is required to better describe the
relationships between ammonia emissions, particulate matter
concentrations, and related impacts.  The control techniques for ammonia
and the analytical tools to quantify the impacts of reducing ammonia
emissions on atmospheric aerosol formation are still evolving.  In
addition, area-specific data are needed to evaluate the effectiveness of
reducing ammonia emissions on reducing PM~2.5~ concentrations in
different areas, and to determine where ammonia decreases may increase
the acidity of particles and precipitation.*

*Due to the considerable uncertainty related to ammonia as a precursor,
our final rules do not require ammonia to be regulated as a PM~2.5~
precursor but do give states the option to regulate ammonia as a
precursor to PM~2.5~ in nonattainment areas for purposes of NSR on a
case-by-case basis. Consistent with our proposal, if a state
demonstrates to the Administrator's satisfaction that ammonia emissions
in a specific nonattainment area are a significant contributor to that
area's ambient PM~2.5~ concentrations, the state would regulate ammonia
as a PM~2.5~ precursor under the NSR program in that nonattainment area.
Once this demonstration is made, ammonia would be a "regulated NSR
pollutant" under NA NSR for that particular nonattainment area, and the
state would need to regulate construction and modification of stationary
sources that increase emissions of ammonia in that area to assure that
these emissions do not interfere with RFP or the ability of that area to
attain or maintain the PM~2.5~ NAAQS. In all other nonattainment areas
in that state and nationally, ammonia would not be subject to the NSR
program. In addition, the action of any state identifying ammonia
emissions as contributing significantly to a nonattainment area's
PM~2.5~ concentrations, or our approval of a nonattainment SIP doing so,
does not make ammonia a regulated NSR pollutant for the purposes of PSD
in any attainment or unclassifiable areas nationally. This is consistent
with our proposal (70 FR 66036) and no commenters took issue with the
proposal. We also retain the ability to make a technical demonstration
for any area, if appropriate, to reverse the presumption and require
ammonia to be addressed in its nonattainment area plan.*

*Given the continued uncertainties regarding ammonia emission
inventories and the effects of ammonia emission reductions we are not
persuaded by the commenter who asserted that ammonia precursor emissions
should be treated the same as NO~x~ emissions.  As discussed previously,
data and modeling analyses provide much more certainty that NO~x~
emissions are a significant contributor to ambient PM~2.5~
concentrations.  In addition, data necessary to understand the
atmospheric composition and balance of ammonia and nitric acid in an
area are not widely available, making it difficult to predict the
results of potential ammonia emission reductions.  Ammonia reductions
may be effective and appropriate for reducing PM~2.5~ concentrations in
selected locations, but in other locations, such reductions may lead to
minimal reductions in PM~2.5~ concentrations and increased atmospheric
acidity.  Research projects continue to expand our collective
understanding of these issues, but at this time, we continue to believe
a case-by-case approach for nonattainment areas is appropriate given
that there is sufficient uncertainty regarding the impact of ammonia
emission reductions on PM~2.5~ concentrations in all nonattainment
areas.  As a result, we do not view the adoption of a "presumed-in"
approach to be appropriate.  However, where a state can gather
sufficient data to demonstrate that reductions in ammonia emissions will
decrease ambient concentrations of PM~2.5~ in a particular nonattainment
area, we believe that the state should be allowed to regulate ammonia
emissions under its PM~2.5~ NSR Program for that area.  In the meantime,
in light of the uncertainties related to ammonia, we encourage states to
continue efforts to better understand the role of ammonia in their fine
particle problem areas. *

*Additionally, and for the reasons stated earlier, we disagree with the
commenter who asserts that the "presumed-out" approach for ammonia
constitutes an improper delegation of authority by EPA to the states. 
Under the general Clean Air Fine Particle Implementation Rule, we retain
the ability to make a technical demonstration supporting a reversal of a
presumption regarding ammonia for a particular area thus resulting in
ammonia being addressed in the nonattainment area plan. *

*Further, although we agree with the commenter who suggested that we
continue research on the role of ammonia in the formation of PM~2.5~, we
disagree with the comment that we should hold off regulating ammonia as
a PM~2.5~ precursor until "sufficient data" are collected.  Although we
believe that it is prudent to continue research on ammonia control
technologies and the ammonia-sulfate-nitrate-SOA equilibrium before
undertaking a broad national program to reduce ammonia emissions, we
believe that there exists enough data on ammonia as a PM~2.5~ precursor
to support the adoption of the presumed-out approach.  However, as we
develop a greater understanding about the potential air quality effects
of reducing ammonia emissions in specific nonattainment areas, it may be
appropriate for ammonia reduction strategies to be included in future
SIPs. *

*Regarding the comment related to ammonia emissions from NO~x~ control
systems, we disagree that such emissions should be excluded from a
state's demonstration that ammonia should be regulated as a PM~2.5~
precursor.  Rather, we believe that a state should evaluate all sources
of ammonia emissions when determining whether to regulate ammonia under
its PM~2.5~ NSR program for a particular nonattainment area.  At the
same time, however, we also encourage states to be mindful of the
potential tradeoff in terms of ambient PM~2.5~ concentrations that may
be related to reducing ammonia emissions from NO~x~ control systems.*

## Other Comments on Precursors

**[Comment:]{.underline}**

One state/local agency (0137.1) asserted that sections (*c*) and (*d*)
of 40 CFR­ 52.21(b)(50)(i) "should be very clear" regarding "how EPA
intends to implement the PSD program where it is the permitting
authority."  The commenter stated that the rule should allow for little
or no direction from the state to EPA given it is EPA's decision and
responsibility to implement the PSD program as opposed to that of the
state (or Tribe) that chose not to implement its own PSD program under
the requirements of 40 CFR 51.166.

**[Response:]{.underline}**

*The EPA agrees with the commenter that it is EPA's decision and
responsibility to implement these sections* (c) *and* (d) *of 40 CFR
52.21(b)(50)(i) as opposed to that of the state or Tribe.  This is not
to say, however, that EPA could not consider information provided by
another party (e.g., state) in making its determination, if it concluded
that such information was relevant and warranted consideration.*

*NOTE:  For additional general and specific information regarding our
regulation of precursors to PM~2.5~, please see sections II.A.2 though
II.A.6 of the preamble to the final Clean Air Fine Particle
Implementation Rule (72 FR 20586).*

# Comments on Major Source Thresholds for Direct PM~2.5~ and Precursor Emissions under Major NSR

The Act contains definitions of "major emitting facility" and "major
stationary source" that apply to PSD and NA NSR programs, respectively.
For convenience, we use the term "major source" to refer to both. A
stationary source is a "major source" if its' actual emissions or its
potential to emit (PTE) for a specific pollutant equals or exceeds the
major source threshold for that pollutant. Different pollutants,
including precursors, are not summed to determine applicability.

## Comments on EPA's Authority to Deviate from the Statutory Definitions of Major Source

In title I of the Act, part C sets forth the requirements for PSD
programs. Section 169(1) of part C provides the major source definition
for the PSD program. It specifies that the major source threshold for
PSD is 100 tons per year (tpy) for specifically-listed source categories
and 250 tpy for all other types of sources.

Part D of title I of the Act sets forth the requirements for
nonattainment areas, including NA NSR programs. Subpart 1 of part D
applies generally to nonattainment areas, while subpart 4 sets out
additional requirements for PM~10~ nonattainment areas. Under subpart 1,
the major source definition found at section 302(j) of the Act, which
specifies a threshold of 100 tpy, is applicable. Subpart 4 sets up a
classification system for PM~10~ nonattainment areas based on the
severity of the nonattainment problem. Under this system, the major
source threshold for moderate PM~10~ nonattainment areas is 100 tpy
\[the default definition under section 302(j)\], while the threshold for
severe PM~10~ nonattainment areas is 70 tpy \[as defined under section
189(b)(3)\].

We proposed to follow the definition of major source in section 169 of
the Act for the PSD program, setting a major source threshold of 100 or
250 tpy for PM~2.5~ and its precursors depending on the source category.
We proposed to implement the NA NSR program under subpart 1 of part D,
based on our interpretation that subpart 4 of part D does not apply to
PM~2.5~. Thus, we proposed that section 302(j) of the Act is controlling
for the PM~2.5~ NA NSR program, with a 100 tpy major source threshold
for PM~2.5~ and its precursors.

### Definition of Major Source for the PSD Program

**[Supporting Comments:]{.underline}**

One industry commenter (0111.1) and one industry group commenter
(0096.1) supported our proposal to follow the definition in sections
169(1) for purposes of defining major sources subject to the PSD program
in attainment or unclassifiable areas. The industry commenter (0111.1)
indicated that the proposed PSD threshold is based on clear statutory
language and should be adopted in the final rule. The industry group
commenter (0096.1) stated that EPA has no discretion to deviate from the
major source threshold that Congress prescribed by statute for the PSD
program. This commenter believes that to do so would be contrary to a
clear statutory mandate as set forth under part C and subpart 1 of the
Act. The commenter noted that these statutory thresholds are defined
with precise annual tonnage levels and Congress has expressly identified
particular criteria pollutants (e.g., ozone and PM~10~) and specific
nonattainment circumstances as the only situations where these major
source thresholds are lowered by specific amounts. The commenter went on
to state that apart from these instances, Congress has conveyed no
authority to adopt different major source thresholds and, as a result,
EPA must adopt the current 250 tpy and 100 tpy thresholds that apply
under part C for PSD.

**[Opposing Comments:]{.underline}**

A coalition of environmental organizations (0154.1) argued that EPA
should use a lower threshold for PSD than the one set forth in section
169(1). As support for this approach, these commenters cited the general
PSD goal in section 160(1) to "protect public health and welfare" and
the provision in section 166(c) pertaining to the content of
pollutant-specific PSD regulations.

**[Response:]{.underline}**

*We agree with the comments supporting the position that section 169(1)
is controlling for PM~2.5~ and that, consequently, the PM~2.5~ major
source threshold for the PSD permit program must be 100 tpy for listed
source categories and 250 tpy for unlisted categories. The EPA has
proposed (72 FR 54112) and will promulgate an additional regulation
containing PSD increments of PM~2.5~, which will address the
requirements of section 166(c) and the incorporated goals and purposes
in section 160 of the Act. We do not interpret the general goal to
"protect health and welfare" to supersede the clear definition in
section 169(1) of a major emitting facility subject to PSD permit
requirements. Although section 166 authorizes EPA to promulgate
additional measures to prevent significant deterioration, nothing in
section 160 or 166 gives EPA the authority to set aside the statutory
requirements pertaining to the size of sources subject to the
preconstruction permitting program for major sources under subpart C of
title I of the Act.*

### Definition of Major Source for the NA NSR Program

**[Supporting Comments]{.underline}:**

One industry commenter (0111.1) and one industry group commenter
(0096.1) supported our proposal that the definition in section 302(j) of
the Act is controlling for purposes of defining major sources for the NA
NSR program for PM~2.5~. The industry commenter (0111.1) indicated that
the proposed major source threshold for NA NSR is based on clear
statutory language and should be adopted in the final rule. The industry
group commenter (0096.1) stated that EPA has no discretion to deviate
from the major source thresholds that Congress prescribed by statute for
the NA NSR program. This commenter believes that to do so would be
contrary to a clear statutory mandate under subpart 1 of part D of the
Act. The commenter noted that these statutory thresholds are defined
with precise annual tonnage levels and Congress has expressly identified
particular criteria pollutants (e.g., ozone and PM~10~) and specific
nonattainment circumstances as the only situations where these major
source thresholds are lowered by specific amounts. The commenter went on
to state that apart from these instances, Congress has conveyed no
authority to adopt different major source thresholds and, as a result,
EPA must adopt the 100 tpy threshold that applies under subpart 1 of
part D for NA NSR.

Another industry group commenter (0109.1) stated that since the 1997
PM~2.5~ NAAQS were added after promulgation of the 1990 Amendments, EPA
should implement the PM~2.5~ NAAQS under subpart 1 and not subpart 2 of
part D, title I of the Act. Thus, the commenter asserted, the
applicability levels already defined in 40 CFR part 51, appendix S
should continue to apply.

**[Opposing Comments]{.underline}:**

Two state/local agency commenters (0142, 0168), one state/local agency
association commenter (0136.2), and one group of environmental
commenters (0154.1) argued that EPA is not bound by section 302(j) of
the Act in defining the major source thresholds for the NA NSR program
for PM~2.5~. The state/local agency association (0136.2) believes that
EPA has ample authority under section 171 of the Act to develop more
protective thresholds that will result in expeditious attainment. The
commenter noted that section 171 states that "\[t\]he term 'reasonable
further progress' means such annual incremental reductions in emissions
of the relevant air pollutant as are required by this part or may
reasonably be required by the Administrator for the purpose of ensuring
attainment of the applicable national ambient air quality standard by
the applicable date." Thus, the commenter believes, Congress gave the
Administrator the flexibility to require emissions reductions that will
ensure attainment of the NAAQS. The commenter stated that more stringent
major NSR thresholds for direct PM~2.5~ emissions would assist states in
achieving prompt attainment of the PM~2.5~ NAAQS.

One state/local agency commenter (0142) stated that in order to address
the impact of high particulate concentrations, the Act mandates EPA to
define a criteria pollutant's major NSR threshold at levels less than
100 tpy. The commenter pointed out that subparts 2 and 4 of part D of
the Act define lower major source thresholds. The commenter believes
that it is unreasonable for EPA to assert that subpart 4 does not apply
to PM~2.5~. The commenter asserted that subpart 4, which regulates all
PM with a diameter of less than 10 m, is directly applicable to the
proposed rule on PM~2.5~. The commenter stated that we recognized as
much in section III.I.5 of the proposal preamble, which specifically
asserted that our options for implementing reasonably available control
technology (RACT) "would be consistent with the approach set forth in
the CAA in subpart 4" (70 FR 66017). In fact, EPA also noted the
similarities between PM~10~ and PM~2.5~ in justifying "comparable RACT
approach\[es\]" for the pollutants (70 FR 66018). The commenter asserted
that our later statement in the NSR context that subpart 4 does not
apply to PM~2.5~ is therefore disingenuous and unsupported by the Act,
and that a reasonable interpretation of the Act requires major sources
of direct PM~2.5~ and precursor emissions to be defined at a baseline
level of 70 tpy, and adjusted further downward as appropriate
considering the characteristics and potential impacts of the pollutants.

The second state/local agency commenter (0168) similarly stated that in
order to address the impact of high particulate concentrations, the Act
allows EPA to define a criteria pollutant's major NSR threshold at
levels less than 100 tpy, as evidenced by the fact that subparts 2 and 4
of part D of the Act define lower major source thresholds. The commenter
asserted that the physical properties, atmospheric chemistry, and health
effects of PM~2.5~ closely match those of PM~10~. Noting that subpart 4
classifies major PM~10~ sources in "serious" PM~10~ nonattainment areas
as 70 tpy or greater, the commenter suggested that this value could be
used as a basis for defining the PM~2.5~ major source threshold based on
the same logic applied when calculating a PM~2.5~ SER from the existing
PM~10~ SER. The commenter stated that when this methodology is applied,
a major source located in a "serious" PM~2.5~ nonattainment area is
defined as 45 tpy or greater, and if subpart 2 of part D is used as a
guide, either the "serious" major source threshold of 50 tpy or the
"severe" major threshold of 25 tpy could be used to define a major
source of direct PM~2.5~ emissions.

The group of environmental commenters (0154.1) stated that EPA must use
a major source definition threshold lower than the one listed in section
302(j) for NA NSR. At a minimum, the commenters stated, EPA must apply
the major source definition found in section 189(b)(3) of 70 tpy as the
nonattainment area NSR threshold for PM~2.5~ emissions.

**[Response:]{.underline}**

*We disagree with the commenters who believe the CAA gives EPA authority
to establish a major source threshold for PM~2.5~ lower than 100 tpy in
NA NSR programs. We continue to read the language of section 302(j) of
the Act to be controlling in this situation and that, consequently, we
are not authorized under subpart 1 to establish a mandatory NA NSR major
source threshold for PM~2.5~ other than 100 tpy. We emphasize here, as
we did in the preamble to the proposed rule, that this approach for NA
NSR is consistent with how we treat other criteria pollutants that are
covered by subpart 1 of part D of title I of the Act, and thus are not
subject to a tiered classification system such as the one required for
ozone nonattainment areas under subpart 2 of part D. We disagree with
the commenters who stated that we must establish a lower threshold based
on the provisions in subparts 2 and 4 of part D of the Act.*

*Under section 172(c)(5) of the Act, the mandatory NA NSR permitting
requirements are applicable to "major stationary sources."
Section 302(j) of the Act defines a "major stationary source" as one
that emits 100 tpy or more "except as otherwise expressly provided."
Since neither section 172 or any other provision in subpart 1 expressly
provides EPA with authority to define a major stationary source
differently and subparts 2 and 4 are not applicable to PM~2.5~, we do
not believe we are authorized to promulgate a major source threshold
lower than 100 tpy for PM~2.5~ under subpart 1 of part D of title I of
the Act.*

*As discussed in more detail in EPA's Clean Air Fine Particle
Implementation Rule (72 FR 20586) and the supporting record, we do not
agree that EPA must apply subpart 4 of part D of the Act in PM~2.5~
nonattainment areas. See pp. 9-14, Responses to Significant Comments on
2005 Proposed Rule to Implement the Fine Particle NAAQS
(EPA-HQ-OAR-2003-0062-251). We believe that the Act is permissibly
construed to allow EPA to implement the PM~2.5~ standard under only
subpart I of part D, which contains the general provisions of the Act
related to NAAQS implementation. Part D of title I of the Act sets forth
the requirements for SIPs needed to attain the NAAQS. Part D also
includes a general provision under subpart 1, which applies to all NAAQS
for which a specific subpart does not exist. Because the PM~2.5~
standards were not established until 1997, the nonattainment plan
provisions that apply are found in section 172 of subpart 1. Subpart 4
was added to the Act by Congress in 1990 to establish a specific set of
mandatory measures for areas that were not yet in attainment with the
PM~10~ NAAQS, which was promulgated in 1987 as a substitute for the
particulate matter NAAQS that had existed for much longer. Thus, it is
reasonable to conclude that Congress intended for the particularized
elements of subpart 4 to apply to PM~10~ nonattainment areas. Congress
also did not intend to constrain EPA and state discretion with respect
to the implementation of a new NAAQS and a new set of nonattainment
areas that would not be identified until after subpart 4 was created.
Thus, we believe it is permissible to read subpart 4 on its face to
apply only to the PM~10~ standard.*

*In general, the emphasis in subpart 4 on reducing PM~10~ concentrations
from certain sources can be somewhat effective in certain PM~2.5~
nonattainment areas, but not in all. Contributions to PM~2.5~
concentrations typically are from a complex mix of sources of primary
(direct) PM~2.5~ emissions and sources of precursor emissions which form
particles through reactions in the atmosphere. Ambient PM~2.5~ also
differs from PM~10~ in terms of atmospheric dispersion characteristics,
chemical composition, and contribution from regional transport.*

*To the extent that EPA may have proposed in other parts of its Clean
Air Fine Particle Implementation Rule to implement certain CAA
requirements consistent with the requirements of subpart 4, that does
not constitute an interpretation that it is mandatory that EPA apply the
particular requirements for PM~10~ in subpart 4 to PM~2.5~. The EPA has
been consistent in stating that it does not interpret subpart 4 to apply
to PM~2.5~, notwithstanding any proposal by EPA under other CAA programs
to follow an element in subpart 4 where EPA has discretion to do so.*

*We realize that this approach results in a higher major source
threshold in PM~2.5~ nonattainment areas than the major source threshold
that applies in some PM~10~ nonattainment areas under subpart 4 of
part D of the Act. However, this scenario is not one that we have the
authority to correct under subpart 1. Section 189(b) of the Act
establishes a 70 tpy major source threshold for "serious" PM~10~
nonattainment areas. Section 302(j) provides that we must use a 100 tpy
threshold for PM~2.5~ except as expressly provided elsewhere in the Act.
Since the Act contains no express authority to establish a different
threshold for PM~2.5~, we are applying a 100 tpy major source threshold
to all PM~2.5~ nonattainment areas based on the definition in section
302(j).*

*EPA does not agree with the commenter who suggested we use the major
source thresholds in subpart 2 as a guide for a PM~2.5~ major source
threshold. It is clear that these thresholds for ozone nonattainment
areas under subpart 2 of the Act are not applicable to particulate
matter of any size. Furthermore, subpart 2 establishes major source
threshold for an ozone precursor (VOCs) rather than ozone itself. In
light of the different chemistry involved in the formation of ozone and
PM~2.5~ and our determination that there is not a sufficient basis to
regulate VOCs as a PM~2.5~ precursor, it would not be technically sound
to look to the major source thresholds in subpart 2 as a guide in the
development of a major source threshold for direct PM~2.5~ emissions.*

*Although the courts have concluded subpart 2 applies for purposes of
implementing the 8-hour ozone NAAQS in at least some 8-hour ozone
nonattainment areas, the rationale applied by the court in drawing this
conclusion does not result in the same conclusion regarding the
applicability of subpart 4 to a PM~2.5~ NAAQS. As EPA explained in full
in the Response to Comment document for the Clean Air Fine Particle
Implementation Rule, subpart 4 speaks exclusively to a PM~10~ standard,
while subpart 2 speaks more generally to any "ozone" standard. We also
note that, unlike the situation for PM, where both a PM~10~ standard
(which continues to be implemented under subpart 4) and a PM~2.5~
standard are in place, the 8-hour ozone NAAQS was promul­gated as a
replacement for the 1-hour ozone NAAQS. In contrast, EPA promulgated the
PM~2.5~ NAAQS as an additional standard that did not replace the PM~10~
NAAQS. See pp. 9-12, Responses to Significant Comments on 2005 Proposed
Rule to Implement the Fine Particle NAAQS (EPA-HQ-OAR-2003-0062-251).*

*We do not agree with the commenters who asserted that EPA could
establish a lower major source threshold based on the definition of
"reasonable further progress" in section 171 of the Act. The term
"reasonable further progress" is used in the NA NSR provisions of the
Act in conjunction with the offset requirement in section 173(a)(1)(A).
Section 171 does not contain a definition of major source and the
controlling definition of "major source" in section 302(j) does not
indicate that it is modified by the "reasonable further progress"
requirement of the Act. Thus, Congress made clear that offsets issued
under the NA NSR should be consistent with "reasonable further progress"
but did not specify than any other aspect of the major NSR program,
including the population of sources subject to the program, was modified
by the reasonable further progress requirement. Nothing in this
rulemaking precludes states from subjecting sources emitting less than
100 tons of PM~2.5~ from meeting requirements similar to those in
section 173 of the Act if they believe this is necessary to ensure RFP.
However, the Act does not authorize EPA to adopt a different major
source threshold for PM~2.5~ than the one set forth in the Act (under
either subpart 1 or subpart 4) in order to direct states how to achieve
RFP under section 171 of the Act.*

*While we do not believe that EPA is authorized to establish a lower
major source threshold for PM~2.5~, the Act does not preclude a state
from using lower major source thresholds within its major NA NSR program
if it so determines. Under Section 116 of the Act, states retain the
authority to adopt any air pollution measures that they deem
appropriate, provided such measures are not less stringent than
corresponding Federal regulations.*

## Comments on the Appropriate Major Source Thresholds for Direct PM~2.5~ Emissions

As noted above, we proposed to set the major source threshold for PSD at
100 or 250 tpy for PM~2.5~ direct emissions, depending on the source
category. We proposed to set the major source threshold for NA NSR at
100 tpy for PM~2.5~ direct.

### Prevention of Significant Deterioration Major Source Threshold

**[Comments:]{.underline}**

Two industry commenters (0083.1, 0140) and one industry group commenter
(0096.1) believed that EPA should establish the PSD applicability levels
for PM~2.*5*~ at the current 100/250 tpy thresholds. Two of these
commenters (0096.1, 0140) added that changing these applicability levels
for PM~2.*5*~ would add more complexity to the rule with little benefit.
One commenter (0096.1) said that retaining the existing threshold levels
will avoid having different levels for the same criteria pollutant,
whether it is PM or other precursor emissions that may be regulated
under the NSR program.

A coalition of environmental organizations (0154.1) argued that EPA
should use a lower threshold for PSD than the one set forth in section
169(1) to protect public health and welfare notwithstanding compliance
with the NAAQS.

**[Response:]{.underline}**

*As described above, EPA believes section 169(1) of CAA is controlling
for PM~2.5~ and thus the PSD threshold for this pollutant must be 100
tpy for listed source categories and 250 tpy for unlisted categories. If
EPA had the authority to selected different thresholds for PM~2.5~, we
agree that having different major threshold for this pollutant would add
more complexity to the PSD regulations. As stated earlier, EPA has
proposed a separate PSD regulation containing increments for PM~2.5~
that are intended to fulfill the "health and welfare goal" cited by the
opposing commenter. Once the minor source baseline date for a pollutant
is triggered in an area, the increments for that pollutant are consumed
by subsequent emissions increases at all sources (regardless of whether
they are classified as major or minor).*

### Nonattainment NSR Major Source Threshold

**[Supporting Comments:]{.underline}**

One state/local agency (0117.1) supported EPA's recommendation of
setting the major source threshold for PM~2.5~ at 100 tpy under NA NSR.

Two industry commenters (0083.1, 0140) believe that EPA should allow the
NA NSR threshold to remain set at 100 tpy. One of the industry
commenters (0140) added that changing this applicability level would add
more complexity to the rule with little benefit.

One group of industry commenters (0096.1) believes that there are strong
policy reasons for retaining the current major source threshold. The
commenters stated that one important consideration is the minimal
environmental gains of lowering the major source threshold for PM~2.5~,
and indicated that lowering the threshold from 100 tpy to 70 tpy in
PM~2.5~ nonattainment areas, for example, would not increase
significantly the number of sources covered under the NA NSR program.
The commenters added that lowering the threshold would just add
regulatory complexity with marginal benefit to air quality, at most.
Among other things, the commenters noted that retaining the existing
threshold level would avoid having different levels for the same
criteria pollutant, whether it is PM or other precursor emissions that
may be regulated under the NSR program.

**[Opposing Comments:]{.underline}**

Six state/local agency commenters (0079.1, 0080.1, 0084.1, 0142, 0164,
0168) and two state/local agency association commenters (0136.2, 0165)
did not agree with the proposed major source threshold of 100 tpy for
direct PM~2.5~ emissions under NA NSR.

One state/local agency commenter (0153) believes that EPA did not
provide an adequate technical defense of its selection of the major
source thresholds for PSD and NA NSR and cannot support any level
without a sufficient defense. The commenter indicated that common sense
would dictate that a fraction of PM would have lower equivalent
thresholds, noting that this principle was demonstrated in the levels of
NAAQS with each smaller PM fraction having a lower NAAQS. Another of the
state/local agency commenters (0164) pointed out that PM~2.5~ is a
subset of PM~10~ and should have correspondingly lower thresholds.

Other state/local agency commenters stated that lower major source
thresholds were justified on the basis of the significant number of
sources with PM~2.5~ emissions between 25-99 tpy and the potential for a
source with this level of emissions to cause a significant impact on
ambient PM~2.5~ concentrations and public health. (We discuss these
particular justifications in more detail in our response, below.)

A coalition of environmental groups commented that, since EPA has
repeatedly found PM~2.5~ to be at least as potent, if not more potent,
in terms of mass concentration than PM~10~, it would be arbitrary for
EPA to not at least adopt the 70 tpy major source threshold in
section 189(b)(3) for all PM~2.5~ nonattainment areas.

One Federal agency commenter (0068) supported an NSR policy on PM~2.5~
components and precursors that is consistent with the nonattainment area
plan requirements. As to what constitutes appropriate major source
thresholds of PM~2.5~ or precursor emissions for the purpose of the
major NSR program, the commenter encouraged EPA to look at all relevant
parts of the Act for guidance on developing its policy. If EPA were not
constrained from considering provisions of the act that may help ensure
attainment and maintenance of the PM~2.5~ NAAQS, such as the more
stringent emissions thresholds Congress required in subpart 4 for PM~10~
nonattainment areas, then the commenter would support that approach. The
commenter indicated that the increased risk of adverse health effects
from fine PM, generally, as well as consideration for other
well-documented pollutant effects that would need to meet requirements
of section 110(a)(2)(D) of the Act, may help justify the use of lower
thresholds for direct PM~2.5~ and PM~2.5~ precursors emissions.[^1]

**[Response:]{.underline}**

*Although we have* considered the technical merit of the 100 tpy major
source threshold *for PM~2.5~ in nonattainment areas, as discussed
above, we do not interpret the CAA to give the Administrator the
authority to establish a lower threshold for PM~2.5~ based on technical
considerations. Since Congress established the major source thresholds
for the NA NSR permitting program in the Act, it is ultimately not
material whether there is an adequate technical justification for the
levels because we are not authorized to establish an alternative level
for PM~2.5~ based on technical considerations. Section 302(j) is
explicit that "except as otherwise expressly provided," the term major
source, means a source that has the PTE 100 tpy. Even if subpart 4 were
applicable to PM~2.5~, this would at most give us the authority to
establish a major source threshold of 70 tpy in only serious
nonattainment areas. No other provision of the CAA expressly provides
EPA with the discretion to establish a major source threshold for
PM~2.5~ in the range of 25-50 tpy for nonattainment areas.*

*We agree that the greater health risk posed by PM~2.5~ and the fact
that PM~2.5~ is a fraction of total PM both justify lower air quality
standards for PM~2.5~, but we do not agree that these facts necessarily
require EPA to establish a lower major source threshold under the NA NSR
program to achieve attainment or RFP. The major source threshold serves
a different function than the NAAQS. The major source definition
determines which large sources are subject to the mandatory
preconstruction permitting program under subpart D of the Act. Congress
made the judgment that those sources emitting greater than the major
source level in the Act should be subject to a mandatory permitting
programs with specific requirements. For sources with emissions below
the statutory level, Congress left the states with the discretion to
define the requirements needed for a construction permitting program (or
other measures) in order to reach attainment with the NAAQS and to
achieve RFP toward the same. Thus, the major source threshold is simply
a level that determines the sources subject to the mandatory permitting
requirements and this does not necessarily mean that there will not
otherwise be sufficient measures in place to protect air quality.
Furthermore, since PM~2.5~ particles have distinct health and welfare
impacts from PM~10~, we do not interpret subpart 4 of the CAA to apply
to PM~2.5~ simply because PM~2.5~ is a subset of the particles that make
up PM~10~. The EPA's interpretation is explained more fully on pages
12-14 of EPA's Response to Comments document for the Clean Air Fine
Particle Implementation Rule (EPA-HQ-OAR-2003-0062-251).*

*We do not believe that using 100 tpy for the NA NSR program for PM~2.5~
will adversely affect attainment of the PM~2.5~ NAAQS. Data from EPA's
emissions inventory indicate that a significant number of sources have
actual direct PM~2.5~ emissions greater than 100 tpy range. Thus, the
mandatory permitting requirements for major sources will have an impact
and hold down emissions increases from new or modified sources with
emissions of PM~2.5~ above the 100 tpy level. Furthermore, the exclusion
of sources with PM~2.5~ emissions below 100 tpy from the NA NSR program
does not preclude states from taking other measures to address the
PM~2.5~ emissions from these sources if necessary to achieve attainment
or RFP. As we discuss elsewhere in this document, states that believe
such sources should be subject to requirements similar to those in
section 173 have the discretion to establish such requirements in
preconstruction permit programs for minor sources.*

*If EPA had the authority to select different thresholds for PM~2.5~, we
agree that having a major threshold for PM~2.5~ other than 100 tpy would
add more complexity to the NA NSR regulations.*

**[Comments:]{.underline}**

Several state agency and association commenters (0136.2, 0142, 0165,
0168) disagreed with our analysis in the proposed rule that "the more
current inventory data shows that the number of sources that would be
covered as major sources by a lower major source threshold would not
increase substantially unless the threshold were lowered to 20 tpy or
below" (70 FR 66037). These commenters referred to state analyses, which
they argue supports a contrary conclusion that a lowered major threshold
level in the 25-50 tpy range would significantly increase (i.e.,
essentially double) the number of sources subject to major NSR review.
One of these commenters (0136.2) said that a number of state agencies
reviewed their emission inventories and found a signifi­cant number of
sources that emit at levels between 45-99 tpy. However, the commenter
did not identify the specific states. The other commenters (0142, 0165,
0168) all cited to a single analysis performed by the State of New
Jersey. Based on a review of its emissions inventory, New Jersey
concluded that there are approximately 26 facilities in New Jersey with
allowable PM~10~ emissions greater than 100 tpy and approximately 56
facilities within this state with allowable PM~10~ emissions between
45-99 tpy.

**[Response:]{.underline}**

*Commenters have not provided sufficient information to persuade us that
our analysis is not reliable. The EPA's analysis was based on a
nationwide inventory and used PM~2.5~ emissions, whereas most commenters
rely on an analysis from a single state based on an inventory of PM~10~
emissions. The use of PM~10~ emissions tends to bias the New Jersey
analysis upwards, increasing the number of sources in the 45-99 ton per
year range, and decreasing the number of sources below this range. The
EPA's national inventory data for PM~2.5~ show that the number of
sources that would be covered as major sources by a lower major source
threshold would not increase substantially unless the PM~2.5~ threshold
were lowered to 20 tpy or below. Thus, even if EPA had the authority to
adopt a 25-50 tpy major source threshold for PM~2.5~ nonattainment
areas, we still do not believe that many additional sources would be
subject to the major NSR program in PM~2.5~ nonattainment areas,
notwithstanding the analysis cited by the commenters. The commenters
that cursorily refer to analyses in more than one state did not provide
enough information about such analyses to enable EPA to evaluate these
assessments or compare the results with EPA's assessment.*

*Even if the commenters could show that a 25 tpy cutoff would double the
number of sources subject to major NSR across the country, we do not
believe that our lack of authority to adopt such a major source
threshold for PM~2.5~ will have significant adverse impact on attainment
of the PM~2.5~ NAAQS. Section 110(a)(2)(C) of the Act and 40 CFR
51.160(b)(2) require state minor NSR programs to assure compliance with
the NAAQS, and these programs can be implemented to prevent attainment
problems that might be caused by source actions that are not subject to
the major NSR program. In addition, as previously noted, the Act does
not constrain states from setting lower major source thresholds for
PM~2.5~ in their major NSR programs. States also may develop other SIP
provisions to regulate direct PM~2.5~ and precursor emissions from
sources with lower emissions.*

**[Comments:]{.underline}**

Three state/local agency and association commenters (0142, 0165, 0168)
believe that a lower major source threshold is justified by the
potential of sources with direct PM~2.5~ emissions of 25 to 99 tpy to
cause high ambient PM~2.5~ impacts. These commenters said this impact
justifies a lower major source threshold to avoid adverse health effects
caused by relatively low ambient concentrations of PM~2.5~ and to ensure
RFP toward attainment of the PM~2.5~ NAAQS in nonattainment areas.

According to two of these commenters (0142, 0165), section III.M.5.b of
EPA's proposal (70 FR 66038) describes a modeling analysis conducted by
EPA to compare PM~2.5~ stack emissions to the resulting ambient impact.
Based on the results of this modeling \[15 tpy of PM~10~ emissions
results in up to 0.8 microgram per cubic meter (g/m^3^) annual PM~10~
concentration\], one can conclude that a 99 tpy source of direct PM~2.5~
could have up to a 5.3 g/m^3^ annual PM~2.5~ impact. This represents 35
percent of the current PM~2.5~ annual NAAQS of 15 g/m^3^. A similar
problem is found for short-term PM~2.5~ impacts, when scaling the
results of the 24-hour modeling presented in section III.M.5.b (70 FR
66038). A 99 tpy PM~2.5~ source could have up to a 39.6 g/m^3^ 24-hour
PM~2.5~ impact. This concentration is approximately 61 percent of the
current PM~2.5~ 24-hour NAAQS of 65 g/m^3^. The issue becomes even more
problematic if the standards are lowered in the future. Under the
recently proposed PM~2.5~ 24-hour NAAQS of 35 g/m^3^, emissions from a
99 tpy PM~2.5~ source could violate the 24-hour NAAQS.[^2]

**[Response:]{.underline}**

*The potential for a source emitting less than 100 tpy of PM~2.5~ to
cause high ambient PM~2.5~ impacts provides a justification for the
state to address the construction of such a source through its minor
source permitting program or other measures in its SIP. However, it does
not necessarily require mandatory application of the NA NSR requirements
under the CAA. As discussed above, EPA does not read the Act to
authorize the agency to lower the major source threshold for PM~2.5~ on
the basis of the potential for a source less than 100 tpy to have a high
ambient impact on PM~2.5~. We do not see any provision in the Act (under
either subpart 1 or subpart 4) that gives EPA the authority to lower the
major source threshold on the basis of the potential ambient air impact
of a source emitting less than 100 tpy of PM~2.5~.*

*With respect to the health impacts, EPA has established the PM~2.5~
NAAQS at a level requisite to protect health with an adequate margin of
safety. States are obligated to submit implementation plans to achieve
attainment with the NAAQS and to achieve RFP toward attainment. Public
health is protected by states complying with these requirements of the
Act and meeting the NAAQS. To the extent implementation of the NA NSR
program, using the major source threshold reflected in the Act, is
insufficient to attain the NAAQS, it is incumbent upon states to develop
additional measures to attain the NAAQS. Congress did not authorize EPA
to lower the 100 tpy major source level for NA NSR to make up for a
failure of states to include such measure in their plans. To the extent
that commenters are concerned about transport from other states that do
not have measures as effective as their own, EPA has established the
CAIR to ensure that states control their contribution to downwind
nonattainment of the PM~2.5~ NAAQS.*

*As discussed above, for major NSR in nonattainment areas, the RFP
requirement is integrated with the offset requirement in section
173(a)(1)(A) of the Act. In light of the way Congress defined "major
source" under the CAA, EPA does not have the authority to lower the
major source threshold for NA NSR on the basis of concerns about RFP.
States have the obligation to establish additional measures in their
SIPs (including the minor NSR program) where such measures are necessary
to achieve RFP. The EPA does not read the Act to give it the authority
to mandate major NSR permitting requirements for source below 100 tpy
based on concerns regarding RFP.*

**[Comment:]{.underline}**

One of the state/local agency commenters (0142) believes that an
appropriate major source threshold for PM~2.5~ emissions can be
calculated using the current SO~2~ and NO~x~ definitions of major source
and SER. The commenter suggested that the ratio of these values (100 tpy
and 40 tpy) can be multiplied by the proposed PM~2.5~ SER of 10 tpy (see
section 4 below for more on the PM~2.5~ SER), resulting in a PM~2.5~
major source threshold of 25 tpy. The commenter indicated that this 25
tpy major source value would provide consistency with those of the
PM~2.5~ precursors SO~2~ and NO~x~. The commenter pointed out that EPA
has recognized the need to define a PM~2.5~ SER at a lower level than
those of SO~2~ and NO~x~, and suggested that common sense would dictate
that the same logic be used to define a PM~2.5~ major source at a lower
level than 100 tpy. The commenter (0142) noted that the levels of
PM~2.5~ that produce adverse health effects are much lower than most
other criteria pollutants regulated by us under NA NSR.

**[Response:]{.underline}**

*We reiterate that we do not believe that the Act gives EPA the
authority to establish a lower PM~2.5~ major source threshold for NA
NSR, whether such level is based on the SO~2~ and NO~x~ thresholds and
SERs or some other methodology. In any case, the major source thresholds
and SERs for SO~2~ and NO~x~ were not defined in relation to one
another, and therefore their relationship would not provide a suitable
basis for developing the PM~2.5~ major source threshold from the PM~2.5~
SER. Major source thresholds are defined in the Act, while the
significant emissions rates were codified independently in regulations
based on an analysis of ambient impacts relative to the applicable
NAAQS.*

**[Comment:]{.underline}**

One state/local agency association (0136.2) recommended a major source
threshold in the range of 25-50 tpy of direct PM~2.5~ in areas that are
likely to attain the PM~2.5~ NAAQS within 5 years, and a level of 10-25
tpy in areas that are likely to take more than 5 years to achieve the
NAAQS. One of the state/local agency commenters (0080.1) recommended
direct PM~2.5~ emission thresholds of 25 tpy for nonattainment areas
showing attainment within 5 years and 15 tpy for areas showing
attainment beyond 5 years. Another state/local agency commenter (0079.1)
suggested a direct PM~2.5~ emission threshold of between 25 and 50 tpy.

**[Response:]{.underline}**

*For reasons similar to those discussed above, we do not interpret
subpart 1 of the CAA to provide EPA with the authority to require that
all states use different major source thresholds on the basis of the
projected time it will take for an area to achieve attainment. However,
states that choose to do so have the discretion to include provisions in
their SIPs that establish requirements modeled on the major NSR program
for sources of this size based on the time projected for each area to
reach attainment.*

### Comments on Relationship of the NSR Major Source Threshold to RACT Thresholds 

**[Comments:]{.underline}**

The group of environmental commenters (0154.1) stated that EPA must use
major source thresholds consistent with the stationary source size
thresholds proposed for RACT in option 2.[^3] The commenters indicated
that NSR requirements should be applied to any source located in a
nonattainment area that has the PTE more than 50 tpy of direct PM~2.5~
emissions or of any precursor to PM~2.5~. The commenters believe that
doing so is justified by the seriousness of the health risks posed by
PM~2.5~ and would help advance attainment by bringing more sources under
the NSR requirements. At a minimum, the commenters stated, EPA must
apply the major source definition found in section 189(b)(3) of the Act
(i.e., 70 tpy) as the nonattainment area NSR threshold for PM~2.5~
emissions.

**[Response:]{.underline}**

*We disagree that the discussion of RACT alternatives has bearing on the
major NSR threshold. In our proposal preamble discussion of RACT we
discussed developing a classifi­cation system for PM~2.5~ nonattainment
areas under section 172(a)(1) of subpart 1, but we did not discuss
subjecting PM~2.5~ to the requirements of subpart 4. (We ultimately
decided not to use a PM~2.5~ classification system.) While our
discussion of RACT contemplated a lower threshold for RACT applicability
in some or all PM~2.5~ nonattainment areas, we did not characterize this
as defining a lower major source threshold. Finally, in section III.I.5
of the proposal preamble*

*(70 FR 66017-20), we pointed to the RACT approach adopted in both
subpart 2 (ozone nonattainment areas) and subpart 4 (PM~10~
nonattainment areas) as a potential model for the approach to PM~2.5~
RACT, but we also discussed other approaches. We believe it is a
mischarac­terization of the discussion to imply that we tied RACT for
PM~2.5~ to the approach for PM~10~ in subpart 4. In fact, in the final
Clean Air Fine Particle Implementation Rule we elected not to use the
approach to RACT found in subparts 2 and 4.*

*Furthermore, the applicability of RACT is not governed by the major
source definition in section 302(j) of the Act. As discussed elsewhere
in this section, we believe the language in section 302(j) is
controlling for PM~2.5~ and does not authorize EPA to establish a
PM~2.5~ major source threshold other than 100 tpy for the NA NSR
program. In contrast, the Act does not establish any specific
app­licability thresholds for RACT or identify the size of sources that
should be subject to this requirement. Thus, although we may have
recognized the authority to consider different size threshold for
application of RACT to PM~2.5~, we do not have the authority to consider
lower major source thresholds for PM~2.5~ under the NA NSR program.*

## Comments on the Appropriate Major Source Thresholds for Precursor Emissions

As noted above, we proposed to set the major source threshold for PSD at
100 or 250 tpy for PM~2.5~ precursors, depending on the source category.
We proposed to set the major source threshold for NA NSR at 100 tpy for
PM~2.5~ precursors.

**[Comments:]{.underline}**

One state/local agency association (0136.2) and one state/local agency
(0080.1) agreed with the 100 tpy threshold under NA NSR for precursors.
No commenters opposed EPA's proposal to use the statutory major source
thresholds for PM~2.5~ precursors.

**[Response:]{.underline}**

*EPA is adopting the proposed major source thresholds for PM~2.5~
precursors. No change in the existing text of the regulations is
required.*

## Comments on the Supplementary Role of Minor NSR

**[Comments:]{.underline}**

Two state/local agency commenters (0142, 0168) and one state/local
agency association (0165) disagreed with EPA's assessment that states
can mitigate sources emitting less than 100 tpy of PM~2.5~ through their
minor NSR programs because of interstate transport and the existence of
interstate PM~2.5~ nonattainment areas. These commenters indicated that
a lower major source threshold for PM~2.5~ sources located in designated
interstate nonattainment areas should be applied uniformly throughout
the entire nonattainment area, but that this would not be possible when
minor NSR programs are defined on a state-by-state basis.

Another state/local agency commenter (0153) stated that the purpose of
the minor NSR program is not to clean up problems found due to issues
within the major NSR program. However, the commenter supported the
ability of states to develop rules for specific problem areas that are
upwind of nonattainment areas. Ideally, the commenter added, EPA would
establish some guidelines for determination of upwind source
contribution to delay or interfere with attainment of the PM~2.5~ NAAQS
(significance levels to be used for PM~2.5~ precursors). The commenter
believes that this would allow for a meaningful discussion of impact on
downwind nonattainment areas and provide for consistent treatment of
sources in different states with downwind impact on the same area.

This commenter (0153) also noted that the concept of placing permitting
restrictions or control requirements on minor sources could help improve
air quality, but stated that instead of implementing this approach at
the nonattainment area level it should be instituted on a nationwide
basis. The commenter indicated that it is important that equity between
nonattainment areas of similar classification is maintained, believing
that otherwise industry will "shop" for nonattainment areas with lesser
requirements. The commenter did not suggest that states should not have
the flexibility to include minor source permitting controls in their
SIPs, but believes that for this approach to be utilized by more than a
few areas it will have to be mandated at the Federal level.

**[Response:]{.underline}**

*We do not agree with the commenters who indicated that minor NSR
programs are not sufficient to address sources below the 100 tpy major
source threshold in interstate PM~2.5~ nonattainment areas due to
interstate transport of direct PM~2.5~ emissions. We believe, to the
contrary, that states can coordinate their minor NSR programs to address
interstate PM~2.5~ nonattainment areas, and we encourage them to do so.
In fact, states also have the option of coordinating their NA NSR
programs to include a lower major source threshold in an interstate
PM~2.5~ nonattainment area, if they so choose.*

*Furthermore, the impacts of direct PM~2.5~ emissions are generally felt
primarily in the local area. Interstate transport is more likely to be
an issue with PM~2.5~ precursors. The EPA has directed states to address
the interstate transport of PM~2.5~ precursors through the CAIR.
Lowering the major source threshold for PM~2.5~ and subjecting more
sources to NSR in upwind states will not necessarily address the
commenters concern regarding upwind contributions to nonattainment. In
the CAIR, we identified the amount of NO~x~ and SO~x~ emissions that are
contributing to downwind nonattainment and required states to reduce
emissions to address this transport. This direct approach of reducing
these emissions across those states contributing to downwind
nonattainment will be more effective for achieving attainment than
lowering the major source threshold for every PM~2.5~ nonattainment
area. The CAIR calls for these reductions across the entire region to
which it is applicable, which includes both attainment and nonattainment
areas. A lower major source threshold for PM~2.5~ would only impact
sources within a nonattainment area and would not do anything to address
transport of PM~2.5~ precursors from upwind areas that may be in
attainment. Furthermore, CAIR provides incentive to reduce emissions
from existing sources, whereas a lower major source threshold for
sources subject to NA NSR would only serve to reduce the potential
increases in emissions (through application of LAER) and offset
emissions increases from new sources or existing source that undertake a
major modification.*

*We agree with the commenter who indicated that states have the ability
to develop rules for specific problem areas that are upwind of
nonattainment areas, and we believe that such rules could include minor
NSR rules as well as other measures. We do not agree, however, that we
should develop general guidelines (such as emissions thresholds) for
determining when upwind sources delay or interfere with attainment of
the PM~2.5~ NAAQS. Ambient concentrations of PM~2.5~ are the result of a
complex set of factors, and each PM~2.5~ nonattainment area represents a
unique combination of these factors. Consequently, we do not believe
that it is appropriate to develop one-size-fits-all emissions thresholds
for minor NSR programs in areas upwind of PM~2.5~ nonattainment areas.*

*We disagree with the suggestion that we should mandate specific minor
NSR requirements in PM~2.5~ nonattainment areas. Section 110(a)(2)(C) of
the Act and 40 CFR 51.160(b)(2) require state minor NSR programs to
assure compliance with the NAAQS, and it is incumbent upon states to
ensure that their programs do so. However, we have traditionally allowed
states flexibility in how they structure their minor NSR programs, and
we see no overarching reason to do otherwise at this time.*

## Comments on Establishing Independent Thresholds for LAER and Offsets

**[Comments:]{.underline}**

A group of environmental commenters (0154.1) said that even if EPA
finally concludes that it has no discretion to establish a more
stringent threshold for defining major sources, it should still require
LAER and offsets for sources that emit more than 50 tpy of direct
PM~2.5~ or any PM~2.5~ precursor. The commenter indicated that nothing
in section 172 or 173 of the Act prevents EPA from applying the LAER and
offset requirements to sources that emit less than 100 tpy. The
commenter believes that the provisions in sections 172(c)(5) and 173 of
the Act define the minimum universe of sources that must be covered by
the NSR requirements. The commenter stated that requiring smaller
sources to meet the LAER and offset requirements is consistent with the
approach outlined in subpart 4 of part D and is reasonable given the
more serious health effects associated with fine particulates. The
commenter averred that EPA cannot simply point to the definition of
major stationary source in section 302(j) to limit the sources that will
be subject to the requirements of section 173, and must provide a
rational basis for exempting smaller sources from the LAER and offset
requirements of section 173.

**[Response:]{.underline}**

*We do not agree that EPA should require states to apply LAER or offsets
to sources smaller than 100 tpy, but we will not preclude states from
electing to do so as part of a minor NSR permit program or some other
program if they consider it necessary to meet the NAAQS. The
requirements for LAER and offsets are the core elements of the NA NSR
permit program that must be adopted as part of each SIP pursuant to
sections 172(c)(5) and 173 of the CAA. As such, the Act only makes the
satisfaction of these requirements mandatory in order to issue a
preconstruction permit to a major source, as defined in section 302(j),
in a nonattainment area. Thus, we do not believe it is permissible for
EPA to disassociate section 173 from the governing definition of major
source and impose the LAER and offset requirements on sources that are
not major or not otherwise subject to the NA NSR program.*

*The CAA establishes a clear division of authority between EPA and the
states. The EPA establishes the NAAQS and the states develop the
implementation plans necessary to satisfy those requirements. Except
where Congress established specific programs such as major NSR and the
more detailed requirements of subparts 2-4, Congress gave the states
discretion to determine the measures necessary to comply with the NAAQS
and the requirements of section 110 of the Act. The EPA has established
specific state mandates such as CAIR where necessary to address the
problem of interstate transport, but we have otherwise not interpreted
the Act to allow EPA to specify precisely how states are to achieve
attainment of the NAAQS. It would be inconsistent with this established
system of cooperative federalism for EPA to mandate that all states
apply LAER and offsets for sources not subject to major source NSR
permitting requirements. Furthermore, since EPA has adopted a mandate in
the CAIR rule directing states to address interstate transport resulting
in PM~2.5~ nonattainment, we do not find it necessary to also impose
LAER and offsets on source less than 100 tpy to address the interstate
transport contribution to PM~2.5~ nonattainment. However, EPA's
regulations do not preclude states from choosing in a minor NSR program
or some other vehicle to apply the LAER and offset requirements in the
Act, or some variant of the same, to sources that are not governed by
the major NA NSR program.*

## Other Comments on Major Source Thresholds

**[Comment:]{.underline}**

One state/local agency commenter (0124.1) stated that the proposal
preamble was not clear as to whether the major source threshold applies
to each individual pollutant (direct PM~2.5~ emissions and each
precursor) or to the sum of these pollutants. The commenter suggested
that the threshold should apply to each individual pollutant in order to
provide consistency with the existing NSR program, as well as avoiding
reclassifying minor sources as major.

**[Response:]{.underline}**

*We agree with the commenter that the major source threshold should
apply individually to direct emissions of PM~2.5~ and to each designated
precursor. If we were not clear on this point in the proposal preamble,
we wish to clarify this point at this time for the final rule.*

# Comments on Significant Emissions Rates (SERs) for Direct PM~2.5~ and Precursor Emissions 

## Comments on the SER for Direct PM~2.5~ Emissions

For direct PM~2.5~ emissions, we proposed a SER of 10 tpy as our
preferred option.  We derived this level using fundamentally the same
approach that we used in setting the SER for total suspended particulate
(TSP) and then PM~10~, that is, by determining the magnitude of
emissions increase that would be unlikely to cause impacts above 4
percent of the NAAQS.  The analysis used to derive the PM~2.5~ SER was
summarized in the proposal preamble (70 FR 66038-39).  We also requested
comment on a range of potential SERs for direct PM~2.5~ emissions from
5 tpy to 15 tpy.

**[Comments Supporting 10 tpy:]{.underline}**

Four state/local agency commenters (0079.1, 0080.1, 0142, 0168), two
state/local agency association commenters (0136.2, 0165), and one
Federal agency commenter (0068) supported our preferred option of a
10 tpy SER for direct PM~2.5~ emissions.  Three of these commenters
(0142, 0168, 0165) agreed that using the same methodology that was used
to set the SER for PM~10~ and TSP for setting the SER for direct PM~2.5~
emissions is warranted.  Another of the state/local agency commenters
(0136.2) opined that the methods that we used to arrive at a significant
emissions rate of 10 tpy for direct PM~2.5~ emissions were acceptable
(namely, using ISCST3 model with meteorological data from Pittsburg and
Oklahoma City to assess the impact of emissions increases on ambient
PM~2.5~ concentrations).

One of the supportive state/local agency commenters (0080.1) stated that
a separate proposal by EPA to change the annual emissions test for major
modifications at electric utilities to an hourly test would completely
undermine this proposal. 

**[Comments Opposing 10 tpy:]{.underline}**

A number of industry, industry group, state/local agency, state/local
agency association, private citizen, and environmental group commenters
submitted comments that directly opposed a 10 tpy SER for direct PM~2.5~
emissions and/or proposed other levels or approaches.  These comments
are summarized below.

Four industry groups (0083.1, 0096.1, 0109.1, 0119.1) directly opposed
our preferred proposal of 10 tpy.  One of the industry groups (0119.1)
believes that our preferred approach is flawed.  The commenter argued
that we should not arbitrarily reduce the rate threshold by rounding
down.  The commenter noted that our methodology of using a ratio between
anticipated PM~2.5~ impacts and the prior assessment of PM~10~ emissions
leads to a SER of ¾ of 15 tpy (70 FR 66038).  The commenter stated that
this results in a SER of 11.25 tpy, which we arbitrarily changed to 10
tpy by "rounding the result."  The commenter argued that providing a
more precise threshold would not entail more work for regulators, create
any environmental problems, or impose a greater burden on industry.  In
addition, the commenter suggested that we rely on a typical
configuration of PM~2.5~ sources rather than on outlier sources modeled
to emit significant amounts of direct PM~2.5~ emissions from very short
stacks.

Two of the industry groups (0083.1, 0096.1) stated that our
justification for lowering the current significant threshold from 15 tpy
to 10 tpy uses a modeling analysis that tends to over-predict actual
representative impact levels under worst-case scenarios. 

One of the industry groups (0109.1) does not support the 10 tpy as a SER
for direct PM~2.5~ emissions because it unclear as to what assumptions
or measurements this proposed SER is based on.  This commenter also
objected to the proposed 5 tpy SER, asserting that the concerns we have
about ambient PM~2.5~ from short stacks are not relevant to a majority
of sources.

**[Recommend SER of 15 tpy:]{.underline}**

Eight industry and industry group commenters (0083.1, 0096.1, 0100.1,
0107.1, 0109.1, 0111.1, 0119.1, 0161) urged us to select 15 tpy as the
SER for direct PM~2.5~ emissions.

One industry commenter (0161) and one industry group (0107.1) stated
that by selecting 15 tpy we would maintain consistency with the PM~10~
SER, if not the methodology by which that rate was established (70 FR
66037-38).  These commenters indicated that given that the PM~2.5~
source population differs from the PM~10~ source population (70 FR
66038), it is not necessary to use identical methodology to set the
SER.  The commenters added that we could conceivably drop the direct
PM~2.5~ emissions SER to 10 tpy after 5 years to capture additional
facilities, if a robust offset market has developed. 

Two industry groups (0083.1, 0096.1) stated that our proposal to lower
the current significant threshold from 15 to 10 tpy is based on modeling
analyses using potential ambient air quality impacts from various
hypothetical major sources of PM~2.5~ emissions which tend to
over-predict actual representative impact levels under worst-case
scenarios.  Because of this and other conservative biases introduced in
the modeling analyses, the commenters believe that the modeled upper
bound level of 15 tpy should be adopted as the direct PM~2.5~ emissions
SER.  The commenters believe that a 15 tpy SER would be a more reliable
indicator of when increased emissions could have significant impact on
ambient PM~2.5~ concentrations under typical source configurations.  An
industry commenter (0111.1) similarly suggested that, since we indicate
that we used conservative modeling assumptions in developing the range
of 5 to 15 tpy for the SER for direct PM~2.5~ emissions, we should
utilize the upper end of the range (as opposed to the middle as we
suggest) in setting major NSR significance levels.

One industry group (0119.1) supported a 15 tpy SER for direct PM~2.5~
emissions based on the fine particulate reductions that are expected
from Federal regulations that are in the pipeline and the relatively
small contribution of industrial sources to the remaining inventory. 
The commenter indicated that a higher threshold is the best way to
balance the need for additional reductions with the burden that major
NSR places on capital improvements and investment. 

One industry group (0100.1) opposed the tightening of the PM~2.5~ SER,
arguing that it should remain at 15 tpy or even be adjusted upwards to
reflect higher emissions levels that will be measured using our proposed
methods (which will include condensables).  A second industry group
(0109.1) questioned whether we really have the technical ability at this
time using Conditional Test Method (CTM) 40 and Reference Method 202 to
accurately measure PM~2.5~ condensable emissions; therefore, the
commenter supports retaining the PM~10~ significance level of 15 tpy as
a surrogate for fine particulate until such technical capability is
available. 

**[Recommend SER of 5 tpy:]{.underline}**

One group of environmental commenters (0154.1) believes that using a 4
percent impact from a single source is hardly a *de minimis* impact,
especially in nonattainment areas, which are required to reduce
emissions as expeditiously as practicable.** ** The commenter asserted
that our own calculations indicate that direct emissions of PM~2.5~ in
excess of 5 tpy from facilities with short stacks would cause a
measurable increase in ambient PM~2.5~ concentrations.  Based on this
information, the commenter argued that we cannot justify choosing a
level greater than 5 tpy as *de minimis*.** **

One private citizen (0062) noted that our selection of 10 tpy as the SER
for direct emissions of PM~2.5~ is based on example modeling with a
target impact of 4 percent of the annual PM~2.5~ standard (0.6
g/m^3^).  The commenter argued that given that it is accepted that, at
most, one-half or less of monitored PM~2.5~ is directly emitted
particulate, the "effective" annual PM~2.5~ standard for directly
emitted PM~2.5~ should be on the order of 7.5­g/m^3^.  Based on this,
the commenter stated that the target impact of 4 percent should be about
0.3 g/m^3^ and the SER for direct emissions of PM~2.5~ should be 5 tpy
or less. 

**[Recommend Other Approaches:]{.underline}**

One state commenter (0153) suggested that we could "split the
difference," an option that could give states and companies some
flexibility.  Modifications increasing direct PM~2.5~ emissions by less
than 5 tpy could be considered *de minimis*; for modifications
increasing direct PM~2.5~ emissions by between 5 and 15 tpy, the source
could choose to either demonstrate an ambient impact of less than a
4 percent of the NAAQS or simply be subject to major NSR; and
modifications with increases of 15 tpy or more of direct PM~2.5~
emissions would be subject.

One industry commenter (0119.1) requested that regulated entities be
given the opportunity to establish (through environmental modeling) that
specific projects which would increase emissions by more than the
designated SER will not result in an ambient PM~2.5~ increase of more
than 4 percent of the NAAQS.  The commenter believes that such an
alternative would ensure adherence to our proposed generic limitation
while recognizing that it may not reflect every circumstance.  The
commenter asserted that the suggested alternative would minimize the
burden on state regulators as most sources and projects would continue
to rely on the generic significance threshold, and regulated entities
would bear the burden of demonstrating that an alternative limitation is
appropriate

**[Response:]{.underline}**

*As proposed, and for the reasons articulated in the proposed rule, the
final rule establishes the SER for direct PM~2.5~ emissions at 10 tpy.
This SER is based fundamentally on the same approach that we used in
setting the significant emissions rate for TSP and PM~10~. We agree with
commenters who indicated that it was appropriate to use the same
methodology for direct PM~2.5~ emissions that was used to set the SER
for PM~10~ and TSP.  We do not agree that using the same SER level as
PM~10~ (15 tpy) is warranted, given the substantially lower PM~2.5~
NAAQS in relation to the PM~10~ NAAQS. *

*We do not agree with commenters who contend that our modeling tends to
overpredict impacts, and thus that we should raise the SER to 15 tpy.
Our analysis is intended to represent a range of sources that could
undergo changes which increase their emissions of PM~2.5~. Even if
commenters could show that EPA's analysis tends to overpredict impacts
for certain sources, some conservatism is justified when setting* de
minimis *levels used to determine whether a modification should be
subject to more detailed review of its air quality impacts.*

*Neither do we agree that a SER of 5 tpy or less is warranted solely
because a source releasing PM~2.5~ emissions from a short stack could
cause measurable increase in ambient PM~2.5~ concentrations.  As stated
in the proposal, our analysis did indicate that an emissions increase of
5 tpy at certain facilities with short stacks could cause an ambient
PM~2.5~ concentration increase above the target* de minimis *level.
However, our approach for calculating a design value to establish the
PM~2.5~ SER involved modeling a variety of source configurations and
downwash conditions with meteorological data from selected urban
settings. Thus, the resulting design value is not intended to be
representative of any particular source or stack height, but instead to
represent a range of sources that could undergo changes which increase
their emissions of PM~2.5~. While some conservatism is helpful when
setting a* de minimis *impact level, we do not believe this justifies
setting the SER based on individual source types that are not
representative of the range of sources that could increase emissions
without having a significant impact.*

*With regard to the comment that our procedure for rounding the SER for
PM~2.5~ to 10 tpy is arbitrary, we agree that a more precise threshold
would not necessarily entail more work for either regulators or
industry. However, rounding the SER to 10 is consistent with the
approach that we have taken in setting SERs for other criteria
pollutants beginning with the 1980 PSD regulations. In those
regulations, as mentioned above we modeled a variety of source
configurations along with other modeling assumptions in order to
calculate a representative design value based on an ambient impact of 4%
of the NAAQS, which we then rounded off to the nearest 5 tons. See 45 FR
at 52707, August 7, 1980**.** Furthermore, rounding down provides some
conservatism to account for factors not reflected in our representative
source analysis, such as the potential impact of shorter stacks
discussed above.*

*We do not agree that inclusion of condensable emissions in future
testing and applicability determinations (see section 5) is grounds for
increasing the SER for direct PM~2.5~ emissions.  The results of the
modeling analyses that are the basis for the SER of 10 tpy are affected
by the quantity of the direct PM~2.5~ emissions used in the model---not
by the nature of the direct PM~2.5~ emissions (i.e., filterable or
condensable).* *The direct PM~2.5~ emissions used in the model included
both the filterable and condensable fractions.*

*We do not agree with the commenter who recommended using an "effective"
annual standard of 7.5 g/m^3^ (half the PM~2.5~ annual NAAQS) to
calculate the SER for PM~2.5~. We have stated that precursors contribute
significantly to ambient PM~2.5~ concentrations, producing approximately
half of the concentration nationally; however, this should not be taken
to mean that primary (or direct) PM~2.5~ emissions affect only half the
NAAQS. From one location to another, ambient PM~2.5~ concentrations may
consist of varying portions of primary and secondary PM~2.5~. The
commenter did not explain why we should consider only half the value of
the standard when determining what the impact will be of a source's
direct PM~2.5~ emissions. We did not develop the PM~2.5~ NAAQS based on
any distinction between the individual components that make up the total
measurement. Similarly, we would not determine a source's compliance
with the NAAQS by comparing the impact of its direct PM~2.5~ emissions
against half the value of the standard.*

*We do not agree that there should be a process whereby a source may
elect to demonstrate that the increase in direct PM~2.5~ emissions from
a proposed modification will have an ambient impact of less than
4 percent of the PM~2.5~ NAAQS. Rather than establishing applicability
of NSR on a source-by-source basis through environmental modeling, we
believe that it is more appropriate to continue our historical method of
specifying* de minimis *cutoffs in terms of "emissions rate" for source
applicability purposes. This approach is consistent with the use of
emissions rates as the criteria for determining which sources are major
and therefore subject to NSR/PSD review. Case-by-case determinations of
NSR applicability on the basis of ambient air quality impacts could add
an unnecessary level of complexity to the review process and could
create an atmosphere of uncertainty as to whether individual sources
needed to apply for a permit or not, and could lead to uneven
application of the regulations from state to state. Case-by-case
modeling of ambient impacts is conducted within the permit process once
it has been established that a proposed modification increases emissions
in an amount that warrants review.*

*We disagree with the commenter's statement that a separate proposal by
EPA to change the annual emissions test for major modifications at
electric utilities to an hourly test would completely undermine this
proposal.  The commenter is apparently referring to our proposal on the
emissions test for electric generating units (70 FR 61081, October 20,
2005).  The SER is relevant as a threshold to determine if a significant
emissions increase occurs at any type of facility---not just power
plants. In any event, EPA will address the potential need for another
SER for power plants, if appropriate, in that particular rulemaking.*

**[Comments:]{.underline}**

Two industry commenters (0107.1, 0161) requested that if we require that
ammonium chloride and other ammonia compounds that result from the use
of ammonia for NO~x~ control be counted as direct PM~2.5~ as a result of
Method 202 or other testing for condensable particulate matter, we
should establish a different SER for direct PM~2.5~ where a source
demonstrates to the permitting authority that a net emissions increase
or PTE will equal or exceed 10 tpy (the final SER for direct PM~2.5~
emissions) due to the use of ammonia in its air pollution control system
for NO~x~ control.  The commenters suggested a SER of 40 tpy of direct
PM~2.5~ emissions for such sources, equal to the SER for NO~x~.

**[Response:]{.underline}**

*As indicated in the Clean Air Fine Particle Implementation Rule
promulgated on April 25, 2007 (72 FR 20586), EPA has adopted a
transition period to validate test methods for measuring condensables. 
Similar to that implementation rule, the final PM~2.5~ NSR
Implementation Rule will require major NSR programs to include
condensable emissions of PM~2.5~ for all purposes from the date
established in the notice and comment rulemaking promulgating validated
test methods or January 1, 2011, whichever is earlier (see section 5). 
Nevertheless, we do not agree that sources generating condensable
PM~2.5~ emissions through use of NO~x~ controls should be subject to a
higher SER for direct PM~2.5~ emissions than other sources, since the
total direct PM~2.5~ emissions (including condensable emissions) are
evaluated against the SER regardless of the origin of the direct PM~2.5~
emissions.**  ***

**[Comment:]{.underline}**

One state/local agency (0153) commented on the proposed regulatory
language for the SER for direct PM~2.5~ emissions.  The commenter
suggested adding the word "direct" to the entry for PM~2.5~ emissions in
the significant emissions tables in the definitions of "significant" in
40 CFR 51.165, 51.166, and 52.21 and in appendix S of 40 CFR part 51.

**[Response:]{.underline}**

*We agree with the commenter and have made this change in the final
regulatory text for the rulemaking. See, e.g., § 52.21(b)(23)(i). This
is consistent with our proposal, since we indicated we would propose to
establish separate SERs for PM~2.5~ precursors.*

## Comments on the SERs for PM~2.5~ Precursors (SO~2~, NO~x~, and VOC)

At proposal, our preferred option for setting the SERs for PM~2.5~
precursors was to use the existing SERs for those precursors already
included in major NSR programs for most attainment and nonattainment
areas, that is, 40 tpy for SO~2~, NO~x~, and VOC.  We also requested
comment on the option of setting the SER for these precursors at the
same level as proposed for direct PM~2.5~ emissions, that is, 10 tpy.

**[Comments Supporting 40 tpy:]{.underline}**

Seven industry commenters (0083.1, 0096.1, 0109.1, 0111.1, 0119.1, 0126,
0161) support our preferred option of utilizing the existing SO~2~,
NO~x~, and VOC SERs of 40 tpy.  Six of these industry and industry group
commenters (0083.1, 0096.1, 0111.1, 0119.1, 0126, 0161) indicated that
using the existing SERs would harmonize and streamline NAAQS attainment
and maintenance requirements and/or would be consistent with the
thresholds under the ozone NSR program.  They stated that by reducing
the complexity of requirements, it would benefit NSR applicability
determinations (including simplifying netting analyses), control
technology determinations, and air quality impact analyses.

Eight state/local agencies commenters (0079.1, 0080.1, 0124.1, 0136.2,
0145, 0158, 0165, 0168) generally support our preferred option of
defining the PM~2.5~ precursor SERs at 40 tpy to harmonize and
streamline the major NSR program.  Three of the commenters (0136.2,
0165, 0168) added that a higher SER for the PM~2.5~ precursor emissions
than for direct PM~2.5~ emissions is reasonable because of the greater
impact of direct PM~2.5~ emissions on ambient concentrations.  For
nonattainment areas, however, these commenters suggested that the rule
include a provision that would allow individual states with
nonattainment areas to define lower precursor emission rates in their
SIP demonstration, similar to the lower SERs for ozone precursors in
some ozone nonattainment areas. 

Another of the supportive state/local agency commenters (0124.1) stated
that if we adopt the 10 tpy SER for precursors, it should be founded
upon a clear need to protect the ambient standard in numerous downwind
locales.  The commenter pointed out that a 10-tpy threshold could
trigger NSR review for sources/modifications that would otherwise be
minor for those given pollutants, creating an unwarranted inconsistency
that would add confusion to the major NSR program.

**[Comments Opposing 40 tpy:]{.underline}**

One state/local agency commenter (0153) stated that, though existing
SERs will provide a program that is of similar effectiveness as
currently implemented for precursors that are also criteria pollutants,
it would not be too complex to administer precursor significance levels
for SO~2~, NO~x~, and VOC at levels other than those that currently
exist.  The commenter asserted that we could conduct additional modeling
to determine the impact of secondary emissions on downwind PM~2.5~
concentrations and construct a program based on the results of this
analysis.

One Federal agency commenter (0068) stated that given that roughly half
or more of ambient PM~2.5~ is derived from precursors, the commenter
would support 10 tpy as appropriate to define significance of PM~2.5~
precursor emissions.

One private citizen commenter (0062) stated that he believes that the
proposed preferred SERs for PM~2.5~ precursors were overstated. 
Regarding SO~2~, the commenter noted that it is commonly accepted that,
in much of the eastern United States, one-half or less of monitored
PM~2.5~ is sulfate, which is usually considered as ammonium sulfate. 
Based on this, he stated that the "effective" annual standard for
ammonium sulfate should be on the order of 7.5 g/m^3^.  The existing
significant emissions rate for SO~2~ of 40 tpy is related to the annual
standard for SO~2~ of 80 g/m^3^ by the ratio of 40:80 or 0.5 tpy per
g/m^3^.  He stated that, by the same ratio, the significant emissions
rate for SO~2~ as a precursor to PM~2.5~ should be 3.75 tpy, which could
be rounded up to 4 tpy.  The commenter went on to argue that the
situation is even more complicated.  He noted that SO~2~ has a molecular
weight of 64.07 while ammonium sulfate has a molecular weight of 132.15,
which means that each ton of SO~2~ has the potential to be treated as
2 tons of ammonium sulfate.  The commenter argued that even recognizing
that probably not all of the SO~2~ will be converted to PM~2.5~ and that
it takes time (equivalent to distance) for the chemical transformation
to occur, it would be prudent to establish a SER at something closer to
4 tpy than the preferred proposal of 40 tpy. 

The private citizen commenter (0062) also stated that the precursor
pollutant NO~x~ could be considered in much the same way.  The commenter
asserted that the fraction of monitored PM~2.5~ that is ammonium nitrate
is more variable but could generously be approximated as one-third,
yielding an "effective" annual standard of 5.0 g/m^3^.  The commenter
also pointed out that the existing SER for NO~x~ of 40 tpy is related to
the annual standard for NO~2~ of 100 g/m^3^ by the ratio of 40:100 or
0.4 tpy per g/m^3^.  Based on the same ratio, the commenter believes
that the SER for NO~x~ as a precursor to PM~2.5~ should be 2.0 tpy. 

**[Response:]{.underline}**

*As proposed in our preferred option, we have decided to promulgate SERs
of 40 tpy for the PM~2.5~ precursors SO~2~, NO~x~, and VOC, which is the
SER value already used for these pollutants under the major NSR program
in most attainment and nonattainment areas.  The use of existing SERs,
where the PM~2.5~ precursor is also regulated under NSR for a separate
criteria pollutant, harmonizes the NSR program for PM~2.5~ with the NSR
programs for those other criteria pollutants.  This harmonization
enables streamlining of determinations regarding the applicable control
technology and analysis of air quality impacts into a single and
comprehensive decision-making process for both PM~2.5~ and other
criteria pollutants that also cover PM~2.5~ precursors.  As a result,
the additional burden on both the regulated industry and regulatory
authorities will be kept to a minimum for an already complex program. 
This approach also follows the precedent we set when we used the
significant emission rate for NO~x~ from the NO~2~ program when ozone
became a criteria pollutant.*

*While the burden imposed is just one factor to be considered when
setting the SERs for precursors, the process for determining the SERs
also involves taking into account the accuracy and certainty by which we
can predict the effect of the precursors on PM~2.5~ emissions.  Although
it is difficult to determine the ambient air quality effects that result
from a single source of emissions of PM~2.5~ precursors, there are
conservative screening models for predicting impacts of large NO~x~ and
SO~2~ sources on ambient PM~2.5~ concentrations.  Therefore, we
conducted a range of modeling analyses to determine the amount of
PM~2.5~ precursor emissions needed to show an increase in ambient
PM~2.5~ concentrations. These analyses showed that precursor emissions
probably have some localized impacts, but that most impact is farther
downwind as precursors have the time to convert to PM~2.5~.  While we
know that precursors contribute to the formation of PM~2.5~ in the
ambient air, the degree to which these individual precursors contribute
to PM~2.5~ formation in a given location is complex and variable.  There
are competing chemical reactions taking place in the atmosphere, and
meteorological conditions play a significant role in the size and
characteristics of particle formation.  For these reasons, we do not
believe that we have adequate data on the impacts of precursor emissions
from individual sources to override the administrative advantages of
setting the significant emissions rates for SO~2~, NO~x~*~,~ *and VOC
for purposes of the PM~2.5~ NSR program at the same levels that are
already used for other purposes in the major NSR program.*

*For the reasons discussed above, we disagree that the SER for PM~2.5~
precursors should be set at the same level as the SER for direct PM~2.5~
emissions, that is, 10 tpy.  Adopting this value for the precursor SER
would imply that 1 ton of precursor emissions is equivalent to 1 ton of
direct PM~2.5~ emissions, which is not the case (see additional
discussion in section V.G.4 of the preamble to the final rule, in the
context of interpollutant trading for offsets).  We also disagree with
the commenter who urged us to establish SERs for SO~2~ and NO~x~ based
on the relationship between the existing SERs for these pollutants and
the NAAQS for the pollutants.  In the first place, and as discussed
above, the ambient PM~2.5~ impact of precursor emissions from a single
source is uncertain and variable, and much more so than the impact of
SO~2~ and NO~x~ emissions on the ambient concentrations of SO~2~ and
NO~2~.  The commenter's suggested approach implies that 1 ton of SO~2~
emissions would have the same effect on ambient PM~2.5~ concentrations
that it would have on ambient SO~2~ concentrations, and likewise for
NO~x~ emissions.  As discussed in our analysis for interpollutant
trading, this is clearly not the case.*

*We note that states may define more stringent precursor SERs for
nonattainment areas as part of their attainment strategy if necessary. 
Under section 116 of the Act, states retain the right to adopt any air
pollution measures that they see fit, provided they are not less
stringent than corresponding Federal regulations.  Note also that 40 CFR
51.165(a)(1) provides that a SIP may deviate from the definitions
therein (which include the SERs) if the state demonstrates that its
definition is at least as stringent as the definition in 40 CFR
51.165(a)(1).  Consequently, we do not believe that additional
regulatory language is necessary to provide this flexibility to states.*

##  Comments on the SER for Ammonia as a PM~2.5~ Precursor

**[Comment:]{.underline}**

One industry commenter (0126) stated that we should not leave it to
states to set SERs for ammonia to determine applicability.  The
commenter argued that this SER should be developed by EPA scientists and
be subject to notice and comment.

**[Response:]{.underline}**

*In the final rule, as proposed, we are allowing those states that
determine in their SIPs that control of ammonia is necessary to set the
SER for ammonia.  The SER will be based on information presented in each
attainment demonstration.  We believe this is more appropriate than EPA
setting a single SER, because of the varying roles ammonia plays in the
formation of PM~2.5~ from one area to another, and also because of our
still-evolving understanding of the impact of reducing ammonia emissions
on ambient PM~2.5~ concentrations.  We note that the SIP revisions that
states need to make to add ammonia to their NA NSR programs and, to set
SERs for ammonia, are subject to notice and comment rulemaking
requirements.  When any state determines that control of ammonia is
necessary in a PM~2.5~ nonattainment area, we advise that state to
develop a SER for ammonia.  Otherwise, according to the definition of
"significant" in the PSD program, "any emissions rate" would be
considered significant.  See 40 CFR 51.166(b)(23)(ii) and
52.21(b)(23)(ii).*

# Comments on Including the Condensable Fraction of Direct PM~2.5~ Emissions for Purposes of Major NSR

Certain sources utilizing high temperature processes emit gaseous
pollutants that rapidly condense into particle form. These "condensable
emissions" typically make up a significant fraction of direct PM~2.5~
emissions. We proposed to clarify in this rule that condensable
emissions must be included when determining whether a source is subject
to the major NSR program and in deriving emissions limitations.

**[\
Supporting Comments:]{.underline}**

One group of environmental commenters (0154.1), three state/local
agencies (0117.1, 0142, 0168), and two state/local agency associations
(0136.2, 0165) supported the requirement to include condensable
emissions in implementing NA NSR and PSD for PM~2.5~. The group of
environmental commenters asserted that there are methods available now
that can both quantify and control condensables.

Two of the state/local agencies (0142, 0168) and one of the agency
associations (0165) favor clarifying through regulation that condensable
emissions (all condensables, including primary sulfates) must be
included when determining PM~2.5~ NSR applicability and required modeled
demonstration of NAAQS, PSD increments, etc. These commenters also urged
that we finalize and recommend the stationary source PM~2.5~ test method
discussed in the proposal preamble.

The other supportive state/local agency association (0136.2) requested
that we define "condensables" in the final rule to include gaseous
pollutants and those that condense into particle form, such as primary
sulfates, nitrates, organic material and metals (that is, both the
"front end" and "back half" of condensables). The commenter urged that
we identify a stationary source test method for PM~2.5~ that will enable
state and local agencies to accurately identify the fraction of the
condensables that is PM~2.5~ in order that permit limits can be set,
increments can be tracked, and ambient impacts can be evaluated.

The other supportive state/local agency commenter (0117.1) noted that
including condensable emission in determinations for when a source will
be subject to the major NSR program for PM~2.5~ is consistent with the
historical determinations related to condensables that have been made in
the commenter's state.

Another state/local agency (0087.1) expressed concern about including
condensables in the rule at this time due to inaccurate test methods.
The commenter believes it is critical that EPA expeditiously develop a
more reliable test method. In the meantime, the commenter suggested
that, for purposes of permitting and compliance, CTM 40 plus Method 202
be used so that there is consistency in these programs.

**[Opposing Comments:]{.underline}**

Seven industry and industry group commenters (0083.1, 0096.1, 0105.1,
0109.1, 0111.1, 0125.1, 0155) expressed opposition to including
condensables at this time.

One of the industry group commenters (0096.1) believes that regulation
of condensable particulate matter at this time will impede, rather than
facilitate, expeditious attainment of the PM~2.5~ standard. This
commenter asserted that regulation of condensable emissions poses too
many significant technical and logistical difficulties to implement at
this time, and that regulation of condensable emissions would only be
appropriate after we have developed a workable transitional strategy
that ensures existing major sources are not placed in "NSR jeopardy" for
physical and operational changes undertaken before new test methods and
other requirements for condensables are established.

Another industry commenter (0111.1) similarly expressed concern about
the potential for retroactive application of the new test method (if and
when a reliable test method is developed) to assert violations of an
emission limit originally based on flawed testing/estimating
methodology. The commenter pointed out that we are including
condensables for purposes of PM~2.5~ NSR, while simultaneously
acknowledging that we have not yet developed test methods to address
these emissions. The commenter suggested that we ensure that when test
methods are developed, sources that have made good faith applicability
decisions will not be subject to retroactive enforcement and that limits
will be revised to include the new method so that sources will not be
forced to certify deviations based on a new method.

This industry commenter (0111.1) also asserted that it is inherent in
the development of any standard that EPA prescribes how compliance will
be determined. In the context of NSR, the commenter stated, sources must
know the standard against which to assess a project's emissions so they
can make an informed decision on whether to proceed with that project.
The commenter concluded by saying that, while his company agrees that
condensable emissions should be considered in the NSR program, EPA's
final rules should clarify that they are included only to the extent
that they are quantifiable by an approved and promulgated test method.

One of the industry group commenters (0109.1) objected to our proposal
to require condensable PM~2.5~ to be included in NSR analyses, given
that we acknowledge that different test methods measure condensables
with varying accuracy. The commenter noted that we mentioned using AP-42
emissions factors for PSD and NA NSR analyses, but asserted that such
factors may not be available for PM~2.5~. The commenter went on to point
out that the Emissions Factor Improvement Project has questioned the
viability of fine particulate factors for such equipment as gas
combustion, which had commonly been thought of as reliable. Based on
this, the commenter recommended that we adopt a flexible approach that
allows states to use AP-42 emissions factors that are currently
available until new ones for fine particles are developed.

**[Other Comments:]{.underline}**

One industry group commenter (0127.2), without expressing support or
opposition to including condensable PM emissions in the major NSR
program for PM~2.5~ at this time, requested that we explicitly develop
the following policies for addressing NSR-related issues in the
transition to including condensable PM:

-   New test methods or emissions estimation techniques will not be used
    as a basis for revisiting prior NSR applicability determinations
    (e.g., used to make a retroactive adjustment to a netting
    calculation).

-   Provide explanations regarding how comparisons of baseline actual
    emission to projections of future actual emission should be made
    when the measurement techniques are changed between the times of the
    two calculations so that the comparison will reflect comparable
    calculation methods.

-   New test methods should only be used for new PM~2.5~ SIP-related
    standards and that changes to emission limits or standards should
    not be made to existing SIP-related and all non-SIP-related
    obligations. Additionally, the commenter requested that we specify
    that such limits or standards should continue to be based on prior
    test methods or estimation techniques.

-   Assure fairness of NSR determinations.

**[Response:]{.underline}**

*Based on the number of comments expressing concern about the
variability and the accuracy of the test methods for measuring
condensable emissions, EPA has adopted a transition period to validate
and promulgate revised test methods before fully integrating
consideration of condensable emissions into the NSR program. We maintain
the view that condensables are an important component of PM~2.5~
emissions that should be addressed. Accordingly, we are finalizing our
proposal to include condensables, but we are deferring the applicability
of this requirement until the end of the transition period. Although we
do not necessarily agree with all of the criticisms of method 202 (See,
pages 362-365, EPA-HQ-OAR-2003-0062-251), we believe that it is
important that the regulated community, states, and other stakeholders
have confidence in the testing methodologies to be used in the NSR
program. In the near term, we think that developing confidence in the
testing methodologies outweighs the benefits of addressing condensable
emissions under the NSR program and thus justifies a temporary deferral
in accounting for the condensable fraction of particulate matter under
this program. During the transition period, addressing only the
filterable fraction of direct PM~2.5~ and the regulated precursors is
likely to provide adequate protection of the PM~2.5~ NAAQS. Also, some
technologies which may be selected as BACT or LAER for PM~2.5~ and
PM~10~ can control condensables, even if the condensables fraction is
not used quantitatively in deriving emissions limitation and assessing
compliance with those limitations.*

*\
During the transition period, we will not require states to establish
enforceable emissions limits that address condensable particulate matter
for either PM~10~ or PM~2.5~ in NSR permits, or to require accounting
for condensable PM when determining NSR applicability, until the
completion of the transition period. This transition period will end
January 1, 2011 unless we advance this date through the rulemaking
process described below. However, EPA recognizes that states having the
authority to do so, may require inclusion of condensable emissions in
NSR permits at their discretion.*

*In the meantime, we are undertaking a collaborative testing effort with
industry, the National Association of Clean Air Agencies (NACAA), and
other stakeholders to assess and improve the effectiveness and accuracy
of the available or revised test methods. The purpose of the stakeholder
testing projects is to collect new direct filterable and condensable PM
emissions data using methodologies that provide data more representative
of sources' direct PM~2.5~ emissions. The EPA, states, and others will
use these data to establish or improve emissions factors and to define
more accurate source emissions limits in permits.*

*Upon completion of the test methods assessment, we will conduct a
notice and comment rulemaking to codify new or revised test methods.
Once these new or revised test methods are in place, states will have
the tools necessary to issue NSR permits addressing condensable
particulate matter. Thus, as part of the test methods rulemaking, we
will consider and take comment on an earlier closing date for the
transition period in the NSR program if we complete the test methods
rule substantially before January 1, 2011. In the meantime, however, we
are establishing January 1, 2011 as the latest possible end date for the
NSR transition period because this is also the end of the transition
period for SIP purposes as described in the Clean Air Fine Particle
Implementation Rule promulgated on April 25, 2007 (*72 FR 20586)*.
Permits issued under PSD and NA NSR during the transition period are not
required to account for condensable emissions in PM~2.5~ or PM~10~
emissions limits. After January 1, 2011 (or any earlier date established
in the new or revised test methods rule), we will require that NSR
permits include limits set considering condensable emissions, as
appropriate. Prior to this date, states are not prohibited from
establishing emissions limits in NSR permits that include the
condensable fraction of PM~10~ or direct PM~2.5~ emissions.*

*We acknowledge the legitimate concerns raised by commenters concerning
potential exposure to retroactive enforcement, and the final rules
address this issue. Although we have previously issued guidance
indicating that we interpreted PM~10~ to include condensables, such
interpretation has not been consistently applied by EPA offices and
states. As a result, we will not revisit applicability determinations
made in good faith prior to the end of the transition period, insofar as
the quantity of condensable PM emissions is concerned, unless the
applicable implementation plan clearly required consideration of
condensable PM. Likewise, we will interpret PM emissions limitations in
existing permits or permits issued during the transition period as not
requiring quantification of condensable PM for compliance purposes
unless such a requirement was clearly specified in the permit conditions
or the applicable implementation plan.*

*After the end of the transition period (January 1, 2011 or an earlier
date established in the new or revised test methods rule), EPA will
require that all NSR applicability determinations for PM~2.5~ and PM~10~
address condensable emissions as applicable, and the source may not rely
on calculations made for previous determinations that did not include an
accurate accounting of condensables. Additionally, compliance with these
limits must be determined using the promulgated validated test methods
that are applicable after that date. Moreover, after that date, we
expect that condensable PM~2.5~ emissions will be addressed in all other
aspects of the major NSR program, such as impact analyses under PSD and
offsets under NA NSR.*

*Additional support for our decision to establish a transition period
for condensable PM~2.5~ can be found on pages 341-371 of the Response to
Comments document for the Clean Air Fine Particle Implementation Rule
(EPA-HQ-OAR-2003-0062-251).*

# Comments on PM~2.5~ Increments, Significant Impact Levels (SILs), and Significant Monitoring Concentration (SMC)

On November 1, 2005, we proposed a rule to implement the PM~2.5~ NAAQS
and to make other changes, including proposed revisions to the NSR
program (70 FR 65984). In that proposal, we indicated our intent to
propose a separate rule for developing PM~2.5~ increments, SILs, and
SMCs and sought comments on general approaches for developing these
values. We proposed PM~2.5~ increments, SILs, and SMCs in a rule dated
September 21, 2007. 72 FR 54112. We intend to address comments received
on these components of the PM~2.5~ PSD program when we finalize that
proposed rule.

# [[]{#__RefHeading___Toc198031149 .anchor}Comments on PSD Pre-Construction Monitoring (PCM) Requirements for PM~2.5~](#__RefHeading___Toc163559646) 

Under sections 165(a)(7) and 165(e) of the Act and the implementing
regulations at 40 CFR 51.166(m) and 52.21(m), sources subject to PSD are
subject to PCM requirements for any criteria pollutant emitted in
significant amounts. If required for a particular source, PCM could add
1 year to the permitting process and increase the cost of the permit.
However, a source may use existing data in lieu of conducting its own
monitoring if it can demonstrate to the satisfaction of the reviewing
authority that the existing monitored date record is representative of
air quality in the project's location. In addition, under existing 40
CFR 51.166(i)(5) and 52.21(i)(5), the reviewing authority has the
discretion to exempt a source from the PCM requirement if: (1) the
maximum modeled concentration caused by the project's emissions increase
is less than the prescribed SMC, or (2) the existing monitored ambient
concentrations are less than the SMC. We proposed five options for
PM~2.5~ PCM requirements and ultimately elected to proceed with a
combination of options 1 and 3.

## Option 1 -- Require PCM but Allow Use of Existing Data on a Case-By-Case Basis

Option 1, our preferred option at proposal, would require PCM for all
major sources of direct PM~2.5~ and precursor emissions, but, on a
case-by-case basis, allow sources to satisfy this requirement by
demonstrating that the existing PM~2.5~ monitoring data is sufficient,
i.e., representative. Comments that specifically supported or opposed
this option are summarized below.

**[Supporting Comments:]{.underline}**

One state/local agency (0077.1) expressly supported Option 1 and opposed
exemptions from PCM. Two state/local agencies (0087.1, 0117.1) also
supported Option 1 because it gives regulatory agencies sufficient
latitude to address sources with unique characteristics. One state/local
agency (0159) agreed that preconstruction monitoring should be required
only on a case-by-case basis, which should occur rarely. Another state
commenter (0137) said that the Option 1 approach has worked well in the
past.

Although generally supportive of Option 1, one state/local agency (0168)
and one state/local agency association (0165) pointed out that relying
only on existing PM~2.5~ data has limitations because current PM~2.5~
monitor locations are not only limited in spatial representative­ness,
but have been sited to be specifically located away from single source
impact areas to represent regional exposure levels. Thus, the commenters
believe that it will be difficult to base a determination of their
representativeness for specific source applicants. Furthermore, the
commenters stated, EPA has proposed dramatic cuts in the states'
monitoring networks and a shift from PM~2.5~ to PM coarse monitors. The
commenters noted that current regulations rely on SMCs for waivers of
PCM. The commenters recommended that EPA develop a 24-hour PM~2.5~ SMC
similar to the PM~10~ value, and use that in combination with existing
PM~2.5~ data as a modified Option 1. Another state/local agency
association (0136.2) supported Option 1, but expressed concern that the
monitoring network may be insufficient.

One industry group (0096.1), although also pointing out certain policy
concerns, noted several advantages inherent in Option 1 including: (1)
the proposal seeks to avoid requiring installation of new PM~2.5~
monitors and redundant PCM in every case; and (2) the proposal
recognizes that PCM is unnecessary where the existing PM~2.5~ monitoring
network is providing sufficient information on the effects of new
construction on the PM~2.5~ NAAQS and increments. The policy concerns
expressed by this commenter related to the case-by-case approach for
administering the PSD preconstruction monitoring exemption. In
particular, the commenter opposed the requirement for the permitting
authority to make an upfront determination that there is no need for
additional monitoring data. The commenter believes that requiring
permitting authorities to make such an upfront discretionary decision
could effectively require redundant PCM in many cases where existing
monitored data are representative of current ambient conditions

**[Opposing Comments:]{.underline}**

One state/local agency commenter (0124.1) indicated that Option 1 would
be overly burdensome until EPA develops an SMC. The commenter noted out
that there are a number of upcoming PSD projects in the state, mostly
mines, which will be located in extremely remote areas where there are
essentially no local or regional PM~2.5~ emission sources. In those
situations, the commenter believes that requiring applicants to collect
ambient PM~2.5~ data serves no purpose. The commenter also pointed out
that operating a particulate monitoring program in remote areas is
expensive, especially when the only access is by air or snowmobile. The
commenter suggested that in such cases, applicants should be granted the
opportunity to present a case to the reviewing authority as to why PCM
is not necessary if its purpose will be to largely document very low
existing concentrations, which will subsequently be of little use in
protecting the NAAQS.

One group of environmental commenters (0154.1) stated that EPA's
proposed Options 1 and 3, which would allow case-by-case or *de minimis*
exemptions from the monitoring requirements, are ill-conceived as a
matter of public policy and contradict the Act's PSD provisions. The
commenters pointed out that the listed purposes of the PSD program focus
on air quality protection and ensuring that decisions to allow increased
pollution are made with due care, and do not include the goal of
"streamlining" preconstruction permit requirements. The commenters
expressed the opinion that PCM under section 165(e)(2) of the Act
represents an essential resource for ensuring that air quality is not
deteriorating, and that EPA does not have the authority to exempt any
source from the requirements of section 165(e)(2).

**[Response:]{.underline}**

*We are adopting a final policy that combines Options 1 and 3 from the
proposal. We believe this final policy reflects existing procedures for
other regulated NSR pollutants, and represents the most pragmatic
approach for demonstrating compliance with the NAAQS and the Act. That
is, we agree with the commenter that recommended combining Option 3 (the
use of a 24-hr PM~2.5~ SMC) with Option 1 and we are finalizing this
approach. We proposed an SMC for PM~2.5~ in the rulemaking on
increments, SILs, and SMCs (72 FR 54112, September 21, 2007). That rule
has not yet been finalized.*

*Our regulations at 40 CFR 51.166(i)(5) and 52.21(i)(5) have allowed the
use of an SMC as screening tool for identifying when an impact is* de
minimis *and there would thus be little or no value in gathering PCM
data. The use of* de minimis *levels of this nature (such as SERs and
SILs) is supported by court precedent interpreting the NSR provisions of
the Act. [Alabama Power Co. v. Costle]{.underline}, 636 F.2d 323, 360
(D.C. Cir. 1979). ("Unless Congress has been extraordinarily rigid,
there is likely a basis for an implication of* de minimis *authority to
provide \[an\] exemption when the burdens of regulation yield a gain of
trivial or no value."). We have consistently recognized for other
pollutants that collecting additional ambient air quality monitoring
data is of trivial value when the proposed new source or modification
alone has a small impact or when measured air pollutant concentrations
representative of an area are known to be very low. Our judgment is the
same for PM~2.5~, and we are proposing SMCs below which we believe it is
of trivial value to require collection of preconstruction monitoring
data (72 FR 54112, September 21, 2007).*

*Once we finalize an SMC for PM~2.5~, the reviewing authority will have
the discretion to exempt a source from the PCM requirement if the
projected PM~2.5~ ambient impact of the source is below the PM~2.5~ SMC
level promulgated in our rules. In the interim, until this value is
finalized, we believe states still have the discretion to use an SMC to
determine whether PCM for PM~2.5~ would yield a trivial gain. We
interpret the SMC for particulate matter reflected in existing
regulations (10 µg/m^3^ of PM~10~ on a 24-hour average) to apply to all
forms of particulate matter. This interim approach does not require a
change to the PCM requirements within our existing PSD regulations, and
is consistent with policy of using PM~10~ as a surrogate for purposes of
interim program implementation. One of the options in the proposed rule
is to derive the SMC for PM~2.5~ using a ratio of the PM~2.5~ to PM~10~
NAAQS. See 72 FR 54141. Furthermore, states are not precluded from
developing and applying their own SMCs for PM~2.5~ in the interim. The
concept of an SMC is firmly established in existing regulations and
grounded on the* de minimis *principles described by the court in
[Alabama Power Co. v. Costle]{.underline}, 636 F.2d 323, 360 (D.C. Cir.
1980). Thus, states are not prohibited from showing that a particular
level of PM~2.5~ ambient impact would make the collection of
preconstruction monitoring data for PM~2.5~ of trivial or no value
simply because EPA has not yet identified a value by rule. But once EPA
establishes a specific SMC for PM~2.5~, states will not be permitted to
use a higher value or the PM~10~ value.*

*In addition, the reviewing authority may decide not to require a source
to collect additional PCM data---even when the SMC is exceeded---when
existing representative monitoring data is available for the area of
concern.*

## Option 2 -- Exempt All Sources from PCM

Under Option 2, we proposed to exempt all sources from PCM based on a
determination that the PM~2.5~ monitoring network is sufficient for all
sources. Comments that specifically supported or opposed this option are
summarized below.

**[Supporting Comments:]{.underline}**

One industry commenter (0111.1) supported Option 2, but believes that
Option 5 is the most practicable. This commenter noted that PCM is
expensive and can significantly delay a project. The commenter stated
that it is very difficult to locate monitors for both direct PM~2.5~ and
precursors because precursors may transport over long distances before
transforming into PM~2.5~. Thus, the commenter believes, a source could
be required to locate multiple monitors over a broad geographic area in
an attempt to satisfy the PCM requirement. By contrast, the commenter
noted, Option 2 would rely on existing monitors. The commenter state
that, as EPA notes, more and more, PSD PCM is based on use of existing
monitors. The commenter opined that we have long been aware of the
problems created by the PCM requirements and that we should take steps
in this rulemaking to limit their impact rather than relying on the
existing regulations, which are already known to be problematic.

**[Opposing Comments:]{.underline}**

One group of environmental commenters (0154.1) stated that EPA's
proposed Option 2, which would determine categorically that "the
existing PM~2.5~ network is sufficient" (70 FR 66041), is clearly
arbitrary and capricious on its face. The commenters pointed out that we
recognized in the proposal preamble that spatial gradients could be
significant for PM~2.5~, especially for primary PM~2.5~. The commenters
stated that the existing monitoring network is severely limited in its
spatial coverage, most especially in attainment areas where PSD PCM
requirements apply. The commenters asserted that to suggest that the
existing network suffices for any source, regardless of where it might
choose to locate, is patently absurd.

**[Response:]{.underline}**

*We decided not to use Option 2 for our final policy because we do not
believe that the current monitoring network will be sufficient for all
sources. As stated in the proposal preamble, we believe that the
existing PM~2.5~ monitoring record has the following limitations:*

-   *The PM~2.5~ monitoring data record would require spatial
    interpolation between monitors for the determination of appropriate
    concentrations at the project's location.*

-   *Use of existing monitored data will not increase the PM~2.5~
    monitoring data record to confirm or contradict conventional
    perceptions.*

-   *The PM~2.5~ monitoring data record assumes that local hot spots of
    high PM~2.5~ concentrations do not exist or are already being
    monitored, which may not be true in all cases.*

-   *Automatic acceptance of existing measurements does not follow our
    current policy that a case-by-case determination needs to be made to
    determine whether PCM is necessary.*

-   *When used with the impact modeling, separate concentrations of
    direct and precursor-formed particulate matter are needed.*

## Option 3 -- Use an SMC to Exempt Sources from PMC

Under Option 3, we proposed to develop an SMC for PM~2.5~, which, as
described previously, would allow a source to receive an exemption from
PCM requirements if the modeled impact of the project's emissions
increase or the existing ambient pollutant concentrations were less than
the SMC. Comments that specifically supported or opposed this option are
summarized below.

**[Supporting Comments:]{.underline}**

One state/local agency commenter (0153) endorsed Option 3, noting that
this approach follows existing procedures to justify the exclusion of
PCM requirements when sufficient data exist. The commenter pointed out
that state/Tribal/local monitoring networks were primarily designed, per
EPA guidance, to monitor neighborhood scale or greater impacts, and to
particularly conform to urban and regional scale considerations. The
commenter stated that, while some monitoring sites were installed to
determine more localized impacts, even those have been gradually
decreasing as short-term NAAQS levels were clarified. The commenter
noted that PSD increments are considered in a different way, and in some
instances, it would be difficult to say that current networks provide
appropriate representation for all locations in the baseline area. The
commenter went on to state that while it is true that direct emissions
and precursors may not be monitored at the same location, that fact
should not preclude sampling, although costs may be increased. The
commenter suggested that we should provide further guidance for
consistent application nationally.

As noted above in section 7.1, a number of commenters favored the use of
SMCs in conjunction with Option 1.

**[Opposing Comments:]{.underline}**

One group of environmental commenters (0154.1) stated that EPA's
proposed Options 1 and 3, which would allow case-by-case or *de minimis*
exemptions from the monitoring requirements, are ill-conceived as a
matter of public policy and contradict the Act's PSD provisions. The
commenters pointed out that the listed purposes of the PSD program focus
on air quality protection and ensuring that decisions to allow increased
pollution are made with due care, and do not include the goal of
"streamlining" preconstruction permit requirements. The commenters
expressed the opinion that PCM under section 165(e)(2) of the Act
represents an essential resource for ensuring that air quality is not
deteriorating, and that EPA does not have the authority to exempt any
source from the requirements of section 165(e)(2).

**[Response:]{.underline}**

*We agree with the commenters who expressed support for our adoption of
Option 3 because a combination of Options 1 and 3 reflects existing
procedures for other regulated NSR pollutants, and because we believe it
is the most pragmatic approach for demonstrating compliance with the
NAAQS and the Act. As discussed previously, a* de minimis *exemption
from monitoring requirements is supported by court precedent
interpreting the PSD provisions of the Act. We do not consider it sound
policy to require gathering additional data when such data is
unnecessary to demonstrate that a proposed source or modification will
not adversely impact air quality. Further, we disagree with the
commenters who asserted that EPA does not have the authority to exempt a
source from the requirements of section 165(e)(2) under any
circumstances. We stand by the position that we may exempt a source
under* de minimis *circumstance both from a policy perspective (this
approach reflects existing procedures for other regulated NSR pollutants
and is also considered to be the most pragmatic approach for
demonstrating compliance with the NAAQS) and legal perspective ([Alabama
Power Co. v. Costle]{.underline}, 636 F.2d 323, 360 (D.C. Cir.
1979)("Unless Congress has been extraordinarily rigid, there is likely a
basis for an implication of* de minimis *authority to provide \[an\]
exemption when the burdens of regulation yield a gain of trivial or no
value.").*

## Option 4 -- Use Existing PM~10~ Data

Option 4, as proposed, would allow sources to use the available large
PM~10~ data record, combined with the recent PM~2.5~ data, in lieu of
carrying out source-specific PCM. Comments that specifically supported
or opposed this option are summarized below.

**[Supporting Comment:]{.underline}**

One industry group (0109.1) opposed any requirement for PCM, which the
commenter asserted could add a year to permitting without any benefit to
the environment. That same commenter, however, endorsed Option 4 if
nationally gathered PM~2.5~ data are not available because a PM~2.5~
network monitor has not been placed nearby (or because it is not
operating properly), allowing the use of existing PM~10~ data collected
at existing monitoring station to be used for a permit application.

**[Opposing Comments:]{.underline}**

One group of environmental commenters (0154.1) believes that proposed
Option 4 is illegal on its face, to the extent that it is intended as a
universally available alternative. The commenters believe that some
sources might be able to demonstrate that PM~10~ monitoring could
fulfill the statutory requirements and purposes of PM~2.5~ monitoring in
some instances (e.g., with sufficiently protective assumptions about
PM~2.5~/PM~10~ proportions), but due to the variability in the
relationship between PM~2.5~ and PM~10~, EPA cannot categorically allow
this substitution.

One state/local agency (0168) and one state/local agency association
(0165) stated that, for the same reasons that we listed in the proposal
preamble, they consider Option 4 not to be a viable approach due to the
convoluted nature of attempting to infer PM~10~ to PM~2.5~ monitoring
data comparisons for source-specific applications.

**[Response:]{.underline}**

*We decided not to adopt Option 4. As we stated in the proposal
preamble, the differences in characteristics between PM~2.5,~ and PM~10~
and our limited understanding of their relationship, are problematic. We
do not believe that generalized factors to convert PM~10~ concentrations
to PM~2.5~ concentrations sufficiently reflect important
industry-specific and spatially-related characteristics of PM~2.5~. In
addition, removing the obligation to provide pre-construction PM~2.5~
ambient monitoring data would eliminate industry's contribution to the
PM~2.5~ data record.*

## Option 5 -- Exempt Sources from PCM if No SMC Is Established

Existing 40 CFR 51.166(i)(5)(iii) and 52.21(i)(5)(ii) state that a
source may be exempted from PCM requirements "if ... the pollutant is
not listed in \[the list of pollutants for which SMCs have been
established\]." The original rationale for this exemption was based on
the lack of adequate methods for measuring ambient concentrations of
pollutants not on the list (45 FR 52723-24). In the proposal preamble,
we requested comment on this interpretation and any other legal or
policy rationale that could support applying these provisions under
Option 5, where we proposed to exempt sources from PCM requirements if
we chose not to define an SMC for PM~2.5~.

**[Supporting Comments:]{.underline}**

One industry commenter (0111.1) stated that, of the five options EPA
included in the preamble regarding how sources may satisfy PCM
requirements under the PSD program, Option 5 is the most practicable to
implement until SMCs can be established and any potential gaps in the
monitoring network can be filled. Because of the problems, EPA has noted
regarding source-specific modeling of ambient PM~2.5~ concentrations,
the commenter believes that it is unreasonable to impose preconstruction
monitoring requirements at this time.

**[Opposing Comments:]{.underline}**

One group of environmental commenters (0154.1) asserted that proposed
Option 5 is illegal under the Act. Whatever may have been the case when
the current list of SMCs was adopted, the commenters believe, methods
now exist for conducting the monitoring required under section 165(e)(2)
of the Act.

One state/local agency (0168) and one state/local agency association
(0165) consider the argument for Option 5 to be inappropriate and
legally questionable. The state/local agency (0168) asserted that EPA
has not carried out its statutory obligation to develop PM~2.5~-specific
PSD guidance and regulations and cannot exempt sources from one of these
PSD requirements. The commenter also stated that the rationale of not
having an SMC defined for PM~2.5~ originally, that of inadequate ambient
monitoring methods, was not valid even back in 1997 (when the PM~2.5~
NAAQS were originally promulgated).

**[Response:]{.underline}**

*We decided not to adopt Option 5 because we agree that methods exist
for conducting PCM for PM~2.5~ and the earlier justification for such a
categorical exemption does not apply to PM~2.5~. Because we have
proposed PM~2.5~ Increments, SILs and SMC rule on September 21, 2007 (72
FR 54112) and "particulate matter" is listed in 40 CFR 51.166(i)(5)(i)
and 52.21(i)(5)(i) , we do not interpret 40 CFR 51.166(i)(5)(iii) and
52.21(i)(5)(ii) to apply to PM~2.5~. See the response above in section
7.1 for our recommendations for handling pre-construction monitoring for
PM~2.5~ in the interim until we finish the SMC for PM~2.5~.*

## Other Comments on PCM

One group of environmental commenters (0154.1) stated that section
165(e)(2) of the Act requires that all PSD permit applications be
accompanied by a year of monitoring data; therefore, EPA does not have
authority to exempt PM~2.5~ sources from submitting the data under any
option.

One state/local agency (0158.2) opposed a blanket exemption from PCM
requirements under any option.

Three industry groups (0083.1, 0096.1, 0109.1) objected to PCM
requirements for PM~2.5~. One of the commenters (0096.1) indicated that
having to provide a year of monitoring data would slow down, and in some
instances prevent, the construction of cleaner units. Two of the
commenters (0083.1, 0096.1) suggested as an alternative that all sources
be exempt from PCM unless on a case-by-case basis the reviewing
authority determines that the existing monitoring network is inadequate.
The third commenter (0109.1) opposed any PCM requirements if national
data are not available.

**[Response:]{.underline}**

*We agree with the commenter who opposed a blanket exemption from PCM
requirements. We disagree with the commenters who advocated a presumed
exemption unless the existing monitoring network is found to be
inadequate on a case-by-case basis, and with the commenter who suggested
that PCM should not be required if national data are not available. As
discussed above in section 7.1, we are adopting a combination of Options
1 and 3 from the proposal, primarily because we believe that it reflects
existing procedures for other regulated NSR pollutants. Specifically, we
are combining Option 3 (the use of a 24-hr PM~2.5~ SMC) with Option 1
and finalizing this approach. We have proposed an SMC for PM~2.5~ (72 FR
54112, September 21, 2007).*

*We do not agree with the commenter who believes that the Act entirely
precludes exemptions from PCM requirements. As stated earlier, our
regulations at 40 CFR 51.166(i)(5) and 52.21(i)(5) have allowed the use
of an SMC as screening tool for identifying when an impact is* de
minimis *and consequently there is little or no value in gathering PCM
data. The use of* de minimis *levels of this nature (such as SERs and
SILs) is supported by court precedent interpreting the NSR provisions of
the Act. [Alabama Power Co. v. Costle]{.underline}, 636 F.2d 323, 360
(D.C. Cir. 1979). ("Unless Congress has been extraordinarily rigid,
there is likely a basis for an implication of* de minimis *authority to
provide \[an\] exemption when the burdens of regulation yield a gain of
trivial or no value.")*

# Comments on Offset Requirements for NA NSR

Under section 173 of the Act, all new major sources and major
modifications at existing major sources within a nonattainment area must
obtain emissions reductions to offset any emissions increases resulting
from the project in an amount that is at least equal to the emissions
increase, and that is consistent with RFP towards attainment of the
NAAQS. We refer to the proportional relationship between the amount of
emissions offset required and the amount of the emissions increase as
the "offset ratio." Under section 173 (which is in title I, part D,
subpart 1 of the Act), the required offset ratio is at least 1:1 for all
criteria pollutants except ozone. In accordance with subpart 2, the
offset ratio in ozone nonattainment areas varies from at least 1:1 up to
1.5:1, depending on the severity of the nonattainment problem. In the
case of ozone, the offset ratios are applied to emissions of the ozone
precursors VOC and NO~x~ because virtually all ambient ozone results
from photochemical reactions involving these compounds rather than from
direct emissions of ozone.

##  Comments on the Proposed 1:1 Offset Ratio for PM~2.5~ Direct Emissions

As discussed in previous sections, we are implementing the PM~2.5~ NA
NSR program under subpart 1 of title I, part D of the Act. Accordingly,
we proposed an offset ratio for direct PM~2.5~ emissions of at least
1:1.

**[Supporting Comments:]{.underline}**

One state/local agency (0080.1) indicated that the safest approach is
for EPA to require 1:1 offsets for either direct emissions or
precursors. Two state/local agencies (0117.1, 0168) and a state/local
agency association (0165) agreed that the offset ratio should be at
least 1:1 for direct PM~2.5~ emissions and that the offsets have to be
real, creditable, and enforceable. Another state commenter (0077.1)
noted that 1:1 offset ratios do not take into account future emission
increases due to growth or potential RFP requirements, and emphasized
that the offset ratio should be [at least]{.underline} 1:1 (emphasis in
the original).

One state/local agency (0103.1) stated that there are many gaps in our
understanding of the science of atmospheric PM. Therefore, the commenter
believes, when there is question on how best to comply with certain
requirements of the Act, a simple and straightforward approach is best.
The commenter indicated that, because section 173(c)(1) of the Act
requires offsets of at least a 1:1 ratio, that is the ratio at which
offsets should be obtained.

One state/local agency association (0136.2) suggested that any offset
ratio of less than 1:1 for both direct and precursor emissions of
PM~2.5~ should be allowed only if there is a net air quality benefit and
if the lower ratio is justified by an air quality modeling analysis. A
state/local agency (0145) concurred in this approach. Another
state/local agency (0142) similarly offered general support for EPA's
proposal for a 1:1 offset ratio, but suggested that in certain limited
situations an offset ratio of less than 1:1 for direct PM~2.5~ emissions
should be allowed when modeling demonstrates that a net air quality
benefit will result. The commenter indicated that such a demonstration
would be possible when a direct PM~2.5~ emissions increase from a tall
stack is being offset by ground-level PM~2.5~ emission reductions, and
noted that applying diesel retrofit technology to bus and truck fleets
is an example of how ground-level PM~2.5~ emission reductions could be
achieved.

One industry group (0096.1) stated that section 173 of the Act
establishes the offset requirement for all major new or modified sources
under the NA NSR program. According to the commenter, one key statutory
provision is the requirement of section 173(c)(1) that the increased
emissions from the proposed source "shall be offset by an equal or
greater reduction, as applicable, in the actual emissions of such air
pollutant from the same or other sources in the area." The commenter
noted that in the case of ozone nonattainment areas subject to the
tiered classification system under subpart 2 of part D of title I of the
Act, the statute prescribes minimum offset ratios ranging from 1:1 to
1.5:1, depending on the ozone nonattainment classification under subpart
2. In all other cases, the commenter believes, the offset requirement is
governed by subpart 1, specifically the provisions of section 173 of the
Act. The commenter pointed out that, in addition to the offset
requirement of section 173(c)(1) for "an equal or greater reduction,"
section 173(a)(1) requires the proposed source to obtain offsetting
emissions reductions in an amount that is consistent with reasonable
progress towards attainment.

The commenter (0096.1) interpreted the statute to provide EPA with very
limited authority to impose minimum Federal emissions offset ratios in
excess of 1:1, asserting that the only situation where minimum offset
ratios greater than 1:1 are authorized is for ozone nonattainment areas
subject to subpart 2. In all other nonattainment areas, including those
areas designated nonattainment for PM~2.5~; the commenter believes that
EPA has no authority to require any proposed source to obtain offsets
greater than 1:1, particularly when the state is meeting the RFP
requirements for the nonattainment area where the proposed source is
located. The commenter stated that subpart 1 of part D authorizes the
imposition of a Federal minimum offset ratio of 1:1, although it allows
states to impose more stringent offset ratios when additional reductions
may be necessary to meet RFP obligations for the nonattainment area. For
these reasons, the commenter believes EPA has no choice but to adopt an
emission offset ratio of 1:1 for direct PM~2.5~ and any precursor
emissions, to the extent that they are subject to an offset requirement
under the NA NSR program.

Two other industry group commenters (0107.1, 0109.1) and an industry
commenter (0161) agreed that subpart 1 of title I, part D is controlling
and that the offset ratio should be 1:1. Two other industry groups
(0083.1, 0105.1) stated that EPA should not impose emission offset ratio
requirements greater than 1:1. Another industry commenter (0074.1) who
favors continuing to use PM~10~ as a surrogate for PM~2.5~ in
determining necessary offsets during and after SIP development indicated
that such PM~10~ offsets should be obtained at a 1:1 ratio.

**[Opposing Comments:]{.underline}**

One group of environmental commenters (0154.1) noted that section 173
requires sources locating in nonattainment areas to obtain offsets to
ensure that emissions from the proposed source "will be sufficiently
less than total emissions from existing sources ... so as to represent
... reasonable further progress." The commenters stated that this
section clearly contemplates greater than 1:1 offsets. The commenter
believes that EPA's rules implementing the NSR program require offsets
of greater than 1:1, and that EPA cannot lawfully or rationally adopt a
less stringent requirement for PM~2.5~ and its precursors -- especially
given that the PM~2.5~ standards are intended to provide greater health
protection. Consistent with section 182 of the Act, and given the health
risks associated with PM~2.5~, the commenter asserted, EPA must require
offsets of at least 1.15:1 for PM~2.5~ precursors in "moderate"
nonattainment areas, and must increase the offset ratio in "serious"
nonattainment areas or in areas that request extensions of their
attainment deadlines. The commenter went on to assert that EPA must
establish even higher offset ratios for direct PM~2.5~ emissions, to
ensure that RFP is achieved across the nonattainment area, including
within the area close to the new source.

**[Response:]{.underline}**

*As proposed, we are finalizing the offset ratio for direct PM~2.5~
emissions as at least 1:1 on a mass, tons per year, basis because the
PM~2.5~ program is being implemented under subpart 1 of title I, part D
of the Act. See section 3 for responses addressing the applicability of
subpart 1 of part D of the Act. Regarding whether an offset ratio of at
least 1:1 under subpart 1 represents a ceiling or a floor on the level
we can prescribe in our regulations, we interpret section 173 of the Act
to allow higher offset ratios where necessary to achieve RFP.
Accordingly, we believe states may establish higher offset ratios in
their state programs if they choose to do so, but we do not believe it
would be appropriate for us to do so for PM~2.5~ in national regulations
because of the variability in conditions across the country. We do not
believe that any offset ratio less than 1:1 is permissible under subpart
1 because section 173(c)(1) specifies the offsets must ensure an "equal
or greater reduction" in actual emissions. In addition, we do not
believe that the higher offset ratios required for ozone precursors
under subpart 2 apply in any way to direct PM~2.5~ emissions or PM~2.5~
precursors, since, as stated above, PM~2.5~ offset ratios are governed
by subpart 1 of part D of the Act.*

*We agree that during the period that a PM~10~ NA NSR program is used as
a surrogate for a PM~2.5~ program, PM~10~ offsets should be obtained in
a ratio of at least 1:1. See section 9 for further discussion of
transition issues.*

**[Comment:]{.underline}**

One industry group (0119.1) asked that we apply the offset obligation
for direct PM~2.5~ emissions only after improved methods for measuring
these emissions (i.e., the condensable fraction) have been developed and
approved.

**[Response:]{.underline}**

*As discussed in section 5, we are not requiring condensable PM
emissions to be included in the PM~2.5~ NA NSR program until we have
completed a collaborative testing effort with industry, the NACAA, and
other stakeholders to assess and improve the effectiveness and accuracy
of the available or revised test methods. In the interim, offset
requirements will apply to the filterable fraction of direct PM~2.5~
emissions unless the applicable SIP mandates inclusion of the
condensable fraction.*

## Comments on Which Precursors Should Be Subject to the Offset Requirements

We proposed that all precursors ultimately identified by a state or EPA
would be subject to offset requirements.

**[Supporting Comments:]{.underline}**

One industry group commenter (0107.1) and one industry commenter (0161)
agreed that only SO~2~ and NO~x~ (absent an EPA finding that NO~x~ is
not contributing to a particular PM~2.5~ problem) should be subject to
the offset requirement. The commenters believe that VOCs and ammonia
should be subject only if and when a state makes a satisfactory
demonstration that one or the other should be treated as a precursor.

**[Opposing Comment:]{.underline}**

Citing NA NSR's added costs and burdens to economic investment in
nonattainment areas, one industry group commenter (0119.1) asked that we
apply the offset obligation only to direct PM~2.5~ emissions, not
precursors.

**[Response:]{.underline}**

*As proposed, the pollutants that are designated as PM~2.5~ precursors
in a particular nonattainment area are subject to the emissions offset
requirement in that area. Accordingly, SO~2~ is subject to offsets in
all PM~2.5~ nonattainment areas. As a "presumed-in" precursor, NO~x~*
*will be subject to offsets unless a state obtains an exemption for its
NSR program through a demonstration that NO~x~ emissions in a particular
area do not contribute significantly to that area's ambient PM~2.5~
concentrations. As "presumed-out" precursors, VOCs and ammonia would be
subject to offsets only in areas where the state has demonstrated that
these emissions are significant contributors to the area's ambient
PM~2.5~ concentrations. We do not agree with the commenter who opposed
requiring offsets for emissions of PM~2.5~ precursors. Rather, we
believe that it is appropriate to offset emissions increases of all
regulated precursors, i.e., that have been established to contribute
significantly to the PM~2.5~ nonattainment problem in a particular
area.*

## Comments on the Offset Ratio for Precursors

We proposed that, as with direct emissions of PM~2.5~, the minimum
offset ratio for precursors permitted under the Act would be at least
1:1.

**[Supporting Comments:]{.underline}**

Three state/local agencies (0077.1, 0117.1, 0168) agreed with "at least"
a 1:1 offset for precursors. One of these commenters (0168) and a
state/local agency association (0165) added that the offsets must be
real, creditable, and enforceable, and the 1:1 ratio should apply for
precursors unless a larger offset is determined to be necessary to
achieve the NAAQS. Another state/local agency (0080.1) believes that,
based on the language of the Act, the safest approach is for EPA to
require 1:1 offsets for either direct emissions or precursors. This
commenter also indicated that emissions reductions in direct emissions
(especially diesel particulates) are more environmentally beneficial and
thus possibly could be acceptable as offsets for precursors at ratios
less than 1:1.

One industry group commenter (0096.1) believes that section 173 of the
Act is controlling for precursors as well direct PM~2.5~ emissions, and
that the offset ratio should be 1:1. Another industry group commenter
(0083.1) agreed that the offset ratio should be no greater than 1:1. An
industry group commenter (0107.1) and an industry commenter (0161)
agreed with a 1:1 offset ratio and added that EPA should make clear in
the final rule that an increase in precursor emissions need only be
offset once, even if the increase triggers NA NSR under, for example,
both the ozone and PM~2.5~ programs.

Another industry commenter (0111.1) agreed that a 1:1 offset ratio is
consistent with section 173 of the Act. The commenter believes that,
absent any statutory direction from Congress, there is no basis for
imposing a more stringent requirement. The commenter added that this
approach also makes sense from a policy perspective because the ability
to obtain NO~x~ reductions in many areas is already quite limited. Thus,
NO~x~ reductions at a greater than 1:1 ratio may be unavailable.

Concerning offset ratios less than 1:1, one state/local agency
association (0136.2) stated that that any offset ratio of less than 1:1
for both direct and precursor emissions of PM~2.5~ should be allowed
only if there is a net air quality benefit \[concurrence by a state
commenter (0145)\] and if the lower ratio is justified by air quality
modeling analysis. For PM~2.5~ precursors, the commenter believes,
chemical reactivity modeling demonstrations should be developed and
approved that are, at a minimum, capable of determining the impacts of
the precursor emissions on the air quality in the nonattainment area in
which the source is located. A state/local agency (0145) also indicated
that states should have the flexibility to adjust offset ratios for
direct PM~2.5~ and precursor emissions as long as a net air quality
benefit is achieved.

**[Opposing Comments:]{.underline}**

One group of environmental commenters (0154.1) stated that consistent
with the statutory scheme for ozone laid out in section 182 of the Act,
and given the severity of the health risks associated with PM~2.5~, EPA
must require offsets of at least 1.15:1 for PM~2.5~ precursors in
"moderate" nonattainment areas, and must increase the offset ratio in
"serious" nonattainment areas or in areas that request extensions of
their attainment deadlines.

**[Response:]{.underline}**

*As with direct PM~2.5~ emissions, we have determined for PM~2.5~
precursors that the minimum offset ratio permitted under subpart 1 of
the Act would be at least 1:1. Based on these requirements of the Act,
we are finalizing our proposal that an offset ratio of at least 1:1
applies where a source seeks to offset an increase in emissions of a
PM~2.5~ precursor with creditable reductions of the same precursor. This
offset ratio applies for all pollutants that have been designated as
regulated PM~2.5~ precursors in a particular nonattainment area. As
noted previously, we do not believe that any offset ratio less than 1:1
is permissible under subpart 1.*

*As mentioned above, we do not believe that subpart 2 of the Act (which
includes section 182) applies to PM~2.5~ or its precursors. Subpart 2 is
specific to ozone. In addition, we are implementing the PM~2.5~ program
under subpart 1. Nevertheless, under the Act, we believe that a state
may require higher offset ratios if it determines that they are
necessary to achieve RFP. Given the variability in conditions across the
country, we do not believe that it is appropriate for us to set higher
offset ratios for PM~2.5~ precursors on a national basis.*

*We agree with the commenters who requested that we make clear in the
final rule that an increase in precursor emissions need only be offset
once, even if the increase triggers NA NSR for more than one pollutant
(e.g., both the ozone and PM~2.5~). We agree that a precursor emissions
increase need to be offset only once and will clarify our intent in the
preamble to the final rule.*

## Comments on Interpollutant and Interprecursor Trading for Offsets 

We proposed to allow increases in emissions of direct PM~2.5~ to be
offset by a decrease in PM~2.5~ precursor emissions. We also proposed to
allow an increase in a PM~2.5~ precursor to be offset by a decrease in
emissions of a different precursor or a decrease in direct PM~2.5~
emissions. However, we proposed that such trades would only be
permissible if the state showed that the trade would be beneficial in
reducing overall ambient concentrations of PM~2.5~ and EPA approved the
trade.

**[Supporting Comments:]{.underline}**

Six industry and industry group commenters (0074.1, 0096.1, 0107.1,
0111.1, 0119.1, 0161) and two state/local agencies (0080.1, 0144)
expressed support for allowing interpollutant trading.

One industry commenter (0074.1) supported the proposed option for an
interprecursor trading program that entails EPA reviewing individual
offset proposals as part of the major NSR permitting process. The
commenter, who supports continuing to use PM~10~ as a surrogate for
PM~2.5~, asserted that flexible options for potential offsets should
include directly emitted PM~10~ or interprecursor offsets including the
precursors SO~2~ and NO~x~ The commenter suggested that the final rule
should allow offsets to be obtained from any source within the entire
nonattainment area (including other counties in the Metropolitan
Statistical Area and any contiguous counties) or from a different
nonattainment area that is contributing to nonattainment within the area
where the new source is located. Because of the number of potential
precursor emissions and emission sources potentially impacting ambient
fine particulate levels, the commenter believes that any nonattainment
offset programs for new sources should provide a variety of options.

One of the supportive industry group commenters (0096.1) indicated that
an affirmative and clear Federal policy on interprecursor trading can
provide much-needed flexibility in meeting the Act's goals for offsets
and RFP in the most efficient and cost-effective manner possible. To
this end, the commenter urged EPA to allow inter-precursor trading under
the following three circumstances:

-   Reductions in precursor emissions to offset direct PM~2.5~ emissions
    increases;

-   Emissions reductions of one precursor to offset emissions increases
    of another precursor (to the extent that precursors are subject to
    the offset requirement); and

-   Reductions in direct PM~2.5~ emissions to offset precursor emissions
    increases (to the extent that precursors are subject to the offset
    requirement).

The commenter stated that such flexibility should provide sources with
another potential source of offset emissions in areas where availability
of offsets may otherwise be limited. In addition, the commenter opined
that providing such flexibility is consistent with the Act's goal "to
protect and enhance the quality of the Nation's air resources so as to
promote the public health and welfare and the productive capacity of its
population." For similar reasons, the commenter believes the rationale
for allowing interprecursor trading to meet the offset requirement also
applies in the case of "netting out" of NSR using interprecursor
emissions reductions within the same source. In both cases, the
commenter noted, the source will be obtaining reductions in direct
PM~2.5~ or precursor emissions that will result in an air quality impact
that is equal to or better than that which would occur in the absence of
interprecursor trading.

Another supportive industry group commenter (0107.1) and one supportive
industry commenter (0161) believe that interprecursor trading is
essential to the ability of enterprises to be able to expand as the
PM~2.5~ NAAQS is implemented, especially in the program's early years.
The commenters indicated that, while NO~x~ offsets generally are
available because of the ozone program, SO~2~ and PM~2.5~ offsets are
not. The commenters believe that without interprecursor trading, many
business expansion projects simply will not be able to be undertaken.
Thus, the commenter asserted, EPA must allow interprecursor trading, as
proposed. The commenters added that EPA needs to expressly recognize the
concept of interprecursor trading in the regulatory language in the new
40 CFR subpart Y and in 40 CFR 51.165.

These commenters (0107.1, 0161) also encouraged EPA to extend
interprecursor flexibility to NSR netting analyses by so providing in 40
CFR 51.165, 51.166, and 52.21. The commenters suggested that whether
this flexibility should be extended to any particular source likely
would need to be evaluated in a formal NSR applicability submission to
the state or EPA to assure that the increases and decreases of different
regulated NSR pollutants have the same or better impact on air quality.

Another supportive industry commenter (0111.1) added that the
flexibility afforded through interprecursor trading is important. The
commenter believes that EPA should allow states the flexibility to adopt
trading rules for approval into their SIPs and also, even without an
approved rule, to allow trading on a case-by-case basis if the trade
will lead to equivalent or better reductions in ambient PM~2.5~
concentrations.

One supportive industry commenter (0119.1) also expressed concern about
flexibility under the proposed rule and supported interpollutant and
interprecursor trading. The commenter indicated that due to the
variability in atmospheric conditions that contribute to fine particle
formation, facilities would not be able to easily discern which
precursor will always have the greatest beneficial effect when reduced.
Thus, the commenter asserted, if precursors are to be included in the
NSR offset program, the default position should allow the regulated
community the flexibility to offset anticipated increases from any of
the identified precursors. The commenter noted that this approach would
also allow for cost-effective use of co-benefits from reducing emissions
that serve compliance in multiple programs.

The commenter (0119.1) stated that offset ratios among precursors are an
unnecessary complication, and that all precursors should be tradable and
interchangeable to provide vital flexibility by reducing the otherwise
significant impediments that NSR imposes to modernizing steel plants and
other similar facilities. Specifically, the commenter believes that
offset trading will allow facilities to secure environmental benefits
for less money by providing a broader range of pollution reduction
options to choose from, and that the availability of such trading will
be particularly beneficial where credits for one particular pollutant
are scarce in a given nonattainment area. The commenter also supported
expanding this approach to netting, indicating that similar significant
benefits are available when sources can use precursors interchangeably
when determining if a project causes a significant net emissions
increase.

One state/local agency (0080.1) supported interprecursor trading so long
as the following hierarchy is established: direct PM~2.5~, SO~2~, NO~x~,
ammonia, and VOC. Under the commenters hierarchy, a pollutant would be
allowed as offsets for a pollutant ranked lower, but not the reverse
(e.g., direct PM~2.5~ emission reductions could be used to offset
increases in any of the listed pollutants, SO~2~ emissions reductions
could offset NO~x~ increases, etc.). The commenter suggested the
possibility that emissions reductions in direct PM~2.5~ emissions
(especially diesel particulates) are more environmentally beneficial and
thus could be acceptable as offsets for precursors at ratios less than
1:1.

Another state/local agency (0144) supported interpollutant and
interprecursor trading, but recommended that such offsets only be
allowed on a case-by-case basis that would demonstrate equivalent air
quality benefits and be consistent with existing NSR provisions. A third
state/local agency (0137.1) requested that EPA provide clear guidance on
how much SO~2~, NO~x~, VOC, or ammonia reduction would be needed to
offset a PM~2.5~ increase without explicitly expressing support for
interprecursor or interpollutant offset trading.

**[Opposing Comments:]{.underline}**

Seven state/local agencies (0077.1, 0103.1, 0117.1, 0142, 0150.1, 0153,
0168), two state/local agency associations (0136.2, 0165), and one group
of environmental commenters (0154.1) opposed all or part of the proposal
to allow interpollutant and interprecursor trading for offsets.

One of the state/local agencies (0103.1) stated that the Act is silent
on offsetting one precursor for another, but believes that a simple
solution is best. The commenter indicated that because we do not know,
for example, how many tons of direct PM~2.5~ emissions reductions are
needed to gain the same air quality improvement gained by the reduction
of 100 tons of SO~2~, offsets should be made for single pollutants only,
rather than allowing for interprecursor offsets.

The group of environmental commenters (0154.1) stated that it would be
irrational for EPA to allow increased emissions of direct PM~2.5~ to be
offset by decreased precursor emissions. The commenters pointed out
that, while secondary PM~2.5~ clearly constitutes a substantial fraction
of total PM~2.5~ concentrations and emissions of PM~2.5~ precursors must
be controlled to attain and maintain PM~2.5~ standards, it is also clear
that on a ton-for-ton basis, increases in direct PM~2.5~ emissions in
nonattainment areas have a greater impact on *local* exposure to PM~2.5~
than increases in precursor emissions, which as stated in the proposal
preamble (70 FR 66038) need time to convert to PM~2.5~. The commenters
indicated that the suggestion that EPA would allow increases in direct
PM~2.5~ emissions to be offset by reduced precursor emissions raises
serious environmental justice concerns, since the impacts of these
pollutants are not even felt on the same spatial scales. Moreover, the
commenters asserted, the equivalence between direct PM~2.5~ and
precursor emissions will vary from place to place and time to time, and
this variability would greatly complicate any determination of whether
the offset ratio for a proposed trade is sufficiently high to ensure
that the trade was "beneficial" on any scale of impact.

The group of environmental commenters (0154.1) went on to state that EPA
also should not allow offset requirements for PM~2.5~ precursors to be
met by reducing emissions of other precursors because the equivalence
between precursors would vary spatially and temporally, making it
extremely difficult to assess. The commenters also noted that
interprecursor "trading" has the further complication that PM~2.5~
precursors also differ in their impacts on other air pollution problems,
including direct health and welfare impacts of SO~2~ and NO~x~,
formation of ozone, acid deposition, and reactive nitrogen deposition.

A state/local agency (0077.1) did not support interprecursor trading,
including for netting, because all precursors are not created equal,
precursors are included in other nonattainment situations, and trading
or precursors could result in unintended consequences due to inflation
of certain pollutant concentrations. For example, the commenter noted,
sulfates are of a much greater concern in the summer, while nitrates
predominate in the winter -- trading of NO~x~ for SO~2~ in the summer
months and vice versa for NO~x~ in the winter months would be
counter-productive.

Another state/local agency (0168) and a state/local agency association
(0165) opposed interprecursor trading or trading of precursors with
direct PM~2.5~ emissions using either a pre-approved SIP demonstration
modeling analysis or a permit-specific analysis. The commenters believe
that, in other than very limited cases, neither interpollutant nor
interprecursor trading for the purposes of PM~2.5~ emission offsets
should be allowed at this time. The commenters' position is based on the
air quality models currently available to perform a detailed PM~2.5~
formation assessment, the complex atmospheric chemistry of secondary
particulate formation, and existing EPA emission offset guidance. The
commenters believe that an increase in direct PM~2.5~ emissions or its
precursors should be offset by a corresponding decrease in the same
direct PM~2.5~ or precursor emissions. The only situation in which the
commenter would favor an interpollutant offset trading is when PM~2.5~
precursor emission increases at a proposed source are to be offset by
direct PM~2.5~ emission decreases. However, the commenters noted, such
interprecursor trading would be difficult to administer and could not
assure that ambient levels of PM~2.5~ would decrease in the areas
affected by the source. The commenters asserted that any assessment by
individual states to demonstrate such decreases from interprecursor
trading would have to consider not only the emissions from in-state
sources, but also emissions from sources, in all nearby states, that
both contribute to the formation of PM~2.5~ and are impacted by the
state's emissions. The commenters added that the situation would be even
more onerous for individual sources that attempt to make such
demonstrations.

These commenters (0165, 0168) pointed out that EPA's nonattainment
offset requirements are given in appendix S to 40 CFR part 51 (Emissions
Offset Interpretative Rule), sections IV.A (Conditions 3 and 4) and
IV.D. The commenters stated that the direct PM~2.5~ emission offsets
should comply with these regulations, and that a demonstration should be
required that these offsets provide a site-specific net air quality
benefit, which will require a modeling analysis in most instances. The
commenters went on to state that for the PM~2.5~ precursors, such as
SO~2~ and NO~x~, offsets should meet the requirements currently applied
to the ozone precursor emissions of NO~x~ and VOC, which would be met by
default by obtaining precursor offsets from a source located anywhere in
the same nonattainment area as the proposed new source. In the instance
when PM~2.5~ precursor emissions are being offset by an equal amount of
direct PM~2.5~ emissions, the commenters believe, a net air quality
benefit can be assured at least in the near-field of the proposed
source. Otherwise, the commenters asserted, a net air quality benefit
should be confirmed through modeling. The commenters believe that
interprecursor trading of emission offsets may be possible in the future
when our ability to model secondary sulfate, nitrate, and ammonia
compound formation improves and becomes less resource-intensive. The
commenters indicated that at that time, EPA should provide detailed
guidance on how such an analysis should be conducted and under what
conditions a positive net air quality benefit is achieved, so that the
process would then apply to all states equitably and would not be
detrimental to the air quality of downwind states such as New York. For
the same reasons that the commenters opposed interprecursor offset
trading, they opposed interprecursor trading in either attainment or NA
NSR netting analyses.

The state/local agency (0168) added that the stable nature of primary
PM~2.5~ emissions as opposed to the complex atmospheric chemistry of the
SO~2~ and NO~x~ precursor emissions makes a comparison of their relative
impacts a difficult task. The commenter pointed out that direct PM~2.5~
emission will have their greatest impact in the immediate vicinity of
the source, while determining where and when precursor emissions of
SO~2~ and NO~x~ will have their impact as sulfate and nitrate is much
more difficult. In most cases, the commenter noted, significant amounts
SO~2~ and NO~x~ will not be converted to sulfate and nitrate until the
plume has traveled for several hours -- in some cases, depending on the
location of the source, the plume could be transported outside the
designated nonattainment area or attainment area before sulfate and
nitrate concentrations become of concern. The commenter believes that
determining a positive net air quality benefit in situations where
direct PM~2.5~ emissions are being offset by PM~2.5~ precursor emissions
will be highly subjective. The commenter suggested that in many cases,
the sulfate and nitrate will be formed outside the nonattainment area
and, consequently, no reasonable progress toward PM~2.5~ standards
compliance in the nonattainment area will result. While the proposed
rule suggests that one method of showing a net air quality benefit would
be a modeling demonstration for the entire nonattainment area instead of
on a source-by-source basis, the commenter believes that this type of
regional modeling demonstration would most likely involve the use of a
sophisticated regional model, but such models only reflect regional
average levels and details on the local impact of direct PM~2.5~
emissions near the stack will be lost.

The commenter (0168) went on to state that ensuring reasonable progress
toward attainment and a net air quality benefit, by developing valid
interprecursor offset ratios between SO~2~ and NO~x~ precursor
emissions, is also unrealistic at this time. The commenter believes that
many of the problems with using regional modeling to determine
interpollutant offset trade ratios will apply to interprecursor offset
trading -- the results from sophisticated models such as CMAQ with their
grid averaging would provide minimal detail, and such analyses would be
resource intensive. Another option given in the proposed rule would be
for individual trades to require modeling as part of their NSR permit
application. However, the commenter noted, requiring each source to
model their emission trades with models such as CALPUFF would also be
resource intensive, and detailed modeling guidance on setting of offset
ratios and the demonstration of a net air quality benefit on a
source-by-source basis will be needed. In summary, the commenter
believes that it will be extremely difficult to quantify on a short- and
long-term basis to compare the impact of SO~2~ emissions on an area's
PM~2.5~ concentration to that of NO~x~ emissions impacting the same
area's PM~2.5~ concentration.

Another state/local agency (0153) stated that the conditions EPA
proposed to allow interprecursor trading would be very difficult to
justify. The commenter noted that EPA has expressed concerns previously
regarding the time difference between primary emission impacts and
secondary emission impacts. The commenter asserted that if there was
disconnect between the impact areas for primary and secondary emissions,
then there should not be any trading between primary and secondary
emissions. The commenter did not support emissions trading for the
purposes of offsets or netting analysis for PM~2.5~.

One state commenter (0142) opposed the proposed trading of PM~2.5~
precursor emissions to comply with the nonattainment offset
requirements. The commenter similarly asserted that the impact of direct
PM~2.5~ emission increases cannot be offset with reductions in emissions
of PM~2.5~ precursors such as SO~2~ and NO~x~ because the direct PM~2.5~
increases degrade air quality locally, while the benefit from reducing
precursor emissions will primarily accrue far from where the emission
increases are occurring. Therefore, the commenter believes that EPA
should allow direct PM~2.5~ emissions to be offset only with reductions
in other direct PM~2.5~ emissions. However, the commenter favors
allowing direct PM~2.5~ emissions to offset precursor emissions because
of the higher local impacts of direct PM~2.5~ emissions. The commenter
provided a detailed discussion of the atmospheric chemistry of PM~2.5~
and its precursors to support her views.

A state/local agency association (0136.2) likewise opposed
interpollutant and interprecursor trading because offsetting like
amounts of precursor and direct emissions is inherently disproportionate
and will result in greater amounts of direct PM~2.5~ emissions. Rather,
the commenter supported the trading of PM~2.5~ direct emissions with
other PM~2.5~ direct emissions, and trading of SO~2~ and NO~x~
precursors with the same precursor, except that EPA should allow direct
PM~2.5~ emission decreases to offset increases of precursor emissions in
nonattainment areas.

A state/local agency (0117.1) agreed that EPA should only allow direct
PM~2.5~ emission decreases to offset increases of precursor emissions in
nonattainment areas. The commenter believes that allowing decreases in
PM~2.5~ precursors to offset increases of direct PM~2.5~ emissions is
potentially detrimental to air quality in nonattainment areas. The
commenter added that current air quality models used for simulating the
transport and chemical formation of PM~2.5~ are too resource intensive
and not sensitive enough to accurately assess the impact on PM air
quality of individual trades.

Concerning trading among precursors, the commenter (0117.1) stated that
the formation rate of PM~2.5~ is dependent upon the mix of precursors
and is likely not equal in any instance between SO~2~ and NO~x~. The
commenter believes that air models would not be a useful tool for
assessing the impact of precursor trading on PM air quality and,
therefore, that trading precursors does not guarantee that air quality
will not deteriorate within a nonattainment area. This commenter, as
well as another state/local agency (0142), also opposed the option of
allowing interprecursor trading on a case-by-case basis or for the
purposes of netting.

One of the state/local agency commenters (0150.1) expressed concern that
interprecursor trading may make it difficult to ensure than ambient
PM~2.5~ continues to decrease, and that the resulting program may be
very staff-intensive to manage. In addition, because of the toxicity of
PM~2.5~, the commenter believes that any trading program must make sure
that vulnerable populations are not adversely affected. The commenter
stated that because precursor interactions are not fully known, trading
may have the potential to worsen an air quality problem (e.g., the
sulfate and ammonia issue as it relates to possible increased particle
and precipitation acidity).

**[Other Comments:]{.underline}**

Without stating support or opposition for the specifics of the proposal,
one state/local agency association (0164) asserted that EPA should
finalize a requirement for offsets consistent with the existing program,
*or a functionally equivalent and equally protective alternative
approach* (emphasis in the original). The commenter stated that there
have been problems with the current offset program. The commenter fully
supported the continued need to ensure that economic and emissions
growth does not adversely affect progress toward attainment. The
commenter also believes that the offset program has been pivotal in
promoting advancement of pollution control technology.

**[Response:]{.underline}**

*After considering the comments received on this issue, we have decided
to allow limited interpollutant trading for purposes of offsets under
the PM~2.5~ NA NSR program. Specifically, the final rules allow
interpollutant trading only based on a trading ratio established in the
SIP as part of the attainment demonstration approved for a specific
nonattainment area, on a statewide basis, or in a regional, multi-state
program. This final policy differs from our proposal in that the final
rules do not allow interpollutant trading on a case-by-case basis as
part of an individual NA NSR permitting process. For the purpose of
offsets in the NA NSR program for PM~2.5~, the final rules allow
reductions in direct PM~2.5~ emissions to offset precursor emissions
increases, emissions reductions of one precursor to offset emissions
increases of another precursor, and reductions in precursor emissions to
offset direct PM~2.5~ emissions increases.*

*We have completed a technical assessment to develop preferred
interpollutant trading ratios that may be used for the purposes of
PM~2.5~ offsets, where appropriate. The ratios are described in the
preamble to the final rule. The preferred ratios were generated with a
PM~2.5~ response surface modeling (RSM) approach based on the EPA's CMAQ
model. Our work here and other recent PM~2.5~ assessments clearly show
that the relative efficacy of emissions reductions varies across
pollutants and that a ton of direct PM~2.5~ is generally more effective
than a ton of precursor emissions in reducing overall PM~2.5~
concentrations. The technical assessment and recommended ratios account
for regional differences and other considerations reflected in public
comments.*

*We recommend that states use the EPA's trading ratios in their
interpollutant trading programs to provide consistency and to streamline
the trading process. If states elect to use EPA's preferred trading
ratios, they may rely on EPA's technical work and a presumption that
such ratios will be approvable by EPA absent a credible showing that
EPA's preferred trading ratios are not appropriate for that location. If
states choose to develop their own hierarchies/trading ratios, they will
have to substantiate them by modeling and/or other technical
demonstrations of the net air quality benefit for PM~2.5~ ambient
concentrations, and such a trading program will have to be approved by
EPA.*

*We have adopted this approach to capture the flexibility advantages of
interpollutant trading, while remaining mindful of the limitations of
existing air quality models. We believe that the regional-scale models
used for area-wide attainment demonstrations have sufficient accuracy to
establish an overall equivalence ratio for a nonattainment area.
However, we do not believe that available models can accurately
determine the effects of interpollutant trades at a single source. In
addition, permit-by-permit modeling demonstrations are extremely
resource intensive, only to yield limited results. For these reasons,
the final rules only allow a state to develop its own interpollutant
trading rule for inclusion in its SIP, based on a technical
demonstration for a specific nonattainment area. We will not accept
case-by-case demonstrations on an individual source permit basis.*

*The flexibility provided by this policy allows sources to select the
most cost-effective manner to obtain the offsets necessary to ensure
that PM~2.5~ air quality improves. This will be particularly beneficial
where offsets for one particular pollutant are scarce in a particular
area; such is often the case for direct PM~2.5~ emissions and SO~2~.*

## Other Comments on Offsets

**[Comment:]{.underline}**

One state/local agency (0168) pointed out that nowhere in our proposal
is there any mention of the required modeling demonstration of net air
quality benefit analysis, similarly to the limited mention of modeling
in attainment areas. The commenter stated that this is contrary to EPA
and state regulations. The commenter noted that sections IV.A.4 and D of
appendix S of 40 CFR part 51 provides requirements for new or modified
sources locating in designated nonattainment areas with respect to an
explicit demonstration of net air quality benefit from the offsetting of
emissions. The commenter argued that such a requirement is necessary for
the direct emissions of PM~2.5~ to assure no additional contribution or
creation of nonattainment conditions in the vicinity of the proposed
source when emission offsets are obtained from distant sources.

**[Response:]{.underline}**

*The commenter is correct that the existing NA NSR regulations require a
demonstration that proposed offsets, in combination with a project's
emissions increase, will result in a net air quality benefit, which may
require modeling in the case of direct PM emissions. These existing
requirements apply to direct PM~2.5~ emissions offsets as they have in
the past to offsets for other indicators of PM.*

# Comments on Transition Issues 

##  Comments on PSD Transition Issues

Upon promulgation of the proposed rules, states that accept delegation
of the Federal PSD program (delegated states) would implement the
PM~2.5~ program in 40 CFR 52.21 beginning on the effective date of the
rule. However, for states that have their own approved PSD programs
(SIP-approved states), we sought comment on three options to address
implementation of the PSD program from the time that our final rules go
into effect until we approve a state's PSD program for PM~2.5~. The
comments and our responses are presented in the following paragraphs.

### Option 1 -- Continue Implementing the 1997 Guidance to Use the PM~10~ Program as a Surrogate for PM~2.5~

As Option 1, we proposed that SIP-approved states that are unable to
implement a PM~2.5~ PSD program upon promulgation of the final rules may
continue to implement a PM~10~ program as a surrogate pursuant to the
guidance we issued in 1997.[^4] However, we proposed two additional
requirements:

-   States must require sources to demonstrate that the project will not
    cause or contribute to a violation of the PM~2.5~ NAAQS; and

-   States must include condensable PM emissions in determining major
    NSR applicability and control requirements.

**[Supporting Comments]{.underline}:**

Three state/local agency and agency association commenters (0080.1,
0136.2, 0167) and four industry/industry group commenters (0074.1,
0083.1, 0096.1, 0125.1) gave general support to Option 1. A fourth
state/local agency association (0164) believes that Option 1 is a
reasonable starting point, but suggested a modified approach (discussed
further below).

One of the supportive industry commenters (0074.1) expressed the opinion
that the current guidance of using PM~10~ as a surrogate for PM~2.5~
during the SIP development period would provide clarity and certainty to
the permitting agency and regulated community. The commenter noted that
PM~2.5~ inventories and methods for estimating emission rates are
rudimentary and may even be nonexistent in some cases which would make
permitting onerous.

One of the supportive state/local agencies (0167) pointed out that any
alternative implementation plan, including an updated version of the
1997 guidance (per Option 2 below) would not be final until September
2006, meaning that states would need to concurrently implement that
alternative while revising their SIPs in accordance with the finalized
PM~2.5~ NSR Implementation Rule. Shortly thereafter, the commenter
noted, states would also be required to submit SIP revisions
implementing separately promulgated PM~2.5~ SILs and increments, and the
revised PM~10~ and PM~2.5~ NAAQS promulgated in October 2006. The
commenter believes that such frequent changes in the regulatory
requirements would create uncertainty for sources and place increased
administrative burden on state agencies, likely resulting in permitting
delays and increased costs. The commenter therefore requested that we
adopt Option 1.

Despite generally supporting Option 1, one of the state/local agency
associations (0136.2) stated that existing source testing methods for
condensable emissions are inadequate to determine major NSR
applicability and to include in an enforceable permit. While the
commenter believes that PM~10~ methods could serve as an adequate
substitute in some cases, the commenter asserted that it is necessary to
have methods that provided greater accuracy in cases where determining
major NSR applicability is close. One of the supportive industry group
commenters (0096.1) similarly questioned and objected to our proposal to
condition the continuation of the 1997 guidance on the state's
satisfaction of conditions, particularly the inclusion of condensable
PM. A second supportive industry commenter (0125.1) also asserted that
EPA should abandon the proposed requirement to include condensable PM
emissions. In contrast, one of the supportive state/local agency
associations (0080.1) specifically stated that we should require that
condensable PM be included in the applicability determinations.

One state/local agency association (0164) believes that proposed
Option 1 is a reasonable starting point (as noted above), but suggested
that because of the difficulties associated with measuring the
condensable fraction and correctly apportioning the PM~2.5~ emissions,
PM~10~ should be used as a surrogate *with a default discount factor
applied* (emphasis in the original). The commenter recommended that we
use two categories with different factors that correspond to the
generally understood fine particle fraction: industrial process
emissions (combustion, etc.) and other emissions (fugitive dust, sawmill
dust, etc).

**[Opposing Comments:]{.underline}**

Three state/local agency/agency association commenters (0142, 0165,
0168) specifically stated that they do not support Option 1. The
commenters did not agree that implementing the PM~10~ program in the
interim period during SIP development is an appropriate surrogate for a
PM~2.5~ program, nor did they agree that this approach would be
protective of the PM~2.5~ standards or prevent air quality
deterioration. The commenters stated that they do not see a basis to
continue an outdated policy (i.e., the 1997 NSR guidance) that
essentially neglects the requirements of a PM~2.5~-specific NSR program.
The commenters believe that the PM~2.5~ NSR program must contain a
specific set or requirements that not only assure attainment of the
PM~2.5~ NAAQS, but also address mandatory PSD increments, SILs for
determination of significant impacts, and PM~2.5~-specific BACT
guidance.

Two of these commenters (0142, 0165) went on to say that they oppose
Option 1 because it does not address the PM~2.5~ problem, cannot be
implemented in some states, and does not incorporate precursor
emissions. Nevertheless, these commenters acknowledged that such an
interim measure would be necessary until the proposed rule is finalized.

**[Response]{.underline}:**

*After considering the comments we received on the three proposed
options, we have decide to adopt Option 1 as our final policy whereby
SIP-approved states may continue to implement a PM~10~ program as a
surrogate to meet the PSD program requirements for PM~2.5~ pursuant to
the 1997 guidance. However, we are not finalizing either of the two
additional requirements that we proposed in Option 1.*

*We have dropped the requirement for demonstrating compliance with the
PM~2.5~ NAAQS in order to maintain consistency in the application of the
existing surrogate policy for the PM~2.5~ PSD program during the interim
period. Since in the final rule we are otherwise allowing SIP-approved
PSD states to continue with the existing PM~10~ surrogate policy to meet
the PSD requirements for PM~2.5~, partially implementing the PM~10~
surrogate policy in this manner (using PM~10~ analyses for BACT, AQRVs,
and the additional impacts analysis) while doing the air quality
analysis for PM~2.5~ would be confusing and difficult to administer.
Thus, to ensure consistent administration during the transition period,
we have elected to maintain our existing PM~10~ surrogate policy which
only recommends as an interim measure that sources and reviewing
authorities conduct the modeling necessary to show that PM~10~ emissions
will not cause a violation of the PM~10~ NAAQS as a surrogate for
demonstrating compliance with the PM~2.5~ NAAQS. Also as discussed
previously in section 5 of this document, we are not requiring
condensable emissions to be fully integrated into the PM~2.5~ program
until the end of the transition period to validate test methods
discussed in section 5.*

*We believe that our final rule is reasonable for the following reasons.
First, PM~10~ will act as an adequate surrogate for PM~2.5~ in most
respects, because all new major sources and major modifications that
would trigger PSD requirements for PM~2.5~ would also trigger PM~10~
requirements because PM~2.5~ is a subset of PM~10~. Second, both of the
precursors presumptively designated in the final rule -- SO~2~ and NO~x~
(presumptively) -- are already regulated under state NSR programs for
other criteria pollutants. Thus, those precursors will be subject to NSR
through those other programs. We do not believe that the other options
or suggestions offer significant advantages that outweigh the utility
and ease of implementation of this approach. See the discussion of the
other proposed options below.*

### Option 2 -- Update the 1997 NSR Guidance to Include Proposed Provisions of this Rule or Amend 40 CFR Part 51, Appendix S to Indicate that 40 CFR 52.21 Would Apply

Proposed Option 2 involved implementing a true PM~2.5~ PSD program
during the SIP development period through one of two approaches:

-   Updating the 1997 guidance to reflect the provisions of the final
    rule and allowing states to run a PM~2.5~ PSD program pursuant to
    the updated guidance; or

-   Amending 40 CFR part 51, appendix S and 40 CFR 52.24 so that the PSD
    requirements of 40 CFR 52.21 would govern PSD permit issuance during
    the interim period.

Under the second approach, EPA would issue the PSD permits if a state
did not believe it had the authority to issue permits under appendix S.
We also requested comment on which of these two approaches should be
used.

**[Supporting Comments:]{.underline}**

Two industry/industry group commenters (0107.1, 0161) expressed support
for the Option 2 approach involving an update the 1997 PSD guidance to
allow SIP-approved PSD states to run a PM~2.5~ program during the
transition period. Given that the transition period should be relatively
short (2 years or so), the commenters believe that our resources would
be better spent updating the 1997 PSD guidance rather than proposing and
finalizing amendments to appendix S, or approving state delegation
requests. The commenters suggested that the guidance be updated to
include PM~2.5~ NAAQS compliance demonstration, inclusion of
condensables, and a provision related to interprecursor netting.

Two state/local agencies (0142, 0168) and one state/local agency
association (0165) supported the concept of revising rules, as suggested
by Option 2, to address the inadequacies so that there is no longer any
reason to rely upon outdated guidance. The commenters urged EPA to
revise pertinent regulations as soon as possible to allow states a ready
means to implement the PM~2.5~ NSR program. The commenters noted that in
several states, reference to EPA policy does not provide sufficient
basis for implementing a major program such as the PM~2.5~ NSR; thus
they did not support EPA merely revising and reissuing guidance for use
over a several year period.

These commenters (0142, 0165, 0168) believe that EPA has the legal
authority and obligation to assure that, during the SIP development
process, the PM~2.5~ NSR program is applied equitably (i.e., in those
states that have delegated programs and would have to apply them
immediately as well as in the remaining states that will have to submit
PM~2.5~ SIPs). Two of the commenters (0142, 0165) went on to assert that
EPA must make the necessary amendments to the pertinent Federal
regulations so that states can adopt them for their own programs (or, in
the event of a state refusal or inability to carry out the program in an
expeditious manner, will allow EPA to implement the PM~2.5~ NSR
program). The third of the commenters (0168) indicated that it is
paramount that PM~2.5~-specific provisions be finalized and applied as
expeditiously as possible.

All three of the commenters (0142, 0165, 0168) stated that it was
unclear as to why we proposed in Option 2 to amend appendix S (and 40
CFR 52.24), the Emission Offset Interpretative Rule for nonattainment
areas, to carry out the requirements of the PSD program in 40 CFR 52.21
or 51.166. They argued that we did not provide reasonable specificity
regarding the proposed changes to allow meaningful public input on this
option.

**[Response]{.underline}:**

*As noted above, we have decided not to adopt Option 2 in favor of
adopting Option 1. We do not believe that Option 2 offers significant
advantages that outweigh the utility and ease of implementation of
Option 1. As one of the commenters in favor of Option 1 pointed out,
requiring states to implement updated guidance or 40 CFR 52.21 for a
brief period during development of their own PM~2.5~ PSD programs,
followed by additional changes for the proposed rulemaking on PM~2.5~
increments, SILs, and SMCs (72 FR 54112, September 21, 2007) (when
finalized) and then for the revised PM~2.5~ NAAQS, would introduce
considerable complication and uncertainty into the program. We do not
believe the benefits of slightly earlier implementation of the PM~2.5~
PSD program outweigh the disbenefits of confusion and shifting
requirements.*

### Option 3 -- State Requests Delegation of 40 CFR 52.21 

As Option 3, we proposed to allow states to request delegation of just
the Federal PM~2.5~ PSD program, as finalized in 40 CFR 52.21. The state
would still have the option of obtaining EPA approval of its own PSD
program for PM~2.5~ if it submitted a SIP revision at a later date.

**[Supporting Comments]{.underline}:**

One industry commenter (0111.1) recommended that states with approved
PSD programs for other pollutants be required to obtain approval for
purposes of the PM~2.5~ program, and in the interim, 40 CFR 52.21
delegations should apply.

One state/local agency (0137.1) favored a variation of proposed Option 3
in which SIP-approved states would request delegation of just the new
portions of 40 CFR 52.21 that are not already part of their codified PSD
programs, then work on incorporating the new provisions on the normal
rulemaking schedule for the state. The commenter added that if this
suggestion is not acceptable to EPA, his state would prefer Option 1.

**[Opposing Comments:]{.underline}**

Two state/local agencies (0142, 0168) and one state/local agency
association (0165) specifically stated that they do not support Option 3
because it is impractical. The commenters pointed out that many states
already have their own PSD programs and plan to modify them for the
PM~2.5~ NSR requirements, and that the remaining states have retained a
form of the PSD program or have returned the program to the EPA.
Therefore, the commenters stated that they did not foresee a situation
where Option 3 would be necessary or appropriate.

**[Response:]{.underline}**

*We agree with the commenters who indicated that Option 3 would be
impractical. We believe that a state PSD program consisting of the
delegated Federal program for PM~2.5~ and state provisions for all other
pollutants would be complicated and confusing to sources and the
implementing agency. In addition, as noted above, we expect that the
delegation would be a short-term situation and, along with other
upcoming changes to the program, would result in an unstable and
confusing program. We do not believe that the benefits of slightly
earlier implementation of the PM~2.5~ PSD program would outweigh the
disbenefits of confusion and shifting requirements. Accordingly, we do
not believe that Option 3 offers significant advantages that outweigh
the utility and ease of implementation of Option 1.*

### Other PSD Transition Comments 

**[Comment:]{.underline}**

One state/local agency (0124.1) stated that none of our proposed options
regarding how SIP-approved states should implement the PSD program
during the transition period are viable options for that state. The
commenter requested that we allow states to continue their existing
PM~10~ program as a surrogate for PM~2.5~ (without caveat) until their
SIPs or regulations can be updated. The commenter explained that based
on state law, the agency would have to update the regulations before
requiring applicants to demonstrate compliance with the PM~2.5~ standard
(which takes 9 to 12 months), which would be required under both Options
1 and 2. The commenter argued that Option 3 (request delegation of the
40 CFR 52.21 PM~2.5~ requirements) would be unmanageable as their
approved program consists of a combination of statutes, regulations, and
Federal guidance adopted by reference, and that including a partial
delegation in this mix would further complicate the program.

**[Response:]{.underline}**

*As noted above, we have decided to adopt Option 1, although we have
dropped the two proposed requirements to demonstrate compliance with the
PM~2.5~ NAAQS and to include condensable PM emissions. This course of
action conforms to the commenter's suggestion. Also as noted, we have
decided not to adopt Option 2 or 3.*

**[Comment:]{.underline}**

One state/local agency (0124.1) and one industry commenter (0111.1)
requested that we clarify in the final rule that air quality analyses
are not required for PM~2.5~ until we complete the process of issuing
SILs. The industry commenter (0111.1) stated that this was necessary so
that projects are not delayed due to the inability to demonstrate a *de
minimis* impact on air quality for PM~2.5~.

The state/local agency (0124.1) recommended that we not require NSR
PM~2.5~ modeling until we complete public review on the technical
details and associated resource requirements regarding what we expect
with regards to modeling. The commenter stated that until this is done,
sources should be allowed to demonstrate compliance with the PM~10~
standards as a surrogate for the PM~2.5~ standards. The commenter
recommended that the following technical details be included:

-   The direct PM~2.5~ SIL;

-   The expected method for assessing indirect PM~2.5~ concentrations in
    a cumulative impact assessment; and

-   The preferred model (if modeling is expected) for estimating
    indirect PM~2.5~ concentrations.

The commenter (0124.1) also suggested that the current lack of
information regarding what the modeling obligations are prior to
development of a PM~2.5~ SIL is troubling and that such obligations need
to be clearly stated. The commenter asked that we address the following
questions:

-   Are we expecting PSD applicants to conduct a cumulative analysis for
    all projects prior to development of the PM~2.5~ SIL?

-   When a cumulative analysis is required, are we expecting applicants
    to also model secondary PM~2.5~ concentrations?

**[Response]{.underline}:**

*We have proposed PM~2.5~ increments, SILs, and SMC under a separate
rulemaking (72 FR 54112, September 21, 2007). We do not agree with the
commenters that suggest we should not require PSD air quality analyses
for PM~2.5~ in delegated states or states with approved SIPs for PM~2.5~
that are otherwise implementing PSD for PM~2.5~ because EPA has not yet
completed the proposed PM~2.5~ increments and SILs. A demonstration that
a source does not cause or contribute to a violation of the PM~2.5~
NAAQS can be conducted, notwithstanding the absence of an increment for
PM~2.5~. These analyses can be conducted independently and do not depend
on each other. Furthermore, a SIL is not a* *prerequisite to conducting
an air quality analysis for PM~2.5~, and the absence of an
EPA-promulgated SIL does not justify an exemption from the air quality
analysis if a state has all the other regulations in place for
implementing the PSD program for PM~2.5~. Among other functions, SILs
can be used as a screening device that enables one to forgo a cumulative
analysis if that analysis would yield no benefit, but the absence of
that level in EPA rules does not justify a complete exemption from
conducting an air quality analysis for PM~2.5~. Also, states are not
precluded from developing and applying their own SILs for PM~2.5~ in the
interim and demonstrating that a cumulative analysis would yield trivial
gain. The concept of a SIL is grounded on the* de minimis *principles
described by the court in [Alabama Power Co. v. Costle]{.underline}, 636
F.2d 323, 360 (D.C. Cir. 1980).*

**[Comment:]{.underline}**

One state/local agency (0164) believes that additional guidance is
needed for implementation of PSD, including increment use and tracking,
netting, modeling, SILs, pre-construction monitoring, and other
procedural and administrative elements. The commenter urged EPA to
develop this guidance quickly, and to provide a simple but protective
interim framework for use by EPA and by delegated states until such
final guidance is available. The commenter suggested that this interim
framework should, at a minimum, ensure that any new or modified project
that exceeds the PSD thresholds use BACT. The commenter also suggested
that we require offsets for projects approved before the other
protective elements of the full PSD program are in place to ensure that
there is no significant deterioration in air quality. (The commenter
noted that there will be a transition period while EPA develops the
suggested guidance and states modify rules and develop implementation
plans and, as discussed above, supported Option 1 as a reasonable
starting point for that period.) A second state/local agency (0079.1)
similarly indicated that delegated states will need PSD increments and
guidance for BACT review, netting analyses, and dispersion modeling to
properly implement the rule and assign resources.

**[Response:]{.underline}**

*As noted above, we have proposed PM~2.5~ increments, SILs, and SMCs (72
FR 54112, September 21, 2007), which will address a number of the areas
mentioned by the commenters. We believe that the proposed rule, when
final, along with this final PM~2.5~ NSR Implementation Rule, will
establish the necessary elements for a complete PM~2.5~ PSD program. In
addition, the existing PM~10~ surrogate policy and other guidance for
the PSD program will continue to apply. We believe that the PSD
transition approach discussed above appropriately addresses the interim
periods that will occur. As a result, we do not believe that additional
guidance is necessary at this time.*

## Comments on NA NSR Transition Issues

Our prior guidance permitted states to implement a PM~10~ NA NSR program
as a surrogate to address the requirements of NA NSR for the PM~2.5~
NAAQS.[^5] However, we proposed that upon promulgation of the final
PM~2.5~ NSR Implementation Rule (for which this document was prepared),
states would no longer be permitted to implement a PM~10~ NA NSR program
as a surrogate for a PM~2.5~ program. Instead, most states would need to
implement a transitional PM~2.5~ NA NSR program under 40 CFR part 51,
appendix S (as amended by the final rulemaking action) until we approve
changes to a state's SIP-approved NA NSR program to reflect the
requirements of the rule. (It is possible that some states would be able
to continue to implement their existing NA NSR programs if the
regulations are written generally enough to apply to PM~2.5~ and to the
newly designated PM~2.5~ nonattainment areas.) We proposed to revise
appendix S to include provisions necessary to implement a transitional
major NSR program for PM~2.5~. We also noted that if a state is unable
to apply the requirements of appendix S (e.g., lacks the legal
authority), EPA will act as the reviewing authority for the relevant
portion of the permit. Comments received on our proposal are summarized
in the following paragraphs.

**[Supporting Comments]{.underline}:**

One industry commenter (0161) and one industry group commenter (0107.1)
agreed that, pursuant to 40 CFR 52.24(k), appendix S to 40 CFR part 51
applies to state NA NSR permitting during the transition period. They
endorsed our proposal that we issue NA NSR permits during this
transition where a state asserts that it lacks the legal ability to
apply the requirements of appendix S. The commenters added that if we
continue to endorse interprecursor trading for NA NSR emission offsets,
the final rule must revise appendix S to authorize interprecursor
trading during the transition period. The commenters believe that with
the paucity of existing direct PM~2.5~ and SO~2~ offsets, business
expansion in PM~2.5~ nonattainment areas from now until at least April
2008 likely will be impossible unless this is done.

One industry commenter (0111.1) expressed that we should amend appendix
S for purposes of NA NSR and should clarify that states that have not
specifically adopted a PM~2.5~ NA NSR program must utilize appendix S in
the interim.

Without specifically mentioning appendix S or endorsing our proposal,
one state/local agency (0168) and one state/local agency association
(0165) urged EPA to make the necessary regulatory changes to allow
either states or EPA to implement immediately the PM~2.5~ NA NSR program
upon finalization of the PM~2.5~ NSR Implementation Rule. The
state/local agency association (0165) went on to say that states that
must revise their regulations and SIPs for the PM~2.5~ program should
not be given any deference in either doing so expeditiously or having
EPA implement the program in those states.

Another state/local agency (0142) urged us to make the necessary
amendments to the pertinent Federal regulations so that states can adopt
them for their own programs or, in the event of a state refusal or
inability to carry out the program in an expeditious manner, allow EPA
to implement the PM~2.5~ NSR program. The commenter suggested that the
2005 PM~2.5~ NSR guidance on use of PM~10~ emissions as surrogate for
PM~2.5~ emissions in PM~2.5~ nonattainment areas should be suspended by
the final PM~2.5~ NSR Implementation Rule.

**[Opposing Comments:]{.underline}**

Three industry commenters (0074.1, 0096.1, 0125.1) requested continued
implementation of the 2005 PM~2.5~ NSR guidance that allows the use of
PM~10~ as a surrogate for the PM~2.5~ NA NSR program during the
transition period and beyond. One of these industry commenters (0074.1)
believes that the current guidance of using PM~10~ as a surrogate for
PM~2.5~ would provide clarity and certainty to the permitting agency and
regulated community. The commenter noted that PM~2.5~ inventories and
methods for estimating emission rates are rudimentary and may even be
nonexistent in some cases, which would make permitting onerous and
challenging for agencies attempting to quantify offsets and define LAER
provisions in the period until PM~2.5~ SIPs are revised. On the other
hand, the commenter stated, PM~10~ emission sources and potential
emission rates are well established due to historic regulation of the
pollutant. On this basis, the commenter asserted that PM~10~ should
continue to be a surrogate for PM~2.5~ in major NSR evaluations not only
during SIP development, but also as an ongoing practice if a state
determines that further refinement of methodologies and additional
information collection are necessary to support a robust PM~2.5~ SIP.

**[Response]{.underline}:**

*We have decided to finalize the rules as proposed. That is, after the
effective date of this rule, states will no longer be permitted to
implement a NA NSR program for PM~10~ as a surrogate for the PM~2.5~ NA
NSR program. Most states will then need to implement a transitional
PM~2.5~ NA NSR program under appendix S to 40 CFR part 51 (as amended in
this rulemaking action) until EPA approves changes to a state's
SIP-approved NA NSR program to reflect the requirements of this rule.*

*In this action, we are finalizing our proposed revisions to appendix S
to include provisions necessary to implement a transitional NA NSR
program for PM~2.5~, including SERs applicable to major modifications
for PM~2.5~ and, as appropriate, precursors.*[^6] *Additionally, since
we have decided to allow limited interpollutant trading for purposes of
offsets under the PM~2.5~ NA NSR program (as discussed above in section
9.4 of this document), we are amending appendix S to allow
interpollutant trading at least for PM~2.5~ in this final rule.*

*Appendix S applies directly to new and modified major stationary
sources. In accordance with the requirements of section 110(a)(2)(c) of
the Act, we believe that the majority of states have the legal authority
to issue permits consistent with these requirements under an existing
SIP-approved permitting program. Nonetheless, at least one state has
reported that it lacks the legal authority to issue permits implementing
the requirements of appendix S under its existing permitting rules. If a
state is unable to apply the requirements of appendix S, we will act as
the reviewing authority for the relevant portion of the permit.*

*We believe it is appropriate for EPA to issue the preconstruction
permits in such circumstances. Congress amended the Act in 1990 to
remove the requirements that would have applied a construction ban in
areas that lacked a SIP-approved part D permit program. Thus, we believe
it is consistent with congressional intent that either the state or EPA
issue permits to construct during the interim period. See the preamble
of the proposal for this rule for more detail on the legal basis for
requiring states to issue NA NSR permits pursuant to appendix S during
the SIP development period (70 FR 66045-46).*

*Our 2005 PM~2.5~ NSR guidance provided that states should use their
approved PM~10~ NA NSR program as a surrogate for a PM~2.5~ program
until we promulgate a final PM~2.5~ NSR implementation rule. The
guidance also reiterated that states should continue to follow our 1997
guidance for PSD requirements. Accordingly, as of the effective date of
the final PM~2.5~ NSR Implementation Rule, the 2005 PM~2.5~ NSR guidance
will no longer apply in PM~2.5~ nonattainment areas. As discussed above
in section 9.1, the 1997 guidance will remain in effect for PSD in the
SIP-approved states during the SIP development period, while 40 CFR
52.21 will apply immediately for PSD in the delegated states.*

## Comments on NSR Transition for PM~2.5~ Precursors

The proposal preamble stated that we were considering whether NSR
applicability to precursors should be stayed for one or more precursors
during the SIP development period. We solicited comments on the
applicability of NSR to precursors during the SIP development period.
The following paragraphs present a summary of the comments received.

**[Comments Favoring a Stay:]{.underline}**

One state/local agency (0124.1) supported staying the Federal NSR
applicability to precursors because its state cannot impose obligations
on NSR applicants until those obligations are established in state
regulations or statute law. The commenter further stated that the
presence of a Federal requirement prior to adoption of the state
requirement creates legal difficulties for applicants who rely primarily
on the state's NSR program as fulfilling all Federal requirements.

Four industry/industry group commenters (0096.1, 0107.1, 0111.1, 0161)
supported waiving the regulation of all PM~2.5~ precursors during the
transition period. One of these industry commenters (0111.1) stated that
staying the regulation of precursors during transition allows states the
time to develop experience and knowledge in establishing local
photochemical models and to performance test their accuracy. The
commenter argued that regulating precursors at this time would pose PSD
preconstruction monitoring requirement problems as time is needed for
states to refine their monitoring networks and modeling protocols.

Two of these commenters (0107.1, 0161) supported waiving the regulation
of PM~2.5~ precursors during the transition period provided appendix S,
the 1997 guidance, and 40 CFR 52.21 include language that allows
interprecursor trading and netting so that direct PM~2.5~ emissions
increases can be offset or netted with SO~2~ and NO~x~ decreases.

Three industry/industry group commenters (0105.1, 0111.1, 0119)
supported staying NSR applicability for NO~x~ under this rulemaking
until the SIP submission deadline. They stated that sources operating in
nonattainment areas would otherwise be subject to NO~x~ NSR standards
that may lack scientific and legal support.

**[Comments Opposing a Stay:]{.underline}**

One state/local agency (0142) requested that SO~2~ precursor emissions
be included in NSR in the time period from adoption of the PM~2.5~ NSR
Implementation Rule until the SIP development period ends (up to April
2008). The commenter asserted that since SO~2~ will be considered a
PM~2.5~ precursor nationwide, states will not be able to opt out of
including these emissions in PM~2.5~ NSR; therefore, they should be
included in the interim period.

One state/local agency (0168) and one agency association (0165) believe
that all applicable provisions of NSR should be applied to the default
precursors SO~2~ and NO~x~, as they do not believe it would hamper a
state's ability to demonstrate that NO~x~ could be exempted as a
precursor. The state/local agency association (0165) went on to state
that if we determine that ammonia and VOC are to be regulated as
precursors, the commenter would support that such a determination should
await the SIP development process.

One environmental group commenter (0154.1) stated that it would be a
mistake to stay applicability to precursors because precursors are as
significant to PM~2.5~ as VOC and NO~x~ are to ozone. The commenter went
on to assert that EPA has no authority to waive regulation of PM~2.5~
precursors, either during or after the SIP development period. The
commenter argued that doing so would allow major new sources to
substantially increase emissions and worsen an area's PM~2.5~ problem
before the area has even developed a plan for reducing existing
pollution levels sufficiently to meet RFP and attainment requirements.

Another environmental group commenter (0106.1) believes that exempting
precursors from NSR until the April 2008 SIP submittal date would delay
pollution cleanups in nonattainment areas, making attainment of the
PM~2.5~ standard more difficult.

**[Response]{.underline}:**

*As discussed in section 2, we are taking final action on NSR
applicability for PM~2.5~ precursors in the final PM~2.5~ NSR
Implementation Rule. Specifically, we are designating SO~2~ as a
national precursor to PM~2.5~ in all areas, NO~x~ as a "presumed-in"
precursor in all areas, and VOC and ammonia as "presumed-out" precursors
in all areas. Thus, states have the option of excluding NO~x~ as a
precursor by demonstrating that NO~x~ emissions do not contribute
significantly to ambient PM~2.5~ concentrations in a particular area. In
addition, states have the option of identifying VOC and/or ammonia as
precursor(s) by demonstrating that emissions of VOC and/or ammonia
contribute significantly in an area, and thus should be subject to major
NSR.*

*However, based on the comments, we have been persuaded that
SIP-approved states will not have the authority to regulate PM~2.5~
precursors before they have amended their SIPs and state law to
incorporate these requirements. Thus, in order to allow time for states
to revise their regulations to incorporate such requirements, the final
rule does not require regulation of SO~2~ or NO~x~ as precursors to
PM~2.5~ under NSR until states revise their SIPs. At that time, SO~2~
will become a precursor in all areas by default. The same is true for
NO~x~, barring an approved demonstration to the contrary for a
particular area. Ammonia and VOC are considered not to be precursors
until an approved demonstration that they should be treated as such for
a particular area.*

## Other Comments on NSR Transition 

**[Comment]{.underline}:**

Five industry and industry group commenters (0074.1, 0089, 0095.1,
0109.1, 0111.1) asserted that a PM~10~ major NSR program should continue
to be used as a surrogate for a PM~2.5~ program (both PSD and NA NSR)
until difficulties with various aspects of the PM~2.5~ program are
overcome.

One of the industry commenters (0074.1) supported the continued use of
PM~10~ as a surrogate for PM~2.5~ not only during the SIP development
process, but also as an ongoing practice if a state determines that
further refinement of methodologies and additional information
collection are necessary to support a robust PM~2.5~ SIP. This commenter
noted that PM~2.5~ inventories and methods for estimating emission rates
are rudimentary and may even be nonexistent in some cases, which would
make permitting onerous and challenging for agencies.

One of the industry group commenters (0109.1) stated that, as a
practical matter, until technical issues of measuring fine particulate
(i.e., filterable and condensable portions) and predicting through
modeling fine particulate formation are resolved, EPA should continue to
implement PM~2.5~ NSR for fine particulate utilizing the PM~10~ NSR
program per the 1997 and 2005 PM~2.5~ NSR Transition Policies.

Another of the industry commenters (0111.1) noted that the proposal
preamble indicated we were relying on the 1997 guidance until "certain
difficulties were resolved, primarily the lack of necessary tools to
calculate the emissions of PM~2.5~ and related precursors, the lack of
adequate modeling techniques to project ambient impacts, and the lack of
PM~2.5~ monitoring sites." The commenter disagreed with our assessment
that these problems have been resolved in most respects, and asserted
that the most significant of the problems have not been resolved -- the
lack of necessary tools to measure or calculate emissions of PM~2.5~ and
to adequately model the transformation of SO~2~ and NO~x~ emissions into
PM~2.5~ for predicting single source impacts on ambient air quality. The
commenter favored continued implementation of the 1997 guidance until
such time as test methods are promulgated, which will also allow
additional modeling data to be developed, monitoring sites to be
installed, and ambient data to be collected.

**[Response]{.underline}:**

*As discussed above, the final PM~2.5~ NSR Implementation Rule provides
that after the effective date of this rule, **s**tates will no longer be
permitted to implement a NA NSR program for PM~10~ as a surrogate for
the PM~2.5~ NA NSR program. For purposes of PSD, SIP-approved states may
continue to implement a PM~10~ program pursuant to the 1997 guidance as
a surrogate to meet the PSD program requirements for PM~2.5~ during
their SIP development process. Delegated states must implement the
PM~2.5~ PSD program found in the revised 40 CFR 52.21 beginning on the
effective date of the final rule.*

*We do not believe it is necessary to provide transition periods longer
than these for the overall PM~2.5~ major NSR program. One of the primary
causes of uncertainty in the PM~2.5~ program is the measurement of the
condensable fraction of emissions. As discussed above in section 5, we
are providing an extended transition period for the inclusion of
condensable PM emissions while we work on improving measurement
methodologies. In addition, we have proposed PM~2.5~ increments, SILs,
and SMCs (72 FR 54112, September 21, 2007). In that proposed rulemaking,
we have proposed that increments, SILs, and SMCs and related analyses
for the PM~2.5~ PSD program be based on direct PM~2.5~ emissions only,
without consideration of PM~2.5~ precursors.*

# Comments on Minor NSR Programs for PM~2.5~

In the proposal preamble, we stated that states must have minor NSR
programs pursuant to section 110(a)(2)(C) of the Act. We asserted that
states must amend these programs to reflect the final rule, that is, to
include direct PM~2.5~ emissions and precursor emissions as included in
the major NSR program for PM~2.5~.

**[Comment:]{.underline}**

One industry group commenter (0109.1) asserted that states are not
required by the Act to adopt minor NSR programs for PM~2.5~. The
commenter stated that the Act refers to minor NSR as merely one option a
state has for implementing a NAAQS, but does not mandate such a program.
The commenter quoted section 110(a)(2)(C) of the Act to require
"regulation \... as necessary to assure that the \[NAAQS\] are
achieved." The commenter indicated that since relatively few areas need
to adopt local measures to achieve the standard, minor NSR programs
would not "be necessary" to achieve the NAAQS.

**[Response:]{.underline}**

*Section 110(a)(2)(C) requires each SIP to include "regulation of the
modification and construction of any stationary source within the areas
covered by the plan as necessary to assure that \[NAAQS\] are achieved,
including a permit program as required in parts C and D." We have always
interpreted this section to require states to establish a minor NSR
program for all pollutants for which there is a NAAQS (along with any
designated precursors). Accordingly, the implementing regulations at 40
CFR 51.160 -- 51.164 require such a program. Thus, we have determined by
regulation that a minor source construction permit program is necessary
to assure the NAAQS are achieved.*

# Other Comments on Major NSR for PM~2.5~

**[Comment:]{.underline}**

One industry commenter (0119.1) requested that we designate areas that
will achieve attainment without further regulatory development as
conditional attainment areas for which NSR is suspended. The commenter
explained that there are areas for which modeling indicates attainment
will be achieved with the implementation of the CAIR rule and other
regulations in the "pipeline" and that EPA should not impose NSR for
particulate emissions in these areas.

**[Response:]{.underline}**

*Part D of title I of the Act requires a NA NSR program in all
nonattainment areas. We do not believe that we have discretion to exempt
any nonattainment area from the NA NSR requirements. In any case, with
the uncertainties inherent in modeling, we believe on policy grounds
that it is prudent to move forward with NA NSR programs in the areas
described by the commenter. It should also be noted that such areas
would not long be subject to NA NSR. Upon redesignation to attainment
for PM~2.5~, such areas would fall under PSD for PM~2.5~.*

**[Comment:]{.underline}**

One state/local agency (0081.1) pointed out a potential issue with
double counting of emissions reductions where the CAIR regulations
overlap with the use of emission reduction credits (ERCs) under NSR. As
background, the commenter noted that the Act specifies that offsetting
emission reductions taken together with all other emission increases and
decreases in a nonattainment area must provide for RFP, which is defined
as an annual incremental improvement towards attainment of the NAAQS.
The commenter pointed out that, as a result of inclusion of large power
stations in rural nonattainment areas, many areas may see no RFP if
controls are not installed on these plants -- in order to allow new
sources in the area, controls will have to be installed. The commenter
indicated that all of the reductions may not, however, be surplus to the
SIP if the state has already taken credit for CAIR reductions at such
power stations.

The commenter (0081.1) explained the overlap as follows:

-   Typically the planning emission inventory "credits" an allowance
    program (e.g., CAIR) by setting the projected emissions from budget
    program-covered sources equal to their allocated allowances, which
    are usually less than the source's base year actual emissions.

-   If the source installs controls, it cannot take NSR offset credit
    for the reduction down to the allocation level since the SIP already
    took this credit.

-   If the source reduces its emissions below the SIP credit level it
    could generate NSR credit (i.e., ERCs) but in order to fulfill the
    SIP budget obligations, an equivalent amount of allowances must be
    surrendered for any new emissions that are allowed by the offset
    credit. Otherwise, the emission reductions are being counted and
    used twice.

-   If the new source is subject to the budget program, this will be
    satisfied automatically; if not, allowances equal to the allowable
    emissions from the new source need to be retired.

The commenter (0081.1) stated that since EPA's CAIR and NSR regulations
do not address this issue, and because of the overlapping complexity
inherent to the NSR and CAIR requirements, it is virtually guaranteed
that double counting may occur if the issue is not addressed in the
final rule. The commenter believes that the simplistic general NSR
requirement that credits be "surplus to the SIP" is inadequate to
prevent double counting from occurring. The commenter noted that
Pennsylvania has adopted NSR and interstate ozone transport NO~x~ Budget
Trading Program provisions that remedy this defect at 25 *Pa. Code*
Chapter 145, Section 145.90, and provided the language of these
provisions. The commenter indicated that the Pennsylvania provisions
address the multiple aspects of ERC and allowance interactions and fully
prevent double counting without constraining the proper functioning of
either program, and also do not allow non-ozone season ERC reductions to
allow ozone season emissions growth. The commenter recommended that
these provisions be tailored as necessary to integrate with individual
state emission credit transfer mechanisms, and be included in each
state's NSR and allowance-based trading program regulations. The
commenter further recommended that the PM~2.5~ NSR Implementation Rule
include similar provisions.

**[Response:]{.underline}**

*While the commenter has presented some valid arguments for preventing
double counting of emissions reductions in general, we did not address
this topic in the November 2005 proposal. Thus, we are unable to address
this subject in this final action.*

[^1]: Section 110(a)(2)(D) of the Act requires SIPs to include
    provisions prohibiting sources from contributing significantly to
    nonattainment in another State or interfering with another State's
    measures for PSD or to protect visibility.

[^2]: On October 17, 2006 (after these comments were submitted), we
    finalized our proposal to lower the 24-hour NAAQS for PM~2.5~ to
    35 g/m^3^.

[^3]: Based on the *Federal Register* citation given by the commenters
    (70 FR 66019, column 1), we believe that they were referring to what
    we designated as sub-option 2 under our first proposed alternative
    approach to RACT in PM~2.5~ nonattainment areas. Under sub-option 2,
    we would have required States to require RACT controls on all
    sources with PTE of 50 tpy or greater.

[^4]: See "Interim Implementation for New Source Review Requirements for
    PM~2.5~," J. Seitz, EPA, October 23, 1997.

[^5]: See "Implementation of New Source Review Requirements in PM-2.5
    Nonattainment Areas," Stephen D. Page, EPA, April 5, 2005.

[^6]: We have revised appendix S to incorporate the 2002 NSR reform
    changes (72 FR 10367, March 8, 2007).