COMMONWEALTH OF VIRGINIA

**STATE AIR POLLUTION CONTROL BOARD**

**SUMMARY AND ANALYSIS OF PUBLIC TESTIMONY FOR**

**REGULATION REVISION E03**

**CONCERNING**

**MAJOR NEW SOURCE REVIEW REFORM**

**(9 VAC 5 CHAPTERS 50 AND 80)**

**[INTRODUCTION]{.underline}**

At the March 2005 meeting, the board authorized the department to
promulgate for public comment a proposed regulation revision concerning
major new source review (NSR) reform.

A public hearing was advertised accordingly and held in Glen Allen,
Virginia on August 17, 2005 and the public comment period closed on
September 12, 2005. The proposed regulation amendments subject to the
hearing are summarized below followed by a summary of the public
participation process and an analysis of the public testimony, along
with the basis for the decision of the board.

**[SUMMARY OF PROPOSED AMENDMENTS]{.underline}**

The proposed regulation amendments concerned provisions covering major
new source review reform. A summary of the amendments follows.

The following amendments apply to Articles 8 (PSD areas) and 9
(nonattainment areas):

1\. Provisions for electric utility steam generating units (EUSGUs) have
been added in order for the baseline state regulations to be consistent
with the baseline federal regulations.

2\. Requirements for determining whether physical changes made to
existing emissions units trigger major NSR requirements have been
revised. Sources establishing their baseline actual emissions may now
use any consecutive 24-month period during the five-year period prior to
the change to determine the baseline actual emissions.

3\. The method for determining if a physical or operational change will
result in an emissions increase has been revised. The previous
\"actual-to-potential\" and \"actual-to-representative-actual-annual\"
emissions applicability tests for existing emissions units have been
replaced with an \"actual-to-projected-actual\" applicability test.

4\. Provisions for plantwide applicability limits (PALs) have been
added. A PAL is a voluntary option that allows a source to manage
emissions without triggering major new source review. The PAL program is
based on plantwide actual emissions. If the emissions are maintained
below a plantwide actual emissions cap, then the facility may avoid
major NSR permitting process when it makes alterations to the facility
or individual emissions units.

5\. Provisions for pollution control projects (PCPs) have been added. A
PCP is an activity, set of work practices, or project at an existing
emissions unit that reduces air pollution. Obtaining a PCP exclusion
relieves the PCP from major NSR review.

6\. Provisions for Clean Units have been added. An emissions unit
qualifies as a Clean Unit, and qualifies to use the Clean Unit control
technology applicability test, if it has gone through major NSR
permitting review and is complying with a BACT or LAER determination
that has been subject to public participation. When a source undergoes
NSR review and installs a BACT or LAER technology that has undergone
public comment, it may make changes to a Clean Unit without triggering
an additional major NSR review.

The following amendments are limited to specific articles:

7\. Article 8 has been revised in order to be consistent with other NSR
regulations. This consists of (i) removing federal enforceability of
certain provisions that should be enforceable by the state (toxics and
odor) in order to prevent state-only terms and conditions from being
designated as federally enforceable in a permit; (ii) deleting
provisions covered elsewhere regarding circumvention, and reactivation
and permanent shutdown; and (iii) adding provisions regarding changes to
permits, administrative permit amendments, minor permit amendments,
significant amendment procedures, and reopening for cause.

8\. Article 6 (the minor NSR regulation) has been revised to remove
provisions for PCPs that would be covered by the changes to the major
NSR regulations.

9\. Article 4 of 9 VAC 5 Chapter 50, which contains general requirements
for new and modified stationary sources, has been revised to be
consistent with the control technology provisions of Articles 8 and 9.

**[SUMMARY OF PUBLIC PARTICIPATION PROCESS]{.underline}**

A public hearing was held in Glen Allen, Virginia on August 17, 2005.
Six persons attended the hearing, with three of those offering
testimony; and seven additional written comments were received during
the public comment period. As required by law, notice of this hearing
was given to the public on or about July 11, 2005 in the Virginia
Register and in seven major newspapers (one in each Air Quality Control
Region) throughout the Commonwealth. In addition, personal notice of
this hearing and the opportunity to comment was given by mail to those
persons on the department\'s list to receive notices of proposed
regulation revisions. A list of hearing attendees and the complete text
or an account of each person\'s testimony is included in the hearing
report which is on file at the department.

**[ANALYSIS OF TESTIMONY]{.underline}**

Below is a summary of each person\'s testimony and the accompanying
analysis. Included is a brief statement of the subject, the
identification of the commenter, the text of the comment and the
board\'s response (analysis and action taken). Each issue is discussed
in light of all of the comments received that affect that issue. The
board has reviewed the comments and developed a specific response based
on its evaluation of the issue raised. The board\'s action is based on
consideration of the overall goals and objectives of the air quality
program and the intended purpose of the regulation.

1\. **[SUBJECT]{.underline}:** Determining baseline emissions and
emissions increases, PALs.

**[COMMENTER]{.underline}:** U.S. Environmental Protection Agency (EPA)

**[TEXT]{.underline}:** In the EPA rule, the lookback period for
determining past actual emissions is specified as any consecutive 24
months in the previous 10 years. The Virginia proposal uses any
consecutive 24 months in the previous 5 years. In the EPA regulation,
the period used for establishing each pollutant baseline can be
different for each pollutant. The Virginia proposal requires that it be
the same for all pollutants except where extenuating circumstances would
allow use of different baseline periods. The EPA rule establishes PAL
duration as 10 years; the Virginia proposal contains a 5-year duration.
The EPA rule allows a different baseline period for each PAL pollutant;
the Virginia proposal requires the same baseline period for all PAL
pollutants unless extenuating circumstances would require use of
different baseline periods. The Virginia rule also proposes additional
recordkeeping requirements that go beyond the federal rules.

The EPA regulation does not specify consequences where the owner
determines there is a reasonable possibility that a project that is not
part of a major modification may result in a significant emissions
increase and does not obtain a permit. The Virginia proposal specifies
how the state will act should the owner fail to make an accurate
determination. The EPA regulation requires owners to develop and
maintain information to support their determination that a given project
is not a part of a major modification that may result in a significant
emissions increase and only requires advance notification from electric
steam generating facilities. The Virginia proposal requires 30 day
advance notification of the availability of the information prior to
beginning actual construction of the project for all sources.

The state will need to explain or offer information to EPA describing
how this proposal should be considered equivalent to the federal
regulations.

To be consistent in application to all sources however, EPA recommends
that the following statement be made for **all** sources with respect to
advance notification: "Nothing in this subdivision shall be construed to
require the owner of such a unit to obtain any determination from the
board before beginning actual construction."

**[RESPONSE]{.underline}:** EPA is requiring states to make significant
changes to their major new source review (NSR) programs that will
provide the regulated community with a significant economic benefit due
to "the reduction in administrative costs from streamlining of the
permit process and the decreased opportunity cost from delayed changes."
EPA has declared that the improvements to the major NSR program will be
"environmentally beneficial compared to the current program." Major NSR
programs are one of the key tools state used to manage the growth of new
emissions, particularly in nonattainment areas.

However, EPA also admits that it "cannot quantify with specificity the
emissions changes for a given pollutant or pollutants, if any, that
result from the NSR rule changes now being adopted, nor can we reliably
determine the anticipated locations of any emissions changes." The
reasons for this uncertainty are stated to be the voluntary nature of
the improvements, insufficiency of available data for modified units to
estimate the benefits of the improvements as it relates to modified
units, difficulty of linking permits to environmental results, and the
absence of detailed records.

Given the qualitative nature of EPA's analysis and, thus, the
uncertainty of this environmental benefit, it is not unreasonable to
conclude that this environmental benefit may not materialize and that
states will risk their air quality if they proceed to implement the
reforms wholesale. Therefore, it is not unreasonable for states to be
conservative and take a cautious approach to implementation, especially
since the ultimate responsibility for meeting the air quality goals of
the federal Clean Air Act rests with the states.

Below is an assessment of (i) the supplemental analysis that forms the
basis for EPA's reform rule, (ii) Virginia's air quality needs with
respect to the major NSR programs and (iii) the demonstration that EPA
requires of states that choose to differ from the EPA rule. This is
followed by the responses to comments related to Virginia's primary
alternative approaches to the federal rule.

**EPA Supplemental Analysis Assessment**

To provide the basis for its major new source review reform regulations,
EPA has promulgated a supporting document: "Supplemental Analysis of the
Environmental Impact of the 2002 Final NSR Improvement Rules,"
("Supplemental Analysis")
\[http://www.epa.gov/nsr/documents/nsr-analysis.pdf\]. In this document,
EPA states, \"These reforms are aimed at providing much needed
flexibility and regulatory certainty, and at removing barriers and
creating incentives for sources to improve environmental performance
through emissions reductions, pollution prevention, and improved energy
efficiency." EPA also states "collectively, the five NSR Improvements
that the Agency is finalizing will be environmentally beneficial
compared to the current program, and will improve air quality by
reducing emissions from industrial facilities."

EPA goes on to state that:

improvements in air quality will result in health and welfare benefits
from reduced concentrations of pollutants regulated by the NSR program,
primarily criteria pollutants. These benefits are relatively small
compared to those of other air regulatory programs, but will result in a
net environmental benefit compared to the current rule. For example,
EPA's analysis of PALs finds that there are likely to be reductions in
emissions of Volatile Organic Compounds (VOC) in the range of 3,400 to
17,000 tons per year from just three industrial categories. The agency
believes that, overall, the use of PALs will actually reduce emissions
by a greater amount, once additional categories and pollutants are
considered. The analysis also finds that the Clean Unit Test and the
exclusion for Pollution Control Projects will result in emissions
reductions compared to the current program. Similarly, the analysis
finds that the actual-to-projected-actual test is likely to be
environmentally beneficial, but only to a small extent. The final
reform, the change in the emissions baseline, will affect a very small
number of facilities. Although it may allow for a small number of
sources to avoid permitting because of the availability of a higher
baseline, a small number of sources will also now be subject to a more
stringent baseline. Thus, the analysis concludes that the overall
consequences of the baseline change will be negligible.

EPA acknowledges that fewer changes will trigger NSR under the 2002 rule
than under the 1980 rule. Although EPA recognized that it lacked
sufficient data to determine whether the 10-year lookback period would
result in an overall increase or decrease in emissions, it concluded
that "in either case, the magnitude of the change is likely to be very
small."

However, as discussed above, EPA has also stated that that it "cannot
quantify with specificity the emissions changes for a given pollutant or
pollutants, if any, that result from the NSR rule changes now being
adopted, nor can \[it\] reliably determine the anticipated locations of
any emissions changes." EPA has acknowledged that its impact analysis is
based on incomplete data and has been unable to reasonably quantify the
2002 rule's impact on public health. A General Accounting Office (GAO)
Report to Congress stated that the economic and environmental impacts of
the 2002 rule are "uncertain because of limited data and difficulty in
determining how industrial companies will respond to the rule." GAO
noted, for example, that because EPA lacked comprehensive data, it
relied on industry anecdotes in concluding that NSR discourages sources
from making changes that improve operating efficiency. GAO further
pointed out that EPA's projection that these efficient changes will
decrease actual emissions is based on the unverified assumption that
sources will not increase their production levels after implementing the
changes. Nevertheless, GAO did not conclude that the 2002 rule lacked
adequate evidentiary support. Rather, GAO recommended that EPA "monitor
the emissions impacts of the rule" and "use the monitoring results to
determine whether the rule has created adverse effects that the agency
needs to address."

In June 2005, the U.S. District Court of Appeals for the D.C. Circuit
Court vacated the Clean Unit and PCP provisions while upholding the
remaining NSR reform provisions. In light of the court's rejection of
the Clean Unit and PCP provisions (on which EPA relied in concluding
that the five NSR reform provisions will improve air quality), the court
recognized that there is a heightened need for EPA to have sufficient
data to confirm that the remaining portions of the reform rule do not
result in increased emissions that harm air quality and public health.

The court concluded that although the data on which it relied was
inadequate, EPA's agency decision to promulgate the NSR reforms was not
arbitrary and capricious. The court, therefore, upheld the remaining NSR
reform provisions: even though the basis for the provisions was faulty,
the agency was not held liable for choosing to promulgate those
provisions. However, the concern at the state level\--where the rules
must be implemented\--is not whether EPA acted in a legally proper way
or not, but rather whether the information on which EPA's rules are
based is adequate.

One may conclude from this analysis that these reforms should be
implemented because there will likely be an environmental benefit due to
some of the improvements and a small or negligible impact for others.
One may also conclude that since there is no adverse environmental
impact due to moving from the current major NSR program to the reform
program, it is not prudent to retain the current program or implement a
compromise program. However, given the qualitative nature of EPA's
analysis and, thus, the uncertainty of this environmental benefit, it is
not unreasonable to conclude that the environmental benefit may not
materialize and that states will risk their air quality if they proceed
to implement the reforms wholesale. Therefore, it is not unreasonable
for states to take a cautious approach to implementation, especially
since the ultimate responsibility for meeting the air quality goals of
the federal Clean Air Act rests with states.

**Virginia\'s Air Quality and Environmental Needs**

Virginia has numerous reasons for taking a somewhat conservative
approach to revising its new source review program. These reasons cover
a variety of issues, from public health and air quality, to
administrative and operational concerns, and are discussed in detail
below.

While many aspects of the EPA rule will likely result in some air
quality benefit when applied in Virginia, the Commonwealth's overall air
quality situation can benefit from a certain changes to the EPA
requirements. § 10.1-1308 of the Code of Virginia states, "The
regulations shall not promote or encourage any substantial degradation
of present air quality in any air basin or region which has an air
quality superior to that stipulated in the regulations." In other words,
no regulation may contribute to the deterioration of air quality. Given
the uncertainty of specific impacts that implementing the federal rules
will have on the areas of the state that are attaining the national
standards, it is believed that a certain limitations on some aspects of
the federal rules may help ensure that this state-specific need is met.

In addition to ensuring that areas of the state that meet the national
standards continue to do so, the Commonwealth is also obligated to
actively improve air quality. Currently, approximately one half of the
Commonwealth's citizens live in areas that do not attain the national
standards. Visibility problems have been identified in Virginia's Class
I (national park) areas. Additionally, nitrogen deposition from airborne
emissions is contributing to serious water quality problems in
Chesapeake Bay. In this larger context, it is clear that the state needs
to take additional steps beyond the immediate legal requirements for
nonattainment and PSD areas if larger, statewide issues of air quality
are to be addressed. Again, given the uncertainty surrounding the
specific impacts of the federal rule, the state rule is exercising its
responsibility to consider a somewhat more closely scrutinized process
for implementing the basic elements of NSR reform.

Virginia has a legal obligation to incorporate the federal regulations
in a manner that will result in equal or better environmental benefit.
In order to balance the need to meet Virginia's specific air quality
needs with the need to improve permitting certainty and flexibility, a
number of revisions to the federal rules have been made.

**Equivalency Demonstration**

To be SIP-approvable, state programs must include the EPA changes as
minimum program elements, and must assure that any program changes are
consistently accounted for in other SIP planning measures. Revisions to
state permitting programs for both nonattainment and attainment areas
are due no later than January 2, 2006.

In the preamble (67 FR 80240, December 31, 2002) to the final federal
NSR regulation, EPA addresses the issue of differences from the federal
base program and states:

. . . State and local jurisdictions have significant freedom to
customize their NSR programs. Ever since our current NSR regulations
were adopted in 1980, we have taken the position that States may meet
the requirements of part 51 "with different but equivalent regulations."
45 FR 52676. Several States have, indeed, implemented programs that work
every bit as well as our own base programs, yet depart substantially
from the basic framework established in our rules . . . we have not
implemented our base programs with a one-size-fits-all mentality and
certainly do not have the goal of "preempting" State creativity or
innovation.

Perhaps the biggest potential disadvantages to implementing the new
applicability provisions as part of our base programs are the time and
effort required to revise existing State programs and to have the
revised programs approved as part of the SIP. For States that choose to
adopt all of the new applicability provisions, we expect that the SIP
approval process will be expeditious. Of course, the review and approval
process will be more complicated for States that choose to adopt a
program that differs from our base programs. For example, if a State
decides it does not want to implement any of the new applicability
provisions, that State will need to show that its existing program is at
least as stringent as our revised base program. It would be impossible
for us to plan ahead for all of the possible variations that States
might ultimately elect to pursue. We will, however, reach out to
relevant stakeholders immediately after publication of these rules and
try to develop streamlined methods for addressing common questions that
may arise during the SIP approval process.

In the text of the final federal NSR regulations (40 CFR 51.165 and 40
CFR 51.166), EPA provides additional specifics on this matter:

With regard to those provisions relating to definitions; relating to the
determinations of significant emissions increases and significant net
emissions; and relating to circumstances where there is a reasonable
possibility that a project that is not a part of a major modification
may result in a significant emissions increase, EPA indicates that
"deviations from these provisions will be approved only if the State
specifically demonstrates that the submitted provisions are more
stringent than or at least as stringent in all respects as the
corresponding" federal provisions.

States must now address EPA's expectation, with no further specific or
formal guidance, that alternatives to the federal program be
demonstrated to be equivalent to or more stringent than the federal
requirements. This demonstration will be made by Virginia when the
regulations are submitted to EPA as a State Implementation Plan (SIP)
revision.

**Virginia Improvements to the Federal Rule**

The EPA rule on which the state rule is based allows states some
discretion in how the program is implemented. As long as the base
elements of the program are included, states are allowed to tailor the
federal rules to meet state needs. EPA has stated that specific
enforcement of the rules is to be delineated by the states. Generally,
as long as the state rule does not impede a source\'s ability to use the
basic elements of the NSR program, EPA considers the state regulation to
be equally as protective as the federal rule. The baseline elements of
the EPA program are being included in the Virginia proposed regulation;
however, the state is also exercising its discretion to make
modifications to the baseline in order to meet state needs.

The air quality situation in Virginia requires additional controls in
order to protect public health and welfare, and a strong NSR program is
one tool by which this can be accomplished. However, the assertion that
the EPA NSR reforms present a "rollback" of protections is inconclusive.
The new rules encourage the application of air pollution control
equipment and work practices. While changes to a source may no longer be
scrutinized through the traditional approach of a permitting analysis
for every facility change, this will be outweighed by a shift in focus
to activities with more significant impacts to the environment. Limited
resources will be diverted to projects with a potentially significant
impact to the environment rather than on projects with positive or
neutral effects to the environment. The availability of additional
recordkeeping that sources will have to conduct in order to justify
projects that are exempt from major source NSR will be another positive
result from the new NSR rules. Generally, the baseline federal reforms
augmented with revisions designed to meet state-specific needs
represents the best approach for implementing the NSR program in
Virginia.

The Virginia regulation amendments are more restrictive that the
applicable legal requirements in the sense that Virginia's changes may
impose some relatively minor restrictions to the baseline EPA
provisions. For example, the Virginia proposal limits the timeframes
from which a source may establish its period of representative operation
in order to assure adequate monitoring for compliance and enforcement
purposes. Virginia's changes also require some additional recordkeeping
and reporting, which may represent an additional upfront burden to
sources that may be dissipated later on as the program transpires, and
which also provide additional compliance and enforcement support.

The Virginia regulation amendments are not more restrictive than the
applicable legal requirements in the sense that the EPA rule on which
the state rule is based allows states discretion in how the program is
implemented. EPA has stated that specific enforcement of the rules is to
be delineated by the states. EPA has also stated that because the
overall purpose of the NSR reforms is to encourage the installation of
cleaner equipment, obstacles to the implementation of the reforms is
considered to be less protective of the environment. Generally, as long
as the state rule does not impede a source\'s ability to use the basic
elements of the NSR program, EPA considers the state regulation to be
equally as protective as the federal rule. The baseline elements of the
EPA program are being included in the Virginia regulation; however, the
state is also exercising its discretion to make modifications to the
baseline in order to meet state needs.

Thus, Virginia's changes to the federal rules are intended to strike a
balance between the advantages to the federal program and the
uncertainties that come with it.

*1. In the EPA rule, the lookback period for determining past actual
emissions for non-EGUs is specified as any consecutive 24 months in the
previous 10 years. The Virginia regulation uses any consecutive 24
months in the previous 5 years, and allows sources to use another
24-month period if it is demonstrated to be more representative.*

As discussed elsewhere, state rules may be equally or more protective
than federal rules. Requiring a 5-year lookback instead of a 10-year
lookback may limit a source's potential to find a higher baseline. This
could in turn restrict a source's ability to emit and is thus inherently
more protective than (rather than equivalent to) the EPA rule.

The purpose of an extended lookback is to establish a period that is
*most representative* of source operation. Establishment of the most
representative operation not only enables sources to plan effective
emissions control strategies, it also provides the department with more
accurate information on which to base long-term air quality planning
strategies. While an extended lookback period will likely result in more
accurate baseline determinations, a more conservative transition is best
for Virginia, and the lookback has thus been limited to 5 years.

It is unlikely that a lookback period of the most immediate preceding 24
months will accurately characterize a facility's representative
operation. It is also feasible that a 10-year lookback may be optimal
for certain industries under certain circumstances. It is not clear,
however, that the 10-year period is the best approach for all
potentially affected sources statewide. First, the 10-year lookback will
affect a limited subset of sources. Second, the 10-year lookback may not
be optimal for all source types, and not all sources may have sufficient
or reliable data for a 10-year period. Also, while there may be periods
of a deep business trough, there may also be periods of unusually high
production. In sum, while there exist a number of plausible scenarios in
support of the 10-year period, there remains the possibility that these
scenarios would not apply statewide to all source types in every
business year.

During the course of the regulatory development period, department
permitting and compliance staff expressed concern about the potential
impact of the NSR reforms on their ability to perform accurate and
timely compliance and enforcement appraisals. Specifically, staff
expressed concern about the amount and quality of data being generated,
and ability of both sources and the department to analyze this
information in a timely and accurate manner.

The 5-year period was selected in order to enable sources to utilize a
moderately extended lookback while providing the board assurance that no
unusually high or low periods would be selected. A conservative
transition to the new system will assure permitting, compliance, and
enforcement reliability while allowing sources the enhanced flexibility
of an extended lookback. Additionally, the regulation allows sources the
use of a different time period in determining baseline actual emissions
if a case can be made that the proposed alternative time period is more
representative of normal source operation. This provision will provide
sources with additional flexibility when appropriate, while providing
the oversight necessary to monitor the program and avoid compliance
issues.

With respect to the lookback period for PALs, we agree that PALs provide
businesses operational flexibility while protecting the environment, and
have thus included nearly every PAL provision as is in the proposal.
However, we also believe that a somewhat shortened lookback period for
PALs is a reasonable alternative to EPA's 10-year period that will
enable sources to enjoy the benefits of PALs while ensuring that
Virginia's air quality resources are protected.

*2. In the EPA regulation, the period used for establishing each
pollutant baseline can be separate for each pollutant. The Virginia
regulation requires that it be the same for all pollutants except where
extenuating circumstances would allow use of different baseline
periods.*

Restricting sources to one baseline could prevent a source from
selecting the highest baselines for a number of pollutants; this is thus
inherently more protective than (rather than equivalent to) the EPA
rule.

During the initial development of the regulation, department permitting
and compliance staff identified the potential for a significant negative
impact of the multiple pollutant baseline approach on their ability to
perform accurate and timely permit issuance and compliance review.
Establishment of a single baseline for all pollutants was considered to
be, in part, one way to alleviate this concern. The single baseline
approach considerably simplifies implementation of the rule for sources
as well as the department---an important consideration in a notably
complex rule.

While the proposal restricts sources to one baseline, it also allows
sources to use different periods for different pollutants provided that
the source can demonstrate that a different period is more appropriate.
This enables sources to make the case for an alternative baseline
approach and for the board to approve such alternatives.

It is a reasonable compromise to allow sources an extended lookback with
the understanding that the maximum possible output of all pollution
types is not an acceptable outcome.

*3. The EPA regulation does not specify consequences where the owner
determines there is a reasonable possibility that a project that is not
a part of a major modification may result in a significant emissions
increase and does not obtain a permit. The Virginia regulation specifies
how the state will act should the owner fail to make an accurate
determination.*

The federal regulations do not address enforcement. However, EPA has
informed the states that this is an intentional omission, and that
enforcement strategies are to be addressed by the states. Virginia has
done so: specifics as to how the state will act should the owner fail to
make accurate determinations are consequences dealt with in other state
regulations and state law. The language added to the regulation that
spells out the consequences of significant emissions miscalculations is
to provide emphasis and, because it is codified elsewhere in the
regulations, does not have an effect on existing requirements.

*4. The EPA regulation requires owners to develop and maintain
information to support their determination that a given project is not a
part of a major modification may result in a significant emissions
increase. The Virginia regulation requires advance notification of the
availability of the information prior to beginning actual construction
of the project.*

Requiring a 30-day advance notification of the availability of
information prior to beginning actual construction of the project is a
requirement in addition to the federal requirements, will result in
additional project oversight, and is thus inherently more protective
than (rather than equivalent to) the EPA rule. Additionally, language
was added to the proposal to clarify that these informational provisions
do not require a source to obtain any determination from the board
before beginning additional construction.

It is crucially important that the department have access to data that
is adequate for determining if a source is in compliance. Given that the
major NSR reforms represent a significant departure from the previously
existing rules, it is in the best interest of the source to maintain
information sufficient to justify its actions and to avoid compliance
problems, particularly in the initial stages of program implementation.
This information also contributes to an improved overall picture of the
state's air quality, and is essential for long-term planning purposes.
As noted in the discussion regarding the consequences of significant
emissions miscalculations, there is no benefit but considerable risk to
a source that cannot account for its actions.

*5. The EPA rule establishes PAL duration as 10 years; the Virginia
regulation contains a 5-year duration.*

Requiring a 5-year duration instead of a 10-year duration allows a
source ability to make changes without permitting review while providing
the department with the opportunity for reasonable periodic reviews.
This approach is inherently more protective than (rather than equivalent
to) the EPA rule.

PALs will result in an air quality benefit and should be implemented in
Virginia. Past board experience in PAL permitting, while limited, has
been positive. A great deal of effort is required initially to develop
the PAL; however, once the PAL is in place it achieves emissions
reductions without creating a continual small-scale permitting burden on
the department or the source. The lookback period and duration have been
limited to 5 years in order to provide additional assurance that no
unacceptably high emissions increases will result, and to allow
department review and oversight.

2\. **[SUBJECT]{.underline}:** Clean Units and PCPs.

**[COMMENTER]{.underline}:** U.S. EPA, Southern Environmental Law Center
et al.

**[TEXT]{.underline}:** The D.C. Circuit Court of Appeals vacated the
Clean Unit exemption and the pollution control project (PCP) exemption.
In light of the court's ruling, both the Clean Unit and PCP provisions
need to be stricken from the proposal. Additionally, the hybrid
emissions test for projects involving both so-called "clean units" and
existing units must be withdrawn.

**[RESPONSE]{.underline}:** Clean Unit and PCP provisions were vacated
by the court and cannot be legally implemented at this time. EPA has
also announced that states currently developing regulations should not
include such provisions. Therefore, inclusion of Clean Unit and PCP
provisions is not appropriate, and appropriate changes reflecting the
intent of the comment have been made to the proposal..

3\. **[SUBJECT]{.underline}:** General concern about NSR program.

**[COMMENTER]{.underline}:** Elizabeth B. Snell, Page D. Calisch, 3
identical emails

**[TEXT]{.underline}:** These citizens generally support a strong NSR
program that will meet Virginia-specific health and welfare needs.

**[RESPONSE]{.underline}:** As discussed in the response to comment 1,
the proposed regulation meets the basic federal legal requirements,
which are mandatory, while containing alternative approaches to address
air quality issues specific to Virginia. We agree that strong NSR
regulations are necessary for protecting the environment, and have
developed regulations that accomplish this goal.

No change has been made to the proposal as a result of this comment.

4\. **[SUBJECT]{.underline}:** General concern about NSR program.

**[COMMENTER]{.underline}:** 141 emails

**[TEXT]{.underline}:** Despite the severity of the Commonwealth's
health concerns, Virginia is considering revisions to its NSR
regulations that would weaken current law in response to federal action.
EPA's changes to the federal NSR regulations would render a key portion
of the Clean Air Act ineffective by allowing the country\'s oldest and
dirtiest smokestacks, power plants, oil refineries and factories to
increase pollution by unlimited amounts without ever having to adopt
modern pollution controls. Virginia does not have to follow the federal
lead, so long as the state regulations are at least as strong as the
federal rules. NSR has been part of the Clean Air Act since 1977, and
has been responsible for the reduction of thousands of pounds of soot
and smog forming pollutants. I urge you to adopt major NSR regulations
that are stronger than the federal recommendations and protect
Virginia\'s existing rules that require polluters to clean up our air to
protect public health.

**[RESPONSE]{.underline}:** As discussed in the response to comment 1,
the proposed regulation meets the basic federal legal requirements,
which are mandatory, while containing alternative approaches to address
air quality issues specific to Virginia. We agree that strong NSR
regulations are necessary for protecting the environment, and have
developed regulations that accomplish this goal.

No change has been made to the proposal as a result of this comment.

5\. **[SUBJECT]{.underline}:** Overall regulatory stringency.

**[COMMENTER]{.underline}:** Southern Environmental Law Center (SELC) on
behalf of American Lung Association of Virginia, Appalachian Voices,
National Parks Conservation Association, Piedmont Environmental Council,
Virginia Conservation Network, Sierra Club, and Virginia League of
Conservation Voters

**[TEXT]{.underline}:** The board has significant leeway under federal
law to customize Virginia's NSR regulations to best address the state's
urgent air pollution concerns. EPA acknowledges -- as the Clean Air Act
requires -- that "\[s\]tate and local jurisdictions have significant
freedom to customize their NSR programs," and explicitly recognizes that
a state may decide "it does not want to implement any of the new
applicability provisions." Because of the Clean Air Act's emphasis on
cooperative federalism, Virginia does not have to follow the federal
lead on NSR. In fact, EPA has stated that it will approve a SIP choosing
an alternate course, so long as the state "show\[s\] that its existing
program is at least as stringent as \[the\] revised base program." The
federal rule changes would greatly expand the overhauls and upgrades
that can be made to aging industrial facilities without requiring
compliance with NSR, leading to significant increases in pollution. By
instituting a program that will require more aging facilities to comply
with NSR when changes significantly increase emissions, Virginia will
have no difficulty establishing that its program is "at least as
stringent in all respects as" the base federal program.

**[RESPONSE]{.underline}:** As discussed in the response to comment 1,
we agree that the EPA rule on which the state rule is based allows
states some discretion in how the program is implemented. The basic
elements of the EPA program are being included in the Virginia proposal;
however, the state is also exercising its discretion to make
modifications to the federal rules in order to meet state needs.

No change has been made to the proposal as a result of this comment.

6\. **[SUBJECT]{.underline}:** General support of the NSR program.

**[COMMENTER]{.underline}:** Southern Environmental Law Center et al.;
Peter deFur

**[TEXT]{.underline}:** Air pollution has serious health impacts,
including heart disease, heart attacks, increased risk of death from
lung cancer, and premature deaths from heart and lung problems. Each
year in Virginia, approximately 1,000 people die prematurely from
exposure to fine particle pollution from power plants alone.
Health-related problems result in significant economic costs, with
hundreds of thousands of work days and school days lost each year due to
air pollution problems. Children and senior citizens are the most
susceptible to temporary and permanent health impacts from air
pollution.

The environmental costs of air pollution are also high. Summertime haze
has reduced vistas in Shenandoah National Park by an average of 75
percent. The park also has recorded more unhealthy air days than several
major cities, including Chicago and Denver, consistently ranking as one
of the most polluted in the country. Equally important is the effect of
emissions from coal-fired power plants on the Chesapeake Bay. Excess
nitrogen causes the greatest harm to the Bay, contributing to algal
blooms and widespread "dead zones." The summer of 2005 has been one of
the worst for dead zones, with 41 percent of the Chesapeake Bay
suffocated by a dead zone of low- or no- oxygen water. A strong NSR
program is essential to ensure that Virginia lives up to its obligations
under the Chesapeake 2000 Agreement.

In addition to these environmental costs, a weakening of NSR could bring
adverse economic impacts to Virginia. The designation of an area as
nonattainment often deters business development because of the federal
restrictions that accompany a nonattainment designation. When an area
falls into nonattainment, it is prohibited from bringing in new
industrial development unless it can provide pollution reduction offsets
to counterbalance the increases in emissions that the new sources will
bring. With so many cities and counties labeled as nonattainment,
Virginia faces real limits on economic growth if it does not improve air
quality.

Aggravating these difficulties are the problems dirty air creates for
maintaining existing businesses. One independent analysis finds that a
25 percent increase in visitation at Shenandoah National Park due to
increased visibility could yield as much as \$30 million annually in
increased sales benefits and tax revenues, and 800 jobs for local
communities surrounding the Park. Ground-level ozone pollution also
costs Virginia's farmers up to \$19 million annually in reduced crop
yields of wheat, soybeans, cotton, peanuts, and corn. This figure
excludes costs of reduced yields in wine-producing grapes, a burgeoning
Virginia industry and one that is particularly vulnerable to ozone
damage.

Additionally, without adequate NSR protections, existing sources would
enjoy an unfair, competitive advantage over newer companies. This
advantage would arise because, under the Clean Air Act, new sources
already have to install modern pollution controls that are absent on
many existing facilities. The NSR program simply requires existing
smokestacks to install many of these same pollution control technologies
whenever an older unit is modified. By requiring modified existing
sources to meet many of the same requirements as new facilities, the
existing NSR program helps level the playing field between entrenched
and newer companies, encourages innovation in cleaner energy, creates
more jobs, and spurs competition.

Accordingly, the board should resist pressure to undo important clean
air protections. Instead, it should commit to maintaining a strong and
healthy NSR program in Virginia and reject the EPA rollbacks on NSR.

**[RESPONSE]{.underline}:** As discussed in the response to comment 1,
we agree that the air quality situation in Virginia requires additional
controls in order to protect public health and welfare, and that a
strong NSR program is one tool by which this can be accomplished.

No change has been made to the proposal as a result of this comment.

7\. **[SUBJECT]{.underline}:** Baseline actual emissions -- lookback
period.

**[COMMENTER]{.underline}:** Southern Environmental Law Center et al.;
Peter deFur

**[TEXT]{.underline}:** The D.C. Circuit concluded that the Clean Air
Act "is silent on how to calculate such 'increases' in emissions,"
meaning that the board has some leeway in tailoring the definition of
"net emissions increase" to best fit Virginia's needs. Under the
existing Virginia rule, the baseline would be set using emissions data
from the two years immediately proceeding construction of a project to
determine the baseline figures for all measured pollutants. EPA changed
the rule to allow electric utility steam generating units (EUSGUs) to
select the highest polluting 2-year period out of the last 5 years of
operation preceding the change. For non-EUSGUs, operators would be able
to select the highest polluting consecutive two years from the last
decade of operation. The proposal replaces the 10-year lookback period
with a 5-year window for all sources, both EUSGUs and non-EUSGUs alike.

While the existing rule's 2-year period provides the most accurate
picture of a facility's operating profile, the 5-year lookback is a
noteworthy improvement over the federal rule's 10-year lookback for
non-EUSGUs. Studies of emissions histories of major pollution sources
suggest that limiting the lookback period for all sources to five years
will significantly limit the quantity of pollution increases that would
fail to trigger NSR.

At the same time, we continue to urge the board to reject both the 5-
and 10-year lookback provisions as they are less protective of the
environment and public health than the 2-year period that has worked
well for Virginia for the last 25 years. An accurate determination of
whether a change to a source results in a significant emissions increase
requires a baseline emissions period representative of the source's
actual pre-change emissions.  A source should not be allowed to
arbitrarily reach back to a period of high emissions in order to inflate
baseline emissions above its actual pre-change emissions.

The proffered rationale behind these extended lookback periods is to
more accurately reflect emissions throughout the business cycle of the
industry. Under the current regulations, however, if the two years
immediately preceding a modification are not reflective of normal source
operations, an operator is already allowed to select another 2-year
period that is more representative. That is, the existing regulations
take into account variations in business cycles. By cherry-picking the
highest emissions from out of the last several years of operation, the
extended lookback period serves only one purpose: to raise the baseline
emissions figure as high as possible, thereby avoiding the installation
of pollution controls in all but the most extreme cases.

Because the 5-year lookback period will lead to increases in pollution
when compared to the current rule, we maintain that the Virginia NSR
program should apply a 2-year lookback period to all sources unless the
source can show that a prior 24-month period is more representative. 

**[RESPONSE]{.underline}:** As discussed in the response to comment 1, a
more conservative lookback from 10 years to 5 is best for Virginia.

No change has been made to the program as a result of this comment.

8\. **[SUBJECT]{.underline}:** Individual pollutants and the baseline
period.

**[COMMENTER]{.underline}:** Southern Environmental Law Center et al.;
Peter deFur

**[TEXT]{.underline}:** We support the decision to maintain the current
state requirement that sources use the same baseline period for all
regulated pollutants rather than allow sources to vary baselines in
order to capture the highest two years of emissions for each pollutant
as permitted in the federal rule. By limiting operators to a single,
24-month period for calculating baseline actual emissions, the proposal
retains a simplified program (when compared to the 2002 federal rule)
and decreases the resources necessary to evaluate permit applications.
Moreover, the proposal remains true to the purpose of allowing a source
to select a baseline emissions period that most accurately reflects
emissions during a normal business cycle. Allowing different baseline
periods for different pollutants would have permitted a source to select
the highest 2-year period of emissions for each pollutant influenced by
factors, such as the type of fuel being used, that have nothing to do
with a normal business cycle. We recommend retaining the language from
the proposed regulations to require sources to use the same 24-month
baseline emissions period for all affected emissions units and all
pollutants.

**[RESPONSE]{.underline}:** Support for the proposal is appreciated.

No change has been made to the proposal as a result of this comment.

9\. **[SUBJECT]{.underline}:** Malfunctions.

**[COMMENTER]{.underline}:** Southern Environmental Law Center et al.

**[TEXT]{.underline}:** The proposed regulations permit sources to
include in baseline calculations emissions associated with malfunctions.
Emissions from malfunctions can be quite significant and are not, by
definition, part of a source's normal operating profile. Including
malfunction emissions, therefore, contradicts one of the stated purposes
of the EPA revisions, which is to calculate baseline emissions to more
accurately reflect normal source operations. Consequently, sources
should not be allowed to artificially inflate baseline calculations by
including emissions increases that result from malfunctions.

That the proposed regulations also require sources to include emissions
from malfunctions in projected actual emissions does not justify
allowing such emissions to be included in baseline calculations. The
proposed regulations provide that emissions from malfunctions are
included in future emission projections only to the extent such
emissions are quantifiable. As a result, a source will likely either: 1)
project that its new or modified equipment will function properly and
therefore no emissions increases from equipment malfunctions will occur;
or 2) claim that there is no way to project the number or frequency of
any potential malfunctions for new or modified equipment and therefore
such emissions are not quantifiable.

Either way, a source will be allowed to count known emissions increases
from malfunctions in its baseline while omitting such increases from
calculations of future emissions. To address this problem, the board
should delete malfunction emissions from both sides of the equation, not
allowing them to be factored into either baseline or projected actual
emission calculations. Alternatively, to ensure that a source does not
overexploit this malfunction loophole, it could be required to assume
the same frequency, number, duration, and intensity of past malfunctions
in projecting future emissions.

**[RESPONSE]{.underline}:** Malfunction emissions are considered to be
part of a facility's overall emissions, and records of malfunction
emissions are included in every aspect of emission reporting; to remove
them from the evaluation would present a unrealistic emissions picture,
and would be inconsistent with the remainder of the air program. For
example, when sources track their post-change emissions, many will use
CEM data which will include emissions during periods of malfunction.  If
the malfunction emissions are excluded from the projected actuals
but not from the post-change emissions, this could result in enough of a
discrepancy to have it appear that NSR was triggered. Malfunctions are,
by definition, unexpected, nonrecurring events, and as such can be
recorded but not predicted.

No change to the proposal has been made as a result of this comment.

10\. **[SUBJECT]{.underline}:** Demand growth.

**[COMMENTER]{.underline}:** Southern Environmental Law Center et al.

**[TEXT]{.underline}:** When EPA first proposed adoption of an
actual-to-projected-actual test for non-EUSGUs, it proposed to eliminate
the demand growth exclusion from projected actuals for EUSGUs and
non-EUSGUs. EPA found that "the demand growth exclusion is problematic
because it is self-implementing and self-policing," and noted that in a
market economy, sources often make physical changes in order to respond
to market forces. Consequently, there is no plausible distinction
between emissions increases due solely to demand growth as an
independent factor and those changes at a source that respond to, or
create new, demand growth, which then result in increased capacity
utilization.

EPA later reversed course to add a demand growth exemption, while
failing to provide any method for distinguishing emissions increases
solely attributable to demand growth from emissions increases due to a
physical change at a unit. The inclusion of a demand growth exclusion in
the method for calculating projected actual emissions, therefore,
creates a major loophole in the NSR program that will allow sources both
to under-predict future emissions and to avoid enforcement for exceeding
projected actual permit limits by attributing the emissions to demand
growth.

The demand growth exemption essentially changes the applicability test
to a past-potential-to-future-actual test. That is, sources are likely
to maintain that any post-change emissions increases due to output
increases up to pre-change nameplate capacity are due to demand growth,
regardless of the facility's pre-change actual operating profile. For
these reasons, the demand growth exclusion provides no benefit for NSR
enforcement, and would in fact guarantee massive, unregulated increases
in pollution. It should be deleted from the proposal.

**[RESPONSE]{.underline}:** This comment is acceptable and appropriate
changes reflecting the intent of the comment have been made to the
proposal.

11\. **[SUBJECT]{.underline}:** Enforcement, recordkeeping, and
reporting.

**[COMMENTER]{.underline}:** Southern Environmental Law Center et al.

**[TEXT]{.underline}:** The EPA rules include a recordkeeping exemption
for facilities believing that they would have "no reasonable
probability" of triggering NSR. This exemption would have allowed
operators to avoid keeping any "records at all -- neither the data on
which they based their projections nor records of actual emissions going
forward." The D.C. Circuit Court of Appeals struck down this exemption,
finding it to be arbitrary and capricious. The court observed, "If EPA
actually knew which sources had no 'reasonable possibility' of
triggering NSR, these sources would obviously have no need to keep
records. The problem is that EPA has failed to explain how, absent
recordkeeping, it will be able to" make that determination. EPA had
argued that it could use its enforcement authority to ensure compliance
with NSR. The court saw the obvious flaw in this reasoning: "EPA
certainly has such inherent enforcement authority, but even inherent
authority depends on evidence."

The proposal would add basic, commonsense preconstruction notice,
recordkeeping, reporting, and enforcement provisions absent from the
2002 federal rules. Specifically, the proposal requires advance notice
to DEQ of the availability of information before an operator can
commence construction on a project that the operator determines does not
trigger NSR. Additionally, the proposal outlines specific enforcement
steps that DEQ will take if an owner wrongly determines that a
modification does not trigger NSR. DEQ deems these requirements as
necessary to ensure compliance with the NSR program for the same reasons
the D.C. Circuit found the absence of notice and recordkeeping
requirements in the federal rule to be arbitrary and capricious.

We support the addition of these provisions to the state program. If a
source relies on projected actual emissions to avoid NSR, it should be
held to its projections. The absence of these enforceability provisions
would invite self-serving future emissions calculations to unlawfully
avoid NSR. If post-change actual emissions are found to exceed the
projections to such a degree that it would have constituted a
significant emissions increase had pre-change projections been accurate,
the source should be required, as proposed, to comply with NSR as if
construction had not commenced.

Additionally, preconstruction notice and post-change recordkeeping
requirements greatly ease the enforcement burden on the department.
Ensuring compliance with NSR requires knowledge of modifications made to
existing emissions units that sources contend are not subject to NSR.
The preconstruction notice requirements guarantee that DEQ will know
about such modifications in a timely fashion, making enforcement more
feasible. Similarly, basic recordkeeping procedures will allow DEQ to
effectively monitor the real-world impact of construction and
modification projects, to determine if pollution has increased, thereby
triggering NSR.

**[RESPONSE]{.underline}:** Support for the proposal is appreciated.

No change has been made to the proposal as a result of this comment.

12\. **[SUBJECT]{.underline}:** Netting.

**[COMMENTER]{.underline}:** Southern Environmental Law Center et al.

**[TEXT]{.underline}:** The proposed regulations define "major
modification" as a physical change that results in a significant
emissions increase and a significant net emissions increase. In other
words, if a physical change results in a significant emissions increase,
a source can still take advantage of these netting provisions to "net
out" of NSR. However, if a physical change does not result in a
significant emissions increase, but netting calculations would result in
a significant net emissions increase, the source would not be required
to "net in" to NSR. By allowing sources to "net out" without requiring
them to "net in," the proposed regulations guarantee that modifications
resulting in significant emissions increases will be able to avoid
installation of pollution controls. Virginia can strengthen its NSR
program and reduce air pollution statewide by requiring sources to "net
in" to NSR as well as allowing them to "net out."

**[RESPONSE]{.underline}:** EPA has, as a matter of longstanding policy,
been implementing the general concept of "netting in," as the commenter
terms it, in the PSD program for many years. Continued implementation of
this policy has not resulted in any discernable environmental effect.

No change has been made to the proposal as a result of this comment.

13\. **[SUBJECT]{.underline}:** PALs in general.

**[COMMENTER]{.underline}:** Southern Environmental Law Center et al.

**[TEXT]{.underline}:** Experience in states that have experimented with
PALs suggests that a PAL exemption would greatly complicate the Virginia
NSR program, increase the burden on DEQ, and make NSR enforcement far
more difficult. As noted in the STAPPA and ALAPCO New Source Review Menu
of Options, "\[s\]tate and local permitting authorities have noted the
high labor costs of developing a PAL, since every emissions unit at the
source must be evaluated, a comprehensive monitoring system to track
compliance must be designed, and the baseline emissions calculations
(setting the PAL) can be laborious and contentious."

More fundamentally, the PAL baseline and renewal provisions of the
federal rule will allow sources to lock in historically high emissions
levels for several years into the future, which would likely result in
significantly more pollution than would be allowed under the state's
current NSR program. The proposal attempts to address this concern by
proposing a 5-year limit on the duration of a PAL, instead of the
10-year limit in the base federal rule. Although the 5-year provision is
an improvement, it does not negate the fact that a PAL exemption would
lead to certain increases in air pollution emitted. Accordingly, the
board should delete the PAL exemption in its entirety from the Virginia
program.

**[RESPONSE]{.underline}:** As discussed in the response to comment 1,
PALs will result in an air quality benefit and should be implemented,
with some restrictions, in Virginia.

No change has been made to the proposal as a result of this comment.

14\. **[SUBJECT]{.underline}:** Malfunctions\--PAL baseline.

**[COMMENTER]{.underline}:** Southern Environmental Law Center et al.

**[TEXT]{.underline}:** Emissions from malfunctions should not be
included in a PAL baseline.

The proposed regulations allow sources to include in their baseline
calculations emissions associated with malfunctions. This allowance is
carried over into the PAL program. Sources should not be allowed to pad
their PAL baselines by including emissions increases that result from
malfunctions.

**[RESPONSE]{.underline}:** As discussed in the response to comment 9,
malfunction emissions are considered to be part of a facility's overall
emissions, and records of malfunction emissions are included in every
aspect of emission reporting; to remove them from the evaluation would
present a unrealistic emissions picture, and would be inconsistent with
the remainder of the air program.

No change has been made to the proposal as a result of this comment.

15\. **[SUBJECT]{.underline}:** PAL and BACT/LAER

**[COMMENTER]{.underline}:** Southern Environmental Law Center et al.

**[TEXT]{.underline}:** A fundamental feature of NSR is its requirement
that all new major sources of emissions install BACT or LAER. Under the
PAL exemption in the proposed regulations, however, once a PAL is
established, a source is allowed to make physical changes without
triggering NSR, so long as sourcewide emissions remain below the PAL.
This exclusion includes constructing new emissions units. Although a PAL
can provide a source with flexibility to make changes to existing units
without triggering NSR, it should not exempt sources from installing
BACT on new units. Any PAL exemption considered by the state should
require a source to meet BACT requirements for any new emissions unit
installed during the term of the PAL if the unit would have the
potential to emit at or above the significance level for the PAL
pollutant

**[RESPONSE]{.underline}:** The addition of a new emissions unit, while
potentially exempt under a PAL for major NSR, may nevertheless still be
subject to BACT under the state minor NSR requirements. If a new unit's
emissions are below the PAL level, and below the significance level for
minor NSR, then its emissions are unlikely to have a significant impact
on air quality. Note that if addition of a new unit would necessitate an
increase in the PAL, then that unit would be required under 9 VAC
5-80-1865 L 1 c to obtain a major NSR permit regardless of the magnitude
of the emissions increase resulting from it (i.e., no significant levels
apply). Such an emissions unit must comply with any emissions
requirements resulting from the major NSR program process (such as
BACT), even though it has also become subject to the PAL. Additionally,
there are a number of safeguards throughout PAL requirements designed to
prevent any emissions increase that will have a negative impact on air
quality.

No change has been made to the proposal as a result of this comment.

16\. **[SUBJECT]{.underline}:** PALs and synthetic minor emission limits
taken to avoid NSR.

**[COMMENTER]{.underline}:** Southern Environmental Law Center et al.

**[TEXT]{.underline}:** The federal rule did not change the provision in
the federal NSR program that requires a source that relaxes a synthetic
minor emissions level taken to avoid NSR, such that the modification
that avoided review would have become a major modification under the
relaxed standard, to undergo NSR as though construction on the
modification had not commenced. And yet, it is clear from the preamble
to the federal rule that EPA intended to exempt PAL sources from the
requirement of 40 CFR 52.21(r)(4). As a result, the PAL provisions of
the proposed regulations unfortunately exempt PAL sources from this
requirement. The exemption from the provisions of 40 CFR 52.21(r)(4) is
the equivalent of permitting sources to remove pollution control
equipment from existing emissions units once a PAL is established. It
represents a step backward in air quality protection and should not be
permitted. If a PAL exemption is contemplated, it should provide that a
PAL source is required to continue to comply with synthetic minor
emissions levels taken to avoid NSR, or to install BACT on the subject
unit.

**[RESPONSE]{.underline}:** 9 VAC 5-80-1865 A 1 c, which is based on 40
CFR 52.21(aa)(1)(ii)(c), states that any physical change in or change in
the method of operation of a major stationary source that maintains its
total sourcewide emissions below the PAL level, meets the rule's general
PAL requirements, and complies with the PAL permit is not subject to the
provisions in 9 VAC 5-80-1605 C (restrictions on relaxing enforceable
emission limitations that the major stationary source used to avoid
applicability of the major NSR program). 9 VAC 5-80-1605 C is analogous
to 40 CFR 52.21(r)(4); both texts state: "At such time that a particular
source or modification becomes a major stationary source or major
modification solely by virtue of a relaxation in any enforceable
limitation which was established after August 7, 1980, on the capacity
of the source or modification otherwise to emit a pollutant, such as a
restriction on hours of operation, then the requirements or paragraphs
(j) through (s) of this section shall apply to the source or
modification as though construction had not yet commenced on the source
or modification." Therefore, EPA did include the exemption in the rule
at 40 CFR 52.21(aa)(1)(ii)(c), and it has been included in the proposal.

The general purpose of a PAL is for a source to maintain its emissions
below a certain level in exchange for the ability to make changes
without undergoing the full permitting process. There are a number of
safeguards built into the PAL permitting process to prevent regression
in air quality. If the PAL will result in an overall reduction in air
pollution, then an exemption from minor NSR levels is appropriate.

No change has been made to the proposal as a result of this comment.

17\. **[SUBJECT]{.underline}:** PAL increase.

**[COMMENTER]{.underline}:** Southern Environmental Law Center et al.

**[TEXT]{.underline}:** The proposed regulations provide that a PAL can
be adjusted upward during the term of the PAL if the sum of emissions
from small units, plus emissions from major units assuming BACT
equivalent controls, plus allowable emissions from all new and modified
units, exceeds the existing PAL. If an existing unit is complying with a
BACT or LAER requirement established in the previous five years, the
emissions control level for the unit is assumed to represent current
BACT or LAER requirements.

Given the rapid evolution of pollution control technology, one would
assume that in many instances the emissions rates associated with BACT
and LAER at a source will be substantially lower at the time the owner
submits an application for a PAL increase than they were five years
earlier. Once a PAL is established, it should not be increased based on
anything other than a current BACT/LAER analysis for all major emissions
units. Any PAL exemption considered by the board should not allow the
PAL to be increased during the PAL effective period unless the emissions
calculation is determined by conducting a new BACT/LAER analysis for all
major units, regardless of when any previous analysis may have been
conducted.

**[RESPONSE]{.underline}:** While some types of pollution control
technology evolve rapidly, most associated with BACT and LAER controls
experience change on a far slower and more incremental scale. If
analysis demonstrates that an upward adjustment would result in
excessive emissions, then the board need not approve the adjustment: for
example, 9 VAC 5-80-1865 K 2 states, "The board may set the PAL at a
level that it determines to be more representative of the source\'s
baseline actual emissions, or that it determines to be more appropriate
considering air quality needs, **advances in control technology**,
anticipated economic growth in the area, desire to reward or encourage
the source\'s voluntary emissions reductions, or other factors as
specifically identified by the board in a written rationale." (Emphasis
added.) A proposed increase would also be subject to the public
participation requirements of 9 VAC 5-80-1865 D. There are thus a number
of opportunities for the board to adjust the PAL increase in the
unlikely event that a significant change in BACT or LAER occurs.

No change has been made to the proposal as a result of this comment.

18\. **[SUBJECT]{.underline}:** PAL renewal.

**[COMMENTER]{.underline}:** Southern Environmental Law Center et al.

**[TEXT]{.underline}:** The proposed regulations provide that at the end
of its 5-year effective period, a PAL can be renewed at its existing
level if the highest 2-year emissions period for each PAL pollutant
during the previous five years, plus an amount equal to the applicable
significance level for the PAL pollutant, equals or exceeds 80 percent
of the existing PAL level. This provision effectively locks in
historically high emissions levels for several years into the future. In
order to prevent this result, a PAL exemption should provide that a PAL
can only be renewed at a level equal to emissions levels for the two
years immediately preceding a renewal application. It should also
provide DEQ with the discretion to lower the PAL level if required to
maintain or achieve healthy air, or if warranted by advances in
pollution control technology or other relevant factors.

**[RESPONSE]{.underline}:** Given that we are limiting sources to a
5-year lookback, it seems reasonable to base renewal levels on that
somewhat limited lookback period. The board has a number of
opportunities in the PAL review process where adjustments can be made to
avoid any unusually large or inappropriate increases.

No change has been made to the proposal as a result of this comment.

19\. **[SUBJECT]{.underline}:** "Bad actor" exclusion.

**[COMMENTER]{.underline}:** Southern Environmental Law Center et al.

**[TEXT]{.underline}:** Because the proposed PAL exemption would allow
sources to lock in historically high emissions levels, the board should
ensure that any operator obtaining a PAL does not have a history of NSR
or related air quality violations. Furthermore, because any PAL
exemption would allow an operator to avoid NSR, this privilege should
not be granted to operators that have a history of violating the
program. A "bad actor" exclusion, prohibiting repeat violators from
obtaining a PAL, would be beneficial in addressing these concerns.

**[RESPONSE]{.underline}:** It is unlikely that a source with a poor
compliance record would be able to muster the extensive documentation
and public scrutiny necessarily to justify PAL issuance.

No change has been made to the proposal as a result of this comment.

20\. **[SUBJECT]{.underline}:** General support for the federal
approach.

**[COMMENTER]{.underline}:** Virginia Manufacturers Association

**[TEXT]{.underline}:** The VMA strongly supports the federal NSR
reforms and advocates adoption of the federal NSR reforms because, as
EPA notes, they would greatly streamline and simplify NSR, provide
certainty about NSR applicability, compliance and enforcement, and
reduce unnecessary permitting burdens on companies and DEQ. The federal
NSR reforms would enable Virginia's businesses to improve the
productivity, reliability, and safety of manufacturing facilities on
which so many citizens of the Commonwealth depend for their livelihood.

Most importantly, the federal NSR reforms would provide these critical
benefits without jeopardizing air quality in the Commonwealth. In fact,
after a thorough analysis, EPA has concluded that collectively, the
federal reforms will result in a net environmental benefit compared to
the NSR rules currently in effect in Virginia. Thus, VMA urges the board
to adopt the federal NSR reforms without change.

Since the beginning of its involvement in NSR reform in Virginia, the
VMA has expressed concern that Virginia should not needlessly adopt NSR
rules more stringent than federally required. For years it has been the
policy of the Commonwealth to eschew the imposition of regulatory
requirements on its businesses and citizens "which are more restrictive
than applicable federal requirements" unless a cogent showing of
necessity supports a more restrictive Virginia rule. This principle is
codified in § 10.1-1308 A of the Virginia Air Pollution Control Law.
Furthermore, § 2.2-4014 of the state code establishes a procedure
whereby the General Assembly reviews regulations during the promulgation
or final adoption process. For regulations that are more restrictive
than applicable federal requirements, the General Assembly has the
opportunity to judge whether such regulations are truly necessary in the
Commonwealth.

Virginia has the opportunity to adopt EPA\'s NSR reforms, which are
applicable federal requirements, but the board has proposed to deviate
from the federal NSR rules in ways that are more restrictive than the
applicable federal requirements. Based in part on the EPA's evaluation
of the environmental effects of the federal NSR reforms, the VMA
believes the board and DEQ cannot sustain their burden to demonstrate
that more restrictive NSR rules are necessary in Virginia. More
stringent Virginia rules which stifle manufacturing innovation, safety,
reliability, and operational flexibility without any incremental benefit
to the environment cannot be justified as "necessary" under longstanding
Virginia law and policy.

**[RESPONSE]{.underline}:** We agree with the commenter that the NSR
reforms will streamline and simplify NSR, provide certainty about NSR
applicability, compliance and enforcement, and reduce unnecessary
permitting burdens on companies and DEQ without jeopardizing air quality
in the Commonwealth. We also believe that the NSR rules themselves, as
well as overarching law and regulation, enable states to tailor federal
programs to meet individual state needs. As discussed in the response to
comment 1, EPA allows states the flexibility to adopt rules different
from the federal as long as the result is equally protective of public
health and welfare. The Virginia proposal incorporates the basic
elements of the federal NSR reforms, with certain limited changes needed
to meet specific state air quality needs.

In its discussion regarding the baseline lookback period (see comment
27), the commenter cites a number of states competing with Virginia
industry that have adopted the 10-year lookback consistent with the EPA
rule: Alabama, Florida, Georgia, Indiana, Kentucky, Louisiana,
Mississippi, Ohio, South Carolina, Tennessee, and West Virginia. Of
these states, Alabama, Florida, Georgia, Indiana, Louisiana, South
Carolina, and Tennessee have also made numerous changes apart from the
lookback period---many significant---to their state rules that differ
from the federal. Note that Georgia, for example, cites as the basis for
its numerous changes to the EPA rule a general state need to protect air
quality and to ensure compliance and enforceability of its rules.

No change has been made to the proposal as a result of this comment.

21\. **[SUBJECT]{.underline}:** Overall balance of interests in the
regulatory development process.

**[COMMENTER]{.underline}:** Virginia Manufacturers Association

**[TEXT]{.underline}:** In the Agency Background Document, DEQ says the
deviations from the federal NSR reform regulations were \"chosen as a
reasonable compromise that would allow permitting flexibility while
protecting enforceability and maintaining clean air protections." To the
extent that there is any \"compromise\" inherent in NSR reform, it is
already in the federal rules. In the litigation challenging the federal
NSR reform regulations, Virginia expressed its belief \"that the 2002
\[NSR reform\] Rule is an appropriate balance of potentially competing
policies and interests.\" All of the \"compromise\" (i.e., \"balance\")
that is \"reasonable\" (i.e., \"appropriate\") has already been embodied
in the federal rules. Any deviation from the federal rules by Virginia
would wreck the \"appropriate balance of potentially competing policies
and interests\" in the federal NSR reform rules.

**[RESPONSE]{.underline}:** Virginia was made part of the litigation by
the Office of the Attorney General without input from the Executive
Branch, including the Secretariat of Natural Resources. Positions
expressed in the litigation therefore do not represent the views of the
board or the department. Any improvement upon the federal rules would
not "wreck the appropriate balance of potentially competing policies and
interests in the federal NSR reform rules." To the contrary: as
discussed in the response to comment 1, federal rules explicitly allow
for state regulations to differ from the federal, thus allowing states
to consider the rules and draw their own conclusions as to what is more
protective of public health and welfare. Note that neither EPA nor the
court in its review of EPA's actions consider whether EPA had correctly
addressed any issues of balance. On behalf of the Commonwealth, the
board exercised the state's right to modify the federal rules.

The compromise made by the department as reflected in the proposal was
the result of, among other considerations, implementation of the
regulatory development process as required by state and federal law and
regulation. Among the many factors considered during the regulatory
development process was input from a regulatory ad hoc group that was
comprised of a balanced group of organizations representing different
viewpoints within the Commonwealth. The primary goal of the ad hoc group
process was to ensure that varying viewpoints among Virginians were
considering during the initial stages of regulatory development, not to
revisit conflicting opinions surrounding the federal rules that have
already been addressed by EPA. Additionally, the proposal underwent a
60-day public comment period, including a public hearing, in order to
obtain additional information\--such as that offered by the
commenter\--in order to enable an informed choice as to what potential
alternatives were appropriate for the state rule. Considering different
opinions and arriving at a conclusion is integral to the regulatory
development process when the state has the obligation to develop its own
rule. Otherwise, EPA would have simply issued a standard and the state
would have simply incorporated it without change.

No change has been made to the proposal as a result of this comment.

22\. **[SUBJECT]{.underline}:** General PSD issues in Virginia law.

**[COMMENTER]{.underline}:** Virginia Manufacturers Association

**[TEXT]{.underline}:** In the preamble to the proposed regulations, the
DEQ cites the requirement in the Virginia Air Pollution Control Law that
regulations "shall not promote or encourage any substantial degradation
of present air quality" and shall "actively improve air quality" in the
Commonwealth. There is no evidence that adopting the federal NSR
reforms, instead of the board's proposed more stringent rules, would
violate these obligations. EPA itself could not impose any such NSR
regulations on Virginia nor can that Agency approve any such regulations
into the Virginia SIP.

**[RESPONSE]{.underline}:** As discussed in response to comment 1,
states have the explicit right to revise the baseline federal rules as
they find appropriate. Based on information gathered during the
regulatory development process (including the comments and information
being discussed in this document) and considered in the larger context
of Virginia's air quality situation, a number of limited changes to the
federal rule were identified in order to assure that the state law is
met.

No change has been made to the proposal as a result of this comment.

23\. **[SUBJECT]{.underline}:** General state of air quality in
Virginia/SIP submittals.

**[COMMENTER]{.underline}:** Virginia Manufacturers Association

**[TEXT]{.underline}:** DEQ also cites the fact that "currently,
approximately one half of the Commonwealth's citizens live in areas that
do not attain the \[NAAQS\]." DEQ fails to note this nonattainment is
exclusively for the ozone NAAQS and that the department is adequately
addressing the ozone nonattainment issues in Virginia through the
submission of SIP revisions to EPA. Indeed, if the DEQ\'s SIP
submissions were not sufficient to address the nonattainment issues, EPA
would not approve them. The SIP amendments DEQ has developed do not in
any way depend on NSR provisions more stringent than the federal
regulations. There is also good reason to believe from recent ambient
air quality analyses that Virginia\'s ozone nonattainment areas outside
of Northern Virginia may be redesignated as attainment in the near
future. EPA and Virginia can best address attainment of the ozone NAAQS
through the many emission control programs specifically designed for
that purpose, not by making our NSR program more stringent than the
federal requirements.

**[RESPONSE]{.underline}:** While it is true that the Commonwealth has
met and continues to meet its overall SIP requirements, nothing in the
federal code or regulations prevents states from revising their SIPs as
needed to meet the NAAQS; see response to comment 1. A state may have a
complete and approved SIP while continuing to have violations of the
NAAQS, which is very much the case in Virginia. Virginia also contains a
number of areas that have been redesignated from nonattainment to
maintenance, and it is important that these areas continue to meet their
maintenance plan obligations and not relapse into nonattainment.
Finally, the air quality in PSD areas is not allowed to deteriorate;
this will not happen in the absence of ongoing state programs to address
Virginia-generated emissions as well as those transported into the state
from elsewhere over which Virginia has no control.

EPA's SIP requirements allow states considerable latitude in determining
what measures are needed in the state to meet the federal standards, and
Virginia is now taking this opportunity to do so. While we continue to
meet both the specific federal requirements for controlling criteria
pollutants (such as, for example, implementation of the CAIR rule) as
well as their general directive for preparing state-specific plans, and
while we are optimistic that implementation of these programs will
ultimately result in the few remaining localities in the state not
attaining the NAAQS to meet attainment, we must continue to take active
steps to reduce ozone, not wait and hope for it to happen. The proposed
changes to the NSR reform provisions are designed to provide added
protection and certainty to a program with the potential for significant
effects on the state's air quality without preventing the regulated
community from taking advantage of the program's potential for
implementing projects that can benefit the environment.

No change has been made to the proposal as a result of this comment.

24\. **[SUBJECT]{.underline}:** General state of air quality in
Virginia/regional issues.

**[COMMENTER]{.underline}:** Virginia Manufacturers Association

**[TEXT]{.underline}:** In the preamble, DEQ states: \"Virginia\'s
nonattainment problems extend beyond its borders as well: a neighboring
state has submitted a § 126 petition to EPA claiming that Virginia\'s
air pollution is having a negative impact on its air quality.\" In its §
126 petition, North Carolina alleged that large electric generating
units (EGUs) in five states, including Virginia, are significantly
contributing to nonattainment, or interfering with maintenance of
attainment, of the 8-hour ozone NAAQS in North Carolina. North Carolina
also alleged that large EGUs in 12 states, including Virginia, are
significantly contributing to nonattainment, or interfering with
maintenance of attainment, of the PM~2.5~ NAAQS.

On August 24, 2005, EPA proposed to deny the petition with respect to
the 8-hour ozone NAAQS. EPA\'s analyses show all of North Carolina to be
in attainment for 8-hour ozone NAAQS following implementation of the
federal Clean Air Interstate Rule. In short, implementation of the
federal CAIR in Virginia, not adoption of a major NSR program more
stringent than federally required, will eliminate any significant impact
Virginia EGUs might be having on air quality in North Carolina.

EPA also proposed to deny North Carolina\'s § 126 petition with respect
to the PM~2.5~ NAAQS for all states, including Virginia, where the
federal CAIR is implemented either by EPA\'s approval of a SIP or by
EPA\'s imposition of a federal implementation plan (FIP). Implementation
of the federal CAIR \"would fully address the \"PM~2.5~-related
interstate transport problem identified in the CAIR and thus . . . there
would no longer be any basis for the section 126 findings\" with respect
to the PM~2.5~ NAAQS. To the extent any of North Carolina\'s allegations
against Virginia sources are valid, they will be thoroughly addressed by
implementation of the CAIR in Virginia, either through a SIP or a FIP.
In short, North Carolina\'s § 126 petition provides absolutely no
justification for imposing more stringent NSR requirements on Virginia
businesses.

**[RESPONSE]{.underline}:** North Carolina's § 126 petition may not
provide a legal justification for making changes to Virginia's NSR
rules; however, the fact that Virginia was included in the petition
suggests that there is room for improvement, regionally and within the
state. The petition was one element of many considered by the department
in its general assessment of overall air quality in the state as well as
the region.

No change has been made to the proposal as a result of this comment.

25\. **[SUBJECT]{.underline}:** General state of air quality in
Virginia/nitrogen deposition.

**[COMMENTER]{.underline}:** Virginia Manufacturers Association

**[TEXT]{.underline}:** In the preamble, DEQ refers to "visibility
problems . . . in Virginia's national park areas." DEQ never says why a
more stringent NSR program in Virginia is necessary to address
visibility problems or how it would ameliorate the visibility problems.
In fact, it isn\'t necessary. DEQ also cites "nitrogen deposition from
airborne emissions contributing to serious water quality problems in
Chesapeake Bay." Again, DEQ never explains why a more stringent NSR
program in Virginia is necessary to address airborne NO~X~ deposition in
the Bay or how it would ameliorate this problem. In fact, it isn\'t
necessary and would have little or no effect on nitrogen deposition into
the Bay. NSR is not the mechanism to address these air quality concerns.
There are numerous other, much more effective air quality programs
specifically designed to address these concerns.

**[RESPONSE]{.underline}:** As discussed in comment 1, regional haze and
nitrogen deposition are among a number of air quality problems facing
the Commonwealth. No, changes to some aspects of the federal NSR reforms
will not directly solve visibility problems in Virginia's Class I areas
or water quality problems in the Bay. The fact remains that pollution in
these areas is serious, which suggests that additional measures beyond
those in the baseline federal rules are needed. As the commenter states
in comment 26, the purpose of the PSD program is not to reduce
emissions, but to limit new emissions so as to prevent significant
deterioration of air quality in the attainment areas. If the air in
Shenandoah National Park has indeed deteriorated to the point where
portions of it have been declared nonattainment, then surely it and
other PSD areas in the state need deteriorate no further.

No change has been made to the proposal as a result of this comment.

26\. **[SUBJECT]{.underline}:** General state of air quality in
Virginia/other federal programs.

**[COMMENTER]{.underline}:** Virginia Manufacturers Association

**[TEXT]{.underline}:** NSR is not the mechanism to address the air
quality concerns DEQ cites in the preamble because it is not a control
program for reducing emissions. EPA has stated this concisely: "Major
NSR is not a measure to reduce emissions to assure attainment." It's
clear that the purpose of the PSD program is not to reduce emissions,
but to limit new emissions so as to prevent significant deterioration of
air quality in the attainment areas. As for nonattainment NSR, EPA
explains: "The major NSR program's purpose 'is to permit States to allow
continued growth or expansion in nonattainment areas, so long as this
growth or expansion is undertaken in a manner consistent with the goals
and objectives of the Clean Air Act.'" In short, NSR is not a program
designed to reduce emissions to improve air quality.

EPA has adopted a host of federal programs, applicable in Virginia, that
are specifically designed to reduce emissions to improve air quality and
that address the air quality concerns DEQ cites in the preamble. These
programs mandate massive emission reductions from both new and existing
sources. Prime examples are the federal Acid Rain Program, the NO~X~ SIP
Call, the Regional Haze Program, and the Clean Air Interstate Rule. The
Acid Rain Program, which applies to large coal-fired electric generating
units, has resulted in huge decreases in emissions of SO~2~ and NO~X~
and dramatically improved air quality nationwide. To further reduce
emissions of NO~X~, one of the principal precursors to the formation of
atmospheric ozone, in the East, EPA promulgated the NO~X~ SIP Call. In
conformance with the NO~X~ SIP call, the board adopted the NO~X~ Budget
Trading Program. The NO~X~ Budget Trading Regulations require Virginia
sources to make massive additional reductions of NO~X~ emissions. The
federal Regional Haze Program is designed to implement the mandate of
the Clean Air Act to restore and enhance visibility in our national
parks and wilderness areas. Virginia must develop regulations to require
best available retrofit technology (BART) at those sources DEQ
determines are interfering with visibility in Class I areas.

In addition, Virginia must soon adopt regulations to meet the
requirements of the federal CAIR. The DEQ has already begun this
rulemaking process. CAIR will result in further, deep cuts in emissions
from new and existing sources in Virginia and neighboring states. In
sum, EPA and Virginia already have several key emission control programs
specifically designed to address ozone nonattainment, visibility, and
acid deposition through massive reductions in NO~X~, SO~2~, PM~2.5~, and
other emissions from both new and existing sources.

In the preamble, DEQ concludes: \"In the larger context, it is clear
that the state needs to take additional steps beyond the immediate legal
requirements for nonattainment and PSD areas if larger, statewide issues
are to be addressed.\" We disagree there is any need for more stringent
NSR regulations in Virginia, much less that such a need is \"clear.\" In
the larger context of the specifically tailored emission control and air
quality programs described above (and others, e.g., mobile source
control programs), an NSR program more stringent than the federal
program is neither a necessary nor a cost-effective way to improve air
quality in the Commonwealth. In short, we do not believe the board or
DEQ has shown, or is able to show, that Virginia\'s NSR regulations must
be more stringent than federally required.

**[RESPONSE]{.underline}:** We agree that the purpose of the NSR program
is to permit states to allow continued industrial growth **so long as
this growth or expansion is undertaken in a manner consistent with the
goals and objectives of the Clean Air Act**. (Emphasis added.) As
discussed in the response to comment 1, the proposed changes to the NSR
program are intended to implement the NSR reform provisions while
ensuring that Virginia can meet the overall goals and objectives of the
Clean Air Act. Virginia is in the process of implementing the EPA
measures enumerated by the commenter, and we agree that these programs
will contribute to improvements in air quality. § 10.1-1308 of the Code
of Virginia states, "The regulations shall not promote or encourage any
substantial degradation of present air quality in any air basin or
region which has an air quality superior to that stipulated in the
regulations." Given the uncertainty of specific impacts that
implementing the federal rules will have on the areas of the state that
are attaining the national standards, and given that there are areas in
the state that continually fail to meet national standards, certain
limitations on some aspects of the federal rules may contribute toward
meeting these state-specific needs.

No change has been made to the proposal as a result of this comment.

27\. **[SUBJECT]{.underline}:** Past actual emissions baselines.

**[COMMENTER]{.underline}:** Virginia Manufacturers Association,
Dominion

**[TEXT]{.underline}:** Part of the solution to NSR capacity
confiscation in the federal reform rules is the use of a \"long
lookback\" period to determine past actual emissions. Under the federal
NSR reform rules, businesses can look back to any consecutive 24-month
period in the past 10 years to set the baseline emission rates. (The
baseline rates must reflect any new emission reduction requirements
imposed since this 24-month period.) EPA explained:

> The new \[long lookback\] baseline procedure is specifically designed
> to allow a source to consider a full business cycle in determining
> whether there will be an emissions increase from a physical or
> operational change. . . . Consequently, the new procedure ensures that
> a source seeking to make changes at its facility at a time when
> utilization may not be at its highest can use a normal business cycle
> baseline by allowing the source to identify capacity actually used in
> order to determine an average annual emissions rate from which to
> calculate any projected actual emissions resulting from the change.

EPA explained further that the 10-year lookback approach would
"eliminate uncertainty and delay over which period is most
representative" and have the added benefit of "removal of the existing
rule's effect of 'confiscating capacity' when changes occur during a low
point in a source's natural business cycle."

Virginia businesses must be allowed to have the benefit of the full
10-year lookback in the federal NSR reform rules. NSR capacity
confiscation is not a theoretical concern to Virginia businesses. In
1999, before EPA promulgated its proposed 10-year lookback rule,
Congressman Rick Boucher, representing Virginia\'s 9th Congressional
District, wrote to the Assistant EPA Administrator to express his
concern with the effects of NSR capacity confiscation on Virginia
businesses. Rep. Boucher noted:

> We have, however, lost production ability in Virginia as a result of
> the application of this \[NSR\] regulation. The loss occurs when
> sources apply for pre-construction permits, at which time a
> calculation is made comparing potential production to actual
> production during a previous window of time. Should it be determined
> that the source had not produced at its permitted potential during
> this window, the source would lose the difference between the
> potential permitted level and the actual production level during that
> period.

EPA promulgated a 10-year lookback in the federal NSR reform rules
because the Agency recognized that any shorter period would perpetuate
capacity confiscation for most sectors of American business. American
businesses routinely experience downturns in business cycles spanning
much longer than five years. EPA commissioned a study \"to better
understand what time period best represents an industry\'s normal
business cycle.\" EPA \"concluded from the study that 10 years of data
is reasonable to capture an entire industry cycle.\"

EPA\'s selection of a 10-year lookback period is clearly supported by
other analyses of American manufacturing data for the past 30 years. Our
own data clearly illustrate that American manufacturing experiences
business cycles much longer than five years. The data show business
cycles with trough to trough durations of approximately seven years.

These cycles in American manufacturing coincide with worldwide business
cycles.

Virginia\'s manufacturers compete in the national and worldwide markets
and are similarly affected by cyclical swings in supply and demand. An
analysis was performed for one large Virginia manufacturing facility,
Celanese Acetate. Production data for this plant from 1985 to the
present showed production troughs in 1987 and 2000 separated by 13
years. The plant is currently experiencing increased product demand as
domestic and worldwide supply and demand shift into a different part of
the business cycle. In sum, it is clear that Virginia manufacturers must
have the full 10-year lookback period to avoid perpetuation of NSR
capacity confiscation.

A 5-year lookback would place Virginia manufacturers at a significant
competitive disadvantage compared to their competitors subject to NSR
rules with a 10-year lookback period. Virginia\'s manufacturers compete
heavily with manufacturers located in neighboring Southern and
Midwestern states: Alabama, Florida, Georgia, Indiana, Kentucky,
Louisiana, Mississippi, Ohio, South Carolina, Tennessee, and West
Virginia. All of these states have adopted or proposed NSR reform rules
with a 10-year lookback period. North Carolina is the only state among
Virginia\'s prime competitors that has adopted a 5-year lookback period.

The important benefits of the full 10-year lookback can be achieved
without any jeopardy to the environment. EPA notes that the 10-year
lookback baseline methodology

> will not alter the baseline at all for most sources, including (1) new
> sources, (2) modifications in the largest-emitting category,
> coal-fired power plants, (3) modifications at any source where
> emissions have been highest in recent years, and (4) modifications at
> any source where emissions have been relatively stable. Together these
> categories comprise an estimated 90 percent of the emissions benefits
> from the NSR Program.

In other words, the 10-year lookback baseline would apply to only a
small subset of the total universe of sources subject to the NSR program
-- those facilities where emissions before the facility change are lower
as a result of decreased capacity utilization due to decreased market
demand, some kind of outage, or other circumstances.

EPA says it is uncertain what exactly the emissions impacts would be
from modifications undertaken at this limited subset of sources.
However, EPA notes "that any overall consequences would be negligible .
. . because the number of sources receiving different baselines likely
represents a very small fraction of the overall NSR permit universe,
excludes new sources and coal fired power plants, and because the
baseline may shift in either direction \[to a higher or a lower
baseline\]." EPA concludes "that the change in baseline . . . will not
result in any significant change to the environmental benefits derived
from the NSR program."

The petitioners in the litigation challenging EPA\'s final NSR reform
rules challenged the legality of EPA\'s 10-year lookback period, arguing
that it ompetitors subject to NSR rules with a ten-year look back
period. to thier look back period to avoid perpetuation of NSR capaciis
impermissible under the Clean Air Act and that it is arbitrary and
capricious. The court rejected both claims, concluding that EPA
supported its selection of the 10-year lookback period \"with detailed
and reasoned analysis based on its experience and expertise.\"
Specifically, the court said \"the business cycle study supports EPA\'s
conclusion that a 10-year lookback period \'is a fair and representative
time frame for encompassing a source\'s normal business cycle.\'\" The
court noted that \"\[b\]ased on \'their experience over the years in
implementing the NSR program,\' state Intervenors \[including Virginia\]
agree that a 10-year lookback period is reasonable.

In the preamble, DEQ solicits comment on whether past actual emission
baselines could be based on any consecutive 24-month period during the
lookback period (as proposed) or, alternatively, should be based on some
other value, such as the average of the lookback period. Averaging
emissions across the entire lookback period would merely perpetuate NSR
capacity confiscation. Using the average emission rate over the lookback
period rather than the highest consecutive 24-month period would
confiscate from the source the productive capacity equivalent to the
difference between the average emission rate during the lookback period
and the emission rate for the highest 24-month period during the
lookback period.  In instances where the lookback period encompasses a
deep business cycle trough, that confiscation would be very significant.
The VMA advocates using the highest consecutive 24-month period in the
past 10 years to set the past actual emission baselines. We cannot
support any of the alternatives posed by DEQ that are more stringent
than the federal NSR provisions.

In sum, to eliminate wasteful NSR capacity confiscation, Virginia
businesses must be allowed to use any consecutive 24-month period during
the past 10 years to determine a source\'s past actual emissions
baselines.

**[RESPONSE]{.underline}:** As discussed in the response to comment 1,
the 5-year period was selected in order to enable sources to utilize a
moderately extended lookback while providing the board assurance that no
unusually high or low periods would be selected. Additionally, the
regulation allows non-EGUs the use of a different time period in
determining baseline actual emissions if a case can be made that the
proposed alternative time period is more representative of normal source
operation. This provision will provide sources with additional
flexibility when appropriate, while providing the oversight necessary to
monitor the program and avoid compliance issues. The commenter observes
that EPA supported its selection of the 10-year lookback period \"with
detailed and reasoned analysis based on its experience and expertise\";
the board has done likewise.

No change has been made to the proposal as a result of this comment.

27\. **[SUBJECT]{.underline}:** Baseline periods.

**[COMMENTER]{.underline}:** Virginia Manufacturers Association

**[TEXT]{.underline}:** The federal NSR reform regulations allow sources
the option to use different baseline periods (i.e., different 24-month
periods within the past 10 years) to determine the past actual emission
baselines for different pollutants. The proposed Virginia NSR reform
regulations would require sources to use the same baseline period for
all pollutants. This is clearly more stringent than the federal rule.
This restriction is not only more stringent than the federal NSR reform
regulations, it is more stringent than Virginia\'s current NSR
regulations (similar to the old federal NSR regulations). Neither the
DEQ nor the board has provided any rationale for making Virginia\'s rule
more stringent that the federal rule or the current Virginia rule.

Virginia businesses need the flexibility to determine the past actual
emissions baselines on a pollutant-by-pollutant basis. VMA\'s member
companies use a variety of production materials and fuels depending on
product demands and energy prices. The mix of production materials and
fuels may vary such that at any one time a facility is using lower
emitting production materials (e.g., lower VOC content) and higher
emitting fuel (e.g., oil versus natural gas). Later, the facility may
switch to higher VOC production materials because of new product demands
and to natural gas fuel because of lower energy prices. Which scenario
is \"normal\" past operation? Both are, so that in the future if the
facility must produce a product using higher VOC materials and oil
rather than natural gas, it is still normal operation of the facility,
and the source should be allowed the maximum flexibility to operate
under this normal condition. Restricting Virginia sources to one
baseline for all normal operating scenarios perpetuates NSR confiscation
because the source owner is forced to give up productive capacity at one
or more manufacturing units or energy generating units.

Restricting sources to the same past actual emissions baseline is
needlessly more stringent than the current federal and Virginia
requirements. Neither DEQ nor the board has provided any rationale for
making Virginia\'s rule more stringent. The Department of Planning and
Budget (DPB) noted in the preamble to the proposed NSR reform
regulations: "The only available assessment of this change on emissions
is provided by EPA. EPA\'s analysis that is based on the more flexible
10 year lookback and less stringent pollutant specific time frame
selection finds that the net impact on emissions could be an increase or
decrease, but is likely to be insignificant." DPB concluded its analysis
of the board\'s proposed baseline rules by stating:

> These more stringent provisions could possibly reduce some potential
> net benefits to the sources and the environment when compared to the
> case where the sources were allowed to operate under more flexible
> time periods as recommended by EPA. Thus, the net benefits from this
> regulatory action could be maximized if more flexible time frames are
> incorporated before the final regulations are published.

The VMA thoroughly concurs with DPB\'s assessment.

**[RESPONSE]{.underline}:** As discussed in the response to comment 1,
the Commonwealth's overall air quality situation can benefit from a
number of changes to the EPA requirements.

DPB's analysis is heavily dependent on the analysis EPA conducted in
support of the federal regulatory action, which is discussed in detail
in the response to comment 1. Under the circumstances, it is not prudent
to rely uncritically on EPA's analysis in the context of assessing
Virginia's air quality needs.

No change has been made to the proposal as a result of this comment.

28\. **[SUBJECT]{.underline}:** Demand growth.

**[COMMENTER]{.underline}:** Virginia Manufacturers Association

**[TEXT]{.underline}:** After careful consideration of numerous
comments, EPA decided to exclude post-change emission increases that do
not result from the physical or operational change, but rather are due
to \"independent factors,\" such as a growth in the demand for the
facility\'s products. The VMA believes it is essential that projected
emissions exclude emissions increases resulting from independent factors
such as demand growth. Where post-change emission increases come from
increased utilization of plant capacity to meet higher product demand,
\"the increased capacity utilization cannot be said to result from the
change and therefore may rightfully be excluded from the projection of
the emissions unit\'s future-actual emissions.\" The reason is clear \--
\"the \[Clean Air Act\] only applies the major NSR requirements to
emissions increases that are the result of a physical or operational
change.\" The causation principle in the Clean Air Act makes it illegal
to require the inclusion of emission increases resulting from
independent factors, such as demand growth, in the calculation of the
projected actual emissions following the facility change. Therefore, VMA
strongly supports retaining the demand growth exclusion in the proposed
Virginia NSR reform regulations.

**[RESPONSE]{.underline}:** While the demand growth exclusion
contributes to a more accurate representation of source emissions, there
also exists some uncertainty with regard to how this information can be
quantified. Demand growth increases the complexity of an already complex
program. It also relies on a source's ability to implement and monitor
the program without agency oversight. For these reasons, a demand growth
exclusion could potentially create significant compliance problems.
Therefore, as discussed in the response to comment 10, the demand growth
exclusion has been removed from the proposal.

29\. **[SUBJECT]{.underline}:** Recordkeeping and reporting.

**[COMMENTER]{.underline}:** Virginia Manufacturers Association,
Dominion

**[TEXT]{.underline}:** The VMA believes the records required in the
proposed Virginia regulations at 9 VAC 5-80-1785 B (which mirror the
corresponding federal regulations) are clearly sufficient to document
the source owner\'s projection of any post-change emission increases,
including any emission increases excluded as the result of independent
factors (e.g., demand growth).

The federal NSR reform regulations do not make the source\'s projected
actual emissions enforceable, e.g., by incorporating the projections as
emission limits in a permit. After considering the public comments,
including concerns expressed by some state agencies \"that they do not
have the resources to adequately administer a program that would require
permits to be issued for every physical or operational change at a major
stationary source,\" EPA decided \"that such a requirement may place an
unmanageable resource burden on reviewing authorities\" and \"that it is
not necessary to make \[a source\'s\] future projections enforceable in
order to adequately enforce the major NSR requirements.\" The VMA agrees
with EPA\'s assessment.

The proposed Virginia regulations add an extra reporting obligation at 9
VAC 5-80-1785 E that is not found in the corresponding federal NSR
regulations. This reporting burden goes beyond not only what is required
by the federal NSR regulations, but also goes beyond what is required by
the current Virginia NSR regulations. The VMA believes this added
reporting burden is unnecessary and unlikely to accomplish more than
making additional work for both Virginia businesses and DEQ. The reason
is simple. As EPA notes:

> We anticipate a large majority of the projects that are not major
> modifications may nonetheless be required to undergo a permit action
> through States\' minor NSR permit programs. In such cases, the minor
> NSR permitting procedures could provide an opportunity to ensure that
> \[the source\'s\] reviewing authority agrees with \[the source\'s\]
> emission projections. Requiring a separate notification would not
> provide the reviewing authority with any additional information in
> such circumstances. Accordingly, we believe today\'s requirements
> provide reviewing agencies with the ability to obtain all the
> information necessary to ensure compliance.

It is very likely that Virginia\'s minor NSR requirements will apply to
those projects for which there is a \"reasonable possibility\" that
major NSR might apply. As EPA notes, the source\'s compliance with
Virginia\'s minor NSR program will provide the DEQ with all the
information necessary to enforce the major NSR requirements. Thus, the
VMA advocates the deletion of the needless, additional burden of
providing the DEQ with advance reports of facility changes with a
\"reasonable possibility\" of triggering major NSR.

The proposed Virginia regulations contain a provision (9 VAC 5-80-1785
E) that if the DEQ believes a project which the source owner claimed did
not trigger major NSR actually did trigger major NSR, the DEQ \"will
proceed as if the owner is in violation of \[the major NSR
requirements\] and may institute appropriate enforcement action.\" This
clearly states that source owners must ensure any physical or
operational changes do not trigger major NSR or face the enforcement
consequences.

**[RESPONSE]{.underline}:** As discussed in the response to comment 1,
it is important that the department have access to data adequate to
determine if a source is in compliance.

No change has been made to the proposal as a result of this comment.

30\. **[SUBJECT]{.underline}:** Malfunctions.

**[COMMENTER]{.underline}:** Virginia Manufacturers Association

**[TEXT]{.underline}:** The VMA favors the approach in the proposed
Virginia regulations of including emissions arising from malfunctions in
both the past actual emissions baselines and the projected actual
emissions following the proposed facility change. This accounting is
both consistent (looking backward and forward) and realistic. Under
certain circumstances, federal and Virginia regulations allow an
\"affirmative defense\" against enforcement penalties for excess
emissions resulting from a malfunction. Virginia regulations (9 VAC
5-20-180 G) go even farther in some circumstances and provide that
excess emissions from malfunctions do not constitute a violation. The
VMA does not believe these provisions should alter the approach of
including emissions occurring during malfunction events in the
calculations of the past actual emissions baselines or projected actual
emissions following a proposed facility change.

**[RESPONSE]{.underline}:** Support for the proposal is appreciated. As
discussed in the response to comment 9, malfunction emissions are an
integral part of a source's overall emissions profile and cannot be
removed for the purpose of determining the baseline.

No change has been made to the proposal as a result of this comment.

31\. **[SUBJECT]{.underline}:** Netting.

**[COMMENTER]{.underline}:** Virginia Manufacturers Association

**[TEXT]{.underline}:** Federal and Virginia NSR regulations have never
required aggregation of separate source changes for the purposes of
determining NSR applicability. As EPA has explained:

If the proposed emissions increase at a major source is ***by itself***
(without considering any decreases) less than \"significant\", EPA
policy does not require consideration of previous contemporaneous small
(i.e., less than significant) emissions increases at the source. In
other words, the netting equation (the summation of contemporaneous
emissions increases and decreases) is not triggered unless there will be
a significant emissions increase ***from the proposed modification***.

There is no reason for the board to deviate from this longstanding
approach to NSR applicability and make Virginia\'s new NSR regulations
needlessly more stringent than the current Virginia rules they will
replace.

**[RESPONSE]{.underline}:** Support for the proposal is appreciated.

No change has been made to the proposal as a result of this comment.

32\. **[SUBJECT]{.underline}:** General support for PALs.

**[COMMENTER]{.underline}:** Virginia Manufacturers Association

**[TEXT]{.underline}:** The VMA strongly supports the inclusion of the
federal PAL permitting provisions into Virginia\'s NSR reform
regulations. The PAL provisions provide businesses with the opportunity
to maximize their flexibility to make facility changes in exchange for
capping the facility's emissions through limitations in a minor NSR or
operating permit. Emission caps (annual emission limits) would be set
near the past actual emission rates for the facility.

VMA strongly supports PAL permitting because of the operational
flexibility it provides. Many of our member companies compete in the
fast-paced, global marketplace where the ability to rapidly respond to
new product and market demands is critical for survival. Our

member companies have had critical business opportunities jeopardized
and even lost because NSR permitting has delayed their response to new
market and production demands. New source review and permitting must be
completed before a company begins construction on a particular facility
change. Very often, Virginia businesses simply do not have enough lead
time to accommodate the lengthy major NSR process without jeopardizing
their ability to respond to global market demands.

Because PAL permitting was not generally available under the federal and
Virginia NSR rules in the mid-1990s, Merck, a pharmaceutical company
with a manufacturing facility in Elkton, Virginia, obtained a
site-specific PAL-type permit through EPA's Project XL. Merck must be
able to respond rapidly to new and increased production demands from the
medical community. The risk of protracted delays in obtaining one or
more major NSR permits in order to respond to new or increased product
demands was too great. Merck needed a PAL-type permit that would allow
the necessary operational flexibility. However, the only path to a
PAL-type permit available at that time under the federal and Virginia
NSR rules was the circuitous path of the Project XL process. PAL
permitting under the NSR reform rules would provide critical operational
flexibility to Virginia businesses at a fraction of the effort expended
by Merck and DEQ on the Project XL process.

Virginia can provide its businesses the benefits of PAL permitting
without any jeopardy to air quality in the Commonwealth. EPA has
estimated the environmental impacts of PAL permitting and concluded
"that PALs are likely to result in a net environmental benefit." As EPA
explains: "These environmental benefits (which represent only a portion
of the overall benefits of the PAL approach) arise primarily because of
the incentives created when a facility caps its emissions in exchange
for future flexibility to make changes without further NSR permit
process." The VMA believes that when they are no longer inhibited by the
threat of adverse business impacts from major NSR, Virginia businesses
will be more likely to pursue projects that further reduce actual
emissions.

EPA undertook a detailed analysis of the environmental impacts of PAL
permitting in three manufacturing sectors -- pharmaceuticals,
semiconductors, and automobiles. EPA estimated

> that PALs will result in at least 3,400 to 17,000 tons per year of VOC
> reductions nationally. Because our analysis focuses only on these
> three categories, it is likely an underestimate, as several other
> source categories will certainly make use of PALs, though to a lesser
> degree in some instances. . . . this analysis illustrates that the
> benefits of PALs are likely to be on the order of magnitude of tens of
> thousands of tons per year of VOC.

EPA points out that even if this is not the case, PALs are still a
"no-lose" proposition for the environment:

> Finally, it is important to note that, should sources be unable to
> reduce their emissions as significantly as we have seen in these early
> cases, the emissions from the facility would still be capped, assuring
> no worse emissions than under the current rules. In the extreme case
> where a facility could not meet its cap, its emissions increases would
> be subject to NSR, just as they are today. Thus, the worst-case
> emissions scenario from adoption of the PAL option is no worse than
> the current rule. However, as noted above, evidence to date shows that
> the far more likely result is that net benefits will occur.

Merck's experience in Virginia confirms EPA's analysis. During the
development of PAL-type permit for Merck's Elkton facility, some
expressed doubt that the environmental benefits expected from the
project would actually be achieved. These doubts were similar to those
expressed during the NSR reform rulemaking concerning the environmental
benefits estimated by EPA. Contrary to the skeptics' predictions, total
criteria pollutant emissions from the facility today are about 10% of
what they were prior to the issuance of that permit. In addition, VOC
emissions have not increased significantly, and are actually today at
about 25% of the level prior to issuance of the permit. While Merck's
success may not always be duplicated, PAL permitting under the NSR
reform rules will consistently result in significant benefits for
Virginia's environment.

**[RESPONSE]{.underline}:** Support for the proposal is appreciated. As
discussed in the response to comment 1, we agree that PAL permitting
should result in an overall net benefit to the environment.

No change has been made to the proposal as a result of this comment.

33\. **[SUBJECT]{.underline}:** 5-year lookback for PALs.

**[COMMENTER]{.underline}:** Virginia Manufacturers Association

**[TEXT]{.underline}:** To maximize the benefits of PAL permitting, it
must be attractive to Virginia businesses. To make it attractive, the
board must adopt regulations allowing PAL limits to be set for each
individual pollutant using the highest consecutive 24-month period
during the past 10 years for that pollutant \-- the same method VMA
advocates for setting the source\'s past actual emissions baselines. For
all of the many reasons discussed above with respect to setting past
actual emission baselines, PAL permit limits based on a 5-year lookback
period will not provide Virginia businesses with sufficient emissions
\"head room\" to operate their facilities during the upturns in their
business cycles. This is crucial to the vitality of Virginia\'s
manufacturers. Several of our member companies have already determined
that PAL permit limits based on a 5-year lookback would be too
restrictive for them. In short, so the full benefits of this worthwhile
permitting program will be realized in Virginia, the board must allow
the use of the 10-year lookback to set the PAL permit limits.

**[RESPONSE]{.underline}:** As discussed in the response to comment 1, a
somewhat shortened lookback period will enable sources to enjoy the
benefits of PALs while ensuring that Virginia's air quality resources
are protected.

No change has been made to the proposal as a result of this comment.

34\. **[SUBJECT]{.underline}:** PAL renewal

**[COMMENTER]{.underline}:** Virginia Manufacturers Association

**[TEXT]{.underline}:** The board proposes to adopt the federal approach
to renewal of PAL permits. The VMA fully supports this approach. We
believe it balances concerns about perpetuating higher than necessary
emissions limits for PAL sources with source owners\' concerns that
productive capacity unused in the recent past would be confiscated by an
arbitrary ratcheting downward of the source\'s PAL permit limits.
Virginia businesses must have some certainty that they will be able to
react to market upturns. The prospect of having productive capacity
confiscated by severely reducing allowable emissions during permit
renewal does not promote the certainty Virginia businesses must have.

**[RESPONSE]{.underline}:** Support for the proposal is appreciated.

No change has been made to the proposal as a result of this comment.

35\. **[SUBJECT]{.underline}:** PAL duration.

**[COMMENTER]{.underline}:** Virginia Manufacturers Association

**[TEXT]{.underline}:** Unlike the federal regulations which establish a
10-year duration for PAL permits, the proposed Virginia regulations
restrict PAL permits to only five years. Virginia businesses need the
certainty of the 10-year permit duration provided in the federal
regulations. This feature of the board\'s proposed regulations makes
them unattractive to many Virginia businesses.

**[RESPONSE]{.underline}:** As discussed in the response to comment 1,
the 5-year lookback provides an increase over the original 2-year
lookback while providing additional assurance to the state that
emissions will be adequately controlled.

No change has been made to the proposal as a result of this comment.

36\. **[SUBJECT]{.underline}:** Definition of \"federally enforceable.\"

**[COMMENTER]{.underline}:** Virginia Manufacturers Association

**[TEXT]{.underline}:** The definition of \"federally enforceable\" is
not the same as the definition in the federal regulations at 40 CFR
52.21(b)(17). Why not?

**[RESPONSE]{.underline}:** As discussed in the response to comment 56,
the current definition is outdated and inconsistent with other EPA
policies and regulations. It has therefore been updated to be more
comprehensive.

No change has been made to the proposal as a result of this comment.

37\. **[SUBJECT]{.underline}:** Definition of \"major emissions unit.\"

**[COMMENTER]{.underline}:** Virginia Manufacturers Association

**[TEXT]{.underline}:** The definition of \"major emissions unit\" is
not the same as the definition in the federal regulations at 40 CFR
52.21(aa)(2)(iv)(a) and (b). Why not? It appears the 100 ton per year
threshold for a \"major emissions unit\" is stated twice \-- once in
subsection (i) and again by reference to subdivision a 1 in the
definition of \"major stationary source\" because that provision also
sets a 100 ton per year threshold (for 28 specific source categories).

**[RESPONSE]{.underline}:** This comment is acceptable and appropriate
changes reflecting the intent of the comment have been made to the
proposal.

38\. **[SUBJECT]{.underline}:** Definition of \"major modification.\"

**[COMMENTER]{.underline}:** Virginia Manufacturers Association

**[TEXT]{.underline}:** Subdivision c of the definition of \"major
modification\" excludes certain activities from the meaning of the term
\"physical change or change in the method of operation.\" One such
exclusion is the \"use of an alternative fuel or raw material by a
stationary source\" under what should be three separate, independent
sets of circumstances. The proposed regulations improperly link the
first and second sets of circumstances with the third set of
circumstances using the conjunctive \"and\" instead of the disjunctive
\"or.\" Under federal and current Virginia NSR rules, a source can
switch to an alternative fuel or raw material if it was capable of
accommodating that alternative fuel or raw material or if the use is
approved by permit. There is no additional requirement that the owner
demonstrate through a trial burn that emissions resulting from the use
of the alternative fuel or raw material would decrease.

We realize the language in subdivision c (5) (c) appears in the State
Air Pollution Control Law, but we have never understood why. If a switch
to an alternative fuel or raw material would decrease emissions, the
switch would not be a modification because of the second (emissions
impact) part of the test for a modification. Thus, there is no need to
exclude the switch from the meaning of physical or operational change in
the first part of the test for a modification. In any event, the
proposed regulation improperly makes a demonstration of decreased
emissions using a trial burn a necessary condition for the exclusion.
There is no basis in the law or past EPA or DEQ practice to support
this. VMA believes the disjunctive \"or\" must be substituted for the
conjunctive \"and\" in subdivision c(5)(b) of this definition.

**[RESPONSE]{.underline}:** The substance of the comment is correct;
however, because it is a matter of state law, this provision cannot be
removed from the regulation. See also the response to comment 58.

No change has been made to the proposal as a result of this comment.

39\. **[SUBJECT]{.underline}:** Definition of \"net emissions
increase.\"

**[COMMENTER]{.underline}:** Virginia Manufacturers Association

**[TEXT]{.underline}:** Subdivision c of the definition of \"net
emissions increase\" sets the conditions under which an emissions
increase or decrease is \"creditable\" for netting purposes. Subdivision
c (i) repeats the timing requirements for emission increases and
decreases previously set out in subdivisions b (1) and (2) of this
definition. Thus, it would appear the repeat of these timing
requirements in subdivision c (i) is unnecessary.

**[RESPONSE]{.underline}:** Subdivision (b) provides the criteria for
determining if an increase or decrease is **contemporaneous**.
Subdivision (c) provides the criteria for determining if an increase or
decrease is **creditable**. We agree that the outcome of this language
is somewhat redundant, but the criteria are meant to cover two different
requirements and thus need to be described separately.

No change has been made to the proposal as a result of this comment.

40\. **[SUBJECT]{.underline}:** Definition of \"potential to emit.\"

**[COMMENTER]{.underline}:** Virginia Manufacturers Association

**[TEXT]{.underline}:** The last sentence in the definition of
\"potential to emit\" does not track the corresponding federal
definition set out in 40 CFR 52.21(aa)(2)(ii)(b). That federal provision
states that for purposes of PALs, \"An emissions unit\'s potential to
emit shall be determined using the definition in paragraph (b)(4) of
this section \[52.21\], except that the words or \'enforceable as a
practical matter\' should be added after \'federally enforceable.\'\"
The proposed Virginia regulation does not mirror this. The last sentence
of the proposed definition should be changed to read: \". . . is
federally and state enforceable or enforceable as a practical matter.\"

**[RESPONSE]{.underline}:** This comment is acceptable and appropriate
changes reflecting the intent of the comment have been made to the
proposal.

41\. **[SUBJECT]{.underline}:** PAL public participation procedures.

**[COMMENTER]{.underline}:** Virginia Manufacturers Association

**[TEXT]{.underline}:** 9 VAC 5-80-1865 D would require the use of the
elaborate and time consuming public participation procedures in 9 VAC
5-80-1775 for PAL permitting. However, PALs can be set for a source
using permits issued under the minor NSR and state operating permit
programs. (See the definition of \"PAL permit.\") The public process in
9 VAC 5-80-1775 is unnecessary overkill considering that only actuals
PAL permits can be issued. These PAL permits cannot authorize any
significant increase in emissions. We see no need for the elaborate and
time consuming public process in 5-80-1775 for PAL permits that must
always restrict emissions to less than the major NSR significance
levels.

**[RESPONSE]{.underline}:** We agree that the public process for major
NSR permits is not necessarily appropriate for minor NSR permits, state
operating permits, or federal operating permits, and have thus revised
the proposal in order to more accurately reflect the public
participation requirements that vary from one type of permit to another.

42\. **[SUBJECT]{.underline}:** Changes to permits.

**[COMMENTER]{.underline}:** Virginia Manufacturers Association

**[TEXT]{.underline}:** 9 VAC 5-80-1925, 1935, 1945, and 1955, which
govern changes to permits, would be entirely new in Virginia\'s major
NSR regulations. It appears these regulatory provisions were borrowed
from Virginia\'s Title V regulations. However, in many cases, the
regulatory language creates uncertainties or worse problems. The reason
for this is that Title V is an operating permit program whereas NSR is a
preconstruction permit program. To illustrate our concern, we are not
sure how the provisions in 9 VAC 5-80-1945 G are to work. This
subsection authorizes a source owner to make changes proposed in the
minor permit amendment request immediately after filing the request with
the DEQ. This suggests circumstances in which a source owner might make
changes at a facility without first obtaining an amendment to the
source\'s major NSR permit. We are having difficulty envisioning such
circumstances and are concerned that our members might misconstrue the
extent of this and similar provisions in the permit amendment sections
of the proposed regulations.

**[RESPONSE]{.underline}:** These provisions, which did originate with
the Title V program, were first added to Article 9 in response to a need
identified in Virginia for specific steps needed for these types of
permit actions; the opportunity is now being taken to add these
provisions to Article 8. These provisions provide both the regulated
community and the department greatly enhanced certainty as to how
certain actions must be implemented in the permitting process, and
improve permitting efficiency overall. This system has worked well in
the nonattainment program (Article 9); it is now time to make the
nonattainment rule (Article 8) consistent with this process.

We appreciate the differences of purpose between the Title V and NSR
programs, but cannot see any possibility for confusion in 9 VAC
5-80-1945 G (minor permit amendments). Note that when these provisions
were originally proposed for Article 9, neither this commenter---nor
anyone else\--offered comment on that particular provision or with any
other aspect of the added permit change provisions; nor to our knowledge
have any other specific issues such as the one the commenter mentions
arisen.

No change has been made to the proposal as a result of this comment.

43\. **[SUBJECT]{.underline}:** Definition of "owner."

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** Throughout the proposal where the EPA
regulations state "owner or operator", the Commonwealth regulations
offer the language "owner" only. Please clarify whether or not DEQ
issues permits to "operators" and whether they have the same regulatory
obligations as "owner."

**[RESPONSE]{.underline}:** The definition of "owner" in 9 VAC 5-10-20
of 9 VAC 5 Chapter 10 (general definitions) includes operators.
Therefore, "operators" have the same regulatory obligations as "owners."

No change has been made to the proposal as a result of this comment.

44\. **[SUBJECT]{.underline}:** Use of "shall" and "will."

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** There are numerous references in Articles 8 and
9 and one in Article 6 at 9-VAC-5-80-1110 C 1 that change "will" for
"shall" and vice versa. We understand that Virginia has its own
protocols for writing regulations, however, EPA needs assurances that
these words cannot be construed in a manner different from that intended
in the federal rule.

**[RESPONSE]{.underline}:** § 5.21 of the Virginia Code Commission's
form, style and procedure manual establishes the following rules for use
of \"shall,\" \"may\" and \"must\":

Use \"shall\" in the imperative sense to express a duty or obligation to
act. The term \"shall\" is generally used in connection with statutory
mandates. \"May\" is permissive and generally expresses a right,
privilege or power. When an individual is authorized but not ordered to
act, the term \"may\" is appropriate. If an obligation to act is
intended, \"shall\" is used. Use \"may not\" when a right, privilege or
power is restricted. \"Shall not\" negates the obligation but not the
permission to act; therefore, \"may not\" is the stronger prohibition.
Wherever possible, the words \"shall\" or \"may\" are used in place of
other terms such as \"is authorized to,\" \"is empowered to,\" \"is
directed to,\" \"has the duty to,\" \"must,\" and similar phrases.
However, if certain action is intended to be a condition before accruing
a right or privilege, the word \"must\" is used instead of \"shall\" or
\"may\" (e.g., \"In order to have your regulations published you must
file them by the deadline.\"

In addition, the following guidance governs the regulations of the
board:

Whenever a State agency has the choice between the use of the words
"will" or "shall" when applicable to its own actions in a regulation,
the prudent choice is "will."  "Shall" should be limited to requirements
on the regulated community.  The word "shall" when applied to the
regulating government entity raises the opportunity for additional
litigation in the nature of mandamus against the entity to enforce the
self-imposed regulatory mandate, and creates potential problems when the
entity's actions may differ somewhat in time or manner from what the
regulation "requires."

Use of these terms in the proposal are consistent with state
requirements without affecting the substance of the federal
requirements.

No change has been made to the proposal as a result of this comment.

45\. **[SUBJECT]{.underline}:** Applicability (Article 8).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** In 9 VAC 5-80-1605 C, the following statement is
not technically correct:

" ...then the requirements of this **article** apply...". In the federal
regulations only certain provisions apply in this instance.

**[RESPONSE]{.underline}:** There are several places in the PSD
regulations where EPA stipulates that paragraphs (j) through (r) \[in
one place it is paragraphs (j) through (s)\] apply to major stationary
sources and major modifications. While we understand that these
paragraphs contain the core of the preconstruction review requirements
and that the PSD regulations contain some requirements that do not apply
to the sources, limiting applicability to those requirements dilutes the
enforceability of other provisions such as stack heights, definitions,
and possibly the new reform provisions. Also, provisions beyond those in
the federal regulations have been added in order to meet state-specific
needs, and we need to make sure that these can be enforced.

No change has been made to the proposal as a result of this comment.

46\. **[SUBJECT]{.underline}:** Applicability (Article 8).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** In 9 VAC 5-80-1605 D, the addition of the "or
modification" doesn't make sense -- how can it apply to a modification
of a major modification?

**[RESPONSE]{.underline}:** This comment is acceptable and appropriate
changes reflecting the intent of the comment have been made to the
proposal.

47\. **[SUBJECT]{.underline}:** Applicability (Article 9).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** We recommend that the text in 9 VAC 5-80-2000 C
be revised to read: "The provisions of this article apply in (i)
nonattainment areas designated in 9 VAC 5-20-204 or 40 CFR part 81, or
...". This would allow nonattainment NSR to apply during the interim
period between designation and the date the NSR SIP is due.

**[RESPONSE]{.underline}:** Part 81 cannot be enforced by the state
unless adopted by reference into the regulations of the board and
updated as EPA makes changes. The process of adopting Part 81 and
keeping references to it up to date would take as much time and as many
resources that are now expended in maintaining and updating the Virginia
list.

No change has been made to the proposal as a result of this comment.

48\. **[SUBJECT]{.underline}:** Definitions -- general.

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** Although "unless otherwise required by context"
in 9 VAC 5-80-1615 A and 9 VAC 5-89-2010 A is not new text, it is
ambiguous and may imply director's discretion.

**[RESPONSE]{.underline}:** Use of this expression is required by the
Registrar of Regulations. It occurs in all Virginia regulations in order
to provide clarity, not ambiguity. It allows for a reasonable
interpretation of a term in the context of a specific regulation that
may not be identical to the general terms found in 9 VAC 5 Chapter 10
that are intended to apply throughout the regulations. EPA has approved
into the SIP many regulations containing this text on numerous
occasions.

No change has been made to the proposal as a result of this comment.

49\. **[SUBJECT]{.underline}:** Definition of "allowable emissions"
(Article 9).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** Recommend changing to "is subject to federally
enforceable or federally and state enforceable limits" in first
sentence. Some limits will be only federally enforceable, such as new
NSPS and MACT standards that have yet to be delegated. Subdivision (a)
includes 40 CFR Part 63. Note that HAPs are not regulated NSR pollutants
and this reference may be inappropriate unless DEQ intends to use this
preconstruction permit program to implement the preconstruction
requirements in 40 CFR 63.9.

**[RESPONSE]{.underline}:** The current text ("subject to federally and
state enforceable limits") is approved into Virginia's SIP. Virginia
cannot recognize new NSPS and MACT standards until they have been
adopted into the Virginia regulations. Additionally, Part 61, which
applies to HAPs, is in the federal regulations; it is unclear why EPA
includes Part 61 but not Part 63.

No change has been made to the proposal as a result of this comment.

50\. **[SUBJECT]{.underline}:** Definition of "applicable federal
requirement" (Articles 8 and 9).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** This term may be unnecessary. Nevertheless, the
term as defined is not inclusive because it does not include the acid
rain program. EPA recommends changing the text to state: "...includes,
but is not limited to the following."

**[RESPONSE]{.underline}:** This term is used throughout the rules in
the context of ensuring that sources meet federal requirements beyond
those of immediate concern to the NSR program. The recommended
additional wording makes the text more accurate, and appropriate changes
reflecting the intent of the comment have been made to the proposal.

51\. **[SUBJECT]{.underline}:** Definition of "best available control
technology" (Article 9).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** The definition includes 40 CFR Part 63 as one of
the backstops for determining BACT. However, BACT applies only to
"regulated NSR pollutants", which do not include HAPs, and it is
inappropriate to include 40 CFR Part 63 as one of the considerations for
BACT.

**[RESPONSE]{.underline}:** As discussed in the response to comment 49,
the equivalent federal language includes Part 61, which also governs
HAPs. Using Parts 61 and 63 as a BACT floor is not the same as
regulating HAPs within the rule. There are pollutants that fall into
both categories of HAP and criteria.

No change has been made to the proposal as a result of this comment.

52\. **[SUBJECT]{.underline}:** Definition of "commence" (Article 8).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** Although the rule text tracks the federal
definition, EPA has had implementation issues with DEQ regarding the
meaning of this provision. We would like to be clear "necessary
preconstruction approvals **or permits**" only refers to those approvals
**or permits** required under the NSR program. It does not mean permits
that may be required by other environmental statutes, or other state or
local municipal authorities.

**[RESPONSE]{.underline}:** Yes, it applies only to NSR permits.

No change has been made to the proposal as a result of this comment.

53\. **[SUBJECT]{.underline}:** Definition of "emissions cap" (Articles
8 and 9).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** EPA would be compelled to disapprove this term.
The only cap recognized by EPA at this time is a PAL. Emission limits
that cap emissions from a unit or a group of units could be construed to
be "mini-PALs" that would allow changes to occur without review so long
as the cap is not exceeded. EPA has not authorized this type of
flexibility in the NSR program.

**[RESPONSE]{.underline}:** This term is necessary in order to define
the type of change being made. It is patterned after Title V, and is
essential for administering the permit change provisions.

No change has been made to the proposal as a result of this comment.

54\. **[SUBJECT]{.underline}:** Definition of "enforceable as a
practical matter" (Article 8).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** EPA would not be able to include in the SIP
revision the bolded text in subdivision (e) stating "\...this article
**and other regulations of the board**." This would effectively be
approval of other regulations not under review by EPA.

**[RESPONSE]{.underline}:** This definition has been added because EPA
uses the term without defining it, and some additional clarity was
needed for the Virginia regulation. This term is essential for the state
to be able to enforce any state-only provisions and other federal
provisions (like NSPSs) that are not in the SIP that may be included in
a permit. The main reason that the \"enforceable as a practical matter\"
concept was introduced was to implement a court decision to require EPA
to recognize \"potential to emit\" based on unapproved state
regulations.

No change has been made to the proposal as a result of this comment.

55\. **[SUBJECT]{.underline}:** Definition of "federally enforceable"
(Article 8).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** (i) Delete the term "and citizens" from first
paragraph. This makes the term more restrictive than the federal
definition. (ii) There is no such thing as a federal operating permit or
federal operating permit program in Virginia. (iii) The definition does
not include minor NSR permits.

**[RESPONSE]{.underline}:** (i) As discussed in the response to comment
56, this definition is patterned after the definition in 40 CFR 63.2.
Additionally, Region III has previously stated that "The term 'federally
enforceable' refers to EPA's **and citizens**' ability to enforce a
provision under §§ 113/167 and 304 of the Clean Air Act." (ii)
Virginia's federal operating permit program was approved by EPA on June
10, 1997 (62 FR 31516).

\(iii\) The definition does include minor NSR permits; see subdivision
e. Virginia's minor NSR program has been approved into the SIP.

No change has been made to the proposal as a result of this comment.

56\. **[SUBJECT]{.underline}:** Definition of "federally enforceable"
(Article 9).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** The definition includes the phrase "enforceable
by the administrator **and citizens**". The text in bold is not marked
as new language being proposed with this rulemaking action. However,
this text is not part of the currently approved SIP regulations.
Nevertheless, EPA could not approve "and citizens" as part of the
definition of federally enforceable because it is inaccurate and
restricts the meaning of the term far beyond what was intended in the
Clean Air Act. With respect to the text "or that are enforceable under
other statutes administered by the administrator," EPA believes that it
goes beyond the purpose served by the PSD program and is not necessary
to be included in the definition. This text is also not part of the
current SIP regulation.

**[RESPONSE]{.underline}:** The current definition in the PSD regulation
is outdated and inconsistent with other EPA policies and regulations.
The definition in the Virginia proposal has therefore been updated to be
more comprehensive. It is patterned after the definition in 40 CFR 63.2:
"Federally enforceable means all limitations and conditions that are
enforceable by the Administrator **and citizens** under the Act\..."

Additionally, in a letter from Region III to the department (8/23/99),
EPA addressed the issue of federal enforceability of Virginia's permit
programs. EPA stated that the major NSR permit programs were federally
enforceable. It also stated that "The term 'federally enforceable'
refers to EPA's **and citizens**' ability to enforce a provision under
§§ 113/167 and 304 of the Clean Air Act."

Part 63 is indeed a HAP program. However, the concept of enforceability
of SIP permits should be universal across all programs. If a SIP permit
is enforceable by citizens under § 112 programs, then it should also be
enforceable by citizens under § 110.

No change has been made to the proposal as a result of this comment.

57\. **[SUBJECT]{.underline}:** Definition of "locality particularly
affected" (Article 8).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** It is not clear how this term is used. Recommend
deleting.

**[RESPONSE]{.underline}:** The term is established in § 10.1-1307.01 of
the Virginia Air Pollution Control Law, and is used in the context of
the promulgating regulations, granting variances, and issuing permits.
It is used in Article 8 in the context of public participation. The
specific term is necessary in this context in order to ensure that such
a locality would receive proper notification.

No change has been made to the regulation as a result of this comment.

58\. **[SUBJECT]{.underline}:** Definition of "major modification"
(Articles 8 and 9).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** (i) In Article 9: subdivision 5(b) should be
"under any permit issued under 40 CFR 52.21 or permit program approved
under 40 CFR 51.166." (ii) Subdivision c (5)(c) 9 (in Article 8) and
subdivision 5 (c) (in Article 9): This provision is not what was
intended in the exclusion for alternative fuels and makes the it more
stringent than the federal definition. It also seems to allow the use of
trial burns without any limits on the duration or frequency of such
tests.

**[RESPONSE]{.underline}:** (i) "This chapter" is used because it
conveys to the reader in a user- friendly way the rules approved under
40 CFR 51.166. (ii) According to 40 CFR 51.165(a)(1), states may use
definitions that are more stringent. This particular provision is to
comply with state law, and cannot be changed.

No change has been made to the proposal as a result of this comment.

59\. **[SUBJECT]{.underline}:** Definitions of "major new source review
permit," "major new source review program," "minor new source review
permit," "minor new source review permit program," "new source review
permit," "new source review program" (Articles 8 and 9).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** These definitions reference § 112 of the Clean
Air Act. Does this mean that DEQ intends to use this program to
implement 40 CFR 63.9?

**[RESPONSE]{.underline}:** These are generic definitions designed to
encompass the NSR program as a whole. As indicated in the definitions,
this includes Articles 8 or 9 of the NSR program. It is Article 7 that
implements § 112(g). There is no intention of implementing 40 CFR 63.9
with Articles 8 or 9. In minor NSR, we do implement the HAPs
preconstruction review program that has been delegated to the states
through this program, as it is the only mechanism available to the state
for making preconstruction approvals required under the HAPs program.

No change has been made to the proposal as a result of this comment.

60\. **[SUBJECT]{.underline}:** Definition of "net emissions increase"
(Article 9).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** Is the last sentence in subdivision (b) intended
to implement the special provisions in the Clean Air Act for aggregating
de minimis increases for applicability purposes? If so, EPA recommends
that this provision be moved to the definition of major modification
since it really an applicability requirement, not a netting issue. If
this is not intended to implement the special provisions, this would
appear to be acceptable.

**[RESPONSE]{.underline}:** The special de minimis provisions are
contained in 9 VAC 5-80-2130. This section has already been approved
into the SIP and is not germane to this regulatory action. EPA has yet
to promulgate its regulations on how states are to comply with the 1990
Clean Air Act Amendments. When EPA promulgates those regulations, this
issue may be revisited.

No change has been made to the proposal as a result of this comment.

61\. **[SUBJECT]{.underline}:** Definition of "reasonable further
progress" (Article 8).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** EPA recommends deleting the definition for this
term. In any case, we would be reluctant to include it in the SIP
because it conflicts with the definition in § 171(1) of the Clean Air
Act. Please note especially that reasonable further progress may not
always require "substantial reductions in the early years," e.g.,
subpart I areas for the 8-hour ozone NAAQS.

**[RESPONSE]{.underline}:** There is no readily apparent conflict with §
171(1). This provision is approved into the SIP, and is not germane to
major NSR reform. As for the "substantial reductions in the early
years," the definition basically includes but is not limited to, so the
perceived conflict with 8-hour is unclear.

No change has been made to the proposal as a result of this comment.

62\. **[SUBJECT]{.underline}:** Definition of "significant" (Article 9)

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** The threshold for PM~10~ is missing. How is DEQ
implementing NSR for PM~2.5~? Does subdivision (b) apply to subpart I
ozone nonattainment areas? If not, it would be advisable to add
appropriate provisions since NSR currently applies in those areas.

**[RESPONSE]{.underline}:** There is no threshold for PM~10~ in the
Virginia regulations because there is no threshold for PM~10~ in the
corresponding federal regulations. Virginia has never had any PM~10~
nonattainment areas, so this is not an issue. With respect to PM~2.5~,
other provisions have been adopted, such as inclusion of the localities
on the list of nonattainment areas and the offset requirements, but
without the significance level absent any EPA guidance. However, the
proposal has been revised to include the threshold in EPA's recent
PM~2.5~ proposal in hope that when EPA promulgates the final regulations
that there will be no change. Subdivision (b) does apply to subpart I
areas---this is why there is a subdivision (a) for serious and severe
areas.

63\. **[SUBJECT]{.underline}:** Definition of "state operating permit
program" (Articles 8 and 9).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** Recommend adding a subdivision stating that it
is also a means of creating state-only requirements. If you read the
definition literally, the three subdivisions are all inherently "and,"
meaning that all are true at all times, which may not be your intent.

**[RESPONSE]{.underline}:** Although the program may be used for other
purposes such as state-only requirements, there is no need to add this
statement for purposes of inclusion in federal requirements.

No change has been made to the proposal as a result of this comment.

64\. **[SUBJECT]{.underline}:** Incorporation of multiple permits
(Article 8).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** The interaction between state operating permits,
NSR permits and title V in 9 VAC 5-80-1625 E and F is confusing. Does
the NSR permit also authorize indefinite operation after the initial
startup and shakedown or is the source compelled to get a state
operating permit in order to operate after initial startup and
shakedown? Regardless of how this question is answered the source will
be obligated to apply for or modify its Title V permit. Is the NSR
permit required to contain all applicable requirements -- not just those
related to NSR? Is the intent of 9 VAC 5-80-1625 E to be able to
incorporate provisions (and even change those provisions) from
previously issued major and minor NSR permits? Otherwise, at its worst,
the provision would seem to be saying that multiple units can have
different permits, regardless of whether they would constructed under
one project and it is the discretion of the board to combine them into
one permit. EPA assumes that state operating permit does not include
title V.

**[RESPONSE]{.underline}:** As discussed in the responses to comments 70
and 71, the proposal has been revised in order to eliminate the
combining of permits, except at the time of initial application and
processing.

65\. **[SUBJECT]{.underline}:** Performance standards (Article 8).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** 9 VAC 5-80-1665 references 9 VAC 5-50-20 and 30,
which establish requirements for all different types of "performance
standards," including NSPS standards and provisions for testing that
already exist in the approved SIP. EPA needs assurance that this
provision does not allow for "director's discretion" with respect to
standards and testing procedures already established by a federal rule
or a federally approved rule that would otherwise require EPA approval
in order to change.

**[RESPONSE]{.underline}:** As discussed in the response to comment 75,
"standards of performance" is a generic term that applies to Chapter 50,
which applies to all new and modified stationary sources. This includes
Part I (special provisions, including 5-50-30 and 5-50-30), Article 4
(BACT and LAER) and Article 5 (NSPSs). Article 5 is not in the SIP, but
Part I and Article 4 are. However, if a permit is issued under Chapter
80, they must comply with the NSPS if we determine that the NSPS is BACT
or LAER. In this case, compliance with the NSPS then becomes federally
enforceable via its inclusion in the Chapter 80 permit.

No change has been made to the proposal as a result of this comment.

66\. **[SUBJECT]{.underline}:** Compensating emission reductions
(Article 8).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** Regarding 9 VAC 5-80-1715 B 2: if modeling
indicates that the new source or modification (as opposed to an existing
source) is **causing** a violation of an ambient standard, the rule must
specify that the source may not construct until emission reductions
sufficient to eliminate the violation are achieved.

**[RESPONSE]{.underline}:** This text is copied from 40 CFR
51.165(b)(2), (3), and (4).

No change has been made to the proposal as a result of this comment.

67\. **[SUBJECT]{.underline}:** Appendix W to 40 CFR Part 51 (Article
8).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** In 9 VAC 5-80-1725 A, there is no date
associated with the version of Appendix W to 40 CFR Part 51 that would
apply. By default, would this mean the version that existed when the
rule was finalized (since this provision is not being changed it is
confusing what that would mean) or can is be presumed to always be the
most recent version in the CFR?

**[RESPONSE]{.underline}:** Appendix W to 40 CFR Part 51 is incorporated
by reference into the Virginia regulations at 9 VAC 5-20-21 E 1 a (2).
Applicability of the provision is not legal unless this action is
accomplished; this is reflected in 9 VAC 5-80-1605 K (old L). It is
updated frequently as needed to reflect the most recent version. This
language is not being revised with this action, and has already been
approved into the SIP.

No change has been made to the proposal as a result of this comment.

68\. **[SUBJECT]{.underline}:** Source information (Article 8).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** In 9 VAC 5-80-1745 A, the references to 9 VAC
5-80-1705, 1715, 1735 and 1755 should be deleted because the analogous
federal rule applies generally. See 40 CFR 51.166(n) where it uses the
"section." It is interesting to note that while the federal regulations
require modeling, impact analyses, etc., these are not necessarily
required to be submitted to the reviewing authority.

**[RESPONSE]{.underline}:** These referenced sections are the required
information and have been added to assist users in finding what the
required information is.

No change has been made to the proposal as a result of this comment.

69\. **[SUBJECT]{.underline}:** General need to obtain a permit (Article
9).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** : The last sentence in 9 VAC 5-80-2020 A uses
the phrase "all the applicable requirements of this article." There is a
definition of "federal applicable requirements." If the latter term is
not used in this rule we recommend removing that definition so that
there is no confusion with the text in 9 VAC 5-80-2020 A, which is
obviously very different from federal applicable requirement.

**[RESPONSE]{.underline}:** The difference between "all applicable
requirements" and "federal applicable requirements" seems obvious.
Because a definition for federally applicable requirements is included,
a reasonable person should be able to distinguish between federal
requirements in general and requirements specific to this article.

No change has been made to the proposal as a result of this comment.

70\. **[SUBJECT]{.underline}:** Combining permit applications (Article
9).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** From an implementation and Title V standpoint,
there are difficulties with 9 VAC 5-80-2020 D. Please clarify how the
following situation would work: In XX year, a facility obtains a NSR
permit to construct two new printing presses, press A and press B. After
5 years, the facility wants to modify press A to increase its capacity,
resulting in a significant net emissions increase so the facility
applies for a new permit for press A. Will the new permit that is issued
address only the modification to press A and will the new permit
supersede the requirements for press A in the original NSR permit?

**[RESPONSE]{.underline}:** Virginia's NSR program consists of several
regulations: two for major NSR, one for minor NSR, and one for major
HAPs. It is possible that an individual source could simultaneously need
permits for the purposes of PSD, minor NSR, and HAPs. In the interest of
efficiency, this provision was created to allow owners to have a single
application for these permits, and to allow the agency to issue a single
permit. Either scenario mentioned could be accomplished under this
provision: we could either issue a new permit, or amend a permit to
reflect the modification. However, in order to address the commenter's
concerns, the proposal has been revised to eliminate permit combining,
except at the time of initial application and processing.

71\. **[SUBJECT]{.underline}:** Interaction between NSR and operating
permits (Article 9).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** The interaction between NSR and operating
permits in 9 VAC 5-80-2020 E is a reversal of how most states handle
these permits. An NSR permit normally covers a "project," not an entire
facility. Furthermore, states usually issue a permit to construct that
covers only the period from construction to startup and shakedown. Then
the facility is required to apply for a permit to operate, the latter
being a permit that regulates the entire facility. The NSR permit
conditions are then incorporated into the operating permit. This allows
modifications to provisions such as monitoring, testing and
recordkeeping to occur within the context of a state operating permit --
a much better vehicle since they usually have administrative procedures
for modifying the permit -- unlike NSR permits. Neither EPA's or the
state's rules have any provisions for modifying NSR permits.

**[RESPONSE]{.underline}:** The Virginia state operating permit does not
operate like other state operating permits. The Virginia SOP is a
source-specific regulatory mechanism, not an operating permit in the
sense that Title V is an operating permit. There are provisions for
modifications (amendments) in all of the permitting rules. However, in
order to address the commenter's concerns, the proposal has been revised
to eliminate combining of permits.

72\. **[SUBJECT]{.underline}:** Combining permit applications (Article
9).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** 9 VAC 5-80-2030 A is confusing. Wouldn't a
source be circumventing NSR if they submitted multiple applications for
emissions units that are part of the same project?

**[RESPONSE]{.underline}:** No problems with this provision have ever
been identified. It is designed to encourage efficiency by encouraging
sources to submit an all-inclusive application for all affected units.

No change has been made to the proposal as a result of this comment.

73\. **[SUBJECT]{.underline}:** Application information required
(Article 9).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** Although this is not required, in 9 VAC
5-80-2040 B, EPA recommends that either the application requirements in
the rules or, at a minimum, the application forms address the
calculations and justifications needed to do the future actual projected
emissions and exclusion for demand growth.

**[RESPONSE]{.underline}:** When EPA came out with the major NSR reform
regulations for PSD, it did not include any such requirement in 40 CFR
51.166(n).

No change has been made to the proposal as a result of this comment.

74\. **[SUBJECT]{.underline}:** Emission caps (Article 9).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** EPA has a concern with 9 VAC 5-80-2050 B,
specifically the reference to "emission caps". Other than PALs, EPA does
not recognize emission caps as being any different than any other
limitation. In other words, if there is a "cap" on one or several units,
this in no way allows a facility to make pre-authorized changes so long
as the cap is not violated. This can only be accomplished through a PAL.
EPA will need to have further clarification on Virginia's use of the
term "cap" before any provisions regarding caps can be approved as part
of the SIP.

**[RESPONSE]{.underline}:** This comment is acceptable and appropriate
changes reflecting the intent of the comment have been made to the
proposal.

75\. **[SUBJECT]{.underline}:** Standards of performance (Article 9).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** In 9 VAC 5-80-2080, use of the term "standards
of performance" and references to 5-50-30 are confusing and possibly
incorrect. Please clarify whether "standards of performance" refers to
EPA's NSPS standards or whether it is a more generic term that can apply
to any emission standard. Are standards different from permit limits in
that they must be established by rule? Please note that 5-80-2080 refers
to 5-50-30 and 5-50-30 specifically refers to compliance with 5-50-410,
which incorporates by reference the federal NSPS standards. It would be
inappropriate and inadvisable to include any compliance provisions for
NSPS in the SIP, particularly when the State's regulations under 2080
would allow for the use of alternative tests, or waivers of testing for
which EPA has not delegated such authority. Note also that the current
SIP contains similar language. If "standards of performance" does
include or can include NSPS standards, this section have been mistakenly
included in the SIP.

**[RESPONSE]{.underline}:** "Standards of performance" is a generic term
that applies to Chapter 50, which applies to all new and modified
stationary sources. This includes Part I (special provisions, including
5-50-30 and 5-50-30), Article 4 (BACT and LAER) and Article 5 (NSPSs).
Article 5 is not in the SIP, but Part I and Article 4 are. However, if a
permit is issued under Chapter 80, they must comply with the NSPS if we
determine that the NSPS is BACT or LAER. In this case, compliance with
the NSPS then becomes federally enforceable via its inclusion in the
Chapter 80 permit.

No change has been made to the proposal as a result of this comment.

76\. **[SUBJECT]{.underline}:** Offsets (Article 9).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** 9 VAC 5-80-2120 H is not consistent with 40 CFR
51.165(a)(3)((ii)(C)(*1*). However, EPA has proposed changing the
requirements for offsets generated by shut down credits and these
changes will be reflected in the phase II ozone implementation rule. In
general, the state must require that the emissions be included in the
inventory for reasonable further progress and the attainment
demonstration, including those sources that were shutdown prior to the
base year inventory (e.g., credits generated prior to 2002 for the
8-hour ozone standard).

**[RESPONSE]{.underline}:** This provision is indeed consistent with 40
CFR 51.165---the federal rule says "date specified for this purpose in
the plan," which has been provided as indicated in this provision. It is
also approved in the SIP. Once EPA issues its Phase II guidance, the
regulations may be revised as needed.

No change has been made to the proposal as a result of this comment.

77\. **[SUBJECT]{.underline}:** Appendix S to 40 CFR 51 (Article 9).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** Please clarify the scope of 9 VAC 5-80-2120 J.
The provision uses the term "article," implying that this provision
applies throughout the NSR rule, not just provisions related to offsets.
Is this correct?

**[RESPONSE]{.underline}:** This comment is acceptable and appropriate
changes reflecting the intent of the comment have been made to the
proposal.

78\. **[SUBJECT]{.underline}:** PAL renewal (Article 9).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** 9 VAC 5-80-2144 J 2 includes the phrase "or
until the board determines that the revised permit with the renewed PAL
will not be issued." Assuming the source submitted a timely renewal
application and the board denies the renewal, what requirements would
the source be obligated to comply with after the permit expires? The
plain text of the last sentence would appear to preclude continuing the
effective date of the PAL until a new permit is issued. What procedures
would the source have to follow (including timeliness) for submitting a
second application (since the renewal application was denied)?

**[RESPONSE]{.underline}:** See 9 VAC 5-80-2144 I, which covers PALs
that are not renewed. A reference to 9 VAC 5-80-2144 I has been added to
9 VAC 5-80-2144 J 2, which should clarify the situation.

79\. **[SUBJECT]{.underline}:** Recordkeeping (Article 9).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** The recordkeeping requirement in 9 VAC 5-80-2144
N 1 goes beyond the federal requirements and needs to be included in any
demonstration that these proposed rules are equivalent to the federal
rules for PALs.

**[RESPONSE]{.underline}:** This provision is identical to that in 40
CFR 51.165(f)(13)(i).

No change has been made to the proposal as a result of this comment.

80\. **[SUBJECT]{.underline}:** Repeal of 9 VAC 5-80-2160 (Article 9).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** The proposed rules have repealed 9 VAC 5-80-2160
but this section remains in the SIP. The SIP revision needs to include a
request to rescind this portion of the approved SIP.

**[RESPONSE]{.underline}:** This section is still in the SIP because EPA
has yet to process Revision D00, which was submitted December 16, 2003.

No change has been made to the proposal as a result of this comment.

81\. **[SUBJECT]{.underline}:** Changes to permits (Article 9).

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** 9 VAC 5-80-2200 through 2240 are new revisions
relative to the SIP. These sections establish procedures for making
revisions to the "permit." However, these provisions are not consistent
with either the Clean Air Act or EPA's implementing regulations for NSR.
Conceptually, a permit to construct is required whenever a new source is
constructed or an existing source is modified. The permit to construct
must contain all requirements necessary to ensure that air quality is
protected for that particular [project]{.underline}, i.e., for that new
source or modification. If a source is added, or an existing unit is
modified again, it needs a new NSR permit to construct. However, it
appears that these sections are intended to have the NSR permit be a de
facto operating permit. If a facility wants to make a physical change or
a change in the method of operation does it apply for a modification of
an existing NSR permit or does it apply for a new NSR permit? If a PSD
permit can be modified to account for a "change", what changes, outside
of NSR related changes, are anticipated by these sections? It is
important to point out that with the addition of these provisions,
Virginia now has six different permit programs: Title V (Articles 1, 2,
3 and 4), State Operating Permits (Article 5), Permits for New and
Modified Stationary Sources (Article 6), Permits for New and
Reconstruction Major Sources of HAPs (Article 7), Permits for Major
Stationary Sources and Modifications -- PSD Areas (Article 8), and
Permits for Major Stationary Sources and Modifications -- Nonattainment
Areas. Each of these has its own administrative procedures for permit
modifications, permit consolidation, etc. How does a facility really
know if it needs to modify an existing permit in order to make a change,
and if so, which one. Or does a facility have to apply for a new permit
for the modification plus all of the other existing activities at a
source? Since these questions are not readily answered by the plain text
of the regulations, EPA will need a lot of clarification as to (1) what
types of changes require a new permit versus a modification of an
existing permit; (2) what safeguards are in place to assure that
facilities know when they need to perform an NSR applicability
determination and when a permit application for a new project is
required.

**[RESPONSE]{.underline}:** Provisions have been added that would ensure
that permit change provisions are not used to address situations that
would require a new permit.

82\. **[SUBJECT]{.underline}:** Clarifications/correction of
typographical errors.

**[COMMENTER]{.underline}:** U.S. EPA

**[TEXT]{.underline}:** Article 9: Definition of "actual emissions"
should read "through c" and not "d." Definition of "regulated NSR
pollutant" refers to "1 and 2" but should read "a and b." 9 VAC
5-80-2020 B and C appear to be redundant.

**[RESPONSE]{.underline}:** These comments are acceptable and
appropriate changes reflecting the intent of the comment have been made
to the proposal.

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