# STATE OF NORTH CAROLINA

DEPARTMENT OF ENVIRONMEN T AND NATURAL RESOURCES DIVISION OF AIR QUALITY

REPORT OF PROCEEDINGS OF PUBLIC HEARING

ON PROPOSED AMENDMENT TO

RULES 15A NCAC 02D . 0530, PREVENTION OF

SIGNIFICANT DETERIORATION AND 15A NCAC 02D .0531, SOURCE S IN NONATTAINMENT AREAS (NSR AND PSD NOx SIGNIFICANCE LEVEL FOR PM2.5 AND PM2.5 INCREMENTS)

JANUARY 15, 2013 KANNAPOLIS, NC

ENVIRONMENTAL MANAGEMENT COMMISSION

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## CONTENTS

CHAPTER I Summaries and Recommendations I-1

Background and Summary I-1

Comments and Responses Thereto I-2

Summary of Comments and Responses I-4

Conclusion I-4

Hearing Officers’ Recommendation I-5

CHAPTER II Rules Proposed for Adoption II-1

CHAPTER III Report of Proceedings III-1

Introduction III-1

Designation of Hearing Officer III-2

Public Notice III-3

Transcript III-5

CHAPTER IV Exhibits IV- 1

Proposed Rules as Presented at the Hearing

IV-2 Hearing Officer Comments at Hearing IV-10

CHAPTER V Written Comments Du ring Comment Period V-1

CHAPTER VI Attachments VI-1

CHAPTER VII Documentation VII-1

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## I-1

CHAPTER I

Summaries and Recommendations

Proposed amendment to Rules 15A NCAC 02D .0530 and .0531.

BACKGROUND AND SUMMARY

A public hearing was held in Kannapolis, NC on January 15, 2013, to take public comments on amendments to 15A NCAC 02D .0530 and .0531. Mr. Benne Hutson was appointed and acted as the hearing officer for th is hearing.

The EMC amended the New Source Review (NSR) and Prevention of Significant Deterioration (PSD) permitting rules in 2010 to establish the significance level for nitrogen oxides (NO

x 

## ) for fine particulate matter in North Carolina at 140 tons per year (tpy). Fine Particula te Matter ( PM 2.5 

## ) is particles less than 2.5 micrometers in diameter and is interchangeably referred to as "fine" particles. This significance level was based on monitoring and modeling data indicating

that NO

x 

## is a lessor contributor to the formation of PM 2.5 

## than sulfur dioxide (SO 2 

## ). As part of its rule review of North Carolina’s state implementation plan (SIP), the United States Environmental Protection Agency (EPA) has determined that, while the federal rule allows for a

demonstration that NO

x 

## is not a significant precursor to formation of PM 2.5 

## , there is not an allowance for states to establish an alternate significance level. As a result, the state significance level must be revised to reflect the federal 40 tpy significance level in the EPA PM 2.5 

## Implementation Rule.

In 2010, the EPA added PM 2.5 

## increments under the program. An increment is the maximum allowable increase in ambient pollutant concentration. Federal increments were established for 24-hour and annual averaging periods in Class I, Class II and Class III areas. Adoption of these federal increments is required in order for the EPA to approve North Carolina’s SIP. The current date of incorporation in the state rule needs to be updated to reflect the current PM 2.5 

## increments for the current annual and 24-hour NAAQS established by the EPA.

15A NCAC 02D .0530, Prevention of Significant Deterioration, is proposed for amendment to
revise North Carolina’s NO

x 

## significance level from 140 tons per year to 40 tons per year and to update the federal cross-reference to reflect the current federal increments for PM 2.5



## .

15A NCAC 02D .0531 Sources in Nonattainment Areas, is proposed for amendment to revise
North Carolina’s NO

x 

## significance level from 140 tons per year to 40 tons per year.

During the public comment period, there were two court decisions that were issued on the implementation of PM 2.5 

## regulations. The first court decision was the U.S. Court of Appeals for the District of Columbia Circuit, January 4, 2013, Sierra Club vs. EPA, No. 08-1250. The court

reviewed of the PM 2.5 

## Implementation Rule, 72 FR 20586 (4/25/2007) and PM 2.5 

## NSR Implementation Rule, 73 FR 28321 (5/16, 2008). The petitioners challenge was EPA decision to promulgate its PM 2.5 

## im plementation rules pursuant to Subpart 1 of Part D of Title I which

## I-2

contains the implementation provisions for nonattainment areas in general rather than Subpart 4 of Part D of Title I which contains implementation provisions specific to PM 10 

## . Subpart 4 is specific to PM 10 

## . The court decision remanded the two implementation rules to EPA to repromulgate them pursuant to Subpart 4 of Part D of Title I of the Clean Air Act.

The second court decision was the U.S Court of Appeals for the District of Columbia Circuit, January 22, 2013, National Resources Defense Council and Sierra Club vs. EPA, No. 10-1413.

The court review ed of the PM 2.5 

## Increments, Significant Impact Levels (SIL) and Significant Monitoring Concentration (SMC) final rule in 75 FR 64864 (October 20, 2010). Specifically, the

court review ed the adoption of the SIL and SMC screening tools EPA uses to determine whether a new source may be exempted from certain requirements under 40 CFR 51.165, Permit requirements.

The SILs sets a de minimis ambient impact where a source’s impact that is below a SIL is not

re quired to conduct more extensive modeling to demonstrate its emission will not contribute to a violation of the NAAQS. The SMC sets a de minimis concentration where a source can show through modeling that its impacts are less than the SMC, eliminating the requirement to collect additional monitoring data. The court decision vacated and remanded the SILs under 40 CFR 51.166(k)(2) and 40 CFR 52.21(k)(2) for further consideration by EPA. The decision also vacated the parts of the rule establishing the SMCs due to EPA exceeding its statutory authority.

The court decisions are included in Chapter VI of the hearing record.

PUBLIC COMMENTS AND RESPONSES THERETO

Comment: Mr. Huncik comment ed that incorporation by reference of the October 20, 2010 Rule as proposed under 15A NCAC 2D .0530(v) should be delayed or revised due to the recent US Court of Appeals for the DC Circuit decision (attached) which directly affects the implementation of the PM 2.5 

## standard. Specifically, EPA has contended that PM 2.5 

## should be treated as a "new pollutant" with new baseline dates. However, the Court refuted this approach in their January 4, 2013 decision. Therefore, the incorporation by reference of the October 20,

2010 Rule which sets a new PM 2.5 

## trigger date and baseline dates is not consistent with the CAA and with the Court's decision. It is important to note that in 1998 the EPA handled PM 10 

## consistent with the CAA when they retained the original 1977 baseline date for particulate.

Mr. Huncik also commented that in the October 20, 2010 preamble, EPA stated that "..For early minor source baseline dates...establishing the emissions inventory for PM 2.5 

## would be extremely difficult, cumbersome, and potentially inaccurate..." However, difficulty in acquiring or developing data is not specific enough for such a significant rule change (i.e., change in trigger date and baseline dates). EPA must adhere to basic standards, including gathering and sharing supporting policy- re levant data, that it bases regulatory changes on. In addition, statements or bases provided in a preamble do not constitute binding, final agency action, except in some unique cases.

## I-3

Response: North Carolina Division of Air Quality (DAQ) recommends not adopting the October 20, 2010 EPA rule amendments by incorporation by reference at this time and leaving the May 16, 2008 prehearing incorporation by reference date unchanged. North Carolina DAQ will review EPA’s resolution to the January 4, 2013 US Court of Appeals for the DC Circuit decision when EPA repromulg ates its rules pursuant to Subpart 4 consistent with the court’s opinion.

Comment: R. Scott Davis of the EPA comment ed that the October 20, 2010, incorporation by reference date for 15A NCAC 02D .0530 does not capture the EPA's October 2012 final rule to amend the definition of "regulated NSR pollutant" promulgated in the 2008 NSR PM 2.5 

## Rule regarding the PM condensable provision at 40 CFR 51.166(b)(49)(vi), 52.21(b)(50)(i) and the EPA's Emissions Offset Interpretative Ruling (See 77 FR 15656). The rulemaking removed the inadvertent requirement in the NSR PM 2.5 

## Rule that the measurement of condensable "particulate matter emissions" be included as part of the measurement and regulation of "particulate matter emissions." The EPA suggests NC DENR provide a clarification letter indicating the department's intentions regarding the term "particulate matter emissions" for the definition of "regulated NSR pollutant" concerning condensable emissions.

Response: North Carolina DAQ defines particulate matter, PM 10 

## , and PM 2.5 

## in Rule 15A 02D .0101, Definitions. North Carolina DAQ relies on the test methods in Rule 15A NCAC 02D .2609, Particulate Testing Methods, to determine the measurement of specific particulate matter pollutants. North Carolina DAQ will include a clarification letter with its SIP submittal.

Comment: R. Scott Davis of the EPA comment ed that regarding the North Carolina Department of Environment and Natural Resources proposed State Implementation Plan (SIP) revision at 15A NCAC 02D .0530 to incorporate by reference (IBR) the PM 2.5 

## SILs at 40 CFR 52.21(k)(2) and Significant Monitoring Concentration at 52.21(i)(5), the U.S . Environmental Protection Agency's authority to implement the PM 2.5 

## SILs and SMC for PSD purposes as promulgated in the October 20, 2010, was challenged by the Sierra Club, Sierra Club v. EPA, Case No 10-1413 (D.C. Circuit). On January 22, 2013 , the court issued an order vacating and remanding to the EPA for further consideration the portions of its 2010 rule addressing the PM 2.5 

## SILs, except for the parts codifying the PM 2.5 

## SILs in the NSR rule at 40 CFR 51.165(b)(2) . The court also vacated the parts of the 2010 rule establishing the PM 2.5 

## SMC on the grounds that those parts of the rule exceed the EPA's statutory authority. Due to the court's decision, the EPA cannot approve any SIP submission containing the parts of the state's PSD regulations authorizing the PM 2.5 

## SILs and SMC that are consistent with the PSD regulations at 40 CFR 51.166 and 52.21 which the court has vacated. Accordingly, the EPA recommends that NC DENR not continue with rulemaking on these two provisions.

Response: North Carolina DAQ recommends not continuing with rulemaking on these two provisions at this time. The rulemaking also includ es amending the NO

x 

## significance level for

PM 2.5 

## from 140 tons per year in the current rule to 40 tons per year that is specified in 40 CFR 51.166(b)(23)(i) and the adding the PM 2.5 

## increments that were adopted by EPA in 40 CFR 51.166(c)(1) in its October 20, 2010 (75 FR 64864) rulemaking. The proposed rule incorporated

the PM 2.5 

## increments by reference. Due to the Court Decision on January 22, 2013 vacating and remanding the PM 2.5 

## SILs and SMC, North Carolina DAQ recommends leaving the May 16,

## I-4

2008 incorporation by reference date unchanged and explicitly adding the PM 2.5 

## and PM 10 

## increments as indicators of particulate matter as Paragraph (v) of the 15A NCAC 02D .0530 since increments are a required element for an approvable SIP.

Comment: R. Scott Davis of the EPA comment ed that NC DENR's current proposed revision at 15A NCAC 02D .0530 to update the IBR date of 40 CFR 52.21 to October 20, 2010, does not include the May 18, 2011 (76 FR 28646) repeal of the PM 2.5 

## grandfathering provision at 40 CFR 52.21(i)(l)(xi). The repeal ended the use of the 1997 PM 10 

## Surrogate Policy for PSD permits under the federal PSD program at 40 CFR 52.21. The current version of 15A NCAC 02D .0530 proposed for revision includes the 2008 grandfather provision. The EPA will not take action to approve the grandfathering provision into the North Carolina SIP in accordance with the May 18, 2011 repeal.

Re sponse: The North Carolina rule does not reference the grandfathering provision in 40 CFR 52.21(i)(1)(xi). North Carolina has an approved program under 40 CFR 51.166. 40 CFR 52.21 contains requirements implementing PSD provisions for States without an EPA-approved SIP. Therefore NC is not required to incorporate the May 18, 2011 repeal of the grandfathering provision in 40 CFR 52.21 since the provisions of 40 CFR 51.166 apply to the North Carolina PSD program and its rule does not reference 40 CFR 52.21.

SUMMARY OF COMMENTS AND RESPONSES

Comments Response Delay or revise the incorporation by reference date of October 20, 2010 due to the US Court of Appeals for the DC Circuit decision on January 4,

2013. Amend the proposed rule to remove the incorporation by reference date of October 20, 2010 and keep the prehearing May 16, 2008 incorporation by reference date. Discontinue rulemaking on PM 2.5 

## SILs and SMC. Incorporate May 16, 2008 version of CFR. Add

PM 2.5 

## increments to the rule explicitly instead of incorporation by reference of the October 20,

201 0 EPA final rule containing SILs and SMC

. Clarify “particulate matter emissions” for the definition of "regulated NSR pollutant" concerning condensable emiss ions Send c larification letter on particulate matter

with SIP submittal.

Proposed rule does not include the May 18, 2011

PM 2.5 

## grandfathering provision repeal in 40 CFR 52.21(i)(l)(xi)

. North Carolina does not reference this grandfathering provision in its rules. No change

in rule.

CONCLUSION

Two people commented on the proposed rules. During the comment period, there were also two U.S. Court of Appeals decisions that affected the EPA’s implementation of PM 2.5 

## regulations.

## I-5

One person commented that the North Carolina Division of Air Quality (DAQ) delay or revise the October 20, 2010 incorporation by reference date in the proposed rule. One person requested that DAQ not continue rulemaking on adding the significant impact levels and significant monitoring concentration provisions to North Carolina PSD regulations. The proposed rule was amended to remove the incorporation by reference date of October 20, 2010 and keep the prehearing May 16, 2008 incorporation by reference date. DAQ also explicitly added the PM 2.5 

## and PM 10 

## increments as indicators of particulate matter in Paragraph (v) of Rule 15A NCAC 02D .0530 since increments are a required element for an approvable SIP.

One perso n asked DAQ to clarify “particulate emissions” in the definition of “regulated NSR pollutant” since Rule 15A NCAC 02D .0530 does not capture EPA’s October 25, 2012 final rule amending the definition of “regulated NSR pollutant. DAQ relies on the test metho ds in Rule 15A NCAC 02D .2609 to determine the measurement of specific particulate matter pollutants. North Carolina DAQ will include a clarification letter with its SIP submittal.

One person commented that the proposed rule does not include the May 18, 2011 PM 2.5 

## grandfathering provision repeal in 40 CFR 52.21(i)(l)(xi). DAQ does not reference this grandfathering provision in its rules. No changes were made in the proposed rule.

The fiscal impact of SILs and SMC provisions in EPA’s October 20, 2010 fina l PM 2.5 

## implementation rule were included in the fiscal note for the proposed PSD rule. EPA’s SILs and SMC provisions were vacated by the January 22, 2013 U.S. Court of Appeals decision. Removing the SILs and SMC from DAQ’s proposed rule did not change th e fiscal impact calculations in the approved fiscal note.

HEARING OFFICERS ’ RECOMMENDATION

The Hearing Officers recommend that the proposed amendment as presented in Chapter II of this hearing report be adopted by the Environmental Management Commission.

## I-6

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### II -1

CHAPTER II 1

2

15A NCA 02D .0530 is proposed for amendment with changes as follows: 3

4

15A NCAC 02D .0530 PREVENTION OF SIGNIFICANT DETERIORATION 5

(a) The purpose of the Rule is to implement a program for the prevention of significant deterioration of air quality 6

as required by 40 CFR 51.166. 7

(b) For the purposes of this Rule the definitions contained in 40 CFR 51.166(b) and 40 CFR 51.301 apply except 8

the definition of "baseline actual emissions." For the purposes of this Rule: 9

(1) "Baseline actual emissions" means the rate of emissions, in tons per year, of a regulated new 10

source review (NSR) pollutant, as determined in accordance with Parts (A) through (C) of this 11

Subparagraph: 12

(A) For an existing emissions unit, baseline actual emissions means the average rate, in tons 13

per year, at which the emissions unit actually emitted the pollutant during any 14

consecutive 24-month period selected by the owner or operator within the 5-year period 15

immediately preceding the date that a complete permit application is received by the 16

Division for a permit required under this Rule. The Director shall allow a different time 17

period, not to exceed 10 years immediately preceding the date that a complete permit 18

application is received by the Division, if the owner or operator demonstrates that it is 19

more representative of normal source operation. For the purpose of determining baseline 20

actual emissions, the following appl y: 21

(i) The average rate shall include fugitive emissions to the extent quantifiable, and 22

emissions associated with startups, shutdowns, and malfunctions; 23

(ii) The average rate shall be adjusted downward to exclude any non-compliant 24

emissions that occurred while the source was operating above any emission 25

limitation that was legally enforceable during the consecutive 24-month period; 26

(iii) For an existing emission unit (other than an electric utility steam generating 27

unit), the average rate shall be adjusted downward to exclude any emissions that 28

would have exceeded an emission limitation with which the major stationary 29

source must currently comply. However, if the State has taken credit in an 30

attainment demonstration or maintenance plan consistent with the requirements 31

of 40 CFR 51.165(a)(3)(ii)(G) for an emission limitation that is part of a 32

maximum achievable control technology standard that the Administrator 33

proposed or promulgated under part 63 of the Code of Federal Regulations, the 34

baseline actual emissions shall be adjusted to account for such emission 35

reductions; 36

### II -2

(iv) For an electric utility steam generating unit, the average rate shall be adjusted 1

downward to reflect any emissions reductions under G.S. 143-215.107D and for 2

which cost recovery is sought pursuant to G.S. 62-133.6; 3

(v) For a regulated NSR pollutant, when a project involves multiple emissions units, 4

only one consecutive 24-month period shall be used to determine the baseline 5

actual emissions for all the emissions units being changed. A different 6

consecutive 24-month period for each regulated NSR pollutant can be used for 7

each regulated NSR pollutant; and 8

(vi) The average rate shall not be based on any consecutive 24-month period for 9

which there is inadequate information for determining annual emissions, in tons 10

per year, and for adjusting this amount if required by Subparts (ii) and (iii) of 11

this Part; 12

(B) For a new emissions unit, the baseline actual emissions for purposes of determining the 13

emissions increase that will result from the initial construction and operation of such unit 14

shall equal zero; and thereafter, for all other purposes, shall equal the unit's potential to 15

emit; and 16

(C) For a plantwide applicability limit (PAL) for a stationary source, the baseline actual 17

emissions shall be calculated for existing emissions units in accordance with the 18

procedures contained in Part (A) of this Subparagraph, and for a new emissions unit in 19

accordance with the procedures contained in Part (B) of this Subparagraph; 20

(2) In the definition of "net emissions increase," the reasonable period specified in 40 CFR 21

51.166(b)(3)(ii) is seven years; 22

(3) The limitation specified in 40 CFR 51.166(b)(15)(ii) does not apply; and 23

(4) Particulate matter PM 2.5 

### significant levels in 40 CFR 51.166(b)(23)(i) are incorporated by 24

reference except as otherwise provided in this Rule. A net emission increase or the potential of a 25

source to emit nitrogen oxide emissions shall be significant if the rate of emissions would equal or 26

exceed 140 tons per year. Sulfur dioxide and nitrogen oxides are precursor to PM 2.5 

### in all 27

attainment and unclassifiable areas. Volatile organic compounds and ammonia are not significant 28

precursors to PM 2.5



### . 29

(c) All areas of the State are classified as Class II except that the following areas are Class I: 30

(1) Great Smoky Mountains National Park; 31

(2) Joyce Kilmer Slickrock National Wilderness Area; 32

(3) Linville Gorge National Wilderness Area; 33

(4) Shining Rock National Wilderness Area; and 34

(5) Swanquarter National Wilderness Area. 35

(d) Redesignations of areas to Class I or II may be submitted as state proposals to the Administrator of the 36

Environmental Protection Agency (EPA), if the requirements of 40 CFR 51.166(g)(2) are met. Areas may be 37

### II -3

proposed to be redesignated as Class III, if the requirements of 40 CFR 51.166(g)(3) are met. Redesignations may 1

not, however, be proposed which would violate the restrictions of 40 CFR 51.166(e). Lands within the boundaries of 2

Indian Reservations may be redesignated only by the appropriate Indian Governing Body. 3

(e ) In areas designated as Class I, II, or III, increases in pollutant concentration over the baseline concentration shall 4

be limited to the values set forth in 40 CFR 51.166(c). 51.166(c) and Paragraph (v) of this Rule. However, 5

concentration of the pollutant shall not exceed standards set forth in 40 CFR 51.166(d). 6

(f) Concentrations attributable to the conditions described in 40 CFR 51.166(f)(1) shall be excluded in determining 7

compliance with a maximum allowable increase. However, the exclusions referred to in 40 CFR 51.166(f)(1)(i) or 8

(ii) shall be limited to five years as described in 40 CFR 51.166(f)(2). 9

(g) Major stationary sources and major modifications shall comply with the requirements contained in 40 CFR 10

51.166(i) and (a)(7) and by extension in 40 CFR 51.166(j) through (o) and (w). The transition provisions allowed by 11

40 CFR 52.21 (i)(11)(i) and (ii) and (m)(1)(vii) and (viii) are hereby adopted under this Rule. The minimum 12

requirements described in the portions of 40 CFR 51.166 referenced in this Paragraph are hereby adopted as the 13

requirements to be used under this Rule, except as otherwise provided in this Rule. Wherever the language of the 14

portions of 40 CFR 51.166 referenced in this Paragraph speaks of the "plan," the requirements described therein 15

shall apply to the source to which they pertain, except as otherwise provided in this Rule. Whenever the portions of 16

40 CFR 51.166 referenced in this Paragraph provide that the State plan may exempt or not apply certain 17

requirements in certain circumstances, those exemptions and provisions of nonapplicability are also hereby adopted 18

under this Rule. However, this provision shall not be interpreted so as to limit information that may be requested 19

from the owner or operator by the Director as specified in 40 CFR 51.166(n)(2). 20

(h) New natural gas-fired electrical utility generating units for which cost recovery is sought pursuant to G. S. 62- 21

133.6 shall install best available control technology for NO X 

### and SO 2 

### , regardless of applicability of the rest of this 22

Rule. 23

(i) 40 CFR 51.166(w)(10)(iv)(a) is changed to read: "If the emissions level calculated in accordance with Paragraph 24

(w)(6) of this Section is equal to or greater than 80 percent of the PAL [plant wide applicability limit] level, the 25

Director shall renew the PAL at the same level." 40 CFR 51.166(w)(10)(iv)(b) is not incorporated by reference. 26

(j) 15A NCAC 02Q .0102 and .0302 are not applicable to any source to which this Rule applies. The owner or 27

operator of the sources to which this Rule applies shall apply for and receive a permit as required in 15A NCAC 28

02Q .0300 or .0500. 29

(k) When a particular source or modification becomes a major stationary source or major modification solely by 30

virtue of a relaxation in any enforceable limitation which was established after August 7, 1980, on the capacity of 31

the source or modification to emit a pollutant, such as a restriction on hours of operation, then the provisions of this 32

Rule shall apply to the source or modification as though construction had not yet begun on the source or 33

modification. 34

(l) The provisions of 40 CFR 52.21(r)(2) regarding the period of validity of approval to construct are incorporated 35

by reference except that the term "Administrator" is replaced with "Director". 36

### II -4

(m) Volatile organic compounds exempted from coverage in 40 CFR 51.100(s) shall be exempted when calculating 1

source applicability and control requirements under this Rule. 2

(n) The degree of emission limitation required for control of any air pollutant under this Rule shall not be affected 3

by: 4

(1) that amount of a stack height, not in existence before December 31, 1970, that exceeds good 5

engineering practice; or 6

(2) any other dispersion technique not implemented before then. 7

(o) A substitution or modification of a model as provided for in 40 CFR 51.166(l) is subject to public comment 8

procedures in accordance with the requirements of 40 CFR 51.102. 9

(p) Permits may be issued on the basis of innovative control technology as set forth in 40 CFR 51.166(s)(1) if the 10

requirements of 40 CFR 51.166(s)(2) have been met, subject to the condition of 40 CFR 51.166(s)(3), and with the 11

allowance set forth in 40 CFR 51.166(s)(4). 12

(q) If a source to which this Rule applies impacts an area designated Class I by requirements of 40 CFR 51.166(e), 13

notice to EPA shall be provided as set forth in 40 CFR 51.166(p)(1). If the Federal Land Manager presents a 14

demonstration described in 40 CFR 51.166(p)(3) during the public comment period or public hearing to the Director 15

and if the Director concurs with this demonstration, the permit application shall be denied. Permits may be issued on 16

the basis that the requirements for variances as set forth in 40 CFR 51.166(p)(4), (p)(5) and (p)(7), or (p)(6) and 17

(p)(7) have been satisfied. Pursuant to 40 CFR 51.166(p)(4), Class I Variances, the maximum allowable increases in 18

micrograms per cubic meter over minor source baseline concentration for particulate matter are as follows: 19

Class I variances

– Particulate Matter

Indicator Averaging Period micrograms per cubic meter

PM 2.5 

### Annual arithmetic mean 4

PM 2.5 

### 24 hour maximum 9

PM 10 

### Annual arithmetic mean 17

PM 10 

### 24 hour maximum 30

20

(r) A permit application subject to this Rule shall be processed in accordance with the procedures and requirements 21

of 40 CFR 51.166(q). Within 30 days of receipt of the application, applicants shall be notified if the application is 22

complete as to initial information submitted. Commencement of construction before full prevention of significant 23

deterioration approval is obtained constitutes a violation of this Rule. 24

(s) Approval of an application with regard to the requirements of this Rule does not relieve the owner or operator of 25

the responsibility to comply with applicable provisions of other rules of this Subchapter or Subchapter 02Q of this 26

Title and any other requirements under local, state, or federal law. 27

(t) When a source or modification is subject to this Rule the following procedures apply: 28

(1) Notwithstanding any other provisions of this Paragraph, the Director shall, no later than 60 days 29

after receipt of an application, notify the Federal Land Manager with the U.S. Department of 30

### II -5

Interior and U.S. Department of Agriculture of an application from a source or modification 1

subject to this Rule; 2

(2) When a source or modification may affect visibility of a Class I area the Director shall provide 3

written notification to all affected Federal Land Managers within 30 days of receiving the permit 4

application or within 30 days of receiving advance notification of an application. The notification 5

shall be at least 30 days prior to the publication of notice for public comment on the application. 6

The notification shall include a copy of all information relevant to the permit application including 7

an analysis provided by the source of the potential impact of the proposed source on visibility; 8

(3) The Director shall consider any analysis concerning visibility impairment performed by the 9

Federal Land Manager if the analysis is received within 30 days of notification. If the Director 10

finds that the analysis of the Federal Land Manager fails to demonstrate to his satisfaction that an 11

adverse impact on visibility will result in the Class I area, the Director shall provide in the notice 12

of public hearing on the application, an explanation of his decision or notice as to where the 13

explanation can be obtained; and 14

(4) The Director may require monitoring of visibility in or around any Class I area by the proposed 15

new source or modification when the visibility impact analysis indicates possible visibility 16

impairment. 17

(u) If the owner or operator of a source is using projected actual emissions to avoid applicability of prevention of 18

significant deterioration requirements, the owner or operator shall notify the Director of the modification before 19

beginning actual construction. The notification shall include: 20

(1) a description of the project; 21

(2) identification of sources whose emissions could be affected by the project; 22

(3) the calculated projected actual emissions and an explanation of how the projected actual emissions 23

were calculated, including identification of emissions excluded by 40 CFR 51.166(b)(40)(ii)(c); 24

(4) the calculated baseline actual emissions and an explanation of how the baseline actual emissions 25

were calculated; and 26

(5) any netting calculations if applicable. 27

If upon reviewing the notification, the Director finds that the project will cause a prevention of significant 28

deterioration evaluation, then the Director shall notify the owner or operator of his findings. The owner or operato r 29

shall not make the modification until it has received a permit issued pursuant to this Rule. If a permit revision is not 30

required pursuant to this rule, the owner or operator shall maintain records of annual emissions in tons per year, on a 31

calendar year basis related to the modifications for 10 years following resumption of regular operations after the 32

change if the project involves increasing the emissions unit's design capacity or its potential to emit the regulated 33

NSR pollutant; otherwise these records shall be maintained for five years following resumption of regular operations 34

after the change. The owner or operator shall submit a report to the director within 60 days after the end of each year 35

during which these records must be generated. The report shall contain the items listed in 40 CFR 51.166(r)(6)(v)(a) 36

### II -6

through (c). The owner or operator shall make the information documented and maintained under this Paragraph 1

available to the Director or the general public pursuant to the requirements in 40 CFR 70.4(b)(3)(viii). 2

(v) Increments. For particulate matter, the maximum allowable increase s in micrograms per cubic meter over the 3

baseline concentration for areas classified as Class I, Class II and Class III shall be as follows: 4

5

Increments

- Particulat e Matter

Indicator Averaging Period Class I Class II Class III

PM 2.5 

### Annual arithmetic mean 1 4 8

PM 2.5 

### 24 hour maximum 2 9 18

PM 10 

### Annual arithmetic mean 4 17 34

PM 10 

### 24 hour maximum 8 30 60

6

(v) (w) The references to the Code of Federal Regulations (CFR) in this Rule are incorporated by reference unless a 7

specific reference states otherwise. The version of the CFR incorporated in this Rule is that as of May 16, 2008 at 8

http://www.gpo.gov/fdsys/pkg/FR- 2008

- 05 -16/pdf/E8-10768.pdf [October 20, 2010 at 9

http://www.gpo.gov/fdsys/pkg/FR

- 2010

- 10

- 20/pdf/2010

- 251 32.pdf ] and does not include any subsequent 10

amendments or editions to the referenced material. 11

12

History Note: Authority G.S. 143-215.3(a)(1); 143-215.107(a)(3); 143-215.107(a)(5); 143-215.107(a)(7); 143- 13

215.108(b); 150B-21.6; 14

Eff. June 1, 1981; 15

Amended Eff. December 1, 1992; August 1, 1991; October 1, 1989; July 1, 1988; October 1, 16

1987; June 1, 1985; January 1, 1985; February 1, 1983; 17

Temporary Amendment Eff. March 8, 1994, for a period of 180 days or until the permanent rule is 18

effective, whichever is sooner; 19

Amended Eff. ; January 2, 2011; September 1, 2010; May 1, 2008; July 28, 2006; July 20

1, 1997; February 1, 1995; July 1, 1994. 21

22

15A NCA 02D .0531 is proposed for amendment as follows: 23

24

15A NCAC 02D .0531 SOURCES IN NONATTAINMENT AREAS 25

(a) For the purpose of this Rule the definitions contained in 40 CFR 51.165(a)(1) and 40 CFR 51.301 apply except 26

the definition of "baseline actual emissions." For the purposes of this Rule: 27

(1) "Baseline actual emissions" means the rate of emissions, in tons per year, of a regulated new 28

source review (NSR) pollutant, as determined in accordance with Parts (A) through (C) of this 29

Subparagraph: 30

### II -7

(A) For an existing emissions unit, baseline actual emissions means the average rate, in tons 1

per year, at which the emissions unit actually emitted the pollutant during any 2

consecutive 24-month period selected by the owner or operator within the 5-year period 3

immediately preceding the date that a complete permit application is received by the 4

Division for a permit required under this Rule. The Director shall allow a different time 5

period, not to exceed 10 years immediately preceding the date that a complete permit 6

application is received by the Division, if the owner or operator demonstrates that it is 7

more representative of normal source operation. For the purpose of determining baseline 8

actual emissions, the following apply: 9

(i) The average rate shall include fugitive emissions to the extent quantifiable, and 10

emissions associated with startups, shutdowns, and malfunctions; 11

(ii) The average rate shall be adjusted downward to exclude any non-compliant 12

emissions that occurred while the source was operating above any emission 13

limitation that was legally enforceable during the consecutive 24-month period; 14

(iii) For an existing emission unit (other than an electric utility steam generating 15

unit), the average rate shall be adjusted downward to exclude any emissions that 16

would have exceeded an emission limitation with which the major stationary 17

source must currently comply. However, if the State has taken credit in an 18

attainment demonstration or maintenance plan consistent with the requirements 19

of 40 CFR 51.165(a)(3)(ii)(G) for an emission limitation that is part of a 20

maximum achievable control technology standard that the Administrator 21

proposed or promulgated under part 63 of the Code of Federal Regulations, the 22

baseline actual emissions shall be adjusted to account for such emission 23

reductions; 24

(iv) For an electric utility steam generating unit, the average rate shall be adjusted 25

downward to reflect any emissions reductions under G.S. 143-215.107D and for 26

which cost recovery is sought pursuant to G.S. 62-133.6; 27

(v) For a regulated NSR pollutant, when a project involves multiple emissions units, 28

only one consecutive 24-month period shall be used to determine the baseline 29

actual emissions for all the emissions units being changed. A different 30

consecutive 24-month period for each regulated NSR pollutant; and 31

(vi) The average rate shall not be based on any consecutive 24-month period for 32

which there is inadequate information for determining annual emissions, in tons 33

per year, and for adjusting this amount if required by Subparts (ii) and (iii) of 34

this Part; 35

(B) For a new emissions unit, the baseline actual emissions for purposes of determining the 36

emissions increase that will result from the initial construction and operation of such unit 37

### II -8

shall equal zero; and thereafter, for all other purposes, shall equal the unit's potential to 1

emit; and 2

(C) For a plantwide applicability limit (PAL) for a stationary source, the baseline actual 3

emissions shall be calculated for existing emissions units in accordance with the 4

procedures contained in Part (A) of this Subparagraph, and for a new emissions unit in 5

accordance with the procedures contained in Part (B) of this Subparagraph; 6

(2) In the definition of "net emissions increase," the reasonable period specified in 40 CFR 7

51.165(a)(1)(vi)(C)(1) is seven years; and 8

(3) Particulate matter PM 2.5 

### significant levels in 40 CFR 51.165(a)(1)(x)(A) are incorporated by 9

reference except as otherwise provided in this Rule. A net emission increase or the potential of a 10

source to emit nitrogen oxide emissions shall be significant if the rate of emissions would equal or 11

exceed 140 tpy. Sulfur dioxide and nitrogen oxides are precursor to PM 2.5 

### in all nonattainment 12

areas. Volatile organic compounds and ammonia are not significant precursors to PM 2.5



### . 13

(b) Redesignation to Attainment. If any county or part of a county to which this Rule applies is later designated in 14

40 CFR 81.334 as attainment, all sources in that county subject to this Rule before the redesignation date shall 15

continue to comply with this Rule. 16

(c) Applicability. 40 CFR 51.165(a)(2) is incorporated by reference. This Rule applies to areas designated as 17

nonattainment in 40 CFR 81.334, including any subsequent amendments or editions. 18

(d) This Rule is not applicable to: 19

(1) complex sources of air pollution regulated only under Section .0800 of this Subchapter and not 20

under any other rule in this Subchapter; 21

(2) emission of pollutants at the new major stationary source or major modification located in the 22

nonattainment area that are pollutants other than the pollutant or pollutants for which the area is 23

nonattainment. (A major stationary source or major modification that is major for volatile organic 24

compounds or nitrogen oxides is also major for ozone.); 25

(3) emission of pollutants for which the source or modification is not majo r; 26

(4) a new source or modification that qualifies for exemption under the provision of 40 CFR 27

51.165(a)(4); or 28

(5) emission of compounds listed under 40 CFR 51.100(s) as having been determined to have 29

negligible photochemical reactivity except carbon monoxide. 30

(e) 15A NCAC 02Q .0102 and .0302 are not applicable to any source to which this Rule applies. The owner or 31

operator of the source shall apply for and receive a permit as required in 15A NCAC 02Q .0300 or .0500. 32

(f) To issue a permit to a source to which this Rule applies, the Director shall determine that the source meets the 33

following requirements: 34

(1) The new major stationary source or major modification will emit the nonattainment pollutant at a 35

rate no more than the lowest achievable emission rate; 36

### II -9

(2) The owner or operator of the proposed new major stationary source or major modification has 1

demonstrated that all major stationary sources in the State that are owned or operated by this 2

person (or any entity controlling, controlled by, or under common control with this person) are 3

subject to emission limitations and are in compliance, or on a schedule for compliance that is 4

federally enforceable or contained in a court decree, with all applicable emission limitations and 5

standards of this Subchapter that EPA has authority to approve as elements of the North Carolina 6

State Implementation Plan for Air Quality; 7

(3) The owner or operator of the proposed new major stationary source or major modification will 8

obtain sufficient emission reductions of the nonattainment pollutant from other sources in the 9

nonattainment area so that the emissions from the new major source and associated new minor 10

sources will be less than the emissions reductions by a ratio of at least 1.00 to 1.15 for volatile 11

organic compounds and nitrogen oxides and by a ratio of less than one to one for carbon 12

monoxide. The baseline for this emission offset shall be the actual emissions of the source from 13

which offset credit is obtained. Emission reductions shall not include any reductions resulting 14

from compliance (or scheduled compliance) with applicable rules in effect before the application. 15

The difference between the emissions from the new major source and associated new minor 16

sources of carbon monoxide and the emission reductions shall be sufficient to represent reasonable 17

further progress toward attaining the National Ambient Air Quality Standards. The emissions 18

reduction credits shall also conform to the provisions of 40 CFR 51.165(a)(3)(ii)(A) through (G) 19

and (J); and 20

(4) The North Carolina State Implementation Plan for Air Quality is being carried out for the 21

nonattainment area in which the proposed source is located. 22

(g) New natural gas-fired electrical utility generating units for which cost recovery is sought pursuant to G. S. 62- 23

133.6 shall install lowest achievable emission rate technology for NO X 

### and SO 2 

### , regardless of the applicability of the 24

rest of this Rule. 25

(h) 40 CFR 51.165(f) is incorporated by reference except that 40 CFR 51.165(f)(10)(iv)(A) is changed to read: "If 26

the emissions level calculated in accordance with Paragraph (f)(6) of this Section is equal to or greater than 80 27

percent of the PAL level, the Director shall renew the PAL at the same level." 40 CFR 51.165(f)(10)(iv)(B) is not 28

incorporated by referenc e. 29

(i) When a particular source or modification becomes a major stationary source or major modification solely by 30

virtue of a relaxation in any enforceable limitation established after August 7, 1980, on the capacity of the source or 31

modification to emit a pollutant, such as a restriction on hours of operation, then the provisions of this Rule shall 32

apply to the source or modification as though construction had not yet begun on the source or modification. 33

(j) To issue a permit to a source of a nonattainment pollutant, the Director shall determine, in accordance with 34

Section 173(a)(5) of the Clean Air Act and in addition to the other requirements of this Rule, that an analysis 35

(produced by the permit applicant) of alternative sites, sizes, production processes, and environmental control 36

### II

- 10

techniques for the source demonstrates that the benefits of the source significantly outweigh the environmental and 1

social costs imposed as a result of its location, construction, or modification. 2

(k) The provisions of 40 CFR 52.21(r)(2) regarding the period of validity of approval to construct are incorporated 3

by reference except that the term "Administrator" is replaced with "Director". 4

(l) Approval of an application regarding the requirements of this Rule does not relieve the owner or operator of the 5

responsibility to comply with applicable provisions of other rules of this Chapter and any other requirements under 6

local, state, or federal law. 7

(m) Except as provided in 40 CFR 52.28(c)(6), for a source or modification subject to this Rule the following 8

procedures shall be followed: 9

(1) Notwithstanding any other provisions of this Paragraph, the Director shall, no later than 60 days 10

after receipt of an application, notify the Federal Land Manager with the U.S. Department of 11

Interior and U.S. Department of Agriculture of an application from a source or modification 12

subject to this Rule; 13

(2) The owner or operator of the source shall provide an analysis of the impairment to visibility that 14

would occur because of the source or modification and general commercial, industrial and other 15

growth associated with the source or modification; 16

(3) When a source or modification may affect the visibility of a Class I area the Director shall provide 17

written notification to all affected Federal Land Managers within 30 days of receiving the permit 18

application or within 30 days of receiving advance notification of an application. The notification 19

shall be at least 30 days before the publication of the notice for public comment on the application. 20

The notification shall include a copy of all information relevant to the permit application including 21

an analysis provided by the source of the potential impact of the proposed source on visibility; 22

(4) The Director shall consider any analysis concerning visibility impairment performed by the 23

Federal Land Manager if the analysis is received within 30 days of notification. If the Director 24

finds that the analysis of the Federal Land Manager fails to demonstrate to his satisfaction that an 25

adverse impact on visibility will result in the Class I area, the Director shall provide in the notice 26

of public hearing on the application, an explanation of his decision or notice where the explanation 27

can be obtained; 28

(5) The Director shall issue permits only to those sources whose emissions will be consistent with 29

making reasonable progress, as defined in Section 169A of the Clean Air Act, toward the national 30

goal of preventing any future, and remedying any existing, impairment of visibility in mandatory 31

Class I areas when the impairment results from manmade air pollution. In making the decision to 32

issue a permit, the Director shall consider the cost of compliance, the time necessary for 33

compliance, the energy and nonair quality environmental impacts of compliance, and the useful 34

life of the source; and 35

### II

- 11

(6) The Director may require monitoring of visibility in or around any Class I area by the proposed 1

new source or modification when the visibility impact analysis indicates possible visibility 2

impairment. 3

The requirements of this Paragraph do not apply to nonprofit health or nonprofit educational institutions. 4

(n) If the owner or operator of a source is using projected actual emissions to avoid applicability of nonattainment 5

new source review, the owner or operator shall notify the director of the modification before beginning actual 6

construction. The notification shall include: 7

(1) a description of the project; 8

(2) identification of sources whose emissions could be affected by the project; 9

(3) the calculated projected actual emissions and an explanation of how the projected actual emissions 10

were calculated, including identification of emissions excluded by 40 CFR 11

51.165(a)(1)(xxviii)(B)(3); 12

(4) the calculated baseline actual emissions and an explanation of how the baseline actual emissions 13

were calculated; and 14

(5) any netting calculations if applicable. 15

If upon reviewing the notification, the Director finds that the project will cause a nonattainment new source review 16

evaluation, then the Director shall notify the owner or operator of his findings. The owner or operator shall not make 17

the modification until it has received a permit issued pursuant to this Rule. If a permit revision is not required 18

pursuant to this Rule, the owner or operator shall maintain records of annual emissions in tons per year on a calendar 19

year basis related to the modifications for 10 years following resumption of regular operations after the change if the 20

project involves increasing the emissions unit's design capacity or its potential to emit the regulated NSR pollutant; 21

otherwise these records shall be maintained for five years following resumption of regular operations after the 22

change. The owner or operator shall submit a report to the director within 60 days after the end of each year durin g 23

which these records must be generated. The report shall contain the items listed in 40 CFR 51.165(a)(6)(v)(A) 24

through (C). The owner or operator shall make the information documented and maintained under this Paragraph 25

available to the Director or the general public pursuant to the requirements in 40 CFR 70.4(b)(3)(viii). 26

(o) The reference to the Code of Federal Regulations (CFR) in this Rule are incorporated by reference unless a 27

specific reference states otherwise. Except for 40 CFR 81.334, the version of the CFR incorporated in this Rule is 28

that as of May 16, 2008 and does not include any subsequent amendments or editions to the referenced material. 29

30

History Note: Authority G.S. 143-215.3(a)(1); 143-215.107(a)(5); 143-215.108(b); 31

Eff. June 1, 1981; 32

Amended Eff. December 1, 1993; December 1, 1992; August 1, 1991; December 1, 1989; October 33

1, 1989; July 1, 1988; October 1, 1987; June 1, 1985; January 1, 1985; February 1, 1983; 34

Temporary Amendment Eff. March 8, 1994 for a period of 180 days or until the permanent rule is 35

effective, whichever is sooner; 36

### II

- 12

Amended Eff. ; January 2, 2011; September 1, 2010; May 1, 2008; May 1, 2005; July 1, 1

1998; July 1, 1996; July 1, 1995; July 1, 1994. 2

3

4

## CHAPTER III

REPORT OF PROCEEDINGS

Introduction

The Department of Environmental and Natural Resources, Division of Air Quality, held a public hearing on January 15, 2013 at 6:00pm in the Kannapolis, NC.

The hearing considered the proposed amendment to Rules 15A NCAC 02D .0530, Prevention Of Significant Deterioration and 15A NCAC 02D .0531, Sources In Nonattainment Areas.

The proposed effective date for these rules is projected to be May 1, 2013.

A public notice announcing this hearing was mailed to each person on the official mailing list for rule-making hearings. The public notice was also published in the North Carolina Register at least 15 days before the public hearing and in the Charlotte Observer , the Wilmington Star News

, the Asheville Citizen Times , the Winston Salem Journal , and the Raleigh News and Observer at least 30 days prior to the public hearing.

## Transcript

A transcript of the January 15, 2013 hearing has not been prepared; however, an audio recording of the proceeding will be kept on file with the Division of Air Quality for one year from the date of the final actions by the Environmental Management Commission.

A list of those attending the hearing as follows:

Hearing Officer

Mr. Benne C. Hutson, member of the Environmental Management Commission

Staff Members

Ms. Joelle Burleson, DAQ, DENR Mr. Glenn Sappie, DAQ, DENR Mr. Patrick Knowlson, DAQ, DENR Mr. Vladimir Zaytsev, DAQ, DENR Mr. Ron Slack, Mooresville Regional Office, DAQ, DENR Ms. Melinda Wolanin, Mooresville Regional Office, DAQ, DENR Ms. Denise Hayes, Mooresville Regional Office, DAQ, DENR Mr. Chuck Greco, Mecklenburg County Local Program

Members of the General Public

No members of the General Public appeared at the hearing.

## This page left intentionally blank.

## CHAPTER IV

EXHIBITS

EXHIBIT PAGE

Proposed Regulations as Published in the North Carolina Register and Presented at the Hearing IV

- 2

Hearing Officer Comments at the Public Hearing IV

- 10

### PROPOSED RULES

27:11 NORTH CAROLINA REGISTER DECEMBER 3, 2012

1013 unopened original container that was filled by the product

manufacturer. (c) Wine; On-premise. A person holding an on-premises wine permit may sell wine in the unopened original container, by the carafe, by the glass or a single-service and single-use container. A person holding an on-premises wine permit may sell wine mixed with non-alcoholic beverages by the carafe, by the glass or a single-service and single-use container. Wine served in carafes, by the glass or single-service and single-use containers may be dispensed under pressure from nitrogen from sealed bulk containers provided the containers and dispensing systems have been approved by the Commission and the State Commissioner

of Health Services. The vintner, brand and type of wine dispensed by the carafe, glass or single-service and single- us e container except for the house wine, shall appear on the wine list; and where the wine is dispensed from bulk containers, the vintner, brand and type shall be shown on the knobs of draught faucets. (d) Use of Siphons. The use of siphons or other types of dispensers is allowed if the malt beverage or wine contents are dispensed directly from the original containers. (e) Mixed Beverages. A person holding a mixed beverages permit may sell mixed beverages in a glass, in a pitcher or in a single-service and single-use container. (f) Multi-Use Containers. All multi-use containers used by permittees to serve any alcoholic beverages shall meet the requirements as referenced by FDA Food Code 2009, 3- 304.11(a). Multi-use containers include glassware, mugs, pitchers and carafes.

Authority G.S. 18B-100; 18B-206; 18B-207; 130A-248(a); FDA Food Code 2009, 3-304.11(a).

TITLE 15A

–

DEPARTMENT OF ENVIRONEMENT AND
NATURAL RESOURCES

Notice is hereby given in accordance with G.S. 150B-21.2 that the Environmental Management Commission intends to amend

the rules cited as 15A NCAC 02D .0530-.0531.

Agency obtained G.S. 150B-19.1 certification:
OSBM certified on: October 10, 2012
RRC certified on: Not Required

Link to agency website pursuant to G.S. 150B-19.1(c): http://www.ncair.org//rules/hearing

Proposed Effective Date: May 1, 2013

Public Hearing : Date: January 15, 2013
Time: 6:00 p.m.
Location: Kannapolis Train Station, 201 South Main Street, Kannapolis, NC 28081 Reason for Proposed Action: 15A NCAC 02D .0530

– Prevention of Significant Deterioration, and 15A NCAC 02D .0531, Sources in Nonattainment Areas, to revise North Carolina's nitrogen oxides (NO

x 

### ) significance level from 140 tons per year (tpy) to 40 tpy. The Unites States Environmental Protection Agency (USEPA) determined that the state significance level for NO

x 

### for fine particulate matter (PM 2.5 

### ) must be revised to reflect the federal 40 tpy significance level in the federal implementation rule. 15A NCAC 02D .0530 is also proposed to be amended to update the federal cross-reference to incorporate the new 24 hour and

annual PM

2.5 

### increments as promulgated on October 20, 2010 (75 FR 64864).

Procedure by which a person can object to the agency on a proposed rule: If you have any objections to the proposed rule, please mail a letter including your specific reasons to: Ms. Joelle Burleson, Division of Air Quality, 1641 Mail Service Center, Raleigh, NC 27699-1641

Comments may be submitted to: Joelle Burleson, Division of Air Quality, 1641 Mail Service Center, Raleigh, NC 27699- 1641, phone (919)707-8720, fax (919)707-8720, email joelle.burleson@ncdenr.gov.

Comment period ends: February 1, 2013

Procedure for Subjecting a Proposed Rule to Legislative
Review: If an objection is not resolved prior to the adoption of the rule, a person may also submit written objections to the Rules Review Commission after the adoption of the Rule. If the Rules Review Commission receives written and signed objections after the adoption of the Rule in accordance with G.S. 150B-21.3(b2) from 10 or more persons clearly requesting review by the legislature and the Rules Review Commission approves the rule, the rule will become effective as provided in G.S. 150B-21.3(b1). The Commission will receive written objections until 5:00 p.m. on the day following the day the Commission approves the rule. The Commission will receive those objections by mail, delivery service, hand delivery, or facsimile transmission. If you have any further questions concerning the submission of objections to the Commission, please call a Commission staff attorney at 919-431-3000.

Fiscal impact (check all that apply).
State funds affected Environmental permitting of DOT affected Analysis submitted to Board of Transportation
Local funds affected
Date submitted to OSBM: Substantial economic impact (≥ $500,000 ) Approved by OSBM No fiscal note required by G.S. 150B

- 21.4

CHAPTER 02 - ENVIRONMENTAL MANAGEMENT

SUBCHAPTER 02D - AIR POLLUTION CONTRO L

REQUIREMENTS

### PROPOSED RULES

27:11 NORTH CAROLINA REGISTER DECEMBER 3, 2012

1014 SECTION .0500

–

EMISSION CONTROL STANDARDS

15A NCAC 02D .0530 PREVENTION OF SIGNIFICANT
DETERIORATION (a) The purpose of the Rule is to implement a program for the prevention of significant deterioration of air quality as required by 40 CFR 51.166. (b) For the purposes of this Rule the definitions contained in 40 CFR 51.166(b) and 40 CFR 51.301 apply except the definition of "baseline actual emissions." For the purposes of this Rule: (1) "Baseline actual emissions" means the rate of emissions, in tons per year, of a regulated new source review (NSR) pollutant, as determined in accordance with Parts (A) through (C) of this Subparagraph: (A) For an existing emissions unit,

baseline actual emissions means the average rate, in tons per year, at which the emissions unit actually emitted the pollutant during any consecutive 24-month period selected by the owner or operator within the 5- year period immediately preceding the date that a complete permit application is received by the Division for a permit required under

this Rule. The Director shall allow a different time period, not to exceed 10 years immediately preceding the date that a complete permit

ap plication is received by the Division, if the owner or operator

demonstrates that it is more representative of normal source operation. For the purpose of determining baseline actual emissions, the following apply: (i) The average rate shall include fugitive emissions to the extent quantifiable, and

emissions associated with startups, shutdowns, and malfunctions; (ii) The average rate shall be adjusted downward to exclude any non-compliant

emissions that occurred

while the source was operating above any

emission limitation that was legally enforceable during

the consecutive 24-month period; (iii) For an existing emission unit (other than an electric utility steam generating unit), the average rate shall be adjusted downward to exclude any emissions that would have exceeded an

emission limitation with which the major stationary source must currently comply. However, if the

State has taken credit in an

attainment demonstration or maintenance plan consistent with the requirements of 40 CFR 51.165(a)(3)(ii)(G) fo r an emission limitation that is part of a maximum

achievable control technology standard that the Administrator proposed or promulgated under part 63

of the Code of Federal Regulations, the baseline

actual emissions shall be adjusted to account for such emission reductions; (iv) For an electric utility steam generating unit, the average rate shall be adjusted downward to reflect any

emissions reductions under

G. S. 143-215.107D and for which cost recovery is sought pursuant to G.S. 62- 133.6; (v) For a regulated NSR pollutant, when a project involves multiple emissions units, only one consecutive

24 -month period shall be

used to determine the

baseline actual emissions for all the emissions units being changed. A different consecutive 24-month period for each regulated NSR pollutant can be used for each regulated NSR pollutant; and (vi) The average rate shall not be based on any consecutive

24 -month period for which there is inadequate information for determining annual emissions, in tons per year, and for adjusting this amount if required by Subparts (ii) and (iii) of this Part; (B) For a new emissions unit, the baseline actual emissions for purposes of determining the emissions increase

that will result from the initial construction and operation of such

### PROPOSED RULES

27:11 NORTH CAROLINA REGISTER DECEMBER 3, 2012

1015 unit shall equal zero; and thereafter, for all other purposes, shall equal the unit's potential to emit; and (C) For a plantwide applicability limit (PAL) for a stationary source, the

baseline actual emissions shall be calculated for existing emissions units

in accordance with the procedures contained in Part (A) of this Subparagraph, and for a new

emissions unit in accordance with the procedures contained in Part (B) of this Subparagraph; (2) In the definition of "net emissions increase," the reasonable period specified in 40 CFR 51.166(b)(3)(ii) is seven years; (3) The limitation specified in 40 CFR 51.166(b)(15)(ii) does not apply; and (4) Particulate matter PM 2.5 

### significant levels in 40 CFR 51.166(b)(23)(i) are incorporated by reference except as otherwise provided in this Rule. Sulfur dioxide and nitrogen oxides are precursor to PM 2.5 

### in all attainment and unclassifiable areas. Volatile organic compounds and ammonia are not significant precursors to PM 2.5



### . (c) All areas of the State are classified as Class II except that the following areas are Class I: (1) Great Smoky Mountains National Park; (2) Joyce Kilmer Slickrock National Wilderness Area; (3) Linville Gorge National Wilderness Area; (4) Shining Rock National Wilderness Area; and (5) Swanquarter National Wilderness Area. (d) Redesignations of areas to Class I or II may be submitted as state proposals to the Administrator of the Environmental Protection Agency (EPA), if the requirements of 40 CFR 51.166(g)(2) are met. Areas may be proposed to be redesignated as Class III, if the requirements of 40 CFR 51.166(g)(3) are met. Redesignations may not, however, be proposed which would violate the restrictions of 40 CFR 51.166(e). Lands within the boundaries of Indian Reservations may be redesignated only by the appropriate Indian Governing Body. (e) In areas designated as Class I, II, or III, increases in pollutant concentration over the baseline concentration shall be limited to the values set forth in 40 CFR 51.166(c). However, concentration of the pollutant shall not exceed standards set forth in 40 CFR 51.166(d). (f) Concentrations attributable to the conditions described in 40 CFR 51.166(f)(1) shall be excluded in determining compliance with a maximum allowable increase. However, the exclusions referred to in 40 CFR 51.166(f)(1)(i) or (ii) shall be limited to five years as described in 40 CFR 51.166(f)(2). (g) Major stationary sources and major modifications shall comply with the requirements contained in 40 CFR 51.166(i) and (a)(7) and by extension in 40 CFR 51.166(j) through (o) and (w). The transition provisions allowed by 40 CFR 52. 21 (i)(11)(i) and (ii) and (m)(1)(vii) and (viii) are hereby adopted under this Rule. The minimum requirements described in the portions of 40 CFR 51.166 referenced in this Paragraph are hereby adopted as the requirements to be used under this Rule, except as otherwise provided in this Rule. Wherever the language of the portions of 40 CFR 51.166 referenced in this Paragraph speaks of the "plan," the requirements described therein shall apply to the source to which they pertain, except as otherwise provided in this Rule. Whenever the portions of 40 CFR 51.166 referenced in this Paragraph provide that the State plan may exempt or not apply certain requirements in certain circumstances, those exemptions and provisions of nonapplicability are also hereby adopted under this Rule. However, this provision shall not be interpreted so as to limit information that may be requested from the owner or operator by the Director as specified in 40 CFR 51.166(n)(2). (h) New natural gas-fired electrical utility generating units for which cost recovery is sought pursuant to G. S. 62-133.6 shall install best available control technology for NO X 

### and SO 2 

### , regardless of applicability of the rest of this Rule. (i) 40 CFR 51.166(w)(10)(iv)(a) is changed to read: "If the emissions level calculated in accordance with Paragraph (w)(6) of this Section is equal to or greater than 80 percent of the PAL [plant wide applicability limit] level, the Director shall renew the PAL at the same level." 40 CFR 51.166(w)(10)(iv)(b) is not incorporated by reference. (j) 15A NCAC 02Q .0102 and .0302 are not applicable to any source to which this Rule applies. The owner or operator of the sources to which this Rule applies shall apply for and receive a permit as required in 15A NCAC 02Q .0300 or .0500. (k) When 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 to emit a pollutant, such as a restriction on hours of operation, then the provisions of this Rule shall apply to the source or modification as though construction had not yet begun

on the source or modification. (l) The provisions of 40 CFR 52.21(r)(2) regarding the period of validity of approval to construct are incorporated by reference except that the term "Administrator" is replaced with "Director". (m) Volatile organic compounds exempted from coverage in 40 CFR 51.100(s) shall be exempted when calculating source applicability and control requirements under this Rule. (n) The degree of emission limitation required for control of any air pollutant under this Rule shall not be affected by: (1) that amount of a stack height, not in existence before December 31, 1970, that exceeds good engineering practice; or (2) any other dispersion technique not implemented before then. (o) A substitution or modification of a model as provided for in 40 CFR 51.166(l) is subject to public comment procedures in accordance with the requirements of 40 CFR 51.102. (p) Permits may be issued on the basis of innovative control technology as set forth in 40 CFR 51.166(s)(1) if the requirements of 40 CFR 51.166(s)(2) have been met, subject to the condition of 40 CFR 51.166(s)(3), and with the allowance set forth in 40 CFR 51.166(s)(4). (q) If a source to which this Rule applies impacts an area designated Class I by requirements of 40 CFR 51.166(e), notice

### PROPOSED RULES

27:11 NORTH CAROLINA REGISTER DECEMBER 3, 2012

1016 to EPA shall be provided as set forth in 40 CFR 51.166(p)(1). If the Federal Land Manager presents a demonstration described in 40 CFR 51.166(p)(3) during the public comment period or public hearing to the Director and if the Director concurs with this demonstration, the permit application shall be denied. Permits may be issued on the basis that the requirements for variances as set forth in 40 CFR 51.166(p)(4), (p)(5) and (p)(7), or (p)(6) and (p)(7) have been satisfied. (r) A permit application subject to this Rule shall be processed in accordance with the procedures and requirements of 40 CFR 51.166(q). Within 30 days of receipt of the application, applicants shall be notified if the application is complete as to

initial information submitted. Commencement of construction before full prevention of significant deterioration approval is

obtained constitutes a violation of this Rule. (s) Approval of an application with regard to the requirements of this Rule does not relieve the owner or operator of the responsibility to comply with applicable provisions of other rules of this Subchapter or Subchapter 02Q of this Title and any other requirements under local, state, or federal law. (t) When a source or modification is subject to this Rule the following procedures apply: (1) Notwithstanding any other provisions of this Paragraph, the Director shall, no later than 60 days after receipt of an application, notify the Federal Land Manager with the U.S. Department of Interior and U.S. Department of Agriculture of an application from a source or modification subject to this Rule; (2) When a source or modification may affect visibility of a Class I area the Director shall provide written notification to all affected Federal Land Managers within 30 days of receiving the permit application or within 30 days of receiving advance notification of an application. The notification shall be at least 30 days prior to the publication of notice for public comment on the application. The notification shall include a copy of all information relevant to the permit application including an analysis provided by the source of the potential impact of the proposed source on visibility; (3) The Director shall consider any analysis concerning visibility impairment performed by the Federal Land Manager if the analysis is received within 30 days of notification. If the Director finds that the analysis of the Federal Land Manager fails to demonstrate to his satisfaction that an adverse impact on visibility will result in the Class I area, the Director shall provide in the notice of public hearing on the application, an explanation of his decision or notice as to where the explanation can be obtained; and (4) The Director may require monitoring of visibility in or around any Class I area by the proposed new source or modification when the visibility impact analysis indicates possible visibility impairment. (u) If the owner or operator of a source is using projected actual emissions to avoid applicability of prevention of significant deterioration requirements, the owner or operator shall notify the Director of the modification before beginning actual

construction. The notification shall include: (1) a description of the project; (2) identification of sources whose emissions could be affected by the project; (3) the calculated projected actual emissions and an explanation of how the projected actual emissions were calculated, including identification of emissions excluded by 40 CFR 51.166(b)(40)(ii)(c); (4) the calculated baseline actual emissions and an explanation of how the baseline actual emissions were calculated; and (5) any netting calculations if applicable. If upon reviewing the notification, the Director finds that the project will cause a prevention of significant deterioration evaluation, then the Director shall notify the owner or operator of his findings. The owner or operator shall not make the modification until it has received a permit issued pursuant to this Rule. If a permit revision is not required pursuant to this rule, the owner or operator shall maintain records of annual emissions in tons per year, on a calendar year basis related to the modifications for 10 years following resumption of regular operations after the change if the project involves increasing the emissions unit's design capacity or its potential to emit the regulated NSR pollutant; otherwise these records shall be maintained for five years following resumption of regular operations after the change. The owner or operator shall submit a report to the director within 60 days after the end of each year during which these records must be generated. The report shall contain the items listed in 40 CFR 51.166(r)(6)(v)(a) through (c). The owner or operator shall make the information documented and maintained under this Paragraph available to the Director or the general public pursuant to the requirements in 40 CFR 70.4(b)(3)(viii). (v) The references to the Code of Federal Regulations (CFR) in this Rule are incorporated by reference unless a specific reference states otherwise. The version of the CFR incorporated in this Rule is that as of October 20, 2010 at http://www.gpo.gov/fdsys/pkg/FR-2010- 10 -20/pdf/2010- 25132.pdf

and does not include any subsequent amendments or

editions to the referenced material.

Authority G.S. 143-215.3(a)(1); 143-215.107(a)(3); 143- 215.107(a)(5); 143-215.107(a)(7); 143-215.108(b); 150B-21.6.

15A NCAC 02D .0531 SOURCES IN
NONATTAINMENT AREAS (a) For the purpose of this Rule the definitions contained in 40 CFR 51.165(a)(1) and 40 CFR 51.301 apply except the definition of "baseline actual emissions." For the purposes of

this Rule:

### PROPOSED RULES

27:11 NORTH CAROLINA REGISTER DECEMBER 3, 2012

1017 (1) "Baseline actual emissions" means the rate of emissions, in tons per year, of a regulated new source review (NSR) pollutant, as determined in accordance with Parts (A) through (C) of this Subparagraph: (A) For an existing emissions unit,

baseline actual emissions means the average rate, in tons per year, at which the emissions unit actually emitted the pollutant during any consecutive 24-month period selected by the owner or operator within the 5- year period immediately preceding the date that a complete permit application is received by the Division for a permit required under

this Rule. The Director shall allow a different time period, not to exceed 10 years immediately preceding the date that a complete permit application is received by the Division, if the owner or operator

demonstrates that it is more representative of normal source operation. For the purpose of determining baseline actual

em issions, the following apply: (i) The average rate shall include fugitive emissions to the extent quantifiable, and

emissions associated with startups, shutdowns, and malfunctions; (ii) The average rate shall be adjusted downward to exclude any non-compliant

emissions that occurred

while the source was operating above any

emission limitation that was legally enforceable during

the consecutive 24-month period; (iii) For an existing emission unit (other than an electric utility steam generating unit), the average rate shall be adjusted downward to exclude any emissions that

would have exceeded an

emission limitation with which the major stationary source must currently comply. However, if the

State has taken credit in an

attainment demonstration or maintenance plan consistent with the requirements of 40 CFR 51.165(a)(3)(ii)(G) for an emission limitation that is part of a maximum

achievable control technology standard that the Administrator proposed or promulgated under part 63

of the Code of Federal Regulations, the baseline

actual emissions shall be adjusted to account for such emission reductions; (iv) For an electric utility steam generating unit, the average rate shall be adjusted downward to reflect any

emissions reductions under

G.S. 143-215.107D and for which cost recovery is sought pursuant to G.S. 62- 133.6; (v) For a regulated NSR pollutant, when a project involves multiple emissions units, only one consecutive

24 -month period shall be

used to determine the

baseline actual emissions for all the emissions units being changed. A different consecutive 24-month period for each regulated NSR pollutant; and (vi) The average rate shall not be based on any consecutive

24 -month period for which there is inadequate information for determining annual emissions, in tons per year, and for adjusting this amount if required by Subparts (ii) and (iii) of this Part; (B) For a new emissions unit, the baseline actual emissions for purposes of determining the emissions increase

that will result from the initial construction and operation of such unit shall equal zero; and thereafter, for all other purposes, shall equal the unit's potential to emit; and (C) For a plantwide applicability limit (PAL) for a stationary source, the

baseline actual emissions shall be calculated for existing emissions units in accordance with the procedures contained in Part (A) of this Subparagraph, and for a new

emissions unit in accordance with the

### PROPOSED RULES

27:11 NORTH CAROLINA REGISTER DECEMBER 3, 2012

1018 procedures contained in Part (B) of this Subparagraph; (2) In the definition of "net emissions increase," the reasonable period specified in 40 CFR 51.165(a)(1)(vi)(C)(1) is seven years; and (3) Particulate matter PM 2.5 

### significant levels in 40 CFR 51.165(a)(1)(x)(A) are incorporated by reference except as otherwise provided in this Rule. Sulfur dioxide and nitrogen oxides are precursor to PM 2.5 

### in all nonattainment areas. Volatile organic compounds and ammonia are not significant precursors to

PM 2.5



### . (b) Redesignation to Attainment. If any county or part of a county to which this Rule applies is later designated in 40 CFR 81.334 as attainment, all sources in that county subject to this Rule before the redesignation date shall continue to comply with

this Rule. (c) Applicability. 40 CFR 51.165(a)(2) is incorporated by

reference. This Rule applies to areas designated as nonattainment in 40 CFR 81.334, including any subsequent

amendments or editions. (d) This Rule is not applicable to: (1) complex sources of air pollution regulated only under Section .0800 of this Subchapter and not under any other rule in this Subchapter; (2) emission of pollutants at the new major stationary source or major modification

located in the nonattainment area that are pollutants other than the pollutant or pollutants for which the area is nonattainment. (A major stationary source or major modification that is major for volatile organic compounds or nitrogen oxides is also major for ozone.); (3) emission of pollutants for which the source or modification is not major; (4) a new source or modification that qualifies for exemption under the provision of 40 CFR 51.165(a)(4); or (5) emission of compounds listed under 40 CFR 51.100(s) as having been determined to have negligible photochemical reactivity except

carbon monoxide. (e) 15A NCAC 02Q .0102 and .0302 are not applicable to any source to which this Rule applies. The owner or operator of the source shall apply for and receive a permit as required in 15A NCAC 02Q .0300 or .0500. (f) To issue a permit to a source to which this Rule applies, the Director shall determine that the source meets the following requirements: (1) The new major stationary source or major

modification will emit the nonattainment pollutant at a rate no more than the lowest achievable emission rate; (2) The owner or operator of the proposed new major stationary source or major modification has demonstrated that all major stationary sources in the State that are owned or operated by this person (or any entity controlling, controlled by, or under common control with this person) are subject to emission limitations and are in compliance, or on a schedule f or compliance that is federally enforceable or contained in a court decree, with all applicable

emission limitations and standards of this Subchapter that EPA has authority to approve

as elements of the North Carolina State Implementation Plan for Air Qual ity; (3) The owner or operator of the proposed new major stationary source or major modification

will obtain sufficient emission reductions of the nonattainment pollutant from other sources

in the nonattainment area so that the emissions from the new major source and associated new

minor sources will be less than the emissions reductions by a ratio of at least 1.00 to 1.15 for volatile organic compounds and nitrogen oxides and by a ratio of less than one to one

for carbon monoxide. The baseline for this

em ission offset shall be the actual emissions of

the source from which offset credit is obtained. Emission reductions shall not include any reductions resulting from compliance (or scheduled compliance) with applicable rules in effect before the application. The difference between the emissions from the new major

source and associated new minor sources of

carbon monoxide and the emission reductions shall be sufficient to represent reasonable further progress toward attaining the National Ambient Air Quality Standards. The

emissions reduction credits shall also conform to the provisions of 40 CFR 51.165(a)(3)(ii)(A) through (G) and (J); and (4) The North Carolina State Implementation Plan for Air Quality is being carried out for the nonattainment area in which the proposed

source is located. (g) New natural gas-fired electrical utility generating units for which cost recovery is sought pursuant to G. S. 62-133.6 shall install lowest achievable emission rate technology for NO X 

### and

SO 2 

### , regardless of the applicability of the rest of this Rule. (h) 40 CFR 51.165(f) is incorporated by reference except that 40 CFR 51.165(f)(10)(iv)(A) is changed to read: "If the emissions level calculated in accordance with Paragraph (f)(6) of this Section is equal to or greater than 80 percent of the PAL level, the Director shall renew the PAL at the same level." 40 CFR 51.165(f)(10)(iv)(B) is not incorporated by reference. (i) When a particular source or modification becomes a major stationary source or major modification solely by virtue of a relaxation in any enforceable limitation established after August 7, 1980, on the capacity of the source or modification to emit a pollutant, such as a restriction on hours of operation, then the provisions of this Rule shall apply to the source or modification as though construction had not yet begun on the

source or modification.

### PROPOSED RULES

27:11 NORTH CAROLINA REGISTER DECEMBER 3, 2012

1019 (j) To issue a permit to a source of a nonattainment pollutant, the Director shall determine, in accordance with Section 173(a)(5) of the Clean Air Act and in addition to the other requirements of this Rule, that an analysis (produced by the permit applicant) of alternative sites, sizes, production processes, and environmental control techniques for the source demonstrates that the benefits of the source significantly outweigh the environmental and social costs imposed as a result of its location, construction, or modification. (k) The provisions of 40 CFR 52.21(r)(2) regarding the period of validity of approval to construct are incorporated by reference

ex cept that the term "Administrator" is replaced with "Director". (l) Approval of an application regarding the requirements of this Rule does not relieve the owner or operator of the responsibility to comply with applicable provisions of other rules of this Chapter and any other requirements under local, state, or federal

law. (m) Except as provided in 40 CFR 52.28(c)(6), for a source or

mo dification subject to this Rule the following procedures shall

be followed: (1) Notwithstanding any other provisions of this Paragraph, the Director shall, no later than 60 days after receipt of an application, notify the Federal Land Manager with the U.S. Department of Interior and U.S. Department of Agriculture of an application from a source or modification subject to this Rule; (2) The owner or operator of the source shall provide an analysis of the impairment to visibility that would occur because of the source or modification and general commercial, industrial and other growth associated with the source or modification; (3) When a source or modification may affect the visibility of a Class I area the Director shall provide written notification to all affected Federal Land Managers within 30 days of receiving the permit application or within 30 days of receiving advance notification of an application. The notification shall be at least 30 days before the publication of the notice for public comment on the application. The notification shall include a copy of all information relevant to the permit application including an analysis provided by the source of the potential impact of the proposed source on visibility; (4) The Director shall consider any analysis concerning visibility impairment performed by the Federal Land Manager if the analysis is received within 30 days of notification. If the Director finds that the analysis of the Federal Land Manager fails to demonstrate to his satisfaction that an adverse impact on visibility will result in the Class I area, the Director shall provide in the notice of public hearing on the application, an explanation of his decision or notice where the explanation can be obtained; (5) The Director shall issue permits only to those

sources whose emissions will be consistent with making reasonable progress, as defined in Section 169A of the Clean Air Act, toward the national goal of preventing any future, and remedying any existing, impairment of visibility in mandatory Class I areas when the impairment results from manmade air pollution. In making the decision to issue a permit, the Director shall consider the cost of compliance, the time necessary for compliance, the energy and nonair quality environmental impacts of compliance, and the useful life of the source; and (6) The Director may require monitoring of visibility in or around any Class I area by the proposed new source or modification when the visibility impact analysis indicates possible visibility impairment. The requirements of this Paragraph do not apply to nonprofit health or nonprofit educational institutions. (n) If the owner or operator of a source is using projected actual emissions to avoid applicability of nonattainment new source review, the owner or operator shall notify the director of the modification before beginning actual construction. The

notification shall include: (1) a description of the project; (2) identification of sources whose emissions could be affected by the project; (3) the calculated projected actual emissions and an explanation of how the projected actual emissions were calculated, including identification of emissions excluded by 40 CFR 51.165(a)(1)(xxviii)(B)(3); (4) the calculated baseline actual emissions and an explanation of how the baseline actual

em issions were calculated; and (5) any netting calculations if applicable. If upon reviewing the notification, the Director finds that the project will cause a nonattainment new source review evaluation, then the Director shall notify the owner or operator of his findings. The owner or operator shall not make the modification until it has received a permit issued pursuant to this Rule. If a permit revision is not required pursuant to this Rule, the owner or operator shall maintain records of annual emissions in tons per year on a calendar year basis related to the modifications for 10 years following resumption of regular operations after the change if the project involves increasing the emissions unit's design capacity or its potential to emit the regulated NSR pollutant; otherwise these records shall be maintained for five years following resumption of regular operations after the change. The owner or operator shall submit a report to the director within 60 days after the end of each year during which these records must be generated. The report shall contain the items listed in 40 CFR 51.165(a)(6)(v)(A) through (C). The owner or operator shall make the information documented and maintained under this Paragraph available to the Director or the general public pursuant to the requirements in 40 CFR 70.4(b)(3)(viii).

### PROPOSED RULES

27:11 NORTH CAROLINA REGISTER DECEMBER 3, 2012

1020 (o) The reference to the Code of Federal Regulations (CFR) in this Rule are incorporated by reference unless a specific reference states otherwise. Except for 40 CFR 81.334, the version of the CFR incorporated in this Rule is that as of May 16, 2008 and does not include any subsequent amendments or

editions to the referenced material.

Authority G.S. 143-215.3(a)(1); 143-215.107(a)(5); 143- 215.108(b).

* * * * * * * * * * * * * * * * * * *

Notice is hereby given in accordance with G.S. 150B-21.2 that the Environmental Management Commission intends to amend the rules cited as 15A NCAC 02D .0902,-.0903, .0909, .0951, .0961-.0962; 02Q .0102.

Agency obtained G.S. 150B-19.1 certification:
OSBM certified on: November 5, 2012
RRC certified on: Not Required

Link to agency website pursuant to G.S. 150B-19.1(c): http://www.ncair.org/rules/hearing/

Proposed Effective Date: May 1, 2013

Public Hearing : Date: January 15, 2013
Time: 6:00 p.m.
Location: Kannapolis Train Station, 201 South Main Street, Kannapolis, NC 28081

Reason for Proposed Action: The proposed amendments are in response to United States Environmental Protection Agency (USEPA) comments on North Carolina’s redesignation demonstration and mai ntenance planfor the North Carolina portion of the Charlotte-Gastonia, NCRock Hill, SC 1997 8-hour Ozone National Ambient Air Quality Standard (NAAQS) Nonattainment Area. USEPA identified the need for adjustment of applicability of the state’s Reasonably Available Control Technology (RACT) rules to meet the requirements of Section 182(b)(2) of the Clean Air Act which requires RACT for all sources addressed by Control Technique Guidelines (CTGs) in nonattainment areas classified moderate

and above. The cur rent RACT rules’ applicability is structured such that the RACT requirement for sources in CTG categories applies to major sources with 100 tons of volatile organic compounds or more per year. Amendments to printing related and industrial solvent cleaning RACT rules are in response to industry associations’ requests for language clarifications and flexibilities consistent with the CTGs on which they are based.

15A NCAC 02D .0902 - Applicability, to reflect applicability to all sources in a CTG category in order to meet the Clean Air Act requirement and thus facilitate the redesignation process and include provisions allowing for the shift of requirements to contingency measures upon redesignation of the area consistent with EPA procedures. 15A NCAC 02D .0909 - Compliance Schedules For Sources In Ozone Nonattainment And Maintenance Areas, to update the compliance schedule corresponding to the adjustment in applicability.

15A NCAC 02D .0951 - RACT For Sources of Volatile Organic Compounds, to provide flexibility to comply via the category specific rules in the Section or through approved site specific

alternative determinations.
15A NCAC 02D .0961 - Offset Lithographic Printing and Letterpress Printing, in response to industry associations’ comments and requests for language clarification and flexibilities consistent with the CTGs on which it is based including an equivalent rolling, consecutive 12 month applicability threshold consistent with the CTG to provide some relief from a recordkeeping standpoint, clarifying language, and addition of some specificity with respect to recordkeeping.
15A NCAC 18A 02D .0962 - Industrial Cleaning Solvents, in

r esponse to industry associations’ comments and requests for language clarification and flexibilities consistent with the CTGs on which it is are based including an alternate VOC content level and compliance options for industrial solvents used for cleaning resins, inks, and coatings manufacturing equipment

consistent with the CTG recommendations.

15A NCAC 02D .0903 - Recordkeeping: Reporting: Monitoring, to update cross-references. 15A NCAC 02Q .0102 - Exemptions, to update cross-references.

Procedure by which a person can object to the agency on a proposed rule: If you have any objections to the proposed rules, please mail a letter including your specific reasons to: Ms. Joelle Burleson, Division of Air Quality, 1641 Mail Service Center, Raleigh, NC 27699-1641.

Comments may be submitted to: Joelle Burleson, Division of Air Quality, 1641 Mail Service Center, Raleigh, NC 27699- 1641, phone (919)707-8720, fax (919)707-8720, email joelle.burleson@ncdenr.gov.

Comment period ends: February 1, 2013

Procedure for Subjecting a Proposed Rule to Legislative
Review: If an objection is not resolved prior to the adoption of the rule, a person may also submit written objections to the Rules Review Commission after the adoption of the Rule. If the Rules Review Commission receives written and signed objections after the adoption of the Rule in accordance with G.S. 150B-21.3(b2) from 10 or more persons clearly requesting review by the legislature and the Rules Review Commission approves the rule, the rule will become effective as provided in G.S. 150B-21.3(b1). The Commission will receive written objections until 5:00 p.m. on the day following the day the Commission approves the rule. The Commission will receive those objections by mail, delivery service, hand delivery, or facsimile transmission. If you have any further questions concerning the submission of objections to the Commission, please call a Commission staff attorney at 919-431-3000. Fiscal impact (check all that apply).
State funds affec ted Environmental permitting of DOT affected

## 1 Hearing Officer's Suggested Hearing Comments

INTRODUCTION

[Hearing officer]:

Good evening ladies and gentlemen. My name is Benne Hutson. I am a member of the North

Carolina Environmental Management Commission. My role as hearing officer is to listen to all

relevant comment on these proceedings and report them to the full commission. Sitting with me

is Ms. Joelle Burleson. Sh e is with the North Carolina Division of Air Quality, Planning Section.

Some of the staff from the Division of Air Quality are here to assist. Ms. Burleson, please

introduce the staff present.

[Ms. Burleson] (Introduces staff)

[Hearing officer]:

This evening we are conducting three public hearings. During Hearing 1, we will take

comments concerning amendments to several volatile organic compound (VOC) reasonably

available control technology (RACT) rules. During Hearing 2, we will take comment on

amendments to two rules that are part of the North Carolina's New Source Review (NSR) permit

program. During Hearing 3, we will take comment on an amendment to the Division of Air

Quality’s permit exemption rule. Fiscal notes have been written for all of the rule amendments

presented in the hearings tonight and were approved and certified by the Office of State Budget

and Management. Th ese hearings will be held according to the North Carolina Administrative

Procedures Act. The public notice for these hearings has been advertised in the North Carolina

Register and five newspapers in the state. Copies of the notice have been sent to those on the

official DAQ mailing list. I will enter the public notice, the proposed amendments and the fiscal

notes into the hearing record without reading them at this time.

## 2

It would be helpful if any person desiring to comment also submit a written statement for

inclusion into the hearing record. Once called to speak, please come to the podium and state

your name clearly, identify the rule or rules you are commenting on, and whom you represent.

[Hearing 1 ]:

I will now open the first hearing and take relevant comments on amendments to North Carolina

volatile organic compound rules in Section .900 of Chapter 2D.

These proposed amendments respond to Environmental Protection Agency (EPA) comments on

North Carolina’s re -designation demonstration and maintenance plan for the Charlotte-GastoniaRock Hill, NC 8-hour Ozone Nonattainment Area. In their comments on North C arolina’s

submittal, EPA identified the need for an adjustment of applicability of the state’s reasonably

available control technology (RACT) rules. Section 182(b) (2) of the Clean Air Act (CAA)

requires RACT for all sources addressed by Control Technique Guidelines (CTGs) issued by

EPA in areas classified as moderate nonattainment for ozone. North Carolina’s current RACT

rule, 15A NCAC 02D .0902, applies only to facilities that have the potential to emit (PTE)

greater than or equal to 100 tons of volatile organic compounds (VOC) per year located in the

Charlotte-Gastonia-Rock Hill, NC 8-hour Moderate Ozone Nonattainment Area. The proposed

amendments bring North Carolina into compliance with federal law by extending this

applicability to all VOC sources covered by any CTG in the nonattainment area. The

amendments also reduce daily recordkeeping burden for printing operations and exempt cleaning

operations of coating, ink, and adhesive manufacturing from VOC content limits in response to

feedback from the industries.

Rule 15A NCAC 02D .0902, Applicability, is proposed for amendment to bring North Carolina

into compliance with federal law by extending RACT applicability to all volatile organic VOC

sources located in the nonattainment area and covered by any CTGs. Rule 15A NCAC 02D

.0903 Recordkeeping: Reporting: Monitoring, is proposed for amendment to reflect

incorporation of the monthly recordkeeping alternative for consistency with the CTG provided in

Rule 15A NCAC 02D .0961 in response to industry representa tives’ comments . Rule 15A

NCAC 02D .0909, Compliance Schedules for Sources in Nonattainment Areas, is proposed for

## 3

amendment to clarify compliance schedules for the newly affected facilities. Rule 15A NCAC

02D .0951 RACT for Sources of Volatile Organic Compounds, is proposed for amendment to

give affected facilities a choice whether to apply the RACT requirements defined in Section

.0900 rules or choose RACT requirements demonstrated to the Director to advance attainment.

Rule 15A NCAC 02D .0961, Offset Lithographic Printing and Letterpress Printing, is proposed

for amendment to comply with RACT requirements for VOC emissions from heatset inks,

fountain solutions, and cleaning materials used in offset lithographic printing operations and for

VOC emissions from heatset inks used in letterpress printing operations. Rule 15A NCAC 02D

.0962, Industrial Cleaning Solvents, is proposed for amendment to exempt RACT cleaning

solvent emission limits applicability for resin, coating, ink, and adhesive mixing, molding, and

application equipment cleaning of coating, ink, and adhesive manufacturing. Rule 15A NCAC

02Q .0102 Activities Exempted From Permit Requirements, is proposed for amendment to

update a cross reference.

{optional script if there are a large number of speakers}

-------------------------------------------------------------------------------------------------------------------- [Hearing officer]: Optional Time Limit

Many people have requested to speak at this hearing. Due to time constraints, speakers’

presentations will be limited to ___ minutes. It would be helpful if speakers would also submit a

written statement by the close of the comment period for inclusion into the hearing record.

---------------------------------------------------------------------------------------------------------------------

[Hearing officer]:

I will now take any comments that you may have.

[SPEAKERS]

## 4

[Hearing officer]:

Is there anyone else who would like to comment? If there are no more comments, then this

hearing is closed. The hearing record will remain open until February 1, 2013, for additional

written comments.

[Hearing 2]:

I will now open the second hearing and take relevant comments on amendments to Rules 15A

NCAC 02D .0530, Prevention of Significant Deterioration and 15A NCAC 02D .0531, Sources

in Nonattainment Areas, to revise North Carolina’s nitrogen oxides (NO

x 

## ) significance level

from 140 tons per year to 40 tons per year. Rule 15A NCAC 02D .0530 is also proposed for

amendment to update the federal cross-reference in the prevention of significant deterioration

rule to reflect the current federal increments for fine particulate matter promulgated on October

20, 2010 in the Federal Register (75 FR 64864).

The EMC amended the prevention of significant deterioration and nonattainment new source

review permitting rules in 2010 to establish the significance level for NO

x 

## for PM 2.5 

## in North

Carolina at 140 tons per year. As part of its rule review of North Carolina’s state implementation

plan (SIP), the United States Environmental Protection Agency (USEPA) has determined that,

while the federal rule allows for a demonstration that NO

x 

## is not a significant precursor to

formation of PM 2.5 

## , there is not an allowance for states to establish an alternate significance

level. As a result, the state significance level must be revised to reflect the federal 40 tons per

year significance level.

In 2010, the USEPA added PM 2 .5 

## increments under the program. An increment is the maximum

allowable increase in ambient pollutant concentration. Federal increments were established for

24-hour and annual averaging periods in Class I, Class II and Class III areas. Adoption of these

feder al increments is required in order for the USEPA to approve North Carolina’s SIP. The

current date of incorporation in the state rule needs to be updated to reflect the current PM 2.5

## 5

increments for the current annual and 24-hour national ambient air quality standards established

by the USEPA.

{optional script if there are a large number of speakers}

-------------------------------------------------------------------------------------------------------------------- [Hearing officer]: Optional Time Limit

Many people have requested to speak at this hearing. Due to time constraints, speakers’

presentations will be limited to ___ minutes. It would be helpful if speakers would also submit a

written statement by the close of the comment period for inclusion into the hearing record.

---------------------------------------------------------------------------------------------------------------------

[Hearing officer]:

I will now take any comments that you may have.

[SPEAKERS]

[Hearing officer]:

Is there anyone else who would like to comment? If there are no more comments, then this

hearing is closed. The hearing record will remain open until February 1, 2013, for additional

written comments.

[Hearing 3]:

I will now open the third hearing and take relevant comments on amendments proposed to clarify

the interaction between Rules 15A NCAC 02Q .0102, Exemptions and 02Q .0702, Exemptions.

## 6

The Division of Air Quality identified the need for clarification regarding the interaction of the

air toxics rule specific exemptions with the more broadly applicable rule regarding sources that

are exempt from the general requirement to obtain a permit. Rule 02Q .0102 specifies which

activities are exempt from the requirement to obtain an air quality permit. Rule 02Q .0702

specifies activities which are exempt from the requirement to obtain a permit to emit toxic air

pollutants (TAP) and not required to be included in TAP demonstrations. The EMC has

previously determined through rulemaking that many of the activities currently exempt from the

general requirement to obtain a permit under 02Q .0102(c) should also be exempt from air toxics

demonstration and permitting requirements as identified in 02Q .0702(a)(1) through (a)(24).

Existing language in 02Q .0102(b)(7) needs to be clarified to reflect this interaction relative to

smaller sources such that small sources not be required to be included in an air toxics

demonstration or permit retain the exemption from having to obtain an air quality permit.

{optional script if there are a large number of speakers}

-------------------------------------------------------------------------------------------------------------------- [Hearing officer]: Optional Time Limit

Many people have requested to speak at this hearing. Due to tim e constraints, speakers’

presentations will be limited to ___ minutes. It would be helpful if speakers would also submit a

written statement by the close of the comment period for inclusion into the hearing record.

---------------------------------------------------------------------------------------------------------------------

[Hearing officer]:

I will now take any comments that you may have.

[SPEAKERS]

[Hearing officer]:

## 7

Is there anyone else who would like to comment? If there are no more comments, then this

hearing is closed. The hearing record will remain open until February 1, 2013, for additional

written comments.

## CHAPTER V

COMMENTS DURING THE COMMENT PERIOD

INDEX OF COMMENTERS

NAME REPRESENTING PAGE

Mark Huncik V

- 2

R. Scott Davis United States Environmental Protection Agency V

- 4

### This page is intentionally blank

## CHAPTER VI

INDEX OF ATTACHMENTS

ATTACHMENTS PAGE

Revisions to New Source Review and Prevention of Significant Deterioration (PSD) Nitrogen Oxides (NO

x 

## ) Significance Level for PM 2.5 

## and PM 2.5 

## Increment Fiscal

Note V I

- 2

Addendum to Fiscal Note VI

- 24

U.S. Court of Appeals for the District of Columbia Circuit, January 4, 2013, Sierra Club vs. United States Environmental Protection Agency (EPA), No. 08

- 1250 VI

- 26

U.S Court of Appeals for the District of Columbia Circuit, January 22, 2013,

National Resources Defense Council and Sierra Club vs. EPA, No. 10

- 1413 VI

- 44

Implementation of the New Source Review (NSR) Program for Particulate Matter Less Than 2.5 Micrometers (PM2.5)

, 73 FR 28321 (5/16/2008) VI

- 66

Prevention of Significant Deterioration ( PSD) for Particulate Matter Less Than 2.5 Micrometers (PM2.5)

— Increments, Significant Impact Levels (SILs) and Significant Monitoring Concentration (SMC) , 75 FR 64864 (10/20/2010) VI

- 96

Federal Register Notices Not Included in Hearing Record VI

- 140

### Draft

– 10/9/2012 1 ECONOMIC ANALYSIS

Rule Citation Number: 15A NCAC 02D .0530, Prevention of Significant Deterioration

15A NCAC 02D .0531 Sources in Nonattainment Areas

Rule Topic: Revisions to New Source Review and Prevention of Significant Deterioration

(PSD) Nitrogen Oxides (NO

x 

### ) Significance Level for PM 2.5 

### (512) and PM 2.5 

### Increment (516)

DENR Division: Division of Air Quality

Agency Contact: Joelle Burleson, Rule Development Branch Supervisor Division of Air Quality (DAQ)

(919) 707-8720 Joelle.Burleson@ncdenr.gov

Analyst: Patrick Knowlson, DAQ
(919) 707-8711

patrick.knowlson@ncdenr.gov

Impact Summary: State government: Yes

Local government: No Substantial impact: No Federal government: No

Private Sector: Yes

Authority: G.S. 143-215.3(a)(1); 143-215.107(a)(3); 143-215.107(a)(5); 143-

215.107(a)(7); 143-215.108(b); 150B-21.6;

Necessity: The proposed rule amendments would revise North Carolina’s nitrogen oxides

significance level from 140 tons per year to 40 tons per year. The proposed rule amendments also update the federal cross-reference in the Prevention of Significant Deterioration (PSD) rule to reflect the current federal increments for fine particulate
matter (PM 2.5 

### ). These proposed rule changes are necessary to comply with federal rules and are consistent with the principles of Executive Order 70.

I. Ex ecutive Summary

This rulemaking package consists of two major rule amendments. First, this proposal would revise North Carolina’s nitrogen oxides significance level from 140 tons per year to 40 tons per year. The second proposed amendment will update the federal cross-reference in the Prevention of Significant Deterioration (PSD) rule to reflect the current federal increments for fine particulate matter (PM 2.5 

### ). The proposed text changes are located in Appendix A.

### Draft

– 10/9/2012 2 The Environmental Management Commission (EMC) amended the New Source Review (NSR) and Prevention of Significant Deterioration (PSD) permitting rules in 2010 to establish the significance level for nitrogen oxides (NO

x 

### ) for PM 2.5 

### in North Carolina at 140 tons per year (tpy). This significance level was based on monitoring and modeling data indicating that NO

x 

### is a lessor

contributor to the formation of PM 2.5 

### than sulfur dioxide (SO 2 

### ). As part of its rule review of North Carolina’s state implementation plan (SIP), the United States Environmental Protection Agency
(US EPA ) has determined that, while the federal rule allows for a demonstration that NO

x 

### is not a significant precursor to formation of PM 2.5 

### , there is not an allowance for states to establish an alternate significance level. As a result, the state significance level must be revised to reflect the federal 40 tpy significance level in USEPA PM 2.5 

### Implementation Rule.

In 2010, the USEPA added PM 2.5 

### increments under the program. An increment is the maximum
allowable increase in ambient pollutant concentration. Federal increments were established for 24- hour and annual averaging periods in Class I, Class II and Class III areas. Adoption of these federal increments is required in order for the USEPA to approve North Carolina’s SIP. The current date of incorporation in the state rule needs to be updated to reflect the current PM 2.5 

### increments for the current annual and 24-hour NAAQS established by the USEPA.

There are no anticipated costs or benefits associated with the change in NO

x 

### significance level for

PM 2.5 

### because the significance level of NO

x 

### for ozone is already 40 tpy (see 40 CFR 51.166(b)(23) and 40 CFR 52.21(b)(23)). Affected facilities have already implemented additional emission
controls to meet the requirements for the NO

x 

### significance level for ozone. State government and the private sector will face additional costs to incorporate the federal PM 2.5 

### increments PSD program. Based on an average of six PSD applications received by the Division of Air Quality (DAQ) per year, the total annual impact to the private sector would be approximately $134,000. DAQ would have about $17,000 in additional expenses. The overall total cost increase to all entities would be approximately $151,000 per year. These cost estimates are based on the assumption that
all applicant facilities will need the highest level of analysis; true costs may be lower.

North Carolina will benefit from this proposed policy change because our NO

x 

### significance level will comply with federal regulations and the federal government will approve our SIP and fund state air quality programs. There will not be any change in the health benefits to the public as a result of these amendments. Changing the NO

x 

### significance levels will have no impact on

emissions. The PM 2.5 

### increments are protective elements of a NSR program designed to prevent a violation of the National Ambient Air Quality Standard (NAAQS) for PM 2.5 

### . Adoption of these
federal increments is required in order for the USEPA to approve North Carolina’s SIP.

The proposed effective date for these proposed rule changes is projected to be May 1, 2013.

II. Background

The Clean Air Act requires the USEPA to set National Ambient Air Quality Standards (NAAQS) for pollutants considered harmful to public health and the environment. The NAAQS has two types of national air quality standards, a primary standard and a secondary standard. Primary standards set limits to protect public health, including the health of "sensitive" populations such as asthmatics,

### Draft

– 10/9/2012 3 children, and the elderly. Secondary standards set limits to protect public welfare, including protection against decreased visibility, damage to animals, crops, vegetation, and buildings. The NAAQS define the maximum permissible concentrations for certain pollutants, known as criteria
pollutants.

A Clean Air Act program known as “New Source Review” (NSR) requires an analysis of emissions
from new sources or significant modifications of existing sources. This analysis protects human health by ensuring air emissions do not exceed the NAAQS for various airborne pollutants. The NSR program consists of two permitting programs. The first permitting program is the Nonattainment New Source Review (NA NSR) program. The second NSR program is called Prevention of Significant Deterioration (PSD). These two programs are contained in North

Carolina’s SIP in Rules 15A NCAC 02D .0530 and .0531.

Either NA NSR or PSD permits are required for all new or existing stationary point sources of pollution, such as factories, that plan major modifications to their facility which may increase emissions above particular pollutant significance levels. The term “ Significance level” refers to a facility’s potential to emit (PTE) pollutants subject to regulation ab ove a specified emissions threshold. If the threshold is exceeded, then the source is evaluated under the NSR program. “ Major

modification ” means any physical change or change in the method of operation of a major stationary source that would result in a significant emissions increase of a regulated NSR pollutant and a significant net emissions increase of that pollutant from the major stationary source.

The NA NSR program requirements are used for screening permit applications from major

st ationary sources located in nonattainment areas. Major stationary source means 

## one that emits, or has the potential to emit, 100 tons per year or more of any regulated NSR pollutant (40 CFR
51.166(b)(50)). A nonattainment area is an area designated by USEPA as not meeting the NAAQS minimal concentration for one or more of the NAAQS pollutants. Nonattainment areas are always designated as nonattainment for one or more NAAQS such as nonattainment for ozone or nonattainment for VOC and ozone. The area's particular nonattainment designation influences the permit screening process. An NA NSR permit screening determines permit requirements to control
the specific NAAQS pollutant for which the area is in nonattainment.

NA NSR permitted facilities are required to obtain emission offsets, which are emission reductions from existing sources in nonattainment area. Offsets are credited to existing facilities that reduce emissions by installing emission control equipment beyond rule requirements; modifying production process es ; or by shutting down one or more emission sources. These offsets ensure that
NAAQS emissions within the nonattainment area do not increase and nonattainment area continues to work toward reaching attainment.

The PSD program does not prevent sources from increasing emissions and is used in attainment areas. Attainment areas are delineated regions designated by USEPA as meeting all NAAQS. The PSD program is designed to maintain that classification. While the NA NSR screening is designed to limit the nonattainment NAAQS pollutant, the PSD screening reviews all the NAAQS pollutants. PSD is designed to:

1. protect public health and welfare;

### Draft

– 10/9/2012 4 2. preserve, protect, and enhance the air quality in national parks, national wilderness areas, national monuments, national seashores, and other areas of special national or regional
natural, recreational, scenic, or historic value;

3. insure that economic growth will occur in a manner consistent with the preservation of existing clean air resources; and

4. assure that any decision to permit increased air pollution is made only after careful evaluation of all the consequences of such a decision and after adequate procedural opportunities for informed public participation in the decision making process.

Once an NA NSR or PSD requirement is triggered for a major stationary source or a major modification by even a single pollutant, a best available control technology review must be done for each PSD regulated pollutant that is emitted in significant quantities.

Federal and State Regulations for PM 2.5 

### are Different

Fine Particular Matter ( PM 2.5 

### ) is particles less than 2.5 micrometers in diameter and is interchangeably referred to as "fine" particles. Fine particles in the atmosphere are made up of a complex mixture of directly emitted and secondarily formed components. The United States Environmental Protection Agency (USEPA) added PM 2.5 

### to the NAAQS pollutants on May 8, 2008 (72 FR 20586). The USEPA’s Clean Air Fine Particulate Implementation Rule, commonly referred

to as the PM 2.5 

### Implementation Rule, guides states as they develop State Implementation Plans (SIP) in response to annual or daily PM 2.5 

### NA AQS.

NO

x 

### Significance level

The PM 2.5 

### Implementation Rule establishes a hierarchy of precursor pollutants. Precursors are gaseous emissions of compounds that chemically combine with other compounds some time later in the atmosphere to form PM 2.5 

### . Sulfur Dioxide (SO 2 

### ) and nitrogen oxides (NO

x 

### ) are significant precursors. USEPA has determined that Volatile Organic Compounds (VOCs) and ammonia (NH 3 

### ) are presumed not to be significant precursors.

In the PM 2.5 

### Implementation Rule, the USEPA set the following significant emission rates or significance levels for PM 2.5 

### ; 10 tons per year (tpy) of direct PM 2.5 

### emissions, 40 tpy of sulfur dioxide emissions, or 40 tpy of nitrogen oxides emissions. Direct PM 2.5 

### consists of both solid and

condensable PM 2.5 

### emissions leaving the stack and entering the atmosphere. Direct PM 2.5 

### does not

include the PM 2.5 

### precursors (SO 2 

### and NO

x 

### ).

In 2010, the Environmental Management Commission (EMC) adopted amendments to the state NA NSR and PSD permitting rules to incorporate requirements relative to the PM 2.5 

### Implementation Rule. The state rule amendments established the significance level for NO

x 

### for PM 2.5 

### in North Carolina at 140 tons per year based on monitoring and modeling data supporting that NO

x 

### is a

lessor contributor to the formation of PM 2.5 

### than SO 2



### .

As part of its review of the rules for incorporation into North Carolina SIP, the USEPA has
determined that, while the federal rule allows for a demonstration that NO

x 

### is not a significant

### Draft

– 10/9/2012 5 precursor to formation of PM 2.5 

### , there is no allowance for a state to establish an alternate significance level. As a result, the significance level needs to be revised to reflect the 40 tpy significance level in the implementation rule.

PM 2.5 

### Increment

PSD increments were developed by USEPA and enacted in December 2010 to prevent the air quality in attainment areas from deteriorating to the level set by the NAAQS. The NAAQS is a maximum allowable concentration "ceiling." A PSD increment, on the other hand, is the maximum

allowable increase in concentration that is allowed to occur above a baseline concentration for a pollutant. The baseline concentration ( referred to as “ background ” in Figure 1 below ) is defined for each pollutant and, in general, is the ambient concentration which exists at the time the first complete PSD permit application affecting the area is submitted. Significant deterioration is said to occur when the amount of new pollution would exceed the applicable PSD increment. It is important to note, however, that the air quality cannot deteriorate beyond the concentration allowed by the applicable NAAQS, even if not all of the PSD increment is consumed. For PM 2.5 

### , this means the Class II increment of 4 ug/m 3 

### for a new or modified source might not be reached before the applicable PM 2.5 

### NAAQS is exceeded. An illustration on PM 2.5 

### increments is included below.

Figure 1

### Draft

– 10/9/2012 6 There are three area classes are part of the increment system originally established by Congress. Congress designated Class I areas (including certain national parks and wilderness areas) as areas of special national concern, where the need to prevent deterioration of air quality is the greatest. Areas not designated as Class I were designated as Class II. The increments of Class II ar eas are larger than those of Class I areas and allow for a moderate degree of emissions growth. For future redesignation purposes, Congress defined a Class III classification to allow the redesignation of any existing Class II area for which a state may desire to promote a higher level of industrial development (and emissions growth). Thus, Class III areas are allowed to have the greatest amount of pollutant increase of the three area classes while still achieving the NAAQS. To date, there have been no redesignations made to establish a Class III area.

The USEPA promulgated the increments for PM 2.5 

### on October 20, 2010 (75 FR 64864). North Carolina’s prevention of significant deterioration rules incorporates various provisions of the corresponding federal regulations by reference as of a certain date. The current date of incorporation in the state rule needs to be updated to reflect the current PM 2.5 

### increments for the current annual and 24-hour NAAQS established by the USEPA. The annual and 24-hour NAAQS and corresponding increments were set by USEPA as follows:



## Table 1. USEPA PM 2.5 

## Increments NAAQS (ug/m 3 

## ) Increment (ug/m 3 

## )

Area

Class I Class II Class III

Annual 15 1 4 8

24

- hour 35 2 9 18

The Significant Impact Limit (SIL) is a screening tool that USEPA developed to evaluate the impact of new sources and major modifications on the PM 2.5 

### NAAQS and PSD increments. If the highest modeled concentrations are greater than the SILs (see Table 2), a full impact, PSD increment analysis is conducted for the significant impact area (SIA). The SIA is a circular area with a radius extending out to the most distant point where the modeling predicts a significant ambient impact (not to exceed 50 kilometers) and represents the geographical area for which the
NAAQS and PSD increment analysis is conducted.



## Table 2. USEPA PM 2.5 

## Significant Impact Limits SILs (ug/m 3 

## )

Area

Class I Class II Class III

Annual 0.06 0.3 0.3

24

- hour 0.07 1.2 1.2

The Significant Monitoring Concentration (SMC), is a screening tool that may be used to determine
if a source must submit to the permitting authority one year of pre-construction air quality monitoring data prior to constructing or modifying a facility. If a proposed source’s predicted impact is less than the SMC, the source’s impact may be considered de minimis for monitoring

### Draft

– 10/9/2012 7 purposes, and the reviewing authority could exempt the applicant from the preconstruction monitoring requirement. The reviewing authority also may exempt the applicant from the monitoring requirement if the existing air quality in the area is shown to be less than the SMC. The USEPA set an SMC 4 μg/m 3 

### (24-hour average) for PM 2.5



### .

As part of the full impact analysis, all facility emissions of PSD criteria pollutants and for which
PSD increments have been established (PM 10 

### , SO 2 

### , NO

x 

### and PM 2.5 

### ) are evaluated to determine the

individual source emissions that consume increment. These sources are included in the PSD increment modeling analysis. There are two types of sources emissions that are included in the analysis: all source increases within the county that have occurred since the baseline data was established and all sources located within the significant impact areas and established after the

baseline data was established.

All new sources or source emission increases that have occurred since the Minor Source Baseline Date (MiSBD) was established for the county in which the PSD application is being submitted must be modeled. A list of the MiSBDs by county is provided on the DAQ website at
http://daq.state.nc.us/permits/psd . Since the MiSBD in NC is county specific, the modeling domain may contain multiple MiSBDs to apply to the source selection process. Major sources in existence prior to the EPA-established Major Source Baseline Date (MSBD) are excluded from the increment modeling analysis.

Facility emission rates must reflect the maximum allowable operating conditions as expressed by the federally enforceable emissions limit, operating level, and operating factor for each applicable pollutant and averaging time. Note: operating levels less than 100 percent of capacity may also need to be modeled where differences in stack parameters associated with the lower operating levels could result in higher ground level concentrations.

Off-site increment consuming sources that were created on or after the MiSBD and that are within the SIA also must be included in the PSD increment analysis. In addition, all increment consuming sources within 50 km (screening area) of the SIA must be evaluated for inclusion in the offsite increment source inventory. Offsite sources within the screening area can be excluded from the modeling if their facility-wide emission rate in tons per year is less than 20D (where D is defined as the distance from the offsite source to the PSD facility being modeled for short term emissions and as the distance from the offsite source to the nearest boundary of the SIA for long term emissions).

Additional information on PSD modeling can be found in North Carolina PSD Modeling Guidance in Appendix B of this document.

I II . Costs and Benefits by Affected Party

The baseline for this analysis is the current PSD and NA NSR rules found in Rule 15A NCAC 02D .0530, Prevention of Significant Deterioration; and 02D .0531, Sources in Nonattainment Areas. The change from the baseline is a decrease in the significance level on the precursor NO

x 

### from the
current North Carolina significance level of 140 tpy to 40 tpy that the USEPA is requiring North Carolina to adopt and the update to the federal cross-reference in the PSD rule to reflect the current

federal increments for PM 2.5



### .

### Draft

– 10/9/2012 8 Public

The rule amendments to both 15A NCAC 02D .0530 and .0531 will decrease the NO

x 

### significance

level for PM 2.5 

### from 140 tpy to 40 tpy but the actual emissions of regulated pollutants would not increase or decrease in response to the proposed amendment since the significance level for ozone continues to be 40 tpy. The rule amendment to 15A NCAC 02D .0530 will also update the federal cross-reference in the PSD rule to reflect the increments set by USEPA for fine particulate matter
(PM 2.5 

### ). Although there is not any expected quantifiable health benefits to the public as a result of

th ese amendments since all areas of the state are currently in attainment for PM 2.5 

### , the NO

x 

### significance levels and the PM 2.5 

### increments are elements of a NSR program to help prevent a violation of the National Ambient Air Quality Standard (NAAQS) for PM 2.5 

### . The NAAQS is set at
a level to be protective of both public health and the environment. The public would benefit from the state retaining its attainment status through the use of the NO

x 

### significance levels and the PM 2.5 

### increments.

North Carolina will benefit from this proposed policy change because our NO

x 

### significance level will comply with federal regulations and the federal government will approve our State Implementation Plan (SIP) and fund state air quality programs. The primary benefit of this set of amendments is to address applicability consistent with the requirements of the Clean Air Act and ensure approval of the SIP by USEPA. Without the proposed rule change, USEPA will not be able
to approve the current version of the plan. If the state does not have a plan that meets federal requirements, the EPA approval can require corrective action within required timeframes or implement a federal plan for North Carolina. A federal plan may require solutions that are not the best to fit a particular area and are less preferable than having a state-controlled program. If not eventually corrected, potential sanctions on highway transportation funding could also occur.

Private Sector

NO

x 

### Significance Level

Currently, North Carolina has two maintenance areas for PM 2.5 

### which are Hickory (Catawba County) and Greensboro/Winston-Salem/High Point (Davidson and Guilford Counties). A maintenance area is an area that was designated nonattainment for one of the NAAQS, but later met the standard and was re-designated to attainment status. These two areas were re-designated based on ambient monitoring data from nonattainment to attainment on December 19, 2011. There are no

nonattainment areas for PM 2.5 

### in North Carolina at this time.

Lowering the NO

x 

### significance level for PM 2.5 

### from 140 tpy to 40 tpy will not impact any new or existing sources located in maintenance areas because the NO

x 

### significance level is already 40 tpy for ozone. Private facilities have already invested in pollution control technologies to comply with the requirements for NO

x 

### in ozone maintenance areas. Actual emissions of regulated pollutants would not increase or decrease in response to the proposed amendment.

### Draft

– 10/9/2012 9 PM 2.5 

### Increment

A PSD increment analysis requires additional engineering and modeling. Since most likely the

PM 2.5 

### increment analysis will be incorporated into an analysis with other pollutants, this will not be a standalone project, thus the cost will be minimized. DAQ has estimated incremental cost

increased based on three different scenarios:

1) Scenario 1 : Below the Significant Impact Level (SIL) thus minimal modeling will be needed, i.e. only level 1 analysis.
2) Scenario 2 : Exceeds the SIL and thus a Class II increment analysis will be required, i.e. level 1 and 2 analysis would be needed.
3) Scenario 3 : Exceeds the SIL, a Class II increment analysis will be required and a Class I Increment analysis is required, i.e. level 1, 2, and 3 analysis would be needed.

Consulting firms usual ly perform the PSD analysis for an affected facility. The facility will likely

have several PM 2.5 

### sources and offsite sources. The consulting firm will collect data and perform modeling for all of these sources. According to the permitting section of DAQ, an offsite source inventory would cost approximately $5,000 for the facility to generate. Industry consultants
contacted by the Air Quality Analysis Branch (AQAB) of the Division of Air Quality (DAQ), estimate it would cost approximately $4,400 to complete a level 1 analysis (Scenario 1 above)

.

If based on minimal modeling the SIL is exceeded, then a Class II increment analysis would also be required (Scenario 2 above). For level 2 analysis, there would be approximately 40 hours of data gathering, 40 hours to assemble the model with the source and parameter inputs and 32 hours of computer time to run the model. A level 2 analysis would add approximately $3,000 to the overall
costs for additional modeling runs. If the source is located in a Class I area, a Class I increment analysis, or level 3 analysis, would also be required (Scenario 3 above). A level 3 analysis would add approximately $10,000 to the overall cost for an increment analysis for the expanded modeling
and more intensive modeling requirements.

DAQ has averaged six PSD permit applications annually for all pollutants since 1999. PM 2.5 

### is a relatively new regulated pollutant so the projected number of PSD permit applications that require a

PM 2.5 

### increment modeling effort is unknown. For this analysis, it is assumed that all of the PSD permit applications will require an evaluation for PM 2.5 

### . Until DAQ starts receiving PSD permit application with PM 2.5 

### increment calculations, it is unknown how many applications on average will require a scenario one, two or three modeling effort. This cost estimate was formulated with the assumption that all six PSD applications would require a Scenario 3 modeling effort. In reality, this is highly unlikely to occur. For this reason, these cost estimates present a highest cost scenario. Under Scenario 3, the total cost for adding a PM 2.5 

### increment analysis to each PSD permit application would be estimated to be $17,400 for the modeling and $5,000 for the offsite source
inventory. The annual cost to affected facilities for all PSD permits submitted to DAQ for review (assuming there would be 6 applications per year) would be approximately $134,000.

Currently, the Significant Monitoring Concentration (SMC) is not used in a PSD analysis. The NC Division of Air Quality (DAQ) does not require one year of preconstruction monitoring. The State

### Draft

– 10/9/2012 10 has an extensive monitoring network. The SMC are incorporated by reference in the rule. If there was a need to require one year of preconstruction monitoring in the future, an affected source could be exempted from the monitoring requirement and associated monitoring costs if the predicted impact is less than the SMC. DAQ does not anticipate using the SMC in the future.

State Agencies

NO

x 

### Significance Level

The rule amendment will not result in an increase or decrease in PSD permit applications. PSD permits are currently required if there is an increase in NO

x 

### PTE emissions of 40 tpy under the ozone standard. Lowering the NO

x 

### significance level for PM 2.5 

### maintenance areas from 140 tpy to 40 tpy will not increase the number of PSD permits.

PM 2.5 

### Increments

The Air Quality Analysis Branch (AQAB) of the Division of Air Quality would require additional

time to review the PM 2.5 

### increment analysis in a PSD permit application. This review would not appreciably change how a PSD permit application review is performed but would add some time

cost to review the PM 2.5 

### increment analysis contained in the permit application. A first level analysis would add an additional eight hours to a PSD review. It is assumed a Meteorologist II employee with 10 years of experience and a salary of $56,000 will review the PSD permit
application. Using the NC Office of State Personnel Employee Compens at ion Calculator, a Meteorologist II hourly compensation is approximately $40. The increase for a first level analysis
would be $320. A se cond level analysis would add approximately three days to the review for a total labor cost of $960. A third level analysis would add a full week to the review process for an additional $1,600 dollars in costs to DAQ. Using the same assumption that all PSD permit
applications would require level 1, 2, and 3 analyses (i.e. Scenario 3), the total impact to DAQ would be about $2,900 per PSD permit application. Based on an average of six PSD applications per year, the annual cost to DAQ would be approximately $17,300.

Uncertainty

There is a small chance that the proposed rule changes may lead to a higher impact than estimate above if the USEPA goes ahead with the proposed new PM 2.5 

### standards on June 14, 2012. This new USEPA proposal would set a new primary annual PM 2.5 

### standard within a range of 12 to 13 ug/m 3



### . The current annual standard is 15 ug/m 3 

### . There is the potential for costs to new or existing sources

if there is a violation of the PM 2.5 

### NAAQS that results in the USEPA designating an area to

nonattainment for PM 2.5 

### at some point in the future. In non-attainment areas, the PSD increments are not used and affected facilities would be required to obtain emission offsets from existing sources. Also modeling is more extensive in nonattainment areas.

The Division of Air Quality thinks, however, that it is unlikely that there will be a violation of the

PM 2.5 

### NAAQS at any point in the foreseeable future. NC’s highest design value (based on 2009-11 data) is 11.2 ug/m 3 

### , which is below the more stringent proposed standard at the federal level. State

### Draft

– 10/9/2012 11 actions to implement the Clean Smokestacks Act, Vehicle Inspection and Maintenance Program and federal Tier 2 engine standards have substantially reduced the amount of PM 2.5 

### in North

Carolina’s air.

The proposed rule changes do not meet the threshold for a substantial fiscal impact.

## Appendix A

Draft

– 10/9/2012 1 15A NCA 02D .0530 is proposed for amendment as follows: 

## 1

2

15A NCAC 02D .0530 PREVENTION OF SIGNIFICANT DETERIORATION 

## 3

(a) The purpose of the Rule is to implement a program for the prevention of significant deterioration of air quality 

## 4

as required by 40 CFR 51.166. 

## 5

(b) For the purposes of this Rule the definitions contained in 40 CFR 51.166(b) and 40 CFR 51.301 apply except 

## 6

the definition of "baseline actual emissions." For the purposes of this Rule: 

## 7

(1) "Baseline actual emissions" means the rate of emissions, in tons per year, of a regulated new 

## 8

source review (NSR) pollutant, as determined in accordance with Parts (A) through (C) of this 

## 9

Subparagraph: 

## 10

(A) For an existing emissions unit, baseline actual emissions means the average rate, in tons 

## 11

per year, at which the emissions unit actually emitted the pollutant during any 

## 12

consecutive 24-month period selected by the owner or operator within the 5-year period 

## 13

immediately preceding the date that a complete permit application is received by the 

## 14

Division for a permit required under this Rule. The Director shall allow a different time 

## 15

period, not to exceed 10 years immediately preceding the date that a complete permit 

## 16

application is received by the Division, if the owner or operator demonstrates that it is 

## 17

more representative of normal source operation. For the purpose of determining baseline 

## 18

actual emissions, the following appl y: 

## 19

(i) The average rate shall include fugitive emissions to the extent quantifiable, and 

## 20

emissions associated with startups, shutdowns, and malfunctions; 

## 21

(ii) The average rate shall be adjusted downward to exclude any non-compliant 

## 22

emissions that occurred while the source was operating above any emission 

## 23

limitation that was legally enforceable during the consecutive 24-month period; 

## 24

(iii) For an existing emission unit (other than an electric utility steam generating 

## 25

unit), the average rate shall be adjusted downward to exclude any emissions that 

## 26

would have exceeded an emission limitation with which the major stationary 

## 27

source must currently comply. However, if the State has taken credit in an 

## 28

attainment demonstration or maintenance plan consistent with the requirements 

## 29

of 40 CFR 51.165(a)(3)(ii)(G) for an emission limitation that is part of a 

## 30

maximum achievable control technology standard that the Administrator 

## 31

proposed or promulgated under part 63 of the Code of Federal Regulations, the 

## 32

baseline actual emissions shall be adjusted to account for such emission 

## 33

reductions; 

## 34

(iv) For an electric utility steam generating unit, the average rate shall be adjusted 

## 35

downward to reflect any emissions reductions under G.S. 143-215.107D and for 

## 36

which cost recovery is sought pursuant to G.S. 62-133.6; 

## 37

## Appendix A

Draft

– 10/9/2012 2

(v) For a regulated NSR pollutant, when a project involves multiple emissions units, 

## 1

only one consecutive 24-month period shall be used to determine the baseline 

## 2

actual emissions for all the emissions units being changed. A different 

## 3

consecutive 24-month period for each regulated NSR pollutant can be used for 

## 4

each regulated NSR pollutant; and 

## 5

(vi) The average rate shall not be based on any consecutive 24-month period for 

## 6

which there is inadequate information for determining annual emissions, in tons 

## 7

per year, and for adjusting this amount if required by Subparts (ii) and (iii) of 

## 8

this Part; 

## 9

(B) For a new emissions unit, the baseline actual emissions for purposes of determining the 

## 10

emissions increase that will result from the initial construction and operation of such unit 

## 11

shall equal zero; and thereafter, for all other purposes, shall equal the unit's potential to 

## 12

emit; and 

## 13

(C) For a plantwide applicability limit (PAL) for a stationary source, the baseline actual 

## 14

emissions shall be calculated for existing emissions units in accordance with the 

## 15

procedures contained in Part (A) of this Subparagraph, and for a new emissions unit in 

## 16

accordance with the procedures contained in Part (B) of this Subparagraph; 

## 17

(2) In the definition of "net emissions increase," the reasonable period specified in 40 CFR 

## 18

51.166(b)(3)(ii) is seven years; 

## 19

(3) The limitation specified in 40 CFR 51.166(b)(15)(ii) does not apply; and 

## 20

(4) Particulate matter PM 2.5 

### significant levels in 40 CFR 51.166(b)(23)(i) are incorporated by 

## 21

reference except as otherwise provided in this Rule. A net emission increase or the potential of a 

## 22

source to emit nitrogen oxide emissions shall be significant if the rate of emissions would equal or 

## 23

exceed 140 tons per year. Sulfur dioxide and nitrogen oxides are precursor to PM 2.5 

### in all 

## 24

attainment and unclassifiable areas. Volatile organic compounds and ammonia are not significant 

## 25

precursors to PM 2.5



### . 

## 26

(c) All areas of the State are classified as Class II except that the following areas are Class I: 

## 27

(1) Great Smoky Mountains National Park; 

## 28

(2) Joyce Kilmer Slickrock National Wilderness Area; 

## 29

(3) Linville Gorge National Wilderness Area; 

## 30

(4) Shining Rock National Wilderness Area; and 

## 31

(5) Swanquarter National Wilderness Area. 

## 32

(d) Redesignations of areas to Class I or II may be submitted as state proposals to the Administrator of the 

## 33

Environmental Protection Agency (EPA), if the requirements of 40 CFR 51.166(g)(2) are met. Areas may be 

## 34

proposed to be redesignated as Class III, if the requirements of 40 CFR 51.166(g)(3) are met. Redesignations may 

## 35

not, however, be proposed which would violate the restrictions of 40 CFR 51.166(e). Lands within the boundaries of 

## 36

Indian Reservations may be redesignated only by the appropriate Indian Governing Body. 

## 37

## Appendix A

Draft

– 10/9/2012 3 (e) In areas designated as Class I, II, or III, increases in pollutant concentration over the baseline concentration shall 

## 1

be limited to the values set forth in 40 CFR 51.166(c). However, concentration of the pollutant shall not exceed 

## 2

standards set forth in 40 CFR 51.166(d). 

## 3

(f) Concentrations attributable to the conditions described in 40 CFR 51.166(f)(1) shall be excluded in determining 

## 4

compliance with a maximum allowable increase. However, the exclusions referred to in 40 CFR 51.166(f)(1)(i) or 

## 5

(ii) shall be limited to five years as described in 40 CFR 51.166(f)(2). 

## 6

(g) Major stationary sources and major modifications shall comply with the requirements contained in 40 CFR 

## 7

51.166(i) and (a)(7) and by extension in 40 CFR 51.166(j) through (o) and (w). The transition provisions allowed by 

## 8

40 CFR 52.21 (i)(11)(i) and (ii) and (m)(1)(vii) and (viii) are hereby adopted under this Rule. The minimum 

## 9

requirements described in the portions of 40 CFR 51.166 referenced in this Paragraph are hereby adopted as the 

## 10

requirements to be used under this Rule, except as otherwise provided in this Rule. Wherever the language of the 

## 11

portions of 40 CFR 51.166 referenced in this Paragraph speaks of the "plan," the requirements described therein 

## 12

shall apply to the source to which they pertain, except as otherwise provided in this Rule. Whenever the portions of 

## 13

40 CFR 51.166 referenced in this Paragraph provide that the State plan may exempt or not apply certain 

## 14

requirements in certain circumstances, those exemptions and provisions of nonapplicability are also hereby adopted 

## 15

under this Rule. However, this provision shall not be interpreted so as to limit information that may be requested 

## 16

from the owner or operator by the Director as specified in 40 CFR 51.166(n)(2). 

## 17

(h) New natural gas-fired electrical utility generating units for which cost recovery is sought pursuant to G. S. 62- 

## 18

133.6 shall install best available control technology for NO X 

### and SO 2 

### , regardless of applicability of the rest of this 

## 19

Rule. 

## 20

(i) 40 CFR 51.166(w)(10)(iv)(a) is changed to read: "If the emissions level calculated in accordance with Paragraph 

## 21

(w)(6) of this Section is equal to or greater than 80 percent of the PAL [plant wide applicability limit] level, the 

## 22

Director shall renew the PAL at the same level." 40 CFR 51.166(w)(10)(iv)(b) is not incorporated by reference. 

## 23

(j) 15A NCAC 02Q .0102 and .0302 are not applicable to any source to which this Rule applies. The owner or 

## 24

operator of the sources to which this Rule applies shall apply for and receive a permit as required in 15A NCAC 

## 25

02Q .0300 or .0500. 

## 26

(k) When a particular source or modification becomes a major stationary source or major modification solely by 

## 27

virtue of a relaxation in any enforceable limitation which was established after August 7, 1980, on the capacity of 

## 28

the source or modification to emit a pollutant, such as a restriction on hours of operation, then the provisions of this 

## 29

Rule shall apply to the source or modification as though construction had not yet begun on the source or 

## 30

modificatio n. 

## 31

(l) The provisions of 40 CFR 52.21(r)(2) regarding the period of validity of approval to construct are incorporated 

## 32

by reference except that the term "Administrator" is replaced with "Director". 

## 33

(m) Volatile organic compounds exempted from coverage in 40 CFR 51.100(s) shall be exempted when calculating 

## 34

source applicability and control requirements under this Rule. 

## 35

(n) The degree of emission limitation required for control of any air pollutant under this Rule shall not be affected 

## 36

by: 

## 37

## Appendix A

Draft

– 10/9/2012 4 (1) that amount of a stack height, not in existence before December 31, 1970, that exceeds good 

## 1

engineering practice; or 

## 2

(2) any other dispersion technique not implemented before then. 

## 3

(o) A substitution or modification of a model as provided for in 40 CFR 51.166(l) is subject to public comment 

## 4

procedures in accordance with the requirements of 40 CFR 51.102. 

## 5

(p) Permits may be issued on the basis of innovative control technology as set forth in 40 CFR 51.166(s)(1) if the 

## 6

requirements of 40 CFR 51.166(s)(2) have been met, subject to the condition of 40 CFR 51.166(s)(3), and with the 

## 7

allowance set forth in 40 CFR 51.166(s)(4). 

## 8

(q) If a source to which this Rule applies impacts an area designated Class I by requirements of 40 CFR 51.166(e), 

## 9

notice to EPA shall be provided as set forth in 40 CFR 51.166(p)(1). If the Federal Land Manager presents a 

## 10

demonstration described in 40 CFR 51.166(p)(3) during the public comment period or public hearing to the Director 

## 11

and if the Director concurs with this demonstration, the permit application shall be denied. Permits may be issued on 

## 12

the basis that the requirements for variances as set forth in 40 CFR 51.166(p)(4), (p)(5) and (p)(7), or (p)(6) and 

## 13

(p)(7) have been satisfied. 

## 14

(r) A permit application subject to this Rule shall be processed in accordance with the procedures and requirements 

## 15

of 40 CFR 51.166(q). Within 30 days of receipt of the application, applicants shall be notified if the application is 

## 16

complete as to initial information submitted. Commencement of construction before full prevention of significant 

## 17

deterioration approval is obtained constitutes a violation of this Rule. 

## 18

(s) Approval of an application with regard to the requirements of this Rule does not relieve the owner or operator of 

## 19

the responsibility to comply with applicable provisions of other rules of this Subchapter or Subchapter 02Q of this 

## 20

Title and any other requirements under local, state, or federal law. 

## 21

(t) When a source or modification is subject to this Rule the following procedures apply: 

## 22

(1) Notwithstanding any other provisions of this Paragraph, the Director shall, no later than 60 days 

## 23

after receipt of an application, notify the Federal Land Manager with the U.S. Department of 

## 24

Interior and U.S. Department of Agriculture of an application from a source or modification 

## 25

subject to this Rule; 

## 26

(2) When a source or modification may affect visibility of a Class I area the Director shall provide 

## 27

written notification to all affected Federal Land Managers within 30 days of receiving the permit 

## 28

application or within 30 days of receiving advance notification of an application. The notification 

## 29

shall be at least 30 days prior to the publication of notice for public comment on the application. 

## 30

The notification shall include a copy of all information relevant to the permit application including 

## 31

an analysis provided by the source of the potential impact of the proposed source on visibility; 

## 32

(3) The Director shall consider any analysis concerning visibility impairment performed by the 

## 33

Federal Land Manager if the analysis is received within 30 days of notification. If the Director 

## 34

finds that the analysis of the Federal Land Manager fails to demonstrate to his satisfaction that an 

## 35

adverse impact on visibility will result in the Class I area, the Director shall provide in the notice 

## 36

## Appendix A

Draft

– 10/9/2012 5

of public hearing on the application, an explanation of his decision or notice as to where the 

## 1

explanation can be obtained; and 

## 2

(4) The Director may require monitoring of visibility in or around any Class I area by the proposed 

## 3

new source or modification when the visibility impact analysis indicates possible visibility 

## 4

impairment. 

## 5

(u) If the owner or operator of a source is using projected actual emissions to avoid applicability of prevention of 

## 6

significant deterioration requirements, the owner or operator shall notify the Director of the modification before 

## 7

beginning actual construction. The notification shall include: 

## 8

(1) a description of the project; 

## 9

(2) identification of sources whose emissions could be affected by the project; 

## 10

(3) the calculated projected actual emissions and an explanation of how the projected actual emissions 

## 11

were calculated, including identification of emissions excluded by 40 CFR 51.166(b)(40)(ii)(c); 

## 12

(4) the calculated baseline actual emissions and an explanation of how the baseline actual emissions 

## 13

were calculated; and 

## 14

(5) any netting calculations if applicable. 

## 15

If upon reviewing the notification, the Director finds that the project will cause a prevention of significant 

## 16

deterioration evaluation, then the Director shall notify the owner or operator of his findings. The owner or operator 

## 17

shall not make the modification until it has received a permit issued pursuant to this Rule. If a permit revision is not 

## 18

required pursuant to this rule, the owner or operator shall maintain records of annual emissions in tons per year, on a 

## 19

calendar year basis related to the modifications for 10 years following resumption of regular operations after the 

## 20

change if the project involves increasing the emissions unit's design capacity or its potential to emit the regulated 

## 21

NSR pollutant; otherwise these records shall be maintained for five years following resumption of regular operations 

## 22

after the change. The owner or operator shall submit a report to the director within 60 days after the end of each year 

## 23

during which these records must be generated. The report shall contain the items listed in 40 CFR 51.166(r)(6)(v)(a) 

## 24

through (c). The owner or operator shall make the information documented and maintained under this Paragraph 

## 25

available to the Director or the general public pursuant to the requirements in 40 CFR 70.4(b)(3)(viii). 

## 26

(v) The references to the Code of Federal Regulations (CFR) in this Rule are incorporated by reference unless a 

## 27

specific reference states otherwise. The version of the CFR incorporated in this Rule is that as of May 16, 2008 

## 28

October 20, 2010 at http://www.gpo.gov/fdsys/pkg/FR

- 2010

- 10

- 20/pdf/2010

- 25132.pdf and does not include any 

## 29

subsequent amendments or editions to the referenced material. 

## 30

31

History Note: Authority G.S. 143-215.3(a)(1); 143-215.107(a)(3); 143-215.107(a)(5); 143-215.107(a)(7); 143- 

## 32
215.108(b); 150B-21.6; 

## 33 Eff. June 1, 1981; 

## 34 Amended Eff. December 1, 1992; August 1, 1991; October 1, 1989; July 1, 1988; October 1, 

## 35 1987; June 1, 1985; January 1, 1985; February 1, 1983; 

## 36 Temporary Amendment Eff. March 8, 1994, for a period of 180 days or until the permanent rule is 

## 37 effective, whichever is sooner; 

## 38 Amended Eff. ; January 2, 2011; September 1, 2010; May 1, 2008; July 28, 2006; July 

## 39 1, 1997; February 1, 1995; July 1, 1994. 

## 40

## Appendix A

Draft

– 10/9/2012 6 

## 1

15A NCA 02D .0531 is proposed for amendment as follows: 

## 2

3

15A NCAC 02D .0531 SOURCES IN NONATTAINMENT AREAS 

## 4

(a) For the purpose of this Rule the definitions contained in 40 CFR 51.165(a)(1) and 40 CFR 51.301 apply except 

## 5

the definition of "baseline actual emissions." For the purposes of this Rule: 

## 6

(1) "Baseline actual emissions" means the rate of emissions, in tons per year, of a regulated new 

## 7

source review (NSR) pollutant, as determined in accordance with Parts (A) through (C) of this 

## 8

Subparagraph: 

## 9

(A) For an existing emissions unit, baseline actual emissions means the average rate, in tons 

## 10

per year, at which the emissions unit actually emitted the pollutant during any 

## 11

consecutive 24-month period selected by the owner or operator within the 5-year period 

## 12

immediately preceding the date that a complete permit application is received by the 

## 13

Division for a permit required under this Rule. The Director shall allow a different time 

## 14

period, not to exceed 10 years immediately preceding the date that a complete permit 

## 15

application is received by the Division, if the owner or operator demonstrates that it is 

## 16

more representative of normal source operation. For the purpose of determining baseline 

## 17

actual emissions, the following apply: 

## 18

(i) The average rate shall include fugitive emissions to the extent quantifiable, and 

## 19

emissions associated with startups, shutdowns, and malfunctions; 

## 20

(ii) The average rate shall be adjusted downward to exclude any non-compliant 

## 21

emissions that occurred while the source was operating above any emission 

## 22

limitation that was legally enforceable during the consecutive 24-month period; 

## 23

(iii) For an existing emission unit (other than an electric utility steam generating 

## 24

unit), the average rate shall be adjusted downward to exclude any emissions that 

## 25

would have exceeded an emission limitation with which the major stationary 

## 26

source must currently comply. However, if the State has taken credit in an 

## 27

attainment demonstration or maintenance plan consistent with the requirements 

## 28

of 40 CFR 51.165(a)(3)(ii)(G) for an emission limitation that is part of a 

## 29

maximum achievable control technology standard that the Administrator 

## 30

proposed or promulgated under part 63 of the Code of Federal Regulations, the 

## 31

baseline actual emissions shall be adjusted to account for such emission 

## 32

reductions; 

## 33

(iv) For an electric utility steam generating unit, the average rate shall be adjusted 

## 34

downward to reflect any emissions reductions under G.S. 143-215.107D and for 

## 35

which cost recovery is sought pursuant to G.S. 62-133.6; 

## 36

## Appendix A

Draft

– 10/9/2012 7

(v) For a regulated NSR pollutant, when a project involves multiple emissions units, 

## 1

only one consecutive 24-month period shall be used to determine the baseline 

## 2

actual emissions for all the emissions units being changed. A different 

## 3

consecutive 24-month period for each regulated NSR pollutant; and 

## 4

(vi) The average rate shall not be based on any consecutive 24-month period for 

## 5

which there is inadequate information for determining annual emissions, in tons 

## 6

per year, and for adjusting this amount if required by Subparts (ii) and (iii) of 

## 7

this Part; 

## 8

(B) For a new emissions unit, the baseline actual emissions for purposes of determining the 

## 9

emissions increase that will result from the initial construction and operation of such unit 

## 10

shall equal zero; and thereafter, for all other purposes, shall equal the unit's potential to 

## 11

emit; and 

## 12

(C) For a plantwide applicability limit (PAL) for a stationary source, the baseline actual 

## 13

emissions shall be calculated for existing emissions units in accordance with the 

## 14

procedures contained in Part (A) of this Subparagraph, and for a new emissions unit in 

## 15

accordance with the procedures contained in Part (B) of this Subparagraph; 

## 16

(2) In the definition of "net emissions increase," the reasonable period specified in 40 CFR 

## 17

51.165(a)(1)(vi)(C)(1) is seven years; and 

## 18

(3) Particulate matter PM 2.5 

### significant levels in 40 CFR 51.165(a)(1)(x)(A) are incorporated by 

## 19

reference except as otherwise provided in this Rule. A net emission increase or the potential of a 

## 20

source to emit nitrogen oxide emissions shall be significant if the rate of emissions would equal or 

## 21

exceed 140 tpy. Sulfur dioxide and nitrogen oxides are precursor to PM 2.5 

### in all nonattainment 

## 22

areas. Volatile organic compounds and ammonia are not significant precursors to PM 2.5



### . 

## 23

(b) Redesignation to Attainment. If any county or part of a county to which this Rule applies is later designated in 

## 24

40 CFR 81.334 as attainment, all sources in that county subject to this Rule before the redesignation date shall 

## 25

continue to comply with this Rule. 

## 26

(c) Applicability. 40 CFR 51.165(a)(2) is incorporated by reference. This Rule applies to areas designated as 

## 27

nonattainment in 40 CFR 81.334, including any subsequent amendments or editions. 

## 28

(d) This Rule is not applicable to: 

## 29

(1) complex sources of air pollution regulated only under Section .0800 of this Subchapter and not 

## 30

under any other rule in this Subchapter; 

## 31

(2) emission of pollutants at the new major stationary source or major modification located in the 

## 32

nonattainment area that are pollutants other than the pollutant or pollutants for which the area is 

## 33

nonattainment. (A major stationary source or major modification that is major for volatile organic 

## 34

compounds or nitrogen oxides is also major for ozone.); 

## 35

(3) emission of pollutants for which the source or modification is not major; 

## 36

## Appendix A

Draft

– 10/9/2012 8 (4) a new source or modification that qualifies for exemption under the provision of 40 CFR 

## 1

51.165(a)(4); or 

## 2

(5) emission of compounds listed under 40 CFR 51.100(s) as having been determined to have 

## 3

negligible photochemical reactivity except carbon monoxide. 

## 4

(e) 15A NCAC 02Q .0102 and .0302 are not applicable to any source to which this Rule applies. The owner or 

## 5

operator of the source shall apply for and receive a permit as required in 15A NCAC 02Q .0300 or .0500. 

## 6

(f) To issue a permit to a source to which this Rule applies, the Director shall determine that the source meets the 

## 7

following requirements: 

## 8

(1) The new major stationary source or major modification will emit the nonattainment pollutant at a 

## 9

rate no more than the lowest achievable emission rate; 

## 10

(2) The owner or operator of the proposed new major stationary source or major modification has 

## 11

demonstrated that all major stationary sources in the State that are owned or operated by this 

## 12

person (or any entity controlling, controlled by, or under common control with this person) are 

## 13

subject to emission limitations and are in compliance, or on a schedule for compliance that is 

## 14

federally enforceable or contained in a court decree, with all applicable emission limitations and 

## 15

standards of this Subchapter that EPA has authority to approve as elements of the North Carolina 

## 16

State Implementation Plan for Air Quality; 

## 17

( 3) The owner or operator of the proposed new major stationary source or major modification will 

## 18

obtain sufficient emission reductions of the nonattainment pollutant from other sources in the 

## 19

nonattainment area so that the emissions from the new major source and associated new minor 

## 20

sources will be less than the emissions reductions by a ratio of at least 1.00 to 1.15 for volatile 

## 21

organic compounds and nitrogen oxides and by a ratio of less than one to one for carbon 

## 22

monoxide. The baseline for this emission offset shall be the actual emissions of the source from 

## 23

which offset credit is obtained. Emission reductions shall not include any reductions resulting 

## 24

from compliance (or scheduled compliance) with applicable rules in effect before the application. 

## 25

The difference between the emissions from the new major source and associated new minor 

## 26

sources of carbon monoxide and the emission reductions shall be sufficient to represent reasonable 

## 27

further progress toward attaining the National Ambient Air Quality Standards. The emissions 

## 28

reduction credits shall also conform to the provisions of 40 CFR 51.165(a)(3)(ii)(A) through (G) 

## 29

and (J); and 

## 30

(4) The North Carolina State Implementation Plan for Air Quality is being carried out for the 

## 31

nonattainment area in which the proposed source is located. 

## 32

(g) New natural gas-fired electrical utility generating units for which cost recovery is sought pursuant to G. S. 62- 

## 33

133.6 shall install lowest achievable emission rate technology for NO X 

### and SO 2 

### , regardless of the applicability of the 

## 34

rest of this Rule. 

## 35

(h) 40 CFR 51.165(f) is incorporated by reference except that 40 CFR 51.165(f)(10)(iv)(A) is changed to read: "If 

## 36

the emissions level calculated in accordance with Paragraph (f)(6) of this Section is equal to or greater than 80 

## 37

## Appendix A

Draft

– 10/9/2012 9 percent of the PAL level, the Director shall renew the PAL at the same level." 40 CFR 51.165(f)(10)(iv)(B) is not 

## 1

incorporated by reference. 

## 2

(i) When a particular source or modification becomes a major stationary source or major modification solely by 

## 3

vi rtue of a relaxation in any enforceable limitation established after August 7, 1980, on the capacity of the source or 

## 4

modification to emit a pollutant, such as a restriction on hours of operation, then the provisions of this Rule shall 

## 5

apply to the source or modification as though construction had not yet begun on the source or modification. 

## 6

(j) To issue a permit to a source of a nonattainment pollutant, the Director shall determine, in accordance with 

## 7

Section 173(a)(5) of the Clean Air Act and in addition to the other requirements of this Rule, that an analysis 

## 8

(produced by the permit applicant) of alternative sites, sizes, production processes, and environmental control 

## 9

techniques for the source demonstrates that the benefits of the source significantly outweigh the environmental and 

## 10

social costs imposed as a result of its location, construction, or modification. 

## 11

(k) The provisions of 40 CFR 52.21(r)(2) regarding the period of validity of approval to construct are incorporated 

## 12

by reference except that the term "Administrator" is replaced with "Director". 

## 13

(l) Approval of an application regarding the requirements of this Rule does not relieve the owner or operator of the 

## 14

responsibility to comply with applicable provisions of other rules of this Chapter and any other requirements under 

## 15

local, state, or federal law. 

## 16

(m) Except as provided in 40 CFR 52.28(c)(6), for a source or modification subject to this Rule the following 

## 17

procedures shall be followed: 

## 18

(1) Notwithstanding any other provisions of this Paragraph, the Director shall, no later than 60 days 

## 19

after receipt of an application, notify the Federal Land Manager with the U.S. Department of 

## 20

Interior and U.S. Department of Agriculture of an application from a source or modification 

## 21

subject to this Rule; 

## 22

(2) The owner or operator of the source shall provide an analysis of the impairment to visibility that 

## 23

would occur because of the source or modification and general commercial, industrial and other 

## 24

growth associated with the source or modification; 

## 25

(3) When a source or modification may affect the visibility of a Class I area the Director shall provide 

## 26

written notification to all affected Federal Land Managers within 30 days of receiving the permit 

## 27

application or within 30 days of receiving advance notification of an application. The notification 

## 28

shall be at least 30 days before the publication of the notice for public comment on the application. 

## 29

The notification shall include a copy of all information relevant to the permit application including 

## 30

an analysis provided by the source of the potential impact of the proposed source on visibility; 

## 31

(4) The Director shall consider any analysis concerning visibility impairment performed by the 

## 32

Federal Land Manager if the analysis is received within 30 days of notification. If the Director 

## 33

finds that the analysis of the Federal Land Manager fails to demonstrate to his satisfaction that an 

## 34

adverse impact on visibility will result in the Class I area, the Director shall provide in the notice 

## 35

of public hearing on the application, an explanation of his decision or notice where the explanation 

## 36

can be obtained; 

## 37

## Appendix A

Draft

– 10/9/2012 10 (5) The Director shall issue permits only to those sources whose emissions will be consistent with 

## 1

making reasonable progress, as defined in Section 169A of the Clean Air Act, toward the national 

## 2

goal of preventing any future, and remedying any existing, impairment of visibility in mandatory 

## 3

Class I areas when the impairment results from manmade air pollution. In making the decision to 

## 4

issue a permit, the Director shall consider the cost of compliance, the time necessary for 

## 5

compliance, the energy and nonair quality environmental impacts of compliance, and the useful 

## 6

life of the source; and 

## 7

(6) The Director may require monitoring of visibility in or around any Class I area by the proposed 

## 8

new source or modification when the visibility impact analysis indicates possible visibility 

## 9

impairment. 

## 10

The requirements of this Paragraph do not apply to nonprofit health or nonprofit educational institutions. 

## 11

(n) If the owner or operator of a source is using projected actual emissions to avoid applicability of nonattainment 

## 12

new source review, the owner or operator shall notify the director of the modification before beginning actual 

## 13

construction. The notification shall include: 

## 14

(1) a description of the project; 

## 15

(2) identification of sources whose emissions could be affected by the project; 

## 16

(3) the calculated projected actual emissions and an explanation of how the projected actual emissions 

## 17

were calculated, including identification of emissions excluded by 40 CFR 

## 18

51.165(a)(1)(xxviii)(B)(3); 

## 19

(4) the calculated baseline actual emissions and an explanation of how the baseline actual emissions 

## 20

were calculated; and 

## 21

(5) any netting calculations if applicable. 

## 22

If upon reviewing the notification, the Director finds that the project will cause a nonattainment new source review 

## 23

evaluation, then the Director shall notify the owner or operator of his findings. The owner or operator shall not make 

## 24

the modification until it has received a permit issued pursuant to this Rule. If a permit revision is not required 

## 25

pursuant to this Rule, the owner or operator shall maintain records of annual emissions in tons per year on a calendar 

## 26

year basis related to the modifications for 10 years following resumption of regular operations after the change if the 

## 27

project involves increasing the emissions unit's design capacity or its potential to emit the regulated NSR pollutant; 

## 28

otherwise these records shall be maintained for five years following resumption of regular operations after the 

## 29

change. The owner or operator shall submit a report to the director within 60 days after the end of each year during 

## 30

which these records must be generated. The report shall contain the items listed in 40 CFR 51.165(a)(6)(v)(A) 

## 31

through (C). The owner or operator shall make the information documented and maintained under this Paragraph 

## 32

available to the Director or the general public pursuant to the requirements in 40 CFR 70.4(b)(3)(viii). 

## 33

(o) The reference to the Code of Federal Regulations (CFR) in this Rule are incorporated by reference unless a 

## 34

specific reference states otherwise. Except for 40 CFR 81.334, the version of the CFR incorporated in this Rule is 

## 35

that as of May 16, 2008 and does not include any subsequent amendments or editions to the referenced material. 

## 36

37

## Appendix A

Draft

– 10/9/2012 11 History Note: Authority G.S. 143-215.3(a)(1); 143-215.107(a)(5); 143-215.108(b); 

## 1 Eff. June 1, 1981; 

## 2 Amended Eff. December 1, 1993; December 1, 1992; August 1, 1991; December 1, 1989; October 

## 3 1, 1989; July 1, 1988; October 1, 1987; June 1, 1985; January 1, 1985; February 1, 1983; 

## 4 Temporary Amendment Eff. March 8, 1994 for a period of 180 days or until the permanent rule is 

## 5 effective, whichever is sooner; 

## 6 Amended Eff. ; January 2, 2011; September 1, 2010; May 1, 2008; May 1, 2005; July 1, 

## 7 1998; July 1, 1996; July 1, 1995; July 1, 1994. 

## 8

### ADDENDUM TO

APPROVED ECONOMIC ANALYSIS

Rule Citation Number: 15A NCAC 02D .0530, Prevention of Significant Deterioration

15A NCAC 02D .0531 Sources in Nonattainment Areas

Rule Topic: Revisions to New Source Review and Prevention of Significant Deterioration (PSD)

Nitrogen Oxides (NO

x 

### ) Significance Level for PM 2.5 

### (512) and PM 2.5 

### Increment (516)

DENR Division: Division of Air Quality

Agency Contact: Joelle Burleson, Rule Development Branch Supervisor Division of Air Quality (DAQ)

(919) 707-8720 Joelle.Burleson@ncdenr.gov



## Initial OSBM approval:

October 10, 2012 http://www.osbm.state.nc.us/files/pdf_files/DENR10102012.pdf

Reason for Addendum:

During the public comment period, there were two court decisions that were issued on the implementation of fine particulate ( PM 2.5 

## ) regulations. The first court decision was the U.S. Court of Appeals for the District of Columbia Circuit, January 4, 2013, Sierra Club vs. United States Environmental Protection Agency (EPA), No. 08-1250. The court reviewed the PM 2.5 

## Implementation Rule, 72 FR 20586 (4/25/2007) and PM 2.5 

## NSR Implementation Rule, 73 FR 28321 (5/16/2008). The petitioners challenged EPA ’s decision to promulgate its PM 2.5 

## implementation rules pursuant to Subpart 1 of Part D of Title I which contains the implementation provisions for nonattainment areas in general rather than Subpart 4 of Part D of Title I which contains implementation provisions specific to PM 10 

## . The court decision remanded the two implementation rules to EPA to repromulgate them pursuant to Subpart 4 of Part D of

Title I of the Clean Air Act.

The second court decision was the U.S Court of Appeals for the District of Columbia Circuit, January 22, 2013, National Resources Defense Council and Sierra Club vs. EPA, No. 10-1413.

The court reviewed of the PM 2.5 

## Increments, Significant Impact Levels (SIL) and Significant Monitoring Concentration (SMC) final rule in 75 FR 64864 (October 20, 2010). Specifically, the court reviewed the adoption of the SIL and SMC screening tools EPA uses to determine whether a new source may be exempted from certain requirements under 40 CFR 51.165, Permit requirements.

The SILs sets a de minimis ambient impac t where a source’s impact that is below a SIL is not required to conduct more extensive modeling to demonstrate its emission will not contribute to a violation of the national ambient air quality standard (NAAQS). The SMC sets a de minimis

## concentration where a source can show through modeling that its impacts are less than the SMC,

eliminating the requirement to collect additional monitoring data. The court decision vacated and remanded the SILs under 51.166(k)(2) and §52.21(k)(2) for further consideration by EPA. The decision also vacated the parts of the rule establishing the SMCs due to EPA exceeding its statutory authority.

Rule Changes:

Rule 15A NCAC 02D .0530 was amended to remove the incorporation by reference date of October 20, 2010 and keep the prehearing May 16, 2008 incorporation by reference date. DAQ also explicitly added the new PM 2.5 

## and existing PM 10 

## increments as indicators of particulate matter in Paragraph (v) of Rule 15A NCAC 02D .0530. Note, the PM 10 

## increments are part of the EPA’s regulation dated May 16, 2008, and as a result were already part of the state rule through the incorporation by reference of the May 16, 2008 regulation. Therefore the inclusion of the

PM 10 

## increments in the rule do es not constitute a new requirement.

Change to OSBM approved fiscal note:

The increments are not changed from the initial proposal. Instead of incorporating the increments by reference, the increments are written into the body of the rule. Therefore there is no change to the calculated fiscal impact due to adding the increment language to the rule.

The significant impact levels (SILs) and significant monitoring concentration (SMC) were incorporated by reference in the proposed rule. Due to the court decision to vacate the SILs and
SMC in EPA’s PM 2.5 

## implementation rule, the SILs and SMC were removed from the proposed rule by changing the incorporation date to the prehearing May 16, 2008. The SIL is a screening tool that EPA developed to evaluate the impact of ne w facilities and major modifications on the

PM 2.5 

## NAAQS and PSD increments. A facility can avoid a full impact increment analysis if its emissions are below the SIL. In the fiscal note that was approved for the proposed rules that went to public hearing, it was assumed that all affected facilities were above the SILs. The fiscal analysis assumed that SILs would not be used when the total cost for adding a PM 2.5 

## increment analysis to each PSD permit application was calculated. It was also determined in the fiscal note that there was no impact due to adding the SMC to the proposed rule.

The removal of the SIL and SMC provisions from the rule does not affect the original fiscal impacts calculated in Section III, Costs and Benefits by Affected Party, for state government and the private sector to incorporate the federal PM 2.5 

## increments into the state PSD program

# United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT



## Argued October 17, 2012 Decided January 4, 2013

No. 08-1250

N ATURAL 

## R ESOURCES 

## D EFENSE 

## C OUNCIL AND 

## S IERRA 

## C LUB



## ,

P ETITIONERS



## v.

E NVIRONMENTAL 

## P ROTECTION 

## A GENCY



## ,

R ESPONDENT



## F INE 

## P ARTICULATE 

## L ITIGATION 

## G ROUP ET AL



## .,

I NTERVENORS



## Consolidated with 09-1102, 11-1430

On Petitions for Review of Final Rules of the United States Environmental Protection Agency

Paul Cort

argued the cause for the petitioners. Tim D.
Ballo and David S. Baron entered appearances.

Brian H. Lynk , Attorney, United States Department of Justice, argued the cause for the respondent. Geoffrey L.
Wilcox and Stephanie L. Hogan , Attorneys, United States Environmental Protection Agency, were on brief.

Charles H. Knauss

, Shannon S. Broome

, Robert T. Smith

, Denise W. Kennedy

, John A. Bryson

, Emily C. Schilling

,

## 2

Leslie S. Ritts

, Norman W. Fichthorn

, Lauren E. Freeman

, Lucinda Minton Langworthy and Lorane F. Hebert were on brief for the intervenors. Michelle M. Schoeppe entered an

appearance.

Before: H ENDERSON



## and T ATEL



## , Circuit Judges , and

W ILLIAMS



## , Senior Circuit Judge

. Opinion for the Court filed by Circuit Judge H ENDERSON



## .

K AREN 

## L E 

## C RAFT 

## H ENDERSON



## , Circuit Judge : The four petitioners seek review of two final rules, promulgated

1 

## pursuant to the Clean Air Act (CAA, Act), which govern implementation of the national ambient air quality standard (NAAQS) for “fine” particulate matter—that is, particulate matter (PM) having a diameter equal to or less than 2.5

2

2.5 

## micrometers (PM ). See Final Clean Air Fine Particle Implementation Rule, 72 Fed. Reg. 20,586 (Apr. 25, 2007)

2.5 

## (PM Implementation Rule); Implementation of the New Source Review (NSR) Program for Particulate Matter Less

2.5 

## Than 2.5 Micrometers (PM ), 73 Fed. Reg. 28,321 (May 16,

2.5 

## 2008) (PM NSR Implementation Rule) (collectively, Final

They include the Natural Resources Defense Council, Sierra 1 

### Club, American Lung Association and Medical Advocates for Healthy

Air.

“Particulate matter is the generic term for a broad class of 2 

### chemically and physically diverse substances that exist as discrete particles (liquid droplets or solids) over a wide range of sizes.” The particles “originate from a variety of anthropogenic stationary and mobile sources as well as from natural sources” and “may be emitted directly or formed in the atmosphere by transformations of gaseous

x x 

### emissions such as sulfur oxides (SO ), nitrogen oxides (NO ), and volatile organic compounds (VOC).” National Ambient Air Quality Standards for Particulate Matter, 62 Fed. Reg. 38,652, 38,653 (July 18, 1997).

## 3

2.5 

## PM Implementation Rules). In particular, the petitioners 3 

## challenge the decision of the Environmental Protection

2.5 

## Agency (EPA) to promulgate the Final PM Implementation Rules pursuant to the general implementation provisions of Subpart 1 of Part D of Title I of the Act, 42 U.S.C. §§ 7501- 7509a (Subpart 1), rather than the particulate-matter-specific provisions of Subpart 4 of Part D of Title I, id . §§ 7513-7513b (Subpart 4). We agree with the petitioners that EPA erred in applying the provisions of Subpart 1 rather than Subpart 4.

I.

Section 109 of the Act mandates that EPA establish a primary NAAQS for each air pollutant for which EPA has issued “air quality criteria” under CAA section 108. 42 U.S.C. § 7409(a)(1). The Act defines each such NAAQS as 4



## that standard “the attainment and maintenance of which in the judgment of the Administrator, based on such criteria and allowing an adequate margin of safety, are requisite to protect the public health.” Id . § 7409(b)(1). EPA is required to “complete a thorough review” of each pollutant’s standard and air quality criteria “at five-year intervals” and “make such revisions in such criteria and standards and promulgate such new standards as may be appropriate.” Id . § 7409(d)(1). Once a NAAQS has been established, each state must adopt

Under the Act’s NSR provisions, new or modified pollutant 3 

### sources must meet “strict standards,” while existing sources are “ ‘grandfathered.’ ” New York v. U.S. EPA , 413 F.3d 3, 13 (D.C. Cir. 2005).

The Act also requires EPA to promulgate a secondary standard, 4 

### “the attainment and maintenance of which . . . is requisite to protect the public welfare from any known or anticipated adverse effects associated with” the pollutant. 42 U.S.C. § 7409(b)(2). In this case, EPA promulgated a single NAAQS as both the primary and the secondary standard.

## 4

and submit to EPA for approval a State Implementation Plan (SIP) that “provides for implementation, maintenance, and enforcement of [the NAAQS] in each air quality control region (or portion thereof) within such State.” Id. § 7410(a)(1). Each SIP must “include enforceable emission limitations and other control measures, means, or techniques . . . , as well as schedules and timetables for compliance, as may be necessary or appropriate to meet the [CAA’s] applicable requirements.” Id. § 7410(a)(2)(A).

Part D of CAA Title I governs “Plan Requirements for Nonattainment Areas” (that is, areas that have not attained compliance with the applicable NAAQS) and Subpart 1 thereof, added to the Act in 1977, addresses “Nonattainment Areas in General.” Subpart 1 provides generally that, once EPA designates an area as “nonattainment,” it “may classify
the area” so as to establish an attainment deadline and it must establish a schedule for the state encompassing the
nonattainment area to submit a SIP. Id . § 7502(a)(1)(A). The SIP, in turn, is required, inter alia, to (1) provide for implementation of control measures, (2) inventory existing emissions, (3) identify and quantify pollutant emissions permissible under the SIP from the construction and operation of all major new stationary emission sources, (4) require NSR permits for such construction and operation and (5) establish compliance schedules and timetables. Id . § 7502(c). Pursuant to this regime, in 1971, EPA established a particulate matter NAAQS applicable to “Total Suspended Particles,” i.e., particulate matter up to 25-45 micrometers in diameter.

In 1987, EPA revised the NAAQS to apply only to

10 

## particles equal to or smaller than 10 micrometers (PM )—a “size-specific indicator” it determined “represent[ed] those particles small enough to penetrate to the thoracic region” because “[t]he risks of adverse health effects associated with deposition of typical ambient fine and coarse particles in the

## 5

thorax (tracheobronchial and alveolar regions of the respiratory tract) are markedly greater than those associated with deposition in the extrathoracic (head) region.” Revisions to the National Ambient Air Quality Standards for Particulate Matter, 52 Fed. Reg. 24,634, 24,639 (July 1, 1987) (footnote omitted) (1987 PM NAAQS Revisions).

In 1990, the Congress amended CAA Part D by adding to it Subparts 2 through 5, each of which contains additional provisions governing nonattainment plan requirements for a particular pollutant or group of pollutants. At issue here, Subpart 4 applies to “Particulate Matter Nonattainment Areas” and covers such matters as setting attainment dates for PM nonattainment areas, classifying the nonattainment areas (as “moderate” or “serious”), reclassifying them (e.g., upon failure to attain) and extending attainment dates. 42 U.S.C. §§ 7513-7513b; see also id . §§ 7511-7511f (ozone-specific requirements); id . §§ 7512-7512a (carbon monoxide-specific requirements).

In 1997, EPA again revised the particulate matter

2.5 

## NAAQS, this time setting separate PM standards for fine particles (having a diameter of 2.5 micrometers or less), while

10 

## retaining the existing PM standards. National Ambient Air Quality Standards for Particulate Matter, 62 Fed. Reg. 38,652, 38,654 nn.5-6 (July 18, 1997) (Final PM NAAQS Rule). We upheld the new particulate matter standards in 2002 after remand from the United States Supreme Court. See Am. Trucking Ass’ns v. EPA , 283 F.3d 355 (D.C. Cir. 2002) (applying Whitman v. Am. Trucking Ass’ns , 531 U.S. 457 (2001)).

In 2005, EPA published its Proposed Rule To Implement the Fine Particle National Ambient Air Quality Standards, 70 Fed. Reg. 65,984 (Nov. 1, 2005). EPA subsequently issued the final fine particle implementation rule in two stages. In

2.5 

## 2007, it published the PM Implementation Rule, setting out

## 6

2.5 

## the general SIP requirements for PM . EPA followed up in

2.5 

## 2008 with the PM NSR Implementation Rule to govern the

2.5 

## NSR permitting process. In each of the two Final PM Implementation Rules, EPA expressly followed the general implementation provisions in Subpart 1 of Part D rather than Subpart 4’s particulate-material-specific provisions. See

2.5 

## PM Implementation Rule, 72 Fed. Reg. at 20,589 (“EPA is

2.5 

## issuing this rule to implement the 1997 PM NAAQS in accordance with the statutory requirements of the CAA set forth in Subpart 1 of Part D of Title 1, i.e., sections 171-179B of the Act. . . . EPA has concluded that Congress did not intend the Agency to implement particulate matter NAAQS

10 

## other than those using PM as the indicator in accordance

2.5 

## with Subpart 4 of Part D of Title 1 . . . .”); PM NSR Implementation Rule, 73 Fed. Reg. at 28,332 (“We do not

2.5 

## agree that subpart 4 of part D applies to PM nonattainment areas. Subpart 4 was added to the Act by Congress

10 

## specifically to address the PM NAAQS. We believe that the

2.5 

## PM standard should be implemented under subpart 1 of part D, which is the general provision of the Act related to NAAQS implementation.”). The petitioners filed timely

2.5 

## petitions for review of both the PM Implementation Rule

2.5 

## and the PM NSR Implementation Rule.

II.

We review EPA’s interpretation of the CAA under Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc. , 467 U.S. 837 (1984). See Natural Res. Def. Council v. EPA , 489 F.3d 1250, 1257 (D.C. Cir. 2007). Under Chevron :

We first ask “whether Congress has directly spoken to the precise question at issue,” in which case we “must give effect to the unambiguously expressed intent of Congress.” If the “statute is silent or ambiguous with respect to the specific issue,” however, we move to the second step and defer to

## 7

the agency’s interpretation as long as it is “based on a permissible construction of the statute.”

Id . (quoting Chevron , 467 U.S. at 842-43) (other quotation marks omitted). Before addressing whether EPA correctly applied Subpart 1 under the Chevron framework, we first consider the timeliness of the petitioners’ instant challenge.

A.

EPA contends the petitioners’ challenge is untimely
because it should have been raised in 1997 when EPA issued the Final PM NAAQS Rule, which, EPA maintains, set out its final decision on Subpart 1’s applicability. Because we conclude EPA did not take final reviewable action in 1997, the petitioners’ challenge is timely. 5



## In urging that it finalized its decision in 1997, EPA relies on two excerpts from the preamble to the 1997 Final PM NAAQS Rule. First, EPA cites its response to comments

2.5 

## challenging its authority to promulgate a separate PM standard given that the 1990 amendments referred only to a

10 

## PM standard. At the conclusion of its response, EPA offered the following defense of its authority to promulgate the new

2.5 

## PM standards, rooted in Subpart 1, couched in plainly tentative language:

2.5 

## EPA’s analysis of its ability to implement a PM standard under the provisions of subpart 1 of Part D of Title I does not support the view that Congress prohibited EPA from promulgating such a standard. Congress clearly specified an approach to the

2.5 

### EPA acknowledges the instant petitions for review of the PM 5

2.5 

### Implementation Rule and the PM NSR Implementation Rule were timely filed within sixty days after each rule’s publication as required under 42 U.S.C. § 7607(b)(1). See Br. of Resp’t 1.

## 8

10 

## implementation of the PM standard in the provisions of subpart 4 of Part D of Title I of the Act.
The EPA believes that the clear and express linkage

10 

## of that approach to the PM standard indicates that a different PM standard should be implemented under the general principles of subpart 1 of Part D of Title I of the Act. That Congress directed specifically how

10 

## EPA and the States should implement the PM standard does not carry with it the implication that Congress intended to prohibit EPA from exercising its otherwise clear and express authority to adopt a
PM standard based on a different metric . . . .

Final PM NAAQS Rule, 62 Fed. Reg. at 38,695 (emphases added). Some pages later, in a footnote, EPA more affirmatively, albeit summarily, stated its position that implementation of the new standard need not and would not be governed by Subpart 4: “The SIP requirements of subpart 4 of Part D of Title I of the Act apply to SIPs for areas

10 

## designated as not attaining NAAQS for PM . Those

2.5 

## requirements will not apply to SIPs to implement the PM NAAQS.” Id . at 38,704 n.96. We conclude these two unembellished snippets, buried in the preamble to the 1997 Final PM NAAQS Rule, did not constitute final agency action
so as to be reviewable in 1997.

“A final agency action is one that marks the consummation of the agency’s decisionmaking process and that establishes rights and obligations or creates binding legal consequences.” Natural Res. Def. Council v. EPA , 559 F.3d 561, 564 (D.C. Cir. 2009) (citing Bennett v. Spear , 520 U.S. 154, 177-78 (1997)). We have observed that “[w]hile preamble statements,” such as those just quoted, “may in some unique cases constitute binding, final agency action susceptible to judicial review, this is not the norm.” Id . at

## 9

564-65 (citations omitted). As this case is not a “unique” one,
we adhere to the norm.

The above quoted excerpts appear in a document expressly intended to “describe[] EPA’s decision to revise the national ambient air quality standards (NAAQS) for particulate matter (PM),” Final PM NAAQS Rule, 62 Fed. Reg. at 38,652 (emphasis added)—it did not purport to detail how the revised standards should be implemented. Indeed, EPA had earlier addressed the issue of implementation in a separate Interim Implementation Policy on New or Revised Ozone and Particulate Matter (PM) National Ambient Air Quality Standards (NAAQS), 61 Fed. Reg. 65,752 (Dec. 13, 1996) (Interim Implementation Policy). Although the Interim Implementation Policy likewise expressed an intent to apply

2.5 

## Subpart 1 to implement the PM standard, 61 Fed. Reg. at 65,753, it made clear that, as its name suggests, it was only a temporary policy, which “would represent EPA’s preliminary views” and “while it m[ight] include various statements that States must take certain actions, these statements [we]re made pursuant to EPA’s preliminary interpretations , and thus d[id]
not bind the States and public as a matter of law.” Id . at 65,752 (emphases added). Accordingly, “[o]nly after EPA ha[d] made its interpretations final through rulemaking”— “follow[ing] the requirements of the Administrative Procedure Act, 5 U.S.C. section 553(b) and (c)”—“will they be binding on the States and public as a matter of law.” Id

.Given EPA’s expressed intent to issue a final, binding noticeand-comment rule on the issue—to supplant its “preliminary” policies—we do not see how the quoted lines from the preamble to the 1997 rule revising the standard itself “mark the consummation of the agency’s decisionmaking process” on how to implement the standard so as to constitute final agency action. Bennett v. Spear , 520 U.S. at 177-78 (internal quotation marks omitted). Instead, we conclude EPA consummated the decisionmaking process to implement the

## 10

2.5 

## PM standard only when it published its final views in the

2.5 

## two Final PM Implementation Rules now under review. Notwithstanding its express and indefinite deferral of a final implementation policy in 1997, EPA argues the Supreme
Court’s decision in Whitman v. American Trucking

Associations , 531 U.S. 457 (2001), requires us to hold otherwise. We are not so persuaded.

In Whitman, the Supreme Court reviewed EPA’s decision to implement its “8-hour” 0.08 ppm NAAQS for ozone— which replaced the previous 1-hour ozone standard of 0.12 ppm—under Subpart 1’s general nonattainment area provisions rather than under Subpart 2’s ozone-specific provisions added in 1990. See National Ambient Air Quality Standards for Ozone, 62 Fed. Reg. 38,856, 38,873 (July 18, 1997) (Final Ozone NAAQS Rule) (“[T]he provisions of subpart 1 of part D of Title I of the Act would apply to the

3 

## implementation of the new 8-hour O standards.”). The Court concluded that, in the main, the new ozone NAAQS should be implemented pursuant to Subpart 2 notwithstanding Subpart 2
was enacted to address the former 1-hour standard and some provisions might therefore be “ill fitted to implementation of the revised standard” and thus leave “gaps” for EPA to fill
under Chevron step 2. Whitman , 531 U.S. at 483-84. The
Whitman Court first addressed the threshold question whether Subpart 1 constituted final agency action subject to review
and concluded that it did. See id . at 477-78.

Addressing the Interim Implementation Policy, which covered both the ozone and the particulate matter standards,
the Whitman Court acknowledged: “If the EPA had done no more, we perhaps could accept its current claim that its action
was not final.” Id . at 477. The Court explained, however, that, vis-à-vis the ozone standard, EPA had done “more.”
After the White House issued a “ ‘Memorandum for the Administrator of the Environmental Protection Agency’ that

## 11

prescribed implementation procedures for the EPA to follow,” EPA “supplemented this memorandum with an explanation of the implementation procedures.” Id .; see Implementation of Revised Air Quality Standards for Ozone and Particulate Matter, 62 Fed. Reg. 38,421, 38,422 (July 18, 1997) (Memorandum of July 16, 1997); Implementation Plan for Revised Air Quality Standards, 62 Fed. Reg. 38,423 (Implementation Memorandum Supplement). In a section of the Implementation Memorandum Supplement titled “Implementation of Ozone Standard,” EPA explained that, after receiving comments on the proposed Interim Implementation Policy, it had “reconsidered” its interpretation in part and determined that “Subpart 2 should continue to apply as a matter of law for the purpose of achieving
attainment of the current 1-hour standard.” Id . at 38,424. But EPA made clear it adhered to its previously expressed view that “[o]nce an area attains the 1-hour standard, those provisions will no longer apply and the area’s implementation of the new 8-hour standard would be governed only by the provisions of Subpart 1 of Part D of Title I.” Id . EPA subsequently “published [this interpretation] in the explanatory preamble to its final ozone NAAQS under the heading, ‘Final decision on the primary standard.’ ”
Whitman , 531 U.S. at 477-78 (citing Final Ozone NAAQS Rule, 62 Fed. Reg. at 38,873). Based on this chronology, the Supreme Court found EPA’s ozone implementation policy was final and reviewable, explaining:

The EPA’s “decisionmaking process,” which began with the 1996 proposal and continued with the reception of public comments, concluded when the agency, “in light of [these comments],” and in conjunction with a corresponding directive from the White House, adopted the interpretation of Part D at issue here. Since that interpretation issued, the EPA has refused in subsequent rulemakings to reconsider

## 12

it, explaining to disappointed commenters that its
earlier decision was conclusive.

Whitman , 531 U.S. at 478-79 (citing 63 Fed. Reg. 31,014,

2.5 

## 31,018-19 (1998)). The history of the PM standard reveals no comparable decisionmaking process regarding implementation. The Implementation Memorandum Supplement did not even mention Subpart 1 or Subpart 4 in its

2.5 

## discussion of the PM implementation—much less distinguish between them or discuss their applicability vel non

2.5 

## to implementation of the PM standard. See 62 Fed. Reg. at

2.5 

## 38,427-29 (section titled “Implementation of New PM NAAQS”). Nor did EPA thereafter overtly treat its “interim”

2.5 

## PM implementation policy as final when it promulgated the

2.5 

## 2007 and 2008 Final PM Implementation Rules challenged here. Accordingly, we conclude the petitioners’ challenge is timely and proceed to EPA’s substantive decision to implement the NAAQS under Subpart 1.

B.

EPA contends that because Subpart 4 repeatedly refers to

10 2.5 

## PM —rather than to PM or “particulate matter” generally—the statutory language limits Subpart 4’s

10 

## applicability to implementation of the current PM standard.

2.5 

## Thus, by default, EPA contends, PM must be implemented pursuant to the general (and less stringent ) implementation 6



### For example, (1) Subpart 4 requires a nonattainment area to be 6 

### classified as “moderate” and upon failure to attain to be reclassified as “serious,” 42 U.S.C. § 7513(a)-(c), while under Subpart 1, EPA “may” but is not required to classify a nonattainment area, id

. § 7502(a)(1)(A); (2) under Subpart 4, a “serious” attainment date may be extended only once (for a maximum of 5 years) and only if the SIP includes the “most stringent measures” included in any state’s SIP or achieved in any State and feasible for the area, id . § 7513(e), while Subpart 1 allows attainment date extensions of up to 10 years with no

## 13

procedure in Subpart 1. This argument ignores the plain meaning of the statute and the lesson of Whitman

. Before the Congress enacted Subpart 4, EPA had

10 

## promulgated a single particulate matter standard—the PM standard—which encompassed all particulate matter with a diameter of 10 micrometers or less—including both coarse and fine particulate matter, that is, particulate matter now

10 2.5 

## governed by both the PM and PM standards—and the 1990 CAA amendments adopted this broad meaning in

10 

## defining “PM .” 1987 PM NAAQS Revisions, 52 Fed. Reg. at 24,639 (“The Administrator . . . has decided to replace [Total Suspended Particles] as the particle indicator for the primary standards with a new indicator that includes only those particles less than a nominal 10 [micrometers] in diameter. . . . In defining the standards for particulate matter,

10 

## this new indicator is termed PM .”); 42 U.S.C. § 7602(t) (“The term ‘PM-10’ means particulate matter with an aerodynamic diameter less than or equal to a nominal ten micrometers . . . .”). Thus, by its express terms, Subpart 4,

10 

## when enacted, governed all PM particles, including those

2.5 

## now denominated PM . The scope of the statutory definition—and consequently of Subpart 4’s application—did

10 

## not change when EPA subdivided PM by regulation. As the

“stringent measures” requirement therefor, id . § 7502(a)(2)(A); (3) Subpart 4 subjects a “serious” nonattainment area that fails to timely attain to a mandatory annual 5% pollutant reduction, id . § 7513a(d), while Subpart 1 includes no such requirement; (4) Subpart 4 requires that “reasonable available control measures” must be implemented within 4 years after designation, id . § 7513a(a)(1)(C), while Subpart 1 requires such measures be implemented “as expeditiously as practicable,” id . § 7502(c)(1); and (5) Subpart 4 requires that best available control measures be implemented no later than 4 years after an area is classified or reclassified as “serious,” id . § 7513a(b)(1)(B), while Subpart 1 has no best available control measures requirement.

## 14

Whitman Court made clear, the intent of the 1990 amendments was to limit the broad implementation discretion Subpart 1 had previously granted EPA. Cf. Whitman , 531 U.S. at 484 (“The principal distinction between Subpart 1 and Subpart 2 is that the latter eliminates regulatory discretion that the former allowed.”). It makes no sense then that the Congress would have wanted EPA to relax Subpart 4’s more stringent, nondiscretionary requirements for implementing

2.5 

## the PM standard at the same time EPA decided to

2.5 

## strengthen the PM standard itself based on “evidence from numerous health studies demonstrating that serious health effects are associated with exposures to elevated levels of

2.5 2.5 

## PM .” PM Implementation Rule, 72 Fed. Reg. at 20,586;

see also id . at 20,586-87 (“Epidemiological studies have shown statistically significant correlations between elevated

2.5 

## PM levels and premature mortality. Other important effects

2.5 

## associated with PM exposure include aggravation of respiratory and cardiovascular disease (as indicated by increased hospital admissions, emergency room visits, absences from school or work, and restricted activity days), changes in lung function and increased respiratory symptoms,
as well as new evidence for more subtle indicators of cardiovascular health. Individuals particularly sensitive to

2.5 

## PM exposure include older adults, people with heart and lung disease, and children.”). Notwithstanding the plain 7



### The regulations’ treatment of precursors provides a useful 7 

### example of how the Agency has used Subpart 1 to establish a less stringent implementation regime than envisioned by Subpart 4. Ammonia is a precursor to fine particulate matter, making it a

2.5 10 10 

### precursor to both PM and PM . For a PM nonattainment area governed by Subpart 4, a precursor is presumptively regulated. See 42

2.5 

### U.S.C. § 7513a(e). But under the PM rules challenged here, the EPA established a rebuttable presumption against regulating ammonia unless a State or the EPA “provides an appropriate technical demonstration” that shows emissions from ammonia “significantly

## 15

meaning of the statutory language and the force of Whitman

, 8 

## EPA offers several unconvincing arguments to support

2.5 

## implementing the new PM standard pursuant to Subpart 1 rather than Subpart 4.

First, EPA claims Subpart 4 “contains requirements that

10 

## are expressly based upon the form of the PM NAAQS.” Br. of Resp’t 31. This may be true but Subpart 4 also expressly governs implementation of the “PM-10” standard, see 42 U.S.C. §§ 7513-7513b, and the Act defines “PM-10” as “particulate matter with an aerodynamic diameter less than or

2.5 

### contribute to PM concentration in the nonattainment area.” 40 C.F.R. § 51.1002(c)(4)(i). When Congress enacted Subpart 4, it sought to end this administrative gamesmanship.

EPA offers several grounds to distinguish Whitman —none of 8 

### them persuasive. First EPA notes that the text of Subpart 2 refers generically to “ozone” while Subpart 4’s text refers specifically to

10 

### PM , EPA Br. 36—but Subpart 4’s title refers generically to “Particulate Matter” and, as we have noted, when the 1990

10 2.5 

### amendments to the CAA were enacted, PM included PM under both the new statutory definition and the existing EPA definition. Second, EPA argues that Subpart 4’s provisions do not “comprehensively prescribe[] classifications and attainment dates for
all particulate matter nonattainment areas.” Br. of Resp’t 37 (emphasis in original). Subpart 4 may not be as comprehensive as Subpart 2 but its requirements are specific, more stringent and far less discretionary than Subpart 1. See supra note 6. Third, EPA contends

2.5 

### that in contrast to Whitman , EPA’s application of Subpart 1 to PM does not render Subpart 4 “utterly nugatory” because Subpart 4 still

10 

### applies to the remaining PM standard. Br. of Resp’t 37 (quoting

Whitman , 531 U.S. at 484). But if EPA’s interpretation stands, Subpart 4 will be “utterly nugatory” with respect to implementation of

2.5 

### the PM standard—notwithstanding the Congress expressly directed

10 25 

### the standard applicable to all PM particles, including PM , be regulated under Subpart 4.

## 16

equal to a nominal ten micrometers,” 42 U.S.C. § 7602(t). Thus, under Chevron step 1, EPA must implement all

10 2.5 

## standards applicable to PM —including its PM standards—pursuant to Subpart 4.

Second, EPA urges that because in the 1987 PM NAAQS Revisions, it “had considered whether to establish a separate

2.5 

## NAAQS for fine particles, using PM as the indicator,” the Congress should have foreseen that it might do so later. Br. of Resp’t 32. It is not at all clear that the Congress should have so foreseen—EPA cites a single, vague footnote to support its claim the Congress was on notice such a change was likely. Id . at 32 (citing 52 Fed. Reg. at 24,639 n.2 (“Particles in ambient air usually occur in two somewhat overlapping size distributions, fine (diameter less than 2.5 [micrometers]) and coarse (diameter larger than 2.5 [micrometers]. The two size fractions tend to have different origins and composition.” (staff document citation omitted)). But even were such notice clear, it does not follow that the

2.5 

## Congress therefore intended that a separate PM standard (if promulgated) be exempt from Subpart 4’s requirements. As

in Whitman , the possibility of such a change suggests only that gaps resulting therefrom might “prevent us from concluding that Congress clearly intended [the specific pollutant subpart] to be the exclusive, permanent means of enforcing a revised ozone standard in nonattainment areas.”
Whitman , 531 U.S. at 484 (emphasis added). It does not render “utterly nugatory” the restrictions that the 1990 amendments imposed on EPA’s discretion in implementing the particulate matter standards for all particles 10
micrometers or less in diameter. See id . As the Supreme Court observed regarding Subpart 2, “[a] plan reaching so far
into the future was not enacted to be abandoned the next time the EPA reviewed the [pollutant’s] standard—which Congress knew could happen at any time.” Id . at 485.

## 17

EPA also argues that the Congress “could have easily used the general term ‘particulate matter,’ rather than the specific term ‘PM-10.’ ” Br. of Resp’t 33. That the Congress

10 

## could have done so does not negate the reality that the “PM ” standard to which the Congress referred in fact included fine

2.5 

## PM (both under the 1987 Rule and the 1990 statutory definition).

In a final Chevron step 1 effort, EPA asserts that the legislative history makes the Congress’s intent clear. Assuming legislative history could override the plain, unambiguous directive of Subpart 4, the history cited here is unconvincing. EPA relies on a single congressman’s statement: “ ‘The Title I PM-10 provisions of H.R. 3030
somewhat reschedule the attainment dates that would otherwise apply under the PM-10 standards as promulgated by EPA.’ ” Br. of Resp’t 39 (quoting A Legislative History of the Clean Air Act Amendments of 1990 , at 2996 (Comm. Print 1993) (statement of Rep. John Murtha)). This statement avails EPA nought. “[P]utting to one side the fact that this was the statement of a single [member of Congress], . . . it is not necessarily inconsistent with” the petitioners’ view that

2.5 

## Subpart 4 continues to apply to PM standards. See Grand Canyon Air Tour Coal. v. FAA , 154 F.3d 455, 474 (D.C. Cir. 1998). At the time the statement was uttered, “the PM-10 standards as promulgated by EPA” applied to all particulate matter having a diameter equal to or less than 10

2.5 

## micrometers—including what is now denominated PM . 9



### Moreover, “judges must exercise extreme caution before 9 

### concluding that a statement made in floor debate, or at a hearing, or printed in a committee document may be taken as statutory gospel, in light of the endemic interplay, in Congress, of political and legislative considerations likely unrelated to the interpretive tasks of a court.” Tex. Mun. Power Agency v. EPA , 89 F.3d 858, 875 (D.C. Cir. 1996) (per curiam) (quotation marks and alterations omitted). Here, it is

## 18

See 1987 PM NAAQS Revisions, 52 Fed. Reg. at 24,639.

EPA additionally argues that its “reading of the act is, at minimum, a ‘permissible’ interpretation entitled to deference
under Chevron step two.” Br. of Resp’t 41 (upper case lowered). This argument is foreclosed, however, under
Chevron step 1 because the statute is plain on its face.

For the foregoing reasons, we grant the petitions for review of the Final Clean Air Fine Particle Implementation Rule, 72 Fed. Reg. 20,586 (Apr. 25, 2007), and the Implementation of the New Source Review (NSR) Program

2.5 

## for Particulate Matter Less Than 2.5 Micrometers (PM ), 73Fed. Reg. 28,321 (May 16, 2008). We remand to EPA to repromulgate these rules pursuant to Subpart 4 consistent with this opinion. 10



## So ordered

.

hard to ignore “the irony that [EPA] points to the same floor statement that the [petitioners] contend[] supports [their] opposite

view.” Grand Canyon Air Tour Coal. , 154 F.3d at 474 (emphasis in original).

In light of our disposition, we need not address the petitioners’ 10 

### challenge to the presumptions in 40 C.F.R. § 51.1002(c)(3)-(4) that

2.5 

### volatile organic compounds and ammonia are not PM precursors as Subpart 4 expressly governs precursor presumptions. See 42 U.S.C. § 7513a(e). Moreover, we decline the petitioners’ invitation to set a deadline for EPA upon remand or to retain jurisdiction pending such

action. See Natural Res. Def. Council v. EPA , 489 F.3d 1364, 1375 (D.C. Cir. 2007) (“We decline to set a two year limit on EPA’s proceedings on remand as the NRDC requests; mandamus affords a remedy for undue delay.”); North Carolina v. EPA , 550 F.3d 1176, 1178 (D.C. Cir. 2008) (per curiam) (declining invitation to “impose a definitive deadline by which EPA must correct [clean air rule’s] flaws” and reminding petitioners of availability of mandamus).

# United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT



## Argued September 24, 2012 Decided January 22, 2013

No. 10-1413

S IERRA 

## C LUB



## ,

P ETITIONER



## v.

E NVIRONMENTAL 

## P ROTECTION 

## A GENCY AND 

## L ISA 

## P EREZ


## J ACKSON



## , A DMINISTRATOR



## , R ESPONDENTS



## U TILITY 

## A IR 

## R EGULATORY 

## G ROUP



## , I NTERVENOR



## On Petition for Review of Final Actions of the United States Environmental Protection Agency

David S. Baron argued the cause for petitioner. With him

on the briefs were Seth L. Johnson and Emma C. Cheuse

.

Jessica O'Donnell , Attorney, U.S. Department of Justice, argued the cause for respondents. With her on the brief were

Brian L. Doster , Assistant General Counsel, U.S. Environmental Protection Agency, and Scott J. Jordan

, At torney.

## 2

Andrea Bear Field

, Makram B. Jaber

, Lucinda Minton Langworthy , and Elizabeth L. Horner were on the brief for intervenor Utility Air Regulatory Group in support of respondent.

Before: S ENTELLE



## , Chief Judge , G RIFFITH



## , Circuit Judge

, and E DWARDS



## , Senior Circuit Judge

.

Opinion for the Court filed by Chief Judge S ENTELLE



## .

S ENTELLE



## , Chief Judge : In October 2010, the Environmental Protection Agency (“EPA”) issued a final rule establishing regulations for particulate matter less than 2.5

micrometers (“PM 2.5 

## ” ) under § 166 of the Clean Air Act (“the Act”)

, 42 U.S.C. § 7476. See Prevention of Significant Deterioration (PSD) for Particulate Matter Less Than 2.5 Micrometers (PM 2.5 

## )— Increments, Significant Impact Levels (SILs) and Significant Monitorin g Concentration (SMC), 75 Fed. Reg. 64,864 (Oct. 20, 2010). In this rule

, the EPA established Significant Impact Levels ( “ SILs ” ) and a Significant Monitoring Concentration ( “ SMC ”) for PM 2.5 

## , screening tools the EPA uses to determine whether a new source may be exempt ed from certain requirements under §

165 of the Act , 42 U.S.C. § 7475

. 75 Fed. Reg. at 64,890– 91, 64,895. Petitioner Sierra Club seeks review of this regulation.

After the Sierra Club filed its petition, the EPA acknowledged that portions of the rule establishing SILs did not reflect its intent in promulgating the SILs , and now requests that we vacate and remand some (but not all) parts of

its PM 2.5 

## SIL regulations

. Notwithstanding the EPA’s concession, the Sierra Club maintains that the EPA lacks authority to establish SILs and requests that we rule

## 3

accordingly. The Intervenor, Utility Air Regulatory Group (“ UARG”), on the other hand, urges us to uphold the SIL provisions EPA established, or alternat ively, to remand the SIL provisions without ordering that they be vacated

.

Although the EPA conceded that it needs to revise some of the SIL provisions, it continues to assert that the portions of

its rule e stablishing the SMC were valid. For the reasons stated below, we accept the EPA’s concession on the SILs,

and vacate and remand some portions of the EPA’s rule establishing SILs. We further conclude that the EPA exceeded its authority in establishing the SMC, and grant the Sierra Club’s petition as to those portions of the EPA’s rule.

I. BACKGROUND

A. The Clean Air Act

The Clean Air Act requires the EPA to set National Ambient Air Quality Standards (“NAAQS”) for various harmful air pollutants at levels neces sary to protect the public

health and welfare. 42 U.S.C. §§ 7401, 7409. Under the Act,

the EPA must designate areas as attainment, nonattainment, or unclassifiable for each NAAQS. Id. § 7407(d)(1)(A ). States have primary responsibility for implementing the NAAQS

, and must submit a state implementation plan ( “ SIP ” ) specifying how the S tate will achieve and maintain compliance with the NAAQS. Id. § 7407(a).

In 1977, Congress amended the Act to add the Prevention of Significant Deterioration ( “ PSD ”) provisions “to protect the air quality in national parks and similar areas of special scenic or recreational value, and in areas where pollution was within the national ambient standards, while assuring economic growth consistent with such protection.”

## 4

En vironmental Defense Fund v. EPA , 898 F.2d 183, 184 (D.C. Cir. 1990) (citing 42 U.S.C. § 7470). When Congress enacted the PSD provisions, it established maximum

allowable increases over baseline concentrations

— also

known as “increments”

— for certain pol lutants in § 16 3 of

the Act. See 42 U.S.C. § 7473 ; Environmental Defense Fund

, 898 F.2d at 184. For other pollutants, Congress delegated to
the EPA the task of promulgating regulations to prevent the significant deterioration of air quality that would res ult from the emissions of these po llutants

. 42 U.S.C. § 7476(a). For pollutants that the EPA began regulating after Congress enacted the PSD provisions, which includes PM 2.5 

## , the EPA

must promulgate PSD regulations within two years of establishing the NAAQS for that pollutant. Id.

T he PSD provisions also establish requirements for preconstruction review and permitting of new or modified sources of air pollution. See id. § 7475. Subsection 165 (a) of

the Act lists the requirements an owner or operator proposing to construct a new source or modify an existing source must

meet before starting construction, which include acquiring a PSD permit for the facility. Id. § 7475(a)(1)

– (2). Of relevance to this petition, § 165(a)(3) requires that an owner or operator proposing to construct a n ew major emitting facility or modify an existing facility demonstrate that emissions from construction or operation of the facility will

not cause or contribute to any violations of the increment more than once per year, or to any violation of the NAAQS

ever. Id. § 7475(a)(3).

Before a review of the § 165(a) requirements may be undertaken, however, either a S tate or the owner or operator of a facility applying f or a PSD p ermit must conduct an analysis of the ambient air quality at the proposed site and in

areas that may be affected by emissions from the facility for

## 5

the relevant pollutants. Id. § 7475(e)(1). This analysis must include continuous air quality mon itoring data gathered to
determine whether the facility will exceed either the increments or the NAAQS. Id. § 7475(e)(2). The Act further mandates that this data be collected for a year before the date the applicant applies for a permit unless a State, in accordance with EPA regulations, “determines that a complete and adequate analysis for such purposes may be accomplished in a shorter time period.” Id . The results of the analysis must be made available to the public at the time of the public hearing on the application for a PSD permit. Id.

The Act requires S tates to address the PSD provisions in

their SIPs. Id. § 7410(a)(2). The EPA has promulgated extensive regulations setting forth requirements and guidelines on how SIPs are to implement the PSD provisions.

See 40 C.F.R. § 51.166. For S tates without an EPA -approved SIP, the EPA has promulgated separate regulations implementing the PSD provisions. See 40 C.F.R. § 52.21.

B. Regulatory Background: Establishing the PM 2.5 

## Increment , SILs, and SMC

In 1997, the EPA revised its NAAQS to include

standards for PM 2.5 

## , see 62 Fed. Reg. 38,652 (July 18, 1997),

and in 2006 revised the PM 2.5 

## NAAQS, s ee 71 Fed. Reg. 61,144 ( Oct . 1 7 , 2006). In 2007, the EPA proposed a rule establishing increments for PM 2.5



## . See 72 Fed. Reg. 54,112 (Sept. 21, 2007). In this rulemaking, the EPA also proposed two screening tools that would exempt a permit ap plicant from some of the air quality analysis and monitoring required under the Act and EPA regulations: significant impac t levels (“ SILs ”) and significant monitoring concentration (“ SMC ”)

. See id. at 54,138–42.

## 6

1. Significant Impact Levels

Under EPA regulations, the owner or operator of a proposed source or modification must undertake a source impact analysis to demonstrate “that allowable emission increases from the proposed source or modification, in conjunction with all other applicable emission increases or

reductions (including secondary emissions), would not cause

or contribute to” a violation of the increments or the NAAQS. 40 C.F.R. § 51.166(k); id. § 52.21(k). In the proposed rul e, the EPA discussed adopting SIL s for PM 2.5 

## , which the E PA

defines as “numeric values derived by EPA that may be used to evaluate the impact a proposed major source or modification may hav e on the NAAQS or PSD increment.” 72 Fed. Reg. at 54,138. This numeric al value, measured in micrograms per meter cubed ( μg/m 3 

## ) , is the level of ambient impact below which the EPA considers a source to have an insignificant effect on ambient air quality. 72 Fed. Reg. at 54,139. According to the EPA’s proposed rule, “ a source that demonstrates its impact does not exceed a SIL at the relevant location is not required to conduct more extensive air quality analysis or modeling to demonstrate that its emissio ns, in

combination with the emissions of other sources in the vicinity, will not cause or contribute to a violation of the NAAQS at that location,” an analysis t he EPA terms the

cumulative impact analysis

, or the cumulative air quality analysis

. 72 Fed. Reg. at 54,139.

As the legal basis for adopting the SILs, the EPA cited

Alabama Power Co. v. Costle , 636 F.2d 323 (D.C. Cir. 1979). 72 Fed. Reg. at 54,139. I n that case we discussed an administrative agency’s de minimis authority to establish

exe mption s from statutory commands, holding that “[c]ategorical exemptions may . . . be permissible as an

## 7

exercise of agency power, inherent in most statutory schemes, to overlook circumstances that in context may fairly be

considered de minimis.” 636 F.2d at 360

. We further stated that “[u]nless Congress has been extraordinarily rigid, there is likely a basis for an implication of de minimis authority to provide exemption when the burdens of regulation yield a gain of trivial or no value.” Id. at 360

– 61. But th at implied authority does not apply to situations “where the regulatory function does provide benefits, in the sense of furthering the regulatory objectives, but the agency concludes that the acknowledged benefits are exceeded by the costs.” Id. at 361. Applying this de minimis authority, the EPA explains that when a source’s ambient impact does not exceed the SIL

— i.e. , is de minimis

— the “EPA considers the conduct of a cumulative air quality analysis and modeling by such a source to yield information of trivial or no value with respect to the impact of the proposed source or modification.” 72 Fed. Reg.

at 54,139.

2. Significant Monitoring Concentration

In 1980, the EPA “adopted regulations that exempt sources from preconstruction monitoring requirements [ i.e.

, § 165(e)(2) of the Act] for a pollutant if the source can demonstrate that its ambient air impact is less than a value known as the [SMC].” Id. at 54,141. When the EPA first adopted SMCs for other pollutants in 1980, 1 

## it described the SMCs as “air quality concentration de minimis levels for each

1 

### When the EPA established the preconstruction monitoring exemption in 1980, it did not label the emissions values below which the exemption applied as “SMCs,” inst ead terming them “ de

minimis emissions levels.” See 45 Fed. Reg. 52,676, 52,709 (Aug. 7, 1980). But because the de minimis emissions levels promulgated
in 1980 serve the same function as the PM 2.5 

### SMC, we will refer to

the 1980 de minimis levels as SMCs throughout this opinion.

## 8

pollutant for the purpose of providing a possible exemption from monitoring require ments.” Id. (internal alter ations and citations omitted). In its proposed rule establishing an SMC

for PM 2.5 

## , the EPA explained that “[i]f a source can show through modeling of its emissions alone that its impacts are less than the corresponding SMC, ther e is little to be gained by requiring that source to collect additional monitoring data

on PM 2.5 

## emissions to establish background concentrations for further analysis.” Id. The EPA proposed different methodologies for establishing a value for the SMC and , as with the SILs, relied on the de minimis d iscussion from

Alabama Power as the legal basis for establishing an SMC for

PM 2.5 

## . 72 Fed. Reg. at 54,141.

C. Final Rule

In its final rule, the EPA adopted and set values for both

the SILs and SMC for PM 2.5



## . See 75 Fed. Reg. at 64,864. The EPA gave three purposes for the SILs in the final rule,

which were to determine:

(1) When a proposed source’s ambient impacts warrant a comprehensive (cumulative) source impact analysis; (2) the size of the impact area within which the air quality analysis is completed, and (3) whether the emissions increase from a proposed new major stationary source or major modification is considered to cause or contribute to a violation of any NAAQS.

Id. at 64,890.

In adopting the SMC, the EPA emphasized that it retained discretion “to determine when it may be appropriate to exempt a proposed new major stationary source or major modification from the ambient monitoring data requirements

## 9

under the PSD rules.” Id. at 64,895

. The rule codified the

SILs at 40 C.F.R. § 51.166(k) (2) and 40 C.F.R. § 52.21(k) (2)

, and the SMC at 40 C.F.R. § 51.166(i)(5)(i)(c) and 40 C.F.R. § 52.21(i)(5)(i)(c). 7 5 Fed. Reg. at 64,902–07.

The rule also codified the PM 2.5 

## SILs in the EPA’s regulations on ne w source review and permitting requirements at 40 C.F.R. § 51.165(b)(2). Unlike the PSD regulations (40 C.F.R. §§ 51.166, 52.21), § 51.165(b)(2) does not use the SILs to exempt a source from conducting a cumulative air quality analysis. Instead, § 51.165 (b)(2) states that a proposed source or modification will be considered to cause a violation of a NAAQS when that source or modification would, at a minimum, exceed the SIL in any area that does not or would not meet the applicable NAAQS.

II. ANALYSIS

A. Significant Impact Levels

The Sierra Club argues that the EPA lacks de minimis

au thority to promulgate the SILs. Specifically, the Sierra

Club contends that the language of § 165 is so extraordinarily rigid that it bars de minimis exemptions, and that adoption of

the SILs is contrary to the legislative design of the Act. Even

if § 165 of the Act were not so extraordinarily rigid as to bar

any de minimis exemption, the Sierra Club asserts that pollution increases below the SILs are not so trivial as to be

de minimis

.

To illustrate the latter point , the Sierra Club explains that if a proposed source or modification is in an area that is close

to violating the NAAQS or an increment, that source could violate the NAAQS or increment even if its emissions wo uld have an ambient impact below the SIL. For example , if a

## 10

proposed source’s emission of PM 2.5 

## would have a projected air quality impact of 1 μg/m 3 

## over a 24

- hour average (below the SIL of 1.2 μg/m 3 

## over a 24

- hour average), and that source proposes to build in an area that already has an ambient PM 2.5 

## concentration of 35 μg/m 3 

## ( the PM 2.5 

## NAAQS over a 24 -hour average), the construction of that source c ould cause a violation of the NAAQS. See id. §§ 50.13(c) (PM 2.5 

## NAAQS), 51.166(k)(2) (PM 2.5 

## SIL). The Sierra Club further

notes that because the EPA’s regulation automatically
exempts a source with a proposed impact below the SIL from demonstrating it will not cause or contribute to a violation of

the N AAQS, unlimited numbers of sources whose impacts are less than the SILs could cumulatively cause a violation of the NAAQS or increments. Also

, the Sierra Club points out that sources whose impact is below the SILs that construct in an upwind attainment area could worsen existing violations in a downwind nonattainment area. As the SIL regulations are currently written, sources in these scenarios would not be required to demonstrate that they would not cause or contribute to a violation of the NAAQS or incr ement

, even though they likely would cause a violation (in an attainment area) or contribute to a violation (in a downwind nonattainment area) , thus contravening the statutory command in § 165(a) of the Act.

In its brief, the EPA concede s that the SIL provisions, as codified, were flawed. When the EPA responded to commenters in the final rule, it explained that “notwithstanding the existence of a SIL, permitting authorities

should determine when it may be appropriate to conclude that

even a de minimis impact will ‘cause or contribute’ to an air quality problem and to seek remedial action from the proposed new source or modification.” 75 Fed. Reg. at 64,8 92. But as the EPA acknowledges in its brief, “the regulatory text it adopted does no t allow permitting

## 11

authorities the discretion to require a cumulative impact analysis, notwithstanding that the source’s impact is below the SIL, where there is information that shows the proposed source would lead to a violation of the NAAQS or

increments .” Resp’t Br. at 34. Because the EPA asserts that

it did not intend to automatically exempt a proposed source from the requirements of the Act without affording the permitting authorities discretion in applying the SILs

, it requests that we vacate and re mand the regulatory text promulgated in the rule at 40 C.F.R. §§ 51.166(k)(2) and 52.21(k)(2).

Despite the EPA’s concession, the Sierra Club asserts that vacatur and remand, while warranted, does not fully resolve its challenge, and asks that we determ ine whether the EPA has authority to promulgate SILs. We disagree with the Sierra Club that it is necessary to decide the EPA’s authority to promulgate SILs at this point. To do so would require that we answer a question not prudentially ripe for determi nation. On remand the EPA may promulgate regulations that do not

include SILs or do include SILs that do not allow the

construction or modification of a source to evade the requirements of the Act as do the SILs in the current rule. In such an event, we would not need to address the universal

disallowance of all de minimis authority. If the EPA promulgates new SIL provisions for PM 2.5 

## and those provisions are challenged, we can then consider the

law fulness of those SIL provisions.

While the Sierra Club argues that simply vacating and remanding the SIL provisions does not go far enough, the

UARG intervenes to argue that vacatur and remand go too far

. The UARG asserts that rema nding the SIL provisions for further rulemaking is unnecessary for two reasons. F irst, intervenor asserts, the SIL provisions, as informed by the

## 12

EPA’s statements during rulemaking, do allow permitting

authorities discretion in how they apply the SILs. Second, it

argues that if a source with an ambient impact below the SIL

doe s cause a NAAQS or increment violation in an area, the permitting authority for that are a is already obligated to revise

its SIP to address the violation. See 40 C.F.R. § 51.166(a)(3).

The UARG bases the first of these arguments on the premise s that an agency’s interpretation of its own regulations is given deference, a nd that the EPA has int erpreted the SIL provisions so that permitting authorities retain discretion in applying the SILs. See Auer v. Robbins , 519 U.S. 452, 461 (1997) (explainin g that an agency’s interpretation of its own regulations is “controlling unless plainly erroneous or

inconsistent with the regulation.”) (internal citations and quotation marks omitted ). Although the first premise is true, the latter premise is contradicted by the EPA’s statements in

its brief that the regulatory text it adopted does not give permitting authorities sufficient discretion to require a cumulative air quality analysis. That the EPA itself requests that we remand these provisions st rongly argues that the current SIL provisions do not give permitting authorities sufficient discretion in applying the SILs.

T he text of the SIL regulations as codified in the Code of Federal Regulations supports the EPA’s interpretation that the

SILs do not allow a permitting authority sufficient discretion

. Cf. Auer , 519 U.S. at 461 (opin ing that a critical phrase in the contested regulation “comfortably bears the meaning the [agency] assigns.”). Although 40 C.F.R. § 51.166(k)(2), which applies to SIP s, states that a plan “may provide” for the use of SILs to exempt a proposed source or modification from undertaking a cumulative air quality analysis, it does not give permitting authorities that implement the SILs discretion to require a cumulative air q uality analysis for sources that are

## 13

below the SIL, but could nevertheless cause a violation of the NAAQS or increment. And 40 C.F.R. § 52.21(k)(2), which applies to states without an approved SIP, goes even further and simply states that the demonstratio n required under § 165(a)(3) is deemed to have been made if a proposed source or modification’s air quality impact is below the SIL.

The UARG’s second argument, that remand is unnecessary because the EPA requires permitting authorities to address violations by revising their SIPs, also does not persuade us that we should deny the EPA’s request to remand its regulations on the PM 2.5 

## SILs. The PSD provisions Congress enacted may not have specified how the owner or operator of a proposed source or modification must demonstrate compliance, but they do require d emonstration

that the source will not cause or contribute to a violation of the NAAQS or increment as a precondition to construction.

See 42 U.S.C. § 7475(a)(3). As t he Sierra Club notes, relying on permitting authorities to address violations, rather than to prevent violations by requiring demonstration that a proposed source or modification will not cause a violation, conflicts with this statutory command

.

The UA RG finally argues that if we remand the SIL regulations, we should not vacate the regulations, based on our holding in Fertilizer Institution v. EPA , 935 F.2d 1303 (D.C. Cir. 1991), where we stated that “when equity demands, an unlawfully promulgated regul ation can be left in place while the agency provides the proper procedural remedy.” Id.

at 1312. According to the UARG, leaving the SIL provisions in place during the new rulemaking would cause no harm to air quality, while vacating the SIL provisions would have “disruptive consequences” for economic growth

— i.e. , by adding additional burdens to sources with de minimis impacts

.

## 14

Therefore, the UARG asserts that equity requires we do not vacate the SIL provisions.

T he UARG’s equitable argument do es not persuade us

. In Fertilizer Institution we left in place administrative exemption s the EPA adopted without providing adequate

notice and comment , a procedural defect, while in this case the EPA has requested we vacate and remand the SILs

because it di d not have authority to promulgate such a broad exemption

. See id. Because this is a substantive defect, and

because the EPA explicit ly requested we vacate and remand some of its SIL provisions, we will grant its request notwithstanding the UARG’s opposition.

Although the EPA asks us to vacate and remand the parts of its rule codifying SILs at §§ 51.166(k)(2) and 52.21(k)(2), it requests that we let the promulgation of SILs in § 51.165(b)(2) remain operative , emphasizing that the Sierra Club’s challenge o f the EPA’s authority to promulgate SILs

was directed only at the first two regulations. We agree that the parts of the EPA’s rule codifying SILs in § 51.165(b)(2) should remain. We are remanding the other regulations because they allow permitting author ities to automatically exempt sources with projected impacts below the SILs from having to make the demonstration required under 42 U.S.C. § 7475(a)(3) , even in situations where the demonstration may require a more comprehensive air quality analysis. Thes e concerns, which are based on whether the EPA has authority to exempt those requirements, are not present in § 51.165(b)(2), which simply states that a source may be deemed to violate the NAAQS if it exceeds the SIL s in certain

situations . Apparently, for that reason, the Sierra Club only addresses § 51.165(b)(2) in the section of its brief challenging the EPA’s methodology in setting SILs, and not in the section challenging the EPA’s authority to promulgate SILs. See

## 15

Pet’r Br. at 32 n.12, 37 n.17. W e are not now ruling on the methodology the EPA used to determine the SILs. Instead,

we are vacating and remanding §§ 51.166(k)(2) and 52.21(k)(2) based on the EPA’s lack of authority to exempt sources from the requirements of the Act. Therefore, vacatur and remand of § 51.165(b)(2) is not necessary at this point.

Accordingly, we vacate and remand the portions of the EPA’s rule regarding SILs

, with the exception of those portions codified in 40 C.F.R. § 51.165(b)(2).

B. Significant Monitoring Concentrati ons

As with the SILs, the Sierra Club argues that the EPA

does not have de minimis authority to promulgate an SMC for

PM 2.5 

## that can be used to exempt an owner of a proposed source or modification from undertaking the year

- long pre

construction air qualit y monitoring requirement under § 165(e)(2) of the Act. As a threshold issue, however, t he EPA argues that the Sierra Club’s challenge is time

- barred under § 307(b)(1) of the Act because the EPA has used SMCs as a screening tool since 1980. See 42 U.S.C. § 7607(b)(1); 45 Fed. Reg. 52,676, 52,710 (Aug. 7, 1980) (explaining that a source owner may be exempt from preconstruction monitoring if the source’s projected impact is de minimis ). We disagree with the EPA that the Sierra Club’ s petition is

time

- barred, and we agree with the Sierra Club that the EPA

did not have de minimis authority to promulgate the SMC

because we hold Congress was “extraordinarily rigid” in mandating preconstruction air quality monitoring

.

Section 307(b)(1) o f the Act requires a petitioner seeking review of an EPA regulation to file its petition within sixty days from the date the challenged regulation was published in the Federal Register. 42 U.S.C. § 7607(b)(1). The EPA relies

## 16

on our decision in Medical Wa ste Institute and Energy Recovery Council v. EPA , 645 F.3d 420 (D.C. Cir. 2011) , to argue that § 307(b)(1) bars the Sierra Club’s challenge to the

PM 2.5 

## SMC . In that case, the petitioner challenged the EPA’s approach to setting the level of emissions contr ol for pollutants emitted by medical waste incinerators. Id. at 422. The EPA had initially set these levels in 1997, but we remanded its regulations after granting an environmental organization’s petition for review. Id. at 423. The EPA

issued a new ru le in 2009 setting even more stringent level s for emissions control than it had in 1997, prompting another petition for review , this time by an industry organization

. Id.

at 424. In re making the rule, the EPA used the same approach to setting the levels of emissions control for the same set of pollutants as it did in 1997, but used a different data set

. Id.

at 426

– 27. We held that because no one challenged the approach to setting lev els of emissions control in 1997

— the same approach the EPA used in its 2009 regulation — the petitioners had failed to file a timely petition

, and their challenge was thus barred by § 307(b)(1). Id. at 427.

Our holding in Medical Waste Institute , however, does

not apply in this case

. T he EPA has promulgated new regulations for a pollutant it did not regulate in 1980. See 45 Fed. Reg. at 52,733– 34 (listing SMCs for various pollutants

that does not include PM 2.5 

## ) . By establishing a new monitoring exemption for a new pollutant, the EPA exposes its PM 2.5 

## regulation s , including whether it has authority to adopt the SMC exemption for PM 2.5 

## and whether it used an appropriate method to d etermine the level of the SMC, to challenge by a timely filed petition. In Ohio v. EPA , 838 F.2d 1325, 1328 (D.C. Cir. 1988), we opined that “the period for seeking judicial review may be made to run anew when the agency in question by some new promulgation creates the opportunity for re newed comm ent and objection.” Although

## 17

not a parallel to this case in that the Ohio case concerned a reopening, we consider its reasoning instructive.

This, of course, does not mean that a petitioner’s challenge to the EPA’s au thority will always survive, as the EPA’s authority to promulgate certain regulations could be

well

- settled. T he solution, however, is not to bar a ny challenge s to that authorit y under § 307(b)(1) of the Act, but instead to consider the timely challenge and any relevant precedent demonstrating that the EPA has the authority in dispute. Because we h ave not yet decided whether the EPA’s

de minimis authority allows it to establish SMCs as a screening tool to determine when to exempt sources from the Act’s preconstruction monitoring requirement, we will

consider whether the EPA had authority to adopt an SMC for

PM 2.5



## .

Subsection (e) of § 165 of the Act requires that before a PSD permit application can be reviewed, either the S tate or the permit applicant must conduct an analysis of the ambient air quality at the proposed site and in areas which the applicant’s facility may affect. 42 U.S.C. § 7475(e)(1). Under subsection (e)(2), this analysis

shall include continuous air quality monitoring data gathered for purposes of determining whether emissions from such facility will exceed the [increment] o r the maximum allowable concentration permitted under [the NAAQS]. Such data shall be gathered over a period of one calendar year preceding the date of application for a permit under this part unless the State, in accordance with regulations promulgated b y the [EPA], determines that a complete and adequate analysis for such purposes may be accomplished in a shorter period. The results of such

## 18

analysis shall be available at the time of the public hearing on the application for such permit.

Id. § 7475(e)(2 ).

We read § 165(e)(2) of the Act as an “extraordinarily rigid” mandate that a PSD permit applicant undertake preconstruction monitoring. Indeed, we recognized the rigidity of this subsection in Alabama Power when we held that “[t]his is a plain requirement f or inclusion of monitoring

data. ” Alabama Power , 636 F.2d at 372 (hol ding that the EPA did not have authority to dispense with monitoring where Congress mandated the use of that technique, even though monitoring technology at the time was limited)

. Congress’s use of the word “shall” in each sentence of the Act

evidence s a clear legislative mandate that the preconstruction monitoring requirement a pplies to PSD permit applicants.

T hat Congress provided only one exception to this monitoring requirement

— a shorter monitoring period

— suggests that Congress did not intend any other exceptions. See Sierra
Club v. EPA , 294 F.3d 155, 160 (D.C. Cir. 2002). If Congress sought to give the EPA discretion to eliminate the monitoring requirement it could have used less rigid language to achieve

that result , as it has in other subsections of § 165 . For example, in 42 U.S.C. § 7475(e)(2), Congress provided that “[a ir quality] data shall be gathered over a period of one calendar year preceding the date of applicat ion for a permit under this part unless the State, in accordance with regulations promulgated by the [EPA], determines that a complete and adequate analysis for such purposes may be accomplished in a shorter period.” (emphasis added ) . In contrast, § 7475( a)(7) requir es as a condition for obtaining a PSD permit, that an

owner or operator of a proposed source or modification agree
to post

- construction monitoring as “ may be necessary to

determine the effect which emissions” from the facility may

## 19

have on air q uality

. (emphasis added). Moreover, the exception for a shorter monitoring period only applies when the permitting authority determines that a complete and adequate analysis may be accomplished in a shorter period. EPA has not explained how a “complete an d adequate” analysis may be accomplished without any of the monitoring data required by § 165(e)(2).

Given how extraordinarily rigidly Congress stated its monitoring mandate in § 165(e)(2), w e are not persuaded by

the E PA’s arguments that it has de minimis authority to exempt the preconstruction monitoring requirement. T he EPA argues that the Sierra Club fails to show that the statute is so rigid that it precludes the exercise of the EPA’s de

minimis authority. The EPA, however, does not explain ho w the statute is ambiguous, but instead asserts that there is a “virtual presumption” of inherent agency authority. Resp’t Br. at 46; see Public Citizen v. Young , 831 F.2d 1108, 1113 (D.C. Cir. 1987) . This argument is circular . E ven if a

“ virtual presum ption” exists, that presumption can be rebutted by an “extraordinarily rigid” statutory mandate

. See Public
Citizen , 831 F.2d at 1113. Whether we call preconstruction monitoring a “plain requirement” or a requirement mandated by an “extraordinarily rigid ” statute, the result is the same : the

EPA has no de minimis authority to exempt the requirement.

Without pointing out any ambiguity in Congress’s mandate, the EPA asserts that the purpose of the statute’s preconstruction monitoring requirement “is to provide data for purposes of performing an air quality analysis, ” and that it can reasonably conclude “the statute permits an exemption for collection of data that is not useful to carrying out the purposes of the statute.” Resp’t Br. at 49. The EPA confuses the purpose of § 16 5 (e)(2)’s monitoring requirement. The statute explicitly states that one purpose of the monitoring

## 20

requirement is to determine whether emissions from a proposed source or modification will exceed the increments or NAAQ S. 42 U.S.C. § 7475(e)(2). We logically infer from

this statement that Congress intended the monit oring requirement to establish the baseline air quality in an area before the owner of a proposed source or modification even applies for a PSD permit. I f an area’s pre

- existing ambient

PM 2.5 

## concentration is so high that a violation of the NAAQS or increment is imminent, a source below the SMC may

nevertheless cause a violation if built or modified

. This is true even if the source’s projected ambient impac t on PM 2.5 

## is so low that the difference in air quality before and after

construction would be impossible to measure with accuracy. But a permitting authority cannot know how close an area is to violating the NAAQS or increment unless it knows the

existin g ambient concentrations of PM 2.5 

## before a source is

constructed or modified.

The EPA ’s argument also fails to address Congress’s mandate that the results of the air quality analysis required by § 165(e ) be made available to the public at the time of a hearing for a PSD permit. Id. § 7475(e)(2). Indeed , one of Congress’s stated purposes in enacting the PSD provisions was “to assure that any decision to permit increased air pollution in any area to which ” the PSD provisions apply be made only after care ful evaluation by the permitting authority and “after adequate procedural opportunities for informed public participation in the decisionmaking process.” 42

U .S.C. § 7470(5) (emphasis added)

. Congress’s express statement that the public shall have air quality data to allow

for informed participation in PSD application hearings bolsters our conclusion that the EPA has no authority to exempt the monitoring requirement.

## 21

In addition to arguing that § 165(e )(2) was extraordinarily rigid, the Sierra Club contends that the EPA

has no de minimis authority because the PM 2.5 

## SMC thwarts the legislative design of the Act. The EPA addresses th is argument by making two arguments . First, the EPA states

that it has advised permitting authorities not to apply the monitoring exemption when an area’s ambient concentration is close to the NAAQS or the consumption of the increment. Second, the EPA asserts that exempting preconstruction monitoring in areas where the ambient concentration itself is below the SMC (and thus not capable of accurate measurement, regardless of a proposed source’s projected impact) furthers legislative design by avoiding pointless expenditures of effort.

Both these points ignore the rigidity o f the statute. Because the statute leaves no room for exemptions, such as those at issue, granting the permitting authorities discretion to apply the exemption is beyond the EPA’s statutory authority

. As to the EPA’s second point, we agree with the Sierra Club

that the estimation that an area is below the SMC does not render monitoring superfluous because monitoring could

reveal that the estimate was incorrect . More importantly, Congress provided a clear mandate that the EPA does not have authority to disregard, even if the mandated requirements appear to it to be superfluous.

To authorize the EPA to exempt the plain requirement of preconstruction monitoring and to retain (and delegate) discretion on when such an exemption should apply would allow the EPA to engage in an impermissible cost

- benefit analysis

. As we explained in Alabama Power , “ implied authority is not available for a situation where the regulatory function does provide benefits, in the sense of furthering the regulatory objectives, but the agency concludes

## 22

that the acknowledged benefits are exceeded by the costs.”

Alabama Power , 636 F. 2 d at 361. To engage in cost -benefit decisions, the EPA’s implied authority “must be based not on a general doctrine but on a fair reading of the specific statute,

its aims and legislative history.” Id. T he monitoring requirement is a regulatory function that provides benefits, and the statute precludes the EPA from exempting that requirement. Although the year

- long preconstruction monitoring requirement may be onerous and, in some cases
, EPA deems it more costly than beneficial, the EPA may not substitute its policy for that of Congress.

III. CONCLUSION

For the foregoing reasons, we vacate and remand to the agency for further consideration the portions of the EPA’s

rule addressing SILs, except for the parts of its rule codifying

PM 2.5 

## SILs in 40 C.F.R. § 51.165(b)(2). We grant the Sierra Club’s petition as to the parts of the EPA’s rule establishing a PM 2.5 

## SMC, and vacate them because these parts of the rule exceed the EPA’s statutory authority

. See 42 U.S.C. § 7607(d)(9)(3).

So ordered

.

### 28321 Federal Register / Vol. 73, No. 96 / Friday, May 16, 2008 / Rules and Regulations

No comments objecting to the proposal were received. Class E airspace areas extending from 700 feet or more above the surface of the earth are published in paragraphs 6005 of FAA Order 7400.96, signed August 14, 2007, and effective September 15, 2007, which is incorporated by reference in 14 CFR 71.1. The class airspace designation listed in this document will be published subsequently in the Order.

The Rule

The FAA is amending Title 14, Code of Federal Regulations (14 CFR) part 71 to modify Class E airspace at Waynesburg, PA, by providing additional controlled airspace for aircraft executing the RNAV (GPS) Runway 09/27 to the Green County Airport. This action also corrects the geographic position coordinates of the airport.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore, (1) is not a ‘‘significant regulatory action’’ under Executive Order 12866; (2) is not a ‘‘significant rule’’ under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a Regulatory Evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

The FAA’s authority to issue rules regarding aviation safety is found in the Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency’s authority.

This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it modifies Class E Airspace at Waynesburg, PA.

List of Subjects in 14 CFR Part 71

Airspace, Incorporation by reference, Navigation (air). Adoption of the Amendment

■ In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 71 as follows:

**PART 71—DESIGNATION OF CLASS A, CLASS B, CLASS C, CLASS D, AND**  **CLASS E AIRSPACE AREAS; AIRWAYS; ROUTES; AND REPORTING**  **POINTS**

■ 1. The authority citation for part 71 continues to read as follows:

Authority: 49 U.S.C. 106(g); 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959– 1963 Comp., p. 389.

**§ 71.1 [Amended]**

■ 2. The incorporation by reference in 14 CFR 71.1 of Federal Aviation Administration Order 7400.9R, Airspace Designations and Reporting Points, signed August 15, 2007, and effective September 15, 2007, is amended as follows:

Paragraph 6005 Class E Airspace Areas Extending Upward from 700 feet or More Above the Surface of the Earth.

* * * * *

AEA PA E5 Waynesburg, PA [Revised]
Green County Airport, PA

(Lat. 39 ° 54 ′ 04 ′′ N., long. 80 ° 07 ′ 51 ′′ W.) That airspace extending upward from 700
feet above the surface of the Earth within an 8.3-mile radius of Green County Airport.

* * * * *

Issued in College Park, Georgia, on April
21, 2008. Lynda G. Otting,
Acting Manager, System Support Group, Eastern Service Center, Air Traffic Organization.
[FR Doc. E8–10425 Filed 5–15–08; 8:45 am]

**BILLING CODE 4910–13–M**

**DEPARTMENT OF HOMELAND SECURITY** 

**Coast Guard**

**33 CFR Part 165**

**[Docket No. USCG–2008–0366]**

**Security Zone; Portland Rose Festival**
**on Willamette River**

**AGENCY :**  Coast Guard, DHS.

**ACTION :**  Notice of enforcement of regulation.

**SUMMARY :**  The Coast Guard will enforce the Portland Rose Festival Security Zone on the Willamette River from 1 a.m. on June 4, 2008 until 10 a.m. June 10, 2008. This action is necessary for the security of public vessels on a portion of the Willamette River during the fleet week of the Rose Festival. This security zone provides for the regulation of vessel traffic in the vicinity of the moored public vessels. During the enforcement period, entry into this zone is prohibited unless authorized by the Captain of the Port or his designee.

**DATES :**  The regulations in 33 CFR 165.1312 will be enforced commencing from 1 a.m. on June 4, 2008 until 10 a.m. June 10, 2008.

**FOR FURTHER INFORMATION CONTACT :**  MST1 Lucia Mack, Coast Guard Sector Portland, 6767 N. Basin Ave, Portland, OR 97217, telephone 503–240–9311.

**SUPPLEMENTARY INFORMATION :**  The Coast Guard will enforce the Rose Festival Security Zone established by 33 CFR 165.1312 from 1 a.m. on June 4, 2008 until 10 a.m. June 10, 2008.

Under the provisions of 33 CFR 165.33 a vessel may not enter the regulated area, unless it receives permission from the Captain of the Port or his designee. The Coast Guard may be assisted by other Federal, State, or local law enforcement agencies in enforcing this regulation.

This notice is issued under authority of 33 CFR 165.1312 and 5 U.S.C. 552(a). In addition to this notice in the Federal Register , the Coast Guard will provide the maritime community with extensive advance notification of this enforcement period via the Local Notice to Mariners and marine information broadcasts.

Dated: May 6, 2008.
F.G. Myer, Captain, U.S. Coast Guard, Captain of the Port, Portland.
[FR Doc. E8–10921 Filed 5–15–08; 8:45 am]

**BILLING CODE 4910–15–P**

**ENVIRONMENTAL PROTECTION AGENCY** 

**40 CFR Parts 51 and 52**

**[EPA–HQ–OAR–2003–0062; FRL–8566–1]**

**RIN 2060–AN86**

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

**AGENCY :**  Environmental Protection Agency (EPA).

**ACTION :**  Final rule.

**SUMMARY :**  The EPA is finalizing regulations to implement the New Source Review (NSR) program for fine particulate matter (that is, particles with an aerodynamic diameter less than or equal to a nominal 2.5 micrometers,


### 28322 Federal Register / Vol. 73, No. 96 / Friday, May 16, 2008 / Rules and Regulations

generally referred to as ‘‘PM 2.5 ’’). The NSR program was created by the Clean Air Act (Act or CAA) to ensure that stationary sources of air pollution are constructed or modified in a manner that is consistent with air quality goals in the area.

The Clean Air Fine Particle Implementation Rule, which was proposed in the Federal Register on November 1, 2005, included requirements and guidance for State and local air pollution agencies to follow in developing State implementation plans (SIPs) and also the NSR provisions. The final implementation rule that was promulgated on April 25, 2007, included all the SIPs related provisions. In this rulemaking, EPA is finalizing the NSR provisions of the November 1, 2005 proposed rule including the major source threshold, significant emissions rate, and offset ratios for PM 2.5 , interpollutant trading for offsets and applicability of NSR to PM 2.5 precursors. **DATES :**  This final rule is effective on July
15, 2008.

**ADDRESSES :**  The EPA has established a docket for this action under Docket ID No. EPA–HQ–OAR–2003–0062. All documents in the docket are listed on the www.regulations.gov Web site. Although listed in the index, some information may not be publicly available, e.g. , CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in hard copy form. Publicly available docket materials are available either electronically through www.regulations.gov or in hard copy at the Air Docket, EPA/DC, EPA West, Room 3334, 1301 Constitution Avenue, Northwest, Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566–1744, and the telephone number for the Air Docket is (202) 566–

1742.

**FOR FURTHER INFORMATION CONTACT :**  Mr. Raghavendra (Raj) Rao, Air Quality Policy Division, Office of Air Quality Planning and Standards (C504–03), U.S. Environmental Protection Agency, Research Triangle Park, North Carolina 27711, telephone number: (919) 541– 5344, facsimile number: (919) 541–5509, e-mail address: rao.raj@epa.gov; or Mr. Dan deRoeck, at the same address, telephone 919–541–5593, or e-mail at deroeck.dan@epa.gov.

**SUPPLEMENTARY INFORMATION :** 

I. General Information

A. Does this action apply to me?

Entities affected by this rule include sources in all industry groups. The majority of sources potentially affected are expected to be in the following

groups:

Industry group NAICS a

Electric services ........................................................................................ 221111, 221112, 221113, 221119, 221121, 221122 Petroleum refining .................................................................................... 32411 Industrial inorganic chemicals .................................................................. 325181, 32512, 325131, 325182, 211112, 325998, 331311, 325188 Industrial organic chemicals ..................................................................... 32511, 325132, 325192, 325188, 325193, 32512, 325199 Miscellaneous chemical products ............................................................. 32552, 32592, 32591, 325182, 32551 Natural gas liquids .................................................................................... 211112 Natural gas transport ................................................................................ 48621, 22121 Pulp and paper mills ................................................................................. 32211, 322121, 322122, 322 13 Paper mills ................................................................................................ 322121, 322122 Automobile manufacturing ........................................................................ 336111, 336112, 336712, 336211, 336992, 336322, 336312, 33633, 33634, 33635, 336399, 336212, 336213 Pharmaceuticals ....................................................................................... 325411, 325412, 325413, 3 25414

a North American Industry Classification System.

Entities affected by this rule also include States, local reviewing authorities, and Indian country with new and modified major stationary

sources. B. Where can I get a copy of this document and other related information?

In addition to being available in the docket, an electronic copy of this final rule will also be available on the World Wide Web. Following signature by the EPA Administrator, a copy of this final rule will be posted in the regulations and standards section of our NSR home page located at http://www.epa.gov/nsr.

C. How is this preamble organized?

The information presented in this preamble is organized as follows:

I. General Information

A. Does this action apply to me? B. Where can I get a copy of this document

and other related information? C. How is this preamble organized? II. Purpose III. Background A. New Source Review (NSR) Program B. Fine Particulate Matter and the NAAQS

for PM 2.5 C. Implementation of NSR for PM 2.5 IV. Overview of This Final Action
V. Rationale for Final Actions

A. Applicability of NSR to Precursors of

PM 2.5 in the Ambient Air 1. What is EPA’s legal authority to regulate

precursors? 2. What is EPA’s approach for addressing

precursors?
3. Final Action on SO 2 4. Final Action on NO X 5. Final Action on VOC
6. Final Action on Ammonia B. Major Stationary Source Threshold for

PM 2.5 C. Significant Emissions Rate for Direct

Emissions of PM 2.5 D. Significant Emissions Rates for PM 2.5

Precursors
E. Condensable PM Emissions F. Prevention of Significant Deterioration

(PSD) Program Requirements 1. How must BACT be implemented for

PM 2.5 ? 2. How does EPA plan to address PM 2.5 Increments, Significant Impact Levels (SILs), and Significant Monitoring Concentrations (SMCs)? 3. What is the ambient air quality analysis

requirement for PM 2.5 ? 4. How must the PSD preconstruction

monitoring requirement be implemented
for PM 2.5 ? G. Nonattainment New Source Review (NA

NSR) Requirements 1. What is the required offset ratio for

direct PM 2.5 emissions? 2. Which precursors are subject to the

offset requirement? 3. What is the required offset ratio for PM 2.5

precursors? 4. Is interpollutant trading allowable to

comply with offset requirements?
H. How will the transition to the PM 2.5 PSD

requirements occur? 1. Background 2. Transition for ‘‘Delegated States’’ 3. Transition for ‘‘SIP-Approved States’’
I. How will the transition to the PM 2.5 NA

NSR requirements occur? 1. Background

2. Transition


### 28323 Federal Register / Vol. 73, No. 96 / Friday, May 16, 2008 / Rules and Regulations

1 In this proposal, the terms ‘‘we,’’ ‘‘us,’’ and ‘‘our,’’ refer to the EPA and the terms ‘‘you,’’ and ‘‘your,’’ refer to the owners or operators of stationary sources of air pollution. 2 The Act uses the terms ‘‘major emitting facility’’ to refer to sources subject to the PSD program, and ‘‘major stationary source’’ to refer to sources subject
to NA NSR. See CAA sections 165, 169, 172(c)(5), and 302(j). For ease of reference, we use the term ‘‘major source’’ to refer to both terms. 3 The term ‘‘criteria pollutant’’ means a pollutant for which we have set a NAAQS.

4 In addition, the PSD program applies to most noncriteria regulated pollutants. 3. Implementation of NSR Under the

‘‘Emissions Offset Interpretative Ruling’’ (40 CFR part 51, appendix S) with

Revisions J. Does major NSR apply to PM 2.5

precursors during the SIP development period? K. Are there any Tribal concerns? L. What are the requirements for minor

NSR for PM 2.5 ? M. Rural Transport Areas VI. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory

Planning and Review B. Paperwork Reduction Act C. Regulatory Flexibility Act
D. Unfunded Mandates Reform Act
E. Executive Order 13132—Federalism
F. Executive Order 13175—Consultation

and Coordination with Indian Tribal

Governments
G. Executive Order 13045—Protection of

Children from Environmental Health and Safety Risks
H. Executive Order 13211—Actions That

Significantly Affect Energy Supply, Distribution, or Use I. National Technology Transfer and

Advancement Act J. Executive Order 12898—Federal Actions

to Address Environmental Justice in Minority Populations and Low-Income Populations K. Congressional Review Act L. Petitions for Judicial Review M. Determination Under Section 307(d) VII. Statutory Authority II. Purpose
The purpose of this rulemaking is to finalize the major NSR program provisions for PM 2.5 . This final rule supplements the final implementation rule for PM 2.5 (excluding the NSR provisions) that we 1 promulgated on April 25, 2007 at 72 FR 20586. This final action on the bulk of the major NSR program for PM 2.5 along with our proposed rule on increments, SILs, and SMC, when final, will represent the final elements necessary to implement a

PM 2.5 PSD program. When both rules are promulgated and in effect, the PM 2.5 PSD program will no longer use a PM 10 program as a surrogate, as has been the practice under our existing guidance.

III. Background

A. New Source Review (NSR) Program

The existing regulations require both major and minor NSR programs to address any pollutant for which there is a National Ambient Air Quality Standard (NAAQS) and precursors to the formation of such pollutant when identified for regulation by the Administrator. This final rule amends the NSR regulations to establish the minimum elements for State, local, and Tribal agency programs implementing NSR for the PM 2.5 NAAQS. This preamble also explains what interim provisions would apply with respect to PM 2.5 during the State Implementation Plan (SIP) development period.

The NSR program is a preconstruction permitting program that applies when a source is constructed or modified. The NSR program is composed of three different programs:

• Prevention of Significant Deterioration (PSD);

• Nonattainment NSR (NA NSR); and

• Minor NSR. We often refer to the PSD and NA NSR programs together as the major NSR program because these programs regulate only major sources. 2

The PSD program applies when a major source that is located in an area that is designated as attainment or unclassifiable for any criteria pollutant is constructed or undergoes a major modification. 3 4 The NA NSR program applies when a major source that is located in an area that is designated as nonattainment for any criteria pollutant is constructed or undergoes a major modification. The minor NSR program addresses both major and minor sources that undertake construction or modification activities that do not qualify as major, and it applies regardless of the designation of the area in which a source is located.

The national regulations that apply to each of these programs are located in the Code of Federal Regulations (CFR) as shown in the following table:

Program Applicable regulations

PSD .......................................................................................................... 40 CFR 52.21, 40 CFR 51.166, 40 CFR 51.165(b). NA NSR .................................................................................................... 40 CFR 52.24, 40 CFR 51.165, 40 CFR part 51, appendix S.
Minor NSR ................................................................................................ 40 CFR 51.160–164.

The PSD requirements include but are not limited to:

• Installation of Best Available Control Technology (BACT);

• Air quality monitoring and modeling analyses to ensure that a project’s emissions will not cause or contribute to a violation of any NAAQS or maximum allowable pollutant increase (PSD increment);

• Notification of Federal Land Manager of nearby Class I areas; and

• Public comment on the permit. Nonattainment NSR requirements include but are not limited to:

• Installation of Lowest Achievable Emission Rate (LAER) control technology; • Offsetting new emissions with creditable emissions reductions;

• Certification that all major sources owned and operated in the State by the same owner are in compliance with all applicable requirements under the Act;

• An alternative siting analysis demonstrating that the benefits of the proposed source significantly outweigh the environmental and social costs imposed as a result of its location, construction, or modification; and

• Public comment on the permit. Minor NSR programs must meet the statutory requirements in section 110(a)(2)(C) of the Act, which requires ‘‘* * * regulation of the modification and construction of any stationary source * * * as necessary to assure that national ambient air quality standards are achieved.’’

B. Fine Particulate Matter and the NAAQS for PM 2.5 Fine particles in the atmosphere are made up of a complex mixture of components. Common constituents include sulfate (SO 4 ); nitrate (NO 3 ); ammonium; elemental carbon; a great variety of organic compounds; and inorganic material (including metals, dust, sea salt, and other trace elements) generally referred to as ‘‘crustal’’ material, although it may contain material from other sources. Airborne particulate matter (PM) with a nominal aerodynamic diameter of 2.5 micrometers or less (a micrometer is


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5 Available in the docket for this rulemaking, ID No. EPA–HQ–OAR–2003–0062, and at http:// www.epa.gov/region07/programs/artd/air/nsr/ nsrmemos/pm25.pdf

. 6 Available in the docket for this rulemaking, ID. No. EPA–HQ–OAR–2003–0062, and at http:// www.epa.gov/nsr/documents/nsrmemo.pdf

. one-millionth of a meter, and 2.5
micrometers is less than one-seventh the average width of a human hair) are considered to be ‘‘fine particles,’’ and
are also known as PM 2.5 . ‘‘Primary’’ particles are emitted directly into the air as a solid or liquid particle ( e.g. , elemental carbon from diesel engines or fire activities, or condensable organic particles from gasoline engines). ‘‘Secondary’’ particles ( e.g. , sulfate and nitrate) form in the atmosphere as a
result of various chemical reactions.

The health effects associated with exposure to PM 2.5 are significant. Epidemiological studies have shown a significant correlation between elevated

PM 2.5 levels and premature mortality. Other important effects associated with

PM 2.5 exposure include aggravation of respiratory and cardiovascular disease (as indicated by increased hospital admissions, emergency room visits, absences from school or work, and restricted activity days), lung disease, decreased lung function, asthma attacks, and certain cardiovascular problems. Individuals particularly sensitive to

PM 2.5 exposure include older adults, people with heart and lung disease, and
children.

On July 18, 1997, we revised the NAAQS for PM to add new standards for fine particles, using PM 2.5 as the
indicator. We established health-based (primary) annual and 24-hour standards
for PM 2.5 (62 FR 38652). We set an
annual standard at a level of 15 micrograms per cubic meter ( μ g/m 3 ) and
a 24-hour standard at a level of 65 μ g/

m 3 . At the time we established the primary standards in 1997, we also established welfare-based (secondary) standards identical to the primary standards. The secondary standards are designed to protect against major
environmental effects of PM 2.5 such as visibility impairment, soiling, and materials damage.

On October 17, 2006, we revised the primary and secondary NAAQS for

PM 2.5 and PM 10 . In that rulemaking, we reduced the 24-hour NAAQS for PM 2.5 to 35 μ g/m 3 and retained the existing
annual PM 2.5 NAAQS of 15 μ g/m 3 . In addition, we retained PM 10 as the indicator for coarse PM, retained the existing PM 10 24-hour NAAQS of 150

μ g/m 3 , and revoked the annual PM 10 NAAQS (which had previously been set

at 50 μ g/m 3 ). See 71 FR 61236. C. Implementation of NSR for PM 2.5 After we promulgated the NAAQS for

PM 2.5 in 1997, we issued a guidance document entitled ‘‘Interim Implementation for the New Source Review Requirements for PM 2.5 ’’ (John S. Seitz, EPA, October 23, 1997). 5 As noted in that guidance, section 165 of the Act suggests that PSD requirements become effective for a new NAAQS upon the effective date of the NAAQS. Section 165(a)(1) of the Act provides that no new or modified major source may be constructed without a PSD permit that meets all of the section 165(a) requirements with respect to the regulated pollutant. Moreover, section 165(a)(3) provides that the emissions from any such source may not cause or contribute to a violation of any NAAQS. Also, section 165(a)(4) requires BACT for each pollutant subject to PSD regulation. The 1997 guidance stated that sources would be allowed to use implementation of a PM 10 program as a surrogate for meeting PM 2.5 NSR requirements until certain difficulties were resolved, primarily the lack of necessary tools to calculate the emissions of PM 2.5 and related precursors, the lack of adequate modeling techniques to project ambient impacts, and the lack of PM 2.5 monitoring sites.

On April 5, 2005, we issued a guidance document entitled ‘‘Implementation of New Source Review Requirements in PM–2.5 Nonattainment Areas’’ (Stephen D. Page, EPA). 6 This memorandum provides guidance on the implementation of the nonattainment major NSR provisions in PM 2.5 nonattainment areas in the interim period between the effective date of the

PM 2.5 NAAQS designations (April 5, 2005) and the promulgation date of the final NSR regulations reflected in this action. Besides affirming the continuation of the Seitz guidance
memo in PM 2.5 attainment areas, the April 5, 2005 memo recommends that until we promulgate the PM 2.5 major NSR regulations, States should use a

PM 10 nonattainment major NSR program as a surrogate to address the requirements of nonattainment major NSR for PM 2.5
.

On November 1, 2005, we proposed a rule to implement the 1997 PM 2.5 NAAQS, including proposed revisions to the NSR program (70 FR 65984). As discussed above, this action finalizes the portion of that proposal related to NSR. The other portions of that proposal, concerning attainment dates, SIP submittals, reasonable further progress (RFP) requirements, etc., were finalized on April 25, 2007 (72 FR 20586).

On September 21, 2007, we proposed additional elements for the PSD program for PM 2.5 including PM 2.5 ‘‘increments,’’ significant impact levels (SILs), and significant monitoring concentrations (SMCs) (72 FR 54112). Increments are the maximum allowable increases over baseline concentrations that can be permitted to occur when a major source is constructed or modified. This is one mechanism by which the PSD program prevents significant deterioration in air quality. A SIL defines the level of ambient air impact that is considered a ‘‘significant contribution’’ to air quality. If the modeled maximum ambient impacts of a new source or modification are below the SILs, the source: (1) Is presumed not to cause or contribute significantly to a PSD increment or NAAQS violation, and (2) is not required to perform the multiple-source, cumulative impacts assessments that are otherwise required under PSD. An SMC defines the level of modeled ambient air impact below which the reviewing authority may exempt a new or modified source from conducting the preconstruction monitoring that may otherwise be required under PSD. The reviewing authority may also exempt the source from preconstruction monitoring if the existing monitored ambient concentration is less than the SMC. This final action on the bulk of the major NSR program for PM 2.5 along with our proposed rule on increments, SILs, and SMC, when final, will represent the final elements necessary to implement a

PM 2.5 PSD program. When both rules are promulgated and in effect, the PM 2.5 PSD program will no longer use a PM 10 program as a surrogate, as has been the practice under our existing guidance.

IV. Overview of This Final Action

The table below summarizes the main elements of the existing NSR program that this action addresses for PM 2.5 as a regulated NSR pollutant. The table indicates our final position on an issue and whether our position has changed based on comments received. Our final action for each element, or where appropriate, explanation of implementation under existing


### 28325 Federal Register / Vol. 73, No. 96 / Friday, May 16, 2008 / Rules and Regulations

7 See ‘‘Implementation of the New Source Review (NSR) Program for Particulate Matter Less Than 2.5 Micrometers in Diameter (PM 2.5 ); Response to Comments,’’ U.S. Environmental Protection Agency. It can be viewed or downloaded at www.regulations.gov , Docket ID No. EPA–HQ–

OAR–2003–0062. regulations, is addressed in detail in the referenced sections of this preamble.

NSR program element Final action Section

Applicability to PM 2.5 precursors ............. SO 2 —Must be regulated as precursor, NO X —Presumed regulated, VOC—Presumed not regulated, Ammonia—Presumed not regulated. V.A

PSD major source threshold ................... 100/250 tons per year (tpy) ....................................................... ............................. V.B NA NSR major source threshold ............ 100 tpy ............................................................................... ..................................... V.B Significant emissions rate ....................... Direct PM 2.5 emissions—10 tpy, SO 2 precursor—40 tpy, NO X precursor—40 tpy, if regulated. V.C & V.D

Condensable PM 2.5 emissions ................ Included in direct PM 2.5 emissions for major NSR applicability determinations after the end of the transition period (changed based on comments received). V.E

Control technology: BACT and LAER ..... Applies for direct PM 2.5 emissions, SO 2 , and other precursors if regulated. V.F.1 & V.G Prevention of significant deterioration ..... Increments, SILs and SMCs covered in a separate rulemaking ......................... .. V.F.2 Air quality impact analysis ...................... Applies for PM 2.5 ..................................................................................................... V.F.3 Preconstruction monitoring ..................... Applies for PM 2.5 (finalizing options 1 & 3) ............................................................ V.F.4NA NSR Statewide compliance and alternative siting analyses. Applies for direct PM 2.5 emissions and precursors, if regulated ............................ V.G

NA NSR offsets ....................................... Applies for direct PM 2.5 emissions and precursors, if regulated ............................ V.G.1–3 Interpollutant offsetting ............................ Allowed on a regional or statewide basis; EPA is issuing guidance with rec

ommended regional hierarchies and trading ratios (changed based on comments received). V.G.4

Transition for PSD ................................... Continues to use PM 10 as a surrogate ................................................................... V.H Transition for NA NSR ............................ Applies through an approved SIP or through 40 CFR part 51, appendix S ......... . V.ISIP development period .......................... Clarifies that major NSR does not apply to precursors during the SIP development period in attainment areas (changed based on comments received). V.J

Tribal concerns ........................................ Cross references to proposed NSR rules for Indian country ............... .................. V.K Minor NSR ............................................... Clarifies that State and local regulatory programs must include PM 2.5 requirements for minor sources. V.L

NSR transport option .............................. Transport classification not available ....................................... .............................. V.M

The provisions of the PM 2.5 major NSR program finalized in this action are codified as revisions in the previously existing regulatory text. The revisions to NA NSR are codified in 40 CFR 51.165 and appendix S to 40 CFR part 51. The PSD revisions are codified in 40 CFR 51.166 and 52.21.

V. Rationale for Final Actions

In this section we discuss each element of our proposal for this rulemaking, explain our final action, discuss the rationale for our final action, and summarize the major public comments we received. The full summary of public comments on the proposal, along with our responses, can be found in the docket for this rulemaking. 7
A. Applicability of NSR to Precursors of

PM 2.5 in the Ambient Air

Scientific research has shown that various pollutants can contribute to ambient PM 2.5 concentrations. In addition to direct PM 2.5 emissions, these include the following precursors:

• Sulfur dioxide (SO 2 );

• Oxides of nitrogen (NO X );

• Volatile organic compounds (VOC); and • Ammonia. These gas-phase precursors undergo chemical reactions in the atmosphere to form secondary PM. Formation of secondary PM depends on numerous factors including the concentrations of precursors; the concentrations of other gaseous reactive species; atmospheric conditions including solar radiation, temperature, and relative humidity; and the interactions of precursors with preexisting particles and with cloud or fog droplets. Several atmospheric aerosol species, such as ammonium nitrate and certain organic compounds, are semi-volatile and are found in both gas and particle phases. Given the complexity of PM formation processes, new information from the scientific community continues to emerge to improve our understanding of the relationship between sources of PM precursors and secondary particle formation.

Precursors contribute significantly to ambient PM 2.5 concentrations, producing approximately half of the concentration nationally. In most areas of the country, PM 2.5 precursor emissions are major contributors to ambient PM 2.5 concentrations. The relative contribution to ambient PM 2.5 concentrations from each of these pollutants varies by area. The relative effect of reducing emissions of these pollutants is also highly variable.

Some PM 2.5 precursors are already subject to major NSR under other NAAQS, as shown in the following table:

PM 2.5 precursor Existing program coverage for major NSR applicability

NO X ................ NA NSR and PSD for NO 2 and Ozone.
SO 2 ................ NA NSR and PSD for SO 2

. VOC ............... NA NSR and PSD for
Ozone. Ammonia ........ No coverage for NSR.

In the subsections that follow, we first discuss our legal authority under the Act for regulating precursors to the formation of criteria pollutants, and then discuss our final action for each of the PM 2.5 precursors. 1. What is EPA’s legal authority to regulate precursors?

As we discussed in the November 1, 2005 proposal, we interpret the Act to not only provide explicit authority for EPA to regulate precursors, but also to grant us discretion to determine how to address precursors for particular regulatory purposes. This reading is based on section 302(g) of the Act, which defines the term ‘‘air pollutant’’ to include ‘‘any precursors to the formation of any air pollutant, to the extent the Administrator has identified such precursor or precursors for the particular purpose for which the term ‘air pollutant’ is used.’’ The first clause of this second sentence in section 302(g) explicitly authorizes the Administrator


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to identify and regulate precursors as air pollutants under other parts of the Act. In addition, the second clause of the sentence indicates that the Administrator has discretion to identify which pollutants should be classified as precursors for particular regulatory purposes. Thus, we do not necessarily construe the Act to require that EPA identify a particular precursor as an air pollutant for all regulatory purposes where it can be demonstrated that various programs under the Act address different aspects of the air pollutant problem. Likewise, we do not interpret the Act to require that EPA treat all precursors of a particular pollutant the same under any one program when there is a basis to distinguish between such precursors within that program. For example, in a recent rule addressing

PM 2.5 precursors for purposes of the transportation conformity program, we chose to adopt a different approach for one precursor based on the limited emissions of that precursor from onroad mobile sources and the degree to which it contributes to PM 2.5 concentrations (70 FR 24280, May 6, 2005).

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

Act:

The Committee notes that some of these precursors may well be controlled under other provisions of the CAA. The Committee intends that * * * the Administrator will develop models, mechanisms, and other methodology to assess the significance of the

PM 10 precursors in improving air quality and reducing PM 10 . Additionally, the Administrator should consider the impact on
ozone levels of PM 10 precursor controls. The Committee expects the Administrator to
harmonize the PM 10 reduction objective of this section with other applicable regulations of this CAA regarding PM 10 precursors, such
as NO X . See H. Rpt. 101–490, Pt. 1, at 268 (May 17, 1990), reprinted in S. Prt. 103–38, Vol. II, at 3292.

In summary, section 302(g) of the Act clearly calls for the regulation of precursor pollutants, but the Act also identifies circumstances when it may not be appropriate to regulate precursors and gives the Administrator discretion to determine how to address particular precursors under various programs required by the Act. Due to the complexities associated with precursor emissions and their variability from location to location, we believe that in certain situations it may not be effective or appropriate to control a certain precursor under a particular regulatory program or for EPA to require similar control of a particular precursor in all areas of the country.

The term ‘‘air pollutant,’’ as defined in section 302(g), is incorporated into the NSR provisions for various purposes. Thus, we interpret section 302(g) of the Act to require us to consider how to address precursors under the NSR program.

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

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

2. What is EPA’s approach for addressing precursors?

As proposed, we are finalizing different approaches for addressing the individual precursors to PM 2.5 under the Act’s NSR provisions. Generally, where the scientific data and modeling analyses provide reasonable certainty that the pollutant’s emissions are a significant contributor to ambient PM 2.5 concentrations, we believe that pollutant should be identified as a ‘‘regulated NSR pollutant’’ and subject to the PM 2.5 NSR provisions. Conversely, where the effect of a pollutant’s emissions on ambient PM 2.5 concentrations is subject to substantial uncertainty, such that in some circumstances the pollutant may not result in formation of PM 2.5 , or control of the pollutant may have no effect or may even aggravate air quality, we generally believe it is unreasonable to establish a nationally-applicable presumption that the pollutant is a regulated NSR pollutant subject to the requirements of NSR for PM 2.5 . We discuss our final action with respect to each of the PM 2.5 precursors and the basis for that action in sections V.A.2 through 5.

For those precursors that are either presumed to be regulated or not regulated (NO X , VOC, and ammonia), a State program need not follow the presumed approach if it can be demonstrated that the precursor in question is not, or is, a ‘‘significant contributor’’ to PM 2.5 concentrations within the specific area. ‘‘Significant contribution’’ in this context is a different concept than that in section 110(a)(2)(D) of the Act. Section 110(a)(2)(D) of the Act prohibits States from emitting air pollutants in amounts which significantly contribute to nonattainment or other air quality problems in other States. Consistent with the previous discussion of sections 189(e) and 302(g), we are clarifying that the use in this NSR implementation rule of the term ‘‘significant contribution’’ to the area’s PM 2.5 concentration means that a significant change in emissions of the precursor from sources in the area would be projected to provide a significant change in PM 2.5 concentrations in the area. For example, if modeling indicates that a reduction in
an area’s NO X emissions would reduce ambient PM 2.5 levels in the area, but that a reduction in ammonia emissions would result in virtually no change in ambient PM 2.5 levels, this would suggest that NO X is a significant contributor but that ammonia is not. We are not


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establishing in this rule a quantitative test for determining whether PM 2.5 levels in an area change significantly in response to reductions in precursor emissions in the area. However, in considering this question, it is relevant to consider that relatively small reductions in PM 2.5 levels are estimated to result in worthwhile public health benefits.

This approach to identifying a precursor as a regulated NSR pollutant reflects atmospheric chemistry conditions in the area and the magnitude of emissions of the precursor in the area. Assessments of whether it is technically feasible and cost effective to control particular emissions units at a source should be part of the later BACT determination within a permit action, and should occur after the basic assessment of which precursors are to be regulated NSR pollutants in an area is completed.

Most commenters did not question our legal authority to identify and regulate PM 2.5 precursors. However, some commenters argued, based on the language of sections 302(g) and 189(e) of the Act, that once we have designated a compound as a precursor, we do not have discretion to presumptively exclude it from NSR requirements. Other commenters on this issue indicated that we do have such discretion, based on the de minimis doctrine of the Alabama Power decision or on practical implementation considerations such as the uncertainty in measuring and modeling the effect of

PM 2.5 precursors.

We do not agree with the comment that the Act does not give us discretion to presumptively exclude a PM 2.5 precursor from NSR requirements. As stated previously, we believe that section 302(g) allows the Administrator to presumptively not require certain precursors to be addressed in PM 2.5 NSR programs generally, while allowing the State or EPA to make a finding for a specific area to override the generalpresumption. In the following pollutantspecific sections of this preamble, we find that at this time there is sufficient uncertainty regarding whether certain precursors significantly contribute to

PM 2.5 concentrations in all areas such that the policy set forth in this rule does not presumptively require certain precursors (ammonia, VOC) to be controlled in each area. However, the State or EPA may reverse the presumption and regulate a precursor if it provides a demonstration showing that the precursor is a significant contributor to PM 2.5 concentrations in the area. In addition, if in the State’s NSR program adoption process a commenter provides additional information suggesting an alternative policy for regulating a particular precursor, the State will need to respond to this information in its rulemaking action.

Hence, we continue to believe that the Act provides us the authority not only to identify and regulate precursors to

PM 2.5 , but also to treat precursors of the same pollutant differently under the

same program.

3. Final Action on SO 2

Sulfur dioxide is emitted mostly from the combustion of fossil fuels in boilers operated by electric utilities and other industrial sources. Less than 20 percent of SO 2 emissions nationwide are from other sources, mainly other industrial processes such as oil refining and pulp and paper production. The formation of sulfuric acid from the oxidation of SO 2 is an important process affecting most areas in North America. There are three different pathways for this transformation.

First, gaseous SO 2 can be oxidized by the hydroxyl radical (OH) to create sulfuric acid. This gaseous SO 2 oxidation reaction occurs slowly and only in the daytime. Second, SO 2 can dissolve in cloud water (or fog or rainwater), and there it can be oxidized to sulfuric acid by a variety of oxidants, or through catalysis by transition metals such as manganese or iron. If ammonia is present and taken up by the water droplet, then ammonium sulfate will form as a precipitate in the water droplet. After the cloud changes and the droplet evaporates, the sulfuric acid or ammonium sulfate remains in the atmosphere as a particle. This aqueous phase production process involving oxidants can be very fast; in some cases all the available SO 2 can be oxidized in less than an hour. Third, SO 2 can beoxidized in reactions in the particlebound water in the aerosol particles themselves. This process takes place continuously, but only produces appreciable sulfate in alkaline (dust, sea salt) coarse particles. Oxidation of SO 2 has also been observed on the surfaces of black carbon and metal oxide particles. During the last 20 years, much progress has been made in understanding the first two major pathways, but some important questions still remain about the smaller third pathway. Models indicate that more than half of the sulfuric acid in the eastern United States and in the overall atmosphere is produced in clouds.

The sulfuric acid formed from these pathways reacts readily with ammonia to form ammonium sulfate, (NH 4 ) 2 SO 4
. If there is not enough ammonia present to fully neutralize the produced sulfuric acid (one molecule of sulfuric acid requires two molecules of ammonia), part of it exists as ammonium bisulfate;

NH 4 HSO 4 (one molecule of sulfuric acid and one molecule of ammonia) and the particles are more acidic than ammonium sulfate. In certain situations (in the absence of sufficient ammonia for neutralization), sulfate can exist in particles as sulfuric acid, H 2 SO 4
. Sulfuric acid often exists in the plumes of stacks where SO 2 , sulfur trioxide (SO 3 ), and water vapor are in much higher concentrations than in the ambient atmosphere, but these concentrations become quite small as the plume is cooled and diluted by mixing.

Because sulfate is a significant component ( e.g. , ranging from 9 percent to 40 percent) of PM 2.5 concentrations, and contributes to other air quality problems in all regions of the country, we proposed to require States to treat
SO 2 as a PM 2.5 precursor in all areas. We are retaining the same approach for SO 2 in this final rule. Sulfate is an important precursor to PM 2.5 formation in all areas, and has a strong regional impact on

PM 2.5 concentrations. This approach is consistent with past EPA regulations, such as the Clean Air Interstate Rule (CAIR), the Clean Air Visibility Rule, the Acid Rain rules, and the Regional Haze rule, each of which require SO 2 reductions to address fine particle pollution and related air quality problems. Finally, we do not believe that regulating SO 2 as a precursor to
PM 2.5 is likely to add a major burden to sources, as SO 2 is already regulated as part of the NSR program for the SO 2 NAAQS.

Most commenters who addressed this issue agreed that SO 2 should be regulated as a PM 2.5 precursor, although one only supported regulation of SO 2 as a precursor in NA NSR, and not under PSD. Two commenters disagreed that
SO 2 acts as precursors to PM 2.5 in all cases and indicated that it should not be regulated as an ‘‘always-in’’ precursor.

We find the commenters’ arguments against regulating SO 2 as a precursor unpersuasive. Sulfate is a significant fraction of PM 2.5 mass in all nonattainment areas currently, and although large SO 2 reductions are projected from electric generating units with the implementation of the CAIR program, sulfate is still projected to be a key contributor to PM 2.5 concentrations in the future, in both attainment and nonattainment areas. Sulfur dioxide emissions also lead to sulfate formation on both regional and local scales.


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4. Final Action on NO X

The sources of NO X are numerous and widespread. The combustion of fossil fuel generates the majority of NO X emissions, with large contributions from power generation and mobile sources. Nitrates are formed from the oxidation of NO X into nitric acid (HNO 3 ) either during the daytime (reaction with OH) or during the night (reactions with ozone and water). Nitric acid continuously transfers between the gas and the condensed phases through condensation and evaporation processes in the atmosphere. However, unless it reacts with other species (such as ammonia, sea salt, or dust) to form a neutralized salt, it will volatilize and not be measured using standard PM 2.5 measurement techniques. The formation of aerosol ammonium nitrate is favored by the availability of ammonia, low temperatures, and high relative humidity. Because ammonium nitrate is semivolatile and not stable in higher temperatures, nitrate levels are typically lower in the summer months and higher in the winter months. The resultingammonium nitrate is usually in the submicrometer particle size range. Reactions with sea salt and dust lead to the formation of nitrates in coarse particles. Nitric acid may be dissolved in ambient aerosol particles.

Based on a review of speciated monitoring data analyses, it is apparent that nitrate concentrations vary significantly across the country. For example, in some southeastern locations, annual average nitrate levels are in the range of 6 to 8 percent of total

PM 2.5 mass, whereas nitrate comprises 40 percent or more of PM 2.5 mass in certain California locations. Nitrate formation is favored by the availability of ammonia, low temperatures, and high relative humidity. It is also dependent upon the relative degree of nearby SO 2 emissions because ammonia reacts preferentially with SO 2 over NO X . Reductions in NO X emissions are expected to reduce PM 2.5 concentrations in most areas. However, it has been suggested that in a limited number of areas, NO X control would result in increased PM 2.5 mass by disrupting the ozone cycle and leading to increased oxidation of SO 2 to form sulfate particles, which are heavier than nitrate particles.

Because of these factors, we are finalizing our proposed approach to
NO X as a precursor to PM 2.5 for the NSR program. Under this approach, NO X is presumed to be a significant contributor to ambient PM 2.5 concentrations in all PSD and NA NSR areas. However, a State or EPA may rebut this presumption for a specific area if the State demonstrates to the Administrator’s satisfaction or EPA demonstrates that NO X emissions in that area are not a significant contributor to that area’s ambient PM 2.5 concentrations. If a State or EPA makes such a demonstration, NO X would not be considered a PM 2.5 precursor under the NSR program in that area. If a State or EPA does not make such a demonstration, NO X must be regulated as a precursor under the PSD, NA NSR, and minor source programs for PM 2.5
. As discussed previously, this ‘‘presumed-in’’ approach is warranted based on the well-known transformation of NO X into nitrates, coupled with the fact that nitrate concentrations vary significantly around the country. This approach is consistent with other recent EPA regulations requiring NO X reductions, which will reduce fine particle pollution, such as the CAIR and a number of rules targeting onroad and nonroad engine emissions.

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

In areas where NO X is regulated as a precursor to PM 2.5 , we do not believe that this is likely to add a major burden to sources, as NO X is already a regulated NSR pollutant. This is because NO X is an identified precursor for the ozone NAAQS and an indicator for the NO 2 NAAQS.

Several commenters agreed that NO X should be regulated under major NSR as a precursor to PM 2.5 . Some of these commenters believe that States should not have the opportunity to demonstrate otherwise, or indicated that a waiver for exclusion of NO X as a precursor should be allowed only if downwind States approve such a waiver. A few commenters stated that NO X should not be regulated as a precursor to PM 2.5 in the major NSR program, either on grounds of scientific uncertainty regarding the impact of NO X emissions on ambient PM 2.5 concentrations or on policy grounds ( i.e. , because NO X is already regulated under NSR for other NAAQS).

We are not persuaded by the argument that NO X should not be regulated as a PM 2.5 precursor because it is a regulated pollutant under other NAAQS. We do not find the degree of scientific uncertainty regarding PM 2.5 formation from NO X to be great enough to preclude regulation of NO X as a precursor with an opportunity for a case-by-case demonstration that NO X is not a significant contributor. Furthermore, the fact that we regulate
NO X for other NAAQS under the NSR program does not by itself justify declining to regulate NO X as a PM 2.5 precursor in circumstances where NO X also significantly contributes to PM 2.5 formation. As noted earlier, the regulation of NO X as a precursor for

PM 2.5 is not expected to add a major burden to regulated sources that are already required to limit NO X emission to meet other NAAQS.

We disagree with the commenters who believe that emissions of NO X cannot be correlated to PM 2.5 formation, or that it is unclear when NO X acts as a precursor. As discussed previously, our decision to regulate NO X as a precursor to PM 2.5 is based on the wellknown transformation of NO X into nitrates. Nevertheless, nitrate concentrations vary significantly across the country. As a result, we believe that the ‘‘presumed-in’’ approach is appropriate for NO X since a State can demonstrate that NO X should not be a precursor in a given area or region.

While we recognize that NO X emissions can affect PM 2.5 concentrations in downwind areas, we disagree that approval from downwind States should be required for a State to exclude NO X as a PM 2.5 precursor for a particular area. This is because States that contribute to downwind nonattainment for PM 2.5 are otherwise required to address transported NO X emissions under the CAIR.

5. Final Action on VOC

The organic component of ambient particles is a complex mixture of hundreds or even thousands of organic compounds. These organic compounds are either emitted directly from sources ( i.e. , primary organic aerosol) or can be formed by reactions in the ambient air ( i.e. , secondary organic aerosol, or SOA). Volatile organic compounds are key precursors in the formation processes for both SOA and ozone. The relative importance of organic compounds in the formation of secondary organic particles varies from area to area, depending upon local emissions sources, atmospheric chemistry, and season of the year.

The lightest organic molecules ( i.e.

, molecules with six or fewer carbon atoms) occur in the atmosphere mainly as vapors and typically do not directly


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form organic particles at ambient temperatures due to the high vapor pressure of their products. However, they participate in atmospheric chemistry processes resulting in the formation of ozone and certain free radical compounds (such as OH) which in turn participate in oxidation reactions to form SOA, sulfates, and nitrates. These VOCs include all alkanes with up to six carbon atoms (from methane to hexane isomers), all alkenes with up to six carbon atoms (from ethene to hexene isomers), benzene, and many low-molecular weight carbonyls, chlorinated compounds, and oxygenated solvents.

Intermediate weight organic molecules ( i.e. , compounds with 7 to 24 carbon atoms) often exhibit a range of volatilities and can exist in both the gas and aerosol phase at ambient conditions. For this reason they are also referred to as semivolatile compounds. Semivolatile compounds react in the atmosphere to form SOA. These chemical reactions are accelerated in warmer temperatures, and studies show that SOA typically comprises a higher percentage of carbonaceous PM in the summer as opposed to the winter. The production of SOA from the atmospheric oxidation of a specific VOC depends on four factors: Its atmospheric abundance, its chemical reactivity, the availability of oxidants (ozone, OH,
HNO 3 ), and the volatility of its products. In addition, recent work suggests that the presence of acidic aerosols may lead to an increased rate of SOA formation. Aromatic compounds such as toluene, xylene, and trimethyl benzene are considered to be the most significant anthropogenic SOA precursors and have been estimated to be responsible for 50 to 70 percent of total SOA in some airsheds. Man-made sources of aromatics gases include mobile sources, petrochemical manufacturing, and solvents. Some of the biogenic hydrocarbons emitted by trees are also considered to be important precursors ofsecondary organic PM. Terpenes (and bpinene, limonene, carene, etc.) and the sesquiterpenes are expected to be major contributors to SOA in areas with significant vegetation cover, but isoprene is not. Terpenes are very prevalent in areas with pine forests, especially in the southeastern United States. The rest of the anthropogenic hydrocarbons (higher alkanes, paraffins, etc.) have been estimated to contribute 5 to 20 percent to the SOA concentration depending on the area.

The contribution of the primary and secondary components of organic aerosol to the measured organic aerosol concentrations remains a complex issue. Most of the research performed to date has been done in southern California, and more recently in central California, while fewer studies have been completed on other parts of North America. Many studies suggest that the primary and secondary contributions to total organic aerosol concentrations are highly variable, even on short time scales. Studies of pollution episodes indicate that the contribution of SOA to the organic PM can vary from 20 percent to 80 percent during the same day.

Despite significant advances in understanding the origins and properties of SOA, it remains probably the least understood component of

PM 2.5 . The reactions forming secondary organics are complex, and the number of intermediate and final compounds formed is voluminous. Some of the best efforts to unravel the chemical composition of ambient organic aerosol matter have resulted in quantifying the concentrations of hundreds of organic compounds representing only 10 to 20 percent of the total organic aerosol mass. For this reason, SOA continues to be a significant topic of research and investigation.

Current scientific and technical information shows that carbonaceous material is a significant fraction of total

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

As a result, this final rule does not, in general, require regulation of VOC as a precursor to PM 2.5 for the NSR program. However, a State may demonstrate to the Administrator’s satisfaction or EPA may demonstrate that VOC emissions in a specific area are a significant contributor to that area’s ambient PM 2.5 concentrations. After such a demonstration, the State would regulate VOC (or a subset of VOC) as a PM 2.5 precursor for the NSR program in that area. That is, the State would need to regulate construction and modification of stationary sources that increase emissions of VOC in that area to assure that these emissions do not interfere with reasonable further progress or the ability of that area to attain or maintain the PM 2.5 NAAQS.

We believe that this ‘‘presumed-out’’ approach is appropriate for VOC because of the complexity in assessing the role of VOC in PM 2.5 formation, as discussed previously. Where the effect of a pollutant’s emissions on ambient

PM 2.5 concentrations is subject to this degree of uncertainty, we do not havejustification to establish a nationallyapplicable presumption that the pollutant is a regulated NSR pollutant subject to the requirements of NSR for

PM 2.5 . Under the circumstances, we believe the best policy is to continue to regulate VOC under NSR as a precursor to ozone in all areas, which will potentially provide a co-benefit for

PM 2.5 concentrations despite the uncertainty in PM 2.5 formation from VOC. As discussed previously, we do not find it appropriate to utilize the same approach for NO X because the scientific data and modeling analyses provide more certainty that NO X emissions are a significant contributor to ambient PM 2.5 concentrations.

Note that we intend to regulate high molecular weight VOC (with 25 carbon atoms or more and low vapor pressure) as direct PM 2.5 emissions because they are emitted directly as primary organic particles and exist primarily in the condensed phase at ambient temperatures. See section V.E following for more on the regulation of such ‘‘condensables.’’

Most commenters agreed with the ‘‘presumed-out’’ approach for VOC. One commenter said that the role of VOC in the formation of PM 2.5 is sufficiently understood to recommend a ‘‘waiver’’ approach for this pollutant in the same way as NO X is treated for PM 2.5 in the rule.

As discussed previously, the reactions forming secondary organics are complex and the number of intermediate and final compounds formed is voluminous. Some of the best efforts to unravel the chemical composition of ambient organic aerosol matter have merely been able to quantify the concentrations of hundreds of organic compounds representing only 10 to 20 percent of the total organic aerosol mass. For this reason, SOA continues to be a significant topic of research and investigation. Accordingly, we do not agree with the commenter who suggested a waiver or ‘‘presumed-in’’ approach for VOC. We continue to believe that our ‘‘presumed-out’’ approach is most appropriate for VOC and have included this approach in the final rules.


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8 NARSTO (2004) ‘‘Particulate Matter Assessment for Policy Makers: A NARSTO Assessment.’’ P. McMurry, M. Shepherd, and J. Vickery, eds. Cambridge University Press, Cambridge, England.
ISBN 0 52 184287 5. See the docket for this rulemaking, Docket ID No. EPA–HQ–OAR–2003–
0062, or http://www.narsto.org/section.src?SID=6

. 6. Final Action on Ammonia

Ammonia (NH 3 ) is a gaseous pollutant that is emitted by natural and anthropogenic sources. Emissions inventories for ammonia are considered to be among the most uncertain of any species related to PM. Ammonia serves an important role in neutralizing acids in clouds, precipitation, and particles. In particular, ammonia neutralizes sulfuric acid and nitric acid, the two key contributors to acid deposition (acid rain). Deposited ammonia also can contribute to problems of eutrophication in water bodies, and deposition of ammonium particles may effectively result in acidification of soil as ammonia is taken up by plants. The NARSTO Fine Particle Assessment 8 indicates that reducing ammonia emissions where sulfate concentrations are high may reduce PM 2.5 mass concentrations, but may also increase the acidity of particles and precipitation. An increase in particle acidity is suspected to be linked with adverse human health effects and with an increase in the formation of secondary organic compounds. Based on this information and further insights gained from the NARSTO Fine Particle Assessment, it is apparent that the formation of particles related to ammonia emissions is a complex, nonlinear process.

Though recent studies have improved our understanding of the role of ammonia in aerosol formation, ongoing research is required to better describe the relationships between ammonia emissions, PM concentrations, and related impacts. The control techniques for ammonia and the analytical tools to quantify the impacts of reducing ammonia emissions on atmospheric aerosol formation are both evolving. Also, area-specific data are needed to evaluate the effectiveness of reducing ammonia emissions on reducing PM 2.5 concentrations in different areas, and to determine where ammonia decreases may increase the acidity of particles and precipitation.

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

We elected to finalize the proposed approach because of continued uncertainties regarding ammonia emission inventories and the effects of ammonia emission reductions.
Ammonia emission inventories are presently very uncertain in most areas, complicating the task of assessing potential impacts of ammonia emissions reductions. In addition, data necessary to understand the atmospheric composition and balance of ammonia and nitric acid in an area are not widely available, making it difficult to predict the results of potential ammonia emission reductions. Ammonia reductions may be effective and appropriate for reducing PM 2.5 concentrations in selected locations, but in other locations such reductions may lead to minimal reductions in PM 2.5 concentrations and increased atmospheric acidity. Research projects continue to expand our collective understanding of these issues, but at this time we believe this case-by-case approach for nonattainment areas is appropriate given that there is sufficient uncertainty regarding the impact of ammonia emission reductions on PM 2.5 concentrations in all nonattainment areas. In light of these uncertainties, we encourage States to continue efforts to better understand the role of ammonia in their fine particle problem areas.

Several commenters agreed with our ‘‘presumed-out’’ approach for ammonia. One of these commenters recommended that we recognize the role ammonia plays in PM 2.5 formation and develop a policy to require the minimization and mitigation of known emissions of ammonia, while another suggested that we require States to initiate comprehensive ambient air monitoring networks to determine the extent of local effects of ammonia.

Four commenters did not support treating ammonia as a PM 2.5 precursor under any circumstances. Three of these commenters stated that if EPA permits States to demonstrate that ammonia should be regulated as a PM 2.5 precursor for NSR purposes, we should make clear that ammonia emissions from the operation of an air pollution control system to control NO X should not factor into such a demonstration.

Two commenters preferred that we use the ‘‘presumed-in’’ approach for ammonia, as for NO X . One of thesecommenters stated that the ‘‘presumedout’’ approach would improperly delegate our authority to regulate
ammonia as a PM 2.5 precursor to the States and would reverse Congress’ requirement to regulate PM precursors unless the emissions are not part of the problem, instead taking the approach that we will ‘‘not regulate unless proven to be part of the problem.’’

We continue to believe that the ‘‘presumed-out’’ approach is most appropriate for ammonia. As discussed previously, considerable uncertainties remain regarding ammonia emission inventories and the effects of ammonia emission reductions. As a result, we do not believe it advisable to adopt a ‘‘presumed-in’’ approach. However, where a State can gather sufficient data to demonstrate that reductions in ammonia emissions will decrease ambient concentrations of PM 2.5 in a particular nonattainment area, we believe that the State should be allowed to regulate ammonia emissions under its

PM 2.5 NSR program for that area.

We do not believe that this approach improperly delegates authority to the States. The final rule establishes a general presumption for all nonattainment areas through this rulemaking process, and allows for the presumption to be modified by the State on a case-by-case basis with EPA approval. Under the Clean Air Fine


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9 See ‘‘NEI–PM 2.5 Source Analysis’’ in the docket for this rulemaking, Docket ID No. EPA–HQ–OAR–

2003–0062. Particle Implementation Rule (72 FR 20586, April 5, 2007) (addressing various nonattainment plan elements other than NSR), we still retain the ability to make a technical demonstration for any area if appropriate to reverse the presumption and require ammonia to be addressed in its nonattainment area plan. As discussed previously in section V.A.1, we interpret the Act to allow the ‘‘presumed-out’’ approach adopted in the final rule.

We agree with the commenter who suggested that we continue research on the role of ammonia in the formation of

PM 2.5 . We believe that it is prudent to continue research on ammonia controltechnologies and the ammonia-sulfatenitrate-SOA equilibrium before undertaking a broad national program to reduce ammonia emissions. As we develop a greater understanding about the potential air quality effects of reducing ammonia emissions in specific nonattainment areas, it may be appropriate for ammonia reduction strategies to be included in future SIPs. At this time, however, we believe that reducing SO 2 and NO X emissions will achieve significant reductions in ambient PM 2.5 concentrations.

Regarding the comment related to ammonia emissions from NO X control systems, we believe that a State should evaluate all sources of ammonia emissions when determining whether to regulate ammonia under its PM 2.5 NSR program for a particular nonattainment area. However, we also encourage States to be mindful of the potential tradeoff in terms of ambient PM 2.5 concentrations that may be related to reducing ammonia emissions from NO X control systems.
B. Major Stationary Source Threshold for PM 2.5 The major NSR program applies to construction of major stationary sources and major modifications at major stationary sources. A stationary source is a ‘‘major source’’ if its actual emissions or its potential to emit for a specific pollutant equals or exceeds the major source threshold for that pollutant established in the Act. Different pollutants, including precursors, are not summed to determine applicability.

Sections 169 and 302(j) of the Act contain definitions of ‘‘major emitting facility’’ and ‘‘major stationary source’’ that apply to programs implemented under part C and subpart 1 of part D of the Act (PSD and NA NSR, respectively). Consistent with our proposal, these final rules follow these definitions for purposes of defining a major emitting facility or major stationary source that would be subject to major NSR. The thresholds set out in the definitions are applied to each relevant pollutant individually, that is, to direct PM 2.5 emissions and to emissions of each pollutant identified as

a PM 2.5 precursor for the applicable NSR program. Under the final rules, the major source thresholds are as follows:

PSD ............. 100 tpy for source categories
listed in 40 CFR 51.166(b)(1)(i)(a) and 52.21(b)(1)(i)(a). 250 tpy for all other source

categories.NA NSR ...... 100 tpy for all source categories.

No regulatory change is required to implement this approach to the major source thresholds for direct PM 2.5 emissions and the PM 2.5 precursors. See 40 CFR 51.165(a)(1)(iv)(a), 51.166(b)(1)(i), 52.21(b)(1)(i), and part 51, appendix S, section II.A.4.

This approach is consistent with how we treat other criteria pollutants that are covered by subpart 1 of part D of the Act. Nonattainment NSR programs under subpart 1 do not include a tiered classification system such as the one required for ozone nonattainment areas under subpart 2 of part D. We do not interpret subpart 4 of part D of the Act (creating ‘‘serious’’ and ‘‘moderate’’ classifications for PM 10 nonattainment areas) as applying to PM 2.5
.

Although our approach is consistent with sections 169 and 302(j) and subpart 1 of part D of the Act, it results in a higher major source threshold in PM 2.5 nonattainment areas than the major source threshold that applies in some

PM 10 nonattainment areas under subpart 4 of part D of the Act. This is because section 189(b) of the Act establishes a 70-tpy major source threshold for
‘‘serious’’ PM 10 nonattainment areas while ‘‘moderate’’ PM 10 nonattainment areas apply a 100-tpy major source threshold based on the definition in section 302(j). We do not believe the Act gives us the discretion to promulgate a lower major source threshold for pollutants such as PM 2.5 that are only subject to subpart 1 of part D of the Act.

Our emissions inventory data do not indicate that this situation will adversely impact attainment of the

PM 2.5 NAAQS. These data indicate that a significant number of sources have actual PM 2.5 emissions in the 100 to 250 tpy range. Additionally, our more current inventory data show that the number of sources that would be covered as major sources by a lower major source threshold would not increase substantially unless the threshold were lowered to 20 tpy or below. Thus, even if EPA had the discretion to adopt a 70-tpy major source threshold for PM 2.5 nonattainment areas, our data indicate that few additional sources would be subject to the major NSR program in

PM 2.5 nonattainment areas. 9

We believe that States should consider such information in developing their own SIP-approved NSR programs. For example, if construction of PM 2.5 sources emitting 99 tpy with no major NSR controls and without mitigation would undermine a State’s ability to achieve reasonable further progress or attain the PM 2.5 NAAQS, the State should consider imposing emissions controls or other requirements on these sources through the State’s minor NSR program. Note that such programs are required under the existing statute and regulations to assure that the NAAQS are achieved.
See section 110(a)(2)(C) of the Act and 40 CFR 51.160. In addition, States may address such sources through other elements in their nonattainment area SIPs that are not statutorily bound to the definition of major source, as the major NSR program is. We reiterate that since we do not interpret subpart 4 of the Act to apply to PM 2.5 , we do not believe that we have discretion under section 302(j) of the Act to define a lower major source threshold for pollutants such as PM 2.5 that are only subject to subpart 1 of part D of the Act.

Some commenters indicated that State minor NSR programs would not be sufficient to address such sources due to interstate transport and the existence of
interstate PM 2.5 nonattainment areas. These commenters indicated that a lower major source threshold for PM 2.5 sources located in designated nonattainment areas should be applied uniformly throughout the entire nonattainment area, which would not be possible when minor NSR programs are defined on a State-by-State basis.

We believe, to the contrary, that States can coordinate their minor NSR programs to address interstate PM 2.5 nonattainment areas, and we encourage them to do so. In addition, we note that the impacts of direct PM 2.5 emissions are generally felt primarily in the local

area.

One commenter stated that in order to address the impact of high PM concentrations, the Act mandates EPA to define a criteria pollutant’s NSR major threshold at levels less than 100 tpy. The commenter gave the example of


### 28332 Federal Register / Vol. 73, No. 96 / Friday, May 16, 2008 / Rules and Regulations

10 For additional background on EPA’s interpretation of modification and rationale for including significant emissions rates in defining major modifications, see 61 FR 38253–54 (Dec. 31, 2002). subparts 2 and 4 of part D of the Act, which define lower major source thresholds for certain classifications of ozone and PM 10 nonattainment areas, respectively. The commenter argued that it is unreasonable for us to assert that subpart 4 does not apply to this rule because it regulates all PM with a diameter of less than 10 micrometers, which includes PM 2.5 . The commenter believes that we recognized as much in our proposal preamble discussion of the options for implementing reasonably available control technology (RACT), where we discussed potential approaches that ‘‘would be consistent with the approach set forth in the Act in subpart 4.’’ 70 FR 66017. This commenter stated that a reasonable interpretation of the Act requires major sources of direct PM 2.5 emissions and precursor emissions to be defined at a baseline level of 70 tpy, and adjusted further downward as appropriate considering the characteristics and potential impacts of the pollutants.

We do not agree that subpart 4 of part D applies to PM 2.5 nonattainment areas. Subpart 4 was added to the Act by Congress specifically to address the

PM 10 NAAQS. We believe that the PM 2.5 standard should be implemented under subpart 1 of part D, which is the general provision of the Act related to NAAQS implementation. Part D of title I of the Act sets forth the requirements for SIPs needed to attain the NAAQS. Part D also includes a general provision under subpart 1, which applies to all NAAQS for which a specific subpart does not exist. Because the PM 2.5 standards were not established until 1997, the nonattainment plan provisions found in section 172 of subpart 1 apply. Subpart 4 on its face applies only to the PM 10 standard. In general, the emphasis in subpart 4 on reducing PM 10 concentrations from certain sources of direct PM 2.5 emissions can be somewhat effective in certain PM 2.5 nonattainment areas but not in all. Contributions to

PM 2.5 concentrations are typically from a complex mix of sources of primary emissions and sources of precursor emissions, which form particles through reactions in the atmosphere. In addition,

PM 2.5 differs from PM 10 in terms of atmospheric dispersion characteristics, chemical composition, and contribution from regional transport.

A group of environmental commenters believed that EPA should be consistent with the stationary source size thresholds proposed for RACT in option 2, see 70 FR 66019/1. In our proposal preamble discussion of RACT, while we discussed developing a classification system for PM 2.5 nonattainment areas under section 172(a)(1) of subpart 1, we did not discuss subjecting PM 2.5 to the requirements of subpart 4. While our discussion of RACT contemplated a lower threshold for RACT applicability
in some PM 2.5 nonattainment areas, we did not characterize this as defining a lower major source threshold. Moreover, section 302(j) defines a major stationary source as one that emits 100 tpy or more ‘‘except as otherwise expressly provided.’’ Since section 172 does not expressly provide EPA with the authority to promulgate a major source threshold below 100 tpy, we do not believe we are authorized to do so under subpart 1 of part D of the Act.

One commenter stated that the major source threshold for PM 2.5 emissions should be calculated using the current
SO 2 and NO X definitions of major source and significant emissions rate. Specifically, the commenter suggested that the ratio of these values (100 tpy and 40 tpy, respectively) should be multiplied by the significant emissions rate for direct PM 2.5 emissions (10 tpy;

see section V.C following) to yield a

PM 2.5 major source threshold of 25 tpy.

As previously stated, we do not believe that we have discretion under the Act to define a lower major source threshold under subpart 1 of part D of the Act. In any case, the major source thresholds and significant emissions rates for SO 2 and NO X were not defined in relation to one another, and therefore their relationship would not provide a suitable basis for developing the PM 2.5 major source threshold from the PM 2.5 significant emissions rate. Major source thresholds are defined directly in the Act, while the significant emissions rates were codified independently in regulations through a modeling analysis of ambient impacts.

C. Significant Emissions Rate for Direct Emissions of PM 2.5

The determination of what should be classified as a modification subject to major NSR is based, in part, on a ‘‘significant emissions rate.’’ 10 The major NSR regulations define this term as a rate above which a net emissions increase will trigger major NSR permitting requirements, if the increase results from a major modification. Sources are exempt from major NSR requirements if the emissions increase resulting from a modification is below this rate because EPA considers such lower emissions increases to be de

minimis for purposes of the major NSR

program.

The significant emissions rates for the criteria pollutants other than PM 2.5 are given in the following table:

Criteria pollutant Significant emissions rate (tpy)

Ozone ................................................................. VOC: Any increase up to 40 tpy (dependent on NA classific ation).
NO X : Any increase up to 40 tpy (dependent on NA classification).
NO 2 ..................................................................... NO X : 40 tpy. Particulate Matter ................................................ 25 tpy, particulate matter emissions. 15 tpy, PM 10 emissions. CO ....................................................................... 50 or 100 tpy (dependent on NA classification).
SO 2 ..................................................................... 40 tpy. Lead .................................................................... 0.6 tpy.

Significant emissions rates for additional (non-criteria) pollutants that are subject to the PSD program are contained in 40 CFR 51.166(b)(23) and 40 CFR 52.21(b)(23).

For direct emissions of PM 2.5 , these final rules define the significant emissions rate as 10 tpy. This is the level that we proposed as our preferred option. This final significant emissions
rate for direct PM 2.5 emissions is based fundamentally on the same approach that we used in setting the previous significant emissions rates for PM
emissions and PM 10 emissions.

Historically, the original significant emissions rate for PM (25 tpy of PM emissions) was set using a modeling analysis to determine the amount of PM
emissions that a source could emit that


### 28333 Federal Register / Vol. 73, No. 96 / Friday, May 16, 2008 / Rules and Regulations

11 The EPA established the original NAAQS for PM in terms of ambient concentrations of TSP (40 CFR 51.100(ss)). Source applicability for PM was
determined in terms of amounts of PM emissions (40 CFR 51.100(pp)) from the affected source. In 1993, at 58 FR 31622 ( see page 31629), EPA
eliminated TSP as the ambient indicator for measuring compliance with both the NAAQS and PSD increments. Thus, EPA no longer considers the TSP ambient indicator to be a regulated NSR pollutant. The EPA is currently evaluating whether it remains appropriate to consider PM as a ‘‘regulated NSR pollutant.’’ There is no NAAQS for TSP/PM, rather the standards address specific size fractions of PM, namely PM 10 and PM 2.5 . However, PM emissions, based on in-stack measurements, continue to be regulated under PSD because of the use of such emissions for evaluating compliance under a variety of CAA section 111 new source performance standards (40 CFR part 60). Given the regulatory changes and positions taken by EPA since 1993, EPA is re-evaluating the implications for PM emissions in the NSPS program (and other air programs) and will act accordingly to clarify this
issue in the near-term. would be unlikely to cause ambient impacts above 4 percent of the PM NAAQS (measured as total suspended particulate (TSP)). 11 Although a range of source configurations can yield a wide range of impacts per tpy of emissions, our review of typical configurations of major PM sources led us to the conclusion that a major modification that increased PM emissions by 25 tpy or less would be unlikely to increase 24- hour average concentrations of TSP by more than 4 percent of the 24-hour TSP NAAQS. Subsequently, when we set the significant emissions rate for PM 10 , we adjusted the rate for PM emissions using the ratio of the 24-hour PM 10 NAAQS to the 24-hour TSP NAAQS to derive the

PM 10 significant emissions rate of 15 tpy. We used the ratio of 24-hour NAAQS for this adjustment because that NAAQS was controlling for both PM and PM 10
.

We used a conceptually similar methodology to derive the final PM 2.5 significant emissions rate from the rate for PM 10 . However, because the 24-hour NAAQS is not controlling for PM 2.5 , we revised the methodology to take into account the annual impact of emissions.
See the proposal preamble for additional information on the methodology we used to develop the final significant emissions rate for direct

PM 2.5 emissions (70 FR 66038).

Several commenters supported our approach to setting the significant emissions rate for direct PM 2.5 emissions and the level (10 tpy) based on the same methodology used for PM emissions and

PM 10 emissions. Numerous other commenters believe that our methodology was too conservative, and suggested a significant emissions rate of 15 tpy. Two commenters suggested that we use significant emissions rate of 5 tpy or less. Another commenter suggested that we could ‘‘split the difference,’’ using an option that could give States and companies some flexibility: Modifications less than 5 tpy
of direct PM 2.5 emissions could be
considered de minimis ; modifications between 5 and 15 tpy of direct PM 2.5 emissions could choose to either demonstrate less than a 4 percent NAAQS increase or simply be subject;
and modifications with increases of 15 or more tpy of direct PM 2.5 emissions would be subject.

We agree with commenters who indicated that we were correct in using the same methodology for direct PM 2.5 that was used to set the significant
emissions rate for PM 10 and PM emissions. We do not agree that using
the same level as PM 10 emissions (15 tpy) is warranted, given the
demonstrated health effects of PM 2.5
. Neither do we agree that a significant emissions rate of 5 tpy or less is warranted. While our screening model
runs indicated that emissions increases in this range at facilities with short
stacks can cause measurable increases
in ambient PM 2.5 levels, we do not
believe that facilities at the extremes should dictate the program for all

sources.

We do not agree that inclusion of condensable emissions in future testing and applicability determinations ( see section V.E) is grounds for increasing
the SER for direct PM 2.5 emissions. The results of the modeling analysis that is the basis for the SER of 10 tpy is not affected by the nature of the direct PM 2.5 emissions ( i.e. , condensable or not).

We also do not agree that the proportions of primary and secondary

PM 2.5 that comprise ambient PM 2.5 concentrations is relevant to determining the appropriate SER for
direct PM 2.5 emissions. Following our historic approach for PM and PM 10 , we based our analysis on determining the
size of a source of direct PM 2.5 emissions that would be expected to have an ambient impact of 4 percent or more of the NAAQS. This relationship holds true regardless of the origin of the particles that make up the ambient

PM 2.5 . The commenter’s approach ( i.e.

,carrying out the analysis based on onehalf of the NAAQS because primary

PM 2.5 makes up only one-half of the
ambient PM 2.5 ) implies that an increase
in ambient PM 2.5 concentrations due to
an increase in direct PM 2.5 emissions is somehow automatically matched by a
like increase in the ambient concentration of secondary PM 2.5 . We do not believe that this is a reasonable approach. D. Significant Emissions Rates for PM 2.5 Precursors

Consistent with the preferred option in the proposal, we are setting significant emissions rates for PM 2.5 precursors at the levels for those pollutants already included in major NSR programs, as shown in the following table:

PM 2.5 precursor Significant emissions rate (equal to or

exceeding)

SO 2 ........................... 40 tpy. NO X .......................... 40 tpy. VOC .......................... 40 tpy. Ammonia ................... Adopted in SIP.

VOC is presumed not to be a precursor to PM 2.5 in any attainment or unclassifiable area, unless the State demonstrates to the Administrator’s satisfaction or EPA demonstrates that emissions of VOC from sources in a specific area are a significant contributor to that area’s ambient PM 2.5 concentrations. Any State making such a demonstration would be required to adopt the 40-tpy significant emissions rate unless it demonstrates that a more stringent significant emissions rate (lower rate) is more appropriate.

For ammonia, States determining in their SIPs that control of ammonia is a necessary part of a PM 2.5 control strategy in a particular area must set the significant emissions rate for ammonia. Otherwise, according to the definition of ‘‘significant’’ in the PSD program, ‘‘any emissions rate’’ would be considered significant. See 40 CFR 51.166(b)(23)(ii).

One commenter stated that we should not leave it to States to set significant emissions rates for ammonia. The commenter argued that EPA’s scientists should shoulder this responsibility, and the resulting significant emissions rate should be subject to notice and

comment.

In the final rule, we are allowing those States that determine in their SIPs that control of ammonia is necessary to set the significant emissions rate for ammonia, based on the information developed for each attainment demonstration. At this time, we believe this is more appropriate than EPA setting a single, nationwide significant emissions rate because of the different role ammonia plays in the formation of

PM 2.5 from one area to another, as well as our still-evolving understanding of the impact of reducing ammonia emissions on ambient PM 2.5 concentrations. In addition, we note that the SIP revisions that States undertake to add ammonia to their NA NSR


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12 Leter from Thompson G. Pace, Acting Chief, Particulate Matter Programs Branch, to Sean Fitzsimmons, Iowa Department of Natural Resources (Mar. 31, 1994) (available at http:// www.epa.gov/Region7/programs/artd/air/ nsr.nsrmemos/cpm.pdf and in the docket for this rulemaking, Docket ID No. EPA–HQ–OAR–2003– 0062). programs are subject to notice and comment rulemaking procedures.

Numerous commenters supported our proposal to set significant emissions rates for PM 2.5 precursors at the levels already used for other purposes in the NSR program. One commenter indicated that since roughly half or more of ambient PM 2.5 is derived from precursors, 10 tpy would be an appropriate significant emissions rate for PM 2.5 precursor emissions. Another commenter suggested a significant emissions rate of 4 tpy for SO 2 and 2 tpy for NO X , based on the percentage of

PM 2.5 that is typically derived from these precursors and the ratios between the existing significant emissions rates for these pollutants and the SO 2 and
NO 2 annual NAAQS. Since the ambient concentrations of PM 2.5 vary across the country and since significant emissions rates have not been developed as a ratio of the NAAQS, we do not believe that the suggested approach is appropriate.

As discussed in the proposal, the use of existing significant emission rates where the PM 2.5 precursor is also regulated under NSR as a separate criteria pollutant harmonizes the NSR program for PM 2.5 with the NSR programs for those other criteria pollutants. This enables a source to determine the NSR impacts of proposed modifications by reference to a single significant emissions rate for each pollutant, and enables streamlining of determinations regarding the applicable control technology and analysis of air quality impacts into a single and comprehensive decision making process for both PM 2.5 and other criteria pollutants that also cover PM 2.5 precursors. This also follows precedent. When ozone became a criteria pollutant, EPA used the NO X significant emissions rate from the NO 2 program.

The burden imposed is not the only factor to consider when setting the significant emission rates for precursors—the process for determining the significant emission rates must also take into account the accuracy and certainty with which we can predict the effect of the precursors on PM 2.5 concentrations. It is difficult to determine the ambient air quality effects that result from a single source of emissions of PM 2.5 precursors. There are conservative screening models for predicting impacts of large NO X and
SO 2 sources on ambient PM 2.5 concentrations. We conducted a range of modeling analyses to determine the amount of PM 2.5 precursor emissions needed to show an increase in ambient

PM 2.5 concentrations. These analyses showed that precursor emissions probably have some localized impacts, but that most impact is farther downwind as precursors have the time

to convert to PM 2.5 . In addition, the modeling available at this time does not provide sufficient information to estimate impacts of emissions from individual sources of ammonia and VOC on ambient PM 2.5 concentrations. While we know that precursors contribute to the formation of PM 2.5 in the ambient air, the degree to which these individual precursors contribute

to PM 2.5 formation in a given location is complex and variable. There are competing chemical reactions taking place in the atmosphere, and meteorological conditions play a significant role in the size and characteristics of particle formation. For these reasons, we do not believe that we have adequate data on the impacts of precursor emissions from individual sources to override the administrative advantages of setting the significant emissions rates for SO 2 , NO X , and VOC for purposes of the PM 2.5 NSR program at the same levels that are already used for other purposes in the major NSR

program.

E. Condensable PM Emissions

In this final NSR rule, EPA will not require that States address condensable PM in establishing enforceable emissions limits for either PM 10 or PM 2.5 in NSR permits until the completion of a transition period, as described herein. In response to significant comments on the variability of test methods available for measuring condensable emissions, we have adopted this transition period approach to allow us to assess the capabilities of the test methods and possibly revise them to improve performance. The transition period will end January 1, 2011 unless EPA advances this date through the rulemaking process described below.

Subsequent to the completion of the test methods assessment, EPA will be conducting a notice and comment rulemaking to codify new or revised test methods. Once these new or revised test methods are in place, States will have the tools necessary to issue NSR permits addressing condensable PM. Thus, as part of the test methods rulemaking, we will take comment on an earlier closing date for the transition period in the NSR program if we are on track to meet our expectation to complete the test methods rule much earlier than January 1, 2011. In the meantime, however, we are establishing January 1, 2011 as the latest possible end date for the NSR transition period because this is also the end of the transition period for SIP purposes as described in the Clean Air Fine Particle Implementation Rule ( see section II.L in 72 FR 20586, April 25, 2007). Prevention of Significant Deterioration and NA NSR permits issued after the effective date of this NSR implementation rule but prior to the end of the transition period for the NSR program are not required to account for condensable emissions in

PM 2.5 or PM 10 emissions limits. After January 1, 2011 (or any earlier date established in the upcoming rulemaking codifying test methods), EPA will require that NSR permits include limits of condensable emissions, as appropriate. Prior to this date, States are not prohibited from establishing emissions limits in NSR permits that include the condensable fraction of direct PM 2.5
.

As noted in the proposal preamble, certain commercial or industrial activities involving high temperature processes ( e.g. , fuel combustion, metal processing, and process cooking operations) emit gaseous pollutants into the ambient air, some of which rapidly condense into particle form. The constituents of these condensed particles include, but are not limited to, organic materials, sulfuric acid, and metals and metal compounds. We consider such condensable emissions to be a component of direct PM emissions. Specifically, direct PM emissions consist of both the ‘‘filterable fraction’’ which already exist in particle form at the elevated temperature of the exhaust stream, and the ‘‘condensable fraction’’ which exist in gaseous form under exhaust stream conditions but condenses rapidly in the ambient air.

Because condensable PM emissions exist almost entirely in the 2.5 micrometer range and smaller, these emissions are inherently more significant for PM 2.5 than for prior PM standards addressing larger particles. Condensable PM emissions commonly make up a significant component of direct PM 2.5 emissions. Therefore, we believe that it is important that the air quality management of PM promote a comprehensive approach to the control of condensable PM.

We proposed on November 1, 2005 to clarify that condensable PM emissions must be included when determining whether a source is subject to the major NSR program. We noted in the proposal that our prior guidance 12 had clarified that PM 10 includes condensable PM and


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that, where States expect condensable PM emissions to be in higher amounts, States should use methods that appropriately measure condensable PM emissions. In addition, we pointed out that the 2001 consolidated emissions reporting rule (CERR) requires States to report condensable emissions in each inventory revision ( see 67 FR 39602, June 10, 2001) and that Method 202 in appendix M of 40 CFR part 51 quantifies condensable PM. We also noted that States have not applied this existing guidance consistently.

We received a number of comments on whether NSR programs should account for condensable PM emissions in light of the current state of knowledge of and uncertainties around the measurement of direct PM 2.5 . Several commenters supported our proposal to require the inclusion of condensable PM emissions in NSR applicability determinations. On the other hand, several other commenters expressed opposition to including condensables at this time and raised concerns about the availability and implementation of test methods and related issues about the uncertainties in existing data for condensable PM 2.5 . As a result of the concerns, these commenters believed EPA would be premature in requiring a comprehensive evaluation of condensable PM 2.5 , especially as it related to developing any new emissions limits for stationary sources.

One commenter noted that regulation of condensable PM at this time will impede, rather than facilitate, expeditious attainment of the PM 2.5 standard. Another commenter expressed concern about the potential for retroactive enforcement over applicability decisions made in good faith, and for retroactive application of the new test method to assert violations of an emission limit, where the applicability decision or the emission limit was originally based on flawed testing/estimating methodology. Several commenters raised serious concerns about the availability and implementation of accurate test methods and emissions factors for condensable PM 2.5 . They further stated that regulation of condensable PM 2.5 emissions would be appropriate only after we have developed a workable transitional strategy that ensures existing major sources are not placed in ‘‘NSR jeopardy’’ for physical and operational changes undertaken before new test methods and other requirements for condensable PM 2.5 are established.

In recognition of these concerns, both as they apply to the NSR program and the broader air program, we have adopted a transition period during which NSR permits need not address limits of condensable PM 2.5 emissions. During this transition period, EPA will undertake a collaborative testing effort with industry, National Association of Clean Air Agencies (NACAA), and other stakeholders to assess and improve the effectiveness and accuracy of the available or revised test methods. The purpose of the stakeholder testing projects will be to collect new direct filterable and condensable PM 2.5 emissions data using methodologies that provide data more representative of sources’ direct PM 2.5 emissions. The EPA, States, and others will use these data to establish or improve emissions factors and to define more representative source emissions limits in permits.

The EPA acknowledges the legitimate concerns raised by commenters concerning potential exposure to retroactive enforcement and has established rules to address this issue. The EPA will not revisit applicability determinations made in good faith prior to the end of the transition period, insofar as the quantity of condensable PM emissions are concerned, unless the applicable implementation plan clearly required consideration of condensable PM. Likewise, EPA will interpret PM emissions limitations in existing permits or permits issued during the transition period as not requiring quantification of condensable PM 2.5 for compliance purposes unless such a requirement was clearly specified in the permit conditions or the applicable implementation plan.

After the end of the transition period (January 1, 2011 or any earlier date established in the upcoming rulemaking codifying test methods), EPA will require that all NSR applicability determinations for PM 2.5 and PM 10 address condensable emissions as applicable, and the source may not rely on calculations made for previous determinations that did not include an accurate accounting of condensables. Additionally, compliance with these limits must be determined using the promulgated validated test methods that are applicable after that date. Moreover, after that date, we expect that condensable PM emissions will be addressed in all other aspects of the major NSR program, such as impact analyses under PSD and offsets under
NA NSR. See 72 FR 20586, April 25, 2007 for the discussion of the transition period as it applies to the other elements of the air program in the final Clean Air Fine Particle Implementation Rule. Although EPA is not requiring that State NSR programs address
condensable emissions of PM until the end of the transition period, States that have developed the necessary tools are not precluded from acting to measure
and control condensable PM emissions in NSR permit actions prior to the end of the transition period, especially if it is required in an applicable SIP. To the extent that a State has the supporting technical information and test methods, the State may assess the capabilities of current control technologies, possible modifications to such technologies, or new technologies as appropriate relative
to control of condensable PM 2.5 emissions. As an example, a specific approach for controlling condensable PM could be a change in control device operating temperature to improve emissions reductions. We also note that it is important that implementation of any new or revised emissions limits and
test methods that account for
condensable emissions should be prospective and clearly differentiated from existing NSR permit requirements. This will avoid confusion over the compliance status relative to existing PM emissions limits that were not developed considering the condensable portion.

Notwithstanding the issues and uncertainties related to condensable PM, we encourage States to begin immediately to identify measures for reducing condensable PM emissions in major NSR permit actions, particularly where those emissions are expected to represent a significant portion of total PM emissions from a source.

F. Prevention of Significant Deterioration (PSD) Program Requirements

To receive a permit for a new major source or a major modification, sources subject to PSD must:

• Install Best Available Control Technology (BACT).

• Conduct air quality modeling to ensure that the project’s emissions will not cause or contribute to either—

—A violation of any NAAQS or

maximum allowable pollutant increase (PSD increment); or —An adverse impact on any Class I area

‘‘air quality related value’’ (AQRV).

• As required, comply with preconstruction monitoring requirements.

This final action regarding each of these elements is discussed in the following
sections.


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1. How must BACT be implemented for

PM 2.5 ?

We are not making any change to our current regulations or policy for implementing BACT requirements at a major source that is subject to the requirements of the PSD program. Accordingly, if a new major source will emit, or have the potential to emit, a significant amount of a regulated NSR pollutant in an attainment area for that pollutant, the source must apply BACT for each emissions unit that emits the pollutant. In addition, if a physical or operational change at an existing major source will result in a significant emissions increase and a significant net emissions increase of a regulated NSR pollutant in an attainment area for that pollutant, the source must apply BACT to each proposed emissions unit experiencing a net increase in emissions of that pollutant as a result of the physical or operational change in the unit. Under the PM 2.5 PSD program, these requirements will apply to direct

PM 2.5 emissions; SO 2 emissions; NO X emissions, unless a State demonstrates that NO X is not a significant contributor to ambient PM 2.5 concentrations in that area; and to VOC if identified by a State as a precursor in the PM 2.5 attainment area where the source is located.

2. How does EPA plan to address PM 2.5 Increments, Significant Impact Levels (SILs), and Significant Monitoring Concentrations (SMCs)?

On November 1, 2005, we proposed a rule to implement the PM 2.5 NAAQS, including proposed revisions to the NSR program (70 FR 65984). In that proposal, we indicated our intent to propose a separate rule for developing PM 2.5 increments, SILs, and SMCs and sought comments on general approaches for developing these values. We proposed

PM 2.5 increments, SILs, and SMCs in a rule dated September 21, 2007. 72 FR 54112. We intend to address comments received on these components of the

PM 2.5 PSD program when we finalize that proposed rule.

3. What is the ambient air quality analysis requirement for PM 2.5 ?

All sources subject to PSD review must perform an ambient air quality impact analysis to show that the emissions from the source will not cause or contribute to a PSD increment or NAAQS violation. See section 165(a)(3) of the CAA; 40 CFR 51.166(k) and 52.21(k). We did not propose, and our final rules do not contain, any changes to the regulations on air quality impact analyses for purposes of the

PM 2.5 NSR program. Accordingly, sources will be required to perform this analysis for the PM 2.5 NAAQS and, when finalized, PM 2.5 increments. Such analyses must consider how a source, in combination with other sources in the area, will impact air quality at existing

PM 2.5 monitor locations, as well as at other locations that are appropriate for comparing predicted PM 2.5 concentrations to the NAAQS based on

PM 2.5 monitor siting requirements and recommendations.

4. How must the PSD preconstruction monitoring requirement be implemented for PM 2.5 ?

Sources subject to PSD are subject to preconstruction ambient air quality monitoring requirements. See sections 165(a)(7) and 165(e) of the Act and 40 CFR 51.166(m) and 52.21(m). The PSD permitting requirements provide that continuous preconstruction ambient air quality monitoring must be conducted for any criteria pollutant emitted in significant amounts. Under 40 CFR 51.166(i)(5) and 52.21(i)(5), the reviewing authority has the discretion to exempt an applicant from this monitoring requirement if:

• The maximum modeled concentration for the applicable averaging period caused by the proposed significant emissions increase (or net emissions increase) is less than the prescribed SMC; or

• The existing monitored ambient concentrations are less than the prescribed SMC. A source may also use existing data as a surrogate for preconstruction monitoring if the existing monitored data record is determined to be representative of the project’s location.

We proposed five options for how to address preconstruction monitoring for

PM 2.5 . We are adopting a combination of options 1 and 3 from the proposal, primarily because we believe that it reflects existing procedures for other regulated NSR pollutants. The following sections summarize the major comments received on each option and explain why we are not adopting particular options.

Option 1—Require Preconstruction Monitoring for All Sources But Exempt on a Case-by-Case Basis

Generally, commenters who supported option 1 believed the option gives regulatory agencies enough flexibility to address sources with unique characteristics. One commentator stated that another benefit is that this option would avoid unnecessary installation of new PM 2.5 monitors and redundant preconstruction monitoring. Another commenter, however, believed option 1 to be overly burdensome until EPA develops an SMC. The commenter argued that for example, there are many upcoming PSD projects in their State, which would be located in extremely remote areas where there are no local or regional PM 2.5 emission sources, so there would be no need to collect such data for these areas. Additionally, one group of commenters stated that option 1 appeared to be ‘‘streamlining’’ preconstruction permit requirements, which is not the intention of the Act’s PSD provisions, and that EPA does not have the authority to exempt sources from the requirements of section 165(e)(2).

We agree with the commenter that recommended combining option 3 (the use of a 24-hr PM 2.5 SMC) with option 1 and are finalizing this approach. We have proposed an SMC for PM 2.5 in the rulemaking on increments, SILs, and SMCs (72 FR 54112, September 21, 2007). Our regulations at 40 CFR 51.166(i)(5) and 52.21(i)(5) have allowed the use of an SMC as screening tool for identifying when an impact is de
minimis and there is thus little or no value in gathering preconstruction monitoring data The use of de minimis levels of this nature (such as significant emission rates and significant impact levels) is supported by court precedent interpreting the NSR provisions of the

Act. Alabama Power Co. v. Costle, 636 F.2d 323, 360 (DC Cir. 1979). (‘‘Unless Congress has been extraordinarily rigid, there is likely a basis for an implication of de minimis authority to provide [an] exemption when the burdens of regulation yield a gain of trivial or no value.’’)

Option 2—Exempt All Sources From Preconstruction Monitoring

Under option 2, we proposed to exempt all PM 2.5 sources from preconstruction monitoring through a blanket determination that the existing

PM 2.5 monitoring network is sufficient. One commenter who preferred option 5 (described subsequently) was also supportive of option 2. This commenter noted that preconstruction monitoring is expensive and can significantly delay a project. The commenter also pointed out that it is very difficult to locate monitors for both direct PM 2.5 and precursors because precursors may transport over long distances before transforming into

PM 2.5 . The commenter indicated that we should not rely on the existing regulations, which are already known to be problematic.

One comment letter from a group of environmental advocacy organizations specifically opposed option 2. These


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13 These sections actually cross-reference the list at 40 CFR 51.166(i)(8)(i) and 52.21(i)(8)(i), however we renumbered those paragraphs to paragraph (i)(5)(i) of those provisions in the December 31, 2002 NSR reform rule and inadvertently overlooked correcting the cross-references in paragraphs (i)(5)(ii) and (i)(5)(iii). See 67 FR 80186. As proposed, in this final action we have corrected this misnumbering and others in this section. commenters noted that spatial gradients can be significant for PM 2.5 , especially for direct PM 2.5 emissions, and that the existing monitoring network is severely limited in its spatial coverage, most especially in attainment areas where PSD preconstruction monitoring requirements apply. The commenters indicated that to make a blanket determination that the existing network suffices for any source, regardless of where it might choose to locate, would be absurd.

We decided not to finalize option 2 because we do not believe that the current network will be sufficient for all existing and potential new sources. As stated in the proposal preamble, we believe that the existing PM 2.5 monitoring record has the following limitations:

• The PM 2.5 monitoring data record would require spatial interpolation between monitors for the determination of appropriate concentrations at the project’s location.

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

• The PM 2.5 monitoring data record assumes that local hot spots of high

PM 2.5 concentrations do not exist or are already being monitored, which may not be true in all cases.

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

• When used with the impact modeling, separate concentrations of direct and precursor-formed PM are needed.

Option 3—Use SMC’s To Exempt
Sources From Preconstruction Monitoring

Several commenters supported this option adding that this approach follows existing procedures to justify the exclusion of preconstruction monitoring requirements when source impacts are less than the SMC or when sufficient representative data exists. One group of commenters stated that EPA’s proposed options 1 and 3, which would allow case-by-case or de minimis exemptions from the monitoring requirements, are ill-conceived as a matter of public policy and contradict the Act’s PSD provisions.

We agree with the commenters that support adopting option 3 because a combination of options 1 and 3 reflects existing procedures for other regulated NSR pollutants. As discussed previously, a de minimis exemption from monitoring requirements is supported by court precedent interpreting the PSD provisions of the Act. We do not consider it sound policy to require gathering additional data when it is unnecessary to demonstrate that a proposed source or modification will not adversely impact air quality.

Option 4—Use Existing PM 10 Data

We proposed using the available large

PM 10 data record combined with the recently acquired PM 2.5 data to provide representative ambient measurements for most sources. One comment letter from an industry group opposed any requirement for preconstruction monitoring, and endorsed option 4 if nationally gathered PM 2.5 data is not available. Three commenters specifically opposed option 4. One comment letter from an environmental advocacy organization stated that option 4 is illegal on its face, to the extent that EPA intends it as a universally available alternative. This comment indicated that some individual sources might be able to demonstrate that PM 10 monitoring could fulfill the statutory requirements and purposes of PM 2.5 monitoring ( e.g. , with sufficiently protective assumptions about PM 2.5 /

PM 10 proportions), but due to the variability in the relationship between

PM 2.5 and PM 10 , EPA cannot categorically allow this substitution. Two other commenters stated that option 4 was not a viable approach due to the convoluted nature of attempting to infer PM 2.5 concentration from PM 10 monitoring data for source-specific applications.

We decided not to finalize option 4. As we recognized in the proposal preamble, the differences in characteristics between PM 2.5 and PM 10 and our limited understanding of their relationship are problematic for this application. We do not believe that generalized factors to convert PM 10 concentrations to PM 2.5 concentrationssufficiently reflect important industryspecific and spatially-related characteristics of PM 2.5 . In addition, removing altogether the obligation to provide preconstruction PM 2.5 ambient monitoring data would eliminate industry’s contribution to the PM 2.5 data record when source impacts are more than de minimis

. Option 5—Exempt Sources From Preconstruction Monitoring if No SMC Is Established

We noted in the proposed rule that the existing regulations at 40 CFR 51.166(i)(5)(iii) and 52.21(i)(5)(ii) could be interpreted to allow a reviewing authority to exempt an applicant from preconstruction monitoring for any pollutant for which we have not established an SMC. These provisions state that a source may be exempted from preconstruction monitoring ‘‘if * * * the pollutant is not listed in’’ the list of pollutants for which SMC have been set. 13 The original rationale for this exemption is based on the lack of adequate methods for measuring ambient concentrations of pollutants not on the list. See 45 FR 52709, 52723– 52724. We requested comment on this interpretation and any other legal or policy rationale that could support applying the text of these provisions to exempt sources from preconstruction monitoring if we elected not to define an SMC for PM 2.5
.

One commenter stated that option 5 is the most practicable to implement until an SMC can be established and any potential gaps in the monitoring network can be filled. Two commenters question the legality of option 5 under the Act. They added that whatever may have been the case when the existing list of SMCs was adopted, methods now exist for conducting the monitoring required under section 165(e)(2). We decided not to finalize option 5, and have proposed an SMC rule for PM 2.5
.

In conclusion, we are finalizing a combination of options 1 and 3 from the proposal, since we believe that it reflects existing procedures for other regulated NSR pollutants. Once we finalize an SMC for PM 2.5 , the reviewing authority will have the discretion to exempt a source from the preconstruction monitoring requirement if the projected PM 2.5 ambient impact of the source is below the PM 2.5 level promulgated in our rules. In addition, additional preconstruction monitoring data may not be necessary based on the availability of existing representative monitoring data in the area, as discussed previously.

G. Nonattainment New Source Review (NA NSR) Requirements

To receive a permit for a new major source or a major modification, sources subject to NA NSR must:

• Install Lowest Achievable Emission Rate (LAER) control technology;

• Offset new emissions with creditable emissions reductions;


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• Certify that all major sources owned or operated by the applicant in the same State are in compliance; and

• Conduct an alternative siting analysis demonstrating that the benefits of the proposed source significantly outweigh the environmental and social

costs. We did not propose, nor are we finalizing, any revisions to the first, third, and fourth of these requirements. Thus, these requirements apply for purposes of PM 2.5 and its designated precursors just as they apply for other criteria pollutants and their designated precursors. In the remainder of this section G, we discuss our final actions related to offsets for direct PM 2.5 emissions and emissions of PM 2.5 precursors. 1. What is the required offset ratio for direct PM 2.5 emissions?

Under section 173 of the Act, all major sources and major modifications at existing major sources within a nonattainment area must obtain emissions reductions to offset any emissions increases resulting from the project in an amount that is at least equal to the emissions increase, and that is consistent with reasonable further progress towards attainment. We refer to the proportional difference between the amount of the required offsets to the amount of emissions increase as the ‘‘offset ratio.’’

The Act specifies an offset ratio for several situations. In ozone nonattainment areas subject to subpart 2 (of title I, part D of the Act), the ratio is set between 1.1:1 and 1.5:1 depending on the area’s level of classification pursuant to subpart 2. For other nonattainment areas, the Act establishes a minimum offset ratio of 1:1 pursuant to subpart 1 of title I, part D of the Act.

As proposed, we are finalizing the offset ratio for direct PM 2.5 emissions as at least 1:1 on a mass basis because the

PM 2.5 program is being implemented under subpart 1 of the Act. The commenters on this issue generally agreed that our regulations should require an offset ratio of at least 1:1 pursuant to subpart 1.

A few commenters indicated that a lower ratio could be acceptable on a source-specific basis if accompanied by a modeling analysis demonstrating a net air quality benefit. One commenter suggested that such a demonstration would be possible when a direct PM 2.5 emissions increase from a tall stack is being offset by ground-level PM 2.5 emission reductions. Applying diesel retrofit technology to bus and truck fleets is an example of how ground-level

PM 2.5 emission reductions could be achieved. We do not believe that a lower offset ratio is authorized under subpart 1, which prescribes an offset ratio of at least 1:1, and therefore we have not adopted this approach in our final rules.

Some of the commenters disagreed regarding whether an offset ratio of at least 1:1 under subpart 1 represents a ceiling or a floor on the level we can prescribe in our regulations. We interpret section 173 of the Act to allow higher offset ratios where necessary to achieve reasonable further progress. Accordingly, we believe that States may establish higher offset ratios in their State programs if they wish, but we do not believe that it would be appropriate for us to do so for PM 2.5 in national regulations. We do not have cause to believe a higher ratio is necessary for

PM 2.5 in each area of the country and prefer to leave this to the discretion of States. We do not believe that the higher offset ratios required for ozone precursors under subpart 2 apply in any way to direct PM 2.5 emissions or PM 2.5 precursors. 2. Which precursors are subject to the offset requirement?

Consistent with our proposal, the pollutants that are designated as PM 2.5 precursors in a particular area are subject to the offset requirement in that area. Accordingly, SO 2 is subject to offsets in all PM 2.5 nonattainment areas. As a ‘‘presumed-in’’ precursor, NO X will be subject to offsets unless a State obtains an exemption for its NSR program through a demonstration that
NO X emissions in a particular area are not a significant contributor to that area’s ambient PM 2.5 concentrations. As ‘‘presumed-out’’ precursors, VOC and ammonia would be subject to offsets only in areas where the State has demonstrated that these emissions are significant contributors to the area’s ambient PM 2.5 concentrations. Two commenters on this issue agreed with this approach; one commenter recommended that we not require offsets for any PM 2.5 precursors. We believe that it is appropriate to offset emissions increases of all precursors that have been established to contribute to the PM 2.5 nonattainment problem in a particular area.

3. What is the required offset ratio for

PM 2.5 precursors?

As discussed previously, the Act requires that a source obtain offsets for emissions increases that occur in a nonattainment area. As with PM 2.5 direct emissions, the minimum offset ratio permitted under subpart 1 of the Act is at least 1:1. Based on these requirements of the Act, we are finalizing our proposal that an offset ratio of at least 1:1 applies where a source seeks to offset an increase in emissions of a PM 2.5 precursor with creditable reductions of the same precursor. This offset ratio applies for all pollutants that have been designated

as PM 2.5 precursors in a particular
nonattainment area.

Most commenters agreed with this approach. A few commenters indicated that an offset ratio of less than 1:1 for precursor emissions of PM 2.5 should be allowed only if there is a net air quality benefit and if the lower ratio is justified by air quality modeling analysis. They noted that for PM 2.5 precursors, chemical reactivity modeling demonstrations should be developed and approved that are, at a minimum, capable of determining the impacts of the precursor emissions on the air quality in the nonattainment area in which the source is located. As noted previously, we do not believe that any offset ratio less than 1:1 is permissible under subpart 1.

One commenter stated that consistent with the statutory scheme for ozone laid out in section 182, and given the severity of the health risks associated with PM 2.5 , EPA must require offsets of at least 1.15:1 for PM 2.5 precursors in ‘‘moderate’’ nonattainment areas, and must increase the offset ratio in
‘‘serious’’ nonattainment areas or in areas that request extensions of their attainment deadlines. As mentioned previously, we do not believe that subpart 2 of the Act (which includes section 182) has any relevance to PM 2.5 or its precursors. Subpart 2 is specific to ozone. In addition, we are implementing the PM 2.5 program under subpart 1. Nevertheless, under the Act, we believe that a State may require higher offset ratios if it determines that they are necessary to achieve reasonable further progress. For the reasons discussed previously with respect to direct PM 2.5 , we do not believe that it is appropriate for us to set higher offset ratios for PM 2.5 precursors on a national basis.

Two commenters requested that we make clear in the final rule that an increase in precursor emissions need only be offset once, even if the increase triggers nonattainment NSR under, for example, both the ozone and PM 2.5 programs. We agree with these commenters and are clarifying that a precursor emissions increase only needs to be offset once. A permit applicant will not, for example, need to obtain two sets of offsets for NO X emissions if
NO X is regulated as a precursor both for ozone and PM 2.5 in the area. The NO X precursor emissions need only be offset once in accordance with the applicable


### 28339 Federal Register / Vol. 73, No. 96 / Friday, May 16, 2008 / Rules and Regulations

14 A full description of this approach is available in the technical support document at http://www. epa.gov/scram001/reports/pmnaaqs

_ tsd

_ rsm

_ all

_ 021606.pdf and in the docket for this rulemaking, Docket ID No. EPA–HQ–OAR–2003–0062. 15 Available in the docket for this rulemaking, Docket ID No. EPA–HQ–OAR–2003–0062. ratio. To the extent a higher ratio applies for ozone under subpart 2, the applicant would have to obtain offsets at the higher ratio. However, when the offset ratios are the same, both requirements can be met with a single set of NO X offsets.

4. Is interpollutant trading allowable to comply with offset requirements?

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

PM 2.5 emissions increases.

We have completed a technical assessment to develop preferred interpollutant trading ratios that may be used for the purposes of PM 2.5 offsets, where appropriate. The preferred ratios were generated with a PM 2.5 response surface modeling (RSM) approach based on the EPA’s Community Multi-Scale Air Quality (CMAQ) model. This RSM approach allows one to distinguish the impact of direct and precursor emissions from particular source groupings on total PM 2.5 concentrations within nine specific urban areas and broadly across U.S. regions. This approach was recently applied by the Agency to inform development of potential PM 2.5 control strategies as part of the Regulatory Impact Assessment (RIA) for the final PM 2.5 NAAQS. 14 Based on results from the RSM, we determined the distribution of predicted ratios for urban areas and regions across the country and developed the preferred ratios with a goal to be environmentally protective. The technical approach with details on data and modeling inputs are fully described in a technical memo to the docket, ‘‘Details on Technical Assessment to Develop Interpollutant Trading Ratios for PM 2.5 Offsets.’’ 15 Use of the preferred ratios is recommended by EPA but not mandatory, and we do not intend to preclude the opportunity for a local demonstration of trading ratios on a case-by-case basis and public input into that process.

Our work here and in other recent

PM 2.5 assessments clearly show that the relative efficacy of emissions reductions varies across pollutants and that a ton of direct PM 2.5 is generally more effective than a ton of precursor emissions in reducing overall PM 2.5 concentrations. For the purposes of reporting information here, we define the ‘‘East’’ to be the 37 States either completely or in part east of 100 degrees west longitude. ‘‘West’’ would include the remaining 11 western-most States in the continental United States. We found the following relationships between pollutants in developing the preferred trading ratios:

1. NO X to SO 2 ; SO 2 to NO X : Our assessment indicated potential disbenefits of reducing NO X ( i.e. , reducing NO X tons in urban areas may increase overall PM 2.5 concentrations) in the eastern United States and urban areas in the western United States. Due to the possibility of these disbenefits and the high degree of variability in the observed
NO X to SO 2 ratios or SO 2 to NO X ratios across urban areas, we are not defining preferred ratios involving trades between these precursors but will rely upon a local demonstration to determine the appropriate trading ratios.

2. NO X to Primary PM 2.5 ; Primary PM 2.5 to NO X : Based on a local demonstration that
NO X reductions are beneficial in reducing

PM 2.5 concentrations ( i.e. , no disbenefits from
NO X reductions as noted previously), our assessment indicates that the preferred trading ratio is 200 to 1 (NO X tons for PM 2.5 tons) or 1 to 200 (PM 2.5 tons for NO X tons) for areas in the eastern United States, and 100 to 1 (NO X tons for PM 2.5 tons) or 1 to 100 (PM 2.5 tons for NO X tons ) for areas in the western United States.

3. SO 2 to Primary PM 2.5 ; Primary PM 2.5 to SO 2 : We have determined a nationwide preferred ratio of 40 to 1 (SO 2 tons for PM 2.5 tons) or 1 to 40 (PM 2.5 tons for SO 2 ) for trades between these pollutants. We recognize there is spatial variability here between urban and regionally located sources of these pollutants that can be addressed through a local demonstration to determine an area-specific relationship, as appropriate.

We recommend that States use these hierarchies and trading ratios in their interpollutant trading programs to provide consistency and streamline the trading process. As indicated by our work and findings, it is appropriate to establish acceptable trading ratios for interpollutant trading for PM 2.5 NSR offsets. If States elect to use EPA’s recommended trading ratios, they may rely on EPA’s technical work and a presumption that such ratios will be approvable by EPA absent a credible showing that EPA’s trading ratios are not appropriate for that location. If States choose to develop their own hierarchies/trading ratios, they will have to substantiate by modeling and/or other technical demonstrations of the net air quality benefit for PM 2.5 ambient concentrations, and such a trading program will have to be approved by

EPA.

We acknowledge that the relationship between pollutants can vary across geographic areas. Thus, local demonstrations, to determine trading ratios, will need to address a number of local factors including, but not limited to, the following:

1. The relative magnitude of emissions of
direct PM 2.5 and precursor gases ( e.g. , SO 2 and NO X ) within the geographic area of
interest.

2. The relative contribution to local PM 2.5 nonattainment of directly emitted PM 2.5 and individual precursors from the various sources or source categories under consideration as part of a potential interpollutant trade.

3. The meteorological conditions and topography of the area, which result in different source-receptor relationships across pollutants within the local area.

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

The flexibility provided by this policyallows sources to select the most costeffective manner to obtain the offsets necessary to ensure that PM 2.5 air quality improves. This will be particularly beneficial where offsets for one particular pollutant are scarce in a particular area, as is often the case for direct PM 2.5 emissions and SO 2
.


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We received a large number of comments on this issue representing a wide variety of viewpoints. Several commenters supported flexible interpollutant trading at ratios established either on an area-wide basis or permit by permit. They often pointed out the economic and administrative benefits of flexibility in the program, especially in areas where offsets for some pollutants will be difficult to obtain. One commenter asserted that such flexibility is essential to the ability of enterprises to be able to expand as the

PM 2.5 NAAQS is implemented, especially in the program’s early years. Another commenter suggested allowing such trading on an equal basis, without the ‘‘unnecessary complication’’ of interpollutant offset ratios.

Many commenters argued against allowing interpollutant trading for offsets. These commenters commonly pointed out that direct PM 2.5 emissions typically have a more local impact, while the impact of precursor emissions are farther afield. A number of commenters pointed out the complex atmospheric chemistry of secondary particulate formation and the shortcomings of the air quality models currently available to perform a detailed

PM 2.5 formation assessment, specifically that local-scale models are not sufficiently accurate and regional-scale models do not have the resolution to show local impacts adequately. According to two commenters, trading precursors for direct PM 2.5 emissions raises serious environmental justice concerns due to the localized impacts of direct PM 2.5 emissions. These commenters also asserted that the equivalence between precursors would vary spatially and temporally, making it extremely difficult to assess, and that

PM 2.5 precursors also differ in their impacts on other air pollution problems, such as direct health and welfare impacts of SO 2 and NO X ; and formation of ozone, acid deposition, and reactive nitrogen deposition.

We also received comments opposing allowing interpollutant trading for netting purposes, on the basis that theresulting program would be very staffintensive apart from the difficulty of demonstrating through modeling the net air quality benefit of a single source trade. We concur with these commenters and are not allowing interpollutant trading for netting purposes at this time.

A number of commenters supported some types of trades, but not others. Most frequently, these commenters favored allowing reductions in direct

PM 2.5 emissions to offset precursor
emissions increases. One commenter suggested a hierarchy as follows: Direct

PM 2.5 emissions, SO 2 , NO X , ammonia, and VOC. That is, a pollutant should be allowed as an offset for a pollutant ranked lower, but not the reverse ( e.g. , reductions in direct PM 2.5 emissions could be used to offset increases in any of the listed pollutants, SO 2 emissions reductions could offset NO X increases, etc.).

As previously noted, this rule allows interpollutant and interprecursortrading of offsets according to a SIPapproved trading program. To be approved, the trading program must either adopt EPA’s recommended trading ratios or be backed up by regional-scale modeling that demonstrates a net air quality benefit using appropriate overall offset ratios for such trades for a specified nonattainment area, State, or multi-State region. There is considerable uncertainty about the relationship of precursor and direct PM 2.5 emissions to localized ambient PM 2.5 concentration both spatially and temporally. Given the uncertainty as to localized adverse and beneficial effects, we have opted for program flexibility. We believe this is necessary, in part, because of the shortage of available offsets for some pollutants, particularly direct PM 2.5 emissions and SO 2 , in many areas.

H. How will the transition to the PM 2.5 PSD requirements occur?

1. Background

On October 23, 1997, after the NAAQS for PM 2.5 was originally promulgated, we issued a guidance document entitled ‘‘Interim Implementation for the New Source Review Requirements for PM 2.5 ,’’ John S. Seitz, EPA. As noted in that guidance, section 165 of the Act suggests that PSD requirements become effective for a new NAAQS upon the effective date of the NAAQS. Section 165(a)(1) of the Act provides that no new or modified major source may be constructed without a PSD permit that meets all of the section 165(a) requirements with respect to the regulated pollutant. Moreover, section 165(a)(3) provides that the emissions from any such source may not cause or contribute to a violation of any NAAQS. Also, section 165(a)(4) requires BACT for each pollutant subject to PSD regulation.

The 1997 guidance stated that sources should continue to use implementation of a PM 10 program as a surrogate for meeting PM 2.5 NSR requirements until certain difficulties were resolved, primarily the lack of necessary tools to calculate the emissions of PM 2.5 and related precursors, the lack of adequate modeling techniques to project ambient impacts, and the lack of PM 2.5 monitoring sites. With this final action and technical developments in the interim, these difficulties have largely been resolved.

2. Transition for ‘‘Delegated States’’

The Federal PSD program is contained in 40 CFR 52.21. This section is the Federal implementation plan for areas lacking an approved PSD program. We implement this program in Indian country and some U.S. territories, but for the most part we have delegated implementation of 40 CFR 52.21 to those States without approved PSD programs (typically referred to as ‘‘delegated States’’). Except as provided in the grandfathering provisions that follow, these final rules go into effect and must be implemented beginning on the effective date of this rule, July 15, 2008 in all areas subject to 40 CFR 52.21, including the delegated States.

Consistent with 40 CFR 52.21(i)(1)(x), wherein EPA grandfathered sources or modifications with pending permit applications based on PM from the PM 10 requirements established in 1987, EPA will allow sources or modifications who previously submitted applications in accordance with the PM 10 surrogate policy to remain subject to that policy for purposes of permitting if EPA or its delegate reviewing authority subsequently determines the application was complete as submitted. This is contingent upon the completed permit application being consistent with the requirements pursuant to the EPA memorandum entitled ‘‘Interim Implementation of New Source Review Requirements for PM 2.5 ’’ (Oct. 23, 1997) recommending the use of PM 10 as a surrogate for PM 2.5 . Accordingly, we have added 40 CFR 52.21(i)(1)(xi) to reflect this grandfathering provision.

3. Transition for ‘‘SIP-Approved States’’

The requirements for State PSD programs are contained in 40 CFR 51.166. Most States have developed PSD programs according to these requirements, which we have approved into each State’s implementation plan. States with PSD programs approvedunder 40 CFR 51.166 are called ‘‘SIPapproved States.’’

States with SIP-approved PSD programs that require amendments to incorporate these final NSR rule changes for PM 2.5 will need time to accomplish these SIP amendments. For example, a State may need to amend its existing regulations to add the specific significant emissions rate for PM 2.5 or a designated precursor. In our December
31, 2002 Federal Register notice


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16 In our proposal, we proposed April 5, 2008 as a deadline for States to comply with the revised nonattainment NSR and PSD requirements in this rule. However, in light of the time it has taken to complete this final rule, expecting States to submit required SIP revisions consistent with this final rule by April 5, 2008 is no longer practical or fair. Nevertheless, States are still currently required to implement a PSD program for PM 2.5 , and we still expect States to fulfill the SIP infrastructure requirements of CAA section 110(a)(2), including the PSD program requirements, by April 5, 2008. We believe these PSD program requirements are currently met by implementing the transitional PSD program for PM 2.5 described in this preamble (a.k.a.
the PM 10 surrogate policy). In accordance with a

Consent Decree in Environmental Defense and American Lung Ass’n v. Johnson , No. 1:05CV00493 (D.D.C. June 15, 2005), EPA must determine by October 5, 2008 whether each State has submitted
the SIP revisions for the PM 2.5 PSD program required under section 110(a)(2) of the Act. This rulemaking does not change the specific guidance we previously provided to States on what they should submit by April 5, 2008 to comply with section 110(a)(2). promulgating other changes to the NSR program, we explained that the Act does not specifically address the timeframe by which States must submit SIP revisions when we revise the PSD and NA NSR rules. We nonetheless looked to section 110(a)(1) to guide our decision to require States to adopt and submit plan revisions within 3 years from when we publish changes in the Federal Register . We codified this approach in the PSD regulations at 40 CFR 51.166(a)(6)(i) and applied this same timeframe to State NA NSR programs through that final rule action. 64 FR 80241. This rule follows our established approach for determining when States must adopt and submit revised SIPs following changes to the NSR regulations, but does not revise otherwise applicable SIP submittal deadlines. Accordingly, we are requiring States with SIP-approved PSD programs to submit revised PSD programs and revised NA NSR programs for PM 2.5 ( see section V.I.) within 3 years from the date of this action. 16

During this SIP development period, the PM 2.5 NAAQS must still be protected under the PSD program in such States. We are finalizing our proposed option 1 that if a SIP-approved State is unable to implement a PSD program for the PM 2.5 NAAQS based on these final rules, the State may continue to implement a PM 10 program as a surrogate to meet the PSD program requirements for PM 2.5 pursuant to the 1997 guidance mentioned previously. Under option 1 for SIP-approved States, we had proposed two additional requirements. These were to require sources to demonstrate that emissions from construction or operation of the facility will not cause or contribute to a violation of the PM 2.5 NAAQS and to include condensable PM emissions in determining major NSR applicability and control requirements. We are not finalizing either of these additional requirements of our proposed option 1. We have dropped the requirement for demonstrating compliance with the

PM 2.5 NAAQS in order to maintain consistency in the application of the existing surrogate policy across the PSD program during the interim period. Since in the final rule we are otherwise allowing SIP-approved States to continue with the existing PM 10 surrogate policy to meet the PSD requirements for PM 2.5 , partially implementing the PM 10 surrogate policy in this manner would be confusing and difficult to administer. Thus, to ensure consistent administration during the transition period, we have elected to maintain our existing PM 10 surrogate policy which only recommends as an interim measure that sources and reviewing authorities conduct the modeling necessary to show that PM 10 emissions will not cause a violation of the PM 10 NAAQS as a surrogate for demonstrating compliance with the

PM 2.5 NAAQS. Also as discussed previously in section V.E, we are not requiring condensable emissions to be fully integrated into the PM 2.5 program until the end of the transition period to validate test methods discussed in section V.E of this preamble.

In our proposal, we offered two additional options for the SIPdevelopment period in States with SIPapproved PSD programs. Under option 2, we would have updated the 1997 guidance to reflect the provisions in these final rules and allowed States to

run a PM 2.5 program pursuant to this updated guidance. Alternatively under option 2, we would have amended appendix S and 40 CFR 52.24 so that the PSD requirements of 40 CFR 52.21 would govern the issuance of major NSR permits during the SIP development period. Finally, under option 3, we would have allowed a State to request delegation of just the Federal PM 2.5 PSD program in 40 CFR 52.21 in that State.A State that otherwise had a SIPapproved PSD program could have requested delegation for PM 2.5 by informing us that it did not intend to submit a PSD SIP for PM 2.5 in the immediate future.

We received several comments supporting option 1, although some of these commenters requested that we not require condensable emissions to be included until the concerns with test methods were resolved. One of these commenters favored continuing to implement the PM 10 program as a surrogate under the 1997 guidance to provide clarity and certainty to the permitting agency and regulated community. The commenter indicated that PM 2.5 inventories and methods for estimating emission rates are rudimentary and may even be nonexistent in some cases, which would make permitting onerous.

A few commenters opposed option 1. One of these commenters indicated that we should not continue outdated policy ( i.e. , the 1997 NSR guidance) because it does not address the PM 2.5 problem, cannot be implemented in some States, and does not incorporate precursor
emissions.

Four commenters expressed support for option 2. Three of these suggested that we issue updated guidance to incorporate these PSD requirements for

PM 2.5 , while one preferred that we revise appendix S to point to the requirements of 40 CFR 52.21. We received one comment in favor of option 3 and three opposed.

Two commenters supported approaches different from our options. One of these commenters requested that the interim framework should, at a minimum, ensure that any new or modified project that exceeds thresholds use BACT. The commenter also suggested that we require offsets for projects approved before the other protective elements of the full PSD program are in place to ensure that there is no significant deterioration in air quality. Another commenter stated that none of the proposed options were viable for their State. The commenter requested that we allow States to continue their existing PM 10 program as a surrogate for PM 2.5 , without caveat.

As noted previously, we are finalizing proposed option 1, without the requirement of demonstrating compliance with the PM 2.5 NAAQS or the requirement to include condensable emissions. We believe that our final rule is reasonable for the following reasons. First, PM 10 will act as an adequate surrogate for PM 2.5 in most respects, because all new major sources and major modifications that would trigger PSD requirements for PM 2.5 would also trigger PM 10 requirements because PM 2.5 is a subset of PM 10 . Second, both of the precursors designated in the final rule—
SO 2 and NO X (presumptively)—are already regulated under State NSR programs for other criteria pollutants. Thus, those precursors will be subject to NSR through those other programs. We do not believe that the other options or suggestions offer significant advantages that outweigh the utility and ease of implementation of this approach.

States may include grandfathering provisions similar to the ones EPA


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17 As discussed earlier, we are following the precedent we established in our 2002 rule for NA NSR program revisions to allow States adequate time to adopt these revisions. For practical and fairness reasons, we are not requiring the NA NSR elements of this rule to be submitted by April 5, 2008, as we had proposed. However, the States are still required to submit nonattainment plans for

PM 2.5 (including NA NSR programs) on April 5, 2008. We believe this requirement is satisfied by implementing the transitional NA NSR program for

PM 2.5 (a.k.a. the PM 10 surrogate policy) described in our April 5, 2005 guidance, or, if submitted after the effective date of this rule, implementing Appendix S as revised in this rule. This rulemaking does not change the specific guidance we previously provided to States on what they should submit to EPA by April 5, 2008 to comply with nonattainment area requirements under Part D. included in the transition requirements for 40 CFR 52.21.

I. How will the transition to the PM 2.5 NA NSR requirements occur?

1. Background

The requirements for State NA NSR programs are contained in 40 CFR 51.165. All States with nonattainment areas have developed NA NSR programs according to these requirements, which we have approved into each State’s implementation plan. However, as noted previously, it takes time for a State to amend its SIP when it must make changes to its NA NSR program. According to the provisions of 40 CFR 52.24(k), during such an interim period when a State lacks an approved NA NSR program for a particular pollutant, appendix S of 40 CFR part 51 applies for NA NSR permitting.

Section 172(c)(5) of the Act requires that States issue major NSR permits for construction and major modifications of major stationary sources in any nonattainment area. Thus, since the

PM 2.5 nonattainment designations became effective on April 5, 2005, States are now required to issue major NSR permits that address the section 173 NA NSR requirements for PM 2.5
.

On the date that the PM 2.5 nonattainment designations took effect (April 5, 2005), we issued guidance to address implementation of the NA NSR program pending the completion of this action to develop implementation rules for PM 2.5
. See memorandum from Stephen D. Page, Director, Office of Air Quality Planning and Standards to Regional Air Directors, ‘‘Implementation of New Source Review Requirements in

PM 2.5 Nonattainment Areas’’ (April 5, 2005).

Our current guidance permits States to implement a PM 10 NA NSR program as a surrogate to address the requirements of NA NSR for the PM 2.5 NAAQS. A State’s surrogate major NSR program in PM 2.5 nonattainment areas may consist of either theimplementation of the State’s SIPapproved NA NSR program for PM 10 or implementation of a major NSR program for PM 10 under the authority in 40 CFR part 51, appendix S.

2. Transition

With this finalization of the new

PM 2.5 NSR implementation requirements under 40 CFR 51.165, States now have the necessary tools to implement a NA NSR program for PM 2.5
. After the effective date of the amended rule (that is, July 15, 2008, States will no longer be permitted to implement a NA NSR program for PM 10 as a surrogate for the PM 2.5 NA NSR requirements. Most States will then need to implement a transitional PM 2.5 NA NSR program under appendix S (as amended in this rulemaking action) until EPA approves changes to a State’s SIP-approved NA NSR program to reflect the new requirements under 40 CFR 51.165. At this time, we do not believe it is appropriate to allow grandfathering of pending permits being reviewed under the PM 10 surrogate program in nonattainment areas, mainly because of a State’s obligations to expedite attainment and the fact that we had not established a similar precedent for transitioning from PM to PM 10
.

The NA NSR provisions in a State’s existing SIP-approved NA NSR program would also apply in areas designated as nonattainment for the PM 2.5 NAAQS if the SIP-approved regulations contain a generic requirement to issue part D permits in areas designated as nonattainment for any criteria pollutant and do not otherwise need to be amended to incorporate the changes finalized in this action. States belonging to the following categories will need to revise their NA NSR regulations and submit them to EPA for incorporation into the SIP within 3 years from the date of this action 17 :

• States that have nonattainment regulations which need to be amended to incorporate the new PM 2.5 requirements.

• States that have designated nonattainment areas for PM 2.5 and their nonattainment NSR regulations specifically list the areas in which NA NSR applies ( i.e. , the list does not include the designated nonattainment areas for PM 2.5 ).

• States that have not previously had nonattainment areas but now have nonattainment areas for PM 2.5
.

These States will have to implement a transitional NA NSR permitting program for PM 2.5 pursuant to 40 CFR 52.24(k) and appendix S until their existing part D SIPs are revised to meet these new PM 2.5 NSR requirements under 40 CFR 51.165.

3. Implementation of NSR Under the ‘‘Emissions Offset Interpretative Ruling’’ (40 CFR Part 51, Appendix S) With
Revisions

In general, appendix S requires new or modified major sources to meet LAER and obtain sufficient offsetting emissions reductions to assure that a new major source or major modification of an existing major source will not interfere with the area’s progress toward attainment. Readers should refer to appendix S for a complete understanding of these and other appendix S requirements. In this action, we are finalizing our proposed revisions to appendix S to include provisions necessary to implement a transitional NA NSR program for PM 2.5 , including significant emissions rates applicable to major modifications for PM 2.5 and, as appropriate, precursors. Additionally, since we are finalizing interpollutant trading provisions in the NSR rules at 40 CFR 51.165, we are also amending appendix S to allow interpollutant trading for PM 2.5 . Appendix S applies directly to new and modified major stationary sources. In accordance with the requirements of section 110(a)(2)(c) of the Act, we believe that the majority of States have the legal authority to issue permits consistent with theserequirements under an existing SIPapproved permitting program. Nonetheless, at least one State has reported that it lacks the legal authority to issue permits implementing the requirements of appendix S under its existing permitting rules.

If a State is unable to apply the requirements of appendix S, we will act as the reviewing authority for the relevant portion of the permit. We believe that it is appropriate for EPA to issue the preconstruction permits in such circumstances. Congress amended the Act in 1990 to remove the requirements that would have applied a construction ban in areas that lacked a SIP-approved part D permit program. Thus, we believe that it is consistent with Congressional intent that either the State or EPA issues construction permits for those projects meeting the applicable criteria during the interim period. See the preamble of the proposal for this rule for more detail on the legal basis for requiring States to issue NA NSR permits pursuant to appendix S during the SIP development period (70 FR 66045–46).

We received three comments supporting the issuance of NA NSR permits under appendix S during the SIP development period. Two of these


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commenters expected States generally to be able to do so, while one suggested that EPA issue such permits because States will lack the authority to do so without protracted rule revisions. One of these commenters also suggested that we revise appendix S to authorize interprecursor trading during the transition period, believing that the paucity of existing direct PM 2.5 emissions and SO 2 offsets likely will make business expansion in PM 2.5 nonattainment areas from now until at least April 2008 impossible unless this is done. One commenter suggested that we suspend the 2005 PM 2.5 NSR guidance which allows use of PM 10 emissions as a surrogate for PM 2.5 emissions in PM 2.5 nonattainment areas when we adopt the final PM 2.5 implementation rules, while three other commenters requested continued implementation of that guidance during the interim period.

As noted previously, this final action will require States to amend their NA NSR programs consistent with the amended rules at 40 CFR 51.165. During the SIP development period, where they have legal authority to do so, States must issue NA NSR permits under appendix S (as revised for purposes of the PM 2.5 program). To address one of the points raised by commenters, we are amending appendix S to allow interpollutant trading for PM 2.5 in this final rule. Where a State determines that it does not have legal authority to issue such permits, we will act as the reviewing authority. As of the effective date of this action, the 2005 PM 2.5 NSR guidance on use of PM 10 emissions as a surrogate for PM 2.5 emissions willremain in effect only for PSD in the SIPapproved States during the SIP development period. In the delegated PSD States and in nonattainment areas, the new PM 2.5 requirements will apply immediately on the effective date of this final action.

J. Does major NSR apply to PM 2.5 precursors during the SIP development period?

As discussed previously in section V.A, we have taken final action on NSR applicability for PM 2.5 precursors. Specifically, we have designated SO 2 as a national precursor to PM 2.5 in all areas, NO X as a ‘‘presumed-in’’ precursor in all areas, VOC as a ‘‘presumed-out’’ precursor in all areas, and ammonia as a ‘‘presumed-out’’ precursor. Thus, States have the option of excluding NO X as a precursor by demonstrating that NO X emissions are not a significant contributor to ambient

PM 2.5 concentrations in a particular area. In addition, States have the option of identifying VOC and/or ammonia as precursor(s) by demonstrating that emissions of VOC and/or ammonia are a significant contributor in an area, and thus should be subject to major NSR.

In the proposal, during the SIP development period, we proposed that
SO 2 should be treated as a regulated

PM 2.5 precursor as of the effective date of this final rule since there is no doubt about its status as such in any area and proposed to defer NSR applicability for
NO X until a State SIP submittal so that if a State elected to submit information to rebut the presumption that NO X is a regulated PM 2.5 precursor, the State would have an opportunity to do so in its SIP submittal. We also proposed that VOCs and ammonia would not be treated as PM 2.5 precursors during the interim period because they are presumed not to be precursors until they have been demonstrated to be through a State’s SIP submittal.

A few commenters supported staying the applicability of NSR to all precursors during the interim period. However, two of these supporters suggested that EPA establish mechanisms for interpollutant trading for offsets during the interim period so that increases in direct PM 2.5 emissions can be offset with SO 2 or NO X emissions reductions. Another supporter noted that their State cannot impose obligations on NSR applicants until those obligations are established in State regulations or statutes. Another indicated that this delay would allow States the time to develop experience and knowledge in establishing local photochemical models and to performance test their accuracy.

Two commenters opposed staying NSR applicability for any precursors. They believe that this would make attainment more difficult. One commenter suggested that SO 2 should be designated as a precursor during the interim period, and another suggested the same for SO 2 and NO X .

Based on the comments, we have been persuaded that SIP-approved PSD States will not have the authority to regulate

PM 2.5 precursors before they have amended their SIPs to incorporate these requirements in attainment areas. Thus, in order to allow time for these States to revise their regulations to incorporate such requirements, this final action does not require regulation of SO 2 or NO X as precursors to PM 2.5 under PSD until the SIP development period ends. In addition, we are allowing SIP-approved PSD States to continue with the existing

PM 10 surrogate policy to meet the PSD requirements for PM 2.5 . However, for delegated PSD States, SO 2 and NO X are regulated as precursors from the effective date of this rule. However, these States or EPA have the option of excluding NO X as a precursor by demonstrating that NO X emissions are not a significant contributor to ambient

PM 2.5 concentrations in a particular

area.

For nonattainment areas, the transitional program pursuant to appendix S will apply on the effective date of this action. Under appendix S,
SO 2 will be regulated as a precursor in all nonattainment areas for PM 2.5
. However, unlike in the proposal, NO X will not be regulated as a precursor for

PM 2.5 because we believe it is appropriate to give States the opportunity to determine whether NO X emissions are a significant contributor to the ambient PM 2.5 problem, and to make the appropriate demonstration in their SIP. Finally, for States determining that VOC and/or ammonia are PM 2.5 precursors under their SIPs, we will approve their definition of ‘‘significant emissions rate’’ for each precursor based on an appropriate demonstration.

K. Are there any Tribal concerns?

Some Tribal areas may be designated as nonattainment, in part because of pollution that is transported from surrounding State lands. Tribal representatives have advocated for additional flexibility to address nonattainment problems caused by transported pollution, such as a pool of available NSR offset set-asides (which we expect would come from State offset pools or banks), because they have limited ability to generate offsets on their own. Tribal representatives have raised these and other concerns in discussions on implementation of the 8- hour ozone and PM 2.5 standards, and in comments on the 8-hour ozone implementation rule. We requested comment on whether emissions offset set-asides, possibly generated by innovative measures to promote additional emissions reductions, are an appropriate method to help level the playing field for the Tribes and support economic development in Tribal areas. We also requested comment on ways in which States may help provide the Tribes access to offsets from non-Tribal areas. We received no comments on these issues.

We recently proposed Tribal NSR rules. See 71 FR 48696, August 21, 2006. They include a NA NSR rule, which refers to appendix S for its substantive requirements, and a minor NSR rule. In recognition of the concerns mentioned above, we have proposed and sought comments on options for obtaining offset relief in that proposal.


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We will address these issues in the context of that rule.

L. What are the requirements for minor NSR for PM 2.5 ?
Pursuant to section 110(a)(2)(C) of the Act, States must have a minor source permitting program. This applies to new and modified stationary sources that are not considered major for a criteria pollutant or a precursor for a criteria pollutant. Prior to this action, States were required to include the following pollutants in their minor NSR program:

• VOC,

• SO 2 ,

• NO X ,

• CO,

• PM 10 , and

• Lead (Pb). Based on this action, States must now amend their minor source programs to include direct PM 2.5 emissions and precursor emissions in the same manner as included for purposes of PM 2.5 major
NSR.
M. Rural Transport Areas

In the proposal for the Clean Air Fine Particle Implementation Rule and this NSR implementation rule for PM 2.5 , we considered the option of classifying some nonattainment areas as transport areas that suffer from overwhelming transport, and of developing NA NSR rules specific to such areas. However, the final implementation rule does not include the rural transport classification. Consequently, no NA NSR rules have been developed or finalized in this rule.

VI. Statutory and Executive Order
Reviews

A. Executive Order 12866: Regulatory Planning and Review

Under Executive Order (EO) 12866 (58 FR 51735, October 4, 1993), this action is a ‘‘significant regulatory action’’ because it is likely to raise novel legal or policy issues arising out of legal mandates, the President’s priorities, or the principles set forth in the Executive Order. Accordingly, EPA submitted this action to the Office of Management and Budget (OMB) for review under EO 12866 and any changes made in response to OMB recommendations have been documented in the docket for this action.

B. Paperwork Reduction Act

The information collection requirements in this rule have been submitted for approval to the OMB under the Paperwork Reduction Act , 44 U.S.C. 3501 et seq. The information collection requirements are not enforceable until OMB approves them. The Information Collection Request (ICR) document prepared by EPA has been assigned OMB Control Number 2060–0003 (EPA ICR No. 1230.21).

To achieve the purposes of the major NSR program, certain records and reports are necessary for the State or local agency (or the EPA Administrator in non-delegated States), for example, to: (1) Confirm the compliance of status of stationary sources, identify any stationary sources not subject to the rules, and identify stationary sources subject to the rules; and (2) ensure that the stationary source control requirements are being achieved. The information would be used by EPA or State enforcement personnel to (1) identify stationary sources subject to the rules, (2) ensure that appropriate control technology is being properly applied, and (3) ensure that the emission control devices are being properly operated and maintained on a continuous basis.

This final NSR rule does not create new information collection requirements, but rather expands the coverage of the existing requirements of the major NSR program. Specifically, the rule changes finalized in this action add PM 2.5 to the list of air pollutants that must be addressed in the major NSR program, and the companion proposal adds certain elements that are necessary for a complete PM 2.5 NSR program. This change is unlikely to increase significantly the number of NSR permits that must be issued, but may add to the analyses that sources and Federal, State, and local reviewing authorities must conduct as part of the construction permit application and review process.

We expect the rule changes finalized in this action to increase the burden associated with major NSR permitting for tracking new emissions of PM 2.5 against increments; collecting ambient air quality monitoring data for existing

PM 2.5 concentrations; reviewing the effects of PM 2.5 emissions on soils and vegetation, as well as on air quality related values in Class I areas; determining the appropriate best available control technology or lowest achievable emission rate; and/or obtaining offsets. At the same time, there would be a reduction in burden directly associated with the revocation of the annual increment for PM 10 , which is proposed in the proposed rule.

Over the 3-year period covered by the ICR, we estimate an average annual burden increase of about 39,000 hours (about 8 percent) and $4.3 million (about 10 percent) for all industry entities that would be affected by this final NSR rule. For the same reasons, we also expect the final rule to increase burden for the State and local authorities reviewing permit applications when fully implemented. In addition, there would be additional burden for State and local agencies to revise their SIPs to incorporate the proposed changes. We estimate the combined increase in burden to average about 16,000 hours and $700,000 annually for all State and local reviewing authorities, which is less than 13 percent.

Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, or disclose or provide information to or for a Federal agency. This includes the time needed to review instructions; develop, acquire, install, and utilize technology and systems for the purposes of collecting, validating, and verifying information, processing and maintaining information, and disclosing and providing information; adjust the existing ways to comply with any previously applicable instructions and requirements; train personnel to be able to respond to a collection of information; search data sources; complete and review the collection of information; and transmit or otherwise disclose the information.

An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for EPA’s regulations in 40 CFR are listed in 40 CFR part 9. When this ICR is approved by OMB, the Agency will publish a technical amendment to 40 CFR part 9 in the Federal Register to display the OMB control number for the approved information collection requirements contained in this final rule.

C. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the Agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations, and small governmental jurisdictions.

For purposes of assessing the impacts of this proposed rule on small entities, ‘‘small entity’’ is defined as: (1) A small business as defined by the Small Business Administration’s regulations at 13 CFR 121.201; (2) a small governmental jurisdiction that is a government or a city, county, town,


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school district or special district with a population of less than 50,000; and (3)a small organization that is any not-forprofit enterprise which is independently owned and operated and is not dominant in its field.

After considering the economic impacts of this final rule on small entities, I certify that this rule will not have a significant economic impact on a substantial number of small entities. The requirements of this final rule apply only to new major stationary sources or major modifications of existing major stationary sources. This final rule does not create any new requirements under the major NSR program, but simply expands the program to cover an additional pollutant, referred to as

PM 2.5 . There is no reason to expect that the rule will significantly or uniquely affect small businesses, organizations, or governments (few, if any, of which act as reviewing authorities pursuant to this final rule).
D. Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104–4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of the UMRA, we generally must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with ‘‘Federal mandates’’ that may result in expenditures to State, local, and tribal governments, in aggregate, or to the private sector, of $100 million or more in any 1 year. Before promulgating an EPA rule for which a written statement is needed, section 205 of the UMRA generally requires us to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-effective, or least burdensome alternative that achieves the objectives of the rule. The provisions of section 205 do not apply when they are inconsistent with applicable law. Moreover, section 205 allows us to adopt an alternative other than the least-costly, most cost-effective, or least-burdensome alternative if the Administrator publishes with the final rule an explanation of why that alternative was not adopted. Before we establish any regulatory requirements that may significantly or uniquely affect small governments, including tribal governments, we must have developed under section 203 of the UMRA a small government agency plan. The plan must provide for notifying potentially affected small governments, enabling officials of affected small governments to have meaningful and timely input in the development of our regulatory proposals with significant Federal intergovernmental mandates, and informing, educating, and advising small governments on compliance with the regulatory requirements.

We have determined that this rule does not contain a Federal mandate that may result in expenditures of $100 million or more for State, local, and tribal governments, in the aggregate, or the private sector in any 1 year. The final rule does not add any new requirements to the NSR program; it simply expands the program to cover

PM 2.5 in addition to the several other pollutants already defined as regulated NSR pollutants. (Technically, the rule also subjects the precursors to PM 2.5 to the NSR program. However, these precursors (SO 2 , NO X , and VOC) are already subject to the existing NSR program.) As discussed previously in section VI.B on the Paperwork Reduction Act , the expansion of the NSR program to cover PM 2.5 will only marginally increase the expenditures of State, local, and tribal governments and the private sector on the program. Thus, this action is not subject to the requirements of sections 202 and 205 of the UMRA.

The EPA has determined that this rule contains no regulatory requirements that might significantly or uniquely affect small governments. As noted previously, this rule does not create any new requirements under the major NSR program, but simply expands the program to cover an additional pollutant (PM 2.5 ). There is no reason to expect that the rule will significantly or uniquely affect small governments, few if any of which act as reviewing authorities.

E. Executive Order 13132—Federalism

Executive Order 13132, entitled ‘‘Federalism’’ (64 FR 43255, August 10, 1999), requires us to develop an accountable process to ensure ‘‘meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.’’ ‘‘Policies that have federalism implications’’ is defined in the Executive Order to include regulations that have ‘‘substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.’’

This final rule does not have federalism implications. It will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132. Pursuant to the terms of Executive Order 13132, it has been determined that this proposed rule does not have ‘‘federalism implications’’ because it does not meet the necessary criteria. Thus, the requirements of section 6 of the Executive Order do not apply to this proposed rule.

In the spirit of Executive Order 13132, however, and consistent with our policy to promote communications between us and State and local governments, we specifically solicited comment on the proposed rule from State and local officials.

F. Executive Order 13175—Consultation and Coordination With Indian Tribal
Governments

Executive Order 13175, entitled ‘‘Consultation and Coordination with Indian Tribal Governments’’ (65 FR 67249, November 9, 2000), requires EPA to develop an accountable process to ensure ‘‘meaningful and timely input by Tribal officials in the development of regulatory policies that have Tribal implications.’’ This final rule does not have ‘‘Tribal implications’’ as defined in Executive Order 13175. This rule concerns the NSR requirements for State and tribal implementation plans. The CAA provides for States to develop plans to regulate emissions of air pollutants within their jurisdictions. The Tribal Air Rule (TAR) under the CAA gives Tribes the opportunity to develop and implement CAA programs such as programs to attain and maintain the PM 2.5 NAAQS, but it leaves to the discretion of the Tribe the decision of whether to develop these programs and which programs, or appropriate elements of a program, they will adopt.

Although Executive Order 13175 does not apply to this rule, EPA did reach out to Tribal leaders and environmental staff in developing this rule. From 2001–2004, the EPA supported a National Designations Workgroup to provide a forum for tribal professionals to give input to the designations process. In 2006, EPA supported a national ‘‘Tribal Air call’’ which provides an open forum for all Tribes to voice concerns to EPA about the NAAQS implementation process, including the PM 2.5 NAAQS. In these meetings, EPA briefed call participants and Tribal environmental professionals gave input as the rule was under development. Furthermore, in December 2005, EPA sent individualized letters to all federally recognized Tribes about the proposal to give Tribal leaders the opportunity for consultation.

This final rule does not have Tribal implications as defined by Executive


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Order 13175. It does not have a
substantial direct effect on one or more Indian Tribes, since no Tribe has implemented a CAA program to attain
the PM 2.5 NAAQS at this time. The EPA
notes that even if a Tribe were implementing such a plan at this time, while the rule might have Tribal implications with respect to that Tribe, it would not impose substantial direct costs upon it, nor would it preempt
Tribal law.

Furthermore, this rule does not affect the relationship or distribution of power and responsibilities between the Federal government and Indian Tribes. The
CAA and the TAR establish the relationship of the Federal government and Tribes in developing plans to attain the NAAQS, and this rule does nothing to modify that relationship. As this rule does not have Tribal implications, Executive Order 13175 does not apply.

G. Executive Order 13045—Protection of
Children From Environmental Health and Safety Risks

Executive Order 13045, entitled
‘‘Protection of Children from Environmental Health Risks and Safety Risks’’ (62 FR 19885, April 23, 1997), applies to any rule that: (1) Is determined to be ‘‘economically significant’’ as defined under Executive Order 12866; and (2) concerns an environmental health or safety risk that we have reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria, the Agency must evaluate the environmental health or safety effects of the planned rule on children, and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by the Agency.

This final rule is not subject to the
Executive Order because it is not economically significant as defined in Executive Order 12866, and because the Agency does not have reason to believe the environmental health or safety risks addressed by this action present a disproportionate risk to children. This rule does not impose any new requirements under the NSR program. However, in expanding the major NSR program to address PM 2.5 , we believe
that this rule will serve to reduce
environmental health risks to all citizens, including children, because one of the basic requirements of the major NSR program is that new and modified major stationary sources must not cause or contribute to air quality in violation of the NAAQS. H. Executive Order 13211—Actions That Significantly Affect Energy Supply, Distribution, or Use

This rule is not a ‘‘significant energy action’’ as defined in Executive Order 13211, ‘‘Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use’’ (66 FR 28355 (May 22, 2001)) because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The final rule does not add any new requirements to the major NSR program; it simply expands the program to cover

PM 2.5 in addition to the several other pollutants already defined as regulated NSR pollutants. Although the major NSR program may apply to energy supply and distribution companies that build or significantly modify major sources of regulated NSR pollutants, we believe that any increase in expenditures for obtaining NSR permits that may result from this rule will be marginal rather than significant.

I. National Technology Transfer and Advancement Act

As noted in the proposed rule, section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law No. 104–113, 12(d) (15 U.S.C. 272 note) directs us to use voluntary consensus standards (VCS) in our regulatory and procurement activities unless to do so would be inconsistent with applicable law or otherwise impractical. The VCS are technical standards ( e.g. , materials specifications, test methods, sampling procedures, and business practices) developed or adopted by one or more voluntary consensus bodies. The NTTAA directs us to provide Congress, through annual reports to OMB, with explanations when we do not use available and applicable VCS.

This final rule does not involve technical standards. Therefore, we did not consider the use of any VCS.

J. Executive Order 12898—Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations

Executive Order 12898 (59 FR 7629 (Feb. 16, 1994)) establishes Federal executive policy on environmental justice. Its main provision directs Federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of its programs, policies, and activities on minorities and low-income populations in the United States.

The EPA has determined that this final rule will not have disproportionately high and adverse human health or environmental effects on minority or low-income populations because it will have the effect of improving air quality. While it does not impose any new requirements under the major NSR program, we believe that this rule, in expanding the NSR program to address PM 2.5 , will serve to reduce adverse human health and environmental effects for all citizens, including minorities and low-income populations.

K. Congressional Review Act

The Congressional Review Act, 5
U.S.C. 801 et seq. , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. The EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . A major rule cannot take effect until 60 days after it is published in the Federal Register . This action is not a ‘‘major rule’’ as defined by 5 U.S.C. 804(2). The rules affected by this action will be effective July 15, 2008.
L. Petitions for Judicial Review

Under section 307(b)(1) of the Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the District of Columbia Circuit by July 15, 2008. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. See Act section 307(b)(2).

M. Determination Under Section 307(d)

The PSD portions of this rulemaking, which implements part C of title I of the Act, are subject to the procedural requirements in section 307(d) of the

Act. See section 307(d)(1)(J). In addition, pursuant to section 307(d)(1)(V) of the Act, the Administrator determines that the NA


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NSR portions of this action should also be subject to the provisions of section 307(d) to ensure consistency. All of the procedural requirements of section 307(d), e.g. , docketing, hearing, and comment periods, have been complied with during the course of this rulemaking.

VII. Statutory Authority

The statutory authority for this action is provided by sections 101, 110, 165, 169, 172, 173, 301, and 302 of the Act as amended (42 U.S.C. 7401, 7410, 7475, 7479, 7502, 7503, 7601, and 7602). This rulemaking is also subject to section 307(d) of the Act (42 U.S.C. 7407(d)).

List of Subjects

40 CFR Part 51

Environmental protection, Administrative practices and procedures, Air pollution control, Intergovernmental relations.

40 CFR Part 52

Environmental protection, Administrative practices and procedures, Air pollution control, Intergovernmental relations.

Dated: May 8, 2008. Stephen L. Johnson,

Administrator.

■ For the reasons stated in the preamble, title 40, chapter I of the Code of Federal Regulations is amended as follows.

**PART 51—[AMENDED]**

■ 1. The authority citation for part 51 continues to read as follows:

Authority: 23 U.S.C. 101; 42 U.S.C. 7401– 7671q.

**Subpart I—[Amended]**

■ 2. Section 51.165 is amended as follows:

■ a. By revising paragraph (a)(1)(x)(A);

■ b. By removing the word ‘‘or’’ at the end of paragraph (a)(1)(xxxvii)(B);

■ c. By revising paragraph (a)(1)(xxxvii)(C);

■ d. By adding paragraph (a)(1)(xxxvii)(D);

■ e. By redesignating paragraphs (a)(9)(i) through (iii) as paragraphs (a)(9)(ii) through (iv), respectively, and adding new paragraph (a)(9)(i);

■ f. By removing from newly redesignated paragraph (a)(9)(iii) the reference to ‘‘paragraph (a)(9)(i)’’ and adding in its place ‘‘paragraph (a)(9)(ii)’’; and

■ g. By adding paragraph (a)(11).

**§ 51.165 Permit requirements.**

(a) * * * (1) * * * (x)(A) Significant means, in reference to a net emissions increase or the potential of a source to emit any of the following pollutants, a rate of emissions that would equal or exceed any of the following rates:

Pollutant Emission Rate
Carbon monoxide: 100 tons per year

(tpy) Nitrogen oxides: 40 tpy Sulfur dioxide: 40 tpy Ozone: 40 tpy of volatile organic

compounds or nitrogen oxides Lead: 0.6 tpy
PM 10 : 15 tpy PM 2.5 : 10 tpy of direct PM 2.5 emissions;

40 tpy of sulfur dioxide emissions; 40 tpy of nitrogen oxide emissions unless demonstrated not to be a PM 2.5 precursor under paragraph (a)(1)(xxxvii) of this section

* * * * *

(xxxvii) * * * (C) Any pollutant that is identified under this paragraph (a)(1)(xxxvii)(C) as a constituent or precursor of a general pollutant listed under paragraph (a)(1)(xxxvii)(A) or (B) of this section, provided that such constituent or precursor pollutant may only be regulated under NSR as part of regulation of the general pollutant. Precursors identified by the Administrator for purposes of NSR are the following:

( 1 ) Volatile organic compounds and nitrogen oxides are precursors to ozone in all ozone nonattainment areas.

( 2 ) Sulfur dioxide is a precursor to

PM 2.5 in all PM 2.5 nonattainment areas.

( 3 ) Nitrogen oxides are presumed to be precursors to PM 2.5 in all PM 2.5 nonattainment areas, unless the State demonstrates to the Administrator’s satisfaction or EPA demonstrates that emissions of nitrogen oxides from sources in a specific area are not a significant contributor to that area’s ambient PM 2.5 concentrations.

( 4 ) Volatile organic compounds and ammonia are presumed not to be precursors to PM 2.5 in any PM 2.5 nonattainment area, unless the State demonstrates to the Administrator’s satisfaction or EPA demonstrates that emissions of volatile organic compounds or ammonia from sources in a specific area are a significant contributor to that area’s ambient PM 2.5 concentrations; or

(D) PM 2.5 emissions and PM 10 emissions shall include gaseous emissions from a source or activity which condense to form particulate matter at ambient temperatures. On or after January 1, 2011 (or any earlier date established in the upcoming rulemaking codifying test methods), such condensable particulate matter shall be accounted for in applicability determinations and in establishing emissions limitations for PM 2.5 and

PM 10 in nonattainment major NSR permits. Compliance with emissions limitations for PM 2.5 and PM 10 issued prior to this date shall not be based on condensable particulate matter unless required by the terms and conditions of the permit or the applicable implementation plan. Applicability determinations made prior to this date without accounting for condensable particulate matter shall not be considered in violation of this section unless the applicable implementation plan required condensable particulate matter to be included.

* * * * *

(9)(i) The plan shall require that in meeting the emissions offset requirements of paragraph (a)(3) of this section, the ratio of total actual emissions reductions to the emissions increase shall be at least 1:1 unless an alternative ratio is provided for the applicable nonattainment area in paragraphs (a)(9)(ii) through (a)(9)(iv) of this section.

* * * * *

(11) The plan shall require that in meeting the emissions offset requirements of paragraph (a)(3) of this section, the emissions offsets obtained shall be for the same regulated NSR pollutant unless interprecursor offsetting is permitted for a particular pollutant as specified in this paragraph. The plan may allow the offset requirements in paragraph (a)(3) of this section for direct PM 2.5 emissions or emissions of precursors of PM 2.5 to be satisfied by offsetting reductions in direct PM 2.5 emissions or emissions of any PM 2.5 precursor identified under paragraph (a)(1)(xxxvii)(C) of this section if such offsets comply with the interprecursor trading hierarchy and ratio established in the approved plan for a particular nonattainment area.

* * * * *

■ 3. Section 51.166 is amended as follows:

■ a. By revising paragraphs (b)(23)(i) and (b)(49)(i);

■ b. By removing the word ‘‘or’’ at the end of paragraph (b)(49)(iii);

■ c. By adding and reserving paragraph (b)(49)(v);

■ d. By adding paragraph (b)(49)(vi); and

■ e. By revising paragraphs (i)(5)(ii) and (i)(5)(iii).


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**§ 51.166 Prevention of significant deterioration of air quality.** 

* * * * *

(b) * * * (23)(i) Significant means, in reference to a net emissions increase or the potential of a source to emit any of the following pollutants, a rate of emissions that would equal or exceed any of the following rates:

Pollutant and Emissions Rate
Carbon monoxide: 100 tons per year

(tpy) Nitrogen oxides: 40 tpy Sulfur dioxide: 40 tpy Particulate matter: 25 tpy of particulate

matter emissions. 15 tpy of PM 10 emissions
PM 2.5 : 10 tpy of direct PM 2.5 emissions;

40 tpy of sulfur dioxide emissions; 40 tpy of nitrogen oxide emissions unless demonstrated not to be a PM 2.5 precursor under paragraph (b)(49) of this section Ozone: 40 tpy of volatile organic

compounds or nitrogen oxides Lead: 0.6 tpy Fluorides: 3 tpy Sulfuric acid mist: 7 tpy Hydrogen sulfide (H 2 S): 10 tpy Total reduced sulfur (including H 2 S): 10

tpy Reduced sulfur compounds (including

H 2 S): 10 tpy Municipal waste combustor organics

(measured as total tetra-through octachlorinated dibenzo-p-dioxins and dibenzofurans): 3.2 × 10–

¥ 6 megagrams per year (3.5 × 10

¥ 6 tons per year) Municipal waste combustor metals

(measured as particulate matter): 14 megagrams per year (15 tons per year) Municipal waste combustor acid gases

(measured as sulfur dioxide and hydrogen chloride): 36 megagrams per year (40 tons per year) Municipal solid waste landfill

emissions (measured as nonmethane organic compounds): 45 megagrams per year (50 tons per year)

* * * * *

(49) * * * (i) Any pollutant for which a national ambient air quality standard has been promulgated and any pollutant identified under this paragraph (b)(49)(i) as a constituent or precursor to such pollutant. Precursors identified by the Administrator for purposes of NSR are the following:

( a ) Volatile organic compounds and nitrogen oxides are precursors to ozone in all attainment and unclassifiable

areas.

( b ) Sulfur dioxide is a precursor to

PM 2.5 in all attainment and unclassifiable areas. ( c ) Nitrogen oxides are presumed to be precursors to PM 2.5 in all attainment and unclassifiable areas, unless the State demonstrates to the Administrator’s satisfaction or EPA demonstrates that emissions of nitrogen oxides from sources in a specific area are not a significant contributor to that area’s ambient PM 2.5 concentrations.

( d ) Volatile organic compounds are presumed not to be precursors to PM 2.5 in any attainment or unclassifiable area, unless the State demonstrates to the Administrator’s satisfaction or EPA demonstrates that emissions of volatile organic compounds from sources in a specific area are a significant contributor to that area’s ambient PM 2.5 concentrations.

* * * * *

(v) [Reserved.] (vi) Particulate matter (PM) emissions,

PM 2.5 emissions, and PM 10 emissions shall include gaseous emissions from a source or activity which condense to form particulate matter at ambient temperatures. On or after January 1, 2011 (or any earlier date established in the upcoming rulemaking codifying test methods), such condensable particulate matter shall be accounted for in applicability determinations and in establishing emissions limitations for PM, PM 2.5 and PM 10 in PSD permits. Compliance with emissions limitations for PM, PM 2.5 and PM 10 issued prior to this date shall not be based on condensable particular matter unless required by the terms and conditions of the permit or the applicable implementation plan. Applicability determinations made prior to this date without accounting for condensable particular matter shall not be considered in violation of this section unless the applicable implementation plan required condensable particular matter to be included.

* * * * *

(i) * * * (5) * * * (ii) The concentrations of the pollutant in the area that the source or modification would affect are less than the concentrations listed in paragraph (i)(5)(i) of this section; or

(iii) The pollutant is not listed in paragraph (i)(5)(i) of this section.

* * * * *

■ 4. Appendix S to Part 51 is amended as follows:

■ a. By revising paragraphs II.A.10(i) and II.A.31;

■ b. By revising paragraph IV.A, Condition 3;

■ c. By redesignating paragraphs IV.G.1 through IV.G.3 as paragraphs IV.G.2 through IV.G.4, respectively, and adding new paragraph IV.G.1;

■ d. By removing from newly redesignated paragraph IV.G.3 the reference to ‘‘paragraph IV.G.1’’ and adding in its place ‘‘paragraph IV.G.2’’; and

■ e. By adding paragraph IV.G.5.

Appendix S to Part 51—Emission Offset Interpretative Ruling

* * * * *

II. * * *
A. * * * 10. (i) Significant means, in reference to a net emissions increase or the potential of a source to emit any of the following pollutants, a rate of emissions that would equal or exceed any of the following rates:

Pollutant and Emissions Rate
Carbon monoxide: 100 tons per year (tpy) Nitrogen oxides: 40 tpy Sulfur dioxide: 40 tpy Ozone: 40 tpy of volatile organic compounds

or nitrogen oxides Lead: 0.6 tpy Particulate matter: 25 tpy of particulate

matter emissions
PM 10 : 15 tpy
PM 2.5 : 10 tpy of direct PM 2.5 emissions; 40

tpy of sulfur dioxide emissions

* * * * *

31. Regulated NSR pollutant , for purposes of this Ruling, means the following:

(i) Nitrogen oxides or any volatile organic compounds;

(ii) Any pollutant for which a national ambient air quality standard has been promulgated;

(iii) Any pollutant that is identified under this paragraph II.A.31(iii) as a constituent or precursor of a general pollutant listed under paragraph II.A.31(i) or (ii) of this Ruling, provided that such constituent or precursor pollutant may only be regulated under NSR as part of regulation of the general pollutant. Precursors identified by the Administrator for purposes of NSR are the following:

( a ) Volatile organic compounds and nitrogen oxides are precursors to ozone in all
ozone nonattainment areas.

( b ) Sulfur dioxide is a precursor to PM 2.5 in all PM 2.5 nonattainment areas; or

(iv) Particulate matter (PM) emissions,

PM 2.5 emissions and PM 10 emissions shall include gaseous emissions from a source or activity which condense to form particulate matter at ambient temperatures. On or after January 1, 2011 (or any earlier date established in the upcoming rulemaking codifying test methods), such condensable particulate matter shall be accounted for in applicability determinations and in establishing emissions limitations for PM,

PM 2.5 and PM 10 in permits issued under this ruling. Compliance with emissions limitations for PM, PM 2.5 and PM 10 issued prior to this date shall not be based on condensable particulate matter unless required by the terms and conditions of the permit or the applicable implementation plan. Applicability determinations made prior to this date without accounting for condensable particulate matter shall not be


### 28349 Federal Register / Vol. 73, No. 96 / Friday, May 16, 2008 / Rules and Regulations

considered in violation of this section unless the applicable implementation plan required condensable particulate matter to be
included.

* * * * *

IV. * * *
A. * * * Condition 3 . Emission reductions ( offsets ) from existing sources 5 in the area of the proposed source (whether or not under the same ownership) are required such that there will be reasonable progress toward attainment of the applicable NAAQS. 6 Except as provided in paragraph IV.G.5 of this Ruling (addressing PM 2.5 and its precursors), only intrapollutant emission offsets will be acceptable ( e.g. , hydrocarbon increases may not be offset against SO 2 reductions).

5 Subject to the provisions of paragraph IV.C of this Ruling.

6 The discussion in this paragraph is a proposal, but represents EPA’s interim policy until final rulemaking is completed.

* * * * *

G. Offset ratios

. 1. In meeting the emissions offset requirements of paragraph IV.A, Condition 3 of this Ruling, the ratio of total actual
emissions reductions to the emissions
increase shall be at least 1:1 unless an alternative ratio is provided for the applicable nonattainment area in paragraphs IV.G.2 through IV.G.4.

* * * * *

5. Interpollutant offsetting . In meeting the emissions offset requirements of paragraph IV.A, Condition 3 of this Ruling, the
emissions offsets obtained shall be for the same regulated NSR pollutant unless interpollutant offsetting is permitted for a particular pollutant as specified in this paragraph IV.G.5. The offset requirements of paragraph IV.A, Condition 3 of this Ruling
for direct PM 2.5 emissions or emissions of precursors of PM 2.5 may be satisfied by offsetting reductions of direct PM 2.5 emissions or emissions of any PM 2.5 precursor identified under paragraph II.A.31 (iii) of this Ruling if such offsets comply with an interprecursor trading hierarchy and ratio approved by the Administrator.

* * * * *

**PART 52—[AMENDED]**

■ 5. The authority citation for part 52 continues to read as follows:

Authority: 42 U.S.C. 7401 et seq.

**Subpart A—[Amended]**

■ 6. Section 52.21 is amended as follows:

■ a. By revising paragraphs (b)(23)(i) and (b)(50)(i);

■ b. By removing the word ‘‘or’’ at the end of paragraph (b)(50)(iii);

■ c. By adding and reserving paragraph (b)(50)(v);

■ d. By adding paragraphs (b)(50)(vi) and (i)(1)(xi);

■ e. By revising paragraph (i)(5)(ii); and

■ f. By adding paragraph (i)(5)(iii). **§ 52.21 Prevention of significant deterioration of air quality.** 

* * * * *

(b) * * * (23)(i) Significant means, in reference to a net emissions increase or the potential of a source to emit any of the following pollutants, a rate of emissions that would equal or exceed any of the following rates:

Pollutant and Emissions Rate
Carbon monoxide: 100 tons per year

(tpy) Nitrogen oxides: 40 tpy Sulfur dioxide: 40 tpy Particulate matter: 25 tpy of particulate

matter emissions
PM 10 : 15 tpy PM 2.5 : 10 tpy of direct PM 2.5 emissions;

40 tpy of sulfur dioxide emissions; 40 tpy of nitrogen oxide emissions unless demonstrated not to be a PM 2.5 precursor under paragraph (b)(50) of this section Ozone: 40 tpy of volatile organic

compounds or nitrogen oxides Lead: 0.6 tpy Fluorides: 3 tpy Sulfuric acid mist: 7 tpy Hydrogen sulfide (H 2 S): 10 tpy Total reduced sulfur (including H 2 S): 10

tpy Reduced sulfur compounds (including

H 2 S): 10 tpy Municipal waste combustor organics

(measured as total tetra-through octachlorinated dibenzo-p-dioxins and dibenzofurans): 3.2 × 10 6 megagrams per year (3.5 × 10 6 tons per year) Municipal waste combustor metals

(measured as particulate matter): 14 megagrams per year (15 tons per year) Municipal waste combustor acid gases

(measured as sulfur dioxide and hydrogen chloride): 36 megagrams per year (40 tons per year) Municipal solid waste landfills

emissions (measured as nonmethane organic compounds): 45 megagrams per year (50 tons per year)

* * * * *

(50) * * * (i) Any pollutant for which a national ambient air quality standard has been promulgated and any pollutant identified under this paragraph (b)(50)(i) as a constituent or precursor for such pollutant. Precursors identified by the Administrator for purposes of NSR are the following:

( a ) Volatile organic compounds and nitrogen oxides are precursors to ozone in all attainment and unclassifiable

areas.

( b ) Sulfur dioxide is a precursor to

PM 2.5 in all attainment and unclassifiable areas. ( c ) Nitrogen oxides are presumed to be precursors to PM 2.5 in all attainment and unclassifiable areas, unless the State demonstrates to the Administrator’s satisfaction or EPA demonstrates that emissions of nitrogen oxides from sources in a specific area are not a significant contributor to that area’s ambient PM 2.5 concentrations.

( d ) Volatile organic compounds are presumed not to be precursors to PM 2.5 in any attainment or unclassifiable area, unless the State demonstrates to the Administrator’s satisfaction or EPA demonstrates that emissions of volatile organic compounds from sources in a specific area are a significant contributor to that area’s ambient PM 2.5 concentrations.

* * * * *

(v) [Reserved.] (vi) Particulate matter (PM) emissions,

PM 2.5 emissions and PM 10 emissions shall include gaseous emissions from a source or activity which condense to form particulate matter at ambient temperatures. On or after January 1, 2011 (or any earlier date established in the upcoming rulemaking codifying test methods), such condensable particulate matter shall be accounted for in applicability determinations and in establishing emissions limitations for PM, PM 2.5 and PM 10 in PSD permits. Compliance with emissions limitations for PM, PM 2.5 and PM 10 issued prior to this date shall not be based on condensable particular matter unless required by the terms and conditions of the permit or the applicable implementation plan. Applicability determinations made prior to this date without accounting for condensable particular matter shall not be considered in violation of this section unless the applicable implementation plan required condensable particular matter to be included.

* * * * *

(i) * * * (1) * * * (xi) The source or modification was subject to 40 CFR 52.21, with respect to

PM 2.5 , as in effect before July 15, 2008, and the owner or operator submitted an application for a permit under this section before that date consistent with EPA recommendations to use PM 10 as a surrogate for PM 2.5 , and the Administrator subsequently determines that the application as submitted was complete with respect to the PM 2.5 requirements then in effect, as interpreted in the EPA memorandum entitled ‘‘Interim Implementation of New Source Review Requirements for

PM 2.5 ’’ (October 23, 1997). Instead, the requirements of paragraphs (j) through


### 28350 Federal Register / Vol. 73, No. 96 / Friday, May 16, 2008 / Rules and Regulations

(r) of this section, as interpreted in the aforementioned memorandum, that were in effect before July 15, 2008 shall apply to such source or modification.

* * * * *

(5) * * * (ii) The concentrations of the pollutant in the area that the source or modification would affect are less than the concentrations listed in paragraph (i)(5)(i) of this section; or

(iii) The pollutant is not listed in paragraph (i)(5)(i) of this section.

* * * * *
[FR Doc. E8–10768 Filed 5–15–08; 8:45 am]

**BILLING CODE 6560–50–P**

**DEPARTMENT OF HOMELAND SECURITY** 

**Federal Emergency Management Agency** 

**44 CFR Part 67**

**Final Flood Elevation Determinations**

**AGENCY :**  Federal Emergency Management Agency, DHS.

**ACTION :**  Final rule.

**SUMMARY :**  Base (1% annual chance) Flood Elevations (BFEs) and modified BFEs are made final for the communities listed below. The BFEs and modified BFEs are the basis for the floodplain management measures that each community is required either to adopt or to show evidence of being already in effect in order to qualify or remain qualified for participation in the National Flood Insurance Program (NFIP).

**DATES :**  The date of issuance of the Flood Insurance Rate Map (FIRM) showing BFEs and modified BFEs for each community. This date may be obtained by contacting the office where the maps are available for inspection as indicated on the table below.

**ADDRESSES :**  The final BFEs for each community are available for inspection at the office of the Chief Executive Officer of each community. The respective addresses are listed in the table below.

**FOR FURTHER INFORMATION CONTACT :**  William R. Blanton, Jr., Engineering Management Branch, Mitigation Directorate, Federal Emergency Management Agency, 500 C Street, SW., Washington, DC 20472, (202) 646–3151.

**SUPPLEMENTARY INFORMATION :**  The Federal Emergency Management Agency (FEMA) makes the final determinations listed below for the modified BFEs for each community listed. These modified elevations have been published in newspapers of local circulation and ninety (90) days have elapsed since that publication. The Assistant Administrator of the Mitigation Directorate has resolved any appeals resulting from this notification.

This final rule is issued in accordance with section 110 of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4104, and 44 CFR part 67. FEMA has developed criteria for floodplain management in floodprone areas in accordance with 44 CFR part 60.

Interested lessees and owners of real property are encouraged to review the proof Flood Insurance Study and FIRM available at the address cited below for each community. The BFEs and modified BFEs are made final in the communities listed below. Elevations at selected locations in each community are shown. National Environmental Policy Act. This final rule is categorically excluded from the requirements of 44 CFR part 10, Environmental Consideration. An environmental impact assessment has not been prepared.

Regulatory Flexibility Act. As flood elevation determinations are not within the scope of the Regulatory Flexibility Act, 5 U.S.C. 601–612, a regulatory flexibility analysis is not required.

Regulatory Classification. This final rule is not a significant regulatory action under the criteria of section 3(f) of Executive Order 12866 of September 30, 1993, Regulatory Planning and Review,

58 FR 51735.

Executive Order 13132, Federalism. This final rule involves no policies that have federalism implications under Executive Order 13132.

Executive Order 12988, Civil Justice Reform. This final rule meets the applicable standards of Executive Order

12988.
List of Subjects in 44 CFR Part 67

Administrative practice and procedure, Flood insurance, Reporting and recordkeeping requirements.

■ Accordingly, 44 CFR part 67 is amended as follows:

**PART 67—[AMENDED]**

■ 1. The authority citation for part 67 continues to read as follows:

Authority: 42 U.S.C. 4001 et seq. ; Reorganization Plan No. 3 of 1978, 3 CFR, 1978 Comp., p. 329; E.O. 12127, 44 FR 19367, 3 CFR, 1979 Comp., p. 376.

**§ 67.11 [Amended]**

■ 2. The tables published under the authority of § 67.11 are amended as follows:

Flooding source(s) Location of referenced elevation * Elevation in feet (NGVD) + Elevation in feet (NAVD) # Depth in feet above ground

Modified Communities affected

**Randolph County, Illinois, and Incorporated Areas**

**Docket No.: FEMA–B–7740**

Kaskaskia River ..................... At confluence with Mississippi River ..................................... +392 Village of Evansville, Unincorporated Areas of Randolph County. Randolph/Monroe County boundary (approximately 700

feet upstream Anna Lane extended). +392

Mississippi River .................... Jackson/Randolph County boundary (approximately Cora Road extended). +382 City of Chester, Unincorporated Areas of Randolph County, Village ofKaskaskia, Village of Prairie Du Rocher, Village of
Rockwood.


### 64864 Federal Register / Vol. 75, No. 202 / Wednesday, October 20, 2010 / Rules and Regulations

**ENVIRONMENTAL PROTECTION AGENCY** 

**40 CFR Parts 51 and 52**

**[EPA–HQ–OAR–2006–0605; FRL–9210–9]**

**RIN 2060–AO24**

**Prevention of Significant Deterioration (PSD) for Particulate Matter Less Than**  **2.5 Micrometers (PM** 2.5 **)—Increments, Significant Impact Levels (SILs) and**  **Significant Monitoring Concentration (SMC)** 

**AGENCY :**  Environmental Protection Agency (EPA).

**ACTION :**  Final rule.

**SUMMARY :**  The EPA is amending the requirements for particulate matter less than 2.5 micrometers (PM 2.5 ) under the Prevention of Significant Deterioration (PSD) program by adding maximum allowable increases in ambient pollutant concentrations ( ‘‘ increments ’’ ) and two screening tools, known as the Significant Impact Levels (SILs) and a Significant Monitoring Concentration (SMC) for PM 2.5 . The SILs for PM 2.5 are also being added to two other New Source Review (NSR) rules that regulate the construction and modification of any major stationary source locating in an attainment or unclassifiable area, where the source’s emissions may cause or contribute to a violation of the national ambient air quality standards (NAAQS).

**DATES :**  This final rule is effective on December 20, 2010.

**ADDRESSES :**  The EPA has established a docket for this action under Docket ID No. EPA–HQ–OAR–2006–0605. All documents in the docket are listed on the http://www.regulations.gov Web Site. Although listed in the index, some information may not be publicly available, e.g., Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in hard copy form. Publicly available docket materials are available either electronically through http://www.regulations.gov or in hard copy at the Air Docket, EPA/DC, EPA West, Room 3334, 1301 Constitution Avenue, Northwest, Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566–1744, and the telephone number for the Air Docket is (202) 566–1742. **FOR FURTHER INFORMATION CONTACT :**  Mr. Dan deRoeck, Air Quality Policy Division, Office of Air Quality Planning and Standards (C504–03), U.S. Environmental Protection Agency, Research Triangle Park, North Carolina 27711, telephone number: (919) 541– 5593, facsimile number: (919) 541–5509, e-mail address: deroeck.dan@epa.gov

. **SUPPLEMENTARY INFORMATION :**  The information in this Supplementary Information section of this preamble is organized as follows:

I. General Information

A. Does this action apply to me? B. Where can I get a copy of this document

and other related information? II. Purpose III. Overview of Final PM 2.5 PSD Regulations

A. Increments B. Significant Impact Levels C. Significant Monitoring Concentration IV. Background

A. PSD Program B. History of Particulate Matter (PM)

NAAQS 1. Total Suspended Particulate (TSP) and

PM 10 NAAQS
2. PM 2.5 NAAQS 3. Revised PM 2.5 and PM 10 NAAQS C. Implementation of NSR for PM 2.5 D. Increments Under the PSD Program E. Historical Approaches for Developing

Increments 1. Congressional Enactment of Increments

for PM and SO 2 2. EPA’s Promulgation of Increments for

NO 2 and PM 10 a. Increments for NO 2 Using the

‘‘ Contingent Safe Harbor ’’ Approach Under Section 166(a) of the Act b. Increments for PM 10 Using ‘‘ Equivalent

Substitution ’’ Approach Under Section 166(f) of the Act V. Final Action on PM 2.5 Increments

A. Decision To Establish PM 2.5 Increments

Using ‘‘ Contingent Safe Harbor Approach ’’ Under Section 166(a) B. Rationale for the Applicability of

Section 166(a) C. EPA’s Interpretation of the

Requirements Under Sections 166(a)–(d) of the Act 1. Regulations as a Whole Should Fulfill

Statutory Requirements 2. Contingent Safe Harbor Approach 3. The Statutory Factors Applicable Under

Section 166(c) 4. Balancing the Factors Applicable Under

Section 166(c) 5. Authority for States To Adopt

Alternatives to Increments D. Framework for Pollutant-Specific PSD

Regulations for PM 2.5 1. Increment System 2. Area Classifications 3. Permitting Procedures 4. AQRV Review by Federal Land Manager

(FLM) and Reviewing Authority 5. Additional Impacts Analysis 6. Installation of BACT E. Final PM 2.5 Increments 1. Identification of Safe Harbor Increments 2. Data Used by EPA for the Evaluation of

the Safe Harbor Increments for PM 2.5 3. Scope of Effects Considered
4. Evaluation of the Health and Welfare

Effects of PM 2.5 a. Health Effects
b. Welfare Effects
5. Fundamental Elements of Increments
6. Evaluation of the Safe Harbor Increments 7. Compliance Determinations for the

PM 2.5 Increments a. Modeling Compliance With PM 2.5

Increments
b. Condensable PM

c. PM 2.5 Precursors F. Final Action on Trigger and Baseline

Dates for PM 2.5 Increments
G. Definition of ‘‘ Baseline Area ’’ for PM 2.5 H. No Final Action With Respect to the

Proposed Revocation of PM 10 Annual

Increments
I. Other Comments on Increments
VI. Final Action on PM 2.5 SILs

A. EPA’s Determination on SILs for PM 2.5 B. Response to Comments Concerning the

SILs 1. Legal Basis for SILs
2. Levels of the SILs
a. Class I SILs
b. Class II and III SILs 3. Relationship Between SILs and AQRVs
4. Form of the SILs
5. SILs for Other Pollutants
VII. Final Action on the PM 2.5 SMC

A. EPA’s Determination on the PM 2.5 SMC B. Response to Comments Concerning the

SMC 1. Legal Issues
2. Level of the SMC
C. Correction of Cross Reference in PSD

Ambient Monitoring Requirements VIII. Dates Associated With Implementation
of the Final Rule
A. Effective Date of the Final Rule 1. State PSD Programs 2. Federal PSD Program
B. Transition Period
C. SILs and SMC for PM 2.5 IX. Other Regulatory Changes X. Statutory and Executive Order Reviews

A. Executive Order 12866—Regulatory

Planning and Review B. Paperwork Reduction Act C. Regulatory Flexibility Act
D. Unfunded Mandates Reform Act
E. Executive Order 13132—Federalism
F. Executive Order 13175—Consultation

and Coordination With Indian Tribal

Governments
G. Executive Order 13045—Protection of

Children From Environmental Health and Safety Risks
H. Executive Order 13211—Actions That

Significantly Affect Energy Supply, Distribution, or Use I. National Technology Transfer and

Advancement Act J. Executive Order 12898—Federal Actions

To Address Environmental Justice in Minority Populations and Low-Income Populations K. Congressional Review Act XI. Judicial Review XII. Statutory Authority


### 64865 Federal Register / Vol. 75, No. 202 / Wednesday, October 20, 2010 / Rules and Regulations

I. General Information

A. Does this action apply to me?

Entities affected by this rule include sources in all industry groups. The majority of sources potentially affected are expected to be in the following

groups:

Industry group NAICS a

Electric services .............................................................................................................. ..................................... 221111, 221112, 221113, 221119, 221121, 221122 Petroleum refining ............................................................................................................. .................................. 32411 Industrial inorganic chemicals ................................................................................................. ............................ 325181, 32512, 325131, 325182, 211112, 325998, 331311,
325188 Industrial organic chemicals ................................................................................................... ............................. 32511, 325132, 325192, 325188, 325193, 32512, 325199 Miscellaneous chemical products ................................................................................................ ........................ 32552, 32592, 32591, 325182,
32551 Natural gas liquids ............................................................................................................ ................................... 211112 Natural gas transport ........................................................................................................................................... 48621, 22121 Pulp and paper mills ............................................................................................................................................ 32211, 322121, 322122, 32213 Paper mills ........................................................................................................................................................... 322121, 322122 Automobile manufacturing ....................................................................................................... ............................ 336111, 336112, 336712, 336211, 336992, 336322, 336312, 33633, 33634, 33635, 336399, 336212, 336213
Pharmaceuticals ................................................................................................................ .................................. 325411, 325412, 325413, 325414

a North American Industry Classification System.

Entities affected by this rule also include State and local permitting authorities, and tribal authorities that implement these regulations.

B. Where can I get a copy of this
document and other related information?

In addition to being available in the docket, an electronic copy of this final
rule will also be available on the World Wide Web. Following signature by the EPA Administrator, a copy of this final rule will be posted in the regulations
and standards section of our NSR home page located at http://www.epa.gov/nsr

. II. Purpose
The purpose of this rulemaking is to finalize certain program provisions under the regulations to prevent significant deterioration of air quality due to emissions of PM 2.5 ( i.e., under the

PM 2.5 PSD regulations). This final rule supplements the final implementation rule for PM 2.5 , known as the Clean Air Fine Particle Implementation Rule (CAFPIR) that we promulgated on April 25, 2007 (72 FR 20586), and the PM 2.5 NSR Implementation Rule that we promulgated on May 16, 2008 (73 FR 28321). Together, these three rules encompass the elements necessary for implementation of a PM 2.5 program in any area. This final rule is important because it establishes increments, SILs, and an SMC for PM 2.5 to facilitate ambient air quality monitoring and modeling under the PSD regulations for areas designated attainment or unclassifiable for PM 2.5
. III. Overview of Final PM 2.5 PSD Regulations

A. Increments

This rulemaking establishes increments for PM 2.5 pursuant to the legal authority contained in section 166(a) of the Clean Air Act (CAA or Act) for pollutants for which NAAQS are promulgated after 1977. The final PM 2.5 increments were identified as Option 1 in the 2007 Notice of Proposed Rulemaking (NPRM) for this action, and are as follows:

Averaging period NAAQS ( μ g/m 3 ) Increments ( μ g/m 3 )

Class I Class II Class III

Annual .........................................................................................................................

..... 15 1 4 8
24-hour ........................................................................................................................

..... 35 2 9 18

As discussed in more detail in sections V.F and VIII, the increments for

PM 2.5 will become applicable on October 20, 2011 in order to comply with section 166(b) of the Act (providing that regulations under section 166(a) ‘‘ shall become effective one year after the date of promulgation ’’ ). This final rule does not revoke the annual increments for particulate matter less than 10 micrometers (PM 10 ) as proposed under Option 1 in the 2007 NPRM. Thus, we are retaining the 24-
hour and annual PM 10 increments in addition to adding PM 2.5 increments. This outcome is discussed in greater detail in section V.H of this preamble. B. Significant Impact Levels

This rule establishes SILs for PM 2.5 for evaluating the impact a proposed new source or modification may have on the NAAQS and PSD increments for PM 2.5
. The SILs for PM 2.5 were developed by scaling the existing PM 10 SILs using a
PM 2.5 -to-PM 10 NAAQS ratio. The final SILs were identified as Option 3 in the 2007 NPRM, and are as follows:


### 64866 Federal Register / Vol. 75, No. 202 / Wednesday, October 20, 2010 / Rules and Regulations

1 We have delegated our authority to some states to implement the Federal PSD program. The EPA remains the reviewing authority in non-delegated states lacking SIP-approved programs and in Indian country. Averaging period SILs ( μ g/m 3 )

Class I Class II Class III

Annual ......................................................................................................................... ............................. 0.06 0.3 0.3
24-hour ........................................................................................................................ ............................. 0.07 1.2 1.2

These values will be added to the State implementation plan (SIP) provisions for PSD at 40 CFR 51.166 (as an optional screening tool) and the Federal PSD program at 40 CFR 52.21, as well as under the preconstruction review permit requirements at 40 CFR 51.165(b) and part 51, Appendix S. See a more detailed discussion of the SILs, as well as the relevant comments and our responses to them, in section VI of this preamble. The SILs for PM 2.5 are incorporated into the Federal PSD program as well as into the regulations for State-implemented PSD programs, although they are regarded as optional for State programs. The effective date for implementing the SILs under the Federal PSD program is the effective date of this final rule. See section VIII of this preamble for further discussion of the effective date.

C. Significant Monitoring Concentration

This final rule establishes the SMC for

PM 2.5 as 4 μ g/m 3 PM 2.5 (24-hour average). This value has been developed pursuant to proposed Option 1; however, it should be noted that the value being established in this final rule is lower than the proposed value of 10

μ g/m 3 that was originally developed under Option 1. A more detailed discussion of the proposed SMC is presented in section VII of this preamble, describing the rationale for altering the proposed SMC, and the relevant comments on the proposed SMC and our responses to them. The SMC for PM 2.5 is incorporated into the Federal PSD program as well as into the regulations for State-implemented PSD programs, although they are regarded as optional for State programs. As with the SILs for PM 2.5 , the effective date for implementing the SMC under the Federal PSD program is the effective date of this final rule. See section VIII of this preamble for further discussion of the effective date.

IV. Background

A. PSD Program

The NSR provisions of the Act are a combination of air quality planning and air pollution control technology program requirements for new and modified stationary sources of air pollution. In brief, section 109 of the Act requires us to promulgate primary NAAQS to protect public health and secondary NAAQS to protect public welfare. Once we have set these standards, states must develop, adopt, and submit to us for approval SIPs that contain emission limitations and other control measures to attain and maintain the NAAQS and to meet the other requirements of section 110(a) of the Act. Part C of title I of the Act contains the requirements for a component of the major NSR program known as the PSD program. This program sets forth procedures for the preconstruction review and permitting of new and modified major stationary sources of air pollution locating in areas meeting the NAAQS ( ‘‘ attainment ’’ areas) and areas for which there is insufficient information to classify an area as either
attainment or nonattainment ( ‘‘ unclassifiable ’’ areas). Most states have SIP-approved preconstruction permit (major NSR) programs. The Federal PSD program at 40 CFR 52.21 applies in some states that lack a SIP-approved permit program, and in Indian country. 1 The applicability of the PSD program to a major stationary source must be determined in advance of construction and is a pollutant-specific determination. Once a major source is determined to be subject to the PSD program (PSD source), among other requirements, it must undertake a series of analyses to demonstrate that it will use the best available control technology (BACT) and will not cause or contribute to a violation of any NAAQS or increment. For the latter demonstration, the PSD regulations generally require sources to submit for review and approval a source impact analysis and an air quality analysis.

The source impact analysis is primarily a modeling analysis designed to show that the allowable emissions increase from the proposed project, in conjunction with other emissions increases from existing sources, will not result in a violation of either the NAAQS or increments. In cases where the source’s emissions may adversely affect an area classified as a Class I area, additional review is conducted to protect the increments and special attributes of such an area defined as ‘‘ air quality related values ’’ (AQRVs).

The air quality analysis must assess the ambient air quality in the area that the proposed project would affect. For this analysis, the owner or operator of the proposed project must submit as part of a complete permit application air quality monitoring data that represent the air quality in the area affected by the proposed source for the 1-year period preceding receipt of the application. Where data may already exist to represent existing air quality, it may be used by the applicant; otherwise, the source owner or operator is responsible for the installation and operation of monitors to collect the necessary data.

Historically, EPA has allowed the use of several types of screening tools to facilitate implementation of the preconstruction review process to reduce the permit applicant’s burden and streamline the permitting process for de minimis circumstances. These tools include a significant emissions rate (SER), SILs, and a SMC. The SER, defined in tons per year (tpy) for each regulated pollutant, is used to determine whether the emissions increase from any proposed source or modification can be excluded from review on the grounds that the increase of any particular pollutant is de minimis. An emission increase for a particular pollutant that is greater than the SER defined in the NSR regulations for that pollutant is considered to be a significant increase.

The SIL, expressed as an ambient pollutant concentration (micrograms per cubic meter ( μ g/m 3 )), is used to determine whether the ambient impact of a particular pollutant (once it is determined to be emitted in significant amounts) is significant enough to warrant a complete source impact analysis involving modeling the collective impacts of the proposed project and emissions from other existing sources.

The PSD regulations generally require each PSD applicant to collect 1 year of continuous air quality monitoring data for any pollutant determined to be subject to preconstruction review as part of complete PSD permit application. Using the SMC as a screening tool, expressed as an ambient pollutant concentration ( μ g/m 3 ), sources may be able to demonstrate that the modeled air


### 64867 Federal Register / Vol. 75, No. 202 / Wednesday, October 20, 2010 / Rules and Regulations

2 The basic monitoring exemption provision is part of the original monitoring requirements adopted in the 1980 PSD rulemaking. 45 FR 52676, 52710, August 7, 1980. quality impact of emissions from the new source or modification, or the existing air quality level in the area where the source would construct, is less than the SMC, i.e., de minimis, and may be allowed to forego the preconstruction monitoring requirement for a particular pollutant at the discretion of the reviewing authority. 2 See 40 CFR 51.166(i)(5) and 52.21(i)(5).

When the reviewing authority reaches a preliminary decision to authorize construction of a proposed major new source or major modification, it must provide notice of the preliminary decision and an opportunity for comment by the general public, industry, and other persons that may be affected by the emissions of the proposed major source or major modification. After considering these comments, the reviewing authority may issue a final determination on the construction permit in accordance with the PSD regulations.
B. History of Particulate Matter (PM) NAAQS
1. Total Suspended Particulate (TSP) and PM 10 NAAQS

The EPA initially established NAAQS for PM in 1971, measured by the TSP indicator. Based on the size of the particles collected by the ‘‘ high-volume sampler, ’’ which at that time was the reference method for determining ambient concentrations, TSP included all PM up to a nominal size of 25 to 45 micrometers. We established both annual and 24-hour NAAQS for TSP.

On July 1, 1987, we revised the NAAQS for PM and changed the indicator from TSP to PM 10 ; the latter indicator includes particles with a mean aerodynamic diameter less than or equal to 10 micrometers. The PM 10 particles are the subset of inhalable particles small enough to penetrate to the thoracic region (including the tracheobronchial and alveolar regions) of the respiratory tract (referred to as thoracic particles). We established annual and 24-hour NAAQS for PM 10 , and revoked the NAAQS for TSP. (52 FR 24634).

2. PM 2.5 NAAQS

On July 18, 1997, we again revised the NAAQS for PM in several respects. While we determined that the NAAQS should continue to focus on particles less than or equal to 10 micrometers in diameter, we also determined that the fine and coarse fractions of PM 10 should be considered separately. We established new annual and 24-hour NAAQS using PM 2.5 (referring to particles with a nominal mean aerodynamic diameter less than or equal to 2.5 micrometers) as the indicator for fine particles. The 1997 NAAQS rule also modified the PM 10 NAAQS for the purpose of regulating the coarse fraction of PM 10 (referred to as thoracic coarse particles or coarse-fraction particles; generally including particles with a nominal mean aerodynamic diameter greater than 2.5 micrometers and less than or equal to 10 micrometers, or

PM 10–2.5 ); however, this part of the rulemaking was vacated duringsubsequent litigation, leaving the preexisting 1987 PM 10 NAAQS in place (62 FR 38652).

3. Revised PM 2.5 and PM 10 NAAQS

On October 17, 2006, we promulgated revisions to the NAAQS for PM 2.5 and

PM 10 with an effective date of December 18, 2006 (71 FR 61144). We lowered the 24-hour NAAQS for PM 2.5 from 65 μ g/

m 3 to 35 μ g/m 3 , and retained the existing annual PM 2.5 NAAQS of 15 μ g/

m 3 . In addition, we retained the existing

PM 10 24-hour NAAQS of 150 μ g/m 3 , and revoked the annual PM 10 NAAQS (set at

50 μ g/m 3 ).
C. Implementation of NSR for PM 2.5 After we established new annual and 24-hour NAAQS based on PM 2.5 as the indicator for fine particles in July 1997, we issued a guidance document titled

‘‘ Interim Implementation for the New Source Review Requirements for PM 2.5 , ’’ John S. Seitz, Director, Office of Air Quality Planning and Standards, EPA, October 23, 1997. As noted in that guidance, section 165 of the Act implies that certain PSD requirements become effective for a new NAAQS upon the effective date of the NAAQS. Section 165(a)(1) of the Act provides that no new or modified major source may be constructed without a PSD permit that meets all of the section 165(a) requirements with respect to the regulated pollutant. Moreover, section 165(a)(3) provides that the emissions from any such source may not cause or contribute to a violation of any increment or NAAQS. Also, section 165(a)(4) requires BACT for each pollutant subject to PSD regulation. The 1997 guidance stated that sources would be allowed to use implementation of a

PM 10 program as a surrogate for meeting

PM 2.5 NSR requirements until certain difficulties were resolved. These difficulties included the lack of necessary tools to calculate the emissions of PM 2.5 and related precursors, the lack of adequate modeling techniques to project ambient impacts, and the lack of PM 2.5 monitoring sites.

On April 5, 2005, we issued a guidance document entitled

‘‘ Implementation of New Source Review Requirements in PM–2.5 Nonattainment Areas, ’’ Stephen D. Page, Director, Office of Air Quality Planning and Standards, EPA. This memorandum provided guidance on the implementation of the nonattainment major NSR provisions in
PM 2.5 nonattainment areas in the interim period between the effective date of the PM 2.5 NAAQS designations (April 5, 2005) and when we promulgate regulations to implement nonattainment major NSR for the PM 2.5 NAAQS. In addition to affirming the continued use of the John S. Seitz guidance memo in

PM 2.5 attainment areas, this memo recommended that, until we promulgated the PM 2.5 major NSR regulations, states should use a PM 10 nonattainment major NSR program as a surrogate to address the requirements of nonattainment major NSR for the PM 2.5 NAAQS.

On November 1, 2005, we proposed a rule to implement the PM 2.5 NAAQS, including proposed revisions to the NSRprogram. For those states with EPAapproved PSD programs, we proposed to continue the 1997 NSR guidance to

use PM 10 as a surrogate for PM 2.5 , but only during the SIP development period. We also indicated in that proposal that we would be developing increments, SILs, and an SMC in a separate rulemaking, i.e., this final rule. Since there was an interim surrogate NSR program in place, i.e., the PM 10 Surrogate Policy, EPA decided to first promulgate the non-NSR part of the implementation rule (including attainment demonstrations, designations, control measures, etc. ). This rule was promulgated as the CAFPIR on April 25, 2007 (72 FR 20586).

The NSR part of the implementation rule was issued separately as a final rule on May 16, 2008 (73 FR 28321), and included sets of NSR regulations for both attainment (PSD) and nonattainment areas (nonattainment NSR) for PM 2.5 . In the May 16, 2008 rule we added one of the important screening tools—the SER—for PM 2.5
. The SER for PM 2.5 is defined as an emissions rate of 10 tpy for direct PM 2.5 emissions. We also listed sulfur dioxide (SO 2 ) and nitrogen oxides (NO X ) as precursors of ambient PM 2.5 and defined

‘‘ significant ’’ as 40 tpy or more of either precursor pollutant. States were allowed up to 3 years from the date of publication in the Federal Register to


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3 Baseline dates are pollutant specific. That is, a complete PSD application establishes the baseline date only for those regulated NSR pollutants that are projected to be emitted in significant amounts (as defined in the regulations) by the applicant’s new source or modification. Thus, an area may have different baseline dates for different pollutants. revise their SIPs and submit their revised NSR programs to EPA for approval.

D. Increments Under the PSD Program

Under section 165(a)(3) of the Act, a PSD permit applicant must demonstrate that emissions from the proposed construction and operation of a facility

‘‘ will not cause, or contribute to, air pollution in excess of any (A) maximum allowable increase or maximum allowable concentration for any pollutant * * *. ’’ The ‘‘ maximum allowable increase ’’ of an air pollutant that is allowed to occur above the applicable baseline concentration for that pollutant is known as the PSD increment. By establishing the maximum allowable level of ambient pollutant concentration increase in a particular area, an increment defines

‘‘ significant deterioration ’’ of air quality in that area.

For PSD baseline purposes, a baseline area for a particular pollutant emitted from a source includes the attainment or unclassifiable area in which the source is located, as well as any other attainment or unclassifiable area in which the source’s emissions of that pollutant are projected (by air quality modeling) to result in a significant ambient pollutant increase. See, e.g., 40 CFR 52.21(b)(15)(i). Once the baseline area is established, subsequent PSD sources locating in that area need to consider that a portion of the available increment may have already been consumed by previous emissions
increases.

In general, the submittal date of the first complete PSD permit application in a particular area is the operative

‘‘ baseline date. ’’ 3 On or before the date of the first complete PSD application, emissions generally are considered to be part of the baseline concentration, except for certain emissions from major stationary sources, as explained in the following discussion of baseline dates. Most emissions increases that occur after the baseline date will be counted toward the amount of increment consumed. Similarly, emissions decreases after the baseline date restore or expand the amount of increment that is available.

In practice, three dates related to the PSD baseline concept are important in understanding how to calculate the amount of increment consumed— (1) Trigger date; (2) major source baseline date; and (3) minor source baseline date. The first relevant date is the trigger date. The trigger date, as the name implies, triggers the overall increment consumption process nationwide. Specifically, this is a fixed date, which must occur before the minor source baseline date can be established for the pollutant-specific increment in a particular attainment area. See, 40 CFR 51.166(b)(14)(ii) and 52.21(b)(14)(ii). For PM (regulated as TSP) and SO 2 , Congress defined the applicable trigger date as August 7, 1977—the date of the 1977 amendments to the Act when the original statutory increments were established by Congress. For nitrogen dioxide (NO 2 ), we selected the trigger date as February 8, 1988—the date on which we proposed increments for NO 2
. See 53 FR 40656, 40658; October 17, 1988. In this final rule, as described later, we are establishing a separate trigger date for purposes of implementing the PM 2.5 increments. See section V.F of this preamble for additional discussion of the trigger date for PM 2.5
.

The two remaining dates— ‘‘ minor source baseline date ’’ and ‘‘ major source baseline date ’’ —as described later, are necessary to properly account for the emissions that are to be counted toward the amount of increment consumed following the national trigger date, in accordance with the statutory definition of ‘‘ baseline concentration ’’ in section 169(4) of the Act. The statutory definition provides that the baseline concentration of a pollutant for a particular baseline area is generally the air quality at the time of the first application for a PSD permit in the area. Consequently, any increases in actual emissions occurring after that date (with some possible exceptions that we will discuss later) would be considered to consume the applicable PSD increment. However, the statutory definition in section 169(4) also provides that

‘‘ [e]missions of sulfur oxides and particulate matter from any major emitting facility on which construction commenced after January 6, 1975, shall not be included in the baseline and shall be counted in pollutant concentrations established under this part. ’’

To make this distinction between the date when emissions resulting from the construction at a major stationary source consume the increment and the date when emissions changes in general ( i.e., from both major and minor sources) begin to consume the increment, we established the terms ‘‘ major source baseline date ’’ and ‘‘ minor source baseline date, ’’ respectively. See 40 CFR 51.166(b)(14) and 52.21(b)(14). Accordingly, the ‘‘ major source baseline date, ’’ which precedes the trigger date, is the date after which actual emissions increases associated with construction at any major stationary source consume the PSD increment. In accordance with the statutory definition of ‘‘ baseline concentration, ’’ the PSD regulations define a fixed date to represent the major source baseline date for each pollutant for which an increment exists. Congress defined the major source baseline date for the statutory increments for PM and SO 2 as January 6, 1975. For the NO 2 increments, which we promulgated in 1988 under our authority to establish an increment system under section 166(a) of the Act, the major source baseline date we selected was February 8, 1988—the date on which we proposed increments for
NO 2 . 53 FR 40656. In both instances, the major source baseline date for the individual increments was set as a date which preceded the date on which the regulations pertaining to those increments were issued. In this final rule, as described later, we are establishing a separate major source baseline date for implementing the

PM 2.5 increments. See section V.F of this preamble for further discussion of the major source baseline date for PM 2.5
.

The ‘‘ minor source baseline date ’’ is the earliest date after the trigger date on which a source or modification submits the first complete application for a PSD permit in a particular area. After the minor source baseline date, any increase in actual emissions (from both major and minor sources) consumes the PSD increment for that area.

Once the minor source baseline date is established, the new emissions increase from that major source consumes a portion of the increment in that area, as do any subsequent actual emissions increases that occur from any new or existing source in the area. When the maximum pollutant concentration increase defined by the increment has been reached, additional PSD permits cannot be issued until sufficient amounts of the increment are

‘‘ freed up ’’ via emissions reductions that may occur voluntarily, ( e.g., via source shutdowns) or by mandatory control requirements imposed by the reviewing authority. Moreover, the air quality in a region cannot deteriorate to a level in excess of the applicable NAAQS, even if all the increment in the area has not been consumed. Therefore, new or modified sources located in areas where the air pollutant concentrations are near the level allowed by the NAAQS may not have full use of the amount of


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4 See EPA’s ‘‘ Guideline on Air Quality Models ’’ at 40 CFR part 51, Appendix W. pollutant concentration increase allowed by the increment.

Under EPA guidance, the actual increment analysis that a proposed new or modified source undergoing PSD review must complete depends on the area impacted by the source’s new emissions. We have provided approved air quality models and guidelines for sources to use to project the air quality impact of each pollutant (over each averaging period) for which an increment analysis must be done. 4 In addition, we established SILs for each pollutant under the permit requirements applicable to new and modified major stationary sources locating in attainment areas that would cause or contribute to a violation of any NAAQS. See 40 CFR 51.165(b) and part 51, Appendix S, section III.A. These SILs have also been used for implementing the PSD program to identify levels below which the source’s modeled impact of a particular pollutant is regarded as de minimis. In this final rule, we are establishing SILs (24-hour and annual) for PM 2.5 that are being added to the aforementioned regulations containing SILs for other pollutants, as well as to the PSD regulations in 40 CFR 51.166 and 52.21.
See further discussion of the SILs for

PM 2.5 in section VI of this preamble.

In the event that a source’s modeled impacts of a particular pollutant are below the applicable SIL at all ambient air locations modeled, i.e., de minimis everywhere, EPA’s policy for PSD provides that no further modeling analysis is required for that pollutant. Our longstanding policy under the PSD program is that when a preliminary screening analysis based on the SIL is sufficient to demonstrate that the source’s emissions throughout the area modeled will not cause or contribute to a violation of the increment, there is no need for a comprehensive source impact analysis involving a cumulative evaluation of the emissions from the proposed source and other sources affecting the area.

Within the impact area of a source subject to PSD, that is, the area within which the proposed project’s emissions increase does have a significant impact, increment consumption is calculated using the source’s proposed emissions increase, along with other actual emissions increases or decreases of the particular pollutant from any sources in the area, which have occurred since the minor source baseline date established for that area. In addition, the emissions increases or decreases from any major source that has commenced construction since the major source baseline date (which precedes the minor source baseline date) will consume or expand increment. Thus, an emissions inventory of sources whose emissions, in whole or in part, of a particular pollutant consume or expand the available increment in the area must becompiled. The inventory of incrementconsuming emissions includes not only sources located directly in the impact area, but sources outside the impact area that affect the air quality for the particular pollutant within the impact

area.

The inventory of incrementconsuming emissions includes emissions from increment-affecting sources at two separate time periods— the baseline date and the current period of time. For each source that was in existence on the relevant baseline date (major source or minor source), the inventory includes the source’s actual emissions on the baseline date and its current actual emissions. The change in emissions over these time periods represents the emissions that consume increment (or, if emissions have gone down, expand the available increment). For sources constructed since the relevant baseline date, all their current actual emissions consume increment and are included in the inventory.

When the inventory of incrementconsuming emissions has been compiled, computer modeling is used to determine the change in ambient concentration that will result from these emissions when combined with the proposed emissions increase from the new major source or major modification that is undergoing PSD review. The modeling has generally been guided by the ‘‘ Guideline on Air Quality Models ’’ (40 CFR part 51, Appendix W), which includes provisions on air quality models and the meteorological data input into these models. The model output (expressed as a change in concentration) for each relevant averaging period is then compared to the corresponding allowable PSD
increment.
E. Historical Approaches for Developing

Increments
1. Congressional Enactment of Increments for PM and SO 2

Congress established the first increments defining significant deterioration of air quality in the 1977 Amendments to the Act. These amendments, among other things, added part C to title I, setting out the requirements for PSD. In section 163, Congress included numerical increments for PM and SO 2 for Class I, II, and III areas.

The three area classes are part of the increment system originally established by Congress. Congress designated Class I areas (including certain national parks and wilderness areas) as areas of special national concern, where the need to prevent deterioration of air quality is the greatest. Consequently, the allowable level of incremental change is the smallest relative to the other area classes, i.e., most stringent, in Class I areas. The increments of Class II areas are larger than those of Class I areas and allow for a moderate degree of emissions growth. For future redesignation purposes, Congress defined a ‘‘ Class III ’’ classification to allow the redesignation of any existing Class II area for which a State may desire to promote a higher level of industrial development (and emissions growth). Thus, Class III areas are allowed to have the greatest amount of pollutant increase of the three area classes while still achieving the NAAQS. To date, there have been no redesignations made to establish a Class

III area.

In establishing these PSD increments, Congress used the then-existing NAAQS for those pollutants as the benchmark for determining what constitutes

‘‘ significant deterioration. ’’ Congress established the increments for PM as a percentage of the then-existing PM NAAQS. At the time the Act was amended in 1977, the NAAQS for PM were expressed in terms of ambient concentrations of TSP. Thus, EPA interpreted the statutory increments for PM using the same ambient TSP

‘‘ indicator. ’’

2. EPA’s Promulgation of Increments for
NO 2 and PM 10

Congress also provided authority for EPA to promulgate additional increments and to update the original PM increments created by statute. The EPA has promulgated two regulations pursuant to this authority.

a. Increments for NO 2 Using the

‘‘ Contingent Safe Harbor ’’ Approach Under Section 166(a) of the Act

Based on section 166(a) of the Act, on October 17, 1988, EPA promulgated increments for NO 2 to prevent significant deterioration of air quality due to emissions of NO X (53 FR 40656). The EPA based these increments on percentages of the NAAQS in the same way that Congress derived the statutory increments for PM and SO 2 . Those NO 2 increments were challenged in 1988 by the Environmental Defense Fund (EDF) when EDF filed suit in the U.S. Court of


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5 The term ‘‘ air quality related values ’’ is not defined in the Act, but the legislative history provides language saying that ‘‘ The term ‘air quality related values’ of Federal lands designated as Class I includes the fundamental purposes for which such lands have been established and preserved by the Congress and the responsible Federal agency. For example, under the 1916 Organic Act to establish the National Park Service (16 U.S.C. 1), the purpose of such national park lands ‘is to conserve the scenery and the natural and historic objects and the wildlife therein and to provide for the enjoyment of the same in such manner and by such means as will leave them unimpaired for the enjoyment of future generations.’ ’’ S. Rep. No. 95–127 at 36 (1977). 6 Under the 2005 NO X regulation, states can adopt measures other than increments as long as they can demonstrate that the measures selected comply with the same criteria and goals of sections 166(c) and (d) of the Act that must be met for increments. Appeals for the District of Columbia Circuit against the Administrator ( Environmental Defense Fund, Inc. v. Reilly, No. 88–1882). The EDF successfully argued that we failed to sufficiently consider certain provisions in section 166 of the Act. The court remanded the case to EPA ‘‘ to develop an interpretation of section 166 that considers both subsections (c) and (d), and if necessary to take new evidence and modify the regulations. ’’ See Environmental Defense Fund v. EPA, 898 F.2d 183, 190 (D.C. Cir. 1990) ( EDF

v. EPA ). Section 166(c) of the Act requires the PSD regulations to, among other things, meet the goals and purposes set forth in sections 101 and 160 of the Act. Section 166(d) requires these regulations be at least as effective as the increments established for PM (in the form of TSP) and SO 2 in section 163 of the Act. The court considered the
NO 2 increment values determined using the percentage-of-NAAQS approach as

‘‘ safe harbor ’’ increments which met the requirements of section 166(d) of the Act. However, the court also determined that EPA’s reliance on such increment levels was contingent upon our completing the analyses required under section 166(c), which provided that the final increment values must address the goals of sections 101 and 160 of the Act to protect public health and welfare, parks, and AQRVs 5 and to insure economic growth.

In response to the court’s decision, we proposed rulemaking on increments for
NO 2 on February 23, 2005 (70 FR 8880) and finalized the rule on October 12, 2005 (70 FR 59582). In the final rule, we established our policy on how to interpret and apply the requirements of sections 166(c) and (d) of the Act. In accordance with the court ruling, we conducted further analyses (considering the health and welfare effects of NO X ) and concluded that the existing NO 2 increments were adequate to fulfill the requirements of section 166(c). See 70 FR 59586 for our detailed analysis of how pollutant regulations satisfy the requirements of section 166 of the Act. Hence, we retained the existing NO 2 increments along with other parts of the existing framework of pollutant-specific
NO 2 increment regulations. We also amended the PSD regulations under 40 CFR 51.166 to make it clear that states may seek EPA approval of SIPs that utilize a different approach than EPA used to establish these NO 2 increments. To receive our approval of an alternative program, a State must demonstrate that its program satisfies the requirements of sections 166(c) and 166(d) of the Act and prevents significant deterioration of air quality from emissions of NO X. 6

b. Increments for PM 10 Using

‘‘ Equivalent Substitution ’’ Approach Under Section 166(f) of the Act

On October 5, 1989, we proposed

PM 10 increments. See 54 FR 41218. Although section 163 did not expressly define the existing statutory increments for PM in terms of a specific indicator, EPA reasoned that Congress’ knowledge that TSP was the indicator for the PM NAAQS, and that the TSP standards were the starting point for the increments levels when the increments were established in 1977, meant that TSP was also the appropriate measure for the PM increments in section 163. As a consequence, EPA believed that the statutory PM increments could not simply be administratively redefined as

PM 10 increments, retaining the same numerical values, following the revision of the PM NAAQS. Rather, we stated our belief that with the promulgation of the PM 10 NAAQS, EPA had both the responsibility and the authority under sections 166 and 301 of the Act to promulgate new increments for PM to be measured in terms of PM 10. We further concluded that promulgating

PM 10 increments to replace, rather than supplement, the statutory TSP increments under section 163 represented the most sensible approach for preventing significant deterioration with respect to PM. See 54 FR 41220–

41221.

We promulgated PM 10 increments to replace the then-existing TSP increments on June 3, 1993 (58 FR 31622). In the interim between proposal and promulgation, Congress enacted the 1990 CAA Amendments. As part of these amendments, Congress amended section 166 to add a new section 166(f). This section specifically authorized EPA to substitute PM 10 increments for the existing section 163 PM increments based on TSP, provided that the substituted increments are ‘‘ of equal stringency in effect ’’ as the section 163
increments.

Thus, we were able to replace the TSP increments under section 163 of the Act using PM 10 increments based directly on the newly enacted authority under section 166(f) of the Act. In the PM 10 rule, we maintained the existing baseline dates and baseline areas for PM that had been previously established using the TSP indicator. Also, as proposed, we promulgated PM 10 increments based on an approach we called the ‘‘ equivalent to statutory
increments ’’ approach. Under this approach, we used the original TSP increments as a benchmark for calculating the PM 10 increments, thereby retaining roughly the same limitations on future deterioration of air quality as was allowed under the TSP
increments.

In using this approach, we considered the historical consumption of TSP increment by a sample population of permitted PSD sources, and then determined the PM 10 increments for each area classification and averaging time that would provide approximately the same percentage of PM 10 increment consumption, on average, by the same population of sources. Then, all future calculations of increment consumption after the PM 10 implementation date would be based on PM 10 emissions. See 58 FR 31622 and 31625.

V. Final Action on PM 2.5 Increments

In this section of the preamble, we will summarize the considerations that went into our proposed action and describe the final action being taken regarding new regulations for preventing significant deterioration of

PM 2.5 air quality—including PM 2.5 increments (sections V.A through V.E, baseline dates and other permit requirements for PM 2.5 (section V.F), baseline areas for PM 2.5 (section V.G), and PM 10 increments (section V.H).

A. Decision To Establish PM 2.5 Increments Using ‘‘ Contingent Safe Harbor Approach ’’ Under Section 166(a)

The EPA’s 2007 NPRM contained three options for developing numerical

PM 2.5 increments. Option 1 used the authority of section 166(a) of the Act to establish increments for PM 2.5 as a new pollutant for which NAAQS were established after August 7, 1977, and established 24-hour and annual PM 2.5 increments (Class I, II, and III) based on the ‘‘ contingent safe harbor ’’ approach. Options 2 and 3 used the contingent safe harbor approach under section 166(a) to only develop 24-hour PM 2.5 increments (Class I, II, and III), while using the ‘‘ equivalent substitution ’’


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approach under section 166(f) of the Act to develop annual PM 2.5 increments. Each of these options is discussed in detail in the 2007 NPRM. 72 FR 54123– 54138. In addition, significant comments on each of the three options, and our responses to them, are provided in this section V of this preamble.

In this final rule, after considering the available information and comments from interested parties, EPA has decided to select Option 1 and establish increments for PM 2.5 using the

‘‘ contingent safe harbor ’’ approach in accordance with the authority provided in section 166(a) of the Act.

This final rule establishes increments for PM 2.5 at the following levels:

Averaging period NAAQS ( μ g/m 3 ) Increments ( μ g/m 3 )

Class I Class II Class III

Annual .........................................................................................................................

..... 15 1 4 8
24-hour ........................................................................................................................

..... 35 2 9 18

B. Rationale for the Applicability of Section 166(a)

In the 2007 NPRM, we expressed our belief that it is permissible to interpret section 166(a) to apply to PM 2.5 . Section 166(a) requires EPA to develop regulations to prevent the significant deterioration of air quality due to emissions of certain named pollutants, and to develop such regulations for any pollutants for which NAAQS are subsequently promulgated. Although EPA has generally characterized the NAAQS for PM 2.5 as a NAAQS for a new indicator of PM, EPA did not replace the

PM 10 NAAQS with the NAAQS for

PM 2.5 when the latter NAAQS were promulgated in 1997. Rather, EPA retained the annual and 24-hour PM 10 NAAQS (retaining PM 10 as an indicator of coarse particulate matter), and established new annual and 24-hour NAAQS for PM 2.5 as if PM 2.5 was a new pollutant, even though EPA had already developed air quality criteria for PM generally. Thus, for purposes of section 166(a), the promulgation of a NAAQS for PM 2.5 established a NAAQS for an additional pollutant after 1977.

Nine commenters supported our proposed Option 1, although only three of these explicitly expressed support for the use of section 166(a) authority to promulgate PM 2.5 increments. Ten other commenters specifically opposed the use of section 166(a) authority and/or supported the use of section 166(f) authority (on which the annual increments under Options 2A and 2B were based).

One of the commenters who explicitly agreed with our proposed use of section 166(a) authority stated that it is the only option that is legally available. This commenter asserted that section 166(a) plainly applies to PM 2.5 because PM 2.5 is a pollutant for which NAAQS were promulgated after August 7, 1977. This commenter held that EPA’s rulemaking duty under section 166(a) is not confined to ‘‘ new pollutants, ’’ but is triggered by post-1977 NAAQS promulgations, regardless of whether for new or previously regulated pollutants. On the other hand, this commenter noted that by its terms, section 166(f) is limited to authorizing the adoption of

PM 10 increments as a substitute for the statutory TSP increments and does not provide for substitution of PM 2.5 increments for TSP or PM 10 increments.

The opposing commenters did not believe that section 166(a) provides a legal basis for EPA to promulgate PM 2.5 increments. One of these commenters stated that section 166(a) can only be used for a new pollutant, and PM 2.5 is not a new pollutant.

Another commenter who opposed the use of section 166(a) authority argued that nothing in section 166(a) of the Act can be interpreted to allow it to be used as the basis of increments when EPA revises an existing NAAQS. The commenter explained that, on its face, section 166(a) can only be interpreted to apply to pollutants other than PM and
SO 2 since increments for these pollutants were enacted by Congress in section 163 of the Act. The commenter added that it can be argued that Congress intended to have section 166(a) apply to the four other pollutants specifically listed there.

This commenter found unpersuasive our argument that we are not

‘‘ substituting ’’ increments (as section 166(f) requires for PM 10 ) but rather adding PM 2.5 increments to the existing

PM 10 increments, and that only section 166(a) allows such an approach (72 FR 54121). The commenter asserted that if EPA had defined a coarse fraction to the particulate matter standards, then that fraction, together with the PM 2.5 standards, would form the set of

‘‘ substituted ’’ new standards for the existing PM 10 standards, and, thus, the
increments.

The commenter also disagreed with EPA’s argument that it can treat PM 2.5 as a new pollutant under section 166(a) of the Act since it has been demonstrated that sub-PM 2.5 particles have distinctly different health and welfare effects than the other forms of PM ( i.e., coarse or PM 10 ). The commenter indicated that just as EPA replaced the TSP standards by PM 10 as a better indicator of health effects, ongoing research has led to establishment of the PM 2.5 standards as a better indicator of certain health effects, and it is the natural outcome of such research that has enabled EPA to separate the effect of total particulate matter into two fractions with distinct effects. The commenter added that given that the definition of particulate matter includes a vast conglomeration of solids and liquids, the finding of differing effects should not come as a surprise. The commenter explained that as is the case of different pollutants having similar effects that are, nonetheless, treated as separate pollutants, the same concept should apply to a range or fraction of particulate matter found to have different effects in establishing it as another indicator and not a different pollutant.

The commenter did not disagree with the specific numerical increments proposed by EPA under Option 1, but did have concerns with the potential consequences of the section 166(a) approach. The commenter’s primary concern was the proposal to allow states to substitute other measures in the place of uniform national increments for

PM 2.5 . (This is discussed further in section V.C.5 of this preamble.) Another commenter also expressed this concern.

Another commenter who opposed the section 166(a) approach believes that the legal and congressional history regarding the establishment of PM increments shows that Congress added section 166(f) to the Act based on the conviction that without it, EPA had no authority to revise the PM increments for PM 10 (citing and quoting from S. Rep. No. 228, 101st Cong., 2nd Sess. 75 (1990), reprinted in 1990 U.S.C.C.A.N. 3385, 3461). The commenter concluded that EPA did not have authority in 1987 under section 166(a) to adopt PM 10 increments, and does not have authority now under section 166(a) to adopt PM 2.5 increments.

We read section 166(a) to authorize EPA to promulgate pollutant-specific PSD regulations meeting the


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7 We also believe that we sufficiently described how section 166(f) might provide alternative authority for establishing increments for PM 2.5 (see,

e.g., 72 FR 54120–54121), but will not address that
in detail here because the increments in this rule are not based on section 166(f) authority. requirements of sections 166(c) and 166(d) for any pollutant for which EPA promulgates a NAAQS after 1977. Most of the pollutants identified in section 166(a) (NO X , photochemical oxidants, carbon monoxide) are pollutants for which EPA had established NAAQS in 1977 when Congress adopted section 166 of the Act. There was no need for Congress to list other criteria pollutants,
SO 2 and PM, in section 166(a) because Congress had already established increments for these pollutants in section 163 of the Act. In addition to requiring regulations for the enumerated pollutants, we conclude that under section 166 of the Act Congress intended to authorize EPA to establish additional pollutant-specific PSD regulations, potentially containing increments, for any additional pollutants for which EPA promulgated a NAAQS under section 109 of the Act. Furthermore, because the Act refers to pollutants for which EPA promulgates NAAQS after 1977, and does not use the phrase ‘‘ additional pollutants, ’’ section 166(a) provides authority for EPA to promulgate new increments after revising an existing NAAQS (including NAAQS first promulgated before 1977), when we find that such action is appropriate.

Moreover, any new increments developed pursuant to section 166(a) have no effect on existing increments, as there is no indication therein that an existing increment should be revoked or replaced when additional increments are promulgated. This was the situation following the promulgation of new NAAQS for PM in 1987 when EPA replaced the old NAAQS based on TSP with new ones based on PM 10 . Had Congress not added new section 166(f) in 1990, increments for PM 10 could have been developed pursuant to section 166(a) of the Act, but such increments would have had no effect on the original statutory increments for PM (based on TSP). Consequently, seeing no basis for retaining the original increments, Congress added section 166(f) which explicitly provides for the replacement of the existing increments with PM 10 increments.

One commenter asserted that if EPA establishes increments for PM 2.5 under the authority of section 166(a) on the basis that PM 2.5 is a new pollutant, then it must also establish PM 10 increments under section 166(a) because (according to the commenter’s analysis) PM 10 is also a new pollutant. In the same analysis, the commenter concluded that EPA must adopt new measures to prevent significant deterioration from coarse PM based on section 166(a). In this final rule, EPA is not setting or amending any increments for PM 10 or otherwise taking action with respect to

PM 10 increments. The preexisting
annual and 24-hour increments for PM 10 are being retained. See section V.H. Similarly, EPA is not taking any action with respect to coarse PM in this rule. For these reasons, the commenter’s arguments on what authority must be
used to set increments for PM 10 and/or coarse PM, and that EPA has some obligation to take action with respect to coarse PM, are not on point for this rule. Thus, no substantive response to this comment is needed. Nevertheless, as mentioned earlier, Congress provided explicit authority under section 166(f) of
the Act to address increments for PM 10, because it intended for such increments
to be substitute increments for the original statutory increments for PM measured as TSP. Thus, the PM 10 increments legally supersede the original statutory increments for PM.
Had the PM 10 increments been developed under section 166(a), which prior to the 1990 Act Amendments was the only authority available for developing new increments, then the original statutory PM increments would
have remained in effect in addition to
the PM 10 increments.

One commenter expressed general objections to EPA’s legal rationale for
the PM 2.5 increments proposal, asserting that we failed to expressly state and support our legal authority for the PM 2.5 increments, offering two possible sources of authority ( ‘‘ contingent safe harbor, ’’ ‘‘ equivalent substitution, ’’ or possibly a combination of the two) but never stating our legal position with clarity. The commenter agreed with EPA’s assessment that the PM 2.5 increments should and must fulfill the legal requirements of the Act (72 FR 54121), and added that it is the government’s burden of proof to establish its legal authority for action. The commenter stated that it would be arbitrary and capricious to promulgate these regulations for which EPA has not stated legal authority.

We do not disagree that the 2007 NPRM described two different legal authorities for the two different options for establishing increments, but we disagree that these discussions did not clearly present the alternative legal bases that the Agency was considering for taking action in this rule. In particular, we clearly described our legal authority for developing the 24- hour and annual PM 2.5 increments under section 166(a) of the Act, which is the basis on which we are taking final action in this rule. 7 First, we expressly stated that Option 1 was based on the statutory authority of section 166(a) of the Act. See 72 FR 54123 (Under the first option, ‘‘ we would use the authority of section 166(a) of the Act to develop new increments for PM 2.5 ’’ ). Second, we provided a discussion of this authority both in general ( see 72 FR 54118–54119 and 54120–54123), and how it would be applied to establish increments for

PM 2.5 ( see 72 FR 54119–120 and 54123– 136).

We now believe that section 166(a) provides the most straightforward approach for developing increments for a pollutant or pollutant indicator for which no increments have yet been established. Our position is also consistent with the comments we received which supported the delay in implementation of the PM 2.5 increments, opposed the potential for two sets of definitions for ‘‘ major source baseline date ’’ and ‘‘ trigger date ’’ for the

PM 2.5 increment system, and highlighted the complexities involved with having to establish and maintain two sets of emissions inventories for the 24-hour and annual PM 2.5 increments. ( See further description of relevant comments in section VIII of this section.)
C. EPA’s Interpretation of the Requirements Under Sections 166(a)–(d) of the Act

In section 166(a) of the Act, Congressdirected EPA to develop pollutantspecific regulations to prevent significant deterioration of air quality. Congress further specified that such regulations meet specific requirements set forth in sections 166(c) and 166(d) of the Act. We stated in the 2007 NPRM that because we believed that section 166(a) could be applied to the development of increments for PM 2.5 , we would follow the interpretation of sections 166(a)–(d) that the Agency adopted in its most recent NO 2 increments rule. 70 FR 59582, October 12, 2005. That particular interpretation and application was upheld in Environmental Defense v. EPA, 489 F.3d 1320 (D.C. Cir. 2007).

The EPA’s interpretation of these provisions is grounded on five principles and conclusions. First, we read section 166 of the Act to direct EPA to conduct a holistic analysis that considers how a complete system of regulations will collectively satisfy the


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applicable criteria, rather than evaluating one individual part of a regulatory scheme in isolation. Second,

we use a ‘‘ contingent safe harbor ’’ approach which calls for EPA to first determine an increment that is at least as effective as the increments in section 163 of the Act, as required under section 166(d) and then to conduct further analysis to determine if additional measures are necessary to fulfill the requirements of section 166(c). Third, we interpret section 166(c) of the Act to identify eight statutory factors that EPA must apply when promulgating pollutant-specific regulations to prevent significant deterioration of air quality. Fourth, where these factors are at odds with each other, we interpret the statute to require EPA to use its judgment to balance the conflicting factors. Fifth, we recognize that the requirements of section 166 may be satisfied by adopting other measures besides an increment and that EPA may allow states to demonstrate that alternatives to increments contained in a SIP meet the requirements of sections 166(c) and 166(d). Below is a brief discussion of each of these five principles and conclusions. A more detailed description of each of these is contained in the 2007 NPRM at 72 FR 54121–

54123.
1. Regulations as a Whole Should Fulfill Statutory Requirements

Section 166(a) of the Act directs EPA to develop pollutant-specific regulations to prevent the significant deterioration of air quality. Sections 166(c) and 166(d) provide detail on the contents of those regulations, but do not necessarily require the same type of increment system Congress created in section 163 of the Act. The EPA interprets section 166 to require that the entire system of PSD regulations (the framework and details, as described in section V.D of this preamble) for a particular pollutant must, as a whole, satisfy the criteria in sections 166(c) and 166(d) of the Act.

2. Contingent Safe Harbor Approach

Section 166(c) of the Act describes the kinds of measures to be contained in the regulations to prevent significant deterioration of air quality called for in section 166(a) and specifies that these regulations are to ‘‘ fulfill the goals and

purposes ’’ set forth in sections 160 and 101 of the Act. Section 166(d) of the Act directs EPA to ‘‘ fulfill such goals and

purposes ’’ by providing ‘‘ specific measures at least as effective as the increments established in section 163

* * *. ’’ Thus, EPA reads section 166(d) to require that the Agency identify ‘‘ safe harbor ’’ pollutant-specific PSD regulations adopted under section 166.

The EPA reads section 166(c) to require that the Agency conduct further review to determine whether, based on the criteria in section 166(c), EPA’s pollutant-specific PSD regulations under section 166 should contain measures that are different from the

‘‘ safe harbor ’’ identified under section 166(d). The EPA construes section 166(d) to require that the measures be

‘‘ at least as effective ’’ as the statutory increments set forth in section 163.

To apply the ‘‘ contingent safe harbor ’’ approach for PM 2.5 , we first identified

‘‘ safe harbor ’’ increments for each area classification (Class I, II, or III), using: (1) Equivalent percentages of the NAAQS as the percentages used for developing the statutory increments; (2) the same pollutant as the NAAQS, i.e.,
PM 2.5 , and (3) the same time (averaging) periods as were used for the PM 2.5 NAAQS. We concluded that this approach would ensure that the increments would be ‘‘ at least as effective as the increments established in section 163, ’’ as required by section 166(d). Second, EPA conducted further review to determine whether the ‘‘ safe harbor ’’ increments, in conjunction with existing elements of the PSD program or additional measures proposed under section 166 to augment the increments, sufficiently fulfill the criteria in subsection (c) of section 166.

In this review, we weighed and balanced the criteria set forth in subsection (c) (and, as provided in subsection (c), the incorporated goals and purposes of the Act in section 101 and the PSD program in section 160) to determine whether additional measures might be needed to satisfy the criteria in subsection (c). See section V.E.6 of this preamble for further discussion of our evaluation, comments on the evaluation, and our response to them.

3. The Statutory Factors Applicable Under Section 166(c)

The EPA interprets section 166(c) of the Act to establish eight factors to be considered in the development of PSD regulations for the pollutants covered by this provision. These eight factors included the three criteria stated in section 166(c) and the five goals and purposes identified in section 160 of the Act (which, as noted below, also cover the goals and purposes set forth in section 101). The three stated criteria in section 166(c) indicate that PSD regulations for specific pollutants should provide: (1) Specific numerical measures for evaluating permit applications; (2) a framework for stimulating improved control technology, and (3) protection of air quality values. The five goals and purposes in section 160 are incorporated into the analysis by virtue of the fourth criterion in section 166(c),which directs that EPA’s pollutantspecific PSD regulations ‘‘ fulfill the goals and purposes ’’ set forth in sections 160 and 101 of the Act. We construed the term ‘‘ fulfill the goals and purposes, ’’ as used in section 166(c), to mean that EPA should apply the goals and purposes listed in section 160 as factors applicable to pollutant-specific PSD regulations established under section 166. The Agency’s view is that PSD measures that satisfy the specific goals and purposes of section 160 also satisfy the more general purposes and goals identified in section 101 of the Act. See
72 FR 54122.

One commenter disagreed with our interpretation that the goals and purposes of section 160 also satisfy all of those in section 101. This commenter asserted that although there is some overlap between the two sections, they are not identical. As an example, the commenter noted that section 101 expressly states that a primary goal of the Act is to promote pollution prevention—a goal not stated in section 160. The commenter asserted that, although the proposed increments would limit some pollution increases, there was no provision in the proposal that would require or promote pollution prevention.

We disagree with the commenter and continue to believe that measures that satisfy the specific goals and purposes of section 160 also satisfy the more general purposes and goals identified in section 101 of the Act. As we stated in the 2005 NO 2 increment rulemaking, the overall goals and purposes of the Act listed in sections 101(b) and 101(c) are general goals regarding protecting and enhancing the nation’s air resources and controlling and preventing pollution. Because these broad goals are given more specific meaning in section 160, EPA does not believe it is necessary to consider them in detail when evaluating whether PSD regulations satisfy the criteria in section 166(c). 70 FR 59587

FN 3.

Regarding pollution prevention specifically, we believe that this general goal is encompassed in, and given more specific meaning by, sections 160(1), 160(2), and 160(4) of the Act. These sections spell out the specific purposes under the PSD program for the general section 101 goals of controlling and preventing pollution. We believe that any requirement to limit or reduce emissions serves to promote pollution prevention, which is often the most cost


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effective means of lowering pollutant
emissions.

In addition to citing the purposes set out in section 160, section 166(c)includes the criterion that pollutantspecific PSD regulations should provide a framework for stimulating improved control technology. As discussed subsequently in sections V.D.1 and V.D.6 of this preamble, we believe that this criterion is fulfilled by the system of increments for PM 2.5 and by the requirement for PSD permittees to apply
BACT to minimize PM 2.5 emissions. In stimulating improved control technology generally, these elements of the PSD program also promote pollution prevention. As noted previously, pollution prevention is often the most cost effective means of control, particularly for new sources and new process lines at existing sources. Inaddition, because BACT is a case-bycase determination that considers cost and collateral environmental impacts, pollution prevention, where technically feasible, often fairs well in BACT analyses because it is typically free from the negative environmental impacts that result from the use of add-on air pollution control devices.

4. Balancing the Factors Applicable Under Section 166(c)

While the eight factors in section 166(c) are generally complementary, there are circumstances where some of the objectives may be in conflict with each other. In these situations, some degree of balance or accommodation is inherent in the requirement to establish regulations that satisfy all of these factors. As first discussed in our 2005
NO 2 increments rulemaking (70 FR 59582 at 59587), we believe this balancing test derives primarily from the third goal and purpose set forth in section 160: To insure economic growth consistent with the preservation of existing clean air resources. A more detailed discussion of how the balancing of factors should be interpreted is contained in the 2007

NPRM at 72 FR 54122–54123.

One commenter claimed that EPA

‘‘ incorrectly and repeatedly asserts ’’ that a goal of section 160 of the Act is to insure economic growth. The commenter claimed that neither section 160 nor section 101 of the Act uses language to support a goal of promoting or maximizing opportunities for economic growth. Instead, the commenter asserted that both sections state only that any growth that does occur must be consistent with protection of air quality. The commenter concluded that ‘‘ EPA’s notion that the need to satisfy the other requirements of Section 166 and other goals and purposes in Sections 101 and 160 can never preclude additional emissions from economic growth unlawfully elevates such growth over all other statutory factors. ’’

The language in section 160(3) provides that one of the purposes of the PSD program is ‘‘ to insure that economic growth will occur in a manner consistent with the preservation of existing clean air resources. ’’ The commenter suggests that this language can only be read as if the statutory phrase ‘‘ economic growth ’’ actually said

‘‘ any economic growth that does occur ’’ such that section 160(3) says ‘‘ to insure that any economic growth that does occur will occur in a manner consistent with the preservation of existing clean
air resources. ’’ We disagree; the phrasing used by Congress is ‘‘ to insure that economic growth will occur. ’’ Thus, we believe the plain language of the statute supports EPA’s reading that section 160(3) requires a balancing of the goals of (1) economic growth and (2) preservation of existing clean air resources. At a minimum, if the language were to be considered ambiguous enough to allow the commenter’s reading, then the Agency’s interpretation is also a reasonable reading of the statutory language.

5. Authority for States To Adopt Alternatives to Increments

While section 166 of the Act authorizes EPA to promulgate increments for pollutants listed under section 166(a), we have also interpreted the section to allow states to employ approaches other than increments to prevent significant deterioration of air quality, so long as such an approach otherwise meets the requirements of sections 166(c) and 166(d). This interpretation was explained in the 2005
NO 2 increment rulemaking (70 FR 59611–59612), in which we amended the PSD regulations at 40 CFR 51.166 by adding new paragraph (c)(2) to codify this statutory authority. Under the existing provision in 40 CFR 51.166(c)(2), states may seek EPA approval of SIPs that use an alternative approach to increments if the State can demonstrate that the alternative program satisfies the requirements of sections 166(c) and 166(d). However, the current language at paragraph (c)(2) states the authority for states to adopt alternative measures only with respect to increments for NO 2 . To clarify our interpretation that the authority to adopt alternative measures covers any pollutant listed in section 166(a), we are revising 40 CFR 51.166(c)(2) to make it inclusive to all applicable pollutants rather than just NO 2
.

Two commenters supported our proposal to revise paragraph (c)(2) to include PM 2.5 , while four State/local agency commenters expressed opposition. An environmental commenter agreed that the Act allows for other approaches, but believes that such approaches must be in addition to the national increments. Specifically, this commenter stated that ‘‘ although EPA can provide for states to adopt approaches in addition to increments in order to fulfill the statutory purposes, the agency must make clear that states cannot adopt approaches that are less protective that the national increments. ’’ This commenter further stated that ‘‘ to the extent that EPA is suggesting that it can allow states to adopt PSD programs that do not include the minimum Federal increments, that position is contrary to the statute. ’’

As in the 2005 NO 2 increment rulemaking, we are codifying the basic principle that states can seek to use alternative measures without defining any specific type of alternative program that would be approved or otherwise creating standards beyond the requirements of sections 166(c) and 166(d). Instead, we plan to make determinations on a case-by-case basis when a State submits a specific alternative approach for EPA to approve as part of a SIP. In making those determinations, we will address the specific alternative measures as states propose them to the Agency in light of the requirements of sections 166(c) and 166(d), including whether the alternative program is ‘‘ at least as effective as the increments established in section 163, ’’ as required in section 166(d).

The four State/local agency commenters opposing the revision to 40 CFR 51.166(c)(2) expressed the importance of using uniform national increments for PM 2.5 . One commenter argued that a nationally inconsistent approach to PM 2.5 in attainment areas could result in a patchwork of State PSD regulations—and the exact kinds of economic repercussions that Congress wished to avoid. The same commenterargued that varying incrementequivalent measures could also result in an uneven playing field for industry and could exacerbate difficulties between states experiencing transport problems.

Another opposing commenter was concerned that allowing states to adopt alternatives to increments would likely lead to a ‘‘ mish-mash ’’ of State approaches which defeats the intention of Congress that there be uniformity in PSD rules to avoid economic


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dissimilarities from State to State that could allow interstate competition for industry based upon which State offers the best (least expensive) environmental compliance regulations. Another commenter objected to allowing the use of alternatives to increments by stating
that such alternative allowances
undermine the desired national consistency, and EPA has failed to even identify any Act programs which would benefit from this approach.

While we acknowledge the potential problems identified by the commenters associated with allowing states to adopt alternative approaches to the numerical increments that we are establishing, we also note that section 166(d) expressly gives EPA some latitude in promulgating regulations that will be at
least as effective as the increments in section 163, by stating that such regulations ‘‘ may contain air quality increments, emission density requirements, or other measures. ’’ Thus, EPA is authorized to provide that states may consider alternatives to the
increments established in this rule. That said, the statutory authority is not a blank check for states to do as they please, but enables states to consider options that may provide a meaningful way for them to manage their air
resources within the framework allowed by the statutory PSD requirements.

D. Framework for Pollutant-Specific PSD Regulations for PM 2.5
In the 2007 NPRM, we proposed to apply the same basic framework for pollutant-specific PSD regulations for

PM 2.5 that we used in our 2005 NO 2 increments regulations. Specifically, we proposed adopting an increment and area classification system for PM 2.5 and applying the statutory AQRV review process to PM 2.5 as well. We also
indicated that while some of the factors applicable under section 166(c) are fulfilled by using this type of framework for pollutant-specific PSD regulations under section 166(a) of the Act, this framework of regulations also needs to satisfy the other applicable factors. Thus, the details of our regulations (such as the characteristics of the increments themselves) are important,
and we evaluated the effectiveness of the framework in conjunction with more detailed elements of our regulations. As discussed in the following subsections, we believe our obligations under section 166(c) of the Act are satisfied when the PSD regulations collectively satisfy the factors applicable under 166(c) of the

Act. 1. Increment System An increment-based program satisfies the requirements under 166(c) to provide ‘‘ specific numerical measures against which permit applications may be evaluated. ’’ An increment is the maximum allowable level of ambient pollutant concentration increase that is allowed to occur above the applicable baseline concentration in a particular area. As such, an increment defines

‘‘ significant deterioration. ’’ Establishing an increment system for PM 2.5 will fulfill two of the factors applicable under section 166(c): (1) Providing specific numerical measures to evaluate permit applications, and (2) stimulating improved control technology.

First, under section 165(a)(3) of the Act, a permit applicant must demonstrate that emissions from the proposed construction and operation of a facility ‘‘ will not cause, or contribute to, air pollution in excess of any (A) maximum allowable increase or maximum allowable concentration for any pollutant * * *. ’’ Once the baseline date associated with the application for the first new major stationary source or major modification in an area is established, the new emissions from that source consume a portion of the increment in that area, as do any subsequent emissions increases that occur from any source in the area. When the maximum pollutant concentration increase defined by the increment has been reached, additional PSD permits cannot be issued until sufficient amounts of the increment are ‘‘ freed up ’’ via emissions reductions that may be required by the reviewing authority. Thus, an increment is a quantitative value that establishes a ‘‘ maximum allowable increase ’’ for a particular pollutant. It functions, therefore, as a specific numerical measure that can be used to evaluate whether an applicant’s proposed project will cause or contribute to air pollution in excess of allowable levels.

Increments also satisfy the second factor in section 166(c) by providing ‘‘ a framework for stimulating improved control technology. ’’ Increments establish an incentive to apply improved control technologies in order to avoid violating the increment and to

‘‘ free up ’’ available increment to promote continued economic growth. These control technologies may become the basis of BACT determinations elsewhere, as the technologies become more commonplace and the costs tend to decline.

One commenter stated that, although increments may encourage the use of existing control technologies, EPA has not cited any evidence that increments actually stimulate the development of improved technologies. Moreover, the commenter asserted that even if increments provide the incentive asserted by EPA, any encouragement of improved control technology is wholly incidental and hardly amounts to a

‘‘ framework ’’ whose purpose is to stimulate such technology.

We continue to believe that the total program, encompassing increments and BACT, does provide an appropriate framework to stimulate BACT in such a way that it is not simply ‘‘ wholly incidental, ’’ as the commenter claims. The fact that economic growth in an area must occur within a defined amount of allowable air quality deterioration should logically lead to the application of improved pollution control technology as the amount of deterioration increases, and should not be regarded as an incidental consequence. As stated in the 2007 NPRM, Congress envisioned that the increments they originally established would serve as an incentive: ‘‘ The incremental ceiling should serve as an incentive to technology, as a potential source may wish to push the frontiers of technology in a particular case to obtain greater productive capacity with the limits of the increments. ’’ S. Rep. 95– 127 at 18, 30 (3 LH at 1392, 1404). We, too, believe that as the available increment in an area becomes smaller, and as states try to preserve some of the remaining increments for future growth, it will be necessary to require sources to install more stringent controls in that area. Such levels of control ultimately must be considered in subsequent BACT evaluations in other PSD areas throughout the country. Admittedly, the increasing stringency of control technologies over time, as observed in EPA’s BACT/Lowest Achievable Emission Rate (LAER) Clearinghouse, supports but cannot in itself conclusively demonstrate that the PSD program has already stimulated development of improved control technology; there are undoubtedly a number of factors that could cause such trends. Nevertheless, even the need to require a more stringent BACT determination in only a few PSD areas (due to dwindling increment availability) necessitates consideration of that level of control for all other PSD sources wherever they may decide to locate. In any event, while the commenter generally questions the effectiveness of the increments as an incentive for tightening BACT, they provided no evidence that more stringent BACT is not related to the


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increment system established as an integral part of the PSD program.

2. Area Classifications

In this final rule, EPA is establishing the same three-tiered area classification system for PM 2.5 that is applicable to the increments for NO 2 and other pollutants under the PSD program and the Act. Accordingly, areas that are currently Class I for other pollutants will also be Class I for PM 2.5 and all other areas will be Class II for PM 2.5 unless we redesignate the area based on a request by a State or tribe pursuant to the process in section 164 of the Act and EPA’s regulations at 40 CFR 51.166(g) and 52.21(g).

As explained earlier in section IV.E.1, Class I areas are areas where very clean air is most desirable. In contrast, Class III areas are designed as those areas in which a State wishes to permit the highest relative level of industrial development, and thus allow the largest incremental increase in pollution. Areas that are not especially sensitive and where states have not provided for a higher level of industrial growth are classified as Class II. When Congress established this three-tiered scheme for
SO 2 and PM, it intended that Class II areas be subject to an increment that allows ‘‘ moderately large increases over existing pollution. ’’ H.R. Rep. 95–294, 4
LH at 2609.

Establishing increments at different levels for each of the three area classifications helps to fulfill two of the factors applicable under section 166(c) of the Act. First, establishing the smallest increments in Class I areas helps fulfill EPA’s obligation to establish regulations that ‘‘ preserve, protect, and enhance the air quality ’’ in parks and special areas. Class I areas are primarily the kinds of parks and special areas covered by section 160(2) of the Act. Second, by providing for two additional area classifications with increment levels that are higher but still protective, the area classification system helps satisfy the goal in section 160(3) of the Act that EPA ‘‘ insure that economic growth will occur in a manner consistent with preservation of clean air

resources. ’’ In those areas where clean air resources may not require as much protection, more growth is allowed. By employing an intermediate level (Class II areas) and higher level (Class III areas), this classification scheme helps ensure that growth can occur where it is needed (Class III areas) without putting as much pressure on existing clean air resources in other areas where some growth is still desired (Class II areas). By requesting that EPA redesignate an existing Class II area to Class III, states may accommodate economic growth and air quality in areas where the Class II increment is too small to allow the siting of new or modified sources. The procedures specified by the Act for such a redesignation require a commitment by the State government to create such an area, extensive public review, local government participation in the SIP area redesignation process, and a finding that the redesignation will not result in the applicable increment being exceeded in a nearby Class I or Class II area. See sections 164(a) and (b) of the Act. (No State has yet requested a Class III redesignation.) The EPA believes that the three-tiered classification system has allowed for economic growth, consistent with the preservation of clean air

resources.

However, an area classification system alone may not completely satisfy the factors applicable under section 166(c) of the Act. The increment that is employed for each class of area is also relevant to an evaluation of whether the area classification system achieves the goals of the PSD program. We briefly discuss the characteristics of increments
in section V.E.5.

One commenter took issue with our assessment of the two factors that we believe a classification system helps to fulfill. As discussed previously in section V.C.4, the commenter asserted that EPA has unlawfully interpreted section 160(3) of the Act to elevate economic growth over all other statutory factors. As explained in greater detail in section V.C.4, we disagree that our interpretation elevates economic growth over other factors, and believe that the plain language of the statute supports EPA’s reading that section 160(3) requires a balancing of the goals of (1) economic growth and (2) preservation of existing clean air resources.

The commenter also stated that EPA has failed to demonstrate that the classification system and safe harbor increments, in combination with the other elements of the regulatory framework, will ‘‘ preserve, protect, and enhance the air quality ’’ in parks and special areas as required under section 160(2) of the Act. These comments and our response to them are found in section V.E.6 of this preamble where we discuss our evaluation of the safe harbor
increments.
3. Permitting Procedures

Two of the factors applicable undersection 166(c) are fulfilled by the caseby-case permit review procedures that are built into our existing PSD regulations. The framework of our existing PSD regulations employs the preconstruction permitting system and procedures required under section 165 of the Act. These requirements are generally reflected in 40 CFR 51.166 and 52.21 of EPA’s PSD regulations. These permitting and review procedures, which apply to construction of new major sources and to major modifications, fulfill the goals set forth in sections 160(4) and 160(5) of the Act. These goals require that PSD programs in one State not interfere with the PSD programs in other states and that PSD programs assure that any decision to permit increased air pollution is made after careful evaluation and public participation in the decision-making process. For the same reasons discussedin our proposal for the pollutantspecific NO 2 increments regulations (70 FR 8896, February 23, 2005), we believe these factors are also fulfilled for PM 2.5 by employing the permit review procedures.

4. AQRV Review by Federal Land Manager and Reviewing Authority

In this final rule, we apply the existing requirements to evaluate impacts on AQRVs in Class I areas ( see existing 40 CFR 51.166(p) and 52.21(p))

to PM 2.5. The existing requirements for an AQRV review, which Congress applied to SO 2 and TSP, provide Federal land managers (FLMs) with the responsibility to review source impacts on site-specific AQRVs in Class I areas and to bring any alleged adverse impacts to the attention of the reviewing authority. Under an increment approach, we consider this review to be an additional measure that helps satisfy the factors in sections 166(c) and 160(2) which require EPA’s pollutant-specific PSD regulations to protect (1) air quality values, and (2) parks and other special areas, respectively.

Two State/local agency commenters supported our proposal to apply the requirements to evaluate impacts on AQRV in Class I areas to PM 2.5 review. However, one commenter indicated that FLM review does not and cannot assure the prevention of all significant PM 2.5 - related deterioration because it applies only to the construction or modification of very large stationary sources ( e.g., factories and power plants) affecting Class I areas. This commenter pointed out that Class I areas do not include Bureau of Land Management wilderness and wilderness study areas (encompassing more than 15 million acres), 341 of the nation’s 390 national park units (only 49 national parks are Class I), and many U.S. Forest Service lands (including a number of wilderness areas). The commenter added that FLM


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8 Even if such a waiver of the Class I increment is allowed upon a finding of no adverse impact, the source must comply with such emissions limitations as may be necessary to ensure that alternative increments specified in the rules for SO 2 or PM are not exceeded. The alternative increments are generally at the level of the Class II increments, with the lone exception being a more restrictive 3-
hour increment for SO 2 . Section 165(d)(2)(C)(iv). The EPA made this provision applicable to the PSD provisions for NO X at the level of the NO 2 Class II increment (53 FR 3704; 53 FR 40656) and
substituted the PM 10 Class II increments for the statutory alternative PM increments, which were based on TSP (58 FR 31622). This final rule expands this provision to include the PM 2.5 Class
II increments as well. See 40 CFR 51.166(p)(4) and 52.21(p)(5).

9 In response to concerns that Class I increment would hinder growth in areas surrounding the Class I area, Congress established Class I increments as a means of determining where the burden of proof
should lie for a demonstration of adverse effects on AQRVs. See Senate Debate, June 8, 1977 (3 LH at 725). 10 See S. Rep. 95–127, at 12, reprinted at 3 LH at 1386, 1410 (describing the goal of protecting ‘‘ air quality values ’’ in ‘‘ Federal lands—such as national parks and wilderness areas and international parks, ’’ and in the next paragraph and subsequent text using the term ‘‘ air quality related values ’’ to describe the same goal); id. at 35, 36 ( ‘‘ The bill charges the Federal land manager and the supervisor with a positive role to protect air quality
values associated with the land areas under the jurisdiction of the [FLM] ’’ and then describing the statutory term as ‘‘ air quality related values ’’ ). H.R. Report 95–564 at 532 (describing duty of
Administrator to consider ‘‘ air quality values ’’ of the tribal and State lands in resolving an appeal of a tribal or State redesignation, which is described in
the final bill as ‘‘ air quality related values ’’ ). review does not help to fulfill section 160(2)’s goal of preserving and protecting air quality in ‘‘ other areas of special national or regional natural, recreational, scenic, or historic value, ’’ such as State and local parks, wildlife refuges, recreation areas, lakes, and historic areas, none of which are Class I areas. In addition, the commenter noted that FLM review does not apply to emissions increases from sources of

PM 2.5 and precursor pollution other than major stationary sources, such as motor vehicles and non-major industrial sources (which are sources that emit substantial amounts of PM 2.5 and precursors). Alabama Power v. Costle, 636 F.2d 323, 362 (D.C. Cir. 1979) ( Alabama Power ) (expressly recognizing that ‘‘ [s]ignificant deterioration may occur due to increased emissions from unregulated minor sources. ’’ ).

The commenter also asserted that FLM review is of limited reach even where it does apply. Under the current PSD regulations, a State must consider an FLM’s objections and must justify its decision in writing when it disagrees with those objections, but the State can still issue a PSD permit over those objections unless emissions are predicted to cause an exceedance of the applicable increment. The commenter believes that, given these limitations, EPA cannot plausibly claim that the existing provision for FLM review ensures the preservation, protection, and enhancement of air quality for parks and natural areas throughout the nation as required by section 160(2) of the Act.

In our rulemakings addressing PSD for NO X , EPA extended the AQRV review procedures set forth in 40 CFR 51.166(p) and 52.21(p) to cover NO 2
. These AQRV review procedures were established based on section 165(d) of the Act, and they were originally applied only in the context of the statutory increments for PM and SO 2
. However, because they also address many of the factors applicable under section 166(c) of the Act, EPA also applied them to NO X through regulation. In this final rule, we are amending the existing PSD regulations to extend, as proposed, the AQRV review procedures to include PM 2.5 by explicitly including PM 2.5 in the regulatory text that now simply references ‘‘ particulate matter. ’’ See new 40 CFR 51.166(p)(4) and 52.21(p)(5).

Section 165(d) creates a scheme in which the FLM and reviewing authority must review the impacts of a proposed new or modified source’s emissions on AQRVs. The Act assigns to the FLM an

‘‘ affirmative responsibility ’’ to protect the AQRVs in Class I areas. This is in notable contrast to the reviewing authority’s responsibility for protecting the increments—including Class I increments. The FLM may object to or concur in the issuance of a PSD permit based on the impact, or lack thereof, that new emissions may have on any affected AQRV that the FLM has identified and for which information is available to the general public. If the proposed source’s emissions are shown not to cause or contribute to a violation of a Class I increment, the FLM may still prevent issuance of the permit by demonstrating to the satisfaction of the reviewing authority that the source or modification will have an adverse impact on AQRVs. Section 165(d)(2)(C). On the other hand, if the proposed source is shown to cause or contribute to a violation of a Class I increment, the reviewing authority (State or EPA) shall not issue the permit unless the owner or operator demonstrates to the satisfaction of the FLM that there will be no adverse impact on AQRVs. 8 Thus, the showing of compliance with the increment determines whether the FLM or the permit applicant has the burden of satisfactorily demonstrating whether or not the proposed source’s emissions would have an adverse impact on AQRVs. 9 In any event, the FLM plays an important and material role by raising these issues for consideration by the reviewing authority, which in the majority of cases will be the State.

Extending the AQRV review procedures of the PSD regulations to

PM 2.5 helps to provide protection with respect to potential adverse effects from

PM 2.5 for parks and special areas (which are generally the Class I areas subject to this review) not afforded by the increment system alone. As discussed later, we believe the factors applicable under section 166(c) of the Act can be fulfilled when the review of AQRVs is applied in conjunction with increments and other aspects of our PSD regulations. In those cases where the increment is not violated and the reviewing authority agrees that a proposed project will adversely affect AQRVs, the parks and other special areas will be protected by denying issuance of the permit or by requiring the applicant to modify the project to alleviate the adverse impact.

We read the legislative history to show that Congress intended the AQRV review provisions of section 165(d) to provide a special layer of protection, beyond that provided by increments. The Senate committee report stated the following:

A second test of protection is provided in specified Federal land areas (Class I areas), such as national parks and wilderness areas; these areas are also subjected to a review process based on the effect of pollution on the area’s air quality related values. ’’
S. Rep. 95–127, at 17, 4 LH at 1401.

As we stated in the NO 2 increment rule, we believe the term ‘‘ air quality values ’’ should be given the same meaning as ‘‘ air quality related values. ’’ Legislative history indicates that the

term ‘‘ air quality value ’’ was used interchangeably with the term ‘‘ air quality related value ’’ (AQRV) regarding Class I lands. 10

The commenter is correct that the FLM (or AQRV) review applies only to Class I areas, and not to other ‘‘ special ’’ areas such as the numerous State and local parks and some other areas that could be seen as being covered by the protective purposes of section 160(2) of the Act. This level of coverage by FLM review to protect AQRVs was established by Congress when it enacted the PSD program, including the purposes set out in section 160(2). Thus, we conclude that Congress believed that the special areas not designated as Class I areas were properly addressed by the other elements of the PSD program. As discussed further in the next section, one such element is the requirement for sources to conduct an ‘‘ additional impacts analysis, ’’ which includes an


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analysis of the impacts on visibility, soils, and vegetation of the proposed source and associated growth, regardless of the classification of the area impacted by the source. Note also that states have the option under the Act of designating additional areas as Class I areas and providing for AQRV review for these State Class I areas if they believe that there are areas within their borders that merit such protection.

The commenter is not correct in saying that the review to protect AQRVs does not apply to emissions increases from sources other than major stationary sources. While it is generally true that a major stationary source may trigger the analysis as part of the required PSD review for new major stationary sources and major modifications where such source’s emissions increase may affect a Class I area, the review itself includes the impacts on an AQRV of other emissions in the area, including emissions from non-major sources. In addition, states may adopt requirements in their State implementation plans to require certain minor sources seeking a permit to undergo an AQRV analysis if they choose to do so.

We agree with the commenter that the AQRV review has certain limitations in that a State can, under some circumstances, issue a PSD permit over the objection of the FLM. Here again, Congress enabled this outcome when it provided that a permit would not be issued when the FLM demonstrates ‘‘ to the satisfaction of the State ’’ that the source will have an adverse impact on AQRVs in a Class I area. Section 165(d)(2)(C)(ii). We read this provision to reflect Congress’s judgment on the appropriate balance between State and FLM discretion in the reach of AQRV review. That said, when a reviewing authority declines to follow a determination of adverse impact by the FLM, the reviewing authority is expected to provide a rational basis for doing so, and a reviewing authority’s rejection of an FLM’s finding may not be arbitrary and capricious. As stated by EPA’s Environmental Appeals Board in In the Matter of: Hadson Power 14— Buena Vista, 4 E.A.D. 258, 1992 WL 345661 (October 5, 1992)(in Section II.A):

States do not have unfettered discretion to reject an FLM’s adverse impact
determination. If a State determines that an FLM has not satisfactorily demonstrated an adverse impact on AQRVs from the proposed facility, the State must provide a ‘‘ rational
basis ’’ for such a conclusion, ‘‘ given the FLMs’ affirmative responsibility and expertise regarding the Class I areas within their jurisdiction. ’’ 50 FR 28549, July 12, 1985. Arbitrary and capricious rejections of adverse impact determinations are not sustainable. (citations omitted).

In sum, the commenter correctly enumerated some of the limitations of the AQRV review under the Act. However, such review is only one element of the full PSD program, which must be evaluated against the statutory requirements in their entirety. We continue to believe, as previously stated, that under an increment approach, FLM review for AQRV impacts is an additional measure that helps satisfy the factors in sections 166(c) and 160(2) of the Act (which require EPA’s pollutant-specific PSD regulations to protect (1) air quality values, and (2) parks and other special areas, respectively) in balance with the other statutory factors. We add that the AQRV review requirements of the existing regulations mirror these requirements in the Act, which reflect Congress’ judgment of how AQRV review should properly be used to promote the purposes of the program as set out in section 160 of the Act.

5. Additional Impacts Analysis

The ‘‘ additional impacts analysis ’’ requirements set forth in our part 51 and 52 PSD regulations also help fulfill the criteria and goals and purposes in sections 166(c) and 160. The additional impacts analysis involves a case-by-case review of potential harm to visibility, soils, and vegetation in Class II and III areas that could occur from the construction or modification of a PSD

source.

Sections 51.166(o)(1) and 52.21(o)(1) of the PSD regulations require that a permit provide the following analysis:

An analysis of the impairment to visibility, soils and vegetation that would occur as a result of the source or modification and general commercial, residential, industrial and other growth associated with the source or modification. The owner or operator need not provide an analysis of the impact on vegetation having no significant commercial or recreational value.

This requirement was based on section 165(e)(3)(B) of the Act, which provides that EPA establish regulations that require ‘‘ an analysis of the ambient air quality, climate and meteorology, terrain, soils and vegetation, and visibility at the site of the proposed major emitting facility and in the area potentially affected by emissions from such facility * * *. ’’

As mentioned in the previous section, one commenter argued that the provisions for protection of Class I areas are of no help in fulfilling the goal set forth in section 160(2) of the Act to preserve and protect air quality in the countless ‘‘ other areas of special national or regional natural, recreational, scenic, or historic value ’’ such as State and local parks, wildlife refuges, recreation areas, lakes and historic areas, none of which were originally defined by Congress as Class

I areas.

We acknowledge that the special provisions for protecting Class I areas are not applicable for protecting areas that are not designated as ‘‘ Class I. ’’ However, we believe that the

‘‘ additional impacts analysis ’’ provisions are especially helpful for satisfying the requirements of section 166(c) in Class II and Class III areas, including the types of areas described by the commenter, that are not Class I areas but are worthy of special protection beyond what might be provided by the NAAQS and increments. 40 CFR 51.166(o) and 52.21(o). These areas are not subject to the special AQRV review that applies only in Class I areas. While the additional impacts analysis is not as intensive a review as the AQRV analysis required in Class I areas, the requirement to consider impairments to visibility, soils, and vegetation through the additional impacts analysis contributes to satisfying the factors applicable under section 166(c) of the Act in all areas, including Class II and Class III areas.

6. Installation of BACT

The requirement that new sources and modified sources subject to PSD apply BACT is an additional measure that helps to satisfy the factors in sections 166(c), 160(1), and 160(2) of the Act. This requirement, based on section 165(a)(4) of the Act, is already included in EPA’s PSD regulations for all pollutants generally and thus, in the 2007 NPRM we considered it to be a part of the regulatory framework for the Agency’s pollutant-specific regulations for PM 2.5 . 40 CFR 51.166(j) and 52.21(j). Our existing regulations define ‘‘ best available control technology ’’ as ‘‘ an emission limitation * * * based on the maximum degree of reduction for each pollutant subject to regulation under the Act * * * which the Administrator, on a case-by-case basis, taking into account energy, environmental, and economic impacts and other costs, determines is achievable for such source through application of production processes or available methods, systems, and techniques * * *. ’’ 40 CFR 51.166(b)(12) and 52.21(b)(12). This pollutant control technology requirement, in practice, has required significant reductions in the pollutant emissions increases from new and modified sources while also stimulating the on-going improvement of control


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11 We have paraphrased these factors here and in other sections to facilitate the explanation of our reasoning. However, we recognize, as we did in our regulation for NO X , that the statutory language is broader than the shorthand we use here for

convenience.

12 Note that the PM 10 increment may still be more limiting in areas where much of that increment has already been consumed. 13 The 24-hour PM 2.5 NAAQS (35 μ g/m 3 ) is about 23 percent of the 24-hour PM 10 NAAQS (150 μ g/

m 3 ). technology. The control of PM 2.5 emissions through the application of BACT helps to protect air quality values, public health and welfare, and parks and other special areas.

E. Final PM 2.5 Increments

Based on our evaluation of the effects of PM 2.5 and a balancing of the criteria in section 166(c) of the Act (and the incorporated goals and purposes of the Act contained in section 101 and the statutory PSD program in section 160 of the Act), EPA has concluded that the

‘‘ safe harbor ’’ increments for PM 2.5 (which satisfy section 166(d) of the Act) are sufficient to fulfill the criteria in section 166(c) when combined with the other measures described earlier that we apply to PM 2.5 . Since several of the eight factors applicable under section 166(c) are satisfied by adopting the framework and other measures described earlier, our development of these increments for

PM 2.5 was guided by the four remaining factors that may not be fully satisfied by the framework and other measures: (1) Protecting AQRVs; (2) protecting the public health and welfare from reasonably-anticipated adverse effects; (3) protecting the air quality in parks and special areas, and (4) insuring economic growth. 11 In accordance with the ‘‘ contingent safe harbor ’’ approach, to determine the specific characteristics of the proposed increments, we first established safe harbor increments representing the level of effectiveness necessary to satisfy the ‘‘ at least as
effective as ’’ requirement in section 166(d) of the Act and then conducted further analysis to determine if additional measures are necessary to fulfill the requirements of section 166(c).

1. Identification of Safe Harbor

Increments

Using the percentage-of-NAAQS approach under proposed Option 1, as explained in section V.C.2 of this preamble, we derived the following safe
harbor increments for PM 2.5 :

Averaging period NAAQS ( μ g/m 3 ) Increments ( μ g/m 3 )

Class I Class II Class III

Annual .........................................................................................................................

..... 15 1 4 8
24-hour ........................................................................................................................

..... 35 2 9 18

The table shows PM 2.5 NAAQS levels (primary and secondary NAAQS) at 15

μ g/m 3 for the annual averaging time and

35 μ g/m 3 for the 24-hour averaging time.
See 40 CFR 50.7. From these NAAQS levels, we calculated the safe harbor increments based on the same percentages that were used by Congress to establish the original PM increments (measured as TSP) in section 163 of the Act, i.e., 6.6 percent of the NAAQS for Class I areas, 25 percent of the NAAQS for Class II areas, and 50 percent of the NAAQS for Class III areas. We have concluded that increments with these characteristics are sufficient to satisfy the requirement in section 166(d) that we adopt increments (or other PSD regulations) that are ‘‘ at least as effective

as ’’ the increments established in section 163 of the Act. See EDF v. EPA, 898 F.2d at 188, 190.

Nine commenters supported proposed Option 1, either explicitly or implicitly supporting our method of calculating the safe harbor increments used to develop increments for PM 2.5 . One of these commenters, while agreeing with the safe harbor increment approach under Option 1, disagreed with our analysis of the adequacy of the safe harbor increments, as discussed in other sections of this preamble. One commenter who opposed Option 1 (based on the belief that section 166(a) of the Act is not the appropriate basis for PM 2.5 increments) nevertheless supported the percentage-of-NAAQS approach for developing PM 2.5 increments under the statutory authority at section 166(f).

A commenter who opposed our proposal to calculate increments using percentages of the NAAQS argued that this approach for setting the PM 2.5 increments is not scientifically supported. This commenter indicated that basing the PM 2.5 increments on the same percentage of the NAAQS that were used to set PM 10 increments based on the TSP NAAQS ignores the relationship between PM 10 and PM 2.5 emissions, which may be much different than the relationship between TSP and

PM 10 emissions. The commenter argued that, because the ratio of PM 2.5 to PM 10 emissions is 0.8, it appears that using the percentages proposed by EPA would indirectly restrict PM 10 /TSP emissions and air quality impacts to proportionally lower levels than the

PM 10 increments in order to avoid exceeding the PM 2.5 increments. The commenter conceded that using the 0.8 factor to set PM 2.5 increments may seem too high, but asserted that using the safe harbor approach would set increments for PM 2.5 that are too low.

We conclude that the commenter is mistaken in saying that the PM 2.5 increments use the same percentage of the NAAQS that were used to set the

PM 10 NAAQS. We adopted the PM 10 increments using the ‘‘ equivalent substitution ’’ approach set forth under section 166(f) of the Act. Under that approach, rather than calculating the

PM 10 increments as specific percentages of the PM 10 NAAQS (using the same percentages that Congress used for setting the statutory increments for PM and SO 2 ), EPA determined the levels of the PM 10 increments that could represent an equivalent amount of increment consumed, as if the TSP increments were still in effect. See 58 FR 31622, June 3, 1993, at 31626–31627. Nevertheless, the commenter is correct that, in cases where the ratio of PM 2.5 to
PM 10 emissions is 0.8 for an individual source, the source may have to reduce
its PM 10 emissions more than would otherwise be necessary to meet the PM 10 increments in order to control its PM 2.5 emissions sufficiently to meet the safe harbor PM 2.5 increments. 12 This is because the safe harbor PM 2.5 increments are less than 80 percent of the PM 10 increments. For example, the Class II 24-hour PM 2.5 safe harbor increment (9 μ g/m 3 ) is only 30 percent of the corresponding PM 10 increment (30 μ g/m 3 ).

The underlying reason that the safe harbor PM 2.5 increments are so much less than the PM 10 increments is that the

PM 2.5 NAAQS are much less than the

PM 10 NAAQS. 13 This is the result of the evolution in our knowledge about the health and welfare effects of PM, in particular the effects of the fine PM


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14 The review completed in 2006 updated the previous review, which began in 1994 and resulted
in revised standards for PM in 1997. represented by PM 2.5 . We believe that it is fitting for PM 2.5 increments to reflect our greater knowledge about PM 2.5 effects (as embodied in the NAAQS), rather than to simply maintain the control level required by the PM 10 increments as suggested by the commenter. If this results in PM 2.5 increments that are more limiting than

PM 10 increments, we believe that this outcome is appropriate in light of our statutory requirement to prevent significant deterioration of air quality as it relates to PM 2.5
. 2. Data Used by EPA for the Evaluation of the Safe Harbor Increments for PM 2.5

We evaluated whether measures other than the safe harbor increments are necessary by analyzing primarily the scientific and technical information on the health and welfare effects of PM 2.5 contained in the June 2005 OAQPS Staff Paper which accompanied the last full review of the PM NAAQS completed in

2006. 14

Section 166(a) of the Act provides that EPA establish pollutant-specific PSD regulations, such as increments, after the establishment of a NAAQS for the applicable pollutants. The Act provides that EPA will promulgate new PSD regulations under section 166, including new increments if appropriate, within 2 years from the promulgation of any NAAQS after 1977. Within that time frame, the health and welfare information used for the setting of the NAAQS would also be ‘‘ current ’’ forpurposes of establishing pollutantspecific PSD regulations. We believe this timing reflects congressional intent that EPA consider the same body of information concerning a pollutant’s health and welfare effects when it promulgates the NAAQS and subsequent PSD increments (or other measures) defining significant air quality deterioration for the same pollutant. However, when we used that same information as the basis for our proposed pollutant-specific PSD regulations, we evaluated that information under the legal criteria in section 166 of the Act rather than the criteria in section 109 applicable to the promulgation of NAAQS. See EDF v. EPA, 898 F.2d at 190.

At the time of our proposal of PM 2.5 increments, we had just completed a review of the PM 2.5 NAAQS. Thus, the information used in the NAAQS review was current and timely for purposes of establishing pollutant-specific PSD regulations for PM 2.5 . On October 17, 2006, based primarily on considerable new data on the air quality and human health effects for PM 2.5 directly, EPA revised the primary and secondary NAAQS to provide increased protection of public health and welfare by retaining the level of the annual standard and tightening the level of the 24-hour standard from 65 to 35 μ g/m 3 while retaining the 24-hour PM 10 NAAQS and revoking the annual PM 10 NAAQS. The information contained in both the 2004 Criteria Document and 2005 Staff Paper that was used for the latest review of the PM NAAQS was also considered for the purpose of evaluating the PM 2.5 increments that we have established in this final rule.

The 2004 Criteria Document and 2005 Staff Paper are the products of a rigorous process that is followed to validate and interpret the available scientific and technical information, and provided the basis for recommending the PM 2.5 NAAQS. In accordance with the Act, the NAAQS process begins with the development of

‘‘ air quality criteria ’’ under section 108 for air pollutants that ‘‘ may reasonably be anticipated to endanger public health or welfare ’’ and that come from

‘‘ numerous or diverse ’’ sources. Section 108(a)(1). For each NAAQS review, the Administrator must appoint ‘‘ an independent scientific review committee composed of seven members of the National Academy of Sciences, one physician, and one person representing State air pollution control agencies, ’’ known as the Clean Air Scientific Advisory Committee (CASAC). Section 109(d)(2)(A). The CASAC is charged with recommending revisions to the criteria document and NAAQS, and advising the Administrator on several issues, including areas in which additional knowledge is required to appraise the adequacy and basis of existing, new, or revised NAAQS. Section 109(d)(2)(B),(C).

‘‘ Air quality criteria ’’ must reflect the latest scientific knowledge on ‘‘ all identifiable effects on public health or welfare ’’ that may result from a pollutant presence in the ambient air. Section 108(a)(2). The scientific assessments constituting air quality criteria generally take the form of a ‘‘ criteria document, ’’ a rigorous review of all pertinent scientific studies and related information. The EPA also develops a

‘‘ staff paper ’’ to ‘‘ bridge the gap ’’ between the scientific review and the judgments the Administrator must make to set standards. See Natural Resources Defense Council v. EPA ( ‘‘ NRDC ’’ ), 902 F.2d 962, 967 (D.C. Cir. 1990). Both documents undergo extensive scientific peer review as well as public notice and

comment. See, e.g., 62 FR 386542.
3. Scope of Effects Considered

The effects of ambient PM 2.5 concentrations may include effects from secondarily-formed PM 2.5 . Thus, when we analyzed the data in this rulemaking, we evaluated the health and welfare effects of both direct PM 2.5 and secondarily-formed PM 2.5 that may result from the transformation of other pollutants such as SO 2 and NO X . This was consistent with the approach we described for addressing these effects in the review of our pollutant-specific NO 2 increments regulations. 70 FR 59590.

4. Evaluation of the Health and Welfare Effects of PM 2.5

Airborne PM is not a specific chemical entity, but rather is a mixture of liquid and solid particles from different sources and of different sizes, compositions, and properties. Particle size distributions show that atmospheric particles exist in two classes: Fine particles and coarse particles. The indicator for fine particles is PM 2.5 , which represents that population of particles that is mostly less than 2.5 micrometers in size. The indicator for thoracic coarse particles is ‘‘ PM 10–2.5 , ’’ which represents particles sized between 2.5 and 10 micrometers. In the last two reviews of the PM NAAQS, EPA concluded that these two indicators, because of their different sources, composition, and formation processes, should be treated as separate subclasses of PM pollution for purposes of setting ambient air quality standards.

Fine PM is derived directly from combustion material that has volatilized and then condensed to form primary PM or from precursor gases, such as SO 2 and NO X , reacting in the atmosphere to form secondary PM. Major components of fine particles are sulfates, strong acid, ammonium nitrate, organic compounds, trace elements (including metals), elemental carbon, and water. Primary and secondary fine particles have long lifetimes in the atmosphere (days to weeks) and travel long distances (hundreds to thousands of kilometers). They tend to be uniformly distributed over urban areas and larger regions, especially in the eastern United States. As a result, they are not easily traced back to their individual sources.

a. Health Effects

The EPA reported important progress since the last PM NAAQS review in advancing our understanding of potential mechanisms by which ambient

PM 2.5 , alone and in combination with other pollutants, is causally linked to a


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15 It should be noted, however, that an increment does not allow air pollution levels in an area to increase beyond the ambient concentration of a pollutant that would exceed the level allowed by the NAAQS. number of key health effects. The more extensive and stronger body of evidence used by EPA to study the health effects of PM 2.5 in our latest review identified a broader range of effects than those previously documented, involving premature mortality and indices of morbidity (including respiratory hospital admissions and emergency room visits, school absences, work loss days, restricted activity days, effects on lung function and symptoms, morphological changes, and altered host defense mechanisms) associated with both long-term and short-term exposure

to PM 2.5 . A more detailed discussion of the health effects associated with PM 2.5 is contained in the 2007 NPRM. 72 FR 54127–54128. In addition, an overview of the scientific and technical evidence considered in the 2004 Criteria Document and 2005 Staff Paper can be found in our proposed rule for revising the NAAQS for PM (71 FR 2619, January 17, 2006).

b. Welfare Effects

Ambient PM alone, and in combination with other pollutants, can have a variety of effects on public welfare. While visibility impairment is the most noticeable effect of fine particles present in the atmosphere, both fine and coarse particles can have other significant welfare-related effects, including effects on vegetation and ecosystems, materials ( e.g., soiling and corrosion), and climate change

processes.

In reaching our decision in 2006 to revise the suite of PM secondary standards, EPA factored in several key conclusions from the scientific and technical information contained in the 2004 Criteria Document and 2005 Staff Paper. These conclusions included the following: (1) PM-related visibility impairment is principally related to fine particle levels, and most directly related to instantaneous levels of visual air quality associated with short-term averaging periods; (2) PM 2.5 concentrations can be used as a general surrogate for visibility impairment in urban areas; (3) any secondary NAAQS for visibility protection should be considered in conjunction with the regional haze program as a means of achieving appropriate levels of protection against PM-related visibility impairment in urban, non-urban, and Class I areas nationwide; (4) the available evidence is not sufficient to support distinct secondary standards forfine or coarse particles for any nonvisibility related welfare effects; and (5) the secondary standards should be considered in conjunction with protection afforded by other programs intended to address various aspects of air pollution effects on ecosystems and vegetation, such as the acid deposition program and other regional approaches to reducing pollutants linked to nitrate or acidic deposition.

In this rulemaking, EPA has reviewed the scientific and technical information concerning welfare related effects considered in the 2004 Criteria Document and 2005 Staff Paper to determine whether there is any basis for modifying the safe harbor increments developed for PM 2.5 to satisfy the criteria under sections 166(c) and 160 of the Act. Our review included information on visibility impairment, and effects on vegetation and other ecosystem components, materials and soiling, and climate changes. A detailed discussion of the various welfare effects we considered for evaluating the safe harbor increments for PM 2.5 is contained in the 2007 NPRM. 72 FR 54128–54133.

5. Fundamental Elements of Increments

As we have previously noted, under the model established in the Act and prior EPA regulations, the function of an increment is not like that of the NAAQS in that an increment is not intended to set a uniform ambient pollutant
concentration ‘‘ ceiling ’’ across the United States. See 70 FR 59600. Instead, while both increments and NAAQS generally serve to limit ambient air pollution levels, increments are designed to allow a uniform amount of pollutant concentration increase for each area in the United States having a particular classification, i.e., Class I, II, or III. The amount of the allowable increase is measured against a baseline air quality level that is typically different for each particular area. 15 Because the baseline air quality level varies from one location to another, and is not established for a particular area until a source proposing to construct in that area submits a complete PSD permit application, it is not possible to determine what the maximum ambient pollutant concentration attainable will be for a given area (to be used to determine the protection afforded by an increment against potential adverse environmental effects) until the specific baseline air quality level is known.

For the reasons described in our NO 2 increments rule, our objective is to establish uniform increments, consistent with the increments for SO 2 and PM originally established by Congress, that allow the same level of deterioration for each area of the country having the same classification. 70 FR 59601. It is important to understand that increments are not intended to reduce ambient concentrations of an air pollutant below existing baseline levels in each area, but rather to define a level of allowable increase in pollutant concentrations above baseline levels, and to identify the level at which ‘‘ significant ’’ deterioration occurs for each area, in accordance with its specific classification. 70 FR 59600.

6. Evaluation of the Safe Harbor

Increments

As indicated earlier (in section V.E.2 of this preamble), mindful of the considerations made about the fundamental characteristics of the increments, we reviewed the scientific and technical evidence available for the 2005 review of the NAAQS for PM in order to determine whether, and to what extent, the ‘‘ safe harbor ’’ increments might need to be modified in order to protect air quality values, health and welfare, and parks while insuring economic growth consistent with the preservation of clean air resources in accordance with sections 166(c) and 160 of the Act. As we did in our evaluation of the safe harbor NO 2 increments (70 FR 59603–59606), we relied on an approach that evaluates how protective the safe harbor PM 2.5 increments are by comparing the marginal pollutant concentration increases allowed by the safe harbor increment levels against the pollutant concentrations at which various environmental responses occur.

We analyzed the available evidence from both a quantitative and qualitative perspective to reach a decision about whether we should modify the contingent safe harbor PM 2.5 increments and whether we have sufficient information to select a specific alternative level, averaging time, or pollutant indicator for the increments. As a result of our analysis, we proposed to conclude that it was not necessary to modify the safe harbor increments toprotect human health, address nonvisibility welfare effects, or further protect visibility. This analysis is described in detail in the 2007 NPRM.

After considering the comments on our evaluation of the safe harbor increments and the conclusions we reached in the 2007 NPRM (summarized in the following paragraphs), we continue to believe that the safe harbor increments for PM 2.5 (which satisfy section 166(d) of the Act) are sufficient to fulfill the criteria in section 166(c) of the Act (and the incorporated goals and purposes of the Act in section 101 and the PSD program in section 160) when


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16 Docket No. EPA–HQ–OAR–2006–0605 can be
accessed on line at http://www.regulations.gov. 17 In the 2005 OAQPS Staff Paper reviewing the NAAQS for PM, EPA cited the following accepted
definition of ‘‘ critical load ’’ : ‘‘ quantitative estimate of an exposure to one or more pollutants below which significant harmful effects on specified
sensitive elements of the environment do not occur according to present knowledge. ’’ See page 6–45. combined with the other measures described earlier that we apply to PM 2.5
. Consequently, this final rule establishes the PM 2.5 increments at the level of the proposed safe harbor increments.

An environmental group submitted extensive comments arguing that the

PM 2.5 safe harbor increments are not sufficient to meet the Act’s requirements for PSD and that our analysis was inadequate, and two other commenters submitted more narrowly targeted comments in this area. A summary of the major comments, along with our responses, follows. A more detailed treatment of the comments can be found in the Response to Comments document for this rulemaking, which is available in the rulemaking docket. 16

The environmental group commenter stated that EPA has not complied with section 166(c) of the Act because the Agency has not made a finding or demonstrated that the PM 2.5 PSD rules will (as required by section 160(2) of the Act) preserve, protect, and enhance the air quality in parks and special areas. The commenter asserted that EPA offered only vague assertions that the proposed increments would ‘‘ satisfy ’’ the statutory factors and that they, along with other programs, would ‘‘ help ’’ to fulfill the statutory purposes. The commenter went on to argue that EPA sought to excuse its failure to show fulfillment of the statutory purposes by asserting that it cannot develop a uniform, quantitative, dose-response relationship between fine particle levels and certain ecosystem impacts (citing 72 FR 54134), but that, even if true, such a claim does not excuse the agency from satisfying its statutory duty under section 166(c).

We conclude that the 2007 NPRM demonstrated that the safe harbor increments, in combination with the other aspects of the regulatory framework, fulfill the statutory requirements despite the scientific uncertainties. We reiterate that finding today. The fact that we did not, in the 2007 NPRM, explicitly state this as a finding does not diminish the demonstration made there and reiterated in this preamble.

The environmental group commenter believes that the relationship between

PM 2.5 and adverse effects can be quantified to a greater extent than stated by EPA. Regarding acid rain and other adverse ecological impacts, the commenter asserted that critical loads can be established as a way of quantifying and limiting the PM 2.5 contribution to degradation, and noted that critical loads are now used by authorities in Europe, have been endorsed by leading North American scientists, and have been used by Federal land management agencies. To comply with section 166(c), the commenter believes that EPA must establish a mechanism to supplement the nationally uniform increments with additional measures, including a requirement to establish area-specific critical loads or equally protective limits, where necessary to protect and enhance air quality in specific parks and natural areas.

With regard to the critical load concept, we agree conceptually with the commenter that critical loads could be used to supplement the existing increments, especially as a means of protecting the known sensitive ecosystems within Class I areas. While we disagree that the critical loads concept can be used as an effective replacement to increments for limiting air quality degradation, we believe that the concept offers considerable promise in helping to protect sensitive receptors in specific Class I areas. However, we do not believe that it would be appropriate at this time to establish a requirement for area-specific critical loads under the PSD program. In our 2005 PSD rule for
NO 2 increments, we indicated that states could propose using information on critical loads as part of their approach for managing air quality in their individual SIP-approved PSD programs, but sufficient information was not yet available for EPA to incorporate the use of critical loads into the national PSD program. See 70 FR

59613.

The concept of critical loads is useful for estimating how much pollution a particular ecosystem can experience on a prolonged basis without showing adverse effects. In addition to addressing the opportunity for using critical loads under its NO 2 increment rule, EPA has addressed the concept of critical loads in the last review of the PM NAAQS and currently in the secondary NO 2 /SO 2 NAAQS review. 17 To date in the United States, critical loads have had their primary application in the area of atmospheric deposition of sulfur (S) and nitrogen (N). In the last review of the PM NAAQS, EPA found that ambient PM was contributing to the total load of pollutants entering the U.S. ecosystem annually. However, the review also concluded that there were ‘‘ insufficient data for the vast majority of U.S. ecosystems that differentiate the PM contribution to total N [nitrate] or S [sulfate] deposition to allow for practical application of this approach as a basis for developing national standards to protect sensitive U.S. ecosystems from adverse effects related to PM deposition. ’’ The 2005 Staff Paper for the PM NAAQS, in reaching this conclusion, addressed various important factors, including (1) the lack of a long-term, historic database of annual speciated PM deposition rates to establish relationships between PM deposition and ecosystem responses; (2) uncertainty in predicting the amount of PM deposited to sensitive receptors from measured concentrations of PM in the ambient air; and (3) the unique nature of each ecosystem and the current inability to extrapolate with confidence any effect from one ecosystem to another. The 2005 Staff Paper recommended that EPA give serious attention to the critical load concept and recommended the collection of data from a ‘‘ greater variety of ecosystems over longer time scales to determine how ecosystems respond to different loading rates over time. ’’ 2005 Staff Paper at page 7–19.

The review of the secondary NAAQS for NO X and sulfur oxides (SO X ), which is currently underway, is evaluating ecological effects due to the atmospheric deposition of NO X and SO X . The two main targeted effects are acidification and nutrient enrichment in both aquatic and terrestrial ecosystems. This review is attempting to use critical loads to evaluate the impact of current depositional loads and alternative loads in several case study areas. However, as mentioned earlier, the estimation of ecosystem critical loads expressed in terms of PM requires long-term ecosystem-level data on speciated PM deposition rates for which an adequate database is currently lacking for most sites in the United States.

The environmental group commenter also asserted that the safe harbor increments would allow PM 2.5 air quality to deteriorate to the level of the NAAQS in many locations. According to the commenter’s analysis, at 55 percent of the locations with PM 2.5 monitors that were not already exceeding the PM 2.5 NAAQS, 24-hour

PM 2.5 concentrations would be allowed to increase up to the level of the NAAQS. In addition, the analysis showed that for 84 percent of locations not already exceeding the NAAQS, the 24-hour PM 2.5 concentrations would be allowed to increase to a level of 30 μ g/


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18 The commenter cited http://www.nps.gov/ shen/naturescience/visibility

_ and

_ haze.htm for historic visibility in national parks. m 3 or more. The commenter believes that allowing such levels would not be protective of public health, given that we stated in the 2007 NPRM that we had previously found that PM 2.5 concentrations less than a range of 30–

35 μ g/m 3 (24-hour average) were protective of public health (citing 72 FR 54128).

The environmental group commenter’s analysis showed similar results for the proposed annual PM 2.5 increments. The commenter asserted that PM 2.5 concentrations would be allowed to increase up to the level of the annual NAAQS in 55 percent of the locations that are currently in attainment, and that 87 percent of these sites would be allowed PM 2.5 concentrations of 12 μ g/m 3 or higher. Again, the commenter believes that allowing annual concentrations at or above 12 μ g/m 3 would not be protective of public health, based on our statement in the 2007 NPRM that we had previously found that PM 2.5 concentrations less than a range of 12–

15 μ g/m 3 (annual average) were protective of public health (citing 72 FR 54128).

We do not believe that increments must be set at levels that ensure that the full amount of increment will be available in all locations. The statutory provisions in the PSD program have always been clear that a source must demonstrate that it will comply with both the NAAQS and increments for any pollutant. Consistent with congressional intent, the PSD program does not allow a source to violate the NAAQS just because its emissions will not cause the increments to be exceeded. If the increments were to be developed in such a way that all areas, taking into account current ambient air quality status, would be able to utilize the full amount of increment, then the increment levels would have to be unnecessarily stringent in areas that are substantially cleaner than levels allowed by the NAAQS.

Congress recognized that all areas of the country might not be able to utilize the full amount of increment when they provided provisions within the Act requiring that both the NAAQS and increments must continue to be met at all times. In areas where the full amount of increment is not available due to levels of pollution approaching the NAAQS, states may need to require emissions reductions at existing sources to accommodate the desired amount of economic growth. Hence, we do not believe it is reasonable to unduly restrict economic growth in cleaner areas by setting more restrictive increments to help maintain air quality levels below the NAAQS in areas which are currently only marginally
attainment.

In addition, we disagree with the commenter’s assertion that the increments will not protect public health. In setting the PM 2.5 NAAQS at

35 μ g/m 3 (24-hour) and 15 μ g/m 3 (annual), EPA concluded that these levels protect public health with an adequate margin of safety. Regardless of the level at which the increments are set, no source is permitted to cause the NAAQS to be exceeded. That is, as noted previously, the upper bound on the permissible concentration of PM 2.5 is determined by the increment or the NAAQS, whichever is more restrictive in each particular case. Thus, the entire framework of the PM 2.5 regulations, including the safe harbor increments, is protective of public health. In asserting otherwise, the commenter has misconstrued our statements in this regard.

In the 2007 NPRM section on the health effects of PM 2.5 (72 FR 54127– 54128), we discussed the fact that we considered setting the 24-hour NAAQS in the range of 30 to 35 μ g/m 3 and the annual NAAQS in the range of 12 to 15

μ g/m 3 . However, we concluded in setting the NAAQS that 35 μ g/m 3 (24- hour) and 15 μ g/m 3 (annual) are protective of public health with an adequate margin of safety. We did not say, nor do we believe, that PM 2.5 concentrations must be below 30 μ g/m 3 (24-hour average) or 12 μ g/m 3 (annual average) to protect public health.

The environmental group commenter believes that there is a quantifiable relationship between visibility impairment and PM 2.5 levels, citing the 2007 NPRM discussion (72 FR 54135) as well as the most recent Criteria Document and Staff Paper for PM 2.5 . The commenter pointed out that in the 2007 NPRM (72 FR 54135), EPA observed that the proposed Class II short-term safe harbor increment of 9 μ g/m 3 , if combined with the estimated daily background levels in most areas ( i.e., 10

μ g/m 3 ), would be below the minimum values recommended in the 2005 Staff Paper for the secondary short-term standard for PM 2.5 (which was 20 μ g/

m 3 ). Rather than supporting the adequacy of 9 μ g/m 3 as an increment level to protect visibility, the commenter believes that this shows that the safe harbor increment is inadequate because consumption of an increment of

9 μ g/m 3 combined with background levels alone would cause an area to reach within 1 μ g/m 3 of the staffrecommended value of 20 μ g/m 3 . The commenter added that most areas would have PM 2.5 pollution from motor vehicles and stationary sources in concentrations substantially greater than background levels, easily placing these areas above 20 μ g/m 3 (citing the 2005 Staff Paper at 2–77).

The environmental group commenter went on to assert that the safe harbor

PM 2.5 increments will not be sufficient to protect visibility in parks and other natural areas. In the 2007 NPRM, we stated that a 24-hour average PM 2.5 concentration of 20 μ g/m 3 correlates to a visual range of approximately 25 to 35 kilometers. 72 FR 54129. The commenter asserted that this visual range distance falls far short of what the National Park Service considers to be good visibility for national parks, adding that the National Park Service has stated that visibility used to be 90 miles (145 km) on average in eastern parks, and 140 miles (225 km), on average in western parks. 18 The commenter stated that the safe harbor increments would allow parks and other natural areas to experience PM 2.5 pollution that is correlated with a 25–35 km visual range.

The visibility impairment issue is more complex than suggested by the environmental group commenter. In addition to predicting what the maximum ambient change in air quality is for a particular area, a visibility impairment assessment considers such things as the frequency, magnitude, and duration of visibility impacts in order to conclude that an adverse impact will

occur.

In addition, the environmental group commenter misconstrued the illustration we included in the 2007 NPRM. We noted that the lowest level we considered as a secondary PM 2.5 NAAQS was 20 μ g/m 3 , which was considered to address visibility issues in urban areas. We also noted that in most areas, the estimated 98th percentile of daily background concentrations is less than 10 μ g/m 3 . In adding the Class II safe harbor increment (9 μ g/m 3 ) to the 98th percentile of background levels, we were simply showing that even in the worst case, the combination of the safe harbor increment and background PM 2.5 would not exceed the most stringent level we considered for the secondary

PM 2.5 NAAQS. The commenter presented this rough, worst-case calculation as if it represented the typical situation that would result from the safe harbor increments. In addition, the environmental group commenter’s statements do not apply to parks and special areas that are classified as Class


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I areas because the safe harbor increments for such areas are much lower.

Another commenter stated that the proposed 24-hour Class I increment (2

μ g/m 3 ) would not be protective of AQRVs, particularly visibility. This commenter noted that the National Park Service uses a 5 percent change in light extinction from estimated natural conditions as the threshold for ‘‘ adverse impacts ’’ to Class I visibility. The commenter indicated that depending on the constituents of the ambient PM 2.5 and the humidity, a concentration of 2

μ g/m 3 in a typical Class I area would result in a change in light extinction ranging from 13 to 80 percent in the Western United States and from 8 to 50 percent in the Eastern United States and, therefore, would likely constitute

‘‘ adverse impacts ’’ to Class I visibility. While acknowledging that the FLM may still determine that the visibility in the Class I area is adversely affected by an increase in concentration that is less than the increment, this commenter pointed out that we stated in the 2007 NPRM that ‘‘ generally speaking an increment should not be so large that it routinely results in substantially more pollution in Class I areas than is generally acceptable under the AQRV approach ’’ (citing 72 FR 54135). The commenter concluded that the proposed 24-hour PM 2.5 increment does not meet this test and recommended that EPA set a lower PM 2.5 24-hour increment.

This commenter appears to have identified a worst-case scenario in terms of increment concentrations, and although we agree with the visibility impacts related to those concentrations discussed in the comment, we do not believe the proposed increment level compromises the protection of visibility or other AQRVs. Although the ‘‘ AQRV

test ’’ uses 5 percent light extinction as a screening threshold, the determinationof adverse impact is made on a case-bycase basis taking into account the geographic extent, intensity, duration, frequency, and time of visibility impairment and how these factors correlate with visitation to the Class I area. The suggestion that the 5 percent threshold is routinely exceeded by PSD sources or that an absolute worst-case scenario is occurring to the geographic extent, intensity, duration, and frequency that would warrant an adverse impact determination is unsupported, especially considering the relatively few adverse impact determinations that have been made in the past. It is, however, important to note that the AQRV analysis is independent of the PSD increment analysis; whether or not the increment is projected to be exceeded does not determine the need for an AQRV analysis. The determination that a facility does or does not cause an adverse impact on a Class I area is not solely contingent upon the PSD increment, so we do not believe that lowering the proposed increment is necessarily more protective of the AQRV.

With respect to these two commenters’ concerns about visibility protection, we continue to believe that the increments cannot be expected to be the sole means of protecting various welfare concerns. In the 2007 NPRM, we stated that ‘‘ visibility protection in Class I areas is more adequately provided by the AQRV process. ’’ Congress defined AQRVs to specifically include visibility and left it for the FLMs to define other special attributes of Class I areas that warranted special protection. We also noted that Congress has established several visibility programs that target emissions reductions to achieve desired visibility benefits. See 72 FR 54135. Collectively, these protective programs, along with the totality of the PSD program, offer an effective means of addressing unique local problems that cannot be addressed solely by uniform national increments.

However, the environmental group commenter asserted that these other programs will not fulfill the statutory purposes. As discussed previously in sections V.D.4 and 5, the commenter does not believe that FLM review in the AQRV process and the air quality impacts analysis required by section 165(a) of the Act are adequate. We disagree; see sections V.D.4 and 5 for more detail on the comments and our

responses.

The environmental group commenter also noted that we cited the regional haze program as a justification for adopting less protective PSD rules (referring to 72 FR 54135), but the commenter pointed out that the haze program applies only to Class I areas and does not apply at all to the majority of the nation, which is Class II. The commenter further noted that we stated in the 2007 NPRM that ‘‘ some State and local governments have also developed programs to improve visual air quality in specific urban areas ’’ (citing 72 FR 54135), and pointed out that we gave no specific information on such programs, nor any information about the visibility protection that they provide beyond that provided by the proposed increments. The commenter asked that we identify the specific State and local programs, and that we specify how much visibility protection such programs are providing. The commenter is correct that the regional haze program directly addresses only Class I areas. As we have discussed before, these are the areas that Congress defined as deserving of the most protection under PSD, including the visibility protection provisions in subpart 2 of title I, part C of the Act, which is the statutory basis for the regional haze program. While Class I areas are the target for the regional haze program, we believe that many areas of the nation will receive collateral visibility benefits from this program. As emissions of the pollutants that cause regional haze are reduced, many areas in the paths of transport will benefit. In addition, as discussed previously in section V.D.5 of this preamble, PSD applicants must prepare an analysis of

‘‘ other impacts, ’’ including visibility impacts, in areas other than Class I

areas.

Regarding State and local visibility programs, in the 2005 Staff Paper EPA described several existing programs to improve visual air quality in urban areas. These programs were located in Denver, CO; Phoenix, AZ; and Lake Tahoe, CA. Also, the states of California and Vermont have each established standards to protect visibility. See the 2005 Staff Paper, pages 6–17 through

6–23.

The environmental group commenter cited the 2007 NPRM (72 FR 54135) where we said that the use of ‘‘ distinct PM increments for visibility protection is not the most effective means of addressing the visibility problem. ’’ The commenter believes that this claim is based on false premises, including the idea (discussed previously) that other programs effectively protect visibility nationwide, and the idea that the only option is a ‘‘ distinct ’’ PM increment for visibility protection. As to the latter, the commenter stated that EPA can strengthen the safe harbor increment to ensure visibility protection and need not adopt a separate ‘‘ visibility ’’ increment. In addition, the commenter asserted that EPA has ignored the statutory mandate that the PSD rules fulfill the statutory goals and purposes, and that we cannot shirk that statutory duty merely because we claim some other type of action would be ‘‘ more effective. ’’

We continue to believe that Class I area visibility protection under the PSD program is appropriately addressed via the AQRV process. As mentioned previously, Congress explicitly included

‘‘ visibility ’’ as an AQRV for which FLMs would have an affirmative responsibility to protect in Class I areas under their jurisdictions. Where the FLM successfully demonstrates that there


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would be an adverse impact on the AQRV ( e.g., visibility), a State cannot issue a PSD permit, even when the source’s emissions do not violate the

PM 2.5 increments. In addition, we continue to believe that the analysis of other impacts, including visibility, in non-Class I areas is the appropriate means of addressing visibility protection in these areas, as envisioned by Congress when it enacted the PSD provisions of the Act.

As a result, we do not believe it is necessary to create a distinct increment ( e.g., with a different averaging period) or to lower the safe harbor increments to protect visibility in urban, non-urban, or Class I areas across the United States. We reach this conclusion in proper consideration of the other, more direct approaches being used to address visibility problems in the United States. The primary such approach, the regional haze program, is within the PSD framework for PM 2.5 . Note that part C of title I of the Act, ‘‘ Prevention of Significant Deterioration of Air Quality, ’’ includes subpart 2, which is the statutory basis for the regional haze program. Regarding our consideration of other State and local visibility protection measures that are outside the PSD framework, we do not believe it isreasonable to disregard these areaspecific measures that focus on the preferences of individual communities where a uniform national increment for visibility protection generally cannot.

The environmental group commenter also stated that the proposed PSD rules fail to ensure fulfillment of the

‘‘ enhancement goal ’’ set out in the Act. The commenter noted that section 101(a) states as the Act’s first purpose:

‘‘ to protect and enhance the quality of the Nation’s air resources, ’’ while section 160(2) states that the purpose of the PSD program is to ‘‘ preserve, protect, and enhance ’’ air quality in parks and other special areas. The commenter asserted that the proposed rule did not address these enhancement requirements or explain how the proposed increments would fulfill those requirements.

This same issue was raised in the 2005 PSD rule affirming the NO 2 increments. At that time we expressed our belief that the goal to enhance air quality in national parks and wilderness areas is implemented through the regional haze program while the PSD program focuses on preserving and protecting air quality in these areas. However, when a PSD increment violation is identified, we agree that EPA may require a State to revise its SIP to correct the violation. See 40 CFR 51.166(a)(3). Otherwise, we do not interpret these PSD provisions to authorize us to direct states in their SIPs to achieve reductions in emissions from existing sources for PSD purposes.

We recognized at that time, and continue to believe, that the growth management goals of PSD may also be fulfilled when the states adopt controls on existing sources that would reduce emissions and allow growth from new sources and major modifications to existing sources without causing significant deterioration. Under the increment approach, we have interpreted the PSD rules to allow states to require reductions from existing sources in order to expand the allowable increments and, thereby, allow for more growth under the PSD program. However, we have never required states to do so because, in the absence of an increment violation, we do not believe section 166 and other provisions in part C of title I of the Act give us the legal authority to mandate such reductions for PSD purposes.

Another commenter stated that the

PM 2.5 increments should be twice the recommended levels because scientific studies do not support the need for such low levels for protection of health and welfare. The commenter believes that increments at the proposed levels would jeopardize the goal of providing opportunities for economic growth. The commenter expressed concern over EPA’s use of epidemiologic studies and questioned the ability of such studies to provide a reliable evaluation of health risks. The commenter claimed that epidemiologic studies are capable of finding association between a substance or exposure and a health effect but rarely capable of determining if there is causation, while toxicological studies using randomized trials are specifically designed to determine causation. The commenter added that other factors providing evidence for causation include dose-response relationships, consistency, and repeatability of studies, which the commenter said are not present in the studies cited by EPA. The commenter specifically referred to two studies, acknowledged by EPA to show no evidence of a dose-response relationship gradient between PM 2.5 and specific health related effects.

We disagree with the commenter’s recommendation that the increments should be twice the proposed (and final) levels. The scientific studies to which the commenter referred pertain to studies that EPA used to determine the health-based NAAQS for PM 2.5 , and we do not believe it is relevant to this rule to respond to comments related to the setting of the NAAQS. The NAAQS are designed to protect public health and welfare; increments then are intended to insure that air quality in clean areas is not allowed to deteriorate significantly, and the PSD regulations insure that any such deterioration does not lead to air pollution levels that exceed the levels defined by the NAAQS.

As discussed previously, we are finalizing this rulemaking using the safe harbor approach under section 166(a) of the Act. Using this approach, we calculated the ‘‘ safe harbor ’’ increments as percentages of the NAAQS comparable to the percentages that Congress used to establish the original statutory increments for PM and SO 2
. These values represent the level of effectiveness necessary to satisfy section 166(d) of the Act, and could be tightened if necessary based on further analysis to determine if additional measures are necessary to fulfill the requirements of section 166(c) of the Act. Thus, under this approach and on this record, we do not conclude that it is appropriate to finalize increments at levels any less stringent than the safe harbor increments, as the commenter recommends.

7. Compliance Determinations for the

PM 2.5 Increments
a. Modeling Compliance With PM 2.5 Increments

Section 163(a) of the Act provides that

‘‘ In the case of any maximum allowable increase * * * for a pollutant based on concentrations permitted under the national ambient air quality standards for any period other than an annual period, such regulations shall permit such maximum allowable increase to be exceeded during one such period per year [emphasis added]. ’’ Accordingly, the existing PSD rules allow one exceedance per year of each short-term increment defined by the rules. See 40 CFR 51.166(c) and 52.21(c). With the addition of the PM 2.5 increments to the list of maximum allowable concentrations in the PSD rules, the existing provision allowing one exceedance per year applies equally to the 24-hour PM 2.5 increments as well. Thus, when modeling increment compliance, the highest value of the second-highest modeled increase in estimated PM 2.5 concentrations at each model receptor for the 24-hour averaging time should be less than or equal to the maximum allowable increase for PM 2.5. For the annual increments, the modeled annual averages should not exceed the annual maximum allowable increase for PM 2.5
. See EPA’s ‘‘ Guideline on Air Quality Models ’’ at 40 CFR part 51 appendix W,
section 10.2.3.3.


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19 We proposed test methods for measuring PM 10 and PM 2.5 , including condensable PM emissions, from stationary sources on March 25, 2009 (74 FR 12970). In the same notice, we sought comments on whether to end the NSR transition period for condensable PM earlier than January 1, 2011. We anticipate publication of a final rule announcing our decision on the NSR transition period in July

2010. We did not expressly state in the 2007 NPRM the implications of adding PM 2.5 increments to the existing list of increments in 40 CFR 51.166(c) and 52.21(c) of the PSD regulations. Nevertheless, it should have been clear at the time that, in the absence of alternative language for PM 2.5 , the existing provision allowing one exceedance for the short-term increments would apply to the increments for PM 2.5 along with the increments already listed. We did not receive any comments either supporting or opposing these methods for determining compliance with the PM 2.5 increments.

We recognize that the above approach for determining compliance with the 24- hour PM 2.5 increments differs from the approach contained in guidance that we provided in a March 23, 2010 memo titled ‘‘ Modeling Procedures for Demonstrating Compliance with PM 2.5 NAAQS, ’’ which sets forth a procedure designed to demonstrate compliance with a statistically based standard that is met when the 98th percentile 24-hour concentration is less than or equal to 35 ug/m 3 . A similar dichotomy exists for the 24-hour PM 10 increments and NAAQS, where compliance with the 24- hour PM 10 NAAQS is based on an expected exceedance form of the standard.

b. Condensable PM

Initially, the EPA will not require PSD applicants under the Federal PSD program to consider condensable PM in emissions calculations to determine whether a proposed project is subject to the PSD requirements. In addition, we will not require the condensable portion to be considered in the required PM 2.5 air quality analyses. In our May 2008

PM 2.5 NSR Implementation Rule, we announced that we would not require that states address condensable PM in establishing enforceable emissions limits for either PM 10 or PM 2.5 in NSR permits until the completion of a transition period. Further, we indicated that the transition period would end January 1, 2011 unless EPA advanced the date through the rulemaking process. We also indicated that such rulemaking would involve the assessment and possible revision of test methods for measuring condensable emissions and taking comment on an earlier closing date for the transition period in the NSR program if we are on track to meet our expectations to complete the test methods rule much earlier than January 1, 2011. 19 In addition, states that have developed the necessary tools are not precluded from acting to include condensable PM emissions in NSR permit actions prior to the end of the transition period, especially if it is required in an applicable SIP. See 73 FR 28334–28336.

c. PM 2.5 Precursors

In the 2007 NPRM, we proposed to add SILs for PM 2.5 to the PSD regulations at 40 CFR 51.166 and 52.21. (The SILs are described more fully in section VI of this preamble.) Accompanying these SILs, we proposed to add a new paragraph to the regulations explaining that the requirements for a source impact analysis for PM 2.5 would be considered to be satisfied, without further air quality modeling, if it were to be shown that the increase in direct PM 2.5 emissions from the source or modification will cause air quality impacts less than the prescribed SILs for

PM 2.5 . The reasoning at the time was that state-of-the-art modeling would not be available to adequately account for secondary PM 2.5 impacts resulting from emissions of precursors of PM 2.5 , e.g., SO 2 and NO X . Nevertheless, the existing PSD rules currently define potential precursors of PM 2.5 . Based on the proposed language, the required compliance demonstration for the PM 2.5 NAAQS and the PM 2.5 increments (when promulgated) would be limited by regulation to an analysis of direct

PM 2.5 emissions, and would not include consideration of emissions of PM 2.5 precursors for comparing the modeled source impacts to the prescribed SILs for PM 2.5
.

The impacts of PM 2.5 precursors on ambient concentrations of PM 2.5 cannot be determined from the dispersion models that EPA has currently approved for modeling individual PSD sources. Such models are not designed to consider chemical transformations that occur in the atmosphere after the precursor emissions have been released from the source. Consideration of these transformations is necessary to be able to add precursor impacts into the total modeled ambient PM 2.5 concentrations for comparison to the SILs for PM 2.5
.

The technical tools needed to complete a comprehensive analysis of all emissions that contribute to ambient concentrations of PM 2.5 are only in the developmental stage; nevertheless, we believe that it would be inappropriate to restrict the regulatory language in such a way that future regulatory amendments would be required to enable the inclusion of precursor impacts in the PM 2.5 analysis as the necessary technical tools become available. Estimating techniques are being developed that will be able to be applied to the PM 2.5 analysis in the near future, which could not be required if the regulatory language precluded them. We acknowledge the concerns that have been expressed by some commenters about the shortcomings of not considering the impacts of PM 2.5 precursors under the PM 2.5 air quality analyses. Accordingly, we believe that the new provision for applying the SILs for PM 2.5 to the required analyses for the NAAQS and increments should not be self-limiting by specifying the use of only direct PM 2.5 emissions. Instead, the new provision contained in this final rule provides that the test will be based on whether ‘‘ the emissions increase * * * would cause * * * air quality impacts less than [the PM 2.5 SILs]. ’’ See new 40 CFR 51.166(k)(2) and 52.21(k)(2). We believe that it would be more effective to rely on interim policy and guidance as appropriate to help determine the best methods available to make the required assessment of source impacts on ambient PM 2.5 resulting from any emissions.
F. Final Action on Trigger and Baseline Dates for PM 2.5 Increments In the 2007 NPRM, we proposed as part of Option 1 to require the implementation of the PM 2.5 increment system (annual and 24-hour increments) with new baseline areas, baseline dates, and trigger date. Specifically, we proposed that the major source baseline date and trigger date, both fixed dates, would be defined as the effective date of the final rule and would reflect a date 1 year from the date of promulgation, in accordance with section 166(b) of the Act. In contrast, under Option 2 (both 2A and 2B), we proposed to establish new baseline dates for the 24-hour PM 2.5 increments, but to retain the existing baseline areas and dates for the annual

PM 2.5 increments because the annual increments would be equivalent substitutes for the existing annual PM 10 increments.

In light of the then-current and expected trends in PM 2.5 concentrations, our judgment was that starting with new baseline dates on or after the effective date of this rule would make the PSD increments for PM 2.5 more protective. We proposed that any emissions reductions occurring prior to the effective date of this rule would lower


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the baseline concentration rather than be used for expanding the PM 2.5 increment. If a retroactive baseline date were to apply, emissions reductions occurring prior to the effective date of this rule would serve to expand the available increments, enabling more new pollution than would otherwise be allowed to occur.

We also expressed our belief that starting with different baseline dates to implement increments for PM 2.5 would be appropriate because Option 1 treats

PM 2.5 essentially as a ‘‘ new ’’ pollutant for purposes of PSD and section 166 of the Act. We continue to believe that establishing a new baseline also overcomes significant implementation concerns that would otherwise exist if the existing PM baseline were maintained. In particular, if we were to require sources and reviewing authorities to conduct PM 2.5 increment analyses based on the minor source baseline dates previously established years or even decades ago under the
TSP or PM 10 program, they would have to attempt to recreate the PM 2.5 emissions inventory as of the minor source baseline date in order to determine the baseline PM 2.5 concentration for the area. For early minor source baseline dates in particular ( e.g., 1976 in some areas of the United States), establishing the emissions inventory for PM 2.5 would be extremely difficult, cumbersome, and potentially inaccurate because historic emissions inventories did not include

PM 2.5 emissions. For all of these reasons, we proposed Option 1 as our preferred option and requested comment on this contingent safe harbor approach for annual and 24-hour PM 2.5 increments under Option 1.

Under Option 1, we proposed that the

PM 2.5 increments would be subjected to a 1-year delay consistent with the procedures under section 166(b) of the Act, which provides in general that these rules ‘‘ shall become effective one year after the date of promulgation. ’’ Alternatively, we sought comment on a 60-day delay as part of our proposal under Option 1. In the proposal we requested comment on the argument that, while the Act includes a 1-year implementation delay for new increments, the same provision calls for EPA to promulgate new increments within 2 years of the promulgation of the NAAQS. Given that these PM 2.5 increments are being promulgated more than 2 years after promulgation of the NAAQS, we expressed our belief that the overall congressional intent reflected in section 166 of the Act could possibly be met by setting the effective date of the PM 2.5 increments earlier than the ‘‘ one year after the date of promulgation ’’ provided in section 166(b) of the Act.

Twelve commenters supported our proposal under Option 1 to establish new trigger and baseline dates for PM 2.5 , regardless of the particular increment option that they otherwise supported. These commenters generally saw new dates as being the best approach because of various problems that would result from retaining existing trigger and baseline dates. Some commenters claimed that it would be technically difficult to try to reconstruct old inventories to determine the amount of

PM 2.5 emitted by sources in the past.

One commenter stated that establishing PM 2.5 increment inventories using existing PM 10 baseline dates would be ‘‘ extremely difficult, cumbersome, and necessarily inaccurate and unreliable as historic emissions did not speciate PM 2.5 emissions. ’’ A State/ local agency commenter said that it would be ‘‘ virtually impossible for States to calculate the PM 2.5 component of previously consumed PM 10 increments because data on the fine and coarse fractions of source emissions are largely unavailable. ’’

Yet another commenter claimed that

‘‘ resurrecting PM 2.5 inventories based on the PM 10 baseline dates would be insurmountable. ’’ Similar comments were echoed by several commenters who supported the use of legal authority set forth in section 166(f) ( ‘‘ equivalent substitution ’’ approach) for developing the numerical values for the PM 2.5 increments. One of these commenters stated that he did not ‘‘ believe the establishment of new baseline dates for

PM 2.5 would abandon past cases of increment consumption for PM 10 , because the 24-hour PM 10 increments would still be in effect * * *. ’’

One commenter suggested that ‘‘ EPA establish the trigger date as of the datewhen it officially established the nonattainment and attainment areas for

PM 2.5 ; that is, April 5, 2005. ’’ The commenter explained that this approach is consistent with the PSD regulations from their inception and partially mitigates EPA’s delays in implementing the PSD program for PM 2.5 . The commenter believes ‘‘ that States should be required to use the baseline areas previously established for their PSD program, unless the process for redefining these areas strictly follow procedures in the PSD regulations and EPA policy. ’’ The commenter claimed,

‘‘ this will minimize any inconsistent applications of the regulations for

PM 2.5
. ’’

One commenter noted that our proposed PM 2.5 increments were very low and ‘‘ facilities may find themselves immediately out of compliance with the

PM 2.5 increments upon promulgation of the rule, based on a January 1975 or 1977 baseline date. ’’

One commenter indicated that the historic TSP/PM 10 baseline dates should be retained. This commenter favored the equivalent substitution approach under section 166(f) and, consistent with that approach, retention of the existing baseline dates.

Having considered all the comments, we believe that the most reasonable approach for addressing the relevant dates associated with the PM 2.5 increments is to start anew with the baseline date concept. As already mentioned, the commenters have identified difficulties that would occur if the PM 2.5 emissions inventory for increment analyses had to be created for an earlier period of time, and the existence of these difficulties supports the approach under Option 1 to establish new dates for implementing the PM 2.5 increments. Also, these new baseline dates for PM 2.5 increments will not undo the current protection provided by the existing increments for PM because we are not revoking the 24- hour or annual PM 10 increments under this new rule. Accordingly, this final rule establishes independent PM 2.5 increments using a ‘‘ trigger date ’’ and

‘‘ major source baseline date ’’ that are separate from the dates defined for the

PM 10 increments. Consequently, new minor source baseline dates and the corresponding baseline areas will be used for the annual and 24-hour PM 2.5 increments, and will be established when a source applies for a PSD permit any time on or after the new trigger date for PM 2.5 . (See also the discussion about changes to the definition of ‘‘ baseline

area ’’ in section V.G of this preamble.)

The ‘‘ major source baseline date ’’ for

PM 2.5 is being set as October 20, 2010— the date of publication of this final rule. The setting of this date differs from previous major source baseline dates which were set as the date of publication of the proposed rule, but is similar to the major source baseline date set for the other increments in that the date precedes the effective date for implementing the increments, and thereby requires that certain major source emissions increases that occur before the trigger date retroactively count toward the amount of increment consumed.

The ‘‘ trigger date ’’ is being set at October 20, 2011, which is 1 year after the date of promulgation of this final rule. We are using this approach to define the date on which the PM 2.5 increments become effective as 1 year


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20 ‘‘ A source will be considered to impact an area if it has an impact of 1 μ g/m 3 or more of SO 2 or PM on an annual basis. This figure has been selected because it corresponds to levels of significance used in previous Agency
determinations for SO 2 and PM. 45 FR 52716. from the date of publication, consistent with the 1-year delay required under section 166(b) of the Act. This date for the ‘‘ trigger date ’’ separates the applicability date of the PM 2.5 increments from the effective date of this final rule in general, but also ensures that the ‘‘ minor source baseline date ’’ for PM 2.5 for any particular PM 2.5 attainment or unclassifiable area cannot be established until after the increments become effective in this final rule. The implementation of these dates as part of the PM 2.5 increment system is discussed in greater detail in section VIII of this preamble.

We recognize that some may still have a concern about our decision to set the major source baseline date as the date of publication of this final rule in light of the fact that the PM 2.5 NAAQS have been in place since 1997; however, we believe that the selection of possible earlier dates would require states to retroactively establish PM 2.5 emissions inventories for increment analyses during a period when sources were generally not required to conduct PM 2.5 air quality analyses. Hence, given the lack of information, and considering the technical difficulties in doing so, we do not believe that it would be appropriate to require states and sources to retroactively account for PM 2.5 increment consumption by setting the major source baseline date at an earlier date than the date we have selected.
G. Definition of ‘‘ Baseline Area ’’ for

PM 2.5 No changes were proposed with respect to the definition of ‘‘ baseline

area ’’ for PM 2.5 increments. One commenter, however, noted that fact in claiming that we did not adequately account for significant impacts of PM 2.5 for purposes of defining the ‘‘ baseline

area ’’ for the PM 2.5 increments. Under the existing regulations, the establishment of a baseline area for any PSD increment results from the submittal of the first complete PSD application, and is based on both the location of the proposed source and the impact of the source’s emissions on the area. In accordance with the definition, the attainment or unclassifiable area in which the proposed source would construct is always part of the baseline area in which the minor source baseline date is established and the increment analysis is conducted. In addition, the definition provides that any surrounding attainment or unclassifiable area in which the proposed source’s impact is greater than

1 μ g/m 3 , annual average, would also become part of the baseline area, assuming the area had not already been established as a baseline area by a previous application for a PSD permit.
See 40 CFR 51.166(b)(15) and 52.21(b)(15).

As explained in the preamble for the 1980 PSD regulations, EPA selected an impact of 1 μ g/m 3 , annual average, for the definition of ‘‘ baseline area ’’ because that value was considered the level of significance for both SO 2 and PM when the definition was originally established. 20 There was no mandate at that time that a 1 μ g/m 3 impact be used to determine the baseline area for increments for other pollutants; however, the use of a 1 μ g/m 3 impact in the definition of ‘‘ baseline area ’’ was not changed when EPA developed increments for NO 2 in 1988 because EPA also defined ‘‘ significant ’’ for NO 2 using the same annual average concentration of 1 μ g/m 3 . The EPA has determined, however, that ‘‘ significant ’’ for PM 2.5 ambient impacts should be considered to occur at a lower concentration than 1 μ g/m 3 . Elsewhere in this preamble, we have indicated that the SIL for PM 2.5 in this final rule is 0.3

μ g/m 3 , annual average. Consequently, although no change to the definition of

‘‘ baseline area ’’ was proposed in this rule, we believe it is necessary and appropriate to define in this final rule a level of significance of 0.3 μ g/m 3

, annual average, for establishing a new baseline area for purposes of PM 2.5 increments. See revised 40 CFR 51.166(b)(15)(i) and 52.21(b)(15)(i).

Had we established the SIL at

1 μ g/m 3 , annual average, as proposed under Option 1 for SILs, then the definition of ‘‘ baseline area ’’ would not need to be revised. However, the revised definition in this final rule is consistent with our decision to establish a SIL of

0.3 μ g/m 3 , annual average, for PM 2.5 . We consider this action to be a logical outgrowth of our decision to establish a SIL for PM 2.5 and the comment concerning the effect of that action on the definition of ‘‘ baseline area. ’’ Thus, we believe that our failure to initially propose this change to the definition of

‘‘ baseline area, ’’ based on the possibility of selecting Option 3 for defining the SIL for PM 2.5 , does not warrant a reproposal.

H. No Final Action With Respect to the Proposed Revocation of PM 10 Annual

Increments

In the 2007 NPRM, we proposed to either revoke or replace the annual increments (Class I, II, and III) for PM 10 to conform to the earlier revocation of the annual PM 10 NAAQS. We proposed to revoke the annual increments, based on the same technical evidence that led us to revoke the annual PM 10 NAAQS, if we decided to use Option 1 for adopting PM 2.5 increments, and discussed our authority and rationale for doing so. 72 FR 54136.

As an alternative, under Options 2A and 2B we proposed to replace the existing annual PM 10 increments with equivalent substitute PM 2.5 increments using the authority under section 166(f) of the Act. After further analysis and consideration of the comments on this issue, we have decided not to take any final action on our proposal to revoke the existing increments for PM 10 as part of this rulemaking. The effect of not taking final action with respect to the

PM 10 annual increments is to leave those increments in place and unchanged.

Three commenters agreed with EPA’s proposal to ‘‘ adopt the 24-hour and annual PM 2.5 increments and to revoke the annual PM 10 increments. ’’ One commenter stated, ‘‘ counting and tracking increment is confusing enough without adding the confusion of potentially overlapping PM standards. ’’ The commenter noted that the ‘‘ cleanest approach is to establish a single new

PM 2.5 increment and work from there. ’’ The commenter suggested that EPA first

‘‘ develop a coarse fraction increment, once EPA establishes coarse PM NAAQS. ’’ The commenter added that the removal of the PM 10 annual increment is supported by the removal of the ‘‘ health based standard for annual

PM 10
. ’’

One of the commenters agreed, ‘‘ it makes no sense for EPA’s regulations to contain an annual increment for PM 10 even though an annual PM 10 NAAQS no longer exists. ’’ The commenter added,

‘‘ EPA is without authority under Section 166(f) to retain the PM 10 annual increment if it adopts a PM 2.5 annual
increment. ’’ This commenter explained,

‘‘ EPA is compelled by law to eliminate the PM 10 annual increment. ’’

We agree with this commenter that section 166(f) is a ‘‘ substitution ’’ approach; however, as we stated in our 2007 NPRM, we expressed some concern about using section 166(f) to substitute PM 2.5 increments for PM 10 increments. In fact, some commenters challenged our authority under section 166(f) to replace the PM 10 increments. In our response to the following comments, we address the legal issues that we believe prevent us from simply revoking the PM 10 increments.


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One environmental commenter claimed, ‘‘ the agency has no authority to repeal an existing PM 10 increment without at the same time restoring the corresponding TSP increment. ’’ The commenter noted, ‘‘ Congress established the TSP increments by statute and gave EPA no authority to revoke them, ’’ and

‘‘ instead, Congress gave EPA only limited authority to substitute PM 10 increments for TSP increments under the conditions specified in Section 166(f). ’’ The commenter explained, ‘‘ EPA cannot revoke the annual PM 10 increments, either by ‘‘ replacing ’’ them with PM 2.5 increments or otherwise, unless EPA at the same time restores the annual TSP increment. ’’ The commenter noted, ‘‘ retention of the PM 10 annual increment is also entirely compatible with the statutory purposes, notwithstanding EPA’s revocation of the annual PM 10 NAAQS. ’’ The commenter further noted the following examples/ evidence that retention of the annual

PM 10 increments is important to achieving the goals of the Act’s PSD provisions:

• ‘‘ While EPA attributes the visibility impairing impacts of PM pollution primarily to elevated short term fine particle concentrations, EPA recognizes that PM 10 plays a significant role in the other welfare related impacts of PM pollution. ’’ 72 FR 54136.

• ‘‘ EPA also states that the most significant PM-related ecosystem-level effects result from long term cumulative deposition * * * that exceeds the natural buffering or storage capacity of the ecosystem and/or affects the nutrient status of the ecosystem. ’’ 72 FR

54131.

Five State/local agency commenters opposed the revocation of PM 10 annual
increments ‘‘ until EPA makes a determination on a PM-coarse NAAQS ’’ and/or ‘‘ establishes equivalent increments for PM-coarse. ’’ One of these commenters added, ‘‘ it is prudent to maintain the PM 10 increments until EPA makes a determination on the health and environmental effects of the coarse fraction of PM. ’’ The commenter claimed that, ‘‘ if EPA retains the annual PM 10 increments ’’ ‘‘ then the determination of

PM 2.5 increments can complement the continuation of PM 10 increment determinations without any discontinuities or unwanted degradation concerns. ’’

Another one of these commenters stated, ‘‘ the basis for dismissing the annual PM 10 NAAQS by the substitution of fine particle NAAQS to address certain health and welfare effects does not provide a basis for dismissing a PSD increment which is meant to stop significant degradation of air quality. ’’ The commenter noted, ‘‘ as refinements are made to estimation of fine particle emissions or in instances where these are deemed not to be a major component of particulate emissions, the PM 10 annual increment could prevent long term deterioration of air quality associated with the coarse component. ’’

One State/local agency commenter noted, ‘‘ EPA also proposes to replace the

PM 10 annual increment with the corresponding PM 2.5 increment under the Section 166(f) options 2A and 2B as well, but does not provide a substantive basis for such an action. ’’ The commenter does ‘‘ not see the tension noted by EPA between Sections 166(a) and (f) with respect to reaching a holistic solution if EPA views PM 2.5 as a new indicator of PM, as we believe it

can. ’’ The commenter explained, ‘‘ under this approach, if EPA determines that coarse particle levels are necessary to protect the public from certain exposures not addressed by PM 2.5 , then it will be appropriate for EPA to define complementary increments for coarse particulates as another indicator of PM. ’’ The commenter also asserted that the 24-hour increments for PM 2.5 must be based on section 166(f) authority, but believes that the PM 2.5 increment need not replace the PM 10 increment for this averaging period.

One commenter requested that EPA

‘‘ keep the PM 10 PSD program (especially the increments) in place until the full

PM 2.5 program is adopted and in place. ’’

One commenter ‘‘ does not support revoking the annual PM 10 increments, ’’ because the commenter feels that ‘‘ there are too many uncertainties regarding

PM 2.5
. ’’ The commenter provided the following example: ‘‘ The program has been dragging for years, analytical methods are not formulated, the NSR part of the implementation rule has not issued, condensables are not yet included, and the impact of precursors has not been definitively explored. ’’ The commenter explained that ‘‘ under these conditions, nothing concerning PM 10 should be revoked until the reasons for doing so are clearly understood and the overall impact on ensuring clean air and the public health and welfare have been fully explored. ’’ The commenter suggested, ‘‘ PM 10 increments and NAAQS should remain in effect until these issues have been resolved to the satisfaction of the Administrator. ’’ This commenter believed that Options 2A and 2B must be based entirely on section 166(f) of the Act, but that the presence of increments for both PM 10 and PM 2.5 can be supported under this section because the two sets of increments complement each other. The commenter indicated that the problem will be resolved when sufficient data are available to revoke the PM 10 NAAQS and increments and/or PM 10 is replaced by PM 10–2.5
.

One State/local agency association commenter recommended that ‘‘ EPA can and should continue both the 24-hour and annual average PM 10 PSD increment program until PM 10

¥ 2.5 standards are promulgated. ’’ The commenter explained that ‘‘ EPA has the discretion to accomplish this under CAA § 166(f) ’’ and ‘‘ at a minimum, the agency should continue the 24-hour PM 10 increments in conjunction with the continuation of the 24-hour PM 10 NAAQS. ’’

As stated previously, in this rule we are taking no final action on our proposal to revoke the annual PM 10 increments even though the annual

PM 10 NAAQS has been revoked. Based on comments and our own legal analysis of the PM 10 increments, we have concluded that there is a strong legal basis for not revoking the annual increments at this time. The PM 10 increments were promulgated on June 3, 1993 (58 FR 31622) as replacement increments for the then existing statutory increments for PM measured as TSP. The fact that EPA promulgated the PM 10 increments as ‘‘ equivalent ’’ replacements for the TSP increments under the authority of section 166(f) of the Act is important in that EPA does not have authority to simply remove the TSP increments that were explicitly defined within the PSD program requirements in the Act. Accordingly, we believe that the annual TSP increments would be restored by default should we decide to revoke the annual

PM 10 increments as proposed. However, even if the original annual TSP increments were not restored, there is no basis for automatically revoking the annual PM 10 increments simply because we have revoked the annual PM 10 NAAQS, because annual increments are not contingent upon the existence of annual NAAQS. This is clear from the court’s decision in the earlier NO 2 increment litigation stating that increments for a particular pollutant do not necessarily need to match the averaging periods that have been established for NAAQS for the same pollutant. EDF v. EPA, at 189–190 ( ‘‘ * * * the ‘goals and purposes’ of the PSD program, set forth in § 160, are not identical to the criteria on which the ambient standards are based. ’’ ).

I. Other Comments on Increments

Ten commenters (including State/ local agencies and industry commenters) supported section 166(f) of the Act as the basis for PM 2.5 increments. These commenters typically


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voiced the belief that when Congress enacted section 166(f), it authorized EPA to update PM increments when another indicator was defined, and that section 166(f) allows EPA to continue do so as long as these increments are of equal stringency to the prior increments. Some of these commenters believe that section 166(f) is the only legitimate approach under the Act, while others indicated simply that it is preferable to section 166(a). Some of the commenters believe that section 166(f) authority can be used to add PM 2.5 increments to the existing PM 10 increments. Others believe that PM 2.5 increments finalized under section 166(f) must fully replace the existing PM 10 increments, and recommended doing so.

For the reasons discussed previously in this preamble, EPA has decided to finalize the PM 2.5 increments under the authority of section 166(a) of the Act. With respect to the potential creation of

PM 2.5 increments under section 166(f) (as discussed in the 2007 NPRM at 72 FR 54120–54121), we have not reached any final conclusion as to whether that approach is authorized by the statute, but believe that such an approach raises significant legal issues. Because the Agency is not relying on section 166(f) in this rulemaking, we do not address these issues in this preamble, though some additional discussion is included in the Response to Comments document for this rule.

One industry association that supported the Option 1 approach based on section 166(a) authority also acknowledged that EPA is authorized to use the Option 2 approach based on section 166(f) authority. An industry commenter indicated that 2007 NPRM’s arguments regarding the alternative legal authorities under section 166(a) and (f) were not compelling; the commenter recommended setting the

PM 2.5 increments at the levels proposed as Option 2B because they would have the lowest economic impact.

As noted previously, we have decided to finalize Option 1 based on section 166(a) authority because we believe that provision provides the clearest statutory authority for purposes of developing increments based on PM 2.5 . We would point out, however, that any conclusion as to which option would yield increments that ‘‘ have the lowest economic impact ’’ must include a consideration of not only the levels of the increments but also the associated baseline dates that define when emissions changes must be considered to affect the amount of increment consumed. Under Options 2 and 3, the

PM 2.5 increments would be regarded as replacement increments for the PM 10 increments and, as such, would include amounts of increment (based upon the

PM 2.5 component) already consumed under the existing PM 10 increment system. Thus, portions of the substitute

PM 2.5 increments could have already been consumed by previous PSD sources that emit PM. If, in fact, a portion of the PM 2.5 increments had already been consumed by the prior

PM 10 increment consumption process, than there would be a basis to conclude that less additional economic growth would be allowed under a set of replacement PM 2.5 increments as compared to PM 2.5 increments based on separate, independent baseline dates.

One industry commenter suggestedthat EPA develop geographic areaspecific increments (and SILs and SMCs) that take local conditions into account. The commenter pointed out that PM 2.5 levels in PSD areas proximate to international borders may be elevated by sources outside the legal and practical control of the United States and State authorities. The commenter also noted that PM 2.5 levels may be elevated by natural conditions, such as drought, fires, geologic formations (sandy or fine-grained surface features), high winds, etc., leading to excessively dusty ambient conditions over which the local area has no control. The commenter indicated that local area baselines must reflect these PM emissions, though they are not reflected in the local area’s emissions inventory. The commenter urged EPA not to penalize such PSD areas by imposing uniform national PSD increments (or SILs or SMCs) where the conditions of concern are not capable of control.

As previously discussed, this final rule establishes an area classification system with prescribed, uniform PM 2.5 increments for each class. We do not believe that it is necessary to develop different increments (or SILs or SMC) for different areas of the country.
Emissions from natural conditions such as those described by the commenter
would not consume increment due to their natural and temporary nature. In addition, if a State wishes to disregard
new emissions from sources outside the United States, the State’s PSD program may provide that such emissions do not consume increment ( see 40 CFR 51.166(f)(1)(iv)).

VI. Final Action on PM 2.5 SILs

A. EPA’s Determination on SILs for

PM 2.5
It is EPA’s longstanding policy to
allow the use of the SILs as de minimis thresholds under the NSR programs at 40 CFR 51.165(b) and part 51, Appendix S, to determine whether the predicted ambient impact resulting from the emissions increase at a proposed major new stationary source or modification is
considered to cause or contribute to a violation of the NAAQS. We have also
allowed the SILs under the PSD program to determine: (1) When a proposed source’s ambient impacts warrant a comprehensive (cumulative) source impact analysis; (2) the size of the impact area within which the air quality analysis is completed, and (3) whether the emissions increase from a proposed new major stationary source or major modification is considered to cause or contribute to a violation of any NAAQS.

We proposed three separate options for setting SILs for PM 2.5 . The first option relied upon the same approach we proposed for PM 10 in the 1996 NSR Reform proposal. This set included Class I SILs set at 4 percent of the Class

I PM 2.5 increments. For class II and III areas, we proposed to codify the SIL values that already existed for PM 10 , i.e.,

1.0 μ g/m 3 (annual) and 5.0 μ g/m 3 (24- hour). Options 2 and 3 relied on scaling the PM 10 SILs, as codified in 40 CFR 51.165(b), by a particular ratio. Specifically, for Option 2, the multiplier was the emissions ratio of PM 2.5 to PM 10 for point sources in the 1999 NEI; for Option 3 the multiplier was the ratio of the PM 2.5 NAAQS to the PM 10 NAAQS. The resulting SILs were proposed as follows:

Option Proposed SILs ( μ g/m 3 )

Class I Class II Class III

Annual 24-hr Annual 24-hr Annual 24-hr

1 .............................................................................................................................. ......... 0.04 0.08 1.0 5.0 1.0 5.0

2 .............................................................................................................................. ......... 0.16 0.24 0.8 4.0 0.8 4.0

3 .............................................................................................................................. ......... 0.06 0.07 0.3 1.2 0.3 1.2


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21 We note that, under the 2007 NPRM, we proposed that the SILs for PM 2.5 would not be treated as a minimum program element for State PSD programs; however, the proposed regulatory language at 40 CFR 51.166(k)(2) incorrectly stated
the ‘‘ the plan shall provide that, ’’ which would
indicate that the use of the SILs for PM 2.5 was required in the State plan. This final rule corrects
this error.

We have decided to finalize the PM 2.5 SILs proposed under Option 3. As explained earlier, these values will be used in the Federal PSD preconstruction review process consistent with our proposal. See 72 FR 54138–41 and

54143.

States are not required to adopt SILs in their NSR or PSD programs; the analyses for PM 2.5 required by each applicable regulation can be carried out without using a SIL. 21 Therefore, we do not intend for any specific deadlines to apply under the regulations at 40 CFR 51.165(b), 51.166, or part 51, Appendix S for states to submit SILs for PM 2.5 , should they choose to do so, as part of their revisions to incorporate the final rules for PM 2.5 into SIPs. Nonetheless, we believe that the availability of SILs as a screening tool greatly improves PSD program implementation by streamlining the permit process and reducing labor hours necessary to submit and review a complete permit application where the projected impact of the proposed source is de minimis in the relevant area. For these reasons, we are including the PM 2.5 SILs in the Federal PSD regulations at 40 CFR 52.21 to screen proposed projects concerning the need for a cumulative source impact analysis for PM 2.5
. B. Response to Comments Concerning the SILs

The primary purpose of the SILs is to identify a level of ambient impact that is sufficiently low relative to the NAAQS or increments that such impact can be considered trivial or de minimis. Hence, the EPA considers a source whose individual impact falls below a SIL to have a de minimis impact on air quality concentrations that already exist. Accordingly, a source that demonstrates that the projected ambient impact of its proposed emissions increase does not exceed the SIL for that pollutant at a location where a NAAQS or increment violation occurs is not considered to cause or contribute to that violation. In the same way, a source with a proposed emissions increase of a particular pollutant that will have a significant impact at some locations is not required to model at distances beyond the point where the impact of its proposed emissions is below the SILs for that pollutant. When a proposed source’s impact by itself is not considered to be ‘‘ significant, ’’ EPA has long maintained that any further effort on the part of the applicant to complete a cumulative source impact analysis involving other source impacts would only yield information of trivial or no value with respect to the required evaluation of the proposed source or modification.

While some commenters opposed all of the proposed options for PM 2.5 SILs, most commenters generally supported the use of a SIL as a screening tool for

PM 2.5 air quality analyses. Commenters who supported one of the proposed options for the SILs were divided as to their support of a particular approach for selecting the SIL value, with each option receiving some support. Commenters also tended to agree that the SILs should not be used for determining significant impacts on AQRVs in Class I areas.

Those commenters supporting the concept of the SILs, yet opposing all proposed options, believed that all options yielded SILs that were too low. Another commenter, an environmental group, presented extensive legal and policy arguments against the SILs concept in general. Some of the significant comments and our responses to them are addressed herein, while others are covered in the Response to Comments document which we have placed in the docket for this rulemaking.

1. Legal Basis for SILs

One commenter opposed all three proposed options on both legal and policy grounds claiming that EPA has no legal authority to promulgate SILs and that the de minimis doctrine endorsed by the court does not apply to increment analyses, where Congress has expressly directed that the letter of the law applies in all circumstances, as it has in this case. (The commenter’s policy concerns about SILs are discussed later in this section of this preamble.) The commenter stated that

‘‘ Congress codified increments in section 163 of the Act, directing that SIPs contain measures assuring that the increments shall not be exceeded. ’’ According to the commenter, ‘‘ The Act plainly provides that no major source may be constructed unless it meets this requirement, and may not contribute to an exceedance ‘for any pollutant in any
area.’ ’’ The commenter further stated that ‘‘ the de minimis doctrine is inapplicable because it applies only where the regulations will yield a gain that is demonstrably trivial or zero. ’’

We disagree with this commenter’s claim that there is no legal basis for SILs. As stated in the 2007 NPRM, the concept of a SIL is grounded on the de
minimis principles described by the
court in Alabama Power at 323, 360. In this case reviewing EPA’s 1978 PSD regulations, the court recognized that

‘‘ there is likely a basis for an implication of de minimis authority to provide exemption when the burdens of regulation yield a gain of trivial or no value. ’’ Alabama Power at 360. See the 2007 NPRM for more on how we have applied the de minimis principle in the past. See also, Sur Contra La
Contaminacion v. EPA, 202 F.3d 443, 448–49 (1st Cir. 2000) (upholding EPA’s use of SILs to allow permit applicant to avoid full impact analysis.)

2. Levels of the SILs

Several commenters opposed all three proposed options on the grounds that all yielded levels of SILs that are too low. One of these commenters argued that the proposed SILs ‘‘ imply a level of monitoring and modeling sophistication that is currently absent in our regulatory scheme. ’’ This commenter recommended that EPA ‘‘ rethink the level of the proposed SILs and select concentrations less likely to be within the level of error inherent in current monitoring and modeling methods. ’’

We disagree with these commenters’ concerns about all the proposed SILs being too low. While we did not select the Option 1 levels, the Class II and III SILs for PM 2.5 under that option were the same ambient concentration levels that are used for the SILs for the other criteria pollutants under 40 CFR 51.165(b), and those existing SILs values are associated with NAAQS that are considerably higher than the NAAQS for PM 2.5 . Clearly, it would have been inappropriate to select Class II and III SILs for PM 2.5 that represent relatively higher values than the existing SIL values for other pollutants in light of the more stringent NAAQS levels that exist for PM 2.5 . We also disagree that the SILs should be consistent with current monitoring capabilities for PM 2.5 . The SILs are a screening tool used in comparison with modeled predictions— not monitored concentrations—of PM 2.5
. Monitoring accuracy is not a relevant concern in predicting with air quality dispersion models the concentrations of a pollutant that a source will cause if its construction and operation are allowed

to occur.

Two commenters expressed concern about national de minimis values. One stated that ‘‘ the idea that a single national number can define ‘trivial’ is flawed, given that even very small impact can be of great significance in an area that is close to an increment or NAAQS. ’’ The other commenter


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22 See ‘‘ Information Collection Request (ICR) for the Prevention of Significant Deterioration for

PM 2.5 -Increments, Significant Impact Levels and Significant Monitoring Concentration, ’’ Docket No. EPA–HQ–OAR–2007–0628. recommended that EPA ‘‘ develop geographic area-specific * * * levels that take local conditions into account. ’’ This commenter reasoned that some
PSD areas ‘‘ should not be ‘penalized’ by a single, national PSD increment, significant impact levels and significant monitoring level, where the conditions of concern are not capable of control. ’’

With regard to the first of these commenters, our longstanding policy has been that when a source has a de
minimis impact on an existing air quality problem, that source should not necessarily be required to bear the burden of addressing its small contribution to a problem caused primarily by other sources. However, notwithstanding the existence of a SIL, permitting authorities should determine when it may be appropriate to conclude that even a de minimis impact will

‘‘ cause or contribute ’’ to an air quality problem and to seek remedial action from the proposed new source or modification.

We do not agree with the second of these comments concerning the development of regional SILs based on a concern that some amounts of PM 2.5 in a particular area are ‘‘ not capable of control. ’’ The PM 2.5 SILs define a threshold level for determining whether a predicted ambient impact by a proposed major stationary source or major modification of PM 2.5 needs to undergo a more thorough analysis of the

PM 2.5 NAAQS or increments. This value is not directly affected by the total amounts of PM 2.5 that may exist in an area or by what causes the existing

PM 2.5 concentrations, rather by the impact of a single source relative to the levels of the NAAQS and increments that must be protected. Therefore, we do not see why the SILs should be influenced by the geographic area of concern, or how different levels of SILs for the same pollutant and averaging period would be necessary.

With regard to the commenters that supported at least one of the proposed SILs options, they generally did not prefer the entire suite of SILs (Class I, II, and III SILs) from a single option, but instead supported parts of different options, primarily divided by drawing a distinction between the Class I SILs and the SILs for Class II and III areas. Consistent with the way that commenters addressed the Class I, II, and III SILs, we will address the comments separately herein as well.

a. Class I SILs

Support and opposition for the proposed PM 2.5 SILs for Class I areas was fairly evenly divided. The PM 2.5 SILs for Class I areas proposed under Option 2 received the support of some commenters, but also received an equal amount of opposition. Option 1, which yielded the lowest (most restrictive) values for the Class I area SILs for PM 2.5 (annual and 24-hour averages), was supported by some commenters, including a Federal agency that serves as a FLM for Federal Class I areas under the PSD program, but was equally opposed. Finally, comments supporting the Class I SILs proposed under Option 3 (from which we derived the values included in the final rules) were matched by comments that opposed the Class I SILs under Option 3.

One commenter opposing the Option 3 SILs for Class I areas said that the values ‘‘ appear to be unrealistically low and, if selected, would point to the need for EPA to conduct an economic impact analysis. ’’ We disagree that adopting the Option 3 SILs for Class I areas (and Class II and III areas) will result in economic impacts significant enough to warrant an economic impact analysis. Under the Paperwork Reduction Act, EPA is required to analyze, and receive approval from the Office of Management and Budget (OMB) for, the recordkeeping and reporting burden imposed by its regulations (referred to as the ‘‘ Information Collection Request ’’

or ‘‘ ICR ’’ for the regulation). For the PSD program, this includes the burden associated with the entire permitting process, including any required modeling analyses. In our analysis for this rulemaking, we have concluded that the number of PSD permits issued annually will be unchanged (at an estimated 274 per year), while the total burden across all PSD permit applicants of adding PM 2.5 analyses will increase by a total of approximately 29,000 hours per year at a cost of approximately $2.8 million per year. This total annual impact on industry is a small fraction of the threshold ($100 million per year) that is considered ‘‘ significant ’’ under Executive Order 12866 (Regulatory Planning and Review) and the Unfunded Mandates Reform Act. See sections X.B and X.D of this preamble for more on the Paperwork Reduction Act and the Unfunded Mandates Reform Act, respectively. Our analysis of the recordkeeping and reporting burden of this rulemaking can be found in the docket for this ICR. 22

Another commenter stated that the use of a NAAQS-based ratio under Option 3 for the proposed SILs does not

‘‘ translate back to the emissions point level when comparing PM 10 and PM 2.5
. ’’ This commenter continued, ‘‘ this is an invalid method of proceeding because EPA has not shown that there is a correlation between the NAAQS and direct PM 2.5 since there is no accounting for precursors and EPA does not have a quantifiable sense of the portion of

PM 2.5 that is condensable for various industries. ’’

We disagree with the commenter’s concern that the use of NAAQS-based ratios is an invalid method for developing the PM 2.5 SILs. The purpose of using the NAAQS ratio with the PM 10 SILs to develop PM 2.5 SILs is to establish values that have a comparable relationship between ambient concentrations of PM 10 and PM 2.5 and their respective NAAQS levels. Whether a particular ambient concentration of

PM 2.5 results from direct PM 2.5 emissions or from precursor emissions is not relevant to this particular approach. The PM 2.5 SILs in this final rule are intended to be compared to the ambient concentrations of PM 2.5 that are predicted by modeling the emissions of a proposed new project. Ambient concentrations of PM 2.5 can be the result of direct PM 2.5 emissions, which may include condensable particulate matter, as well as precursor emissions, e.g., SO 2 and NO X .

We note that the 2007 NPRM included proposed regulatory language providing that demonstrations of whether the air quality impact of a major new source or modification would be less than the PM 2.5 SILs be based on direct PM 2.5 emissions from the proposed project. The intent of this was to recognize the technical limitations associated with modeling precursor emissions to predict ambient

PM 2.5 impacts. However, in this final rule we have removed that limitation by removing the reference to ‘‘ direct ’’ PM 2.5 emissions.

One commenter, who did not support any of the proposed SILs options, was especially critical of the Class I SILs for

PM 2.5 under Option 1, stating that multiplying the proposed PM 2.5 increment by 4 percent is without legal or practical merit. The commenter stated that just because ‘‘ 4 percent may have been a reasonable multiplier to use in establishing a significant emission rate threshold does not mean that the multiplier should be used for a completely different regulatory

purpose. ’’ The commenter added that if the PM 2.5 SILs for Class I areas under Option 1 were codified, emissions from even the most well-controlled coal-fired electric generating station located as far away as 300 km from a Class I area could well exceed the threshold.


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In contrast, the Federal agency commenter supporting the PM 2.5 SILs for Class I areas under Option 1 explained that they analyzed the effectiveness of the three sets of proposed SILs by modeling four different coal-fired power plantscenarios using an EPA-approved longrange transport model. The modeled plants included a large 1,500 megawatt (MW) facility, a moderate-sized 500 MW facility, and two medium 800 MW facilities. Based on this modeling analysis, the commenter concluded that the proposed levels of the Class I 24- hour SILs based on Option 1 and Option

3 are ‘‘ more appropriately protective of the proposed Class I PM 2.5 increment and impacts to visibility than the level obtained under Option 2. ’’ This commenter supported the consistency of using 4 percent of the Class I increments that was used by EPA in proposing Class I SILs for SO 2 , NO X , and PM 10 in

1996.

We chose the Class I SILs under Option 3 because we believe that this option yields the most appropriate combination of SILs for all area classifications. Whether a particular source will have a significant impact on an area is determined to some extent by the amount of its emissions, but also by other factors such as the height of release, pollutant transport distance, terrain features, and meteorological factors. Thus, we did not select SILs values to address a certain size source or the degree of control of that source, but the ambient impact of that source relative to the NAAQS and increments that will result from the source’s emissions. While the annual Class I SIL under Option 3 represents a level that is somewhat greater than 4 percent of the PM 2.5 annual increment for Class I areas, it is sufficiently close (as derived from a ratio of the PM 2.5 NAAQS to the

PM 10 NAAQS) so as to provide a reasonable threshold for defining de
minimis for purposes of conducting a Class I increment analysis. We had proposed the use of 4 percent of the existing Class I increments to develop SILs for pollutants in the 1996 NSR Reform proposal; however, that particular component of the proposal was never finalized. See 61 FR 38250 beginning at 38291. We will further discuss our rationale for selecting the SILs under Option 3 in the discussion which follows for the Class II and III
SILs.

b. Class II and III SILs

While many commenters tended to favor Option 2 with regard to the proposed Class I increments, they tended clearly to support Option 1 for defining Class II and III SILs for PM 2.5
. These particular SILs for PM 2.5 were proposed so as to be equal to the existing Class II and III SILs for the existing pollutants. In all, six commenters supported Option 1. One of these commenters stated that Option 1 SILs for Class II and III areas are

‘‘ sufficiently stringent and fully consistent with the de minimis justification for SILs. ’’ The commenter added that ‘‘ when conducting an air quality impact analysis * * * most applicants assume all coarse PM 10 to be

PM 2.5
. ’’ The commenter claimed that this assumption is conservative and

‘‘ overestimates the amount of fine particles being emitted and renders the effective SIL thresholds for PM 2.5 lower than those written into the regulations. ’’

We strongly disagree that the SILs proposed under Option 1 as applied to

PM 2.5 are sufficiently stringent. The application of such values as SILs for

PM 2.5 would result in ambient concentrations of PM 2.5 that consume a much larger portion of both the PM 2.5 NAAQS and increments than either of the other two options proposed for

PM 2.5 in light of the correspondingly more stringent levels of the PM 2.5 NAAQS and increments than those for the other pollutants. We believe that of the 3 options proposed, the PM 2.5 SILs based on Option 3 represent values thatare more closely aligned percentagewise with the SILs that have been or are being used for other forms of PM when compared to their respective NAAQS and increments.

We also disagree with the commenter’s suggestion that the development of the SILs for PM 2.5 , or any other pollutant, should in any way be influenced by the possibility that some sources may use conservative techniques for estimating a source’s emissions rate. Such conservative techniques may be needed to the extent that technical issues associated with the determination of PM 2.5 emissions are identified, and can certainly be used at any time as a simplified methodology for estimating PM 2.5 emissions. But when such an overly conservative approach fails to yield de minimis results, the source may find it necessary to rely upon more accurate techniques for determining the amount of PM 2.5 that the source will emit.

Finally, one commenter, objecting to all of the proposed SILs, stated that EPA must assure that SILs are truly de

minimis and must also include limitations on the use of SILs as necessary to prevent air quality from significantly deteriorating. We acknowledge that we did not conduct any new modeling or other types of analyses of the proposed SILs in order to explicitly show that the final PM 2.5 SILs values in this final rule are de
minimis. Instead, we have relied on past actions regarding the setting of de
minimis levels to illustrate that the

PM 2.5 values selected via Option 3 represent values that are as stringent as the previous levels that have been established to define de minimis for

PM 10 and TSP. See 45 FR 52706–708 (using modeling and representative data).

Using the 24-hour and annual NAAQS ratios of PM 2.5 to PM 10 , and multiplying them by the corresponding existing PM 10 SILs, we conclude that the

PM 2.5 SILs define de minimis for the

PM 2.5 NAAQS in the same way as the

PM 10 SILs do for PM 10 NAAQS. Using the increments as a basis for comparison provides further support for our conclusion. The annual and 24-hour

PM 2.5 SILs represent about 7.5 and 13 percent of the annual and 24-hour PM 2.5 increments, respectively. By comparison, the annual and 24-hour

PM 10 SILs represent about 5 and 17 percent of the annual and 24-hour PM 10 increments, respectively. We believe the

PM 2.5 SILs fall into a comparable relative range with the PM 10 SILs and can be considered de minimis.

In EPA’s 1980 final rule for PSD, EPA adopted SERs for the pollutants then subject to regulation under the PSD requirements. The SER adopted for PM (then measured as TSP) was 25 tpy, which represented an emissions rate for which EPA modeled impacts that represented about 4 percent of the TSP 24-hour NAAQS and about 28 percent of the 24-hour TSP increment. Thus, EPA considered it acceptable under the de minimis assessment for PM that a source of particulate matter capable of consuming around 28 percent of the applicable 24-hour TSP increment could be exempted from the requirements to complete a comprehensive source impact analysis for the PM NAAQS and
increments. 45 FR 52708.

In looking at the amount of increment that could be consumed by a source that is ultimately exempted from having to complete a comprehensive modeling analysis, it should be pointed out that the maximum modeled concentration typically occurs in a relatively limited area, as compared to the entire modeling domain. In particular, for the short-term averaging periods, such as the 24-hour averaging period, modeled concentrations across the modeled area generally show that ground level impacts are reduced significantly from the peak value as the pollutant travels a relatively short distance from the source, so that the peak modeled


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concentrations represent the source’s impact at only a relatively few receptors within the modeled area. In addition, it is important to note that the temporal and spatial conditions which lead to a maximum impact by one source are seldom the same for other sources, such that maximum impacts of individual sources do not typically occur at the same location or at the same time.

Thus, in an area where several sources can demonstrate that their modeled impacts are de minimis, it generally should not be assumed that their individual maximum (albeit de
minimis ) impacts on the increment are additive. For example, four sources with de minimis PM 2.5 impacts, each consuming 12 percent of the 24-hour

PM 2.5 increment, would not necessarily consume 48% of the 24-hour increment. Increment consumption is determined by the cumulative impact of source emissions on each individual receptor or modeling point in the area of impact within the baseline area defined for the affected PSD sources.

The preamble for the 1980 final rule for PSD included a description of a modeling analysis that EPA conducted to illustrate that a number of major sources each making a de minimis emissions increase for SO 2 could locate in an area (in that case, the Dayton area) and not cause a violation of either the applicable SO 2 increment or NAAQS. In that particular case, the modeling indicated that the maximum aggregate increment consumption for 37 sources emitting 40 tpy of SO 2 (the de minimis emissions rate for SO 2 ) would have a cumulative impact at any location of less than 1.5 μ g/m 3 on a 24-hour basis— well below the NAAQS and increments for SO 2. 45 FR 52708.

With regard to the commenter’s recommendation that we place limitations on the use of SILs, we earlier provided an example of when it might be appropriate to require a modified source to mitigate its contribution to a violation of a NAAQS or increment even when the predicted ambient impact of the proposed emissions increase would result in what is normally considered to be de minimis. In addition, we have historically cautioned states that the use of a SIL may not be appropriate when a substantial portion of any NAAQS or increment is known to be consumed. We have indicated elsewhere in this preamble that states are not required to adopt the SILs for PM 2.5 in this final rule. At their discretion they may choose not to rely on SILs to screen applicants or they may establish more stringent values.

Finally, it should be noted that while a source having only de minimis impacts may not be required to complete a comprehensive source impact analysis, the emissions from such sources are still considered to consume increment and would be counted as part of the next increment analysis required to be completed by a PSD applicant in that same area, or by the State under a periodic increment
review.
3. Relationship Between SILs and AQRVs

While commenters generally supported EPA’s position that the SILs should not be used in any way to determine effects of emissions increases on the AQRVs in a Class I area, two commenters urged that the de minimis concentration be used for analyzing Class I area impacts under certain circumstances. That is, they believed that the SILs should be used to determine the need for a Class I area air quality analysis when an FLM has not identified a specific AQRV related to the pollutant under evaluation or obtained ambient monitoring data to confirm that predicted concentrations from air dispersion models are representative of actual AQRV impacts in the Class I area. The commenters claimed that without this flexibility, applicants would be required to conduct complex and extensive Class I air dispersion modeling without any clear objective, and regulatory agencies would have to review the modeling with limited information to determine if the emissions could cause an ‘‘ adverse ’’ impact or if potentially costly controls should be required.

These commenters appear to be suggesting that an FLM may needlessly call for an analysis of a particular Class I area, involving ‘‘ complex and extensive Class I area dispersion modeling ’’ despite the fact that no AQRV has been identified for that Class I area. We agree that a Class I analysis in the absence of any known AQRVs would be unnecessary because any demonstration of an adverse impact must be made with respect to a pollutant adversely affecting an AQRV. We believe, however, that such analyses would be avoided under the procedures set forth in section 165(d)(2)(C) of the Act which require that a notice be filed alleging that a proposed source may cause or contribute to adverse effects, and identifying the adverse impact. Insofar as the FLM must also demonstrate ‘‘ to the satisfaction of the State that emissions from such facility will have an adverse impact on the air quality related values, ’’ it would be difficult to require the source to undertake any kind of detailed analysis in the absence of an AQRV on which such adverse impacts must be demonstrated. Thus, we have concluded that it is not necessary to use the SILs as a safeguard against unnecessary Class I area analyses. Instead, we believe that the need for a Class I analysis, other than the required analysis of the NAAQS and Class I increments (for both of which the SILs are intended to be used), should be based on the potential for adverse effects on an AQRV that the FLM has identified and believes could be affected by a pollutant that would be emitted by the proposed project.

4. Form of the SILs

One commenter stated that ‘‘ the Proposal does not indicate how the proposed PM 2.5 SILs are to be interpreted. ’’ This commenter believed that ‘‘ the form of the SILs should be consistent with the form of the PM 2.5 NAAQS ’’ adding that ‘‘ the current PM 2.5 NAAQS requires that compliance with the 24-hour and annual standards be determined using 3-year averaging. ’’ Specifically, ‘‘ The annual standard is calculated based upon the 3-year average of annual mean PM 2.5 concentrations, and the 24-hour standard is based on the 3-year average of the 98th percentile (or highest-8th high value) of 24-hour concentrations. ’’

In a March 23, 2010 EPA memorandum titled ‘‘ Modeling Procedures for Demonstrating Compliance with PM 2.5 NAAQS, ’’ we provided guidance for using the SILs in conjunction with the 24-hour and annual PM 2.5 NAAQS, which takes into account the statistical form of the NAAQS. Following promulgation of the

PM 2.5 increments in this final rule, we intend to provide guidance for interpreting the SILs for their use with the 24-hour and annual PM 2.5 increments as well.

5. SILs for Other Pollutants

In proposing Option 1, we noted that many who commented on the 1996 NSR Reform proposal supported this approach and believed that the proposed PM 10 SIL values would serve as appropriate de minimis values. In fact, we are aware that many states have been using these proposed SILs for PM 10 as screening tools since 1996 or earlier.

Regarding the proposed Class I SILs under Option 1, we expressed our belief that where a proposed source consumes less than 4 percent of the Class I increment, the source’s impact is sufficiently low so as not to warrant requiring the source to carry out a detailed analysis of the combined effects of the proposed source and all other increment-consuming emissions in the


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23 In 1985, the requirements now contained in 40 CFR 51.165(b) were contained in 40 CFR 51.18(k), which was later part of a major restructuring of the part 51 SIP requirements. 24 In the case of a NAAQS compliance analysis,
all sources in the area are considered to contribute to the air quality levels; for increments, however,

‘‘ all ’’ refers only to those sources whose emissions, in whole or in part, consume PSD increment for a particular pollutant. 25 The provision for the monitoring exemption was originally promulgated at 40 CFR 51.24(i)(8) and 52.21(i)(8); it should be noted, however, that this provision is now found at 40 CFR 51.166(i)(5) and 52.21(i)(5). area. 72 FR 54140. We previously used a similar rationale to establish the SERs for PSD applicability purposes, concluding in part that emissions rates that resulted in ambient impacts less than 4 percent of the 24-hour standards for PM and SO 2 were sufficiently small so as to be considered de minimis. 45
FR 52707–8.

The original SIL values of 1.0 and 5.0

μ g/m 3 for TSP and PM 10 were interpreted by EPA as representing the minimum amount of ambient impact that is significant. This formed the basis for the proposed Option 1 PM 2.5 SIL values of 1.0 and 5.0 μ g/m 3 for the annual and 24-hour averaging periods for Class II and III areas.

The SILs currently appear in EPA’s regulations at 40 CFR 51.165(b). That particular NSR regulation provides that states must include a preconstruction review permit program for any new major stationary source or major modification that proposes to locate in an attainment or unclassifiable area and would cause or contribute to a violation of the NAAQS. These values, added to 40 CFR 51.165(b) on July 1, 1987, have previously been referred to as

‘‘ significant ambient impact
concentrations ’’ and are used to enable a source to determine whether its emissions would cause or contribute to a NAAQS violation at ‘‘ any locality that does not or would not meet the applicable national standard. ’’ 52 FR 24672, April 2, 1985, at 24688.

In 1985, when EPA proposed to add

‘‘ significant ambient impact levels ’’ for

PM 10 , we also indicated that for PSD purposes the requirements under section 51.165(b) 23 ‘‘ would be applied to all applicable PSD requirements. ’’ The EPA has since applied these values in other analogous circumstances under the PSD program. Based on EPA interpretations and guidance, SILs have also been widely used in the PSD program as a screening tool for determining when a new major source or major modification that wishes to locate in an attainment or unclassifiable area must conduct a more extensive air quality analysis to demonstrate that it will not cause or contribute to a violation of the NAAQS or PSD increment in the attainment or unclassifiable area. The SILs are also used to define the extent of the Significant Impact Area where, using air dispersion models and ambient monitoring data, a cumulative source impact analysis accounting for emissions changes from affected sources is performed. 24 See the 2007 NPRM for additional information on the history of EPA’s guidance related to SILs (72 FR 54138–39).

In the 1996 NSR Reform proposal, we proposed to add the SILs for PM 10 and other pollutants already contained in 40 CFR 51.165(b)(2) directly into the PSD regulations at 40 CFR 51.166 and 52.21. Because the SILs in 40 CFR 51.165(b) did not include thresholds for Class I areas, we proposed to set Class I SILs at the level of 4 percent of the respective Class I increments. Thus, for PM 10 , the proposed Class I SILs were 0.2 μ g/m 3 (annual) and 0.3 μ g/m 3 (24-hour), and the proposed Class II and III SILs were

1.0 μ g/m 3 (annual) and 5.0 μ g/m 3 (24- hour). The EPA has not yet taken final action on the 1996 proposal on SILs for pollutants other than PM 2.5 ; therefore, we rely upon our longstanding policy to use those values, as codified in 40 CFR 51.165(b)(2), for PSD permitting.

VII. Final Action on the PM 2.5 SMC

A. EPA’s Determination on the PM 2.5 SMC

As with the increments and SILs for

PM 2.5 , we proposed three different options for establishing an SMC for

PM 2.5 . The first option, referred to as the

‘‘ lowest detectable concentration ’’ approach, relied on the method we used in 1980 to develop the SMCs for the pollutants then subject to PSD. This particular method focused on development of the SMC value based on the current capability of providing a meaningful measure of the pollutants.
See relevant discussion later in this section and at 45 FR 52710. Options 2 and 3, called the ‘‘ PM 2.5 to PM 10 emissions ratio ’’ and the ‘‘ PM 2.5 to PM 10 NAAQS ratio, ’’ respectively, used the SMC for PM 10 as the base for multiplying the emissions and NAAQS ratios to derive an SMC for PM 2.5. See 72 FR 54141. The three proposed options yielded the following numerical levels for the SMC:

• Option 1: 10 μ g/m 3 , (24-hour average);

• Option 2: 8.0 μ g/m 3 (24-hour average); and

• Option 3: 2.3 μ g/m 3 (24-hour average).

We are taking final action on the SMC for PM 2.5 using the ‘‘ lowest detectable
concentration ’’ approach (Option 1). However, we have determined that the SMC value that is calculated under this methodology is lower than the proposed value of 10 μ g/m 3 to reflect ‘‘ current capability ’’ with respect to the measurement and collection of ambient

PM 2.5 concentrations. The result of such revised calculation is that the SMC value in this final rule is different from (more stringent than) the proposed level. The revised value is 4 μ g/m 3 (24- hour average). Our basis for the revised calculation and the resulting lower value is described in greater detail later in this section.

The EPA and its delegated reviewing authorities will use the PM 2.5 SMC to determine when it may be appropriate to exempt a proposed new major stationary source or major modification from the ambient monitoring data requirements under the PSD rules. Similarly, states with EPA-approved PSD programs that adopt the SMC for

PM 2.5 may use the SMC, once it is part of an approved SIP, to determine when it may be appropriate to exempt a particular major stationary source or major modification from the monitoring requirements under their State PSD programs ( see 40 CFR 51.166(i)(5)).

B. Response to Comments Concerning the SMC

1. Legal Issues

Under the Act and EPA regulations, an applicant for a PSD permit is required to gather preconstruction monitoring data in certain circumstances. Section 165(a)(7) of the Act calls for ‘‘ such monitoring as may be necessary to determine the effect which emissions from any such facility may have, or is having, on air quality in any areas which may be affected by emissions from such source. ’’ In addition, section 165(e) of the Act requires an analysis of the air quality in areas affected by a proposed major facility or major modification and calls for gathering 1 year of monitoring data unless the reviewing authority determines that a complete and adequate analysis may be accomplished in a shorter period. These requirements are codified in EPA’s PSD regulations at 40 CFR 51.166(m) and 52.21(m).

In 1980, EPA adopted regulations that included pollutant-specific SMCs as a screening tool for sources to determinewhether they should conduct sitespecific preconstruction ambient monitoring. 25 We explained our


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position that it was appropriate to exempt sources from preconstruction monitoring requirements for a pollutant if the source could demonstrate that its ambient air impact was less than a value known as the Significant Monitoring Concentration or SMC. At the time the SMCs were adopted, EPA described them as ‘‘ air quality concentration de
minimis level[s] for each pollutant [that were available] for the purpose of providing a possible exemption from monitoring requirements. ’’ 45 FR 52676, 52707 (August 7, 1980). The EPA explained that it believed there was

‘‘ little to be gained from preconstruction monitoring ’’ where a source could show that its projected impact of a pollutant within the affected area was below the de minimis concentration for that pollutant. 45 FR at 52710.

One commenter opposed our proposed establishment of any SMC for

PM 2.5 , claiming that SMCs in general are contrary to the Act. The commenter stated that ‘‘ in Section 165(e) Congress mandated a full year of continuous air quality monitoring for each major source subject to the PSD program. ’’ With this in mind, the commenter indicated that there are no exceptions, other than the limited statutory provisions, discussed above, which allow for less than a year’s worth of monitoring based on a determination that a complete and adequate analysis of such purposes may be accomplished in a shorter period. The commenter then argued that ‘‘ the allowance for a ‘shorter period’ hardly amounts to authority to waive monitoring entirely, which is what EPA’s SMC proposal would do. ’’

As with the SMCs adopted by EPA in 1980, the SMCs that we proposed for

PM 2.5 are supported by the de minimis doctrine set forth in the Alabama Power opinion. Like the other pollutants for which EPA has promulgated SMCs, EPA believes there is little to be gained from preconstruction monitoring of PM 2.5 concentrations that cannot be accurately measured.

Therefore, in developing the three proposed options for an SMC, EPA sought to use methods that would identify levels representing a de

minimis or insignificant impact on

PM 2.5 ambient air quality that makes the collection of additional monitoring data

extraneous.

2. Level of the SMC

As indicated earlier, the SMC for

PM 2.5 in this final rule is 4 μ g/m 3 , 24- hour average. This value may be used by permitting authorities to determine when they may exempt a proposed major stationary source or major modification for PM 2.5 from the air quality monitoring requirements for

PM 2.5 under 40 CFR 51.166. The EPA and its delegated State/local programs will also use this new value under the Federal PSD program at 40 CFR 52.21.

We proposed three options for developing the SMC for PM 2.5 ; each option yielded a different concentration value. In choosing between the three options, EPA proposed to select the option that reflected the degree of ambient impact on PM 2.5 concentrations that could be considered truly de
minimis and used to justify exempting a source from the requirement to gather 1 year of ambient monitoring data for

PM 2.5. Ultimately, we have selected the

‘‘ lowest detectable concentration ’’ approach (Option 1) that relies directly upon ambient monitoring measurement sensitivity and precision. That is, if either the predicted source impact or estimated existing air quality in an area is below a concentration that can be accurately measured, then it would not be reasonable to require a source to attempt to collect such ambient data.

In 1980, EPA determined the SMCs based on the then current capability of providing a meaningful measure of ambient pollutant concentrations. The EPA promulgated values that represented five times the lowest detectable concentration in ambient air that could be measured by the instruments available for monitoring the pollutants. 45 FR 52710. The factor of

‘‘ five ’’ took into account the measurement errors associated with the monitoring of these low pollutant levels or small incremental changes in concentration. These measurement errors were said to arise from various sources, such as sample collection, analytical measurement, calibration, and interferences. See May 20, 1980 EPA memorandum from Rehme, K. A., to Warren Peters, contained in the docket for this rulemaking. Accordingly, in the 2007 NPRM for PM 2.5, we voiced our belief that this was a reasonable approach, since it was also used for

PM 10 and TSP. 72 FR 54141.

Eight commenters expressed support for the SMC based on Option 1, albeit at the higher level as originally proposed. In some cases, it is not clear whether these commenters supported the particular approach ( i.e., an SMC linked to the lowest detectable level) or the fact that the calculated value was simply the highest value of the values proposed under the three options. Clearly, some of the commenters indicated their support for the approach because it is consistent with the approach used for setting the original
SMCs in 1980. Two commenters opposed Option 1 because it resulted in an SMC value that was too high. These latter commenters noted that the SMC derived via Option 1 (10 μ g/m 3 , 24-hour average) was greater than the proposed 24-hour PM 2.5 increment for Class II areas and argued that such an outcome is inappropriate. We believe that this important concern is adequately addressed by the level of the SMC for

PM 2.5 that is established in this rulemaking.

Several commenters supported the levels derived from either Option 2 or Option 3, but were concerned that the justification for choosing either of these values would need to be further explained. Some of these commenters were specifically concerned about the use of a 0.8 PM 2.5 -to-PM 10 emissions ratio which, they argued, relied on inventory data that did not adequately address all sources that would likely affect ambient concentrations of PM 2.5 in an area.

We conclude that Option 1 is the appropriate option for defining the SMC for PM 2.5 . The ability to accurately measure ambient PM 2.5 concentrations is not related to a ratio of PM 2.5 to PM 10 either directly in terms of emissions or as expressed by the respective NAAQS, which were used to define the SMC for

PM 2.5 under Options 2 and 3, respectively. Our original concern was that, while Option 1 linked the SMC directly to the concept of a minimum detectable concentration (in order to identify de minimis monitoring circumstances), the value originally derived from that approach in the 2007 NPRM was high in relationship to the concentrations of PM 2.5 defined by the existing NAAQS and increments for

PM 2.5.

In considering the use of Option 1 for developing the SMC in the final rules, however, we recognized after publication of the proposed rule that it was necessary to re-examine the assumptions that we relied upon in 1980 to develop the numerical values for the original SMCs so that we could most accurately reflect current monitoring techniques for PM 2.5 . Our reexamination for this final rule utilized the most current information concerning the physical capabilities of the PM 2.5 Federal Reference Method Samplers, and addresses uncertainties introduced to the measurement of PM 2.5 due to variability in the mechanical performance of the PM 2.5 samplers and the micro-gravimetric analytical balances that weigh filter samples.

The minimum detection limit (MDL) of 2 μ g/m 3 , originally used in 1980 for the SMC for PM and promulgated for

PM 2.5 in 1997 ( see 40 CFR part 50, Appendix L, section 3.1), has been


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26 This information is contained in a March 12,
2009 internal EPA memorandum from Dennis Crumpler to Raj Rao, titled ‘‘ PSD Monitoring De Minimis Concentration for PM 2.5 , ’’ which has been placed in the docket for this rulemaking. reaffirmed by 9 years of field blank data collected by EPA through the PM 2.5 Performance Evaluation Program. However, we found that new data exist

to ‘‘ indicate a conservative estimate of the aggregate uncertainty factor is no greater that ‘2’ at the concentration equal to the MDL of 2 μ g/m 3

. ’’ 26 Accordingly, the lowering of the uncertainty factor from ‘‘ five ’’ to ‘‘ two ’’ under Option 1 yields an SMC of 4 μ g/

m 3 PM 2.5, 24-hour average, rather than the proposed concentration of 10 μ g/m 3

.

We conclude that the modified level
of 4 μ g/m 3 PM 2.5 , 24-hour average, for the SMC under Option 1, based upon a more current understanding of monitoring precision for PM, especially fine PM, addresses commenter support
for the use of a method that is consistent with the way other SMCs were developed and most directly reflects monitoring capability for the pollutant of concern, while at the same time responding to the concern of other
commenters that a value in the lower range of proposed SMC values is most reasonable considering the levels of the NAAQS and increments for PM 2.5
. C. Correction of Cross Reference in PSD Ambient Monitoring Requirements

In the 2007 NPRM, we proposed to
take final action to correct a cross reference contained in paragraph (i) of the part 51 and 52 PSD regulations. Specifically, at the time of the proposal, paragraphs (ii) and (iii) in 40 CFR 51.166(i)(5), and paragraph (ii) in 40 CFR 52.21(i)(5), each referred to concentrations listed in paragraph (i)(8)(i) of both regulations. However, there is no paragraph (i)(8)(i) in existing 40 CFR 51.166, and no concentration values are contained in existing section (i)(8)(i) of 40 CFR 52.21. The cross reference in these provisions was
intended to reference the SMCs in paragraph (i)(5)(i) of the two PSD regulations, but EPA failed to make this change when the paragraphs were renumbered in an earlier rulemaking. We did not receive any comments concerning this proposed corrective action. We made the necessary correction as part of the May 16, 2008
final PM 2.5 NSR Implementation Rule ( see 73 FR 28348 and 28349); therefore it is not necessary to take any further action in this final rule with regard to the proposed correction. VIII. Dates Associated With Implementation of the Final Rule

This section describes the key dates that we have established for implementing the final rule. In the 2007 NPRM, we indicated that different dates appeared to be appropriate for implementing the PM 2.5 increments, each date depending on the legal authority that we relied upon to promulgate it. We described and took comment on some alternative effective dates for increments, as well. In addition, we discussed and took comment on potential implementation dates for the SILs and SMC components of the proposed rule, which we indicated were not subject to the same statutory considerations as the
increments.

We received a number of comments on the different proposed dates. We carefully considered these comments in selecting the dates described below for the final rule. Some of the significant comments and our responses to those comments are provided below. The remaining comments and our responses are contained in the Response to Comments document included in the docket for this rulemaking.

A. Effective Date of the Final Rule

In the 2007 NPRM, we took comment on the effective date of the final rule by presenting the different options available for implementing the PM 2.5 increments. Under Option 1 for developing the increments, we stated that section 166(b) of the Act specifies that increments promulgated pursuant to section 166(a) are to become effective 1 year following their promulgation. In contrast, there is no such 1-year delay or any other date prescribed for increments promulgated in accordance with section 166(f) of the Act, upon which we based Options 2 and 3 for the annual PM 2.5 increments. Thus, increments promulgated under Option 1, which relies on the procedural provisions of section 166(b) of the Act, would normally be subject to a 1-year delay in implementation, while increments promulgated under either Option 2 or 3, relying on section 166(f) of the Act, could follow a 30- or 60-day effective date, typical of the effective date for most new rules in general. In either case, our consideration of the effective date for the PM 2.5 increments assumed that the selected date would also be the effective date of the final rule.

In the 2007 NPRM, we took comment on some alternative approaches to establishing the effective date for PM 2.5 increments. Specifically, while proposing a 1-year effective date under Option 1, we requested comment on whether we could promulgate these increments under section 166(a) of the Act with an effective date of only 60 days. See 72 FR 54142.

Nine commenters supported our proposal to establish the effective date of the part 51 and 52 PSD regulations for

PM 2.5 as 1 year from the date of publication. Alternatively, two commenters encouraged us to apply the 60-day effective date, while three other commenters supported other effective dates, as described in this section.

Seven industry and industry association commenters supported our proposal to make the final rule for PM 2.5 increments effective 1 year after promulgation. Most of these commenters cited the additional time necessary to develop the needed PM 2.5 inventories needed for implementation of the PM 2.5 PSD program. Two of the commenters urged EPA to allow State programs sufficient time to adopt increments, particularly if condensable particulate matter is included in the increment and its analysis. These commenters stated that the Federal rule should not be effective for 1 year. (They also stated that states should have 3 years for the associated SIP revisions.) These same commenters added that this delay would provide time for sources that have permits in the pipeline or are just about to submit an application to be able to complete the permitting process without undue delay. One of the commenters specifically voiced support for Option 1 for the effective date of the final rule (1 year) and Option 2B for the period granted for SIP revisions (3 years). This commenter also explained that this additional time may give the Agency time to promulgate better measurement methods for sources of condensable particulate matter.

Another of these commenters noted that, at the time of the proposal, the NSR portion of the CAFPIR had not yet been promulgated, and that states would need time to incorporate that rule as well as the requirements of the proposal into their SIPs. This commenter added that making the PM 2.5 increments effective before states and sources have had a reasonable opportunity to begin, let alone complete, the SIP process for the two related rulemakings wouldunnecessarily complicate an alreadycomplex regulatory process.

In contrast, the two commenters supporting the shorter effective date encouraged us to apply the 60-day period for the effective date under whatever option is finalized. One of these commenters urged us to take measures to expedite the


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implementation of the PM 2.5 final rule and suggested that we choose the shortest of the proposed effective dates which are allowed under any of the applicable regulations. This commenter indicated that in light of the excessive delay in the implementation of the

PM 2.5 PSD program since the NAAQS were promulgated, the 60-day effective date should be applied under EPA’s preferred option.

In light of our decision to promulgate

PM 2.5 increments under the authority of section 166(a) of the Act (proposed Option 1), we are faced with the decision as to how to most effectively implement the long-awaited PM 2.5 increments, recognizing that the Act provides for a 1-year implementation delay. We have concluded that it is most appropriate to follow the plain language of the Act which calls for a 1-year effective date for implementing increments developed under section 166(a) of the Act. We agree with the commenters who suggested that a shortened implementation delay was desirable because of the substantial delay in the promulgation of measures to prevent significant air quality deterioration with respect to PM 2.5
. Nevertheless, we believe it would be inappropriate in this action to disregard the statutory language which plainly calls for a 1-year delay. Accordingly, we are setting the effective date of the PM 2.5 increments at 1 year from the date of promulgation of this final rule, consistent with the 1-year delay required under section 166(b) of the Act. We are doing this by setting the ‘‘ trigger date ’’ for PM 2.5 as October 20, 2011. See new 40 CFR 51.166(b)(14)(i)( c ) and (ii)( c ), and new 40 CFR 52.21(b)(14)(i)( c ) and (ii)( c ). At the same time, we are establishing an effective date for the other provisions, i.e., the SILs and SMC for PM 2.5 , in this final rule as December 20, 2010. This will enable the implementation of these key elements of this rule under the Federal PSD program as soon as possible.

1. State PSD Programs

In this final rule, we are establishing the final PM 2.5 increments as minimum program elements for all State PSD programs. Accordingly, states must submit for EPA’s approval revised SIPs that incorporate the final PM 2.5 increments or alternative measures that can be demonstrated to EPA’s satisfaction to provide an equivalent level of protection as the PM 2.5 increments. In accordance with section 166(b) of the Act, we are requiring states to submit revised implementation plans to EPA for approval within 21 months of promulgation, that is, by July 20, 2012. Section 166(b) also specifies that we must approve or disapprove these revisions within 25 months of promulgation (4 months from the statutory deadline for SIP submittal). We regard these statutory deadlines as maximum allowed timeframes for action. Moreover, we do not believe that the Act restricts our ability to approve SIP revisions requested by a State at any time before these deadlines. In this final rule, we are amending the regulatory provisions at 40 CFR 51.166(a)(6)(i) to articulate the deadline set forth by the statute for the SIP submittals involving the PM 2.5 increments pursuant to section 166(a) of the Act.

It is very unlikely that states will be able to revise their SIPs and submit them to EPA for approval prior to the applicability date of the PM 2.5 increments in this final rule, which is October 20, 2011. Therefore, there is likely to be a period of time after October 20, 2010 when State laws will not require PSD applicants otherwise subject to PSD for PM 2.5 to complete an increment analysis for the PM 2.5 increments, even though the PM 2.5 increments, major source baseline date, and trigger date have been established as a result of this final rule. Similarly, it is not clear whether states will have the authority to consider such applicants as having triggered the minor source baseline date during this interim period before their revised PSD rules containing the PM 2.5 increments and relevant baseline dates become effective.

The EPA does not intend to prescribe the implementation timeline for State programs; rather, each State will need to determine how increment consumption and the setting of the minor source baseline date for PM 2.5 will occur under its own PSD program. Nevertheless, regardless of when a State begins to require PM 2.5 increment analyses and how it chooses to set the PM 2.5 minor source baseline date, the emissions from sources subject to PSD for PM 2.5 on which construction commenced after October 20, 2010 (the major source baseline date) will consume PM 2.5 increment and must be included in increment analyses occurring after the minor source baseline date is established for an area under the State’s revised PSD program.

2. Federal PSD Program

The Federal PSD regulations under 40 CFR 52.21 apply where states do not have approved PSD programs and in Indian lands. In such cases, either EPA implements the PSD program or the State will implement it under authority granted by EPA through a delegation agreement. We proposed to begin implementing the Federal PSD program for PM 2.5 on the effective date of the final rule, i.e., either 1 year from the date of publication in the Federal Register or 60 days from date of publication, if we developed the PM 2.5 increments pursuant to proposed Option 1. Alternatively, we requested comment on whether we should delay implementation of the Federal PSD program until 25 months after promulgation, which is the latest date by which EPA is required to approve State SIP revisions. This is the same approach we took in 1988 to implement the then new NO 2 increments. See 53 FR 40658. We did not propose the 24- month delay for the PM 2.5 increments because of the significant delay that has already occurred between the time we promulgated the PM 2.5 NAAQS and the time the PM 2.5 increment rulemaking would be finalized. However, we sought comment on this alternative approach because we recognized that it might not be equitable to begin implementation of the new program requirements in those few areas where the Federal program applies before the majority of states are required to implement the program.

Two commenters urged EPA to hold off implementation of State programs administered under the Federal PSD program in order to provide a uniform and consistent national approach. One State agency supported implementing the Federal PSD program with a delayed effective date of 1 year after the effective date of the final rule instead of 60 days.

We have decided to begin implementing the revised Federal PSD program as set out previously in our introductory discussion of this issue in section VIII.A. That is, the revised regulations at 40 CFR 52.21 will become effective in 60 days, on December 20, 2010. This will allow EPA or the delegated State agency to begin using the SILs and SMC for PM 2.5 on that date, as described in section VIII.C of this preamble. However, the date established in the regulations for the trigger date will ensure that the PM 2.5 increments do not become effective for 1 year, consistent with section 166(b) of the Act, and that the minor source baseline date cannot be established until the

PM 2.5 increments become effective. However, PSD sources subject to PM 2.5 that receive their PSD permit after the date of publication of this final rule will be considered to consume PM 2.5 increments by virtue of the fact that they will commence construction after the major source baseline date for PM 2.5 , which is the date of publication of this final rule.


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Thus, sources in an area subject to the Federal PSD program for PM 2.5 will be able to use the SILs and SMC as screening tools for the required PM 2.5 NAAQS compliance demonstration, but in most cases will not be required to submit a PM 2.5 increment analysis as part of a complete PSD permit application for a Federal PSD permit unless the application is submitted on or after October 20, 2011. On or after that date, when an applicant submits a complete PSD permit application that is required to address PM 2.5 under the Federal PSD program, that first application will establish the minor source baseline date for PM 2.5 in the applicable attainment or unclassifiable

area.

As with the State PSD program requirements, prior to the establishment of the minor source baseline date in an area, emissions increases from minor sources in the area will be counted toward the baseline concentration, rather than to the PM 2.5 increment. As described earlier, the emissions from major stationary sources that commence construction after the major source baseline date, regardless of the date on which their PSD application is submitted, must be counted toward consumption of the PM 2.5 increments. While these sources will not be required to submit an increment analysis for

PM 2.5 as part of their complete application as long as they receive their PSD permit before the trigger date for

PM 2.5 ( see discussion that follows in section VIII.B), the emissions increases resulting from the permitting of these sources ultimately must be counted toward the PM 2.5 increments when the first PSD permit application submitted after the trigger date establishes the minor source baseline date for the area of concern, and in all subsequent PM 2.5 increment analyses for that area.

B. Transition Period

In the 2007 NPRM, we proposed a transition period to clarify when PSD permit applications must contain an increment analysis demonstrating compliance with the PM 2.5 increments following the date the PM 2.5 increments become effective in any State or Federal PSD program. Specifically, we proposed to establish a grandfathering provision to allow complete applications submitted before the increment effective date, but for which the permit had not yet been issued by the effective date, to continue being processed using the

PM 10 Surrogate Policy to satisfy the requirement to demonstrate compliance with the new PM 2.5 requirements. The grandfathering provision for PM 2.5 was originally proposed in the 2007 NPRM at 40 CFR 51.166(i)(10) and 40 CFR 52.21(i)(11) for State and Federal PSD programs, respectively. See 72 FR 54149 and 54154.

Three commenters supported the proposed grandfathering provision for sources that submitted a complete application before the effective date of the applicable PSD rules. Another commenter felt that it was reasonable to allow states a choice between using

PM 10 or PM 2.5 increments during a transition period including SIP approval, where applicable.

During the time since the proposal of this rule in 2007, we have reconsidered the need for the proposed transition period in the Federal PSD program to effectively implement the PM 2.5 increments. In light of the importance of preventing significant deterioration of

PM 2.5 air quality and the amount of time that has passed since the initial promulgation of the PM 2.5 NAAQS, we do not believe that further delay is warranted. We expect that most permits issued after October 20, 2011 will be from sources that submitted their PSD applications after the major source baseline date for PM 2.5 , which is defined as the date of publication of this finalrule, so that they will be incrementconsuming sources. Therefore, when these sources apply for their PSD permits, they will have had significant advance notice of when the PM 2.5 increments will become effective, i.e., 1 year from the date of publication of this final rule. The review and permitting of permit applications submitted prior to the publication date of this final rule should generally be completed prior to the effective date of PM 2.5 increments and thus effectively have a transition period of 1 year to complete processing.

Thus, we are requiring each source that receives its PSD permit after the effective date of the PM 2.5 increments, regardless of when the application was submitted, to provide a demonstration that the source’s proposed emissionsincrease, along with other incrementconsuming emissions, will not cause or contribute to a violation of the PM 2.5 increments.

Under this final rule, sources applying for a PSD permit under the Federal PSD program after the major source baseline date for PM 2.5 ( i.e., after the date of publication of this final rule), but before the PM 2.5 increments become effective ( i.e., the date 1 year after publication of this final rule), will be considered to consume PM 2.5 increment. While EPA will not require any such source to include a PM 2.5 increment analysis as part of its initial PSD application, an increment analysis ultimately will be required before the permit may be issued if the date of issuance will occur after the trigger date, when the PM 2.5 increments become effective under the Federal PSD

program.

Finally, for the same reasons that we are not adopting the proposed transition period that would have exempted PSD applicants with pending permit applications from demonstrating compliance with the PM 2.5 increment requirements under the Federal PSD program, we have decided not to provide an option for states to apply a transition period under 40 CFR 51.166. We believe it is appropriate for all increment-consuming sources subject to

PM 2.5 to demonstrate compliance with the PM 2.5 increments when the required permit is issued after the PM 2.5 increments become effective in the State’s PSD regulations.
C. SILs and SMC for PM 2.5 In the 2007 NPRM, we explained our position that SILs and SMCs are not minimum required elements of an approvable SIP. While these de minimis values are widely considered to be useful components for implementing the PSD program, they are not absolutely necessary for the states to implement their PSD programs. That is, states can satisfy the statutory requirements for a PSD program by requiring each PSD applicant to submit air quality monitoring data and to conduct a comprehensive air quality impacts analysis for PM 2.5 without using de minimis thresholds to exempt certain sources from such requirements. Because the de minimis values for PM 2.5 (and other pollutants) are not mandatory elements, we proposed not to establish specific deadlines for submitting revisions to incorporate the specific values for PM 2.5 into SIPs.

One State/local commenter agreed that the SILs and SMCs should not be a required element of the PSD SIP. Another State/local commenter agreed with our proposal, but stated that EPA has the authority to include SILs and SMCs as minimum program requirements per the opinion set forth
in Alabama Power. This commenter added that the EPA Environmental Appeals Board has affirmed EPA’s interpretation of the Act to allow EPA to evaluate the significance of a source’s impact when determining whether the source’s emissions would ‘‘ cause or contribute ’’ to a NAAQS or increments violation under section 165(a)(3) of the

Act.

Two commenters disagreed with our proposed position and argued that SILs and SMCs should be mandatory elements of a State PSD program. One


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of these commenters argued that the requirement to model without the use of screening models with SILs and SMCs is so unreasonable that EPA must require that states adopt the SILs and SMCs to meet the Purpose clause of the Act, which requires a balancing of environmental and economic considerations. The other opposing commenter stated that the increments, SILs, and SMCs need to be adopted as a single regulatory approach because the SILs and SMCs define when additional work is needed to ensure that PSD requirements, such as maintaining adequate increment, are met. This commenter added that there is no reason for sources to be placed in the position of conducting expensive modeling that can delay a project when it is unnecessary from an air quality perspective.

We agree that the SILs and SMCs used

as de minimis thresholds for the various pollutants are useful tools that enable permitting authorities and PSD applicants to screen out ‘‘ insignificant ’’ activities; however, the fact remains that these values are not required by the Act as part of an approvable SIP program. We believe that most states are likely to adopt the SILs and SMCs because of the useful purpose they serve regardless of our position that the values are not mandatory. Alternatively, states may develop more stringent values if they desire to do so. In any case, states are not under any SIP-related deadline for revising their PSD programs to add these screening tools.

Using the SILs for PM 2.5 , when a proposed major new source or major modification of PM 2.5 predicts (via air quality modeling) an impact less than the PM 2.5 de minimis value, the proposed source or modification is not considered to have a significant air quality impact and would not need to complete a cumulative impact analysis involving an analysis of other sources in the area. Also, a source with a de
minimis ambient impact would not be considered to cause or contribute to a violation of either the PM 2.5 NAAQS or
increments.

The PM 2.5 SILs will become effective under the Federal PSD program on the effective date of this final rule, that is, on December 20, 2010, when either EPA, or a State acting under a delegation of EPA’s authority, implements the revised PSD permitting requirements for PM 2.5 pursuant to 40 CFR 52.21. The SILs will be for use initially with the compliance demonstration for the PM 2.5 NAAQS, and later for the PM 2.5 increment analysis, under the Federal PSD program. We emphasize, however, that the PM 2.5 SILs are not intended to be used as part of the determination of adverse impacts on AQRVs for PM 2.5 in Class I areas.

Similarly, we intend to use the PM 2.5 SMC (4 μ g/m 3 , 24-hour average) as a screening tool in the Federal PSD permit program beginning on December 20, 2010. Accordingly, when either the modeled PM 2.5 impact of, or the existing ambient air quality within the area of, the proposed new major source or major modification is less than the PM 2.5 SMC, the reviewing authority may exempt the source or modification from the monitoring data requirements for PM 2.5 under 40 CFR 52.21(m).

IX. Other Regulatory Changes

The Act provides that the PSD regulations apply to areas designated as

‘‘ attainment ’’ or ‘‘ unclassifiable ’’ as defined by the Act. When the original regulations were written, the Act provisions for designating areas as either ‘‘ attainment ’’ or ‘‘ unclassifiable ’’ were contained in sections 107(d)(1)(D) and (E), respectively. In 1990, Congress revised section 107 and changed the relevant paragraphs defining

‘‘ attainment ’’ and ‘‘ unclassifiable ’’ areas to sections 107(d)(1)(A)(ii) and (iii), respectively. In accordance with these statutory changes, we are correcting the references to the statutory classifications contained in the existing PSD rules to match the revised paragraphs in the Act.
See revised 40 CFR 51.166(b)(14)(iii)( a ) and (15)(i) and (ii), and 40 CFR 52.21(b)(14)(iii)( a ) and (15)(i) and (ii).

In adding the SILs for PM 2.5 in this final rule, we restructured paragraph (k) ( ‘‘ Source impact analysis ’’ ) in the existing PSD regulations at 40 CFR 51.166 and 52.21. Under the restructuring of paragraph (k), old paragraph (k)(2) is now paragraph (k)(1)(ii). To accommodate this restructuring change, we are also revising grandfathering provisions that are contained in existing paragraphs (i)(8) and (i)(9) at 40 CFR 51.166, and paragraphs (i)(9) and (i)(10) at 40 CFR 52.21, which contained references to requirements contained in paragraph (k)(2). As revised, the grandfathering provisions now reference new paragraph (k)(1)(ii).

X. Statutory and Executive Order
Reviews

A. Executive Order 12866—Regulatory Planning and Review

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is a

‘‘ significant regulatory action ’’ because it raises novel legal or policy issues arising out of legal mandates, the President’s priorities, or the principle set forth in the Executive Order. Accordingly, EPA submitted this action to OMB for review under Executive Order 12866 and any changes made in response to OMB recommendations have been documented in the docket for this action.

B. Paperwork Reduction Act

The information collection requirements in this rule have been submitted for approval to the OMB under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. The information collection requirements are not enforceable until OMB approves them.

Pursuant to title I, part C, of the Act, the PSD program requires the owner or operator to obtain a permit prior to either constructing a new major stationary source of air pollutants or making a major modification to an existing major stationary source. The information collection for sources under PSD results from the requirement for owners or operators to submit applications for NSR permits. In some cases, sources must conduct preconstruction monitoring to determine the existing ambient air quality. For reviewing authorities, the information collection results from the requirement to process permit applications and issue permits, and to transmit associated information to EPA. The EPA oversees the PSD program, and the information collected by sources and reviewing authorities is used to ensure that the program is properly implemented.

The final rule will increase the PSD permitting burden for owners and operators of major stationary sources of

PM 2.5 emissions by adding PM 2.5 increments to the list of existing increments for which air quality impact analyses must be carried out to track the amount of increment consumed by the proposed source and other sources in the area. Over the 3-year period covered by the ICR, we estimate an average annual burden totaling about 29,000 hours and $2.8 million for all industry entities that will be affected by the final rule. For the same reasons, we also expect the final rule (when fully implemented) to increase burden for the State and local authorities reviewing PSD permit applications. In addition, there will be additional burden for State and local agencies to revise their SIPs to incorporate the proposed changes. Over the 3-year period covered by the ICR, we estimate that the average annual burden for all State and local reviewing authorities will total about 7,500 hours and $581,000. Burden is defined at 5 CFR 1320.3(b).


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An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for EPA’s regulations in 40 CFR are listed in 40 CFR part 9. When this ICR is approved by OMB, the Agency will publish a technical amendment to 40 CFR part 9 in the Federal Register to display the OMB control number for the approved information collection requirements contained in this final rule.

C. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the Agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations, and small governmental jurisdictions.

For purposes of assessing the impacts of this rule on small entities, ‘‘ small entity ’’ is defined as: (1) A small business as defined by the Small Business Administration’s regulations at 13 CFR 121.201; (2) a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; and (3)a small organization that is any not-forprofit enterprise which is independently owned and operated and is not dominant in its field.

After considering the economic impacts of this final rule on small entities, I certify that this action will not have a significant economic impact on a substantial number of small entities. This final rule will not impose any requirements on small entities because small entities are not subject to the requirements of this rule.
D. Unfunded Mandates Reform Act

This action contains no Federal mandates under the provisions of Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 1531– 1538 for State, local, or tribal governments or the private sector. The action imposes no enforceable duty on any State, local or tribal governments or the private sector. The final rules adds only a relatively small number of new requirements to the existing permit requirements already in place under the PSD program, since states are currently implementing a PM 10 surrogate program pursuant to EPA guidance. Thus, this action is not subject to the requirements
of sections 202 or 205 of UMRA.

This rule is also not subject to the requirements of section 203 of UMRA because it contains no regulatory requirements that might significantly or uniquely affect small governments. The final rule applies only to new major stationary sources and to major modifications at existing major stationary sources.

E. Executive Order 13132—Federalism

This final rule does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government, as specified in
Executive Order 13132. The final rule makes relatively minor changes to the established PSD program, simply making it possible for states to implement PSD for PM 2.5 instead of relying on PM 10 as a surrogate. Thus, Executive Order 13132 does not apply to this rule. In the spirit of Executive Order 13132, and consistent with EPA policy to promote communications
between EPA and State and local governments, EPA specifically solicited comment on the proposed rule from
State and local officials.

F. Executive Order 13175—Consultation
and Coordination With Indian Tribal

Governments

This action does not have tribal implications, as specified in Executive Order 13175 (65 FR 67249, November 9, 2000). The final rule provides the elements to implement a PM 2.5 PSD program in attainment areas. The Act provides for states to develop plans to regulate emissions of air pollutants within their jurisdictions. The Tribal Air Rule (TAR) under the Act gives tribes the opportunity to develop and implement Act programs to attain and
maintain the PM 2.5 NAAQS, but leaves
to the discretion of the tribes the decision of whether to develop these programs and which programs, or appropriate elements of a program, they will adopt. Thus, Executive Order 13175 does not apply to this action.

The EPA did reach out to national tribal organizations in 2006 to provide a forum for tribal professionals to provide input to the rulemaking. However, not much participation or input was received. G. Executive Order 13045—Protection of Children From Environmental Health and Safety Risks

This action is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997) because it is not economically significant as defined in Executive Order 12866, and because the Agency does not believe the environmental health or safety risks addressed by this action present a disproportionate risk to children. One of the basic requirements of the PSD program is that new and modified major sources must demonstrate that any new emissions do not cause or contribute to air quality in violation of the NAAQS.

H. Executive Order 13211—Actions That Significantly Affect Energy Supply, Distribution, or Use

This action is not a ‘‘ significant energy
action ’’ as defined in Executive Order 13211 (66 FR 28355, May 22, 2001) because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. Further, we have concluded that this rule is not likely to have any adverse energy effects.
I. National Technology Transfer and Advancement Act

Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104– 113, 12(d) (15 U.S.C. 272 note) directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( e.g., materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies. The NTTAA directs EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards.

This action does not involve technical standards. Therefore, EPA did not consider the use of any voluntary consensus standards.

J. Executive Order 12898—Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations

Executive Order 12898 (59 FR 7629, Feb. 16, 1994) establishes Federal executive policy on environmental justice. Its main provision directs Federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing,


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as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States.

The EPA has determined that this final rule will not have disproportionately high and adverse human health or environmental effects on minority or low-income populations because it does not affect the level of protection provided to human health or the environment. This final rule will provide regulatory certainty for implementing the preconstruction NSR permitting program for PM 2.5 . However, the requirements are similar to the existing requirements of the PM 10 program and hence do not impact the human health or environmental effects.

K. Congressional Review Act

The Congressional Review Act, 5
U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. The EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . A major rule cannot take effect until 60 days after it is published in the Federal Register . This action is not a

‘‘ major rule ’’ as defined by 5 U.S.C. 804(2). Nevertheless, this rule needs to be reviewed for the PM 2.5 increments being promulgated herein so that they can be scrutinized by Congress as intended under section 166(b) of the Act. Even though the PM 2.5 increments will not become applicable for 1 year, the final rule will become effective 60 days from the date of publication, that is, on December 20, 2010, for the screening tools (SILs and SMC) being established in this rule.

XI. Judicial Review

Under section 307(b)(1) of the Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the District of Columbia Circuit by December 20, 2010. Any such judicial review is limited to only those objections that are raised with reasonable specificity in timely comments. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. Under section 307(b)(2) of the Act, the requirements of this final action may not be challenged later in civil or criminal proceedings brought by us to enforce these requirements.

XII. Statutory Authority

The statutory authority for this final action is provided by sections 101, 160, 163, 165, 166, 301, and 307(d) of the Act as amended (42 U.S.C. 7401, 7470, 7473, 7475, 7476, 7601, and 7607(d)).

List of Subjects

40 CFR Part 51

Administrative practices and procedures, Air pollution control, Environmental protection, Intergovernmental relations.

40 CFR Part 52

Administrative practices and procedures, Air pollution control, Environmental protection, Intergovernmental relations.

Dated: September 30, 2010. Lisa P. Jackson,

Administrator.

■ For the reasons set out in the preamble, title 40, chapter I of the Code of Federal Regulations is amended as follows:

**PART 51—[AMENDED]**

■ 1. The authority citation for part 51 continues to read as follows:

Authority: 23 U.S.C. 101; 42 U.S.C. 7401– 7671q.

**Subpart I—[Amended]**

■ 2. Section 51.165 is amended by revising the table in paragraph (b)(2) to read as follows:

**§ 51.165 Permit requirements.**

* * * * *

(b) * * * (2) * * *

Pollutant Annual Averaging time (hours)

24 8 3 1

SO 2 ............................................................................................................... 1.0 μ g/m 3 5 μ g/m 3 25 μ g/m 3
PM 10 .............................................................................................................. 1.0 μ g/m 3 5 μ g/m 3
PM 2.5 ............................................................................................................. 0.3 μ g/m 3 1.2 μ g/m 3 NO 2 ............................................................................................................... 1.0 μ g/m 3 CO ................................................................................................................ 0.5 mg/m 3 2 mg/m 3

* * * * *

■ 3. Section 51.166 is amended as follows:

■ a. By revising paragraph (a)(6)(i);

■ b. By revising paragraph (b)(14)(i)( a );

■ c. By removing the period at the end of paragraph (b)(14)(i)( b ) and adding ‘‘ ; and ’’ in its place;

■ d. By adding paragraph (b)(14)(i)( c );

■ e. By revising paragraph (b)(14)(ii)( a );

■ f. By removing the period at the end of paragraph (b)(14)(ii)( b ) and adding ‘‘ ; and ’’ in its place;

■ g. By adding paragraph (b)(14)(ii)( c );

■ h. By revising paragraph (b)(14)(iii)( a ); ■ i. By revising paragraph (b)(15)(i) and paragraph (b)(15)(ii) introductory text;

■ j. By revising the table in paragraph (c)(1);

■ k. By revising paragraph (c)(2);

■ l. By revising paragraph (i)(5)(i)( c );

■ m. By redesignating existing paragraphs (i)(5)(i)( d ) through ( j ) as paragraphs (i)(5)(i)( e ) through ( k );

■ n. By adding new paragraph (i)(5)(i)( d );

■ o. By removing ‘‘ (k)(2) ’’ from paragraph (i)(8) and adding ‘‘ (k)(1)(ii) ’’ in its place; ■ p. By removing in two places ‘‘ (k)(2) ’’ from paragraph (i)(9) and adding

‘‘ (k)(1)(ii) ’’ in those places;

■ q. By revising paragraph (k);

■ r. By removing the words ‘‘ particulate

matter ’’ in the last sentence of paragraph (p)(4) introductory text and adding in their place ‘‘ PM 2.5 , PM 10 ’’ ; and

■ s. By revising the table in paragraph (p)(4).

**§ 51.166 Prevention of significant deterioration of air quality.** 

(a) * * *
(6) * * *


### 64903 Federal Register / Vol. 75, No. 202 / Wednesday, October 20, 2010 / Rules and Regulations

(i) Any State required to revise its implementation plan by reason of an amendment to this section, with the exception of amendments to add new
maximum allowable increases or other measures pursuant to section 166(a) of the Act, shall adopt and submit such plan revision to the Administrator for approval no later than 3 years after such amendment is published in the Federal Register . With regard to a revision to an implementation plan by reason of an amendment to paragraph (c) of this
section to add maximum allowable increases or other measures, the State shall submit such plan revision to the Administrator for approval within 21
months after such amendment is published in the Federal Register

. * * * * *

(b) * * *

(14)(i) * * * ( a ) In the case of PM 10 and sulfur dioxide, January 6, 1975;

* * * * *

( c ) In the case of PM 2.5, October 20,

2010.

(ii) * * * ( a ) In the case of PM 10 and sulfur dioxide, August 7, 1977;

* * * * *

( c ) In the case of PM 2.5, October 20,

2011.

(iii) * * * ( a ) The area in which the proposed source or modification would construct is designated as attainment or unclassifiable under section 107(d)(1)(A)(ii) or (iii) of the Act for the pollutant on the date of its complete application under 40 CFR 52.21 or under regulations approved pursuant to 40 CFR 51.166; and

* * * * * (15)(i) Baseline area means any intrastate area (and every part thereof) designated as attainment or unclassifiable under section 107(d)(1)(A)(ii) or (iii) of the Act in which the major source or major modification establishing the minor source baseline date would construct or would have an air quality impact for the pollutant for which the baseline date is established, as follows: Equal to or greater than 1 μ g/m 3 (annual average) for SO 2, NO 2 , or PM 10 ; or equal or greater than 0.3 μ g/m 3 (annual average) for PM 2.5
.

(ii) Area redesignations under section 107(d)(1)(A)(ii) or (iii) of the Act cannot intersect or be smaller than the area of impact of any major stationary source or major modification which:

* * * * *

(c) * * * (1) * * *

Pollutant Maximum allowable increase (micrograms

per cubic

meter)

Class I Area

PM 2.5 : Annual arithmetic mean ......................................................................................................... ....................................................... 1
24-hr maximum ..................................................................................................................

........................................................... 2
PM 10 : Annual arithmetic mean ......................................................................................................... ....................................................... 4
24-hr maximum ..................................................................................................................

........................................................... 8 Sulfur dioxide:
Annual arithmetic mean ......................................................................................................... ....................................................... 2
24-hr maximum ..................................................................................................................

........................................................... 5 3-hr maximum ................................................................................................................... ............................................................ 25 Nitrogen dioxide:
Annual arithmetic mean ......................................................................................................... ....................................................... 2.5

Class II Area

PM 2.5 : Annual arithmetic mean ......................................................................................................... ....................................................... 4
24-hr maximum ..................................................................................................................

........................................................... 9
PM 10 : Annual arithmetic mean ......................................................................................................... ....................................................... 17
24-hr maximum ..................................................................................................................

........................................................... 30 Sulfur dioxide:
Annual arithmetic mean ......................................................................................................... ....................................................... 20
24-hr maximum ..................................................................................................................

........................................................... 91
3-hr maximum ................................................................................................................... ............................................................ 512 Nitrogen dioxide:
Annual arithmetic mean ......................................................................................................... ....................................................... 25

Class III Area

PM 2.5 : Annual arithmetic mean ......................................................................................................... ....................................................... 8
24-hr maximum ..................................................................................................................

........................................................... 18
PM 10 : Annual arithmetic mean ......................................................................................................... ....................................................... 34
24-hr maximum ..................................................................................................................

........................................................... 60 Sulfur dioxide:
Annual arithmetic mean ......................................................................................................... ....................................................... 40
24-hr maximum ..................................................................................................................

........................................................... 182
3-hr maximum ................................................................................................................... ............................................................ 700 Nitrogen dioxide:


### 64904 Federal Register / Vol. 75, No. 202 / Wednesday, October 20, 2010 / Rules and Regulations

Pollutant Maximum allowable increase (micrograms

per cubic

meter)

Annual arithmetic mean ......................................................................................................... ....................................................... 50

* * * * *

(2) Where the State can demonstrate that it has alternative measures in its plan other than maximum allowable increases as defined under paragraph (c)(1) of this section, that satisfy the requirements in sections 166(c) and 166(d) of the Clean Air Act for a regulated NSR pollutant for which the Administrator has established maximum allowable increases pursuant to section 166(a) of the Act, the requirements for maximum allowable increases for that pollutant under paragraph (c)(1) of this section shall not apply upon approval of the plan by the Administrator. The following regulated NSR pollutants are eligible for such

treatment: (i) Nitrogen dioxide. (ii) PM 2.5
. * * * * *

(i) * * * (5) * * * (i) * * * ( c ) PM 2.5 –4 μ g/m 3 , 24-hour average; ( d ) PM 10 –10 μ g/m 3 , 24-hour average;

* * * * *

(k) Source impact analysis —(1) Required demonstration. The plan shall provide that the owner or operator of the proposed source or modification shall demonstrate that allowable emission increases from the proposed source or modification, in conjunction with all other applicable emissions increases or reduction (including secondary emissions), would not cause or contribute to air pollution in
violation of:

(i) Any national ambient air quality standard in any air quality control region; or

(ii) Any applicable maximum
allowable increase over the baseline concentration in any area.

(2) Significant impact levels. The plan may provide that, for purposes of PM 2.5 , the demonstration required in paragraph (k)(1) of this section is deemed to have
been made if the emissions increase from the new stationary source alone or
from the modification alone would cause, in all areas, air quality impacts less than the following amounts:

Pollutant Averaging time Class I

area Class II

area Class III

area

PM 2.5 .................................................................... Annual .................................................................. 0.06 μ g/m 3 0.3 μ g/m 3 0.3 μ g/m 3
24-hour ................................................................. 0.07 μ g/m 3 1.2 μ g/m 3 1.2 μ g/m 3

* * * * *

(p) * * * (4) * * *

Pollutant Maximum allowable increase (micrograms

per cubic

meter)

PM 2.5 : Annual arithmetic mean ......................................................................................................... ....................................................... 4
24-hr maximum ..................................................................................................................

........................................................... 9
PM 10 : Annual arithmetic mean ......................................................................................................... ....................................................... 17
24-hr maximum ..................................................................................................................

........................................................... 30 Sulfur dioxide:
Annual arithmetic mean ......................................................................................................... ....................................................... 20
24-hr maximum ..................................................................................................................

........................................................... 91
3-hr maximum ................................................................................................................... ............................................................ 325 Nitrogen dioxide:
Annual arithmetic mean ......................................................................................................... ....................................................... 25

* * * * *

■ 4. Appendix S to part 51 is amended by revising the table in section III.A to read as follows: Appendix S to Part 51—Emission Offset Interpretative Ruling

* * * * * III. * * *

A. * * *

Pollutant Annual Averaging time (hours)

24 8 3 1

SO 2 ........................................................................ 1.0 μ g/m 3 5 μ g/m 3 25 μ g/m 3

PM 10 ...................................................................... 1.0 μ g/m 3 5 μ g/m 3


### 64905 Federal Register / Vol. 75, No. 202 / Wednesday, October 20, 2010 / Rules and Regulations

Pollutant Annual Averaging time (hours)

24 8 3 1

PM 2.5 ...................................................................... 0.3 μ g/m 3 1.2 μ g/m 3 NO 2 ........................................................................ 1.0 μ g/m 3 CO ......................................................................... 0.5 mg/m 3 2 mg/m 3

* * * * *

**PART 52—[AMENDED]**

■ 1. The authority citation for part 52 continues to read as follows:

Authority: 42 U.S.C. 7401, et seq.

**Subpart A—[Amended]**

■ 2. Section 52.21 is amended as follows:

■ a. By revising paragraph (b)(14)(i)( a );

■ b. By removing the period at the end of paragraph (b)(14)(i)( b ) and adding ‘‘ ; and ’’ in its place;

■ c. By adding paragraph (b)(14)(i)( c );

■ d. By revising paragraph (b)(14)(ii)( a );

■ e. By removing the period at the end of paragraph (b)(14)(ii)( b ) and adding ‘‘ ; and ’’ in its place;

■ f. By adding paragraph (b)(14)(ii)( c );

■ g. By revising paragraph (b)(14)(iii)( a );

■ h. By revising paragraph (b)(15)(i) and paragraph (b)(15)(ii) introductory text;

■ i. By revising the table in paragraph (c);

■ j. By revising paragraph (i)(5)(i);

■ k. By removing ‘‘ (k)(2) ’’ from paragraph (i)(9) and adding ‘‘ (k)(1)(ii) ’’ in its place; ■ l. By removing in two places ‘‘ (k)(2) ’’ from paragraph (i)(10) and adding

‘‘ (k)(1)(ii) ’’ in those places;

■ m. By revising paragraph (k);

■ n. By removing the words ‘‘ particulate

matter ’’ in the last sentence of paragraph (p)(5) introductory text and adding in their place ‘‘ PM 2.5 , PM 10 ’’ ; and

■ o. By revising the table in paragraph (p)(5).

**§ 52.21 Prevention of significant deterioration of air quality.** 

* * * * *

(b) * * * (14)(i) * * * ( a ) In the case of PM 10 and sulfur dioxide, January 6, 1975;

* * * * *

( c ) In the case of PM 2.5, October 20,

2010.

(ii) * * * ( a ) In the case of PM 10 and sulfur dioxide, August 7, 1977;

* * * * *

( c ) In the case of PM 2.5, October 20,

2011.

(iii) * * * ( a ) The area in which the proposed source or modification would construct is designated as attainment or unclassifiable under section 107(d)(1)(A)(ii) or (iii) of the Act for the pollutant on the date of its complete application under 40 CFR 52.21 or under regulations approved pursuant to 40 CFR 51.166; and

* * * * *

(15)(i) Baseline area means any intrastate area (and every part thereof) designated as attainment or unclassifiable under section 107(d)(1)(A)(ii) or (iii) of the Act in which the major source or major modification establishing the minor source baseline date would construct or would have an air quality impact for the pollutant for which the baseline date is established, as follows: equal to or greater than 1 μ g/m 3 (annual average) for SO 2, NO 2 , or PM 10 ; or equal or greater than 0.3 μ g/m 3 (annual average) for PM 2.5
.

(ii) Area redesignations under section 107(d)(1)(A)(ii) or (iii) of the Act cannot intersect or be smaller than the area of impact of any major stationary source or major modification which:

* * * * *

(c) * * *

Pollutant Maximum allowable increase (micrograms

per cubic

meter)

Class I Area

PM 2.5 : Annual arithmetic mean ......................................................................................................... ....................................................... 1
24-hr maximum ..................................................................................................................

........................................................... 2
PM 10 : Annual arithmetic mean ......................................................................................................... ....................................................... 4
24-hr maximum ..................................................................................................................

........................................................... 8 Sulfur dioxide:
Annual arithmetic mean ......................................................................................................... ....................................................... 2
24-hr maximum ..................................................................................................................

........................................................... 5
3-hr maximum ................................................................................................................... ............................................................ 25 Nitrogen dioxide:
Annual arithmetic mean ......................................................................................................... ....................................................... 2.5

Class II Area

PM 2.5 : Annual arithmetic mean ......................................................................................................... ....................................................... 4
24-hr maximum ..................................................................................................................

........................................................... 9
PM 10 : Annual arithmetic mean ......................................................................................................... ....................................................... 17
24-hr maximum ..................................................................................................................

........................................................... 30 Sulfur dioxide:
Annual arithmetic mean ......................................................................................................... ....................................................... 20


### 64906 Federal Register / Vol. 75, No. 202 / Wednesday, October 20, 2010 / Rules and Regulations

Pollutant Maximum allowable increase (micrograms

per cubic

meter)

24-hr maximum ..................................................................................................................

........................................................... 91
3-hr maximum ................................................................................................................... ............................................................ 512 Nitrogen dioxide:
Annual arithmetic mean ......................................................................................................... ....................................................... 25

Class III Area

PM 2.5 : Annual arithmetic mean ......................................................................................................... ....................................................... 8
24-hr maximum ..................................................................................................................

........................................................... 18
PM 10 : Annual arithmetic mean ......................................................................................................... ....................................................... 34
24-hr maximum ..................................................................................................................

........................................................... 60 Sulfur dioxide:
Annual arithmetic mean ......................................................................................................... ....................................................... 40
24-hr maximum ..................................................................................................................

........................................................... 182
3-hr maximum ................................................................................................................... ............................................................ 700 Nitrogen dioxide:
Annual arithmetic mean ......................................................................................................... ....................................................... 50

* * * * *

(i) * * * (5) * * * (i) The emissions increase of the pollutant from the new source or the net emissions increase of the pollutant from the modification would cause, in any area, air quality impacts less than the following amounts:

( a ) Carbon monoxide—575 μ g/m 3

, 8-hour average;

( b ) Nitrogen dioxide—14 μ g/m 3

, annual average;

( c ) PM 2.5 —4 μ g/m 3 , 24-hour average; ( d ) PM 10 —10 μ g/m 3 , 24-hour average; ( e ) Sulfur dioxide—13 μ g/m 3 , 24-hour

average;

( f

) Ozone; ( g

) Lead—0.1 μ g/m 3 , 3-month average; ( h ) Fluorides—0.25 μ g/m 3 , 24-hour

average; ( i ) Total reduced sulfur—10 μ g/m 3

, 1-hour average;

( j ) Hydrogen sulfide—0.2 μ g/m 3

, 1-hour average;

( k ) Reduced sulfur compounds—

10 μ g/m 3 , 1-hour average; or

Note to paragraph (c)(50)(i)( f ): No de
minimis air quality level is provided for ozone. However, any net emissions increase of 100 tons per year or more of volatile organic compounds or nitrogen oxides subject to PSD would be required to perform an ambient impact analysis, including the gathering of ambient air quality data.

* * * * *

(k) Source impact analysis —(1) Required demonstration. The owner or operator of the proposed source or modification shall demonstrate that allowable emission increases from the proposed source or modification, in conjunction with all other applicable emissions increases or reductions (including secondary emissions), would not cause or contribute to air pollution in violation of:

(i) Any national ambient air quality standard in any air quality control region; or

(ii) Any applicable maximum allowable increase over the baseline concentration in any area.

(2) Significant impact levels. For purposes of PM 2.5 , the demonstration required in paragraph (k)(1) of this section is deemed to have been made if the emissions increase from the new stationary source alone or from the modification alone would cause, in all areas, air quality impacts less than the following amounts:

Pollutant Averaging time Class I

area Class II

area Class III

area

PM 2.5 ................................................................... Annual ................................................................. 0.06 μ g/m 3 0.3 μ g/m 3 0.3 μ g/m 3
............................................................................. 24-hour ................................................................ 0.07 μ g/m 3 1.2 μ g/m 3 1.2 μ g/m 3

* * * * * (p) * * *


### 64907 Federal Register / Vol. 75, No. 202 / Wednesday, October 20, 2010 / Rules and Regulations

(5) * * *

Pollutant Maximum allowable increase (micrograms

per cubic

meter)

PM 2.5 : Annual arithmetic mean ......................................................................................................... ....................................................... 4
24-hr maximum ..................................................................................................................

........................................................... 9
PM 10 : Annual arithmetic mean ......................................................................................................... ....................................................... 17
24-hr maximum ..................................................................................................................

........................................................... 30 Sulfur dioxide:
Annual arithmetic mean ......................................................................................................... ....................................................... 20
24-hr maximum ..................................................................................................................

........................................................... 91
3-hr maximum ................................................................................................................... ............................................................ 325 Nitrogen dioxide:
Annual arithmetic mean ......................................................................................................... ....................................................... 25

* * * * *
[FR Doc. 2010–25132 Filed 10–19–10; 8:45 am]

**BILLING CODE 6560–50–P**


## Federal Register Notices Not Included in Hearing Record

1. Implementation of the New Source Review (NSR) Program for Particulate Matter Less Than 2.5 Micrometers (PM2.5); Final Rule To Repeal Grandfather Provision, 76 FR
28646, May 18, 2011, http://www.gpo.gov/fdsys/pkg/FR-2011-05-18/pdf/2011- 12089.pdf.

2. Implementation of the New Source Review (NSR) Program for Particulate Matter Less Than 2.5 Micrometers (PM2.5): Amendment to the Definition of ‘‘Regulated NSR Pollutant’’ Concerning Condens able Particulate Matter, 77 FR 65107, October 25, 2012,
http://www.gpo.gov/fdsys/pkg/FR-2012-10-25/pdf/2012-25978.pdf.

## VII-1

Chapter VII

The following documentation of filing and notification is incorporated as part of this hearing record and is

maintained on file:

1. ENR 101 Internal Approval Form.

2. Submission for Notice Form and material submitted to the Office of Administrative Hearings.

3. The public notice as it appears in The North Carolina Register Volume 27, Issue 11, pages 1013-1020.

4. Letters to newspapers requesting that the public notice be published.

5. Affidavits of Publication from newspaper.

6. Memorandum transmitting hearing notice and proposal to regional offices for public inspection.

7. Memorandum transmitting hearing notice and proposal to local programs.

8. Letter notifying EPA of hearing.

9. Submission of Filing Forms and material filed with Office of Administrative Hearings.

10. Letter transmitting hearing record to EPA.

11. Executive Order No. 70 Certification Form

## VII-2

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