UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

RESEARCH TRIANGLE PARK, NC 27711 

APR - 1 2010 

OFFICE OF 

AIR QUALITY PLANNING 

AND STANDARDS 

MEMORANDUM 

SUBJECT: Applicability of the Federal Prevention of Significant Deterioration Permit 

Requirements to New and Revised National Ambient Air Quality 

Standards A I-_ A <--;-) 

FROM: Stephen D. Page, Director~ --;;;:-)f 

Office of Air Quality Planning & Standards (e404-04) 

TO: Air Division Directors and Deputies 

Regions I - X 

This memorandum responds to inquiries that we are receiving from parties who 

are currently developing or reviewing applications for Prevention of Significant 

Deterioration (PSD) permits under the Clean Air Act (CAA) requesting that the Office of 

Air and Radiation (OAR) provide guidance on the applicability of PSD permitting 

requirements to a newly promulgated or revised National Ambient Air Quality Standard 

(NAAQS or standards). Accordingly, I am writing to reiterate the Environmental 

Protection Agency's (EPA's) existing interpretation of the relevant provisions ofthe 

CAA and EPA regulations, and EPA's position on how these requirements apply under 

the federal PSD program. 

General Applicability ofPSD Permit Requirements to New or Revised NAAQS 

The CAA requires that proposed new and modified major stationary sources must, 

as part of the issuance of a permit to construct, demonstrate that emissions from the new 

or modified major source -

will not cause, or contribute to, air pollution in excess of any 

(A) maximum allowable increase or maximum allowable concentration for any 

pollutant in any area to which this part applies ... ; 

(8) national ambient air quality standard in any air quality control region; or 

(C) any other applicable emission standard or standard of performance under this 

chapter; 

Intemet Address (URL). http://www.epa.gov 

Recycled/Recyclable. Printed wHh Vegetable Oil Based Inks on Recycled Paper (Minimum 25% Poslconsumer) 
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CAA §165(a)(3). Similarly, EPA's federal PSD program regulations at 40 CFR 

52.21 (k)(1) require proposed sources and modifications to demonstrate that their 

allowable emissions will not cause or contribute to a violation of "any national ambient 

air quality standard in any air quality control region." 

EPA generally interprets the CAA and EPA's PSD permitting program 

regulations to require that each final PSD permit decision reflect consideration of any 

NAAQS that is in efIect at the time the permitting authority issues a final permit. As a 

general matter, permitting and licensing decisions of regulatory agencies must reflect the 

law in effect at the time the agency makes a final determination on a pending application. 

See Zi(Mn v. United States, 318 U.S. 73,78 (1943); State of Alabama v. EPA, 557 F.2d 

1101,1110 (51h Cir. 1977); In re: Dominion EnergvBravton Point. LLC, 12 E.A.D. 490, 

614-616 (EAB 2006); In re Phelps Dodge Corp., 10 E.A.D. 460,478 n. 10 (EAB 2002). 

Consistent with such interpretations, EPA has previously concluded that the 

relevant provisions cover any NAAQS that is in effect at the time of issuance of any 

permit. For example, in the context of applying the PSD provisions to the NAAQS for 

particulate matter less than 2.5 micrometers (PM25), EPA has stated that "section 165 of 

the CAA suggests that PSD requirements become effective for a new NAAQS upon the 

effective date of the NAAQS." 73 FR 28321, 28340, (May 16, 2008); 70 FR 65984, 

66043, (Nov. 1,2005). That observation was based, in part, on EPA guidance for 

implementing the PM25 NAAQS that the Agency issued shortly after those standards first 

became effective in 1997. John Seitz, EPA Office of Air Quality Planning and 

Standards, "Interim Implementation for the New Source Review Requirements for PM25" 

(Oct. 23, 1997). Both the 1997 guidance and EPA's final rule addressing the application 

of the PSD program to PM25 explained that section 165(a)(1) of the CAA provides that 

no new or modified major source may be constructed without a permit that meets all the 

requirements in section 165(a). In addition, those documents observe that one such 

requirement is the provision in section 165(a)(3) which says that emissions from such 

source may not cause or contribute to a violation of any NAAQS. The October 23, 1997 

guidance provided an interim policy for assuring compliance with the requirements for 

PM25, after observing that the "new NAAQS for PM25, became effective on 

September 16, 1997." In addition, the guidance expressed EPA's intent to provide a 

separate memorandum that would address "EPA's views on implementing the ozone and 

PM 10 NAAQS during the interim period following the effective date of the new 8-hour 

ozone and revised PM]o NAAQS." [Emphasis added.] Those statements made shortly 

after the promulgation of new NAAQS in 1997 are consistent with the view expressed in 

the final rule for PM25 in 2008 that "PSD requirements become effective for a new 

NAAQS upon the effective date of the NAAQS." 

Additional precedent for this interpretation can be found in the 1987 final rule 

titled "Regulations for Implementing Revised Particulate Matter Standards" (52 FR 

24672. July 1, 1987) issued at the time EPA established new PM]o standards. In that rule, 

EPA stated that "once the PM]o NAAQS becomes effective, EPA will be responsible for 

the protection of the PM]o NAAQS as well as the review of PM]o as a regulated 

pollutant." 52 FR at 24682. In support of that conclusion, EPA observed that the federal 
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PSD regulations at 40 eFR 52.21 (k)(l) contain "a general provision requiring 

prospective PSD sources to demonstrate that their potential emissions will not cause or 

contribute to air pollution in violation of 'any' NAAQS." Id. at 24682 n. 9. Based on 

that analysis, EPA concluded that "[w]hen the revised NAAQS for particulate matter 

becomes efIective, each PSD application subject to EPA's Part 52 PSD regulations, and 

not eligible to be grandfathered under today's action, must contain a PMIO NAAQS 

analysis." 52 FR at 24684. 

As illustrated above, under certain circumstances EPA has previously allowed 

proposed new major sources and major modifications that have submitted a complete 

PSD permit application before the effective date of new requirements under the PSD 

regulations, but have not yet received a final and effective PSD permit, to continue 

relying on information already in the application rather than immediately having to 

amend applications to demonstrate compliance with the new PSD requirements. In the 

transition from the total suspended particulate NAAQS to the PM]o NAAQS, EPA 

explicitly established rule provisions that allowed proposed new major sources and major 

modiilcations that had submitted a complete PSD permit application before the effective 

date of new PM]o NAAQS, but that had not yet received a final and effective federallyissued PSD permit, to continue relying on information already in the submitted 

application rather than immediately having to amend applications to demonstrate 

compliance with the new PSD requirements. See, e.g., 40 eFR 52.2I(i)(I)(x). EPA has 

adopted similar provisions pertaining to new or revised PSD increments. 40 eFR 

52.21 (i)(9)-(l 0). Those proposed sources and modifications meeting these transition 

requirements were "grandfathered" or exempted from the new PSD requirements that 

would otherwise have applied to them. Thus, while We have included the necessary 

provisions to grandfather sources from new requirements under certain circumstances, we 

have not always chosen to do so for NAAQS revisions in general. 

Applicability of the New I-Hour N02 NAAQS to gxisting })ermit Applications 

On January 22, 20 I 0, the EPA Administrator signed a final rule containing a new 

NAAQS for nitrogen dioxide (N02) based on a I-hour averaging time. That final rule 

was published in the Federal Register on February 9, and will become effective on April 

12,2010. EPA did not promulgate a grand fathering provision related to the I-hour N02 

NAAQS fot· permits in process but not yet issued as of April 12,2010. Accordingly, 

permits issued under 40 eFR 52.21 on or after April 12,2010, must contain a 

demonstration that the source's allowable emissions will not cause or contribute to a 

violation of the new I-hour N02 NAAQS. In the case of the new N02 I-hour NAAQS, 

while the short-term standard is new, the pollutant is not, having been considered a 

regulated pollutant for many years pursuant to the N02 annual NAAQS. There are no 

exceptions under 40 eFR 52.21 in this case because as noted above, EPA has not adopted 

a grandfathering provision applicable to the I-hour N02 NAAQS that would enable the 

required permit to be issued to prospective sources in the absence of such ambient air 

quality demonstration. 
cc: Jeff Clark 

Anna Wood 

Peter Tsirigotis 

Lydia Wegman 

Richard Wayland 

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