UNITED STATES ENVIRONMENTAL PROTECTION AGENCY RESEARCH TRIANGLE PARK, NC 27711 

## APR

- 1 2010

OFFI CE OF AIR QUALITY PLANN ING AND STANDARDS

MEMORANDUM
SUBJECT: Applicability ofthe Federal Prevention ofSignificant Deterioration Permit Requirements to New and Revised National Ambient Air Quality Standards A 

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FROM: Stephen D. Page,

## Director**~**

# --;;;:-)f Office ofAir 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 ofSignificant Deterioration (PSD) permits under the Clean Air Act (CAA) requesting that the Office of Air and Radiation (OAR) provide guidance on the applicability ofPSD permitting requirements to a newly promulgated or revised National Ambient Air Quality Standard (NAAQS or standards). Accordingly, Iam writing to reiterate the Environmental Protection Agency's (EPA's) existing interpretation ofthe relevant provisions ofthe CAA and EPA regulations, and EPA's position on how these requirements apply under the federal PSD program.


### General Applicability ofPSD PermitRequirements to New orRevised NAAQS
The CAA requires that proposed new and modified major stationary sources must, as part ofthe issuance ofa permit to construct, demonstrate that emissions from the new ormodified major source
- will not cause, orcontribute to, air pollution in excess ofany (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 ofperformance under this chapter;

Intemet Address (URL). http://www

.epa.gov Recycled/Recyclable. Printed wHh Vegetable Oil Based Inks on Recycled Paper (Minimum 25% Poslconsumer)2

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 permittingprogram regulations to require that each final PSD permit decision reflect consideration ofany NAAQS that is in efIect at the time the permitting authority issues a final permit. As a general matter, permitting and licensing decisions ofregulatory agencies must reflect the law in effect at the timethe agency makes a final determination on a pending application. See Zi(Mn v. UnitedStates, 318 U.S. 73,78 (1943); State of Alabamav. EPA, 557 F.2d 1101,1110 (5 1h 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 ofissuance ofany permit. Forexample, in the context ofapplying 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 ofthe 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 ofAir Quality Planning and Standards, "Interim Implementation for the New Source Review Requirements for PM25" (Oct. 23, 1997). Boththe 1997 guidance and EPA's final rule addressing the application ofthe PSD program to PM25 explained that section 165(a)(1) ofthe CAA provides that
no new ormodified major source may be constructed without a permitthat meets all the requirements in section 165(a). In addition, those documents observethat 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 ofany NAAQS. The October 23, 1997 guidance provided an interimpolicy 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 ofthe new 8-hour
ozone and revised PM]o NAAQS." [Emphasis added.] Those statements made shortly after the promulgation ofnew 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 ofthe NAAQS."

Additional precedentfor 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 "oncethe PM]o NAAQS becomes effective, EPA will be responsible for the protection ofthe PM]o NAAQS as well as the review ofPM]o as a regulated pollutant." 52 FR at 24682. In support ofthat conclusion, EPA observed that the federal3

PSD regulations at 40 eFR 52.21(k)(l) contain "ageneral 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]henthe 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 thathave submitted a complete PSD permit application before the effective date ofnewrequirements under the PSD regulations, but have not yet received a final and effective PSD permit, to continue relying on information already in the applicationrather 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 ofnew 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 eFR52.2I(i)(I)(x). EPA has adopted similarprovisions pertaining to new or revised PSD increments. 40 eFR 52.21(i)(9)-(l0). 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 chosento do so for NAAQS revisions in general. Applicability ofthe New I-HourN02 NAAQS to gxisting })ermitApplications
On January 22, 20I0, 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 grandfathering provision related to the I-hour N02 NAAQS fot· permits in process butnot yet issued as ofApril 12,2010. Accordingly, permits issued under 40 eFR52.21 on or after April 12,2010, must contain a demonstration that the source's allowable emissions will not cause orcontribute to a violation ofthe new I-hour N02NAAQS. In the case ofthe newN02I-hourNAAQS, 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 eFR52.21 in this case because as noted above, EPA has not adopted
a grandfathering provision applicable to the I-hourN02 NAAQS that would enable the required permitto be issued to prospective sources in the absence ofsuch ambient air quality demonstration.cc: 

### JeffClark Anna Wood Peter Tsirigotis Lydia Wegman Richard Wayland 4