Page 1 of 114 6 NYCRR Part 200, General Provisions, Part 201, Permits and Registrations, and Part 231, New Source Review for New and Modified Facilities

Assessment of Public Comments Comments Received From September 24, 2008 Through 5:00 p.m. October 24, 2008

Many of the comments that were receiv ed by the Department during this peri od were similar or identical to the comments received by the Department during the Sept ember 26, 2007 6 NYCRR Part 231 rulemaking proposal public comment period. Thus, many of the Department’s re sponses are similar or identical to the responses in the Assessment of Public Comments (APC) docum ent from the September 26, 2007 6 NYCRR Part 231 rulemaking proposal. For the purpose of clarity, the Depa rtment has included, at the end of each response that it copied from the previous APC document, the res ponse number from the September 26, 2007 6 NYCRR Part 231 rulemaking proposal APC document in parenthesis - (APC: #).

Adirondack Mountain Club, American L ung Association of New York Stat e, Earthjustice, Environmental Advocates, Natural Resources Defense Council, New York Public Interest Resear ch Group, Sierra Club - Atlantic Chapter: (Commenter Number 7)

1) Comment: Additional safeguards are needed to pr event sources from improperly excluding related

emissions increases when determin ing whether a physical or operati onal change is a “modification”.Page 2 of 114 Response: The Department disagrees with the comment th at the proposed rule fails to provide any oversight of a facility owner’s exclusion of “ unrelated” emissions. The Department has revised Part 231, in response to public comments, to further strengthen recordkeeping and reporting requirements. The Department will now require facilities to notify the Department when they undertake a physical or operational change (not a modification as defined in Part 231) if the facility attributes one hundred percent of the post-change emissions to independent factors and those post-change emissions exceed the significance threshold. Specifically, the Department will add subdivision 231-3.6 (c) to read as fo llows: (c) Any owner or ope rator of a facility that proposes a project that involves a phys ical change or change in the me thod of operation that the owner or operator determines would be followed by a facility emi ssions increase that equals or exceeds any of the significant project thresholds in Subpart 231-13, Tables 3, 4 or 6, must notify the Department in writing of the proposed project prior to implementing the change if the owner or operator determines that the project does not

constitute a modification because all the emission increases are attributable to indepe ndent factors in accordance with clause 231-4.1(b)(42)(i )(b). The notification sh all include the following: (1) A description of the change. (2) The calculation of the projected emissions increase. (3) The proposed date of the change. (4) An explanation of the factual basis for the conclusion that none of the projected emission

increases are attributable to the proposed project. (APC: 6, 10, 17)

2) Comment: Additional improvements to the Plantwid e Applicability Limit (PAL) provision are needed.

Response: The Department disagrees with the comment er. The Department’s rationale for accepting a different 24 month baseline period fo r different pollutants was explained in the prior APC document and the Regulatory Impact Statement (RIS). As discussed in both documents, th e Department wants to encourage thePage 3 of 114 use of PALs in the State and believes that they could provide a measure of regulatory flexibility while at the same time providing for long-term pr otection of the environment. Co mmenter’s proposed revisions would significantly reduce the fl exibility provided by the rule and, as a result, discourage th e use of PALs in the State.

Although as commenter notes the De partment adopted a single baseli ne period for modifications, the Department determined that this approach was too stringent in the case of facilities which are accepting PALs. By accepting a PAL, a facility is essen tially agreeing to limit emissions to no more than baseline levels plus an amount equal to the applicable signifi cant project threshold for the PAL contaminant in exchange for flexibility on the permitting when they make modifi cations within the PAL level. The Department views this as a positive result for the environment and believes, under the circ umstances, that allowing facilities to use different baseline periods for different pollutants is appropriate given the be nefits that will be realized.

The Department also disagrees with the commenter’s position that emissions from a new source should not be included in the PAL in an amount equal to the potential to emit. The Depa rtment also disagrees that the PTE for a new source necessarily represents an inflated em issions calculation or base line. Emissions from a permitted emission source must be included in the PAL; th ere is no other basis to estimate the emissions from one that has not operated other than the level of emi ssions which are permitted. The commenter suggests that many sources do not operate at potential to emit. This is not necessarily the case for recently permitted sources, the ones at issue here, which are subject to the latest and most stringent pollution co ntrol requirements. Since the regulation provides for adjustment of the PAL at the end of the PAL period (or five years in some cases), the Department does not believe this provision is inappropriate.

Finally, requiring a permittee to reestablish the PAL at th e end of the PAL period (10 years or less) would, in the Department’s view, discourage the use of PALs and make it unlikely that any facility would pursue one.Page 4 of 114 The Department declines to adopt this suggested revision. (APC: 12)

3) Comment: DEC’s proposal to exem pt temporary and relocated sources fr om NSR violates the Clean Air Act and must not be adopted.

Response: The requirements in proposed subdivisio n 231-3.4(c) are taken dir ectly from 40 CFR 51.166(i). More specifically, this exemption is limited in scope a nd only applies to the temporary relocation of a portable

emission source.

4) Comment: The DEC must provide that an NSR permit automatically expires if construction does not commence within 18 months of permit issuance.

Response: The Department does not believe an automatic expiration provision is appropriate under the prevailing State laws and regulations that govern permits in New York Stat e. Section 231-3.8 provides that the permit shall not authorize construction which is not co mmenced within 18 months after the date of permit issuance (unless the date is extended), if construction is discontinued for a period of 18 months or more, or if construction is not completed within a reasonable time as determined by the Department. Permits issued by the Department will include a condition reflecting the langua ge of Section 231-3.8, which is consistent with the Department’s current practice. In a ddition, Subpart 231-11 now requires f acilities to notify the Department within 30 days of the commencement of construction. These regulatory provisions and permit terms and conditions will provide assurance to the Department that facilities have actually commenced construction in a timely manner and will make clear that the Department ’s authorization specifically prohibits facilities from commencing construction after 18 months.Page 5 of 114 The Department believes, however, it is important and n ecessary that appropriate administrative action be taken to terminate or modify a permit where the authorization to construct has lapsed and thus will not include an automatic expiration provision in Pa rt 231. Such action ensures that the Department, the permittee, and members of the public are clear as to th e status of the permit and that the ai r permit accurately reflects the extent of the facility’s authority to construct and operate. Without such process, a permit could “expire” without notice to the Department or the public. Consequently, Pa rt 231 will continue to provide that permits shall be subject to revocation (for a new facility or new emission source) if any of the above conditions are met. The Department previously revi sed the proposed express terms based upon comments received on its September 26, 2007 proposal to ensure that the intent of this provi sion is clear: facilities mu st commence and complete construction in a timely manner to ensure the continued e ffectiveness of their permit a nd avoid a violation of its

terms and conditions.

The Department notes that 40 CFR 52.21(r) does not state that a Prevention of Significant Deterioration (PSD) permit will automatically expire, but rather that the author ization to construct shall b ecome invalid if it is not commenced within the dictates of the regulation. As a matter of State administrative law, the Department’s handling of air permits must occur in a manner consistent with the State Administrative Procedure Act (SAPA) and the uniform procedures set forth in Article 70 of the Environmental Conservation Law (ECL) for permit modifications, suspensions, revocations , and renewals. The Department im plements the provisions of Article 70 insofar as permits are concerned pursuant to 6 NYCRR Parts 621 (Uniform Pr ocedures) and 624 (Permit Hearing Procedures). These provisions of law and regulation require the Department to provide notice to the permittee when, among other things, a permit application is denied, a permit is issued with conditions to which the permittee objects, or the permit is revoked or rescinded. The permittee may request a hearing and present

witnesses and evidence to rebut the Department’s claims. The Departme nt must compile a record of anyPage 6 of 114 administrative proceeding. A Commi ssioner’s final determination can onl y be made upon a complete record, after the Department has complied with these due process requirements.

A provision for automatic expiration of the permit would frustrate the procedural du e process requirements of State law because it would terminate a permit as a legal matter before the permittee could avail itself of any administrative due process, including notice and the opportunity for a hearing. It would also create confusion among the public and members of the regulated community with respect to the status of the facility’s air pollution permit. Legitimate questions could exist whether a facility had commenced construction as envisioned under the NSR regul ations and would need to be addressed before a dete rmination was made that a facility had not complied with NSR requirements. Accordingly, the Department does not believe such an issue can be appropriately addressed absent agency overs ight with a provision for automatic permit expiration.

Whether a facility has actually co mmenced construction, or complete d construction in a reasonable time involves a case-specific inqui ry. According to EPA policy guidance, a source must, in addition to obtaining all required permits, satisfy one of two a dditional requirements to commence c onstruction: (1) begin a continuous program of physical on-site constructi on; or (2) enter into a contractual obligation to undertake a program of onsite construction that will be completed within a reasonable time. Physical on-site construction may include the placement, assembly, or installation of materials, equipment, or facil ities which will make up part of the ultimate structure of the source. Certain activities, such as placement of footings, pilings and other materials needed to support the ultimate structures, have been held to constitute on-site construction while others do not. The construction of auxiliary buildings or construction sh eds, for example, is generally not sufficient unless

there is clear evidence that constructi on of the entire facility will definitely go forward in a continuous manner. The Department would have to evalua te what activities occurred in connec tion with a project to see if they constituted physical on-site construction. Likewise, a cont ractual obligation must involve a commitment for sitePage 7 of 114 specific work and be one that cannot be cancelled or modified without incurring a substantial financial cost. EPA has provided guidance on determining whether a loss should be deemed "substantial". Whether a particular contract was sufficient to satisfy the oblig ation to commence constructi on would thus depend on the Department’s case-by-case review in the event that a dispute arose. The Department believes that any

determination which could affect the le gal status of a permit should be made consistent with the procedures laid

out in the ECL and Part 621.

The commenter contends that Part 231 inappropriately leaves up to the disc retion of the Department whether to initiate permit revocation proceedings if construction do es not commence within 18 months. The Department does not agree. Permits will include conditions specifi cally delineating the scope of a facility’s authority to construct. A facility which does not comply with these te rms and conditions will be in violation of its permit. The Department believes Part 231, with the additional revisions discussed herei n, strikes the appropriate balance by limiting the right to construct consistent with Federal regulations, but providing an opportunity for a hearing before a final agency determination is made to re voke or modify the permit as required under State law. Based on the Department’s experience implementing the PSD program, in the few instances where this issue has arisen, financial difficulties ar e usually the reason why construction has not commenced. Facilities are more likely to voluntarily relinquish or terminate their permits rather than incur the expense of a hearing. Nonetheless, the Department believes it is appropriate a nd necessary to provide due process before taking action to revoke or modify a permit. (APC: 21)

5) Comment: The DEC is correct to propose el iminating existing “Clean Coal” exemptions.

Response: Comment noted.Page 8 of 114 6) Comment: The DEC must demonstrate that revising its State Implementation Plan (SIP) to allow sources to avoid NSR by “netting” would not violate the Clean Air Act’s anti-backsliding provision.

Response: As explained in the RIS and further discusse d in the previous APC document, Part 231 meets all applicable State and Federal statutory and regulatory requirements for adoption. Fu rther, the Department’s submission of Part 231 to EPA for approval in the SIP will likewise meet all applicable State and Federal statutory and regulatory requi rements for EPA approval.

On the merits, the Department believes that commente r’s manner of comparison of the approved 1981 Part 231 rule and the proposed rule is not a valid comparison for purposes of assessing anti-backsliding. The commenter notably focuses on one aspect of the proposed Part 231 rule declaring that because net ting is not included in the 1981 rule, netting is therefore invalid and violates the Act’s anti-backsliding provisi ons. The Department does not agree. The proposed Part 231 rule, along with the othe r versions of the rule which were enacted subsequent to the SIP-approved 1981 rule, have imposed increasingl y more stringent regulato ry requirements on new and modified sources, including imposing lower thresholds for applicabilit y, establishing emission offset requirements, and expanding the scope of sources and ge ographic areas covered by the rule. These changes were made upon the assessment of, and address, the increasingl y more stringent Federal requirements imposed

on new and modified sources.

In addition, the Department believes that Part 231’s netting provisi on is not inconsistent with either the Act or the SIP. Notably, Part 231 ensures that facilities whic h propose to use netting to avoid major NSR requirements are subject to stringent permit requirements. These requ irements will ensure that the projected actual emissions following a modification and emission re ductions relied upon are enforceable. This means that such reductions are quantified, actually realized, not otherwise required by applicable regul ations, and contained in a permitPage 9 of 114 issued by the Department which has been subject to pub lic notice and comment. Thus, facilities which want to rely on emission reductions at one emission source to be reflected in the calculation of total emission increases at the facility will be subject to rigorous protocols and permitting. The Department believes such a regulatory

scheme is consistent with the intent and purpose of both the Act and ECL. (APC: 9)

7) Comment: Use of alternative operating scenarios under Ti tle V. It is unclear why the DEC needs to provide a separate definition of “contemporaneous” for a Title V “alternative operating scenario” since the mechanism cannot replace minor or majo r NSR permitting requirements.

Response: There appears to be some confusion with the interpretation of the definition. In terms of measuring the 5 year lookback period for determining wh ether a significant emissi ons increase has occurred, facilities which are seeking permit modifications for alte rnative operating scenarios n eed to look back 5 years from the date that their Part 201 permit ap plication is determin ed to be complete.

The Department agrees that an “alternative operating scenario” cannot replace minor or major NSR permitting requirements. However, the purpose of an “alternati ve operating scenario” is to conduct a complete permit review (including NSR) at the time of permit renewal that allows a facility the flexibility to install new equipment in the future. The “alternative operating scen ario” contains all of the conditions required for all applicable regulations including NS R, New Source Performance Standards (NSPS), and Maximum Achievable Control Technology (MACT). If a fac ility that has an “alternative operating scenario” decides to conduct another modification (regardless of whether the “alternat ive operating scenario” has b een built) the emissions increases from the “alternative operating scenario” are coun ted in the NSR analysis as an increase during the contemporaneous period. Finally, “alternative operating sc enarios” that are not built during the five year term of the permit must be re-evaluated (including an update d review for NSR) during the next permit renewal.Page 10 of 114 Mirant (Commenter Number 5)

8) Comment: Mirant Bowline, LLC supports the comme nts submitted by the Business Council of New York State, INC and the Independent Po wer Producers of New York (IPPNY) on the Amendments to 6 NYCRR Parts 200, 201, and 231 regulations.

Response: Comment noted.

Business Council of New York, Inc and Independent Po wer Producers of New York (Commenter Number 11)

9) Comment: Routine Maintenance, Repair & Replacem ent (RMRR): For several reasons, we believe the proposed definition of "routine maintenance, repair and replacement" in proposed Part 200.1(cl) is simply unworkable and an unnecessary departure from Federal regulatory language.

A major concern is the proposed language which states that “ Generally , routine maintenance, repair and replacement refer to activities that are undert aken on a prescribed . . . schedule . . . and typically paid for out of the operation and maintenance budget . . and . . . generally do not refer to activities that are infrequent . . . .” (Emphasis added.)

As a practical matter, this is a non-definition, in that it provides no clear criteria for compliance. It is unclear how the business community can comply consistently with regulatory standards that are “generally” or “typically” applicable.Page 11 of 114 In its Assessment of Public Comment, the DEC asserts that industry has misunderstood the proposed definition. If it is possible for industry to misunderstand the defi nition, then the definition obviously needs improvement.

Furthermore, the DEC‘s Assessment of Public Comment states that “the use of the terms "generally" and "typically" in the proposed definition make clear that no one factor is determinative in the analysis. The DEC notes that that the proposed regula tion does not establish a presumptiv e exclusion from the RMRR exemption

for those activities financed from an operations and maintenance (O&M) budget and that a project that is funded from a capital budget could still qualify as RMRR, if other fact ors suggest routinene ss (e.g., the nature, purpose, or frequency of the activity).” The DEC should revi se the language of the definition to make its stated

intention clearer.

We remain concerned that the language of the definitio n will be seen as establishing a presumptive exclusion from this exemption for any maintenance, repair an d/or replacement activities not financed from an O&M budget.

The financing of such activities often will be determined based on accounting principles, rather than based on environmental regulatory definitions. For example, repa ir and replacement ac tivities may be treated as capital expenditures for accounting and/or tax r easons (i.e., the depreciation rather th an expensing of the expenditure).

The financial classification of such activities should not be a primary basi s for determining their status under

this rule.

Further, while “routine maintenance” activities may genera lly be undertaken on a regular schedule and paid for out of O&M budgets, the same is not true for repair and replacement activities which occur on an “as needed”

basis.Page 12 of 114 Finally, we are concerned with the proposed language st ating that routine maintenance generally excludes activities that “. . . extend the life of a facility, or resu lt in the regaining of lost capacity. . .” This vague concept is infinitely expandable, as a ny project may be said to extend the life of the facility or regain lost capacity, and could be used to eliminate the exemption. In our view, this proposed language would exclude a wide range of routine activities essential to the efficien t operation of industrial and utility equipment, and would place facilities in a status of perpetual NSR review.

We also are concerned that this rule would significantly impair the ability of a bus iness particularly a public utility or power generator to respond to a forced outage, if the required repair does not fall under the restrictive proposed definition of “routine maintenance, repair an d replacement.” We note that existing Part 201-6.6(c) provides an emergency defense in Title V permits, wh ich provides an affirmative defense for non-compliance with an applicable requirement due to an emergency, a nd that Part 201-2.1(b)(12) provides a somewhat limited definition of “emergency.” In the event of an emergenc y at an energy generation or transmission facility, the loss of this public utility service co uld have significant, adverse impact on the community, and it would be in the public interest to assure that response to such emergencies is not impaired or delayed by unnecessary NSR obligations.

Overall, we see this definition to be in part unwor kably vague and in part excessively restrictive. If implemented, this definition will result in significant compliance uncertainty. It also will result in significant new compliance costs, as businesses conduct NSR assessmen ts on RMRR activities that were exempt from Part

231 under the states current de finition of “modification.”

The Business Council is also concerned that, given ongoing NSR litigation at the federal level, the Department risks adoption of prescriptive regulator y language that could be changed or invalidated by the courts or EPA.Page 13 of 114 For these reasons, The Business Council recommends that the Department continue the current treatment of “routine maintenance” as set forth in the existing Part 200.1(aq) definition of "modifi cation." To do so in the context of the current rule-making, the proposed defi nition of “modification” found at Part 231-4.1(b)(32)

should be modified to read

(i) Routine maintenance, re pair and replacement as de fined in Part 200 of equipment or parts thereof are not considered physical changes

.

The Department should focus the definition to state that the determination as to whether a project is routine is to be made on a case-by-case basis by examining the nature and extent, purpose, frequency a nd cost of the project.

Further, we recommend that the Department consider establishing clear guidance an d compliance certainty to the regulated community. For exampl e, the Department could define “r outine maintenance, replacement and repair” in terms of a reasonable, fixed percentage of the replacement cost of a unit, at five percent (though we would prefer the number be higher) of replacement costs. Such an approach would provide the Department, the regulated community, and the interested public a workable, quantifiable test for evaluating the “routine” status of maintenance, repair and/ or replacement activities.

Response: The Department is proposing to adopt a de finition for RMRR to address industry’s stated desire for additional guidance on how the Department will impl ement the RMRR exclusion. The interpretation of the RMRR exclusion is a recurring issue that numerous States and the fede ral government and members of the regulated community have confronted in connection with the enforcement of the NSR provisions of the Act. The Department, with this rulemaking, intends to esta blish a framework for how the RMRR exclusion will be applied in New York State when Part 231 is adopted.Page 14 of 114 The definition proposed by the Department is consistent with both long-standing EPA practice and the approach

that Courts have utilized and endo rsed in addressing RMRR disputes si nce 1990. ‘See’ ‘Wisconson Electric Power v. Reilly’, 893 F.2d. 901 (7 th Cir. 1990), which, in upholding EPA’ s regulatory interpretation of the RMRR exclusion, noted that “EPA makes a case-by-case de termination by weighing the nature, extent, purpose, frequency, and cost of the work, as well as other releva nt factors, to arrive at a common-sense finding.” The proposed Part 200 definition will not re sult in New York implementing a new approach to assessing whether an activity constitutes RMRR; the Department will continue to implement the exclusion on a case-by-case basis according to EPA’s four factor test. The proposed Pa rt 200 RMRR definition merely codifies the case-by-case determination that EPA has applied, and which Courts have upheld, for more than two decades in connection with the implementation of the PSD and NSR programs.

As the Courts have instructed, the Department must give effect to the express stat utory language of the Clean Air Act. Section 111(a)(4) of the Act defines the term “modification” as “‘any physical change’ in, or change in the method of operation of, a stationary source whic h increases the amount of any air pollutant emitted by

such source or which results in the emission of any air pollutant not previously emitted”. As explained further below, Courts have given this definition broad effect.

Numerous legal challenges have ensued over the RMRR exclusion from the federal definition of “major modification” and the issue garnered significant discussion during the drafting of this re gulation. One of the more significant legal challenges oc curred in 2003 when EPA adopted the so-called ‘Equipment Replacement Rule’ (ERP) in an attempt to amend the RMRR exclus ion. The ERP rule specifically exempted equipment replacements from NSR if the fixed cap ital cost of the replacement component did not exceed twenty percent of the replacement value of the process unit and did not change its basic design parameters. The ERP rule departed substantially from EPA’s pr evious regulatory interpretation of the RMRR exclusion as an exclusionPage 15 of 114 limited to de minimis circumstances. New York State joined many other St ates in suing EPA over the adoption of this regulatory amendment.

The United States Court of Appeals for the District of Columbia held that the ERP rule violated the NSR provisions of the Clean Air Act and vacated it. ‘State of New York, et. al. v U.S. Environmental Protection Agency’, 443 F.3d. 880 (D.C. Cir. 2006) (New York v. EPA). The Court’s decision is instructive because it provides guidance for how the Department should implement the RMRR on a going-forward basis.

Focusing on the express language of th e Clean Air Act, the Court determined that the ERP rule violated the definition of modification in section 111(a)(4) of the Ac t. In the Court’s view, Congress’s use of the word “any” in defining a modification means that modification en compasses all types of “physical changes”. Simply stated, “any” means “any”.

As the Court noted, Congress expressly limited the scope of NSR applicability to “any physical change” that increases the amount of any air pollutant emitted by the source or which results in the emission of any air pollutant not previously emitted. Absent additional express statutory limitations, however, the Court was unwilling to imply any further limitation in the term “a ny physical change”. According to the Court, only physical changes that do not result in emission increases are excused from NSR. ‘New York v EPA’, 443 F.3d.

at 887.

The Court found that the EPR rule would have allowed eq uipment replacements that resulted in non-de minimis emission increases to avoid NSR, not withstanding that the Act defines modification in terms of emission

increases. The Court concluded that the ER P rule violated the Act and vacated it.Page 16 of 114 The ‘New York v EPA’ decision is consistent with esta blished judicial precedent holding that the Clean Air Act evinces a clear Congressional intent to broadly construe the term “modifi cation”, and neither expressly, nor impliedly, provides any categorical exemptions for part icular activities or physical changes. It is the Department’s position that given the statutory framework of the Act, an y exemption estab lished by regulation must, by necessity, be of a ‘de minimis’ nature. A ccordingly, the RMRR exclusion must be viewed in the nature of a narrow, ‘de minimis’ exclusion from NSR requirements rather than as a broad exemption or a measure providing regulatory flexibility.

The Department devoted considerable time to addressing the RMRR exclusion during its rule development. In particular, the Department convened a New Source Review Workgroup in 2004 to provide a forum for interested parties, members of the regulated community, local governments, state agencies and environmental organizations to discuss amendments to Parts 200, 201 and 231. Members of the regulated community had the opportunity to comment on the Department’s pending am endments, including the practice of evaluating RMRR on a case by case basis. The Department agreed to discuss the RMRR issue at one of the Workgroup’s meetings and accept follow-up comments on the issue.

The Department specifically encouraged workgroup memb ers to present alternativ e proposals and Department Staff also presented concepts for discussion in addition to the EPA four factor test. The Department’s concepts included (1) a provision for predeter mining RMRR activities in Title V permits, subject to public notice and comment; (2) relying on Title V operational flexibility pr ovisions; and (3) utilization of PALs. Workgroup members did not present specif ic proposals, nor did they reach consensus on a partic ular approach to the RMRR issue or endorse any of the concepts presented by the De partment. Absent an alte rnative viable regulatory proposal, the Department believes that th e four factor test is a ppropriate for inclusion in a regulatory definition, especially in light of the decision in ‘New York v. EPA’. Facilities that want to avoid case-by-casePage 17 of 114 determinations and permitting review for modifications can avail themselves of other more appropriate regulatory flexibility available through the permitting process.

The RMRR definition mentions sources of funding in orde r to differentiate between operation and maintenance budgets, which would likely have funds specifically se t aside for routine replac ements, and those capital expenditures which would be more indicative of non-r outine activities. The proposed regulation does not establish a presumptive exclusion from the definition of modification for those activitie s financed from a capital budget, or establish a bright-line for treating O&M expenses as RMRR. The source of funding is one of several

criteria to consider when characterizi ng an activity as routine or non-routine.

Thus, the Department’s proposed definition of RMRR merely codifies the existing EPA four-factor test as has been interpreted by a majority of the courts. It is ne ither more stringent nor less stringent than EPA’s RMRR methodology. The Department believes that some commenters have misr ead the proposed definition as excluding certain types of activities from the meaning of RMRR. The use of the terms “generally” and “typically” in the proposed defi nition make clear that no on e factor is determinative in the analysis. A project that is funded from a capital budget c ould still qualify as RMRR if other factors suggest routineness (e.g., the nature, purpose, or frequency of the activity). In conclusio n, whether work performed on an emissions source

constitutes RMRR will continue to be determined on a case-by-case basis by examining the nature and extent, purpose, frequency, and cost of the activity.

10) Comment: Net Emission Increase (NEI) - The definition of “net emission increase” (proposed Part 231- 4.1(b)(29)) should be ch anged to be consistent with federal regul ation. The EPA define s NEI as including the emissions from the source project: “Any other increases and decreases in actual emissions at the major stationary source that are contemporan eous with the particular change and are otherwise creditable.”Page 18 of 114 Our proposed change to the Department’s draft rule w ould define “net emission increase” to include all increases and decreases at the major stationary source that are contemporaneous an d creditable, deleting the proposed additional burden of obtaining an “ERC” in orde r to include the decreases currently included in proposed Part 231-4.1(b)(29)(iii ) . Any emission reduction that meets th e four factor test for ERCs surplus, quantifiable, permanent, and enforceable should qualify as an emission reduction or offset.

For example, a facility may have surrendered its permit fo r a source that has been taken out of service, but has not formally applied for an ERC for such reductions. Th e facility should not be obligated to go through the procedural requirements for ERC certific ation to be able to consider such surplus, quantifiable, permanent, and

enforceable reductions in their NEI determination.

Response: The Department disagrees with commenter’s assessment that the process in Subpart 231-10 to

create ERCs for use in a net emission increase determin ation is unnecessary and burdensome. This process has been in effect since October 1994, with the initial promulgation of S ubpart 231-2. For consistency, the Department has carried over this requirement to the proposed PSD regul ations. The process also ensures that the implementation of Part 231 is consistent with the st atutory definition of the terms “emission reduction” and “emission reduction credit” in the Environmental Conservation Law which require that emission reductions or

emission reduction credits “red uce emissions beyond that which is require d by the Act”, “are real and actually occur”, “are quantifiable”, “are enforceable by the Commi ssioner or the Administrator” and “are assured for the life of a corresponding increas e”. The permit process for the creation of ERCs in Su bpart 231-10 ensures that these requirements are met. The Depa rtment further notes that the require ment for “enforceability” whether for the creation of ERCs or for capping under Part 201 require s a condition in a permit that has been subject to public notice and comment. (APC: 38c)Page 19 of 114 11) Comment: Reliability Concerns Related to Netting Requirements: Additionally, The Business Council and its members are concerned that electricity system reliabil ity concerns could arise from the DEC’s draft rule. In particular, the requirements related to the need to obtain permits for projects that involve emissions at less than the significance level are problematic. For example, the draft rule would require the acceptance of a permit limit on projected emissions (i.e. a 3 tons increase) in a non -attainment area. This requirement could restrict operations in the future, due to unrelat ed emissions resulting from fuel cha nges or from a hot summer, such as

the one that occurred in 2005.

Response: The Department’s policy has always been to require applicants to accept permissible emission limits when avoiding NSR applicabil ity. BACT and LAER avoidance perm it conditions have been included in dozens of facility permits throughout New York State since the NSR progra m was first promulgated. This is not a new requirement and onl y affects the source that was constructed or modified not necessarily an entire facility (depending on the facility’s configuration and permitting scenario). Please note that these avoidance

emission limits are no different from capping conditions used to avoid app licability to other regulations (like Title V) and are a tool the Department has used for 30 years to ensure compliance with netting analyses.

12) Comment: Use of ERCs in Netting: Proposed Part 231-10.1(f) provides that “An ERC, or portion thereof, which is used to avoid a determination of a significan t net emission increase cannot subsequently be used for emission offset purposes or in any s ubsequent netting determinations.” The Business Council believes this proposal exceeds the intent underlying the Federal rule, departs from the De partment’s existing rule, and places

unwarranted restrictions on the use of ERCs. If the emission reductions u pon which an ERC is based occurred within the contemporaneous period of a source project, the rule should allow that emission reduction to be considered in any significant net emi ssion increase determination. The only exception to apply is that an ERC or emission reduction that was used in a prior netting ex ercise cannot subsequently be used as an emissionPage 20 of 114 offset. If the Department's proposed language were to be adopted, netting would in clude emission increases but not corresponding creditable emission decreases, ther eby unnecessarily imposing NSR compliance obligations on projects that rightfully shoul d be allowed to net out.

Therefore, we recommend that subdiv ision (f) be rewritten as follows:

(f) An ERC, or portion thereof, which is used to avoi d a determination of a signi ficant net emission increase cannot subsequently be used as an internal offset, or emission offset but may be used in a subsequent net emission increase determination, if contemporaneous or in any subsequent netting determinations

.

This language is consistent with pr ovisions of existing Part 231-2.6(d)(7), which states “An ERC, or portion thereof, which was used in a net emission increase determ ination of non-applicability shall not subsequently be used for internal offset or emission offset purposes, but may be used in a subseq uent net emission increase determination, if contemporaneous.”

Response: The Department disagrees with the commenter’s conclusions . The EPA is responsible for overseeing the implementation of the NSR program. EPA in SIP comment letters dated February 5, 1999 and June 4, 2001 on previously proposed revisi ons to Part 231 stated the following:

“Use of ERCs (emission reduction cred its). It states that “an ERC, or portion thereof, which was used in

a net emission increase determinatio n of non-applicability shall not subs equently be used for internal offsets or emission offset purposes, but may be used in a subsequent net emission increase determination, if contemporaneous.” This seems to state that, as long as it remains contemporaneous, an emission decrease can be used indefinitely to net out several different future emissions increases withinPage 21 of 114 the facility. This is not correct. According to EPA regulations, “a decrease in actual emissions is creditable only to the extent th at the reviewing authority has not re lied on it in issuing any permit under regulations approved pursuant to 40 CFR Part 51 Subpart I or the State has not relied on it in demonstrating attainment or reasonable further progress” (no double counting)”.

The Department believes that if a facility undertaking a modification avoids NSR through contemporaneous emission reductions that keep the emission increases be low significance levels, those reductions should not be double counted to allow another project to avoid NSR. This position, the Department believes, is reasonable and consistent with the Clean Air Act. The proposed revisions to Pa rt 231 require that a fa cility netting out of Part 231 applicability obtain a permit with an enforceab le emission limit equal to the new projected actual emissions or PTE of the modified emission source(s). Th e Department in issuing a pe rmit for a project that has netted out of applicability relies not only on the proposed emission increase but also on the ERCs that were used to keep the project net emission increas e from being a significant net emissi on increase. Additionally, EPA in a December 29, 1989 memorandum from John Calcagni, Director , Air Quality Management Division to Bruce P. Miller, Chief, Air Programs Branch, Region IV regardi ng EPA’s position on netting st ates that “States with federally approved prevention of signif icant deterioration (PSD) State imple mentation plans are free to follow a more stringent interpre tation of their regulations”. The Departme nt’s proposed revisions to Part 231 include PSD requirements and will be submitted to EPA for SIP approval. (APC: 38d)

13) Comment: Definition of "Actua l Emissions": In proposed Part 231-4.1(b)(1)(ii), the term “actual emissions” which only applies "for the purpose of determin ing the baseline concentra tion, and the calculation of air quality impacts according to Section 231-12.2, is defined as:Page 22 of 114 Actual emissions as of a pa rticular date shall equal the rate at which the emission source actually emitted the NSR contaminant during the consecutive 24 month period which precedes the particular date and which is representative of normal facili ty operation. [italics added]

Earlier drafts defined this term as referring to the “average rate” of emissions during the 24 month period, which we assumed meant an average hourly rate. Now that the “average” criterion has been deleted, it is

unclear how this “rate” is to be determined.

We note that the pre-existi ng definition of “actual emissions” found in Part 201-2.1(b)(2) -- and which applies to all other uses of this term in the proposed Part 231 -- refers to emissions from normal operating conditions, averaged over a two year period (or an other more representative period).

We believe that this newly proposed definition of “actual emissions” likewi se should be a twenty-four month average. The Department needs to clarify this issue.

The proposed rule (draft Part 231-4.1(b)(1)(iii)) also states that “t he Department may presume that facilityspecific allowable emissions . . . are e quivalent to the actual emissions of the emission source,” [italics added] without providing any criter ia as to when the Department can make this determination. We recommend that subparagraph (iii) be amended to say “ If actual emissions cannot be dete rmined pursuant to subparagraph (ii) , the Department may presume that facility-specific al lowable emissions . . . are equivalent to the actual emissions of the emission source.” Otherwise, it seems that the Department can ma ke arbitrary decisions to

substitute allowable emissions for actual emissions.Page 23 of 114 Response: The term “actual emissions” is define d in 231-4.1(b)(1) for the purposes of baseline concentrations and air quality impact analysis. Thus, the term ‘actual emi ssions’ is differentiated from the term

‘baseline actual emissions’. The term ‘actual emissions’ cl arifies that the general pre-existing definition of this term, noted in the comment to be the average over two pr ior years, is only to be used for applicability and similar purposes, but should not be used for air quality anal ysis. For the latter purpose, the definition of actual emissions will depend on whether the short term or annual average concentrations are being considered. That is why the qualifier “average” was taken out of the “rate” defi nition. The proper calculati on of the actual emission rate for the differing averaging times is provided in Chapter C, section IV.D.4 of EPA’s Draft 1990 NSR Workshop Manual and is also discu ssed in Appendix E of DAR-10.

The Department does not agree with commenter’s suggested language change to subparagraph 231- 4.1(b)(1)(iii). The proposed Part 231 definition of “actual emissions” incorporates the language of 51.166(b)(21) which gives the reviewi ng authority discretion to presume that the al lowable emissions are representative of actual emi ssions in the instance where the latter are deemed not to be properly determined by an applicant. Thus, the burden is on the applicants to provide informati on necessary to justify that actual emissions should be used in air quality assessments, such as in PSD increment consumption from existing sources. The Department will not make the requested change. (APC: 70a and 70b)

14) Comment: Baseline Actual Emissions: The proposed Part 231-4.1(b)(4)(d) states that, for a regulated NSR contaminant, when a project involves multiple emission sources, the same baseline period must be used to

determine the baseline actual emissions of each of the emission sources being modified -- a provision consistent with the Federal rule. It goes on to state that a diffe rent baseline period cannot be used for each regulated NSR contaminant. Although the structure of this subdivision is confusing, this second restriction seems to apply to all source projects, not just thos e involving multiple sources.Page 24 of 114 The provision is a significant instance where the Depa rtment's proposed rule would eliminate compliance flexibility to in-state bu siness that is provided for in Federal regulation.

The Federal rule provides that: For a regulated NSR pollutant, when a project invol ves multiple emissions units, only one consecutive 24- month period must be used to determine the baseline act ual emissions for the emissi ons units being changed. A different consecutive 24-month period can be used for each regulated NSR pollutant.

The Federal rule specifically allows use of different baseline periods for different NSR pollutants related to a source project. Its only restriction is to require a single baseline period for any given NSR pollutant when a project involves multiple emission units.

We recommend that the Department adopt the Federa l approach. NSR applies to criteria pollutants on a pollutant by pollutant basis. As such, the applicability analysis for a given project properly can reflect different baseline emissions periods for each affected pollutant. Emissions of different pollutants from an emission source can be affected by different f actors (e.g., production levels versus cha nges in materials or fuel content). These different factors will justify the use of different baseline periods to define "representative" emissions. We note that in proposed Part 231-9.4 regarding Plant-wide Applicability Levels (PALs), different 24 month periods can be used for each different PAL contaminant at a facility, which correctly recognizes that more than one baseline period can be applied to an emissi on source that emits more than one category of PAL

contaminant.Page 25 of 114 In its Regulatory Impact Statement, the Department raised concerns that the federal approach could result in artificially high baselines never actua lly experienced or baselines that coul d never be actually achieved by the

source. We believe these concerns can be addressed effectively by amending subdivision (d) to state that:

“Multiple baseline periods can be used to determine the ba seline actual emissions of the emission sources being modified upon demonstration that th e periods are more representative of normal facility operations.” This provision would allow the Department to disallow use of proposed baselines based on operating scenarios

that are not achievable under real-world conditions.

Response: The Department understands the commenter’s concerns but, as explained in the RIS, the Department has determined that a single baseline period for a sp ecific project is more protective of the public health and the environment and the only reasonable al ternative for the New York State NSR program. The Department considered two alternatives with respect to the definition of Baseline Actual Emissions: (1) adopt the Federal definition or (2) adopt a definition based on the Federal rule but tailored to the needs of New York State. The Department does not believe that the first a lternative is reasonable because it will potentially inflate the calculation of baseline actual emissions, thereby subj ecting fewer projects to NS R review and potentially result in higher air emissions in the State. The s econd alternative is considered more reasonable because

baseline actual emissions will more accurate ly reflect a facility’s actual operations.

Pursuant to the December 2002 Federal NSR Rule, a facility could develop a baseline emissions profile which is not derived from a permitted operating scenario, but is based on pollutant-specific emissions achieved during different operating scenarios and different baseline pe riods. The use of multiple baselines could result in a facility selecting several different ba seline periods to maximize the determ ination of past actual emissions for several different pollutants. This co uld create an artificially high profile of baseline actual emissions which inPage 26 of 114 fact were never emitted by the facility (or emission source) and, in extreme cases, could never be achieved by the facility in actual operation. More importantly, the operating permit would not have authorized such emission levels under either operating scenario. With hi gher baseline emissions duri ng a particular two-year period, a proposed project could possibl y avoid being subject to NSR for thos e pollutants as a re sult of selecting that baseline period. At no time w ould the actual emissions of the eff ected emissions source in any one operating scenario be honored, notwithstanding that th e Part 201 permitting program establishes emission limits for each operating scenario. The result of this is the potential for a project that would otherwise be considered major except for the artificially high baseline to either “cap out” or “net out” of NSR. This would cause an

increase in emissions that would exacerbate air quality problems in New York State.

The use of a single baseline period over five years provides the source ow ner sufficient flexib ility to choose an operating scenario that best reflec ts operating conditions during the norma l business cycle without unnaturally inflating emissions. This single ba seline period will be a scenario that has actually occurred and was experienced by the source and the environment. For th is reason, the Department believes a single baseline period is the only reasonable methodology to determine base line actual emissions. This is important given the synergistic relationships that many air pollutants have. NO x and VOC, and to a smaller extent CO, react to form

ozone. SO 2 , NO x and VOCs react to form PM (which is also di rectly emitted by many sources). In order to not exacerbate air quality problems in this proposal, the Department has decided that a si ngle baseline period best represented the goals of the NSR pr ogram for the State of New York.

The Department has considered the cost effectivenes s of the proposed rule ve rsus adopting the Federal definition. The Department recognizes that costs may, in some cases, increase as a result of the proposed provision. However, the Department maintains that the benefits to ai r quality, public health and natural resources, and the ability of clean industry to site within an area outweighs these costs.Page 27 of 114 With regard to proposed Section 231-9.4 (PALs), the Depa rtment also considered a pplying the single baseline requirement to all PAL pollutants for a specific project but determined that such an approach was too stringent to encourage use of PALs. By accepting a PAL, a facility is essentially agreeing to limit emissions for ten years

to no more than current baseline actu al emissions plus an amount equal to the applicable si gnificant project threshold for the PAL contaminant in exchange for flexibility on permitting when modifications are made within the PAL level. The Department views this as a positive result for the environment and believes, under the circumstances, that allowing facilities to use di fferent baseline periods for different pollutants when determining a PAL is appropriate, given the bene fits that will be realized. (APC: 32 and 71)

15) Comment: Record-keeping Requirements: The curre nt draft Part 231-6.1(a) and Part 231-8.1(a) would subject certain modifications at existi ng major facilities, including exempt and trivial sources as defined in Part 201-3, and certain emissions related to “demand growth,” to new record-keeping requirements set forth in proposed Part 231-11.4 even if their project emission po tential is below the appli cable significant project thresholds, and to even more extensiv e record-keeping and reporting requiremen ts if such emissions are equal to or exceed the applicable significan t project threshold. Furthermore, ac cording to the DEC’s Assessment of Public Comment, the DEC would require that, if a faci lity subtracts or excludes emissions due to demand growth or independent factors from the calculation of projected actual emissions, a record should be provided in regards to what the facility did, so that compliance w ith NSR can be assured. A dditionally, Part 231 includes recordkeeping and reporting requiremen ts for netting (limiting emissions through enforceable emission caps), NSR major modifications, and new facilities. In all of these circumstances, facilities have the burden to maintain adequate documentation to ensure they can demonstrate compliance with Part 231. Theses provisions will impose regulatory requirements that are more stringent than Federal requirements. Further, we believe this change will impose unnecessary and potentially significant additional co mpliance burdens on business. The draft rule as written could involve hundreds of filings and significant resources. Th e Business Council and itsPage 28 of 114 members urge the DEC to revise the Regulatory Impact Statement to address specifically the additional costs associated with new Title V permitting requirements and the resource burden to both regulated sources and the Department.

For example, the proposed rule would re quire a facility to go through consider able effort to ca lculate the PEP or PTE related to very minor changes at existing major facilities, and would impose the additional burden of compliance certification for those calculations.

To partly remedy our concerns, we recommend that exempt and trivial sources, as defined in Part 201-3, be exempt from the record-keeping requirem ents of proposed 231-6.1(a) and -8.1(a).

Further, we recommend deletion of the proposed Part 231-11.2(b), a cha nge that would not impose any new record-keeping requirements on those m odifications that result in emissions increases less than 50 percent of the applicable significant source th resholds. If the Department were to keep its propose d paragraph (b), it would literally subject emission increases of as little as one pound to new record-keeping requirements. This requirement is extremely burdensome and provides little , if any, regulatory benefit. The Department should follow EPA’s “reasonable possibility” rule by elimin ating the record-keeping requirements for those

modifications that result in emissions increases less than 50 percent of the applicable significant thresholds. EPA clarified that a “reasonable possibility” of a signi ficant emissions increase exists—and therefore recordkeeping and reporting requirements a pply—if the projected increase in emissions equals or exceeds 50 percent of the applicable NSR significance leve l for a relevant pollutant. While these record-keeping requirements are meant to address projects that present a “reasonable possi bility” of a significant emissions increase, in contrast, the Department’s proposed rule would also apply to pr ojects that present no “reasonable possibility” of exceeding significant source thresholds. It makes absolutely no sense to impose burdensome record-keepingPage 29 of 114 requirements on New York businesses for increases that have no “reasonable possibi lity” of resulting in a significant emissions increase.

We believe that our proposed appro ach is more workable than the Depa rtment’s proposal, in that it would eliminate record-keeping and formal PTE calculations for projects with relatively in significant emissions. Even so, it should be noted that our proposed approach is compar able to even more stringen t than the stat es existing Part 231. Under the current state rule, an emission unit that is part of a source project at a major facility is exempt from Part 231 requirements if its “project emissi on potential” is below the applicable significant source project threshold. That same emission unit would have a partial Part 231 exemption if its PEP exceeded the significant source project thre shold, but did not result in a significant net emission increase (it still would be subject to permitting, netting and o ffsets, but exempt from LAER).

Response: The Department disagrees with the commen t. Maintaining the records under proposed Subpart

231-11 ensures that all emission increases are on record and avai lable should a facility propose a project in the

future for which a net emission increase determinati on is required. The propos ed requirements provide safeguards to ensure that any facility which makes a phys ical or operational change will be in compliance with

the Clean Air Act and 6 NYCRR Part 231. Based on the Department’s experience, netting has been used frequently by many facilities to avoid NSR applicability. Further, Federal regulations require that all emissions, including emissions from any exempt or trivial activity, which are contemporan eous with a proposed project, be included in any net emissions increase determination. This has been a requirement since the promulgation of the original NSR regulations. Based on this requirement applicants were expected to maintain some records pertaining to every modification that caused an emissi on increase at their facility . Because these projects

should have been documented and record ed in the past, no new costs will be incurred in the future. (APC: 61b)Page 30 of 114 16) Comment: Demand Growth: The proposed rule, at Part 231-4.1(b)(40)(i)(c), allows an applicant to exclude from the calculation of projected act ual emissions those emission increases that could have been accommodated during the baseline period that are unrel ated to the project, including emissi ons related to increased utilization due to demand growth. The Business Council strongly supp orts retention of this pr ovision. This exemption

reflects the intent of NSR to address emission increases related to physical and operational changes, and will provide valuable operational flexibility to businesses in stat es that conform to the Federal NSR reforms. This is a key Federal reform issue whose adoption in New York w ill help assure a more even regulatory “playing field”

for in-state business.

However, in regards to demand growth, the DEC’s Assessm ent of Public Comment indi cates that the DEC also clarified the language of Subpart 231-11 on Permit and Reasonable Possi bility Requirements to exclude

increased emissions that the source can establish are due to independent factors, without specifying demand growth as one such potentially independe nt factor. The DEC states that th is change is made to negate any misunderstanding that emission increases attributable to demand growth are necessarily unrelated to a project. The reasonable possibility provisions now will requ ire more stringent recordkeeping and reporting for modifications, which are not significant themselves but which would be signi ficant if the emissions attributable to independent factors are added. These changes to th e draft rule increase burde ns on regulated entities.

Response: Comment noted. Also, pleas e see response to comment number 15.

17) Comment: Transition Plan: To clarify that 40 CFR Part 52 will not apply to New York’s new NSR program once this rulemaking takes effect, Part 231-3.2 should be amended as follows:Page 31 of 114 231-3.2 Transition plan. (a) On or after the effective da te of this Subpart, any owner and/or operator of a proposed new or modified facility, for which a complete application has not been submitted to the department, must comply with the provision s of Subparts 231-3 through 231-13. The Business Council supports language stating: “the requirements of 40 CFR Part 52 shall not a pply to such applications.” Response: The Department does not believe that such a statement is appropriate or necessary and, therefore, will not make the commenter’s requested change. It shoul d be noted that the Department does not make such a statement regarding federal nonatta inment regulation 51.165 in proposed Pa rt 231, nor does the Department’s existing Subpart 231-2 make such a statement. Furthe r, commenter’s statement is not accurate because the requirements of 40 CFR 52.21 will con tinue to apply until EPA approves revised Part 231 into the State Implementation Plan. (APC: 74)

18) Comment: Guidance v. Policy: In several instances , i.e., proposed Part 231-5.5(d)(2), Part 231-5.5(e), Part 231-6.6(d)(2), Part 231-6.6(e), the Department’s proposed rule mandates the use of Departmental “policy” documents with regard to air quality impact analysis. “Policy” documents are no t formally promulgated, nor have they been subject to form al public notice and comment, impact assessments and other statutory requirements. We are concerned that the Department ’s proposal to mandate their use will give these unpromulgated policy documents the for ce and effect of law, in clear vi olation of the State Administrative Procedures Act. As such, we strongly recommend th at these references be de leted from the final rule.

We note that existing Part 231 makes two specific refere nces to Department policy or guidance, but in both instances, states that the permit applicant may , rather than shall, employ the Department’s Air Guide 27 guidance document in their impact assessments.Page 32 of 114 In the proposed draft rule, the Department has changed an initial reference from De partmental “guidance” to Departmental "policy.” While it is unclear what cons titutes Departmental "polic y," at least Departmental "guidance’ has a statutory basis in that ECL Section 3-0301.1(z) subjects “guidanc e and similar documents of general applicability" to public no tice and comment requirements.

Even so, the public notice provided under this provisi on of the ECL does not authorize guidance memoranda to

be referenced or construed as esta blishing binding and enforceable standa rds. As set forth in ECL 3-0301.2(a) rules, regulations, and standards and criteria must be reviewed by the State Environmental Board, adopted in

accordance with the State Uniform Proce dures Act, filed with th e Secretary of Sate and published in the Code of Rules and Regulations to become enforceable. Sinc e “guidance” does not meet this statutory criterion for rule-making, the Department must delete all requirements that incorporate “policy,” or guidance by reference.

Response: The revision from Department “guidance” to “policy” in proposed Part 231 was merely a matter of nomenclature. Department guidance is provided in DEC policy documents, including DEC Program Policy documents. Contrary to the commenter’s assertion, al l Department policy documents are required to undergo public notice. During the formulation of the draft Part 231 ru le, the air quality impact analysis procedures referred to were published on March 8, 2006 and finalized as DAR-10 in th e Environmental Notice Bulletin on May 24, 2006 after minor public comments were receiv ed. DAR-10 is titled “NYSDEC Guidelines on Dispersion Modeling Procedures for Ai r Quality Impact Analysis.”

The purpose of DAR-10 is to provide guidance to the regulated community as to what methods will be considered acceptable approaches for dispersion modeli ng methodologies and related air analysis procedures. Without such recommended procedures, a permit applic ant would be required to propose and demonstrate acceptability of modeling schemes on case by case basis. It is important to note that DAR-10 essentiallyPage 33 of 114 incorporates methodologies in EPA’s Guideline on Air Qu ality Models, which has been formally adopted in regulation as Appendix W at 40 CFR Part 51. It also includes approaches found in Appendix S of 40 CFR Part 51 and provides information on New York specific data ba ses and approaches. Since these databases and some of the methodologies evolve over time, th e Department believes it is admini stratively efficient to include them in policy documents. Moreover, in accordance with Section 3-0301(z) of the Environmental Conservation Law, the Department must make available for public notice, and in appropriate cases public comment, all guidance memoranda and similar documents of general applicabil ity which provide guidance to the general public in complying with the Environmental Conserva tion Law and its regulations. (APC: 75)

19) Comment: Permit Application Requirements: Draft Part 231-11.1(a)(4) states that all permit applications are required to include "proposed emission monitoring, record-keeping a nd reporting provisions to establish compliance with the applicable requirements of this Part." To clarify this requirement, we recommend this additional provision:

“Where an underlying applicable requirement specifies the type and frequency of monitoring, record-keeping and reporting, such specification fulfills this requirement."

We believe this additional provision also is consistent with the deci sion in the Appalachian Power case.

Response: The intent of the Department is for the applicant to identify its proposed monitoring, reporting and recordkeeping provisi ons at the time of permit application. The determination whether or not the provisions provided by the applicant are adequate and accep table will be made during the Department’s review of the permit application. The Department w ill not be revising this provision. (APC: 76)Page 34 of 114 20) Comment: Significant Project Thre shold: The Business Council has long advocated for an increase in the significant project threshold applicable to downstate Ne w York. The reclassification of the former severe nonattainment area and the revamping of Part 231 represent an opportune time for adopti ng this sensible regulatory reform. It is our understanding that the Federal rule woul d allow for a significant source project threshold of 25 tpy in the NY-LI-NNY moderate non-attainment area. Wh ile this provision would be a preferred outcome, at minimum, we recommend increasing the significant pr oject threshold in proposed Part 231-13.3, Table 3 to 12.5 tpy. We believe this approach makes regulatory and environmental sense for se veral reasons, such as:

• It would relieve regulatory burde ns on existing major facilities, but eliminating the need to do formal netting analysis for relativ ely minor projects. Since these f acilities still would be subject to the same net emission increase threshold, an increase in the project-specific threshold would not result in a lessening of regulator y requirements affecting emissions.

• It addresses the regulatory incong ruity that allows for construction of new 24 tpy sources in the downstate region with no regulatory requirements under Part 231, but it subjects extremely small projects (>2.5tpy) at existing major facilities to additional regulatory assessments.

Response: The Department will retain the signifi cant project threshold of 2.5 tons per year for NO X and

VOC for the severe ozone nonattainment area unde r the 1-hour ozone NAAQS. The Department has

determined that retention of this threshold is vital to Ne w York State’s ability to control ozone and crucial to its SIP for attaining the 1-hour ozone NAAQS. Raising the significant project threshold to 12.5 tpy as requested by commenter would relax requirements that have been in place for almost eight years and result in fewer modified facilities undergoing NSR review and could potentially raise concerns under the anti- backsliding provisions of the Clean Air Act. Another reason the Department has chosen not to raise the significant projectPage 35 of 114 threshold is to maintain the NNSR requirements and em ission capping provision that ar e contained in existing operating permits. By retaining existi ng requirements, the proposed amendmen ts to Part 231 will continue to assist in protecting public health an d the environment and preserve the re quirements in the ozone attainment plan. Finally, the threshol d levels for non-attainment areas are established in th e Clean Air Act (CAA). For severe areas the CAA requires that a ny increase be considered significant. In the April 3, 2000 revisions to Subpart 231-2, the Department convinced EPA to accept a 2.5 ton per year significant threshold level for the

severe area of New York State. (APC: 77)

21) Comment: Emission Source Shutdown: Draft Part 231-4.1(b)(20) defines "emission source shutdown," for purposes of establishing ERCs, as "the permanent removal from service of an emission source, as reflected by a permit condition formally prohibiting the emission source from further operation, provided that it does not result in a facility shutdown." This definition doe s not address instances wher e a source is physically dismantled. The dismantling of a sour ce also should also constitute "shut down," and such source should be removed from the permit, rather than ha ving a permit condition prohibiting its operation.

Response: The Department disagrees with the comme nt. Subparagraph 231-4.1(b)( 18(ii) of the definition ‘emission source shutdown’ includes the following:

“the physical removal of an emission source at a facility as reflected by a permit modification that removes the emission source from the permit, provided that it does not result in a facility shutdown.”

22) Comment: Particulate ERCs: Draf t 231-10.1(c) provides that "An ERC must be the same type of regulated NSR contaminant as the emission increase requiring ERCs ," and this section goes on to provide a single example stating that only a particulate form of emission re duction is allowed to be used as an emission offset orPage 36 of 114 in netting for new particulate emissions . This provision, and especially th is example, raises concerns because there are no fine particulate ERC’s currently in the state registry. The lack of any existing pool of PM 2.5 ERCs’ in New York State is especially alar ming, because it will effectively curta il the permitting of new state-of-theart facilities in non-attainment PM 2.5 areas. Moreover, DEC’s proposed method for creating PM 2.5 ERCs from mobile sources, which could be used for stationary source offsets, is untested and unproven. And the general program for creating offsets is too restrictiv e. All reasonable opportu nities to create PM 2.5 ERCs should be promoted, including the use of NOx and SO2 as PM 2.5 precursors.

EPA’s May 2008 final NSR regulations for PM 2.5 offer an offset program that we strongly urge the Department to follow, since those regulations recognize SO 2 and NOx as PM 2.5 precursors and allow ERCs of these

contaminants to be used to offset PM 2.5 increases and for internal PM 2.5 netting. The Department’s choice not

to follow EPA’s lead will si gnificantly, if not to tally, eliminate the ab ility to modify exis ting facilities and will prevent businesses from modernizing their facilities with pollution control technology. For example, if a facility wanted to install SCR – wh ich would significantly reduce NOx em issions – it could not do so without producing PM 2.5 . Since there are no readily available ERCs for PM 2.5 , the Department’s rule as proposed would severely restrict the in stallation of SCR at facilities in nona ttainment areas throughout the state.

Response: The Department understands commenter’s conc erns. However, addressing the issue raised by the commenter is beyond the scope of this rulemaking. As noted by the commenter, EPA on May 8, 2008 issued final rules governing the impl ementation of the New Source Review program for PM2.5. EPA’s final rule requires permits to address directly emitted PM2.5 as well as pollutants responsible for secondary formation of PM2.5, referred to as precursors. EPA has identified SO 2 as a regulated precursor, and also NO x unless a state can demonstrate that NO x emissions are not a significant contri butor to the formation of PM2.5. The final EPA rule also allows interpollutant tradi ng under the nonattainment NSR program on a regional basisPage 37 of 114 or statewide basis, but precludes su ch trading on a permit by permit basis. EPA’s permissible interpollutant offset trading allows reductions in direct PM2.5 to offset precursor emissions in creases, emissions reductions of one precursor to offset emissions incr eases of another precursor, and reducti ons in precursor emissions to offset

direct PM2.5 emissions increases.

To facilitate these interpollutant trading provisions, EPA has provided in their final PM2.5 rule what they consider as acceptable trading ratios. States may elect to use EPA’s trading ratios or develop their own subject to EPA approval. States with EPA approved PSD programs and those with PM2.5 nonattainment areas have up to three (3) years to submit revised State Implementation Pl ans (SIPs) incorpor ating the PM2.5 NSR requirements. At the present time EPA will be implementing all PM2.5 NSR requirements until such time as New York’s revised NSR program addressing PM2.5 is approved by EPA. As noted above, New York has up to three years to submit a revised SIP addressing PM2.5. The Department will need time to evaluate EPA’s final PM2.5 rule, specifically with rega rd to applicable PM2.5 precursors a nd appropriate interp ollutant trading ratios to determine what provisions make sense fo r New York. As such, the Department will not be incorporating into this Part 231 rule making provisions establishing PM2.5 pr ecursors or interpollutant trading provisions. Following the Department’s detailed eval uation of EPA’s final PM2.5 rule, the Department will propose amendments to Part 231, if appropriate and necessa ry, to incorporate the Depa rtment’s decisions with respect to PM2.5 precursors and inte rpollutant trading. (APC: 79)

23) Comment: General Prohibitions: Proposed section 231-3.5 should be dele ted. This provision prohibits the construction and operation of a proposed major facility, NSR major modification, or existing major facility which undertakes a significant modification but avoids NSR applicability through netting, without an NSR permit. This provision unnecessarily imposes NSR comp liance obligations on proj ects that do not increase

emissions at all.Page 38 of 114 Response: The Department does not agree that this s ection should be deleted. Th is section does not impose NSR compliance obligations on project s that do not increase emissions.

24) Comment: Source Obligation: Draf t Section 231-3.6 (a) shoul d be deleted. Under th e state’s Title V permit program, a permit issued to a major source under Part 201-6 includes all applicable requirements. This provision which states: “The issuance of a permit does not relieve any owner or operator of the responsibility to comply fully with applicable provisions of the Stat e Implementation Plan and any other requirements under

local State and Federal law” creates a superfluous additional federa lly enforceable Applicable Requirement which would be required to be included in the Title V permit (potentially with attendant monitoring and/or record keeping requirements) for which the permittee will be required to certify compliance. We see no need for this additional requirement and recommend its deletion.

Response: The Department agrees with the comment . The following language in subdivision 231-3.6(a) “and any other requirements under local, State, or Federal law” will be deleted.

25) Comment: Baseline period: The Department’s initia l proposed rule, in Part 231-4.1(b)(7), adopted the federal NSR reform allowing for a ten- year look back for establishing a non-EUSGU facility’s baseline period, and a five-year look back period for EU SGU facilities (with Department discre tion to consider a baseline period that is more representative of norm al operations.) During the Depart mental advisory committee process, industrial and utility representatives illustrated how business cycles extend well beyond a five year period.

This revised proposal now rejects th e federal flexibility reform, and limits both EUSGU and non-EUSGU units to a five year look back.Page 39 of 114 These regulatory “take backs” are c oupled with the carry-over proposal to disallow use of different baseline periods for different NSR contaminants. During the ea rlier advisory committee process, we illustrated how different categories of emissi ons at a single facility could be affected by different economic factors, e.g., VOC emissions could be affected by changes in production levels, while NOx emissions could be influenced by changes in fuel use due to significan t changes in relati ve fuel prices.

While the revised rule is an improvement over existing Pa rt 231, it fails to provide in -state businesses with the same regulatory flexibility offered in most states, a nd reduce the ability to set baselines based on truly representative production levels.

The Business Council urges the Department to adopt th e EPA baseline period provisions. Alternatively, the Department could adopt the 10 year look back period while reserving th e ability to determine whether a proposed baseline period is most representative of nor mal operations and adopt the ability to apply different baseline periods to different categories of pollutants, if the Department finds that emission levels of different pollutants are impacted by different economic factors.

Response: As discussed in the RIS, in the preambl e to the 2002 Federal NSR Ru le EPA stated that one "common complaint" about their 1980 ru le is that sources have "limited ability to consider the operational

fluctuations associated with normal business cycles when establishing ba seline actual emissions unless [the] reviewing authority agrees that another period is 'more representative of normal source operation.'” ( 67 Fed Reg

80191-92 ). Members of the regulated community in New York echoed this same concern during the NSR Workgroup meetings and noted that establishing a baselin e period pursuant to the existing NSR regulations was too complex and burdensome and often involved protract ed permit proceedings with the Department. To address this issue, the Department has decided to es tablish a uniform baseline period provision for EUSGUs andPage 40 of 114 non-EUSGUs. Under this provision, all emission sources w ould be able to select a baseline using any 24 consecutive month period in the past five years. The Department believes that this approach strikes the most appropriate balance considering environmental protecti on, administrative burden, and economic growth. Both

EUSGUs and non-EUSGUs would have more flexibility than under the De partment’s current Subpart 231-2 regulation in establishing thei r baseline as they would not have to spec ifically demonstrate, in order to lookback beyond the two most recent year s that another 24 consecutive month period within five years was more representative of normal emission source operations. As under current Subpart 231-2, both EUSGUs and nonEUSGUs would not be able to look-back further than the most recent five y ears to attempt to show that there was another 24 consecutive month period that was more representative of normal em ission source operations.

The Department believes that, in light of the D.C. Ci rcuit’s decision in the ‘Sout h Coast’ case, adopting a 10- year look-back period could be lega lly vulnerable as an impermissible “backsliding” of a control in a

nonattainment area. Section 193 of the Clean Air Act, 42 U.S.C. S ection 7515, prohibits th e “backsliding” of control requirements in nona ttainment areas; ‘see also’ 42 U.S.C. S ection 7502(e) (prohibiting the relaxation of a primary national ambient air quality standard absent the promulgation of requirements that “provide for controls which are not less stringent than the controls applicable to areas designated as nonattainment before such relaxation”). In ‘South Coast’, the court held th at EPA acted unlawfully when it decided that the one-hour NSR requirements need not be continued, given that “[t]he result of this change is to subject fewer areas to LAER and to offset requirements that themselves are weakened,” but did not require alternative requirements

that would ensure the same level of emission reductions (‘South Coast’ , 472 F.3d 882, 901). Similarly, if the Department were to adopt the 10-year look-back provi sion for non-EUSGUs the baseline period provision could be challenged in court as being inconsis tent with the ‘South Coast’ decision.Page 41 of 114 Under the current Part 231, both EUSG Us and non-EUSGUs may attempt to demonstrate to the Department that a 24 consecutive month period ot her than the two most recent years (with a limit on looking back five years) should be used in establishing the baseline period. However, as the D.C. Circuit noted in the ‘New York v EPA’ decision, “EPA appropriately refers to the problems experi enced under the 1980 [PSD] rule . . . [including that] establishing a repres entative baseline period other than the two-year peri od immediately preceding the change was ‘complex and time-consuming’ and often involved ‘disputed judgment calls’” (‘New York v EPA’, 413 F.3d 3, 53-54 [quoting 61 Fed Reg 38,258]). Removing this aspect of the regulation should reduce the administrative burden on the Department, allo wing it to use its limited resources in other more pressing areas.

The Department also believes that overa ll this approach will al so provide additional flex ibility for facilities,which EPA concludes could result in additional economic growth. In particular, both EUSGUs and nonEUSGUs will be able to use any 24 consecutive month peri od within the past five years, without the burden of demonstrating to the Department that this period is mo re representative of norma l source operations than the two most recent years. In addition, the business cycle study relied upon by EPA, to justify the 10-year lookback, found business cycles vari ed in the industries surveyed from three years to eight years. A five-year lookback offers a period that is approximately the average length of these cycles. (APC: 82)

26) Comment: PAL Reductions: Plant-wi de Applicability Limits can provide a significant degree of flexibility to business, by allowing businesses to make facility m odifications without each being individually subject to

NSR review.

In this proposal, Part 231-9.4(e), PALs will be subject to an automatic reduction commencing in the sixth year. Generally, the PAL would be reduced by 25 percent, unless it can demons trate at the time of the initialPage 42 of 114 application for the PAL that applicat ion of BACT and/or LAER to all ma jor emissions sources covered by the PAL would not result in a 25 pe rcent reduction in emissions if such source s were operated at full capacity.

Businesses have questioned the utility of the Department’s initial PA L proposal, given its record-keeping requirements. We have received cons iderable input from member companies stating that placing this additional regulatory restriction on the use of a PAL will make this a less valuable “operational flexibility” option. We

recommend deletion of these auto matic reduction requirements.

Response: As discussed in the RIS, the Department ha s determined that additional environmental benefits will result from requiring a reduction in the PAL of up to 25 percent by the end of the fifth year of the PAL.

This condition will ensure that reduced emissions will result from the implementation of each PAL and that older, less efficient faciliti es will not be authorized to emit at hist orically high emission levels without updating their pollution control technology

. Although the Department acknowledges th at fewer facilities may opt for a

PAL because of the emission reduc tion requirement, the PALs that w ould not go forward because of the emission reduction requirement are those at facilities which do not have state-of-t he-art pollution control technology and whose emission levels exceed BACT an d LAER limits. Because the PAL provision is voluntary, limiting its availability to those facilities that commit to reduce emissions or operate at levels that reflect state-of-the-art pollution control technology will not impose any additional costs or burdens on regulated industry, compared to the Federal PA L provision. The PAL provi sions provide facilities wi th the flexibility in deciding how and whether they will need to make emission reductions to ac commodate a physical or operational change and allow the facility to avoid any delays associated with permitting that might otherwise trigger NSR emission reduction requirements. Therefore, the implementation of a PAL can have the effect of allowing a facility to avoid the imposition of controls that would result in reduced emissions. Requiring a

reduction in the PAL level ensures that environmental be nefits will be achieved by the implementation of thePage 43 of 114 PAL. The Department believes that the proposed PAL provisions best balance the goals of improving air quality while reducing the burden of NS R compliance on industry. (APC: 29)

27) Comment: Offset Ratios: Existing tables 2 and 3 (sub-par ts 231-2.12 and 2.13 respectiv ely) set the required offset ratios at a fixed ratio “or more” for VOC, NOx, PM10 and CO emissions. While the Act allows for higher offset ratios, they are not mandated.

The proposed amendments to Part 231, set forth in Pa rts 231-13.1 through .4, Tables 1 through 4, states that

offset ratios will be “at l east” the stated figures.

It was always unclear how or when the “or more’ clause would be applied to VOC or NO x sources, especially since both existing Part 231 (see existi ng Part 231-2.9(b)(2), and this proposal only incl udes criteria for offsets

above the fixed ratios for PM10 and CO emissions.

Absent clear regulatory criter ia for applying higher offset ratios, we recommend that these tables should only

reference offset levels “at least” th e fixed percentage for particulate sour ces and CO sources, and “at” the fixed percentages for other contaminants.

Response: The Act uses the phrase “at least” when sp ecifying required offset ratios for ozone nonattainment areas, and specifically for ozone precursors VOC and NO x . See Section 182(b)(5) and Section 182(d)(2) of the 1990 CAAA. The Department will not make the requested change. (APC: 84)

28) Comment: Other Regulated NSR Contaminant: The revised rule (Part 231-13.5, Table 5 and -13.6, Table 6) lists a major facility thresholds a nd significant project thresh olds for “any other regulated NSR contaminant”Page 44 of 114 other than those listed in Tables 5 a nd 6. It is unclear what contaminants other than those lis ted are potentially subject to regulation under NSR. We recommend deletion of this language.

Response: 40 CFR 52.21(b)(23)(i) define s ‘Significant’ in reference to a net emissions increase or the potential of a source to emit by providing a list of po llutants with corresponding rate s of emissions that if equaled or exceeded would be significant. For any pollutant not listed under 40 CFR 52.21(b)(23)(i), but subject to regulation under the CAA, 40 CFR 52.21(b)(23)(ii) defines significant as “any emissions rate”. The inclusion of the language “any othe r regulated NSR contaminant” in Section 231-13.5, Table 5 and Section 231- 13.6, Table 6 conforms Part 231 with the requirement of 52.21(b)(23)(ii) and will no t be removed. (APC: 85)

State of New York Department of Public Service (Commenter Number 4)

29) Comment: Our concern is with the proposed Section 200.l(cl) definition of routin e maintenance, repair or replacement (RMRR), which provides: (cl) Routine mainte nance, repair, or replacement. Whether work done at an emissions source constitutes routine maintenance, repair, or replacement is determined on a case-by-case basis by examining the nature and extent , purpose, frequency, and cost. Ge nerally, routine maintenance, repair, or replacement refer to activities that are undertaken on a prescribed and/or regular schedule, limited in scope and expense, and typically paid for out of the ope ration and maintenance budget of the facility. Routine maintenance, repair, and replacement generally do not refe r to activities that are infrequent, large in scope, extend the life of the facility, or result in th e regaining of lost capacity or availability.

As stated in DEC's Assessment of Public Comments Su mmary, several commenters found that the definition of routine maintenance, repair and replacement in Secti on 200.1 is far too vague and unworkable and will likely result in delaying needed repairs, with a resulting decr ease in plant availability. The definition seeks to limitPage 45 of 114 repair and maintenance to items accounted for in th e affected entities' operation and maintenance (O&M) accounts. Further, the proposed regulat ion triggers NSR requirements for any types of repair that are, "infrequent, large in scope, extend the life of the facility, or result in the regaining of lost capacity or availability."

Affected entities may have differing accounting system s for tracking expenditures. Moreover, situations can arise during a repair of an electrical steam generati ng station or steam boiler that may, for example, require removing and replacing a number of s ections of boiler tubes that may not be accounted as O&M but as a capital expenditure. This repair does not increas e the emission level or capability of th e plant, but simply restores it to its permitted capability and should not trigger a NSR.

Regarding activities that are infrequent or large in scop e, there are a number of these that occur at electric generating stations that do not increase emissions or pl ant capability. For example, the repair of an electric generator rotor can be a large project, undertaken in-frequently that would be subject to review and approval, yet which has no effect on emissions or capability.

Generators in New York are subject to competitive markets, so if generating facilities were to become subject to NSR under this provision, the capital expenditures require d to comply with Best Available Control Technology might not be recoverable through the market, maki ng some facilities uneconomic and precipitating their shutdown. Premature retirements would almost certainly have a negative affect on overa ll system reliability, as less electric capacity would be available, and would result in increased costs as well.

DPS Staff recommends that the proposed RMRR definiti on include provisions that exempt maintenance and repairs that do not increase the entities permitted emissi on levels or capability. This would provide a clearerPage 46 of 114 metric for entities when performing maintenance and hen ce prevent delays that could jeopardize electric system reliability by decreasing unit availabili ty. Although DEC stated in the Asse ssment of Public Comments that it would maintain the proposed definiti on, we urge reconsideration so that the regulated community can clearly assess whether a given repair or ma intenance activity will trigger NSR provi sions. DPS Staff recommends the following language:

(cl) Routine maintenance, repair, or replacement: A ny physical or operational change that does not result in an increase in an affected entity's permitted em ission limits or more than a nominal increase in a facility's existing generati ng or steam output capability.

DPS Staff also believes that the increased record k eeping requirements that are specified in the proposed regulations have the potential to significantly increase costs incurred by the state's electric and steam generators, raising the costs paid by load-serving entities and the customers they serve. Likewise, the requirement to request DEC review and approval of maintenance related activi ties to determine whether such activities trigger NSR provisions will increase both the cost needed to mainta in facilities and the time needed to perform routine

maintenance.

Reliable and affordable electric servi ce is critical to the security and eco nomic well being of New York State. DEC should consider revising its proposed regulations implementing the NSR and PSD programs in a manner

that reflects the obvious need to avoid, or at least minimize, the disruption of el ectric service.

Response: As recognized the cour t in New York vs. EPA 443 F.3d880 the term modification means any physical change, or change in the method of operation of a stationary source which increases the amount of any air pollutant emitted by the source or which results in the emission of any air pollutant not previously emitted.Page 47 of 114 A facility’s generating or steam output capacity may not be directly related to th e amount of air pollutants emitted. It is conceivable that the steam output capacity could remain constant while emissions of air pollutants increase significantly as a result of a physical or operational change. The Department cannot make this changed as it is inconsistent with the Act. Also, please see response to comment number 9 above.

Alcoa Inc. (Commenter Number 1)

30) Comment: Alcoa Inc. supports the comments of the Business Council of Ne w York State, Inc. regarding the proposed revisions to Parts 200, 201, and 231.

Response: Comment noted.

31) Comment: Please also note that Al coa is strongly opposed to the proposed definition in Part 200 for Routine Maintenance, Repair, and Replacement. This definition is unworkable for facility owners/operators in the State

of New York because it would result in an unreasonable and unwarranted expansion of NSR-related compliance

costs with uncertain benefit to th e environment. The proposed defi nition would also create unnecessary uncertainty and confusion rega rding the ability of a facility to adequately repa ir and maintain long-term capital investments. This uncertainty stems from the proposed need for “case-by-case” de terminations for routine maintenance, repair and replacement activities and the proposed limitations for routine maintenance repair and replacement to “generally” include only those activi ties performed on a “prescribe d” schedule and “typically” paid for out of the O&M budget.

Many components of capital operating equi pment are replaced on an as needed basis rather than a “prescribed and/or regular” schedule to minimize opera ting expense. To the extent that these repairs and replacements werePage 48 of 114 not anticipated during the annual budget process, the cost of these repair s may not have been included in a facility's O&M budget. Other repairs may be required le ss frequently, but none-the-le ss, represent a necessary routine maintenance, repair or replacement to ensure return on the original capital equipment investment. In any case, the repair or replacement of such compone nts will not necessarily increase emissions of NSR regulated pollutants. Yet, New York’s proposed de finition would require facilities to seek case-by-case

determinations for all these mainte nance activities under the NSR program before such maintenance could be performed. This will result in unnece ssary and truly unworkable delays fo r manufacturing faci lities and added costs for both the facilities and the New York State DEC (Department).

Furthermore, the logic applied in the definition of “Rou tine maintenance, repair, or replacement” for excluding

activities that extend the life of a f acility is flawed. The proposal definition continues to afford affected

facilities an exclusion for “routine maintenance.” “Maint enance” by its very nature is an activity that extends

the functional and useful life of an emission unit in that the maintenance act ivity avoids the pr emature failure of the emission unit, enabling it to function for a longer peri od of time than would be expected if maintenance were not performed.

The proposed definition creates significant regulatory un certainty for owners/operato rs who are already vested in manufacturing equipment in the State of New York as well as those who may consid er investments. The use of vague terms such as “generally”, “prescribed”, and “typically”, will provide unlimited deference to Department interpretations regarding what maintenan ce can and cannot be performe d at a facility without incurring the potentially significant cost and delays asso ciated with NSR permitting. Business in the State of New York will have significant difficulty managing their op erations with the degree of regulatory uncertainty created by the proposed Routine Maintena nce, Repair, and Replacement definition.Page 49 of 114 Response: The commenter states that New York’s propos ed definition would require facilities to seek caseby-case determinations for all maintenance activities unde r the NSR program before such maintenance could be performed. The Department disagrees with this comment. It is the Department’s intent that the facility is responsible for making a RMRR determination for any propos ed project. If the facility owner has any doubt or questions regarding whether a proposed project is truly RMRR, then the f acility owner should submit a request to the Department for a RMRR determination. Furtherm ore, the maintenance activity would not trigger NSR, and no case-by-case determination would be required, if emissions do not increase by more than the significance threshold over the baseline. Please note th at projects that are determ ined not to be RMRR and do not propose a significant emissions in crease, are not subject to the em ission offset and control technology requirements of Part 231. However, these projects would still be subject to the requirements of section 231- 11.2 for insignificant modifications. Also, pleas e see response to comment number 9 above.

Nucor Steel Auburn, Inc. (Commenter Number 2)

32) Comment: Nucor is a member of, and supports the comments submitted by the Business Council of New York State, Inc.

Response: Comment noted.

33) Comment: We are concerned with the NYSDEC’s definition of “routine ma intenance, repair and replacement” (RMRR). As you know, the extent of this exception under the federal regulations has been the subject of ongoing litigation. Consequen tly, because the full scope of this exclusion is unsettled at the federal level, we believe that it is premat ure to promulgate a definition at this time. Any definition promulgated nowPage 50 of 114 may be invalidated as a result in the federal litigation or may result in New York having a definition that is unnecessarily more restrictive than the federal counterpart, with no significant additional environmental benefit.

Further, while it appears that NYSDEC is attempting to codify judicial holdings, the use of “generally” and “typically” creates ambiguity because a facility cannot be assure d that its actions fall under this definition. Likewise, excluding activities that exte nd the life of a facility or result in regaining lost capacity from the definition of RMRR may effectively eliminate this exclus ion because any project argu ably extends the life of a facility or regains lost capacity.

Nevertheless, if NYSDEC does intend to retain a defin ition of RMRR, we propose that the definition include a sentence that replacement of equipment components w ith substantially similar components constitutes RMRR. Substantially similar components are those with the sa me basic design parameters as the components being replaced. When a company is replacing the components of a piece of equipment with like-kind or substantially similar components with the same basic design parameters, it should not need to examine whether the replacement triggers NSR review. Thus, if the Depa rtment does not eliminate the definition of RMRR, we propose adding the following sentences to the definition:

“Routine maintenance, repair and replacement does refe r to activities in which equipment components are replaced with substantially similar components. Substa ntially similar components are those with the same basic design parameters.”

Response: Please see response to comment number 9 above.Page 51 of 114 34) Comment: We are also concerned that the proposed revisi ons do not allow a facil ity to use a different baseline period for different NSR pollutants. See proposed NYCRR 231- 4.1(b)(4)(d). The federal rule specifically allows a facility to use a different baseline period for diffe rent NSR pollutants. See, e.g., 40 CFR § 51.165(a)(1)(xxxv)(3). The factor s which influence the emissions of diff erent pollutants vary. Using only one 24-month period for all pollutants will have the effect of establishing a baseline for some pollutants that is not truly representative. As a result, Nucor supports NYSDEC adopting the federa l requirement that allows the use of different baseline periods for different NSR pollutants.

Response: Please see response to comment number 14 above.

35) Comment: Nucor also objects to proposed Parts 231-6.1(a) and 231-8.1(a) that impose record keeping requirements for any project whose “project emissions potential” is below the significant threshold. The ultimate effect is that any major source will be re quired to prepare and maintain unnecessary records for projects with only nominal emission increases. We support the Busi ness Council’s proposal to exclude “exempt” and “trivial” sources from these requirements and to delete proposed Part 231-11.4(a) so that any change that results in an emissions increase less than 50 percent of the applicable significance source threshold is not included in these record keeping requirements.

Response: Please see response to comment number 15 above.

36) Comment: Finally, Nucor strongly objects to NYSDEC’s revision of the “look back” period from 10 years to 5 years. NYSDEC initially adopted the federal 10-year look back period, but revised it to 5 years in the later proposal. It is unclear why the look back period was changed. The federal rules and the majority of statesPage 52 of 114 recognize that a 10-year look back period is representative of business cycles and allows a business to utilize a truly representative 24-m onth period when determining baseline emissions.

Response: Please see response to comment number 25 above.

NRG Energy, Inc (Commenter Number 3)

37) Comment: NRG Supports The Actual-T o-Projected-Actual Emissions Test The federal NSR rules strike an important balance betw een allowing existing source s to continue operating as they have traditionally while requiri ng them to install appropriate emissi on control technology when they make changes that result in an increase in actual emissions to the environment. By following the federal NSR rules and proposing an actual-to-projected-actual emissions test that allows sources to exclude from their projection

those emissions increases that are unrelated to the ch ange, including increases resu lting from demand growth (Section 231-4.1(b)(40)(i)(c)), the DEC will ensure that physical changes or changes in the method of operation ( A physical or operational changes @ ) made to existing sources will not tr igger the NSR requirements unless they alter the way that the source will operate and, as a result, increase actual emissions of regulated NSR

contaminants.

NRG believes the exclusion for unrelated emissions increa ses in proposed Section 231-4.1( b)(40)(i)(c) is clearly mandated by the federal Clean Air Act, which only applie s the NSR requirements to existing sources that make a physical or operational change A which increases the amount of any air pollutant emitted by such source or which results in the emission of any air pollutant not previously emitted. @ 42 U.S.C. ' 741 1(a)(4). This clearly

establishes a causation re quirement for applicability of the NSR regulations so that only physical or operational changes that result in a si gnificant net increase in emissions should be subject to the NSR requirements. BasedPage 53 of 114 on the statutory language, emissions increases not related to the physical or operation al change should not be considered in calculating post-project emissions.

The proposed definition of A modification @ in Section 231-4.1(b)(28) also es tablishes that unrelated emissions increases should not be considered in projecting post-proj ect emissions. According to the proposed definition, a modification is a physical or operational change that A results in @ an increase in actual emissions over the baseline or that “results in” the emission of any air contaminant not previously emitted by the source.

NRG supports the DEC = s language in proposed Section 231-4.1(b)(40 )(I)(c), which clarifies that unrelated

emissions increases should not be considered in projecting future actu al emissions. The language conforms to congressional intent, the proposed definition of A modification @ and the federal NSR rules and makes it clear to sources how they should perform their post-project emissions calculations when analyz ing the project emissions potential of a proposed physic al or operational change.

Response: Comment noted. 38) Comment: The Proposed Definition Of Routine Maintenance, Repair And Replacement Is Unworkable The proposed NSR rules exclude A routine maintenance, repair and replacement @ (RMRR) from the definition of a modification in Section 231-4.1(b)( 28)(i) for major NSR purposes. The Company supports this important exclusion from the definition to allow the Company to continue to maintain its plants. However, the Department = s proposed definition of A routine maintenance, repair and replacement @ in Section 200.1(cl) is unworkable as worded and would force the Company to unde rtake extensive emissions analysis for most of the maintenance projects it perfor ms at its plants every year.Page 54 of 114 The first part of the definition provides that RMRR is determined on a case-by-case basis by examining the nature and extent, purpose, frequency and cost of a project. These factors, which have been used by EPA and various district courts, offer sources appropriate flexibility to determine whether their projects must be

considered modifications or are excl uded from the major NSR requirements as RMRR. However, the latter part of the proposed definition renders it unworkable.

According to proposed Section 200.1(cl):

Generally, routine maintenance, repair , or replacement refer to activities that are undertaken on a prescribed and/or regular schedule, limited in scope and expense, and typically paid for out of the operation and maintenance budget of the facility. Routine maintenance, repair, and replacement generally do not refer to activities that are infrequent, large in scope, extend the life of the facility, or result in the regaining of lost capacity or availability.

These two sentences appear to more severely limit the type of projects that can be considered as RMRR than the first part of the definition. If the Department intends that projects cannot be considered as RMRR unless they are undertaken on a prescribed or regular schedule, are limited in scope and expense and paid for out of the operations and maintenance budget of a source, then virt ually all maintenance projects at electric generating units ( A EGUs @ ) could not be deemed RMRR.

An EGU is a complicated assembly of multiple syst ems and components and proper operation of the unit depends on all of the systems and components working toge ther in an integrated ma nner. To ensure proper operation, EGUs perform hundreds of maintenance proj ects per year, including replacements of components that degrade as a result of design defects, manufacturing defects, misapp lication of material s and normal wearPage 55 of 114 and tear due to the tremendous heat and stress to whic h the components are subjected. However, due to the complexity of an EGU, the overall harsh operating condi tions in various components, and the vastly different operating conditions and failure modes for the individual co mponents, it is not possible to predict or plan to undertake specific replacement projects on a prescribed or regular schedule even though such replacements are anticipated during the EGU = s lifetime. Electric generating companies do not want to make such replacements prematurely, as doing so would raise the costs of operating, which would then be passed on to the consumers in the State. Therefore, the industr y generally waits for components to begin to degrade before undertaking replacement, as determined from inspections or fa ilures of the component. NRG does not believe this economical practice should make a component replacement any less routine.

Further, although a maintenance activity may be fairly minor by itself, the project may appear more extensive or costly simply due to the component = s location within the EGU. For instan ce, it is not possible replace a turbine component without undertaking the extens ive task of opening up the turbine. Similarly, any boiler maintenance activities cannot be performed without removing sections of the boiler or erecting scaffolding to reach the area where the maintenance will be performed. Again, NRG does not believe such common practices at EGUs should result in a project being considered non-routine. Finally, most component replacements are capitalized for accounting purposes. The Department appears to be including in the propose d definitions an arbitrary and artificial distinction between projects that are paid for out of the operations and maintenance budget versus project s that are paid for out of the capital budget. The

distinction would elim inate any concept of A routine replacements @ at EGUs since component replacements are usually capitalized for accounting and tax purposes. NRG = s current practice is to capitalize component replacements that cost as little as $4,500. DEC ca nnot seriously intend that replacements of $4,500 be automatically excluded from consideration as RMRR. The co st of a project is only one of the four factors that EPA evaluates in determining whether a project is routine maintenance, repair and replacement and that thePage 56 of 114 DEC endorses in the first sentence of the pr oposed definition of RMRR. However, the DEC = s proposed wording in the subsequent sentence of the proposed definition would appear to add the source of funding as a

fifth factor and elevate it above the other four factors in determin ing whether a project is routine. The Department = s proposed artificial distinction between component replacements th at are capitalized or expensed should be given no weight in the evalua tion of whether the project is routine. Companies make distinctions on project funding primarily for accounting and tax purposes. Th is distinction should not be used for the unrelated purpose of determining whether a project is subject to environmental regulation.

The Company recognizes that certain c ourts have looked at the factors addr essed in the latter part of the proposed definition in the context of evaluating whether the specific projects at issue in the case are RMRR. However, the Department’s proposed definition appears to predetermine that projects meeting one or more of

the listed criteria cannot be consider ed RMRR. The Company believes the De partment must offer flexibility in the definition by avoiding general ch aracterizations such as those found in the latter part of the proposed

definition.

NRG regularly performs maintenance projec ts at its plants to maintain availa bility and reliability and to ensure the plants are operated efficiently and safely. Although mo st of the maintenance proj ects are not performed on a regular or prescribed schedule, may appear extensive simply due to their location within the EGU and may be capitalized, NRG historically has considered such projects to be RM RR. The Department’s proposed definition appears to foreclose the possibility that the Company can continue to view such maintenance projects as

RMRR.

The definition of RMRR, as proposed, is likely to for ce companies to undertake exte nsive emissions analyses for most of their maintenance projects and meet perm itting requirements, a burden some result that willPage 57 of 114 significantly raise the cost of compliance in the State. It also could lead to delays for needed projects due to the permitting requirements proposed in Section 231-11.2, which c ould seriously impact the reliability of EGUs. Accordingly, the Company requests that the proposed definition of RMRR be revised to read as follows:

(cl) Routine maintenance, repair, or replacement. Whether work done at an emissions source constitutes routine maintenance, repair, or replacement is determined on a case-by-case basis by examining the nature and extent, purpose, frequency, and cost.

Response: Please see response to comment number 9 above.

39) Comment: The Requirements In Section 231-11.2 for T itle V Permitting of Insignificant Modifications Are Unnecessary And Burdensome

In proposed Sections 231-6.1 and 231-8.1( a), a project with a pr oject emission potential th at does not equal or exceed the applicable significant proj ect threshold in the appropriate tabl e of Subpart 231-13 must comply with the requirements of Section 231-11.2. Proposed Section 231-11.2 addresses the requirements for insignificant modification where there is a reasonable possibility that the modification will result in an emissions increase. Under Section 231-11.2(c), if an existi ng source seeking to undertake a proj ect has a project emission potential that equals or exceeds 50 percent of the applicable sign ificant project threshold when considered alone or when added to any unrelated projected emi ssion increases expected at the emissi ons unit (those emi ssions excluded in accordance with proposed Section 231-4.1(b) [(40)(i)(c)], the source would have to modify its Title V permit under the minor permit provisions of Subpart 201-6 and, under proposed Section 231-11.2(c)(1)-(3), would

need to retain records of certain information, monitor emissions and subm it emission reports to the Department for five years after completion of the insignificant modification.Page 58 of 114 The Company believes the requirement for a minor pe rmit revision is unnecessary , goes well beyond what the federal NSR rules require and serves no purpose other th an to create an administra tive burden and potentially delay projects needed for sources to remain economica lly competitive in the State. (The company understands that the requirements of S ection 231-11.2 can be avoided if a source calc ulates projected actual emissions using the emission unit’s potential to emit, but the Company does not s ee this as a viable opt ion. In virtually all circumstances, using the potential to emit to calculate projected actual emissions would result in a significant increase in emissions, which would force a source to m eet even more onerous permitting requirements than the minor permit revision procedures in S ubpart 201-6.) Under the federal NSR rules, pursuant to 40 C.F.R. section 52.21(r)(6), sources equaling or exceeding 50 percent of a significant emission threshold must meet requirements that mirror the recordkeeping, monito ring and reporting provisions of proposed Section 213- 11.2(c)(1)-(3). Compliance with thes e requirements is automatic and th ere is no need under the federal NSR rules to seek a minor permit revision to incorporate such requirements into the source’s Title V permit.

The Company is unclear why the Depa rtment believes such a provision is necessary under the State’s NSR program and the Department has offere d no sound explanation to support its proposed requirement. Pursuant to 40 C.F.R. section 52.21(r)(6), prior to beginning actual constr uction of a physical or operational change that meets or exceeds the 50 percent reasonable possibility threshold, the source must document and maintain certain information regarding the project, including its emissions calculations. Electric utility steam generating

units must send this documentation to EPA or the state permitting authority. The Company believes this requirement is sufficient for insignificant modifications th at do not trigger major NSR permitting requirements. Obtaining a minor permit revision creates unnecessary ad ministrative steps and could potentially delay a project if the department holds up a complete ness determination under Section 201-6.9(c). Under 201-6.7(c)(5), a

minor modification cannot be made until the DEC deems the application complete. If the DEC has not acted within 15 days after receipt of the application it will be deemed complete by default and the minor modificationPage 59 of 114 may be made 25 days after th e permit application was received by the DE C. However, the permit might be held up even longer if the Department finds the initial app lication was incomplete. Further, although the source may go ahead with its project once the permit application is deemed complete, no permit shield would apply until the permit revision is issued by the Department which puts the source at risk which c ould adversely affect the reliability of EGUs, especially in the New York City area, which already has reliability concerns.

Requiring a Title V minor permit revision is particularly problematic given the narrow definition of RMRR that the Department proposes to adopt. As discussed above, this narrow definition will ma ke most activities at EGUs non-routine and, hence, activities for which the s ource must perform emissions analyses to determine whether projected actual emissions will exceed baseline levels by the significant project threshold. Unless a source expects no changes over baseline levels, e.g., does not projec t increases in demand or changes in the fuel used at the emissions unit, it is very likely that, for most projects at EGUs , projected actual emissions, including

those emissions that can be excluded under Section 231- 4.1(b)(40)(i)(c), will exceed baseline emissions by more than 50 percent of the significant project threshold. As a result, a single source c ould be forced to submit several minor permit revision applicatio ns every year to address all the ma intenance activities performed at the source, which would leave the source’s Ti tle V permit in a constant state of flux.

The proposed permitting requirements also would unnecessa rily complicate and delay efficiency improvements at EGUs. The State should be encouraging efficiency improvements, which are critical to more cost-effectively comply with RGGI. Mandating that sources obtain minor Title V permit revisions fo r efficiency improvements

as a result of unrelated increases in emissions woul d do nothing more than create unwarranted regulatory

barriers for no environmental benefit.Page 60 of 114 The proposed Title V minor permit revision requirements are especially onerous for sources in severe ozone nonattainment areas where the significant project thres hold is only 10 percent of the significant net emission increase threshold. Given that, virtually any post-project emissions change , even if wholly unrelated to the project, would force the source into the Title V minor permitting revision process.

Further, given the number of sources in the State, the proposed Title V permitting requirement likely would bog down the Department’s permit revision process and put a strain on its resources. The Regulatory Impact Analysis contains no mention of the expected impact to sources or the Department expected as a result of the requirement to apply for minor Title V permit revisions for insignificant modifications. This is crucial to understanding the resources re quired both by the regu latory community a nd the Department to implement this provision.

The Company believes that the recordkeeping, monito ring and reporting requirement s of proposed Section 231- 11.2(c)(1)-(3) are sufficient for sources to demonstrate that thei r insignificant modifications are not major NSR modifications. Accordingly, the Department should delete the Title V permitting requirement. The requirement is unnecessary, will complicate the process and is lik ely to strain both industry and State resources.

Response: The Department acknowledges that the record keeping requirements of the proposed rule are in excess of the federal rule. However, the Department di sagrees with the commenter’s proposed change and will not eliminate these provisions. Thr ough the requirement to maintain these records the Department can assure better compliance with the proposed rule and prot ect the applicant from unfounded accusations of circumvention. In doing so, the Department believes that these provisions are necessary to protect the environment and public health. The provisions for Title V permit modifica tions are straight forward. Upon notice of a complete application, or on the 25 th day after the date the Department received the application, if noPage 61 of 114 notice is given, the facility may proceed with the m odification in accordance with 6 NYCRR subdivision 201- 6.7(c).

40) Comment: The Provisions To Be Incorporated Into Title V Permits Must Be Clearly Defined If the Department insists on including in the final NSR rules the requirement that insignificant modifications meeting or exceeding 50 percent of the significant pr oject threshold must obtain a minor Title V permit revision, the provisions to be incorporat ed into the Title V permit must be cl early identified. It is not at all apparent from the proposed rules wh at provisions would need to be included in the minor permit revision application. The company presumes that the recordkeeping, monitoring and reporting provisions of Section 231-11.2(c)(1)-(3) would be incorporated into the Title V pe rmit, as indicated in the Revised Regulatory Impact Statement, but Section 231-11.2(c) is silent as to whether additional pe rmit requirements would need to be incorporated.

The Company urges the Department to address this issue and, fu rther, to limit the pr ovisions that must be incorporated into the source’s Title V permit to those re quirements for recordkeeping, monitoring and reporting that identified in Section 231-11.2(c)(1 )-(3). Any additional requirements w ould be unnecessary to demonstrate that the source is in compliance. Clearly defining the pr ovisions that must be incorporated into the Title V permit will avoid any confusion, make it more likely that a permit application can be deemed complete within 15 days of submittal and allow less uncertainty that could lead to permit challenges.

Response: The Department disagrees with the comm enter’s assessment. All of the Department’s regulations outline the requirements each affected faci lity must comply with. These regulations do not specifically state that each and every provision must be included in the permit. The Department will not make the requested change.Page 62 of 114 41) Comment: The Permitting Requirements For Netting Are Unnecessarily Stringent, Complicated And

Unclear Pursuant to proposed Sections 231-6.1( b) and 231-8.1(b), if a proposed modifi cation at an existing source has a project emission potential that equals or exceeds the applicable significant project threshold in the appropriate table of Subpart 231-13 but does not result in a major m odification, the source must co mply with the provisions of proposed Sections 231-6.2 or 2 31-8.2, as applicable. Proposed Sec tions 231-6.2 and 231-82 establish the requirements for netting. Under proposed Sections 231 -6.2(b) and 231-8.2(b), a so urce must obtain a permit

that establishes an emission limit equal to the projected actual emissions or potenti al to emit of the proposed modification for each air pollutant that exceeds the appli cable significant project th reshold. Certain of the permit application requirements for a netting permit ar e detailed in proposed Section 231-11.1(a). Proposed Section 231-11.1(a)(3) requires a source to include in its perm it application the calc ulations and supporting documentation for baseline emissions, projected actua l emissions, the project em ission potential and the net emission increase determination for the modified facility . If the calculation of pr ojected actual emissions

excludes emissions that could have been accommodated during the baseline period and are unrelated to the modification, the source must incl ude detailed documentation of the ex cluded emissions “i n order for the

exclusion of those emissions to be allowed in de termining future compliance.” Proposed Section 231- 11.1(a)(3).

The Department’s proposal that sources must obtain a pe rmit limit equal to projected actual emissions from a proposed project for which netting is us ed is overly restrictive. Such a requirement goes we ll beyond what is required in the federal NSR regulati ons, where a source would only be required to obtain a permit to make contemporaneous emission decreases enforceable. The proposed provision appears to unnecessarily complicate the use of netting and it is not at all clear how the permit lim it is supposed to work in practice. Proposed Section 231-11.1(a)(3) appears to provide that emissions which were ex cluded from the calculation of projectedPage 63 of 114 actual emissions, as allowed under proposed Section 231-4. 1(b)(40)(i)(c), also woul d be excluded when the Department is determining compliance with the permit limit. However, it is not clearly established in the rules.

Further, the proposed rules fail to address what happens if the source exceeds both the permit limit and its projection of unrelated emissions increas es due to unexpected factors that ar e unrelated to the project, such as unexpected changes in the type of fu el being combusted in the unit, an unexpected shutdown of another unit, severe weather or unanticipated dema nd growth. Would such increases over the permit limit also be allowed even though they were not projected by the source? For example, if four years after a modification has been made for which netting was used, an oil-and gas-fired unit, which primarily used natural gas during the baseline period and projected similar fuel usage during the post-proj ect period, switched to burning oil as its primary fuel due to an unforeseen increase in natural gas prices and such oil usage resulted in higher levels of pollutants than the emissions projected or included in the facility’s permit, how will that situation be handled? This is a serious concern given the apparent permanent nature of the permit limit.

If a source is restricted from havi ng unrelated emission increases beyond wh at was projected, the proposal will artificially constrain operations and, potentially, fuel usage for purposes unr elated to a physical or operational change simply because a source was unable to accurately forecast future actual emissions. For example, in the future, a source might face unexpected changes in the availab ility of fuel, such as the curtailment of natural gas during peak demand periods. Additionally, it is extremely difficult to accurately forecast weather changes, which are likely to impact electricity usage. For example, looking at past degree days (a c limate indicator of energy needs), the variation from the climate normal from 1992 to 2006 averaged 5.9 percent annually and 19.6 percent during the ozone season. In fact, the minimum pe rcentage difference from normal for the ozone season was 4.3 percent and ranged as high as 52 percent.Page 64 of 114 The Department cannot expect that a source would be able to accurately predict future emissions for the entire life of an emissions unit, yet that is what appears to be required. Further, there is no clear indication as to how emissions from future insignificant m odifications would be handled. W ould such increases be allowed to exceed the permit limit or would the source be constraine d from making future insi gnificant modifications once it has accepted a permit limit for netting purposes?

The Company believes these unanswered questions make the permitting requirement for netting complicated and leave compliance uncertain. The company believes th at requiring sources using netting to take a permit limit equal to the project emission potential of a proposed modification is unnecessary and urges the Department to delete this requirement from the proposed NSR rules.

Response: If the facility were to ex ceed their emission cap (ton per year li mit) they would be considered in violation of their Title V perm it. If the facility chooses to operate in a manner that could cause a permitted limit to be exceeded, then the facility woul d need to modify their permit to a llow for a different operating scenario which raises their emission cap. This modification may cause the facility to become subject to the provisions of Part 231. Also, please note that this rule does not preclude a facility from proposing futu re modifications. If a facility proposes a future modification the procedures in Part 231 will be used to dete rmine applicability. If the facility is able to net out of applicability, a new cap w ill be included in the Title V permit. If the facility is unable to cap, then the new emission lim it will be included in the Title V permit in addition to any other applicable requirements of Part 231. Finally, please see responses to comment numbers 11 and 15 above.

42) Comment: The Netting Requirements Are Problematic In Severe Ozone Nonattainment Areas The problems with requiring sources to obtain permit limits for netting purposes ar e exacerbated in severe

ozone nonattainment areas. According to proposed Sec tion 231-6.1(b), if a s ource in a severe ozonePage 65 of 114 nonattainment areas has a proposed modification that e quals or exceeds the significant project threshold for

NO x or VOCs of 2.5 tons per year, as identified in Table 3 in proposed Se ction 231-13.3, the source must meet the requirements of proposed Section 231-6.2 regarding netting. Even if the source has no contemporaneous

emissions increases or decrease s that could be used for netting, it appear s that the source w ould be required to obtain a netting permit and take a limit e qual to its projected emissions of NO x or VOCs. For example, if a source proposes a modification that would result in an actual emissions increase of 3 tons per year of NOx, pursuant to proposed Section 231-6.1, the source must go through a netting analysis. If the source does not have any contemporaneous emissions in creases or decreases of NOx, result of the netting analysis would remain at three tons. Pursuant to proposed Section 231-6.2(b), it appears that the source would need to obtain a permit

limit for the three ton modification. This is a particularly burdensome requi rement for sources in severe ozone nonattainment areas given that the proj ect emission threshold is only one-te nth of the significant net emission increase threshold. For all other pollu tants in nonattainment areas, the signi ficant project threshold is equal to the significant net emission increase threshold, so that a source in any area other than a severe ozone nonattainment area with emissions that are only 10 per cent of the significant net em ission increase threshold

would not have needed to undertake the netting analysis in the first place.

The Department has offered no rationale as to why th e significant project threshold is not equal to the significant net emission increase thres hold for sources in severe ozone nonattainment areas. If the Department insists on retaining the permit requirements for netti ng, the Company urges the Department to raise the significant project threshold to the le vel of the significant net emission incr ease threshold. Otherwise, sources

in severe ozone nonattainment areas w ould be forced to take permit limits for very insignificant increases in emissions, which raises all the attendant issues that the Company has noted above.

Response: Please see responses to comment numbers 11 and 20 above.Page 66 of 114 43) Comment: The DEC Should Allow A Source To Demo nstrate That A Baseline Pe riod Outside Of The Five Years Preceding A Project Is More Represen tative Of Normal Facility Operations The definition of ‘baseline period” in proposed Section 231-4.1(b)(7) a llows emission sources to use 24

consecutive months out of the five years preceding a project as their baseline period. NRG supports the fiveyear lookback period for the baseline fo r EGUs, which is consistent with th e federal NSR rules. However, the Department’s proposal would not allow a source to select a differe nt baseline if it is more representative of normal facility operation.

The proposed definition is unnecessarily restrictive and may force sources to choose a baseline that does not reflect normal source operation, which may inappropriately inflate the emi ssions associated with a proposed project. NRG requests that the Department follow the federal NSR rules for establishing a baseline for EGUs, which simply authorize the EPA Administrator on a case-b y-case basis to allow sources to use a different time period as the baseline if it is more representative of normal operations. The propos ed rules as written would

eliminate consideration of a 24-mont h period outside of the five years immediately preceding a project as the baseline as well as shorter time peri ods that the Department would otherw ise agree are more representative of normal facility operations.

Response: The Department believes that the implementa tion of NSR in New York needs to be streamlined, and having a more straightforward appr oach to determining baseline actual emissions is a significant step to achieving that goal. Under the baselin e period definition in current Subpart 231-2, facilities are not allowed to

demonstrate that a 24 consecutive mont h period, outside of the five years immediately preceding a project, is more representative of normal facility operations. Faci lities do, however, have the o pportunity to make a case that another two consecutive year period within five years immediately preced ing a project is more representative of baseline emissions. This requires a case-by-case review of histor ical facility operations byPage 67 of 114 Department staff, an extremely resource intensive proce ss, as noted in the Regulatory Impact Statement, that can lead to inconsistent application of the rule throughout the State. Allowing facilities to choose any two consecutive years in five immediately preceding a project avoids this re sult. The Department believes that allowing any two consecutive years in five provides facilities with a sufficient period of time to establish baseline emissions. The Regul atory Impact Statement discusses in deta il the rationale behind the Department’s decision to propose the baseline period consisting of any two consecutive year s in five immedi ately preceding a project. (APC: 28)

44) Comment: The Definition of “Baseline Actual Em issions” Should Allow Sources To Select Different

Baseline Periods for Different Pollutants In the definition of ‘baseline actual emissions” in pr oposed Section 231-4.1(b)(4)(i) (d), the DEC proposes to require sources to use the same baseline period fo r all regulated NSR contaminants. NRG opposes this requirement and urges the DEC to fo llow the federal NSR rules, which allow sources to select a different baseline period for each regulated NSR pollutant. See 40 C.F.R. section 52.21(b)(48)(i)(c). This type of flexibility under the NSR program is important to ensure that sources can select periods of representative emissions for each regulated NSR contaminant rather than be forced to choose one 24-month period that might unfairly penalize the source with respect to emissions of certain NSR contaminants.

For example, during a 24-month period th at is the most representative of NO x emissions, the source might have been burning coal with a low sulfur content that is not representative of SO 2 emissions. If the source selects another 24-month period that is representative for SO 2 emissions, the NO x emissions during that period might not be representative. The source would then be placed in the untenable position of selecting a baseline that is not reflective of typical annual emissions from the unit for one or more regulated NSR contaminants.Page 68 of 114 Accordingly, NRG urges the DEC to follow the federal NSR rules and allow sources to select a different baseline period for each regulated NSR contaminant.

Response: Please see response to comment number 14 above.

45) Comment: Reducing A Plantwide Applicability Lim it In The Sixth Year Is Unnecessarily Restrictive In Section 231-9.4(e), the Department pr oposes that in the sixth year of an initial Plantwide Applicability Limit (PAL), the level must be reduced by 25 percent. Th is requirement would make a PAL a very unattractive option in New York and it is inconsistent with the federal PAL regulations.

The biggest advantage of a PAL is that it provides certa inty to a source as to when a project will trigger the NSR requirements. With a PAL, a source can make a ny physical or operational change without triggering NSR provided that the PAL level will not be exceeded. This provides the source with flex ibility in deciding how and

whether it will need to make emission reductions to acco mmodate a physical or operational change and allows the source to avoid any delays associated with perm itting that might otherwise be mandated. However, as proposed by the Department, the adva ntages of a PAL would be seriously outweighed by the disadvantages of forcing a source to reduce its emissions regardless of what ac tivities the source might have undertaken in the first five years of the PAL.

The PAL as proposed by the Department may have some limited utility for source s that intend to reduce

emissions after the effective date of a PAL for some other program. Howe ver, for the majority of sources in the state, NRG does not believe that the PA L option will be attractive if the Depa rtment retains the requirement that it be reduced by 25 percent in the si xth year. Forcing sources with a PAL to meet unjustified emissionsPage 69 of 114 reduction requirements serves no purpose other than ensuri ng that the PAL option will be of little use in the

state.

The proposed 25 percent reduction require ment in the PAL section is one wa y that the Department’s proposed NSR program conflicts with other emi ssion reduction programs and goals in the state, such as RGGI. Without the 25 percent reduction requirement, PALs would be a very attractive option for sources seeking to pursue efficiency upgrades to meet the goals of RGGI. A PA L would allow a source the flexibility and certainty to undertake efficiency improvements w ithout encountering the delays asso ciated with performing emissions calculations and pursuing permitting if necessary. Howe ver, the 25 percent reduction requirement, which effectively eliminates the PAL as a viable option for sour ces in the state, is contrary to the goals of RGGI. Eliminating the 25 percent reduction requirement would harmonize the goals of RGGI and the Department’s NSR program by making a PAL a more appealing option for sources.

Consistent with the federal PAL rules, the Department proposed PAL provisions a llow the PAL to be reduced upon permit renewal if actual emissions ar e less than 80 percent of the ini tial PAL level. This requirement

should be sufficient to ensure that sources do not obt ain an unfair advantage by agreeing to a PAL.

Response: The commenter states that the 25 percent reduction requirement in the sixth year of a PAL effectively eliminates the PAL as a viable option for source s in the state, and is contrary to the goals of RGGI. Commenter further states that eliminating the 25 per cent reduction requirement would harmonize the goals of RGGI and the Department's NSR pr ogram by making a PAL a more app ealing option for sources. The commenter, however, does not elaborate as to how the pr oposed 25 percent reduction re quirement conflicts with the goals of RGGI, therefore, the Depart ment is not able to address this comment. The Department is not awarePage 70 of 114 of a conflict between the proposed 25 percent reduction and RGGI. Also, please see response to comment

number 26 above.

National Grid (Commenter Number 6)

46) Comment: The Proposed Definition of Routine Ma intenance, Repair And Replacement Is Unworkable The proposed NSR rules exclude “routine maintenance, repa ir and replacement” (RMRR) from the definition of a modification in Section 231-4.1(b)( 28)(i) for major NSR purposes. The Company supports this important exclusion from the definition to allow the Company to continue to maintain its plants. However, the Department’s proposed definition of “routine maintenan ce, repair and replacement” in Section 200.1(cl) is

unworkable as worded and would for ce the Company, other EGUs and industr ial sources to und ertake extensive emissions analyses for most of the rou tine maintenance projects it performs at its plants every year. This action places NY States electric generators and industrial community at an economi c disadvantage relative to sources complying with the federal rule.

The first part of the definition provides that RMRR is determined on a case-by-case basis by examining the nature and extent, purpose, frequency and cost of a project. These factors, which have been used by EPA and various district courts, offer source appropriate flexibility to determin e whether their projects must be

considered modifications or are excl uded from the major NSR requirements as RMRR. However, the latter part of the proposed definition poses considerable subjectivity.

According to proposed Section 200.1(cl):Page 71 of 114 Generally, routine maintenance, repair or replacement refer to activities that are undertaken on a prescribed and/or regular schedule, limited in scope and expense, and typically paid for out of the operation and maintenance budget of the facility. Routine maintenance, repair, and replacement generally do not refer to activities that are infrequent, large in scope, extend the life of the facility, or result in the regaining of lost capacity or availability.

These two sentences appear to more severely limit the type of projects that can be considered as RMRR than the first part of the definitio n. Nevertheless, beginning the sentence with “Generally” recognizes, as exemplified below, that significant, infrequent and capital financed maintenance is routinely common in the industry.

An EGU is a complicated assembly of multiple syst ems and components and proper operation of the unit depends on all of the systems and components working toge ther in an integrated manner. To ensure proper operation, new and older facilities perf orm hundreds of maintenance projects per year, includin g replacements of components that degrade as a result of design defects, manufacturing defects, mi sapplication of materials,

emission control burdens and normal wear and tear due to the complexity of an EGU, the overall harsh operating conditions in the boiler, a nd the vastly different operating c onditions and failure modes for the individual components, it is not possi ble to predict or plan to undertake specific replacement projects on a prescribed or regular schedule even though such repl acements are routinely an ticipated during the EGU’s lifetime. While we work diligently at preventive main tenance we do not want to make routine replacements prematurely, as doing so would raise the costs of operating, which would then be passed on to Long Island Power Authority consumers. We generally strive to condu ct necessary routine maintenance before reliability or availability decline, but simply because unanticipated failures oc cur we do not believe that component replacement as such time is any less routine.Page 72 of 114 Further, although a maintenance activity may be fairly minor by itself, the project may appear more extensive or costly simply due to the component’s lo cation within the emissions unit. It is not possible to replace a failed or impaired turbine component without undertaking the extensive task of opening up the turbine. Many boiler maintenance activities cannot be performed without removi ng sections of the boiler or erecting scaffolding to reach the area where the maintenance will be perf ormed. Again, such common practices are routine.

Finally, many component replacements are capitalized fo r accounting purposes. The Department appears to be including in the proposed de finition an unnecessary distinction between projects that paid for out of the operations and maintenance budget versus projects that are paid for out of the capital budget. Companies make such distinctions on project funding primarily for acc ounting and tax purposes. Such accounting distinctions should not be used for the unrelated purpose of determining whether a project is routine.

While the word “generally” could provide the flexibil ity appropriate to accommodate the maintenance work routinely done at individual plants and within the industry, we believe a definition along the following lines would be less subjective:

(cl) Routine maintenance, repair, or replacement. Whether work done at an emissions source constitutes routine maintenance, repair, or replacement is determined on a case-by-case basis by examining the nature and extent, purpose, frequency, and cost.

We are also concerned that the proposed changes in the definition could have th e unintended consequence of delaying a facilities ability to responsibly respond to a forced outage of a critical component of its electric generation infrastructure. The resulting emergency (lo ss of electric service) will have an adverse impact onPage 73 of 114 system reliability and possibly community safety. It is clearly not in the public’s in terest to delay addressing such an emergency in order to c onduct unnecessary emissions analysis.

Response: Please see response to comment number 9 above.

47) Comment: The Requirements In Section 231-11.2 Fo r Title V Permitting Of In significant Modifications Are Unnecessary And Burdensome In proposed Sections 231-6.1 and 231-8.1( a), a project with a pr oject emission potential th at does not equal or exceed the applicable significant proj ect threshold in the appropriate tabl e of Subpart 231-13 must comply with the requirements of Section 231-11.2. Proposed Section 231-11.2 addresses the requirements for insignificant

modifications where there is a reasonab le possibility that the modification w ill result in an emissions increase. Under Section 231-11.2(c), if an existi ng source seeking to undertake a proj ect has a project emission potential that equal or exceeds 50 percent of the applicable signif icant project threshold when considered alone or when added to any unrelated projected emi ssion increases expected at the emissi ons unit (those emi ssions excluded in accordance with proposed Section 231-4.1( b)(40)(i)(c), the source must modify its Title V permit under the minor permit provisions of Subpart 201-6 and, under pr oposed Section 231-11.2(c)(1)-(3), must retain records of certain information, monitor emissi ons and submit emission reports to the Department for five years after completion of the insignificant modification.

We believe the requirement for a minor permit revision is unnecessary, goes well beyond what the federal NSR rules require and serves no purpose other than to create an administrative burden a nd potentially delay projects needed to ensure system reliability (The Company unders tands that the requirements of Section 231-11.2 can be avoided if a source calculates projecte d actual emissions using the emission unit’s potential to emit, but the Company does not see this as a viab le option. In virtually all circumstances, using the potential to emit toPage 74 of 114 calculate projected actual emissions will result in a significant increase in emissions, which would force a source to meet even more onerous permitting requirements than the minor permit revision procedures in Subpart 201-6.) Under the federal NSR rules, pursuan t to 40 CFR 52.21(r)(6), so urces equaling or exceeding 50 percent of a significant emission threshold must meet requirements that mirror the recordkeeping, monitoring and reporting requirements of proposed S ection 213-11.2(c)(1)-(3). Compliance with these requirements is automatic and there is no need under the federal NSR rules to seek a minor permit revision to incorporate such requirements into the source’s Title V permit.

We are unclear why the Department believes such a pr ovision is necessary under the State’s NSR program. Pursuant to 40 CFR 52.21(r)(6), prior to beginning actual constr uction of a physical or ope rational change that meets or exceeds the 50 percent reasonable possibility threshold, the source must document and maintain certain information regarding the project, including its emissions calculations. Electric utility steam generating units must send this documentation to EPA or the state pe rmitting authority. This re quirement is sufficient for insignificant modifications that do not trigger major NS R permitting requirements. The Department should not mandate the additional step of requir ing a minor permit revision, which crea tes unnecessary administrative steps and could potentially delay a projec t if the department holds up a comp leteness determination under Section 201-6.7(c). (Under 201-6.7(c)(5), a minor modification cannot be made until the DEC deems the application complete. If the DEC has not acted within 15 days after receipt of the application it will be deemed complete by default and the minor modification may be made 25 da ys after the permit application was received by the DEC. However, the permit might be held up even longer if the Departme nt finds the initia l application was incomplete. Further, although the source may go ahead wi th its project once the perm it application is deemed complete, no permit shield would apply until the permit revision is issued by the Department, which puts the source at risk.)Page 75 of 114 Requiring a Title V minor permit revisi on is particularly problematic gi ven the subjective nature of the proposed definition of RMRR. As discussed above, this subjective definition will ina ppropriately classify most activities at EGUs non-routine and, hen ce, activities for which the source mu st perform emissions analyses to determine whether projected actual emissions will exceed baseline levels by the sign ificant project threshold. Unless a source expects no changes over baseline levels, e.g., does not project increases in demand or changes

in the fuel used at the emissions un it, it is very likely that, for most projects at EGUs, projected actual emissions, including those emissions that can be ex cluded under Section 231-4.1(b)(40)(i)(c), will exceed baseline emissions by more than 50 percent of the sign ificant project threshold. As a result, a single source could be forced to submit several minor permit revision ap plications every year to address all the maintenance activities performed at the source, wh ich would leave the source’s Title V pe rmit in a constant state of flux and impose an unnecessarily administrative burden on both the EGU’s and regulatory agencies.

The proposed Title V minor permit revision requirements are especially onerous for sources in severe ozone nonattainment areas where the significant project thres hold is only 10 percent of the significant net emission increase threshold. Given that, virtually any post-project emissions change , even if wholly unrelated to the project, will force the source into the Title V minor permitting revision process. Given the number of sources in the State, the pr oposed Title V permitting requirement likely would bog down the Departments permit revision proce ss and put a strain on its resources . The Regulatory Impact Analysis contains no mention of the impact to sources or the Depart ment expected as a result of the requirement to apply for minor Title V permit revisions for insignificant modifications. This is crucial to understanding the resources required both by the regulatory community and the Department to implement this provision.

We believe that the recordkeep ing, monitoring and reporting requi rements of proposed Section 213- 11.2(c)(1)(3) are sufficient for sources to demonstrate th at their insignificant modifi cations are not major NSRPage 76 of 114 modifications. Accordingly, the Department should delete the Title V permitting requirement. The requirement is unnecessary, will complicate the process and is likely to strain already limited resources in the State.

Response: Please see response to comment number 39 above.

48) Comment: The Provisions To Be Incorporated Into Title V permits Must Be Clearly Defined If the Department insists on including the final NSR rules the requirement that insignificant modifications meeting or exceeding 50 percent of the significant pr oject threshold must obtain a minor Title V permit revision, the provisions to be incorporated into the Title V permit mu st be clearly identified. It is not at all clear from the proposed rules what provisi ons would need to be included in th e minor permit revisi on application. Presumably, the recordkeeping, monitoring and reporti ng provisions of Section 231-11.2(c)(1)-(3) would be incorporated into the Title V permit, as indicated in the Revised Regulatory Impact Statement, but Section 231- 11.2(c) is silent as to whether additional permit requirements w ould need to be incorporated.

We urge the Department to address this issue and, further, to limit the provisions that must be incorporated into the sources Title V permit to those requirements for reco rdkeeping, monitoring and reporting that are identified in Section 231-11.2(c)(1)-(3), Any additional requireme nts would be unnecessary to demonstrate that the source is in compliance. Clearly defining the provisions th at must be incorporated into the Title V permit will avoid any confusion, make it more likely that a permit a pplication can be deemed co mplete within 15 days of submittal and allow less uncertainty that could lead to permit challenges.

Response: Please see response to comment number 40 above.Page 77 of 114 49) Comment: The Permitting Requirements for Netting Are Unnecessarily Stringent, Overly Complicated And

Unclear Pursuant to proposed Section 231-6.1( b) and 231-8(b), if a proposed modi fication at an existing source has project emission potential that equals or exceeds the applicable significant project threshold in the appropriate table of Subpart 231-13 but does not result in a major m odification, the source must co mply with the provisions of proposed Sections 231-6.2 or 231-8.2, as applicab le. Proposed Sections 231-6.2 and 231.82 establish the requirements for netting. Under proposed Sections 231 -6.2(b) and 231-8.2(b), a so urce must obtain a permit

that establishes an emission limit equal to the projected actual emissions or potenti al to emit of the proposed modification for each air pollutant that exceeds the appli cable significant project th reshold. Certain of the permit application requirements for a netting permit ar e detailed in proposed Section 231-11.1(a). Proposed Section 231-11.1(a)(3) requires a source to include in its perm it application the calc ulations and supporting documentation for baseline emissions, projected actua l emissions, the project em ission potential and the net emission increase determination for the modified facility . If the calculation of pr ojected actual emissions

excludes emissions that could have been accommodated during the baseline period and are unrelated to the modification, the source must incl ude detailed documentation of the ex cluded emissions “i n order for the

exclusion of those emissions to be allowed in de termining future compliance.” Proposed Section 231- 11.1(a)(3). The Department’s proposal that sources must obtain a pe rmit limit equal to projected actual emissions from a proposed project for which netting is us ed is overly restrictive. Such a requirement goes we ll beyond what is required in the federal NSR regulati ons, where a source would only be required to obtain a permit to make contemporaneous emissions decreases enforceable. The proposed provision appears to unnecessarily complicate the use of netting and it is not at all clear how the permit limit is supposed to work in practice. Proposed Section 231-11.1(a)(3) appears to state that emissions which were excluded from the calculation of projected actual emissions, as allowed under proposed Section 231-4.1(b)(40)(i)(c), also would be excludedPage 78 of 114 when the Department is determining compliance with the permit limit. However, it is not clearly established in

the rules.

Further, the proposed rules fail to address what happens if the source exceeds both the permit limit and its projection of unrelated emissions increas es due to unexpected factors that ar e unrelated to the project, such as unexpected changes in the type of fu el being combusted in the unit, an unexpected shutdown of another unit, severe weather or unanticipated dema nd growth. Would such increases over the permit limit also be allowed even though they were not projected by the source? For example, if four years after a modification has been made for which netting was used, an oil-and gas-fired unit, which primarily used natural gas during the baseline period and projected similar fuel usage during the post-proj ect period, switched to burning oil as its primary fuel due to an unforeseen increase in natural gas prices and su ch oil usage resulted in higher levels of pollutants than the emission projected or included in the facility’s pe rmit, how will that situati on be handled? This is a particular problem given the apparent permanent natu re of the permit limit and one which would adversely affect both reliability and economic competitiveness.

If a source is restricted from havi ng unrelated emission increases beyond wh at was projected, the proposal will artificially constrain operations and, potentially, fuel usage for purposes unrelated to a modification simply because a source was unable to accurately forecast future actual emissions. The Department cannot expect that a source would be able to accurately predict future emissi ons for the entire life of an emissions unit, yet that is what appears to be required. Further, there is no clear indication as to how emissions from future insignificant

modifications would be handled. Would such increases be allowed to exceed the permit limit or would the source be constrained from making future insignificant modifications once it has accepted a permit limit for netting purposes?Page 79 of 114 The Company believes these unanswered questions make the permitting requirement for netting complicated and leave compliance uncertain. We believe that requiri ng sources using netting to take a permit limit equal to the project emission potential of a proposed modification are unnecessary and we respectfully, urge the Department to delete this requirement from the proposed NSR rules.

Response: Please see response to comment number 41.

50) Comment: The Netting Requirements Are Problematic In Severe Ozone Nonattainment Areas The problems with requiring sources to obtain permit limits for netting purposes ar e exacerbated in severe ozone nonattainment areas. According to proposed Section 231.6.1(b), if a source in a severe ozone nonattainment area has a proposed modification that equa ls or exceeds the significant project threshold for NO x or VOCs of 2.5 tons per year, as identified in Table 3 in proposed Section 231-13.3, the source must meet the requirements of proposed Section 231.6.2 regarding netti ng. Even if the source has no contemporaneous

emissions increases or decrease s that could be used for netting, it appear s that the source w ould be required to obtain a netting permit and take a limit e qual to its projected emissions of NO x or VOCs. For example, if a source proposes a modification that would result in an actual emissions increase of 3 tons per year of NO x , pursuant to proposed Section 231-6.1, the source must go through a netting analysis. If the source does not have any contemporaneous emissions increases or decreases of NO x , the result of the netting analysis would

remain at three tons. Pursuant to proposed Section 231-6.2(b), it appears that the source would need to obtain a permit limit for the three ton modification. This is a part icularly burdensome requirement for sources in severe ozone nonattainment areas given that the project emissi on threshold is only one-ten th of the significant net

emission increase threshold. For all ot her pollutants in nona ttainment areas, the signifi cant project threshold is equal to the significant net emission increase threshold, so that a source in any area other than a severe ozonePage 80 of 114 nonattainment area with emissions that are only 10 per cent of the significant net em ission increase threshold would not have need to undertake the netting analysis in the first place.

The Department has offered no rationale as to why th e significant project threshold is not equal to the significant net emission increase thres hold for sources in severe ozone nonattainment areas. If the Department insists on retaining the permit requirements for netti ng, the Company urges the Department to raise the significant project threshold to the le vel of the significant net emission incr ease threshold. Otherwise, sources

in severe ozone nonattainment areas w ould be forced to take permit limits for very insignificant increases in emissions, which raise all the attend ant issues that we noted above.

Response: Please see responses to comment numbers 11 and 20 above.

Dominion (Commenter Number 9)

51) Comment: The DEC proposal for a definition of A routine maintenance, repair and replacement @ (RMRR) may cause substantial regulatory uncertainty and should be withdrawn. The DEC pr oposed rule contains the following definition of RMRR:

A Whether work done at an emissions source constitutes routine mainte nance, repair or replacement is determined on a case-by-case basis by examining the na ture and extent, purpose, frequency, and cost. Generally, routine maintenance, repair , or replacement refer to activities that are undertaken on a prescribed and/or regular schedule, limited in scope and expense, and typically paid for out of the operation and maintenance budget of the facility. Routine maintenan ce, repair and replacement generally do not refer to activities that are infrequent, large in scope, extend the life of the facility, or result in the regaining of lostPage 81 of 114 capacity or availability. @ (New York State Register. “Revised Ru lemakings – Department of Environmental Conservation – NYRti6/pt200. NYRti6/pt201, NYRti6/p t231 – Source Review for New and Modified Facilities”, proposed section 200.1(cl), September 24, 2008.)

The use of ambiguous terms like A generally @ and A typically @ in the proposed RMRR definition can lead to any number of interpretations and provides no clear criteria for compliance.

We are also concerned that the la nguage contained in the RMRR proposal will be seen as establishing a presumptive exclusion from this exemption for any ma intenance, repair and/or replacement activities not financed from an O&M budget. The financing of repl acement activities at a faci lity will most often be determined based on accounting principles, rather than environmental regulatory definitions. For example, repair and replacement activities may be treated as capita l expenditures for accounting and/or tax reasons (i.e., for depreciation rather than expensing of the activities). The financial classification of such activities should not be a primary basis for determining their A routine maintenance @ status under this rule.

Further, not all RMRR activities occur on a regular schedule. While A routine maintenance @ activities may be undertaken on a regular schedule an d paid for out of O&M budgets, A routine maintenance @ can also occur on an

A as needed @ non-prescribed basis. In addition, Dominion is c oncerned with the proposed language stating that routine maintenance generally

excludes activities that “...extend the life of a facility, or result in the regaining of lost capacity... @ Any project may be construed as extending the life of a facility or result ing in the gain of lost capacity, and could be used to eliminate the exemption. Th is proposed language may exclude a wide range of routine maintenance activities essential to the efficient operation of industrial and utility equipment, and w ould place facilities in a status ofPage 82 of 114 perpetual NSR review. Dominion proposes to amend the final sentence of the definition to state, A Routine maintenance, repair, and replacement generally do not refe r to activities that are infr equent and large in scope. @

We are also concerned that this ru le would significantly impair the ability of a public utility to respond to a forced outage, if the required repa ir does not fall under the proposed rest rictive definition of RMRR. We note that existing Part 201-6.6(c) provides an emergency defense in Title V pe rmits, which provides an affirmative defense for non-compliance with an applicable requireme nt due to an emergency, a nd that Part 201-2.1(b)(12) provides a somewhat li mited definition of A emergency. @ In the event of an emer gency at an energy generation or transmission facility, the loss of this public utility service could have significant, adverse impact on the community, and it would be in the public interest to assure that response to such emergenc ies is not impaired or delayed by NSR obligations th at are not truly necessary.

Dominion recommends that the DEC w ithdraw its proposed definition of @ routine maintenance @ in Part 200, and retain the existing definition of A modification @ at Part 200.1(aq).

The DEC proposal for a definition of RMRR states that RMRR activities will be A determined on a case-by-case

basis @ . The ownership of this determination is unclear in the proposed rule and it should be clarified that this responsibility lies with the applicants.

Dominion generally agrees that a case-by-case review of a facility = s maintenance, repair and replacement activities should be conducted prior to commencing any such activit y. However, this review should be conducted by the facility owner rather than DEC. Facili ty owners would be much better prepared to assess the

A routineness @ of any activity involving plant ma intenance, repair of plant equipm ent and/or replacement of plant components, in that facility owners are better equipped to A weed out @ activities that are obviously routine. ThePage 83 of 114 proposed rule as written is vague concerning who is res ponsible for the review and c ould be interpreted to set up an unworkable process and an unreasonable burden on the staff of the DEC. This could lead to unnecessary project delays that could je opardize the efficient operation of the plant or even risk serious safety concerns.

Response: The commenter notes that any RMRR review should be conducted by the facility owner rather than DEC since facility owners would be much bette r prepared to assess the ro utineness of any activity involving RMRR. The Department agr ees that the facility owner shoul d be responsible for making a RMRR determination for any proposed project. If the facility owner has any doubt or questions regarding whether a proposed project is truly RMRR, then the facility owner should submit a reque st to the Department for a RMRR determination. Also, please see re sponse to comment number 9 above.

52) Comment: The DEC proposal includes a new definition of A actual emissions @ for baseline analysis that is

unclear. The rules should make it clear that an A average rate @ is to be used to determine A actual emissions @ and that the hourly rate is to be averaged over a 24 month period.

The DEC proposal includes a definition for A actual emissions @ that applies A for the purpose of determining the baseline concentration, and the calculation of air quali ty impacts according to Section 231-12.2", as follows:

A Actual emissions as of a particular date shall equal the rate at which the emission source actually emitted the NSR contaminant during the consecutive 24 month period which precedes the particular date and which is representative of norma l facility operations. @ 2 (New York State Register, ‘Rev ised Rulemakings – Department

of Environmental Conservation – NYRti6/pt200, NYRti6/pt201, NYRti6/pt231 – Source Review for New and Modified Facilities”, proposed section 231-4.1(b)(1)(ii), September 24, 2008.)Page 84 of 114 Earlier drafts defined this term as referring to the A average rate @ of emissions during the 24 month period. Now

that the A average @ criteria have been deleted, it is unclear how this A rate @ is to be determined. In order to clear up this uncertainty, Dominion suggests that the propos ed definition should be amended to read, “Actual emissions as of a particular date shall equal the average hourly rate... @ to more clearly define the units in which the rate is expressed.

The current definition of A actual emissions @ found in Part 201-2.1(b)(2), and wh ich applies to all other uses of this term in the proposed Part 231, re fers to emissions from normal opera ting conditions, averaged over a two year period (or an other more representative period). We believe that this newly proposed definition of A actual

emissions @ likewise should be a 24 month average.

Response: Please see response to comment number 13 above.

53) Comment: The DEC NSR reform proposal restricts the A past actual @ baseline determination to five years for all subject sources. The DEC rules should remain consiste nt with the federal rule and adopt the 10-year lookback for determining the A past actual @ emissions baseline.

The change from the current 2-year look-back to a 10- year look-back (five years for electric utility steam generating units) is an extremely impor tant part of the federal NSR reform s. This most recent DEC proposed rule limits this flexibility to only 5 years in all cases.

Although EPA = s Regulatory Impact Analysis concludes that the magnitude of the environment changes expected to be derived from the change from a 2-year look-back to a 10-year look-back are A likely to be very

small @ 3 (U.S. Environmental Protection Agency, “New Source Review (NSR) Improvements, SupplementalPage 85 of 114 Analysis of the Environmental Im pact of the 2002 Final NSR Improvement Rules”, pg. F-7, November 21, 2002.), the DEC has concluded in th e Proposed Regulation Agency Bac kground Document, without supporting documentation, that the New York rule should be more restrictive. DEC = s proposal for adoption of the emission baseline provision of EPA = s NSR Reform rules significantly restricts the intended flexibility of the reform changes by slashing the time period for the look-back by half.

Dominion urges the DEC to adopt the EPA baseline period provisions. Alternativel y, the DEC could adopt the 10-year look back period while reserving the ability to determine whether a proposed baseline period is most representative of normal operations and adopt the ability to apply diffe rent baseline periods to different categories of pollutants, if the DEC finds that emission levels of different pollutants are impacted by different

economic factors.

Response: Please see response to comment number 25 above.

54) Comment: The DEC proposal contains restrictions on the baseline determinations. Dominion recommends the DEC NSR proposal for A baseline actual emissions @ conform to the federal approach.

The proposal Part 231-4(b)(4)(d) states that, for a regulated NSR contaminant, when a project involves multiple emission sources, the same baseline period must be used to determine the baseline ac tual emissions of each of the emission sources being modified, consistent with the fe deral rule. In conflict with the federal rule, the DEC proposal goes on to state that A a different baseline period cannot be us ed for each regulated NSR contaminant. @

The federal rule provides that:Page 86 of 114 “For a regulated NSR pollutant, when a project invol ves multiple emissions units, only one consecutive 24- month period must be used to determine the baseline ac tual emissions for the emissions units being changed. A different consecutive 24-month period can be used for each regulated NSR pollutant.” 4 (Code of Federal Regulations, Title 40, Part 52.21, “Prevention of significant deterioration of air quality”, Section 52.21(b)(48)(ii)(d) definition of “Baseline actual emissions”.)

The federal rule specifically allows use of different ba seline periods for different NSR pollutants related to a source project. Its only restriction is to require a single baseline period for any given NSR pollutant when a project involves multiple emission units.

Dominion recommends that the DEC adopt the federal a pproach. NSR applies to criteria pollutants on a pollutant by pollutant basis. The applicability analysis for a given project can prope rly reflect different baseline emissions periods for each affected po llutant. Emissions of different polluta nts from an emissi on source can be affected by different factors (e.g., pr oduction levels versus changes in ma terials or fuel content). These different factors will justify the use of different baseline periods to define “representative” emissions. We note that in proposed Part 231-9.4 regarding plant-wide appl icability levels, different 24 month periods can be used for each different PAL contaminant at a facility, which co rrectly recognizes that more than one baseline period can be applied to an emission source that emits more than one category of PAL contaminant.

Response: Please see response to comment number 14 above.

55) Comment: The DEC proposed NSR reform rule expands the reporting and recor dkeeping requirements for projects at non-electric utility steam generating units for NSR applicabil ity determinations. Dominion urges DEC to conform to the federal approach.Page 87 of 114 The December 21, 2007 federal NSR “Reasonable Possibility” reporting and recordkeeping rules require source owners to calculate past actual emi ssions and compare them to future pr ojected actual emissions to determine NSR applicability. The federal rules require source owners of electric utility steam generating units to submit this documentation of the past actual-t o-future-projected emissions calculati on to the regulatory authority before beginning actual construction of project s if the future projected emissions caused by the project exceed 50% of the significant source thresholds. Thes e facilities must also m onitor the post-project emi ssions of any regulated NSR pollutant emitted by any emissions unit and submit a report to the permit reviewing authority within 60 days after the end of each year. Under the federal rule s, non-electric utility steam generating units do not have to submit this post-project emissions calculation unle ss the post-project emissions exceed the pre-project estimate. The DEC proposal would expand this post-projec t reporting requirement to a ll major sources, not just electric utility steam generating units, thus eliminating an important flexibil ity feature of the reform rule. The DEC proposal also accelerates the dead line for submitting this post-project re port from the 60 days after the end of each year (under the federal program) to 30 days.

Furthermore, the DEC proposal at Pa rt 231-11.4(a) would also require ne w recordkeeping requirements for projects that result in emissions incr eases less than 50 percent of the appli cable significant source thresholds, by requiring facilities to maintain detailed information a bout each project and make it available to the DEC upon request. If the Department were to keep its proposed paragraph (a), it would literally subject emission increases of as little as one pound to new recordkeeping requirements.

The excessive complexity and burdensome recordkeepin g and reporting requirements have been a universal criticism of the existing NSR rules. This proposed de viation from the federal rule reverses important relief provided by the federal reforms.Page 88 of 114 Response: Please see responses to comment numbers 15 and 39 above.

Wyeth Pharmaceuticals (Commenter Number 10) 56) Comment: It is our understanding th at the federal rule would allow for a significant source project threshold of 25 tpy in the New York moderate non-attainment area. Such change would provide statewide consistency in the implementation of these rules and allow the Agency a nd the regulated community to focus on what are truly significant sources and projects.

Response: Please see response to comment number 20 above.

57) Comment: 231-3.2 Transition Plan: Th e transition plan does not include tr ivial or exempt sources. All trivial sources should be excluded from the rule, since they are transient, and of ten unquantifiable. Exempt sources that have been planned prior to the effective da te of these revisions should have the option to follow

either rule Part 231-2 or these new revisions.

Response: The Department disagrees with commenter. Federal regulations require that all emissions, including emissions from any exempt or trivial activity be included in any NSR applicability determination. This has been a requirement since the promul gation of the original NSR regulations.

58) Comment: 231-3.5 General Prohibitions: This para graph should be deleted. It imposes permitting and compliance obligations on facilitie s for minor actions. (See addi tional comments under “netting”).

Response: The Department does not agree that this se ction should be deleted. Also, please see response to

comment number 11 above.Page 89 of 114 59) Comment: 231-3.10(a) Circumvention: It is our understa nding that part of the basis for New York having a lower significant source project threshold in the severe area was to avoid a facility from phasing several small, related projects. With this circumvention paragraph, th at argument goes away, and we encourage the agency to take advantage of the opportunity to raise the significant source project threshold to match the significant net

emission increase threshold.

Response: Please see response to comment number 20 above.

60) Comment: 231-4.1(b)(13) Creditable emission increase: We support the ch ange in this definition; to use actual or projected actual emission increase. This is particularly important for batch or intermittent operations.

Response: Comment noted.

61) Comment: 231-4.1(b)(28) Modification: The term “fac ility” should be changed to “s ource”. This is a new “source” review program, and modificat ions are determined at the source level. Introduci ng “facility” adds

confusion.

Response: EPA uses the term ‘source’ to refer to a faci lity. The Department in its regulations has always used the term ‘facility’, as defined in Part 200, to refer to a facility. No change will be made.

62) Comment: 231-6.2(b) Netting: When no emission reductions are used in a netting analys is, a permit should not be required. As written, in the severe non-attainment area, a new sour ce project with a th ree ton per year potential on a site with unrelated em ission increases (e.g. new emergency gene rators installed) that has a five year aggregate increase in emissions of 15 tons per y ear would be subject to permitting. These increases arePage 90 of 114 insignificant and should not be subject to permitting requirements. At most, a notification to the agency with a copy of the netting analysis should suffice.

Response: Please see response to comment number 11 above.

63) Comment: 231-13.3 – Table 3 Significan t Project Threshold: The significan t project threshol d in the severe area should be changed to 25 tons per year. This woul d make netting consistent statewide, in that a netting analysis would only be used to net “out”, and not required to net “in”. When the significant project threshold is lower than the significant net emission increase level mi nor increases in the contem poraneous five year period that are unrelated to the project are tracked and may cause an otherwise in significant project to be subject to these rules. The additional proposed “general prohibi tions” and “permit requirements” for any netting out compound the inequities and divert resources from “maj or new source” review – the intent of this rule.

Response: Please see response to comment number 20 above.

Eastman Kodak Company (Commenter Number 8) 64) Comment: Part 200.1(cl) - Definition of “routine maintenance, repair or replacement”: NYSDEC’s Part 231 re-proposal includes a definition of “routine maintenance, repair, or replacement” (RMRR) that is unchanged from the original propos al. Given its lack of clear bounda ries and language that may be misconstrued, Kodak expressed con cerns regarding this definition in comments on the September 2007 proposal. NYSDEC’s Response to Comm ent #27 indicates that the RMRR definition is intended to provide guidance used in assessing whether or not an activity may be considered RMRR. Further, NYSDEC offered

these clarifications in the “Assessment of Public Comment s” (APC): “The definiti on codifies what has been articulated by the Courts and current Department practice, wherein routine maintenance activities arePage 91 of 114 considered on a case-by-case basis considering the nature and extent, purpose, frequency and cost.” (Pages 38- 39)

“The Department’s proposed definition of RMRR merely c odifies the existing EPA four-factor test as has been interpreted by a majority of the courts. It is neither more stringent nor less st ringent than EPA’s RMRR methodology. . . . The use of the terms “generally” and “typically” in the proposed definition make clear that no

one factor is determinative in the an alysis. A project that is funded from a capital budget could still qualify as RMRR if other factors suggest routineness (e.g., the nature, purpose, or freque ncy of the activity).”

Absent the clarifications articulat ed in the APC document, Kodak rema ins concerned, that the regulatory definition itself may be misinterpret ed to exclude from the RMRR exempti on, certain activities that truly are eligible for that exemption. As such, Kodak asks NYSDEC to maintain the Response to Comment #27 on the NYSDEC Bureau of Stationary Sources’ website so that for purposes of eval uating future projects, the regulated community and Regional NYSDEC staff have ready access to the Department’s interpretation of its RMRR definition.

Response: Please see response to comme nt number 9 above . Comment noted.

65) Comment: 231-4.1(b)(29) - Definition of “net emission increase”: Kodak continues to have the following

concerns with the definition of “net emissions increase”: ERCs must be obtained fo r all creditable decreases used for netting purposes even if those decreases have been otherwise reviewed by NYSDEC and made enforceable through permitting. Kodak believes that this requirement adds unnecessary administrative burdens that are in excess of the federal major NSR program. (See subsequent comments on the ERC provisions in 231- 10.) As explained in the Response to Comment 38(c), the Department is extendi ng the 6NYCRR Subpart 231-2Page 92 of 114 process adopted in 1994 to the state’s PSD program for cons istency and to ensure that the statutory definition of

the terms “emission reduction” and emissi on reduction credit” is satisfied.

Kodak understands NYSDEC’s desire to rely and build on a process that, at least in the Department’s view, has been used successfully. However, in its regulatory just ification, it is important for the Department to address that the scope of this pr oposal is much more expansive than Subpa rt 231-2, which only applies to major new sources and major modifications locate d in nonattainment areas with respect to a handful of nonattainment area pollutants. On the other hand, this proposal’s applicability includes new major source s and modifications in

both nonattainment and attainment areas with respect to a dozen or more pollutants. Under 231-2, the required use of ERCs for netting may have been viewed as accepta ble by industry because it would have been triggered relatively infrequently; wher eas, considering the broader applicability of this propos al (i.e., to address major

facilities and modifications previously covered by the Federal PSD program as well as those subject to nonattainment area NSR), these admi nistrative procedures will be tr iggered much more frequently.

Kodak believes that requiring the use of ERCs for netting could be made more palatable if: 1) under 231- 10.4(a), NYSDEC would waive the newspaper notice when ERCs are used for net ting purposes; and 2) under 231-10.3(b)(2), NYSDEC would allow appli cants to provide the ERC information in a format acceptable to the Department which may include the ERC quantification form or an equivalent substitute. Kodak provides comments on these ERC provisions below and asks th e Department to either revise the definition of net emission increase to remove the ERC requirement or make the requested changes to the ERC process.

Response: The Department disagrees with the commente r’s assessment that it has not adequately justified the use of ERCs for netting (for bo th non-attainment and attainment anal yses) in the supporting documents of this rulemaking package. Also, please see response to comment number 10 above.Page 93 of 114 66) Comment: Subparagraphs (ii) and (iii) of the de finition of “net emission increase ”, pertaining to the use of contemporaneous emission increases and ERCs, contai n language that does not c onform with the federal language. Kodak could not find a speci fic NYSDEC response to this issue in the APC document, but believes this may have resulted inadvertently from re-using the definition of “net emissions increase” from the current Subpart 231-2, which deals solely with nonattainment area major NSR.

Per subparagraph 231-4.1(b)(29 )(ii), every creditable incr ease is used which is cont emporaneous and “for which an emission offset was not obtained”. Similarly unde r subparagraph (iii), any ERC is used which is contemporaneous and “which was not previously part of an emission offset or internal offset.” On the other hand, the federal language says that emissions increa ses and decreases are creditable: “if the reviewing authority has not relied on it in issuing a permit for the source under regul ations approved pursuant to this section.” (See, for example, 40 CFR 51.165(a)(1)(vi)(C) .) Per EPA’s Draft New Source Review Workshop Manual (October 1990, p. A.39 and 40):

“An emissions increase or decreas e is creditable only if the re levant reviewing authority has not relied on it in issuing a PSD (This paragraph is in a section of the workbook entitled PSD Applicability, hence the reference to “PSD” permits and not the broader major NSR permit) permit for the source, and the permit is still in effect

when the increase in ac tual emissions from the proposed modificati on occurs. A reviewi ng authority relies on

an increase or decrease whe n, after taking the increase or decrease into account, it conclude s that a proposed project would not cause or contribute to a violation of an increment or ambient standard. In other words, an emissions change at an emissions poi nt which was considered in the issuance of a previous PSD permit for the

source is not included in the source's "net em issions increase" calculation. Th is is done to avoid "double counting" of emissions changes.”Page 94 of 114 Although emission offsets are an esse ntial component of nona ttainment area NSR perm its, they are not routinely part of the PSD program. Because the “net emissions increase” de finition is used to implement both the Nonattainment and PSD major NSR programs, NYSDEC s hould revise the definition to properly reflect that

emission increases and decreases relied on in issuing any major NSR permit do not need to be included in a net

emissions increase determination.

To address the concerns identified above and to make the definition of “net emissions increase” more consistent with the federal rule, 231-4.1( b)(29) should be modified as shown: “(33) Net emission increase. The a ggregate increase in emissions of an attainment or nonattainment contaminant in tons per year at an existi ng major facility resulting from the sum of: (i) the project emission potenti al of the modification; and (ii) every creditable emission increase at the facility which is contemporaneous and which was not previously relied on in issuing a major NSR permit or for which an emission offset was not obtained; and (iii) any ERC or other creditable emission decrease at the facility, or portion ther eof, selected by the applicant which is contemporaneous a nd which was not previously relied on in issuing a major NSR permit or used as part of an emission offset or an internal offset.”

Response: The Department agrees that the definition of net emissions increase inadvertently omitted the

reference to creditable emission decr eases (ERCs) that may have been relied upon in the issuance of a permit. To address this issue subparagraph 231-4.1( b)(29)(iii) will be amended as follows:

“ any ERC at the facility, or portion thereof, selected by the applicant which is contemporaneous and which was not previously used as part of an emission offset, an in ternal offset, or relied upon in the issuance of a permit

under this Part.”Page 95 of 114 The Department disagrees that the definition of net em issions increase should excl ude creditable emission increases that may have been relied upon in the issuance of a permit. The commente rs suggested revision to subparagraph 231-4.1(b)(29)( ii) will not be made.

67) Comment: 231-6.2(b)(1) and 231-8.2( b)(1) Emission limit requirements: These paragraphs require an owner or operator relying on netting to demonstrate that a project will not result in a significant net emission

increase to: “ apply for and obtain a permit which establishes an emissi on limit that equals the proj ected actual emissions or potential to emit, as appropriate, of the modification of each regulated NSR contaminant(s) which exceed(s) the applicable significant project threshold.”

These provisions depart from the federal majo r NSR program in the following two key ways: 1) the Department requires such a limit even if the PTE of the project is relied on in lieu of projected actual emissions; and 2) there are no explicit expiration dates for thes e emission limits.

Under the federal major NSR program, the requirements of 52.21(r)(6), for example, are not triggered when the PTE is used as the basis of the emissions increase, even if such increase is significant. Moreover, the recordkeeping requirements of 52.21(r)(6 ) would only apply for five years if there has been no increase in capacity, or 10 years if there has been a capacity increase.

In Response to Comment 53(b) NYS DEC provides this explanation:Page 96 of 114 “Commenter has stated that “A project that triggers netting w ould be one that has a “r easonable possibility” of exceeding the significance threshold.” This statement is not accurate. A project triggers netting if in fact the project emission potential is equal to or greater than the applicable significant pr oject threshold before the facility undertakes additi onal emission reductions to avoid NSR appl icability. Therefore, the Department believes different procedures should be implemented to ensure that these emi ssions reductions, which the facility is relying on to avoid NSR, ar e in fact realized. Such emission reductio ns are not a factor to consider if the project emission potential itself is less than the significant project threshold, which explains why permitting, monitoring and recordkeep ing requirements are different for faci lities triggering onl y the “reasonable possibility” provisions of Part 231.

The process of requiring an enforceable emission limit for the projected actual emissions or potential to emit, as applicable for each NSR contaminant that triggers netting is reasonable and not inconsistent with either the Act or the State Implementation Plan. It is also consistent with current De partment practice for projects that avoid applicability through netting under the Department’s existing Su bpart 231-2 nonattainment regulation. The proposed Part 231 netting requirem ents ensure that sources which pr opose to use netting to avoid major NSR requirements are subject to stringent permit requiremen ts to ensure that the projected actual emissions or potential to emit, as applicable, and the emission reductio ns relied upon are enforceable. Thus facilities which want to rely on emission re ductions at one emission source to be reflected in the ca lculation of total emission increases at the facility will be subject to rigorous protocols and permitting, and subject to public notice and comment. The Department believes such a regulatory scheme is consistent with the intent and purpose of both

the Clean Air Act and Environmental Conservation Law.”

Kodak understands that for sources s ubject to netting there may be a need for permit requirements beyond those articulated under 52.21(r)(6), but for pur poses of this discussion is focusing solely on the need to establishPage 97 of 114 emission limits under 231-6.2(b)(1) and 231- 8.2(b)(1). Kodak would like to hi ghlight a number of concerns with NYSDEC’s analysis presented above.

First, under the federal major NSR program, projects that result in netting are subject to the reasonable possibility recordkeeping and reporting requirements of 52.21(r)(6). This is cl ear from 52.21(r)(6)(i)(c) which says “A description of the applicability test used to determine that the project is not a major modification . . . and any netting calculations , if applicable.” (Emphasis added.) The De partment’s stated belief that different procedures should be used for projects triggering netting and, in particular the requirement to establish limits under 231-6.2(b)(1) and 231-8.2(b) is clearly in excess of what the Clean Air Act and the federal major NSR implementing rules would require.

Second, NYSDEC’s position that these provisions “are not inconsistent with the Act or the State Implementation Plan” is misleading. EPA’s rules set forth the approach used to implement major NSR under the Act and state programs must conf orm to the minimum requirements esta blished by EPA. One such element is represented by 52.21(r)(6), which as discussed above covers sources that perform net emission increase determinations. Although the Act does allow states to impose more st ringent requirements, NYSDEC must conform to subdivision 19-0303(4) of the Environmenta l Conservation Law and properly justify requirements that exceed the federal program.

As for consistency with NY’s SIP, Subpart 231-2 and NYSDEC’s practice of requiring such emission limits for netting was never approved into the SIP. Alternativ ely, 201-7 and its “Federally Enforceable Emission Cap” procedures were approved by EPA. 201-7 does not mandate establishing form al emission limits when PTEs are naturally below rule applicability thre sholds. Rather, these capping provisions are entered into voluntarily if aPage 98 of 114 source would otherwise trigge r an applicable requirement and the owne r or operator requests an enforceable constraint to artificially maintain the PTE below applicability triggers.

In conclusion with respect to this second point , since proposed 231-6.2(b)(1) and 231-8.2(b)(1) are not consistent with the Act (as set forth by EPA’s rule) or NY’s SIP, NYSDEC may not clai m that they are in order to justify these provisions.

Third, by establishing permit limits under 231-6.2(b)(1) and 231-8.2(b)(1) with no expiration of such limits, instead of restricting these conditio ns to a 5 or 10 year life as pr escribed by 52.21(r)(6)), NYSDEC has transformed “projected actual emissions” into “potential to emit”. In essen ce, for all projects triggering a net emissions increase determination, NYSDEC has eliminated the baseline actual to proj ected actual emission test, a key major NSR Reform. These provisi ons cannot be justified, particularly since the Department can readily substitute enforceable permit conditions that reflect 231- 11.2(c)(2) and (3) that expire in 5 or 10 years without exceeding EPA’s major NSR program requirements.

In light of the issues and concerns identified abo ve, NYSDEC must revise 231- 6.2(b)(1) and 231-8.2(b)(1) as follows to be consistent with the Act:

“ apply for and obtain a permit which establishes a permit condition reflecting the requirements of 231- 11.2(c)(2) and (3) an emission limit that equals the projected actual emissions or potential to emit, as appropriate, of the mod ification of each nonattainme nt contaminant(s) which exceed(s) the applicable significant project threshold .”

Response: Please see responses to comment numbers 11 and 15 above.Page 99 of 114 68) Comment: 231-6.2(b)(2) &(3) and 231-8.2(b)(2) & (3) Netting and use of ERCs: In the September 2008 proposal, NYSDEC has retained the requirements to esta blish and use ERCs when emission reductions are used for netting, rather than allow for an alternate process. In comments above on the definition of “net emission increase” in 231-4.1(b)(29) and below on 231-10.3(b)(2) and 231-10.4(a), Kodak has indicated that requiring ERCs for netting may be more palatable to the exte nt NYSDEC s eliminates some of the administrative

burdens. Kodak asks NYSDEC to consider these comme nts and make the revisions shown below for 231- 6.2(b)(2) &(3) and 231-8.2(b)(2) & (3) or make the changes Kodak prop oses elsewhere fo r 231-10.3(b)(2) and 231-10.4(a) that are intended to make the proces s for establishing and using ERCs more reasonable.

“(2) apply for and obtain a permit which establishes the ERCs or emission reductions relied on for the net emission increase determination, if the ERCs or emission reductions are not already approved by the department.

(3) if ERCs are used, submit a Use of Emission Reduction Credits Form (duly completed and signed by the applicant) for each source of ERC’s to be used for netting. Upon issuance of the permit for the proposed modification, the ERC Registry will be amended to reflect that the ERCs have been committed to the proposed

modification.”

Response: The Department respectfully disagrees wi th the commenter’s position and will not make this revision. Also, please see response to comment number 10 above.

69) Comment: 231-10.1(f) - ERCs Used fo r Netting: This provision states: “(f) An ERC, or portion thereof, which is used to a void a determination of a signi ficant net emission increase cannot subsequently be used for emission offset purposes or in any subsequent ne tting determinations.”Page 100 of 114 Kodak submitted comments on this proposed provision in the 2007 proposal, indicating our belief that excluding emission reductions that had b een only used in a significant net em issions increase determination was inconsistent with the approach se t forth in the federal program. In Response to Comment # 38(d) NYSDEC disagreed with this posi tion indicating that:

“The EPA is responsible for overseeing the implementatio n of the NSR program. Its determination is that if ERCs were used to avoid NSR applicability through netti ng, the same ERCs could not be used again for netting

or emission offsets.”

In preparing comments on this proposal, Kodak contacted NYSDEC representatives responsible for this rulemaking who indicated that the De partment did not consult with EP A Region 2 prior to responding to comments on the September 2007 proposal. Instead, the Department relied on an EPA Region 2

communication that identified a deficien cy with a provision in 231-2 which a llows ERCs used in a significant net emissions increase to be used ag ain in a subsequent netting determ ination. Kodak does not have ready access to that EPA communication. Therefore, we as k NYSDEC to consider the following information and consult with EPA Region 2 to resolve what Kodak sees as discrepancies with the EPA Region 2 position and

the EPA “central office” in terpretation, set forth in the December 29, 1989 EPA NS R Guidance memo, “Use of NSR Netting Credits 4.44”, and an arti cle written by Gary McCutchen, a re spected consultant and former EPA Chief of the New Source Review Section. (See Attach ments.) These documents both support that creditable emission decreases used in a previous netting transaction ar e to be used in a subsequent netting transaction to the extent they remain “contemporaneous”.

Mr. McCutchen writes on page 5.2 of his article: “This po ints out the fact that net ting involves an algebraic summing of all contemporaneous emissions increases and d ecreases each time.” (Emphasis added.) Further, onPage 101 of 114 page 5.3, he states: “However, emissions increases or d ecreases that have been used by a source only to net out of review have not been “relied upon ” and, therefore, can still be include d in a netting calculation (if otherwise creditable) . . .”

Mr. McCutchen’s explanation is consistent with formal EPA interpretations as demonstrated by this example from the December 29, 1989 NSR memo:

“For example, a major source proposes to replace a boiler that emits 30 tons per year (tpy) of sulfur dioxide (SO 2 ) with a new unit that has a potential to emit 50 tpy SO 2 . Also, the source shut down a 40 tpy SO 2 unit 3 years prior to the proposed modification. As su ch, the netting equation for the example is:

+50 tpy (proposed increase) minus 30 tpy (current s hutdown) minus 40 tpy (previ ous shutdown) = -20 tpy SO 2 Note that these shutdowns, as all other decreases, must be federally enforceable in order to be creditable. Consequently, the source nets out of re view, and no PSD permit is issued. We do not view the -20 tpy SO 2 that results from the netting calcu lation as "leftover" credit. Rather, we view each of the contemporaneous and otherwise creditable emissions increases and decreases considered by the source in netting out of review as sti ll being fully available, and must theref ore be included in the next netting

transaction at the source. To further illustrate, suppos e the source in the exampl e plans to add another new boiler in 3 years, which will increase SO 2 emissions by 50 tpy without replac ing any existing units. A new net emissions increase must be calculated. The 40 tpy reduc tion that was creditable in the previous netting transaction will have passed out of the contemporaneous window, so it is no longer available. The new net

emissions increase is calculated as follows: +50 tpy (proposed increase) plus 50 tpy (previous increase) minus 30 t py (previous shutdown) = 70 tpy SO 2Page 102 of 114 In this case, the source does not net ou t of review and must get a PSD permit.

If 231-10.1(f) remains as currently proposed, a 100 tpy emission reduction from a 2007 source shutdown used for netting a 2008 project with a 50 tpy increase in emissions could not be reconsidered (included in the algebraic sum) if a second project of 45 tpy were proposed in 2010, even though the 100 tpy reduction is still contemporaneous. As a result, because the first project’s increase must be considered per the definition of net emission increase (see 231-4.1(b)(29) and the decrease c ould not be considered pe r 231-10.1(f), this provision would inappropriately lead to NSR applicability for a project with no true increase in emissions during the contemporaneous period. Under the Department’s propos al, the net emissions increa se for the second project would be 95 tpy, whereas under the fe deral rules, it would be (-) 5 tpy.

In light of the above discussion, Kodak asks NYSDEC to revisit this is sue with EPA Region and revise 231- 10.1(f) as follows to eliminate a significant inco nsistency with the federal major NSR program:

“(f) An ERC, or portion thereof, which is used to a void a determination of a signi ficant net emission increase cannot subsequently be used fo r emission offset purposes or in any subsequent netting determinations .”

To the extent that different require ments may apply in nonattainment areas versus attainment areas, Kodak asks NYSDEC to appropriately disti nguish such differences in re gulatory language to ensure that with respect to this issue, Part 231 is no more stringent than the underlying federal major NSR program.

Response: Please see response to comment number 12 above.Page 103 of 114 70) Comment: 231-10.3(b)(2) – ERC Quantification Form : This provision requires a complete “Emission Reduction Credit Quantification Form” with supporting documentation to be submitted as part of the application for an ERC. In Res ponse to Comment # 56, NYSDEC indicates:

“The Department’s “Emission Reduction Credit Quanti fication Form” (ERC Form) has been required for all ERC applications since 1995. . . The ERC Form has been noted by both industry and cons ultants as being a very concise and helpful form to calculate and document th e value of a proposed ERC. . .Use of the ERC Form maintains consistency in the Department’s review of ERC applications and is used as the document for entry of approved ERCs into NY’s ERC Regist ry. The ERC Form will remain required for all ERC applications.”

First, it is Kodak understa nds that, per 231-10.6(a), ERCs designated for netting pur poses do not require entry into the NY’s ERC Registry. Specifically 231-10.6(a) sa ys “All approved ERCs which may be used as offsets will be entered into a listing of ava ilable ERCs. . .” (Emphasis added.) Kodak asks NYSDEC to confirm the interpretation that the reduc tions intended for netting are not added to the ERC Registry

.

Kodak’s concerns with 231-10.3( b)(2) stem not from the content of the forms currently used, but rather that 231-10.3(b)(2) provides no flexibility to present that c ontent in another, less burdensome manner acceptable to both the applicant and the NYSDEC. When netting under the federal PSD program, the operator of Kodak’s boilers used a straightforward appro ach to the net emission increase de termination through use of an Excel workbook. The various spreadsheets methodically and succ essfully showed the basis and calculations for the creditable, contemporaneous decreases for all regulated NS R pollutants as well as the increase from the project, all other creditable, contemporaneous increases, and the net emission in crease determination. Following review of the submission, NYSDEC established permit conditions for the required emission reductions. It isPage 104 of 114 Kodak’s view that, had they been required for this project, the comple tion of ERC forms themselves would

have added no value.

The ERC Forms generally are not subject to public notice and comment, have not been formally made part of this proposed rulemaking, and may be changed by the De partment without any public review. Requiring the use of these forms under 231-10.3(b)(2), without affording any flexibility for the regulated community to provide the information in another equally suitable manner is procedurally unacceptable. Other NYSDEC air program rules provide flexibility w ithout negatively impacting the department’s continued successful implementation of those rules. For example, 201-6.3(d) provides: “All title V facility permit applic ations submitted to the department shall be provided in a format acceptable to the department .” (Emphasis added.). Similarly, 202- 2.4(h) allows: “Any owner or operator of a reportable facility shall transmit the emission statement to the department in a format acceptable to the department .” (Emphasis added.)

Consistent with the approach used in other NY air program rules, Kodak asks NYSDEC to revise 231- 10.3(b)(2) as shown below to allow for an equivalent means of conveying th e required information.

“(2) A complete “Emission Reduction Credit Quantification Form” or equivalent acceptable to the Department with supporting documentation establishing that th e emission reduction is surplus, quantifiable and

enforceable.”

Response: The commenter has requested that the De partment confirm the interpretation that emission reductions intended for netting are not added to the ERC Registry. The commenter is correct. However, the Department does note in the ERC Registry when any prev iously approved unused ERC listed in the Registry isPage 105 of 114 used for netting purposes rather than emission offset purposes, since any E RC which is used for netting cannot subsequently be used as an emission offset.

The Department’s “Emission Reduction Credit Quantif ication Form” (ERC Form) has been required for all ERC applications since 1995. It is th e main component of an ERC application. As noted by commenter, the ERC Form methodically presents the information that bot h the applicant and the Department must review. The ERC Form has been noted by both industry and consulta nts as being a very conc ise and helpful form to calculate and document the value of a proposed ERC. The final summary information (baseline emissions, future emissions, RACT /MACT surplus calculations, applic ability dates, requested E RC, etc.) provided in the Form is typically supported by attached detailed documentation such as spreadsheets, calculations, etc. noted by commenter. Use of the ERC Form maintains consistency in the Department’s review of ERC applications and is used as the document for entry of approved ERCs into NY’s ERC Registry. The ERC Form will remain required for all ERC applications. The suggested langua ge addition of “or equivale nt” will not be made.

Finally, the Department does not requi re any specific format for backgr ound or support information that an applicant submits with the ERC from. An applicant ma y submit any format of documentation (electronic or hard copy) that supports the in formation provided in the ERC Quantification Form. (APC: 56)

71) Comment: 231-10.4(a) – ERC Newspaper Notice: This paragraph requires applicants for permit modifications that create ERCs to publish a notice in a local newspaper. This provision is unchanged from the September 2007 proposal. In Response to Comment # 58, NYSDEC supports the requi red newspaper notice for ERCs, because it exists under Subpart 231 -2 and is consistent with the De partment’s reading of Part 621. Kodak disagrees with this position a nd continues to believe that newspape r notices are unnece ssarily expensive requirements for notifying the public of emission decr eases. Through this rulema king, NYSDEC has both anPage 106 of 114 opportunity and a responsibility to revi sit costly and unnecessary practices, especially in light of the expanded applicability of Part 231.

In addition, because NYSDEC unnecessarily requires emi ssion reductions intended for netting purposes to be

established as ERCs and facilities that net are demonstra ting that there will not be an increase in emissions from those facilities, ERCs used specifically for netting should not require a newspaper notice.

Kodak asks NYSDEC to strike from 231-10.4(a) the phrase “and the applicant must pub lish notice in a local newspaper” or at a minimum revise this paragraph by adding the following phrase to the end of this paragraph: “unless the ERC will be used only fo r net emission increase determinations”.

Response: The Department respectfully disagrees w ith the commenter. The requirement for newspaper publication exists in curre nt Subpart 231-2. Clause 231-2.6(a)(5)(ii)(‘d’) requires that for an ERC to be enforceable the permit modification establishing the ERC must be noticed in the Environmental Notice Bulletin and a local newspaper for a 30 day public comment period. This requirement will be maintained in the revised rule in Section 231-10.4. The Department maintains that it has and will continue to read Part 621 consistent with this Part 231 requirement. Approval of an ERC rega rdless of its intended use will require public notice.

Finally, ERCs approved for the purpose of netting are routin ely noticed concurrently with the project that is, or will be using the ERCs. Therefore, no additional costs fo r public notice are, or will be incurred. (APC: 58)

72) Comment: “Reasonable Possibility” Recordkeeping Re quirements: 231-11.2(b) Recordkeeping for projects less than 50 percent of the significan ce thresholds NYSDEC has restructured Subpart 231-11 and requirements for insignificant modifications now are under 231-11.2(b) for projects with less than 50 percent of thePage 107 of 114 significance threshold, considering projec ted actual emissions and emissions from “independent factors”. These requirements also extend to exempt and trivial sources . NYSDEC has revised 231-11.2( a), to make clear that the requirements for insignificant modi fications do not apply if the project emission potential is determined using potential to emit in lieu of projected actual emi ssions. The provisions in 231-11.2(c) for projects greater than or equal to 50 percent of the si gnificance thresholds appear to be c onsistent with the federal major NSR “reasonable possibility” requirements in 52.21(r)(6). However, the recordkeeping requirements in 231-11.2(b) are in excess of what EPA’s major NSR rule s would require and s hould be eliminated.

In promulgating its “reasonable possibility” rule, EPA ch ose a bright-line percentage test of 50 percent or greater of the significance thresholds, including both proj ected actual emissions resulting directly from the project and emissions increases from independent factors. This approach responded to the petitioners’ and the court’s concerns regarding the vagueness and lack of enforceability of the NSR Reform rule in which “reasonable possibility” was undefine d. EPA’s rationale supporting th e adoption of this test noted:

“Nonetheless, agencies do not invari ably require the regulated community to keep records to prove the nonapplicability of a requirement. In imposing recordkeeping requirements in this case, we strove for a balance between ease of enforcement and avoidance of requi rements that would be unn ecessary or unduly burdensome on reviewing authorities or the regulated community.” (72 FR 72610, col. 1 and 2.)

On the other hand, NYSDEC’s approach to mandate recordkeeping on projects less than the 50 percent significance threshold will require regulated entities to keep records to prove non-applicability and does not achieve a balance between enforcement and the impositi on of unnecessary or unduly burdensome requirements. Since NY’s minor NSR program is one of those highlighted by EPA as providing the Department with the “opportunity to review virtually all projects causing an emissions increase before construction begins” (72 FRPage 108 of 114 72613, col. 1), it is unnecessary and unreasonable for NYSDEC to impose the additional recordkeeping burdens associated with 231-11.2(b).

EPA’s “reasonable possibility” rule making further indicated that:

“Projects with projected increases below the 50-percent threshold, especially when emissions from demand growth are included in projections, are, we believe, suffici ently small that any variability or error in calculations is less likely to be large enough for the change to have increased emissions to the significant level. This view

seems to be consistent with comm ents submitted by the group of States that successfully challenged the “reasonable possibility” rule .” (72 FR 72611, col. 3)

Conversely, by continuing to includ e the recordkeeping requirements proposed in 231-11.2(b), NYSDEC is taking the position that no matter how sm all or how large a projected actual increase may be, (whether 1⁄2 pound, five pounds, 10 pounds, 100 pounds, etc.), there may be a chan ce, no matter how slight, that the si gnificance thresholds for major modifications could be exceeded. Therefore, NYSDEC requires records to be kept for every insignificant modification to prove otherwise. It appears, then, that the driver for these requirements is

environmental enforcement and not environmental benefit. Unfortunately, regulated entities will bear the costs associated with these over-reaching recordkeeping require ments that apply to projects that have no “reasonable possibility” of exceeding the ma jor NSR significance thresholds.

Since the insignificant modification requirements in 231- 11.2(b) create unnecessary burdens and will result in no proven environmental benefits, th ey are unjustified. Kodak asks NYSDEC to eliminate the provisions under 231-11.2(b).Page 109 of 114 Response: Please see response to comment number 39 above.

73) Comment: 231-6.1(a) and 231-8.1(a) PTE and “reasonable possibility” provisions: These paragraphs now read: “For a project with a project emission potential, calculated utilizing proj ected actual emissions, which does not equal or exceed the applicable significant project threshold. . ., the facility owner or operator must comply with the provisions of Section 231-11.2 of this Part

. ” (Emphasis added.)

The Department revised these provisions and 231-11.2(a) to address Kodak comments on the 2007 proposal. In Response to Comment #51, NYSDEC said they agreed with Kodak’s position th at when facilities rely on PTE to determine project emission potential, the “reasona ble possibility” requirement s of 231-11.2 should not be triggered. Although this is clearly stated in para graph 231-11.2(a), Kodak is concerned that the language NYSDEC added to 231-6.1(a) and 231-8.1(a) may not be as clear because the definition of “projected actual emissions” includes in subparagraph (ii) the following: “In lieu of using th e method set out in Subparagraph (i) of this Paragraph, the owner or operator of the facility may elect to use the potential to emit of the emission source(s), in tpy.” (Emphasis added.)

Because the definition of “projected actual emissions” al lows for the substitution of PTE, Kodak asks NYSDEC to revise 231-6.1(a) and 231-8.1(a) as follows or provide other suitable clarification:

“For a project with a project em ission potential, calculated utilizi ng projected actual emissions in lieu of potential to emit in accord ance with 231-4.1(b)(40)(ii) . . .”

Response: The Department disagrees with the comm enter’s proposed change. The Department does not

believe that additional clar ifications are necessary.Page 110 of 114 74) Comment: 201-2.1(b)(21) - Definition of “major stat ionary source”: In response to Kodak comments, NYSDEC indicated that the propos ed definition of “major stationary sour ce” is intended to be used for Title V and major NSR. NYSDEC changed the proposed definition to correct a pr ovision that inadvertently changed 201-6 applicability. Specifically, the newly proposed paragraph (i) of this definition reflects the 100 tpy threshold for any pollutant regulated under the Act as require d under the federal Title V program. Kodak now believes that paragraph (iii) of the pr oposed definition could lead to confus ion when this definition is relied upon for implementing Part 231 because the 250 tpy major f acility threshold, that a pplies in attainment or

unclassified areas for sources that are not in a listed source category (See 231-13.5), is not referenced. To the

extent that NYSDEC will us e this definition to impl ement both programs, Kodak recommends that NYSDEC add the following language to paragraph (iii) of the definition of “major stationary source”:

(iii) Solely for purposes of implementing the PSD program under Part 231 in attainment and unclassified areas, a stationary source, source, or f acility, or that directly emits or has the potential to emit 250 tpy , or a stationary source, source or facility that belongs to one of the following source categories and directly emits or has the potential to emit 100 tpy of any ai r pollutant or air contaminant regulated under the Act. . . .” ( The remainder of the paragraph remains unchanged. )

Response: The Department has review ed the commenter’s issue and agrees that a revision to the proposed definition of “major stationary source” is necessa ry. The Department will revise this definition.

75) Comment: Section 231-3.6( a) - Source obligations: NYSDEC ha s opted to retain proposed 231-3.6(a) which states: “The issuance of a permit does not relieve an y owner or operator of th e responsibility to comply fully with applicable provisions of the State Implementa tion Plan and any other requir ements under local, State and Federal law.” (Emphasis added.) Kodak continues to see this requirement as superfluous. In earlierPage 111 of 114 comments, Kodak expressed concern that the mere incl usion of this provision in the final rule could be construed to convert all these “other requirements” into federally enforceable “applicable requirements” which must be included in a Title V pe rmit, potentially with burdensome monitoring, recordkeeping and/or certification requirements. On page 63 of the APC, th e Department replied that: “The term applicable requirement is defined in Part 201 and will not be expa nded through this provision to include requirements that do not fall within the purview of Paragraph 201-2.1(b)(5).” Kodak concurs that the definition is clear that to be an applicable requirement “a standard or other requirement must be required under the act”. It is important to note, however, that the referenced de finition of “applicable requirement” ge nerally includes: “any standard or other requirement approved in the New York State Implementation Plan (SIP) that is effective at the time of permit issuance.” (Emphasis added.) Because the Clean Air Act does not mandate these ot her requirements referenced in 231-3.6(a), Kodak asks th e Department to confirm that even if 231-3.6(a) is approved into the SIP, that the referenced requirements contained therein would not constitute applicable requirements.

Response: Please see response to comment number 24 above.

76)Comment: 231-3.6(c) Significant increases from “independent factors”: The Department has added provisions under 231-3.6(c) re quiring facility notifica tions to NYSDEC prior to implementing a physical change or change in the method of ope ration that the facility determines is not a modification, yet will lead to a significant emissions increase due solely to emission incr eases from “independent factors”. Kodak fails to see

the relevance of this s ection. The “reasonable possibility” pr ovisions in 231-11.2(c) already provide a mechanism for Departmental involvement when there is a modification with a combined increase in projected actual emissions and emissions from independent fact ors that equals or exceeds 50% of the significance

thresholds. It is unclear how , if an increase results solely from “indepe ndent factors”, it would be attributable to a physical change or change in the method of operation without being a modification. For these reasons, andPage 112 of 114 because this provision exceeds what is required under the fede ral program, Kodak asks NYSDEC to delete 231- 3.6(c).

Response: The Department disagrees with the commenter ’s assessment. Subdivisi on 231-3.6(c) is intended to address situations where a facility makes a physical or operational change which it projects will result in no emission increase but projects a signi ficant emission increase from indepe ndent factors. The Department believes that these provisions are necessary to protect the environment and public health.

77) Comment: Section 231-4.1(b)(4)(d) – “Baseline actual emissions”: The definition of “Baseline actual

emissions” does not conform to the federal rule that allows a different baseline period to be used for each NSR contaminant. As a result of this pr ovision the proposed Part 231 NSR rules may apply to projects that would be exempt under the federal rules. K odak understands NYSDEC’s position, but believes the pote ntial for this provision to unacceptably result in increased emissions within NY has been over-s tated. Moreover, to the

extent that a source is authorized to emit based on va rious operating scenarios in its permit, it seems reasonable that different baseline periods be available to allow dete rmination of representative emissions to the greatest extent possible under those scenarios. As such, Kodak asks NYSDEC to mod ify this provision as shown, below:

“(d) For a regulated NSR contaminant, when a project i nvolves multiple emissions sources, one baseline period

must be used to determine the baseline actual emissi ons of the emission sources being modified. A different baseline period can cannot be used for each regulated NSR contaminant.”

Response: Please see response to comment number 14 above.Page 113 of 114 78) Comment: Sections 231-5.1(b), 231-7.1( b) - PTE Limit: For projects that do not exceed the applicable major facility threshold but that woul d make the facility major for such contaminant, 231-5.1(b) and 231-7.1(b) require a facility owner or operator “to obtain a permit in accordance with Part 201 and the permit must contain an emission limit(s) equal to the potential to emit (“PTE”) of the emission source(s) affected by the modification.” In “Response to Comment” #49, NYSDEC states:

“ The above cited sections apply to minor facilities which undertake a m odification which re sults in them becoming a major Title V facility. The requirement to obtain an emission limitation ensures that the modification by itself does not exceed the thresholds which would trigger NSR review and/or the requirement for LAER and emission offsets. In so doing, this requirem ent is consistent with th e objectives to protect the environment and maintain healthy air quality in New York.”

Kodak has a number of minor fac ilities in NY and finds these provisions impose significant and unjustified permitting burdens that are unnecessary given the permitting processes in Part 201 that already ensure that major NSR review has not been triggered. Namely, unde r the registration provisions of 201-4, a notification to NYSDEC is required 30 days in advance of any project that changes applicable rules. Similarly, for facilities subject to state facility or Title V permitting, such a change would be reviewed by NYSDEC via the minor or significant permit modification procedures under 201-6.7 or operational flexibility provisions of 201-5.4(b). Should the project lead to an increas e of the facility’s PTE above major source thresholds, there are provisions under 201-7 for source owners or operator s to elect to use a cap to avoid an applicab le requirement such as major NSR. In all cases, NYSDEC has ample opportunity to review the proj ect in question and take steps to ensure that NSR has not been triggered. NYSDEC has failed to justify why the provisions in 231-5.1(b) and 231-7.1(b) provide additional environmental benef its beyond those provided by the current permitting

processes. Because the federal rule does not require that a preconstruction permit with a PTE limit be obtainedPage 114 of 114 for projects that are below the NSR applicability th reshold, we urge NYSDEC to revise 231-5.1(b) and 231- 7.1(b) by deleting the last sentence of these paragraphs as shown below:

“(b) . . . However, the facility o wner or operator must apply for and obtai n a permit in accordance with Part 201 and the permit must contain an emission limit(s) equal to the potential to em it of the emission source(s) affected by the modification. ”

Response: The above cited sections apply to minor facilities which unde rtake a modificati on which results in them becoming a major Title V facility. The requir ement to obtain an emission limitation ensures that the modification by itself does not exceed the thresholds which would trigger NSR review and/or the requirement for LAER and emission offsets. In so doing, this requir ement is consistent with th e objectives to protect the environment and maintain healthy air quality in New Yo rk. Also, please see respon se to comment number 11 above. (APC: 49)