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Citation: 44 Fed. Reg. 3274 1979 

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3274

the Uranium Mill Tailings Radiation

Control Act of 1978, publishing the re- sults of such study and furnishing the

results thereof to the Congress and,

based on such study, determining and

taking whatever actions, if any, shall

be appropriate and in the public interest to require payment by such per- sons as the study identifies, of all or any part of the costs incurred by the

United States for such remedial action

for which he determines such persons are liable. i

Dated: January 5, 1979.

GRIFFIN B. BELL,

Attorney General

EFR Doe. 79-1481 Filed 1-15-79; 8:45 am]

[6560-01-M]

Title 40-Protection of Environment

CHAPTER I-ENVIRONMENTAL

PROTECTION AGENCY

SUBCHAPTER C-:AIR PROGRAMS

[FRL 963-2]

PART 51-REQUIREMENTS FOR PREPARATION, ADOPTION AND SUBMITTAL OF IMPLEMENTATION

PLANS

Emission Offset Interpretative Ruling

AGENCY: Environmental Protection

Agency.

ACTION: Final Rule.

SUMMARY: This rule describes the

requirements . for preconstruction

review-which apply to large new (or modified) air pollution sources affect-

,ing areas with air quality worse than

the levels set to protect the public health and welfare. The Action makes

certain revisions to ERA's Emission

Offset Interpretative Ruling of December 21, 1976 (41 FR .55524). These

revisions are a result of the public

comments (including four public hearings) on the December 21, 1976, Interpretative Ruling and changes required by the Clean Air Act Amendments of,

1977 (Pub. L. 95-95, note under 42

U.S.C. 7401).

DATES: These changes are applicable

to permits applied for on or after January 16, 1979. States may, if they so desire, make these changes applicable on a retroactive basis unless specified

otherwise in the Ruling. Comments on specified issues should be submitted in

accordance with the proposal pub-. lished elsewhere in 'today's FEDERAL

REGISTER.

FOR FURTHER INFORMATION

CONTACT:

D. Kent Berry, Office of Air Quality

Planning and Standards, EnvironRULES AND REGULATIONS

mental Protection Agency, Mail

Drop 11, Research Triangle Park,

North Carolina 27711, Telephone: 919-541-5341.

SUPPLEMENTARY INFORMATION:

On December 21, 1976, EPA Issued an Interpretative Ruling (41 FR 55524)

addressing the issue of whether and to

what extent national ambient air qual- ity standards (NAAQS) established

under the Clean Air Act may restrict or prohibit construction of major new or modified stationary air pollution sources. The Ruling provides, in gener- al, that a major new source, which

emits pollutants in excess of specified

amounts and would otherwise contribute to an existing violation of a na- tional standard, may be constructed

only if stringent conditions can be

met. These conditions are designed to

insure that the new source's emissions

will be controlled to the greatest degree possible; that more than equiv- alent offsetting emission reductions

("emission offsets") will be obtained

from existing sources; and that there

will be progress toward achievement of

the standards. Where such a source would otherwise cause a new violation

of an NAAQS, offsets or additional

control must be provided to prevent a new violation of the standards.

Although this Ruling was made ifmediately effective, the Agency solicited written comments and held public hearings in San Francisco, Dallas, Chicago, and New York. The comments

received (including a summary of

those commerits) and the public hearing records are available for public inspection and copying .during normal

business hours at: Public Information

Reference Unit,_ Environmental 'Protection Agency, Room 2922 (EPA Ilbrary) 401 M Street, SW., Washington, D.C. 20460.

S- PERMITS REQUIRED FOR NEW OR

MODIFIED AIR POLLUTION SouRcEs

The Federal Clean Air Act and most

State regulations require that new air

pollution sources and modifications of

existing sources which would increase

air pollution emissions must obtain a permit before construction is begun. The State (or local) new source review

procedures apply to almost all new or modified air pollution sources. This

review is intended to ensure that new sources will meet all alplicable air pol- lution regulations adopted by the

States. In addition, larger sources (which will have increased emissions

of 50 tons per year of any air pollut- ant) I will be subject to more stringent requiremen'ts relating to the source's

impact upon air quality. A given source may have air pollu- tion impacts in an area which has

'The criteria for determining the applica- bility of these more stringent requirements are actually more complex and can be found

in the specific regulations mentioned below.

clean air or in an area which has dirty air. Some sources can affect both

types of areas. The type of review re- quirements that a new source must

comply with depends on whether the source affects a dirty air or clean air area. A source which impacts an area where the air Is cleaner than the na- tional ambient air quality standards

(NAAQS) is subject to regulations for

preventing significant deterioration

(PSD) of air quality.2 The purpose of

these regulations Is to keep clean air

clean and the primary focus Is to limit new emissions of sulfur oxides and

particulate matter.

A new source that would affect a dirty. air area will also be subject to

EPA's Emission Offset Interpretative Ruling, the niain provisions of which

require the new source to meet the

lowest achievable emission rate for the

problem pollutant(s) and to obtain more than equivalent 'offsetting emission reductions (emission offsets) from

existing sources. A source may be subject to PSD for one pollutant and to

the Offset Ruling for another pollutant, or may affect both clean and dirty areas for the same pollutant. At the present time, the Offset

Ruling is generally carried out by the

States as part of their own new source review procedures. In most areas,

EPA's Offset Ruling will terminate as of July 1, 1979, and will be replaced by State-adopted new source review re- quirements. However, if States fail to

adopt an acceptable plan to attain the

NAAQS by the dates specified in the

Clean Air Act, the Act requires that no permits for major new sources applied for after June 30, 1979 be Issued.

The PSD program Is generally being carried out by EPA through its Regional Offices. Thus, large dources

must now get a preconstruction permit from both the State (for offsets) and

EPA (for PSD): However, many States

will be developing their own PSD program, allowing the air permit program

to be consolidated at the State level.

Until this occurs, major source owners should obtain their State permit before applying to EPA for a PSD

permit. It is recommended that source owners consult with both EPA and the

States before submitting a permit ap- plication to determine what requirements will be applicable and what kind

of information must be submitted, To

avoid delays, major source owners should apply for a permit as early in

their planning process as possible and

should allow for a minimum of three

months from the date of application for a permit to be issued.

IMMEDIATELY EFFECTIVE CHANGES RESUdLTING FROM 197T CLEAN AIR ACT

AMENDMENTS

1. Baseline. In the December 21, 1976 Ruling, the baseline for deter.

2 See Federal Register of June 19, 1978, pp 26380-26410.

FEDERAL REGISTER, VOL 44, NO. I-TUESDAY, JANUARY 16, 1979
mining emission offset credit was the

SIP emission limitations in effect for

existing sources (Le., control of existing sources beyond that required by

the SIP could be used to offset irmissions from new sources). Howeer, for areas where EPA had formally-found

the State plan inadequate and had re- quested revision, the baseline was the

emissions that would result from application or reasonably available con- trol measures (RACM) by existing

kources. Furthermore, even where the

baseline was the existing SIP rather

than RACM, the 1976 Ruling provided for several adjustments to the baseline

to take account of unusual circumstances. Explicit provisions were included to govern situations where

there was no applicable SIP requirement, where offset credit would come from switching to cleaner fuels, and

where the permitted emission level ex- ceeded the uncontrolled' emission

factor of the'source. 41 FR at 55529

cols. 2-3. In addition, EPA does not interpret the 1976 Ruling as allowing

offset credit for tightening SIP re- quirements for a source to yeduce the

emission level allowed by the SIP

down to the level allowed for the source by applicable new source performance standards (NSPS) or national emission standards for hazardous

air pollutants (NESHAPS) requirements (i.e., requirements under Sections 111 and 112, respectively, of the

Act). Any other approach would allow

offset credit for so-called "paper" re- ductions, where the .SIP is adjusted

but no -actual tightening of requirments under the Act occurs. These

special provisions all implement the

general principle behind the "1976

JRuling, that offsets must ordinarily

represent, reductions in emissions

below the emissions allowed by existing requirements.

-Section 129(a)(1) of the Clean Air

Act Amendments of 1977 (Pub. I. 95-

95 (note under 42 U.S.C. 7502)) states

that the 1976 Ruling, as it may be

modified, shall remain in effect,

except that the baseline for determinIng emission offset credit "shall be the

applicable implementation plan of the

State in effect at the time of application for a permit *! * *." The legislative

history indicates that this provision was intended to eliminate the provision in the 1976 Ruling that the baseline was RACM where EPA had called

for -a SIP revision. But this provision was not inntended to displace the provisions under the 1976 Ruling to ac- cominmodate special circumstances,

giving credit only for reductions below

the emissions allowed by existing re- quirements..

For the foregoing reasons, the ruling

is--revised to eliminate the requirement

that the baseline be RACM where

EPA has called for SIP revisions.3 EPA

3The 1977 Amendments and legislative

history clearly call for this Amendment. See

RULES AND REGULATIONS

invites public comment on its policy that the Ruling does not allow offset

credit for tightening SIP requirements

down to NSPS or NESHAPS levels, and invites comment on whether the

language ?f the Ruling establishing the baseline should be revised to make

this policy more explicit. 2. Nonattainment requirements under the amended Act-a. Amendments required by nonattainment pro- visions of the Act. New Part D of Title

Ir of the Act ' requires States to revise

their SIP's for every area where an

NAAQS is not being met. For each

standard, areas were designated, under

Section 107(d) and 171(2) of the Act,

as either attaining the standard (at- tainment areas), violating the standard (nonattainment areas), or areas

that canrot be classified on the basis

of available information (unclassifiable areas). For areas Initially desig- nated as nonattanment areas,5 the

deadline for States to submit required SIP revisions is January 1, 1979. Revised SIP's meeting the requirments of

Part D must be in effect by July 1, 1979. For areas initially designated as

attainment or unclassiflable but are

later found to be nonattinment areas,

additional tinie may be necessary for

development, submittal and approval

of the required SIP revisions.

The Act provides that the Ruling be

superseded after June 30, 1979-(a) by preconstruction review provisions of

the revised SIP, If the SIP meets the

requiretnents of Part D, or (b) by pro- hibition on cdnstruction under the applicable SIP and Section 110(a)(2)(I) of the Act, if tfie SIP does nbt meet

the requirments of Part D. The Ruling

is now being amended to reflect this, and to state that the Ruling will

remain in effect to the extent not superseded under provisions of the Act.

The above prohibition on major new

source construction does not apply to

a source whose permit for construction

or modification wasapplied for during

a period when the SIP was in compliance with Part D, or before the deadline for having a revised SIP in effect

that satisifies Part D. The Ruling Is

amended to reflect this.'

123 Congressional Record at S 9165 col. 2

(daily ed. June 6, 1977). therfore. EPA has

determined that notice and public proce- dure are unnecessary before making this

Amendment.

'Part D of the Act, which includes Sections 171 through 178 (42 U..C. 7501-7508).

5WIntia designations were published by EPA on March 3. 1978, 43 FR 8962. Revi.

sions to the Initial designations were recently published for some'States (43 FR 40412.

43 FR 40502. and 43 FR 45993. September 11 and 12. and October 5. 1978) and will soon be published for other States. Designa. tions are codified at 40 CFR 81.300 eL seq. 'These amendments to the Ruling do no more than state that the Act provides for

supersession of this Ruling. Furthermore, it

is important to have a clear statement at

3275

b. Additional effects of nonattainment requirements on this Ruling. By

its terms, this Ruling has always applied to proposed major sources and

major modifications anywhere in the

State that will cause or contribute to a violation of an NAAQS, regardless of

whether the sources or modifications were within an area determined in

general to be nonattainment. 41 FR

55528 col. 2. Designations of nonattainment, therefore, do not limit the areas within which this Ruling applies.

In EPA's view, the Act requires that

for any area disignated as monattainment for any NAAQS, the preconstruction review provisions under Part

D, or the prohibition on construction

under the applicable SIP and Section

110(a(2)(I), must apply to all major sources within the State that will cause or contribute to a violation of

the NAAQS within an area initially

designated as a nonattainment area. Consequently, after July 1, 1979, the

Intrepretative Ruling will only apply

in the followng situations: (a) To sources in one State which contribute

to a violation of an NAAQS only with

another State, (b) during the time allowed for the development and approval and/or promulgation of revised

SIP in an area which is subsequently

determined to violate an NAAQS, and

(c) during any extended time allowed

under Section 110(b) for development of a SIP revision of an area that violates only a secondary NAAQS. Also,

for sources in one State (which has an acceptable SIP) that would contribute

to a violation in another State (which

does not have an acceptable SIP), the

restrictions on new source construction under the applicable SIP and Section 110(a)(2)(I) do not apply.

Under the preconstruction permit

requirements in Part D, States have

two basic options for dealing with proposed new major sources within a non- attainment area that cause or contribute to a violation of an NAAQS. The

SIP may provide an allowance for

growth while assuring reasonable further progress toward attainment, and new sources-may be allowed that do

not result (individually or in the aggregate) in emissions that exceed the

allowance. If the growth allowance is

used up, or if none is provided, the

State's other option is to allow sources to be constructed only if case-by-case

offsets are obtained sufficient to provide for reasonable further progress

towards attaining the NAAQS by the

attainment date prescribed under Part

D. If the SIP for the nonattainment

this time of the earliest possible application of the prohibition on major new source con- struction, to assist industrial planning. For

these reasons. EPA has determined that so- liciting public comment before making these

amendments would be unnecessary and con- trary to the public interest.

FEDERAL REGISTER, VOL 44, NO. I )-TUESDAY, JANUARY 16, 1979

a-
3276

area is not being carried out, however, no permits may be issued within the

area as required by Section 173(4).

The discussion in this notice of the

requirements for revised SIP's under

Part D, and for a prohibition on con- struction under the applicable SIP and

Section 110(a)(2)(I), is provided to

place the Ruling- in perspective, and

,does not constitute regulations promulgated or final action taken by the

Administrator to establish or interpret

those requirements. Many of the approaches used by the Agency in revising the Ruling may be used by the

States as guidance in developing provisions under Part D; but again, except

as noted below, this does not consititute regulations or final action establishing or interpreting requirements

for preconstruction review provisions.

The Agency's nationally applicable

policy summarizing the elements that a SIP submittal must contain to meet

the requirements of Part D was. published in the FsEEAL, REGISTER on May 19, 1978, 43 FR 21673, and the

discussion and guidance provided by

this notice merely supplement that

policy.

The only exception is that certain

terms in the Ruling-are also used in

Sections 172(b)(6), 173, and 302(j) of

the Act to prescribe the requirements

for revised preconstruction review provisions. Therefore, the definitions in

this ruling of the terms "source," "potential," and "modification" (see dis-

•cussion below on additional'flexibility

in defining "modification") apply to

the statutoiy requirements for preconstruction review provisions under Sections 110(a)(2)(I) and Part D as well as under this Ruling. The discussion

below of "lowest achievable emission

rate," and of cut-offs-to limit review of

small sources, also apply to State preconstruction review programs under

Section 173 of the Act [although not

to the prohibition on . construction

under Section 110(a)(2)(I)].

MAJOR SOURCE ISSUES

1. Sources subject to review-a. Defintition of "'potential" to emit and definition of cutoff points. Section 129(a)

of the 1977 Amendments requires that

the offset requirements be applicable

to all major stationary sources (includ

ing Federal facilities) as defined in

Section 302. of the Act (i.e., sources with potential emissions of 100 tons or more per year). The emission offset re- quirements currently apply to'sources

with allowable emissions greater than

100 tons per year. Since the 1977 Act

Amendments did not define potential

emissions and .there has been some question as to the Congressional

intent of this term, this change was not made immediately effective. However, this issue was dealt with in EPA's

proposed regulations for preventing

RULES AND REGULATIONS

significant deterioration (PSD) of air

quality (42 FR 26388). Ks set forth in

the final PSD regulations, potential

emissions are defined in terms of uncontrolled emissions -but sources are

exempt from the best available control

technology and the air quality related

tests if the source's allowable emissions would be less than each of the

following cutoff points: 50 -tons per

year, 1000 pounds per day or 100

pounds per hour. The short-term criteria are - included to ensure that a' source that operates seasonally or intermittently is adequately dealt with

regarding its impkct on short-term air

quality. For the- same reasons as are discussed in the preamble to the PSD

regulations, the Emission Offset

Ruling is revised to require review of sources based on their uncontrolled

'emissions, but to exempt sources from

the major conditions of the Ruling if

the allowable emissions are less than

the above cutoff points.

-It should be noted that any source with allowable emissions less than the

above amounts which is exempted

from the offset requirements will use up part of the State's allocation for'

growth (see discussion in preceding

section) at the time such 96urce begins

operation. Thus, a State plan may

need to require additional control of

existing sources (or more rapid compliance) in order to achieve the "annual

reasonable further progress toward at-,

tainment" required by the Act.

b. Definition of "source." A number

of commenters indicated the need for a more explicit definition of "source."

Some readers found that it was un- clear under the 1976 Ruling whether a plant with a number of different proc- esses and emission points would be

considered a single source. The

changes set forth below define a source as "any structure, building, facility, equipment, installation, or operation (or combination thereof) which

is located on one or more contiguous or adjacent properties and which Is

owned or operated by the same person

(or by persons under common con- trol)." This definition precludes a large plant from being separated into

individual production lines, for pyurposes of determining applicability of

the offset requirements.

The revised definition of "source" is

only a clarification, and represents no change from EPA's intent in the December'1976 Ruling and the way the

Ruling has been implemrented. The

definition is consistent with the uge of

this term in other $IP-related regulations (e.g., 40 CFR Part 51, Appendix

C), and is identical to the approach re- cently adopted for the Prevention of

Significant Deterioration (PSD) -regu- lations (see 40 CFR 52.21(b)(4), 43 FR

'26388, June 19, 1978).

c. Public comment. Comments were originally solicited on the definition of

cut-off points to limit review of small sources in the Advance Notice of Proposid Rulemaking published on December 21, 1976. 41 FR 55559. Comments were received on the definition

of'"source" in the 1976 version of this

Ruling. The definitions of the term

"potential" and "source," and the definition of cut-off points to limit review, were all the subject of extensive public

comment In response to EPA's proposed PSD regulations, which con- tiined an approach very similar to

that adopted here. The definitions

adopted here were based on all of this

public comment, and EPA has determined that It is unnecessary to postpone adoption of these definitions

until after further comment Is solicited and evaluated. However, since a major industrial group has requested

another opportunity to comment on these important Issues, EPA Is inviting

further comment on these definitions,

particularly to Identify any, considerations that were not relevant in developing the ,PSD regulations, and any

additional considerations relevant to

the application of these definitions to

requirements for new preconstruction

review programs under Section 173.

Any comments must be subnmitted on or before February 15, 1979.

d. Applicability to modifications ac- corApanied by emission reductions

within the same source (intrasource,

offsets). Some commenters Suggested

that the Ruling should be amended to

exempt a modification of an existing source which increases allowable emissions by 50 tons per year, 1000 pounds

per day, or 100 pounds per hour, or more if there are accompanying reductions within the same source (intra- source offsets) such that the net in- crease from the source is less than the

above amounts, or even that there Is a net decrease. It was even suggested

that this exemption apply to the addition of new facilities at an existing source. Where a state Implementation

plan Is revised and implemented to

satisfy the requirements of Part D, including the reasonable further prog- ress requirement, the plan requirements for major modifications may

exempt modifications of existing facilities that are accompanied by ntra- source offsets so that there is no net

increase in emissions. The Agency en- dorses such exemptions, which would

provide greater flexibility to sources to

effectively manage their air emissions

at least cost. However, as long as the

emission Offset Interpretative Ruling

remains operational, the exemption

will not be allowed for the reasons stated below. The text of the Ruling is

rewritten to. state In positive terms

that the exemption is not permitted.

Since the 1976 Ruling invited public

FEDERAL REGISTER, VOL 44, NO. 11-TUESDAY, JANUARY 16, 1979
comment on the requirements for

modifications, and since this amendment clarifies the original language

without changing the substance, EPA

has determined that additional notice

and bublic procedure before making

the amendment are unnecessary.

If the-Ruling Were amended in the.

suggested manner, a source owner could construct or substantially

modify a facility by obtaining only

part of the offsets ordinarily required

and avoiding the other conditions re- quired for major pollution sources in

nonattainment areas prior to there

being an adequate Part D implementation plan. This would conflict with sev- eral of the basic purposes of the

Ruling, which are to assure that sufficient offsets be obtained to represent

reasonable progress - toward -attainment of the applicable standard, that

the new facilities meet the lowest

achievable emission rate (LAER), and

/that other sources owned bythe applicant be in compliance with the approved SIP or on acceptable compli- ance schedules. The need to reduce new emissi6ns through these requirements is particularly great before re- vised plans under Part D are adopted

and implemented. Therefore, it is not

enough that there be no net increase

in-emissions; there are additional independent requirements which must be

met. There is no reason to depart from

this principle simply because offsets

happen to come from a- facility within

the same source. Since the facility Will

be new or substantially modified, it

has an opportunity to employe LAER

and satisfy the other requirements

like any other source subject to the

Ruling. This has been the consistent

application of this Ruling.

Unlike this Ruling, EPA's recently-'

published PSD regulations include an exemption for modifications of existing facilities which are accompanied

by sufficient intrasource offsets that

there would be no net increase in emissions (see discussion at 43 FR 26394,

June 19, 1978). EPA believes that the

need to reduce new emissions as-much as possible is greater under this Ruling

for an area where standards are violated than under the PSD requirements

for a clean area where deterioration is.

the only concern.

Modifications of existing facilities

accompanied by sufficient intrasource

offsets so that there would be .no net

increase in emissions may, however, be

exempted by the States from the new source review procedures under Part D'

that will supersede this Ruling. This

exemption would not be applicable

where a major facility is added to or is

reconstructed at a source, whether the

addition is to replace production ca- pacity or for growth. The above ex- emption is permitted under the SIP

because, to be approved under Part D,

RULES -AND REGULATIONS

plan revisions due by January 1979

must contain adopted measures assuring that reasonable further progress will be made. Furthermore, in most

circumstances, the measures adopted

by January 1979 must be sufficient to

actually provide for attainment of the

standards by the dates required under

the Act, and in all circumstances measures adopted by 1982 must provide for

attainment. See Section 172 of the Act

and 43 FR 21673-21677 (May 19. 1978).

Also, Congress intended under Section

173 of the Act that States would have

some latitude to depart from the strict

requirements of this Ruling when the

State plan is. revised and is being carried out in accordance with Part D.

Under a Part D plan, therefore, there

is less need to subject a modification

of an existing facility to LAM and

other stringent requirements if the

modification is accompanied by sufficient ntrasource offsets so that there

is no net increase in emissions. Consequently, for a plan approved and implemented under Part D, It is accept- able for the State to Include the above

exemption for intrasource offsets in

its new source construction under the

State plan and Sections 110(a)(2)(I) and 173(4) must apply to major modifications regardless of intrasource off-

-sets if the plan is found not to satisfy Part D or is not being implemented,

because in those instances the plan

cannot be relied upork to assure reasonable further progress and, eventually, attainment.

OTMa CHANGES TO THE RULING

1. Definition of 'signiAcant" air

quality impacL Several commenters

requested that EPA provide specific quantification as to the incremental

level of pollution that would be considered as contributing to an existing violation of an NAAQS. The Ruling has

been revised to include "significance

levels" which are generally based on

the Class I prevention of significant deterioration (PSD) increments contained in Section 163 of the Act. A new

or modified source will not be considered to cause or contribute to a violation of an NAAQS if the air quality impact of the source is less than the

specified significance levels. The sig- nificance levels are only applicable when a major source is to be located in

a "clean" area (i.e., a locality where

both the primary and secondary standards are being met), but would

impact an area that exceeds an

NAAQS some distance away. The sig- nificance levels are not intended to be

used for PSD purposes where the

Class I increments are concerned, nor

are they to be used for implementing Condition 4 of Section IV of the

Ruling (i.e., emission offsets must

result in a net air.qualfty benefit). Significance increments are not specified

3277

for photochemical oxidants, since atmospheric simulation models are not

adequate to predict the air quality

impact of a single source of volatile or- ganic compounds (VOC). Further discussion of offsets for VOC sources appears below.

It is possible for a source with a good

engineering practice stack height and

substantial plume rise, and with very

good controls (e.g., partlilate matter

from fuel combustion -sources) to not

exceed the significance increments at

any location. Thus, such a source would be able to locate just at the

edge of a locality where the particulate standard is violated without being

subject to the Ruling. This situation

would be most common for particulate

matter (since controls exceeding 99% are normal) and would rarely occur for

the other pollutants.

2. Relationship of offset requirements to designations of attainment

status. On March 3, 1978, EPA published the attainment status of all

States in relation to the NAAQS. 43

FR 8962. However, as noted above,

this Ruling has always provided that

determinations be made on a case-by- case basis independent of any general

determination of nonattainment. 41

FR 55528. Therefore, the determination under this Ruling of whether a source will cause or contribute to a violation of an NAAQS will continue

to be made on a case-by-case basis. A source may try to prove that a locality

meets an NAAQS even if the locality is

part of a designated nonattainment area. There are several reasons for

this. First, the initial determinations were made on the basis of 1975 or 1976

air quality data, while the determination of whether a source would ciuse or contribute to a violation of an NAAQS must be made as of the new source's start-up date. Thus, a source locating in a nonattainment area which is projected to be an attainment area as part of an approved SIP con- trol strategy by the source's start-up

date may not be subject to the requirements of the Offset Ruling. Also a State may have designated a large

county or air quality control region (AQCR) as nonattainment on the

basis of a localized violation of stand-

"ards in a small portion of the county or AQCR. The designations were designed to provide a starting point for

State planning, and were not designed

to resolve issues of air quality for purposes of individual permit applications. While not altering the requirement of the Ruling that air quality determinations be made on a case-by- case basis, EPA has amended the language of the Ruling to explain the re- lationship in practice between the

Ruling and the Section 107 designations.7

'Because these amendments are technical

and conforming, and do not change the subFootnotes continued on nextpage

FEDERAL REGISTER, VOL 44, NO. Il-TUESDAY, JANUARY 16, 1979
3278

a. Sources, in attainment or unclassifiable areas. Certain portions of the

Ruling' may be applicable in areas designated as attaining the NAAQS or which cannot be classified as to their

attainment status. A source locating in

such an. area which would contribute

to a violation of an NAAQS- anywhere

(i.e., exceed the", above significance

levels at the site of the violation) must

meet Conditions 1, 2 and 4 of SectionIV 'of this Ruling. This is true regard,

less of the designation that applies to

the locality where the violation would occur. Although full emission offsets are not required, such a source must

obtain emission offsets sufficient to

compensate for its air quality impact

where the violation occurs. (States and

local agencies are free to require

larger offsets if deemed appropriate.)

Most such sources will, be subject to

prevention. of significant, deterioration

(PSD) requirements, which include a,

requirement for best available control

technology for all pollutants regulated

under the Act. In addition, after

August 7, 1978, many sources; subject

to PSD must present air'quality monitoring data at the proposed site as- part of their application to construct,

especially where there is good reason

to believe that a new source would cause or worseri a violation: of. an

NAAQS. Thus, major sources applying

for a permit after August 7, 1978, will

not be exempt from the requirements

of this. Ruling simply- because no air

quality data are available to determine'

whether the source would adversely

impact upon an NAAQS.

b. Sources locating in a. "clean" portio7L of a designated nonattainmen

area. A source locating in a clean por--

tion (or which will be clean as of the new source start-up date) of a designated nonattainment area may be

exempt from the requirements of this

Ruling if the source would not exceed

the significance levels discussed, above

in the actual area of nonattainment

(as of the new source start-up date). If

such a source would exceed the signifi- cance increments in the actual nonattainment area, it is subject to the,

same requirements 'applicable to sources in designated attainment or"

unclassified areas (i.e., Conditions 1, 2

and 4). c. General impact df nonattainment

designations dn the proceedings. It

will be assumed as the starting point

in reviewing a, permit application that

every location within a designated

nonattainment area will exceed the

NAAQS (as of the new spurce start-up

date), and that any source with, allowable emissions exceeding 50' tons per

year, 1000 pounds per day, or 100

Footnotes continifed from last page .

stance of the Ruling, EPA has determined

that notice and, public procedures on them are. unnecessarr.

RULES AND REGULATIONS

.pounds per hour' locating in the area will significantly contribute to a violation. However, If the applicant or any

other participant presents a 'substantial and relevant argument (including

any necessary analysis or ottier documentation) why that assumption is incorrect,' then the- applicability of this

Ruling would be determined by the

sxecifio facts'in the case. 3. Exemptions. The Ruling has been

revised- to exempt temporary emissions, such as pilot plants, portable

facilities, which will be relocated away

from the nonattainment area after a short period of time, and emissions re- sulting from the construction phase of a new, source, -from the erdission offset

and net air quality benefit require:

ments (Conditions 3 and 4 of Section

IV of'the Ruling). The LAER requirement and other conditions of the

Ruling are still applicable to such sources. A similar exemption would

also be available to resource recoverr facilities utilizing municipal solid

waste (including refuse derived fuel

and/or sewage sludge from municipal

sources) to provide more than 50% of

the heat input for generating steam or"

electricity. In, addition, the use of

refuse derived -fuel in an existing

boiler would not qualify as a modification and would not be subjict'to the

Interpretative Ruling.

The exemption for temporary emissions does not change the intent of the

original Ruling and is consistent with

interpretations issued under the original Ruling. Emissions occurring for

less than two years within the nonattainment area would generally be con-.

sidered temporary. Emissions for

longer periods of time might also be

considered to be temporary (such as the emissions related to the construction of power plants and other large

sources), but should be'dealt with on a. case-bY-ycaie basis. -

Again, it should be noted that any source which is exempted from the

offset requirements will use up part of

the State's allocation for growth at

the time such source begins operation.

Thus, a State plan may need to re- quire additional control of existing sources (or more rapid compliance) in

order to. achieve the "annual reason- able further .progress toward attainment" required by the Act.

4. Geographic applicability to major

VOC sources One of the issues not totally resolved in the 'December 21,

1976, Ruling was, the 'letermination of

the areas where offsets for sources of

volatile organic compounds (VOC)

would be required, especially since atmospheric simulation modeliig techniques are generally not available to

estimate the air quality impact. on ap

individual VOC source. For rural VOC

sources, as for other sources, offsets

and other conditions of the Ruling

'were required for major sources that

would cause or contribute to a viola-'

tion of an NAAQS. Any source locatIng within d major metropolitan area (over 200,000 population). where the

standard was violated was assumed to cause or contribute to the violation. 41

FR 55527 col. 1. However, no firm

rules were adopted for application of

the Ruling to sources outside of such

areas, or for determining where offsets

could be found for proposed sourceS'in

or out of such areas. Reviewing au- thorities were left with discretion to

determine, on .a case-by-case basis,

whether any particular proposed rural source would cause or contribute to a

violation, or whether any particular

emission reduction would constitute an acceptable offset for a proposed source.

The Ruling did refer to a discussion

of the rural oxidant problem pub-

" lished in the same FDERAL RtornS

issue as the Ruling. 41 FR 55528 col 2,

55559-60. This discussion suggested

tentative reasons why proposed VOC sources outside of major metropolitan

areas should not need offsets, and why sources within such areas should

obtain offsets from sources that are also vithin such areas, however, since

that discussion was contained in an ad- vance notice of proposed rulemaking,

It was intended only to inform, not to

govern individual permit decisions.

On the basis of comments received

responding to the, advance notice of

.proposed rulemaking, EPA has devel-

-oped the proposal for rural VOC sources stated in the Ruling. Comments are invited on this proposal.

Until final rulemaking on this issue is

completed, this proposal represents

EPA's interim policy for determining

under this Ruling whether a proposed

rural VOC source would cause or con- tribute to a violation or whether an

emission reduction would constitute an acceptable offset for a proposed

rural source. Under the proposal, offsets will generally be required for VOC sources located 'in or affecting any area that Is

designated as rionattainment for oxidant or is otherwise shown to be ex- ceeding the NAAQS for oxidant.

There are many situations where a

source locating outside a nonattainment area may adversely impact upon a nearby locality where the standard

is violated. Since photochemical dispersion models are not available to es- timate the air quality impact of a single VOC source, it is necessary to use a general approximation of the

area around a nonattainment monitor

where emissions would reasonably be

expected to have an impact on a meas- ured violation. Unless specific data are available to define the impact of a VOC source, offsets, should be re- quired for VOC sources locating

FEDERAl RE-GISTERVOL44rNO. 11-TUESDAY', JANUARY 16, 1979
RULES AND REGULATIONS

within 36 hours traveltime (under

wind conditions associated with oxidant concentrations exceeding 'the

NAAQS for oxidants) of a nonattainment monitor. This distance ig based on evidence which suggests that precursor emissions which occur within

36 hours traveltime of each other interact to form oxidant.

In addition, the changes to the

Ruling provide the owner of a proposed VOC source an opportunity to

show that the emissions from the proposed source would have "virtually no

effect on any area that exceeds the oxidant standard" and therefore the

source would be exempt from the

Ruling. This exemption is only intended for remote rural sources whose

emissions would be very unlikely to interact with other significant sources of

VOC or NO, to form additional oxidant. Such- a demonstration might in-

-elude a showing that the proposed

source would. be located in an area that is not subject to multi-day stagnation conditions and that VOC and NO,

emissions within the same AQCR or

within 36 hours traveltime are minimal. Suggestions from the public are

invited on establishing specific-criteria

or cut-offs to assist applicants in

making such a demonstration.

Generally, offsets will be acceptable

if obtained from within the same

AQCR as the new source or from

other nearby areas which may be con- tributing to the oxidant problem affected by the prol~osed new source. As

with other pollutants, it is desirable to

obtain offsets from sources located as

close to the proposed new source site

as possible. If the proposed offsets

would be from sources located at

greater. distances from the new source,

the reviewing authority should increase the ratio of the required offsets

and require a showing that nearby offsets were investigated and reasonable

alternatives were not available.

5. Changes to Section IV, Condition

2. In the original Ruling, the reviewing

authority was required to examine all

enforcement orders for other sources

owned by the applicant in the AQCR

to determine if more expeditious compliance was practical. Some commenters pointed out that in interstate

AQCR's, the reviewing authority has

no control over compliance schedules or enforcement orders in the adjoining

State(s). Also, in a very similar provision set forth in Section 173(3) of the

Act, the demonstration concerning

compliance by other sources owned by

the applicant is specified on a state

rather than an AQCR basis. Consequently, the Ruling has been changed

to be consistent with the provisions in

the 1977 Act Amendments. The wording of Condition 2 has also have been

changed in accordance with Section

173(3) to clarify the various forms of

ownership and control covered by Condition 2. Condition 2 is intended to be

applied in a broad sense so as to cover

subsidiaries controlled by the applicant and to all facilities owned by any

individual business entity that controls a joint enterprise applicant.

For the time being, determinations

of what entities control, are controlled

by, or are under common control with,

the applicant will be made on a case- by-case basis. 1owever. to save time

and resources of both applicants and

decisionmakers, EPA proposes to establish criteria for determining issues

of control For example, any person

with a ten percent voting interest in

an entity, or with the power to make

or veto decisions by the entity to Implement major emission-control measures, might be deemed to control the

entity. Such criteria would also be

used for determining whether facilities are part of the same source, under

Section II.A.1. of this Ruling. Since

the definition of "source" Is the same under the Agency's PSD regulations as

well as this Ruling, the criteria for determining whether facilities are part

of the same source are expected to be

Identical. Comments and suggestions

are invited on such criteria for determining control.

6. Change to Condition 4. Condition

4 of the original Ruling required'that

an emission offset must also result in a

"net air quality benefit" in the area

affected by the new source. In response to questions as to whether an

air quality analysis is necessary for

VOC and NO, emissions pursuant to

the "net air quality benefit" requirement, the Ruling is clarified to indicate that fulfillment of the emission

offset requirements of Condition 3 will

be adequate to meet the requirements

of Condition 4 for these pollutants.

It should be noted that the "net air

quality benefit" test need not be interpreted'as requiring an air quality Improvement at every location affected

by the source. This condition is intended to insure that the sources involved in an offset situation impact air

quality in the same general area, but

the net air quality benefit test should

be made "on balance" for the area affected by the new source. 7. Elimination of Condition S. Condition 5 of the original Ruling con- tained a prohibition on major source

growth after January 1, 1979, in areas

where EPA had called for a SIP revision, unless EPA had approved or promulgated the required SIP revision by

that date. EPA had issued 221 notices

of required SIP revisions In mid-1976.

One of the principal purposes of the

* nonattainment provisions In the 1977

Amendments, however, was to revise

this administrative approach. Under

the Act, designation of an area as non- attainment constitutes, in effect, a call

for a SIP revision. The required contents of the revision and the deadline

for submittal are specified in the Act.

The Act's revision requirements differ

from those established in the Agencys

1976 calls for revisions. Furthermore,

the limitation on growth that wflI

result from a failure of the State to

comply Is set forth in Section

110(a)(2)(I) of the Act. The Administrator has, therefore, concluded that

the 1976 calls for SIP revisions for

nonattainment areas were superseded by the 1977 Amendments, as was the

limitation on growth provided in Condition 5. Therefore, Condition 5 has

been deleted from this Ruling."

8. Baseline where there is no meaningful SIP requirement. Section IV.C.2

had previously provided that where

the particulate emission limit in the

SIP for fuel combustion exceeded the

uncontrolled emission rate for the fuel

being burned (as when a State has a single emission limit for all fuels),

emission offset credit would be allowed only for control below the appropriate uncontrolled emission

factor. Since this situation may occur for sources other than fuel combustion sources, this provision has been

made more general and incorporated

in Section IV.C.1.

9. Fuel conversion. The Interpretative Ruling as originally; published,

provided that the use of an alternative

fuel would not be considered a modificatlofi subject to the Ruling if, prior to

December 21. 1976, the sources could

accommodate such alternative fuel. In an associated Advance Notice of Proposed Rulemaking published on, December 21, 1976 (41 FR 55558), com- ments were solicited on whether this

exemption should apply to sources affecting nonattainment areas. In the

Administrator's judgment, the most

appropriate way to handle fuel conver- sions where no major physical- modification takes place is through the SIP

revision process. In particular, new

Section 124 of the Clean Air Act re- quires States to review their plans to

ensure that they will be adequate to

attain and maintain the national am- bient air quality standards in light of

known or anticipated fuel conversionsFurthermore, under Section 172(b)(4),

emissions from fuel conversions must

be considered in determining periodically whether the plan is adequate to assure attainment by the required date. Therefore, the Ruling still

exempts a fuel conversion where the source Is designed to accommodate the

alternative fuel.

'Since there Is no question but that Section 11O(a)(2XI) was intended to supersede

Condition 5. and since in, any event recisions

of the 1976 calls for SIP revisions eliminates

any effect of Condition 5, EPA has determined that notice and public procedure on the elimination of Condition 5 are unneces- sary.

FEDERAL REGISTER, VOL 44, NO. 11-TUESDAY, JANUARY 16, 1979

3279
RULES, AND REGULATIONS

For purposes of controls ta protect

air quality in clean areas, and controls

that. States must. adopt in nonattainment areas, Congress. provided that "modification" should not include a

conversion to an alternative fuel by reason of an order under the Energy'

Supply and Environmental Coordination Act of 1974. or a natural gas cur- tailment plan pursuant, to the Federal

Power Act. see Sections [11(a) (4) .and

(8), 169(2)(C), and 171)4, 42 U.S.C7411(a) (4), and (8), 7479(2)(C), and

7501(4). EPA therefore has decided

that it would be consistent. with Congressional intent, to exclude such con- versions from the definition of "modification" in this Ruling as well.

To further conform. the Ruling to:

the Act and avoid confusion, ERPA has

also qualified the definition of modification by adding the provision that a switch to an alternative fuel by reason..

of 'an order or rule under Section 125

of the Act (41 U.SC. 7425). is not. a * modification. 9 -

In nonattainment areas, States must.

-deal with increased emissions. fr6m,

fuel conversions in their 1979. revisions. For conversions that are not

major modifications as defined in the

Ruling and for purposes of Part D, the

States may deal with increased emissions by any means they choose. A

State may include in Its control strategy demonstration an assumption that. "all sources which couldf, reasonably

convert to, a. dirtier fuel will do so. Alternatively, the State may require fuel

conversions which are exempt, as a modification urnder the Ruling to

obtain a permit prior to converting to an alternate fuel, Such, conversions

would-then be required to obtain offsets on' a case-by-case basis or would be

reviewed against the allowance forgrowth provided for in the SIP under

Section 172(b)(5). Although conver- sions that are not major modifications

need not satisfy all of the conditions

of Section 173, in the. interest of simplicity the State may choose to- deal

with the increased emissions by

making the conversions subject to.

these conditions. . 10. Banking. One of the issues that was frequently raised in comments on the Ruling involved' "banking" of

emission reductions to allow for future new source growth. Banking was re- stricted by EPA because it was felt

that banking would create a difficult

accounting problem, probablyr would

not. result in any environmental benefit, and tended to dilute the potential

benefits of the offset policy. However,

the advocates of banking felt that if

the offsets obtained in a given situation were considerably greater than

the new source's emissions, some of

'EPA has determined -that ,notice and,

public procedure prior to making this minor

conforming amendment are unnecessary.

the "excess" emission reductions

should be "bankable" to allow for

future growth. The* general argument

was that a "na-banking" rule would

have an adverse air quality impact (at

least in the short-term) by discouraging early clean-up of sources. For ex- ample, if a source were undergoing: a modernization program, and retiring a. number of obsolete facilities, a "nobanking" provision, might encourage

the owner to delay retirement of sev- eral of the facilities so that they could

be used in future offset situations.

.Furthermore, the Clean Air, Act

Amendments of 1977 modified this re- striction by allowing States to incorporate provisionsfor growgth in SIP plans

for nonattainment areas. Under Section 173(1) of the-Act, emission reductions are compared to a "reasonable"

further progress" goal, and reductions:

beyond the minimum. requirement

may be used to offset future growth.

In essence, the State becomes- the

banker and must, decide how to allocate the banked emissions. Therefore.

the restriction on banking in. the

Ruling has been removed for offsets

approved after the date of publication

of these changes in. the FEDERAL REGIST aL States which wish. to allow banking may do so, as long as it is recognized that there will be chanies in the

basis' for approval -of major new sourcesi after June 30, 1979,. " A reviewing authority may allow,

banked offsetsto be used under the

preconstruction review" program re- quired by Part D, as long as these'

banked emissions are identified and

accounted for in the SIP control strategy . So- long as the pollution control.

requirements under the Act are satisfied; the State is free'to govern owner- ship,, use, sale, and commercial transactions in banked emission offsets as'-it sees fit. A reviewing authority may not

approve the construction of a source using banked offsets if the new/source

would interfere with. the SIP control

strategy or if such use would violate

any othir condition set forth for use of offsets. To preserve- banked emission reductions, the reviewing authority must identify- them in either a SIP

revision or a permit. Furthermore, the

reviewing authority should provide a. registry to identify the person, private

entity; or governmental authority that

has the right to use or allocate the:

banked emission reductions, and to

,record any transfers of, or liens on,

this right that the reviewing authoritymay allow. Additional, comments on how banking should be implemented

are solicited

1-1. Source shutdown and curtailments. A sub-issue related to banking

is. the credit which may be taken for source shutdowns or curtailments oc-• curring.prior. to the date the new- source application is filed Footnote 7

of the original Ruling had restricted

offset, credit to situations where the,

shutdown or curtailment occurred as a result of an enforcement action and

the new source was clearly a replacement. The Ruling has been changed ta

eliminate the requirement that a prior.

shutdown be related to an enforcement action in order to be used as,

offset credit. HoWever, toensure that an offset relates to the current air

quality problem, It Is necessary to put some limit on the credit that can be

taken for shutdowns that have taken

place in the past. Therefore, the

Ruling requires that a source shutdown or curtailment must have oc- curred after the date of enactment of

the 1977 Amendments or less than one ,year prior to the date the new source permit application Is filed, whichever

is earlier, in order to be acdeptable as offset credit. Such credits may be

banked, subject to the limitations outlined above. 12. Equivalency of State regulations.

Some States have, or may wish to develop, offset regulations which differ

in some of the details from the EPA

Interpretative Ruling. EPA Intends to

approve such regulations if the State

submits a demonstration that the

overall impact on emissions In the areas _where the regulation will apply

is at least as stringent as the EPA Interpretative- Ruling. At a minimum,

the State regulations must contain the

four major conditions specified. in Section IV-. These constraints do not,

apply to offset regulations applying

after June 30. 1979, in accordance with

the requirements of Section 173(1)(A):

separate guidance will be issued 'for

meeting these requirements. Nor does

this apply to general waivers of the re- quirements of this Ruling, under Section 129(a)(2) of the Clean Air Act

Amendments of 1977 (note under 42

U.S.C. §7502).

13. Technology transfer in deterniting LAER. It has been EPA's interpretation that in determining the lowest

achievable emission rate (LAER), the

reviewing authority may consider

transfer of technology from one source type. to another where such

technology is applicable. Although

Congress changed the definition of

LAER. EPA continues to believes that

technology transfer may be consldeied

In determining LAER. Congress intended to require new sources in non- attainment areas to apply the "maxi- mum feasible pollution control," even if this involves "technology-forcing."t'

Therefore, the Agency does not, feel

"'See report to accompany HR. 6101, H.R.

Rep. No. 95-294, 95th Congress. First Session 215 (May 12. 1977). Furthermore, technology transfer and technology forcing are accepted concepts In determining both new source performance standards and reason- ably available control technology under the

Act.

FEDERAL REGISTER. VOL 44, NO- Il-TUESDAY, JANUARY- 16, 1979

3280
RULES AND REGULATIONS

that the phrase "achieved in practice

by such class or category of source"

(under Section 171(3)) prbhibits technology transfers, from other types of sources. If pollution-control technology can feasibly be transferred from one type of source to anotier, then for

purposes of determining LAER, EPA

will consider both types of sourre to

be in the same "class or category of

source." Comments on this interpretation and whether it is necessary or appropriate to revise the regulatory definition are solicited.

14. Fugitive dust As noted above, an Advance Notice of Proposed Rulemakng was published on December 21,

1976 (41 FR 55558) which dealt with

several issues closely related to the Interpretative Ruling published on the same date. Comments were urged to

be submitted on both notices in a con- solidated fashion.

One of the issues raised related. to

how fugitive dust, particularly rural

fugitive dust which May significantly

contribute to violations of the NAAQS

for particulate matter, should be ac- counted for in perforiing new source reviews. This issue was also raised, in

conjunction with EPA's proposed PSD

regulations. On the basis of comments

received responding to the Advance

Notice of Proposed Rulemaking, EPA

has developed the proposal for fugitive dust associated with major sources stated in this Ruling. Comments are

invited on this proposal. Until the

final rulemaking on this issue is com- pleted, this proposal represents EPA'sinterim policy for dealing with fugitive

dust associated with a major source. Under the proposal, fugitive dust associated with major sources locating-in

clean portions of nonattainment, areas or in attainment or unclassified areas would be subject only to applicable re- quirements for preventing significant

deterioration of air quality (see 40

CFR 52.21). Under the PSD regulations, fugitive dust associated with a major source is subject to the best

available control technology requirements, but is exempt from a review

against the NAAQS and PSD increments. Fugitive dust associated with

major sources locating in an actual

nonattainment area." (and which is

not exempt as a temporary source)

would be subject to. Conditions 1, 2

and 3 of Section IV-4. of this Ruling.

15. Secondary emissions.'The original Ruling .,required that if a major new source would result in secondary

"Under existing EPA policy, a rural area that exceeds the NAAQS for particulate

matter primarily because of. fugitive dust

emissions is not necessarily considered as nonattainment for purposes of SIP development and new source review (see "Fugitive

Dust Policy: SIP's and New Source Review,"

available from EPA, Air Pollution Technical

Information center, MD-35, Research Triangle Park, N.C. 27711.)

emissions which could be accurately

quantified, such emissions should also

be dealt with under the Ruling (see

footnote 3 at 41 FR 55528). Questions

have arisen on the Agency's intent regarding secondary emissions, and further clarification is provided In the

changes published today. A more specific definition is added as follows:

"Secondary emissions" means emissions

from new or existing sources which occur as a result of the construction and/or oper- ation of a major source or major modification. but do not come from the source Itself.

For purposes of this ruling, secondary emissions must be specific and well defined.

must be quantifiable, and must Impact the same general nonattainment area as the

major source which causes the secondary emissions. Secondary emissions may include.

but are not limited to: a. Emissions from ships or trains coming

to or from a refinery, terminal facility. etc.

b. Emissions from off-site support facillties which would be constructed or would

otherwise increase emissions as a result of

the construction of a major source.

The Ruling indicates that secondary

emissions need not be considered in

determining whether the emission

rates in Section 31.C. would be exceeded. However, if a source is subject to

the Ruling on the basis of the direct

emissions'fro&ii the source, the applicable conditions of this Ruling must also

be met for secondary emissions.

The requirement that secondary

emissions must Impact the same general nonattainment area as the major source which causes the secondary

emission means different areas for different pollutants. For all pollutants,

however, the test is whether, In the

actual area of nonattainment, there is

any overlap between the areas of

impact of the direct emissions and the

indirect emissions. This is a pollutantby-pollutant analysis. In other words,

the conditions of the Ruling must be

met for secondary emission of a particular pollutant only if the major source is subject to the Ruling conditions on the basis of direct emission of that

same pollutant.

-For nitrogen oxides, particulates,

carbon monoxide, and SO2, the areas of impact can be determined by modeling. If the source and the permitting

authority disagree as to whether the

secondary emissions impact the same area as the direct emissions, the source has the burden of proving It is

correct by performing the necessary

modeling. For VOC emissions, the areas of impact should be consistent

with the treatment given to the direct

emissions (see previous discussion on

VOC sources). Under the proposal for

VOC sources, the area'of impact would

be the areas to which the pollutants

could be transported in 36 hours from

the sources, assuming wind conditions

associated with oxidant concentrations

exceeding the NAAQS for oxidants

(unless more specific data on source Impacts are available)

A corollary of this aspect of the definition is that secondary emissions

must be traceable to particular facilities. If this were not true, it would be

impossible to determine the area of

Impact of the indirect emissions. Thus,

for example, a new steel plant necessitates more electric power being produced; but. If the power is supplied

from a grid covering many States, the

emissions could not be'quantified and

would not Impact the same general

nonattainment area. On the other

hand, Increased particulate emissions

from a coke plant near the same steel

plant would be considered to be seeon'dary emissions If certain conditions

were met. Those conditions would be

that the emissions came from an existing coke plant which was not previously subject to the Ruling for those

emissions, the coke plait emissions

were Increased above historical levels

as a result of additional demand from

the steel plant, and the coke plant was

situated near the steel plant. The coke

plant emissions are specific, quantifiable, and impact the same general

nonattainment area as the direct emissions.

Since the 1976 Ruling invites public

comment on the treatment of secondary emissions, and since this amendment to the Ruling only clarifies the

language without altering the substance, EPA has determined that additional notice and public procedure

thereon are unnecessary.

16. Applicability of RuZing to new or

revised NAAQS. While this Ruling

technically does not apply to new

sources of lead emissions which would

cause or contribute to a violation the

newly established NAAQS for lead (43

FR 46246) during the period before

the revised lead SIP's are submitted

and approved, It is clear that such sources will be required to abate their

emissions after construction, if necessary to attain and maintain the lead

standard. In addition, excessive lead

emissions from a new source could

result in health problems. Accordingly, States are urged to use their available authorities to review new sources of lead to protect against violations of

the lead standard. The Ruling will,

continue to apply to VOC sources

which cause or contribute to violations

of the NAAQS for photochemical oxidant '(ozone) which will be revised

shortly (see proposal of June 28. 1978,

43 FR 26962). Specific proposals for

dealing with mew sources of pollutants

subject to new or revised NAAQS in

the context of the revised SIP's will be

included in upcoming changes to 40

CFR 51.18.

FEDERAL REGISTER, VOL 44, NO. 1--TUESDAY, JANUARY 16, 1979

3281
3282

SEVERABILITY

EPA intends that the changes made

by this notice be treated as severable,

If a court should rule that one or more

of the changes is not valid, EPA intends that the -other changes remain

in effect and that the provisions of the

December 1976 Ruling that would

have been amended by the invalid

changes be in effect, unless th6 court

rules that some other, disposition is legally required.

The Agency finds good cause to

make the changes announced today effective for permit applications filed on

or after today, because the normal

processing time between permit application and source construction provides adequate lead time for compliance with new requirements in the

Ruling,

AUTHORITY'

The Administrator has determined

that this rulemaking is nationally applicable and is based on determinations of nationwide scope and effect.

This rulemaking is issued under Section 129(a) of the Clean Air Act

Amendments of 1977, Pub. L. 95-95, 91

Stat. 745, August 7, 1977 (note under

42 U.S.C. 7502) and Section 301 of the

Clean Air Act (42 U.S.C. 7601).

Dated: December 29, 1978.

DOUGLAS M. COSTLE,

Administrator.

The Interpretative Ruling published

by EPA on December 21, 1976, at 41

FR 55524, is revised and codified as a

new Appendix S to 40 CFR Part 51. In

the footnote to 40 CFR 51.18 "41 FR

55528, December 21, 1976," is deleted

and "Appendix S" is inserted in its

place. As revised Appendix S reads as

follows:

APPENDIX S-EMISSION OFFSET

INTERPRETATIVE RULING

I. INTRODUCTION

This appendix sets-forth EPA's Interpretative Ruling on the preconstruction review

requirements for stationary sources of-air

pollution (not including indirect sources)

under 40 CFR 51.18 and Section 129 of the

Clean Air Act Amendments of 1977, Pub. L.

95-95, (note under 42 U.S.C. § 7502). A major new source or modification which would

contribute to a violation of a national ambient air quality standard (NAAQS) may be

allowed to construct only if the stringent.

conditions set forth below are met These

conditions are designed to insure that the new source's emissions will be controlled to

the greatest degree possible; that more than

equivalent offsetting emission reductions

("emission offsets") will be obtained from

existing sources; and that there.will be prog- ress toward achievement of the NAAQS.

For each area designated as exceeding an NAAQS (nonattainment area) -under 40

CFR 81.300 et seq., this Interpretative

Ruling will be superseded after June 30,

1979-(a) by preconstruction review provisions of the revised SIP, if the SIP meets

RULES AND REGULATIONS

the requirements of Part D, Title 1, of the

Act; or (b) by a prohibition on construction

under the applicable SIP and Section

110(a)(2)(I) of the Act, if the SIP does not

meet the requirements of Part D. The

Ruling will remain in effect to the extent

not superseded under the Act. This prohibi- tion on major new source construction does

not apply to a source whose permit to con- struct was applied for during a period when

the SIP was in compliance with Part D, or before the deadline for having a revised SIP

in effect that satisfies Part D.

IL INITIAL SCREENING ANAYLSES AND

'DETERMINATION OF APPLICABLE REQUIREMENTS

A. Definitions. For purposes of this

R ling.

1. "Source" Means any structure, building, facility, equipment, installation or operation

(or combination thereof) which is located on one or more contiguous or adjacent properties and which Is owned or operated by the same person (or by persons under common control).

2. "Facility" means an Identifiable piece or process equipment. A stationary source is

composed of one or more pollutant-emitting

facilities.

. 3., "Potential" to emit means the maximium capacity to emit a pollutant absent air

pollution control equipment. "Air pollution

control equipment" includes control equilpment which is not, aside from air pollution

control laws and regulations, vital to production of the normal product of the source or to Its normal operation. Annual potential

shall be based on the maximum annual

rated capacity of the source, unless the source is subject to enforceable permit con- ditions which limit the operating rate or hours of operation, or both. Enforceable

permit conditions on the type or amount of

materials combusted or processed may be

used in determining the potential emission

rate of a source. 4. "Major source" means any source for

which the potential emission rate is equal to or greater than 100 tons per year of any of

the following pollutants: particulate matter,

sulfur oxides, nitrogen oxides, volatile or- ganic compounds, or carbon monoxide.

5. "Major modification" means any physical change in, change in the method of operation of, or addition to a stationary source which increases the potential emission rate

of any air pollutant specified in Section A.4.

above (including. any not previously emitted

and taking into account all accumulated In- creases in -potential emissions occurring at -

the source since February 16, 1979, or since

the time of the last construction approval

issued for the source pursuant to this

Ruling, whichever time is more recent, and

regardless .'of any emission reductions

achieved ele~where in the source) -by 100

tons per year or more. (I) A physical change shall not include,

routine maintenance, repair, and replacement.

(ii) A change in the method of operation,

unless previously limited by enforceable

permit conditions, shall not include:

(a) An increase in the production rate, if

such increase does not exceed the operating

design capacity of the source; -

(b) An increase in the hours of operation; (c) Use of an alternative, fuelsor raw material, if on December 21, 1976, the source was capable of accommodating such fuel or rna- terial;

7 (d) Use of an alternative fuel or raW mate.

rial by reason of an order in effect under

Sections 2 (a) and (b) of the Energy Supply

and Environmental Coordination Act of

1974 (or any superseding legislatior), or by

reason of a'natural gas curtailment plan In

effect pursuant to the Federal Power Act:

(e) Use of an alternative fuel by reason of

an order or rule under Section 125 of the

Act;

(f) Change in ownership of a source, or

(g) Use of refuse derived fuel generated

from municipal solid waste.

6. "Allowable emissions" means the emig--

sion rate calculated using the maximum

rated capacity of the source'(unless the source is subject to enforceable permit cow

ditions which limit operating rate, or hours

of operation, or both) and the most stringent of the following:

(I) Applicable new source performance

standards or standards for hazardous pollutants set forth in 40 CFR Part 60 or 61:

(Ii) Applicable SIP erhission limitation: or

(i1) The emission rate specified as an en.

forceable permit condition.

7. "Lowest achievable emission rate"

means, for any source, that rate of omis.

sions based on the following, whichever is

more stringent:

(i) The most stringent emission limitation

which is contained in the implementation

plan of any State for such class or category

of source, unless the owner or operator of

the proposed source demonstrates that such

limitations are not achievable; or - (i) The most stringent emission limitation

which Is achieved in practice by such class

or category of source. ' This term, applied to a modification, means the lowest achievable emission rate

for the new or modified facilities within the source. In no event shall the application' of

this term permit a propos6d new or modifled facility\ to emit any pollutant in excess

of the amount allowable under applicable new source standards of performance,

8. "Fugitive dust" means particulate emissions composed of soil which Is uncontamin.

ated by pollutants resulting from industrial

activity. Fugitive dust may Include emis.

sions from haul roads, wind erosion of ex- posed soil surfaces and soil storage piles and

other activities in which soil is either re- moved, stored, transported, or redistributed,

9. "Reconstruction" will be presumed to

have taken-place where -the fixed capital

cost of the new components exceed 50 per.

cent of the fixed capital cost of a comparable entirely new facility. However, any final

decision as to whether reconstruction lias

occurred shall be made in accordance with

the pr~visions of 40 CFR 60.15(f)()-(3). A

reconstructed facility will be treated as a new facility for purposes of this Ruling,

except that use of an alternative fuel or raw material by reason of an order in effect

under Sections 2 (a) and (b) of the Energy

Supply and Environmental Coordination

Act of 1974 (or any superseding legislation),

by reason of a natural gas curtailment plan

in effect pursuant to the Federal Power Act, or by reason of an order or rule under Section 125 of the Act, shall not be considered

reconstruction.

In determining LAER for a reconstructed

source, the provisions of 40 CFR 60.15(f)(4)

shall be taken Into account in assessing

whether i new source performance standard

-is applicable to such source.

FEDERAL REGISTER, VOL 44, NO. I1-TUESDAY, JANUARY 16, 1979
RULES AND REGULATIONS

10. "Fixed capital cost" means the capital

needed to provide all the depreciable com- ponents.

11."Secondary emissions" means emissions

from new or existing sources which occur as a result of the construction and/or operation of a major source or major modification, but do not come from the source itself.

For purposes of this Ruling, secondary

emissions must be specific and well defined.

must be quantifiable, and must impact the

-same general nonattainment area as the

major source which causes the secondary

emission. Secondary emissions may include,

but are not limited to: a. Emissions from ships or trains coming

to or from a refinery, terminal facility, etc.

b. Emissions from off-site support facilities which would be constructed or would

otherwise increase emissions as a result of

the construction of a major source. 12. "Resource recovery facility" means any facility at which solid waste is processed

for the purpose of extracting, converting to

energy, or otherwise separating and preparing solid waste foi reuse. Energy conversion

facilities must utilize solid waste to provide

more than 50% of the heat input to be con- sidered a resource recovery facility under

this Ruling.

B. Review of all sources for emission limitation compliance. The reviewing authority

must examine each proposed major new source and proposed major modification-' to

determine if such a source will meet all applicable emission requirements in the SIP,

any applicable new source performance

standard in 40 CFR Part 60, or any national

emission standard for hazardous air pollutants in 40 CFR Part 61. If the reviewing au- thority determines that the proposed major new source cannot meet the applicable emission requirements, the permit to construct

must be denied.

C. Reviiw of specifted sources for air quality impact In addition, for each proposed

major new source with allowable emissions

exceeding 50 tons per year, 1000 pounds per

day, or 100 pounds-per hour, whichever is

most restrictive, the reviewing authority

must determine if the source will cause or contribute to a violation of an NAAQS.2 A

proposed source which would not exceed

any of the above emission levels needs no

further analysis under this ruling, provided

such a source meets the requirements of

Section IL B.

Where a source is constructed or modified

in increments which individually do not

emit more than the above amounts and the

increments have not been offset in accordance with this Ruling, the allowable emissions from all such increments granted a permit to construct after December 21, 1976,

'Hereafter -the term-"source" will be used

to denote both any source and any modification.

'Required only for those pollutants for

which the increased allowable emissions

exceed 50 tons per year, 1000 pounds per

day, or 100 pounds per hour, although the

reviewing authority may address other pollutants if deemed appropriate. The preceding hourly and daily rates shall apply only

with respect to a pollutant for which a na- tional ambient air quality standard, for a

period less than 24-hours or for a 24-hour

period, as appropriate, has been established.

shall be added together and this Ruling

may be applicable when a proposed Increment would cause the sum of the allowable

emissions which have not been offset to

equal or exceed 50 tons per year, 1000

pounds per day, or 100 pounds per hour. If

the total modification would cause or contribute to a violation of the NAAQS. all of

the provisions of this Ruling are then applicable to each Increment. If any of the Increments has not previously been subject to

Condition I of Section IV.A. (requiring the source to meet the lowest achievable emlssion rate), such determination must consid- er the stage of construction of such increment and the'ability of the source to Install

additional control equipment.

For "stable" air pollutants (Le., SO,. particulate matter and CO), the determination

of whether a source will cause or contribute

to a violation of an NAAQS generally

should be made on a case-by-case basis as of

the proposed new source's start-up date

using the source's allowable emissions in an atmospheric simulation model (unless a

source will clearly Impact on a receptor

'which exceeds an NAAQS).

For sources of nitrogen oxides, the initial

determination of whether a source would

cause or contribute to a violation of -the

NAAQS for NO. should be made using an atmospheric simulation model assuming all

the nitric-oxide emitted Is oxidized to NO

by the time the plume reaches ground level.

The initial concentration estimates may be

adjusted If adequate data are available to

account for the expected oxidation rate.

For photochemical oxidants, sources of

volatile organic compounds (VOC) locating

in areas designated under 40 CFR 81.300 eL

seq. as nonattainment, for photochemical ox- idant or otherwise shown to be In violation

of the NAAQS for oxidant shall be subject

to the provisions of Section IV of this.

Ruling. In addition, VOC sources locating

within 36 hours travel time (under wind

conditions associated with concentrations

exceeding the NAAQS for oxidants) of a nonattainment monitor shall also be subject

to Section IV of this Ruling. However, a

VOC source may be exempt from these re- quirements if the source owner can demonstrate that the emiions from the proposed source will have virtually no effect- upon

any area that exceeds the NAA(CS for photochemical oxidant. This exemption is only

intended for remote rural sources- whose

emissions would be very unlikely to interact

with other significant sources of VOC or

NO. to form additional oxidant.3

As noted above, the determination as to

whether a source would cause or contribute

to a violation of an NAAQS should be made as of the new source's start-up date. Therefore, If a designated nonattainment area is

projected to be an attainment ara as part

of an approved SIP control strategy by the

new source start-up date, offsets would not

be required if the new source would not

cause a new violation.

M2. Sources locating in a "clean" portion of a designated nonattainment area. A source locating In a clean portion (or which will be

clean as of the new source start-up date) of a nonattainment area designated pursuant

to Section 107 of the Act may be exempt

from the requirements of this ruling if the

allowable emissions from the source or facility (not including any emission reductions

achieved elsewhere in the source) would not cause the following significance levels to be

exceeded In the actual area of non-attainent (as of the new source start-up date):

Averaglng Time Pollutant Annual 24-Hour 8-Hour 3-Hour 1-Hour

SO, 1.0 pg/m.-- 5 J:/m'.- 25 pgjm. .

T1SP _ ___/m_. 1.0 5 ktglm_.. NO. LO05s'2m ' CO_ .. .... 0.5 MZI=3- -_ 2 mr/=.%.--

No si gnificance Increments are applicable

for hydrocarbofis or photochemical oxidants. If the source would exceed the significance levels in the portion of the designated nonattalnment area where the

NAAQS is actually violated (actual area of

nonattalnment), all requirements of this

Ruling (except Condition 3 of Section IVA.)

would be applicable.

It will be assumed as the starting point in

reviewing a permit application that every locality in a designated nonattainment area will exceed the NAAQS (as of the new

source start-up date), and that any major source locating in the area will significantly

contribute to the violation. However, if the

applicant or any other participant presents

a substantial and relevant argument (including any necessary analysis or other demonstration) why that assumption is- Incorrect.

then the applicability of this Ruling would

be determined by the specific facts in the

case.

E. Sources in attainment or unclassifjable areas. For areas designated under 40 CFR

81.300 eL seq. as attainment or unclassifiable for the NAAQS. sources locating in such areas which would exceed the above signifi- cance increments at any locality that does

not meet the NAAQS are subject to this

Ruling. However, such a source may be

exempted from Condition 3 of Section IVA..

of this Ruling.

F. Fugitfire dust source&.I Fugitive dust as- sociated with major sources locating, in

clean portions of designated nonattainment

areas or in designated attainment or unclassifiable areas shall be subject. only to applicable requirements for preventing significant deterioration, of air quality (see 40 CPR

52.21). Fugitive dust associated with major

sources locating In an actual area. of nonattainment shall be subject to Conditions 1, 2

and 3 of Section IV.A. of this Ruling.

G. Secondary emission& Secondary emissions need not be considered in determining

whether the emission rates.in Section ILC.

above would be exceeded. However, if a

3

The discussion in this paragraph is a proposal, but represents EPA's interim policy

until final rulemaking is complefed.

FEDERAL REGISTER, VOL 44, NO. 11-TUESDAY, JANUARY 16, 1979

3283
3284

source is subject to this Ruling on the basis

of the direct emissions from the source, the

applicable conditions of this Ruling must

also be'met for secondary emissions. However, If the secondary emissions are not under

the control of the applicant, such secondary emissions may be exempt from Conditions 1

and 2 of Section IV. Also, since EPA's au- thority to perform or require Indirect source review relating to mobile sources regulated

under Title II of the Act (motor vehicles

and aircraft) has been restricted by statute, consideration of the indirect impacts of

motor-vehicles and aircraft traffic is not re- quired under this Ruling.

III. SOURCES LOCATING IN "CLEAN AREAS",

BUT WOULDCAUSE A NEw VIOLATION OF AN

NAA QS

If the reviewing authority finds that the

emissions from a proposed source would cause a new violation of an NAAQS, but

would not contribute to an existing violation, approval may be granted only if.both

of the following conditions are met:

Condition 1. The new source is required to

meet a more stringent emission limitation4

and/or the control of existing sources below

allowable levels is required 'so that the source will not cause a violation of any

NAAQS.

Condition 2. The new emission limitations

for the new source as well as any existing sources affected must be enforceable in ac- cordance with the mechanisms set forth in

Section V below.

IV. SOURCES THAT WOULD°CONTRIBUTE TO

CONCENTRATIONS WHICH EXCEED AN NAAQS

A. Conditions for approval If the reviewing authority finds that the emissions from a proposed source would contribute to con- centrations which exceed an NAAQS as of

the source's proposed start-up date, approval may be granted only If the following con- ditions are met:

Condition 1. The new source is required to

meet an emission Limitation which speci- fies the lowest achievable emission rate for

-,such source.*

Condition 2. The applicant must certify

that all existing major sources 5 owned or operated by the applicant (or any entity controlling, controlled by, or under common

'If the reviewing authority determineg that technological or economic limitations on the application'of rmeasurement methodology to a iiarticular class of sources would.

make the imposition of an enforceable nu- merical emission standard infeasible, the au- th6rity may instead prescribe a design, oper- ational or equipment standard. In such

cases, the reviewing authority shall make its

best estimate as to the emission rate that

will be achieved and must specify that rate

In the required submission to EPA (see Part

V). Any permits isstied without an enforceable numerical emission standard must con- tain enforceable conditions which assure that the design characteristics or equipment will be properly maintained (or that the

operational conditions will be properly per- formed) so as to. continuously achieve the

assumed degree of control. Such conditions

shall be enforceable as emission limitations

by private parties under Section 304. Hereafter, the term "emission limitation" shall

also include such design, operational, or equipment standards. ' BSubject to the provisions of section IV.C.

below.

RULES AND REGULATIONS

control with the apppltcant) in the same State as the proposed source are in compli- ance with all applicable emission limitations

and stafidards under the Act (or are in com- pliaice with an expeditious schedule which

is Federally enforceable or contained in a court decree).

.Condition 3. Emission reductions ("off- sets") from existing sources In the area of

the proposed source (whether or not under

the same ownershfp) are required such that

there will be reasonable progress toward at.

taifmnent of the applicable NAAQs. 2 Only intrapollutant emission offsets will be ac- ceptable (e.g., hydrocarbon increases may not be offset against SO2 reductions). Condition 4. The emission offsets will pro- vide a positive net air quality benefit in the

affected area (see Section IV.D. below). 2Atmospheric simulation modeling Is not neces- sary for volatile organic compounds and

NO,. Fulfillment of Condition 3 and Section

IV.D. will Jbe considered adequate to meet

this condition.

B. Exemptions from certain conditions.

The reviewing authority may exe~ipt the

following sources from Condition 1 under

Section III or Conditions 3 and 4. Section

IV.A.: (i) Resource recovery facilities burning municipal solid waste, and (I) sources which must switch fuels due to lack of adequate fuel supplies or where a source Is re- quired to be modified as a result of EPA reg- ulations (e.g., lead-in-fuel requirements) and no exemption from such regulation is available to the source. Such an exemption may be granted only If:

1. The applicant demonstiates that It

made its best efforts to obtain sufficient

emission offsets to comply with Condition 1

under Section M or Conditions 3 and 4

under Section IV.A. and that such efforts were unsuccessful;

2. The applicant has secured all available

emission offsets; and

3. The applicant will continue to seek the

necessary emission offsets and apply them

when they become available.

Such an exemption may result in the need

to revise the SIP to provide additional con- trol of existing sources. Temporary emission sources, such as pilot plants, portable facilities which will be relocated- outside of the nonattainment area after a short period of time, and emissions

resulting from the construction phase of a new source, are exempt from Conditions 3

and 4 of this Section.

C.' Baseline for determining credit for emission and air quality offsets. The baseline for determining credit for emission and

air quality offsets will be the SIP emission

limitations in effect at the time the applica- tion to construct or modify a source is filed.

Thus, credit for emission offset purposes

may be allowable for -existing control that

goes beyond that required by the SIP. Emis- -

sion offsets generally should be made on a pounds per hour basis when all facilities Involved in the emission offset\ calculations are operating at their maximum expected or allowed production rate. The reviewing

agency should specify other averaging peri- ods (e.g., tons per year) in addition to the

pounds per hour basis'f necessary to carry 'out the intent of this Ruling. When offsets

are, calculated on a: tons per year basis, the

baseline emissions for existing sources pro- viding the offsets should be calculated using the actual annual operating hours for the

previous one or two year period (or other

appropriate period if warranted by cyclical

.business conditions). Where the SIP re- quires certain hardware controls In lieu of an emission limitation (e.g., floating roof

tanks for petroleum storage), baseline allowable emissions should be based on actual bp- erating conditions for the previous one or two year period (i.e., actual throughput and

vapor pressures) in conjunction with the re- quired hardware controls.

1. No meaningful or applicable SIP re- quirement Where the applicable SIP does

not contain an emission limitation for a source or source category, the emission

offset baseline Involving such sources shall

be the actual emissions determined In ac- cordance with, the discussion above regard- ing operating conditions,

Where the SIP emission, limit allows

greater emissions than the potential emis

sion rate of the source (as when a State has a single particulate emission limlt for all

fuels), emission offset credit will,be allowed

only for control below the potential emission rate.

'2. Combustion of fuels. Generally, the

emissions for determining emission offset

credit involving an existing fuel combustion source will be the allowable emissions under

the SIP for the type of fuel being burned at

the time the new source application Is filed

(i.e., if the existing source has switched to a different type of fuel at some earlier date,

any resulting emission reductlon (either actual or allowable] shall not be used for

emission offset credit). If the existing source commits to switch to a cleaner fuel at some future date, emission offset credit

based on the allowable emissions for the

fuels involved Is not acceptable unless the

permit is conditioned to require the use of a specified alternative control measure which

would achieve the same degree of emission

reduction should the source switch back to a dirtier fuel at some later date. The reviewing authority should ensure that adequtto

long-term supplies of the new fuel are avail.

able before granting emission offset credit

for fuel switches.

3. Operating hours and source shutdown,

A source may be credited with emiSsion re- ductions achieved by shutting down an ex- isting source or permanently curtailing pro duction or operating hours below basblino

levels (see initial discussion to this Section

C) provided, that the work force to be af.

fected has been notified of the proposed shutdown or curtailment. Emission offsets

that involve reducing operating hours or production or source shutdowns must be legally enforceable, as in the case for all emis

sion offset situations. 6 - 4. Credit for hydrocarbon substitution, As

set forth in the Agency's "Recommended

Policy on Control of Volatile Organic Compounds" (42 FR 35314, July 8, 1977), EPA

has-found that almost all non-methane hy- drocarbons are photochemically reactive

and that low reactivity hydrocarbons even6

Source shutdowns and curtailments In

production or operating hours occurring prior to the date the new source application is filed generally may not be used for emis.

sion offset credit, However, where an applicant can establish that it shut down or cur- tailed production after August 7, 1977, or less than one yehr prior to the date of

permit application, whichever is earlier, and

the proposed new source is a replacement for the shutdown or curtailment, credit for

such shutdown or curtailment may be ap.

plied to offset emissions from the now source.

FEDERAL REGISTER, VOL 44, NO. 1 1-TUESDAY, JANUARY 16, 1979
RULES AND REGULATIONS

tually form as much photochemical oxidant as the highly reactive hydrocarbons. Therefore, no emission offset credit may be allowed for replacing one hydrocarbon com- pound with another of lesser reactivity,

except for those compounds listed in Table

1 of the above policy statement.

5. "Banking" of emission offset credit. For new sources obtaining permits by applying

offsets after January 16,-1979, the reviewing

authority may allow offsets that exceed the

requirements of reasonable progress toward

attainment (Condition 3) to be "banked"

(i.e., saved to provide offsets for a source seeking a permit in the future) for use under this Ruling. Likewise, the reviewing

authority may allow the owner of an existing source that reduces its own emissions to

bank any resulting reductions beyond those

required by the SIP for use under this

-Ruling, even if none of the offsets are applied immediately to anew source permit. A

reviewing authority may allow these banked

offsets to be used under the preconstruction

review program required by Part D, as long

as thee banked emissions are identified and

accounted for in the SIP control strategy. A

reviewing authority may not approve the

construction of a source using banked offsets if the new source would interfere with

the SIP control strategy or if such use would violate any other condition set forth

for use of offsets. To preserve banked offsets, the reviewing authority should identify

them in either a SIP revision or a permit,

and establish rules as to how and when they

may be used.

D. Location of offsetting emissions. In the case of emission offsets involving volatile or- ganic compounds (VOC), the offsets may be

obtained from sources located anywhere in

the broad vicinity of the proposed new source. Generally, offsets will be acceptable

if obtained from within the same AQCR as the new source or from other areas which

may be contributing to the oxidant problem

at the proposed new source location. As

with other pollutants, it is desirable to

obtain offsets from sources located as close

to the proposed new source site as possible..

If -the proposed offsets would be from sources located at greater distances from

the new source, the reviewing authority

should increase the ratio of the required

offsets and require a showing that nearby

offsets were investigated and reasonable alternatives were not available7.3

Offsets for NO. sources may also be obtained within the broad area of nonattainment. This is because areawide oxidant and

NO, levels are generally not as dependent on specific hydrocarbon or NO, source location as they are on overall area emissions.

Since the air quality impact of SO., particulate and carbon monoxide sources is site dependent, simple areawide mass emission offsets are not appropriate. For these pollutants, the reviewing authority should consid- er atmospheric simulation modeling to ensure that the emission offsets provide a positive net air quality benefit. However, to

avoid unnecessary consumption of limited,

costly and time consuming modeling re- sources, in most cases it can be assumed

thit-if the emission offsets are obtained

from an existing source on the same premises or in the immediate vicinity of the new source, and the pollutants disperse from

substantially the same effective stack

height, the air quality test under Condition

4 of Section IV.A. above will be met. Thus,'

when stack emissions are offset. against a

ground level source at the same site, modeling would be required. The reviewing au- thority may perform this analysis or require

the applicant to submit appropriate modeling results.

E. Reasonable progress towards attainmeat. As long as the emission offset Is great- er than one-for-one, and the other criteria

set forth above are met, EPA does not

intend to question a reviewing authority's

judgment as to what constitutes reasonable

progress towards attainment as required

under Condition 3 in Section V.A. above.

This does not apply to "reasonable further

progress" as required by Section 173.

V. ADMUUSTRATIVE PROCEDURES

The necessary emission offsets may be

proposed either by the owner of the proposed source or by the local community or the State. The emission reduction committed to must be enforceable by authorized

State and/or local agencies and under the

Clean Air Act, and must be accomplished by

the new source's start-up date. If emission

reductions are to be obtained in a State that

neighbors the State in which the new source. Is to be located, the emission reductions committed to must be enforceable by

the neighboring State and/or local agencies

and under the Clean Air Act. Where the new facility is a replacement for a facility

that is being shut down in order to provide the necessary offsets, the reviewing authority may allow up to 180 days for shakedown

of the new facility before the existing facility is required to cease operation.

A. Source initiated emission offsets. A source may propose emission offsets which

involve: (1) Reductions from sources con- trolled by the source owner (internal emission offsets); and/or (2) reductions from

neighboring sources (external emission offsets). The source does not have to investigate all possible emission offsets. As long as the emission offsets obtained represent rea- sonable progress toward attainment, they

will be acceptable. It is the reviewing authority's responsibility to assure that the

emission offsets will be as effective as proposed by the source. An Internal emlssion

offset will be considered enforceable if It Is

made a SIP requirement by Inclusion as a condition of the new source permit and the

permit Is forwarded to the appropriate EPA

Regional Office.' An external emission

offset will not be enforceable unless the affected source(s) providing the emission re- ductions is subject to a new SIP requirement to ensure that Its emissions will be re- duced by a specified amount In a specified

time. Thus, If the source(s) providing the

emission reductions does not obtain the nec- essary reduction, It will be in violation of a SIP requirement and subject to enforcement action by EPA. the State and/or private parties.

The form of the SIP revision may be a State or local regulation, operating permit

condition, consent or enforcement order, or any other mechanism available to the State

that is enforceable under the Clean Air Act.

If a SIP revision Is required, the public

hearing on the revision may be substituted

for the normal public comment procedure

required for all major sources under 40 CFR

'The emission offset will, therefore, be en- forceable by EPA under Section 113 as an applicable SIP requirement and will be en- forceable by private parties under Section

304 as an emission limitation.

51.18. The formal publication of the SIP re- vision approval in the FmE-mu. Rzsrza

need not appear before the source may proceed with construction. To minimize uncer- tanity that may be caused by these procedures. EPA will, if requested by the State,

propose a SIP revision for public comment

In the FERA REOrsaT concurrently with

the State public hearing process. Of course,

any major change in the'final permit/SIP

revision submitted by the State may require a reproposal by EPA.

B. State or community initiated emission

offset. A State or community which desires

thbLt a source locate in its area may commit

to reducing emissions from existing sources (including niobile sources) to sufficiently

outweigh the impact of the new source and

thus open the way for the new source. As

with source-initiated emission offsets, the

commitment must be something more than

one-for-one. This commitment must be submitted as a SIP revision by the State.

VL POLICY' WXE ATTAINUMM DAMES HAVE

NOT PASSED

In some cases, the dates for attainment of

primary standards specified in the SIP

under Section 110 have not yet pased due

to a delay In the promulgation of a plan

under this section of the Act. In addition

the Act provides more flexibility with re- spect to the aates for attainment of secondary NAAQS than for primary standards.

Rather than setting specific deadlines, Section 110 requires secondary NAAQS to be

achieved within a "reasonable time". Therefore. In some eases, the date for attainment

of secondary standards specified in the SIP

under Section 110 may also not- yet have

passed. In such cases, a new source which

would cause or contribute to an NAAQS violation may be exempt from the Conditions

of Section IV.A. so long as the new source meets the applicable SIP emission limitations and will not interfere with the attainment date specified in" the SIP under SecUon 110 of the Act.

(See. 129(a), Pub. L. 95-95 (note under 42

U.S.C. 7502), and Sec. 301 of the Clean Air

Act, as amended (42 U.S.C. '7601).)

IFR Doc. 79-1423 Filed 1-15-79; 8:45 am]

[6560-o1-M] -

-EFRL 1031-3]

PART 65-DELAYED COMPLIANCE

ORDERS

Delayed Compliance Order for U.S.

Air Force 928th Tactical Airlift Group

AGENCY: U.S. Environmental Protection Agency.

ACTION: Final Rule.

SUMTMARY: By this rule the Administrat6r of U.S. EPA issues a Delayed

Compliance Order to the U.S. Air

Force 928th Tactical Airlift Group

(Air Force). The Order requires the

Air Force to bring air emissions from

Its building 1 Heating Plant, Chicago,

Illinois, into compliance with certain

regulations contained in the federally

approved Illinols State Implementation Plan (SIP). The Air Force's cornFEDERAL REGISTER, VOL 44, NO. I1-TUESDAY, JANUARY 16, 1979

3285