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6 NYCRR Parts 200, 201 and 231 

Revised Regulatory Impact Statement 

1. STATUTORY AUTHORITY 

 The statutory authority for these regulations is found in the Environmental Conservation Law (ECL) 

Sections 1-0101, 3-0301, 3-0303, 19-0103, 19-0105, 19-0107, 19-0301, 19-0302, 19-0303 and 19-0305, and in 

Sections 160-169 and 171-193 of the Federal Clean Air Act (42 USC Sections 7470-7479; 7501-7515) (Act or 

CAA). 

 Section 1-0101. This Section outlines the policy declaration for the Department of Environmental 

Conservation (Department) regarding the protection of New York State’s environment and natural resources 

including the control of “air pollution, in order to enhance the health, safety and welfare of the people of the 

state and their overall economic and social well being.” 

 Section 1-0101 further requires that it is the policy of the State to coordinate the State’s environmental 

plans, functions, powers and programs with those of the federal government and other regions and manage air 

resources to the end that the State may fulfill its responsibility as trustee of the environment for present and 

future generations. This Section provides that it is the policy of the State to foster, promote, create and maintain 

conditions by which man and nature can thrive in harmony by providing that care is taken for air resources that 

are shared with other states. 

 Section 3-0301. This Section states that it shall be the responsibility of the Department to carry out the 

environmental policy of the State. In furtherance of that mandate, Section 3-0301(1)(a) gives the Commissioner 

authority to “[c]oordinate and develop policies, planning and programs related to the environment of the State 

and regions thereof...” Section 3-0301(1)(b) directs the Commissioner to promote and coordinate management 

of, among other things, air resources “to assure their protection, enhancement, provision, allocation, and 
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balanced utilization consistent with the environmental policy of the State and take into account the cumulative 

impact upon all of such resources in making any determination in connection with any license, order, permit, 

certification or other similar action or promulgating any rule or regulation, standard or criterion.” Pursuant to 

ECL Section 3-0301(1)(i), the Commissioner is charged with promoting and protecting the air resources of New 

York including providing for the prevention and abatement of air pollution. 

 Section 3-0301(2)(a) permits the Commissioner to adopt rules and regulations to carry out the purposes 

and provisions of the ECL. Section 3-0301(2)(g) allows the Commissioner to enter and inspect sources of air 

pollution and to verify compliance. Section 3-0301(2)(m) gives the Commissioner authority to “adopt such 

rules, regulations, and procedures as may be necessary, convenient, or desirable to effectuate the purposes of 

this chapter.” 

 Section 3-0303. This Section requires that the Department formulate and, from time to time, revise a 

statewide environmental plan for the management and protection of the quality of the environment and the 

natural resources of the State. In formulating this plan and any revisions, the Department is required to conduct 

public hearings, cooperate with other departments, agencies and government officials, and any other interested 

parties, and obtain assistance and data as may be necessary from any department, division, board, bureau, 

commission or other agency of the State or political subdivision or any public authority to enable the 

Department to carry out its responsibilities. 

 Section 19-0103. This Section is a declaration of the State’s policy with specific reference to air 

pollution. “It is declared to be the policy of the State of New York to maintain a reasonable degree of purity of 

the air resources of the State . . . and to that end to require the use of all available practical and reasonable 

methods to prevent and control air pollution.” 

 Section 19-0105. This Section sets out the purpose of Article 19 of the ECL, “to safeguard the air 

resources of the State from pollution” consistent with the policy expressed in Section 19-0103 and in 

accordance with other provisions of Article 19. 
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 Section 19-0107. This Section provides definitions to be used in the application of the requirements of 

Article 19 of the ECL. 

Sections 19-0301(1)(a) and (b). These sections state that: 

1. Consistent with the policy of the State as it is declared in Section 19-0103, the Department 

shall have power to: 

a. Formulate, adopt and promulgate, amend and repeal codes and rules and regulations 

for preventing, controlling or prohibiting air pollution in such areas of the State as shall 

or may be affected by air pollution ... 

b. Include in any such codes and rules and regulations provisions establishing areas of the 

State and prescribing for such areas (1) the degree of air pollution or air contamination 

that may be permitted therein, (2) the extent to which air contaminants may be emitted to 

the air by any air contamination source ... 

 Section 19-0301(2)(a) states that it shall be the duty and responsibility of the Department to prepare and 

develop a general comprehensive plan for the control or abatement of existing air pollution and for the control 

or prevention of any new air pollution recognizing various requirements for different areas of the State. 

 Section 19-0301(5) directs the Department to “certify emission reduction credits and establish an 

emission reduction credit registry. Such registry shall identify emission credits that are certified by, or used in, 

New York State. Prior to certifying credits, the Department shall publish notice and provide the opportunity for 

public comment, pursuant to article 70 of this chapter, on the proposed modification of a sources’ permit to 

reflect that emission reductions will be certified as emission reduction credits...” 

 Section 19-0302. This Section states that permit applications, renewals, modifications, suspensions and 

revocations will be governed by rules and regulations adopted by the Department, and that permits issued may 

not include performance, emission or control standards more stringent than any established by the Act or by the 
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United States Environmental Protection Agency (EPA) unless such standards are authorized by rules or 

regulations. 

 Section 19-0303. This Section provides that a code, rule or regulation or any amendment or repeal 

thereof will not be adopted until after a public hearing is held and may not become effective until filed with the 

Secretary of State. The Department may also recognize the difference in the State’s air quality areas in its 

rulemaking. Finally, this section prescribes procedures for adopting any code, rule or regulation which contains 

a requirement that is more stringent than the Act or regulations issued pursuant to the Act by the EPA. 

 Section 19-0305. This Section authorizes the Department to enforce the codes, rules and regulations 

established in accordance with Article 19 of the ECL. 

 Sections 71-2103 and 71-2105 set forth the civil and criminal penalty structures for violations of Article 

19. 

2. LEGISLATIVE OBJECTIVES

The Act requires states to have a preconstruction and operating permit program for new and modified 

major stationary sources. This rulemaking is being undertaken to satisfy New York’s obligations under the Act 

and also to meet the environmental quality objectives of the State. This Section discusses the legislative 

objectives of the rulemaking, including overview of relevant federal and State statutes and regulations. 

Environmental Conservation Law

 Articles 1 and 3, of the ECL, set out the overall State policy goal of reducing air pollution and providing 

clean air for the citizens of New York. They provide general authority to adopt and enforce measures to do so, 

including the regulation of mobile sources of air pollution. In addition to the general powers and duties of the 

Department and Commissioner to prevent and control air pollution found in Articles 1 and 3, Article 19 of the 

ECL was specifically adopted for the purpose of safeguarding the air ‘quality’ of New York from pollution. To 
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facilitate this purpose, the Legislature bestowed specific powers and duties on the Department, including the 

power to formulate, adopt, promulgate, amend and repeal regulations for preventing, controlling and prohibiting 

air pollution. This authority specifically includes promulgating rules and regulations for preventing, controlling 

or prohibiting air pollution in such areas of the State as shall or may be affected by air pollution, and provisions 

establishing areas of the State and prescribing for such areas (1) the degree of air pollution or air contamination 

that may be permitted therein, and (2) the extent to which air contaminants may be emitted to the air by any air 

contamination source. In addition, this authority also includes the preparation of a general comprehensive plan 

for the control or abatement of existing air pollution and for the control or prevention of any new air pollution 

recognizing various requirements for different areas of the State. 

The Federal Clean Air Act 

 In 1970, Congress amended the Act “to provide for a more effective program to improve the quality of 

the Nation’s air.” The statute directed EPA to adopt National Ambient Air Quality Standards (NAAQS) and 

required states to develop implementation plans known as State Implementation Plans (SIPs) which prescribed 

the measures needed to attain the NAAQS. The statute also mandated that states attain the NAAQS by 1975, or 

with certain allowable extensions, by 1977. The 1970 Act amendments mandated that SIPs contain “a 

procedure for review (prior to construction or modification) of the location of any new or modified air pollution 

source.” 

 When it became clear that the goals of the 1970 Act amendments would not be achieved, Congress 

amended the Act in 1977 to provide additional safeguards to protect the nation's air quality. The 1977 

amendments required states to identify areas that did not meet the NAAQS which were then designated as 

“nonattainment” areas. In particular, the 1977 amendments strengthened the Act by (1) expressly creating a 

preconstruction review program for new or modified major sources located in “nonattainment” areas (i.e., areas 

which failed to meet NAAQS) (‘see generally’ 42 USC Sections 7501-7515); and (2) expressly providing a 
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parallel preconstruction review program for new or modified sources located in “attainment” areas (i.e., areas 

which met NAAQS or where there was insufficient information to evaluate whether NAAQS were met) (‘see 

generally id.’ Sections 7470-7492). The two programs are collectively known as New Source Review (NSR). 

The first program is commonly referred to as Nonattainment New Source Review (NNSR), and the second as 

Prevention of Significant Deterioration (PSD). 

 The NNSR program, as contained in the 1977 Act amendments and set forth in Part D of Title 1 of the 

Act, required states to adopt permit programs for the construction, modification and operation of major 

stationary sources in nonattainment areas. Facilities subject to NNSR must apply emission control technologies 

in order to achieve the Lowest Achievable Emission Rate (LAER) for new or modified emission sources, and 

obtain emissions reductions from other sources such that the resulting emissions from the new or modified 

emission source produces no increase in overall regional emissions. Facilities must also demonstrate that any 

other facility owned by the same company is in compliance with the requirements of the Act. 

 Part C of Title 1 of the 1977 Act amendments established the PSD program and sets forth the 

preconstruction review and permitting requirements for stationary sources located in areas that are in attainment 

of the NAAQS. The PSD provisions establish preconstruction permitting requirements for new major 

stationary sources and major modifications at existing stationary sources which require, among other things, 

that (1) the proposed new or modified sources be subject to the Best Available Control Technology (BACT), 

and (2) the source perform ambient air quality analyses to show that it will neither violate NAAQS increments 

nor adversely affect air quality in national parks or other areas that EPA has designated as needing particularly 

high-quality air. 42 USC Section 7475. 

 The 1977 Act amendments directed that, at a minimum, LAER and BACT must be as restrictive as any 

New Source Performance Standard (NSPS) promulgated pursuant to Section 111 of the Act (‘see’ 42 USC 

Section 7479[3] [“In no event shall application of [BACT] result in emissions of any pollutants which will 
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exceed the emissions allowed by any applicable standard established pursuant to [NSPS]”]; ‘see also’ 42 USC 

Section 7501[3] [‘for LAER’]).

 Congress passed the 1990 Act amendments, after nearly a decade of consideration, in recognition of the 

fact that many areas of the country continued to be out of compliance with the NAAQS and that full nationwide 

attainment, particularly with the ozone standard, could not be achieved as expeditiously as originally thought. 

The goal of the 1990 amendments was to set more realistic deadlines that recognized the differences among 

areas while requiring reasonable progress towards attainment. To accomplish this, the 1990 amendments 

divided every state into areas designated as “attainment,” “nonattainment,” or “unclassifiable,” like the 1977 

Act amendments, but went a step further by dividing nonattainment areas into different classifications 

depending on the severity of the problem in each area. Each classification had a separate deadline for 

attainment and incrementally more stringent control requirements for areas with higher nonattainment 

classifications (worse air quality problems). 

 One aspect of the 1990 Act amendments relevant to this rulemaking consisted of more stringent 

permitting requirements for new and modified major stationary sources. Specifically, the 1990 amendments 

mandated that states with areas which had been designated as nonattainment had to revise their SIP to include 

specific measures to ensure attainment and reasonable further progress towards attainment. Among other 

measures, SIPs had to provide for a permit program for new and modified major stationary sources in 

accordance with Section 173 of the Act. Section 110 of the Act already required that SIPs include provisions 

implementing the permitting programs required in Parts C and D of Title 1 of the Act for new and modified 

stationary sources (42 USC Section 7410[a][2][j]). 

 Section 173 of the Act continued to impose special review, permit and emission offset requirements on 

new and modified major stationary sources in nonattainment areas. The 1990 Act amendments imposed the 

additional requirements that a proposed new or modified major stationary source analyze alternative sites, sizes, 

production processes, and control techniques, and the permitting agency make a finding that the benefits of the 
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source outweigh its environmental and social costs. Section 173(c) imposed new restrictions on emission 

offsets, including the requirement that they be obtained from the same nonattainment area, or from a different 

nonattainment area if (1) the other area has an equal or higher nonattainment classification and (2) emissions 

from the other area contribute to the nonattainment problem in the area in which the source is proposed to be 

located. Any emission reductions required by the Act could not be counted for the purpose of establishing 

emission offsets. 

Federal NSR Regulations

 In 1978, EPA promulgated a NSR regulation, followed by multiple sets of regulations including 

regulations applying to PSD and NNSR in states with and without approved SIPs. These regulations are 

substantially similar. This document will collectively refer to the regulations as the NSR regulations. Industry 

groups commenced legal action challenging the 1978 regulations. Following the decision in ‘Alabama Power v 

Costle’, 623 F2d 323 (D.C. Cir. 1979), EPA promulgated a revised NSR regulation in 1980. 

One of the central areas of controversy with the 1980 NSR regulation, which still persists today, 

concerned the definition of the term “modification.” The final 1980 rule defined the term “major modification” 

as follows: “ ‘[m]ajor modification’ means any physical change in or change in the method of operation of a 

major stationary source that would result in a ‘significant net emissions increase’ of any pollutant subject to 

regulation under the Act” (45 Fed Reg 52676 [August 7, 1980] [emphasis added]). The regulation further 

defined “[n]et emissions increase” as “any increase in actual emissions from a particular physical change or 

change in method of operation” that occurred after taking into account, through a process known as “netting,” 

“any other increases and decreases in actual emissions at the source that are contemporaneous with the 

particular change and are otherwise creditable” (‘id’ at 52736). 

The regulation then defined “actual emissions” as follows: “(ii) In general, actual emissions as of a 

particular date shall equal the average rate, in tons per year, at which the unit actually emitted the pollutant 
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during a two-year period which proceeds the particular date and which is representative of normal source 

operation. The Administrator shall allow the use of a different time period upon a determination that it is more 

representative of normal source operation. Actual emissions shall be calculated using the unit's actual operating 

hours, production rates, and types of materials processed, stored, or combusted during the selected time period. 

(iii) The Administrator may presume that source-specific allowable emissions for the unit are equivalent to the 

actual emissions of the unit. (iv) For any emission unit which has not begun normal operations on the particular 

date, actual emissions shall equal the potential to emit of the unit on that date.” 

 Unlike the proposed regulation, the 1980 final rule emphasized “actual emissions.” EPA explained in 

the regulation's preamble that while the initial ‘Alabama Power’ decision had used the phrase “potential to 

emit,” the later opinion used language that, “like the [statutory] definition, suggest[ed] changes in actual 

emissions,” and that EPA had acted consistently (‘id.’ at 52700). Finally, the 1980 regulation provided that “[a] 

physical change or change in the method of operation shall not include ... an increase in the hours of operation 

or in the production rate” (‘id.’ at 52735-36). 

1996 Federal NSR Reform Proposal

In 1996, EPA proposed a NSR rule revision that it described as “the first comprehensive overhaul of the 

program in 15 years” (61 Fed Reg 38250 [July 23, 1996] [1996 Draft Rule]). The proposed changes were 

“intended to reduce costs and regulatory burdens for permit applicants” without sacrificing air quality (‘id.’ at 

38251) EPA estimated that the changes, if finalized, would result in approximately 50 percent fewer sources 

being subject to NSR (‘see id.’ at 38319). 

The 1996 Draft Rule set forth, among other things, the following proposals: 

Emissions calculation methodology. For non-electric utility steam generating units (EUSGUs), states 

were given the choice of either retaining the “actual-to-potential” emissions calculation methodology or 

adopting the “actual-to-future-actual” test. Sources that opted for the latter methodology would have to 
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submit annually to the permitting authority information demonstrating that the physical or operational 

change did not result in an emissions increase (‘see, e.g.’, proposed 40 C.F.R. Section 52.21[b][21][vi]). 

Emissions baseline. All non-EUSGUs would have been allowed to use any 24 consecutive month 

period in the past 10 years when establishing a baseline level for use in calculating emission increases 

from non-routine physical or operational changes. This baseline level had to incorporate current 

emission limitations, whether mandatory or voluntary. 

Plantwide Applicability Limits (PALs). Facility owners could make physical changes or changes in the 

method of operation without undergoing NSR, as long as the facility did not exceed the PAL. The PAL 

was to be set using the facility’s baseline emissions plus an operating margin less than the significant 

level of the pollutant (‘see, e.g.’ proposed 40 CFR Section 52.21[u][3]). 

Clean Unit Exclusion. An emissions unit that had undergone NSR and installed controls considered to 

be BACT or LAER would avoid NSR for any non-routine physical or operational changes that occur 

during a 10-year period in which the exclusion applies. A unit that had not undergone NSR, but that had 

installed controls comparable to BACT or LAER, would merit a five-year exclusion. 

Pollution Control Project (PCP) Exclusion. The Draft Rule proposed establishment of a single 

comprehensive regulatory exclusion for a specific list of pollution control projects, including add-on 

controls, switches to less-polluting fuels, and pollution prevention projects. 

To “provide states with greater flexibility to customize their own regulations implementing the NSR 

program,” the 1996 Draft Rule offered a “menu” approach, pursuant to which States could choose to 

incorporate any -- or none -- of these changes into their respective NSR programs (61 Fed Reg 38251). 
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In 1998, in light of comments received on the 1996 Draft Rule and changed circumstances, EPA issued 

a Notice of Availability (NOA) entitled “Alternatives for New Source Review (NSR) Applicability for Major 

Modifications; Solicitation of Comment” (63 Fed Reg 39857 [July 24, 1998]). EPA used the NOA to present 

its preliminary conclusions on those aspects of the 1996 Draft Rule that dealt with emissions methodology and 

PALs and to request additional comment. 

December 31, 2002 Federal NSR Final Rule

On December 31, 2002, the EPA published a final rule revising the regulations that implement the PSD 

and NNSR provisions of the Act (‘see’ 67 Fed Reg 80185 [2002 Federal NSR Rule]). EPA stated that the rule 

was designed to “reduce burden, maximize operating flexibility, improve environmental quality, provide 

additional certainty, and promote administrative efficiency” (‘id.’ at 80189). 

The 2002 Federal NSR Rule departed from the 1996 Draft Rule and prior NSR rules in several 

significant respects. Under the 1980 rule, sources determined past actual emissions by averaging their annual 

emissions for two years immediately prior to the change, though they could use more representative or source 

specific periods with approval of the permitting agency. Both the 1996 Draft Rule and 2002 Federal NSR Rule 

included provisions for (1) the use of a 10-year look-back period for establishing baseline emissions, (2) the 

extension to sources other than EUSGUs of a past-actual to future-projected-actual test for emissions increase 

calculations, and (3) three permitting provisions that would allow a source to make changes without triggering 

NSR - PALs, the Clean Unit exclusion, and the PCP exclusion. The 1996 Draft Rule, however, proposed a 

menu approach whereby states could select the NSR applicability provisions they deemed most appropriate; the 

2002 Federal NSR Rule made adoption of these provisions mandatory. The 2002 Federal NSR Rule extended 

to all sources, not just EUSGUs, EPA’s 1992 rulemaking revisions addressing the Wisconsin Electric Power 

Company (WEPCO) decision requiring an actual-to-future actual methodology for calculating emission 

increases (57 Fed Reg 32,314). In addition, the 2002 Federal NSR Rule provided that facilities could forgo 
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recordkeeping documenting post-modification emissions, if the facility determined that there was no 

“reasonable possibility” that a modification could trigger NSR. 

The 2002 Federal NSR Rule required States with approved PSD and NNSR programs to submit a SIP 

revision by January 2006. The Department’s NNSR regulation at 6 NYCRR Part 231 is subject to this SIP 

submittal requirement. The Department implemented the PSD program on behalf of EPA pursuant to a 

delegation agreement with EPA that had been in effect since the mid 1980s. The Department could have 

continued to implement the PSD program as a delegated State but objected to several aspects of EPA’s 2002 

Federal NSR Rule and determined that it could not implement the 2002 Federal NSR Rule in its entirety and 

EPA declined to have the Department implement the PSD program on a partial agreement. On May 24, 2004, 

the Department returned delegation of the PSD program to EPA after failing to reach agreement on a partial 

implementation of the program. The Department advised EPA that it intended to adopt a State PSD program 

that would be protective of the State’s air resources and submit the regulations to EPA for SIP approval. 

The December 31, 2002 Federal NSR Rule included the following key provisions: 

Baseline Emissions. In calculating whether an emissions increase has occurred, a source must first 

calculate its baseline emissions. Under the 1980 rule, baseline emissions were calculated by determining the 

average tons per year of the pollutant at issue, that were emitted during the two-year period immediately 

preceding the proposed change. Under the 2002 Federal NSR Rule, baseline emissions are to be calculated by 

taking an average of the annual emissions in any 24 consecutive month period (selected by the permittee) within 

the 10-year period that precedes the change, adjusted to reflect current enforceable emissions limitations. A 

notable exception exists in the case of electric generating units, which are limited to any 24 consecutive month 

period within the five-year period immediately preceding when a permittee begins actual construction of a 

project, as was established in EPA’s WEPCO rule. 
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Reasonable Possibility Test. A facility that made a non-routine physical or operational change did not 

need to maintain records of post-modification emissions unless all of the following three criteria were met: (1) 

the facility chose to project post change emissions instead of using an actual-to-potential test; (2) the facility 

determined it would not significantly increase emissions using the actual-to-projected-actual test; and (3) the 

facility believed there was a “reasonable possibility” that the project may in fact result in a significant emissions 

increase that would trigger NSR. If the three criteria were met, the facility was required to track its emissions 

and keep records for either five or 10 years, depending on the nature of the change. By contrast, facilities which 

believed there was no “reasonable possibility” that a change would trigger NSR did not need to keep any data to 

verify that conclusion. 

Independent and Unrelated Emissions Increase Exclusion. Under the pre-December 31, 2002 Federal 

PSD regulation, only EUSGUs could take advantage of the exclusion for emissions from independent and 

unrelated factors such as demand growth initially established in the WEPCO case. The 2002 Federal NSR Rule 

broadened its application, allowing all facilities to exclude from post-change emissions calculations any 

increase in emissions that a unit could have accommodated during the 24 consecutive month period used to 

establish the baseline as long as the emissions are unrelated to the proposed project, including any increased 

utilization due to product demand growth. 

PALs. A source may obtain a PAL and avoid NSR permitting when a modification is made, as long as 

the total emissions from the source remain below the PAL specified in the permit. The PAL is established as 

the sum of the baseline actual emissions of the PAL pollutant plus an amount equal to the applicable 

significance level. The PAL has a 10-year term and may be renewed for an additional 10 years. PALs are 

established in the Title V operating permit and are subject to monitoring and recordkeeping requirements to 

assure compliance with the PAL emission limit. 
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Clean Unit Exemption. Under the 2002 Federal NSR Rule, a unit qualified for Clean Unit status if in 

the last 10 years it had implemented BACT or LAER at the time of making a change that triggered NSR, or if 

the unit had not undergone NSR but had control technology in place that is “comparable” to BACT or LAER, 

and the unit demonstrates that its allowable emissions will not violate NAAQS or NSPS. Under the 2002 

Federal NSR Rule, a unit with Clean Unit status would have retained that status for 10 years and could have 

renewed that status as long as it remained in compliance with emissions limits and other NSR permit 

requirements. If such a unit made a change that would otherwise have triggered NSR by increasing emissions 

at a source, the unit could have nevertheless avoided NSR as long as the change does not alter the unit’s Clean 

Unit status. EPA referred to this approach as “an innovative approach to NSR applicability” that would 

measure increases in emissions in terms of the ‘status’ of a unit, rather than its actual emissions. 

Pollution Control Project Exclusion. The 2002 Federal NSR Rule provided for an exemption from NSR 

of specific projects which entail a physical or operational change that reduced emissions of a primary pollutant, 

even if as a collateral effect the project increases emissions of another pollutant. If the net effect was 

environmentally beneficial, then the work would have been exempt from NSR permitting. 

NSR LITIGATION

December 31, 2002 Federal NSR Rule

 On June 24, 2005, the United States Court of Appeals for the District of Columbia issued a 73-page 

decision on a consolidated lawsuit challenging the 2002 Federal NSR Rule. The case, ‘State of New York, et 

al. v U.S. Environmental Protection Agency’, 413 F 3d 3 (D.C. Cir. 2005) (‘New York v EPA’), is one in which 

the State of New York and numerous other State and local government entities, among others, sued EPA over 

its 2002 Federal NSR Rule changes (implemented in March 2003) to the NSR provisions of the Act. It 

consolidated a number of procedural and substantive challenges to the 2002 Federal NSR Rule that had been 
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raised by both government and industry petitioners. The lawsuit challenged various aspects of the new rule, 

including: the use of a 10-year look-back period for establishing baseline emissions; the extension of the 

exclusion for emissions from independent and unrelated factors such as demand growth to sources other than 

EUSGUs; the extension to sources other than EUSGUs of the past-actual to future-projected-actual test for 

emissions increase calculations; the elimination of the requirement that sources keep records documenting postmodification emissions, where the source determines that there is no “reasonable possibility” that a 

modification will trigger NSR; and three permitting provisions that would allow a source to make changes 

without undergoing NSR - PALs, the Clean Unit exclusion and the PCP exclusion. 

 Also at issue in ‘New York v EPA’ were claims by the government petitioners that: EPA’s requirement 

that an approvable SIP must include EPA’s changes to the NSR provisions as minimum program elements, 

precluded the adoption by States of more stringent program requirements; the new rules violate the antibacksliding provisions of the Act; and EPA’s rejection of the menu approach for State and local governments to 

choose which provisions of the new rules to incorporate in their programs, was not a logical outgrowth of the 

proposed rule. 

 The Court upheld most of EPA’s changes to the NSR provisions, including the past-actual to futureprojected-actual emissions increase calculations methodology for non-EUSGUs; the 10-year look-back 

provision (a five-year look-back was retained in the 2002 Federal NSR Rule for the utility industry); the use by 

non-EUSGUs of the exclusion for emissions from independent and unrelated factors such as demand growth in 

calculating baseline emissions; and the use of PALs to avoid NSR permitting. The court rejected the 

government petitioners’ challenges regarding approvable SIPs, anti-backsliding, and EPA’s rejection of the 

menu approach. The two former arguments were rejected as unripe for judicial review. The latter was rejected 

on substantive grounds, the Circuit Court having concluded that EPA’s rejection of the menu approach was one 

of two possible outcomes of its proposed rule, and that EPA had provided adequate notice of the change. 
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 However, the Court upheld the government petitioners’ challenges to the Clean Unit and PCP 

exclusions, and remanded the “reasonable possibility” test for recordkeeping. With respect to the first two 

exemptions, the court concluded that EPA erred in its interpretation of the Act when it implemented those 

provisions, and lacked the authority to create those exemptions. The Court vacated those two provisions of the 

2002 Federal NSR Rule. With respect to the “reasonable possibility” test, the court agreed with Government 

petitioners that EPA’s standard that if a source undertaking a modification concludes that it has no “reasonable 

possibility” of triggering a significant increase in emissions as a result, the source need not retain records to 

either document or verify that conclusion is unenforceable. The Court remanded the recordkeeping standard to 

EPA instructing the Agency to “provide an acceptable explanation for its ‘reasonable possibility’ standard or to 

devise an appropriately supported alternative” (‘New York v EPA’, 413 F.3d at 28). From the State’s 

perspective, these issues represented some of the most troublesome aspects of the 2002 Federal NSR Rule. 

 

Baseline Emissions. During the litigation, government petitioners objected to a 10-year look-back 

period, arguing first that EPA’s analysis was impermissible under the Act, as the ordinary meaning of the word 

“increase” mandated the use of the time period immediately preceding the change. The court concluded, 

however, that the statute did not unambiguously require the adoption of that analysis and that the only question 

was whether EPA’s interpretation of the term “increase” was permissible under a ‘Chevron’ analysis.1 The 

 

1 ‘Chevron U.S.A., Inc. v Natural Resources Defense Council’, (467 US 837 [1984]), established a two-part test 

for analyzing a regulatory agency’s exercise of authority in promulgating an implementing regulation. Under 

Step 1, a court must determine whether Congress clearly spoke to the issue in writing the statute. If the statute 

expresses a clear Congressional intent, that intent must be given effect in the regulation. If the statute is 

ambiguous, however, the agency has the authority to clarify that intent. Under Step 2 of the analysis, the court 

must determine whether the agency’s regulation is based on a permissible interpretation of the statute. If so, the 

court will defer to the agency’s interpretation. 
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ertise.”2

court concluded that it was, and that EPA’s interpretation of the term was supported by a “‘detailed and 

reasoned analysis’ based on its experience and exp

 The second argument advanced by government petitioners with respect to the emissions baseline was 

that the switch to a 10-year period violated the CAA because it could result in increases of emissions to historic 

levels, without the required NSR review, harming public health and the environment. The Court rejected this 

argument, relying on several factors. First, the 2002 Federal NSR Rule incorporated three “safeguards”: (1) the 

baseline must be adjusted downward to reflect any legally enforceable emissions limitations; (2) there must be 

sufficient record information to support the use of a particular baseline period; and (3) the baseline calculations 

cannot include emissions that exceed any legally enforceable emissions limits imposed during the baseline 

period. Second, the Court noted that EPA concluded in its environmental impact analysis that the 2002 Federal 

NSR Rule would reduce pollution and therefore be protective of public health and the environment. Finally, 

despite both EPA’s acknowledgment and a Federal Government Accountability Office (GAO) study which 

noted the lack of data available to determine how companies would respond to the rule (in terms of whether 

they would actually make changes that would decrease pollution), the GAO did not conclude that inadequate 

evidentiary support existed for the provisions with respect to the baseline period. The GAO recommended that 

EPA monitor emissions impacts to determine whether there would be adverse effects created by the rule. The 

Court concluded that incomplete data did not render EPA’s determination on the baseline issue arbitrary and 

capricious. 

 

Independent and Unrelated Emissions Increase Exclusion. The Court rejected the argument of the 

government petitioners that in its 1998 Notice of Availability, EPA had tentatively concluded that this exclusion 

for emissions from independent and unrelated factors such as demand growth was inappropriate, because 

 

2

Part of this analysis involved EPA’s review of industry business cycles, and its conclusion that a 10-year 

period, while not representative of the business cycle of all industries, would provide “ ‘a fair and representative 

time frame for encompassing a source’s normal business cycle’ ”. 
Page 18 of 76 

among other things all changes in utilization could be proximately linked to market demand, and that EPA had 

therefore arbitrarily changed its position on this issue without notice. The Court found that EPA had addressed 

this issue in its denial of the petition for reconsideration, and that EPA’s approach was adequately explained and 

supported by the record, and that the statutory language of the modification was only intended to cover emission 

increases that resulted from physical changes. 

 

2002 Reasonable Possibility Test. Under the 2002 Federal NSR Rule, a facility that made a nonroutine physical or operational change did not need to maintain records of post-modification emissions unless 

all of the following three criteria were met: (1) the facility chose to project post change emissions instead of 

using an actual-to-potential test; (2) the facility determined it would not significantly increase emissions using 

the actual-to-projected-actual test; and (3) the facility believed there was a “reasonable possibility” that the 

project may result in a significant emissions increase that would trigger NSR. If these criteria were met, the 

facility was required to track its emissions and keep records for either five or 10 years, depending on the nature 

of the change. By contrast, a facility that believed there was no reasonable possibility that a change would 

trigger NSR did not need to keep its emission calculations or any data to verify that prediction. EPA concluded 

that the new rule actually increased recordkeeping requirements for non-EUSGUs, and that many cases would 

arise where a source determined that there was a reasonable possibility of an emissions increase. EPA also 

argued that sources with a low likelihood of triggering NSR should not have to bear the same burden of 

monitoring and recordkeeping. The Court concluded that EPA’s position ignored significant differences 

between the old and new rules, and rejected its reasoning as flawed on a number of grounds. 

 Under the former NSR rules the emissions applicability test was an actual to potential emissions test. 

By definition, a facility’s post-modification actual emissions could not exceed its potential to emit, making it 

unnecessary to maintain records to establish whether the post change actual emissions exceeded projected 

emissions. In the alternative, facilities that wanted to avoid NSR could take a cap on their emissions levels, 
Page 19 of 76 

which requires stringent monitoring. In addition, under the pre-2002 Federal NSR Rule, the utility industry was 

required to maintain records for a minimum of five years following a change, a fact the Court noted 

underscored EPA’s flawed analysis on the recordkeeping provision in the 2002 Federal NSR Rule. 

 EPA also argued that Title V imposed additional recordkeeping requirements, and that states have the 

ability to establish their own, more stringent, recordkeeping and reporting requirements for modifications, if 

they choose to do so. The Court determined, however, that nothing in Title V emissions records would 

necessarily be traceable to a particular change. Moreover, EPA’s argument did not address those states that 

would simply rely on the requirements in the 2002 Federal NSR Rule, a prospect the Court found unacceptable. 

The Court explicitly recognized the enforcement difficulties that would arise from the lack of a paper trail that 

documents a source’s emissions and its projections of emissions increases related to a change, stating that “EPA 

has failed to explain how, absent recordkeeping, it will be able to determine whether sources have accurately 

concluded that they have no ‘reasonable possibility’ of significantly increased emissions” (‘New York v EPA’, 

413 F3d at 53-54). As a result, the Court remanded the issue to EPA “for it to either provide an acceptable 

explanation for its ‘reasonable possibility’ standard or to devise an appropriately supported alternative” (‘Id.’ at 

56). 

 

Plantwide Applicability Limitations (PALs). Government petitioners argued that the PAL provision 

was unlawful because it would allow a source to increase emissions beyond recent actual emission levels 

without triggering NSR, and that there would be harmful impacts to public health and the environment as a 

result. The Court rejected these arguments for the same reasons stated in its analysis of the 10-year look-back 

provision, concluding that the petitioners had “fail[ed] to demonstrate that PALs are based on an impermissible 

statutory interpretation or are otherwise arbitrary and capricious” (‘Id.’ at 57). The Court upheld EPA’s 

determination that the term “increases” could be defined in terms of facility-wide emissions, and deferred to 

EPA’s discretion to define which changes at a plant are “substantially contemporaneous”. The Court further 
Page 20 of 76 

stated that environmental petitioners failed to “refute EPA’s assessment of the environmental benefit of PALs” 

and that the State intervenors’ experience with the NSR program confirmed EPA’s conclusions about the 

environmental benefit of PALs. Thus, the Court upheld PALs as a reasonable exercise of EPA’s authority 

under the Act. 

 

Clean Unit Exemption. EPA referred to the Clean Unit exemption approach as “an innovative approach 

to NSR applicability” that would measure increases in emissions in terms of the ‘status’ of a unit, rather than its 

actual emissions. The Court rejected EPA’s position. Instead the Court sided with the government and 

environmental petitioners who argued that the Clean Unit Exemption was contrary to the plain meaning of the 

Act which requires that increases be measured in terms of actual emissions. EPA argued that the Act was silent 

as to whether emissions must be measured in terms of actuals, allowables, potentials, or in some other manner. 

The Court found, however, that Congress distinguished between these categories of emissions when it enacted 

the 1977 amendments to the Act, that Congress was clearly conscious of the distinction between actual and 

allowable emissions, and that various provisions of the Act indicated Congress fully intended that increases be 

measured in terms of actual emissions. The Court noted that EPA had come to the same conclusion in its 

preamble to the 1980 rule. Thus, the Court vacated the Clean Unit Exemption as contrary to the Act based on 

its findings that Congress intended to apply NSR to changes that increase emissions and EPA lacked the 

authority to change the definition of “increase.” 

 

Pollution Control Projects. EPA’s position on PCPs was that, despite the fact that PCPs are 

modifications, Congress did not intend that PCPs would be the type of activity that would trigger NSR. EPA 

argued that the statutory definition of “modification” was adopted from the NSPS regulations, which excluded 

PCPs, and that to discourage the implementation of PCPs by requiring NSR would be absurd. The court 

rejected EPA’s position, the latter argument in particular, given EPA’s lack of support for this statement, as well 
Page 21 of 76 

as the court’s earlier analysis of the relationship between the NSPS and NSR programs. The court also held that 

EPA had failed to provide any evidence of Congressional intent on this issue, and that Congress had not given 

EPA the authority to create this regulatory exemption to NSR. 

 

Modification. The other significant aspect of Court’s decision in ‘New York v EPA’ is that, in contrast 

to the decision of the Fourth Circuit Court of Appeals in ‘United States of America v Duke Energy 

Corporation’, the D.C. Circuit Court of Appeals rejected industry’s position with respect to the interpretation of 

the term “modification”, as it pertains to calculating emissions increases. Industry argued (and prevailed on this 

argument one week earlier in the ‘Duke Energy’ lawsuit) that Congress intended that the analysis required 

under the NSPS of the Act also be used to analyze emissions increases under NSR. Under the NSPS, emissions 

increases are analyzed by calculating the hourly emissions rate of a unit. Under NSR, it has long been EPA’s 

position that emissions increases at a unit are to be measured in annual tons. 

EPA and the Utility Air Regulatory Group (UARG) moved for a rehearing of the June 24, 2005 

decision. On December 8, 2005, the Court denied both requests for a rehearing. EPA wanted a rehearing with 

respect to Clean Units and for clarifications of the retroactive application of the June 24, 2005 decision with 

respect to PCPs. UARG sought to reargue the Court’s approval of EPA’s revised emission increase calculation 

methodology and its rejection of the PCP exemption. Significantly, the D.C. Circuit said that the plain language 

of the Act does not permit EPA to exempt any increase in emissions from modified sources. It also said that 

there is no indication that Congress intended to adopt an hourly emission rate test. (‘id.’ at 23) 

Equipment Replacement Provision rule

 On October 27, 2003, EPA promulgated a second NSR rule, known as the Equipment Replacement 

Provision (ERP). The ERP would have amended the Routine Maintenance, Repair, and Replacement (RMRR) 

exclusion from NSR requirements. Pursuant to Section 111(a)(4) of the Act, 42 USC Section 7411(a)(4), which 
Page 22 of 76 

is made applicable to the NSR program through Sections 7501(4), 7479(2)(c), sources that undergo “any 

physical change” that increases emissions are subject to NSR. The RMRR exclusion created by EPA in the 

1970s historically provided that routine maintenance, repair, and replacement do not constitute changes which 

trigger NSR. 

 The ERP rule would have significantly expanded the scope of the routine maintenance, repair, and 

replacement exclusion by categorically stating that the replacement of components with identical or functionally 

equivalent components that do not exceed 20 percent of the replacement value of the process unit or change its 

basic design parameters is not a change and is within the RMRR exclusion (68 Fed Reg 61248, 61270 [Oct. 27, 

2003]) [ERP Rule]; ‘see also’ 70 Fed Reg 33838 [June 10, 2005] [“Reconsideration”]. New York and a 

consortium of other States filed a lawsuit challenging EPA’s promulgation of the ERP Rule. The Court stayed 

the effective date of the ERP Rule and subsequently vacated the rule on March 17, 2006, as contrary to the plain 

language of section 111(a)(4) of the Act (‘State of New York, et. al. v U.S. Environmental Protection Agency’, 

443 F.3d. 880 [D.C. Circuit, March 17, 2006] [‘New York v EPA II’). 

 

South Coast Air Quality Management District v EPA (Eight hour ozone, Phase 1)

 On December 22, 2006, the United States Court of Appeals for the District of Columbia ruled on 

petitions challenging EPA’s Phase 1 eight-hour ozone rule. (‘South Coast Air Quality Management District v. 

E.P.A.’, 472 F.3d 882 [‘South Coast’]). With respect to NSR, the Court agreed with State petitioners that the 

rule violated the Act’s prohibition on backsliding because it permitted states to remove one-hour NSR 

requirements as well as other requirements related to non-attainment planning from state implementation plans. 

The Court concluded that these measures, including pollution control requirements under NSR, are controls and 

as such any removal of them from a state implementation plan constitutes impermissible backsliding. The end 

result is that, in order to prevent backsliding, EPA must keep in place measures which are intended to constrain 

ozone levels. 
Page 23 of 76 

Environmental Defense v. Duke Energy Corporation

 On April 2, 2007, the United States Supreme Court issued a decision upholding the annual tonnage test 

for measuring a significant net emissions increase under the Act’s PSD regulations. In ‘Environmental Defense 

v Duke Energy Corporation’ the Supreme Court reversed the Fourth Circuit Court of Appeals’ earlier decision 

upholding Duke Energy’s argument that major modifications under the PSD regulations must be interpreted in 

the same manner under both the NSR and NSPS regulations, and that a major modification could therefore only 

be found if it was determined that there had been an hourly increase in emissions. In so holding, the Supreme 

Court rejected the Fourth Circuit Court of Appeal's conclusion that the term “major modification” must be 

interpreted identically in the two sets of regulations. The Court held that EPA’s construction of the PSD 

regulations in such a manner as to measure actual emissions in terms of the actual operations averaged over 

time - i.e., tons of pollutant per year - could not “be squared with a regime under which ‘hourly rate of 

emissions’ . . . is dispositive”. The Court further held that the Court of Appeals’ “effort to trim the PSD 

regulations to match their different NSPS counterparts can only be seen as an implicit declaration that the PSD 

regulations were invalid as written”. The Court held that a review of the validity of the regulations should have 

taken place in the Court of Appeals for the District of Columbia within 60 days of EPA's rulemaking. 

December 21, 2007 NSR Reasonable Possibility In Recordkeeping (Final Rule)

 On December 21, 2007 EPA published in the Federal Register (Vol. 72, No. 245) its final NSR rule, 

“Prevention of Significant Deterioration and Nonattainment New Source Review: Reasonable Possibility in 

Recordkeeping”. The rule finalizes EPA’s proposed revisions to its 2002 Federal NSR Rule governing the 

major NSR programs mandated by parts C and D of title I of the Act by clarifying what constitutes ‘‘reasonable 

possibility’’ and when the ‘‘reasonable possibility’’ recordkeeping requirements of the 2002 Federal NSR Rule 

apply. This final rule is in direct response to the U.S. Court of Appeals for the DC Circuit in ‘New York v. 

EPA’, 413 F.3d 3 (DC Cir. 2005) (‘New York’) remand to the EPA to either provide an acceptable explanation 
Page 24 of 76 

for its ‘‘reasonable possibility’’ standard or to devise an appropriately supported alternative. The ‘‘reasonable 

possibility’’ standard identifies for facilities and reviewing authorities the criteria under which an owner or 

operator of a major facility undergoing a physical change or change in the method of operation that does not 

trigger major NSR permitting requirements must keep records. The standard also specifies the recordkeeping 

and reporting requirements on such facilities. 

The December 21, 2007 rule finalizes a ‘‘percentage increase trigger’’ for reasonable possibility. 

Under the ‘‘percentage increase trigger’’ option, there is a reasonable possibility that a change would result in 

a significant emissions increase if the projected increase in emissions of a pollutant, determined by comparing 

baseline actual emissions to projected actual emissions, equals or exceeds 50 percent of the applicable NSR 

significant level for that pollutant. The rule imposes recordkeeping, emissions monitoring, and reporting 

requirements on any facility projecting that a change could result in a reasonable possibility of a significant 

emissions increase. By EPA definition, ‘‘projected actual emissions’’ excludes emissions attributable to an 

independent factor 5 (such as demand growth); see, ‘e.g.’, 40 CFR 52.21(b)(41). The 2002 NSR Rule excluded 

emissions attributable to independent factors (such as demand growth) from the projected increase in emissions 

to which the ‘‘reasonable possibility’’ recordkeeping trigger applied. The final rule requires that emissions 

attributable to independent factors (such as demand growth) be considered for purposes of the ‘‘percentage 

increase’’ test. The final rule also retains the requirement that facilities compare baseline actual emissions to 

projected actual emissions to determine whether the emissions increase equals or exceeds 50 percent of the 

applicable NSR significant level. If so, those facilities must comply with both pre-change and post-change 

recordkeeping and reporting requirements. This final rule includes the additional requirement that facilities 

whose projected actual emissions increase is less than 50 percent of the applicable NSR significant level must 

determine whether emissions attributable to an independent factor (such as demand growth) that is unrelated to 

the change would cause the post-project emissions increase to exceed 50 percent of the applicable NSR 

significant level. If so, then, these facilities also have a reasonable possibility of causing a significant 
Page 25 of 76 

emissions increase, but under these circumstances, the final rule requires such sources to comply with only the 

pre-change recordkeeping requirements and not the pre-change reporting requirements or post-change 

recordkeeping and reporting requirements. 

 3. NEEDS AND BENEFITS 

NSR Implementation in New York.

 The Department is undertaking this rulemaking to comply with the 2002 Federal NSR Rule EPA 

promulgated and correct deficiencies that EPA identified in regards to New York’s existing NNSR regulation. 

The 2002 Federal NSR Rule modified both the nonattainment NSR and PSD regulations at 40 CFR 51.165 and 

52.21, respectively, and requires states with SIP approved NSR programs to revise their regulations in 

accordance with the 2002 Federal NSR Rule and submit the revisions to EPA for approval into the SIP. The 

Department’s existing NNSR program at Part 231 is subject to this requirement. 

 The Department first adopted Part 231 in 1980 and made subsequent substantial revisions to the 

regulation in 1984, 1994, and 2000. The program establishes requirements for new and modified facilities 

including the requirement to meet LAER and obtain emission offsets in the case of new major facilities and 

modifications which resulted in a significant net emission increase. LAER must be determined at the time of 

permit issuance. Emission offsets may be obtained from the same nonattainment area that a project is to be 

located, or from other nonattainment areas of equal or higher classification if emissions from such other areas 

contribute to a violation of the NAAQS in the nonattainment area where the proposed project is to be located. 

 Following the 1994 rule revisions, the Department sent Part 231 to EPA for SIP approval. EPA 

identified deficiencies which, for the most part, the Department corrected. This rulemaking will address the 

remaining deficiencies. One deficiency concerned the use of the Maximum Annual Potential (MAP) of an 

emission unit for determining whether a proposed facility modification would be subject to NNSR. Under this 

methodology, only those modifications which would increase the MAP of an emission unit would be subject to 
Page 26 of 76 

further Part 231 applicability review. If the MAP was projected to increase, the facility was required to 

compare the lesser of the prior actual annual or allowable annual emissions to the projected MAP of the 

emission unit to determine if there would be a significant emission increase. The proposed amendments to Part 

231 correct this deficiency consistent with the D.C. Circuit’s decision in ‘New York v EPA’. Applicability 

under the proposed Part 231 is determined by comparing baseline actual emissions of an emission source to 

projected actual emissions of the source to determine whether there is a significant emission increase, consistent 

with the 2002 Federal NSR Rule. 

 EPA also commented that Part 231 did not require automatic revocation of permits if construction did 

not commence within 18 months after issuance of a permit. Part 231 states that permits shall be subject to 

revocation, while the 2002 Federal NSR Rule states that a permit “shall become invalid” if construction is not 

commenced within 18 months. Amending Part 231 to provide for automatic permit revocation appears contrary 

to the State Administrative Procedure Act and the ECL. 

 SAPA establishes uniform administrative procedures that apply to rulemaking, adjudicatory procedures, 

and the issuance of permits by State agencies. The provisions of SAPA Section 401, with respect to 

adjudicatory proceedings, apply when a license (permit) is required by statute to be preceded by notice and 

opportunity for hearing. Section 70-0115 of the ECL, which establishes uniform review procedures for the 

major regulatory programs of the Department, states that the Department may revoke a permit after providing 

the permit holder notice stating the grounds for its action and an opportunity for a hearing. Part 70 applies to 

major stationary source air permits including Title V and air permits incorporating PSD and NSR requirements. 

 Pursuant to the State Administrative Procedures Act, as implemented by 6 NYCRR Part 621, the 

Department must provide due process, including the opportunity for a hearing before it can proceed with permit 

revocation. Consequently, the Department cannot subject NSR permits to automatic revocation if construction 

is not commenced in 18 months. The Department must follow the procedures outlined in Part 621 which 

provide the opportunity for the permittee to request a hearing. 
Page 27 of 76 

 EPA also identified a deficiency with respect to the netting procedures of Part 231 regarding the use of 

ERCs. EPA stated that an ERC, or a portion thereof, which was used in a net emissions increase determination 

of non-applicability may not be used in a subsequent net emissions increase determination, even if 

contemporaneous. The proposed amendments to Part 231 correct this deficiency. 

 Another purpose of the rulemaking is to adopt a State PSD program for proposed new major facilities 

and major modifications to existing facilities located in attainment areas. In the 1980s, EPA delegated to the 

Department authority to implement the Federal PSD permit program on behalf of EPA pursuant to a delegation 

agreement. Among other things, the agreement specified that the Department would issue and enforce PSD 

permits consistent with Federal regulations. PSD permits were therefore subject to Federal administrative 

review and appeal. The agreement was modified from time to time when PSD regulations changed, but 

remained essentially the same until March 2003. The Department implemented the PSD program until March 

3, 2003 when the revised 2002 Federal NSR Rule took effect and the Department returned delegation of the 

PSD program to EPA. 

 New York is not obligated to adopt a SIP-approved PSD program and could continue to implement the 

Federal PSD program on behalf of EPA. The Department, however, has determined that the 2002 Federal NSR 

Rule does not adequately protect the air resources of the State and believes the appropriate course of action is to 

adopt a State PSD rule rather than implement the less protective 2002 Federal NSR Rule. ‘See also’ ‘General 

Accounting Office, Clean Air Act: EPA Should Use Available Data to Monitor The New Source Review 

Program 24’ (2003) (the economic and environmental impacts of the 2002 Federal NSR Rule are uncertain 

because of the limited data and difficulty in determining how industrial companies will respond to the rule). 

The proposed Part 231 rule incorporates provisions from the Federal PSD regulations in significant part 

with additional provisions to ensure enforceability of the rule and effective monitoring, recordkeeping and 

reporting. New major facilities and major modifications at existing facilities must comply with the requirement 

to install BACT. Facilities must quantitatively assess the impact of new emission sources and major 
Page 28 of 76 

modifications at existing facilities through an air quality impact analysis. The procedures for an air quality 

impact analysis are set forth in proposed 6 NYCRR Subpart 231-12. A companion guidance document, 

Division of Air Resources-10 / NYSDEC Guidelines on Dispersion Modeling Procedures for Air Quality 

Analysis, has been developed by the Department to establish the detailed procedures for conducting these 

ambient air quality impact analyses. DAR-10 follows the federal procedures set forth in 40 CFR Part 51, 

Appendix W: Guideline on Air Quality Models of the EPA. 

PSD regulations require project applicants to demonstrate that allowable emission increases from the 

proposed facility or modification would not cause or contribute to a violation of any ambient air quality 

standard, any applicable maximum allowable PSD increment increase over the baseline concentrations for 

Federal Class I, II and III areas, or any Quantified Air Quality Related Values (AQRVs) including visibility in 

Federal Class I areas. PSD increments have been set for Particulate Matter (PM), Sulfur Dioxide (SO2) and 

Nitrogen Dioxide (NO2). Although New York State does not have any Class I areas, there are Class I areas 

(large national parks and wilderness areas) in downwind States. All of New York State is designated as Class II 

for the purposes of PSD. BACT is required for any new major facility or major modification at an existing 

facility. 

Benefits of the NSR Program

 From the State’s perspective, major NSR is a critical tool in meeting the Legislature’s air quality 

objectives and ensuring that healthful air quality is preserved in areas of the state that meet the NAAQS and 

does not further degrade but actually improves in areas of the State which currently are not in attainment of the 

NAAQS. 

The State of New York currently has areas that are designated nonattainment for ozone, and particulate 

matter or particles with an aerodynamic diameter less than or equal to 2.5 micro-meters (PM-2.5). As a result, 

the Department must have a NNSR program that meets the requirements of Part D of Title I of the Act to adopt 
Page 29 of 76 

permit programs for the construction, modification and operation of major stationary sources in nonattainment 

areas. The Department must also adopt provisions of Section 184(b)(2) of the Act, which states that any major 

stationary source in the Ozone Transport Region (OTR) is subject to the provisions applicable to areas classified 

as moderate ozone nonattainment. 

Ozone

 The implementation of NNSR, as a practical matter, has been primarily driven by the issue of 

nonattainment with the ozone NAAQS. Because of New York State’s inclusion in the OTR, NNSR has, and 

will continue to be, applied statewide with respect to major facilities which emit ozone precursor pollutants 

such as NOX and VOCs. Thus, for every new and modified major facility in the State, NNSR has controlled 

emissions of ozone precursor pollutants through the requirement that such sources achieve LAER, and ensured, 

in effect, negative emissions growth by requiring emission offsets. 

The primary ozone NAAQS is established by EPA at a level the attainment and maintenance of which is 

requisite to protect the public health. In the northeastern United States the ozone nonattainment problem is 

pervasive as concentrations of ozone often exceed the level of the NAAQS by mid-afternoon on a summer day. 

On sunny hot summer days, VOCs react with NOX to form ozone. It is well-settled that ground-level ozone 

aggravates respiratory conditions like chronic lung and heart diseases, allergies and asthma, and recent studies 

have demonstrated a definitive link between even short-term ozone exposure and death in humans. ‘See 

generally’ Senate Committee on Environment and Public Health, S. Rep. No. 101-228 (1990), ‘reprinted in’ 

1990 U.S.C.C.A.N. 3385. The United States Senate has recognized that a growing body of scientific evidence 

indicates that over the long term, chronic exposure to ozone may produce accelerated aging of the lung 

analogous to that produced by cigarette smoke exposure (‘id.’). In 1995, EPA recognized that “[m]uch of the 

ozone inhaled reacts with sensitive lung tissues, irritating and inflaming the lungs, and causing a host of shortterm adverse health consequences including chest pains, shortness of breath, coughing, nausea, throat irritation, 
Page 30 of 76 

and increased susceptibility to respiratory infections” (60 Fed Reg 4712-13 [Jan. 24, 1995]). Moreover, two 

recent studies have shown a definitive link between short-term exposure to ozone and human mortality. ‘See’ 

292 ‘Journal of the American Medical Asssn.’ 2372-78 (Nov. 17, 2004); 170 ‘Am. J. Respir. Crit. Care Med.’ 

1080-87 (July 28, 2004) (observing significant ozone-related deaths in the New York City Metropolitan Area). 

Even healthy adults during exercise can experience 15 percent to 20 percent reductions in lung function from 

exposure to low levels of ozone over several hours. 

 Children are most at risk from exposure to ozone. Because their respiratory systems are still developing, 

they are more susceptible than adults. This problem is exacerbated because ozone is a summertime 

phenomenon. Children are outside playing and exercising more often during the summer which results in 

children being exposed to ozone more than adults. Outdoor workers are also more susceptible to lung damage 

because of their increased exposure to ozone. The elderly are also more susceptible to ozone exposure because 

of the cardiovascular impairment that often accompanies aging. 

 Ground level ozone interferes with the ability of plants to produce and store food. This compromises 

growth, reproduction and overall plant health. By weakening sensitive vegetation, ozone makes plants more 

susceptible to disease, pests and environmental stresses. Ozone has been shown to reduce yields for many 

economically important crops (e.g., corn, kidney beans, or soybeans). Ozone damage to species with long lives, 

such as trees (by killing or damaging leaves), can significantly decrease the natural beauty of an area, such as 

the Adirondacks. 

PM 2.5 or Fine Particulate Matter

 Particulate Matter (PM) is a generic term for a broad class of chemically and physically diverse 

substances that exist as discrete particles (liquid droplets or solids) over a wide range of sizes. As noted above, 

PM-2.5 or fine particulate matter refers to particulate matter or particles with an aerodynamic diameter less than 

or equal to 2.5 micro-meters. EPA first established a NAAQS for PM in 1971 and conducted its first periodic 
Page 31 of 76 

review of the standard in 1979. In April 1994, EPA conducted the second periodic review of the criteria and 

NAAQS for PM and promulgated significant revisions to the NAAQS in 1997. Among other things, EPA 

established an annual and 24-hour standard for PM fine concentrations. In October 1997 EPA published its 

plans for the current periodic review of PM criteria and NAAQS. 

 Particulate matter, especially fine particles, contains microscopic solids or liquid droplets that can lodge 

deep into the lungs and cause serious health problems. Numerous scientific studies have linked particle 

pollution exposure to a variety of respiratory and cardiovascular problems including: increased respiratory 

symptoms, such as irritation of the airways, coughing, or difficulty breathing, for example; decreased lung 

function; aggravated asthma; development of chronic bronchitis; irregular heartbeat; nonfatal heart attacks; and 

premature death in people with heart or lung disease. People with heart or lung diseases, children and older 

adults are the most likely to be affected by particle pollution exposure. However, even healthy people may 

experience temporary symptoms from exposure to elevated levels of particle pollution. 

 Subsequent to the promulgation of NAAQS for fine particulate matter, EPA designated the New York 

City metropolitan area as nonattainment for the PM-2.5 standard (70 Fed Reg 944). NNSR is now required for 

new major facilities and major modifications to existing facilities that emit fine particulate in significant 

amounts in the PM-2.5 nonattainment area. NNSR requires that every new major facility and major 

modification at existing facilities in the PM-2.5 nonattainment area control emissions of direct PM-2.5 through 

the requirement that such sources achieve LAER and obtain emission offsets. On May 8, 2008 EPA issued final 

rules governing the implementation of the NSR program for PM-2.5. EPA’s final rule requires permits to 

address directly emitted PM2.5 as well as pollutants responsible for secondary formation of PM-2.5, referred to 

as precursors. EPA has identified SO2 as a regulated precursor, and also NOx unless a state can demonstrate 

that NOx emissions are not a significant contributor to the formation of PM2.5. The final EPA rule also allows 

interpollutant trading for emission offsets under the nonattainment NSR program on a regional basis or 

statewide basis, but precludes such trading on a permit by permit basis. EPA’s permissible interpollutant offset 
Page 32 of 76 

trading allows reductions in direct PM-2.5 to offset precursor emissions increases, emissions reductions of one 

precursor to offset emissions increases of another precursor, and reductions in precursor emissions to offset 

direct PM-2.5 emissions increases. 

To facilitate these interpollutant trading provisions, EPA has provided in their final PM-2.5 rule what 

they consider as acceptable trading ratios. States may elect to use EPA’s trading ratios or develop their own 

subject to EPA approval. States with EPA approved PSD programs and those with PM-2.5 nonattainment areas 

have up to three (3) years to submit revised State Implementation Plans (SIPs) incorporating the PM-2.5 NSR 

requirements. At the present time New York does not have an approved PSD program, nor does it have the 

legal authority to implement EPA’s nonattainment requirements of 40 CFR Part 51 Appendix S. Therefore, 

EPA will be implementing all PM-2.5 NSR requirements until such time as New York’s revised NSR program 

addressing PM-2.5 is approved by EPA. As noted above, New York has up to three years to submit a revised 

SIP addressing PM-2.5. The Department will need time to evaluate EPA’s final PM-2.5 rule, specifically with 

regard to applicable PM-2.5 precursors and appropriate interpollutant trading ratios to determine what 

provisions make sense for New York. As such, the Department will not be incorporating provisions 

establishing PM-2.5 precursors or interpollutant trading provisions into this Part 231 rulemaking. Following the 

Department’s detailed evaluation of EPA’s final PM-2.5 rule, the Department will propose amendments to Part 

231, if appropriate and necessary, to incorporate the Department’s decisions with respect to PM-2.5 precursors 

and interpollutant trading.

Sulfur Dioxide

 Sulfur Dioxide or SO2 belongs to the family of sulfur oxide gases (SOx). These gases dissolve easily in 

water. Sulfur is prevalent in all raw materials, including crude oil, coal, and ore that contains common metals 

like aluminum, copper, zinc, lead, and iron. SOx gases are formed when fuel containing sulfur, such as coal 

and oil, is burned, and when gasoline is extracted from oil, or metals are extracted from ore. SO2 dissolves in 
Page 33 of 76 

water vapor to form acid, and interacts with other gases and particles in the air to form sulfates and other 

products that can be harmful to people and their environment. Over 65 percent of SO2 released to the air comes 

from electric generating units, especially those that burn coal. Other sources of SO2 are industrial facilities that 

derive their products from raw materials like metallic ore, coal, and crude oil, or that burn coal or oil to produce 

process heat. Examples are petroleum refineries, cement manufacturing, and metal processing facilities. 

SO2 contributes to respiratory illness, particularly in children and the elderly, and aggravates existing 

heart and lung diseases. Peak levels of SO2 in the air can cause temporary breathing difficulty for people with 

asthma who are active outdoors. In addition, SO2 reacts with other chemicals in the air to form tiny sulfate 

particles (fine PM). When these particles are inhaled, they gather in the lungs and are associated with increased 

cardiovascular and respiratory symptoms and disease, difficulty in breathing, and premature death. Longerterm exposures to high levels of SO2 gas and particles cause respiratory illness and aggravate existing heart 

disease. 

Significantly, SO2 is one of two chemicals in the atmosphere which contributes to the formation of acid 

rain. Acid rain forms in the atmosphere where SO2 and NOX react with water, oxygen and oxidants to form a 

solution of sulfuric and nitric acid. This solution in turn falls to the earth as acid rain in the form of snow, rain, 

fog and other forms of precipitation. These forms of acid rain are known as wet deposition. Additionally, 

acidity in the atmosphere falls to the earth’s surface as dry deposition (gases and dry particles). These acid 

particles and gases are carried by prevailing winds and deposited onto cars, buildings, homes, trees and the 

earth’s surface (sometimes hundreds of miles from the source). These dry deposits can also be washed from 

surfaces by rainstorms, mix with wet deposition and, in turn, result in the creation of a more acidic solution than 

would be caused by the wet deposition alone. This is also called acid deposition. 

The adverse effects of acid deposition are pervasive and well documented in New York State. Acid 

deposition can damage trees, crops, historic buildings and monuments; and makes soils, lakes, and streams 

acidic. The Department prepared an extensive analysis of environmental and public health issues associated 
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with acid deposition in the Regulatory Impact Statements for rulemakings: 6 NYCRR Part 237, the Acid 

Deposition Reduction NOX Budget Trading Program; and 6 NYCRR Part 238, the Acid Deposition Reduction 

SO2 Budget Trading Program. 

SO2 also contributes to the formation of atmospheric particles that cause visibility impairment, most 

noticeably in national parks. Finally, SO2 and the pollutants formed from SO2, such as sulfate particles, can be 

transported over long distances and deposited far from the point of origin. This means that problems with SO2

are not confined to areas where it is emitted. 

Nitrogen Dioxide

Nitrogen dioxide or NO2 belongs to the family of nitrogen oxide gases. NO2 is a reddish or 

orange/brownish, highly reactive gas. It is one of the most ubiquitous air pollutants and a deadly poison by 

inhalation. NO2 acts as a respiratory irritant and can cause permanent lung injury resulting in decreased lung 

function. Nitrogen oxides are produced from burning fuels, including gasoline and coal. Nitrogen oxides react 

with volatile organic compounds to form ozone as well as reacting with other atmospheric pollutants to create 

fine particulate matter and acid rain. 

 

Carbon Monoxide 

 Carbon monoxide (CO) is a colorless, odorless gas that is formed when carbon in fuel is not burned 

completely. It is a component of motor vehicle exhaust, non-road engines and vehicles (such as construction 

equipment and boats), combustion installations (boilers, turbines and engines), industrial processes (such as 

metals processing and chemical manufacturing), residential wood burning, and natural sources such as forest 

fires. CO can cause harmful health effects by reducing oxygen delivery to the body's organs (like the heart and 

brain) and tissues. The health threat from low levels of CO is most serious for those who suffer from heart 

disease, like angina, clogged arteries, or congestive heart failure. For a person with heart disease, a single 
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exposure to CO at low levels may cause chest pain and reduce that person's ability to exercise. Repeated 

exposures may contribute to other cardiovascular effects. Healthy people can also be affected by high levels of 

CO. People who breathe high levels of CO can develop vision problems, reduced ability to work or learn, 

reduced manual dexterity, and difficulty performing complex tasks. At extremely high levels, CO is poisonous 

and can cause death. CO in the atmosphere also contributes to the formation of ozone. 

 

Lead

 Lead is a metal found naturally in the environment as well as in manufactured products. The major 

sources of lead emissions have historically been motor vehicles (such as cars and trucks) and industrial sources. 

Due to the phase out of leaded gasoline, metals processing is now the major source of lead emissions to the air 

today. The highest levels of lead in air are generally found near lead smelters. Other stationary sources of lead 

include municipal and industrial waste incinerators, utilities, and lead-acid battery manufacturers. 

 People, animals, and fish are mainly exposed to lead by breathing and ingesting it in food, water, soil, or 

dust. Lead accumulates in the blood, bones, muscles, and fat. Infants and young children are especially 

sensitive to even low levels of lead. Lead causes damage to the kidneys, liver, brain and nerves, and other 

organs. Exposure to lead may also lead to osteoporosis (brittle bone disease) and reproductive disorders. 

Excessive exposure to lead causes seizures, mental retardation, behavioral disorders, memory problems, and 

mood changes. Low levels of lead damage the brain and nerves in fetuses and young children, resulting in 

learning deficits and lowered IQ. Lead exposure causes high blood pressure and increases heart disease, and 

may also lead to anemia. 

Proposed Part 231 Amendments

 The Department has supported efforts to reform the NSR program since 1996, when EPA proposed its 

first comprehensive set of revisions aimed at making NSR more efficient and cost effective while meeting the 
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goals and objectives of the Act. Efforts to revise NSR in the 1990s extended into a multi-year review process 

and EPA did not finalize a rule until six years later in December 31, 2002. EPA’s 2002 Federal NSR Rule 

departs significantly from its 1996 proposal in several key respects which are discussed in the Legislative 

Objectives section of this document. A Federal Court ruled in June 2005 that several provisions of the 2002 

Federal NSR Rule, including the Clean Unit Exemption, PCP provision and the “reasonable possibility” test, 

were contrary to the intent and express terms of the Act (‘see New York v EPA’, 413 F3d 3, 40-41). New York 

objected to these provisions and prevailed in Court. The Department will not incorporate into its proposed Part 

231 rulemaking those provisions that did not survive the litigation. It is the Department’s position that the 2002 

Federal NSR Rule contains significant regulatory gaps with respect to enforceability and, therefore, is not 

protective of the environment and public health and welfare or consistent with the goals and policy objectives of 

the State. 

 The Department’s objectives with its proposed rulemaking are to develop a State specific NSR program 

which fulfills the mandates of the Act and the Federal NSR program, as appropriate, but is sufficiently tailored 

to meet the environmental quality needs and objectives of the State. Implementation of the Part 231 revisions 

will, in concert with counterpart programs established by other states and other measures implemented by the 

State, enable the Department to effectively track and reduce the pollution emitted from major facilities, ensure 

that those facilities are meeting their regulatory obligations to install and operate state-of-the-art pollution 

control equipment when undertaking major new construction or modifications, and achieve applicable emission 

limits. In all, a robust permitting program for new major facilities and major modifications at existing facilities 

will help ensure that emissions of ozone precursors from these facilities are minimized and thereby reduce 

contributions to ozone formation in New York State and will decrease the adverse public health and welfare 

effects described above. 
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NSR Workgroup

 In May 2004, the Department convened a workgroup to discuss the development and adoption of a State 

NSR regulation (revised Part 231). Participants included members of the regulated community, State and 

Federal agencies, and environmental organizations: American Lung Association; the Business Council of New 

York State, Inc. (BCNYS); the Chemical Alliance; the National Federation of Independent Businesses; 

Consolidated Edison Company of New York; the Energy Association of New York State; EPA Region II; 

Independent Power Producers of New York; the Natural Resources Defense Council (NRDC); the New York 

Public Interest Research Group (NYPIRG); New York Department of Public Service (NYSDPS); New York 

State Office of the Attorney General (NYSOAG); and the Governor’s Office of Regulatory Reform (GORR). 

 The Department held four meetings in the summer and fall of 2004 to discuss the major reform 

provisions included in EPA’s 2002 Federal NSR Rule and Equipment Replacement Provision (ERP). The 

following issues were discussed: the Clean Unit and Pollution Control Project exemptions; whether the 2002 

Federal NSR Rule adequately addressed compliance monitoring, reporting and recordkeeping; the methodology 

for determining baseline actual emissions, including the appropriate look-back period (five years versus 10 

years); the “reasonable possibility” test; the method for determining whether a significant emission increase 

occurred - the baseline actual emission to projected actual emissions test; whether emissions attributable to an 

independent factor (such as demand growth) should be excluded from the projection of post-modification actual 

emissions; routine maintenance, repair, and replacement, including the ERP rule, and the practice of conducting 

case-by-case determinations; and the PAL provision. 

 The workgroup re-convened on February 16, 2006 to discuss proposed amendments to Part 231. The 

Department presented an overview of the proposed amendments to Part 231 and discussed the differences 

between the proposed amendments to Part 231, EPA’s 2002 Federal NSR Rule and the Department’s existing 

NNSR Regulation (6 NYCRR Subpart 231-2). The workgroup commented on provisions which might be too 

broadly (e.g., permit modification triggers) or too narrowly construed (e.g., definition for routine maintenance, 
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repair, or replacement). The attendees were also interested in the timing of the regulation and other pending and 

anticipated EPA regulations which might impact NSR review. The Department requested written comments 

and revised the proposed amendments to Part 231, as appropriate, taking into account comments that were 

received. On September 6, 2006, the Department publicly noticed for hearings and comment proposed 

amendments to Part 231. Following this proposal and receipt of comments, the workgroup reconvened once 

again on March 28, 2007 to discuss further changes that the Department planned to make to its proposed 

amendments to Part 231. The workgroup attendees were interested in the Department’s proposed changes to 

baseline emissions, exemptions, PALs, and monitoring/reporting/recordkeeping requirements particularly as 

they relate to insignificant modifications and emissions attributable to independent factors such as demand 

growth. The Department once again requested written comments and revised the proposed amendments to Part 

231, as appropriate, taking into account comments that were received. 

 The Department has also provided outreach through Part 231 rulemaking presentations at the New York 

State Business Council’s 2005 Annual Industry-Environmental Conference held on October 13 & 14, 2005 in 

Saratoga Springs, New York, and at the Air & Waste Management’s Ninth Annual Environmental, Health & 

Safety Seminar held in Rochester, New York on February 15, 2006. Comments from these presentations were 

also considered during development of the proposed amendments to Part 231. The amendments to Parts 200, 

201, and 231 were published in the State Register on September 26, 2007 for public hearings and comment. 

Hearings were held in Avon on November 13, 2007, Albany on November 15, 2007, and in Long Island City on 

November 16, 2007. The comment period closed on November 26, 2007. The Department received written 

and oral comments. All of the comments have been reviewed, summarized and responded to by the 

Department. Public notice will be held to obtain additional comments on the Department=s proposed revisions 

to its original proposed amendments to 6 NYCRR Parts 200, 201, and 231 that were published in the State 

Register on September 26, 2007. 
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Overview of Part 200, 201 and 231 Amendments 

 The Part 200 amendments will add a definition for Routine Maintenance, Repair, or Replacement. In 

addition, the Department is revising Part 200 (Section 200.9 and 200.10). Section 200.9 is being amended to 

include all federal materials referenced in the proposed amendments to Part 231. Section 200.10(a) is being 

amended to reflect that the Department is no longer delegated responsibility for implementation of the Federal 

PSD Program. 

 The Department is amending the definition for “major stationary source or major source” at 6 NYCRR 

201-2.1(b)(21). The definition will now encompass the term “major facility” and incorporate major source and 

significant project thresholds for facilities emitting PM-2.5. 

 The existing NNSR program at Part 231 will be re-titled as “New Source Review for New and Modified 

Facilities” and will include new Subparts 231-3 through 231-13 incorporating the Federal PSD program 

requirements for attainment areas, and revised federal requirements for NNSR in nonattainment areas. The 

proposed revisions to Part 231 will incorporate elements of the 2002 Federal NSR Rule provisions that survived 

court challenge. The revisions are expected to make the regulations less burdensome to implement from the 

perspective of the Department and the regulated community without compromising air quality. The Department 

will retain the existing provisions for NNSR in Subparts 231-1 and 231-2 since these provisions are currently 

cited in State air permits. 

 Proposed Subparts 231-3 through 231-13 are organized to facilitate the implementation of NSR by 

providing a consistent regulatory framework for review and permitting in attainment and nonattainment areas. 

Subparts 231-5 and 231-6 set forth requirements for new major facilities and major modifications at existing 

facilities in nonattainment areas, including Lowest Achievable Emission Rate technology and emission offsets. 

Subparts 231-7 and 231-8 set forth the requirements for new major facilities and major modifications at existing 

facilities in attainment areas, including Best Available Control Technology and the requirement for ambient air 

quality analyses. In addition, Subparts 231-5 and 231-7 (new facilities) and Subparts 231-6 and 231-8 
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(modified facilities) contain parallel provisions for determining applicability. Proposed new facilities with a 

potential to emit at or above the applicable major facility threshold will be subject to major NSR review. 

Existing facilities undertaking a major modification will have the ability to use netting procedures to avoid NSR 

applicability. 

Subpart 231-3 “General Provisions” sets forth provisions which apply generally such as a transition plan 

specifying the effective date of the new Subparts, exemptions, general permit requirements and prohibitions 

which restrict construction or operation without permits, source obligations, a provision for a shakedown period 

to verify the operation of new equipment, and a prohibition against undertaking actions to circumvent the 

regulation. The Exemption section (231-3.4) will no longer include the exemptions for Clean Coal 

technologies. These exemptions originated in the 1990 Clean Air Act Amendments (and are approximately 20 

years old). The purpose for the exemptions was to allow the design, development, and installation of new clean 

coal fired equipment. At the time that these exemptions were promulgated, there were very few air pollution 

controls (specifically for the emissions of NOX and SO2) that had been developed and implemented on coal 

fired equipment. Over the past two decades the ability to control air pollution from coal fired equipment has 

increased dramatically. New coal fired sources can meet NOX and SO2 emission limits that rival gas fired 

sources based on the available control technologies. Therefore, the Department has determined that the 

exemptions for Clean Coal technologies are out of date and are no longer necessary. The Source Obligation 

section (231-3.6) includes a specific requirement that any owner or operator of a facility that proposes a project 

that involves a physical change or change in the method of operation that the owner or operator determines 

would be followed by a facility emissions increase that equals or exceeds any of the significant project 

thresholds in Subpart 231-13, Tables 3, 4 or 6, must notify the Department in writing of the proposed project 

prior to implementing the change if the owner or operator determines that the project does not constitute a 

modification because all the emission increases are attributable to independent factors in accordance with clause 

231-4.1(b)(42)(i)(b). The notification must include (1) a description of the change, (2) the calculation of the 
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projected emissions increase, (3) the proposed date of the change, and (4) an explanation of the factual basis for 

the conclusion that none of the projected emission increases are attributable to the proposed project. 

Subpart 231-4 “Definitions” contains definitions for terms used in the NNSR and PSD programs and, 

where possible, integrates the regulatory terms which are common to both programs. The Department has opted 

not to continue to utilize the exemptions for Clean Coal technologies, as discussed above. Therefore, the 

definitions for Clean Coal technologies will not be included in the proposed revisions to Part 231. 

 The remaining subparts apply generally to facilities in attainment and nonattainment areas. Subpart 

231-9 sets forth the requirements for establishing PALs. Subpart 231-10 defines emission offset and Emission 

Reduction Credit (ERC) creation and use. Subpart 231-11 provides permit and reasonable possibility 

requirements. Subpart 231-12 details the ambient air quality impact analysis requirements for facilities in 

attainment areas. Subpart 231-13 compiles tables and lists emission thresholds which are applicable throughout 

the proposed regulation. 

 Many permits issued throughout the State reference regulatory provisions of Subparts 231-1 and/or 231-

2. To avoid confusion in the implementation of the Part 201 permit program, the Department is retaining 

Subparts 231-1 and 231-2 rather than repealing them. Subpart 231-1 will remain titled “Requirements for 

Emission Sources Subject to the Regulation Prior to November 15, 1992.” Similarly, Subpart Part 231-2 will be 

re-titled “Requirements for Emission Units Subject to the Regulation on or after November 15, 1992 and Prior 

to the Effective date of Subparts 231-3 through 231-13”, to indicate that it does not apply to applications 

received on or after the effective date of the proposed Part 231 revisions. 

 The following provisions from the 2002 Federal NSR Rule are being addressed in the proposed 

amendments to Part 231: 

Baseline Period

 In the preamble to the 2002 Federal NSR Rule, EPA stated that one "common complaint" about the 

1980 rule is that sources have "limited ability to consider the operational fluctuations associated with normal 
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business cycles when establishing baseline actual emissions unless [the] reviewing authority agrees that another 

period is 'more representative of normal source operation.'” (67 Fed Reg 80191-92). Members of the regulated 

community in New York echoed this same concern during the Workgroup meetings including raising the 

following. Establishing a baseline period pursuant to the existing NSR regulations was too complex and 

burdensome and often involved protracted permit proceedings with the Department. Facilities which 

experienced low demand or low production faced the prospect of “losing capacity” by capping emissions at 

unrepresentative low levels or incurring the time and expense of obtaining NSR permits for facility 

modifications that involved small changes. If the economy experienced a downturn which slowed production at 

a facility for a few years, the facility’s baseline would decrease and the facility would lose operational 

flexibility. A facility would be discouraged from making modifications that might otherwise benefit the 

environment such as pollution prevention measures. 

 The Department has decided to establish a uniform baseline period provision for EUSGUs and nonEUSGUs. Under this provision, all emission sources would be able to select a baseline using any 24 

consecutive month period in the past five years. The Department believes that this approach strikes the most 

appropriate balance considering environmental protection, administrative burden, and economic growth. For 

EUSGUs, which since EPA’s 1992 rule addressing WEPCO have been able to establish their baseline emissions 

using this approach, the only change would be that a facility could not look back further than five years to 

attempt to show that there was another 24 consecutive month period that was more representative of normal 

emission source operations. Both EUSGUs and non-EUSGUs would have more flexibility than under the 

current Part 231 in establishing their baseline as they would not have to specifically demonstrate (in order to 

look back beyond the two most recent years) that another 24 consecutive month period within five years was 

more representative of normal emission source operations. As under the current Part 231, both EUSGUs and 

non-EUSGUs would not be able to go beyond the most recent five years in establishing their baselines. 
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 The Department believes that, in light of the D.C. Circuit’s decision in the ‘South Coast’ case, adopting 

a 10-year look-back period could be legally vulnerable as an impermissible “backsliding” of a control in a 

nonattainment area. Section 193 of the Clean Air Act, 42 U.S.C. Section 7515, prohibits the “backsliding” of 

control requirements in nonattainment areas; ‘see also’ 42 U.S.C. Section 7502(e) (prohibiting the relaxation of 

a primary national ambient air quality standard absent the promulgation of requirements that “provide for 

controls which are not less stringent than the controls applicable to areas designated as nonattainment before 

such relaxation”). In ‘South Coast’, the court held that EPA acted unlawfully when it decided that the one-hour 

NSR requirements need not be continued, given that “[t]he result of this change is to subject fewer areas to 

LAER and to offset requirements that themselves are weakened,” but did not require alternative requirements 

that would ensure the same level of emission reductions (‘South Coast’, 472 F.3d 882, 901). Similarly, if the 

Department were to adopt the 10-year look-back provision for non-EUSGUs the baseline period provision could 

be challenged in court as being inconsistent with the ‘South Coast’ decision. 

 Under the current Part 231, both EUSGUs and non-EUSGUs may attempt to demonstrate to the 

Department that a 24 consecutive month period other than the two most recent years (with a limit on looking 

back five years) should be used in establishing the baseline period. However, as the D.C. Circuit noted in the 

‘New York v EPA’ decision, “EPA appropriately refers to the problems experienced under the 1980 [PSD] rule 

. . . [including that] establishing a representative baseline period other than the two-year period immediately 

preceding the change was ‘complex and time-consuming’ and often involved ‘disputed judgment calls’” (‘New 

York v EPA’, 413 F.3d 3, 53-54 (quoting 61 Fed Reg 38,258)). Removing this aspect of the regulation should 

reduce the administrative burden on the Department, allowing it to use its limited resources in other more 

pressing areas. 

The Department also believes that overall this approach will also provide additional flexibility for 

facilities, which EPA concludes could result in additional economic growth. In particular, both EUSGUs and 

non-EUSGUs will be able to use any 24 consecutive month period within the past five years, without the burden 
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of demonstrating to the Department that this period is more representative of normal source operations than the 

two most recent years. In addition, the business cycle study relied upon by EPA, to justify the 10-year lookback, found business cycles varied in the industries surveyed from three years to eight years. A five-year lookback offers a period that is approximately the average length of these cycles. 

Although the 2002 Federal NSR Rule allows facilities to choose a different baseline period for each 

NSR pollutant, proposed amendments to Part 231 require facilities to select a single baseline period for all 

pollutants. The Department has determined that a single baseline period for a specific project is more 

appropriate for New York’s NSR program. The use of a single baseline period assures that a proposed project 

is based on an actual operating scenario and not an artificially high emissions baseline. The use of multiple 

baselines could result in picking several baseline periods to maximize emissions for several different pollutants. 

For example, a combustion facility permitted to burn both oil and natural gas could choose different baseline 

periods when using natural gas to maximize VOC, CO, and PM-10 emissions and oil to maximize PM, NOX

and SO2 emissions. This would create an artificially high baseline never actually experienced by the source nor 

emitted to the atmosphere surrounding the facility and, in extreme cases, a baseline that could never actually be 

achieved by the source. 

Pursuant to the 2002 Federal NSR Rule, a facility could develop a baseline emissions profile which is 

not derived from a permitted operating scenario, but is based on pollutant-specific emissions achieved during 

different operating scenarios and different baseline periods. In practice, the facility would not have emitted at 

the two-year high levels for all the NSR pollutants during any consecutive two-year baseline period. More 

importantly, the operating permit would not have authorized such emission levels under either operating 

scenario. With higher baseline emissions during a particular two-year period, however, a proposed project 

could avoid being subject to NSR for those pollutants as a result of selecting that baseline period. At no time 

would the actual emissions of the affected emissions source in any one operating scenario be honored, 

notwithstanding that the Part 201 permitting program establishes emission limits for each operating scenario. 
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The result of this is the potential for a project that would otherwise be considered major except for the 

artificially high baseline to either “cap out” or “net out” of NSR. This would cause an increase in emissions 

that would exacerbate air quality problems in New York State. 

Independent and Unrelated Emissions Increase Exclusion.

In considering whether to exclude emissions from independent and unrelated factors such as demand 

growth from the calculation of post-modification emissions, the Department is guided by the decision in ‘New 

York v EPA’ which upheld the exclusion as consistent with the Act. EPA’s explanation that the CAA and the 

implementing regulations require a causal link between the proposed change and any post-modification increase 

in emissions and that the 2002 Federal NSR Rule excluded demand growth where it was unrelated to the 

particular project persuaded the Court that the approach was consistent with the Act (‘see’ ‘New York v EPA’, 

413 F3d 3, 32). In rejecting petitioner’s arguments, the Court noted that the 2002 Federal NSR Rule establishes 

two criteria a facility must meet before it can exclude emissions from the projection of post change actual 

emissions. First, the facility must demonstrate that the emission source could have achieved the necessary level 

of utilization during the 24 consecutive month period selected to establish the baseline actual emissions. 

Second, the increase cannot be related to the physical or operational change(s) made to the emission source. 

Even if the emission source could have been operated to achieve a particular level of demand during the 

representative baseline period, if the increase is related to the modification of the emission source, the emissions 

increases resulting from the increased operation must be attributed to the modification, and cannot be excluded 

from the projection of post-modification actual emissions. For example, if a proposed physical change or 

change in the method of operation (modification) at a facility lowers the cost of production, thereby enabling 

the facility to produce and sell more of its product as a result, the emissions attributable to the increase in 

production and sales must be included in the calculation of projected actual emissions. On the other hand, if a 

facility’s proposed modification lowers the cost of production, but without any projection of increased 
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production or sales, the modification would not be projected to result in increased emissions. Likewise, if a 

facility produces more solely because of increased demand that is unrelated to a proposed modification, the 

increase in emissions due solely to the production increase would be excluded in the calculation of projected 

actual emissions for the modification. 

One of the Department’s concerns with the Federal independent and unrelated factors emissions 

exclusion in the 2002 Federal NSR Rule is that as a practical matter it is often difficult to separate such 

emission increases from other emission increases resulting from a project. A facility may vent emissions from 

more than one emission source out of the same emission point, in some circumstances making it difficult to 

attribute stack emissions to a particular emission source. Alternately, since emissions from independent and 

unrelated factors such as demand growth depends on production, and production figures are often deemed 

confidential business information, it would be difficult to reproduce calculations that support the independent 

and unrelated factors, or impossible to obtain sufficient information from the facility to verify whether 

emissions are truly attributable to such factors. Since EPA promulgated the independent and unrelated factors 

emissions exclusion in 1992 as a result of the WEPCO case, EPA has not published any guidance for how this 

distinction should be made. Further, EPA acknowledged in the Technical Support Document in connection 

with its determination on Reconsideration of the 2002 Federal NSR Rule that it may be difficult to separate 

independent and unrelated factor emission increases from other increases resulting from a project (‘Technical 

Support Document for the Prevention of Significant Deterioration (PSD) and Nonattainment Area New Source 

Review (NSR): Reconsideration,’ EPA-456/R-03-005, October 30, 2003, page 19). As a result, EPA concluded 

in its response to comments document that it is “very important that the source retain a record of all information 

available to support its initial claim that an emissions increase predicted to occur as a result of demand growth 

did not result from the physical or operational change to an emissions unit. This information may be required 

by the reviewing authority should there be a question about the project being a major modification” (EPA 

Technical Support Document’ November 2002, I-5-44). EPA noted, however, that there are situations where 
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the distinction clearly can be made, including: skyrocketing demand because the product becomes a fad; 

mishaps at a factory causing production increases at remaining supplier sources; decrease in raw material 

prices; opening of new markets; and improved economic conditions. 

To the extent that facilities can make those distinctions, and in light of the Court’s ruling that the CAA 

definition of modification contemplates a causal connection between the proposed change and any postmodification emission increase, proposed amendments to Part 231 allow facilities to exclude emission increases 

from independent and unrelated factors consistent with the 2002 Federal NSR Rule. Emission increases which 

an emission source was capable of accommodating prior to the modification and which are not in any way 

related to the change do not have to be included in the projection of (post-modification) projected actual 

emissions. The proposed amendments to Part 231 require that facilities provide (at the time of permit 

application for a modification) adequate documentation of projected actual emissions, including any emissions 

attributable to independent and unrelated factors that an emission source was capable of accommodating prior 

to the modification. Emissions associated with independent and unrelated factors cannot be excluded where the 

emissions are related to the modification, or if the facility cannot establish that the emission source could have 

accommodated the increase. Thus, proposed amendments to Part 231 are structured to provide a mechanism for 

the Department to ensure that regulated entities are properly invoking the exclusion for emissions from 

independent and unrelated factors and can adequately document their determination of post-modification actual 

emissions, and the basis for any emission exclusions. 

Permit Requirements

The 2002 Federal NSR Rule requires modified facilities to obtain NSR permits only when the 

modification is major above significance levels. Similarly, the proposed amendments to Part 231 require 

facilities to obtain permits and/or permit modifications when the proposed modification will result in a 

significant net emission increase. In addition, the proposed amendments to Part 231 require a facility to obtain 
Page 48 of 76 

a new or modified permit if the facility utilizes netting to avoid a significant net emission increase. Under the 

netting provisions of the proposed amendments to Part 231, a facility can subtract any contemporaneous 

emission decreases from other emission sources at the facility, from the project emission potential. The 

requirement for a permit where a facility relies on netting to avoid major NSR is consistent with how the 

Department has implemented Part 231 since November 15, 1992. The 2002 Federal NSR Rule does not require 

a permit for netting and requires facilities to maintain records of post-modification emissions only when the 

facility itself determined that a “reasonable possibility” exists that a significant net emissions increase could 

occur notwithstanding the facility’s projections that it would not. In ‘New York v EPA,’ the Court held that the 

“reasonable possibility” provision was unenforceable. To avoid any questions concerning the implementation 

of NSR in New York for facilities that use netting to avoid NSR requirements, the proposed amendments to Part 

231 expressly require that facilities apply for and obtain a permit. The permit will include appropriate 

recordkeeping, monitoring, and reporting provisions to ensure that modification will not result in a significant 

net emission increase. 

Although the 2002 Federal NSR Rule does not expressly require facilities to obtain a permit when the 

facility relies on netting or make specific assumptions with respect to the magnitude of post-modification 

emissions, EPA, in its oversight of New York’s implementation of the CAA, has required permits as a matter of 

policy and administrative practice. Under the current Subpart 231-2, if the proposed emissions increase 

(baseline actual emissions to potential to emit) of a modified emission source exceeds applicable NSR 

thresholds the facility must obtain a permit with appropriate terms and conditions limiting emissions or be 

subject to NSR requirements. Consistent with the Department’s current implementation of Part 201, a 

limitation on a facility’s “potential to emit” must be enforceable through the issuance of an operating permit 

with appropriate terms and conditions limiting the capacity of the facility to emit. 

The Department promulgated Subpart 201-7 “Federally Enforceable Emission Caps” in 1996, in the 

absence of a Federal emission capping regulation, to provide a legal mechanism for facilities to avoid federal 
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CAA permitting requirements by accepting a State-issued permit with federally enforceable emission caps. 

EPA approved Subpart 201-7 into New York’s SIP in 2005, making the regulation enforceable as a matter of 

federal law. The Department has consistently used the Part 201 permitting program, including Subpart 201-7, 

to ensure that: (1) new facilities seeking to avoid Federal permit requirements maintain emissions below 

applicable thresholds; (2) facilities undertaking modifications do not exceed their projections of postmodification emissions, and (3) facilities claiming credit for voluntary emission reductions actually achieve 

those reductions. These goals are accomplished by including terms and conditions in permits limiting 

emissions, hours of operation or production, requiring the implementation of appropriate work practices 

reflecting the emission source shutdown or curtailment of operations, and requiring compliance monitoring, 

recordkeeping, and reporting. 

The proposed amendments to Part 231 will continue the long-standing practice ensuring compliance 

with regulatory standards through the Part 201 permitting program. Facilities which avoid NSR through netting 

will be required to obtain operating permits with appropriate terms and conditions ensuring that the emission 

reductions relied upon are achieved. New or modified facilities which are subject to NSR will be required to 

obtain permits limiting their potential to emit or projected actual emissions respectively, to ensure that 

emissions do not exceed the amounts upon which the Department made its NSR determinations with respect to 

emission offsets and control technology requirements. 

Emission Reduction Credits

Under the ECL, ERCs are defined as the actual decrease in emissions of a regulated air contaminant in 

tons per year (ECL Section 19-0107[16]). Under the proposed amendments to Part 231, ERCs will be used in 

both the PSD and NNSR programs to reflect emission decreases in annual tonnages consistent with ECL 

Section 19-0107(16). In the case of a new major facility or major modification at an existing facility located in 

a nonattainment area or the Ozone Transport Region, ERCs can be utilized to meet the CAA requirement for 
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emission offsets. Emission offsets are a subset of ERCs and represent emission reductions which are required 

to be obtained by a facility to obtain a permit to construct. ERCs can also be used by facilities in both 

attainment and nonattainment areas for netting whereby a facility reduces emissions of other emission sources 

at the facility to limit the net emission increase of a proposed NSR major modification to below significance 

levels. ERCs are subject to Department review and approval through a notice and comment permit process and 

will be documented in the operating permit with enforceable emission limitations. There are specific provisions 

which apply to ERCs used as emission offsets which will be carried over from existing Subpart 231-2 into the 

proposed amendments to Part 231. 

Reporting, Monitoring, and Recordkeeping 

 Under the proposed amendments to Part 231, operating permits must include appropriate monitoring, 

recordkeeping and reporting requirements to ensure compliance with any emission limitation or standard or 

emission reduction credit established. These requirements will be implemented through a facility’s Title V 

operating permit or state facility preconstruction permit and are consistent with the Department’s 

implementation of existing Part 231. These provisions are applicable to a new major facility, NSR major 

modification and to facilities that avoid NSR requirements by netting. Facilities which undertake insignificant 

modifications (those that are not projected to result in significant emission increases) will be required to comply 

with the proposed Part 231 Reasonable Possibility Requirements for Insignificant Modifications, and comply 

with any other requirements that may be applicable, including Part 201 permitting requirements. 

 On December 21, 2007 EPA finalized its Reasonable Possibility Rule which identifies the criteria under 

which an owner or operator of a major facility undergoing a physical change or change in the method of 

operation that does not trigger major NSR requirements must keep records (72 Fed. Reg. 72607). Proposed Part 

231 tracks these Federal requirements with a few additional provisions. Some revisions for clarification were 

made to the Department’s original proposal but the substantive requirements are essentially the same. EPA has 
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concluded that it is “very important that the source retain a record of all information available to support its 

initial claim that an emissions increase predicted to occur as a result of demand growth did not result from the 

physical or operational change to an emissions unit.” 

 The Federal Reasonable Possibility Rule only requires post-change monitoring for insignificant 

modifications if the projected actual emissions increase (Part 231 project emission potential) is by itself greater 

than or equal to 50 percent of the applicable significance threshold. Proposed Part 231 extends the post-change 

monitoring requirement to also include any modification with a project emission potential which is less than 50 

percent of the applicable significant project threshold in Table 3, Table 4 or Table 6 of Subpart 231-13, but 

equals or exceeds 50 percent of the applicable significant project threshold when emissions excluded in 

accordance with Clause 231-4.1(b)(42)(i)(c) (emissions from independent and unrelated factors) are added. 

Facilities will be required to keep records of their calculation of emission increases from independent and 

unrelated factors such as demand growth, monitor post-modification emissions, and submit annual reports to 

verify the accuracy of their calculations. This should increase accountability and enforceability, consistent with 

the D.C. Circuit Court’s decision in ‘New York v. EPA’, 413 F.3d. 3. Additionally, the Federal Reasonable 

Possibility Rule only requires EUSGUs to notify the Department, prior to beginning actual construction, for any 

modification with a project emission potential which equals or exceeds 50 percent of the applicable significant 

project threshold. Proposed Part 231 extends the pre-construction notification requirement to any facility that 

proposes a modification with a project emission potential which equals or exceeds 50 percent of the applicable 

significant project threshold or proposes a modification with a project emission potential which is less than 50 

percent of the applicable significant project threshold in Table 3, Table 4 or Table 6 of Subpart 231-13, but 

equals or exceeds 50 percent of the applicable significant project threshold when emissions excluded in 

accordance with Clause 231-4.1(b)(42)(i)(c) (emissions from independent and unrelated factors) are added. The 

Department believes these requirements are necessary to ensure that facilities take into account the emissions 

from such projects in any future Part 231 applicability determination or netting analysis and comply with the 
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proposed amendments to Part 231. Because facilities will have to generate this information to determine 

whether they are subject to the proposed amendments to Part 231, there should be little if any additional cost 

associated with maintaining the records. In the case of netting at existing major facilities, and for insignificant 

modifications, the proposed recordkeeping, monitoring, and reporting requirements are more extensive than 

those included in the 2002 Federal NSR Rule. For netting, the proposed regulation is consistent with current 

Department practice which requires permits to include enforceable emission limits and appropriate 

recordkeeping, monitoring, and reporting. For insignificant modifications, the proposed regulation requires that 

facilities maintain records of the modification and comply with any other requirements that may be applicable, 

including Part 201 permitting requirements. While proposed Part 231 recordkeeping, monitoring, and reporting 

requirements may be more extensive than the 2002 Federal NSR Rule, from the perspective of New York 

State’s implementation of NSR, the requirements are not significantly changing. 

Routine Maintenance, Repair, and Replacement (RMRR)

The regulatory exemption from the federal definition of “modification” for routine maintenance, repair, 

and replacement, known as the RMRR exclusion, has been subject to numerous court challenges and garnered 

significant discussion during the NSR workgroup meetings. A discussion of the statutory framework and the 

legal issues surrounding the interpretation and implementation of the RMRR provision is helpful to 

understanding the proposed amendments to Part 231 with respect to this issue. 

The Act defines modification broadly as “any physical change in, or change in the method of operation, 

of a stationary source which increases the amount of any air pollutant emitted by such source or which results in 

the emission of any air pollutant not previously emitted” (42 USC Section 7411[a][4]). A modification triggers 

permitting requirements under the CAA as well as the duty to install pollution controls (42 USC Sections 

7475[a]), 7479[2][C]) and 7503[a]). By regulation, EPA exempted certain activities from the definition of 
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modification, including maintenance, repair, and replacement activities. ‘See also’ 40 CFR Section 

52.21[b][2][iii]). 

To give full effect to the plain language of the CAA, which contains no exemption provision for the 

term “modification”, Courts have construed the RMRR exclusion narrowly. As the Court explained in 

‘Alabama Power v Costle,’ 636 F.2d 323 (1979), a case challenging the legality of EPA’s then promulgated 

NSR rule, EPA does have discretion, in administering the Act's "modification" provision, to exempt from PSD 

review some emission increases on grounds of ‘de minimis’ or administrative necessity, however, such 

discretion is limited: 

Implementation of the statute's definition of "modification" will undoubtedly prove inconvenient 

and costly to affected industries; but the clear language of the statute unavoidably imposes these 

costs except for de minimis increases. The statutory scheme intends to "grandfather" existing 

industries; but the provisions concerning modifications indicate that this is not to constitute a 

perpetual immunity from all standards under the PSD program. If these plants increase pollution, 

they will generally need a permit. Exceptions to this rule will occur when the increases are de 

minimis,. . . 

(636 F2d at 400). 

Consistent with ‘Alabama Power,’ EPA had, for over two decades, defined the RMRR exclusion as 

limited to “‘de minimis’ circumstances” (‘see’ 68 Fed Reg 61272 [Notice of ERP Rule, October 27, 2003]). 

In the seminal decision ‘Wisconsin Electric Power v Reilly’, the Seventh Circuit Court of Appeals 

addressed the interpretation of “modification” and the extent of the RMRR regulatory exemption in the context 

of a proposed project at an electric generating facility (‘Wisconsin Electric Power Company v Reilly,’ 893 F.2d 

901 [7th Cir. 1990] [en banc] [‘WEPCO’]). At issue in WEPCO was a proposed replacement program, termed a 

"life extension" program, which WEPCO submitted to Wisconsin Public Service Commission for approval. In 

support of the project, WEPCO stated that renovation of the emission units was necessary to enable them to 

operate beyond their currently planned retirement dates and would make the plant capable of generating at its 

design capacity until year 2010 (‘id.’ at 906). 
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The Court opined on two central issues, namely whether certain activities constituted a physical change 

within the meaning of the CAA and second whether, assuming the projects involved physical changes, did they 

constitute exempt RMRR activities. Notably, the Court rejected outright the argument that Congress intended 

to exclude like-kind replacements from the purview of a physical change: 

[W]hether the replacement of air heaters and steam drums is a 'basic or fundamental change' 

in [defendant's facility] is irrelevant for our purposes, given Congress's directions on the 

subject: 'The term 'modification' means any physical change . . . . 

(‘id.’ at 908; ‘see also id.’ at 913 ["the modification provision applies to ‘any physical change, without regard to 

cost’, that causes an increase in emissions"] [emphasis added]). On the issue of how to interpret what activities 

constituted RMRR, the Court relied on EPA’s policy guidance. That guidance stated that whether proposed 

work at a facility is routine, involves a case-by-case determination which considers four factors, namely the 

nature, extent, purpose, frequency, and cost of the work, as well as other relevant factors, to arrive at a 

common-sense finding. Having determined that the proposed work constituted a physical change and, thus, a 

modification, the Court went on to apply the four factors to determine whether the projects avoided 

classification as a modification as being RMRR. The Court concluded that the nature and extent of the 

proposed projects at WEPCO did not compare with other projects done in the industry, as WEPCO argued. The 

Court further concluded that the purpose, frequency and cost of the work demonstrated that the activities were 

not routine, but rather intended to extend the life of the units from their planned retirement dates and at a cost of 

at least $70.5 million. These facts, in the Court’s view, provided strong indication that the projects were not 

routine. (‘id.’ at 912). 

‘United States v. Southern Indiana Gas & Electric Co.,’ 245 F.Supp. 2d 994 (S.D. Ind. 2003) 

(‘SIGECO’) is also helpful in examining the routine maintenance issue. The Court in SIGECO addressed how 

broadly the RMRR exclusion should be defined in the context of a series of modifications at several power 

plants owned by defendants. Citing to ‘WEPCO,’ the Court stated: 
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The general rule is that any physical change to a unit which results in an increase in emissions 

constitutes a "modification" triggering compliance with the CAA. If the routine maintenance 

exemption were defined broadly, as Ohio Edison urges, the exemption would swallow both the 

rule and specific provisions of the Clean Air Act. More fundamentally, the exception for "routine 

maintenance, repair, or replacement" was not included by Congress in the Clean Air Act. This 

regulatory exception then must also be harmonized with the statutory language of the Clean Air 

Act. This Court concludes that if the broad definition given to "routine maintenance, repair, or 

replacement" by Ohio Edison were adopted, the regulation would be in direct conflict with the 

superceding and controlling language of the Clean Air Act 

 

(‘id.’ at 855). 

Applying the four part test to each of the activities in question, the Court found that many of the projects 

were large in scope, expensive, involved outside contractors and increase in value to the units and were treated 

by the company as capital expenditures for accounting purposes. In other instances, the company failed to 

substantiate that the activities at issue were undertaken with such frequency that they could be considered 

routine (‘id.’ at 861). 

More recently, and shortly after the last workgroup meeting, the U.S. Court of Appeals for the D.C. 

Circuit spoke to the issue of routine maintenance when it vacated the ERP Rule (‘New York v. EPA II’, 443 

F.3d 880). The ERP Rule both defined and expanded the RMRR exclusion by providing that the replacement of 

components with identical or functionally equivalent components does not constitute a physical change as long 

as the cost of the replacement did not exceed 20 percent of the replacement value of the process unit and did not 

change its basic design parameters. The Court held that the ERP violated Section 111 of the Act in two 

respects. First, the word “any” in the definition “modification” means that all types of “physical changes” are 

covered and that an activity within the common phrase of “physical change” is subject to NSR when that 

activity results in an emission increase. Second, Congress defined modification in terms of emission increases, 

but the ERP would allow equipment replacements resulting in non-‘de minimis’ emission increases to avoid 

NSR, in violation of the express terms and clear intent of the Act. 

In light of the foregoing, in particular the ‘New York v. EPA II’ decision, the Department believes that 

the question of how the term “modification” should be interpreted with respect to any regulatory exemption, 
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including the RMRR exemption, is settled. The Act evinces a clear Congressional intent to broadly construe the 

term “modification”, and neither expressly, nor impliedly, provides any categorical exemptions for particular 

activities or physical changes. Given the statutory framework, any exemption established by regulation must, 

by necessity, be of a ‘de minimis’ nature. Thus, the RMRR exclusion must be viewed in the nature of a narrow, 

‘de minimis’ exclusion from NSR requirements rather than as a broad exemption or a measure providing 

regulatory flexibility. 

The RMRR exclusion is currently embedded in the definition of the term “modification” in existing Part 

200. To clarify the Department’s intent with respect to RMRR, Part 200 will be amended to include a definition 

for RMRR. Whether work done at an emissions source constitutes RMRR will continue to be determined on a 

case-by-case basis by examining the nature and extent, purpose, frequency, and cost of the activity. Generally, 

RMRR refers to activities which are undertaken on a prescribed and/or regular schedule, limited in scope and 

expense, and typically paid for out of the operation and maintenance budget of the facility. RMRR generally 

does not refer to activities that are infrequent, large in scope, extend the life of the facility, or result in the 

regaining of lost capacity or availability. 

Some activities which might qualify as RMRR in the case of an electric generating facility, for example, 

include the following: cleaning of a boiler and related ductwork to facilitate maintenance access and 

inspections; inspection of the furnace and gas path; inspection including non-destructive examination of known 

trouble areas; individual tube repair/replacement; inspection of tube shields and high erosion areas; inspection, 

repair and replacement of refractory in the slag necks and troughs; inspection and repair of ductwork and 

expansion joints; cleaning and inspection of boiler penthouses; water blasting, inspection, stud replacement and 

new refractory (cyclone fired boilers); inspection and repair of boiler casing, doors and inspection ports; 

inspection and repair of gas path deflection baffles and flow distributors; inspection and repair of all dampers 

(air and gas); removal, disassembling, inspection and repair of ignitors; cleaning, inspection and repair of 
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external steam header vestibules; pressure testing water and steam tubing components; and chemical cleaning of 

water-side tubing to remove internal deposits. 

During the workgroup meetings, but prior to the March 17th Federal Court decision, members of the 

regulated community expressed concern with the current practice of evaluating RMRR on a case by case basis 

and preferred the bright line test established by the ERP Rule. New York however, challenged the ERP Rule as 

clearly contrary to the CAA because it allowed potentially significant emission increasing activities to occur 

without the requirement for NSR review, under the auspices of a regulatory exemption. The Department agreed 

to discuss the RMRR issue during the workgroup process, but made clear that from the State’s perspective, the 

ERP Rule was not a viable option for inclusion in a State NSR rule. The Department encouraged workgroup 

members to present alternative proposals and, in turn, presented concepts for discussion in addition to the four 

factor test. The Department’s concepts included (1) a provision for predetermining RMRR activities in Title V 

permits, subject to public notice and comment; (2) relying on Title V operational flexibility provisions; and (3) 

utilization of PALs. Workgroup members did not present specific proposals and did not reach consensus on a 

particular approach to the RMRR issue. The Department believes that the four factor test is appropriate for 

inclusion in a regulatory definition in light of ‘New York v EPA’ II and that facilities which want to avoid case 

by case determinations and permitting review for modifications can avail themselves of other more appropriate 

regulatory flexibility discussed below. 

Options for Regulatory Flexibility

The RMRR exclusion is not intended as a tool for regulatory flexibility as some persons in the 

regulatory community might have been envisioned. The proposed amendments to Part 231, however, and the 

Title V program do include provisions for operational flexibility. The Department believes that these provisions 

can be utilized by facilities to meet their business needs and benefit the environment at the same time. 
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 The PAL provisions allow a facility to establish a facility-wide emission limitation based on historical 

operating data. The PAL must be reduced by 25 percent by the sixth year that the PAL is in effect, unless the 

facility is able to justify a lesser reduction on the grounds that application of BACT and/or LAER at the facility 

(depending on attainment status) would achieve less than a 25 percent reduction. As long as the facility’s 

emissions remain under the applicable PAL, the facility can undertake modifications without undergoing NSR 

review. PALs will enable facilities to more effectively respond to market-place changes. Through the use of a 

PAL, the facility can accommodate shifting demand for various products without the need for review and 

scrutiny by the Department prior to making such changes. 

 To obtain a PAL, a facility is required to monitor and maintain records of its activities to ensure 

compliance and have appropriate conditions in its Title V permit reflecting these requirements. Some members 

of the workgroup expressed concern that these requirements would be burdensome. It is important to note 

however that major facilities are already subject to extensive monitoring, reporting, and recordkeeping 

requirements. It is likely that these facilities already have these systems in place that could be used to meet the 

regulatory requirements for PALs. 

 The Department believes that PALs will be a valuable tool for regulatory flexibility, enabling a facility 

owner to obtain the benefit of increased flexibility in return for committing to a plant-wide emission cap that 

will ensure reduced emissions and improved air quality. Review of the record of EPA’s rulemaking and the 

Department’s own experience establish that PALs can also achieve substantial reduction in emissions. For 

example, the D.C. Circuit noted in ‘New York v EPA’ that participants in six pilot projects evaluated by EPA 

resulted in emission reductions of 27-83 percent below their PAL levels. Requiring a reduction of 25 percent 

ensures that such reductions will be realized (‘New York v EPA’, 413 F.3d 3, 37). In the absence of a 

requirement to reduce emissions as a condition of a PAL, EPA estimates “conservatively” that reductions of at 

least 10-33 percent will be achieved (‘id.’at 38). 
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 Likewise, NRG in 2004 agreed to a settlement of alleged CAA violations in which NRG agreed to a 

substantial (85-90 percent) reduction in emissions through a series of annual system-wide emission reduction 

targets that limit total SO2 and NOx emissions from their Huntley and Dunkirk facilities. Under this 

settlement, beginning in 2005 NRG would have to meet significant annual tonnage reductions in emissions of 

both NOX and SO2 from both facilities. In terms of annual tonnages, by the end of 2013 NRG will have 

reduced the SO2 emissions at Huntley and Dunkirk from its pre-enforcement permitted levels of over 100,000 

tons per year across both plants, to 14,169 tons. By the end of 2012, NRG’s NOX emissions will be reduced 

from pre-enforcement permitted levels of over 17,000 tons per year to 3,241 tons or an emission rate equivalent 

to the presumptive BACT level of 0.10 lb/mmBtu per year across both plants. Although NRG has flexibility in 

the short term to allocate emission reductions between its facilities, it ultimately must propose and comply with 

a plant-wide emission cap for each facility. NRG commented during the workgroup meeting of February 16, 

2006 that it has been meeting the monitoring, recordkeeping, and reporting obligations under the Consent 

Decree and does not find the requirements to be burdensome. 

 The Department recognizes that most facilities will not take advantage of PALs, regardless of whether a 

25 percent reduction in emissions is required. However, in those instances when a source determines that the 

added flexibility justifies its agreement to a PAL, the provisions, as revised, ensure that reduced emissions and 

improved air quality will result. 

4. COSTS 

 NSR reviews are done on a case-by-case basis so the costs of compliance with either the Federal NSR 

rules or the proposed Part 231 revisions will be very facility specific. Under proposed Part 231, the following 

types of costs may be incurred. New facilities or facilities that undertake modifications will have costs 

associated with determining regulatory applicability in the first instance. Some facilities that undertake 

insignificant modifications will only incur the costs associated with maintaining records of information that they 
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would have needed to generate to determine whether they are subject to the proposed amendments to Part 231, 

therefore, there should be little if any additional cost associated with maintaining the records. Other facilities 

proposing an insignificant modification will be required to keep records of their calculation of emission 

increases from independent and unrelated factors such as demand growth, monitor post-modification emissions, 

and submit annual reports to verify the accuracy of their calculations. Although such facilities will incur some 

additional costs, the Department believes that the costs will not be significant and are necessary for 

accountability and enforceability, consistent with the D.C. Circuit Court’s decision in ‘New York v. EPA’, 413 

F.3d. 3. Facilities that require emission caps will have the costs of preparing permit applications and emissions 

monitoring, recordkeeping and reporting. Facilities that are subject to NSR in its entirety will have costs 

associated with preparing permit applications, including control technology and environmental impact 

assessments, obtaining emission offsets for nonattainment areas, and emissions monitoring, recordkeeping, and 

reporting. The proposed amendments to Part 231, in general, add provisions for increased regulatory flexibility 

and provide for a coordinated review process for NSR affected projects. The technology assessment 

requirements of LAER, for facilities subject to the Department’s existing Part 231, remain unchanged in the 

Department’s proposed amendments to Part 231. While some aspects of the regulatory applicability 

determination will be more restrictive for non-attainment NSR than current Part 231, i.e. the baseline actual 

emissions to projected actual emissions methodology will replace the maximum annual potential (MAP) 

methodology calculation, other aspects of the proposed regulation will be more flexible than the current 

regulation. For example, for baseline determinations facilities will have the option to choose any 24 

consecutive month period in the past five years while the current Part 231 requires facilities to use the most 

recent 24 consecutive month period unless they can demonstrate that another period is more representative. It is 

possible that the proposed revisions to Part 231 will result in more facilities being subject to nonattainment NSR 

review than under current Part 231 since the Department is eliminating the MAP concept. As explained earlier 

in this document, EPA determined that the MAP methodology was inconsistent with the Act and since then has 
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revised its rule for determining regulatory applicability. The Department’s revisions to Part 231 address these 

issues. It is also possible that more facilities will be subject to NSR under revised Part 231 than under the 

Federal regulations since the Department is proposing to determine baseline actual emissions based on a fiveyear look-back period rather than a 10-year look-back as in the Federal NSR rule. The Department anticipates 

that more facilities will be subject since there will be less opportunity for an emission look-back, however, the 

Department does not have definitive data to determine for certain that this will be the case. As far as the costs 

of compliance are concerned the Department does not envision significant increased costs. Since the proposed 

amendments to Part 231 apply to proposed major facilities, NSR major modifications and netting, annual 

compliance and administrative costs would remain consistent with those currently incurred to comply with the 

Department’s 6 NYCRR Part 201 Title V requirements. 

 

Recordkeeping, monitoring, and reporting requirements

 The proposed revisions require all emission sources that undergo NSR keep appropriate monitoring 

records and submit required reports to the Department. The Title V permit program under 6 NYCRR 201-6 

requires that facilities which have monitoring conditions and emission limits in their permits maintain records 

and submit reports to the Department. The capping requirements under 6 NYCRR 201-7 also require facilities 

to maintain records and submit reports associated with all emission limitations and monitoring provisions in 

their permits. Therefore, the addition of these proposed requirements to Part 231 will not increase costs to 

facilities that are either subject to, or avoiding Part 231 applicability by capping. 

 Major facilities that undertake modifications with a project emission potential which is less than 50 

percent of the applicable significant project threshold, but equals or exceeds 50 percent of the applicable 

significant project threshold when excluded emissions from independent and unrelated factors such as demand 

growth are added, or for a modification with a project emission potential which equals or exceeds 50 percent of 

the applicable significant project threshold, the facility owner or operator must submit an application to modify 
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the facility permit under the minor permit provisions of Subpart 201-6 or obtain a preconstruction permit under 

the provisions of Subpart 201-6, and will be required to keep records, perform monitoring, and submit annual 

reports to the Department. The Department revised these requirements of the proposed regulation to address 

comments, comply with EPA’s December 21, 2007 final Reasonable Possibility Rule and to insure 

accountability and enforceability, consistent with the D.C. Circuit Court’s decision in ‘New York v. EPA’, 413 

F.3d. 3. Facilities which are subject to this requirement will incur costs associated with monitoring emissions 

and preparing annual compliance reports, but these costs are not expected to be significant. Major facilities 

already have systems and technology in place to monitor emissions and are subject to annual compliance 

reporting under the Title V permit program. Therefore, the Department believes these obligations will not 

impose significant additional burdens on facilities. 

 Facilities that undergo insignificant modifications and do not project emission increases due to 

independent and unrelated factors such as demand growth or project only insignificant emission increases even 

with emissions from independent and unrelated factors such as demand growth will be required to maintain 

records of their modifications for a minimum of five years, and make the records available to the Department 

upon request. Facilities that undertake a project that involves a physical change or change in the method of 

operation that the owner or operator determines would be followed by a significant facility emissions increase 

attributable solely to independent factors must notify the Department in writing and submit supporting data of 

the proposed project prior to implementing the change. The requirement to maintain and submit these data 

records is not expected to result in any cost increase. The maintenance of these records will insure a future 

streamlined permitting process. 

PALs

The proposed regulation requires that the PAL shall be reduced to 75 percent of the initial PAL, 

commencing with the first day of the sixth year of the PAL, unless the owner or operator demonstrates that a 
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lesser level of reduction is justified. The owner or operator may seek an alternative reduced PAL by 

demonstrating that the application of BACT and/or LAER, as applicable, on all major PAL emission sources at 

the facility would not result in a 25 percent reduction in the initial PAL. The Department may authorize a 

reduction in the PAL to a level that would reflect the emissions from the facility if all major PAL emission 

sources are operated at full capacity after complying with BACT and/or LAER, as applicable. In making these 

determinations, emissions from minor PAL emission sources shall be held constant at the initial baseline levels. 

In no event shall the reduced PAL exceed the initial PAL. 

The capital, operation and maintenance, and monitoring costs associated with the acceptance of a PAL, 

if any, will vary on a case-by-case basis. The requirement to reduce the PAL may cause an increase in cost to 

the facility that chooses to use a PAL, if a facility chooses a capital-intensive means of achieving the emission 

reductions. However, some facilities may meet the 25 percent reduction without incurring any additional costs, 

such as when a facility already plans to reduce the usage of a less efficient source within the facility, or 

implements efficiency improvements that reduce emissions and the cost of operation. Since PALs are a new 

compliance option, no specific cost estimates are available to determine if the PAL provisions will cause a 

monetary burden on any facility that chooses to use a PAL. 

Emission Offsets 

The proposed amendments to Part 231 set forth PM-2.5 applicability requirements for new major 

facilities and NSR major modifications consistent with new Federal PM-2.5 requirements. EPA designated the 

New York City metropolitan area as nonattainment for the PM-2.5 standard (70 Fed Reg 944). NNSR is now 

required for new major facilities and major modifications to existing facilities that emit PM-2.5 in significant 

amounts in the PM-2.5 nonattainment area. The Department must include PM-2.5 in its proposed amendments 

to Part 231 to receive SIP approval. For new major facilities and NSR major modifications for PM-2.5, located 

in a PM-2.5 nonattainment area, the proposed rule requires the application of LAER and emission offsets of 
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PM-2.5 at a ratio of one to one. For new major facilities and NSR major modifications for PM-2.5, located in a 

PM-2.5 attainment area, the proposed rule requires the application of BACT and preparation of an ambient air 

quality impact analysis. Facilities which meet the PM-2.5 applicability criteria will incur additional costs above 

those in existing Part 231 since PM-2.5 is not a regulated contaminant under existing Part 231 and was not 

previously a regulated contaminant under Federal 40 CFR 52.21 (PSD). The most significant cost increase will 

be for new facilities and modifications that need to obtain PM-2.5 emission offsets. These costs will vary 

greatly, being dependent on the amount (tpy) of emission offsets needed and the availability of approved 

reductions to be used as PM-2.5 offsets. 

5. PAPERWORK 

 Most of the proposed amendments to Part 231 are not expected to entail any significant additional 

paperwork for the Department, industry, or State and local governments beyond that which is already required 

to comply with the Department’s existing permitting program under 6 NYCRR Part 201-6 and existing NSR 

regulations under 6 NYCRR Part 231, and federal 40 CFR 52.21. While Part 231 may include more specific 

recordkeeping and monitoring requirements than the Federal NSR rule, as discussed above, the paperwork 

involved in complying with the additional requirements is not considered as extensive or significantly more 

than facilities are currently required to maintain under the Title V permit program. Another area where revised 

Part 231 may entail additional paperwork is with the initial PAL review, which is a voluntary program. 

Applicants that seek to justify a reduction of less than 25 percent in the PAL will have to conduct control 

technology assessments that will increase the amount of paperwork beyond that required if the applicant chose 

not to avail itself of the option to agree to a PAL. 
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6. STATE AND LOCAL GOVERNMENT MANDATES 

 The adoption of the proposed amendments to Part 231 are not expected to result in any additional 

burdens on industry, State, or local governments beyond those currently incurred to comply with the 

requirements of the existing NSR process under 6 NYCRR 201-6, 6 NYCRR 231-2, and 40 CFR 52.21. 

7. DUPLICATION 

 This proposal is not intended to duplicate any other Federal or State regulations or statutes. The 

proposed amendments to Part 231 will ultimately conform the regulation to the CAA. 

 In the short term, some duplication may occur. Currently, EPA Region 2 implements the PSD program 

for new and modified major facilities in attainment areas of New York State. Federal PSD regulations were 

included in the New York State SIP by Federal action. The Department intends to submit the proposed 

amendments to Part 231 to EPA for SIP review, replacing the current PSD and NNSR SIP provisions. When 

the proposed amendments to Part 231 are promulgated, the Department will implement PSD requirements for 

subject sources pursuant to its authority under State law. EPA also will continue to implement the Federal PSD 

program until such time as the amendments are approved into the SIP. Once the proposed amendments to Part 

231 are approved into the SIP, the Department will have sole responsibility for implementing PSD and no 

duplication will occur. During the period of overlapping jurisdiction, the Department will work with the 

USEPA to avoid conflicting regulatory reviews. 

8. ALTERNATIVES 

1. Take No Action. 

 The State would be in violation of Federal law if no action is undertaken. As discussed in more detail in 

the Legislative Objectives, CAA Section 172 mandates that States have a SIP approved permitting program for 

NNSR. CAA Section 161 requires that State SIPs include emission limitations and other measures, as 
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determined by regulation to be necessary, to prevent significant deterioration of air quality. In 2000, EPA 

advised the Department that the methodology for determining NNSR modification applicability in existing 

Subpart 231-2, based on the concept of MAP, did not conform to the Act because it did not take into account 

increases in actual emissions. EPA required that existing Subpart 231-2 be revised as a condition of SIP 

approval and to fulfill the Department’s obligations under the Act. Moreover, under the “no action” alternative, 

the EPA would continue to implement the PSD Program for the preconstruction and permitting requirements for 

facilities located in areas that are in attainment of the NAAQS. The Department does not find this alternative 

acceptable in light of the noted deficiencies in the 2002 Federal NSR Rule and believes the policy objectives of 

the ECL are better addressed with a State PSD program. Thus, the State does not have the option of taking no 

action here. The rulemaking will correct the major deficiencies identified by EPA which is necessary for SIP 

approval. In addition, the rulemaking will incorporate some provisions of the 2002 Federal NSR Rule as well 

as other provisions which the Department believes is necessary to comport with the Act and with the State’s air 

quality objectives. 

2. Adopt the Federal NSR Rule

The Department does not believe that adoption of the Federal NSR Rule is consistent with the policy 

objectives of the State as articulated in the ECL and therefore has determined that this is not a viable option. 

Although the 2002 Federal NSR Rule allows facilities to choose a different baseline period for each NSR 

pollutant, the proposed amendments to Part 231 require facilities undergoing an NSR major modification to 

select a single baseline period for all pollutants. The Department has determined that a single baseline period is 

more appropriate. The use of a single baseline period assures that a modification is based on an actual operating 

scenario and not an artificially high emissions baseline period. The use of multiple baselines, for facilities 

undergoing an NSR major modification, could result in picking several baseline periods to maximize emissions 

for several different pollutants. 
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Additionally, under the 2002 Federal NSR Rule, baseline emissions are to be calculated by taking an 

average of the annual emissions in any 24 consecutive month period (selected by the permittee) within the 10-

year period that precedes the change, adjusted to reflect current enforceable emissions limitations. A notable 

exception exists in the case of EUSGUs, which are limited to any 24 consecutive month period within the fiveyear period immediately preceding when a permittee begins actual construction of a project, as was established 

in EPA’s rule addressing WEPCO. The Department believes that, in light of the D.C. Circuit’s decision in the 

‘South Coast’ case, adopting a 10-year look-back period could be legally vulnerable as an impermissible 

“backsliding” of a control in a nonattainment area. Section 193 of the Clean Air Act, 42 U.S.C. Section 7515, 

prohibits the “backsliding” of control requirements in nonattainment areas; ‘see also’ 42 U.S.C. Section 7502(e) 

(prohibiting the relaxation of a primary national ambient air quality standard absent the promulgation of 

requirements that “provide for controls which are not less stringent than the controls applicable to areas 

designated as nonattainment before such relaxation”). The Department has, therefore, decided to establish a 

uniform baseline period provision for EUSGUs and non-EUSGUs. Under proposed Part 231, all emission 

sources would be able to select a baseline using any 24 consecutive month period in the past five years. The 

Department believes that this approach strikes the most appropriate balance considering environmental 

protection, administrative burden, and economic growth. 

The Department has also determined that the Federal NSR Reasonable Possibility standards finalized on 

December 21, 2007 still contain some regulatory gaps and, therefore, are not totally protective of the 

environment and public health and welfare or consistent with the goals and policy objectives of the State. The 

Department’s proposed Part 231 tracks the Federal Reasonable Possibility Rule requirements with a few 

additional provisions to ensure that sufficient recordkeeping, monitoring and reporting is required for 

insignificant modifications that have a reasonable possibility of exceeding the applicable significance threshold. 
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3. Adopt a State-specific NSR program

 Because neither option discussed above is acceptable, the Department proposes to adopt a State specific 

NSR program. The program will consist of modifications to the Department’s existing Part 231 NNSR program 

and adoption of a State PSD program. The rulemaking will incorporate some of the provisions of the 2002 

Federal NSR Rule as well as other provisions tailored to New York’s air quality needs and objectives. 

 To address potential backsliding issues, proposed Part 231, like current Part 231, provides for a uniform 

approach on look-back periods allowing EUSGUs and non-EUSGUs to select any 24 consecutive month period 

within the last five years. Federal regulations allow non-EUSGUs to select any 24 consecutive month period 

within the last 10 years. As discussed elsewhere in this document, the Department believes a uniform approach 

strikes the most appropriate balance between air quality, administrative burden, and economic growth and 

minimizes the potential for backsliding. The proposed amendments to Part 231 require facilities undergoing an 

NSR major modification to select a single baseline period for all pollutants rather than allowing them to select 

multiple baselines. In addition, requiring facilities to use a single baseline period assures that a modification is 

based on an actual operating scenario and not an artificially high emissions baseline period. 

 The proposed amendments to Part 231 also provide clear criteria for recordkeeping and emissions 

monitoring to address the State’s concerns with rule enforceability. Notably, with regard to reasonable 

possibility requirements for insignificant modifications, the proposed rule requires that modifications with a 

project emission potential which is less than 50 percent of the applicable significant project threshold, but 

equals or exceeds 50 percent of the applicable significant project threshold when excluded emissions from 

independent and unrelated factors such as demand growth are added, or for a modification with a project 

emission potential which equals or exceeds 50 percent of the applicable significant project threshold, the facility 

owner or operator must submit an application to modify the facility permit under the minor permit provisions of 

Subpart 201-6 or obtain a preconstruction permit under the provisions of Subpart 201-6. Facilities will be 

required to keep records of their calculation of emission increases from independent and unrelated factors such 
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as demand growth, monitor post-modification emissions, and submit annual reports to verify the accuracy of 

their calculations. The Department believes that this more objective standard must be adopted as a trigger for 

recordkeeping, monitoring, and reporting and is essential to ensure accountability, and enforceability of the 

regulation. 

 Finally, the Department believes that additional environmental benefits will result from requiring a 

reduction in an initial PAL of up to 25 percent by the end of the fifth year of the PAL or a demonstration that 

major PAL emission sources at the facility already comply with the best available control technology or the 

lowest achievable emission rate technology. 

9. FEDERAL STANDARDS 

 The proposed amendments to Part 231 exceed federal standards in the following circumstances. 

Baseline Period

 Unlike the Federal regulations, which provide for different “look-back” periods for establishing baseline 

emissions and different approaches for demonstration of representative baseline emissions periods for EUSGUs 

and non-EUSGUs, the proposed amendments to Part 231 provide for a uniform approach on look-back periods 

and representative emission demonstrations. Under the proposed amendments to Part 231, EUSGUs would be 

allowed to choose any 24 consecutive month period in the last five years, as in the Federal regulations. The 

only difference for EUSGUs between the new Part 231 and the federal regulations would be that EUSGUs 

would no longer be allowed to look back beyond the last five years to attempt to demonstrate to the Department 

that another 24 consecutive month period is more representative of normal source operations. Like EUSGUs, 

non-EUSGUs would be allowed to choose any 24 consecutive month period in the last five years. This differs 

from the approach in the Federal regulations, which allows non-EUSGUs to choose any 24 consecutive month 

period in the last 10 years. 
Page 70 of 76 

 As discussed above, the Department believes that adoption of a uniform baseline period strikes the right 

balance between air quality, administrative burden, and economic growth. In addition, given the D.C. Circuit’s 

recent decision in the South Coast litigation, the adoption of a 10-year look-back period could be legally 

vulnerable as an impermissible “backsliding” on control requirements in nonattainment areas. 

Single Baseline Selection for Facilities Undergoing NSR Major Modifications 

Although the 2002 Federal NSR Rule allows facilities to choose a different baseline period for each 

NSR pollutant, the proposed amendments to Part 231 require facilities undergoing an NSR major modification 

to select a single baseline period for all pollutants. The Department has determined that a single baseline period 

is more appropriate. The use of a single baseline period assures that a modification is based on an actual 

operating scenario and not an artificially high emissions baseline period. The use of multiple baselines, for 

facilities undergoing an NSR major modification, could result in picking several baseline periods to maximize 

emissions for several different pollutants. For example, a combustion facility permitted to burn both oil and 

natural gas could choose two different baseline periods; one when using natural gas to maximize VOC, CO, and 

PM-10 emissions, and another when using oil to maximize PM, NOx, and SO2 emissions. This would create an 

artificially high baseline never actually experienced by the source nor emitted to the atmosphere surrounding 

the facility and, in extreme cases, a baseline that could never actually be achieved by the source. 

Pursuant to the 2002 Federal NSR Rule, a facility could develop a facility-wide baseline emissions 

profile which is not derived from a permitted operating scenario, but is based on pollutant-specific emissions 

achieved during different operating scenarios and different baseline periods. In practice, the facility would not 

have emitted at the 24 consecutive month period high levels for all the NSR pollutants during any 24 

consecutive month baseline period. More importantly, the operating permit would not have authorized such 

emission levels under either operating scenario. With higher baseline emissions during a particular 24 

consecutive month period, however, a proposed project could avoid being subject to NSR review for those 
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pollutants as a result of selecting that baseline period. At no time would the actual emissions of the facility in 

any one operating scenario be honored, notwithstanding that the Part 201 permitting program establishes 

emission limits for each operating scenario. The result of this is the potential for a project that would otherwise 

be considered major, except for the artificially high baseline, to either “cap out” or “net out” of NSR. In order 

to not exacerbate air quality problems in this proposal, the Department has decided that a single baseline best 

represented the goals of the NSR program for the State of New York. This is important given the synergistic 

relationships that many air pollutants have (NOX and VOC, and to a smaller extent CO, react to form ozone, 

while SO2, NOX and VOCs react to form PM [which is also directly emitted by many sources]). 

 The emissions from a facility undergoing an NSR major modification are related to each other. Only the 

utilization rate or type of fuel fired in a source will cause different emission profiles (as noted in the above 

example). The single baseline criteria will not be used for determining a PAL. PALs are voluntary facility 

limits that account for all of the emissions from every process and source at a facility. Facility wide emissions 

can vary based on many factors. Unrelated processes can cause a facility to emit more of one regulated NSR 

contaminant, in any given year, than another regulated NSR contaminant. For example, a facility that 

manufactures aluminum has three distinctive processes; anode baking, aluminum smelting, and aluminum 

extruding. The facility sells and uses anodes, aluminum ingots, and finished aluminum parts. Although the 

three processes are linked, each process can be operated at a different rate depending on several outside factors. 

The emissions rates of SO2, NOx, and PM will differ each year, depending on which processes are utilized 

more. Therefore, the Department feels it is appropriate to allow a different baseline period for each regulated 

NSR contaminant for which a facility is seeking a PAL. 

Source Obligations

 Subdivision 231-3.6(c) includes a requirement that any owner or operator of a facility that proposes a 

project that involves a physical change or change in the method of operation that the owner or operator 
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determines would be followed by a facility emissions increase that equals or exceeds any of the significant 

project thresholds in Subpart 231-13, Tables 3, 4 or 6, must notify the Department in writing of the proposed 

project prior to implementing the change if the owner or operator determines that the project does not constitute 

a modification because all the emission increases are attributable to independent factors in accordance with 

clause 231-4.1(b)(42)(i)(b). The notification must include (1) a description of the change, (2) the calculation of 

the projected emissions increase, (3) the proposed date of the change, and (4) an explanation of the factual basis 

for the conclusion that none of the projected emission increases are attributable to the proposed project. The 

Department believes these requirements are necessary to ensure accountability of the NSR applicability 

requirements and the Department’s goals of improving air quality. Facilities that meet this requirement will 

only incur the costs associated with developing information that they would have needed to generate in order to 

determine whether they are subject to the proposed amendments to Part 231, therefore, there should be little if 

any additional cost. 

Reasonable Possibility for Insignificant Modifications 

 On December 21, 2007 EPA finalized its Reasonable Possibility Rule which identifies the criteria under 

which an owner or operator of a major facility undergoing a physical change or change in the method of 

operation that does not trigger major NSR requirements (insignificant modification) must keep records (72 Fed. 

Reg. 72607). Proposed Part 231 tracks these Federal requirements with a few additional provisions. Some 

revisions for clarification were made to the Department’s original proposal but the substantive requirements are 

essentially the same. EPA has concluded that it is “very important that the source retain a record of all 

information available to support its initial claim that an emissions increase predicted to occur as a result of 

demand growth did not result from the physical or operational change to an emissions unit.” 

The Federal Reasonable Possibility Rule only requires post-change monitoring for insignificant 

modifications if the projected actual emissions increase (Part 231 project emission potential) is by itself greater 
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than or equal to 50 percent of the applicable significance threshold. Proposed Part 231 extends the post-change 

monitoring requirement to also include any modification with a project emission potential which is less than 50 

percent of the applicable significant project threshold in Table 3, Table 4 or Table 6 of Subpart 231-13, but 

equals or exceeds 50 percent of the applicable significant project threshold when emissions excluded in 

accordance with clause 231-4.1(b)(42)(i)(c) (emissions from independent and unrelated factors) are added. For 

such modifications, facilities will be required to keep records of their calculation of emission increases from 

independent and unrelated factors such as demand growth, monitor post-modification emissions, and submit 

annual reports to verify the accuracy of their calculations. 

 Additionally, the Federal Reasonable Possibility Rule only requires EUSGUs to notify the Department, 

prior to beginning actual construction, for any modification with a project emission potential which equals or 

exceeds 50 percent of the applicable significant project threshold. Proposed Part 231 extends the preconstruction notification requirement to any facility that proposes a modification with a project emission 

potential which equals or exceeds 50 percent of the applicable significant project threshold or proposes a 

modification with a project emission potential which is less than 50 percent of the applicable significant project 

threshold in Table 3, Table 4 or Table 6 of Subpart 231-13, but equals or exceeds 50 percent of the applicable 

significant project threshold when emissions excluded in accordance with Clause 231-4.1(b)(42)(i)(c) 

(emissions from independent and unrelated factors) are added. The Department believes these requirements are 

necessary to ensure that facilities take into account the emissions from such projects in any future Part 231 

applicability determination or netting analysis and comply with the proposed amendments to Part 231. 

Some facilities that undertake insignificant modifications will only incur the costs associated with 

maintaining records of information that they would have needed to generate to determine whether they are 

subject to the proposed amendments to Part 231, therefore, there should be little if any additional cost 

associated with maintaining the records. Other facilities proposing an insignificant modification will be 

required to keep records of their calculation of emission increases from independent and unrelated factors such 
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as demand growth, monitor post-modification emissions, and submit annual reports to verify the accuracy of 

their calculations. Although such facilities will incur some additional costs, the Department believes that the 

costs will not be significant and are necessary for accountability and enforceability, consistent with the D.C. 

Circuit Court’s decision in ‘New York v. EPA’, 413 F.3d. 3. While proposed Part 231 may include more 

specific recordkeeping and monitoring requirements for some insignificant modifications than under the Federal 

NSR Rule, as discussed above, the Department does not believe that the additional requirements are extensive 

or significantly more than facilities are currently required to maintain under the Title V permit program. 

 

Plantwide Applicability Limits

 The proposed amendments to Part 231 allow facilities to establish a PAL for an initial term not to 

exceed 10 years. The 2002 Federal NSR Rule also allows for the establishment of a PAL for a 10 year term. 

Amended Part 231, however, aligns the PAL term with the Title V permit so that the PAL expires when the 

renewed Title V permit which includes the PAL expires. This may cause the duration of the initial PAL term to 

be less than 10 years. For example, if a PAL is established two years into the Title V permit term, the PAL will 

expire in eight years rather than 10 years. This will enable the PAL to be renewed in conjunction with the Title 

V permit rather than in a separate proceeding as a major modification to the Title V permit. The Department 

believes that a single permit process will facilitate public review of the PAL and the Title V permit and also 

eliminate the costs associated with a separate permit application and review process. 

 The Department has determined that additional environmental benefits will result from requiring a 

reduction in the PAL of up to 25 percent by the end of the fifth year of the PAL. This condition will ensure that 

reduced emissions will result from the implementation of each PAL. Although the Department acknowledges 

that fewer facilities may opt for a PAL because of the emission reduction requirement, the PALs that would not 

go forward because of the reduction requirement are necessarily those PALs that would not result in substantial 

emission reductions. Because the PAL provision is voluntary, limiting its availability to those facilities that 
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commit to reduce emissions will not impose any additional costs or burdens on regulated industry, compared to 

the Federal PAL provision. 

 The Department considered three alternatives. First, based on comments from industry representatives 

in the working group that it is unlikely that many facilities will seek a PAL, the Department considered 

dropping the PAL provision entirely. The Department, however, determined that even if that prediction is 

correct and the number of sources that select a PAL is limited, the alternative selected will provide benefits to 

both the environment and the facility in those few instances in which a PAL is put in place. 

 Second, the Department considered implementing the Federal PAL provision, as initially proposed. The 

Department recognizes that a source operating under a PAL is free to undertake plant changes that might 

otherwise trigger NSR emission reduction requirements. Therefore, the implementation of a PAL can have the 

effect of allowing a facility to avoid the imposition of controls that would result in reduced emissions. 

Requiring a reduction in the PAL level ensures that environmental benefits will be achieved by the 

implementation of the PAL. 

 Third, in determining how to structure a PAL that requires a reduction in emissions, the Department 

considered requiring that the PAL mandate the actual implementation of BACT or LAER at the facility within 

five years of the commencement of the PAL. The Department determined that such an approach would likely 

limit the usage of PALs to those instances in which a facility is already fully controlled to BACT or LAER 

levels. Therefore, no additional environmental benefit would result from such an approach. 

 Therefore, the Department determined that the PAL provision adopted best balances the goals of 

improving air quality while reducing the burden of NSR compliance on industry. 

EPA May 1, 2007 Final Rules 40 CFR Parts 51, 52, 70, and 71

 On May 1, 2007 EPA promulgated final rule revisions to 40 CFR Parts 51, 52, 70, and 71 Prevention of 

Significant Deterioration, Nonattainment New Source Review, and Title V: Treatment of Certain Ethanol 
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Production Facilities Under the ‘‘Major Emitting Facility’’ definition; Final Rule – with an effective date of 

July 2, 2007. To remain consistent with this rulemaking, the Department proposes to modify the definition of 

“Major stationary source or major source or major facility” under Part 201, and Table 9 – Source Category List 

under Subpart 231-13 to exclude ethanol production facilities that produce ethanol by natural fermentation 

(included in NAICS codes 325193 or 312140) from chemical process plants.

10. COMPLIANCE SCHEDULE 

 The proposed amendments do not involve the establishment of any compliance schedules. The 

regulation will take effect 30 days after publication in the State Register, anticipated to be in late 2008. The 

regulation has specified “on or after the effective date of this Subpart” as the applicability date, associated with 

the submission of a complete application. Current permit renewal schedules for regulated industries will 

continue and provisions of this regulation will be incorporated at the time of permit renewal. Modifications will 

continue to be addressed upon application by the facility and subsequent review by the Department of such 

application.