[Federal Register Volume 74, Number 192 (Tuesday, October 6, 2009)]
[Rules and Regulations]
[Pages 51418-51440]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-23794]



[[Page 51417]]

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Part III





Environmental Protection Agency





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40 CFR Parts 70 and 71



Operating Permit Programs; Flexible Air Permitting Rule; Final Rule

Federal Register / Vol. 74, No. 192 / Tuesday, October 6, 2009 / 
Rules and Regulations

[[Page 51418]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 70 and 71

[EPA-HQ-OAR-2004-0087; FRL-8964-8]
RIN 2060-AM45


Operating Permit Programs; Flexible Air Permitting Rule

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: We are revising the regulations governing State and Federal 
operating permit programs required by title V of the Clean Air Act (CAA 
or the Act) to promote flexible air permitting (FAP) approaches that 
provide greater operational flexibility and, at the same time, ensure 
environmental protection and compliance with applicable laws.
    The revisions to our title V regulations consist of adding 
definitions for alternative operating scenario (AOS) and approved 
replicable methodology (ARM) and codifying some clarifications to 
existing provisions. These revisions are intended to clarify and 
reaffirm opportunities for accessing operational flexibility under 
existing regulations. We are not finalizing any revisions to our 
existing minor or major New Source Review (NSR) regulations. In 
particular, we are withdrawing that portion of the proposal which 
relates to Green Groups and their potential inclusion in NSR programs 
required by parts C and D of title I of the Act. Instead, we are 
encouraging States and sources to investigate in more depth the 
flexibilities currently available under the major NSR regulations.

DATES: This final rule is effective on November 5, 2009.

ADDRESSES: The EPA established a docket for this action under Docket ID 
No. EPA-HQ-OAR-2004-0087. All documents in the docket are listed on the 
http://www.regulations.gov Web site. Although listed in the index, some 
information may not be publicly available, e.g., CBI or other 
information whose disclosure is restricted by statute. Certain other 
material, such as copyrighted material, is not placed on the Internet 
and will be publicly available only in hard copy form. Publicly 
available docket materials are available either electronically through 
http://www.regulations.gov or in hard copy at the Air and Radiation 
Docket, EPA/DC, EPA West, Room 3334, 1301 Constitution Avenue, 
Northwest, Washington, DC. The Public Reading Room is open from 8:30 
a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The 
telephone number for the Public Reading Room is (202) 566-1744, and the 
telephone number for the Air and Radiation Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: For general issues concerning this 
action, please contact Michael Trutna, Air Quality Policy Division 
(C504-01), U.S. Environmental Protection Agency, Research Triangle 
Park, NC 27711; telephone (919) 541-5345; fax number (919) 541-4028; or 
electronic mail at <a href="/cdn-cgi/l/email-protection#31454344455f501f5c585a54715441501f565e47"><span class="__cf_email__" data-cfemail="b6c2c4c3c2d8d798dbdfddd3f6d3c6d798d1d9c0">[email protected]</span></a>.
    For specific issues concerning the pilot permits used to support 
this rulemaking, contact David Beck, Office of Policy, Economics, and 
Innovation, Innovative Pilots Division (C304-05), U.S. Environmental 
Protection Agency, Research Triangle Park, NC 27711; telephone (919) 
541-5421; fax number (919) 541-2664; or electronic mail at 
<a href="/cdn-cgi/l/email-protection#5a383f3931743e3b2c333e1a3f2a3b743d352c"><span class="__cf_email__" data-cfemail="543631373f7a3035223d30143124357a333b22">[email protected]</span></a>.
    For issues relating to monitoring, recordkeeping, and reporting for 
FAPs, contact Barrett Parker, Sector Policies and Programs Division, 
Measurement Policy Group (D243-03), U.S. Environmental Protection 
Agency, Research Triangle Park, NC 27711; telephone 919-541-5635; fax 
number (919) 541-1039; or electronic mail at <a href="/cdn-cgi/l/email-protection#b4c4d5c6dfd1c69ad6d5c6c6d1c0c0f4d1c4d59ad3dbc2"><span class="__cf_email__" data-cfemail="3848594a535d4a165a594a4a5d4c4c785d4859165f574e">[email protected]</span></a>.
    For other part 70 issues, contact Juan Santiago, Operating Permits 
Group, Air Quality Policy Division (C504-05), U.S. Environmental 
Protection Agency, Research Triangle Park, NC 27711; telephone (919) 
541-1084; fax number (919) 541-5509; or electronic mail at 
<a href="/cdn-cgi/l/email-protection#5427353a203d35333b7a3e21353a143124357a333b22"><span class="__cf_email__" data-cfemail="f7849699839e969098d99d829699b7928796d9909881">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:

    The information in this Supplementary Information section of this 
preamble is organized as follows:

Table of Contents

I. General Information
    A. Does This Action Apply to Me?
    B. Where Can I Get a Copy of This Document and Other Related 
Information?
II. Purpose
III. Background
    A. What Is a Flexible Air Permit?
    B. What Is the Title V Operating Permit Program?
    C. What Is the New Source Review (NSR) Program?
    1. Major NSR
    2. Minor NSR
IV. Overview of This Final Action
    A. What Specific Changes to Parts 70 and 71 Is EPA Finalizing?
    B. What Changes to Parts 51 and 52 Is EPA Finalizing?
    C. What Approach Is Being Used To Discuss the Final Actions?
    D. What Are EPA's Recommendations for Public Participation in 
Flexible Permitting?
    E. What Types of Support Does EPA Intend To Offer?
V. Advance Approval of Minor NSR
    A. Background
    B. Final Action
VI. Alternative Operating Scenarios
    A. Background
    B. Final Action
VII. Approved Replicable Methodologies
    A. Background
    B. Final Action
VIII. Green Groups
    A. Background
    B. Final Action
IX. Statutory and Executive Order Reviews
    A. Executive Order 12866--Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132--Federalism
    F. Executive Order 13175--Consultation and Coordination With 
Indian Tribal Governments
    G. Executive Order 13045--Protection of Children From 
Environmental Health and Safety Risks
    H. Executive Order 13211--Actions That Significantly Affect 
Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
    J. Executive Order 12898--Federal Actions To Address 
Environmental Justice in Minority Populations and Low-Income 
Populations
    K. Congressional Review Act
X. Judicial Review

I. General Information

A. Does This Action Apply to Me?

    Entities potentially affected by this final action are facilities 
currently required to obtain title V permits under State, local, 
Tribal, or Federal operating permits programs, and State, local, and 
Tribal governments that are authorized by EPA to issue such operating 
permits. Potentially affected sources are found in a wide variety of 
industry groups. In particular, we believe based on the collective 
experience in implementing the pilot permit activity that these groups 
will include, but are not limited to, the following:

[[Page 51419]]



------------------------------------------------------------------------
       Industry group                SIC \a\              NAICS \b\
------------------------------------------------------------------------
Aerospace Manufacturing.....  372.................  336411, 336412,
                                                     332912, 336411,
                                                     335413.
Automobile Manufacturing....  371.................  336111, 336112,
                                                     336712, 336211,
                                                     336992, 336322,
                                                     336312, 33633,
                                                     33634, 33635,
                                                     336399, 336212,
                                                     336213.
Industrial Organic Chemicals  286.................  325191, 32511,
                                                     325132, 325192,
                                                     225188, 325193,
                                                     32512, 325199.
Chemical Processes..........  281.................  325181, 325182,
                                                     325188, 32512,
                                                     325131, 325998,
                                                     331311.
Converted Paper and           267.................  322221, 322222,
 Paperboard Products.                                322223, 322224,
                                                     322226, 322231,
                                                     326111, 326112,
                                                     322299, 322291,
                                                     322232, 322233,
                                                     322211.
Magnetic Tape Manufacturing.  369.................  334613.
Petroleum Refining..........  291.................  32411.
Other Coating Operations....  226, 229, 251, 252,   313311, 313312,
                               253, 254, 267, 358,   314992, 33132,
                               363.                  337122, 337121,
                                                     337124, 337215,
                                                     337129, 37125,
                                                     337211, 337214,
                                                     337127, 322221,
                                                     322222, 322226,
                                                     335221, 335222,
                                                     335224, 335228,
                                                     333312, 333415,
                                                     333319.
Paper Mills.................  262.................  322121, 322122.
Pharmaceutical Manufacturing  283.................  325411, 325412,
                                                     325413, 325414.
Printing and Publishing.....  275.................  323114, 323110,
                                                     323111, 323113,
                                                     323112, 323115,
                                                     323119.
Pulp and Paper Mills........  262.................  32211, 322121,
                                                     322122, 32213.
Semiconductors..............  367.................  334413.
Specialty Batch Chemical      282, 283, 284, 285,   3251, 3252, 3253,
 Processes.                    286, 287, 289, 386.   3254, 3255, 3256,
                                                     3259, except 325131
                                                     and 325181.
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\a\ Standard Industrial Classification.
\b\ North American Industry Classification System.

    This table is not intended to be exhaustive, but rather provides a 
guide for readers regarding entities likely to be affected by this 
action. If you have any questions regarding the applicability of this 
action to a particular entity, contact the person listed in the 
preceding FOR FURTHER INFORMATION CONTACT section.

B. Where Can I Get a Copy of This Document and Other Related 
Information?

    In addition to being available in the docket, an electronic copy of 
this final rule will also be available on the World Wide Web. Following 
signature by the EPA Administrator, a copy of this final rule will be 
posted in the regulations and standards section of our NSR home page 
located at http://www.epa.gov/nsr.

II. Purpose

    The purpose of this rulemaking is to clarify and reaffirm 
opportunities within the existing regulatory framework to encourage the 
wider use of the FAP approaches. The Agency has learned a great deal 
over the past decade through the implementation and evaluation of pilot 
permits. In light of that experience and the comments we received on 
the proposed FAP rulemaking (72 FR 52206, September 12, 2007),\1\ we 
are finalizing certain elements of that proposal.\2\
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    \1\ In addition to written comments submitted on the proposal, 
we have received input from stakeholders in outreach meetings held 
to discuss the proposal. These meetings, and the topics discussed, 
are documented in the docket for this rulemaking, Docket No. EPA-HQ-
OAR-2004-0087. For purposes of this preamble, we refer to input from 
all these sources as ``comments.''
    \2\ On January 13, 2009, then Administrator Stephen L. Johnson 
signed a final Flexible Air Permitting Rule and the signed rule was 
made publicly available on EPA's Web site. The signed rule was 
submitted to the Office of Federal Register for publication. Rahm 
Emanuel, Assistant to the President and Chief of Staff, issues a 
memorandum on January 20, 2009, directing Agencies to withdraw from 
the Office of Federal Register ``all proposed and final regulations 
that have not been published in the Federal Register so that they 
can be reviewed and approved by a department or agency head.'' 
Administrator Lisa P. Jackson reviewed and approved the final 
Flexible Permitting Rule, and this rule as published is identical in 
substance to the rule previously signed January 13, 2009.
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III. Background

A. What Is a Flexible Air Permit?

    A FAP is a title V permit that by its design facilitates flexible 
operations at a source, allowing it to be market-responsive while 
ensuring equal or greater environmental protection than that achieved 
by conventional permits. In particular, a FAP contains one or more 
approaches that allow the source, under protection of the permit 
shield, to make certain types or categories of physical and/or 
operational changes without further review or approval of the 
individual changes by the permitting authority as they subsequently 
occur. Flexible air permit approaches, as discussed in this notice, 
include advance approvals of minor NSR, AOSs, and ARMs. In pursuing a 
FAP, the source must propose one or more of these approaches to the 
permitting authority who then would accept those which are judged to be 
appropriate in a particular situation. In order to be effective, the 
combination of FAP approaches contained in the title V permit must 
address all applicable requirements and requirements of part 70 
relevant to the anticipated changes being authorized.\3\ Flexible air 
permits cannot circumvent, modify, or contravene any applicable 
requirement and, instead, by their design must assure compliance with 
each one as it would become applicable to any of the authorized 
changes.
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    \3\ ``Applicable requirements'' is a term that is used in title 
V. The EPA has defined the term to include, among other things, 
State implementation plan (SIP) rules, the terms and conditions of 
preconstruction permits issued under a SIP-approved NSR program, and 
requirements pursuant to the new source performance standards 
(NSPS), national emission standards for hazardous air pollutants 
(NESHAP), maximum achievable control technology (MACT), and Acid 
Rain Programs. See 40 CFR 70.2.
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    For more than a decade, we participated in a pilot permit activity 
with certain title V sources and permitting authorities through which 
were tested and evaluated various

[[Page 51420]]

permitting approaches that afford operational flexibility. The lessons 
learned through the pilot permit experience served, in part, as the 
basis for our adoption of the plantwide applicability limitation (PAL) 
provisions of the 2002 NSR Improvement rule. They also serve as a basis 
for this rulemaking, in which we clarify and reaffirm existing 
regulatory provisions that currently afford reasonable opportunities 
for operational flexibility, while ensuring the required levels of 
environmental protection. We intend that this rulemaking provide a more 
positive foundation upon which FAPs can be considered by sources and 
permitting authorities and, as appropriate, be designed and 
implemented.

B. What Is the Title V Operating Permit Program?

    When Congress amended the Act in 1990, it established an operating 
permit program in title V of the Act for major (and certain other) 
stationary sources of air pollution. Title V mandates that each State 
develop and implement an operating permit program, and requires EPA to 
establish minimum standards for these programs. The purpose of the 
program is to improve the enforceability, and thus the effectiveness, 
of the Act's requirements by issuing to every covered source a permit 
that lists all the requirements applicable to the source under the Act 
and contains other terms as necessary to assure compliance with those 
requirements. States may delegate program responsibility to local 
agencies, and eligible Tribes may develop and implement a program at 
their option. In 1992, EPA promulgated regulations setting forth 
minimum requirements for State, local, and Tribal operating permit 
programs in part 70 of title 40 of the Code of Federal Regulations (40 
CFR part 70). Currently all States and many local agencies administer 
operating permit programs approved by EPA pursuant to the part 70 
requirements. There are 112 such State, territorial, and local 
operating permit programs. These programs are typically referred to 
interchangeably as ``title V programs'' or ``part 70 programs.''
    In addition, title V requires EPA to implement an operating permit 
program in areas lacking an approved or adequately administered State, 
local, or Tribal program. Accordingly, in 1996 EPA promulgated the 
Federal operating permit program at 40 CFR part 71. In 1999, EPA 
amended part 71 specifically to address Indian country. Currently, EPA 
administers the part 71 program in Indian country, for sources located 
on the outer continental shelf, and for deep water ports.\4\ There are 
currently no Tribes with approved part 70 programs, although one Tribe 
has received delegation to administer the part 71 Federal program.
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    \4\ The EPA may also issue a part 71 permit where a State 
permitting authority fails to respond to an objection by the 
Administrator to a part 70 permit. See CAA section 505(c), 40 CFR 
71.4(e).
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    The concept of operational flexibility in title V permits is not a 
new one. Since they were initially promulgated in 1992, the part 70 
State operating permit program regulations have included operational 
flexibility provisions. One of these is the AOS provision found at 40 
CFR 70.6(a)(9), which is one subject of this rulemaking.<SUP>5, 6</SUP> 
Section 70.6(a)(9) generally provides that any permit issued under part 
70 must include terms and conditions for reasonably anticipated 
operating scenarios identified in its application by the source and as 
approved by the permitting authority. Over the years, we have proposed 
rulemaking or guidance to address operational flexibility further, but 
none has been finalized.\7\
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    \5\ The Federal operating permit program at part 71 addresses 
reasonably anticipated operating scenarios in the same fashion as 
part 70. See 40 CFR 71.6(a)(9). This rulemaking affects both parts 
70 and 71, and the revisions to each part are virtually identical. 
For ease of reference, this preamble discussion refers to the part 
70 provisions, but the discussion applies equally to the part 71 
program revisions. Section numbers given for the part 70 rules 
correspond directly to the analogous sections in part 71. The term 
``title V permit'' refers to permits issued under either part 70 or 
part 71.
    \6\ The EPA included other operational flexibility provisions in 
the final part 70 regulations, including 40 CFR 70.4(b)(12), 
(b)(14), and (b)(15), which implement section 502(b)(10) of the Act. 
This rule does not address those provisions.
    \7\ In the 1990's, we proposed certain clarifications and 
modifications to the part 70 regulations. See generally 60 FR 45529 
(August 31, 1995) and 59 FR 44460 (August 29, 1994). In those 
proposals, among other things, we discussed the concept of ``advance 
NSR'' in relation to AOSs, and proposed a definition for 
``alternative operating scenarios.'' In August 2000, based in large 
part on the experience gained through the pilot permit activity 
discussed below, we issued a draft guidance document called White 
Paper Number 3 (64 FR 49803, Aug. 15, 2000), on which we solicited 
comment. That draft guidance addressed various flexible permitting 
approaches, including the use of the AOS provisions, Clean 
Buildings, and PALs. In fashioning the proposal on which this final 
rule is based, we considered a summary of those comments received on 
the prior proposals that addressed advance approval and AOSs (which 
is available in the docket) and the relevant individual comments 
received on the draft guidance (which are also in the docket).
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    Shortly after we promulgated part 70, we initiated and/or supported 
pilot permit activities with interested States.\8\ Companies 
participating in this activity sought to reduce the cost, time, and 
delays associated with a permit revision for each operational change at 
a facility. We and the States sought to increase the sources' 
operational flexibility, while assuring compliance with applicable 
requirements, ensuring environmental protection, and facilitating 
pollution prevention (P2). These pilots typically allowed for both 
changes to operations of existing emissions units and the addition of 
new emissions units, provided that the changes were sufficiently well 
described in the permit application so that the permitting authority 
could confirm that all applicable requirements were identified and that 
the permit contained terms and conditions assuring compliance with all 
applicable requirements.
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    \8\ Sources at the following locations participated in the pilot 
permit activity: (1) 3M (St. Paul, MN); (2) Intel (Aloha, OR); (3) 
Lasco Bathware (Yelm, WA); (4) Imation (Weatherford, OK); (5) Cytec 
(Connecticut); (6) DaimlerChrysler (Newark, DE); (7) Merck (Elkton, 
VA); (8) Merck (Barceloneta, PR); (9) Saturn (Spring Hill, TN); (10) 
BMW (Spartanburg, SC); (11) Eli Lilly (West Lafayette, IN); (12) 3M 
(Nevada, MO); and (13) Imation (Camarillo, CA).
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    To evaluate the pilot permit activity, we conducted a thorough 
review of the six pilot permits for which at the time there was 
significant implementation experience.\9\ We reviewed on-site records 
to track utilization of the flexible permit provisions, assessed how 
well the permits worked, evaluated total emissions reductions achieved, 
and analyzed the economic benefits associated with the permits. 
Overall, we found that the flexibility approaches which States 
implemented under their current authorities had worked well for both 
the sources and the permitting authorities, with significant benefits 
accruing as follows:
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    \9\ The six permits that we analyzed were: (1) Intel (Aloha, 
OR); (2) 3M (St. Paul, MN); (3) Lasco Bathware (Yelm, WA); (4) 
DaimlerChrysler (Newark, DE); (5) Saturn (Spring Hill, TN); and (6) 
Imation (Weatherford, OK).
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    <bullet> Environmental--The sources generally achieved 30 to 80 
percent reductions in actual plantwide emissions or emissions per unit 
of production.
    <bullet> Informational--Permitting authorities and the public 
received better information about the scope of planned changes at the 
sources and the maximum, cumulative environmental effects of those 
changes.
    <bullet> Economic--Increased permitting certainty and reduced 
transaction costs improved the participating companies' ability to 
compete effectively in the market and enabled them to retain, and in 
some cases, create jobs.
    <bullet> Administrative--Even with the higher front-end design 
costs associated with the pilot permits, permitting authorities 
reported a net reduction in administrative costs over the life of the

[[Page 51421]]

permits as a result of a reduction in subsequent permit revisions.

For a more extensive discussion of the findings of the pilot permit 
evaluation, see the evaluation report.\10\
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    \10\ ``Evaluation of the Implementation Experience with 
Innovative Air Permits.'' A copy of this report is located in the 
docket for this rulemaking, or can be accessed at http://www.epa.gov/ttn/oarpg/t5/memoranda/iap_eier.pdf.
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C. What Is the New Source Review (NSR) Program?

    The NSR program is a preconstruction permitting program that 
applies when a source is constructed or modified. The NSR program is 
composed of three different programs:
    <bullet> Prevention of Significant Deterioration (PSD);
    <bullet> Nonattainment major NSR (NA NSR); and
    <bullet> Minor NSR.
1. Major NSR
    We often refer to the PSD and NA NSR programs together as the major 
NSR program because these programs regulate only major sources.\11\ 
These programs are mandated by parts C and D of title I of the Act.
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    \11\ The Act uses the terms ``major emitting facility'' to refer 
to sources subject to the PSD program, and ``major stationary 
source'' to refer to sources subject to NA NSR. See CAA sections 
165, 169, 172(c)(5), and 302(j). For ease of reference, we use the 
term ``major source'' to refer to both terms.
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    Part C contains the PSD provisions. The PSD program applies when a 
major source that is located in an area that is designated as 
attainment or unclassifiable for any criteria pollutant is constructed 
or undergoes a major modification.<SUP>12 13</SUP> Part D prescribes 
the NA NSR program, which applies when a major source that is located 
in an area that is designated as nonattainment for one or more criteria 
pollutants is newly constructed or undergoes a major modification for 
any of those pollutants. The implementing regulations for the PSD 
program are found at 40 CFR 52.21, 40 CFR 51.166, and 40 CFR 51.165(b). 
For NA NSR, the regulations are found at 40 CFR 52.24, 40 CFR 51.165, 
and 40 CFR part 51, appendix S.
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    \12\ The term ``criteria pollutant'' means a pollutant for which 
we have set a NAAQS.
    \13\ In addition, the PSD program applies to many noncriteria 
regulated pollutants.
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    As noted above, parts C and D set forth the statutory requirements 
for the PSD and NA NSR programs, and the implementing regulations 
include requirements for State major NSR programs. As a result, major 
NSR programs generally are similar across the States.
    The PSD requirements include but are not limited to:
    <bullet> Installation of Best Available Control Technology (BACT);
    <bullet> Air quality monitoring and modeling analyses to ensure 
that a project's emissions will not cause or contribute to a violation 
of any national ambient air quality standards (NAAQS) or maximum 
allowable pollutant increase (PSD increment);
    <bullet> Notification of Federal Land Manager of nearby Class I 
areas; and
    <bullet> Thirty-day public comment period and opportunity for a 
public hearing on the permit.
    Nonattainment NSR requirements include but are not limited to:
    <bullet> Installation of Lowest Achievable Emission Rate (LAER) 
control technology;
    <bullet> Offsetting new emissions with creditable emissions 
reductions;
    <bullet> Certification that all major sources owned and operated in 
the State by the same owner are in compliance with all applicable 
requirements under the Act;
    <bullet> An alternative siting analysis demonstrating that the 
benefits of the proposed source significantly outweigh the 
environmental and social costs imposed as a result of its location, 
construction, or modification; and
    <bullet> Thirty-day public comment on the permit.
    Based on our pilot permit evaluation and our 1996 proposed 
modifications to the major NSR program, in December 2002 we finalized 
the NSR Improvement rule. In that rule, we promulgated regulations for 
PALs in the PSD and NA NSR programs. As explained in the preamble to 
the December 2002 final rule, a PAL is an alternative approach for 
determining NSR applicability on a plantwide basis. See 67 FR 80206. 
Sources with PALs can make changes without triggering the major NSR 
preconstruction permitting requirements, provided such changes remain 
below the limit established in their PAL and do not otherwise violate 
the requirements of the PAL. A PAL is an important technique which is 
often used in tandem with other FAP approaches such as advance 
approvals for minor NSR.
2. Minor NSR
    Under section 110(a)(2)(C) of the Act, States are required to have 
``minor'' NSR programs, which apply to new and modified sources that do 
not meet the emissions thresholds for the NSR programs that apply to 
major sources, as well as permit programs to meet parts C and D of the 
Act. In addition, section 110(j) requires all applicants for permits 
issued under title I of the Act to show that they will comply with 
standards of performance and all other requirements of the Act. The 
minor NSR program is part of each State's ``State implementation plan'' 
(SIP) and is designed to ensure that the construction or modification 
of any stationary source does not interfere with the attainment of the 
NAAQS. Aside from this requirement, which is stated in broad terms, the 
Act includes no specifics regarding the structure or functioning of 
minor NSR programs. The implementing regulations, which are found at 40 
CFR 51.160 through 51.164, also are stated in very general terms. As a 
result, SIP-approved minor NSR programs can vary quite widely from 
State to State.

IV. Overview of This Final Action

    This final action is primarily a reaffirmation of currently 
available flexibility options and the process for accessing them. This 
action adds some new definitions and clarifications to existing parts 
70 and 71 provisions in order to promote greater certainty and 
reasonable consideration of these options. This notice discusses each 
of the FAP approaches (e.g., advance approvals of minor NSR, AOSs, and 
ARMs) and the common process for their consideration. In this process, 
the source first proposes use of one or more of the FAP approaches to 
the permitting authority who then evaluates the proposal on a case-by-
case basis.
    Commenters have generally found these options to be available to 
the extent needed and appropriate under existing authorities. 
Commenters have also found the common process to be sufficient and 
effective in the reasonable consideration of the particular options 
proposed for a FAP. These commenters have convinced the Agency that 
more prescriptive approaches proposed to assure greater consistency may 
well be counterproductive to our objective for greater consideration 
and appropriate use of FAP approaches. While deciding not to prescribe 
specific approaches to the design and implementation of FAPs, EPA does 
intend to monitor State activities in these areas, to evaluate the 
effectiveness of various FAP approaches periodically, and to assess, on 
the basis of new experiences and other information, whether any 
additional rulemaking would be appropriate in the future.

A. What Specific Changes to Parts 70 and 71 Is EPA Finalizing?

    We are finalizing a proposed revision to the title V permit 
application requirements at 40 CFR 70.5(c)(3)(iii) to facilitate the 
use of emissions caps, including those for advance approvals of minor 
NSR and for PALs, although

[[Page 51422]]

the wording has been changed slightly in the final rule. The final 
revisions clarify that for emissions units subject to an annual 
emissions cap, the application may report the units' emissions as part 
of the aggregate emissions associated with the cap, except where more 
specific information is needed, including where necessary to determine 
or assure compliance with an applicable requirement.
    With respect to AOSs, after considering the comments we received on 
the proposed rules, we are finalizing only those aspects of our 
proposal that would preserve the current levels of flexibility and add 
no new administrative burden. In particular, we are revising the rules 
to:
    <bullet> Add a definition of AOS, but eliminating the reference to 
``physical and operational changes'' from the proposed definition.
    <bullet> Clarify that the permitting authority shall require the 
source to supplement its application with additional information when 
necessary to define permit terms and conditions to implement a proposed 
AOS as requested by the source.
    <bullet> Clarify that the compliance plan requirements for 
applications must address proposed AOSs when an application includes 
them.
    <bullet> Clarify that applications must contain documentation that 
the source has obtained all authorizations required under the 
applicable requirements relevant to a proposed AOS or a certification 
the source has submitted all relevant materials for obtaining such 
authorizations.
    <bullet> Clarify that permits must contain all authorizations as 
required under the applicable requirements relevant to an AOS.
    <bullet> Use consistent terminology wherever the rules refer to 
AOSs.
    We are not finalizing other proposed requirements relating to the 
specific content of AOSs in logs and permits and to the need to report 
AOS implementation every 6 months. We have been persuaded by the 
commenters on the proposal that these potential new requirements would 
not be necessary and may, in fact, be counterproductive.
    In the final rules with respect to ARMs, we are adding the proposed 
definition of ARM and supplementing it with two clarifications added in 
40 CFR 70.6(a)(1): (1) As is currently the case for AOSs, the source 
must identify in its application a potential ARM and the permitting 
authority must then choose to approve it before the ARM can be 
effective; and (2) an ARM cannot be used to circumvent any other 
applicable requirement. Although ARMs can reduce the number of 
potential permit revisions that a source must otherwise request, an ARM 
must be consistent with and implement an applicable requirement or 
requirement of part 70. We are not finalizing the proposed requirement 
for sources to identify in the 6-month monitoring report any ARMs 
implemented during the reporting period. Instead, we are clarifying 
that implementation records for all ARMs use must be kept on-site by 
the source.
    Because the final rules represent clarifications to the existing 
part 70 regulations, we believe that many States will be able to 
implement the final rules without revising their regulations. This 
belief is further based on the pilot experience and on the comments 
received from States who affirmed that their current authority was 
sufficient to implement both AOSs and ARMs (i.e., no State rulemaking 
was thought to be needed to incorporate the new definitions and 
clarified requirements).
    However, since the AOS provisions are impacted by the rule and are 
one of the part 70 program minima, and State part 70 programs differ, 
some States may revise their current part 70 program to add sufficient 
authority to implement the final rule or opt to make current authority 
on flexible permits more explicit.
    With respect to AOSs, for those States that believe they lack 
authority under their current part 70 programs to implement the final 
rule, or that chose to make current authority more explicit, such 
States should submit proposed revisions to their title V operating 
permits program to their EPA Regional Offices pursuant to 40 CFR 
70.4(i). For other States if, based on their subsequent efforts to 
implement the final rule, we determine in writing that a particular 
part 70 program does not provide sufficient authority to implement the 
final rule or is inconsistent with the final rule, then the relevant 
State must revise the program pursuant to 40 CFR 70.4(i). Accordingly, 
the State will have, from the date of our written determination, 180 
days, or such other period as the Administrator may specify following 
notification by the Administrator, or within 2 years if the State 
demonstrates that additional legal authority is necessary to make the 
required program revisions, to submit a proposed operating permit 
program revision consistent with the final rule to us for review and 
approval.
    With respect to ARMs, States may choose to send us specific 
revisions to their current programs at any time. There is no mandate 
for part 70 programs to contain provisions specific to ARMs. Thus, 
States are not obligated to revise their part 70 programs in this 
regard as a result of this final rule. However, optional rule changes 
may be useful to some States in implementing the final rule more 
effectively and to achieve the anticipated administrative benefits 
attributed to ARM implementation.
    Regardless of whether States revise their rules to incorporate the 
part 70 rule changes that are being finalized in this action, the 
Agency wishes to reiterate that inclusion of AOSs or ARMs in a title V 
permit remains an essentially voluntary activity. A source owner in 
deciding whether to propose one must first determine that an AOS and/or 
ARM would be useful in increasing certainty and flexibility and then 
the permitting authority must determine whether or not to grant the 
source's request for an AOS and/or ARM. The permitting authority, on a 
case-by-case basis, may reject source proposals as inadequate to assure 
compliance with the underlying applicable requirements or otherwise 
inappropriate, depending on the specific facts of the situation.

B. What Changes to Parts 51 and 52 Is EPA Finalizing?

    We are not finalizing any changes to the NSR program in parts 51 
and 52. We did not propose any changes to the regulations for minor NSR 
based on our experience with several pilot States. Comments received on 
the proposal affirmed that the relevant pilot experience was broadly 
applicable and that States, in general, have sufficient existing 
authority to advance approve minor NSR, where they determine it 
appropriate to do so, and to incorporate the permit terms accomplishing 
this approval into title V permits as applicable requirements. As a 
result, we continue to believe revisions to our part 51 minor NSR 
regulations are not necessary. Where States are considering revisions 
to their current minor NSR programs to provide more explicit authority 
for authorizing advance approvals, EPA is willing to discuss possible 
revisions and to review any rule changes proposed by the State, 
consistent with 40 CFR 51.160 through 51.164.
    We have also decided to terminate our rulemaking proposal for Green 
Groups. As discussed more fully later in this preamble, we instead 
intend to support States and sources who wish to explore the 
flexibilities available under the existing major NSR regulations. Upon 
request to do so, EPA is willing to assist States in an evaluation of 
their current SIPs and to discuss possible

[[Page 51423]]

replacement provisions with them consistent with our 40 CFR 51.165 and 
51.166 regulations governing NA NSR and PSD SIPs.

 C. What Approach Is Being Used To Discuss the Final Actions?

    The final actions relative to parts 70 and 71 and to parts 51 and 
52 are subsequently discussed in four sections entitled: V. Advance 
Approval of Minor NSR; VI. Alternative Operating Scenarios (AOSs); VII. 
Approved Replicable Methodologies (ARMs); and VIII. Green Groups. Each 
of these sections first summarizes what we proposed and the significant 
reactions of commenters to our proposal, and then describes what EPA is 
finalizing as a result. A more comprehensive summary and analysis of 
the written comments received can be found in our Response to Comments 
document, which is available in the public docket for this rulemaking 
as described in the ADDRESSES section of this preamble.

 D. What Are EPA's Recommendations for Public Participation in Flexible 
Permitting?

    Based on our experience with pilot permits, we believe that FAPs 
provide at least as much environmental protection as conventional 
permits and often promote superior environmental performance. 
Nevertheless, we also recognize that FAPs will contain features, such 
as AOSs, ARMs, or advance approval of minor NSR, that may not be 
familiar to the reviewing public at least until these approaches are 
more widely used. For this reason, we encourage permitting authorities 
to consider using their discretion to enhance the relevant public 
participation process (as currently required in both title V and NSR 
regulations), as appropriate, for a particular FAP. Some 
recommendations which we found to work well in the context of the pilot 
permits are described below.
    During the permitting process, permitting authorities could 
consider making the permit application available to the public soon 
after receipt. We found in pilot permits that early outreach to the 
community, rather than waiting until the draft permit was prepared, was 
an effective public participation strategy. Some permitting authorities 
have also found it useful to issue a local press release (in addition 
to a conventional notice in the newspaper) when a permit containing 
innovative approaches is released for comment. Press releases have 
potential to reach more people and raise local awareness of FAP 
approaches.
    The minimum public comment period required for a title V permit 
renewal or significant permit modification is 30 days. Where a 
significant amount of a permit's content consists of terms to 
incorporate operational flexibility, we suggest that permitting 
authorities consider expanding the comment period to 45 days or more. 
Note, however, that for some pilot permits, an up-front outreach to the 
public was sufficient to resolve community questions and comments early 
in the process, so that by the time of the public hearing and comment 
period no adverse comments were received.
    Finally, in order to ensure adequate technical support and 
accessibility for the public in their efforts to understand and comment 
upon FAPs, we suggest that permitting authorities provide a principal 
point of contact for responding to technical questions and ensure the 
availability of draft permits, applications, and technical support 
documents on an Internet Web site. We believe that any additional costs 
here will be offset by the subsequent administrative cost savings to 
the permitting authority resulting from the reduced need to process 
permit revisions for sources with FAPs.

E. What Types of Support Does EPA Intend To Offer?

    The Agency anticipates that the effort by States and sources to 
investigate FAPs will involve a potentially wide spectrum of sources 
(see section I.A). As a result, EPA intends to provide general support 
to States, sources, and the public on this and other FAP topics, 
potentially in the form of a Web site, workshops, and an EPA network of 
contacts. In addition, we will consider other types of support to 
individual States where requested to do so.

V. Advance Approval of Minor NSR

A. Background

    Pursuant to section 110(a)(2)(C) of the Act and its implementing 
part 51 regulations (see 40 CFR 51.160 through 51.164), States are 
required to adopt minor NSR programs that complement their major NSR 
programs required under parts C and D of title I the Act. Given the 
general nature of these requirements, the content of minor NSR programs 
varies widely among the States. Regardless of their specific 
provisions, through the pilot permit experience, we found that State 
minor NSR requirements, where applicable, are among the most important 
in designing a FAP for sources making frequent and/or rapid physical 
and operational changes. Absent an up-front authorization for these 
changes under minor NSR (usually categories or types of changes), an 
individual review by the permitting authority typically is required at 
the time each change would be approved.
    We refer to up-front, categorical authorizations as ``advance 
approvals'' under minor NSR.\14\
---------------------------------------------------------------------------

    \14\ ``Advance approval'' generally refers to an authorization 
to make certain categories or types of changes which is issued to a 
source by its permitting authority pursuant to a specific applicable 
requirement that requires approval prior to making subject changes 
(e.g., minor and major NSR, section 112(g), etc.). Changes within 
the types or categories of changes which are advance approved can 
subsequently be made over the duration of the permit without further 
review or approval by the permitting authority with respect to the 
particular applicable requirement for which the changes are advance 
approved. In order to explore use of a specific advance approval, a 
source would first propose its use which then could be accepted or 
rejected by the permitting authority, as appropriate. Advance 
approvals authorized under one particular applicable requirement 
(e.g., advance approvals under minor NSR) may also address 
additional requirements which may or may not themselves require 
prior approval before the specified changes can be made (e.g., MACT, 
NSPS, and State air toxics requirements).
---------------------------------------------------------------------------

    Upon examining the provisions of their minor NSR programs, most of 
the States in which pilot permits were conducted (``pilot States'') 
found that they could issue advance approvals under existing minor NSR 
authority for a wide spectrum of changes, provided that certain 
boundary conditions were established in the minor NSR permit. The 
conditions established in the minor NSR permit to accomplish such 
approvals varied depending upon the requirements of the different State 
minor NSR programs and the specific facts of the particular situation.
    The pilot permits employed several types of techniques to 
authorize, in a practicably enforceable manner, a category of changes 
under minor NSR. These techniques, while not necessarily transferable 
in all aspects to other permitting situations, do represent field-
tested reference points from which similar advance approval approaches 
can be considered by other permitting authorities. Ultimately, as with 
all FAP approaches, in order for a minor NSR project proposing use of 
an advance approval to be viable, the source must first propose it to 
the permitting authority, and the permitting authority must then agree 
to pursue it in the context of its own SIP-approved minor NSR rules and 
the case-specific facts.
    Permitting authorities in pilot States employed the following 
approaches and safeguards when authorizing the advance approval of 
minor NSR:
    <bullet> Scope of minor NSR project--Permitting authorities were 
able to rely

[[Page 51424]]

upon available flexibility to interpret the relevant SIP-approved 
definitions (e.g., emissions unit, facility, source) in order to 
fashion a reasonable scope and duration of the minor NSR pilot project 
(i.e., ones that provide appropriate operational flexibility for the 
particular situation while ensuring environmental protection). In 
general, these advance approvals (i.e., the minor NSR projects) consist 
of several categories of potential changes anticipated to occur over an 
appropriately defined period of time (e.g., a range of possible types 
of changes, such as ``any of various physical changes to the rollers, 
drive mechanism, and other components of the coating section within a 
coating line''). In their permit applications requesting advance 
approval of minor NSR, pilot sources described these changes in 
sufficient detail to allow the permitting authority to conduct the 
relevant ambient air impact and control technology reviews, to 
determine relevant applicable requirements, and to assess the 
compatibility of the changes with the approved emissions reduction and 
monitoring approaches. The SIP-approved requirements concerning the 
timeliness of the approved construction project vary among the pilots, 
depending upon the content of the approved SIP and the ability to 
characterize the project (as deemed appropriate by the permitting 
authority) as a series of related ongoing changes.
    <bullet> Non-applicability of major NSR--In order to assure the 
types of changes authorized under the advance approvals for minor NSR 
could subsequently occur without further review and approval by the 
permitting authority, the pilot permits contain terms to prevent major 
NSR from also applying to the same changes. These terms typically 
involve either a PAL based on actual emissions or a potential to emit 
(PTE) cap to prevent an existing source from becoming major, depending 
on whether the source is already major or not for the pollutant(s) 
involved in the advance approval of minor NSR.
    <bullet> Control technology requirements--Permitting authorities 
imposed terms in pilot permits as necessary to assure compliance with 
all applicable control requirements. In all pilot permits, these terms 
require compliance with Federal standards (e.g., MACT, NSPS, NESHAPs) 
that continue to apply regardless of the approach taken to advance 
approve minor NSR. In addition, the advance approved changes must meet 
any applicable SIP requirements, including those in some States to 
apply best available technology (BAT) to certain changes subject to 
their minor NSR programs. In those pilot permits subject to a State BAT 
requirement, permitting authorities also determined whether the advance 
approval allowed discrete changes with later construction times and 
whether any initial BAT determination for them would require re-
evaluation.
    <bullet> Protection of ambient standards--Pilot permits contain 
terms judged appropriate by the permitting authority to assure that the 
minor NSR pilot project would not interfere with the attainment and 
maintenance of the NAAQS. Typically, since the advance approvals 
requested by the pilot sources involved VOC emissions, pilot projects 
primarily focused on protecting the ozone NAAQS. The plantwide VOC 
emissions caps used in the pilots were determined to be adequate for 
purposes of safeguarding the ozone NAAQS, but for other pollutants 
(e.g., air toxics) States sometimes required a replicable modeling 
procedure to screen the impacts of individual emissions increases 
relative to acceptable ambient levels. In the case of one pilot, an 
ambient dispersion model, complete with implementation assumptions, was 
included in the permit to evaluate any new air toxic pollutants of 
concern, or increases in existing toxic pollutants. Failure of a 
particular change to meet the screening levels triggered a case-by-case 
review of that change by the permitting authority. Additional 
safeguards were imposed to a varying extent, as applicable and as 
deemed appropriate, by the permitting authority to address averaging 
time concerns potentially applicable to NAAQSs other than ozone.
    <bullet> Public participation--Each pilot permit project was 
subjected to an opportunity for public comment. Often this process was 
enhanced to facilitate better understanding and support for the 
project. (See section IV.D.)
    To augment initial application information, pilot States, as part 
of authorizing advance approvals under their existing minor NSR 
programs, frequently decided to require sources to send a notice to the 
permitting authority contemporaneous with the operation of any entirely 
new emissions unit relying upon the advance approval. Pilot States were 
also able to add other permit terms, where necessary, to make 
enforceable any advance approvals of minor NSR that were authorized.
    Often the permitting authorities were able in pilot permits to 
streamline various permit terms so as to accomplish multiple objectives 
and to simplify the overall permit. For example, the pilot source 
frequently requested its permitting authority to establish in the minor 
NSR permit a plantwide VOC emissions cap at a particular level for two 
purposes. First, the level was requested to prevent the applicability 
of major NSR. In cases where the existing plantwide VOC emissions were 
below the major source threshold, the permitting authority approved an 
emissions cap to constrain the PTE of the source in a practicably 
enforceable fashion so that it would not be a major source of VOC 
emissions for purposes of PSD. In other cases, where the source was an 
existing major stationary source for its VOC emissions, the source 
requested a plantwide cap level to function as a PAL. In response, the 
permitting authority approved the requested PAL consistent with the PAL 
provisions of the major NSR regulations (see, e.g., 40 CFR 52.21(aa)). 
Accordingly, compliance with the PAL ensures that major NSR would not 
apply to any future changes made at the source during the time period 
over which the PAL was effective. Second, the VOC emissions level 
established in the PTE cap or in the PAL, as applicable, was 
interpreted by the permitting authority as a sufficient safeguard to 
prevent future changes approved under minor NSR, in combination with 
existing source emissions, from interfering with the ozone NAAQS. As 
such, the VOC emissions cap would both prevent major NSR from applying 
to changes at the source and ensure that the advance approval of 
changes under minor NSR does not jeopardize the NAAQS. Given the 
strategic importance of such caps, pilot sources typically maintained a 
significant margin of safety between their actual plantwide emissions 
and the level required by their emissions cap(s).
    Under the current part 70 regulations, any permit terms 
accomplishing an advance approval pursuant to a SIP-approved minor NSR 
program must be incorporated into the title V permit as applicable 
requirements, and combined with other permit terms established in the 
part 70 permit as necessary to assure compliance with all requirements 
that will apply when the approved changes are subsequently implemented. 
Thus, the part 70 permit would include the requirements directly 
addressed in the minor NSR permit, as well as other requirements that 
the minor NSR permit did not address, if any. Changes advance approved 
under minor NSR can then be implemented without any further review or 
approval by the permitting authority, provided that the terms of the 
authorizing minor NSR permit are effective upon its issuance and are 
incorporated into the title V

[[Page 51425]]

permit as applicable requirements consistent with 40 CFR 70.2.
    In our evaluation of pilot permits,\15\ we found that the use of 
advance approvals under minor NSR improved operational efficiency at 
the plants because companies knew in advance what changes were 
authorized, making resource allocation more efficient and accommodating 
the typically incremental, iterative nature of industrial process 
improvements. We also found that P2 projects approved in advance became 
more attractive to the companies because such projects could be 
undertaken without the delay and uncertainty of future case-by-case 
approvals. In addition, P2-related projects reduced emissions and 
enabled sources to comply more easily with emissions limits such as the 
plantwide emissions caps that were often features of the pilot permits.
---------------------------------------------------------------------------

    \15\ See footnote 9 for information on where to obtain our 
report ``Evaluation of the Implementation Experience with Innovative 
Air Permits.''
---------------------------------------------------------------------------

    As mentioned above, pilot permit experience indicates that 
obtaining advance approval under minor NSR is often a critical element 
in the design of a FAP. This experience also suggests that many State 
minor NSR programs may already provide, in situations judged to be 
appropriate by the permitting authority, the legal authority necessary 
to issue minor NSR permits that accommodate various types of 
operational flexibility, which can be readily incorporated into title V 
permits. Although we did not propose any revisions to the minor NSR 
regulations at 40 CFR 51.160 through 51.164, we used the proposal 
preamble to encourage States to implement advance approvals in response 
to requests by sources under their existing minor NSR programs, as 
appropriate, and to seek additional authority to consider source 
proposals where they do not currently have such discretion. Based on 
pilot experience, we also expressed our belief that permitting 
authorities can often advance approve changes with respect to other 
applicable requirements that require a specific authorization without 
regulatory changes. See 72 FR 52215.
    We proposed one revision to part 70 to facilitate the use of 
advance approvals under minor NSR, which, as mentioned, often rely upon 
one or more emissions caps to accomplish their authorizations.\16\ This 
revision to 40 CFR 70.5(c)(3)(iii) would clarify that for emissions 
units subject to an annual emissions cap, the title V permit 
application may report the units' emissions (in tons per year) as part 
of the aggregate emissions associated with the cap, except where more 
specific information is needed to determine and/or assure compliance 
with an applicable requirement.
---------------------------------------------------------------------------

    \16\ In the proposal preamble, we discussed this proposed 
clarification as a revision for purposes of AOSs (72 FR 52219). We 
now believe that it is more appropriately portrayed as a revision in 
support of advance approvals under minor NSR.
---------------------------------------------------------------------------

    As explained in the proposal preamble (72 FR 52219), the 
introductory text in 40 CFR 70.5(c) states generally that the 
application must include information for each emissions unit. Existing 
40 CFR 70.5(c)(3)(iii) further requires that the application provide 
the emissions rate in tons per year and in such terms as are necessary 
to establish compliance consistent with the applicable reference test 
method. We proposed to clarify this regulatory requirement as it 
applies to sources subject to title V permitting requirements that 
employ an annual emissions cap (e.g., caps which are PALs, limit PTE, 
and/or enable advance approval for minor NSR). In particular, we 
proposed that for the operation of any emissions unit authorized under 
an annual emissions cap, a source can meet 40 CFR 70.5(c)(3)(iii) by 
reporting the aggregate emissions associated with the cap.
    We noted in the proposal preamble that under the proposed approach, 
an emissions cap could be thought of as a constraint on annual 
emissions from each emissions unit under the cap as well as on the 
aggregated emissions from the group of units. That is, in the extreme, 
a unit could emit up to the full amount of the cap if all other units 
under the cap had zero emissions. Thus, for a group of emissions units 
under an annual emissions cap, the 40 CFR 70.5(c)(3)(iii) requirement 
for unit-by-unit emissions figures could be met by reporting in the 
permit application that the emissions cap represents the upper limit on 
emissions both from each unit in the group and from the entire group. 
The proposed revision to 40 CFR 70.5(c)(3)(iii) would simply clarify 
that in this particular situation, more specificity is not needed in 
the title V permit application (unless additional specificity is 
necessary to determine applicability or to assure compliance with one 
or more potentially applicable requirements). Reporting emissions data 
in this manner would be permissible except where the permitting 
authority determined that more specific emissions information was 
needed (e.g., where an applicable requirement for a specific emissions 
unit depends on the emissions type or level, or where annual emissions 
figures are needed to assess compliance for the unit).
    We did not propose any other revisions to part 70 related to 
advance approvals under minor NSR. Part 70 already requires 
incorporation into a title V permit of the terms of any State minor NSR 
permit, including those issued to advance approved changes. These 
permit terms are themselves applicable requirements as defined in 40 
CFR 70.2. Sometimes, however, the permitting authority may need to 
include other terms in the title V permit, in addition to the terms of 
a minor NSR permit authorizing advance approved changes, so that the 
changes can be made without further review or approval. This would be 
the case if there were other applicable requirements also implicated by 
the advance approved changes that were not addressed in the minor NSR 
permit. In such cases, the part 70 permit must assure compliance with 
these applicable requirements as well.
    We pointed out in the proposal preamble that an advance approval 
that is incorporated into a part 70 permit remains subject to all the 
conditions of the underlying authorization. For example, if an 
underlying minor NSR permit is contingent upon the source commencing 
construction of the authorized change(s) within a certain period, the 
part 70 permit must contain terms to ensure that the part 70 permit 
does not authorize operation if the source fails to meet the required 
deadline. The source is responsible for obtaining any extensions or 
additional authorizations as necessary to keep the advance approval in 
the part 70 permit in effect. See 72 FR 52217, footnote 23.
    In the proposal preamble we also noted that an advance approval 
under minor NSR may be added to a title V permit through permit 
issuance or renewal or through the permit revision process. When an 
existing permit is to be revised to incorporate an advance approval of 
minor NSR, the appropriate revision track depends on the nature of the 
proposed advance approval and the process under which it was 
established (e.g., whether the authorizing NSR process also addressed 
title V requirements). See 40 CFR 70.7(d) & (e). Note also that the 
permit shield (where available and granted by the permitting authority) 
can be extended to advance approvals added through permit issuance or 
permit renewal or to those added during a significant permit 
modification, but not to those added through other permit revision 
procedures.
    Commenters generally agreed that no Federal rulemaking is needed on 
the advance approval of changes under minor NSR because States 
currently can,

[[Page 51426]]

at their discretion, employ a variety of advance approval techniques 
under their existing rules and authorities. Some commenters indicated 
that any new Federal rules might actually constrain innovation by the 
States in this area, rather than enable greater use of advance 
approvals. A commenter noted that some State minor NSR programs require 
contemporaneous minor source BACT determinations that are not 
consistent with the advance approval of a wide spectrum of changes, and 
some expressed concern about the burden and other costs that advance 
approval permits could impose upon State agencies for uncertain 
projects and uncertain environmental gain.
    Several industry commenters urged EPA to further encourage States 
to issue advance approvals under minor NSR. On the other hand, an 
association of State and local air agencies indicated that States do 
not need our encouragement to use their minor NSR programs for advance 
approvals as appropriate, and objected that the discussion in the 
proposal preamble could be misinterpreted as having regulatory force. 
This commenter believed that advance approvals cannot be issued under 
some minor NSR programs.
    We received few comments on our proposal to revise 40 CFR 
70.5(c)(3)(iii). One State agency indicated that for a combined NSR/
title V permit program unit-specific information is often needed for 
several purposes, including control technology assessment, modeling, 
compliance assessment, determining the appropriate level and frequency 
of monitoring, etc., even if the unit is covered by an emissions cap. 
This commenter wanted to retain the ability to require such information 
as needed.

B. Final Action

    Consistent with our proposal, we are not revising any part 51 
requirement in order to require or facilitate advance approvals under 
minor NSR (or under any other applicable requirement). We continue to 
believe that many States are able to advance approve changes under 
their existing minor NSR programs, to the extent that they believe it 
is appropriate to do so. As mentioned by a commenter, EPA recognizes, 
however, that certain minor NSR rules are not as amenable to advance 
approval as are others. In particular, advance approvals under State 
rules that require sources to employ best available technology (where 
such rules are judged to be open to advance approval by the permitting 
authority and appropriate for use in a particular case) may require 
additional permit terms as necessary to assure that best available 
technology will be used.
    We would also like to emphasize that permitting authorities, 
operating under their existing minor NSR regulations and authorities, 
must include terms as necessary to ensure the practical enforceability 
of advance approvals. For example, for purposes of tracking compliance 
with an emissions cap established in minor NSR, the minor NSR permit 
should contain sufficient terms that collectively act to monitor and 
quantify the relevant emissions at the site over the applicable time 
period.
    We are finalizing the proposed revision to the title V permit 
application requirements at 40 CFR 70.5(c)(3)(iii) with minor changes. 
As proposed, the final revisions clarify that for emissions units 
subject to an annual emissions cap, the application may report the 
units' emissions as part of the aggregate emissions associated with the 
cap, except where the permitting authority determines that more 
specific information is needed. The EPA agrees with the commenter who 
wanted to assure that permitting authorities retained the ability to 
require more unit-specific information as needed to develop permit 
terms needed to determine or to assure compliance with all applicable 
requirements relevant to emissions units included under the emissions 
cap. As a result, the final rule language now indicates that unit-
specific information must be provided whenever it is needed, including 
where necessary to determine or assure compliance with an applicable 
requirement.
    We believe that the revised 40 CFR 70.5(c)(3)(iii) will facilitate 
the use of advance approvals under emissions caps. This combination of 
FAP tools was repeatedly validated in our evaluation of pilot permits. 
In addition, emissions caps were clearly shown to promote emissions 
reductions as sources sought to create ``head room'' under their caps 
to allow for additional growth. No other changes to part 70 are being 
made for the purposes of accomplishing advance approvals under minor 
NSR or incorporating them into part 70 permits. However, we again 
stress that an advance approval which is incorporated into a part 70 
permit must include all the conditions of the underlying authorization. 
The source is responsible for obtaining any extensions or additional 
authorizations as necessary to keep the advance approval in the part 70 
permit in effect.
    While we believe that appropriately crafted advance approvals of 
minor NSR can, in certain cases, facilitate operational flexibility 
while protecting the environment (at least as effectively as would the 
individual review of each change as it occurs), we do not intend to 
imply that States should issue such advance approvals in any cases that 
would be inconsistent with their existing rules or, in their judgment, 
would be inappropriate. As a general matter, the permitting authorities 
have authority to decide, on a case-by-case basis, the merits of 
granting an advance approval of minor NSR to a particular requesting 
source. Additionally we do not intend to imply that States must revise 
their current rules to facilitate advance approvals in the future. 
Rather, where existing rules may limit advance approval opportunities, 
EPA simply encourages States to consider the adoption of more flexible 
minor NSR rules under the broad governing regulations in 40 CFR 51.160-
51.164. It is EPA's policy to support State use of advance approvals 
under minor NSR, where they deem them appropriate, and particularly 
where States expect benefits similar to those found in our evaluation 
of pilot permits to occur.
    We also acknowledge that States, in order to respond to requests by 
sources for advance approval of minor NSR, may incur additional up-
front development costs for which they may have to charge additional 
service fees. However, based on the pilot permit experience, annual 
administrative costs associated with FAPs should decline over time and, 
over the life of the permit, be less than those for conventional 
permits.

VI. Alternative Operating Scenarios

A. Background

    Since they were initially promulgated in 1992, the part 70 State 
operating permit program regulations have included the AOS provisions 
found at 40 CFR 70.6(a)(9).\17\ These provisions were promulgated 
consistent with section 502(b)(6) of the Act, which requires permit 
programs to include provisions for adequate, streamlined and reasonable 
procedures for expeditious processing of the application and 
expeditious review of permit actions. Accordingly, 40 CFR 70.6(a)(9) is 
a mandatory part 70 program element, but its use is discretionary on 
the part of both sources

[[Page 51427]]

and permitting authorities. In particular, 40 CFR 70.6(a)(9) provides 
that any permit issued under part 70 must include terms and conditions 
for reasonably anticipated operating scenarios identified by the source 
in its application, as approved by the permitting authority.\18\
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    \17\ As noted previously, our proposed and final actions related 
to AOSs apply equally to part 70 and part 71. For simplicity, we 
refer only to part 70 in this preamble discussion. The provisions of 
part 71 generally mirror those of part 70, so the part 71 paragraphs 
that correspond to the cited paragraphs in part 70 differ only by 
designating part 71 instead of part 70 (unless otherwise noted). For 
example, the AOS provisions of part 71 are found at 40 CFR 
71.6(a)(9) rather than at 40 CFR 70.6(a)(9).
    \18\ Alternatively, if a title V permit is issued without an 
AOS, it must nonetheless, pursuant to 40 CFR 70.6(a)(1), contain 
terms sufficient to assure compliance with all applicable 
requirements at the time of permit issuance. While permissible to do 
so, failure to address anticipated changes in an AOS which are not 
otherwise sufficiently addressed by the included applicable 
requirements may result in the need for a permit revision or, if 
available under the State's part 70 program, an off-permit action 
which would require an advance notice and would not be eligible for 
the permit shield. On the other hand, if an AOS were authorized in a 
title V permit, then the source could subsequently implement it 
without further review or approval, provided that such 
implementation was contemporaneously recorded in an on-site log upon 
making the relevant change(s).
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    The Agency outlined broad policy on the design and implementation 
of AOSs in our final part 70 rule and then further explained our policy 
in the September 12, 2007 proposal. In the final part 70 rule, we 
emphasized the importance of 40 CFR 70.6(a)(9), noting that a permit 
that contains approved AOSs ``will be a more complete representation of 
the operation at the permitted facility.'' See 57 FR 32276. We also 
explained that once a permit with approved AOSs is issued, the need for 
additional permit modifications will be substantially reduced since the 
permit will already contain appropriate terms and conditions to 
accommodate the approved operating scenarios. In the final part 70 
rule, we did not place any restrictions on the types of operations that 
could qualify as a reasonably anticipated operating scenario. Instead, 
the Agency deferred to the process under which a candidate AOS would be 
identified by the source and considered for approval by the permitting 
authority to establish those AOSs which would be appropriate for 
streamlining purposes.
    In the September 12, 2007 proposal, the Agency explained that, when 
deciding to approve an AOS, the permitting authority must ensure that 
the proposed operating scenarios are adequately described for each 
relevant emissions unit such that all applicable requirements 
<SUP>19 20</SUP> associated with each scenario are identified and 
appropriate terms and conditions to assure compliance with these 
requirements (when they become applicable) are included in the permit. 
We also noted that the source must obtain all specific authorizations 
which are required under any applicable requirements (e.g., those under 
minor NSR) in order to implement any AOS approved by the permitting 
authority without any further review or approval on their part. In 
addition, EPA affirmed that, while States must have sufficient 
authority in their part 70 programs to grant an AOS, if proposed by a 
source, permitting authorities retain the discretion as to the 
appropriateness of doing so on a case-by-case basis, depending on the 
specific facts of each situation. The Agency further conveyed that 
changing to an AOS can not be used to circumvent applicable 
requirements or to avoid an enforcement action. A switch to an AOS does 
not affect the compliance obligations applicable to a source under its 
previous operation.
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    \19\ ``Applicable requirement'' as defined in 40 CFR 70.2 
includes all the separate emissions reduction, monitoring, 
recordkeeping, and reporting requirements of a particular standard 
or SIP regulation and all the terms and conditions of 
preconstruction permits issued pursuant to regulations approved or 
promulgated through rulemaking under title I of the Act.
    \20\ Failure to anticipate and include a particular change in a 
part 70 permit (including under an AOS) does not in and of itself 
bar the source from implementing the change, without a permit 
revision, if it can satisfy the requirements of the off-permit 
provisions in an approved part 70 permit program. Cf. 40 CFR 
70.4(b)(12) and (b)(14).
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    As with advance approvals, we noted in the proposal preamble that 
an AOS may be added to a title V permit through permit issuance or 
renewal or through the permit revision process. When an existing permit 
is to be modified, the appropriate modification track (significant or 
minor) depends on the nature of the proposed AOS (or the proposed 
revision to an AOS) and whether it would qualify for treatment as a 
minor permit modification under existing 40 CFR 70.7(e)(2)(i). We noted 
also that the permit shield (where available and granted by the 
permitting authority) can be extended to AOSs added during permit 
issuance or renewal or through a significant permit modification, but 
not to those added through minor permit modification procedures (per 
existing 40 CFR 70.7(e)(2)(vi)).
    In addition, we pointed out in the proposal preamble that the 
contents of the AOS log, such as its description of requirements that 
apply to a particular AOS, are not permit provisions for purposes of 
the permit shield. Thus, a source would not be deemed to be in 
compliance with the applicable requirements of the Act simply because 
it was in compliance with the description of applicable requirements 
contained in the log, if that description were inaccurate.
    On a few occasions prior to our September 2007 proposal, we 
proposed rulemaking and guidance on AOSs. These proposals focused 
primarily on how AOSs might relate to advance approvals. We did not 
finalize our proposals.\21\
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    \21\ In the 1990s, we proposed certain clarifications and 
modifications to the part 70 regulations. See generally 60 FR 45529 
(August 31, 1995) and 59 FR 44460 (August 29, 1994). In those 
proposals, among other things, we discussed the concept of ``advance 
NSR'' in relation to AOSs, and proposed a definition for 
``alternative operating scenarios.'' In August 2000, we issued a 
draft guidance document called White Paper Number 3 (64 FR 49803, 
Aug. 15, 2000), on which we solicited comment. That draft guidance 
addressed various flexible permitting approaches, including the use 
of the AOS provisions. In fashioning the proposal on which this 
final rule is based, we considered a summary of the comments 
received on the prior proposals that addressed AOSs (which is 
available in the docket) and the relevant individual comments 
received on the draft guidance (which are also in the docket).
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    In the preamble to our September 2007 proposed rulemaking we also 
proposed several specific revisions to the existing part 70 and part 71 
regulations as they apply to AOSs. The Agency stated that the primary 
purpose of these revisions to parts 70 and 71 is to build upon the 
existing regulatory framework and to ensure that the flexible 
permitting approaches with which we have experience are more readily 
and widely used.
    We specifically proposed to define the term ``alternative operating 
scenario (AOS)'' in 40 CFR 70.2 and to codify certain related 
requirements to promote consistency and a common understanding of AOSs. 
The proposed definition read as follows:

    Alternative operating scenario (AOS) means a scenario authorized 
in a part 70 permit that involves a physical or operational change 
at the part 70 source for a particular emissions unit, and that 
subjects the unit to one or more applicable requirements that differ 
from those applicable to the emissions unit prior to implementation 
of the change or renders inapplicable one or more requirements 
previously applicable to the emissions unit prior to implementation 
of the change.

    The other proposed revisions included the following:
    <bullet> Revisions to 40 CFR 70.5(c)(7) to clarify that the 
permitting authority may require the source to include in its 
application additional information as necessary to define permit terms 
and conditions implementing any AOS;
    <bullet> Additional revisions to 40 CFR 70.5(c)(7) to clarify that 
the application must include a demonstration that the source has 
obtained all authorizations required under the applicable requirements 
that apply to any AOS, or a certification that the source has submitted 
a complete application for such authorizations;

[[Page 51428]]

    <bullet> Revisions to the compliance plan requirements for 
applications under 40 CFR 70.5(c)(8) to clarify that such plans must 
address AOSs when an application includes them;
    <bullet> Revisions to 40 CFR 70.6(a)(3)(iii)(A) to require the 
source to identify in the 6-month monitoring report any AOSs 
implemented during the reporting period;
    <bullet> Revisions to 40 CFR 70.6(a)(9)(i) to clarify what specific 
information must be included in the AOS log (already required under the 
existing regulations) when an AOS is implemented;
    <bullet> Revisions to 40 CFR 70.6(a)(9)(iii) to clarify what 
constitutes an acceptable description in a title V permit for an AOS;
    <bullet> Additional revisions to 40 CFR 70.6(a)(9)(iii) to make 
clear that the permitting authority cannot grant final approval of an 
AOS until the source has obtained all the authorizations required under 
the applicable requirements relevant to that AOS; and
    <bullet> Revisions to use consistent terminology wherever the rules 
refer to AOSs.
    The commenters on our proposal generally indicated an overall 
consensus that the proposed additional requirements for AOSs are not 
necessary or useful. They pointed out that AOSs are already provided 
for in part 70, and that permitting authorities have been implementing 
these provisions without difficulty for years. On the other hand, some 
commenters believe that use of AOS provisions, in their experience, has 
not been necessary in some States. In these States, commenters assert 
that permitting authorities have been able to address prospective 
operating scenarios identified by the source by simply including in the 
title V permit the applicable requirements and corresponding compliance 
assurance terms (i.e., monitoring, recordkeeping, and reporting 
requirements) related to these scenarios. Commenters further asserted 
that in many cases, such terms are adequate to assure compliances at 
all times without AOS-specific logs or reports. Therefore, they 
objected to the level of detail proposed for the content of AOS logs 
and permit terms, and to the requirement to document AOS implementation 
in the 6-month monitoring reports. These commenters also claim that the 
proposed requirements would be unnecessarily burdensome and would not 
improve compliance assurance. Moreover, some States indicated the 
rulemaking on AOSs, as proposed, might have the unintended consequence 
of stifling innovative approaches to operational flexibility by 
prescribing a rigid approach to AOSs. These commenters collectively 
seek to preserve the current levels of available flexibility and the 
avenues for accessing it.
    We also received a number of comments specific to our proposed 
definition of AOS. Most of these commenters objected to the inclusion 
of the phrase ``physical or operational change'' in the definition, 
believing that this will cause confusion with the similar phrase 
``physical change or change in the method of operation'' used in the 
NSR program.

B. Final Action

    Based on the comments received, the States' current approach to 
implementing existing AOS rules (described above) has proven to be 
fundamentally sound and effective. We are persuaded that the proposed 
specific revisions which would be new requirements would not promote 
more widespread use of AOSs and other effective strategies than does 
the current process-based approach and that these revisions might 
instead be counterproductive. The Agency has therefore decided to not 
impose any additional requirements onto an already working approach. 
Rather, we intend to preserve the flexibility available under existing 
rules by codifying a definition of ``AOS'' (as modified in response to 
comments received) and promulgating a few minor clarifications to the 
existing rules intended to improve certainty. The Agency believes that 
these actions, in light of the comments received, are appropriate and 
consistent with the basic streamlining tenets of section 502(b)(6) of 
the Act on which the provisions for AOSs are based.
    Commenters have convinced us that permitting authorities are 
currently able, in response to a request by a source for more 
operational flexibility, to develop title V permits which allow the 
source to shift among identified operating scenarios. Commenters 
correctly point out that, under the current rule, in lieu of using an 
AOS, this result might be achieved by relying on the authority and 
provisions contained in the applicable requirements implicated by the 
anticipated scenario. This would be true where the applicable 
monitoring and/or reporting requirements assure compliance (including 
requirements for records that effectively identify when the scenario 
operates) or where the source and permitting authority have opted to 
streamline the relevant applicable requirements consistent with White 
Paper Number 2.\22\ Conversely, AOSs would be useful where additional 
records are needed to document when a new scenario occurs. We are 
therefore agreeing with commenters that, for flexibility purposes, the 
current process is effective in developing: (1) Appropriate permit 
design options to access the inherent flexibility under relevant 
applicable requirements to provide for alternative modes of operation; 
and (2) AOSs which are determined to be adequate and otherwise 
appropriate by the permitting authority in reducing administrative 
costs while assuring compliance with all applicable requirements.
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    \22\ In streamlining, the compliance terms are based on the most 
stringent requirement applicable to the proposed changes and are 
effective upon permit issuance. In guidance generally referred to as 
``White Paper Number 2,'' we interpreted our part 70 rules to allow 
sources to streamline multiple applicable requirements that apply to 
the same emissions unit(s) into a single set of requirements that 
assure compliance with all the subsumed applicable requirements. See 
``White Paper Number 2 for Improved Implementation of the Part 70 
Operating Permits Program,'' March 5, 1996, (http://www.epa.gov/ttn/oarpg/t5/memoranda/wtppr-2.pdf). If all the applicable requirements 
that apply to a set of changes are streamlined in the permit and the 
permitting authority approves the proposed streamlining, the source 
need only comply with the streamlined requirement. This benefits all 
parties by simplifying and focusing the compliance requirements 
contained in the permit. As a result, a source relying upon 
emissions limit streamlining implicitly has chosen not to pursue the 
use of AOSs, since the source would always be required to meet the 
worst case scenario at all times regardless of which scenario was 
actually operated.
    As explained in White Paper Number 2, sources that seek to 
streamline applicable requirements should submit their request as 
part of their title V permit application, identifying the proposed 
streamlined requirements and providing a demonstration that the 
streamlined requirements assure compliance with all the underlying, 
subsumed applicable requirements. Upon approval of the streamlined 
requirements, the permitting authority would place the requirements 
in the title V permit (see White Paper Number 2 for the complete 
guidance on the streamlining of applicable requirements). A source 
can request in its title V permit application that the permitting 
authority streamline an advance approval already authorized under 
minor NSR with all other relevant applicable requirements. For the 
complete text of the elements that must be included in a title V 
application, see 40 CFR 70.5(c).
---------------------------------------------------------------------------

    In finalizing these limited revisions, the Agency wishes to make 
some additional observations relative to AOSs. First, as in the past, 
an AOS is essentially defined through the process used to establish it. 
This allows AOSs to encompass situations in which the relevant 
applicable requirements might be sufficient with respect to monitoring 
and/or recordkeeping to determine the compliance status of the unit at 
a given time but the source and permitting authority have nonetheless 
opted to use an AOS for greater certainty. We continue to believe that 
this result is acceptable if the source and permitting authority choose 
to pursue it. Although a log is required to record

[[Page 51429]]

implementation of an AOS, the primary objectives of section 502(b)(6) 
are still met, since the authorized changes can subsequently occur 
without further review or approval by the permitting authority. On the 
other hand, in the absence of an AOS, the title V permit authorizing 
multiple operating scenarios at a particular emissions unit which 
implicate different applicable requirements must require sufficient 
records to determine, at any point in time, which requirements apply to 
the unit and whether the unit is in compliance with each of them. If 
permit terms ensuring this result can be written by relying upon the 
authority contained in the relevant applicable requirements themselves 
and not that in 40 CFR 70.6(a)(9), then there would be no need for the 
permitting authority to approve an AOS. Conversely, if the permitting 
authority would need the authority contained in 40 CFR 70.6(a)(9), for 
example, to require the operational and/or material use records needed 
to determine which scenario is operating at any time, then the 
permitting authority, as appropriate, could either authorize these 
changes as AOSs (if first proposed by the source) or reject the 
operating scenario proposed without this recordkeeping and address 
future changes under the applicable off permit (as available from the 
permitting authority) or permit revision provisions.
    We have decided to finalize a definition for ``alternative 
operating scenario (AOS)'' and to revise the various references to AOSs 
to use consistent terminology. We believe that the term ``AOS'' should 
be defined and used consistently in the regulations.
    The final definition reads as follows:

    Alternative operating scenario (AOS) means a scenario authorized 
in a part 70 permit that involves a change at the part 70 source for 
a particular emissions unit, and that either results in the unit 
being subject to one or more applicable requirements which differ 
from those applicable to the emissions unit prior to implementation 
of the change or renders inapplicable one or more requirements 
previously applicable to the emissions unit prior to implementation 
of the change.

    The final definition is different from the proposed definition in 
that we no longer define an AOS as involving a ``physical or 
operational change.'' We agree with the commenters that inclusion of 
the phrase ``physical or operational change'' invites confusion with 
the major NSR provisions.
    The deletion of this phrase also helps to clarify the interface 
between the concepts of advance approvals (e.g., advance approval of 
minor NSR) and AOSs. As mentioned in the previous section, we 
recognized, based on our evaluation of pilot permits, that potentially 
many States could currently advance approve minor NSR and then 
incorporate the terms of the authorizing minor NSR permit into the 
title V permit as applicable requirements. While not proposing to do 
so, the Agency nonetheless took comment on whether some aspects of such 
advance approvals might also involve AOSs. Commenters strongly affirmed 
the current abilities of States to authorize advance approvals of minor 
NSR and that these authorizations should be kept generally separate and 
distinct from AOSs. The EPA agrees with these commenters and finds that 
the deletion of the phrase is useful in maintaining this 
separation.\23\ Thus, in most cases, advance approval of minor NSR is 
simply another example of how the inherent flexibility in an applicable 
requirement can be accessed without the need for an AOS.
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    \23\ Alternative operating scenarios, in contrast to advance 
approvals of minor NSR, more often involve the reversible shifts in 
operation of existing emissions units which implicate different 
applicable requirements and require additional monitoring and/or 
recordkeeping to determine what requirements apply at a particular 
time. On the other hand, advance approvals of minor NSR generally 
involve either: (1) The implementation of a modification to any 
existing unit which irreversibly triggers new applicable 
requirements such that the emission unit cannot return to its 
preconstruction status in the future; or (2) the construction and 
operation of a new unit which represents the beginning of the 
initial or baseline operation of the unit. In some cases, however, 
one or more AOSs may be used to complement an advance approval. For 
example, a complementary AOS might be useful where the source 
anticipates varying operation of the future or changed existing 
emissions unit in a manner that would implicate a set of applicable 
requirements different from those of the minor NSR advance approval.
    While AOSs and advance approvals of minor NSR are typically used 
as separate FAP approaches, sources and permitting authorities are 
not precluded from relying upon AOS authority to establish an 
advance approval of minor NSR in a title V permit. For example, an 
AOS might be appropriate where a different control approach would 
not be effective until and unless a particular change were made to 
an existing emissions unit.
---------------------------------------------------------------------------

    The deletion of the phrase ``physical or operational'' is also 
consistent with our previously stated decision to preserve the scope 
and operation of the current rule regarding AOSs. That is, the Agency 
believes, in light of comments received, it is not necessary to 
constrain the scope of AOSs by limiting them to those triggered by a 
``physical or operational'' change when the current approach only 
restricts the establishment of AOSs to those which both the source and 
permitting authority must agree are appropriate and are consistent with 
all underlying applicable requirements, including those involving NSR. 
The existing process to establish an AOS in a title V permit also 
addresses any potential concerns that too many AOSs might be proposed, 
including, for example, those involving a switch from one compliance 
option to another as provided for under a MACT (or other) standard. We 
do not believe that the population of AOSs actually approved will be 
impacted by the deletion. First, the deletion just preserves the status 
quo. Moreover, sources and permitting authorities are unlikely to 
establish alternative MACT compliance options as one or more AOSs, 
since the extensive monitoring and recordkeeping requirements typically 
found in MACT standards can themselves authorize shifts in compliance 
options after being incorporated into a title V permit.
    In addition to adding a revised definition of AOS and standardizing 
the part 70 references to AOSs to use consistent terminology, we have 
decided to finalize three other aspects of our proposed rules which we 
believe will also preserve the basic operation of the current rule 
while improving certainty. First, we are essentially finalizing the 
proposed revisions to 40 CFR 70.5(c)(7) to clarify that the permitting 
authority shall require the source to include in its application 
additional information as necessary to define permit terms and 
conditions to implement any AOS. Note that the final version obligates 
the permitting authority to require, as contained in the proposal, 
additional information to develop and implement AOSs, but this 
requirement only extends to situations where the permitting authority 
believe such information is necessary. We believe that this obligation 
has always been implicit in the previously existing language of the 
section, but that an explicit clarification is appropriate. Second, we 
are finalizing our proposed revisions to the compliance plan 
requirements for applications under 40 CFR 70.5(c)(8) to clarify that 
such plans must address proposed AOSs when an application includes 
them. We believe that this clarification also merely codifies existing 
policy and is appropriate to ensure that all applicants understand what 
is required for AOSs when a source chooses to request one.
    Finally, we are finalizing our proposed revisions to 40 CFR 
70.5(c)(7) to specify that the application must include a demonstration 
that the source has obtained all authorizations required under the 
applicable requirements that apply to any AOS being requested for 
approval by the source, or a certification that the source has 
submitted a complete application for such authorizations, and 
additional revisions

[[Page 51430]]

to 40 CFR 70.6(a)(9)(iii) to make clear that the permitting authority 
cannot grant final approval of an AOS until the source has obtained all 
the authorizations required under the applicable requirements relevant 
to that AOS. These actions again just codify existing policy and should 
be manageable given the relatively few AOSs that may also involve an 
advance approval (e.g., the preconstruction approval of a new unit 
requiring AOSs for its multiple future operating modes or for its 
involvement as a replacement component unit in an AOS for an existing 
emissions unit at the same source). This clarification will also help 
to ensure that any additional resources required for AOS development 
are focused on sources which are likely to use them and to eliminate 
any confusion over a provision approved without such authorizations.
    As noted above, we have been convinced by numerous commenters from 
both State and local permitting agencies and industry that the other 
more specific requirements proposed for AOSs are unnecessary and 
potentially could undermine the streamlining objectives of the AOS 
provisions. We have, therefore, elected to not finalize them. In 
particular, proposed revisions that we are not finalizing are the 
following:
    <bullet> Revisions to 40 CFR 70.6(a)(3)(iii)(A) to require 
additionally that the source identify in the 6-month monitoring report 
any AOSs implemented during the reporting period;
    <bullet> Revisions to 40 CFR 70.6(a)(9)(i) to clarify the type of 
information that must be included in the AOS log when an AOS is 
implemented; and
    <bullet> Revisions to 40 CFR 70.6(a)(9)(iii) to clarify what 
constitutes an acceptable description in a title V permit for an AOS.
    Based on comments received, the Agency is persuaded that the new 
reporting requirements, as proposed for inclusion in the 6-month 
monitoring report, would not be necessary or useful. We generally 
believe that sufficient information about AOSs and their use already 
exists from the combination of the AOS provisions contained in the 
permit and the required reports concerning annual compliance 
certification and the prompt reporting of deviations from achieving 
compliance with the AOS terms of the permit. In addition, pursuant to 
40 CFR 70.6(a)(9)(i), permits must require the source to keep an on-
site log that contemporaneously records the implementation of any AOS 
which occurred during the duration of the title V permit. Pursuant to 
40 CFR 70.6(a)(3)(ii)(B), the source owner must keep these records at 
their site for at least 5 years. Under 40 CFR 70.6(a)(6)(v) the source 
must submit to the permitting authority, upon their request, this and 
any other on-site information which is required to be kept by the 
permit or is needed by the permitting authority to determine compliance 
with the permit.
    The Agency also agrees with commenters that there is no need to 
standardize the content of AOS logs and permit provisions. While not 
finalizing any specific content or format requirements for permits or 
logs involving AOSs, the Agency notes that there remains an overall 
obligation that the information which is required by the permitting 
authority for AOSs must be adequate to assure compliance with all 
applicable requirements. Thus, the structure of the AOS implementation 
log required by the permitting authority is relatively flexible, 
provided that the required records are, in total, sufficient to verify 
the requirements applicable to a particular operating scenario and 
whether the source was in compliance with them.

VII. Approved Replicable Methodologies

A. Background

    Under the Act, title V permits are required to assure compliance 
with all applicable requirements. Sometimes, circumstances change for a 
source that bring about the need to recalculate or update a value used 
either in determining the compliance status of the source with an 
applicable requirement or in determining the applicability of a 
requirement. An advance approval under minor NSR or an AOS can 
incorporate flexibility into a permit, but the scope of changes that 
can be authorized in them can be severely limited with respect to a 
particular applicable requirement, if such recalculations or updates 
are involved and require case-by-case review/approval and a permit 
revision to ensure ongoing implementation. To facilitate such 
implementation, and to encourage additional permitting techniques that 
reduce the need for permit revisions (in a manner consistent with part 
70), we proposed the use of ARMs.
    In our September 12, 2007 proposal on flexible air permitting, EPA 
included provisions dealing with ARMs. Therein we stated our belief 
that ARMs are available now as one type of permit term described in 40 
CFR 70.6(a)(1) that can assure compliance with all applicable 
requirements at the time of permit issuance. In order to establish an 
ARM, a source would first propose one to the permitting authority who 
would then consider the appropriateness of authorizing it on a case-by-
case basis, depending on the specific facts of the situation. In all 
cases, the implementation of the proposed ARM must be consistent with 
all underlying applicable requirements.
    While we believed that ARMs as proposed are generally available 
without any rulemaking (depending on the structure and content of 
individual part 70 programs, as approved for States), we proposed to 
codify certain additions to 40 CFR parts 70 and 71 in order to promote 
greater certainty and use of ARMs, where the permitting authority 
decides it is appropriate to do so.
    In particular, we proposed to define ARMs at 40 CFR 70.2 as part 70 
permit terms that: (1) Specify a protocol which is consistent with and 
implements an applicable requirement or requirement of part 70, such 
that the protocol is based on sound scientific/mathematical principles 
and provides reproducible results using the same inputs; and (2) 
require the results of that protocol to be used for assuring compliance 
with such applicable requirement or requirement of part 70, including 
where an ARM is used for determining applicability of a specific 
requirement to a particular change. In the proposal preamble we also 
noted that within the scope of this definition, an ARM may be used to 
assure that a given requirement does not apply in a particular 
situation.
    As proposed, the terms of an ARM must specify when the ARM is to be 
used, the applicable methodology (e.g., equation or algorithm), and the 
purpose for which the output obtained upon the execution of the 
prescribed methodology will be used (e.g., to determine compliance with 
an applicable requirement or to modify the level of the parameters used 
to determine compliance in the future). All necessary terms and 
conditions must be included in the permit at the time the ARM is 
approved so that no permit revision will be required in the future to 
implement the ARM.
    We emphasized that an ARM, like any provision of a part 70 permit, 
cannot modify, supersede, or replace an applicable requirement, 
including, but not limited to, any monitoring, recordkeeping, or 
reporting required under applicable requirements.\24\

[[Page 51431]]

Instead, we proposed ARMs as a strategic approach for incorporating 
into a title V permit relevant applicable requirements and the 
requirements of part 70. The ARM provides a method for obtaining and 
updating information consistent with an underlying applicable 
requirement(s) or requirement(s) of part 70 in such a manner so as to 
avoid the need to reopen or revise the permit to incorporate the 
updated information. As such, an ARM must work within and be consistent 
with the applicable part 70 rules that govern permit revisions.
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    \24\ Under the authority of 40 CFR 70.6(a)(3), however, the 
permit can also contain additional streamlined monitoring or gap-
filling periodic monitoring as needed to assure compliance with 
applicable requirements. We pointed out that an ARM could operate on 
the information gathered under these obligations as well.
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    We further explained that the protocol to obtain information under 
an ARM must be objective and scientifically valid and reliable--such as 
an EPA test method or monitoring method (usually specified in the 
applicable requirement itself). We noted that an ARM also includes the 
instructions governing how the results of the protocol are to be used. 
For example, an ARM could specify that firebox temperature measurements 
taken during a performance test of a thermal oxidizer be used to: (1) 
Define a temperature level that assures compliance with a particular 
applicable requirement; and (2) revise and update the minimum firebox 
operating temperature of the oxidizer previously relied upon to assure 
compliance.
    We found permit terms containing ARMs to be useful in maintaining 
the effect of the advance approvals found in the pilot permits. 
Pervasively, all the pilot permits contained ARMs as the quantification 
methodology by which the source would sum VOC emissions from individual 
emissions units on an ongoing basis. These ARMs also included 
requirements governing when the aggregation procedures for determining 
total actual VOC emissions for the site would be compared to the 
relevant plantwide emissions cap(s) in order to assess source 
compliance. In some cases, the aggregation ARM relied on other ARMs to 
assure that certain input values were replicably determined. For 
example, two of the pilot permits contained replicable testing 
procedures. These procedures, once implemented, determined the control 
device operating parameter values that the source must monitor to 
demonstrate compliance with capture and destruction efficiency 
requirements (i.e., the applicable requirement). Without the replicable 
testing procedures in the permit, those values would have been included 
on the face of the permit, and the source would have had to seek a 
permit revision each time it repeated the testing procedures and the 
operating parameter values changed.\25\ Another pilot permit specified 
the process (i.e., compliance method) by which a source-specific 
emissions factor could be updated and used to determine whether 
emissions remained under the source's PTE cap where both the emissions 
cap and the ARM were established in its minor NSR permit. By including 
these replicable processes (e.g., replicable testing and/or emissions 
factor updating procedures) in the permit instead of specific operating 
values and emissions factors, sources could update those values and 
indicate compliance based on the latest results consistent with the 
replicable testing procedures in the title V permit, and forego a 
permit revision each time the values are changed.
---------------------------------------------------------------------------

    \25\ Although an ARM can reduce the number of permit revisions a 
source must make, it cannot modify an applicable requirement. For 
example, there are some instances where the applicable requirement 
requires a notice to the permitting authority, such as where the 
requirement calls for notice of a performance test or the submission 
of certain performance test results. An ARM can not abrogate these 
requirements.
---------------------------------------------------------------------------

    In addition to proposing a definition of an ARM, we also proposed 
that the 6-month monitoring reports (required under existing 40 CFR 
70.6(a)(3)(iii)) must identify any ARMs implemented during the 
reporting period, and that for ARMs generating values related to 
parametric monitoring (e.g., an ARM used to determine the minimum 
operating temperature of a thermal oxidizer during a performance test), 
the source must also include the results of the ARM in the 6-month 
monitoring report. We also proposed to modify 40 CFR 70.6(a)(1) to 
include a reference to ARMs, because ARMs are an example of permit 
terms that assure compliance with applicable requirements. Although we 
believe that the proposed regulatory change to 40 CFR 70.6(a)(1) is a 
relatively simple clarification, given that all permits must include 
terms that assure compliance with applicable requirements and the 
requirements of part 70, we proposed the change to promote increased 
consideration of ARMs, where appropriate. We recognized that we could 
have proposed to modify other provisions of part 70, such as 40 CFR 
70.6(a)(9), to include a reference to ARMs, but given the structure and 
content of the existing regulations, we did not believe that such 
additional changes were needed.
    As with advance approvals and AOSs, we noted in the proposal 
preamble that an ARM may be added to a title V permit through permit 
issuance or renewal or through the permit revision process. When an 
existing permit is to be modified, the appropriate modification track 
(significant or minor) depends on the nature of the proposed ARM (or a 
proposed change to an ARM which requires a permit revision) and whether 
it would qualify for treatment as a minor permit modification under 
existing 40 CFR 70.7(e)(2)(i). We also noted that the permit shield 
(where available and granted by the permitting authority) can be 
extended to ARMs added through a significant permit modification, but 
not to those added through minor permit modification procedures (per 
existing 40 CFR 70.7(e)(2)(vi)). In addition, we pointed out in the 
proposal preamble that a source that incorrectly applies the procedures 
and criteria for an ARM will be considered not to be in compliance with 
the terms of the permit (and therefore not in compliance with the Act).
    In proposing ARMs, we stated our belief that ARMs are authorized 
under title V of the Act and its implementing regulations. Section 502 
sets forth the minimum elements for a State operating permit program. 
Among other things, section 502 provides that for a State operating 
permit program to be approved, the permitting authority must have 
adequate authority to ``issue permits and assure compliance by all 
sources required to have a permit * * * with each applicable standard, 
regulation or requirement'' under the Act. See CAA section 
502(b)(5)(A). Section 504(a) of the Act also requires that each title V 
permit contain ``enforceable limitations and standards * * * and such 
other conditions as are necessary to assure compliance with applicable 
requirements of this Act, including the requirements of the applicable 
implementation plan.'' The Act further provides that any State 
operating permit program must include ``adequate, streamlined, and 
reasonable procedures * * * for expeditious review of permit actions.'' 
See CAA section 502(b)(6).
    Several State commenters indicated that the rulemaking on ARMs is 
unnecessary because States already issue permits with these sorts of 
terms under existing authority, as evidenced by EPA's discussion of 
ARM-like permit terms in some of the pilot permits. These commenters 
also expressed concern that this Federal rulemaking on ARMs might have 
the unintended consequence of stifling innovative approaches to 
operational flexibility by prescribing a rigid approach to ARMs. Some 
commenters expressed concern

[[Page 51432]]

that an ARM could be used to avoid the applicability of major NSR, 
which might otherwise apply when the operating conditions of a control 
device are altered and actual emissions are anticipated to increase as 
a result.
    Several industry commenters indicated that the rulemaking and EPA's 
expression of support for ARMs would help to clarify for States that 
ARMs are supported by the Act and viewed favorably by EPA. However, 
none of these commenters expressed support for the proposed 6-month 
reporting requirements for ARMs, and one industry commenter objected to 
the proposed 6-month reporting requirement for ARMs on the basis that 
no additional reporting is warranted for what is simply a method for 
showing compliance.

B. Final Action

    In response to these commenters, EPA has decided to finalize the 
proposed definition with minor changes and to add certain additional 
clarifications to Sec.  70.6(a)(1). In doing so, we reaffirm the 
proposal as summarized in the preceding section, except as described 
below in this section. As previously mentioned, these final rules with 
respect to ARMs do not affect any specific minima for part 70 programs, 
and, due to their clarifying nature, we do not expect many States to 
opt to revise their operating permit programs (see footnote 13).
    While we agree that States currently have authority to issue ARMs 
in title V permits, we do not agree that placing a definition for ARM 
in our part 70 rules will stifle innovation by the States. On the 
contrary, we believe that finalizing the ARM definition will clarify 
the availability of this aid to flexible permitting to those States and 
sources that are not aware of it or have had prior issues concerning 
its use.
    The final definition is nearly identical to the one proposed (i.e. 
we added a minor clarification that the results of the ARM be recorded 
as well as used for assuring compliance with any applicable requirement 
or requirement of part 70). The final definition reads as follows:

    Approved replicable methodology (ARM) means part 70 permit terms 
that:
    (1) Specify a protocol which is consistent with and implements 
an applicable requirement, or requirement of this part, such that 
the protocol is based on sound scientific and/or mathematical 
principles and provides reproducible results using the same inputs; 
and
    (2) Require the results of that protocol to be recorded and used 
for assuring compliance with such applicable requirement, any other 
applicable requirement implicated by implementation of the ARM, or 
requirement of this part, including where an ARM is used for 
determining applicability of a specific requirement to a particular 
change.

    We wish to emphasize that, under the final definition, an ARM may 
be used as a means to determine the applicability of a requirement, not 
just as an aid for assuring compliance. The EPA has included other ARM-
like mechanisms in several of our national standards for MACT and NSPS. 
If a source proposes an ARM to delineate which changes are subject to 
one requirement instead of another, examples should be provided to the 
permitting authority and to the record supporting proposed approval of 
the ARM illustrating the prospective use of the ARM (if approved). We 
believe that the permitting process is the best forum for clarifying 
how a proposed ARM would work in the relevant situations reasonably 
expected to occur over the duration of the permit. However, in the case 
where the permitting authority has significant concerns over how an 
applicability ARM would operate in certain situations, the permitting 
authority should not authorize the ARM for those situations.
    We are also revising 40 CFR 70.6(a)(1) to acknowledge that ARMs may 
be considered as one type of part 70 permit term that assures 
compliance with applicable requirements. We are also adding two 
clarifications that appropriately focus ARM implementation. The Agency 
believes that these clarifications in combination with the mentioned 
final definition will promote increased consideration of ARMs, where 
appropriate.
    This final version of 40 CFR 70.6(a)(1) incorporates existing 
policy that a source must first request an ARM in its part 70 permit 
application before it can be considered by the permitting authority. 
Note that this request could appear as part of the originally submitted 
application or in the later submittal of supplemental application 
material (e.g., a letter requesting consideration of a replicable 
protocol as an ARM). As is the case for AOSs, the permitting authority 
must then decide whether to accept the proposed ARM and may reject it 
or modify it for several appropriate reasons, including concerns over 
its replicability and/or value in lowering administrative costs. This 
addition is consistent with the basic process required for the 
establishment of AOSs which, based on comments received, is effective 
in ensuring that FAP approaches are appropriately considered.
    Relevant to the first element of the final ``ARM'' definition, 
sources will identify candidate protocols that if judged to be 
replicable could be considered further as a potential ARM by the 
permitting authority. Candidates for such protocols would frequently 
arise from already established applicable requirements, such as MACT 
standards, NSPS, or preconstruction permits (e.g., minor or major NSR). 
If accepted by the permitting authority as an ARM, pursuant to the 
second element of the final definition, the part 70 permit would 
contain the ARM (i.e., the combination of the replicable protocol and 
the instructions for its use, including the type of data to be 
inputted).
    The second clarification to 40 CFR 70.6(a)(1) was added in response 
to those commenters who were concerned that ARM implementation of one 
applicable requirement might circumvent the applicability of another 
applicable requirement. We believe that this final clarification 
adequately conveys appropriately that an ARM created under part 70 to 
streamline the implementation of one applicable requirement cannot be 
used to contravene compliance with another requirement under the Act or 
to circumvent its applicability as a result of implementing an ARM. 
Accordingly, the terms of an NSR permit, which are applicable 
requirements that must be incorporated into a title V permit, cannot 
subsequently be changed using an ARM created under different authority. 
Approved replicable methodologies can be used to update values only 
when the applicable requirement allows for this to occur. For example, 
if an existing NSR permit includes specific parametric monitoring 
levels as compliance indicators, to automate the updating of such 
levels the NSR permit would need to be revised to establish an ARM. The 
title V process could not create an ARM to revise the NSR conditions 
directly. Similarly, the potential applicability of other requirements 
implicated by the implementation of an ARM (e.g., NSR) must be 
independently evaluated and determined.
    As noted above, no commenters specifically supported our proposed 
reporting requirements for ARMs, and one commenter specifically opposed 
the reporting requirement. In addition, numerous States opposed the ARM 
proposal in general as being unnecessary and likely to reduce, rather 
than expand, the flexibility available under the existing rules. 
Although these commenters did not specifically refer to the reporting 
portion of the ARM

[[Page 51433]]

proposal (or most other specifics of the proposal), we believe that 
this is one aspect of the proposal that was targeted as unnecessary and 
potentially restrictive. Finally, several commenters raised concerns 
regarding our similar proposal to require reporting the implementation 
of AOSs in the 6-month monitoring report which we believe are also 
appropriate to consider in deciding whether to require the 6-month 
reporting of ARMs. As a result, we have concluded that the information 
contained in the permit about the nature of any approved ARM and the 
instructions for its use along with the required reports concerning 
annual compliance certification and the prompt reporting of deviations 
from achieving compliance with the ARM should generally be sufficient. 
In addition, sources must keep on-site records of ARM 
implementation.\26\ Moreover, any required on-site records must be 
submitted to the permitting authority upon their request pursuant to 40 
CFR 70.6(a)(6)(v). Therefore, we have decided to drop the proposed 
requirement for the 6-month monitoring report to identify any ARMs 
implemented during the reporting period.
---------------------------------------------------------------------------

    \26\ The authority to impose this requirement typically arises 
from the ARMs themselves being applicable requirements (e.g., 
provisions within NSPS or MACT standards or terms of preconstruction 
permits) but also can occur under other authorities such as 40 CFR 
70.6(a)(9) authority where the ARM would be part of an AOS.
---------------------------------------------------------------------------

VIII. Green Groups

A. Background

    We proposed to modify the major NSR regulations in order to create 
an alternative means to comply with major NSR. Specifically, we 
proposed to allow a new pathway that would treat a number of emissions 
activities as a single emissions unit (which we termed, a ``Green 
Group'') where the emissions from each of these activities would be 
routed to a common emissions control device meeting BACT/LAER, and 
future emissions increases and other changes within the Green Group 
would be approved for a 10-year period in a major NSR permit. The 
proposed approach was described as an extension of our December 2002 
NSR reform regulations (67 FR 80186, December 31, 2002). In particular, 
Green Groups would complement the use of plantwide emissions caps 
(termed, plantwide applicability limitations, or PALs) by providing a 
flexible permitting option for a section of a plant. Like PALs, we 
proposed that Green Groups would be a mandatory minimum element of a 
State NSR program, but the permitting authorities would retain 
discretion as to when to approve individual Green Groups requested by 
sources.\27\ However, we also solicited comment on whether Green Groups 
should be a voluntary, rather than mandatory, program element for 
States.
---------------------------------------------------------------------------

    \27\ The major NSR rules refer to the ``reviewing authority,'' 
while part 70 refers to the ``permitting authority.'' For purposes 
of consistency with the other sections of this preamble, we use the 
term ``permitting authority'' in this section. In these discussions, 
this term is intended to have the same meaning as ``reviewing 
authority.''
---------------------------------------------------------------------------

    The Green Group provisions were proposed to encourage a wide 
spectrum of sources to construct specified types of changes for a 10-
year period with greater certainty and flexibility in exchange for 
implementing BACT/LAER, regardless of whether or to what extent the 
source may have been subject to the current major NSR regulations. That 
is, the Green Group provisions, as an alternative means to comply with 
major NSR, did not require an evaluation of whether conventional major 
NSR would otherwise apply.
    In its permit application, the source would be required to describe 
the new and existing emissions activities to be included in a Green 
Group in sufficient detail to allow the permitting authority to 
determine BACT or LAER (as applicable) for the Green Group taken as a 
whole and to conduct an ambient air impact analysis to safeguard 
relevant ambient increments and standards (including the determination 
of any offsets necessary in nonattainment areas) or to safeguard air 
quality values in any relevant Class I areas. We further proposed that 
the type of detail required in a permit to describe the authorized 
changes in the Green Group must be sufficient to allow the permitting 
authority to determine, when a change subsequently was implemented, 
whether the permitting authority contemplated that change in the scope 
of the advance approval contained in the major NSR permit.
    We proposed that, in general, two types of emissions limits must be 
set in the major NSR permit for Green Groups: (1) An emissions limit to 
constrain the overall emissions of the Green Group; and (2) a limit to 
ensure that BACT/LAER technology is being employed and is effective 
across the Green Group (e.g., lbs/gal, percent reduction). These two 
limits would complement each other and collectively implement the core 
requirements for the Green Group. The amount of any actual emissions 
increase from authorized changes above previous actual emissions would 
be limited by the annual emissions cap and by the BACT/LAER emissions 
limitation, both of which would apply to the applicable emissions unit, 
in this case designated as the Green Group, and would be placed in the 
major NSR permit.
    The major NSR review process must determine the level of 
monitoring, recordkeeping, reporting, and testing (MRRT) to assure 
compliance with the control technology requirement and any other 
emissions limit(s) imposed by the permitting authority on emissions 
unit(s) as necessary to meet major NSR. We proposed specifically for 
Green Groups that a source would be required to monitor all emissions 
activities that comprise the Green Group to ensure compliance with the 
Green Group limit using essentially the same approaches that would meet 
our requirements for tracking emissions associated with a PAL. These 
monitoring, recordkeeping, and reporting requirements would be 
incorporated into the NSR permit that established the Green Group.
    We proposed that all NSR projects using a Green Group be of a 10-
year duration, for two reasons. First, we stated that this time frame 
represents a balance between the useful life of the emissions control 
system and the time frame in which additional major NSR review is 
likely to result in little, if any, added environmental benefit. 
Second, we stated that a 10-year duration for a Green Group is 
supported by the same rationale we used in choosing a 10-year period 
for the duration of PALs. For PALs we concluded that a 10-year period 
was necessary to ensure that the normal business cycle would be 
captured generally for any industry; to balance the need for regulatory 
certainty with the administrative burden; and to align the PAL renewal 
with the title V permit renewal. See 67 FR 80216, 80219. In proposing a 
10 year duration for the Green Group, the Agency also solicited comment 
on the appropriateness of a 15-year period.
    The Agency further proposed to exclude from application to a Green 
Group the existing PSD part 52 requirements in 40 CFR 52.21(r)(2) for 
timely construction and in paragraph (j)(4) of both parts 51 and 52 PSD 
requirements for the BACT reevaluation of later independent phases of 
phased construction projects. We also clarified, albeit without 
proposing specific rule language, that the provisions of 40 CFR 
52.21(r)(4), 51.166(r)(2), and 51.165(a)(5)(ii), which subject a source 
to major NSR upon the relaxation of certain permit terms that had 
previously allowed the source to avoid major NSR, are met during any 
major NSR process like one that would establish a Green Group. Finally, 
we noted that, under the

[[Page 51434]]

current NSR regulations, an emissions change is only creditable for 
netting purposes to the extent that the permitting authority has not 
previously relied on it in issuing a major NSR permit. See 40 CFR 
52.21(b)(3)(iii). Accordingly, emissions increases and decreases that 
occur at the emission activities of a source subject to a current major 
NSR permit, like those in a Green Group during its effective period, 
are not to be included in future netting calculations at the same 
source.
    In our proposal, we based the legal rationale for Green Groups on 
the premise that the changes and emissions activities within a Green 
Group are specifically authorized to occur as a result of undergoing, 
not avoiding, major NSR. Conversely, other changes that a source seeks 
to implement, but that are not authorized in the Green Group, cannot 
occur without first obtaining all necessary preconstruction approvals 
that would apply to such changes. The determination of whether the 
newly proposed, but unauthorized changes trigger NSR would be made 
using the ``actual-to-projected-actual test'' under, for example, 40 
CFR 52.21(a)(2)(iv). The Agency noted that this legal rationale for 
Green Groups differs from the legal rationale for Clean Units, a 
provision in the 2002 NSR reform rules that employed an allowable 
emissions test for netting purposes which the U.S. Court of Appeals for 
the DC Circuit vacated. New York v. EPA, 413 F.3d at 40 (DC Cir. 2005).
    Finally, as discussed in the proposal preamble, we believe that the 
environment and the public would potentially benefit from Green Groups 
for several reasons. First, we believe that substantial environmental 
benefits could occur because a Green Group would require all included 
emissions activities to be controlled to the level of BACT or LAER. The 
BACT or LAER limits would apply to existing emissions activities (which 
otherwise would remain uncontrolled or be subject to less stringent 
control requirements), as well as to emissions activities that are 
modified or added pursuant to the Green Group authorization. In 
addition, absent a Green Group, some modifications and new emissions 
activities might not be subject to major NSR because their emissions 
would be below applicability thresholds or because they would ``net 
out'' of review. Even when individual changes would prove to be subject 
to major NSR, the resulting BACT might in some cases be less stringent 
than that required for a Green Group, given the economies of scale in 
evaluating BACT at the same time for all the activities and authorized 
changes making up a Green Group. Moreover, we expect that environmental 
benefits would accrue from the better and more frequent type and amount 
of monitoring proposed to be required for Green Groups. Finally, we 
believe that Green Groups would also promote greater administrative 
efficiency for permitting authorities and sources, because a Green 
Group would eliminate iterations of permitting processes that produce 
little or no environmental benefit.
    The commenters, while mixed in their overall reaction to the Green 
Group concept, generally did not support the specifics of the Green 
Group proposal. State commenters indicated that the proposed 10-to-15-
year term of the Green Group is inappropriate because the Act and good 
environmental stewardship require BACT/LAER reviews and air quality 
analyses to be conducted contemporaneously with the time of each change 
at a facility. These commenters disagreed with our assertion that BACT 
and LAER typically do not advance significantly over the proposed 10- 
or 15-year period. They added that such permits would unfairly reserve 
PSD increments for projects that might never be built and that the air 
quality status in the area of a Green Group could also change due to, 
for example, transported pollution, revisions to the NAAQS, and natural 
events. State commenters also questioned the environmental benefits of 
Green Groups and did not believe that the pilot permits contained in 
the docket supported the Green Group approach. They also asserted that 
Green Groups share the legal flaws of Clean Units. State commenters 
further conveyed that many permitting authorities already offer 
considerable flexibility and that it is the permitting authorities who 
can best decide the structure of their own programs in this regard. The 
State commenters generally believe that the Green Group proposal should 
be abandoned, but if it is finalized it should be a voluntary element 
of the major NSR program, rather than mandatory as proposed.
    The environmental group that commented on the proposal asserted 
that the proposed 10-to-15-year term of the Green Group is inconsistent 
with the Act's requirements for contemporaneous BACT/LAER and air 
quality reviews. The environmental group also indicated that Green 
Groups suffer from the same legal flaws as Clean Units. Like most State 
commenters, the environmental group believes that the Green Group 
proposal should be abandoned, but if it is finalized it should be 
voluntary for the States.
    Industry commenters, on the other hand, typically favored some 
aspects of the proposal and believe the Green Group to be a real 
incentive for sources to control beyond their legal requirements in 
exchange for greater regulatory certainty and operational flexibility. 
These commenters often argued that a term of 10 to 15 years would be 
necessary to justify the expenditure for state-of-the-art controls for 
a Green Group. They agreed with the proposal that Green Groups should 
be a mandatory element of the major NSR program and attributed real 
benefits such as those associated with lower administrative costs. They 
believe that Green Groups are legally defensible and clearly different 
from Clean Units. However, industry commenters asserted that the 
proposal did not reflect how manufacturing facilities are constructed 
and operated. In particular, they stated Green Groups should not be 
limited to a single control device and that pollution prevention should 
be allowed as the primary Green Group control approach. In addition, 
they indicated that the proposed monitoring, recordkeeping, and 
reporting requirements are unnecessarily detailed and prescriptive.

B. Final Action

    Primarily for certain policy reasons raised by commenters and on 
our belief that the current major NSR regulations already provide 
considerable flexibility to States, EPA has decided to withdraw our 
proposal on Green Groups. As described below, the Agency will consider 
initiating another rulemaking related to flexibility under the major 
NSR regulations if new data becomes available after additional field 
experience that supports such an approach. Any such rulemaking would be 
an entirely new rulemaking separate and distinct from the Green Group 
proposal being withdrawn in this action.
    Notwithstanding our withdrawal of the Green Group proposal, we wish 
to note that certain statements we made in support of the proposal are 
not affected by the Green Group withdrawal. First, the requirements of 
40 CFR 51.165(a)(5)(ii), 51.166(r)(2), and 52.21(r)(4) are met when an 
emissions unit with emissions limits previously taken to avoid major 
NSR subsequently undergoes major NSR review.\28\ Next, we continue to 
believe that a longer-

[[Page 51435]]

term major NSR project is clearly different from a Clean Unit and may 
be defended on that basis. Construction of the later portions of an 
approved major NSR project is simply ``building out'' the permit as 
authorized and does not rely on an allowables emissions test. Finally, 
pursuant to 40 CFR 52.21(b)(3)(iii), and to analogous provisions in 40 
CFR 51.166(b)(3)(iii) and 51.165(a)(1)(vi)(C)(2), emissions increases 
and decreases that occur as authorized in a major NSR permit qualify as 
having been ``relied upon by the permitting authority'' in issuing a 
major NSR permit. As such, these emissions changes are not to be 
included in the future netting calculations at the same source during 
the time that the NSR permit would be effective.
---------------------------------------------------------------------------

    \28\ Sections 51.165(a)(5)(ii), 51.166(r)(2), and 52.21(r)(4) 
provide that when a source or modification that took an emissions 
limit to avoid major NSR review wishes to relax that limitation, it 
must undergo major NSR as if construction had not yet commenced.
---------------------------------------------------------------------------

    Our decision to withdraw the Green Group proposal is in large part 
based on the significant new information and policy perspectives 
conveyed in certain comments received on this proposal. Based on the 
varying types of concerns raised by commenters, EPA no longer believes 
that promulgation of the Green Group approach--which was EPA's effort 
to develop a single, nationally uniform approach for Green Groups to 
achieving advance approval under major NSR--is appropriate. While an 
approach like that proposed for Green Groups might be effective in 
certain situations, several commenters pointed out serious reservations 
about initial air quality and technology reviews becoming stale over 
the 10-year life of a Green Group. Others were concerned that the 
proposed Green Group approach was not flexible enough to encompass 
already tested approaches involving emissions units serviced by 
multiple control approaches. These commenters also persuaded the Agency 
that a mandatory, one-size-fits-all approach under the major NSR rules 
could be counterproductive as well as too inflexible. Many of the same 
commenters believed that national rules requiring a specific template 
for Green Groups across all States could instead stifle future 
innovation and flexibility while adding complexity and unnecessary 
administrative burden.
    The Agency is also not finalizing our proposal on Green Groups 
because we believe that the current major NSR regulations already 
provide States considerable ability to design and implement their SIPs 
in ways that provide operational flexibility while addressing the types 
of concerns raised by commenters. The major NSR regulations, in 
general, are quite detailed and prescriptive as to what changes are 
subject to review, but afford considerable flexibility to determine 
specifically how subject NSR projects must be permitted. The inherent 
flexibility for States to design and implement their SIP provisions 
with respect to NSR projects arises from the structure and content of 
the part 51 PSD and the nonattainment (``NA'') NSR regulations.
    First, the definition of ``project'' can accommodate a wide 
spectrum of physical and operational changes, provided such changes are 
authorized by the permitting authority.\29\ Similarly, the definition 
of ``emissions unit'' is elastic in its ability to include several 
types of situations, ranging from a simple piece of equipment to a 
collection of them at the same site.\30\ A ``project'' involves changes 
to or addition of one or more emissions units. Thus, the permitting 
authority may define these terms in its SIP broadly or narrowly, for a 
particular case, provided that the physical and operational changes 
included in the project are covered by the major NSR requirements, as 
appropriate.
---------------------------------------------------------------------------

    \29\ ``Project'' is defined in the major NSR regulations as ``a 
physical change in, or change in the method of operation of, an 
existing major stationary source.'' See, for example, 40 CFR 
52.21(b)(52).
    \30\ ``Emissions unit'' is defined in the major NSR regulations 
as ``any part of a stationary source that emits or would have the 
potential to emit any regulated NSR pollutant. * * *'' See, for 
example, 40 CFR 52.21(b)(7).
---------------------------------------------------------------------------

    Moreover, the other provisions of the part 51 PSD and NA NSR 
regulations do not impose limitations on the scope or implementation of 
NSR projects once they are defined by the permitting authority. The NA 
NSR regulations do not contain any specific provisions that restrict 
how the permitting authority might define the scope, duration, and 
timeliness of an NSR project. The part 51 PSD regulations only 
indirectly affect the acceptable scope of an NSR project in their 
requirements and the BACT reevaluations of certain phases of phased 
construction projects.\31\
---------------------------------------------------------------------------

    \31\ The part 51 PSD requirement related to the permitting of 
subject projects only mandates that States in their SIPs require 
reevaluations of certain BACT determinations for the later 
independent phases of an approved phased construction project at the 
latest reasonable time prior to their commencement of construction 
(see 40 CFR 51.166(j)(4)). This longstanding safeguard was 
established in order to prevent inappropriate reserving of the 
available PSD increment by an individual source (see 43 FR 26396).
---------------------------------------------------------------------------

    As a result, under the current major NSR regulations, with the 
exception of the relatively narrow class of construction projects with 
independent phases for PSD purposes,\32\ States are free to design and 
implement their major NSR SIPs to address contemporaneity of 
construction, project scope and duration, number and types of emissions 
units comprising the project which are subject to emissions tracking, 
timely construction of authorized changes, and reevaluation of initial 
control technology and/or air quality impact reviews as they judge to 
be reasonable. For example, a SIP may be structured to allow the 
permitting authority to determine these aspects of a major NSR permit 
on a case-by-case basis after balancing appropriately the benefits of 
operational flexibility with the types of concerns raised by commenters 
on the Green Group proposal.
---------------------------------------------------------------------------

    \32\ See footnote 30.
---------------------------------------------------------------------------

    The same part 51 flexibility has allowed states to adopt 
voluntarily some additional PSD regulatory constraints into their SIPs 
similar to those contained in paragraphs (r)(2) and (n)(1) of the 40 
CFR part 52 regulations, which regulate the timeliness of construction 
and the required level of information for reviewing proposed NSR 
projects.\33\ The part 52 regulations, which apply to interim EPA 
implementation of the PSD program in the absence of an approved SIP, 
contain these additional requirements in paragraphs (r)(2) and (n)(1) 
to help preserve the available PSD air quality increments until the 
State can assume full responsibility for the program under an approved 
SIP.
---------------------------------------------------------------------------

    \33\ Section 52.21(n)(1) requires more specific detailed 
information about construction schedules and plans to be submitted 
by sources than do the analogous requirements of part 51 (see 40 CFR 
51.166(n)(1)). Section 52.21(r)(2), which has no counterpart in 40 
CFR 51.166, ensures the timely construction of non-phased projects 
and provides, without specification, the opportunity for the 
permitting authority to extend these deadlines.
---------------------------------------------------------------------------

    The EPA believes that States which have opted to include these 
additional regulatory constraints in their SIPs retain considerable 
discretion to interpret and implement them within the meaning of their 
SIP approved language. Affected States may choose to implement their 
programs consistent with policies that EPA has developed in our 
implementation of these provisions or to explore the adoption of 
different policies through their own administrative procedures. In 
addition, in accordance with their plans for preserving PSD increments 
and for protecting the NAAQS, States may maintain their current SIPs or 
opt to revise them as appropriate consistent with the applicable part 
51 and/or part D requirements in order to allow greater flexibility to 
the permitting authority in reasonably determining how NSR projects can 
be approved on a case-by-case basis. The Agency is willing to work with 
States to evaluate their

[[Page 51436]]

current SIPs and to assist them in discussing possible revisions where 
requested to do so.
    The EPA is interested in learning more as to whether the 
flexibility under existing major NSR regulations to sources and 
permitting authorities is sufficient and appropriate. In order to gain 
additional perspectives about the currently available level of 
flexibility--including the need for it; the benefits, costs, and/or 
impediments associated with its use; and any lack of safeguards to 
assure its effectiveness--the Agency is encouraging States and sources 
to explore how projects subject to major NSR might be more flexibly 
permitted and administratively managed. Where a State would agree to 
investigate such possibilities with a requesting source, we ask that 
the State give us an advance notice of the project before any permit is 
released for comment. In addition, EPA requests that the State make 
available relevant information about both the development of the permit 
and its subsequent implementation so as to facilitate any future 
analysis on our part. We also intend to collect other information that 
would be useful to informing us as to whether a new rulemaking should 
be initiated in the future.
    In summary, the concerns of commenters on the potential 
inflexibility of the proposed Green Group affirms the need, at least 
for now, to maintain the relative openness of the current major NSR 
rules. These rules essentially defer to the States as to whether to 
adopt more specific requirements or to resolve flexibility needs on a 
case-by-case basis. This outcome is entirely consistent with the stated 
preference contained in State comments received on the proposal that 
States be allowed to structure their own SIP programs with respect to 
NSR flexibility.

IX. Statutory and Executive Order Reviews

A. Executive Order 12866--Regulatory Planning and Review

    This action is not a ``significant regulatory action'' under the 
terms of Executive Order (EO) 12866 (58 FR 51735, October 4, 1993) and 
is therefore not subject to review under the EO.

B. Paperwork Reduction Act

    The information collection requirements in this rule have been 
submitted for approval to the Office of Management and Budget (OMB) 
under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. The 
information collection requirements are not enforceable until OMB 
approves them.
    The information collection requirements resulting from this final 
rule are associated with obtaining FAPs under minor or major NSR 
(pursuant to the requirements of title I of the Act and the 
implementing regulations at 40 CFR 51.160 through 51.166, appendix S to 
40 CFR part 51, and 40 CFR 52.21) and/or under the title V operating 
permit program (pursuant to the requirements of title V of the Act and 
the implementing regulations at 40 CFR parts 70 and 71). The NSR and 
title V programs are established programs with approved information 
collection requests (ICRs). This final rule will encourage permitting 
authorities and sources to work together to create FAPs, which will 
eliminate the need for some subsequent permits and permit revisions and 
thereby reduce the burden on both the permitting authorities and 
sources.
    The NSR program requires a permit to be obtained by the owner or 
operator prior to constructing a new stationary source of air 
pollutants or modifying an existing source in such a way that air 
pollution emissions increase or a new air pollutant is emitted. The 
minor NSR program applies to minor sources and minor modifications, 
while the major NSR program applies to major sources and major 
modifications. The information collection for sources under NSR results 
from the requirement for owners or operators to submit applications for 
NSR permits. In some cases, sources must conduct preconstruction 
monitoring to determine the existing ambient air quality. For 
permitting authorities, the information collection results from the 
requirement to process permit applications and issue permits, and to 
transmit associated information to EPA. The EPA oversees the NSR 
program, and the information collected by sources and permitting 
authorities is used to ensure that the program is properly implemented.
    The title V program requires major sources and certain other 
sources of air pollutants to obtain an operating permit that contains 
all the requirements that apply to the source under the Act. The 
information collection for sources under the title V program results 
from the requirement for owners or operators to submit applications for 
title V permits and to submit deviation reports, semi-annual monitoring 
reports, and annual compliance certifications. For permitting 
authorities, the information collection results from the requirement to 
process permit applications and issue permits, to review the reports 
submitted by sources, and to transmit associated information to EPA. 
The EPA oversees the title V program, and the information collected by 
sources and permitting authorities is used to ensure that the program 
is properly implemented.
    Flexible air permits are innovative permits that authorize sources 
to make certain anticipated changes to their operations without being 
required to obtain new or revised permits at the times these changes 
are implemented, while assuring that all applicable requirements of the 
Act are met and that the environment is protected at least as well as 
it would have been under conventional permitting procedures. The 
initial burden to apply for and issue a FAP is greater than for a 
conventional permit, but this increase in burden is more than 
compensated for by the subsequent burden reduction for foregone new 
permits and permit revisions. Thus, the net effect of this final FAP 
rule is a reduction in the burden the approved ICRs for the NSR and 
title V programs.
    As a result of this final rule, we estimate that 845 sources will 
obtain FAPs each year over the 3-year period of this ICR, with a total 
annual burden reduction averaging approximately 251,000 hours, or 
almost 300 hours per source. We do not expect a burden increase or 
reduction in capital costs, operation and maintenance costs, or 
purchase-of-services costs. For the 112 permitting authorities over the 
3-year period of this ICR, we estimate a total annual burden reduction 
averaging about 197,000 hours, or nearly 1,800 hours per permitting 
authority and 234 hours per permit. Burden is defined at 5 CFR 
1320.3(b).
    An agency may not conduct or sponsor, and a person is not required 
to respond to a collection of information unless it displays a 
currently valid OMB control number. The OMB control numbers for EPA's 
regulations in 40 CFR are listed in 40 CFR part 9. When this ICR is 
approved by OMB, the Agency will publish a technical amendment to 40 
CFR part 9 in the Federal Register to display the OMB control number 
for the approved information collection requirements contained in this 
final rule.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to prepare a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements under the Administrative 
Procedure Act or any other statute unless the Agency certifies that the 
rule will not have a significant economic impact on a substantial

[[Page 51437]]

number of small entities. Small entities include small businesses, 
small organizations, and small governmental jurisdictions.
    For purposes of assessing the impacts of this rule on small 
entities, ``small entity'' is defined as: (1) A small business as 
defined by the Small Business Administration's regulations at 13 CFR 
121.201; (2) a small governmental jurisdiction that is a government of 
a city, county, town, school district or special district with a 
population of less than 50,000; and (3) a small organization that is 
any not-for-profit enterprise which is independently owned and operated 
and is not dominant in its field.
    After considering the economic impacts of this final rule on small 
entities, I certify that this action will not have a significant 
economic impact on a substantial number of small entities. In 
determining whether a rule has a significant economic impact on a 
substantial number of small entities, the impact of concern is any 
significant adverse economic impact on small entities, since the 
primary purpose of the regulatory flexibility analyses is to identify 
and address regulatory alternatives ``which minimize any significant 
economic impact of the rule on small entities.'' 5 U.S.C. 603 and 604. 
Thus, an agency may certify that a rule will not have a significant 
economic impact on a substantial number of small entities if the rule 
relieves regulatory burden, or otherwise has a positive economic effect 
on all of the small entities subject to the rule.
    This final rule merely clarifies existing requirements and allows 
regulated entities to seek additional flexibility for their Clean Air 
Act permits. It does not create a new burden for regulated entities. 
Because FAPs are voluntary on the part of all permittees, including any 
small entities that are subject to permitting requirements, only those 
permittees who expect to reduce their permitting burden will seek FAPs. 
We have determined there will be cost savings for small entities 
associated with this final rule. We have therefore concluded that this 
final rule will relieve regulatory burden for all affected small 
entities.

D. Unfunded Mandates Reform Act

    This action contains no Federal mandate under the provisions of 
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C., 
1531-1538 State, local, and Tribal governments, in the aggregate, or 
the private sector. This action imposes no enforceable duty on any 
State, local or Tribal governments or the private sector. As discussed 
previously, we estimate that this rule will save State, local, and 
Tribal permitting authorities an average of $11.5 million per year over 
the first 3 years of implementation and result in an administrative 
burden reduction averaging 197,000 hours per year over that period. 
Similarly, we estimate that this rule will save permittees an average 
of $20.6 million per year and reduce their administrative burden by an 
average of 251,000 hours per year over the first 3 years. Therefore, 
this action is not subject to the requirements of sections 202 or 205 
of UMRA.
    This rule is also not subject to the requirements of section 203 of 
UMRA because it contains no regulatory requirements that might 
significantly or uniquely affect small governments. As discussed 
earlier, this rule is expected to result in cost savings and an 
administrative burden reduction for all permitting authorities and 
permittees, including small governments to the extent that they fall in 
either category.

E. Executive Order 13132--Federalism

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 
10, 1999), requires EPA to develop an accountable process to ensure 
``meaningful and timely input by State and local officials in the 
development of regulatory policies that have federalism implications.'' 
``Policies that have federalism implications'' is defined in the 
Executive Order to include regulations that have ``substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.''
    This final rule does not have federalism implications. It will not 
have substantial direct effects on the States, on the relationship 
between the national government and the States, or on the distribution 
of power and responsibilities among the various levels of government, 
as specified in Executive Order 13132. This rule is projected to result 
in cost savings and administrative burden reductions for States and 
will not alter the overall relationship or distribution of powers 
between governments for the part 70 and part 71 operating permits 
programs or for the part 51 and part 52 NSR programs. Thus, Executive 
Order 13132 does not apply to this rule.
    In spirit of Executive Order 13132 and consistent with EPA policy 
to promote communications between EPA and State and local governments, 
EPA solicited comment on the proposed rule from State and local 
officials. We believe that this final rule is generally responsive to 
the comments received from these and other groups.

F. Executive Order 13175--Consultation and Coordination With Indian 
Tribal Governments

    This action does not have Tribal implications, as specified in 
Executive Order 13175 (65 FR 67249, November 9, 2000). This action 
merely clarifies existing requirements and allows regulated entities to 
seek additional flexibility for their CAA permits. Thus, Executive 
Order 13175 does not apply to this action.

G. Executive Order 13045--Protection of Children From Environmental 
Health and Safety Risks

    The EPA interprets EO 13045 (62 FR 19885, April 23, 1997) as 
applying only to those regulatory actions that concern health or safety 
risks, such that the analysis required under section 5-501 of the 
Executive Order has the potential to influence the regulation. This 
action is not subject to Executive Order 13045 because it does not 
establish an environmental standard intended to mitigate health or 
safety risks.

H. Executive Order 13211--Actions That Significantly Affect Energy 
Supply, Distribution, or Use

    This action is not a ``significant energy action'' as defined in 
Executive Order 13211 ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use'' (66 FR 
28355, May 22, 2001) because it is not likely to have a significant 
adverse effect on the supply, distribution, or use of energy. This 
action merely clarifies existing requirements and allows regulated 
entities to seek additional flexibility for their CAA permits.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (``NTTAA''), Public Law 104-113, 12(d) (15 U.S.C. 272 note) 
directs EPA to use voluntary consensus standards in its regulatory 
activities unless to do so would be inconsistent with applicable law or 
otherwise impractical. Voluntary consensus standards are technical 
standards (e.g., materials specifications, test methods, sampling 
procedures, and business practices) that are developed or adopted by 
voluntary consensus standards bodies. The NTTAA directs EPA to provide 
Congress, through OMB, explanations when the Agency decides not to use 
available and applicable voluntary consensus standards.

[[Page 51438]]

    This action does not involve technical standards. Therefore, EPA 
did not consider the use of any voluntary consensus standards.

J. Executive Order 12898--Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations

    Executive Order (EO) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes 
Federal executive policy on environmental justice. Its main provision 
directs Federal agencies, to the greatest extent practicable and 
permitted by law, to make environmental justice part of their mission 
by identifying and addressing, as appropriate, disproportionately high 
and adverse human health or environmental effects of their programs, 
policies, and activities on minority populations and low-income 
populations in the United States.
    The EPA has determined that this final rule will not have 
disproportionately high and adverse human health or environmental 
effects on minority or low-income populations because it does not 
affect the level of protection provided to human health or the 
environment. This final rule merely clarifies existing requirements and 
allows regulated entities to seek additional flexibility for their CAA 
permits. Such FAPs achieve equal or better environmental protection 
than that achieved using more conventional permits.

K. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. The EPA will submit a report containing this rule and 
other required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. A major rule cannot 
take effect until 60 days after it is published in the Federal 
Register. This action is not a ``major rule'' as defined by 5 U.S.C. 
804(2). This rule will be effective November 5, 2009.

X. Judicial Review

    Under section 307(b)(1) of the Act, petitions for judicial review 
of this action must be filed in the United States Court of Appeals for 
the District of Columbia Circuit by December 7, 2009. Any such judicial 
review is limited to only those objections that are raised with 
reasonable specificity in timely comments. Filing a petition for 
reconsideration by the Administrator of this final rule does not affect 
the finality of this rule for the purposes of judicial review nor does 
it extend the time within which a petition for judicial review may be 
filed, and shall not postpone the effectiveness of such rule or action. 
Under section 307(b)(2) of the Act, the requirements of this final 
action may not be challenged later in civil or criminal proceedings 
brought by us to enforce these requirements.
    Pursuant to section 307(d)(1)(V) of the Act, the Administrator 
determines that this action is subject to the provisions of section 
307(d). Section 307(d)(1)(V) provides that the provisions of section 
307(d) apply to ``such other actions as the Administrator may 
determine.'' This action finalizes some, but not all, elements of a 
previous proposed action--the Flexible Air Permitting Rule proposed on 
September 12, 2007 (72 FR 52206). That action included proposed 
revisions to the PSD regulations under part C of title I of the Act and 
was, therefore, subject to section 307(d) pursuant to section 
307(d)(J). Consequently, although the proposed PSD revisions are not 
being finalized in this action, the procedural requirements of section 
307(d) have been complied with for purposes of this action.

List of Subjects

40 CFR Part 70

    Environmental protection, Administrative practice and procedures, 
Air pollution control, Intergovernmental relations, Reporting and 
recordkeeping requirements.

40 CFR Part 71

    Environmental protection, Administrative practice and procedures, 
Air pollution control, Intergovernmental relations, Reporting and 
recordkeeping requirements.

    Dated: September 25, 2009.
Lisa P. Jackson,
Administrator.

0
For the reasons set out in the preamble, title 40, chapter I of the 
Code of Federal Regulations is amended as set forth below.

PART 70--[AMENDED]

0
1. The authority citation for part 70 continues to read as follows:

    Authority: 42 U.S.C. 7401, et seq.


0
2. Section 70.2 is amended by adding definitions of ``Alternative 
operating scenario (AOS)'' and ``Approved replicable methodology 
(ARM)'' in alphabetical order, to read as follows:


Sec.  70.2  Definitions.

* * * * *
    Alternative operating scenario (AOS) means a scenario authorized in 
a part 70 permit that involves a change at the part 70 source for a 
particular emissions unit, and that either results in the unit being 
subject to one or more applicable requirements which differ from those 
applicable to the emissions unit prior to implementation of the change 
or renders inapplicable one or more requirements previously applicable 
to the emissions unit prior to implementation of the change.
* * * * *
    Approved replicable methodology (ARM) means part 70 permit terms 
that:
    (1) Specify a protocol which is consistent with and implements an 
applicable requirement, or requirement of this part, such that the 
protocol is based on sound scientific and/or mathematical principles 
and provides reproducible results using the same inputs; and
    (2) Require the results of that protocol to be recorded and used 
for assuring compliance with such applicable requirement, any other 
applicable requirement implicated by implementation of the ARM, or 
requirement of this part, including where an ARM is used for 
determining applicability of a specific requirement to a particular 
change.
* * * * *

0
3. Section 70.4 is amended by revising paragraph (d)(3)(xi) to read as 
follows:


Sec.  70.4  State program submittals and transition.

* * * * *
    (d) * * *
    (3) * * *
    (xi) Approval of AOSs. The program submittal must include 
provisions to insure that AOSs requested by the source as approved by 
the permitting authority are included in the part 70 permit pursuant to 
Sec.  70.6(a)(9).
* * * * *

0
4. Section 70.5 is amended as follows:
0
a. By revising paragraph (c)(2);
0
b. By revising paragraph (c)(3)(iii);
0
c. By revising paragraph (c)(7);
0
d. By adding paragraph (c)(8)(ii)(D); and
0
e. By adding paragraph (c)(8)(iii)(D).
    The additions and revisions read as follows:


Sec.  70.5  Permit applications.

* * * * *

[[Page 51439]]

    (c) * * *
    (2) A description of the source's processes and products (by 
Standard Industrial Classification (SIC) Code) including those 
associated with any proposed AOS identified by the source.
    (3) * * *
    (iii) Emissions rate in tpy and in such terms as are necessary to 
establish compliance consistent with the applicable standard reference 
test method. For emissions units subject to an annual emissions cap, 
tpy can be reported as part of the aggregate emissions associated with 
the cap, except where more specific information is needed, including 
where necessary to determine and/or assure compliance with an 
applicable requirement.
* * * * *
    (7) Additional information as determined to be necessary by the 
permitting authority to define proposed AOSs identified by the source 
pursuant to Sec.  70.6(a)(9) of this part or to define permit terms and 
conditions implementing any AOS under Sec.  70.6(a)(9) or implementing 
Sec.  70.4(b)(12) or Sec.  70.6(a)(10) of this part. The permit 
application shall include documentation demonstrating that the source 
has obtained all authorization(s) required under the applicable 
requirements relevant to any proposed AOSs, or a certification that the 
source has submitted all relevant materials to the appropriate 
permitting authority for obtaining such authorization(s).
    (8) * * *
    (ii) * * *
    (D) For applicable requirements associated with a proposed AOS, a 
statement that the source will meet such requirements upon 
implementation of the AOS. If a proposed AOS would implicate an 
applicable requirement that will become effective during the permit 
term, a statement that the source will meet such requirements on a 
timely basis.
    (iii) * * *
    (D) For applicable requirements associated with a proposed AOS, a 
statement that the source will meet such requirements upon 
implementation of the AOS. If a proposed AOS would implicate an 
applicable requirement that will become effective during the permit 
term, a statement that the source will meet such requirements on a 
timely basis. A statement that the source will meet in a timely manner 
applicable requirements that become effective during the permit term 
will satisfy this provision, unless a more detailed schedule is 
expressly required by the applicable requirement.
* * * * *

0
5. Section 70.6 is amended by revising paragraphs (a)(1) introductory 
text and (a)(9) to read as follows:


Sec.  70.6  Permit content.

    (a) * * *
    (1) Emissions limitations and standards, including those 
operational requirements and limitations that assure compliance with 
all applicable requirements at the time of permit issuance. Such 
requirements and limitations may include ARMs identified by the source 
in its part 70 permit application as approved by the permitting 
authority, provided that no ARM shall contravene any terms needed to 
comply with any otherwise applicable requirement or requirement of this 
part or circumvent any applicable requirement that would apply as a 
result of implementing the ARM.
* * * * *
    (9) Terms and conditions for reasonably anticipated AOSs identified 
by the source in its application as approved by the permitting 
authority. Such terms and conditions:
    (i) Shall require the source, contemporaneously with making a 
change from one operating scenario to another, to record in a log at 
the permitted facility a record of the AOS under which it is operating;
    (ii) May extend the permit shield described in paragraph (f) of 
this section to all terms and conditions under each such AOS; and
    (iii) Must ensure that the terms and conditions of each AOS meet 
all applicable requirements and the requirements of this part. The 
permitting authority shall not approve a proposed AOS into the part 70 
permit until the source has obtained all authorizations required under 
any applicable requirement relevant to that AOS.
* * * * *

PART 71--[AMENDED]

0
6. The authority citation for part 71 continues to read as follows:

    Authority: 42 U.S.C. 7401, et seq.


0
7. Section 71.2 is amended by adding definitions of ``Alternative 
operating scenario (AOS)'' and ``Approved replicable methodology 
(ARM)'' in alphabetical order, to read as follows:


Sec.  71.2  Definitions.

* * * * *
    Alternative operating scenario (AOS) means a scenario authorized in 
a part 71 permit that involves a change at the part 71 source for a 
particular emissions unit, and that either results in the unit being 
subject to one or more applicable requirements which differ from those 
applicable to the emissions unit prior to implementation of the change 
or renders inapplicable one or more requirements previously applicable 
to the emissions unit prior to implementation of the change.
* * * * *
    Approved replicable methodology (ARM) means part 71 permit terms 
that:
    (1) Specify a protocol which is consistent with and implements an 
applicable requirement, or requirement of this part, such that the 
protocol is based on sound scientific and/or mathematical principles 
and provides reproducible results using the same inputs; and
    (2) Require the results of that protocol to be recorded and used 
for assuring compliance with such applicable requirement, any other 
applicable requirement implicated by implementation of the ARM, or 
requirement of this part, including where an ARM is used for 
determining applicability of a specific requirement to a particular 
change.
* * * * *r

0
8. Section 71.5 is amended as follows:
0
a. By revising paragraph (c)(2);
0
b. By revising paragraph (c)(3)(iii);
0
c. By revising paragraph (c)(7);
0
d. By adding paragraph (c)(8)(ii)(D); and
0
e. By adding paragraph (c)(8)(iii)(D).
    The additions and revisions read as follows:


Sec.  71.5  Permit applications.

* * * * *
    (c) * * *
    (2) A description of the source's processes and products (by SIC 
Code) including those associated with any proposed AOS identified by 
the source.
    (3) * * *
    (iii) Emissions rates in tpy and in such terms as are necessary to 
establish compliance consistent with the applicable standard reference 
test method. For emissions units subject to an annual emissions cap, 
tpy can be reported as part of the aggregate emissions associated with 
the cap, except where more specific information is needed, including 
where necessary to determine and/or assure compliance with an 
applicable requirement.
* * * * *
    (7) Additional information as determined to be necessary by the 
permitting authority to define proposed AOSs identified by the source 
pursuant to Sec.  71.6(a)(9) or to define permit terms and conditions 
implementing any AOS

[[Page 51440]]

under Sec.  71.6(a)(9) or implementing Sec.  71.6(a)(10) or Sec.  
71.6(a)(13). The permit application shall include documentation 
demonstrating that the source has obtained all authorization(s) 
required under the applicable requirements relevant to any proposed 
AOSs, or a certification that the source has submitted all relevant 
materials to the appropriate permitting authority for obtaining such 
authorization(s).
    (8) * * *
    (ii) * * *
    (D) For applicable requirements associated with a proposed AOS, a 
statement that the source will meet such requirements upon 
implementation of the AOS. If a proposed AOS would implicate an 
applicable requirement that will become effective during the permit 
term, a statement that the source will meet such requirements on a 
timely basis.
    (iii) * * *
    (D) For applicable requirements associated with a proposed AOS, a 
statement that the source will meet such requirements upon 
implementation of the AOS. If a proposed AOS would implicate an 
applicable requirement that will become effective during the permit 
term, a statement that the source will meet such requirements on a 
timely basis. A statement that the source will meet in a timely manner 
applicable requirements that become effective during the permit term 
will satisfy this provision, unless a more detailed schedule is 
expressly required by the applicable requirement.
* * * * *

0
9. Section 71.6 is amended by revising paragraphs (a)(1) introductory 
text and (a)(9) to read as follows:


Sec.  71.6  Permit content.

    (a) * * *
    (1) Emissions limitations and standards, including those 
operational requirements and limitations that assure compliance with 
all applicable requirements at the time of permit issuance. Such 
requirements and limitations may include ARMs identified by the source 
in its part 71 permit application as approved by the permitting 
authority, provided that no ARM shall contravene any terms needed to 
comply with any otherwise applicable requirement or requirement of this 
part or circumvent any applicable requirement that would apply as a 
result of implementing the ARM.
* * * * *
    (9) Terms and conditions for reasonably anticipated AOSs identified 
by the source in its application as approved by the permitting 
authority. Such terms and conditions:
    (i) Shall require the source, contemporaneously with making a 
change from one operating scenario to another, to record in a log at 
the permitted facility a record of the AOS under which it is operating;
    (ii) May extend the permit shield described in paragraph (f) of 
this section to all terms and conditions under each such AOS; and
    (iii) Must ensure that the terms and conditions of each AOS meet 
all applicable requirements and the requirements of this part. The 
permitting authority shall not approve a proposed AOS into the part 71 
permit until the source has obtained all authorizations required under 
any applicable requirement relevant to that AOS.
* * * * *
[FR Doc. E9-23794 Filed 10-5-09; 8:45 am]
BILLING CODE 6560-50-P


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