United States Office of Air Quality

Environmental Protection Planning and Standards November 2002

Agency Research Triangle Park, NC 27711 http://www.epa.gov/ttn/nsr/rule_dev.html

Technical Support Document for the 

Prevention of Significant Deterioration

and Nonattainment Area New Source Review

Regulations
Technical Support Document for the

Prevention of Significant Deterioration

and Nonattainment Area New Source Review

Regulations

Integrated Implementation Group

 Information Transfer and Program Integration Division

Office of Air Quality Planning and Standards

U. S. Environmental Protection Agency

Research Triangle Park, NC 27711

November 2002
i

This document has been reviewed by the Information Transfer and Program Integration Division

of the Office of Air Quality Planning and Standards, EPA, and approved for publication. 

Mention of trade names or commercial products is not intended to constitute endorsement or

recommendation for use. Copies of this report are available through the Library Services Office

(MD-35), U.S. Environmental Protection Agency, Research Triangle Park NC 27711, (919) 541-

2777, or from National Technical Information Service, 5285 Port Royal Road, Springfield VA

22161. You may also access this document on EPA’s website at

http://www.epa.gov/ttn/nsr/rule_dev.html.
Table of Contents

ii

List of Acronyms ............................................................ xiv

Volume I: Comments Received by the End of the Comment Period

Chapter 1 - Introduction ...................................................... I-1-1

Chapter 2 - Baseline Emissions ................................................ I-2-1

2.1 Overview ..................................................... I-2-1

2.2 Extending the Emission Baseline to 10 Years ......................... I-2-1

2.2.1 EPA Should Extend the Time Period ......................... I-2-1

2.2.2 EPA Should Not Finalize The Proposed Look Back Period ........ I-2-4

2.2.3 Prefer To Modify Actual-to-potential Test ..................... I-2-8

2.2.4 Discretion To Choose Representative Time Period ............... I-2-9

2.2.5 Other Comments on the Look Back Methodology .............. I-2-11

2.3 Baseline Period in Nonattainment Areas and Ozone Transport

Regions ..................................................... I-2-20

2.3.1 Support Different Baseline Period ........................... I-2-20

2.3.2 Oppose Different Baseline Period ........................... I-2-20

2.4 Data Required to Support a 10-year Baseline ........................ I-2-22

2.4.1 Length of Look Back Period and Data Acceptability ............ I-2-22

2.4.2 EPA vs. State Agency Role ................................ I-2-23

2.5 Interaction with CAA Section 182(c) and 182(e) ..................... I-2-24

2.6 Length of Contemporaneous Period ............................... I-2-25

2.6.1 Support for 5-Year Contemporaneous Period .................. I-2-25

2.6.2 Support Alternatives to the 5-Year Contemporaneous

Period ................................................. I-2-26

2.6.3 Other Comments on the 5-Year Contemporaneous Period ........ I-2-26

2.7 Protection of Short-Term Increments and NAAQS .................... I-2-27

Chapter 3 - Baseline Emissions, 1998 NOA ...................................... I-3-1

3.1 Method for Determining Baseline .................................. I-3-1

3.1.1 Support for 10-year Baseline ................................ I-3-1

3.1.2 Oppose 10-year Baseline ................................... I-3-2

3.2 Other Comments on Baseline Emissions ......................... I-3-5

3.2.1 Prefer Other Baseline Periods ............................... I-3-5

3.2.2 Comments on Procedures for Baseline Determination ............. I-3-7

3.2.3 Other Comments on Baseline Emissions ....................... I-3-9
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iii

Chapter 4 - Actual-to-future-actual Methodology ................................. I-4-1

4.1 Overview ..................................................... I-4-1

4.2 Should EPA retain the actual-to-potential test? ........................ I-4-1

4.2.1 EPA Should Retain the Actual-to-potential Test ................. I-4-1

4.2.2 EPA Should Extend the Actual-to-potential Test to Utilities ....... I-4-1

4.2.3 EPA Should Not Retain the Actual-to-potential Test ............. I-4-2

4.2.4 Other Comments on Actual-to-potential Methodology ............ I-4-5

4.3 Actual-to-potential Test Is Contrary to Statute and Case Law ............. I-4-9

4.4 Actual-to-future-actual Test - General Comments..................... I-4-12

4.4.1 Support Actual-to-future-actual Test ......................... I-4-12

4.4.2 Oppose Actual-to-future-actual Test ......................... I-4-14

4.5 Actual-to-future-actual Test - Extend to Non-utilities .................. I-4-20

4.5.1 Support extending to non-utilities ........................... I-4-20

4.5.2 Opposed extending to non-utilities .......................... I-4-21

4.6 Eliminate Actual-to-future-actual for Utilities ........................ I-4-22

4.7 Enforcing Actual-to-future-actual Methodology ...................... I-4-24

4.8 Other Comments on Actual-to-future-actual Methodology .............. I-4-27

4.9 Support Other Applicability Options ............................... I-4-29

4.9.1 Support PTE-to-PTE Test ................................. I-4-29

4.9.2 Support an Allowable-to-allowable Test ...................... I-4-30

4.9.3 Other Applicability Options ................................ I-4-30

4.10 Demand Growth ............................................... I-4-32

4.10.1 Support Extending Demand Growth Exclusion ................. I-4-32

4.10.2 Oppose Extending Demand Growth Exclusion ................. I-4-35

4.10.3 Other Comments on the Demand Growth Exclusion ............ I-4-36

4.11 Utilization Increases ............................................ I-4-37

4.12 5-year Tracking - General Comments .............................. I-4-40

4.13 5-year Tracking - Adequacy of Tracking; Whether Tracking is

Working as Intended and Whether It Should be Changed In Any

Way ........................................................ I-4-41

4.13.1 Tracking does work ...................................... I-4-41

4.13.2 Tracking does not work and how to improve it ................. I-4-42

4.14 5-year Tracking - Length of Tracking Period ........................ I-4-44

Chapter 5 - Comments on NOA NSR Applicability Test ............................ I-5-1

5.1 Overview ..................................................... I-5-1

5.2 General Comments on Amending the Current Applicability Test

for Modifications ............................................... I-5-1

5.2.1 General Support for Amending the Current Applicability

Test for Modifications ..................................... I-5-1
Table of Contents

iv

5.2.2 General Opposition for Amending the Current Applicability

for Modifications ......................................... I-5-1

5.2.3 Suggested Alternative Approaches ........................... I-5-4

5.2.4 Other General Comments on NSR Applicability Test ............ I-5-11

5.3 Comments on the Statutory and Regulatory Bases for Applicability ...... I-5-13

5.3.1 Physical Change or Change in the Method of Operation .......... I-5-13

5.3.2 Increase in Emissions ..................................... I-5-14

5.3.3 Routine Maintenance, Repair, and Replacement ................ I-5-15

5.3.4 “Begun Normal Operations” ............................... I-5-17

5.4 Specific Comments on Components of NSR Applicability Test .......... I-5-18

5.4.1 Support for EPA’s Proposal on Actual-to-enforceablefuture-actual Test ........................................ I-5-18

5.4.2 Oppose Actual-to-future-enforceable-actual Test ............... I-5-18

5.4.3 Adequacy of Existing Emission Projection and Tracking

Abilities ............................................... I-5-25

5.5 Proposal to Create Enforceable 10-year Emissions Level ............... I-5-29

5.5.1 Support Enforceable 10-year Emission Level .................. I-5-29

5.5.2 Oppose Enforceable 10-year Emission Level .................. I-5-29

5.5.3 Retain 5-year Tracking .................................... I-5-34

5.5.4 Other Comments Concerning 10-year Enforceable Limit ......... I-5-35

5.6 Comments Concerning Elimination of the Demand Growth

Exclusion .................................................... I-5-37

5.6.1 Support Eliminating Demand Growth Exclusion ............... I-5-37

5.6.2 Oppose Eliminating Demand Growth Exclusion ................ I-5-38

5.6.3 Other Comments Regarding Demand Growth Exclusion ......... I-5-39

5.7 Should the Actual-to-enforceable-future-actual Test Apply to

Increases in Design Capacity or PTE? .............................. I-5-44

5.7.1 Support Applying to Increases in Design Capacity or PTE ........ I-5-44

5.7.2 Oppose Applying to Increases in Design Capacity or PTE ........ I-5-45

5.7.3 Assuming the actual-to-enforceable-future-actual test is

appropriate for increases in design capacity or PTE, is it

appropriate to assume that any emission increases resulting

from the change will occur within 10 years of the change? ........ I-5-45

5.7.4 Other Comments on Design Capacity Increases ................ I-5-46

5.8 Should the Actual-to-future-actual Test Apply to Netting? .............. I-5-47

5.8.1 Yes, the Actual-to-future-actual Test Should Apply to

Netting ................................................ I-5-47

5.8.2 No, the Actual-to-future-actual Test Should Not Apply to

Netting ................................................ I-5-48

5.9 Debottlenecking ............................................... I-5-49
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v

Chapter 6 - CMA Exhibit B ................................................... I-6-1

6.1 Overview ..................................................... I-6-1

6.2 Support CMA Exhibit B ......................................... I-6-1

6.2.1 Support CMA Exhibit B ................................... I-6-1

6.2.2 Partial Support ........................................... I-6-2

6.2.3 Support Potential-to-Potential Methodology .................... I-6-2

6.3 Oppose CMA Exhibit B .......................................... I-6-4

6.4 Environmental Impacts of CMA Exhibit B ........................... I-6-6

6.4.1 General Comments on Environmental Impacts of CMA

Exhibit B ............................................... I-6-6

6.4.2 Actual Emission Increases Without Review (Paper Credits) ........ I-6-6

6.5 Impact on Permitting New Greenfield Sources ........................ I-6-9

6.6 Air Quality Planning Process ..................................... I-6-10

6.7 Modifying CMA Exhibit B ...................................... I-6-11

6.8 Other Comments on CMA Exhibit B .............................. I-6-12

Chapter 7 - 1996 PALs ....................................................... I-7-1

7.1 Overview ..................................................... I-7-1

7.2 General Support for or Opposition to PAL Concept .................... I-7-1

7.2.1 General Support for PAL Concept ............................ I-7-1

7.2.2 General Opposition for PAL Concept ......................... I-7-3

7.3 Area-wide PALS ............................................... I-7-5

7.3.1 Support Area-wide PALs ................................... I-7-5

7.3.2 Oppose Area-wide PALs ................................... I-7-6

7.4 Alternatives for Establishing PALs ................................. I-7-9

7.4.1 Base PALs on Actual Emissions ............................. I-7-9

7.4.2 Base PALs on Actual Emissions Plus an Operating Margin ....... I-7-10

7.4.3 Other Methods for Establishing PALs ........................ I-7-15

7.4.4 Other Comments on Establishing PALs ...................... I-7-17

7.5 Other Alternatives for Establishing PALs ........................... I-7-20

7.5.1 Base PALs on Allowables ................................. I-7-20

7.5.2 Permitting Authority Should Determine How to Set PAL

Emission Levels ......................................... I-7-23

7.6 Permitting Authority Issues ...................................... I-7-24

7.6.1 PALs and Minor NSR Programs ............................ I-7-24

7.6.2 PALs in Attainment and Nonattainment Areas ................. I-7-26

7.6.3 PALs Only for Sources With at Least 2 Years of Records ........ I-7-27

7.6.4 PALs Only for Some Source Categories ...................... I-7-28

7.6.5 PALs For All Pollutants ................................... I-7-28

7.6.6 Permitting Authority Option on Whether to Allow PALs ......... I-7-28
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vi

7.6.7 Permitting Authority Option on Type of PAL Rule .............. I-7-30

7.6.8 Accommodate Existing Programs and Permits ................. I-7-31

7.7 Changes Under PALs ........................................... I-7-34

7.7.1 Emission Increases Above the PAL .......................... I-7-34

7.7.2 Adding New Units Under a PAL ............................ I-7-38

7.7.3 Other Comments on Changes Under PAL ...................... I-7-40

7.8 PAL Review and Adjustments .................................... I-7-41

7.8.1 PAL Adjustments During the Effective Period ................. I-7-41

7.8.2 Periodic PAL Review and Adjustment ....................... I-7-45

7.9 PALs in Serious and Above Nonattainment Areas .................... I-7-51

7.9.1 PALs in Serious and Severe Ozone Nonattainment Areas ........ I-7-51

7.9.2 PALs in Extreme Ozone Nonattainment Areas ................. I-7-53

7.10 Air Quality Changes ............................................ I-7-55

7.10.1 Support Requiring Modeling Under PAL ..................... I-7-55

7.10.2 Require modeling only for significant change .................. I-7-55

7.10.3 Oppose Modeling under PAL .............................. I-7-56

7.10.4 Other Comments on Modeling under PALs ................... I-7-57

7.11 Partial or Mini-PALs ........................................... I-7-58

7.11.1 Support for Partial or Mini-PALs ........................... I-7-58

7.11.2 Oppose Partial or Mini-PALs .............................. I-7-60

7.12 Monitoring and Enforcement of PALs .............................. I-7-60

7.13 Section (r)(4) Limits ............................................ I-7-64

7.14 PALs and Clean Facilities ....................................... I-7-67

7.15 Miscellaneous Comments on PALs ................................ I-7-67

7.15.1 Notification requirements ................................. I-7-67

7.15.2 Interaction between PALs and other programs ................. I-7-68

7.15.3 Other ................................................. I-7-70

Chapter 8 - 1998 Comments on PALs ........................................... I-8-1

8.1 Overview ..................................................... I-8-1

8.2 General Support for or Opposition to PALs .......................... I-8-1

8.2.1 General Support For PALs .................................. I-8-1

8.2.2 General Opposition to PALs ................................ I-8-3

8.2.3 Generally Oppose PALs Because Not Environmentally

Protective Enough ........................................ I-8-3

8.3 Support for or Opposition to Not Adjusting PALs for MACT

Purposes ...................................................... I-8-5

8.3.1 Support for Not Adjusting PALs for MACT Purposes ............ I-8-5

8.3.2 Opposition to Not Adjusting PALs for MACT Purposes .......... I-8-5

8.4 Legal Concerns (Contemporaneity Requirement of Alabama

Power) ....................................................... I-8-6
Table of Contents

vii

8.4.1 PALs Are Legal .......................................... I-8-6

8.4.2 PALs Are Not Legal ....................................... I-8-9

8.5 Environmental Concerns Regarding PALs .......................... I-8-13

8.5.1 Environmental Impact of PALs Relative to Conventional

NSR .................................................. I-8-13

8.5.2 Potential Concerns with Unadjusted PALs .................... I-8-16

8.6 General Comments Regarding Periodic PAL Review and

Adjustment ................................................... I-8-21

8.6.1 General Support for Periodic PAL Review and Adjustment

...................................................... I-8-21

8.6.2 General Opposition to Periodic PAL Review and

Adjustment ............................................. I-8-21

8.6.3 Other General Comments on Periodic PAL Review and

Adjustment ............................................. I-8-23

8.6.4 Alternatives for Periodic Review and Adjustment .............. I-8-24

8.7 Time Period for PAL Review .................................... I-8-29

8.7.1 Ten-Year Time Period for PAL Review ...................... I-8-29

8.7.2 Other Time Periods for PAL Review ......................... I-8-30

8.7.3 Opposition to Time Period for PAL Review ................... I-8-32

8.8 Adjustments for Shutdowns or Dismantled Units ..................... I-8-34

8.8.1 Support for Adjustments for Shutdowns or Dismantled

Units .................................................. I-8-34

8.8.2 Opposition to Adjustments for Shutdowns or Dismantled

Units .................................................. I-8-35

8.8.3 Methodology for Calculating Adjustments for Shutdowns

or Dismantled Units ...................................... I-8-36

8.8.4 Other Comments on Shutdowns or Dismantled Units ............ I-8-37

8.9 Adjustments for Unused Capacity ................................. I-8-39

8.9.1 Support for Adjustments for Unused Capacity ................. I-8-39

8.9.2 Opposition to Adjustments for Unused Capacity ............... I-8-39

8.9.3 Methodology for Calculating Adjustments for Unused

Capacity ............................................... I-8-41

8.9.4 Alternatives for Ensuring an Operating Cushion After an

Adjustment for Unused Capacity ............................ I-8-43

8.10 PAL Expiration and Renewal .................................... I-8-45

8.10.1 Support for PAL Expiration and Renewal .................... I-8-45

8.10.2 Opposition to PAL Expiration and Renewal .................. I-8-45

8.10.3 General Comments on PAL Expiration and Renewal ........... I-8-48

8.11 Adjustments for Sources That Implement Good Controls or P2 .......... I-8-50

8.11.1 Appropriate to Adjust the PAL for Sources That Implement

Good Controls or P2 ..................................... I-8-50
Table of Contents

viii

8.11.2 Inappropriate to Adjust the PAL for Sources That

Implement Good Controls or P2 ............................ I-8-50

8.11.3 Appropriate Definition and Use of “Good Controls” Terminology

...................................................... I-8-52

8.11.4 Inappropriate Definition and Use of “Good Controls”

Terminology ............................................ I-8-52

8.12 Other Comments on PAL Adjustments ............................. I-8-55

8.12.1 Comments on Listed “Appropriate Considerations” for

PAL Adjustment ........................................ I-8-55

8.12.2 Additional PAL Adjustment Considerations .................. I-8-57

8.13 Comments Not Directly Related To The NOA ....................... I-8-61

Chapter 9 - Clean Units ...................................................... I-9-1

9.1 Overview ..................................................... I-9-1

9.2 Support/Oppose Clean Unit Proposal ............................... I-9-1

9.2.1 Support Clean Unit Proposal ................................ I-9-1

9.2.2 Oppose Clean Unit Proposal ................................ I-9-2

9.3 Hourly PTE Test ............................................... I-9-4

9.3.1 Support Hourly PTE Test ................................... I-9-4

9.3.2 Oppose Hourly PTE Test ................................... I-9-4

9.3.3 Six-month Period to Establish Pre-Change Emissions Rate ........ I-9-9

9.3.4 Other Comments on Hourly PTE Limit ....................... I-9-10

9.4 Should the Clean Unit exclusion presumptively apply to units with

MACT or RACT limits? ........................................ I-9-13

9.4.1 Clean Unit Exclusion Should Not Presumptively Apply to

Units With MACT/RACT Limits ........................... I-9-13

9.4.2 Clean Unit Exclusion Should Presumptively Apply to Units

With MACT/RACT Limits ................................ I-9-13

9.5 Length of Clean Unit Exclusion ................................... I-9-17

9.5.1 Oppose 10-year Duration for Clean Unit Exclusion ............. I-9-17

9.5.2 Support/Oppose 10-year Duration for Clean Unit Exclusion

For Units Permitted Under State Minor NSR .................. I-9-19

9.5.3 10-year Exclusion Period For Existing Units That Have Not

Undergone a BACT or LAER Determination or

Comparable State Technology Requirement. .................. I-9-22

9.6 Expiration of the Clean Unit Designation ........................... I-9-26

9.7 Requirements for Units Permitted Under State Minor NSR ............. I-9-27

9.7.1 Clean Unit Exclusion for Units Permitted Under State

Minor NSR ............................................. I-9-27

9.7.2 Other Comments on Units Permitted Under State Minor

NSR .................................................. I-9-32
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9.8 Clean Unit Provisions for Units That Have Not Undergone Major

or Minor NSR Review (case-by-case determinations) .................. I-9-34

9.8.1 Support/Oppose Clean Unit for Units That Have Not

Undergone Major or Minor NSR ............................ I-9-34

9.8.2 For Units That Have Not Undergone Major or Minor NSR

Review, Impose a Specific Methodology for Determining

That a Specific Emissions Unit Has Controls That Are

Comparable to BACT/LAER ............................... I-9-36

9.8.3 Using Title V Permitting Process for Existing Units That

Have Not Undergone a BACT or LAER Determination or

Comparable State Technology Requirement ................... I-9-41

9.8.4 Other Comments on Case-by-case Determinations .............. I-9-43

9.9 Other Comments on Clean Units .................................. I-9-44

9.9.1 Other Comments on Applicability ........................... I-9-44

9.9.2 Implementation and Enforcement ........................... I-9-47

9.9.3 Rule Language Clarifications ............................... I-9-48

9.9.4 Relationship to Other Applicability Provisions ................. I-9-51

Chapter 10 - Pollution Control Projects ......................................... I-10-1

10.1 Overview .................................................... I-10-1

10.2 General Support or Opposition for EPA’s Proposal ................... I-10-1

10.2.1 General Support for Proposal ............................... I-10-1

10.2.2 Full or Partial Opposition to Proposal ........................ I-10-1

10.3 Extending the PCP Exclusion to Non-utilities ........................ I-10-3

10.4 Extending the PCP Exclusion to Non-listed Technologies .............. I-10-5

10.4.1 Requests to Expand List of Add-on Projects and Fuel

Switches ............................................... I-10-5

10.4.2 Requests to Add Specific Technologies to the List .............. I-10-8

10.4.3 Whether PCPs Not Listed in the Regulations Must Be

“Demonstrated in Practice” to Qualify for the Exclusion ........ I-10-11

10.4.4 Extending the Exclusion to P2 Projects ...................... I-10-12

10.5 Extending the PCP Exclusion to Substitution of ODS ................ I-10-15

10.5.1 Support Blanket Exemption ............................... I-10-15

10.5.2 Support ODP-Weighted Approach ......................... I-10-16

10.5.3 Limiting Increases in Production Capacity ................... I-10-16

10.6 Extending the PCP Exclusion to Cross Media Projects ................ I-10-18

10.6.1 Support Extending the Exclusion to Cross Media Projects ....... I-10-18

10.6.2 Oppose Extending the Exclusion to Cross Media Projects ....... I-10-18

10.6.3 Support Environmentally Beneficial Test for Cross Media Projects

..................................................... I-10-19
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10.6.4 Oppose Environmentally Beneficial Test for Cross Media Projects

..................................................... I-10-20

10.6.5 Other Comments on Cross Media Projects ................... I-10-20

10.7 Extending the PCP Exclusion to Projects That Increase Utilization ...... I-10-21

10.8 Adequate Safeguards for the PCP Exclusion: The Primary Purpose

Test ........................................................ I-10-23

10.9 Adequate Safeguards for the PCP Exclusion: The Environmentally

Beneficial Test ............................................... I-10-25

10.9.1 Support or Oppose Using the Environmentally Beneficial

Test .................................................. I-10-25

10.9.2 Requiring the Environmentally Beneficial Test Creates a

Bias Against P2 Projects ................................. I-10-27

10.9.3 No Need for Public Notice Regarding the Environmentally

Beneficial Test for P2 Projects............................. I-10-29

10.9.4 Request for Clarification of Definition of “Environmentally

Beneficial” ............................................ I-10-30

10.9.5 Air Toxics and the Environmentally Beneficial Test ............ I-10-31

10.10 Adequate Safeguards for the PCP Exclusion: The Cause or

Contribute Test ............................................... I-10-32

10.10.1 Support or Oppose Cause or Contribute Test ................ I-10-32

10.10.2 How to Address Collateral Emissions ..................... I-10-35

10.10.3 Other Comments on the Cause or Contribute Test ............ I-10-37

10.11 Calculating ERCs From PCPs ................................... I-10-38

10.11.1 Support ERCs from PCPs ............................... I-10-38

10.11.2 Oppose ERCs from PCPs ............................... I-10-38

10.11.3 Other Comments on ERCs From PCPs .................... I-10-39

10.12 Other Comments on PCPs ...................................... I-10-40

Chapter 11 - Listed HAPs ................................................... I-11-1

11.1 Overview .................................................... I-11-1

11.2 Listed HAP and PSD ........................................... I-11-1

11.3 Federal Enforceability of Existing SIP Provisions ..................... I-11-4

11.4 Elemental Lead and Lead Compounds ............................. I-11-5

11.5 Section 112(r) Compounds ...................................... I-11-6

11.6 Other Comments on Listed HAPs ................................. I-11-7

Chapter 12 - Minimum SIP Program Elements ................................... I-12-1

12.1 Overview .................................................... I-12-1

12.2 Minimum SIP Program Elements ................................. I-12-1

12.2.1 Core Program Elements ................................... I-12-1

12.2.2 Support Minimum SIP Program Elements .................... I-12-1
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12.2.3 Oppose Minimum SIP Program Elements ..................... I-12-3

12.3 Effective Date ................................................ I-12-4

Chapter 13 - General Comments on the Notice of Availability ....................... I-13-1

13.1 Overview .................................................... I-13-1

13.2 General Support or Opposition of the NOA Proposal .................. I-13-1

13.2.1 Generally Support NOA ................................... I-13-1

13.2.2 Generally Oppose NOA ................................... I-13-1

13.2.3 Generally Oppose NOA Proposal Because Too Restrictive

or Burdensome .......................................... I-13-1

13.2.4 Generally Oppose NOA Proposal Because Not

Environmentally Protective Enough ......................... I-13-2

13.2.5 Generally Oppose NOA Proposal Because Contrary to Act

and Regulations or Unnecessary ............................ I-13-2

13.3 Requests for Extension of the Comment Period ...................... I-13-3

13.4 Other General Comments on the NOA ............................. I-13-4

13.4.1 Need Regulatory Language ................................ I-13-4

13.4.2 Other General Comments on the NOA ....................... I-13-5
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Volume II: Comments Received After the End of the Comment Period

Chapter 1 - Introduction to Volume II .......................................... II-1-1

Chapter 2 - Late Comments on Baseline Emissions ............................... II-2-1

2.1 Overview .................................................... II-2-1

2.2 Extending the Emission Baseline to 10 Years ........................ II-2-1

2.2.1 Support/Oppose 10-year Baseline ........................... II-2-1

2.2.2 Other Comments on the Look Back Methodology .............. II-2-2

2.3 Length of Contemporaneous Period ............................... II-2-3

Chapter 3 - Actual-to-future-actual Methodology ................................. II-3-1

3.1 Overview .................................................... II-3-1

3.2 Should EPA Retain the Actual-to-potential Test? ..................... II-3-1

3.2.1 EPA Should Not Retain the Actual-to-potential Test ............ II-3-1

3.2.2 Other Comments on Actual-to-potential Methodology ........... II-3-3

3.3 Actual-to-potential Test Is Contrary to Statute and Case Law ............ II-3-5

3.4 Support Other Applicability Options ............................... II-3-6

3.4.1 Support PTE-to-PTE Test ................................. II-3-6

3.4.2 Support an Allowable-to-allowable Test ...................... II-3-7

3.4.3 Other Applicability Options ................................ II-3-8

3.5 Complex Manufacturing Proposal ................................ II-3-10

3.6 Utilization Increases ........................................... II-3-13

3.7 5-year Tracking - Length of Tracking Period ....................... II-3-14

Chapter 4 - Late Comments on PALs .......................................... II-4-1

4.1 Introduction .................................................. II-4-1

4.2 General Support for PAL Concept ................................. II-4-1

4.3 Alternatives for Establishing PALs ................................ II-4-2

4.3.1 Base PALs on Actual Emissions ............................. II-4-2

4.3.2 Base PALs on Allowables .................................. II-4-2

4.4 Two-cap PAL ................................................. II-4-4

4.4.1 Initial Industry PAL Concept Paper (IV-D-437) ................. II-4-4

4.4.2 STAPPA PAL Proposal (IV-D-333) .......................... II-4-7

4.4.3 Revised Industry PAL Concept Paper (IV-D-371) ............... II-4-9

4.4.4 NRDC PAL Proposal (IV-D-363) ........................... II-4-10

4.4.5 NJ, RAPCA, and Industry Comments on NRDC Two-cap

PAL ................................................. II-4-11

4.5 PAL Duration ................................................ II-4-15

4.6 PALs in Serious and Severe Nonattainment Areas ................... II-4-16

4.7 Increasing the PAL ............................................ II-4-17
Table of Contents

xiii

4.8 PAL Adjustment ............................................. II-4-19

4.9 Partial PALS ................................................ II-4-20

4.10 Monitoring and Enforcement of PALs ............................. II-4-21

4.11 PALs and (r)(4) Limits ......................................... II-4-23

4.12 Other Comments on PALs ...................................... II-4-24

Chapter 5 - Late Comments on Clean Units ..................................... II-5-1

5.1 Overview .................................................... II-5-1

5.2 Support Clean Units Proposal .................................... II-5-1

5.3 Length of Clean Units Exclusion .................................. II-5-2

5.4 Renewing the Clean Unit Designation .............................. II-5-4

5.5 Alternative Suggestions for Clean Unit Provisions .................... II-5-4

5.5.1 Complex Manufacturer's Alternative Approach for Clean

Units .................................................. II-5-4

5.5.2 State and Local Agency Alternative Approach for Clean

Units .................................................. II-5-6

5.6 Using Title V Permitting Process for Existing Units That Have Not

Undergone a BACT or LAER Determination or Comparable State

Technology Requirement ........................................ II-5-8

Chapter 6 - Late Comments on Pollution Control Projects .......................... II-6-1

6.1 Overview .................................................... II-6-1

6.2 Comments on PCP Exclusion .................................... II-6-1

Chapter 7 - Late General Comments on NSR Reform .............................. II-7-1

7.1 Overview .................................................... II-7-1

7.2 Request Further Analysis ........................................ II-7-1

7.3 Support Reform of the CAA’s NSR Program ........................ II-7-2

7.4 Support Main-streaming Flexible Air Permitting ..................... II-7-3

7.5 Concerned About Reform of the CAA’s NSR Program ................ II-7-4

7.6 Other Comments .............................................. II-7-8

Appendix A: Public Commenters .............................................. A-1
xiv

Acronym List

AQRV Air Quality Related Value

BACT Best Available Control Technology

BAT Best Available Technology

BBS Bulletin Board System

CAA Clean Air Act

CAAA 1990 Amendments to the Clean Air Act

CAM Compliance Assurance Monitoring

CEMS Continuous Emissions Monitoring System

CERCLA Comprehensive Environmental Response Compensation and Liability Act

CFC Chlorofluorocarbon

CFR Code of Federal Regulations

CMA Chemical Manufacturers Association

CMS Continuous Monitoring System

CO Carbon Monoxide

COMS Continuous Opacity Monitoring System

DOI Department of Interior

EPA United States Environmental Protection Agency

ERC Emission Reduction Credit

FACA Federal Advisory Committee Act

FLM Federal Land Manager

FR Federal Register

HAP Hazardous Air Pollutant

HCFC Hydrochlorofluorocarbons

LAER Lowest Achievable Emissions Rate

MACT Maximum Achievable Control Technology

MRRT Monitoring, Recordkeeping, Reporting, and Testing

MSWLF Municipal Solid Waste Landfill

MWC Municipal Waste Combustor

NAA NSR Nonattainment Area New Source Review

NAAQS National Ambient Air Quality Standards

NEPA National Environmental Policy Act

NERC Nuclear Energy Regulatory Commission

NESHAP National Emission Standards for Hazardous Air Pollutants

NOA Notice of Availability

NOx Nitrogen Oxides

NPDES National Pollutant Discharge Elimination System

NPS National Park Service

NSPS New Source Performance Standards

NSR New Source Review

OAQPS Office of Air Quality Planning and Standards
xv

ODP Ozone Depleting Potential

ODS Ozone Depleting Substance

OSHA Occupational Safety and Health Administration

OTR Ozone Transport Region

P2 Pollution Prevention

PAL Plantwide Applicability Limitation

PC-CMO Physical Change or Change in Method of Operation

PCP Pollution Control Project

PM Particulate Matter

PM10 Particulate Matter less than 10 microns in diameter

POTW Publicly Owned Treatment Works

PSD Prevention of Significant Deterioration

PTE Potential to Emit

RACT Reasonably Available Control Technology

RBLC RACT/BACT/LAER Clearinghouse

RCRA Resource Conservation and Recovery Act

RECLAIM Regional Clean Air Incentives Market

RFA Regulatory Flexibility Analysis

RFP Reasonable Further Progress

RIA Regulatory Impact Analysis

RMRR Routine Maintenance, Repair, and Replacement

SARA Superfund Amendments and Reauthorization Act

SCR Selective Catalytic Reduction

SCAQMD South Coast Air Quality Management District

SIC Standard Industrial Classification

SIL Significant Impact Level

SIP State Implementation Plan

SO2 Sulfur Dioxide

STAPPA/ALAPCO State and Territorial Air Pollution Program Administrators/Association of

Local Air Pollution Control Officials

TPY tons per year

UT/A Undemonstrated Technology Application

VOC Volatile Organic Compound

WEPCO Wisconsin Electric Power Company 
Volume I

Comments Received by the End of the Comment Period
I-1-1

Chapter 1 - Introduction

On July 23, 1996, we proposed to revise regulations for both the approval and

promulgation of implementation plans and the requirements for preparation, adoption, and

submittal of implementation plans governing the NSR programs mandated by parts C and D of

title I of the Clean Air Act (61 FR 38249). The NSR program includes the part C PSD and part

D NAA NSR Programs. These regulations are contained in 40 CFR 51.165, 51.166, 52.21, 52.24

and part 51, appendix S. The proposed changes were commonly known as the NSR Reform

package. They included baseline emissions, actual-to-future-actual methodology, establishment

of PALs, Clean Units, PCPs, PSD applicability for HAPs, State selection of applicability options,

and other changes. This FR Notice also included EPA’s proposed action on CMA Exhibit B.

The opportunity for written and oral public comment on the regulations was announced

with the proposal. (61 FR 38250) A public hearing for oral comment on the proposed changes

was held on September 16, 1996, in Research Triangle Park, North Carolina. The period for

written public comments on the proposed changes ended October 21, 1996. In response to

requests for extension of the public comment period, we subsequently extended the public

comment period to December 20, 1996 (61 FR 67274) to allow interested parties to review the

corrected and final transcripts of the September 16, 1996 public hearing on the proposed rule and

the September 17, 1996 meeting of the NSR Reform Subcommittee of the Clean Air Act

Advisory Committee. There were 212 comment letters (see Appendix A) submitted by facility

owners and operators, trade associations, State and local air pollution control agencies, and

private citizens (IV-D-02 through IV-D-193; IV-G-1 through IV-G-20). 

On July 24, 1998, we published a FR NOA soliciting comments on a specific alternatives

for determining the applicability of NSR to modifications of major stationary sources. (63 FR

39857) This notice requested additional comment some of the changes presented in the 1996

Reform proposal, including baseline emissions, actual-to-future-actual methodology, and PALs. 

The period for written public comments on the proposed changes ended August 24, 1998. There

were 137 comment letters (see Appendix A) submitted by facility owners and operators, trade

associations, State and local air pollution control agencies, and private citizens during the public

comment period. (IV-D-194 through IV-D-328; IV-D-392 and 393; IV-G-25). 

Volume I of this document summarizes the written and oral comments that were

submitted during the public comment period regarding the 1996 and 1998 FR Notices. For the

topics that were covered in the 1998 NOA in addition to the 1996 Reform proposal (baseline

emissions, actual-to-future-actual methodology, and PALs), there is a separate chapter for

comments on each FR Notice. Volume I of this document includes all of the comments directly

on the 1998 NOA that were received by the end of the public comment period. It also includes

all of the public comments on areas of the 1996 Reform Proposal for which we have taken final

action. (That is, baseline emissions, actual-to-future-actual methodology, PALs, Clean Units,

PCPs, PSD applicability for HAPs, and State selection of applicability options). It does not

include public comments on other aspects of the 1996 Reform Proposal. Volume I of this
1 - Introduction

I-1-2

document also includes our responses to these comments. This comment summary and our

responses provided input for the revisions made to the standards between proposal and

promulgation. 

Public comments that are related to our promulgation rules, but were received after the

end of the comment period, are summarized in Volume II of this document. These comments

were not submitted specifically in response to the 1996 and 1998 FR Notices, but address the

topics in those proposals on which we have taken final action in our promulgation rules. (That

is, baseline emissions, actual-to-future-actual methodology, PALs, Clean Units, PCPs, PSD

applicability for HAPs, and State selection of applicability options.) 

A complete set of the public comments on the 1996 proposal and 1998 NOA, as well as

the comments that were received after the end of the public comment period is available as part

of Docket A-90-37. This docket can be accessed at the U.S. EPA Docket Center, 1301

Constitution Avenue, NW, Washington, D.C., 20004 in Room B-108, Waterside Mall (ground

floor), 8:30 a.m. through 4:30 p.m., Monday through Friday. 

Although the 1996 Reform Proposal and the 1998 NOA did not specifically address or

request comment on Routine Maintenance, some public commenters did address this issue in

their response to the 1996 and 1998 proposals. The summary of these comments and our

responses to these comments will be addressed as part of the rulemaking process for the Routine

Maintenance, Repair, and Replacement rule. Public comment letters submitted in response to the

1996 and 1998 actions are cross-referenced in Docket A-2002-04, which is the docket for the

Routine Maintenance, Repair, and Replacement rule.
I-2-1

Chapter 2 - Baseline Emissions

2.1 Overview

We received numerous comments on our 1996 proposal to allow sources to base their

pre-change actual emissions on any consecutive 12 months of utilization during the 10-year

period prior to the proposed change multiplied by the unit’s current emission rate. Commenters

addressed the length of the emission baseline period and provided other comments on the

proposed look back methodology. Commenters also addressed whether the baseline period

should differ in nonattainment areas and ozone transport regions, the data required to support a

10-year look back period, interactions with Clean Air Act sections 182(c) and 182(e), the length

of the contemporaneous period for netting, and requirements needed to protect short termincrements and the NAAQS. These comments are found in sections 2.2 through 2.7 of this

chapter. Comments and responses on baseline determination provisions in the 1998 NOA are

found in chapter 3 of this document.

2.2 Extending the Emission Baseline to 10 Years

2.2.1 EPA Should Extend the Time Period

Comment:

Many commenters (IV-D-9, 10, 28, 37, 38, 40, 42, 43, 57, 62, 67, 70, 72, 73, 74, 79, 83,

87, 88, 92, 93, 97, 98, 105, 106, 107, 111, 112, 117, 120, 126, 127, 129, 130, 132, 138, 142, 143,

150, 153, 156, 157, 160, 162, 163, 169, 170, 177, 180, 181, 183, 184, 191; IV-G-2, 3, 4, 9)

generally supported the proposed extension of the baseline.

One commenter (IV-D-40) said that a 10-year look back period would greatly simplify the

current regulations, which often result in uncertainty concerning the appropriate period used to

determine a baseline that is representative of normal source operations. In fact, according to the

commenter, EPA should require the States to adopt the 10-year look back as part of their NSR

programs. Another commenter (IV-D-107) said the 10-year look back will minimize arbitrary

impacts in cases where low utilization rates have persisted at specific power generation facilities

for extended periods and it will establish a “bright line” test for determining past actual

emissions that will simplify the NSR accounting rules. Another commenter (IV-D-57) agreed

with EPA that this provision has been unevenly implemented and creates a source of delay in the

permitting process, and said that these problems would be resolved under the proposal. One

commenter (IV-D-10) endorsed EPA’s decision not to allow any other look back periods prior to

the 10-year look back period. 

Two commenters (IV-D-92, 180) recognized that the use of a 10-year look back period in

addition to the 5-year contemporaneous period would result in establishing the baseline for

certain changes of emissions that occurred 15 years ago. However, this is preferable to the
2 - 1996 Comments on Baseline Emissions

I-2-2

current situation where applicants and permitting authorities waste a lot of resources debating

over whether a time period other than 2 years immediately prior to the change is more

representative of normal operation. These discussions rarely result in an improvement in air

quality.

One commenter (IV-D-162) recommended adopting the proposed extended baseline but

noted two concerns: the calculation would be complex and not have a true relationship with

actual past emission levels; and the agencies would have to consider old records and determine

what surrogate records to rely on in cases where direct utilization records are not available.

One commenter (IV-G-4) said the 10-year look back approach would be acceptable if it

would also allow sources to measure the significance of the change over the same representative

year of operations. This is because in the electric utility industry a modification can shift

operations between units, which is different than changes in demand. Using the same year for

both separates the load fluctuation issues from the load attraction issues. 

While one commenter (IV-D-143) generally supported the 10-year look back approach,

they noted that the problems of the current system could better be resolved by making the current

provision that allows for establishment of a “more representative” baseline outside of the 5-year

look back period more workable.

Response:

We believe that the new rules allowing a fixed look back period of 10 years will improve

in several ways the procedures for establishing a modified emissions unit’s baseline emissions

rate. The new rules attempt to remedy specific complaints that have arisen that the process of

establishing a representative baseline period other than the 2-year period preceding the

proposed change can be complex, confusing, and time consuming, and often involves disputed

judgment calls. In addition, industry has complained that they are often expected to surrender

capacity under the current approach because it is not being utilized in the 2-year period

immediately preceding the change. We believe it is reasonable and appropriate to allow sources

that are planning to modify one or more emissions units to make a determination of NSR

applicability based in part on the use of historical operating levels of the units being changed

without having to make a case-by-case demonstration subject to the reviewing authority’s

approval, as long as the provisions set forth in the new rules are followed. The new rules will

help simplify the process of determining the appropriate baseline period, eliminate any

ambiguity and delays associated with the previous approach, increase certainty, and provide the

source owner or operator with a greater ability to preserve a unit’s historical operating levels

and associated emissions. 

In the 1996 NPRM, we indicated that we were not proposing to extend the 5-year

contemporaneous period along with the proposed 10-year look back period associated with the
2 - 1996 Comments on Baseline Emissions

I-2-3

establishment of baseline actual emissions. The comments provided did not provide any

compelling reason to change the existing 5-year contemporaneous period. The two look back

periods serve different purposes and need not be the same in order to effectively implement the

NSR program objectives. However, under the existing regulations States have always had the

flexibility to define a different contemporaneous period under SIP-approved NSR programs, and

may use that flexibility to adjust the contemporaneous period if they believe that a different

period is more appropriate for their particular purposes under the new applicability

requirements. [See, for example, §51.166(b)(3)(ii).] Therefore, under today’s new

requirements, we have not changed the 5-year contemporaneous period under the Federal PSD

program. It should be noted that for purposes of determining the baseline actual emissions of a

contemporaneous change in emissions from an emissions unit that was an existing unit at the

time of the contemporaneous change, the new requirements authorize a source to use the 10-year

look back period. However, we want to emphasize that using the 10-year look back is dependent

on having adequate information to calculate an average annual emissions rate, in tons per year,

for the specific 24-month period selected to represent the unit’s representative operation. See,

for example, new § 52.21(b)(48)(ii)(e). 

We disagree with the comment that the calculation of a baseline emissions level using the

10-year look back will necessarily be “complex and not have a true relationship with the actual

past emissions levels.” The calculation must be accomplished with actual operating data for the

emissions units that are being changed, including historical utilization rates, fuels or raw

materials used, applicable emissions limitations, etc. If such data is not available for a

particular period of time, the source cannot rely on that period of time to calculate the annual

emissions rate for the affected emissions units. The source must maintain a record of the

baseline emissions calculations and will be held accountable for the accuracy of these

calculations. The source will also be responsible for making this and other relevant information

available for inspection when so requested by the reviewing authority. In addition, the

calculation should provide a true relationship with actual past emissions, so long as that

emissions rate, based on the level of utilization during the representative period, continues to be

achievable under the most current legally enforceable emissions limits and restrictions. If the 

current limits and restrictions are more stringent than those used in the original emissions

calculation, then the current legally enforceable limits and restrictions must be used instead of

those in effect during the representative period to adjust downward the original calculations.

The comment regarding modifications in utilities is not relevant to our decision to allow

a 10-year look back period for modifications of existing emissions units . We continue to believe

that the 5-year look back (with the opportunity to request another period of time) is appropriate

for utilities, and have not changed the procedures for calculating the baseline emissions rate for

electric utility steam generating units. In each case, however, where more than one unit is being

modified under a given construction project the new rules require that th e same 24-month

period be used to calculate the baseline actual emissions for the changed units. For utilities,

see, for example, new § 52.21(b)(48)(i)(c). 
2 - 1996 Comments on Baseline Emissions

I-2-4

We gave consideration to simply revising the current applicability test, involving the use

of the past 2 years of operation unless another period is more representative of normal

operations, but rejected that alternative because it would continue rely upon a process of

demonstrations and determinations that could lead to inconsistent results and unnecessary time

delays in the permitting process. The fixed 10-year approach enables sources to select such 24-

month period that they believe is representative of the source’s historical operational without a

demonstration, providing adequate data is available on record to make the necessary

calculations. At the same time, the new procedure provides greater certainty than the existing

method by limiting the look back to the 10-year period immediately preceding the change.

 

 2.2.2 EPA Should Not Finalize The Proposed Look Back Period

Comment:

Several commenters (IV-D-20, 113, 152, 172, 192; IV-G-8, 12) said that a 10-year look

back period is too long. Commenter IV-D-192 said the proposed baseline creates the opportunity

for a source to increase production to the 10-year maximum, and prevents the State and local air

regulators from addressing the increase in emissions. Three commenters (IV-D-113; IV-G-8, 12)

supported a 5-year look back. One commenter (IV-D-20) said that 5 years is appropriate, and

then only if there are adequate records. Commenter IV-D-137 added that EPA may also want to

include provisions that prevent a source from applying the new definition of actual emissions

(after the fact) , retroactively netting out of PSD/NSR and requesting a revision or modification

of their permit that eliminates emission reductions.

One commenter (IV-D-14) was concerned that the proposal would result in relaxed

permit actions that will cause significant air quality deterioration, while another (IV-D-172)

stated that the extended look back period would make PSD increment tracking more difficult. 

One commenter (IV-D-4) stated that the proposed look back period would exacerbate

environmental inequities and be inconsistent with EPA’s goals. Not only could sources choose a

12-month period of very high production, but current emission factors might correspond to less

stringent control standards and higher emissions. The resulting baseline would make the NSR

trigger a significant increase of emissions from abnormally high emission levels. There are other

problems with the proposal such as the likelihood that sources evading NSR using the new

baseline may produce emissions that harm environmental justice communities already beset by

pollution, and the rule prevents permitting authorities from exercising discretion to protect

vulnerable communities. Also, the rule does not reduce complexity; the administrative cost of

establishing fair baselines through case-by-case determinations is worth the environmental

benefit.

Several commenters (IV-D-20, 34, 109, 137) stated that the proposed baseline process is

inconsistent with fundamental NSR principles since it would allow significant increases in
2 - 1996 Comments on Baseline Emissions

I-2-5

emissions to escape the technology and ambient impact review requirements of NSR. For

example, commenters (IV-D-109, 137) said the proposal to change the determination of actual

emissions from an activity level that is representative of normal source operation to the greatest

activity level in a consecutive 12-month period within the look back period will result in greater

potential for adverse impacts on attainment or maintenance of the NAAQS. 

Response:

We disagree that a 10-year look back period for determining a modified emissions unit’s

baseline emissions rate is too long. In our 1996 proposal, we indicated that it was our intent to

allow sources to determine major NSR applicability based on their highest level of utilization (61

FR July 23, 1996 at 38258.) It is known that a source’s production activity and associated

emissions generally will fluctuate as a result of normal fluctuations in market conditions during

a business cycle. Thus, “normal operation” within the context of a typical business cycle

recognizes that variability will occur. With that in mind, we do not believe that it is reasonable

to require a source to establish its representative baseline emissions rate (in tons per year) based

simply on the most recent production level when that level is considerably lower than the levels

historically achieved under more favorable market conditions. Instead, we believe that the

source should be able to determine the representative production level from levels that have

actually occurred to establish a baseline emissions rate. In order to learn more about the kinds

of business cycles that different industries experience, we contracted a study of business cycles

for various major source categories subject to the Prevention of Significant Deterioration

Program. [“Business Cycles in Major Emitting Source Industries,” September 25, 1997;

Eastern Research Group, Inc.] Based on the study’s findings, we concluded that a 10-year look

back would assure that the normal business cycle generally would be captured for any industry. 

A 5-year look back, as recommended by comments, would not offer that same assurance. We

believe that the use of a 10-year look back, which enables a source to determine what level of 

utilization (and emissions) has actually occurred over the course of a normal business cycle, is

appropriate. It should be noted that the new rules do not require a source to select the highest

level of utilization for calculating the baseline emissions rate, but allow the source to calculate

an average annual emissions rate based on any level of utilization actually achieved during the

10-year look back period.

With regard to the concern that industry may try to apply the new requirements

retroactively to undo current restrictions on existing sources, we want to emphasize that the new

procedures do not apply retroactively to existing NSR permits or major modifications that

sources have made in the past. Prior applicability determinations on major modifications and

the control requirements that currently apply to sources remain valid and enforceable. 

We generally do not believe that the new provisions for a 10-year look back will result in

the use of “abnormally high” emissions levels for determining post-change emissions increases,

although we cannot rule out the possibility that some sources by comparison will have higher
2 - 1996 Comments on Baseline Emissions

I-2-6

baseline emissions using the new 10-year look back versus the current approach. The basic

intent of the new baseline provisions is to enable sources with existing units undergoing

modifications to select a level of operation for the unit, and its associated emissions rate, which

will be representative of the unit’s operating history. In some cases, for example, a unit’s

highest levels of operation may have occurred in the 2 years immediately preceding a change,

and there would be no advantage to the longer look back period. In addition, the current

method, which generally bases a unit’s baseline emissions rate on the 2 years of operation

immediately preceding a proposed change, also allows another period of time to be used if that

alternative period is approved by the reviewing as being more representative of normal source

operation. In any event, the new baseline provisions contain two elements which help to ensure

that the baseline emissions rate established for any particular existing emissions unit prior to a

physical or operational change will not be “abnormally high.” First, the new method requires

the baseline emissions to be calculated on the basis of source operation during a consecutive 24-

month period, instead of the proposed 12-month period. This averaging period (which is

consistent with the averaging period in the current method) will help prevent short-term

emissions peaks from unduly influencing the average annual emissions rate calculated for the

unit’s operation during the representative period selected. Second, the new rules also require

the source to make a downward adjustment in the baseline emissions calculation to account for

any legally enforceable emissions limits and restrictions that have been imposed since the

representative baseline period and are more stringent than the original limits and restrictions. 

(Note that the current rules allow a for the use of a look back period beyond the 2 years

immediately preceding a proposed change, but do not require any adjustment of the emissions

rate to account for the most current emissions limits and restrictions.) The source must also

maintain a record of how the baseline emissions were calculated and make it available for

inspection when requested to do so by the reviewing authority. For all of the above reasons, we

believe that concerns regarding “abnormally high” emission levels as a result of the new

baseline provisions are inappropriate.

We disagree with the commenters who believe that the new baseline requirements will not

reduce complexity. Under the existing rules, a source has the option of trying to demonstrate

that a period of time other than the 2-year period immediately preceding a proposed physical or

operational change is more representative of normal operation. We believe that the use of a

fixed 10-year look back period will help provide additional certainty to the process and eliminate

any ambiguity and confusion that can occur when an applicant and the reviewing authority

would otherwise disagree on what pre-change period should be used to best represent the

source’s normal operation. Admittedly, sources may not be able to use the full 10-year look

back for awhile because adequate records may not be available at this time for the last 10 years. 

The new rules prohibit sources from calculating their baseline emissions without adequate

information. Therefore, they must select a consecutive 24-month period within the past 10 years

for which adequate information exists to make the necessary calculations of source utilization

and annual emissions. This may limit the use of the 10-year look back for many sources until
2 - 1996 Comments on Baseline Emissions

I-2-7

they improve their recordkeeping and have the data necessary data in their records for future

baseline calculations. 

We do not believe that there is clear evidence that the 10-year look back provisions under

the new rules will result in greater air quality deterioration in individual circumstances. This

requires a knowledge of how a unit’s emissions would actually change as a result of a major

modification determination under the “actual-to-potential” test versus the new “actual-toprojected -actual” test. Modifications to existing emissions units represent only a portion of the

total number of NSR permits issued annually. Moreover, there is also a question of how many

existing units that will undergo physical or operational changes under the new rules will have 

Clean Unit status (not subject to the 10-year look back). However, we do believe that the

changes to the rules, when considered collectively, will improve air quality by creating

incentives for sources to improve environmental performance through emissions reductions and

pollution prevention, and by removing barriers to investments in new technologies that improve

energy efficiency. We believe some of these benefits will occur through changes that sources

make to existing emissions units under the new rules. With regard to emissions increases that do

not go through NSR, States retain the responsibility to evaluate emissions increases regardless of

whether or not the increases result directly from modifications to existing sources to determine

whether the increases will cause or contribute to violations of any NAAQS or PSD increment. 

See the related discussion in section 4.4 concerning the “actual-to-projected -actual”

applicability test.

This leads to the concern expressed by a second set of comments that increment tracking

will become more difficult. We acknowledge that increment tracking may become more difficult

in a sense because fewer modifications may possibly be required to conduct an increment

analysis if they are not considered major modifications under the new applicability test. 

Instead, under the new rules, it may become necessary for the reviewing authority to take a

greater responsibility for conducting periodic increment assessments in the absence of a sourceinitiated PSD analysis. We believe, however, that this is a necessary outcome of the new

procedures which enable a source to calculate emissions increases resulting from a physical or

operational change in a different manner. Under the current rules, source emissions may

fluctuate from one year to the next due to normal fluctuations in market conditions without a

source having to undergo an increment analysis. Only when a major modification occurs is an

existing source required to undergo an increment analysis as a prerequisite to the issuance of a

PSD permit. The new rules allow a source to distinguish between emissions increases that occur

as a result of a physical or operational change versus increases that are not related to the

change. While distinctions about the cause of the emissions increase are important for

determining whether a modification will occur, the distinctions do not change the fact that both

types of emissions increases must be counted toward the consumption of the applicable PSD

increment where appropriate.
2 - 1996 Comments on Baseline Emissions

I-2-8

Finally, we disagree with the comment that the proposed baseline provisions are

inconsistent with the fundamental NSR principles. The Act requires that sources which increase

their emissions as a result of a physical or operational change should be required to undergo

major NSR. At issue is the question of how to best determine whether a source’s emissions will

actually increase as a result of a physical or operational change. The Act is silent concerning

the particular procedures to use in making this determination, although it is reasonable to

conclude that the increase of concern should result from the change that is made. We believe

that the new approach, which includes, in part, the use of a 10-year look back, as explained

above, to establish a baseline emissions rate from which the post-change emissions increase will

be determined, is a reasonable interpretation of the statutory definition of “modification” and is,

therefore, consistent with the statutory NSR principles.

2.2.3 Prefer To Modify Actual-to-potential Test

Comment:

Two commenters (IV-D-137, 172) believed that instead of extending the period for

establishing actual emissions, the actual-to-potential test should be changed. Commenter IV-D137 said the problem is not that the current system does not go back far enough to set a fair actual

emissions baseline, but that the methodology (even the new proposal) does not account for the

fact that most emissions units are operating at an activity level much less than the allowed

activity level. The commenters believe that many of the real problems with the current NSR

programs for modifications would be eliminated if the actual-to-potential procedure were

modified in an equitable manner. One commenter (IV-D-137) added that the netting process is

inconsistent with STAPPA and ALAPCO’s NSR principles because netting allows significant

increases in emissions to escape the technology and ambient impact review requirements of

NSR. The commenter (IV-D-137) preferred not allowing netting. However, if netting is to be

used, the commenters (IV-D-137, 172) prefer a netting methodology like the model that New

Jersey is currently using, which is based on a potential-to-potential-less-actual netting

methodology. Specifically, the actual-to-potential test should be changed such that when a

change involves only one unit, the old PTE should be compared with the future PTE on an

annual basis to determine whether there will be a significant net emissions increase. Where the

change involves more than one unit, the current system should be retained. 

Response:

Our reasons for supplementing the current “actual-to-potential” test with the “actual-toprojected -actual” test are discussed in chapters 4 and 5 of this volume. However, in either test,

it is necessary to determine the source’s emissions baseline prior to the physical or operational

change being made. For the reasons given above, we believe the new fixed 10-year look back

offers a fair and reasonable procedure for determining a modified unit’s emissions baseline. (It

should also be noted that it will not be necessary to use the fixed 10-year look back for existing
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units that have Clean Unit status. See chapter 9 (volume 1) and chapter 5 (volume 2) for

additional discussion about Clean Units.)

Our regulations have historically contained procedures for netting, which we consider to

be a reasonable approach for considering the cumulative effects of emissions increases and

decreases at a source. The judicial decision in Alabama Power v. Costle endorsed the use of

netting in the PSD program. We do not believe that the comments provide any compelling

reason to eliminate the netting provisions, which enable a source to modify an emissions unit

without obtaining a permit so long as “actual emissions” do not increase significantly over

baseline levels at the plant as a whole.

2.2.4 Discretion To Choose Representative Time Period

Comment:

Commenters (IV-D-40, 50, 62, 97, 105, 142, 143, 160; IV-G-3), some of whom generally

accepted the 10-year look back approach (IV-D-40, 105, 143, 160), opposed the proposed

elimination of discretion to allow a more representative time period outside the 10-year look

back period. One commenter (IV-D-143) stated that the proposal to use the highest 12 months

out of 10 years is unacceptable because the reviewing authority should retain the discretion to

approve a different period outside of the presumptive look back period if it is more

representative. One commenter (IV-D-50) stated that currently it determines the netting baseline

on a case-by-case basis using the two previous years of operation that represent the source’s

normal operation. EPA’s proposal relies on a rolling average which is difficult to support with

good data and unlikely to represent the source’s current emissions. Instead, the determination of

the appropriate period should be left to the discretion of the local reviewing authority. One

commenter (IV-D-105) requested a case-by-case mechanism to demonstrate more representative

periods or industry sector-specific cycles longer than 10 years. Sources should have the option of

looking back less than 10 years if appropriate. 

Two commenters (IV-D-40, 142) requested a narrow exception to the 10-year look back

period for units that have been placed in cold reserve due to reduced demand and that have not

been operated in the past 10 years. Such units would have to meet the following criteria. 

• The owner/operator has continually maintained a valid operating permit.

• The unit has been maintained in operating condition or included in a reactivation plan

filed with the appropriate agency.

• The unit’s emissions are included in the reviewing authority’s emissions inventory and

attainment plan.

• The unit’s post-change emissions would not result in a violation of NAAQS or PSD

increments.
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In addition, the exception could further be limited by an absolute look back cut-off of 20 years.

One commenter (IV-D-152) noted that while industry representatives have stated that

EPA should allow use of earlier periods when they are more representative than the presumptive

prior 2-year period, this argument is only sensible if the source is required to show that the earlier

period is in fact more representative. Such a requirement is missing from the proposal and

should be added. Any look back period should be presumptive, and if it is shown that the look

back period is not representative of current conditions, then the presumption should not apply. 

One commenter (IV-D-154) asked EPA to clarify existing law concerning the emissions

baseline. EPA should state that current law does not require the use of the 2 years immediately

preceding the proposed change, but allows the use of any 2-year period before the change that is

representative of source operation. Alternatively, commenter IV-D-160 suggested that EPA issue

immediate guidance clarifying that sources may establish their baseline emissions using

emissions during any consecutive 12-month period of their choosing within the 10 years

preceding an anticipated physical or operational change. This method of setting the emissions

baseline is permitted under the definition of “actual emissions” in the current NSR regulations. 

This will address problems experienced by sources in cyclical industries.

Response:

We believe that use of a fixed 10-year look back period provides the desired additional

clarity and certainty to the process of establishing a source’s baseline emissions level. The new

rules eliminate the need for a demonstration by the applicant--and a determination by the

reviewing authority--of what particular period of time best represents normal source operation. 

The existing procedures added resource burden and delay in the issuance of a permit

determination. We believe that it is reasonable and appropriate to provide a fixed look back

period from which all determinations of baseline emissions must be made (except for electric

utility steam generating units subject to the 1992 WEPCO rules.) We did not adopt the option of

allowing sources/reviewing authorities the possibility of choosing another period of time outside

the fixed 10-year look back because we believe that 10 years in itself is an ample period of time

from which to select a representative operating level, and without the fixed period the

uncertainty and complexity of the original procedure would be retained. We are unaware of any

data demonstrating business cycles longer than 10 years. In reality, a normal business cycle for

most industries involves recurrent ups and downs in the level of activity or plant utilization, and

one year of operation within the cycle is not necessarily more “normal” than another. The new

rules, avoid this confusion and enable a source to select a period of maximum actual utilization

(or a different period if another period yields a higher level of annual emissions) from which to

calculate the average annual emissions of the units that are changed. It should be noted,

however, that the calculation of baseline emissions derived from the source’s representative

operating records may have to be adjusted downward to account for any more stringent

emissions factors and restrictions that may have been imposed on the unit since the
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representative period. See section 2.2.5.2 for further discussion of the basis for adjusting the

baseline emissions calculation. All calculations relevant to the establishment of the baseline

emissions rate must be recorded and maintained by the source, and may be requested by the

reviewing authority.

With regard to the commenters who recommended an extension to the 10-year look back

for emissions units that have been sitting idle for periods exceeding 10 years, we do not believe

that such an extension is appropriate, because it adds an unnecessary complication to the

process in light of the few emissions units that are likely to have been actually maintained in

operating condition during such a long period of time. It is more likely that most units that have

not been operated for such lengths of time are in need of extensive repairs and refurbishment in

order to become fully operable again. Our view is that these are the types of sources that

Congress intended to undergo NSR if they are to be brought back into regular operation. Hence,

under the new rules, if an emissions unit was not actually emitting a pollutant during the selected

24-month baseline period, that unit cannot be given credit for emitting for that period of time in

order to establish the baseline actual emissions. 

2.2.5 Other Comments on the Look Back Methodology

2.2.5.1 Utilization rate calculation

Comment:

One commenter (IV-D-107) endorsed EPA’s proposal to allow sources to use their

highest capacity level achieved during any 12 consecutive months within the 10 years prior to a

proposed physical or operation change. This change provides improved flexibility in establishing

a source’s annual capacity level that is truly representative of normal operations.

Five commenters (IV-D-22, 83, 98, 111, 160) objected to requiring sources to use the 12

months with the highest utilization. Three commenters (IV-D-83, 98, 111) stated that using the

production rate is unworkable in many circumstances. One commenter (IV-D-22) said that there

is not always a clear relationship between production rate and emissions, and that reliable records

may not be available to determine the highest production rates during the look back period. 

Another commenter (IV-D-160) stated that reliance on the highest utilization is inappropriate

because it assumes that a facility produces only one product and that there is a consistent, linear

relationship between utilization and emissions. Applying the emission factor for the new product

would be infeasible for facilities that change products between the baseline year and the year of

the proposed modification. Instead, the commenter said the final rule should allow sources to

establish their emissions baseline using emissions from any 12-month period of their choosing in

the preceding 10 years, adjusted to reflect current rules. Two commenters (IV-D-83, 111)

suggested allowing the source to use any 12 months of their choice, which is an option presented

in the draft rule.
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Three commenters (IV-D-137, 140, 172) were concerned about the effect of the

utilization rate calculation in a system based on actual-to-potential emissions. One commenter

(IV-D-140) stated that the 12-consecutive month criteria creates an artificially low baseline by

not adequately accounting for market conditions and the need for operational flexibility. 

According to the commenters, the definition of “actual emissions” should be based on

established maximum emission rates and utilization rates; such an approach would satisfy many

of EPA’s concerns with the CMA Exhibit B approach. The actual emissions baseline for new or

recently modified facilities should be equivalent to allowable emissions due to the extended

shakedown periods necessary for such facilities. Commenter IV-D-130 recommended that the

reviewing authority be provided with discretion to determine that actual emissions are equal to

allowable emissions. According to the commenter, this provision creates the current ability for

sources to use plant wide caps and it should not be deleted from the regulations.

Two commenters (IV-D-137, 172) stated that the current system’s problem is that it

compares past actual emissions to future allowed (potential) emissions. One commenter (IV-D137) added that even the proposed actual-to-future-actual methodology does not account for the

fact that most emissions units are operating at an activity level much less than the allowed

activity level. 

Another commenter (IV-D-61) suggested that baseline should reflect the best estimate of

actual emissions and be based on actual capacity utilization and the average emissions rate during

that year. The latter should be based on stack tests, published emission factors or other

engineering calculations.

Two commenters (IV-D-130, 153) who supported the look back proposal indicated their

confusion with EPA’s discussion of the appropriate calculation. EPA’s discussion of allowing

the use of the highest utilization rather than the emission rate appears to refer to the adjustment

for subsequent control requirements; the statements are not intended to limit the relevant factors

affecting representative emissions to utilization levels. A number of factors affect a source’s

emissions, not just utilization levels. They recommended that EPA clarify that the highest actual

emission levels with appropriate adjustments for subsequent control requirements may be used in

selecting the emissions baseline.

Response:

We agree with the commenters’ concerns that sources should not be required to select the

period of time that reflects a unit’s highest utilization level. The concern was based on the fact

that a unit’s highest emissions rate may not occur during the period of highest utilization. Our

reference in the proposal preamble to selecting the period of highest utilization was based on

our general assumption that the period of maximum utilization would also represent the period

of highest pollution levels for the unit of concern. The new rules do not require that a source
2 - 1996 Comments on Baseline Emissions

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select the 24-month period when a unit’s utilization is the highest. Instead, the new rules allow

the source to select any consecutive 24-month period within the 10 year-year period immediately

preceding the physical or operational change made to the unit. Thus, a source may choose a 24-

month period that enables it to maximize the average annual emissions rather than the average

utilization rate. (Nevertheless, the source may be required to adjust downward its baseline

emissions calculation to account for any more stringent legally enforceable emissions factors

and restrictions that have been imposed on the unit since the representative period selected.)

With regard to the commenter who recommended that the actual emissions baseline for

new or recently modified facilities should be equivalent to allowable emissions, we believe it is

appropriate to handle the baseline emissions calculation for each emissions unit on the basis of

its individual classification, e.g., new or existing unit. We agree with the commenter in the case

of a new emissions unit (unit that does not yet have a 2-year operating history) that the baseline

emissions rate should be the unit’s potential to emit, since a unit with less than 2 years of normal

operation at the time of a physical or operational change does not have sufficient operating

history to determine its actual emissions. However, for existing units that are going to undergo

physical or operational changes, we believe it is more appropriate to use the fixed 10-year look

back to calculate the baseline emissions because the units have adequate operating history from

which to calculate an emissions rate based on actual utilization of the unit. 

We generally disagree with the comments recommending that a modified unit’s baseline

emissions should be set equal to the unit’s maximum emissions rate. Under the new rules, if the

existing unit has Clean Unit status, then projects at that unit would not require a major NSR

permit if the project does not cause the need for a change in the emission limitations or work

practice requirements in the permit for the unit. See chapter 9 of this volume and chapter 5 of

volume 2 for further discussion of the new requirements for Clean Units. However, for

modifications to existing units that do not have Clean Units status, we believe that it is

appropriate to allow a source to identify a representative level of operation (and emissions) that

has actually been achieved by the unit during a normal business cycle, and use such

representative operating date to calculate a baseline emissions rate. In doing so, the new

procedures allow the source to determine the actual emissions increase resulting from a physical

or operational change on the basis of a baseline emissions level generally representing

maximum actual utilization of the unit, rather than the level of utilization during the two-year

period immediately preceding the change. As mentioned above, the new requirements authorize

the source to select a single consecutive 24-month period within the 10-year look back period to

determine the average annual utilization rate and calculate the baseline actual emissions for

each and every emissions units that will undergo physical or operational change(s) as part of a

project (or series of related projects). See, for example, new §52.21(b)(48)(ii)(e). It is possible

that not all of the emissions units that will undergo change will achieve their highest levels of

utilization during the same 24-month period. Nevertheless, a source will have the ability to

select the single 24-month period that best represents the collective level of operation (and

emissions) for the units that will be changed.
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We disagree with the comment that the baseline emissions level should be based on the

modified unit’s actual utilization and actual emissions rate during that year selected by the

source. There are two reasons why we disagree. First, we have concluded that it would be more

appropriate for a unit’s baseline emissions rate to be based on a average of two years of

operation rather than the 12-month period which was originally proposed. By extending the

averaging period to two years (a consecutive 24-month period), the effects of a short-term spike

in operation (emissions)–not truly representative of “normal” operation–will be reduced. 

Second, we do not believe it would be appropriate to use a unit’s actual emissions during the

representative period selected without some form of adjustment in cases when the unit is no

longer able to emit the calculated amount of a pollutant at the time of a physical or operational

change (due to the imposition of more stringent emissions factors or restrictions since the

representative period). Therefore, under the new rules sources are required to adjust downward

the average annual emissions rate calculated from the representative period, when more

stringent emissions factors or restrictions have been imposed since the representative period. 

This adjustment procedure is discussed in the next section. 

2.2.5.2 Role of emission limits in baseline calculation

Comment:

One commenter (IV-D-143) opposed the proposed requirement for any current Federal,

State or voluntary limits to be included in the establishment of the pre-change baseline. The

commenter said the provision would penalize sources that complied with title IV or chose to

implement pollution prevention programs. The requirement should apply only to those limits set

more than 5 years before the change and be consistent with current rules. If the proposal to

determine the baseline using current emissions factors were removed, then the 10-year look back

provision would represent true reform. 

Three commenters (IV-D-57, 60, 107) opposed reducing the baseline for voluntary

reductions. Two commenters (IV-D-60, 107) opposed the requirement to base a source’s historic

baseline on voluntary reductions implemented prior to the change because it is counterproductive

and penalizes sources for voluntarily lowering their emissions, whatever the operational reason. 

One commenter (IV-D-57) stated that in determining the netting baseline, reviewing agencies

should provide credit for voluntary reductions that have been taken by a facility. For example,

while printing facilities typically must reduce VOCs emissions by 85-90 percent, a facility may

use control equipment that achieves a 95-percent reduction. With no accounting for these

additional reductions in the netting baseline, the facility is penalized for reducing emissions

beyond minimum requirements. Thus, the baseline should be increased by an amount equal to

any emission reductions achieved voluntarily during the relevant period.

Other commenters (IV-D-11, 14, 57, 67, 140, 142) generally supported the consideration

of current Federal, State or voluntary limits in the establishment of the pre-change baseline. One
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I-2-15

commenter (IV-D-67) said current emission factors should be adjusted by all currently applicable

Federal and State requirements, not just federally enforceable limitations. Another commenter

(IV-D-140) suggested that EPA consider applicable rather than current federally enforceable

limitations. For example, unless the wording of the provision is changed it could be

misinterpreted to include an NSPS that is not applicable because it was proposed after

construction had started. One commenter (IV-D-142) stated that using the unit’s current

permitted emission rate in determining its baselines would ensure that any recently imposed

emission limitations applicable to the source are included in its calculation. This environmental

protection is absent from the current rules. 

One commenter (IV-D-14) noted that the proposed language only mentions federally

enforceable emission limits. If a State-only limit applied, the source could ignore the effect of

the State regulation and use uncontrolled emissions. This, according to the commenter, would

produce inconsistences between units that have a permit and those that do not, and it would not

represent actual emissions. The commenter also asserts that the language in the regulation and

the discussion in the preamble are contradictory. The reference in the preamble is to the current

federally enforceable emission factor, although the term emission factor is not used in the

language of the regulation. If the intent is for the emission factor to be the allowable emission

rate, then this may be substantially higher than the actual emission rate. If the intent is for the

enforceable limit to be substituted in place of actual emissions, this could involve a fundamental

relaxation of the PSD program. Only if the intent is that actual annual emissions are determined

recognizing currently imposed restrictions, does the commenter support this requirement. 

Commenter IV-D-14 also raised concerns regarding how the “emission factor” would be

obtained. The commenter supported an interpretation that the actual annual emission rate (12-

month total) which presently occurs under the imposition of the current restrictions would be

prorated to any higher utilization under the same configuration as the time of the change,

provided this is within the 10-year period. 

Conversely, another commenter (IV-D-152) opposed the use of a source’s current

allowable emission rate as its baseline because current actual emissions may be significantly

lower than the current allowables. The commenter asserts that allowable emissions are often set

for reasons that are unrelated to the actual emissions pattern of the facility and should not be the

determining factor.

Response:

Despite the comments opposing our proposal to require the adjustment of the baseline

emissions rate under certain circumstances, we continue to believe that is appropriate for the

adjustment to be made. First, with regard to the concern that the adjustment would penalize

sources that complied with title IV or chose to implement pollution control programs. Title

IV–Acid Rain Program–applies to electric utility plants. We do not intend to extend the fixed 10-
2 - 1996 Comments on Baseline Emissions

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year look back period, or the adjustment provision, to existing electric utility steam generating

units. Therefore, the adjustment provision has no impact on electric utilities that complied with

title IV. 

Second, we believe it is appropriate to require adjustments to the baseline emissions

calculations even when the adjustment is based on limitations that the source has taken

voluntarily (such as pollution prevention projects) as long as such voluntary reductions result in

a legally enforceable limitation being placed on the source. Voluntary reductions, such as

netting credits, offsets, and Emissions Reductions Credits, result in legally enforceable

restrictions being placed on the source to ensure that such reductions are permanent. The

baseline emissions rate is intended to represent the unit’s pre-change emissions from which a

post-change emissions increase is to be projected. Thus, we believe any current legally

enforceable reductions should be considered in establishing a modified unit’s baseline emissions

if it is to be considered a realistic baseline value. We agree with the comments indicating that

the adjustment must be made on the basis of any enforceable limitation, not just federally

enforceable ones. The new rules clarify this issue. 

With regard to the concerns expressed about the proposal requiring the use of a unit’s

current allowable emissions as its pre-change baseline emissions rather than current actual

emissions, we believe that the commenters misunderstood our intended approach for adjusting

the initial baseline emissions calculation. Our description of the adjustment to the initial

calculation of a unit’s pre-change baseline emissions (based on a source’s records of actual

operating conditions during the consecutive 24-month period within the past 10 years) was

intended to require the source to use the current legally enforceable emissions factors (e.g.,

pounds per million Btu, percent sulfur in fuel) and restrictions (e.g., hours per day, shifts per

day)–not current allowable emissions (tons per year based on full design capacity) unless the

current allowable emissions are less than the original baseline emissions calculation. The

adjustment would only be required when the current factors and restrictions are more stringent

than those in effect during the representative period, and would link the source’s representative

level of utilization with the current emissions factors and restrictions to ensure that the unit

would not base its pre-change baseline emissions rate on an emissions rate (tons per year) that

could not currently occur when operating at the “representative” utilization level.

2.2.5.3 Other

Comment:

One commenter (IV-D-150) advocated using allowable emissions rather than emission

factors for the baseline because constraints on future emissions should not be based on a

company’s current performance when performance already exceeds what is required by existing

permits. One commenter (IV-D-11) suggested an alternative using the current emissions, which
2 - 1996 Comments on Baseline Emissions

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is determined to be the lower of the emission rate during the highest utilization or the current

allowable rate. 

Response:

The commenters appear to have misunderstood the purpose of the downward adjustment

to the baseline emissions calculation. The objective of the adjustment is to ensure that the units

that are changed do not get more credit for their baseline emissions (average annual emissions

rate, in tons per year) than they would if those units were operated at the same levels today

under current emissions factors and restrictions. Thus, once the average annual utilization rate

is calculated for the consecutive 24-month period selected by the source owner or operator, it is

presumed that under favorable market conditions the unit could return to that level of operation

just prior to the change absent a physical or operational change to the unit. In order to provide

a realistic estimate of the emissions that would result from that representative level of operation

just prior to the change, it is then necessary to account for any current emissions factors and

restrictions that are more stringent than the original ones. The need for the adjustment should

not be construed to mean that the unit’s emissions absent the adjustment would exceed its

maximum allowable emissions rate (although, if that were the case, then the baseline emissions

rate would have to be set at the source’s current allowable emissions rate). For example,

operating at an average annual rate of 70% capacity over the selected 24-month period, a unit’s

average annual emissions rate was calculated at 145 tons per year of SO2. Today, however, a

more stringent sulfur-in-fuel restriction exists and, if it had existed during the selected 24-month

period, would lower the unit’s emissions (at the same level of operation) to 115 tons per year. 

By comparison, the unit’s maximum allowable emissions rate (at full capacity) under the current

restrictions is 165 tons per year. In accordance with the new rules, the adjusted rate of 115 tons

per year must be used. 

Comment:

One commenter (IV-D-14) raised several other specific questions on how the baseline

would actually be calculated, for example, how to calculate maximum emissions and address

discontinued units. The commenter would support a baseline calculation that requires all actual

emissions must be from equipment currently in use or capable of use without any physical

changes to the process to accomplish the use. An emission decrease that occurred outside of the

contemporaneous time period would be lost. If the unit operated within the contemporaneous

time period, but there was a higher annual emission within the 10-year time period, this would be

substituted subject to any limitations on the use of the equipment.

Response:

The 10-year look back period is used to determine the pre-change baseline emissions

(average annual emissions rate) for each emissions unit that is changed–not the entire source, as
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suggested by the commenter. Therefore, only the emissions units that are changed will be

considered in the 10-year look back. In particular, previously discontinued units are not

involved in the look back because they are not subject to being changed. For existing emissions

units being changed, the source must calculate an average annual emissions level, in tons per

year, based on the units’ actual operating parameters (e.g., level of utilization, fuels and raw

materials, relevant emissions factors, etc.) during a consecutive 24-month period within the 10-

year look back. (If any changed emissions unit was not in existence or operation during the

selected 24-month period, then no baseline emissions can be credited to that unit.) In the event

that any emissions factor or operational restriction has been replaced with a more stringent one,

then the more stringent factor or restriction must be substituted in the calculation of the average

annual emissions using the utilization rate from the selected 24-month period. Under the new

rules, the source is also required to document and maintain a record of the baseline emissions

calculations along with other calculations pertaining to the determination of any emissions

increase associated with the physical or operational change.

Comment:

One commenter (IV-D-14) raised several concerns and questions regarding how the 10-

year look back would translate in a baseline emission calculation and the relationship between

the contemporaneous time period, the 10-year actual emissions baseline, and the netting

procedure. The commenter anticipates numerous minor NSR permit actions to un-do or change

past minor permit actions in order to recover past utilization restrictions and emissions that were

imposed under the current PSD regulations if this proposal is finalized. This will make minor

NSR more burdensome and complicated. It will also result in relaxed permit actions that will

cause significant air quality deterioration. The commenter said the rule needs to prevent turning

back the clock on previous (minor and PSD) NSR permit actions. Instead, the rule must only

apply from the date of promulgation forward in time and must not be used to invalidate previous

permit actions which were taken to avoid PSD under the current rules.

Response:

We agree with the commenter that it generally would be detrimental to allow sources to

undo existing permit requirements by attempting to apply the new requirement retroactively. We

have not added any new language to the rules that would cause a source to conclude that its

existing permit is no longer valid, nor can we see that there is any incentive for a sources to want

to invalidate a previously-issued permit. However, sources that may have submitted permit

applications under the current rules for which a permit has not yet been issued may wish to reevaluate their applicability under the new rules and submit a new permit application. Prior

applicability determinations on major modifications and the control requirements that currently

apply to sources remain valid and enforceable.
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Comment:

One commenter (IV-D-156), who generally supported the extended baseline, said that it

would be impractical and unrepresentative for facility operations to apply an actual or allowable

baseline approach to landfill gas emissions. EPA should consider a specific exemption or

approach for landfills in order to address the unique emissions profiles associated with such

facilities.

Response:

We recognize that there are some unique differences between annual emissions profiles at

landfills and other source categories. In particular, landfills do not go through the types of

business cycles that other industries do, and their emissions do not fluctuate in a similar way. 

We do not believe, however, that an exemption is needed to address this difference because we

do not intend to preclude a landfills from continuing to calculate their emissions changes

associated with modifications in the same way that they are presently making that calculation. 

If, following the adoption and implementation of the new rules, we determine that additional

guidance is necessary, such guidance will be provided for addressing landfill emissions changes

from modified sources.

Comment:

One commenter (IV-D-142) said the 10-year look back period should be based on the

date a complete permit application is filed. The commenter said basing the look back period on

the date of commencement of construction, as proposed, would cause confusion in the permitting

process, allow the reviewing authority and third parties to inappropriately manipulate the

baseline, and shorten the look back period. This is because the NSR rules define “commence” as

the date that the source has all permits and has begun a program of continuous construction (or

entered into a binding agreement to undertake a program of actual construction) rather than in

terms of actual construction or other tangible steps under the control of the source. The look

back period should be based on the date that a complete permit application is filed, or if no

permit is required, on the date the source “begins actual construction” as defined in section

52.21(b)(11).

Response:

We agree with the commenter that in some cases the 10-year look back should begin from

the complete permit application date ; however in certain cases, we believe that it is appropriate

for the look back to begin on the date that the source begins actual construction because the

source will not be required to submit a permit application. Thus, the new rules reflect

determination of the applicable date as follows: If a source believe that it will need either a

major or minor NSR permit to proceed with a proposed physical or operational change, then the
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source may use the 10-year period immediately preceding the date on which it submits a

complete permit application. If, however, the source believes that the physical or operation

change(s) it plans to make will not result in either a significant emissions increase from the

project or a significant net emissions increase at the major stationary source (that is, the project

will not be a major modification), and the source is not otherwise required to submit a permit

application to obtain a minor NSR permit before making such change, then it must use the 10-

year period that immediately precedes the date on which actual construction of the physical or

operational change will begin. See, e.g., 51.165(a)(1)(xxxv)(B)(2).

Comment:

One commenter (IV-D-154) noted that permit applications may contain very conservative

estimates on emission rates, but that after the facility becomes operational the owner/operator

should be able to demonstrate actual emissions and request a reduction of the emission limits by

an administrative change. Any excess Emission Reduction Credits that were used for the netting

or offsetting of the proposed emissions should be returned to the applicant.

Response:

This commenter does not appear to be addressing an issue that was raised in developing

this rulemaking. It is not relevant to the new applicability requirements that have been

promulgated.

2.3 Baseline Period in Nonattainment Areas and Ozone Transport

Regions

Comment:

2.3.1 Support Different Baseline Period

Two commenters (IV-D-137; IV-G-12) supported a November 15, 1990 cutoff for the

baseline determination in nonattainment areas. One commenter (IV-D-137) commended EPA

for not extending the look back period in ozone nonattainment areas, where the baseline for

attainment plans is the 1990 actual emissions inventory. One commenter (IV-G-12) supported

the November 15, 1990 cut-off for the look back period in nonattainment areas and the ozone

transport regions (OTRs) as an alternative to reducing the overall baseline look back to 5 years.

2.3.2 Oppose Different Baseline Period

Several commenters (IV-D-9, 10, 28, 40, 42, 43, 72, 105, 107, 108, 112, 126, 139, 142,

143, 150, 157, 163, 184; IV-G-9) opposed the November 15, 1990 cut-off for baseline emissions

in nonattainment areas and the OTR. One commenter (IV-D-142) stated that EPA’s concern
2 - 1996 Comments on Baseline Emissions

I-2-21

over establishing a baseline consistent with the emissions inventories and attainment plan

requirements for these areas should not warrant the imposition of a cut-off date. The commenter

suggested allowing an earlier period if a source’s calculated actual emissions baseline does not

exceed its emissions in the area’s current emissions inventory and attainment plan. One

commenter (IV-D-143) stated that EPA apparently did not think these restrictions were needed in

the WEPCO rule and has not explained why they are needed now. Another commenter (IV-D40) stated that the cut-off is inappropriate for underutilized sources or those placed in reserve

during November, 1990 due to economic downturns. The cut-off date would deny these sources

the opportunity to establish representative baselines. One commenter (IV-D-9) stated that the

cut-off unfairly penalizes facilities that voluntarily took part in EPA’s Industrial Toxics Program

(33/50 Program). Another commenter (IV-D-157) added that if the 1990 emissions inventory

reveals a need to regulate an existing source more tightly, then the relevant SIP provisions should

be changed.

One commenter (IV-D-126) stated that OTR attainment will be met via allowance capand-trade rules currently being adopted by OTR States pursuant to a memorandum of

understanding. New sources that meet the applicability criteria in the memorandum of

understanding must obtain NOx allowances in addition to the offset requirements, and EPA’s

limiting the look back period to November 15, 1990 in the OTR is an unnecessarily restrictive

policy.

Two commenters (IV-D-42, 108) stated that strict SCAQMD requirements for

recordkeeping, reporting and inventory were in place before November 15, 1990, and there is no

reason to limit the look back to eliminate years before that date. In southern California, the

prescribed look back years would preclude sources from using the last years of the region’s prerecession production levels and this method therefore would use unrepresentative, higher

recessionary production levels that would limit recovery from the recession. The proposal would

require facilities that modify their equipment to provide offsets simply to return to previous

production levels. This is an unfair economic penalty that Congress did not intend.

Response:

Sufficient time has elapsed since the time of the proposal to render the November 15,

1990 limit moot for projects planned at major stationary sources. However, it is still possible

for the cut-off date to affect the look back period for changes that occur contemporaneously with

such projects. For contemporaneous changes that include a 10-year look back to establish a

unit’s baseline emissions rate, we believe that it is still appropriate to retain the restriction

prohibiting sources from using any period of time earlier than November 15, 1990 in

nonattainment areas and ozone transport regions. The 1990 Amendments included a number of

changes in the tracking of emissions and how emissions are to be inventoried, particularly in

nonattainment areas and ozone transport regions. The changes strengthen reasonable further

progress tracking requirements, offset limitations, and RACT requirements for nonattainment
2 - 1996 Comments on Baseline Emissions

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areas. They also establish enhancement emission inventory requirements for all areas. Because

we do not anticipate many contemporaneous changes to have occurred before 1990, we do not

view this requirement as unnecessarily burdensome. In addition, by the time most State plans

are revised to incorporate the new requirements, we do not believe that the November 15, 1990

cutoff date should not factor into many contemporaneous circumstances. 

2.4 Data Required to Support a 10-year Baseline

2.4.1 Length of Look Back Period and Data Acceptability

Comment:

Several commenters (IV-D-14, 42, 72, 93, 142; IV-G-12) generally supported limiting the

extended look back period to situations in which adequate emissions and/or capacity utilization

data are available. One commenter (IV-D-142) stated that although the lack of adequate data

may be of concern for the next few years for certain source categories, concerns will be

eliminated over time as more sources begin to retain utilization data in anticipation of future

projects. If a 10-year look back is adopted, the commenter added that sufficiently accurate data

records must exist such that actual emissions (or utilization) can be quantified. If the data do not

exist, then progressively more recent years should be reviewed and over time the records will

become available.

One commenter (IV-D-137) opposed EPA’s proposal to predicate the use of a longer look

back period on the accuracy and completeness of available data and establishment of specific

criteria using older data. This approach could raise the possibility that netting decisions would

be based on questionable data and would add uncertainty to the process.

One commenter (IV-D-156) suggested for sources that lack the historical data necessary

to establish a baseline that EPA allow an opportunity to document their actual and allowable

emission rates and utilization levels using other facility records. Landfills, for example, are

unlikely to have the necessary data since landfill gas emissions have not typically been regulated

to the degree that other facilities have.

Response:

We recognize that in many cases, sources presently maintain records on emissions and

operations for only 3 to 5 years. Thus such sources may have only limited use of the full 10-year

look back period at the start of the implementation period for the new rules. However, this

limitation should be remedied over time as sources begin to maintain records for longer periods

in order for them to use the 10-year look back opportunity. The comments received provide no

compelling reasons why it is not sound policy to require the availability of adequate data in

order for a source to be able to use the full 10-year look back for establishing baseline emissions
2 - 1996 Comments on Baseline Emissions

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rates for modified emissions units. In conjunction with this policy we do not believe that sources

should be allowed to use information derived from the records of other facilities. There are

generally sufficient differences between the way individual facilities operate, even when they are

similar source types with similar operating characteristics. The baseline emissions are an

important component of the calculation of a modified unit’s emissions increase and should,

therefore, be based on accurate information reflecting the source’s operation and emissions

during the representative period selected by the owner or operator of the source. This applies to

the calculation of emissions changes associated with the netting calculations. Consequently, the

new rules follow the proposal in requiring that full use of the new 10-year look back period be

conditioned on the accuracy and completeness of source records of emissions and capacity

utilization for any emissions unit that undergoes a physical or operational change. [See, for

example, new §52.21(b)(48)(f)]. 

2.4.2 EPA vs. State Agency Role

Comment:

Several commenters (IV-D-10, 20, 61, 62, 73, 74, 88, 92, 137, 180) agreed that it would

be appropriate for EPA to allow the reviewing authority to determine the accuracy and

completeness of emissions data. One commenter (IV-D-20) said EPA should provide minimum

requirements for the adequacy of records. This will help reviewing authorities avoid lengthy,

subjective arguments with industry on what constitutes sufficient records for a baseline

determination. Four commenters (IV-D-10, 61, 88, 137) said that case-by-case decision-making

by State and local reviewing authorities would be preferable to EPA establishing specific criteria. 

Commenter IV-D-137 said State and local reviewing authorities are in better positions to judge

the quality and acceptability of data used for establishing past emissions inventories and activity

levels. A national one-size-fits-all approach is not likely to be as workable.

One commenter (IV-G-7) suggested a phased approach in which the State reviewing

authority determines the number of years in the look back period. 

Two commenters (IV-D-172; IV-G-8) said that extending the look back would require

agencies to accept questionable data. Case-by-case determinations would lead to inconsistent

implementation at the national level because most sources do not keep good records for 10 years;

EPA should issue regulations that would reduce the number of case-by-case determinations. 

Response:

Under the new rules, sources are not required to submit their baseline emissions

calculations, or any information associated with a finding that a project is not a major

modification, to the reviewing authority for review and validation under the major NSR permit

program. (Note that utilities must send an advance notice prior to construction). We believe
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that such submittals by all modified emissions units would have resulted in a large burden on

reviewing authorities to review information, which in most cases it would not represent major

modifications. We do believe, however, that States will require some of these sources to apply

for permits under their minor NSR permit program, where they will have the opportunity to

review the submitted information. Nevertheless, the sources are responsible for the adequacy of

the source information which they use to determine a unit’s applicability to the major NSR rules,

and may be required to provide such information to the reviewing authority upon request. 

Moreover, States may adopt more stringent provisions in their NSR rules to establish greater

accountability on the part of the source if they believe it is appropriate to do so. At this time, we

do not intend to provide specific guidance on the types of information that would be considered

adequate or inadequate. The type of data necessary to determine emissions will vary drastically

from source category to source category and from process to process within a source category. 

If, however, we determine at a later date that particular guidance is necessary, we will consider

the development of such guidance at that time.

2.5 Interaction with CAA Section 182(c) and 182(e)

Comment:

Three commenters (IV-D-42, 72, 108) stated that the proposed extension of the look back

period fits within the design and intent of sections 182(c) and (e). One commenter (IV-D-42)

noted that EPA has approved the California SIP containing the RECLAIM program, which uses a

baseline process similar to the EPA proposal. According to the commenters, baseline calculation

will ensure that air quality is protected in the long run if it meets the following conditions.

• It takes into account prior emission reductions that presumably would have undergone

NSR.

• It nets those reductions with the operational change at issue.

• It requires that in order to avoid further major NSR the net be less than zero.

Thus, the commenter concludes that, because the proposal meets these conditions, it will fit with

section 182(e).

Conversely, another commenter (IV-D-137) suggested that there is a significant conflict

between changing the emissions baseline for netting and the ozone nonattainment provisions of

sections 182(c) and (e). According to the commenter, this conflict can be resolved by deferring

to the section 182 offset NSR requirements for serious ozone nonattainment areas. The

commenter further observed that, while NSR programs are tools to attain and maintain

compliance with the NAAQS, the programs should not be available to undermine specific

statutory and SIP requirements designed to resolve nonattainment problems.
2 - 1996 Comments on Baseline Emissions

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Response:

We disagree with the commenter’s alarm that the use of a 10-year look back period to

implement sections 182(c) and (e) of the Act for purposes of establishing a modified unit’s

baseline emissions will undermine any statutory and SIP requirements designed to address

nonattainment problems. The two sections establish special procedures for determining whether

a proposed modification to a major stationary source of ozone in a serious, severe or extreme

ozone nonattainment area will be subject to major NSR under part D of the Act. The Act is silent

on the issue of how one is to determine whether a physical or operational change increases the

amount of a pollutant for a changed emissions unit. We believe, therefore, that we have the

authority to establish a regulatory procedure for making the required determinations concerning

emissions increases resulting from physical or operational changes. Furthermore, the look back

period does not negate the offset requirements of sections 182(c) and (e).

In light of the fact that the 10-year look back period may be used for some existing

emissions units (other than electric utility steam generating units) that are involved in

contemporaneous emissions changes (for netting purposes), it should be noted that the new

requirements prohibit the use of the look back period earlier than November 15, 1990. 

Consequently, for emissions units whose contemporaneous emissions changes occurred before

November 15, 2000, the consecutive 24-month period selected for calculating the baseline actual

emissions relevant to the contemporaneous emissions change cannot include a date prior to

November 15, 1990. It should also be pointed out that for modifications involving emissions of

VOC in areas classified as “extreme” the statutory language is clear that the increase in

emissions resulting from the change is not required to be a significant increase, rather “any

increase” that is projected using the new “actual-to-projected -actual” will trigger the

applicable NSR requirements. 

2.6 Length of Contemporaneous Period

2.6.1 Support for 5-Year Contemporaneous Period

Comment:

Some commenters (IV-D-10, 14, 126, 138, 160, 191) generally supported keeping the

contemporaneous period at 5 years. One commenter (IV-D-126) stated that there is no legal or

policy impediment to using different look back periods for NSR applicability purposes and for

determining contemporaneous emission increases or decreases in a netting context. Another

commenter (IV-D-14) stated that the 5-year contemporaneous period should be retained because

if it were altered to a longer period, recent permit actions might be invalidated. Also, under the

present rules when a PSD permit is issued, all netting increases and decreases are wiped out and

the process starts again. EPA’s proposal leaves this practice unchanged.
2 - 1996 Comments on Baseline Emissions

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2.6.2 Support Alternatives to the 5-Year Contemporaneous Period

One commenter (IV-D-157) said EPA should adopt a 10-year contemporaneous period

because inconsistencies between the two periods leads to inconsistent and counterproductive

results. The same arguments that support a longer baseline for measuring the initial increase

support using a longer baseline for computing netting credits. Using a 5-year baseline to measure

netting credits means that the netting period will often omit periods of peak production because it

is too short to cover a full business cycle. In that case “past actual” emissions will be

unrepresentatively low, and so will the amount of the “netting credits” created by reducing the

applicable emissions limits at these units.

Commenter IV-D-157 added that emission increases due to modifications made in the last

5 years would still be accumulated under the 10-year look back approach. All of those increases

could still be offset with every qualified decrease during that period. The baseline would simply

specify how those increases and decreases were to be measured (which is a topic not mentioned

by the proposal) and would do so by applying the same 10-year accounting period used more

generally for measuring emissions increases. 

An industry coalition (IV-D-153) stated that a source should have the option of selecting

either a 10- or 5-year contemporaneous period for netting purposes. This would more closely

reflect the circumstances surrounding the particular 12-month period chosen, and the netting

calculation would more accurately reflect the increases or decreases associated with the source’s

actual emissions during the 10-year look back. One commenter (IV-D-62) recommended

decreasing the contemporaneous period to 1 year to reduce confusion about appropriate netting

determinations and simplify the number of projects that must be included in the netting

calculation. The current 5-year period is difficult to administer given the recordkeeping demands

for de minimis changes. Another commenter (IV-D-21) proposed a 5-year representative

operating period, not just 5 consecutive years. The latter might include extended periods of nonrepresentative data.

2.6.3 Other Comments on the 5-Year Contemporaneous Period

Several commenters (IV-D-137; IV-G-8, 12) expressed reservations about different

baseline and contemporaneous periods, but did not directly support changes to the 5-year

contemporaneous periods. These commenters said different periods could lead to inconsistencies

in the regulation of a source as a whole. 

Three commenters (IV-D-92, 137, 172) requested clarification on whether the proposal

would allow using data generated 15 years before construction of the specific change undergoing

review. One commenter (IV-D-137) said that it is unclear if EPA’s proposal provides for

establishing the netting baseline with an activity level that could have occurred up to 15 years

before construction of the specific facility change undergoing review. Other commenters (IV-D-
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92, 180) said that the proposal would result in establishing the baseline for certain changes on

emission activity levels that occurred 15 years ago, and that this would be preferable to the

current situation where applicants and reviewing authorities waste resources debating about the

most representative time periods. 

Response:

Some commenters did not understand how the proposed 10-year look back period would

affect contemporaneous changes. We indicated in our 1996 NPRM that it was not our intent to

extend the 5-year contemporaneous period (for considering creditable emissions increases and

decreases as part of the netting calculus) even if we established a 10-year baseline look back

period. We do not believe that any of the comments provided a compelling reason to change the

existing 5-year contemporaneous period. The look back periods serve different purposes and

need not be the same in order to effectively implement the NSR program objectives. States retain

the flexibility to define a different contemporaneous period under SIP-approved NSR programs,

and may use that flexibility to adjust the contemporaneous period if they believe that a different

period is more appropriate for their purposes under the new applicability requirements. [See, for

example, §51.166(b)(3)(ii). Therefore, under today’s new requirements, we have not changed

the 5-year contemporaneous period under the Federal PSD program.] It should be noted that

for purposes of determining the baseline actual emissions of a contemporaneous change in

emissions from an emissions unit that was an existing unit at the time of the contemporaneous

change, the new requirements authorize a source to use the 10-year look back period. 

With regard to the comment that the representative operating period be based on a 5-

year period, we believe that such a lengthy period is unnecessary for establishing a unit’s

baseline emissions. Historically, we have relied on a 2-year average to establish an actual

emissions rate, and believe that a 2-year average is sufficient for the present purpose as well. 

2.7 Protection of Short-Term Increments and NAAQS

Comment:

Several commenters (IV-D-72, 92, 138, 180) agreed with EPA that the addition of a

short-term test to the netting calculation is unnecessary. However, commenters (IV-D-92, 180)

said the proposal seems to require the applicant to prove that there will be no violation of any

NAAQS or PSD increment, or any impact on AQRVs of Class I areas. These commenters

recommended that EPA confirm that the current policy outlined in the draft NSR Workshop

Manual will remain, at least until guidance on when and how to demonstrate equivalent

qualitative significance is promulgated. Commenters (IV-D-92, 121, 180) opposed requiring

sources to prove that the netting calculation would not increase short-term emissions and cause a

violation of any NAAQS or PSD increment or adversely impact AQRVs in Class I areas. 
2 - 1996 Comments on Baseline Emissions

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Commenters (IV-D-92, 180) objected to the burdens of such a standard and urged EPA to

continue the current policy. 

One commenter (IV-D-173) recommended that EPA define the standards States will use

to analyze whether there is a change to qualitative significance for public health, and requested

an explanation for expanding the definition to include “any applicable maximum allowable

increase over baseline concentrations or having an adverse impact on AQRVs in Class I areas.” 

One commenter (IV-D-121) objected to the proposal to ensure that the change in the

netting baseline does not adversely impact short- (or long-) term ambient standards by requiring

that, to be creditable for netting purposes, an emission reduction must be sufficient to prevent the

proposed increase from causing or contributing to a violation of any NAAQS or PSD increment

and most not have an adverse impact on AQRV (including visibility) of Class I areas. The

commenter said this is inconsistent with prior Agency pronouncements on the health and welfare

equivalency demonstration. According to the commenter, EPA lacks the authority to require a

qualitative health and welfare equivalency demonstration for purposes of making the threshold

NSR applicability determination and cannot import an impact analysis for Class I AQRVs into

such a demonstration requirement. The commenter recommended that EPA remove the existing

health and welfare equivalency provisions entirely.

Response:

As we stated in the proposal preamble (61 FR 38259-60), we believe that a test that relies

on a unit’s highest short-term actual emissions would be too easy to circumvent. For a short

time, sources can run the affected unit at maximum capacity so that the baseline short-term

emissions would likely be nothing less than the unit’s maximum potential emissions. Moreover,

we are not sure that limiting the source to it highest past short-term emissions level will

necessarily provide any additional protection to the NAAQS, increments, or Class I AQRV. 

Therefore, we did not add a short-term emissions applicability test.

Although we did propose language regarding an air quality test to determine whether a

contemporaneous emission reduction is creditable for netting purposes, we are not taking final

action on that change at this time. The proposed air quality test required that an emissions

reduction must be sufficient to prevent the proposed increase from causing or contributing to a

violation of any NAAQS or PSD increment, and must not have an adverse impact on AQRV of a

Class I area. EPA’s current definition of “net emissions increase,” restricts the creditability of

some emissions decreases where the overall netting transaction could jeopardize air quality. In

particular, a provision in the definition of “net emissions increase” allows credit for a reduction

only to the extent that it has approximately the same qualitative significance for public health

and welfare as the increases from the proposed change. See e.g., § 51.165(a)(1)(vi)(E)(4). In a

June 28, 1989 rulemaking (54 FR 27286) we clarified that aspect of the regulations to require

that, despite the absence of a significant net increase in emissions, an applicant proposing to net
2 - 1996 Comments on Baseline Emissions

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out of review must demonstrate that the proposed netting transaction will not cause or contribute

to an air quality violation before the emissions reduction may be credited. 
1 These are the commenter’s direct comments regarding the 10-year baseline as

found on page 4. The comment does not appear relevant to this issue, but to the

10-year future actual methodology, which is discussed in Chapter 5. 

I-3-1

Chapter 3 - Baseline Emissions, 1998 NOA

3.1 Method for Determining Baseline

Comment:

3.1.1 Support for 10-year Baseline

Four industry commenters (IV-D-210, 219, 221, 311) and two utility industry

commenters (IV-D-252, 261) supported the baseline provisions in the NOA. One regulatory

agency (IV-D-262) supported the 10-year baseline period, as long as the 10-year limit was

permanent. One industry commenter (IV-D-220) supported the proposed 10-year time frame and

suggested that this time frame be extended to all areas, not just attainment. One industry

commenter (IV-D-221) supported the 10-year baseline period, but also requested the flexibility to

choose a 5-year period. One commenter (IV-D-210) maintained that 10 years was sufficient to

demonstrate to the reviewing authority that the physical or operational change did not result in a

significant emissions increase.1

 One utility industry commenter (IV-D-261) explained that

capacity utilization of non-nuclear units varies substantially depending on the availability of

nuclear units, and that therefore a long look back period was desirable. Another utility

commenter (IV-D-252) explained that the 10-year period more closely represented a

fossil-generating unit’s normal operating cycle. An industry commenter (IV-D-219) supported

the 10-year baseline because it better reflects actual emissions at normal operations. The

commenter (IV-D-219) maintained that emissions often decrease at the end of the useful life of

equipment, and that the decrease frequently occurs after 5 years.

Response:

As previously stated in chapter 2, we are adopting a new procedure, relying upon a fixed

10-year look back period, for establishing the baseline annual emissions for non-utility existing

emissions units that are being modified. Electric utility steam generating units are not eligible

to use this new look back. We believe the new fixed 10-year look back offers a reasonable

approach to determining a source’s representative operations and the emissions associated with

that level of operation. Our complete rationale for adopting the new procedure is provided in

chapter 2. The new procedure will apply in all areas (attainment, unclassifiable, and

nonattainment areas) and the relevant major NSR regulations are being amended accordingly. 

It should be noted, however, that in nonattainment areas the look back period shall not include

any time before November 15, 1990 for contemporaneous emissions changes (see section 2.3.2) 
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We do not believe that there is a compelling reason to change the existing 5-year

contemporaneous period. However, the 10-year look back is also used to determine the baseline

emissions rate for a unit whose emissions increased or decreased contemporaneously with the

current change. This is also discussed in our response to comments in chapter 2.

We continue to believe that a 5-year look back is generally appropriate for electric utility

steam generating units and have not changed the procedures for calculating the emissions

baseline for such units. However, it should be noted that the new rules codify the 2-years-in-5

look back period that had been established as a presumptive procedure in the 1992 WEPCO

rules. Utilities are not necessarily precluded from using a longer look back period; as part of

the newly-codified provision, utilities may request that another period of time beyond the 5 years

preceding the change be approved by the reviewing authority.

Comment:

3.1.2 Oppose 10-year Baseline

Three industry commenters (IV-D-283, 299, 312), ten utility industry commenters 

(IV-D-257, 268, 269, 278, 280, 281, 282, 295, 300, 323), nine regulatory agency commenters

(IV-D-216, 222, 246, 253, 255, 262, 287, 311, 317), STAPPA/ALAPCO (IV-D-259), three

environmental group commenters (IV-D-291, 303, 327), and one individual commenter

(IV-D-218) opposed the 10-year baseline provisions for the various reasons indicated below.

3.1.2.1 Oppose 10-year baseline because it is too restrictive

One industry commenter (IV-D-283) and eight utility industry commenters (IV-D-257,

276, 278, 280, 281, 295, 300, 323) viewed the 10-year baseline as more restrictive than the

current rules. These commenters argued that the existing rules allow selection of any

representative 2-year period as the baseline, regardless of whether it occurred within the last

10 years. The commenters also objected to the use of the current emission factor, which was also

more restrictive than existing regulations.

Seven utility industry commenters (IV-D-257, 278, 280, 281, 295, 300, 323) opposed the

use of current emission factors because these factors included newly applicable RACT, MACT,

NESHAP, BACT, LAER, and NSPS requirements that would not have been part of the baseline

emission level. Such an approach would make the baseline more stringent than it would be

under the current rules, especially in nonattainment areas. Another utility industry commenter

(IV-D-269) opposed the use of current emission factors because these factors would penalize

sources for making significant emission reductions made in response to other regulatory 

requirements.
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3.1.2.2 Oppose 10-year baseline because it is not environmentally

protective enough

One regulatory agency commenter (IV-D-222) and two environmental commenters

(IV-D-291, 303) opposed the use of a 10-year baseline period on the grounds that it would allow

use of historic emission levels that were higher than current levels to establish baseline

emissions. One environmental commenter (IV-D-303) further suggested that the only

appropriate baseline period for electric utilities was a declining baseline, as operations and

emissions decline over time absent capital improvements. The regulatory agency commenter

argued that the highest emissions in any 12-month period over the last 10 years could merely be a

spike. In order to avoid spikes and dips, and to be more acceptable to the reviewing authorities

and the public, the regulatory agency commenter suggested taking the average of the highest 3

years out of the last 10 years as the baseline. As an alternative, the regulatory agency commenter

suggested linking the baseline to the term of the title V permit, that is, taking the average of the

highest 3 years out of the 5-year term of the title V permit.

One regulatory agency (IV-D-246), STAPPA/ALAPCO (IV-D-259) and one individual

(IV-D-218) commented that the proposed baseline would not be protective of the NAAQS in

Class I and attainment areas. 

3.1.2.3 Oppose 10-year baseline because it is contrary to the CAA

On environmental commenter (IV-D-291) and one individual (IV-D-218) considered the

baseline provisions contrary to the CAA, as Congress did not intend for the NSR program to

grandfather older, more polluting emission units indefinitely.

3.1.2.4 Retain 2-year baseline

One regulatory agency commenter (IV-D-246) and one environmental commenter

(IV-D-291) preferred that the 2-year baseline period be retained.

Response:

We believe that the use of a fixed 10-year look back period provides clear advantages

over the current approach. The current approach focuses primarily on the 2-year period

immediately preceding the proposed physical or operational change to an emissions unit. The

approach allows flexibility in that another 2-year period may be used (without any stated limited

to the magnitude of the look back period); however the selection of another period involves a

demonstration by the applicant and its approval by the reviewing authority. Many stakeholders

have claimed that this process tends to be confusing, contentious and time consuming. 

Furthermore, even when the 2-year period immediately preceding a change is not most 
3 - 1998 Comments on Baseline Emissions

I-3-4

representative of normal operation, it is often difficult to reach agreement on a more

representative period. The benefits of the new 10-year look back are also discussed in chapter 2.

We do not believe that this approach grandfathers older, more polluting emissions units

indefinitely, as one commenter has claimed. Instead, the new approach is designed to provide

sources with a fair and reasonable approach for calculating a baseline emissions rate that can

be considered representative of the source’s normal operation. The Act is silent as to how the

emissions increase following a change is to be calculated, including the calculation of the prechange baseline emissions level. The new approach affords the source flexibility in

determining a representative level of utilization (a level actually achieved by the unit) during a

normal business cycle. We also believe that our selection of a 10-year look back is reasonable

and supported by a study performed to examine the typical length of business cycles for various

type of major stationary sources. Also, see response to comments at section 2.2.2.

We agree with the comment claiming that the use of a 12-month period to calculate the

baseline annual emissions may be susceptible to short-term emissions spikes. Thus, we have

changed the proposed procedure to require that the baseline emissions rate be based on a

consecutive 24-month period (rather than the proposed 12-month period) during the past 10

years. This longer averaging period will help lessen the effect of short-term peaks on the

average annual emissions rate. The use of a 24-month averaging period is also discussed in the

response to comments in chapter 2.

We also believe that it is appropriate to adjust an emissions unit’s baseline emissions to

reflect the most current legally enforceable emissions factors and operating restrictions. The

baseline emissions rate serves as the modified unit’s pre-change emissions rate from which

emissions increases resulting from the physical or operational change are to be calculated. 

Consequently, the baseline emissions rate should reflect what the unit could emit under the

representative operating levels just prior to the proposed change. Also see response to

comments at section 2.2.5.2.

We also do not agree with the comments that the baseline provisions will not adequately

protect the environment when compared to the current approach for setting the baseline

emissions rate. In sections 2.2.2 and 4.4 of this chapter, we provide our reasons why we do not

believe that either the new approach for determining a unit’s baseline emissions rate or the

“actual-to-projected-actual” test will result in adverse environmental impacts. The baseline

provisions should provide a fair and reasonable approach for selecting a modified emissions

unit’s pre-change emissions rate, that is representative of the unit’s normal operation, from

which it will be determined whether a physical or operational change will result in a significant

emissions increase. 

As mentioned above in the response following section 3.1, we continue to believe that a 5-

year look back period is generally appropriate for establishing baseline actual emissions for
3 - 1998 Comments on Baseline Emissions

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electric utility steam generating units. However, unlike the 10-year look back for other existing

emissions units, utilities may request that another period of time beyond the 5 years preceding

the change be considered by the reviewing authority.

3.2. Other Comments on Baseline Emissions

3.2.1 Prefer Other Baseline Periods

Comment:

Several commenters (IV-D-218, 222, 250, 259, 273, 299, 311) preferred baseline periods

other than 10 years.

One regulatory agency commenter (IV-D-222), STAPPA/ALAPCO (IV-D-259) and two

industry commenters (IV-D-250, 299) advocated using a 5-year baseline period. The industry

commenters (IV-D-250, 299) further suggested that if the applicant determined that the 5-year

baseline did not represent normal operations, then the use of the 12-month period in the previous

10 years should be allowed. One individual commenter (IV-D-218) recommended adoption of a

baseline period no more than 5 years from the date a complete application was submitted. 

One regulatory agency commenter (IV-D-222) suggested using the average of the highest

3 years out of the 5-year term of the title V permit. STAPPA/ALAPCO (IV-D-259)

recommended using a look back period of 5 calendar years, with the highest calendar year of

utilization as the baseline. A 5-year period would be consistent with title V compliance

certification requirements, ensuring a higher level of accountability and more accurate baseline

emission estimates. Any period longer than 5 years would be problematic, because most State

and local agencies only require retention of data for 2 to 5 years. STAPPA/ALAPCO (IV-D-259)

strongly advocated the use of the calendar year, as emission inventories and other historical

records were typically kept on a calendar year basis. STAPPA/ALAPCO (IV-D-259) further

indicated that if the EPA did not use a calendar year baseline, it should be very specific regarding

the baseline period requirements. 

One industry commenter (IV-D-273) suggested allowing sources to calculate their

baseline emissions using the highest actual emissions during any 3-month period over the last 10

years. The commenter explained that production levels can be influenced by economic cycles

and the seasonal needs of customers. These variations would be more accurately reflected by the

use of a 3-month period.

An industry commenter (IV-D-311) suggested that the 10-year period should be longer

than any prolonged economic recession.
3 - 1998 Comments on Baseline Emissions

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Response:

We continue to believe that a 10-year look back is reasonable for enabling a source to

identify its representative operation from which to calculate a baseline emissions rate. The

current baseline provisions, as contained in the definition of “actual emissions,” do not preclude

the use of a 10-year (or longer) look back. A 10-year look back should ensure that sources have

a sufficient period of time within which to identify a representative operating scenario. As stated

earlier, we also believe that the fixed nature of the new 10-year look back will bring more

certainty to the procedure for determining baseline emissions. In addition, the decision to use a

24-month averaging period, rather than the proposed 12-month period, The use of the longer

averaging period will help prevent skewing of the annual emissions that could result from a

short-term emissions peak. We see no compelling reasons to use a different baseline period than

the proposed 10-year period, and we continue to believe that the limited resources of reviewing

agencies are better spent on issues other than debating what is the most representative baseline

period.

We disagree with the commenters who believed that the 10-year baseline should not be

used due to potential data problems over that length of time. While we agree that accurate data

is critical, we believe it makes more sense to limit use of the 10-year period when data is not

available than to categorically disallow a 10-year baseline period. The rule amendments

condition the full use of the new 10-year look back period on the accuracy and completeness of a

source’s records of emissions and capacity utilization for any emissions unit that undergoes a

physical or operational change, or is affected by such change. [See, for example, new

§52.21(b)(48)(f)]. As with all emissions calculations, accuracy and completeness are central

elements for applicability determinations. In many cases, sources presently maintain accurate

records on emissions and operations for only 3 to 5 years. Thus, we think it is appropriate to

limit use of the full 10-year look back period when a source does not have data for this time

period. However, this limitation should be alleviated over time as sources begin to maintain

records for longer periods to accommodate the 10-year look back opportunity.

We do not agree with the commenter who stated that the 10-year baseline should be

extended in the case of a prolonged economic recession. We believe 10 years is the appropriate

time to account for a normal business cycle. Allowing for extensions of the 10-year look back

would retain the element of uncertainty that was criticized under the original approach. Also,

see response to comments in chapter 2, section 2.2.4.
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3.2.2 Comments on Procedures for Baseline Determination

Comment:

Several commenters (IV-D-259, 271, 275, 276, 278, 282, 317, 320, 322) had questions on

the procedures for determining baseline emissions, especially regarding utilization rates and

emission factors.

One commenter (IV-D-262) stated that even if the EPA were to promulgate a 10-year

baseline period, baseline emissions should be calculated using 2 consecutive years rather than the

year with the highest capacity utilization. This commenter further advised that the same time

period be used for all emission units involved in source shutdowns. Otherwise, if the source

could select different periods for different emission units, the combined baseline could exceed

the actual source emissions in any given year.

Four utility commenters (IV-D-271, 275, 276, 322) interpreted the NOA as requiring

sources to calculate their baseline by using the unit's current emissions factor in combination

with the utilization level from that 12-month period, rather than on the basis of the unit's highest

emissions rate during a selected 12-month period. One of these utility commenters (IV-D-271)

explained that this methodology was deemed illegal in the WEPCO rule. Three of the

commenters (IV-D-271, 276, 322) explained that the "past-actual-to-enforceable-future-actual"

methodology is the same as the past-actual-to-future-potential" methodology.

One utility industry commenter (IV-D-282) found the baseline determination provisions

confusing, as it was unclear how the baseline past actual emissions would be determined. This

commenter wanted to know whether the period of highest emissions would correlate with the

period of highest utilization and then be reduced by any voluntary measures or if it would be

based on gross annual emissions and then reduced to reflect any currently enforceable emission

limits?

One regulatory agency commenter (IV-D-320) and STAPPA/ALAPCO (IV-D-259) also

requested that the EPA clarify “whether the phrase ‘current emission factors’ includes the results

of the most recent stack and performance tests (for example, coating applicator transfer

efficiency and control equipment capture and destruction efficiency, as well as current material

specifications (for example, coating VOC content).” If that was the EPA’s intent, then the

commenters suggested the phrase “highest emissions” should be replaced with “highest capacity

utilization.”

Another utility industry commenter (IV-D-278) supported the baseline provisions only if 

the current emission factor requirement was deleted. Then the baseline provisions would be

beneficial, as these provisions would not penalize utilities for regional economic cycles which

could affect generation and were clearly unrelated to activities at utilities.
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Another regulatory agency commenter (IV-D-216) suggested that the baseline period

provisions should be like those in many trading programs, in which the lower of the actual or

allowable emission rate was applied to the highest level during the baseline period. 

One regulatory agency commenter (IV-D-320) and STAPPA/ALAPCO (IV-D-259)

requested that the EPA clarify the phrase “highest emissions in the past ten years” by specifying

whether EPA is referring to one calendar year, any consecutive 12-month period during the last

10 years, an average of more than one calendar year, or some other time period.

Response:

We agree with the commenter that the source should be able to choose any period of

operation rather than simply the period of highest capacity utilization. We are not requiring

that source owner/operators select the baseline using the priod with the highest utilization. 

Instead, we are requiring the use of any consecutive 24-month period within the 10-year look

back to calculate the baseline actual emissions for any emissions unit that undergoes a physical

or operational change, or is affected by such change. The longer 24-month period allows the

source to reference any particular level of utilization that has been achieved in the past 10 years,

but also eliminates the potential problem associated with short-term peaks that do not truly

represent the unit’s normal annual operation. Our reference in the 1996 NPRM to selecting the

period of highest utilization was based on our general assumption that the period of maximum

utilization also represents the period of highest pollution levels for the unit of concern. 

However, sources are not required to select the period of highest utilization, particularly if

another period yields a higher emissions rate. This approach also eliminates concerns about

artificially low baselines.

Several commenters requested clarification of what we meant by “current emission

factor.” Under the final rules sources are required to adjust the baseline emissions rate

(avergage annual emissions rate) derived directly from the selected 24-month period under

certain circumstances. Specifically, a source must adjust downward this baseline rate if any new

legally enforceable emissions factors have been imposed on the unit since the representative

period. Such factors may include any State or Federal requirements such as RACT, MACT,

BACT, LAER, NSPS, and NESHAP; fuel restrictions; operational restrictions, or other factors

that are legally enforceable. For example, assume that during the selected consecutive 24-month

period an emissions unit burned fuel oil and was subjected to a sulfur limit of 2 percent sulfur

(by weight). Today, the unit is only allowed to burn fuel oil with a sulfur content of 0.5 percent

or less. Consequently, the source would be required to adjust its preliminary calculation of

baseline actual emissions for SO2 (that is, substitute the lower sulfur limit into the emissions

calculation yielding a 75 percent reduction in the emissions rate as initially calculated) to reflect

the current restriction allowing only 0.5 percent sulfur in fuel oil. The original utilization rates

would not be adjusted if more stringent operational limitations have not been imposed to further

restrict that average annual utilization rate.
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Sources must also adjust for any voluntary emission limitations as long as the limitations

are legally enforceable, such as limits that may have been taken for netting credits, emissions

offsets, or the creation of Emission Reduction Credits. Also, sources must adjust their emissions

from the 24-month period if a raw material they used during the baseline period is now

prohibited. For example, a source may have used a paint with a high solvent concentration

during a portion of the consecutive 24-month period. Today, the source is prohibited from using

that particular paint. The source must then adjust its emissions rate to reflect the emission

factor for the paint that it is now allowed or required to use. 

We agree with the commenter who thought the same 24-month period should be used for

all emissions units involved in the modification. The final rules require that a source select a

single consecutive 24-month period within the 10-year look back period to calculate the baseline

actual emissions for each and every emissions units that will undergo physical or operational

change(s), or will be affected by the change(s), as part of a project (or series of related projects). 

See, for example, new §52.21(b)(48)(ii)(e). It follows that the baseline actual emissions for each

affected pollutant also must be based on the same consecutive 24-month period as well.

We agree with the commenter that the exact time period for the baseline determination

should be clear. Our final rules specify that the baseline period is any consecutive 24-month

period in the past 10 years. The new rules provide no alternative period of time for the 10-year

look back period applicable to existing emissions units. 

3.2.3 Other Comments on Baseline Emissions

Comment:

One environmental commenter (IV-D-303) suggested an alternative baseline

determination option, which would be declining actual emissions. The commenter stated that

the EPA “should adopt an applicability test that recognizes that absent investment at a facility, its

rate of operation and its annual emissions will inevitably decline over time.” For electric

generating units, the EPA should presume a decline of 3 to 5 percent per year, absent investments

that improve productivity. To avoid NSR applicability, the facility would commit to an

enforceable limit that maintained the emissions below the declining path that would be presumed

to occur in the absence of the investment. That is, the declining baseline actual emissions would

become an enforceable limit.

Another environmental commenter (IV-D-291) stated that the baseline period should be

made permanently enforceable. The declining actual emissions baseline would be related to the

expected declining efficiency of units that could be expected over time absent significant

financial investment.
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Response:

We have chosen new procedures which do not include either of the commenters’

recommendations described in this subsection. We do not believe that it is necessary to require

sources to agree to declining cap on baseline emissions. The baseline emissions rate is not

intended to represent the source’s maximum allowable emissions prior to the proposed change,

but the average annual emissions rate associated with the representative average annual

operation of the affected emissions unit selected from a consecutive 24-month period during the

10 years prior to the physical or operational change. It should be recognized that the source is

not prohibited from increasing its production rate or increasing its hours of operation alone, as

long as such increase and does not violate current legally enforceable conditions placed on the

source. Instead, the baseline emissions merely serve as a yardstick for measuring emissions

increases that may occur as a result of any physical or operational change that is made to an

emissions unit.

Comment:

Another regulatory agency commenter (IV-D-287) questioned whether the EPA was

proposing that the baseline period be 10 calendar years of data or 10 years from the date of the

application submittal. This commenter (IV-D-287) also recommended that the accuracy and

correctness of the actual emissions be re-examined prior to establishing the baseline. The

commenter (IV-D-287) also questioned whether the regulatory agency or the source would have

the final say in establishing the accuracy of the baseline. Another commenter (IV-D-253)

emphasized that the 10-year baseline period should not predate the permit application, so that the

source would not be able to request revisions to previous determinations and permits.

Response:

Concerning the comment as to when the 10-year period begins, a source may use the 10-

year period immediately preceding the date on which a source submits a complete permit

application. If, however, the source believes that the physical or operation change(s) being

planned will not result in either a significant emissions increase from the project or a significant

net emissions increase at the major stationary source (that is, the project will not be a major

modification), and the source is not otherwise required to obtain a minor NSR permit before

making such change, then the source must use the 10-year period that immediately precedes the

date on which it begins actual construction of the physical or operational change. Under the

final rules, neither the source nor the reviewing authority will have the authority to select

another period of time from which to calculate baseline actual emissions for the emissions units

undergoing change.
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Comment:

Another regulatory agency commenter (IV-D-262) said that a 10-year baseline was not

appropriate for calculating emission reduction credits (ERCs), especially for shutdowns. The

commenter (IV-D-262) believed that data from at least an average of 2 consecutive years that

were representative of normal operations during the 5-year period preceding the shutdown should

be used to calculate the baseline for Emission Reduction Credits (ERCs). 

Response:

The 10-year look back applies only to existing emissions units (other than EUSGU), for

applicability purposes, when the units undergo a physical change or a change in their method of

operation. In such cases, the 10-year look back is used to determine the baseline emissions from

which the emissions increase resulting from the change will be calculated. Separate EPA policy

governs the procedures for determining emissions reduction credits from emissions units that

have been or will be shut down. However, the 10-year look back can be used to determine the

amount of a contemporaneous emissions decrease for netting purposes as part of a modified

unit’s applicability determination.

Comment:

A regulatory agency commenter (IV-D-216) suggested that the baseline period provisions

should be like those in many trading programs, in which the lower of the actual or allowable

emission rate was applied to the highest level during the baseline period. An industry commenter

(IV-D-212) maintained that, for sources with allowable emission limits set in previous NSR

applicability determinations, the baseline should be the allowable emission limit. Another

industry commenter (IV-D-220) recommended using allowable emission levels to establish the

baseline rather than emission factors.

Response:

We do not believe allowable emissions (assuming maximum capacity utilization) are

appropriate in general for determining pre-change baseline emissions. The baseline emissions

for an existing emissions unit represent the average annual emissions associated with the level of

utilization actually achieved by that unit during the previous 10 years. It was not our intent to

allow a source to represent its baseline emissions with an emissions rate that is higher than it

actually achieved in the past. Moreover, our baseline calculation procedures do require a

source to adjust downward an emissions unit’s average annual emission rate if any legally

enforceable emissions limitations (including but not limited to any State or Federal requirements

such as RACT, MACT, BACT, LAER, NSPS, and NESHAP) have been imposed on the unit’s

ability to emit a particular regulated NSR pollutant or to operate at levels that existed during the

selected 24-month period from which a source calculated the average annual emissions rate.
3 - 1998 Comments on Baseline Emissions

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Therefore, we disagree with these commenters regarding use of an emissions unit’s maximum

allowable emissions for establishing the baseline emissions.

Comment:

Another regulatory commenter (IV-D-253) agreed with the 10-year baseline period, as

long as it was phased in and did not apply retroactively. The 10-year baseline also should not

extend beyond the previous contemporaneous period, the commenter cautioned. 

Response:

With regard to the concern that industry may try to apply the new requirements

retroactively to undo current restrictions on existing sources, we want to reiterate that sources

should not assume that the new procedures apply retroactively to existing NSR permits or

changes that sources have made in the past. Prior applicability determinations on major

modifications and the control requirements that currently apply to sources remain valid and

enforceable.

We do not believe that there is a compelling reason to “line up” the baseline and

contemporaneous periods. The look back periods serve different purposes and need not be the

same in order to effectively implement the NSR program objectives. States retain the flexibility

in defining a different contemporaneous period under SIP-approved NSR programs, and may use

that flexibility to adjust the contemporaneous period if they believe that a different period is

more appropriate for their purposes under the new applicability requirements. See, for example,

§51.166(b)(3)(ii). It should be noted that for purposes of determining the baseline actual

emissions of a contemporaneous change in emissions from an emissions unit that was an existing

unit at the time of the contemporaneous change, the new requirements authorize a source to use

the 10-year look back period. 

Comment:

Two industry commenters (IV-D-221, 250) advocated that the baseline actual emissions

be augmented by an additional cushion to cover operational flexibility. 

Response:

We do not agree with the commenters’ suggestion. We believe the 24-consecutive months

in 10-year baseline period addresses the commenters’ concern regarding operational flexibility.

This period allows a source to select the most appropriate level of utilization that actually

occurred over the course of a normal business cycle with which to calculate the unit’s baseline

emissions rate.
I-4-1

Chapter 4 - Actual-to-future-actual Methodology 

4.1 Overview

We received numerous comments on our 1996 proposal to retain the current actual-topotential test, or to adopt the actual-to-actual test for all sources categories. Some commenters

expressed support for alternative applicability options. Commenters also provided comments on

the extension of the demand growth exclusion to non-utilities, how we should address utilization

increases, and whether 5-year tracking of actual emissions in needed or beneficial. These

comments are summarized in sections 4.2 through 4.14 of this chapter.

4.2 Should EPA retain the actual-to-potential test?

Comment:

4.2.1 EPA Should Retain the Actual-to-potential Test

Several commenters (IV-D- 20, 33, 47, 52; IV-G-11, 13) supported continued use of the

actual-to-potential test. One commenter (IV-D-47) stated that the actual-to-potential test should

be retained for all sources, including utility units. Another commenter (IV-D-52) stated that this

existing methodology, however flawed, remains superior to the proposed alternatives. These

flaws can be better addressed by plantwide applicability limits and the pollution prevention

exclusion. Another commenter (IV-D-33) stated that the actual-to-potential test is a more

streamlined process without the additional burden of recordkeeping inherent than the actual-tofuture-actual methodology.

One commenter (IV-G-13) supported the actual-to-potential test over the actual-to-futureactual test due to the inherent problems arising from the sufficient records demonstration. Stack

testing does not always reflect daily facility operations. Professional engineers and scientists are

not always available to ensure accuracy. Moreover, test conditions and parameters do not always

reflect daily levels because stack testing is generally not a good indicator of daily emissions.

One commenter (IV-D-50) believed the actual-to-potential test should be used to

determine applicability for any source that has never gone through major NSR. For

modifications, the potential-to-potential test should apply.

4.2.2 EPA Should Extend the Actual-to-potential Test to Utilities

One commenter (IV-D-47) believed the actual-to-potential tests should apply to public

utilities. The commenter suggested that the basis for the original WEPCO rulemaking has been

significantly altered as a result of new “open access” rules at the State and Federal level to

promote wholesale competition in the public utility industry. One of the major predicates for the

WEPCO rule was the involvement of State public utility commissions in the regulation of
4 - 1996 Comments on Actual-to-future-actual Methodology

I-4-2

electric power. Subsequent to the WEPCO rule, the Federal Energy Regulatory Commission

(FERC) has significantly modified the role of State public utility commissions through

promulgation of the regulations related to “Promoting Wholesale Competition through Open

Access Non-Discriminatory Transmission Services by Public Utilities; Recovery of Stranded

Costs by Public Utilities and Transmitting Utilities.” The Open Access Rule allows utilities to

compete for services in much the same way as manufacturing operations. These changes will

result in increased competition, decreased regulation, and undermine the predicate for the

original WEPCO rulemaking (that is, the involvement of State public utility commissions in the

regulation of electric power). For this reason, the actual-to-potential test rather than the actualto-future-actual methodology should be applied to public utilities.

4.2.3 EPA Should Not Retain the Actual-to-potential Test

Many commenters (IV-D-9, 33, 38, 42, 43, 46, 58, 61, 65, 67, 70, 72, 81, 105, 106, 117,

126, 131, 134, 140, 143, 146, 147, 149, 153, 154, 157, 160, 162, 163, 169, 186, 188, 190, 191;

IV-G-4) opposed the existing actual-to-potential methodology.

Go to section 4.5 to see related comments that specifically recommended extending the

actual-to-future-actual test to non-utilities.

4.2.3.1 Applies too broadly

Many commenters (IV-D-33, 38, 42, 46, 65, 67, 72, 105, 106, 131, 134, 149, 153, 157,

169, 191) opposed the existing actual-to-potential test because it overestimates emissions, and

draws sources that have no actual emission increases, or actual emission decreases, into review. 

Two commenters (IV-D-67, 131) maintained that the actual-to-potential test has also often

resulted in inflated estimates of potential future emissions that are not in keeping with the reality

of production or utilization. According to the commenters, in almost every case, the actual-topotential test will trigger the need for NSR. One commenter (IV-D-157) opposed the actual-topotential methodology, noting that it illegally extends the reach of NSR to many changes that

will never cause a significant emissions increase. 

One commenter (IV-D-134) stated that the actual-to-potential test unreasonably and

unfairly overstates the difference in emissions between the before- and after-modification

scenario and subjects many projects to onerous offset requirements even where emissions will

actually be less after the modification. This has resulted in many environmentally sound and

beneficial projects not being pursued. One commenter (IV-D-131) stated that the current

regulations and policies typically inflate the magnitude of actual emission increases and tend to

diminish the magnitude of actual emission decreases. According to the commenter, this is

evident when the actual-to-potential test is applied to first an emission increase and then to an

equal emission decrease. The commenter suggests that, instead of resulting in no net change of

emissions, EPA’s procedures will always result in an apparent increase of emissions. In fact,
4 - 1996 Comments on Actual-to-future-actual Methodology

I-4-3

according to the comment, EPA’s procedures result in an apparent increase of emissions in all

cases except where the final potential emissions are lower than the prior actual emissions. The

comment asserts that, more important, perhaps, is the fact that actual emissions (as currently

defined) are abnormally low during economic recessions. This is suggested to result in an

artificially high value in the apparent emissions increase (i.e., the difference between the prior

actual emissions and the new potential emissions) for a new project. 

Several commenters (IV-D-38, 42, 43, 61, 65, 105, 140) noted that the actual-to-potential

test is inequitable for sources that have low actual emissions or reduce emissions. One

commenter (IV-D-65) stated that the actual-to-potential test penalizes those sources that

voluntarily reduce their emissions because doing so increases the possibility that the next

modification will trigger major NSR. Two commenters (IV-D-65, 140) stated that a source with

actual emissions below its PTE is more likely to trigger major NSR than is an otherwise identical

source with a history of high emissions. According to the commenter, that phenomenon

produces other unfair and illogical results, in that it creates what the commenter views as an

unjust enforcement trap for the source that innocently makes changes that, from a common sense

point of view, do not increase emissions but nonetheless have a significant difference between

actual and potential emission. The actual-to-potential test also undermines the policy that the

best time to install new controls is when large changes are being made to the emitting equipment

because the actual-to-potential test can be triggered (and a “significant net emissions increase”

artificially created) by very minor physical or operational changes. According to the commenter,

while there are various exemptions (e.g., changes in raw materials that could have been used

before the PSD program was created, increases in hours of operation, and environmentally

beneficial projects) built into the policy that would mitigate some of these adverse effects, they

greatly complicate the major NSR rules.

According to one commenter (IV-D-105), sources are penalized for past operation at less

than 8,760 hours per year. Time spent for shutdowns, maintenance, lack of demand, etc., all

reduce actual emissions and consequently broaden the difference between the past actual and

future potential. The commenter further noted that pollution control projects in particular should

not be subject to actual-to-potential accounting, and gave an example of a source that had already

met MACT using a pollution control project, but then was required to undergo BACT.

One commenter (IV-D-61) believed the actual-to-potential test unfairly penalizes sources

that are environmentally conscientious by minimizing actual emissions. According to the

commenter, the actual-to-future potential test encourages sources to emit as much as possible

now, in order to avoid NSR in the future. Another commenter (IV-D-46) noted that NSR

requires review of every physical change in, or change in the method of operation of a major

stationary source, except for a limited number of changes that are specifically excluded from the

program. As a result, the comment continues, source owners and implementing agencies must

expend limited resources on changes that are not likely to negatively impact the environment.
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4.2.3.2 Does not allow utilization increases

Several commenters (IV-D-38, 140, 143, 146, 160) opposed the actual-to-potential test

because it does not exempt emission increases due to demand growth or increased utilization,

which they viewed as unfair and contrary to the statute and case law. One commenter (IV-D146) stated that EPA’s analysis of the current requirements is inconsistent with both the current

regulatory language, and prior court decisions. According to the commenter, the overly broad

applicability described in the preamble would allow for confiscation of existing production

capacity without any increase in the rate of total amount of allowable emissions, merely because

a source has experienced a decline in its productivity or hours of operation due to accident, aging

and/or deterioration of its production equipment. In the view of the commenter, the Agency’s

proposal to further limit the long-standing exclusion for such activities is unjustified and

unreasonable, and provides none of the relief sought by State program officials and industry

representatives from this reform effort.

One commenter (IV-D-160) stated that in many cases, the application of the actual-topotential test is inconsistent with the CAA, as well as the existing NSR regulations. The statute

requires that a source be subject to NSR if a particular PC-CMO results in an increase in actual

emissions. See CAA 169(2)(C) (cross-referencing the definition of “modification” in CAA III

(a)(4)). According to the commenter, by following this approach, EPA has captured within the

NSR system changes that cannot reasonably be expected to cause an increase in actual emission. 

Another commenter (IV-D-143) stated that Congress never envisioned an NSR program that

would hamper the ability of a source to increase utilization up to its original design capacity in

order to take advantage of fluctuating market conditions or impose an impediment to those

sources wishing to undertake non-routine physical or operational changes to enhance efficiency.

One commenter (IV-D-42) stated that the current methodology presents the risk that even

physical or operational changes that reduce a unit’s emissions could trigger a net emission

increase if the unit was not previously used at full capacity and if post-modification emissions are

calculated at full utilization (i.e. “potential”) rates. The commenter notes that the end result has

been that many environmentally sound and beneficial projects did not happen.

One commenter (IV-D-38) stated that the current approach needlessly penalizes sources

that do not utilize their full PTE all the time. A source currently can voluntarily forfeit this

“excess” PTE to EPA in many ways. EPA recognizes that a source reduces its PTE via a

federally enforceable SIP, permit limit or even by generating emission reduction credits. A

source should retain its options on its full PTE regardless of actual operations even when adding

or modifying emission units.
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4.2.3.3 Reduces operational flexibility

Several commenters (IV-D-42, 67, 70, 81) opposed the actual-to-potential test because it

reduces operational flexibility. One commenter (IV-D-81) stated that the actual-to-potential test

reduces the operational flexibility of a plant, restricting the ability to implement minor changes. 

According to the commenter, these effects oppose the operational flexibility concepts of the 1990

CAAA.

Five commenters (IV-D-42, 65, 67, 70, 81) stated that the actual-to-potential test

encourages sources to operate their equipment as close to the allowable limits as possible, and

this method discourages modernization.

4.2.3.4 Burdensome

Several commenters (IV-D-9, 65, 67, 147, 154, 190) believed the actual-to-potential test

was confusing and cumbersome for industry and reviewing authorities. Another commenter (IVD-190) stated that the current policy and regulatory structure has led to a confusing array of

regulatory requirements. One commenter (IV-D-154) stated that the “actual-to-future-actual” test

is accompanied by permitting, recordkeeping, and other procedural burdens that prior to this

proposal did not exist under the program. One commenter (IV-D-147) noted that State regulators

offer compelling reasons why the actual-to-potential system is confusing, requires additional

exclusions, and produces only marginal environmental benefit. 

Three commenters (IV-D-46, 67, 131) noted the existing burden posed by an NSR

program that is cumbersome, has discouraged facility changes, has discouraged production,

growth, and innovation, and requires spending limited resources on changes that are not likely to

negatively impact the environment. Two commenters (IV-D-46, 186) stated that the proposed

reforms do not improve the focus of the NSR program and may increase the overall complexity

of NSR applicability determinations. Another commenter (IV-D-65) stated that the present test

discourages meaningful reform and simplification of major NSR.

4.2.4 Other Comments on Actual-to-potential Methodology

One commenter (IV-D-137) preferred a revised actual-to-potential test. The commenter

suggested that the simplest solution to the actual-to-potential problem is for the utility to accept

federally enforceable limits on its PTE so that there would not be a significant net emissions

increase. However, according to the commenter, State and local agencies’ resources are better

spent on other issues, based on the assumption that the demand-growth test and the 5-year

reporting provisions are adequate to ensure that the WEPCO provision is not a sham that allows

physical or operational changes to result in unregulated significant increases in emissions. The

commenter recommends that consideration be given to differentiating between PSD and NSR in

attainment areas, where the goal has already been achieved, and offsets in nonattainment areas,
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where further reductions are needed to attain compliance with the NAAQS. Therefore, as

described in section 6.4.1, the commenter offered qualified support for the actual-to-future-actual

test.

One commenter (IV-D-9) stated that EPA made an incorrect statement in the preamble’s

Footnote 9 regarding the pharmaceutical industry. The current actual-to-potential threshold

determination should not be applied to the pharmaceutical industry, since pharmaceutical

equipment is not “design-inhibited” on a feedstock basis and calculating PTE on a per-feedstock

and hourly basis is not representative of the industry. 

One commenter (IV-D-42) expressed concern that EPA apparently is continuing to

require “Federal enforceability” of permit limitations when taking into account those permit

limitations in the NSR applicability determination. According to the comment, two recent D.C.

Circuit court decisions (National Mining Association V. EPA and Chemical Manufacturers

Association V. EPA) disposed of this issue, making it clear that EPA overstepped its bounds in

requiring Federal enforceability for this and other purposes. Moreover, the commenter suggested

that requiring Federal enforceability when State and local permit limitations are just as

enforceable makes little sense and only complicates the NSR process. According to the

comment, transaction costs, which are very high for major NSR to begin with, are increased by

EPA’s insistence on Federal enforceability with no commensurate benefit to air quality. The

commenter suggest that EPA repeal its requirement that a source that wishes to limit its PTE

must obtain a federally enforceable limit.

One commenter (IV-D-76) stated that the central NSR applicability issue for Municipal

Solid Waste Landfills (MSWLFs) is defining fugitive emissions versus non-fugitive emissions so

that an MSWLF’s PTE can be determined. Unless the Agency promulgates a rule specific to a

non-categorical source under section 302(j) of the CAA, fugitive emissions cannot be counted

toward a source’s PTE. The commenter suggests that EPA should use the proposed rule as an

opportunity to clarify the applicability of major NSR for MSWLFs by incorporating the October

21, 1994 memorandum, authored by John S. Seitz Director, Office of Air Quality Planning and

Standards, regarding the classification of emissions from landfills for NSR applicability purposes

into the preamble discussion of the final rule. This memorandum provides guidance for

determining which emissions from an MSWLF could reasonably pass through a stack or

equivalent opening (and thus would be non-fugitive), and which could not (and thus should be

excluded from the major source threshold calculation as fugitive emissions). 

The commenter (IV-D-76) added that EPA should also clarify the application of NSR

rules as far as they apply to the various stages in the development of MSWLFs. According to the

commenter, MSWLFs are unique from other sources in that they are best characterized as

ongoing construction projects whose emissions gradually build up and then fall off over time. 

The commenter suggests the most efficacious manner in which to deal with MSWLF air

emissions is to permit an initial phase of the landfill and then deal with modifications that
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account for the changes in emission levels over time. According to the comment, This kind of

approach will assure that the landfill gas system is efficiently designed and operated according to

the level of control necessary for the amount of emissions.

Response:

While some commenters presented arguments in support of retaining the current “actualto-potential” test, we have concluded, for the reasons given below, that the proposed “actual-tofuture-actual” test (now promulgated as the “actual-to-projected-actual” test), with some

revisions, is a fair and reasonable method for implementing the statutory definition of

“modification,” and should be made more broadly available than it has been to the present time. 

Under both the “actual-to-potential” test and the “actual-to-projected-actual” test, once

it is determined that a non-routine change will occur, past actual emissions generally can’t be

relied upon in determining the emissions after the change; rather, a projection of post-change

emissions is needed. Under the “actual-to-potential” test, there is an initial presumption that

the source will operate at is full potential to emit following the change. When the source

believes that actual emissions won’t significantly increase, it is free to project the actual

emissions increase, but it must set this level out in an enforceable permit cap. This cap is often

set forth in a minor NSR permit or other enforceable mechanism, and must be accomplished

before construction may begin. Moreover, the cap may restrict the ability of a source to increase

its emissions in association with an increase in production or hours of operation, which when

done alone are not normally considered as physical or operational changes. As stated above,

the “actual-to-projected-actual” test also relies on the premise that a projection of a project’s

post-change emissions is needed. In contrast to the “actual-to-potential” test, however, we

believe that under the “actual-to-projected-actual” test , a projection of post-change actual

emissions accompanied by recordkeeping, and in some instances reporting, is sufficient. We

generally agree with commenters who have argued that existing emissions units in general

(including replacement and reconstructed units) have ample track record such that the

projection of post-change emissions alone is sufficiently reliable and enforceable and thus the

burdens of up-front permit caps on emissions are unnecessary. Thus, the new rules reflect this

change in the applicability test for all existing emissions units. For new units, however, we

believe that the “actual-to-potential” test continues to be the most appropriate applicability test. 

In addition, the new rules contain special applicability tests for certain units, including Clean

Units, as well as those involved in PALs and pollution control projects. 

We disagree with the commenters who thought that the “actual-to-potential” test should

be retained because, among other things, the recordkeeping requirements associated with the

“actual-to-projected-actual” test would be burdensome. We believe that the new method

warrants the requirement for retaining operational records of the unit’s emissions following the

change when there is a reasonable possibility that the project may result in a significant

emissions increase. The records are needed to enable the source and reviewing authority to
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ensure that the physical or operational changes that are made do not actually result in a major

modification. Moreover, many, if not most, of the sources in question are already required to

maintain records of emissions for 5 years because they are major sources under Title V of the

Act. See 40 CFR 70.6(a)(3)(ii)(B). Likewise, many minor NSR programs or other SIP provisions

require tracking and retention of emissions data. In addition, for most sources, the burden of

recordkeeping is substantially less than the present burden of obtaining a permit containing an

up-front cap on actual emissions. We believe the benefits to source owners and operators of the

new method outweigh any residual burden placed on them to maintain the necessary post-change

records. The new recordkeeping requirements will mean that a source must (1) maintain a

record of its pre-change projection of post-change actual emissions and (2) track its post-change

annual emissions, retaining these records on site for 5 years from the date the modified unit

returns to regular operation. This recordkeeping requirement will involve a 10-year tracking

and data retention period if the physical or operational change will increase the changed unit’s

design capacity or its potential to emit a regulated NSR pollutant. It should be noted, however,

that we have retained a form of the “actual-to-potential” method in that if a source can use an

emissions unit’s potential emissions in lieu of a projection of post-change actual emissions to

show that the physical or operational change will not result in a significant emissions increase,

then it can avoid the recordkeeping requirements associated with the projections otherwise

required. 

We also disagree with the commenter who stated that the actual-to-potential test should

be reinstated for EUSGUs due to the increased level of competition in the electric utility

industry. The commenter believes that the increased competition and deregulation in the

industry would lead to less accurate estimates of post-change utilization and demand growth. 

We have no evidence at this time that deregulation will affect the ability of utilities to make

accurate calculations of their post-change emissions. However, in any particular case when the

projection of post-change emissions underestimates the actual emissions increase, then the

source would ultimately be subjected to the NSR requirements if post-change records show that a

major modification actually occurred. EUSGUs must submit annually, for 5 years after the

change, sufficient records to demonstrate that the change has not resulted in a significant

emissions increase over the baseline levels, unless the reviewing authority specifies a longer

reporting period up to 10 years. 

With regard to the commenter’s concerns about emissions from municipal solid waste

landfills, we recognize that there are some unique differences between annual emissions profiles

at landfills and other source categories. In particular, landfills do not go through the types of

business cycles that other industries do, and their emissions do not fluctuate in a similar way. 

We do not believe, however, that an exemption is needed to address this difference because we

do not intend to preclude a landfills from continuing to calculate their emissions changes

associated with modifications in the same way that they are presently making that calculation. 

If, following the adoption and implementation of the new rules, we determine that additional
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guidance is necessary, such guidance will be provided for addressing landfill emissions changes

from modified sources. 

4.3 Actual-to-potential Test Is Contrary to Statute and Case Law

Comment:

Several commenters (IV-D-117, 143, 147, 153, 154, 157, 160) opposed the actual-topotential test because they viewed EPA as unfairly applying it to all physical changes and

changes to the method of operation. The commenters believed that EPA had incorrectly

interpreted the statute and the case law to require that all units are subject to the actual-topotential test. Instead, the actual-to-potential test should only apply to units that have not “begun

normal operations,” that is, according to the commenter, only newly constructed units that have

never been in operation. These commenters maintained that the court’s interpretation in the

WEPCO ruling, and EPA’s discussion of the WEPCO ruling in the preamble to the 1992

regulations incorporating those changes, correctly indicate the use of the actual-to-future-actual

methodology for determining whether an emission increase has occurred. Commenters (IV-D117, 143, 154, 157, 160) believed instead that non-utility sources (that is, sources other than

electric utility steam generating units), are allowed under current regulations to apply the actualto-actual test to determine emission increases.

Commenter IV-D-153 said that the proposal preamble overstates the extent to which

relevant case law supports the actual-to-potential approach as interpreted by EPA. The

commenter said the preamble to the final rule should address the problems associated with

requiring the use of the actual-to-potential test under current law. The commenter also believed

that the court would not uphold EPA’s promulgation of its interpretation of the current PSD

regulatory scheme as it has been applied to existing sources. According to the commenter, the

actual-to-potential approach cannot withstand scrutiny as a basis for evaluating whether a

significant net increase in actual emissions will result.

One commenter (IV-D-143) said while EPA “declines to create a presumption that every

emissions increase that follows a change in efficiency is inextricably linked to the efficiency

change,” (57 FR 32327), the Agency erroneously asserts that its decision to not adopt such a

presumption is limited to “change[s] in efficiency (at an electric utility generating unit).” The

comment suggests that the WEPCO preamble’s discussion of this issue makes it clear that the

rationale underlying EPA’s position applies equally to all sources.

Several commenters (IV-D-117, 143, 153, 154, 160) believed EPA’s interpretation of the

phrase “begun normal operations” was rejected by the Seventh Circuit in the WEPCO case. 

Commenter IV-D-117 noted that while EPA never defined “normal operations” in its regulations,

the D.C. Circuit Court has held that any unit already in operation has “begun normal operations.”
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Two commenters (IV-D-143, 154) characterized EPA’s interpretation as contrary to

Congressional intent. According to one commenter (IV-D-154), by adhering to its interpretation

of the phrase “begun normal operations,” and applying the actual-to-potential approach to

virtually all PC-CMOs, the Agency ignores Congress’ intent to capture under major NSR only

those changes causing significant actual increases in emissions from major sources.

Two commenters (IV-D-143, 160) stated that EPA’s current interpretation contradicts the

explanation of the phrase “begun normal operations” in the preamble to the WEPCO Rule. [57

FR 32312 (July 21, 1992)] In that rulemaking, the Agency specified that “[U]nder its current

regulations, EPA must consider the facts of each case and apply the actual-to-potential test only

where the change is sufficiently significant to support a finding that ‘normal operations’ have not

‘begun.’ The commenter suggests that, at least for changes that are ‘like-kind replacements,’

‘normal operations’ have begun, and the actual-to-potential test is impermissible.”

One commenter (IV-D-154) stated EPA’s presumption that most non-utility sources

undergoing physical or operational changes have not “begun normal operations” has led to the

inappropriate application of the actual-to-potential approach in virtually every case. The

commenter noted that the preamble emphasized that “EPA must consider the facts of each case

and apply the actual-to-potential test only where the change is sufficiently significant to support a

finding that ‘normal operations’ have not begun.” Moreover, EPA acknowledged that “[b]ecause

the ‘begun normal operations’ criterion is highly fact dependent and its application is inherently

case-by-case, it may be an uncertain indicator of what emissions test will be applied in a given

instance” (57 FR 32317). The commenter recommends that the preamble to the final rule discuss

these types of problems with requiring use of the actual-to-potential approach under current law. 

The commenter maintained that many States do not interpret the regulation in the unsupportable

manner that EPA appears to and do not require all existing units to base post-change emissions

on the unit’s PTE after the change. The commenter therefore believed that the Agency should

clarify that sources that have relied upon and complied with the explicit requirements of the NSR

regulations will not be subject to liability for violating the Agency’s inconsistent interpretation of

those regulations.

Two commenters (IV-D-105, 143) believed the actual-to-potential test should not apply

to like-kind replacements. One commenter (IV-D-143) specifically indicated that the WEPCO

court ruling regarding like-kind replacements should apply to non-utilities. The commenter

stated that the WEPCO preamble’s discussion of this issue makes it clear that the rationale

underlying EPA’s position applies equally to all sources. In describing the court’s ruling in

WEPCO, EPA appears to suggest that a “like-kind replacement” consists of the replacement of

particular pieces of a facility’s equipment with “new components of identical design and

function.” (61 FR 38255). By this the Agency is apparently attempting to place a restrictive gloss

on the meaning of “like-kind replacement.” The commenter believes that such a restriction is not

warranted. This is so because the court in WEPCO did not define “like-kind replacement” as

requiring that any replacement components be of “identical design and function.” Rather, the
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commenter asserts that the origin of the term was WEPCO’s own briefs, which described “likekind replacement” as meaning the substitution of new parts that perform the same-function as

worn or deteriorated parts at a facility without changing the type or character of the pollutants

emitted.” (Petitioner’s Initial Brief at 3 n.2) Citing the WEPCO decision, according to the

commenter, EPA has itself defined a “like-kind replacement” generally as one that “does not

change or alter” the design or nature of a facility.”

Another commenter (IV-D-105) did not cite WEPCO, but agreed that the actual-topotential test should never apply to like-kind replacements. The commenter (IV-D-105) stated

that the current actual-to-potential approach unfairly causes some like-kind replacements to

trigger NSR. In the case of a like-kind replacement, the emission factors and the PTE are the

same, so a replaced unit should not be subject to an actual-to-potential test.

Response:

We disagree with the commenters who claim that statute case law, and current

regulations do not adequately support the “actual-to-potential” test. We have set forth our legal

rationale for the existing regulations in various preambles and policy memoranda. The purpose

of our proposed rules was not to seek alteration of these interpretations, but to request comment

on how our approach for determining emissions increases might be improved. Therefore, we

consider comments addressing the “actual-to-potential” test to be outside the scope of this

rulemaking.

We do agree with some of the commenters that there are acceptable alternatives to the

“actual-to-potential” approach for certain units beyond just existing electric steam generating

units (EUSGUs). The CAA itself is silent on whether increases in emissions, for purposes of

determining whether a physical change or a change in the method of operation at an emissions

unit constitutes a modification, must be measured in terms of actual emissions, potential

emissions, or some other currency. Therefore, we have some discretion to determine the

appropriate test for determining whether a modification has occurred. In the NSPS program, we

determine whether there has been an “increase in any air pollutant emitted” by the source by

comparing hourly emission and the maximum-hourly-achievable emissions. EPA and the courts

have recognized, however, that the NSR programs and the NSPS programs have different goals,

and thus, we have utilized different emissions tests in the NSR programs. After considering the

recommendations of various commenters, and the desirability of adopting alternative

methodologies for other source categories, we have now established an applicability test based

on an “actual-to-projected-actual” applicability test for existing emissions units in general

(including replacement units and reconstructed units), and a different test for those existing units

Clean Unit status. For the construction of new emissions units, we continue to believe that the

test most appropriately applied to these units is the “actual-to-potential” test. See section 4.2.4

of this chapter for further discussion on our decision to shift from the “actual-to-potential” test
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to the “actual-to-projected-actual” test for all existing emissions units. Also, see chapter 9 of

this volume and chapter 5 of volume 2 for additional information about the new Clean Unit test. 

4.4 Actual-to-future-actual Test - General Comments

Comment:

4.4.1 Support Actual-to-future-actual Test

Numerous commenters (IV-D-9, 16, 28, 36, 39, 42, 45, 53, 56, 57, 62, 70, 72, 77, 79, 93,

97, 98, 108, 110, 112, 113, 117, 120, 121, 126, 127, 130, 136, 138, 139, 145, 146, 149, 150, 153,

163, 169, 170, 176; IV-G-2, 3, 4) generally supported use of the actual-to-future-actual test.

Many other commenters (IV-D-11, 14, 106, 123, 137, 142, 157, 160) offered qualified support,

however. Finally most of the commenters (IV-D-9, 28, 39, 42, 45, 53, 56, 57, 62, 70, 72, 77, 79,

98, 106, 108, 112, 117, 120, 121, 126, 127, 137, 138, 139, 142, 146, 149, 150, 153, 154, 157,

169, 170, 176; IV-G-3) specifically stated that the actual-to-future-actual methodology should be

extended to non-utilities. 

One commenter (IV-D-137) offered qualified support for the actual-to-future-actual

methodology. The commenter was concerned that the methodology would permit significant

increases in allowed emissions that are not subject to the technology review and ambient impact

review requirements of NSR. The commenter stated that State and local agencies will need to

invest much more resources to understand the likely future activity level for a non-utility

stationary source. The commenter concluded, however, that in the absence of a good argument

to do away with the actual-to-future-actual methodology, there is not a compelling reason to limit

its use to the utility industry. While there will be less assurance of the accuracy of the results of

future activity reviews, this, in and of itself, is not a good reason to preclude other industries

from using this provision.

Some commenters (IV-D-137, 142, 153, 157) said they could not support the actual-tofuture-actual methodology unless the demand growth exclusion was included for all sources. 

Some commenters (IV-D-137, 157) also said that 5-year tracking requirements were essential. 

Commenter IV-D-137 observed that if an emissions unit were determined to be ineligible for the

NSR exemption during the 5-year period (for example, increases in actual annual emissions were

caused by factors that did not meet the criteria of the demand growth review), the owner or

operator of the emissions unit would likely find that the cost of retrofit would be significantly

higher several years after the physical or operational change was made. The commenter

mentioned this as a key concern with providing an actual-to-future-actual methodology and one

of the reasons why the commenter gave only qualified support for the actual-to-future-actual

methodology.
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One commenter (IV-D-123) said that for electric utilities they supported the actual-tofuture-actual test as described in the WEPCO rule. 

One commenter (IV-D-11) suggested using the actual-to-future-actual test except where

the SIP is based on allowable emissions. The commenter believed that this would preclude

sources from trading emission reductions that were in the SIP.

One commenter (IV-D-106) offered qualified support for an actual-to-future-actual test. 

The commenter would support an actual-to-future-actual test only if accompanied by a weighted

12-month average of hours of operation of 50 percent or greater operating capacity as a baseline. 

The commenter explained why including hours of operating with production capacity below 50

percent would result in an unreasonably low actual emissions baseline and unfairly restrict

operations. The commenter requested that EPA propose their baseline methodology for

comment along with the actual-to-future-actual test.

One commenter (IV-D-14) supported using the actual-to-future-actual test only for

utilities, recognizing that utilities had the authority to use the test. Another commenter (IV-D142) said even if EPA concludes that the actual-to-future actual test is inappropriate for all source

categories, it should be retained for the electric utility industry. This methodology is particularly

appropriate for electric utility units, which are required to retain accurate records of emission and

utilization pursuant to other programs and other authorities. One commenter (IV-D-123)

preferred that EPA retain the current regulations for utilities.

The commenters who supported the actual-to-future-actual methodology gave various

reasons for their support.

Several commenters (IV-D-9, 93, 97, 112) stated that this methodology is more accurate

and realistic than the existing actual-to-potential method. One commenter (IV-D-97) pointed

out that the test appropriately focuses limited facility and State resources on changes that are

likely to have a significant impact on the environment, and where NSR permitting can result in

an environmental benefit.

One commenters (IV-D-149) stated that the actual-to-future-actual test is a rational

accounting method because it uses the same basis for baseline emissions and post-change

emissions. Three commenters (IV-D-33, 87, 160), who preferred a potential-to-potential test but

would support the actual-to-future-actual as a second option, agreed. One commenter (IV-D-28)

characterized it as an entirely reasonable means of determining the effects of a major

modification. According to this commenter, it appropriately allows for environmental control

and other modifications, pollution control, and pollution prevention projects.

One commenter (IV-D-108) supported the actual-to-future-actual test because without it,

even physical changes that reduce a unit’s emissions rate could trigger a net emissions increase if
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the unit was not previously used at full capacity, and if post-change emissions are calculated at

full utilization rates.

One commenter (IV-D-170) clarified that allowables are poor indicators of actual

emissions. At most compressor stations, engines or turbines sufficient to meet peak day demand

for transmission and storage are installed. That is, sufficient horsepower is installed to handle

the coldest day during the winter heating season and storage requirements during the summer

months. Consequently, this equipment is underutilized most of the year. Another commenter

(IV-D-16) stated that using PTE rather than actual emissions to determine increases in emissions

would be unreasonable for the reasons shared by EPA at 61 FR 38268. According to this

commenter, reliance on paper emissions in determining whether sources have undertaken major

modifications could result in grievous emission increases. The commenter commended EPA

“for its emphasis on the real world.”

One commenter (IV-D-57) noted that the actual-to-future-actual test would accommodate

the printing industry. This commenter suggests that , unlike many industries where there is a

simple relationship between operational practices and air emissions (such that the PTE can be

estimated in a straight-forward manner), in the printing industry potential emissions are difficult

to determine because the theoretical boundaries on emissions have no relationship to realistic

practices. According to the comments, the current use of PTE estimates is more difficult for the

printing industry than the actual-to-future-actual methodology would be. The commenter

recommends that EPA allow application of the actual-to-future-actual methodology to the

addition or replacement of a printing press or other equipment at a printing facility such as an

automatic blanket washer.

One commenter (IV-D-139) stated that the actual-to-future-actual test is more appropriate

to research facilities where PTE is especially difficult to predict because research is a highly

changeable activity. Should the actual-to-future-actual methodology not be adopted universally,

the commenter requested that it be made specifically applicable to research facilities.

4.4.2 Oppose Actual-to-future-actual Test

Many commenters (IV-D-14, 20, 47, 51, 52, 61, 81, 105, 109, 115, 152, 172, 191; IV-G13) opposed using the actual-to-future-actual test.

Two commenters (IV-D-109, 152) opposed the actual-to-future-actual test because it

would allow emission increases that would not be allowed under the actual-to-potential test. One

commenter (IV-D-152) stated that EPA should require sources that do not operate 8,760 hours a

year at 100 percent capacity to commit to that lower level as an enforceable limit on emissions. 

According to this commenter, to simply allow an exemption based on a claim that a source’s

future emissions will not increase above some level, and to provide no mechanism for holding

the source to that claim, is little more than a fraud on the public. The commenter stated that the
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significant negative impacts of the future-actual to past-actual comparison would outweigh some

of the modest benefits that it provides. Another commenter (IV-D-109) stated that the test would

permit significant increases in allowed emissions that are not subject to the technology review

and ambient impact review requirements of NSR. 

Several commenters (IV-D-14, 20, 52) objected to any provisions that would allow

retrospective determination of NSR applicability, such as might occur if tracking shows that

post-change emissions later increase. One commenter (IV-D-20) stated that neither agency

reviewers nor the applicants have the authority for activities that are not included in the

application, or for a scope of operation exceeding the permitted levels. The commenter

suggested that an applicant whose plans change should expect additional agency review before

permission is granted. According to the commenter, the fact that demand grows beyond

projections should not eliminate the need for impacts analysis and compliance review. The

commenter recommends that, if an operator substantially changes the process, the operator must

recognize that the reviewing authority is obligated to review the compliance status of the new

activity. 

One commenter (IV-D-52) stated that if the actual-to-future-actual methodology were

implemented, the Agency would need to make a difficult decision about whether an exceedance

was due to a modification. According to the commenter, typically, this decision is hampered by

economic and political implications, which may outweigh the environmental factors. The

commenter also opposed the actual-to-future-actual methodology because it is wasteful to apply

the proper controls after the initial modification. The commenter suggests the total amount of

permitting time needed (combined permitting time for the original permitting and the backwardslooking analysis) will exceed that needed for a normal NSR permit; the cost to retrofit a

technology will exceed the cost of installing the controls at the time of modification or

installation; and during the period in which controls were not applied, additional pollution

occurs.

One commenter (IV-D-172) noted that if a facility can project future-actual emissions to

show that they will not exceed significant levels, and the facility is willing to submit 5 to 10

years of future operational records to verify their projections, why aren’t they willing to

incorporate those projections into the permit to begin with, thus removing the need for a demand

growth exemption? According to the commenter, the only foreseeable benefit to the new

methodology seems to be that it allows facilities to factor out actual emission increases

attributable to demand growth, which is not allowed under current provisions. The commenter

suggests that the cost of this flexibility is: (1) to force State agencies into the unpopular position

of taking enforcement action, after retrospectively evaluating permit actions; and (2) to require

costly air pollution control retrofits.

One commenter (IV-D-14) opposed the actual-to-future-actual methodology for several

reasons. First, it is impossible to predict future emissions. Even for a simple process, future
4 - 1996 Comments on Actual-to-future-actual Methodology

I-4-16

emissions are difficult to predict and are influenced by natural variations and process upsets. 

Future emissions must also consider future utilization. The commenter, a State agency, noted

that they have often been told that sources cannot make any estimate of projected capacity

utilization. Furthermore, according to the agency, even if future emissions are predictable, it

would be impossible to determine whether an emission increase was caused by the modification

or by something else. 

Several commenters (IV-D-20, 47, 52, 105, 109, 172, 191) objected to the actual-tofuture-actual methodology because they viewed it as needlessly complex and likely to create

burdens on the reviewing authority. One commenter (IV-D-47) said under the proposed actualto-future-actual methodology, a source planning a modification would have to predict its future

capacity and actual emissions resulting from the modification. This, according to the

commenter, would be difficult for many source categories and result in the generation and

analysis of extensive information unrelated to air quality protection. Another commenter (IV-D52) stated that a future-actual to past-actual comparison would require difficult retrospective

judgments and be too hard to implement. One commenter (IV-D-105) conceded that although an

actual-to-future-actual approach has merit, it does not reduce the complexity and recordkeeping

burdens on the regulated community. In addition, it is often difficult to calculate past actual

emissions, particularly when equipment is operating at different loads throughout the year. The

commenter suggests that emissions of CO are especially susceptible to load variation, and

calculation of CO emissions would entail an analysis of time spent at various operating loads. 

Additionally, emission factors can vary by machine type and size, and relying on AP-42 factors is

not an accurate way of calculating actual emissions. The commenter also questioned how

emissions would be tracked under an actual-to-future-actual accounting. One commenter (IV-D191) stated that EPA needs to provide clear guidance on a methodology for projecting futureactual emissions.

One commenter (IV-D-81) stated that the actual-to-future-actual test tends to penalize

sources for operating existing equipment in the best manner to control emissions, and encourages

sources to operate their equipment as close to the allowable limits as possible. According to the

commenter, this method discourages modernization of equipment and encourages the use of

antiquated equipment with lower productivity and less efficiency per unit of emissions. It also

reduces the operational flexibility of a plant, restricting the ability to implement minor changes. 

The commenter believes that these effects oppose the operational flexibility concepts of the

CAAA.

One commenter (IV-D-47) observed that because the actual-to-future-actual test does not

apply to replacements or new source construction, its potential use is very limited. The

commenter also believed that PALs offered a more viable solution than the actual-to-futureactual methodology for streamlining the process for modifications. The commenter stated that

the potential benefit to the regulatory community of the actual-to-future-actual methodology can

be accomplished more efficiently and effectively within the context of a PAL.
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Response:

Some of the comments in this section have already been addressed in the responses to

comments on retaining the actual-to-potential test in Section 4.2, above. Comments involving

the calculation of baseline emissions have been addressed in Chapters 2 and 3. The responses

below address those comments not already specifically discussed.

We disagree with those commenters who asserted that some modification projects that

would have triggered major NSR as major modifications under the “actual-to-potential” test

will not trigger review under the new “actual-to-projected-actual” test. As explained previously

in section 4.2, the essential difference between the two methods is that under the “actual-topotential” approach, the projection of actual emissions may be set forth in a minor NSR permit

or other enforceable emissions-capping mechanism before construction, whereas the “actual-toprojected-actual” approach relies on emissions tracking and recordkeeping to insure that

projected actual emissions are not exceeded (unless the company obtains a major NSR permit). 

The end result is that State and local reviewing authorities now have the option of focusing their

limited resources on those types of changes that are going to result in significant increases in

actual emissions to the environment. Use of the new test will also remove the perceived

disincentive claimed by many industry commenters for sources to make the types of changes that

improve operating efficiency, implement pollution prevention projects, and result in other

environmentally beneficial changes. 

We also note that the current rules do not require every emissions increase to undergo

major NSR as some commenters seem to assume. For example, under the definition of

“modification,” emissions increases resulting from increases in production and increases in the

hours of operation at an emissions unit do not constitute modifications that are subject to review

(other than increases associated with construction-related activities at the unit). The new rules

likewise allow sources to exclude these types of emissions increases when calculating the

emissions increase resulting from a physical or operational change from an existing emissions

unit as long as those increases are not related to the physical or operational change. 

We disagree that the actual-to-projected-actual test will make it more difficult to

accurately identify those changes at a unit that will result in actual emissions increases. The

requirement that a physical or operational change cause an emissions increase in order to

constitute a modification is implicit in the CAA itself, has always been an explicit requirement of

EPA regulations, and is not being changed in the new rules. In addition, as explained

previously, the 5-year tracking provision in the final rule will assure that any subsequent

emissions increase that exceeds the projected level (insofar as it represents a significant

emissions increase) must be reported to the reviewing agency and then appropriate review will

take place. Likewise, the commenter's statement that the actual-to-projected-actual test will

allow emissions increases to escape ambient impact review where they would not under existing

rules is not correct, because the new test does not change the basic calculus for determining
4 - 1996 Comments on Actual-to-future-actual Methodology

I-4-18

major NSR applicability, but only how that calculus is enforced. In addition, physical or

operational changes that do not, under either the existing rules or the new rules, undergo major

NSR are often subject to minor NSR requirements. (Examples include upgrades to a power

boiler at an industrial plant where the owner projects that there will be less than a significant

increase in emissions.) EPA’s minor source regulations require State minor NSR programs to

insure that air quality analyses are conducted regarding changes at existing sources as may be

necessary to insure that they do not interfere with attainment or maintenance of the NAAQS 

Also, emissions increases at existing sources remain subject to review by the reviewing authority

under a periodic assessment of the PSD increments or in response to information that an

applicable increment is being violated. See 40 CFR 51.166(a)(4). For such analyses, the new

rules provide that the current procedures for measuring the effects of actual emissions increases

(using the current definition of “actual emissions) would continue to apply. The new rules

provide that the new “actual-to-projected-actual” test be used only for applicability purposes to

determine whether a project involving one or more existing emissions units at a major stationary

source will result in a significant emissions increase

We agree with the commenters who believe retrospective NSR applicability

determinations would be problematic. It is our intent under the new rules that the need for such

retroactive determinations would be minimal. The main purpose of the annual tracking

requirements is to maintain adequate information to ascertain whether the source's initial

estimate of post-change actual emissions is accurate, but such a tracking requirement should

also promote careful and accurate projections so that sources will not have to face the risk of

retroactive NSR applicability and possible enforcement actions. The new rules also contain

procedures enabling the reviewing authority to review a source’s post-change operating records

and institute further action as necessary if either the resulting post-change annual emissions

increase or the emissions projection is significant.

We disagree that the level of emissions used to determine an emissions unit's post-change

actual emissions should automatically be an enforceable permit condition. The purpose of the

“actual-to-projected-actual” applicability test is to determine whether a physical or operational

change at an existing emissions unit will result in a major modification of the source without

requiring up-front limitations on post-change emissions. Such limitations would become an

administrative burden on the reviewing authorities responsible for their issuance and would also 

limit the ability of the source to respond to economic conditions by making the types of

production changes that are not considered to be physical or operational changes. Thus, it

would defeat the central purpose of the new test to require the projection of the unit’s postchange actual emissions rate that is part of this test to represent a new allowable emissions rate

for the source. 

We agree with the commenters who requested inclusion of the demand growth exclusion

for non-utility sources. This exclusion has been retained in the final rule. We have concluded

that this provision is consistent with both the statute and the existing regulations, which require
4 - 1996 Comments on Actual-to-future-actual Methodology

I-4-19

a causal link between the proposed change and any post-change increase in emissions, that is,

"...any physical change or change in the method of operation that would result in a significant

net emissions increase..." [emphasis added]. See, for example, existing §52.21(b)(2)(i). While in

a very few cases it may be difficult to determine whether a particular emissions increase is

directly attributable to a physical or operational change that is made to an emissions unit, it

would be inappropriate to eliminate the availability of the exclusion to everyone in order to

address this concern. Consequently, the final rule follows the 1996 NPRM in that when a

projected increase in equipment utilization is in response to a factor such as growth in market

demand, a source may subtract the emissions increases from the unit's post-change actual

emissions if the source can show that the unit could have achieved the necessary level of

utilization during the consecutive 24-month period it selected to establish the baseline actual

emissions, and the increase is unrelated to the physical or operational change(s) made to the

unit. See, for example, new §52.21(b)(41)(ii)(c). We emphasize that demand growth can only be

excluded to the extent that the associated emissions increase is not related to the physical or

operational change. Thus, even if the operation of an emissions unit to meet a particular level of

demand could have been accomplished during the representative baseline period, but it can be

shown that the increase is related to the changes made to the unit, then the emissions increases

resulting from the increased operation must be attributed to the modification project, and cannot

be subtracted from the projection of post-change actual emissions. 

With regard to the commenter who claimed that the actual-to-projected-actual test would

encourage sources to operate as close as possible to their emission limits. We believe there is no

more incentive under the “actual-to-projected-actual” test than there is under the “actual-topotential” test to operate at a higher emission rate. 

Concerning the comment on data availability for the 10-year look back period, the new

rules limit the full use of the 10-year look back period based on the accuracy and completeness

of a source’s records of emissions and capacity utilization for any emissions unit that undergoes

a physical or operational change. See, for example, new §52.21(b)(48)(f). As with all emissions

calculations, accuracy and completeness are central elements for applicability determinations. 

In many cases, sources presently maintain accurate records on emissions and operations for

only 5 years. Thus we think it is appropriate to limit use of the full 10-year look back period

when a source does not have data for this time period. However, this limitation should be

alleviated over time as sources begin to maintain records for longer periods to accommodate the

10-year look back opportunity. The subject of data quality and availability for the 10-year look

back period is addressed more fully in Chapter 2.
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4.5 Actual-to-future-actual Test - Extend to Non-utilities

Comment:

4.5.1 Support extending to non-utilities

Many commenters (IV-D-9, 28, 39, 42, 45, 53, 56, 57, 62, 70, 72, 77, 79, 93, 98, 106,

108, 112, 117, 119, 120, 121, 123, 126, 127, 136, 138, 139, 140, 142, 143, 146, 147, 149, 150,

153, 154, 157, 160, 169, 170, 176; IV-G-3) urged EPA to extend the use of the actual-to-actualfuture methodology to all source categories.

Several commenters (IV-D-77, 106, 117, 119, 123, 136, 142, 143, 147, 157, 160, 169)

argued that the WEPCO rule already allows any unit that has begun normal operations (that is,

any existing emission unit) to use the actual-to-future-actual methodology. These commenters

maintained that the regulations and the applicable case law require use of an actual-to-futureactual approach when the source has “begun normal operations.” Another commenter (IV-D117) stated that EPA should emphasize in the preamble to its final rulemaking the actual-tofuture-actual methodology revision does not represent an entirely new rule of law. Rather,

according to the commenter, the revision simply codifies the court’s interpretation of existing

law in the WEPCO opinion. Two of the commenters (IV-D-147, 160) noted the preamble to the

1992 WEPCO rule (57 FR 32317) and recent EPA policy memos as supporting the application of

actual-to-future-actual test to all types of sources.

One commenter (IV-D-142) stated that EPA must always use the actual-to-future-actual

test for both electric utility sources and non-electric utility sources that have begun normal

operations. The commenter suggests that, in the case of electric utility sources the determination

of whether normal operations have begun is relatively straightforward: the “past-actual/futureactual” methodology applies to all physical or operational changes, except those that constitute

an addition of a new unit or constitute a replacement of an existing unit. The commenter

recommends that, in the case of non-electric utility sources, the determination of when normal

operations have begun is a case-by-case one, although for those changes that involve like-kind

replacements, the actual-to-actual approach applies. One commenter (IV-D-119) noted that the

actual-to-future-actual test should only applied to like-kind replacements.

One commenter (IV-D-42) stated that gas utilities should be able to use the WEPCO rule

because they are generally similar to coal-fired utilities. In areas where emission data are

plentiful, accurate, and readily available, post-modification tracking of emissions for the requisite

5 years after the modification would be an easy task. In the preamble to the NSR reform

proposal, EPA recognizes that utilities are subject to control by Public Utility Commissions but

makes no distinction between gas and electric utilities. The gas utility business also has no

control over demand growth in its service territories and should be allowed to benefit from

application of the WEPCO rule.
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Three commenters (IV-D-72, 93, 140) stated that it is not equitable to have one

applicability test for utilities and another applicability test for other industries. One commenter

(IV-D-140) suggested that this is particularly true in industries where debottlenecking projects

often trigger major NSR due to increased power demands. Another commenter (IV-D-72) noted

that the factors EPA cites for possibly confining the methodology to electric utilities are

irrelevant.

Two commenters (IV-D-137; IV-G-2) gave qualified support to extending the actual-tofuture-actual methodology to non-utility sources but also recognized that because non-utility

sources are not subject to the level of oversight experienced by utilities, State and local agencies

will need to invest more resources to understand the future activity level for a source that uses

this approach. The commenter notes that there will be less certainty in the results of this review;

however, this is not a sufficient reason to preclude other industries from using the methodology. 

Commenter IV-D-137 added that in the absence of a good argument to eliminate the actual-tofuture-actual methodology, there is no a compelling reason to limit its use to the utility industry.

4.5.2 Opposed extending to non-utilities

Some commenters (IV-D-109, 125, 393; IV-G-07) opposed extending the actual-tofuture-actual test to non-utilities. They expressed concern that non-utility sources may fail to

properly and safely use the actual-to-projected-actual test. One commenter (IV-D-125) stated

that electric utilities are unique because their production and emissions may reliably be forecast. 

Commenters (IV-D-109, 125; IV-G-07) agreed that few sources share this characteristic and the

use of the WEPCO precedent should be applied only to electric utilities. Commenter IV-D-109

added that the proposal, whereby historical actual emissions are compared to projected actual

emissions, would permit significant increases in allowed emissions which are not subject to

NSR. According to this commenter, the entire proposed methodology is needlessly complex and

should be eliminated. 

Response:

As explained above in the response to comments in Section 4.2, we have always

maintained that the decision in the WEPCO case requiring an actual-to-future-actual

applicability test (now the actual-to-projected-actual test) for modifications to existing EUSGUs

could be extended to non-utility sources. We did propose such an extension in the 1996 NPRM

(61 FR 38250) and requested further comments in the 1998 NOA (63 FR 39857). Most of the

comments listed here have already been addressed in our response to comments in sections 4.2 –

4.4, and the reader is referred to those sections for more detailed responses.

With regard to the commenter’s claim that the new “actual-to-projected-actual” method

is needlessly complex, we would note that the existing “actual-to-potential” method also allows

an applicant alternatives that are similar to the ones under the new method for determining
4 - 1996 Comments on Actual-to-future-actual Methodology

I-4-22

baseline emissions and the post-change actual emissions. Under the existing method, sources

may seek to use an historical operating rate other than the 2 years immediately preceding the

change to establish baseline emissions. This method has been widely criticized as being

complex, burdensome and time consuming. The new method would eliminate most of the

problems associated with the existing approach. In addition, the new method requires the

baseline emissions to be adjusted for current emissions limitations, whereby the existing method

does not. With respect to post-change emissions, the existing method allows a source to predict

the post-change actual emissions increase in lieu of accepting the increase at allowable levels. 

However, the existing method requires the source to accept an emissions cap at the predicted

actual level of increase, thereby prohibiting the source from making other subsequent production

changes at the source that would otherwise be allowed in the absence of a major NSR permit. 

Moreover, if the source determines, during the 5 or 10 years of required recordkeeping, that the

changes made to a unit result in greater emissions increases than originally calculated, and such

increase results in a significant emissions increase, the source should submit a report to the

reviewing authority to explain the discrepancy. We believe the new method will eliminate the

confusion and burdens associated with the existing method and will provide sources with greater

flexibility to make changes that will improve efficiency without resulting in significant emissions

increases. If, however, individual source owners prefer to instead obtain an enforceable cap on

potential emissions following the change, as under the existing regulations, this remains an

option.

We believe that these added recordkeeping and reporting measures will provide the

information necessary for reviewing authorities to assure that such changes are made consistent

with the Clean Air Act requirements. Altogether, we believe that today's regulatory amendments

focus on the types of changes occurring at existing emissions units that are more likely to result

in significant contributions to air pollution. The amendments will also require greater

accountability on the source’s part to retain information from which the reviewing authority can

determine the nature of any changes that are made at the facility as well as the actual emissions

increases that are associated with those changes.

4.6 Eliminate Actual-to-future-actual for Utilities

Comment:

Several commenters (IV-D-28, 123, 128, 143, 145, 169; IV-G-3) opposed eliminating the

actual-to-future-actual approach for electric utility sources. Six commenters (IV-D-28, 123, 128,

143, 145; IV-G-3) stated that there is no basis for eliminating the actual-to-future-actual approach

for electric utility sources. According to these commenters, to do so would signify a retreat from

the WEPCO ruling and a significant limitation on rules that have been in place since the NSR

program was first promulgated. One commenter (IV-D-145) stated that if EPA is proposing to

eliminate the actual-to-actual methodology, then it is proposing a fundamental and unprecedented
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change in the way the modification rules are applied, a change that can only be accomplished

through rulemaking that includes public notice and opportunity for comment.

One commenter (IV-D-137) offered qualified support for retaining the actual-to-actual

test for utilities. The commenter (IV-D-137) endorsed retaining the actual-to-future-actual test

for utility units based on the observation that a utility unit (which makes a physical or operational

change that does not increase its hourly emission rate and would not wish to be restricted to the

actual past operating schedule) should not be required to meet the control technology

requirements of NSR. According to the commenter, current Federal regulations do not generally

require the application of NSR to existing emissions units that increase their activity level. The

commenter suggests that the demand-growth provision requirements and 5- to10-year reporting

put a practical limitation on the use of this provision. Notwithstanding a future increase in

activity level due to demand growth and an increase in annual emissions, the emissions unit must

be able to demonstrate that: (1) the existing unit would have had an increase in activity level

anyway; and (2) the existing unit could have operated at the increased activity level anyway.

One commenter (IV-D-47) believed the actual-to-future-actual methodology should be

eliminated for utilities. The commenter believed that the factual basis and safeguards in the

WEPCO rule for utilities had been significantly altered as a result of new rules at the State and

federal levels promoting wholesale competition in the public utility industry through open access. 

Subsequent to the WEPCO rule, the Federal Energy Regulatory Commission (FERC) has

significantly modified the role of State public utility commissions through promulgation of the

regulations related to “Promoting Wholesale Competition through Open Access NonDiscriminatory Transmission Services by Public Utilities; Recovery of Stranded Costs by Public

Utilities and Transmitting Utilities.” The commenter noted that the Pennsylvania Public Utility

Commission and the Pennsylvania legislature are evaluating the promotion of wholesale

competition through open access at the State level. These changes will increase competition,

decrease regulation, and undermine the predicate for the original WEPCO rulemaking,

Response:

In the 1996 NPRM, we specifically requested comment on whether the actual-to-futureactual test should be eliminated completely, including the current provisions for EUSGUs (see

61 FR 38267). After careful consideration of all the comments received, we decided to retain

the test for EUSGUs essentially as provided in the WEPCO rules, except that EUSGUs will now

use the same “actual-to-projected-actual” test that all other existing emissions units will use. 

Moreover, we believe that EUSGUs will continue to have adequate emission projection and

tracking capabilities, regardless of deregulation of some aspects of public utilities. EUSGUs are

still required to meet rigorous monitoring requirements under title IV as well. 
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4.7 Enforcing Actual-to-future-actual Methodology

Comment:

Several commenters (IV-D-46, 72, 73, 74, 88, 147, 160; IV-G-7) were concerned that it

would be difficult to make compliance determinations, control technology determinations, and

enforce NSR 5 years out if the 5-year tracking showed the future-actual emissions were

exceeded. 

Seven commenters (IV-D- 46, 72, 73, 74, 88, 147, 160) requested that EPA describe in

more detail how NSR would be applied to a source that exceeds its future-actual emission levels

during the required 5-year tracking period. The commenter recommends that the final rule

clarify the enforcement ramifications associated with an inaccurate projection of future-actuals. 

In particular, the commenter suggests that the final rule provide that a source that is in error in

predicting its future-actual emissions but acts in good faith will not incur civil or criminal

penalties for unanticipated emission increases. 

One commenter (IV-D-160) stated that the final rule should specify that if a significant 

emission increase unrelated to demand growth occurs, a source may install what the relevant

BACT/LAER would have been at the time the physical change or change in method of operation

occurred. One commenter (IV-D-46) believed that if the future actual emissions level was

exceeded, the source should have an opportunity to mitigate the increase without penalty by

installing control technology or offsetting emissions. According to the commenter, the reviewing

authority is the one who establishes the projected representative actual emissions, so the source

should not be subject to enforcement action for exceeding the future actual emissions if they have

been working in good faith with the agency. Another commenter (IV-D-72) also believed that if

the future actual emissions level was exceeded, the source should not be subject to enforcement

action. Instead, it should have a 6-month period to lower emissions. 

Another commenter (IV-D-62) believed a source should not be unfairly penalized because

it underestimated its future-actual emissions; it should still be entitled to increase its emissions

within the NSR significance levels without triggering retroactive NSR. According to this

commenter, State permit compliance issues may develop independently of the NSR issue if

actual emissions exceed permitted levels. Four commenters (IV-D-39, 73, 74, 88) urged EPA to

clarify that reviewing authorities should not require that the estimated future-actual emissions

become the de facto or normal permitted limits.

On the other hand, several commenters (IV-D-14, 47, 82, 137, 152) stated that if the

actual-to-future-actual methodology was adopted, there should be an enforceable limitation on

the future emissions. These commenters generally believed that if a source maintains that its

actual emissions in the future will not exceed some level, then the source should be willing to

commit to that level as an enforceable limit on its emissions. One commenter (IV-D-152) stated
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that it would be worth exploring ways to introduce flexibility to account for industrial and

company production and market cycles in establishing an actual-to-enforceable-future-actuals

test. Two commenters (IV-D-82, 137) stated that the NSR program should require new or

modified sources to have legally enforceable limits on their future emissions that are compatible

with applicable SIPs and are analyzed at their future allowable rate. Another commenter (IV-D14) suggested that instead of finding that the applicability call for PSD was incorrect, the actual

emissions should be set as an enforceable limit, or that the PTE should be used as the enforceable

limit. The tests should involve future PTE, not future-actual emissions.

One commenter (IV-G-13) opposed the actual-to-future-actual methodology because it

did not protect against emission increases. If there was an emission increase at the end of 5 years

the environmental damage would already have been done. The commenter asked how the

applicable agency would go back and remove from nearby residents, wildlife, and the

environment those pollutants that would not have been released if the applicable agency had

originally applied PSD, NSR, and BACT? The commenter believed EPA is de-emphasizing the

cost to human health and the environment. The commenter was also concerned that the emission

records were only one piece of information needed to determine compliance. The commenter

asked what would happen if the facility has sufficient records showing non-compliance or if

continuous monitors show non-compliance, but a stack test shows compliance? The commenter

also suggested that if EPA allows the WEPCO regulations to apply to all industries, EPA should

require that facilities submit all records, not just those showing compliance. The commenter was

further concerned that there is no opportunity for public comment if a company fails to provide

sufficient records or demonstrate compliance under the actual-to-future-actual methodology.

Response:

We believe that the final rules adequately describes how NSR would be applied to a

source that exceeds its post-change actual emissions level during the 5- (or 10-) year tracking

period. If the post-change annual emissions rate of a pollutant from the emissions unit(s) that is

modified results in a significant emissions increase at the emissions unit(s), and the emissions

rate is inconsistent with the pre-change projection, then the source should report this to the

reviewing authority. If this increase is related to the physical or operational change, then the

source is required to comply with the major NSR requirements, including an evaluation of

BACT, and an analysis of air quality impacts to ensure that the major modification does not

cause or contribute to a violation of any NAAQS or PSD increments. Moreover, the source may

be subject to an enforcement action for being in violation of the major NSR requirements.

When, according to the source’s best calculations, the physical or operational changes

that are being planned to one or more existing emissions units at a major stationary source will

not constitute a major modification, and there is a reasonable possibility that the project may

result in a significant emissions increase, the source must document its findings (including a

description of the project, an identification of emissions units whose emissions could increase as
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a result of the project, the baseline actual emissions for each emissions unit, the projection of

post-change actual emissions before adjustments, the adjusted post-change emissions (future

actual emissions or potential emissions) and the reason for the adjustment (for example, increase

in product demand unrelated to the change), and, if the projected emissions increase is

significant, the netting calculations using offsetting emission reductions elsewhere at the major

stationary source to avoid being a major modification).

In addition, the final rules require a source to maintain post-change emissions data for

all existing emissions units that are changed when there is a reasonable possibility that the

project may result in a significant emissions increase. The source must maintain this

information and compare it to the baseline actual emissions for at least 5 years. If the project

will increase the design capacity or potential to emit of any existing emissions unit, the source

must maintain and compare these data for that emissions unit to its baseline actual emissions for

10 years. The information that must be maintained may include continuous emissions

monitoring data, operational levels, fuel usage data, source test results, or any other readily

available information of sufficient accuracy for the purpose of determining an emissions unit's

post-change emissions. 

As mentioned above, a source must report to the reviewing authority any increase in its

post-change emissions rate when that rate exceeds the baseline actual emissions by a significant

amount and is inconsistent with the original projections. See, for example, new §52.21(r)(6)(iii). 

In addition to the reporting requirements discussed above, a source is also obligated to

ensure that the necessary emissions information is available for examination upon request by the

reviewing authority. A source must also be prepared to make this information available to the

general public upon their request pursuant to existing State procedures meeting the requirements

of §70.4(b)(3)(viii) of the title V permit program, which requires that the reviewing authority has

legal authority to "make available to the public any permit application, compliance plan, permit,

and monitoring and compliance certification report pursuant to section 503(e) of the Act, except

for information entitled to confidential treatment pursuant to section 114(c) of the Act."

There are no provisions in the final rules to protect from civil or criminal penalties the

owner or operator of a source that constructs a “major modification” without obtaining a major

NSR permit, nor is there a provision to allow a certain amount of time to come into compliance

as suggested by some commenters. We believe the post-change actual emission projection must

be validated at all times to adequately protect and safeguard the environment and human health. 

In response to the commenter who was concerned about a significant emissions increase after

the 5-year period, we re-emphasize that even when a source’s projections of post-change

emissions indicate that there will not be a major modification, when there is a reasonable

possibility that the project may result in a significant emissions increase, the source must

maintain annual records of actual emissions and report to the State when the post-change
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annual emissions rate (1) exceed the baseline emissions by a significant amount, and (2) is

inconsistent with the original projections. We believe this procedure sufficiently minimizes any

potential harm from excess emissions without overburdening the reviewing authority or the

source with excessive recordkeeping and reporting.

We do not agree with the commenters who suggested that the actual-to-projected-actual

methodology must be accompanied by an enforceable limitation on post-change emissions. 

Although we proposed this in our 1998 NOA, we have decided not to adopt it for the reasons we

describe in Chapter 5.

4.8 Other Comments on Actual-to-future-actual Methodology

Comment:

Several commenters (IV-D-46, 62, 67, 72, 106, 123, 136, 153, 160, IV-G-4) believed that

the actual-to-future-actual methodology should only apply if the emission increase is significant

and that this should be clarified in the final rule. Commenter IV-D-106 requested that the words

“significant net” should be inserted before the phrase “emissions increase” in 40 CFR sections

51.165(a)(1)(xii)(F), 51.166(b)(21)(vi), 52.21(b)(21)(vi), and 52.24(f) to clarify that the

significance thresholds are to be used with the actual-to-future-actual methodology. One

commenter (IV-D-160) stated that by using the phrase “emissions increase” rather than

“significant net emissions increase,” the proposed regulatory language implementing the futureactual test inappropriately suggests that a source could be subject to NSR if any increase in actual

emissions occurs in the 5 years after a PC-CMO, regardless of whether the increase exceeds the

significance threshold, or whether there are contemporaneous decreases to net-out increases. 

According to the commenter, this approach would contradict established policy as well as the

existing regulations, which define a “major modification” as any PC-CMO that would result in a

significant net emissions increase of any pollutant subject to regulation under the Act. The

commenter recommends that EPA revise the proposed rule to clarify that under the actual-tofuture-actual test a particular PC-CMO will not be subject to NSR requirements, so long as the

source maintains records during the 5-year tracking period demonstrating that the PC-CMO did

not result in a significant net emissions increase. One commenter (IV-D-62) suggested that only

changes that cause future-actual emissions to exceed permitted emissions by more than the

applicable significance level should be subject to NSR. 

Several commenters (IV-D-73, 74, 88, 97, 146, 157) urged EPA to extend the actual-tofuture-actual methodology to new sources, replacements, and/or reconstructions. Two

commenters (IV-D-97, 157) disagreed with EPA’s decision to allow only modifying facilities,

rather than constructing facilities, to take advantage of many of the changes in the proposed rule

that provide additional flexibility including calculating the baseline based on an actual-to-actual

comparison. These commenters believe that new sources should also be given the opportunity to

project their future-actual emissions. They recommended that if EPA continues to treat
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construction differently than modification, it should clarify in the final rule the difference

between the modification and construction of a new unit at an existing source.

Four commenters (IV-D-73, 74, 88, 146) stated that the proposed actual-to-future-actual

test should apply to units that qualify as major modifications because of replacement or

reconstruction. EPA should clarify that replacement or reconstruction of an emissions unit with a

similar unit that does not result in a significant net emissions increase (that is, a replacement-inkind) is not a major modification and therefore not subject to NSR. Another commenter (IV-D146) agreed that EPA should extend the use of the actual-to-future-actual comparison to

replacement or reconstruction since there is no practical difference between this situation and one

in which a unit is merely modified. In both cases an adequate operating history exists and the

unit that is reconstructed or replaced has “begun normal operations” to the same extent that a

modified unit has.

Two commenters (IV-D-106, 143) stated that the Agency should reiterate that for electric

utility sources, the actual-to-future-actual methodology is the proper approach to use for sources

that have begun normal operations, and that (apart from the construction of a new unit or the

replacement of an existing unit) there is no physical or operational change that will transform an

existing unit into a unit that has not begun normal operations.

Response:

In response to the commenters who found our proposed descriptions of the actual-tofuture-actual methodology (now called the “actual-to-projected-actual”) confusing regarding

how a significant net emissions increase is determined, we have made clarifying changes to our

regulations. In the final rules we are including a new section that outlines how a major

modification is determined under the various major NSR applicability options and clarifies

where to find the provisions in our revised rules. For each applicability option, we have

described in our new rules how a major modification is determined in detail. You will find this

new applicability "roadmap" in §51.165(a)(2), §51.166(a)(7), and §52.21(a)(2).

We have revised the definition of “major modification” to clarify what has been our

policy for over two decades -- that determining whether a significant net emissions increase has

occurred is a two-step process. The new definition of major modification basically includes any

physical change in or change in the method of operation of a major stationary source that would

result in (1) a significant emissions increase of a regulated NSR pollutant from a combination of

one or more emissions units following the physical or operational change; and (2) a significant

net emissions increase of that pollutant from the major stationary source over the

contemporaneous period. 

We understand the commenters’ concerns about proposed rule language suggesting that

any post-change emissions increase, rather than a significant emissions increase, at a modified
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emissions unit would trigger NSR. The final rules make it clear that a modification project is

subject to NSR only when the post-change actual emissions increase results in a significant

emissions increase from the project and a significant net emissions increase at the source. In

addition, the new rules require a source to report its post-change annual emissions rate to the

reviewing authority only if the rate represents a significant emissions increase and the rate

differs from the projected post-change emissions rate. See, e.g., new § 52.21(a)(2)(ii)(a), and

(r)(6)(v), respectively. It should, be noted however, that utilities must report their post-change

annual emissions to the reviewing authority even when they do not represent a significant

emissions increase. See, e.g., new § 52.21(r)(6)(iv). 

Regarding the comments recommending that like-kind replacements be allowed to use the

new “actual-to-projected-actual” applicability test, we have decided to change the requirement

that replacement units and reconstructed units be evaluated as new emissions using the “actualto-potential” test. We now believe that such units possess ample track records to provide

sufficient reason to believe that a projection of post-change actual emissions can be sufficiently

reliable, and an up-front enforceable emissions cap is unnecessary. Instead, under the new

rules, replacement and reconstructed units may, like modified existing units, compare their

baseline emissions to their projection of post-change actual emissions to determine whether the

replacement or reconstruction results in a significant emissions increase. In addition, we plan to

reconsider the issue of how to treat like-kind replacement units in an upcoming rulemaking

addressing the concept of routine maintenance, repair and replacement. 

4.9 Support Other Applicability Options

Comment:

4.9.1 Support PTE-to-PTE Test

Many commenters (IV-D-46, 74, 87, 88, 94, 134, 140, 145, 147, 154, 157, 160, 191; IVG-4) endorsed the actual-to-future-actual methodology only as an alternative to the potential-topotential test. Several of these commenters (IV-D-73, 74, 88, 160) preferred a potential-topotential applicability test, but supported the actual-to-future-actual test with a demand growth

exclusion for all source categories as a second option. One commenter would only support an

actual test if the “before” and “after” emissions are evaluated over the same representative year

of operation. See Chapter 7 for more detailed comments on the 10-year look back proposal. 

One commenter (IV-D-191) stated that the actual-to-future-actual test is too cumbersome and

does not facilitate the goal of NSR simplification. However, the commenter would support the

actual-to-future-actual test as a second option to the potential-to-potential test. 

One commenter (IV-D-106) supported a potential-to-potential test unless EPA allowed a

weighted twelve month average of hours of operation of 50 percent or greater operating capacity

as a baseline with the actual-to-future-actual test. The commenter explained that a potential-to-
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potential test removes from NSR small changes that do not result in an increase of actual

emissions and enables sources to make use of previously permitted capacity without being

subject to NSR.

4.9.2 Support an Allowable-to-allowable Test

Two commenters (IV-D-105, 157) supported an allowable-to-allowable test because it is

simple, protects air quality, and allows source flexibility. One of these commenters (IV-D-157)

interpreted the regulations as supporting an allowable-to-allowable test, citing §52.21(b)(21)(iii),

which states that the reviewing authority may presume that the “source-specific allowable

emissions for any unit are equivalent to the actual emissions of the unit.” One commenter (IV-D36) preferred an allowable-to-allowable applicability determination, but would support an actualto-future-actual determination as a second option.

4.9.3 Other Applicability Options

Several commenters (IV-D-67,110, 127, 130, 153) supported either actual-to-actual or

potential-to-potential applicability options. Some commenters (IV-D-127, 130, 153) believed

sources should have a choice of using either an actual-to-future-actual test or a potential-topotential test such as CMA Exhibit B. One commenter (IV-D-108) supported the actual-tofuture-actual test, but also supported a potential-to-potential methodology in the South Coast

(Los Angeles area) and other regions in the country, provided a cap is imposed on all or part of a

facility. The cap would be based on peak actual emissions during the previous 10 years. The cap

would be supplemented, as appropriate, with full permitted emissions for any units that have

previously undergone NSR, and thus fully offset, or with other increases due to collateral or

cross-media impacts of excluded projects or to ozone depleting substances (ODS) substitution.

Two commenters (IV-D-46, 140) stated that in the absence of the potential-to-potential

test, EPA should provide both the actual-to-potential test and the actual-to-future-actual tests. 

Exclusive use of the actual-to-future-actual test would result in higher permitting review burdens

because a major stationary source would be subject to an applicable requirement for every

triggering change, regardless of the change or size of the expected increase. The actual-topotential test can result in less administrative and permitting burdens for small changes than the

actual-to-future-actual test. Under the actual-to-potential test, changes with an uncontrolled or

non-capped increase in PTE less than the significance threshold are not subject to a separate

applicable requirement for demonstrating major NSR non-applicability.

One commenter (IV-D-157) preferred the actual-to-future-actual approach as a second

option if EPA does not adopt an allowable-to-allowable test. The commenter stated that

although an actual-to-future-actual approach would not simplify the NSR system nearly as much

as an allowable-to-allowable approach, it would reduce some of the over-coverage of the actualto-potential test. Yet, according to the commenter, as with the allowable-to-allowable
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discussion, EPA has failed to set the future-actuals discussion in the legal context and therefore

restricted the proposed reforms.

One commenter (IV-D-67) advocated allowing each State to chose any one of the

following applicability options: potential-to-potential, allowable to allowable, and actual-tofuture-actual that allows capacity utilization increases. 

One commenter (IV-G-07) recommended that States should be allowed to retain the

actual-to-potential methodology and add the actual-to-future-actual methodology. Sources

should have the opportunity to choose either the actual-to-potential or actual-to-future-actual test. 

Commenter IV-D-153 disagreed and said the States should not be allowed to use the actual-topotential test as an option. Instead, the options should include the actual-to-future-actual test and

a potential-to-potential test. 

One commenter (IV-D-154) said EPA should significantly simplify applicability

determinations within the major NSR program to more fully satisfy NSR reform. The

commenter added that Alabama Power provides that EPA does not have to regulate sources or

modifications if trivial or no environmental gains would result. EPA has relied on this decision

to support the “de minimis” test. According to the commenter, Alabama Power may also be

relied on to more clearly define and limit the types of physical changes or changes in the method

of operation that will be subject to major NSR. The commenter further notes that a simple,

straightforward process for determining applicability may be more successful in achieving CAA

goals for the major NSR programs with less burden on the regulated community and State

implementing agencies.

Response:

The potential-to-potential test supported by these commenters is similar in most respects

to the CMA Exhibit B methodology that we presented in the 1996 NPRM. We received many

comments in response to the 1996 proposal regarding CMA Exhibit B. Although some

commenters believed the potential-to-potential test appropriately focuses on the significant

emission changes that could produce an adverse environmental impact, several commenters

believed that a potential-to-potential test would be environmentally detrimental. These

commenters believed that CMA Exhibit B represents a substantial weakening of the PSD

program with large increases in actual emissions, which in itself could lead to a significant

deterioration of air quality. They also agreed with our concerns regarding the creation of paper

credits and other impacts on the broader air quality planning process. One commenter stated

that the potential-to-potential test would conflict with SIPs that are based on actual emissions,

threaten a State's efforts to make reasonable further progress demonstrations, and interfere with

emission credits relied on by SIPs. 
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We agree with these commenters that a potential-to-potential test for major NSR

applicability could lead to unreviewed increases in emissions that would be detrimental to air

quality. We also agree with the commenters that the potential-to-potential test could make it

difficult to implement the statutory requirements for state-of-the-art controls.

Our own concerns, coupled with the concerns expressed by some commenters, have

caused us to reject the use of the Exhibit B regulatory changes for general purposes of

determining whether a proposed physical or operational change would result in a major

modification. For the reasons stated above, we do not believe that a potential-to-potential

approach is acceptable for major NSR applicability as a general matter. However, we agree

with the commenters in part--some of the benefits of a potential-to-potential approach are

desirable. We believe that in more limited circumstances a potential-to-potential like approach

would be acceptable. Therefore, we are promulgating two new applicability provisions that

capture the benefits of a potential-to-potential approach but still have the necessary safeguards

to ensure environmental protection-- PALs (see chapters 7 and 8) and Clean Units (see chapter

9). We believe that these applicability provisions address the concerns of the commenters

supporting a potential-to-potential applicability test. 

We also fully considered the comments recommending other applicability tests such as

the allowable-to-allowable test. While each of these tests has its merits, we believe that they are

inappropriate for the general purpose of determining whether a proposed physical or

operational change would result in a major modification. However, the new applicability tests

and options that we have included in the final rule provide broad flexibility to allow sources to

respond to rapidly changing markets and plan for future investments in pollution control and

prevention technologies.

4.10 Demand Growth

Comment:

4.10.1 Support Extending Demand Growth Exclusion

Numerous commenters (IV-D-9, 28, 33, 42, 46, 62, 68, 72, 73, 74, 88, 97, 98, 108, 119,

123, 128, 129, 132, 136, 137, 138, 140, 142, 143, 146, 147, 149, 153, 154, 157, 160, 169 )

supported extending the use of the demand growth exclusion to all sources.

Many of the commenters (IV-D-62, 74, 88, 142, 143, 149, 153) believed that the currently

promulgated regulations already provide a demand growth exclusion for non-utilities. One

commenter (IV-D-153) explained that as the preamble to the WEPCO rule makes clear, when

projected increased operations are in response to an independent factor such as demand growth,

the increased operations cannot be said to result from the change and therefore may be excluded
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from the projection of the unit’s post-change actual emissions. Such increases, according to the

commenter, should not be included in post-change emissions even in the absence of a demand

growth exclusion, as they are not the result of the changes under consideration. The commenter

suggests that the proposed demand growth exclusion simply makes that principle explicit and

eliminates confusion as to how emissions should be calculated. Another commenter (IV-D-143)

stated that under current law the causal link requirement underpins the modification rule and

provides an implicit demand growth exclusion for non-electric utility sources. The commenter

recommends that EPA must, at a minimum, explicitly indicate that it is changing current

regulations to eliminate these elements of current law and explain its authority to make such a

fundamental change.

One commenter (IV-D-46) stated that if EPA does not provide industry with the same

flexibility shown utilities to accommodate demand growth increases that would have occurred

absent a modification, the actual-to-future-actual test will provide little more than an actual-tofuture-allowable test with a prescribed 5-to-10-year limit on these allowables. According to the

commenter, it is critical for industry to have the ability to increase production rates and operating

hours to respond to increased market demand. 

Several commenters (IV-D-123, 128, 143, 154, 160) stated that emission increases

resulting from demand growth must be excluded from the calculation of future-actual emissions

for all source categories. This is because any contrary interpretation would violate the causation

requirement set forth in both the statutory definition of the term “modification” as well as the

regulatory definition of the term “major modification.” One commenter (IV-D-123) stated that

any proposal that does not allow for growth in the public’s use of electricity restricts the current

law. According to the commenter, EPA discourages any efforts to reduce costs by stating that

any increase in utilization following a change will be attributed to that change. The commenter

asserts that EPA appears to be motivated by the notion that all increases in demand will have to

be supplied by new plants, and that such new, NSPS plants are preferred over increasing the

efficiency of existing sources. According to this commenter, it is by no means clear that

increased demand cannot be met by older existing sources that are currently operating well below

capacity. Another commenter (IV-D-128) noted that prior to EPA’s adoption of the WEPCO

rule, the exclusion of emission increases attributable to increased operation in response to

demand growth was already directed by the NSR rules. This commenter recommends that EPA

affirm that the modification rule provides an implicit demand growth exclusion for non-utility

sources by making the demand growth exclusion available to all sources,.

Several commenters (IV-D- 62, 68, 140, 146, 154, 160) stated that the utility industry is

not unique in having demand growth that increases emissions that are not related to a PC-CMO. 

Other industries should not be penalized for product demand growth increases in emissions that

would have been allowed under their previous permit limits, and that are not related to the PCCMO, just because a PC-CMO has occurred. One commenter (IV-D-146) pointed out that, like

electric steam generating units, production equipment frequently operates at less than full
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capacity for reasons beyond the control of the owners and operators. Projections of market

demand in the utility industry are no more reliable than similar information generated for many

other sectors of the economy, but they are submitted to and reviewed by other regulatory agencies

due to their importance. Moreover, the commenter notes that the source of the projections of

demand growth in the utility industry are the utilities themselves, and other industry groups can

provide similar information if necessary to support the exclusion contemplated by the proposal. 

Another commenter (IV-D-62) stated that while all sources may not be subject to the demand

growth and utilization scrutiny that utilities face, changes in demand and related production level

adjustments are routinely monitored and documented by all industries. The commenter observes

that the mining industry is subject to periodic fluctuations in demand and price that dictate

changes in production levels entirely independent of facility changes. According to the

comment, emissions resulting from these independent factors should not be included in an NSR

calculation for other industries any more than they are for utilities.

Two commenters (IV-D-128, 136) stated that EPA provides no rationale for eliminating

the utility demand growth exclusion. They assert that it is inappropriate to subject a plant to

NSR simply because it fulfills its legitimate, planned and permitted objective, which is to serve

growth in demand. 

One commenter (IV-D-142) observed that independent factors should not trigger the

application of BACT/LAER. It claims that to do otherwise would prohibit facilities that make a

minor physical or operational change from ever increasing their emissions in the future in

response to unrelated factors. In the commenter’s view it would be inappropriate and outside of

the scope of the NSR program to consider demand growth or other independent factors in

calculating post-change representative actual emissions.

One commenter (IV-D-157) stated that EPA should retain the demand-growth exclusion

in the current WEPCO rule since source emissions may go up for many reasons completely

unrelated to a physical or operational change. Conversely, PC-CMOs that increase efficiency

often do not cause an emissions increase. According to the commenter, an actual-to-future-actual

accounting system that does not recognize these factors would not differ meaningfully from an

actual-to-potential approach. In the commenter’s view, this was the message of the WEPCO

case: the court found that the operating history of the entire plant was the proper guide to

estimating the future emissions of the reconstructed unit.

One commenter (IV-D-31) recommended that the demand growth exclusion be extended

to essential public service facilities, as long as their capacity remains in conformity with

population growth in their service areas. Essential public service facilities such as publicly

owned treatment works (POTWs), landfills, and water utilities must continuously increase,

modify and modernize their facilities/activities at a pace consistent with population growth

demands. This commenter asserts that most of the emission increases from these facilities are

associated with demand growth, and that demand growth projections for essential public services
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in general are generated by the metropolitan planning organization and have many levels of input

and approval. 

One commenter (IV-D-137) offered qualified support for the extension of the demand

growth exclusion, in the absence of a preferred system based on a revised actual-to-potential

methodology.

4.10.2 Oppose Extending Demand Growth Exclusion

Several commenters (IV-D-14, 47, 125, 152, 393; IV-G-13) opposed the use of a demand

growth exclusion.

One commenter (IV-D-152) stated that the provision would be subject to abuse and might

provide an opportunity for creative accounting as sources expand their operations to meet growth

in demand. The commenter stated, “What else are sources going to be expanding their operation

for if not to meet growth in demand?” Another commenter (IV-D-125) suggested that the

demand growth exclusion provides a disincentive for emissions reduction because of the

difficulty in enforcement of compliance with the limits of the exclusion. According to the

commenter, the reduction of costs due to higher efficiency may lead to higher product demands

and thus to increased emissions. The commenter believes that if emission limitations under the

exclusion guidelines cannot be punitively enforced, sources will have no incentive to comply.

Another commenter (IV-D-47) stated that the demand growth exclusion provisions of the

WEPCO rule would require projections, estimates and post-modification evaluations of increased

emissions to determine whether they were a result of increased demand; a costly and timeconsuming process has little to do with air quality control. The commenter stated that if the

current actual-to-potential methodology is continued, there is no need for a demand growth

exclusion. This is because a source that establishes enforceable emission levels as part of the

NSR process is not precluded from increasing demand so long as its post-modification emissions

rate does not change. According to the commenter, the only reporting necessary under such an

approach is the compliance reporting presently in place for sources

One commenter (IV-G-13) stated that the current demand growth exclusion fails to take

into account situations where costs are reduced by using waste products such as tires and

hazardous waste as fuels. This cost reduction may, in turn, increase demand. According to the

commenter, this is another large oversight in light of the many facilities turning to waste fuels as

a means to reduce their costs.

One commenter (IV-D-14) suggested that if EPA adopts the actual-to-future-actual test,

then the demand growth exclusion should be eliminated for non-utility industries. The

commenter asserts that most agencies do not have the specific process engineering background
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that companies do, and they are generally unable to evaluate the veracity of the claim that a

change affects capacity, nor do they possess any basis to evaluate projections of capacity. 

4.10.3 Other Comments on the Demand Growth Exclusion

Two commenters (IV-D-126, 169) requested that if EPA finds the demand growth

exclusion provision inappropriate for all other sources, it should at least retain it for electric

utilities. They believe that the demand growth exclusion works well for utility units where

demand and facility utilization data are typically assessed by an independent regulatory agency

(for example, State public utility commissions) and made available to the public. This kind of

information may not be readily available for other source categories. They further argue that an

electric utility has much less influence over demand growth than an unregulated company in the

private sector. Another commenter (IV-G-4) said utilities have an obligation to serve and are

expected to maintain adequate capacity to respond to surges in demand and a margin to meet

gradual growth in demand. This commenter asserts that the need for such reserve margins

equates to greater differential between “actual” and “potential” emissions with the utility

industries than typically occurs in most other industries.

Two commenters (IV-D-143, 145) stated that EPA would have to undertake a further

round of notice-and-comment rulemaking specifically on this issue before the Agency could

eliminate the demand growth exclusion for utilities. One commenter (IV-D-143) stated that if

EPA eliminated the demand growth exclusion for utilities without first taking public comment, it

would foreclose the commenter’s right under §307(d) of the Clean Air Act to review and

comment meaningfully. 

Two commenters (IV-D-129, 132) stated that the approved options for developing

demand growth exclusion levels for chemical and manufacturing plants should include: (1)

projecting the growth rate (sales or production) for the entire industry applied as a blanket

demand growth exclusion; (2) basing the demand growth exclusion on the projected sales growth

rate for the company, plant site, or production unit; and (3) basing the demand growth exclusion

on the projected sales growth of the chemical or plastic being produced.

One commenter (IV-D-157) suggested two “decision rules” for States to use in making a

broad actual-to-future-actual test workable. First, all changes at a plant that do not significantly

affect its overall production cost or product quality should be exempted from NSR. New or

modified units without major impact on overall plant costs should be presumed not to cause any

increase in overall plant activity levels. Second, even if a change at a source reduces costs or

improves quality to a significant degree, regulators should not presume that it causes a later

increase in source activity levels. According to the commenter, there is no logic to EPA’s

blanket presumption that any change at a plant that markedly increases efficiency or product

attractiveness must always be evaluated under the actual-to-potential test. The commenter

recommends that the actual-to-future-actual test and the demand growth exclusion still be
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available for changes that significantly improve efficiency or product quality, as long as the

source shows that the change did not cause an emissions increase.

Response:

Under the final rules, sources will be allowed to apply the causation provision as

originally contained in the WEPCO amendments. We have concluded that this provision is

appropriate and consistent with both the statute and implementing regulations, which suggest

that there should be a causal link between the proposed change and any post-change increase in

emissions, that is, "...any physical change or change in the method of operation that would result

in a significant net emissions increase..." [emphasis added]. See, for example, existing

§52.21(b)(2)(i). While in a very few cases it may be difficult to determine whether a particular

emissions increase is related to a physical or operational change that is made to an emissions

unit, it would be inappropriate to completely eliminate the availability of the exclusion to

everyone. Consequently, the final rules follow the 1996 NPRM in that when a projected increase

in equipment utilization is in response to a factor such as growth in market demand, the

emissions increases from the unit's post-change actual emissions may be subtracted if it can be

shown that the unit could have achieved the necessary level of utilization during the consecutive

24-month period that was selected to establish the baseline actual emissions, and the increase is

unrelated to the physical or operational change(s) made to the unit. See for example, new

§52.21(b)(41)(ii)(c).

On the other hand, demand growth can only be excluded to the extent that the physical or

operational change is not related to the emissions increase. Thus, even if the operation of an

emissions unit to meet a particular level of demand could have been accomplished during the

representative baseline period, but it can be shown that the increase is related to the changes

made to the unit, then the emissions increases resulting from the increased operation must be

attributed to the modification project, and cannot be subtracted from the projection of postchange actual emissions.

4.11 Utilization Increases

Comment:

Several commenters (IV-D-28, 46, 62, 67, 72, 114, 119, 121, 123, 136, 143, 145, 157,

172) argued that emission increases due to increased utilization should not be considered major

modifications. 

Some of these commenters (IV-D-121, 136, 143) insisted that EPA policy and rules had

always allowed increases in capacity utilization without triggering a modification. The

commenters cited the rules at 40 CFR 52.21(b)(2)(iii)(f) and Congressional intent as allowing

increases in hours of operation or in production rate without triggering a modification. 
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Expanding NSR jurisdiction to utilization increases would penalize American industry for

periodic underutilization of existing equipment, the commenters maintained. Two commenters 

(IV-D-121, 143) opposed what they termed as EPA’s proposal to subject increases in a source’s

production rate or hours to major NSR because it codifies an interpretation of the exclusion that

is contrary to the meaning and the regulatory history of the rule. They argue that the provision of

the CAA that codifies the NSPS definition of modification for purposes of the NSR program

precludes EPA from making this change, or any other change that would significantly limit this

NSPS-based exclusion. They claim that the seminal statutory provision, section 111(a)(4), 42

U.S.C. 7401(a)(4), provides no warrant for such a test. In their view, EPA should rely in the case

of all kinds of units solely on a good faith, reasonable, pre-construction estimate of futureactuals. One commenter (IV-D-143) stated that the claim by EPA of historical consistency in

applying the hours of operation exclusion in the manner it now advances is incorrect. The

commenter claims that, prior to the WEPCO/Port Washington determinations, EPA’s practice

was to apply the hours of operation/production rate exclusion where an emissions increase was

attributable to increased capacity utilization, even if the increase in production rate was preceded

by non-routine physical changes at the facility.

 Several commenters (IV-D-42, 108, 140, 160) urged EPA to clarify that emission

increases due to increased utilization would be excluded from NSR applicability if the source

was able to accommodate the capacity increase before the physical change or change in method

of operation. However, emission increases due to a debottlenecking project that extends a

source’s capacity and PTE would not be excluded from NSR applicability. Another commenter

(IV-D-160) raised concerns that EPA’s interpretation of the demand growth exclusion is

excessively narrow. In the commenter’s view, EPA should clarify that the only circumstance in a

which a product demand increase would not be excluded from NSR would be a case where a

corresponding PC-CMO increases the source’s PTE, thus enabling the source to accommodate

demand it was previously unable to accommodate.

One commenter (IV-D-123) stated that not allowing utilization increases will limit new

capacity to new units instead of promoting increased efficiency at existing units. One commenter

(IV-D-72) stated that it is not sensible to include increases in utilization unrelated to the facility

change in the post-modification emissions estimate. According to the commenter, even in cases

where future demand growth may be more difficult to predict than in the electric utility industry,

it would be absurd to count emissions that are related to an increase in demand for tires or

automotive belts. 

One commenter (IV-D-157) stated that there is no logic to EPA’s blanket presumption

that any change at a plant that markedly increases efficiency or product attractiveness must

always be evaluated under the actual-to-potential test. The commenter advocates that the actualto-future-actual test should still be available for changes that significantly improve efficiency or

product quality, as long as the source shows that the change did not cause an emissions increase.
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One commenter (IV-D-28) noted that demand growth is one of several possible

independent factors that may result in a source increasing emissions quite independently of the

permitted modification the exclusion projects. The commenter suggests that the fundamental

basis of the attacks on the exclusion is obstructionism proceeding from an anti-growth attitude -

not environmental protection. According to the comment, the exclusion recognizes, and does not

exclude, emission increases due to increased efficiencies at a unit, and otherwise recognizes that

only increases in emissions attributable to the modification itself should in fact be attributed to

the modification.

One commenter (IV-D-67) explained that plants are often built with excess capacity that

may not be used in the future, depending on the demand for products. The commenter has many

plants that have much higher potential emissions than actual emissions. The commenter believes

that these plants should be allowed to increase emissions without triggering NSR because

increases are associated with increased demand rather than any physical or operational change. 

The commenter believes that this scenario is very similar to the utilities’ circumstance, and

recommends that for plants with excess capacity, a version of the actual-to-future-actual test is

the best measurement of when NSR should be triggered because it allows consideration of

capacity utilization.

One commenter (IV-D-114) stated that the way modifications are currently evaluated for

potential emissions is subjective primarily because of the utilization multiplier that is used in

conjunction with an hourly emission rate. The utilization factor is dependent upon numerous

conditions. According to the commenter, while EPA considers unit reliability and efficiency to

be primary in determining utilization rate, in the natural gas transportation industry, demand is

almost exclusively the determining variable. The commenter therefore maintained that

utilization increases are generally due to demand growth. The commenter preferred that a

potential-to-potential accounting methodology be used to avoid subjective decisions regarding

whether emission increases were attributable to utilization increases or demand growth.

One commenter (IV-D-125) stated that explicit guidelines for emission increases due to

utilization increases need to be adopted and enforced. This commenter believes that making

determinations on a case-by-case basis is dangerously vague and could potentially be detrimental

to the goals of the NSR.

Response:

We agree with the commenters that an increase in utilization should not automatically

trigger the major NSR requirements. As explained in previous comment responses, the Clean Air

Act only applies the major NSR requirements to emission increases that are the result of a

physical or operational change. Thus, we do not believe that the major NSR requirements

should apply to a utilization increase unless it is related to the modification. Under the final

rules, sources may exclude emissions related to an increase in utilization if they were able to
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accommodate the increase in utilization during the 24-month period that was selected to

establish baseline actual emissions and the increased utilization is not related to the change. We

believe this provision addresses the commenters' concerns regarding guidelines for emission

increases due to utilization increases.

In addition, we believe the calculation of the pre-change baseline emissions in the final

rule (the average annual emissions rate, in tons per year, using any consecutive 24-months

during the 10-year period immediately preceding the change, adjusted to reflect current emission

factors) allows sources to preserve utilization levels that were actually achieved during a normal

business cycle. In most circumstances, sources will be able to preserve the utilization levels

achieved during the 24-month period that they selected, unless a restriction, such as a limit on

the hours of operation, has since been imposed. We believe that the 10-year look back period

prevents the perceived confiscation of underused capacity at sources who have had low

utilization rates for an extended period. This 10-year look back period is more likely to afford a

source a baseline actual emissions calculation that best reflects representative source operating

conditions.

4.12 5-year Tracking - General Comments

Comment:

Some commenters (IV-D-14, 39, 72, 79, 97, 120, 137, 170) generally supported EPA’s

tracking proposal. One commenter (IV-D-14) said 5-year tracking should be required so that

there is a factual finding as to whether emissions increased. 

Other commenters (IV-D-33, 46, 53, 94, 97, 123, 129, 132, 138, 147, 149, 153, 154, 191)

opposed the proposed tracking requirements. Several commenters (IV-D-123, 153, 154) viewed

the 5-year tracking requirement as burdensome. Two commenters (IV-D-123, 154) stated that

the proposed tracking system would place an enormous reporting burden on industry without

additional environmental benefit. One commenter (IV-D-153) characterized the recordkeeping

proposal as inconsistent with the goal of streamlining the NSR process. According to this

commenter, the focus of the reporting should be whether a significant net emissions increase has

occurred, not whether the projected actual emissions level proved entirely accurate. 

Response:

We agree with those commenters who recommend that sources should be required to

track emissions for a period of time following a modification to assure that the modification does

not result in a major modification. Accordingly, the new rules require a source to monitor and

record its emissions when there is “a reasonable possibility that a project that is not part of a

major modification may result in a significant emissions increase.” We have limited the scope of

the recordkeeping requirement so that they will not be interpreted so stringently as to require
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recordkeeping for any physical or operational change regardless of its potential effect on

emissions. Thus, we have retained our proposed requirement for sources to maintain operating

data and to document their annual emissions information (along with other information

associated with the calculations for determining a significant emissions increase) for a period of

5 years following the change. We expanded this requirement to 10 years for changes that result

in an increase in an emissions unit's capacity or its potential to emit a regulated NSR pollutant.

We disagree that these recordkeeping requirements would be overly burdensome. Many

existing SIP programs (for example, minor NSR programs) already require such emissions

tracking, so this requirement is generally not considered to be an additional burden on industry. 

The NSR program remains a pre-construction review program. To ensure a level playing field

between sources that may approach the pre-construction projection of post-change emissions

with different degrees of conscientiousness, monitoring the quality of pre-construction

projections is important. 

4.13 5-year Tracking - Adequacy of Tracking; Whether Tracking is

Working as Intended and Whether It Should be Changed In Any

Way

Comment:

4.13.1 Tracking does work

Some commenters (IV-D-28, 120) believed that emissions could be tracked and that the

requirement to track emissions provided an adequate safeguard for using the actual-to-actual

methodology. One commenter (IV-D-28) believed the 5-year tracking period and potential for

extension to 10 years offered sufficient protection to allow the actual-to-future-actual

methodology. One commenter (IV-D-120) concluded that a 5-year tracking system is an

adequate safeguard since new equipment is installed to track various operating parameters (hours

of operation, fuel use, etc.).

Several commenters (IV-D-62, 112, 121) maintained that non-utilities would be able to

track emissions as well as utilities can. Two of the commenters (IV-D-112, 121) stated that

because all major sources will soon be required to conduct CAM-level monitoring,

recordkeeping, and reporting under title V of the CAA, verifying future-actual emissions should

be a task that sources are equipped to handle. One commenter (IV-D-62) stated that EPA had no

basis for its concern that non-utility industries will fail to adequately monitor emissions because

they are not subject to the same level of monitoring required of utilities. The commenter asserted

that, under title V and other CAA programs, major sources will be upgrading their monitoring

and reporting capabilities, and that these sources will be able to provide the necessary

documentation of their compliance with a post-change emissions prediction. Another commenter
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(IV-D-121) asserted that the emission parameters of industrial boilers can be monitored as well

as the emission parameters of utility boilers.

4.13.2 Tracking does not work and how to improve it

One commenter (IV-D-105) stated that it would be difficult to track past-actual emissions

and future-actual emissions. The commenter posed the following questions: 

• Must the source always use the same past actual emissions?

• Can the two-year period for determining past actual emissions change depending on what

the future-actual emissions become?

• Would the system be based on a 12-month rolling average, which compares past to

future-actual emissions?

• What about the possibility of retroactive PSD review which could occur if a physical

change subsequently resulted in higher-than-expected emissions, thereby tripping the

significant emission rate criteria in a future year? 

Several commenters (IV-D-46, 72, 94, 97, 129, 132, 138, 154) suggested various changes

or improvements to the tracking requirements in the promulgated rule. One commenter (IV-D72) stated that some tracking of future-actual emissions is necessary to ensure that a facility does

not surpass these projected emissions, but EPA should not require elaborate and time-consuming

recordkeeping. The commenter asserted that much of the information should already be

available, because, for example, companies often will need to track actual emissions under their

title V permits. The commenter believes that the recordkeeping and reporting associated with

this tracking exercise undoubtedly will be expensive, and an extension of the period from 5 to 10

years cannot be justified. Moreover, according to the commenter, a reviewing authority will not

be able to predict a facility’s future production levels. The commenter recommends that futureactual emissions should be determined during the 5-year period by a fairly simple tracking of unit

or line utilization, as is done in the WEPCO rule.

Several commenters (IV-D-46, 94, 138) supported keeping tracking records on site, but

not reporting emissions as a way to reduce the burden. Two commenters (IV-D-46, 138) stated

that there should be no requirement to report the emissions unless there is a problem. The

commenter noted that since this recordkeeping requirement would be another applicable

requirement for which the owner/operator must report deviations and certify compliance under

title V, the added process of submitting these records to EPA or the reviewing authority is

unnecessarily duplicative for both the regulated community and the implementing agencies. 

Another commenter (IV-D-97) stated that EPA should rely on records kept for other purposes to

determine compliance. 

Three commenters (IV-D-129, 132, 154) stated that because the CAM rule and the title V

program will also mandate monitoring and recordkeeping requirements that can be used to make
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the 5-year demonstration, the installation of expensive continuous emissions monitors is not

justified for demonstrating non-applicability. Two commenters (IV-D-129, 132) stated that stack

testing after a modification should suffice as an option for demonstrating compliance during the

5-year period following the application of the actual-to-future-actual test to a physical or

operational change. Records of hours of operation, fuel rates, production rates, etc. can then be

used with the new emissions factor to demonstrate that NSR is not triggered during the 5-year

period. 

One commenter (IV-D-67) proposed that recordkeeping should confirm the source’s

projection of the future-actual calculation rather than confirming that there is no increase over the

baseline actuals, and that EPA’s discussions of this section confirm this recordkeeping concern.

[The commenter provided specific language describing future-actual emissions.] Commenter IVD-154 agreed that industry should maintain data for 5 years to demonstrate that a significant net

increase in actual emissions did not occur, which should be sufficient to meet EPA’s needs.

One commenter (IV-G-7) proposed that if a source uses the proposed actual-to-futureactual methodology and the emission tracking shows a increase over the baseline level, the

source should be allowed a maximum of 180 days to develop and submit a plan of action to

ensure that the source can adequately protect future emissions.

One commenter (IV-D-125) suggested that the 5-year reporting/tracking period should be

combined with an enforcement mechanism and strict ramifications for non-compliance. This

commenter believes that a tracking period with no enforcement mechanism creates the potential

for mischief and limits emission reduction opportunities. The commenter did not support the

actual-to-future-actual methodology for non-utility sources. 

Two commenters (IV-D-129, 132) stated that EPA should only require 5-year tracking of

post-modification emission rates if the source fails the existing actual-to-potential test. That is

the existing applicability test should be retained as an option. The commenter recommends that

EPA not require additional monitoring in situations where it would not have been required under

the current regulations. The commenter did not explain the criteria for judging whether a source

had failed the actual-to-potential test.

Response:

We believe that the tracking requirements in the final rules alleviate many of the concerns

presented by these commenters, particularly those concerns dealing with the procedures to be

used, the elaborateness of required records, minimizing reporting, and enforcement mechanisms. 

When, according to the owner or operator’s best calculations, the physical or operational

changes the major stationary source is planning to make at one or more existing emissions units

at a major stationary source will not constitute a major modification, but there is a reasonable

possibility the project may result in a significant emissions increase, the source must document
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I-4-44

its findings concerning the resulting emissions increase, including a description of the project,

identification of emissions units that will be changed, baseline emissions calculations and any

adjustments made, and projections of post-change actual emissions. Moreover, if the projection

shows that the physical or operational change will result in a significant emissions increase,

then additional calculations associated with any contemporaneous increases and decreases used

for netting purposes must also be documented and maintained.

In addition, when there is a reasonable possibility that a project may result in a

significant emissions increase, the final rules require a source to maintain records of postchange emissions from the project. The source must maintain this information and compare the

project’s post-change annual emissions, in tons per year, it to its baseline actual emissions for at

least 5 years. If the project will increase the design capacity or potential to emit of any

emissions unit, the source must maintain and compare this data for that emissions unit to its

baseline actual emissions for 10 years. The information that must be maintained may include

continuous emissions monitoring data, operational levels, fuel usage data, source test results, or

any other readily available information of sufficient accuracy for the purpose of determining an

emissions unit's post-change emissions. 

As mentioned in previous comment responses, sources must report to reviewing authority

any increase in a post-change emissions rate when the rate exceeds the baseline actual emissions

by a significant amount, and is inconsistent with the initial projections. See, for example, new

§52.21(r)(6)(iii).

Finally, in addition to the reporting requirements discussed above, sources are also

obligated to ensure that the necessary emissions information is available for examination upon

request by the reviewing authority. A source must also be prepared to make this information

available to the general public upon their request pursuant to existing State procedures meeting

the requirements of §70.4(b)(3)(viii) of the title V permit program, which requires that the

reviewing authority has legal authority to "make available to the public any permit application,

compliance plan, permit, and monitoring and compliance certification report pursuant to section

503(e) of the Act, except for information entitled to confidential treatment pursuant to section

114(c) of the Act."

4.14 5-year Tracking - Length of Tracking Period

Comment:

Several commenters (IV-D-14, 79, 120, 170) specifically supported the 5-year emissions

tracking requirement. Two commenters (IV-D-79, 170) stated that since the relevant data would

tend to be collected and reported anyway in the context of title V compliance, this approach

would dovetail well with other CAA regulations.
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One commenter (IV-D-191) supported a 2-year tracking period for the actual-to-futureactual test, but objected to a longer tracking period because it asserts that the relationship

between a modification and emission increases more than 2 years after the modification is too

remote and tenuous to justify tracking. One commenter (IV-D-97) preferred no tracking but

stated that if EPA requires tracking, a 3-year period should be sufficient to indicate that the

source was correct or incorrect in its projection.

Two commenters (IV-D-72, 160) stated that the final rule should not extend the proposed

5-year tracking period to a longer time frame (for example, 10 years). The commenters (IV-D72, 160) noted that extending the tracking period would be unfair to sources because it would

impose an unreasonable presumption that emission increases occurring as much as 10 years after

a particular PC-CMO are attributable to that change. According to the commenter, the

relationship between a PC-CMO and emission increases more than 5 years later is too tenuous to

justify this presumption. Finally, the commenter asserts that the proposed requirement that

sources submit records during the 5-year tracking period would increase the reporting burden on

industry without providing any corresponding environmental benefit. The commenter suggests

that it would be sufficient to require industry to maintain data for 5 years to demonstrate that a

significant net increase in actual emissions did not occur.

One commenter (IV-D-138) advocated a 5-year information tracking period after a

determination that emissions after a particular source change will not increase significantly. 

During this tracking period the source owner should be required to maintain records and

estimates of actual emissions on-site, and immediately report to the reviewing agency should the

increase in actual emissions resulting from the source change exceed the applicable NSR

significance level.

Two commenters (IV-D-33, 149) suggested that the more logical endpoint for tracking

emissions would be at the expiration of the part 70 or 71 permit term when the required

monitoring provisions, if any, would be renewed. [The commenter recommended specific

language revisions to the proposed §51.166(b)(21).]

Response:

Generally, a source’s projection of post-change actual emissions must be tracked against

a facility's emissions for 5 years following completion of the changes, unless there is not a

reasonable possibility that the project may result in a significant emissions increase. We will

presume that any increases that occur after 5 years are not associated with the physical or

operational changes. If, however, one of the effects of the physical or operational change(s) is to

increase a unit's design capacity or potential to emit, such that a significant emissions increase

could result, but the source does not believe that the new capacity or potential to emit will be

fully utilized (so as not to cause a significant net emissions increase), the projection of postchange actual emissions must represent the maximum actual annual emissions rate that will
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result from the unit in any one of the 10 calendar years after the change. This extended period

allows for the possibility that the increased capacity that was added via the physical or

operational changes could be fully utilized during a normal business cycle.

The final rules require sources to keep a record of post-change emissions projection and

to track post-change emissions and retain those records on site when there is a reasonable

possibility that the project may result in a significant emissions increase. These records will

enable the source and the reviewing authority to ensure that the physical or operational changes

that were made do not actually trigger a major modification. If the source determines, during

the 5 or 10 years of required recordkeeping, that the changes made to an emissions unit result in

annual emissions that are higher than the initial projections, and such emissions increase or the

emissions projection results in a significant emissions increase, the source should submit a

report to the reviewing authority to explain the discrepancy and could be subject to major NSR. 

We believe that these added recordkeeping and reporting measures will improve the

overall compliance rate and provide the information necessary for reviewing authorities to

assure that such changes are made consistent with the Clean Air Act requirements. Altogether,

we believe these regulatory amendments focus on the types of changes occurring at existing

emissions units that are more likely to result in significant contributions to air pollution. The

amendments will also require greater accountability on a source’s part to retain information

from which the reviewing authority can determine the nature of any changes that are made at an

emissions unit, as well as the actual emissions increases that are associated with those changes.
I-5-1

Chapter 5 - Comments on NOA NSR Applicability Test

5.1 Overview

This section includes general comments on amending the current applicability test for

modifications, general comments on the statutory and regulatory bases for applicability, and

specific comments on components of the proposed NSR Applicability test. These general

comments were made in response to our July 24, 1998 NOA [63 FR 39857].

5.2 General Comments on Amending the Current Applicability Test

for Modifications 

Comment:

5.2.1 General Support for Amending the Current Applicability Test for

Modifications

There were no comments generally supporting the provisions concerning the applicability

test for modifications.

5.2.2 General Opposition for Amending the Current Applicability for

Modifications

Eleven industry commenters (IV-D-264, 265, 270, 289, 292, 297, 298, 306, 307, 313,

314), twelve utility industry commenters (IV-D-257, 276, 280, 281, 282, 286, 295, 300, 316, 322,

323, and IV-G-22), two regulatory agency commenters (IV-D-211, 317), and one environmental

commenter (IV-D-291) opposed the provisions concerning the applicability test for modifications

for the various reasons indicated below.

5.2.2.1 Proposal is too restrictive

Ten industry commenters (IV-D-264, 265, 270, 289, 292, 297, 298, 306, 313, 314) and

nine utility industry commenters (IV-D-257, 280, 281, 282, 286, 295, 300, 323, and IV-G-22)

considered the proposed approach to be more restrictive than the current rules. These

commenters considered the proposal to be generally unreasonable and cumbersome.

One utility industry commenter (IV-D-286) maintained that the proposed provisions

would complicate the existing NSR program and add another level of enforceable restrictions. 

Another utility industry commenter (IV-D-300) claimed that the proposed applicability

provisions would make it difficult to make the changes required to keep facilities operating safely

and efficiently. 
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I-5-2

Two industry commenters (IV-D-292, 297) considered the current NSR rules restrictive

and believed that the NOA did not ameliorate the situation. One of these commenters

(IV-D-297) further explained that the current rules impose limits, based on actual emissions, that

are more restrictive than those in the operating permits. The commenter (IV-D-297)

recommended that NSR applicability be based on the permit limit. One industry commenter

(IV-D-297) stated that the EPA should not be expanding NSR applicability by “retrenching on

the WEPCO rule.” The commenter also believed that the costs of complying with the NSR

program would be completely out of proportion to the minimal environmental benefit gained. 

The other industry commenter (IV-D-292) believed that the current NSR applicability test

encouraged the continued operation of obsolete, higher-emitting equipment because it was too

difficult to obtain the required modification to replace it. The commenter felt the sheer

complexity of the new applicability test would defeat its usefulness.

5.2.2.2 Proposal is not environmentally protective enough

One regulatory agency (IV-D-211) and one environmental group (IV-D-291) commented 

that the NOA approach was not as protective of the environment as the current rules.

5.2.2.3 Proposal is ambiguous

One utility industry commenter (IV-D-282) felt the applicability provisions in the current

rules were frequently misapplied or misinterpreted. The commenter argued that the proposed

revisions were even more complex than the current rules, and that sources would not have fair

notice of what was required of them. The commenter stated that the EPA should not allow the

“perpetuation or adoption of ambiguous standards.”

5.2.2.4 Proposal is contrary to the CAA and regulations

One industry commenter (IV-D-307), seven utility industry commenters (IV-D-257, 280,

281, 282, 295, 323, and IV-G-22) and one environmental commenter (IV-D-291) maintained that

the concepts in the NOA contravened the CAA and existing regulations, and were also

contradictory to stated EPA policy. The utility industry commenters maintained that the

proposed applicability approach conflicted with the CAA definition of modification. One

industry commenter (IV-D-307) argued that the proposed changes would create “substantial risk

of unlawful, retroactive enforcement actions.”

5.2.2.5 Proposal discourages efficiency

One utility industry commenter (IV-D-286) felt the applicability test provisions would

discourage efficiency by increasing the number of changes that would have to be reviewed. 

Another utility industry commenter (IV-D-316) believed that the proposed approach would

discourage energy efficiency, as it would make it more difficult to replace units with newer, more

efficient units that were less polluting. Existing units, on the other hand, consumed more power
5 - NOA Applicability

I-5-3

and thereby increase greenhouse gas emissions. Three utility industry commenters (IV-D-271,

300, 316) further charged that such an approach was contrary to the EPA’s policy of energy

efficiency in electrical production as a means to reduce greenhouse gas emissions. Two utility

industry commenters (IV-D-271, 300) also suggested that the methodology was incongruent with

the EPA’s policy concerning the use of renewable energy sources to reduce NOx and CO

emissions. One industry commenter (IV-D-313) and two utility industry commenters (IV-D-276,

322) believed the NSR applicability tests encouraged sources to continue to operate less efficient,

higher polluting units instead of replacing them with new units. One utility commenter (IV-G23) claimed that EPA’s proposal is a strong disincentive for any industrial source to voluntarily

undertake environmentally beneficial modifications.

5.2.2.6 Proposal is not necessary given other CAA requirements

One utility industry commenter (IV-D-286) believed that the EPA’s proposal was

unnecessary given the comprehensive requirements under other sections of the CAA such as

SIPs, NSPS, RACT, MACT, the acid rain rules, and the recent NOx SIP call.

5.2.2.7 Proposal impairs competitiveness

One utility industry commenter (IV-D-286) believed the applicability test provisions

would paralyze American industry by requiring lengthy waiting periods prior to approval of new

projects. The commenter felt that these provisions would also impair competitiveness by making

it more difficult to enhance the reliability and efficiency of existing equipment. One industry

commenter (IV-D-313) noted that the proposal can affect competitiveness, resulting in shutdown

of businesses or relocation to other countries, as well as loss of reductions in air pollutants.

5.2.2.8 Proposal is burdensome

Two utility industry commenters (IV-D-286, 300) and one regulatory agency (IV-D-317)

claimed that the proposal would increase the administrative burden for the reviewing authority

and lead to permitting delays. One utility industry commenter (IV-D-286) further claimed that

the proposal was contrary to the stated Clinton Administration goal of tailoring regulations to

impose the least burden on society. One utility industry commenter (IV-D-276) stated that EPA

had intended to simplify the NSR program, however, the opposite has occurred.

Response:

While we do not necessarily agree with all of the reasons that these commenters provided

for opposing the applicability options presented in the NOA, we have decided that the proposed

changes, which included an “actual-to-enforceable-future-actual” applicability test (now

promulgated as the “actual-to-projected-actual” test) without a demand growth exclusion, were

not appropriate for the final rulemaking. We do believe that the imposition of an enforceable

limit on the projected post-change emissions level would have resulted in unnecessary burdens,
5 - NOA Applicability

I-5-4

because the regulations already provide that a modified source which results in a significant net

emissions increase must undergo NSR.

The definition of “modification” in both the statute and regulations provides that there

be a causal relationship between the physical or operational change undertaken by the source

and the emissions increase. To better focus on those emissions increases that result from a

change, we are extending the demand growth concept to all modified existing emissions units

using the “actual-to-projected-actual” applicability test.

We continue to believe that it is reasonable and appropriate to adopt the new method for

establishing a modified unit's baseline actual emissions. Our complete set of responses to

comments on the new baseline approach is contained in chapters 2 and 3 of this volume, and

chapter 2 of volume 2. 

Finally, we do not believe that the actual-to-projected-actual test would be less protective

of the environment than the existing rules because modifications that result in a significant net

emissions increase would continue to be subjected to NSR, including a source impact analysis. 

In addition, the procedure for determining emissions levels for carrying out the ambient impact

analysis would continue to be based on the existing procedures which use the existing definition

of “actual emissions.” 

Comment:

5.2.3 Suggested Alternative Approaches

5.2.3.1 Use a PTE-to-PTE test

Thirteen industry commenters (IV-D-219, 260, 267, 289, 293, 297, 298, 302, 304, 307,

310, 313, 314) preferred that the EPA adopt a PTE-to-PTE test for determining applicability of

modifications in lieu of an actual-to-future-actual test, or at a minimum provide a PTE-to-PTE

test as an option. These commenters did not specifically identify the CMA Exhibit B as the

preferred applicability test. The commenters believed that a potential-to-potential test would

simplify and streamline the NSR program, eliminate the need to track past actual emissions, and

improve compliance and enforcement. Several industry commenters (IV-D-260, 297, 298, 304,

313) advocated the PTE approach because it would capture modifications that significantly

increased emissions and avoid capturing increased utilization in the NSR applicability net. One

industry commenter (IV-D-307) preferred the potential-to-potential test, but would accept a

past-actual-to-future-actual test as a second choice. Three industry commenters (IV-D-260, 307,

313) advocated the PTE test because it is simple for sources and reviewing agencies, and ensures

that the NSR program applies to large increases in actual emissions. One industry commenter

(IV-D-297) also preferred the PTE approach because compliance would be based on the permit

limit. One industry commenter (IV-D-313) also challenged EPA’s claim that the court agreed

with EPA’s policies in the Puerto Rican Cement case. The commenter (IV-D-313) wrote that
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“the judge did not say that potential-to-potential (test) was not allowed, rather that the source in

this case had not availed itself of that argument in a timely manner.”

Seven utility industry commenters (IV-D-257, 268, 280, 281, 295, 323, and IV-G-22)

identified a “hybrid” potential-to-potential approach, under which NSR would be triggered only

where a given activity at a source would increase the source’s rate of emissions (on a kg/hr basis)

above the rate the source was capable of accommodating during a representative baseline period. 

These commenters further explained that the calculation of the unit’s emissions for netting or

offsets would be based either on the unit’s actual or allowable emissions, whichever was lower. 

The commenters considered this approach to be the practical application of the current WEPCO

rule.

Two industry commenters (IV-D-289, 313) strongly advocated basing applicability on a

potential-to-potential test. These commenters maintained that the CAA would permit a

potential-to-potential test, but that the EPA had rejected such a test in developing the initial NSR

rules because it would allow actual emissions to rise above the NAAQS and the PSD increments. 

The commenters quoted the preamble to the 1980 NSR rule (45 FR 52676) regarding the creation

of “paper offsets” to illustrate this point. The commenters further explained that State and local

agencies had made huge leaps in air quality management since the 1970's, that most sources were

now subject to preconstruction permits limiting emissions, and that requirements pursuant to the

1990 CAAA also limited emissions. According to the commenter, the combination of these

factors means that the SIP and permit system can handle the “paper offset” problem. Therefore,

the commenters assert that the EPA’s previous concerns regarding the air quality impacts of a

potential-to-potential test are no longer valid, clearing the way to “lift the categorical ban against

the PTE-to-PTE system.” The commenters urged the EPA to provide adequate guidance to

reviewing authorities so that the SIPs and permits would be able to support a PTE-to-PTE

system. The commenters maintained that adopting the potential approach would result in an

ideal regulatory regime and facilitate the use of improved combustion technologies that would be

beneficial to the environment.

Two industry commenters (IV-D-260, 313) advocated the potential-to-potential test

because it would not prohibit changes that improve productivity or energy efficiency and reduce

the ratio of waste to product. The commenters (IV-D-260, 313) argued that the

potential-to-potential test avoided applicability determinations for changes that would improve

economic performance or efficiency. Furthermore, they indicated that it was highly unlikely that

such changes would substantially increase actual emissions; and, therefore, the

potential-to-potential test would ultimately benefit the environment. One industry commenter

(IV-D-313) claimed that improved efficiency would provide for both emission reductions and

economic development; however, the current proposal thwarts installation of more efficient

equipment. The commenter (IV-D-313) provided several examples of projects that could lower

emissions and that an industry could pursue if they did not trigger NSR, such as product

replacement, raw material changes, process changes, and replacement of older equipment with

higher efficiency equipment.
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Two industry commenters (IV-D-260, 313) also maintained that pollution prevention and

pollution control projects, which sometimes result in increased capacity, can trigger the

actual-to-potential test. However, they assert that this problem would not occur under a

potential-to-potential test. The commenters (IV-D-260, 313) explained why a

potential-to-potential test would also improve compliance and enforcement. According to the

commenters, under the current regulatory regime, sources set limits well above actual emission

levels to avoid penalties associated with exceedances, and the sources also maintain

unnecessarily high actual emissions to raise the baseline for NSR calculations. Thus, the

commenter asserts that permit levels do not serve as a reference for operational limits. They

believe that the potential-to-potential test would remove this problem.

Another industry commenter (IV-D-219) preferred the potential-to-potential test because

potential emissions were fixed, unlike actual emissions, which were difficult to estimate. The

commenter also believed that the potential-to-potential test would eliminate the need for costly

and time consuming minor permit modifications.

5.2.3.2 Use an allowable emissions test

Six industry commenters (IV-D-260, 265, 292, 304, 310, 313) recommended that the

EPA adopt an allowable-to-allowable test in lieu of the actual-to-future-actual test. Such a test

would base applicability on enforceable emission limitations that the regulatory agencies had

previously approved. One industry commenter (IV-D-265) endorsed this approach because it

would improve the environment, draw only changes that increased PTE into NSR applicability,

encourage sources to increase production without increasing PTE, and be consistent with

market-based systems. Two industry commenters (IV-D-265, 310) also maintained that the

present regulations at 40 CFR 52.21(b)(21)(iii) provide for such an approach, stating that

reviewing authorities may “presume that source-specific allowable emissions for any unit were

equivalent to the actual emissions of the unit.” Another industry commenter (IV-D-220)

suggested including a permitted-to-future-permitted test provided that both existing and future

equipment be controlled.

Three industry commenters (IV-D-260, 267, 313) preferred a potential-to-potential test,

but would accept an allowable-to-allowable test as a second option. These commenters 

suggested that emission limits pursuant to other CAA requirements (for example, RACT, NSPS,

MACT, SIPs, and others) be used as the pre-change emission level against which post change

emissions were compared. In their view, if the change were sufficient to trigger NSR, the source

could still accept an emission cap instead of going through NSR review. The commenters cited

the approach for grandfathered sources without allowable emission levels as one of many details

that would need to be worked out.

One industry commenter (IV-D-310) stated that the EPA had proposed the allowable

approach for Clean Units and Clean Facilities, and therefore the EPA should use the allowable

approach for all changes to be consistent.
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Two industry commenters (IV-D-297, 314) suggested that an allowable-to-allowable

approach would work if the EPA accepted potential emissions as allowable emissions for sources

not subject to legal emission limits.

5.2.3.3 Adopt CMA Exhibit B

Five industry commenters (IV-D-264, 270, 292, 309, 313) and seven utility industry

commenters (IV-D-257, 268, 280, 281, 295, 323, and IV-G-22) specifically identified the CMA

Exhibit B as the preferred applicability test. The six utility industry commenters also offered two

other options for applicability determinations, which are described in sections 5.2.3.1 and 5.2.3.4.

Three industry commenters (IV-D-264, 270, 313) requested that the EPA provide the

potential-to-potential approach in the final rule as an option. This methodology would have the

advantage of greatly simplifying the NSR process. The commenters acknowledged that the

Exhibit B approach might need to be modified by creating offsets and emission credits, with the

offsets linked to actual emissions.

One industry commenter (IV-D-304) stated that it was questionable whether the EPA was

meeting its obligations for notice and comment under the CMA settlement agreement,

considering EPA’s failure to address the potential-to-potential approach in the NOA.

5.2.3.4 Use the NSPS definition of modification

Four industry commenters (IV-D-264, 270, 284, 313) and twelve utility industry

commenters (IV-D-257, 268, 276, 279, 280, 281, 282, 286, 295, 322, 323, and IV-G-22)

suggested that the EPA adopt the definition of modification that was used in the NSPS developed

pursuant to section 111 of the CAA. These commenters argued that the CAA gives the EPA

statutory authority to use this definition of modification in the NSR program. Such an approach

would simplify the NSR program while improving compliance with the regulations, the

commenters argued.

One utility industry commenter (IV-D-282) cited 42 U.S.C. 7475(a), 7479(2)(C),

7411(a)(4), 7501(4), and 7502(c)(5) as indicative of Congressional intent that the EPA use the

same definition of modification for the NSPS and NSR programs. The commenter believed that

the use of the NSPS definition of modification would not restrict capacity utilization, would

create incentives for using pollution prevention and control projects, and would be consistent

with current modeling guidance and SIP demonstration requirements.

One industry commenter (IV-D-284) and one utility commenter (IV-D-286) endorsed the

NSPS modification test because it did not confiscate underutilized production capacity from

complying sources. The industry commenter (IV-D-284) maintained that using the NSPS

definition of modification would erase the problems in the current rules by making applicability

determinations without regard to fluctuations in annual utilization rates.
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One utility industry commenter (IV-D-276) claimed that the proposed approach conflicts

with the CAA’s definition of “modification,” and stated that under Parts C and D of the CAA,

Congress directed the term modification be deemed as it was under section 111. Seven utility

industry commenters (IV-D-257, 268, 280, 281, 295, 323, and IV-G-22) offered the section 111

definition of modification as one of three options that would be consistent with the CAA and

workable for affected sources. The commenters did not state a preference among the three

options. The commenters believed that a methodology based on the definition of modification in

sections 111, 169(2)(C), and 171(4) of the CAA would focus on an existing source’s true

capacity to emit a pollutant -- the hourly emission rate during some representative baseline

period. Instead of focusing on changes in the number of hours a facility was operated, which can

be influenced by innumerable factors, the CAA section 111 definition of modification would

focus on true increases in pollution as measured by the hourly emissions rate.

One utility industry commenter (IV-D-286) asserted that reviewing agencies also

supported the use of the NSPS methodology for determining whether a modification had

occurred.

Three industry commenters (IV-D-264, 270, 313) considered the NSPS definition of

modification to be a potential-to-potential approach, and recommended that the EPA adopt such

an approach.

5.2.3.5 Other alternative applicability approaches

Three utility industry commenters (IV-D-281, 282, 286) suggested that the EPA eliminate

NSR applicability for pollutants and sources subject to an approved emissions trading program. 

The commenters specifically requested that the EPA waive applicability for SO2 for utility or

opt-in sources subject to the Acid Rain rules, as well as for NOx for utility, large industrial, and

opt-in sources in States with an approved NOx trading rule. 

STAPPA/ALAPCO (IV-D-259) recommended that applicability determinations be made

using an actual-to-potential test. They believed that such a test would be more protective of air

quality because it makes NSR applicability consistent with SIP assumptions and avoids double

counting emission reductions.

One commenter (IV-D-313) presented an alternative approach for the EPA to use to

determine whether NSR should apply to a source. Under the approach, the changes at a source

would be evaluated cumulatively against the source’s maximum or permitted emission level

(such as a PAL). This emission level would not be reduced except under certain conditions such

as: (1) an area becomes nonattainment and the SIP requires emission reductions; (2) the source

becomes subject to another Federal, State, or local regulation that reduces emissions of many

types; (3) the source voluntarily reduces emissions by installation of emission control devices; or

(4) the source reduces emissions or reduces its permitted levels to provide offsets, etc., to another

source. The emission level would be reviewed every 5 years to coincide with the title V
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operating permit review. The emission level would be included in the title V permit and any

future changes in source configuration would be evaluated against this emission level.

Two utility industry commenters (IV-D-276, 322) recommended that the NSR program

should focus on new sources and new units at existing major sources. Regarding modifications

at existing units, the commenters suggested adopting the NSPS approach to determining a major

modification at an existing unit (any increase in the hourly emission rate at maximum capacity). 

Under this approach, an increase in the hourly emission rate must be demonstrated, along with an

increase in annual emissions over applicable thresholds. The commenters objected to the

proposed approach, which would trigger a modification based solely on a projected increase in

hours of operation (without an increase in hourly emission rate).

Response:

We disagree that an “allowable-to-allowable” test should be used to determine an

emissions increase at existing emissions units that have not undergone major NSR in recent

years. We believe that these types of units, having neither applied state-of-the-art control

technology nor undergone an air quality impact analysis, are the very sources that the Act

intends to be required to undergo major NSR when a physical or operational change results in a

significant net emissions increase at the unit. For those emissions units which have undergone

major NSR in the past 10 years, new requirements for units having a Clean Unit status are being

adopted as part of the rulemaking. These requirements provide a new applicability test based on

a determination that a project at a Clean Unit will not cause the need for a change in the

emission limitations or work practices in the permit for the Clean Unit that were adopted in

conjunction with the BACT or LAER requirement, as applicable. For units that have not

previously undergone major NSR, we believe the best approach is to use the “actual-toprojected-actual” test to determine the emissions increase that will result from the physical or

operational change to the unit. Thereafter, the Clean Unit test would apply as long as the unit

retains a Clean Unit status.

We disagree with the commenters who recommended using the NSPS definition of

“modification” under the NSR rules. We have addressed this issue previously and pointed out

the differences in the objectives of the two programs to explain why they rely on two different

approaches to the concept of “modification.” In keeping with our concern for increases in

annual emissions, we believe that “actual-to-projected-actual” test based on a tons per year

emissions increase is the best option for determining an emissions increase for modifications of

existing units that have not undergone major NSR in the past 10 years.

We disagree that our new approach conflicts with the Act’s definition of “modification.” 

The Act is stipulates that the emissions increase must result from the physical or operational

change, but it is silent on how to determine the emissions increase that will result from a

physical or operational change. We have exercised our discretionary authority to establish an

appropriate approach.
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The potential-to-potential test supported by these commenters is similar in many respects

to the CMA Exhibit B methodology that we presented in the 1996 NPRM. We received many

comments in response to the 1996 proposal regarding CMA Exhibit B. Although some

commenters believed the potential-to-potential test appropriately focuses on the significant

emission changes that could produce an adverse environmental impact, several commenters

believed that a potential-to-potential test would be environmentally detrimental. These

commenters believed that CMA Exhibit B and other potential-to-potential tests represent a

substantial weakening of the PSD program with large increases in actual emissions, which in

itself could lead to a significant deterioration of air quality. They also agreed with our concerns

regarding the creation of paper credits and other impacts on the broader air quality planning

process. 

We agree with these commenters that a potential-to-potential test for major NSR

applicability could lead to unreviewed increases in emissions that would be detrimental to air

quality. We also agree with the commenters that the potential-to-potential test could make it

difficult to implement the statutory requirements for state-of-the-art controls.

Our own concerns, coupled with the concerns expressed by some commenters, have

caused us to reject the use of the Exhibit B regulatory changes for general purposes of

determining whether a proposed physical or operational change would result in a major

modification. For the reasons stated above, we do not believe that a potential-to-potential

approach is acceptable for major NSR applicability as a general matter. However, we agree

with the commenters in part--some of the benefits of a potential-to-potential approach are

desirable. We believe that in more limited circumstances a potential-to-potential like approach

would be acceptable. Therefore, we are promulgating two new applicability provisions that

capture the benefits of a potential-to-potential approach but still have the necessary safeguards

to ensure environmental protection–PALs (see chapters 7 and 8) and Clean Units (see chapter

9). We believe that these two applicability provisions adequately address the concerns of the

commenters supporting a potential-to-potential applicability test. More detail on PALs and

Clean Units is provided in separate chapters of this document. For replacement units, however,

which some commenters felt should be allowed to use a “potential-to-potential” test, we have

decided not to require the use of the “actual-to-potential” applicability test as it applies to new

emissions units, but to allow such units to be treated in the same manner as existing emissions

units undergoing a physical or operational change. Consequently, under the new rules,

replacement units will be allowed to use the “actual-to-projected-actual” test to determine

whether such units’ post-change actual emissions will result in a significant emissions increase.

Concerning the comments suggesting that we should use the NSPS definition of

modification, we note that the CAA itself is silent on whether increases in emissions for purposes

of determining whether a physical or operational change constitutes a modification must be

measured in actual emissions, potential emissions, or some other currency. Therefore, we have

the discretion to determine the appropriate basis for modifications. In the NSPS program, we

determine whether there has been an “increase in any air pollutant emitted” by the source by
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comparing the hourly potential emissions under maximum capacity immediately before the

change to emissions at maximum capacity after the change. EPA and the courts have

recognized, however, that the NSR programs and the NSPS programs have different objectives,

and thus, we have utilized different emissions tests in the NSR programs. We have now

established a special applicability test for Clean Units (see chapter 9 of this volume and chapter

5 of volume 2) and an “actual-to-projected-actual” applicability test for any modified existing

emissions units (including EUSGU).

Under the two-part test set forth in Chevron, U.S.A. v. NRDC, 467 U.S. 837 (1984),

EPA’s interpretation of an ambiguous phrase in a statute that it is responsible for administering

should be followed as long as it is “a permissible construction of the statute.” Id. at 843-4. Our

discretion is not unbounded, however, and we may not adopt an interpretation that “completely

nullifies ... provisions meant to limit [our] discretion” or that “is at odds with ... [the statute’s]

structure and manifest purpose,” Whitman v. American Trucking Association, Inc. et al., 531

U.S. 457, 485-6 (2001). We believe our establishment of an “actual-to-projected-actual” test for

existing emissions units is based on a reasonable interpretation of the phrase “which

increases...or results in the emission of any air pollutant....” which is not contrary to the

manifest purpose of the NSR statutes.

We also fully considered the comments recommending other applicability tests such as

the allowable-to-allowable test, or retaining the “actual-to-potential” test . While each of these

tests has its merits, we believe that they are inappropriate for the general purpose of determining

whether a proposed physical or operational change would result in a major modification. 

However, applicability tests and options that we have included in the final rule (Clean Units,

actuals PALs, and “ actual-to-projected-actual” for modified existing emissions) provide broad

flexibility to allow sources to respond to rapidly changing markets and plan for future

investments in pollution control and prevention technologies.

Comment:

5.2.4 Other General Comments on NSR Applicability Test

One regulatory agency commenter (IV-D-305) recommended that any changes to the

applicability provisions must be accompanied by provisions ensuring protection of AQRVs in

Class I areas. 

One regulatory agency commenter (IV-D-216) agreed with the EPA’s statement that the

actual-to-future-actual modification test should only apply to existing sources. 

One utility industry commenter (IV-D-261), who belonged to a group that generally

supported EPA’s applicability proposal, emphasized that the support was based on an assumption

that the EPA would retain the PCP exclusion. The commenter argued that the PCP exclusion

and other applicability provisions were closely related. 
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Another utility industry commenter (IV-D-282) believed that the universe of NSR

applicability determinations had reached “overwhelming proportions.” This commenter gave an

example in which EPA Region VII decided that changes to be made to a steam turbine at the

Sunflower Electric Power Company in Kansas were subject to NSR review. The commenter

asserted that Region VII incorrectly required a PSD permit application for a unit that did not emit

any regulated pollutants and was not subject to CAA requirements. 

Another utility industry commenter (IV-D-300) indicated that the NOA would have a

“chilling effect” on future voluntary efforts by the utility industry.

Two industry commenters (IV-D-265, 292) strongly urged the EPA to retain a Clean Unit

exclusion and offered extensive rationale for this view. One commenter (IV-D-265) urged that

the Clean Unit test also applied to units that were netted out.

Two industry commenters (IV-D-260, 313) provided four examples of the adverse effects

of the current NSR policy as an Appendix to their comments concerning the NOA.

Response:

Many of the comments in this section have been addressed in the responses to comments

in Sections 5.2.2 and 5.2.3, above. In general, as we discussed in those sections, we believe our

new rules meet the statutory requirements, ensure environmental protection, and provide

flexibility for sources. The responses below address those comments not already specifically

discussed.

We agree with the commenter that protection of AQRV is important, as is protection of

the NAAQS and PSD increments. While we chose not to adopt the “actual-to-enforceablefuture-actual” test that the commenter opposed, the new applicability test for existing units

undergoing physical or operational changes does not change the way in which source impact

analyses are to be completed once it is determined that a major modification (significant net

emissions increase at the source) has occurred. If the physical or operational change does not

result in a major modification, we believe that most of the projects will undergo minor NSR,

which should include a determination that the source will not cause or contribute to a NAAQS

violation. Where a source would cause an emissions increase that is less than significant, we

believe it is unlikely that its emissions would cause a problem with the PSD increments or

AQRVs. Nevertheless, when such problems are identified, States should take the appropriate

course of remedy through their approved implementation plan. (The commenter may be

referring to the new procedures for protection of Class I areas, as proposed in the 1996

proposal. We have not made an ultimate decision not to promulgate such procedures; however,

we did decide not to promulgate such procedures in this particular rulemaking.).
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Consistent with the request by some of the commenters, we have adopted the Clean Unit

test and the PCP exclusion in the new rules. These topics are discussed in more detail in chapter

9 for Clean Units, and chapter 10 for PCPs.

5.3 Comments on the Statutory and Regulatory Bases for

Applicability

Comment:

5.3.1 Physical Change or Change in the Method of Operation

Two industry commenters (IV-D-265, 292) and two utility commenters (IV-D-269, 271)

felt that the EPA was extending the circumstances under which the provisions for a physical

change or change in the method of operation would occur. These commenters interpreted the

EPA’s statements in the NOA as extending the modification provisions to any project that

improves reliability or efficiency, reduces costs, or involves replacements that reflect improved

design. The commenters were concerned that the overall effect of EPA's proposal would be to

draw previously unregulated changes into NSR applicability. One industry commenter

(IV-D-265) stated that everything a company did to improve its market position could

conceivably be classified as a physical change or change in the method of operation, including

changing company leadership or installing a new computer system. The utility industry

commenters (IV-D-269, 271) contended that the policy was contrary to the EPA’s goal of

reducing emissions overall. The commenters (IV-D-269, 271) stated that utilities should be

encouraged to make beneficial improvements that decrease emissions per unit of energy

produced, not penalized for making improvements.

Four industry commenters (IV-D-263, 284, 308, 311) and ten utility industry commenters

(IV-D-252, 257, 276, 280, 282, 295, 316, 322, 323, and IV-G-22) opposed what they termed

EPA’s “activist policy” to expand NSR applicability to increases in utilization. These

commenters insisted that EPA policy and rules had always allowed increases in capacity

utilization without triggering a modification. Two industry commenters (IV-D-263, 308) and one

utility industry commenter (IV-D-286) cited the rules at 40 CFR 52.21(b)(2)(iii)(f) and

Congressional intent as allowing increases in hours of operation or in production rate without

triggering a modification. Expanding NSR jurisdiction to utilization increases would penalize

American industry for periodic underutilization of existing equipment, the commenters

maintained.

Two industry commenters (IV-D-285, 311) stated that facilities had always been allowed

to operate up to their design capacities in the absence of other restrictions. One of the

commenters (IV-D-282) argued that capacity utilization increases were common sense

exemptions just like routine maintenance and repair. The commenter asserted that restricting

increases in capacity utilization would be inconsistent with Congressional intent and judicial

precedent; it would also strangle American industry and exacerbate enforcement.
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One industry commenter (IV-D-265) viewed the applicability provisions in general as

tantamount to suggesting that any change would be subject to actual-to-potential accounting. 

The commenter gave an example of a company putting a statue of its founder over its gate. Such

a change would not be routine, so would it trigger NSR?

A regulatory agency commenter (IV-D-216) recommended that all changes be considered

physical or operational changes, in which case the applicability determination would be made on

the basis of whether a significant net emissions increase occurred. Emission offsets would be

required for any significant net emissions increase. The commenter (IV-D-216) also believed

that increases in capacity or PTE should be considered modifications.

5.3.2 Increase in Emissions

Four industry commenters (IV-D-264, 270, 292, 313) stated that emission increases that

were not the result of the modification currently were not and should not be subject to NSR.

One industry commenter (IV-D-292) believed that increases in emissions not associated

with the change itself should not be subject to NSR review. This commenter gave an example of

a recovery furnace in which criteria pollutant emissions were not increased when a wet bottom

precipitator was replaced with a more efficient dry bottom precipitator. However, NSR

applicability would be triggered by the modification, and emissions of pollutants not influenced

by the change would also be reviewed. This approach would discourage the source from

incorporating the environmentally beneficial, pollution preventing change.

A regulatory agency (IV-D-262) commented that changes in the operating schedule that

lead to increased emissions should not be considered modifications.

Response:

We agree with these commenters that only those emission increases related to a physical

change or a change in the method of operation should be considered increases under the

definition of “modification.” Both the statute and implementing regulations suggest that there

should be a causal link between the proposed change and any post-change increase in emissions,

that is, "...any physical change or change in the method of operation that would result in a

significant net emissions increase..." [emphasis added]. See, for example, existing

§52.21(b)(2)(i). 

Similarly, we agree with the commenters who argued that an emissions increases

resulting from increased utilization alone should not be subjected to review as major

modifications unless the increase results from a physical or operational change or is the result of

an action that is otherwise prohibited by a condition of the currently-enforceable permit. 

Accordingly, we have decided not to adopt the proposed applicability approach described in the

NOA. Instead, under the final rules, when projecting post-change actual emissions, a source
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may exclude emissions resulting from an increase in utilization (e.g., demand growth) if the

emissions unit was able to accommodate the increase in utilization during the 24-month period it

selected to establish the baseline actual emissions and the increased utilization of existing

equipment is not related to the change.

In response to the commenters who suggested we have extended the reach of the NSR

program to any change at a facility, we note that, in order to trigger NSR, the modification must

affect one or more emissions units. The types of modifications suggested by the commenters

generally would not affect emissions units at the facility and, therefore, would not be subject to

review under the final rules.

Comment:

5.3.3 Routine Maintenance, Repair, and Replacement

Six industry commenters (IV-D-265, 270, 277, 289, 298, 313) and twelve utility industry

commenters (IV-D-257, 268, 269, 271, 275, 280, 281, 295, 322, 323, 328, and IV-G-22) stated

that the current NSR rules excluded routine maintenance, repair, and replacement from the

modification provisions. These commenters believed that the changes that the EPA was

proposing would require applicability determinations in nearly all circumstances, which would

prevent the use of the routine maintenance and repair exclusion. They assert that the proposed

changes would also be contrary to previous regulations and the CAA. The commenters cited

numerous examples of routine maintenance, repair, and replacement, and stated that such

activities were necessary to operate facilities safely and properly. They also stated that requiring

applicability determinations regarding these types of changes would be extremely burdensome

and lead to inevitable delays.

Six utility industry commenters (IV-D-257, 280, 281, 295, 323, and IV-G-22) explained

that industry-wide statistics show that coal handling systems were repaired or replaced at least

5,000 times each year and that $100 million was spent annually on valves and valve parts. These

commenters also disparaged a recent applicability determination by EPA’s Region VII in which

the replacement of deteriorated turbine blades did not constitute “routine” replacement. In their

view, new and improved equipment is frequently the only type available, and should fall in the

category of routine repair and replacement.

One utility industry commenter (IV-D-261) stated that their group’s support of changes to

the applicability provisions was contingent upon a “fair and reasonable” definition of what was

routine in the electric generating industry. This commenter offered to assist the EPA in defining

routine maintenance and repair for the electric utility generating industry. Another utility

industry commenter (IV-D-282) cited the November 19, 1991 EPA policy memo from John

Rasnic as the correct interpretation that repair and replacement of existing equipment did not

have to trigger NSR.
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Three industry commenters (IV-D-265, 270, 277) and one utility industry commenter

(IV-D-269) indicated that the EPA has never defined “routine repair and replacement.” One

industry commenter (IV-D-265) also questioned whether a replacement pump, which was more

efficient because it was newer, would trigger NSR.

Two industry commenters (IV-D-221, 250) requested clarification as to whether changes

in power in turbines and turbocharged engines occurring as a result of changes in the weather and

routine turbine parts replacement were exempt from the NSR process. The commenters 

explained that routine but infrequent maintenance activities like turbine parts replacement were

part of manufacturer's maintenance. The commenters explained that maintenance such as

changing rotor compressor blades may result in the replacement of an entire gas generator

assembly, for the sake of convenience and to save money. One commenter (IV-D-250) referred

to the "Standards Support and Environmental Impact Statement Volume I: Proposed Standards

of Performance for Stationary Gas Turbines" which states that "substantial portions of turbines

may be replaced as a matter of routine maintenance during normal overhauls," and that

replacement of parts like stator vanes, bleed valves, compressor rotor blades, air intake snouts,

nozzle box, etc. was a normal part of routine turbine maintenance. 

One utility industry commenter (IV-D-328) explained that turbine blades need to be

replaced every 5 to 10 years due to the corrosive effect of superheated steam. The commenter

further noted that recent improvements in blade design have increased the efficiency of the

turbine blades without increasing the emissions. The commenter believed that such changes

should be considered routine and exempt from major NSR. 

STAPPA/ALAPCO (IV-D-259) believed that like-kind replacements for maintenance and

repair should not be considered new equipment subject to modification provisions. The

commenter further indicated that it was critical to distinguish between new equipment being

added at a facility and modifications to existing equipment.

One environmental group (IV-D-303) maintained that the EPA should narrow the

categorical exclusions for routine maintenance, repair, and replacement, as the current provisions

can be interpreted so broadly as to allow grandfathered sources to continue to escape NSR

applicability.

Response:

We disagree with the commenters who claimed that our proposed changes would have

prevented the use of the routine maintenance, repair and replacement exclusion. The proposal

was not intended to address that particular issue. Nevertheless, we did not select the option

presented in the NOA for the final rulemaking. In addition, we are planning to propose

amendments which address the issue of routine maintenance, repair, and replacement in a

forthcoming notice of proposed rulemaking. Commenters will be given an opportunity to discuss

the merits of our proposal when the notice is formally published in the Federal Register.
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Comment:

5.3.4 “Begun Normal Operations”

Thirteen industry commenters (IV-D-264, 265, 270, 277, 285, 289, 292, 293, 307, 310,

312, 313, 319) and twelve utility industry commenters (IV-D-257, 268, 271, 279, 280, 281, 282,

295, 300, 312, 323, and IV-G-22) objected to EPA’s statement in the NOA that no existing

source that had been subject to a modification could be said to have already “begun normal

operations.” These commenters maintained that the law and existing regulations already

provided for an actual-to-actual test for modifications in non-utility sources, at least for like-kind

replacements. Some of the commenters interpreted the WEPCO language more broadly,

suggesting that the WEPCO court decision did not limit the application of the

actual-to-future-actual methodology to like-kind replacements or to utilities. The commenters

indicated that the EPA had mischaracterized the current NSR rules to suggest that a unit that had

undergone any non-routine physical or operational change was and always had been deemed to

have “not begun normal operations,” thus making it subject to the PTE test.

One utility industry commenter (IV-D-279) extended this argument with the

interpretation of the Puerto Rican Cement court case made by the commenter’s organization. 

[Puerto Rican Cement Co. v. EPA, 889 F.2d 292 (1st Cir. 1989)]. The commenter maintained

that, unlike EPA’s interpretation, “Puerto Rican Cement is in harmony with the WEPCO holding

that those nonroutine physical changes that do not so alter the character of the unit that the unit

can be considered to have not ‘begun normal operations’ must not trigger the actual-to-potential

methodology for calculating the net emissions increase.” 

One industry commenter (IV-D-307) maintained that the EPA could not use the proposal

interpretation concerning the use of PTE for existing units, if adopted, to “impose retroactive

liability for reading the provision literally over the past 18 years.”

Three industry commenters (IV-D-264, 270, 313) believed that many State reviewing

authorities did not interpret the current applicability provisions to require that existing units 

(for example, those that had already begun normal operations) must use the PTE methodology.

The commenters (IV-D-264, 270, 313) believed that the validity of the applicability provisions in

the current regulations had never been affirmed in court, and that it was unlikely that the

regulations would stand up in court if repromulgated as proposed in the NOA.

Four industry commenters (IV-D-264, 270, 293, 313) also believed that the EPA had

acknowledged the difficulty of using a begun normal operations test in the WEPCO preamble

when the EPA stated that “because the ‘begun normal operations’ criterion is highly fact

dependent and its application is inherently case-by-case, it may be an uncertain indicator of what

emissions test will be applied in a given instance.” [57 FR 32317]
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Response:

We disagree with the commenters who believe that the court in WEPCO rejected our

interpretation of the phrase “begun normal operations” for all sources. We have set forth our

legal rationale for the existing regulations in various preambles and policy memoranda. The

purpose of our proposed rules was not to seek alteration of these interpretations, but to request

comment on how our approach for determining emissions increases might be improved. 

Therefore, we consider comments addressing the phrase “begun normal operations” to be

outside the scope of this rulemaking.

5.4 Specific Comments on Components of NSR Applicability Test

Comment:

5.4.1 Support for EPA’s Proposal on Actual-to-enforceable-future-actual

Test 

Ten industry commenters (IV-D-208, 210, 254, 263, 270, 299, 308, 311, 315, 321), one

utility industry commenter (IV-D-261), and one regulatory agency commenter (IV-D-216)

generally supported an actual-to-future-actual test for all source categories, although they did not

necessarily support the EPA’s specific proposal for the actual-to-enforceable-future-actual test.

One regulatory agency commenter (IV-D-216) supported the EPA’s proposal if all

changes were considered physical or operational changes and any source with a significant net

emissions increase was required to certify offsetting emissions. This commenter further stated

that any source not obtaining offsets prior to the applicability test would later be required to

obtain three times as many offsets.

One utility industry commenter (IV-D-261) supported the actual-to-actual test, arguing

that the courts recognized that the PTE methodology was based on an absolutely worst case

scenario, even when more realistic predictions were available.

5.4.2 Oppose Actual-to-future-enforceable-actual Test

Thirty industry commenters (IV-D-219, 221, 254, 260, 263, 264, 265, 266, 267, 270, 272,

283, 284, 285, 289, 292, 293, 298, 301, 302, 304, 306, 307, 308, 310, 311, 312, 313, 319, 324),

twenty utility industry commenters (IV-D-252, 257, 261, 267, 271, 275, 276, 278, 279, 280, 281,

282, 294, 295, 300, 312, 318, 322, 323, and IV-G-22), five regulatory agency commenters

(IV-D-211, 246, 255, 287, 305), STAPPA/ALAPCO (IV-D-259) and two environmental

commenters (IV-D-291, 303) opposed the EPA’s proposed actual-to-enforceable-future-actual

test for the various reasons indicated below.
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5.4.2.1 Oppose because contrary to the CAA and WEPCO

Four industry commenters (IV-D-265, 279, 285, 293) and seven utility industry

commenters (IV-D-268, 271, 275, 281, 282, 294, 300) maintained that the EPA’s proposal was

contrary to the CAA. Four industry commenters (IV-D-267, 270, 272, 274) and seven utility

industry commenters (IV-D-252, 269, 271, 275, 276, 318, 322) argued that the proposal was

contrary to the WEPCO rule. Four utility industry commenters (IV-D-268, 271, 275, 281)

maintained that requiring sources to obtain applicability determinations every time they

undertook any physical or operational change at the source was a “radical change to existing

law.” 

5.4.2.2 Oppose because burdensome to sources and permitters

Seven industry commenters (IV-D-274, 283, 284, 301, 304, 306, 307), eight utility

industry commenters (IV-D-261, 271, 275, 278, 281, 282, 294, 318), two regulatory agency

commenters (IV-D-255, 287) and STAPPA/ALAPCO (IV-D-259) believed that the

actual-to-enforceable-future-actual test provisions would be burdensome. One industry

commenter (IV-D-307) argued that the addition of different applicability methods for different

types of changes (that is, modifications and netting) would add complexity and burden to the

program.

One utility industry commenter (IV-D-261) believed that the proposed approach would

adversely affect the ability to make reasonable and customary changes. Another utility industry

commenter (IV-D-281) stated that the EPA’s proposed methodology would require applicability

determinations before making any type of change, which was infeasible.

One utility industry commenter (IV-D-261) and one regulatory agency commenter

(IV-D-287) believed that extending the future-actual test would impose significant administrative

burdens on reviewing agencies.

5.4.2.3 Oppose because not environmentally protective enough

One regulatory agency commenter (IV-D-211) and one environmental commenter 

(IV-D-303) believed the proposal would lead to detrimental effects on air quality.

5.4.2.4 Oppose using actual-to-future-actual test for any source

categories

One regulatory agency (IV-D-287), STAPPA/ALAPCO (IV-D-259) and two

environmental groups (IV-D-291, 393) opposed allowing any facility to use an

actual-to-future-actual test for determining whether a modification had occurred. 

STAPPA/ALAPCO (IV-D-259) believed that utility industry deregulation would mean that

adequate emission projection and tracking data was no longer available, and that this information
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was not currently available for other industries. Therefore, regulators and the public would not

have a “high level of confidence that their data are sufficient to accurately assess NSR

applicability.”

5.4.2.5 Retain actual-to-future-actual for utilities and do not extend

Four regulatory agency commenters (IV-D-211, 246, 255, 305) recommended retaining

the actual-to-future-actual test for utilities, but not extending its applicability to other industries.

5.4.2.6 Retain actual-to-future-actual test for utilities and extend

Twenty industry commenters (IV-D-221, 250, 254, 263, 264, 266, 267, 270, 273, 274,

285, 289, 298, 302, 304, 306, 307, 308, 311, 313) and five utility industry commenters

(IV-D-252, 269, 294, 312, 318) recommended that some version of the actual-to-future-actual

test should be extended to all source categories. However, all of these commenters opposed

eliminating demand growth and adding an enforceable limit.

Twelve industry commenters (IV-D-263, 264, 266, 270, 285, 298, 304, 306, 307, 308,

311, 313) and two utility industry commenters (IV-D-294, 312) recommended retaining the

current applicability test as included in the WEPCO rule, but extending it to all industries. 

However, two industry commenters (IV-D-298,307) identified the WEPCO rule as a second

choice to a PTE-to-PTE applicability test. Two industry commenters (IV-D-298, 304)

interpreted the WEPCO court case and current regulations at 40 CFR 52.21(b)(21)(iv) to already

allow any non-utility unit that had begun normal operations to use the actual-to-actual

methodology. Six industry commenters (IV-D-254, 264, 270, 285, 289, 313) preferred that the

EPA retain the actual-to-future-actual test as proposed for all source categories in the July 23,

1996 NSR Reform package (61 FR 38250).

Three industry commenters (IV-D-266, 298, 302) preferred that the EPA add

recordkeeping and notification requirements rather than eliminating the actual-to-future-actual

methodology. One of these commenters (IV-D-266) further suggested that the information be

publicly available. One industry commenter (IV-D-254) suggested that the source owner should

be required to maintain records and estimates of actual emissions on-site and immediately report

to the reviewing agency should the increase in actual emissions resulting from the change ever

exceed the applicable NSR significance level. The commenter maintained, however, that on-site

recordkeeping was sufficient and that automatic submission of emissions data would be

burdensome.

One utility industry commenter (IV-D-252) recommended that the WEPCO rule be

amended to identify a protocol for post-change verification of future actual emission estimates. 

There would also be penalties for not complying with the protocol. In this manner, all sources

would be able to use the actual-to-future-actual methodology.
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5.4.2.7 Other reasons to oppose

Eight industry commenters (IV-D-265, 285, 289, 301, 302, 307, 312, 313), four utility

industry commenters (IV-D-271, 282, 300, 316) and one regulatory agency (IV-D-255) opposed

the actual-to-enforceable-future-actual test for various reasons.

One utility industry commenter (IV-D-316) was concerned that the proposed applicability

approach would negate the alternative fuel use exemption currently found in the PSD rules. This

commenter thought that the temporary emission limit would prohibit plant owners from

purchasing a lower cost coal or switching to a different coal mine, changes that would not be

reviewed under the current rules. Another utility industry commenter believed the proposal

would disrupt State and local agency minor NSR programs.

Another utility industry commenter (IV-D-271) contended that the proposal was in direct

opposition to the efforts of electric utilities to maximize the efficiency of generating units and

subsequently reduce CO2 and other green house gas emissions. The commenter was concerned

that the revocation of the WEPCO rule would derail future efforts to reduce carbon dioxide

emissions.

One industry commenter (IV-D-307) argued that the actual-to-enforceable-future-actual

methodology should also apply to new units when their operation was limited physically or

operationally by the existing equipment. In such cases, the commenter believed, the future

emissions could be estimated.

Two industry commenters (IV-D-289, 313) viewed the proposed provisions as the EPA’s

attempt to “create civil liability (for example, penalties) if a company underestimates the relevant

emissions in an applicability determination, even if it did everything possible to make an accurate

estimate.” The commenters objected to the interpretation that emission estimates must be

correct, not just reasonable.

One regulatory agency (IV-D-255) opposed extending the actual-to-future-actual test to

non-utilities because the proposal did not require verification of emissions or consequences for

exceeding the projected emission level.

Two industry commenters (IV-D-285, 312) felt the proposal was unclear regarding how

future actual emissions would be projected.

5.4.2.8 Oppose because proposal is restrictive

Nine industry commenters (IV-D-265, 274, 284, 285, 292, 298, 310, 312, 324) and six

utility industry commenters (IV-D-271, 275, 281, 282, 294, 318) felt that the proposed

applicability test would be more restrictive than the current rules. One industry commenter

(IV-D-265) believed that the proposed methodology would result in tighter emission limits that
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would constrain production. A utility industry commenter (IV-D-294) stated that the proposal

would penalize utilities that were not currently operating at full capacity by forcing them to

accept permit limitations for any nonroutine changes.

Another industry commenter (IV-D-265) believed that the methodology would be

especially problematic for plants that had experienced a significant period of below-capacity

operation. These plants would not be able to avoid NSR without sacrificing production capacity,

as any limit would be based on their unrealistically low past actual emissions.

Another industry commenter (IV-D-324) was concerned that EPA’s proposal would

unnecessarily restrict capacity increases, thereby discouraging efficiency improvements.

One industry commenter (IV-D-301) claimed that the proposal would sweep too many

modifications into the NSR program. 

5.4.2.9 Oppose because proposal is the same as actual-to-potential

test

Six industry commenters (IV-D-265, 292, 293, 298, 304, 319) and twelve utility industry

commenters (IV-D-257, 271, 276, 279, 280, 281, 294, 295, 300, 322, 323, and IV-G-22) opposed

the proposed applicability test, claiming that it was only another version of the current

actual-to-potential test. These commenters maintained that the

actual-to-enforceable-future-actual test was essentially the same as assuming a synthetic minor

permit to limit post-change emissions below the major source threshold amounts, with the only

difference being the length of the emission limit (that is, 10 years versus permanent). According

to these commenters, the proposed methodology and the current rules each allow the same two

choices--undergo NSR or limit emissions to past actual levels.

One industry commenter (IV-D-292) asserted that the current actual-to-potential

methodology restricted sources from using permitted capacity, and that the proposed approach

exacerbated the problem. Many companies intentionally had emission limits that were higher

than actually anticipated to establish a safety buffer between permitted levels and actual

emissions, as well as to cover small emission increases due to equipment degradation over time. 

This buffer allowed for variation in normal source operations and helped assure compliance with

the permitted limits. The commenter maintained that many companies routinely operated at

levels below the permitted limits.

The commenter (IV-D-292) gave an example of a company with permitted VOC

emissions of 500 tpy, but average actual emissions for the past 5 years of 300 tpy. The current

NSR rules would prohibit the source from increasing emissions to levels more than 340 tpy

without a full NSR review. If the source then wanted to make a change, it would have to either

accept an emission limit that was 52 percent less than the current limit or risk months of permit

negotiations and additional costly control requirements. Such a scenario would even prevent the
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installation of pollution prevention technology. The commenter argued that the NSR proposal

did not offer any relief from these problems.

5.4.2.10 Oppose because sources can already take an enforceable limit

Five industry commenters (IV-D-219, 254, 283, 284, 310), one utility industry

commenter (IV-D-282), and one regulatory agency (IV-D-305) maintained that the proposed

applicability test did not improve the NSR program because a source can already take an

enforceable limit to avoid regulation. Thus, the EPA’s proposed approach would complicate the

existing program while failing to provide any relief from administrative burdens. One of the

industry commenters (IV-D-284) argued that the temporary limit was no different than a

synthetic minor limit, except that the representative baseline emission level was artificially

diminished.

Response:

We agree with the commenters who argued that the “actual-to-enforceable-futureactual” test proposed in the NOA would have been unnecessarily restrictive and burdensome due

to its creation of a temporary emissions cap and the elimination of the demand growth exclusion. 

In addition, as mentioned above in the responses following section 5.3.2, we have concluded that

it is appropriate to extend the demand growth exclusion to all existing emissions units and the

emissions cap placed on units under the “actual-to-enforceable-future-actual” approach would

have likely prohibited such increases from occurring. The final rulemaking does not include this

test, but instead adopts the “actual-to-projected-actual” test for modifications to existing

emissions units . We disagree, however, with those commenters who felt that either test would

have adverse environmental effects. Under either approach, we indicated that the requirements

for an ambient impact analysis would follow the same procedures as contained in the current

rules. That is, emissions levels would continue to be determined in accordance with the existing

definition of “actual emissions,” which was to be retained for all NSR purposes other than

determining whether physical or operational change at an existing emissions unit (other than an

electric utility steam generating unit) would result in a significant emissions increase. The

requirement for an ambient impact analysis would continue to be triggered by an increase that

results in a significant net emissions increase, i.e., a major modification. The new approach

better ensures that a project will not be considered a major modification where there will not be 

a significant emissions increase resulting from the modification project at the source. 

Accordingly, the new approach can be summarized as follows: 

• A source will determine the pre-change (baseline) actual emissions by calculating an

average annual emissions rate, in tons per year, using any consecutive 24-months during

the 10-year period immediately preceding the change. This rate may need to be adjusted

to reflect current emission factors.
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• A source will project post-change actual emissions rates, in tons per year, to reflect the

increase in actual emissions resulting from the proposed change, that is, excluding

increases that could have legally been accomplished during the baseline period, and that

are not related to the change. The projected actual emissions are not required to be

enforceable permit limits.

• When there is a reasonable possibility that the project may result in a significant

emissions increase (even though the projection of post-change emissions shows no

significant increase), the source must maintain sufficient emissions information for at

least 5 years following a physical or operational change to demonstrate that projected

actual emissions do not represent a significant emissions increase from the emissions

unit(s) modified, or affected by the modification. If during those years of recordkeeping

the source determines that its post-change annual emissions rate exceeds the baseline

actual emissions by a significant amount and is inconsistent with the original projection

of post-change emissions, then the source must submit a report to the reviewing

authority.

We are eliminating the existing applicability test for projecting post-change emissions at

existing EUSGUs and allowing them to use the new “actual-to-projected-actual” test now

applicable to changes at all existing emissions units, including replacement and reconstructed

units. In addition, EUSGUs must submit a notice to the reviewing authority prior to making the

proposed changes, and must report its post-change annual emissions rate to the reviewing

authority for the required period of time after the change. Also, we are codifying the

"2-years-in-5" presumption for calculating the baseline actual emissions for modified EUSGUs. 

However, the "2-years-in-5" baseline method does not apply to EUSGUs when calculating

contemporaneous emissions changes for netting purposes. Instead, EUSGUs must continue to

use the current procedures based on the definition of “actual emissions.” 

We agree that the reporting requirements that we originally proposed to apply to all

existing units would have been a burden on sources, but more so on the reviewing authority,

(that is to report every year for 5 or 10 years the annual emissions from the affected emissions

units, regardless of whether the emissions level exceeded the predicted level). However, we

disagree with the commenters who thought the added recordkeeping requirements would be too

burdensome. The new rules require a source to keep a record of its post-change emissions

projections, and, where there is a reasonable possibility that the project may result in a

significant emissions increase, to track the post-change emissions and retain those records on

site for 5 years (10 years if the physical or operational change at an existing emissions unit will

increase the unit's design capacity or its potential to emit a regulated pollutant) from the date a

modified emissions unit returns to regular operation. We believe that the new “actual-toprojected-actual” test warrants these recordkeeping requirements (instead of a temporary

emissions cap, as required by the “actual-to-potential” test) in order to enable the source and

the reviewing authority to ensure that the physical or operational changes made at unit do not

actually result in a major modification. We believe the benefits to sources of the new
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applicability test outweigh any residual burden placed on them to maintain the necessary postchange source records when they are required to do so. See also our response to comments on

this issue following section 4.2 of this volume. 

We believe that these added recordkeeping and reporting (of emissions exceedances)

measures will improve the overall compliance rate and provide the information necessary for

reviewing authorities to assure that such changes are made consistent with the CAA

requirements. Altogether, we believe that the final rules focus on the types of changes occurring

at existing emissions units that are more likely to result in significant contributions to air

pollution. The final rules will also require greater accountability on a source’s part to retain

information from which the reviewing authority can determine the nature of any changes that are

made at specific emissions units, as well as the actual emissions increases that are associated

with those changes. We believe these added benefits far outweigh the additional burden of

maintaining the records. Additionally, many existing SIP programs (such as minor NSR

programs) already require such emissions tracking, so this requirement is generally not

considered to be an inappropriate or unnecessary burden on industry.

We disagree with those commenters who believed the actual-to-projected-actual test was

contrary to the CAA and WEPCO. Please see our responses in Sections 5.2.3 and 5.3.4 for

further details.

For our response as to why we do not believe the actual-to-projected-actual test should

include an enforceable emission cap , see Section 5.5.

Comment:

5.4.3 Adequacy of Existing Emission Projection and Tracking Abilities

5.4.3.1 Adequacy of existing emission projection and tracking

abilities for utilities

Two industry commenters (IV-D-263, 308) believed that the utility industry emission

projection and tracking abilities were adequate for purposes of applying the

actual-to-enforceable-future-actual test. One utility industry commenter (IV-D-294) stated that

power pools will continue to require utilities to accurately predict projected capacity utilization. 

Therefore, the commenter argued, emission projection and tracking abilities will continue to

support the actual-to-future-actual test.

STAPPA/ALAPCO (IV-D-259) maintained that the deregulation of the utility industry

would change its ability to provide accurate emission projections. Local public utility

commissions had historically required utilities to make reliable estimates of future capacity

utilization, but deregulation of electric utilities was quickly reducing the public utility
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commission’s role. Therefore, according to STAPPA, utilities will no longer be able to

accurately project emissions. 

5.4.3.2 Adequacy of existing emission projection and tracking

abilities for non-utilities

Fourteen industry commenters (IV-D-210, 221, 254, 260, 263, 264, 270, 273, 289, 299,

301, 308, 311, 313), two utility industry commenters (IV-D-252, 254), and one regulatory agency

commenter (IV-D-253) maintained that non-utility industry facilities do have sufficient

recordkeeping and reporting to track future emissions, with reliability comparable to that of the

utility industry sector. These commenters believed that requirements under the title V operating

permit program and other regulations adopted pursuant to the 1990 CAAA had improved the

emission projection and tracking abilities of non-utility sources so that they would be able to

comply with the actual-to-future-actual test. Furthermore, these commenters suggested that EPA

now has broad experience with a number of industries other than utilities.

Six industry commenters (IV-D-210, 263, 264, 270, 308, 313) cited the CAM rule as

providing substantially more information from the non-utility sector than was available when the

WEPCO rule was promulgated. Two industry commenters (IV-D-260, 313) noted that

requirements for yearly emission inventories would mean that adequate emissions tracking

information was available. These commenters further indicated that annual emission statements

of actual VOC and NOx emissions were currently required in the Northeast Ozone Transport

Region. Another industry commenter (IV-D-301) stated that they had completed an extensive

and costly project to establish accurate emission factors for many rubber manufacturing

processes, and that these factors could easily be used to quantify post-modification emissions. 

One industry commenter (IV-D-311) stated that the ability to track emissions was dependent

upon assuming that demand for the company’s product was within projections.

Two regulatory agencies (IV-D-246, 287) and STAPPA/ALAPCO (IV-D-259)

maintained that non-utility industry facilities did not have adequate emission tracking and

projection capabilities. STAPPA/ALAPCO (IV-D-259) stated that emission factors and other

methods used by non-utility sources were not sufficiently accurate to quantify either past

emissions or future actual emissions. Two of these commenters (IV-D-246, 259) further

commented that most industries did not have ability to track NOx emissions in particular. One

commenter (IV-D-246) noted that emissions tracking might be adequate for some non-utility

sources using continuous emissions monitors (CEMs), or that other stringent quality

assurance/quality control measures might be acceptable on a case-by-case basis.
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5.4.3.3 Adequacy of existing emission projection and tracking

abilities should not be a consideration

Two industry representatives (IV-D-260, 313) commented that the adequacy of existing

emission projection and tracking abilities should not be a consideration in determining whether

to apply an actual-to-future-actual test. The commenters believed that the uncertainties

associated with an actual-to-future-actual test were probably less than those for an

actual-to-potential test because they were based on known factors and did not include safety

factors.

Response:

We believe that the tracking requirements in the final rules alleviate many of the

commenters’ concerns about industry’s alleged inability to predict their post-change actual

emissions increases. Numerous industry commenters indicated that they believed adequate

emissions predictions could be made. We agree that all sources are now in a better position to

predict post-change emissions increases. Nevertheless, when, according to its best calculations,

the physical or operational changes being planned for one or more existing emissions units at a

major stationary source will not constitute a major modification, yet there is a reasonable

possibility that the project may result in a significant emissions increase, the source must

document its findings [including a description of the project, an identification of emissions units

whose emissions could increase as a result of the project, the baseline actual emissions for each

emissions unit, the projection of post-change actual emissions before adjustments, the adjusted

post-change emissions (post-change actual emissions, or potential emissions) and the reason for

the adjustment (for example, increase in product demand unrelated to the change)]. If the

projection of post-change actual emissions shows a significant increase, the source must also

document its compliance with applicable netting procedures if it uses offsetting emission

reductions elsewhere at the major stationary source to avoid being a major modification. With

the exception of EUSGUs, however, sources are not required to report their post-change annual

emissions unless the recorded annual emissions rate in any given year exceeds the baseline

actual emissions by a significant amount and is inconsistent with the original projections.

In addition, where there is a reasonable possibility that the project may result in a

significant emissions increase (even though a source’s projection of post-change emissions

shows that it would not), the final rules require a source to maintain emissions data for all

emissions units that are changed. The source must maintain this information and compare it to

the calculated baseline actual emissions for at least 5 years. (We will presume that any

emissions increases that occur after 5 years are not associated with the physical or operational

changes.) If the project will increase the design capacity or potential to emit of any emissions

unit, the source must maintain and compare this data for that emissions unit to its baseline

actual emissions for 10 years. (This extended period allows for the possibility that the increased

capacity that the source added via the physical or operational changes could be fully utilized

during a normal business cycle.) The information that must be maintained may include
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continuous emissions monitoring data, operational levels, fuel usage data, source test results, or

any other readily available information of sufficient accuracy for the purpose of determining an

emissions unit's post-change emissions. With the exception of EUSGUs, the source must report

to the reviewing authority any post-change annual emissions rate only when that rate exceeds

the baseline actual emissions rate by a significant amount and is inconsistent with the original

projections. See, for example, new §52.21(r)(6)(iv). For EUSGUs, however, an annual report of

post-change annual emissions is required even when the projected post-change emissions rate is

not exceeded. See, for example, new §52.21(r)(6)(iii).

As mentioned earlier, we believe that these added recordkeeping and reporting measures

are justified and will improve the overall compliance rate and provide the information necessary

for reviewing authorities to assure that such changes are made consistent with the CAA

requirements. Altogether, we believe these regulatory amendments focus on the types of changes

occurring at existing emissions units that are more likely to result in significant contributions to

air pollution. The amendments will also require greater accountability on a source’s part to

retain information from which the reviewing authority can determine the nature of any changes

made to emissions units, as well as the actual emissions increases that are associated with those

changes.

Industry commenters generally indicated that they would be able to make a projection of

a project’s post-change emissions and track their actual emissions following the change as

required by the new “actual-to-projected-actual” applicability test. We believe that most

sources should be able to adequately project the emissions increases that will result from the

physical and operational changes that they choose to make. If for some reason the projection is

not accurate, the required tracking of emissions for 5 years following the changes will determine

whether a significant emissions increase has actually occurred. Where the change is found to be

a major modification, despite the projections made by the source, the reviewing authority will be

expected to proceed with the process of subjecting the source to the major NSR requirements.

We disagree with the commenter who stated that increased competition and deregulation

in the electric utility industry would lead to less accurate estimates of post-change utilization and

demand growth. Nevertheless, the new rules require modified EUSGUs to submit a notice to

the reviewing authority prior to beginning actual construction that is not considered a major

modification. and must submit post-change annual emissions rate data, in tons per year,

annually for 5 years after a change is made. Again, this requirement applies to EUSGUs when

the new “actual-to-projected-actual” applicability test shows that the change will not result in a

significant emissions increase at the unit (or significant net emissions increase at the source),

even in cases when the post-change annual emissions during the 5-year period do not show a

significant emissions increase. We believe these provisions will continue to provide accurate

information on post-change emissions at EUSGUs. Moreover, we believe that EUSGUs will

continue to have adequate emission projection and tracking capabilities, regardless of

deregulation of some aspects of public utilities. Also, EUSGUs are still required to meet

rigorous monitoring requirements under title IV.
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5.5 Proposal to Create Enforceable 10-year Emissions Level

Comment:

5.5.1 Support Enforceable 10-year Emission Level

One industry commenter (IV-D-273) and one utility industry commenter (IV-D-252)

supported the 10-year emission limit. Another industry commenter (IV-D-321) supported a

10-year tracking period, but did not specifically endorse the proposed enforceable 10-year

emission level. One industry commenter (IV-D-250) stated that a 10-year limit would be

acceptable if the applicant desires it.

One utility industry commenter (IV-D-252) believed the temporary emissions cap was

necessary to ensure that a significant net emissions increase did not occur. The commenter 

stated that “Otherwise, as it stands now, if these estimates of future emissions prove to be low, it

is possible that a source would have inappropriately avoided NSR review at the time of the

modification of the unit and the only ‘penalty’ they would pay would be to install BACT or

LAER emission controls years after they would otherwise have had to.”

5.5.2 Oppose Enforceable 10-year Emission Level

Twenty-seven industry commenters (IV-D-219, 254, 260, 263, 264, 265, 266, 270, 279,

283, 289, 292, 293, 297, 298, 299, 301, 302, 304, 306, 307, 308, 310, 311, 313, 314, 315), eight

utility industry commenters (IV-D-251, 261, 266, 278, 279, 294, 300, 318), eight regulatory

agency commenters (IV-D-211, 216, 246, 255, 262, 287, 305, 317), STAPPA/ALAPCO

(IV-D-259) and four environmental commenters (IV-D-291, 303, 325, 327) opposed the

enforceable 10-year emission level for various reasons. One of the utility commenters

(IV-D-251) requested that the EPA withdraw the proposal for the 10-year limit.

One utility industry commenter (IV-D-251) questioned EPA’s statements regarding the

necessity of the 10-year cap. The commenter reminded the EPA that utility sources were already

required to submit 5 years of post-change emissions data to the reviewing authority. This

requirement would provide adequate assurance that a source did not inappropriately avoid NSR

review. The commenter also asserted that it was unlikely that a source would make a

modification and then wait 5 years to use the modification in order to avoid major NSR

permitting. The commenter also questioned how the current proposal alleviates EPA's concern

that reviewing authorities can "only examine data submitted after-the-fact by the source." The

commenter explained that once a source had committed to meeting a certain emissions level to

qualify for minor rather than major NSR, the source had accepted responsibility for ensuring

compliance with the emission limitations contained in the preconstruction permit. The

commenter contended that the proposed temporary cap just served to extend the period of

post-change data provision from 5 years to 10 years.
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5.5.2.1 10 years is too long

Twelve industry commenters (IV-D-263, 264, 270, 293, 297, 298, 301, 302, 307, 308,

313, 314) and one utility industry commenter (IV-D-261) maintained that 10 years was too long a

period for an enforceable emission level to be in place. These commenters believed that the

emission limit period did not have to equate to the look back period for determining the emission

baseline. Four industry commenters (IV-D-264, 270, 293, 313) explained that the purpose of the

two different periods was different. The look back period defined the representative year to

which future emissions could be compared. The future year determined whether a change caused

an emissions increase.

Seven industry commenters (IV-D-264, 270, 297, 298, 307, 313, 314) felt emission

increases would occur well before 10 years, and therefore believed the period for the limit was

too long. One industry commenter (IV-D-298) believed that any emissions increase resulting

from a change would occur in a short period of time, probably less than 2 years. The commenter

(IV-D-298) and another industry commenter (IV-D-302) recommended a 2-year limit if the EPA

were to adopt a limit.

Two industry commenters (IV-D-297, 314) indicated that 10 years could be several

product cycles, and that a 10-year limit would require a business to accurately forecast the

demand for products it was not yet making. One industry commenter (IV-D-307) agreed, stating

that market returns were expected and weighed before a project was constructed. Three other

industry commenters (IV-D-264, 270, 313) also indicated that changes were not generally made

to achieve benefits years into the future.

5.5.2.2 10 years is not long enough

Two environmental commenters (IV-D-291, 303) maintained that the emission limit must

be permanently enforceable by the EPA and by citizens, as provided in sections 113 and 304 of

the CAA. Three regulatory agencies (IV-D-211, 246, 262) and STAPPA/ALAPCO (IV-D-259)

also recommended a permanent limit. Another regulatory agency (IV-D-216) agreed that it was

preferable to track emissions indefinitely. These commenters noted that a short-term limit could

complicate future applicability determinations and compromise air quality.

STAPPA/ALAPCO (IV-D-259) also indicated that a temporary limit was inconsistent

with current practice, in which the permanent enforceable limit on PTE was contained in the

preconstruction permit and carried over into the title V permit.

5.5.2.3 Other reasons to oppose

Twelve industry commenters (IV-D-265, 266, 289, 293, 297, 301, 302, 304, 307, 313,

314, 315), five utility industry commenters (IV-D-271, 278, 294, 300, 318), and two

environmental commenters (IV-D-291, 303) opposed the enforceable 10-year emission level for
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various reasons. One utility industry commenter (IV-D-278) held that the 10-year limit would

not be a temporary limit, but would become a “de facto baseline” for any additional permitting at

the facility and would discourage reviewing agencies from allowing increases in PTE at the

facility. Two utility industry commenters (IV-D-278, 294) further explained that the 10-year

limit would likely be used in SIP planning to meet air quality goals, which would make it

unlikely that the reviewing agencies would allow an increase at the end of the 10-year period. 

One of the utility industry commenters (IV-D-294) stated that the problem would be even worse

when the limits were met using pollution controls, as State law would force the source to

continue to operate the controls.

One industry commenter (IV-D-307) maintained that the 10-year limit was not based on

economic theory. The commenter had several questions about how the 10-year limit would

work, including whether the source would have to reassess changes made during the 

10-year period, how the baseline would be determined if changes were made during the 10-year

period, and what would happen if the past actual emissions decreased.

One industry commenter (IV-D-265) and one utility industry commenter (IV-D-294)

opposed the 10-year limit because the regulatory structure for designing and implementing such

limits was in its infancy. Two utility industry commenters (IV-D-294, 318) stated that the EPA

had not explained how the temporary limit would be terminated or relaxed at the end of the

10-year period.

Another industry commenter (IV-D-301) opposed the 10-year limit because of the

additional enforcement liability it would impose. The commenter argued that it would be unfair

to subject a facility to enforcement proceedings if it exceeded the limit, as predicting future

emissions was difficult.

Two industry commenters (IV-D-289, 313) objected to the 10-year limit, claiming that it

usurped State prerogatives. The commenter stated that “How tightly to weave the PSD/NSR

applicability net is a decision for each State to make in the context of its SIP.”

An industry commenter (IV-D-266) stated that the unit would constantly be subject to a

“temporary” emissions limitation since the limit established for any given change would not

expire before the next change was made.

Three utility industry commenters (IV-D-271, 294, 318) felt the 10-year limit would

discourage sources from making efficiency improvements. Two of the commenters (IV-D-271,

294) stated that the efficiency improvements were required to reduce emissions, and the 10-year

limit was thus counter to the EPA’s greenhouse gas emission reduction program. One of the

commenters (IV-D-318) further explained that the temporary limits would make many projects

economically infeasible.
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5.5.2.4 Oppose 10-year limit because it is burdensome

Nine industry commenters (IV-D-219, 265, 272, 297, 298, 301, 304, 314, 315), six utility

industry commenters (IV-D-268, 271, 275, 278, 294, 324), two regulatory agencies 

(IV-D-255, 287) and STAPPA/ALAPCO (IV-D-259) opposed the enforceable 10-year emission

level on the grounds that it would create an administrative burden by increasing the number of

applicability determinations. One industry commenter (IV-D-298) and four utility industry

commenters (IV-D-268, 271, 275, 324) characterized the enforceable limit provision as

mandating formal applicability determinations.

One industry commenter (IV-D-301) stated that the limitations would also make

compliance overly burdensome and time-consuming. The commenter (IV-D-301) believed that a

10-year period as opposed to a 5-year period would create additional burdens.

Two regulatory agency commenters (IV-D-255, 287) and STAPPA/ALAPCO (IV-D-259)

believed that the additional work required for establishing the temporary limits and tracking

emissions would create a severe administrative burden for State and local reviewing agencies.

STAPPA/ALAPCO (IV-D-259) explained that the temporary limits would require additional

preconstruction permits, even though some of the changes would be true minor NSR changes

under the current rules and do not require a permit now. Such permits would necessitate public

comment and reopening permits to include applicable monitoring and recordkeeping

requirements, which would require additional staff time and resources. Tracking the actual

emissions resulting from numerous modifications would also be unwieldy.

One industry commenter (IV-D-219) and one regulatory agency commenter (IV-D-317)

opposed the temporary limit asserting that, because it would cover modifications that would be

minor or exempt under the current rules. The regulatory agency commenter (IV-D-317) further

explained that the temporary limit would create an additional administrative burden by covering

these types of changes.

Two utility industry commenters (IV-D-278, 294) objected to the 10-year limit because it

would impose a “hard limit” on emissions, including emission increases due to changes that

would not be regulated under the current rules. The proposed limit would thus be more

burdensome than the current rules. One of these commenters (IV-D-278) interpreted the 10-year

limit as a major shift in the applicability of the rules that would hamper operational flexibility. 

Two utility industry commenters (IV-D-294, 318) argued that the 10-year limit would prohibit

production rate increases or increases in hours of operation. According to the commenter, this

inability to increase utilization would severely affect electric reliability and lead to brownouts or

blackouts.

One industry commenter (IV-D-265) believed the temporary limit would impose a severe

burden in unpredictable markets. Another industry commenter (IV-D-304) stated that the

temporary limit would exacerbate administrative burden because it would involve the same
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permitting process required under the current approach, but would require more permit revisions. 

Another industry commenter (IV-D-315) explained that the permit emission limits may change at

the end of the 5-year period. Therefore, the commenter asserts that a 10-year limit would create

confusion and additional burden.

One utility industry commenter (IV-D-300) opposed the 10-year limit because it was

more stringent than the current rules.

5.5.2.5 Oppose 10-year limit because it is like PTE

Five industry commenters (IV-D-263, 283, 304, 306, 308) and two utility industry

commenters (IV-D-278, 300) viewed the enforceable 10-year emission level as similar to the

current procedures for limiting PTE by obtaining a synthetic minor permit limit. The

commenters believed there was no advantage to including another such mechanism in the

permitting rules. One of these commenters (IV-D-304) maintained that there would be so many

changes that the temporary limit would not ever expire. Therefore, the proposed approach would

in effect be an actual-to-potential methodology because a temporary limit would always exist.

5.5.2.6 Oppose 10-year limit because lower than PTE limit

Five industry commenters (IV-D-266, 292, 298, 304, 310) opposed the enforceable

10-year emission level because it would be based on actual emissions, which were typically

lower than the allowable emission levels on which current enforceable limits were based. One

industry commenter (IV-D-298) explained that enforceable emission limits under the NOA

proposal would be even tighter than PTE limits because the limits would be based on actual

emissions. The limits would thus be below the significance levels. In cases where a second or

third change occurred, additional tightening of the limit would occur. The 10-year limit would

thus restrict operating flexibility. Because the limit would be lower than a limit set under the

PTE approach, one industry commenter (IV-D-304) stated that the limit would be an unnecessary

barrier to productivity and would restrict the source from making changes that were not regulated

under NSR.

5.5.2.7 Oppose 10-year limit because it is illegal

Three industry commenters (IV-D-265, 304, 307), two utility industry commenters 

(IV-D-279, 294), one regulatory agency (IV-D-305), and one environmental group (IV-D-303)

asserted that the 10-year limit would be illegal. One regulatory agency (IV-D-305) and one

environmental group (IV-D-303) believed the 10-year limit contravened the CAA because

requirements under it should be enforceable for their duration.

One utility industry commenter (IV-D-279) stated that the WEPCO and Puerto Rican

Cement court cases found “EPA’s imposition of a federally enforceable permit limit at the NSR

trigger level unreasonable.” One industry commenter (IV-D-304) argued that the 10-year limit
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exceeded statutory authority by requiring a Federal permit exercise in cases where the emission

increase did not exceed the significance level. The commenter claimed that his requirement

would thereby subject all sources to some form of major NSR program regulation. The

commenter (IV-D-304) compared the temporary limit to the erroneous implementation of the

modification provisions in the 1978 NSR rules, which the Alabama Power court overturned. 

One utility industry commenter (IV-D-294) agreed that the WEPCO rule allows insignificant

increases in emissions without requiring an emissions cap.

One industry commenter (IV-D-307) argued that the 10-year limit was inconsistent with

the existing rules at 40 CFR 52.21(r)(4), which require a source to be subject to major NSR if it

increases its emissions after accepting an emission limit to remain a minor source. To correct

this problem, the commenter further maintained that regulatory language would be required to

state that the source would regain all the temporarily foregone utilization emissions without

triggering NSR review at the end of the 10-year period.

Another industry commenter (IV-D-265) maintained that the EPA had no authority to

require sources to cap their plantwide emissions in the absence of NAAQS and increment

violations.

5.5.2.8 Oppose 10-year limit because cannot track emissions

One industry commenter (IV-D-315) maintained that it was impossible to track emissions

for a 10-year period. The commenter explained that most industries cannot anticipate product

mixtures, market demand, and raw materials accurately for more than 5 years.

5.5.3 Retain 5-year Tracking

Thirteen industry commenters (IV-D-250, 254, 260, 263, 298, 299, 301, 304, 307, 308,

311, 313, 315) and one utility industry commenter (IV-D-318) supported retaining a 5-year

tracking period, as opposed to requiring a 10-year enforceable emission limit. The commenters

maintained that a 5-year period would be consistent with the requirements under title V and that

industry forecasting was often performed 5 years forward. 

An industry commenter (IV-D-311) stated that returns on investments must be made in a

shorter period of time than 10 years; therefore, 5-year tracking was adequate. The commenter 

noted that they usually required a return within less than 2 years. Two other industry

commenters (IV-D-260, 313) noted that the EPA had accepted a 5-year period under the WEPCO

rule, and thus questioned why the time period would need to change now.
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5.5.4 Other Comments Concerning 10-year Enforceable Limit

5.5.4.1 Two-year limit is preferable

Four industry commenters (IV-D-264, 270, 298, 313) preferred a 2-year enforceable limit

if the EPA adopted an enforceable limit. The commenters argued that any emission increases

resulting from a change would occur within 2 years.

5.5.4.2 Additional comments concerning 10-year limit

Two industry commenters (IV-D-263, 308) and one utility industry commenter 

(IV-D-261) preferred a 5-year limit rather than a 10-year limit. Two of the commenters 

(IV-D-263, 308) specifically identified a 5-year limit (not just 5 years of tracking emissions) as

preferable to not allowing the use of the actual-to-future-actual methodology. The commenters

(IV-D-263, 308) proposed that title V and CAM compliance certifications be used to verify the

annual emission reports that would be submitted. Failure to submit the reports would be a

separate violation of the NSR program. If the actual emissions exceeded the applicable NSR

threshold during the 5-year period, the source would then have to undergo NSR review. 

Advance notice of using the actual-to-future-actual methodology would be required. Another

industry commenter (IV-D-299) noted that a 5-year limit would be acceptable if it included a

reasonable cushion over the future actual emission level to provide operational flexibility. 

One industry commenter (IV-D-304) provided an alternative actual-to-future-actual

approach in which there would be no temporary emission limit. Under the approach, the source

would calculate and document past actual emissions and anticipated future actual emissions for

each regulated pollutant. If the change would not increase emissions over the significance levels,

the source would then submit a notification to the reviewing authority. The notification would

include a description of the modification and the results of the actual emission estimates. The

source could then make the change, but would have to track emissions for 5 years after the

change and report them periodically. The commenter clarified that the notification and reporting

provisions would be required in the rule. The commenter (IV-D-304) believed that this approach

would eliminate the need for preconstruction review and temporary limits while providing

sufficient compliance assurance and enforcement of major NSR requirements.

One utility industry commenter (IV-D-261) opposed the 10-year limit because it would

mean that the permit limit, which was based on actual emissions, would be lower than the NSR

applicability thresholds. The commenter gave the example of an actual projected future

emissions increase of 30 tons of NOx where the NSR significance level was 50 tons. The permit

should allow 49 tons of additional NOx emissions, the commenter maintained.

Another utility commenter (IV-D-252) maintained that the temporary limit should only

last for 5 years if the demand growth provisions were eliminated.
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One regulatory agency (IV-D-317) and STAPPA/ALAPCO (IV-D-259) offered two

alternative proposals. The first was to exclude changes that did not increase emissions above the

regulatory thresholds from the temporary limit. The second was to allow States to develop

streamlined methods for dealing with minor changes. These streamlined methods would include

compliance determination procedures, which would allow the temporary limit to be incorporated

into the SIP. Under such an approach, the reviewing authority could issue a permit setting the

temporary limit without providing for additional public comment. However, this approach

would be contingent upon the SIP allowing such a procedure.

STAPPA/ALAPCO (IV-D-259) also recommended that NSR applicability be assessed

any time that a synthetic minor or temporary permit limit was removed. Otherwise, the source

could increase capacity, just as if new physical capacity were being added. This approach would

eliminate any ambiguity about whether an increase that occured more than 10 years after the

change would trigger NSR.

One regulatory agency (IV-D-320) requested that the EPA clarify what emission limits

would apply to a source after the temporary limits had expired, as the temporary limit established

minor source status. The commenter questioned whether the title V permit would have to be

modified upon expiration of the temporary limits or whether the limits that would apply upon

expiration of the temporary limits would be incorporated into the permit at the time of issuance.

One regulatory agency (IV-D-255) supported a 10-year tracking period for utilities only. 

Another regulatory agency (IV-D-305) believed that the enforceable limit should be for the same

period of time as the source’s operating and minor source permits.

Response:

After a thorough review of all the comments received both in support and opposition to

establishing a 10-year enforceable limit on the projected post-change actual emissions, we

decided not adopt a requirement that would establish a source’s projection of post-change

actual emissions as an enforceable limitation. If we were to establish a permanent cap, then it

would be similar to the existing “actual-to-potential” test, and such emissions increases as

those resulting from demand growth would likely be prohibited under the cap. We do not

believe that a 10-year cap is necessary to ensure that a significant net emissions increase does

not occur. Notwithstanding the absence of such an enforceable restriction, if the annual

emissions rate of a regulated NSR pollutant from the project is determined in a given calendar

year to have resulted in a significant emissions increase or significant net emissions increase at

the major stationary source, then a source must report this increase to the reviewing authority. 

If this increase is related to the physical or operational change, then the source may be required

to comply with the major NSR requirements, such as an evaluation of BACT, and an analysis of

air quality impacts to ensure that a major modification does not cause or contribute to a

violation of any NAAQS or PSD increments. Moreover, sources may be subject to an

enforcement action for being in violation of the major NSR requirements. Thus, we believe that
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the existing requirements prohibiting the construction of a major modification without

undergoing major NSR make any additional requirement for an enforceable emissions

cap–short-term or longer-- unnecessary to ensure compliance.

We agree with the commenters who claimed that the 10-year enforceable limit could

inappropriately place an emissions cap on a source that is capable of operating at levels that

could cause emissions achieving–and possibly exceeding–that cap in the absence of a physical or

operational change. As alluded to above, a cap based on the maximum emissions increase

resulting from the physical or operational changes would likely prevent a source from increasing

production levels that would otherwise be allowed.

Additionally, we are concerned that an enforceable post-change actual emissions level

may place an unmanageable resource burden on reviewing authorities. As claimed by a number

of industry and regulatory agency commenters, States would have to establish the 10-year

enforceable caps through some form of applicability determination and issue a minor source

permit, SIP revision, or other legal mechanism–even in cases where the change was not subject

to minor NSR or other SIP programs .

As previously mentioned, for any project using the “actual-to-projected-actual”

applicability test, when there is a reasonable possibility that the project may result in a

significant emissions increase, the new rules require that a source’s projection of post-change

actual emissions must be tracked against a modified unit’s emissions for 5 years following

completion of the changes. We will presume that any increases that occur after 5 years are not

associated with a physical or operational changes. If, however, one of the effects of the physical

or operational change(s) is to increase a unit's design capacity or potential to emit, such that a

significant emissions increase could result, but the source does not believe that the new capacity

or potential to emit will be fully utilized (so as not to cause a significant net emissions increase),

the projection of post-change actual emissions must represent the maximum actual annual

emissions rate that will result from the unit in any one of the 10 calendar years after the change. 

This extended period allows for the possibility that the increased capacity that was added via the

physical or operational changes could be fully utilized during a normal business cycle.

5.6 Comments Concerning Elimination of the Demand Growth

Exclusion

Comment:

5.6.1 Support Eliminating Demand Growth Exclusion

Five regulatory agency commenters (IV-D-216, 247, 253, 305, 317), STAPPA/ALAPCO

(IV-D-259) and five environmental commenters (IV-D-291, 303, 324, 327, 393) supported

eliminating the demand growth exclusion.
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One regulatory agency (IV-D-216) maintained that a facility’s post change emission

increases due to demand growth could not be disassociated from those that resulted directly from

the physical or operational change.

One environmental commenter (IV-D-303) stated that, “There simply is no logic to

support a claim that demand growth resulted in an emission increase but the change itself did

not.” The commenter further maintained that the EPA never had a permissible rationale for

demand growth.

5.6.2 Oppose Eliminating Demand Growth Exclusion

Twenty-eight industry commenters (IV-D-208, 212, 219, 221, 250, 260, 264, 265, 266,

270, 283, 284, 285, 289, 292, 293, 298, 299, 301, 302, 304, 306, 307, 310, 311, 312, 313, 319),

and 23 utility industry commenters (IV-D-252, 257, 268, 269, 271, 275, 276, 278, 279, 280, 281,

282, 286, 294, 295, 300, 316, 318, 322, 323, 324, and IV-G-22, 23) opposed eliminating the

demand growth provisions, stating that market factors do independently cause emission increases

absent physical and operational changes. The commenters objected to what they considered to be

the EPA’s irrefutable presumption that all emission increases result from physical or operational

changes. Eight utility industry commenters (IV-D-257, 279, 280, 281, 295, 323, 327, and IV-G22) further maintained that the EPA was incorrectly establishing an irrefutable supposition that

any non-routine change would result in the unit operating at its maximum design PTE. One of

these commenters (IV-D-279) argued that emission units could be operated at higher capacity

absent physical or operational changes, so that it was incorrect to assume that a change

automatically resulted in an increased capacity and higher emissions.

These commenters also indicated that demand could increase coincidentally with a

physical or operational change, but be unrelated to the change. Such increases associated with

demand should not be subject to an applicability test predicated on whether a physical or

operational change occurred. Three industry commenters (IV-D-285, 310, 319) noted that

changes were often made to increase efficiency to stay competitive. Even though production

increases, such changes would not increase emissions because the newer process was more

efficient (and less polluting) than the process it replaced.

5.6.2.1 Oppose eliminating demand growth for utilities

Twenty-two industry commenters (IV-D-219, 254, 260, 264, 266, 270, 283, 284, 285,

289, 293, 298, 299, 301, 302, 304, 306, 307, 311, 312, 313, 319), and thirteen utility industry

commenters (IV-D-257, 278, 279, 280, 281, 282, 286, 294, 295, 300, 316, 323, and IV-G-22)

stated that they specifically opposed eliminating the demand growth provisions for utilities.
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5.6.2.2 Oppose not extending demand growth for non-utilities

Twenty-three industry commenters (IV-D-212, 219, 254, 260, 264, 266, 270, 283, 284,

285, 289, 293, 298, 299, 301, 302, 304, 306, 307, 311, 312, 313, 319), and thirteen utility

industry commenters (IV-D-257, 278, 279, 280, 281, 282, 286, 294, 295, 300, 323, 324, and IVG-22) stated that they specifically opposed not extending the demand growth provisions to other

industries. One industry commenter (IV-D-254) endorsed the July 1996 NSR Reform package

concepts, which included the actual-to-future-actual test without removing the demand growth

provisions. The commenter (IV-D-254) further indicated that they would have the data to make

the demand growth concept viable.

5.6.3 Other Comments Regarding Demand Growth Exclusion

5.6.3.1 Contrary to court, law, policy

Twelve industry commenters (IV-D-264, 265, 266, 270, 284, 285, 298, 307, 311, 312,

313, 319), and sixteen utility industry commenters (IV-D-257, 269, 271, 275, 276, 278, 279, 280,

281, 282, 286, 294, 295, 300, 323, and IV-G-22) maintained that demand growth exclusion was

legally required under the CAA, the WEPCO court decision, and existing EPA regulations. 

These commenters asserted that the EPA’s current statements in the NOA contradict EPA’s

previous acknowledgment of the causation factor in the preamble to the WEPCO rule. Six utility

industry commenters (IV-D-257, 280, 281, 295, 323, and IV-G-22) quoted the EPA’s statement

in the preamble to the WEPCO rule (57 FR 32327) that “the analysis of the causation

requirement may disclose that an emissions increase that follows a non-routine physical or

operational change is merely coincidental and in fact results from independent factors such as

demand growth.” One utility industry commenter (IV-D-294) cited the April 6, 1993 EPA policy

memo from David McKee as evidence that the EPA recognized that fuel switches may not lead

to increased utilization.

5.6.3.2 Independent factors causing emission increases

Six industry commenters (IV-D-260, 265, 307, 311, 313, 319) and ten utility industry

commenters (IV-D-257, 271, 279, 280, 281, 294, 295, 316, 323, and IV-G-22) identified a

number of reasons why they believe that emission increases unrelated to physical or operational

changes occur. These included general improvements in the economy; deterioration of

equipment; making changes to comply with EPA, OSHA, or disability regulations; demand

skyrocketing because the product becomes a fad; a mishap from one supplier causing increases

for another supplier; the decreasing of the raw material price; a factory making a competing

product closes; new management techniques allowing the company to cut prices; new markets

developing; demand in existing markets increasing; one unit increasing its output because

another unit had shutdown or had been physically or legally restrained; increasing output due to a

meteorological condition such as heat wave; severe storms or system breakdowns reducing unit

utilization for extended periods; variations in regional electric utility demands; variations in
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electricity demand from large industrial users; investments to improve efficiency and reliability;

and improved economic conditions in other economic sectors.

One utility industry commenter (IV-D-316) gave an example where the natural variability

of the fuel supply, which was an independent factor, would cause the facility to violate 

an enforceable permit limit such as the EPA was proposing to adopt. In the example, the amount

of energy generated, efficiency, and fuel source remained the same over a 10-year period. 

However, the fuel supply sulfur content varied enough to cause an exceedance of the permit limit

in all but one of the 10 years in the baseline period. The commenter believed that not

recognizing the fuel supply variability as an independent factor, in combination with using the

current emission factor for the baseline determination, would lead to the violation. Therefore,

the rules should account for independent factors in determining both whether a major

modification occurs and in setting the enforceable emission level.

Another utility industry commenter (IV-D-294) cited a recent decision in which the EPA

agreed with Eli Lilly that increases in utilization were related to weather conditions. Eli Lilly

proposed switching to natural gas combustion at three existing coal-fired boilers. The change

would decrease emissions, but the lower costs from using natural gas would increase utilization.

An industry commenter (IV-D-311) noted that there was a flood of extraordinarily cheap

raw aluminum in the early 1990's when the Soviet Union collapsed and Russian companies sold

off stockpiles of aluminum that had already been produced. This event curtailed aluminum

production in the United States. However, the commenter stated that aluminum manufacturers

later increased production. The increased production was a result of demand growth due to

external factors beyond the company’s control. No modifications occurred, the facilities

remained in the State emission inventories, and permits were not rescinded. Therefore,

according to the commenter, it would be incorrect to characterize the increased production as the

result of a physical or operational change.

5.6.3.3 Source must demonstrate independent factors

One industry commenter (IV-D-307) and one utility industry commenter (IV-D-252)

believed that the EPA should retain the demand growth provisions but require the source to

demonstrate that demand growth, rather than the physical change or operational change, caused

increased emissions. One of these commenters (IV-D-252) stated that the EPA had the discretion

to provide the burden of proof on the source for demonstrating demand growth eligible for the

exclusion. The commenter (IV-D-252) suggested that the EPA use this discretion as a practical

and fair way of preserving the exclusion. The commenter (IV-D-252) further stated that one way

to demonstrate increased utilization of a unit resulting from demand growth, as opposed to a

physical change, was to use load growth factors available for the NERC regions within which a

particular electric company operates.
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5.6.3.4 No technical basis for removing demand growth

Three industry commenters (IV-D-264, 270, 313) claimed that the EPA had not

“conducted any real world study to support its assertions” concerning demand growth. One

utility industry commenter (IV-D-281) noted that the EPA’s “experience” lead to the conclusion

that sources generally make changes to improve market position. 

5.6.3.5 Burdensome to eliminate demand growth

Two industry commenters (IV-D-284, 285) and three utilities (IV-D-281, 282, 286) stated

that removing the demand growth provisions would create additional burdens for sources. The

commenters indicated that removing the demand growth provisions would create many

additional and unnecessary regulatory reviews. One utility industry commenter (IV-D-282) was

concerned that eliminating demand growth would make it more difficult to make the changes

necessary to comply with new title IV and NOx SIP call requirements.

5.6.3.6 Eliminating demand growth would discourage changes to

improve efficiency and reliability

Eight utility industry commenters (IV-D-257, 279, 280, 281, 282, 295, 323, and IV-G-22)

maintained that eliminating demand growth would discourage changes to improve efficiency and

reliability. These utilities stated that projects to improve efficiency, reduce costs, or maintain

reliability were necessary to stay in business and may or may not contribute to an improvement in

market share. If the demand growth provisions were eliminated, it would be difficult to make the

necessary changes to conduct business in a competitive world economy. One utility industry

commenter (IV-D-279) specified that operating at lower efficiency results in higher fuel

consumption and an increase in emissions of the NSR regulated pollutants. One other utility

commenter (IV-G-23) also stated that eliminating the causation requirement would be a strong

disincentive toward projects that could increase efficiency, lower emission rates, or were

otherwise environmentally beneficial.

One utility industry commenter (IV-D-279) also argued that eliminating demand growth

would be restrictive because it would effectively limit a source to the level of its past actual

emissions.

5.6.3.7 Other comments on demand growth

Two industry commenters (IV-D-263, 308) did not directly state support or opposition for

removing the demand growth provisions. However, the commenters preferred that the EPA

clarify that the regulations at 40 CFR 52.21(b)(2)(iii)(f) were not being eliminated. These

provisions allow increases in production rates and hours of operation without a modification. 

According to the commenters (IV-D-263, 308), the EPA should specify that increases in

production rates and hours of operation were a separate issue from demand growth.
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One utility industry commenter (IV-D-252) offered two methods of isolating changes due

to demand growth. The first method was to use load growth factors from the NERC region. The

commenter compared this approach to that used under the Acid Rain rules. Under those rules, a

unit did not have to decrease its SO2 allowance if it could be demonstrated that underutilization

was due to decreased utilization in the NERC region. The second, and their preferred option,

was to require the owner of the unit to submit proof at the time of NSR review that increases in

capacity factor at the unit (relative to the baseline level) could be accommodated without any

capital expenditures. The commenter explained that this approach was similar to the NSPS

methodology for determining emission rates before and after a proposed physical change.

Two industry commenters (IV-D-250, 299) noted that title V monitoring requirements

could be used to verify demand growth. One of the commenters (IV-D-250) further indicated

that the reviewing agency could specify a test for verifying emissions due to demand growth. 

Two industry commenters (IV-D-298, 304) recommended that the EPA retain the demand

growth provisions but add notification and reporting requirements. One industry commenter

(IV-D-304) offered an alternative proposal in which the demand growth provisions would be

retained, but sources would be required to keep records and report emissions occurring after the

change. Any use of the demand growth provision, including a detailed justification, would be

recorded. The commenter believes this approach would ensure compliance and enforcement

with the demand growth provisions.

One industry commenter (IV-D-265) questioned whether the EPA was presuming that

any change always brings the affected unit to its maximum emission levels or that any change

causes any emissions increase that may take place at that unit over the next 10 years.

Other industry commenters (IV-D-264, 270, 313) supported the demand growth

provisions because these provisions make it explicit that emission increases that were not caused

by the change must be excluded from the applicability determination. The commenter thinks the

demand growth provisions thus eliminate confusion regarding how emissions should be

calculated.

Two industry commenters (IV-D-289, 313) stated that in some cases a company will be

able to factor demand growth accurately in estimating emission increases and in other cases it

will not. However, the EPA should still allow demand growth exclusions. Instead, the EPA

should provide guidance on methodologies and burden of proof.

One industry commenter (IV-D-212) recommended that demand growth be retained for

essential public service facilities as long as their capacity remains in conformity with population

growth in their respective service areas. This commenter offered to assist the EPA with

developing the definition of essential services.

One industry commenter (IV-D-221) saw no justification for eliminating this exemption

and stated that emission calculations should be the same for everyone. A utility industry
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commenter (IV-D-269) suggested that instead of eliminating all load growth, EPA should allow

future growth consistent with what had occurred over the baseline period.

One industry commenter (IV-D-272) stated that most non-utility sources would not be

able to take advantage of the actual-to-future-actual methodology unless the demand growth

exclusion was retained. Otherwise, the commenter indicated, the non-utility sources would

project significant future actual emission increases.

One industry commenter (IV-D-307) recommended that the EPA convene a group to

discuss why the recordkeeping and notification provisions in the WEPCO rule had not worked

(in EPA’s view) and changes that could be made so that the exclusion could be used more easily

by the rest of the industry. One utility commenter (IV-G-23) also suggested that EPA’s efforts

should be focused on developing meaningful guidance to address perceived concerns with the

WEPCO rule, rather than simply discarding the rule.

One industry commenter (IV-D-301) stated that demand growth was especially necessary

for cyclical industries such as the rubber manufacturing industry. The commenter (IV-D-301)

noted that an increase in demand for automobiles could increase demand for rubber tires in the

time period after a modification occurred. In this case the increased emissions would not be

related to the modification, but to the increased demand for rubber tires.

One utility commenter (IV-G-23) stated that EPA’s proposal eliminates the causation

requirement from the existing NSR rules. The causation requirement has always been required to

show that a physical or operational change was a modification and that the modification itself

resulted in a significant emissions increase.

Response:

We agree with those commenters who opposed eliminating the demand growth provisions

when the emissions increase resulting from such growth is unrelated to the physical or

operational changes at the source. Moreover, we agree with the commenters who believed this

provision should apply to all industries, not just EUSGUs. We have concluded that this

provision is appropriate and consistent with both the statute and implementing regulations,

which suggest that there should be a causal link between the proposed change and any

post-change increase in emissions, that is, "...any physical change or change in the method of

operation that would result in a significant net emissions increase..." [emphasis added]. See, for

example, existing §52.21(b)(2)(i). While in a very few cases it may be difficult to determine

whether a particular emissions increase is directly attributable to a physical or operational

change that is made to an emissions unit, it would be inappropriate to completely eliminate the

availability of the exclusion to everyone. Consequently, the final rules follow the 1996 NPRM in

that when a projected increase in equipment utilization is in response to a factor such as growth

in market demand, the emissions increases may be subtracted from the unit's post-change actual

emissions if it can be shown that the unit could have achieved the necessary level of utilization
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during the consecutive 24-month period selected to establish the baseline actual emissions, and

the increase is unrelated to the physical or operational change(s) made to the unit. See, for

example, new §52.21(b)(41)(ii)(c). On the other hand, if the operation of an emissions unit to

meet a particular level of demand could have been accomplished during the representative

baseline period, but it can be shown that the increase is related to the changes made to the unit,

then the emissions increases resulting from the increased operation must be attributed to the

modification project, and cannot be subtracted from the projection of post-change actual

emissions. It is, therefore, very important that the source retain a record of all information

available to support its initial claim that an emissions increase predicted to occur as a result of

demand growth did not result from the physical or operational change to an emissions unit. This

information may be required by the reviewing authority should there be a question about the

project being a major modification.

5.7 Should the Actual-to-enforceable-future-actual Test Apply to

Increases in Design Capacity or PTE?

Comment:

5.7.1 Support Applying to Increases in Design Capacity or PTE

Nine industry commenters (IV-D-208, 260, 266, 285, 298, 304, 307, 311, 313) agreed

that the actual-to-enforceable-future-actual test should be available for increases in design

capacity or PTE. These commenters argued that it was inappropriate to automatically assume

that such increases will affect normal operations, which would require the potential-to-potential

test. One utility industry commenter (IV-D-208) maintained that modifications that increase

capacity generally do not increase emissions because these modifications improve efficiency and

add better control devices, allowing units to operate at higher capacity with lower emissions. 

One industry commenter (IV-D-307) believed that the new applicability test would have little

value if increases in design capacity or PTE were not covered.

One industry commenter (IV-D-304) stated that changes that increase the design capacity

or PTE of a unit but do not affect “normal operations” were common. The commenter

(IV-D-304) gave the example of replacing an existing conveyorized solvent cleaning machine

with a similar machine having 20 percent more capacity. The change would simply “speed up”

normal operations. The future actual emissions could easily be calculated on the basis of past

operating experience.

Two industry commenters (IV-D-260, 313) noted that the use of the

actual-to-future-actual methodology for increases in design capacity or PTE should not mean that

such changes would require an enforceable emission limit. 

Another industry commenter (IV-D-311) questioned why the EPA was worried about this

issue. To increase design capacity was very expensive. Therefore, it could be assumed that a
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company would use the additional capacity as soon as it was available. A temporary limit in this

case would be a moot point.

5.7.2 Oppose Applying to Increases in Design Capacity or PTE

Two regulatory agency commenters (IV-D-287, 305) opposed using the

actual-to-enforceable-future-actual test for increases in design capacity or PTE. One regulatory

agency commenter (IV-D-305) maintained that physical or operational changes that increase

design capacity or PTE should be treated just as any other modification would be under the

current rules, using an actual-to-potential test. One regulatory agency commenter (IV-D-287)

maintained that increasing the design capacity or PTE would alter normal operations and make

previous actual emissions “unreliable and irrelevant.” The commenter (IV-D-287) instead

recommended that increases in design capacity be evaluated using PTE.

One industry commenter (IV-D-285) believed that increases in design capacity or PTE do

not require applicability determinations at all. The commenter stated that Congress never

envisioned that the NSR program would hamper a source’s ability to increase utilization up to its

original design capacity.

5.7.3 Assuming the actual-to-enforceable-future-actual test is appropriate

for increases in design capacity or PTE, is it appropriate to assume

that any emission increases resulting from the change will occur

within 10 years of the change?

5.7.3.1 Yes, appropriate to assume emission increases will occur

within 10 years of the change

One regulatory agency commenter (IV-D-287) stated that the 10-year period would

redefine normal operations for the changed unit, and there would be no need to track emissions

after that period.

5.7.3.2 Not appropriate to assume emission increases will occur

within 10 years of the change

One environmental commenter (IV-D-303) stated that, “There is no provision in the CAA

that says such increases may be ignored if they occur more than ten years after the change.” The

commenter further maintained that the EPA’s proposal was based on a presumption that there

was no emission increase 10 years after the change. Plants with changes were the ones that had

emission increases and it is an “exercise in fantasy” to claim that emission increases would occur

without the change, the commenter stated.
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5.7.4 Other Comments on Design Capacity Increases

A regulatory agency (IV-D-287) commented that it would be difficult to determine what

BACT or LAER would be at the end of the 10-year period following a capacity or PTE increase. 

This commenter recommended a de-evaluation of the economic factors involved in determining

BACT if the applicability determination was delayed because the company initially increases

capacity and then later (that is, after the end of the 10-year period) utilizes it.

One industry commenter (IV-D-307) questioned the meaning of the EPA’s statement in

the preamble regarding a “mode of operation that could not have been achieved without the

change.” The commenter was concerned that this “ambiguous term” would mean that some

types of changes would be excluded from the actual-to-future-actual test. The commenter stated

that it was unclear what the EPA was requesting comment on, and questioned why the EPA was

posing questions concerning increases in design capacity. The commenter believed that the

EPA’s intent was to eliminate exclusions for repairing and replacing basic equipment because

these repairs and replacements increase utilization. The commenter requested that, if that was

the case, the EPA state this argument directly for public comment. They stated that the practical

implication of EPA’s position was that sources keep duplicates of all parts (for example, 1980

pumps if the plant was built in 1980). Such a requirement was never intended under the 1980

PSD rules, the commenter maintained.

Response:

We do not believe that every modification that includes added capacity or PTE is

intended for full use of that new capacity or PTE. Such actions could well be intended to

enhance current operations without resulting in increased production or operation. However,

where a source does intend to use the added capacity, we believe it is reasonable to assume that

the capacity will be utilized within the source’s normal business cycle. Sources are not likely to

wait more than 10 years to use capacity simply to avoid NSR. Therefore, under the new rules,

sources are not required to count the emissions increase that would result from full use of new

capacity or PTE if they conclude that such capacity or PTE will not be fully utilized and the

emissions increase resulting from that portion of the capacity that will be used will not result in

a significant emissions increase from the modification or a significant net emissions increase at

the source. The new requirements include a provision that requires sources to monitor the

emissions from the modification project for 10 years following the resumption of regular

operation of the emissions units modified, or affected by the modification. The 10-year period

reflects our determination that this time frame is sufficient to encompass the normal business

cycle for industry in general. This extended recordkeeping requirement represents a special

condition that supersedes the normal 5-year period for the recordkeeping requirements being

adopted in the final rules. During the 10-year period, a source must report to the reviewing

authority any information that indicates that the modification project at its facility did actually

exceed the baseline actual emissions by a significant amount, and is inconsistent with the

original projections. As mentioned earlier, we have decided not to adopt the “actual-to-
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enforceable-future-actual” test in the final rulemaking, Instead, we have adopted the “actual-toprojected-actual” test. Accordingly, the new applicability test includes the provision described

above calling for a 10-year recordkeeping period when a project deemed not to be a major

modification would, nevertheless, increase an emissions unit’s capacity or potential to emit.

5.8 Should the Actual-to-future-actual Test Apply to Netting?

Comment:

5.8.1 Yes, the Actual-to-future-actual Test Should Apply to Netting

Thirteen industry commenters (IV-D-208, 219, 260, 263, 264, 265, 266, 270, 298, 301,

304, 308, 313) and six utility industry commenters (IV-D-252, 266, 279, 282, 294, 318)

maintained that the actual-to-future-actual test should also be used for the netting analysis. 

These commenters believed that the rules could not define emission increases differently for

netting than for modifications. One utility industry commenter (IV-D-279) based this assertion

on their interpretation of the Alabama Power court case. [Alabama Power Co. v. Costle, 636

F.2d 323, 401-03 (D.C. Cir. 1979)] The commenter quoted the court’s language, stating that

“There is no basis in the Act for establishing two different definitions of modification, one that

looks only at net increases for substantive requirements, and a second that looks at all increases,

without allowing offsets, for procedural requirements.” Another utility industry commenter

(IV-D-294) believed that applying a potential methodology to netting was contrary to WEPCO. 

The commenter (IV-D-294) also stated that the EPA had not provided public opportunity for

comment for the actual-to-potential methodology, which was required by the WEPCO court and

by section 307 of the CAA. A third utility commenter (IV-D-282) stated that reviewing

authorities routinely rely on enforceable and creditable emission decreases as part of the netting

analysis.

One industry commenter (IV-D-265) argued that netting involved real emission

reductions that completely canceled out any increase in PTE. Therefore, the

actual-to-future-actual test should definitely apply to netting transactions. Another industry

commenter (IV-D-298) believed that two sets of books would be required unless the

actual-to-actual methodology applied to netting.

One industry commenter (IV-D-304) maintained that it would be illogical not to allow the

actual-to-future-actual approach for netting because a change that was not a modification would

then still be significant under the netting analysis. Two commenters (IV-D-298, 304) further

argued that not allowing the actual-to-future-actual approach would penalize sources in serious,

severe, and extreme nonattainment areas. Such sources must offset all emission increases and

decreases over a rolling 5-year period. If future actual emissions were not available for netting

purposes, the sources would never be able to use the actual-to-actual methodology because these

sources would need to establish limits to effectively manage their rolling net total.
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Two industry commenters (IV-D-263, 308) believed that not applying the

actual-to-future-actual methodology to netting transactions would lead to “absurd results.” The

commenters (IV-D-263, 308) gave an example of two facilities, each proposing modifications. 

Facility Number 1 had an actual emissions increase of 39 tons per year (tpy), and Facility 2 had

an actual emissions increase of 25 tpy. Facility 2 was shutting down two units, but would not be

eligible for the future-actual comparison because a netting transaction was involved. Therefore,

Facility 2 would unfairly be subject to NSR, while Facility 1 would not. The commenters 

thus maintained that not allowing the future-actual methodology for netting would discourage

incentives to shutdown less efficient units.

One industry commenter (IV-D-301) believed that both the WEPCO rule and the NSR

Reform package supported using actual-to-future-actual accounting for netting.

Another industry commenter (IV-D-219) believed that if the temporary limit were

enforceable, it should be appropriate for netting and offsetting. The commenter (IV-D-219)

further explained that if the netting baseline were not the enforceable level, the rules in effect

require offsetting emissions that could never legally be emitted.

5.8.2 No, the Actual-to-future-actual Test Should Not Apply to Netting

One regulatory agency (IV-D-262) and one environmental group (IV-D-303) opposed

allowing the actual-to-future-actual approach to apply to netting increases. One of the

commenters (IV-D-262) maintained that the sole purpose of the actual-to-future-actual

methodology was to determine if an emission increase will occur. The environmental group

commenter (IV-D-303) maintained that the EPA should revise the netting provisions in the

existing rules, as current netting policy allowed high-emitting sources to continue to escape NSR

applicability. This commenter further insisted that the EPA had the authority to eliminate

netting. The commenter recommended that the EPA change its definition of contemporaneous so

that only project activities, as opposed to plantwide activities, were included in the netting

analysis. The commenter also proposed that the netting credits for shutdowns and curtailments

be reduced.

One industry commenter (IV-D-250) requested clarification on the use of

netting/contemporaneous changes for actual-to-future-actual comparisons and the issue of

Federally Enforceable.

Response:

We disagree with the commenters who stated that retaining the current procedures for

measuring contemporaneous increases and decreases will require two different accounting

systems and lead to absurd results. Regardless of which methodology is used to determine

changes in emissions, the same type of emissions information must be reviewed and maintained

to support a source’s conclusion. For example, although a source may rely on its projection of
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post-change actual emissions in the actual-to-projected-actual applicability test, part of

determining the post-change actual emissions requires the source to consider what amount of

emissions increase the modified emissions unit could have emitted before the change and after

the change before the source subtracts emissions unrelated to the change. It also requires the

source to consider whether it is increasing its potential to emit of any regulated NSR pollutant

from an emissions unit. Accordingly, we believe that the information necessary to compute a

contemporaneous emissions increase or decrease based on an emissions unit's potential to emit

will be available. We do not believe that performing two separate analyses (one for determining

a significant emissions increase at an emissions unit and one for determining a significant net

emissions increase at the source) presents an unreasonable burden. Moreover, we have required

different methodologies for the basic applicability test and netting for EUSGUs since the 1992

WEPCO rules and we are not aware of any absurd results or undue burden placed on EUSGUs

from the implementation of those rules. Accordingly, we are not extending the "actual-toprojected-actual" methodology to the computation of contemporaneous emissions changes for

netting.

5.9 Debottlenecking

Comment:

Two industry commenters (IV-D-265, 307) believed that collateral emission increases

arising after debottlenecking changes to non-emitting equipment should not trigger NSR analysis

under the actual-to-potential methodology. The commenters maintained that actual emission

increases resulting from increased utilization of the equipment because of a change elsewhere in

the plant were not subject to an “actual-to-potential” test. One commenter (IV-D-307) also

believed their interpretation was consistent with policy memos from EPA Regions IV and VI. 

The other commenter (IV-D-265) was concerned that other recent policy memos reversed

longstanding regulations and policy to apply NSR to debottlenecked sources. The commenter

(IV-D-265) reasoned that since BACT and LAER did not apply to debottlenecked units, the

applicability test also should not apply.

Response:

We did not specifically request comments on debottlenecking issues in the 1998 NOA. 

However, we are currently reviewing these issues. Please see our press release at

http://www.epa.gov/air/nsr-review/ concerning expected action related to debottlenecking. 
I-6-1

Chapter 6 - CMA Exhibit B

6.1 Overview

As part of the settlement of a challenge to the EPA’s 1980 NSR regulations by CMA and

other industry petitioners, EPA agreed to propose for public comment and take final action on a

methodology for determining whether a source has undertaken a modification based on its

potential emissions. The exact regulatory language that EPA was to propose was set forth in

Exhibit B to the Settlement Agreement. Under this methodology, sources may calculate

emission increases and decreases based on either the actual emissions methodology in the

existing rules or the unit’s potential emissions, measured in terms of hourly emissions (that is,

pounds of pollutant per hour). In the July 23, 1996 NSR reform proposal, EPA proposed the

CMA Exhibit B methodology (the potential-to-potential test) as an alternative for determination

of NSR applicability to modifications. This chapter contains the specific public comments on the

CMA Exhibit B methodology. See chapters 4 and 5 for related comments on the potential-topotential methodology in general and other applicability tests favored by commenters.

6.2 Support CMA Exhibit B

Comment:

6.2.1 Support CMA Exhibit B

Numerous commenters (IV-D-21, 31, 33, 38, 42, 62, 81, 98, 114, 127, 130, 146, 149,

154, 160, 161, 183) supported CMA Exhibit B. The commenters also offered various reasons for

supporting CMA Exhibit B.

Two commenters (IV-D-33,114) stated that the potential-to-potential test will simplify

and improve the administration of the NSR process. One commenter (IV-D-33) said potentialto-potential accounting reduces unnecessary NSR recordkeeping. Other commenters (IV-D-154,

160) stated that the potential-to-potential test in CMA Exhibit B will improve compliance and

enforcement.

Some commenters (IV-D-154, 160) stated that the potential-to-potential test in CMA

Exhibit B is an appropriate “apples-to-apples” comparison. Commenter IV-D-160 added that

this would be fairer than the existing actual-to-potential approach, which has the inequitable

result of capturing a source’s unused capacity.

Some commenters (IV-D-62, 154) preferred the potential-to-potential test in CMA

Exhibit B because it facilitates tracking emissions. One commenter (IV-D-62) stated that the test

would provide a more understandable system with easier tracking for both industry and EPA

compliance personnel. Other commenters (IV-D-154, 160) also stated that unlike the actual-to-
6 - CMA Exh ibit B

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potential approach, the proposed potential-to-potential test in CMA Exhibit B is more likely to

facilitate applicability decisions at the plant level.

Several commenters (IV-D-33, 38, 42, 114, 149, 160) preferred the potential-to-potential

test in CMA Exhibit B because it would allow utilization increases. One commenter (IV-D-160)

stated that the potential-to-potential test in CMA Exhibit B should be available for sources in

cyclical industries such as automobile manufacturing plants because using existing capacity is

critical. Another commenter (IV-D-114) encouraged the EPA to consider this option particularly

in the utility/natural resource sector where utilization and demand are so closely related. 

6.2.2 Partial Support

Some commenters (IV-D-22, 36, 106, 108, 121, 151, 153) gave partial or conditional

support for the potential-to-potential test in CMA Exhibit B.

Three commenters (IV-D-36, 106, 153) indicated CMA Exhibit B as one of several

acceptable choices for determining applicability. One of the commenters (IV-D-106) advocated

CMA Exhibit B as a second preference to an actual-to-future-actual test. To avoid a decrease in

representative actual emissions that may result from economic fluctuations within the 12-month

period, the EPA should also develop the potential-to-potential methodology. The other

commenter (IV-D-153) advocated allowing CMA Exhibit B as another choice for applicability

that sources can choose to use in certain situations. The commenter (IV-D-153) endorsed CMA

Exhibit B because it would not require a source to forfeit utilization increases, but did not specify

when sources could choose to use the CMA Exhibit B methodology. One commenter (IV-D-36)

supported an allowable-to-allowable methodology, but believed that CMA Exhibit B was really

an allowable-to-allowable accounting.

Two commenters (IV-D-22, 108) supported a potential-to-potential applicability test such

as CMA Exhibit B. The commenters did identify CMA Exhibit B as an example of an

acceptable potential-to-potential test, but did not indicate directly that EPA should promulgate

the proposed CMA Exhibit B. One of the commenters (IV-D-108) said in some parts of the

country (such as the South Coast AQMD in the Los Angeles area) there should be a cap based on

peak actual emissions during the previous 10 years. This cap could be supplemented as

appropriate, with full permitted emissions for any units that had previously undergone NSR and

thus are fully offset. The cap could also be supplemented with other increases due to collateral

or cross-media impacts of excluded projects or ODS substitutions. 

6.2.3 Support Potential-to-Potential Methodology

Many commenters supported using a potential-to-potential methodology, but did not

directly support CMA Exhibit B. The comments generally supporting a potential-to-potential

methodology are in chapter 4 of this document.
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Response:

We recognize that the test prescribed under the CMA Exhibit B approach would provide

additional flexibility to existing sources with respect to general determinations of applicability to

the NSR requirements when a physical or operational change is made at a source. However, we

do not believe that a test based on changes in a unit’s hourly potential emissions would be

appropriate as a general test for implementing the statutory definition of “modification” in the

NSR program. We believe the statutory definition is best interpreted in the NSR program on the

basis of actual annual emissions increases that will result from a physical change or a change in

the method of operation of an emissions unit. However, as described below and in chapter 9 of

this volume, we have not completely rejected an altered version of the concept for modified

emissions units under certain circumstances, i.e., for emissions units with Clean Unit status.

Under our new rules, we are adopting a general applicability test that tracks the

statutory definition of “modification” and eliminates the some of the burdens associated with the

current “actual-to-potential” test when a source can project its actual emissions increases that

will result from a modification project. This new test– the “actual-to-projected-actual”

test–authorizes a source to project the post-change actual emissions of existing emissions units

(including replacement and reconstructed units) that will undergo physical or operational

changes. (New units will continue to undergo the current “actual-to-potential” test.) This

projection of post-change actual emissions is compared to a baseline emissions rate that is based

on the unit’s actual operation during any consecutive 24-month period during the 10 years

preceding the change to the unit. By allowing the source to use any consecutive 24-month

period in the past 10 years, the problems associated with fluctuating emissions from one year to

the next, as expressed by some commenters, are addressed by the new baseline approach. (See

additional discussion of the rationale for the fixed 10-year look back in chapters 2 and 3 of this

volume.) When more stringent emissions factors and operational limitations have been imposed

on a unit since the representative period selected, the average annual emissions calculation

derived from the unit’s operation during such 24-month period must be adjusted as appropriate

to account for the more stringent emissions factors and operational limitations. The adjustment

helps to ensure that the unit’s baseline emissions rate will not exceed the level of emissions the

unit could emit currently when operating at the representative utilization level. The new

applicability test, based on the new “actual-to-projected-actual” test, allows the source to

exclude any component of the post-change annual emissions that could have been achieved by

the unit before the change if that amount of increase is not related to the change. We believe

this new test follows an appropriate interpretation of the statutory definition of “modification”

for addressing emissions increase that result from a physical change or change in the method of

operation at an existing emissions unit. It also addresses commenters’ concerns about losing

credit for capacity utilization under the original procedure. 

The new rules provide some alternative applicability tests for certain existing emissions

units when we believe it is appropriate to deviate from the new “actual-to-projected-actual” test. 
6 - CMA Exh ibit B

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The first alternative applies to sources that wish to establish an actuals PAL based on a

plantwide actual emissions cap. If the source keeps the emissions below the emissions cap, then

it will avoid the major NSR permitting process when alterations are made to the facility or to

individual emissions units. The actual emissions become the de facto potential emissions and the

source may emit up to the permitted level without going through major NSR, even if changes are

made to the facility. The PAL allows a source to make changes quickly by allowing it to alter

emissions units without first going through major NSR review. It thus limits the number and

complexity of NSR applicability determinations, and reduces costs and delays. It also allows a

plant manager to authorize changes, as long as the emissions remain under the permitted level,

without first obtaining reviewing authority review under major NSR. Furthermore, it provides

an incentive to use state-of-the-art controls and install new, lower-emitting equipment, which

will allow sources to increase utilization. In return for the flexibility a PAL allows, a source

must monitor emissions from all of its emissions units under the PAL. Therefore, the PAL

ensures good controls and protection of air quality.

The Clean Unit test relies on current emission limitations as part of the test for

particular units. The Clean Unit test recognizes that when a source goes through major NSR

review (including air quality review) and installs BACT or LAER or comparable technology, the

source may make any subsequent changes to the CU without losing Clean Unit status as long as

the proposed project does not cause the need for a change in the emission limitations or work

practice requirements in the permit for the unit that were adopted in conjunction with BACT or

LAER, as applicable. Therefore, for Clean Units, the emission limit is set at a level that is

protective of air quality, but the source is not required to examine the impact of every subsequent

physical change or change in the method of operation that meets the stated test. With these

provisions, sources will have improved certainty and flexibility, reduced burden, and opportunity

for utilization increases without compromising air quality. Like the PAL, the Clean Unit test

includes necessary safeguards by requiring enforceable permit terms and conditions to ensure

environmental protection.

6.3 Oppose CMA Exhibit B

Comment:

Many commenters (IV-D-7, 11, 14, 16, 47, 125, 137, 152, IV-G-7, 11) opposed the CMA

Exhibit B potential-to-potential test. These commenters generally believed that the CMA

Exhibit B test would be environmentally detrimental.

Three of the commenters (IV-D-14, 125, IV-G-11) believed the potential-to-potential test

would allow sources to escape the major modification provisions. One commenter (IV-G-11)

predicted that the potential-to-potential test would virtually eliminate NSR in most modification

cases. Allowing facilities to use representative actual emissions as future emissions would make

NSR a retrospective regulation program, which is neither the purpose of the program nor an
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I-6-5

effective way to control air pollution. Once a facility has proceeded without NSR based on the

representative actual emissions test, it would be difficult to take an enforcement action years later

that would successfully require that facility to retrofit LAER and obtain offsets retrospectively. 

One commenter (IV-D-125) stated that the test would inappropriately exclude physical and

operational changes at existing sources from major NSR due to the maximization of flexibility

that the Exhibit B methodology provides. Under the potential-to-potential test, an existing

source could make any change so long as the change did not significantly increase the source’s

hourly potential emissions rate. This is an unacceptable provision because it allows less control

of greater numbers of emission sources. One of the commenters (IV-D-14) was concerned that

CMA Exhibit B would mean that the statutory requirement for BACT was circumvented.

One commenter (IV-D-152) opposed CMA Exhibit B in its entirety. The commenter

stated that under this approach, paper credits would dominate the program and real emission

increases that would damage air quality would be allowed without review or the requirement to

minimize emissions. The commenter indicated support of EPA’s analysis of the problems of

CMA Exhibit in the July 23, 1996 proposed rulemaking.

One commenter (IV-D-11) disagreed with the CMA Exhibit B methodology except in

cases where the SIP is based on allowable emissions rather than actual emissions. This would

preclude sources from trading emissions reductions that had already been relied on in the SIP.

Response:

As mentioned above, we agree with these commenters that a potential-to-potential

test–especially one that focuses on short-term emissions rates--for major NSR applicability could

lead to unreviewed significant emissions increases resulting from a physical or operational

change made to an emissions unit. Such increases could be detrimental to air quality. We

further agree with the commenters who were concerned regarding the creation of paper credits

and other impacts on the broader air quality planning process. We also agree with the

commenters that the potential-to-potential test prescribed by CMA Exhibit B could 

inappropriately enable certain modification projects to avoid the statutory requirements for

state-of-the-art controls. However, as stated in Section 6.2 of this chapter, we believe the

potential-to-potential methodology has benefits, and we have included PALs (see chapters 7 and

8) and the Clean Unit test (see chapter 9) into the final rule to take advantage of some of these

benefits. See our response in section 6.4 of this chapter for more details concerning the

environmental impacts of the CMA Exhibit B applicability test.
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6.4 Environmental Impacts of CMA Exhibit B

Comment:

6.4.1 General Comments on Environmental Impacts of CMA Exhibit B

Some commenters (IV-D-62, 106, 114, 154, 160) believed the potential-to-potential test

in CMA Exhibit B would be environmentally beneficial. They stated that the potential-topotential test appropriately focuses on the significant emissions changes that could produce an

adverse environmental impact. Some commenters (IV-D-154, 160) stated that by ensuring

significant changes would be captured within the NSR system and by providing sources with an

incentive to reduce emissions by installing new, lower-emitting equipment (which might

inappropriately trigger NSR under the current actual-to-potential test), the potential-to-potential

test in CMA Exhibit B would maintain the integrity of environmental protection. They also said

it removes the disincentive to investments in process modifications.

One commenter (IV-D-160) stated that the test in CMA Exhibit B will promote the

objective of environmental protection in a more cost-effective manner than the existing actual-topotential approach. The current expansive application of the actual-to-potential approach

imposes significant costs on sources and reviewing authorities without yielding environmental

benefits. The potential-to-potential test would improve the cost-effectiveness of the NSR

program by substantially reducing the associated costs without sacrificing environmental

protection. The uniform application of the potential-to-potential test would lower the costs of the

NSR process by reducing the complexity of the NSR applicability determination.

Several commenters (IV-D-7, 14, 47, 125, 152) believed that CMA Exhibit B would be

environmentally detrimental. One of the commenters (IV-D-14) stated that CMA Exhibit B

represents a substantial weakening of the PSD program with large increases in actual emissions,

which in itself could lead to a significant deterioration of air quality.

6.4.2 Actual Emission Increases Without Review (Paper Credits)

Some commenters (IV-D-14, 16, 125, 152; IV-G-7) agreed that EPA’s concern that

potential accounting could lead to real emission increases due to unreviewed paper credits is

legitimate. One commenter (IV-G-7) stated that the potential-to-potential test would conflict

with SIPs that are based on actuals, threaten a State’s RFP demonstration, and interfere with

emissions credits relied on by SIPs. One of the commenters (IV-D-14) noted that older sources

could use equipment that is not operating (that is, paper emissions) to avoid PSD. Even if the

test was whether the equipment was operating, the source could game the system by just turning

on the equipment. Also, there is nothing to prevent a source from acquiring equipment but not

using it except to gain potential emissions for netting out of PSD. Finally, since there would be

no requirement for equipment to be listed in the emission inventory, a company could move
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equipment from one plant to another and thus gain credit for netting purposes due to the

equipment potential emissions, even though the equipment was never operated.

On the other hand, other commenters (IV-D-33, 62, 183) believed that EPA’s concerns

regarding the environmental impact of a potential test were unfounded, particularly when

potential emissions are used in attainment demonstrations and impacts analyses. One commenter

(IV-D-183) noted that projects authorized under the PSD program have already undergone a

sufficient review of air quality impacts in the pre-construction permitting process. The potentialto-potential test would eliminate the creation of paper reductions and ensure that only true

emission reductions could be certified as such.

One commenter (IV-D-160) said the potential-to-potential accounting methodology in

CMA Exhibit B would promote the objective of environmental protection in a more costeffective manner than the existing actual-to-potential approach. The uniform application of the

potential-to-potential test would lower the costs of the NSR process by reducing the complexity

of the NSR applicability determinations, and by limiting the scope of the program to encompass

only those significant physical changes that Congress intended to cover. By ensuring that

significant changes would be captured within the NSR system, and by providing sources with an

incentive to reduce emissions by installing new, lower-emitting equipment (which might

inappropriately trigger NSR under the current actual-to-potential test), the potential-to-potential

test would maintain the integrity of environmental protection.

One commenter (IV-D-146) noted that in reality actual and allowable emission rates are

close because of other CAA requirements. These requirements will ensure that paper credits

would not occur under a potential accounting system. The commenter said EPA’s reservations

about the use of allowable emission levels as a basis for NSR and PSD review are based on

historical data. This fails to consider the convergence between actual and allowable emission

rates being forced upon major sources that are required to comply with recently promulgated

RACT and MACT standards. As the stringency of standards for new and existing sources

increases, any gap between actual and allowable emission levels will narrow enough to be

inconsequential for purposes of establishing generic administrative criteria for major source

permitting.

Some commenters (IV-D-146, 154) noted that current programs are really based on

allowables, so EPA’s concern about the gap between actual and allowable emissions is

unfounded. One commenter (IV-D-146) agreed that allowable emission rates and production

levels are the currency upon which EPA and State and local reviewing agencies issue preconstruction and operating permits, and for major sources this will be included for entire

facilities in their title V operating permits. Most States employ allowable emission levels and

production rates as the basis for SIP demonstrations and air quality modeling.
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One commenter (IV-D-31) agreed with EPA that under the CMA Exhibit B methodology

past paper emissions could become future actual emissions not subject to NSR. However, the

commenter did not believe this was a reason to reject a potential-to-potential test. It could

happen under an actual-to-actual methodology also, where nothing precludes sources from

maximizing their emissions 12 months before the planned modification.

Response:

Before proposing the CMA Exhibit B language, we did a preliminary analysis of the

impact on the NSR program of the CMA Exhibit B changes. Clearly, these changes would

provide additional flexibility to existing facilities with respect to determining if a significant net

emissions increase would result from a physical or operational change. However, we also

expressed concern about the environmental consequences associated with the CMA Exhibit B

provisions. For example, a source could modernize its aging facilities (restoring lost efficiency

and reliability while lowering operating costs) without undergoing preconstruction review, while

increasing annual pollution levels as long as hourly potential emissions did not change. Also,

CMA Exhibit B would allow sources to generate netting credits and ERCs for offsets based on

potential hourly emissions, even if never actually emitted. This, too, could sanction even greater

actual emissions increases to the environment often from older, unreviewed facilities, without

any preconstruction review. In addition, significant increases in actual emissions resulting from

unreviewed modification projects could go largely undocumented until a PSD review is

performed by a new or modified facility that ultimately must undergo review. By that time,

however, a violation of an increment could have unknowingly occurred. We were also

concerned that Exhibit B would ultimately stymie major new source growth by allowing

unreviewed increases of emissions, particularly those increases resulting from the physical or

operational change, to consume all available increment in PSD areas. In addition, contrary to

what a commenter indicated, the types of modifications that will be subject to the “actual-toprojected-actual” test are units that have not recently undergone NSR (some, if grandfathered,

may have never undergone NSR) and generally lack up-to-date control technology, so as not to

be eligible for the Clean Unit test, which checks to ensure that a project at a Clean Unit does not

cause the need for changes in the emission limitations or work practices associated with BACT

or LAER, as applicable (see chapter 9 concerning Clean Units). 

In our analysis supporting the 1996 NPRM, we were unable to reach any conclusions as

to the magnitude of any environmental impacts beyond noting that the effects would vary from

State to State depending on how much cumulative difference exists between the unused potential

emissions and actual emissions in a given inventory of sources and the extent to which any

unused potential emissions have been used in attainment demonstrations. However, our analysis

did show that typical source operation frequently does result in actual emissions that are below

allowable emission levels.
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6.5 Impact on Permitting New Greenfield Sources

Comment:

Some commenters (IV-D-7, 14, 125; IV-G-7) had concerns that the potential-to-potential

test in CMA Exhibit B would consume a State’s PSD increment. Two commenters (IV-D-14,

125) predicted that Exhibit B would negatively affect the permitting of new greenfield sources. 

One of the commenters stated that CMA Exhibit B would result in increment being consumed

because BACT would be circumvented. This would result in inadequate air resources, which

would mean that development would be blocked.

Two commenters (IV-D-62, 160) disagreed that CMA Exhibit B methodology would

result in a State’s PSD increment being consumed. One of the commenters (IV-D-160) noted

that neither title I, part C of the CAA, nor the current PSD regulations contemplates that all

activities resulting in emissions increases will be reviewed to determine their impact on PSD

increments. For example, emissions increases from activities at existing sources would not

trigger PSD review, provided that such activities do not meet the definition of PC-CMO. The

CAA specifies that, if emissions increases resulting from such activities trigger increment

violations, the appropriate remedy is to revise the SIP. Accordingly, the SIP revision process set

forth in the statute should not be used to address any PSD increment violations that might result

from activities not captured with the PSD system under the potential-to-potential approach.

One commenter (IV-D-62) believed that CMA Exhibit B would not have an impact on

increment consumption, as permitting decisions, inventories, and SIPs consider potential

emissions.

Response:

In the preamble, we discussed our concerns about the environmental effects that could

result from the general use of an applicability test based on the CMA Exhibit B approach. We

indicated that the approach, based on increases in hourly potential emissions, could result in

unreviewed emissions increases on a tons per year basis from modifications of existing sources

consuming all available increment in PSD areas. We agree, in part, with the commenters who

stated that neither the Act nor our regulations contemplate that all activities resulting in

emissions increases will be reviewed to determine their impact on PSD increment–even though

these increases would consume increment. In fact, our definition of “major modification”

excludes as physical or operational changes “routine maintenance, repair, and replacement,” as

well an “increase in the hours of operation or in the production rate” that occur alone and are

not otherwise prohibited. We continue to believe that the “actual-to-projected-actual” test–and

not the CMA Exhibit B test–is the more appropriate method for measuring actual emissions

increases that result from a physical or operational change, while not counting for applicability

purposes the emissions increases that result from excluded activities.
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With regard to the comment that the CMA Exhibit B approach would not have an impact

on increment consumption because permitting, emissions inventories, and SIP’s consider

potential emissions, we believe that this conclusion overlooks the fact that the regulatory

increment consumption process is based on changes in “actual emissions.” PSD increment

analyses performed with potential emissions tend to be screening analyses, which are accepted if

the results show that no violations will result. Hence, while many analyses may be done initially

with potential or allowable emissions, PSD applicants always have the ability to perform a more

refined analysis should the initial analysis reveal problems meeting the increment. That is,

actual emissions increases ultimately may need to be (and in some cases have been) used to

determine whether an increment is being violated. This is one reason why we believe that it is

important to retain an applicability process that triggers NSR on the basis of actual emissions

increases.

6.6 Air Quality Planning Process

Comment:

Several commenters (IV-D-7, 11, 14, 16, 47, 125) agreed that CMA Exhibit B is

inconsistent with the air quality planning process. One of the commenters (IV-D-14) stated that

tighter PSD applicability is conducive to the air quality planning goals of the CAA and the CMA

Exhibit B relaxes PSD applicability. One commenter (IV-D-125) stated that CMA Exhibit B is

inconsistent with the air quality planning goals of the NSR program in which section 173 of the

CAAA requires offsets to be based on actual emissions, and the PSD increment system and many

nonattainment area plans are keyed to an actual emissions baseline. Another commenter

(IV-D-11) questioned whether the CMA Exhibit B methodology is consistent with section 173(c)

of the CAAA regarding offsets in nonattainment areas. Another commenter (IV-D-14) agreed

that increments are tied to actuals and having a potential baseline would be problematic for

determining increment consumption.

One commenter (IV-D-47) said that the commenter’s State has completed its SIP

modeling based on actual emissions from existing facilities. Because the potential-to-potential

test would require modeling to be based on potential emission levels, it would be virtually

impossible for the State to meet the CAA requirements for attainment.

Two commenters (IV-D-154, 160) said the problem for air quality planning could be

easily avoided by requiring that only actual emissions be used by sources in nonattainment areas

to calculate offsetting emissions reductions to secure ERCs. Commenter IV-D-153 agreed that

the CMA Exhibit B approach might need to be modified with regard to the creation of offsets

and emission credits, because as currently drafted it would allow sources to rely on offsets

resulting from a reduction of potential emissions even where actual emissions are not reduced. 

The commenter said offsets would probably have to be linked in an appropriate fashion to actual

emissions.
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One commenter (IV-D-62) maintained that using CMA Exhibit B would not disrupt air

quality planning. The commenters (IV-D-62) believed that potentials could be used for ERCs

and offsets. 

One commenter (IV-D-33) believed the reviewing authority should be responsible for

ensuring that netting credits and ERCs under the CMA Exhibit B potential applicability approach

were accounted for in SIP planning. The commenter suggested that if the State or local

reviewing authority has not accounted for increased emissions, a source should be given the

discretion to adopt control measures, install control technology at the facility to limit emissions,

or otherwise reduce the amount of ERCs generated but still be allowed to generate such credits

for offsets based on potential emissions. The State or local reviewing authority would have the

burden of showing that it has not accounted for the effect of the increased emissions in their

SIPs.

Response:

We believe that, in addition to the CMA Exhibit B methodology being inadequate for

accounting for actual emissions increases associated with physical or operational changes at

existing emissions units, the methodology would also be problematic for generating ERCs,

particularly for use as offsets. The use of potential emissions for offset credits is in direct

conflict with the Act. Under section 172(c) of the Clean Air Act, emissions offsets must be based

on reductions in actual emissions. Allowing sources to get credit for reductions in potential

emissions would result in “paper” credits, and could allow sources to receive credit for

reducing emissions that never actually occurred. Thus, our rules have not changed with regard

to the calculation of reductions in actual emissions for offsetting purposes. 

With regard to the amount of emissions increase that must be offset, consistent with our

proposal, the new rules provide once a physical or operational change is determined to be a

major modification (based on the “actual-to-projected-actual” applicability test) the current

definition of “actual emissions” would continue to be used for other NSR purposes, including

ambient impact analyses. Based on this position, the new rules for nonattainment NSR provide

that the total tonnage of increased emissions, in tons per year, resulting from a major

modification must be determined by summing the difference between the allowable emissions

after the modification and the “actual emissions” (as defined by the current rules) before the

modification for each emissions unit affected by the modification. [§See 51.165(a)(3)(ii)(J)]

6.7 Modifying CMA Exhibit B

Comment:

Two commenters (IV-D-81, 143) proposed modifying CMA Exhibit B.
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One commenter (IV-D-81) stated that new and replacement sources with reasonable

allowable emission rates and that have been reviewed under PSD, NSR, BACT, and other

existing regulations should be treated as potential-to-potential emissions in PSD determinations. 

Grandfathered sources that have unreasonable emission limits that have not been similarly

reviewed should be treated as actual-to-actual or actual-to-future-actual sources. This

modification of the approach to CMA Exhibit B would allow a smooth transition to the new

method without significant increases in actual emissions. This approach would also address the

CMA concerns with the existing and proposed methods.

Another commenter (IV-D-143) recommended that NSR would be triggered only where a

given activity at a source would increase the source’s rate of emissions (on a kg/hr basis) above

the rate that the source was capable of accommodating, physically and legally, during a

representative baseline period. (Presumptively 5 years before the change, with the option of

demonstrating that some further “look back” period is more representative.) Emission

calculations for netting or offsetting would be based on actuals or allowables (taking into account

enforceable permit conditions), whichever is lower.

Response:

After considering the commenters' suggestions for improving the CMA Exhibit B

methodology, we ultimately decided to reject this methodology for the general purpose of

determining whether a physical change or change in the method of operation would result in a

major modification. We recognize, however, that the methodology does have certain benefits. 

Accordingly, we included provisions for PALs and Clean Units in the final rules to implement

some of these benefits. Some of the recommendations given by these commenters are similar to

provisions in our final rules. These include the use of the actual-to-projected-actual

methodology for the emissions increase resulting from a physical or operational change at an

emissions unit that has not recently undergone major NSR, and the use of permitted allowable

emissions (and associated work practice requirements) for determining NSR applicability for

units with Clean Unit status.

6.8 Other Comments on CMA Exhibit B

Comment:

One commenter (IV-D-14) stated that if the EPA is intent upon using the potential-topotential test, a different means of ensuring BACT should be considered. Alternatives could

include minimum control requirements for netting transactions. The only way the CMA

Exhibit B methodology would work would be to require that control technology be employed on

all new emission units or modified existing units regardless of whether they net out of PSD. The

CMA Exhibit B methodology does not eliminate the need to track actual emissions since this is

still needed for PSD increment consumption (PM, SO2

, NO2

).
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One commenter (IV-D-42) stated that a potential-to-potential test could be used in the

South Coast Air Quality Basin (SCAB), provided that a cap is imposed on all or part of a facility,

and that it is based on peak actual emissions during the highest 12-month consecutive period in

the preceding 10 years.

Two commenters (IV-D-62, 161) stated that EPA has not acted in good faith regarding

the 1982 Settlement Agreement, noting that EPA essentially dismisses the CMA Exhibit B

methodology in the proposal. Commenter IV-D-161 stated that the CMA Exhibit B changes are

not incorporated into the proposed PSD/NSR rules revisions and are referenced as an alternative. 

Therefore, the July 23, 1996 NPRM does not accomplish the goal of proposing the CMA

Exhibit B changes.

Response:

We disagree that we did not act in good faith when we proposed the CMA Exhibit B

methodology. In the 1996 NPRM, we explained in detail the methodology contained in the CMA

proposal. Although we did not include regulatory language for the potential-to-potential test in

the 1996 NPRM, we explained that the language was contained in CMA Exhibit B, which was

available to the public in the docket for the rulemaking. Then, in 1998, we published a NOA

soliciting comments on a specific policy option for determining the applicability of NSR to

modifications at existing major stationary sources. We did not specifically address CMA

Exhibit B in the NOA because ample opportunity for comment was provided in the 1996 NPRM,

and we knew of no issues at that time requiring additional public comment. Nowhere in the 1998

NOA did we explicitly or implicitly dismiss the CMA Exhibit B methodology, nor did we

downplay its significance in the rulemaking process.

Because we decided to use a methodology other than the CMA Exhibit B methodology to

determine whether a physical or operational change would result in a major modification, the

concerns expressed by these commenters on the BACT analysis and how the CMA Exhibit B

methodology could work in practice are no longer relevant.
I-7-1

Chapter 7 - 1996 PALs

7.1 Overview

We received numerous public comments on PALs in response to the 1996 NSR Reform

Proposal. The comments on PALs concerned general support or opposition to PALs, area-wide

PALs, alternatives for establishing emission levels for PALs, options for the permitting

authorities, changes under the PAL, PAL review and adjustment, PALs in serious and above

nonattainment areas, air quality changes, partial or mini-PALs, monitoring and enforcement of

PALs, and PALs and clean facilities, as well as other miscellaneous comments on PALs.

We considered the public comments on the 1996 Reform proposal. In response to those

comments and to further deliberations, we subsequently published a NOA concerning PALs in

1998. The NOA solicited comments on when, how, and why adjustments to PALs should be

made. Chapter 8 of this document contains our responses to the PAL comments from the NOA. 

7.2 General Support for or Opposition to PAL Concept

Comment:

7.2.1 General Support for PAL Concept

Many industry commenters generally supported EPA’s proposal allowing PALs. (IV-D9, 33, 42, 43, 45, 47, 57, 62, 65, 66, 67, 72, 73, 74, 78, 79, 80, 87, 90, 94, 97, 106, 111, 126, 129,

132, 138, 142, 150, 153, 154, 157, 167, 176; IV-G-04). Several regulatory agency commenters

also generally supported EPA’s proposal allowing PALs. (IV-D-19, 29, 70, 117, 137; IV-G-1, 2,

11)

 One commenter (IV-D-43) stated that the PAL is one of the most important and positive

changes EPA has proposed. Commenters (IV-D-43, 70, 72, 90, 129, 132, 138, 150, 176; IV-G11) gave the following reasons why they supported the proposal. 

• Readily understandable approach to emissions control

• Focus on what really matters– emissions

• Increased operational flexibility

• Quick reaction to market demand

• Permitting predictability, including certainty regarding the level of emissions at which a

stationary source will be required to undergo major NSR

• Reduced costs for industry and permitting authorities

• Provides benefits without compromising air quality

• Incentives for source owners and operators to create room for growth under the cap by

implementing pollution prevention and other pollution reduction strategies on existing

emission units.
7 - 1996 PALs

One commenter's company (IV-D-111) obtained the first auto industry PAL at one of

their plants. The commenter stated that the effort involved in obtaining the PAL was reasonable,

and it was able to establish practically enforceable conditions acceptable to EPA and the State

authorities, and the current PAL is working well. 

One commenter (IV-D-157) endorsed PALs as a true “win-win” approach both for

sources and for the environment. The commenter claimed that sources are relieved of the burden

of permit review for every little change and are more readily able to innovate, shift production,

and respond to demand shifts. 

One commenter (IV-D-52) supported PALs because they make many of the proposed

changes to the NSR program unnecessary. The commenter stated that because the PAL

methodology contains its own comparisons method (requiring actual emissions to be tracked and

limited), the proposed changes to the comparison methods do not affect modifications under the

PAL. In addition the commenter feels that sources with PALs may undertake pollution control

and pollution prevention projects without an NSR exemption; the PALs assure an overall benefit

to the environment. Also, claimed the commenter, sources with PALs may initiate their

construction activities at any time, as long as they comply with the terms of their permit. Thus,

according to the commenter, a widespread use of PALs would eliminate the need for these types

of exemptions, exclusions, and other ways to allow projects to avoid NSR analysis.

One commenter (IV-D-65) strongly supported PALs but cautioned that they would be

successful only if implemented correctly. Commenter IV-D-65 said the PAL is a way for sources

that are generally well-controlled and have good compliance monitoring techniques to make

changes that have little or no effect on air quality without encountering substantial procedural

delays. However, confirmed the commenter, implementation will work only if the title V

operational flexibility provisions, the rules for implementing Section 112(g), and the major NSR

rules create an integrated approach for making physical and operational changes. 

Other commenters (IV-D- 92, 98, 180) stated qualified support. One commenter (IV-D98) stated that this regulation has the potential to be extremely valuable, but is not well defined. 

The standard, asserted the commenter, will allow inequities among facilities that are even

greater than those allowed by current regulations. Some commenters (IV-D-92, 180) said they

could only support a PAL program limited to well-controlled facilities. Otherwise, the

commenters claim, the States’ ability to disallow use of the PAL will be undermined by pressure

to be no more stringent than EPA.

One commenter (IV-D-67) stated that if litigation holds up other NSR reform provisions,

the EPA should still issue guidance establishing the groundwork for PAL.
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7.2.2 General Opposition for PAL Concept

Several commenters (IV-D-08, 19, 34, 77, 110, 119, 128, 144, 147, 152; IV-G-02, 04)

generally opposed the PAL proposal because of the burden it would impose.

One commenter (IV-D-128) objected to the extent PALs are intended to replace current

law with what would, in fact, be a more burdensome and restrictive regulatory approach. The

commenter stated that the agency should not pursue PALs (or any other supposedly beneficial

“new” approach) at the cost of refusing to recognize and affirm the full extent of the relief that is

already available under current law. The commenter stated that the relief that already is available

to their industry under the current NSR rules (including the existing WEPCO rule), where those

rules are properly understood and given their full effect, is far more beneficial than anything

provided by the PAL approach.

Two commenters (IV-D-19, 77) stated that the proposed rule is much too complex,

especially the applicability provisions. The commenters claim they are burdened with many

complicated preconditions, especially those for PAL users.

One commenter (IV-D-160) maintained that, although PALs hold promise for simplifying

NSR and providing greater certainty for all concerned parties, the proposed rule does not yield

the full promise of PALs because it sets inappropriate ground rules for their establishment and

implementation.

One commenter (IV-D-110) stated that the PAL proposal was not beneficial and that it

contained pitfalls and threatened the flexibility the title V program was supposed to provide. The

commenter claimed that the essential flaw of the PAL program is that it will be more restrictive

than the current options available to source operators. Today, noted the commenter, a source

operator can avoid PSD/NSR as long as emissions do not increase by a significant amount as a

result of a non-exempt change in the plant or the manner of operation. According to the

commenter, plant-wide netting already provides flexibility for the source operator to offset

emission increases to stay below the significance threshold. However, unlike today’s relative

flexibility, the commenter asserted that the proposed PAL program has the potential to straightjacket management decisions to a degree that will discourage participation in PALs. 

One commenter (IV-D-119) disagreed that the new PAL approach is a major streamlining

of the NSR program. According to the commenter, the currently applicable bubble approach

available to sources is a far simpler way to achieve the same result. The commenter further

stated that the PAL process is unnecessarily cumbersome and will not be useful in practice.

One commenter (IV-D-144) stated that the PAL provisions, as proposed, would establish

an overly complicated regulatory framework for obtaining and operating under a permit with one

or more PALs. The commenter felt that this framework could force a source to engage in an
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extensive regulatory process to establish one or more PALs, only to have this process followed

subsequently by extensive accounting mechanisms and a burdensome regulatory process every

time a source wishes to undertake a change -- even a change that should fall within the PAL

permit. According to the commenter, the existing NSR Program regulations already allow States

to develop PAL permits. Thus, rather than overlay these regulations with complex and

potentially counterproductive requirements, the commenter claims that the Agency should

refocus its NSR Reform effort on pursuing measures that would enhance the current regulatory

framework. The commenter suggested that such measures should begin with the development of

guidance to States on how to integrate PAL permits more fully into NSR programs. 

One commenter (IV-D-04) stated that a PAL determination is problematic because it is an

applicability determination made in lieu of NSR. The commenter claims that will PALs, the

requirement to conduct an analysis of alternatives, environmental cost and social cost in

nonattainment areas is not legally required.

Commenter IV-D-152 opposed the proposed PAL approach because it is a voluntary

program and the environment is likely to suffer because of gaming in the selection process. 

According to the commenter, the sources that are most likely to participate in a PAL program are

the ones that are least likely to be forecasting increased emissions. In addition the commenter

stated that the ones that are most likely to stay out of the program are the sources that are most

likely to be considering plans that would increase actual emissions.

One commenter (IV-D-14) believed the benefits of PALs were negligible. According to

this commenter, the PAL must be set using minor NSR, which requires enforceable conditions,

recordkeeping and reporting requirements, and public comment. Therefore, claimed the

commenter, the only real benefit to EPA’s PAL as proposed would be if it streamlined the public

comment process.

Response:

We appreciate all the supportive comments and agree with the commenters that believe

that PALs will provide regulatory certainty and operational flexibility for sources and that PALs

will be a win -win approach for you, the public and the environment.

A PAL is an optional approach that provides you with the ability to manage facility-wide

emissions without triggering NSR. We believe this added flexibility of a PAL allows you to

respond rapidly to market changes. You will benefit from the PAL option because you will have

increased operational flexibility and regulatory certainty, a simpler NSR applicability approach,

and fewer administrative burdens. 

To comply with a PAL, you need to ensure that there are no emissions increases from

your major stationary source, as measured against the PAL, through monitoring and
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recordkeeping. However, the PAL concept may not be attractive to you if you do not believe that

the flexibility and regulatory certainty that a PAL provides is worth the investment needed to

operate a well-maintained facility with the necessary monitoring, recordkeeping, and reporting.

Finally, we believe that PALs will provide environmental benefit. Over the past several

years, we have allowed use of major stationary source-wide emissions caps to demonstrate

compliance with major NSR in a select number of pilot projects. We recently reviewed six of

these innovative air permitting efforts and found substantial benefits associated with the

implementation of permits containing emissions caps (among other types of permit terms offering

greater flexibility than conventional permitting programs). Specifically, we reviewed on-site

records to track utilization of these flexible permit provisions, to assess how well the permits are

working and any emissions reductions achieved, and to determine if there were any economic

benefits of the permits. Overall, we found significant environmental benefits occurred using the

permit terms for each of the permits reviewed. In particular, the six flexible permits established

emissions cap-based frameworks that encouraged emissions reductions and P2 , even though

such environmental improvements were not an explicit requirement of the permits. 

Based on the results of these pilot projects, we believe that PALs will over time tend to

shift growth in emissions to cleaner units, because the growth will have to be accommodated

under the PAL cap. Specifically, we expect that PALs will encourage you to undertake such

projects as replacing outdated, dirty emissions units with new, more efficient models; installing

voluntary emissions controls; and researching and implementing improvements in process

efficiency and use of P2 technologies so that you can maintain maximum operational flexibility. 

Lastly, we disagree with the commenters that believe that PALs are complex, burdensome

and difficult to implement, based on our study of the pilot projects mentioned above. 

7.3 Area-wide PALS

Comment: 

7.3.1 Support Area-wide PALs

Several commenters (IV-D-31, 129, 140, 160, 167, 183, 189; IV-G-4) supported

including provisions for area-wide PALs in the regulations.

Two commenters (IV-D-167; IV-G-4) recommended that the PAL concept be expanded

to allow multi-facility bubbles where appropriate. Because reductions for ozone and fine

particulates are district-wide mandates, the commenter claimed that the location of a particular

reduction within a district is inconsequential. According to the commenter, EPA should simply

require that title V permits clearly identify those limits that are intended to meet regional

emission reduction targets. The commenter proposed that groups of facilities could exchange
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limits back and forth without penalty, as long as the appropriate monitoring and record-keeping

were in place to document that the aggregated individual facility limits stayed under the limit. In

that way, claims the commenter, sources could negotiate among themselves to implement the

most cost-effective means of meeting the region’s emission reduction targets. The commenter

also proposed that RACT-based limits and percentage reduction requirement based limits,

intended to help control regional pollutants like ozone or fine particulate, should be

interchangeable within and among facilities.

One commenter (IV-D-31) stated that an area-wide PAL approach could be meritorious. 

The commenter noted that precedent for such an approach has been clearly established in

SCAQMD Rule 1135. According to the commenter, the SCAQMD rule set up a basin-wide

flexible NOx limit control strategy for utility boilers, essentially assigning a maximum annual

limit for each specific utility company. In the rule, the annual limit was ratcheted downward

each year for purposes of attainment. The commenter stated that the rule allowed the utilities to

distribute the NOx

 load among their operating boilers as they saw fit. As many as 60 utility

boilers were under the rule at one time, according to the commenter.

One commenter (IV-D-129) observed that an area-wide PAL presents an excellent

method for coordinating pollution control programs between two companies sharing space in the

same complex. One commenter (IV-D-183) supported the concept of area-wide PALs in

situations arising from change of control or ownership. The commenter felt that such a program

may become increasingly important in a deregulated electric industry.

One commenter (IV-D-140) supported the use of area-wide PALs but requested careful

consideration of the method EPA uses to set area-wide PALs and allowance of individual

facilities to opt-out of the area-wide PAL at any time. For those facilities that are included in the

PAL, the commenter stated that the PAL should be set following the precedent established in the

facility-specific PAL definition; that is, the “area-wide” actual emissions plus a margin less than

the cumulative applicable significant emission rate for each participating facility. The

commenter stated that one complicating factor would be how the Agency addresses the situation

where a PAL exceeds the area limit. In the situation, the commenter felt that the facility should

only have to undergo the NSR review.

One commenter (IV-D-160) asserted that although States should have the flexibility to

implement PALs on an area-wide basis, the final rule should clarify that individual sources may

“opt out” of area-wide PALs.

7.3.2 Oppose Area-wide PALs

Several commenters (IV-D-11, 43, 86, 92, 94, 103, 105, 106, 125, 137, 142, 147, 153,

154, 157, 180, 191) opposed including provisions for area-wide PALs in the regulations.
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7.3.2.1 Area-wide PALs are unworkable and of little practical use

One commenter (IV-D-11) raised concern with the workability of an area-wide PAL. 

According to the commenter, the source-specific PAL system is unduly restrictive and its

complexity outweighs the operational flexibility offered. An area-wide PAL, notes the

commenter, if it is defined with the same level of complexity as is the source-specific PAL, will

be unworkable.

 One commenter (IV-D-86) believed that units with technology-based source-specific

emission limitations, generally units regulated through BACT, LAER, and NSPS, are excluded

from full consideration in the area-wide PAL program. The commenter claimed that the law

does not require these units to be excluded. As proposed, the commenter felt that the area-wide

PAL program will in most instances be of little practical use. Excluding these sources , notes the

commenter, results in increased spending of EPA, permitting authority, and industry resources

via the high load of permitting and review actions, which are neither necessary nor required to

protect the nation’s air. The commenter also felt that the area-wide PALs impedes economic

growth diverted from other worthy public and private projects. Moreover, the commenter

claimed that the environment is adversely affected. For example, according to the commenter,

the proposed rule provides incentives for older equipment with greater emissions to be operated

for as long as possible and at the highest capacity, since it is only this “grandfathered” equipment

that can participate in the area-wide PAL program contemplated by the proposed rule.

Some commenters (IV-D-86, 92, 137, 180) maintained that the area-wide PAL concept

made the most sense when a close relationship exists between actuals and allowables. However,

claims the commenter, this type of trading should be considered under the open market trading

rules, not the NSR rules, as many issues must be explored. These issues, noted the commenter,

include the enforceability of the cap, off-property impacts, and cooperation between participating

companies.

One commenter (IV-D-105) expressed particular concern about area-wide PALs. 

According to the commenter, area-wide PALs would effectively require reductions in emissions

from sources that are currently in compliance with all applicable regulations. Therefore, the

commenter asserted that a company would be hesitant to install any type of pollution control

equipment voluntarily or by permit if an area-wide PAL could be set by a regulatory agency that

will require further reductions. 

One commenter (IV-D-125) argued that implementing an area-wide PAL will lead to

forgone emissions control opportunities.

One commenter (IV-D-137) said State and local air agencies will need time to develop

PALs consistent with the approaches provided in the final NSR rule, as well as to develop data

management and compliance assurance approaches that will accommodate the PAL approach. 
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Thus, the commenter claimed that adding the area-wide PAL, at the same time as the sourcespecific PAL, may create several administrative headaches.

One commenter (IV-D-157) stated that in cases where the attainment and PSD

demonstrations for an area are based on allowable or potential emissions, the PAL should be

based on such limits as well. The commenter believed that any such new site-specific limit

should be presumed to represent actual emissions and, thus, can provide the basis for a PAL. 

And even when such a PAL is reviewed after having been in effect for 10 years, the commenter

stated the PAL should be reaffirmed without change as long as its emissions levels are still

consistent with all applicable air quality goals. The commenter questioned that if this is the case,

what justification is there for a new regulatory proceeding? 

7.3.2.2 Area-wide PALs should be a voluntary program

Many commenters (IV-D-09, 33, 39, 43, 94, 103, 109, 111, 142, 147, 153, 154, 191) said

PALs should never become mandatory. These commenters supported the PAL concept as long

as it was voluntary and the source could choose whether to request one. 

One commenter (IV-D-94) opposed an area-wide PAL unless EPA can ensure that all

subject facilities in an area want PALs as an alternative to NSR.

One commenter (IV-D-103) observed that as proposed the area-wide PALs would require

all major sources in an affected non-attainment area to operate under PALs, whether they wanted

to or not. The commenter stated that States might then unfairly focus on facilities with PALs

when trying to meet Reasonable Further Progress requirements. The commenter felt that facility

owners, not State agencies, should decide whether to operate under PALs. 

 Two commenters (IV-D-106, 142) said area-wide PALs would be inequitable. 

Commenter IV-D-106 said, because of the variation among facilities, the criteria for establishing

a PAL may work well in some situations, but not in others. The commenters claimed that

adoption of a PAL program on an area-wide basis would help some companies, but hurt others,

and the commenter could see no compelling regulatory reason for universal application of this

approach to all sources in an area. The commenter (IV-D-142) added that such an approach

would penalize facilities that are underutilized and could lead to the imposition of BACT/LAER

for even minor changes at such units. 

Commenter IV-D-154 added that sources need the flexibility that mandatory PALs

threaten to take away from them. 
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Response:

We agree with the many commenters who opposed an area-wide PAL system, believing

that the approach would be complex and resource and time intensive. We also perceived little

interest in such an approach from the various stakeholders with whom we have met. 

Accordingly, we are not including any provisions in our final rules to implement an area-wide

PAL system. However, if a State has or proposes to have an area-wide PAL, they would have to

demonstrate that their program is equivalent to or more stringent than our Federal rule and

complies with the minimum elements of the Federal program.

7.4 Alternatives for Establishing PALs

Comment:

7.4.1 Base PALs on Actual Emissions

One commenter (IV-D-20) supported basing the PAL level on actual emissions. Another

commenter (IV-D-14) supported basing the PAL level on actual emissions as one of two

acceptable options, but only if actual emissions were based on the highest 12 months of

utilization in the past 10 years, as well as on actual emissions plus an operating margin less than

the significance level. The commenter (IV-D-14) believed that basing the PAL on actual

emissions as defined in current §51.166(b)(21)(ii), the highest 2 years in the past 5, would be

more stringent than emission limits under the current netting procedures. Such provisions,

claimed the commenter, would benefit the environment, but would also require some sources to

give up capacity if their limits were based on a period of economic slump. If the actual

emissions were based on the highest 12 months in the past 10 years, the commenters felt that the

source would not have to give up unused capacity because the highest year emissions is almost

certain to exceed a 2-year average. 

Four commenters (IV-D-96, 109, 177; IV-G-11) advocated basing the PAL level on

historic actual emissions.

One commenter (IV-G-11) stated that it was essential to clarify that (in a nonattainment

area) a facility is precluded from using a base year that is prior to the year of the most recent SIP

inventory (on which the State’s attainment demonstration is based). The commenter claimed that

EPA suggests a reasonable operating margin that is less than a “significant increase” could then

be added. The commenter also claimed that the historical actual is an acceptable baseline, but it

does not comport with adding a margin that is less than “significant.” The commenter felt that

this margin is still an environmentally significant amount of emissions. As it is possible this

increase could occur without a physical or operational change, the commenter claimed that many

jurisdictions would have no legal handle to review or in any way “control” that emission

increase. According to the commenter, EPA’s requirement that the PAL approval would have to
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be made up of RACT, BACT or other operational limitations (so as to be federally enforceable)

would be difficult to put into place in the approval, particularly for this “margin.” 

Commenters (IV-D-96, 177) viewed the PAL and the use of historic actual emissions as a

practical approach to limit mass emissions and to clarify the conditions from which emission

increases are determined. In addition to their being used to establish a reasonable baseline, the

commenters believed the historic actual emissions are used in establishing a source's surplus

reductions that may be used as offsets. The commenters further stated that the PAL emissions

should be calculated based upon current information.

One commenter (IV-D-04) stated that if actual emissions are calculated using the

proposed baseline determination (highest 12 months in past 10 years), the methodology creates

the risk that an emissions cap will be significantly higher than emissions under normal

operations. Moreover, claims the commenter, any inflexible formula for the baseline

determination prohibits the permitting authority from considering the interests of nearby

communities. 

One commenter (IV-D-125), who requested that the alternatives for establishing PALs be

structured to optimize air quality improvement and avoid opportunities to forego emissions

control, said the “actual emissions” alternative for establishing a PAL could be problematic if the

source is permitted for actual emissions and then allowed to use PTE.

7.4.2 Base PALs on Actual Emissions Plus an Operating Margin

7.4.2.1 Agree with proposal

Several commenters (IV-D-28, 31, 47, 52, 53, 67, 72, 80, 97, 106, 110, 111, 112, 113,

137, 138, 142, 157, 163, 170, 172) supported basing the PAL on actual emissions plus an

operating margin. However, only six of these commenters (IV-D-106, 110, 112, 113, 142, 172)

specifically supported basing the PAL on actual emissions plus an operating margin less than the

applicable significance level. 

One commenter (IV-D-110) stated that using actual emissions plus a “reasonable

operating margin less than the applicable significant emission rate" is the only appropriate

definition. The commenter stated that EPA's other options are to expand the EPA’s jurisdiction

to regulate changes beyond its current authority, or violate the Act. The commenter stated that an

increase of emissions to above the PAL level triggers PSD/NSR review, but under the PAL

proposal, it is not only for the major source or the changed source, but for all emission sources

for that pollutant, including minor and de minimis sources. In essence, the commenter felt that

accepting a PAL is an acquiescence by the operator to Federal enforcement authority of all

emission sources of that particular pollutant. The commenter also felt that preemption of State

jurisdiction over minor sources and de minimis sources is simply inappropriate. Another
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commenter (IV-D-142) also recommended that the PAL level include a reasonable operating

margin that is less than the applicable “significant” emissions level, as defined in the NSR

regulations. The commenter noted that major NSR does not apply to changes that do not result

in a “significant” increase in emissions. The commenter supports including a reasonable

operating margin less than the applicable significant emission level in the PAL is consistent with

this approach. The commenter stated that if sources are prohibited from including a reasonable

operating margin in their PALs, the PAL could be exceeded for relatively minor changes, or for

routine activities.

One commenter (IV-D-14) identified actual emissions plus an operating margin less than

the significance levels as one of two acceptable options, but only if actuals were based on the

highest 12 months in the past 10 years. The commenter believed this approach would be roughly

equivalent to the current rules with netting provisions. The commenter believed that an

operating margin greater than the significance level would weaken the PSD program and would

not be true “reform.” The commenter claimed that more physical source modifications could

escape installation of the BACT during plant modernization. The commenter believed that

because most minor NSR programs do not have any BACT provision, emissions to the

atmosphere would increase. 

7.4.2.2 Proposal is too stringent

Several commenters (IV-D-17, 28, 52, 72, 138, 163) believed that an operating margin

less than the significance level would be too stringent.

One commenter (IV-D-52) stated that PALs set by the current calculation method are

particularly difficult for large sources to accept. The commenter claimed that normal fluctuations

in emissions would probably cause the source to exceed its PAL level set at the current definition

of past actuals about half the time (since the definition is based on an average). The commenter

felt that adding an operating margin equivalent to the significance level can mitigate part of this

problem, but if the variation in VOC emissions (for example) can exceed 100 tons per year, an

operating margin of 40 tons per year will not be sufficient to allow the source to remain below

the PAL level. 

One commenter (IV-D-17) pointed out that basing a PAL on actuals plus an operating

margin is not a viable option in extreme nonattainment areas where the significance level is zero. 

One commenter (IV-D-28) believed that the “reasonable operating margin” should be at least

greater than the “applicable significant emissions rate;” otherwise, there would be no room for

growth.

One commenter (IV-D-138) endorsed EPA’s proposal to set the PAL based on actual

emissions, with the addition of an operating margin to accommodate short-term and long-term

production growth. However, the commenter believed there is no good reason to restrict the
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growth allowance in the PAL to no more than the significance levels for the particular emissions. 

The effects on air quality of emission increases beyond the significance levels can be assessed as

part of the PAL permitting process to ensure no impairment of air quality would accompany the

increased emissions from higher production levels. 

One commenter (IV-D-72) failed to understand why PALs should be restricted to actual

emissions plus a reasonable operating margin that is less than the applicable significant

emissions rate. The commenter claimed that few facilities would elect to establish such a

restrictive PAL because current NSR rules allow a greater emissions increase during the 5-year

period. The commenter noted that the ceiling currently imposed by the “significant emission

rate” (for example, 39 tons for VOCs) applies for each facility modification, and not for a period

as long as 5 years. In fact, according to the commenter, under today’s rules a source could

possibly make three 39-ton modifications over a 5-year period without triggering NSR. 

One commenter (IV-D-163) stated that the proposed PAL would require facilities to

undergo NSR review if emission increases were made that were greater than the significance

threshold. The commenter stated that this is the same as the current NSR program.

7.4.2.3 Other definitions for operating level

Several commenters (IV-D-28, 46, 47, 52, 67, 72, 80, 106, 138, 157, 163) supported

basing PALs on actual emissions with an operating margin, but defined the operating level

differently than EPA’s proposal of less than the applicable significance levels.

One commenter (IV-D-47) suggested that the baseline emissions cap determinations

should be consistent with the methodology used in determining ERCs. In those circumstances,

described by the commenter, the emissions baseline is calculated using the two calendar years

immediately preceding the actual emissions reduction that generated the ERC. To address those

instances when the two consecutive calendar years preceding the emissions reduction are not

representative of normal facility operations or emission rates, the commenter proposed that the

generator of the ERC may use any consecutive 2 calendar year period within the preceding 5

years that is representative of facility operations. The facility emissions cap would be set at the

actual baseline plus any unused major source growth allowed up to the pollutant threshold levels

that trigger NSR. This emissions add-on would be affected by increases that have occurred

during the appropriate contemporaneous period for this facility. If individual sources or groups

of sources already have existing emission caps for PSD or NSR purposes, those caps must be

retained or the sources must undergo a new PSD or NSR evaluation. All new sources installed

must also undergo a State BAT analysis. This approach ensures that all sources are controlled to

at least today’s available technology standards without diminishing a facility’s emissions cap,

even if the technology is installed on existing sources. The facility would not be penalized by the

BAT requirement with a reduced emissions cap, but retaining the State BAT requirements

assures the continued development of lower emitting sources for the future.
7 - 1996 PALs

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One commenter (IV-D-52) proposed setting the PAL at a level that gives sources

sufficient room to operate, calculating the baseline and the operating margin as follows: set the

PAL level at the sum of the baseline and the operating margin. The commenter proposed that the

baseline would be either the source’s highest 12-month utilization during the last 5 years times

its current emission factor or its highest 12 months of emissions during the last 5 years. In

addition, the commenter proposed that the operating margin would be three standard deviations

of the normal fluctuation of the emission data or the appropriate significance level. 

 Several commenters (IV-D-80, 97, 134, 142, 157, 162) advocated using the 12 months of

highest utilization in the past 10 years as the PAL baseline. One commenter (IV-D-142)

recommended that the PAL level be set as actual emissions, as based on 12 consecutive months

of utilization data within the past 10 years, coupled with current permitted emission rates. 

Further, the commenter recommended that the source should be allowed to use different

utilization data for each emissions unit in establishing the PAL level. Another commenter (IVD-157) requested that the EPA allow States to set the PAL baseline by using the same “twelve

consecutive months out of 10 years” rule that it has proposed for other “past actual”

determinations. The commenter claimed that a 10-year baseline for determining “past actual

emissions” is needed to avoid an NSR system that confiscates production capacity by setting a

baseline for determining “past actual” emissions that is too short to take in past high production

years. One commenter (IV-D-80) supported choosing any consecutive 12-month period within

10 years prior to the modification or establishment of a PAL. Based on the commenter’s

experience with multiple process units and maintenance turnarounds, the "12 in 120" method will

alleviate confusion surrounding the representative period vs. the preceding 2-year period. The

commenter noted that different process units have differing periods of highest utilization. The

commenter claimed that selection of a single 12-month period would result in several process

units not being at their highest utilization. The commenter asserts that this is typical of a large

complex facility with multiple products and cyclic variation. If facilities are required to use one

time period for all sources of pollutants, the commenter feels that the PAL may be set too low

and become overly restrictive for some pollutants. Commenter IV-D-134 further indicated that

the baseline could be from before November 15, 1990. Another commenter (IV-D-157) stated

that otherwise unused production capacity would be confiscated. 

One commenter (IV-D-163) stated that the PAL should be based on a 10-year past

production basis plus a reasonable margin based on growth and inherent process variability. A

PAL constructed in this manner, asserted the commenter, could be greater than an NSR criteria

pollutant threshold. However, if this were the case, the commenter noted that a source would

have to demonstrate compliance with the NAAQS. The commenter felt that this system would

allow a PAL to be constructed such that it reflects real operation and market-conditions. An

exceedance of the limit would then be subject to NSR. According to the commenter, changes

within this “real-life” PAL would not be subject to NSR, as proposed by the Agency. 
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Two commenters (IV-D-67, 139) also urged EPA to consider utilization in setting the

PAL. One commenter (IV-D-139) raised concern that the “reasonable operating margin” (used to

establish the PAL) is not properly defined. According to the commenter, the term should be

presented as a percentage of emissions, which could also vary with the pollution control

equipment, processing, or throughput capacity. Another commenter (IV-D-67) advocated basing

the operating margin on predicted utilization.

Two commenters (IV-D-55, 67) advocated having a demand growth provision in the

PAL. One of the commenters (IV-D-55) believed that the permitting authority and the source

should decide how the demand growth exclusion would be used for industries other than utilities.

The other commenter (IV-D-67) stated that it is not realistic for sources seeking PALs to base

them on future potential emissions. The commenter stated however that, basing PALs on very

recent actual emissions, with no “breathing room” for a facility, eliminates any benefit PALs may

provide. Therefore, asserts the commenter, PAL caps should be set based on multiplying baseline

actual emissions by a demand growth factor. 

One commenter (IV-D-72) proposed the operating margin be based on the significant

emissions rate multiplied by three -- during the life of the PAL.

One commenter (IV-D-157) claimed that the PAL approach is an application of the

EPA’s 1980 view that site-specific allowable emissions could be considered equal to actual

emissions and they recommended that the “baseline” for each PAL reflect that same approach. 

Accordingly, they requested that the PAL should be set equal to the “actual emissions” at the

time the PAL is created, plus an “operating margin” to reflect the fact that any source that aims at

reliable compliance will always hold its actual emissions somewhat under its PAL. 

One commenter (IV-D-31) maintained that PALs could be established at levels higher

than actual emissions, particularly if a source has fully offset potential emissions, and if

appropriate monitoring is in place. According to the commenter, establishing the PAL at existing

actual levels would make the program unattractive to many sources in severe and extreme areas

since they would be “donating” valuable property (the difference between actuals and purchased

offsets for a higher PTE). The commenter did not specify what the level of emissions above

actuals should be.

Commenter IV-D-113 would add definitions for significance for serious, severe, and

extreme ozone nonattainment areas. (That is, less than 25 tpy in serious and severe ozone

nonattainment areas and 0 tpy in extreme ozone nonattainment areas.)

Commenter IV-D-125 said if an operating margin is allowed, it should be minimal.
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7.4.3 Other Methods for Establishing PALs

Several commenters (IV-D-11, 31, 33, 44, 52, 53, 67, 80, 84, 87, 92, 94, 98, 108, 121,

139, 140, 142, 147, 149, 152, 157, 180, 184, 192) offered other methods for determining the

PAL level.

One commenter (IV-D-44) advocated choosing a PAL baseline that has been promulgated

through notice and comment rulemaking. The commenter emphasized that the procedures for

establishing the PAL should be simple or companies will not enter the PAL program. 

Two commenters (IV-D-94, 147) strongly encouraged the EPA to finalize a provision that

supports the use of a number of different baselines (that is, actuals, potentials, and allowables) in

establishing the PAL. Under the current proposal, claimed the commenters, many facilities will

be penalized severely if they re-permit their facilities to an actual baseline and relinquish unused

capacity that currently exists in the form of potential or allowable emissions. 

One commenter (IV-D-192) urged EPA to consider ambient air quality averaging times in

addition to annual emissions for establishing the PALs. The commenter maintained that the

increased operational flexibility provided to the source creates a situation where the facility could

make substantial operational changes that unknowingly exceed the PAL. The commenter noted

that responsibility would fall upon the State to discover this violation and assess penalties. 

Unfortunately, according to the commenter, the PAL as proposed only considers annual

emissions as the primary parameter of environmental effect. The commenter requested a greater

recognition of all the NAAQS averaging times. This approach, claimed the commenter, would

utilize operational changes that do not involve either any appreciable change either in the quality

or nature, or any increase in either the potential to emit or the effect on air quality.

One commenter (IV-D-152) recommended that the PAL be set at a level that achieves

significant overall emission reduction or, in some cases, a reduction in emissions per unit of

production. The commenter suggested that in the latter case, there be an air quality impact

review, and that it also be limited to PSD areas so as not to risk creating or exacerbating

nonattainment problems.

One commenter (IV-D-87) argued that the proposed PAL definition will reduce the

effectiveness of PALs. The commenter claimed that basing the PAL on actual emissions could

have the unfortunate effect of encouraging companies to operate older, dirtier equipment at

maximum rates in order to maximize the actual emission cap. Instead, the commenter advocated

basing levels on the sum of a company’s actual and allowable emissions, divided by two, with a

reasonable operating margin that recognizes the cyclical nature of operations.

Commenters (IV-D-92, 180) argued that the PAL should be established based on

maximum design capacity with BACT controls installed across the entire plant site (maximum
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potential to emit, but calculated after controls). Using this method, the commenters claimed that

the maximum emission rate is contrasted to the prior actual emissions and compared with

Federal significance levels up front. Under the PAL, the commenters stated that the emissions a

source will produce over time may be expected not to increase. The commenter felt that no

target or motivation is provided to the source to reduce emissions. Conversely, under the State’s

flexible permits guideline, the commenters claimed that the emissions a source will produce over

time may be expected to decrease. The target, the commenters stated, is measured reduction over

defined time. The commenter requested clarification on how EPA's second and third methods

would be applied. The commenter predicted that under the current PAL proposal, a poorly

controlled facility will come away with a distinct market advantage over its well-controlled

competitor. The commenters claimed that higher historical emission rates translate to a higher

PAL. According to the commenters, as long as the PAL is not exceeded, the source can add

units, shut down units and replace units without being subjected to a rigorous Federal review. 

On the other hand, claimed the commenters, the well-controlled competitor will have tighter

restrictions and fewer options under the low emission cap it is granted and will be more likely to

trigger Federal review for even minor changes. The commenters believed limitations on the PAL

should be set based on a minimum level of control. In addition, the commenters believed

flexibility should reward well-controlled facilities and motivate less well-controlled facilities. 

The commenters claimed the PAL as proposed does neither.

One commenter (IV-D-98) preferred using either allowable or potential emissions as the

basis for the PAL level.

Two commenters (IV-D-33, 149) supported the use of a methodology that conforms to

either “potential-to-potential” or “actual-to-future actual” to establish PALs. The commenters

suggested that options conforming to both methodologies for establishing PALs be incorporated

into the final rule.

One commenter (IV-D-121) maintained that there are instances where a PAL set at

potential emission levels would not interfere with timely attainment and maintenance of NAAQS

and increments and therefore could receive EPA approval. The commenter acknowledged that

perhaps the company would have to perform some modeling, or the State would have to do a

study. The commenter felt that EPA should not foreclose those opportunities. Instead, according

to the commenter, the Agency should give guidance and assistance to States on the burdens they

would have to carry to gain approval for a PAL program based on potential emissions.

One commenter (IV-D-184) referred to lessons learned from the adoption of the NOx/SOx

RECLAIM program and the rejection of the VOC RECLAIM program in the South Coast Air

Basin and requested that the PAL be derived from the emissions of only the highest level of

activity year. 
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One commenter (IV-D-140) stated that the permitting authority should also have the

flexibility to aggregate emission units in order to establish PALs. The commenter gave examples

of situations in which a source cannot determine the exact emission rate from an individual

emission unit, however, the aggregated emissions from a group of emission units could be

determined. In these cases, according to the commenter, an administrative change should be

sufficient to modify existing permits from an individual emission unit basis to an aggregated

basis.

One commenter (IV-D-52) proposed a market-based approach to air emissions with the

PAL concept. The commenter claimed that a significant fee would encourage each source to

identify its inefficient processes and eliminate or change them (through pollution prevention

activities, for example). The commenter believed that the PAL would provide a flexible

environment for the source to make these changes. In addition, the commenter believed the PAL

would be a safeguard; for those sources at which the emission fee was not a major cost (relative

to the product), the PAL would still require technology review for projects exceeding the PAL, as

well as providing the incentives for remaining below the PAL.

7.4.4 Other Comments on Establishing PALs

Some commenters (IV-D-11, 14, 47, 113, 147) raised other issues regarding setting

 PALs. 

One commenter (IV-D-11) recommended that initial permitting should use best available

information to estimate emissions for purposes of setting the PAL. The commenter stated that

provisions should be integrated into the rulemaking for revising the PAL when better information

is obtained in the future regarding changes in actual emissions. In existing PAL-like programs,

claimed the commenter, emission factors or limited test data often improve after a PAL is set for

a facility. According to the commenter, the permitting authority should be able to make adequate

corrections without the permittee having to fear enforcement for noncompliance. On the other

hand, if those changes trigger any new applicable requirements, those new requirements must be

addressed.

One commenter (IV-D-47) recommended that all emission changes at a facility be

reported, although they may be allowed under the PAL. The commenter claimed that this

stipulation allows the State permitting authority to make assessments of these changes, including

ambient impact analysis. 

One commenter (IV-D-14) maintained that PALs should not be set so high that they

create paper emissions. The commenter provided that one way in which paper emissions could

be created would be to go far enough in the past in order to include emissions from equipment or

processes no longer in use or emissions that are no longer capable of being generated because of

alternations or reconfiguration to processes (upstream or down stream) of the equipment in
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question. The commenter urged EPA to set the PAL to prevent discontinued equipment and

process lines from potentially being included in the PAL, as there is no 5-year contemporaneous

time period like in the netting analysis. 

One commenter (IV-D-14) requested clarification of proposed §51.166(u)(3)(i)(A): that

is, does the wording of the section “Emission limitations and conditions” mean that : (1) the

PAL can exceed current allowable emissions once the operating margin is added, or: (2) that

PAL is the plantwide actual emissions and after a reasonable operating margin is included the

PAL cannot exceed allowable emissions? The commenter stated that if the PAL were, for

instance, to exceed a level assumed to avoid PSD, then this approach would undermine previous

PSD actions. 

One commenter (IV-D-147) said EPA should clarify in the final rule that PALs should

not be imposed on sources that do not want them.

One commenter (IV-D-113) said establishing a PAL should require at least a minor

source construction permit review or be consider a minor modification of a major source. The

commenter requested that the rule should be more specific regarding the information that must

accompany a request for a PAL.

Response:

After considering the many comments on alternatives for establishing PALs, we have

decided to go forward with PALs based on actual emissions. We believe that a major stationary

source’s compliance with an actuals-based PAL system is a permissible means of assuring that

the source does not have a significant net emissions increase. Under the final regulations, the

PAL level will be set by summing the baseline actual emissions of the PAL pollutant for each

emissions unit at your existing major stationary source, and then adding an operating margin

amount equal to the applicable significant level for the PAL pollutant under paragraph 40 CFR

52.21(b)(23) or under the Act , whichever is lower. 

We believe that the operating margin is necessary for the following three reasons: To be

consistent with the current NSR applicability rules - the current regulations exempt emissions

increases of less than significance level from NSR since they do not result in a significant net

emissions increase and hence a major modification. Secondly, it is important to provide this

margin to ensure that a source has some room to allow for operational fluctuations - otherwise

every fluctuation potentially could trigger a violation. Finally, we believe that this margin will

serve as an incentive for sources to opt for this program, since these sources will be giving up

their allowable emissions when they obtain a PAL based on baseline actual emissions.

We agree with those commenters who advocated a 10-year baseline period for PALs. In

the final rules, we are changing the definition of baseline actual emissions for the major NSR
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program to allow a look back period of 10 years (except for utilities). This change was based

on a study of business cycles [“Business Cycles in Major Emitting Source Industries,”

September 25, 1997; Eastern Research Group, Inc.] . The study’s findings supported a 10-year

look back to ensure that the normal business cycle would be captured generally for any industry. 

For consistency with the base program and ease of implementation, we believe that the baseline

period for PALs should also be 10 years.

We do not agree with the commenters who preferred different baseline periods for

different units under the PAL. In the final rules, we are requiring the use of the same single

consecutive 24-month period within the 10-year look back period to calculate the baseline actual

emissions for existing emissions units in the major NSR program. For consistency with the base

program and ease of implementation, we believe that the baseline period for all units while

setting a PAL should be the same. 

We do not agree with those commenters who believed that the PAL should be based on

the ambient air quality averaging times. When establishing a PAL, you must comply with all

applicable requirements of the reviewing authority’s minor NSR program, including modeling to

ensure the protection of the ambient air quality. The reviewing authority would ordinarily

request air quality modeling for any changes if it believes that the changes under the PAL may

affect the NAAQS or PSD increments or cause an adverse impact on an AQRV in a Class I area .

One commenter stated that the PAL baseline must not be before the most recent SIP

inventory on which an attainment demonstration is based. While, we agree that the PAL

baseline must be consistent with current assumptions regarding the source’s emissions that are

used under the applicable SIP for planning or permitting purposes, we believe it is up to the

States to use appropriate measures to ensure consistency between PALs and the emissions levels

used by them in their attainment demonstrations.

We agree with the commenters who believed adequate corrections to the PAL should be

made if incorrect emission factors have been used. The reviewing authority must reopen the

PAL during the PAL effective period to adjust for typographical and calculation errors. 

In summary, to calculate the level of the actuals PAL under the final rules, you first sum

baseline actual emissions from each emissions unit at your major stationary source. To

determine the baseline actual emissions for each emissions unit, you must use the definition of

baseline actual emissions in the major NSR rules. [See 40 CFR 51.165(a)(1)(xxxv)(B),

51.166(b)(47), and 52.21(b)(48) as amended by the final rules.] For most types of existing

emissions units (units with > 2 years operating history), this means that the baseline actual

emissions of the PAL pollutant you would use to establish the PAL will equal the average rate, in

tpy, at which your emissions units emitted the PAL pollutant during a consecutive 24-month

period, within the 10-year period immediately preceding the application for a PAL. Consistent

with the final rule, you will have broad discretion to select any consecutive 24-month period in
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the last 10 years to determine your baseline actual emissions. If you did not operate an existing

emissions unit during the period you select, then you must not include the baseline actual

emissions from this unit when establishing your PAL. For most new emissions units (units with

< 2 years operating history), the baseline emissions shall equal the potential to emit of the units.

7.5 Other Alternatives for Establishing PALs

7.5.1 Base PALs on Allowables

Comment:

Multiple commenters (IV-D-10, 46, 61, 62, 79, 107, 111, 132, 135, 147, 160, 164, 191)

supported basing the PAL level on allowable emissions. One commenter (IV-D-147) asserted

that it was particularly important that sources with recent PSD/NSR determinations be authorized

to use “allowables” as the PAL baseline. Use of allowables PAL, claimed the commenter, would

avoid severe penalties for well-controlled sources and may make PALs generally more attractive. 

According to the commenter, the Agency appears to have disregarded this concern, indicating

that the “clean unit” exclusion addresses this issue. The commenter claims, however, that clean

units may be individual pieces of equipment or discrete process lines. Moreover, claims the

commenter, as the EPA would currently provide, there would be little, if any, flexibility to

modify a clean unit or change its emissions, particularly for batching processes -- a place where

PALs may be most beneficial -- and remain within this narrow exclusion.

One commenter (IV-D-111) stated that the PAL limit should be based on a facility’s

allowable emissions instead of actuals in certain cases; otherwise, a plant’s full production

capacity could never be utilized. The first case, provided the commenter, is when a source has

gone through LAER and offsets review or netted out of NSR with enforceable limits going into

effect after 1990. The commenter requested that facilities that have been issued a PSD permit

since 1990 should also be permitted to use their allowable emissions for the same reasons.

One commenter (IV-D-10) maintained that it does not seem correct to require a PAL to

be based on actual emissions. The commenter notes that each facility currently is limited to

federal/State enforceable emission limits, so why not continue these limits as a PAL by adding up

the total to set the PAL? According to the commenter, if the PAL is set at actual emissions, it

may immediately restrict the operation to existing levels. The commenter claimed that existing

PAL-type programs have already determined that the allowed emissions are acceptable. 

Therefore, the commenter asserted that allowed emissions should be acceptable for PALs.

One commenter (IV-D-164) raised concern that the Agency’s current proposal only

supports the use of actual emissions in establishing a PAL in an attainment area. According to

the commenter, if this is the only possible baseline, many facilities will be penalized severely if

they re-permit their facilities under a PAL. The commenter claimed that establishing a PAL for a
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new facility at the actual baseline will cause the facility to relinquish unused capacity that

currently exists in the form of potential or allowable emissions. The commenter believed that a

facility with a PAL based on a PSD review should not be required to reduce its allowable

emissions to obtain the benefits of a PAL. According to the commenter, this approach only

encourages new facilities to run operations at levels to maximize emissions to obtain the benefits

of a PAL based on actual emissions. The commenter claimed that this “use it or lose it”

mentality should not be fostered by an approach that has the potential to provide environmental

protection and flexibility. The commenter claimed that facilities that have been issued a PSD

permit since 1990 should be able to base a PAL on allowable or potential emissions because the

allowable emissions have been fully accounted for in the PSD permit review by the State. 

Regardless of the form of the baseline, the commenter acknowledged once a facility’s emissions

are capped under a PAL, both the source and the permitting agency would have a predictable

framework for evaluation of changes at a facility for NSR purposes.

One commenter (IV-D-107) expressed concerns about precluding PSD-permitted

facilities from obtaining PALs based on their allowable emissions. As an alternative, the

commenter stated that the permitting authorities should be allowed to establish PAL levels based

on the annual allowable limits contained in PSD permits for such sources. This alternative

approach, according to the commenter, should be used at least in cases where the source has

received a PSD permit or reconfirmed through a NSR modification in PSD annual allowable

limits within the last 5 years.

Two commenters (IV-D-61, 132) requested that the PAL be based on plantwide

maximum or allowable emissions as they currently exist, since such emissions have already been

approved for the source and undergone environmental scrutiny. 

One commenter (IV-D-132) stated that if an agency has reviewed the plant for control

technology and environmental impacts within the preceding 5 years, there is no reason why the

plant’s PAL should not be based on allowable emissions. The commenter also stated that States

should be allowed the flexibility to craft PALs that increase with the phased installation of

equipment when such phased installation is authorized under an NSR permit. 

Two commenters (IV-D-160, 191) maintained that the final rule should provide that the

initial PAL emissions limitation should be established at a level equal to the current allowables,

if consistent with the State’s air plan. The commenter further maintained that if a source does

not have an allowable limit, then the PAL limit should be established, at a minimum, at the

facility’s actual emissions as determined using the actual emissions baseline approach discussed

above, including a reasonable operating margin. The commenter questioned that EPA clarify

that, in determining what constitutes a “reasonable operating margin,” permitting authorities

should take into consideration significant levels and the de minimis provisions in section 182 (c)-

(e) of the Act.
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 One commenter (IV-D-160) stated that under the current NSR regulations, permitting

authorities “may presume that source-specific allowable emissions for the unit are equivalent to

the actual emissions of the unit.” See, for example, §52.21(b)(21)(iii). Therefore, according to

the commenter, sources may use their current allowables as past actuals for purposes of

determining whether a physical change or change in method of operation results in a significant

net emissions increase. Furthermore, the commenter asserted that assuming they are federally

and practically enforceable, the source’s allowables may be used as future potentials (as well as

future actuals). Accordingly, the commenter felt that an enforceable PAL could be viewed as the

source’s past actuals and future potentials/future actuals (that is, a de facto allowable-toallowable test). Under this formula, the commenter believed changes (including any physical

change or change in method of operation) resulting in emissions below the PAL limit would not

result in a significant net emissions increase and, therefore, would not trigger NSR.

One commenter (IV-D-79) requested that EPA consider adopting an element of Oregon’s

program, that is, basing the PAL on emission rates established in the permit rather than on the

previous 6 months of actual emissions. The commenter stated that the proposed approach is

overly restrictive and would merely reduce the incentives for sources to utilize the PAL option,

without adding any substantive air quality protection.

One commenter (IV-D-147) believed that EPA should permit a reasonable increase over

the allowable PAL, which would not be restricted to the significance levels. The commenter

claimed that such an emission level could be set by the applicant with the permitting authority.

Another commenter (IV-D-135) believed that basing the PAL on source-specific

allowables would breathe life into a concept that, as proposed, preserves most of the unrealistic

features of the current rules. According to the commenter, EPA's proposal: (1) would not

account for variations in the business cycle; (2) would trigger NSR review for changes that EPA

has exempted from the definition of modification (use of alternate fuels and raw materials); (3) 

would subject a source to major NSR for changes that do not approach the source’s current

allowable emissions ceiling; and (4) would retain the uncertainty and burdens associated with

trying to quantify current actual emissions. 

Response:

As noted above, we have concluded that a major stationary source’s compliance with an

actuals-based PAL system is a permissible means of assuring that a major stationary source

does not have a significant net emissions increase. We also concluded that this approach can be

implemented in a manner that is consistent with the Act. Thus, we are adopting regulations that

authorize States to issue actuals PALs. However, we also plan to develop an alternative that

would give a source the option of obtaining a PAL based on allowable emissions. 
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7.5.2 Permitting Authority Should Determine How to Set PAL Emission

Levels

This section only includes comments on State discretion to establish the PAL level. For

other comments on permitting authority options, see section 7.5.

Comment:

Several commenters (IV-D-04, 11, 42, 46, 67, 94, 97, 114, 147) believed that each State

or local agency should have discretion to determine how the PAL would be set. One commenter

(IV-D-04) supported allowing each permitting authority to determine the PAL level according to

whatever methodology they felt best. Another commenter (IV-D-11) believed that each

permitting authority should include a prescriptive methodology for establishing a PAL in their

SIP. 

One commenter (IV-D-97) recommended that the EPA not require any of the proposed

alternatives to establishing a PAL level, but instead give States some discretion in setting PAL

levels, allowing States to approve a level that is appropriate for a particular source. Another

commenter (IV-D-114) stated that EPA should allow flexibility under a PAL by giving States the

option to offer sources the following three alternatives: actual emissions plus an allowance

margin; allowable emissions; and future actual emissions. Another commenter (IV-D-46)

believed EPA should provide permitting authorities the discretion to work with the permittee to

establish a PAL, subject to public review and comment, that makes the most sense given the

unique circumstances surrounding the plant (including its location, operations, and current

environmental controls and pollution prevention practices), as well as the State’s environmental

programs and needs. The commenter also believed EPA should eliminate the requirement that

PALs must be based on actual emissions or allowable emissions established in a major NSR

permit issued within the last 2 years, and replace this requirement with an adaptable provision

that allows consideration of specific source or State issues. 

One commenter (IV-D-67) supported giving States flexibility to choose any one of a

number of methods for calculating PAL emission caps, providing that States do not prescribe a

methodology that arbitrarily limits sources to the average of their last 2 years of actual emissions. 

One commenter (IV-D-42) maintained that the successful implementation of a PAL

concept will hinge largely on the calculation methodology used to determine emission increases

and decreases for individual units within a source. The commenter believed that a single

methodology cannot be made to work for all industries and equipment types. Accordingly, the

commenter stated that EPA should develop several methodologies so that local permitting

authorities could use the methodology that most accurately reflects the proposed modification. 

The commenter felt that having several methodologies available will give local jurisdictions the
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tools needed to address the conflicting issues of protecting short-term NAAQS and PSD

increments while also protecting industry’s capacity and flexibility. 

Response:

We do not agree with the commenters that believe that your reviewing authority must

have discretion to use different methods for setting the PAL level. This would lead to inequitable

treatment of sources by different States. Hence to provide consistency and uniformity for sources

across the nation , in our final PAL rules today, we are establishing minimum elements of the

program that all States are required to meet. A State’s alternative PAL program must be

equivalent to or more stringent than the Federal program for it to be approved into the SIP. 

7.6 Permitting Authority Issues

One commenter (IV-D-53) agreed with the options EPA proposed for permitting

authorities in adopting the PAL approach, but did not give further details. These options,

specific comments, and our responses are presented in the following sections. 

7.6.1 PALs and Minor NSR Programs

Comment:

Several commenters (IV-D-09, 47, 67, 111, 160) urged EPA to encourage States to

streamline their minor NSR programs and craft them to be consistent with EPA’s proposed PAL

provisions, specifically regarding setting limits that cover multiple pieces of equipment and allow

netting. Otherwise, the PAL provisions in the Federal NSR regulations will be moot. Of these,

some commenters (IV-D-09, 67, 111, 160) believed sources with PALs should be exempt from

the requirements of minor NSR programs. These commenters endorsed exemption from the

minor NSR program, rather than just advocating exemption from the synthetic minor emission

limits specifically (for example, (r)(4) limits; see section 7.13). Some of these commenters (IVD-67, 111) urged EPA to encourage States to offer minor NSR relief for sources with PALs.

One of the commenters (IV-D-47) argued that PALs can and should be available for both

major and nonmajor facilities. Pursuant to existing authority to implement PALs for sources

operating under a federally enforceable emissions cap, all new and modified sources are still

subject to the State BAT requirement, regardless of the size of the facility. The PAL emissions

cap, established independently for the permitted facility, would not eliminate any existing

applicable requirements.

One commenter (IV-D-09) requested that EPA encourage States to modify their existing

regulations to provide relief from the extensive procedural requirements for minor NSR projects. 

Some States still require equipment-specific NSR for new equipment located in areas regulated
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by an existing PAL or PAL-like permit. Any new VOC-emitting equipment must still undergo

minor NSR, even if emissions from the new equipment will not result in an exceedance of the

PAL. In addition, the State regulations do not allow sources to use netting to determine NSR

applicability. The existing State rules thus negate any flexibility provided by EPA's proposed

PAL approach. EPA should require or, at a minimum, specifically request that States with these

types of provisions modify their rules to allow the PAL flexibility provisions contained in this

proposed rulemaking.

One commenter (IV-D-111) recommended that EPA encourage States to provide PAL

sources with relief from minor NSR as long as the PAL limit is still met. For example, States

could preapprove, when the PAL is set, certain changes that are common to the source. This

would maximize the intended benefits of the PAL. Minor NSR can be triggered for even small

changes at a facility, and this can cause significant delays.

One commenter (IV-D-67) maintained that most if not all State minor NSR programs

currently allow PALs. Therefore, EPA should send a strong message to States that if their

current rules do not allow sources ways to become exempt from minor NSR (through either a

PAL or a standard permit that allows advance minor NSR and therefore does not trigger minor

NSR), they should actively work to change their rules. In this regard, EPA should ask States to:

(1) consider the overall effect their minor NSR, air toxics and other programs might have on the

viability of emission caps; and (2) construct programs that do not present barriers to PALs.

One commenter (IV-D-160) asserted that the benefits EPA hopes to create through its

proposed PAL provisions, including operational flexibility and a reduced permitting burden, will

be greatly increased if the principles of those provisions extend to minor NSR programs as well. 

If the PAL exclusion is limited to major NSR only, then facilities will still need to undergo timeconsuming State permit reviews, even for small changes. EPA should indicate that States can

provide the same treatment under minor NSR as is provided under major NSR. Alternatively,

States should be able to preapprove certain types of changes common to the source at the time

the PAL is established, as had occurred in several PALs that have already been issued.

Response:

The final major NSR rules do not extend the PAL provisions to State minor NSR

programs or otherwise affect those programs. We do not agree that our major NSR regulations

should provide PALs for both minor and major sources, since PALs are an alternative

applicability scenario to major NSR. We do not believe it is appropriate for us to dictate or

encourage States to streamline their minor NSR program. Lastly, we did not propose or seek

comment on the PAL program’s interaction with the State’s minor NSR program and as such are

not taking any action relative to the State’s minor NSR program. 
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7.6.2 PALs in Attainment and Nonattainment Areas

Comment:

7.6.2.1 PALs in attainment areas

Four commenters (IV-D-11, 14, 52, 53, 137) agreed that PALs should be available for

new sources in attainment areas based on the review of the entire facility. Other commenters

(IV-D-106, 107, 139, 164 ) believed that PALs should be available for new sources in attainment

areas without specifically stating how the PAL level would be determined. Commenter IV-D137 indicated that the initial PAL level should be revised once emissions data were available. 

Another commenter (IV-D-14) endorsed PALs for new greenfield PSD sources provided

that they were limited to sources with a normal operations record of at least 2 years based on

historical actual emissions (plus possibly a safety factor not exceeding the PSD significance

level). EPA should allow the States to determine whether PALs for new sources make sense,

which would be consistent with EPA’s general approach of providing greater deference to States

in customizing a NSR program that meets each State’s individual needs. Also, it will be difficult

to successfully pre-judge the relative usefulness of the PAL and clean facility mechanisms before

either mechanism has been implemented and tested in “real world” situations. The resolution of

this issue should be left to States administering the NSR program and sources subject to NSR. 

7.6.2.2 PALs in nonattainment areas

Several commenters (IV-D-11, 42, 52) supported allowing PALs in nonattainment areas. 

One commenter (IV-D-42) stated that PALs should be available to sources in nonattainment

areas. If there is an emission increase over the PAL, the source should offset the emission

increase. Emission offsets should be enforceable through the SIP or the title V permit.

One commenter (IV-D-52) requested that EPA clarify that PALs may be used in

operating permits and administrative orders where no operating permits are required (or in any

other regulatory documents that are the basis of a SIP submittal for nonattainment areas), and that

if necessary EPA should make rule amendments to extend PAL availability to these other

documents. This flexibility in nonattainment areas is particularly important because many of

these types of permits will be submitted as part of a SIP. Every amendment to these permits will

have to go through Federal rulemaking, in addition to the State process. Since permit

amendments are doubly complicated, the administrative benefits of reducing the need for such

amendments is twice as great. Otherwise, new sources undergoing NSR in nonattainment areas

would gain the advantages of PALs but existing sources would still be required to have unit-byunit limitations in their permits or orders, and still have to seek amendments at both the State and

Federal levels.
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Two commenters (IV-D-147, 184) opposed requiring an approved attainment

demonstration plan as a condition for establishing PALs in nonattainment areas. One commenter

(IV-D-147) stated that EPA should clarify that PALs should be approved even if there is no

currently approved SIP for an area. The commenter expressed concern that the EPA still seems

to be requiring some sort of consistency with SIP demonstrations as a pre-condition for

approving PALs in a State. To the extent that so few PALs are currently approved, and in the

event that so many States will be required to submit new demonstrations under the likely new

NAAQS, references to such restrictions should be removed. One of the commenters (IV-D-184)

stated that the concept of the PAL being set at “any emissions level completely offset and relied

upon in an EPA approved State attainment demonstration plan” could potentially force a facility

to reduce its emissions at a rate that will prove unachievable in practice. This is because many

plans rely upon technology forcing rules to produce lower emitting products, processes, etc. 

Response:

After considering these comments and discussions at stakeholder meetings, we have

decided to go forward with PALs in both attainment and nonattainment areas, except in extreme

nonattainment areas. Under our final rules, actuals PALs are available only to existing major

stationary sources. The initial PAL level will be set based on baseline actual emissions, plus the

significant level for the PAL pollutant, as discussed above in section 7.4. For new major

greenfield sources, we also plan to develop an alternative that would give them the option of

obtaining a PAL based on allowable emissions. 

As stated earlier, PALs are permissible in all but extreme nonattainment areas. (Also,

See section 7.9.) We agree with the commenters who indicated that an approved attainment

demonstration plan should not be a requirement for establishing PALs in a nonattainment area. 

Consequently, no such requirement appears in the final rules. 

7.6.3 PALs Only for Sources With at Least 2 Years of Records

Comment:

One commenter (IV-D-46) opposed limiting PALs to sources with only 2 years of

emission records. Conversely, another commenter (IV-D-52) believed PALs should only be

available for sources with a record of existing emissions or normal operations for at least 2 years,

in order to establish a PAL based on historical actual emissions.

Response:

Under our final rules, actuals PALs are available only for existing major stationary

sources. As stated above, actuals PALs are based on your source’s actual emissions. Without at

least 2 years of operating history, your source has not established actual emissions upon which
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to base an actuals PAL. However, for individual emissions units with less than two years of

operation, allowable emissions would be considered as actual emissions. Therefore, you may

obtain an actuals PAL only for an existing major stationary source even if not all emissions units

have at least 2 years of emissions data.

7.6.4 PALs Only for Some Source Categories

Comment:

One commenter (IV-D-52) believed PALs should be restricted to certain source category

codes, but did not identify which ones.

Response:

The final rules do not restrict PALs to certain source category codes. We see no basis for

such a restriction, and none was offered by the commenter.

7.6.5 PALs For All Pollutants

Comment:

One commenter (IV-D-52) believed that States should offer PALs for all pollutants. 

Response:

In the final rules, PALs are allowed only for regulated NSR pollutants as defined in final

rules. An individual PAL must address only one pollutant, but you may apply for PALs for one

or more pollutants.

7.6.6 Permitting Authority Option on Whether to Allow PALs

Comment:

Two commenters (IV-D-111, 126) urged the EPA to require States to adopt PALs as

opposed to offering it to States on a voluntary basis; that is, the State agencies would have to

include PALs in their rules, but the PAL would still be optional for sources. The commenters

claimed that the PAL option will provide existing sources both flexibility and certainty with

respect to their operations and planning. In addition, the commenters claimed that it will also

ease the permitting burden of States while maintaining air quality. One of the commenters (IVD-111) stated that the benefits of PALs are too great to make the PAL approach optional. Also,

one commenter (IV-D-111) suggested that a relatively consistent NSR program and PAL

provisions among States would simplify the process for those applicants with facilities in more
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than one State. In contrast, one commenter (IV-G-11) argued that States should have discretion

to decide whether to provide for PALs.

Response:

We agree with the commenters who indicated that PALs should be a required element in

State major NSR programs, since PALs provide potential benefits to you, the public and the

environment. . Accordingly, the PAL provisions of the final rules are mandatory in that States

are required to amend their major NSR programs to include a PAL program, unless they can

demonstrate that their program, without PAL provisions, is more stringent than a program with

PALs under these rules. (However, the PAL program is optional for sources.) The State may

adopt the PAL provisions of the final rules or may adopt an alternative PAL program. To use an

alternative PAL program, the State must demonstrate to us that their alternative program is

equivalent to or more stringent than the PAL provisions of the final rules, and we must approve

the alternative PAL provisions into the SIP. 

Comment:

Three commenters (IV-D-10, 67, 137) recommended that EPA develop guidelines for

States to use in identifying when PALs would be beneficial. 

In consideration of agency resources, one commenter (IV-D-67) recommended that the

EPA identify circumstances in which PALs may be beneficial and suggested the following

guidelines for States to consider in determining whether sources should seek a PAL:

• Whether the source has several synthetic minor permits

• Whether the source needs operational flexibility, due to the rapid changes what will be

needed at the facility to meet market demand

• Whether there have been or are expected to be multiple netting situations at the source

• Whether the source has production constraints that need to be removed

• Whether the source would benefit from coordinating or consolidating applicable

requirements (for example, meeting overlapping State and Federal reporting or

monitoring requirements for a large facility by implementing one overall reporting or

monitoring system). 

Another commenter (IV-D-137) recommended that the EPA list characteristics

(guidelines) for determining the best candidates for PALs. The commenter recommended

characteristics include the activities necessitating minor NSR review, willingness to reduce

emissions from older units to make room under the PAL, location in attainment areas for PAL

pollutants, good working relationship with the permitting authority, and lack of significant

compliance problems.
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Response:

We do not, at this time, have plans to issue guidelines for when PALs may be beneficial. 

We believe that you must weigh the pros (for example, certainty and flexibility) and cons (for

example, allowable emissions foregone and increased monitoring requirements) to determine

what is best for your unique circumstances. Similarly, the reviewing authority should evaluate

the suitability of the source for a PAL. Reviewing authorities retain the discretion not to provide

a PAL for a particular source. 

7.6.7 Permitting Authority Option on Type of PAL Rule

Comment:

Several commenters (IV-D-42, 43, 46, 67, 92, 147, 180) believed States should have

discretion in setting up their PAL rules. Two commenters (IV-D-42, 43) urged EPA to provide a

menu of PAL options, among which States could choose. Several commenters (IV-D-42, 43,

46, 67) believed States should have options regarding the PAL baseline, enforceability, and other

features. One commenter (IV-D-43) believed States should be able to select from a range of

possible program elements such as alternative PAL calculation methods, mechanisms to ensure

enforceability, and other features consistent with each State’s unique program. Another

commenter (IV-D-67) proposed that States be granted the flexibility to select appropriate

program elements such as alternative PAL calculation methods, mechanisms to assure

enforceability, appropriate PAL reopeners (perhaps based upon the method used to establish the

PAL cap) and other features consistent with each State’s unique program. One commenter (IVD-147) recommended that the final rule should give the States the right to adapt or customize

these options, or develop new options, so long as the State’s approach yields equivalent

applicability results.

Several commenters (IV-D-04, 11, 42, 46, 67, 94, 97, 114, 147) believed that each State

or local agency should have discretion specifically to determine how the PAL baseline would be

set. Their comments on establishing the PAL baseline are included in Section 7.4.4.

Some State agency commenters (IV-D-29, 92, 180) believed that if the PAL provisions

are adopted as proposed, it will seriously undermine a State’s ability to disallow the use of the

PAL, since States will be pressured to be no more stringent than the EPA. The State commenter

claimed that this proposal will have serious repercussions to air quality in Texas, which has its

own more stringent PAL program. According to the State commenters, the permitting authorities

should be allowed to demonstrate that their State program is at least as stringent as the PAL

proposal and to determine the best approach for their State. On the other hand, two commenters

(IV-D-170, 39) cautioned EPA against establishing overly stringent PALs. The commenters

claimed that allowing States to impose PALs that are more stringent than Federal and allowing
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States to ratchet-down PALs in the future could have severe consequences for industries that

need to maintain capacity regardless of recent use history. 

Response:

After considering the comments and input gathered at public hearings and stakeholder

meetings, we are requiring that States adopt the PAL provisions contained in the final rules or

an alternative program demonstrated to be equivalent to or more stringent than the PAL

provisions of the final rules. We believe that this approach is necessary to ensure that the PALs

are consistent with the statutory requirements, as well as to promote a degree of certainty and

uniformity across the nation. 

7.6.8 Accommodate Existing Programs and Permits

Comment:

Several commenters (IV-D-29, 92, 118, 129, 180, 189) urged EPA to allow permitting

authorities to demonstrate that their State PAL program is equivalent to EPA’s. These

commenters (IV-D-92, 118, 129, 180, 189) specifically indicated that Texas and Oregon should

be allowed to demonstrate their programs are equivalent. One commenter (IV-D-118) requested

the PAL rules allow States that already have PAL’s in place -- Oregon, Texas, etc. -- to substitute

their programs for EPA’s if they provide adequate environmental protection. Two commenters

(IV-D-129, 183) encouraged EPA to work with the Texas Natural Resource Conservation

Commission to coordinate their flexible permit program with EPA’s program for establishing

PALs. Commenter IV-D-129 urged EPA to deem the Texas program, under 30 TAC §116.715,

equivalent to EPA’s PAL provisions. The commenter claimed that the Texas program requires

not only BACT and covers toxic air pollutants, but also would reduce emissions to a greater

extent than the Federal program would. The commenters (IV-D-129) further suggested that if

EPA did not deem the Texas program as equivalent, the Agency should adopt the Texas

approach to establishing emission caps as an additional means of calculating the PAL. One

commenter (IV-D-11) argued that EPA should not require any State with an existing EPAapproved PAL-like program to demonstrate compliance with or equivalency to the final PAL

rules. The commenter noted Oregon has been using its Plant Site Emission Limit program since

1981 and has brought all of its nonattainment areas into attainment with this program in place. 

The commenter also noted it would be a tremendous waste of both State and Federal resources to

require the State to expend an iota of resources in demonstrating equivalency or compliance. In

addition, the commenter stated, it would be ironic not to accept Oregon’s program in light of

EPA’s ongoing promotion of the permitting program and the industrial operational flexibility it

provides. The commenter claimed that providing operational flexibility while successfully

improving the environment is good reason to keep hands off something that is not broken. 
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One commenter (IV-D-189) raised concern that EPA’s PAL program may supersede

existing State permit programs or cause those companies who have pioneered PALs to have their

existing permits invalidated by the proposal as an unintended result. Therefore, the commenter

stated that EPA should include a provision that allows existing State programs with at least equal

environmental protection to continue uninterrupted. 

Several commenters (IV-D-11, 43, 67) believed States should be able to develop PALs

that are approvable into the SIP under major NSR but also accommodate existing PALs and PAL

programs. These commenters believed permitting authorities should have enough flexibility in

developing PAL rules that they could accommodate existing programs. These commenters did

not specifically state that an equivalency demonstration would be necessary for the existing PAL

programs to continue.

One commenter (IV-D-43) noted that States have issued, and continue to issue, federally

enforceable PAL-type permits. According to the commenter, some PAL-type approaches have

already started under existing State regulations that are federally approved as part of the SIPs. 

The commenter also noted that other PALs are, or will soon be, starting as part of title V permit

cap permits. The commenter claimed that States and companies have the ability to continue

those PALs in full operation without any need for revision until such time as a PAL would

normally be reviewed. The commenters requested that at that time, pre-existing PALs can be

reviewed for consistency within the revised NSR regulations. The commenter noted that because

EPA is only clarifying its existing PAL-type approval authority in the NSR proposal, EPA should

not disqualify previous PAL-type provisions that have been adequately reviewed under SIP or

title V rules. According to the commenter, to avoid uncertainty, EPA should clarify this point in

the final NSR reform package.

Another commenter (IV-D-67) proposed that States be granted the flexibility to craft the

EPA-approvable NSR programs that accommodate existing PALs, by selecting appropriate

program elements consistent with each State’s unique program. 

Several commenters (IV-D-33, 43, 67, 72, 118, 153, 189) urged EPA to clarify that

promulgation of PAL provisions in the NSR rules would not invalidate existing emission caps.

One commenter (IV-D-118) stated that it is important that existing PALs should not be subject to

reopening because of this rulemaking. Commenter IV-D-153 stated that EPA should not

promulgate a final rule that inadvertently interferes with certain emission caps that are already in

place. 

Several commenters (IV-D-72, 147, 160, 163) requested that the EPA clarify in the final

rule that PALs can be adopted under existing regulations. In addition, these commenters

requested that EPA help companies use this innovative approach even before the “reformed”

NSR rules take effect. Otherwise, provided the commenters, State permitting staff will not even

realize that adopting a PAL is an option under the current system. One commenter (IV-D-147)
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requested that the EPA not delete §51.165(a)(1)(xii)(C) from the existing NSR regulations, as

this provision authorizes the existing PAL limits established by States. According to the

commenter, its deletion would not only minimize the use of PALs in jurisdictions without

specific SIP authorizations, a result apparently not intended by the Agency, but it also would

jeopardize current PALs. 

Response:

We do not agree with the commenters who believed that existing State programs should

automatically be deemed equivalent or otherwise not required to demonstrate equivalency. 

After considering the comments and input gathered at public hearings and stakeholder meetings,

we are requiring that States adopt the PAL provisions contained in the final rules. Once the

final rules are promulgated, States must demonstrate that any alternative PAL-like programs

they use are at least as stringent as or more stringent than the PAL provisions of the final rules. 

Thus, existing PAL programs need not be changed, provided that they are at least equivalent to

the final rules.

 Nothing in the final rules specifically precludes reviewing authorities from issuing PALlike permits under the existing regulations during the period prior to adoption of any new PAL

provisions into the State major NSR program. However, to minimize transition problems (see

below), we recommend reviewing authorities consider our final rules in developing any PALs

issued in this interim period. 

The final rules contain transition provisions for any PAL-like permits issued prior to

approval of the final PAL rules into the State’s major NSR program. Under these provisions, the

reviewing authority has the discretion to supersede the existing PAL-like permit with a PAL that

meets the new requirements. Thus, adoption of the final PAL provisions (or their equivalent)

into the State major NSR program does not automatically invalidate existing PAL-like permits. 

However, the reviewing authority may not issue a PAL that does not comply with the new

requirements after they have been approved in the SIP. Thus, any existing PAL-like permit must

be converted to a PAL that meets the new requirements at the time of renewal.
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7.7 Changes Under PALs

7.7.1 Emission Increases Above the PAL

7.7.1.1 Application of BACT and LAER to modifications under the PAL

Comment:

Many commenters (IV-D-20, 21, 28, 31, 33, 37, 47, 52, 53, 56, 61, 62, 67, 72, 78, 79, 80,

92, 93, 97, 105, 106, 108, 118, 126, 137, 138, 139, 140, 142, 147, 150, 157, 160, 163, 172, 180)

commented on whether BACT or LAER should apply to modifications under the PAL.

Several commenters (IV-D-28, 37, 52, 56, 62, 78, 92, 118, 126, 163) disagreed with

EPA’s statement that BACT or LAER should be required for modifications under the PAL. Two

of the commenters (IV-D-52, 56) believed instead that the source should be allowed to select the

control strategy that would produce emission reductions equivalent to those achieved under

BACT or LAER. Commenter IV-D-118 claimed that the requirement for BACT/LAER controls

on major modifications is inconsistent with the objectives of PALs. Instead, the commenter

claimed, EPA should require determinations of reductions that would be accomplished by

installation of either BACT or LAER. According to the commenter, once those pollutant

reductions are determined, a source should be allowed to achieve the determined reductions by

using any control strategy that the source develops (including shutdowns) and verifies to the

permit agency. One commenter (IV-D-37) recommended that where changes included multiple

emission units within the facility resulting in minor emission increases at each unit, it would be

inefficient and costly to apply BACT or LAER to each unit. The commenter requested that the

existing source be given the opportunity to identify those emission units to contribute to the

emissions increase above the plantwide applicability limit and evaluate which of these units

could effectively control to BACT or LAER requirements. According to the commenter, the

source should be given the flexibility to install controls on those units that would most

effectively reduce emissions to a level below the existing PAL.

Several commenters (IV-D-20, 21, 31, 33, 47, 61, 67, 72, 80, 92, 93, 97, 105, 106, 126,

137, 138, 140, 142, 147, 150, 160, 180) believed BACT or LAER should apply only to those

modifications that can be associated with the increase. Commenter IV-D-126 explained that

review for all units under the PAL would be unnecessary, as most States have a mini-NEPA

environmental impact review process. It is likely, according to the commenter, that any new

emissions unit will have to undergo the scrutiny of this process aside from the NSR process. One

commenter (IV-D-106) recommended that, where a PAL is exceeded as the result of a specific

new unit or physical operational change (such as a new production line, or modification to a

specific process), the applicable BACT or LAER requirements should only apply to the unit that

causes the triggering increase in emissions. At the same time, claimed the commenter, there will
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be some cases where the reason for emission increases are less distinct. In that instance,

assuming that the facility chose to accept a PAL voluntarily, the commenters believed that the

BACT or LAER requirements should be applied to those units or modifications that the facility

identifies as associated with the increase. If those units or modifications cannot be reasonably

identified, asserts the commenters, the requirements should apply to those physical changes or

changes in operating method that occurred since the last PAL renewal or that have occurred

during a distinct prior time period (such as 2 to 3 years). Commenter IV-D-147 added that

changes to non-emitting equipment should not require NSR. 

One commenter (IV-D-47) stated that if the company is not able to identify the specific

sources causing the cap exceedance, then all sources installed or modified since the cap was

established should potentially be subject to the BACT or LAER re-analysis.

Another commenter (IV-D-172) expressed concern regarding retrospective application of

BACT or LAER if a PAL is exceeded. The commenter emphasized that any BACT or LAER

evaluation should happen before the construction or modification occurred. The commenter

claimed that the increased complexity of retrospective evaluation of permit approvals is

undesirable. According to the commenter, retrospective requirements create problems with the

engineering and installation of a retrofit and confusion as to which equipment must be retrofitted. 

Also according to the commenter, retrospective application of requirements adds permitting

requirements and review time, requiring additional permitting personnel. Finally, the commenter

claimed that the same emission reduction levels will not be achieved through retrofit as are

achieved through installation of emissions control at the time of the construction or

reconstruction.

Commenter IV-D-53 supported EPA’s Option 2, that BACT or LAER should apply to all

modifications that have occurred under the PAL since the last PAL renewal. One commenter

(IV-D-139) advocated applying BACT or LAER either to all changes under the PAL since

renewal or in the last 5 years.

Some commenters (IV-D-62, 79, 92, 137, 180) suggested that only emission increases

above the cap exceeding significance levels should trigger an evaluation of Federal NSR

applicability. Commenter IV-D-137 stated that once the significance level was triggered, all

emission units associated with the project that caused the exceedance should be subject to

BACT/LAER. However, noted the commenter, units applying BACT should be held outside of

the PAL until enough time as passed to establish past actual emissions (for example, 1 to 2

years).

Another commenter (IV-D-92) believed that once Federal review has been triggered, only

the modification that triggered the review should be processed through Federal NSR. According

to the commenter, the EPA-suggested alternative that all modifications made under the PAL

should be reviewed appears to be unnecessarily punitive. The commenter concurred that
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emission increases that trigger Federal NSR should be offset in nonattainment areas. The

commenter preferred that any changes to the PAL, including control technology requirements, be

made at permit renewal. In addition, the commenter noted, the source would be responsible for

complying with regulatory limits (even if a modification occurred) over the period in which the

change occurred before the PAL limit was revised. 

One commenter (IV-D-79) stated that EPA should not limit the PAL usefulness by

subjecting all exceedances, however incrementally insignificant, to major NSR. The commenter

claimed that EPA should more closely parallel Oregon's approach, which under certain

circumstances would allow “de minimis” emission increases (that is, increases of less than 40

TPY) that also result in exceedance of the PAL to undergo minor, rather than major NSR. These

changes, according to the commenter, would not require a BACT determination. Requiring

major NSR in all such instances, according to the commenter, would increase the risk of

requiring BACT for minor modifications and therefore, would significantly reduce the usefulness

of the PAL concept for many sources who would otherwise wish to adopt it.

One commenter (IV-D-157) believed that PALs should not be subject to BACT or LAER

for any reason. This commenter added that RACT and SIP requirements should also be

suspended for units under PALs.

Response:

After considering the comments received relative to an increase in PAL level, we have

chosen middle ground - that is neither require major NSR on the entire source nor require no

major NSR on any emissions units - but require major NSR only on the emissions units (either

new or modifications of existing units) causing the increase. Accordingly, in the final

regulations, we are confirming our proposed requirement that only those emissions units that are

part of a PAL major modification would be subject to major NSR. We believe this approach is

consistent with the treatment of new or modified emissions units in major NSR.

We believe that a PAL provides you with an incentive to control existing and new

emissions units to maximize your operational flexibility under your PAL. We also believe that

you must request a PAL increase only after you have attempted to control all your units. 

Therefore, under our final rules, before the reviewing authority may approve a mid-term

increase in your PAL, you must demonstrate that you are unable to maintain plantwide

emissions below your current PAL even if you were to assume BACT equivalent controls on all

of your significant and major emissions units (adjusted for a current BACT level of control

unless the emissions units are currently subject to a BACT or LAER requirement that has been

determined within the preceding 10 years, in which case the assumed control level shall be equal

to the emissions unit’s existing BACT or LAER control level.). The new PAL level is the sum of

the allowable emissions from the new and/or modified units that have gone through major NSR;

plus the sum of the baseline actual emissions of the other significant and major emissions units,
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assuming application of BACT control; plus the baseline actual emissions of the small emissions

units.

Compliance with the PAL increase procedures mentioned above would avoid

retrospective application of BACT or LAER ( a concern raised by one commenter) in situations

that cause a PAL exceedance. 

We do not agree that major NSR should be triggered only by significant increases above

the PAL. Keeping in mind that the PAL level is initially set by adding the significance level to

the baseline actual emissions, any increase up to or above the PAL level is a significant increase

above baseline emissions.

7.7.1.2 Types of emission increases covered by BACT and LAER

Comment:

Several commenters (IV-D-20, 42, 47, 57, 62, 72, 73, 74, 103, 108, 125, 126, 139, 142,

147) commented on whether BACT or LAER should apply for emission increases over the PAL

that are not associated with a physical change or change in method of operation.

Several commenters (IV-D-20, 47, 57, 62, 72, 73, 74, 103, 126, 142) believed that

increases above the PAL resulting from an increase in overall plant production should not be

subject to BACT or LAER. Other commenters (IV-D-108, 147) believed that in such cases the

source owner or operator and the permitting authority should work together to apply BACT at the

most appropriate units, and not to each unit. Another commenter (IV-D-126) advocated that the

source should be allowed to acquire external emission offsets to compensate for the increase in

emissions when the increase was not associated with a physical or operational change. Two of

the commenters (IV-D-73, 74) further clarified that emission increases above the PAL due to

demand growth should not result in the requirement to apply BACT or LAER. These

commenters believed that if EPA included such provisions requiring major NSR for an increase

over the PAL due to production increases or demand growth, the Agency should provide

additional flexibility in setting and meeting the PAL, or in responding to a violation of the PAL. 

One commenter (IV-D-42) stated that BACT or LAER should only apply to the particular

pollutant that triggered the increase over the PAL. In other words, according to the commenter,

if the project that increased emissions over the PAL had increases of more than one pollutant,

only the pollutant(s) that increased the emission level over the PAL should be subject to

BACT/LAER.

Commenter IV-D-125 believed that BACT or LAER should be applied to emission

increases that are not directly associated with a particular modification or physical change to an

emission unit to maximize emission reduction opportunities.
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One commenter (IV-D-108) believed that when an increase over the PAL occurred, any

unit whose emissions rate was the same or lower should not be subject to BACT or LAER. 

Response: 

 A PAL offers you the advantage of flexibility to make changes quickly at your facility

without obtaining a major NSR permit. In return for this flexibility, you must commit to monitor

emissions from all of your emissions units and keep the emissions from the facility below the PAL

level. In the event the PAL level is exceeded, the facility may be subject to enforcement action. 

Such action may also require retroactive application of BACT or LAER and procurement of

offsets . Where the PAL exceedance results from an increase in production rate, we agree that

you and the reviewing authority should work together to identify the appropriate unit(s) for

controls. If you need to increase your PAL for any reason, the final rules provide a mechanism

to do so (see section 7.7.1.1 above). 

7.7.2 Adding New Units Under a PAL

Comment:

Several commenters (IV-D-14, 28, 33, 34, 42, 43, 50, 52, 67, 92, 106, 107, 108, 118, 120,

125, 135, 157, 162, 170, 172, 180; IV-G-11) commented on whether new units added under a

PAL must meet BACT or LAER.

Some commenters (IV-D-34, 92, 172, 180; IV-G-11) believed that all new units added

under a PAL must at least meet BACT. One commenter (IV-G-11) stated that whether individual

BACT approvals or “presumptive BACT” would be installed under the auspices of the PAL

should then be up to each individual State.

Three commenters (IV-D-14, 34, 50) believed PALs are inappropriate if they allow a

facility to net out of BACT. According to the commenters, construction and modification of

equipment without the application of BACT violates the basic principles of NSR. In addition,

the commenters stated that units under the PAL should also be subject to LAER. 

Commenter IV-D-125 advocated applying BACT or LAER to all new units that net out of

major NSR or new units added under the PAL.

Several commenters (IV-28, 33, 42, 43, 52, 67, 106, 107, 108, 118, 120, 135, 157, 162,

and 170) opposed requiring the application of a particular level of control technology to new

units that net out of NSR or that are added under the PAL. One commenter (IV-D-52) stated that

allowing sources the flexibility to decide how they can reduce emissions at the least expense is an

important benefit resulting from the use of a PAL. This benefit, according to the commenters,

would be minimized if the PAL rule required mandatory control on new or modified units. One
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commenter (IV-D-106) opposed any suggestion (such as made at 61 FR 38265-66) that would

require all new units at a PAL facility to meet a particular control technology standard. 

According to this commenter, a facility should be given the flexibility of operating in the most

cost-effective means possible, without skewing that choice with government mandated choices of

particular control technologies. 

Commenter IV-D-107 questioned the need for the EPA to impose BACT or LAER

technology requirements on new units at PAL sources. In the event, however, that EPA decides

in favor of imposing a technology control requirement on the new unit, the commenter stated that

this requirement should be applied through performance-based standards, rather than the

installation of a specific control technology. More importantly, noted the commenter, EPA

should establish very flexible procedures for completing the BACT or LAER determinations,

such as through minor NSR review procedures.

One commenter (IV-D-108) requested that changes under the PAL not trigger BACT or

LAER because the PAL would, in essence, be set based on peak actual emissions. 

Two commenters (IV-D-120, 170) stated that for a major modification at a PAL facility

involving the addition of new equipment, such as the addition of a new engine or turbine to a

compressor station, the level of control on the new equipment will have to be a pollutant

reduction equivalent to BACT or LAER. The commenter requested that EPA allow one of two

approaches to achieve the required level of control; either require (1) the new equipment itself to

meet BACT/LAER requirements or: (2) the operator to obtain an equivalent emission

reduction(s) within the PAL facility itself. Thus, according to the commenter, control

requirements for a new engine could be met by installing controls on one or more existing

engines at the compressor station.

One commenter (IV-D-67) proclaimed strongly that there should be no regulatory control

technology requirement for new units that net out of major NSR or for new units added under a

PAL (other than as required by another program such as MACT or NSPS). The commenter

noted that a PAL is a performance-based limit, and sources should be allowed to decide how best

to meet that limit. It also noted that as a practical matter, sources adding new units probably will

need to apply control technology or pollution prevention measures to avoid triggering major NSR

or exceeding the PAL. By mandating prescribed levels of control, claimed the commenter, EPA

or States could preclude innovative use of pollution prevention. Moreover, according to the

commenter, the PAL should be set to account for the need for flexibility as well as the

maintenance of air quality, and therefore there is no need for a new unit control standard in the

rule.

One commenter (IV-D-33) maintained that if a new unit has netted out of NSR, then the

net emission increases, if any, are judged to be insignificant and there should be no further

technology installation requirement. The commenter further claims that the owner or operator
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would be most knowledgeable about where to apply the most cost-effective changes in its

operation in order to net out a new unit. Therefore, the commenter claims that a rigid

requirement by EPA to install controls on a new unit, after net-out, would be burdensome and

inconsistent with the intent of NSR reform.

Response:

We have considered all your comments and agree with the commenters that suggest that

requiring controls for new units added under the PAL would reduce the benefits provided by the

PAL program. Accordingly in the rules to be finalized, we have decided not to require any

controls on new units added under a PAL. . Our decision is based on a review of the 

performance of a limited number of facilities that are participating in PAL pilot projects. (See

our study, “Evaluation of the Implementation Experience with Innovative Air Permits,” a copy of

which is located in the docket for this rulemaking.) From this study, we have found that these

facilities’ desire to maintain a large degree of operational flexibility under a PAL system has

encouraged them to voluntarily install state-of-the art controls on new emissions units. We

anticipate similar results as we extend the PAL program more broadly. Alternatively, we believe

that you will add emissions controls to existing emissions units if this is a more cost-effective

approach to controlling your emissions. This is precisely the type of flexibility you should have

for managing your total source wide emissions under a PAL system.

Accordingly, we do not believe that it is necessary to mandate the installation of

emissions controls on new emissions units if you are able to continue to comply with your PAL

even after installing the new emissions unit. 

As discussed in section 7.4, we have concluded that actuals PALs are a permissible

means of assuring that a major stationary source does not have a significant net emissions

increase and can be implemented in a manner that is consistent with the Act. Thus, we do not

agree that allowing the installation of new units under a PAL without the application of BACT or

LAER violates the basic principles of NSR.

7.7.3 Other Comments on Changes Under PAL

Comment:

Four commenters (IV-D-43, 144, 150, 191) believed any change under the PAL should be

allowed, as long as it does not increase emissions above the PAL level. One commenter (IV-D144) stated that the NSR Reform Proposal appears to indicate that “a physical change or change

in the method of operation” that would not otherwise trigger major NSR might be treated as a

major NSR change simply because the source has a PAL. According to the commenter, such an

approach would nullify any manufacturing flexibility offered by a PAL, and moreover, would be

infeasible to implement. Instead, the commenter claims that EPA should recognize that a State
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would retain authority to require minor NSR for all changes under the PAL below NSR

significance levels, and that there is no major NSR “look back” for changes at PAL renewal or

otherwise. To increase the flexibility afforded by a PAL, however, the commenter thinks EPA

should encourage States to pre-approve such minor NSR changes to the maximum feasible

extent.

Response:

We agree that any change at your source that can be accomplished under the PAL should

not trigger major NSR. As discussed above, new emissions units that can be added without

exceeding the PAL will not be required to install BACT or LAER. No Major NSR “look back” is

required at renewal. BACT or LAER will be applied retroactively, however, if you exceed your

PAL without prior approval from the reviewing authority.

We also agree that your State minor NSR program continues to apply to all changes at

the source that are accomplished under the PAL. Under the final PAL provisions, by definition,

all such changes (regardless of the size of the change itself) are below major NSR significance

levels and, as such, may be subject to minor NSR. 

7.8 PAL Review and Adjustments

7.8.1 PAL Adjustments During the Effective Period

Comment:

7.8.1.1 Revise PAL to Correct Technical Error

Several commenters (IV-D- 20, 28, 47, 52, 53, 67, 87, 92, 97, 98, 106, 108, 109, 111,

112, 127, 137, 140, 160, and 163) commented on whether a PAL should be adjusted for a new

applicable requirement. These commenters supported revising the PAL to correct a technical

error. The commenters advocated revisions to adjust PAL calculations based on outdated data

and methodologies (IV-D-53, 92, 106, 112, 127), reduction of an emission factor (IV-D-112),

and mistakes (IV-D-98). 

Two commenters (IV-D-72, 103) opposed revising the PAL to correct a technical error. 

Commenter IV-D-72 explained that it would be a mistake to amend PALs downward when

technical errors have been made, as the proposal preamble suggested. To avoid enormous

disruptions, the commenter feels that facilities should be “shielded” from honest technical

mistakes, just as they are when a title V permit limit is discovered to be based on erroneous data.
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One commenter IV-D-92 stated that the legal authority to revise a PAL to correct a

technical error already exists and there is no need to include such provisions in the rules.

7.8.1.2 Adjust PAL for New Applicable Requirement

Several commenters (IV-D-20, 47, 53, 67, 78, 92, 98, 109, 111, 118, 126, 127, 137, 142,

160, 163, 180) supported adjusting the PAL for a new applicable requirement. However, four of

the commenters (IV-D-67, 118, 160, 163) emphasized that the PAL should only be adjusted for

criteria pollutants that the PAL addressed, not to meet new MACT requirements. Commenter

IV-D-67 preferred to handle most changes, including those for toxic air pollutants, through an

advance NSR process. Commenter IV-D-56 believed that the source should be allowed to

implement any control strategy under the PAL that will accomplish equivalent emissions

reduction to MACT or other Federal requirements.

Two commenters (IV-D- 97, 147) opposed adjusting the PAL when new requirements

were added. One of these commenters (IV-D-97) further indicated that to avoid any ambiguity

EPA should include language in the regulation that a new MACT standard would not trigger a

review and possible revision of a PAL. The other commenter (IV-D-147) believed that the PAL

should not be reduced for a RACT or Reasonable Further Progress requirement, as the source

with a PAL had already limited its emissions and should not be penalized by a “double hit.”

7.8.1.3 Adjust PAL for Offsets or Shutdowns

Two commenters (IV-D-52, 105) commented on adjusting the PAL for offsets or

shutdowns. One commenter (IV-D-52) believed the PAL should be opened to account for

permanent offsets. The other commenter (IV-D-105) believed that the PAL should only be

decreased if the unit was permanently shutdown. 

7.8.1.4 Reduce PAL When Negative Air Quality Impacts

Several commenters (IV-D-11, 39, 43, 47, 52, 56, 60, 61, 67, 72, 78, 80, 107, 118, 138,

149, 153, 170) commented on whether PALs should be reduced when there are negative air

quality impacts.

Some commenters (IV-D-43, 47, 52, 60, 61, 78, 80, 118, and 170) supported reducing

the PAL when air quality might be negatively impacted. However, other commenters (IV-D-43,

52, 78, 118) cautioned that there should be a downward change only if modeling clearly shows

that maintaining the PAL would violate the NAAQS. 

Several commenters (IV-D-11, 39, 56, 60, 61, 67, 72, 78, 80, 107, 138, 149, 153, 170)

believed that proposed regulatory language concerning changes to PALs for air quality reasons

and “other appropriate reasons” was too vague and broad. Commenter IV-D-170 explained that
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the need for a mechanism to revise the PAL to reflect changes at the source or to address changes

in applicable requirements does not justify the broad language at §51.165(a)(9)(v)(B)(1) “...air

quality consideration...,” or §51.165(a)(9)(v)(B)(3) “Other appropriate considerations.” 

According to the commenter, regulatory authorities should not be given this broad, poorly

defined authority to revise the PALs. Another commenter (IV-D-80) claimed that reducing the

PAL as provided in §52.21(x)(5)(ii)(B) “for changes at the source” seems to defeat the purpose

of the PAL because PALs are specifically designed to accommodate benign changes without

undergoing the major NSR review process. The commenter noted that the language at

§52.21(x)(5)(ii)(B) seems to allow the Administrator to change the PAL after each and every

“change,” including changes that would not trigger NSR. The commenter asserts that sufficient

provisions exist in Part 70 and Part 71 for the Administrator (or delegated State) to re-open a

permit, including any PAL provisions, for any cause. According to the commenter, as proposed,

the Administrator need not demonstrate any cause or concern, but can simply revise the PAL. 

The commenter claims that this does not provide adequate protection for the owner of a facility

covered by the PAL, nor does it allow for the due process considerations in part 70 and 71. The

commenter also asserts that §52.21(x)(5)(ii)(C), “other appropriate considerations,” is extremely

vague, and should be deleted.

Response:

After considering the comments, we have finalized the PAL rules to require the reviewing

authority to reopen and adjust the PAL under certain circumstances, and to provide the

reviewing authority with discretion to reopen and adjust the PAL under other circumstances. 

The reviewing authority must reopen the permit for the following reasons: (1) to correct

typographical/calculation errors made in setting the PAL or to better reflect a more accurate

determination of emissions used to establish the PAL; (2) to reduce the PAL if the owner or

operator of the major stationary source creates creditable emissions reductions for use as

offsets; (3) to revise a PAL to reflect an increase in the PAL (PAL increase provisions discussed

in volume I, 7.7.1).

The reviewing authority may reopen the permit to: (1) to reduce the PAL to reflect newly

applicable Federal requirements (for example, NSPS) with compliance dates after the PAL

effective date (however, your reviewing authority shall specify a reduced PAL level(in tons/yr) in

the PAL permit to become effective on the future compliance date(s) of any applicable Federal or

State regulatory requirement(s) that the reviewing authority is aware of prior to issuance of the

PAL permit);(2) to reduce the PAL consistent with any other requirement, that is legally

enforceable, and that the State may impose on the major stationary source under the SIP; (3)

reduce the PAL if the reviewing authority determines that a reduction is necessary to avoid

causing or contributing to a NAAQS or PSD increment violation, or to an adverse impact on an

AQRV that has been identified for a Federal Class I area by a FLM and for which information is

available to the general public. Except for typographical or calculation errors that do not

increase the PAL, all other mandatory and discretionary reopenings must be conducted in
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accordance with the public participation requirements that apply to initial establishment and

renewal of PALs.

 While the final rule does not require the source’s reviewing authority to immediately

reopen the PAL permit to reflect newly applicable Federal or State regulatory requirements (for

example, NSPS, RACT) that become effective during the PAL effective period, it does require the

PAL to be adjusted to reflect the requirements at the time of the source’s title V permit renewal

or PAL permit renewal, whichever occurs first. The reviewing authority should not wait for a

renewal, but should reopen the permit to adjust for new requirements if it is taking credit for the

reductions resulting from those requirements in its attainment demonstration. 

As the final rules indicate, we agree with the commenters who supported PAL

adjustments to correct technical errors to protect sources that may have inadvertently

underestimated baseline actual emissions while establishing the PAL.

We agree with the commenters who supported adjusting PALs for new applicable

requirements. However, we believe the reviewing authority should have discretion regarding

when to adjust the PAL for a new applicable requirement.

We do not agree with the commenter who stated that you should be allowed to implement

any control strategy under the PAL that will accomplish equivalent emissions reductions to other

Federal requirements. Requirements such as RACT and NSPS are applicable to specified

equipment, and you must meet such requirements independent of the PAL. Note also that you

are required to demonstrate compliance with a new applicable requirement on the schedule

included in requirement. The fact that the reviewing authority has discretion to delay adjusting

the PAL until renewal has no bearing on the applicable compliance date.

We do not agree with the commenter who indicated that the PAL should not be adjusted

for RACT or RFP requirements. These requirements are instrumental in achieving and

maintaining compliance with the NAAQS, and must bring about real reductions in emissions. If

the PAL were not adjusted downward to reflect these requirements, you would be free to

increase emissions at unaffected emissions units by an amount equal to the reductions at affected

units. Thus, the reductions counted upon by the State might not be achieved. Nevertheless, for

administrative convenience, the final rules give the reviewing authority the option of reopening

the PAL or waiting to adjust it at title V permit revision or PAL renewal, whichever comes first.

We agree with the commenters who believe emissions from shutdown units (during the

PAL term) must be excluded from the baseline emissions when renewing a PAL. Under our

initial PAL setting and renewal provisions, the PAL level is calculated as the sum of the baseline

actual emissions (for all existing and new emissions units) plus significant level. When

establishing the actuals PAL level, only one consecutive 24-month period may be used to

determine the baseline actual emissions for all existing emissions units. Emissions associated
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with units that were permanently shutdown after this 24-month period must be subtracted from

the PAL level. Emissions from units on which actual construction began or begins after the 24-

month period must be added to the PAL level in an amount equal to the potential to emit of the

units. This flexibility to reallocate emissions within the major stationary source is precisely the

flexibility that compliance with the PAL allows. However, if the facility intends to make the

emissions reductions federally enforceable for use as offsets, then the PAL permit must be

reopened immediately and the PAL adjusted by the amount of the emissions reductions.

We agree with the commenters who supported reopening and adjusting the PAL when

needed to address air quality concerns. We believe reviewing authorities are in the best

position to determine whether there is a need to reduce the PAL for air quality reasons and

therefore the final rules give the reviewing authority the discretion to do so. Note also that a

reopening requires a public participation process similar to that required for initial

establishment or renewal.

We share the commenters’ view that the PAL should not be frequently and arbitrarily

revised. We also agree with the commenters who objected to some of the broad, open-ended

language of the 1996 proposal, such as “air quality reasons and other appropriate reasons” . 

Accordingly, our final rules provide specific requirements for when the PAL should or may be

reopened as discussed above in section 7.8.1. 

7.8.2 Periodic PAL Review and Adjustment

Comment:

7.8.2.1 Need for periodic review and timing

Several commenters (IV-D-17, 22, 28, 33, 37, 52, 53, 56, 67, 68, 72, 80, 87, 92, 97, 98,

103, 105, 106, 107, 108, 110, 111, 112, 126, 137, 138, 142, 144, 147, 150, 152, 153, 157, 160,

163, 180, 191) addressed the need for periodic review and when it should occur.

Several commenters (IV-D-37, 56, 67, 72, 80, 87, 97, 98, 105, 107, 110, 111, 126, 138,

147, 153, 163) were concerned that the proposed regulations would allow permitting authorities

too much leeway to frequently and arbitrarily revise PALs. Such requirements, according to the

commenters, would result in too little certainty for sources and little incentive to establish PALs. 

One of the commenters (IV-D-37) believed provisions for changing the PAL were unnecessary. 

The commenters claimed that if there is that much variability, the permitting authority should not

write a PAL, but should instead permit each emission unit. Another commenter (IV-D-147)

cautioned that sources would not accept PALs to begin with if the permitting authority could

reduce the PAL at any time that the source reduced emissions. The primary benefit of a PAL,

according to the commenter, is having room for future growth without a permit modification; and
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if the permitting authority is able to adjust the PAL downward, there will be no motivation to

obtain a PAL in the first place. 

Several commenters (IV-D-22, 67, 72, 97, 106, 107, 111, 112, 138, 142, 150, 163)

emphasized that the periodic review should not be viewed as an opportunity to “rachet down” the

PAL level. One commenter (IV-D-22) maintained that possible lowering of limits would destroy

the incentive to get a PAL. 

One commenter (IV-D-152) believed that PALs should be permanent. The commenter

notes that the PAL concept allows unreviewed changes to occur at a plant site that will involve

the construction of emitting facilities that may stay in operation for thirty or forty years or more. 

The commenter claims that if the PAL limit is not permanent, the EPA could create a “shellgame.” That is, according to the commenter, a source would get its new construction built

without review and live under the PAL for a few years when capacity factors at the new

equipment are low. Then, as noted by the commenter, when the source is ready to ramp up to its

full production capacity of the projects it built under the PAL, the PAL could expire and

emission increases could occur from equipment that effectively received grandfather status under

the PAL. Therefore, the commenter recommended that there either be permanent limits, or if the

PAL terminates, then BACT/LAER should be determined for those projects that were

constructed during the term of the PAL and additional emission reductions should be required.

Several commenters (IV-D-17, 33, 52, 53, 67, 80, 87, 97, 103, 108, 112, 150) supported

reviewing the PAL at the title V permit renewal. Other commenters (IV-D-22, 28, 37, 67, 68, 72,

80, 103, 108, 110, 111,137, 142, 144, 147, 160, 163, 191) opposed reviewing the PAL

periodically. Some commenters (IV-D-92, 180) believed each permitting authority should

determine how and when the PAL would be reviewed, and preferred conducting reviews under

the NSR program rather than the title V program. These commenters also believed it would be

more appropriate to schedule a renewal of a PAL permit. Commenter IV-D-137 preferred that

the permitting authority set the schedule for renewing the PAL. One commenter (IV-D-153)

preferred that the PAL be reviewed at the end of the PAL term (i.e., every 10 years). Another

commenter (IV-D-157) advocated reviewing the PAL only at 10-year intervals. According to the

commenter, this would ensure that PALs do not lose their reliability. One commenter (IV-D191) said that if EPA must propose periodic review of PALs, the Agency should clearly define

exactly how frequently the reviews should occur so that the review period is not arbitrary. 

One commenter (IV-D-80) requested that EPA add specific language to the proposed

regulations at §52.21(x)(3) to state that the PAL will not be revised unless there is a modification

or a scheduled renewal.

One commenter (IV-D-43) stated that PALs should not be subject to changes in emission

limits through NSR review, CAM or the title V reviewing process. The commenter supported

States accounting for PALs in their SIP processes. Yet, claims the commenter, a source
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accepting a PAL level based on actual emissions -- as EPA proposed in §51.166(b)(ii) (emissions

during 10-year baseline) -- should not be subject to reopening except for extraordinary

circumstances.

7.8.2.2 Review criteria

Some commenters (IV-D-10, 43, 53, 67, 137) recommended that EPA define the specific

conditions under which the PAL limit could be revised. Commenters (IV-D-11, 56, 105, 107,

138, 153) further urged EPA to define specific criteria for when the PAL should be opened,

rather than stating it should be opened for “other appropriate considerations.” One commenter

(IV-D-11) requested that EPA clearly spell out the conditions under which the PAL can be

revised downward by the permitting authority. Unless clear, the commenter claims that facilities

will have no incentive to voluntarily reduce their emissions. Likewise, the commenter asserts,

permitting authorities should have the ability to “retrieve” unused allowable emissions from the

airshed, under some clearly defined procedures, for planning purposes. The commenter claims

that establishing a procedure for industry to “preserve” unused emissions by identifying future

uses of the emissions or by establishing a finite lifetime for the preserved emissions may be a

possible solution. The commenter reiterated that certainty is important for both industry and the

permitting authority. 

One commenter (IV-D-138) believed EPA or the implementing State permitting agency

should adopt, through a notice and comment rulemaking, criteria under which “the

appropriateness” of the emission caps will be judged prior to adjustment. These criteria,

according to the commenter, should include the frequency of review and the reasons for any

downward adjustment of the PAL permit limits.

One commenter (IV-D-10) requested that the types of changes, and the parameters that

would trigger State review, should be spelled out. For example, the commenter claims that if

changes in stack configurations cause an ambient modeled impact increase over a certain amount

in its State, then the source must undergo minor NSR. They requested that other such changes

that would require review be detailed in either the final rule or in policy.

7.8.2.3 Other comments on periodic review

Five commenters (IV-D-78, 80, 112, 118, 184) opposed public review of changes under

the PAL. Commenter IV-D-112 advocated that an administrative process with no public review

would suffice if a downward adjustment were required. One commenter (IV-D-78) stated that a

source jeopardizes its ability to operate every time the PAL goes to public notice. According to

the proposed rule, the commenter notes that the permit authority reviews the PAL and may

reduce the PAL for any “appropriate consideration.” The commenter further notes that this puts

a source who chooses to use a PAL at risk for losing its allowable emissions at least once every 5

years (title V permit renewal). One commenter (IV-D-80) believed that the proposed language in
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§52.21(x)(5)(i)(B), allowing for re-evaluation of the PAL pursuant to “another process with

public notice and opportunity for comment,” could allow any party to request a revision during a

public hearing that is unrelated to the PAL, such as an NPDES permit or a State waste disposal

permit. The commenter recommended deleting this provision. One commenter (IV-D-184)

stated that it would be preferable to limit public participation to the general development of a rule

for establishing and maintaining a PAL, rather than on permitting a specific proposed PAL as

part of the permitting process. 

Several commenters (IV-D-97, 98, 106, 112, 138, 150, and 170) opposed decreasing the

PAL for any reason. One commenter (IV-D-112) explained that because sources will generally

operate at an emission level below the PAL to provide a “reasonable operating margin,” there

may be a tendency upon a review of the PAL to adjust the PAL downward because the

“plantwide actual emissions” are consistently below the PAL. To make the PAL useful and

prevent abuse of the PAL by State or local agencies, the commenter requested that EPA propose

for public comment the specific criteria for when the periodic review of the PAL may result in a

downward adjustment. Otherwise, according to the commenter, sources will be encouraged to

operate as close to the PAL as possible to avoid losing the emission limits. The commenter

claims that this could result in increased pollution and violations. Another commenter (IV-D-97)

stated that facilities should be allowed to operate within defined parameters for some certain

period of time. If the State can revise the PAL downward as a routine matter, asserts the

commenter, then the facility cannot undertake any meaningful planning activities because the

emissions target will be constantly changing. Commenter IV-D-138 stated that the source should

be able to make any change under the PAL without revising it.

One commenter (IV-D-80) believed the PAL should be revised to incorporate

modifications separate from the existing PAL or emission increases above the PAL from

unmodified units.

One commenter (IV-D-53) recommended that the source must show compliance with

new requirements at the time it becomes subject, even though the permit will not be revised until

the title V renewal or modification. Also, the commenter recommended that consistent

notification procedures be developed to provide a mechanism for a facility to tell the permitting

authority when a change in plant operations has occurred.

Response:

After considering the related comments on our 1996 proposal and 1998 NOA, we have

gone forward with final rules that provide for mandatory and discretionary PAL reopenings, as

well as a fixed PAL effective period of 10 years. At the end of 10 years, the PAL can expire or be

renewed. The level of the PAL must be reevaluated at renewal. Thus, the renewal process

serves as a periodic review and adjustment of the PAL.
7 - 1996 PALs

 

1

Eastern Research Group Inc. Report on “Business Cycles in Major Emitting Source Industries” dated

September 25, 1997.

I-7-49

 We agree with the commenters that we should define exactly how frequently the reviews

should occur. Furthermore, we agree with the commenters who advocated a review of the PAL

after 10 years. We announced that we were considering (and requested comment on) a 10-year

effective period for PALs in our 1998 NOA. We disagree with those commenters who believe

reviewing the PAL at the same time as title V permit renewal. Instead, we believe that 10 years

is a reasonable effective period for PALs for the following two reasons. First, we believe that a

10-year period is practical and reasonable both for the reviewing authority and you. While a

logical stopping point may seem to be 5 years in line with the title V permit period, we do not

believe that requiring PALs to be reviewed every 5 years provides industry with a sufficient

period of regulatory certainty. We also believe that while the overall administrative burden for

you and the reviewing authority is reduced if you are complying with a PAL, the establishment of

a PAL requires an initial commitment of substantial resources. Given this initial resource

investment, we do not believe that a 5-year, fixed term for a PAL provides you or your reviewing

authority with an adequate incentive to participate in the PAL system. Thus, in an effort to

balance the need for regulatory certainty, the administrative burden, and a desire to align the

PAL review and renewal with the title V permit renewal, we believe a fixed term of 10 years, the

equivalent of two title V effective terms, is most appropriate. Second, a study conducted by

Eastern Research Group, Inc.1

 supported a 10-year look back to ensure that the normal business

cycle would be captured generally for any industry. However, we do suggest that you request

that your reviewing authority renew your title V permit concurrently with issuance of your PAL

in order to align the two processes for administrative convenience.

We disagree with the commenters who opposed periodic review of the PAL. In the 1998

NOA, we gave several reasons why it might be appropriate to require PALs to be periodically

adjusted. We continue to have concerns with an approach that would allow a PAL to be

renewed without any evaluation of the appropriateness of the current PAL level. We believe

such an approach would be contrary to the Act, and contrary to the court’s decision in WEPCO

v. Reilly, 893 F. 2d 901, 908 (7th Circ. 1990). In WEPCO, the court determined that one

statutory purpose of the NSR requirements is “to stimulate the advancement of pollution control

technology,” and that, “allowing increased production (and pollution) through the extensive

replacement of deteriorated generating system” without triggering NSR review would create,

“vistas of indefinite immunity from the provisions of ... PSD.” 

We believe the final PAL rules avoid this inappropriate outcome by requiring the

reviewing authority to consider whether your source’s PAL continues to be reasonably

representative of its baseline actual emissions and of its PTE (if lower than its baseline actual

emissions) at the time of PAL permit renewal. 
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I-7-50

 Although we firmly believe that a periodic review of the level of the PAL is necessary,

and that this should result in an adjustment in your PAL to a level that is representative of your

baseline actual emissions or current PTE (whichever is lower), we do not believe that we should

mandate an adjustment to the PAL based on only one prescribed methodology. Such an

approach could lead to inappropriate results. Instead, we believe that our concerns can be

appropriately addressed by providing the States the authority to adjust the PAL considering your

source’s baseline actual emissions (or current PTE). We agree in part with the commenters

who were concerned about downward adjustments to the PAL. Although today’s final rules

allow the reviewing authority to consider a downward adjustment of the PAL when your current

baseline actual emissions plus the significant level are less than 80 percent of your PAL level, it

also provides the reviewing authority the discretion to establish the appropriate level. 

We share the concerns of the commenter who indicated that PALs should be permanent. 

However, rather than make PALs permanent, we have adopted a different approach to address

PALs that expire. After expiration of your PAL, each of your emissions units that existed under

the expired PAL will be subject to an allowable emissions limitation. This allowable emissions

limitation will represent a redistribution of the PAL level to individual emissions units or group

of emissions units. After PAL expiration, the reviewing authority must issue a revised permit

with unit-specific emissions limitations to restore your source to the major NSR program. After

a PAL expires , a physical or operational change at an individual emissions unit must be

evaluated to determine whether this change will result in a major modification. 

Today’s final rules do not contain specific provisions related to the issue of terminating a

PAL. Decisions about whether a PAL can or should be terminated will be handled between you

and your reviewing authority in accordance with the requirements of the applicable permitting

program.

We do not agree with the commenter who suggested that additional notice and comment

rulemaking is needed to adopt criteria under which the appropriateness of the PAL level will be

judged prior to adjustment. We believe that the 1996 proposal and the 1998 NOA provided

ample notice of the approaches and criteria we were considering. Accordingly, in the final rules

we are proposing that while determining the PAL renewal level, the EPA will and the reviewing

authority may, at its discretion, also take into account such factors as air quality needs,

advances in control technology, anticipated economic growth in the area, desire to encourage

voluntary emissions reductions, and cost effective emissions control alternatives.

In response to the commenter who requested that we spell out the types of changes and

the parameters that would trigger State review, we note that State minor NSR provisions are not

affected by the final PAL rules. Consequently, existing State review requirements continue to

apply normally. As discussed above, we have spelled out the circumstances that can trigger

mandatory and discretionary PAL reopenings and the timing and considerations for periodic

PAL review and adjustment.
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We do not agree with the commenters who oppose public review of PAL permit actions,

except for reopenings to correct typographical or calculation errors that do not result in a

higher PAL level. Major NSR has historically required public participation pursuant to 40 CFR

51.160 and 51.161 of this chapter, and we believe that PAL permitting should be no exception. 

The public has a legitimate interest in emissions at major sources. We do not believe, however,

that changes under the PAL need to be subject to public review beyond that which applies under

any applicable State minor NSR program. We believe that State minor NSR programs will

provide the appropriate mechanism for notifications, where required, to the reviewing authority

when you make changes under a PAL.

We do not agree that the language proposed for §52.21(x)(5)(i)(B) in the 1996 proposal

(which would have allowed for reevaluation of the PAL pursuant to “another process with public

notice and opportunity for comment”) would have allowed any party to request a revision during

a public hearing that is unrelated to the PAL. Nevertheless, we have not included this language

in the final rules.

7.9 PALs in Serious and Above Nonattainment Areas

7.9.1 PALs in Serious and Severe Ozone Nonattainment Areas

Comment:

One commenter (IV-D-157) believed that the requirements of CAA section 182(c)(6) are

met if increases over the PAL are limited to less than 25 tpy. 

Two commenters (IV-D-160, 191) believed that as long as the PAL is not exceeded, the

requirements of 182(c)(6) through (8) have been met. One commenter (IV-D-160) stated that

EPA should interpret section 182(c)(6) through (8) such that PALs will not go through any NSR

offsetting or full NSR review so long as the PAL for VOCs is not exceeded. The commenter

(IV-D-160, trade association) agreed that in certain circumstances it may be necessary to take

steps to ensure that changes under a PAL do not contribute to an adverse impact on ambient

standards. The commenter noted, however, that this must be done in a way that retains key

benefits of PALs, including the flexibility to make operational changes without triggering timeconsuming State or Federal review as long as PAL are met. 

One commenter (IV-D-191, business association) expressed concern that, in practice, a

requirement that major NSR is triggered by any increase in a facility’s actual emissions over the

PAL in severe ozone nonattainment areas contravenes the ability of industries to increase

production on existing permitted equipment.
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I-7-52

One commenter (IV-D-140, trade association) supported the availability of a PAL in

serious and severe ozone non-attainment areas. The appropriate PAL should be the de minimis

emission rate of 25 tpy for VOCs.

One commenter (IV-D-137, STAPPA) recommended that in serious or severe ozone

nonattainment areas, all changes resulting in an aggregate increase of 25 tons over a five-year

period be subject to major NSR, LAER, and 1.2 to 1 or 1.3 to 1 offset ratios, as required by CAA

section 182 (c) and (d). They pointed out that tracking of emission increases under PALs in these

areas and the amount of emission increases allowed under the PAL before major NSR is

triggered will have to be consistent. Moreover, the commenter notes, offsets should be required

for increases triggering nonattainment review.

One commenter (IV-D-125, environmental group) recommended that special provisions

for modifications to major sources in serious, and severe ozone nonattainment areas be

toughened. According to the commenter, in such areas, a PAL may be problematic because it

could allow for an increase at an emissions unit although there would be no emissions increase of

the source’s PAL. At minimum, noted the commenter, a PAL should comport with the statutory

requirements for modifications to major sources in these nonattainment areas by looking at the

new air quality benefit. The commenter did not otherwise specify how the special modification

provisions should be toughened.

Response:

We agree with commenters who believe that the PAL approach does not conflict with the

provisions of 182(c)(6). We do not interpret this section to be a limitation on our ability to

authorize PALs in serious and severe nonattainment areas. This section directs that when there

is an increase meeting certain criteria, it may not be considered de minimis, but it does not

specify the methodology by which an emissions increase must be calculated. Accordingly, we

have the discretion to establish the methodology; and we are doing so in this rule by having the

PAL serve as the actuals emissions baseline against which future emissions increases are

measured. If your source’s emissions equal or exceed the PAL, it will trigger NSR, whereas

maintaining plant emissions below the PAL ensures that there is no emissions increase. We

believe that our interpretation reasonably implements the statutory purpose of the section, given

that PAL sources agree to be subject to a plantwide cap that serves as the reference point for

determining whether there has been an increase and that the appropriateness of the PAL level is

reviewed at 10-year intervals. Actuals PALs effectively prevent the small serial unrelated

emissions increases that section 182(c)(6) is designed to address. Additionally, the provisions of

sections 182(c)(7) and (8) of the Act apply only if a particular physical or operational change

under a PAL at a major stationary source in a serious or severe ozone nonattainment area is not

considered de minimis under section 182(c)(6).
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I-7-53

We do not agree with the commenter who indicated that a PAL contravenes the ability of

industries to increase production on existing permitted equipment, since the source can create

sufficient headroom for the increase by controlling other emissions units at the source. 

We do not agree with the commenter who suggested that the requirements of section

182(c)(6) are met if increases over the PAL are limited to less than 25 tpy. The 25 tpy

significance level in these areas is included in the PAL; therefore, any increase to or above the

PAL constitutes a PAL major modification subject to major NSR (except where you have

received prior approval from the reviewing authority to increase the PAL). We agree with the

commenter who indicated that offsets in the required ratios for serious and severe nonattainment

areas should be required for emissions increases above the PAL. The final rules require your

PAL major modification to undergo major NSR as applicable in the area where your source is

located.

We do not agree with the commenter who recommended that the special provisions for

modifications to major sources in serious and severe nonattainment areas be toughened. As

noted above, we have concluded that our PAL rules comport with statutory requirements,

including the requirement for offset ratios of 1.2 to 1 and 1.3 to 1 where required.

We agree with the commenters who indicated that in certain circumstances it may be

necessary to take steps to ensure that changes under a PAL do not contribute to an adverse

impact on ambient standards. See section 7.10 below for more on this topic.

7.9.2 PALs in Extreme Ozone Nonattainment Areas

Comment:

Five industry commenters (IV-D-17, 42, 108, 160, 191) and one regulatory agency (IV-D31) opposed requiring a declining emissions cap for PALs in extreme ozone nonattainment

areas.

Two commenters (IV-D-42, 108) strongly disagreed with EPA’s belief that CAA section

182(e)(2), applicable in extreme ozone nonattainment areas, appears to allow for a PAL, as long

as it contains a “declining value cap.” The commenter claims that the provisions of 182(e)(2)

would be satisfied if the PAL were set at historical actual peak emission rates (using the highest

12 months of actual emissions during the 10-year look-back period); the potential-to-potential

method could be used to determine net emission increases at units for which actuals are not

available. Thus, according to the commenter, only physical or operational changes that result in

emission rates above the applicable PAL would trigger the need for offsets. The commenter

referred to the genesis of 182(e)(2), which was designed by its crafters to allow modifications

within an electric utility’s system-wide bubble (as existed in the SCAQMD under Rule 1135

before RECLAIM) without triggering the offset requirement, so long as the system-wide cap was
7 - 1996 PALs

I-7-54

part of the SIP, or the utility’s compliance plan was contained in its SCAQMD permit. The

commenter claims that a PAL is far less extensive in scope than the type of multi-facility electric

utility system for which this section was designed, and thus PALs should be allowed under the

same section. 

One commenter (IV-D-31) argued that PALs with declining caps for extreme

nonattainment areas are a further burden on South Coast facilities. The commenter claims that

EPA is dwelling on the RECLAIM model, which was implemented as an attainment strategy, not

for general NSR flexibility. According to the commenter, sufficient constraints already are in

place for South Coast stationary sources to make mandatory declining caps unnecessary.

Two commenters (IV-D-160, 191) maintained that activities under the PAL should not

trigger NSR requirements even if significance levels or the sections 182(e) de minimis levels are

exceeded, so long as the PAL limit continues to be met. 

One commenter (IV-D-17) maintained that the proposed PAL is overly restrictive for

sources operating in an extreme nonattainment area. For instance, the commenter notes the PAL

is based upon actual emissions plus a margin “less than the applicable significant emission rate.” 

In an extreme nonattainment area, the significant emission rate is zero; therefore, according to the

commenter, a source in an extreme nonattainment area cannot have any margin as currently

proposed. The commenter proposed that one way to alleviate this would be to allow a source to

purchase ERCs and use them to provide an ample margin.

Two commenters (IV-D-137) recommended that in extreme ozone nonattainment areas,

all changes resulting in an emission increase are subject to major NSR and LAER, unless offsets

at a ratio of 1.3 to 1, as required by CAA section 182 (e) are obtained. They pointed out that

tracking of emission increases under PALs in these areas and the amount of emission increases

allowed under the PAL before major NSR is triggered will have to be consistent. Moreover, the

commenter claims that offsets should be required for increases triggering nonattainment review.

One commenter (IV-D-50) believed units under the PAL in extreme ozone nonattainment

areas should be subject to LAER. The commenter noted that for an extreme ozone nonattainment area, Section 182(e)(2) of the Act states that “any change...at a major stationary source

which results in any increase in emissions from any discrete operation, unit or other pollutant

emitting activity at the source shall be considered a modification....” and therefore subject to

LAER and offsets. The commenter notes that while offsets can be obtained externally or

internally relative to the source, and on the aggregate relative to the State or local program,

LAER is required for each unit subject to NSR.

One commenter (IV-D-125) recommended that special provisions for modifications to

major sources in extreme ozone nonattainment areas be toughened. In such areas, the commenter

claims that a PAL may be problematic because it could allow for an increase at an emissions unit
7 - 1996 PALs

I-7-55

although there would be no emissions increase of the source’s PAL. At a minimum, asserts the

commenter, a PAL should comport with the statutory requirements for modifications to major

sources in these nonattainment areas by looking at the new air quality benefit. The commenter

did not otherwise specify how the special modification provisions should be toughened.

Response:

 Because section 182(e)(2) clearly requires consideration of any increases at individual

emissions units in extreme ozone nonattainment areas, we have concluded that PALs for VOC or

NOx should not be allowed in these areas. Any increase in emissions from any unit in those

areas (unless offset at a ratio of at least 1.3 to 1 by an emissions decrease within the same

facility, for the purpose of complying with the offset requirement) constitutes a major

modification subject to major NSR. Thus, we disagree with those commenters who indicated that

a PAL was permissible in extreme nonattainment areas.

7.10 Air Quality Changes

Comment:

7.10.1 Support Requiring Modeling Under PAL

One commenter (IV-D-125) recommended that modeling or other types of ambient

impact assessments be required at a very low threshold for changes occurring under a PAL. 

According to the commenter, the threshold should either be all the time or based on a per ton fee

to pay for interim impact assessments wherever new emissions exceed 3 percent of inventory. 

The commenter also recommended that changes in stack parameters and locations should also be

evaluated because such changes can affect local air quality even if the emissions do not increase.

One commenter (IV-G-12) referred to EPA’s acknowledgment that certain changes under

the PAL can change a source’s impact area, and must be assessed to demonstrate protection of

NAAQS, increments, and AQRVs. Therefore, according to the commenter, when any emission

changes under the PAL are proposed, the applicant should consult with the Federal Land

Manager to determine what analyses will be needed to demonstrate that the proposed changes do

not adversely affect AQRVs.

7.10.2 Require modeling only for significant change

Three commenters (IV-D-11, 52, 137) recommended that modeling under the PAL be

required only for significant changes.

One commenter (IV-D-11) believed that requirements to evaluate ambient impacts

conflict with the goal of operational flexibility and minimal oversight by permitting authorities
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I-7-56

for minimal-impact changes. The commenter claims there should be a definition of significant

changes requiring ambient impact evaluation or guidance on permit conditions that describe

allowable changes not requiring evaluation. The commenter proposed that a compromise may be

to establish mini-caps over sources with equal impacts and allow trading under each mini-cap but

restrict trading between mini-caps or require contemporaneous demonstration of equivalent

impact for trading between mini-caps. Either way, the commenter acknowledges, the

establishment of mini-caps results in less operational flexibility than a facility-wide cap.

One commenter (IV-D-52) claimed that if traditional NSR fails to require facilities to

examine the potential ambient impacts from emission increases, facilities with a PAL should not

be required to examine these impacts (beyond ensuring that an emission decrease has

approximately the same qualitative significance or public health and welfare as that attributed to

the increase from the particular change). The commenter noted one exception to this is that

modeling should be required for sources that can have a significant impact on the local

attainment status. However, the commenter notes that a common sense approach should dictate

the method for performing the modeling. According to the commenter, a facility could report the

modeled effect of a minor change after the change is made (quarterly, semi-annually), while more

significant changes should be modeled prior to construction. Nevertheless, the commenter stated

that the permitting authority would need to review the modeling to check its accuracy and to

assess the status of the air quality in the area.

One commenter (IV-D-137) stated that requirements to evaluate ambient impacts conflict

with the goal of operational flexibility and minimal oversight by permitting authorities for

minimal-impact changes. The commenter suggested that EPA finalize a definition of significant

changes requiring evaluation or issue guidance on permit conditions that describe changes

allowed that do not require an ambient impact evaluation. Moreover, the commenter suggested

modeling should be required for sources that can have a significant impact on the local

attainment status. However, the commenter notes that a common sense approach should dictate

the method for performing the modeling. In this regard, according to the commenter, a facility

report that shows the effects of a minor change after the change is made (in a quarterly, semiannual, or perhaps annual modeling summary) is recommended, while significant changes should

be modeled prior to construction. The commenter recommends that the facility be given a lot of

responsibility in these cases and then held accountable (that is, required to mitigate) should an air

quality increment or NAAQS be exceeded. The commenter proposed that the impacts evaluation

be conducted at the time the PAL is established. In addition, the commenter proposes that the

PAL clearly define what flexibility the source is allowed without further ambient impacts review

and the types of changes for which additional review will be required.

7.10.3 Oppose Modeling under PAL

One commenter (IV-D-147) opposed requiring modeling under the PAL. The commenter

believed most emissions would not even raise the issue, but stated that if EPA were to require
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I-7-57

modeling for changes under the PAL, the PAL would be of little benefit. The commenter

advocated discussing up front with permitting authorities which emission shifts might have

consequences that would require additional modeling or monitoring. If there are any such

concerns, claims the commenter, the PAL should be approved with conditions assuring that a

post-approval modeling analysis be submitted.

7.10.4 Other Comments on Modeling under PALs

Commenters (IV-D-92, 180) suggested that modeling and other impact assessments be

done up front, at issuance of the PAL. Thus, according to the commenter, the initial review

defines what changes a source can do without additional approval and what changes require

additional permitting action.

One commenter (IV-D-157) said sources that have undergone site-specific analysis

showing their allowable or potential emissions are low enough to attain and maintain air quality

standards and increments should quality for PALs. A relevant example provided by the

commenter is the case where a source is subject to a generic SIP regulation, but satisfied an

evaluation showing that it is the “functional equivalent” of a site-specific emission limit.

Response:

We agree with the commenters that requirements to evaluate ambient impacts would be

likely to conflict with the goal of operational flexibility and minimal administrative burden,

especially for small changes under the PAL. Moreover, we believe that we can rely on the

reviewing authority’s existing programs for addressing air quality issues resulting from changes

under your PAL. As a result, the final PAL rules do not explicitly require modeling or other

types of ambient impact assessments. 

Certain changes in effective stack parameters under the PAL would generally be covered

by the reviewing authority’s minor NSR program. The reviewing authority would ordinarily

request air quality modeling for any changes if it believes that the changes under the PAL may

affect the NAAQS or PSD increments. We agree with the commenters who recommended that

you and your reviewing authority establish in advance what sorts of changes under the PAL will

trigger such requirements.
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I-7-58

7.11 Partial or Mini-PALs

Comment:

7.11.1 Support for Partial or Mini-PALs

Several commenters (IV-D-46, 47, 72, 80, 94, 131, 140, 147, 154, 157, 162, 186, 188)

supported the use of partial facility PALs.

One commenter (IV-D-140) stated that the permitting authority should have the flexibility

to establish a PAL for an individual process or production unit within a plant site, especially a

large complex consisting of many different process or production units, each operating under

separate control rooms. Otherwise, according to the commenter, large complex plants would be

penalized in comparison to smaller individual facilities without affording any additional emission

reductions.

One commenter (IV-D-131) stated that it would be very difficult to implement one PAL

for a large, complex site. Also, the commenter claims, there is no reason to penalize a large site

by preventing it from taking advantage of the flexibility of a PAL for one or more process units.

The commenter also claims that a large company may have competitors with smaller sites that

would be allowed to use PALs.

One commenter (IV-D-72) requested that EPA clarify that a PAL need not be established

on a facility-wide basis. Instead, the commenter proposes several sets of units should be able to

be grouped together as separate PALs – with limits for each set within the facility. Another

commenter (IV-D-186) requested that PALs be allowed for a designated portion of a facility or

site. Often, according to the commenter, a single PAL for the entire site is unreasonable because

of the diversity of operations or products produced. Also, the commenter requested that PALs be

considered for a source if the major emission units which comprise a process are covered. 

One commenter (IV-D-154) stated that the PAL should be able to apply to only a portion

of a site. The commenter noted that one PAL for the entire site may not be realistic; the more

diverse the operations, the harder it is to combine them under one PAL. The commenter stated

that most large sites have a multitude of small sources that contribute only insignificantly to the

source’s total emissions of pollutants. Since having a PAL will impose burdensome monitoring,

reporting and recordkeeping requirements, the commenter thinks it would be a disincentive to

participation, with negligible offsetting environmental benefits, to require a source to include

every emission point (for example, every analyzer) on a site in the PAL. Moreover, according to

the commenter, there are sources at a site that are difficult or impossible to quantify. The

commenter stated that the EPA should consider emissions that are independent of capacity

separately from those that depend on capacity. As an example, the commenter noted that VOC
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from piping fugitive emissions is only a function of hours that VOC is present in the piping and

not dependent on operating rates or even VOC composition (as long as the VOC does not change

from light liquid to heavy or vice versa). The commenter thinks it may be logical to handle

emissions such as these separately from those that are a function of operating rate or product

type, in order to reduce or eliminate the monitoring, reporting and recordkeeping burdens

associated with a PAL.

One commenter (IV-D-46) stated that many major stationary sources have a variety of

processes, with independent yet autonomous division operations. In these circumstances, the

commenter feels a PAL is difficult to administer. Furthermore, the commenter feels that sharing

an operating margin of 40 tpy VOC across the entire facility would provide no flexibility to the

individual operating division. Moreover, the commenter noted that certain activities at the plant

are not well suited to recordkeeping associated with a PAL. According to the commenter, a PAL

should be established for a portion of a plant with the appropriate safeguards. Examples of

safeguards provided by the commenter include: (1) partial PALs cannot be used to change a

portion of the plant’s status as a major stationary source; and (2) an activity performed within a

portion of the facility covered by a partial PAL may only be moved to another portion of the

facility covered by a partial PAL, unless major NSR applicability is determined or the partial

PALs in question are adjusted accordingly.

One commenter (IV-D-94) stated that many plant sites in the pharmaceutical industry are

diverse enough (for example, bulk chemical manufacturing and formulation frequently exist at

the same plant site) that a PAL is more practical for part of the entire site. The commenter feels

that the source definition should accommodate using either a single process or a collection of

processes.

One commenter (IV-D-147) stated that frequently batch or cyclical operations within a

large plant would make the entire plant ineligible for the advantages offered by PALs. The

commenter notes, however, that in many industries certain facilities within a plant are ideal

candidates for PALs because of their controls, monitoring, and general operations. The

commenter requested the EPA to explicitly authorize States to allow the use of the PAL by these

operations.

One commenter (IV-D-188) argued that allowing PALs for significant portions of a site

would simply provide equal treatment for all members of the regulated community. For

example, according to the commenter, a large company may have competitors with smaller sites

that would be allowed to use PALs.

One commenter (IV-D-80) advocated allowing a PAL to be established for a process or

other logical portion of a source as was done for VOC process emissions, but not VOC boiler

emissions, in the 3M “minor modification” permit.
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One commenter (IV-D-157) stated that what was particularly encouraging was EPA's

explanation at the September, 1996, Advisory Subcommittee meeting that PALs could apply to

sets of units within a source, or to single units, even though to date the PAL approach has

focused on entire plants.

7.11.2 Oppose Partial or Mini-PALs

Some commenters (IV-D-53, 92, 137, 157, 180) opposed partial or mini-PALS. 

Commenter IV-D-137 recommended that each PAL cover all emission units, including

insignificant activities (unless the EPA defines insignificant activities for NSR purposes). The

commenter stated that facilities should not be allowed to select more than one PAL baseline. 

Moreover, the commenter claimed that short-term VOC and PM10 emissions from temporary

operations at a site, such as intermittent construction or site remediation activities, should be

included in the PAL. In addition, the commenter claimed that PAL limits should be based on

some minimum level of control. The commenter feels that only well-controlled facilities should

get the additional flexibility offered by the PAL. Some commenters (IV-D-92, 180) objected to

allowing facilities to create partial PALs. According to the commenters, partial PALs will

exacerbate existing problems with this proposal, especially when combined with the other

exclusions.

One commenter (IV-D-157) said the PAL should be established as a single source-wide

number for compliance and applicability. The commenter stated that this will give the plant

flexibility to achieve the necessary reduction of emissions by different combinations of controls

at different times. In addition, the commenter noted, a single source-wide PAL helps limit

enforcement exposure.

Response:

We have not made a final decision about whether partial PALs (that is, PALs that would

not include all quantifiable emissions of the PAL pollutant at a major stationary source) are

permissible under the current regulations, nor are we adopting any partial PAL provisions in

our final rules. We will continue to explore partial PALs on a case-by-case basis and the

circumstances, if any, under which such PALs might be appropriate. 

7.12 Monitoring and Enforcement of PALs

Comment:

Several commenters (IV-D-04, 31, 42, 43, 67, 152, 163, 191) commented on monitoring

and enforcement of PALs. One commenter (IV-D-43) stressed that the PALs should be easily

implemented and that the PAL provisions among the various regulatory programs should be
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coordinated to avoid conflicting requirements under title V or under the CAM Rule. All of these

programs, according to the commenter, should reduce administrative burdens for companies and

permitting authorities by ensuring there is not an increase in monitoring, reporting, and

recordkeeping burdens, as indicated in the EPA’s draft R.A. The commenters feel that the

owner/operator of the source and the permitting agency should be able to develop a single PAL

permit that meets the criteria under the title V and CAM programs, as well as the revised NSR

rules. The commenters also feel that the final NSR rule should contain provisions to provide

clarity, avoid duplication, and ensure that sources covered by PALs achieve the full operating

flexibility and other benefits of the PAL program.

One commenter (IV-D-31) raised concern with the degree of monitoring that a facility

would be required to perform under a PAL. The commenter claimed that the proposed CAM

explicitly exempts PALs from those considerations, suggesting that sufficient monitoring

restrictions must exist within the PAL to forego imposing CAM. The commenter feel that EPA

should not impose real time monitoring or other severe monitoring protocols as the only practical

demonstration that a facility complies with its PAL. The commenter also feels that monitoring

requirements under PALs should be reasonable and not so restrictive as to deter facilities from

taking advantage of this new flexibility. Also, according to the commenter, EPA should provide

more reasonableness with respect to “truing up” a PAL facility’s emissions at the end of a

reporting period. According to the commenter, this includes a reasonable reconciliation period at

the end of a reporting cycle, the ability to buy and apply credits to make up any shortfall,

reduction in the allowable facility emissions in the ensuing year in the event of a shortfall, etc.

One commenter (IV-D-04) claimed that the flexibility under a PAL emissions cap,

although beneficial to plant managers and permitting authorities, might be more burdensome on

enforcement officials. The commenter noted that if “practically enforceable” means that

enforcement personnel can determine if a violation has occurred only after inspecting the facility,

compiling information, and correlating voluminous data, then what is gained at the permitting

end, in the way of saving regulatory resources, is lost at the enforcement end. The commenter

found the demonstrated disparity in public enforcement for low income communities and

communities of color particularly troublesome. Unless there are continuous monitoring

requirements or other straightforward means to determine compliance, the commenter felt the

PAL approach might unintentionally perpetuate inequities at the enforcement end. 

One commenter (IV-D-67) supported the EPA’s decision not to define the term “practical

enforceability” when establishing a PAL permit. In discussions with various State permitting

authority representatives on the meaning of “practically enforceable,” however, the commenter

has become concerned that States may be thinking that they need to apply measures that may be

overly restrictive given the circumstances, in an effort to ensure “practical enforceability.” The

commenter did not believe, for example, that achieving “practical enforceability” requires

facilities to use continuous emission monitors for all emitting sources and claims that systems of

monitoring production information and recordkeeping provide practical enforceability for
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permitting authorities. Based on the commenter’s past experience with a PAL cap at one of its

plants, certain monitoring requirements can be overly burdensome in comparison with the

benefits achieved. 

One commenter (IV-D-152) requested that the EPA address the issue of monitoring and

enforceability of PALs. The commenter claims that the Agency has not spoken to these issues in

the context of the PAL, and where it has spoken to the issue of monitoring in the case of

compliance assurance monitoring, the Agency’s approach is entirely inadequate. The commenter

asserts that the CAM approach did not provide an adequate basis for enforcing source-specific

limits; and it would not provide an adequate basis for enforcement of a plant-wide limit. The

commenter referred to the problems of scarce resources at regulatory agencies and stated that

those scarce resources have to be taken into account in determining how easy or difficult it is to

enforce a PAL. The commenter recommended a simple, easily enforceable PAL program, at

least for the first few years of the program.

One commenter (IV-D-163) referred to the proposed requirement that the PAL must be

incorporated into a federally enforceable permit and contain compliance methods and monitoring

requirements. The commenter noted that because PALs would be determined for all priority

pollutants, all sources included in the PAL (even unpermitted sources, if applicable) would have

to be equipped with adequate monitoring such that compliance can be verified. If the Agency is

considering instrument-based monitors (for example, CEMS), the commenter maintained that

such monitoring is well beyond the scope of even the recently proposed CAM rule. The

commenter felt that EPA should make clear that emission monitoring proscribed in, and required

by titles I, III, IV and V, will be wholly sufficient. The commenter claimed that monitoring

requirements must be kept as flexible as possible, and still achieve the goals of accurate

accounting of annual emissions and practicable enforceability. A CEMS will be prohibitively

expensive to equip and operate, and would stifle the utility of a PAL.

Two commenters (IV-D-42,191) maintained that EPA should not require that a PAL be

federally enforceable. The commenters claimed that it should be sufficient that the PAL is

enforceable by the State. Commenter IV-D-42 did not understand why EPA claims that for a

permit limitation to be “practically enforceable” it has to be “federally enforceable.” In addition,

the commenter claimed that such a requirement for Federal enforceability would bring only

confusion to title V sources by necessitating the modification of a source’s title V permit and

gaining EPA approval of the change. The commenter claimed this approach would present an

additional bureaucratic burden that would undermine any streamlining that may be achievable

under a PAL approach.

Response:

We believe that the PAL must assure that the source maintains emissions below the PAL

level to assure that major NSR does not apply. Therefore, we agree with the commenters who
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stated that adequate data collection requirements through means such as monitoring, reporting,

and recordkeeping requirements are necessary to ensure that the PAL limits are enforceable as a

practical matter. In fact, we find that not only monitoring, recordkeeping, and reporting

requirements, but also emissions testing requirements, for emissions units subject to a PAL differ

from other MRRT in one important aspect: actual unit emissions must be measured to provide a

12-month rolling total, and compared against a limit. Currently, many emissions units are

required only to have MRRT suitable for initial or spot checks on emissions concentrations, not

emissions quantification. Even emissions units whose MRRT meets the title V requirements in

§70.6(a)(3)(i)(B) or §70.6(c)(1), including those imposed by part 64 (the CAM rule), may need to

be upgraded when those units are proposed to become subject to a PAL, because the approved

title V MRRT may not be able to count emissions against a cap. While we believe you can obtain

data for emissions quantification best through the use of CEMS or PEMS, in today’s final rule

we are allowing you to propose other types of emissions monitoring quantification systems,

depending upon such factors as the size category of the emissions unit and its margin of

compliance.

We agree with the commenters who stated that we should address the issue of monitoring

and enforceability of PALs. We also agree that PAL enforcement must not be overly burdensome

for the reviewing authority. Accordingly, the final rules contain minimum requirements for

monitoring for PALs.

You need to propose a monitoring system as part of your PAL permit application

submission to your reviewing authority. The monitoring system proposed must accurately

determine plant-wide emissions. In your permit application, you must describe how you will

collect and transform data from each emissions unit subject to a PAL permit, so that the

emissions from each unit can be quantified as a 12-month rolling total. In addition, you need to

demonstrate how you can be assured the data are and remain accurate by describing how you

will install, operate, certify, test, calibrate, and maintain the performance of your monitoring

system(s) on each emissions unit that will be subject to the PAL. You will also need to provide

calculations for the maximum potential emissions without considering enforceable emission

limitations or operational restrictions for each unit in order to determine emissions during

periods when the monitoring system is not in operation or fails to provide data. In lieu of the

permit requiring maximum potential emissions during periods when there is no monitoring data,

you may propose another alternate monitoring approach as a backup. This backup monitoring,

however, must still meet the minimum requirements for the monitoring approaches prescribed in

the regulation. In addition, your permit must require you to maintain records of your monitoring

and testing data that support any compliance certifications, reports, or other compliance

demonstrations. Your permit must also require you to meet the semi-annual monitoring and

prompt deviation reporting requirements of the title V operating permit program, since the terms

and conditions of an approved PAL become title V applicable requirements that will be placed in

your title V permit.
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In terms of testing, as part of your PAL application and as directed by your reviewing

authority, you must use current emissions or other current direct measurement data to

demonstrate that your monitoring systems accurately determine emissions from each unit subject

to a PAL. You will need to collect such data from all units subject to the PAL, including those

that are unregulated at the present time. If you do not have current emissions data, or if your

emissions unit’s operation and equipment have changed since collection of that data, you will

need to obtain current, accurate data, typically by conducting performance tests or other direct

measurements before submission of your complete permit application to obtain a PAL.

You must conduct all testing in accordance with test methods appropriate to your

emissions unit and applicable requirement. For example, among the test methods for measuring

organic emissions are Methods 18, 25, 25A, and 25B, which can be found in 40 CFR part 60,

appendix A. During testing, your emissions unit must operate within the range you wish to

subsequently operate (for normal operation), so as to provide an accurate quantification of

emissions across the entire range. This may require you to perform more than one performance

test. In addition, you will need to re-validate the data and any correlation to demonstrate that

your monitoring systems continue to accurately determine emissions from each unit subject to a

PAL. This re-validation must occur at least once every 5 years for the life of the PAL. Data

must be re-validated through a performance evaluation test or other scientifically valid means

that is approved by the reviewing authority.

Any violation of the PAL is subject to enforcement action. Moreover, the failure to

conduct, operate, or maintain your monitoring system, including failure to meet ongoing data

quality assurance requirements, is also subject to an enforcement action. Because the PAL is a

legally enforceable optional alternative to major NSR, an exceedance of your PAL constitutes a

violation of major NSR. Once you have chosen to obtain a PAL for major NSR purposes, during

the effective period of the PAL you cannot rely on other major NSR provisions to demonstrate

compliance regarding your PAL pollutant (for example, exemptions from major modifications or

netting), nor do we need to prove the elements of the NSR program to prove a violation of major

NSR. You should not presume that in the case of a PAL exceedance that your only responsibility

would be to reduce emissions to below the PAL. You could also be required to install additional

controls and/or monitors, to conduct emissions testing, or to collect data on a more frequent

basis. 

7.13 Section (r)(4) Limits

Comment:

Several commenters (IV-D-09, 47, 52, 67, 80, 111, 147, 160) commented on issues

related to “(r)(4) limits.” This term is based on the requirements of §52.21(r)(4), which states

that any time a source or modification becomes a major stationary source or major modification

solely by virtue of a relaxation in any enforceable limitation which was established after
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August 7, 1980, then the requirements of major NSR apply to the source or modification as

though construction had not yet commenced. Similar provisions are included in §§51.165 and

51.166. Such “enforceable limitations” are commonly referred to as “(r)(4) limits.” They create

synthetic minor sources or emissions units.

One commenter (IV-D-52) urged EPA to revise §52.21(r)(4). Two commenters (IV-D80, 147) also urged EPA to add provisions eliminating all previous NSR limits once a PAL is

established. 

One commenter (IV-D-52) believed that certain PSD provisions, not addressed in the

NSR proposal, may deter sources from requesting a PAL. One such provision, noted the

commenter, guards against sham permitting: 40 CFR 52.21(r)(4). According to the commenter,

this provision has been interpreted in at least two ways. The commenter claims that two types of

synthetic minor limits currently exist and §52.21(r)(4) only applies to one of the two types. Even

as to that one type of synthetic limit, the commenter asserts that the restriction of this section

should only apply for a limited amount of time, and the commenter proposed the following

language to amend §52.21(r)(4) accordingly. 

(1) Eliminate limits taken on unmodified units. When a source installs a new unit or

modifies an existing unit that, standing alone, would be a major PSD modification, it may

choose to net out. To create the netting credits, the source may reduce emissions from

one or more existing emission units to a level below current actual emissions. The

limitations creating these netting credits become “federally-enforceable” in a construction

permit or a combined construction/operating permit (as is the case with this particular

State). Where a PAL has been established, the source must acknowledge that this type of

condition limits the potential emissions of the unit or units on which the limitation has

been placed. Then, once the PAL is set (based on actual emissions), the limitation need

not be retained, as actual decreases in emissions must offset any emission increases from

the units previously limited for the source to remain below the PAL.

(2) Create a “sunset” provision for limits taken on modified units. When a source takes a

limit on the modified unit to avoid PSD review, the commenter believes that the limit

must be maintained (unless the source performs a new PSD review) for some period of

time. This must be done to prevent sham permitting; to make sure that unscrupulous

sources do not circumvent regulations. However, it is clear that a planning cycle has a

limited duration; at the conclusion of the planning cycle, a federally-enforceable

condition on a modified unit becomes an artifact of a regulatory process, rather than a

restriction that prevents circumvention of the regulation. Section 52.21(r)(4) should be

amended to provide for a “sunset” provision on these types of limits. The sunset period

would last as long as the planning cycle, with 5 years as an extreme outer time limit. 
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One commenter (IV-D-147) stated that §52.21(r)(4) should not be used to require

facilities to retain old synthetic minor limits when a PAL is established. The commenter

believed that the language of the regulation clearly provides an alternative to major NSR

application when synthetic minor limits are replaced by plantwide emission caps. The

commenter claims a source that has gone through many minor NSR permitting actions and

expects to continue to need permit modifications in the future gains flexibility under the PAL

because the unit-specific limits become unnecessary. The commenter feels EPA should

recognize this and provide guidance and provisions for the PAL option that synthetic minor

limits and netting limits are to be replaced by the PAL. 

Commenter IV-D-80 stated that if a facility and agency accept a PAL that has been

calculated with a federally enforceable limitation on emissions, then the PAL incorporates the

facility’s individual unit emission limits. Thus, according to the commenter EPA can be assured

of sustained air quality even if previous individual unit limits are not expressly noted in the

permit, because they have been incorporated into the PAL. In addition to eliminating

§52.21(r)(4) limits, the commenter maintains that the limits taken in order to generate netting

credits and BACT emission rate limits should also be eliminated. If the previous limits are not

superceded, notes the commenter, EPA should at least provide sunset provisions that the limits

will not apply after 5 years.

Commenter (IV-D-147) maintained that the PAL option will be of little use to many

facilities if the EPA does not address the treatment of unit-specific limits at the facility when a

PAL is adopted. As noted by the commenter, some of these limits are BACT or LAER limits,

some are limits taken in prior NSR permits to keep a modification minor, and some are limits

taken to create netting reductions. 

Response:

We agree with the commenters who indicated that (r)(4) limits need not be retained when

your PAL becomes effective. The PAL effectively stands in the shoes of the (r)(4) limits as an

enforceable limitation that avoids major NSR applicability. Accordingly, the final rules provide

that an actuals PAL may eliminate enforceable permit limits you may have previously taken to

avoid the applicability of major NSR to new or modified emissions units. Before removing the

limits, your reviewing authority should make sure that you are meeting all other regulatory

requirements and that the removal of the limits does not adversely impact the NAAQS or PSD

increments. If your PAL subsequently expires, the previous (r)(4) limits do not become

applicable again.

We do not agree with the commenters who suggested that other types of unit-specific

limits should be superseded by a PAL. Such limits are taken as a consequence of NSR

applicability or reflect other programs’ requirements. The PAL does not substitute for them. 

Consequently, the final rules do not provide for previously applicable unit specific limits (other
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than (r)(4) limits) such as BACT, NSPS limits to be superseded or eliminated when your PAL

becomes effective.

7.14 PALs and Clean Facilities

Comment:

Two commenters (IV-D-111, 135) addressed PALs and clean facilities. One commenter

(IV-D-111) disagreed with other parties’ suggestion that the clean facilities exclusion would

work equally well for sources seeking PAL limits based on such allowed emission levels. First,

according to the commenter, it is possible to go through Federal NSR/PSD without having all

emission units meet the clean facility control requirements. More importantly, claims the

commenter, a PAL permit is structured to provide plant-wide flexibility whereas a PSD permit

may have unit specific limits that cannot be modified or exceeded under the clean facility

exclusion. Lastly, the commenter noted that the clean facility exclusion does not provide a

context for pre-approval of changes that might trigger minor NSR. For all other cases the

commenter agreed that the PAL limit should be based on a facility’s actual emissions, using the

10-year look-back approach to establishing actual emissions, plus a reasonable operating margin.

One commenter (IV-D-135) recommended merging the PAL and clean facility exclusions

because they are closely related concepts. The commenter claimed the PAL could cap a source at

plantwide actual emissions and the clean facility exclusion could cap a recently permitted major

source at its current allowable limits. The commenter asserted that the PAL should be based on

source-specific allowables, in which case the clean facility exclusion would be unnecessary. 

Response:

Most commenters and stakeholder participants did not support the clean facility

exclusion. Some indicated that it would be similar to a PAL based on allowable emissions,

although the allowables PAL would be preferable. We have taken no action on clean facilities in

the final rules. We will continue to evaluate clean facilities as we consider allowables PALs.

7.15 Miscellaneous Comments on PALs

7.15.1 Notification requirements

Comment:

Some commenters (IV-D-14, 52, 137) addressed notification requirements. One

commenter (IV-D-52) stated that the source must make periodic reports about its emissions, its

compliance status, and its construction activities. The commenter noted that minor changes may

be reported after the fact, while the source should notify the permitting authority of major
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changes prior to the start of construction. The commenter felt that the notification format should

be set by agreement of the permitting authority and the source. In addition, the commenter felt

that there should be some flexibility to allow the use of electronic mail and other new

communication methods. However, noted the commenter, the public should have ready access to

this information. One commenter (IV-D-137) recommended that consistent notification

procedures be developed to provide a mechanism for a facility to tell the permitting authority

when a change in plant operation has occurred. According to the commenter, the notice

requirements should be commensurate to the level of change being made and there should also be

a clear linkage between the PAL and source improvements. In addition, the commenter stated

that the PAL should explicitly establish a hierarchy of preferences to be considered and analyzed

by a source when it determines the potential impact of a new or modified product.

One commenter (IV-D-14) stated that the language in the proposed rule is silent about the

process to address the timing and notification for changes under the PAL. That is, when can they

make a change, what type of notice to the permitting authority, timing and process for ensuring

enforceable conditions to ensure that the PAL limit is not exceeded, the type of review to ensure

that emission changes (increases and decreases) will occur within the PAL limit. The commenter

felt that discussion of these issues, and any needed additions to the regulation as a result of these

factors should follow in the Federal Register announcement of the final rulemaking. The

commenter also felt that it is clear that the source may need to perform modeling to address the

“qualitative significance” [(§51.166(u)(4)(i)] of an emission trade to ensure that the netting does

not worsen air quality. The commenter requested clarification of what EPA is envisioning by the

“qualitative significance” of the change. Also, title V may not be an appropriate vehicle since it

does not consider any ambient impact analysis; according to the commenter that usually occurs

within minor and major NSR. The commenter supported §51.166(u)(4), Plantwide applicability

limit modifications.

Response:

We do not agree with the commenters that the PAL rules must require notification for

changes under the PAL, and hence the final rules do not contain any such requirements. As long

as the source does not meet or exceed the PAL limit and meets the monitoring requirements of

the PAL, the source is in compliance with the PAL. Moreover, State minor NSR programs will

continue to require appropriate notice and air quality analyses for changes that you carry out

under your PAL.

7.15.2 Interaction between PALs and other programs

Comment:

Some commenters (IV-D-52, 114, 137) advised EPA to address how HAPs would be

treated under the PAL. One commenter (IV-D-137) claimed that some existing State and local
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HAP programs would limit the trading of HAP emissions. The commenter recommended that

the EPA either address HAPs in the PAL provisions of the NSR rule or recognize that State and

local agencies will continue to operate their own HAP program. The commenter requested that

these programs either preclude certain VOC PALs or place restrictions on inter-HAP trading; but

nonetheless allow intra-HAP trading. One commenter (IV-D-114) stated that the PAL concept is

not discussed in enough detail. For instance, a commenter questioned whether a facility will

have to accept plantwide limitations on the more exotic HAPs, and will a modification be major

if it requires an increase in any of these limitations? The commenter stated that a notice of

proposed rulemaking covering just the PAL issue would be beneficial in terms of focusing

review and comments, thus maximizing potential utilization of this voluntary option.

Another commenter (IV-D-52) requested that EPA address several issues related to PALs. 

They requested that EPA address PAL interaction with other regulations. They suggested that

PALs also be discussed in rulemakings for the operating permit program and for the NESHAP. 

According to the commenter, EPA should ensure that a PAL permit will be able to include “preauthorization” for all types of changes, including NSPS and NESHAP installations and

modifications. To facilitate this, the commenter noted that it would be helpful for EPA to issue

guidance on how to include the public in the “PAL-approval” process. This guidance, according

to the commenter, would help alleviate public concerns as well as the concerns of environmental

groups.

Two commenters (IV-D-45, 62) requested that EPA coordinate the PAL provisions with

the title V and CAM rules.

One of the commenters (IV-D-45) stated that PALs need to be coordinated with emission

caps for minimizing Part 70 permit review, and flexible compliance through emissions bubbles

or other types of averaging approaches. Unfortunately, the commenter claims that EPA has

struggled to translate the abstract goal of operational flexibility into regulatory reality. The

commenter states that the predominant cause of this problem appears unrelated to inflexible

statutory limitations, but rather to rigid institutional barriers to innovative approaches within

different offices and regions of the Agency. The commenter claimed that this was all too well

evidenced in a recent NSR permit proceeding where the commenter sought to negotiate binding

emissions limitations not only for NSR applicability, but also for demonstrating compliance with

applicable CAA emissions standards. According to the commenter, although they were able to

demonstrate at least the same level of protection as provided by traditional command-and-control

limits, EPA regional staff were simply unwilling to allow the incorporation of an emissions cap

concept into the final NSR permit for either the entire source or discrete subcategory of

operations (for example, the coating operations for the vehicle assembly plant). The commenter

feels that this experience does not bode well for the PAL concept, since it would appear to be too

limited from an operational flexibility standpoint.
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Response:

We do not agree with the comment that PALs should address HAPs. You cannot obtain a

PAL for HAP emissions because HAPs are not “regulated pollutants”as defined in today’s

rulemaking, except where they are constituents of or precursors to a regulated pollutant, such as

VOC. See Clean Air Act Section 112(b)(6).

PALs are intended only to govern major NSR applicability, and are unrelated to

preapprovals for other types of applicable requirements such as NSPS and NESHAPs. Thus, the

permit action under which your PAL is created is not expected to address other types of

preapprovals. 

We agree that public involvement in PAL permitting is important. Accordingly, the final

rules require the reviewing authority to conduct a public participation process before they can

issue a PAL permit. This process must be consistent with the requirements at §51.161 and

include a minimum of a 30-day period for public notice and opportunity for public comment on

the proposed permit. Where the PAL is established in a major NSR permit, major NSR public

participation procedures apply.

In reference to title V operating permits and coordination with PALs, the reviewing

authority establishes a PAL in a federally enforceable permit using its minor NSR construction

permit process, the major NSR permit construction process, or another SIP-approved operating

permit process, and eventually rolls these requirements into a title V operating permit. The

process for incorporating the conditions of a PAL into your title V operating permit depends on

whether your initial title V permit has already been issued. If the initial title V permit has not

been issued, the PAL permit would be incorporated during initial issuance of your title V permit.

If the initial title V permit has already been issued, the PAL permit would be incorporated

through the appropriate part 70 modification procedures. We suggest that you request that your

reviewing authority renew your title V permit concurrently with issuance of your PAL in order to

align the two processes together and decrease the administrative burden on you and your

reviewing authority. Once a PAL is established, a change at a facility is exempt from major

NSR, but could require a title V permit modification. Whether a title V permit modification

would be required, and which permit modification process would be used, is governed by the

current part 70 rule as implemented by the reviewing authority.

7.15.3 Other

Comment:

One commenter (IV-D-67) requested that the EPA clarify that PALs should be available

for R&D facilities. The commenter feels that due to the small quantities of chemicals involved

in each R&D experiment, and the need to avoid encumbering R&D, EPA should allow very
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flexible enforceability provisions for R&D. For example, claims the commenter, purchase

records should be more than adequate for demonstrating compliance with the PAL at a R&D

facility.

One commenter (IV-D-52) requested that EPA address insignificant activities. The

commenter feels that accounting for all minor emission units and their annual emissions can be a

tedious job with little environmental benefit. The commenter requested that EPA develop a

consistent list of insignificant activities that is effective for both operating permits and for PALs,

as well as for other title I and title III provisions. According to the commenter, this would allow

the source and the permitting authority to focus their efforts on the more significant pollution

emitters.

One commenter (IV-D-67) argued that PALs should be structured to allow use of

pollution prevention techniques, because they provide crucial flexibility to facilities operating

under PALs. According to the commenter, however, requiring pollution prevention under PALs

would limit source flexibility. The commenter feels that sources should be given the freedom to

determine how and when to optimize use of pollution prevention techniques.

One commenter (IV-D-67) noted that the proposed additions regarding PALs do not

address a situation in which a PAL is withdrawn by an agency due to an exceedance or other

violation of the PAL. The commenter requested that EPA add provisions stating that if a PAL is

withdrawn, the source will have a reasonable period of time, which may be 180 days or more, to

obtain a traditional permit (or to revise the permit to include provisions that substitute for the

PAL). The commenter noted that a similar provision was included in Minnesota’s recentlyadopted Environmental Regulation Innovations Act.

One commenter (IV-D-186) requested that the provisions that require all emissions to be

quantified be relaxed to exclude insignificant emission units below a threshold level. Also,

according to the commenter, engineering estimates and rates based on emission factors should be

explicitly recognized as equivalent to emission rate tests made by standard methods. The

commenter claimed that actual stack tests would incur tremendous costs, which would largely

defeat the advantages of PALs.

One commenter (IV-D-162) recommended several changes to the proposed PAL

provisions: (1) Clarify that the source has the option of adding a new unit with a separate limit

outside of the PAL if it wishes to do so (for example, a source has a PAL of 500 tpy on existing

units/activities, but takes separate 39 tpy SO2 limits on 3 new units over the next 5 years); (2)

clarify that a PAL can be established--and is presumptively proper--for one or more, but not

necessarily all, pollutants (as was done for VOC emissions at 3M); and (3) clarify that sources

that seek a PAL are not to be penalized by being treated any more stringently than non-PAL

sources (for example, for emissions trades, or with monitoring requirements greater than those

minimally necessary to provide reasonable assurance of compliance).
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Response:

The final rules do not directly address R&D facilities. Nevertheless, nothing precludes

such facilities from using PALs. The monitoring requirements of the final rules are structured to

ensure that PALs are enforceable as a practical matter. Nevertheless, there is flexibility built in

so that you and the reviewing authority can agree upon reasonable procedures for your

situation, including for R&D facilities.

As noted above, the monitoring requirements of the final rules allow enough flexibility for

you and the reviewing authority to develop reasonable quantification procedures for all types of

emissions units. In particular, the rules allow the use of published emission factors for

quantifying emissions from insignificant and trivial units, as referenced in Part 70. We are not,

developing a list of insignificant activities that is effective for both operating permits and for

PALs. It is up to you to work with your reviewing authority and identify these units.

It is our policy to encourage Pollution Prevention (P2) in all our programs. PALs can be

issued for sources using P2. While not specifically addressed in the final rules, the PAL

approach encourages you to implement P2 to create headroom under the PAL, allowing greater

operational flexibility. 

We do not agree with the commenter who suggested that we provide you with the option

of adding new units at your source outside the PAL, since we are not providing for partial PALs

in the final rules as discussed in section 7.11. 

We agree with the commenter who indicated that you do not have to establish a PAL for

all the regulated pollutants that your source emits. In fact, a PAL is specific to a single

pollutant. However, you may apply for PALs for more than one pollutant.
I-8-1

Chapter 8 - 1998 Comments on PALs

8.1 Overview

We received public comments on PALs in response to the 1998 NOA concerning general

support or opposition to PALs, Support or Opposition to not adjusting PALs for MACT

purposes, legality of PALs, environmental concerns, periodic PAL review and adjustment, time

period for PAL review, adjustments for shutdowns and dismantled units, adjustments for unused

capacity, PAL expiration and renewal, adjustments for sources that implement good controls or

pollution prevention, and other comments on PAL adjustments. These comments and our

responses are summarized in sections 8.2 through 8.12. Other comments and responses on topics

not directly addressed in the NOA are included in section 8.13. 

Two industry commenters (IV-D-220, 270) and two utility industry commenters

(IV-D-276, 322) provided certain comments on the 1996 reform proposal. The comments that

were relevant to the topics covered in the NOA have been summarized in appropriate sections in

this document. Those comments that were strictly limited to the 1996 NSR Reform proposal,

and were therefore out of scope of the NOA, were not summarized.

8.2 General Support for or Opposition to PALs

Comment:

8.2.1 General Support For PALs

One utility industry commenter (IV-D-294), STAPPA/ALAPCO (IV-D-259), nine

regulatory agency commenters (IV-D-211, 216, 246, 253, 262, 287, 305, 317, 320), and

twenty-two industry commenters (IV-D-210, 219, 220, 256, 258, 263, 266, 270, 274, 283, 293,

296, 301, 304, 306, 307, 308, 310, 312, 315, 321, IV-G-21) generally supported the concept of

PALs. 

Two regulatory agency commenters (IV-D-253, 262) and eight industry commenters

(IV-D-256, 258, 266, 306, 307, 310, 315, 321) supported PALs because of the flexibility

provided. Reductions or elimination of PSD applicability determinations, or decreased

permitting burdens for sources and permitting authorities, were recognized by the commenters as

a positive result of PALs.

Three regulatory agencies (IV-D-253, 287, 305) supported PALs provided that PALs

were accompanied by an equivalent or increased level of environmental benefit. One regulatory

agency (IV-D-287) and STAPPA/ALAPCO (IV-D-259) supported PALs as long as regulations

provided clear and adequate provisions for properly designing and enforcing them. PALs must

incorporate unit-specific emission rate limitations, as well as a facility limit, to ensure

compliance, contended the one regulatory agency (IV-D-287) and STAPPA/ALAPCO
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(IV-D-259). Increased monitoring requirements were deemed appropriate on a case-by-case

basis by the one regulatory agency (IV-D-287) and STAPPA/ALAPCO (IV-D-259). One

regulatory agency (IV-D-305) supported PALs provided that PALs included the necessary

provisions to protect AQRVs, PSD increments, and the NAAQS. A source proposing any

emission changes under a PAL must show that the changes would not adversely affect AQRVs or

violate any applicable PSD increments or NAAQS, according to the regulatory agency

(IV-D-305).

STAPPA/ALAPCO (IV-D-259) was concerned about PALs in nonattainment areas.

STAPPA/ALAPCO (IV-D-259) recommended that sources should be subject to future SIP

reductions and not receive special protections because they are included in a PAL. 

STAPPA/ALAPCO (IV-D-259) suggested that EPA should not allow nonattainment to persist

indefinitely just to provide incentives for PALs. STAPPA/ALAPCO (IV-D-259) also supported

requiring an ambient air impact analysis for each PAL increase to ensure that the NAAQS or

increment will not be exceeded.

Two industry commenters (IV-D-256, 321) stated that PALs eliminate the disincentive

for pollution prevention efforts that exist under current NSR practices or for encouraging

innovative control technologies, pollution prevention, and emission reductions. Another industry

commenter (IV-D-306) said that EPA has acknowledged the environmental improvement

(incentive for growth industries to reduce emissions, elimination of “paper emissions” in the

system) that flexible permitting vehicles (like PALs) provide.

One regulatory agency (IV-D-211) suggested initiating the PAL as a pilot project in two

or three States before launching it nationwide. 

Another regulatory agency (IV-D-246) wanted to restrict PALs to title IV units or

facilities that maintain quality assured continuous emissions data. 

One regulatory agency (IV-D-246) contended that the PAL was a good approach to

avoiding the “past-actual-to-future-potentials” test for PSD applicability provided that accurate

emissions data are available.

One industry commenter (IV-D-321) noted that PALs allow for timely process changes. 

Industry commenters (IV-D-258, 266) using batch processing supported PALs because future

potential to emit was overstated to create flexibility, and batch operations typically means the

equipment was operated at rates much lower than theoretical capacity. The industry commenters

(IV-D-258, 266) contended that PALs mitigate unfair results of biasing PSD applicability on a

past-actual to future-potential test, particularly where utilization was often much less than

capacity. Another industry commenter (IV-D-306) said that rapidly changing, global industries

(such as the electronics industry) needed PALs and other flexible permitting vehicles to maintain

technically and economically viable operations.
8 - 1998 PAL Comments

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Three industry commenters (IV-D-274, 283, 310) who supported the concept of PALs

were concerned that the initially proposed rule fell far short of providing sources with significant

opportunities for operational flexibility or that the changes proposed in the NOA would limit the

usefulness of the PAL. Two industry commenters (IV-D-263, 308) conceptually supported the

PAL concept, but said that it would probably result in little practical benefit. The two industry

commenters (IV-D-263, 308) noted that their member companies would be hesitant to accept

what would amount to a 10-year emission limit and, consequently, a limit on growth. Moreover,

the two industry commenters (IV-D-263, 308) explained, regardless of the PAL concept, most

State permitting programs will still require facilities to undertake extensive pre-construction

review that will nullify most of the benefits associated with a Federal PAL.

8.2.2 General Opposition to PALs

Four environmental commenters (IV-D-290, 291, 303, 327) and two individual

commenters (IV-D-218, 247) generally opposed the concept of PALs.

Two of the environmental commenters (IV-D-290, 327) asserted that PALs will allow

existing older sources to escape NSR and pollution control requirements. 

 Another commenter (IV-D-247) stated that the present system has worked well for 20

years, that increased emissions from future facility changes would have to undergo a level of

review similar to that currently required, and that PALs could result in additional paperwork for

regulators trying to track changes and their emission impacts.

One environmental commenter (IV-D-291) said that the proposed PAL rules would

subvert the CAA by allowing the persistence of dirty facilities in non-attainment areas and by

allowing an older facility in a PSD area effectively to “use up” emission allowances that would

otherwise be available to new economic development.

One environmental group (IV-D-327) opposed PALs because they would interfere with

SIP calls to reduce NOx and SO2. The commenter believed that allowing PALs would “tie EPA’s

hands” under NSR, which is a critical program tool for achieving emission reductions.

8.2.3 Generally Oppose PALs Because Not Environmentally Protective

Enough

Three environmental commenters (IV-D-290, 291, 303) and one individual commenter

(IV-D-218) believed the PAL concept was not environmentally beneficial. 

One environmental commenter (IV-D-291) said that while it may be true that some

case-by-case PALs are appropriate, for example to encourage innovative process improvements

that allow increased production without further fouling the air, Congress did not intend for EPA
8 - 1998 PAL Comments

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to create a universally available "out" from the NSR requirements the commenter claim. The

grandfathering of existing large stationary sources was never intended to continue in perpetuity,

but the creation of the PAL as proposed would have that effect.

Response:

As discussed in volume I, 7.2, we have concluded that the PAL regulations represent a

permissible construction of the Act and are consistent with the Congressional purpose and intent

underlying NSR. The PAL regulations constitute a reasonable interpretation of the Act’s

definition of “modification” and are permissible under current law. Moreover, we believe that

PALs will provide many benefits to you, reviewing authorities, the public, and the environment. 

See our response in volume I, 7.2 for additional detail on these general considerations.

We do not agree with the commenter who suggested allowing PALs on a pilot project

basis, since we have already conducted a pilot project study and found PAL like programs to be

beneficial both for the source and the environment . Over the past several years, we have

allowed use of major stationary source wide emissions caps to demonstrate compliance with

major NSR in a select number of pilot projects. We recently reviewed six of these innovative air

permitting efforts and found substantial benefits associated with the implementation of permits

containing emissions caps (among other types of permit terms offering greater flexibility than

conventional permitting programs). Specifically, we reviewed on-site records to track utilization

of these flexible permit provisions, to assess how well the permits are working and any emissions

reductions achieved, and to determine if there were any economic benefits of the permits. 

Overall, we found significant environmental benefits occurred using the permit terms for each of

the permits reviewed. In particular, the six flexible permits established emissions cap-based

frameworks that encouraged emissions reductions and P2, even though such environmental

improvements were not an explicit requirement of the permits.

We agree with the commenter who believes that PALs should only be allowed for

facilities that maintain quality assured continuous data and in the final rules have included

adequate monitoring provisions to ensure availability of accurate data. 
8 - 1998 PAL Comments

I-8-5

8.3 Support for or Opposition to Not Adjusting PALs for MACT

Purposes

Comment:

8.3.1 Support for Not Adjusting PALs for MACT Purposes

Seven industry commenters (IV-D-208, 256, 292, 298, 304, 306, 307) and one regulatory

agency commenter (IV-D-211) supported EPA’s proposal to not adjust PALs to reflect new

MACT standards.

Three industry commenters (IV-D-208, 256, 298) asserted that PALs are designed to

address criteria pollutants and not to limit HAPs addressed by MACT standards. Two industry

commenters (IV-D-298, 307) felt that sources with PALs should be treated no differently than

other sources with respect to reductions reflected in the SIP. One industry commenter

(IV-D-292) stated that the adjustment would limit the ability to make changes for production

demands, limit production capacity, and limit economic growth. One industry commenter

(IV-D-298) noted that the MACT reduction level or control requirement may have already been

considered and reflected in establishing the PAL.

8.3.2 Opposition to Not Adjusting PALs for MACT Purposes

Three regulatory agency commenters (IV-D-253, 255, 287), STAPPA/ALAPCO

(IV-D-259), and one industry commenter (IV-D-315) opposed EPA’s proposal to not adjust

PALs for MACT purposes. 

One regulatory agency commenter (IV-D-255) and STAPPA/ALAPCO (IV-D-259) stated

that PALs should be adjusted whenever rules requiring new or additional control technologies are

promulgated, for example, RACT, MACT, and SIP requirements. (The regulatory agency

commenter was not clear on whether this comment applied broadly or only when the MACT

applies to the PAL pollutant, and STAPPA/ALAPCO did not specifically address the case where

MACT does not directly regulate the PAL pollutant.)

One industry commenter (IV-D-315) believed that new regulatory requirements, such as a

more stringent RACT or new MACT requirements, should be incorporated into a facility’s PAL

renewal review, and the facility’s PAL limit should be adjusted accordingly. The industry

commenter (IV-D-315) provided the following example: To meet the MACT requirements to

control a specific HAP, a facility may select a system that not only will achieve the HAP control,

but also realize VOC reductions. The industry commenter (IV-D-315) believed that the facility

should be allowed to keep the VOC reductions as incentives for implementing pollution

prevention initiatives.
8 - 1998 PAL Comments

I-8-6

One regulatory agency commenter (IV-D-253) felt that adoption of a MACT standard

should trigger reevaluation of a PAL; however, it could be concluded that the PAL should be

reduced (to account for the reduction in gross emissions resulting from MACT compliance) or

that the PAL should be unchanged (because the source already complied or will reformulate to

comply with MACT but not reduce emissions of criteria pollutants).

One regulatory agency commenter (IV-D-287) stated that not requiring PALs to be

adjusted for new MACT standards appears to be a change from current policy. Current policy

states that emission reductions at a facility that are required in order for a facility to meet

regulatory limits cannot be used for netting purposes. Here EPA appears to be saying that

emission reductions required in order to meet a newly promulgated MACT standard may be

counted toward emission netting goals. 

Response:

As discussed in volume I, 7.8.1, the final PAL rules do not always require the reviewing

authority to adjust your PAL for a newly applicable MACT standard. However, if your

reviewing authority has adopted the new MACT standard in its SIP, then the reviewing authority

must adjust the PAL. The reviewing authority generally has discretion to reopen your PAL

immediately for this adjustment or to wait until the time of your title V permit renewal or PAL

permit renewal, whichever occurs first. However, the reviewing authority must reopen and

adjust your PAL immediately if you are creating creditable emissions reductions for use as NSR

offsets. 

8.4 Legal Concerns (Contemporaneity Requirement of Alabama

Power)

Comment:

8.4.1 PALs Are Legal

Eighteen industry commenters (IV-D-208, 254, 256, 258, 265, 266, 272, 292, 293, 296,

298, 301, 302, 304, 306, 307, 310, 311), three regulatory agency commenters (IV-D-211, 216,

253), and one utility industry commenter (IV-D-279) maintained that PALs are legal.

Two industry commenters (IV-D-298, 302) stated that the legal and policy concerns

regarding PAL adjustment raised by EPA in the NOA are unwarranted.

One industry commenter (IV-D-208) believed that PALs will not cause contemporaneity

issues.
8 - 1998 PAL Comments

I-8-7

Two industry commenters (IV-D-304, 306) maintained that PALs are authorized under

current law and regulations as clearly illustrated by EPA's development and approval of PALs

throughout the country. The two industry commenters (IV-D-304, 306) stated that EPA should

acknowledge the current legal viability of PALs to give security to facilities currently operating

under PALs and to allow PALs to be developed in the title I and V permitting actions that will

occur before NSR Reform is finalized in May 1999. EPA must distinguish and coordinate

between PALs and other flexible permitting vehicles, claimed the two industry commenters

(IV-D-304, 306).

One regulatory agency (IV-D-211) believed that the key issue in contemporaneity under

the PAL is that it must be applied equally to increases and decreases. According to the

Commenter until the PAL baseline is reset, all increases and decreases since baseline must be

counted to determine if a net significant emission rate increase has occurred.

Another regulatory agency (IV-D-216) agreed with the court that EPA's 1978 regulations

limiting plantwide netting conflicts with the language and purposes of CAA, and that EPA

should not only permit, but should also require, sources to net on a plantwide basis. In order to

net, the regulatory agency (IV-D-216) stated that a PAL should be set by capping actual

emissions.

Five industry commenters (IV-D-265, 272, 292, 307, 311), one utility industry

commenter (IV-D-279) and one regulatory agency (IV-D-253) commented on the court providing

EPA with discretion to define contemporaneity. One regulatory agency (IV-D-253) believed that

the Court in Alabama Power interpreted the CAA to require contemporaneity but left the

definition to EPA. The commenter claimed that those regulations can be amended such that the

proposed 10-year concept put forth in this proposal can encompass contemporaneity. Similarly,

two industry commenters (IV-D-292, 307) and one utility industry commenter (IV-D-279)

maintained that EPA has discretion, within reason, to define changes that can be considered

substantially contemporaneous. One utility industry commenter (IV-D-279) said that EPA

should exercise this discretion to expand the scope of the contemporaneity provision previously

codified for netting such that the contemporaneity period for PALs that account for shutdowns,

unused capacity, or pollution control initiatives is longer than the 10-year contemporaneity period

for netting. Another industry commenter (IV-D-292) said that EPA could establish a period for

contemporaneous increases and decreases that matches the effective period of the PAL permit

itself. According to the commenter upon re-issuance of the PAL permit, a new period for

assessing contemporaneity would begin. One industry commenter (IV-D-265) said that the court

did not explain its contemporaneity requirement, and nothing in the CAA supports this

requirement the commenter claimed that. PALs will require sources to quantify and permanently

document the emission changes at their facility with an accuracy unknown in 1978. The

commenter felt that A "contemporaneous" rule could serve to make sure that emission reductions

were used before the data that supported them grew stale. The commenter claimed that but there

is no point to such a rule with PALs, since their data will not grow stale. Because one of the
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I-8-8

major purposes - if not the major purpose - of a "contemporaneous" requirement does not apply

to PALs, the commenter claimed that EPA could properly make the requirement inapplicable to

PALs. Similarly according to the commenter, EPA already allows States to allow sources to

"bank" ERCs for an indefinite period. Another industry commenter (IV-D-311) said that PALs

were not contemplated when the court made its decision in 1979, so it is inappropriate to assume

that the court would have lumped PALs with the normal form of netting. Furthermore, the

industry commenter (IV-D-311) surmised that the court would look favorably upon a workable

solution that provides facilities with a consistent option to avoid NSR as long as there is no

detriment to the environment. One commenter (IV-D-272) stated that EPA cannot rely on

Alabama Power to argue that "contemporaneity" dictates the design of PALs. One industry

commenter (IV-D-272) discussed Chevron v. NRDC, and stated that the Supreme Court held that

neither the statute nor the legislative history addressed the bubble concept, and that Congress had

no intent with respect to a plantwide netting analysis. Therefore, one industry commenter

(IV-D-272) contended that although the current regulations still contain the "contemporaneity"

requirement suggested by the Alabama Power decision, this requirement is a matter of EPA

discretion and is not a mandate of the CAA. The industry commenter (IV-D-272) claimed that

the reasoning in Alabama Power does not apply to PALs.

Eleven industry commenters (IV-D-254, 256, 258, 266, 272, 296, 301, 304, 306, 307,

310) said that PALs are not a form of netting. One commenter (IV-D-254) did not believe the

contemporaneity requirement is ever implicated by the PAL process. Another commenter

(IV-D-256) said that Alabama Power does not provide a basis for requiring periodic review of

PALs; EPA should not allow that decision to affect PAL policy according the commenter. This

requirement [contemporaneity] applies only to netting analyses under NSR requirements. 

Additional compliance with a PAL exempts a source from NSR requirements, including netting. 

Furthermore, the commenter felt that PAL adjustments should not require reducing the cap level

to reflect the source's emissions during the period of the PAL. Another industry commenter

(IV-D-258) said that a PAL is better characterized as a new type of applicability test that

simplifies the calculus. The commenter believed that a PAL meets CAA objectives because it is

based on the premise that the PAL limit adequately protects air quality and prevents significant

deterioration of air quality in attainment areas. Five industry commenters (IV-D-258, 266, 304,

306, 310) provided reasons why PALs should not be considered netting. First according to the

commenter’s EPA's regulations provide that "source-specific allowable emissions" may be used

as a measure of past emissions. Accordingly, the commenter stated that under a PAL, a change

would never result in an actual emissions increase because the PAL emissions cap would

constitute actual emissions before and after the change. Thus, all changes would occur on an

allowable to allowable basis and would not implicate netting. Second, EPA according to the

commenter’s has discretion to identify categories of activities that do not constitute "physical

changes or changes in the method of operation" for purposes of major NSR. The commenter felt

that ample justification exists to exclude activities falling under a PAL from this definition. In

fact according to the commenter the NSR Reform proposal recognized that changes made under a

PAL "shall not constitute a major modification for the pollutants covered by the [PAL]." (61
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FR38250, 38343). One industry commenter (IV-D-272) referred to EPA's assertion that PALs

may be characterized as a form of netting as illogical, and reminded the EPA that the purpose of

PALs is to provide an alternative to netting under the current regulations. Because the timing of

emission changes is not relevant to NSR applicability under PALs, the commenter stated that

EPA cannot logically argue that PALs need to be periodically adjusted to reflect

contemporaneous emission increases and decreases. Another industry commenter (IV-D-301)

said that PALs are a flexible mechanism that allows NSR applicability to be determined on a

wider basis than a single emissions unit. One industry commenter (IV-D-307) said that netting

does not involve public review and there is full public and environmental review of the PAL.

One industry commenter (IV-D-272) noted that the CAA has been amended since

Alabama Power to allow and even encourage “market-based” approaches like PALs. The

commenter stated that, given the flexible, market-based approach reflected in this and other EPA

proposals, PALs can now rest on a variety of authorities.

Two industry commenters (IV-D-304, 306) said that if EPA decides that PALs do

constitute a form of netting, EPA must recognize that this interpretation applies only for major

NSR applicability, and does not impact minor NSR approaches developed by State PALs to

preserve operational flexibility or apply to other non-title I emission caps and other flexibility

tools. The commenter claimed that Alabama Power did not create a principle that can be

extended to other requirements of the CAA.

Five industry commenters (IV-D-254, 293, 304, 306, 307) said that the essential question

of NSR applicability under the PAL approach is not whether a change results in a net significant

emissions increase, but whether anything (including changes that currently are not considered

modifications) done at the source results in emissions that exceed the PAL. 

One industry commenter (IV-D-298) said that EPA's revised NSR regulations should

provide that all activities under a PAL do not constitute a physical change or change in the

method of operation. According to the commenter Such an exclusion from the regulatory

definition would clarify that changes under a PAL do not constitute netting and do not require

periodic adjustment under Alabama Power.

Another industry commenter (IV-D-292) said that a more effective way to resolve any

legal concerns regarding contemporaneity is to revise the current NSR applicability test to an

"allowable to allowable" analysis.

8.4.2 PALs Are Not Legal

Two environmental commenters (IV-D-291, 303) and one individual commenter

(IV-D-218) maintained that PALs are not legal and that they will allow circumvention of PSD

rules.
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One of the environmental commenters (IV-D-291) stated that the EPA has no statutory

authority to promulgate PAL rules that act as an exemption from NSR for existing units and

would subvert the purpose and intent of the CAA by allowing the persistence of dirty facilities in

non-attainment areas. 

The other environmental commenter (IV-D-303) stated that the PAL concept does not

respect the principle of contemporaneity and that an emission increasing activity at a PAL source

could be shielded from NSR/PSD based on an emission reduction that occurred 20 years earlier.

This commenter emphasized that both the legal and policy problems of EPA’s PAL proposal

flow from the Agency’s proposed choice of a baseline calculated from historic high levels of

emissions. The commenter also emphasized that PALs are outside the EPA’s legal authority

because they permit reliance on emission reductions that are not contemporaneous with facility

changes and that the only legally permissible role for PALs is to ensure that emissions from a

facility will decline and approach new source performance levels over a reasonable period.

The individual commenter (IV-D-218) stated that the 10-year look back for defining an

emissions baseline is akin to allowing for non-contemporaneous emissions netting (de facto

emission reductions that occur over time are not contemporaneous with emission increases that

will occur with the physical change) and that section 193 of CAA prohibits adoption of both the

10-year look back and the PAL concept. This commenter also asserted that the PAL concept was

a form of netting that allowed non-contemporaneous changes and that if EPA insisted on

implementing PALs, then PALs should either be revised once every 5 years or the source owners

should be given the option of opting out of the PAL plan.

Response:

We have considered these comments and have concluded that PALs are legal. Our

reasoning is presented below. 

We believe that the concept of contemporaneity, as articulated in Alabama Power and as

set forth in the regulations governing major NSR, does not apply to PALs. The PAL program

differs in certain important respects from our current regulations and from the 1978 regulations

at issue in Alabama Power. The Alabama Power court was not presented with the PAL

approach for determining whether there was an increase in emissions and did not consider

whether the principles it set forth in its opinion would apply to such an approach.

Under the 1978 PSD regulations (43 FR 26380), a source was not subject to BACT

review only if “no net increase in emissions of an applicable pollutant would occur at the

source, taking into account all emission increases and decreases at the source which would

accompany the modification.” 43 FR at 26385. The test for whether a “major modification”

had occurred required the source to sum all accumulated increases in potential emissions that

had occurred at the source since issuance of the regulations, or since issuance of the last
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construction permit, whichever was more recent. Reductions achieved elsewhere in the source

could not be taken into account.

In Alabama Power, the D.C. Circuit held that EPA was correct in excluding from BACT

review any changes that did not result in a net increase of a pollutant. [636 F.2d at 401.] It

concluded, however, that EPA had incorrectly excluded contemporaneous decreases from the

calculation of whether a “major modification” had occurred. Id. at 402-03. 

The current regulations take contemporaneous decreases into account for all PSD review

purposes. Under the current regulations, you look initially at the emissions unit undergoing the

change and determine whether there will be a significant increase at that unit. If there is no

significant increase at the unit, the inquiry ends there. While we continue to believe that this is a

permissible approach, one drawback to this approach is that it allows small, serial, unrelated

emission increases. If there will be a significant increase at the unit, then you expand the inquiry

to other units at the source. You take into account contemporaneous increases and decreases at

the source in determining whether there will be an increase for the source as a whole. Thus, you

must calculate increases and decreases at individual units in order to arrive at a net figure for

the entire source. 

In contrast, under the final PAL regulations, the inquiry begins and ends with the source. 

Your PAL represents source wide baseline actual emissions. As such, it is the reference point for

calculating increases over baseline actual emissions. If your source’s emissions will equal or

exceed the PAL, then there will be an emissions increase at your source. There is no need to

calculate increases and decreases at individual units.

The final PAL regulations constitute a reasonable, though not the only, approach to

determining whether there is an emissions increase at your source. While we believe that the

principle of contemporaneity continues to be important for purposes of major NSR netting

calculations, we do not believe that it is a necessary concept for purposes of PALs. This is

because if your source has a PAL, you have accepted a different means of calculating an

emissions increase for the PAL pollutant. The only relevant question is whether your source has

reached or exceeded the PAL level. 

Even though PALs are a new approach, they do not alter the fundamental question,

which is whether there will be an increase in emissions from your source. For actuals PALs, we

consider whether there will be an increase above baseline actual emissions. Because the PAL

serves as the baseline for measuring an increase, we have taken steps to ensure that the PAL is

reasonably representative of baseline actual emissions. 

In addition, we believe that the PAL renewal provisions ensure that each 10-year term

represents a distinct “contemporaneous” period. The renewal process is designed to prevent

decreases that occurred outside of the current 10-year PAL term from being used to offset
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increases during that term. More generally, the reviewing authority is required to determine at

renewal whether the PAL is still reasonably representative of baseline actual emissions and

provide a written rationale (for public comment) for either adjusting or not adjusting the PAL at

renewal. As part of this process, the reviewing authority must adjust the PAL downward if your

source’s current PTE is below the PAL level. We believe that this adjustment is important for air

quality planning purposes. The reviewing authority may ordinarily renew the PAL at the same

level, without considering any other factors, if baseline actual emissions plus significant level of

the PAL pollutant equals or exceeds 80 percent of the PAL level. Conversely, if your source’s

baseline actual emissions plus the significant level are less than 80 percent of the PAL level, the

reviewing authority may set the PAL at a level that it determines to be more representative of the

source’s baseline actual emissions, or that it determines to be appropriate considering air

quality needs, advances in control technology, anticipated economic growth in the area, desire

to reward or encourage the source’s voluntary emissions reductions, or other factors as

specifically identified by the reviewing authority in its written rationale. If you believe that the

new PAL level that the reviewing authority proposes for your source is not representative of your

source’s baseline actual emissions, you may propose a different level. In addition, any person

may propose a different level as being more representative of your source’s baseline actual

emissions. The reviewing authority may approve a higher or lower level if it determines that it is

reasonably representative of your source’s baseline actual emissions. However, the reviewing

authority cannot approve a higher PAL level, unless the source complies with the PAL increase

provisions.

Because of the safeguards described above, we believe that the actuals PAL program as

finalized ensures that the PAL will serve as an appropriate baseline for determining whether

there is a significant net “increase” in overall emissions from the source, and thus whether the

source is undergoing a “modification.”

Moreover, we believe that a PAL approach satisfies Congressional intent to only apply

the NSR permit process when industrial changes cause emission increases to an area and not

when changes in plant operations result in no emissions increase from the major stationary

source. See Alabama Power, 636 F2d at 401. 

We do not agree with the commenter that stated that section 193 of the Act prohibits

adoption of both the 10-year look back and the PAL concept. Neither concept allows an existing

control requirement in a nonattainment area to be altered in a manner that would fail to ensure

equivalent or greater reductions of the nonattainment pollutant. 

As discussed in volume I , 7.2 the PAL regulations constitute a reasonable interpretation

of the Act’s definition of “modification” and are permissible under current law. 
8 - 1998 PAL Comments

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8.5 Environmental Concerns Regarding PALs

8.5.1 Environmental Impact of PALs Relative to Conventional NSR

Comment:

Four industry commenters (IV-D-292, 298, 312, 321) said that PALs are equal to or more

beneficial than traditional NSR. Another industry commenter (IV-D-272) stated that the EPA

has no basis to conclude that PALs will result in more emissions from plant modifications than

would result from continued application of the “contemporaneous” rule. One regulatory agency

commenter (IV-D-211) believed that PALs would be more beneficial only under certain

conditions. 

One industry commenter (IV-D-292) stated that environmental concerns raised in the

NOA are not significant because PAL permits hold emissions from the source more constant than

under traditional permit programs. Under traditional programs, sources can undergo minor NSR

and increase emissions numerous times over the course of a few years. In contrast, PALs set

actual emission caps, limiting overall emissions to the environment.

Another industry commenter (IV-D-298) emphasized that PALs achieve equivalent or

better environmental results than the traditional NSR program’s netting option according to the

commenter. The PAL setting process subjects the source to intensive public scrutiny the

commenter claims that the resulting PAL typically requires the source to forfeit some level of

allowable emissions. PALs result in the imposition of new compliance requirements (for

example, monitoring, recordkeeping, and reporting). In addition, the commenter claims that

PALs also provide greater certainty as to the total levels of pollutants that a source can emit. The

commenter also claims that according to the commenter, because PALs cap total source

emissions even during periods of growth, sources are encouraged to develop and install good

controls and implement pollution prevention measures so that growth can be accommodated

without exceeding the PAL limit.

Another industry commenter (IV-D-312) stated that under a PAL, voluntary emission

reductions that result in real emission decreases will be more likely. An additional industry

commenter (IV-D-321) felt that in order to make modifications, additional control equipment

must be added, not only to the new or modified equipment, but to existing equipment that would

not otherwise trigger NSR, so that a PAL will actually drive the installation of better control

technology faster than traditional NSR.

The regulatory agency commenter (IV-D-211) believed that the PAL can achieve

equivalent or better environmental results only if it is applied to an entire geographic area. The

commenter claimed that sources can individually elect to opt in to the PAL, those that benefit

will and those that do not benefit will not, and the net program will be less stringent that the
8 - 1998 PAL Comments

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traditional approach. The commenter requested that EPA require that any State opting into the

PAL to use PAL emissions in the SIP attainment demonstration, and that EPA change its

guidance on the use of actual emissions in attainment demonstrations to reflect this.

One environmental commenter (IV-D-290) and one individual commenter (IV-D-218)

emphasized that PALs are less beneficial than traditional NSR. 

The individual commenter (IV-D-218) stated that the PAL concept is not environmentally

beneficial and because it is voluntary, only those owners who stand to gain a significant benefit

will participate (namely, those who will have low emissions). The environmental commenter

(IV-D-290) emphasized that the proposed rule would allow uncontrolled older sources to come

out of cold standby, make significant refurbishments, and yet avoid NSR and modern pollution

controls. 

Response:

We agree with the commenters who indicated that PALs will be equal to or more

beneficial environmentally than major NSR. Through a PAL, we are assuring that air emissions

from your major stationary source will not exceed the facility wide cap set forth in the permit

unless you first meet the major NSR requirements. Additionally, through the final PAL rules, we

are promoting voluntary improvements in pollution controls by creating an incentive for you to

control existing and new emissions units to maintain a maximum amount of operational

flexibility under the PAL. 

Most importantly, for pollutants subject to a PAL, we are prohibiting serial, small

unrelated emissions increases above the PAL, which otherwise can occur under major NSR and

that could adversely impact air quality. Such emissions increases occur under major NSR

because you can make physical changes or changes in the method of operation without

triggering major NSR applicability provided the individual changes do not result in significant

net emissions increases. We have interpreted this requirement to allow you to make unrelated

changes that, standing alone, do not result in significant emissions increases and to allow such

changes to occur without considering whether other contemporaneous emissions increases

render the change significant. See, for example, Memorandum from John Calcagni, Director,

Air Quality Management Division, to William B. Hathaway, Director, Air, Pesticides, and Toxics

Division, Region VI, at 1-2 (Sept. 18, 1989). Over time you could undertake numerous unrelated

projects without triggering major NSR, provided the individual projects did not increase

emissions by a significant amount, thus allowing source wide emissions to increase over time

without requiring any emissions controls for these individual projects. For example, a large

chemical plant that is located in an ozone attainment area adds a new product line in 2001 and

properly avoids PSD (including the BACT requirement) by limiting the VOC emissions increase

to 39 tpy. Later, in 2003 the plant adds a different product line and also properly avoids PSD by

limiting VOC emissions from the new line to 39 tpy. For this example, two process lines at the
8 - 1998 PAL Comments

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same plant with total potential emissions (78 tpy) above the 40 tpy VOC significant level under

PSD were properly permitted over a 3-year period without BACT applying to either new product

line.

In addition, under major NSR, production increases at existing emissions units that can

be accomplished without modifying the unit are not subject to review (absent a permit limit that

would prevent it). Thus, without a PAL, you can increase production at such units up to full

utilization, with emissions rising from historic levels up to the full PTE, without review. Such

emissions increases are capped under a PAL.

Over the past several years, we have allowed use of major stationary source-wide

emissions caps to demonstrate compliance with major NSR in a select number of pilot projects. 

We recently reviewed six of these innovative air permitting efforts and found substantial benefits

associated with the implementation of permits containing emissions caps (among other types of

permit terms offering greater flexibility than conventional permitting programs. (A complete

copy of our study, “Evaluation of the Implementation Experience with Innovative Air Permits,”

is located in Docket A-90-37.) Specifically, we reviewed on-site records to track utilization of

these flexible permit provisions, to assess how well the permits are working and any emissions

reductions achieved, and to determine if there were any economic benefits of the permits.

Overall, we found significant environmental benefits occurred using the permit terms for

each of the permits reviewed. In particular, the six flexible permits established emissions capbased frameworks that encouraged emissions reductions and P2, even though such

environmental improvements were not an explicit requirement of the permits. For instance, one

company lowered its actual VOC emissions by over two-thirds in becoming a synthetic minor

source (that is, 190 tpy to 56 tpy). Other companies lowered their actual VOC emissions by as

much as 3,600 tpy by increasing capture, by using voluntary P2 and other voluntary emissions

control measures, and by reducing production rates.

Participants reported that two of the benefits of a PAL are having the ability to make

rapid, iterative changes to optimize process performance in ways that minimize emissions and

reducing the administrative (time delays and uncertainty) associated with making operational

and equipment changes, encourages facilities to make changes that improve yields and reduce

per unit emissions. It is also critical for responding to product development needs and market

demand, and maintaining overall competitiveness.

Reviewing authorities consistently reported that the permits worked well and proved

beneficial, and that there was a reduction in the number of case-by-case permitting actions they

needed to undertake. Specifically, we found that flexible permit provisions (for example,

emissions caps) are enforceable as a practical matter by using a mixture of mass balance-based

equations, CEMS, and parameter monitoring. No emissions cap exceedances or violations of the

monitoring provisions were experienced by any of the pilot sources. In addition, the monitoring
8 - 1998 PAL Comments

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and reporting approaches worked well and were generally of higher quality and of more

extensive scope than those directly required by individual applicable requirements. 

Based on the results of these pilot projects, we believe that PALs will, over time, tend to

shift growth in emissions to cleaner units, because the growth will have to be accommodated

under the PAL cap. Specifically, we expect that PALs will encourage you to undertake such

projects as replacing outdated, dirty emissions units with new, more efficient models; installing

voluntary emissions controls; and researching and implementing improvements in process

efficiency and use of P2 technologies so that you can maintain maximum operational flexibility. 

Overall, we believe that PALs will prove to be as beneficial to the environment as they are to you

and your reviewing authority.

8.5.2 Potential Concerns with Unadjusted PALs

Comment:

8.5.2.1 General Comments on Unadjusted PALs

One utility industry commenter (IV-D-261) generally shared EPA’s concerns about

allowing sources to retain unused allowable emissions indefinitely. Three industry commenters

(IV-D-258, 292, 321) indicated that EPA’s potential concerns with unadjusted PALs are

unwarranted.

One of the industry commenters (IV-D-258) stated that the environmental concerns in the

NOA do not require periodic adjustments to the PAL, do not outweigh the needs of

manufacturing and research facilities to make changes quickly and with fewer resources, and can

be addressed through other means that do not limit flexibility. 

Another industry commenter (IV-D-292) believed that, assuming the permitting authority

properly evaluates air quality impacts, the plantwide emissions cap established by the PAL

permit will preserve air quality and protect the NAAQS. An additional industry commenter

(IV-D-321) stated that EPA concerns with unadjusted PALs are unfounded because PALs will be

set using NSR, which requires protection of the NAAQS, and that other environmental impacts

and goals be addressed.

8.5.2.2 Effect of Unadjusted PALs on the Environment

Two environmental commenters (IV-D-291, 303) agreed that unadjusted PALs hurt the

environment. One environmental commenter (IV-D-291) stated that nonattainment areas must,

under the terms of the CAA, continually make progress towards clean air. Therefore according

to the commenter, allowing existing older electric generating units to lock in current high

emission levels and avoid modernized pollution controls when they invest in life extending
8 - 1998 PAL Comments

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projects runs contrary to the CAA’s requirements. In addition the commenter believed the PAL

concept as proposed would yield both such results and therefore should not be adopted. The

other environmental commenter (IV-D-303) agreed with EPA’s observations on the policy

problems with permitting a PAL baseline that is based on historically high emissions. According

to the commenter such an approach perpetuates the high emission privileges of grandfathered

sources. Under EPA’s proposal, noted the commenter an 18-year-old youth living near a major

source would be told she had no rights to seek review of dramatic increases in emissions from

new construction because the source had made an emissions reduction 2 years before she was

born.

One regulatory agency commenter (IV-D-211) and one industry commenter (IV-D-258)

disagreed that unadjusted PALs hurt the environment.

The regulatory agency commenter (IV-D-211) emphasized that the build-up of unused

PAL is not necessarily bad and means that the airshed has benefitted from voluntary reductions.

The industry commenter (IV-D-258) believed that unadjusted PALs would have a different effect

in the pharmaceutical industry than in other industries. According to the commenter the

pharmaceutical industry is characterized by batch operations, which inherently operate at less

than full capacity. The commenter noted that there may be no emission reductions that occur;

instead, the swing in emission levels are more likely the result of changing products and different

utilization of the same equipment. Moreover according to the commenter, a pharmaceutical

plant will most likely have already forfeited a substantial amount of capacity to gain the

simplicity and flexibility afforded by the PAL.

8.5.2.3 Effect of Unadjusted PALs on Other Sources

Two environmental commenters (IV-D-291, 303) and one industry commenter

(IV-D-254) agreed that unadjusted PALs hurt other sources.

The industry commenter (IV-D-254) was concerned with the growth of both new and

existing businesses. The commenter believed that under certain circumstances the opportunities

for new and expanded business might be stifled if a significant number of existing sources obtain

PALs with limits that turn out to be substantially higher than necessary. The commenter required

that some balance be struck to provide existing PAL sources a "cushion" above their historic

emission rates so their business can thrive and grow with new and increased production

demands, while at the same time ensuring that emission allowances are available to other

businesses that need them.

One of the environmental commenters (IV-D-291) stated that the PAL concept should not

be adopted because, in PSD areas, it would allow an existing unit to “eat up” the emission

allowances that would otherwise be available for new economic development, and it would run

contrary to the CAA’s attempt to balance air quality preservation with the need for economic
8 - 1998 PAL Comments

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growth. The other environmental commenter (IV-D-303) agreed that permitting a PAL baseline

based on historically high emissions distorts an area’s growth opportunities by giving

grandfathered sources a privileged claim on scarce air quality resources.

Three industry commenters (IV-D-258, 301, 311) disagreed that unadjusted PALs hurt

other sources.

One of the industry commenters (IV-D-258) said that the concern that PAL’s hurt sources

seemingly states a preference for new sources to emit actual emissions compared to an existing

source holding "paper" emissions--a situation that would result in more emissions to the

environment. Furthermore, while this concern may apply to pollutants for which there are PSD

increments, the commenter stated that it does not apply to VOC, which is the pollutant most

commonly emitted by manufacturing operations needing the most flexibility (such as

pharmaceutical, electronics, and automobile manufacturing).

Another industry commenter (IV-D-301) said that any emission reductions obtained by

adjustment of PALs in a particular area will be insignificant. According to the commenter the

emissions freed up by taking such credits from sources with PALs will not provide much

opportunity for growth of other sources, nor will they have any real impact in the SIP attainment

planning process. In addition the stated any possible policy benefits of adjusting PALs would be

more than offset by the harmful uncertainty that would result from such revisions.

One industry commenter (IV-D-311) said that emission credits have value to the facility

that holds them. EPA should allow facilities to sell such credits to other entities. Simply to

"take" the credits from the facility that has not emitted up to its PAL is not consistent with the

purpose of having a PAL in the first place.

8.5.2.4 Effect of Unadjusted PALs on State Attainment Planning

STAPPA/ALAPCO (IV-D-259), one utility industry commenter (IV-D-261), and one

environmental commenter (IV-D-303) agreed that unadjusted PALs disrupt State planning for

attainment.

STAPPA/ALAPCO (IV-D-259) recommended that EPA require permitting authorities

instituting PALs to account for these potential emissions in the SIP, which will allow State and

local agencies to properly achieve the national air quality goals. The environmental commenter

(IV-D-303) agreed with EPA’s observations of policy problems with permitting a PAL baseline

based on historically high emissions, making the job of developing adequate attainment plans

more difficult, and stated that sources with PALs based on 20-year-old emission levels could

dramatically increase emissions without review in amounts that could jeopardize attainment and

maintenance of ambient standards.
8 - 1998 PAL Comments

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Six industry commenters (IV-D-258, 266, 289, 301, 311, 313) and one regulatory agency

commenter (IV-D-211) disagreed that unadjusted PALs disrupt State planning for attainment.

One of the industry commenters (IV-D-258) believed that the States should be required to

use PAL limits in attainment planning, the commenter also stated that this requirement would not

impose burdens on the States because the PAL limit will be readily known by the State and

because the commenter expected only a small number of sources will operate under PALs. 

Another industry commenter (IV-D-266) believed that the number of PAL sources in any

particular air quality area is likely to be quite small, both in terms of absolute numbers and in

terms of overall emissions and, as a result, it is unlikely that PAL sources will become an

impediment to air quality planning. 

Two industry commenters (IV-D-289, 313) maintained that there are instances where a

PAL, set at potential emission levels, would not interfere with timely attainment and maintenance

of NAAQS and increments. The commenter requested that EPA provide guidance and assistance

to States on the burdens that companies and States would have to carry to gain approval. In this

way according the commenter, PALs could reflect the maximum emissions, provided such

emissions have been accounted for in the State planning process. The commenter claimed that

Emissions that have been fully offset or otherwise accounted for in the SIP have essentially been

"bought and paid for." The commenter stated this was so because the State has relied upon the

emission offset at the maximum allowable emission rate of the source in its attainment planning.

Another industry commenter (IV-D-301) stated that any emission reductions obtained by

the adjustment of PALs in a particular area will be insignificant. The commenter claimed that

the emissions freed up by taking such credits from sources with PALs will not provide much

opportunity for growth of other sources, and they will not have any real impact in the SIP

attainment planning process. Any possible policy benefits of adjusting PALs would be more

than offset by the harmful uncertainty that would result from such revisions.

One industry commenter (IV-D-311) felt that in many cases, a facility would have already

received permit approval to emit up to a certain level, and this permitted level should have been

accounted for in the State's attainment planning and should continue to be allowed, regardless of

the actual level of emissions. The industry commenter (IV-D-311) stated that EPA could require

states that issue permits with PALs to use the PAL level in all attainment demonstrations, and

that this is an acceptable surrogate for "actual" emissions, since the PAL will be based on past

actual emissions anyway.

The regulatory agency commenter (IV-D-211) emphasized that even though the PAL

allows modifications to net out of major NSR, it does not prevent a permitting authority from

requiring that the modifications be well controlled under a minor NSR program. According to

the commenter if SIP attainment demonstrations are based on the PALs, the program is

protective of air quality, and if the PAL emissions cannot be accommodated in the SIP, the State
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I-8-20

or local agency can adopt rules requiring emission reductions which, in turn, would lead to

adjustment of the PAL. The commenter requested EPA require that any State opting into the

PAL use PAL emissions in the SIP attainment demonstration, and EPA change its guidance on

the use of actual emissions in attainment demonstrations to reflect this.

Response:

In our 1998 NOA, we expressed three reasons why it might be appropriate to require

PALs to be periodically adjusted. First, we expressed concern that the allowable-to-allowable

applicability system of the PAL would allow you to indefinitely retain the right to pollute at an

historical level of actual emissions. Second, we were concerned that a PAL may allow you to

retain unused emissions credits that would otherwise be available for economic growth in the

area. And third, we were concerned that a PAL may interfere with a State’s ability to plan for

attainment if your actual emissions to the atmosphere are lower during a SIP planning year than

in a subsequent year. Commenters responded to our request for comments in this area with the

comments summarized above.

After reviewing these comments, our concerns related to unadjusted PALs remain. We

agree with the commenters who noted the potential for unadjusted PALs to affect the

environment, economic growth, and attainment planning. The final PAL rules provide for

periodic review and adjustment to address these concerns. (See volume I, 7.8.2 and 8.6 for

additional detail on this topic.) In addition, the final rules provide for both mandatory and

discretionary reopenings to adjust the PAL under some circumstances, in part to address these

concerns. (See volume I, 7.8.1 for more detail on PAL reopenings.)

Because the reviewing authority must ordinarily adjust your source’s PAL downward if it

is no longer reasonably representative of its baseline actual emissions, or it is no longer

representative of its current PTE, a PAL will not provide you with a right to pollute at your

historical level of baseline actual emissions. Although we firmly believe that a periodic review

of the level of the PAL is necessary, we do not believe that we should mandate an adjustment to

the PAL based on only one prescribed methodology. Such an approach could lead to

inappropriate results. Instead, we believe that our concerns can be appropriately addressed by

providing the States the authority to adjust the PAL based on what is representative of your

source’s baseline actual emissions (or current PTE). This approach allows reviewing

authorities to consider the effect of the PAL on the environment, other sources, and attainment

planning. 

We are providing your reviewing authority discretion to take into consideration air

quality planning needs. For example, although we remain concerned that a PAL may allow you

to retain unused emissions credits that would otherwise be available for economic growth in

your area, we believe that managing an area’s economic growth is the primary responsibility of

the State. As such, the State, through your reviewing authority, should have discretion to
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manage the growth increment for your area. If your State wishes to encourage economic

growth, then it may, at its discretion, reduce your PAL for that reason. Conversely, it may

decide that encouraging economic growth is not a priority for the area and concurrently find no

other concerns that warrant a downward adjustment in your PAL. 

We also believe that it is inappropriate for us to mandate in all cases a prescribed

methodology for adjusting PALs based on our concern that a PAL system may interfere with a

State’s ability to plan for attainment. We believe that the concern regarding planning for

attainment is not unique to a PAL system. Under our major NSR applicability system, you could

increase your emissions over your historical actual emissions by increasing utilization or hours

of operation. If this occurs, there may be a discrepancy between the amount the State carries in

the emissions inventory and the amount that you emit to the atmosphere. States should be

cognizant of these issues and take appropriate measures in their SIP planning procedures to

assure that emissions from any major stationary source, including a PAL participant, are

properly characterized in the emissions inventory.

8.6 General Comments Regarding Periodic PAL Review and

Adjustment

Comment:

8.6.1 General Support for Periodic PAL Review and Adjustment

Two utility industry commenters (IV-D-252, 294) and three regulatory agency

commenters (IV-D-222, 305, 317) generally supported periodic PAL review and adjustment.

8.6.2 General Opposition to Periodic PAL Review and Adjustment

Comment:

Thirty-one industry commenters (IV-D-208, 212, 221, 250, 254, 256, 258, 260, 264, 266,

267, 272, 274, 283, 284, 289, 292, 293, 296, 298, 299, 301, 302, 304, 306, 307, 310, 312, 313,

315, IV-G-21), four utility industry commenters (IV-D-269, 279, 294, 318), one regulatory

agency (IV-D-211) and one environmental commenter (IV-D-303) generally opposed periodic

PAL review and adjustment. One industry commenter (IV-D-220) opposed ratcheting down of

PAL limits.

Five industry commenters (IV-D-221, 250, 267, 272, 274) and two utility industry

commenters (IV-D-269, 318) opposed the EPA's proposal to adjust or place restrictions on PALs,

stating that these requirements would discourage sources from using the PAL approach, reduce

their flexibility, limit their application, become a disincentive to efficiency improvements. The
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commenter claimed that PAL restrictions are not legally required, and are not consistent with

current EPA policies.

One industry commenter (IV-D-208) stated that PAL limits should not be reduced and

should be available to the source for either use by that source or for sale as credits to other

sources.

One industry commenter (IV-D-296) maintained that a downward adjustment would be

totally unreasonable given the anticipated loss of unused operational capacity at the outset of the

PAL.

Another industry commenter (IV-D-212) stated that PALs are not an attainment strategy

and therefore continuous adjustments are unnecessary.

One industry commenter (IV-D-310) stated that the PAL should not be reduced at any

time unless it is necessary for the State to claim the emission reduction in the development of a

nonattainment area plan.

One industry commenter (IV-D-315) contended that the commenter questioned that a

downward adjustment is an unfair practice and could create an unfair market advantage. How

does the permitting agency decide whose emission limit may be reduced and which facility may

receive the credit?

Seven industry commenters (IV-D-256, 258, 260, 292, 296, 298, 313) opposed periodic

downward adjustments, stating that adjustment would undermine the attractiveness and limit the

benefits of a PAL. Some industry commenters (IV-D-292, 293, 298, 301) said that periodic

adjustment would discourage sources from participating in the program.

Six industry commenters (IV-D-256, 258, 264, 296, 312, 313) and one regulatory agency

(IV-D-211) stated that adjusting the PALs would penalize sources for achieving emission

reductions, may actually discourage companies from reducing actual emissions, and eliminate

incentives for voluntary emission reductions under the PAL. One industry commenter

(IV-D-312) said that a facility would potentially be encouraged to avoid emission reductions or

to increase emissions prior to the review to ensure the PAL reduction would not take away

potentially needed capacity. One regulatory agency (IV-D-211) said that periodic review and

adjustment of PALs can create disincentives to make voluntary reductions or encourage sources

to operate inefficient or polluting emission units longer than necessary.

Three industry commenters (IV-D-258, 292, 298) maintained that adjusting PALs would

inject uncertainty into the process.
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Four industry commenters (IV-D-258, 283, 284, 299) stated that adjusting the PAL would

erode the allowed cushion built into the PAL for new products or increased production and

eliminate the incentive of operational flexibility.

Two industry commenters (IV-D-289, 313) stated that a 10-year term with periodic

adjustments offers no clear advantage over the current system.

Two industry commenters (IV-D-293, 301) said that adjusting the PALs is not legally

compelled and recommended that the States should determine whether periodic PAL adjustments

are necessary to achieve air quality goals.

One industry commenter (IV-D-254) recommended that PALs be adjusted downward for

compelling environmental reasons (for example, new regulatory requirements) or under only

those circumstances that clearly jeopardize the ability of other businesses to thrive and grow and

only to the extent necessary to ensure that other businesses can thrive and expand.

8.6.3 Other General Comments on Periodic PAL Review and Adjustment

Twelve industry commenters (IV-D-212, 254, 256, 258, 265, 274, 298, 301, 304, 306,

315, 321), STAPPA/ALAPCO (IV-D-259), five regulatory agency commenters (IV-D-211, 216,

253, 262, 287), and one utility industry commenter (IV-D-261) provided other general comments

on periodic PAL review and adjustment. 

Two regulatory agencies (IV-216, 253) wanted to ensure that the rule does not limit the

authority of the regulatory agency to condition, limit, suspend or terminate any PAL, for example

upon the adoption of new, more stringent regulations. One industry commenter (IV-D-265)

maintained that as long as a PAL is consistent with attaining the NAAQS and the increments, the

States should be allowed to make their own decisions whether or not to adjust the PAL limits

periodically.

One regulatory agency (IV-D-211) stated that resetting the PAL is a workload intensive

option because it requires a review of historical data and negotiation with sources. 

One industry commenter (IV-D-212) suggested that the mechanics of PALs should be

kept as simple as possible and a regulatory agency (IV-D-253) said that one or two complete

approaches for periodically reviewing PAL approaches would be most useful and provide for

simplicity of implementation (as opposed to accommodating a number of approaches).

Two industry commenters (IV-D-256, 298) found it difficult to assess whether the options

described in the NOA are reasonable when only able to review a portion of the NSR reform

package. The industry commenters (IV-D-256, 298) suggested that EPA draft a policy on how
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the PAL approach would work (specifically, provide details on how PAL levels are set, and when

States can adjust PALs) and release this draft approach for review and comment.

One industry commenter (IV-D-306) said that no special mandate for PAL adjustment

should apply in situations with general applicability to all sources according to the commenter. 

Any PAL adjustment approach should exclude situations that apply to all sources: (1) in the

event of NAAQS violations, imposition of additional requirements should proceed through the

normal SIP process for all sources, not just PAL sources; and (2) for unused capacity,

adjustments should be pursuant to a SIP process that applies to all sources.

One industry commenter (IV-D-306) said that there should be no presumption of

downward PAL adjustment, but upward adjustments should be allowed the commenter claimed

that because. The cap is set on the basis of site-wide emissions (which may include many

emission units that were previously permitted separately), then by analogy to the traditional NSR

provisions, the PAL emissions cap is not necessarily limited to a single "significance bump"

above site-wide emissions because each separate emission unit qualifies for its own "significance

bump." Moreover, noted the commenter if the PAL had previously been adjusted downward, the

site should be able to "recapture" the prior reduction without exceeding the original emissions

limitation.

8.6.4 Alternatives for Periodic Review and Adjustment

One regulatory agency (IV-D-211) suggested that an option for review and adjustment is

to evaluate the difference between the current PTE of a source and the PAL baseline. The

commenter claimed that if the PAL baseline exceeds the current PTE by some specified amount

(say 100 tpy), the source would be required to submit a plan for use of the PAL within a limited

time period (say the next permit term), or some portion of the unused PAL (say 50 percent)

would be reduced.

One regulatory agency (IV-D-253) recommended that EPA consolidate several of its

proposals to provide for practical use of PALs. According to the commenter PALs should

"reward" sources that reduce emissions significantly below PAL levels while "penalizing"

sources that do not. The commenter claimed that This can be accomplished by allowing PAL

sources with emissions significantly below their PAL levels to continue operating within a

slightly lower PAL (10 percent to 15 percent) if they choose to. The commenter also claimed

that sources whose actual emissions at review are very close to their PAL levels would not

necessarily continue to be eligible for PALs. The commenter noted that "Significantly below"

could be a fixed percentage, 20 percent as suggested by EPA or more, like 30 percent. The

commenter also noted that "Close to" might be within 5 percent to 15 percent of the level. 

According to the commenter such sources should be subject to review to determine whether they

should revert to traditional NSR, since the environment has not benefitted from lower emissions

in exchange for flexibility.
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One commenter (IV-D-270) contended that PALs are difficult to establish for large plant

sites because these plants often have many emission sources and these plants are at a

disadvantage due to their size and complexity. The commenter (IV-D-270) suggested that PALs

be established by factoring in a process variability amount above the pollutant significance level. 

According to the commenter this source-specific variability would be determined using the same

data set that established the baseline in a 10-year look back period. In most States, the

commenter claimed that PALs are not approved or not understood, and it will take SIP changes

and several years before they are practical.

Another industry commenter (IV-D-299) encouraged EPA to tie the PAL process to the

title V permit program. The commenter stated that The PAL process should use the 5 years of

monitoring gathered under the title V program for verifying that non-routine operational and

physical changes are not subject to NSR. In addition the commenter stated that the PAL cap

should not be reconsidered until the facility's title V permit is up for renewal. According to the

commenter the cap should not be changed unless the verifying data shows emission increases

from non-routine changes were "significant." In that event, claimed the commenter the PAL

would be reduced by the amount that would be comparable to a BACT or LAER limit for the

changed unit, if such a control requirement would have been required under NSR.

One industry commenter (IV-D-301) suggested EPA consider ways in which facilities

might be induced to voluntarily adjust a PAL in return for receiving emissions credits elsewhere. 

Alternatively, the commenter suggested that EPA might allow companies to sell credits to other

companies, as is now done under various emission trading programs.

One industry commenter (IV-D-315) said that these options show the definite need for a

formalized emission banking and trading system. The commenter felt that emission credits

should be treated as a commodity. The commenter also felt that A facility may assess its

emission status and decide whether it should buy available credits from other sources or sell its

excess emission credits, collected from either shutting down operations, or from implementing

good controls or pollution prevention initiatives. One industry commenter (IV-D-274) suggested

allowing ERCs, such as PM reductions resulting from the NOx SIP call, to be sold and also

applied towards PALs.

Response:

As discussed previously in volume I, 7.8.2 and 8.5.2, we continue to have concerns with

an approach that would allow a PAL to be continued indefinitely or to be renewed without any

evaluation of the appropriateness of the current PAL level. We believe such an approach would

be contrary to the CAA, and contrary to the court’s decision in WEPCO v. Reilly, 893 F. 2d 901,

908 (7th Circ. 1990). In WEPCO, the court determined that one statutory purpose of the NSR

requirements is “to stimulate the advancement of pollution control technology,” and that,

“allowing increased production (and pollution) through the extensive replacement of
8 - 1998 PAL Comments

I-8-26

deteriorated generating system” without triggering NSR review would create, “vistas of

indefinite immunity from the provisions of ... PSD.” 

We believe the final PAL rules avoid this inappropriate outcome, by requiring the

reviewing authority to evaluate your source's baseline actual emissions and of your PTE (if

lower than your baseline actual emissions) at the time of PAL permit renewal and provide a

written rationale (for public comment) for either adjusting or not adjusting the PAL at renewal. 

As part of this process, the reviewing authority must adjust the PAL downward if your source’s

current PTE is below the PAL level. We believe that this adjustment is important for air quality

planning purposes. Additionally, the reviewing authority may renew the PAL at the same level,

without consideration of any other factors, if your source’s baseline actual emissions plus the

significant level are equal to or greater than 80 percent of the PAL level. Conversely, if your

source’s baseline actual emissions plus the significant level are less than 80 percent of the PAL

level, the reviewing authority may set the PAL at a level that it determines to be more

representative of the source’s baseline actual emissions, or that it determines to be appropriate

considering air quality needs, advances in control technology, anticipated economic growth in

the area, desire to reward or encourage the source’s voluntary emissions reductions, or other

factors as specifically identified by the reviewing authority in its written rationale. 

We believe that some discretion in determining what is representative of actual emissions

is appropriate based, in part, on our experience with the pilot projects previously mentioned. In

one instance, a participant voluntarily agreed to reduce its actual emissions by 54 percent in

exchange for obtaining a source wide emissions cap. After agreeing to this emissions reduction,

the participant further reduced emissions by increasing capture efficiency and incorporating P2

strategies into its operations. Unexpectedly, the participant also suffered an unusual economic

downturn that caused a decrease in the rate of production and a corresponding decrease in

actual emissions. At the time of renewal of the source wide emissions cap, the participant’s

actual emissions were 10 percent of its actual emissions before committing to the emissions cap. 

The participant chose not to renew its emissions caps, because renewal required an automatic

adjustment to its current actual emissions level. Clearly, such a result contravenes the mutual

benefits operating under a PAL provides, and discourages you from undertaking voluntary

reductions. 

We are also providing your reviewing authority discretion to take into consideration air

quality planning needs. For example, although we remain concerned that a PAL may allow you

to retain unused emissions credits that would otherwise be available for economic growth in

your area, we believe that managing an area’s economic growth is the primary responsibility of

the State. As such, the State, through your reviewing authority, should have discretion to

manage the growth increment for your area. If your State wishes to encourage economic

growth, then it may, at its discretion, reduce your PAL for that reason. Conversely, it may

decide that encouraging economic growth is not a priority for the area and concurrently find no

other concerns that warrant a downward adjustment in your PAL. 
8 - 1998 PAL Comments

I-8-27

We believe that our adopted approach strikes the proper balance between: (1) providing

you with regulatory certainty, flexibility, and incentives to reduce emissions; and (2) addressing

the legitimate environmental and air quality planning concerns associated with PALs. In

deciding whether to request a PAL initially, and whether subsequently to renew your PAL, you

should weigh the advantages and disadvantages relative to major NSR in light of your own

particular circumstances. The PAL program is voluntary; it is up to you to determine whether

the advantages of a PAL are worth the “price of admission.” 

We do not agree that downward PAL adjustments based on the reviewing authority’s

desire to encourage economic growth are unfair or could create an unfair market advantage. 

We believe that managing an area’s economic growth is the primary responsibility of the State. 

(See Vol. I, 8.5.2)

 A PAL does not preclude you from taking part in emissions trading programs established

under your State SIP. Thus, we agree with the commenters who indicated that emissions

reductions under a PAL should be available to you for sale as credits to other sources. 

However, you must make such emissions reductions federally enforceable and also reduce the

PAL level by the amount of the emissions reductions. The federally enforceable emissions

limitations associated with creating such credits fall into the category of new applicable

requirements that have become effective during the term of your PAL. As such, your PAL will

have to be adjusted to account for the new limitations.

We agree with the commenters who said that the PAL rules should not limit the authority

of the reviewing authority to condition, limit, or suspend any PAL, for example upon the

adoption of new, more stringent regulations. As discussed above, the final rules provide for

mandatory and discretionary PAL reopenings in a number of circumstances, and for periodic

review and adjustment at each renewal. 

We agree with the commenters who indicated (here and in sections dealing with specific

types of adjustments) that resetting a PAL at renewal requiring specific types of emissions

reductions at specific emissions units is labor intensive. That is a primary reason for our

decision to provide a 10-year term for PALs, rather than a shorter period. (See volume I, 8.7.) 

In addition, the final rules set out an uncomplicated approach to PAL adjustments that is based

on overall baseline actual emissions, rather than specific types of emissions reductions at

specific emissions units (See volume I, 8.8, 8.9, and 8.11).

We do not agree with the commenters who recommended that we should draft a policy on

how the PAL approach would work and release the draft for review and comment. We

thoroughly discussed the options we were considering for PALs in our 1996 proposal and 1998

NOA, and the final rules are a logical outgrowth of those notices and the comments we received.
8 - 1998 PAL Comments

I-8-28

We agree with the commenter who indicated that sources with PALs should not be

singled out for additional requirements in the event of NAAQS violations, and we do not expect

such treatment by States. However, we recognize that it is the prerogative of States to determine

how best to address air quality problems, including to decide which sources should be required

to reduce emissions to accomplish air quality goals.

We do not agree with the commenter who stated that the PAL should be set to provide an

operating margin based on adding the significant level for the PAL pollutant for each emissions

unit at the facility, either initially or at renewal. The final rules provide for an initial operating

margin based on adding a single significant level of the PAL pollutant to baseline actual

emissions. (See volume I, 7.4.) We agree with the commenter’s assertion that PALs should be

able to be increased, but only if the change you wish to make that cannot be accommodated

under the PAL undergoes major NSR. (See volume I, 7.7.1.1.)

We disagree with the commenter who suggested that you should be able to retain a PAL

level greater than your PTE at PAL renewal. To retain a PAL greater than the PTE of currently

operating equipment, you must have binding contracts for new equipment or modifications to

existing equipment at the time of renewal. However, if the renewed PAL level is higher than the

current PAL level, the source must comply with the PAL increase provisions in the final rules. 

We do not agree with the commenter who suggested that PALs should “reward” sources

that reduce emissions significantly below PAL levels and “penalize” sources that do not. We

believe that if you comply with your PAL, you have fulfilled your part of the “bargain” by

maintaining emissions below the agreed level. Additionally, we believe that you and the

environment should both benefit if you decrease your emissions significantly below your PAL. 

Thus, the final rules provide for an adjustment of the PAL at renewal based on your baseline

actual emissions, plus an operating margin, determined at that time. 

We agree that it may be difficult to establish and review PALs at large plant sites with

many emissions units. You must determine whether the flexibility and regulatory certainty of a

PAL are worth the initial effort. In many cases, a PAL may be most useful at large plants

because of the frequency of changes at such facilities and the many units across which emissions

increases and decreases can be balanced.

We do not agree with the commenter who suggested that PALs be established and

renewed by factoring in a process variability amount above the PAL pollutant significant level. 

You are free to select your consecutive 24-month baseline period in the last 10 years to maximize

the baseline actual emissions that form the basis for your PAL. We believe that process

variability has been adequately accounted for by this process. 

We do not agree with the commenter who stated that the PAL process should be tied to

the title V permit program. For practical enforceability, we believe that you must conduct
8 - 1998 PAL Comments

I-8-29

monitoring sufficient to calculate emissions on a 12-month rolling total, which may require

better monitoring than that required under title V. (See volume I, 7.12.) In addition, we believe

that the PAL term should be 10 years, rather than the 5 years of the title V permit, although we

suggest that you and your reviewing authority coordinate the two so that the PAL is renewed

concurrently with every other title V permit renewal. (See volume I, 8.7.) We agree that the PAL

should be reviewed and adjusted at renewal, but as discussed above and in volume I, 7.8.2, not

as suggested by the commenter. In addition, the final rules provide for the PAL to be opened and

adjusted under certain circumstances.

We do not agree with the commenters who indicated that you should be able to meet your

PAL with ERCs that you purchase from other facilities. Use of ERCs would defeat the purpose

of PALs, which include capping your source’s emissions and encouraging you to implement

good controls and P2, thereby shifting production over time to less-polluting equipment.

8.7 Time Period for PAL Review

Comment:

8.7.1 Ten-Year Time Period for PAL Review

Four industry commenters (IV-D-210, 256, 273, 298) and one regulatory agency

commenter (IV-D-253) felt that 10 years is the appropriate time period for PAL review. One

industry commenter (IV-D-221) contended that the 10-year review of PALs should be restricted

to an administrative review for the purpose of ensuring accurate accounting.

The regulatory agency commenter (IV-D-253) emphasized the following: Ten years is

generally an appropriate period, as long as there is recognition of the need for necessary

adjustments to reflect any changes in environmental requirements that cannot be addressed by the

current terms of the PAL, or to reflect States' needs to demonstrate attainment when the current

terms of the PAL may obstruct such a demonstration. The commenter claimed that States must

have the flexibility to revisit PALs under certain defined circumstances, which would normally

require a source's permit to be revisited anyway. In the absence of such events, the commenter

claimed that it would be convenient to review a PAL every other time the title V permit is

renewed. The commenter stated stat that given possible delays in processing title V permits, it

may be appropriate to provide for expiration of the PAL after 12 years (if a set maximum term

for PALs is desired) to allow coordination with the title V cycle. The commenter noted that ten

years is generally appropriate for sources to do long-range planning and to have certainty

regarding what will be expected of them. The commenter believed that five years is too short; 

15 years is too long.

One of the industry commenters (IV-D-256) stated that 10 years is an appropriate period

to allow before any adjustments because it allows facilities adequate time to design, order, and
8 - 1998 PAL Comments

I-8-30

install any new or modified equipment, bring it up to full production, and recover costs. Another

industry commenter (IV-D-298) supported the 10-year PAL adjustment time period, but

requested EPA allow States to establish less frequent review periods depending on the

circumstances of individual sources.

8.7.2 Other Time Periods for PAL Review

STAPPA/ALAPCO (IV-D-259), four regulatory agency commenters (IV-D-255, 287,

305, 317), five industry commenters (IV-D-208, 279, 304, 306, 307), one environmental

commenter (IV-D-303), and one individual commenter (IV-D-218) supported time periods other

than 10 years for PAL review.

STAPPA/ALAPCO (IV-D-259), four regulatory agency commenters (IV-D-255, 287,

305, 317), one industry commenter (IV-D-208), one environmental commenter (IV-D-303), and

one individual commenter (IV-D-218) supported a time period of 5 years for PAL review. Three

commenters (IV-D-304, 306, 307) supported a period no shorter than 10 years.

One industry commenter (IV-D-208) said the length of a PAL should not exceed the

contemporaneous period EPA selects in the final NSR regulation changes. The commenter

stated that A 10-year period is not appropriate or fair; rather a 5-year look back and 5-year

overview of emissions should be used for PALs because it is a manageable time period to keep

records.

One individual commenter (IV-D-218) stated that if EPA insists on implementing the

PAL concept, then PALs should be either revised once every 5 years or the source owners should

be given the option of opting out of the PAL plan.

Four regulatory agencies (IV-D-255, 287, 305, 317), STAPPA/ALAPCO (IV-D-259), and

one industry commenter (IV-D-220) said that PAL review should be timed to occur in

conjunction with the title V permit reissuance every 5 years. One regulatory agency suggested

that implementation of the PAL should be carried out through and coincide with the title V

permit process for administrative efficiency. According to the commenter A new PAL could be

established upon renewal of the title V permit every 5 years, which is also the contemporaneous

period under PSD. In addition the new the commenter noted that PAL should be based on

application of the level of control at the end of the 5-year period to the highest calendar year

operating level during the 5-year period.

One regulatory agency commenter (IV-D-317) contended that the current proposal would

allow a facility to combine a PAL baseline set using the highest (one) emission year during the

last 10 years with a 10-year PAL, and thus potentially retain one-time high emission levels for 20

years. The commenter claimed that A 5-year permit reduces the maximum term to 15 years. The
8 - 1998 PAL Comments

I-8-31

commenter also stated that the 5 years ties review and renewal to an existing permit review

period.

One regulatory agency (IV-D-255) and STAPPA/ALAPCO (IV-D-259) recommended

PAL limits be adjusted whenever: (1) rules requiring new or additional control technology are

promulgated (for example, RACT, MACT, State SIP requirements); or (2) changes in calculation

methodology affect the limit. According to the commenter the permit holder should still be

responsible for complying with the regulatory limits and for keeping records demonstrating this

compliance.

One regulatory agency (IV-D-287) suggested that the 5-year schedule would more closely

correspond to the length of the operating permit and to the 5-year netting period for PSD. The

commenter claimed that using the last 10-year period of historical data to establish both the

initial and any subsequent downward revision of the PAL would be appropriate.

One environmental commenter (IV-D-303) said that the period over which such a cap

should achieve NSR/PSD performance levels should not exceed a reasonable amortization period

for the existing facilities at the site. Some of the most vocal industrial commenters of the PAL

concept have argued that their investment cycle is much more rapid than the 20 to 30-year

timescale that may have prevailed earlier in the 20th century. By definition, the commenter stated

that PALs would apply to plants with facilities that are already partially amortized. According to

the commenter given this fact and the need to respect the legal and policy grounds for

contemporaneity, the cap should decline to NSR/PSD performance levels over a period no longer

than 10 to 15 years.

Three industry commenters (IV-D-304, 306, 307) supported a period no shorter than 10

years. Two industry commenters (IV-D-304, 306) opposed adjustment, but stated that if EPA

does have a time period for adjustment, 10 years represents the minimum frequency for PAL

adjustments. The commenter noted that the electronics industry is prone to significant periodic

market shifts, which could last for more than 10 years, particularly for any particular source

(which may be held at low capacity if the economic climate favors shifting production to other

facilities in the company). In the final rule, the commenter requested that EPA provide PAL

review no more frequently than 10 years, with permitting authority discretion to establish less

frequent review depending on site-specific conditions. Legally, the commenter noted that EPA

has the discretion to define "contemporaneous." According to the commenter given that market

shifts in the electronics industry can exceed 10 years, it is reasonable to establish a system that

accommodates periods of 10 or more years. The other industry commenter (IV-D-307)

recommended that States should not be encouraged to establish a shorter period than 10 years for

reevaluating PALs, given unutilized capacity surrendered by a source when it accepts a PAL.

One utility commenter (IV-D-279) recommended that for shutdowns, unused plant

capacity, or situations where sources implement good controls or pollution prevention, PALs be
8 - 1998 PAL Comments

I-8-32

valid for periods reflective of the source's remaining life. The commenter claim that the

adjustment of PALs over shorter periods (for example, the 10-year period in EPA's proposal)

creates a disincentive to engage in the very activities that have a salutary effect on air quality.

8.7.3 Opposition to Time Period for PAL Review

Two industry commenters (IV-D-270, 315) objected to the 10-year time period. One

industry commenter (IV-D-315) did not believe that reviewing PAL levels every 10 years is

necessary because CAM and title V will verify future actual emissions. The commenter noted

that title V reviews the emissions every 5 years. According to the commenter adding 10-year

reviews for PALs just increases the paperwork burden. The commenter also noted that

applicability for major NSR is also based on 5 years. The commenter stated that most industries

have difficulty accurately anticipating beyond 5 years. According to the commenter ten years

will reduce the facility's ability to react to market demands. The other industry commenter

(IV-D-270) objected to the proposed 10-year "look forward" requirement, saying that 10 years is

not necessary to see the results of process changes.

Response:

After considering the comments, we have decided to go forward with a 10-year period for

PAL review. The mechanism for this review is a 10-year fixed term for the PAL. At the end of

10 years, the PAL expires unless you choose to renew it. See volume I, 8.10 for additional

information on PAL expiration and renewal.

We do not agree with the commenters who suggested a 5-year time period for PAL

review, consistent with title V permit renewal. We do not believe that requiring PALs to be

reviewed every 5 years provides industry with a sufficient period of regulatory certainty. We

also believe that while the overall administrative burden for you and the reviewing authority is

reduced if you are complying with a PAL, the establishment of a PAL requires an initial

commitment of substantial resources. Given this initial resource investment, we do not believe

that a 5-year, fixed term for a PAL provides you or your reviewing authority with an adequate

incentive to participate in the PAL system. Thus, in an effort to balance the need for regulatory

certainty, the administrative burden, and a desire to align the PAL review and renewal with the

title V permit renewal, we believe a fixed term of 10 years, the equivalent of two title V effective

terms, is most appropriate. 

You may elect to renew your PAL after 10 years, for a subsequent 10-year period, rather

than allow the PAL to expire. In order to align the PAL review and renewal process with the

title V permitting process, we suggest that you request that the reviewing authorities renew title

V permits concurrent with issuance of the initial PAL permit, regardless of how many years are

actually left on your title V permit.
8 - 1998 PAL Comments

1

Eastern Research Group Inc. Report on “Business Cycles in Major Emitting Source Industries” dated

September 25, 1997.

I-8-33

We agree with the commenters who stated that the PAL may need to be adjusted before

the end of its fixed term in some circumstances, such as to incorporate the effect of new

applicable requirements, to address air quality needs, or to correct the calculation methodology. 

Accordingly, the final rules include mandatory and discretionary reopenings for PAL

adjustments for just these sorts of situations. See volume I, 7.8.1 for additional detail on these

provisions.

We do not agree with the commenters who suggested that the PAL review period should

be tied to the 5-year contemporaneous period under major NSR, since we believe that the

concept of contemporaneity, as articulated in Alabama Power and as set forth in the regulations

governing major NSR, does not apply to PALs. To the extent such a concept has any application

in this context, we have also ensured that actuals PALs as adopted in the final rules are

consistent with the concept of contemporaneity. We believe that 10 years is a reasonable

contemporaneous period for PALs for the following two reasons. First, we believe that a

10-year period is practical and reasonable both for the reviewing authority and you for the

reasons outlined above. Second, a study conducted by Eastern Research Group, Inc.1

supported a 10-year look back to ensure that the normal business cycle would be captured

generally for any industry (Eastern Research Group Inc. Report on “Business Cycles in Major

Emitting Source Industries” dated September 25, 1997.) See volume I, 8.4 for more information

on our position on PALs and contemporaneity.

We do not agree with the commenters who indicated that a 10-year PAL review period is

burdensome, suggesting that 5 years is preferable because this is a more manageable period

over which to keep records and because most industries have difficulty accurately anticipating

beyond 5 years. We do not agree because most industry commenters preferred 10 years or more,

wishing to maximize regulatory certainty and minimize administrative burden. If you feel that

you cannot adequately anticipate your operations 10 years out, you may not be a good candidate

for a PAL. In addition, the final rules include provisions for increasing the PAL if you find

during its term that you need to make a change that cannot be accomplished under the PAL.

We do not agree with the commenter who stated that a 10-year PAL review is

burdensome and unnecessary because title V and CAM requirements will verify future actual

emissions on a 5-year schedule. See volume I, 7.12 for a discussion of monitoring for PALs. In

addition, as discussed in volume I, 7.8.2 and 8.6, we have concluded that a periodic PAL review

and adjustment is necessary if you wish to continue your PAL beyond 10 years. Typical title V

activities are not adequate for this exercise. A more extensive process every 10 years is one

price of maintaining the flexibility and regulatory certainty of a PAL. 
8 - 1998 PAL Comments

I-8-34

We agree with the commenter who noted that delays are possible in processing title V

permit renewals. However, we do not agree that it is necessary to extend the PAL effective

period to 12 years to allow coordination with the title V cycle. Instead, the final rules provide

that if you submit a complete PAL renewal application no later than 6 months before the

expiration date, your existing PAL continues until the renewed PAL is established.

We do not agree with the commenters who suggested that reviewing authorities should be

given discretion to extend the PAL review period beyond 10 years based on site-specific

conditions. However, the final PAL rules give the reviewing authority discretion to consider, in

setting the renewed PAL, any evidence that you present related to your baseline actual emissions

being representative of normal operations, such as evidence of a prolonged market shift in your

industry that has lasted longer than the previous 10 years, but that you believe is not permanent. 

We believe that some discretion in determining what is representative of actual emissions is

appropriate based, in part, on our experience with various pilot projects.

We do not agree with the commenter who stated that a PAL should be a declining

emissions cap that achieves BACT/LAER performance levels over a reasonable amortization

period for the existing units at the PAL facility. One of the primary goals of the NSR program is

to ensure that air quality is not significantly degraded in areas attaining the NAAQS and to

ensure that new emissions do not interfere with a State’s ability to meet the NAAQS in

nonattainment areas. We believe that the final PAL rules achieve this goal without specifically

providing for a declining emissions cap. In addition, we believe that PALs provide real

advantages to the environment as well as to you and the reviewing authority, as illustrated by the

pilot facilities we have discussed previously. Accordingly, we do not think it is sensible to set up

a PAL system that is so onerous that no sources will choose to take part. Such a system would

forego the potential environmental benefits of PALs and benefit no one.

8.8 Adjustments for Shutdowns or Dismantled Units

Comment:

8.8.1 Support for Adjustments for Shutdowns or Dismantled Units

Three utility industry commenters (IV-D-261, 278, 318), one regulatory agency

commenter (IV-D-216), and two industry commenters (IV-D-221, 254) gave at least qualified

support for adjustments for shutdowns or dismantled units.

Three utility industry commenters (IV-D-261, 278, 318) and two industry commenters

(IV-D-221, 25) stated that they support downward adjustment of PALs where emission

reductions attributable to shutdown or dismantled units are unused for at least 10 years.
8 - 1998 PAL Comments

I-8-35

One industry commenter (IV-D-254) supported a carefully crafted program for reviewing

and adjusting PALs under certain circumstances. The commenter required that A source which 

has permanently shut down an emissions unit, might forfeit all or a substantial part of the

emission reductions accruing from that shutdown if the source's actual emissions remain

substantially lower than its PAL limits for a long period, for example, 10 years.

The regulatory agency commenter (IV-D-216) agreed with EPA that the periodic

downward adjustment of PALs for the failure to use emissions associated with shutdown or

dismantled units is appropriate for air quality planning purposes.

One utility industry commenter (IV-D-318) requested that the EPA specify that only

permanent shutdowns or dismantlements be cause for downward adjustment of a PAL.

8.8.2 Opposition to Adjustments for Shutdowns or Dismantled Units

Ten industry commenters (IV-D-219, 260, 289, 293, 299, 301, 307, 311, 313, 315), three

regulatory agency commenters (IV-D-253, 255, 317), and one environmental commenter

(IV-D-303) opposed adjustments for shutdown or dismantled units.

Two industry commenters (IV-D-219, 315) said that taking away the emission “credits”

will result in facilities continuing to pollute at high levels to maintain an emissions cap. One

industry commenter (IV-D-219) said that emission credits should be available until a regulatory

action takes place to reduce these emissions on a case-by-case basis.

One regulatory agency (IV-D-255) and one industry (IV-D-301) commenter said that

adjustment for permanent shutdowns would be counterproductive and discourage facilities from

replacing less efficient emission units with more efficient ones. One industry commenter

(IV-D-299) urged EPA to allow a source to keep credits generated through replacement of old,

worn-out equipment with newer, less-polluting equipment or the retirement of an older unit. 

Otherwise, according to the commenter sources may find they are forced to continue running old

equipment on a limited basis to keep the credits.

One regulatory agency (IV-D-253) said that limiting the PAL adjustment to the narrow

situations described in the proposal would not be sufficient. The commenter asserted that A

source should not necessarily be "penalized" by downward adjustment for shutdown or

dismantled units if it has met other environmental stewardship criteria. Another regulatory

agency (IV-D-317) said that this would be difficult to implement, particularly at a complex

facility that would shut down several units and start up others.

One industry commenter (IV-D-315) said that these "credits" have value to the facility

and should not be taken away with a downward adjustment. If EPA insists that such adjustments

are necessary. The commenter requested that EPA should allow States to reset PALs at the new
8 - 1998 PAL Comments

I-8-36

level of emissions, plus the appropriate significance level. According to the commenter the State

would be required to ensure that any ongoing projects that are slated to utilize any excess credits

are accounted for and allowed under the new PAL. Conversely, the commenter claimed that the

facility should be obligated to inform the State of its plans to use the excess.

Two industry commenters (IV-D-260, 313) supported EPA's proposal that the PAL would

not be adjusted where a shutdown unit's emissions have been used elsewhere at the plant.

Two industry commenters (IV-D-250, 299) suggested that a facility be allowed to bank

the emission reductions from retiring a unit and said that the facility could notify the permitting

Agency, which would then adjust the cap, and all documentation of the reduction could be added

as an addendum letter to the permit. One industry commenter (IV-D-250) suggested that EPA

add a time period, such as 10 years, by which emissions credits need to be used.

Three industry commenters (IV-D-289, 299, 313) said that if EPA insists on needing PAL

adjustments, then adjustments should be limited to equipment that is shut down and dismantled

for a minimum of 10 years and should in no instance be used for equipment that is merely

underutilized.

One environmental commenter (IV-D-303) maintained that adjusting for unit shutdowns

and unused capacity would be easily gamed and invites criticism for creating perverse incentives

to maintain emissions at a high level to avoid "losing" them.

One industry commenter (IV-D-272) suggested that PAL adjustments for shutdown or

dismantled units is an option that should be left to the States to decide.

8.8.3 Methodology for Calculating Adjustments for Shutdowns or

Dismantled Units

Three regulatory agency commenters (IV-D-211, 216, 287), three industry commenters

(IV-D-221, 293, 307), and one utility industry commenter (IV-D-294) provided comments on the

methodology for calculating adjustments for shutdowns or dismantled units.

One regulatory agency commenter (IV-D-211) recommended against differentiating

between shutdowns and under-utilization of capacity because if shutdowns are treated more

harshly, sources will have an incentive to continue operating more polluting units. Another

regulatory agency commenter (IV-D-216) stated that EPA could follow the New Hampshire

Department of Environmental Services example of how to treat shutdown ERCs, which become

public credits and revert to the State, although there are procedures for the source to hold on to

the credits. The final regulatory agency commenter (IV-D-287) asked: [Is EPA] assuming the

PAL would be reduced by the PTE [of the shutdown or dismantled unit]?
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One industry commenter (IV-D-293) maintained that, assuming EPA adopts this

approach, the reduction should consume only the emissions capacity that is unused for the entire

life span of the PAL. The commenter furthermore maintained that the Agency could simplify the

accounting by creating a presumption that works against the forfeiture of emission capacity. The

other industry commenter (IV-D-307) stated that if an adjustment is required for units that are

shutdown or dismantled, the reduction should consume only unused emissions. According to the

commenter confiscation of all emissions relating to the shutdown or dismantled units would be

entirely unjustified. The commenter claim that it would be impractical to adjust a PAL based on

shutdowns because accounting for shutdown equipment and resultant increases in emissions

elsewhere in the plant would represent an almost overwhelming burden.

The utility industry commenter (IV-D-294) emphasized that EPA should only adjust a

PAL level downward to account for permanent shutdowns and dismantled units where the

associated emission reductions remain unused for greater than 10 years, or if a source has sold or

traded away any creditable emission rights through a Federal or State program. According to the

commenter EPA would consider a shutdown unit to be one that the source did not operate during

the 10-year life of the existing PAL. The commenter was concerned that this proposed definition

of shutdown unit would encompass shutdowns that are intended to be temporary. The

commenter urged EPA to allow sources to demonstrate that shutdowns lasting for more than 10

years were not intended to be permanent. Where sources can make such a demonstration, the

commenter requested EPA not adjust the PAL level downward to account for that shutdown.

One industry commenter (IV-D-221) requested clarification on whether shutdown credits

and shutdown reductions for the PAL will be based on allowable emissions, that is, the highest

actual emission from the unit over a 12-month period during the 10 years prior to shut-down,

plus an allowance for operating flexibility. 

8.8.4 Other Comments on Shutdowns or Dismantled Units

One regulatory agency (IV-D-287) and STAPPA/ALAPCO (IV-D-259) urged EPA to

consider the workload for State and local agencies to adjust PAL limits for unused capacity or

shutdowns. STAPPA/ALAPCO (IV-D-259) said that EPA should avoid unnecessary

complexities. The commenter examples of the complexities include: (1) sources should not be

allowed to switch back and forth between PALs and conventional NSR; (2) coordinate PALs

with title V permit renewal; (3) for practical enforceability, specify the ongoing compliance

determination method in the permit; and (4) EPA should consider workload for PAL adjustments

for unused capacity or shutdowns.

One industry commenter (IV-D-306) said that PALs should be adjusted only when

permitted units under the PAL are shutdown or dismantled and the associated emission

reductions remain unused for at least 10 years.
8 - 1998 PAL Comments

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Response:

We agree with the commenters who believe emissions from shutdown units (during the

PAL term) must be excluded from the baseline emissions when renewing a PAL. Under our

initial PAL setting and renewal provisions, the PAL level is calculated as the sum of the baseline

actual emissions (for all existing and new emissions units) plus significant level. When

establishing the actuals PAL level, only one consecutive 24-month period may be used to

determine the baseline actual emissions for all existing emissions units. Emissions associated

with units that were permanently shutdown after this 24-month period must be subtracted from

the PAL level. Emissions from units on which actual construction began or begins after the 24-

month period must be added to the PAL level in an amount equal to the potential to emit of the

units. This flexibility to reallocate emissions within the major stationary source is precisely the

flexibility that compliance with the PAL allows. However, if the facility intends to make the

emissions reductions federally enforceable for use as offsets, then the PAL permit must be

reopened immediately and the PAL adjusted by the amount of the emissions reductions.

 Additionally, the final rules allow your reviewing authority to consider potential

emissions from projects for which you are currently under binding contract. By this we mean to

allow the reviewing authority to include future projected emissions from any future project in

which you are actively engaged, including a modification to an existing emissions unit or an

addition of a new emissions unit. However, in no case may the reviewing authority renew your

PAL at a level that is higher than your existing PAL, unless you comply with the provisions for

increasing the PAL.

We considered, but did not adopt, an option to exclude emissions from PALs only if a unit 

did not operate at all during the 10-year life of the PAL. Under this option, the PAL would not

be adjusted downward if you utilized those emissions from the shutdown or dismantled units

elsewhere at your source (for example, by adding new emissions units or capacity, or by

increasing capacity utilization at existing emissions units). As we indicated in our proposal, we

believe it is too difficult to determine whether you have actually relied on these emissions

decreases in undertaking other activities at your source. We did not receive any comments

suggesting ways to overcome this identified problem.

We agree with the commenters who said that we should consider the administrative

burdens associated with PALs in adjusting for shutdowns during the PAL term. Accordingly, we

have limited PAL review and renewal to once every 10 years and suggested a mechanism for

coordinating PALs with title V permit renewal, as discussed above in volume I, 8.7. 

We agree that you should have the opportunity to demonstrate that a shutdown is not

intended to be permanent. The issue of whether an emissions unit is “permanently shutdown” is

discussed in the Administrator’s response to a petition objecting to an operating permit for a
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facility in Monroe, Louisiana. See Monroe Electric Generating Plant, Petition No. 6-99-2

(Adm’r 1999). A copy of this decision is in the Docket A-90-37 for the final rules. 

We do not agree that the overall issue of PAL adjustments for permanently shutdown or

dismantled emissions units should be left to the State. However, reviewing authorities are given

a great deal of discretion under the final rules to set the renewed PAL at the level that makes

sense for your facility after considering a wide range of factors, including but not limited to, air

quality needs, economic growth in your area and business cycles affecting operations at your

facility.

The final PAL rules do not preclude you from taking part in any emissions trading

program authorized under your State’s SIP. Thus, you may generate ERCs from shutdowns at

your source according to your State requirements. Note that the federally enforceable

requirement to permanently shutdown the unit for purposes of the trading program will

constitute a new applicable requirement that must be accounted for in the level of your PAL and

the title V permit . In addition, if the emissions reduction credits are to be used as offsets or

other title I program reductions, your reviewing authority must reopen the PAL permit and

reduce the PAL level by the amount of the emissions reductions, before they are creditable.

8.9 Adjustments for Unused Capacity

Comment:

8.9.1 Support for Adjustments for Unused Capacity

One utility industry commenter (IV-D-261) supported downward adjustment of PALs

where emission reductions from operation below the capacity levels used to establish the PAL

are unused for at least 10 years. 

8.9.2 Opposition to Adjustments for Unused Capacity

Sixteen industry commenters (IV-D-208, 219, 221, 250, 254, 260, 272, 289, 293, 298,

299, 301, 307, 311, 313, 315), three utility industry commenters (IV-D-278, 294, 318), one

environmental commenter (IV-D-303), and one regulatory agency commenter (IV-D-317)

opposed adjustment of PALs for unused capacity.

Six industry commenters (IV-D-208, 219, 221, 250, 254, 299) and one utility industry

commenter (IV-D-318) expressed concern that adjusting for unused capacity will result in a

forfeiture of a safe “operating margin” that is necessary for compliance. One industry

commenter (IV-D-208) said that for these limits to be adjusted downward to reflect a source's

non-use of an "operating margin" on emissions effectively would force a cutback on operation

because a source would have to reduce its operation to continue to have a safe margin below
8 - 1998 PAL Comments

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allowables to ensure compliance. Another industry commenter (IV-D-219) said that EPA will

render the PAL program ineffective by lowering PAL limits as a result of under-utilization. 

According to the commenter source must always operate below the PAL limit to remain in

compliance. One industry commenter (IV-D-254) would not support any downward adjustment

of PALs based on unused capacity unless there were safeguards against the confiscation of the

operating and emissions cushion necessary to thrive and grow. The commenter claimed that the

safeguards suggested in the NOA are too meager. One industry commenter (IV-D-250) said that

most sources retain a comfortable margin between "allowable" and "actual" emissions so that an

emergency situation cannot throw them out of compliance. The commenter claimed that a

adequate margin is also needed for back-up purposes. According to the commenter fear of losing

emission allowances would be a very big disincentive to PALs.

One industry (IV-D-221) and one utility industry commenter (IV-D-318) said that it

would penalize sources for shutdowns or curtailments, that, while extended, are intended to be

temporary.

Two industry commenters (IV-D-260, 313) supported EPA’s position that the PAL

should not be adjusted due to underutilization of units still under operation. While opposing

these adjustments overall, the commenters (IV-D-260, 313) suggested 10-year approaches for

determining utilization provide more flexibility that the current 2-year average approach. 

Nevertheless, the commenters (IV-D-260, 313) contended that these approaches may

compromise the operational viability of equipment.

One industry commenter (IV-D-221) stated that it is not appropriate to reduce a PAL

when the source voluntarily reduces its emissions. According to the commenter such reductions

should continue to be available for netting, NSR, sale, or for whatever the owner deems

appropriate within the law.

Two utility industry commenters (IV-D-278, 294) said that adjusting a PAL downward to

account for unused capacity is shortsighted and would severely limit operational flexibility. The

commenter claimed that if a facility were permitted and built with more than enough capacity for

present needs as a way to meet future demand, and the additional capacity went unused for 10

years, that capacity would be lost, regardless of the fact that operation at full capacity was already

approved under NSR at the start of the project. According to the commenter this would make a

PAL less attractive than standard NSR.

One industry commenter (IV-D-298) said that sources should always be able to maintain

allowables based on the use of controls that continue to qualify as BACT/LAER. By proposing

that PALs be adjusted in cases of a NAAQS violation or unused capacity, the commenter claimed

that EPA is singling out sources subject to PALs and creating an unreasonable double standard

that will undoubtedly discourage the use of PALs. According to the commenter if a source has

unused capacity under a PAL, it should be treated no differently than any other source in such a
8 - 1998 PAL Comments

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situation - allowable emission levels should not be adjusted except through a SIP process

authorizing adjustments for industrial sources generally.

One industry commenter (IV-D-301) said that companies would be encouraged to run at a

higher capacity than planned, so as not to lose allowable emissions under the PAL. The

commenter claimed that it once again would be unfair to take permitted emission credits from the

facility. One environmental commenter (IV-D-303) said that adjusting for unit shutdowns and

unused capacity would be easily gamed and invites criticism for creating perverse incentives to

maintain emissions at a high level to avoid "losing" them. One regulatory agency (IV-D-317)

said that the adjustment for unused capacity would require a significant time investment

identifying all the "changed" and "unchanged" units to determine whether to include those units

in an adjustment. 

One industry commenter (IV-D-311) stated that if a facility ever operated at the level that

was used to set the PAL, the facility should be allowed to return to that level without penalty. 

The commenter claimed that the approach suggested by EPA could cause a source to become

subject to major NSR without a modification. The commenter believe, this is contrary to the

intent of major NSR and does not support past practices.

One industry commenter (IV-D-315) contended that a facility should not be deprived of a

valuable property, and the opportunity to achieve maximum production level, maximum

efficiency and hopefully, profitability and creation of jobs.

8.9.3 Methodology for Calculating Adjustments for Unused Capacity

Four regulatory agency commenters (IV-D-211, 216, 253, 287) and six industry

commenters (IV-D-210, 272, 293, 299, 301, 307) provided comments on the methodology for

calculating adjustments for unused capacity.

One regulatory agency (IV-D-287) maintained that the most appropriate option for

reviewing and adjusting PALs is option 4, where the PAL would be reset using the same

approach as was used to initially set the PAL. Since the decrease in the PAL would only occur

after a 10-year period of under utilization, the commenter claimed that a revised PAL would

more closely reflect the actual operation of the installation.

One industry commenter (IV-D-210) suggested that EPA modify the adjustment process

from the proposed highest capacity utilization for a single 12-month period to a single 3-month

period, and urged EPA to adopt the 3-month time period for purposes of determining the highest

capacity utilization. One of the regulatory agency commenters (IV-D-253) stated that basing a

PAL adjustment on the highest capacity utilization at the entire source during a single 12-month

period within the past 10 years is not appropriate, and it would not necessarily provide a
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meaningful evaluation of the range of operation under the PAL, with appropriate emphasis on

recent years.

One industry commenter (IV-D-299) suggested the facility could identify when

underutilized units are no longer needed for operational purposes, such as back-up for electric

outages or possible market demand opportunities. The commenter claimed that the facility could

seek agency approval to retire the unit and, if desired, take credit for the reductions. In addition

the commenter claimed that the process could apply to a voluntary addition of control

technologies on units that are not legally required to have such controls. According to the

commenter credits could be made available for such reductions, and the cap could be adjusted

accordingly.

Another industry commenter (IV-D-301) believed that if EPA does adopt this option, it

should limit the downward adjustment to no more than 5 percent, and should not adjust the PAL

at all if the highest capacity utilization during the review period is within 20 percent of the

original utilization. Another regulatory agency commenter (IV-D-216) stated that the PAL

adjustment should be based on the highest capacity utilization at the entire source, not for each

individual unit, and the highest utilizations of the individual units may not occur simultaneously.

Another industry commenter (IV-D-293) believed that the proposed adjustment for

unused capacity might require sources to track the capacity utilization of each emissions unit

under the PAL for the entire life span of the PAL, which is a significant additional burden on

sources that reduces the attractiveness of PALs. If EPA promulgates the unused capacity

adjustment, the commenter requested that EPA should also promulgate provisions that will

ensure that an appropriate operating cushion exists after the adjustment is made. Otherwise,

according to the commenter the plant will probably be unable to operate at the PAL levels to

which it is legally entitled, owing to the need to maintain a compliance margin and to avoid

violations.

The final regulatory agency commenter (IV-D-211) recommended against differentiating

between shut downs and under-utilization of capacity. According to the commenter if shutdowns

are treated more harshly, sources will have an incentive to continue operating more polluting

units. The commenter noted that it was is evaluating less work-intensive options to adjust the

PAL. The difference between the capacity utilization and the PAL baseline could be evaluated,

according to the commenter and if the PAL baseline exceeds the capacity utilization by some

specified amount (for example, 100 tpy), the source would be required to submit a plan for use of

the PAL within a limited time period (for example, the next permit term), or some portion of the

unused PAL (for example, 50 percent) would be reduced. The commenter claimed that this

alternative would not provide as much operating cushion, could result in incentives to increase

emissions, and could result in higher work load for agencies.
8 - 1998 PAL Comments

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One industry commenter (IV-D-272) suggested leaving the decision to eliminate unused

capacity from a PAL by adjusting a PAL downward for the States to decide.

One industry commenter (IV-D-307) stated that the proposed approach is unacceptable,

and it would represent an unwarranted confiscation of capacity that might be needed in the

future, as the unit may return to high utilization simultaneously with high utilization at the

source’s other units.

8.9.4 Alternatives for Ensuring an Operating Cushion After an Adjustment

for Unused Capacity

Four industry commenters (IV-D-254, 260, 311, 313) provided comments on alternatives

for ensuring an operating cushion after an adjustment for unused capacity.

One of the industry commenters (IV-D-254) stated that the safeguards in the NOA are too

meager to ensure against the confiscation of substantial emission reductions from PAL sources,

and advocated increasing or decreasing the safeguard percentages, as appropriate, by at least a

factor of two. 

Two industry commenters (IV-D-260, 313) opposed these suggestions because they

would compromise important investments in equipment (that is, would not be adequate

safeguards). The last industry commenter (IV-D-311) stated that none of the four options

suggested by EPA are workable solutions and that the credits generated by a facility operating

below its PAL have value and should not be taken without compensation to the facility.

Response: 

After considering the comments on this and other potential adjustments, we have decided

to go forward with an integrated PAL adjustment system based directly on the level of baseline

actual emissions for the entire source during the previous 10 years . We have decided not to

finalize an adjustment tied specifically to unused capacity at each emissions unit. At the time of

renewal, it may be very difficult for a reviewing authority to distinguish the reason for a

decrease in your baseline actual emissions level. It could be because you have a loss of

capacity, aggressively applied emissions controls, a decrease in utilization, a desire to maintain

a compliance margin, or any of a number of other reasons. Accordingly, we believe that it

would be difficult to advise a reviewing authority to calculate adjustments based on unused

capacity. Therefore, in the final rules, the reviewing authority may renew the PAL at the same

level without consideration of any other factors if the baseline actual emissions of all the

emissions units at the source plus the significant level equals to or is greater than 80 % of the

PAL level. If this is not the case, then the reviewing authority would consider adjusting the PAL

level based on several factors including air quality planning needs, advances in control
8 - 1998 PAL Comments

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technology, etc. However, if the renewed PAL level is higher than the current PAL, the source

must comply with the PAL increase provisions in the final rules.

We agree with the commenters who believe that a unit-by-unit review and adjustment

based on capacity utilization would be labor intensive and inappropriate. We have opted instead

for a simpler and more manageable system based on source-wide baseline actual emissions as

the basis for any PAL adjustment.

One commenter suggested that sources should be able to maintain the right to emit at the

level of allowable emissions if they use controls that continue to qualify as BACT/LAER. This

option is available unit by unit through the Clean Unit provisions elsewhere in the final rules. 

We have not included it in the PAL rules. We are reserving the issue of allowables PALs for

future consideration.

We do not agree with the commenter who suggested that PAL adjustments for unused

capacity be based on a 3-month period in the previous 10 years. We believe that baseline actual

emissions are the appropriate starting point for evaluating potential PAL adjustments, and that

the PAL program should be consistent with the rest of the major NSR program in defining

baseline actual emissions. See volume I, 2.2 for the discussion of our reasoning for defining

baseline actual emissions based on a consecutive 24-month period in the previous 10 years.

We agree with the commenter who suggested that a single 12-month period is not

appropriate for evaluating capacity utilization at a source; we have finalized a 24-month period

as discussed above. 

As discussed in previous sections, the final PAL rules do not preclude you from taking

part in any emissions trading program authorized under your State’s SIP. Thus, you may

generate ERCs from unused capacity at your source according to your State requirements. 

However, your PAL will have to be reduced accordingly by the amount of the ERCs.

We do not agree that the overall issue of PAL adjustments for unused capacity should be

left to the State, and our final rules effectively require this adjustment as part of the unified

adjustment system based on baseline actual emissions. However, as noted above, reviewing

authorities are given a great deal of discretion under the final rules to set the renewed PAL at

the level that makes sense for your facility after considering a wide range of factors, including

business cycles affecting operations at your facility.
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8.10 PAL Expiration and Renewal

Comment:

8.10.1 Support for PAL Expiration and Renewal

Three regulatory agency commenters (IV-D-262, 287, 317), one industry commenter

(IV-D-311), and one utility industry commenter (IV-D-252) supported provisions for PAL

expiration and renewal.

One of the regulatory agency commenters (IV-D-262) emphasized that the process of

PAL adjustment must be simple and straightforward. The commenter (IV-D-262) recommended

the option of re-setting the PAL as though it were set initially at the end of the 10-year period. 

The commenter stated that the source should be given the option to either re-establish the PAL

for the entire facility or to allow the PAL to expire (but the PAL need not cover the entire plant). 

In situations where the re-establishment of the PAL was based on highest capacity utilization in

the preceding 10 years, the commenter claimed that an operating margin slightly lower than the

applicable significance threshold should be added to the actual emissions for the emission units

covered by the PAL.

The other regulatory agency commenter (IV-D-317) supported allowing the permitting

authority to consider the units under the PAL as a whole. The commenter posed several

questions regarding adopting traditional NSR after a PAL expires: How is NSR applicability

determined for units that are covered by the former PAL and that are modified? What if the

addition of a new unit increases utilization of existing units covered under the PAL? What about

replacing a unit covered by the former PAL? What about a physical change to a unit (formerly

under PAL) that qualifies as major NSR?

One industry commenter (IV-D-311) stated that if EPA was intent on making PALs lapse

after 10 years, the commenter (IV-D-311) generally supports the provisions for capacity

adjustments discussed in the NOA. However, the commenter (IV-D-311) did not agree that

EPA's proposal allows "sufficient flexibility to a source because it maintains the ability of the

source to operate the units previously covered under the PAL at their full rated capacity." [63 FR

39865]. According to the commenter this directly conflicts with the assertion that "once the PAL

limit expires as a major NSR applicability limit compliance with the PAL as an allowable limit

would still be required." The commenter claimed that there is simply no guarantee that the

original PAL was set at the unit's "full rated capacity."

8.10.2 Opposition to PAL Expiration and Renewal

Thirteen industry commenters (IV-D-208, 221, 250, 254, 260, 272, 293, 299, 301, 306,

307, 313, 315), three utility industry commenters (IV-D-278, 294, 318), STAPPA/ALAPCO
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(IV-D-259), four regulatory agency commenters (IV-D-222, 253, 255, 287), and one

environmental commenter (IV-D-303) opposed provisions for PAL expiration and renewal.

Five industry commenters (IV-D-250, 260, 299, 301, 313) and two utility industry

commenters (IV-D-278, 294) objected to the potential for ratcheting down the PAL emission

limit. Two industry commenters (IV-D-260, 313) said that EPA's proposal greatly reduces the

value of the PAL concept. According to the commenter to assure compliance with a PAL,

sources will have to operate so that their emissions are less than the PAL limit. The commenter

stated that the proposal would take away this operating margin every 10 years. Reducing actual

emissions to establish a new operating margin would provide a major cost disincentive to

renewing a PAL. Furthermore, the commenter claimed that in some cases the 10-year limit

would not provide adequate benefits to offset the cost of providing the initial operating margin

needed to justify establishing a PAL in the first place. Two industry commenters (IV-D-250,

299) asked whether a facility would lose its cap and need to start the process all over again. The

commenter maintains that sources could be forced to accept a severe operational limit in the

PAL, only to be thrown into NSR review on the whole facility after the 10-year PAL expires, if

the permitting agency then views the source as a new source. The commenter requested that

EPA revise its proposal to avoid this Catch-22 situation. One industry commenter (IV-D-301)

said that forcing a facility to renew a PAL based on the then-current actual operating conditions

and emissions would serve as a disincentive to implement emission reductions during the life of

the PAL. The commenter claimed that such voluntary decreases would harm the facility by

ratcheting down the baseline from which the PAL is established. The commenter noted that one

would therefore expect the source to keep emissions as high as possible to preserve its flexibility. 

Two utility industry commenters (IV-D-278, 294) said that reestablishing a PAL every 10 years

is shortsighted and would severely limit operational flexibility. One utility industry commenter

(IV-D-294) said that requiring sources to reestablish the PAL level every 10 years would allow

EPA to lower the cap to eliminate the operating cushion. According to the commenter this

downward trend would continue each time the PAL is reestablished. Consequently, the

commenter claimed that sources would be unlikely to use the PAL concept more than once if

they were required to establish a new, decreased PAL level every 10 years. In addition, the

commenter claimed that this option would seriously discourage P2 activities, pollution control

projects and efficiency improvements.

One industry commenter (IV-D-208) believed that the PAL should continue to be

enforceable despite expiration of whatever term EPA ultimately chooses.

One industry commenter (IV-D-254) suggested that terminating the PAL permit and

starting the PAL setting process all over again robs the source of much of the benefit of the

bargain in restricting its emissions in exchange for relief from permitting.

One industry commenter (IV-D-293) recommended that sources be allowed to leave the

PAL in place if they can show they did not make any changes at the units covered by the PAL
8 - 1998 PAL Comments

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that would have triggered NSR had the PAL not existed. The commenter noted that it is unclear

how baselines would be established after expiration of the PAL.

One industry commenter (IV-D-307) maintained that although this option for PAL

adjustment is preferable to the others discussed in the NOA, there is not a sufficient rationale 

for it.

One regulatory agency commenter (IV-D-253) said that sources that have operated well

within their PAL should be allowed to continue with a reasonable PAL at the time of renewal. 

The commenter felted that full recalibration based on actual emissions at the time of renewal

would not allow this to occur for those sources that are most entitled to such renewal, that is,

those that have substantially reduced emissions. In addition, the commenter noted that full

recalibration is appropriate only if a source has operated at or near its PAL.

One regulatory agency commenter (IV-D-255) opposed the concept of PALs expiring

after a 10-year limit unless the source renews the PAL. The commenter (IV-D-255) suggested

PALs should be reviewed every 5 years concurrent with title V permit renewal.

One environmental commenter (IV-D-303) said that allowing a PAL to terminate

presented opportunities for gaming that would frustrate clean air objectives. According to the

commenter if a PAL terminates after 10 years, sources could schedule construction of major

sources during the last several years of the PAL, avoid NSR/PSD review for all such sources, and

then proceed to operate them at fully ramped-up capacity immediately upon termination of the

PAL. The commenter claimed that EPA's supplemental notice does not address this fundamental

problem with the PAL concept. The commenter believed that a cap on plantwide emissions

should continue permanently (at NSR/PSD performance levels) so that sources constructed

during the PAL tenure are not allowed to create unreviewed emission increases.

One regulatory agency commenter (IV-D-287) and STAPPA/ALAPCO (IV-D-259) stated

that the EPA’s PAL approach should not allow sources to switch back and forth between PAL

and traditional major NSR applicability.

One industry commenter (IV-D-272) stated that PALs were expensive for the source and

permitting authority and that a termination of a PAL should not automatically require that a

subsequent PAL use an actual emissions baseline from the prior PAL period. 

One industry commenter (IV-D-250) questioned what happened to the PAL after the

periodic review for accounting purposes and questioned whether the source would lose their cap

and need to start the process all over again. 
8 - 1998 PAL Comments

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One industry commenter (IV-D-306) recommended that PAL adjustment be limited to

shutdowns and those circumstances clearly warranting a change, but not to under capacity,

expiration, and recalculation.

8.10.3 General Comments on PAL Expiration and Renewal

Two industry commenters (IV-D-296, 307) and one regulatory agency (IV-D-320)

provided general comments on PAL expiration and renewal. 

One industry commenter (IV-D-296) stated that it is essential that a smooth transition

between going from a PAL to traditional PSD be developed and that a facility that opts not to

renew a PAL should in no way be penalized. The other industry commenter (IV-D-307) asked

how a new baseline would be calculated if a PAL was renewed. According to the commenter the

NOA does not specify, as it should, that the new PAL level would be the highest level of the

previous 10 years. Rather, the NOA refers to a level "based on the last 10 years of operating

data."

One regulatory agency commenter (IV-D-320) requested clarification of the requirements

that apply to a source that lets a PAL expire. The regulatory agency (IV-D-320) questioned

whether the source would return to the applicable requirements that existed before the PAL was

established, and if so, what was the legal basis for reinstating those requirements. The 

regulatory agency (IV-D-320) also questioned whether both sets of requirements must be

incorporated into the PAL permit in case the source decides to let the PAL expire. The

regulatory agency commenter also questioned whether major NSR would be triggered by the

expiration of the PAL if the change from past actual emissions to the new allowed emissions is

"significant.”

Response:

In our 1998 NOA, we announced that we were considering, and requested comment on,

an approach that would require PALs to expire after 10 years unless you chose to renew the PAL

to reflect a new current baseline actual emissions. Our final rules require a PAL to be effective

for a period of 10 years. You may elect to renew your PAL after 10 years, for a subsequent 10-

year period, rather than allow the PAL to expire. 

We believe that a fixed-term PAL, that then either expires or must be renewed, benefits

both you and the environment. The environment benefits by assuring that you are committed to

the long-term management of your source wide emissions. On the other hand, it provides you

with an appropriate time of regulatory certainty and allows a sufficient period of time for

planning long term capital improvements.
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We believe a 10-year PAL term protects the environment and strikes a balance between

regulatory certainty and operational flexibility. For a detailed explanation of the reasons why

we believe a 10-year term for the initial and renewal PAL is appropriate, please see our

response in volume I, 8.7. 

We agree with the commenters who were concerned that the reviewing authority would

automatically “ratchet down” the baseline at renewal. We also agree with the commenters who

were concerned that the renewed PAL would not have a reasonable operating margin. 

Accordingly, our final rules set the renewed PAL using baseline actual emissions with no

automatic ratcheting. (For our renewal provisions, see Vol I , 8.9.4)

Today’s final rules do not contain specific provisions related to the issue of terminating a

PAL. Decisions about whether a PAL can or should be terminated will be handled between you

and your reviewing authority in accordance with the requirements of the applicable permitting

program.

We do not agree with the commenter who said that allowing PALs to expire would allow

you to schedule construction of major emissions units without major NSR during the last years

under the PAL, then proceed to operate them at fully ramped-up capacity immediately upon

termination of the PAL. As explained above, after the PAL expires, a source-wide multi-unit

emissions cap remains in place over your entire source until you and the reviewing authority

agree on a scheme for allocating the emissions to individual emissions units (or groups of units)

as allowable emissions limits.

We believe that our final PAL rules address the commenters’ requests for clear and

workable procedures for returning your source to major NSR if you decide to let your PAL

expire rather than renewing it. We believe that this system will allow a smooth transition. We

believe that our adopted PAL approach strikes the proper balance between: (1) providing you

with regulatory certainty, flexibility, and incentives to reduce emissions; and (2) addressing the

legitimate environmental and air quality planning concerns associated with PALs. 

In response to the commenter who requested clarification on the requirements that apply

when a PAL expires, (r)(4) limits need not be retained when your PAL becomes effective. 

Accordingly, the final rules provide that an actuals PAL may supersede enforceable permit limits

you may have previously taken to avoid the applicability of major NSR to new or modified

emissions units. [Under the major NSR regulations at 40 CFR 52.21(r)(4), 51.166(r)(2), and

51.165(a)(5)(ii), if you relax these limits, the units become subject to major NSR retroactively as

if these units had not yet been constructed]. Before removing the limits, your reviewing

authority should make sure that you are meeting all other regulatory requirements and that the

removal of the limits does not adversely impact the NAAQS or PSD increments. If your PAL

subsequently expires, the previous (r)(4) limits do not become applicable again.
8 - 1998 PAL Comments

I-8-50

Other types of unit-specific limits are not superseded by a PAL. The final rules do not

BACT and LAER limits or limits taken to generate netting credits suspends when your PAL

becomes effective.

8.11 Adjustments for Sources That Implement Good Controls or P2

Comment:

8.11.1 Appropriate to Adjust the PAL for Sources That Implement

Good Controls or P2

Two regulatory agency commenters (IV-D-253, 317) felt that it is appropriate to adjust

the PAL for sources that implement good controls or P2.

One of the regulatory agency commenters (IV-D-253) maintained that sources utilizing

good controls or P2 should be "rewarded," provided their emissions are well below the PAL

level. However, the commenter claimed that it is still necessary for a PAL to be adjusted

downward by some degree to memorialize the emission reductions that have occurred. 

According to the commenter the source should expect that some portion of the reduction may be

reflected in the future PAL, in exchange for the flexibility of the PAL. The commenter believed

that the adjustment should reasonably balance the conflicting policy interests of NSR,

administrative burden, efficiency, and source flexibility.

The other regulatory agency commenter (IV-D-317) suggested that sources be allowed to

keep credits for 50 percent of reductions achieved through these type of measures and, after

discounting the amount of emissions prevented, the permitting authority could add the prevented

emissions to the PAL baseline. 

8.11.2 Inappropriate to Adjust the PAL for Sources That Implement

Good Controls or P2

Fifteen industry commenters (IV-D-220, 256, 260, 264, 272, 289, 292, 293, 298, 301,

306, 307, 311, 313, 315), STAPPA/ALAPCO (IV-D-259), four regulatory agency commenters

(IV-D-216, 222, 255, 305), and four utility industry commenters (IV-D-261, 278, 294, 318) felt

that it is inappropriate to adjust the PAL for sources that implement good controls or P2. One

environmental commenter (IV-D-303) believed adjusting PALs for good control or P2 would

invite gaming, enforcement disputes, and huge program complexity.

 One regulatory agency commenter (IV-D-216) suggested it would be best to allow

sources to obtain credit for "good" or "innovative" controls or "P2" activities under separate

emission reduction trading rules, and not address these issues at all in this NSR Reform

rulemaking.
8 - 1998 PAL Comments

I-8-51

Another regulatory agency commenter (IV-D-255) opposed adjustments for sources that

already have good controls. According to the commenter this would provide a disincentive for

innovative control technologies.

One industry commenter (IV-D-256) stated that if a PAL facility can demonstrate that it

has controls equivalent to BACT or LAER in place, it should not be adjusted. The commenter

claimed that this would encourage P2 measures because the facility would not lose credit for

these efforts, and State agencies and the public would be assured the facility is well controlled.

STAPPA/ALAPCO (IV-D-259) and two industry commenters (IV-D-289, 313) said that

emission reductions effected at a source through implementation of pollution-prevention

activities should remain in control of the source owner/operator to use in maintaining the

emission "cap." Any other approach according to the commenter’s would certainly destroy any

remaining incentive to voluntarily make improvements. Two industry commenters (IV-D-260,

313) and one utility industry commenter (IV-D-318) contended that if a source goes beyond

requirements, those reductions should be available for future use. The utility industry commenter

(IV-D-318) contended that these activities may be undertaken to cost effectively free up

emissions for use elsewhere at a source, or to maintain a comfortable operating cushion, and that

companies should not be penalized for installing pollution controls, undertaking pollution control

activities, or making efficiency improvements.

Nine industry commenters (IV-D-220, 264, 298, 301, 306, 307, 311, 313, 315) and three

utility industry commenters (IV-D-261, 278, 294) said that EPA should ensure that sources not

be discouraged from employing voluntary or "good controls" or P2. According to the commenter

requiring a PAL adjustment under these circumstances could create a disincentive to engage in

these initiatives. One industry commenter (IV-D-315) said that to compete and be successful in

obtaining the needed capital and human resources [for P2 initiatives], the project must meet the

minimum return on net assets, and the project must demonstrate the creation of additional

emission credits for operational flexibility and future expansions. The commenter stated that A

PAL adjustment of good controls or P2 initiatives is a huge disincentive for implementing such

environmentally proactive projects. One industry commenter (IV-D-298) said that if a source

knows that its PAL will be adjusted if its emission levels are reduced, it will have an incentive to

maintain its emission levels near the PAL level. The commenter requested EPA to exclude

emission reductions resulting from the installation of good controls and implementation of P2

from the adjustment analysis. One utility industry commenter (IV-D-261) said that ratcheting

PALs downward at such facilities could serve to penalize well-controlled facilities and another

utility industry commenter (IV-D-278) said that adjusting PALs after installation of controls or

implementation of P2 is ill conceived and would be counterproductive.

One industry commenter (IV-D-292) said that such adjustments would be too severe and

would limit the ability to make changes necessary to meet production demands. Also, the

adjustments would unfairly limit production capacity and a company's economic growth.
8 - 1998 PAL Comments

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One industry commenter (IV-D-293) said that no PAL adjustment should be required

when the source got "offsets" in order to construct, since such sources have already compensated

in advance for any emission increases up to their full PAL allowables.

Two industry commenters (IV-D-272, 307) said that permitting authorities should retain

the discretion to identify the types of technologies and practices that would qualify for this

exemption.

One regulatory agency (IV-D-222) said that a source with a PAL should be able to

generate emission credits using P2 and similar "industrial ecology" principles that would offset

any potential emission increases. The commenter claimed that the generation of the credits must

meet the criteria set forth in EPA's emissions trading policy. Once the credits are established and

certified, the commenter stated that they could then be used to satisfy compliance with RACT,

BACT, and even MACT emissions rates.

One industry commenter (IV-D-307) and one utility industry commenter (IV-D-294) said

that the equivalent of a BACT or LAER determination is not required. One industry commenter

(IV-D-307) said that EPA should not insist on absolute consistency, since this would stifle

innovation. If EPA believes that greater consistency is desirable, the Agency can develop a

system for information-sharing to assist permitting authorities.

One environmental commenter (IV-D-303) generally stated that the proposed exception

from adjustment for “good controls” and “P2” has the aroma of apple pie but invites gaming,

enforcement disputes, and huge program complexity.

8.11.3 Appropriate Definition and Use of “Good Controls” Terminology

Three industry commenters (IV-D-260, 289, 313) felt that “good controls” terminology is

appropriately used and defined.

Two industry commenters (IV-D-260, 313) maintained that EPA’s concern over clear

terminology is unwarranted because, in addition to the large number of regulations that already

establish and define good controls, EPA has numerous guidance documents for both EPA and

industry to use in evaluating technology levels.

8.11.4 Inappropriate Definition and Use of “Good Controls” Terminology

Two industry commenters (IV-D-301, 306), one regulatory agency commenter

(IV-D-216), and one utility industry commenter (IV-D-261) maintained that the “good controls”

terminology is inappropriately used and defined.
8 - 1998 PAL Comments

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The regulatory agency commenter (IV-D-216) stated that the terms “good controls” and

“innovative controls” are too ambiguous, and they should be replaced with controls that are

equivalent to BACT or LAER because P2 initiatives should be required to at least be equivalent

to BACT or LAER. The utility industry commenter (IV-D-261) implied that the terms are not

well defined by emphasizing that it is important to define “good” and “innovative” controls and

“P2” with precision.

One of the industry commenters (IV-D-301) maintained that “good controls,” “innovative

technology,” and “P2 initiatives” are all defined too narrowly, and sources would be discouraged

from implementing useful measures that reduce emissions but do not meet the definitions of

EPA’s terms. The other industry commenter (IV-D-306) stated that uniform, one-size-fits-all

definitions of "good" controls and "P2" are not necessary. States should have latitude to develop

exclusions for these within certain general parameters that will allow States to reflect unique SIP

requirements, take into account State P2 laws, and respond to special needs of different

industries.

Response: 

After further consideration, we have not finalized PAL adjustments specific to sources

that implement good controls or P2. Instead, as discussed in volume I, 8.9, we have adopted an 

unified approach to PAL adjustments.

We agree with the commenters that mandating an adjustment at renewal, based solely on

current operations and emissions levels, would discourage the voluntary emissions reductions

the PAL is specifically designed to encourage. This would especially be the case when the

emission reductions are the result of voluntarily installing good controls or using P2 practices. 

We agree with commenters that both you and the environment should benefit from your

commitment to comply with a PAL. Should you engage in voluntary emissions reductions, we

believe you should be able to retain a portion of these emissions reductions and the

accompanying flexibility that encouraged you to make these reductions. At the time of renewal,

it may be very difficult for a reviewing authority to distinguish the reason for a decrease in your

baseline actual emissions level. Therefore, the final rules allow your reviewing authority to

renew the PAL at a level that is representative of baseline actual emissions. (See Vol. I, 8.9.4 for

our renewal provisions).

Moreover, the baseline provisions in our final rules provide additional flexibility. Your

choice of the baseline period for determining your baseline actual emissions at renewal can help

preserve your operating cushion in your renewed PAL. If you select a baseline period before the

implementation of good controls or P2 (and these measures are voluntary, not the result of a new

applicable requirement), the emission reductions will not be reflected in your baseline actual

emissions. Thus, you would be free to take advantage of these reductions throughout the term of

your renewed PAL. 
8 - 1998 PAL Comments

I-8-54

Alternatively, you can select a baseline period after you implemented voluntary emissions

reductions and after you increased emissions from other units (existing, modified, or new) to take

advantage of the headroom created under your PAL by your voluntary reductions. In any case,

any replacement or new emissions units at your source (that is, those units with less than 2 years

of operating history at renewal) go into the calculation of baseline actual emissions at their PTE

level, and the reviewing authority may include any projects for which you are under binding

contract at this level, as well. These provisions reward sources who voluntarily install good

controls or use P2 practices.

We agree with the commenter who suggested that it would be better to allow sources to

obtain credit for voluntary emissions reductions under separate emissions trading rules, and not

address these issues in this rulemaking. As discussed in previous sections, the final PAL rules do

not preclude you from taking part in any emissions trading program authorized under your

State’s SIP. Thus, you may generate ERCs from voluntary emissions reductions at your source

according to your State requirements. However, your PAL will have to be reduced accordingly

by the amount of the emissions reductions.. In addition, you cannot use such credits (your own

or purchased credits) to meet your PAL or to avoid increasing your PAL.

We do not agree with the commenter who suggested that you should be able to use ERCs

generated under a PAL to comply with RACT, BACT, and even MACT. This would be contrary

to existing emissions trading rules and policy, and would not be appropriate for these emissions

unit-specific control requirements. If the ERCs generated are sold as offsets to another source,

then the PAL must be adjusted by the amount of the emissions reductions.

One commenter suggested that your PAL should not be adjusted if you use controls that

are equivalent to BACT/LAER. We do not agree that this should be part of the PAL program. 

In the context of this rulemaking, we do not agree with the commenter who said that no

PAL adjustment should be required if you got offsets at the full PAL level in order to construct

your source. Under the major NSR program in nonattainment areas, you are not able to

preserve indefinitely your “rights” to emit at the full level of the offsets you have obtained. 

Instead, after your emissions units have operated long enough to establish actual emissions (that

is, for at least 2 years), you must evaluate any modifications to those units based on their

historic actual emissions, not on the level of offsets obtained for the units. For this rulemaking,

we believe it appropriate for the PAL provisions to be consistent with major NSR in this regard. 

Regarding the comments on the definition and use of “good controls” terminology, note

that the final rules do not use this term. Instead, we have decided on a simple, unified PAL

adjustment system that does not consider the implementation of good controls or P2 separately

from any other emissions reduction strategies. 
8 - 1998 PAL Comments

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8.12 Other Comments on PAL Adjustments

8.12.1 Comments on Listed “Appropriate Considerations” for PAL

Adjustment

Comment:

Thirteen industry commenters (IV-D-212, 221, 250, 256, 258, 260, 292, 298, 299, 304,

306, 313, 321) and four regulatory agency commenters (IV-D-222, 253, 255, 305) provided

comments on the “appropriate considerations” for PAL adjustment, listed in the NOA at 63 FR

39862, column 3.

Six industry commenters (IV-D-250, 256, 258, 298, 304, 306), and one regulatory agency

(IV-D-255) supported changes where technical errors have been made.

Eight industry commenters (IV-D-212, 221, 250, 256, 258, 260, 298, 313) and three

regulatory agencies (IV-D-222, 255, 305) supported changes when new requirements apply to the

PAL pollutant, such as RACT, NSPS, or SIP-required reductions. Three industry commenters

(IV-D-299, 304, 306) opposed changes when new requirements apply to the PAL pollutant, such

as RACT, NSPS, or SIP-required reductions. 

One industry commenter (IV-D-256) and one regulatory agency (IV-D-305) maintained

that it is appropriate to adjust a PAL downward when a new State regulation is adopted that is

applicable to a source covered under a PAL. One industry commenter (IV-D-256) said that the

adjustment should reflect the reductions attributable to that rule’s implementation. The

regulatory agency (IV-D-305) said that the downward adjustments are appropriate to allow States

the flexibility to reduce emission costs effectively. Two industry commenters (IV-D-260, 313)

supported EPA’s position that voluntary reductions should not be used to circumvent underlying

base regulatory requirements and, therefore, the adjustment to any previous PAL limit should

reflect only the change in stringency level of newly issued regulations.

One industry commenter (IV-D-299) stated that EPA proposes to reopen the PAL to

make unspecified technical corrections or to apply RACT to the source, and that this would

eliminate the benefit of a PAL. The commenter maintained that businesses need to have some

minimal level of predictability for planning, and EPA’s proposal would leave the regulated

community wondering what is to be gained by a PAL if it can be changed for so many reasons. 

Two industry commenters (IV-D-304, 306) did not agree that PALs necessarily should be

adjusted when rules issued under other Act programs require reductions in a PAL pollutant. 

Because past actual emissions are used to set the PAL, the allowable emissions of the units

covered by the PAL have no direct or necessary bearing on the resulting limitation.
8 - 1998 PAL Comments

I-8-56

One industry commenter (IV-D-258) and one regulatory agency (IV-D-255) supported

changes where emission reductions below PAL levels are used for offsets.

One non-utility industry commenter (IV-D-258) supported changes for permanent

shutdowns where the State has the authority to remove permanent shutdowns from the emissions

inventory after a certain time period. One of the regulatory agency commenters (IV-D-255)

disagreed with adjustment of PALs for permanent shutdowns of sources and felt that it is

counterproductive and discourages facilities from replacing less efficient emission units with

more efficient ones. (The commenter did not differentiate between shutdowns in EPA's list of

"appropriate considerations" and other shutdowns.) 

Two industry commenters (IV-D-258, 321) and one regulatory agency (IV-D-255)

supported changes when any changes (though consistent with the PAL) might cause or contribute

to a violation of any NAAQS or PSD increment or would have an adverse impact on air quality

related values. One industry commenter (IV-D-292) said that PALs should not be adjusted for

regional violations of NAAQS that are not caused by the PAL-permitted source. Such

adjustments would be too severe and would limit the ability to make changes necessary to meet

production demands. Also, the commenter claimed that it would unfairly limit production

capacity and a company's economic growth. 

One industry commenter (IV-D-321) said that the only time to consider changing the PAL

is when there is a change in the NAAQS or in the State air quality plan, such as: (1) a change in

NAAQS or other environmental goals; (2) a change in the emission inventory; (3) a change from

attainment to nonattainment; or (4) a change from nonattainment to attainment. According to the

commenter if the air quality control agency determines that it is necessary to adjust a PAL to

attain or maintain the NAAQS, the PAL should be reviewed and adjusted at that time. If a new

NAAQS is adopted, the commenter claimed that the air quality control agency should review the

PAL to ensure attainment and maintenance of the NAAQS. The commenter noted that other

environmental goals may also lead to periodic review. The commenter also believed that if the

emission inventory changes significantly, the air quality control agency should review the PAL as

part of the planning process. The commenter claimed that A new major source can approach a

PAL facility and negotiate a contract to lower the PAL so the new source can locate there.

One industry commenter (IV-D-258) said that any grounds outside of the five

“appropriate considerations” for adjusting PALs downward are unwarranted confiscation of

production capacity.

One regulatory agency commenter (IV-D-253) believed that PALs must be revisited if

"programmatic" rules are adopted that may require reduced emissions, and that [besides MACT]

the other example of such rules are those adopted to establish new emission limits as part of

attainment strategies, and it should be recognized that no reduction in the PAL may be needed. 
8 - 1998 PAL Comments

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Response:

See volume I, 7.8.1 for a discussion of PAL adjustments for technical errors, new

applicable requirements, offsets, and preventing violations of any NAAQS or PSD increment. 

See volume I, 8.8 for a discussion of PAL adjustments for shutdown emissions units.

We agree with the commenters who indicated that changes under the PAL should receive

appropriate review to ensure that they do not cause or contribute to a violation of any NAAQS or

PSD increment, or cause an adverse impact on AQRVs in a Class I area. We believe that we can

rely on the reviewing authority’s existing programs for addressing air quality issues resulting

from changes under your PAL. See volume I, 7.10 for more on this topic.

8.12.2 Additional PAL Adjustment Considerations

Three regulatory agency commenters (IV-D-222, 255, 305), STAPPA/ALAPCO

(IV-D-259), six industry commenters (IV-D-272, 289, 292, 304, 306,313), and two utility

industry commenters (IV-D-278, 294) provided additional PAL adjustment considerations.

Comment:

One of the regulatory agency commenters (IV-D-255) maintained that a PAL should be

adjusted when a facility with a PAL completely changes the nature of its business, for example, a

flexographic printing facility with a VOC PAL limit changing its business to metal furniture

coating.

Response:

While our final rules do not specifically address the situation where a facility completely

changes the nature of its business, we believe the provisions for determining baseline actual

emissions address the commenter’s concerns. There are at least two ways in which you could

change your existing emissions units over the course of time that would affect your ability to use

the 10-year look back period. You could replace the existing units (by either reconstructing

them, as defined under 40 CFR 60.15, or by shutting them down and replacing them), or you

could make other physical changes or operational changes that would fall within the definition

of a modification. While such issues may not be unique under our final rules, because we are

adopting a longer look back period, it may be more common for an emissions unit to have

undergone changes during the course of a 10-year period. 

Your ability to use any consecutive 24 months in the last 10 years will be limited if your

changes involved replacement of an emissions unit. In contrast, you will have full use of any

period within the past 10 years despite modifications you may make to such emissions unit

during that 10-year period. 
8 - 1998 PAL Comments

I-8-58

For example, you owned and operated a flexographic printing facility and you

reconstructed several existing emissions units at the facility to allow you to switch to metal

furniture coating four years ago. Now you wish to make additional changes to your emissions

units that may lead to an increase in emissions; thus, you must select a consecutive 24-month

period to establish baseline actual emissions. Under our final rules, you would be precluded

from going back more than 4 years because your change 4 years ago involved a replacement of

the unit used for flexographic printing. 

In contrast, for the following situation, nothing in our final rules would prohibit you from

using any consecutive 24 months in the past 10-year period, provided you have adequate source

records. You are a car manufacturer, and 7 years ago you produced compact cars but 3 years

ago you modified your existing production units to accommodate the production of sports utility

vehicles (SUV). No units were reconstructed or otherwise replaced to accomplish this

conversion. Under our new requirements, because the existing emissions units associated with

your operations were modified, but not shut down or replaced, you would still be able use the

emissions from any consecutive 24-month period in the past 10 years to establish your baseline

actual emissions if there are no other legal constraints that would prevent you from operating

(or emitting) at this average rate today. 

Comment:

Two regulatory agency commenters (IV-D-222, 255) and STAPPA/ALAPCO (IV-D-259)

stated that PALs should be adjusted when changes in calculation methodology affect the limit. 

One regulatory agency (IV-D-222) suggested limiting adjustments to improvements in the

precision and accuracy of techniques or methods used to determine the initial PAL baseline. The

commenter (IV-D-222) recommended allowing only one growth allowance at the initial setting

of the PAL.

Response:

We agree with the commenters that the PAL should be adjusted when changes in

calculation methodology affect the limit. See volume I, 7.8.1 for more on this topic. We agree

with the commenter who recommended including only one growth allowance (that is, significant

level) in the initial setting of the PAL. See volume I, 7.4 for more on setting the initial PAL level.

Comment:

Two utility industry commenters (IV-D-278, 294) emphasized that EPA should adjust a

PAL to account for emission reductions that have been sold or otherwise transferred through

emission credit programs. The utility industry commenter (IV-D-294) said that in such a

situation the source clearly would be prohibited from continuing to use these emissions.
8 - 1998 PAL Comments

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Response:

We agree with the commenters who said that the PAL should be adjusted to account for

ERCs that have been sold or otherwise transferred through emissions credit programs. The final

rules provide that the PAL must be reopened and adjusted when you create federally enforceable

offsets. In addition, enforceable limits taken for purposes of other emissions trading programs

can be considered “newly applicable requirements;” the reviewing authority has discretion to

reopen the PAL to adjust for these requirements or to make the adjustment at the next title V

permit or PAL renewal, whichever comes first.

Comment:

One regulatory agency (IV-D-305) and one industry commenter (IV-D-306) stated that a

mandatory PAL adjustment would apply when a source seeks to expand beyond the PAL limit. 

The regulatory agency (IV-D-305) said that if the new PAL exceeded the original or a succeeding

PAL by a significant amount, as currently defined, the new PAL should be subject to NSR.

Response:

We agree that a new PAL must be established at the time you seek to increase the PAL. 

The final rules require major NSR review for any increase in the level of your PAL because the

PAL is initially set to include the significant level for the PAL pollutant. See volume I, 7.7.1.1

for a discussion of increasing the PAL and the applicability of major NSR when the PAL is

increased. 

Comment:

Two industry commenters (IV-D-304, 306) said that EPA should make clear that

permitting authorities may establish and adjust PALs using SIP-approved minor NSR programs

or EPA-approved part 70 programs. One regulatory agency commenter (IV-D-222) and one

industry commenter (IV-D-250) recommended that PAL adjustments be linked to title V permit

renewal.

Response:

We agree with the commenters and our final rules allow PALs to be established using

SIP-approved minor NSR programs and title V permits.

Although the requirements associated with your PAL must be incorporated into your

title V permit (along with all other requirements applicable to your source under the CAA) the

title V permit cannot be used to create those requirements. The title V permit, with limited

exceptions, may only record the requirements created under other programs. Thus, under the
8 - 1998 PAL Comments

I-8-60

final rules, the reviewing authority establishes your PAL in a federally enforceable permit using

its minor NSR construction permit process, the major NSR construction permit process, or

another SIP-approved operating permit process, and eventually rolls these requirements into

your title V operating permit. 

Subsequent mandatory and discretionary PAL adjustments and PAL renewals must be

effected through the same types of permitting programs that are used to establish the PAL,

although to minimize administrative burden we recommend that you coordinate these permit

actions with the title V processes necessary to incorporate the PAL changes into your title V

permit. To ease this coordination, the final rules allow the reviewing authority to wait until the

next title V permit or PAL renewal, whichever comes first, to make discretionary adjustments to

your PAL. To further minimize administrative burden, we suggest that you request that your

reviewing authority renew your title V permit concurrently with issuance of your PAL in order to

align the two processes together for subsequent PAL renewals.

Comment:

One industry commenter (IV-D-272) recommended that PAL reevaluation and adjustment

matters be left to the States to decide.

Response:

We do not agree that the overall issue of PAL adjustments should be left to the State. For

certain types of changes at your source, the final rules require an adjustment, although in some

cases the reviewing authority has discretion to postpone the adjustment until the next title V

permit or PAL renewal, whichever comes first. See volume I, 7.8.1 for more discussion on these

mandatory and discretionary PAL adjustments. However, reviewing authorities are given a

great deal of discretion under the final rules to set the renewed PAL at the level that makes sense

for your facility. See volume I, 7.8.2 and 8.6 for additional discussion of PAL adjustments at

renewal.

Comment:

Two industry commenters (IV-D-289, 313) suggested that if EPA tightens the PAL

netting process by tying the validity of offsets to the "contemporaneous" period, the rules should

also allow "less than significant" increases in the PAL over similar "contemporaneous" periods. 

The commenters (IV-D-289, 313) explained that such a provision would make the use of PALs

feasible for companies that have the potential for, or do not wish to forgo the potential for,

growth at a site.
8 - 1998 PAL Comments

I-8-61

Response:

We do not agree with the commenters who believe that “less than significant increases”

should be allowed for a PAL source, since the significant level is already included in the PAL

level, when a PAL is established. Nevertheless, the final rules allow for the PAL to be increased

in mid-term. If you wish to increase the level of your PAL by any amount, the final rules require

major NSR review of the emissions units involved in this “PAL major modification.” See volume

I, 7.7.1.1 for more on increasing your PAL.

8.13 Comments Not Directly Related To The NOA

Many commenters submitted comments that were not directly related to the topics in the

NOA. Seventeen industry commenters (IV-D-221, 256, 263, 265, 270, 289, 292, 293, 298, 301,

302, 304, 306, 307, 310, 311, 313), STAPPA/ALAPCO (IV-D-259), eight regulatory agency

commenters (IV-D-211, 222, 253, 255, 262, 287, 305, 317), and two environmental commenters

(IV-D-291, 303) had specific comments on aspects of PALs that were not addressed in the NOA. 

Our responses related to many of these topics are located in volume I, chapter 7 of this document.

Comment:

One regulatory agency (IV-D-211) requested that EPA allow successful programs like

Oregon's to be retained, and to be improved upon, while not requiring complete adherence to the

PAL concept. According to the commenter an option would be to grandfather the existing

Oregon Plantwide Emission Limit (PEL) program. The commenter claimed that requiring

Oregon to change to the PAL would be extremely disruptive of that State’s program.

Response:

See volume I, 7.6.8.

Comment:

STAPPA/ALAPCO (IV-D-259) and one regulatory agency (IV-D-211) were concerned

about the additional work load impacts. Specifically, STAPPA/ALAPCO (IV-D-259) and the

regulatory agency (IV-D-211) commented that EPA should evaluate the work load impacts of the

PAL on permitting authorities, there needs to be clarity about which increases are subject to

control requirements, it must be possible to assess compliance with the PAL on an ongoing basis,

and all requirements within the PAL program must be consistent and consistent with SIP

assumptions.
8 - 1998 PAL Comments

I-8-62

Response:

We agree that the work load associated with PALs for you and the reviewing authority is

an important consideration, and we finalized the PAL rules to minimize that work load. As

discussed in previous sections, the final rules set the PAL period at 10 years to give you and the

reviewing authority a long enough period of regulatory certainty and freedom from major NSR

permitting requirements to make establishing and renewing the PAL worthwhile. In addition,

the 10-year term and the discretionary PAL adjustments allow most PAL actions to be made in

conjunction with title V permit renewals, reducing administrative burden. Finally, the system for

periodic PAL review and adjustments in the final rules is a simple, unified approach based on

the baseline actual emissions for your source over the previous 10 years, without labor-intensive

individual treatment for different types of emissions reductions that have occurred over the

course of the PAL term.

Comment:

Three industry commenters (IV-D-250, 265, 310), one utility industry commenter

(IV-D-269), and one regulatory agency (IV-D-211) commented on whether PALs should be

voluntary. One regulatory agency (IV-D-211) recommended that PALs be used on all facilities

in a geographic area, and not on a plant-by-plant basis. Three industry commenters (IV-D-250,

265, 310) and one utility industry commenter (IV-D-269) suggested that participation by sources

should be strictly voluntary.

Response:

See volume I, 7.3.

Comment:

Two industry commenters (IV-D-263, 292) said that the PAL need not cover the entire

source, but could apply to a group of similar emission units. For example, according to one of

the commenters (IV-D-263), if a PAL is established for glass furnaces, it must include all glass

furnaces but not necessarily the support sources such as boilers. One industry commenter

(IV-D-292) said that PALs should not be issued strictly as a control on plant-wide emissions. 

Instead, the commenter supported a more diversified PAL program that would allow portions of

a facility, such as integrated processes or emission units, to be permitted under a PAL. 

Two other industry commenters (IV-D-265, 310) said that the PAL was too narrowly

defined and should be revised to include individual emission units or groups of units. The

industry commenters (IV-D-265, 310) explained that an emissions cap can be applied to an entire

emission source or to separate emission units in the same manner that EPA currently proposes

under the Clean Unit exemption. The industry commenters (IV-D-265, 310) further explained
8 - 1998 PAL Comments

I-8-63

that this would be useful for mines, smelters, and similar sources with unquantifiable fugitive

emissions that make determining plantwide emissions impossible, particularly for purposes of

determining compliance with an emissions cap.

Response:

See volume I, 7.11.

Comment:

One regulatory agency commenter (IV-D-222) suggested adding the "growth allowance"

to the initial baseline, and suggested that the growth allowance plus the baseline equals the PAL. 

Response:

See volume I, 7.4.

Comment:

Two industry commenters (IV-D-292, 311) said that PALs should be established based on

a source's current allowable limits. The commenter claimed that this would allow sources added

operational flexibility so long as they remain within their permitted limits. Two industry

commenters (IV-D-220, 313) recommended using either permitted or potential emissions when

establishing a PAL. One industry commenter (IV-D-220) made this recommendation because it

would not penalize the source for under-utilization (for example, in the case of pollution control

project). The other industry commenter (IV-D-313) suggested that the PAL constructed in this

manner could be an acceptable alternative to the potential-to-potential applicability test.

Response:

See volume I, 7.5.

Comment:

One industry commenter (IV-D-221) suggested that, in those cases in which a PAL was in

effect, minor changes should be allowed with only a simple administrative report showing the

changed emissions and the unit(s) in question. One regulatory agency (IV-D-255) said that EPA

should promulgate consistent notification procedures to provide a mechanism for a facility to tell

the EPA when a change in plant operation has occurred. The commenter claimed that the notice

requirements should be commensurate to the level of change being made.
8 - 1998 PAL Comments

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Response:

See volume I, 7.15.1.

Comment:

One regulatory agency (IV-D-253) asked if sources under PALs must continue to comply

with underlying requirements, such as RACT and once-in/always-in provisions. The regulatory

agency (IV-D-253) explained that adherence to these concepts discourages P2 and undermines

the very purpose of PALs, which is granting flexibility in return for accelerated improvement of

the environment. The regulatory agency (IV-D-253) recommended that sources with PALs not

be mandated to continue to meet traditional requirements so long as the PAL remains in effect.

Response:

See volume I, 7.8.1.

Comment:

One regulatory agency (IV-D-255) said that if a source undergoes a modification that

does not increase its emissions above the PAL, additional control requirements beyond that

which the modification would be subject (NSPS, RACT, etc.) would be inappropriate. The

commenter further stated that each PAL must cover all emission units, including exempt and

trivial activities.

Response:

Regarding modifications that do not increase emissions to or above the PAL, see volume

I, 7.7.3. We agree that the PAL is intended to be a source-wide emissions cap, extending over all

emissions units at your source. However, the degree of monitoring that is appropriate for

tracking emissions varies with the size of the unit. See volume I, 7.12 for information on

appropriate monitoring. 

Comment:

One industry commenter (IV-D-256) recommended that EPA encourage States to provide

PAL facilities with relief from minor NSR as long as the PAL is met. The commenter requested

EPA to encourage States to pre-approve, certain changes when the PAL is set, that are common

to the source, that would further reduce delays for regulatory review and focus permit reviews on

those changes that clearly need to be reviewed. The commenter believed PAL levels should be

based on allowable emissions instead of actual emissions when a source has: (1) gone through

LAER and offsets review or netted out of NSR with enforceable limits going into effect after
8 - 1998 PAL Comments

I-8-65

1990; or (2) gone through a PSD review recently. For other facilities, the commenter believed

that it is reasonable for PALs to be based on recent emissions plus a reasonable operating margin.

Response:

Regarding preapproval of changes at your source and the relationship between PALs and

State minor NSR programs, see volume I, 7.6.1 and 7.7.3. Regarding PALs based on allowable

emissions, see volume I, 7.5.1. Regarding setting PALs based on actual emissions, see volume

I, 7.4. 

Comment:

STAPPA/ALAPCO (IV-D-259) disagreed that new units are not required to undergo

major NSR if the PAL is not exceeded. STAPPA/ALAPCO (IV-D-259) believed this would

undermine (without adequate justification) the principles that the best time to install controls is

during construction and that NSR is a preconstruction program to avoid equity-in-the-ground

issues.

STAPPA/ALAPCO (IV-D-259) and two regulatory agencies (IV-D-287, 317)

recommended that BACT/LAER apply to new units at the time of construction. 

STAPPA/ALAPCO suggested that only changes to existing equipment that do not exceed the

PAL should avoid BACT/LAER. STAPPA/ALAPCO (IV-D-259) and the two regulatory

agencies (IV-D-287, 317) explained that if EPA rejects this approach, facilities that exceed PALs

should apply BACT/LAER on all emission units associated with the project that caused the PAL

exceedance. According to the commenter units applying BACT should be held outside the PAL

one or two years to establish past actual emissions. However, the commenter claimed that

BACT/LAER should not be required for units that have not been physically modified. The

commenter claimed that if EPA exempts new units under a PAL from BACT/LAER, EPA should

clarify whether (when a source exceeds its PAL) BACT/LAER applies to all emission units, or

only to modified ones. The commenter noted that if a source exceeds its PAL, it is unclear

whether it must apply the current BACT/LAER or the BACT/LAER that would have applied at

the time of the modification. The regulatory agency (IV-D-287) said that allowing a facility to

add a new emitting unit without requiring up-front BACT or LAER will assume that status quo is

the goal and essentially provide a permanent allocation of the air resource to the facility. 

According to the commenter this will also remove citizen input from the NSR process until the

facility exceeds their PAL. Another regulatory agency (IV-D-317) suggested that facilities have

the option to install new units "outside the PAL." The commenter claimed that adding such units

would trigger a major modification under the existing NSR rules, so the facility would be

required to apply the appropriate controls -- BACT or LAER – to the units built outside the PAL,

explained the regulatory agency (IV-D-317). Further, the regulatory agency (IV-D-317) believed

that a facility could modify a unit within the PAL and take it outside the PAL. The regulatory
8 - 1998 PAL Comments

I-8-66

agency (IV-D-317) contended that this action is a major modification and the facility must

comply with BACT/LAER.

STAPPA/ALAPCO (IV-D-259) suggested that PALs be applied equally to increases and

decreases. STAPPA/ALAPCO (IV-D-259) explained that because older reductions can be used

to avoid NSR, older increases must be subject to NSR once triggered. STAPPA/ALAPCO

(IV-D-259) also stated that retrofit controls must be applied to older increases that contributed to

exceeding the PAL. Additionally, STAPPA/ALAPCO (IV-D-259) explained that some agencies

with PAL experience had indicated that this provides a powerful incentive for further reductions

to avoid NSR. Also, STAPPA believes that if the PAL baseline is set for individual units (which

STAPPA/ALAPCO (IV-D-259) did not recommend), the facility should not be permitted to net

between these units.

Response:

Regarding control requirements for new units under a PAL, see volume I, 7.7.2. 

Regarding emissions increases to or above the level of the PAL, see volume I, 7.7.1.1. 

Regarding establishing and functioning of the PAL, see volume I, 7.4. Regarding PALs for

individual units, see volume I, 7.11.

We do not agree that you have the option to add new units “outside the PAL” or modify a

unit under the PAL and take it outside the PAL. The PAL is intended remain a source-wide cap

throughout its term. However, the final rules allow you to increase your PAL during its term if

necessary. (See volume I, 7.7.1.1.)

Comment:

One environmental commenter (IV-D-303) contended that the most straightforward,

protective, and legally defensible approach was to require commitment to a declining cap as the

eligibility criterion for a PAL. The commenter noted that the concept is not an approach that

EPA is mandated to adopt. The commenter claimed that EPA has ample authority to condition

the availability of a PAL on criteria that are designed to be protective of the emission reducing

objectives of the PSD/NSR programs and supportive of other CAA goals. Rather than using a

static baseline based on excessive historical emissions, the commented requested that EPA

require a PAL limitation that begins with current emission levels (average of the immediately

preceding 2-year period) and that declines annually over a reasonable period to an emission level

that reflects the application of NSR/PSD performance standards to the plant as a whole.

Response:

We do not agree with the commenter that a PAL should be a declining emissions cap that

achieves BACT/LAER performance levels over a reasonable period for the existing units at the
8 - 1998 PAL Comments

I-8-67

PAL facility. One of the primary goals of the NSR program is to ensure that air quality is not

significantly degraded in areas attaining the NAAQS and to ensure that new emissions do not

interfere with a State’s ability to meet the NAAQS in nonattainment areas. We believe that the

final PAL rules achieve this goal without specifically providing for a declining emissions cap. In

addition, we believe that PALs provide real advantages to the environment as well as to you and

the reviewing authority, as illustrated by the pilot facilities we have discussed previously. 

Accordingly, we do not think it is sensible to set up a PAL system that is so onerous that no

sources will choose to take part. Such a system would forego the potential environmental

benefits of PALs and benefit no one.

Comment:

One industry commenter (IV-D-265) said that the NOA properly recognizes that PALs

are a form of "allowable-to-allowable" accounting, as are the Clean Unit and Clean Facility

exclusions. According to the commenter, the Clean Unit and Clean Facility exclusions should be

merged into the PAL approach, omitting the excess detail found in the Clean Unit/Clean Facility

approach. The commenter claimed that the fact that this detail is not found in the PAL proposal

shows it is not needed to safeguard the regulatory system. According to the commenter the result

would be an allowable-to-allowable system that applied both to plants with PALs and to any

individual units or groups of units within them for which there was reasonable assurance that

actual emissions would correspond to allowable emissions. The commenter believes this

approach would be far more flexible than an allowable-to-allowable approach restricted to

plantwide PALs, which is an option only for a plant that is willing to accept an irrevocable cap

on total emissions and is also willing to go through the intense effort of framing PAL conditions. 

The commenter also believes this approach would simplify NSR dramatically for all those units

under it, with no loss of NSR accountability where accountability might make a difference. 

According to the commenter NSR would still apply whenever new units were added outside the

complex of units covered by the PAL, or whenever PAL-covered units significantly increased

their PTE.

Response:

We are reserving the issue of allowables PALs for future consideration. Most

commenters and stakeholder participants did not support the Clean Facility exclusion. We have

taken no action on Clean Facilities in the final rules. We will continue to evaluate Clean

Facilities as we consider allowables PALs. We have taken final action to promulgate provisions

for Clean Units. See chapter 9 for information on Clean Units.

Comment:

Three industry commenters (IV-D-304, 306, 307) said that EPA should finalize its 1996

proposal to exclude changes under a PAL from the definition of modification and make it clear in
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I-8-68

the final rule that changes made under a PAL do not trigger a title V permit revision. Without

this coordination of CAA requirements, the flexibility offered by a PAL would be undermined or

nullified.

Response:

See volume I, 7.4, 7.7.2, and 7.7.3 regarding changes under a PAL. See volume I, 7.15.2

regarding the relationship of PALs to title V permits.

Comment:

Six industry commenters (IV-D-267, 272, 277, 293, 302, 307) and one utility industry

commenter (IV-D-275) stated that the absence of regulatory language in the NOA makes it

difficult for the public to assess and comment on the issues that EPA is presently considering. In

addition, the commenter felt that many of the Agency's positions seem to rest on EPA

suppositions about how economies and business behave, rather than on data and analysis. These

commenters urged the Agency to allow the public an opportunity to review the regulatory

language, and the missing factual and analytical support for its rule, before promulgating the final

rule.

Response:

We believe that the 1996 proposal, the 1998 NOA, the docket for this rulemaking, and

this technical support document provide an adequate basis for the final rules.

Comment:

One industry commenter (IV-D-221) suggested that PALs should continue to allow

netting out of permit review for the life of the PAL because the purpose of the PAL is to allow

changes without administrative complexity at sources that are willing to adopt limits.

Response:

See volume I, 7.4, 7.7.2, and 7.7.3 regarding changes under a PAL.

Comment:

One industry commenter (IV-D-212) maintained that EPA needs to address the extent of

monitoring that will be necessary to sustain a facility’s claim that they are under their cap.
8 - 1998 PAL Comments

I-8-69

Response:

See volume I, 7.12.

Comment:

One regulatory agency commenter (IV-D-287) and STAPPA/ALAPCO (IV-D-259)

requested that the PAL process include a HAP analysis, as well as a screening health-risk

assessment provision to determine if any modifications allowed under a PAL will increase HAP

pollutant emissions or affect the dispersion and concentration of such emissions by changes in

plant configuration.

Response:

See volume I, 7.15.2.
I-9-1

Chapter 9 - Clean Units

9.1 Overview

We received public comments supporting and opposing the Clean Unit proposal, which

are included in section 9.2. We requested comment on a number of issues, including whether the

Clean Unit exclusion should be based on an hourly PTE test, whether the Clean Unit exclusion

should presumptively apply to units with RACT or MACT limits, the length of the Clean Unit

exclusion, requirements for units permitted under State minor NSR programs, and Clean Unit

provisions for units that have not undergone major or minor NSR (case-by-case determinations). 

Comments and responses on these issues are included in sections 9.3 through 9.8. Other public

comments and our responses on various aspects of the Clean Unit proposal are summarized in

section 9.9.

9.2 Support/Oppose Clean Unit Proposal

Comment:

9.2.1 Support Clean Unit Proposal

Many commenters (IV-D-14, 17, 19, 20, 42, 43, 61, 62, 65, 66, 70, 72, 77, 80, 93, 103,

106, 111, 117, 118, 127, 129, 130, 132, 135, 142, 146, 147, 156, 170; IV-G-2, 9) generally

supported the Clean Unit exclusion.

One commenter (IV-D-70) stated that the Clean Unit exclusion for major NSR will give

an additional incentive to the source to install voluntary controls in order to avoid the timeconsuming NSR process. Other commenters (IV-D-70, 72) noted that for units which have

recently undergone these reviews, reevaluation of the technology shortly after the source is

constructed would likely result in very little or no incremental improvement in emission control.

Another commenter (IV-D-80) supported the Clean Unit and Clean Facility exclusions

because they are a useful alternative to PALs for providing flexibility. The commenter stated

that despite comments at an NSR subcommittee meeting where others expressed concern with

the complexity of this program and wished to eliminate it from the NSR reform, it remains the

case that the exemption provides an incentive for facilities with no Clean Units to become clean,

and that those that are clean will be given valuable flexibility in optimizing these units.

Several commenters (IV-D-19, 33, 36, 43, 46, 77, 107, 118, 147, 149, 154, 170, 186)

generally endorsed the proposed Clean Unit exclusion, but objected to elements of the proposal

that were overly complex and prescriptive and requested that EPA simplify or relax the

qualifying criteria. 
9 - Clean Units

I-9-2

One commenter (IV-D-62) believed that the 1982 Settlement Agreement, which would

have allowed changes at sources that did not increase potential hourly emissions to be exempt

from NSR, was preferable to the Clean Unit exclusion. However, the commenter supported the

concept of a Clean Unit exclusion in the absence of the 1982 Settlement Agreement approach.

9.2.2 Oppose Clean Unit Proposal

Several commenters (IV-D-34, 47, 50, 52, 53, 92, 109, 124, 125, 137, 152, 157, 180, 192;

IV-G-11) opposed the Clean Unit exclusion in general. 

Several commenters (IV-D-47, 50, 109, 152) stated that EPA should eliminate the Clean

Unit exemption because it will create a loophole to avoid NSR review. One of the commenters

(IV-D-152) maintained that the Clean Unit exclusion would allow emission limit decisions made

as long as 10 years ago to exempt a source from major NSR. The commenter noted that

Congress recognized in the 1977 amendments to the Clean Air Act that emission limit

determinations quickly became stale. One commenter (IV-D-47) opposed the Clean Unit

exclusion because of the risk that a unit could increase actual annual emissions without

undergoing major NSR. The commenter noted that EPA recognized this risk at 61 FR 38256.

One commenter (IV-D-125) believed the Clean Unit proposal is problematic because

sources will not be held accountable for their emissions rates and the enforceability of the unit’s

emissions rate level is difficult.

Several commenters (IV-D-53, 109, 137, 152; IV-G-11) opposed the Clean Unit

exclusion because it would impede the development of BACT/LAER determinations. Two

commenters (IV-D-53, 109, 137, 152) believed that BACT/LAER determinations would become

outdated long before the Clean Unit exclusion ended. One of the commenters (IV-D-53) stated

that generally, the time a BACT or LAER determination becomes out-of-date depends on

whether add-on control technology was implemented as part of the determination. Under the

proposed changes, the commenter suggested, a facility with emissions up to 10 times greater than

what is currently considered BACT could be exempted as a Clean Unit. The commenter also

noted that BACT and LAER determinations made during the last 10 years may not have been

done using the top-down approach for BACT or the process for establishing LAER, both of

which require consideration of a combination of P2 measures and add-on controls, and both of

which contain moving targets. One commenter (IV-G-11) disagreed with the Clean Unit

approach completely. The fact that a given facility, or new portion thereof, has recently been

issued a BACT or LAER approval, is no grounds whatsoever to eliminate this same up-front

control requirement for the next modification the facility plans to make or add. One review has

nothing to do with the other, said the commenter.. 
9 - Clean Units

I-9-3

Commenter IV-D-180 said unless EPA addresses the serious defects in the proposal, it

should allow States to offer alternative approaches that may more appropriately accomplish the

same goal with less turmoil and less cost to the regulated community. 

Two commenters (IV-D-53, 137) recommended that the Clean Unit exclusion be dropped

from the NSR reform package for numerous reasons. They stated that the exemption is premised

on a belief that there would not be a significant increase in annual emissions. A re-review of a

BACT or LAER demonstration, they said, whether the control approach continues to meet the

BACT or LAER requirement, could be done quickly, especially if the previous determination

was based on control measures representing the maximum degree of reduction. They also

believed that longer-term analyses of emissions increases (number of hours-per-day or days-peryear of operation) that are part of existing NSR programs need to be maintained to ensure

continued protection of NAAQS.

Several commenters (IV-D-52, 53, 137, 192) were concerned about the burden the Clean

Unit exclusion would place on permitting authorities. Two of the commenters (IV-D-53, 137)

stated that under this proposal, State and local agency staffs will undoubtedly be unsure, or

unable, to consistently apply the rule, and will expend additional staff resources with a case-bycase approach. One commenter (IV-D-52) believed the Clean Unit exclusion had limited

applicability and would require too many resources. The commenter (IV-D-52) believed few

units are modified within 5 or 10 years of their most recent previous modification and therefore

preferred to use its resources in other areas. One commenter (IV-D-192) maintained that the

process of determining the applicability of the exclusion creates additional review and oversight

responsibilities for the State agencies. This burden should not be underestimated, the commenter

said, and is counter to the goal of overall simplification and efficiency.

One commenter (IV-D-34) believed that sources really want streamlined permitting and

are willing to install good controls to get a permit issued quickly. Therefore, suggested the

commenter, EPA should not allow anything less than the BACT/LAER level of control.

Several commenters (IV-D-56, 82, 99, 104, 113, 115, 130, 153, 157) stated that the

exclusion has so many qualifying caveats that there is little benefit for the relevant sources. One

commenter (IV-D-153) stated that the Clean Unit exclusion as written would apply to few, if any,

of the situations where NSR would otherwise be required. The commenter noted that EPA’s RIA

estimated that only 5 percent of all potential major modifications each year would qualify for the

Clean Unit test.

Response:

We agree with the commenters who supported Clean Unit provisions, and are adopting

provisions for Clean Units. We believe Clean Units improve the NSR regulations in several

ways. The Clean Unit applicability test benefits the public and the environment by providing
9 - Clean Units

I-9-4

facilities with an incentive to install state-of-the-art emissions controls, even if they would not

otherwise be required to control emissions to this level. Owners or operators will benefit from

these final rules because they are provided with increased operational flexibility. Once facilities

have installed state-of-the-art emissions controls on an emissions unit and it has been designated

a Clean Unit, they may make changes to respond rapidly to market demands without having to

obtain a preconstruction major NSR permit. Moreover, the facility and the reviewing authority

will benefit from increased administrative efficiency. We believe that once state-of-the-art

emissions controls have been installed, an additional major NSR review will generally not result

in any additional emissions controls for a period of years after the original control technology

determination is made. In such cases, the major NSR permitting requirements impose a

paperwork burden with little to no additional environmental benefit. The Clean Unit

applicability test eliminates this unnecessary administrative action.

9.3 Hourly PTE Test

Comment:

9.3.1 Support Hourly PTE Test

Some commenters (IV-D-93, 129, 132) generally supported EPA’s proposal to exclude

from NSR a change at a Clean Unit or Clean Facility if the change will not increase the unit’s

maximum potential hourly emissions. Two of these commenters (IV-D-129, 132) did not

support the proposed pre-change six-month period used to establish the hourly potential

emissions rate of the unit.

9.3.2 Oppose Hourly PTE Test

Many commenters (IV-D-46, 53, 65, 92, 94, 106, 113, 125, 130, 137, 138, 147, 154, 160,

180, 186, 190, 191) opposed basing the Clean Unit exclusion on an hourly PTE test as

summarized in sections 9.3.2.1 through 9.3.2.3. 

9.3.2.1 Test lacks sufficient environmental protection

Several commenters (IV-D-53, 92, 125, 137, 180) generally viewed the hourly PTE test

as not providing enough environmental protection.

One commenter (IV-D-137) opposed basing the exclusion on changes in the hourly

emissions rate because they believe it would not account for situations in which the

BACT/LAER determination was not based on the most stringent emission control due to cost

considerations. The commenter (IV-D-137) preferred that the Clean Unit exclusion apply only if

the BACT/LAER determination had been based on the set of control measures that represented

the maximum degree of reduction without any control measures being discounted because of
9 - Clean Units

I-9-5

cost-benefit considerations. The commenter believes that if this was the case, a re-review of the

BACT/LAER determination could be done quickly. Two commenters (IV-D-92,180) noted that

the BACT economic analysis is based on an annual emission level. As a result, they said, if

sources are allowed to increase the annual emission rate without review, the economic analysis

may no longer be valid. In addition, they pointed out, hourly emission rates are often inflated to

predict the worst case for the off property impact analysis. The annual emission rate is normally

held to a level far below the corresponding hourly emission rate. 

Commenter IV-D-125 stated that basing the Clean Unit on hourly PTE is problematic

because they believe it would allow for “running up” or other artificial contortions of the baseline

which counter the effectiveness of the NSR. Two commenters (IV-D-92,180) agreed that a

major deficiency in the proposal is the absence of a check on annual emissions. In addition, the

commenter said that if a source proposes to decrease actual emissions concurrent with an

increase, the permitting authority should be able to grant increases beyond the allowable rate for

a Clean Unit. This would provide the opportunity to evaluate the trade for NAAQS, increments,

and other impact effects.

Several commenters (IV-D-53, 92, 137, 180) also opposed the hourly emission rate

method because they felt it would not account for the emission increase’s effect on air quality. 

The commenters stated that most NAAQS consider concentration on a longer term basis. As a

result, while an emissions unit might not have an increase on an hourly basis, an emissions

increase in the number of hours per day or days per year of operation could have a significant

effect on a longer term NAAQS. Further, the commenters noted, ozone SIPs are based on

pounds per day of emissions, not pounds per hour. The commenters said that these longer term

analyses need to be maintained to ensure continued protection of the NAAQS. These

commenters preferred that the Clean Unit exclusion be based on annual actual emission rates.

Two commenters (IV-D-92, 180) opposed basing the Clean Unit on allowable emissions. 

These commenters (IV-D-92, 180) stated that allowing wholesale increases up to the allowable

may have dire consequences for ozone near-nonattainment areas or may even set back the

attainment demonstration for existing ozone nonattainment areas since State Implementation

Plans (SIP) for these areas are based on actual emissions rather than allowable emissions.

Revision of the SIP process to reflect allowable rates would be an appropriate course if this

exclusion is promulgated as proposed. However, they suggested, revising the structure of the SIP

to account for allowable instead of actual emissions would require tremendous resources on the

part of the state.

9.3.2.2 Test is too restrictive

Many commenters (IV-D-46, 94, 106, 130, 138, 147, 154, 160, 186, 190, 191) opposed

basing the Clean Unit exclusion on an hourly PTE test because they viewed the hourly PTE test

as too restrictive.
9 - Clean Units

I-9-6

Two of the commenters (IV-D-130, 154) requested that the no increase in hourly PTE

limitation be eliminated in the final rule because it ignores what they consider to be the real

issue, that is, the control efficiency of the unit. They believe that the addition of alternative or

more extensive control systems would not likely be justified under NSR control technology

review, particularly since excess capacity is already designed into existing control systems in

order to maintain required control efficiency while accommodating fluctuations in parameters

such as gas flow rate and pollutant loading entering the system. The commenters said it would

be hard to see how a Clean Unit exclusion with an hourly PTE limitation could be used to

exclude a change at an existing source that would not already be covered by other exclusions or

by proposed changes in the NSR applicability test. Another commenter (IV-D-186) echoed the

above comments regarding design capacity.

Two of the commenters (IV-D-154, 160) suggested that activities that would result in an

increase in potential hourly emissions should not automatically lose eligibility for the Clean Unit

exclusion. At most, they believe such activities should simply trigger additional evaluations as to

their impact on NAAQS, PSD increment, or AQRVs, etc., with de minimis impacts allowed as

appropriate.

Two commenters (IV-D-130, 154) stated that they could not identify how a Clean Unit

exclusion with an hourly PTE limitation could be used to exclude a change at an existing source

that would not already be covered by other exclusions or by proposed changes in the NSR

applicability test.

One commenter (IV-D-138) expressed concern that EPA’s proposal would not allow

source owners to make changes to a Clean Unit that would increase the unit’s hourly emissions

rate, that is, its hourly PTE, although still allowing changes that increase the unit’s efficiency,

capacity, availability, longevity, and utilization. The commenter did not see the rationale in

denying the exclusion in the former case and gave an example to support the requested revision.

One commenter (IV-D-46) suggested that EPA adopt a more reasonable restriction;

namely, that there can be no increase in the annual allowable or potential emissions of the unit

and no decrease in the required efficiency of the control device. Although restricting the increase

in the maximum hourly emissions rate can provide assurance that an emissions unit remains a

Clean Unit after a proposed change, the commenter said it has numerous problems. For example,

they believe the test is overly conservative and prescriptive. Also, if evaluated according to the

regulatory language, the commenter pointed out, performance tests may show increases that are

not truly increases in hourly PTE, because of inherent uncertainty in comparing monitoring or

testing results before and after a change. The commenter stated that a straightforward approach

to ensure that Clean Units remain clean after a change would be a stipulation that the unit must

maintain the required control device efficiency. If EPA still needs an additional safeguard to

ensure that the emissions do not drastically increase after a change, the commenter suggested that

prohibiting increases in the annual PTE or allowable emissions would be a reasonable
9 - Clean Units

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compromise to the “no increase in hourly PTE” test, while still proving incentives to use the

exclusion and to install voluntary controls. However, if EPA insists on keeping the hourly PTE

test, said the commenter, the Agency must clarify that there is no presumed increase if the

emissions measured before and after the change are within the relative accuracy limits (for

example, ±10 percent) of the methods. 

9.3.2.3 Test does not reflect batch operation conditions

Several commenters (IV-D-65, 94, 147, 190) stated that there were problems with the

Agency’s approach for batch processes and the pharmaceutical industry. One commenter (IV-D94) suggested that the Agency should eliminate any references to hourly PTE as a condition of

eligibility for the Clean Unit or Clean Facility exemption because hourly PTE is not a viable

measure in the pharmaceutical or batch chemical industry. Actually, the commenter said, the

current practice is to establish PTE on an annual process basis. The commenter stated that the

Agency incorrectly characterized the current practice in the pharmaceutical industry concerning

hourly PTE on a feedstock basis (61 FR 38255, July 23, 1996). The focus of the Clean Unit or

Clean Facility exemption should be on the removal efficiency of the previous controls (for

example technology resulting from the BACT/LAER analysis) rather than the PTE of the

proposed changes to the unit or facility. The commenter believes the hourly PTE test is

completely unworkable in the pharmaceutical industry and others. Another commenter (IV-D190) stated that the proposed “no increase in hourly potential emissions” poses a major problem

for their batch processes, particularly those that campaign using the same facilities. At the

commenter’s facility, three different processes use the same equipment or processing, and the

typical campaign for each product may last 3-4 months (allowing production of all three products

in a given year). However, one scenario they have encountered is the sudden increased demand

for one product in which the hourly potential emissions may increase, but the annual emissions

overall will decrease due to reducing the production line time of another product in the same

facility with higher emissions to accommodate additional line time needed for the product in

sudden demand. The commenter pointed out that Texas has a regulation that bases the emission

changes to facilities on “allowable” emissions instead of “potential” emissions. 

Two commenters (IV-D-65, 147) referred to the proposal statement that potentially Clean

Units cannot increase “the average emission rate, in pounds or kilograms per hour,” over the

actual emissions from the unit in any one week from the prior six months. These provisions, they

said, while appropriate for continuous processes and operations where product changes occur

infrequently, do not accommodate the needs of the batch pharmaceutical industry. The

commenters noted that, although Footnote 9 on page 38255 of the preamble (61 FR 38255, July

23, 1996) discusses a potential approach for batch operations, the proposal is based on erroneous

assumptions about the pharmaceutical industry. They believe the test for determining if an

emission increase has occurred must address the unique aspects of batch operations whose

emissions are highly variable. The only meaningful way to derive an average hourly emission

rate for a batch operation is to divide the total emissions for the entire batch by the number of
9 - Clean Units

I-9-8

hours it takes to complete the batch. When comparing the emissions before and after the change,

they suggested a batch facility should be allowed to choose the highest hourly average emissions

for any batch manufactured any time after installation and operation of the controls that make the

source potentially eligible for the Clean Unit exemption.

Response:

After careful consideration of the comments received regarding the proposed hourly PTE

approach, we are not finalizing the hourly PTE test as proposed. As suggested by some

commenters, we are instead promulgating the Clean Unit designation based on source-specific

allowable emissions. 

With regard to those comments expressing concern about potential increases due to the

use of allowable emission levels as the NSR trigger for Clean Units, we believe that reviewing

authorities are in the best position to determine the emissions level that is protective of air

quality for a given emissions unit and to establish emissions limits, as well as operational limits

and other permit terms and conditions, that will ensure air quality protection. By this we are

allowing the reviewing authority to decide the appropriate emission limitation to be included in

the source's permit, an exceedance of which will cause the emissions unit to lose Clean Unit

designation and go through major NSR if a significant net emissions increase also occurs. We

expect the major NSR or SIP-approved permit will include short-term and annual limits for air

quality purposes, for BACT/LAER (or comparable control technology) purposes, and any other

conditions necessary to protect air quality. The reviewing authority should clearly specify which

of these limits will be considered the emission unit’s permitted allowables for purposes of

measuring emissions increases under the Clean Unit applicability test, as opposed to other

permit limits and conditions that are necessary to ensure proper operation and maintenance of

the control technology but are not to be used in the NSR applicability analysis.

In addition, regardless of how the emission unit qualifies as a Clean Unit (BACT/LAER

or comparable controls), the source requesting Clean Unit designation for an emissions unit will

be required to show during the permitting process that it will not cause or contribute to a

violation of any NAAQS or PSD increment, and that there will not be an adverse impact on an

identified AQRV (an AQRV that has been identified by the FLM, such as visibility) in a Class I

areas.

We agree with those commenters who stated that emission units that have gone through

control review and installed state-of-the-art controls should not have to account for every

change at the source. We believe that once an emission level that is protective of air quality is

set, based on state-of-the-art control, that control efficiency is reliable for a period of time,

which is reflected in the specific expiration date of the Clean Unit designation. Thus, as long as

the Clean Unit's permitted allowable emissions are not exceeded, there is no need to account for

each and every change at the unit.
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9.3.3 Six-month Period to Establish Pre-Change Emissions Rate

Comment: 

One commenter (IV-D-125) opposed the proposed 6-month period because it is too short

and may allow for circumvention. The commenter (IV-D-125) noted that a facility could

artificially elect to run a unit at a maximum hourly rate prior to the change, thereby allowing a

modification to occur that would allow the source to operate at that higher rate continuously,

even if the maximum rate was based on a one-time hourly rate that is not expected to be achieved

on a continuous basis. 

Many commenters (IV-D-31, 33, 129, 132, 140, 142, 149, 153) stated that the proposed

6-month period is too short and overly restrictive.

Two commenters (IV-D-129, 132) suggested that EPA should allow a pre-change period

longer than the proposed 6 months due to the cyclical nature of some businesses. These

commenters noted that the previous 6 months may not coincide with the busy season and may not

provide a true picture of Clean Unit’s maximum emissions. In this case, they suggested the

source could provide data demonstrating pre-change maximum potential emissions for that unit

from the date of the proposed change back to when the Clean Unit or Clean Facility qualified for

the exclusion. Two other commenters (IV-D-33, 149) stated that the 6-month look back period

for maximum hourly emissions may not be indicative of the nominal pattern of operation. They

suggested that a period of 10 years, consistent with the new, overall baseline proposal, would be

simple and consistent to implement by both the regulators and the source. 

Another commenter (IV-D-140) stated that if EPA maintains the limitation on hourly

PTE, it should at least consider hourly emissions for a full 12 months preceding the change. The

commenter believed that the proposed 6-month period is too short because: (1) some operations

are seasonal and the unit’s emissions will be understated; and (2) because of economic

conditions, it may not be possible to demonstrate the worst-case emission scenario during a 6-

month period. The commenter thought it should be clarified that the period is prior to the “start”

of the proposed project, since projects may take many months to complete and the 6 months may

expire during the project rather than prior to it. 

One commenter (IV-D-153) suggested that the permitting authority should have the

discretion to accept information establishing the pre-change rate that existed during an identified

period within 2 years prior to the change, provided that the source can establish that there is no

reason to believe that the rate has significantly changed. As a result, a source could avoid

unnecessary replication of data that existed prior to the 6-month period. One commenter (IV-D31) saw no strong reason to consider only the previous 6 months in establishing the pre-change

hourly potential emission rate. Any previous source test data should be given consideration,
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I-9-10

suggested the commenter, provided the source can satisfactorily demonstrate that the unit has not

been modified, emissions have not changed, and feed material has not changed between the

source test and the initiation of the proposed activity or project. 

One commenter (IV-D-142) urged EPA to allow units to establish or verify their

maximum pre-change hourly emission rate at any time within the last 6 months or a longer

period, for units that operate only intermittently and have not operated in the past 6-month

period. This time frame, they suggested, would offer critical flexibility to units that are operated

infrequently (such as electric utility peaking units) or units that have been shut down recently due

to load fluctuations. In the alternative, offered the commenter, EPA should allow units to

demonstrate their maximum hourly emission rate at any time within the lesser of: (1) the past 6

months of operation; or (2) the past 2 calendar years. This would ensure that units that have been

shut down for several years would not be able to take advantage of the Clean Unit exclusion

without a demonstration of their ability to equal or exceed the hourly emission performance

achieved in the past. Another commenter (IV-D-153) provided similar comments.

Response:

The 6-month pre-change baseline was part of the proposal to base Clean Unit

applicability on potential emissions. Because we are using allowable emissions for the Clean

Unit applicability test, this issue is moot. We believe it is appropriate to base Clean Unit status

on the reviewing authority’s determination of the emission rate (the allowable emissions rate)

that is based on state-of-the-art emissions control and has been demonstrated to be protective of

air quality. We believe that the reviewing authority is in the best position to set the emission

limits that reflect BACT/LAER or comparable control technology and that are protective of air

quality. Moreover, we expect both short and longer-term limits may be required for a particular

source. Therefore, we are not specifying a particular format for the allowable emissions rate for

Clean Units. 

9.3.4 Other Comments on Hourly PTE Limit

Comment: 

One commenter (IV-D-154) stated that when the underlying applicable requirement is

stated in a different averaging time, the hourly PTE limit should be changed to the same

averaging time stated in the standard.

One commenter (IV-D-113) supported basing the emissions test for the Clean Unit

exclusion on the maximum emissions rate achievable based on the actual operation of the

emissions unit. The commenter also believed the emissions test for the Clean Unit exclusion

should be done using the maximum emission rate based on the lower of the physical design or

the unit or enforceable limits. 
9 - Clean Units

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Two commenters (IV-D-129, 132) supported the hourly PTE test, but believed an

allowable rate should be an option. These commenters (IV-D-129, 132) preferred that the

allowable emission rate from a permit or other NSR authorization be used for the Clean Unit’s

emission rate. Furthermore, they believed, the Clean Unit would be allowed to make a change

without permitting as long as the allowable emissions were not exceeded. The commenters

maintained that such a provision would ensure the facilities qualify as Clean Units while

minimizing the difficulty of determining maximum potential emissions. Another commenter

(IV-D-157) advocated basing the Clean Unit exclusion on allowable emissions. The commenter

(IV-D-157) believed that the danger that allowable-to-allowable accounting for Clean Units

would lead to increased emissions is extremely small, and the danger that any air quality damage

would result from a change would be even smaller.

Two commenters (IV-D-46, 154) requested that EPA make the Clean Unit presumption

absolute except for those units that previously have not been designated to be a Clean Unit. In 40

CFR 52.21(b)(2)(iii)(L)(5), EPA provides that “the Administrator may presume” that an eligible

Clean Unit’s emissions limits before and after the change are comparable to BACT or LAER. 

They commented that, to reduce unnecessary procedural burdens and to provide certainty that

will encourage the regulated community to undertake voluntary Clean Unit controls, EPA must

make this presumption absolute. That is, if the unit is considered a Clean Unit and it is within

the 10-year exclusion period, changes can be made and no BACT or LAER review is required. 

One commenter (IV-D-127) suggested allowing the use of existing emissions data, such

as routine compliance tests or other generally accepted tests (for example, EPA reference method

testing), to establish the pre-change hourly emissions rate. (That is, the source would not have to

do additional tests specifically to establish the Clean Unit exclusion.)

One commenter (IV-D-14) was concerned that establishing the maximum hourly potential

rate would be difficult. The commenter presented actual data from a sulfur recovery unit to

illustrate widely varying emission rates (214-308 lb/hr, even when operating near design

capacity), and indicated that the maximum potential rate would depend on when in the day the

test was conducted. The commenter was concerned that an inspector would need a broad range

of experience to assess whether the unit was functioning properly and within its design

specifications during the test, and that it therefore would be easy for mistakes to be made in

establishing the permitted emission rate. The commenter suggested that the easiest way to ensure

the emission rate does not increase over the life of the Clean Unit exclusion would be to require

that the emission rate prior to the change be established as an enforceable limit.

One commenter (IV-D-14) maintained that, although equipment may have been installed

that equates comparably to BACT, it does not follow that the permitted emission rate

corresponds to that which would arise from a PSD BACT requirement. The commenter noted

that the proposed regulatory language at §51.166(b)(2)(iii)(L)(2) was helpful, but not sufficient. 

The commenter cited that in New Mexico, a permit applicant often requests an emission rate that
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I-9-12

is substantially higher than the manufacturer’s guarantee in order to build in a cushion against

inadvertent non-compliance. Thus, the commenter said, a federally enforceable emission limit is

not in itself sufficient. The commenter maintained that the limit must correspond to (or be close

to) a limit that would have resulted from a PSD review, and should be in effect at the time that

the applicant desires to use the exclusion. 

Response:

As previously stated, we are not finalizing the proposed hourly PTE approach. The

hourly PTE test is being replaced by the use of the emissions unit permitted allowable emission

levels for the Clean Unit test. As a result, averaging times for the hourly PTE limits are no

longer of consequence. We agree with those commenters who stated that the allowable emission

rate from an NSR permit or other NSR authorization should be used for the Clean Unit’s

emission rate. Since NSR permits require state-of-the-art controls along with an air quality

impact analysis, this approach ensures that the emission unit is truly a “clean” unit and that air

quality protection is maintained.

We agree with the commenters that if the unit is designated a Clean Unit, changes can be

made without further BACT/LAER review, as long as the emissions unit is complying with all of

the terms and conditions identified in the permit establishing the Clean Unit status.

We are not requiring additional tests for emission units that have gone through a

BACT/LAER or other control technology determination, as long as those control technology

determinations meet the requirements in our regulations.

We believe that the reviewing authority is in the best position to determine the specific

limits for Clean Units. We believe that the Clean Unit limit must be based on state-of-the-art

control that is either BACT/LAER or comparable to BACT/LAER. Our tests to qualify for Clean

Unit status all require a close examination of BACT/LAER limits. In addition, when the unit in

question has not undergone NSR review and as a result does not have an NSR permit, the public

will have an opportunity to review and comment on the reviewing authority’s decision to

designate an emissions unit as clean, including the ability to raise any issues concerning the

sufficiency of the data upon which the determination is based. This approach ensures that the

emissions unit is meeting an emissions level comparable to that of BACT or LAER, while

providing the facility the flexibility to use the controls that are best suited for its processes. 
9 - Clean Units

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9.4 Should the Clean Unit exclusion presumptively apply to units

with MACT or RACT limits? 

Comment: 

9.4.1 Clean Unit Exclusion Should Not Presumptively Apply to Units With

MACT/RACT Limits

Several commenters (IV-D-11, 53, 92, 125, 137, 180 ; IV-G-8, 12) supported not

presumptively applying the Clean Unit exclusion to units with MACT or RACT limits. 

9.4.2 Clean Unit Exclusion Should Presumptively Apply to Units With

MACT/RACT Limits

Many commenters (IV-D-9, 20, 33, 36, 43, 55, 56, 65, 72, 77, 78, 91, 107, 121, 135, 140,

147, 153, 157, 158, 159, 160, 183) believed the Clean Unit exclusion should presumptively apply

to units with either MACT or RACT limits or both.

9.4.2.1 Reasons supporting presumptive application

One commenter (IV-D-153) stated that the Clean Unit exclusion should presumptively

apply to sources that satisfy stringent RACT requirements, and to sources meeting MACT

requirements where those requirements also regulate pollutants subject to NSR. To allay

concerns about using MACT standards, the commenter believes that if the permitting authority

questions whether non-HAP pollutants are being controlled sufficiently at the unit, the source

should need to show that such was the case. With regard to RACT units, suggested the

commenter, the presumption should be controlling unless the permitting authority determines

that RACT is not sufficiently stringent.

Several commenters (IV-D-20, 43, 55, 65, 72, 78, 91, 43, 118, 135, 147, 158, 159, 160,

183) maintained that MACT limits achieve control equivalent to BACT or LAER. Two

commenters (IV-D-65, 147) suggested that EPA provide a presumptive exclusion for sources

meeting MACT, which can be more effective than BACT. They believed a presumptive

exclusion would prevent requiring expensive installation of BACT for minimally better controls

where sources make a modification in years shortly after they install MACT. This comment was

echoed by another commenter (IV-D-72) who stated that MACT controls required for its industry

will also control criteria pollutant emissions.

One commenter (IV-D-78) stated that since MACT generally controls both VHAPs and

VOCs, these controls or their equivalent should qualify as Clean Units and be thereby exempt

from NSR on both existing and new units.
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One commenter (IV-D-91) stated that the MWCs that meet the new MACT standard

should qualify for the Clean Unit exclusion. MACT standards for MWCs are authorized

pursuant to sections 111 and 129 of the CAA, which is different from typical MACT standards

established under section 112, noted the commenter. The MWC regulatory process initiated

under sections 111 and 129, said the commenter, has resulted in extremely stringent technologybased standards for criteria pollutants (that is, NOx

, SO2, CO, and PM) that are comparable to

BACT/LAER under NSR. In light of the preceding facts, the commenter believed the final NSR

rules should be clarified to provide that sources subject to the MWC MACT also qualify for the

Clean Unit exemption. Another commenter (IV-D-160) requested that if EPA does

presumptively qualify MACT controls for the Clean Unit exclusion, EPA should specify that the

Agency may establish, in the process of setting an individual MACT standard [under sections

112(g), or (j)], that the standard is “comparable” to BACT/LAER and should be included in the

first category of “presumptive” Clean Units.

Several other commenters (IV-D-43, 55, 118) requested that MACT controls for VHAPs

(for example, MACT for gasoline distribution, refineries, and marine vessel loading) should be

presumptively considered Clean Units, since these controls also remove other VOCs.

 One commenter (IV-D-135) stated that the Clean Unit exclusion should cover units on

which controls have been installed to meet MACT standards. The commenter said that EPA has

already gone through the exercise of minimizing collateral emissions from MACT control

systems. Two commenters (IV-D-158, 159) suggested that during MACT development, EPA

should determine whether the MACT standard will presumptively qualify for the Clean Unit

exclusion, and if so, for which pollutants. The presumption should last for 10 years. In addition,

one commenter (IV-D-158) requested that EPA make a similar determination regarding

NESHAP and MACT standards already issued since 1990. Specifically, EPA should state that

compliance with the secondary lead smelting NESHAP automatically qualifies units for the

Clean Unit exclusion with regard to lead, PM10, VOC, and CO. 

9.4.2.2 Case-by-case determinations are appropriate

One commenter (IV-D-31) recommended that EPA allow States the flexibility to

determine on a case-by-case basis if sources that have installed MACT within the last 10 years

are eligible for the Clean Unit exemption. The commenter disagreed with EPA’s concern that a

MACT limit could be significantly less than its BACT or LAER counterpart for concomitant

increases in criteria pollutant emissions. As EPA has done when setting regulations in the past,

suggested the commenter, the Agency should be responsible for balancing the interaction

between tighter toxics controls and emissions of criteria pollutants. Where MACT and NSPS or

section 129 requirements have been simultaneously addressed for a source category, local

authorities should be prohibited from disallowing the Clean Unit exemption.
9 - Clean Units

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Two commenters (IV-D-9, 62) recommended that EPA allow States the flexibility to

determine on a case-by-case basis if sources who have installed MACT or RACT controls within

the last 10 years are eligible for the Clean Unit exemption. One of the commenters (IV-D-62) 

believed State and local permitting authorities were in the best position to make these

determinations, as they were generally more familiar with sources in their jurisdiction. The other

commenter (IV-D-9) stated that some pharmaceutical facilities will need to upgrade HAP

controls by the expected MACT compliance date of November 2000. The commenter noted that

a company that wishes to construct a new facility after the MACT proposal date would have to

install new source MACT and go through NSR, but without the likelihood of significant

environmental benefits, since BACT is unlikely to be more stringent than MACT.

Two commenters (IV-D-20, 183) who believed that sources subject to recent MACT

requirements should qualify as Clean Units, also stated that RACT represents a lesser level of

control, is more variable, and should not qualify for a presumptive exclusion. RACT should

instead qualify only a case-by-case basis. One of the commenters (IV-D-20) noted that only

emission units for which MACT limits were required within the past 5 years should qualify for

the Clean Unit exclusion. (That is, MACT limits were imposed within the past 5 years, not the

duration of the Clean Unit status would be 5 years.)

9.4.2.3 EPA should extend the presumptive exclusion

Several commenters (IV-D-33, 36, 46, 56, 77, 98, 121, 127, 140, 150, 153, 154, 157, 170,

181) preferred to extend the presumptive exclusion beyond those units with MACT or RACT

limits. One commenter (IV-D-153) requested that the Clean Unit exclusion be broadly defined to

cover any well-controlled unit. Two commenters (IV-D-36, 121) urged EPA to presumptively

allow the exclusion for units that have: (a) been through major PSD/NSR review or otherwise

obtained source-specific, SIP-enforceable limits, (b) recently applied MACT, NSPS or RACT, or

(c) accepted specific limits through an EPA-approved minor State NSR program. They

suggested that these processes incorporate sufficient safeguards to ensure SIP integrity and the

protection of NAAQS and PSD increments. Another commenter (IV-D-181) requested that EPA

expand the Clean Unit exclusion to apply to any process unit that in the last 10 years has been

subject to either NSPS or NSR permitting. 

One commenter (IV-D-140) stated that EPA must broaden the Clean Unit test if it is to

have any practical value. The commenter said the Clean Unit exclusion should apply if the unit

complies with MACT or NSPS, in addition to BACT and LAER, and the permitting agency

should have the authority to qualify MACT.

Another commenter (IV-D-157) stated that the Clean Unit exclusion should apply to any

unit that has installed LAER, BACT, MACT, or RACT within the last 10 years, or that has been

the object of a significant investment in other pollution controls, or in modernization generally,

unless the permitting agency has reason to believe that the unit will not be operated close to
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capacity. In general, noted the commenter, the exclusion’s allowable-to-allowable basis would

logically recommend broader application of the exclusion, and would logically recommend

combining the exclusion with a PAL approach into a simpler overall system. 

One commenter (IV-D-127) suggested that any unit using a control technology listed in

the RBLC should qualify as a Clean Unit.

Many commenters (IV-D-33, 46, 56, 77, 98, 127, 140, 150, 154, 157, 170) requested that

EPA extend the exemption to replacements and reconstructions as allowed under the Clean

Facility exclusion, or to also extend the exclusion to new units. One of the commenters 

(IV-D-77) suggested that the exclusion be allowed for new units that are intended to replace

older units, and are likely to provide the same environmental benefits as modifications. Another

commenter (IV-D-98) maintained that if replacements are not allowed, facilities cannot

modernize, which ultimately reduces emissions. They believe newer equipment or upgrades will

improve capture of VOCs and possibly improve the VOC destruction. One commenter (IV-D33) recommended that replacement or construction of a unit should be considered as a Clean

Unit as long as BACT, LAER, BACT-equivalent, LAER-equivalent, MACT, or RACT is

applied. This new unit or reconstructed unit should not be subject to further NSR. 

Two commenters (IV-D-46, 154) who requested that EPA allow the exclusion for

replacement or reconstruction, noted that a reconstruction is not currently reviewed under the

major NSR program (although it is under the NSPS program). However, noted the commenters,

in creating this Clean Unit exclusion EPA has added a restriction that prohibits a reconstructed

Clean Unit from using the corresponding exclusion. They believe nothing is gained from

reviewing reconstruction and replacement at Clean Units that do not relax control efficiencies or

increase annual PTE. Another commenter (IV-D-140) referred to EPA’s proposal to allow

“changes to a qualifying unit so long as the change will not increase the unit’s emissions” and

requested that this be expanded to allow any replacement or reconstruction so long as the source

complies with the other requirements. Another commenter (IV-D-170) stated it is hard to think

of an example of a modification of an emission unit that is not a replacement or reconstruction.

One commenter (IV-D-172), however, recommended that all installations of new major

equipment or reconstructions must require BACT, since this is the best time to require a source

to install state-of-the-art control technology economically.

Response:

We are maintaining the position expressed in the proposed rule that we are not inclined

to have the Clean Unit designation apply across the board to units with MACT or RACT limits. 

Rather, we believe that MACT or RACT limits should be found to qualify for the Clean Unit

exclusion using a SIP-approved permitting process to obtain Clean Unit designation. This is

because of our belief that these limits could be significantly less effective in limiting VOC
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emissions than BACT or LAER in many circumstances. A MACT emission limit may adequately

control a toxic VOC but could result in emission increases of pollutants subject to NSR.

 We disagree with the commenters that a replaced or reconstructed emission unit should

continue to qualify as a Clean Unit without additional review as the emission limits and

conditions for the existing Clean Unit might not be appropriate or representative for the

replaced or reconstructed unit. As a result, if Clean Unit designation was allowed to continue

without review, it could possibly have a negative impact on the air quality. In these instances we

cannot be sure that the criteria for Clean Unit status are still being met. For example, switching

to a smaller but more polluting process than originally permitted could potentially trigger

stricter BACT/LAER requirements, even at the same annual emission rate, since higher

percentage removal rates and lower costs would be possible at higher concentrations, making

feasible some options that otherwise would have not been cost-effective. Sources may not

replace or reconstruct a Clean Unit under an existing Clean Unit designation. If the source

wishes to replace or reconstruct a Clean Unit, it must re-qualify for Clean Unit status.

Similarly, new units are not Clean Units unless they have been designated as Clean Units

according to the procedures in our regulations.

9.5 Length of Clean Unit Exclusion

Comment:

9.5.1 Oppose 10-year Duration for Clean Unit Exclusion

Several commenters (IV-D-14, 16, 20, 35, 47, 52, 109, 113, 125, 137, 172, 192; IV-G-8,

11, 12) stated that the 10-year and 5-year periods suggested in the proposal are too long to

presume “clean” status for a unit, primarily because advances in control technology occur with

sufficient rapidity that a 10-year exemption would be too long. 

Several commenters (IV-D-14, 47, 52, 113, 137, 172; IV-G-8, 12) recommended a 5-year

maximum period for presumptive or other exclusions. One commenter (IV-D-16) recommended

a 3- to 5-year maximum period. Two commenters (IV-D-20, 53) recommended a 3-year period. 

One commenter (IV-D-125) recommended a 2-year period, and another commenter (IV-G-11)

recommended a 1- or 2-year period.

One commenter (IV-D-137) stated that the long exemption window would provide

sources with an avenue for escaping NSR because BACT determinations during the past 10 years

may not have been made using the top-down approach. In addition, the 10-year period for

identifying major BACT/LAER determinations is too long because it would allow sources to be

excluded from NSR based on out-dated BACT or LAER. The commenter recommended that for

BACT/LAER determinations based on process parameters (such as VOC content for coatings)
9 - Clean Units

I-9-18

current information should be reviewed to determine whether alternative methods could be used

with little capital expenditure. The commenter further recommended that the advances from

BACT/LAER reviews not be minimized, especially considering tighter NAAQS are likely within

the next 5 years.

One commenter (IV-G-11) stated that the premise that a 5 or even 10-year time frame

could be used is naive. Technology has been known to change very rapidly, noted the

commenter, so that a state-of-the-art control 5 years earlier could have been surpassed by an

order of magnitude in the present. 

One commenter (IV-G-12) stated that a review of Ranking Reports from the EPA’s

RBLC clearly demonstrates that control technology can improve significantly over a 10-year and

even a 5-year period. This demonstrates how, when implemented properly, control reviews can

be technology forcing. If an inappropriate number of exemptions are allowed, this development

of new, improved technology will be greatly delayed. 

One commenter (IV-D-192) stated that the 10-year exclusion provides too many

opportunities for industry to ignore relevant control technology and creates greater discrepancies

between neighboring States. Also, NSR provides for air quality impact analysis and air toxics

review which would be lost. 

One commenter (IV-D-14) stated that a 10-year period does not seem to agree with the

concept of “recently permitted or shortly after installation.” For some equipment, 10 years

represents the useful life. However, there are two concerns. First, it is possible for a BACT

determination to result in no controls. Second, advances in technology can be such that

substantial improvements may occur well under 10 years (and may occur under 5 years) that

would change a BACT finding of no controls. “No controls” does not equate to a well-controlled

emissions unit. An emissions unit with no controls required by an old BACT determination

ought to be required to undergo the BACT technology review if it “modifies.” However, the

“modification” definition and associated tests are also being altered in this proposed rule and

those changes should be understood in terms of the effect of the exclusion because those

proposals also decrease the stringency of the PSD rules. A presumptive finding should not

exceed 5 years at most, since BACT can advance from 90 percent to 98 percent in this time

frame. Two other commenters (IV-D-137, 172) agreed that difficulties with a long extension are

compounded when the BACT/LAER decision was made on a given unit without any add-on

control. Another commenter (IV-D-11) agreed with the 10-year exclusionary time frame for the

BACT/LAER determinations, but recommended that it be limited to BACT/LAER

determinations that resulted in add-on controls. A shorter period, they suggested, such as 5 years,

should be used for BACT/LAER determinations that resulted in no add-on controls.

One commenter (IV-D-20) stated that the concept of a Clean Unit exemption from major

NSR based upon a unit’s recent application of state-of-the-art technology is a good one. The
9 - Clean Units

I-9-19

proposal, however, is undermined by an unrealistic definition of “recent” review. One of

industry’s frequent complaints about NSR is that BACT/LAER is a moving target, difficult to

predict. Following this argument, said the commenter, it makes no sense to propose a 10-year

old LAER determination to be state-of-the-art without review. A 10-year time period might

make sense for shielding a source from new RACT or MACT requirements, but it does not make

sense for shielding a source from installation of new controls on a source whose economic value

is being upgraded by the operator. 

One commenter (IV-D-125) believed 10 years was too long for any kind of Clean Unit

exclusion. The commenter stated that changes to NAAQS or the source’s area attainment status

may change attainment status for a particular source and trigger more stringent standards (that is,

LAER instead of BACT).

Another commenter (IV-D-53) opposed the Clean Unit exclusion for all units, but

supported only a 3-year duration for the Clean Unit exclusion if EPA does adopt one.

Two commenters (IV-D-92, 180) expressed reservations about the 10-year duration of the

Clean Unit exclusion, but did not directly oppose the 10-year duration for units with

BACT/LAER determinations. In the area of NOx controls and coatings operations, they believed,

a Clean Unit should not be defined based on 10-year old technology. However, this 10-year

period would be consistent with the commenter’s State’s “qualified facilities” determination,

which allows limited modifications without a re-review of control technology. Another

commenter (IV-D-137) also indicated 10 years was too long for BACT/LAER determinations on

coating operations.

9.5.2 Support/Oppose 10-year Duration for Clean Unit Exclusion For Units

Permitted Under State Minor NSR

9.5.2.1 Support 10-year period for minor NSR units

Numerous commenters (IV-D-11, 21, 28, 33, 42, 43, 46, 61, 62, 65, 79, 80, 93, 98, 103,

106, 107, 108, 120, 126, 127, 130, 142, 146, 147, 150, 153, 154, 160, 170, 183, 191) supported

the 10-year time frame. 

One commenter (IV-D-61), stated that as long as air quality standards are being met, a

source should not have to meet a new BACT/LAER limit on an emission unit more often than 10

years because it could impose significant costs while not significantly benefitting the

environment. The commenter also maintained that if a source has received a BACT

determination during the last 10 years, the source should be eligible for the exclusion

retroactively back to the date of the determination. Another commenter (IV-D-62) stated that

keeping the 10-year period would allow time for source owners to recoup the original

investments in control technology before expensive retrofits may be required. They believed the
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I-9-20

small risk that a new control technology would replace existing BACT/LAER within 10 years is

far outweighed by the large number of sources that would incur the needless delay and expense

of NSR, only to confirm that sources are already using BACT or LAER. One commenter (IV-D21) supported the 10-year exclusion period since it allows for at least one permit renewal and

time for technology development, which is critically tied to BACT and LAER requirements. One

commenter (IV-D-153) stated that 10 years should be the minimum period for Clean Units

permitted under minor NSR programs.

One commenter (IV-D-153) suggested that sources that have undergone NSR after

enactment of the 1990 Amendments should be excluded from review again for the useful life of

the equipment. Because the Clean Unit exclusion applies only if a source continues to meet the

stringent emissions restrictions established at the time it went through the NSR process, the

commenter believed, the source should not be required to undertake NSR a second time for

changes that do not cause it to exceed or violate those restrictions. For sources subject to NSR

prior to the 1990 Amendments, said the commenter, 10 years is the minimum period for a source

to gain real benefits from the exclusion. Two commenters (IV-D-62, 153) stated that 10 years is

the minimum period for a source to gain real benefits from the exclusion. 

One commenter (IV-D-46) maintained that the eligibility period for a Clean Unit, across

the board, should last for a period of 10 years from the date the control technology commences

operation or 5 years from the most recent permitting authority designation, whichever is longer. 

The commenter maintained that there is no reason to differentiate between state-of-the-art

controls installed to comply with a major NSR permit versus those that are installed voluntarily. 

For consistency, it would seem appropriate to treat them equitably under the Clean Unit

exclusion. Given the costs of state-of-the-art controls, the commenter believed, providing a 10-

year eligibility period from the date of operation would provide a better incentive for sources to

install them voluntarily. For units that require a formal determination on the part of the

permitting authority, the eligibility period could be established based either on start of operation

or the designation itself. Five years would be a reasonable time frame, and could apply to reevaluations that occur subsequent to the initial designation as well. However, suggested the

commenter, permitting authorities should be given flexibility to lengthen these time periods as

circumstances warrant (for example, to have them coincide with title V permit renewals).

One commenter (IV-D-65) disagreed that 10 years is too long a period for a BACT/LAER

determination to continue to reflect the state of the art. Over the last 10 years, noted the

commenter, state-of-the-art control technologies for particulate, sulfur dioxide and volatile

organic compounds have advanced only in small increments.

One commenter (IV-D-142) believed it is unlikely that a source equipped with state-ofthe-art control technology would be required to install new technology within a 10-year period.

Accordingly, Clean Unit test should be available for 10 years to encourage the voluntary

installation of stringent controls.
9 - Clean Units

I-9-21

One commenter (IV-D-43) stated that the Agency should qualify the statement that a

Clean Unit is one that has installed BACT or LAER within the last 10 years, or longer, if BACT

or LAER requirements have not changed for the specific unit, and if the source can demonstrate

the unit is still in good working order. Often, noted the commenter, BACT or LAER for a

specific source will not change for more than 10 years, and companies routinely perform

maintenance to keep equipment in good working order.

One commenter (IV-D-139) stated that the length of time could be decided on a case-bycase basis based on the length of time the unit has been in place, the incremental costs and

benefits of newer technologies, the financial health of the company, the attainment status of the

area, enforcement factors, etc. The commenter said that five years may be too short, but 10 years

is probably an appropriate maximum. Since case-by-case determinations require greater

resources, suggested the commenter, EPA should leave it to the states to decide whether to make

them. 

9.5.2.2 Oppose 10-year period for minor NSR units

Several commenters (IV-D-52, 53, 92, 125, 137) opposed a 10-year duration for Clean

Units permitted under State minor NSR programs. 

Several commenters (IV-D-52, 53, 137) supported a 5-year duration for the Clean Unit

exclusion. As for other types of Clean Units, two of these commenters (IV-D-53, 137) noted that

in many cases the BACT/LAER determination is out of date sooner than 10 years, particularly if

the BACT/LAER determination was not based on add-on control technology. Also, they noted,

not all BACT/LAER determinations in the last 10 years have been made using the top-down

methodology. One of the commenters noted that between 1989 and 1993 BACT for NOx for gas

turbines was reduced from 42/65 ppm for firing gas and oil to 4.5/18 ppm. 

Two commenters (IV-D-92, 180) disagreed with having a different duration for Clean

Unit exclusions under a State minor NSR program than for those under major NSR programs. 

Therefore, the commenter opposed the 5-year duration for units permitted under a State minor

NSR program. 

Two commenters (IV-D-82, 125) argued that cost-effective improvements in air pollution

control technology are occurring at a rapidly increasing rate. EPA should be encouraging the use

of these improved technologies and not creating other grandfather provisions that will ultimately

discourage the development of new cost effective air pollution control technology. Rather than

grant Clean Unit exemptions for specific time periods, suggested the commenter, EPA should

adopt the Industry Average Performance System, “IAPS,” suggested by New Hampshire. The

commenter maintained that IAPS provides equitable treatment for both new and existing sources

and thereby eliminates the need for Clean Unit exemptions.
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9.5.3 10-year Exclusion Period For Existing Units That Have Not

Undergone a BACT or LAER Determination or Comparable State

Technology Requirement.

9.5.3.1 Oppose 10-year period for non-minor NSR sources

Comment: 

Several commenters (IV-D-53, 92, 125, 137) opposed a 10-year duration for the Clean

Unit exclusion for units that had not undergone a BACT/LAER or State minor NSR review. 

One of the commenters (IV-D-137) opposed the Clean Unit exclusion for all units, but supported

only a 5-year duration for the Clean Unit exclusion if EPA does adopt one. As for other types of

Clean Units, the commenter suggested that in many cases the BACT/LAER determination is out

of date sooner than 10 years, particularly if the BACT/LAER determination was not based on

add-on control technology. Also, not all BACT/LAER determinations in the last 10 years have

been made using the top-down methodology. 

One commenter (IV-D-92, 180) opposed the 5-year duration for the Clean Unit exclusion

for units that have not undergone major or minor NSR. The commenter asserted that this

inconsistency would make the rule unnecessarily complex. Unlike the case where the control

technology had an implementation date associated with the permit, noted the commenter, these

units may not have an associated date. Furthermore, technology changes not meeting current

BACT should not be allowed to have carte blanche for either a 5-year or a 10-year period. 

Therefore, the commenter believed that units not permitted should either be required to qualify

for the exclusion each time a change is proposed or get a minor NSR permit, which meets

today’s BACT and triggers the 10-year exclusion. 

One commenter (IV-D-125) opposed an exclusion period that began at the time eligibility

was determined and ended 5 years later. The commenter believed this would allow a source to

increase emissions between the time that the eligibility is determined and the exclusion comes

into effect, which is counter to NSR goals. The commenter instead preferred a 2-year Clean Unit

exclusion for units permitted under State minor NSR programs.

9.5.3.2 Support 10-year period for non-minor NSR units

Many commenters (IV-D-33, 43, 93, 98, 106, 108,120,128, 129, 130, 132, 142, 146, 147,

150, 153, 154, 157, 160, 170, 183, 191) supported providing the 10-year exclusion period for

existing units that have not undergone a BACT or LAER determination or comparable State

technology requirement.

A few commenters (IV-D-130, 154, 160) maintained that it was unnecessary to treat caseby-case exemptions differently since they must be comparable to BACT/LAER to qualify for the
9 - Clean Units

I-9-23

exclusion. Two of the commenters (IV-D-130, 154) stated that control equipment with a high

control efficiency will provide that level of control regardless of whether its Clean Unit

designation is established through an NSR BACT determination or a case-by-case determination. 

Therefore, they maintained, there is no justification for a different eligibility period for units that

qualify as Clean Units through the case-by-case determination process.

One of the commenters (IV-D-157) advised that the Clean Unit exclusion for qualifying

units that net out apply for 10 years after the year that generated the netting credit. For example,

if a source nets out a new unit in 1997 by shutting down an old unit and taking credit for peak

emissions reached by that old unit in 1987, the transaction would still be valid, but the netted out

unit would not be entitled to Clean Unit status. If the source took credit only for the reduction

from 1993 levels, it would be entitled to Clean Unit status for 6 years, while if the reduction was

measured from 1997 levels, the source would be entitled to a full 10 years of Clean Unit status.

Two commenters (IV-D-120, 170) stated that a shorter period would overlook three

considerations. First, they noted, this rule will apply to a large number of diverse source

categories nationwide. Thus, it must have broad applicability. Undoubtedly some improvements

in control technologies will occur over both the 5- and 10-year periods proposed, but they will

only be applicable to discrete small segments of the total population of source categories. 

However, they suggested, the majority of source categories will not experience improvements in

this time frame and it is not reasonable nor practical to require 5-year reviews of the whole

universe of source categories when only some discrete small segments may experience

improvements. Second, they noted that BACT/LAER technologies accomplish substantial

pollutant removals on the order of 80-90 percent. At this level of control, they believed most

control technology improvement is associated with increased reliability and lower capital and

operating costs, rather than significantly increased removal efficiencies. Furthermore, as EPA

has acknowledged, the cost of a slight increase in pollutant removal is usually substantial. Third,

they noted that based on the developments in control technologies for natural gas-fired turbines

and reciprocating engines, improvements in control technology that are demonstrated and field

tested in a full range of operational conditions usually take longer than 5 years. They believed

new technologies can require even more time.

One of the commenters (IV-D-142) stated that limiting the case-by-case exemption to 5

years will unfairly penalize units that have installed state-of-the-art controls for purposes other

than the NSR program. Also, they believe it is unlikely that a source equipped with the state-ofthe-art control technology would be required to install new technology within a 10-year period. 

Two commenters (IV-D-130, 154) stated that extending the 10-year eligibility period to

all three categories would increase the usefulness of the Clean Unit exclusion by allowing

facilities the necessary time to complete design, order, install, and operate the Clean Unit, as well

as to obtain a reasonable return on investment. Furthermore, they suggested, a uniform 10-year
9 - Clean Units

I-9-24

duration would promote efficiency by eliminating the need to impose additional controls when

doing so would provide little or no incremental improvement in emissions control. 

 Three commenters (IV-D-129, 132, 147) stated that a Clean Unit or Clean Facility may

not be able to recover the costs for the purchase, installation, and operation of the control

equipment with a 5-year life. Two commenters (IV-D-43, 108) stated that 10 years from

installation is considered an appropriate amortization period for determining LAER or BACT

cost-effectiveness. Another commenter (IV-D-128) opposed the alternative 5-year period

because the time would be primarily absorbed during the construction period. 

Response:

In our proposal rule, we proposed for the duration of Clean Unit designation to be 10

years, while at the same time we solicited comments on whether there should be a different

duration for emission units that qualify for the Clean Unit test by going through major NSR as

opposed to those who qualify on the basis of controls installed to meet State minor NSR

requirements. Although our final rules contain different procedures for establishing Clean Unit

status for these two groups, we do not believe a difference in the duration of the Clean Unit

designation is appropriate. In both cases, the Clean Unit duration is a function of the control

life and ability to benefit the environment. Furthermore, we believe both methods of qualifying

for Clean Unit status will result in state-of-the-art controls that are protective of air quality. We

agree with those commenters who stated that control equipment with a high level of efficiency

will provide that level of control regardless of whether its Clean Unit designation was

established through a major NSR determination or otherwise. There is no reason to differentiate

between state-of-the-art controls installed to comply with major NSR versus those that are

installed under other permitting programs, as long as air quality review and public participation

are required.

We believe that we have discretion to determine the appropriate period for Clean Unit

eligibility. We agree in part with those commenters who stated that the Clean Unit duration

should be a function of the useful life of the controls. As a policy matter, we believe that this

time period should reach a balance between the unit’s useful emission control equipment life,

and the time frame in which additional major NSR review is likely to result in no added

environmental benefit. Rapid advancement in emission control technology over a short period of

time is likely to occur for source categories that currently have little to no control technology

options, not where state-of-the-art technology is already available. We agree with the

commenters who stated that it is unlikely that a source equipped with state-of-the-art control

technology would be required to install new technology within a 10-year period. As a practical

matter, we realize that the “ideal” time frame will vary by emission control technology and by

pollutant; however, we have used a single time frame to provide simplicity in our final rules. 
9 - Clean Units

 

1

Vatavuk, William, “Part II, Factors for estimating capital and operating cost,” Chemical Engineering, Nov.

3, 1980.

I-9-25

We also agree with those commenters who stated that owner/operators are more likely to

install state-of-the-art controls if they have some assurance that they will be able to recoup the

costs for the purchase, installation, and operation of the control equipment. Recovering the

costs of installation is more likely over a longer period of time. Moreover, with more certainty

regarding the ability to use expensive controls over time, we expect that source owner/operators

will be encouraged to install advanced controls to improve product recovery or increase

throughput.

 To determine an average life expectancy for a variety of control technologies, we relied

on the guidelines for equipment life for nine commonly used emission control technologies

published in “Estimating Costs of Air Pollution Control Systems, Part II: Factors for

Estimating Capital and Operating Costs.”1 Using the average of the low, average, and high

values, we determined that a reasonable average equipment life for a control technology is

approximately 15 years. Therefore, we disagree with those commenters who believe 10 years is

too long. We then looked at the incremental improvement in control technology over time. We

found that the evolution of pollution control equipment over time is dominated by innovation,

rather than invention. In other words, the change in design and capacity for any given device

type occurs infrequently as a series of marginal improvements over the preceding design. 

Consequently, the marginal improvement in pollution abatement one can expect between

generations of the same type of device is also very small - too small to justify the cost of an

entirely new unit. For example, flue gas desulfurization (FGD) units have been used in the

United States for about twenty years, and were used in Japan and Germany for 10 years before

that. During the early 1980's, a typical FGD removed about 90 percent of the sulfur from a flue

gas stream. Today, modern FGD systems typically average 95 to 99 percent removal efficiency -

less than a 10 percent improvement in 20 years. This further supports our disagreement with the

commenters’ assertion that advances in control technology occur at intervals less than 10 years. 

It also confirms the reasonableness of a 10-year duration for Clean Unit status.

We agree with those commenters who were concerned that Clean Unit status would be

based on BACT/LAER determinations that result in no controls. We agree that “no controls”

does not equate to a well-controlled unit. In most cases, BACT/LAER will result in significant

emission decreases (such as 90 percent control for many VOC coating sources). In rare

circumstances, however, the outcome of a reviewing authority’s BACT or LAER determination

may result in an emissions limitation that the source will meet without using a control

technology (add-on control or P2 technique). Under our new rules, sources will not qualify as a

Clean Unit in such circumstances. We do not believe that an emissions unit qualifies for Clean

Unit status unless it has state-of-the-art controls that reduce emissions. Therefore, Clean Unit
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I-9-26

designation is not appropriate for those instances where a BACT/LAER determination of no

control was made, generally on a cost effectiveness basis. Moreover, allowing a source with no

controls to qualify as a Clean Unit opens the door for circumvention of the CAA requirements. 

More specifically, our new rules also require sources to make an investment (which includes

expenses to research the application of a P2 technique to the emission units unit or to retool the

unit to apply a P2 technique) to qualify initially as a Clean Unit. We believe that application of

add-on controls or a change to the source's emissions unit or process to implement P2 will

require research, followed by a retooling or reformulation of the emissions unit or process. 

Such changes will require the source to have at least some investment. We believe P2 techniques

have the potential to reduce emissions and we do not want to discourage use of such options. 

Therefore, we disagree with those commenters who believed P2 techniques are not an adequate

basis for Clean Unit status.

We want to emphasize that the control technology determination is a balance between the

unit’s useful emission control life and the time frame in which additional major NSR review is

likely to result in no added environmental benefit. For this reason, our rules contain

requirements that control technology determinations (add-on or P2) must be protective of air

quality and under go public review. We believe these requirements ensure appropriate control

determinations and environmental benefit, encourage the use of state-of-the-art controls, and

allow sources to recover the costs of installing controls.

9.6 Expiration of the Clean Unit Designation

Comment:

Several commenters (IV-D-106, 129, 130, 132, 147, 153, 154, 170) requested that EPA

further broaden the exclusion by allowing units to “re-up” their exemption at the end of the initial

exemption period, if performance is still deemed comparable to BACT or LAER.

Two commenters (IV-D-104, 170) asked how likely it is that the level of control would

be considered equivalent to BACT/LAER after 10 years. Worse, they asked, how consistently

will these determinations be made over 100 permitting agencies? They noted that expiration of

the Clean Unit designation means use of the actual-to-potential test. EPA should extend the

“clean” period to 20 years or automatic renewal of the 10-year “clean” designation unless the

reviewing agency rules otherwise.

Two of the commenters (IV-D-130, 154) suggested that EPA could implement the “reupping” concept by establishing a rebuttable presumption that a Clean Unit whose eligibility

period has expired, may qualify as a Clean Unit under the case-by-case determination process.

Two commenters (IV-D-129, 132) requested that EPA allow an additional 5 or more years

beyond the initial 10 years if a facility demonstrates that the existing control technology is still

consistent with those technologies provided in Federal guidance such as the RBLC.
9 - Clean Units

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Response:

We agree with the commenters who believed that source owner/operators should be able

to re-qualify for Clean Unit status. Sources may re-qualify their emissions unit for Clean Unit

designation by using the same procedures used for initial Clean Unit designation. That is, by

undergoing major NSR, by demonstrating that the unit is “substantially as effective” as

BACT/LAER controls, or by a SIP-approved permitting program. As we stated before, we

believe that once a source has installed state-of-the-art emissions control, an additional major

NSR review will generally not result in any additional emissions controls for a period of years

after the original control technology determination is made. Also, the period for which any

specific technology (add-on or P2) will continue to achieve the same level of control depends on

many factors. As a practical matter, we have established a single time frame of 10 years for the

Clean Unit designation to provide simplicity in our final rules. However, we determined that a

reasonable average equipment life for a control technology is generally longer than 10 years. 

Certainly we want to encourage source owner/operators who would otherwise not be required to

install add-on controls to install and maintain such state-of-the-art control. We believe this is

more likely when source owner/operators can be assured that they can retain the Clean Unit

designation for the useful life of the equipment, as long as the air quality continues to be

assured. The useful life of the equipment may extend beyond the original Clean Unit expiration

date. Therefore, we are promulgating final regulations that allow source owner/operators of

Clean Units for which the designation has been lost or expired, to re-qualify the emissions unit

for a new Clean Unit designation.

9.7 Requirements for Units Permitted Under State Minor NSR

9.7.1 Clean Unit Exclusion for Units Permitted Under State Minor NSR

Comment: 

Several commenters (IV-D-20, 111, 121, 146) supported allowing units permitted under

State minor NSR programs to qualify for the Clean Unit exclusion.

One commenter (IV-D-53) stated that if the Clean Unit approach is maintained, EPA

should limit the exclusion to BACT/LAER demonstrations and not all other NSR requirements,

such as units permitted under a State minor NSR program. The commenter believed any

emission increase should be reviewed to determine the effect it will have on air quality. Most

NAAQS consider concentrations on a longer-term basis. Thus, noted the commenter, while an

emissions unit might not have an increase in the hourly potential emissions, an emissions

increase in the number of hours per day or days per year of operation will increase the annual

emissions and could have a significant effect on a longer-term NAAQS. The commenter asserted

that these longer-term analyses, which are a part of existing NSR programs (such as ozone SIPs),

need to be maintained to ensure continued protection of the NAAQS.
9 - Clean Units

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Some commenters (IV-D-14, 92, 146, 180) supported EPA’s proposal that permitting

authorities may submit minor NSR control technology requirements for certification by EPA that

the minor NSR program requires control technology that would satisfy the requirements for the

Clean Unit exclusion. However, two commenters (IV-D-92, 180) asserted that State, local, or

tribal minor NSR programs that require BACT should not be required to submit an individual

control technology certification for each emission unit. If the minor NSR program has to wait for

EPA’s approval each time a source wants to qualify as a Clean Unit, they suggested, the revised

program could result in no net improvement in streamlining the NSR program.

Many commenters (IV-D-11, 31, 53, 65, 72, 121, 128, 129, 137, 138, 147, 152, 160, 183,

191) opposed provisions related to requiring certification that a State’s minor NSR program is

equivalent to BACT or LAER. 

A few commenters (IV-53, 137, 152) opposed provisions allowing an equivalency

certification of State technology programs because control technology determinations made

under such programs might not be equivalent to BACT/LAER under major NSR. One of the

commenters (IV-D-152) opposed EPA’s proposed exemption based on limits that were set under

programs that were determined as comparable to BACT and LAER programs without any

assessment of whether the actual determinations in any way reflected current best technology. 

The commenter stated that this exemption has no procedural safeguards to ensure the adequacy

of these exemption-creating determinations and it is not clear who makes the determinations,

how they are documented, or what opportunity for public participation and transparency is

involved. Another commenter (IV-D-53) stated that the proposal that permitting authorities may

submit for certification by EPA minor NSR control technology requirements that would satisfy

the requirements for the Clean Unit exclusion is not appropriate. However, if EPA keeps this

provision, suggested the commenter, the Agency’s review should ensure that the minor NSR

technology is indeed equivalent to a full BACT or LAER determination. One commenter (IV-D137) stated that several important issues need answers before general support for this proposed

revision is adopted. For example, it would help to know what specific State and local air agency

surrogate reviews for Clean Units are equivalent to a Federal BACT or LAER demonstration. 

The commenter believed EPA’s NSR proposal focuses too much on BACT and LAER

equivalency as the only issue in Federal NSR demonstrations, while failing to consider and

implement all the other aspects of major source review, such as NAAQS and increment impacts

for criteria pollutants, testing requirements, and compliance issues. The commenter asserted that

if EPA keeps this provision, the Agency’s review must ensure that the minor NSR technology is

indeed equivalent to a full BACT or LAER determination, and the time frames should be

reduced. 

Many commenters (IV-D-11, 65, 72, 121, 128, 129, 138, 147, 160, 183, 191) opposed the

certification because they believed that States should have discretion to determine whether

controls under their minor NSR programs were equivalent to BACT/LAER. One of the
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commenters (IV-D-65) recommended that States should have broad discretion to determine

whether controls established by a process other than major NSR qualify as Clean Units, and

believed that the proposed certification process for State programs essentially requires the State

process to be identical to and result in major NSR. Another commenter (IV-D-72) stated that the

key criterion is the controls installed, not the status of the program under which they were added.

States are well-equipped to make these evaluations.

Another commenter (IV-D-121) stated that EPA’s proposal to require that States submit

their control technology review programs to EPA for certification is misplaced and contrary to

the spirit of the Act. The commenter believed this proposal amounts to little more than an extralegal attempt by EPA to review and potentially override individual State applicability and

permitting decisions. EPA should properly confine its review of State decisions to conformance

of the SIP with the requirements of the Act. Another commenter (IV-D-138) stated that in the

past, EPA has demonstrated little regard for the discretion State agencies must have in order to

properly administer the air programs in their States. Furthermore, said the commenter, States

may go for years without receiving the EPA’s certification that the State’s minor NSR control

technology requirements are equivalent to BACT or LAER. States should be given the discretion

to make these determinations of equivalency of minor and major NSR control technology

requirements and should not require EPA certification.

Two commenters (IV-D-65, 147) recommended that States be given the discretion to

evaluate a number of factors when determining whether a source should be eligible for the Clean

Unit exemption under the provision for comparable State programs. These factors should

include: a comparison to recent BACT/LAER determinations for both emission rates and overall

emission impacts (that is, tons per year); consideration of the age of the controls on the proposed

Clean Unit; and the incremental cost-effectiveness between the proposed Clean Unit exclusion

and BACT/LAER.

One commenter (IV-D-160) stated that the final rule should explain and simplify the

process by which EPA would certify that a State program requires emission limitations

comparable to BACT/LAER. First, the rule should provide that, in determining whether a

program requires “comparable” limits, the Agency should focus on whether the program as a

whole achieves comparable environmental results, rather than requiring that the program impose

controls identical to BACT/LAER for each type of emissions unit. Second, the rule should

establish a presumption that any State requesting a certification from EPA satisfies the standard

of “comparability” unless the Agency demonstrates otherwise.

One commenter (IV-D-31) recommended that EPA approve or disapprove State and local

agency BACT/LAER lists, rather than approving their entire minor NSR program. One

commenter (IV-D-31) stated that the comparability requirement would simply consist of a

comparison of the State or local district’s BACT/LAER technology list against EPA’s listing

with comments as appropriate where the State’s list was not adequate. The commenter believed
9 - Clean Units

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that analysis of the adequacy of the State’s entire minor NSR program seems outside the scope of

a simple technology comparison. 

One commenter (IV-D-147) believed that EPA had unduly constrained the factors that the

States could use when determining whether a minor NSR source should be eligible for the Clean

Unit test. The commenter identified comparison to recent BACT/LAER determinations for both

emission rates and overall emission impacts (that is, tons per year). The State agency,

maintained the commenter, should also be allowed to consider the age of controls on the

proposed Clean Unit and the incremental cost effectiveness between the proposed Clean Unit and

BACT/LAER.

Response:

We agree that control technology determinations made by State and local agencies can

be comparable to BACT/LAER, regardless of the purpose for which the control technology

decision is made. However, we also agree with those commenters who believe that a thorough

analysis is necessary to ensure air quality is protected. Moreover, we agree that a control

technology determination is not comparable to BACT/LAER unless it has been through public

review. 

Therefore, we are promulgating regulations that allow emissions units that have not had

a BACT/LAER determination to qualify for the Clean Unit designation if they are permitted

under a SIP-approved permitting program that provides for public notice of the proposed

determination and opportunity for public comment to determine whether they should qualify as a

Clean Unit.

As the court outlined in Alabama Power, 636 F.2d at 351-352, the PSD permitting

program has five key elements: control technology review; air quality review; monitoring

requirements; information on the source; and procedures for processing applications, including

public notice and the opportunity for comment. A new major source or major modification in an

attainment area must go through PSD permitting to become a Clean Unit. That process would

have had to include the elements listed above. [C.A.A. § 165.]

 

Similarly, the CAA requires new major sources or major modifications undertaken in

nonattainment areas to obtain permits that require them to meet the lowest achievable emission

rate and to obtain offsetting emissions reductions. [C.A.A. § 173.] In order to be designated a

Clean Unit, a major source or modification in a nonattainment area would have had to satisfy

these and other requirements of nonattainment NSR. 

We agree with commenters that Clean Units established in permits issued pursuant to

State and local agency minor NSR programs must conform with the requirements of the CAA. 

We believe that units that have undergone minor source permitting in a manner that fulfills the
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statutory purposes of major NSR – either because a State’s minor NSR program already contains

equivalent provisions or because the existing program is enhanced for the purpose of allowing

the reviewing authority to satisfy Clean Unit criteria – also will have satisfied the requirements

of the CAA in a manner sufficient to justify Clean Unit status. To obtain Clean Unit status

through a minor NSR program, that process must include a requirement for public participation. 

Furthermore, emissions units that are designated as Clean Units through SIP-approved minor

NSR programs must satisfy an air quality test. Sources must demonstrate that no negative air

quality impact will result even if the emissions unit emits up to its full permitted allowable

emissions level. If the emissions unit has already been permitted under minor NSR or another

SIP-approved permitting program, the source may have already satisfied the second part of this

test. If not, consistent with the requirements in sections 165(a)(3) and 173(a) of the CAA, the

source will be required to show that its emissions will not cause or contribute to a violation of

any NAAQS or PSD increment, and that it will not have an adverse impact on an identified

AQRV (an AQRV that has been identified by the FLM, such as visibility) in a Class I areas. For

areas that do not already attain the NAAQS, the source would be required to show that the

emissions for the unit have been previously offset, or the reviewing authority will have to show

that these emissions will not interfere with the State’s ability to achieve attainment. 

Because our rules require that Clean Units be designated only when the major NSR

statutory requirements have been met and the public will have the opportunity for commenting

on whether they are, we do not see the need for a case-by-case review of each State or local

agency’s minor NSR program before the reviewing authority is allowed to designate Clean Unit

status through such a program. The public will have an opportunity to review and comment on

the reviewing authority’s decision to designate an emissions unit as clean, including the ability

to raise any issues concerning the sufficiency of the RBLC data upon which the determination is

based. This approach ensures that an emissions level comparable to that of BACT or LAER is

met. Therefore, we agree with those commenters who opposed provisions related to requiring

certification that a State’s minor NSR program is equivalent to BACT or LAER. The unit must

meet the same stringent requirements regardless of whether the permit was issued under a major

NSR or other SIP-approved permit program. State and local reviewing authorities are in the

best position to determine whether particular controls are comparable to BACT/LAER, which is

a minimum requirement for obtaining Clean Unit status. We also agree that requiring

additional approval of State and local programs would hinder Clean Unit approvals and

streamlining of the NSR program in general. 

For a more detailed discussion of the control requirements for emission units that have

not been through major NSR, see our response under 9.8.2.
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9.7.2 Other Comments on Units Permitted Under State Minor NSR

Comment:

One commenter (IV-D-14) advocated that any State Clean Unit determinations must be

based on current BACT, and preferred that EPA clarify this requirement in the regulatory text

and the preamble. The commenter referred to §51.166(b)(2)(iii)(L)(5)(iii), which provides a

Clean Unit exemption for any activity that occurs no later than 60 months (5 years) from the date

in which the permit authority made a determination that the emission limit was equivalent to

BACT (or LAER). The commenter noted that it is not entirely clear how this type of BACT

analysis ought to be conducted. Is it a simple comparison to the RBLC, or does it require a full

BACT analysis? Would you factor in retrofit costs and equipment age factors, or would you treat

the case as though the source had never been built? Comparability must be obtained to present

BACT as if construction had not previously commenced, suggested the commenter. The reason

for the exemption, they believe, is that controls installed on an emissions unit are comparable to

those that would have resulted from a current PSD permit for the source modification. The

commenter believed that this is clearly not an evaluation looking back in time at what would

have been arrived at 5-10 years ago. Rather, if the source were required to obtain a PSD permit

for a modification at the present time, they said, the control equipment installed on the unit

would be found to be comparable to wording in the regulation that the comparable BACT finding

is an evaluation of current and not past BACT. The commenter believes that preamble guidance

would also be helpful, especially if EPA believes that retrofit costs should be considered. 

One commenter (IV-D-20) recommended that the permitting authority be allowed to

determine after a cursory review that existing controls at any facility qualify as LAER, and may

therefore treat the unit as a Clean Unit. For example, their agency maintains a BACT Workbook

(their BACT is equivalent to EPA’s LAER), which is updated whenever a new BACT

determination is made. They would consider any source operating in conformance with the

handbook to be utilizing BACT. 

One commenter (IV-D-125) stated the appropriate standard for EPA to use in determining

whether a permitting authority’s minor NSR program control technology requirements are

comparable to the BACT/LAER requirements would be to determine that the program requires

equivalent or greater emissions reductions. 

One commenter (IV-D-113) asked whether the source would be required to submit a

BACT/LAER analysis to U.S. EPA. Will EPA provide opportunity for public comment? Will

there be an appeal process?
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Response:

We believe that emissions limitations (based on the BACT/LAER determination) and

other permit terms and conditions (such as any limits on hours of operation, raw materials, etc.,

that were used to determine BACT/LAER), are protective of air quality and form a sufficient

basis against which future increases should be measured. Moreover, we believe that once a

BACT/LAER determination has been made, there is a period of time in which additional major

NSR review is likely to result in no added environmental benefit. This period of time generally

corresponds to the equipment control life, which is generally at least 15 years. (We promulgated

10 years because we did not take comment on 15, but our analysis shows 15 years is a

reasonable average control equipment life.) Therefore, as long as the BACT/LAER

determination occurred within the last 10 years, we disagree with the commenter who believed

that units that had already undergone a BACT/LAER review must undergo an additional review

at the time the Clean Unit status is designated. Because state-of-the-art controls will achieve the

same high level of efficiency regardless of whether they were installed to meet BACT/LAER or to

meet State and local agency requirements, we also believe it makes sense to allow the Clean Unit

status without re-review for the same period of time for qualifying units that are permitted under

SIP-approved programs.

Emissions units that have been through major NSR automatically qualify for Clean Unit

status. This includes those emissions units that went through major NSR before promulgation of

our new final rules. If an emissions unit automatically qualifies for Clean Unit status because it

went through major NSR, the Clean Unit designation is based on the BACT/LAER controls that

went into service as a result of the major NSR review. That is, Clean Unit status is based on the

BACT/LAER controls regardless of whether the actual Clean Unit designation process through

title V occurs at some time after the controls went into service. 

For emissions units that have not been through major NSR, our rules also allow the

reviewing authority to provide sources with a Clean Unit designation for emissions control that

has already been installed and operated. However, we have limited the time frame under which

the reviewing authority is allowed to make such retroactive determinations for Clean Unit

designations that are granted through a SIP-approved permitting process other than major NSR. 

If the source begins operation of the emissions controls later than 2 years after promulgation of

the final rules, it must obtain a Clean Unit designation from the reviewing authority before it

brings its emissions control into service. If the source is applying for a retroactive Clean Unit

designation for an emission unit that has not been through major NSR, our new final rules allow

the reviewing authority to compare the source's emission control level to the BACT or LAER

level that would have applied at the time the source began construction of its emissions unit. 

However, the reviewing authority must have sufficient information to make a reasoned judgment

regarding whether the control is comparable to BACT/LAER. Therefore, if the source is unable

to find data to support its comparability analysis based on the date it began construction of its

unit, the source must compare its emission control to current day BACT or LAER. In this case,
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the source may still only use the Clean Unit applicability test for a period of 10 years from when

the emissions control went into service. 

To assure continued air quality protection, we believe that control technology

determinations must be reassessed before a new Clean Unit designation can be obtained by the

source. Therefore, to re-qualify for a new Clean Unit status, sources must use the same

procedures used to obtain the initial Clean Unit designation. That is, by undergoing major NSR,

or by demonstrating that the unit has controls that are comparable to BACT/LAER controls

under a SIP-approved permitting program. This procedure comports with our policy that the

controls must be state-of-the-art and achieving emissions reductions adequate to assure air

quality protection to retain Clean Unit status. 

9.8 Clean Unit Provisions for Units That Have Not Undergone Major

or Minor NSR Review (case-by-case determinations)

9.8.1 Support/Oppose Clean Unit for Units That Have Not Undergone Major

or Minor NSR

Comment:

9.8.1.1 Support allowing units that have not undergone major or minor 

 NSR to qualify as Clean Units

Several commenters (IV-D-107, 121, 125, 130, 146, 154, 160, 157) believed that units

that have not undergone major or minor NSR should be eligible for the Clean Unit exclusion. 

One of the commenters (IV-D-125) supported this option if a BACT/LAER determination

would not result in any lower level of emissions from the unit for the pollutant in question. The

commenter (IV-D-125) believed that the proposed criteria for the case-by-case exemption are

vague and allow for accidental non-compliance as well as difficult enforceability. The

commenter said that the costs, benefits and technical considerations associated with the retrofit

application of additional controls to the particular unit “may be considered” by the permitting

agency in the evaluation. This standard is insufficient. When, why, and under what conditions

will the permitting agency consider the evaluation of application of additional controls?

One of the commenters (IV-D-157) maintained that units that have not undergone major

or minor NSR are good candidates for the Clean Unit exclusion because a unit that “nets out” has

an incentive to keep its emission increase as small as possible to minimize its need for netting

credits. A unit that is netted out must obtain emission reductions elsewhere that completely

avoid any significant emissions increase, while a unit that installs technology is free to emit

whatever the technology does not remove. The commenter believed allowing units that net out
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to qualify for the Clean Unit exclusion would also encourage P2 because netting credits can be

generated by the types of subtle process or materials changes that a requirement for end-of-pipe

controls on a designated unit will simply miss. Another commenter (IV-D-121) agreed that

substantial environmental and economic benefits would be realized if EPA were to extend the

Clean Unit exclusion to units that net out. 

One commenter (IV-D-107) advocated allowing case-by-case determinations without

public notice and comment.

9.8.1.2 Oppose allowing units that have not undergone major or minor 

 NSR to qualify as Clean Units 

Several commenters (IV-D-20, 31, 53, 137, 152) objected to the case-by-case allowance. 

One of these commenters (IV-D-152) maintained it amounts to a repeal of the Act’s requirement

for BACT and LAER. The commenter believes the proposal to allow blanket Clean Unit claims

to be processed during the title V permit issuance and renewal process is an invitation for abuse. 

If this approach becomes law, asserted the commenter, it will quickly become known as the NSR

immunity bath: any Clean Unit claim that was not affirmatively challenged could become the

basis for a 10-year exemption from NSR. 

One commenter (IV-D-20) stated that the idea behind the Clean Unit concept is to

streamline the review of units that have recently been scrutinized. It therefore makes no sense,

said the commenter, to extend the concept to other units. (that is, the “many source and emission

unit categories for which BACT or LAER determinations do not exist, let alone recent

determinations”) The commenter opposed extending the Clean Unit exclusion to units without

BACT or LAER determinations and recommended leaving these units to the regular process. 

One commenter (IV-D-31) stated that the proposed exclusion is not an incentive to

sources due to the case-by-case qualification for a Clean Unit exclusion that requires the

permitting authority’s technology review and public notice and opportunity for comment. EPA

should periodically publish presumptive BACT and LAER levels for common source categories

so that determination of a Clean Unit can be made by a simple comparison between the EPA’s

published BACT/LAER database versus the subject unit’s emission rates or control technology. 

Two commenters (IV-D-53, 137) stated that permitting authorities did not have the time

or resources to invest in “what if” reviews for case-by-case determinations for Clean Unit

exclusions. As proposed, the permitting authority would be required to engage in a technology

review that is similar to a BACT or LAER review in order to qualify a unit for the exclusion. 

They believe this approach simplifies neither the application requirements for an applicant nor

the technical review for permitting authorities. Another commenter (IV-D-137) expressed

several reservations regarding the EPA’s proposed qualification of units on a case-by-case basis. 

They believe State and local permitting authorities do not generally have the resources to invest
9 - Clean Units

I-9-36

in “what if” reviews. If the company is not seeking a pre-review, then the time that is needed to

review a specific application for compliance with the BACT or LAER requirement would not be

any different than the time needed to do this review outside of the Federal NSR program. 

Response:

We agree with those commenters who believed that units that have not undergone major

or minor NSR should be eligible for the Clean Unit exclusion. Although we solicited comment

on units that have not gone through major or minor NSR review because they netted out, we

recognize that there may be other emission units that may be permitted under other State or

Federal programs that may have state-of-the-art controls that would qualify as Clean Units. We

want to encourage installation of state-of-the-art controls. Furthermore, there is a fundamental

fairness issue involved: state-of-the-art controls will achieve the same high level of efficiency

regardless of the purpose for which they were installed. Moreover, commenters did not

generally distinguish between units that have netted out of major NSR and other units that have

not been through major NSR. Therefore, we developed the final regulations to cover only two

types of units: those that went through major NSR and those that went through a SIP-approved

permitting process that contained control review, air quality review, and public participation. 

Thus, the unit must meet the same stringent requirements regardless of whether the permit was

issued under a major NSR or other SIP-approved permit program. We believe these

requirements will ensure that Clean Units designated pursuant to permitting through SIPapproved programs will have undergone permitting in a manner that fulfills the statutory

purposes of major NSR.

9.8.2 For Units That Have Not Undergone Major or Minor NSR Review,

Impose a Specific Methodology for Determining That a Specific

Emissions Unit Has Controls That Are Comparable to BACT/LAER

Comment: 

One commenter (IV-D-62) endorsed allowing States to make the case-by-case

determinations regarding BACT/LAER equivalency (including whether RACT and MACT

standards or state-imposed limits and controls are equivalent controls for the unit at issue)

without rigid protocol because States are generally more familiar with the sources in their

jurisdiction.

9.8.2.1 Alternatives for determining BACT for units that have not 

undergone major or minor NSR Review: average of last 3 years

Several commenters (IV-D-14, 20, 92, 120, 125, 170, 180; IV-G-12) opposed making

BACT/LAER determinations based on the average for the last three years. 
9 - Clean Units

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One of the commenters (IV-D-125) stated that the alternative basis upon which a

permitting authority could make the determination that a unit has comparable BACT or LAER

emissions limitation should not be based on averages. Averages can mislead permitting analysis

because they are too general and prone to misuse. If an average must be used, suggested the

commenter, the highest and lowest numbers in the range should be thrown out before the average

is computed.

Another commenter (IV-G-12) disagreed with the proposal’s assertion that the average of

recent determinations could be used to determine if previous control is “comparable” to BACT or

LAER, especially if EPA defines “recent” as the past 10 years. The commenter pointed out that

the RBLC Ranking Reports demonstrate that the average control determination can differ

significantly from the most recent control determination. The permitting authority’s

“comparable” determination should include examination of all of the technologies required to be

considered in a BACT/LAER determination (that is, technologies “demonstrated in practice”),

not just those listed in the RBLC. The commenter noted that the preamble states that units that

did not initially qualify for Clean Unit exemptions could subsequently install controls to qualify,

if the original air quality impact is not compromised. This stipulation should be included in the

actual regulatory language, suggested the commenter.

One commenter (IV-D-14) maintained that the alternative of using the average for the

most recent 3 years may lead to unusual results if the control levels have substantially changed in

that time period. For example, the average of 0 percent and 90 percent, at least 45 percent,

would not be considered clean to most persons, suggested the commenter. Calling an

uncontrolled unit a “clean” or “state-of-the-art” controlled unit, and providing an exemption that

is meant to give a break to companies that have taken the effort and expense to install controls or

low emitting equipment is not acceptable, asserted the commenter. 

Two commenters (IV-D-92, 180) stated that it would be inappropriate for many source

types to use an average value (the first EPA-proposed method) when making this assessment. 

Not all of the reasons for a specific BACT determination are evident in the RBLC information,

they said, and inclusion of all source types, without consideration for specifics, could skew the

numeric value for BACT. For example, a retrofit boiler might not be able to achieve typical

BACT values because of technical limitations. The commenter believed that including this data

point in determining the average would reduce the control technology requirement for new

boilers.

Another commenter (IV-D-20) noted that the concepts of BACT and LAER are not

consistent with the practice of the averaging of recent determinations. The commenter stated that

the alternatives that incorporate this approach needlessly complicate the simple concept that a

new source should apply the best available control technology.
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Two commenters (IV-D-120, 170) stated that both of the proposed alternatives for

making determinations of BACT or LAER comparability will require a continual classification of

the new and modified sources into similar or equivalent source categories, identification of the

control technology as BACT or LAER, identification of the pollutant(s) reduction or emission

levels and determination of an average of the most recent emissions levels. One commenter (IVD-120) stated that even relatively straightforward equipment with well-defined BACT/LAER

levels for a generic category (for example, a gas-fired turbine) will require frequent collection

and maintenance of large quantities of information such as machine design parameters,

utilization conditions, type of control technology, fuel type, design capacity, operating cycles, to

name but a few. 

9.8.2.2 Alternatives for determining BACT for units that have not 

 undergone major or minor NSR review: percent control

Several commenters (IV-D-14, 73, 74, 88) supported the Agency’s proposed second

alternative - determining if the unit’s control level is within some percentage, such as 5 or 10

percent, of the most recent BACT or LAER level for equivalent or similar sources] for the caseby-case review to provide industry with some flexibility in meeting BACT or LAER levels. One

commenter (IV-D-14) stated that the second alternative of 5 to 10 percent of the most recent may

prove to be more workable. Using the level within 5 to 10 percent of the most recent is

acceptable, they said, but the time period that constitutes most recent is left unstated. 

However, several commenters (IV-D-92, 120, 137, 170, 172, 180) opposed controlling to

within 5-10 percent of the most recent BACT/LAER determination. One commenter (IV-D-172)

noted that for major sources, even a small percentage increase in emissions translates into large

increases in mass emission rate emitted into the air uncontrolled. Also, the commenter

maintained that for major sources, such emission increases may have the potential to exceed

significant air quality impact levels. For any emission increase occurring after 5 years from the

date of original approval, the commenter believed additional control should be considered. Two

commenters (IV-D-92, 180) said this method, particularly when used for sources of large

magnitude, can create a significant difference in authorized emissions. The commenter gave an

example where a 5 percent margin for two sulfur recovery units could result in a 1,900 ton per

year difference in emissions. An adequate database of BACT/LAER determinations, suggested

the commenter, may provide a more valuable tool for regulators and the regulated community

than the use of an additional factor. One commenter (IV-D-137) maintained that establishing

control levels based on a percentage of current BACT or LAER levels for equivalent sources is

not a simple matter, as evidenced by the extended controversy over MACT floors. Defining

control levels based on a certain percentage derived from BACT and LAER for equivalent

sources does not result in BACT or LAER itself, suggested the commenter, but merely something

that is close to BACT or LAER.
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Two commenters (IV-D-120, 170) stated that both of the proposed alternatives for

making determinations of BACT or LAER comparability will require a continual classification of

the new and modified sources into similar or equivalent source categories, identification of the

control technology as BACT or LAER, identification of the pollutant(s) reduction or emission

levels and determination of an average of the most recent emissions levels. One commenter (IVD-120) stated that even relatively straightforward equipment with well-defined BACT/LAER

levels for a generic category (for example, a gas-fired turbine) will require frequent collection

and maintenance of large quantities of information such as machine design parameters,

utilization conditions, type of control technology, fuel type, design capacity, and operating

cycles, to name but a few. 

9.8.2.3 Alternatives for determining BACT for units that have not 

 undergone major or minor NSR review: other alternatives

Some commenters (IV-D-125, 130, 137, 154, 160, 170) suggested other alternatives for

determining BACT/LAER when the unit has not undergone major or minor NSR.

One commenter (IV-D-137) believed that there are significant differences among BACT

and LAER determinations for emission units in the same source category that are located in

different areas or owned or operated by different companies. Further, establishing control levels

based on a percentage of current BACT or LAER levels for equivalent sources is difficult and

does not result in BACT or LAER itself, but merely something that is close to BACT or LAER. 

A case-by-case determination (despite various concerns) of BACT and LAER is more

appropriate, because it allows individual circumstances to be reviewed and incorporated into the

BACT or LAER determination as appropriate.

One commenter (IV-D-170) suggested that a less demanding but more efficient

alternative would be to establish a single minimum percentage reduction in actual emissions that

represents BACT and LAER reductions for the majority of sources in the country, subject to

periodic revisions every 3 to 5 years. The commenter suggested that any units meeting or

exceeding this reduction would qualify as a Clean Unit. This approach would need to include an

option for an owner to demonstrate that a lower level of reduction is BACT or LAER, noted the

commenter.

Three commenters (IV-D-130, 154, 160) requested that the final rule ease the rigid

requirements currently proposed for State case-by-case determinations of BACT/LAER

“comparability” under the third category of Clean Units. Instead, the commenters (IV-D-130,

154, 160) suggested that State permitting authorities should have the flexibility to make “frontend” determinations of comparability for certain technologies, such that any technology that is

identified in advance as comparable to BACT/LAER would automatically qualify as a Clean

Unit. One of the commenters (IV-D-160) also suggested that the final rule establish a notice-
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I-9-40

and-go procedure for applying the exclusion. Under this approach, suggested the commenter, the

burden would shift to the permitting authority to demonstrate that the exclusion should not apply.

Response:

We agree with those commenters who stated that our proposed methods for determining

the Clean Unit control, averaging and percent control, were unworkable for various reasons. 

Based on the comments that our two proposed methods were unworkable, we decided to develop

a simpler method for determining when an add-on control technology or P2 technique is

comparable to BACT/LAER. Sources can make a showing that the add-on control technology or

P2 technique is comparable to BACT/LAER in one of two ways: (1) by comparing the emissions

unit’s control level to BACT/LAER determinations for other similar sources in the RBLC; or (2)

by making a case-by-case demonstration that the emissions control is “substantially as effective”

as BACT or LAER. 

Under the first option (comparable to BACT/LAER), the source must obtain from the

RBLC all BACT or LAER emissions limits for all similar sources that have been determined

within the past 5 years. (For nonattainment areas, the determination would be based on LAER.) 

For PSD sources, the source must take the average emissions limit for all BACT determinations

made during the last 5 years from the RBLC and compare its unit's emissions to that average. If

the emissions unit control level (that is, its emissions rate) meets the emissions limit based on the

average emissions rate as described above, and passes the air quality test, then the source may

presume in its application to the reviewing authority that it would qualify as a Clean Unit. For

sources in nonattainment areas, the determination would be based on any of the top five LAER

determinations made during the last 5 years that are available in the RBLC. If the emissions

control level on the emissions unit meets the emissions limit based on any of the best performing

5 similar sources and passes the air quality test, then the source may presume in its application

to the reviewing authority that it would qualify as a Clean Unit. The reviewing authority may

also consider other BACT/LAER determinations that are not included in the database to

determine whether the proposed emission rate is comparable to BACT/LAER. In addition, the

public will have an opportunity to review and comment on the reviewing authority’s decision to

designate an emissions unit as clean, including the ability to raise any issues concerning the

sufficiency of the RBLC data upon which the determination is based. This approach ensures that

the source is meeting an emissions level comparable to that of BACT or LAER, while providing it

with the flexibility to use the controls that are best suited for its processes. 

Under the second option, if the emissions unit does not meet the emissions limit based on

the analysis described above, or if there is insufficient information in the RBLC to conduct the

analysis, then the source may still show, on a case-by-case basis, that its emissions unit will

achieve a level of control that is “substantially as effective” as that achieved by the best

performers. The reviewing authority will make a decision on whether a particular add-on

control technology or P2 technique is “substantially as effective” as the BACT/LAER technology
9 - Clean Units

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for a specific source on a case-by-case basis. The “substantially as effective” test for sources in

nonattainment areas must consider only LAER determinations.

 While we are not promulgating specific requirements or performance criteria for

satisfying the “substantially as effective” test, we believe reviewing authorities are in the best

position to determine whether in fact a particular add-on control technology or P2 technique is

“substantially as effective” as the BACT/LAER technology for a specific source. The case-bycase determinations must meet the same air quality test as those units going through a

BACT/LAER determination. Moreover, the public has opportunity for public review and

comment on the “substantially as effective” decision. With these safeguards, we believe the

“substantially as effective” test will ensure determinations that meet both the control technology

and air quality tests, as well as allow sources to implement the controls that are best suited to

their individual processes. The “substantially as effective” test avoids a “one-size-fits-all”

approach that could preclude some well-controlled sources from benefitting from the Clean Unit

designation simply because there is insufficient information in the RBLC or because they are

using an innovative approach to emissions control.

We acknowledge the concerns of commenters regarding the need for comprehensive and

accurate information in the RBLC. To address these issues, we are now updating information

entered in the RBLC since the 1990 CAA Amendments. As with other control technology

determinations, the reviewing authority may consider BACT/LAER determinations that are not

included in the database to determine whether the proposed emission rate is comparable to

BACT/LAER. If there is insufficient information in the RBLC to conduct the analysis, then the

source may still show, on a case-by-case basis, that the emissions unit will achieve a level of

control that is “substantially as effective” as that achieved by the best performers. 

9.8.3 Using Title V Permitting Process for Existing Units That Have Not

Undergone a BACT or LAER Determination or Comparable State

Technology Requirement

Comment:

A few commenters (IV-D-42, 53, 62) supported allowing the permitting authority to make

a Clean Unit determination in connection with the title V permitting process, and supported

listing Clean Units in the permit so that thereafter, the source could make changes at those units

without requiring additional review or permit modification. One commenter (IV-D-53) opposed

the case-by-case determination provisions but stated that if EPA adopts the exclusion, then title

V is not an appropriate mechanism for these determinations, since any delay in the Clean Unit

determination process would likely delay the title V permitting process. However, title V would

be an appropriate mechanism for documenting and declaring sources as “clean.”
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Several commenters (IV-D-11, 20, 92, 137, 180) opposed the suggestion to use title V for

determining or recording case-by-case qualification for the exclusion. One of the commenters

(IV-D-20) maintained that the Clean Unit designation affects the nature of the review process for

modifications, not the need for one. Since the exclusion is not an operating requirement, it does

not belong in the title V permit. Another commenter (IV-D-11) strongly disagreed that the title

V permitting process is the vehicle for determining what qualifies for the exclusion. This

determination belongs in the NSR regulatory area. Adding another review element to the title V

permitting process would be a disaster for States already struggling to meet the current title V

requirements. This type of review, which offers the permittee an exclusion or shield from future

applicable requirements, would lead to title V permit applications burying State permitting

authorities under a mountain of evidence. Many States have found in early implementation of

title V that the permit shield provisions have resulted in some very creative and voluminous

proposals of what qualifies for the shield, and would expect similar proposals for what qualifies

for this exclusion.

Two commenters (IV-D-92, 180) opposed the EPA’s proposal to use title V permits to

conduct a control technology review. Since technical reviews are already conducted in the NSR

program, moving the technical review to the title V program would result in duplicative effort. 

Under the EPA proposal, all units would need to be evaluated to determine if they meet Clean

Unit status regardless of whether they would use the exclusion or not. This process would add an

unnecessary administrative burden to an already lengthy title V permit review and would do little

to streamline the procedure.

One commenter (IV-D-137) did not recommend using title V as a mechanism for

allowing non-Clean Units to install controls and then be certified as Clean Units. State and local

agency NSR programs and staff expertise (for example, modeling, toxic review) are needed in

this process. In addition, State and local agencies have the same concerns over this provision as

previously expressed in their comments on the “State Minor NSR Exclusion.” Title V is an

appropriate mechanism for documenting and declaring clean sources, but the process for

certifying sources as clean should be removed from the title V process to eliminate the possibility

that sources will blame the title V operating permit system for causing delays.

Response:

We agree with the commenters who believed that title V is an appropriate mechanism for

documenting Clean Units, but that the process for certifying sources should be separate from

title V. As commenters noted, this approach will avoid delays in title V permitting. Moreover,

we believe that major NSR or a SIP-approved permitting program is a more appropriate vehicle

for making control technology determinations and air quality analyses, which are typically not

done through the title V permitting process. Also, the title V process is designed to incorporate

and assure compliance for requirements under the Act, not to initially develop emission

limitations to meet those requirements.
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The Clean Unit designation and other permit terms and conditions must be included in

the title V permit at the time that the permit action establishing Clean Unit status occurs. If the

Clean Unit designation is established in a major NSR action occurring after the date that the

State or local agency has authority to establish Clean Unit status, there must then be a

significant modification to the title V permit to incorporate the Clean Unit designation and other

permit terms and conditions. (Some agencies have combined title V/NSR permit programs that

are approved into the SIP and under title V, in which case a separate title V permitting action

may not be required.) If the Clean Unit designation is established through another SIPapproved permitting process that meets these requirements for authorizing Clean Unit

designations, the title V permit must also be revised. We believe this process preserves the intent

of both the major NSR and title V programs, while ensuring that sources are able to utilize the

Clean Unit designation in the most expeditious manner.

9.8.4 Other Comments on Case-by-case Determinations

Comment:

Two commenters (IV-D-92, 180) maintained that the proposed public notice for case-bycase Clean Unit exclusions is not appropriate in cases where no increase in the allowable

emissions is authorized. In this situation, they believed, public notice would increase the

administrative burden rather than diminishing it as was intended by the reform effort.

Two commenters (IV-D-92, 180) believed that States with full delegation of federal NSR

should be allowed to determine BACT on a case-by-case basis without requiring the certification.

Response:

We believe that all Clean Unit designations must meet the public notice requirement. The

Clean Unit designation is an alternative applicability for major NSR, and as such our rules

require that Clean Units meet the major statutory requirements for major NSR. One of these

requirements is public participation.

We are allowing any unit to qualify for Clean Unit status, as long as it has either been

through major NSR or been through a SIP-approved permitting process that requires an air

quality review and public participation. Under the SIP approved permitting process, a

reviewing authority may make a case-by-case determination regarding a given control

technology for a particular source.
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9.9 Other Comments on Clean Units

9.9.1 Other Comments on Applicability

Comment:

One commenter (IV-D-14) agreed with the exclusion provided that the unit has installed

control equipment found to be BACT and that the owner/operator has not evaded the installation

of controls. To close a potential loophole, the commenter thinks EPA should include a statement

in the regulatory text requiring that a Clean Unit must be one that has installed state-of-the-art

controls.

Response:

We agree with the commenter that there must be an enforceable commitment to meet the

requirements for Clean Unit status, including the requirement to control emissions using the

specific air pollution control measures that were the basis for its Clean Unit status. We have

included regulatory language that requires the permit designating Clean Unit status to contain

such language. [See, for example, §51.166(t)(7)(iv).]

Comment:

Two commenters (IV-D-14, 113) believed the Clean Unit exclusion should not apply if a

BACT review results in “no controls.” Commenter IV-D-14 said that this type of unit would

clearly not be a Clean Unit. Technology can advance quickly from “no technology available” to

“substantial equipment available” and should be re-evaluated. Commenter IV-D-113 would also

require sources with a BACT/LAER determination limited to the use of an applicable standard

under 40 CFR part 60 and 61, as well as sources with a “no controls” determination, to revisit the

control technology determination. Otherwise, the commenter said, a source could apply for a

permit for an operation whose size is deliberately reduced that is not subject to controls, and then

subsequently modify the operation to reach its originally intended capacity and avoid control

requirements.

Response:

We agree with those commenters who were concerned that Clean Unit status would be

based on BACT/LAER determinations that result in no controls. We agree that “no controls”

does not equate to a well-controlled unit. In most cases, BACT/LAER will result in significant

emission decreases (such as 90 percent control for many VOC coating sources). In rare

circumstances, however, the outcome of a reviewing authority’s BACT or LAER determination

may result in an emissions limitation that the source will meet without using a control

technology (add-on control or P2 technique). Under our new rules, a source will not qualify as
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a Clean Unit in such circumstances. We do not believe that an emission unit qualifies for Clean

Unit status unless it has state-of-the-art controls that reduce emissions. Therefore, Clean Unit

designation is not appropriate for those instances where a BACT/LAER determination of no

control was made, generally on a cost effectiveness basis. Moreover, allowing a source with no

controls to qualify as a Clean Unit opens the door for circumvention of the CAA requirements. 

Our new rules also require sources to make an investment (defined as any expenses that would

qualify as a capital expense by the IRS filing guidelines, irrespective of whether the owner or

operator actually chooses to file it as a capital expenses) to qualify initially as a Clean Unit. We

believe that application of add-on controls or a change to the emissions unit or process to

implement P2 will require research, followed by a retooling or reformulation of the emissions

unit or process. Such changes will require sources to have at least some investment. We believe

P2 techniques have the potential to reduce emissions and we do not want to discourage use of

such options.

We do not agree with the commenter that a BACT/LAER determination based on parts 60

or 61 should be revisited. BACT/LAER determinations based on parts 60 and 61 are still

required to meet stringent air quality requirements. We don’t believe it is advisable to “second

guess” the reviewing authority’s assessment that the controls are protective of air quality. 

Moreover, the commenter’s suggestion could unfairly disadvantage sources with BACT/LAER

determinations based on parts 60 and 61.

Comment:

One commenter (IV-D-42) supported allowing emission units that did not initially qualify

as Clean Units to be eligible for the Clean Unit exclusion if they later install controls. 

Response:

We agree with the commenter. Emission units may qualify for Clean Unit status if they

meet the control technology and air quality tests, regardless of whether they previously qualified

or not. We believe this is only fair and furthermore encourages sources to install state-of-the-art

controls that are environmentally beneficial.

Comment:

One commenter (IV-D-153) believed that sources should be allowed to replace or

reconstruct existing units under the Clean Unit, so long as permit terms and conditions are met. 

The commenter believed that otherwise the Clean Unit exclusion was of limited value. If a unit

being replaced or reconstructed is subject to the same permit limits and the same control

technology is utilized, there is no reason to subject the unit to NSR, the commenter said. There

would be no significant net increase. The commenter believed that if a unit has recently been

permitted, it is less likely to have physical deterioration and more likely to be running near
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permitted capacity. Thus, changes to the unit will not likely result in increased utilization and

increased actual emissions.

Response:

 We disagree with the commenter that a replacement or reconstruction can automatically

continue to meet the Clean Unit terms and conditions. Changes to a qualifying Clean Unit may

be acceptable, as long as the permitted emission rate is not exceeded and the other terms and

conditions for the Clean Unit continue to be met. However, replacements, reconstructions, and

modifications into completely different units than were originally permitted are not acceptable. 

In these instances we cannot be sure that the criteria for Clean Unit status are still being met. 

For example, switching to a smaller but more polluting process than originally permitted may

trigger stricter BACT/LAER requirements, even at the same annual emission rate, since higher

percentage removal rates and lower costs would be possible at higher concentrations. Sources

may not replace or reconstruct a Clean Unit under an existing Clean Unit designation. If a

source wishes to replace or reconstruct a Clean Unit, it must re-qualify for Clean Unit status.

We expect that changes such as, but not limited to, increasing production to permitted

levels, reconfiguring the process, changing process chemicals if consistent with the original

Clean Unit application, replacing components, replacing catalysts, adding other controls, or

other changes would be allowable for Clean Units. In no instances are we authorizing

violations of any existing permit conditions or other applicable requirements that may apply to

the Clean Unit. 

Comment:

One commenter (IV-D-147) noted that the Clean Unit exclusions are not exclusions in the

traditional NSPS/NSR sense because they are not self-executing. Instead, the commenter noted,

they are heavily dependent on case-by-case State decision-making and procedures that may not

be equivalent to major NSR, but are certainly equivalent to minor NSR, and therefore,

unnecessarily burdensome. EPA should eliminate any requirement that a unit that has been

through a BACT/LAER review needs a case-by-case determination to be considered a Clean

Unit. Instead, the exclusion should be self-executing.

Response:

Any emissions unit permitted through major NSR automatically qualifies for the Clean

Unit designation, provided the BACT/LAER determination results in some degree of emission

control. These units already meet both the control technology and air quality criteria of the CAA

and the NSR regulations. We believe that the emissions limitations (based on the BACT/LAER

determination) and other permit terms and conditions (such as any limits on hours of operation,

raw materials, etc., that were used to determine BACT/LAER), are protective of air quality and
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form a sufficient basis against which future increases should be measured. Although emissions

units that have been through major NSR automatically qualify for Clean Unit designation, these

units must meet the specific procedures for establishing and maintaining Clean Unit designation.

Comment:

One commenter (IV-D-146) urged EPA to adopt provisions that clearly provide for

continuation of the exclusion, even if an area is redesignated due to a change in the NAAQS. 

The commenter was concerned that changes in the designation of a planning area from

attainment to nonattainment due to a revision of the NAAQS would adversely impact previous

equivalency determinations.

Response:

We agree with the commenter. If the emissions unit received a Clean Unit designation

while the unit was located in an attainment area and the area’s status subsequently changes to

nonattainment, the emissions unit retains the Clean Unit designation until expiration.

Comment:

One commenter (IV-D-47) believed that Clean Units should not be excluded from offset

requirements.

Response:

Our proposed Clean Unit provisions were unclear on how emissions offsets and other

nonattainment area requirements are affected by a Clean Unit designation. We want to clarify

this issue. For sources in nonattainment areas, the permitted emissions level for the Clean Unit

designation must be shown to be consistent with air quality planning for that nonattainment area

at the time the source obtains the permit containing the emission limits and conditions for the

Clean Unit designation. If necessary, the State may need to require the source to mitigate a

potential air quality impact by requiring offsets or other mitigation measures. 

9.9.2 Implementation and Enforcement

Comment: 

In light of recent court decisions concerning potential to emit, two commenters (IV-D-62,

154) believed that emission limits and control requirements for Clean Units should not have to be

federally enforceable. One of the commenters (IV-D-154) stated that it should make no

difference whether an existing control technology is unregulated, regulated by “state-only”

enforceable requirements, or regulated by federally enforceable requirements, as long as it is
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physically in place, has a “comparable” high control efficiency, and is being operated correctly. 

Commenter (IV-D-42) also opposed making the emission limitation federally enforceable.

Response:

We agree with the commenters that control technology determinations made pursuant to

State and local programs can be used to qualify an emission unit as a Clean Unit, provided the

determination is made under a SIP-approved program that provides opportunity for public

comment and the unit meets the requirements in our regulations. However, the Clean Unit

designation is an alternative applicability option to major NSR for qualifying units. As such, the

Clean Unit designation and all the Clean Unit terms and conditions must be included in a permit

that is enforceable by EPA and by citizens. 

Comment:

One commenter (IV-D-154) recommended that the final rule provide that the Clean Unit

exclusion is a minimum element of the Federal regulations and must be included in State

programs.

Response:

We agree with the commenter. To be approvable under the SIP, State and local agency

programs implementing part C (PSD permit program in §51.166) or part D (Nonattainment NSR

permit program in §51.165) must include the Clean Unit provisions and other promulgated

changes as minimum program elements. 

9.9.3 Rule Language Clarifications

Comment: 

One commenter (IV-D-125) said the definition of a “well-controlled” unit is unclear. The

commenter said a unit that does not additionally qualify for the Clean Unit exclusion would

install controls meeting the criteria EPA establishes for “well controlled” units and thereby

qualify for the exclusion. In addition to the source alteration requirements to comply with

applicable Act and SIP procedures, the commenter asserted, the units should also monitor and

report emissions. The commenter also recommended that Clean Units be required to monitor

and report emissions.

Response:

We agree with the commenter that the specific control requirements for Clean Units must

be clear. Emission units that have been through a major NSR determination, as long as that
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determination resulted in some level of control, are well controlled and qualify as Clean Units. 

Emissions units that have not been through major NSR may also qualify for the Clean Unit

applicability test if their emission control technology (that is, add-on control technology or P2

technique) is comparable to BACT or LAER. To be comparable to BACT/LAER, the controls

must meet the specific comparability test in our rules. [See, for example, §51.166(u)(5).] That

is, sources must show that the add-on control technology or P2 technique is comparable to

BACT/LAER in one of two ways: 1) by comparing the emissions unit’s control level to

BACT/LAER determinations for other similar sources in the RBLC; or (2) by making a case-bycase demonstration that its emissions control is “substantially as effective” as BACT or LAER. 

These requirements can be found in our new regulations at §51.165(c) and (d), §51.166(t) and

(u), and §52.21(x) and (y). 

Our new regulations require that the permit establishing Clean Unit status must include

the monitoring, record keeping and reporting requirements necessary to demonstrate that a

“clean” level of emissions control is being achieved. [See, for example, §51.165(d)(7)(vi).] 

When the reviewing authority incorporates the Clean Unit designation into the title V permit,

additional monitoring, record keeping and reporting may be required to assure compliance

under 40 CFR 70.6(a)(3) or 70.6(c)(1) (that is, to assure compliance under title V).

Comment: 

Several commenters (IV-D-46, 130, 135, 154, 160) stated the exclusion should not be

limited to changes that can be made without revising an existing permit and stated that one of

EPA’s gatekeepers would nullify the exemption in some States. EPA should replace the

proposed wording in sections 51.165(a)(1)(v)(C)(10), 51.166(b)(2)(iii)(L)(3), and

52.21(b)(2)(iii)(L)(3) with the following:

“(3) The activity either will not require a significant increase in allowable emissions of

any pollutant regulated under this section, or the Administrator determines that this

increase would not cause or contribute to a violation of any national ambient air quality

standard or any maximum allowable increase over the baseline concentration.” 

Response:

We disagree with the commenters. The Clean Unit applicability test measures whether

an emissions increase occurs based on that unit’s allowable emissions level. If a source installs

state-of-the-art emissions control technologies (add-on control technology or P2 techniques) that

are determined to be BACT or LAER, it may make any changes to the Clean Unit without

triggering major NSR unless the unit exceeds its permitted emissions level by any amount, and

also has a significant net emissions increase in actual emissions. 

Comment:
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One commenter (IV-D-46) suggested that EPA rewrite the Clean Unit exclusion in plain

language to more clearly define the eligibility criteria. Without the preamble discussion, the

Clean Unit exclusion [for example, §52.21(b)(2)(iii)(L)] will be difficult to interpret because: (1)

a clearly recognizable term, such as “Clean Unit” is not used; (2) some terms used within the

corresponding provisions are undefined (for example, “maximum emissions rate,” “maximum

emissions rate achievable,” and “reconstruction”; ( 3) there are multiple references to other

regulations without specific indications of what those regulations are; and (4) there are multiple

and often unnecessary restrictions on the exclusion’s availability.

The commenter believed that EPA should write separate provisions for a Clean Unit

exclusion and a “Clean Unit” definition as follows:

“Any activity undertaken at a Clean Unit provided that:

(1) The annual potential or allowable emissions of the regulated air pollutant in

question are unchanged;

(2) There is no violation of a federally enforceable emissions limit; and

(3) The Clean Unit remains a Clean Unit. A Clean Unit shall be presumed to remain

a Clean Unit if the required level of control device efficiency continues to be

achieved and demonstrated.”

Response:

We agree with the commenter. Our regulations now specifically identify the Clean Unit

provisions. [See §51.165(c) and (d), §51.166(t) and (u), and §52.21 (x) and (y).] We have also

included a definition of Clean Unit at §51.165(a)(1)(xxix), §51.166(b) (41), and §52.21(b)(42). 

These provisions incorporate the commenter’s suggestions.

Comment:

Two commenters (IV-D-92, 180) requested clarification in the Clean Unit proposal on

how collateral increases associated with a modification should be addressed. They maintain that

collateral increases have traditionally been considered actual increases in emissions that are the

direct result of a modification elsewhere on the site. Also, the commenter asked if collateral

increases at a Clean Unit would be viewed as part of a modification even when there should be

no increase in allowable emissions.

Response:
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We are not requiring a review of collateral emission increases of other regulated

pollutants to obtain Clean Unit status for a specific regulated pollutant. However, Clean Unit

status for one regulated pollutant does not exempt the emission unit with the Clean Unit

designation from major NSR requirements for another regulated pollutant. If an emission unit

emits or has the potential to emit a regulated pollutant in significant amounts, that emission unit

must meet major NSR requirements either through the Clean Unit status or through conventional

major NSR. 

9.9.4 Relationship to Other Applicability Provisions

Comment:

Four commenters (IV-D-52, 121, 135, 157) recommended that EPA merge the Clean Unit

and Clean Facility exclusions together, or with the PAL proposal. One of these commenters (IVD-157) requested that the Clean Unit and Clean Facility exclusions be merged into the PAL

approach. In the course of that merger, EPA should remove excess safeguards that are currently

found in the Clean Unit and Clean Facility exclusions but that are absent from the PAL proposal. 

The commenter believed the PAL approach’s allowance for additions or replacements is good

both for industrial flexibility and for environmental protection. Another commenter (IV-D-135)

stated that the PAL should be based on source-specific allowables, in which case the Clean

Facility exclusion would not be necessary. One commenter (IV-D-52) suggested, instead of

supporting a Clean Facility option, that such a source operate for a time period that is adequate to

provide “representative” operating data, and then apply for a permit that establishes a PAL. 

Response:

We are not taking final action on our proposed Clean Facility provisions now. We have

taken final action to promulgate provisions for actuals PALs. We believe that the Clean Unit

and PAL provisions are complementary, and providing for both allows more flexibility than only

providing for one or the other. Each source owner/operator may decide whether to pursue a

Clean Unit designation or PAL for a particular source.
I-10-1

Chapter 10 - Pollution Control Projects

10.1 Overview

We received public comments on support for a PCP exclusion; extending the PCP

exclusion to non-utilities, non-listed technologies, substitution of ozone depleting substances,

cross media projects, and projects that increase utilization; the primary purpose test; the

environmentally beneficial test; the cause or contribute test; and calculating ERCs from PCPs. 

These comments and our responses are summarized in sections 10.2 through 10.11. We also

received various miscellaneous comments on PCPs, which are summarized in 10.12.

10.2 General Support or Opposition for EPA’s Proposal

Comment: 

10.2.1 General Support for Proposal

Multiple commenters from industry and State agencies (IV-D-10, 14, 16, 17, 28, 42, 44,

46, 47, 50, 52, 61, 62, 65, 67, 76, 82, 90, 92, 98, 113, 126, 127, 129, 130, 134, 135, 137, 138,

140, 143, 149, 150, 154, 156, 183; IV-G-2) gave full or partial support for the PCP exclusion. A

frequent rationale for support was that the proposed PCP exclusion would allow sources to avoid

major NSR for projects with significant overall environmental benefits (in some cases, despite

small collateral increases in emissions), which they would otherwise not undertake. 

10.2.2 Full or Partial Opposition to Proposal

Several commenters (IV-D-19, 77, 110, 123, 142, 147, 162; IV-G-3) stated that the

proposed PCP exclusion is too complex and will inhibit business development. It does not

simplify or reduce regulatory burdens, but instead substantially increases them and discourages

projects to improve the efficiency and competitiveness of American industry. Their specific

concerns were the applicability provisions, the environmentally beneficial test, the primary

purpose test, the treatment of cases in which utilization will increase, minor NSR permits, and

the provisions involving Class I areas. One commenter (IV-D-110) believed that a PCP

exclusion, similar to the one in the NSPS program, was implicitly available under the NSR

program. The commenter therefore believed the PCP exclusion was unnecessary. 

One commenter (IV-D-52) suggested that rather than trying to address issues of collateral

pollutant increases PCP and P2 only within the framework of NSR, EPA should conduct an allencompassing rulemaking intended to address such P2 or PCPs and their environmental impacts

from all media.

One commenter (IV-D-125) opposed the PCP exemption because emission reductions

can then be used as ERCs. 
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Response:

We have retained the PCP Exclusion in the final rule, because we believe it removes a

regulatory disincentive that might otherwise prevent industry from undertaking voluntary

pollution control measures that result in a net environmental benefit. We are also removing a

regulatory burden that may require industry to go through a permitting action before installing a

pre-approved control technology to comply with the requirements of the CAA. The PCP

Exclusion will allow the installation of certain projects with significant environmental benefits to

avoid the permitting requirements of major NSR for its collateral emissions increases that

exceed the significant level. This rule will provide a single, comprehensive NSR exclusion for all

types of qualifying PCPs, including add-on controls, switches to less-polluting fuels, improved

work practice standards, and P2 projects. Morever, it will minimize procedural delays in getting

a PCP approved while ensuring appropriate environmental protection. As described in the rest

of this chapter, we have made several modifications to the PCP Exclusion that offer flexibility

while still resulting in improved air quality.

While we attempted to create a fully encompassing PCP Exclusion for NSR, it was too

difficult to lay the framework for a P2/PCP exclusion that included consideration of non-air

environmental media impacts. The commenter provided no specific details on how such an

exclusion could be approached.

We agree with the commenters who believed the primary purpose test was potentially

restrictive. Our primary objective in allowing for a PCP Exclusion is to offer NSR relief for

those projects that create a net environmental benefit, and thus we should not concern ourselves

with a source’s motivation for undertaking their project. Therefore, the final rule allows a

project to qualify for the PCP exclusion, even when the primary purpose is not to reduce

emissions, as long as it is shown to be environmentally beneficial and to have no air quality

impact.

We also agree that emissions reductions that are counted on for the PCP Exclusion as

part of the source’s environmentally beneficial demonstration should not be used later as ERCs.

The emission reductions are traded, in effect, for the significant emissions increase of the

collateral pollutants. To then re-use the reductions would weaken the PCP exclusion and would

not ensure appropriate environmental protection. Additionally, there is an significant associated

burden of having to accurately account for and track the reductions for emissions credits and

using the credits.

Notwithstanding our position on disallowing PCP reductions as netting or offset credits,

sources are allowed to continue to use these reductions to generate allowances for purposes of

complying with the title IV Acid Rain program. In 1992, the PCP exclusion was originally

designed for use by electric utility steam generating units because we did not envision that

Congress intended for the NSR program to apply to projects undertaken to comply with title IV. 
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Nothing in today’s proposal is intended to change that design. Moreover, once a source receives

a PCP Exclusion, it can then apply for ERCs if they change their process conditions in such a

way that furthers the environmental benefit of their PCP. For example, consider an add-on

control technology which receives a PCP Exclusion that, at full operation, allows it to increase

its emissions of a specific collateral pollutant emits 100 tons per year (tpy) of a pollutant (either

a targeted pollutant or a collateral pollutant). If the source later decides to take an hours of

operation limit for their process line and/or control technology that reduces their emissions of

this pollutant to 75 tpy, then 25 tpy of the pollutant can be used as ERCs if deemed acceptable in

all other respects by the reviewing authority.

10.3 Extending the PCP Exclusion to Non-utilities

Comment:

Several commenters (IV-D-128, 143, 145, 168, 169) supported continuing the WEPCO

PCP Exclusion for utilities, regardless of whatever else EPA does in the rulemaking. They gave

various reasons for the preference.

• The additional AQRV restriction is complicated and unlawful.

• The procedural safeguard pertaining to minor NSR review offers little or no additional

environmental protection.

• The changes are unwarranted and conflict with EPA’s goal of eliminating program

complexity.

• The PCP exclusion already exists in law, and EPA does not need to amend its rules to add

it. 

Several commenters (IV-D-28, 42, 90, 113, 129, 143, 149, 153, 154, 168) supported

applying the WEPCO PCP Exclusion to all source categories. They gave several reasons for

favoring this approach. 

• There is no good policy reason to limit applicability to utilities.

• It is a way to ensure application of the WEPCO exclusion to utilities.

• It would provide other types of sources with the predictability and P2 incentives inherent

in the WEPCO rule.

• It would promote inclusion of the WEPCO rule in State NSR regulations.

The commenters favoring this alternative held mixed views on the desirability of modifying the

specific provisions for defining PCPs. 

Two commenters (IV-D-40, 61) supported EPA’s proposal to supersede the WEPCO PCP

exclusion with the new, broader PCP exclusion because the identical treatment of source

categories would ensure equitable treatment. More specifically, if the new exclusion is adopted,
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1

July 1, 1994 memorandum from John S. Seitz, Director, OAQPS, “Pollution Control

Projects and New Source Review (NSR) Applicability” and hereinafter referred to as the “July 1,

1994 policy guidance.”

I-10-4

the WEPCO exclusion should not be retained for electric utility steam generating units, as it

would effectively penalize them. They maintained that electric utility steam generating units,

like any other sources, should be able to take advantage of the proposed broader definition of

“PCP,” and the proposed deletion of the requirement that add-on controls and fuel switches be

subject to the “environmentally beneficial” test. 

One commenter (IV-D-142) appears to favor a variant on the proposal in which EPA

would promulgate the proposed, comprehensive exclusion without the proposed AQRV

restriction and the procedural safeguard pertaining to minor NSR review. Unless these elements

are removed from the proposal, the commenter would strongly oppose the proposal and would

prefer to be left with the current WEPCO rule.

Response:

The PCP Exclusion was proposed on July 23, 1996, and closely paralleled our existing

policy memorandum1 which, in effect, enabled a control project exclusion for EUSGU

implemented under the electric utility-specific NSR rule (See 57 FR 32314, hereinafter “WEPCO

PCP Exclusion”) to apply to all types of sources, and enabled qualifying P2 projects to apply for

an exclusion as well. The final rule will replace both the WEPCO PCP Exclusion and the July 1,

1994 policy guidance with a single, comprehensive NSR exclusion for all types of qualifying

PCPs, including add-on controls, switches to less-polluting fuels, improved work practice

standards, and P2 projects. We agree with the commenters that this new, broader PCP

Exclusion will ensure equitable treatment of all source categories.

Thus, owners or operators of EUSGUs who want a PCP Exclusion may, like other source

categories, use the expanded definition of “PCP,” which includes the lengthened list of

environmentally acceptable control devices. Despite rule revisions addressing a broader array

of pollution control and P2 projects at a larger variety of sources, we feel that its procedures are

less complex and clearer than the WEPCO PCP Exclusion and the July 1, 1994 policy guidance. 

After further consideration, we believe that continuing to require a check of impacts on

AQRV provides a much needed level of protection. See section 10.10 for more information

related to issues associated with AQRV.
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10.4 Extending the PCP Exclusion to Non-listed Technologies

10.4.1 Requests to Expand List of Add-on Projects and Fuel Switches

Comment:

Numerous commenters (IV-D-16, 17, 36, 40, 46, 55, 56, 77, 91, 97, 106, 108, 129, 135,

137, 139, 140, 147, 153, 154, 157, 158, 160, 181) stated that the PCP exclusion should apply to

more technologies than those listed in the proposal. Some commenters (IV-D-36, IV-D-181)

recommended that the exclusion should apply to projects undertaken to comply with the

environmental regulatory requirements of Federal, State, and local governments. Commenters

recommended that EPA should automatically qualify for the PCP exclusion any equipment or

process change installed to reduce the criteria pollutants, HAPs, or greenhouse gases. All

technologies required by MACT rules, including MACT for municipal waste combustors, should

be included. One commenter (IV-D-157) stated that the PCP exclusion should be encouraged

and used for all projects (voluntary or otherwise), not only those undertaken for compliance with

a specific regulation. Commenters also suggested these specific ways of broadening the

qualifications for the exclusion: add all technologies required by MACT rules to the list of

exclusions; add the MACT reference control technologies in EPA’s Guidance to States

Implementing MACT for MWCs to the list of exclusions; and apply the exclusion to the control

devices listed in the recent draft of the Compliance Assurance Monitoring rule. 

Several commenters (IV-D-16, 137, 140, 153, 160) asserted a need for clarifying or

expanding the list of acceptable technologies or otherwise making it easier for a technology to

qualify for the exclusion. A commenter (IV-D-16) stated that the proposed definition of “PCP”

in §51.165(a)(1)(xxv) appears to cover all technologies, but its language and organization could

lead permitting authorities to mistakenly conclude that EPA approves of only certain

technologies. 

One commenter (IV-D-160) recommended a more flexible, ad hoc approach to setting the

qualifications for the PCP exclusion. If EPA does not categorically qualify technologies installed

to comply with MACT limitations when developing individual MACT standards, the Agency

should evaluate whether each compliant technology would be eligible for the exclusion. Also,

EPA should provide States with autonomy in implementing the PCP exclusion. For example,

EPA should allow States to establish a list of activities, in addition to those listed by EPA, that

would presumptively qualify for the exclusion. 

Another commenter (IV-D-153) suggested that EPA should continue to update the list of

pollution control and P2 qualifying technologies in the regulations and should issue guidance to

permitting authorities for interim use between the time of determination and the time that

regulations are amended.
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Another commenter (IV-D-140) stated that because the burden of case-by-case approval

can discourage use of legitimate technologies, care should be taken to include all of the

commercially demonstrated technologies in the list of projects that qualify for the PCP

exemption.

One commenter (IV-D-113) said the rule should clarify that the “replacement” of a PCP

should not include substitution of less effective control devices.

Response:

As described in section 10.4.2, we have expanded the list of presumptively

environmentally beneficial projects to include other add-on control technologies that are

commonly used to reduce emissions at major sources. The list also includes certain P2 projects,

and specified fuel switches. Most of these new PCPs (that were not part of the ‘96 proposal)

were added as a result of the comments received during the public comment period. However,

we have not gone as far as some commenters suggested, such as allowing the presumptive

application of any equipment or process change installed to reduce the criteria pollutants,

HAPs, or greenhouse gases. This is because our selection is based on the presumption that the

listed projects are environmentally beneficial, and many of the suggestions offered by the

commenters could not satisfy this criteria on a presumptive basis. 

The WEPCO PCP Exclusion provided that, to qualify for the exclusion, a PCP could not

render the unit less environmentally beneficial. We believe that being “environmentally

beneficial” is the bedrock of the PCP Exclusion. For the list of PCPs in the final rule, we are

satisfied that the net impact on the environment from these projects is beneficial because of our

broad experience with these technologies. Consequently, such projects are desirable from an

environmental protection perspective, and we have no reason at this time to doubt the validity of

the environmentally beneficial presumption when such controls are applied to existing sources

consistent with standard and reasonable practices. And we are giving more autonomy to

sources and permitting authorities in the PCP determination process by reducing the Federal

permitting constraints and leaving minor source permitting up to the cognizant state and local

agencies.

For those projects not listed in the final rule, the environmentally beneficial presumption

does not exist and consequently the PCP Exclusion is not self-executing. This includes some

technologies required by MACT standards. On a case-by-case basis, the permitting authority

must consider the net environmental benefit of a non-listed project and approve requests for the

PCP Exclusion for a specific application of the project. The source must receive this approval

from its permitting authority before beginning actual construction of the PCP. This approval

must be conducted through a SIP-approved permitting process that conforms to the requirements

of 40 CFR Parts 51.160 and 51.161, which would typically mandate a public hearing and 30-day

public comment period to allow an opportunity for the public and EPA to review and comment
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on the environmentally beneficial analysis and the air quality impacts assessment. The

permitting authority’s decision on a case-specific approval of a PCP Exclusion is not binding, in

that it does not serve to proclaim that a given technology is environmentally beneficial for

purposes of subsequent PCP Exclusion applications for the same technology.

We may add non-listed control devices, work practice standards, and P2 projects to the

approved list, such that a previously non-listed technology can be considered for a self-executing

PCP Exclusion. The technology or procedure must be reviewed by us to ensure that the project’s

overall net impact on the environment is indeed beneficial. Our evaluation would hinge on the

same factors mentioned above for the permitting authority’s case-by-case reviews. Once

“listed,” a subsequent project could be presumed environmentally beneficial unless case-specific

factors or impacts would indicate otherwise. We believe the case-by-case procedure for

approval of non-listed technologies addresses the commenters’ concerns regarding a flexible

approach for such non-listed PCPs.

Also, in contrast to the WEPCO PCP Exclusion and the July 1, 1994 policy guidance, we

have provided more guidance in the final rule on what constitutes an environmentally beneficial

fuel switch. In general, we lack information to support categorically determining that a switch

to solid fuel will be “inherently less polluting.” For instance, switching from oil to woodwaste

may decrease sulfur emissions, while increasing particulate emissions. Switching between solid

fuels, such as coal, woodwaste, or tire-derived fuels, must therefore be evaluated more closely

before we can determine whether such a switch could qualify as an environmentally beneficial

PCP. We are consequently clarifying that any switch to solid fuels, or between solid fuels, is not

inherently less polluting, and we specifically define which switches to non-solid fuels are

available for the exclusion.

Finally, we are clarifying in the final rule that upgrading or replacing existing emissions

control equipment with a more effective emissions control project can qualify for the PCP

Exclusion. However, the PCP would have to result in a level of control more effective than the

original control device, in terms of a lower emissions rate or output-based emissions rate, or by

achieving an equivalent stringency but with a more energy efficiency device. Examples include

upgrading a scrubber to increase removal efficiency or conversion of a thermal oxidizer to a

catalytic oxidizer. In the case of switching to the catalytic oxidizer, the newer control device

would need to achieve an equivalent VOC control level as the thermal oxidizer, but it would

reduce energy use.

We do not agree with those commenters who believe that States should have broad

authority to implement the PCP Exclusion. While we think it makes sense for the permitting

authority to approve a non-listed technology as a PCP on a case-by-case basis for a particular

source, we do not believe it is appropriate for State agencies to make blanket determinations that

would enable the technology to be presumptively environmentally beneficial for subsequent

applications. Consistent with our authority to develop regulations under CAA sections 165 (PSD
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I-10-8

preconstruction requirements) and 173 (nonattainment NSR permit requirements), the final rule

vests the EPA Administrator with the sole authority to approve non-listed pollution strategies as

presumptively environmentally beneficial.

10.4.2 Requests to Add Specific Technologies to the List

Comment:

Commenters (IV-D-16, 46, 62, 76, 106, 140, 154, 183) requested addition of numerous

end-of-pipe technologies to the list of PCPs. The requested additions are as follows. 

• Biofiltration

• Adsorption and absorption technology (not limited to carbon absorption)

• All thermal oxidizers (not restricted to regenerative thermal oxidizers)

• Ionizing wet scrubbers (which are different from two-stage electrostatic precipitators)

• Floating roofs for tanks as an effective control method for VOCs and HAPs;

• Conversion of a fixed roof tank to a floating roof tank

• Scrubbers for the control of soluble substances

• Burners out of service, over-fire air, and non-selective catalytic reduction for NOx

controls

• Scrubbers for VOC controls

• Sulfuric acid plants for sulfuric acid control

• Conversion of existing landfill gas systems from flares to energy recovery systems, which

should qualify as a P2 project. 

Three commenters (IV-D-120, 127, 169) provided amendments to the proposed

regulatory language pertaining to the PCPs that reduce NOx emissions at

§51.165(a)(1)(xxv)(A)(3). These amendments are: (1) include “combustion modifications for

NOx reductions” in the list because they (for example, precombustion chambers, etc.) have been

proven for reducing NOx emissions for many types of reciprocating internal combustion engines

used in the natural gas industry; (2) insert “combustors or modifications to the combustion

chamber that are intended to lower emissions of nitrogen oxides” after “low-NOx burners” to

avoid any possibility that these devices will not be included in this definition; and (3) insert “or

combustors” after “low-NOx burners.” 

A commenter (IV-D-33) reiterated the environmental benefits of switching to natural gas

and suggested alternate language for §51.166(b)(31)(i)(F) and (G). A source that would modify

an existing emissions unit by switching to natural gas, a natural gas equivalent (for example, fuel

gas containing methane and ethane), or syngas (for example, a product of gasification containing

hydrogen), or installing any current technology or future innovative technology that uses these

clean-burning fuels in place of a more polluting fuel such as coal should automatically qualify

under §51.166(b)(31)(i)(E), (F), or (G). 
10 - Pollution Control Projects

2For the purposes of the final rule, “Hydrocarbon flare” denotes a flare that serves to

control emissions from waste stream comprised predominantly of hydrocarbons and containing

no more than 1.0 percent sulfur compounds.

I-10-9

A commenter (IV-D-139) stated that the proposal is not clear regarding applicability of

the NSR provisions to redemption-type actions and processes, such as the partial

decommissioning of a site or specific areas on a site as compared to the decommissioning and

closure of an entire site or facility. Decommissioning activities, they suggested, can be

considered to be pollution control or P2 projects when the net effect of the event is less pollution

or risk of pollution. The EPA should explicitly state in the final rule that such decommissioning

activities would fall within the rule’s scope. 

Response:

As described above, we have expanded the list of presumed environmentally beneficial

PCPs. We based our decision to add certain projects to the list on two criteria: (1) the PCP is

“demonstrated in practice;” and (2) its overall effectiveness in reducing emissions of the primary

pollutant(s) when balanced against its potential for emissions increases of collateral pollutant(s). 

The list now includes the following PCPs.

• Conventional & advanced flue gas desulfurization

• Sorbent injection

• Electrostatic precipitators

• Baghouses

• High efficiency multiclones

• Scrubbers

• Flue gas recirculation

• Low-NOx burners or combustors

• Selective non-catalytic reduction

• Selective catalytic reduction

• Low emission combustion (for IC engines) 

• Oxidation/absorption catalyst (for example, SCONOxTM)

• Regenerative thermal oxidizers

• Catalytic oxidizers

• Thermal incinerators

• Hydrocarbon flares2

• Condensers

• Absorbers & adsorbers

• Biofiltration

• Floating roofs (for storage vessels) 
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I-10-10

Other presumed environmentally beneficial PCPs include activities or projects undertaken

to accommodate: (1) switching to different ODS with a less damaging ozone-depleting effect

(factoring in its ODP and projected usage); and (2) switching to an inherently less polluting fuel,

to be limited to the following.

• Switching from a heavier grade of fuel oil to a lighter fuel oil, or any grade of oil to 0.05

percent sulfur diesel (that is, from a higher sulfur content #2 fuel, or from #6 fuel, to CA

0.05 percent sulfur #2 diesel).

• Switching from coal, oil, or any solid fuel to natural gas, propane, or gasified coal.

• Switching from coal to wood, excluding construction or demolition waste, chemical or

pesticide treated wood, and other forms of "unclean" wood.

• Switching from coal to #2 fuel oil (0.5 percent maximum Sulfur content).

• Switching from high sulfur coal to low sulfur coal (maximum 1.2 percent Sulfur content).

Of these listed PCPs, several of them have been added as a result of comments received during

the public comment period (e.g., biofiltration and floating roofs).

For non-listed PCPs, the environmentally beneficial presumption does not exist either

because they are not demonstrated in practice or there is a lack of information on which to base a

general assumption that they are environmentally beneficial. Consequently, non-listed PCPs are

not self-executing. Instead, the permitting authority must first consider case-specific factors to

determine whether the project results in a net environmental benefit and then must provide any

opportunity and respond to public notice and comment before approving the project as a PCP.

We have not added decommissioning activities to the list of the specific projects. These

suggested PCP scenarios would not trigger NSR because there would not be an increase in

emissions, from either the collateral or primary pollutant. We have never required a unit to

undergo NSR before terminating operation; consequently, there is no need for a PCP Exclusion.

We agree with commenters regarding the need to add combustion modifications for NOx

reductions and to allow switches to natural gas to qualify as PCPs. These types of projects have

been added to the list of environmentally beneficial PCPs. However, in the case of “combustion

modifications,” we felt that the term is extremely generic and potentially problematic. Such a

broad term could conceivably exempt a myriad technologies from NSR, some of which are not

necessarily environmentally beneficial. We therefore limited its addition to a commonly

employed combustion modification used for emission control in the IC engine industry– low

emission combustion.
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10.4.3 Whether PCPs Not Listed in the Regulations Must Be

“Demonstrated in Practice” to Qualify for the Exclusion

Comment: 

Several commenters (IV-D-46, 140, 154) stated that EPA should not require the

effectiveness of an unlisted technology to be comparable to the effectiveness of the listed

technologies. One commenter (IV-D-154) stated that such a comparison would be ambiguous

given the level of detail contained in the current list, and unnecessary given that the requirement

is a net environmental benefit rather than a benefit comparable to or greater than would be

achieved by any specific technology. Two commenters (IV-D-46, 140) added that since the

effectiveness of any control technology can vary according to the operation and pollutants

emitted, it would be difficult to know to what standard the control technology is being compared. 

Furthermore, such a comparison is unnecessary because a control project can provide a net

environmental benefit even if the relative level of effectiveness is less than that of other listed

technologies. One commenter (IV-D-46) stated that the current language provides no incentive

to the regulated community to evaluate innovative control approaches. Also, since projects

involving new unlisted technologies still must be evaluated on a case-by-case basis to determine

if they are environmentally beneficial, EPA should delete the requirement that these technologies

must be “demonstrated in practice.” 

One commenter (IV-D-47) supported the use of the demonstrated in practice test for

PCPs. If the new technology has been demonstrated in practice and installed for PCP purposes,

it should be eligible for the exclusion so long as it does not cause emission increases that trigger

NSR applicability.

Another commenter (IV-D-21) stated that EPA should only require these criteria for a

PCP exclusion: (1) it has been demonstrated in practice; and (2) it has been determined by the

permitting authority to be environmentally beneficial. A process improvement project that meets

these two criteria should also be considered for the PCP exclusion. 

Three commenters (IV-D-73, 74, 88) stated that a UT/A should also be allowed as a new

qualifying technology under the PCP exclusion. The UT/A should be allowed to satisfy the

second criterion for new qualifying technologies (that is, “demonstrated in practice”) under the

proposed rule. Unless the Agency includes UT/As under the exclusion, it is not clear how a new

and innovative technology would ever qualify if it must first be “demonstrated in practice.”

One commenter (IV-D-147) said EPA should remove the requirement for technologies to

be “demonstrated in practice.” Instead, the exclusion should be extended to new pollution

control technologies and P2 practices.
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I-10-12

Response:

We disagree with commenters who said we should ease restrictions that require new addon technologies to be demonstrated in practice. We are continuing to require that new

technologies be demonstrated in practice before being added to the list because it is important to

have demonstrated evidence that a technology is environmentally sound before presuming that it

will achieve the necessary reductions and exempting it from NSR requirements. We have

expanded the meaning of “demonstrated in practice” to include technologies demonstrated

outside of the United States.

However, unlike the proposed PCP Exclusion, we will not require that non-listed

technologies be comparable in effectiveness on a pollutant-specific basis with the emission

reduction efficiency of currently listed technologies in order to qualify as environmentally

beneficial, since this is difficult to compare when different primary and collateral pollutants

must be considered. Also, the final rule vests the EPA Administrator with the sole authority to

approve non-listed pollution strategies as presumptively environmentally beneficial. The

permitting authority may perform a case-specific approval of a PCP Exclusion in which they

would determine that a non-listed technology is environmentally beneficial, but that

determination only pertains to the particular case under evaluation and would not serve to

presume that the technology is environmentally beneficial for subsequent applications.

We do not agree with those commenters who believed that UT/As can qualify as PCPs. 

By definition, a UT/A is not demonstrated in practice. Therefore, it cannot be presumed to be

environmentally beneficial if the control system is not demonstrated in practice.

10.4.4 Extending the Exclusion to P2 Projects

Comment:

10.4.4.1 Oppose extending the exclusion

One commenter (IV-D-63) supported using P2 techniques when considering BACT and

LAER decisions, but maintained EPA and State and local agencies must protect against abuse of

these programs to the detriment of air quality. The commenter suggested that a natural point of

contention exists when sources can avoid NSR at the time of new construction or modification

by proposing P2 projects that are environmentally beneficial. Such an allowance, the commenter

believed, is inconsistent with NSR principles; therefore, P2 project proposals should be reviewed

by State and local agencies within the BACT/LAER process, not excluded from NSR merely

because they propose environmentally beneficial P2 projects as an appropriate control method.
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10.4.4.2 Support extending the exclusion

Numerous commenters (IV-D-28, 31, 66, 67, 89, 92, 133, 149, 154, 157, 180) supported

extending the PCP exclusion to P2. The reasons for support included the benefits for both the

environment and businesses, and the ancillary benefits from in-process recycling, decreased

energy use, and decreased maintenance costs. Commenters also recognized P2 projects may

appear to be inferior to a control technology in terms of pure pollution destruction efficiency. 

Some commenters (IV-D-92, 180) noted that in a BACT or LAER analysis, comparison of P2 to

end-of-pipe controls may be difficult because, although the P2 project may have a lower emission

reduction, it will have other benefits such as less energy use and lower maintenance costs. 

Some commenters (IV-D-92, 180) recommended changing the wording in the rule to

reflect that P2 is preferred to traditional end of pipe control as follows: “The addition,

replacement, or use of a P2 or pollution control project... may be used.”

One commenter (IV-D-190) believed that P2 projects with de minimis increases should

eligible for the PCP exemption. The de minimis levels should be those that are in current Federal

regulations and SIPs. For P2 projects with significant emission increases, the State agency

should determine whether they were eligible for the PCP exemption on a case-by-case basis, if

the environmental benefits outweighed the emission increases.

A commenter (IV-D-33) supported automatic exclusions for P2 projects that substitute

natural gas for other fuels, and provided alternative regulatory language for §51.166(b)(31)(i)(F). 

“(F) P2 projects which are determined by the permitting agency through a process

consistent with section 51.161 of this part to be environmentally beneficial. P2 projects

that may result in an unacceptable increased risk from the release of hazardous pollutants

are not environmentally beneficial. P2 projects that utilize natural gas as a source of

energy is [sic] inherently environmentally beneficial and can be waived from

consideration through the process consistent with section 51.161 of this part at the

discretion of the permitting agency.”

One commenter (IV-D-133) said EPA should include a list of P2 projects specifically

judged to be environmentally beneficial.

10.4.4.3 Request to create a P2 Exclusion Clearinghouse or other

similar list for add-on projects and fuel switches

Several commenters (IV-D-10, 11, 53, 89, 137, 180) recommended that EPA develop a

list, Web site, or clearinghouse for P2 projects that are considered environmentally beneficial. 

One commenter (IV-D-10) stated that EPA should develop several examples (in addition to the

already-developed ones) of P2 projects, because examples explain the limitations of the rules and
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I-10-14

guidance much better. Commenters stressed the purpose of facilitating or greatly simplifying the

review of the overall environmental impact of P2 projects.

One commenter (IV-D-11) provided an example list of P2 projects that could be

automatically qualified for the exclusion and also recommended that EPA develop a mechanism

for adding to the list of pre-qualified P2 projects. If the environmentally beneficial test

requirement is retained for P2 projects, EPA should implement a national database similar to the

RACT/BACT/LAER Clearinghouse for environmentally-beneficial determinations. This

database would work best if permitting authorities were mandated to enter their determinations,

suggested the commenter. Another State commenter (IV-D-137) also recommended that EPA

create a national database of environmentally-beneficial P2 projects. Permitting authorities

should be required to enter “environmentally beneficial” determinations to help reduce the

industries’ burden associated with proposing a project.

One commenter (IV-D-89) stated that EPA should publish a predetermined list of

acceptable P2 projects, methods, processes, or technologies, to be supported and maintained on

EPA’s Web site in partnership with industry, State and local government, and the public. The

list should not be in the rules, but should be provided as a guidance document on the Internet. 

The EPA’s Environmental Technology Verification Project could help to serve this purpose. 

Another State agency commenter (IV-D-180) also recommended that the list, similar to the list of

specific PCPs, could be in guidance form.

One commenter (IV-D-11) suggested that the ideal situation would be to offer an

automatic exclusion for a list of P2 projects and to require a slightly more onerous process for

PCPs before they could qualify for the exclusion. 

Response:

We agree with commenters who supported extending the PCP Exclusion to P2 projects,

and feel, with all other things being equal, that P2 projects have the potential to be preferred

over end-of-pipe controls. Switching to a less-polluting fuel or a less potent quantity of ODS are

prime examples of P2 projects and both are already listed as presumptively environmentally

beneficial. However, some commenters pointed out that there are far more end-of-pipe, add-on

technologies that are listed as environmentally beneficial and recommended that we include

more P2 technologies and develop a database to record environmentally beneficial

determinations. Although we fully support and encourage P2 projects and strategies, we believe

special care must be taken in evaluating a P2 project for a PCP Exclusion. P2 projects tend to

be dependent on site-specific factors and lack a historical record of performance, which proves

problematic in deciding whether they are environmentally beneficial when applied universally. 

We believe that both add-on control devices and P2 projects have equal chances of being

presumed environmentally beneficial, but we have more data and history with the add-on control

equipment and this is why the list includes more of those types of pollution strategies. P2
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projects can still qualify as an environmentally beneficial PCP, but we must evaluate them to

confirm their environmental benefits.

Non-listed P2 projects may also be considered using the case-by-case determination

mechanism. In this case, the permitting authority must consider the net environmental benefit of

a non-listed project and approve requests for the PCP Exclusion for a specific application of the

project. The source must receive this approval from its permitting authority before beginning

actual construction of the PCP. This approval must be conducted through a SIP-approved

permitting process that conforms to the requirements of 40 CFR Parts 51.160 and 51.161, which

would provide for an opportunity for the public and EPA to review and comment on the

environmentally beneficial analysis and the air quality impacts assessment.

The final rule also contains a process under which we may evaluate non-listed PCPs for

addition to the list of environmentally beneficial projects. Once we approve a PCP, we will

undergo notice-and-comment rulemaking in order to pronounce the new technology as

environmentally beneficial. Once “listed,” a subsequent project could be presumed

environmentally beneficial unless case-specific factors or impacts would indicate otherwise. We

will maintain and update the list as we deem additional technologies to be environmentally

beneficial. We also reserve the right to remove from the list any project that we erroneously

listed.

Several commenters on the proposal suggested that we have a clearinghouse for newly

added environmentally beneficial PCPs. We agree that additions to the approved PCP list need

to be available to the public as soon as possible following approval; however, since rulemaking

will be used to add new PCPs to the approved list, no additional public notice will be necessary. 

Also, use of a web page or clearinghouse as the sole mechanism to announce a newly listed PCP

would not comply with the procedures we must follow under the Administrative Procedure Act.

10.5 Extending the PCP Exclusion to Substitution of ODS

Comment:

10.5.1 Support Blanket Exemption

One commenter (IV-D-147) said EPA should exempt CFCs and HCFCs from NSR, just

as EPA has exempted section 112(r) pollutants from title V permit programs. If this can be done,

the commenter believed there would be no purpose to addressing ODS under the PCP Exclusion. 

According to the commenter, there is no basis in the statute for concluding that these are

pollutants to be regulated under title I of the Act. Further, there is no scientific or policy

rationale for the PSD/NSR structure to apply to ODS, because they have no local or regional

effects on tropospheric ozone levels. The commenter added that subjecting ODS to PSD
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requirements could actually result in delaying implementation of title VI and thus hurt efforts to

improve stratospheric ozone levels by preventing manufacture of substitutes.

10.5.2 Support ODP-Weighted Approach

One commenter (IV-D-108) supported EPA’s position to qualify projects that substitute

less ODS for the PCP Exclusion. The commenter noted that in some circumstances, the

substitution of a less potent ODS may result in increased emissions of a criteria pollutant (for

example, VOCs). In such circumstances, the related net emissions increases should be exempt,

as well, provided the substituted material or process represents the best available technology

considering cost and feasibility.

10.5.3 Limiting Increases in Production Capacity

 One commenter (IV-D-38) said there are situations where an expansion in capacity is a

valid PCP designed to reduce or eliminate the use of ODS. For example, in some cases it may be

desirable when replacing CFC equipment to increase cooling capacity in order to use the

equipment more efficiently, which is environmentally beneficial. 

One commenter (IV-D-97) said switching to lower-ODP should be encouraged instead of

penalized, even if production increases result, provided that the facility has lowered its overall

emissions of ODS on an ODP-weighted basis. The restrictions on production capacity make no

sense from an environmental protection perspective, suggested the commenter, and will lead to

needless delays and increased expenditures without any net environmental benefit to an area’s

attainment status. The commenter believes this limitation will increase the demand for CFCs and

further encourage an already thriving black market for CFCs.

One commenter (IV-D-139) supported allowing substitution of lower-ODS, but did not

support limiting PCPs to those that do not increase unit capacity. The commenter said

replacement equipment probably will not be identical to the original equipment. The commenter

suggested instead that the limit be based on the concept that potential emissions cannot be

increased.

Some commenters (IV-D-92, 180) said sources should not be allowed to expand

production capability without a BACT review, even when the ODP of the facility may be reduced

as a result of the substitution. The commenter said this type of modification should not be a

PCP.
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Response:

We disagree with the commenter who said ODS are not regulated substances. In fact,

because ODS are regulated under title VI of the CAA, they are pollutants “subject to regulation”

under the CAA for purposes of the NSR program, including the PCP Exclusion.

We agree with commenter who supported the concept of weighting ODS emissions by

their ODP. The weighted approach discussed below will provide an incentive for sources to

make earlier substitutions to ODS with lower ODP. It is also a straight-forward procedure that

is easily implemented. Thus, in the final rule, we have clarified how to make a determination

that substitution to ODS with lower ODP is environmentally beneficial using an ODP-weighted

approach as suggested by commenters. For determining emissions before and after the change,

the source must perform a weighted comparison of the change based on ODP, taken from 40

CFR Part 82, and the past and projected future usage of each ODS. In cases where we have

expressed a chemical’s ODP in 40 CFR Part 82 as a range, the most conservative value (that is,

the upper bound value) should be used. The replaced ODP-weighted amount is then calculated

by multiplying the baseline actual usage (using the annualized average of any 24 consecutive

months of usage within the past 10 years) by the ODP of the replaced ODS. The projected ODPweighted amount is computed by multiplying the projected future annual usage of the new

substance by its ODP. The following example illustrates how to make these calculations in

determining whether a switch to a different ODS is environmentally beneficial.

EXAMPLE: A source plans to replace solvents in its batch process line. Their current

solvent, CFC-12 (ODP = 1.0), is emitted at 200 tpy. It will be substituted with a less

potent solvent, an HCFC with an ODP of 0.02. As a result of this change, the straight

mass emissions coming from the solvent will increase twofold due to the new process

solvent having a higher vapor pressure than the old solvent. However, this substitution

most likely would be viewed as environmentally beneficial, since the ODP-weighted

emissions would reveal a decreased risk in environmental harm. Specifically, the R-12

would be multiplied by its ODP of 1.0, resulting in 200 tpy for pre-change ODP-weighted

emissions. In contrast, the 400 tpy of HCFC emissions would be multiplied by 0.02,

giving it a post-change, ODP-weighted emission level of 8 tpy. The net effect is an

emission decrease of 192 tpy on an ODP-weighted basis.

We do not agree with the commenters that the PCP exclusion should apply when the ODS

substitution activity increases the productive capacity of the equipment. We continue to believe

that a limit on the source’s ability to increase production capacity is needed to ensure the

environmental benefits of this change.
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10.6 Extending the PCP Exclusion to Cross Media Projects

Comment:

10.6.1 Support Extending the Exclusion to Cross Media Projects

Many industry commenters urged EPA to allow States to grant PCP exclusions to cross

media projects. (IV-D-31, 46, 47, 57, 58, 59, 61, 72, 73, 74, 88, 89, 92, 106, 108, 126, 129, 134,

138, 139, 140, 153, 154, 157, 160, 180, 190, 191).

One commenter (IV-D-31) stated that a cross media exclusion would be welcome and

could provide an incentive for sources to do a better job than they might otherwise. For example,

noted the commenter, there is a South Coast Air Quality Management District rule that requires

refineries to close their drain vents to limit VOC emissions to the air, but this rule only causes a

large percentage of those emissions to be transferred to the wastewater treatment system. The

commenter suggested that a cross media exclusion could provide an incentive for sources to

instead control such emissions directly. The EPA should also consider including relief from

having to control collateral pollutants that increase as a result of installing controls for a target

pollutant.

Two commenters (IV-D-106, 108) stated that EPA should authorize States to grant the

exclusion to cross media projects so that NSR would not be federally required for an emissions

increase caused by compliance with Clean Water Act, RCRA, or CERCLA requirements. One

commenter (IV-D-129) recommended that an exclusion should be granted for cross media

projects so that at existing plants, NSR would not be required for an emission increase caused by

compliance with a Clean Water Act requirement. Without such exclusions, asserted the

commenter, plants face unnecessary burdens when implementing projects required by other

regulations.

One commenter (IV-D-47) stated that permitting agencies should have the flexibility to

authorize cross media projects on a case-by-case basis. However, the NSR proposal should not

allow a broad exclusion for cross-media projects. The commenter noted that, although adequate

research regarding the impact of cross media PCPs is currently unavailable, several States are

currently evaluating cross media projects in the context of facility-wide permitting.

10.6.2 Oppose Extending the Exclusion to Cross Media Projects

One commenter (IV-D-152) expressed broad disagreement with EPA’s proposal to

qualify cross media projects for exclusion. Such a proposal, said the commenter, would

encourage reducing pollution in one medium but increasing pollution in another medium. The

commenter also recommended that EPA not grant exclusions to P2 projects that increase actual
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emissions and urged the Agency instead to maintain a pollution reduction approach that

considers the whole environmental impact.

.

One commenter (IV-D-10) stated interest in P2 projects that have cross media impacts,

but believed it would be difficult to approve cross media P2 projects that result in increases in air

pollution emissions. It seems that increases should be dealt with through the normal permitting

process.

10.6.3 Support Environmentally Beneficial Test for Cross Media

Projects

One commenter (IV-D-46) supported the exclusion for cross media projects with the

provision that EPA revise regulatory language to ensure that cross media PCPs could be assessed

on a case-by-case basis to ensure that they are environmentally beneficial and employ the

appropriate safeguards. The commenter believes allowances for cross media exclusions are

consistent with EPA’s current multimedia philosophy. Another commenter (IV-D-140) echoed

that cross media PCPs could be assessed on a case-by-case basis to ensure that they are

environmentally beneficial and employ the appropriate safeguards.

One commenter (IV-D-58) supported the cross media exemption, but also noted that

cross media pollution reduction aspects of specific technologies should be evaluated prior to

acceptance. If a PCP offers significant pollution reductions to other media while reducing

emissions of air pollutants, it should be considered a viable technology even if the air emission

reductions are not as great as other PCP technologies. However, technologies that can increase

pollutants to other media should be evaluated cautiously. For example, noted the commenter, the

application of SCR technology for reducing NOx emissions can result in ammonia-contaminated

boiler ash, presenting disposal problems and resulting in cross media pollution.

One commenter (IV-D-126) stated that it is important to encourage cross media projects

because, unlike conventional PCPs that may transfer pollutants from one medium to another

medium (for example, air to land), cross media projects aim to prevent or minimize this transfer

of pollutants. These cross media projects should certainly be eligible for the PCP exclusion, said

the commenter, with the provision that they be subject to the environmentally beneficial test, as

well as the provision regarding violating NAAQS or exceeding PSD increments. Two

commenters (IV-D-92, 180) encouraged EPA to explore methods of encouraging cross media

P2/PCPs. For complex evaluations, they suggested it may be possible to use the environmentally

beneficial test as the determining factor on whether the source would get an exclusion from NSR

or would be allowed to take credit for reductions.

One commenter (IV-D-126) suggested that the proposed exclusion include

environmentally beneficial, multimedia P2 projects. As it stands now, noted the commenter, the

exclusion is limited to a project which, “as its primary purpose, reduces emissions of air
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pollutants from such unit.” The commenter believes a project that does not primarily reduce

emissions of a pollutant but has clean, demonstrable benefits in terms of reducing pollutants to

other media (for example, land, water, etc.) should be eligible for the PCP exclusion, at least on a

case-by-case basis. The definition should be revised to include “any activity or project

undertaken at an existing emissions unit which reduces air emissions from such unit or is

otherwise determined to be environmentally beneficial as a result of multimedia environmental

considerations.”

10.6.4 Oppose Environmentally Beneficial Test for Cross Media Projects

Three commenters (IV-D-72, 160, 191) stated that the final rule should be revised to

allow for cross media projects without use of the environmentally beneficial test. One

commenter (IV-D-160) stated that, as a general matter, the PCP exclusion should extend to all

pollution control and P2 projects that do not increase the source’s PTE.

One commenter (IV-D-153) said if the project is required in order to comply with the

requirements of another statute, there should be no requirement to show that it is environmentally

beneficial. The commenter believes these issues should be addressed in the context of

proceedings under the other statute.

10.6.5 Other Comments on Cross Media Projects

One commenter said (IV-D-47) if a cross media project covered air, water quality, and

waste media, the increased emissions from the project that meet or exceed the NSR applicability

threshold should at a minimum be offset with creditable reductions.

One commenter (IV-D-57) gave examples of potential cross media projects for a printing

facility, including the following.

• Addition of a paper baling system that collects paper scrap and waste and bales it

for recycling. The system is a potential source of particulate emissions, but the

increase may be more than offset by increased collection, transportation, and

recycling efficiencies.

• Replacement of a blanket wash that contains RCRA-listed chemicals with a

somewhat higher volatility blanket wash that contains no RCRA-listed chemicals. 

The higher volatility of the new wash may be more than offset by the generation

of less hazardous waste in the form of used rags containing RCRA chemicals.

• Addition of an automatic blanket washer to replace manual washing. An

automatic blanket washer may have higher VOC content than manual wash, but

less wash is used in total and the emissions can be more readily ducted to a

control device.
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• Replacement of thermal oxidizers with a turbine that uses VOCs to generate

electricity. The turbine would result in an increase in NOx emissions but would

continue to control VOC emissions and would reduce or eliminate the need for

outside electricity.

Where such cross media projects provide an overall environmental benefit, said the commenter,

they should not be hindered by blind application of air permit requirements. 

Response:

By definition, a PCP reduces emissions of air pollutants subject to regulation under the

Act. Therefore, while the primary environmental benefit of the PCP would be to reduce air

emissions, a secondary benefit could be reducing pollution in other media. These cross-media

tradeoffs are difficult to compare, so it is difficult to weigh their importance in appraising the

overall environmental benefit of a PCP. We solicited comments in the proposal on how to

compare cross-media pollution, but we received no suggestions on how to design such a system. 

As a result, we have determined that it is inappropriate to consider non-air impacts when

considering a PCP for an exclusion from NSR.

10.7 Extending the PCP Exclusion to Projects That Increase

Utilization

Comment:

Several commenters suggested that EPA should not automatically eliminate projects that

increase capacity, decrease production costs, or improve marketability from the definition of a

PCP (IV-D-46, 82, 89, 121, 126, 129, 131, 135, 139, 140, 154, 160, 168, 190). These

commenters believed that the primary purpose and environmentally beneficial safeguards

eliminated the need to prohibit utilization increases. One commenter (IV-D-121) believed that

the State agency should decide whether a project that increased utilization should be granted the

pollution project exemption. 

One commenter (IV-D-11) generally supported the position that where a PCP results in

creating additional significant emitting capacity of equipment, the increased emitting capacity

should be subject to major NSR because it represents a new source of emissions that did not

previously exist at the facility.

Another commenter (IV-D-20) stated that the central policy question is: when are the

benefits from a reduction of one pollutant or set of pollutants sufficient to justify a significant

incompletely controlled increase in another pollutant or pollutants? A P2 project that does not

result in increased unit capacity or utilization should qualify for the P2 exemption. A P2 project
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that results in increased unit capacity or utilization should be separated into two parts. The first

part is the P2 project (consisting of emissions resulting from process changes at the baseline

production rate), which qualifies for the exemption. The second project, subject to NSR, consists

of the emissions resulting from production increases. This, said the commenter, makes

evaluation of the environmental benefit of the project relatively simple. The commenter

maintains that a source that extends a unit’s useful life by implementing a legitimate pollution

project receives the entitled benefit, but in order to increase unit production, the source must also

go through NSR.

One commenter (IV-D-129) stated that the following provisions are proposed to be

incorporated into section 30 T.A.C. 116.617(5) of the Texas Standard Permit program to address

the issue of PCPs that may result in increased utilization of the affected emission units.

“(5) Installation of the control equipment or implementation of the control equipment or

implementation of the control technique must not result in an increase in the facility’s

production capacity unless the capacity increase occurs solely as a result of the

installation of control equipment or the implementation of control techniques on existing

units.

(1) The owner or operator must obtain or qualify for any necessary authorization...prior

to utilizing any production capacity increase from a PCP required by any governmental

standard that:

(1.1) results in the exceedance of any emission limit in an existing permit, other

authorization, or grandfathered baseline; or

(1.2) results in an emissions increase which exceeds the emission reduction due to the

installation of control equipment or implementation of control techniques.

Any production capacity increase resulting from the voluntary installation of controls or

the implementation of control techniques shall not be utilized until the owner or operator

obtains or qualifies for any necessary authorization...”

The commenter asserted that these rules allow the permitting authority to regulate the use of any

production capacity increase made available through PCPs while preventing increased emissions

without the permitting authority’s approval. With Agency oversight of any potential emissions

increase, said the commenter, the need for public participation is alleviated. EPA should include

provisions such as these in the final rule.
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Response:

We agree, in part, with commenters who suggested we extend the PCP Exclusion to

include strategies and projects associated with efficiency upgrades and utilization increases. 

However, we do not want to open the door to a multitude of potential efficiency upgrades that

may result in utilization increases while only providing for slight decreases in pollution on a per

product basis. This would promote increases in production and in annual emissions.

It is important to note that virtually every modernization or upgrade at an existing

industrial facility that reduces raw material usage or lowers per unit production costs has the

concurrent effect of lowering emissions per unit of fuel, raw material, or output. Nonetheless,

annual emissions to the environment may increase due to increased utilization even if per unit

emissions decrease. It is these capital investments in industrial equipment that have an

associated significant increase in air pollution that are the very types of projects that Congress

intended to include in the new source modification provisions.

Consequently, we are not allowing projects to qualify for the PCP Exclusion if their only

benefit is that they would result in an increase in efficiency or utilization of the process unit. 

This approach is consistent with the WEPCO PCP Exclusion that stipulated "... changes

intended primarily to restore original capacity, or to improve the operational efficiency of the

facility are not considered [a PCP]." For projects where increased efficiency is not the only

benefit, they may be considered for the PCP Exclusion if their reviewing authority, through a

case-specific analysis, determines the technology is environmentally beneficial and does not

cause or contribute to an air quality violation. In other words, projects that would otherwise

qualify for a PCP Exclusion are not disqualified if they have an effect of increasing process

efficiency or utilization.

10.8 Adequate Safeguards for the PCP Exclusion: The Primary

Purpose Test

Comment:

One commenter (IV-D-135) stated that the permitting authority must confirm that the

primary purpose of the project is to reduce air emissions.

Several commenters ( IV-D-97, 126, 129, 131, 139, 140, 142, 154, 160) opposed using

the primary purpose test for qualifying for the PCP exclusion. 

Three commenters (IV-D-131, 140, 154) pointed out that many activities and projects

have multiple purposes in addition to reducing emissions (for example, optimization of

operations, improvement of reliability of equipment, modernization, or increasing production)
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and that EPA should not look to the “primary purpose” of the project but should rather look at

the net environmental benefits. 

Three commenters (IV-D-126, 129, 142) objected to defining a PCP as a project that has

“as its primary purpose” the reduction of air pollutants. Such a definition is impossible to

reasonably demonstrate in practice and would discourage the economically efficient win-win

situations that drive both technology and environmental improvements. 

One commenter (IV-D-97) stated that PCPs should not be limited to projects that result in

reduced emissions. Projects that will convert from use of a toxic material to a less toxic material

should be allowed if there is an overall toxic benefit or an air quality benefit. 

One commenter (IV-D-129) stated that under the proposal, if a project does not fall under

EPA’s list of specific PCPs, it must be either: (a) a P2 project; or (b) the installation of control

technology that does not result in a significant net increase in representative annual emissions

that causes or contributes to a violation of any NAAQS or PSD increment, or have an adverse

effect on visibility as set out in 40 CFR 51.301(a). For projects meeting these requirements,

maintained the commenter, there would be no need for a primary purpose test.

One commenter (IV-D-139) stated that by focusing on the purposes or intent rather than

the results of an action, administrative agencies will be forced to devote scarce resources to

determinations other than actual emission reductions. A more objective test should be used to

determine applicability of the exclusion.

One commenter (IV-D-113) said additional guidance is needed on how to determine the

“primary purpose” of a project because it is a very subjective determination.

Response:

The primary purpose test was established for the proposed rule to be an initial screening

mechanism for permit authorities to screen out inappropriate projects and to streamline the

approval process. It was designed to help permitting authorities avoid dedicating unnecessary

resources to non-qualifying projects. Furthermore, we recognized that all of the listed PCPs

have a primary purpose of reducing air pollution, so it followed logically that any other PCP

should have the same primary purpose.

However, we agree with commenters that many activities and projects have multiple

purposes in addition to reducing emissions, and we should not focus on the primary purpose of

the projects in considering them for a PCP Exclusion, but rather their net environmental benefit. 

This approach would disqualify projects that may be environmentally beneficial, but happen not

to have pollution control as their primary purpose. We also agree that by focusing on the intent
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of the project rather than its end result, administrative agencies will be forced to devote scarce

resources to making those sort of pre-screening decisions.

Therefore, we have concluded that the primary purpose test is potentially restrictive. Our

primary objective in allowing for a PCP Exclusion is to offer NSR relief for those projects that

create a net environmental benefit, and thus we should not concern ourselves with a source’s

motivation for undertaking their project. The final rule allows a project to be considered a PCP

even when the project’s primary purpose is not to reduce emissions, as long as it is shown to be

environmentally beneficial and to have no air quality impact.

10.9 Adequate Safeguards for the PCP Exclusion: The

Environmentally Beneficial Test

10.9.1 Support or Oppose Using the Environmentally Beneficial Test

Comment:

Four commenters (IV-D-21, 129, 133; IV-G-11) supported the environmentally beneficial

test for PCPs. One commenter (IV-D-53) indicated that the case-by-case environmentally

beneficial determination should be required for unlisted pollution control and P2 projects. 

Another commenter (IV-G-11) disagreed with the proposal to eliminate entirely the

environmentally beneficial test for all listed PCPs because some could still have a significant

environmental impact. The commenter also stated that decisions about the applicability of the

test should be made on a case-by-case basis. 

Many commenters (IV-D-62, 73, 74, 88, 117, 121, 129, 133, 142, 147, 153, 160, 183,

191) opposed the environmentally beneficial test for P2 projects. Two commenters (IV-D-62,

147) opposed applying the environmentally beneficial criteria to HAP regulated under section

112 of the CAA. 

One commenter (IV-D-47) preferred to eliminate the environmentally beneficial test for

P2 projects because it would be administratively burdensome and would require time consuming

modeling. This commenter stated that if EPA retains the environmentally beneficial test, the

Agency should define environmentally beneficial.

Three commenters (IV-D-73, 74, 88) stated that by definition, a P2 project is

“environmentally beneficial” because it will reduce or eliminate air pollutants. An additional,

subjective determination by the permitting authority, they suggested, would be unnecessary and

would only add delays and uncertainty to the permitting process and should be eliminated as

superfluous.
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One commenter (IV-D-129) stated that under the proposal, P2 projects that qualify for the

PCP exclusion may not result in a significant net increase in representative annual emissions that

causes or contributes to a violation of any NAAQS or PSD increment, or has an adverse effect on

visibility as set out in 40 CFR 51.301(a). For projects like these, there would be no need for an

environmentally beneficial test.

One commenter (IV-D-160) opposed the environmentally beneficial test for P2 projects,

but stated that if the test is retained, States should have the discretion to establish a list of P2

projects that are presumptively “environmentally beneficial” and therefore do not require caseby-case approval. One commenter (IV-D-191) stated that the final rule should not subject P2

projects to an environmentally beneficial test because it limits the advantages of the exclusion

and means that the exclusion will not be self-implementing. One commenter (IV-D-153) stated

that the environmentally beneficial test should not apply to all P2 projects, and there should be a

strong presumption that P2 projects are environmentally beneficial, particularly where the project

will control the emissions of HAPs, bring a source into compliance with MACT or RACT

requirements, or meet other similar statutory requirements.

Another commenter (IV-D-142) stated that the environmentally beneficial test is

confusing and unnecessary and should be deleted. The commenter believes the test requires a

case-by-case analysis not clearly predicated on defined factors, and that will complicate rather

than streamline the NSR process. The other safeguards proposed by the Agency (qualification

predicated on the project not causing or violating any NAAQS or PSD increment or having any

adverse impact on AQRVs), suggested the commenter, will offer sufficient assurances against

potential exclusion of environmentally detrimental projects. Another commenter (IV-D-62)

stated that the “environmentally beneficial” test that EPA implemented successfully under the

NAAQS program would capture and address air quality concerns presented by any project; the

commenter opposes other environmental safeguards.

Response:

We agree with commenters who support the environmentally beneficial test. We disagree

with the changes suggested by commenters to restrict its use in certain cases, such as P2

projects. We think it is clear that being “environmentally beneficial” is the bedrock of the PCP

Exclusion. For the list of PCPs in the final rule, we are satisfied that the net impact on the

environment from these projects is beneficial because of our broad experience with these

technologies. Consequently, such projects are desirable from an environmental protection

perspective, and we have no reason at this time to doubt the validity of the environmentally

beneficial presumption when such controls are applied to existing sources consistent with

standard and reasonable engineering practices.

It is important to emphasize that the environmentally beneficial determination is a

presumption that can be overturned in cases where site-specific factors would cause the
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permitting authorities to determine that a particular proposed PCP project is not

environmentally beneficial (for example, an unacceptable increase in collateral pollutant

emissions). Also, this presumption does not apply when a source can reasonably suspect that: 

(1) the PCP is not designed, operated, or maintained in a manner consistent with standard and

reasonable practices; or (2) the collateral pollutant emissions increases are not minimized

within the physical configuration and operational standards usually associated with the

emissions control device or strategy; or (3) the unit will be less environmentally beneficial. Also,

when a reviewing authority determines that an otherwise listed project would not be constructed

and operated consistent with standard practices, they may rebut the environmentally beneficial

presumption for that application of the technology. As an example, if the installation of an

electrostatic precipitator debottlenecks a process and enables the process to operate at its rated

capacity, which is well above the previous utilization of the unit and thereby causes a larger than

expected collateral pollutant emissions increase, then the presumption could be rebutted by the

permitting authority. Also, when a permitting authority determines that an otherwise listed

project would not be constructed and operated consistent with standard practices, they may

rebut the environmentally beneficial presumption for that application of the technology. If the

source then proceeds with the project without obtaining a major NSR permit, it can be subject to

State and Federal enforcement action.

For those projects not listed in the final rule, the environmentally beneficial presumption

does not exist and consequently the PCP Exclusion is not self-executing. On a case-by-case

basis, the permitting authority must consider the net environmental benefit of a non-listed project

and approve requests for the PCP Exclusion for a specific application of the project. A source

must receive this approval from its permitting authority before beginning actual construction of

the PCP. This approval must be conducted through a SIP-approved permitting process that

confirms to the requirements of 40 CFR Part 51.160 and 51.161. The permitting authority’s

evaluation of the project’s net environmental benefits is limited to air quality considerations;

specifically, the air quality benefits of the primary pollutant decrease must outweigh that of the

collateral pollutant increase, when comparing the unit’s post-change actual emissions to its prechange baseline actual emissions. Also, the permitting authority’s decision on a case-specific

approval of a PCP Exclusion is not binding, in that it does not serve to proclaim that a given

technology is environmentally beneficial for purpose of subsequent PCP Exclusion applications

for the same technology.

10.9.2 Requiring the Environmentally Beneficial Test Creates a Bias

Against P2 Projects

Comment:

Several commenters (IV-D-11, 47, 52, 53, 62, 73, 74, 88, 89, 92, 97, 129, 133, 137, 147,

180) stated that the proposed exclusion regulations, by including the environmentally beneficial
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criterion for only P2 projects, may present a bias for end-of-pipe controls rather than P2 and

process innovation.

One commenter (IV-D-89) stated that even though it is always environmentally beneficial

to prevent pollution in the first place rather than to manage it, this environmentally beneficial test

approach creates a barrier to promoting P2. The commenter noted that the benefits of P2 are

sometimes more difficult to quantify than those of pollution control technology, which has been

around much longer. At a minimum, said the commenter, there should be a level playing field

that does not require an unduly higher level of scrutiny for P2 projects than for pollution control

ones.

Another commenter (IV-D-133) stated strong support for EPA’s new Draft P2 Policy and

recommended that the proposed NSR rules should include certain incentives to P2. The

environmentally beneficial test should be deleted for P2 projects and should be replaced with a

definition of a P2 project similar to the PCP definition [§51.166(b)(31)], which includes criteria

to ensure a comparable level of confidence to that recognized for PCPs, as determined by the

permitting authority.

Another commenter (IV-D-137) also suggested that P2 projects should be on an equal

footing with PCP projects; therefore, EPA should also apply the environmentally beneficial test

to PCPs. The commenter noted that some add-on controls (e.g., combustion devices) can

increase emissions.

One commenter (IV-D-52) stated that while the environmentally beneficial test presents a

bias against P2, deleting the test could remove necessary safeguards. The EPA should provide a

compromise that allows an exclusion to P2 projects that reduce emissions of the primary

pollutant by 80 percent or more on a pound per hour basis. If the project leads to collateral

increases of the other pollutants, suggested the commenter, the source would be required to

conduct an analysis similar to that required for a PCP.

Response:

We do not agree with the commenters that the PCP exclusion is biased against P2

projects and strategies. The environmentally beneficial test applies to all non-listed PCP, not

just P2 projects and strategies. 

Our current list of PCP that are presumed environmentally beneficial does include more

add-on controls than P2 projects and strategies. Although we fully support and encourage P2

projects and strategies, special care must be taken in evaluating a P2 project for a PCP

Exclusion. P2 projects tend to be dependent on site-specific factors and lack a historical record

of performance, which proves problematic in deciding whether they are environmentally

beneficial when applied universally. We believe that both add-on control devices and P2
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projects, as well as enhanced work practice standards, have equal chances of being presumed

environmentally beneficial, but we have more data and history with the add-on control

equipment and this is why the list includes more of those types of pollution strategies. P2

projects can still qualify as an environmentally beneficial PCP, but they must be evaluated by us

to confirm their environmental benefits. Moreover, the final rules provide for case-by-case

evaluation of PCP that apply equally to P2 projects, work practice standards, and add-on

controls. 

10.9.3 No Need for Public Notice Regarding the Environmentally

Beneficial Test for P2 Projects

Comment: 

Three commenters (IV-D-89, 130, 133) recommended that EPA delete the requirement

for public notice of the environmentally beneficial test.

One commenter (IV-D-133) said the EPA should delete the reference to §51.161 in the

definition in §51.166(b)(31)(i)(F), which addresses the public notice process. The commenter

does not think it is the most appropriate process to determine what constitutes a P2 project. In

addition, if the commenter’s suggestion to develop criteria and list accepted P2 project types in

the rule is accepted, this reference would be unnecessary. 

One commenter (IV-D-89) noted that the current proposal includes a public notice

provision for the environmental benefits test for P2 projects. The commenter appreciated that

public notice can be a helpful tool in increasing awareness of a facility’s activities; however,

asserted the commenter, this provision would prevent a facility from undertaking a minor P2

project without informing the public, which would inappropriately entail a higher level of

scrutiny than is required for PCPs. In lieu of the public notice, the commenter suggested that the

facility could communicate the P2 project via a community advisory panel, annual meeting, or

public outreach effort.

One commenter (IV-D-130) stated that pending codification of the PCP exclusion, EPA

should revise the July 1994 guidance on the PCP exclusion to eliminate the public notice

requirement and to clearly allow the exclusion for P2 activities. It is critical that the full scope of

the exclusion be available as soon as possible and that procedural obstacles to its application in

specific cases be removed.

Response:

We disagree with commenters who suggested that we delete the requirement for any

public notice of the environmentally beneficial test. The environmentally beneficial test is the

bedrock of the PCP exclusion, and the public should have opportunity to review the air quality
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impacts of installing a PCP where they are not already known, such as would be the case in sitespecific reviews conducted by the permitting authority for non-listed PCPs. We do not believe

the public notice requirements in these instances are excessive or burdensome. 

The Federal rulemaking process will have already provided public notice for projects

listed on the presumptively environmentally beneficial list. Therefore, by these rule revisions, we

are not requiring any major NSR public or permitting authority review of a PCP prior to

enabling the use of the exclusion, with the exception of case-specific reviews conducted by the

permitting authority for nonlisted technologies. Nonetheless, existing State regulations for

minor NSR will continue to apply to projects that qualify for the PCP Exclusion, in part because

they will involve a significant increase of a collateral air pollutant. Minor NSR programs are

designed to consider the impact these increases could have on air quality, including whether

local conditions justify rebutting the presumption that a particular project is environmentally

beneficial. Nothing in this rule voids or otherwise creates an exemption from any otherwise

applicable minor NSR preconstruction review requirement in any SIP that has been approved

pursuant to section 110(a)(2)(C) of the Act and 40 CFR 51.160 through 164. The minor NSR

permits may afford the public an opportunity to review and comment on the use of the PCP

Exclusion for a specific project. (See 40 CFR 51.160 and 51.161.) Furthermore, to undertake a

PCP Exclusion, a source could use the title V permit revision process to officially effect the PCP

Exclusion. This would enable the public to review the PCP determination at that time.

Thus, the process for implementing a PCP exemption would be similar to the other

exemptions within NSR (that is, routine maintenance, change in ownership, etc.), whereby a

source is empowered to make the proper decision based on the facts of the case and the rule

requirements. When this decision is not clear to a source, they are advised to consult with their

permitting authority in advance of installing the PCP, for to proceed with a project that is not

environmental beneficial or that adversely impacts the air quality would be cause for

enforcement action.

10.9.4 Request for Clarification of Definition of “Environmentally

Beneficial”

Comment: 

Several commenters (IV-D-11, 52, 53, 106, 137; IV-G-11) recommended more

clarification regarding the criteria that must be met to demonstrate case-by-case environmental

benefit determinations. One commenter (IV-D-11) asked whether an environmental benefit

inherently means an emission reduction from the unit’s previous PTE.

One commenter (IV-G-11) recommended that EPA further define the environmentally

beneficial test. The test need not be an enormous hurdle and might in some areas consist only of

an assessment whether the project would or would not result in a “significant” increase of
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another regulated pollutant, with the additional consideration of any local health impacts. 

Another commenter (IV-D-52) suggested that EPA consider incorporating into the test a

requirement to address cross media impacts from pollution control and P2 activities.

Response:

Unfortunately, a specific definition of “environmentally beneficial” is difficult because

we would have to guess at all the possible scenarios that could occur, and inclusion of multimedia factors would only add to the complexity. Instead we have opted to use a case-by-case

procedure that can address each projects unique elements and each area’s needs.

We have clarified in the final rule how a source should calculate emissions increases for

primary and collateral pollutants for the purpose of determining the environmental impact of the

PCP. We also eliminated the primary purpose test requirement, expanded the list of

presumptively environmental projects, provided detailed calculations for determining whether a

switch to a different ODS is beneficial, identified which fuel switches are presumed “inherently

less polluting,” and made several other changes to improve and clarify the case-by-case process. 

We believe these changes provide the needed clarification to the process while still providing

flexibility to address unique situations.

As described in section 10.6.5, we have not extended the analysis to address cross media

impacts.

10.9.5 Air Toxics and the Environmentally Beneficial Test

Comment:

Two commenters (IV-D-46, 140) opposed disqualifying P2 projects that may result in an

unacceptable increased risk from the release of hazardous pollutants. One commenter (IV-D-46)

stated that EPA should instead include the evaluation of risk as part of the process for

determining if a P2 project is environmentally beneficial, such that the evaluation of increased

risk is subject to public notice and comment on a case-by-case basis rather than being left to

discretionary review by permitting authorities without public process. Another commenter (IVD-140) stated two reasons for eliminating this language. First, it would impose a requirement to

evaluate “unacceptable increased risk,” for which there is no guidance. Second, the restriction is

not necessary in light of section 112(f) of the CAA, which addresses any potential concerns from

residual risks to public health from HAPs.

Response: 

The NSR program is not designed to address emissions of HAP chemicals. Our final

rules contain a new definition of “regulated pollutant” that addresses this issue. The new
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definition clarifies that HAP under section 112 are not regulated pollutants for NSR purposes

unless they are constituents or precursors of a more general pollutant that is regulated under

section 108 of the CAA. Accordingly, it is difficult to mandate the consideration of air toxics in

any NSR programmatic context.

Secondly, we agree with the commenter that it is difficult to determine what is an

“unacceptable increased risk” from the release of air toxics when there is no guidance

available. We believe it would be a rare event that a listed PCP would trigger an “unacceptable

increased risk” from the creation of air toxics. However, in those cases that an air toxics

increase could result in harm, the Clean Air Act’s MACT program is designed to effectively

address the reduction of those HAP emissions and the increased risk from their release. 

Therefore, in an effort to streamline this NSR rule provision, sources should not consider

the impacts of increased emissions of air toxic pollutants in evaluating the environmental

benefits of their PCP.

10.10 Adequate Safeguards for the PCP Exclusion: The Cause or

Contribute Test

Comment:

10.10.1 Support or Oppose Cause or Contribute Test

Numerous commenters (IV-D-10, 12, 28, 42, 47, 52, 82, 125, 126, 152, 186; IV-G-8)

supported the proposed cause or contribute test. One commenter (IV-D-82) fully supported

EPA’s position that a PCP or any physical or operational change cannot result in an emissions

increase that will cause or contribute to a violation of any NAAQS or PSD increment, or have an

adverse impact on AQRV in a Class I area, and supported EPA’s proposed safeguards.

One commenter (IV-D-42) supported the cause and contribute test, as long as modeling

will not be required if the increase in emissions of the other pollutant is below the de minimis

level. 

Several commenters (IV-D-31, 33, 56, 92, 118, 128, 135, 153, 154, 158, 180, 190; IV-G3) opposed the proposed cause or contribute test. Some commenters (IV-D-31, 92, 121, 180)

stated that the burdens of addressing NAAQS or PSD increments, or potential adverse impacts of

AQRVs in a Class I area, would outweigh the usefulness of the exclusion for both the sources

and permitting authorities. One commenter (IV-D-31) stated that if the Agency keeps the

requirements for extensive impact analysis, EPA should develop a simple screening

methodology. 
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One commenter (IV-D-142) stated that the AQRV restrictions are not necessary, and

would only ensure undue delays. The commenter stated that, after several years of applying the

PCP exclusion under the WEPCO rule, no one, including EPA, has offered a single example of

where installation of pollution controls rendered a unit “less environmentally beneficial” because

of some adverse impact on an AQRV. Furthermore, because of the ambiguity in defining

adverse AQRV impacts, no applicant can readily conclude whether or not an AQRV could be

threatened by a proposed project. The commenter pointed out that ambiguity about which

authorities belong to the permitting authority or the FLM make it unclear what a State must do to

grant an exclusion, suggesting that EPA has decided it no longer has any interest in encouraging

PCPs. Another commenter (IV-D-128) stated that the provisions regarding AQRVs and FLM

roles are not well defined and could cause lengthy delays in the permit approval process. The

commenter objected to the proposed requirement that NAAQS and increment modeling be

performed for any pollutant increase from the project. This requirement, which is more stringent

than current WEPCO rule requirements, asserted the commenter, would effectively negate any

PCP exclusion benefits.

One commenter (IV-D-91) noted that most PCPs will not “result in” or “cause” an

emissions increase of any criteria pollutant. Without such a resulting emissions increase, the

PCPs are not subject to NSR even under the current regulations, regardless of the existence of a

proposed NSR exemption for PCPs. The commenter requested that EPA explicitly confirm this

fact in the body and preamble of the final rule and clarify that sources are authorized to

implement such environmentally beneficial projects without seeking review and approval of

EPA. 

One commenter (IV-D-158) stated that there should be no required cause and contribute

test. It would be better to require the source to offset any emission increases. In this way, a

source would be free to install a PCP that is required by a MACT rule or other requirement.

One commenter (IV-D-92, 180) suggested that once a project is considered

environmentally beneficial, there should be no requirement to conduct an impact analysis. There

should be no requirement to submit a netting analysis when the PCP is authorized. Instead,

increases and decreases from the project should be submitted with future netting exercises.

Response:

We agree with the commenters who supported the cause and contribute test. We

proposed a criterion for qualification for all PCPs that the emissions from the modified

emissions unit, after completion of a PCP project, cannot cause or contribute to a violation of

any NAAQS or PSD increment, or adversely impact an AQRV. This has been called the “causeor-contribute test.” We continue to believe that the PCP Exclusion must include such safeguards

to ensure protection of the environment and public health. Consequently, we are promulgating

the PCP Exclusion with no significant changes to the proposed cause-or-contribute test.
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We disagree with the commenters who stated that determining whether there would be an

adverse impact on an AQRV is too difficult and expressed the belief that the proposal is

ambiguous in defining roles of FLMs and permitting authorities. The intention of the statutory

structure for preconstruction permit review in section 165(d) of the Act unambiguously is to

protect against any adverse impact on AQRVs in Class I lands. Therefore, we continue to

believe that any air quality assessment for a PCP should consider all relevant AQRVs in any

Class I area that are identified by the FLM at the time a source submits their notice or permit

application for the project. 

While a source is not required to notify the Federal Land Manager of any Federal Class I

area located near the facility as a prerequisite for proceeding with a PCP, they must determine

whether any AQRVs have been identified in these areas. For purposes of those projects on the

list of presumptively environmental beneficial projects, we are limiting the consideration of

AQRVs to those that have already been identified by an FLM for the Federal Class I area. FLM

have identified AQRVs for many of the Federal Class I areas and made this information

available on a dedicated web site (go to http://www2.nature.nps.gov). If no AQRVs have been

identified for a particular Class I area, a source’s demonstration is simply a statement that no

AQRVs exist in Class I areas that it has the potential to affect. Similarly, if there are AQRVs in

nearby Federal Class I areas, but the pollutants associated with these AQRVS will either not be

emitted by the facility or will not increase by a significant amount as a result of the PCP, then

the source’s demonstration should simply indicate the lack of any association between its PCP

and the known AQRVs. If a source is required to obtain both permitting authority approval and

a permit before beginning actual construction of their project, then additional AQRVs may be

identified by an FLM consistent with the procedures provided for in that permitting process.

We agree with the commenter that modeling will not always be required as part of the

cause and contribute test. Although today’s final rule contains the core safeguard to prevent an

adverse air quality impact, a modeling exercise is not necessarily warranted in all cases. On the

other hand, the source should be prepared to conduct modeling with respect to any pollutant that

their PCP will cause to increase by a significant amount when that pollutant is associated with a

known AQRV in a nearby Federal Class I area. Oftentimes, a screening model may be used to

estimate the ambient impacts of the emissions increase from the facility. Special concern should

be given in cases where an FLM has already identified adverse impacts for such AQRV. In such

cases, the source is expected to record and consider any information which the FLM has made

available concerning the adverse effects to help determine whether the pollutant impacts from

their facility has the potential to cause further adverse impacts.

If, upon receiving a source’s notification of using the PCP Exclusion, a permitting

authority believes that the air quality impacts analysis is inadequate to make a complete

assessment of the air quality impact, they are entitled to request more information from the

source, including additional local or regional modeling.
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10.10.2 How to Address Collateral Emissions

Comment:

10.10.2.1 Increases in collateral emissions

One commenter (IV-D-138) stated that true PCPs (those that reduce source emissions) do

not trigger current NSR rules, and requested that EPA clarify the circumstance when a PCP

would trigger NSR. Consider EPA’s example where a source installs a VOC incinerator that

causes increased NOx, suggested the commenter: even in this circumstance, NOx emissions

would have to exceed 40 tons per year (or exceed allowable PSD consumption for the PSD area)

to trigger NSR. 

Another commenter (IV-D-106) requested clarification as to whether a PCP causing

collateral emissions increases would be subject to major NSR. For example, asked the

commenter, would a significant increase in NOx emissions from using an incinerator to control

VOC emissions constitute a major NOx source for NSR? The commenter believes that the

preamble implies that the increase in collateral emissions would mean the PCP exclusion does

not apply.

One commenter (IV-D-42) agreed with EPA’s comment that “it is possible that a PCP,

while significantly reducing the emissions rate of a targeted pollutant, could still cause an

increase in actual emissions of that or another pollutant at the source.” 

One commenter (IV-D-61) stated that certain projects, such as switching to natural gas,

may significantly reduce emissions of some pollutants (such as SO2) but may increase emissions

of other pollutants (such as NOx). The rules should clarify that a project may qualify for the PCP

exclusion if the total net change in emissions (determined by summing the increases and

decreases for all pollutants) results in a net decrease in emissions, or where an overall positive

environmental benefit results. The commenter requested that the net change be based on the

maximum lb/hr emission rate.

10.10.2.2 Requirement to mitigate significant increases in

nonattainment area pollutants

Several commenters (IV-D-12, 47, 52, 125, 129, 152, 186) supported EPA’s caution in

readily extending exemptions without mitigation where there may be collateral increases. One

commenter (IV-D-52) stated support for provisions that a source must mitigate any significant

collateral increases (but objected to the use of predicted actual emissions rather than PTE for

determining possible impacts). Another commenter (IV-D-47) supported extending the PCP

exclusion to all source categories, but stated that if the PCP exclusion is a regulatory or statutory

requirement and results in collateral emission increases of criteria pollutants or their precursors
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above the nonattainment NSR applicability threshold, the source must provide offsetting

emission reductions, to ensure that the project is environmentally beneficial. 

Several commenters (IV-D-29, 33, 50, 108, 140, 153, 154) disagreed with EPA’s position

that sources must automatically offset any significant increases in a nonattainment pollutant that

result from a PCP. One commenter (IV-D-29) stated that this requirement is unduly burdensome

and will only serve to block implementation of environmentally beneficial PCPs. In the case of

mandatory PCPs, the permitting authority should be required to account for the cost of obtaining

offsets when it determines the control activities that must be undertaken. The burden of securing

offsets should be on the entity requiring the pollution control activities. At the same time, said

the commenter, it is equally inefficient to require permitted sources that voluntarily engage in

PCPs to pay for the necessary offsets. A source that voluntarily implements control measures has

obviated the need for a permitting authority to develop and enforce a PCP for that source. Given

this, it is inequitable to force the volunteering source to suffer the cost of securing offsets. The

EPA should modify its position regarding a source’s liability for securing offsets required as a

result of a PCP. Another commenter (IV-D-50) supported the exemption from offsets and

modeling for PCPs because it recognizes efforts to reduce pollution and provides an incentive to

encourage such projects.

Two commenters (IV-D-33, 108) believed that EPA should not require sources to offset

collateral emission increases. Instead, State and local agencies should have discretion in this

determination, as they may have accounted for these collateral increases elsewhere in their SIP. 

One of the commenters (IV-D-33) further stated that the development of Federal regulations

requires that all costs associated with their implementation be considered. The commenter

asserted that it would be virtually impossible for EPA to accurately determine the offset costs,

given that these offsets would be granted on a case-by-case basis and would be site-specific. 

Hence, suggested the commenter, EPA cannot accurately determine the economic impact of the

proposal or the control requirements proposal. The commenter recommended the following

changes for proposed §51.166(b)(2)(iii)(H):

(H) The addition, replacement or use of a pollution control project at an existing

emissions unit. For the purpose of this paragraph, the permitting agency may show that

the pollution control project will result in a significant net increase in representative

actual annual emissions of any pollutant regulated under this section and the permitting

authority may determine that this increase will cause or contribute to a violation of any

national ambient air quality standard or any maximum allowable increase over the

baseline concentration, or will have an adverse impact on air quality related values at any

Class I area. With this showing, the permitting authority may deem such project as not

meeting the definition of pollution control project. For the purpose of this paragraph, in

lieu of the source’s representative actual annual emissions, the emissions levels used for

that source in the most recent air quality impact analysis in the area conducted for the

purpose of title I of the Act, if any, may be used.”
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Analogous changes should be made to the proposed §52.21(b)(2)(iii)(H).

One commenter (IV-D-153) stated that sources subject to the PCP exclusion should not

be required to offset collateral emissions increases that may exceed significance thresholds in

nonattainment areas. The determination of what impacts a pollution control requirement will

have on air quality is one that should be made by the regulatory authority at the stage where

requirements are being developed. Another commenter (IV-D-154) also encouraged relief of any

collateral compliance with major NSR requirements when involuntary PCPs are undertaken.

Response:

We agree with the commenters that PCPs causing collateral emission increases may still

qualify for the PCP exclusion. As the commenter noted, a common example of such a project is

installation of a thermal incinerator, which forms NOx as a collateral pollutant while reducing

VOC emissions. For evaluating the environmental impact of the collateral emissions increase,

the source and permitting authority will assess the difference between the emissions unit’s postchange actual emissions and its pre-change baseline actual emissions. That increase is then

weighed against the emissions decrease of the primary pollutant, determined using the same

methodology, to evaluate whether the PCP, as a whole, provides an environmental benefit. The

source and permitting authority also must ensure that the change does not cause or contribute to

an air quality violation, that no ERCs are generated (by the initial application of the PCP), and

that any significant emissions increase of a nonattainment pollutant is offset with acceptable

emission reductions.

The PCP Exclusion is available, regardless of an area’s attainment status or its severity

of nonattainment. Nonetheless, because increases in a nonattainment pollutant contribute to the

existing nonattainment problem, for any significant emissions increase in a nonattainment

pollutant resulting from a PCP, either the source or the permitting authority must offset the

increase with acceptable emission reductions. Because less than significant collateral emissions

increases (for example, less than 40 tpy of VOC in a moderate ozone nonattainment area) do not

trigger major NSR, such mitigation requirements are not necessary for the PCP Exclusion when

the increase of the non-attainment pollutant will be below the applicable significance level. Be

aware, however, that a less-than-significant emissions increase may be subject to a State’s minor

NSR requirements.

10.10.3 Other Comments on the Cause or Contribute Test

Comment:

One commenter (IV-D-46) suggested that EPA should use the defined term “net

emissions increase” instead of “net increase” within the PCP exclusion provision. This term,

suggested the commenter, would clarify that the PCP exclusion is available except when a
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significant net emissions increase in representative actual annual emissions would cause or

contribute to a violation of NAAQS, exceed a maximum allowable increase over the baseline

concentration, or adversely impact an AQRV in a Class I area.

One commenter (IV-D-31) interpreted the preamble’s language to mean that

“contributes” is defined as when a source causes a “significant” increase in the applicable

pollutant. Thus, concluded the commenter, de minimis emissions increases (for example, less

than 40 tons per year of VOC in a moderate ozone nonattainment area) would not “contribute” to

a violation of a NAAQS or use up a PSD increment.

Response: 

We agree with the commenter that the cause and contribute test would not apply to PCP

unless there is a significant increase in emissions. We have clarified the requirements for the

cause and contribute test in our final rules. The rules require a demonstration that the PCP will

not have an adverse air quality impact (i.e, modeling, screening level modeling results, or a

statement that the collateral emissions increase is included within the parameters used in the

most recent modeling exercise). [See, for example, §52.21(z)(3)(v).] An air quality impact

analysis is not required for any pollutant that will not experience a significant emissions

increase as a result of the project. We have added a new definition of significant emissions

increase at §51.165(a)(1)(xxvii), §51.166(b)(39), and §52.21(b)(40).

10.11 Calculating ERCs From PCPs

Comment: 

10.11.1 Support ERCs from PCPs

Many commenters (IV-D-46, 50, 53, 62, 73, 74, 82, 88, 92, 140, 147, 154, 183)

supported the generation of ERCs by PCPs. 

One commenter (IV-D-92) indicated that ERCs should be allowed even when the project

triggers the significance level of other criteria air pollutants, provided the project is assessed as

being environmentally beneficial. 

One commenter (IV-D-53) stated that as long as the collateral increase is offset at a oneto-one ratio, the project should be eligible for ERCs for the pollutant being reduced.

10.11.2 Oppose ERCs from PCPs

Two commenters (IV-D-11, 152) discussed potential difficulties with implementing the

provisions for ERCs. Both commenters believed that the use of ERCs (for NSR offsets or
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netting credits) generated by PCPs could cause some problems for tracking emission reductions

and use of the credits. One commenter (IV-D-152) stated that, with respect to EPA’s aim of

program simplification, it should refer to its own discussion of ERCs associated with excluded

PCPs as an example of the level of complexity associated with the whole process of tracking

reductions attributable to ERCs and tracking what portion of the difference is captured by the

PCP. 

10.11.3 Other Comments on ERCs From PCPs

Four commenters (IV-D-46, 92, 140, 154) suggested that EPA should allow permitting

authorities to “give credit” for emission reductions generated from a PCP even if there is a

collateral increase above the significance levels for one or more other pollutants. The

commenters stated that the current proposed language is too restrictive and should be revised to

give the permitting authority more latitude, such that if a permitting authority determines that a

PCP is environmentally beneficial without a reduction of the collateral increase to a level below

the significance level, credit should be given for the emission reductions achieved that are

otherwise creditable. Alternatively, if the permitting authority deems it necessary, offsets or

contemporaneous internal reductions may be required to ensure that a project is environmentally

beneficial.

Three commenters (IV-D-73, 74, 88) stated that the proposed language for recognizing

ERCs should be revised to delete the “environmentally beneficial” condition, which is

superfluous since a PCP is by definition environmentally beneficial.

One commenter (IV-D-31) noted that the preamble states that the calculation of ERCs

will be based on the difference between the pre-modification actual emissions and the postmodification PTE, while NSR applicability will be determined based on the difference between

the pre-modification actual baseline emissions and post-modification actual emissions. The

commenter asked, if in the reform process it was deemed unreasonable to use post-modification

PTE minus pre-modification actuals for the applicability determination, why is it not also

considered unreasonable to use that same formula in the ERC calculation? There should be

consistency between the applicability and the ERC calculation processes.

One commenter (IV-D-137) asked EPA to clarify its intent and provide guidance

regarding the use of ERCs from PCPs. For example, asked the commenter, if a source that has a

PCP exclusion is found to have used credits in a manner that lessened the environmental benefit,

would the exclusion have to be revoked and the source required to undergo NSR for the PCP?

Response:

The proposal would have allowed certain projects approved for the PCP Exclusion to use

their primary pollutant emission reductions as NSR offsets or netting credits. We included in the
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proposed rule a specialized environmentally-beneficial test that would apply to PCPs that

generate ERC.

We agree with the commenters who opposed allowing PCP to generate ERC. We no

longer believe that allowing PCPs to generate netting credits or offsets is prudent, in light of the

increased complexity with tracking generation and usage as raised by the commenters. But

perhaps more importantly, we feel these emission reductions achieved by the PCP are integral to

the environmentally beneficial demonstration for the PCP exclusion. The emission reductions

are traded, in effect, for the significant emissions increase of the collateral pollutants. To then

re-use the reductions would weaken the PCP exclusion and would not ensure appropriate

environmental protection. Consequently, a source can not use emission reductions generated

from a PCP as netting credits or offsets.

Notwithstanding our position on disallowing PCP reductions as netting or offset credits,

sources are allowed to continue to use these reductions to generate allowances for purposes of

complying with the title IV Acid Rain program. In 1992, the PCP exclusion was originally

designed for use by electric utility steam generating units because we did not envision that

Congress intended for the NSR program to apply to projects undertaken to comply with title IV. 

Nothing in today’s proposal is intended to change that design. Moreover, once a source receives

a PCP Exclusion, it can then apply for ERCs if they change their process conditions in such a

way that furthers the environmental benefit of their PCP. For example, consider an add-on

control technology which receives a PCP Exclusion that, at full operation, allows it to increase

its emissions of a specific collateral pollutant emits 100 tons per year (tpy) of a pollutant (either

a targeted pollutant or a collateral pollutant). If the source later decides to take an hours of

operation limit for their process line and/or control technology that reduces their emissions of

this pollutant to 75 tpy, then 25 tpy of the pollutant can be used as ERCs if deemed acceptable in

all other respects by the reviewing authority.

10.12 Other Comments on PCPs

Comment: 

A commenter (IV-D-16) recommended that EPA should include modification of PCPs

under §51.165(a)(1)(v)(C)(8). Upgrading a scrubber to increase removal efficiency (or lower

operating costs) or conversion of a thermal oxidizer to a catalytic oxidizer to reduce energy use

would fit the spirit of this section, suggested the commenter, but neither is strictly defined as

“addition,” “replacement,” or “use.” To avoid an unintended result, §51.165(a)(1)(v)(C)(8)

should be amended to read: “The addition, replacement, modification, or use of a pollution

control project....” 
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Response:

We agree with the commenter that modification of PCP should qualify for the PCP

exclusion. Our final rules allow for a modification to occur by stipulating in the PCP definition

that “such qualifying activities or projects can include the ... upgrade of an existing emissions

control technology with a more effective unit.”

Comment: 

Some commenters (IV-D-121, 135, 143, 153) opposed using minor NSR to grant the PCP

exemption. One commenter (IV-D-135) stated that it would be helpful if EPA clarified that

minor NSR review is not the only possible vehicle for granting approval for the PCP exclusion. 

Minor NSR is very burdensome. Commenter IV-D-153 said the exclusion should be selfexecuting. 

Response:

We agree with these commenters in part. The PCP that are listed in our rules are

presumed environmentally beneficial. For these PCP, the process is self-executing. Prior to

commencing construction on a PCP, the source must submit a notice to the permitting authority

that includes the information we specify in our rules. [See, for example, §52.21(v)(3).] As the

commenters suggest, a minor NSR permit action is not always required for listed PCP. 

Depending on the permitting authority’s requirements, this information may be submitted with a

Part 70, Part 71, or a SIP-approved permit application such as a minor NSR permit application.

If allowed under the permitting authority’s regulations and the source’s existing permit, a source

may begin construction on the PCP immediately upon submitting notice to the permitting

authority. (Some regulations require prior approval for controls or emission control plans in

order to verify that they will meet the requirements of that rule.) The requirements for the PCP

Exclusion would then be incorporated into the source’s title V permit at the next renewal.

For projects not listed in our rules, the environmentally beneficial presumption does not

exist and the PCP Exclusion is not self-executing. On a case-by-case basis, the permitting

authority must consider the net environmental benefit of a non-listed project and approve a

source’s request for the PCP Exclusion for a specific application. The source must receive this

approval from their permitting authority before beginning actual construction of the PCP. The

permitting authority review must be conducted pursuant to a SIP-approved or title V permitting

process that meets the minimum requirements established in 40 CFR Part 51.160 and 51.161. 

As these rule revisions indicate, we are not requiring any major NSR public or permitting

authority review of a PCP prior to enabling the use of the exclusion, with the exception of casespecific reviews conducted by the permitting authority for non-listed technologies. Nonetheless,

existing State regulations for minor NSR will continue to apply to projects that qualify for the
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PCP Exclusion, in part because they will involve a significant increase of a collateral air

pollutant. Minor NSR programs are designed to consider the impact these increases could have

on air quality, including whether local conditions justify rebutting the presumption that a

particular project is environmentally beneficial. Nothing in this rule voids or otherwise creates

an exemption from any otherwise applicable minor NSR preconstruction review requirement in

any SIP that has been approved pursuant to section 110(a)(2)(C) of the Act and 40 CFR 51.160

through 164. The minor NSR permits may afford the public an opportunity to review and

comment on the use of the PCP Exclusion for a specific project. [See 40 CFR 51.160 and

51.161.] Furthermore, to undertake a PCP Exclusion, a source could use the title V permit

revision process to officially effect the PCP Exclusion. This would enable the public to review

the PCP determination at that time.

Thus, the process for implementing a PCP exemption would be similar to the other

exemptions within NSR (i.e., routine maintenance, change in ownership, etc.), whereby a source

is empowered to make the proper decision based on the facts of the case and the rule

requirements. When this decision is not clear to a source, they are advised to consult with their

permitting authority in advance of installing the PCP, for to proceed with a project that is not

environmental beneficial or that adversely impacts the air quality would be cause for

enforcement action per Section 113 of the CAA.

Comment: 

A commenter (IV-D-138) requested clarification of whether NSR applicability would

affect the switching to an alternative fuel or raw material that the source was capable of

accommodating prior to 1975. The commenter stated that such a change would not appear to

trigger major NSR review.

Response:

We agree with the commenter that switching to an alternative fuel or raw material that

the source was capable of accommodating before 1975 would not trigger major NSR review. We

have not changed this provisions in our final regulations. [See §52.21(b)(2)(iii)(e).] This

language continues to apply. The new PCP languages broadens the exclusion from major NSR

by extending the qualifying fuel and raw material switches. The new PCP exclusion covers

several types of fuel switching to an inherently less polluting fuel. [See §52.21(b)(32).] 

Therefore, sources that were capable of accommodating a particular fuel or raw material switch

before 1975 will also be able to use any of the switches in the new rules that they were not

previously capable of accommodating. Also, newer sources that were not capable of

accommodating a fuel or raw material switch before 1975 will be able to take advantage of fuel

and raw material switches.
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Comment: 

One commenter (IV-D-11) believed that EPA should require that a project can only

qualify as a PCP if the wastes generated can be managed within existing waste management

systems. 

Response:

By definition, a PCP reduces emissions of air pollutants subject to regulation under the

Act. Therefore, while the primary environmental benefit of the PCP would be to reduce air

emissions, a secondary benefit could be reducing pollution in other media. However, these

cross-media tradeoffs are difficult to compare, so it is difficult to weigh their importance in

appraising the overall environmental benefit of a PCP. We solicited comments in the proposal

on how to compare cross-media pollution, but we received no suggestions on how to design such

a system. As a result, we have determined that it is inappropriate to consider non-air impacts

when considering a PCP for an exclusion from NSR.

Comment:

One commenter (IV-D-15) asked three questions regarding fuel burning and SOx controls.

 1. Would an otherwise qualifying fuel-switching project at PSD-permitted fuel-burning

units qualify for the PCP exclusion if the project includes removal of scrubbers that were

necessary to meet SO2 emission limitations when burning the “dirty” fuel, but are no

longer necessary to meet those limitations when burning the cleaner fuel?

The commenter discussed that the specific project that prompted the request for

clarification involves the substitution of a cleaner burning natural gas and fuel gas mixture in fuel

burning units currently permitted to burn high-sulfur fuel oil. When burning the new fuel

mixture, applicable SO2 limitations can be met without the scrubbers; therefore, suggested the

commenter, it would make economical sense to eliminate the scrubbers. The commenter stated

that the threshold question is whether a fuel-switching project such as that described would

qualify for a PCP exclusion. The proposed definition includes language that expressly includes

“any activity that is necessary to accommodate switching to an inherently less polluting fuel.” In

the case mentioned above, the switch would not necessitate removal of the scrubbers, but the

switch would make the scrubbers unnecessary and uneconomical.

It is not clear, notes the commenter, that removal of the scrubbers could be considered

part of the PCP and thus exempt from review. However, it is clear that the proposed project

would be consistent with the purpose of the proposed regulatory amendments. More importantly,

the commenter believes, an interpretation to include such a project within the PCP definition

would also be consistent with the overarching purpose of the NSR regulations to protect NAAQS
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and PSD increments. Therefore, EPA is requested to clarify in the response to comments or

preamble to the final regulations that the intent of these proposed regulations is to allow

unnecessary pollution control equipment to be removed when a switch to clean-burning fuel is

made.

2. If the fuel-switching project with removal of the SO2 scrubbers does constitute a PCP,

must the source modify the existing PSD permit to delete the permit condition requiring

that the fuel-burning units be equipped with scrubbers?

Presuming that the PCP exclusion would apply to the removal of unnecessary pollution

control equipment as part of a fuel-switching project, suggested the commenter, there should be

some sensible instruction with regard to how to modify the permit. As a practical matter,

revising the PSD permit to delete the scrubber condition appears to serve no real purpose and

would be unduly burdensome to the permittee, notes the commenter. More importantly,

requiring a PSD permit modification would obviously be contrary to granting an exemption for

the PCP itself. If, however, it is determined that the permit must be revised to delete the

“scrubber” condition, then the commenter requests that the burden must be minimized by

requiring only an administrative review rather than a substantive review, and by processing the

application through minor NSR rather than major NSR.

3. If the existing PSD permit must be modified to delete the scrubber condition, would that

modification require major NSR or minor NSR procedures?

Response:

Switching from burning fuel oil to burning natural gas would qualify as a listed PCP.

For such a PCP, the process is self-executing. Prior to commencing construction on a PCP, a

source must submit a notice to their permitting authority that includes the information we specify

in our rules. [See, for example, §52.21(v)(3).] Depending on the permitting authority’s

requirements, this information may be submitted with a Part 70, Part 71, or a SIP-approved

permit application such as a minor NSR permit application. If allowed under the permitting

authority’s regulations and the existing permit for the facility, the source may begin construction

on the PCP immediately upon submitting notice to the permitting authority. (Some regulations

require prior approval for controls or emission control plans in order to verify that they will

meet the requirements of that rule.) The requirements for the PCP Exclusion would then be

incorporated into the source’s title V permit at the next renewal.

Although the fuel switch and removal of the scrubbers would not require a major NSR

permit revision, minor NSR requirements still apply. The terms and conditions of the minor NSR

permit would need to be revised to reflect the use of natural gas according to the procedures of

the minor NSR permitting program under which the scrubbers were installed.
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Comment:

One commenter (IV-D-129) stated that proposed 40 CFR 51.165(a)(1)(v)(C)(8) , which

looks for a significant net increase in “any pollutant regulated under the Act,” conflicts with the

parallel provision in the proposed Texas regulations, which evaluates PCPs for significant net

increases of any criteria pollutant. Proposed 40 CFR 51.165(a)(1)(v)(C)(8) also conflicts with

EPA’s PSD and nonattainment regulations, which address criteria pollutants rather than any

pollutant regulated under the Act. Under EPA’s proposal, notes the commenter, VOC emissions

would be treated individually rather than as a group. As a result, PCPs that resulted in any

increase in any one form of VOC would be reviewed as major modifications. The commenter

believes this is burdensome and counterproductive, and will keep regulated sources from taking

full advantage of this extension of the WEPCO rule. Further, asserts the commenter, this

proposal extends the NSR program into the air toxics control program, which Congress has

explicitly determined should be accomplished differently under section 112. The EPA should

modify the proposed exclusion to require that a permitting authority measure only criteria

pollutants when making this determination. 

Response:

We do not agree with the commenter that the appropriate terminology for the pollutants

under NSR is “criteria pollutants” rather than “pollutants regulated under the Act.” Our rules

have always required that NSR applies to pollutants regulated under the Act. However, we

agree with the commenter that which pollutants are regulated under the Act needs clarification. 

Our final rules contain a new definition of regulated pollutant to address this issue. The new

definition clarifies that HAP under section 112 are not regulated pollutants for NSR purposes

unless they are constituents or precursors of a more general pollutant that is regulated under

section 108 of the CAA. 
I-11-1

Chapter 11 - Listed HAPs

11.1 Overview

This chapter contains comments on our proposed changes to requirements that would

exempt certain HAP from PSD review, consistent with 1990 CAA provisions. The majority of

commenters agreed with these changes.

11.2 Listed HAP and PSD

Comment:

One commenter (IV-D-165) opposed the exclusion of certain listed HAPs from PSD

review, especially mercury. The commenter was concerned because these HAPs are known to

cause harm in humans and wildlife and it would be years before there would be final regulations. 

Therefore, these HAPs would be unregulated until the regulations are finalized. The commenter

stated that any interpretation of the statue would not exclude those HAPs from PSD review until

final regulations are in place. The commenter asked whether the proposed amendments would

allow facilities to emit over 200 pounds of mercury per year without any regulations applying.

One commenter (IV-D-173) supported the proposed changes and requested that EPA

publish an annual listing of HAPs subject to the provisions of this section as part of 40 CFR 51. 

The commenter recommended that EPA leave “significant means” at the beginning of

§51.166(b)(23)(ii). The commenter also recommended that EPA add “of” after “112" and before

“the” in the first sentence of §51.166(i)(13).

Several commenters (IV-D-46, 65, 73, 74, 88, 110, 128, 143, 147, 160, 162) agreed that

HAPs listed in title III should not be subject to PSD, because this is consistent with section

112(b)(6) of the CAA, which expressly exempts section 112 HAPs from the statutory PSD

requirements. One commenter (IV-D-162) stated that the CAA is very clear that Congress

intended to exclude the HAP listed in section 112(b)(2) from PSD. Three commenters (IV-D110, 143, 162) also agreed with proposed §51.166(i), which provides that a SIP “may provide

that the [PSD] provisions . . . do not apply to any stationary source with respect to any or all of

the hazardous air pollutants listed in section 112 of the Act, as well as any or all pollutants that

may be added to the list under the provisions of section 112(b)(2) of the Act.” Three

commenters (IV-D-73, 74, 88) stated that any change under the proposed rule that might

inadvertently regulate a listed HAP as part of the PSD program would conflict with the statute.

Many commenters (IV-D-46, 135, 147, 160, 162) said any pollutant specifically regulated

under section 112, including but not limited to sections 112(b), 112(k), and 112(r), are also

specifically excluded. Three commenters (IV-D-135, 160, 162) stated that HAPs that are

precursors or constituents of section 108 pollutants should also be exempt. In a similar vein,

another commenter (IV-D-46) said EPA should provide regulatory language clearly stipulating
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that all pollutants listed under section 112 of the CAA (including every subsection of this

section) are not subject to the PSD program. According to the commenter (IV-D-46), EPA’s

proposed language stating that HAPs listed under section 112(b)(1) is not subject to regulations

under the Act is inconsistent with the statute and preamble discussion excluding all section 112

pollutants from PSD.

One commenter (IV-D-46) suggested that EPA add a definition for “pollutants subject to

regulation under the Act” to 40 CFR 52.21 that limits the scope of this term under PSD. 

According to the commenter, this definition should clearly exclude all pollutants listed under

section 112 of the CAA and list the specific pollutants that may be subject to PSD. Under this

suggested approach, when new pollutants are subject to regulation under the CAA and if they are

subject to PSD, the list could be updated.

One commenter (IV-D-31) said if pollutants covered under a section 112 NESHAP are

exempt from federal PSD applicability, then pollutants for which MACT (NESHAP) standards

apply should be exempt from PSD applicability. The commenter cited recent NSPS and

emission guidelines for MWC compounds that were developed according to section 129 of the

CAA and as such, promulgates MACT standards for those source categories.

One commenter (IV-D-87) supported the proposal to exempt named chemicals that are

components of the compounds listed under section 112(b)(1). In addition, the commenter said

that when surrogates are used for controlling section 112 pollutants under the NESHAP program,

these surrogates should also be exempt from the PSD program.

One commenter (IV-D-121) urged EPA to clarify that when a HAP is delisted under

sections 112(b)(3) or 112(r)(3) of the CAA, and is not otherwise regulated under the CAA, PSD

does not apply. The commenter stated that this clarification is consistent with Congressional

intent and EPA’s proposal. The commenter recommended that EPA clarify the language in

proposed §§51.166(i)(13) and 52.21(i)(14) by adding the following phrase at the end of the

second sentence: “unless the pollutant is not otherwise regulated under the Act.” In a similar

vein, the commenter urged EPA to amend proposed §§51.166(b)(23)(ii) and 52.21(b)(23)(ii) as

follows:

However, for purposes of the applicability of this section, the hazardous air pollutants

listed under section 112(b)(l) of the Act, including the hazardous air pollutants that may

be added to the list, or any hazardous air pollutants that may be removed from the list and

are not otherwise regulated under the Act, are not considered subject to regulation under

the Act. [Supplemental material underlined.]
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Response:

We agree with the commenters that our proposal reflects the statutory requirements. 

Therefore, we will promulgate these proposed provisions at §51.166(b)(23)(i), §51.166(i),

§52.21(b)(23)(i), and §52.21(i). As the final rule provides, the following pollutants currently

regulated under the Act are subject to Federal PSD review and permitting requirements.

• CO

• NOx

• SO2

• PM and PM-10

• Ozone (VOC)

• Pb (elemental)

• Fluorides (excluding hydrogen fluoride)

• Sulfuric acid mist

• H2S

• Total reduced sulfur compounds (including H2S)

• CFCs 11, 12, 112, 114, 115

• Halons 1211, 1301, 2402

• Municipal Waste Combustor (MWC) Acid Gases, MWC metals, and MWC organics

• ODS regulated under title VI

The PSD program automatically applies to newly regulated pollutants, which would include

final promulgation of an NSPS applicable to a previously unregulated pollutant. 

One commenter asked us to amend the regulations to include a definition of pollutants

regulated under the Act. We agree with the commenter that such a provision would clarify which

pollutants are covered under the PSD program. Moreover, the nonattainment NSR rules at

§51.165 would also benefit from this clarity. Therefore, the final rule will include a definition

for regulated pollutant. The new definition codifies that HAPs listed in section 112 of the CAA

(including any pollutants that may be added to the list pursuant to section 112(b)(2) of the CAA),

are not pollutants regulated under the CAA unless they are otherwise regulated under the CAA. 

However, when any pollutant listed under section 112 of the Act is also a constituent or

precursor of a more general pollutant that is regulated under section 108 of the Act, that listed

pollutant is subject to the major NSR requirements. 
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11.3 Federal Enforceability of Existing SIP Provisions

Comment:

Several commenters (IV-D-110, 121, 128, 135, 143, 160, 162) disagreed that existing

federally-approved SIP provisions that subject HAPs to PSD regulations and permit requirements

are “federally enforceable.” Two commenters (IV-D-143, 162) argued that because section

112(b)(6) exempts HAPs from PSD requirements, those provisions of existing SIPs that impose

PSD requirements on HAPs no longer implement a relevant requirement. Therefore, under this

suggested approach, they cannot be part of an “applicable implementation plan” under the Act

and are not federally enforceable. The commenters noted that while sections 116 and 112(d)(7)

of the CAA may allow States to regulate HAP under state PSD programs, they do not make those

provisions federally enforceable because they do not “implement a relevant requirement.” Three

commenters (IV-D-135, 160, 162) stated that the final rule should clarify that the section

112(b)(6) exemption is self-implementing, and SIP provisions inconsistent with this statutory

requirement are automatically vacated.

According to one commenter (IV-D-110), existing SIP provisions that subject HAPs to

PSD requirements contradict the language of the statute, do not implement the CAA, and are

therefore, not federally enforceable. The commenter stated that EPA should clarify that existing

SIP provisions that regulate HAPs as part of a PSD program are not federally enforceable.

One commenter (IV-D-121) requested that EPA make it clear that existing SIP provisions

that regulate HAPs as part of a PSD program are no longer federally enforceable because section

112(b)(6) of the CAA exempts HAPs from PSD requirements under the CAA.

Some commenters (IV-D-143, 162) said that the use of the term “shall” in section

112(b)(6) indicates that the provision is mandatory and, because of the absence of other direction

in the CAA, effective upon the date of enactment. According to two commenters (IV-D-143,

162), the statutory exemption of HAP from PSD requirements is self-executing and immediately

effective.

Response:

As we indicated in our proposal, State and local agencies with an approved PSD

program may continue to regulate the HAP now exempted from Federal PSD by section

112(b)(6) if their PSD regulations provide an independent basis to do so. These State and local

rules remain in effect unless they are revised to provide similar exemptions. Such provisions that

are part of the SIP are federally enforceable. 

Section 112(q) retains existing NESHAP regulations by specifying that any standard

under section 112 in effect before the enactment of the 1990 Amendments remains in force. 
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I-11-5

Therefore, the requirements of 40 CFR 61.05 to 61.08, including preconstruction permitting

requirements for new and modified sources subject to existing NESHAP regulations, are still

applicable. 

11.4 Elemental Lead and Lead Compounds

Comment:

Two commenters (IV-D-113, 135) did not agree with our proposal with respect to lead. 

One commenter (IV-D-113) opposed using the term “elemental” as a clarification for the lead

listing. According to the commenter, this could cause confusion and inadvertently lead to the

omission of lead compounds. The commenter suggested using “lead and lead compounds, as

Pb,” or a definition as follows: “Lead” means the element lead, excluding any other elements,

and includes lead in particulates, vapors, aerosols and compounds.

One commenter (IV-D-135) stated that EPA’s proposal does not implement the section

112(b)(6) exemption for pollutants listed under section 112. The commenter specified that

EPA’s proposal nullifies the statutory exemption for lead compounds. The commenter agreed

that lead is still a criteria pollutant subject to the lead NAAQS. However, the commenter did not

agree with our position that the elemental lead portion of lead compounds should still be subject

to the NAAQS and PSD. The commenter argued that the term “elemental lead” means lead

found in its elemental form, and therefore, there is no such thing as an elemental lead portion of a

lead compound. The commenter further explained that EPA has conceded that elemental arsenic,

beryllium, and mercury are exempt from PSD applicability because Congress exempted the

compounds in which they appear in nature. The commenter urged EPA to apply the same logic

to lead. The commenter stated that section 112(b)(6) requires EPA to revise its proposal to

substitute “elemental lead” for “lead” in the list of pollutants in 40 CFR 51.166(b)(23)(i) and

52.21(b)(23)(i), as well as in the list of de minimis ambient impact levels in §§ 51.166(i)(8)(i)

and 52.21(i)(8)(i). The commenter also stated that we should clarify that part 60 Appendix A

Method 12 is not a proper test method to measure elemental lead because it doesn’t distinguish

between lead and lead bound in compounds.

One commenter (IV-D-135) agreed that section 112(b)(6) does not prevent PSD

regulation of lead compounds as constituents of PM10. However, the commenter stated that the

language in the proposed §§51.166(i)(13) and 52.21(i)(14) is over-inclusive. The commenter

argued that, as proposed, §§51.166(i)(13) and 52.21(i)(14) would subject a listed HAP to PSD

review, not only as a constituent or precursor of a “general pollutant,” but also as the listed HAP. 

The commenter said that section 112(b)(6) does not allow this result and recommended that these

sections should be reworded as follows:
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Any hazardous air pollutants listed under section 112 of the Act remain subject to the

provisions of this section to the extent that they are regulated as constituents or precursors

of a pollutant listed under paragraph (b)(23)(i) of this section.

Response:

As we indicated in our proposal package, CAA section 112(b)(7) states that elemental Pb

(the named chemical) may not be listed by the Administrator as HAP under section 112(b)(1). 

Therefore, elemental Pb emissions are not exempt from the Federal PSD requirements because

section 112(b)(6) exempts only the pollutants listed in section 112. Elemental Pb continues to be

a criteria pollutant subject to the Pb NAAQS and other requirements of the Act. As proposed, we

are also continuing to maintain that the reference to Pb in the regulations regarding the

significance levels and significant monitoring concentrations covers the Pb portion of Pb

compounds. [See §51.166(b)(23), §51.166(i), §52.21(b)(23), and §52.21(i).] Otherwise, the

word elemental might imply that only Pb that is not part of a Pb compound is covered.

11.5 Section 112(r) Compounds

Comment:

Several commenters (IV-D-46, 135, 147, 162) interpreted the CAA at 112(b)(6) to mean 

that all pollutants under section 112, including 112(r) pollutants, should be exempt from PSD.

According to one of these commenters (IV-D-135), Congress exempted pollutants listed

under section 112(b)(6) from PSD review, regardless of whether they are regulated under other

sections of the Act. Thus, the commenter (IV-D-135) recommended several changes to the

proposed rules. The commenter (IV-D-135) said the following: that (1) hydrogen sulfide should

be deleted from the list of pollutants and “significant” emission rates in §§51.166(b)(23)(i) and

52.21(b)(23)(i); (2) the listing for “fluorides” should be amended to specify “(not including

hydrogen fluoride)”; (3) the listings for “total reduced sulfur” and “reduced sulfur compounds”

should be amended to specify “(not including hydrogen sulfide)”; (4) the references in

§§51.166(b)(23)(i) and 52.21(b)(23)(i) to “section 112(b)(1)” should be amended to read “section

112”; and (5) §§51.166(i)(13) and 52.21(i)(14) should be amended to read as follows. 

The requirements of this section do not apply to any stationary source with respect to each

hazardous air pollutant listed pursuant to section 112 of the Act, as well as all pollutants

that may be added to such list under the provisions of sections 112(b)(2) or 112(r)(3) of

the Act. However, the applicable provisions of this section shall apply to any pollutant

listed pursuant to sections 112(b)(l) or (b)(2) of the Act that is deleted from such list

under the provisions of section 112(b)(3) of the Act, and that does not remain listed under

section 112(r)(3). Any hazardous air pollutants listed under section 112 of the Act which

are regulated as constituents or precursors of a more general pollutant listed under section
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I-11-7

108 of the Act are still subject to the provisions of this section, notwithstanding section

112(b)(6) of the Act. remain subject to the provisions of this section to the extent that

they are regulated as constituents of a pollutant listed under paragraph (b)(23)(i) of this

section.

Another commenter (IV-D-162) believed that section 112(r) compounds are excluded

from NSR because section 112(b)(6) prohibits NSR coverage. However, the commenter stated

that section 112(r) pollutants were never intended to be regulated under NSR. The commenter

pointed to the proposed part 70 revisions, which state that section 112(r) pollutants are part of a

program that is independent of and very different from traditional air quality management and

thus should not be part of permitting that is directed by air quality management. The commenter

stated that because Congress did not specifically prohibit EPA from regulating these pollutants

under NSR does not mean that Congress authorized EPA to do so. According to the commenter,

it is clear that the 1990 Congress deliberately cut back EPA’s existing interpretation that any

pollutant “regulated” under the Act was an NSR-regulated pollutant.

The other commenter (IV-D-46) recommended that EPA clarify that all pollutants listed

under section 112 are not regulated pollutants for PSD purposes. The commenter (IV-D-46)

urged EPA to develop a definition of “pollutant regulated under the Act” that would exclude

112(r) pollutants.

Response:

We do not agree with the commenters that CAA 112(b)(6) specifically exempts pollutants

listed under section 112(r) from PSD. However, we have not included pollutants listed under

section 112(r) in the new definition of regulated NSR pollutant. As we proposed, substances

regulated under 112(r) may still be subject to PSD if they are regulated under other provisions

of the Act. For example, even though H2S is listed under section 112(r), it is still regulated under

the Federal PSD provisions because it is regulated under the NSPS program in section 111. 

This means that the listing of a substance under section 112(r) does not exclude the substance

from the Federal PSD provisions; the PSD provisions apply if the substance is otherwise

regulated under the Act.

11.6 Other Comments on Listed HAPs

Comment:

One commenter (IV-D-31) said the proposal specifically singles out as subject to Federal

PSD review and permitting requirements MWC acid gases, MWC metals, and MWC organics. 

The commenter said singling out this source category is without precedent and that EPA

addresses no other source categories in this manner.
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Response:

We disagree with the commenter. The MWC gases, metals, and organics are regulated

pollutants under the Act, pursuant to section 129 of the CAA. Therefore, we have treated the

MWC compounds as required by the CAA. The statute only excludes from PSD review those

pollutants that are regulated under section 112 of the CAA. 

Comment:

Three commenters (IV-D-135, 157, 162) stated that §52.21(i)(14) is not clear and should

be clarified by adding the underlined text as follows:

“Any hazardous air pollutant listed under section 108 of the Act are still subject to the

provisions of this section as part of the more general pollutant, not withstanding section

112(b)(6) of the Act.” 

Response:

We agree with the commenter, and the final rule clarifies that any HAP listed in section

112(b)(1) that are regulated as constituents or precursors of a more general pollutant listed

under section 108 are still subject to PSD as a constituent or precursor of the more general

pollutant, despite the exemption in section 112(b)(6).

Comment:

One commenter (IV-D-165) stated that Florida does not realize that “the impact on

emissions of other pollutants, including unregulated pollutants, must be taken into account in

determining BACT for a regulated pollutant." The commenter referred to a recent Florida

decision that an ESP was BACT for a cement plant and not a baghouse. According to the

commenter, the effect of unregulated pollutants was not discussed; moreover, at the

administrative hearing, petitioner faced constant objection concerning any evidence of

unregulated pollutants. Thus, this needs to be included in a regulation. Three commenters (IVD-135, 160, 162) stated that EPA had no legal basis for the suggestion that a BACT analysis

required as a result of the emissions of nonexempted pollutants should involve the consideration

of various control options on all pollutants, including exempted HAPs. 

Response:

Consistent with our March 11, 1991 policy memo and our 1996 NPRM (61 FR 38310),

we will continue to require that the impact on emissions of other pollutants, including

unregulated pollutants, must be taken into account in determining BACT for a regulated

pollutant. This policy is based on the remand decision on June 3, 1986 by the EPA
11 - Listed HAPs

I-11-9

Administrator in North County Resource Recovery Associates (PSD Appeal No. 85-2). When

evaluating control technologies and their associated emissions limits, combustion practices, and

related permit terms and conditions in a BACT proposal, the applicant must consider the

environmental impacts of all pollutants not regulated by PSD. Once a project is subject to

BACT due to the emission of nonexempted pollutants, the BACT analysis should therefore

consider all pollutants, including title III HAPs previously subject to PSD, in determining which

control strategy is best. We believe the policy memo is clear, and rule changes are not needed.
I-12-1

Chapter 12 - Minimum SIP Program Elements

12.1 Overview

In our 1996 proposal (61 FR 3852-30), we took comment on whether several applicability

options should be adopted as a menu of options from which a State or local agency may pick and

choose. The applicability options included Clean Units, baseline emissions, the PCP exclusion,

actual-to-future-actual test, and CMA Exhibit B. This chapter contains comments on whether the

proposed applicability program elements should be adopted as a menu of options, or

alternatively, whether we should require that State/local programs include the applicability

options as minimum program elements. Several State agencies and industry representatives

commented on this issue. State agencies commenting on this issue generally opposed making the

applicability options minimum program elements while the industry representatives supported

making them minimum program elements. No environmental group commented on this issue. 

One commenter also addressed the NSR core program elements, rather than the applicability

options specifically. 

12.2 Minimum SIP Program Elements

Comment:

12.2.1 Core Program Elements

One commenter (IV-D-52) believed EPA should retain a nation-wide set of definitions

and rules for the backbone of the NSR program, which includes the actual-to-potential

methodology. Permitting authorities should be required to adopt this program. However, as

discussed in the next section, this commenter opposed making all of the applicability program

elements mandatory.

12.2.2 Support Minimum SIP Program Elements

Several industry commenters (IV-D-147, 153, 160) believed that EPA should mandate

that States adopt and implement the proposed applicability options, rather than allowing State

and local agencies to pick and choose which options would be included in their programs. For

example, one commenter (IV-D-160) said the final rule should specify that the proposed

applicability exclusions and accounting rules are minimum elements that must be incorporated

into both Part 51 and Part 52 NSR programs. The commenter added, however, that EPA should

defer to the expertise of the States and allow them significant autonomy in implementing these

provisions. 

One of the commenters (IV-D-147) believed not mandating the reforms would have

several undesirable consequences. According to the commenter, States would have no incentive

to adopt the options because they add to their workload. Also, according to the commenter,
12 - Minimu m SIP Prog ram Elem ents

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neighboring States would eventually have very different NSR programs and sources would

“shop” to find the best location. It would also complicate the EPA Regional Office task of

overseeing the programs. Finally, according to the commenter, State discretion would undermine

regulatory streamlining and economic benefit.

Another commenter (IV-D-153) believed that requiring States to adopt the applicability

options would encourage them to engage in meaningful reform. According to the commenter, if

use of the applicability options is itself entirely optional, there is a danger that some States will

simply retain existing provisions through inertia because no further action would be required to

do so. According to the commenter, States that want to make their programs more stringent

would have to make an affirmative decision not to include a particular option and obtain EPA

approval not to do so during the SIP revision process.

One commenter (IV-D-154) said the final rule should provide that the Clean Unit

exclusion is a minimum element of the federal regulations and must be included in State NSR

programs.

One commenter (IV-D-157) said EPA should grant far more discretion to the States to

develop alternative approaches. The commenter believed that the existing regulations allow

more flexibility than EPA has interpreted. Therefore, according to the commenter, the

applicability reforms could be accomplished through guidance or an interpretive rulemaking,

rather than formal regulatory amendments. According to the commenter, this approach would

make it easier for States to implement as a practical matter because they would not have to

change their existing regulations. According to the commenter, it would also shorten the time

required for EPA to issue the final regulatory package.

One commenter (IV-D-341) stated that if EPA includes PAL provisions in 40 CFR parts

165 and 166, then these provisions should be mandatory minimum elements for SIPs.

One commenter (IV-D-152) maintained that States should not have the option to make

PALs voluntary. If PALs are voluntary, some sources may choose them and others may not. 

Those sources that are likely to increase emissions will not participate in the PAL. Instead,

according to the commenter, companies will shift production from a facility that is in the PAL to

one that isn’t. The environment will suffer. Although the commenter did not directly support

area-wide PALs, it appeared the commenter was stating that EPA should not give States an

option to adopt or not adopt area-wide PALs. That is, although the commenter did not support

area-wide PALs, they certainly should not be optional in some States and mandatory in others. 
12 - Minimu m SIP Prog ram Elem ents

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12.2.3 Oppose Minimum SIP Program Elements

Several State agency commenters (IV-D-11, 52, 70, 92, 180) urged EPA not to require

that the applicability options in the proposed rule become minimum program elements. Not all

of these commenters expressed an opinion on each program element.

One State agency (IV-D-11) strongly recommended that EPA allow those States with

existing EPA-approved PAL programs to maintain that approvability and not have to

demonstrate equivalency, approvability, or conformance with the proposed rules. The

commenter believed that while national uniformity is an admirable goal, demonstrated success

with an existing program is more important.

Another State agency (IV-D-92, 180) stated that if EPA fails to account for the serious

defects in the proposed rules, they should allow States to offer alternative approaches that may

more appropriately accomplish the same goal with less turmoil and less cost to the regulated

community.

One State agency (IV-D-52) believed that PALs and pollution control projects should be

alternatives that permitting authorities may choose to implement. The commenter also believed

that permitting authorities should have an option to conduct “regulatory experiments,” but did

not specify what they would be.

One State agency (IV-D-70) believed that none of the applicability options should be

required program elements. Instead, according to the commenter, each State authority should be

given the flexibility to address all the variables that affect a given project’s impact on the

NAAQS.

One State agency (IV-D-192) did not directly comment on whether the applicability

options should be minimum program elements, but preferred that EPA not promulgate the

regulations as proposed because they were too lax. The commenter noted that their air law has a

clause that prohibits their rules from being “stricter” than the Federal regulations, and therefore

promulgation of the proposed rules would mean that their regulations would also be too lenient. 

Finally, one State agency commenter (IV-D-166) urged EPA to craft a final rule that

would allow the greatest possible flexibility to State and local agencies to implement their own

NSR programs.

Response: 

We agree with the commenters who believed the applicability options should be minimum

program elements. We interpret the requirements of sections 110 and 116 of the CAA to require

States to meet a certain minimum set of requirements before any SIP can be approved by the
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Administrator. These requirements include plan requirements for a PSD program and

nonattainment NSR [collectively known as NSR]. On September 5, 1979, the Administrator took

comment on our interpretation that, “the Administrator can only approve different PSD

requirements submitted by states that individually are more stringent than the corresponding 40

CFR Part 51 regulations. As a result, few opportunities are left for approval of different, but

effective, state PSD programs.” (44 FR 51924) We specifically requested comment on the

degree of flexibility and innovation we should provide to State programs versus the need for

nationwide consistency. At that time, we proposed to treat all elements of the part 51 programs

as mandatory, but divided the requirements into those to which States must strictly adhere and

those for which we would allow some variations in State plans if the alternative approach was

substantially equivalent. In 1980, when we finalized the 1979 proposed rules, we affirmed the

proposed approach, “... states will be permitted to meet the following requirements of 40 CFR

Part 51... with different but equivalent regulations...” (45 FR 52676) This has been our

approach to reviewing SIPs since that time.

In our 1996 proposal, we specifically solicited comments on an alternative approach

which would allow us to “...break from this one-size-fits-all approach to applicability by

proposing to adopt these changes as a menu of options....” While we indicated that this was our

proposed approach, as with any proposal, we must consider comments received before taking

any final action. In response to our request for comment on this issue, commenters raised

concerns that an optional approach would lead to nationwide inconsistency and permit

“shopping,” result in a lack of incentive for States to make SIP changes due to competing

priorities and lack of resources, and would increase the burden of regulatory oversight. 

Accordingly, we chose not to adopt this proposed approach and are retaining our longstanding

position that States may meet the minimum elements with different but equivalent regulations.

12.3 Effective Date

Comment:

One commenter (IV-D-160) added that the final rule should clarify that any proposed

applicability revisions that are merely clarifications of how the existing regulations should be

implemented, as opposed to new regulatory language, will be effective immediately upon

promulgation of the NSR Reform package. According to the commenter, this could occur even

earlier through EPA guidance. Revisions to State NSR rules and/or SIPs should not be required

before these provisions become effective.

Response:

We do not agree with the commenter that any proposed applicability revisions that are

merely clarifications of the existing regulations should be effective immediately upon

promulgation. All of the changes in the final rules will take effect in the Federal PSD program
12 - Minimu m SIP Prog ram Elem ents

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(codified at 40 CFR 51.21) on the date that is 60 days after the date of publication of the final

rules in the Federal Register. This means that these rules will apply on the date that is 60 days

after the date of publication of the final rules in the Federal Register in any area without an

approved PSD program, for which we are the permitting authority, or for which we have

delegated our authority to issue permits to a State or local permitting authority. 

 The CAA at 110(a)(1) sets the criteria for adoption of amendments for State and local

agency programs implementing part C (PSD permit program in §51.166) or part D

(Nonattainment NSR permit program in §51.165) of title I. Section 110(a)(1) requires that SIP

revisions must be adopted and submitted within 3 years, or such shorter period as the

Administrator may prescribe. We believe that State and local agencies should be able to adopt

and submit plan revisions containing the changes to the rules no later than 3 years from the

effective date of the final regulations. State and local agencies must adopt and submit revisions

to their part 51 permitting programs implementing these minimum program elements no later

than the date 3 years after promulgation of the final regulations in the Federal Register. That is,

for both nonattainment and attainment areas, the SIP revisions must be adopted and submitted

within 3 years of the effective date of the amendments to §51.165 and §51.166. In cases where

States and local agencies are issuing NSR permits under a part C or part D major NSR program,

which we have approved into the SIP, the program changes will take effect in these areas no

later than the date we approve these requirements into the SIP.
I-13-1

Chapter 13 - General Comments on the Notice of Availability

13.1 Overview

This section contains general comments submitted on the July 24, 1998 NOA [63 FR

39857] as a whole. It includes comments generally supporting the NOA, generally opposing the

NOA, requesting extensions of the comment period, and making other general statements.

13.2 General Support or Opposition of the NOA Proposal

Comment:

13.2.1 Generally Support NOA

Three industry commenters (IV-D-221, 250, 267), two utility industry commenters

(IV-D-252, 261) and three regulatory agency commenters (IV-D-255, 287, 320) and

STAPPA/ALAPCO (IV-D-259) generally supported the concepts in the NOA. These

commenters commended EPA’s efforts and believed the NOA approach would improve the NSR

Regulations.

13.2.2 Generally Oppose NOA

Nine industry commenters (IV-D-260, 265, 270, 297, 298, 301, 307, 313, 324), seven

utility industry commenters (IV-D-257, 271, 280, 281, 288, 295, 323), one regulatory agency

commenter (IV-D-247), two environmental commenters (IV-D-291, 327), and one individual

commenter (IV-D-218) generally opposed the concepts in the NOA. An industry commenter 

(IV-D-297) and a utility industry commenter (IV-D-281) urged the EPA to forgo the entire

proposal, as it did not simplify the existing program. Two industry commenters (IV-D-260, 313)

stated that the NOA would only perpetuate the traditional problems with NSR. One industry

commenter (IV-D-313) congratulated EPA on attempting to reform NSR, but did not feel that the

proposal had changed anything.

13.2.3 Generally Oppose NOA Proposal Because Too Restrictive or

Burdensome

Fifteen industry commenters (IV-D-260, 265, 270, 283, 289, 292, 297, 298, 299, 301,

302, 307, 310, 312, 313) and four utility industry commenters (IV-D-280, 281, 288, 323)

believed the NOA further complicated a complex and burdensome program and failed to improve

or reform the NSR rules. These commenters asserted that the proposed changes would restrict

operating flexibility, create administrative burdens, and delay permitting decisions. One industry

commenter (IV-D-270) contended that the proposed NOA failed to incorporate the

simplifications proposed in 1996.
13 - General Comments on 1998 NOA

I-13-2

One industry commenter (IV-D-301) maintained that the NOA was complicated and

confusing. One utility industry commenter (IV-D-323) stated that the proposal would be an

impediment to cost efficiency and improved reliability. Another utility industry commenter

(IV-D-288) indicated that the proposal would deter energy efficiency improvements that would

reduce SO2, NOx, and CO emissions, especially at existing natural gas-fired plants. A third

utility industry commenter (IV-D-281) asserted that the proposed changes would make it difficult

to continue operations or expand business. Three industry commenters (IV-D-260, 297, 313) felt

that the costs of the proposed new requirements would far exceed the modest improvement in air

quality that would be gained.

Two industry commenters (IV-D-289, 313) stated that the proposal was not more

favorable because the EPA continued to believe that PTE-to-PTE comparisons would threaten

the integrity of SIPs.

One industry commenter (IV-D-265) maintained that the NOA approach would stifle

competitive ability because it was more stringent than the current rules.

13.2.4 Generally Oppose NOA Proposal Because Not Environmentally

Protective Enough

Three regulatory agency commenters (IV-D-216, 247, 287) and two environmental

commenters (IV-D-303, 327) felt the concepts in the NOA would have detrimental effects on air

quality.

One environmental commenter (IV-D-303) urged the EPA to apply the Act more broadly

rather than to create more exemptions.

One regulatory commenter (IV-D-216) believed the proposal would seriously weaken the

NSR program and thus threaten the ability to achieve the required ozone reductions. Another

regulatory commenter (IV-D-247) stated that the EPA’s proposal would allow sources near

Class I Areas to escape review for impact on AQRVs. A third regulatory commenter (IV-D-287)

cautioned that the NSR program must ensure attainment and maintenance of the NAAQS.

13.2.5 Generally Oppose NOA Proposal Because Contrary to Act and

Regulations or Unnecessary

One industry commenter (IV-D-321) and one environmental commenter (IV-D-291) held

that the concepts in the NOA contravened the Act and reversed previous regulations and policy.

One industry commenter (IV-D-298) maintained that the NOA was inconsistent with

section 811 of the Act, which requires reducing and eliminating any competitive disadvantage for

domestic manufacturers. 
13 - General Comments on 1998 NOA

I-13-3

Two industry commenters (IV-D-297, 314) opposed the concepts in the NOA, stating the

concepts were unnecessary due to increased regulation pursuant to requirements under the 1990

Amendments to the Act.

Response:

The 1998 NOA asked for additional comments on the actual-to-future-actual test, method

to calculate baseline emissions, and PALs. We have considered all of the comments we received

on these issues. Our responses and final decisions are reflected in the issue-specific chapters in

this document. Specifically, see Chapters 3 (Baseline Emissions 98), 5 (Actual-to-future-actual

Methodology 98) and 8 (PALs 98). Many comments were submitted in response to our 1996

NPRM that concerned the actual-to-future-actual test, baseline emissions, and PALs. Our

responses to these commenters are found in Chapters 2 (Baseline Emissions 96), 4 (Actual-tofuture-actual Methodology 96) and 7 (PALs 96). We also considered comments received after

the 1998 comment deadline. Although many comments were broader than the issues raised in

the 1998 NOA, we did receive comments that are relevant. The post-1998 comments and our

responses concerning the topics in the NOA are found in Volume II, Chapters 2 (Baseline

Emissions), 3 (Actual-to-future-actual Methodology), and 5 (PALs).

13.3 Requests for Extension of the Comment Period

Comment:

Thirty-one utility industry commenters (IV-D-201, 202, 203, 204, 205, 207, 209, 213,

214, 215, 217, 225, 226, 227, 230, 231, 232, 233, 234, 235, 236, 237, 238, 239, 240, 241, 242,

244, 245, 248, 249), six industry commenters (IV-D-198, 199, 206, 224, 228, 229), and one

regulatory agency commenter (IV-D-243) felt that 30 days was an insufficient amount of time to

review and analyze the NOA, and requested at least a 60-day extension to October 23, 1998. 

One of the utility industry commenters (IV-D-249) requested a 60- to 90-day extension. The

regulatory agency commenter (IV-D-243) requested at least a 30-day extension, but preferred a

60-day extension. 

One industry commenter (IV-D-284) urged the EPA to extend the comment period by an

unspecified amount.

Response:

While we did not extend the comment period, we did consider comments received after

the 1998 comment deadline. The post-1998 comments and our responses are found in Volume II.
13 - General Comments on 1998 NOA

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13.4 Other General Comments on the NOA

13.4.1 Need Regulatory Language

Comment:

Sixteen industry commenters (IV-D-264, 267, 270, 272, 277, 279, 284, 293, 297, 298,

307, 311, 312, 313, 314, 319) and ten utility industry commenters (IV-D-257, 267, 275, 280, 281,

282, 286, 288, 295, 323) stated that EPA should propose regulatory language incorporating the

concepts in the NOA. These commenters felt the lack of proposed regulatory language made it

impossible to fully understand the Agency’s intent or to provide comprehensive comments. The

commenters indicated that the details of the program make enormous differences in its practical

consequences. The commenters also believed that EPA was legally required to provide the

language and take comment on it.

Five utility industry commenters (IV-D-257, 280, 281, 295, 323) specifically identified

CAA section 307(d) and section 553 of the Administrative Procedure Act as requiring the EPA

to propose regulatory language and to seek public comment. These commenters further indicated

that the Agency should prepare a new RIA and RFA. The commenters questioned EPA’s earlier

decision not to prepare an RFA for the Reform proposal, disagreeing with the Agency’s

conclusion that the rule would not have a significant economic impact on a substantial number of

small businesses. One industry commenter (IV-D-293) also identified the Administrative

Procedures Act as requiring the EPA to propose regulatory language. 

Another industry commenter (IV-D-297) believed that the EPA was proposing to change

the regulations in critical ways that would impact the applicability of the rules. According to the

commenter, if the public were not allowed to comment on such major changes prior to their

implementation, this approach could subject a source to “retroactive enforcement,” which would

be unfair and possibly illegal.

Response:

In July 1996, we proposed changes to the NSR program including proposed regulatory

language. We received several hundred comments on this package. The intent of the 1998 NOA

was purposefully narrow and was designed to solicit additional comment on options for

determining the applicability of NSR to modifications at existing major stationary sources and

for PALs. Regulatory language for both of these topics was proposed in our 1996 NPRM. With

publication of the final rule language, we have acted on all of these comments.
13 - General Comments on 1998 NOA

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13.4.2 Other General Comments on the NOA

Comment:

Five industry representatives (IV-D-264, 265, 270, 292, 313), one utility industry

commenter (IV-D-286), two regulatory agency commenters (IV-D-200, 305), and one individual

(IV-D-218) made general comments concerning the NOA.

Three industry commenters (IV-D-264, 270, 313) maintained that the EPA’s applicability

approach in the NOA failed to acknowledge recent court decisions [Chemical Manufacturers

Association v. EPA, No. 89-1514, slip op. (D.C. Cir, Sept. 15, 1995)] vacating the requirement

that PTE for purposes of the NSR program must be federally enforceable. The industry

commenters (IV-D-264, 270, 313) and one utility industry commenter (IV-D-286) stated that the

Agency should clarify the status of the PTE definition in the final NSR rule. The industry

commenters (IV-D-264, 270, 313) suggested that State and local agency limits be enforceable,

even if the limits were voluntary. The industry commenters (IV-D-264, 270, 313) also argued

that any source whose actual emissions were kept below 50 percent of the major source threshold

should not be treated as a major source.

Another industry commenter (IV-D-292) claimed that the NSR program in general was

costly, time consuming, detrimental to economic growth, and discouraged use of pollution

prevention projects.

One regulatory agency commenter (IV-D-305) emphasized that any changes to the

applicability provisions, either the actual-to-future-actual test or the PALs, should not exempt a

source from new regulatory or SIP requirements, especially those that might be needed to comply

with the NAAQS.

One regulatory agency commenter (IV-D-200) viewed the EPA’s proposal as a “synthetic

minor with a built-in time release mechanism.” This commenter (IV-D-200) recommended that

the EPA require BACT review for synthetic minor sources or alternatively, a retroactive BACT

review when a project becomes subject to NSR.

Response:

Regarding the comment on PTE, this issue is broader than the NSR rulemaking. Our

interim policy concerning PTE in response to the 1995 court decision is included in our January

22, 1996 and January 31, 1996 policy memos. You can download copies of these memos at

http://www.epa.gov/ttn/oarpg/t5pgm.html.

We believe that the final rulemaking makes substantial process in streamlining the NSR

program, increasing its effectiveness, and encouraging the use of pollution prevention projects.
13 - General Comments on 1998 NOA

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We agree with the commenter who noted that changes to the applicability provisions

should not exempt a source from new regulatory or SIP requirements.

Finally, a commenter’s suggestion that we require BACT reviews for synthetic minor

sources is beyond the scope of this rulemaking. Such issues are within the discretion of the

permitting agency.
Volume II

Comments Received After the End of the Comment Period
II-1-1

Chapter 1 - Introduction to Volume II

This volume contains comments submitted after the end of the public comment periods

concerning the topics in the promulgation rules- baseline emissions, actual-to-future-actual

methodology, establishment of PALs, Clean Units, PCPs, and general comments on NSR

Reform. Comments on other topics covered in the 1996 NPRM that are not addressed in the

final rules are not included in this volume. There were no late comments on CMA Exhibit B,

State selection of applicability options, or how listed HAPs should be treated in PSD

applicability.

Chapter 2 covers baseline emissions. Chapter 3 includes comments on actual-to-actualmethodology. Chapter 4 covers PALs. Chapter 5 includes comments on Clean Units. Chapter 6

has comments on PCP. Chapter 7 includes general comments on NSR reform. 
II-2-1

Chapter 2 - Late Comments on Baseline Emissions

2.1 Overview

This chapter contains comments on baseline emissions received after the end of the

public comment period. For comments on baseline emissions submitted by the end of the public

comment period, see volume I, chapters 2 and 3.

2.2 Extending the Emission Baseline to 10 Years

2.2.1 Support/Oppose 10-year Baseline

Comment:

One commenter (IV-D-346) supported the 10-year baseline look back period.

One commenter (IV-D-408) stated that the proposed 10-year look back period would

include a period long enough to include a normal business cycle. Any shorter periods would not

meet that requirement. The commenter (IV-D-408) was concerned that EPA was considering not

finalizing the 10-year look back period and was considering a shorter period to prevent letting

“too many sources out of NSR.” The commenter stressed that shorter baseline periods would not

incorporate an entire normal business cycle. According to the commenter, any change during a

slow part of the business cycle would result in NSR being triggered, not because of the change,

but because of the business cycle. The commenter stated that a change should not cause an

emissions increase when it returns emissions to a level that the source had actually emitted in the

past 10 years. The commenter stated that they do not believe that the argument that a 5-year look

back period would result in a significant emissions increase that would not be projected using a

10-year look back period supports a shorter time period.

One commenter (IV-D-423) took issue with EPA’s approach to allow a source to chose

any 24-month period over that last 10 years to be considered their baseline emissions. The

commenter stated that this baseline is arbitrary and inflated and that using this baseline to

calculate emission increases would be more speculative and unenforceable. The commenter also

stated that this approach would provide more opportunities for NSR to be avoided.

Response:

We agree with the commenters who supported a 10-year baseline period for calculating

baseline emissions. However, we did not change the baseline calculation procedures for electric

utility steam generating units, for which a 5-year look back period was established under the

1992 WEPCO rules. Under those same rules, the utility has an opportunity to request use of

another time period if it can be shown to be more representative of normal operations. The 10-
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II-2-2

year baseline period for existing emissions units other than utilities does not provide an option

for using another representative period. For a complete discussion of why we adopted a 10-year

baseline look back period, please see sections 2.2 and 3.1 of volume 1 of this Technical Support

Document.

We do not agree with the commenter that the 10-year period will result in a baseline that

is arbitrary, inflated, and unenforceable. The calculation must be accomplished with actual

operating data, including historical utilization rates, fuels used, etc. If adequate data is not

available for a particular time, the emissions calculation cannot be based on that period. The

source owner/operator will be held accountable for the accuracy of this calculation and would

be required to submit the information to the reviewing authority if requested to do so. In

addition, the calculation should provide a true relationship with actual past emissions levels but

must be adjusted if more stringent emissions factors or operational limitations that are legally

enforceable have been imposed on a unit since the representative period selected. This

adjustment would ensure that the baseline emissions rate is not any higher than the level of

emissions that would result from the units operation today under the representative level of

utilization. Thus, we believe the adjustment helps ensure that the baseline emissions rate is not

an inflated value. By comparison, the existing method for calculating baseline emissions under

the definition of “actual emissions” could allow a source to select another period of time other

than the 2 years immediately preceding the proposed change, but does not require that the

calculated rate be adjusted even though it could no longer be achieved under current legally

enforceable limitations imposed on the source. 

2.2.2 Other Comments on the Look Back Methodology

Comment:

One commenter (IV-D-403) stated that sources that have been through NSR permitting or

air quality analyses (involving modeling at allowable emission levels) should be allowed to use

their permitted or modeled emissions as the NSR applicability baseline. The commenter stated

that this was provided in the current regulations. The commenter (IV-D-403) stated that

permitting authorities should be given greater flexibility to determine that source-specific

allowable emissions can be used as the baseline.

Response:

We generally agree with the commenter that for sources having recently undergone NSR

permitting the “actual-to-projected-actual” applicability test may not be the most appropriate

applicability test. As part of the new rules, we have included provisions which allow emissions

units having Clean Unit status to use a different applicability test. Please see chapter 9 (volume

1) and chapter 5 (volume 2) of this Technical Support Document for further information

concerning this new test for Clean Units. In other cases, however, when a unit does not have
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II-2-3

Clean Unit status, we believe that it is more appropriate to use the new “actual-to-projectedactual” applicability test to determine whether a modified unit’s actual emissions increase

resulting from a physical or operational change will result in major modification. The use of a

unit’s permitted allowable emissions, or modeled emissions, as recommended by the commenter

would not adequately address actual emissions increase that would result from a physical or

operational change. For a more detailed response on why we adopted the “actual-to-projectedactual” test, please see chapters 4 and 5 of volume 1. 

Comment:

One commenter (IV-D-363) supported defining emission baseline as declining with

facility age, absent new investments. According to the commenter, any significant investment at

a facility would therefore trigger NSR.

Response:

We do not agree with the commenter that a declining baseline is advisable. One of the

goals of the NSR program is to ensure that air quality is not significantly degraded in areas

attaining the NAAQS and to ensure that new emissions do not interfere with a State’s ability to

meet the NAAQS in areas that are nonattainment. We believe that the final rules achieve this

goal without specifically providing for a declining baseline with facility age.

2.3 Length of Contemporaneous Period

Comment:

One commenter (IV-D-346) supported a 5-year contemporaneous period.

Response:

We indicated in our 1996 NPRM that it was not our intent to extend the 5-year

contemporaneous period (for considering creditable emissions increases and decreases as part

of the netting calculus) even if we established a 10-year baseline look back period. We still do

not believe that there is a compelling reason to change the existing 5-year contemporaneous

period. The look back periods serve different purposes and need not be the same in order to

effectively implement the NSR program objectives. States retain the flexibility to define a

different contemporaneous period under SIP-approved NSR programs, and may use that

flexibility to adjust the contemporaneous period if they believe that a different period is more

appropriate for their purposes under the new applicability requirements. [See, for example,

§51.166(b)(3)(ii). Therefore, under today’s new requirements, we have not changed the 5-year

contemporaneous period under the Federal PSD program.] It should be noted that for purposes
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of determining the baseline actual emissions of a contemporaneous change in emissions from an

emissions unit that was an existing unit at the time of the contemporaneous change, the new

requirements authorize a source to use the 10-year look back period. 
II-3-1

Chapter 3 - Actual-to-future-actual Methodology

3.1 Overview

This chapter contains comments received after the end of the comment period on our

proposal to retain the current actual-to-potential applicability test for modifications or to adopt

the actual-to-future-actual test for all source categories. For comments on the applicability test

submitted by the end of the public comment period, see Volume I, Chapters 4 and 5.

3.2 Should EPA Retain the Actual-to-potential Test?

Comment:

3.2.1 EPA Should Not Retain the Actual-to-potential Test

3.2.1.1 Applies too broadly

Several commenters (IV-D-334, 403, 408, 411, 416) opposed the actual-to-potential test

because they believed that every source required to take that test would trigger NSR. One

commenter (IV-D-334) urged EPA to eliminate the actual-to-potential test. The commenter

stated that by comparing actual annual average emissions to maximum potential emissions,

which assumes operations at maximum capacity, 24 hours/day, 52 weeks/year, every source

required to perform the test is guaranteed to fail. Furthermore, the commenter stated that actual

annual emissions are almost never constant from year to year and vary for reasons unrelated to

NSR.

Four commenters (IV-D-403, 408, 411, 416) stated that since few units emit at their

“potential emissions” level, applying an actual-to-potential test would overstate the amount of the

increase. According to the commenters, most sources operate with a margin of compliance,

which in some cases is greater than the NSR significance levels. Therefore, any time a change is

made at the source, applying the actual-to-potential test would trigger NSR, even if there is no

associated emissions increase. The commenters maintained that the margin of compliance is

necessary for a source to ensure continuous compliance. Furthermore, three commenters (IV-D408, 411, 416) stated that sources could not avoid NSR by accepting a new limit since the

modified unit would also require a margin of compliance. Therefore, according to the

commenter, the actual-to-potential test penalizes sources that operate with margins of safety, but

rewards sources that operate with no safety margins. According to two commenters (IV-D-408,

411), plants that make series of changes to a unit operating with a compliance margin would have

to accept successively tighter emissions limits with each change. One commenter (IV-D-416)

said that sources would be discouraged from performing P2 projects because they would reduce

baseline emissions.
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Two of the commenters (IV-D-408, 411) stated that EPA’s policy favors short-term

emissions limits, which makes the difference between actual and potential worse. The

commenter stated that, because NSR applicability is calculated on an annual basis, PTE would be

calculated by multiplying the hourly limit by 8,760 hours per year. Since sources preserve a

margin of compliance below the hourly limit to maintain compliance at all times, the difference

between actual annual emissions and EPA’s calculations of PTE will be dramatic, even though

the source is operating at full production. This would also result in a modification triggering

NSR regardless of its actual emissions impact according to the commenter,.

3.2.1.2 Does not allow utilization increases

Four commenters (IV-D-403, 408, 411, 416) stated that since few units emit at their

“potential emissions” level, applying an actual-to-potential test would “confiscate” their

productive capacity. Two commenters (IV-D-408, 411) maintained that in a “well-run

environmental control system,” plant operators would try to minimize emissions, rather than stay

close to the emissions limits. The commenters argued that the actual-to-potential test

discourages and penalizes this practice by making low actual emissions the baseline for future

NSR decisions and using the difference between the baseline and applicable emissions limits to

trigger NSR.

One commenter (IV-D-344) opposed the actual-to-potential test because it did not allow

utilization increases. The commenter (IV-D-344) stated that in an efficiency-driven economy,

modernizing changes will be environmentally efficient, utilizing less energy, less raw material,

and less environmental releases per unit of product. The actual-to-potential test would project an

emissions increase, when actual emissions are in fact reduced. Therefore, according to the

commenter, the actual-to-potential test would impede such efficiency projects and

environmentally beneficial projects.

3.2.1.3 Reduces operational flexibility

Two commenters (IV-D-408, 411) opposed the actual-to-potential test because plants

would have to sacrifice their operational flexibility if they were forced to accept new, tighter

emissions limits to avoid the test’s “over-inclusiveness,” and to maintain a compliance margin

for the new limit. The commenter was concerned about sacrificing productive capacity and the

ability to vary raw materials and fuels. In addition, the commenter stated that many sources must

keep high emissions limits for use in special circumstances (for example, an oil embargo that

forces a switch to coal). Therefore, during normal operations (for example, burning oil),

emissions will be far lower than the coal limit allows. Thus, according to the commenter,

whenever a change is made to the unit, the low actual emissions associated with normal

operations will be compared to the higher limit and will trigger NSR, even if the change has

nothing to do with the emissions limit.
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3.2.1.4 Burdensome

Four commenters (IV-D-376, 381, 408, 411) opposed the actual-to-potential test because

it prohibits environmentally beneficial projects. One commenter (IV-D-381) stated that the

actual-to-potential methodology increases the creation of synthetic minor limits, which are not

environmentally beneficial, but instead delay projects. The commenter was concerned that even

though a physical change would lower emissions, since the modified unit is not used 8,670 hr/yr

the current methodology would indicate that the change was a major modification and would

increase the regulatory burden. The commenter (IV-D-381) believed that sources would abandon

projects rather than prove their proposed technology is BACT or accept a limit on operations.

One commenter (IV-D-376) stated that the current system has disincentives for making

plant changes that improve efficiency with accompanying emission reductions. According to the

commenter, these disincentives would be reduced by establishing an emission increase

methodology based on comparing maximum achievable emissions before and after the change.

One commenter (IV-D-411) stated that EPA’s alleged new interpretation of the definition

of a modification allows EPA the discretion to classify projects as modifications, without any

guidelines for sources, resulting in additional burden for sources trying to plan future projects. 

The commenter argued that EPA and State agencies did not have the staff to undertake increased

requests for applicability determinations, and would result in the delay of essential projects while

waiting for review. The commenter said that the American industry would incur direct costs in

excess of a billion dollars, while preventing the facilities from performing maintenance projects. 

Furthermore, the commenter stressed that competitiveness in the marketplace would be harmed,

especially due to EPA’s suggestion about treating new technologies that improve efficiency as

non-routine “physical changes.”

Two commenters (IV-D-340, 354) acknowledged that the actual-to-potential test was a

source of frustration and confusion and stated that alternative approaches would streamline and

improve the process.

3.2.2 Other Comments on Actual-to-potential Methodology

Two commenters (IV-D-408, 411) stated that the actual-to-potential test was not

consistent with other EPA emission reduction programs. The commenter referred to EPA’s

Proposed Economic Incentive Program Guidance, which requires all emissions trades to be

discounted by 10 percent to prevent sources claiming their compliance margin as emission

reductions. According to the commenter, in NSR the existence of the compliance margin counts

as an emissions increase since it can lead to NSR being triggered when no real emissions

increases occur.
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One commenter (IV-D-408) stated that EPA has never defended the actual-to-futurepotential test. The commenter said that EPA never justified the conclusion that using future

potential emissions is acceptable as a “best guess” because it is not possible to estimate actual

emission levels from a unit that has not “begun normal operations.” The commenter argued that

the actual-to-potential test is used only in the absence of any practical alternatives. The

commenter stated that now that alternatives that reconcile the competing factors without

overstating emissions increases have been proposed, the EPA’s current approach is no longer

defensible.

Response:

While we have adopted several new applicability tests to replace the “actual-topotential” test in certain cases, we have not completely eliminated the test as recommended by

some commenters. We believe that the “actual-to-potential” test continues to be the most

appropriate test for new emissions units; however, for existing emissions units and units which

replace existing units, we now believe that the “actual-to-projected-actual” test is appropriate

because these units can more reliably predict their post-change emissions and thus do not need

the safeguard (and associated cost and delay) of the “actual-to-potential” test. Nevertheless, we

do not agree that the “actual-to-potential” test fails to focus on the emissions increase “that

would result” from physical or operational changes. Under the “actual-to-potential” test, an

applicant who believes that a modified emissions unit’s actual emissions increase following a

physical or operational change will not increase significantly has the option of establishing an

enforceable cap based on the predicted post-change actual emissions increase so that if the

emissions increase is not significant, it will not be regulated as a major modification. However,

as was noted by several commenters, the test could, in some cases, restrict the unit’s ability to

make normal production increases (that increase emissions) not considered to be physical or

operational changes under the NSR regulations, places a substantial resource burden on

permitting authorities and prevents you from making a non-major change before a permit is

issued. The new rules allow you to undertake changes at existing emissions units that will not

result in significant emissions increases (and significant net emissions increases) as long as

when there is a reasonable possibility that the project may result in a significant emissions

increase, the source satisfies the requirement for maintaining appropriate operating records and

documenting the annual emissions following the change to ensure that the change is not really a

major modification. In addition, for utilities, a notice of the proposed change must be provided

to the reviewing authority prior to the change, and post-change annual emissions rates must be

reported for the 5-year period following the change. The final requirements more closely follow

the 1996 proposal than the 1998 NOA in that your projection of post-change annual emissions

does not establish an enforceable emissions cap on the units being changed.

We do not agree with the comment that use of the actual-to-potential test has never been

defended. We have set forth our legal rationale for the existing regulations in various preambles

and policy memoranda. The purpose of our proposed rules was not to seek alteration of these
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interpretations, but to request comment on how our approach for determining emissions

increases might be improved. Therefore, we consider comments addressing the “actual-topotential” test to be outside the scope of this rulemaking.

We disagree with the commenter that applicability test under major NSR must match the

Economic Incentive Program guidance. The two programs have different objectives under

different statutory requirements, and there is no requirement that these programs have the same

requirements. 

3.3 Actual-to-potential Test Is Contrary to Statute and Case Law

Comment:

Four commenters (IV-D-334, 387, 408, 411) opposed the actual-to-potential test because

they viewed EPA as unfairly applying it to all PC-CMO. The commenters believed that EPA had

incorrectly interpreted the statute and the case law to require that all units are subject to the

actual-to-potential test. One commenter (IV-D-334) stated that the actual-to-potential test does

not agree with the methodology used to set emission limits under the CAA. According to the

commenter, the normal methodology for setting SIP limits and preconstruction permit limits is to

assume a source will operate at its maximum capacity constantly, unless there are physical or

operational design constraints or an enforceable restriction on operating levels.

One commenter (IV-D-387) stated that the actual-to-potential test should only apply to

units that have undergone a change that resulted in an increase in maximum emissions rate and

would be considered a modification under section 111 of the CAA. The commenter maintained

that the court’s holding in the WEPCO case, and EPA’s discussion of that holding in the

subsequent changes to the NSR program in 1992, correctly indicate the use of the actual-tofuture-actual methodology for determining whether an emission increase has occurred.

Two commenters (IV-D-387, 411) opposed EPA’s interpretation of NSR rules that an

emissions unit that underwent any non-excluded change was considered a unit that had “not

begun normal operations,” even if that change did not result in a change in the unit’s maximum

hourly emission rate. The commenters stated that EPA’s reinterpretation of the NSR rules in this

regard was rejected by the Seventh Circuit in the WEPCO case. The commenters characterized

EPA’s interpretation as contrary to Congressional intent. According to the commenters, by

adhering to its stance that non-excluded changes that do not result in emissions increases can

constitute a modification, and thus applying the actual-to-potential approach to virtually all PCCMOs, the EPA ignores the CAA, the regulatory language, and case law. One commenter (IVD-387) went on to say that EPA’s interpretation of the 1992 WEPCO rule to mean that a nonexcluded change that does not result in an increase in the in a unit’s maximum hourly emission

rate nonetheless constitutes a “construction” activity within the meaning of the CAA was

“fundamentally flawed.” Both commenters (IV-D-387, 411) stated that EPA’s approach
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represents a change in existing law, which must be addressed through notice and comment

rulemaking.

One commenter (IV-D-411) stressed that competitiveness in the marketplace would be

harmed, especially due to EPA's suggestion about treating new technologies that improve

efficiency as non-routine “physical changes.” The commenter believed that this result was in

conflict with Congress’ original intent for the NSR program, as well as being inconsistent with

EPA’s guidance. The commenter also stated that EPA had not given proper notice to

stakeholders regarding new interpretations of NSR rules. The commenter said that EPA was

required to provide its proposal to stakeholders, including regulatory language, justification of

the impact on affected sources and the economy and allow stakeholders the opportunity to

provide comments.

Response:

We have set forth our legal rationale for requiring the use of the “actual-to-potential”

test in the existing regulations in various preambles and policy memoranda. The purpose of our

proposed rules was not to seek alteration of these interpretations, but to request comment on

how our approach for determining emissions increases might be improved. Therefore, we

consider comments addressing the “actual-to-potential” test to be outside the scope of this

rulemaking.

With regard to the comment about our failure to give proper notice to stakeholders about

possible treatment of new technologies as non-routine physical changes, wish to point out that a

notice of proposed rulemaking will address this issue (routine maintenance, repair and

replacement.) All interested parties will be given ample opportunity to comment on the issues as

set forth in the proposal. 

3.4 Support Other Applicability Options

3.4.1 Support PTE-to-PTE Test

Comment:

Three commenters (IV-D-336, 352, 416) supported a potential-to-potential test. One

commenter (IV-D-336) stated that unless EPA requires the potential-to-potential test (or at least

some “apples to apples” comparison), the current permitting scheme is “unworkable and unduly

punitive to expansion efforts.” According to the commenter, every project, no matter how trivial

or beneficial, would be pulled into NSR using the actual-to-potential test. According to one

commenter (IV-D-352), using an actual-to-potential test discourages P2. The commenter

believed that industry would be penalized for trying to reduce emissions when they “come in for

NSR.” The commenter pointed to industry’s concession to be subject to BACT for all new and
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newly modified sources, whether or not NSR is triggered. The commenter stated that this would

settle issues related to BACT and NSR. The other commenter (IV-D-416) supported a potentialto-potential test for controlled sources. The commenter stated that this approach would be a

straightforward way to determine the baseline for evaluating modifications. The commenter

stated that the actual-to-potential test was intended to keep existing sources from avoiding PSD

and installing BACT add-on controls. The commenter stated that this methodology would

provide an incentive for applying BACT. Furthermore, by offering this approach as an incentive,

more facilities would go through PSD and install BACT, rather than pursuing strategies to avoid

PSD. The commenter also stated that the potential-to-potential approach prevents sources from

operating at lower efficiencies to increase actual emissions.

One commenter (IV-D-416) advocated that, for a controlled source with a federally

enforceable permit limit on PTE, using potential emissions as a baseline is a straightforward

approach to determine emissions associated with a modification. The commenter maintained

that the potential-to-potential test is a distinct applicability test because the facility has an

enforceable condition that establishes its PTE and/or baseline for modifications. The commenter

believed that facilities that have been through PSD review and installed BACT controls should

be able to make “emissions neutral” changes or overall emission reductions without having to

modify their permit. The commenter also recommended a time limit for the life of the potentialto-potential test so that revised BACT analyses would be necessary as technology improves.

The commenter indicated that the potential-to-potential approach has limitations when

applied to existing, uncontrolled sources. For such sources, the commenter suggested requiring

the source to undergo a complete PSD review and ensure that there are no adverse impacts on the

ambient air quality standard or the increment. Furthermore, the commenter stated that a control

technology review would be necessary and they would be required to install controls in order to

qualify for the potential-to-potential test. Thus, before the potential-to-potential test is applied, a

source (new or existing) would have to go through point source modeling, BACT review, and

PSD permit issuance with public comment.

3.4.2 Support an Allowable-to-allowable Test

Comment:

One commenter (IV-D-403) supported an allowable-to-allowable test. The commenter

referred to the definition of “net emissions increase” [40 CFR 52.21(b)(3))(iii)], in which actual

emissions increases are creditable only if the Administrator has not relied on them in issuing a

permit. The commenter stated that the definition of “net emissions increase” supports the

principle that once emissions increases and decreases are taken into account for a prior PSD

permit, they should not be used again in determining an increase or decrease from “post-PSD

permit projects.” According to the commenter, it would be improper to use increases or

decreases from an emissions unit when determining if the change would cause an increase, but
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then not use those same increases or decreases when conducting a netting analysis. Therefore,

according to the commenter, once such increases are “relied on” for a PSD permit they should be

omitted from future NSR applicability analyses. The commenter believed that in future NSR

analyses, past-actual emissions should be viewed as allowable/modeled emissions. The

commenter also pointed to the definition of “actual emissions” in 40 CFR 52.21(b)(21)(iii) and

(iv) to support this position.

The commenter supported allowing sources that have undergone air quality analyses not

being required to go through NSR provided their emissions do not exceed the allowable/modeled

levels. According to the commenter, the allowable/modeled levels should be considered baseline

emissions if the source had previously been issued an NSR permit or performed air quality

analyses. The commenter recommended that States be given the flexibility to determine sourcespecific allowable emissions that could be used as baseline.

One commenter (IV-D-398) stated the use of an allowable-to-allowable test for

significant increases for sources with practically enforceable limits or a potential-to-potential test

for sources without enforceable limits is achievable with meaningful reform of the major NSR

program.

3.4.3 Other Applicability Options

Comment:

One commenter (IV-D-408) supported a broader actual-to-future-actual approach. The

commenter proposed that the provision should apply to all modifications made at a source,

including installing new emissions units. Under this approach, a source that makes a PC-CMO

would record a prediction of the actual future level of annual emissions resulting from the

change. The commenter clarified that this would not be an emission limit, but a defined

applicability threshold. As long as actual future emissions did not exceed that level, NSR would

not be triggered. Likewise, the commenter proposed that if future emissions did exceed that level

by a significant amount, the source would trigger NSR, but would not incur penalties.

The commenter stated that their approach would eliminate the “confiscation” of

compliance margins and the “mismatch” between short-term emission limits and long-term

applicability limits. Sources would make their own predictions of actual annual emissions, rather

than using the artificially inflated levels resulting from applying the potential emissions test to

short-term limits. The commenter stated that EPA had objected to this type of approach in the

WEPCO case because of the difficulty in determining future emissions, but believed their

approach eliminates this concern because the burden of predicting emissions are on the source,

and not the government. 
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The commenter also stated that their approach should be applied to new units because

they would also suffer from the “confiscation” of compliance margins. The commenter referred

to the WEPCO case where the court maintained that the operating history of the entire plant was

the proper guide to estimating future emissions of the units within it. The commenter argued that

this logic applies to new or reconstructed units as well as modified units. The commenter stated

that combining their proposed approach with the EPA’s reformed approach to determining past

actual emissions would result in an actual-to-actual test that would remove the “fatal legal

defects” of the actual-to-potential approach.

The commenter recommended an approach that would prevent triggering NSR by

“special-purpose” emissions limits when a particular change did not cause the source to switch

limits. The commenter’s approach included a provision for declaring future emissions in more

than one operating scenario (normal operations as well as special circumstances). The

commenter suggested that shifts between scenarios would not trigger NSR, but the source would

be required to give notice whenever a shift occurs and would be required to show that the switch

was triggered by extraneous factors, and not by physical or operational changes in the last 3

years.

Comment:

Two commenters (IV-D-340, 354) acknowledged that the actual-to-potential test was a

source of frustration and confusion and stated that alternative approaches would streamline and

improve the process. The commenters recommended an actual, maximum hourly test. The

commenter stated that the hourly emission test alternative is promising in lieu of the complex

netting process.

Response:

Despite the support provided by several commenters, neither the “potential-to-potential”

test nor the “allowable-to-allowable” test ensures that an actual emissions increase resulting

from a physical or operational change at an emissions unit will be properly identified and

subjected to NSR if such increase would cause a major modification. For further discussion of

our responses to commenters supporting these particular tests, please refer to chapter 4, section

4.9 (volume 1). 

Some of the commenters recognized that the “potential-to-potential” test would not be

satisfactory for emissions units that have not been previously reviewed and tend to be

undercontrolled. We have adopted a special applicability test for emissions units with Clean

Unit status. Please refer to chapter 9 (volume 1) and chapter 5 (volume 2) of this Technical

Support Document for further information on Clean Units. For units that do not have Clean

Unit status, we believe that actual emissions increases resulting from a modification at an
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existing unit are more appropriately determined via the “actual-to-projected-actual” test that we

have adopted under the new rules.

We do not agree with the commenter who proposed extending the “actual-to-projectedactual” test to new emissions units. Under both the “actual-to-potential” test and the “actualto-projected-actual” test source owners or operators can make projections of future actual

emissions, but we believe that existing units that undergo physical or operational changes can

more reliably predict their post-change emissions than can new units, and thus do not require

the safeguard of an up-front emissions cap which must accompany the projection under the

former test. On the other hand, we believe that the “actual-to-potential” test continues to be the

best approach for new emissions units. However, in response to the recommendation of many

commenters who felt that replacement units could be considered in many cases to have begun

normal operations, we now believe that it is reasonable to allow sources to project a

replacement unit’s post-change actual emissions in accordance with the “actual-to-projectedactual” emissions test. Reconstructed units (in accordance with the NSPS test) are also afforded

the same applicability test. See additional response on this issue following section 4.2 (volume

1) of this Technical Support Document.

We do not agree with the commenter that a maximum hourly emissions test is an

appropriate test for major NSR applicability. As we explain in the responses in section 4.3

(volume 1), the courts have recognized our prerogative to determine the major NSR applicability

test and that test does not have to be the same as that used in the NSPS program.

3.5 Complex Manufacturing Proposal

Comment:

Four commenters (IV-D-344, 347, 348, 376, 403) suggested an alternative methodology

to simplify the NSR process for complex manufacturing sources, referred to as the complex

manufacturing proposal. The complex manufacturing proposal contained the following

elements: (1) procedures for determining NSR applicability for new units (including no netting

out of control technology for new units), (2) procedures for determining NSR applicability for

existing units, including a potential-to-potential modification test, (3) requirements for air quality

analyses, (4) title V permitting requirements, (5) procedures for issuing formalized guidance, (6)

procedures for incorporating PALs, and (7) methods to provide additional assurance for existing

unit “environmental performance.” The key to this proposal is the potential-to-potential

modification test for existing units.

As a part of the complex manufacturing proposal, the commenters suggested not

changing the definition of a physical change or change in the method of operation, but for

existing sources, changes in an emissions unit’s PTE should be compared to the NSR

significance levels. The commenters stated that emission increases should be determined by
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comparing the unit’s hourly emission rate (annualized using allowable hours of operation) to the

maximum “contemporaneous past achievable level” (contemporaneous being within the past 5

years). One commenter (IV-D-348) stated that non-routine changes to existing emissions units

should be determined by comparing maximum hourly emissions before the change to maximum

hourly emissions after the change. The commenter stated that a simpler, more appropriate test,

based on hourly emissions, would address States’ concerns that there be a short-term basis for

comparing emissions when making applicability determinations. According to one commenter

(IV-D-344), the hourly achievable approach should be modeled on the NSPS “modification” test

as applied to utility boilers. Under this approach, hourly emissions before the change would

correspond to the maximum hourly rate achievable by the unit at any time over the past 5 years. 

The determination of maximum hourly emissions before the change would be self-administered,

and would not require testing. The commenter stated that as an alternative, permit limits could

be used unless they clearly exceeded the physical capacity of the unit. According to another

commenter (IV-D-376), the proposed methodology would simplify the determination of whether

control requirements are applicable.

Two of the commenters (IV-D-344, 376) indicated that for batch processes, the hourly

test would probably not work and an alternative would be necessary. According to these

commenters the rules should be applied so as to prevent overstating emissions from batch

processes or flexible manufacturing operations.

In support of the complex manufacturing proposal, two of the commenters (IV-D-344,

347) stated that should the EPA adopt the complex manufacturing proposal, there should be no

impact on SIP planning. According to the commenters, SIP planning currently does not assume

that all units emit at their PTE.

The commenters recommended that SIP amendments to manage the increment directly as

an air quality issue should be required in order to address EPA’s concern about the consumption

of increment by unreviewed emissions increases. Furthermore, the commenters questioned

whether increment consumption was a major issue because emissions would be decreasing as a

result of the acid rain program, the application of ozone attainment controls, and the visibility

protection program.

One of the commenters (IV-D-344) stated that they believed that air quality-based

controls can be established more efficiently than by applying the actual-to-potential test. In the

complex manufacturing proposal, the commenter stated that the focus was to identify changes to

existing emissions units that provided an opportunity to efficiently upgrade control equipment. 

According to the commenter, it is not sensible to require the installation of controls that are not

directly required for air quality protection when small changes to existing units do not involve

major investments. Furthermore, the commenter stated that small changes must be able to be

made quickly. 
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Two commenters (IV-D-398, 381) supported the complex manufacturing proposal. One

commenter (IV-D-381) supported the complex manufacturing proposal’s recommendation of

using a potential-to-potential comparison, based on maximum hourly emissions. The commenter

stated that this change is significant and needs to be made a part of the transformation of the

entire program. The other commenter (IV-D-398) also supported the complex manufacturing

proposal, but stated that if EPA does not follow it, then EPA should define a modification as a

change in the process that would require an increase in the permit-allowable emission limits, or

in the absence of a permit, a change in the process that would change the facility’s PTE.

Three commenters (IV-D-333, 370, 379) did not support the complex manufacturing

proposal. One commenter (IV-D-333) stated that although the complex manufacturing proposal

for NSR process changes had some positive components, they believed that it had problems and

needed some changes. Instead, the commenter advocated the actual-to-potential test for

modifications. Another commenter (IV-D-379) stated that the proposal addresses future

modifications based on changes to maximum achievable rates, rather than the actual-to-potential

test or a potential-to-potential test. The commenter stated that they did not understand the

significance of the proposal. The third commenter (IV-D-370) stated that EPA should reject the

complex manufacturing proposal primarily because it includes a potential-to-potential test,

especially if a 100 tpy trigger is set without taking into account an area’s attainment statue or

influence on other area’s attainment status. The commenter stated that since actual emissions are

considerably lower than their PTE, reductions associated with PTE would not be actual

reductions.

Response:

We believe there are worthwhile provisions in the complex manufacturing proposal. 

However, the applicability test proposed is similar in many respects to a “potential-to-potential”

test. For the reasons presented in the previous response, as well as in Chapters 4 and 5 of

Volume I, we rejected the potential-to-potential test. Accordingly, we also reject the

applicability test presented in the complex manufacturing proposal.

Other aspects of the complex manufacturing proposal have been incorporated into the

final rules, either in total or in part, or in a modified form. These include PALs and Clean Units. 

We also believe our new baseline provisions and “actual-to-projected-actual” methodology

provide additional flexibility for sources. Please see chapters 5 and 6 of this volume and

chapters 7-10 of volume I for further discussion of these topics.

For a discussion of why we believe the NSPS test for modifications is not appropriate for

major NSR, see our response in section 4.3 (volume 1).

We do not agree with the commenters that increment consumption is strictly an air

quality issue and should not be addressed under the major NSR program. The CAA specifically
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requires a review of increment consumption as a part of PSD preconstruction review under

section 165. 

3.6 Utilization Increases

Comment:

One commenter (IV-D-387) argued that emission increases due to increased utilization

should not be considered major modifications. The commenter maintained that under the CAA,

a physical change or change in the method of operation must result in an increase in an emissions

unit’s “maximum rate of emissions” before any evaluation can be undertaken to determine

whether the change constitutes a major modification under NSR. The commenter opposed

EPA’s proposal to subject increases in a source’s production rate or hours to major NSR because

they claimed it codifies an interpretation of the exclusion that is contrary to the meaning and the

regulatory history of the rule. According to the commenter, the provision of the CAA that

codifies the NSPS definition of modification for purposes of the NSR program precludes EPA

from making this change, or any other change that would significantly limit this NSPS-based

exclusion. According to the commenter, if emission increases resulting from increases in

utilization (such as hours of operation) are considered modifications, whenever a unit undergoes

a “nonexcluded change,” the change will almost always trigger NSR even though a modification

as defined under section 111 of the CAA has not occurred. The commenter stated that any final

NSR rule must recognize that the CAA, contemporaneous EPA interpretations, and governing

Court of Appeals decisions define construction of a “new” emissions unit as either a “greenfield”

unit or modification to an existing unit as defined in section 111of the CAA. The commenter

stated that EPA must explain why they disagree with this view of the governing law.

Response:

We agree with the commenters that an increase in utilization alone should not

automatically trigger the major NSR requirements. As explained in Chapter 4 (Volume I) of this

Technical Support Document, the statutory definition of “modification” applies to a physical or

operational change “which increases the amount of any air pollutant emitted...or which results

in the emission of any air pollutant not previously emitted.” Thus, we do not believe that the

major NSR requirements should apply to a utilization increase unless it is related to the changes

being made to an emissions unit. Accordingly, under the final rules we are adopting, when

forecasting post-change actual emissions you may exclude emissions increases related to an

increase in utilization if: (1) you were able to accommodate the increase in utilization (e.g.,

demand growth) during the 24-month period you select to establish your baseline actual

emissions and (2) the increased utilization is not related to the change. 

We disagree with the comment that a physical or operational change must result in an

increase in an emissions unit’s “maximum rate of emissions” before being subject to NSR. As
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II-3-14

noted above, the definition of “modification” is tied to an increase in emissions related to a

physical or operational change. The Act is silent as to how this increase is to be calculated. We

have historically linked increases in actual annual emissions, expressed as tons per year, to the

NSR program, while relying on a an increase in the maximum hourly achievable emissions to

trigger NSPS. Consequently, it is possible for a source undergoing a physical or operational

change to be subject as a modification to the NSR program but not the NSPS. For further

discussion of why we believe the NSPS test for modifications is not appropriate for major NSR

applicability, see our response in section 4.3 (volume 1) of this Technical Support Document.

3.7 5-year Tracking - Length of Tracking Period

Comment:

One commenter (IV-D-408) disagreed with EPA’s proposal in the 1998 NOA that the

effect of changes should be tracked for 10 years, which would correspond with the 10-year lookback period. The commenter stated that they believed the length of time the effect of changes

should be tracked should be based a source’s expected return on investment. The commenter

said that the look-back period and the period for tracking the effect of changes are not linked and

should not be the same.

One commenter (IV-D-408) proposed that the modification of an existing emissions unit

or installation of a new emissions unit would trigger NSR if emissions from the new or modified

unit increased above predicted levels during the first 3 years after the changed unit began full

operation, unless the source could show a clear extraneous cause for the increase that took place

after the period had run that would not trigger NSR. The commenter defended the 3-year period

because most companies only authorize investments that pay off within 3 years. Therefore, if the

pay-off results in increased emissions, the increase in emissions should be apparent within 3

years. The commenter argued that it is not reasonable to presume that a change would cause

emissions increases at an emissions unit that do not begin for 3 or more years after the change.

Response:

We agree that it is generally not necessary to link the length of the recordkeeping

requirement to the length of the look back period for establishing baseline actual emissions. Our

final rules require that sources maintain records tracking their annual emissions for a 5-year

period if there is a reasonable possibility that the project may result in a significant emissions

increase. However, we have decided that it is appropriate to require a 10-year recordkeeping

requirement in situations where the physical or operational changes that the source makes will

increase the design capacity or potential to emit of the emissions units involved in the change. In

such cases, even though the projections may indicate that the source will not use that increased

capacity or potential to emit to such extent that a significant emissions increase will occur, we

believe that such emissions should be monitored for a 10-year period to ensure that no
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significant emissions increase will occur during the source’s complete business cycle, if there is

a reasonable possibility that the project may result in a significant emissions increase. However,

the source is not required to report to the reviewing authority during that 5-year (or 10-year)

period unless the data shows that the post-change annual emissions during any calendar year

during that time would result in a significant emissions increase. In addition, the new

requirements provide that a source is not required to maintain any records associated with the

physical or operational change if it determines that no significant emissions increase will occur

when the potential to emit of a unit is assumed as the level of the future actual emissions

increase.

Many, if not most, of the sources in question are already required to maintain records of

their emissions for 5 years because they are major sources under title V of the Act. Likewise,

many minor NSR source programs or other SIP provisions require tracking and retention of

source emissions data. Consequently, we do not believe that the new requirement under the

NSR/PSD rules represents a significant new burden for industry. 
II-4-1

Chapter 4 - Late Comments on PALs

4.1 Introduction

This chapter contains comments on PAL received after the end of the public comment

period for the NOA. For comments on PALs submitted by the end of the public comment period

for the 1996 NPRM, see volume I, chapter 7. For comments on PALs submitted by the end of

the public comment period for the 1998 NOA, see volume I, chapter 8.

4.2 General Support for PAL Concept

Comment:

Many industry commenters (IV-D-349, 341, 347, 363, 371, 388, 397, 398, 412) generally

supported PALs. Several regulatory agency commenters (IV-D-333, 336, 337, 352, 369, 370)

also generally supported PALs.

One commenter (IV-D-349) stated that a workable PAL policy will provide significant

environmental benefits relative to traditional NSR and: (1) will provide greater air quality

certainty if it includes an emissions cap feature; (2) will ensure that new major units are wellcontrolled; (3) can be used to place some existing major units on a schedule to have their

controls upgraded; and (4) can provide a powerful incentive to P2 as the means by which

sources can grow while remaining under the emissions cap.

One commenter (IV-D-337) encouraged the continued development of the PAL approach

and the participation of appropriate stakeholders in those discussions.

One commenter (IV-D-398) supported the use of voluntary PALs as a separate NSR

option that can be applied to one or more criteria pollutants and all or certain specified sources at

a facility. 

One commenter (IV-D-369) stated that the PAL option provides opportunities to both

businesses and environmental protection. This commenter presented an example within their

State of a recently issued air permit that incorporates a PAL for NOx emissions at a

manufacturing facility. The commenter believed that facilities are willing to reduce their

allowable emissions when it secures greater flexibility to respond to rapidly changing market

demands.

One commenter (IV-D-341) stated that regulatory requirements need to be easily

understandable and that the major NSR program can be difficult to comprehend. The commenter

supported the use of PALs as being easier to understand while providing “certainty regarding the

level of emissions at which a stationary source will be required to undergo major NSR.” They
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further explained that a PAL source would have greater operational flexibility with a decreased

permitting burden for both the source and permitting authority. The PAL was also supported as

being a valuable tool for managing and coordinating with other requirements under the CAA. 

The PAL encourages P2, whereas the current NSR penalizes P2. The commenter explained that

under the current NSR, voluntary P2 efforts increase the likelihood that NSR will be triggered

later when recent actual emissions are compared to future PTE.

One commenter (IV-D-397) stated that they generally supported the PAL concept, but

preferred that the PAL have a declining cap. 

Response:

We appreciate the comments in support of PALs. We have concluded that the PAL

regulations represent a permissible construction of the Act and are consistent with the

Congressional purpose and intent underlying NSR. Moreover, we believe that PALs will provide

many benefits to you, permitting authorities, the public, and the environment.

4.3 Alternatives for Establishing PALs

4.3.1 Base PALs on Actual Emissions

Comment:

One commenter (IV-D-398) supported the use of an actuals PAL based on the highest 12-

month period from the last 10 years with the initial level of the PAL being set at the recent

“actual” emissions plus some insignificance level.

Response:

We agree with the commenter that actual emissions are an appropriate basis for PALs

and have promulgated final rules containing provisions for actuals PALs. The PAL baseline,

like that for major NSR, is any consecutive 24-month period in the past 10 years. For our

rationale for the PAL baseline, please see our response in volume I, 7.4. Additional information

on the 2-in-10 baseline is found in volume I, chapters 2 and 3.

4.3.2 Base PALs on Allowables

Comment:

One commenter (IV-D-341) provided extensive comments on the use of an allowablesbased PAL. These comments were given in response to questions from EPA, and were not

specifically related to the two-cap PAL proposal.
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The commenter (IV-D-341) stated that under an allowables-based PAL, a facility must

meet criteria for being well-controlled, which assures that any growth in activity at the facility is

better-controlled and emissions per unit output would be less. The commenter proposed that the

allowables-based PAL be based on recent BACT or LAER determinations or a determination that

the facility has good controls at the time the PAL is set. They explained that it was their position

that it is necessary or appropriate to require BACT for units that are minor. They suggested that

an acceptable allowables-based PAL would consider the following.

• The setting of BACT or LAER for major-emitting units would not require a full major

NSR review, but would be limited to a technology assessment.

• The BACT or LAER applied to units that are less than major but greater than significant

could be a performance-based requirement as long as it was practically enforceable.

• Enforceable limits on emissions could be taken to limit PTE for units that are not

significant and are not expected to operate over significant levels, but would be viewed as

significant based on EPA’s approach to PTE.

• PAL facilities would be given a brief period to upgrade units to BACT or LAER if they

were not there at the outset, but the PAL would reflect the BACT/LAER levels when it is

going into effect.

• Flexibility and adjustment provisions are provided.

• Air quality modeling and Class I analysis would be required for setting the allowablesbased PAL, if the air quality at the allowable level has not already been analyzed. The

commenter suggested that in such situations, the permitting authority should decide what

the analysis is to include.

The commenter (IV-D-341) stated that greenfield sources that have an allowables PAL

should not be required to make an adjustment to reflect actual emissions after a fixed period of

time (for example, 5 or 10 years) because the construction of such sources represents a major

investment with the intent to operate for over 20 years. They explained that such an investment

would not be made knowing that the allowed emissions would be reduced early in the facility’s

lifetime to a level already achieved.

Another commenter (IV-D-390) stated that an allowables PAL was one of the types of

PALs they supported, along with an actuals PAL. The allowables PAL should have a declining

cap that would equate to BACT performance on all units significant and larger. They support a

schedule for meeting BACT (with significant progress being made in the early years of PAL

implementation) within 10 years of PAL implementation. 
4 - Late Comments on PALs

II-4-4

Response:

As noted above, we have concluded that a major stationary source’s compliance with an

actuals-based PAL system is a permissible means of assuring that a major stationary source

does not have a significant emissions increase. We also conclude that this approach can be

implemented in a manner that is consistent with the Act. Thus, we are adopting regulations that

authorize States to issue actuals PALs. However, we also plan to develop an alternative that

would give a source the option of obtaining a PAL based on allowable emissions. 

4.4 Two-cap PAL

Following the end of the public comment period for the 1998 NOA, we held a number of

meetings and received additional comment from various stakeholders concerning PALs. On May

17, 1999, an industry stakeholder (IV-D-437) submitted a proposed approach for PALs. 

STAPPA (IV-D-333) responded to this proposal in a letter dated June 4, 1999. In their letter,

STAPPA gave their own recommendations and coined the name “two-cap” PAL. State, industry,

and environmental group commenters all stated preferred approaches for PALs, none of which

were the same. Each also rebutted various aspects of the other proposals. Below is a summary

of the key aspects of each commenter’s proposal, given basically in order of the receipt of the

comments. As the commenters each presented a specific approach for PALs, their approach is

summarized in whole so as not to be taken out of context.

Comment:

4.4.1 Initial Industry PAL Concept Paper (IV-D-437)

Commenter IV-D-437 provided a revision of a concept paper that was discussed at a

meeting between industry and the EPA on May 7, 1999. The initial concept paper was submitted

in a May 17, 1999 letter. (IV-D-437) This concept paper included the industry commenter’s

proposal for a regulatory structure for PAL permits. Comment letters IV-D-341 and 349, from

the same commenter as IV-D-437, provided additional comments on this approach. 

PAL Coverage

• Commenter IV-D-437 supported a PAL for one or more criteria pollutants and for all or

certain specified sources at the sight. With the approval of the permitting authority, a

PAL can be set to exclude certain minor sources or a separate part of the facility if the

two operations are clearly distinct and the same manufacturing activities are not and will

not be carried out at parts covered and uncovered by the PAL.
4 - Late Comments on PALs

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PAL Enforceability

• Commenter IV-D-437 stated that a PAL permit should include terms that ensure the PAL

is practically enforceable, where it would include terms that provide for replicable

procedures to quantify emissions occurring under the PAL.

Initial Level of PAL

• Commenter IV-D-437 proposed two options that a PAL applicant could choose from to

determine an initial level of the PAL. The first option would be to base the initial level of

the PAL on recent actual emissions plus an “insignificant” increase (that is, 39 tons per

year). Recent actual emissions would be determined the same as it is under NSR rule

definitions. The second option would be to base the initial level of the PAL on emissions

levels higher than recent past actual emissions in 3 circumstances. These circumstances

include: (1) Greenfield facilities where the new facility has satisfied applicable State and

Federal NSR requirements, and the facility has not reached full capacity; (2) facilities

where an extensive revamp or expansion has been reviewed and approved consistent with

applicable State/Federal NSR requirements, and recent actual emissions are lower than

the levels considered in the NSR approval of the expansion or revamp; and (3) where

applicants can demonstrate that recent actual emissions plus an insignificant increase is

not adequate to operate the existing equipment at its full capacity. Under the first

circumstance, the PAL would be set on the basis of the NSR review. Under the last

circumstance, the PAL would be designed based on specific relevant plant operational

factors.

• Commenter IV-D-437 explained that under all proposed initial level PAL options, if the

PAL levels exceed recent past actuals, the PAL level would not be allowed to exceed the

levels permissible under existing rules and permits or any new source reviews recently

conducted prior to setting PAL; all units that emit a pollutant covered by the PAL at

major levels must meet BACT; units below major but greater than significant (based on

attainment status or locality) would be required to set a performance-based requirement

reflecting BACT; and all remaining units would be required to meet State NSR program

emission performance requirements for the PAL pollutant. 

• Commenter IV-D-437 stated that the PAL limit would reflect the performance

requirements of all applicable BACT, LAER, or State NSR determinations. If the use of

emissions above recent actuals could result in a significant increase in emissions and the

air quality implications have never been analyzed, the permitting authority should require

an air quality impact analysis. 
4 - Late Comments on PALs

II-4-6

PAL Adjustments

• Commenter IV-D-437 supported 3 circumstances under which PAL emissions limitations

could be reduced. These 3 circumstances include: (1) to adjust the PAL emissions

limitations when there is any significant error in the setting of the PAL emissions limit;

(2) to reduce the emissions limitation to reflect the effect of a new applicable requirement

that applies to source covered by the PAL that expressly requires a reduction in the

emission of the criteria pollutant in question; and (3) for major PAL pollutants sources, to

reduce the emissions limitation to require that a unit be placed on a schedule for control

technology upgrades to current best available technology performance levels over the first

10 years of the PAL permit in place. Under the last circumstance, the PAL limit would

be reduced by the amount reflective of the impact of that upgrade.

Flexibility Under a PAL

• Commenter IV-D-437 supported NSR applicability being determined solely by

conformance with the PAL level, whereby the source would not trigger Federal NSR as

long as the PAL level is not exceeded.

Expanding the PAL Level

• Commenter IV-D-437 proposed that a PAL level be expanded through the applicable

Federal NSR process, whereby all major units covered by the PAL must have good

controls or be on an enforceable schedule to have good controls or shutdown within 5

years.

PAL Termination

• Commenter IV-D-437 supported a PAL being set for a period of 10 years, with select

provisions being reviewed every 5 years. They stated that during the 10 years the PAL

could be terminated at the request of the PAL source owner with the approval of the

permitting authority and completion of an air quality analysis to determine the impact of

the termination. If the permitting authority approves the PAL termination, all limits in

the PAL will be retained and incorporated into the operating permit for the facility. As

the end of 10 years approaches, a facility could request a renewal from the permitting

authority for another 10-year period. The commenter proposed that at the end of 20

years, the PAL be re-evaluated.

In a later letter, the commenter (IV-D-341) provided the following additional comments.
4 - Late Comments on PALs

II-4-7

• Under an actuals-based PAL, a facility can never emit over recent actual emissions plus a

de minimis increase. They explained that under current NSR, a facility can emit up to the

current PTE. 

• A source under a PAL could be placed on a schedule to upgrade controls on older units,

which is not an option under the current NSR. 

• The PAL permit owner should have the option to decide whether an enforceable limit on

its emissions level is an appropriate way to address a unit where a unit is truly minor. 

This commenter also stated that an owner or operator should also have the option to use

an enforceable limit on emissions or on operations as a means to limit the PTE.

• This PAL proposal would provide a guarantee of BACT on all new “major” units added

under PAL for nonattainment pollutants versus having LAER on some units (because of

the ability to net out under conventional NSR). They explained that they believed that the

commitment to BACT is environmentally better and that they did not endorse the

mandatory application of a LAER technology, which does not consider cost effectiveness.

• The permitting authority should be given the authority to require units with emissions

over 100 tpy or the major source threshold for the area (whichever is lower) for a PAL

pollutant that has never been through Federal or State NSR technology review to be put

on a schedule for control technology upgrade over the first 10 years of the PAL. The

commenter suggested that the permitting authority should have discretion in exercising

that authority.

In another letter, the commenter (IV-D-349) stated that the industries he represented

would support the use of a PAL for existing major units that have not been through NSR where

the unit can be put on a schedule to be upgraded during the first 10 years of the PAL. This

commenter stated that they would not support non-major units or unmodified units being brought

under a PAL. He explained that if they were brought under the PAL, many parties with such

existing units would be reluctant to utilize the PAL policy and none of the added benefits of

PALs would be realized. 

4.4.2 STAPPA PAL Proposal (IV-D-333)

In response to the industry proposal submitted by the commenter (IV-D-437, 341, and

349), STAPPA (IV-D-333) stated that they support a two-cap approach that does not allow

netting out BACT/BAT for new emissions units, includes an actuals-based and an allowablesbased emission cap(s) and considers upgrades of existing units over 10 years. They also

recommended the following be included in a two-cap approach.
4 - Late Comments on PALs

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• Every source in a PAL should be subject to declining caps that move to BACT/BAT

within a fixed time (for example, 10 years); renew PAL every 5 years.

• The approach should prohibit the combination of actual and allowable emissions under

one cap.

• In establishing the PAL emissions cap, there should be a buffer added above actual

emissions on a facility-wide (not unit) basis.

• PALs should be allowed to be established on a smaller than plantwide basis, with

consideration of the grouping of like units for compliance monitoring purposes.

• MACT and other emission reduction programs should result in reductions of the PAL cap

if such emission reduction programs reduce a pollutant covered by the PAL.

• The approach should provide significant flexibility for modifications.

• Significant emissions monitoring to document progress and maintain enforceability

should be adopted where any required parametric monitoring needs to be related to

emissions.

• Approval should be required prior to commencement of new unit construction.

• BACT/LAER should be required to be installed on all modified or reconstructed units

that avoided Federal NSR during the PAL lifetime in situations where the PAL is

exceeded or the company terminates the PAL during the term of the PAL.

• The approach should require that normal NSR be triggered for all changes that increase

PAL emissions levels.

• Ambient air quality safeguards should be included, such as the triggering of a facilitywide air quality analysis when there are net increases in facility-wide actual emissions; a

streamlined unit-specific analysis to avoid downwash or other ambient air problems in

situations where stack parameters change or a stack is added; and an adjustment to the

PAL when changes cause or contribute to a violation of any NAAQS or PSD increment.

• The approach should include the use of an improved BACT Clearinghouse with annually

defined presumptive BACT to streamline technology approval. 
4 - Late Comments on PALs

II-4-9

4.4.3 Revised Industry PAL Concept Paper (IV-D-371)

The industry group represented by commenter letters IV-D-437, IV-D-341, and IV-D-349

submitted a revised PAL concept paper. These comments were submitted as letter IV-D-371 in

December 1999.

One commenter (IV-D-371) stated that the PAL applicant would choose an initial level of

the PAL based on one of two options. The first option would be to base the initial level of the

PAL on recent actual emissions plus an “insignificant” increase (that is, 39 tons per year). 

Recent actual emissions would be determined the same as it is under NSR rule definitions. The

second option would be to base the initial level of the PAL on emissions levels higher than recent

past actual emissions in 3 circumstances. These circumstances include: (1) Greenfield facilities

where the new facility has satisfied applicable State and Federal NSR requirements, and the

facility has not reached full capacity; (2) facilities where an extensive revamp or expansion has

been reviewed and approved consistent with applicable State/Federal NSR requirements, and

recent actual emissions are lower than the levels considered in the NSR approval of the

expansion or revamp; and (3) where applicants can demonstrate that recent actual emissions plus

an insignificant increase is not adequate to operate the existing equipment at its full capacity. 

Under the first circumstance, the PAL would be set on the basis of the NSR review, and under

the last circumstance, the PAL would be designed based on specific relevant plant operational

factors.

The commenter (IV-D-371) stated that under all initial level PAL options, if the PAL

levels exceed recent past actuals, the PAL level would not be allowed to exceed the levels

permissible under existing rules and permits or any new source reviews recently conducted prior

to setting PAL; all units that emit a pollutant covered by the PAL at major levels must meet

BACT; units below major but greater than significant (based on attainment status or locality)

would be required to set a performance-based requirement reflecting BACT; and all remaining

units would be required to meet State NSR program emission performance requirements for the

PAL pollutant. 

The commenter (IV-D-371) also stated that the PAL must reflect the performance

requirements of all applicable BACT, LAER, or State NSR determinations. If the use of

emissions above recent actuals could result in a significant increase in emissions and the air

quality implications have never been analyzed, the permitting authority should require an air

quality impact analysis. 

Two commenters (IV-D-371, 402) supported the initial level of a PAL being based on

past actuals or, in specific circumstances, on emissions higher than past actuals. PAL emissions

limits should be established (in specific circumstances) on the basis of BACT emissions limits or

a performance limit reflecting BACT. An approach that is based on past actuals is

environmentally protective, yet would be more workable than an allowables-based approach for
4 - Late Comments on PALs

II-4-10

many facilities. Therefore, two options for establishing PAL emissions limitation should be

provided.

One commenter (IV-D-412) supported the December 1999 white paper PAL proposal as

being one that should satisfy all stakeholders while assuring accountability and superior

environmental protection and providing operational flexibility and certainty. They warned that

significant changes to any of the principal features of this proposal runs the risk of making the

burden/cost of a PAL permit too expensive such that few companies would choose the PAL

option. They urged the EPA to move ahead quickly with PAL provisions as soon as possible.

4.4.4 NRDC PAL Proposal (IV-D-363)

NRDC (IV-D-363) supported a BACT-performance PAL as follows. 

• The PAL would have two caps: (1) an annual emissions cap equal to BACT-performance

rates times actual annual operation levels; and (2) an NSR applicability cap equal to

BACT-performance rates times full capacity operation levels. (Full capacity would refer

to full capacity at the time the PAL was established). 

• As long as the facility remained below the NSR applicability cap, modifications would

not be subject to NSR review. Some form of public air quality impact review would be

required when a modification would increase actual emissions.

• The two caps would operate together to provide headroom for well-controlled increases

in facility operations but would not allow facilities to use reduced operation rates to

continue reliance on poorly-controlled units.

• Units with potential emissions above NSR significance levels must meet BACT limits on

a unit-by-unit basis.

• Units with potential emissions greater than de minimis but less than NSR significance

levels must in the aggregate meet BACT-performance levels (individual units can be

above or below BACT-performance as long as operation-weighted total equals BACT

performance).

• Facilities with current actual rates greater than BACT-performance must meet a

compliance schedule to bring large units to BACT and smaller units to aggregate BACT

performance within a 5- to 10-year period. (The 5-year compliance period would apply to

facilities where the majority of emitting units are already amortized).

• Emitting units would continue to be subject to enforceable emission rate limitations

consistent with the above requirements.
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• Capacity-expansion projects that could not be achieved within the NSR applicability cap

would go through traditional NSR.

• BACT-performance targets would be reviewed at least every 10 years with new

compliance timetables established to achieve revised performance targets.

4.4.5 NJ, RAPCA, and Industry Comments on NRDC Two-cap PAL

New Jersey (IV-D-388), the Regional Air Pollution Control Association (RAPCA) (IVD-390), and the industry commenter group (IV-D-391, 402) responded to NRDC’s comments. 

Commenter IV-D-391 is the same commenter as IV-D-437, 341, and 349.

4.4.5.1 NJ (IV-D-388)

The commenter (IV-D-388) stated that actual emissions should be used as the basis for

the initial facility cap with a working towards BACT with a declining cap on emission rates per

process, as processes are retrofit or replaced with BACT. The commenter supported their

position by stating that they felt it would attract companies with old equipment to modernize.

The commenter (IV-D-388) stated that they supported a cap that requires retrofitting

moderate sized sources (that is, those with PTE greater than de minimis but less than the

significant level). They explained that their State requires such sources to apply state-of-the-art

control without going through the Federal BACT process. For over “significant” sized units,

their State would require them to go through the BACT process. The commenter explained that

most State/local governments would support such a Federal proposal as long as they maintained

the discretion on the control determination for units less than “significant” level.

The commenter (IV-D-388) explained that their State already has a performance-based

option for units between de minimis and significant. The commenter reported that they had

published 17 state-of-the-art manuals for some common new source categories. Under their

program, if a source meets the performance limit in the manual, they do not do a case-by-case

review of the technology unless mandated under PSD/major NSR. It was explained that their

program concept parallels the concept of “presumptive BACT,” which is supported by most

State/local governments.

The commenter (IV-D-388) explained that their State requires a preconstruction permit

for new units above de minimis (which they define as 5 tpy for criteria pollutants). They

explained that they use a State minor NSR process for units above EPA significant levels. The

commenter requested that State and local agencies should retain discretion regarding their minor

NSR review process. 
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4.4.5.2 RAPCA (IV-D-390)

The commenter (IV-D-390) believed that given the history of their consideration of PAL

issues, negotiations with industry, and the compilation of positions to date, the proposed two-cap

PAL approach would need to include certain allowances/provisions to meet the current positions

of the State and local governments they represent. The commenter recommended the following

changes be made. 

• For actuals-based PALs, the baseline should be the last 2 years of operation, with the

possibility of substituting a more representative period of time if the industry makes a

convincing argument, using PSD contemporaneous guidelines.

• Not opposed to the use of BACT as the basis for the PAL for nonattainment pollutants

rather than LAER.

4.4.5.3 Industry Comments on NRDC Two-cap PAL (IV-D-391, 402)

One commenter (IV-D-391) stated that it is important that the “two-cap” PAL not be too

restrictive. The vast majority of source owners will find it unattractive and will therefore not

adopt it and the environmental and efficiency benefits of the PAL concept will be lost. The

following suggestions were made for inclusion into a “two-cap” PAL.

• Inclusion of an actuals-based PAL as a motivation to bring emissions down (below recent

actuals) under a PAL. The commenter (IV-D-391) supported an actuals-based PAL as a

way to provide incentives for facilities that have a number of non-BACT units. They

explained that such owners would be motivated to bring their emissions down (below

recent actuals) under a PAL because the cost of putting on BACT level controls

plantwide would otherwise be too great.

• Inclusion of a partial PAL under limited conditions where gaming is avoided.

• Plantwide LAER in nonattainment areas would be such an impediment that sources are

unlikely to request a PAL in such areas. It would be better to require BACT for PALs in

nonattainment areas, as the very high level of control that could have been obtained with

BACT would otherwise be lost.

• If an “annual actuals cap” is included, it should be based on a fair and workable index of

production.

• BACT and BACT-performance cut-off levels need to be set high enough so that the

benefits of adopting the PAL outweigh the burden.
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• Processing for determining new unit BACT should be quick or it will be easier to go

through PSD and not adopt a PAL. 

Another commenter (IV-D-402) stated that the “two-cap” approach outlined by NRDC

would make PALs unworkable as a practical matter. They explained that it would require an

entire facility (except for “very small de minimis units”) to achieve BACT/LAER-level

performance in order to obtain a PAL permit and would require BACT/LAER-level controls on

all subsequent modifications and additions. The “two-cap approach” would address difficult

NSR applicability problems that PALs are supposed to solve by imposing many aspects of major

NSR at each affected facility, such that no facilities will seek PALs. The following suggestions

were offered to introduce substantial incentives to seek PALs.

• The PAL emissions limitation should not be indexed to current production levels. An

annual actuals cap would require constant adjustments according to the actual operation

rate of the affected facility, which would be unworkable. The purpose of a PAL should

be to establish a bright line way of determining when major NSR permitting requirements

are triggered. Assuring a BACT/LAER overall level of control is neither legally nor

practically justifiable as a test of major NSR applicability.

• LAER should not be required for nonattainment pollutants. If a LAER level of control is

required for nonattainment pollutants, it would be a substantial practical disincentive for

any facility considering a PAL. Imposing LAER as a condition of obtaining a PAL is not

legally supported as major NSR is not triggered when a PAL is established and changes

made under the PAL, by definition, do not trigger NSR.

• The initial level of a PAL should be based on past actuals or, in specific circumstances,

on emissions higher than past actuals. PAL emissions limits should be established (in

specific circumstances) on the basis of BACT emissions limits or a performance limit

reflecting BACT. An approach that is based on past actuals is environmentally

protective, yet would be more workable than an allowables-based approach for many

facilities. Therefore, two options for establishing PAL emissions limitation should be

provided.

• BACT-level control should not be required for units with emissions below relevant

significance levels. Therefore, requiring BACT/LAER level controls on all units covered

by a PAL except for “very small de minimis units” is impracticable given that the

environmental benefit of imposing BACT/LAER on such sources would be negligible

while the costs/burden would be substantial to sources.

Response:

We appreciate the extended involvement of these stakeholders concerning PALs. 
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As noted above, we have concluded that a major stationary source’s compliance with an

actuals-based PAL system is a permissible means of assuring that a major stationary source

does not have a significant net emissions increase. We also conclude that this approach can be

implemented in a manner that is consistent with the Act. Thus, we are adopting regulations that

authorize States to issue actuals PALs. However, we also plan to develop an alternative that

would give a source the option of obtaining a PAL based on allowable emissions. 

We agree with the commenters concerning many aspects of their proposals. Where

appropriate, these provisions have been incorporated into our final rules. Specifically, we have

incorporated actuals-based PALs; the initial level of the PAL being determined based on the

major NSR baseline actual emissions, plus the applicable significant level of the PAL pollutant;

a PAL term of 10 years; ability to renew the PAL (although the level of the PAL is reviewed at

that time); any increase in the PAL requiring major NSR review; and availability of PALs for

one or more pollutants (although each PAL addresses only one pollutant). We agree that major

NSR does not apply to changes under the PAL. We also have incorporated provisions to require

adjusting the PAL for technical errors and for newly applicable requirements. Finally, we agree

that the PAL must be legally and practically enforceable and our final rules contain monitoring,

recordkeeping, reporting, and testing requirements to ensure this. 

We have not adopted a number of other suggestions. As noted above, we have not

adopted an allowables-based PAL, although we continue to consider it. The suggestions for

PALs set above the level of historical actuals emissions were variations of allowables PALs. We

will continue to study these and other concepts in the comments summarized above as we

consider allowables PALs.

We have not adopted the two-cap PAL, nor are we requiring the actuals PAL to be based

on BACT-level performance. We are not requiring a declining actuals PAL or requiring you to

install BACT on the emissions units under the actuals PAL regulations. We agree with the

commenter who indicated that an actuals PAL can be attractive to sources with a number of nonBACT units, and provide incentive for such sources to reduce emissions from those units

(through voluntary controls or P2) to allow for increased production under the PAL. We also

agree with the commenter that an annual emissions cap indexed to current production levels

would be unworkable.

We do not agree with the commenter who stated that a PAL should be a declining

emissions cap that achieves BACT/LAER performance levels for the existing units at the PAL

facility. One of the primary goals of the NSR program is to ensure that air quality is not

significantly degraded in areas attaining the NAAQS and to ensure that new emissions do not

interfere with a State’s ability to meet the NAAQS in nonattainment areas. We believe that the

final PAL rules achieve this goal without specifically providing for a declining emissions cap. In

addition, we believe that PALs provide real advantages to the environment as well as to the
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source and the reviewing authority, as illustrated by the pilot facilities discussed in volume I,

8.5. 

The final rules do not include a partial PAL (that is, a PAL that encompasses less than

the entire facility). See section 5.9 below for more on partial PALs. 

4.5 PAL Duration

Comment:

One commenter (IV-D-363) proposed that the PAL for facilities with current actual rates

greater than BACT-performance meet a compliance schedule to bring large units to BACT and

smaller units to aggregated BACT performance within a 5 to 10-year period. The commenter

suggested that the BACT-performance targets could be reviewed at least every 10 years with new

compliance timetables established to achieve revised performance targets.

One commenter (IV-D-439) proposed that the PAL could be adjusted as frequently as

every 5 years with a commitment to control major units that have never been through NSR within

10 years. They proposed that the PAL could undergo total re-evaluation and re-vamp at the end

of 20 years. The commenter believed that a policy of PAL adjustment shorter than 10 years

would not be acceptable to industry. The commenter explained that the issue of PAL duration

should be linked to the mechanisms for terminating the PAL at the end of that period and the

mechanisms for termination and revamping a PAL more generally.

Two commenters (IV-D-333, 388) supported the periodic adjustment to a PAL every 10

years when entering a new PAL. One of these commenters (IV-D-333) recommended that every

source in a PAL be subject to declining caps that move to BACT within a fixed time (for

example, 10 years); renew PAL every 5 years. 

One commenter (IV-D) believed that the total re-evaluation and revamp PAL duration of

20 years is too long and suggested that there should be mid-course corrections at 5 years and a

full re-evaluation at 10 years.

One commenter (IV-D-398) stated that a facility should be allowed to opt out of the PAL

process at any time by modifying the permit. The facility would then become subject to NSR

(either major or minor) to cover any additions or modifications that had been made to the facility

during the period of the PAL coverage. 

One commenter (IV-D-341, 371) requested that a permit owner or operator (with

approval of the permitting agency) be able to terminate a PAL set for 10 years during those 10

years. The commenter explained that upon termination, the PAL limit can be retained as a
4 - Late Comments on PALs

1

Eastern Research Group Inc. Report on “Business Cycles in Major Emitting Source Industries” dated

September 25, 1997.

II-4-16

permitted cap. At the end of the 10 years, renewal can be requested for another 10 years. At the

end of 20 years the PAL could be re-evaluated. 

Response:

We agree with the commenters who advocated a review of the PAL after 10 years. We

believe that 10 years is a reasonable effective period for PALs for the following two reasons. 

First, we believe that a 10-year period is practical and reasonable both for the reviewing

authority and the source. While a logical stopping point may seem to be 5 years in line with the

title V permit period, we do not believe that requiring PALs to be reviewed every 5 years

provides industry with a sufficient period of regulatory certainty. We also believe that while the

overall administrative burden for you and the reviewing authority is reduced if you are

complying with a PAL, the establishment of a PAL requires an initial commitment of substantial

resources. Given this initial resource investment, we do not believe that a 5-year, fixed term for

a PAL provides you or your reviewing authority with an adequate incentive to participate in the

PAL system. Thus, in an effort to balance the need for regulatory certainty, the administrative

burden, and a desire to align the PAL review and renewal with the title V permit renewal, we

believe a fixed term of 10 years, the equivalent of two title V effective terms, is most appropriate. 

Second, a study conducted by Eastern Research Group, Inc.

1

 supported a 10-year look back to

ensure that the normal business cycle would be captured generally for any industry. The PAL

renewal period is also 10 years.

Today’s final rules do not contain specific provisions related to the issue of terminating a

PAL. Decisions about whether a PAL can or should be terminated will be handled between you

and your reviewing authority in accordance with the requirements of the applicable permitting

program.

For a complete discussion of why we adopted a 10-year duration for the PAL, see

volume I, 8.7. For additional discussion of PAL review and renewal, see volume I, 7.8.2 and

8.10.

4.6 PALs in Serious and Severe Nonattainment Areas

Comment:

Two commenters (IV-D-391, 401) clarified that changes under a PAL in “serious and

severe” non-attainment areas do not result in an increase in emissions under the NSR rules. 

Therefore, a netting analysis examining emissions increases and decreases over a 5-year
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“contemporaneous” period (under section 182) whenever there is a modification that involves an

increase in actual emissions will not be triggered under a PAL. They also clarified that because

the 5-year contemporaneous period for netting under section 182 “rolls” continuously, it presents

no impediment to a 10-year PAL. 

Response:

We agree with commenters who believe that the PAL approach does not conflict with the

provisions of 182(c)(6). We do not interpret section 182(c)(6) to be a limitation on our ability to

authorize PALs in serious and severe nonattainment areas. This section directs that when there

is an increase meeting certain criteria, it may not be considered de minimis, but it does not

specify the methodology by which an emissions increase must be calculated. Accordingly, we

have the discretion under Chevron, USA, Inc. v. NRDC, Inc., 467 U.S. 837, 865 (1984) to

establish the methodology, and we are doing so in this rule by having the PAL serve as the

actuals emissions baseline against which future emissions increases are measured. If the

source’s emissions equal or exceed the PAL it will trigger NSR, whereas maintaining plant

emissions below the PAL ensures that there is no emissions increase. We believe that our

interpretation reasonably implements the statutory purpose of the section, given that PAL

sources agree to be subject to a plantwide cap that serves as the reference point for determining

whether there has been an increase and the appropriateness of the PAL level is reviewed at

10-year intervals. Actuals PALs effectively prevent uncontrolled serial small unrelated

emissions increases that section 182(c)(6) is designed to address. Consistent with

section 182(c)(6), the final rules require the source to use 25 tpy as the significant level when

calculating a PAL in a serious or severe nonattainment area. 

4.7 Increasing the PAL

Comment:

Two commenters (IV-D-341, 371) requested that the PAL be increased “by taking the

change that is associated with the need for the increase through the Federal NSR process.” They

also requested that in order to expand the PAL, that all major units covered by the PAL must

have good controls or be on an enforceable schedule to install the controls or shutdown within 5

years. They explained that they did not believe that expanding the PAL will be necessary if all

new units can fit under the current PAL cap. They stated that this can be accomplished by

installing additional controls to the existing units or implementing P2 changes that will reduce

emissions enough to remain compliant with current PAL limits. They explained that expansion

may be necessary if the new unit is of sufficient size that the PAL cap needs to be increased, such

that the new PAL level could be set at the level reflected in the future case of the Federal NSR

review.
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One commenter (IV-D-363) stated that capacity-extension projects that could not be

achieved within the NSR applicability cap should have to go through traditional NSR.

One commenter (IV-D-398) stated that PALs can be increased requiring BACT or LAER

and emissions offsets through the normal NSR offset process. 

Response:

We have concluded that it is unnecessary to mandate a specific control level on new

emissions units that the source adds under an established PAL. After reviewing the performance

of a limited number of facilities that are participating in PAL pilot projects, we have concluded

that these facilities’ desire to maintain a large degree of operational flexibility under a PAL

system has encouraged them to voluntarily install state-of-the art controls on new emissions

units. (See our study, “Evaluation of the Implementation Experience with Innovative Air

Permits,” a copy of which is located in the docket for this rulemaking.) We anticipate similar

results as we extend the PAL program more broadly. Alternatively, we believe that the source

will add emissions controls to existing emissions units if this is a more cost-effective approach to

controlling emissions. This is precisely the type of flexibility the source should have for

managing the total source wide emissions under a PAL system. 

Accordingly, we do not believe that it is necessary to mandate the installation of

emissions controls on new emissions units if the source is able to continue to comply with its

PAL even after installing the new emissions unit. 

We also agree with the commenter that capacity-extension projects that can not be

achieved within the NSR applicability cap should have to go through traditional NSR.

We agree with the commenter that requiring current BACT or LAER and emissions

offsets are an appropriate way to increase the PAL. Accordingly, under our final rules, the

source would be subject to BACT or LAER and emissions offsets only on the emissions units

which cause the PAL to increase. Additionally, before applying for a PAL increase caused by a

PAL modification, the source must demonstrate that it is unable to maintain emissions below its

current PAL level even if BACT (adjusted for a current BACT level of control unless the

emissions units are currently subject to a BACT or LAER requirement that has been determined

within the preceding 10 years) were to be applied on all existing major and significant emissions

units. For further discussion on PAL increases, See volume I , 7.7.1 
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4.8 PAL Adjustment

Comment:

Three commenters (IV-D-341, 371, 398) requested that a PAL be adjusted to correct for

significant errors. The commenter (IV-D-341) explained that a “significant” error would be one

where the impact is greater than the de minimis.

One commenter (IV-D-398) stated that PALs should only be adjusted in three

circumstances: (1) if the PAL was calculated incorrectly in the first place; (2) to reflect the

addition of a new applicable requirement that requires emissions reductions from one or more of

the units covered by the PAL; and (3) to ensure that the facility has reached the level of

emissions that represent “good controls.”

One commenter (IV-D-349) stated that the PAL level should be reduced in the context of

a MACT standard going into effect only in situations where a SIP includes a regulation that

requires associated criteria pollutant reductions. The reasons provided for this recommendation

include the following: (1) there is not a one-for-one correlation between HAPs and many criteria

pollutants and multiple compliance approaches under MACT effect criteria pollutant emissions;

and (2) reducing the PAL would adversely effect PAL facilities because other sources are not

required to accept enforceable limits on their criteria pollutant emission when a MACT standards

becomes effective.

Response:

After considering the comments, we have finalized the PAL rules to require the reviewing

authority to reopen and adjust the PAL under certain circumstances, and to provide the

reviewing authority with discretion to reopen and adjust the PAL under other circumstances. 

The reviewing authority must reopen the permit for the following reasons: (1) to correct

typographical/calculation errors made in setting the PAL or to better reflect a more accurate

determination of emissions used to establish the PAL; (2) to reduce the PAL if the owner or

operator of the major stationary source creates creditable emissions reductions for use as

offsets; (3) to revise a PAL to reflect an increase in the PAL (PAL increase provisions discussed

in volume I, 7.7.1).

The reviewing authority may reopen the permit to: (1) to reduce the PAL to reflect newly

applicable Federal requirements (for example, NSPS) with compliance dates after the PAL

effective date (however, your reviewing authority shall specify a reduced PAL level(in tons/yr) in

the PAL permit to become effective on the future compliance date(s) of any applicable Federal or

State regulatory requirement(s) that the reviewing authority is aware of prior to issuance of the

PAL permit); (2) to reduce the PAL consistent with any other requirement, that is legally

enforceable, and that the State may impose on the major stationary source under the SIP;
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II-4-20

(3) reduce the PAL if the reviewing authority determines that a reduction is necessary to avoid

causing or contributing to a NAAQS or PSD increment violation, or to an adverse impact on an

AQRV that has been identified for a Federal Class I area by a FLM and for which information is

available to the general public. Except for typographical or calculation errors that do not

increase the PAL, all other mandatory and discretionary reopenings must be conducted in

accordance with the public participation requirements that apply to initial establishment and

renewal of PALs.

 While the final rule does not require the source’s reviewing authority to immediately

reopen the PAL permit to reflect newly applicable Federal or State regulatory requirements (for

example, NSPS, RACT) that become effective during the PAL effective period, it does require the

PAL to be adjusted at the time of the source’s title V permit renewal or PAL permit renewal,

whichever occurs first. 

As the final rules indicate, we agree with the commenters who supported PAL

adjustments to correct technical errors. We do not agree with the commenter who suggested that

there needs to be a distinction as to what a significant error is. 

4.9 Partial PALS

Comment:

Several commenters (IV-D-371, 390, 398, 402, 437) supported partial PALs. One

commenter (IV-D-371) requested that a source be allowed to request approval from the

permitting authority to exclude certain minor sources or a separate part of the facility from the

PAL.

Commenter IV-D-437 supported a PAL for all or certain specified sources at the sight. 

With the approval of the permitting authority, a PAL can be set to exclude certain minor sources

or a separate part of the facility if the two operations are clearly distinct and the same

manufacturing activities are not and will not be carried out at parts covered and uncovered by the

PAL.

Two commenters (IV-D-341, 388) discouraged the use of partial PALs. One commenter

(IV-D-388) explained that a partial PAL would not allow an emissions increase over historical

actuals because one would not be able to tell if that increase or combination of increases at other

sources not in the PAL was causing a significant increase. The commenter believed that a partial

PAL without a significant increase may be okay. 

One commenter (IV-D-402) stated that partial PALs should be allowed under limited

circumstances. There are practical circumstances where permitting authorities should be able to

establish a PAL over only part of a facility. It should be possible to exclude minor sources (such
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II-4-21

as VOCs from fuel combustion) from a PAL, or even a separate part of the facility if the two

operations are clearly distinct.

Response:

We have not made a final decision about whether partial PALs (that is, PALs that would

not include all quantifiable emissions of the PAL pollutant at a major stationary source) are

permissible under the current regulations, nor are we adopting any final regulations to provide

for this option. We will continue to explore partial PALs on a case-by-case basis and the

circumstances, if any, under which such PALs might be appropriate. Such an approach will

provide an opportunity for us to address the concerns associated with a partial PAL option. If

we determine that partial PALs are permissible, we will issue appropriate guidance or amend

the regulations, as necessary.

4.10 Monitoring and Enforcement of PALs

Comment:

One commenter (IV-D-341) stated that it will be harder to measure sources under a PAL. 

They explained that operating under a PAL will likely require periodic assessment and

recordkeeping of emissions from the units under the PAL (for example, rolling 12-month

average). This would require monthly, if not more frequent, determination and recording of

emissions such that emission units not operating under a PAL would only be required to do a

detailed emissions analysis when a “modification” is made. 

One commenter (IV-D-352) stated that though they agreed that the PAL approach was a

valuable option, they noted that it will not be feasible for many plants. The commenter explained

that many plants do not have the necessary CEMS, or other monitoring capability.

Two commenters (IV-D-341, 371) supported a PAL permit that would include terms that

ensure the PAL emissions limit is practically enforceable. 

One commenter (IV-D-341) stated that PALs should have sufficient flexibility for source

owners to develop methods for ensuring practical enforceability that are tailored to site-specific

circumstances. 

Response:

We agree with the commenter who stated that demonstrating compliance with a PAL will

require computing a rolling 12-month average of plant-wide emissions. The final rules include

provisions on monitoring, recordkeeping, reporting, and testing to ensure that the PAL is

enforceable as a practical matter, and specify related permit content. Also, the final rules allow
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enough flexibility for the source and the reviewing authority to develop reasonable

quantification procedures for all types of emissions units. For more on this topic, see volume I,

7.12.

Comment:

One commenter (IV-D-341) recommended that “good control” be defined as reflecting

the use of a particular control technology (or the achievement of an emissions limitation) that

reflects the maximum degree of reduction of the emissions of the regulated air pollutant,

determined on a case-by-case basis, considering the experience at sources in the same industry

and taking into account energy, environmental and economic impacts which, in turn, reflect the

incremental effects of added control measures beyond those already in place, any added cost of

retrofitting controls, and the remaining useful life of the source. 

One commenter (IV-D-386) suggested that for significant and larger units installed under

a PAL, the Clean Unit lists (that is the controls for various types of emission units proposed by

commenters IV-D-403 and 405 as part of the Complex Manufacturer’s Proposal) could serve as

pre-defined control levels that would be acceptable to the State or local agency. 

One commenter (IV-D-398) stated that facilities should have “good controls,” based on

the age of the equipment and that the PAL emissions determination should be based on capture

and removal efficiencies rather than tested values.

One commenter (IV-D-349) stated that they believed that State and local agencies are

capable of performing “good technology” determinations. The commenter recommended that

“good technology” determinations be set with the initial PAL level and scope of control of

existing major units over the first 10 years of the PAL, where it can be subject to an EPA and

public sector formal comment process. They explained that once the PAL is operational, the

State or local authority can insure good technology use through their minor NSR program, which

can be exercised at the time of a change or through advanced review and approval of specific

types of changes. They suggested that when a State or local agency doesn’t have technology

review built into their minor NSR program, the technology review aspects of the PAL could be

built into the permit itself, which would be subject to EPA and public review at the time the

PAL is initially proposed.

Response:

As noted above in section 5.4, the final rules for actuals PALs do not require retrofitting

of controls to existing emissions units under a PAL. In addition, we do not believe that it is

necessary to mandate a specific control level on new emissions units that the source adds under

an established actuals PAL (see section 5.7 above). However, as discussed in that section, if the

source is unable to make a planned equipment modification or addition without equaling or
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exceeding your PAL, the “PAL major modification” that results will be subject to major NSR

review, including BACT or LAER analysis, as applicable.

We agree with the commenter who noted that State minor NSR programs will continue to

apply to changes that the source makes under a PAL, including any technology review

requirements. In promulgating the final PAL rules, we have not required or advocated for any

changes to State minor NSR programs.

The 1998 NOA raised the issue of whether a PAL should, during periodic reviews, be

adjusted downward when the source has reduced emissions through the use of “good controls”

or P2. The NOA asked for comment on this issue, as well as how “good controls” should be

defined. After further consideration, we have not finalized PAL adjustments specific to sources

that implement good controls or P2. Instead, as discussed in volume I, 8.9, we have adopted an

uncomplicated, unified approach to PAL adjustments that is based on the level of the source’s

baseline actual emissions, regardless of what factors led to that level of emissions. Thus, in that

context, the definition of “good controls” is no longer relevant.

4.11 PALs and (r)(4) Limits

Comment:

One commenter (IV-D-341) stated that a PAL would encourage States to eliminate or

streamline existing minor NSR limits, providing flexibility while ensuring that control devices

relied on to avoid triggering PSD continue to be operated. As an example, for facilities that

relied on control devices to avoid triggering PSD, it is likely that general permit language that

requires sources to operate their controls properly would take the place of any specific control

device terms created in a minor NSR permit. This would provide flexibility while ensuring

control devices relied on to avoid triggering PSD continue to be operated. 

Response:

We agree with the commenter that (r)(4) limits need not be retained when the PAL

becomes effective. Accordingly, the final rules provide that an actuals PAL may supersede

enforceable permit limits the source may have previously taken to avoid the applicability of

major NSR to new or modified emissions units. [Under the major NSR regulations at 40 CFR

52.21(r)(4), 51.166(r)(2), and 51.165(a)(5)(ii), if the source relaxes these limits, the units become

subject to major NSR retroactively as if these units had not yet been constructed. ] Before

removing the limits, the reviewing authority should make sure that the source is meeting all other

regulatory requirements and that the removal of the limits does not adversely impact the NAAQS

and PSD increments. 
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4.12 Other Comments on PALs

Comment:

A few commenters (IV-D-333, 370, 388, 390, 397) advocated a declining PAL. One of

the commenters (IV-D-397) would not support a PAL that allows firms to “hold” emissions for

some period of time, which contrasts with the goal of the PSD program. The commenter instead

suggested that the PALs could have a specified cap. The cap could be reduced during the

periodic review, by a set reduction, or every 5 years based on the average of the last 2 years or the

highest 2 years. 

One commenter (IV-D-370) supported the implementation of cap-and-trade programs

with the caps declining to the appropriate level for each criteria pollutant. PALs are one

approach for this. The commenter believed that the declining cap concept could be implemented

in such a manner as to achieve equivalent or greater reductions than the existing NSR program. 

Response:

We did not propose or seek comments on requiring declining PALs for all sources;

accordingly, these final rules do not contain such a requirement. We do not believe that it is

necessary for a PAL to be a declining emissions cap that requires BACT/LAER performance

levels for the existing units at the PAL facility. Nevertheless, we believe that a PAL should

remain representative of the source’s baseline actual emissions. The final rules require PAL

review and adjustment at each 10-year renewal. This review must evaluate the source’s baseline

actual emissions over the previous 10 years, although the reviewing authority retains the

flexibility to consider a variety of factors in setting the level of the renewed PAL. See volume I,

7.8.2 and 8.6 for additional discussion about periodic PAL review and adjustments.

States are free to implement cap-and-trade programs as they see fit to resolve

nonattainment problems. However, we do not believe that it is appropriate to integrate PALs,

which are created for purposes of major NSR applicability, with cap-and-trade programs, which

have the purpose of bringing about area-wide reductions in the target pollutant.

Comment:

One commenter (IV-D-341) stated that they do not support the requirement of offsets in

the setting of a PAL unless it is being established in the context of the permitting of a change that

would otherwise trigger offsets that was initiated at the time the PAL is being established. 
4 - Late Comments on PALs

II-4-25

Response:

We agree that the source should not be required to obtain offsets as a price for

establishing an actuals PAL, provided that no change that would otherwise trigger offsets is

occurring at the time the PAL is established. Accordingly, the final rules do not require offsets

to obtain a PAL. However, if the source wishes to increase its PAL, the “PAL major

modification” that necessitates the increase must go through traditional major NSR, including

the requirement to obtain offsets in nonattainment areas. 

Comment:

One commenter (IV-D-341) requested that when changes are made to a source that are

“substantially contemporaneous,” that the EPA allow source wide netting under its PSD

program. The commenter believed that such a “contemporaneity requirement” does not apply to

PALs. 

Response:

We agree with the commenter. We believe that the concept of contemporaneity, as

articulated in Alabama Power, and as set forth in the regulations governing traditional major

NSR does not apply to PALs. For a complete response regarding this issue, see volume I, 8.4.

Comment:

One commenter (IV-D-341) specifically requested that any new NSR regulations not

jeopardize the standing or structure of existing PALs. 

Response:

 After considering the comments and input gathered at public hearings and stakeholder

meetings, we are requiring that States adopt the PAL provisions contained in the final rules or

an alternative PAL program demonstrated to be equivalent to or more stringent than the PAL

provisions of the final rules. 

The final rules contain transition provisions for any existing PAL-like permits issued

prior to approval of the final PAL rules into the State’s major NSR program. Under these

provisions, the reviewing authority has the discretion to supersede, or not, the existing PAL-like

permit with a PAL that meets the new requirements. Thus, adoption of the final PAL provisions

(or their equivalent) into the State major NSR program does not automatically invalidate existing

PAL-like permits. However, the reviewing authority may not issue a PAL that does not comply

with the new requirements after they have been approved. Thus, any existing PAL-like permit
4 - Late Comments on PALs

II-4-26

must be converted to a PAL that meets the new requirements at the time of renewal. For

additional discussion of this issue, see volume I, 7.6.8.

Comment:

One commenter (IV-D-390) supported inclusion of significant and major new units

(Federal NSR/PSD definitions) under a PAL, whether it is actuals-based or allowables-based,

meeting BACT. They also supported giving State and local agencies the discretion to include

minor sources in the PAL. Significant and larger units installed under a PAL should be

controlled at the pre-defined levels included in the Clean Unit lists that are acceptable to the State

or local agency. 

Response:

We believe actual emissions are an appropriate basis for a PAL and have promulgated a

final actuals PAL. We are reserving the issue of allowable PALs for future consideration.

The final rules require the PAL to include all emissions units at your facility. As

discussed above in section 5.9, we have not made a final decision about whether partial PALs

are permissible under the current regulations nor are we providing the partial PAL option in the

final rules.

We are not requiring a predefined control level for emission units under the PAL. As

discussed above in section 5.4, we do not believe that new emissions units that the source can

install without equaling or exceeding the PAL should be subject to control requirements. 

However, any such units continue to be subject to any technology requirements mandated by the

State minor NSR program.

Comment:

One commenter (IV-D-341) supported the use of a unit’s highest 12-month level of

operations within the last 10 years, but had concerns on EPA’s approach to determining baseline

emissions. They explained that applying “current emission factors” to historical operations is not

workable. They stated that a workable solution would allow historical emissions to be adjusted

to reflect rules implemented since the baseline period and would allow adjustment to the

plantwide baseline based on the changing configuration of the sources since the baseline period. 

This proposed workable version of the 12-month level is used in the 5-year look back for most

sources that are under a PAL. 
4 - Late Comments on PALs

II-4-27

Response:

The PAL baseline, like that for traditional major NSR, is any consecutive 24-month

period in the past 10 years. For our rationale for the PAL baseline, please see our response in

volume I, 7.4. Additional information on the 2-in-10 baseline is found in volume I, chapters 2

and 3.

Comment:

One commenter (IV-D-371) requested that a facility be able to have a PAL for one or

more criteria pollutants.

Response:

We agree with the commenter. Accordingly, the final rules permit a source to obtain

PALs for one or more regulated air pollutants.

Comment:

As part of comments received by one commenter (IV-D-345) on a proposal to streamline

NSR in SIP call States, options for using PALs to adjust NSR applicability criteria were

provided. One option suggested was that NSR applicability regulations could be modified to

provide that a budget source’s PAL could be equivalent to its “allowable emissions.” Another

option suggested setting the PAL for all NOx budget sources at a level represented by a NOx

source’s highest ozone season NOx emissions in the 15 years prior to 2003, when SIP controls are

scheduled to be implemented. 

Response:

We do not believe that this comment is relevant to our proposals or final actions

regarding actuals PALs as an alternative applicability approach to major NSR. 
II-5-1

Chapter 5 - Late Comments on Clean Units

5.1 Overview

This chapter contains comments on Clean Units received after the end of the public

comment period. For comments on Clean Units submitted by the end of the public comment

period, see Volume I, Chapter 9.

Comment letters IV-D-379, 386, and 423 are from the same commenter, an organization

representing State and local agency air permitting authorities. This commenter made several

changes to their position on Clean Units over time. They provided comments after the end of the

comment period that differed from their comments during the comment period. The comments

they submitted during the public comment period are summarized in Volume 1, Chapter 9 of this

document. 

5.2 Support Clean Units Proposal

Comment:

Several commenters (IV-D-372, 379, 386, 398, 409) supported the Clean Unit proposal. 

One commenter (IV-D-372) maintained that when a facility spends money to create a well

controlled unit, it signifies the facility’s intent to operate the unit at an operating rate close to the

unit’s capacity in order to recover the investment. Therefore, it would be unlikely for a future

unrelated change to cause an increase in operating rate because the source anticipated this

increase when the investment for air pollution control equipment was made. The commenter

concluded that the allowable emission limits associated with the controls be considered baseline

in the future.

One commenter (IV-D-398) stated that Clean Unit and clean facility exemptions are

achievable with meaningful reform of the NSR program.

Comment letter IV-D-386 stated that the commenters support EPA’s Clean Unit concept. 

The commenters (IV-D-386) further stated, “We see the development and use of this concept as

providing timeliness and certainty to the NSR process and benefit to the environment. The

associations believe the Clean Unit concept could provide all industries with the opportunity to

gain timeliness and certainty on future operations, while at the same time achieving BACT

control on an existing source.” Therefore, the commenter (IV-D-386) encouraged EPA to make

this Clean Unit test a core element in the NSR reform process. The commenter (IV-D-386)

stated that units that meet pre-defined Clean Unit emissions levels and have shown ambient

impact modeling within allowable levels should be eligible for the Clean Unit exclusion. 
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Two commenters (IV-D-403, 405) generally supported the Clean Unit proposal, but

found it too complicated and too limited in the relief it provided to have much practical impact. 

The commenters stated that since the Clean Unit program would be voluntary, it is important that

the approach be workable in practice.

Response:

We agree with the commenters that stated that the clean unit approach would provide

timeliness and certainty to the NSR process, while at the same time providing benefit to the

environment. As a result, we are promulgating final rules that include provisions for Clean

Units. We also agree that the clean unit approach as proposed was not practical and somewhat

difficult to implement and as a result we have made changes based on many of the comments and

suggestions received.

5.3 Length of Clean Units Exclusion

Comment:

Several commenters (IV-D-379, 386, 403, 405, 423) commented on the length of the

Clean Unit exclusion. 

One organization made several comments in different letters (IV-D-379, 386, and 423) on

the length of the Clean Unit test. Comment letter IV-D-379 stated that although they originally

opposed the 10-year look back concept, they could support it provided it was based upon a

current top-down BACT. The commenter (IV-D-386) suggested that the Clean Unit exemption

should have a default lifetime of 10 years, with monitoring and recordkeeping permit

requirements. Periods less than or beyond the default 10 years could be established on a unit

category basis. Commenter IV-D-386 also recommended that existing sources should have a 2-

year look-back period to determine whether they would be eligible for the Clean Unit exemption. 

In their most recent letter, the associations (IV-D-423) reiterated their support for exempting

sources that install the best available controls from further NSR for a limited time into the future.

The commenter (IV-D-423) was concerned that under the Clean Unit exemption now under

consideration by the Administration, not only would a source that has installed the best available

controls be exempt from further NSR for 15 years, this exemption would apply retroactively, thus

allowing sources that installed controls more than 10 years ago to escape NSR until the balance

of the 15 years has expired." 

Two commenters (IV-D-403, 405) argued that including a workable “Clean Unit”

program in the final rule would be an incentive for the purchase of pollution control technologies

and inherently less-polluting processes/units, and would also promote P2 measures. These

commenters suggested that the Clean Unit status should cover new sources as well as existing

sources that install controls 1 year before the promulgation of the NSR rules for 20 years after
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II-5-3

beginning operations or the lifetime of the control equipment, whichever is shorter. The

commenters also stated that Clean Unit status should cover other existing sources for 10 years. 

In addition, the commenters suggested that sources should have 3 years to install Clean Units and

that NSR would not be triggered within those 3 years provided a binding commitment to install

the Clean Unit technology was signed. 

Response:

We are promulgating a 10-year duration for the Clean Unit designation. We are also

proposing a 15-year duration for the Clean Unit designation. See Volume I, Chapter 9.5 for a

complete response regarding the duration of the Clean Unit designation. We agree with the

commenters who recognized that the Clean Unit status should be based on the control life

equipment and that such an approach would be an incentive for the purchase of pollution control

technologies and inherently less-polluting processes/units, and would also promote P2 measures. 

For the reasons we identify in our response in 9.5, we believe 10 years, rather than 2, is an

appropriate period for control equipment life for existing sources. Therefore, we disagree with

the commenter that existing sources would have a 2-year look back for determining whether they

are eligible for the Clean Unit test.

The Clean Unit test is an alternative applicability test to conventional major NSR. We

believe that emissions limitations (based on the BACT/LAER determination) and other permit

terms and conditions (such as any limits on hours of operation, raw materials, etc., that were

used to determine BACT/LAER), are protective of air quality and form a sufficient basis against

which future increases should be measured. Moreover, we believe that once a BACT/LAER

determination has been made, there is a period of time in which additional major NSR review is

likely to result in no added environmental benefit. This period of time generally corresponds to

the equipment control life. Therefore, as long as the BACT/LAER determination occurred within

the last 10 years, we disagree with the commenter who believed a retroactive determination of

Clean Unit status would effectively mean that a source has “escaped major NSR.” 

Emissions units that have been through major NSR automatically qualify for Clean Unit

status. This includes those emissions units that went through major NSR before promulgation of

our new final rules. If an emissions unit automatically qualifies for Clean Unit status because it

went through major NSR, the Clean Unit designation is based on the BACT/LAER controls that

went into service as a result of the major NSR review. That is, Clean Unit status is based on the

BACT/LAER controls regardless of whether the actual Clean Unit designation process through

title V occurs at some time after the controls went into service. The 10 year duration would still

apply. 

We agree with the commenters that the Clean Unit designation can apply to both new and

existing units.
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5.4 Renewing the Clean Unit Designation

Comment:

Commenters IV-D-403 and IV-D-405 suggested that a source should be able to apply for

5-year extensions of Clean Unit status on a case-by-case basis. 

Response:

We agree with the commenters who believed that source owner/operators should be able

to re-qualify for Clean Unit status. A source may re-qualify for Clean Unit designation if it

meets the conditions in our final regulations. As we stated before, we believe that once a source

has installed state-of-the-art emissions control, an additional major NSR review will generally

not result in any additional emissions controls for a period of years after the original control

technology determination is made. Also, the period for which any specific technology (add-on or

P2) will continue to achieve the same level of control depends on many factors. As a practical

matter, we have established a single time frame of 10 years for the Clean Unit designation to

provide simplicity in our final rules. However, we determined that a reasonable average

equipment life for a control technology is generally longer than 10 years. Certainly we want to

encourage source owner/operators to install and maintain state-of-the-art control. We believe

this is more likely when source owner/operators can be assured that they can retain the Clean

Unit designation for the useful life of the equipment, as long as the air quality continues to be

assured. The useful life of the equipment may extend beyond the original Clean Unit expiration

date. Therefore, we are promulgating final regulations that allow source owner/operators to

apply for re-qualification of the Clean Unit designation, and since the provisions to re-qualify

for clean unit designation require that the emissions unit undergo a process identical to the one

used to obtain the original clean unit status, we believe 10 years is the most appropriate period

for the re-qualification. Therefore, if BACT/LAER has become more stringent since the last

Clean Unit designation, you may need to add new controls.

5.5 Alternative Suggestions for Clean Unit Provisions

Comment:

5.5.1 Complex Manufacturer's Alternative Approach for Clean Units

Two commenters (IV-D-403, 405) proposed an alternative approach for major NSR. The

approach was called the Complex Manufacturing proposal and one of the things it addressed was

Clean Units. The commenters (IV-D-403, 405) supported the concept that once a unit has Clean

Unit status, its emissions are not considered in determining if significant increases occur from a

modification elsewhere in the plant. The commenters (IV-D-403, 405) recommended that for
5 - Late Clean U nit Comm ents

II-5-5

“new controls” (that is, controls and processes installed after the final NSR rule is promulgated),

Clean Unit status be applied to all “case-by-case” BACT or LAER determinations on “major

units” or “presumptive BACT” on new pieces of equipment that would result in emissions less

than 100 tons per year. The commenters also suggested that PCPs or P2 projects should be

eligible to be considered Clean Units.

The commenters (IV-D-403, 405) also provided a list of examples of controls that would

be considered Clean Units for “existing controls” (that is, controls and processes in place before

the final NSR rule is promulgated). The commenters believed that any emissions unit with these

controls should be considered a Clean Unit. Examples were provided for VOC, PM, NOx, and

SO2. In addition to the listed controls, the commenters stated that BACT/LAER determinations

since 1990 should also qualify. According to the commenters (IV-D-403, 405), if an existing

source operated one of their proposed controls, they would be considered Clean Units, provided: 

(1) they operate for 98 percent of the time (that is, 98 percent of 8,760 hours, unless the State

accepts another appropriate time period) that the process, production, or manufacturing

equipment is operated; and (2) the owner/operator certifies annually that operation/maintenance

procedures were carried out. The commenters (IV-D-403, 405) clarified that the 98 percent of

8,760 hours is intended to handle issues related to startup, shutdown and malfunction, and

compared that allowance to the O&M manuals reference to a 95-percent “up-time.” 

Commenters IV-D-403 and 405 also advocated case-by-case discretion to grant Clean

Unit status to provide incentives for multi-pollutant control technologies, P2, or waste

minimization in cases where single pollutant control effectiveness is only slightly below the

presumptive Clean Unit levels. According to the commenters, States should be allowed, on a

case-by-case basis, to grant Clean Unit status to changes that result in overall environmental

benefit due to a particular project. As a part of this process, the normal public notice and

comment procedures would apply.

The commenters (IV-D-403, 405) advocated public comment only on whether the control

or process satisfies the criteria for a particular type of Clean Unit, but no case-by-case comment

on the Clean Unit criteria and categories would be allowed. The commenters (IV-D-403, 405)

recommended that the list of approved Clean Units would be sent out for public notice and that

projects could commence construction before the notice is provided. For existing sources,

applicants would need to supply information to the permitting authority substantiating the

applicability of Clean Unit status to individual units or groupings of equipment.

These commenters (IV-D-403, 405) stated that Clean Units should not be included in

NSR applicability emission calculations involving changes at other units. Further, new units

“netted in” by shutdowns of other units should not qualify for Clean Unit credit. However, the

commenters would include netted units if emissions reductions are obtained by controls on other

units “equivalent” to those that would be obtained by installation of a Clean Unit. This

determination would be subject to a case-by-case showing by applicant.
5 - Late Clean U nit Comm ents

II-5-6

The commenters (IV-D-403, 405) stated that new units “netted in” by shutdowns of other

units should not qualify for Clean Unit credit. The commenters stated that netted units should be

included if emissions reductions are obtained by controls on other units “equivalent” to those that

would be obtained by installation of a Clean Unit, determined on a case-by-case basis.

5.5.2 State and Local Agency Alternative Approach for Clean Units

State and local agency commenters (IV-D-379, 386, 409) also proposed an alternative

approach for major NSR that included provisions for Clean Units. These commenters (IV-D379, 386, 409) supported the Clean Unit exclusion because it would encourage the application of

BACT for existing units, especially when a facility is complying with MACT or RACT limits. 

The commenters stated that the Clean Unit exclusion is a core element in the NSR process to all

industries and would provide timeliness and certainty to the process, while benefitting the

environment by implementing BACT on existing sources. The commenter (IV-D-386) stated

that Clean Unit lists (that is, the controls proposed by the Complex Manufacturing group) would

pre-define BACT/LAER for new sources and increase consistency in BACT/LAER

determinations as well as increasing the timeliness of the BACT/LAER permit process, while

conserving State and local resources. However, in order to assure the Clean Unit lists are

accurate and relevant, commenter IV-D-386 emphasized that the RBLC should be strengthened. 

Commenter IV-D-386 recommended that ambient air impact analyses be performed by

any facility anticipating future increases in actual emissions up to allowable levels. According to

the commenter, if impact analyses show acceptable conditions at allowable emissions, the Clean

Unit should be able to increase emissions up to these levels at any time in the future. The

commenter believed that the ambient air impact analyses would alleviate any Environmental

Justice issues associated with the Clean Unit test. 

Commenter IV-D-386 recommended that when an existing unit applies controls sufficient

to meet the Clean Unit test, the emission reductions below SIP allowables should be eligible for

meeting the offset requirements of new units. According to the commenter, as long as the excess

emission reductions are not used to net a new unit out of review, the emission reductions would

otherwise meet the offset requirements.

Response:

We appreciate the extended involvement of these stakeholders in the regulatory process

and have considered their recommendations in developing the final regulations. We agree with

the commenters in part, and where we agree with them, our final regulations reflect that

agreement.

We agree with the State and local agency commenters that Clean Units are a core

element in NSR Reform that will provide timeliness and certainty to the process. We also agree
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II-5-7

with the State and local agency commenters that there must be an air quality analysis for a

Clean Unit that shows acceptable conditions at allowable emissions, and that once the allowable

emissions limit has been set, the Clean Unit may emit up to this level.

Regarding the control technology required for Clean Units, we do not agree with either

set of commenters that a list of controls that are presumptively “Clean Unit” controls is

advisable. In many cases, the controls identified by the commenters will be BACT/LAER or

equivalent. However, we believe that case-by-case determinations for BACT/LAER or equivalent

control comport with the statutory requirements for major NSR, will achieve a high level of

control, and will provide more flexibility to source owner/operators. Moreover, we have

developed a list of presumptively environmentally beneficial controls that are considered PCPs. 

We believe the PCP exclusion is a better method for excluding the installation of certain

pollution control strategies from major NSR permitting requirements. While we do not believe it

makes sense to provide a presumptive list of controls for qualifying as Clean Units, we do agree

with the commenters that PCPs or P2 projects may be eligible to be considered Clean Units,

subject to the criteria in our final regulations. We agree that case-by-case determinations are

the appropriate procedure for determining whether multi-pollutant controls or waste

minimization procedures qualify a particular unit for Clean Unit status. 

We also agree with the commenters emission units that have undergone BACT/LAER

determinations since 1990 should be able qualify as Clean Units, as long as the BACT/LAER

determination occurred within the last 10 years. As we have stated before, we believe that once

a BACT/LAER determination has been made, there is a period of time in which additional major

NSR review is likely to result in no added environmental benefit. This period of time generally

corresponds to the equipment control life, which is generally at least 15 years. We do agree

with the State and local agency commenters who urged updating the RBLC, and we are in the

process of doing that now. We further agree that MACT/RACT controls do not automatically

qualify a unit for Clean Unit status.

We agree with the commenters that Clean Units should not be included in NSR

applicability emission calculations involving changes at other units. Further, new units “netted

in” by shutdowns of other units should not qualify for Clean Unit credit. As a general principle,

we do not agree that units used to “net out” other units can later qualify as Clean Units. For

purposes of making retroactive Clean Unit designations, we will not require the reviewing

authority to determine whether the emissions reductions have ever been used to net an emissions

unit out of major NSR review. However, as a general matter, emissions decreases used to obtain

Clean Unit designation cannot be used as ERC or offsets. On the other hand, if an emissions

unit with Clean Unit designation obtains emissions reductions beyond those needed for the

original clean unit analysis, those additional emissions reductions will be available to be used as

ERC.
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5.6 Using Title V Permitting Process for Existing Units That Have

Not Undergone a BACT or LAER Determination or Comparable

State Technology Requirement

Comment:

Commenter IV-D-386 stated that implementation of the Clean Unit exemption could be

accommodated through permits to install or title V permits. The commenter (IV-D-386) stated

that the title V permits would eliminate debottlenecking issues if unit-by-unit emission

allowables are specified in the permit and emission units do not exceed these allowables. 

 Two commenters (IV-D-403, 405) stated that it was not appropriate for compliance

assurance measures to be determined for each Clean Unit through the permitting process. The

commenters stated that in order to minimize the burden on the permitting authorities, they were

willing to accept more stringent controls (that is, BACT/LAER) and CAM in lieu of the

flexibility offered by case-by-case permitting. However, the commenters did not support

continuous instrumental monitoring on all controls. The commenters recommended other

monitoring options, specifically monitoring selected as a part of the CAM reference guideline

maintained by EPA. The commenters also suggested that monitoring could be addressed using

post-title V permitting, and would be reviewed on a case-by-case basis.

Response:

We believe that title V is an appropriate mechanism for documenting Clean Unit status,

but that the process for designating Clean Unit status should be separate from title V. Major

NSR or a SIP-approved permitting program is a more appropriate vehicle for making control

technology determinations and air quality analyses, which are typically not done through the

title V permitting process. 

Major NSR permits contain the emissions limitations based on BACT/LAER, other permit

terms and conditions that the reviewing authority identifies as representative of BACT/LAER

(such as limits on hours of operation), and monitoring, record keeping and reporting

requirements for the emissions unit. If a source is qualifying for Clean Unit status through the

major NSR review, its major NSR permit will have such terms and conditions. Likewise, any

permit under a SIP-approved permitting process other than major NSR that designates an

emissions unit as a Clean Unit must specify: 1) the source-specific allowable permit emissions

limitations, the exceedance of which in combination with a significant net emissions increase,

will trigger major NSR review; 2) other permit terms and conditions that the reviewing authority

identifies as representative or comparable to BACT/LAER for the control technology (such as

limits on operating parameters, etc.); (3) any conditions used as the basis for the control

technology determinations (hours of operation, limits on raw materials, etc); and (4) the
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monitoring, record keeping and reporting requirements necessary to demonstrate that a “clean”

level of emissions control is being achieved. Additional monitoring, record keeping and

reporting may be required to assure compliance under 40 CFR 70.6(a)(3) or 70.6(c)(1) (that is,

to assure compliance under title V). We believe this process will ensure that Clean Units have

appropriate compliance assurance measures while minimizing the procedural burden on the

reviewing authorities.
II-6-1

Chapter 6 - Late Comments on Pollution Control Projects

6.1 Overview

This chapter contains comments on PCPs received after the end of the public comment

period. For comments on PCPs submitted by the end of the public comment period, see

Volume I, Chapter 10.

6.2 Comments on PCP Exclusion

Comment:

One commenter (IV-D-403) stated that the PCP exclusion has not proven to be as useful

as many commenters had hoped. The commenter explained that this is because EPA Regions

often insist on BACT or BACT-level controls, and often require use of actual-to-potential

accounting despite the clear language of the policy to the contrary. The commenter

recommended that changes be made to this exclusion to enhance its utility. The commenter

expressed that the use of actual-to-actual accounting to measure the emissions increases from

PCPs would represent a correct reading of the existing rules even if the PCP policy did not exist. 

The commenter recommended that EPA clarify that the actual-to-actual accounting system

should always be used to evaluate the emissions increases from PCPs, except under certain

circumstances. The commenter also recommended that EPA clarify that there is no specific

technology requirement for collateral emissions subject to a PCP exclusion; clarify that the

mitigation of collateral emission increases does not contemplate a technology or operational

restriction; and extend the exclusion to cross-media PCPs.

Response:

We agree with the commenter that an actual-to-actual test for PCP makes sense in some

instances. Permitting authorities must consider the net environmental benefit of a PCP. The

permitting authority’s evaluation of the project’s net environmental benefits is limited to air

quality considerations; specifically, the air quality benefits of the primary pollutant decrease

must outweigh that of the collateral pollutant increase, when comparing the unit’s post-change

emissions to its pre-change baseline actual emissions. For existing EUSGUs, the source will use

the actual-to-representative actual annual test. For other existing emissions units, the source will

use the actual-to-future-actual test. For projects that involve multiple types of units, the source

will use the hybrid test. New and replacement units do not have an operational history on which

to base future emissions projections, therefore, the appropriate method for estimating the

emissions increase that will result from a modification of these units continues to be the “actualto-potential” test. That increase is then weighed against the emissions decrease of the primary

pollutant to determine whether the PCP, as a whole, provides an environmental benefit. 
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We do not agree with the commenter that the PCP exclusion should be extended to crossmedia projects. By definition, a PCP reduces emissions of air pollutants subject to regulation

under the Act. Therefore, while the primary environmental benefit of the PCP would be to

reduce air emissions, a secondary benefit could be reducing pollution in other media. However,

these cross-media tradeoffs are difficult to compare, so it is difficult to weigh their importance in

appraising the overall environmental benefit of a PCP. We solicited comments in the proposal

on how to compare cross-media pollution, but we received no suggestions on how to design such

a system. As a result, we have determined that it is inappropriate to consider non-air impacts

when considering a PCP for an exclusion from NSR.

Comment:

One commenter (IV-D-344), stated that even if EPA adopts a potential-to-potential

applicability methodology, it would still be necessary to have a PCP exclusion.

Response:

For the reasons stated in Volume I, Chapter 6, we have not adopted a potential-topotential applicability test. We agree with the commenter that a PCP exclusion is beneficial and

our final rules include such provisions.
II-7-1

Chapter 7 - Late General Comments on NSR Reform

7.1 Overview

This chapter contains general comments on NSR reform received after the end of the

public comment period. For general comments received before the end of the comment period,

see Volume I, Chapter 13.

7.2 Request Further Analysis

Comment:

One commenter (IV-D-362) stated that the NSR rule is among a number of rulemakings

that will directly impact U.S. forest product workers and requested that a high-level liaison on the

White House staff be assigned to work with them to conduct a cumulative employment impact

analysis on these regulations before they become final. 

Response:

Under Executive Order 12866, (58 FR 51735, October 4, 1993) the Agency must

determine whether regulatory actions are "significant" and therefore subject to OMB review and

the requirements of the Executive Order. The Order defines "significant regulatory action" as

one that is likely to result in a rule that may: 

(1) have an annual effect on the economy of $100 million or more or adversely affect in a

material way the economy, a sector of the economy, productivity, competition, jobs, the

environment, public health or safety, or State, local, or tribal governments or communities; 

(2) create a serious inconsistency or otherwise interfere with an action taken or planned

by another agency;

(3) materially alter the budgetary impact of entitlements, grants, user fees, or loan

programs or the rights and obligations of recipients thereof; or

(4) raise novel legal or policy issues arising out of legal mandates, the President's

priorities, or the principles set forth in the Executive Order.

The Office of Management and Budget has determined that the final rule 

is significant for novel policy reasons but not for economic reasons. As such, under Executive

Order 12866 we are not required to do a regulatory impact analysis. Nonetheless, we maintain

that the changes to the NSR program included in the final rule are aimed at creating incentives

for companies to reduce emissions, to promote greater certainty for regulated sources, and to

improve overall environmental compliance without sacrificing air quality.
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7.3 Support Reform of the CAA’s NSR Program

Comment:

Several commenters (IV-D-355, 378, 404, 407, 416, 427, 431) supported reform of the

CAA’s NSR program.

One commenter (IV-D-355) thanked the EPA for its efforts to simplify and clarify the

CAA’s NSR program. The commenter urged continued communication with the States and

regulated communities on the NSR reform process with the goal of streamlining NSR while still

meeting the objectives of the program.

One commenter (IV-D-378) stated that they strongly supported the development of an

alternative approach and appreciated the EPA’s willingness to work with many stakeholders on

this complicated task. They urged that promulgation of the proposed NSR regulations be

postponed until cost effective and environmentally beneficial reforms are achieved.

One commenter (IV-D-404) requested that the EPA continue negotiations with

stakeholders to ensure a workable program that will provide a cleaner and safer environment,

while preserving high-skill living wage jobs in the pulp and paper industry. They believed that

the current NSR program is not working. They also believed that the regulatory complexities

overshadow the objectives to improve air quality and place thousands of American jobs at risk.

One commenter (IV-D-407) supported major reform to the NSR program in order to

remove barriers to innovation necessary for achieving significant emission reductions. They

stressed that this reform effort is of great importance to the agency, States, and stakeholders. The

final rule will shape industrial decisions and resulting environmental impacts for generations to

come.

One commenter (IV-D-416) supported work on NSR reform as one of EPA’s top

priorities and provided a States’ workgroup report on proposed reform to the NSR program. The

workgroup comprises six States. The commenter believed that any reform of the air permitting

regulations must not weaken the fundamental requirements of the federal CAA. They provided

White Papers describing the Workgroup priority proposals for reform in four specific areas:

(1) PSD applicability for modifications; (2) Agency review/public review; (3) BACT

Determinations; and (4) use of guidance in lieu of rulemaking. 

One commenter (IV-D-427) encouraged the EPA to move ahead with substantive

administrative reforms to the CAA’s NSR program. The commenter explained that confusion

and uncertainty regarding the NSR program comes from the lack of specificity and unanswered

questions in language of the federal rules, policy, and guidance. They specifically pointed out the

need for clarification of the definitions for “modification” and “routine maintenance.” 
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One commenter (IV-D-431) supported the EPA’s review of the NSR regulations and their

impact on energy availability and the environment. They believed that the current

implementation of NSR threatened the availability of affordable and reliable power supplies to

rural America. They explained that though they are not directly impacted by NSR, they are

indirectly impacted by higher energy costs, and believed that NSR should be implemented in

such a way that minimizes costs and regulations while maintaining environmental progress. 

They suggested that the NSR program be structured in a way that allows energy facilities to

perform routine maintenance without requiring installation of expensive pollution control

equipment.

Response:

We appreciate the commenters’ support for NSR Reform. We have taken final action on

five changes to the NSR program that have been developed with extensive public input. These

changes represent a substantive reform of the program and will reduce burden, maximize

operating flexibility, provide certainty, and promote administrative efficiency. As we have

announced (see http://www.epa.gov/air/nsr-review/release.html), we plan to propose changes to

the procedures for routine maintenance, repair, and replacement.

Comment:

One commenter (IV-D-333) maintained that the NSR Reform changes would not work

without strong State and local agency minor NSR programs. 

Response:

We agree that strong State and local agency minor NSR programs are necessary for the

major NSR program to work effectively. States have significant latitude under the Clean Air Act

to shape the contours of their minor NSR programs. Moreover, we believe that State and local

governments are generally in the best position to determine the particular provisions in their

minor NSR programs that will support air quality goals. Most States have minor NSR programs

that have been approved into the SIP. We have not made any determination that any specific

program is inadequate. We plan to review this issue in the future, and, if appropriate, take

actions to ensure that all programs comport with our regulations. Where our final regulations

provide for alternatives to major NSR that are effected through minor NSR programs (such as

for Clean Units, PALs, and Pollution Control Projects), we have specified requirements for the

minor NSR programs, consistent with §51.160 through §51.164.

7.4 Support Main-streaming Flexible Air Permitting

One commenter (IV-D-415) requested that the EPA prioritize attention to main-streaming

flexible air permitting. They stated that the PAL rule the EPA plans to send to the OMB in 2001
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is a good example. The commenter stated that this rule would provide facilities that need

operational flexibility a means of avoiding the NSR program, while ensuring the air quality

results provided by NSR. The commenter requested that the PAL rule be separated from the

balance of the NSR to expedite its promulgation as the NSR rule has provisions that are widely

controversial.

Response:

We agree with the commenter that flexible air permitting is a priority. We have

promulgated final provisions for actuals PALs. We also have a number of ongoing flexible

permitting projects under our Pollution Prevention in Permitting Program.

7.5 Concerned About Reform of the CAA’s NSR Program

Comment:

Several commenters (IV-D-365, 410, 414, 417, 418, 422, 424, 425, 428, 430, 435, 441)

stated they were concerned about reform of the CAA’s NSR program.

One commenter (IV-D-365) stated that they were concerned by reports that the EPA

might issue rules that would significantly weaken the requirement that “top down” BACT be

demonstrated before a permit to emit air pollution will be issued to sources proposed in pristine

areas of the nation. They explained that the EPA’s requirement for a “top down” BACT

demonstration has resulted in forcing sources nationwide to consistently utilize the most stringent

air pollution control technologies for pollutants of concern. They feared that EPA’s reforms may

lead to BACT being applied nationally in an inconsistent manner. They also believed incentives

to develop and apply cleanest control technology would be diminished.

One commenter (IV-D-417) urged the EPA not to weaken the CAA by modifying the

requirements of the NSR regulation. The commenter explained that NSR is one of the nations’s

best tools in the critical effort to improve our air quality and protect public health. The

commenter expressed dismay that the EPA halted EPA’s investigations into violations of the

CAA, especially when so many refineries and power plants have tried to circumvent NSR. The

commenter stated that there is a need for better enforcement of the laws protecting the air we

breathe, not an unraveling of this protection and a free pass to industrial polluters.

One commenter (IV-D-410) stated that they were concerned with the proposed changes to

the CAA’s NSR program, soon to be issued in 2001. They urged the EPA to publish the

proposed final rule in the Federal Register and seek formal comment from all interested parties in

order to prevent a flawed rule from being issued. They explained that all relevant stakeholders

have not had a fair chance to understand the scope of any new requirements on the EPA’s

reinterpretations of existing rules. The commenter believed that the EPA was expanding the
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scope of the NSR program beyond its intended boundaries, which would significantly undermine

constructive industry efforts to reform the basic NSR requirements. According to the

commenter, Congressional members have objected that including carbon dioxide emissions

reductions as part of this program would violate Congress’ express prohibition against

implementation of the Kyoto Protocol prior to its ratification by the U.S. This commenter further

expressed that the regulatory process is flawed; that EPA rule interpretations threaten reliability

and efficiency investments; and that the current program results in procedural delays,

disincentives to innovate, and increases in burden. The commenter endorsed proposals that

industry has crafted as the preferable approach to defining a basic NSR scheme, including the

Utility Air Regulatory Group, PAL, and complex manufacturing proposals as a basis to start

serious discussions between the EPA, industry, and other stakeholders. 

One commenter (IV-D-418) expressed concern that the existing NSR standards must not

be relaxed. They explained that upwind emission sources to their State have extended the useful

lives of their outdated facilities in violation of the NSR standards. They explained that, because

of this, there has been continued adverse impacts on human health and damage to irreplaceable

forests and lakes of downwind areas. They also expressed that the international effort to address

greenhouse gas emissions and global climate change would result in economic advantages for

those nations and corporations that position themselves well for the future and concomitant

disadvantages for those nations and corporations that are the last to adapt. They stated that they

would be interested in working with the EPA to help create a “four-pollutant” federal approach

that includes a market-based trading mechanism for carbon dioxide. 

One commenter (IV-D-414) expressed that they were disappointed with the substance of

the NSR reform version moving forward in 2001. The commenter expressed that the package

contains some improvements, such as PALs, but other elements of the package deviate from the

proposal or, were not proposed. It was expressed that they wanted the EPA to share the actual

regulatory language on PALs before the rule is transmitted to OMB. They emphasized that they

support the need for ongoing emissions reductions and NSR reform and remain committed to

work with the EPA and other stakeholders to develop a reform rule that implements the CAA’s

requirements and simplifies the NSR process, but that the package briefing they had on

December 18th failed to meet this goal.

Two comment letters (IV-D-422, 424), representing numerous environmental groups,

charged that they understood the EPA was considering issuing several final rules with significant

changes to the CAA’s NSR program without a rulemaking proposal. The commenter stated that

they believed this course of action would be illegal and irresponsible. They went on to cite

section 307(d) of the CAA, which requires that the EPA base rules on a record developed under a

notice of proposed rulemaking that must include a summary of the factual data on which the rule

is based, the methodologies used to obtain and analyze that data, and the major legal

interpretations and policy considerations underlying the proposed rule. They also discussed the
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II-7-6

benefits of the NSR program and enforcement actions against dozens of power plants and

refineries accused of violating existing NSR regulations. 

One comment letter (IV-D-425) from numerous States voiced concern that the EPA was

considering adopting final amendments to its NSR rules without sufficient consultation with

State and local agencies, which are responsible for implementing the rules. The commenter

explained that additional flexibility in NSR rules must be considered only in conjunction with a

broader approach to the adoption of additional controls to achieve compliance with all NAAQS,

PSD provisions, and regional haze requirements. They stated that they cannot fulfill their

responsibility for developing emissions controls sufficient to provide their citizens with healthful

air quality and clear vistas without strong federal support in requiring the most up-to-date clean

air technology. They encouraged the EPA to work more closely with State and local agencies as

they develop new approaches to deal with energy and environmental problems, enforce existing

requirements, and balance any new proposals by the enactment of a strong multi-pollutant law.

One comment letter (IV-D-426) from many States expressed that it was their view that

moving forward on NSR amendments without a proposal would be illegal. They expressed that

they were troubled to learn that moving forward to loosen NSR requirements even though the

EPA has not yet conducted a full review of the air quality and public health impacts. They

requested that the EPA commit to conducting a full review of the impacts of any regulatory

changes, independent of any EPA legislative initiative, before taking final regulatory action.

One comment letter (IV-D-428) from numerous non-profit organizations stated that they

were alarmed and concerned over the reported Administration and EPA proposal to essentially

gut the NSR program, which is the core CAA program protecting public health, visibility, and

the environment from life-threatening pollution. The commenter expressed that if the reported

proposal is adopted, it is unlikely that areas that do not meet current health-based air quality

standards will come into compliance and will certainly worsen other areas into noncompliance. 

They explained that the EPA has long promised that any changes to the NSR program would not

decrease either environmental protections or public participation, and now the EPA is on the

verge of essentially gutting NSR’s public health protections by allowing industry to significantly

increase pollution. They continued by asking the EPA a lot of questions regarding a multitude of

adverse impacts that might result due to the reported proposal. They provided examples of

instances where pollution increases could occur. 

One commenter (IV-D-430) stated they were deeply concerned that the Bush

Administration is on the verge of weakening the CAA’s NSR program. They asked that the EPA

Administrator stand with the many State and local air regulators across the country that have

taken a stand against the NSR rollbacks to protect the public health, and not the big polluters, by

refusing to sign any measure or support effort that would weaken the NSR program.
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One comment letter (IV-D-435) outlined information in undisclosed EPA documents. 

Based on this information, the commenter stated that the Bush Administration plans to

undermine the CAA NSR provisions. The commenter requested that the EPA’s Administrator

Christine Whitman publicly repudiate the proposed rollbacks and refuse to sign any rule changes

that would weaken important safeguards. The commenter stated that the undisclosed documents

outline plans that would result in significant pollution increases at industrial facilities as they

would allow a facility to pick a fictional pollution baseline that is worse than its actual pollution

levels, essentially allowing the facility to pollute more and pretend it is not. The commenter also

stated that the documents revealed plans to create a new loophole from the NSR requirements by

allowing for a “Clean Unit” exemption, which would allow significant increases in harmful air

pollution to escape cleanup under today’s NSR rules. The commenter went on to state that the

EPA was planning to adopt a PAL concept that purports to be a 10-year “cap” on pollution

covering an entire facility. Using this approach, facilities could lock in excessive pollution levels

with no requirements for those levels to decline and avoid cleanup under NSR for 10 years and

beyond.

 A letter from a number of Congressional representatives (IV-D-438) urged

Administrator Whitman not to relax the NSR rules. 

One comment letter (IV-D-441) from a number of environmental groups were concerned

that EPA would substantially weaken the NSR program such that significant increases in

pollution would occur. The commenter (IV-D-441) was also concerned that the new rules would

result in less public participation. Finally, the commenter (IV-D-441) asked whether EPA had

evaluated the impact of the rules on air quality in New York, specifically new ozone and fine

particulate matter standards.

Response:

We have not taken final action on our proposed regulations concerning top-down BACT.

We do not agree with the commenters that the final regulations will increase emissions. 

We believe that our final rules will add new incentives to States’ NSR programs for reducing

emissions and eliminate existing disincentives to maintain higher levels of emissions. For

example, under a PAL, a facility would accept strict plantwide emissions caps and then may

choose where to apply the most cost effective controls (achieving the highest possible emission

reductions for the lowest cost). Morever, facilities with PALs will have a strong incentive to

keep actual emissions well below their caps in order to maximize operational flexibility under

the cap. Under the Clean Unit Test, a facility is encouraged to install state-of-the-art emission

controls. We believe many who would not otherwise be subject to the modification provisions

will install controls to gain the added flexibility under PALs and the Clean Unit test. Moreover,

our final regulations provide increased opportunity for public review and comment of proposed

permit actions. Permits issued under the final rules will be protective of public health.
7 - Late G eneral Co mm ents on NSR R eform

II-7-8

Therefore, we do not expect the new regulations to result in added air quality or public health

problems. 

We disagree with the commenters that stakeholders have not been involved in the

development of these final regulations. We have been involved in an extensive stakeholder

process in an effort to reform the existing NSR regulations for over 10 years. There has been

general agreement among most of these stakeholders that the regulations can and should be

improved. The final NSR rules that we hope to finalize in the near future are the product of this

decade-long effort. In 1992, we empaneled a FACA for the sole purpose of investigating whether

NSR could be improved and, if so, how. After nearly 4 years of extensive consultation and hard

work, we published a proposed rule addressing many of the ideas developed during this multiyear effort. Between the 1996 proposal and January 2001, we held two public hearings and more

than 50 meetings with a variety of stakeholders including environmental groups, industry, and

state, local and federal agency representatives. Over 600 detailed comments have been

submitted to EPA between 1992 and 2001. 

In response to the President’s recent request for EPA's review of the NSR program, we 

met with more than 100 groups, held four public meetings around the country, and received

more than 130,000 written comments. Moreover, over the years, we have seldom turned down a

request to meet with any stakeholder group that wishes to discuss improving NSR.

Regarding commenter IV-D-435's submittal of undisclosed EPA documents, we believe

that intra-agency discussions and correspondence are internal and non-discoverable. We have

developed changes in part based on discussions between various EPA offices. Our policy and

legal justification for our proposed and final rules will be established when the packages are

finalized. All information which we rely in formulating our rules will be included in the public

docket prior to publication of the rules.

7.6 Other Comments

Comment:

One environmental commenter (IV-D-439) submitted an analysis showing that the

benefits of NSR are 7 to 10 times greater than the costs. The commenter (IV-D-439) asserted

that EPA is proceeding to recommend a major regulatory change without any cost/benefit

analysis. 

Response:

As previously stated, under Executive Order 12866, (58 FR 51735, October 4, 1993) the

Agency must determine whether regulatory actions are "significant" and therefore subject to

OMB review and the requirements of the Executive Order. The Office of Management and
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Budget has determined that the final rule is significant for novel policy reasons but not for

economic reasons. As such, under Executive Order 12866 we are not required to do a

regulatory impact analysis. Nonetheless, we maintain that the changes to the NSR program

included in the final rule are aimed at creating incentives for companies to reduce emissions, to

promote greater certainty for regulated sources, and to improve overall environmental

compliance without sacrificing air quality.

Comment:

One commenter (IV-D-440) requested that EPA decouple NSR and multi-pollutant

issues. The commenter (IV-D-440) also requested that EPA prepare a report addressing NSR

issues facing facilities, as well as possible solutions for those issues. The report should include

routine maintenance and repair, exclusions for projects that save energy or raw materials or are

associated with fuel switching, an emissions test that more accurately reflects actual emissions

increases, non-aggregation policy, and debottlenecking. The commenter also requested an

alternative market-based PAL for emissions associated with an entire facility. 

Response:

We have promulgated final changes to the major NSR regulations, independently of final

action on multi-pollutant issues. We continue to believe that both programs are necessary to

meet long-term environmental goals. You’ll find information about our Clear Skies multipollutant initiative at http://www.epa.gov/clearskies/. Information about the NSR program can

be found at http://www.epa.gov/air/nsr-review/.

We have promulgated provisions for PALs that will provide the owners or operators of

major stationary sources with the ability to manage facility wide emissions without triggering

NSR. In addition, we will soon be proposing regulations concerning routine maintenance and

repair. As we announced on our website on June 13, 2002, we expect to propose regulations

addressing non-aggregation and debottlenecking. 
Appendix A. Public Commenters
A-1

Table 1. Public Comments Received During the Comment Period

Item Number in

Docket A-90-37

Commenter and Affiliation Date of Document

IV-D-01 Letter from Tiffany J. Elliot, Milbank, Tweed, Hadley & McCloy, 

Washington, DC

06-07-96

IV-D-02 Letter from Jackie L. Waynick, Manager, Technical Services Program, Tennessee Air

Pollution Control, Nashville, TN

08-28-96

IV-D-03 Letter from Martin W. Ledwitz, Senior Regional Air Quality

Representative, Southern California Edison, Rosemead, CA

09-16-96

IV-D-04 Letter from Eileen Gauna, Associate Professor of Law, Southwestern University School

of Law, Los Angeles, CA

09-16-96

IV-D-05 Letter from Rasma I. Zvaners, Associates Director, Air Issue, 

Chemical Manufacturers Association, Arlington, VA

10-03-96

IV-D-06 Letter from Dana K. Mount, P.E., Director, Division Environmental Engineering,

Bismarck, ND

10-04-96

IV-D-07 Letter S.M. Price, Manager, Environmental Protection, Environmental Integration, Flour

Daniel Hanford, Inc., Richland, WA

10-15-96

IV-D-08 Letter from Larry F. Runyan, Director of Manufacturing Servicing,

American Furniture Manufacturers Association, High Point, NC

10-17-96

IV-D-09 Letter from Thomas X. White, Associate Vice President,

Pharmaceutical Research, April 22, 1987

10-21-96

IV-D-10 Letter from Robert F. Hodanbosi, Chief

Division of Air Pollution Control, 

State of Ohio Environmental Protection Agency, 

Columbus, OH

10-17-96

IV-D-11 Letter from Gregory A. Green, Administer,

Air Quality Division, Department of Environmental Quality, 

Portland, OR

10-18-96

IV-D-12 Letter from Arthur S. Kell, New York City Toxics Project

Coordinator, New York Public Interest Research Group, New York, NY

10-18-96

IV-D-13 Letter from David W. Carr, Jr., Staff Attorney, Southern

Environmental Law Center, Charlottesville, VA

10-18-96

IV-D-14 Letter from State of New Mexico, Environmental Department, Air

Pollution Control Bureau, Santa Fe, NM

10-18-96

IV-D-15 Letter from Patrick J. Cafferty, Jr., Munger, Tolles & Olson, San Francisco, CA 10-18-96

IV-D-16 Letter from Michael Wax, Deputy Director, Institute of Clean Air Companies,

Washington, DC

 10-16-96

IV-D-17 Letter from Terence Larson, Manager, HES Compliance, Health, Environment and Safety,

76 Products Company, Santa Ana, CA

 10-21-96

IV-D-18 Deleted. Item was a duplicate of item number IV-D-09 

IV-D-19 Letter from Carol B. Brown, Department of Environment, City of Chicago, Chicago, IL 10-24-96

IV-D-20 Letter from Ellen J. Garvey, Air Pollution Control Officer, Bay Area Air Quality

Management District, San Francisco, CA

10-17-96

IV-D-21 Letter from Aru Deshmukh, Environmental Specialist - Air Quality, Occidental Chemical

Corporation, Dallas, TX

10-21-96
Table 1. Public Comments Received During the Comment Period

Item Number in

Docket A-90-37

Commenter and Affiliation Date of Document

A-2

IV-D-22 Letter from Robert L. Beasley, Director, Office of Permit Assistance & Technical

Support/John M. Daniel, Jr., PE, DEE, Director, Air Division, Department of

Environmental Quality, Commonwealth of Virginia, Richmond, VA 

10-28-96

IV-D-23 Letter from Robert H. Colby, Chairman, ALAPCO Air Toxics Committee/Bliss M.

Higgins, Chairman, STAPPA Air Toxics Committee, Washington, DC

08-05-96

IV-D-24 Letter from Ellen Siegler, American Petroleum Institute, Washington, DC 09-06-96

IV-D-25 Message from Robert D. Bessette, Council of Industrial Boiler Owners, Burke, VA 09-10-96

IV-D-26 Letter from Rasma I. Zvaners, Associate Director, Air Issues, Chemical Manufacturers

Association, Arlington, VA

10-03-96

IV-D-27 Letter from Iclal Atay, Ph.D., Chief Bureau of Air Quality Engineering, Department of

Environmental Protection, State of New Jersey, Trenton, NJ

10-01-96

IV-D-28 Letter from W.T. Crenshaw, Environmental Issues Analyst, Southwestern Public Services

Company, Amarillo, TX

10-21-96

IV-D-29 Testimony on New Source Reform Proposal 09-16-96

IV-D-30 Item number deleted. Duplicate of item # IV-D-04

IV-D-31 Letter from Gregory M. Adams, Assistant Departmental Engineer, Office Engineering

Department, County Sanitation Districts of Los Angeles County, Whittier, CA 

11-13-96

IV-D-32 Letter from R.D. Pitre, OOC Chairman, Offshore Operators Committee, New Orleans, LA 11-20-96

IV-D-33 Letter from Arthur Lee, Senior Staff Environmental Engineer, Texaco Inc., Beacon, NY 11-25-96

IV-D-34 Letter from John A. Paul, Director, Regional Air Pollution Control Agency, Dayton, OH 11-22-96

IV-D-35 Michael D. Wang/Ronald R. Wilkniss, Western States Petroleum Association, Glendale,

CA 

11-25-96

IV-D-36 Letter from Thomas C. Jorling, Vice President, Environmental Affairs, International

Paper, Purchase, NY

12-04-96

IV-D-37 Letter from Gary D. Kinsey, Lead Environmental Engineer, Air Products and Chemicals,

Allentown, PA

11-27-96

IV-D-38 Letter from Paul Yaroschak, Director, Environmental Compliance and Restoration, Dept

of Navy, Washington, DC

11-26-96

IV-D-39 Letter from David T. Ellis, Vice President, Tenneco, Houston, TX 11-26-96

IV-D-40 Letter from R.W. Orchowski, Manager of Environmental Affairs, Duquesne Light,

Pittsburgh, PA

11-29-96

IV-D-41 Letter from Kelly Robinson, Chair, Demand Group, NJ Emissions Trading Working

Group, Rutgers Univ, New Brunswick, NJ

11-27-96

IV-D-42 Letter from Peter E. Jonker, Director of Governmental Affairs. Southern California Gas

Company, Los Angeles, CA

11-26-96

IV-D-43 Letter from P.T. Cavanaugh, Vice President and General Manager, Chevron, Corp.,

Washington, DC

11-27-96

IV-D-44 Letter from Peter J. Alexandro, Director, Environmental Services, Wyeth Ayerst, Pearl

River, NY

11-27-96

IV-D-45 Letter from Kevin Butt, Manager, Environmental Affairs, Toyota Motor Manufacturing

North America, Inc., Erlanger, KY 

12-02-96
Table 1. Public Comments Received During the Comment Period

Item Number in

Docket A-90-37

Commenter and Affiliation Date of Document

A-3

IV-D-46 Letter from James M. Gerek, Unit Director, Environmental Issues, Eastman Kodak

Company, Rochester, NY

12-03-96

IV-D-47 Letter from James W. Rue, Dep Secretary for Air, Recycling & Radiation Protection,

Pennsylvania Dept of Environmental Protection, Harrisburg, PA 

11-25-96

IV-D-48 Letter from Jim Brooks, Director Bureau of Air Quality, State of Maine, Department of

Environmental Protection, Augusta, ME

12-02-96

IV-D-49 Letter from Charles A. Samuels, Government Relations Counsel, Association of Home

Appliance Manufacturers, Washington, DC 

12-02-96

IV-D-50 Letter from James M. Lents, Executive Officer South Coast Air Quality Management

District, Diamond Bar, CA

11-22-96

IV-D-51 Letter from Richard T. Metcalf, Health, Safety and Environmental Affairs Coordinator,

Louisiana Mid-Continent Oil and Gas Association, Baton Rouge, LA

11-03-96

IV-D-52 Letter from Michael J. Sandusky, Acting Division Manager, Air Quality Division,

Minnesota Pollution Control Agency, St. Paul, MN

11-03-96

IV-D-53 Letter from David Sterman, Deputy Commissioner, New York State Department of

Environmental Conservation, Albany, NY

12-04-96

IV-D-54 Letter from Peter K. Velez, Manager Regulatory Affairs, Shell Offshore Inc., New

Orleans, LA

12-04-96

IV-D-55 Letter from Sarosh J.H. Manekshaw, Director, Environmental, Safety and Health Affairs,

Pennzoil Company, Houston, TX 

12-04-96

IV-D-56 Letter from W.T. Flis, Coordinator, Environmental and Safety Department, Exxon

Company, Houston, TX

12-04-96

IV-D-57 Letter from Lynn L. Bergeson & Ann Claassen, Weinberg, Bereson & Neuman,

Washington, DC

12-05-96

IV-D-58 Letter from P.R. Lorello, Director, Health, Safety, and Environmental Quality, Kennecott

Corporation, Salt Lake City, UT

12-04-96

IV-D-59 Letter from James W. Rue, Deputy Secretary, Pennsylvania Department of Environmental

Protection.

12-04-96

IV-D-60 Letter from James P. Brooks, Director, Bureau of Air Quality, Sate of Maine, Department

of Environmental Protection, Augusta, ME

12-04-96

IV-D-61 Letter from David A. Buff, Principal Engineer, KBN, Washington, DC 12-04-96

IV-D-62 Letter from John Mudge, Director, Environmental Affairs, Newmont Gold Company,

Denver, CO

12-04-96

IV-D-63 Letter from Leon Sedefian, Co-chairman, Modeling Committee, Division of Air

Resources, NESCAUM, Boston, MA 

12-04-96

IV-D-64 Letter from Ken Fischer, Director, Committee Operations, International Association of

Drilling Contractors, Houston, TX

12-04-96

IV-D-65 Letter from Bernie Paul, Technical Group Leader, Air Program, Environmental Affairs

Division & Michael Ray Smith, Attorney, Eli Lilly and Company, Indianapolis, IN 

12-04-96

IV-D-66 Letter from Alice E. Boomhower, Regulatory Services Coordinator, Amoco Corporation,

Chicago, IL 

12-04-96

IV-D-67 Letter from Jeffry Muffat, Senior Regulatory Specialist, 3M Environmental Technology

and Services, St. Paul, MN

12-03-96
Table 1. Public Comments Received During the Comment Period

Item Number in

Docket A-90-37

Commenter and Affiliation Date of Document

A-4

IV-D-68 Letter from David R. Christiansen, Environmental, Health & Safety Manager, Chemical

Lime Company, Ft. Worth, TX 

12-04-96

IV-D-69 Letter from Philip Shopodock, Tribal chairman, Forest County Potawatomi Tribe,

Crandon, WI

11-29-96

IV-D-70 Letter from Harish S. Agarwal, Professional Environmental Engineer, Bureau of Air

Radiation, Dept of Health and Environment, Topeka, KS 

11-27-96

IV-D-71 Letter from Philip A. Squair, Legislative and Regulatory Affairs, Air-Conditioning &

Refrigeration Institute, Arlington, VA

12-05-96

IV-D-72 Letter from Thomas E. Cole, Rubber Manufacturers Association, Washington, DC 12-05-96

IV-D-73 Letter from William M. Guerry, Jr. & Peter G. McHugh, Counsel to the SSINA, Collier,

Shannon, Rill & Scott, Washington, DC

12-05-96

IV-D-74 Letter from William M. Guerry, Jr. & Peter G. McHugh, Counsel to the SMA, Collier,

Shannon, Rill & Scott, Washington, DC

12-05-96

IV-D-75 Letter from Paula S. Rowe, Director, Exploration & Production, Rocky Mountain Oil &

Gas Association, Denver, CO

12-04-96

IV-D-76 Letter from Jonathan Greenberg, Director of Environmental Policy, Browning-Ferris

Industries, Washington, DC

12-05-96

IV-D-77 Letter from Brain Neville, Manager, Regulatory Affairs & John Prokop, President and

Counsel, Independent Liquid Terminals Association, Washington, DC

12-05-96

IV-D-78 Letter from William R. Beck, Environmental Health and Safety, Issues Coordinator,

Mobile Business Resources Corporation, Fairfax, VA

12-05-96

IV-D-79 Letter From John D. Cassady, Director, Environmental & Regulatory Planning, Pacific

Gas Transmission Company, Portland, OR

12-05-96

IV-D-80 Letter from Jeff C. Johnson, Assistant Environmental Manager, Minnesota Operations,

Koch Refining Company, St. Paul, MN

12-05-96

IV-D-81 Letter from Marion Lommis, Executive Director, Wyoming Mining Association,

Cheyenne, WY

12-02-96

IV-D-82 Letter from Kenneth A. Colburn, Director, Air Resources Division, Department of

Environmental Services, Concord, NH

12-02-96

IV-D-83 Letter from David L. Carlson, Director, Stationary environmental & Energy, Chrysler

Corporation, Auburn Hills, MI

10-21-96

IV-D-84 Letter from Ann Broadwell, Adams & Broadwell, South San Francisco, CA 10-16-96

IV-D-85 Letter from Leslie S. Ritts, National Environmental Development Association,

Washington, DC 

09-26-96

IV-D-86 Letter from Peter B. Briggs, Vice President, Environmental Compliance & Program, U.S.

Sugar Corporation, Clewiston, FL

12-05-96

IV-D-87 Letter from Gary D. Myers, President, The Fertilizer Institute, Washington, DC 12-05-96

IV-D-88 Letter from William M. Guerry, Jr. & Peter G. McHugh, Counsel to the Outdoor Power

Equipment Institute, Collier, Shannon, Rill & Scott, Washington, DC

12-05-96

IV-D-89 Letter from Natalie Roy, Executive Director, National Pollution Prevention Roundtable,

Washington, DC 

12-05-96

IV-D-90 Letter from Richard A. Miller, Manager, Environmental Regulatory Affairs, Northeast

Utilities System, Hartford, CT

12-04-96
Table 1. Public Comments Received During the Comment Period

Item Number in

Docket A-90-37

Commenter and Affiliation Date of Document

A-5

IV-D-91 Letter from Maria Zannes, President, Integrated Waste Services Association, Washington,

DC

12-03-96

IV-D-92 Letter from Dan Pearson, Executive Director, Texas Natural Resource Conservation

Commission, Austin, TX

12-05-96

IV-D-93 Letter from Arline M. Seeger, Executive Director, National Lime Association, Arlington,

VA

12-03-96

IV-D-94 Letter from Dorothy P. Bowers, Vice President, Environmental and Safety Policy, Merck

Co., Inc., Whitehouse Station, NJ 

12-05-96

IV-D-95 Letter from R.A. Valentinetti, Director, Air Pollution Control Division, Agency of Natural

Resources, State of Vermont, Waterbury, VT

12-05-96

IV-D-96 Letter from M Zaw-Mon, Director, Air & Radiation Management Administration,

Maryland Dept of the Environment, Baltimore, MD

12-05-96

IV-D-97 Letter from M. A. Healy, Director, Federal Environmental and Transportation Issues, The

Society of the Plastics Industry, Inc., Washington, DC

12-05-96

IV-D-98 Letter from D.G. Ellison, Manager Environmental Engineering, American National Can

Company 

12-05-96

IV-D-99 Letter from T. Ewing, Manager, Environmental Affairs, Greater Cincinnati Chamber of

Commerce, Cincinnati, OH

12-05-96

IV-D-100 Letter from R. Gow, Manager, Environmental Affairs, Questar Corporation, Salt Lake,

UT 

12-03-96

IV-D-101 Letter from R.S. Price, Leader, Environment Center of Excellence, Allied Signal,

Morristown, NJ 

12-03-96

IV-D-102 Letter from D. Stirpe, Executive Director, Alliance for Responsible Atmospheric Policy,

Arlington, VA

12-16-96

IV-D-103 Letter from M.P. Steinberg, Air Quality Manager, North American Consumer Products,

Safety & Environmental Affairs Division, S.C. Johnson & Son, Inc., Racine, WI

12-03-96

IV-D-104 Letter from M.H. Levin, Senior Partner, McGuire, Woods, Battle & Boothe, Washington,

DC

12-17-96

IV-D-105 Letter from M.E. Payne, Atlantic Richfield Company, Los Angeles, CA 12-19-96

IV-D-106 Letter from F.A. Sembach, Vice President, Government Affairs, Pennsylvania Chamber,

Harrisburg, PA

12-20-96

IV-D-107 Comments of the Electric Power Supply Association 12-23-96

IV-D-108 Letter from M.J. Carroll of Latham & Watkins, Attorneys at Law, Washington, DC 12-20-96

IV-D-109 Letter from D. Quetin, Air Pollution Control Officer, Unified Air Pollution Control

District, Monterey, CA

12-18-96

IV-D-110 Letter from D.T. Musselman, Senior Counsel, Cinergy Corp., Cincinnati, OH 12-30-96

IV-D-111 Letter from D.L. Carlson, Director, Stationary Environmental & Energy, Chrysler

Corporation, Auburn Hills, MI

01-02-97

IV-D-112 Letter from L.M. Pruett, Director of Environmental Services, Phelps Dodge Corporation,

Phoenix, AZ

01-02-97

IV-D-113 Letter from D. L. Johnston, Chief of the Printing and Coating Section, Bureau of Air

Management, State of Wisconsin/Department of Natural Resources, Madison, WI 

01-02-97
Table 1. Public Comments Received During the Comment Period

Item Number in

Docket A-90-37

Commenter and Affiliation Date of Document

A-6

IV-D-114 Letter from D.A. Johnson, Manager, Safety and Environmental Affairs, Williston Basin

Interstate Pipeline Company, Glendive, MT

01-02-97

IV-D-115 Letter from R. Guerrero, Texas Air Programs Team, American Electronics Association,

Plano, TX

01-06-97

IV-D-116 Letter from N.C. Klaus, Assistant Legal Counsel, Metropolitan Washington Airports

Authority, Alexandria, VA 

01-21-97

IV-D-117 Letter from A. Nugteren, Vice President for Environmental Affairs, Atlanta Chamber of

Commerce, Atlanta, GA 

01-21-97

IV-D-118 Letter from G.W. Frick, Vice President and General Counsel, American Petroleum

Institute, Washington, DC 

01-08-97

IV-D-119 Letter from M.R. Robida, Manager - Air Quality, Environmental Services Division,

American Electric Power Corporation, Columbus, OH 

12-31-96

IV-D-120 Letter from M.J. Atherton, Environmental Affairs Department, Columbia Gas System,

Reston, VA

01-10-97

IV-D-121 Letter from R.D. Bessette, Council of Industrial Boiler Owners, Burke, VA 01-13-97

IV-D-122 Letter from S.M. Ruffin, Corporate Environmental Affairs, Environmental Services

Department, South Carolina Electric & Gas Company, Columbia, SC

01-16-97

IV-D-123 Letter from R. Ellison, P.E., Environmental Protection - Air Quality, Duke Power

Company, Hunterville, NC

01-10-97

IV-D-124 Letter from K.M. Bennett, Vice President, Environment, Safety & Health, James River

Corporation, Richmond, VA

01-10-97

IV-D-125 Letter from M. Chytilo, Chief Counsel Environmental Defense Center, Santa Barbara, CA 01-06-97

IV-D-126 Letter from J.A. Miakisz, Director Environmental Regulatory Affairs, Niagara Mohawk

Power Corporation, Syracuse, NY

01-13-97

IV-D--127 Letter from J. Bach, QEP Manager, Environmental Permitting, Natural Gas Pipeline

Company of America, Lombard, IL

01-16-97

IV-D-128 Letter from A.W. Hadder, Manager, Environmental Policy & Compliance, Virginia

Power, Glen Allen, VA

01-17-97

IV-D-129 Letter from L.B. Feldcamp & S.J. Miller, Baker & Botts L.L.P., Houston, TX 01-20-97

IV-D-130 Letter from R.W. Schenker, Manager-Air Pollution Control, General Electric Company,

Fairfield, CT

01-17-97

IV-D-131 Letter from D. Gustafson, Env. And Health Regulatory Affairs, & T. Threet, Legal

Department, The Dow Chemical Company, Midland, MI

01-20-97

IV-D-132 Letter from J.W. Boyd, P.E., R.E.M., President, International Carbon Black Association,

Borger, TX

01-20-97

IV-D-133 Letter from H.L. Rhodes, Director, Division of Air Resources Management, Department

of Environmental Protection, Tallahassee, FL 

01-17-97

IV-D-134 Letter from C.L. Coleman, Executive Director, California Manufacturers Association, Los

Angeles, CA

01-17-97

IV-D-135 Letter from K. Parameswaran, Senior Analyst Government Affairs, ASARCO

Incorporated, New York, NY

01-21-97

IV-D-136 Letter from R.M. Hayslip, Manager, Environmental, Land and Risk Management,

Phoenix, AZ 

01-20-97
Table 1. Public Comments Received During the Comment Period

Item Number in

Docket A-90-37

Commenter and Affiliation Date of Document

A-7

IV-D-137 Letter from J. Williams, President, STAPPA & B. Anderson, President, ALAPCO,

Washington, DC

01-16-97

IV-D-138 Letter from C.C. Wampler, Vice President/General Counsel, Virginia Manufacturers

Association, Richmond, VA

01-17-97

IV-D-139 Letter from R.F. Pelletier, Director, Office of Environmental Policy and Assistance,

Department of Energy, Washington, DC 

01-21-97

IV-D-140 Letter from M.A. Greene, Attorney at Law, Kean, Miller, Hawthorne, D’Armond,

McCowan & Jarman, L.L.P., Baton Rouge, LA

01-20-97

IV-D-141 Letter from R.D. Furiga, Deputy Assistant Secretary for Strategic Petroleum Reserve,

Department of Energy, Washington, DC

01-21-97

IV-D-142 Letter from D.J. Jezouit, Counsel to the Class of ‘85, Regulatory Response Group, Baker

& Botts, L.L.P., Washington, DC 

01-21-97

IV-D-143 Letter from D.S. Harlow, Counsel for the Utility Air Regulatory Group, Hunton &

Williams, Washington, DC 

01-21-97

IV-D-144 Letter from J.A. Hatcher of Latham & Watkins, Washington, DC 01-21-97

IV-D-145 Letter from J.M. Kennedy, Manager, Air Programs, Florida Power Corporation, St.

Petersburg, FL

01-20-97

IV-D-146 Letter from J. Henry, Attorney at Law, Porter, Wright, Morris & Arthur, Columbus, OH 01-20-97

IV-D-147 Letter from L.S. Ritts, Hogan & Hartson, L.L.P., Washington, DC 01-21-97

IV-D-148 Letter from J. Womack, Senior Corporate Counsel, ARCO, Los Angeles, CA 01-21-97

IV-D-149 Letter from B.A. Craig, Director, Natural Gas Supply Association, Washington, DC 01-21-97

IV-D-150 Letter from M.G. Wygonik, Director, Technology & Regulatory Affairs, Flexible

Packaging Association, Washington, DC 

01-21-97

IV-D-151 Letter from J. Bluestein, P.E., Director, Coalition for Gas Based Environmental Solutions,

Arlington, VA

01-21-97

IV-D-152 Letter from D. Faulkner, Program Assistant, Natural Resources Defense Council,

Washington, DC

01-21-97

IV-D-153 Letter from W.H. Lewis, Morgan, Lewis & Bockius, L.L.P., Washington, DC 01-21-97

IV-D-154 Letter from J.J. Mayhew, Assistant Vice President, Environmental & Policy Analysis

Regulatory Affairs, Chemical manufacturers Association, Arlington, VA

01-21-97

IV-D-155 Letter from J.O. Blum, Polyisocyanurate Insulation Manufacturers Association,

Washington, DC

01-21-97

IV-D-156 Letter from E. Skernolis, Director Regulatory Affairs, WMX Technologies, Inc.,

Washington, DC 

01-21-97

IV-D-157 Letter from W.F. Pederson, Jr., Shaw, Pittman, Potts & Trowbridge, Washington, DC 01-21-97

IV-D-158 Letter from R.N. Steinwurtzel & M.E. Ward, Counsel for the Association of Battery

Recyclers, Inc., Swidler & Berlin, Washington, DC

01-21-97

IV-D-159 Letter from R.A. Leiby, Jr., Vice President, Metals Operations, East Penn Manufacturing

Co., Inc., Lyon Station, PA

01-21-97

IV-D-160 Letter from E. Praschan, Regulatory Liaison Manager, American Automobile

Manufacturers Association, Washington, DC 

01-21-97
Table 1. Public Comments Received During the Comment Period

Item Number in

Docket A-90-37

Commenter and Affiliation Date of Document

A-8

IV-D-161 Letter from R.C. Kaufmann, Director of the Air Quality Program, American Forest &

Paper Association, Washington, DC 

01-21-97

IV-D-162 Letter from M.H. Levin, Senior Partner, Washington Environmental Practice, McGuire,

Woods, Battle & Boothe L.L.P., Washington, DC

01-21-97

IV-D-163 Letter from D.W. Marshall, Director, Corporate Office of Environmental Affairs,

Savannah, GA

01-21-97

IV-D-164 Letter from M. Warner, Environmental Engineer, Mercedes-Benz U.S. International, Inc.,

Tuscaloosa, AL 

01-21-97

IV-D-165 Letter from P.N. Harris, Esq., Harris Law Offices, Orange Park, FL 01-21-97

IV-D-166 Letter from R.W. Gore, Chief, Air Division, Alabama Department of Environmental

Management, Montgomery, AL 

01-21-97

IV-D-167 Letter from J.T. (Ted) Holcombe, Environmental Services, Pacific Gas and Electric

Company, San Francisco, CA

01-21-97

IV-D-168 Letter from C. Wagner, Senior Environmental Engineer, Baltimore Gas and Electric

Company, Baltimore, MD

01-21-97

IV-D-169 Letter from J.M. Loney, Manager, Environmental Management, Tennessee Valley

Authority, Knoxville, TN

01-21-97

IV-D-170 Letter from L.S. Beal, Director, Environmental Affairs, Interstate Natural Gas Association

of America, Washington, DC 

01-21-97

IV-D-171 Memo from V.L. Patton, Staff Attorney, USEPA 11-21-96

IV-D-172 Letter from C. Cowan, Assistant Commissioner, Department of Environmental Protection,

State of New Jersey 

12-04-96

IV-D-173 Letter from G. Von Bodungen, P.E., Assistant Secretary, Departmental Quality, Baton

Rouge, LA

11-20-96

IV-D-174 Letter from S. Fotis, VanNess Feldman, Attorneys at Law, Washington, DC 11-04-96

IV-D-175 Letter from D. Newsad, Air Quality Specialist, Residuals Management Technology, Inc.,

- Columbus, Dublin, OH

09-18-96

IV-D-176 Letter from R.A. Miller, Manager, Environmental Regulatory Affairs, Northeast Utilities

Service Company, Hartford, CT 

12-04-96

IV-D-177 Letter from M. Zaw-Mon, Director, Air & Radiation Management Administration,

Maryland Department of the Environment, Baltimore, MD

12-05-96

IV-D-178 Memo from L. Gueriguian, OPPE/Regulatory Information Division, USEPA 12-11-96

IV-D-179 Letter from G.M. Adams, Assistant Departmental Engineer, Office Engineering

Department, County Sanitation Districts of Los Angeles County, Whittier, CA 

07--8-96

IV-D-180 Letter from S. Hagle, Office of Air Quality, Texas Natural Resource Conservation

Commission 

12-05-96

IV-D-181 Comments from International Papers undated

IV-D-182 Letter from S.C. Fotis, VanNess Feldman, Attorneys at Law, Washington, DC 11-12-96

IV-D-183 Letter from B.C. Carmine, P.E., Manager Air Resources Division, Environmental

Department, Houston Lighting & Power, Houston, TX 

12-05-96

IV-D-184 Letter from M.M. Yamada, Director Air Quality, Environmental Resource, Northrop

Grumman Corporation, El Segundo, CA

12-03-96
Table 1. Public Comments Received During the Comment Period

Item Number in

Docket A-90-37

Commenter and Affiliation Date of Document

A-9

IV-D-185 Letter from M. Chytilo, Chief Counsel, Environmental Defense Center, Santa Barbara,

CA

01-06-97

IV-D-186 Letter from R.C. Phelps, Environmental Associate Eastman Chemical Company & D.A.

Golden, Esq., Counsel, Eastman Chemical Company, Kingsport, TN 

01-20-97

IV-D-187 Letter from B.L. Taranto, Exxon Chemical Americas, Houston, TX 01-20-97

IV-D-188 Letter from D. Gustafson, Env. And Health Regulatory Affairs/T. Threet, Legal

Department, The Dow Chemical Company, Midland, MI

01-20-97

IV-D-189 Letter from B.J. Price, Vice President, Health, Environment & Safety, Phillips Petroleum

Company, Bartlesville, OK 

01-17-97

IV-D-190 Letter from J.A. Dege, Jr., Manager, Air Programs, Dupont SHE Excellence Center,

Wilmington, DE 

01-20-97

IV-D-191 Letter from P.K. Stevens, Environmental Policy Director, Wisconsin Manufacturers &

Commerce, Madison, WI

01-17-97

IV-D-192 Letter from R.D. Randolph, Director, Department of Natural Resources, Jefferson City,

MO

01-17-97

IV-D-193 C.H. Knauss, Attorney-At-Law, Swidler & Berlin, Washington, D.C. 01-21-97

IV-D-194 L.S. Ritts, Counsel to National Environmental Development Association/Clean Air

Regulatory Project (NEDA/CARP), Washington, D.C.

01-23-98

IV-D-195 L.S. Ritts, Counsel to National Environmental Development Association/Clean Air

Regulatory Project (NEDA/CARP), Washington, D.C.

03-02-98

IV-D-196 The Clinton Administration’s Comprehensive Electricity Competition Plan 03-25-98

IV-D-197 C.L. Shaver, Chief, Air Resources Division, National Park Service, U.S. Department of

the Interior, Denver, CO 

5-27-98

IV-D-198 L.S. Ritts, Counsel to National Environmental Development Association/Clean Air

Regulatory Project (NEDA/CARP), Washington, D.C.

07-28-98

IV-D-199 H.V. Nickel & D.S. Harlow, Hunton & Williams, on behalf of the Utility Air Regulatory

Group, Washington, D.C.

07-30-98

IV-D-200 A.T. Butler, Private Citizen, via E-Mail 08-05-98

IV-D-201 P.F. Faggert, Team Leader, Environmental Regulations and Permits, Virginia Power, Glen

Allen, VA

08-07-98

IV-D-202 J.K. Miller, Manager of Environmental Affairs, Basin Electric Power Cooperative,

Bismark, NC

08-14-98

IV-D-203 J.M. Loney, Manager, Environmental Management, Tennessee Valley Authority 08-11-98

IV-D-204 P.E. Reynolds, P.E., Manager, Environmental & Plant Safety Services, Hoosier Energy,

Bloomington, IN

08-14-98

IV-D-205 C. Swartzendruber, Manager Environmental Coordination & Planning, Western

Resources, Topeka, KS

08-13-98

IV-D-206 P.V. O’Connor, Senior Attorney, Independence Mining Co., Inc., Englewood, CO 08-14-98

IV-D-207 J.M. Skradski-Spires, Interim Environmental Protection Supervisor, Nebraska Public

Power District, Columbus, NE

08-19-98

IV-D-208 Comments of the Colorado Association of Commerce and Industry, prepared by D.L.

Arfmann, Holme Roberts & Owen, Denver, CO

08-21-98
Table 1. Public Comments Received During the Comment Period

Item Number in

Docket A-90-37

Commenter and Affiliation Date of Document

A-10

IV-D-209 C.S. Means, PE, Manager of Environmental Services, Associated Electric Cooperative,

Inc. (AECI), Springfield, MO

08-18-98

IV-D-210 G.D. Myers, President, The Fertilizer Institute (TFI), Washington, DC 08-24-98

IV-D-211 A. Ginsburg, Oregon Department of Environmental Quality (ODEQ) 08-24-98

IV-D-212 C.W. Carry, Chief Engineer, General Manager and G.M. Adams, Assistant Departmental

Engineer, Office Engineering Department, County Sanitation Districts of Los Angeles

County, Whittier, CA

08-18-98

IV-D-213 D.P. Jeronimus, Minnesota Power, Duluth, MN 08-20-98

IV-D-214 M.D. Tubbs, Manager of Governmental Affairs, Association of Electric Cooperatives,

Glen Allen, VA

08-18-98

IV-D-215 D.N. Smith, Environmental Coordinator, Old Dominion Electric Cooperative, Glen Allen,

VA

08-18-98

IV-D-216 J.T. Fontaine, Emissions Reductions Trading Programs Manager, Air Resources Division,

State of New Hampshire Department of Environmantal Services (NHDES)

Concord, NH

08-20-98

IV-D-217 B.C. White, Manager, Environmental Services, Carolina Power & Light Company

(CP&L), New Hill, NC

08-20-98

IV-D-218 T.A. Elter, PE, Fabius, NY undated

IV-D-219 J.R. Carson, Staff Engineer, Inland Steel Company, East Chicago, IN 08-24-98

IV-D-220 M.G. Wygonik, Director, Technology & Regulatory Affairs, Flexible Packaging

Association (FPA), Washington, DC

10-02-98

IV-D-221 R. Gow, Manager, Environmental Affairs, Questar Corporation, Salt Lake City, UT 09-29-98

IV-D-222 C.A. James, Acting Director, Engineering and Technical Services Division, Bureau of Air

Management, Connecticut Department of Environmental Protection, Hartford, CT

09-29-98

IV-D-223 R.A. Wyman, Latham & Watkins, Los Angeles, CA 10-08-96

IV-D-224 M. Young, Director of Regulatory Affairs, Pennsylvania Coal Association, Harrisburg,

PA

07-31-98

IV-D-225 T.R. Kuhn, President, Edison Electric Institute, Washington, DC 08-04-98

IV-D-226 D.T. Musselman, Senior Counsel, Cinergy Corp., Cincinnati, OH 08-05-98

IV-D-227 T.M. Hogan, Manager, Environmental Affairs, Indianapolis Power & Light Company

(IPL), Indianapolis, IN

08-07-98

IV-D-228 M.H. Levin, McGuire Woods Battle & Boothe, LLP, New Source Review Reform

Coalition, Washington, DC

08-07-98

IV-D-229 R. Godbole, Phelps Dodge Corporation, Phoenix, AZ 08-07-98

IV-D-230 D.E. Heydlauff, Vice President, Environmental Affairs, American Electric Power (AEP),

Columbus, OH

08-10-98

IV-D-231 R.L. White, Vice President, Environmental Services, Texas Utilities (TU) Services, Inc.,

Dallas, TX

08-10-98

IV-D-232 W.J. Pardue, C.E.P., Director, Environmental Services, Florida Power Corporation, St.

Petersburg, FL

08-11-98

IV-D-233 M. Hershel, Director of Regulatory Affairs, Florida Electric Cooperatives Association,

Inc. (FECA), Tallahassee, FL

08-13-98
Table 1. Public Comments Received During the Comment Period

Item Number in

Docket A-90-37

Commenter and Affiliation Date of Document

A-11

IV-D-234 T. Clay, Environmental Director, Wisconsin Federation of Cooperatives (WFC), Madison,

WI

08-13-98

IV-D-235 D.F. Crabtree, Assistant General Manager, General Counsel, Deseret, Murray, UT 08-14-98

IV-D-236 C. Karnei, Executive Vice President and General Manager, Brazos Electric Power

Cooperative, Inc., Waco, TX

08-14-98

IV-D-237 Comments of the Utility Air Regulatory Group, submitted by J.C. Lydzinski, Geologist

Senior, Coastal Corporation, Roanoke, VA

08-14-98

IV-D-238 M.W. Schwirtz, Environmental & Fuels Resource Manager, Arizona Electric Power

Cooperative, Inc., Benson, AZ

08-17-98

IV-D-239 M. Roddy, Environmental Engineer, Seminole Electric Cooperative Incorporated, Tampa,

FL

08-18-98

IV-D-240 J.A. Vann, Jr., President and Chief Executive Officer, Alabama Electric Cooperative, Inc.,

Andalusia, AL

08-18-98

IV-D-241 D. Sogard, General Counsel, Minnkota Power Cooperative, Inc. (MPC), Grand Forks, ND 08-19-98

IV-D-242 C.D. Mitchell, Senior Vice President, Power Supply, Oglethorpe Power Corporation,

Tucker, GA

08-19-98

IV-D-243 D.R. Schregardus, Director, Ohio Environmental Protection Agency (Ohio EPA),

Columbus, OH

08-19-98

IV-D-244 T.W. Stevenson, President & CEO, Wolverine Power, Cadillac, MI 08-19-98

IV-D-245 F.R. Knutson, General Manager, Tri-State Generation and Transmission Association, Inc.,

Denver, CO

08-19-98

IV-D-246 M. Costello, P.E., Florida Department of Environmental Protection, Tallahassee, FL 08-24-98

IV-D-247 J. Reynolds, former EPA employee 08-24-98

IV-D-248 D. Shaw, Director Environmental Services, Texas Electric Cooperatives, Inc., Austin, TX undated

IV-D-249 V. Matheny, Environmental & Safety Coordinator, Central Iowa Power Cooperative

(CIPCO), Cedar Rapids, IA

undated

IV-D-250 V.D. Lajiness, Director, Environmental Legislative and Regulatory Affairs, Coastal

Corporation, Detroit, MI

10-05-98

IV-D-251 M.W. Schwirtz, Environmental & Fuels Resource Manager, Arizona Electric Power

Cooperative, Inc. (AEPCO), Benson, AZ

10-01-98

IV-D-252 J.A. Miakisz, Director Environmental Regulatory Affairs, Niagara Mohawk (NM),

Syracuse, NY

09-30-98

IV-D-253 B. Mathur, Chief, Bureau of Air, Illinois Environmental Protection Agency, Springfield,

IL

10-06-98

IV-D-254 C.C. Wampler, Vice President/General Counsel, Virginia Manufacturers Association

(VMA), Richmond, VA

10-06-98

IV-D-255 C. Johnson, Deputy Commissioner, Office of Air and Waste Management, New York

State Department of Environmental Conservation, Albany, NY

10-07-98

IV-D-256 D.L. Carlson, Director, Stationary Environmental Energy, Chrysler Corporation, Auburn

Hills, MI

10-06-98

IV-D-257 Comments of the Environmental Committee of the Ohio Electric Utility Institute,

Prepared by M.E. Born, Esq., Shumaker, Loop & Kendrick, LLP, Columbus, OH

undated
Table 1. Public Comments Received During the Comment Period

Item Number in

Docket A-90-37

Commenter and Affiliation Date of Document

A-12

IV-D-258 B. Paul, Technical Group Leader, Air Program, Environmental Affairs Division, Eli Lilly

and Company, Indianapolis, IN

10-07-98

IV-D-259 Comments of State and Territorial Air Pollution Program Administrators and Association

of Local Air Pollution Control Officials, Submitted by B. Hodanbosi, STAPPA Chair,

Permitting Committee, and J. Paul, ALAPCO Chair, NSR Committee, Washington, DC

10-08-98

IV-D-260 T.T. Cromwell, Senior Director, Air Issues, Chemical Manufacturers Association (CMA),

Arlington, VA

10-08-98

IV-D-261 A.G. Berwick, Director, The Clean Energy Group, Concord, MA 10-07-98

IV-D-262 D.K. Chamberlain, Deputy Secretary, Pennsylvania Department of Environmental

Protection, Harrisburg, PA

10-07-98

IV-D-263 Comments of the Specialty Steel Industry of North America (SSINA), submitted by J.L.

Wittenborn and C.M. Thompson, Counsel to SSINA, Collier, Shannon, Rill & Scott,

PLLC, Washington, DC

10-08-98

IV-D-264 Comments of the Clean Air Implementation Project, submitted by W.H. Lewis, Counsel,

Morgan, Lewis & Bockius, Washington, DC 

10-08-98

IV-D-265 Comments of American Forest & Paper Association, American Iron & Steel Institute,

American Petroleum Institute, Association of International Automobile Manufacturers,

and National Mining Association, submitted by W.F. Pedersen, Shaw Pittman Potts &

Trowbridge, Washington, DC

10-08-98

IV-D-266 T.X. White, Associate Vice President, Manufacturing and Quality Control, Regulatory

and Scientific Affairs, Pharmaceutical Research and Manufacturers of America (PhRMA),

Washington, DC

10-08-98

IV-D-267 V. Collins, Regulatory Services Coordinator, Environment, Health, and Safety, Amoco

Corporation, Warrenville, Il

10-07-98

IV-D-268 S.M. Ruffin, Environmental Services Department, South Carolina Electric & Gas

Company (SCE&G), Columbia, SC

10-06-98

IV-D-269 C.S. Wollums, Environmental Services, Vice President, MidAmerican Energy, Davenport,

IA

10-07-98

IV-D-270 D.W. Marshall, Corporate Director, Office of Environmental Affairs, Union Camp

Corporation, Savannah, GA

10-07-98

IV-D-271 D.P. Jeronimus, Director-Environmental Resources Department, Minnesota Power

Electric (MPE), Duluth, MN

10-08-98

IV-D-272 P.T. Cavanaugh, Vice President and General Manager, Federal Relations, Chevron

Companies, Washington, DC

10-06-98

IV-D-273 K.G. Ford, Director, Safety & Environmental Affairs, Cordant Technologies Inc., Salt

Lake City, UT

10-07-98

IV-D-274 Comments of West Virginia Chamber of Commerce, submitted by K.G. Beckett, Counsel,

Jackson & Kelly, Charleston, WV

10-07-98

IV-D-275 A.W. Hadder, Manager, Environmental Policy & Compliance, Virginia Power, Glen

Allen, VA

10-07-98

IV-D-276 W.J. Pardue, CEP, Director, Environmental Services Department, Florida Power, St.

Petersburg, FL

10-07-98

IV-D-277 J.J. Lettrich, Counsel, Aluminum Company of America (Alcoa), Pittsburgh, PA 10-07-98

IV-D-278 B.C. Carmine, PE, Manager, Air Resources Division, Environmental Department,

Houston Industries Incorporated (HII), Houston, TX

10-07-98
Table 1. Public Comments Received During the Comment Period

Item Number in

Docket A-90-37

Commenter and Affiliation Date of Document

A-13

IV-D-279 J.K. Watts, Manager of Advanced Production Technology and Regulatory Integration,

Tennessee Valley Authority (TVA), Chattanooga, TN

10-06-98

IV-D-280 M.W. Stroben, Manager, Corporate Environment, Health & Safety Technical Analysis,

Duke Energy Corporation, Charlotte, NC

10-07-98

IV-D-281 Comments of Cinergy Corporation, Cincinnati Gas & Electric Company and PSI Energy,

submitted by D.T. Musselman, Senior Counsel, Cincinnati, OH

10-07-98

IV-D-282 M.A. Gray, Manager-Environmental Services, American Electric Power (AEP),

Columbus, OH

10-07-98

IV-D-283 Comments of Wisconsin Manufacturers & Commerce (WMC), submitted by B.

Fassbender

10-08-98

IV-D-284 Comments of the Ohio Chamber of Commerce, the Ohio Chemical Council, and the

Printing Industry of Ohio, submitted by R.L. Brubaker, Counsel, Porter, Wright, Morris &

Arthur, Columbus, OH

10-08-98

IV-D-285 C.E. Scott, Chairman, Environmental Concerns Committee, North Carolina Citizens for

Business & Industry (NCCBI), Raleigh, NC

10-08-98

IV-D-286 Comments of the FirstEnergy Operating Companies, submitted by D.J. Weber, Counsel,

Porter, Wright, Morris & Arthur, Columbus, OH

10-08-98

IV-D-287 R.D. Randolph, Director, Air Pollution Control Program (APCP), Missouri Department of

Natural Resources (DNR), Jefferson City, MO

10-08-98

IV-D-288 R.L. White, Vice President, Environmental Services, Texas Utilities Services, Inc., Dallas,

TX

10-08-98

IV-D-289 R.D. Bessette, President, Council of Industrial Boiler Owners (CIBO), Burke, VA 10-08-98

IV-D-290 Comments of 29 environmental organizations, submitted by A. Weeks, Counsel, Clean

Air Task Force (CATF), Boston, MA

10-08-98

IV-D-291 Comments of 21 national and regional environmental organizations, submitted by A.B.

Weeks, Counsel, Clean Air Task Force (CATF), Boston, MA

10-08-98

IV-D-292 Comments of Champion International Corporation, submitted by B.J. Renaud, Counsel,

Howard & Howard, Bloomfield Hills, MI

10-08-98

IV-D-293 P. Bailey, Director, Health and Environmental Affairs, American Petroleum Institute

(API), Washington, DC

10-08-98

IV-D-294 Comments of the Class of ‘85 Regulatory Response Group, submitted by D.J. Jezouit,

Counsel, Baker & Botts, Washington, DC

10-08-98

IV-D-295 Comments of the Utility Air Regulatory Group (UARG), submitted by D.S. Harlow,

Counsel, Hunton & Williams, Washington, DC

10-08-98

IV-D-296 D.P. Bowers, Vice President, Environmental and Safety Policy, Merck & Co., Inc.,

Whitehouse Station, NJ

10-02-98

IV-D-297 P.R. Huard, Senior Vice President, Policy and Communications, National Association of

Manufacturers (NAM), Washington, DC

10-08-98

IV-D-298 E. Praschan, Regulatory Liaison Manager, American Automobile Manufacturers

Association (AAMA), Washington, DC

10-08-98

IV-D-299 Comments of the American Gas Association (AGA) and the Interstate Natural Gas

Association of America (INGAA), submitted by P.A. Lacey, Senior Managing Counsel,

AGA, and L.S. Beal, Director, Environmental Affairs, INGAA

10-08-98
Table 1. Public Comments Received During the Comment Period

Item Number in

Docket A-90-37

Commenter and Affiliation Date of Document

A-14

IV-D-300 R.H. Ihara, Acting Vice President, Energy Supply and Environment, Edison Electric

Institute (EEI), Washington, DC

10-08-98

IV-D-301 T.J. Norberg, Director, Environmental Affairs, Rubber Manufacturers Association

(RMA), Washington, DC

10-08-98

IV-D-302 R.W. Schenker, Manager-Air Pollution Control, General Electric Company (GE),

Fairfield, CT

10-08-98

IV-D-303 Comments of the Natural Resources Defense Council (NRDC), submitted by D. Hawkins,

Senior Attorney, Washington, DC

10-08-98

IV-D-304 S.F. Harper, Manager, Environmental, Health, and Safety Policy, Intel Corporation,

Washington, DC

10-05-98

IV-D-305 C.L. Shaver, Chief, Air Resources Division, United States Department of the Interior,

National Park Service, Denver, CO

10-08-98

IV-D-306 Comments of the Electronic Industries Alliance (EIA), submitted by J.A. Hatcher,

Counsel, Latham & Watkins, Washington, DC

10-08-98

IV-D-307 L.S. Ritts and E. Siegler, Counsel to NEDA/CARP, National Environmental Development

Association’s Clean Air Regulatory Project, Washington, DC

10-08-98

IV-D-308 T.A. Danjczek, President, Steel Manufacturers Association, Washington, DC 10-08-98

IV-D-309 L.R. Lemke, CAE, Executive Vice President, Georgia Mining Association (GMA),

Morrow, GA

10-07-98

IV-D-310 Comments of Phelps Dodge Corporation, submitted by T.W. Rallison, Counsel, Gallagher

& Kennedy, Phoenix, AZ

10-08-98

IV-D-311 A. Gates, Reynolds Metals Company undated

IV-D-312 J. Durrett, Vice President for Environmental Affairs, Metro Atlanta Chamber of

Commerce, Atlanta, GA

10-08-98

IV-D-313 J.A. Dege, Jr., Director-Air Programs, EI DuPont de Nemours, Inc. (DuPont),

Wilmington, DE

10-08-98

IV-D-314 J.L. Chavez, Representative, Environmental Affairs, Grocery Manufacturers of America

(GMA), Washington, DC

10-08-98

IV-D-315 J.C. Shih, PE, Manager, Environmental Affairs, Navistar International Transportation

Corp.

10-06-98

IV-D-316 G. Van Helvoirt, Wisconsin Public Service Corporation (WPSC) undated

IV-D-317 A.M. Foss, Major Facility, Operations and Planning Section Manager, North District,

Minnesota Pollution Control Agency (MPCA), St. Paul, MN

10-01-98

IV-D-318 E.R. Hennen, Director, Environmental Affairs, Dairyland Power Cooperative, La Crosse,

WI

10-07-98

IV-D-319 S.D. Matchett, Senior Counsel, Environmental, Fort James Corporation, Richmond, VA 10-08-98

IV-D-320 D. Yanochko, State of Michigan, Department of Environmental Quality, to OAR. 

Response to request for comments on July 24, 1998 Federal Register Notice of

Availability regarding Alternatives to New Source Review Applicability for Major

Modifications. 

2 pp.

September 21, 199
Table 1. Public Comments Received During the Comment Period

Item Number in

Docket A-90-37

Commenter and Affiliation Date of Document

A-15

IV-D-321 E-mail. K. Winborn, Trinity Consultants, (for Koch Refining Company, L.P.), to M.

Sewell and 

D. Solomon, EPA:ITPID. Response to request for comments on July 24, 1998 Federal

Register Notice of Availability regarding Alternatives to New Source Review

Applicability for Major Modifications. 9 pp.

October 8, 1998

IV-D-322 J. Vick, Florida Electric Power Coordinating Group, Inc., to 

D. Solomon, EPA:ITPID. Response to request for comments on 

July 24, 1998 Federal Register Notice of Availability regarding Alternatives to New

Source Review Applicability for Major Modifications. 6 pp. 

October 7, 1998

IV-D-323 F. Stokes, Ohio Valley Electric Corp., to OAR. Response to request for comments on

July 24, 1998 Federal Register Notice of Availability regarding Alternatives to New

Source Review Applicability for Major Modifications. 

2 pp. 

October 8, 1998

IV-D-324 M. Fox, New Century Energies, to OAR. Late received response to request for comments

on July 24, 1998 Federal Register Notice of Availability regarding Alternatives to New

Source Review Applicability for Major Modifications. 

5 pp.

October 8, 1998

IV-D-325 W. Jones, to C. Browner, EPA:OAR. Project for an Energy Efficient Florida. Late

response to request for comments on July 24, 1998 Federal Register Notice of Availability

regarding Alternatives to New Source Review Applicability for Major Modifications. 

1 p. 

October 8, 1998

IV-D-326 B. Wallerstein, South Coast Air Quality Management District, to D. Howekamp,

EPA:Office of the Director. Announcement and agenda for August 4, 1998 meeting

among EPA, ARB, Coalition for Clean Air, California Manufacturers Association, and

Small Business Coalition concerning the AQMD’s implementation of BACT/LAER in

San Francisco, California. 4 pp. 

July 30, 1998

IV-D-327 A. Weeks, Clean Air Task Force, to Administrator, EPA. Alternatives for New Source

Review (NSR) applicability in nonattainment and PSD areas. 4 pp.

October 8, 1998

IV-D-328 C. Goodman, Southern Company, to R. Perciasepe, EPA:OAR. Request seeking

reconsideration. Discussion and examples of NSR reforms that might discourage “energy

efficiency” projects, provided by the Utility Air Regulatory Group in response to an EPA

request for examples during the September 30, 1998 meeting. 3 pp.

October 19, 1998

IV-D-392 C. Oren, Rutgers University, to 

D. Crumpler, EPA:OAQPS. E-mail regarding questions about the “notice of availability.” 

2 pp.

July 27, 1998

IV-D-393 D. Hawkins, NRDC, to D. Crumpler, EPA:OAQPS. E-mail regarding the WEPCO

litigation stakeholders meeting. 1 pp.

August 27, 1998

IV-G-01 Letter from B.S. Carhart, Executive Director, Ozone Transport Commission, Washington,

DC

01-22-97

IV-G-02 Letter from B. Mathur, Chief, Bureau of Air, Environmental Protection Agency, State of

Illinois, Springfield, IL

01-17-97

IV-G-03 Letter from W.H. Crouch, Manager, Engineering Services, Old Dominion Electric

Cooperative, Glen Allen, VA

01-21-97

IV-G-04 Letter from J.T. (Ted) Holcombe, Pacific Gas and Electric Company, San Francisco, CA 01-21-97

IV-G-05 Letter from N.J. Carman, PhD, Clean Air Program, Lone Star Sierra Club, Austin, TX 01-21-97

IV-G-06 Letter from R.W. Gore, Chief, Air Division, Alabama Department of Environmental

Management, Montgomery, AL

01-21-97
Table 1. Public Comments Received During the Comment Period

Item Number in

Docket A-90-37

Commenter and Affiliation Date of Document

A-16

IV-G-07 Letter from L.D. Byrum, Director, Air Quality Division, Department of Environmental

Quality, State of Oklahoma, Oklahoma, OK

01-21-97

IV-G-08 Letter from A. Bryant, Director, Watershed and Air Staff, U..S. Department Of

Agriculture, Washington, DC

01-21-97

IV-G-09 Letter from W.H. Crouch, Manager, Engineering Services, Old Dominion Electric

Cooperative, Glen Allen, VA

01-21-97

IV-G-10 Letter from H.R. Siebert, Jr., Vice President, Resources, Environment and Regulatory

Policy, National Association of Manufacturers, Washington, DC

01-23-97

IV-G-11 Letter from B.A. Kwetz, Director, Division of Air Quality Control, Department of

Environmental Protection, Commonwealth of Massachusetts, Boston, MA

01-24-97

IV-G-12 Letter from S.K. Rieff, Deputy Chief of Staff, Department of Interior, Washington, DC 01-28-97

IV-G-13 Letter from P.N. Harris, Esq., Harris Law Offices, Orange Park, FL 01-21-97

IV-G-14 Letter from Deborah Faulkner, Program Assistant, Natural Resources Defense Council,

Washington, DC

01-21-97

IV-G-15 Letter from Barbara A. Kwetz, Director, Division of Air Quality Control, The

Commonwealth of Massachusetts, Department of Environmental Protection, Boston, MA

01-24-97

IV-G-16 Letter from R.D. Furiga, Deputy Assistant Secretary for Strategic Petroleum Reserve,

Department of Energy, Washington, DC

01-21-97

IV-G-17 Letter from G.W. Frick, VP and General Counsel, American Petroleum Institute,

Washington, DC

01-08-97

IV-G-18 Letter from Sherri W. Goodman, Deputy Under Secretary of Defense, Washington, DC 03-22-97

IV-G-19 Letter from Robert Ellison, Duke Power Company, Environmental Protection - Air

Quality, Huntersville, NC

01-10-97

IV-G-20 Letter from Glenn H. Heilman, Vice President, Heilman Pavemnet Specialist, Inc., Sarver,

PA

4-09-97

IV-G-21 L.E. Solomita, Environmental Regulatory Services Engineer, Cytec Industries Inc.,

Wallingford, CT

10-6-98

IV-G-22 F.L. Stokes, Chief--Production and Environmental Engineering, Ohio Valley Electric

Corporation, Piketon, OH

10-08-98

IV-G-23 N.J. Norem, Senior Engineer, Public Service Company of New Mexico (PNM),

Albuquerque, NM

10-06-98

IV-G-24 J.O. Vick, Chairman, FCG Environmental Committee, Florida Electric Power

Coordinating Group, Inc., Tampa, FL

10-07-98
A-17

Table 2. Public Comments Received After the Comment Period

Item Number in

Docket A-90-37

Commenter and Affiliation Date of Document

IV-D-334 D. Wylie, Mississippi Department of Environmental Quality, to R. Perciasepe, EPA:OAR. 

Comments on the proposed changes to the New Source Review (NSR) regulations. 2 pp.

July 16, 1999

IV-D-335 J.M. Daniel, Virginia Department of Environmental Quality, to J. Seitz, EPA: OAQPS. 

Comments urging continued discussions with industry groups and states on New Source

Review (NSR). 5 pp.

July 29, 1999

IV-D-336 E. Hurley, Smurfit-Stone, to R. Perciasepe, EPA:OAR. Follow up to recent conversation

discussing some concerns of the forest products industry regarding the Clean Air Act New

Source Review program and PSD/NSR reform efforts. 2 pp.

August 12, 1999

IV-D-337 M.E. Burg, State of Washington Department of Ecology, to R. Perciasepe, EPA:OAR. 

Comments supporting the EPA’s efforts to reform the New Source Review (NSR)

process. 1 p.

August 18, 1999

IV-D-338 A.E. Smith, NiSource, to R. Perciasepe, EPA:OAR. Comments supporting utilities

suggestion of an integrated approach for New Source Review (NSR). 1 p.

August 20, 1999

IV-D-339 S. Windom, State of Alabama, to R. Perciasepe, EPA:OAR. Comments supporting

revisions to Clean Air Act’s New Source Review (NSR) program. 

2 pp.

August 30, 1999

IV-D-340 R. Marquez, Texas Natural Resource Conservation Commission, to R. Perciasepe,

EPA:OAR. Comments regarding the New Source Review (NSR) reform effort. 1 p.

September 1, 1999

IV-D-341 P. Raher, Hogan & Hartson L.L.P, to J. Seitz, EPA: OAQPS. PAL Group Response to

EPA’s Questions Concerning the Group’s May 17, 1999 NSR Reform Proposal. 19 pp.

September 7, 1999

IV-D-342 M. Hall, Trigen Energy Corporation, to B. Harnett, EPA: OAQPS. Comments regarding

the cap alternative to New Source Review (NSR). 3 pp.

October 6, 1999

IV-D-343 H. Nickel, Hunton & Williams, to J. Seitz, EPA: OAQPS. “Utility Air Regulatory Group”

Response to EPA’s Questions Concerning the Group’s September 10, 1999 NSR Reform

Proposal. 629 pp.

October 8, 1999

IV-D-344 C. Knauss, Air Permitting Forum, to J. Seitz and W. Harnett, EPA: OAQPS. “Complex

Manufacturing Group” Response to EPA’s Questions Concerning the Group’s May 11,

1999 NSR Reform Proposal. 16 pp.

October 11, 1999

IV-D-345 W. Tyndall, Cinergy Corp., to R. Perciasepe, EPA:OAR. Proposal to Streamline New

Source Review in SIP Call States. 27 pp.

December 8, 1998

IV-D-346 A. Berwick, The Clean Energy Group, to L. Wegman, EPA:OAQPS. Follow-up letter

after Feb. 2-3, 1999 stakeholder meeting on NSR reform. 2 pp.

February 24, 1999

IV-D-347 C. Knauss et al, Air Permitting Forum, to J. Paul and W. O’Sullivan, STAPPA/ALAPCO. 

Complex Manufacturer’s proposal for NSR reform titled “Alternative NSR Approach for

Complex Manufacturers.” 6 pp.

May 11, 1999

IV-D-348 C. Knauss et al, Air Permitting Forum, to J. Paul and W. O’Sullivan, STAPPA/ALAPCO. 

Response to STAPPA/ALAPCO’s comments on the Complex Manufacturer’s May 11,

1999 proposal for NSR reform. 3 pp.

June 16, 1999

IV-D-349 P. Raher, Hogan & Hartson LLP, to J. Seitz, EPA:OAQPS. Response to

STAPPA/ALAPCO’s comments on the PAL Group’s April 1999 draft proposal for NSR

reform. 3 pp.

June 18, 1999

IV-D-350 L. Ritts, Hogan & Hartson LLP, to R. Rodriguez, EPA:OAR. NEDA/CARP’s request for

a 1-hour meeting with R. Perciasepe to discuss NSR reform. 2 pp.

June 30, 1999
Table 2. Public Comments Received After the Comment Period

Item Number in

Docket A-90-37

Commenter and Affiliation Date of Document

A-18

IV-D-351 B. Mikulski, U.S. Senator, to R. Perciasepe, EPA:OAR. Letter conveying industry

concerns regarding NSR program, and request to consider State and industry proposals. 1

p.

July 13, 1999

IV-D-352 J. Seif, Pennsylvania DEP, to R. Perciasepe, EPA:OAR. Letter requesting EPA to

continue considering options for NSR reform. 3 pp.

August 27, 1999

IV-D-353 S. Hammett, Alabama House of Representatives, to R. Perciasepe, EPA: OAR. Request

to delay finalization of NSR reform and continue dialogue with State agencies. 3 pp.

August 31, 1999

IV-D-354 R. Marquez, Texas NRCC, to R. Perciasepe, EPA:OAR. Request to offer stakeholders

additional time to refine NSR reform proposals. 2 pp.

September 1, 1999

IV-D-355 J. Turner, U.S. House of Representatives, to R. Perciasepe, EPA:OAR. Request for EPA

to continue to communicate with States and industry regarding NSR reform. 1 p.

September 1, 1999

IV-D-356 S. Windom, State of Alabama, to R. Perciasepe, EPA:OAR. Request to delay finalization

of NSR reform and continue dialogue with State agencies. 2 pp.

September 15, 1999

IV-D-357 M. Bradley, The Clean Energy Group to K. Blanchard, EPA:OAQPS. Integrated Air

Quality Strategy for the Power Generation Industry. 3 pp.

September 20, 1999

IV-D-358 J. Bluestein, IPP to EPA. Presentation on “An Emissions Cap Alternative to New Source

Review.” 19 pp.

September 27, 1999

IV-D-359 D. Siegelman, State of Alabama, to R. Perciasepe, EPA:OAR. Request to delay

finalization of NSR reform and continue dialogue with State agencies. 1 p.

September 30, 1999

IV-D-360 M. Bradley, The Clean Energy Group, to J. Seitz, EPA:OAQPS. Response to questions

raised at the Group’s meeting with EPA on September 30, 1999. 8 pp.

November 10, 1999

IV-D-361 T. Jensen, Troutman Sanders LLP, to R. Ballentine, Deputy Asst. to the President for Env.

Initiatives. Letter expressing serious concern about EPA’s recent NSR enforcement

action. 1 p.

November 12, 1999

IV-D-362 D. McCurron, United Brotherhood of Carpenters and Joiners of America and B. Young,

PACE Int’l Union, to W. Clinton, U.S. President. Letter expressing concern over

employment impacts resulting from several major rulemakings including NSR. 3 pp.

December 14, 1999

IV-D-363 D. Hawkins, NRDC to W. Harnett, EPA:OAQPS. Copy of NRDC paper sent to

STAPPA/ALAPCO titled “Outline of Critical “NSR Reform” Elements.” 3 pp.

January 4, 2000

IV-D-364 L. Church, Electric Power Supply Association, to Docket No. A-90-37. Comments on

NSR issues following the January 13, 2000 stakeholder meeting on sector-based

approach. 5 pp.

February 3, 2000

IV-D-365 T. Jorling, State of New York Department of Environmental Conservation, to W. Reilly,

EPA: Administrator. Comments on revisions to BACT requirements. 1 p.

November 18, 1992

IV-D-366 P. Hamlin, State of Iowa Department of Natural Resources, to C. Browner,

EPA: Administrator. Comments on Prevention of Significant Deterioration (PSD)

permitting process. 2 pp.

August 3, 1998

IV-D-367 H. Nickel, Hunton & Williams, to J. Seitz, EPA: OAQPS. A memorandum outlining

UARG’s proposal for NSR reform titled “Achieving New Source Emission Reductions

from Existing Electric Generating Unit -- Proposed Program of the Utility Air Regulatory

Group.” 6 pp.

April 29, 1999

IV-D-368 P. Hamlin, State of Iowa Department of Natural Resources, to D. Shephard, National Park

Service. Comments on Prevention of Significant Deterioration (PSD) permitting process. 

2 pp.

May 7, 1999
Table 2. Public Comments Received After the Comment Period

Item Number in

Docket A-90-37

Commenter and Affiliation Date of Document

A-19

IV-D-369 R. Varney, State of New Hampshire Department of Environmental Services, to C.

Browner, EPA: Administrator. Comments and regarding Plantwide Applicability Limits

(PAL). 3 pp.

May 26, 1999

IV-D-370 J. Fontaine, State of New Hampshire Department of Environmental Services, to J. Seitz,

EPA: OAQPS. Comments on three industry proposals developed to revise the New

Source Review (NSR) program. 3 pp.

June 8, 1999

IV-D-371 P. Raher, Hogan & Hartson, to A. Wood, EPA: OPAR and M. Sewell, EPA: OAQPS. 

PAL issue paper titled “Outline for a Regulatory Structure for PAL Permits.” 11 pp.

December 2, 1999

IV-D-372 B. Pedersen, Shaw Pittman, to J. Devine, EPA: OGC. Comment concerning justification

for Clean Units that can be used as a legal defense. 1 p.

February 11, 2000

IV-D-373 R. Smith, Private citizen., to W. Reilly, EPA:Administrator. Letter stating concerns

regarding revisions to the nation’s clean air laws. 4 pp.

October 28, 1992

IV-D-374 D. Hawkins, Natural Resources Defense Council, to W. Reilly, EPA:Administrator. 

Letter stating concerns regarding possible revisions to the BACT requirements. 3 pp.

November 13, 1992

IV-D-375 BACT Revisions Rolled Into New Source Review Debate. Clean Air Permits. Thompson

Publishing Group, Inc. February 1993. 2 pp.

February 1993

IV-D-376 C. Knauss et al, Complex Manufaturer’s Group, to W. Harnett, EPA:OAQPS and J. Seitz,

EPA:OAQPS. Letter to explain the elements of industry’s proposal to reform the basic

NSR program. 10 pp.

October 19, 1999

IV-D-377 J. Cooper, Alliance of Automobile Manufacturers, to R. Perciasepe, EPA:OAR. Letter

suggesting additional meetings to discuss the NSR rulemaking package. 2 pp.

February 8, 2000

IV-D-378 J. O’Hanlon, Dominion Generation, to R. Perciasepe, EPA: OAR. Letter stating support

for the development of an alternative approach for compliance and requesting the delay of

promulgation of the NSR regulations. 1 pp.

February 15, 2000

IV-D-379 W. O’Sullivan, STAPPA, and J. Paul, ALAPCO, to J. Seitz, EPA:OAQPS. Letter

reiterating the associations’ top priorities on the agency’s 1996 base proposal and the

industry proposals for NSR reform. 4 pp.

March 14, 2000

IV-D-380 C. Shaver, National Park Service, and S. Silva, Fish and Wildlife Service, to U.S. EPA,

Air Docket. Comments on the utility sector’s proposed alternative approaches regarding

applicability of New Source Review permitting requirements to modifications of existing

utility sources. 4 pp.

March 20, 2000

IV-D-381 L. Thorvig, Minnesota Pollution Control Agency, to R. Perciasepe, EPA:OAR. Letter

presenting views on New Source Review Reform. 2 pp.

July 12, 1999

IV-D-382 L. Ritts and E. Siegler, Council to NEDA/CARP, to J. Bunyak, National Park Service (cc

to D. Crumpler, EPA:OAQPS). Letter presenting NEDA/CARP comments on the

Federal Land Managers’ Air Quality Related Values Workgroup (FLAG) Draft Phase I

Report. 23 pp.

February 7, 2000

IV-D-383 B. Wallerstein, South Coast Air Quality Management District, to J. Seitz, EPA:OAQPS. 

Letter further discussing EPA’s requirement for LAER and the utility of the

RACT/BACT/LAER Clearinghouse. 2 pp.

February 17, 2000

IV-D-384 R. Sussman, Latham and Watkins, to W. Harnett, EPA:OAQPS. Letter presenting

Cinergy’s comments on the NSR “offramp” for power producers outlined by EPA. 6 pp.

April 13, 2000

IV-D-385 R. Teetz, KeySpan Energy, to J. Seitz, EPA:OAQPS. Letter stating reasons KeySpan is

opposed to a NSR reform trigger based on plant age. 2 pp.

April 14, 2000
Table 2. Public Comments Received After the Comment Period

Item Number in

Docket A-90-37

Commenter and Affiliation Date of Document

A-20

IV-D-386 STAPPA and ALAPCO’s NSR Subcommittee, to B. Harnett, EPA:OAQPS and K.

Blanchard, EPA:OAQPS. Memorandum regarding STAPPA/ALAPCO’s NSR

Subcommittee’s Revised Comments on EPA’s April 6, 2000 NSR Proposals. 

2 pp.

May 1, 2000

IV-D-387 D. Harlow, Hunton and Willliams - Counsel to the Utility Air Regulatory Group, to

Docket No. A-90-37. Second supplemental comments of the Utility Air Regulatory

Group on NSR. (Note: Attachments include a videotape titled “Power Industry

Maintenance Practices and New Source Review”) 181 pp.

May 4, 2000

IV-D-388 W. O’Sullivan, New Jersey DEP, to 

K. Blanchard, EPA:OAQPS, et. al. 

E-mail response to request for comments on 2 Cap PAL approach. 3 pp.

June 19, 2000

IV-D-389 D. Hawkins, NRDC, to W. O’Sullivan, New Jersey DEP, et. al. E-mail response to

request for comments on 2 Cap PAL approach. 3 pp.

June 20, 2000

IV-D-390 J. Paul, RAPCA, to W. O’Sullivan, New Jersey DEP, et. al. E-mail response to request

for comments on 2 Cap PAL approach. 4 pp.

June 21, 2000

IV-D-391 D. Kenney, Hogan and Hartson L.L.P., to B. Harnett, EPA:OAQPS. E- mail regarding

comments on 5-year contemporaneous period for PALs and 

2 Cap PAL approach. 5 pp.

June 21, 2000

IV-D-392 C. Oren, Rutgers University, to 

D. Crumpler, EPA:OAQPS. E-mail regarding questions about the “notice of availability.” 

2 pp.

July 27, 1998

IV-D-393 D. Hawkins, NRDC, to D. Crumpler, EPA:OAQPS. E-mail regarding the WEPCO

litigation stakeholders meeting. 1 pp.

August 27, 1998

IV-D-394 S. Jelinek, ENSR Consulting and Engineering, to D. Crumpler, EPA:OAQPS. E-mail

regarding routine maintenance repair and replacement exemption under NSR. 1 pp.

September 4, 1998

IV-D-395 D. Shepard, National Park Service, to

D. Crumpler, EPA:OAQPS, et. al. Memorandum regarding NSR issues pertaining to

Class 1 areas. 20 pp.

December 4, 1998

IV-D-396 C. Knauss, Swidler Berlin Shereff Friedman, LLP., to D. Crumpler, EPA:OAQPS. 

Agenda for February 2-3, 1999 stakeholder meeting. 7 pp.

February 1, 1999

IV-D-397 R. Cordes, Minnesota Pollution Control Agency, to D. Crumpler, EPA:OAQPS. E-mail

regarding MPCA comments on new NSR proposal from February 2-3, 1999 stakeholders

meeting. 5 pp.

February 19, 1999

IV-D-398 A. Gates, Reynolds Metal Company, to D. Crumpler, EPA:OAQPS. E-mail regarding

comments on NSR revisions. 

7 pp.

May 20, 1999

IV-D-399 D. Johnston, Wisconsin DNR, to 

D. Crumpler, EPA:OAQPS. E- mail regarding questions on status of NSR. 

1 pp.

July 13, 1999

IV-D-400 C. Henagen, Squire, Sanders, & Dempsey, L.L.P., to D. Crumpler, EPA:OAQPS. 

E- mail regarding questions on NSR Reform. 1 pp.

October 20, 1999

IV-D-401 P. Raher, Hogan & Hartson, to

J. Seitz, EPA:OAQPS. Letter regarding the five-year contemporaneous period. 

3 pp.

June 13, 2000
Table 2. Public Comments Received After the Comment Period

Item Number in

Docket A-90-37

Commenter and Affiliation Date of Document

A-21

IV-D-402 W. Wehrum, Latham and Watkins, to K. Blanchard, EPA:OAQPS. Facsimile transmitting

comments on NRDC’s Two-Cap PAL Approach. 4 pp.

July 6, 2000

IV-D-403 Representatives of the “Complex Manufacturing Group,” to K. Blanchard, EPA:OAPQS,

and B. Harnett, EPA:OAQPS. Letter regarding the 

July 25, 2000 meeting with EPA in Research Triangle Park. 27 pp.

July 20, 2000

IV-D-404 B. Young, PACE, to R. Perciasepe, EPA:OAR. Letter expressing concerns on the NSR

program. 2 pp.

August 16, 2000

IV-D-405 L. Ritts, Hogan & Hartson L.L.P., to T. Driscoll, EPA:OAQPS. Facsimile transmitting

response to July 6, 2000 questions on the “Clean Units Issue Paper” submitted as part of

the July 20, 2000 memorandum from representatives of the NSR reform “Complex

Manufacturing Group.” 4 pp.

August 21, 2000

IV-D-406 Representatives of the “Complex Manufacturing Group,” to R. Perciasepe, EPA:OAR. 

Letter requesting a meeting on the status of the NSR Reform. 2 pp.

September 15, 2000

IV-D-407 State Environmental Directors/Commissioners of Michigan, Ohio, Oklahoma, Idaho,

Alaska, Montana, North Dakota, Louisiana, New Mexico, West Virginia, Illinois, and

Kansas to Carol Browner, EPA. Provide final opportunity for public comment on NSR

Reform. 3 pgs.

August 15, 2000

IV-D-408 T. Hunt, American Forest and Paper Association, to Air Docket. Supplemental

Comments on NSR Reform Proposal and NSR NOA. 17 pgs.

October 6, 2000

IV-D-409 E. Kropp, West Virginia DEP, to John Seitz, EPA. Concern regarding Federal Land

Manager veto authority on NSR permits. 1 pg.

October 18, 2000

IV-D-410 Earnest Deavenport, Business Roundtable, to President Clinton. Policy Statement on

NSR Reform. 5 pgs.

October 23, 2000

IV-D-411 Henry Nickel, Hunton and Williams, to Carol Browner, EPA. Petition of the Industry

Petitioners for Further Notice and Comment Rulemaking on EPA’s Proposed Rule on

New Source Review. 477 pgs.

November 3, 2000

IV-D-412 Holly Evans, Electronic Industries Alliance, to Robert Perciasepe, EPA. Plantwide

Applicability Limits. 3 pgs.

November 17, 2000

IV-D-413 Christine Shaver, National Park Service and Sandra Silva, Fish and Wildlife Service, to

John Seitz, EPA. 4 pgs. 2 attachments.

December 15, 2000

IV-D-414 Alliance of Automobile Manufacturers, American Chemistry Council, American Forest

and Paper Association, American Petroleum Institute, Clean Air Implementation Project,

Can Manufacturer’s Institute, Council of Industrial Boiler Owners, Edison Electric

Institute, Electronics Industries Alliance, Flexible Packaging Association, National

Association of Manufacturers, Clean Air Regulatory Project, National Lime Association,

National Mining Association, National Petrochemicals and Refiners Association, National

Small Business United, The Biomass Power Coalition, The SBREFA Coalition, Utility

Air Regulatory Group, to Robert Perciasepe, EPA. Request for Regulatory Action on

PALs. 2 pgs.

December 22, 2000

IV-D-415 Craig Barrett, Intel, to Christine Whitman, EPA. Mainstreaming Flexible Air Permitting

and Ensuring Risk-Based Approaches to Chemical Bans and Restrictions. 2 pgs.

February 20, 2001

IV-D-416 Russell Harding, Michigan DEQ, to Christine Whitman, EPA. Proposal to Reform NSR

regulations by Alabama, Michigan, North Carolina, South Carolina, Virginia, and West

Virginia Air Pollution Control Agencies.

March 12, 2001

IV-D-417 Alesha Herrera, Houston, TX, to President G. W. Bush, Washington, DC. Request not to

modify the requirements of New Source Review. 

07/17/01
Table 2. Public Comments Received After the Comment Period

Item Number in

Docket A-90-37

Commenter and Affiliation Date of Document

A-22

IV-D-418 Erin M. Crotty, State of New York, Department of Environmental Conservation, Albany,

NY. Request that the requirements of New Source Review not be relaxed.

10/12/01

IV-D-419 Theresa Pugh, Manager, Environmental Services to P. Smith. Comments on EPA’s Draft

Guidance on Source Determination for Combined Heat and Power Facilities.

11/14/01

IV-D-420 David S. Harlow, Hunton and Williams, Counsel to the Utility Air Regulatory Group, DC,

to Air Docket A-90-37, U.S. EPA, DC. Letter regarding the proposed revision of the

definition of “Indian Reservation.”

11/20/01

IV-D-421 David R. Wooley, Counsel, Clean Air Task Force to Docket No. A-90-37. Comments by

40 Environmental Groups on Review of Interpretation, Implementation and Enforcement

of Clean Air Act New Source Review Programs.

01/07/02

IV-D-422 Johnathan F. Lewis, Clean Air Task Force, to EPA Docket No. A-90-37. Letter

disagreeing with changes to the Clean Air Act’s New Source Review Program.

01/18/02

IV-D-423 Arthur A. Williams and Lloyd L. Eagan, STAPPA/ALAPCO, to the Honorable Christine

Todd Whitman, U.S. EPA Administrator. Letter regarding concerns about the New

Source Review reform changes development process.

01/23/02

IV-D-424 Johnathan F. Lewis, Clean Air Task Force, to EPA Docket No. A-90-37. Letter

disagreeing with changes to the Clean Air Act’s New Source Review Program.

01/24/02

IV-D-425 Susan S.G. Wierman, Executive Director, Mid-Atlantic Regional Air Management

Association, to the Honorable Christine Todd Whitman, U.S. EPA Administrator. Letter

regarding concerns about the New Source Review reform changes development process.

02/05/02

IV-D-426 Attorney Generals from MA, CT, ME, MD, NH, NJ, NY, RI, and VT, to the Honorable

Christine Todd Whitman, Administrator, U.S. EPA, DC. Letter expressing concern about

New Source Review reform changes.

02/06/02

IV-D-427 Mark L. Shurtleff, Attorney General, State of Utah to Christine T. Whitman, EPA

Administrator. Letter regarding administrative reforms to the CAA’s NSR program. 2

pgs.

11/15/01

IV-D-428 Kelly Haragan, Staff Attorney, Public Citizen’s Texas Office, and numerous undersigned

non-profit organizations, to Gregg Cooke, EPA Regional Administrator, Region VI. 

Letter commenting on EPA’s proposed rollback of CAA health protections.

1/15/02

IV-D-429 Ralph Marquez, Chair, ECOS Air Committee, to Christine Whitman, EPA Administrator. 

Letter regarding soon-to-be-issued NSR reform rules.

2/19/02

IV-D-430 Regina Neri, Special Issues Assistant, Mount Shasta Bioregional Ecology Center, to

Christine Whitman, EPA Administrator. Letter regarding concern over weakening of the

CAA’s NSR program.

2/24/02

IV-D-431 Keith Dittrich, President, American Corn Growers Association, to Christine Whitman,

EPA Administrator. Letter supporting EPA’s review of NSR regulations.

2/28/02

IV-D-432 Susan A. MacIntyre, Winston and Strawn on behalf of the Alliance for Responsible

Atmospheric Policy to Air Docket A-90-376, Air and Radiation Docket. 

IV-D-433 Robert Engberg, President, Capitol Aggregates, Ltd., to Christine Todd Whitman, EPA

Administrator. Facsimile that includes a copy of a letter that supports EPA’s

reconsideration of the NSR program. 

3/15/02

IV-D-434 Timothy L. Matz, Environmental Coordinator, Lehigh Cement Company to Christine

Todd Whitman, EPA Administrator. Letter supporting EPA’s reconsideration of the NSR

program. 

4/4/02
Table 2. Public Comments Received After the Comment Period

Item Number in

Docket A-90-37

Commenter and Affiliation Date of Document

A-23

IV-D-435 John D. Walke, Director, Clean Air Program, Natural Resources Defense Council

(NRDC), to the Air and Radiation Docket. E-mail and attachments submitted to the EPA

by NRDC. 

4/16/02

IV-D-436 William J. Hamel, Deputy General Counsel, ATOFINA Chemicals, Inc, to Christine Todd

Whitman, EPA Administrator. Petition to Establish a Significance Level for ODSs.

4/30/02

IV-D-437 Patrick M. Raher, Partner, Hogan and Hartson, to John Seitz, EPA. Letter regarding

NSR/PAL Concepts.

5/18/00

IV-D-438 United States Senate Representatives, to Christine Whitman, EPA Administrator. Letter

re: the NSR program.

5/13/02

IV-D-439 Cohen, Armond, Executive Director, Clean Air Task Force, to Air Docket A-90-37, U.S.

EPA Air Docket Section. A letter transmitting “A Preliminary Analysis of the Benefits

and Costs of Current New Source Review Litigation.”

6/25/02

IV-D-440 Marc J. Meteyer, American Petroleum Institute, and Norbert Dee, NPRA, to Jeffrey

Holmstead, EPA

11/16/01

IV-D-441 Peter Iwanowicz, American Lung Association, to Jane Kenny, EPA Region 2 01/15/02

IV-D-442 John Paul, RAPCA, to Jeffrey Holmstead, EPA 01/28/02

IV-D-443 Natural Resources Defense Council, Index of Submission

(12 items)

09/13/02

IV-D-444 Natural Resources Defense Council, Index of Submission

(51 items)

09/13/02

IV-D-445 Walke, John D. Director, Clean Air Program, to Lynn Hutchinson. Facsimile transmitting

NRDC's Analysis of the 1996 Regulatory Impacts Document. "Examining EPA's Refusal

to Perform a Public Health, Environmental and Air Quality Analysis of Its NSR

Rulemaking Changes."

10/16/02

IV-G-25 B.R. Wallerstein, D. Env., Executive Officer, SCAQMD, Diamond Bar, CA 04-16-99