# Review of New Sources and Modifications in

Indian Country

Response to Comments(This page intentionally left blank.)

# Review of New Sources and Modifications in

Indian Country

Response to Comments

New Source Review Group Air Quality Policy Division Office of Air Quality Policy and Standards

U. S. Environmental Protection Agency Research Triangle Park, NC 27711

June 20 11(This page intentionally left blank.)Review of New Sources and Modifications in Indian Country Response to Comments

i 

## TABLE OF CONTENTS

LIST OF ACRONYMS AND ABBREVIATIONS

................................ ................................ ...... iv

LIST OF UNITS

................................ ................................ ................................ ............................. v

1 INTRODUCTION

................................ ................................ ................................ ................... 1

1.1 Backg round

................................ ................................ ................................ .................... 1

1.2 The Commenters

................................ ................................ ................................ ............ 2

1.3 Organization of This Document

................................ ................................ ..................... 2

2 MINOR NSR PROGRAM

................................ ................................ ................................ ...... 9

2.1 Proposed Approach to Minor NSR

................................ ................................ ................ 9

2.1.1 Minor NSR Program for Indian Country

................................ ........................... 9

2.1.2 Minor NSR Should Be Based on Surrounding State Programs

....................... 13

2.1.3 Proposed Approach Is Not Appropriate for the Oil and Gas Sector

................ 16

2.1.4 Other Comments on the Proposed Approach t o Minor NSR

........................... 17

2.2 Definition of “Minor Source”

................................ ................................ ....................... 21

2.3 Definition of “Modification”

................................ ................................ ........................ 22

2.3.1 Allowable Emissions Basis

................................ ................................ .............. 22

2.3.2 Exemptions from the Definition of “Modification”

................................ ......... 26

2.3.3 Other Comments on the Definition of “Modification”

................................ .... 29

2.4 Process for Determining Whether a Proposed Change Is a Modification

.................... 30

2.4.1 Project Netting

................................ ................................ ................................ . 30

2.4.2 Other Comments on the Mod ification Applicability Test

................................ 32

2.5 Minor NSR Thresholds

................................ ................................ ................................ 34

2.5.1 General Comments on Thresholds

................................ ................................ ... 34

2.5.2 Level of the Pr oposed Thresholds

................................ ................................ .... 35

2.5.3 Methodology Used To Develop the Proposed Thresholds

.............................. 40

2.5.4 Other Comments on the Proposed Thresholds

................................ ................. 42

2.6 Proposed List of Insignificant Units and Activities

................................ ..................... 44

2.6.1 Expanding the List of Exemptions

................................ ................................ ... 45

2.6.2 Sources Exempted from the Minor NSR Program

................................ ........... 46

2. 7 Permitting Process

................................ ................................ ................................ ........ 47

2.7.1 Permit Application Requirements

................................ ................................ .... 47

2.7.1.1 Timing of Applications

................................ ................................ ....... 48

2.7.1.2 Fugitive Emissions

................................ ................................ .............. 48

2.7.1.3 Minor Source Plantwide Applicability Limitations (PALs)

............... 52

2.7.2 Control Technology Review

................................ ................................ ............ 54

2.7.3 Air Quality Impact Analys is

................................ ................................ ............ 61Review o f New Sources and Modifications in Indian Country Response to Comments

ii 2.7.4 Permit Issuance Process

................................ ................................ ................... 63

2.7.4.1 General Comments on the Permit Issuance Process

........................... 64

2.7.4.2 Completeness Review Period

................................ ............................. 65

2.7.4.3 Technical Review Period

................................ ................................ .... 67

2.7.4.4 Public Comment Period

................................ ................................ ...... 68

2.7.5 Permit Term

................................ ................................ ................................ ..... 69

2.7.6 Other Comments on the Permit Issuance Provisions

................................ ....... 70

2.8 Applicability of the Minor NSR Program to Existing Sources

................................ .... 75

2.8.1 Comme nts on Option 1

................................ ................................ .................... 75

2.8.2 Comments on Option 2

................................ ................................ .................... 76

2.8.3 Comments on Option 3

................................ ................................ .................... 77

2.8.4 Comments on Option 4

................................ ................................ .................... 78

2.8.5 Other Suggestions for Addressing Existing Sources

................................ ....... 79

2.9 Synthetic Minor Sources

................................ ................................ .............................. 80

2.10 Case

- by

- Case MACT Determinations under Section 112(g) of the Act

...................... 82

2.11 Public Participation Requirements

................................ ................................ ............... 84

2.12 Monitoring, Recordkeeping, and Reporting

................................ ................................ . 87

2.12.1 General Comments on Monitoring, Recordkeeping, and Reporting

................ 87

2.12.2 Monitoring Requirements

................................ ................................ ................ 87

2.12.3 Recordkeeping Requirements

................................ ................................ .......... 88

2.12.4 Reporting Requirements

................................ ................................ ................... 88

2.13 General Permits

................................ ................................ ................................ ............ 89

2.14 Final Permit Issuance and Administrative and Judicial Review

................................ .. 94

2.14.1 Notice of Final Permit Action

................................ ................................ .......... 94

2.14.2 Administrative Record for a Permit Decision

................................ .................. 95

2. 14.3 Procedures for Appealing a Permit Decision

................................ ................... 96

2.14.4 Procedures for Reopening a Permit

................................ ................................ 101

2.14.5 Administrative Permit Revisions

................................ ................................ ... 102

3 MAJOR NSR PROGRAM IN NONATTAINMENT AREAS OF INDIAN COUNTRY

. 105

3.1 Requirements for Major Source Permitting under Appendix S

................................ . 105

3.2 Options for Addressing the Lack of Available Offsets in Indian Country

................. 106

3.2.1 General Comments on Waiving Offset Requirements in Indian Country

..... 107

3.2.2 Economic Development Zone Option

................................ ............................ 110

3.2.3 Appendix S, Paragraph VI Option

................................ ................................ . 113

3.3 Public Part icipation Requirements for the Nonattainment Major NSR Program

...... 115

3.4 Compliance Certification Requirements of the Act

................................ ................... 115

4 LEGAL BASIS, STATUTORY AUTHORITY, AND JURISDICTIONAL ISSUES

....... 119

4.1 Jurisdiction in Indian Country

................................ ................................ .................... 119

4.1.1 EPA’s Authori ty in Indian Country

................................ ............................... 119

4.1.2 Definition of “Indian Country”

................................ ................................ ...... 124Review of New Sources and Modifications in Indian Country Response to Comments

iii 4.1.3 Establishing the Borders of Indian Country

................................ ................... 127

4.2 Delegation of the NSR Programs to Tribes

................................ ................................ 129

4.3 Permits Previously Issued by States to Sources in Indian Country

............................ 132

5 OTHER COMMENTS ON THE PROPOSED RULEMAKING

................................ ....... 135

5.1 Implementation of the NSR Program

................................ ................................ ......... 135

5.1.1 Resources for Implementation

................................ ................................ ....... 135

5.1.2 Implementation Timeline

................................ ................................ ............... 138

5.1.3 Other Comments on Implementation

................................ ............................. 139

5.2 Consultation with Tribes During the Rulemaking Process

................................ ........ 141

5.3 Use of FIPs for the NSR Program

................................ ................................ .............. 143

5.4 Regulatory Needs in Nonattainment Areas

................................ ................................ 144

5.5 Statutory and Executive Order Reviews

................................ ................................ .... 146

5.5.1 Regulatory Flexibility Act (RFA) Review

................................ ..................... 146

5.5.2 Executive Order 12866 and 13211 Review

................................ ................... 147

5.6 Miscellaneous Comments on the Proposal

................................ ................................ . 148Review o f New Sources and Modifications in Indian Country Response to Comments

iv 

## LIST OF ACRONYMS AND ABBREVIATIONS

Act Clean Air Act (42 U.S.C. 7401

- 7671q)

AQIA Air quality impact analysis

BACT Best a vailable c ontrol t echnology

BARCT Best a vailable r etrofit c ontrol t echnology

CAA Clean Air Act (42 U.S.C. 7401

- 7671q)

CEMS Continuous emission monitoring systems

CFR Code of Federal Regulations

CO Carbon m on oxide

EAB Environmental Appeals Board

EDZ Economic Development Zone

EPA U. S. Environmental Protection Agency

ERP Equipment Replacement Provisions

FIP Federal Implementation Plan

FR Federal Register

HAP Hazardous air p ollutant

LAER Lowest a chievab le e mission r ate

MACT Maximum achievable control t echnology

MOU Memorandum of Understanding

NESHAP National Emission Standards for Hazardous Air Pollutants

NO

x Nitrogen o xides

NSPS New Source Performance Standard

NSR New Source Review

PAL Plantwide applicability limitation

PM Particulate m atter measured as “total suspended particulate matter”

PM 10 Particulate m atter l ess t han 10 μm

PM 2.5 Particulate m atter l ess t han 2.5 μm

PSD Prevention of Significant Deterioration

PTE Potential t o e mit

RACT R easonably a vailable c ontrol t echnology

RFP Reasonable f urther p rogressReview of New Sources and Modifications in Indian Country Response to Comments

v 

## LIST OF ACRONYMS AND ABBREVIATIONS

RMRR Routine maintenance, repair, or replacement

SAFETEA Safe, Accountable, Flexible, Efficient Transportation Equity Act of 2005

SIP State Implementation Plan

SO 2 Sulfur d ioxide

TAR Tribal Authority Rule

TAS Treatment as a state

TIP Tribal Implementation Plan

U.S.C. United States Code

VOC Volatile o rganic c ompound



## LIST OF UNITS

tpy Tons per y ear

μm Micrometer (One

- millionth of a m eter)Review o f New Sources and Modifications in Indian Country Response to Comments

vi (This page intentionally left blank.)Review of New Sources and Modifications in Indian Country Response to Comments

1 

## 1 INTRODUCTION

**1.1 Background** 

On August 21, 2006, the U. S. Envi r o nmental Protection Agency (EPA or we ) proposed a rulemaking titled Review of New Sou rces and Modifications in Indian Country , which would

create a Federal Implementation Plan (FIP) for Indian c ountry. 1 The FIP would include two basic air quality regulations for the protection of communities in Indian country. The two rules

are elements of the New Source Review (NSR) program. The first rule would apply to minor stationary sources (minor sources) and minor modifications at major stationary sources (major sources) in Indian country (minor NSR rule). The second rule would apply to all new major sources and major modifications located in areas of Indian country that are designated as not attaining the National Ambient Air Quality Standards (NAAQS) (nonattainment major NSR rule). These rules would be implemented by EPA, or a delegate tribal agency assisting EPA with administration of the rules, until replaced by an EPA

- approved implementation plan for an area of Indian country.

The purpose of this rulemaking is to ensure that air resources in Indian country will be protected in the manner intended by the Clean Air Act (the Act or CAA) by establishing a permitting program for stationary sources in Indian country. Currently no tribe is administering

an EPA

- approved Prevention of Significant Deterioration ( PSD ) program

. 2 For the

nonattainmen t major NSR program or the minor NSR program in Indian country, no tribes have been administering an EPA

- approved nonattainment major NSR program and only a few tribes have been administering EPA

- approved minor NSR programs

. 3 In addition, there has been n o FIP in place to implement these programs until now. Hence, there was a regulatory gap in Indian country. This final rule will allow us to address that gap and provide regulatory certainty to allow for environmentally sound economic growth in Indian cou ntry. By establishing this FIP for Indian country, we will provide more consistency with the requirements and programs of the states and thus create a more level regulatory playing field for owners and operators within and outside of Indian country.

Th is document presents a summary of the public comments on the proposed rule , along with our responses to those comments. The document supports the final rule for Review of New Sources and Modifications in Indian Country

.

1 The FIP was proposed in the Federal Register , Volume 71, beginning on page 48,696 (71 FR 48696).

2 However, EPA has been implementing a FI P for major sources in attainment areas and has been issuing PSD permits in Indian country. See 40 CFR 52.21.

3 For example, the St. Regis Mohawk Tribe has in place an EPA

- approved TIP that includes provisions for minor NSR and synthetic minor permitting ( see http://www.srmtenv.org/pdf_files/airtip.pdf ). In addition, the Gila River Indian Community has developed a TIP that includes a minor NSR program ( s ee http://www.epa.gov/region9/air/actions/gil a

- river.html )

.Review o f New Sources and Modifications in Indian Country Response to Comments

2 

### 1.2 **The Commenters**

The public commen t period was originally scheduled to end on November 26, 2006 but was extended to January 19, 2007 and then reopened until March 20 , 2007 as a result of a number of timely extension requests ( 0040, 0049.1, 0055, 0057, 0090, 0107.1

, 0108.1

, 0109.2 )

, althoug h one commenter (0110.1) preferred that the comment period not be extended

. 4 W e received a total of 5 8 sets of written comments on the proposed rules ( excluding duplicates, supplemental comments from a previous commenter , and requests related solely to ex tending the public comment period ) . The commenters can be broken down by general type as follows:

2 7 tribal and tribal association commenters, 7 s tate/local air agencies and agency associations

, 1 5 industry and industry association commenters

, 1 environme ntal group commenter

, and

8 private citizens. The comments are listed in Table 1, which appears at the end of this section.



### 1.3 **Organization of This Document**

After this introductory section, this document is divided into four additional sections.

The sec tions are as follows:

• Section 2

– MINOR NSR PROGRAM IN INDIAN COUNTRY

• Section 3

– M AJOR NSR PROGRAM IN NONATTAINMENT AREAS OF

INDIAN COUNTRY

• Section 4

– LEGAL BASIS, STATUTORY AUTHORITY, AND

JURISDICTIONAL ISSUES

• Section 5

– OTHER COMMENTS ON THE PROPOSED RULEMAKING

4 The comment period was extended from November 26, 2006 to January 19, 2007 at 71 FR 62227 ( October 24, 2006) and reopened from January 19 to March 20, 2007 at 72 FR 5944 ( February 8, 2007)

.Review of New Sources and Modifications in Indian Country Response to Comments

3 Table 1. List of Commenters

DOCKET ID

a b COMMENT DESCRIPTION TYPE OF

COMMENTER

0015 Comment submitted by D. Terrell Pri vate Citizen

0016 Comment and attachment submitted by Angela Saad et al., University of Houston Law Center Pri vate Citizen

0018 Comment and attachment submitted by Barry R. Wallerstein, Executive Officer, South Coast Air Quality Management District State/ L ocal Air Agency

0019 Comment submitted by F. Taubert Private Citizen

0020 Comment submitted by V. R. "B utch" Martineau, Vice

Chairman, Fond du Lac Band of Lake Superior Chippewa Tribe

0021 Comment and attachment submitted by Michael A. Golas, General Manager, Environment, Health and Safety, Questar Market Resources (Questar's) Industry

0022 Comment and attachment submitted by Angie Burckhalter, V.P. Regulatory Affairs, Oklahoma Independent Petroleum Association (OIPA) Industry

Association

0023 Comment and attachment submitted by Kevin Kessler, Acting Director, Bureau of Air Management, Wisconsin Depart ment of Natural Resources State/ L ocal Air Agency

0024 Comment and attachment submitted by Anne R. Gobin, Chief, Bureau of Air Management, Connecticut Department of Environmental Protection State/ L ocal Air Agency

0025 Comment and attachment submitted by the Interstate Natural Gas Association of America (INGAA) Industry

Association

0026 Comment and attachment submitted by Luke Johnson, Environmental Protection Officer, Fort Mojave Indian

Tribe Tribe

0027 Comment and attachment submitted by Stephanie R

. Meadows, Upstream Environmental Coordinator, American Petroleum Institute (API) Industry

Association

0028 Comment and attachment submitted by Greg Cooperrider, St. Maries Complex Manager, Potlatch Forest Products Corporation (PFPC) Industry

0029 Comm ent and attachment submitted by Wanda Burget, Sr. Manager, Regulatory Services

- West, Peabody Energy Company Industry

0030 Comment submitted by Patrick E. Flynn, Environmental Health & Safety Manager, Resolute Natural Resources Company Industry

0031 Comment submitted by Waldo Walker, Chairman, the

Washoe Tribe of Nevada and California TribeReview o f New Sources and Modifications in Indian Country Response to Comments

4 Table 1. List of Commenters

DOCKET ID

a b COMMENT DESCRIPTION TYPE OF

COMMENTER

0032 Comment submitted by Ann C. Becker, Attorney, Arizona Public Service Company Industry

0033 Comment submitted by Jay Littlewolf, Air Quality

Administrato r, Northern Cheyenne Tribe Tribe

0034 Comment and attachment submitted by Steven E. Chester, Director, Michigan Department of Environmental Quality (MDEQ) State/ L ocal Air Agency

0035 Comment and attachment submitted by Dan Anderson,

Vice President of Production, Berry Petroleum Company Industry

0036 Comment and attachment submitted by Scot Anderson, Attorney on behalf of the Ute Indian Tribe of the Uintah and Ouray Tribe

0037 Comment and attachment submitted by Jana Milford,

Senior Scientist and At torney, Vickie Patton, Senior Attorney, Environmental Defense Environmental Group

0038 Comment and attachment submitted by Brandy Toft, Air Quality Specialist, Leech Lake Band of Ojibwe Tribe

0039 Comment submitted by Duane Zavadil, Vice President,

Gov ernment and Regulatory Affairs, Bill Barrett Corporation (BBC) Industry

0040

Extension

request Comment submitted by Stephen V. Quesenberry, Attorney, Karshmer & Associates on behalf of Morongo

Band of Mission Indians Tribe

0041 Comment submitted by Cle ment J. Frost, Chairman,

Southern Ute Indian Tribe Tribe

0042 Comment submitted by Kevin Wanttaja, Manager, Environmental Services Department, Salt River Project (SRP) Industry

0043 Comment and attachment submitted by Wilfred J. Nabahe, Tribal C

- Chair, Region 9 Tribal Operations

Committee Tribal

Association

0044 Comment submitted by Brian Patterson, President, United South and Eastern Tribes, Inc. (USET) Tribal

Association

0045 Comment and attachment submitted by William O'Sullivan, New Jersey Co

- Ch air, John Paul, Dayton,

OH Co

- Chair, National Association of Clean Air Agencies (NACAA) State/ L ocal Agency

Association

0046 Comment and attachment submitted by the Oklahoma Department of Environmental Quality (ODEQ) State/ L ocal Air Agency

0047 Comment and attachment submitted by Diane Enos, President, Salt River Pima

- Maricopa Indian Community (SRPMIC) TribeReview of New Sources and Modifications in Indian Country Response to Comments

5 Table 1. List of Commenters

DOCKET ID

a b COMMENT DESCRIPTION TYPE OF

COMMENTER

0048 Comment and attachment submitted by Deborah Seligman, Director of Government Affairs, New Mexico

Oil and Gas Association Industry

Associatio n

0049 Comment and attachment submitted by Ian Kanair, Environmental and Natural Resources Department, Snoqualmie Tribe Tribe

0050 Comment and attachment submitted by Jill Elise Grant, Nordhaus Law Firm, LLP on behalf of Eugenia Quintana, Environment al Department Manager, and Charlene Nelson, Environmental Program Supervisor, The Navajo Nation EPA Air Quality Program Tribe

0051 Comment submitted by Larry R. Allen, President,

California Air Pollution Control Officers Association (CAPCOA) State/ L ocal Agency

Association

0052 Comment submitted by Paul E. Frye, Frye Law Firm on behalf of the Navajo Nation Oil and Gas Company (NNOGC) Industry (T ribally Owned)

0053 Comment submitted by Norman Harry, Pyramid Lake Tribal Chairman, Pyramid Lake Paiute Tri be Tribe

0054 Comment submitted by Marjianne Yonge, Tribal Chairwoman, Lone Pine Paiute

- Shoshone Reservation Tribe

0055

Extension

request Comment submitted by Wilfred J. Nabahe, Tribal Co

Chair, Region 9 Tribal Operations Committee Tribal

Association

0056 Comment submitted by Joseph Brings Plenty, Chairman and Carlyle Ducheneaux, CWA 106/Air Quality Coordinator, CRST Environmental Protection Department, Cheyenne River Sioux Tribe Tribe

0057

Extension

request Mark Macarro, Tribal Chairman, Pechanga Band of

Luiseno Mission Indians Tribe

0061 Comment and attachment submitted by Brian Cladoosby, Chairman, Swinomish Tribe Tribe

0071 Comment submitted by Tony Basabe, Tribal Air Monitoring Support (TAMS) Steering Committee

Chairman Tribal

Association

0072 Comment submitted by Sandra Miller, Manager, Environmental Department, El Paso Corporation Western Pipelines on behalf of El Paso Natural Gas Company and Colorado Interstate Gas Industry

Association

0076 Comment submitted by the Makah Tribe TribeReview o f New Sources and Modifications in Indian Country Response to Comments

6 Table 1. List of Commenters

DOCKET ID

a b COMMENT DESCRIPTION TYPE OF

COMMENTER

0081 Comment and attachment submitted by Kathleen Sgamma, Manager, Government Affairs, Independent Petroleum Association of Mountain States (IPAMS) Industry

Association

0090

Extension

request Comment submitted by Marjianne Yonge, Tribal Chairwoman, Lo ne Pine Paiute

- Shoshone Reservation Tribe

0091 Comment submitted by Ryan Callison, National Tribal Air Association (NTAA) Tribal

Association

0092 Comment and attachment submitted by Chunyan Chai, Bard Center for Environmental Policy Private Citizen

0093 Comment and attachment submitted by Altje Marie Hoekstra, Center for Environmental Policy, Bard College Private Citizen

0094 Comment submitted by C. Ferguson Private Citizen

0095 Comment submitted by K. MacManus Private Citizen

0096 Comment sub mitted by M. Williams Private Citizen

0097 Comment and attachment submitted by Robert Martin, Chairman, Morongo Band of Mission Indians Tribe

0098 Comment and attachment submitted by Gwen Carter,

RTOC Co

- Chair, Region 10 Tribal Caucus (RTC) Tribal

Ass ociation

0099 Comment and attachment submitted by Terry O. Enos,

Vice

- Chairman, Ak

- Chin Indian Community Tribe

0100 Supplements

0046 Comment and attachment submitted by William C. Scott, Modrall, Sperling, Roehl, Harris & Sisk, PA on behalf of

Oklahoma Department of Environmental Quality State/ L ocal Air Agency

0101 Comment and attachment submitted by Samuel N. Penney on behalf of Rebecca A. Miles, Chairman, Tribal Executive Committee, Nez Perce Tribe Tribe

0103

D uplicate of

0097 Comment submitted by Lolita Brewster, Secretary,

Karshmer & Associates Industry

Association

0104 Comment submitted by Brandy Toft, Air Quality Specialist, Leech Lake Band of Ojibwe Tribe

0106 Comment and attachment submitted by Fawn R. Sharp, President, Quinault Indian Na tion Tribe

0107

Extension

request Comment and attachment submitted by Fawn R. Sharp, President, Quinault Indian Nation Tribe

0108

Extension

request Comment and attachment submitted by Brandy Toft, Air Quality Specialist, Division of Resource Management

, Leech Lake Band of Ojibwe TribeReview of New Sources and Modifications in Indian Country Response to Comments

7 Table 1. List of Commenters

DOCKET ID

a b COMMENT DESCRIPTION TYPE OF

COMMENTER

0109

Extension

request Comment and attachment submitted by J. Stephen Hartsfield, Operations Coordinator, National Tribal Air Association (NTAA) Tribe

0110

Nonextension
request Comment and attachment submitted by Jason S. Walker, Air Coordinator, Northwestern Band of the Shoshoni

Nation Tribe

0129 Comment and attachment submitted by Charlie Lippert, Mille Lacs Band of Ojibwe Tribe

0130 Comment attachment submitted by Mary Munn, Air Program Coordinator, Fond du Lac Res ervation, Minnesota (MN) Tribe

a Docket ID identifies comments found in Docket No. EPA

- HQ

- OAR

- 2003

- 0076 by document

number.

b Doc uments submitted to the docket together appear in the docket as multiple document s with

the same “ root number. ” For example , comments received via email are identified by two numbers. First, the root number (e.g., 0001) is assigned to the email message. Second, the

root number with an extension (e.g., 0001.1) is assigned to the attached comment. Any

additional attachments a re assigned extensions in numerical order (e.g., 0001.2, 0001.3, etc.). For the purposes of this table, all such documents are listed under the root number. In the text of the comment summary, each source document is identified by the entire document num ber.Review o f New Sources and Modifications in Indian Country Response to Comments

8 (This page intentionally left blank.)Review of New Sources and Modifications in Indian Country Response to Comments

9 

## 2 MINOR NSR PROGRAM

**2.1 Proposed Approach to Minor NSR** 

We proposed a minor NSR program as a Federal Implementation Plan (FIP) for Indian country pursuant to section 110(a)(2)(C) of the Act. T his section of the Act requires “regulation of the modification and construction of any stationary source within the areas covered by the plan as necessary to assure that national ambient air quality standards are achieved, including a permit program as re quired in parts C and D.” Part C of Title I of the Act contains the requirements for PSD, while part D sets out the requirements for nonattainment NSR. While section 110(a)(2)(C) of the Act forms the basis for the core policies behind the federal minor

N SR program in Indian country, EPA is issuing the final rules pursuant to its authority under sections 301(a)(1) and 301(d)(4) of the CAA and 40 CFR 49.11. Section 301(a)(1) grants the Administrator the authority “to prescribe such regulations as are neces sary to carry out [her]

functions u nder this chapter.” 42 U.S.C. 7601(a)(1). Under section 301(d)(4), when the Administrator determines that the treatment of Indian tribes as identical to States is inappropriate or administratively infeasible, the Admini strator can “provide by regulation, other means by which the Administrator will directly administer such provisions [of the Clean Air Act] so as to achieve the appropriate purpose.” 42 U.S.C. 7601(d)(4). The Administrator exercised the authority granted by CAA section 301(d)(4) in promulgating 40 CFR 49.11, which provides that the Administrator shall exercise the discretionary authority granted under CAA sections 301(a) and 301(d)(4) to promulgate such Federal implementation plan provisions “as are necess ary or appropriate to protect air quality” in circumstances where a tribe either does not submit a tribal implementation plan or does not receive EPA approval of a submitted tribal implementation plan. 40 CFR 49.11(a). The Administrator has determined th at it is appropriate to issue the final rules in order to “protect air quality” in Indian country.



### 2.1.1 Minor NSR Program for Indian Country

Supporting Comments:

Numerous commenters [ s ix trib al commenters (0026.1, 0031, 0050.1, 0061.1/0061.2

, 0091.1 , 0097.1 ), three industry commenters (0025.1, 0027.1, 0030), one environmental group (0037.1), two state /local commenters (0045.1. 0051.1), and one private citizen (0093.1)] endorsed the concept of a minor NSR program for Indian country. A number of these

comment ers also had significant comments about some aspects of the proposed program, which are discussed in the following sections of this document. The commenters generally lauded the intent of the proposed minor NSR program for Indian country

– to close a regu latory gap in such

areas so as to protect the air resources as intended by the Act and create a level regulatory playing field inside and outside of Indian country. The commenters often endorsed the program for creating regulatory certainty and encouragin g economic development in Indian country.

One of the trib al commenters (0061.1) stated that the proposed rule should balance environmental protection with allowing economic development on r eservation s , and indicatedReview o f New Sources and Modifications in Indian Country Response to Comments

10 that the proposed rule does this for t he most part. However, the commenter believes that the balance should be made through sufficient protection of air quality and a leveling of the playing field with surrounding local air management jurisdictions rather than reliance on only waivers

and exe mptions for emission sources locating within Indian country.

The private citizen (0093.1) cautioned that the minor NSR program should not be any more lenient or any more stringent than the programs in the surrounding areas. One industry commenter (0027. 1) suggested that the minor NSR FIP will help standardize the processes that

trib es will likely develop if they choose to maintain their own environmental air quality programs. Another industry commenter (0030), after endorsing the concept of a minor NSR program, stated that the proposed rules are unnecessarily complex and onerous, provide little or no environmental benefit at significant expense, and are too similar to the requirements for major sources under part 71 and PSD.

O pposing Comments:

Two ind ustry commenters (0029.2, 0032) stated that they do not believe that the proposed minor NSR program is necessary to protect the air resources in Indian country.

One of these industry commenters (0029.2) disagreed with our statement that minor NSR

in Indi an country must be “comparable to that which applies outside of Indian country, in order to create a more level regulatory playing field for owners and operators within and outside of Indian country.” The commenter asserted that the Act does not require E PA to create any “level regulatory playing field” for owners and operators, regardless of their locations. Rather, the commenter went on, the Act requires a minor NSR program “as necessary to assure that national ambient air quality standards are achieved .”

The commenter (0029.2) pointed out that much of Indian country’s air quality is often significantly below the levels of the NAAQS and that emission growth rates are typically quite low in Indian country. The commenter believes that, as a result, it i s not unreasonable to conclude that the air quality impacts of new or modified minor sources in Indian country will have less environmental significance than if those sources were instead located in developed areas outside of Indian country. Based on this reasoning, the commenter concluded that, without compromising protection of the NAAQS and related increments, minor NSR in Indian country does not need to be as substantive as those programs in most s tates. The commenter suggested

that minor NSR for Indi an country should place even less emphasis on the need for control technology or ambient air quality reviews, and that the degree of proposed monitoring, recordkeeping, and public participation are inconsistent with the minimal needs for such

activities fo r minor sources in Indian country.

Finally, the commenter (0029.2) discussed the origins of the regulations that govern minor NSR programs [Title 40 of the Code of Federal Regulations , sections 51.160 and 51.161 (40 CFR 51.160 and 51.161) ] to support her company’s assertions. The commenter pointed out that the current 40 CFR 51.160 and 51.161 differ very little from the first NSR regulations, which were codified in the early 1970’s when neither the PSD nor nonattainment major NSR programs existed. The c ommenter concluded from this that because the requirements of 40 CFRReview of New Sources and Modifications in Indian Country Response to Comments

11 51.160 and 51.161 originally governed the entire NSR program (major and minor), they are more comprehensive than necessary for minor NSR in Indian country today (where separate major

NSR programs will soon be in effect).

The second of the industry commenters (0032) pointed out the that the proposed minor NSR rules refer to the “rare instances where the reviewing authority has reason to be concerned

that the... modification would cause or c ontribute to a NAAQS or PSD increment violation” [proposed 40 CFR 49.154(d)(1)]. Based on this language, the commenter indicated that there is no need or justification for proposed minor NSR program in Indian country. The commenter asserted that the pro posed minor NSR FIP would impose extremely burdensome permitting requirements for minor plant projects, and stated that NSR should only apply to those projects that threaten the NAAQS. The commenter believes that reviewing such projects is the function

of major NSR, and stated that EPA promulgated the major NSR significance thresholds for the express purpose of protecting the NAAQS and PSD increments. The commenter indicated that the purpose of section 110(a)(2)(C) of the Act and 40 CFR 51.160

– to protec t and maintain the NAAQS

– is fully satisfied by the major NSR significance thresholds.

The commenter (0032) went on to state that if EPA proceeds to adopt a minor NSR program, it should at most require a simple notification to the reviewing authority of minor modifications at major sources, allowing the reviewing authority to require further action if it has reason to believe that the proposed change will have an adverse impact on the NAAQS or

increments. The commenter added that if minor NSR is indeed required and EPA is serious about leveling the regulatory playing field, we should apply the FIP to all areas of the country, and should require all s tate and t ribal regulatory authorities to implement consistent minor NSR

programs.

Response:

We agree w ith the commenters that endorsed the concept of developing a minor NSR program for Indian country under this final FIP to ensure that air resources in Indian country will be protected in the manner intended by the Act. Currently no tribes have been admini stering

EPA

- approved PSD 5 or nonattainment major NSR programs and only a few tribes have been administering EPA

- approved minor NSR programs

. 6 In addition, there has been no FIP in place to implement the nonattainment major NSR nor the minor NSR programs u ntil now. Hence, there was a regulatory gap in Indian country. This final rule will allow us to address that gap and provide regulatory certainty to allow for environmentally sound economic growth in Indian country. By establishing this FIP for Indian c ountry, we believe we will provide more consistency with the requirements and programs of the states and thus create a more level regulatory playing field for owners and operators within and outside of Indian country.

5 H owever, EPA has been implementing a FIP for major sources in attainment areas and has been issuing PSD permits in Indian country. See 40 CFR 52.21.

6 For example, the St. Regis Mohawk Tribe has in place an EPA

- approved TIP that includes provisions for minor NSR and synthetic minor permitting (see http://www.srmtenv.org/pdf_files/airtip.pdf ). In addition, the Gila River Indian Community has developed a TIP that includes a minor NSR program (see http://www.epa.gov/region9/air/actions/gila

- rive r.html )

.Review o f New Sources and Modifications in Indian Country Response to Comments

12 W

e do not believe , however, that th e goal of balancing environmental protection and economic growth is being accomplished through waivers and exemptions that will only apply to Indian country, as one commenter suggested. Most of the exemptions and waivers being finalized under this rule ar e available for state major and minor NSR programs and they are consistent with how we have historically implemented the NSR program.

We also disagree with the commenter s who stated that the minor NSR program should not be any more lenient or any more stringent than the programs in surrounding areas or that we should level the regulatory playing field by applying the FIP to all areas of the country, including both states and tribes

. As a general matter, it would be neither practical nor

administrativel y feasible for us to develop and implement a separate program for each area of

I

ndian country

. In addition, we recognize that not all states and tribes face the same air quality

issues. T herefore, we encourage states and tribes to develop their own minor source programs for incorporation into a SIP or TIP. If a tribe is developing its own program, this FIP can serve as one example of a program that meets the objectives and requirements of the Act.

We are also not in agreement with those commenters wh o suggested that the minor NSR program is not necessary to protect the air resources in Indian country or that it should contain fewer requirements than the state minor NSR programs because much of Indian country’s air quality is often significantly below the levels of the NAAQS

. Under t he Act , EPA has a general obligation to ensure the protection of air quality throughout the n ation, including throughout Indian country . This is particularly true in circumstances where EPA has determined that the implemen tation of a particular program by tribes is generally inappropriate or administratively infeasible. In addition , to protect air quality if tribal efforts do not result in adoption and approval of tribal plans or programs , we have expressed our intent , con sistent with sections 301(a) and 302(d)(4) of the Act, to promulgate without unreasonable delay such FIP provisions as are necessary or appropriate

. 7

Finally, we disagree with those comments that mentioned that the program is too burdensome for minor so urces, that the purpose of sections 110(a)(2)(C) of the Act and 40 CFR

51.160 are fully satisfied by the major NSR significance thresholds

, or that the provisions under 40 CFR 51.160 and 51.161 are more comprehensive than necessary for minor NSR in Indian country today

. Section 110(a)(2)(C) of the Act requires that every state program contain measures to regulate the construction or modification of “any stationary source” that may affect attainment of the NAAQS and this statutory requirement applies to all stationary sources, not just major sources. In addition, Title I of the Act requires that the NSR program be established to protect public health and welfare, national parks, and wilderness areas as new sources of air pollution are built or exis ting s our ces are modified and we believe that the minor source NSR

pr o gram is an integral part of the NSR program. T he minor source NSR program is designed to protect and ma intain the NAAQS by specifically control ling those emissions sources that are not subject t o the maj or NSR program because their emissions are below the major source NSR significance thresholds. Furthermore, we believe that the requirements under 40 CFR 51.160

and 51.161 continue to be appropriate for inclusion in the minor source NSR program s as evidenced by the fact that we retained these requirements when we adopted the major source

7 S ee 63 FR 7265, 40 CFR 49.11.Review of New Sources and Modifications in Indian Country Response to Comments

13 programs set forth in 40 CFR 51.160 and 51. 161 . Finally, state implementation plans are required to comply with the requirements at 40 CFR 51.160 and 51.161 and w e believe the same requirements should be an integral part of a plan for Indian country

.

Other Comments:

One trib al commenter (0101.1) supports the rules in the existing FIP that currently applies to its reservation, which include 40 CFR 49.138 (regis tration of sources and reporting of emissions) and 40 CFR 49.139 (non

- Title V operating permits). The commenter would support NSR FIP rules that offer additional (though not redundant) air quality protections.

Response:

We agree with the commenter who s upports the FIP titled “Federal Implementation

Plans Under the Clean Air Act for Indian Reservations in Idaho, Oregon and Washington (commonly known as the FARR R ule). Accordingly

, in the final rule w e do not have redundant air quality protections for the tribes located in these s tates.



### 2.1.2 Minor NSR Should Be Based on Surrounding State Programs

Comments:

Four state /local commenters (0018.1, 0034.1, 0045.1, 0051.1) indicated that the minor NSR programs for each area of Indian country should mirror the rule s applicable in the adjacent

state

.

One of these commenters (0018.1) believes that regulation in Indian country should be based not only on the attainment classification of the Indian country lands, but also on the attainment classification of adjacent o r affected areas under state jurisdiction. The commenter noted that there may not be sufficien t monitoring within Indian country to establish a nonattainment classification, but yet the area may still be nonattainment or may impact adjacent

nonattainment areas. The commenter also indicated that mirroring the state rules is necessary for

environmental and health reasons and for economic reasons

– to create a “level playing field” and prevent the perception of Indian country as a “pollution haven.” The com menter suggested that creating individual minor NSR programs for each area of Indian country could be carried out by the EPA Regional Offices because the adjacent or surrounding state area will have already drafted and implemented the rules that would be p roposed for the Indian country areas.

Another of the state /local commenters (0034.1) stated that the “one size fits all” approach of a single minor NSR FIP for all Indian country will create inequities in each state that has an

established minor source N SR program with differing threshold definitions or hazardous air pollutant (HAP) provisions. The commenter added that tying up permits in EPA’s Environmental Appeals Board (EAB), in the federal Court of Appeals, or in s ection 126

- like

actions is not in th e best interest of any state

, trib e, or company. The commenter went on to assert that the proposed FIP creates a program that is significantly less stringent on pollutingReview o f New Sources and Modifications in Indian Country Response to Comments

14 sources than his state ’s existing minor source and nonattainment major NSR permittin g program, including the air toxics program, because it takes advantage of many simplifications (allowable

to

- allowable applicability for minor source permits, allowable plantwide applicability limits for minor sources, creating a roadmap by which offsets would not be required, vague control technology requirements for minor sources, etc.) that all work together in a common direction. The commenter believes that no single simplification, by itself, can be clearly criticized; however, use of all these optio ns creates an exceedingly flexible program which could attr act industry to the Indian country . The commenter asserted that creating this type of incentive to locate polluting sources in Indian country could constitute an actionable environmental justice

c laim, as could the reduced level of control being required by the less stringent FIP. To rectify this situation, the commenter believes that the federal program should create a per mitting program for each area of Indian country that matches the level of s tringency of the surrounding

state (s) programs by extending the existing state programs to cover Indian country (or portions thereof) that lie within each state . The commenter suggested that authority for administration of such programs could reside with EPA, or with each state as a delegation of authority from EPA.

The commenter added that individual trib es could create their own permitting program TIP for

their lands.

The third state /local commenter (0045.1) strongly agreed that Indian country should not be viewed by industrial sources as a “pollution haven” from the regulatory requirements of NSR and other requirements. The commenter is particularly concerned about the specifics of the proposal relating to control technology, and believes that the pr oposed regulations will do little to address the goal of minimizing the basic inequities in air pollution regulation between those

oper ating businesses off and on Indian country areas and will do little to clean the air in Indian country. The commenter en couraged trib es to adopt the minor NSR program of the closest neighboring state or local air agency, with EPA and the trib es working together to identify the appropriate minor NSR program for large reservations spanning more than one air agency jurisdictio n. The commenter believes that the only reasonable method of creating parity between

industrial sou rces in and outside Indian country is to hold operations in Indian country to the same standards that apply to operations in neighboring areas. The comment er added that with this approach, industry would be treated evenhandedly and residents in and around Indian country would benefit from the same public health protections as other Americans.

The fourth state /local commenter (0051.1) noted that we indicate d in the proposal preamble that the Indian country minor NSR requirements will be stricter than the surrounding area’s in some cases and less strict in other cases. The commenter believes that this will only substitute one equity problem for another. Whi le the commenter is encouraged that EPA is taking steps to apply NSR to minor sources of air pollution in nonattainment areas, the commenter believes that the only way to provide the stated goal of parity is to apply the same regulations that are applied i n the neighboring air jurisdictions.

Response:

As stated previously, we disagree with those commenters that would like us to extend existing state programs to cover Indian country (or portions thereof) that lie within each state. States and tribes may face different air quality issues that a single or national program may orReview of New Sources and Modifications in Indian Country Response to Comments

15 may not be able to address. W e also believe that, in most cases and in the absence of an EPA

approved program, it would be neither practical nor administratively feasible for us t o develop and implement a separate program for each area of Indian country. We therefore encourage states and tribes to develop their own minor source programs for incorporation into their SIPs and TIPs. If a tribe is developing its own program, this FIP can serve as one example of a program that meets the objectives and requirements of the Act.

In addition and as EPA has stated elsewhere, state s generally lack the authority to regulate air quality in Indian country. See Alaska v. Native Village of V enetie Tribal

Government , 522 U.S. 520, 527 fn.1 (1998) (“Generally speaking, primary jurisdiction over land that is Indian country rests with the Federal Government and the Indian Tribe inhabiting it, and not with the States.”)

, California v

. Cabazon Ba nd of Mission Indians , 480 U.S. 202, 216, and n.18 (1987); see also HRI v. EPA , 198 F.3d 1224, 1242 (10 th Cir. 2000); see also discussion in EPA’s final rule for the f ederal operating permits program, 64 FR 8251

- 8255, February 19, 1999. Thus, it would be inappropriate and inconsistent with tribal sovereignty to impose state standards on adjacent areas of Indian country.

Finally, EPA disagrees with the suggestion that this rule is inconsistent with environmental justice. The EPA defines environmental ju stice to mean fair treatment and meaningful participation in environmental decisionmaking for everyone, regardless of race, color, national origin, or income. This rule does that, by filling a “gap” in C AA coverage in Indian country, where there is curren tly no mechanism for permitting minor sources, thereby ensuring that those areas receive the benefits of coverage under the Act. Moreover, consistent with principles of environmental justice, the rule does not impose disproportionately high and

adverse hu man health or environmental effects

. It establishes a single program to provide air protection throughout Indian country that is more rigorous than the programs in some states, and less rigorous than the programs in others. The purpose of the minor sourc e program is to ensure that sources of pollutants will not cause or contribute to a violation of a NAAQS

. Because such standards are set at a level requisite to protect the public health, with an adequate margin of safety, compliance with the NAAQS is emb lematic of a level of protection that does not impose disproportionately high and adverse effects on tribal or other populations.

Comment:

One industry commenter (0022.1) recommended specifically that EPA should not disturb long

- standing effective ai r regulatory programs administered by the State of Oklahoma. The commenter noted that Oklahoma has established practices and procedures, which the regulated community is familiar with and has come to know and rely upon in structuring their activities.

Th e commenter added that Oklahoma’s air program is efficient, fosters economic development, is fair and reasonable, and is not overly burdensome on the regulated community. The commenter believes that the proposed rule would provide an unnecessary bureaucra tic layer and diminish the effectiveness of the existing air program in Oklahoma. The commenter urged us to

allow the state s (especially Oklahoma ) to implement any NSR program in Indian country to avoid inconsistencies, inefficiencies, and confusion withi n the regulated community.

Response:Review o f New Sources and Modifications in Indian Country Response to Comments

16 As stated previously, s tates generally lack jurisdiction under the Act over facilities in Indian country and EPA generally excludes such areas from state programs approved under the

Act

. The EPA recognizes that the S afe, Accountable, Flexible, Efficient Transportation Equity Act of 2005 (SAFETEA) contains a provision (section 10211) relating to implementation of environmental regulatory programs under federal environmental laws, including the CAA, in Indian country in Oklahoma. However, to date, neither the State of Oklahoma, nor any Indian tribe in Oklahoma, has applied for EPA approval to administer either of the CAA programs included in this rulemaking for any area of Indian country. In the absence of an EPA

- appro ved program, these FIPs will apply throughout Indian country, including Indian country in Oklahoma. In promulgating these FIPs, EPA is not acting on any potential request by the State of Oklahoma to administer any CAA or other regulatory program in Indian country, nor is EPA acting on any potential “ treatment as a state ” (TAS) application for an environmental regulatory program by any Indian tribe in Oklahoma. The EPA would address any such applications when necessary and on a case

- by

- case basis and in fu ll consideration of the requirements of Section 10211 of SAFETEA. Section 10211 of the SAFETEA is thus not implicated in this rulemaking and is not a relevant consideration in EPA’s promulgation of the minor and nonattainment major NSR programs for Indian country, including Indian country in

Oklahoma.



### 2.1.3 Proposed Approach Is Not Appropriate for the Oil and Gas Sector

Comments:

Seven industry commenters (0021.1, 0022.1, 0030, 0035.1, 0039, 0052, 0081) and one

trib al commenter (0036.1) believe that the pr oposed minor NSR program is not appropriate for the oil and gas sector in Indian country due to the uniqueness of oil and gas production facilities. The commenters believe that the proposed program would be more stringent than the state permitting program s that apply to oil and gas extraction and production facilities outside of Indian country, and a number of the commenters offered the programs in Colorado and/or Wyoming as examples of state programs that address the oil and gas sector appropriately.

Th e commenters variously pointed to the following characteristics of the oil and gas sector which they believe make the proposed minor NSR program overly burdensome for the industry:

• The large number of individual locations that would be subject to permitti ng, including nearly every well that will be drilled.

• It is not possible for an operator to realistically predict the emissions associated with a well because emissions are related to production characteristics and volumes, neither

of which is known for mo st wells at the time that they are drilled.

• There is a high degree of consistency in the technology used to produce oil and gas.

• Production from an individual well typically declines rapidly.Review of New Sources and Modifications in Indian Country Response to Comments

17 • Production sites are not attended, are in remote areas, and a re exposed to the extremes

of weather.

The commenters believe that an expedited permitting system is necessary for the oil and gas sector. They suggested the following types of measures, which they indicated are common

in state programs:

• De minimis thr esholds below which a permit is not required.

• Presumptive Best Available Control Technology ( BACT ) , rather than a case

- by

- case control technology review.

• A list of insignificant sources or categorically exempt sources or operations.

• General permits for oil and gas sector operation.

• Allowing the permit application to be submitted when a well begins production or operation (when actual emissions can be evaluated) to avoid the significant delays that would be caused by preconstruction permitting of minor sourc es.

• A provision to allow a permit to be withdrawn when the facility’s emissions fall below the permitting thresholds.

The trib al commenter (0036.1) believes that the proposed min or NSR rule might create a disincentive for operators to explore for and pro duce oil and gas in Indian country, putting the

trib e at a disadvantage in the responsible development of its mineral wealth. The trib e believes that the proposed minor NSR program does not achieve the proper balance between the protection of air resource s and economic development in Indian country, and sacrifices a

measure of much

- needed economic development for more stringent protection of air resources within Indian country than currently exists outside of Indian country. A number of the

commenters bel ieve that the proposed minor NSR program would put trib es at a competitive disadvantage when trying to develop their oil and gas resources, and two commenters (0036.1, 0081) indicated that this would be in conflict with the intentions of Title V of the Ene rgy Policy Act of 2005, the “Indian Tribal Energy Development and Self

- Determination Act of 2005.”

Response:

In light of the comments received, we will develop a general permit specific for the oil and gas industry that will address many of the concern s expressed by these commenters.



### 2.1.4 Other Comments on the Proposed Approach to Minor NSR

Comment:

One of the industry commenters who opposes the entire minor NSR program (0032) also stated that our authority to promulgate a minor NSR p rogram under s ection 110(a)(2)(C) of the Act extends, at most, to criteria pollutants (and their precursors) only. The commenter pointed out that the proposed minor NSR FIP would apply to any regulated NSR pollutant, which is not defined in the proposal and therefore relies on the definition in the PSD program. At 40 CFRReview o f New Sources and Modifications in Indian Country Response to Comments

18 52.21(b)(50), “regulated NSR pollutant” is defined to include essentially any pollutant regulated under the Act. The proposed minor NSR threshold table also includes entries for the non

- criteria pollutants for which there are significant emission s rates in the PSD regulations. However, because our only claimed authority for a minor NSR program is section 110(a)(2)(C) of the Act, which allows “regulation of the modification and construction of any stationary source” only “ as necessary to assure that national ambient air quality standards are achieved ” (emphasis added), the commenter believes that we have statutory authority, at most, to regulate only criteria pollutants (and their precursors) under this provi sion of the Act.

Response:

While section 110(a)(2)(C) of the Clean Air Act (CAA) forms the basis for the core policies behind the federal minor NSR program in Indian country, EPA is issuing the final rules pursuant to its authority under sections 301(a) (1) and 301(d)(4) of the CAA and 40 CFR 49.11. Section 301(a)(1) grants the Administrator the authority “to prescribe such regulations as are necessary to carry out [her] functions under this chapter.” 42 U.S.C. 7601(a)(1). Under

section 301(d)(4), when the Administrator determines that the treatment of Indian tribes as identical to States is inappropriate or administratively infeasible, the Administrator can “provide by regulation, other means by which the Administrator will directly administer such

pro visions [of the Clean Air Act] so as to achieve the appropriate purpose.” 42 U.S.C. 7601(d)(4). The Administrator exercised the authority granted by CAA section 301(d)(4) in promulgating 40 CFR 49.11, which provides that the Administrator shall exercise the discretionary authority granted under CAA sections 301(a) and 301(d)(4) to promulgate such f

ederal implementation plan provisions “as are necessary or appropriate to protect air quality”

in circumstances where a tribe either does not submit a tribal im plementation plan or does not receive EPA approval of a submitted tribal implementation plan. 40 CFR 49.11(a). The Administrator has determined that it is appropriate to issue the final rules in order to “protect air quality” in Indian country.

The fina l rules are modeled after state programs established in response to CAA

section 110(a)(2)(C), 42 U.S.C. 7410(a)(2)(C). The final rules are not, however, required by

section 110(a)(2)(C) and go beyond what that section requires of states by including non

N

AAQS pollutants. The minor source permitting provisions of the final rules deal with two distinct types of sources, “synthetic minor” sources and “true minor” sources and EPA’s rationale for addressing non

- NAAQS pollutants is different for each type of so urce. With regard to “synthetic minor” sources, the rules provide a mechanism whereby sources can obtain enforceable limits on their potential to emit (PTE) in order to avoid the application of major source requirements under the PSD program (part C of T i tle I of the CAA; 42 U.S.C. 7470

- 7479), the National Emission Standards for Hazardous Air Pollutants ( NESHAP ) / Maximum Achievable Control Technology ( MACT ) program (CAA section 112; 42 U.S.C. 7412) and/or the

T

itle V operating permit program (CAA sections 501

– 506; 42 U.S.C. 7661

– 7661e). As such, EPA believes that it is appropriate to address a wide variety of emissions in the context of permitting synthetic minor sources. Our rationale regarding requiring “true minor” sources, i.e., sources with a PT E below the major source thresholds without having to obtain any restrictions on its PTE, to address an identified group of non

- NAAQS pollutants is somewhat different. Because programs designed to protect air quality in Indian country are relativelyReview of New Sources and Modifications in Indian Country Response to Comments

19 new, resulting in uncertainties regarding the types of pollutants that are likely to cause significant air quality degradation, and the sources of those pollutants, the Administrator has determined that it is appropriate to establish thresholds for certain non

- NAAQS pollutants, as specified in the minor NSR threshold table in the final rules, and to require sources emitting those pollutants in amounts that exceed those thresholds to obtain a permit pursuant to the program established by the final rules. (The n on

- NAAQS pollutants included in the minor NSR threshold table are all regulated pursuant to one or more N ew S ource P erformance S tandards (NSPS) promulgated pursuant to section 111(b) of the CAA, 42 U.S.C. 7411(b).) This requirement will enable EPA to unde rstand, and where necessary, limit the quantity of these emissions before they can cause significant air quality degradation, either individually or cumulatively.

Comment : 8

One trib al commenter (0043.1) believes that both of the proposed NSR programs a re not
consistent with the Tribal Authority Rule ( TAR ) 9 and its underlying principles (such as providing interested trib es with the resources to develop air programs, recognizing the differences between the policies and priorities of different trib es, enga ging in ongoing consultation, and refraining from imposing requirements based on non

- Indian practices without

trib al consent). The commenter suggested two alternative approaches:

• Withdraw the rule as a nationwide FIP and promulgate regional or reservatio n

specific FIPs for those trib es who believe finalization of the proposed rule in its current form aligns with their economic development or environmental program priorities. For those areas of Indian country that are not covered by such regional or

reser vation

- specific FIPs, EPA could commit to working with the trib es to encourage the development of more effective trib al programs, or to develop mutually agreeable

FIPs in those areas where the trib es choose not to pursue their own programs.

• Incorporate an Opt

- In or Opt

- Out provision into the rule. This would enable

individual trib es to determine whether the provisions of the rule are consistent with

trib al goals and to opt in or out of coverage. For those tribes that do not opt in (or that opt out, as the case may be), EPA can work with them, as suggested in the first alternative, to determine how best to support trib al program development or to adopt mutually agreeable federal regulations.

Without addressing consistency with the TAR, a second tribal comm enter (0097.1) suggested the two alternative approaches above for the proposed nonattainment major NSR rule, while expressing general support for the proposed minor NSR rule.

8 Comments from Commenter 0043.1 apply to both the minor and nonattainment major NSR programs while the comments from Commenter 0097.1 apply only to the nonattainment NSR program. We respond to

Commenter 0097.1 i n this minor NSR section since the response to the comments from both commenters is the

same.

9 The “Tribal Authority Rule” or “TAR

, ” refers to the final rule “Indian Tribes: Air Quality Planning and Management” ( 63 FR 7254, February 12, 1998 ), which is codified at 40 CFR part 49, subpart A.Review o f New Sources and Modifications in Indian Country Response to Comments

20 In the event we choose not to withdraw the proposed rule as a nationwide FIP, o ne of the

tribal commenter s (0043.1) offered some comments regarding the preferred approach for the final rule, as follows:

• Encourage the development of trib al air programs and TIPs by including specific provisions that address how EPA will work with trib es to ensure adequate resources are available to assist the development and maintenance of trib al programs and to

streamline the TIP review process. Tribal commenter 0097.1 also supported this approach.

• Continue to conduct consultation while the proposed rule is being finalized. Now that

a document is available that trib es can assess with specificity, trib al leaders and environmental program personnel should be given additional consultation opportunities before the rule is finalized.

• Continue to conduct consultation during implementation of the rule. It is important that the rule expressly provide a mechanism by which EPA, as long as it remains the reviewing authority, and regardless of whether any delegated authority is sought or granted, engage in con sultation with each trib al government having jurisdiction over a facility for which EPA is rendering a permitting decision. The consultations would address such matters as the process by which permit applications will be considered, including the appropri ate scope of public participation, and the specific regulatory criteria to be applied.

• Provi de a mechanism by which affected trib al governments can provide input into

decision

- making regarding the appropriate regulatory criteria to apply on a regional

or r eservation

- specific basis. Several of the topics in the proposed rule about which EPA sought comment relate to specific substantive technical or procedural regulatory provisions. The EPA should consider using the criteria in the final rule as guidelines that can be tailored by region or reservation after consultation with each potentially impacted trib al government.

Response:

Under the Act, EPA has a general obligation to ensure the protection of air quality throughout the nation, including throughout I ndian country, when a tribe either does not have an approved TIP. Specifically, CAA sections 301(a) and 301(d)(4) provide the EPA Administrator with authority to promulgate such federal implementation plan provisions “as necessary or appropriate to protec t air quality” in circumstances where a tribe either does not submit a TIP or does not receive EPA approval of a submitted tribal implementation plan. 40 CFR 49.11(a). In addition, the final TAR (see 70 FR 18075

- 18076) explains that EPA intends to use its authority under the CAA “to protect air quality throughout Indian country” by directly implementing the CAA’s requirements where tribes have chosen not to develop or are not implementing a CAA program. 63 FR 7254, February 12, 1988 ; 40 CFR 49.11. Curren tly, no

tribes have bee n administering EPA

- approved PSD or nonattainment NSR programs and only a few tribes have been administering EPA

- approved minor NSR programs. Therefore, the Administrator has determined that it is appropriate to issue these final rul es in order to protect air quality in Indian country.Review of New Sources and Modifications in Indian Country Response to Comments

21 W

e also conducted consultation and outreach with tribes throughout the development of the rule and we have planned for conducting extensive consultation and outreach in implementing the rule. This consultation and outreach includes identification of available resources, training for all stakeholders

, and support for developing delegation s or TIP s. The

EPA continues to be supportive of tribes developing their own air quality programs and submitting programs to EPA for approval under the Act and the TAR. Among other things, EPA believes that the administrative delegation provision contained in the FIP will provide significant opportunities for interested tribes to become involved in the a dministration of the minor source program and to develop relevant expertise that may aid such tribes in ultimately developing their own programs.

Finally, in those cases where the EPA is the reviewing authority, sources and EPA will inform the tribes re garding the permitting applications being submitted in Indian country , A ny permitting decisions will be made in conformity with the goals and objectives of the CAA and after consideration of any public comments received, especially comments from the tribe where

the source will locate.

Comment:

One tribal commenter (0099.1) suggested an approach whereby a proposed source

locate d on or adjacent to Indian country lands would be required to demonstrate compliance on

both Indian country and non

- Indian count ry lands, since pollution has no set boundary. The commenter also proposed to enact government

- to

- government relations on the issuance of permits. The commenter believes that trib al economic development should not be hindered whereby the trib e should rec eive preference (first choice) benefiting from the exemptions

– if new source(s) are proposed to be located on trib al lands and cannot demonstrate compliance then

the trib e should have the sole decision in allowing development of such source within its jur isdiction, not the EPA.

Response:

Sources only need to demonstrate that they are complying with the requirements that apply in the area where the proposed source or modification will be located. W e encourage states and tribes , however, to work together in the issuance of permits either on state or Indian

country lands, especially when the facilities will be located close to their r espective geographic boundaries. Where EPA is the reviewing authority, it intends to consult with all affected tribes

regar ding permitting decisions, prior to making those decisions, and all such decisions will be made in conformity with the goals and objectives of the CAA.



### 2.2 **Definition of “Minor Source”**

Comment:

One trib al commenter (0036.1) and one industry commenter (0039 ) specifically indicated that they agree with the proposed definition of “minor source” as one whose PTE is lower thanReview o f New Sources and Modifications in Indian Country Response to Comments

22 an applicable major source threshold. However, both commenters expressed concerns that the definition does not accommodate any de minimi s exceptions or insignificant source categories or activities. These concerns are discussed further below in the appropriate sections of this

document.

Response:

We agree with th ese commenters. Therefore, we have finalized a definition for minor

sourc e t hat accommodate s the language that refers to de minimis exemptions and insignificant categories or activi ties. This definition can be found under 40 CFR 49.152.



### 2.3 **Definition of “Modification”**

2.3.1 Allowable Emissions Basis

We proposed a definition of “modi fication” for the minor NSR program that would include “any physical or operational change at a source that would cause an increase in the allowable emissions of the affected emissions units for any regulated NSR pollutant or that

would cause the emission of any regulated NSR pollutant not previously emitted.” (The definition includes some exemptions, which are discussed below in section 2 .3.2.)

Supporting Comments:

Four teen commenters, including s even trib al commenters (0020, 0031, 0033, 0036.1, 0041, 0056

, 0106.1 ), six industry commenters (0021.1, 0025.1, 0027.1, 0032, 0042, 0081), and

one state /local commenter (0018.1), supported our proposal to base the definition of “modification” on the change in allowable emissions caused by a project. These supp ortive commenters generally favored the “allowable

- to

- allowable test” because it would be simpler for the sources in Indian country than the actual

- to

- projected

- actual test that applies under the major NSR program. Two of the industry commenters (0027.1, 0081) expressed this forcefully, contrasting the ease of determining if a project is a permittable action under the allowable

- to

allowable test to the “quagmire that has become major NSR permitting (what with actual

- to

potential, actual

- to

- projected actual , netting, contemporaneous periods, offsetting, etc., etc.).”

One of the trib al commenters (0031) expressed concern that a definition based on actual emissions would be too costly, time consuming, and complicated for minor sources locating on

the trib e ’ s lands.

A number of the supportive commenters (0018.1, 0025.1, 0027.1, 0032, 0081) also indicated that the proposed allowable

- to

- allowable test is legal and that our interpretation of the applicable provisions of the Act is correct. Two of the supportive commenters (0025.1, 0036.1) also indicated that the proposed allowable

- to

- allowable test is consistent with state and local minor NSR programs that we have approved in SIPs pursuant to section 110 of the Act. One of these commenters (0025.1) went on to c onclude that our interpretation of the statutory term “modification” will provide an equitable and consistent program across various jurisdictions for the purpose of minor NSR.Review of New Sources and Modifications in Indian Country Response to Comments

23 The state /local commenter (0018.1) supported this approach with the caveat th at all applicable limits on allowable emissions must be considered, not just hourly allowable emissions. For example, the commenter noted, the source may have taken a limit on monthly or yearly emissions, for purposes of defining required offsets, or beco ming a synthetic minor

.

Opposing Comments:

Twenty commenters, including nine trib al commenters (0026.1, 0038.1, 0044, 0050.1, 0054, 0061.2, 0076, 0091.1, 0098.1), five private citizens (0016.1, 0092.1, 0093.1, 0094, 0096), three industry commenters (002 8.1, 0072, 0081), two state /local commenters (0023.1, 0034.1), and one environmental group (0037.1), expressed opposition to the allowable

- to

- allowable test

for modifications. The trib al commenters, private citizens, state /local commenters, and

environmen tal group oppose the proposed test because they believe that it is less stringent than the alternative tests and/or that it is contrary to the Act and recent court decisions and therefore will be tied up in litigation. Most of these commenters prefer an a pplicability test based on actual emissions, although two (0037.1, 0061.2) prefer the actual

- to

- potential test and one

state /local commenter (0023.1) suggested that the applicability test should mirror the neighboring state program. The industry commenter s believe that adding the allowable

- to

allowable test for minor NSR would introduce unnecessary complexity. They would prefer to be consistent with major NSR and use the actual

- to

- projected

- actual test.

One of the opposing trib al comments (0098.1) exp ressed a number of common themes. The commenter is concerned that EPA’s focus is inappropriately placed on easing the regulatory burdens on minor sources and not with actually achieving the NAAQS. Under the allowable

- to

allowable test, the commenter beli eves, it is likely that a majority of modifications at existing sources will escape review. The commenter also expressed concern that the allowable

- to

allowable test will not hold up if challenged in court. Although the commenter understands the “slight technicality” that is the legal basis for our proposed definition of modification, the commenter does not see the benefit of miring the proposal in litigation over this issue, when the actual emissions standard is, arguably, more appropriate. The commente r maintained that what is best for Indian country is a test that is consistent in its application to major and minor sources, is legally defensible, and that protects air quality.

One of the private citizens (0016.1) stated that EPA should clearly expla in the legal and policy rationale for choosing to employ a definition of “modification” that is at odds with statutory definition and which seems, to the commenter, counterintuitive. Moreover, the commenter urged some explanation as to what effect changin g this definition would have on the achievement of the NAAQS (which is the ultimate goal per section 110 of the Act) in those tribal

areas that are not in attainment. The commenter believes that without this additional information, we may be acting in an “arbitrary or capricious” manner.

One of the state /local commenters (0023.1) believes that short

- term emission increases

should also be evaluated on a unit

- by

- unit basis to determine applicability. Without such an approach, the commenter believes that t he potential exists for sources to escape evaluation in Indian country when similar source elsewhere would be reviewed and regulated under programsReview o f New Sources and Modifications in Indian Country Response to Comments

24 such as NSPS or NESHAP, leading to NAAQS and increments being adversely impacted outside

of the Indian count ry. The commenter suggested that source category exemptions and short

- term potential emission rate analysis are better methodologies to be used to determine minor NSR applicability.

The environmental group (0037.1) submitted extensive comments on this t opic. The main points of the comments are summarized below:

• In proposing an allowables

- to

- allowables applicability approach for minor NSR in Indian country, EPA ignores the statutory purpose of the minor NSR program: to regulate “the modification and co nstruction of any stationary source within the areas covered by the plan as necessary to assure that national ambient air quality standards

are achieved .” Section 110(a)(2)(C) of the Act (emphasis added). The EPA also fails

to consider that Indian countr y has been significantly lacking in air quality regulation for the last 35 years or more.

• The EPA must design the minor NSR regulation for sources and modifications in Indian country to be more inclusive. The EPA must consider its own longstanding require ments applicable to s tates in developing such NSR programs. Specifically,

40 CFR 51.160(a) requires SIPs to include procedures for a state to determine whether “the construction or modification of a facility, building, structure, or

installation or combin ation of these” would result in a violation of a control strategy

or interfere with attainment or maintenance of a national standard.

• For many unregulated sources, an allowables

- to

- allowables applicability test is essentially equivalent to a potential

- to

- p otential test. In 2002, EPA indicated that it did not support such a potential to potential comparison for major NSR. Specifically, in its Technical Support Document for its 2002 changes to the major source NSR regulations, EPA stated “[w] e agree with th ese 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

. ”

• As envisioned by Congress, the PSD and nonattainment major NSR programs are a subset of the general requirements for NSR specified in section 110(a)(2)(C) of the Act. This is how many state s’ NSR regulations are set up

– with more general NSR requirements applicable to all sources, and then specific PSD or nonattainment major

NSR provisions for new and modified major sources. Accordingly, applicability to the minor NSR program in Indian country should be based on an approach that is more inclusive than applicability under the major source NSR program, rather than being less inconclusive and /or inconsistent with the major source NSR program.

• The EPA’s proposal for minor NSR will add confusion for both the regulated community and the permitting authorities and could result in source owners assuming that, if a modification is exempt from the mi nor NSR provisions for modifications to existing sources in Indian country, it will also be exempt from major NSR requirements.

• The EPA must devise an applicability mechanism that will both catch all modifications that should be subject to the major source NSR rules and also that will ensure that the many modifications that are now allowed to be exempt from majorReview of New Sources and Modifications in Indian Country Response to Comments

25 NSR will still be reviewed under the minor NSR rule. In promulgating its 2002 revisions to the major source NSR rules, EPA indicated in numerous instances that it

assumed state and local minor NSR programs would provide for accountability and ensure protection of air quality for those modifications that would no longer be subject to major NSR permitting requirements.

• An actual

- to

- potential test is more appropriate in Indian country for defining whether a modification is subject to NSR. The commenter provided extensive information relating to this position.

• In the alternative, an actual

- to

- future

- actual test could be acceptable, with appropriate

saf eguards. The suggested test is not the same as the actual

- to

- project ed

- actual test that applies to major NSR. The commenter provided a lengthy discussion of this option.

Response:

For the most part, we agree with those commenters that endorsed the conc ept of defining the term modification for the minor NSR program as a change in allowable emissions. As we

stated in the rule ’ s proposal (71 FR 48696), w e evaluated the three basic types of applicability tests (actual

- to

- potential, actual

- to

- projected

- actu al, and allowable

- to

- allowable) and

determined that the allowable

- to

- allowable test is the most suitable for Indian country because, apart from being a simple test, it will help with easier implementation of the program for the

minor sources in Indian coun try that, to date, have little experience with any air regulations.

S ince minor sources in Indian country have been unregulated until now, many of these sources

have no actual emissions data, making the initial application of any test based on actual

emis sions virtually impossible. We believe that the resulting data gaps would make it virtually impossible to implement any test based on actual emissions, and we have rejected such a test for

that reason. In addition, we understand that some state minor NSR programs use an allowable

to

- allowable test which would make this program for Indian country consistent with the programs in these states.

Moreover and as we discussed in the proposal preamble, we believe that we have the

discretion to use an allowabl e

- to

- allowable test for this minor NSR program because the statutory basis for minor NSR is section 110(a)(2)(C) of the Act. By contrast, parts C and D of

Title I of the Act provide the statutory basis for the major NSR program and refer to

section 111(a) (4) of the Act (the definition of “modification” for purposes of the NSPS) in defining “modification” for purposes of the major NSR program. The D.C. Circuit Court of Appeals has ruled that, based on the wording of the definition of “modification” in

sect ion 111(a)(4) of the Act, the applicability of major NSR to modifications must be based on changes in actual emissions ( State of New York v. U.S. EPA , 413 F. 3d 3 (D.C. Cir. 2005). However, that reasoning based on the definition in section 111 of the Act does not apply to minor source permitting because the statutory basis for the minor NSR program is section 110(a)(2)(C) of the Act, which does not define or refer to a definition of “modification.” Thus, we believe that we have discretion in defining the term for the minor NSR program in Indian country, and we do not believe that the decision of the D.C. Circuit Court of Appeals applies to the minor NSR

program.Review o f New Sources and Modifications in Indian Country Response to Comments

26 To address the concerns of those commenters who expressed that the allowable

- to

allowable te st is less stringent than an actual

- emissions

- based test or that this test is at odds with section 110(a)(2)(C) of the Act, we commit to conducting a study to collect actual emissions data for a period of 5 years from the minor source registration program 10 we are finalizing with this rule to assess the feasibility of implementing an actual

- emissions

- based test. If our study concludes that adequate actual emissions data are available for minor sources, we will consider

undert aking a rulemaking to adopt an a ctual

- emissions

- based test within 2 years from the end of

the 5

- year study period.

Furthermore, because of our concern that some minor modifications at major sources might completely escape review under the minor NSR program as proposed, we are finalizin g that the applicability of the minor NSR program to minor modifications at major sources be

based on the actual

- to

- projected

- actual test used in the applicable major NSR program. Thus, in the final rule, if a proposed modification at an existing major so urce does not qualify as a major modification (which would be subject to major NSR) based on the actual

- to

- projected

- actual test, it is considered a minor modification and is subject to the minor NSR program if the emissions increase from the actual

- to

- pro jected

- actual test is equal to or exceeds the minor NSR

thresholds listed in Table 1 of section IV.A.3 of the final rule’s preamble. The rationale for using

an allowable

- to

- allowable test for modifications at minor sources in Indian country

– that actual emissions data are not available for minor sources and an actual

- emissions

- based test would be beyond the capabilities of many minor sources

– does not apply to modifications at major sources. We believe this approach will be simpler and more efficient th an an approach requiring the use of a second, allowable

- to

- allowable test for the minor NSR program. Hence, we are revising the definition of modification under 40 CFR 49.152 accordingly.



### 2.3.2 Exemptions from the Definition of “Modification”

The proposed de finition provided the following the exemptions:

• A physical or operational change does not include routine maintenance, repair, or replacement (RMRR)

.

• An increase in the hours of operation or in the production rate is not considered an operational change u nless such increase is prohibited under any federally

- enforceable permit condition or other permit condition that is enforceable as a practical matter.

• A change in ownership at a stationary source is not considered a modification.

Supporting Comments:

T wo industry commenters (0025.1, 0042) and one trib al commenter (0036.1) specifically endorsed the exemptions in the proposed definition of “modification.” One of the industry commenters (0042) added that RMRR should be better defined to alleviate any pote ntial confusion and misinterpretations by the reviewing authority and the regulated community.

10 We are requiring minor sources to register within 18 months from the effective date of this rule. See section IV.F of the final rule’s preamble for more details about the registration program.Review of New Sources and Modifications in Indian Country Response to Comments

27 Another industry commenter (0032) also agreed with the RMRR exemption and encouraged us to provide a clear, objective definition of RMRR under the minor NSR pr ogram. Specifically, the commenter suggested that EPA should adopt for the minor NSR program provisions similar to the Equipment Replacement Provisions (ERP) that were promulgated but never took effect under the major NSR programs. See 68 FR 61268, Octob er 27, 2003, vacated

in New York v. EPA , 443 F.3d 880 (D.C. Cir. 2006) ( NY II ), pet. for cert. pending . The

commenter asserted that the D.C. Circuit’s NY II decision is not relevant to the minor NSR program, for the same reasons that the court’s rejection of an “allowable

- to

- allowable” test for some activities under the major NSR rules is not relevant to the minor NSR program’s definition of “modification.” The commenter believes that, at a minimum, we should clarify that we do not intend to adopt under t he minor NSR program a narrow reading of RMRR, and we should exclude from minor NSR activities that are commonly performed within the industry, even if they are performed infrequently or have not been performed before at a specific plant. See 57 FR 32314, 32316, July 21, 1992; see also U.S. v. Ala. Power Co. , 372 F.Supp.2d 1283 (N.D. Ala. 2005); U.S. v. Duke Energy Corp. , 278 F.Supp.2d 619 (M.D.N.C. 2003). Although RMRR is a contentious issue and the subject of extensive litigation, the commenter believes that this litigation, and the parties’ respective positions on this issue, have no bearing on the appropriate scope of minor NSR.

Opposing Comments:

One environmental group (0037.1) expressed serious concerns with the proposed

exclusions for RMRR. The commenter believes that determining whether a maintenance, repair, or replacement project is “routine” for a particular industry can be time

- consuming and controversial, as has been shown in numerous NSR enforcement actions. To avoid unnecessary

controve rsy and delay in beginning the task of controlling minor source emissions in Indian country, the commenter believes that we should eliminate the RMRR exemption, so that applicability to modifications is governed simply by emissions changes. The commenter added

that the ERP published at 40 CFR 51.166(y) and stayed by the Court in December 2003 are inconsistent with the Act, and should not be used in any part of the NSR program.

One private citizen (0095) expressed concern with the exemption for an increase in hours of operation. The commenter pointed out that daily NAAQS could be threatened by an increase in daily hours of operation, even if annual emissions do not increase.

Other Comments:

The environmental group (0037.1) did not contend that all incre ases in hours of operation or production rate should trigger minor NSR applicability, but stated that it is imperative that the exemption for increased production or hours of operation clearly state as a caveat that, for an increase in hours of operation o r production rate to be exempt from being considered a modification, any such increase must not be associated with any physical or operational change(s) made at the emission unit(s) in question or anywhere else at the facility (i.e., must not

be the result of a “debottlenecking”). The commenter believes that we must write this exemption more clearly in the Indian country minor NSR rule to facilitate compliance because theReview o f New Sources and Modifications in Indian Country Response to Comments

28 commenter has seen examples of facility owners who made source debottlenecking change s several years before increasing production and claimed subsequent exemption for increases in production.

Response:

Facilities perform RMRR to keep their facilities in proper working order, and these activities have been determined as exempt from the d efinition of modification under the major NSR rule provisions. As such, EPA believes it is prudent to carry over the RMRR exclusion for the minor NSR program in Indian c ountry. The EPA has historically interpreted "the RMRR

exclusion as limited to de min imis circumstances." New York v. EPA , 443 F.3d 880, 884 (D.C. Cir. 2006), cert. denied 127 S. Ct. 2127 (2007) (citing Alabama Pow. Co, v. Costle , 636 F.2d 323 (D.C. Cir 1980)). Further, “in determining whether proposed work at an existing facility is

‘ro utine,’ EPA makes a case

- by

- case determination by weighting the nature, extent, purpose, frequency and cost of the work, as well as other relevant factors, to arrive at a common

- sense finding.” Memorandum from Don R. Clay, Acting Assistant Administrator, Office of Air and Radiation, U.S. EPA, “ Applicability of Prevention of Significant Deterioration (PSD) and New Source Performance Standards (NSPS) Requirements to the Wisconsin Electric Power Company (WEPCO) Port Washington Life Extension Project ” (Sep. 9, 1988) (http://www.epa.gov/region07/air/nsr/nsrmemos/wpco2.pdf). The EPA further explained these factors in Letter dated May 23, 2000 from Francis X. Lyons, Regional Administrator, Region V, U.S. EPA, to Henry Nickel, Counsel for the Detroit Edison Compan y, Hunton & Williams ( http://www.epa.gov/region07/air/nsr/nsrmemos/detedisn.pdf ). Given the case

- and fact

- specific analysis for determining whether an activity at a pla nt qualifies as RMRR, we do not believe it is necessary to further define RMRR in the context of creating an RMRR exemption for minor

sources.

We also do not believe it is necessary to adopt t he ERP to define whether a modification at a minor source qu alifies for the routine maintenance, repair

, and replacement exemption

, as a

commenter suggested. The ERP was an impermissible exemption from CAA section 111(a)(4) that would have allowed certain physical changes to not be deemed to be modifications when they would cause an actual emission increase otherwise regulated under the major nonattainment NSR and PSD programs. The ERP would have substituted a test based on emissions limits for the actual emissions

- based test required by CAA section 111(a)(4). Fo r reasons described in the record, we are not restricted by the terms of CAA section 111(a)(4) when we establish a minor source program. However, an ERP for minor sources would be too complex to administer, requiring estimates of capital costs and enginee ring judgment as to the basic design parameters of the emission unit. We believe the thresholds applicable to minor modifications and the allowable emissions test established by this rule provide a simpler and more appropriate method for determining when an emission increase is a minor modification.

Furthermore , we continue to believe that the hours of operation exemption is appropriate . Where necessary to account for variation in hours of operation, a combination of long

- term and s hort

- term emission limits may be required as part of any enforceable emission limitation. Therefore, increases in hours of operation or in the production rate will still allow for NAAQS protection as long as the increase is not prohibited under any federally

- enforceableReview of New Sources and Modifications in Indian Country Response to Comments

29 pe rmit condition (e.g., emission limit) or other permit condition that is enforceable as a practical

matter.

Under our major source NSR provisions, when a source undertakes a modification, it must consider, for applicability purposes, all emissions change s that result from the modification at the source. This includes both the emissions changes that are part of the project (i.e., the units undergoing the physical or operational changes), as well as emission changes from any units that are not part of the project. This latter category may include units that are “debottlenecked,” and therefore emit more pollution, as a result of the physical or operational change occurring elsewhere at the facility. However, for the purposes of the BACT analysis for

a modi fied source, EPA only considers the units that are part of the project, which would not include debottlenecked units since they are not physically or operationally changed. As such, the commenter’s request to include the caveat “for an increase in hours o f operation or production rate to be exempt from being considered a modification, any such increase must not be associated with any physical or operational change(s) made at the emission unit(s) in question or anywhere else at the facility (i.e., must not be the result of a “debottlenecking”)” is inconsistent with our debottlenecking policy for major NSR source permittin g, and we do not s ee any reason to deviate from this policy for our minor source NSR provisions for Indian c ountry.



### 2.3.3 Other Comments on th e Definition of “ Modification”

Comment:

One industry commenter (0028.1) pointed out that the wording of the proposed definition of “modification” deviates from existing major NSR definition for “major modification.” The proposed definition refers to ch anges that would cause an increase in emissions, while the existing definition of “major modification” refers changes that would result in certain emissions increases. The commenter requested that we revise the proposed minor NSR definition to more

closel y track the existing major NSR definition. The commenter believes that this change would likely minimize confusion, maintain consistency between terms of art used in NSR programs, and enhance understanding of the program.

Response:

The definition of “ m odification ” for this minor NSR program differs from the definition of “ modification ” under the major NSR program because we did not propose the concept of

contemporaneous netting under the mino r NSR program. O nly emissions increases from the proposed phy sical or operational change are accounted for to determine if a source has undergone a minor modification and not any other increases and decreases at the source that are contemporaneous with the particular change. Therefore, we believe it is appropriate to define modification, for the purposes of the minor NSR program, using the word “ cause ” instead of the word s “ result in ” as the commenter suggested.

Comment:Review o f New Sources and Modifications in Indian Country Response to Comments

30 One trib al commenter (0054) is concerned that we have proposed to look at net

increase/decr ease for minor new source modifications on a yearly basis, while past NSR rules have required that net increase/decrease look at the past 5 years. The commenter suggested that

EPA take the more conservative 5

- year approach with minor new sources, as a pre cautionary measure to ensure that environmental creep from minor sources does not occur.

Response:

For the minor NSR program, we did not propose the concept of contemporaneous netting, as used in the major NSR program, and we are not finalizing the prop osed project netting concept to be consistent with our position in the major NSR program ( s ee final rule

titled: “ Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NSR): Aggregation and Project Netting” January 15, 2009 (7 4 FR 2376)). Therefore, we are not considering a 5

- year net increase/decrease look back period , as the commenter suggested

.



### 2.4 **Process for Determining Whether a Proposed Change Is a**
**Modification**

2.4.1 Project Netting

Supporting Comments:

Eight commenters, in cluding five industry commenters (0025.1, 0027.1, 0028.1, 0042, 0081), two trib al commenters (0031, 0036.1), and one environmental group (0037.1) supported our proposal to allow “project netting” in the minor NSR program for determining whether a proposed project qualifies as a modification. These commenters frequently suggested that the project netting provision will provide incentive to sources to reduce emissions from existing

units such that the net increase in allowable emissions will be less than min or NSR thresholds.

Some of these commenters ( 0027.1, 0036.1, 0037.1, 0081 ) also specifically stated that they are not in favor of including provisions for “contemporaneous netting” in the minor NSR rule. These commenters commonly indicated that contempo raneous netting is too complicated for minor NSR. The environmental group (0037.1) added that project netting could readily be

accommodated in the actual

- to

- potential test that the commenter advocates.

One supportive industry commenter (0042) stated tha t contemporaneous netting should be allowed as an option. The commenter believes that the fundamentals of contemporaneous netting are generally much less complex than conducting a case

- by

- case control technology analysis, which is also required by this ru le. If the underlying purpose of this rule is to ensure compliance with the NAAQS, the commenter asserted, previous emission reduction projects, even if not performed at exactly the same time, should be counted toward future projects. The

commenter went on to point out that major sources are also subject to this ruling, and such sources do have a background in netting. The commenter believes that facilities should have the choice to undertake contemporaneous netting.Review of New Sources and Modifications in Indian Country Response to Comments

31 Opposing Comments:

One state /local commenter (0023.1) stated that the proposed use of an annual emissions test with an ability to utilize project netting has the potential to result in projects that may have large emission thresholds to proceed without review. The commenter believes that short

- term
emission increases should also be evaluated on a unit

- by

- unit basis to determine applicability.

One industry commenter (0021.1) supported the use of contemporaneous netting rather than project netting for taking credit for emissions reductions . The commenter noted that although more complex than project netting, contemporaneous netting provides a manner for taking credit for emission reductions that may not related to a specific project but have occurred within a specified period of time.

Oth er Comments:

One trib al commenter (0099.1) who did not endorse project netting nevertheless opposed contemporaneous netting. The commenter took this stance because of concern about the immediate impacts of emissions on its membership, employees, and the environment, and stated that there should be no exceptions or allowances made for a facility’s past performance.

One industry commenter (0025.1) noted that the proposal preamble (71 FR 48713) indicates that to validate a project net emissions increase, a source must obtain allowable emissions limit(s) for existing emissions units involved in the project net. The commenter pointed out that the proposed regulatory provisions do not provide a permit mechanism to implement such allowable emissions other tha n minor NSR. If a source would still be required to obtain a minor NSR permit to make the new allowable emissions enforceable, the commenter asserted, other elements of the minor NSR program including control technology review requirements would also be t riggered. The commenter believes that this approach clearly will not provide any incentive or benefit to the applicant for reducing emissions from existing emissions units or operations. Therefore, the commenter recommended that EPA provide an

alternativ e permit mechanism to make emissions increases and decreases enforceable for projects involving netting, similar to the proposed administrative permit revision provisions for increases in allowable emissions under 40 CFR 49.159(f)(1)(v) or the synthetic mi nor permit provisions under 40 CFR 49.158. The commenters suggested approach would allow applicants proposing project netting to obtain a permit that will allow higher allowable emissions for some units (e.g., newly constructed or modified units) and decr eases in the allowable emissions for other existing

units.

Response:

We are not finalizing the “project netting” concept at this time to be consistent with our position in the major NSR program ( s ee final rule titled: “ Prevention of Significant

Deteriora tion (PSD) and Nonattainment New Source Review (NSR): Aggregation and Project Netting” January 15, 2009 (74 FR 2376)).Review o f New Sources and Modifications in Indian Country Response to Comments

32 

### 2.4.2 Other Comments on the Modification Applicabilit y Test

Comment:

Two industry commenters (0025.1, 0032) expressed concern related to the allowable

- to

allowable test for unpermitted existing emissions units undergoing physical or operational changes. The proposal indicated that the emissions increase will be the allowable emissions after the change minus the PTE prior to the change. T he commenters stated that based on the definitions of these terms in the proposed rule, for an existing unpermitted emissions unit (assuming no SIP, NSPS, etc. is applicable), allowable emissions after the change will be the uncontrolled PTE (since there a re no applicable emissions limits that are enforceable as practical matter). Therefore, the commenters believe that in this situation, the emissions increase would be calculated by subtracting the uncontrolled PTE before change from the uncontrolled PTE a fter the change. The commenters requested that we clarify this further in the preamble to the final

minor NSR rule.

One of these commenters (0032) also stated that proposed Flowchart 6 does not indicate

what to do if a source does not have an allowable limit. The commenter recommended that we modify Flowchart 6 to indicate that if the unit’s post

- change PTE does not exceed the pre

- change PTE by the minor NSR threshold, minor NSR is not triggered.

Response:

We agree with these commenters. Allowable em issio ns after the change will be

uncontrolled PTE for an existing unpermitted emissions unit that does not take an enforceable

limitation on its PTE after the change. W e have cl arified this concept in the preamble of this final rule.

We did not receiv e strong support for the proposed flowcharts and therefore, we are not finalizing these flowchart s in this final rule

.

Comment:

One industry commenter (0032) noted that Flowcharts 3 and 5 both include a box stating, “Does physical change constitute a ma jor SS [stationary source] by itself?” The commenter believes that this language is unclear and encouraged EPA to clarify.

Response:

We did not receive strong support for the proposed flowcharts and therefore, we are not finalizing these flowchart s in this final rule

.

Comment:

One industry commenter (0032) recommended that we explicitly provide that a physical change or change in the method of operation at a major emitting facility that results in no netReview of New Sources and Modifications in Indian Country Response to Comments

33 emissions increase under the “major modificati on” rules applicable under PSD and nonattainment NSR is not a “modification” at all and thus is not subject to minor NSR.

Response:

We have finalized provision s in the final rule that state that if a proposed modification at an existing major source do es not qualify as a major modification (which would be subject to major NSR) based on the actual

- to

- projected

- actual test, it is considered a minor modification and is subject to the minor NSR program if the net emissions increase from the actual

- to

projec ted

- actual test is equal to or exceeds the minor NSR thresholds listed in Table 1 of section IV.A.3 of the final rule’s preamble. Therefore, a physical change or change in the method of operation at a major emitting facility that results in no net emissio ns increase under the “major modification” rules applicable under PSD and nonattainment NSR would not be a modification under the minor NSR program because the net emissions increase will not exceed the minor NSR thresholds under this final rule.

Commen t:

One trib al commenter (0036.1) is concerned that language regarding a physical or operational change that may be subject to the proposed minor NSR program, even if it is not classified as a modification, is unnecessarily confusing and potentially quite burdensome. The commenter noted that the proposal preamble stated that “if a proposed change in emissions at any emissions unit would exceed a permitted allowable emissions limit for that unit, [the operator] must apply to revise the existing permit limi t before [it] may implement the change” (71 FR 48706). The commenter indicated that this language forces a two

- step process which is

more time

- consuming, burdensome and generally ill

- suited to the needs of the oil and gas sector.

Response:

We would l ike to clarify that the language the commenter is referencing is in regards to administrative permit revisions and these revisions can only be used when the increase in an unit’s annual allowable emissions limit for a regulated NSR pollutant is not subject to major or

minor NSR . See 40 CFR 49.159(f) for more information about administrative permit revisions.

Comment:

One state /local commenter (0034.1) noted that if a project nets to an exempt emissions

increase [ generally less than 10 tons per year (t py ) ] , any individual emissions unit that is part of the project may have its emission limit revised upwards as an administrative amendment. The commenter is concerned that there appears to be no preclusion against sham permitting in the proposed minor sou rce permitting program. Specifically, the commenter believes that a facility could break up a single project into multiple smaller projects such that each smaller project falls below the exempt emissions increase, allowing a project that should have under gone a full preconstruction permitting review to make changes to the existing permit with only administrative amendments. The commenter believes that the regulations should preclude suchReview o f New Sources and Modifications in Indian Country Response to Comments

34 actions. The commenter suggested that the rules require the minor N SR thresholds to apply to the combination of all affected emission units, as defined in the regulations.

Response:

We understand that there might be particular concerns with the provision at 40 CFR 49.159(f)(v) where an administrative permit revision is allowed for an increase in an emissions unit’s annual allowable emissions limit for a regulated NSR pollutant, when the action that necessitates such increase is not otherwise subject to review under major source NSR or under this program. For example, th is case could be one where a source introduces a new coating to a process line that will increase the emissions of that unit but the emissions increases from the source will not trigger the minor NSR requirements.

Although this type of change does not t rigger the major or the minor NSR thresholds, we continue to believe that we need to account for these changes in emissions in the permit to know the source’s current allowable emissions and to ensure that the source is complying with the applicable requir ements. Therefore, an administrative permit revision can be used when the

increase in a unit’s annual allowable emissions limit for a regulated NSR pollutant is not subject to major or minor NSR . Similarly, other proposed physical or operational changes that could not be implemented within the requirements of an existing permit would necessitate a permit revision, even if they are not otherwise subject to major or minor NSR. We believe that this fact will serve to ensure that the types of changes that co uld significantly alter the dispersion characteristics of the air pollutants emitted by your source will be brought to the attention of your reviewing authority.

In response to the concern regarding sham permitting, where a facility might break up a

pro ject into multiple small projects, the reviewing authority can ask the source to justify why all the multiple small projects shall not be considered a single project.



### 2.5 **Minor NSR Thresholds** 

2.5.1 General Comments on Thresholds

Supporting Comments:

Eight comm enters, including four from industry (0025.1, 0035.1, 0039, 0072), two trib al commenters (0026.1, 0036.1), and two private citizens (0016.1, 0094), specifically supported the

establishment of minor NSR thresholds in the rule. A number of these commenters had additional comments on some aspects of the proposed thresholds, which are summarized below in the appropriate sections of this document. No comments were received that specifically opposed minor NSR thresholds.

Response:Review of New Sources and Modifications in Indian Country Response to Comments

35 We agree with those comment ers that endorse d the development of minor NSR

thresholds. Therefore

, in this final rule we are promulgating m inor NSR thresholds

.

Comment:

Four of the supportive commenters (0035.1, 0036.1, 0039, 0072) specifically endorsed setting the minor NSR thres holds in terms of a mass emission rate in tpy, rather than based on air quality impacts. However, another of the supportive commenters (0016.1) believes that we should formulate a threshold rule that is simpler to apply for more people. The commenter

ass erted that determining whether a source is exempt under the “emission rates in tpy” methodology laid out in proposed 40 CFR 49.153(a) would seem to require a degree of technical expertise (e.g., engineering analyses employing mass balance equations, etc

. ) beyond the typical small businessperson.

Response:

We agree with the commenters that would like us to establish minor NSR thresholds in terms of mass emission rates in tpy . Therefore, we are finalizing the minor NSR thresholds on a

tpy basis. We under stand that these mass emissions rates require some technical expertise and

we plan to have tools and resources available to help minor sources comply with these limits as needed or requested.

Comment:

One industry commenter (0021.1) indicated that EPA needs to adjust periodically the minor NSR thresholds, utilizing recent monitoring data, to maintain the NAAQS. The commenter suggested that, as monitoring data become available within Indian country, we should exercise our responsibility for reviewing ne w information and adjusting minor NSR thresholds as warranted for ensuring continuous compliance with the NAAQS.

Response:

We agree with the commenter and intend to revise the thresholds, if necessary, based on recent monitoring data.



### 2.5.2 Level of the Pr oposed Thresholds

All Thresholds Should Be Less Stringent:

Six industrial commenters (0022.1, 0025.1, 0028.1, 0029.1, 0048.1, 0072) and one tribal commenter (0097.1) asserted that all of the proposed minor NSR thresholds should be less stringent. Two o f these commenters (0022.1, 0048.1) indicated that the proposed thresholds are

well in excess of those in the state minor NSR programs where they do business (Oklahoma and New Mexico, respectively). Commenter 0022.1 stated that Oklahoma’s program adequate ly addresses minor sources without being too burdensome on the regulated community, and that theReview o f New Sources and Modifications in Indian Country Response to Comments

36 proposed thresholds will create a significant, unnecessary burden on small businesses and the reviewing authority. Commenter 0048.1 noted that the minor NSR t hresholds in New Mexico

are 25 tpy for all pollutants except lead, and suggested tha t the minor thresholds align with the already established applicability thresholds for a major modification.

One of these industrial commenters (0029.2) stated that when due consideration is given to the typical, low levels of ambient air pollutants in Indian country, the thresholds for minor NSR in Indian country could be significantly higher than the proposed values. Another of the commenters (0025.1) stated that EPA’s analysis concluded that increasing minor NSR thresholds generally had a small effect on the percentage of total emissions and the percentage of sources that would be exempt from minor NSR. On this basis, the commenter recommended that we

raise the minor N SR applicability thresholds for all regulated NSR pollutants [ with the possible exception of volatile organic compounds ( VOC) ] to reduce the administrative burden of obtaining minor NSR permits and performing control technology evaluations for very small

s ources that are not significant contributors to the total emissions.

One of the industrial commenters (0028.1) stated that, based upon his company’s experiences with minor NSR projects, the proposed thresholds do not afford sufficient flexibility for maj or sources to undertake minor modifications that would result in an emissions increase. The commenter believes that the proposed thresholds are likely to result in numerous permit requests that consume limited resources of the regulated entity and of the reviewing authority. The tribal commenter (0097.1) similarly indicated that EPA may not currently be staffed to handle the substantial number of new permit applications that will result from the proposed thresholds, which the commenter believes will trigg er permit review for almost everything, particularly in nonattainment areas. The commenter stated that sources with emissions less than 20 to 25 percent of the major source thresholds are likely not worth pursuing for the amount of

time and effort necessa ry for permitting and the associated administrative burden.

Thresholds for VOC Should Be Less Stringent:

Six industrial commenters (0021.1, 0027.1, 0030, 0035, 0039, 0081) and one trib al commenter (0036.1) believe that the proposed threshold for VOC is too stringent. These commenters generally expressed concern that the VOC threshold would be unduly burdensome for oil and gas operators in Indian c ountry because a whole host of minor sources and activities would be subject to individual permits in Indian country, which are typically not required outside of Indian country. In addition to adding to the list of excluded emissions units and activities for such facilities ( see section 2 .6 below), most of the commenters asked that we increase the

threshold for VOC in attainment areas to 10 tpy and in nonattainment areas to 5 tpy. The commenters generally noted that this would promote consistency across NSR criteria pollutant categories and would make the threshold for VOCs equivalent to that of the nonmethane organic compounds for solid waste landfills in attainment areas. Two of the commenters (0027.1, 0081) analyzed the figures we presented in Table 2 of the proposal preamble to conclude that raising the threshold to 10 tpy would bring the percent of unregul ated sources of VOC more in line with that of the other criteria pollutants.

Thresholds for Carbon Monoxide ( CO ) Should Be Less Stringent:Review of New Sources and Modifications in Indian Country Response to Comments

37 Two of the industrial commenters (0025.1, 0072) who believe that all of the minor NSR

thresholds should be less st ringent are especially concerned that the threshold for CO is too stringent. These commenters pointed out that operation of combustion units often involves a

trade

- off between nitrogen oxides ( NO

x ) and CO emissions. That is, combustion optimization

for N O

x emissions reduction often results in an increase in CO emissions and vice versa. The commenters noted that under the major NSR regulations for attainment areas, the significant

emission s rate threshold and significant impact level for ambient air quali ty are significantly higher for CO in comparison to NO

x . Also, based on EPA guidance and regulatory provisions relating to Pollution Control Projects under major NSR, reduction and control of NO

x emissions is considered more beneficial than any collateral increase in CO emissions. In addition, stationary sources (both major and non

- major) are not significant contributors to the overall CO emissions according to EPA’s website, which indicates that on

- road vehicles are the major

contributor to CO emissions (nearly 56 percent ) nationwide and in urban areas this contribution is even higher (85

- 95 percent ). The commenters recommended that for purpose of consistency and avoiding the administrative burden of permitting very small sources of CO emissions, EPA

sho uld raise the minor NSR applicability threshold for CO in relation to other regulated NSR pollutants, which will also avoid requiring application of control technology at very small sources of CO emissions that may cause increased NO

x emissions.

Response:

After consideration of comments received and further evaluation of the proposed thresholds, we are finalizing the minor NSR thresholds as proposed, except for the NO

x and VOC thresholds in extreme ozone nonattainment areas. We are amending the proposed “0” tpy NO

x and VOC thresholds for the minor NSR program in extreme ozone nonattainment areas because we believe that these thresholds, while required under section 182(e)(2) of the Act and appropriate as significance levels for major sources located in ex treme ozone nonattainment areas, are not appropriate for minor sources. We believe that a “0” tpy threshold for modifications at minor sources in extreme nonattainment areas will place tribes at a competitive disadvantage with surrounding areas since a “0 ” tpy threshold will require all modifications at

minor sources in these areas to obtain a permit before beginning construction. Therefore, we are finalizing minor NSR thresholds for NO

x and VOC in extreme nonattainment areas as 5 and 2 tpy respectively.

Furthermore, we continue to believe that the sources with emissions below the thresholds will be inconsequential to attainment or maintenance of the NAAQS because the national source distribution analysis in the proposal (71 FR 48702) applied to the nat ional source distribution at the time (sources inside and outside of Indian country) and not only to estimates of the possible number of existing sources in Indian country. For each pollutant, we found that only around

1 percent (or less) of total emissio ns would be exempt from review under the minor NSR program. At the same time, the thresholds would promote an effective balance between environmental protection and source burden because anywhere from 42 percent to 76 percent of sources (depending on the pollutant) would be too small to be subject to preconstruction review.Review o f New Sources and Modifications in Indian Country Response to Comments

38 In addition, we believe that such thresholds are included in many of the minor NSR programs, which will allow us to begin leveling the playing field with the surrounding state

progra ms, and will result in a more cost

- effective program by reducing the burden on sources and reviewing authorities.

Nevertheless, to address any concerns about the stringency of the thresholds, we will evaluate the information we collect as part of the regi stration provisions for minor sources we are finalizing under this rule (see section IV.F of the final rule preamble for more information) and will consider changing the minor NSR thresholds as appropriate

. 11

Thresholds for Modifications Should Be More Str ingent:

One environmental group (0037.1) asserted that we should promulgate lower thresholds for defining whether modifications are subject to the minor NSR program. The commenter noted that we proposed thresholds that would apply to both new constructi on and to modifications. The commenter believes that these minor source thresholds are much too high for defining whether a modification to an existing minor or major source should trigger applicability to the minor NSR program, and recommended that we pr omulgate separate, lower emission

thresholds for modifications.

The commenter indicated that a review of the six states in EPA Region VIII found that

four out of the six state s’ minor source NSR regulations would include modifications that would

result in any increase in emissions or in the emissions of a pollutant not previously emitted. (The

other two state s had de minimis thresholds for defining when modifications to existing sources would be subject to minor NSR requirements, although neither of th ose state s’ de minimis rules

has been approved by EPA as part of the SIP.) The commenter observed that many benefits to air quality protection and management can be gained from an inclusive definition of modifications subject to the minor NSR permitting p rogram, including the ability for the reviewing authority to monitor modifications for compliance with major source NSR permitting requirements and the ability to track emission changes at existing sources for use in air quality planning/regulation develop ment efforts. The commenter suggested that we should strongly consider requiring all modifications that would increase emissions, on an actual

- to

- potential basis, to trigger applicability to the minor NSR program in Indian country.

At the minimum, the c ommenter added, EPA should promulgate modification thresholds in a similar manner to how we set the significance thresholds for major modifications; that is,

modification emission thresholds should be 0

- 40 percent (or 100 percent in the case of CO ) of

the minor source applicability threshold specified in Table 1 of the proposed rulemaking, depending on the pollutant. The commenter indicated that, for example, this would mean in an attainment area, the NO

x and sulfur dioxide ( SO 2 ) modification thresholds sh ould be at maximum, 40 percent of the minor source threshold in Table 1, or 4 tpy, similar to how the major modification emission threshold in the major source regulations is 40 tpy or 40 percent of the 100 tpy major source threshold.

11 We might also cons ider proposing thresholds for greenhouse gases in accorda nce with any future rulemakings to address small greenhouse gas sources as outlined in the rule titled: “Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule” (75 FR 3151 4).Review of New Sources and Modifications in Indian Country Response to Comments

39 Response:

We do no t believe that we need to finalize more stringent minor NSR thresholds for modifications or that these thresholds should be set in a similar manner to how we set the significance thresholds for major modifications

. As we stated in the proposal, we continu e to believe that the sources with emissions below the thresholds we proposed will be inconsequential to attainment and maintenance of the NAAQS based on national source distribution analysis in the proposal (71 FR 48702).

Nevertheless, b ased on our conce rn that some minor modifications at major sources might completely escape review under the minor NSR program based on the proposed

allowable

- to

- allowable test , we are finalizing that the applicability of the minor NSR program to minor modifications at majo r sources be based on the actual

- to

- projected

- actual test used in the applicable major NSR program. Thus, in the final rule, if a proposed modification at an existing major source qualifies as a major modification, it will be subject to the thresholds und er the major NSR program. If the proposed modification does not qualify as a major modification (which would be subject to major NSR) based on the actual

- to

- projected

- actual test, it is considered a minor modification and is subject to the minor NSR progr am if the net emissions increase from the actual

- to

- projected

- actual test is equal to or exceeds the minor NSR thresholds listed in Table 1 of section IV.A.3 of the final rule’s preamble. For all other minor modification s , we believe that the minor NSR th resholds listed in Table 1 of Section IV.A.3 of the final rule’s preamble are appropriate for these purposes.

Comment:

One private citizen (0094) stated that distinguishing nonattainment areas from attainment areas in setting the threshold is vital to success of this method, as it will deal with air quality standards more appropriately.

Response:

As proposed and as suggested by this commenter, we are finalizing thresholds that are more stringent for nonattainment areas than attainment areas. We beli eve that this approach will help us bring nonattainment areas into attainment.

Comment:

One industrial commenter (0025.1) indicated that we should clarify that the applicability

threshold for particulate matter less than 2.5 micrometers ( μm ) (PM 2.5 ) noted in the minor NSR thresholds table applies to direct PM 2.5 emissions and does not represent the contribution of other precursors such as SO 2 or NO

x to ambient PM 2.5 formation. The commenter believes that emissions of precursors for PM 2.5 formation for which minor NSR applicability thresholds are specified should be subject to those respective thresholds and not the direct PM 2.5 emissions

threshold.Review o f New Sources and Modifications in Indian Country Response to Comments

40 Response:

We agree with this commenter. Therefore, we want to clarify that the PM 2.5 thre shold for applicability purposes applies to direct PM 2.5 emissions, and does not represent the contribution of its precursors (e.g. , SO 2 or NO

x ).

Comment:

One industrial commenter (0025.1) noted that we proposed stringent applicability

thresholds for m inor sources locating in “extreme” ozone nonattainment areas. Because only

VOC and NO

x emissions are considered precursors for the formation of ozone, the commenter recommended that for “extreme” ozone nonattainment areas, we should define applicability

t hresholds for VOC and NO

x emissions only.

Response:

We are amending the proposed “0” tpy NO

x and VOC thresholds for the minor NSR program in extreme ozone nonattainment areas because we believe that these thresholds, while required under section 182(e)(2 ) of the Act and appropriate as significance levels for modifications at major sources located in extreme ozone nonattainment areas, are not appropriate for minor sources. We believe that a “0” tpy threshold for modifications at minor

sources in extreme n onattainment areas will place tribes at a competitive disadvantage with surrounding areas since a “0” tpy threshold will require all modifications at minor sources in these areas to obtain a permit before beginning construction. Therefore, we are finalizi ng minor NSR thresholds for NO

x and VOC in extreme nonattainment areas as 5 and 2 tpy respectively.

As a result , we do not define different thresholds for extreme ozone nonattainment areas for any pollutant s in the final rule

.



### 2.5.3 Methodology Used To Develop the Proposed Thresholds

Comment:

Three industrial commenters (0029.2, 0032, 0042) believe that our methodology for selecting minor NSR thresholds is inadequate. These commenters indicated that, because the purpose of the minor NSR program under sectio n 110 of the Act is to protect the NAAQS and PSD increments, the selection of minor NSR thresholds should be based on an analysis of air quality impacts. They do not believe that we have performed the necessary analysis to support our proposal preamble st atement that “[t]hese thresholds would prevent stationary sources that make negligible contributions to pollution from being regulated under this rule.”

One of these commenters (0029.2) added the methodology fails to acknowledge the particular characteri stics of much of Indian country, i.e., relatively low levels of ambient pollutants and low emissions densities of stationary sources. Although the commenter offered no specific data on this point, the commenter believes it is reasonable to believe that th e air quality

and emissions densities of most state s are appreciably different from that of Indian country andReview of New Sources and Modifications in Indian Country Response to Comments

41 questioned our reliance on state s’ minor NSR thresholds as guidance for setting those values for Indian country.

Another of the commenters (003 2) stated that the threshold for “insignificant activities” under Title V is 2 tpy, below which the activity is not subject to regulation. So, for example, an emissions unit with less than 2 tpy of PM 2.5 emissions would be considered insignificant for

Tit le V purposes. In comparison, the commenter pointed out, under the proposed thresholds an increase of 3 tpy PM 2.5 (1 tpy more than the Title V insignificance threshold) sufficiently threatens the NAAQS that preconstruction review is required and control t echnologies, potentially including BACT, may be warranted. The commenter also noted that EPA Region IX recently issued a draft air permit for a new coal

- fired power plant on the Navajo Nation in which Region IX concluded that the total emissions from the entire plant will not threaten the NAAQS, even though the project estimated emissions are 3,325 tpy NO

x , 5,529 tpy CO, 3,319 tpy SO 2 , and 1,120 tpy of particulate matter less than 10 μm ( PM 10 )

.

The third of these commenters (0042) stated that the analysis in the proposal preamble of the distribution of sources and emissions under the proposed minor NSR thresholds does not show how these levels will protect air quality, but rather, evaluates the potential workload of the regulatory agency that will be responsible for reviewing the applications.

A fourth industrial commenter (0072) also believes that our analysis does not adequately support the proposed thresholds. The commenter stated that a comparison of the range of state minor NSR thresholds is not informative for this rulemaking, since the thresholds used by state s may reflect strategies for regulating a wide variety of air quality issues

, and state s in different

p arts of the country develop rules based on the makeup of sources located there. The commenter also said that the proposal preamble appears to indicate that we proposing to regulate a larger number of minor VOC sources (and larger portion of emissions) tha n for other pollutants. The commenter recommended that we set the minor NSR thresholds based on a percentage of the corresponding major NSR thresholds for a given area, which would allow for a variation in

minor NSR thresholds for nonattainment areas whil e ensuring consistency in regulation of different pollutants.

Two industry commenters (0039, 0081) and t hree trib al commenters (0036.1, 0043.1

, 0097.1 ) also expressed concern that our source distribution analysis relied on outdated

information that does not reflect the current mix of minor sources in Indian country. The commenters are concerned that the final 1999 National Emission Inventory 

### (NEI), extrapolated to 2001, is nearly a decade old. Three of the commenters (0036.1, 0039, 0081) specifically

st ated that these inventory data do not reflect the growth in minor sources in the oil and gas exploration and production sector that has occurred in recent years. As a result, these commenters believe that the proposed thresholds will not prevent stationar y sources with insignificant emissions from being regulated under the minor NSR program. The commenters recommended that the final rule include categorical exemptions, such as for storage of produced water and many other oil and gas sector activities that individually and in the aggregate have insignificant emissions which should not threaten maintenance of the NAAQS in Indian country, as well as a VOC threshold of 10 tpy.Review o f New Sources and Modifications in Indian Country Response to Comments

42 Response:

We continue to believe that the sources with emissions below the thresho lds will be inconsequential to attainment or maintenance of the NAAQS because the national source distribution analysis in the proposal (71 FR 48702) applied to the national source distribution at the time (sources inside and outside of Indian country) and not only to estimates of the possible number of existing sources in Indian country. For each pollutant, we found that only around 1 percent (or less) of total emissions would be exempt from review under the minor NSR program. At the same time, the thres holds would promote an effective balance between environmental protection and source burden because anywhere from 42 percent to 76 percent of sources (depending on the pollutant) would be too small to be subject to preconstruction review.

In addition, w e believe that such thresholds are included in many of the minor NSR programs in surrounding states, which will allow us to begin leveling the playing field with the surrounding state programs, and will result in a more cost

- effective program by reducing t he burden on sources and reviewing authorities.

Nevertheless, to address any concerns about the stringency of the thresholds, we will evaluate the information we collect as part of the registration provisions for minor sources we are finalizing under this rule (see section IV.F of th e preamble to the final rule for more information) and will consider changing the minor NSR thresholds as appropriate

. 12



### 2.5.4 Other Comments on the Proposed Thresholds

Comments Related to HAPs:

Four trib al commenters (0033, 0038. 1, 0056

, 0106.1 ) and one private citizen (0093.1) requested that thresholds for HAPs be included in the minor NSR rule. One additional trib al commenter (0061.1) asked that the minor NSR program regulate HAPs, although the commenter did not specifically re quest applicability thresholds for HAPs. The commenters would like the minor NSR program to regulate HAPs because of the known health effects of these compounds. One of the commenters stated that HAPs generally have limited transport and deposit near the facility, not hundreds of miles away, directly affecting the local environment and those who

reside in the affected area. Another of the commenters noted that his trib e has issued a fish consumption advisory due to elevated mercury levels in fish which, according to their research, largely results from atmospheric deposition of mercury.

In addition, one industry commenter (0021.1) stated that we should utilize the de minimis levels for various constituents previously established under section 112 (g) of the Act

.

12 We might also consider proposing thresholds for greenhouse gases in accordance with any future rulemakings to address small greenhouse gas sources as outlined in the rule titled: “Prevention of Significant

Deterioration and Title V Greenhouse Gas Ta iloring Rule” (75 FR 31514).Review of New Sources and Modifications in Indian Country Response to Comments

43 Response:

We disagree with these commenter s and do not believe that i t would be appropriate to establish thresholds for HAPs in the context of the minor source NSR program

. Section 112 of

the Act establishes a comprehensive program for ad dressing emission of HAP including a preconstruction program for major sources of HAP emissions. S pecifically, s ection 112(g)(B) prohibits the construction or reconstruction of a major source of HAP unless the Administrator (or the State) determines that the maximum achievable control technology emission limitation under section 112 for new sources will be met and this determination is made on a case

- by

- case basis where no applicable emission limitations have been established by the Administrator. Thus, C ongress has already established the threshold for requiring preconstruction review of new sources of HAP emissions. In addition, our definition of regulated NSR pollutant under 40

CFR 51.166(b)(49)(iv) and 52.21(b)(50)(iv) specifically excludes any or all HAP s either listed in section 112 of the Act or added to the list, unless the listed HAP is also regulated as a constituent or precursor of a general pollutant listed under section 108 of the Act.

Comments Related to PM 2.5 :

One industry commenter (002 9.2) observed that the proposed rule identifies particulate

matter measured as “ total suspended particulate matter” ( PM ) as a regulated NSR pollutant by way of inclusion of a minor NSR threshold for PM. The commenter strongly suggested that the

time is ri pe for EPA to acknowledge that PM should not be considered a regulated NSR pollutant. The commenter noted that by 1995 we had withdrawn the NAAQS for PM , thereby leaving but one NAAQS for particulate matter , i.e., the NAAQS for PM 10 . At that time EPA

iss ued a guidance memorandum entitled “Definition of Regulated Pollutant for Particulate Matter for Purposes of Title V.” Attached to that memorandum was an EPA

- prepared discussion paper entitled “Regulated Air Pollutant: Particulate Matter,” stating that “a t this time, PM

- 10 is considered to be the only regulated form of particulate matter.”

Although these documents contain various disclaimers which purport to limit that Agency guidance only to the Title V program, the commenter (0029.2) believes that th is restriction of the policy to Title V purposes not only lacks any legal basis, but is also illogical. In short, the commenter asserted, the context of a specific CAA program, such as Title V, was not a determinative factor in the Agency’s assessment of why PM is not a regulated air pollutant; consequently, that Agency policy with respect to PM should apply with equal force to Title I programs, such as minor NSR. If PM is not a form of particulate matter regulated under NSPS (section 111 of the Act), the n the commenter believes that PM cannot satisfy the Agency’s definition of the term “regulated NSR pollutant.” Thus, the commenter concluded that PM should not be identified as a pollutant subject to regulation under the Agency’s proposed minor

NSR rule.

In addition, another industry commenter (0028.1) asserted that the minor NSR program should not include an applicability threshold for PM 2.5 at this time because estimating emissions

of PM 2.5 remains imprecise and infeasible. As support for this position , the commenter noted that in guidance memoranda in 1997 and 2005 we acknowledged “significant technical difficulties that now exist with respect to PM 2.5 monitoring, emissions estimation, andReview o f New Sources and Modifications in Indian Country Response to Comments

44 modeling....” 13 The commenter proposed we: (1) delete the PM 2.5 threshold until such time as the technical issues are resolved and implementation guidance has been issued; or alternatively (2) expressly acknowledge the difficulties in applying the PM 2.5 threshold so that permittees are

aware of the technical difficult ies, and allow that PM 10 analyses be used as a surrogate for PM 2.5 analyses consistent with current EPA guidance.

Response:

The pollutant PM or “particulate matter measured as “total suspended particulate

matter ” is a form of particulate matter regulated under certain subparts of the NSPS program and as such it is considered regulated under the definition of the term “regulated NSR pollutant.” In addition , t he definition of “ regulated NSR pollutant ” under 40 CFR 51.166(b)(49) and 52.21(b)(50) states that regulated NSR pollutants are not only the ones regulated under the NSPS program, CAA s ection 111 , but also includes, among other pollutants, any pollutant for which a NAAQS has been promulgated and any constituents or pre cursors for such pollutants. Ther efore , when we established the PM 2.5 NAAQS on July 18, 1997, PM 2.5 became a regulated NSR pollutant.

In addition, w e disagree with the commenter that states that it is not currently possible to estimate emissions of PM 2.5 . In fact, we believe that the various PM 2.5 implementation issues that led to the adoption of the PM 10 Surrogate Policy in 1997 have been largely resolved to a degree sufficient for the owners or operators of sources and permitting authorities to conduct meaningful permit

- related PM 2.5 analyses. For example, adequate procedures for the collection of ambient PM 2.5 are now well established throughout the country and provide data useful for the purpose of PSD permitting. Also, air quality modeling of direct PM 2.5 emissions can be accompl ished using an EPA

- approved model to predict ambient PM 2.5 impacts caused by new and modified sources of PM 2.5 emissions. Emissions factors for calculating PM 2.5 emissions from various source categories and equipment are available, as are national invento ries of PM 2.5 emissions. See EPA’s proposed rulemaking for ending the PM 10 surrogate policy at 75 FR 6827, 6833 (col 1), and the EPA memorandum dated March 23, 2010 titled “Modeling Procedures for Demonstrating Compliance with PM 2.5 NAAQS.”



### 2.6 **Proposed List of Insignificant Units and Activities** 

In the proposal preamble, we noted that certain emissions units and activities at stationary sources either do not emit regulated NSR pollutants to the ambient air or emit these pollutants in negligible amounts. Ac cordingly, we proposed a list of such units and activities located at a minor source that would be exempt from the requirements of the minor NSR program. [ See proposed 40 CFR 49.153(c)]. The proposed list of exempt emissions units and activities was as

f

ollows:

13 See Interim Implementation of New Source Review Requirements for PM 2.5

, John Seitz, October 24, 1997

and Implementation of New S ource Review Requirements in PM

- 2.5 Non

- attainment Areas

, Stephen D. Page, April 5, 2005.Review of New Sources and Modifications in Indian Country Response to Comments

45 • Air

- conditioning units for comfort that are not subject to applicable requirements

under Title V I of the Act and do not exhaust air pollutants into the ambient air from any manufacturing or industrial process;

• Ventilating units for comfort that do not exhaust air pollutants into the ambient air from any manufacturing or other industrial process;

• Heating units for comfort that do not provide heat for any manufacturing or other industrial process;

• Noncommercial food preparation;

• Consumer use of offic e equipment and products;

• Janitorial services and consumer use of janitorial products;

• Internal combustion engines used for landscaping purposes;

• Bench scale laboratory activities, except for laboratory fume hoods and vents; and

• Any emissions unit or activ ity that does not have the potential to emit a regulated NSR pollutant or HAP, so long as that emissions unit or activity is not part of a process unit that emits or has the potential to emit a regulated NSR pollutant or HAP.



### 2.6.1 Expanding the List of Exempti ons

Comment:

Seven industry commenters (0021.1, 0025.1, 0030, 0035.1, 0039, 0052, 0081), one trib al commenter (0036.1), one state /local commenter (0018.1) and one private citizen commenter (0016.1) believe that the list of exemptions should be expanded

.

Six of the industry commenters (0021.1, 0030, 0035.1, 0039, 0052, 0081) and the trib al commenter (0036.1) aimed their comments primarily at the oil and gas industry in Indian country. The commenters expressed concern that the proposed minor NSR progra m does not

include a de minimis exception (we believe that the commenters were referring to an emissions

cut

- off, below which an emissions unit at a permitted source need not be addressed in the permit) or provide for insignificant source categories or act ivities that are included in many state minor source preconstruction permitting programs. As a result, the commenters fear that sources previously considered as insignificant, including lube oil, glycol and produced water tanks, and line and tank heaters, will require permitting as emission sources. One industry commenter (0021.1) indicated that maintenance of equipment, including painting, and ESD events will require inclusion as permitted activities. The commenters typically named Colorado and/or Wyomi ng as examples of state s with appropriate exemption lists.

The tribal commenter (0036.1) added that failure to expand the list of exemptions will significantly burden operators of minor sources wishing to locate in Indian country, and will thereby disadv antage the commenter’s trib e, as well as other trib es. One of the industry commenters (0021.1) recommended that we work with representatives of industry, including oil and gas, and review lists previously prepared by state agencies to expand further upon the list of categorically exempt sources/activities to be included in the minor NSR program. TheReview o f New Sources and Modifications in Indian Country Response to Comments

46 commenter added that this expanded list of exempt sources/activities will probably include many insignificant sources as affected emissions units.

The other industry commenter (0025.1) had similar comments, requesting that EPA add a list of exempt emissions units and activities for existing sources based on de minimis emissions levels to further reduce regulatory burden, thereby freeing source owners/operator s from being required to evaluate the addition, replacement, or modification of very small and insignificant emissions units for the purpose of minor NSR. The commenter believes that such exemptions will reduce administrative burden and provide regulatory certainty for sources with little or no environmental consequence.

The private citizen (0016.1) suggested that we add the Texas program’s de minimis

source list to the minor NSR program as a non

- exclusive list of exempt sources. The commenter

is conce rned that the proposed list of sources exempt from minor source NSR will not “square” with the sources that are exempted from minor NSR in surrounding state s, which may have an impact on the siting of new facilities and may materially impact the economic w elfare of people residing on trib al lands. Accordingly, to ensure a “level playing field,” the commenter that EPA add language to proposed 40 CFR 49.153(c) that would allow a minor source in Indian country to claim any exemption from minor NSR that could be claimed by a similar source in a surrounding state

.

One state /local commenter (0018.1) commented specifically on exemptions in extreme ozone nonattainment areas, suggesting that there is a need to include in the program some reasonable types of exempt ions for insignificant sources that are not included in the proposed minor NSR program. Otherwise, the commenter believes, EPA may well find itself overwhelmed with permit applications from very small sources. The commenter suggested that

South Coast Air Quality Management District’s Rule 219 is an example of a reasonable exemption program.

Response:

In light of the comments received, we agree that the list of exempted units and activities might need to be expanded. Therefore, we intend to propose a s eparate rule to seek public comment on the issue of whether additional units or activities should be exempted from the minor NSR program.



### 2.6.2 Sources Exempted from the Minor NSR Program

Comment:

On e state /local agency commenter (0024.1) recommended that he ating and ventilating units used to provide comfort for manufacturing, industrial, and commercial activities not be exempted from the minor NSR program unless they do not exhaust air pollutants to the ambient air. (This would narrow the proposed exemption .) The commenter made this recommendationReview of New Sources and Modifications in Indian Country Response to Comments

47 out of concern that the emissions from units supplying comfort heat to large complexes such as hotels and casinos can have significant impacts on air quality.

Response:

The list of exempted units and activities we have finalized does not exempt air

conditioning units for comfort and heating units for comfort until we can study the implications of the new rules for greenhouse gases (see Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule, 75 FR 31514) on these units.

Comment:

One trib e (0036.1) questioned the utility of the last proposed exemption on the list, for those emissions units or activities that do not have the potential to emit a regulated NSR pollutant or HAP, so long as that emissions unit or activity is not part of a process unit that emits or has the potential to emit a regulated NSR pollutant or HAP. The commenter noted that this categorical exemption appears to describe a unit or activity which is not even a sourc e of air pollutants. The commenter asked whether we intended that product recovery equipment that does not have emissions, is not required for emissions control, and normally is not permitted would fall within this exception, and whether such equipment wo uld include condensers and vapor recovery units (“VRUs”).

Response:

We are deleting the exemption referenced by this commenter (a ny emissions unit or activity that does not have the potential to emit a regulated NSR pollutant or HAP, so long as

that emi ssions unit or activity is not part of a process unit that emits or has the potential to emit a regulated NSR pollutant or HAP) because we agree with the commenter that this exemption can be confusing and redundant.



### 2.7 **Permitting Process**

2.7.1 Permit Application Requirements

Under the proposed minor NSR program, the owner or operator of a proposed new minor source or a proposed modification that is subject to this rule must submit a complete application to the reviewing authority requesting a minor NSR permit s pecific to the source. In addition to basic information identifying and describing the source, the application must include a list of all

affected emissions units. “Affected emissions units” are defined as all the emissions units at the proposed new mino r source or all the new, modified, and replacement emissions units that comprise the proposed modification [excluding the exempt emissions units and activities listed in proposed 40 CFR 49.153(c)]. The application must document the increase in emissions t hat will result from the new source or modification, including the PTE in tpy for each new emissions

unit.Review o f New Sources and Modifications in Indian Country Response to Comments

48 

### 2.7.1.1 Timing of Applications

Comment:

Two industry commenters (0022.1, 0035.1) proposed that the NSR rulemaking be revised to address the timing of whe n information is available to assess NSR applicability of new oil and gas production facilities. One of the commenters (0035.1) recommended the approach used in the Wyoming program, under which production facilities can commence operation, and, within a

s pecified period, an estimation assessment and permit application is required. A Notice of Installation that captures administrative information and informs the regulatory authority of the startup of a new production facility is required within 40 days of the first date of production.

The second industry commenter (0022.1) urged EPA to allow oil and gas operators

120 days after first production to determine emissions and apply for appropriate air permits as needed. The commenter believes this is justifie d because a preconstruction permitting process will take a significant amount of time, costing the operator, royalty owners, and the state
valuable revenue.

Response:

In light of the comments received, we will develop a general permit specific for the o il and gas industry that will address many of the concerns expressed by these commenters.



### 2.7.1.2 Fugitive Emissions

Under the proposed rule, all permit applications must document the increase in emissions

that will result from the new source or modification. Comments were requested on whether the reported emission levels should include fugitive emissions, to the extent that they are quantifiable, for all sources, for only those source categories listed pursuant to section 302(j) of the Act, or for no sources.

Comments Favoring Including Fugitives Emissions for All Sources:

Four trib al commenters (0020, 0038.1, 0041, 0050.1), one state /local commenter (0024.1), one environmental group (0037.1), and two private citizens (0094, 0096) supported the

inclusion of fugitive emissions for all sources, to the extent quantifiable.

One of the trib al commenters (0050.1) stated that EPA should include fugitive emissions for all sources, not just for sources listed under section 302(j) of the Act, in calculating emissions levels for applicability purposes. The commenter noted that studies performed for the Grand Canyon Visibility Transport Commission demonstrated that fugitive emissions are a large proportion of air pollutants in Indian country, and many sources of fugiti ve emissions that are prevalent in Indian country (such as mining activities and other industrial activities using dirt

road s) are not listed under section 302(j) of the Act. The commenter concluded that, because fugitive emissions have an impact on air q uality, especially in Indian country, they should beReview of New Sources and Modifications in Indian Country Response to Comments

49 included in determining whether a particulate source is subject to minor NSR permitting.

Another of the trib al commenters (0038.1) also pointed out the problems encountered with fugitive emissions from industrial operations on unpaved roads as a simple example of why fugitive emissions are of concern and should be part of minor NSR permits.

The environmental group commenter (0037.1) asserted that there is no justification for excluding fugitive emissio ns from the NSR program for minor sources and modifications to existing sources in Indian country. The commenter stated that the basic statutory purpose of the minor NSR program is to ensure that the NAAQS will be attained and maintained, according to

sec tion 110(a)(2)(C) of the Act. The commenter pointed out that section 110(a)(2)(C) of the Act requires a program to regulate the construction or modification of “any stationary source,” and that section 302(z) of the Act defines “stationary source” in a ve ry broad manner. The commenter argued that the reference in the transportation exception for those emissions resulting “directly” from an internal combustion engines makes clear that Congress intended for fugitive

emissions from roads to be included in de fining a stationary source. The commenter added that because the mandate of the minor NSR program is based on protection of air quality, EPA must require all sources of emissions, including fugitive emissions, to be included in determining applicability o r minor NSR.

Comments Favoring Including Fugitives Only for Source Categories Listed under

Section 302(j) of the Act:

One industry commenter (0029.2) stated that fugitive emissions should be included in minor NSR threshold applicability determinations o nly for source categories listed under

section 302(j) of the Act. The commenter included an extensive analysis of the history of regulating fugitive emissions under NSR, particularly fugitive emissions from surface coal mines. (We have declined to list s uch sources under section 302(j).) The commenter maintained that substantial uncertainty and inconsistency surround the issue of whether fugitive particulate matter emissions are deemed “quantifiable” and thus acceptable for use in some threshold applicab ility determinations. The commenter believes that EPA should expressly acknowledge that existing technical and economic limitations on current measurement methods for such emissions preclude the reviewing authority from considering those emissions to be

“ quantifiable.” The commenter added that for applicability determinations that do include fugitive particulate matter emissions, we must define the criteria for determining when those emissions are “quantifiable.”

Comments Opposing Inclusion of Fugitive Emissions for Any Sources:

Nine industry commenters (0021.1, 0022.1, 0027.1, 0028.1, 0032, 0039, 0042, 0048.1, 0081) and two trib al commenters (0031, 0036.1) believe that EPA should exclude the calculation of fugitive emissions in the applicability deter mination of all sources. The majority of these commenters maintain that fugitive emissions at minor sources are miniscule, and a requirement

to include them for minor sources would be excessive.

Two industry commenters (0027.1, 0081) pointed out that most, if not all, new and/or major sources of fugitive VOC and HAP emissions have been subject to previous standards andReview o f New Sources and Modifications in Indian Country Response to Comments

50 requirements. As a result, the remaining fugitive emissions are extremely low. They are highly variable and difficult to quantify acc urately.

Another industry commenter (0028.1) noted that calculating fugitive emission rates involves first calculating an emission factor and then applying the emission factor to a production of usage rate. In most cases, the emission factor calculation s involve several variables related to the process. Few of these variables are common among processes; however, all of the variables are important in the calculations. Due to the technical nature of many of these emission factor variables, it would take a considerable amount of time and resources for someone unfamiliar with these concepts to understand all of the variables. Facilities located within Indian country that operate outside the typical range for which emissions factors apply would be obligated to pay to collect site

- specific information. To keep the minor NSR program simple, the commenter recommended that we exclude fugitive emissions from applicability

determinations.

One of the industry commenters (0032) argued that if EPA requires fugitiv es to be included and authorizes the imposition of controls, the costs of complying with minor NSR for fugitive emissions could potentially be substantial, and it would be particularly arbitrary to impose a requirement posing such costs without a sound rea son. The commenter noted that EPA is subject to the requirements of the federal Administrative Procedure Act to engage in reasoned

decision

- making and to avoid discounting or ignoring permissible factors arbitrarily. Thus, the commenter went on, EPA may only impose requirements in a FIP entailing substantial costs where EPA identifies a sound reason for doing so. The commenter believes that EPA has not

done so here.

One of the trib al commenters (0036.1) does not believe that the exclusion of fugitive

e missions, including for minor sources operating in the oil and gas sector, will materially contribute to a violation of the NAAQS for ozone or other regulated NSR pollutants in Indian country. The other trib al commenter (0031) suggested that each trib e sh ould be able to decide how it wants to handle fugitive emissions.

One of the industry commenters (0042) pointed out that in almost all cases, an allowable emissions limit for a fugitive emission source could not be enforced as a practical matter because of the inherent difficulties with accurately quantifying actual emissions from these sources.

Response:

Based on consideration of the comments received, we are finalizing provisions that require including fugitive emissions in the minor NSR applicabilit y determination, to the extent that they are quantifiable, only if the source belongs to one of the source categories listed pursuant to section 302(j) of the Act (i.e., the source categories listed in 40 CFR part 51, Appendix S, P aragraph II.A.4(iii) and in 40 CFR 52.21(b)(1)(iii)), for the following reasons.

For the source categories listed pursuant to section 302(j) we have historically identified these source categories as having the potential to significantly degrade air quality, and it has

been dem onstrated to be reasonable and cost

- effective for sources in these categories to quantifyReview of New Sources and Modifications in Indian Country Response to Comments

51 and include their fugitive emissions in applicability determinations. We believe it is reasonable to continue to require these source types to quantify fugitive emis sions in determining applicability of minor NSR. While some other source categories also contribute significantly to air pollution, we have thus far not required counting their fugitive emissions in determining applicability because of unreasonable econom ic costs associated with doing so ( s ee 54 FR 48879).

We have the discretion under CAA section 110(a)(2)(C) to follow a similar approach in the minor program as long as the NAAQS are protected, and we are using that discretion

because we believe it would be unreasonably cumbersome and costly to expect the wide variety of minor source types not on the 302(j) list to be able to quantify their fugitive emissions.

Without discounting the fact that fugitive emissions from individual sources or source categori es may be significant contributors to air pollution, we believe that, as a whole, the air quality impacts of emissions from the number of sources that would likely be excluded from minor NSR because of exclusion of their fugitive emissions are likely to be small, and therefore not commensurate with the regulatory and economic burden we would impose on minor sources in Indian country if we were to require the estimation of fugitive emissions for all minor sources and subject them to permitting based on those emissions. This is especially the case since we are developing a program that applies generically to sources in Indian country regardless of whether fugitive emissions from major or minor sources are a significant source of air pollution in a specific lo cation. Given this diversity, and the potential costs, our approach strikes a

reasonable balance.

Finally, this approach in our final rule is consistent with how fugitive emissions are treated in some state minor source programs.

In regards to the com menter who suggested that an allowable emission limit for a fugitive emission source could not be practically enforced, we acknowledge that there will be limitations during the quantification of fugitive emissions for purposes of calculating actual emissio ns. However, we expect sources to do so to the extent fugitive emissions are quantifiable.

Comment:

One industry commenter (0029.2) who opposes including fugitive emissions for source categories not listed under section 302(j) of the Act (see above) said that, in the alternative, if EPA concludes that existing AP

- 42 factors for fugitive particulate matter emissions are acceptable for characterizing the rates of such emissions for substantive regulatory purposes including control technology reviews, ai r quality impact analyses ( AQIAs ) , visibility impact assessments, and other regulatory evaluations requiring estimates of either actual emissions or potential to emit, then those same AP

- 42 factors (or existing alternatives previously approved by

the revie wing authority) must be considered acceptable for NSR threshold applicability

determinations.

One trib al commenter (0054) encouraged EPA to only include those fugitive emissions

that have emission factors in AP

- 42 and that are associated with the project

.Review o f New Sources and Modifications in Indian Country Response to Comments

52 Response:

AP

- 42 emission factors are avail able for many source categories and we encourage sources to consult with their reviewing authorities for the appropriate use of emission factors for applicability determinations

.



### 2.7.1.3 Minor Source Plantwide A pplicability Limitations (PALs)

Under the proposed minor NSR program, an owner or operator may request in its application an annual minor source plantwide applicability limitation (minor source PAL) for one or more of the regulated NSR pollutants emitted by a new or existing minor stationary

source. A minor source PAL is a source

- wide limitation on allowable emissions of a regulated NSR pollutant, expressed in tpy

, that is established under the proposed 40 CFR 49.155 and that is enforceable as a practica l matter.

Supporting Comments:

One trib al commenter (0036.1) supported the flexibility contained in the proposed minor NSR rule to request minor source PALs. The commenter believes it is very important that aspects of permitting programs at the fede ral and state level outside of Indian country that provide operator flexibility, including the creation of PALs, also be afforded operators currently in or wishing to locate in Indian country.

One private citizen (0092.1) commented that once PALs are der ived, the source would have the flexibility to increase emissions at some units within the plant without triggering NSR, as long as the plantwide limit and allowable emission level were not exceeded.

Opposing Comments:

One environmental group (0037.1) a rgued that EPA must not provide for minor source PALs in its proposed Indian country NSR rule. The commenter believes such provisions will not ensure compliance with the statutory mandates applicable to minor NSR programs under

section 110(a)(2)(C) of the Act to ensure the NAAQS are attained and maintained. Further, the commenter maintained such limits would likely be unenforceable as a practical matter, at most minor sources. The commenter’s extensive arguments are listed below.

• Under a PAL, a minor so urce could add a new unit or make other changes that could change the dispersion characteristics of the source’s emissions, which could affect air pollutant concentrations even if total allowable emissions stay constant under the PAL. Under the statutory requirements of section 1 10(a)(2)(C) of the Act, EPA must require that modifications that could increase air pollutant concentrations be modeled to ensure that the NAAQS will be attained and maintained.

• When EPA promulgated regulations for PALs at major s tationary sources on December 31, 2002, EPA indicated in several instances that it assumed that changesReview of New Sources and Modifications in Indian Country Response to Comments

53 under a major source PAL would still be reviewed under most state s’ minor NSR programs. If EPA thought such changes under major source PALs (which may not be great in magnitude) should warrant review under a state ’s minor NSR program, then such changes at a minor source should also be subject to review under the minor NSR

program.

• The EPA has not specified any criteria for the development of minor source PALs in its proposed Indian country NSR rule. It appears that, at most, the limitations on a minor source PAL is that it cannot be greater than the major source thresholds and

that it cannot be above source allowable emission limitations. This means tha t so called minor source PALs could be as high as 99

- 249 tpy, depending on whether the source is in one of the 28 listed source categories for which a 100 tpy major source threshold applies. If actual emissions have been much less than 100

- 249 tpy, this

m eans that emission increases in excess of the minor source thresholds and even well in excess of the major modification significance levels could occur under a PAL entirely without any review by the reviewing authority

.

• The EPA’s proposed Indian country rule would apparently allow increases in a PAL limit through an administrative permit amendment without any public review or comment or any modeling analysis, as long as the increase would not trigger applicability under major NSR permitting requirements. This makes the minor source PAL an extremely weak limitation, and also negates the value of any modeling done for a minor source PAL limit since the PAL limit could readily be increased with no

review.

• Depending on the status of air pollutant concentratio ns in the region where a source is located, even small increases in emissions could impact attainment or maintenance of the NAAQS or compliance with the PSD increments. Seemingly inconsequential emission increases at minor sources could cause significant problems especially in areas with rugged topography or with significant emissions from major or minor sources and/or pollution transport from other more industrialized areas.

• Minor source PALs (and major source PALs as well) will be difficult to enforce

un less the facility has continuous emission monitoring systems (CEMS) on all emission units. While proposed 40 CFR 49.155(a)(3)(iii) requires “monitoring to determine the actual emissions from your source for each month and the total actual

emissions for ea ch 12

- month period, rolled monthly,” EPA has not required CEMS to ensure continuous compliance with PALs. The EPA has also not specified any additional detailed requirements in the rule or preamble as to what constitutes sufficient monitoring for a PAL. Further, EPA has not addressed how fugitive emissions must be monitoring in showing compliance with a PAL. Thus, EPA’s monitoring requirement is excessively vague, which will impair effective implementation of the PALs and the NSR rules. Many minor sourc es in Indian country likely have not conducted stack tests, and most probably do not have any CEMS. Thus, many sources’ method of determining compliance may be based on source category emission factors, which may not accurately reflect a source’s actual

e missions. Consequently, source compliance with a minor source PAL will be very difficult to ensure and yet such a PAL will enable most modifications at the source to forego any review.Review o f New Sources and Modifications in Indian Country Response to Comments

54 One private citizen (0094) is concerned about hotspots developing th rough the use of minor source PALs. The commenter pointed out that major and minor stationary sources could emit up to the PAL level, without regard to whether the stationary source is in an attainment area

or a nonattainment area. The commenter noted th at a PAL does not distinguish how many other stationary sources are in the area, and therefore there is the potential for all of the sources to emit up to their limit without restriction. The commenter is concerned that this would create hotspots

of emiss ions and possibly create pollution levels that could affect the NAAQS.

Response:

Based on consideration of the comments received and further evaluation, we are not finalizing the minor source PAL provisions at this time because we agree with the opposin g commenter that stated, for example, that finalizing the PAL provisions without more specific criteria, including provisions for extensive monitoring, would not be enforceable.



### 2.7.2 Control Technology Review

In the minor NSR program, we proposed that each reviewing authority perform a case

by

- case control technology review when issuing the permit (other than a general permit). “Control technology,” is defined as pollution prevention techniques, add

- on pollution control equipment, design and equipment spec ifications, work practices, and operational restrictions. We noted that the required control technology resulting from such a review could range from technology that is less stringent than the reasonably available control technology (RACT) level

of contro l (which is typically required for existing major sources in nonattainment areas), to technology that is the BACT level of control (which is the level required for new major sources and major modifications in attainment areas), depending on the air quality needs of the area, other applicable regulatory programs of the Act, and technical and economic feasibility.

In proposing a case

- by

- case control technology review process to determine an appropriate level of control for minor sources and subject modifi cations in Indian country, we considered a number of factors, including: (1) the control technology review process should be as flexible as possible to provide for the specific needs and conditions of each area of Indian country, consistent with the requi rements of the Act; (2) a reasonable level of air pollution control for new minor sources and subject modifications in Indian country is generally warranted to ensure protection of air resources in Indian country; and (3) Indian country must not be seen

as a potential “pollution haven” where minor stationary sources can go to escape air pollution control requirements.

Comments Supporting the Proposal:

Ten trib al commenters (0031, 0033, 0041, 0044, 0056, 0061.2

, 0076, 0091.1, 0097.1,

0106.1 ) supported o ur proposed case

- by

- case control technology review for each minor NSR permit. Four of these trib al commenters (0033, 0041, 0056

, 0106.1 ) specifically recommended this approach to adequately reduce industrial emissions as part of the proposed minor NSR rul e.Review of New Sources and Modifications in Indian Country Response to Comments

55 They stated that the case

- by

- case control technology requirements would allow and promote economic growth and development as well as include tailored emissions controls in Indian
country. Two of the tribal commenters (0076, 0091.1) indicated that requ iring sources to meet a specific control technology requirement could place sources on tribal lands at a competitive disadvantage as they would need to expend resources on technologies already possessed by nearby competitors not within Indian country. The y added that a flexible approach promotes innovation and could ultimately lead to a means of reducing minor source emissions that woul d not have occurred by meeting a specific control technology requirement.

One trib al commenter (0061.2) believes the cas e

- by

- case control technology approach is appropriate. The commenter observed that having no capacity to impose controls on minor sources would seem to defeat the purpose of a permitting process for such facilities, and that a paper permit that could not i mpose any controls adds nothing to existing regulation or protection of health and the environment. The commenter also stated that a system that requires a single set of controls for all minor sources across Indian country does not provide the needed flex ibility to adapt regulation to the needs of individual r eservations or to take into account the benefit of a level playing field with the surrounding jurisdictions.

Another tribal commenter (0097.1) noted that many minor sources, such as standby
generato rs, do not lend themselves to add

- on control technology. While such source may need to be permitted under this program, the commenter believes there is no need to require a control technology assessment beyond meeting existing regulatory requirements for such equipment. Therefore, the commenter asserted that a case

- by

- case approach is vital.

Comments Opposing Any Control Technology Requirement:

Five industry commenters (0028.1, 0029.2, 0032, 0042, 0081) opposed any control technology requirement in the minor NSR program for Indian country. One of these commenters (0028.1) stated that because local air quality conditions vary, a federal program is likely to be applied inconsistently, resulting in competitive disadvantage for source s located in certain a reas. In addition, the commenter believes that case

- by

- case control goes beyond minor NSR requirements generally applied in state minor NSR programs, and that where these exist, the requirement creates uncertainty and added expense for projects which resu lt in minor emissions impacts. The commenter added that many sources are already subject to technology

- based

standards [ such as N SPS and Maximum Achievable Control Technology (MACT) standards ]

, and that further control requirements are unwarranted.

On e of the industry commenters (0032) believes that EPA has no authority to impose a control technology requirement under section 110(a)(2)(C) of the Act. The commenter pointed out that while section 165 of the Act (which establishes the PSD program) expres sly requires the imposition of BACT and section 173 of the Act (which establishes the nonattainment major NSR program) expressly requires the imposition of the lowest achievable emissions rate ( LAER )

, section 110(a)(2)(C) of the Act contains no technology requirement. The commenter stated that it is a fundamental tenet of statutory construction that, where Congress imposes an explicit requirement in one statutory provision and declines to do so in another provision, Congress is presumed to know what it is doing and therefore did not intend to authorize the requirement inReview o f New Sources and Modifications in Indian Country Response to Comments

56 the silent provision. The commenter added that because controls are not authorized under the Act and thus cannot be imposed, the commenter fails to see the point of minor NSR, other than

p otentially to delay projects that are necessary to maintain the plant and to assure safe, reliable operation.

Another of the industry commenters (0029.2) stated that a separate control technology review process under minor NSR is unnecessary when the thr eat of PSD review will otherwise accomplish the ultimate objective

– protection of air resources. This commenter indicated that because PSD review is generally so complex, time

- consuming and expensive, most sources will design their projects to remain bel ow the applicable PSD thresholds, even if that means installing more efficient controls, switching to a cleaner fuel, or restricting production or operating hours. The commenter added that section 110 requirements for minor NSR should be driven by ambient air quality considerations and not separately by control technology considerations. Thus, the commenter believes that a control technology review should be considered only during those rare instances where the minor project may violate the NAAQS or incre ments due to influences of nearby complex terrain when existing ambient levels already are close to their limits.

One of the industry commenters (0042) believes that control technology determinations under the proposal would not be equivalent because the case

- by

- case analysis would be subjected to different interpretations by different reviewing authorities, and the level of control could vary widely between a very minimal requirement (e.g., work practices) to a very stringent requirement (e.g., BACT) bas ed on the reviewing authority. On this basis, the commenter asserted that the minor NSR program should not contain a control technology requirement.

Another of the industry commenters (0081) said that implementing the control technology review on a case

- by

- case basis does not allow for any kind of uniformity to oil and gas exploration an d production operations, and that the case

- by

- case situation will not allow companies to plan properly because the commenter will never know what the requirements will

be until after the permit is issued. The commenter requested that the control technology requirement be removed based on the thought that these minor sources will not have the ability

to influence NAAQS violations.

Comments Supporting a Standardized Contr ol Technology Requirement:

Six industry commenters (0021.1, 0032, 0035.1, 0039, 0042, 0081), one trib al commenter (0036.1), one environmental group (0037.1), and one state /local commenter (0024.1) recommended a clearly defined, standardized method for de termining the required level of control. Three of the industry commenters (0032, 0042, 0081) primarily opposed any control technology requirement, but advocate a more defined analysis if control technology is required.

The commenters generally expressed concern that case

- by

- case review accords far too much discretion to the reviewing authority, and therefore may not be applied consistently across the country. They generally indicated that the proposed requirements are too vague. However, beyond these p oints of general agreement, the commenters’ views differed widely.Review of New Sources and Modifications in Indian Country Response to Comments

57 One of the industry commenters (0032) said that given that the authority for a minor NSR program is the regulation of non

- major new sources and modification only “as necessary to

assure t hat [NAAQS] are achieved,” control technology review should be authorized only in

those “rare instances” in which a reviewing authority has reason to be concerned that the

construction of the new minor source or minor modification could cause or contribute to a NAAQS or increment violation. (Phrasing from the proposal preamble at 71 FR 48704.) The commenter asserted that, even in such rare instances, the reviewing authority cannot require controls just for the sake of controls or because some other simila r source has constructed such

controls. The commenter contended that the only authority to require controls would be to remedy a potential NAAQS or increment violation, if one were actually demonstrated in the AQIA.

Another of the industry commenters (0 042) stated that if retained in the program, the control technology requirement must be better defined so that it is implemented un equivocally throughout the nation, whether the source is located inside or outside of Indian country, similar

to the control technology requirements in the major NSR program.

The comments of the other four industry commenters (0021.1, 0035.1, 0039, 0081) and

the trib al commenter (0036.1) were specifically related to the oil and gas production industry.

These commenters are co ncerned that a case

- by

- case control technique review would be too time consuming and would unacceptably delay the permitting process in this dynamic industry that must act quickly to match production to the demands of the market. These commenters

recommen ded that we adopt a presumptive BACT approach to oil and gas facilities, which they believe is appropriate because of the consistency in the equipment used at such sites. The commenters generally mentioned that Wyoming and Texas have good programs in this area that could be used as an example for the minor NSR program in Indian country. Two of these commenters (0021.1, 0081) also indicated that there is no need to consider the anticipated economic growth in an area when determining control technology requ irements for a source [ see proposed 40 CFR 49.154(c)(1)(iii)] and advised that this factor should be removed.

The environmental group (0037.1) commented that the control technology requirements of the Indian country NSR rule must be more rigorous. The c ommenter asserted that the proposed technology requirements, especially when considered with other proposed provisions of the Indian country NSR rule, are very vague and unenforceable. The commenter urged us to require all sources that trigger applicabili ty to the Indian country minor NSR program be subject to a BACT review, which the commenter stated is similar to what is required in many state s’ minor NSR programs. Even in state s without an NSR BACT requirement, the commenter asserted, most state s typic ally have general control technology requirements that apply to at least certain types of sources as part of the SIP. The commenter believes that a definitive BACT requirement would thus establish a level playing field for all new and modified sources in Indian country, especially given the lack of other implementation plan requirements in Indian country. The commenter noted that costs of control and other environmental and energy issues can be taken into account in a BACT determination, as well as the le vel of control that has typically been required or achieved at other similar sources. Thus, the commenter believes, reviewing authorities will have flexibility in defining the BACT limits for owners of smaller sources orReview o f New Sources and Modifications in Indian Country Response to Comments

58 sources with difficult to control emissions such that the requirement will not pose an economic burden or put such sources in Indian country at a competitive disadvantage.

The state /local commenter (0024.1) similarly recommended application of a case

- by

- case control technology determi nation to include a “top

- down,” or best control, assessment of similar sources located in areas with the same, or better, attainment/nonattainment classification. The commenter recommended that the rule include the requirement to apply BACT rather than th e less stringent assessment of “typical” control technology proposed by EPA.

Comments Supporting Other Approaches to Control Technology Requirements:

One state /local commenter (0018.1) believes that the program’s requirements should mirror the programs in the surrounding or adjacent nonattainment areas.

One industry commenter (0025.1) recommended that EPA promulgate control technology requirements for various processes/emissions unit categories located in Indian country, while retaining case

- by

- case co ntrol technology review for situations that are not covered by promulgated control technology requirements or for unique circumstances. This commenter believes the proposed control technology review requirement will involve extremely onerous and

intricate analyses that will be the responsibility of resource

- limited reviewing agencies (EPA Regional Offices or trib al agencies) implementing minor NSR programs. The commenter also shared the concerns discussed above regarding the uncertainty, lengthy review, a nd potential for inequity that could result from the proposed case

- by

- case process.

The commenter (0025.1) elaborated that EPA should develop applicable minimum control technologies for various categories of processes or emissions units (such as boilers, internal combustion engines, material handling and conveying operations, etc.) that are prevalent at minor sources located in Indian country. While categorical minimum control technology evaluations may be resource intensive at the early stages of develo pment of the minor NSR program, the commenter believes they will avoid lengthy and cumbersome case

- by

- case reviews for subsequent permit applications. The commenter pointed out that the notice and comment rulemaking procedures associated with the promulga tion of minimum control technology requirements would provide the regulated community and public with the opportunity to review and comment on the provisions. The commenter believes that minimum control technology requirements for designated processes/emi ssions unit categories will provide regulatory certainty and clarity as well as streamlined minor NSR permitting.

The commenter (0025.1) also recommended that EPA adopt applicability thresholds for control technology requirements based on an emissions un it’s potential to emit regulated NSR pollutant(s). The commenter indicated that these applicability thresholds should apply for each emissions unit and should be set reasonably higher than the applicability threshold for minor NSR permitting.

One indu stry commenter who opposes any control technology requirement (0028.1) suggested that if EPA finalizes a control technology requirement in this rule, sources subject toReview of New Sources and Modifications in Indian Country Response to Comments

59 existing control standards, such as NSPS or MACT, should be expressly exempt from any

a dditional case

- by

- case review requirements.

One trib al commenter (0020) believes that control technology should not necessarily be required for minor sources but that the option should be available in order to protect the NAAQS or any applicable tribal r egulations. The commenter supported the use of other techniques, such as design and equipment specifications, work practices

, and operational restrictions, as first step measures, followed by required control equipment if needed to protect health and envi ronmental

concerns.

Other Comments on the Proposed Control Technology Requirement:

One trib al commenter (0050.1) generally agrees with the proposed control technology review approach. However, the commenter believes that the best way for the reviewing authority to determine whether the NAAQS will be achieved is for the application to contain an AQIA. Without the requirement of an AQIA, the commenter cannot support the proposed approach to control technology review.

A state /local commenter (0023.1) agreed that in instances where a case

- by

- case control technology review is utilized to determine applicable requirements, the determination should be based in part upon an ambient air quality analysis, or a rationale for foregoing such an analysis.

This c ommenter also questioned whether trib al agencies will have adequate resources to conduct such analyses, which often either take an extensive amount of time or lack the benefit of detailed analysis. The commenter added that minor NSR program should include a backstop for the case

by

- case control technology review requiring that the resulting emission rate be no less stringent than that which would be required under the rules of the surrounding state

.

Another state /local commenter (0034.1) observed that t he proposed minor NSR program would allow controls that are less stringent than the RACT level of control. The

commenter’s state applies the RACT floor to all sources, major and minor. The commenter suggested that allowing the possibility of controls les s than the RACT floor may set up a

“rush to the r eservation” for minor sources, which, due to the proximity of Indian country to
the commenter’s state ’s nonattainment areas, could adversely affect the state ’s ability to

reach attainment in those areas.

O ne industry commenter who opposes any control technology requirement (0032) stated that if controls are authorized under minor NSR, the program should not allow the imposition of

BACT

- level controls. The commenter added that BACT controls are some of the most stringent controls achievable, typically require extensive and costly plant modifications, and are entirely unwarranted for minor plant projects. Furthermore, the commenter believes, to allow the imposition of BACT for inconsequential plant projects effectively eliminates the distinction between minor and major NSR.

Response:Review o f New Sources and Modifications in Indian Country Response to Comments

60 We agree with those commenters that support a case

- by

- case control technology review because as we stated in the proposal, the reviewing authority, at a minimum, must requir e control technology that assures that the NAAQS are achieved.

We disagree with commenters that oppose any control technology requirement or who suggested that we have no authority to require such controls because section 110(a)(2)(C) requires us to as sure that the NAAQS are achieved, and we believe that requiring control technologies when necessary will ensure the NAAQS are protected as established in this section. Furthermore, section 110(a)(2)(C) does not preclude us from requiring additional provis ions that will further the goal of NAAQS protection and the fact that the statutory language requires a control technology review under some statutory provisions does not mean that the statute prohibits EPA from requir ing it under other provisions. Indeed , it is unclear what purpose a preconstruction permitting program would serve if the reviewing authority were precluded from requiring controls on new or modified sources.

We also do n o t agree with those commenters that would like us to require control

t echnologies only when there is a NAAQS or increment violation. As we have stated previously, section 110(a)(2)(C) provides for a program to regulate the construction and modif ication of stationary sources that ensure s attainment and maintenance of the NAA QS. Therefore , w e should strive for not allowing nonattainment of the NAAQS and nothing in the language of section 110 prevents us from using emission control requirements as a means of managing new source growth as to ensure that the NAAQS will continue to be achieved, even if an individual source will not cause a violation of the NAAQS

. Moreover, the control requirements that we are adopting will allow for consideration of air quality. Specifically, t he determination of when a control technology would be needed for a particular source or source category, will depend on the air quality needs of the area (e.g.., is the area almost in nonattainment?, is the control technology appropriate based on the anticipated growth of the area?), any other applicable

r equirements that the minor source needs to comply with, and the technical and economic feasibility for the particular control technology.

We also disagree with those commenters that would like us to implement consistent control technologies across the nation. As we stated in the proposal, it would be impossible to create a single program that creates precisely equivalent regulations among all areas of Indian country. We wish to ensure that Indian country is not seen as a potential “pollution haven”

wh ere minor sources can go to escape air pollution control requirements, and we also do not want to put tribes or owners and operators locating in Indian country at a competitive disadvantage by requiring substantially more stringent controls in a particular area of Indian country than are required in the surrounding areas. Therefore, a case

- by

- case control technology review provides the reviewing authority with the flexibility to create requirements that protect public health and environment, but also takes into consideration the needs of the area in question based on its current air quality situation, the potential air quality impacts from the growth associated with the source, and the technological and economic feasibility of the control technology as well as the control technologies in use in the surrounding states.

Therefore, t he final rule requires the reviewing authority to perform a control technology

review on a case

- by

- case basis when issuing a site

- specific minor NSR permit. See the finalReview of New Sources and Modifications in Indian Country Response to Comments

61 40 CFR 49.154(c). For general permits, the control technology review will be performed at the time when the general permit is developed. More details on general permits are provided in section IV.C of the final rule preamble.

Comment:

Three trib al comm enters (0033, 0041, 0056) recommended that, in order to reduce noncompliance with a technology

- based emission limitation due to an emergency or upset condition, the minor NSR program should include provisions for these episodic events.

Response:

We are allowing reviewing authority discretion for including episodic events provisions in the minor NSR permits.



### 2.7.3 Air Quality Impact Analysis

Under the proposed minor NSR program for Indian country, the reviewing authority typically would not require an AQIA for a new or modified minor source permit application. However, we stated in the proposal preamble (71 FR 48704) that “[i]n rare instances, if the reviewing authority has reason to be concerned that the construction of the minor source or

modification cou ld cause or contribute to a NAAQS or PSD increment violation, to ensure protection of the NAAQS, ... the reviewing authority may require the applicant to conduct an AQIA using dispersion modeling in accordance with 40 CFR part 51, appendix W to determine

the impacts that will result from [the] new source or modification. If the AQIA demonstrated that the construction of [the] source or modification would cause or contribute to a NAAQS or PSD increment violation, [the applicant] would be required to further r educe its impact before [it] could obtain a permit.” The comments on this proposal are summarized below.

Comments Supporting More Stringent AQIA Requirements:

Four trib al commenters (0033, 0041, 0050.1

, 0106.1 ), one environmental group commenter (0037. 1), and one private citizen (0094) supported more stringent AQIA requirements. Two of these commenters pointed out that it is not clear how the reviewing authority could have “reason to be concerned” without having an AQIA to review. The private

citizen (0094) favors requiring applicants to submit an AQIA in all cases, not only in “rare

instances.” T hree of the trib al commenters (0033, 0041

, 0106.1 ) stated that AQIAs should be required in areas that are in nonattainment or near nonattainment. The third trib al commenter (0050.1) suggested reversing the presumption such that an AQIA is required except in the rare instances when a source can demonstrate that it presents no cause for concern. The environmental group (0037.1) stated that to satisfy the Act, the minor NSR program must require that a minor NSR permit cannot be issued unless the source demonstrates that it will not cause or contribute to a violation of a NAAQS or PSD increment. The commenter stressed that the

burden for the demonstration must b e placed on the source, although conservative screening techniques can be used where appropriate to simplify the process.Review o f New Sources and Modifications in Indian Country Response to Comments

62 Comments Supporting More Specific AQIA Requirements:

Three industry commenters (0035.1, 0039, 0081), one trib al commenter (0036.1), and

one state /local air agency commenter (0024.1) suggested that EPA should set pollutant specific emissions thresholds or screening

- modeling impact levels to determine when detailed ambient air quality impacts analyses should be required. Three of these commenters (0035.1, 0039, 0036.1) suggested these thresholds be set at 50 percent of major source levels. One of these commenters (0081), who believes AQIAs should not be required at all (see below), proposed setting thresholds at 75 percent of major sou rce levels if they are to be required. Without requesting specific applicability provisions, another state /local commenter (0023.1) stated that the means for determining when an AQIA is to be conducted are vague and nondescript.

Comments Opposing Any AQI A Requirement:

Six industry commenters (0022.1, 0027.1, 0028.1, 0030, 0052, 0081) and one trib al commenter (0044) requested that EPA not require an AQIA in the minor NSR program. The commenters believe that this requirement would be excessive and very costly and time consuming for small businesses. These commenters often stated that if there is to be an AQIA requirement, the program should include prescribed screening procedures for when an AQIA must be performed. Two of these commenters (0027.1, 0028 .1) pointed out that the AQIA is rarely used in comparable state s’ minor source NSR programs. One of the commenters (0028.1) went on to say that if AQIAs are required at all, it should only be in rare instances, and the program should specify that fugitiv e emissions need not be included in modeling analyses.

Other Comments on the AQIA Requirement:

One industry commenter (0029.2) said that AQIA should be a rare exception, rather than the rule. The commenter pointed out that in general, stationary source s in Indian country are “few and far between.” Consequently, situations involving overlapping impacts from multiple sources threatening compliance with either the NAAQS or the increments are not a typical characteristic of Indian country. The commenter b elieves that, with the low ambient concentrations that generally prevail in Indian country and the inherent cap on emissions necessary to avoid PSD, minor sources and modifications will only rarely threaten a NAAQS or

PSD increment. The commenter conceded that an AQIA could be needed in the rare situation where a source is located close to an area with complex terrain and ambient concentrations that are near a NAAQS or PSD increment level. To address such situations, the commenter believes

that the minor NSR program should prescribe “trigger values” to include (1) a specific distance to an area of complex terrain, and (2) an existing elevated level of air quality (as a percent of the NAAQS).

Another industry commenter (0021.1) stated that the proposed ru le does not specify the require d modeling criteria. The commenter expressed concern that, because little permitting has been done within Indian country, relevant modeling data are not readily available and issuance of the draft permit could be delayed sig nificantly.Review of New Sources and Modifications in Indian Country Response to Comments

63 Two tribal commenters (0076, 0091.1) stated their understanding that the proposed rule would require each minor source to conduct dispersion modeling to determine the impacts that

would result from the source or modification. Because such mo deling could place a financial burden on minor sources in Indian country, the commenters recommended that EPA provide assurances that the requisite resources will be available to conduct such modeling.

One trib al commenter (0099.1) requested the authorit y to require an AQIA at the trib e ’ s discretion, for sources both on and off the reservation that may have the potential to adversely impact the trib e’s air quality.

Response:

Based on consideration of the comments received, we are finalizing the AQIA pro visions as proposed at 40 CFR 49.154(d). We continue to believe that allowing reviewing authority discretion for when an AQIA might be required ensures that construction of new minor sources or modifications at existing minor sources do not cause or contr ibute to a NAAQS or PSD increment violation when needed, but limits overburdening all minor sources in Indian country with these types of air quality analysis. Nevertheless, t o aid the reviewing authorities in the determination of when an AQIA might be ne eded for minor NSR sources in Indian country and to address the commenters’ suggestions, we intend to develop guidance that will consider the suggestions presented by these commenters. W e are also eliminating the language in the proposal preamble that sta ted (71 FR 48704) that AQIAs will be required “[i]n rare instances.” Since the reviewing authority has the discretion to require an AQIA, it is difficult to predict that such AQIAs will be required only in rare instances.



### 2.7.4 Permit Issuance Process

The p roposed minor NSR program specifies that within 45 days after receiving a minor NSR permit application, the reviewing authority must either determine that the application is complete enough to commence a technical review or request additional information. If the applicant does not receive a request for additional information or a notice of a complete application within 50 days (to allow for mailing), the application is deemed complete. Once the application is complete, the reviewing authority develops a d raft permit and provides a public notice seeking comments on the draft permit for a 30

- day period. After considering all timely, relevant comments, the reviewing authority issues a final permit if it determines that the application meets all applicable re quirements. Otherwise, the reviewing authority sends a letter denying the permit application with the reasons for the denial.

The subsections below discuss the comments received on the proposed process up through the public comment period. The comments received on the process for issuing the final permit or denial and on opportunities for subsequent administrative and judicial review are

discussed in section 2 .14 of this document.Review o f New Sources and Modifications in Indian Country Response to Comments

64 

### 2.7.4.1 General Comments on the Permit Issuance Process

Comment:

Eight indust ry commenters (0021.1, 0022.1, 0025. 1, 0027.1, 0028.1, 0032, 0048.1, 0081)

and two trib al commenters (0026.1, 0031) commented that the proposed permit issuance process is too lengthy for minor sources and/or too uncertain. A number of the commenters indi cated

that state minor NSR programs are bound by shorter and more definite timelines, and that the minor NSR program in Indian country should be too. Two trib al commenter s (0033

, 0106.1 ) recommended that we specify a complete timeline in the final rule, b ut did not recommend a specific period.

Two industry commenters in the oil and gas sector (0027.1, 0081) stated that the processing requirements are too stringent for a minor source program, and are even more stringent in some cases than the PSD progr am. These commenters indicated that under the proposal, a permit application could be withheld without a final decision for an unreasonable period, resulting in serious financial burden, lost business opportunities, a delay in the project,

and even cancel lation of the project. The commenters believe that frequent project delays and cancellations in the oil and gas sector could ultimately lead to serious loss of available oil and natural gas supply being brought to market.

F our commenters recommended tha t we set a limit on the time that the reviewing authority can take to issue the final permit after it has received the permit application. Two industry commenters (0032, 0048.1) suggested 90 days/3 months after receipt of a complete application. One of t hese commenters (0048.1) noted that the New Mexico program is based on

a 90

- day review period. The other (0032) believes that 3 months is adequate, especially because the commenter believes that the review process cannot lawfully include imposition of a c ontrol technology requirement.

Another industry commenter (0025.1) suggested a fixed timeframe not to exceed

150 days from the date an application is first received until the final determination.

Response:

In light of the comments received, w e decid ed to finalize a definite timeline for the overall minor source permit issuance process

. We believe this timeline will provide regulatory certainty for the regulated community and the public, as well as time for the regulated community and the reviewing a uthority to plan for the permit issuance process. Th e timeline was finalized u nder 40 CFR 49.154(b) and varies depending on the type of source being regulated under the minor NSR program as follows :

• For minor sources seeking a site

- specific permit, the p ermit issuance process timeline includes a period of 45 days for the application completeness review as well as a

30

- day public comment period. Any site

- specific permit will be granted or denied noReview of New Sources and Modifications in Indian Country Response to Comments

65 later than 135 days after the date the application is dee med complete and all additional information necessary to make an informed decision has been provided.

• For minor modifications at major sources seeking coverage under a site

- specific permit, the permit issuance process timeline includes a period of 60 day s for the application completeness review as well as a 30

- day public comment period. Any

site

- specific permit will be granted or denied no later than 1 year after the date the application is deemed complete and all additional information necessary to make an informed decision has been provided.

• For minor sources seeking coverage under a general permit (discussed in

section IV.C of the final rule preamble and under 40 CFR 49.156), the permit issuance process timeline includes a completeness review period o f 45 days

. Any request for coverage by individual sources under a general permit will be granted or

denied within 90 days of the receipt of such request for coverage by the reviewing authority. We believe that since the general permit requirements have b een subject to public notice when the general permit was developed, a shorter permit issuance process is warranted for determining whether a source is eligible for coverage under the general permit

.

• For synthetic minor sources (discussed in section IV.D of this preamble and under

40 CFR 49.158), the permit issuance process timeline includes, as proposed, a period of 60 days for the application completeness review as well as a 30

- day public comment period. Any synthetic minor permit will be granted or den ied no later than 1 year after the date the application is deemed complete and all additional information necessary to make an informed decision has been provided as well.



### 2.7.4.2 Completeness Review Period

Comment:

We proposed that the reviewing authority wou ld have 45 days to conduct a completeness review on an application for a minor NSR permit, and that if the source had not received a notice of completeness or a request for additional information in 50 days, the application would be deemed to be complete. A number of commenters believe that this is too long for a minor NSR program. Specifically, three industry commenters (0022.1, 0027.1, 0081) and one trib al commenter (0041) recommended a 15

- day completeness review, while three industry commenters (0028.1 , 0030, 0035.1) and two trib al commenter s (0033

, 0106.1 ) recommended a

30

- day limit. Two other industry commenters (0021.1, 0048.1) stated that the proposed period is too long without recommending a specific shorter period. These commenters often indicat ed that

state minor NSR programs have shorter deadlines for the completeness review than the proposed 45 days. One of the commenters (0048.1) recommended that the source be allowed to commence work on the proposed construction or modification as soon as t he application is determined to be complete, as is permitted by the Idaho program.

Two industry commenters (0039, 0042) and one trib al commenter (0036.1) believe that a

45

- day completeness review period is appropriate, but stated that the 50

- day limit fo r deemingReview o f New Sources and Modifications in Indian Country Response to Comments

66 the application is confusing and unnecessary. One of these commenters (0042) suggested that the minor NSR program require the completeness determination to be postmarked within 45 days of receipt. This commenter also asked that we clarify that the receipt date is the day that the reviewing authority receives the application, not the day that it is received by the reviewer within the agency. Another of the commenters suggested that there could be a statutory mail delivery period by which complet eness determinations are deemed mailed and received, e.g., 3 days.

One trib al commenter (0101.1) requested that we extend the period for the completeness determination to 60 days in the final rule.

Response:

After reviewing the comments about the compl eteness review period , we still believe that

t he application for a permit under this program should be reviewed by the reviewing authority within 45 days of its receipt for site

- specific permits (60 days from its receipt for synthetic minor permits and min or modification at major sources) to determine whether the application contains all the information necessary for processing the application. If the reviewing authority determines that the application is not complete, it will request additional information as necessary to process the application. If the reviewing authority determines that the application is complete, it will notify the source in writing. The reviewing authority’s completeness determination or request for additional information should be pos tmarked within 45 days of receipt of the permit application by the reviewing authority for site

- specific permits (60 days of receipt of the permit application by the reviewing authority for synthetic minor permits and minor modifications at major sources). If the source do es not receive a request for additional information or a notice of complete application postmarked within 45 days of receipt of the permit application by the reviewing authority for site

- specific permits (60 days for synthetic minor permit s and minor modification at major sources) , the application will be deemed complete. Once the application is complete, the reviewing authority will develop a draft permit and provide public notice seeking comments on the draft permit for a 30

- day period. A fter considering all ti mely, relevant comments, if the reviewin g authority determines that the new source or modification meets all applicable requirements, it will issue the final permit. Otherwise, the re viewing authority will send a letter den ying the p ermit application with reasons for the denial.

W

e amended our proposed completeness review procedures, as suggested by some commenters, and we will no longer require that if the source has not received a notice of completeness or a request for additional information in 50 days, that the application would be deemed complete. We agree with those commenters that expressed that this provision can be confusing. Therefore, if the source do es not receive a request for additional information or a notice of compl ete application postmarked within 45 days of receipt of the permit application by the reviewing authority for site

- specific permits (60 days for synthetic minor permits and minor

modi fication at major sources), the application will be deemed complete.

For general permits, the reviewing authority must comply with a 45

- day completeness review period to determine if the request for coverage under a general permit is complete. Therefore, within 30 days after the receipt of the coverage request, the reviewing a uthority must make an initial request for any additional information necessary to process this request and the source owner or operator must submit such information within 15 days. If the source does notReview of New Sources and Modifications in Indian Country Response to Comments

67 submit the requested information within 15 days fro m the date of the request for additional information and this results in a delay that is beyond the 45

- day completeness review period, the

90

- day permit issuance period for this general permit will be extended by the additional days the

source took to subm it the requested information beyond the 45

- day period. If the reviewing authority fails to notify the source owner or operator within a 30

- day period of any additional information necessary to process the coverage request, the source will still have 15 day s to submit such information and the reviewing authority must still grant or deny the request for coverage under a general permit within the 90

- day general permit issuance period and without any time extension. If the reviewing authority determines that t he request for coverage under a general permit has all the relevant information and is complete, we will notify the source owner or operator in writing as soon as th at determination is made. If the source do es not receive from the reviewing authority a req uest for additional information or a notice that the request for coverage under a general permit is complete within the 45

- day completeness review period described previously, the request for coverage under a general permit will be deemed complete. As prop osed, the reviewing authority shall grant or deny the request for coverage under a general permit without another 30

- day public comment period. However, the source owner or operator must submit a copy of such request to the tribe in the area where the sour ce is locating. We will also post notice of the coverage request under the general permit on our website. During our review of the request for coverage under the general permit, commenters can only notify us of any concerns about the eligibility of the sou rce to obtain coverage under that general permit and not on any other issue. The reviewing authority shall grant or deny the request for coverage under a general permit as expeditiously as possible by sending the source owner or operator a letter notifying the source of the approval or denial of the request. This letter is a final action for purposes of judicial review ( see 40 CFR 49.159) only for the issue of whether the source qualifies for coverage under the general permit. If the request for coverage un der a general permit is approved, the source owner or operator must post, prominently, a copy of the letter granting suc h request at the site where the source is locating and the source must comply with all the condition and terms of the general permit.



### 2.7.4.3 Technical Review Period

Comment:

Several commenters disagreed with our proposal not to impose a limit on the length of time that the reviewing authority has to complete its technical review of a complete application and prepare a draft permit. These c ommenters generally indicated that this would create unreasonable uncertainty regarding the permitting schedule. Two commenters (0027.1, 0081) indicated that the lack of a deadline could result in significant delays for a variety of reasons,

such as a lac k of reviewing authority resources, frequent change in agency personnel, and low priority being assigned to the permit program within the agency.

One industry commenter (0022.1) recommended allowing 15 days for technical review, but not more than 30 days . One industry commenter (0039) recommended a 45

- day period. Another industry commenter (0030) recommended a period of 45 to 60 days. Four industryReview o f New Sources and Modifications in Indian Country Response to Comments

68 commenters (0027.1, 0028.1, 0035.1, 0081) and one trib al commenter (0041) recommended a

60

- day period. T wo industry commenters (0042, 0072) suggested that we promulgate a specific period, but did not recommend a specific length.

Response:

We believe that the reviewing authority has the discretion to determine the appropriate length of time needed to compl ete the technical review of a complete permit application based on the particular circumstances of that permit and other factors such as available resources. However, to address the commenters’ concerns about the uncertainty of the permitting schedule

and to en sure that permits are issued on a timely manner, we have finalized a definite timeline for the overall minor source permit issuance process that varies depending on the type of source being regulated under the minor NSR program. See section 2. 7 .4.1 of this document for more

details on these timelines.



### 2.7.4.4 Public Comment Period

Comment:

One industry commenter (0028.1) recommended that the final rule limit the public comment period to 30 days (as proposed). One trib al commenter (0041) and two indust ry commenters (0021.1, 0072) suggested that we not require a public comment period for all minor NSR permits.

The trib al commenter (0041) indicated that while the importance of the public notice and participation is well understood, the nature and less er complexity of a minor source could allow this aspect of the proposed rule to be revisited in an effort to shorten permit processing times. The commenter suggested that we should consider a tiered screening approach to applicability for the public notic e and participation requirements, which could be as simple as a de minimis level for a particular regulated NSR pollutant, whereby only sources above this level would be subject to public notice requirements. The commenter gave Colorado Air Quality Regula tion #3, Part B.III.C as an example of this type of public comment applicability provision

One of the industry commenters (0072) indicated that requiring a 30

- day public notice and comment period for all permits is atypical for minor NSR programs implem ented by state s, and that it is not necessary. The commenter believes that this type of requirement would simply prolong the process of approval for sources with a small potential to impact the public. The commenter suggested that it would be appropriate for public notice to be required using a different set of emissions thresholds than the ones that trigger permitting, or that the final rule could only require public notice for permits that satisfy a certain criteria, such as those containing a synthetic minor permit limit. The other industry commenter (0021.1) questioned whether every minor source permit should be required to go through public comment because of the sheer number of permits and the similarity between many of these permits.

Response:Review of New Sources and Modifications in Indian Country Response to Comments

69 We continue to believe that a public comment period is important and necessary to

ensure that the public is informed about the permitting actions occurring in Indian country and to ensure that the particular needs of Indian country are considered

. However, we are not

ma tching the public participation requirements to the environmental significance of the project, as some commenters suggested, because we believe that the public has the right to know about any permitting actions occurring in their area

, notwith standing the environmental significance of the project

, and that a 30

- day public comment period on a permitting action, as in our existing regulations, is an appropr iate timeline for this purpose. Therefore, we are finalizing the public comment period pro visions as proposed. See section 2.11 of this document for more details about these public participation provisions.



### 2.7.5 Permit Term

Comment:

Four industry commenters (0022.1, 0035.1, 0039, 0081) and one trib al commenter (0036.1) recommended that the fi nal minor NSR program include a provision to allow a permit to be canceled at the source’s request when its emissions fall below the minor NSR applicability thresholds. The commenters requested this provision in light of the fact that production at oil

an d gas facilities typically declines rapidly, with an attendant decline in emissions.

Response:

Permits under this program would not be revoked at the source’s request when there is a rapid decrease in production. In such a case, the limits of these perm its might be revised appropriately to account for the reduction, but the permit would not be revoked. Permits will be revoked only if the source officially shuts down its operation and notifies the reviewing authority

about the business closure.

Comment:

One state /local commenter (0018.1) noted that the proposal specifies that permits to construct do not expire, as long as the source completes construction within a reasonable period of time. The commenter cautioned that this provision may be administra tively impractical to implement, and stated that it may be appropriate to specify that the permit does expire after a specified period, subject to renewal for a specified period upon a showing of diligence by the source. Otherwise, the commenter believes that the source may proceed with construction, but not within a “reasonable time,” only to have EPA retroactively find that the permit actually had expired.

Response:

Upon further review of these provisions, we have noticed that the language we used in

t he proposal preamble was not consistent with the provisions we proposed under 40 CFRReview o f New Sources and Modifications in Indian Country Response to Comments

70 49.155(b). Under 40 CFR 49.155(b), we proposed provisions for when permits become invalid and did not state that “a preconstruction permit does not expire.” Therefore, w e have eliminated the proposal preamble language that stated that permits do not expire and we are finalizing the proposed provisions as stated under 40 CFR 49.155(b).

Under 40 CFR 49.155(b), we have finalized provisions that state that your permit

rema ins valid as long as you commence construction on your project within 18 months after the effective date of the permit, you do not discontinue construction for a period of 18 months or more, and you complete construction in a reasonable time. The reviewin g authority may extend

the 18

- month period where justified and that 18

- month limit does not apply to the time period between construction of approved phases of a phased construction program. In those cases, you must commence construction of each such phas e within 18 months of the approved commencement date for that phase.



### 2.7.6 Other Comments on the Permit Issuance Provisions

Comment:

One state /local commenter (0051.1) expressed the opinion that the proposed minor NSR program will have a small impact, if a ny, on air quality because program contains no real requirements other than the need to obtain a permit. The commenter stated that there is no required degree of control technology (only a proposal for a work

- intensive, case

- by

- case control technology ana lysis that may conclude that no technology is required), no requirement to assure that the proposed increase in emissions does not cause or contribute to a nonattainment situation, and no requirement that such emissions increases be mitigated with emission s offsets.

The commenter (0051.1) went on to assert that the only certain requirement in the proposed minor NSR program is that the public be allowed to comment on proposed permits prior to issuance. The commenter believes that this is a noteworthy impr ovement on the status quo, but that the public notice process is a labor

- intensive process with no direct impact on air quality. Based on extensive experience with public notices and public involvement in permitting decisions, the commenter believes that for the proposed minor NSR program (which has no meaningful requirements such as BACT or offsets) the public’s involvement will be limited to pointing out that the program cannot address concerns about air quality and public health, and will only result in increased frustration on the part of the public.

Response:

The minor source permitting program we are finalizing with this action addresses, on a national level, many environmental and regulatory issues that are specific to Indian country.
However, we recognize that different tribes may face different issues and therefore it would be impossible for us to create a single program that creates precisely equivalent regulations among all areas of Indian country. We wish to ensure that Indian country is not seen as a potential “pollution haven” where minor sources can go to escape air pollution control requirements, and we also do not want to put tribes or owners and operators locating in Indian country at aReview of New Sources and Modifications in Indian Country Response to Comments

71 competitive disadvantage by requiring substantiall y more stringent controls in a particular area of Indian country than are req uired in the surrounding areas. Therefore , we are finalizing specific permit requirements that the source and the reviewing authority will have to comply with

in order to ensure that the NAAQS are achieved and maintained , but we are also providing the flexibility for considering the needs of the area in question based on its current air quality situation, the potential air quality impacts from the growth associated with the source , and the technological and economic feasibility of the control technology as well as the control technologies in use in the surrounding states.

Furthermore, we disagree with the commenter w hen he implies that emissions offsets should be required for min or sources. Unlike section 173 of the Act, which specifically requires offsets for major sources in nonattainment areas, section 110(a)(2)( C ) of the Act does not provide us with explicit authority to require offsets for minor sources. In addition, we bel ieve that requiring offsets for minor sources will put tribes at a competitive disadvantage because offset requirements are not included in state minor NSR programs.

Finally, we continue to believe that a public comment period is important and necessary

to ensure that the public is informed about the permitting actions occurring in Indian country and to ensure that the particular needs of Indian country are considered. Therefore, we are finalizing provisions that will require a 30

- day public comment per iod for site

- specific minor

NSR permits

.

Comment:

One state /local commenter (0024.1) interpreted the proposal to require only annual emissions limits in the minor source permits (based on language at 71 FR 48705). The

commenter recommended that short

- term emission limits also be required in the permits, noting

that short

- term limits are more practically enforceable and can be made consistent with the averaging time of the shortest relevant ambient air quality standard associated with the regulated pol lutant.

Response:

We agree with this commenter. Therefore, w e want to clarify that the reviewing authority may not only require annual emissions limits in the minor NSR permits, but also short

- term limits as necessary. Short

- term emission limits m ay also be required as part of any enforceable emission limitation and, if applicable, depending on the relevant ambient air quality standard associated with the regulated pollutant.

Comment:

One industry commenter (0072) noted that the proposal for the minor NSR program

stated in several places that any permit issued under the program would need to ensure that a proposed project would not cause or contribute to a NAAQS violation. The commenter further noted that the minor NSR program will apply to mino r modifications at major sources (including Title V sources). The commenter believes that the NAAQS protection requirement should notReview o f New Sources and Modifications in Indian Country Response to Comments

72 result in the need for an existing Title V facility to certify compliance with the NAAQS or PSD

increments. The commente r asserted that this requirement is specifically prohibited by 40 CFR 71.2, in the definition of “applicable requirement,” where it specifically states that these ambient air quality standards are only applicable requirements for temporary sources permitte d under

section 504(e) of the Act.

Response:

As proposed, the NAAQS protection requirement only applies to the minor modification and not the existing major source, which may also be a Title V source and thus subject to Title V requirements.

Comment:

Two industry commenters (0028.1, 0072) commented on the proposed requirement of

40 CFR 49.155(a)(2) and 40 CFR 49.154(c) for emissions limits for each affected unit in the permit, if such a limit is technically and economically feasible. One of these c ommenters (0028.1) believes that this is potentially over

- reaching and beyond reasonableness. The commenter asserted that emissions units should be subject to emissions limits if there is a substantive regulatory basis to impose a limit, such as a technol ogy or health

- based standard, and that an emissions limit should be related to an environmental protection purpose, not imposed simply because it is feasible. The commenter requested that we revise these subsections to link the requirement for emissions l imitations in minor NSR permits to a substantive regulatory or environmental protection basis.

The second industry commenter (0072) stated that it is not clear why the permit must

contain an emission limit for each affected unit. The commenter asserted that such a limit is appropriate if a synthetic minor limit is required to avoid an applicable requirement. However, the commenter believes that in other cases, if operation at the design capacity of a source would not trigger any requirements and would n ot cause or contribute to a NAAQS or PSD increment violation, then there is no need for a permitted emission limit.

Response:

In order for the reviewing authority to ensure that the NAA QS are maintained or achieved, control technologies and its correspo nding emissions limita tions will be required as necessary and based on the review of the permit application. As we stated in the proposal at

40 CFR 49.154(c), a fter determining that your application is complete, the reviewing authority

will conduct a case

- by

- case control technology review to determine the appropriate level of control, if any, necessary to assure that NAAQS are achieved, as well as the corresponding emission limitations for the affected emission s units at your source. To determine if a con trol technology requirement is needed and as stated in 40 CFR 49.154(c)(1), the reviewing authority will consider the following: ( 1 ) local air quality conditions (2) typical control technology or other emissions reduction measures used by similar sources in surrounding areas, (3) anticipated economic growth in the area, and (4) cost

- effective emission reductions

alternatives.Review of New Sources and Modifications in Indian Country Response to Comments

73 T

he main reason for choosing a control technology is based on the air quality of the area, including the anticipated growth and subsequent emission increases that will come from this growth. However, we also understand that we need to consider the emission reduction measures already in place in surrounding areas (to reduce the possibility of pollution havens or too stringent air p ollution control requirements in Indian country) and the cost of such measure in comparison with other alternatives that might achieve the same goal of air quality protection. This will ensure that the control technology chosen, if any, is not excessively burdensome or

lenient.

Therefore , emission limits that are technically or economically feasible will only be required when the reviewing authority has determined, mainly based on air quality considerations, that a control technology is needed.

Comm ent:

One state /local commenter (0034.1) requested clarification of the following definition:

Emission limitation means a requirement established by the reviewing authority which limits the quantity, rate, or concentration of emissions of air pollutants on a continuous basis , including any requirement relating to the operation or maintenance of a source to assure continuous emissions reduction, and any design standard, equipment standard, work practice, operational standard, or pollution prevention techni que. [Emphasis added.]

The commenter stated that specifying that the quantity, rate, or concentration of emissions is limited “on a continuous basis” implies that every emission limitation must be complied with on an instantaneous time period and acco mpanied by a continuous emission monitoring system (CEMS). The commenter went on to say that a more pragmatic reader would draw the conclusion that the word “continuous” means that the limitation applies “at all times.”

The commenter noted that the remai nder of the regulations does not use the concept of continuous as meaning an instantaneous time period over which the limit must be achieved, which argues for the more pragmatic reading but does not certify that interpretation. The commenter requested tha t this definition be clarified.

Response:

The term “on a continuous basis” in the definition of emission limitation does not imply that every emission limitation must be complied with on an instantaneous time period and accompanied by a CEMS. The ter m “on a continuous basis,” as the commenter suggests, means that the limitation applies “at all times”, but not that the emission limitation has to be accompanied by a CEMS. There are various ways to monitor compliance with limitations that apply on a con tinuous basis as we mention in the section IV.B.3 of the final rule preamble.

Comment:Review o f New Sources and Modifications in Indian Country Response to Comments

74 Two industry commenters (0027.1, 0081) noted that proposed 40 CFR 49.155(a)(7)(vii) would require the permittee to allow a representative of the reviewing autho ri ty on to the premises. The commenters believe that t he authority of agency personnel to enter the premises should be contingent on agency personnel compliance with facility safety practices. One of the commenters (0081) recommended that a phrase that state s “the reviewing autho ri ty must comply with the safety requirements of the permittee” should be included in the language. The second commenter (0027.1) suggested adding the phrase “the reviewing autho ri ty must comply with the safety requirements of the pe rmittee and the facility in question.”

Response:

Upon further evaluation of these provisions, we have stated in the preamble of the final

rule that we do believe that the representative of the reviewing authority should follow standard safety requireme nts identical to the ones that apply to the permittee’s employees.

Comment:

One trib al commenter (0041) noted that the proposed rule does not mention a schedule that would hold the reviewing authority to a specified time frame to complete permit revisio ns. The commenter recommended that permit modification provisions be included to clarify the applicability and timing of this type of request.

This commenter (0041) also suggested that an Off

- Permit Change(s) provision be included in the minor NSR prog ram. The commenter noted that to meet the changing demands of industry, many times changes will occur in the field and in order to remain compliant with permit requirements a source will submit the changes to the reviewing authority. In many

instances du e to a variety of reasons, the processing of these requests may be delayed. To alleviate time loss due to changes that are not otherwise addressed or prohibited in a permit, the commenter recommended that procedures addressing these types of requests be i ncluded in the NSR program.

Response:

In light of the comments received, we decided to finalize a definite timeline for the overall minor source permit issuance process. We believe this timeline will provide regulatory certainty for the regulated commun ity and the public, as well as time for the regulated community and the reviewing authority to plan for the permit issuance process. The tim eline was finalized under 40 CFR 49.154(b) and it is described in section 2.7.4.1 of this document.

As to off

- per mit changes, we do not believe it is appropriate to allow off

- permit changes,

other than at exempted units , under the tribal minor source NSR program. The tribal minor source NSR program does, however, provide a number of mechanisms for addressing potenti al changes. Fir st, to the extent that possible changes can be anticipated at the time of permit issuance, they can be included in the permit as alternative operating scenarios. Second, we would process changes in an unit’s allowable emission limit for a regulated NSR pollutant that is

not otherwise subject to major or minor source NSR through an administrative permi t revision

.Review of New Sources and Modifications in Indian Country Response to Comments

75 See final 40 CFR 49.159(f) for more information on the provisions that govern administrative permit revisions

.



### 2.8 **Applicability of the Minor NSR Program to Existing Sources** 

In the proposal preamble, we proposed Option 1 and solicited comment on Options 2, 3,

and 4 as follows:

• Option 1

– Existing minor sources are exempt from the program until they propose a

modification.

• Option 2

– Existing synthetic minor sources are subject to all aspects of the program and must submit an application within 1 year.

• Option 3

– All existing minor sources must register within 1 year, but not be subject to permitting requirements.

• Option 4

– All exis ting minor sources are subject to all aspects of the program.

In sections 2.8.1 through 2.8.5 below we summarize the comments on each of these options and comments suggesting other approaches. Our response to all the comments in these subsections appear s at the end of section 2.8.5.



### 2.8.1 Comments on Option 1

Supporting comments:

Numerous commenters supported Option 1, including nine industry commenters (0021.1, 0022.1, 0025.1, 0027.1, 0030, 0035.1, 0042, 0052, 0081) and three trib al commenters (0026.1,

003 6.1, 0044). These commenters typically made some or all of the following points:

• Option 1 is consistent with state minor NSR programs.

• Option 1 is the least burdensome on existing sources.

• Regulation of existing minor sources is not needed to maintain th e NAAQS.

• The EPA and trib es do not have resources available to implement any of the other options.

One of the trib al commenters (0036.1) supported Option 1 only on the condition that an existing source would still be able to obtain a synthetic minor perm it. If that would not be allowed, the commenter supported Option 2.

Two of the supportive industry commenters (0025.1, 0081) specifically indicated that under Option 1 an exempt minor source should be allowed to opt for a permit under the minor NSR prog ram (without being subject to any of the requirements) to establish enforceable limits associated with a consent decree or other enforcement mechanism. A third of the industryReview o f New Sources and Modifications in Indian Country Response to Comments

76 commenters (0022.1), who favors applying state minor NSR programs in Indian cou ntry, noted that such limits are already available under state programs.

Opposing comments:

Three commenters specifically opposed Option 1, including one state /local commenter (0024.1), one private citizen (0016.1), and one environmental group (0037.1). The state /local commenter (0024.1) expressed concern that Option 1 would allow an existing source to obtain a permit with unrealistically high allowable emissions, and then to avoid becoming subject to the proposed rule when modifying by refining the all owable emissions calculations concurrent with the physical modification. The private citizen (0016.1) pointed out that Option 1 would not address any air quality impacts resulting from existing sources, and asserted that if EPA has a plan for NAAQS mainte nance and planning under Option 1, we should state the plan explicitly.

The environmental commenter (0037.1) strongly urged EPA to ensure that existing major sources (as well as minor sources) are brought up to date with emissions control technology, in order to fill the gap left by decades of delay in addressing sources located in Indian country. The commenter agreed with our statement that there has been a regulatory gap in Indian country over the past 35 years, and added that there is often a lack of data regarding all of the air pollution sources in existence in Indian country. The commenter believes that this historical gap justifies action by EPA to address minor sources in Indian country that should have been covered by NSR requirements over the p ast three decades, as well as any existing major sources that lack current controls. As a result, the commenter does not support Option 1.



### 2.8.2 Comments on Option 2

Supporting comments:

One private citizen (0016.1) supported Option 2 if Option 3 (the comme nter’s preferred option) proves to be too burdensome for reviewing authorities and sources. One trib al commenter (0036.1) endorsed Option 2 only if existing sources would not be able to obtain a synthetic minor permit under Option 1 (the commenter’s prefe rred option). Three trib al commenters (0020, 0050.1, 0098.1) and one environmental group (0037.1) favored a combination of Options 2 and 3 (discussed further in section 2.8.5).

Opposing comments:

Two industry commenters (0025.1, 0081) specifically oppo sed Option 2. One of these commenters (0025.1) stated that Options 2 through 4 represent extremely onerous provisions for sources and reviewing authorities and provide limited or no gain in terms of environmental improvement. The commenter also noted tha t areas with real air quality concerns are already required under other programs to develop attainment/maintenance plans. The other commenter (0081) stated that Option 2 would have a large monetary effect on existing oil and gas industry plants and compre ssor stations.Review of New Sources and Modifications in Indian Country Response to Comments

77 

### 2.8.3 Comments on Option 3

Supporting comments:

Ten trib al commenters (0031, 0033, 0038.1, 0041, 0047.1, 0053, 0076

, 0091.1, 0097.1,

0106.1 ), three state /local commenters (0023.1, 0024.1, 0034.1), and one private citizen (0016.1) supported Opt ion 3. Three additional trib al commenters (0020, 0050.1, 0098.1) and one environmental group (0037.1) favored a combination of Options 2 and 3 (discussed further in section 2.8.5).

The supportive commenters generally supported this option because they b elieve it would place a small administrative burden on existing sources to report their existing emissions while providing trib es with important information about the existing emissions within their jurisdictions. Six of the supportive trib al commenters ( 0033, 0038.1, 0041, 0076

, 0091.1,

0106.1 ) also indicated that they would like us to add a provision requiring existing sources to notify the trib e if they change their operations or shut down.

One of the supportive trib al commenters (0038.1) suggested th at, in addition to registration, each existing source be reviewed for pollution control equipment and emissions (which is similar to Option 4). The commenter added that changes to bring the facilities into compliance could be done over a few years to less en the economic burden. The commenter

believes that the trib e needs to manage emissions from minor sources to protect their resources because they greatly outnumber major sources on the r eservation and cumulatively emit a large volume of pollutants.

One of the supportive state /local commenters (0034.1) added that registration would allow the reviewing authority to provide each source with its permitting options, as follows:

• True Minor Sources

– obtain minor source permit or track emissions to annually

c ertify continuing minor source status.

• Synthetic Minor Source

– obtain synthetic minor permit in order to avoid major source requirements.

• Synthetic Minor Source Eligible

– obtain synthetic minor permit to reduce allowable emissions below major source leve l(s) in order to avoid major source requirements.

• Major Sources

– obtain major source permit.

• Already Permitted Major and Minor Sources

– convert existing permits to new permitting system as provided for in the proposed regulations.

One industry commente r (0081) who supports Option 1 conceded that Option 3 would not be overly burdensome and would assist with NAAQS planning.

Opposing comments:

One trib al commenter (0036.1) who supports Option 1 or 2 specifically opposed Options

3 and 4. The commenter b elieves that Options 3 and 4 would be unduly burdensome andReview o f New Sources and Modifications in Indian Country Response to Comments

78 overbroad, and could significantly disadvantage minor sources already operating in Indian
country.



### 2.8.4 Comments on Option 4

Supporting comments:

Two trib al commenters (0056, 0061.2) and two privat e citizens (0094, 0096) supported Option 4. One of the trib al commenters (0056) added that the final rule should require a notice

to the trib e when a source shuts down.

The other trib al commenter (0061.2) noted that state s have generally regulated min or sources, and most trib es have not done so in Indian country. In order to level the playing field and protect health and the environment, the commenter believes that all appropriate minor sources should be subject to the minor NSR program. The commente r stated that the requirements of the program are not onerous. The commenter believes that at a minimum, all synthetic minor sources should be subject to the program (Option 2) to assure that they limit emissions to the permitted level. This com menter al so noted that the Indian country areas in the Northwest are already subject to a registration requirement under an applicable FIP.

One of the private citizens (0096) suggested that existing sources be required to meet control requirements, such as BACT o r LAER, depending on the air quality in the region where the facility is located. The commenter added that this could be implemented through a “sunset clause,” which would allow sources some time to come into compliance and thereby avoid undue

economic bu rden all at once.

Opposing comments:

Three industry commenters (0025.1, 0072, 0081), one trib al commenter (0036.1), and

one state /local commenter (0018.1) specifically opposed Option 4. The state /local commenter (0018.1) believes that the case

- by

- case reviews required under Option 4 would overwhelm EPA’s capabilities. One of the industry commenters (0072) similarly indicated that requiring permits for existing sources would overwhelm EPA’s ability to write permits for new and modified sources, resultin g in unnecessary construction delays. This commenter also noted that there is no requirement for existing major sources to obtain an NSR permit and stated that it is not clear what benefit would be gained from requiring minor sources to do so.

One of th e industry commenters (0025.1) stated that Options 2 through 4 represent extremely onerous provisions for sources and reviewing authorities and provide limited or no gain in terms of environmental improvement. The commenter also noted that areas with real air quality concerns are already required under other programs to develop attainment/maintenance plans. The trib al commenter (0036.1), who supports Option 1 or 2, specifically opposed Options 3 and 4. The commenter believes that Options 3 and 4 would be unduly burdensome and overbroad, and could significantly disadvantage minor sources already operating in IndianReview of New Sources and Modifications in Indian Country Response to Comments

79 country. Another of the industry commenters (0081) believes that Option 4 would be overly burdensome on oil and gas operations cu rrently opera ting in Indian country

.



### 2.8.5 Other Suggestions for Addressing Existing Sources

Comments:

A number of commenters suggested other ways to address existing sources in Indian country. Three trib al commenters (0020, 0050.1, 0098.1) recommended a combination of Options 2 and 3. Under this approach, all existing sources would be required to register and provide emissions information to the reviewing authority and the trib e, and synthetic minor sources would be required to apply for a permit and undergo the full p ermitting process. One of these commenters (0098.1) stated that this combination would be a good balance between protecting both air quality and Indian country economies.

An environmental group (0037.1) similarly suggested that we implement Options 2 an d 3 now, and follow up with comprehensive retrofit control requirements in coming years. The commenter recommended that we develop retrofit control requirements by source category to

avoid the burden of case

- by

- case review and to allow prioritization of s ource categories.

One state /local commenter (0024.1) recommended that the final rule require existing sources to register (to aid in attainment planning and implementation of the NSR program) and to apply RACT controls. Another state /local commenter (00 18.1) advocated that we require best available retrofit control technology (BARCT) for each class or category of source. The commenter believes that it would be easier for EPA to promulgate such source category BARCT rules than to perform case

- by

- case rev iews, since the presumptively appropriate BARCT would be whatever the adjacent state agency has included in its SIP for that source category.

Response:

After considering the comments, we have decided to finalize Option 3 for true minor sources. For synt hetic minor sources, we are finalizing provisions as stated in section IV.D of the final rule preamble, which include provisions that require certain sources to obtain permits under this program 1 year after the effective date of this rule. We are not f inalizing our preferred option for “true” minor sources, Option 1, because even though we agree that this option is consistent with state minor NSR programs and it is the least burdensome option for existing minor sources, we believe that collecting source inventory data for minor sources in Indian country is necessary to successfully implement the minor NSR program. In addition, the source emissions data are needed to assess the feasibility of an actual emissions based applicability test and to determine i f we need to modify the minor NSR thresholds at a later time. We are also not finalizing Option 4 at this time because we believe that Option 4 would overwhelm limited EPA resources even if we were to use a “sunset clause.” Thus, under the program we are finalizing, we are creating a registration program for minor sources in Indian country. Under the minor source registration program, an owner or operator of an existing true minor source in Indian country (as defined in 40 CFR 49.152(d))Review o f New Sources and Modifications in Indian Country Response to Comments

80 must register the source with the reviewing authority in thei r area within 18 months after the effective date of this progra m. This date has been modified from the 12 months we proposed to provide existing sources additional time to comply with these requirements. These p rovisions are discussed further in section VII.C of the final rule preamble. If the true minor source commences construction in the ti me period between the effective date of this rule and 36 months from the rule’s effective date, the source owner or opera tor must register the source wit h the ir reviewing authority within 90 days after the source begins operation. If cons truction or modification of the source is scheduled to commence any time on or after 36 months from the effective date of this rule

, the s ource must submit a permit application

and the information in the application will be used to fulfill all the other registration requirements described in 40 CFR 49.160(c)(2). For modifications, the permit application must

also include the source’s actual emissions (if available). This registration will be a one

- time registration (not an annual registration) of the source’s estimated actual and allowable emissions as provided in 40 CFR 49.160. For the Indian reservations subject to the registration requir ements under 40 CFR 49.138 (“Rule for the registration of air pollution sources and the reporting of emissions”), the data being collected under that rule will be used to fulfill the requirements of this national registration program.



### 2.9 **Synthetic Minor Sou rces** 

The proposed minor NSR program includes provisions at 40 CFR 49.158 for synthetic minor source permits for both criteria pollutants and HAPs. With such permits, a source that has the potential to emit a pollutant in major amounts, but has actual em issions that are below the major source threshold, can accept enforceable emission limitations that reduce its potential emissions below the major source threshold. The synthetic minor source will then avoid the requirements that apply to major sources.

Supporting Comments:

Two industry commenters (0025.1, 0035.1), two trib al commenters (0031, 0036.1), one

state /local commenter (0051.1), and one private citizen (0094) support at least some aspects of the proposal to provide for synthetic minor permits. Two of these commenters (0025.1, 0036.1) noted that this option has previously been available for sources located outside of Indian country.

The state /local commenter (0051.1) believes that synthetic minor sources would be better addressed by the adopti on of regulations specifically designed to allow the granting of synthetic minor operating permits, rather than preconstruction permits. The private citizen (0094) supports synthetic minor source permits for criteria pollutants, but not for HAPs because o f the potential danger to human health and the environment from these hazardous pollutants. This commenter also suggested specific wording changes in proposed 40 CFR 49.158(a)(1)(ii)(A) (revising it to read “... a description of its effect on actual emissio ns or and the potential to emit.”) and 49.158(a)(1)(ii)(H) (revising it to read “Estimates of the allowable emissions and /or potential to

emit ....”Review of New Sources and Modifications in Indian Country Response to Comments

81 Opposing Comments:

One trib al commenter (0041) and one private citizen (0092.1) opposed the proposal to

al low for synthetic minor source permits. The private citizen (0092.1) apparently believes that synthetic minor source permits are not available outside of Indian country and therefore opposed the proposal in the belief that HAP sources would rush to Indian country to avoid MACT standards, thereby undermining Congressional intent to protect human health and inflicting economic disadvantage on HAP sources located outside of Indian country.

The trib al commenter (0041) believes that the proposed synthetic min or rule will hinder

some trib es’ ability to develop and/or maintain their own sustainable Title V major source permitting program by decreasing the number of major sources and thereby reducing permitting fees collected and utilized by the trib es to run the ir Title V permitting programs. The commenter also indicated that the inclusion of the synthetic minor source provision will force certain trib es’ major source permitting programs to either raise the remaining major sources’ permitting fees or

restructure their program to ensure sustainability. The commenter requested that either specific language be incorporated in the minor NSR rule to allow for each trib e to decide whether or not to allow for a synthetic minor permit program, or the proposed synthetic minor source rule be made applicable only to new sources constructed following the effective date of this rule.

Response:

We agree with those commenters that would like us to allow synthetic minor source permits for both criteria pollutants and HAPs. W e believe that allowing synthetic minor source permits could be beneficial to the environment by reducing the amount of pollution that could have been emitted to the air otherwise. In addition, this option has been available for sources outside of Indian country for both regulated NSR pollutants and HAP s for many years. Thus, we disagree with the commenter who believed that we will be creating pollution havens in Indian country for HAP sources because HAP sources who obtain synthetic minor permits need to comply with emissions limits that are enforceable as a practical matter (as defined in 40 CFR 49.152) and with the applicable regulations under 40 CFR part 63.

We do not believe that synthetic minor source permits will significantly reduce the

number of Title V major sources in Indian country and hence the associated permit fees, since we do not anticipate many sources to change their current status to synthetic minor status once this rule is final. The PTE transition policy described in this rule’s p roposal had already allowed sources in Indian country, until this FIP becomes final, to limit their PTE to avoid major source status for purposes of the Title V program. However, if a tribe is concerned that existing

Title V programs may be unsustainable after a certain number of sources change their existing

Title V permits to synthetic minor source permits, the tribe will have to consider raising their

Title V fees as necessary to ensure that, as stated in section 502(b)(3) of the Act, the fees

collected under the Title V program are “sufficient to cover all reasonable (direct and indirect) costs required to develop and administer the permit program requirements.” For details on the synthetic minor provisions we have finalized, please see section IV.D of the final rule preamble.Review o f New Sources and Modifications in Indian Country Response to Comments

82 In regards to changing the proposed regulatory language under 40 CFR 49.158(a)(1)(ii)(A) and 49.158(a)(1)(ii)(H)

, we believe is not feasible. A source owner will be either proposing a new or modified source . A new source ca n only estimate the effect of the proposed emission limitations on their PTE (they will lack actual emissions data)

, while an existing source will estimate the effect of the p roposed limitations on allowable limits not PTE as described in section IV.A.2 of the final rule pr e amble

.

We also disagree with the commenter that suggested that regulations for synthetic minor permits should be part of an operating permits program instead of the precon struction permits program established in the final rules

. EPA believes that the use of a pre

- construction permit program is preferable to the use of an operating permit program for this purposes for a number of reasons. First, EPA has determined that it is appropriate to establish and implement a pre

construction mi nor source NSR permit program in Indian country in order to protect air quality in those areas and this would be true even if there were a separate operating permit program. As a result, EPA believes that the establishment of an operating permit program w ould be somewhat redundant and would result in unnecessary complexity. Second, EPA believes that a

pre

- construction permit program is imminently suited to the issuance of synthetic minor source permits because it is specifically designed to take into acco unt the affect of increases in emissions in the area where a new source will be located. Finally, to the extent that the commenter is concerned about ongoing operations once a pre

- construction permit is issued, it is important to remember that the require ments specified in the pre

- construction permit will govern facility operations on an ongoing basis.

Comment:

One industry commenter (0081) stated that general permits should be allowed for the permitting of synthetic minor sources. The commenter beli eves that even though synthetic minor permits are intended to be a less burdensome program, the use of general permits may still be advantageous due to streamlined processes and the absence of public notice requirements. Accordingly, the commenter request ed that we clarify that general permits can be used for synthetic minor permits.

Response:

We disagree with this commenter since these sources are otherwise major sources until they are approved to construct under a synthetic minor source permit. We be lieve that the size and amount of emissions from these sources warrants a case

- by

- case review of the source and their proposed emission limitations. Therefore, in the final rule, we are not allowing general permits for synthetic minor sources.



### 2.10 **Case**

**- by** 

**- Case MACT Determinations under Section**  **112(g) of the**

**Act**

Section 112(g)(2)(B) of the Act provides that a major source of HAPs may not be

constructed or reconstructed unless MACT controls are installed. If the source is not in a sourceReview of New Sources and Modifications in Indian Country Response to Comments

83 category for which a MACT standard has been established, MACT for the source must be

determined on a case

- by

- case basis. The proposed minor NSR program provides one mechanism

for such a case

- by

- case determination in Indian country. Other options include a part 71 permit

a ction or a “Notice of MACT Approval.”

Supporting Comments:

One industry commenter (0025.1) and two trib al commenters (0036.1, 0061.2) supported the proposal to provide for case

- by

- case MACT determinations in the minor NSR program. The industry commente r (0025.1) noted that the proposal is consistent with the practice of most state programs. One of the trib al commenters (0036.1) indicated that it would be administratively

convenient to address case

- by

- case MACT determinations in a minor NSR permitting a ction, and the other (0061.2) noted that regulation of HAPs is important for health.

Opposing Comment:

One industry commenter (0081) suggested that if a source is major for HAPs, it should not apply for a minor source permit but instead apply for a majo r source permit, which would require a case

- by

- case MACT determination.

Other Comments:

One state /local commenter ( 0018.1) believes that the proposal conflicts with the requirement of the Act that major sources of HAPs must obtain Title V permits. The commenter found the proposal preamble to be confusing in that we stated that a source could obtain a case

by

- case MACT determination through the minor source program, but would ultimately have to

obtain a part 71 permit for the source (71 FR 48715). The c ommenter indicated that this provision needs to be clarified to demonstrate that it is not in conflict with the Act.

One industry commenter (0021.1) similarly found the preamble explanation to be confusing. This commenter requested that we provide defin itive clarification as to whether sources major for only HAPs, and thus minor for criteria pollutants, can be permitted under the proposed minor source NSR permitting process.

Response:

We agree with those commenters that supported the use of the minor NSR program as one of the mechanisms for obtaining a case

- by

- case MACT determination. We believe it is administratively convenient for us, as the reviewing authority, and for the source owner to combine the preconstruction permit review process for both r egulated NSR pollutants and case

by

- case MACT determinations for HAPs under this minor NSR program in circumstances where

the source is either a true minor source or it can effectively limit its PTE for regulated NSR pollutants to below major source levels , but cannot do so for HAP . If not, t he minor NSR source

that is major fo r HAPs would have to apply for both a minor NSR permit for its regulated NSR pollutant emissions and a separate preconstruction or reconstruction part 71 permit or Notice of MACT App roval for its case

- by

- case MACT determination prior to commencing construction

.Review o f New Sources and Modifications in Indian Country Response to Comments

84 We want to clarify, however, and as the opposing commenter suggested, that using the minor NSR program as the mechanism for a section 112(g) case

- by

- case MACT determination do es not mean that a major source of HAP will be subject to requirements that will be less stringent as

will otherwise be the case . The source still needs to comply with the requirements of 40 CFR 63.40 through 63.44 that apply to case

- by

- case MACT determin ations using “other administrative procedures .” In addition, we want to clarify, as requested by one commenter,

that any source that is required to obtain a case

- by

- case MACT determination is a major source of HAPs and thus will have to obtain a part 71 p ermit for its major source emissions

.

Moreover , we would like to clarify that for case

- by

- case MACT determinations under this minor NSR program, we will apply the public noticing requirements under 40 CFR 49.157 and the administrative and judicial revie w procedures under 40 CFR 49.159. See final 40 CFR 49.153(a)(5) for the provisions related to section 112(g) case

- by

- case MACT determinations.



### 2.11 **Public Participation Requirements**

We proposed public participation requirements for minor NSR permits in Ind ian country that are consistent with the requirements at 40 CFR 51.161 for state minor NSR programs. Specifically, the proposed program would require that the reviewing authority prepare a draft permit and provide adequate public notice to ensure that the affected community and the general public have reasonable access to the application and draft permit information. We proposed a mix of mandatory and optional methods for providing public notice.

Supporting Comments:

Three commenters generally supporte d the proposed public participation requirements, including two trib al commenters (0031, 0101.1) and one state /local commenter (0023.1). One of

the trib al commenters (0031), although supporting the proposed public participation requirements, added that th e overall permitting process time frame should be shortened. The

other trib al commenter (0101.1) stated that EPA must ensure that the government

- to

- government consultation process with the affected trib al government is followed throughout. The state /loca l commenter (0023.1) added that the proposal for alternative notification methodologies is a good

idea.

One of the trib al commenters (0036.1) and one of the industry commenters (0039) agreed with the proposed mix of mandatory and optional approaches to n otices, where notices are needed. These commenters also indicated that they understand the need for public participation and hearings on draft general permits, since such permits will be used by many sources. They supported the 30

- day comment period for draft permits and strongly recommended a 45

- day limit for the reviewing authority to consider the public comments and make a decision on pending draft permits.

Opposing Comments:

Eleven commenters, including six industry commenters (0022.1, 0027.1, 0029 .2, 0035.1, 0081), t hree trib al commenters (0026.1, 0036.1 , 0097.1 ), and two state /local commentersReview of New Sources and Modifications in Indian Country Response to Comments

85 (0018.1, 0034.1), generally opposed the proposed public participation requirements for being too burdensome. One environmental group (0037.1) expressed opp osition to certain aspects of the requirements for not being strong enough.

The opposing commenters frequently indicated that the proposed requirements would be

burdensome and time

- consuming, and would be open to abuse by persons who oppose any sort

of d evelopment to obstruct and delay even the smallest projects. Most also asserted that state minor NSR programs do not have such extensive requirements for most minor NSR permits. Six of the commenters (0027.1, 0029.2, 0035.1, 0039, 0081) suggested adding a de minimis threshold below which sources would be exempt from the public notice and participation requirements in order to match the level of public participation to the environmental significance of the project, specifically:

• Industry commenters 0027.1 and 0081 suggested a threshold of 40 tpy, consistent with the approach in the Colorado minor NSR program.

• Industry commenter 0035.1 suggested a threshold of allowable emissions at a level of 50 percent of the major source threshold.

• Tribal commenter 0097. 1 suggested a threshold of no lower than 60 percent of the major source threshold for requiring public notice outside the r eservation.

• Industry commenter 0039 suggested a threshold of 50 tpy actual emissions. The commenter also gave Utah and Colorado as e xamples of state programs with reasonable exemptions.

• Industry commenter 0029.2 suggested a minor NSR program which “may vary the procedures for, and timing of, public review in light of the environmental significance of the activity.” (Quoting our propos ed 40 CFR 51.161(c), 60 FR 45564, August 31, 1995, which was never finalized.) The commenter also stated that the program should designate certain categories of sources and changes as being de minimis and not requiring public participation.

One of the i ndustry commenters (0029.2) noted that we relied on the provisions of

40 CFR 51.161 in order to be consistent with existing state requirements. The commenter asserted that this statement is misleading, as a number of state s’ minor NSR rules currently

matc h the public participation process to the environmental significance of a prospective project. The commenter quoted proposals by EPA in 1994 and 1995 as evidence that we have endorsed this approach in the past (59 FR 44460, August 29, 1994; 60 FR 45549 an d 45564, August 31, 1995). These proposals were primarily focused on revisions to the procedures for revisions Title V permits, but also proposed conforming changes to 40 CFR 51.161.

The environmental group (0037.1), who believes that the requirements s hould be strengthened, stated that the proposal fails to ensure adequate opportunity for public notice and comment on minor NSR applications. In particular, the commenter recommended that the requirements be changed as follows:

• Require notices to be sent by mail or email to all persons requesting such notice (currently included in the optional measures).Review o f New Sources and Modifications in Indian Country Response to Comments

86 • Require notices to be published in a tribal newspaper or newsletter or by other means of publication customary to the trib e, where possible (currently in cluded in the optional measures).

• Require that a public hearing be held whenever one is requested (currently required only when, on the basis of requests, there is a significant degree of public interest).

Response:

After careful consideration of these comments, we are finalizing our public participation requirements for site

- specific permits as proposed with the clarification that the appropriate types of notice will take into consideration any seasonal activities that may conflict with the public parti cipation of the local community ( e.g. , subsistence hunting and fishing or other seasonal cultural practices) . We believe these requirements are consistent with the current public availability of information requirements under our existing regulations at 4 0 CFR 51.161 and they add optional public noticing and participation provisions that will enhance the permitting process.

We are not matching the public participation requirements to the environmental significance of the project, as some commenters sugg ested, because we believe that the public has the right to know about any permitting actions occurring in their area notwithstanding the environmental significance of the project and that a 30

- day public comment period on a permitting action, as in our exi sting regulations, is an appropriate timeline for this purpose. The

EPA ’s regulations require that state minor NSR permitting actions meet the public participation requirements of 40 CFR 51.161. Those requirements do not apply where sources are not requi red to obtain permits. Therefore, the only time EPA’s SIP regulations would allow a state to “match” the public participation requirements to the environmental significance of a project is where the state program establishes a significance threshold, and a project falls below that threshold. In that case, no public participation would be required because no permit is required.

In addition, we do not believe that our public participation requirements need to be strengthened at this time, as some commenter s suggested, because we used the existing regulations under 40 CFR 51.161 as the basis for our public noticing requirements and added additional optional provisions to ensure that factors such as the nature and size of the source, the local air quality, an d the characteristics of the population in the area are considered. Therefore, we believe that these requirements are more detailed than the requirements in our existing regulations under 40 CFR 51.161 and do not need to be strengthened even further at

th is time.

Furthermore, we continue to believe that, as proposed, the reviewing authority should be able to hold a public hearing at its own discretion. We believe that the reviewing authority is in the best position to determine whether there is signifi cant interest in a hearing on a case

- by

- case basis, and to decide whether it is more administrative efficient and economically prudent to ask a small number of commenters to submit their comments in writing.

To address any concerns about the length of t he entire permit issuance process, we are finalizing definite timelines for the overall permitting process depending on source type. SeeReview of New Sources and Modifications in Indian Country Response to Comments

87 section IV.B.4.a of the final rule preamble for more details about the permit issuance process

timeline.



### 2.12 **Monitoring, Recordkeeping, and Reporting** 

Sections 110(a)(2)(A) and (C) of the Act require that a preconstruction permitting program provide for the enforcement of measures that include “enforceable emission limitations and other control measures, means, or technique s ... as well as schedules and timetables for compliance.” Section 110(a)(2)(F) additionally requires that a permitting program may require “the installation, maintenance, and replacement of equipment, and the implementation of other necessary steps by owne rs and operators of stationary sources to monitor emissions from such sources,” as well as “periodic reports on the nature and amounts of emissions and emission

related data from such sources.” Accordingly, we proposed that all permits issued under the

mi nor NSR program contain emission limitations that are enforceable as a practical matter, as well as adequate monitoring, recordkeeping, and reporting requirements as may be necessary to assure compliance with those limitations.



### 2.12.1 General Comments on M onitor ing, Recordkeeping, and Reporting

In sections 2.12.1 through 2.12.4 below we summarize the comments received, if any, in regards to the monitoring, recordkeeping and reporting requirements. Our response to all the comments in these subsections appears a t the end of section 2.12.4.

Comment:

Five industry commenters (0021.1, 0030, 0032, 0035.1, 0039) and one trib al commenter (0036.1) commented generally that the proposed monitoring, recordkeeping, and reporting requirements are too burdensome and are no t justified for minor sources. These commenters generally stated that the requirements are much more stringent than what is required under state minor NSR programs and are basically the same as the requirements for major sources under the

Title V permitti ng program. The commenters typically suggested that we develop requirements that are comparable to state minor source requirements. One industry commenter (0035.1) suggested that we exempt true minor sources from the monitoring, recordkeeping, and report ing requirements.



### 2.12.2 Monitoring Requirements

We proposed that minor NSR permits must include monitoring requirements sufficient to assure compliance with any control technology requirements contained in the permit. Monitoring approaches may include cont inuous emissions monitoring systems (CEMS), predictive emissions monitoring systems (PEMS), continuous parameter monitoring systems (CPMS), periodic manual logging of monitor readings, equipment inspections, mass balances, periodic performance tests, and/o r emission factors, as appropriate for each minor source basedReview o f New Sources and Modifications in Indian Country Response to Comments

88 on the types of emissions units, magnitude of emissions, and air quality considerations. Such monitoring shall assure use of terms, test methods, units, and averaging periods consistent with

t he control technology and emission limitations required for the source. We did not receive any comments specific to the proposed requirements for monitoring other than those general

comments summarized above in section 2.12.1.



### 2.12.3 Recordkeeping Requirements

We proposed that permits must include recordkeeping requirements sufficient to assure compliance with the enforceable emission limitations in each permit, such as records of all calculations using emissions factors, all stack tests or sampling informatio n including date and time of test or sampling, the name of the company or entity that performed the analyses, the analytical techniques or methods used, the results of such analyses and the operating conditions existing at the time of sampling or measureme nt. All such records (including support information) must be retained for 5 years from the date of the record. We did not receive any comments specific to the proposed requirements for recordkeeping other than those general

comments summarized above in s ection 2.12.1.



### 2.12.4 Reporting Requirements

We proposed that sources must submit annual monitoring reports to show compliance permit emission limitations. We also proposed that sources must submit prompt reports of deviations from permit requirements, includi ng those attributable to upset conditions as defined in the permit, the probable cause of such deviations, and any corrective actions or preventive measures taken. Within a permit, the reviewing authority must define “prompt” in relation to the degree and type of deviation likely to occur.

Comment:

Three industry commenters (0027.1, 0039, 0081) specifically asserted that requiring annual monitoring reports for minor sources is overly burdensome. These commenters indicated that testing and monitoring re sults should be maintained on

- site or at a local field office and be made available upon request. The commenters noted that this is more consistent with state minor NSR programs.

One industry commenter (0072) requested that the monitoring reports requir ement be changed to require submittal no less than annually, which would give the reviewing authority flexibility to require semiannual monitoring reports. The commenter favors semiannual reporting since Title V facilities are required to submit semiannua l monitoring reports, and it would simplify the reporting process if all facilities on Indian land were on the same reporting schedule. The commenter noted that this approach would also reduce the volume of monitoring data required to be submitted with ea ch report.

Other Comments:Review of New Sources and Modifications in Indian Country Response to Comments

89 Three industry commenters (0021.1, 0039, 0081) recommended that the word “prompt” (for reporting of deviations) be defined within the regulation. The commenters are concerned that the proposed approach will result in inconsis tent definitions in different permits, resulting in unnecessary advantages or disadvantages based on the area and/or the permit writer. Two of the commenters (0039, 0081) also noted that the requirement for deviation reporting is a traditional Title V req uirement and not a minor source requirement.

Response:

We disagree with those commenters that state that the monitoring, recordkeeping and reporting requirements are too burdensome . As stated in the proposal, sections 110(a)(2)(A)

and 110(a)(2)(C) of th e Act require preconstruction permitting program s to provide for the enforcement of measures that include “enforceable emission limitations and other control measures, means, or techniques * * * as well as schedules and timetables for compliance.” In

addi tion, section 110(a)(2)(F) requires that a permitting program may require “the installation, maintenance, and replacement of equipment, and the implementation of other necessary steps by owners and operators of stationary sources to monitor emissions from such sources,” as well as periodic reports on the nature and amounts of emissions and emissions

- related data from such

sources. W e believe that these same core policies should apply in Indian country and that the annual reporting requirements are needed t o ensure that sources are complying with their annual emissions limits as well as any other limits determined by the reviewing authority

.

W

e do not believe , however, that requiring monitoring reports more frequently than annually, as one commenter sugg ested, would be appropriate for minor sources. Minor sources are typically much smaller than the Title V sources the commenter is referring to . As a result, requiring monitoring reports more frequently than annually might be overly burdensom e for

these s ources. W e encourage reviewing authorities to develop annual monitoring schedules in

accordance with Title V permit monitoring schedules if that facilitates the reporting of emissions to the reviewing authority.

We also disagree with the commenters tha t would like us to define the word “prompt” for the reporting of deviations. We continue to believe that deferring the definition of this term to the reviewing authority is more appropriate to ensure that the respective permits are protective of the NAAQS while also ensuring that the particular needs of the area where the source is being permitted are considered. For example, if a source is locating in a particular area of Indian country, the reviewing authority might define this term by considering the p rovisions of the state and/or the air quality control districts surrounding the area of Indian country where the source is locating as well as technical and economical feasibility. Therefore, we are finalizing the monitoring, recordkeeping and reporting r equirements as proposed and these requirements will be included in each permit as necessary to assure compliance with the source’s emission

limitations.



### 2.13 **General Permits**

The proposed minor NSR program for Indian country would allow reviewing authorities to issue “general permits.” A general permit is a preconstruction permit that may be applied to aReview o f New Sources and Modifications in Indian Country Response to Comments

90 number of similar emissions units or stationary sources. The purpose of a general permit is to simplif y the permit issuance process for similar facilities s o that a reviewing authority’s limited resources need not be expended for case

- by

- case permit development for such facilities. A general permit may be written to address a single emissions unit, a group of the same type of emissions units, or an en tire mi nor source. Comments were requested on the use of general permits, eligible emissions units and source categories, and the process of issuing general permits.

Supporting Comments:

Eight industry commenters (0025.1, 0027.1, 0030, 0032, 0035.1, 0039, 007 2, 0081) and

two trib al commenters (0036.1, 0101.1) supported the establishment of general permits. These commenters believe the development of general permits for source s of similar operation and emissions will simplify the permit application and issuanc e process.

One of the commenters (0025.1) noted that the development of general permits will help

avoid the need for case

- by

- case control technology review. Another of the commenters (0027.1) believes the general permit system will reduce the administr ative burden of obtaining permits for the majority of projects that have minimal environmental impact.

One of the trib al commenters (0101.1) supported the proposal, but suggested EPA consider delegating minor source general permit issuance to the Regio n al Office s who can work

with the trib es in their areas on a regional basis to develop general permits that are appropriately representative of those trib es.

Opposing Comments:

One environmental group commenter (0037.1) urged EPA to issue guidance for s ource categories to streamline permitting, rather than using general permits. The commenter agreed that there is a need to simplify the permitting process for similar sources, but believes that developing guidance documents is a better method. The commen ter used the example of Wyoming Air Quality Division’s guidance for oil and gas development source and for coal bed methane sources ( http://deq.state.wy.us/aqd/oilgas.asp and http://deq.state.wy.us/aqd/coalbed.asp ).

Response:

We agree with those commenters that support the development of general permits because we believe, as some commenters suggested, that general permits will simp lify the permi t issuance process, avoid the need for case

- by

- case control technology review for those source categories/units for which the general permit was established, and reduce the administrative burden of the reviewing authorities.

However, we disagree with th e commenter that preferred guidance rather than general permits for the minor NSR program in Indian country. We understand that general permits are not appropriate in all circumstances, but we believe it is appropriate to develop general permitsReview of New Sources and Modifications in Indian Country Response to Comments

91 for certa in source categories/units, especially for those source categories/units for which the control technology or technologies available are fairly standard. Therefore, we are finalizing the option of developing general permits as proposed under 40 CFR 49.156.

Comment:

Seven industry commenters (0021.1, 0022.1, 0027.1, 0035.1, 0039, 0052, 0081) and one

trib al commenter (0036.1) specifically mentioned establishing general permits for the oil and gas sector. One of these commenters (0027.1) pointed out that o il and natural gas exploration and production projects have difficult scheduling issues that permitting delays exacerbate.

Response:

In light of the comments received, we will develop a general permit specific for the oil and gas industry that will addr ess many of the concerns expressed by these commenters.

Comment:

One industry commenter (0025.1) recommended that EPA adopt general permits for categories of similar sources and emissions units that will be applicable in all jurisdictions implementing minor NSR program for Indian county throughout the nation. Another industry commenter (0039) similarly suggested that general permits should be consistent across the differing agencies to avoid confusion. One industry commenter (0027.1) suggested establi shing a workgroup that would assist in development of the draft general permits. This commenter indicated a willingness to fund the workgroup and hire a contractor to work with EPA in developing a general permits program that will benefit all parties invo lved. Other industry commenters (0021.1, 0022.1) agreed that it would be beneficial if industry representatives had input into the development of the general permits. One of the latter commenters (0021.1) added that EPA needs to define further the specif ics of the general permit program (e.g., criteria for developing general permits and the categories of emissions sources to which the program may apply) prior to promulgation of the proposed rule.

Three industry commenters (0027.1, 0030, 0081) believe tha t general permits should be developed before the minor NSR program is adopted on Indian lands.

Response:

Based on consideration of the comments received, we are in the process of developing general permits for various source categories. The permits will be consistent across all of Indian country, as some commenters suggested, unless there is a need to develop specific provisions, or a specific general permit, for a particular area of Indian country. We also plan to finalize these general permits, after the opportunity for public notice and comment, using the public noticin g procedures under 40 CFR 49.157 . Furthermore, we plan to update general permits, also after the opportunity of notice and comment under 40 CFR 49.157, as appropriate to account for ad vances in control technology or for other pertinent reasons. However, when weReview o f New Sources and Modifications in Indian Country Response to Comments

92 update a general permit, sources operating under the existing general permit will be able to continue to operate under that existing permit until such time when the source is mo dified.

Comment:

Two industry commenters (0027.1. 0081) stated that the general permit fr amework should allow either equipment specific or threshold based permits. The commenters noted that,

a s proposed, general permits appeared to be equipment speci fic, which matches certain effective

state programs. However, the commenters added that some state s also have threshold

- based permits that are also effective. For example, Commenter 0081 pointed out that Colorado is currently proposing a registration of projects emitting less than 20 tpy, without fu rt her control requirements for these small sources, which may be adequate in some Indian c ount ry areas. The commenters suggested that threshold

- based general permits may allow the owner/operator to

propose con trols, monitoring, and recordkeeping to reduce emissions below the permit applicability thresholds (e.g., 10 tpy for NO

x ), similar to synthetic minor permits for larger

sources.

Response:

We are considering all options as we develop general permits for certain source categories.

Comment:

Two industry commenters (0027.1, 0081) stated that the 90

- day period for the reviewing authority to approve the general permit should be eliminated, or at least reduced to 30 days. One of the commenters (0027.1) stat ed that many state s allow the notification of use of a general permit simultaneously with construction (i.e., Texas’ permit

- by

- rule or PBRs) or even 90 days after the completion of a well (i.e., Wyoming’s O&G Permit). The commenter (0027.1) believes

that if general permits must be reviewed by agency personnel, the project should be automatically approved if the reviewing authority has not responded to the applicant within

30 days.

Response:

We disagree with those commenters that would like us to make fin al decisions on general permit applications in less than 90 days. We continue to believe that a 90

- day permit issuance timeframe is appropriate since the reviewing authority needs adequate time to determine if your request for coverage has all the relevan t information and is complete. If not, the reviewing authority will need to request additional info rmation. Moreover, we believe it is appropriate to add a completeness review time period for sources requesting coverage under a general permit,

as one com menter suggested, to ensure that both sources and reviewing authorities act on a request for coverage under a general permit as expediti ously as possible. T he reviewing authority must comply with a 45

- day completeness review period to determine if a sourc e’s request for coverage under a general permit is complete. Therefore, within 30 days after the receipt of the coverage request , the reviewing authority must make an initial request for anyReview of New Sources and Modifications in Indian Country Response to Comments

93 additional information necessary to process this request and the source owner or operator must submit such information within 15 days. If the source owner or operator do es not submit the requested information within 15 days from the date of the request for additional information and this results in a delay beyond the 45

- day completeness review period, the 90

- day permit issuance period for the general permit will be extended by the additional days the source owner or

operator take s to submit the requested information beyond the 45

- day period. If the reviewing authority fails to notify the source within a 30

- day period of any additional infor mation necessary to process the coverage request , the source owner or operator will still have 15 days to submit such information and the reviewing authority must still grant or deny the request for coverage under a general permit within the 90

- day general permit issuance period and without any time extension. If the reviewing authority determines that the request for coverage under a general permit has all the relevant information an d is complete, we will notify the source in writing as

soon as that determination is made. I f the source do es not receive from the reviewing authority a request for additional information or a notice that the request for coverage under a general permit is complete within the 45

- day completeness review period described previously , the request for coverage under a general permit will be deemed complete. If a source qualifies for a general permit, the source owner or operator may request coverage under that ge neral permit to the reviewing authority 4 months after the effective date of the general permit, that is, 6 months after publication of the general permit in the Federal Register. The reviewing authority must notify the source of the final decision within 90 days of its receipt of the coverage request. The permit issuance process timeline for general permits is less than that for the site

- specific permits, since the minor NSR program requirements, including control technology, if any, have already been esta blished during the development of the general permit. See section IV.C. of the final rule preamble for more details on the general permit provisions.

Comment:

One industry commenter (0022.1) noted that we proposed that the general permit and

letter b e maintained at the source location at all times. The commenter pointed out that many oil and gas sites are unmanned and suggested that we allow the general permit and letter to be maintained at the operator’s closest office to the emission source.

Ano ther industry commenter (0027.1) similarly suggested that the requirement to post a prominent notice of the general permit letter of intent should be removed. The commenter noted that if a general permit applies, a review process

– including public review and comment

– has already been undertaken. The commenter believes that requiring an applicant to further post information at the source about the fact that now a general permit will be applied is duplicative and unnecessary.

Response:

We continue to be lieve that, posting prominently, a copy of the letter granting a source’s request for coverage under a general permit at the site where the source is locating is appropriate since this will facilitate any inspection by the reviewing authority. Moreover, t hisReview o f New Sources and Modifications in Indian Country Response to Comments

94 will allow the public to be informed about the sources locating in their area. The original copy of this letter of approval can be kept in a safe place, for example, a corporate office, especially for source locations that are unmanned.

Comment:

One state /local commenter (0018.1) who is neutral on the general permits proposal stated that, if we adopt general permits, we should apply a similar approach to existing sources, not just

new sources.

Response:

We agree that it may be appropriate to cr eate general permits for certain source categories that would apply to both new and existing minor sources. We are considering all options as we develop general permits for certain source categories.

Comment:

One industry commenter (0022.1) said that t he establishment of a general permit for similar sources would be beneficial only if it is easy for a small business to understand and complete (without the need of a consultant).

Response:

To the extent possible, general permits will be simple to und erstand and complete by the regulated community

. However, EPA will assist the regulated community as needed to fulfill the requirements of this minor NSR program.



### 2.14 **Final Permit Issuance and Administrative and Judicial Review**

2.14.1 Notice of Final Permit Actio n

Under the proposal, after the decision on a permit, the reviewing authority must notify the applicant of the decision, in writing, and if the permit is denied, of the reasons for the denial. If the reviewing authority issues a final permit to an appli cant, it must make a copy of the permit available at all of the locations where the draft permit was made available. In addition, the reviewing authority must provide adequate public notice of the final permit decision to ensure

that the affected communit y, general public, and any individuals who commented on the draft permit have reasonable access to the decision and supporting materials. Depending on the circumstances of the permit, the reviewing authority may elect to provide notice directly to the

ind ividuals who commented on the draft permit and/or use any of the other methods of public notice that may be used to provide public notice of the draft permit.

Supporting Comments:Review of New Sources and Modifications in Indian Country Response to Comments

95 One trib al commenter (0036.1) and one industry commenter (0039) largely s upported the proposed provisions for providing notice of final permit actions. However, the commenters

recommended that such notice be provided in the same manner that it was provided during the public comment on the draft permit. The commenters believe that numerous inconsistencies will occur if the agency uses subjective discretion based upon “depending upon the circumstances of your permit.”

Opposing Comments:

Three industry commenters (0027.1, 0030, 0081) and one state /local commenter (0018.1)

indi cated that the proposed notification requirements are excessive. The industry commenters stated that the proposed requirements are more stringent than the requirements for major sources under the PSD program (one commenter also added the part 71 program), which they believe is unwarranted because the impact of minor sources on public health and/or the environment would be much lower than major sources. The state /local commenter noted that EPA may find the proposed requirements burdensome and expensive unl ess the method of notice is limited to something such as publication on EPA’s website.

Response:

Based on consideration of the comments received, we agree that, for site

- specific permits and general permits, making a copy of the permit available at all o f the locations where the draft permit was made available might be too burdensome for the reviewing authorities. Accordingly, we are amending 40 CFR 49.159(a) to require a copy of the final permit or letter of approval or

denial to be made available at al l of the locations where the draft permit was made available for synthetic minor sources and minor modifications at major sources, but we are requiring the reviewing authority to only elect one or more of the methods for public noticing under 40 CFR

49.157 (b)(1)(ii) for site

- specific permits and general permits.



### 2.14.2 Administrative Record for a Permit Decision

The proposed minor NSR program would require that the reviewing authority’s final decision on the permit be based on an administrative record. The pr oposed rule also includes requirements on what must be in that record. We proposed that the reviewing authority must retain permit

- related records for not less than 5 years.

Comment:

One trib al commenter (0036.1) and one industry commenter (0039) agree d that the reviewing authority's final decision on a permit should be based on an administrative record that contains certain required information specified in the proposed rule.

Response:Review o f New Sources and Modifications in Indian Country Response to Comments

96 Based on the comments received and in accordance with our propos ed provisions, the reviewing authorities will base their final permit decisions on the administrative record of each particular permit. For more details on these provisions, see 40 CFR 49.159(b) and (c).

Comment:

One industry commenter (0032) noted tha t the proposed minor NSR program does not specify the circumstances under which a permit may be denied. The commenter believes that it is critical that the rules clearly delineate when a permit must be approved, and when it may be

denied. The commenter s uggested that, at a minimum, the rules should provide that a reviewing authority may only deny a permit if the proposed project is projected to cause a NAAQS or PSD

increment violation.

Response:

We disagree with this commenter. We do not believe tha t the final rules have to specify the circumstances of a permit denial since we cannot predict all the reasons why a permit could

be denied.

Comment:

One environmental group (0037.1) said that EPA must require the reviewing authority to retain permit r ecords for the life of the source. The commenter pointed out that permit records may be used years after permit issuance, for various purposes such as:

• Understanding the basis for an emission limit specified in a permit when a source is proposing to revi se and increase or eliminate the limit (e.g., to determine if it is a

limit on PTE or a limit taken to ensure protection of the NAAQS or PSD increments).

• Reviewing modifications to see if a source unlawfully avoided review of a project by splitting it into smaller projects.

• Understanding the history of the various emission units, processes, and production rates at a source if this information is not clear in the permit.

Response:

We disagree with this commenter. We believe that keeping permit records for the life of the source will be too burdensome, especially when we do not require permit records for major sources under some provisions of the major NSR program to be kept for more than 5 years either. Therefore, we have finalized, as proposed and under 40 CFR 49.159(b), that the reviewing authority must retai n permit

- related records for no less than 5 years.



### 2.14.3 Procedures for Appealing a Permit Decision

We proposed two options for reviewing initial permit decisions by reviewing authorities. In Option 1, review of minor NSR permits would be similar to review of major PSD permitsReview of New Sources and Modifications in Indian Country Response to Comments

97 issued under 40 CFR 52.21. To challenge the terms of the permit, the applicant or another party would have to file a petition for review with EPA’s EAB. Decisions by the EAB c ould be appealed to the federal Court of Appeals for the location of the source. Under this option, permit decisions may be appealed to the EAB within 30 days of issuance, and a final permit typically would not become effective during that period. In add ition, if someone filed a petition for review of the permit with the EAB, the permit would be stayed until the EAB decided whether to review any part of the permit and the reviewing authority took any action required by the EAB.

Alternatively, in Option 2, the reviewing authority’s initial permit could be appealed directly to the appropriate federal Court of Appeals without a requirement to appeal to the EAB first. Under this option, the permit would become effective immediately upon issuance. The

sourc e could begin construction immediately, but could be placed in the difficult position of having the permit revoked after starting construction.

Comments Supporting Option 1:

Six trib al commenters (0031, 0044, 0076, 0091.1, 0097.1, 0101.1) and one state / local commenter (0034.1) supported Option 1. The trib al commenters (0031, 0044, 0076, 0091.1, 0101.1) generally preferred this option because they believe that the EAB has greater environmental expertise and is likely to resolve the issues more quickly. Most of the trib al commenters believe it makes more sense to delay the effective date of the permit while the issues are being resolved, rather than allowing the source to begin construction. One of the tribal commenters (0097.1) added that a critical con sideration is the timeliness issue and therefore urged EPA to ensure that the EAB is provided with the staffing and funding necessary to address what will undoubtedly be an increasing number of appeals. This commenter believes that in the absence of adequ ate staffing and funding, Option 1 would be extremely problematical because it would result in unreasonable delays while appeals are pending. The state /local agency (0034.1) prefers Option 1 because citizen appeals to the EAB represent an easier threshold to meet for the layperson that is aggrieved by a final agency action, since it is easier for most citizens to write a letter to the EAB requesting an appeal than it is to hire an attorney to sue a governmental agency.

T hree additional trib al commenters (0033, 0041

, 0106.1 ) offered conditional support for Option 1. These commenters also believe that this option will allow for the quicker resolution of appeals by an appellant review entity that has specialized knowledge. However, the commenters

recommen ded that we revise Option 1 to allow the permit to become immediately effective upon issuance, unless a later effective date is specified. They believe that Option 1, with this revision, will allow for development on trib al lands while encouraging partici pation from environmental experts, should an appeal occur.

Comments Opposing Option 1:

Two industry commenters (0039, 0081) and one trib al commenter (0036.1) specifically opposed certain aspects of Option 1. One of the industry commenters (0081) stated that d elaying final permit effectiveness for 30 days after issu an ce will compound an already lengthy permitting process, and could be used by commenters to delay the permitting process simply by requesting a permit ch an ge du ri ng the public comment pe ri od. The commenter asserted that this is notReview o f New Sources and Modifications in Indian Country Response to Comments

98 consistent with the process that most state s follow with their minor NSR programs, which could
put Indian country at a disadvantage for air quality permitting.

The trib al commenter (0036.1) and the other industry commenter (0039), who both also specifically endorsed Option 2, oppose the automatic stay upon filing a petition for review with the EAB under Option 1. These commenters believe that this provision is ripe for abuse and would encourage challenges from an ti

- development stakeholders simply to delay oil and gas development in Indian country. The commenters stated that, while this process may be appropriate for major source permits, it is time consuming and onerous to impose it on minor source permits.

Comm ents Supporting Option 2:

Five industry commenters (0025.1, 0028.1, 0029.2, 0039, 0042), two trib al commenters (0036.1, 0050.1), and one state /local commenter (0018.1) specifically endorsed Option 2. The commenters generally supported this option becaus e the permit is effective upon issuance, allowing the source to determine whether to commence construction at its own risk.

One industry commenter (0025.1) and the state /local commenter (0018.1) noted that this approach is more consistent with most sta te minor NSR programs. The state /local commenter (0018.1) also supports Option 2 because it eliminates an intermediate step (i.e., the EAB review) that, in the case of determined appellants, would not likely resolve any cases.

Two industry commenters (0025.1, 0039) and one trib al commenter (0036.1) believe that EAB review and an automatic stay may be appropriate for the PSD program, but not for minor NSR. One of these industry commenters (0025.1) pointed out that PSD permits involve large, complex sou rces with relatively high potential to emit regulated NSR pollutants. For these operations, the commenter believes, the selection of the BACT and the assessment of impacts on ambient air quality in the area are a significant concern to affected parties, i ncluding applicants and the public. In contrast, the commenter noted, minor NSR permits are issued to relatively smaller operations where emissions of regulated NSR pollutants generally do not contribute significantly to total emissions in the area, and c ontrol technology requirements for such operations should not be as contentious as under major NSR. On these bases, the commenter believes that Option 2 is more appropriate for minor sources.

Another of the industry commenters (0029.2) believes that onc e an informed and experienced reviewing authority issues a minor NSR permit, the applicant should be entitled to begin actual construction. The commenter opined that issuance of a permit represents that reviewing authority’s reasoned assessment that the N AAQS and associated increments will be protected, while an automatic stay has the effect of overruling that agency’s assessment pending

another time

- consuming and burdensome round of administrative review. The commenter believes that such a result, which calls into question the reviewing authority ’s decision making, is an unwarranted outcome for any minor NSR permit. Instead, the commenter believes that it is reasonable to presume that the reviewing authority’s decision on a minor NSR application is

corre ct and that further administrative review of that decision is unnecessary. Thus, according toReview of New Sources and Modifications in Indian Country Response to Comments

99 the commenter, any subsequent challenge to such a decision should only consist of judicial

review.

One of the industry commenters (0028.1) stated that, general ly, the nature of minor NSR permit appeals is such that petitioners seek modification to a portion of the permit, not denial of the permit itself. Therefore, the commenter noted, in these circumstances under proposed Option 2, the source can evaluate the risk of proceeding while an appeal is pending, but the source would not be prohibited from proceeding as outlined by Option 1.

One of the trib al commenters (0050.1) supports Option 2 because it expedites the permit issuance process, and since the review ing authority will have been required to assemble the record on which the initial permit decision was based, there is no need for another layer of review to create that record. Moreover, the commenter believes that the approach proposed in Option 2 places less of a burden on government resources with regard to the permit issuance process. The commenter noted that this is the approach that the commenter’s trib al environmental agency takes with its own permitting process (with the exception that appeals

fro m these permits are taken to trib al court rather than federal court).

Other Comments on the Proposed Options:

One trib al commenter (0061.2) claimed that neither option is complete. The commenter

believes that for trib es that have, or will be seeking, d elegation of the NSR program, the rule

should allow for t ribal a dministrative and t ribal c ourt r eview prior to going to federal c ourt. For actions and decisions by EPA, the commenter believes that federal administrative or judicial

reviews are appropriate . The commenter asserted, however, that when actions are taken by the

trib e under this rule (once authority is delegated), the rule must allow exhaustion of trib al administrative review first, trib al c ourt review if appropriate (depending on the issue), a nd

federal court appeal only after exhaustion of appropriate trib al review.

Response:

Based on consideration of the comments received, we agree with those commenters that support the option of filing a petition for permit review through the E AB . We bel ieve, as some commenters stated, that the EAB has substantial environmental expertise , is likely to solve issues more quickly, and it will be easier for the public to file a petition through the EAB than to hire

an attorney to pursue appeals in federal cou rt

.

However, we are not allowing permits to become effective immediately upon the service of notice of the final permit decision under the EAB option, as some commenters suggested, because the proposed provisions are based upon the EAB regulations under 40 CFR 124.15 and we did not propose to allow a different approach under this rule. The EAB regulations clearly state, under 40 CFR 124.15(b), that a final permit decision shall become effective 30 days after the service of notice of the decision unless: (1) a later effective date is specified in the decision; (2) a review is requested on the permit under 40 CFR 124.19 or (3) no comments requested a change in the draft permit, in which case the permit shall become effective immediately upon

issuance. In o ther words, EPA regulations specify that the only permits that become effectiveReview o f New Sources and Modifications in Indian Country Response to Comments

100 upon issuance are those for which no comments were submitted. Furthermore, we do not believe we can allow sources to construct while the EAB process is pending, because while a permit is being reviewed by the EAB, it is not effective, and thus it does not authorize construction.

Regarding the commenter that stated that delegated programs should allow for tribal administrative and tribal court review prior to going to federal court, we disagree. This is because under a delegated federal program, the delegated Indian tribe would be assisting EPA with the administration of federal requirements on EPA’s behalf under these federal regulations. Any federal requirement administere d by a delegated tribe and any permit issued by such a delegated tribe would remain federal actions subject to EPA enforcement and EPA appeal procedures under federal law. On the other hand, if a tribe develops and EPA approves a TIP that includes a NSR p rogram, tribally

- issued NSR permits would be subject to administrative and judicial review under the applicable tribal program as approved by EPA.

Comment:

One state /local commenter (0018.1) and one industry commenter (0025.1) believe that

the federal Court of Appeals is an inappropriate venue for hearing what could be a large number of appeals of very small permits. The state /local commenter noted that the federal Court of Appeals is not accustomed to dealing with such small issues, and that these co urts are not nearby to most sources in Indian country and would basically be inaccessible to the source and probably also to appellants. The industry commenter pointed out that the federal Court of Appeals may have other priorities, such as criminal cases or other regulatory matters of greater significance. The commenters suggested that EPA should consider whether the judicial review of minor NSR permits can be undertaken at a local federal District Court. The state /local commenter (0018.1) also suggeste d that state court might be an appropriate venue.

Response:

We agree with the commenter when he/she states that the federal Court of Appeals might not be the best venue for hearing a large number of appeals for very small permits due to their expertise and othe r priorities. Therefore , and based on the benefits of the EAB option state d on the response to the previous comment , we are not finalizing the federal Court of Appeals option

at this time.

Comment:

One industry commenter (0081) addressed a comm ent specifically toward the review process for general permits. The commenter suggested that general permits be reviewed using Option 1, and once a general permit is accepted, all applications under the general permit would be reviewed using Option 2. Th e commenter believes that this would allow careful review and acceptance of the general permit, while properly allowing for subsequent applications under the general permit which are less likely to be contested and could proceed quickly.

Another trib al c ommenter (0020) noted that in our proposal preamble we asked if a mechanism should be established for administrative reconsideration through the EAB, evenReview of New Sources and Modifications in Indian Country Response to Comments

101 when a party is seeking judicial review in the Court of Appeals (71 FR 48717). The commenter
support ed this approach, stating that it is useful for trib es to have more than one course of action from which to choose, depending on the specifics of each situation. The commenter does not believe that it is necessary to provide for permits to be stayed while the appeal process goes forward, since the rule addresses minor sources only.

Response:

For the reasons stated previously, we believe that the EAB Option is the most appropriate at this time for the permit appeals process and thus, we are not allowing two different permit appeals options depending on the stage of development for general permits or the course of action of the permit

.



### 2.14.4 Procedures for Reopening a Permit

The proposed minor NSR program included provisions that address reopening a permit after it has been issued if it contains a material mistake or fails to assure compliance with the permit requirements. Specifically, we proposed that any person (including the permittee) may petition the reviewing authority to reopen a permit for cause, a nd that the reviewing authority may commence a permit reopening on its own initiative. We further proposed that the reviewing authority may not reopen a permit unless it contains a material mistake or fails to assure compliance with applicable requirement s.

Supporting Comments:

One trib al commenter (0036.1) supported the ability to reopen a permit after issuance for material mistake of facts or failure to assure compliance with permit requirements. One industry commenter (0039) stated that industry app licants should have the ability to reopen a permit after issuance for material mistake of facts or failure to assure compliance with permit requirements.

Opposing Comments:

Four industry commenters (0027.1, 0030, 0052, 0081) objected to enabling any per son to petition for a minor NSR permit to be reopened. The commenters asserted that the proposal is more stringent than the reopening provisions in major source permitting programs (variously mentioning PSD, Title V, and/or nonattainment major NSR ), which they contend is unwarranted for minor sources. Two of the commenters (0027.1, 0081) stated that o nly EPA should be able to initiate the process to reopen a minor NSR permit, and added that individuals always have the right to complain about a facility’s operation and the Agency can reopen the permit if that action

is warranted.

Another of the commenters (0030) indicated that the proposal is inconsistent with state minor NSR programs. This commenter added that the proposal opens up a potential avenue for any person, even if uninformed or maliciously intentioned, to harass and disrupt operations, andReview o f New Sources and Modifications in Indian Country Response to Comments

102 asserted that people need to be involved at the appropriate time and in the provided forums to be

heard.

One of the industry commenters (0052) (which is owned by a trib e) expressed

conce rn that the proposed rule would a ll ow individuals to effectively veto the trib e’s development decisions through use of the provisions a ll owing an yone

– regardless of motive or lack of factual suppo rt

– to petition to r eopen permits issued related to sources of insi gn ific an t emissions. One industry commenter (0081) suggested that the permit reopening petition should be allowed only for those members of public who provide substantial comments during the draft or final pe rmit public notice period.

Response:

We agree, as some commenters suggested, that the provisions we proposed might open potential avenues for any person, even if uninformed or maliciously intentioned, to harass and disrupt permitting operations. In add ition, we did not intend to excessively restrict the reasons for why a permit should be reopened by us, as the reviewing authority, by stating in the proposal that the reviewing authority may not reopen a permit for a cause unless it contains a material

mi stake or fails to assure compliance with the applicable requirements. We do agree that the reasons for reopening the permit by the reviewing authority should not be limited to the permit containing a material mistake or failing to assure compliance with a pplicable requirements. Therefore , we have amended the proposed provisions by adopting the language finalized at 40 CFR 49.159(e). These provisions state that the reviewing authority may reopen a final, currently

- in

- effect permit for cause on its own init iative, such as if the permit contains a material mistake or fails to assure compliance with applicable requirements. However, except for those permit reopenings that do not increase the emissions limitations in the permit, such as permit reopenings that

c orrect typographical errors, all other permit reopenings shall be carried out after the opportunity for public notice and comment and in accordance with one or more of the public participation requirements under 40 CFR 49.157(b)(1)(ii).



### 2.14.5 Administrative Per mit Revisions

The proposed minor NSR program contained provisions for administrative permit revisions to make minor changes in the permit without being subject to the permit application, issuance, public participation, or administrative and judicial revi ew requirements of the program. One use we proposed for administrative permit revisions was for increasing an emissions unit’s

annual allowable emissions limit when the need for the increase is not associated with a modification that is subject to the maj or or minor NSR program.

Supporting Comments:

One trib al commenter (0036.1) and one industry commenter (0039) specifically supported the allowance of administrative permit revisions to make minor changes in a permitReview of New Sources and Modifications in Indian Country Response to Comments

103 without being subject to the full pan oply of permit application, issuance, public participation, or administrative and judicial review requirements of the minor NSR program.

Opposing Comments:

One environmental group (0037.1) opposed the proposal to allow increases in allowable

emission l imits through an administrative permit revision. The commenter asserted that increases in allowable emission rates must be subject to NSR permitting, review of impacts on air quality, and public notice and review. The commenter believes that the limitati on on such administrative changes (i.e., that the action that necessitates such increase is not otherwise subject to review under major NSR or minor NSR) is not sufficient to ensure protection of air quality or compliance with major source permitting requi rements because the language of the limitation is vague and unenforceable.

Response:

We agree with those commenters that support the administrative permit revision provisions for the situations outlined in the proposal and hence we are finalizing these provisions as proposed at 40 CFR 49.159(f). We believe that permit changes involving typographical errors, more frequent monitoring and reporting requirements and/or changes in ownership should not go through the overall permitting process.

We understa nd, however, and as the opposing commenter suggested, that there might be particular concerns with the provision at 40 CFR 49.159(f)(v) where an administrative permit revision is allowed for an increase in an emissions unit’s annual allowable emissions lim it for a regulated NSR pollutant, when the action that necessitates such increase is not otherwise subject to review under major NSR or under this program. For example, this case could be one where a source introduces a new coating to a process line that will increase the emissions of that unit but the emissions increases from the source will not trigger the minor NSR requirements.

Although this type of change does not trigger the major or the minor NSR thresholds, we

continue to believe that we need to account for these changes in emissions in the permit to know the source’s current allowable emissions and to ensure that the source is complying with the applicable requirements. Therefore, an administrative permit revision can be used when the

increase in a unit’s annual allowable emissions limit for a regulated NSR pollutant is not subject to major or minor NSR . Similarly, other proposed physical or operational changes that could not be implemented within the requirements of an existing permit would ne cessitate a permit revision, even if they are not otherwise subject to major or minor NSR. We believe that this fact will serve to ensure that the types of changes that could significantly alter the dispersion characteristics of the air pollutants emitted by your source will be brought to the attention of your reviewing authority.

Comment:

One industry commenter (0028.1) noted that the proposed rule does not propose how an administrative permit revisions is to be obtained, that is, there is no proposa l for submittal of anReview o f New Sources and Modifications in Indian Country Response to Comments

104 application or notification, no description of the type of information required by the reviewing authority , nor any timeline proposed for the permitting agency to process the requested

amendment. The commenter believes that without t his definition on the process to amend a permit, the review and agency action is unpredictable and uncertain. The commenter recommended the following with respect to this subsection: (1) EPA propose a process and timeline to obtain this type of permit rev ision; (2) EPA expressly include language in the rule confirming that upon submittal of a request for revision under this subsection, the permittee is expressly authorized to operate or implement the change; and (3) EPA reconsider use of the term

“administ rative amendment” for this type of revision because that is a term of art under the

Title V operating permit program and its use here may cause confusion. One trib al commenter (0041) similarly recommended that administrative permit modification provisions be included to clarify the applicability and timing of this type of request.

Response:

We believe that reviewing authorities, based on the particular air quality needs of the

relevant are a of Indian country , should have the discretion to define how an administrative permit revision is to be obtained. Therefore , we are not finalizing more specific administrative permit revision provisions at this time. We also disagree with the commenter that would like us to change the term "administrative permit revi sion" to "administrative amendment" because we believe that this change is not necessary to be able to use these provisions under their respective programs appropriately.Review of New Sources and Modifications in Indian Country Response to Comments

105 

## 3 MAJOR NSR PROGRAM IN NONATTAINMENT AREAS
OF INDIAN COUNTRY

**3.1 Requirements for Major S**  **ource Permitting under Appendix S**

We proposed to establish a nonattainment major NSR program for Indian country by applying 40 CFR part 51, Appendix S to major sources and major modifications in areas of Indian country that are designated as nonattainmen t areas. Pursuant to Paragraph IV of Appendix S, a reviewing authority may issue a permit for a new major source or a major modification locating in a nonattainment area, if it complies with the following conditions:

• The new major source or a major modif ication meets the LAER for that source utilizing add

- on controls or pollution prevention measures.

• The applicant certifies that all existing major sources owned or operated by the applicant (or any entity controlling, controlled by, or under common control with the applicant) in the same state as the proposed source are in compliance with (or under a federally

- enforceable compliance schedule for) all applicable emission limitations

and standards under the Act.

• Emission reductions (offsets) from existing sou rces in the area of the proposed source (whether or not under the same ownership) are obtained such that there will be reasonable progress towards attainment of the applicable NAAQS.

• The emission offsets provide a net air quality benefit in the affected area.

Comment:

One tribal commenter (0026.1) stated that Appendix S fails to meet the requirement of

the C AA Amendments of 1990 and should not be applied to Indian country. One state /local commenter (0034.1) was more specific, noting that section 173(a )(5) of the Act provides for permits in a nonattainment area to be issued if “an analysis of alternative sites, sizes, production processes, and environmental control techniques for such proposed source demonstrates that benefits of the proposed source sig nificantly outweigh the environmental and social costs imposed as a result of its location, construction, or modification.” The commenter stated that this requirement is included in every approved SIP in the country, but is not present in 40 CFR
part 51, Appendix S. Therefore, by requiring only the provisions of Appendix S, the commenter believes that the proposed nonattainment major NSR program fails to satisfy the requirements of the Act. The commenter suggested that a requirement for an adequate alter nate site assessment should be added to the proposed regulations as a complementary requirement to Appendix S.

Response:

Upon further review of Appendix S, we agree that the section 173 alternate site provision was inadvertently missing from Appendix S r egulations. Therefore, we have amended AppendixReview o f New Sources and Modifications in Indian Country Response to Comments

106 S to include the section 173 alternatives site provision to ensure that the provisions of the 1990 amendments, including the CAA section 173 alternative sites analysis provision, is codified in implementing regulations. See section V.F. of the final rule preamble for more details on the Appendix S amendments.

Comment:

One trib al commenter (0101.1) lacked sufficient information to comment as to whether the Appendix S requirements would indeed result in sui table gap

- filling air quality protections in Indian country. The commenter suggested that EPA consider delegating development of nonattainment major NSR permit conditions to the EPA Region Offices, who can work with the

trib es in their areas on a regional basis to ensure permit conditions are appropriately representative of those trib es.

Response:

The EPA R egional O ffices will work with the tribes in their regions to ensure that the permit conditions are appropriately representative of those tribes and their surrounding areas.

Comment:

One industry commenter (0072) noted that, as of the date of the comments, we had not yet amended Appendix S to include NSR Reform provisions adopted into other m ajor NSR rules in December 2002. The commenter urged us to finalize the proposed changes to Appendix S either before, or concurrent with, the final NSR rules for Indian country . The commenter

believes that if the nonattainment major NSR rule for Indian country is finalized before Appendix S is updated, then ma jor sou rces in Indian country would be subject to different, more stringent applicability rules for modifications t han major sources on state land, providing an unfair business advantage to sources not located in Indian country

.

Response:

The current ver sion of Appendix S does include NSR reform provisions as well as rec ent
NSR revisions that applied to A ppendix S.



### 3.2 **Options for Addressing the Lack of Available Offsets in Indian Country** 

Under nonattainment major NSR, including under Appendix S, new maj or sources and major modifications must obtain emission reductions from other sources to offset the increase in emissions from the source or modification. Tribal representatives have repeatedly stated that requirements for emission offsets are problematic in Indian country. They have advocated for additional flexibility to address offsets, such as the provision of NSR offset set

- asides (which

would come from state offset pools or banks). Tribal representatives have raised these and otherReview of New Sources and Modifications in Indian Country Response to Comments

107 concerns in disc ussions on implementation of the 8

- hour ozone and PM 2.5 standards, and in

comments on the 8

- hour ozone implementation rule.

We proposed two options to provide exemptions from offset requirements in Indian country, the Economic Development Zone (EDZ) opti on, and the Appendix S, Paragraph VI option. We also invited comment on other options for offset relief in Indian country. In the subsections that follow, we first discuss general comments on waiving offset requirements in Indian country, then turn to th e comments on the two proposed options, and finally address comments on other offset options.



### 3.2.1 General Comments on Waiving Offset Requirements in Indian Country

General Support for Waiving Offset Requirements:

Five trib al commenters (0026.1, 0031, 0036. 1, 0053, 0054) and one industry commenter (0025.1) gave general support to waiving the requirement for offsets in Indian country, either through support of one or both of the proposed options or through advocating a general waiver on other grounds.

Gene ral Opposition to Waiving Offset Requirements:

Five state /local commenters (0018.1, 0023.1, 0024.1, 0045.1, 0051), three private citizens (0093, 0094, 0096), two trib al commenters (0050.1, 0061.2), and one environmental group (0037.1) believe that offset ting of major NSR projects should be a requirement of the nonattainment major NSR program. The environmental group joined a number of the state /local commenters in asserting that the proposed waiver of offset requirements would likely be illegal

under the Act. The trib al commenters and private citizens generally cited air quality concerns for their belief that offsets should not be waived in Indian country.

The state /local commenters also typically indicated that the proposal to waive offsets in

Indian country would be unfair. For example, one state /local commenter (0051) indicated that there is a shortage of offsets in virtually every district in California. Another of the state /local commenters (0045.1) suggested that the proposal would create an inc entive for industrial sources to find Indian country a kind of refuge from regulatory requirements

– resulting in a tilted playing field and exacerbating air quality and public health problems on reservations.

Other General Comments on Offset Waivers:

Four state /local commenters (0018.1, 0023.1, 0024.1, 0051), two private citizens (0093, 0096), one trib al commenter (0050.1 ), and one environmental group (0037.1) commented that EPA should allow sources in Indian country to obtain offsets not just from th e Indian area itself, but from adjacent or upwind areas. Two of these commenters (0018.1, 0037.1) noted that section 173(c) of the Act specifically provides that offsets may be used if they are from an area with an equal or higher nonattainment classifica tion and if emissions from that area contribute toReview o f New Sources and Modifications in Indian Country Response to Comments

108 a violation of the NAAQS in the area needing the offsets. One of the commenters (0050.1) cited

40 CFR part 55 (designation of “corresponding onshore areas” for sources on the outer continental shelf for p urposes of compliance with offsets and other requirements) as an example. Three of the commenters (0023.1, 0037.1, 0096) suggested that EPA, the state s, the trib e, and sources could collaborate to identify acceptable offsets outside of Indian country.

O ne trib al commenter (0038.1) claimed that making it necessary for trib es to go to the

state s to obtain offsets for economic development on the r eservation denigrates the government

to

- government relations. The commenter believes that if the state and the trib e, both in need of economic development, were vying over the same facility but the trib e had to obtain offsets for the facility from the state , the trib e would always suffer. One private citizen (0096) recommended against trading of offsets between In dian country and state s due to trib al sovereignty issues and potential for confusion involving monitoring and tracking costs, as well as

who receives tax revenue from the offsets.

Two state /local commenters (0018.1, 0051) stated that EPA should launch a concerted effort to improve the availability of offsets in all areas that need them (not just in Indian country) by encouraging the development of protocols to allow the creation of offsets from nontraditional sources, especially mobile and area sources. One trib al commenter (0026.1) and one private

citizen (0096) also suggested generating offsets from on

- reservation minor sources, and one private citizen (0094) also suggested offsets obtained from mobile sources. One trib al commenter (0054) pointed out that, because minor sources are typically much smaller than major sources, it would require offsets from many minor sources to compensate for one major source.

One trib al commenter (0020) suggested that the EPA implement a set

- aside program in

which tri b es receive a certain amount of offset emissions that would need to be made up by the

other sources in the state . The commenter believes that this would be fair because most nonattainment problems in Indian country are caused by sources that are not under trib al control.

One trib al commenter (0061.2) suggested that EPA should allow trib es to participate in offset pools. With the approach of opening offset pools to trib es, those trib es wishing to develop major sources in nonattainment areas would stil l be able to do so, but would be treated like other sources in needing to obtain an offset to maintain air quality.

Another trib al commenter (0054) indicated that there would be problems in trying to institute the use of offset banks in Indian country. The commenter stated that setting up an offset bank within an area of Indian country would be difficult because no source on trib al land is currently subject to NSR, and therefore there are currently no offsets from sources on trib al land to be bought or s old. The commenter believes that with no available offsets, when NSR is

enacted on trib al lands, the price of the first offsets will be unaffordable for most if not all

sources on tribal lands.

This commenter (0054) also believes that there would be p roblems in allowing sources

on trib al lands access to the state offset banks. The commenter believes that state s will be apprehensive to allow sources on trib al lands access to state

- established offset banks becauseReview of New Sources and Modifications in Indian Country Response to Comments

109 state s will not receive the tax revenue from offsets purchased by sources on trib al lands as they

do with sources within the state

.

One tribal commenter (0097.1) stated that u ntil and unless a system is developed that allows tribes to generate and obtain emission reduction credits in a manner that does not put such

facilities at an environmental or economic disadvantage as compared with similar facilities operating outside Indian country , the offset provisions should be waived. The commenter did not suggest that the waiver continue indefinite ly, but only that offsets not be required until there is a system in place that allows the tribes to participate on equal footing with the region surrounding their facility, including the ability to generate and bank credits and/or obtain them

from outside the reservation. The commenter believes that the proposed ideas of waivers under Appendix S and/or EDZ s allow some margin for development on tribal lands in the short term

but do not address the long

- term solution. The commenter strongly suggest ed that the

nonattainment major NSR provisions of th e proposed rule be withdrawn, reevaluated

, and proposed on region/tribal

- specific basis and negotiated through a stakeholder process that fully addresses the local/regional concerns.

One trib al commenter (0026.1 ) recommended that EPA waive the offset requirement entirely and develop a rule permitting importation of offsets into Indian country, or generate

offsets from on

- reservation minor source emissions reductions.

Another trib al commenter (0054) believes tha t trib es should be afforded the opportunity to request a permanent offset waiver based on language in the TAR. The commenter indicated that this would be allowed under the TAR, which states: “provide an opportunity for Indian

T

ri bes to assume responsibili ty for the development and implementation of CAA programs on

lands within the exterior boundaries of their reservations or other areas within their jurisdiction.” The commenter pointed out that the offset problem in Indian country was created by inconsist encies in the TAR, NSR, and SIPs: trib es have been included in state

- designated nonattainment areas, but with the implementation of the TAR, trib es are not granted access to

state

- developed offset banks.

One tribal commenter (0049.1) stated that there n eeds to be greater flexibility in addressing offsets through consultation and coordination with EPA, such as establishing a “Tribal Area” (not just EDZ) for this process.

Response:

We recognize the unique circumstances that tribes face as well as the dif ficulty in obtaining offsets in certain parts of the country; however, we do not have the legal authority to waive the offset requirement under section 173 of the Act or under the TAR.

Thus and to address the lack of offsets availability, both inside an d outside of Indian country, we encourage states and tribes to work together in the creation and use of offset banks for their areas since we agree that, where appropriate, tribes can obtain offsets from surrounding areas. For example, tribes may enter in to a Memorandum of Understanding (MOU) with their neighboring state s to allow tribal access to offsets in the state offset bank andReview o f New Sources and Modifications in Indian Country Response to Comments

110 vice

- versa if and when tribes develop their own offset banks. This MOU would contain provisions establishing the criteria f or emissions reductions to be used as offsets such as real, quantifiable, surplus, permanent and enforceable.

Furthermore, we are considering the lack of availability of offsets in general. For example, in the final rule titled, “ Implementation of the New Source Review (NSR) Program for Particulate Matter Less Than 2.5 Micrometers (PM 2.5 )” (73 FR 28340, May 16, 2008 ), we finalized provisions that allow for inter

- pollutant and inter

- precursor trading of offsets between

direct PM 2.5 emissions and its pre cursor emissions

. 14 We believe this is a first step in the process of addressing the shortage of offsets in the nation and we will continue to explore and implement, as one commenter suggested, the use of non

- traditional sources of offsets such as offsets from mobile sources and area or minor sources.

Regarding the offset waivers we proposed, we want to clarify that these waivers are currently available under the CAA and implementing regulations for both states and tribes. The EDZ option is currently a vailable under section 173(a)(1)(B) of the Act and the Appendix S

P aragraph VI option is currently available under 40 CFR part 51

, Appendix S. Therefore, we disagree with those commenters that believed that if the proposed offset waivers would only be

ava ilable for Indian country, then states would be at an economic disadvantage and/or that we would be creating pollution havens in Indian country.

Nevertheless, based on the opposing comments we received, including comments from the tribes, regarding the implementation issues under the Appendix S

, Paragraph VI option, we are only allowing the EDZ option that is currently available under the statute for both tribes and

s tates as a potential option for offset waiver and we are not finalizing the Appendix S

, Paragraph VI option in this final rule.



### 3.2.2 Economic Development Zone Option

The nonattainment major NSR requirements in section 173(a)(1) of the Act require major sources and modifications to obtain offsets unless they are located in a zone “identified by the Administrator, in consultation with the Secretary of Housing and Urban Development, as a zone to which economic development should be targeted” (i.e., in an EDZ) and their emissions will not exceed the allowance permitted for such sources under sec tion 172(c). Section 172(c)(4) requires that such emissions be consistent with the achievement of reasonable further progress (RFP) and not interfere with attainment of the NAAQS by the applicable attainment date.

Under this proposed option, appropria te areas in Indian country would be identified as EDZs. Subsequently, sources in the EDZs that are subject to nonattainment major NSR may be exempt from the offset requirement, provided that the state / trib e could demonstrate that the new permitted emissio ns would be consistent with RFP and would not interfere with NAAQS attainment by the applicable attainment date.

14 This aspect of the regulations is currently under reconsideration by EPA. See letter from Lisa P. Jackson, EPA Administrator, to Paul R. Cort, Earthjustice, April 24, 2009. http://www.epa.gov/n sr/documents/Earthjustice.pdf

.Review of New Sources and Modifications in Indian Country Response to Comments

111 We also proposed that the Administrator would consult with the Secretary of Housing and Urban Development only once to develop a general set of approval criteria, such that a consultation is not required every time a trib e applies for its area of Indian country to be designated as an EDZ. We would provide assistance as needed for a trib e to complete an EDZ designation request.

Supporting Com ments:

One trib al commenter (0036.1) and one industry commenter (0025.1) specifically supported the EDZ option. The industry commenter believes that this option provides the flexibility for EPA not to require emissions offsets for a project where econom ic development and environmental protection are equally important concerns. In addition, the commenter indicated that the reviewing agency would be required to demonstrate achievement of RFP, which will provide flexibility to the reviewing agency to use t raditional and non

- traditional measures to provide balanced economic growth and environmental protection.

Opposing Comments:

A number of commenters had misgivings about the EDZ option, although not all expressed outright opposition.

One state /local c ommenter (0018.1) and one environmental group (0037.1) believe that the EDZ option cannot lawfully be applied in the present circumstances. According to

section 173(a)(1)(B) of the Act, the affected source must not cause or contribute to emissions

levels “which exceed the allowance permitted for such pollutant for such area from new or modified stationary sources under section 172(c).” The latter section, at section 172(c)(4) of the Act, provides that the implementation plan shall identify and quantify th e emissions, if any, that

will be allowed to be used under section 173(a)(1)(B) (the EDZ section), and shall “demonstrate to the satisfaction of the Administrator that the emissions quantified for this purpose will be

consistent with the achievement of rea sonable further progress and will not interfere with attainment of the applicable national ambient air quality standard by the applicable attainment

date.”

The environmental group (0037.1) stated that, in the absence of a TIP or a SIP that quantifies t he allowance and makes the required demonstration, this precondition for offset relief in EDZs would not generally be met within Indian country. The commenter asserted that EPA must require enforceable TIP or SIP revisions to allocate any such allowances.

The state /local commenter (0018.1) indicated that the applicable SIP must have created

an “allowance” of emissions for E DZ sources to use. By definition, the commenter believes, the proposed rule does not apply where there is a TIP; therefore, EPA woul d need to look at the relevant SIP of the surrounding or adjacent state for the applicable allowance. The commenter noted that in many cases there may be no such allowance, and that even if the relevant state SIP includes an allowance, that allowance woul d almost certainly not have been calculated under the assumption that areas in Indian country could access the allowance. Under these circumstances,Review o f New Sources and Modifications in Indian Country Response to Comments

112 the commenter asserted, the affected state would be entitled under the Act to determine in the

first insta nce what, if any, access to the allowance it wished to make available to sources in Indian country. The commenter concluded that as a matter of law the EDZ option is unavailable

unless and until the relevant state creates and makes available an appropriat e allowance.

The state /local commenter (0018.1) also noted that as proposed, EPA would consult with the Secretary of Housing and Urban Development only once to develop a general set of approval criteria for EDZs. The commenter stated that this approach appears to conflict with the language of the Act, which requires consultation on each individual zone.

One trib al commenter (0038.1) believes that the idea that trib es could come in for an

E DZ does not always work in favor of the trib e. The commenter n oted that an EPA representative stated at an October 2006 Consultation meeting that if a trib e had a casino it might not meet the requirements for the program. The commenter stated that it is a common misconception is that if a trib e has a casino they mus t be well off economically, and that this false stereotype could hurt many trib es with concerns about offsets.

Two trib al commenters (0053, 0054) stated that the data being used for the EDZ option is

from the 1990 census and does not take into consider ation the development in and around Indian country since that time. A third trib al commenter (0043.1) similarly indicated that the accuracy of any census data relied on should be confirmed through consultation with the affected trib es. Another tribal com menter (0026.1) indicated that the EDZ option would be difficult to implement. The commenter noted that the trib e is in a three

- state area where offsets would have to be obtained to qualify EDZs, and stated that in this type of “checkerboard area” it woul d require state (s) input and true trib al applicability would be lacking.

One trib al commenter (0061.2) stated that the EDZ option is not acceptable because EDZ

status would be difficult for some trib es to obtain and because such a waiver does not balan ce legitimate development needs with environmental protection. Another tribal commenter (0097.1) no ted that EDZs are not an option for tribes such as the commenter’s that have a self

supporting economic base and thereby do not qualify for consideration un der that provision.

One private citizen (0092) pointed out the potential for a “hotspot” considering that more industries will come into this area to avoid offset requirement, and another private citizen (0094) stated that the EDZ option creates a potent ial for too much leniency and an imbalance of

environmental and economic issues.

Response:

After reviewing all the comments received, we believe that the EDZ option as established by statute is available for offset relief as long as the area meets the s tatutory criteria in order to qualify. In other words, tribes who develop TIPs might request EPA to establish their area as an EDZ so they can avail themselves of the offset provision under section 173 of the Act.

However, we disagree with the commente r who believed that , by definition, the proposed rule does not apply where there is a TIP and thus EPA would need to look at the relevant SIP ofReview of New Sources and Modifications in Indian Country Response to Comments

113 the surrounding or adjacent state for the applicable “allowance of emissions” for EDZ sources.

We do not see w hy the commenter believed that a TIP is not an appropriate mechanism for the EDZ provision under section 173 since the TAR provides that eligible tribes may be treated in the same manner as states for virtually all CAA programs and s tates are generally not approved to administer programs under the Act over facilities in Indian country.

The ability of an area to qualify would be determined on a case

- by

- case basis, but criteria for including tribes in the EDZs and for consultation with the tribes will nee d to be developed in advance and in coordination with the Secretary of Housing and Urban Development. These criteria will ensure that tribal and state input are included and that considerations are put in place to avoid industries coming into an area stri ctly for the offset relief. Therefore, we disagree with the commenter that believed that a general set of approval criteria will be in conflict with the language of the Act.



### 3.2.3 Appendix S, Paragraph V I Option

Paragraph VI of 40 CFR part 51, Appendix S n otes that in some cases, the dates for attainment of the primary or secondary NAAQS may not have passed. In such cases, Appendix S provides that a new source locating in a nonattainment area may be exempt from the requirements of P aragraph IV.A of Appendi x S, including the offset requirement, if the following conditions are met:

• The new source complies with the applicable implementation plan emission limitations;

• The new source will not interfere with the attainment date for a regulated NSR pollutant; and

• The preceding two conditions are determined by the Administrator to have been satisfied and such determination is published in the Federal Register

.

In the proposal preamble, we noted that trib es would be able to use this option for offset

relief for th e 8

- hour ozone and PM 2.5 NAAQS. For instance, the attainment dates for 8

- hour ozone nonattainment areas range from 2007 for marginal areas to 2021 for severe areas. Hence, a new major source or a major modification locating in such a nonattainment area p rior to the attainment date may be exempt from the requirements of P aragraph IV of Appendix S, if the associated conditions are met. It is important to note that this option would provide only temporary offset relief because it would cease to be available once the attainment date for a pollutant has passed. For example, this option would not be available in marginal 8

- hour ozone

nonattainment areas after 2007.

Supporting Comments:

Two trib al commenters (0031, 0036.1) and one industry commenter (0025.1 ) supported

the use of 40 CFR part 51, Appendix S, Paragraph VI for temporary relief for sources locating in nonattainment areas in Indian country where attainment dates have not yet passed. The industry commenter (0025.1) noted that this option will prov ide relief, for a limited period, for areasReview o f New Sources and Modifications in Indian Country Response to Comments

114 where attainment dates have not yet passed and EPA has not finalized the designation of that area as an EDZ. This commenter also believes this option provides equivalent environmental protection since the review ing agency has to demonstrate that the proposed source will not interfere with the attainment date for the regulated NSR pollutant(s) in the area.

Opposing Comments:

A number of commenters had misgivings about the Paragraph VI option, generally on legal or environmental grounds.

One state /local commenter (0018.1) and one environmental commenter (0037.1) stated that the Paragraph VI option is inapplicable and unlawful for the following reasons:

• Because there is no applicable implementation plan in In dian country, so no source can “comply with applicable implementation plan emissions limitations.” (Commenter 0018.1 conceded that if we interpret this to require the source to meet the SIP limits in the surrounding or adjacent state , this requirement cou ld be met.)

• If there is no applicable implementation plan, it will be impossible to demonstrate that a source will not interfere with the attainment date for a nonattainment pollutant.

• The Act requires that for every major source, the source must provide s ufficient offsetting emissions reductions such that there is a reduction in emissions amounting

to RFP , when considered together with emissions from other new and existing sources. ( See section 173(a)1)(A) of the Act).

• The 1990 Amendments to the Act set out specific offset ratios which major sources must meet, such as 1.5 to 1 for Extreme Areas, 1.3 to 1 for Severe Areas, etc. (section 182 of the Act). These ratios may be met on an aggregate basis (i.e., individual sources may be exempt from offsets if the state makes an equivalency demonstration showing that the universe of new sources as a whole meets the applicable ratios). However, nothing in Paragraph VI requires that equivalency demonstration to be made. Therefore, Paragraph VI on its face violat es the 1990 Amendments to the Act. Whatever may have been its status before 1990, Paragraph VI clearly may not lawfully be used today.

One trib al commenter (0061.2) stated that the Paragraph VI option is not acceptable

because it would be difficult fo r some trib es to obtain and because such a waiver does not balance legitimate development needs with environmental protection. Another trib al commenter (0026.1) agreed that Paragraph VI waivers would be hard to obtain because a major source could

not inte rfere with attainment. This commenter also noted that these waivers would expire at attainment dates, and added that these “expiration dates” established by state s should not be imposed on trib es.

One private citizen (0094) stated that the Paragraph VI option is problematic because it appears that the source is being permitted to emit pollution in an area that is already under emissions stress without a deadline. The commenter believes that, although such a waiver is “buying time” for sources, it is wea kening environmental protection.Review of New Sources and Modifications in Indian Country Response to Comments

115 Response:

Based on the comments we received, we are not finalizing the Appendix S provision as an option for offset waiver, since the provision is only available temporarily and it will be challenging for EPA or the tribe to demonstrate that the proposed source will not interfere with

the attainment date.



### 3.3 **Public Participation Requirements for the N**  **onattainment M**  **ajor NSR Program** 

We believe that the public participation requirements of 40 CFR 51.161 apply to permitting u nder Appendix S. Additionally, we proposed detailed public notice requirements for

the nonattainment major NSR program, which are very similar to the requirements proposed for the minor NSR program.

Comment:

One trib al commenter (0047.1) stated that a public comment period of 30 days is not

sufficient for trib es to review and provide comment on a proposed permit application. The commenter requested that the comment period be extended to 60 days.

Response:

Consistent with the Executive Branch and EP A policies regarding consultation and

coordination with Indian tribes , when issuing permits under this rule, EPA will strive to involve

the trib es early so that they are not solely dependent on the 30 day comment period.



### 3.4 **Compliance Certification Require ments of the Act** 

According to section 173(a)(3) of the Act, an owner or operator of a proposed new or modified major stationary source must demonstrate that all other major stationary sources under

her/his control in the same state are in compliance or o n a schedule for compliance with all emission limitations and standards of the Act. We requested comment on whether, for the nonattainment major NSR program in Indian country, this requirement should be expressed as an Indian country

- wide compliance certi fication or remain a statewide certification.

Comment:

Two trib al commenters (0020, 0061.2), one state /local air agency commenter (0018.1), and one industry commenter (0025.1) believe that certification should be on a statewide basis.

This is in order to avoid providing source s in Indian country with a competitive advantage over sources in non

- Indian areas . Also, the number of sources in Indian country is relatively small compared to the number of sources in general. The industry commenter (0025.1) be lieves that obtaining certification for all of Indian country would be very difficult because it is a vast areaReview o f New Sources and Modifications in Indian Country Response to Comments

116 and sources under common control may be operated by different business units of the same parent company. Tribal Commenter 0062.1 added that if a trib e receives TAS status under the TAR, it should be free to expand the certification requirement to all of Indian country.

On the other hand, one industry commenter (0081) stated that it is inappropriate for a proposed rule for Indian country to refe rence compliance within the same state . Other sources

within the same state may not be within Indian country and thus regulated by the state rather than EPA. The proposed statement would give EPA overreaching authority to facilities that are operating un der SIP

- approved programs within the state

.

Four trib al commenters (0026.1, 0031, 0047.1, 0101.1) asserted that source owner/operators should be required to certify that that they are in compliance nationally. The commenters believe that expanding the r equirement will ensure that the sources attempting to locate in Indian country will operate within regulatory parameters. Also, several reservations

exist in more than one state

.

One trib al commenter (0050.1) believes that compliance certification shoul d be on an Indian country

- wide basis. The commenter pointed out that benefits from this requirement would be helping trib es develop compliance databases, assisting trib es with monitoring patterns of noncompliance, minimizing risk of noncompliance, and bui lding and enhancing consumer and market confidence. If Indian country

- wide certification is too burdensome, the commenter

believe s there should at least be a compliance certification requirement for each applicable area

of Indian country (i.e.

, for Tribe A’s Indian country, Tribe B’s Indian country, and so on).

One industry commenter (0021.1) recommended that the compliance certification requirement be limited to only those operations which are under EPA’s direct jurisdiction, i.e.,
operat ions located wi thin Indian country . Further, the commenter would limit the requirement to only the specific nonattainment area where the new permit is being requested, as opposed to all of Indian country.

Four trib al commenters (0036.1, 0076 , 0091.1 , 0097.1 ) recommend ed that the compliance certification requirement be limited to those sources in the same trib e’s Indian
country . The commenters generally believe that it would be too burdensome to require such certification across all of Indian country. One of the comme nters (0036.1) added that this is

more consistent with treatment of individual trib es as state s under applicable EPA regulations, rather than aggregating all trib es’ sovereign lands into one for purposes of an Indian country certification requirement.

Res ponse:

After consideration of comments, we are finalizing a statewide compliance certification requirement consistent with section 173(a)(3) of the Act. We believe that a statewide compliance certification: (1) provides a broad enough look at the complia nce history of the company, without overburdening the review process, and (2) reflects a geographic approach to the certification rather than an approach based on the entity that is sovereign. An Indian country

-Review of New Sources and Modifications in Indian Country Response to Comments

117 wide certification would not have the proxim ity and geographic contiguity that a statewide approach would have.Review o f New Sources and Modifications in Indian Country Response to Comments

118 (This page intentionally left blank.)Review of New Sources and Modifications in Indian Country Response to Comments

119 

## 4 LEGAL BASIS, STATUTORY AUTHORITY, AND
JURISDICTIONAL ISSUES

**4.1 Jurisdiction in Indian Country** 

We interpret the Act to provid e EPA with the authority to protect air quality throughout Indian country by directly implementing the Act’s requirements. We proposed to exercise the rulemaking authority entrusted to us by Congress by creating FIPs through which to directly implement th e minor NSR permitting program and nonattainment major NSR permitting program throughout all areas of Indian country where no EPA

- approved minor NSR or nonattainment major NSR program exists.



### 4.1.1 EPA’s Authority in Indian Country

Comment:

Two state /local c ommenters (0034.1, 0046.1/0100.1 ) and one industry commenter (0021.1) commented upon EPA’s analysis of its jurisdiction in Indian country. One of the

state /local commenters (0034.1) offered the following points:

• The U.S. Supreme Court has recognized that state s have plenary power over residents

within their borders [ citing the Department of Taxation and Finance of New York v

. Milhelm, Attea & Bros., Inc. , 512 US 61, 72 (1994) ] . This means that any preemption analysis requires “a particularized inquiry in to the nature of the state, federal, and tribal interests at stake, an inquiry designed to determine whether, in the specific context, the exercise of state authority would violate federal law.” White Mountain Apache Tribe v

. Bracker , 488 US 136, 142, 145 (1980). “[E]ven on reservations, state laws may be applied unless such application would interfere with reservation

self

- government or would impair a right granted or reserved by federal law.” Mescalero Apache Tribe v

. Jones , 411 US 145, 148 (1973).

• The state has a valid, strong interest in seeing that citizens of the state comply with

state laws governing the emissions of air pollutants. Congress placed the primary responsibility of preventing air pollution on state s and local governments. Title 42 of the United States Code, section 7401(a)(3) [ 42 U.S.C. 7401(a)(3) ] . The mobile nature of air pollution emphasizes the importance to the state of regulating all sources of pollution within its geographic boundaries.

• Congress has also recognized the impor tance of state law in the Act, where it states

that state s retain authority to adopt or enforce: (1) any standard or limitation respecting emissions of air pollutants or; (2) any requirement respecting control or abatement of air pollution except that if a n emission standard or limitation is in effect under an applicable implementation plan or under [42 U.S.C. 7411 or 7412 ] , such

state or political subdivision may not adopt or enforce any emission standard orReview o f New Sources and Modifications in Indian Country Response to Comments

120 limitation which is less stringent that the stan dard or limitation under such plan or

section. 42 U.S.C. 7416.

• The section also limits the federal interest to preempting less stringent state laws. Nothing in 42 U.S.C. 7410(o) and 7601(d) of the Act indicates that this general

retention of state author ity does not apply in Indian country.

• The trib al interests generally match those of the federal government because clean air benefits everyone. There is also no history of trib al regulation of air resources in Indian country. The state s and the federal g overnment regulated air quality because of its mobile nature. A particularized inquiry into the various interests involved in regulating air quality therefore shows that federal law does not preempt state air quality laws that are not less stringent than federal law in Indian country.

• All this is consistent with EPA ’ s past approval of the state ’s authority over sources of air emissions in Indian country. These approvals should be respected because they worked for many years to protect the air resources in Indian country.

The other state /local commenter ( 0046.1/0100.1 ) commented separately regarding EPA’s authority to implement the proposed nationwide FIPs in Indian country. The main points of

these comments are as follows:

• The Administrator has failed to make a finding that any specific state or trib e has failed to submit an implementation plan, or that any specific implementation plan either fails to satisfy the minimum criteria under the Act or has been disapproved in whole or in part. Such a finding is a prerequisite to any valid issuance of a FIP.

• The Act only authorizes the adoption of a FIP on a jurisdiction

- by

- jurisdiction basis, not nationally. In promulgating a FIP, EPA must act in the place of either a state or a trib e. Because no state or t rib e has nationwide regulatory authority, EPA cannot purport to regulate nationwide when acting in the shoes of a state or a trib e.

• The proposed rule fails to require EPA to make the necessary individualized jurisdictional determination concerning the scop e of authority of the state or trib e for which it would act. As a practical matter, EPA’s proposed nationwide FIP will cause significant regulatory uncertainty and spawn unnecessary litigation. In the absence of jurisdictional determinations for each sta te and trib e, state s, trib es, and members of the regulated community will have no clear understanding whether a given source is located in “Indian country.”

• The proposed FIP further violates the Act by impermissibly delegating EPA's authority to trib es to assist in administering the proposed nationwide FIP. The Act plainly allows a delegation of authority to a trib e only if the trib e has demonstrated that it has adequate legal authority to regulate the areas it claims. Because EPA has not made any jurisdi ctional determinations in connection with the proposed FIP, EPA’s delegation of authority to trib es to assist in administering the FIP violates the plain requirements of the Act.

• Even if the EPA adopts the proposed nationwide FIP, that FIP cannot supersede , and EPA must acknowledge, the State of Oklahoma’s right to administer its state air quality programs in areas of Indian country within Oklahoma under SAFETEA

.Review of New Sources and Modifications in Indian Country Response to Comments

121 The industry commenter (0021.1) agreed with the last point made by the second

state /local com menter. This commenter stated that Congress understood the complexity and uniqueness of Oklahoma ’s Indian country lands in regards to delegation of environmental programs when it passed section 10211 of the SAFETEA in 2005. The commenter expressed the

vi ew that this bill allows the State of Oklahoma to administer approved programs in Indian country upon request to EPA, and it establishes a process whereby trib es may obtain TAS for a program only in coordination with the state . The commenter urged us to d elegate authority to

the state (especially in Oklahoma) to administer any air pro gram implemented on Indian country

, in order to provide consistency and uniformity as Congress envisioned.

Response:

EPA’s Authority to Implement the CAA in Indian Country

. In the final rule entitled “Indian Tribes: Air Quality Planning and Management,” generally referred to as the “Tribal Authority Rule” or “TAR,” EPA explains that it intends to use its authority under the CAA “to protect air quality throughout Indian count ry ” 15 by directly implementing the CAA’s requirements where tribes have chosen not to develop or are not implementing an EPA

- approved CAA program. 63 FR 7254, February 12, 1998. The final TAR at 40 CFR 49.11 states that EPA would “promulgate without unrea sonable delay such FIP provisions as are necessary or appropriate to protect air quality” for these areas. The EPA is exercising its authority under sections 301(a) and 301(d)(4) of the CAA and 40 CFR 49.11(a) to promulgate FIPs in order to remedy an exis ting regulatory gap under the CAA with respect to Indian country.

Although facilities in these areas may have historically followed state and local government air quality pro grams, with rare exception, EPA has never approved those governments to exercis e regulatory authority under the CAA in any area of Indian country

. 16 In addition, EPA has never approved a state or local government to implement a minor NSR or nonattainment major NSR program in Indian country. Since the CAA was amended in 1990,

EPA has been clear in its approvals of state programs that the approved state program does not extend into Indian country. It is EPA’s position that, absent an explicit demonstration of authority by a state to administer a CAA program in Indian country, and abse nt an explicit finding by EPA of such jurisdiction and explicit approval of the state in Indian country, state and

15 “I ndian country” is defined under 18 U.S.C. 1151 as: (1) All land within the limits of any Indian reservation under the jurisdiction of the United States Government, notwithstanding the issuance of any patent, and

includi ng rights

- of

- way running through the reservation, (2) all dependent Indian communities within the borders of the United States, whether within the original or subsequently acquired territory thereof, and whether within or without the limits of a state, and (3) all Indian allotments, the Indian titles to which have not been extinguished, including rights

- of

- way running through the same. Under this definition, EPA treats as reservations trust lands validly set aside for the use of a tribe even if the trust la nds have not been formally designated as a reservation.

16 For purposes of approving the Washington Department of Ecology (WDOE) operating permits program under 40 CFR part 70, EPA explicitly found that WDOE demonstrated that the Washington Indian (Puyallup) Land Claims Settlement Act, 25 U.S.C. 1773, gives explicit authority to state and local governments to administer their

enviro nmental laws on all nontrust lands within the 1873 Survey Area of the Puyallup Reservation in Tacoma, Washington.Review o f New Sources and Modifications in Indian Country Response to Comments

122 local governments lack authority under the CAA over air pollution sources, and the owners or operators of air pollution sources, throughout I ndian country.

Because only a few tribes have yet sought eligibility to administer a minor NSR program, and no tribe has yet sought eligibility for the nonattainment major NSR program, a gap for implementation of these programs currently exists in India n country. Given the longstanding air quality concerns in some areas and the need to establish requirements in all areas to maintain CAA standards, EPA believes that these FIP provisions are appropriate to protect air quality in Indian country where no EP A

- approved minor NSR or nonattainment major NSR program is in place.

The rules published here are based on the same CAA authority as EPA has used

elsewhere in rulem aking and that has been affirmed by the courts. The EPA’s interpretation of

its authorit y has been affirmed by the U.S. Court of Appeals for the District of Columbia Circuit

in Arizona Public Service Co. v. EPA , 211 F.3d 1280 (D.C. Cir. 2000), cert. denied 121 S. Ct. 1600 (2001). In addition, EPA’s authority to issue operating permits to maj or sources located in Indian country under Title V of the Act, pursuant to nationwide regulations at 40 CFR part 71, was affirmed in State of Michigan v. EPA , 268 F.3d 1075 (D.C. Cir. 2001). The EPA has used this same authority to issue a number of FIPs t o address air pollution concerns on a regional basis and at specific facilities located in Indian country. See Federal Implementation Plans Under the Clean Air Act for Indian Reservation in Idaho, Oregon and Washington, 40 CFR

part 49, subpart M (70 FR 18 074, April 8, 2005) [ upheld in Safe Air for Everyone v EPA , 2006 WL 3697684 (9 th Cir. 2006) ] ; FIP for Tri

- Cities landfill, 40 CFR 49.22 (64 FR 65664,

November 23, 1999); Salt River Pima

- Maricopa Indian Community, 40 CFR 49.22 (64 FR 65663, November 23, 199 9); FIP for the Astaris

- Idaho LLC Facility (formerly owned by FMC Corporation) in the Fort Hall PM

- 10 Nonattainment Area, 40 CFR 49.10711 (65 FR 51412, August 23, 2000); and FIP for Four Corners Power Plant, Navajo Nation, 40 CFR 49.23 (72 FR 25698, May 7, 2007) [ upheld in Arizona Public Service Co. v. EPA , 562 F.3d 1116 (10 th Cir. 2009) ]

.

Effects of State Law

. The rules established by EPA here are in effect under the CAA. The EPA recognizes that in a few cases, other state or local governmental entitie s may have established air quality requirements that the commenters believe apply to activities in Indian country. However, unless those rules or requirements have been explicitly approved by EPA under the CAA to apply in Indian country, compliance with t hose other requirements does not relieve a source from complying with the applicable provision s of this FIP. As EPA has stated elsewhere, states generally lack the authority to regulate air quality in Indian country. See

Alaska v. Native Village of Venet ie Tribal Government , 522 U.S. 520, 527 fn.1 (1998) (“Generally speaking, primary jurisdiction over land that is Indian country rests with the Federal Government and the Indian Tribe inhabiting it, and not with the States.”), California v. Cabazon Band of Mission Indians , 480 U.S. 202, 216 and n.18 (1987); see also HRI v. EPA , 198 F.3d 1224, 1242 (10th Cir. 2000); see also discussion in EPA’s final rule for the federal operating permits program, 64 FR 8251

– 8255, February 19, 1999.

Furthermore, with regar d to Indian reservations, EPA interprets the CAA as establishing unitary management of air resources and as a delegation by Congress of federal authority toReview of New Sources and Modifications in Indian Country Response to Comments

123 eligible tribes to implement the CAA over all sources within their reservations, including non

Indi an sources on fee lands. Accordingly, even if a state could demonstrate authority over non

Indian sources on fee lands within an Indian reservation, EPA believes that the CAA generally provides the Agency the discretion to federally implement the CAA over all Indian reservation sources in order to ensure an efficient and effective transition to tribal CAA programs and to avoid the administratively undesirable checkerboarding of reservation air quality management based on land ownership. The EPA believes t hat Congress intended that EPA take a territorial view of implementing air programs within reservations. The EPA also believes that air quality planning for a checkerboarded reservation area would be more difficult and that it would be inefficient if a st ate were to exercise regulation over piecemeal tracts of land within such areas, possibly with similar Indian country sources being subject to different substantive requirements. The EPA’s approach provides for coherent and consistent environmental regula tion within Indian country.

Although EPA does not recognize state or local air regulations as being effective within Indian country for purposes of the CAA, absent an express approval by EPA of those regulations for an area of Indian country, this rulema king does not address the validity of state and local law and regulations with respect to sources in Indian country, or the authority of state and local agencies to regulate such sources, for purposes other than the federal CAA. We are specifically

not ma king a determination that these federal CAA rules override or preempt any other laws that have been established outside the scope of the federal CAA. The EPA does not, therefore, believe that any further preemption analysis suggested by the commenters is needed in these circumstances. As described above, EPA believes that its authority under the CAA to implement these programs in Indian country is clear and well

- established and has been upheld by reviewing

courts in similar circumstances.

With regard to the comments relating to Indian country and the State of Oklahoma, EPA recognizes that SAFETEA contains a provision (section 10211) relating to implementation of environmental regulatory programs under federal environmental laws, including the CAA, in

Ind ian country in Oklahoma. However, to date, neither the State of Oklahoma, nor any Indian tribe in Oklahoma, has applied for EPA approval to administer either of the CAA programs included in this rulemaking for any area of Indian country. In the absence o f an EPA

- approved program, these FIPs will apply throughout Indian country, including Indian country in Oklahoma. In promulgating these FIPs, EPA is not acting on any potential request by the State of Oklahoma to administer any CAA or other regulatory pro gram in Indian country, nor is EPA acting on any potential TAS application for an environmental regulatory program by any Indian tribe in Oklahoma. The EPA would address any such applications when necessary and on a

case

- by

- case basis and in full consider ation of the requirements of s ection 10211 of SAFETEA.

Section 10211 of the SAFETEA is thus not implicated in this rulemaking and is not a relevant consideration in EPA’s promulgation of the minor and nonattainment major NSR programs for Indian country, i ncluding Indian country in Oklahoma. In addition, although EPA recognizes that certain potential challenges may exist in implementing some CAA programs over relative small parcels of land, we have already described our clear authority to administer these programs throughout all areas of Indian country (in the absence of an EPA

- approved program) and believe we will be able to act on permit applications for all sources covered by these programs in such areas.Review o f New Sources and Modifications in Indian Country Response to Comments

124 

### 4.1.2 Definition of “Indian Country”

Comment:

One trib al commenter (0031) suggested that, for purposes of allotment lands, we define “Indian country” as follows: (1) All land within the limits of any Indian reservation under the jurisdiction of the United States Government, notwithstanding the issuance of any patent, and, including rights

- of

way running through the reservation; (2) All dependent Indian communities within the borders of the United States whether within the original or subsequently acquired territory thereof; and (3) All Indian allotments, the Indian titles to which have not been extinguished, including rights

- of

- way running through the same. Unless otherwise indicated, the term “Indian country” is used instead of “Indian reservation” for consistency (18 U.S.C. 1151c).

One state /local commenter (002 3.1) believes that the term “Indian country” as defined and used within the proposed NSR program may lead to jurisdiction and implementation issues, primarily in regard to small parcels of land that include trib al installations such as stores and

casinos. The commenter noted that there are numerous such trib al installations scattered throughout his agency’s state . The commenter pointed out that if these types of installations are regulated under the proposed NSR program, emission sources located in Indian country lands may be reviewed and managed by the same trib al entity. The commenter believes that this approach could lead to a conflict of interest and potentially result in significant impact on air quality in areas that are located outside the boundary of this type of installation. The commenter noted that in his agency’s state , there is a clear separation of responsibility amongst agencies where the air emissions created by the operations of one agency are regulated by another, and

that EPA required t he state Attorney General to provide an opinion regarding this separation in conjunction with the approval of the state ’s Title V operating permit program. The commenter

believes that a similar obligation should be put forth in the approval of TIPs adopti ng the NSR

program.

T hree trib al commenters (0044, 0076 , 0091.1 ) indicated that, under the proposed

definit ion of “Indian country,” Alaska Native Villages and Oklahoma trib es may be excluded. A

fourth trib al commenter (0098.1) expressed si milar concerns regarding Alaska trib es. One of these commenters (0044) suggested that in modifying the definition to ensure trib es are eligible to participate, EPA may wish to consult with the American Indian Environmental Office regarding their current effort to define “Indian country.”

T wo of the commenter s (0076 , 0091.1 ) stated that within the past few years, the jurisdiction of Oklahoma trib es has been called into question due to a 2005 “midnight rider” included as part of a transportation bill that now necessitate s trib al water quality standards be approved by that state . The commenter s added t hat during recent years, Alaska Native Corporations (for

- profit) have gained many of the rights specific to Alaska Native Villages,

which has sometimes led to the latter bei ng found ineligible for certain federal programs whileReview of New Sources and Modifications in Indian Country Response to Comments

125 the former have been found to be eligible, likely due to the vast resources that they bring to the table in carrying out such programs. Based on these two issues, the commenter s recommended

additional language as part of the definition for “Indian country” to include “in Indian country and including in Oklahoma and in Alaska.” The commenter s noted that, aside from the addition of “in Oklahoma,” the rest of the language has been recommended by the EPA’ s Office of General Counsel in the past to address Alaskan Native Villages and their eligibility under federal programs. The commenter s believe that adding “in Oklahoma” to this phrase would be a

harmonious addition and not defeat the intent of the Office of General Counsel’s

recommendation.

The fourth trib al commenter (0098.1) said that EPA failed to address air quality impacts

from new sources and modifications whi ch affect air quality in Alaska Native V illages. The commenter pointed out that the Alas ka Native Claims Settlement Act extinguished trib al claims

to most land over which Alaskan trib es held title, resulting in a unique jurisdictional standing for

Alaskan trib es compared to trib es in the contiguous United States. The commenter believes that

it is the federal government’s position that federal laws and rules affecting “Indian country” are not applicable on lands typically owned and occupied by members of Alaskan trib es, and that such constrained laws and rules apply only on the sole reservatio n in Alaska, the Metlakatla Indian Community, and to the scattered native allotments, trust lands, and other similar lands set aside in restricted status by the federal government.

The commenter (0098.1) believes that although the proposed NSR programs g o a long way to filling the regulatory gap in Indian country in the contiguous United States, its jurisdictional arm does not extend to the tribal environment occupied and owned by most Native Alaskans. The commenter asserted that it is unacceptable for E PA to continue promulgating rules and regulations for Indian country while failing to address the lack of environmental

resources available to Alaskan trib es to confront the same issues.

The commenter (0098.1) recommended that EPA immediately initiate a broad and detailed investigation into possible opportunities in which the Office of Air and Radiation can empower Alaskan trib es to improve and protect air quality in their communities. In light of EPA’s trust responsibility to trib es and the 1984 EPA Ind ian Policy, the commenter believes that EPA must examine any and all opportunities to address these concerns over the failure to address air quality for Alaskan trib es.

Response:

The minor NSR and nonattainment major NSR programs promulgated in these FIP s will apply to sources located in Indian country. As explained elsewhere, Indian country, as defined at 18 U.S.C. 1151, is the area over which jurisdiction, including the regulatory authority to promulgate these rules, generally lies with the federal gov ernment and the trib es, and not with

the state s. Indian country is also, therefore, the area EPA excludes from approved state programs under the CAA, absent an explicit demonstration by the state (and finding by EPA) of authority in such area. Indian cou ntry is thus the area where the regulatory gap filled by the federal minor NSR and nonattainment major NSR programs

– and EPA’ authority to fill that gap

– exists. This includes Indian country in both Alaska and Oklahoma, which will be covered byReview o f New Sources and Modifications in Indian Country Response to Comments

126 these rul es. The EPA does not believe that any change to the definition of Indian country at

18 U.S.C. 1151 is needed to include Indian country within those two states within the scope of these federal programs. The EPA recognizes that certain trib es, including A laska Native Villages, may have interests in lands and resources located outside of Indian country, and EPA is aware of the history of the status of lands located in Alaska. However, as described in detail in the preamble to these rules, EPA is exercising jurisdictional authority under sections 301(a) and 301(d) of the CAA and the TAR to fill the regulatory gap in Indian country. With regard to

other areas in which trib es may have an interest, EPA has not generally excluded from approved

state programs an y areas other than areas that qualify as Indian country. A gap in program implementation would thus generally not exist in such areas. The EPA notes that we will continue to exercise oversight of approved state programs and that tribal interests may, as appropriate, be relevant considerations in such oversight.

With regards to the state /local commenter’s concern about conflicts of interest within tribal agencies, we disagree that such potential conflicts are an issue for these rules. The

programs prom ulgated in these FIPs will be federal programs implemented under federal authority. Even where a tribe is assisting EPA with implementation through a delegation agreement, the rules, and any permits issued under the rules, remain federal and subject to

ap peals to the E AB and to federal enforcement by EPA. To the extent the commenter is concerned about potential conflicts of interest associated with TIPs, EPA notes that these rules do not approve any TIP for any area of Indian country and that any such iss ues would be appropriately addressed in the context of a particular tribe’s application for TIP approval.

Comment:

One state /local commenter (0034.1) stated that air programs traditionally have been developed in a manner that ensures that the air resour ce is protected in an entire airshed. The commenter asserted that, accordingly, EPA must define a minimum size for which the proposed NSR program would be applicable. With no such definition, the commenter believes t hat small parcels of Indian country wi ll become a checkerboard of areas within each state , but not under

state jurisdiction, which will short

- circuit a state ’s ability to manage its air resources to meet the NAAQS and HAP obligations.

Response:

The EPA does not believe that the CAA requires us to define a minimum size for geographic areas of Indian country over which EPA may exercise authority under the statute.

Because state s are generally not approved to administer CAA programs in Indian country, and in the absence of an EPA

- approved trib al CAA program, a regulatory gap exists throughout such areas, irrespective of the size of the Indian country area at issue. As described in detail elsewhere in this Response to Comments Document and in the final rule preamble, EPA has authority under the CAA to fill this gap throughout Indian country.

We understand that states and tribes may face different air quality issues that a single national program may or may not be able to address. However, we also believe that it would be impossible to create a single program that creates precisely equivalent regulations among allReview of New Sources and Modifications in Indian Country Response to Comments

127 areas of Indian country and the surrounding state areas. This rule simply represents EPA’s best judgment about the most appropriate way to implement the program in Indian country in the absence of an EPA

- approved i mplementation p lan. In the absence of EPA

- approved programs, we believe that, in most cases, it would be neither practical nor administratively feasible for us to develop and implement a separate program for each area of In dian country.

Si nce we understand that states and eligible tribes may face different issues, and may therefore choose to develop different programs, we encourage those entities to develop their own minor programs for incorporation into their FIPs or TIPs . If a tribe is deve loping its own program, the final rule (FIP) can serve as one example of a program that meets the objectives and requirements of the Act.



### 4.1.3 Establishing the Borders of Indian Country

Comment:

Two state /local commenters (0034.1, 004 6.1/0100.1 ) and two industry commenters (0027.1, 0081) indicated that we should specifically define the borders of Indian country to ave rt

any unce rt ainty conce rn ing the proper reviewing authority for a specific proposed location.

One of the state /loca l commenters ( 0046.1/0100.1 ) believes that without a clear delineation of jurisdiction, there is no basis for a state, individual tribes, or the regulated community to understand or predict which agency has regulatory and permitting authority, particularly in light of the inclusion of “dependent Indian communities” in the definition of “Indian country” and, therefore, in the area that the proposed FIP would cover. The commenter pointed out that in a land status determination concerning Hydro Resources, Inc ., EPA adopted the Tenth Circuit Court of Appeals ’ three

- step “dependent Indian community” analysis, and that the first step in that analysis is a highly fact

- intensive identification of the “appropriate community of reference” (which can aggregate both In dian and non

- Indian owned lands). After summarizing the history and difficulties of the Hydro Resources, Inc. case, the commenter

concluded that without individualize d jurisdictional determinations by EPA in advance, the fact

intensive dependent Indian co mmunity analysis will be unmanageable and will foster needless regulatory uncertainty and protracted litigation. Because of this, the commenter believes that the proposed rule should be withdrawn.

The other state /local commenter (0034.1) pointed out tha t in the TAR, EPA has made it incumbent upon trib es to “identify with clarity and precision the exterior boundaries of the reservation including, for example, a map and a legal description of the area ...” and for “...areas

outside the boundaries of a rese rvation, the statement should include ... a map or legal description of the area over which the application asserts authority.” This commenter suggested that, as part of the final rulemaking, we should make available to all state and local air pollution

c ontrol entities such information in an easy

- to

- use and understandable manner. The commenter believes that current U.S. Department of the Interior tools are too cumbersome for expeditious

use.Review o f New Sources and Modifications in Indian Country Response to Comments

128 One industry commenter (0027.1) believes that the jurisdictio nal boundaries within Indian country are often unclear between state s, federal agencies (EPA, B ureau of L and

M anagement , B ureau of I ndian A ffairs , etc.), and trib al governments, especially when private/fee lands are intermixed among trib al lands. For more effective compliance, the commenter believes that EPA should provide to the regulated community the exact tools and maps the agency is using to determine what lands are subject to the final rule. As an example, the commenter noted

that in it s notice of p roposed rulemaking on Indian Oil Valuation (71 FR 7453; February 13, 2006) the Minerals Management Service listed seven specific areas of oil production on trib al reservation and allotted lands (page 7454). The commenter believes it is imperative to the

s uccessfulness of this program that EPA provide similar specificity on the applicability of the requirements.

The other industry commenter (0081) similarly stated that the bounda ri es of Indian
country must be specifically defined within this proposed rule to ave rt any unce rt ainty

conce rn ing the proper reviewing authority for a specific proposed location. The commenter indicated that ju ri sdictional conflicts currently exist between the EPA and state autho ri ties, giving as an example po rt ions of the Wind Ri ver Indi an Reservation where both the EPA and the

State of Wyoming claim ju ri sdiction for permitting. Unless these conflicts are resolved, the commenter believes, new emission sources would be required to submit separate permit applications to both EPA an d the state , which would create the potential for conflicts between permits issued by the two agencies. The commenter suggested that, following the resolution of

the federal an d state ju ri sdictional issues, the bounda ri es for all Indi an country should be published, thereby allowing new sources to readily determine the proper authority for permitting.

Response:

The EPA does not believe that specific delineation of the borders of all parcels of Indian country throughout the nation is needed for EPA to pro mulgate these rules. As we have explained previously, EPA has well

- established authority under the CAA to fill regulatory gaps in Indian country through federal implementation of CAA programs, in the absence of an EPA

approved program. In taking action o n state program approval applications, EPA has not to date approved any state to administer either the minor NSR or nonattainment major NSR program in any area of Indian country. In addition, because only a very small number of trib es have applied for eli gibility to administer an approved minor NSR program, and no trib e has applied for eligibility to administer an approved nonattainment major NSR program, there is currently a regulatory gap for these programs throughout much or all of Indian country

. In

s imilar circumstances, EPA currently implements several programs under the CAA

– as well as numerous additional programs under other federal environmental laws

– throughout Indian country on a nationwide basis. Two relevant examples of this implementation throughout Indian country under the CAA include the federal major source operating permits program under 40 CFR part 71 and the permit requirements for major sources in attainment areas under the PSD program under 40 CFR 52.21. The minor NSR and nonattain ment major NSR programs will be similarly implemented under EPA’s authority in Indian country.

As EPA has explained elsewhere, we also believe that in most cases, determining whether sources are located within Indian country will be straightforward and n on

- controversial, andReview of New Sources and Modifications in Indian Country Response to Comments

129 that EPA and sources will be able to easily assess whether a source is located within Indian country. See 64 FR 8247, 8256

- 57. Because EPA takes the position that state and local air quality programs do not, for CAA purposes, extend into Indian country absent express approval by EPA, EPA does not generally believe that sources in Indian country will be confused about whether they are covered by a state /local program or the federal minor NSR or nonattainment major NSR programs promulg ated here. This is especially true for sources located in Indian country that are already covered by EPA CAA or other environmental programs based on their location in Indian country. In addition, EPA notes that state s should be fully aware of whether

EP A has explicitly approved their CAA programs as applying in Indian country, or excluded such areas from the state program. The EPA also believes that assessments of whether a source is located in Indian country can generally be easily verified through con sultation with the U.S. Department of the Interior or through reference to readily available materials. The EPA recognizes that certain rarer situations may raise more complex factual scenarios. In such cases, EPA intends to work with the Department of t he Interior and relevant state s, trib es, sources, and other stakeholders to assess the Indian country status of the particular source’s

location. The EPA notes that it is ultimately a source’s responsibility to ascertain whether it is subject to the feder al minor NSR or nonattainment major NSR program and to submit any required permit application.



### 4.2 **Delegation of the NSR Programs to Tribes**

We proposed a process to allow trib es to seek to assist EPA with administration of the

federal NSR programs through a delegation agreement with EPA that would be similar to the process to delegate the administration of federal programs to trib es and state s under other EPA rules. This process would not require the trib e to obtain TAS status or approval of a tribal m inor

NSR or nonattainment major NSR program under tribal law. Rather, the programs would remain federal and would continue to be implemented under EPA’s federal authority in Indian country. The only difference is that a trib e would, pursuant to an agreement w ith EPA, assist EPA by carrying out certain functions on EPA’s behalf. In our proposal, we noted that certain types of functions would not be available for delegation to an interested trib e. For instance, EPA would

not include the enforcement of the NSR programs, which would be reserved to EPA under

federal law. Of course, trib es would be free to pursue TAS status and approval to administer all aspects of a trib al NSR program under trib al law.

Comments Favoring Administrative Delegation :

Numerous tri b al commenters (0031, 0033, 0038.1, 0041, 0044, 0047.1, 0049.1, 0053, 0054, 0056, 0061.2, 0071, 0076, 0091.1, 0098.1, 0099.1, 0101.1

, 0106.1 ) recommended that the administrative delegation of the program to trib es include enforcement authority. Where they were specific, most of these commenters specified delegation of civil enforcement authority (including the ability to collect civil penalties to help support the program), but a number also favor delegation of criminal enforcement authority. The commente rs often suggested that the rules should give trib es the option of requesting delegation of enforcement authority, and two commenters (0047.1, 0071) believe that trib es should be allowed to negotiate the level of enforcement authority on a case

- by

- case bas is.Review o f New Sources and Modifications in Indian Country Response to Comments

130 T hree of the trib al commenters (0038.1, 0076 , 0091.1 ) noted that there are a number of

state s that are exercising enforcement authority under their respective minor NSR programs, specifically due to delegation of such authority by EPA. The comment ers believe that this

should be available for trib es as well.

A number of the commenters do not believe that it makes sense to divide implementation of the program between multiple agencies. For example, trib al c ommenter 0098.1 stated that bisecting t he program confuses permittees and the public, adds to the administrative burden of

EPA and trib al staff, and limits the possibility that trib es will want to aid EPA in administering the program.

Three of the commenters (0044, 0054, 0071) indicated that the current practice in other delegations is for EPA to retain criminal enforcement, but delegate civil enforcement to the

trib es. These commenters questioned why this was not followed for the NSR program. One of the commenters (0071) expressed fear that the NSR program will change the status quo in these

matters.

One of the commenters (0031) insisted that trib al sovereignty be maintained. This

commenter believes that it is essential that trib es have enforcement power for both criminal and

civil cases so as to guarantee that if a source is in violation and the EPA is not capable of handling it immediately, the trib e can pursue the case independently. The commenter also

believes that the trib e should be responsible for enforcing all air quality standard s upon sources that are owned or operated by trib al members.

One of the commenters (0049.1) stated that it may be efficient to address these gaps in environmental protection through methods including delegation of authority, but this method

should be in addition to, not as a replacement for, the inherent authority and sovereignty of the tribal government. To that end, the commenter believes that the wording in the proposed rule pertaining to non

- delegable elements of the FIPs is too broad and could lead to jurisdictional conflicts, rather than enhancing coordination as the proposed rules seem to intend. Specifically,

the commenter indicated that the tribe should also retain the authority and capacity to issue and enforce, revoke, or terminate permits iss ued pursuant to the proposed rules for minor NSR or nonattainment major NSR, and these components should be delegable under the Act.

One of the commenters (0054) believes it is unrealistic to require a trib e to have an approved TIP in order to be delegat ed NSR enforcement. The commenter pointed out that the TIP process has been known to take a decade or more to complete.

Comments Opposing Administrative Del egation :

Two state /local commenters (0034.1, 0046.1/0100.1 ) and one industry commenter (0022.1) opposed the proposed administrative delegation of the NSR program to trib es. One of

the state /local commenters (0034.1) noted that trib es can receive delegation if they demonstrate that they are formally recognized by the U.S. Department of the Interior, are currently carrying out substantial governmental powers, have authority to administer the program, and haveReview of New Sources and Modifications in Indian Country Response to Comments

131 sufficient technical expertise to carry out the program. This commenter is concerned that these demonstrations will be approved by EPA based on their administrative completeness, rather than on their technical or legal merit. The commenter recommended that any delegation be contingent upon an approved TIP.

The industry commenter (0022.1) maintained that only the TAS process should be used

to de legate authority of environmental programs to trib es. The commenter asserted that EPA has not provided any justification for why the proposed administrative delegation process is needed over the existing TAS process. In addition, the commenter believes t hat the proposed administrative delegation process will create jurisdictional conflicts between EPA, trib es, and the

state (especially in Oklahoma because there have been significant problems there with trib es providing adequate jurisdiction of lands they claim) and will be confusing to the regulated community. The commenter suggested that if the administrative delegation process is included in the final NSR program, it should include a Federal Register public notice and comment provision.

The second sta te /local commenter ( 0046.1/0100.1 ) stated that the Act plainly allows a delegation of authority to a trib e only if the trib e has demonstrated that it has adequate legal authority to regulate the areas it claims. Because EPA has not made any jurisdictional determinations in connection with the proposed FIP, the commenter believes that delegation of authority to trib es to assist in administering the FIP violates the plain requirements of the Act.

Response:

The EPA believes that some of these commenters mi stake the distinction between approvals of tribal programs under tribal law provided for in the TAR and the administrative delegations at issue here. Where EPA approves an eligible tribe for TAS under

CAA section 301(d) and the TAR, EPA will continue to r eview the applicant tribe’s authority, including its authority to enforce, in an appropriate tribal forum, any approved tribal program operated under tribal law. In such circumstances, EPA has recognized that certain limitations

on tribal criminal authori ty should not constitute a bar to tribal program approval and has determined to fill any gap in tribal criminal authority by retaining primary criminal enforcement at the federal level for all circumstances in which a tribe is precluded from exercising suc h authority. See 40 CFR 49.7(a)(6) and 49.8. In such situations EPA would, however, generally expect the applicant tribe to demonstrate authority to pursue appropriate civil enforcement under tribal law of any approved tribal program.

By contrast, any permits issued under the federal NSR programs (even where issued by a

trib e acting on EPA’s behalf pursuant to a delegation agreement) remain federal in character and continue to be enforceable (whether civilly or criminally) in federal court. The EPA do es not believe that it would be appropriate to delegate enforcement of a federal permit in federal court to an Indian tribe assisting EPA with administration of the NSR program. Indeed, in similar circumstances EPA has consistently withheld enforcement in federal court from any administratively delegated entity, whether a state or a tribe. For instance, under certain other CAA programs (e.g. , EPA’s major source operating permit program under 40 CFR part 70 and EPA’s PSD program under 40 CFR 52.21) EPA may , in appropriate circumstances, delegateReview o f New Sources and Modifications in Indian Country Response to Comments

132 administration of elements of the program to non

- federal entities. However, while such entities may pursue enforcement in their own courts of parallel non

- federal air quality requirements, enforcement of the federa l permit in federal court will always be retained and conducted by

EPA. 17 See also 40 CFR 49.122; 70 FR 18074, 18080

- 81, April 8, 2005 (discussing EPA’s similar approach to administrative delegation in the context of FIPs for Indian reservations in

the Pac ific Northwest).

The EPA’s approach to administrative delegation of the federal NSR programs is thus consistent with other administrative delegation regulations and does not alter E PA’s approach to approval of tribal eligibility under the TAR. The EPA notes that tribes interested in enforcing NSR permits issued in their areas may continue to seek TAS eligibility and program approval pursuant to established procedures under the TAR. Indeed, EPA expects that the approach to administrative delegation of e lements of the federal NSR program may benefit such trib es by providing opportunities for tribes that are building air quality programs to gain experience by assisting EPA with administration of the federal rules without needing to first develop tribal air programs under tribal law. To the extent such tribes do subsequently obtain TAS eligibility and NSR program approval, their approved tribal programs under tribal law would replace the relevant federal rule. In addition, EPA recognizes that some trib es m ay choose not to develop air programs under tribal law, but may still want to participate in air quality management in their areas of Indian country. Administrative delegation of elements of the federal rules may provide an appropriate opportunity for suc h tribal involvement.

Consequently, EPA believes the distinction between delegation of administration of aspects of the federal NSR rules and approval of eligible tribal programs under CAA

section 301(d) and the TAR is significant and warrants EPA’s reten tion of federal enforcement of federal NSR permits in federal court. The EPA also believes that this approach does not create any inconsistency with its treatment of tribal eligibility for CAA programs under the TAR or with EPA’s approach to administrativ e delegations of other CAA programs to tribes and states.



### 4.3 **Permits Previously Issued by States to Sources in Indian Country** 

Historically, sources in some areas of Indian country have received permits from state s operating EPA

- approved programs. However, state s generally lack jurisdiction under the Act over these facilities and generally were not authorized under the Act to issue such permits in Indian country. The rulemaking proposal included a mechanism to change state permits issued to major sources o f regulated NSR pollutants in nonattainment areas of Indian country to federal

nonattainment major NSR permits. Specifically, the proposal indicated that owners/operators of major stationary sources with state

- issued nonattainment major NSR permits would be required to apply to convert the permit to a federal permit under the federal nonattainment major NSR

17 M ost states have sought and obtained EPA approval to administer their own minor and nonattainment major NSR programs administered under st ate law. To the extent the commenters believe that states are pursuing enforcement of NSR programs, EPA notes that such enforcement is likely being taken pursuant to state law under such approved state programs.Review of New Sources and Modifications in Indian Country Response to Comments

133 program within 1 year of the effective date of the program. In this case, the source would not be subject to any additional requirements under the non attainment major NSR program for Indian
country.

Comment:

Two industry commenters (0027.1, 0081) believe that state or federal permits (whether minor or major source) should b e transferred to the reviewing authority when the rule becomes effective, or t he program is delegated. The commenters pointed out that proposed 40 CFR 49.168(b) addresses the requirements to reapply for a nonattainment major NSR permit previously issued by a state to a source in Indian country, while proposed 40 CFR 49.158(c)(1)

di scusses the ability of an applicant to reapply for a synthetic minor source permit, if desired. (Commenter 0081 added that similar concerns exist with PSD, Title V, and minor NSR permits.) The commenters indicated that the reapplication processes set out in proposed 40 CFR 49.158(c)(1) and 49.168(b) seem unnecessarily complex. The commenters argued that these permits should be transferred “en mass e ” from one agency to the other with a simple notification to the operator of the transfer of jurisdiction.

One of the commenters (0027.1) also offered the following alternative: a transitional MOU to specify a reasonable handoff between agencies for reporting, enforcement, audits, and the other compliance

- related aspects of this transition. Both commenters ( 0027.1, 0 081)

indicated that if EPA believes that the “en mass” transfer methods are impracticable, then the source should be able to transfer the permit by submitting a transfer request (not a complete application) with a copy of the permit to both agenci es. This transfer should occur without a review of the permit as stated in 40 CFR 49.168(b). The commenters added that additional information on the facility would be submitted to the reviewing authority upon request. One of the commenters (0081) stress ed that sources with state minor NSR permits should be grandfathered into the Indian country program and not required to conduct minor NSR permitting.

A trib al commenter (0101.1) also believes that EPA should issue a federal permit under

the Indian count ry NSR program to “any facility located in Indian country that has been erroneously issued a state permit.” (Although the commenter did not explicitly say so, we interpret this comment as favoring conversion of state minor NSR permits as well as

nonattain ment major NSR permits.) The commenter maintained that previous (erroneous) state permit conditions may be appropriate to be included in the new federal permit, but that this should not be automatic. The commenter stated that government

- to

- government con sultation

between EPA and the affected trib e must take place during this process.

T hree trib al commenters (0044, 0076 , 0091.1 ) pointed out that the proposal did not

discuss what enforcement mechanism would be used if a source failed to convert a state pe rmit

to a federal permit in the given time frame. One of the commenters (0044) stated that similar rules within EPA have an enforcement component, and that this rule should follow that precedent. This commenter recommended that EPA consider utilizing tri b al courts for this purpose because the infraction would occur o n Indian country and within trib al jurisdiction.Review o f New Sources and Modifications in Indian Country Response to Comments

134 Response:

After considering these comments, we believe that transforming state nonattainment major NSR permits into federal nonattainment maj or NSR permits in Indian country is appropriate to protect air quality in Indian country. However, we do not believe that these permits should be transferred “en masse” from one agency to another or be automatically transferred because we need to determin e if the permit complies with the applicable requirements under the federal NSR program. If it does not, a new permit with appropriate requirements would have to be public ly noticed and issued. If a source fails to obtain a required federal permit by the established timeline and/or does not meet the applicable requirements under this rule, it may be subject to potential enforcement action. We also believe that since any failure of a source to convert a state permit into a federal permit would be a violat ion of this rule, the violation is of the federal requirement and thus administratively enforceable by EPA and in federal court, not tribal court. Because these programs are operated under federal authority, there is no finding (and no need for a finding) of tribal jurisdiction.Review of New Sources and Modifications in Indian Country Response to Comments

135 

## 5 OTHER COMMENTS ON THE PROPOSED RULEMAKING

In this section, we present the comments, along with our responses, on other aspects of the proposal.



### 5.1 **Implementation of the NSR Program**

Section 5.1.1 addresses comments on the reso urces needed for implementation of the proposed NSR program, while section 5.1.2 deals with the implementation timeline. Finally, section 5.1.3 presents additional comments on implementation of the program.



### 5.1.1 Resources for Implementation

Comment:

Numer ous commenters questioned whether EPA or trib es will have adequate resources (staff and/or funds) to implement the NSR program. These commenters included 1 9 trib al commenters (0031, 0033, 0038.1, 0041, 0044, 0047.1, 0049.1, 0050.1, 0053, 0054, 0056, 0071, 0076, 0091.1, 0097.1, 0098.1, 0099.1, 0101.1

, 0106.1 ), 3 industry commenters (0027.1, 0030, 0081), and 1 state /local commenter (0051.1).

As discussed further below , most of the trib al commenters believe that the NSR program

should include a mechanism that allows trib es/EPA to collect fees to offset the costs of the program. Some of the trib al commenters (0031, 0047.1, 0049.1, 0053, 0098.1, 0099.1) also indicated that EPA should provide funding for trib al implementation of the NSR program, for example, through cooperative agreements and grants. Two of these commenters (0047.1, 0053) pointed out that trib es that do not accept delegation of the program will still need resources, such as funds to train and support personnel who will be reviewing and comme nting on the permitting applications and providing technical assistance to businesses regarding compliance issues.

Tribal Commenter 0047.1 state d that EPA should consult with individual trib es regarding the resources needed to implement the program. One of the commenters (0098.1) indicated that, with EPA’s limited staff and funding, the best chance of successful implementation of the NSR program is to partner with trib es through adequately

- funded delegation agreements. However,

the commenter observed tha t despite ever

- growing trib al interest, available resources to fund

trib al air programs are shrinking in relationship to the additional trib es interested in participating, and that specific enforcement resources have also declined over the past years. Ano ther of the commenters (0099.1) stated that special funding for this proposed rule must be clearly stated and should not come from monies already allocated for implementation of trib al air quality programs.

Two trib al commenters (0038.1, 0044) indicated that they believe that we significantly underestimated the number of minor sources in Indian country and, therefore, have underestimated the resources required to implement the minor NSR program. One of these commenters (0038.1) noted that her trib e’s gre atest fear is the potential lack of enforcement byReview o f New Sources and Modifications in Indian Country Response to Comments

136 EPA. Another trib al commenter (0053) wondered whether EPA has adequate staff available to enforce the NSR program and indicated that time frames, monitoring, and compli an ce are of great concern, noting th at if EPA is not be able to make a site visit for a noncompliance issues,

the emission source will continue to exceed emissions levels. Two other tribal commenter s ( 0076, 0091.1) recommended that EPA provide assurances that it will have sufficient resourc es to enforce the FIP for the nation’s many tribes.

Based on their experience with EPA issuance of Title V and PSD permits in Indian country, three industry commenters (0027.1, 0030, 0081) expressed doubt that EPA has the resources to take on the NSR pro gram without significant permitting delays. One of the commenters (0030) expressed similar concerns regarding trib al agencies. This commenter (0030) believes that EPA has grossly underestimated the number of minor sources associated with oil and gas deve lopment that would be required to seek a minor NSR permit, and suggested that using general permits for typical oil and gas sources and recognizing that certain de minimis sources are insignificant and should be permit

- exempt would help address this shortf all in administrative resources. The other two commenters (0027.1, 0081) applauded the requirement

that trib es must demonstrate that adequate resources are available to administer the program before the program is delegated to the trib e. These commenters asserted that permits should not be required in any Indian country area until the administrating agency, whether EPA or a trib al government, has demonstrated that adequate resources are budgeted to the program.

One state /local commenter (0051.1) pointe d out that the proposed NSR program would create an enormous new workload for EPA Region IX , given the huge amount of Indian country in California and other Region IX state s, and given EPA’s presupposition that few, if any, trib es will be prepared to pursu e delegation of the responsibility to implement these requirements. The commenter is very concerned that this new workload will create significant delays in already

impacted program areas, notably the air quality attainment plan and SIP rule approval proc esses and possibly other permit programs such as Title V, where local permitting agencies have to wait to issue final Title V permits until after a 45

- day EPA review period.

Six teen trib al commenters (0031, 0033, 0041, 0047.1, 0050.1, 0053, 0054, 0056, 0 071, 0076, 0091.1, 0097.1, 0098.1, 0099.1, 0101.1

, 0106.1 ), one state /local commenter (0018.1), and one environmental group (0037.1) recommended that provisions for the collection of permit fees

be added to the rule. The trib al commenters generally assert ed that trib es who receive delegation of the program should be expressly allowed to collect permit fees to support the program, and several of these commenters also indicated that EPA should be empowered to collect fees when it is the reviewing authority. The trib al commenters believe that such fee provisions are necessary for providing the resources to enable sufficient oversight and operation of the trib al NSR program.

Some of the trib al commenters addressed the fate of any fees collected:

• One trib a l commenter (0053) simply indicated that who will collect and retain fees is

an issue.

• One trib al commenter (0071) posited that under the proposed program, any fees collected by a delegate trib e would go back to EPA with no assurance that the feesReview of New Sources and Modifications in Indian Country Response to Comments

137 would go toward continuing trib al air programs development. This commenter argued that this situation would violate trib al statutes and protocol, as well as putting

trib es at a great disadvantage when compared to state programs. The commenter

asked that the rule provide for trib es to retain all permit fees that they collect.

• One trib al commenter (0050.1) indicated that without a mechanism under the Act similar to Title V, any fees collected by EPA would go to the U.S. Treasury. The

commenter stated that trib al p rograms would not be subject to that requirement, and recommended that the final rule require delegate trib es to charge fees sufficient to cover the direct and indirect costs of the program. The commenter suggested that the

fees be based on emissions or a ny other method that EPA deems appropriate. The commenter noted that TIP programs can devise their own fees.

• One trib al commenter (0101.1) recommended that fees collected by EPA be directed to the EPA Regional trib al air program, and that fees collected b y a delegate trib e be retained by the trib e. In both cases, the commenter believes that the fees should support administration of the NSR program.

• One tribal commenter (0097.1) recommended that any permit fees collected by EPA under the permitting program , including the existing major source permitting programs for which EPA collects fees, be directed back to the Tribal Air Program in order have another resource pool for grants to further support tribal program development.

One trib al commenter (0099.1) recommended that EPA consult with each trib e regarding fees. The commenter went on to say that the fee structure for sources owned and operated by the

trib e should be different than for other sources.

The state /local commenter (0018.1) stated that the f inal rule should require applicants to pay permit fees to EPA or the delegate trib e to make up for the resources expended on the program. The commenter noted that section 110(a)(2)(L) of the Act requires state s to charge such fees, and indicated that such fees should be charged in Indian country in order to provide a level playing field.

The environmental group (0037.1) stated that without the ability to collect fees, trib es may be deterred from accepting delegation of authority of the NSR program. The commenter believes that implementation of the NSR program would be an important step in building trib al capacity to administer other programs under the Act.

Response:

The Agency is aware of and concerned about the resource needs of the rule, but the CAA does not give the Agency explicit authority to charge permit fees for preconstruction permitting. However, under a delegation agreement, EPA and the delegated tribe could, as appropriate, establish mechanisms to fund the work by tribal staff, that may inc lude federal funding assistance through cooperative agreements and grants and/or user fees and charges established by the tribe under tribal law for the purpose of funding its administrative activities on behalf of

EPA

. See Federal Implementation Plans Un der the Clean Air Act for Indian Reservations in Idaho, Oreg on and Washington (70 FR 18080 ). In addition, tribes that develop TIPs can chargeReview o f New Sources and Modifications in Indian Country Response to Comments

138 for permits under their authority. Furthermore, the final rule includes a number of mechanisms

to address concer ns regarding the resource burden, including: encouraging delegation of the program through trainings (face

- to

- face training sessions and through ITEP training), and developing and using general permits. We are also phasing in the implementation of the ru les. See section 5.1.2 (next section) for more information abou t the implementation timeline.



### 5.1.2 Imple mentation Timeline

Comment:

Three industry commenters (0022.1, 0027.1, 0081) and one state /local commenter (0051.1) requested that the program be phase d in over a longer period of time. The three industry commenters (0022.1, 0027.1, 0081) noted that, as proposed, the NSR program would become effective 60 days after the rule is finalized, and that NSR permits would be required for projects in Indian coun try that commenced construction after this effective date.

Two of the industry commenters (0027.1, 0081) stated that requiring preconstruction permits so soon after the rule is finalized will potentially disrupt currently planned projects

– industry wi ll have insufficient time to obtain permits and EPA will have insufficient resources to process permit applications in a timely fashion. The commenters asserted that the ability for industry to continue with currently planned projects is imperative to pro ject economics and to sustain America’s energy supply. Even if the reviewing authority has sufficient resources available when the rule is finalized to process the increased permit load, the commenters estimated that it may take 8 to 12 months to obtain t he first preconstruction minor NSR permit in Indian country. They suggested that this could easily be avoided by delaying the preconstruction permit requirement for at least 12 months after the effective date of the rule, which would also allow agencies t o develop general permits to reduce the resource burden for both industry and the reviewing authority.

The third industry commenter (0022.1) stated that t he proposed rule does not allow industry adequate time to understand and comply with the final rule

. The commenter believes that many small businesses will be regulated for the first time, and that these businesses will need time to understand and budget for those requirements. The commenter indicated that many, if not all, such businesses will have t o hire consultants to help them comply with the final rule as most have limited knowledge and experience with air permitting issues. The commenter is concerned with the availability of consultants and budgeted funds to comply within 60 days of

the final r ule. The commenter recommended that EPA consider at least 18 months, which will also allow EPA time to develop guidance and general permits to expedite the permitting process.

The state /local commenter (0051.1) indicated that if we do not adopt requirem ents that

mirror the loc al jurisdictions’ SIPs (the commenter’s preferred approach), we should postpone implementing the minor NSR rules for Indi an c ountry until sufficient expe ri ence an d knowledge is gathe re d by implementing the nonattainment major NSR re qui re ments, including the impact on the EPA Regional Offices, to al low EPA to construct a more productive an d less labor

intensive minor NSR program for Indi an country.Review of New Sources and Modifications in Indian Country Response to Comments

139 Response:

We agree that it would be very challenging for us, as the reviewing authori ty until a tribe

obtains delegation or approval of a TIP, to implement all elements of the final rules simultaneously beginning on the effective date of the rules due to the resource constraints we currently experience and the new workload this rule will c reate, especially for those EPA

R egion al Office s where EPA, as the reviewing authority, oversees a large area of Indian country with a potentially significant number of covered sources . Consequ ently, we have decided to phase in the implementation of the rules depending on the type of source being regulated. See section VII.C of the final rule pr e amble for more details on the phase

- in

schedule.



### 5.1.3 Other Comments on Implementation

Comment:

One trib al commenter (0053) expressed concern that the Indian cou ntry NSR program will apply to all trib es, with or without trib al input, and that sources will be required to comply with NSR 60 days after the rules are promulgated. The commenter is concerned that, in the case

of trib es that do not have an air quality p rogram, no one will inform the Tribal Council about the NSR program.

Response:

We intend to do extensive training and outreach to the t ribes and to provide compliance assistance to encourage and support trib al involvement.

Comment:

One industry com menter (0021.1) and one state/local commenter (0046.1/0100.1)

indicated that the p roposed NSR program for Indian c ountry would be especially problematic to implement in Oklahoma . The industry commenter (0021.1) gave the following reasons:

• Unlike reservat ions in western states, Oklahoma has 39 recognized trib es.

• There are no formal reservations in Oklahoma where a trib al government has primary control over significant sized tracts of contiguous lands. Indian country in Oklahoma

include s isolated lands suc h as trust lands, dependent Indian communities, and allotments that are scattered throughout the state and are located in and among private lands held by non

- trib al members.

• Tribal trust lands and individual allotments can vary over time, and as such, th e list of impacted property over which the trib e would assert jurisdiction would be constantly changing.Review o f New Sources and Modifications in Indian Country Response to Comments

140 • The broad definition of “Indian country” makes it almost impossible to determine

where affected lands are located.

• The TAS process requires a trib e t o demonstrate its jurisdiction over tracts of lands being claimed. There have been significant problems in Oklahoma with trib es providing adequate jurisdiction of lands they claim ( see supplemental comments submitted to EPA Region VI on August 19, 2005 on behalf of the Oklahoma Department of Environmental Quality regarding the Cherokee Tribe’s TAS application for portions of the Act).

The commenter (0021.1) does not think EPA has the ability to implement the environmental programs on thousands of non

- c ontiguous trib al parcels of land spread throughout Oklahoma. Given these considerations, the commenter believes that the State of Oklahoma is in the best position to implement an air program over the entire state , including all Indian lands.

The commente r urged EPA to use its discretion and allow the state to do so.

The state/local commenter (0046.1/0100.1) stated that the proposed FIP’s assertion of jurisdiction over “dependent Indian communities” creates particular regulatory uncertainty in Oklahoma, given that state’s history and land ownership patterns. The commenter points out that while there are no “reservations” in the traditional sense in Oklahoma, there are approximately 97,000 acres of non

- contiguous tribal trust land spread throughout the st ate and more than

1 million acres of allotted, individually owned lands held by members of one tribe or another scattered throughout most of Oklahoma’s 77 counties. Thus, according to the commenter, much of the state of Oklahoma resembles a sparsely India n

- owned “checkerboard area.” Based on this situation, the commenter made the following points:

• Absent a clear jurisdictional determination prior to adoption of the proposed FIP, many land title issues would have to be adjudicated on a case

- by

- case basis. For example, in its application for TAS status the Cherokee Nation claimed title to parcels of “trust land” scattered across 14 counties in northeast Oklahoma. However, the review of land title of records established that many of the scattered parcels t he Nation had claimed were trust land, in fact were not held in trust for the Cherokee Nation, and the Cherokee Nation had no interest at all in some of the claimed trust land parcels.

• Sweeping non

- Indian owned land under the FIP as part of a “dependent In dian community” would needlessly disrupt long

- standing, effective environmental regulatory programs administered by the commenter’s agency.

• The EPA has repeatedly recognized that “checkerboarded” regulation can confound

efficient and effective environmenta l regulation. In the preamble to the federal operating permits program , for example, EPA made this point regarding tracts of land

within a r eservation (64 FR 8247)

. That same rationale should apply here to prevent checkerboarding of regulatory jurisdicti on in Oklahoma among the state, tribes

, and

EPA.

• In SAFETEA , Congress appropriately sought to avoid precisely this kind of regulatory confusion and litigation.Review of New Sources and Modifications in Indian Country Response to Comments

141 Based on these points, the commenter (0046.1/0100.1) concluded that the proposal to administer a FIP in Indian country should be withdrawn in its entirety or, alternatively, should be revised to

exclude all lands within the State of Oklahoma.

Response:

A s described above in section 4.1.3 of this document, EPA has authority to implement

these CAA programs in Indian country on a nationwide basis in the absence of an EPA

- approved

non

- federal program. The EPA believes that determining whether sources are located in Indian country will generally be straightforward and that in cases that present more c omplex factual scenarios EPA can work with DOI and relevant states, tribes, sources, and other stakeholders to assess the Indian country status of a particular source’s location. With regard to Indian country in the State of Oklahoma, a s we have stated pr eviously, EPA recognizes that SAFETEA contains a provision (section 10211) relating to implementation of environmental regulatory programs under federal environmental laws, including the CAA, in Indian country in Oklahoma. However, to date, neither the St ate of Oklahoma, nor any Indian tribe in Oklahoma, has applied for EPA approval to administer either of the CAA programs included in this rulemaking for any area of Indian country. In the absence of an EPA

- approved program, these FIPs will apply throughou t Indian country, including Indian country in Oklahoma. In promulgating these FIPs, EPA is not acting on any potential request by the State of Oklahoma to administer any CAA or other regulatory program in Indian country, nor is EPA acting on any potential TAS application for an environmental regulatory program by any Indian tribe in Oklahoma. The EPA would address any such applications when necessary and on a case

- by

- case basis and in full consideration of the requirements of s ection 10211 of SAFETEA. Se ction 10211 of SAFETEA is thus not implicated in this rulemaking and is not a relevant consideration in EPA’s promulgation of the minor and nonattainment major NSR programs for Indian country, including Indian country in

Oklahoma. In addition, although EP A recognizes that certain potential challenges may exist in implementing some CAA programs over relative small parcels of land, we have already described our clear authority to administer these programs throughout all areas of Indian country (in the absenc e of an EPA

- approved program) and believe we will be able to act on permit applications for all sources covered by these programs in such areas.



### 5.2 **Consultation with Tribes During the Rulemaking Process**

Comment:

Eight trib al commenters (0044, 0049.1, 00 61.2, 0071, 0076, 0091.1, 0098.1, 0101.1) indicated that there was no meaningful consultation between EPA and the trib es in developing

this rule. These trib al commenters typically stated that while EPA initially gathered comments

from interested trib es in 2002, the Agency did not communicate with the trib es on the results of that information gathering and offered no discussion of why some trib al suggestions were accepted and others rejected. Consultation on a government

- to

- government basis, they noted, is

a two

- way communication, not merely a one

- way distribution of information or a collection of

comments from the trib es. The trib al commenters often stated that EPA did not consult at all

with trib es about the proposed nonattainment major NSR program.Review o f New Sources and Modifications in Indian Country Response to Comments

142 T h ree of the trib al commenters (0071, 0076 , 0091.1 ) pointed out that EPA failed to

follow the trib al consultation plan set out in 2002 by allowing a period of more than 2 years pass until further substantive discussions concerning the proposed FIP took place between the EPA

and trib es. During this time, the EPA changed its staff overseeing development of the proposed FIP but failed to pass on information about previous trib al consultations to the new staff. Even

after contacts were renewed at a 2004 Nationa l Tribal Air Association meeting, EPA did not act on the earlier consultation plan, but conducted the majority of its consultation/outreach efforts through a number of regional and national conferences, none of which met EPA’s policy of direct, government

- to

- government relations with trib es. One of these commenters (0071) asked that EPA revisit and carry out the original consultation plan, conduct further consultation on a
government

- to

- government basis, and consult with trib es regarding the nonattainment major

NSR program. T wo of the commenters (0076 , 0091.1 ) believe that additional opportunities exist for government

- to

- government consultation and urged EPA to act on these opportunities as soon as possible.

One of the trib al commenters (0101.1) agreed t hat additional opportunities exist for
government

- to

- government consultation on the proposed minor NSR and nonattainment major

NSR programs. This commenter stated that completion of promulgation of the proposed rule and its implementation must include a p rocess that encourages continuing consultation with every impacted trib al government to ensure that each trib e’s policies and priorities (including existing air quality protections) are honored in the decision

- making process. Another of the

tribal comment ers (0049.1) requested government

- to

- government consultation on the rulemaking process for the proposed rules, the implementation of the rules, and the enforcement process and necessary funding to carry out the provisions of the proposed rules.

One of th e trib al commenters (0098.1) noted that consultation as expressed in Executive Order 13175 is the substantive baseline from which EPA must approach all environmental issues that might have an impact on trib es, trib al communities, or the trib al environment. This commenter requested that EPA provide a formal response to trib es that participated in the consultation process and that EPA directly address each trib e’s specific concerns in this response. In addition, the commenter urged EPA to sincerely incorpor ate the trib al complaints over the consultation process for the Tribal NSR proposal in an effort to improve consultation in

the future.

Response:

The EPA conducted substantial outreach and consultation with tribal officials and other tribal representati ves, and has incorporated tribal views, throughout the course of developing these rules. See section III.D of the final rule preamble for more details on our tribal outreach and consultation efforts. However, w e agree that consultation and on going commun ication are

critical to effective rulemaking and that long delays between consultations and ot her

communication methods were problematic. For that reason, we plan to improve our communication efforts during the implementation of this rule to ensure that p roper outreach and

consultation is conducted. In addition, we intend to do extensive training and outreach to the

trib es and to provide compliance assistance to encourage and support trib al involvement.Review of New Sources and Modifications in Indian Country Response to Comments

143 

### 5.3 **Use of FIPs for the NSR Program**

Comment:

One p rivate citizen (0016.1) questioned the effectiveness of EPA’s process for establishing and implementing the NSR program for Indian country. Noting the lack of involvement by trib es with the existing PSD program and the 15 percent response rate to the

init ial outreach effort to trib es (75 responses to 500 letters mailed out regarding these NSR rules), the commenter stated that EPA’s actions seem to indicate a long

- term implementation and execution role in Indian country. The commenter believes that EPA has established regulations that create false options for trib al control of their own lands, given the lack of authority and funding given to trib es and the fact that there is no straightforward plan or means to transfer

control to the trib es. The commenter indicated that EPA’s current trajectory involves continued implementation, execution, and enforcement of the Act in Indian country for an undefined period. Instead, the commenter recommended that EPA establish a strong government

- to

government approach th rough a permanent plan to invest monetarily and influentially in Indian country environmental programs, rather than continue to create a stream of FIPs implemented by

EPA.

Response:

We agree that an implementation plan is needed and that development of this plan needs

to involve trib es. To address this, we have an on going workgroup comprised of trib al environmental professionals and are working with them to develop a NSR implementation plan.

The EPA intends to continue this work and to consult with tri bes on an ongoing basis as these programs are implemented and as EPA considers other issues regarding implementation of the CAA programs in Indian country.

Comment:

One private citizen (0093.1) commented that EPA should aim to respect trib al sovereign ty by allowing trib es to create their own TIP in lieu of the FIP, as proposed. In order for this to become a reality, the commenter believes there needs to be more collaboration

between EPA and the trib es, as well as an increase in funding and staffing ne cessary to implement the TIP.

Response:

We agree that collaboration is important and that support should be given to the trib es. Therefore , we have developed an implementation plan in collaboration with interested trib al

environmen tal professionals thr ough an on going workgroup that includes increased outreach

and communication with the trib es, out reach to the sources, and training

. We believe that this final implementation plan will meet the needs of the trib es

. The EPA continues to support tribal eff orts to develop TIPs and believes that these rules may assist in those efforts throughReview o f New Sources and Modifications in Indian Country Response to Comments

144 opportunities for tribes to seek administrative delegation and also by forming an example upon which tribes may base potential tribal programs.

Comment:

Another p rivate citizen (0096) sim ilarly suggested that the Indian country NSR rules should emphasize the adoption of TIPs with enforcement powers for the trib es. However, this commenter went on to recommend that, in cases where a TIP is currently infeasible for a given

trib e, the trib e should be given the option to incorporate themselves into the SIP NSR program that is within the same air basin (while retaining the option of developing a TIP in the future). The commenter gave the following as advantages of state administration of NSR in trib al areas:

• Reduced burden on the increasingly overwhelmed EPA Regional Offices. This burden would fall on some Regional Offices more heavily than on others due to the differing numbers of trib es in each region.

• States already have the NSR regulatory framework established, unlike the EPA Regional Offices.

• It is preferable to apply uniform regulations in an entire airshed, not divide it up along political boundaries.

• Jurisdiction will be consistent across the United States, with no question about who will be regulated and by whom. This would provide a consistent set of rules for the regulated community, whether they operate within trib al areas or not.

Response:

We agree trib es should be encouraged to develop TIPs where appropr iate. However,

s tates generally lack jurisdiction under the Act over facilities in Indian country (See section 4 of this document for more information about states’ lack of jurisdiction in Indian country). Therefore, we do not believe it will be feasible or appropriate to incorporate a tribe into the SIP NSR program that is within the same air basin.



### 5.4 **Regulatory Needs in Nonattainment Areas**

Comment:

Three state /local commenters (0018.1, 0045.1, 0051.1) indicated that the proposed NSR program for Indi an cou ntry does not go far enough for Indian country located in nonattainment areas. Commenters 0018.1 and 0045.1 specifically recommended that attainment plans be developed and implemented for Indian country located in nonattainment areas.

One of the c ommenters (0018.1) stated EPA should promulgate and implement a full set

of rules for Indian country areas that are in nonattainment areas or whose emissions may impact nonattainment areas, which should include RACT, other applicable CAA requirements, and enough additional rules to assure attainment in the affected area. The commenter believes thatReview of New Sources and Modifications in Indian Country Response to Comments

145 EPA has a moral duty to protect Indian residents to the same extent as state and local agencies are required to protect their own residents, i.e., by assuring t imely attainment. The commenter asserted that EPA has an obligation to regulate sources in Indian country as needed to assure attainment in areas affected by emissions from these sources, given that state and local authorities are very limited in their ab ility to do so. The commenter also noted that EPA Region X has promulgated a limited set of rules applicable in Indian country that go beyond NSR, and suggested that this could be carried out and expanded by the EPA Regional Offices.

The other two comme nters (0045.1, 0051.1) pointed out that, even with implementation of the proposed Indian country NSR program, existing sources in Indian country will be unregulated even though they operate within the same air basins as sources subject to all state
and fed eral CAA requirements for nonattainment areas. The commenters asserted that the result is a serious inequality in air pollution regulation and a significant potential impact

– untouchable by state and local air quality regulators

– on the air quality in a reas already having degraded air quality. As an example, the commenters noted that on one side of the Indian country boundary, a facility can operate large existing industrial equipment, such as boilers and internal combustion engines, with large quantiti es of uncontrolled emissions, while on the other side of the boundary line, the same type of facility has made significant expenditures for pollution control equipment

to reduce emissions.

The latter two commenters (0045.1, 0051.1) believe that sources i n Indian country should comply with provisions that are consistent with those of the SIP of the bordering state or local agency. One of the commenters (0045.1) suggested that these requirements should be embodied in a TIP that requires compliance with the relevant SIP. Because the SIP rules have already been drafted and implemented by the state or locality, the commenter believes that it would require relatively little effort to develop effective trib al rules to mirror the SIP. The second of these

commen ters (0051.1) requested that EPA consider adopting, as the FIP for each respective area of Indian country, the SIP that has been adopted by the adjacent state or local agency. This commenter pointed out that such SIPs have already been demonstrated to con tain the necessary components to attain the NAAQS for the area, which is the same air basin in which the Indian
country areas are located.

Response:

In this final rule, we are establishing a major NSR program for new major sources and major modifications at existing major sources in nonattainment areas of Indian country at

40 CFR 49.166 through 49.175. This program is designed to meet the requirements of part D of

Title I of the Act, and, as proposed, sources subject to this program would be required to comply with the requirements of 40 CFR part 51, Appendix S (Appendix S).

Appendix S is titled “Emission Offset Interpretative Ruling” and sets forth preconstruction review requirements for major sources and modifications locating in

nonattainment areas wh ere the state does not have an EPA

- approved nonattainment major NSR program. In general, Appendix S is a transitional nonattainment major NSR program that covers the period after an area has been newly designated as nonattainment, up until the time

that t he state has amended its SIP’s nonattainment major NSR program, as needed, to addressReview o f New Sources and Modifications in Indian Country Response to Comments

146 the new nonattainment area. The requirements under Appendix S are essentially the same as our requirements for state nonattainment major NSR programs at 40 CFR 51.165.

We are finalizing our proposal to apply Appendix S to nonattainment areas in Indian country for a number of reasons. First, Appendix S generally applies in nonattainment areas where there is no approved nonattainment major NSR program, and since no trib e currently has such a program, we believe that Appendix S should also apply in Indian country. Second, EPA Regional Offices (which will be implementing the program until an EPA

- approved implementation plan is in place) and owners/operators of several maj or sources in Indian country are familiar with the implementation and provisions of Appendix S. In addition, we believe it is appropriate to apply Appendix S provisions in Indian country for administrative

convenience.

We considered and rejected the option of amending Appendix S to extend its application to Indian country, since we believe that sources in Indian country are more likely to look for regulations applicable to them under part 49, which is solely dedicated to regulations that apply

in Ind ian country. We also considered drafting a parallel major NSR regulation to apply to sources in Indian country, but rejected this option since it would essentially re

- propose Appendix S provisions, which have been in effect outside of Indian country for m any years. We wanted to avoid any potential confusion or possible perception that these parallel regulation requirements would be different than the Appendix S requirements.

Therefore, we believe this program will ensure protection of air quality in Indi an country consistent with the requirements that apply to state programs.

In addition, and as noted elsewhere, EPA continues to support interested tribes’ efforts to seek TAS eligibility and program approval for their own NSR programs. As appropriate, s uch tribes may look to their surrounding states’ SIPs as guides in developing their own programs. However, eligible tribes are not required to so do. The EPA does not believe it would be appropriate to simply adopt existing SIP requirements for the surro unding states into this FIP for each area of Indian country. As noted elsewhere, state requirements generally do not apply under the Act in Indian country and may not have been developed with tribal involvement or with Indian country in mind. The EPA bel ieves that reliance on Appendix S requirements is the most efficient and appropriate means of implementing the federal program throughout Indian country until such time as EPA approves an implementation plan for a particular area.



### 5.5 **Statutory and Executiv e Order Reviews** 

5.5.1 Regulatory Flexibility Act (RFA) Review

Comment:

One trib al commenter (0038.1) believes that EPA has grossly underestimated the number

of minor sources on r eservations nationwide. The commenter stated that utilizing data from

11 emissio n inventories is inadequate for estimating sources and the variability of sources fromReview of New Sources and Modifications in Indian Country Response to Comments

147 r eservation to r eservation. For example, the commenter pointed out that Leech Lake alone has over 250 gas stations, while Fond du Lac has only three.

Another trib al commenter (0044) indicated that EPA may wish to reconsider the method used to determine types of minor sources in Indian country and the corresponding number of affected small business. The commenter believes that because EPA used only 11 trib al emission inventories to project the expected number of affected small business and estimate costs incurred, it is very likely that the costs incurred by these small businesses will be much greater

than estimated.

One industry commenter (0022.1) also thinks that E PA has not adequately addressed the impacts to small businesses. The commenter asserted that m any small businesses operating minor sources will be regulated for the first time by EPA’s proposed minor NSR rule because of the low applicability thresholds. The commenter believes that many, if not all, oil and gas operators in Indian country will be subject to these new requirements; many of these operators are small businesses. The commenter stated that many will have to hire consultants to determine applic ability and comply with the proposed rule because they do not have the knowledge or expertise on air issues. The commenter questioned whether EPA addressed this issue in the cost impact analysis and urged EPA to make the proposed rule as straightforward a nd simple as possible to help small businesses comply without the aid of a consultant.

Response:

We understand there is some uncertainty about the number of minor sources located on Indian country because we currently lack emission inventory data for all sources located in Indian country. Nevertheless, we revised the economic impact analysis between the proposal and final rule to account for better inventory data we gathered about sources located in Indian

country. In addition, t o address concerns about the lack of inventory data, we are finalizing procedures that will require sources to register after the effective date of the rule to better understand the emission sources in Indian country. In addition, the phased

- in implementation of

the rule will al low us to provide adequate outreach to small businesses in Indian country with the hope that the need of some sources to hire consultants to comply with the rule will be
minimized. The EPA R egional O ffices will also be available to help sources comply wit h the requirements of the rules as needed

.



### 5.5.2 Executive Order 12866 and 13211 Review

Comment:

One industry commenter (0022.1) does not believe that EPA has fully addressed Executive Orders 12866 and 13211 as they relate to the impacts of the proposed rule on the regulated community. Specifically, the commenter does not believe that EPA has made an adequate assessment of the effects of the proposal on the nation’s energy supply, distribution, or use of energy, or on the cost and benefit to industry. The c ommenter indicated that the proposed action has the potential to adversely impact the nation’s energy supply, distribution, and use byReview o f New Sources and Modifications in Indian Country Response to Comments

148 impeding necessary domestic energy development because of delays and increases in the cost of drilling and producing oil and natural gas. The commenter urged EPA to use its discretion to implement air programs in Indian country through existing state programs (especially in Oklahoma) to avoid inconsistencies, inefficiencies, and confusion within the regulated community.

Re sponse:

We disagree with this commenter . The number of projected new sources in the energy sector due to this rule is a small share (about 1 percent) of the total number of energy sector facilities nationwide. Therefore, EPA does not believe that this action will have a significant effect on energy production. In addition, EPA’s cost analysis, presented in the Economic Impact Analysis, estimates the total annualized cost of the rule will be substantially less than the $100 million cost and/or benefits trigger identified in E xecutive O rder 12866 and thus this action is not considered an “economically significant regulatory action.” With the final rule not being a economically significant regulatory action, it is not considered a significant energy actio n.



### 5.6 **Miscellaneous Comments on the Proposal**

Comment:

One industry commenter (0028.1) indicated that the proposed rule does not address the relationship between permits issued under the proposed rule, and issuance or revision of Title V operating permits. Specifically, the commenter asked how permits or exemption determinations under this rule are to be incorporated into a major source Title V permit. Once a permit is issued under this program and construction or modification is authorized will the permi ttee have to revise its Title V permit before operation of that source commences?

Response:

The comment is unclear. Title V permits or renewals are issued to major sources in

Indian c ountry pursuant to 40 CFR part 71 provisions and will include all NSR requirements as appl icable requirements. After a source is approved to construct o r modify its operations under

a nonattainment major NSR major source permit, a source can then commence operation and would have up to 12 months to apply for a Title V perm it. Sources that currently have

nonattainment major NSR permits under a source

- specific FIP w ill not have to revise their permits unless they propose a modification that would cause their nonattainment major NSR and subsequently their Title V permit to ch ange.

Comment:

One private citizen (0015) commented that the State of Idaho has a huge program with an annual grass burn on the local Indian r eservation. The commenter state d that the density of the smoke regularly exceeds EPA standards and should be managed.Review of New Sources and Modifications in Indian Country Response to Comments

149 Response:

Although we agree smoke management may be very important to address air quality, the preconstruction permitting requirements included in this rule do n o t apply for this type of air pollution source. However, EPA can collaborate with this commenter and other interested parties to address air quality burning under other C AA provisions.

Comment:

One private citizen (0019) contended that “we” do not need any more regulations until the rest of the world catches up with ours.

Respons e:

We disagree with this commenter. The EPA has a general obligation under the Act to ensure the protection of air quality throughout the Nation, includ ing throughout Indian country Prior to this action, there has been no federal permitting mechanism fo r minor sources in Indian country and for major sources in areas of Indian country that are designated as not attaining the NAAQS. These final rules will fill this regulatory gap. In addition, these rules will provide regulatory certainty to allow for en vironmentally sound economic growth in Indian country.

Comment:

Thre e tribal commenter s (0104 , 0129.1, 0130.1 ) requested that EPA move the NSR rule

forward based on their tribes’ circumstances

. One of t he commenter stated that Indian country

needs to s ee the rule finalized to close this loophole and allow tribes to assume delegation of the program and also have enforcement authority.

Response:

We agree that it is important to fill the gaps in the NSR program in Indian country. Accordingly, we are is suing the final rule. See section 4.2 of this document for the discussion of delegation and enforcement authority.