# arT 14\994

SUBJECT: UNITEDSTATESENVIRONMENTALPROTECTION AGENCY WASHINGTON,D.C.

Part D New Source Review (part Areas Requesting Redesignation

Nichols

## ~~~~nt Admini trator for Air and Radiation**(~101)** MEMORANDUM

FROM:

TO: Director, Air, Pesticides andToxics Management Division, Regions I and IV Director, Air andWaste ManagementDivision, Region II Director, Air, Radiation and Toxics Division, Region III Director, Air and Radiation Division, Region V Director, Air, Pesticides and Toxics Division Region VI Director, Air andToxics Division, Regions VII, VIII, IX, and X

I. Introduction

with this memorandum, EPAis amending one aspect ofguidance issued September 4, 19921and September 17, 19932regarding requirements for nonattainment areas requesting redesignation to attainment. In these previous memoranda, EPAindicated that States must submit and receive full approval of any part D NSR regulations that were required by the Act to be submitted to EPA prior to or at the time ofthe submission ofa complete redesignation request. The EPAhas reconsidered that policy, however, and is establishing a new policy underwhich

1Memorandum entitled, "Procedures for Processing Requests to Redesignate Areas to Attainment," from John Calcagni, Director, Air QualityManagement Division, to Regional Air Division Directors.

2Memorandum entitled, "SIP Requirements for Areas sUbmitting Requests for Redesignation to Attainment ofthe Ozone and CO NAAQS On or After November 15, 1992," from Michael H. Shapiro, Acting Assistant Administrator for Air and Radiation, to Regional Air Division Directors.



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nonattainment areas may be redesignated to attainment notwithstanding the lack of a fully-approved part D NSRprogram, provided the program is not relied upon for maintenance. In addition, EPA is not requiring that existing part D NSRrules be placed in the contingency portion ofthe maintenance plan pursuant to section 175A ofthe Act. As discussed below, however, EPAbelieves its newpolicy will assure that the statutory goals ofpart D NSRand section 175Ato protect and maintain the NAAQS are achieved.

The EPAbelieves that this newpolicy is justifiableunder the Agency's general authority to establish de minimis exceptions to statutory requirements where the application ofthe statutory requirements would be oftrivial or no value environmentally. [See Alabama Power Co. v. Costle, 636 F.2d 323, 360-61 (D.C. Cir. 1979).]

II. Background/Clean AirAct Requirements

section 107(d)(3)(E) of the Act requires that a State have in place a fully-approved SIP meeting all the requirements applicable to a nonattainment area under section 110 and part D oftitle I ofthe Act in order for the area to be redesignated to /- attainment.

In addition, section 175Arequires that the area must have a fully-approved maintenance plan containing contingency provisions, as necessary, to promptly correct any violation of the applicable NAAQS that occurs after redesignation ofthe area. At a minimum, the contingency planmust "include a requirement that the State will implement all measures with respect to the control ofthe air pollutant concernedwhichwere contained in the State implementation plan for the area before redesignation ofthe area as an attainment area."

The NSkrequirements are contained in section 110(a)(2)(C) and in parts Cand Dof title I ofthe Act. Broadly speaking, section 110(a)(2)(C) of the Actmandates the development of a preconstruction review program to assure that the construction or modification of any stationary source is consistentwith attainment ofthe NAAQS. The nonattainment NSRprogram in part D NSRand the attainment area prevention of significant deterioration (PSD) program in part Capply to major new sources andmodifications ofexisting major sources. (Implementing regulations that set forth minimum requirements for State or local programs and Federal permitting programs have been promulgated at 40 CFRpart 51 subpart I and appendix S, and 40 CFR section 52.21, respectively.)

To assure that major new or modified sources do not interfere with reasonable further progress towards attainment, nonattainment area part D NSRrequires installation of control3 technology representing the lowest achievable emissions rate (LAER) and emission offsets. To prevent "clean air" areas from significant degradation, the PSD programrequires installation of best available control technology (BACT) and modeling to show that the new ormodified source will not cause or contribute to violation ofa NAAQS or a PSD air quality growth increment. Previously, EPA interpretedtheseprovisions together to require that any area seeking redesignation to attainment must have fUlly-approved part D NSRrules as part ofthe required fully-approved SIP. In addition, upon redesignation, the part D NSRrules were to be placed in the maintenance plan contingency provisions in accordance with section 175A ofthe Act unless the
area needed to continue implementing part D NSRas one element of the maintenance strategy.

III. NSRPolicy and Legal Rationale

The EPAnow believes that a de minimis exception to the requirement of section 107(d)(3)(E) for part D NSR is justifiable because requiring the adoption and full approval ofa part D NSR program as a prerequisite to redesignationwould not be of significant environmental value in certain circumstances. The r-' EPAhas reconsidered its earlier position because, once an area is redesignated to attainment, the part D NSRprogrammay be replaced by the corollary PSDprogram, if it is shown through the maintenance demonstration that the area will maintain without part D NSRand becausepart D NSRneed not become part ofthe contingency plan.

A. Preconstruction Review Programs in Attainment Areas

There are several provisions in the Act and in EPA's regulations that require preconstruction review of new or modified major sources in attainment areas to assess the impact ofthe proposed emissions increases on the applicable NAAQS. These include the PSD programwhich covers 100 ton per year (tpy)
or 250 tpy or greater sources (depending on the source category), the preconstruction review requirements of 40 CFR 51.165(b) that
cover 100 tpy or greater sources, and the Interpretive Offset Rule. As to ozone, there are some particular requirements that apply. The EPAbelieves these programs will ensure that major
new sources and modifications are given adequate preconstruction review.

After redesignation to attainment, state PSD rules, or Federal PSD rules in a delegated program, must ensure, as required by sections 165(a)(3)(B) and 110(a)(2)(C) of the Act, that preconstruction review of new and modified major sources will prevent increases in emissions that would cause or contribute to violations of the NAAQS. [See 40 CFR 51.166(k), 40 CFR 52.21(k).]4

In addition, EPA's regulations at 40 CFR 51.165(b) require that SIP's containpreconstruction review requirements that apply to new ormodified 100 tpy or greater sources ofa pollutant in areas designated attainment orunclassifiable for the pollutant in cases where the new or modified source would contribute to a violation of a NAAQS. This requirement provides for preconstruction review for sources that are exempt from PSD due to PSD's higher (250 tpy) major source threshold for certain
source categories.

In the absence of SIP prov1s1ons that comply with 40 CFR 51.165(b) or a part 0 NSRprogram, States wouldhave to use the Interpretive OffsetRule at 40 CFR 51 appendix S as a surrogate rule for permitting new and modified major sources in these attainment areas. (See 45 FR 31310, May 13, 1980.)

For S02' PM-10, N02, and CO, EPAhas established levels of ambient impacts to determine whether the major new ormodified
source would cause or contribute to a violation. Where the
source is found to cause or contribute to a violation, the source would be sUbject to more stringent technology and emissions mitigation requirements of appendix S or a 40 CFR 51.165(b) program.
with particular respect to ozone, because ofthe difficulty in modeling the impact of emissions from specific sources on ozone formation, EPAregulations (40 CFR 51.165(b)(3) and appendix S] do not fully address how emissions of ozone precursors should be treated to assure thatmajor new or modified
sources do not cause or contribute to a NAAQS violation. Nevertheless, ifpreconstructionmonitoring or other information indicates the area is not continuing to meet the standard after redesignation to attainment, appendix S or a 40 CFR 51.165(b) programwould also apply. The EPAbelieves that in any area that is designated or redesignated as attainment under section 107, but experiences violations of the NAAQS, these provisions (and any implementing SIP provisions) should be interpreted as requiring major new or modified sources to obtainVOC emission offsets of at least a 1:1 ratio, and as presuming (consistent with section 182(f)] that 1:1 NOxoffsets are necessary.3

In addition, attainment (PSD) plans require that major new and modified sources apply BACT. Generally, BACT differs from LAERby enabling permitting authorities to justify, based on

3The EPA is in the process ofrev1s1ng EPA's rules for NSR and PSD, some ofwhich will replace appendix S. However, the proposed revisions will not change the substantive permitting requirements where an attainment area is violating the ozone NAAQS.

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economic, energy, and environmental impacts, the use of control technologies less effective than the most stringent available. In an area that is notmeeting the NAAQS, EPAbelieves that due to consideration ofthe NAAQS violations, the state may impose a more stringent level ofcontrol thanmight be otherwise selected
as BACT. [See Draft New SourceReviewManual, page 8.54 (October 1990). ]

Taken together, these preconstruction reviewprograms can assure thatmajor new or modified sources achieve the statutory goals ofpart D NSRand the maintenance provisions of section 175A.

B. Part D NSRand Contingency Provisions Requiring the full approval of a part D NSRprogramwould
ensure that the programwould become a contingency provision in the maintenance plan. As stated above, pursuant to section 175A(d) and section 107(d)(3)(E), the contingency plan must contain, at a minimum, all measures contained in the nonattainment SIP. However, EPA is interpreting the term "measure" as used in section 175A(d) so as not to include part D NSR.

The term "measure" is not defined in section 175A(d) and Congress utilized that term differently in different provisions of the Actwith respect to the PSD and partD NSRpermitting programs. For example, in section 110(a)(2)(A), Congress required that SIP's include "enforceable emission limitations and other control measures, means, or techniques ••. as may be necessary or appropriate to meet the applicable requirements of the Act." In section 110(a)(2)(C), Congress required that SIP's include "a program to provide for the enforcement of the measures described in subparagraph (A), and regulation ofthe 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 required in parts Cand D (i.e., PSD and part DNSR)." [Emphasis added.]

Ifthe term "measures," as used in sections 110(a)(2)(A) and 110(a)(2)(C), had been intended to include PSD and part D NSR, there would have been no point to requiring that SIP's include both measures and preconstruction review under parts C and D (PSD
or part DNSR). Thus, in sections 110(a)(2)(A) and (C), it is apparent that Congress distinguished the requirement for "measures" from the requirement for preconstruction review programs. On the other hand, in other provisions ofthe Act, such as section 161, Congress appears to have included PSD within

,._ the scope of the term "measures."**.~.**



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The fact that Congress used the undefined term "measure" differently in different provisions ofthe Act indicates that the term is susceptible to more than one interpretation and that EPA has the discretion to interpret it in a reasonable manner in the context of section 175A. Inasmuch as Congress itselfhas used the term in a manner that excluded PSD and part D NSRfrom its scope, EPAbelieves it is reasonable to interpret "measure," as used in section 175A(d), not to include part D NSR. The reasonableness ofthis interpretation is further supported by the fact that PSD, a program that is the corollary ofpart D NSRfor attainment areas, goes into effect in lieu ofpart DNSR,4 and that, as discussed above, EPAintends to implement the PSD and otherNSRprograms in a way that will achieve the basic statutory goals ofpart D NSR. Therefore, EPAdoes not believe that part D NSRneed be part of an area's contingency plan.

IV. Other Required Programs

The EPA is not changing its previously statedpolicy with respect to the need for states to adopt and receive full approval of other programs required by the Act prior to or at the time of the submission of a redesignation request. The existence of a corollary program for attainment areas distinguishes part D NSR from other required programs under the Act, such as enhanced inspection and maintenance and reasonably available control technology (RACT) programs, which have no corollary program. Moreover, EPAbelieves that those other required programs are clearly within the scope ofthe term "measure" as used in section 175A.

For further information regarding part D NSRrequirements for areas redesignating to attainment, please contact Carla Oldham at (919) 541-3347; for general information about PSD requirements for attainment areas, contact Dennis Crumpler at (919) 541-0871.

cc: Air Branch Chief, Regions I-X

4EPA is not suggesting that NSRand PSD are equivalent, but merely that they are the same type ofprogram.