arT 1 4 \994

SUBJECT:

UNITED STATES ENVIRONMENTAL PROTECTION 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 and Toxics

Management Division, Regions I and IV

Director, Air and Waste Management Division,

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 and Toxics Division,

Regions VII, VIII, IX, and X

I. Introduction

with this memorandum, EPA is amending one aspect of guidance

issued September 4, 19921 and September 17, 19932 regarding

requirements for nonattainment areas requesting redesignation to

attainment. In these previous memoranda, EPA indicated 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 of the submission of a complete

redesignation request. The EPA has reconsidered that policy,

however, and is establishing a new policy under which

1Memorandum entitled, "Procedures for Processing Requests to

Redesignate Areas to Attainment," from John Calcagni, Director,

Air Quality Management Division, to Regional Air Division

Directors.

2Memorandum entitled, "SIP Requirements for Areas sUbmitting

Requests for Redesignation to Attainment of the 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.

@ Printed on Recycled Paper
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nonattainment areas may be redesignated to attainment

notwithstanding the lack of a fully-approved part D NSR program,

provided the program is not relied upon for maintenance. In

addition, EPA is not requiring that existing part D NSR rules be

placed in the contingency portion of the maintenance plan

pursuant to section 175A of the Act. As discussed below,

however, EPA believes its new policy will assure that the

statutory goals of part D NSR and section 175A to protect and

maintain the NAAQS are achieved.

The EPA believes that this new policy is justifiable under

the Agency's general authority to establish de minimis exceptions

to statutory requirements where the application of the statutory

requirements would be of trivial or no value environmentally.

[See Alabama Power Co. v. Costle, 636 F.2d 323, 360-61 (D.C. Cir.

1979) .]

II. Background/Clean Air Act 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

of title I of the Act in order for the area to be redesignated to

/- attainment.

In addition, section 175A requires 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 of the area.

At a minimum, the contingency plan must "include a requirement

that the State will implement all measures with respect to the

control of the air pollutant concerned which were contained in

the State implementation plan for the area before redesignation

of the area as an attainment area."

The NSk requirements are contained in section 110(a) (2) (C)

and in parts C and D of title I of the Act. Broadly speaking,

section 110(a) (2) (C) of the Act mandates the development of a

preconstruction review program to assure that the construction or

modification of any stationary source is consistent with

attainment of the NAAQS. The nonattainment NSR program in part D

NSR and the attainment area prevention of significant

deterioration (PSD) program in part C apply to major new sources

and modifications of existing major sources. (Implementing

regulations that set forth minimum requirements for State or

local programs and Federal permitting programs have been

promulgated at 40 CFR part 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 NSR requires installation of control
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technology representing the lowest achievable emissions rate

(LAER) and emission offsets. To prevent "clean air" areas from

significant degradation, the PSD program requires installation of

best available control technology (BACT) and modeling to show

that the new or modified source will not cause or contribute to

violation of a NAAQS or a PSD air quality growth increment.

Previously, EPA interpreted these provisions together to

require that any area seeking redesignation to attainment must

have fUlly-approved part D NSR rules as part of the required

fully-approved SIP. In addition, upon redesignation, the part D

NSR rules were to be placed in the maintenance plan contingency

provisions in accordance with section 175A of the Act unless the

area needed to continue implementing part D NSR as one element of

the maintenance strategy.

III. NSR Policy and Legal Rationale

The EPA now 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 of a part D NSR

program as a prerequisite to redesignation would not be of

significant environmental value in certain circumstances. The

r-' EPA has reconsidered its earlier position because, once an area

is redesignated to attainment, the part D NSR program may be

replaced by the corollary PSD program, if it is shown through the

maintenance demonstration that the area will maintain without

part D NSR and because part D NSR need not become part of the

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

of the proposed emissions increases on the applicable NAAQS.

These include the PSD program which 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 EPA believes 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).]
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In addition, EPA's regulations at 40 CFR 51.165(b) require

that SIP's contain preconstruction review requirements that

apply to new or modified 100 tpy or greater sources of a

pollutant in areas designated attainment or unclassifiable 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 NSR program, States would have to use the

Interpretive Offset Rule 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, EPA has established levels of

ambient impacts to determine whether the major new or modified

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 of the difficulty

in modeling the impact of emissions from specific sources on

ozone formation, EPA regulations (40 CFR 51.165(b) (3) and

appendix S] do not fully address how emissions of ozone

precursors should be treated to assure that major new or modified

sources do not cause or contribute to a NAAQS violation.

Nevertheless, if preconstruction monitoring 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)

program would also apply. The EPA believes 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 obtain VOC emission

offsets of at least a 1:1 ratio, and as presuming (consistent

with section 182(f)] that 1:1 NOx offsets are necessary.3

In addition, attainment (PSD) plans require that major new

and modified sources apply BACT. Generally, BACT differs from

LAER by enabling permitting authorities to justify, based on

3The EPA is in the process of rev1s1ng EPA's rules for NSR

and PSD, some of which 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 not meeting the NAAQS, EPA believes that due

to consideration of the NAAQS violations, the state may impose a

more stringent level of control than might be otherwise selected

as BACT. [See Draft New Source Review Manual, page 8.54 (October

1990) . ]

Taken together, these preconstruction review programs can

assure that major new or modified sources achieve the statutory

goals of part D NSR and the maintenance provisions of section

175A.

B. Part D NSR and Contingency Provisions

Requiring the full approval of a part D NSR program would

ensure that the program would 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 Act with respect to the PSD and part D NSR permitting

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 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

required in parts C and D (i.e., PSD and part D NSR)." [Emphasis

added. ]

If the 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 D NSR). 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 of the 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 of the 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 itself has used

the term in a manner that excluded PSD and part D NSR from its

scope, EPA believes it is reasonable to interpret "measure," as

used in section 175A(d), not to include part D NSR. The

reasonableness of this interpretation is further supported by the

fact that PSD, a program that is the corollary of part D NSR for

attainment areas, goes into effect in lieu of part D NSR,4 and

that, as discussed above, EPA intends to implement the PSD and

other NSR programs in a way that will achieve the basic statutory

goals of part D NSR. Therefore, EPA does not believe that part D

NSR need be part of an area's contingency plan.

IV. Other Required Programs

The EPA is not changing its previously stated policy 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, EPA believes that those other required programs are

clearly within the scope of the term "measure" as used in section

175A.

For further information regarding part D NSR requirements

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 NSR and PSD are equivalent, but

merely that they are the same type of program.