RESPONSE TO COMMENTS OF THE NATIONAL RESOURCES DEFENSE

COUNCIL TO EPA’S PROPOSED RULE TO CONDITIONALLY APPROVE OHIO’S CHANGES TO ITS NEW SOURCE REVIEW RULES.
The National Resource Defense Council (NRDC) commented on EPA’s proposal to conditionally approv e Ohio’s new source review (NSR) rule changes. NRDC primarily commented on the requirements of the federal NSR rules, not Ohio’s application of the federal requirements in its own rules. The more appropriate venue for these comments would have been when EPA public noticed our rule changes. However, this response to comment document contains responses to the entire range of comments in the letter submitted by NRDC on the May 11, 2005 proposal to conditionally approve Ohio’s NSR rule changes. Following ea ch point raised by NRDC in comment , EPA respon d s to the comment. Comment: I. Ohio's Adoption of EPA's 2002 New Source Review Rule A. Provisions in Ohio's Submission Prevent the State's Revised Plan From Meeting
- and Cause the Revised Plan to Interfere With
- the Applicable Requirements in Sections 110(a)(2)(C), 110(a)(2)(I), and 110(a)(2)(J) . Provisions in Ohio's submission contravene sections 165(a) and 169(2)(C) in part C of the Clean Air Ac t (CAA) and sections 171(4) and 172(a)( 5) in part D of the Act, thereb y preventing the permit program in the state's revised plan from being "as required in parts C and D," id. § 7410(a)(2)(C), from "meet[ing] the applicable requirements of . . . part C," id. § 7410(a)(2)(J), and from meet[ing] the applicable req uirements of part D." Id. § 7410(a)(2)(1) . The conflict is stark: Whereas sections 165(a), 169(2)(C), 171(4), and 172(a)(5) of the Act apply the preconstruction permitting requirements to all activities that fall within section I 11(a)(4)'s definition of "modification," id. §§ 7475(a) (applying preconstruction permitting provisions to all "construction"), 7479(2)(C) ("`construction' . . . includes the modification (as defined in section 7411(a) of this title) of any source or facility "), 7502(a)(5) ("plan provisions shall require permits for the construction . . . of new or modified major stationary sources"), 7501(4)( "`modified' mean[s] the same as the term `modification' as used in section 7411(a)(4) of this title"), the following provisions in Ohio's submission purport to exempt activities that fall within that statutory definition:
OAC 3745

- 31

- 01: (O) ("or shall equal the unit's potential to emit if operation of the new unit has begun") (Y) (lll)(4)(c) (111)(4)(d) (111)(5)(h) (111)(5)(i) (111)(5)(j) ( PPP)(1)(a)(vi)2

(PPP)(1)(a)(vii) (SSS)(3)(d) (CCCC) (RRRR) (ZZZZZ)(2)(h) ("57 FR 3946, Feb. 3, 1992 . . . 67 FR 80244, Dec. 31, 2002") (ZZZZZ)(2)(u) ("57 FR 3946, Feb. 3, 1992 . . . 67 FR 80244, Dec. 31, 2002") OAC 3745

- 31

- 21 : (E)(2) (E)(3) (E)(4) OAC 3745

- 31

- 30 (entirety) OAC 3745

- 31

- 31 (entirety) The United States Court

- of Appeals for the District of Columbia Circuit recently held that these very provisions

- as found in the EPA rule that the Ohio revision seeks to implement (see 70 Fed. Reg. at 24734/2, 24735/3)

- unlawfull y ex empt activities that fall within section 111(a)(4)'s definition of "modification ." New York v. EPA, 413 F .3d 3, 40 (D.C. Cir. June 24, 2005) (Attachment 20) ("because the plain language of the CAA indicates that Congress intended to appl y NSR to changes that increase actual emissions instead of potential or allowable emissions, we hold that EPA lacks authority to promulgate the Clean Unit provision, and we vacate that portion of the 2002 rule") ; id. at 41

- 42 ("we hold that EPA la cks authorit y t o create PCP exemptions from NSR, and we vacate those parts of the 1992 and 2002 rules . . . as contrary to the statute") . [Please note: EPA states that "Ohio also revised the rule language to require that electric utility steam generatin g unit actual emissions are to be based on potential to emit rather than representative actual annual emissions." 70 Fed. Reg. at 24735/3 . We do not find a provision meeting EPA's description in the referenced Ohio provision. See OAC 3745

- 31

- 01(C)(2) . If Ohio's submission does contain such a provision, and if the provision applies to determining whether a ph ys ical or operational change "increases the amount of any air pollutant emitted," 42 U.S.C. § 7411(a)(4), then the provision contravenes and interfere s with parts C and D of the CAA , because "the CAA indicates that Congress intended to apply NSR to changes that increase actual emissions instead of potential or allowable emissions." New York v. EPA, 413 F.3d at 40.] The presence of those provisions in O hio's revised permit program thus prevents the state's program from being "as required in parts C and D," 42 U.S.C. § 7410(a)(2)(C), from "meet[ing] the applicable requirements of . . . part C," id. § 7410(a)(2)(J), and from "meet[ing] the applicable requi rements of part D." I d. § 7410(a)(2)(I) . Therefore, EPA will exceed its authority under section 110(k)(3) and violate section 110( l ) if the agency approves Ohio's revised plan. Response: EPA responds that EPA’s rules were upheld by the court which revie wed them, State of New York et al. v. EPA , 413 F.3d 3 (D.C. Circuit, June 24, 2006) , with the exception of the pollution control project and clean unit provisions. Therefore , EPA’s rules (with the exceptions3

noted) are lawful , and Ohio’s rules based on th e EPA rules are also lawful and, for the reasons stated in the notice of final rulemaking, are being approved
. I n a November 15, 2005 letter , the OEPA withdrew its request for approval of the sections of the Ohio Administrative Code that correspond with t he vacated portions of EPA’s rules
. Furthermore, on June 2, 2008 OEPA removed the pollution control project and clean unit provisions from its rules. The action became effective June 30, 2008. EPA is not approving th ese section s into the SIP.

Comment: B. Other Provisions in Ohio's Submission Cause the State's Revised Plan to Interfere with Applicable Requirements Concerning Attainment and Reasonable Further Progress. Other provisions in Ohio's submission cause the state's revised plan to "interfere wi th [] applicable requirement[s] concerning attainment and reasonable further progress." Id. § 7410(1). Specifically , the following provisions in Ohio's submission cause the state's revised plan to interfere with the statutory requirements that a state plan provide for attainment, prohibit emissions that interfere with attainment or maintenance, and require reasonable further progress toward expeditious attainment, see id. §§ 7410(ax2)(C) ("provide for the . . . regulation of the modification and construction of an y s tationary source within the areas covered b y the plan as necessary to assure that national ambient air quality standards are achieved"), 7410(a)(2)(D)(i) ("contain adequate provisions . . . prohibiting" significant contribution to nonattainment

– or interference with maintenance

- of an y national ambient air quality standard in another state), 7502(c)(1) ("provide for attainment of the national ambient air quality standards"), 7502(c)(2), 7501(1), 7502(a)(2)(A)

- (B) ("require reasonable further progress" toward "attainment of the applicable national ambient air quality standard[s]" "as expeditiously as practicable") : OAC 3745

- 31

- 01: (D) (O) (I lI )(6) (SSS)(3)(a) (CCCC) (DDDD) (EEEE) (FFFF) (GGGG) (HHHH) (IIII) (JJJJ) (KKKK) (0000)4

(ZZZZZ)(2)(h) ("57 FR 3946, Feb. 3, 1992 . . . 67 FR 80244, Dec. 31, 2002") (ZZZZZ)(2)(u) ("57 FR 3946, Feb. 3, 1992 . . . 67 FR 80244, Dec. 31, 2002") OAC 3745

- 31

- 32 (entirety) As EPA continues to acknowledge, section 110(l) of the Act prohibits the agency from approving a state plan revision that would "allow[] emissions that are prohibited by the current SIP," unless EPA can uphold a demonstration by the state that "the emissions that are allowed b y i ts revised rule but are prohibited by the current SIP would not interfere with attainment or other applicable requirements." 70 Fed. Reg. 36901, 36903/3 (June 27, 2005); accord id. at 36903/2 ("EPA's first concern is that the expansion of exemptions from Ohio's opacit y l imits constitute[s] a relaxation that may interfere with a pplicable requirements and thus contravene Clean Air Act section 110(l)."); id. at 36903/2 ("[T]he revised rules allow excess opacity on occasions that excess opacity i s currently prohibited, without any compensating prohibitions of emissions that are curr ently allowed."); id. at 36903/3 ("EPA cannot approve such a revision that also includes a less stringent set of opacity l imits without a demonstration pursuant to section 110(1) that the revisions would not interfere with applicable requirements of the Cl ean Air Act."). The 2002 rule provisions that were not vacated b y the D .C. Circuit in New York v. EPA allow previously

- prohibited emissions

- increases to occur. See Petition for R econsideration of American Lung Association, et al. (May 8, 2003) (Attachment 8), at 1

- 93; Reconsideration Comments of NRDC, et al. (Aug. 28, 2003) (Attachment 10), at 3

- 17, 19

- 27; Final Opening Brief of Environmental Petitioners (Attachment 16), at 11

- 33, 45

- 47; Brief of Government Petitioners (Attachment 17) at 16

- 35, 44

- 47, 51

- 53 ; Final Reply Brief of Environmental Petitioners (Attachment 18) at 2

- 16, 21

- 23; Reply Brief of Government Petitioners (Attachment 19) at 2

- 15, 21

- 26; Abt. Associates, Nucor Steel Analy sis (Attachment 1); Abt. Associates, Mobile Joliet Analy sis (Attachm ent 2); Environmental Integrity P roject, Bright Lines or Loopholes? (Attachment 3); Affidavit of Craig A. Wright (Attachment 4); Affidavit of Dr. Iclal Atay (Attachment 5); Affidavit of Marc Allen Robert Cone, P.E. (Attachment 6); National Academ y of Publi c Administration, A Breath of Fresh Air (Attachment 7); General Accounting Office, EPA Should Use Available Data to Monitor the Effects of Its Revisions to the New Source Review Program (Attachment 9); Connecticut, et al. Reconsideration Comments (Attachme nt 11); Delaware Reconsideration Comments (Attachment 12) ; Environmental Integrity Project Letter to EPA (Attachment 13) ; William R. Moomaw, Assessment of "Reform or Rollback?" (Attachment 14); Environmental Integrit y P roject, Additional Results and Corr ections (Attachment 15). [Please note: The 2002 rule provisions considered by the D.C. Circuit in New York v. EPA were EPA regulations, not state ones. The court thus had no occasion to decide whether EPA could approve an y s tate's versions of an y of the 2 002 rule provisions consistently with section, 110(1) of the Act. Cf. 69 Fed. Reg. 54006, 54008/3 (Sept. 7, 2004) ("[C]ertain requirements in the submitted NSR program may not be needed to satisfy CAA NSR requirements for major sources and major modificati ons, but are necessary to provide EPA with the basis to approve the overall NSR program revision to supersede the existing SIP

- approved Clark County NSR program under section 110(1)") .]5

EPA does not deny this. See, e.g., Brief for Respondent United State s Environmental Protection Agency in New York v. EPA (filed Oct. 26, 2004) at 78

- 79 (estimating that, in practice, "the change in the method for calculating baseline actual emissions" will allow "a higher baseline" for a group of non

- electric utility sourc es that account for 3 percent of the total annual emissions

- increases from all existing and new non

- electric utility and electric utility sources in the United States); id. at 81 ("some small number of facilities may be able to increase emissions without b eing subject to NSR under the revised rule when they would not have been able to do so under the old rule"); EPA, Supplemental Analy sis of the Environmental Impact of the 2002 Final NSR Improvement Rules (Nov. 21 . 2002), at 14 ("the actual

- to

- projected ac tual test would reduce the number of sources who would need to take permit limits"). Accord New York v. EPA, 413 F .3d at 28 ("EPA acknowledges that fewer changes will trigger NSR under the 2002 rule than under the 1980 rule"). Cf. 70 Fed. Reg. at 36903/2 ("Ohio is correct that its rule revisions do not increase the total amount of allowable time of excess capacity (i.e. opacity between 20 and 60 percent), nor do the revisions alter the 60 percent opacity cap. However, the revised rules allow excess opacity on occasions that excess capacity is currently prohibited, without any compensating prohibition of emissions that are currently allowed.") (emphasis in original). The above

- listed provisions in Ohio's revised permit program track those 2002 rule provisio ns, see, e.g., 70 Fed. Reg. at 24739/2 ("This section of the Ohio permit to install rules regarding PAL applicability is consistent with 40 C .F.R. 51 .166(w) and 40 C.F.R. 51 .165(f)."), just as Ohio's preexisting permit program tracked EPA's preexisting rules. State plans like Ohio's currentl y do not guard against the new emissions increases allowed b y the weakened permit provisions . See Brief of Government Petitioners (Attachment 17) at 21

- 24, 44

- 47; Reply Brief of Government Petitioners (Attachment 19) at 6, 9; Abt. Associates, Nucor Steel Analysis (Attachment 1); Abt. Associates, Mobile Joliet Analy sis (Attachment 2); Environmental Integrity Project, Bright Lines or Loopholes? (Attachment 3); Affidavit of Craig A. Wright (Attachment 4); Affidavit of Dr . Iclal Atay (Attachment 5); Affidavit of Marc Allen Robert Cone, P.E. (Attachment 6); National Academ y of Public Administration, A Breath of Fresh Air (Attachment 7); General Accounting Office, EPA Should Use Available Data to Monitor the Effects of Its R evisions to the New Source Review Program (Attachment 9); Connecticut, et al. Reconsideration Comments (Attachment 11) ; Delaware Reconsideration Comments (Attachment 12); Environmental Integrity P roject L etter to EPA (Attachment 13); William R. Moomaw, As sessment of "Reform or Rollback? " (Attachment 14); Environmental Integrity P roject, Additional Results and Corrections (Attachment 15). EPA does not deny this either. See, e.g., Brief for Respondent United States Environmental Protection Agency in New Yo rk v. EPA at 77 ("State SIPs must include whatever provisions are necessary to ensure that sources do not contribute significantl y t o nonattainment in other States. 42 U.S.C. § 7410(a)(2)(D) . EPA may enforce this requirement b y compelling States to modify SIPs that are inadequate.") (emphasis added).6

As it is revised by the above

- listed provisions, then, Ohio's plan " allows emissions that are prohibited b y the current SIP ." 70 Fed. Reg. at 36903/3 . Ohio nevertheless has made no "demonstration that the e missions that are allowed by its revised rule but are p rohibited by the current SIP would not interfere with attainment or other applicable requirements." Id. Indeed, EPA does not propose to find that Ohio has made such a demonstration. See 70 Fed. Reg. at 4735/3

- 39/3. Instead, EPA proposes to approve the above

- listed Ohio provisions on the basis of its finding that those provisions are consistent with the parallel ones found in the agency's 2002 rule. See, e.g., id. at 24739/2 ("This section of the Ohio pe rmit to install rules regarding PAL applicability is consistent with 40 C.F.R. 51 .166(w) and 40 C.F .R. 51 .165(f) . Therefore we propose to approve this rule."). But EPA has never made, or even proposed to make, a finding that revising Ohio's permit pro visions so that they track the non

- vacated provisions of the 2002 rule " would not interfere with attainment or other applicable requirements. " 70 Fed. Reg. at 36903/3. The most the agency has been able to assert (without any substantiation whatsoever) is that "implementation of the 2002 rule" as a whole (i.e., before large portions of it were vacated) will be "environmentally beneficial, or at worst, neutral" on a national scale. Brief for Respondent United States Environmental Protection Agency in New York v. EPA at 76. Neither Ohio nor EPA has analyzed the particular impact of each part of the rule, much less the particular impact that each part's adoption by Ohio would have on that state's compliance with the requirements that it provide for attainment, prohibit emissions that interfere with attainment or maintenance, and require reasonable further progress toward expeditious attainment. See 42 U .S.C. §§ 7410(a)(2)(C), 7410(a)(2)(D)(i), 7501(1), 7502(a)(2)(A)

- (B), 7502(c)(1) 7502(c)(2). This despite the D.C. Circuit's observation that the "invalidation of portions of the new rule may affect [the rule's] overall environmental impact as compared to the old rule," New York v. EPA, 413 F .3d at 43, and despite the court's corresponding admonishment:

In light of our vacatur of the Clean Unit and PCP portions of the 2002 rule, . . . on which EPA relied in concluding that "collectively , the five NSR [provisions in the 2002 rule] will improve air quality ," ENVIRONMENTAL IMPACT ANALYSI S at 2, there is a heightened need for EPA to have sufficient data to confirm that the remaining portions of the 2002 rule do not result in increased emissions that harm air quality and public health. Id. at 30

- 31. Indeed, EPA cannot make a finding that revising Ohio's permit provis ions so that they track the non

- vacated provisions of the 2002 rule "would not interfere with attainment or other applicable requirements," 70 Fed. Reg. at 36903/3, because the opposite is plainly true. See NRDC, et al., Petition for Reconsideration of 200 3 NSR Rule (Attachment 22)7

at 7 ("NSR serves as a key component of the statutory program for attaining health

- based air quality standards

– an objective the Supreme Court has described as the `heart' of, and `central' to, the Act.") (quoting Train v. NRDC, 421 U.S . 60, 66 (1975)); Petition for Reconsideration of American Lung Association, et al. (Attachment 8) at 1

- 93; Reconsideration Comments of NRDC, et al. (Attachment 10) at 3

- 17, 19

- 27; Final Opening Brief of Environmental Petitioners (Attachment 16) at 11

- 33, 45

- 47; Brief of Government Petitioners (Attachment 17) at 16

- 35, 44

- 47, 51

- 53; Final Reply Brief of Environmental Petitioners (Attachment 18) at 2

- 16, 21

- 23; Reply Brief of Government Petitioners (Attachment 19) at 2

- 15, 21

- 26 ; Abt. Associates, Nucor Steel Analy sis (Attachment 1); Abt. Associates, Mobile Joliet Analy sis (Attachment 2); Environmental Integrity Project, Bright Lines or Loopholes? (Attachment 3); Affidavit of Craig A. Wright (Attachment 4); Affidavit of Dr. Iclal Atay (Attachment 5) ; Affidavit of Marc Allen Robert Cone, P.E. (Attachment 6); National Academ y of Public Administration, A Breath of Fresh Air (Attachment 7); General Accounting Office, EPA Should Use Available Data to Monitor the Effects of Its Revisions to the New Source Review Program (Attachment 9); Connecticut, et al. Reconsideration Comments (Attachment 11) ; Delaware Reconsideration Comments (Attachment 12); Environmental Integrity Project Letter to EPA (Attachment 13); William R. Moomaw, Assessment of "Reform or Rollback? " (Attachment 14); Environmental Integrity Project, Additional Results and Corrections (Attachment 15). Therefore, finalizing the EPA rulemaking proposal at issue here would violate section 110(1) of the Act. See 70 Fed. Reg. 35946, 35956/1 (June 21, 2005) ("[T]he State has not made a demonstration under section 110(1) of the CAA that the conversion of the vehicle I/M program in the Cincinnati area (and in the Dayton area) to a contingency measure will not interfere with attainment of the affected NAA QS or with compliance with other requirements of the CAA. Therefore, we cannot approve, at this time, the State's request to make vehicle I/M a contingency measure in the Cincinnati area 1

- hour ozone maintenance plan.") ; id at 35951/2 ("EPA must complete rulemaking finding that . . . section 110(1) of the CAA ha[s] been satisfied before Ohio discontinues the E

- Check program and converts E

- Check to contingency measures in the ozone maintenance plans for the Cincinnati and Dayton areas.") ; id. at 36949/3

- 50 /1 ("We are deferring this discussion until we review Ohio's section 110(1) demonstrations of non

- interference with attainment of other NAAQS and with compliance with the requirements of the CAA for this area. Through that future rulemaking, the public wil l be given an opportunity to review and comment on Ohio's new emission projections for 2010 and 2015 .") ; id. at 35954/2 ; id. at 35955/2; id. At 35955/3; id. at 35958/2 . See also 70 Fed. Reg. 46127, 46128/2 (Aug. 9, 2005) (in part because "the revised [ Ohio] rules provide modified approaches to regulating fugitive emissions from roadways, parking areas, and storage piles for the Ford Motor Company and I SG facilities," EPA "deferred rulemaking on the Cleveland area emission limits pending receipt of a fur ther assessment of the impact of the revisions on attainment of the annual air quality standard for particles 10 microns and smaller, known as PMI0.") ; id. at 46129/1 ("revised. emission estimate is necessary " for Ohio's modified regulation of "the I SG fa cility's storage piles," because the revised rules do not have "equivalent stringency as the former rules") .8

Response: Section 110(l) of the CAA states that “[t]he Administrator shall not approve a revision of a plan if the revision would interfere wit h any applicable requirement concerning attainment and reasonable further progress ... or any other applicable requirement of this chapter.” CAA , 42 U.S.C. § 7410(l). In “Approval and Promulgation of Implementation Plans; NSR ; State of Nevada, Clark Count y Department of Air Quality and Environmental Management,” 69 Fed. Reg. 54006 (Sept. 7, 2004), the EPA stated that section 110(l) does not preclude SIP relaxations. The Agency stated that Section 110(l) only requires that the “relaxations not interfere wi th specified requirements of the Act including requirements for attainment and reasonable further progress,” and that therefore, a state can relax its SIP provisions, if it is able to show that it can “attain or maintain the NAAQS and meet any applicable r easonable further progress goals or other specific requirements.” 69 Fed. Reg
. at 54011

- 12.

T he Ohio Proposed NSR Reform Rules track the federal NSR Reform Rules, and EPA previously determined that the implementation of the federal NSR Reform Rules will be environmentally beneficial. (See 68 Fed. Reg. at 44620 and 63021). The EPA’s Supplemental Analysis for the federal NSR Reform Rules estimated that there are likely to be reductions in emissions of volatile organic compounds (VOC) due to the use of PA Ls. A quantitative methodology was applied in the Supplemental Analysis to three industrial categories, concluding that 3,400 to 17,000 tons of VOC emission reduction per year were likely nationwide in just these categories. The three industrial categori es selected were Automobile Manufacturing (SIC 3711), Pharmaceutical Manufacturing (SIC 2834), and Semiconductor Manufacturing (SIC 3674). These were chosen based on the Flexible Permit Pilot Evaluation Report 1 that concluded facilities in these source c ategories were likely to adopt a PAL because of frequent operational, time

- sensitive changes, and because of opportunities for economical air pollution control measures. Although Ohio has minimal pharmaceutical manufacturing or semiconductor manufacturing , it does have several automobile manufacturing facilities which may take advantage of the PAL option under the federal NSR Reform Rules . The Supplemental Analysis determined that 50

- 75% of

1 The full report, “Evaluation of Implementation Experiences with Inno vative Air Permits,” is included in the Supplemental Analysis as Appendix A.9

the Automotive Manufacturing facilities would seek a PAL and each of facility would reduce its emissions by 10

- 33%. The following tables evaluate the potential affects of a PAL in the automobile manufacturing sector in Ohio. Facility Name VOC (tpy) HONDA OF AMERICA MANUFACTURING INC 1,606.96 HONDA OF AMERICA EAS T LIBERTY PLANT 456.09 DAIMLERCHRYSLER CORP 413.98 FORD MOTOR COMPANY

- OHIO ASSEMBLY PLANT 679.15 GENERAL MOTORS CORPORATION

- MORAINE ASSEMBLY 676.14 KENWORTH TRUCK COMPANY 164.60 GM NAO/SCG LORDSTOWN ASSEMBLY 1,791.59 DAIMLERCHRYSLER CORP 503.78 

## If 75% of Ohio’s Automotive Manufacturing

sources take a PAL 10% VOC Reduction 433.61 VOC in tpy 33% VOC Reduction 1430.9 VOC in tpy 

## If 50% of Ohio’s Automotive Manufacturing

sources take a PAL 10% VOC Reduction 231.52 VOC in tpy 33% VOC Reduction 7 64.00 VOC in tpy 10% reduction at largest single source 179.16 VOC in tpy 33% reduction at largest single source 591.22 VOC in tpy Using the same methodology used in the Supplemental Analysis to assess the emissions benefits of the Ohio’s NSR Reform Rules in Ohio as EPA used to assess the benefits nationally, we conclude that the PAL option would result in a net reduction of between 179.16 and 1430.9 tons of VOC per year. It is more difficult to assess the environmental impacts of the actual

- to

- pr ojected

- actual test and the “2 in 10” baseline provisions. The Supplemental Analysis determined that there is a slight national environmental benefit brought about by these NSR reform provisions. However, in Ohio, sources undergoing construction which ar e not subject to the best available control technology or lowest achievable emission reduction NSR requirements will need to10

comply with Ohio’s best available technology provisions under Ohio Administrative Code 3745

- 31

- 05(A)(3). Overall, we expect change s in air quality as a result of implementing PALs, actual

- to

- projected

- actual test and the “2 in 10” baseline provisions in Ohio to be somewhere between neutral and providing modest contribution to RFP. Accordingly, EPA determines that these changes will not interfere with any applicable requirement concerning attainment and reasonable further progress or any other applicable requirement of the CAA. Comment: C. The Same Provisions in Ohio's Submission Violate Section 193 in Part D. The same Ohio provisi ons discussed in part I.B., supra, violate the Clean Air Act's part D, section 193 ban on "backsliding" in nonattainment areas. Section 193 declares, in part, that

No control requirement in effect . . . before November 15, 1990, in any area which is a no nattainment area for an y air pollutant may be modified after November 15, 1990, in any manner unless the modification insures equivalent or greater emission reductions of such air pollutant. 42 U.S.C. § 7515. [Please note: In New York v. EPA, the D.C. Ci rcuit dismissed as unripe the government petitioners' claim that EPA's promulgation of the 2002 NSR rule violated section 193, on the grounds that EPA had not yet taken action on any state regulations promulgated in response to that rule. 413 F.3d at 42. E PA is attempting to take such action now, in this rulemaking.] NSR is a "control requirement," because it controls emissions increases. See 67 Fed. Reg. at 80187/2 (Dec. 31, 2002) ("The NSR provisions of the Act are a combination of air quality planning and air pollution control technology program requirements for new and modified stationary sources of air pollution.") (emphasis added); 64 Fed. Reg. 29563

- 64 (June 2, 1999) (anal yz ing Rhode I sland's state implementation plan revisions, including changes to NSR applicability requirements, in light of section 193); 58 Fed. Reg. 10964

- 65 (Feb. 23, 1993) (Massachusetts' state implementation plan revision consistent with section 193 because it would "insure equivalent reductions with Massachusetts' prior NSR program"); EPA Opening Merits Brief in Chevron, U.SA v. NRDC, S. Ct. 82

- 1005 (Aug. 31, 1983), 1982 Lexis U.S. Briefs 1005, at n.55 (NSR is one of the "pollution

control measures" applicable in nonattainment areas.); 42 U.S .C. §§ 7501(3), 7503(a)(2) (sources s ubject to NSR must apply "lowest achievable emission rate," which is a stringent "emission limitation.") ; id. § 7602(k) (defining "emission limitation" as "a11

requirement established by the State or the Administrator which limits the quantity, rate, or con centration of emissions of air pollutants on a continuous basis, including any requirement relating to the operation or maintenance of a source to assure continuous emission reduction, and any design, equipment, work practice or operational standard promul gated under this chapter"); id. § 7503(d) ("The State shall provide that control technology information from permits issued under this section will be promptly submitted to the Administrator for purposes of making such information available through the RAC TBACT/LAER clearinghouse to other States and to the general public.") (emphasis added); id. § 7408(h) (provision entitled "RACT/BACT/LAER Clearinghouse" provides: "The Administrator shall make information regarding emission control technology available to the States and to the general public through a central database. Such information shall include all control technology information received pursuant to State plan provisions requiring permits for sources, including operating permits for existing sources.") (emphasis added); id. § 7503(a)(5) (requiring an alternatives analy sis that considers inter alia the source's "environmental control techniques"); id. § 7418(a) (requiring federal facilities to comply with requirements for "the control and abatement of air pollution," including "an y r equirement respecting permits") ; 1990 House Report at 234 (describing NSR as a "graduated control program" involving increasingl y protective requirements for higher classifications, and including

as the first three examples of that control program

- provisions relating to NSR); id. at 272 (RACTBACT/LAER clearinghouse is to include inter alia information on "lowest achievable emission rate control requirements proposed or adopted in each State") (emphasis added); Lead Industries Assn, Inc. v. EPA, 647 F.2d 1130, 1149 n.37 (D.C. Cir. 1980) (referring to measures in state implementation plans that impose pollution control requirements on sources). Moreover, when NSR is triggered, it often achieves emissions reductions. That is the case for sources in attainment areas, because the installation of best available control technology reduces a previously grandfathered unit's emissions below the pre

modification level. It is especially the case for sources in nonattainment areas. Spec ificall y, the permitting agency cannot issue an NSR permit unless it determines that "b y the time the source is to commence operation, sufficient offsetting emissions reductions have been obtained, such that total allowable emissions from existing sources in the region, from new or modified sources which are not major emitting facilities, and from the proposed source will be sufficiently less than total emissions from existing sources (as determined in accordance with the regulations under this paragraph) p rior to the application for such permit to construct or modify so as to represent (when considered together with the plan provisions required under section 7502 of this title) reasonable further progress (as defined in section 7501 of this title) ." 42 U . S.C. § 7503(a)(1)(A) ; see also id. § 7501(a) (defining "reasonable further progress" as "such annual incremental reductions in emissions of the relevant air pollutant as are required b y this part or may reasonabl y b e required by the Administrator for the purpose of ensuring attainment of the applicable national ambient air quality standard by the applicable date") ; id. § 7503(c); 1990 House Report at 234 ("Also included in the graduated control requirements are increasing offset ratios that require a greater level of pollution reductions from other sources in the nonattainment area to offset increases in pollution from new sources or12

modifications . This program is intended to allow economic growth and the development of new pollution sources and modificat ions to continue in seriously polluted areas, while assuring that emissions are actually reduced.") (emphasis added). Accord, id. at 244 (explaining NSR requirements for extreme areas, committee notes that those areas "cannot afford to miss any opportunit y for greater emission reductions") (emphasis added). The Ohio provisions identified in part I.B., supra, modify NSR in several significant respects. Notwithstanding that fact, Ohio has made no demonstration, and EPA has proposed no finding, that the modif ications ensure "equivalent or greater emissions reductions." 42 U.S.C. § 7515. EPA made no such finding either with respect to any of the 2002 rule provisions that Ohio's provisions track. Those facts alone establish that if EPA takes final action on its proposal, the action will violate section 193. See 64 Fed. Reg. 70652, 70654 (Dec. 17, 1999) ("[T]he language is in fact `extraordinarily rigid' in its requirement to provide equivalent or greater emission reductions to offset relaxations to pre - 1990 rules . . . . [S]ection 193 unambiguousl y r equires an y r elaxations to control requirements or plans in effect prior to enactment of the CAA amendments of 1990 to be offset b y equivalent or greater emission reductions. The clarity of the statutory language supported by the legislative history evidences intent by Congress that relaxations to pre

1990 requirements should occur onl y wh ere compensating strengthening will result in no increase in emissions.") ; id. at 70656 ("compensating reductions must be contemporaneous with the relaxation"). Moreover, Ohio cannot make a demonstration of equivalency, and EPA cannot make such a finding. Because, far from ensuring "equivalent or greater emission reductions" than Ohio's preexisting permit provisions, the modifications ensure that emissions will not be reduced as much as under the preexisting rules. In fact, the modifications allow emissions to increase in Ohio's nonattainment areas. See 61 Fed. Reg. at 38251 (the rulemaking was intended to "significantl y reduce the number and t ypes of activities" that trigger NSR); Brief of Government Petitioners (Attachment 17) at 18

- 26, 26

- 33, 44

- 47, 51

- 53 ; Reply Brief of Government Petitioners (Attachment 19) at 2

- 15, 21

- 23, 25

- 26; Petition for Reconsideration of American Lung Assoc iation, et al. (May 8, 2003) (Attachment 8), at 1

- 93; Reconsideration Comments of NRDC, et al. (Aug. 28, 2003) (Attachment 10), at 3

- 17, 19

- 27; Final Opening Brief of Environmental Petitioners (Attachment 16), at 11

- 33, 45

- 47; Final Repl y B rief of Environm ental Petitioners (Attachment 18) at 2

- 16, 21

- 23; Abt. Associates, Nucor Steel Analy sis (Attachment 1); Abt. Associates, Mobile Joliet Analy sis Attachment 2); Environmental Integrity P roject, Bright Lines or Loopholes? (Attachment 3); Affidavit of Craig A. Wright (Attachment 4); Affidavit of Dr. Iclal Atay (Attachment 5); Affidavit of Marc Allen Robert Cone, P.E. (Attachment 6); National Academ y of Public Administration, A Breath of Fresh Air (Attachment 7); General Accounting Office, EPA Should Use Availab le Data to Monitor the Effects of Its Revisions to the New Source Review Program (Attachment 9); Connecticut, et al. Reconsideration Comments (Attachment 11); Delaware Reconsideration Comments (Attachment 12); Environmental Integrity P roject Letter to EPA (Attachment 13); William R. Moomaw, Assessment of "Reform or Rollback?"13

(Attachment 14); Environmental Integrity P roject, Additional Results and Corrections (Attachment 15). Indeed, as the government petitioners noted in their opening brief in New York v. EPA:

EPA has previously taken the position that NSR regulations that increase industry flexibility are less stringent. For example, in the Duquesne L ight case referenced above, EPA argued that the State's definition of "actual emissions" was more stringe nt than EPA's because it limited industry 's flexibility to "look back" to set its baseline for purposes of calculating emissions reduction credits. See Brief of Respondent EPA in Duquesne Light Co. v. EPA, 1998 WL 34084103, at 13 (Oct. 26, 1998) ("Penns yl v ania's definition is easily recognized as more stringent than the federal definition."). In support of this argument, EPA cited the "ten

- ye ar lookback" provision of its own 1996 proposed rule as an example of a regulation that "increases industry flexibili ty " and therefore is less stringent. Id. at 19; see also id. at 18 (it is "self

- evident" that a state regulation that prohibits a facility from using a "bubble" approach in measuring emissions increases is more stringent than an EPA regulation with the "bu bble" concept). Brief of Government Petitioners (Attachment 17) at 47; see also Repl y B rief of Government Petitioners (Attachment 19) at 22

- 23 ("See Brief of EPA in Duquesne Light Co. v. EPA, 1998 WL 34084103 . . . at 13 (`Pennsylvania's [baseline emissio ns] definition is easily recognized as more stringent than the federal definition.')"). Therefore, Ohio's modifications violate section 193, and any EPA approval of those modifications (even a conditional approval) will also violate section 193. Moreover, because section 193 lies within part D, the Ohio provisions prevent the permit program in the state's revised plan from being "as required in parts C and D," id. § 7410(a)(2)(C), from "meet[ing] the applicable requirements of . . . part C," id. § 7410(a)( 2)(J), and from "meet[ing] the applicable requirements of part D ." Id. § 7410(a)(2)(I) . Thus, if EPA approves Ohio's revised plan, that action will additionally exceed the agency's authority under section 110(k)(3) and violate section 100(l). Response: As the commenters point out, Section 193 of the CAA provides in part that: “No control requirement in effect ... before November 15, 1990, in any area which is a non - attainment area for any air pollutant may be modified after November 15, 1990, in any man ner unless the modification insures equivalent or greater emission reductions of such air pollutant.” CAA , 42 U.S.C. § 7515.14

Assuming that section 193 applies to NSR, section 193 does not require additional emission reductions before this SIP revision is approved. As of November 15, 1990 , the approved SIP did not contain a major source NSR program consistent with the requirements of the CAA, which requires offsets for construction of major sources or major modifications in nonattainment areas
. T he SIP in effect on November 15, 1990 did include a preconstruction permitting program, but that program did not require offsets for any sources. Under Ohio’s new rules , major sources are subject to permitting requirements that are consistent with current CAA r equirements (while minor sources remain subject to the 1990 permitting program). Th is SIP revision affects only the major source permitting program. Thus, even if section 193 does apply to the permitting program in the SIP as of November 15, 1990 , that program did not achieve any "emission reductions" from major sources because it did not require offsets for any sources. It follows that if there were no emission reductions generated by the 1990 permitting program, then the section 193 requirement to pr ovide "equivalent or greater emission reductions" of any air pollutant as part of this SIP revision would be satisfied with no additional reductions. Furthermore, for the reasons discussed above with respect to Section 110(l), EPA has found that the net e ffect of these changes will be neutral or environmentally beneficial.

Comment: II . Ohio's Incorporation of EPA's 2003 New Source Review Rule by Reference EPA's notice appears to propose to approve Ohio provisions that incorporate by reference an EPA ru le that has been stayed b y order of the D.C. Circuit, as well as a second EPA rule

– a related federal implementation plan ("FIP") rule

- that the agency has acknowledged to be stayed by virtue of the same D.C. Circuit order. Compare 70 Fed. Reg. at 24738/2 (proposing approval of OAC 3745

- 31

- 01 (ZZZZZ)(2)) to Order on Motions to Stay (Attachment 26) and 69 Fed. Reg. 40274 (July 1, 2004) (Prevention of Significant Deterioration (PSD) and Non

- attainment New Source Review (NSR): Equipment Replacement Provision of the Routine Maintenance, Repair and Replacement Exclusion; Stay). If EPA approves those provisions

- even conditionall y

– the action will be a violation of the D.C. Circuit's order. Additionally , the action will exceed EPA's authority under section 110 (k)(3) of the Act while violating sections 110(l) and 193. In October 2003, EPA finalized a revision to its NSR rules that would have significantly expanded the rules' exemption for routine maintenance, repair, and replacement projects.15

68 Fed. Reg. 61247 , 61277/2 (Oct. 27, 2003) (revising 40 CFR §51 .165(h)(1)) . Two months later, EPA promulgated another rule that purported to incorporate the "equipment replacement provision" ("ERP") exemption directly into FIPs. 68 Fed . Reg. 74483 (Dec. 24, 2003).
Nume rous citizens groups and states petitioned for review of the rule in the D.C. Circuit, New York v. EPA, D.C. Cir. Case No. 03

- 1380 (and consolidated cases), and requested that the court stay the rule pending the outcome of their challenges. See, e.g. ., Environmental Petitioners' Motion for a Stay Pending Review (Attachment 24). The petitioners argued that the ERP violated the plain language of the Clean Air Act, conflicted with its structure and purpose, and would irreparabl y i njure it members. 1d; see als o Environmental Petitioners' Reply in Support of Stay Motion (Attachment 25). The court granted the stay motions, ruling that "[p]etitioners have demonstrated the irreparable harm and likelihood of success on the merits required for the issuance of a stay pending review." Order on Motions to Stay (Attachment 26). Because the FIP rule was issued on the same day that the court stayed the ERP rule, several states asked EPA to acknowledge that the court's order invalidated the ERP exemption as it applied to SIPs and FIPs . Letter from Jared Snyder (Office of the Attorney of General of New York) to C.J Morris Morris (U.S. Department of Justice) (Feb. 12, 2004). EPA eventually c omplied with the request by stating that the FIP amendments were ineffective because

" [t]he terms of the court order prevented the ERP from coming into effect." 69 Fed. Reg. at 40274/3; see also id. at 4027/2 (stating that because the Court stayed the ERP two day s before the rule was schedule to take effect, "the new provisions never became effective") ; L etter from C ynthia J. Morris (U.S . Department of Justice) to Jared Snyder (Office of the Attorney of General of New York) (February 20, 2004) (acknowledging the full scope of the court's stay order). In spite of the D.C. Circuit's order s taying the ERP rule, and in spite EPA's public acknowledgement that the rule "never became effective," Ohio has nevertheless attempted to incorporate the text of the ERP rule into its SIP. Specifically , Ohio's submission states:

(ZZZZZ) Incorporation by r eference. This chapter includes references to certain matter or materials. The text of the incorporated materials is not included in the regulations contained in this chapter. The materials are hereb y made a part of the regulations in this chapter. For mat erials subject to change, onl y the specific versions specified in the regulation are incorporated. Material is incorporated as it exists on the effective date of this rule. Except for subsequent annual publication of existing (unmodified) Code of Federal R egulations compilations, any amendment or revision to a referenced document is not incorporated16 unless and until this rule has been amended to specify the new dates.
(2) Incorporated materials
* * * (h) 40 CFR 51 .165; "Permit requirements;" . . . 68 FR 61276. Oct. 27 2003: 68 FR 63027, Nov. 7, 2003.
OAC 3745

- 31

- 01(ZZZZ)(2)(h) (emphasis added). In its proposal to approve Ohio's revised plan, EPA simply notes that "Ohio has also updated and added to the incorporations b y reference in OAC 3745

- 31

- 01(ZZZZ )(2). Ohio has added references to 40 CFR 51 .165 . . . ." 70 Fed. Reg. at 24738/2. If EPA approves Ohio's incorporation of the ERP rule by reference, as EPA appears to be proposing to do, that action will violate the D.C. Circuit's order in New York v. E PA, by giving effect to the stayed ERP exemption . The approval will also contravene EPA's own final rule reflecting the court's stay in the Code of Federal Regulations, and run afoul of the agency's accompan yi ng interpretation of the effect of the stay on the PSD FIP in various SIPs. See generally 69 Fed. Reg. at 40274 et seq. Moreover, Ohio's incorporation of the ERP rule by reference prevents the state's revised implementation plan from "meet[ing] applicable requirements" of the Clean Air Act. 42 U.S.C. § 7410(k)(3). It also causes the revised plan to "interfere with [] applicable require m ent[s]" of the Act, id. § 7410(1), and to violate outright the Act's proscription against "backsliding" in nonattainment areas. Id. § 7515. The Act does not authorize EP A to approve such a plan revision. See id. § 7410(k)(3) (authorizing EPA to approve an implementation plan revision, or portion thereof, that "meets all the applicable requirements of this chapter") . In fact, the Act prohibits the agency from doing so. Id . § 7410(1) (EPA "shall not approve a revision of a plan if the revision would interfere with any . . . applicable requirement of [the Act]"). Therefore, if EPA approves Ohio's incorporation of the ERP rule by reference

- even conditionally

– that action w ill be "arbitrary , capricious, an abuse of discretion, [and] otherwise not in accordance with law." Id. § 7607(d)(9)(A). Ohio's incorporation of the ERP rule by reference prevents the state's revised plan from meeting

- and causes the revised plan to inte rfere with

- the applicable requirements in sections 110(a)(2)(C), 110(a)(2)(I), and 110(a)(2)(J) in the same fundamental way that the provisions discussed in part I.A., supra, do. Specificall y, whereas sections 165(a), 169(2)(C), 171(4), and 172(a)(5) of the Act appl y the preconstruction permitting requirements to all activities that fall within section 111(a)(4)'s definition of "modification," id. §§ 7475(a) (applying preconstruction permitting provisions to all "construction"), 7479(2)(C) ("`construction ' . . . includes the modification (as defined in section 7411(a) of this title) of an y s ource or facility "), 7502(a)(5) ("plan provisions shall17

require permits for the construction . . . of new or modified major stationary sources"), 7501(4) ("`modified' m ean[s] the same as the term `modification' as used in section 7411(a)(4) of this title"), the ERP exempts activities that fall within that statutory definition. See American Lung Association, et al., Comments on Proposed 2003 NSR Rule (Attachment 21); NRDC , et al., Petition for Reconsideration (Attachment 22); NRDC, et al., Reconsideration Comments (Attachment 23) ; Environmental Petitioners' Motion for a Stay Pending Review (Attachment 24); Environmental Petitioners' Repl y i n Support of Stay Motion (Attachment 25); Order on Motions to Stay (Attachment 26); NRDC, et al., Supplemental Reconsideration Comments (Attachments 27, 30, 31); EPA Office of Inspector General, Evaluation Report: New Source Review Rule Change Harms EPA's Ability to Enforce Against Coal

- Fired Electric Utilities (Attachment 28); Joel A. Mintz, "Treading Water" (Attachment 29). The presence of the ERP rule incorporation in Ohio's revised permit program thus prevents the state's program from being "as required in parts C and D," 42 U.S.C. § 7410(a)(2)(C), from "meet[ing] the applicable requirements of . . . part C," id. § 7410(a)(2)(J), and from "meet[ing] the applicable requirements of part D." Id. § 7410(a)(2)(1) . Therefore, EPA will exceed its authority under section 110(k)(3) and violat e section 110(1) if the agency approves Ohio's revised plan. Ohio's incorporation of the ERP rule also violates the Clean Air Act's part D, section 193 ban on "backsliding" in nonattainment areas. The ERP fundamentally modifies NSR. Notwithstanding that f

act, Ohio has made no demonstration, and EPA has proposed no finding, that the modifications ensure "equivalent or greater emissions reductions." 42 U.S.C. § 7515. EPA has made no such finding with respect to the ERP either. Those facts alone establish that if EPA takes final action on its proposal, the action will violate section 193. See 64 Fed. Reg. 70652, 70654 (Dec. 17, 1999) ("[T]he language is in fact `extraordinaril y ri gid' in its requirement to provide equivalent or greater emission reductions to o ffset relaxations to pre

- 1990 rules. . . .[S]ection 193 unambiguously requires an y relaxations to control requirements or plans in effect prior to enactment of the CAA amendments of 1990 to be offset b y equivalent or greater emission reductions. The clarit y of the statutory language supported b y the legislative history evidences intent by Congress that relaxations to pre

- 1990 requirements should occur onl y where compensating strengthening will result in no increase in emissions."); id. at 70656 ("compensati ng reductions must, be contemporaneous with the relaxation"). Moreover, Ohio cannot make a demonstration of equivalency, and EPA cannot make such a finding. Because, far from ensuring "equivalent or greater emission reductions" than Ohio's preexisting permit provisions, the incorporation of the ERP ensures that emissions will not be reduced as much as under the preexisting rules. In fact, the modifications allow emissions to increase in Ohio's nonattainment areas. See American Lung Association, et al., Comments on Proposed 2003 NSR Rule (Attachment 21); NRDC, et al., Petition for Reconsideration (Attachment 22); NRDC, et al., Reconsideration Comments (Attachment 23); Environmental Petitioners' Motion for a Stay Pending Review (Attachment 24); Environmental Petitioners' Repl y i n Support of18

Stay Motion (Attachment 25); Order on Motions to Stay (Attachment 26); NRDC et al., Supplemental Reconsideration Comments (Attachments 27, 30, 31); EPA Office of Inspector General, Evaluation Report: New Source Review Rule Change Harms EPA's Ability to Enforce Against Coal

- Fired Electric Utilities (Attachment 28); Joel A. Mintz, "Treading Water" (Attachment 29). Therefore, Ohio's incorporation of the ERP rule violates section 193, and any EPA approval of that Ohio provision (even a conditional approval) will also violate section 193. Moreover, because section 193 lies within part D, the Ohio provision prevents the permit program in the state's revised plan from being "as required in parts C and D," id. § 7410(a)(2)(C), from "meet[ing] the applicable requirements of . . . part C," id. § 7410(a)(2)(J), and from "meet[ing] the applicable requirements of part D." Id. § 7410(a)(2)(1) . Thus, if EPA approves Ohio's incorporation of the ERP rule, that action will additionally exceed the agency's authorit y under section 110(k)(3) and violate section 100(1). Finally , for these same reasons, it is further incumbent upon EPA to require Ohio to amend its underl yi ng state regulations in order to eliminate the incorporation by reference of the ERP rule and the related PSD FIP rulemaking. See OAC 3745

- 31

- 01 (ZZZZZ)(2)(h) . As a result of these incorporations, Ohio's state plan is inconsistent with the Clean Air Act, governing EPA regulations, the D.C. Circuit's stay order, EPA actions acknowl edging the legal consequences of that stay, and even Ohio's own SIP. In order to correct the legal problems created b y the Ohio Administrative Code's incorporation by reference of federal rules that are at odds with the Clean Air Act and also the subject t o a court stay , and to ensure that Ohio has legal authority under state law to carry out its responsibilities to administer the PSD/NSR permitting programs, Ohio must amend its Code to eliminate these incorporations b y r eference. Through these comments, an d pursuant to the Clean Air Act and Administrative Procedures Act, we hereby petition EPA to compel Ohio to amend its administrative code accordingly

. Response: EPA responds that i n a November 15, 2005 letter , the OEPA withdrew it’s request for approval of the phrase “68 FR 61276, Oct.27, 2003:” in OAC 3745

- 31

- 01 (ZZZZZ)(2)(h) . EPA is not approving th is section into the SIP. Furthermore, in the November 15, 2005 letter, OEPA commits to strike this phrase during its next 5

- year review which is expected t o be completed by June 2006. On November 20, 2006, the phrase “68 FR 61276, Oct.27, 2003:” in OAC 3745

- 31

- 01 (ZZZZZ)(2)(h) was removed. The change became effective on December 1, 2006.