[Federal Register Volume 89, Number 13 (Friday, January 19, 2024)]
[Proposed Rules]
[Pages 3613-3619]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-01029]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R04-OAR-2021-0691; FRL-11644-01-R4]


Air Plan Approval; KY; 2015 8-Hour Ozone Nonattainment New Source 
Review Permit Program Requirements and Rule Revision for Jefferson 
County

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The Environmental Protection Agency (EPA) is proposing to 
approve a revision to the Jefferson County portion of the Kentucky 
State Implementation Plan (SIP) submitted by the Commonwealth of 
Kentucky through the Kentucky Energy and Environment Cabinet (Cabinet) 
on June 13, 2022. The changes were submitted by the Cabinet on behalf 
of the Louisville Metro Air Pollution Control District (District, also 
referred to herein as Jefferson County). EPA is proposing to approve 
changes to the District's rules on the construction or modification of 
major stationary sources that are located within nonattainment areas or 
that have emissions impacting nonattainment areas. EPA also is 
proposing to approve the certification submitted by Kentucky on behalf 
of the District that the new version of the Nonattainment New Source 
Review (NNSR) permitting regulations proposed for incorporation into 
the Jefferson County portion of the Kentucky SIP meets the NNSR 
nonattainment planning requirements for the 2015 8-hour ozone National 
Ambient Air Quality Standards (NAAQS). The certification covers the 
Jefferson County portion of the Louisville, Kentucky-Indiana multi-
state nonattainment area for the 2015 8-hour ozone NAAQS. This action 
is proposed pursuant to the Clean Air Act (CAA or Act) and its 
implementing regulations.

DATES: Comments must be received on or before February 20, 2024.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R04-
OAR-2021-0691 at www.regulations.gov. Follow the online instructions 
for submitting comments. Once submitted, comments cannot be edited or 
removed from Regulations.gov. EPA may publish any comment received to 
its public docket. Do not submit electronically any information you 
consider to be Confidential Business Information (CBI) or other 
information whose disclosure is restricted by statute. Multimedia 
submissions (audio, video,

[[Page 3614]]

etc.) must be accompanied by a written comment. The written comment is 
considered the official comment and should include discussion of all 
points you wish to make. EPA will generally not consider comments or 
comment contents located outside of the primary submission (i.e., on 
the web, cloud, or other file sharing system). For additional 
submission methods, the full EPA public comment policy, information 
about CBI or multimedia submissions, and general guidance on making 
effective comments, please visit https://www.epa.gov/dockets/commenting-epa-dockets.

FOR FURTHER INFORMATION CONTACT: Pearlene Williams-Miles, Multi-Air 
Pollutant Coordination Section, Air Planning and Implementation Branch, 
Air and Radiation Division, U.S. Environmental Protection Agency, 
Region 4, 61 Forsyth Street SW, Atlanta, GA 30303-8960. The telephone 
number is (404) 562-9144. Ms. Williams-Miles can also be reached via 
electronic mail at <a href="/cdn-cgi/l/email-protection#22754b4e4e4b434f516f4b4e47510c724743504e474c47624752430c454d54"><span class="__cf_email__" data-cfemail="2b7c424747424a46586642474e58057b4e4a59474e454e6b4e5b4a054c445d">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: 

I. Background

    The New Source Review (NSR) program is a preconstruction permitting 
program that requires certain stationary sources of air pollution to 
obtain permits prior to beginning construction.\1\ The NSR permitting 
program applies to new construction and to the modification of existing 
sources. New construction and source modifications that cause emissions 
of ``regulated NSR pollutants'' over certain thresholds are subject to 
major NSR requirements, while smaller emitting sources and 
modifications may be subject to minor NSR requirements.\2\
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    \1\ In this proposed action, the EPA refers to ``source'' as 
shorthand for ``source owner/operator.''
    \2\ ``Regulated NSR pollutant'' is defined at 40 CFR 
52.21(b)(50). A ``regulated NSR pollutant'' includes any pollutant 
for which a NAAQS has been promulgated and other pollutants 
regulated under the CAA. These other pollutants include, among 
others, fluorides, sulfuric acid mist, hydrogen sulfide, total 
reduced sulfur, and reduced sulfur compounds. See, e.g., 40 CFR 
52.21(b)(23). For NNSR, regulated NSR pollutants include only the 
NAAQS, also known as criteria pollutants, and the precursors to 
those pollutants for which the area is designated nonattainment. See 
40 CFR 51.165(a)(1)(xxxvii).
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    The NSR permitting program applies to sources located in an area 
where the NAAQS have been exceeded (nonattainment area), areas where 
the NAAQS have not been exceeded (attainment), and areas that are 
unclassifiable. However, the demonstration that must be made to obtain 
a permit and the conditions of such permits are different for 
nonattainment and attainment/unclassifiable areas. Thus, the 
pollutant(s) at issue and the air quality designation of the area where 
the facility is located or proposed to be built determine the specific 
permitting requirements.
    A new stationary source is subject to major NSR requirements if its 
potential to emit a regulated NSR pollutant exceeds certain emission 
thresholds. If it exceeds an applicable threshold, the NSR regulations 
define it as a ``major stationary source.'' \3\ An existing major 
stationary source triggers major NSR permitting requirements when it 
undergoes a ``major modification,'' which occurs when a source 
undertakes a physical change or change in method of operation (i.e., a 
``project'') that would result in: (1) A significant emissions increase 
from the project, and (2) a significant net emissions increase from the 
source. See, e.g., 40 CFR 51.165(a)(1)(v)(A), 40 CFR 
51.165(a)(1)(xxxix), and 40 CFR 51.165(a)(2)(ii)(A).
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    \3\ For major sources subject to Prevention of Significant 
Deterioration (PSD) requirements, the CAA uses the term ``major 
emitting facility,'' which is defined as a stationary source that 
emits, or has a potential to emit (PTE) of, at least 100 tons per 
year (tpy) if the source is in one of 28 listed source categories--
or at least 250 tpy if the source is not--of ``any air pollutant.'' 
CAA section 169(1). For NNSR, the emissions threshold for a major 
stationary source is 100 tpy, although lower thresholds may apply 
depending on the degree of the nonattainment problem and the 
pollutant.
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    Jefferson County is located within a nonattainment area for the 
2015 8-hour ozone NAAQS. See 40 CFR 81.318; see also EPA's 
Greenbook.\4\ Therefore, Jefferson County is required to have NNSR 
rules approved into the Jefferson County portion of the Kentucky SIP 
for this criteria pollutant addressing the requirements of CAA section 
172(c)(5), CAA section 173, 40 CFR 51.165, and 40 CFR 51.1314.
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    \4\ The Kentucky portion of the Greenbook is available at 
https://www3.epa.gov/airquality/greenbook/anayo_ky.html.
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II. Analysis of the Commonwealth's Submittal

    The Commonwealth has proposed changes to Regulation 2.04--
Construction or Modification of Major Sources In or Impacting Upon Non-
Attainment Areas (Emission Offset Requirements) in the Jefferson County 
portion of Kentucky's SIP. EPA's analysis of the Commonwealth's 
proposed revisions to Regulation 2.04 is provided below.

a. CAA Requirements Regarding the Changes to Regulation 2.04

    Based on Jefferson County's nonattainment designation for the 2015 
8-hour ozone NAAQS, Kentucky was required to develop a SIP revision 
addressing the requirements of CAA sections 172(c)(5) and 173 for this 
nonattainment area. Section 172(c)(5) requires each state with a 
nonattainment area to submit a SIP revision requiring NNSR permits in 
the nonattainment area in accordance with the permitting requirements 
of CAA section 173.\5\ The minimum SIP requirements for NNSR permitting 
for the ozone NAAQS are in 40 CFR 51.165. See 40 CFR 51.1314. The 
proposed revisions to Regulation 2.04 must comply with these minimum 
requirements.
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    \5\ CAA section 173 requires, among other things, emissions 
offsets. The emissions offset ratio for moderate ozone nonattainment 
areas is found in CAA section 182(b)(5).
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    On June 13, 2022, Kentucky submitted a SIP revision \6\ to EPA that 
includes changes to the District's Regulation 2.04, which establishes 
requirements for Jefferson County's NNSR program, along with a 
certification that this updated version of Regulation 2.04 satisfies 
the requirements of the CAA for the 2015 8-hour ozone NAAQS applicable 
to the Jefferson County portion of the Louisville, KY-IN 2015 ozone 
moderate nonattainment area.\7\
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    \6\ The June 13, 2022, submission was received via a letter 
dated June 15, 2022.
    \7\ On July 13, 2021, Kentucky, on behalf of Jefferson County, 
submitted a certification that the current SIP-approved version of 
Regulation 2.04 fulfills requirements of the NNSR program. Jefferson 
County withdrew that submission on June 13, 2022, and replaced it 
with a SIP revision containing changes to District Regulation 2.04 
and an updated certification that the modified version of Regulation 
2.04 complies with NNSR requirements for the 8-hour ozone NAAQS as 
addressed in this proposed rulemaking.
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b. Changes to Regulation 2.04

    The Jefferson County June 13, 2022, SIP revision includes changes 
to Jefferson County's NNSR permitting regulations to align those 
regulations with the federal requirements for NNSR permitting in 40 CFR 
51.165. Specifically, these changes update Jefferson County's 
Regulation 2.04--Construction or Modification of Major Sources In or 
Impacting Upon Non-Attainment Areas (Emission Offset Requirements), 
which applies to new major stationary sources and major modifications 
locating in an area designated as nonattainment.<SUP>8 9</SUP> EPA last

[[Page 3615]]

approved amendments to Regulation 2.04 in the SIP on October 23, 2001, 
with a local effective date of March 17, 1993. See 66 FR 53660. 
Approximately twenty-nine years have passed between this local 
effective date and the local effective date of Jefferson County's 
updated Regulation 2.04 that EPA is now proposing to approve into the 
SIP. The June 13, 2022, SIP revision aims to align the Jefferson County 
regulations with the most recent version of 40 CFR 51.165, which sets 
forth minimum NNSR permitting program requirements.
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    \8\ Under the June 13, 2022, cover letter, Jefferson County also 
submitted updates to the following District Regulations: Regulation 
1.06--Stationary Source Self-Monitoring, Emissions Inventory 
Development, and Reporting and Regulation 2.17--Federally 
Enforceable District Origin Operating Permits. These rules will be 
acted on separately by EPA.
    \9\ The existing sections in the redline strike-through text of 
the submittal appear are misnumbered. Section 1 is repeated twice--
once at Section 1 Applicability and again at Section 1 Definitions. 
For example, Section 9 Permit Condition Rescission is marked as 
Section 8 in the redline strike-through text of the submission. The 
erroneous numbering extends throughout the entirety of Regulation 
2.04. The text in each section is accurate despite the misnumbering, 
and this misnumbering is not contained in the non-redline version of 
the regulatory text contained within the submittal.
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    Since the last time EPA approved amendments to Regulation 2.04, EPA 
has updated the federal NNSR regulations in 40 CFR 51.165 to clarify 
provisions, provide greater regulatory certainty, and provide 
administrative flexibility while correcting certain errors in the NNSR 
regulations that had accumulated over time. Jefferson County's 
requested SIP revision replaces the District's NNSR regulations largely 
in their entirety with a new version that reflects changes to the 
federal NNSR regulations at 40 CFR 51.165, including provisions 
promulgated in the following federal rules:
    <bullet> ``Requirements for Preparation, Adoption and Submittal of 
Implementation Plans; Approval and Promulgation of Implementation 
Plans; Standards of Performance for New Stationary Sources,'' Final 
Rule, 57 FR 32314 (July 21, 1992) (generally referred to as the 
Wisconsin Electric Power Company (WEPCO) Rule);
    <bullet> ``Prevention of Significant Deterioration (PSD) and 
Nonattainment New Source Review (NSR): Baseline Emissions 
Determination, Actual-to-Future-Actual Methodology, Plantwide 
Applicability Limitations, Clean Units, Pollution Control Projects,'' 
Final Rule, 67 FR 80186 (December 31, 2002) (generally referred to as 
the NSR Reform Rule);
    <bullet> ``Prevention of Significant Deterioration (PSD) and Non-
Attainment New Source Review (NSR): Reconsideration,'' Final Rule, 68 
FR 63021 (November 7, 2003) (generally referred to as the 
Reconsideration Rule);
    <bullet> ``Prevention of Significant Deterioration (PSD) and Non-
Attainment New Source Review (NSR): Removal of Vacated Elements,'' 
Final Rule, 72 FR 32526 (June 13, 2007) (generally referred to as the 
Vacated Elements Rule);
    <bullet> ``Prevention of Significant Deterioration, Nonattainment 
New Source Review, and Title V: Treatment of Certain Ethanol Production 
Facilities Under the `Major Emitting Facility' Definition'', 72 FR 
24060 (July 2, 2007) (generally referred to as the Ethanol Rule); \10\
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    \10\ The June 13, 2022, submittal contains changes to address to 
the Federal NNSR provisions promulgated in the Ethanol Rule. EPA is 
not proposing to act on these changes in this proposed rulemaking.
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    <bullet> ``Prevention of Significant Deterioration and 
Nonattainment New Source Review: Reasonable Possibility in 
Recordkeeping,'' Final Rule, 72 FR 72607 (December 21, 2007), 
(generally referred to as the Reasonable Possibility Rule);
    <bullet> ``Final Rule To Implement the 8-Hour Ozone National 
Ambient Air Quality Standard--Phase 2; Final Rule To Implement Certain 
Aspects of the 1990 Amendments Relating to New Source Review and 
Prevention of Significant Deterioration as They Apply in Carbon 
Monoxide, Particulate Matter and Ozone NAAQS; Final Rule for 
Reformulated Gasoline,'' Final Rule, 70 FR 71612 (November 29, 2005) 
(generally referred to as the Phase 2 Rule);
    <bullet> ``Implementation of the New Source Review (NSR) Program 
for Particulate Matter Less Than 2.5 Micrometers (PM<INF>2.5</INF>),'' 
Final Rule, 73 FR 28321 (May 16, 2008) (generally referred to as the 
NSR PM<INF>2.5</INF> Rule);
    <bullet> ``Prevention of Significant Deterioration (PSD) for 
Particulate Matter Less Than 2.5 Micrometers (PM<INF>2.5</INF>)--
Increments, Significant Impact Levels (SILs) and Significant Monitoring 
Concentration (SMC),'' Final Rule, 75 FR 64864 (October 20, 2010) 
(generally referred to as the PM<INF>2.5</INF> PSD Increments-SILs-SMC 
Rule);
    <bullet> ``Prevention of Significant Deterioration (PSD) and 
Nonattainment New Source Review (NSR): Reconsideration of Inclusion of 
Fugitive Emissions; Interim Rule; Stay and Revisions'', Interim Rule, 
76 FR 17548 (March 30, 2011) (generally referred to as the Fugitive 
Emissions Interim Rule);
    <bullet> ``Prevention of Significant Deterioration (PSD) and 
Nonattainment New Source Review (NNSR): Project Emissions Accounting'', 
85 FR 74890 (November 24, 2020) (generally referred to as the Project 
Emissions Accounting Rule); and
    <bullet> ``New Source Review Regulations; Correction'', 86 FR 37918 
(July 19, 2021) (generally referred to as the NSR Corrections Rule).
    Additional information regarding each of the above-described rules 
is available within the Federal Register citations provided and at 
https://www.epa.gov/nsr/nsr-regulatory-actions. More detailed 
discussion of the textual changes proposed by Jefferson County is 
provided below.
    Section 1--As revised, the existing Section 1, Applicability, is 
now titled Definitions. The text of the existing section, which 
identifies sources that are regulated by Regulation 2.04, is removed in 
its entirety, and replaced with the Definitions section, which has been 
relocated from Section 2.
    The proposed definitions in Section 1 would modify, add, or remove 
existing definitions currently found in Section 2 and reorder several 
definitions. The definitions that are removed include: ``Reasonable 
further progress,'' ``Adverse impact on visibility,'' ``State 
Implementation Plan,'' ``Mandatory Class I federal area,'' ``Natural 
conditions,'' and ``Visibility impairment.'' Jefferson County's June 
13, 2022, SIP revision also includes the removal of the definition, 
``Class I area.'' However, the District has since withdrawn its request 
for this change.\11\
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    \11\ In a letter dated August 24, 2023, the District withdrew 
its request to remove Section 2.2.20 of Regulation 2.04 from the 
SIP, which defines ``Class I area,'' from EPA's consideration. In a 
subsequent email dated November 14, 2023, the District clarified 
that the withdrawal of the June 13, 2022, request to remove from the 
SIP Regulation 2.04 version 7 Section 2.2.20, includes all 
subparagraphs within the definition (i.e., 2.2.20.1 through 
2.2.20.7). See the August 24, 2023, letter, and the November 14, 
2023, clarifying correspondence in the docket for this proposed 
rulemaking.
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    New definitions are added in Section 1, which include: ``Volatile 
organic compounds (VOC),'' ``Electric utility steam generating unit,'' 
``Replacement unit,'' ``Temporary clean coal technology demonstration 
project,'' ``Clean coal technology,'' ``Clean coal technology 
demonstration project,'' ``Pollution prevention,'' ``Significant 
emissions increase,'' ``Projected actual emissions,'' ``Nonattainment 
major new source review (NSR) program,'' ``Continuous emissions 
monitoring system (CEMS),'' ``Predictive emissions monitoring system 
(PEMS),'' ``Continuous parameter monitoring system (CPMS),'' 
``Continuous emissions rate monitoring system (CERMS),'' ``Baseline 
actual emissions,'' ``Regulated NSR pollutant,'' ``Reviewing 
authority,'' ``Project,'' ``Best available control technology (BACT),'' 
``Prevention of Significant Deterioration (PSD) permit,'' ``Federal 
Land Manager,'' ``Act,'' ``Administrator,'' and

[[Page 3616]]

``NAICS.'' Among the additions, three entries labeled ``[Reserved]'' 
are added at 1.25, 1.29, and 1.36. Lastly, the following definitions 
have been modified: ``Stationary source,'' ``Building, structure, 
facility, or installation,'' ``Secondary emissions,'' ``Actual 
emissions,'' ``Emissions unit,'' ``Major stationary source,'' ``Major 
modification,'' ``Net emission increase,'' ``Potential to emit,'' 
``Construction,'' ``Commence,'' ``Necessary preconstruction approval or 
permits,'' ``Allowable emissions,'' ``Federally enforceable,'' 
``Fugitive Emissions,'' ``Significant,'' and ``Lowest achievable 
emission rate.''
    Certain definitions were also revised to remove outdated 
terminology and align the rules with the Federal regulations at 40 CFR 
51.165. EPA is proposing to approve these definitional revisions, 
except that EPA is not proposing at this time to approve into the SIP 
the following phrase in the definition at 1.4.3.20 originating from the 
Ethanol Rule: ``--The term chemical processing plant shall not include 
ethanol production facilities that produce ethanol by natural 
fermentation included in NAICS codes 325193 or 312140''. The remaining 
definitions (i.e., those neither modified nor removed in Section 2) 
were moved into Section 1 unchanged.
    Section 2--As revised, the existing Section 2, Definitions, is now 
titled Applicability Procedures. As mentioned above, the terms and 
definitions in the existing Section 2 are relocated to Section 1 as 
part of the proposed changes. The revised Section 2 includes revised 
applicability provisions of Rule 2.04, including three subsections 
that: (1) Define which sources are subject to regulation under Rule 
2.04, (2) outline the procedures for determining whether a project is a 
major modification for a regulated NSR pollutant, and (3) require that 
any major stationary source with a plantwide applicability limit (PAL) 
for a regulated NSR pollutant comply with requirements under section 16 
of Rule 2.04.
    Section 3--As revised, the existing Section 3, Initial Screening 
Analyses and Determination of Applicable Requirements, is now titled 
Conditions for Approval. The existing text of Section 3 requires the 
District to evaluate a source's compliance with applicable emission 
requirements to determine their eligibility for a construction permit. 
The regulation also requires that the District evaluate a source's 
impact on air quality to determine whether offset credits are required. 
Lastly, the regulation exempts certain sources from applicable 
conditions for approval established in the existing Section 5 text, and 
visibility impact analysis addressed in Section 10, if the source's 
fugitive emissions are considered in calculating the source's potential 
to emit and the source does not belong to specified source categories. 
The revised Section 3 provides the conditions that new major stationary 
sources or major modifications must meet prior to approval of 
construction in an area designated as nonattainment.
    Section 4--As revised, the existing Section 4, Sources Locating in 
Designated Attainment or Unclassifiable Areas, is now titled Baseline. 
The existing Section 4 provisions regulate new major stationary sources 
and major modifications of existing sources in areas designated as 
attainment or unclassifiable if the source or modification would cause 
impacts which exceed the significance levels specified in Appendix B at 
any locality that does not, or would not, meet the NAAQS. The proposed 
changes to this rule remove these provisions in their entirety from 
Section 4 and move them, with revisions compliant with 40 CFR 51.165, 
to Section 15. The revised Section 4 establishes baseline emissions 
limits for which emission reduction credits are determined. The text 
added in this section regulates allowable credits and includes 
provisions pertaining to credits for shutting down an existing 
emissions unit, the replacement of one hydrocarbon compound with 
another of lesser reactivity, the requirement that offset credits be 
federally enforceable, offset requirements for owners of new sources 
and modifying sources, and limitations on credit claimed.
    Section 5--As revised, the existing Section 5, Conditions for 
Approval, is now titled Fugitive Emissions. The existing Section 5 
regulates the conditions for approval to construct in a nonattainment 
area. As revised, the text under this section is removed in its 
entirety and, as mentioned above, conditions for approval are discussed 
in the proposed language of revised Section 3. The proposed language in 
the revised Section 5 establishes how fugitive emissions should be 
treated when evaluating NNSR applicability. EPA is not proposing to 
incorporate the language originating from the Ethanol Rule within 
Section 5.20, which states that ``The term chemical processing plant 
shall not include ethanol production facilities that produce ethanol by 
natural fermentation included in NAICS codes 325193 or 312140,'' into 
the Jefferson County portion of Kentucky's SIP in this notice.
    Section 6--As revised, the existing Section 6, Baseline for 
Determining Credit for Emission Offsets, is now titled Effect of Other 
Requirements. The existing Section 6 establishes the requirements for 
determining baseline emissions. This section is moved in its entirety 
to Section 4. The proposed language of the revised Section 6 requires 
an owner or operator to comply with any requirements under local, 
state, or Federal law even after approval to construct has been given. 
Additionally, the revised Section 6 establishes that when a relaxation 
of an enforcement limitation occurs and a source or modification is 
deemed a major source due to its capacity to emit a pollutant, the 
requirement of this provision will then apply to the source or 
modification in a manner as if construction had not commenced.
    Section 7--As revised, the existing Section 7, Administrative 
Procedures, is now titled Applicability Recordkeeping and Reporting. 
The existing text of Section 7 regulates the administrative procedures 
for managing source-initiated and District-initiated emission offsets, 
which are enforceable by the District and EPA. The proposed changes in 
Section 7 remove the text for administrative procedures in its entirety 
and replace it with provisions on applicability recordkeeping and 
reporting. As revised, Section 7 provides specific recordkeeping and 
reporting provisions for any regulated NSR pollutant emitted from 
projects at existing emissions units at a major stationary source 
(other than projects at a source with a PAL) where there is a 
``reasonable possibility'' that a project that is not a part of a major 
modification may result in a significant emissions increase of such 
pollutant and the owner or operator elects to use the actual-to-
projected-actual applicability process for calculating projected actual 
emissions.
    Section 8--As revised, the existing Section 8, Source Obligation, 
is now titled Availability of Documentation. The existing language of 
Section 8 describes a source's compliance obligations and the 
enforcement that may be taken against the source when the source fails 
to comply with these obligations. The failure to comply may occur when 
a source relaxes an enforceable emissions limitation such that the 
particular source or modification becomes a major stationary source or 
major modification solely by virtue of a relaxation in any enforcement 
limitation or when the source initiates construction of a source prior 
to obtaining a required permit. The proposed changes in Section 8 
include

[[Page 3617]]

the removal of the existing text in its entirety and the addition of 
requirements for owners or operators to present documentation required 
by Section 7 upon request by the District or the general public.
    Section 9--As revised, the existing Section 9, Permit Condition 
Rescission, is now titled Applicability of VOC Requirements to Major 
Sources of NOX. The existing text under Section 9 regulates the 
recission of permits that were issued prior to April 21, 1982. The 
proposed changes include removal of this text in its entirety. As 
revised, Section 9 provides that ``[t]he requirements of this 
regulation applicable to major stationary sources and major 
modifications of volatile organic compounds shall apply to nitrogen 
oxides emissions from major stationary sources and major modifications 
of nitrogen oxides in an ozone transport region or in any ozone 
nonattainment area'' except where the EPA Administrator has granted a 
NO<INF>X</INF> waiver.
    Section 10--The proposed changes include the addition of a new 
Section 10, Offset Ratio, which establishes the offset ratio provisions 
to accompany the conditions for approval provided in Section 3.\12\
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    \12\ In a letter dated August 24, 2023, the District withdrew 
its request to remove Section 10--Protection of Visibility, from 
EPA's consideration. Keeping Section 10--Protection of Visibility in 
the SIP allows the Commonwealth to maintain visibility provisions 
for the Jefferson County area in accordance with 40 CFR 
51.307(b)(2). The request to add Section 10--Offset Ratio remains 
before EPA for consideration. The withdrawal would leave two 
sections numbered ``10'' in Rule 2.04: one locally effective on 
March 13, 1993, and the other locally effective on March 16, 2022. 
The District intends to address the duplicate numbering in a future 
submission.
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    Section 11--The proposed changes include the addition of a new 
Section 11, Applicability to PM10 Precursors. This section provides 
that the requirements of Regulation 2.04 applicable to major stationary 
sources and major modifications of particulate matter with a diameter 
of 10 microns or less (PM<INF>10</INF>) shall also apply to major 
stationary sources and major modifications of PM<INF>10</INF> 
precursors, except where the Administrator determines that such sources 
do not contribute significantly to PM<INF>10</INF> levels that exceed 
the PM<INF>10</INF> ambient standards in the area.
    Section 12 and Section 13--Sections 12 and 13 are added as 
``Reserved'' sections for future use.
    Section 14--The proposed changes include the addition of a new 
Section 14, Applicability to PM2.5 Precursors. This section provides 
that the control requirements of Regulation 2.04 applicable to major 
stationary sources and major modifications of PM<INF>2.5</INF> shall 
also apply to major stationary sources and major modifications of 
PM<INF>2.5</INF> precursors in a PM<INF>2.5</INF> nonattainment area, 
except that a reviewing authority may exempt new major stationary 
sources and major modifications of a particular precursor from the 
requirements of the rule for PM<INF>2.5</INF> if the NNSR precursor 
demonstration submitted to and approved by EPA shows that such sources 
do not contribute significantly to PM<INF>2.5</INF> levels that exceed 
the standard in the area.
    Section 15--The proposed changes include the addition of a new 
Section 15, Applicability of Regulation in Attainment Areas. This 
section applies to any new major stationary source or major 
modification, as defined in paragraphs 1.4 and 1.5 of Regulation 2.04, 
that would locate in any area designated as attainment or 
unclassifiable for any NAAQS when it would cause or contribute to a 
violation of any NAAQS. This section also includes the significance 
levels above which a source would be considered to cause or contribute 
to a violation of the NAAQS. It also provides that applicable sources 
may obtain sufficient emissions reductions to compensate for their 
impact on air quality. Lastly, the revised regulations clarify that 
Section 15 sources need not be subject to the provisions of Section 15 
for a regulated NSR pollutant if they can demonstrate that the area in 
which the source would be located is not in attainment for that 
particular regulated pollutant.
    Section 16--The proposed changes include the addition of a new 
Section 16, Actuals PALs. This section establishes the provisions in 
which a reviewing authority may approve the use of an actuals PAL for 
any existing major stationary source and establishes relevant 
definitions pertaining to PALs. This section contains PAL regulations, 
including the requirements related to permit applications, public 
notice and comment, the establishment of PAL levels, and the components 
a PAL permit.
    Section 17 and Section 18--Sections 17 and 18 are added as 
``Reserved'' sections for future use.
    Section 19--The proposed changes include the addition of a new 
Section 19, Public participation requirements. This section establishes 
the reviewing authority's responsibility to notify the public of a 
draft permit and establishes how the notification must take place.
    Appendix A and Appendix B--As revised, existing Appendix A, 
Significant Pollutant and Emission Rate, and existing Appendix B, 
Significant Levels of Air Quality Impact, are removed in their 
entirety. The information that is provided in existing Appendix A and 
Appendix B is condensed into chart form in the revised Section 15. 
PM<INF>2.5</INF> and PM<INF>10</INF> are defined in Regulation 1.02.

c. Nonattainment New Source Review Certification

    Jefferson County has a longstanding and fully implemented NNSR 
program that establishes air quality permitting requirements for the 
construction or modification of major stationary sources located within 
areas designated as nonattainment. The program, found at Jefferson 
County Regulation 2.04, Construction or Modification of Major Sources 
in or Impacting upon Nonattainment Areas (Emission Offset 
Requirements), contains NNSR permitting requirements for the Jefferson 
County portion of the Kentucky SIP.\13\ In its June 13, 2022, SIP 
revision, Kentucky, on behalf of the District, certified that the 
version of Regulation 2.04 proposed for incorporation into the 
Jefferson County portion of the Kentucky SIP satisfies the Federal NNSR 
requirements for the Jefferson County portion of the Louisville, KY-IN 
2015 ozone moderate nonattainment area. The version of Regulation 2.04 
that is contained in the current Jefferson County portion of the 
Kentucky SIP was approved into the SIP by EPA on October 23, 2001, see 
66 FR 53658, and was state effective as of March 17, 1993.
---------------------------------------------------------------------------

    \13\ In 2003, the City of Louisville and Jefferson County 
governments merged, and the ``Jefferson County Air Pollution Control 
District'' was renamed the ``Louisville Metro Air Pollution Control 
District.'' See The History of Air Pollution Control in Louisville, 
available at https://louisvilleky.gov/government/air-pollution-control-district/history-air-pollution-control-louisville. However, 
each of the regulations in the Jefferson County portion of the 
Kentucky SIP still has the subheading ``Air Pollution Control 
District of Jefferson County.'' Thus, to be consistent with the 
terminology used in the SIP, EPA refers throughout this notice to 
regulations contained in the Jefferson County portion of the 
Kentucky SIP as the ``Jefferson County Regulations.''
---------------------------------------------------------------------------

    As revised, Regulation 2.04 provides requirements for the 2015 
ozone moderate nonattainment area for Jefferson County and remains 
adequate to meet all applicable NNSR requirements for the 2015 8-hour 
ozone NAAQS. EPA is therefore proposing to approve the District's 
certification, submitted on its behalf by Kentucky, that Jefferson 
County Regulation 2.04, as proposed for incorporation into the SIP, 
meets the NNSR requirements for implementation of the 2015 8-hour ozone 
NAAQS.

[[Page 3618]]

d. Clean Air Act Sections 110(l) and 193

    Section 110(l) of the CAA requires that a revision to the SIP not 
interfere with any applicable requirement concerning attainment and 
reasonable further progress (as defined in section 171), or any other 
applicable requirement of the Act. As noted above, since the last time 
EPA approved amendments to Regulation 2.04, with a local effective date 
of March 17, 1993, EPA has updated the Federal NNSR regulations in 40 
CFR 51.165 several times. These revisions include NSR Reform and the 
related Reasonable Possibility Provisions implemented through the 
December 31, 2002, final rule (67 FR 80186), with revisions per the 
November 7, 2003, final rule (68 FR 63021), the June 13, 2007, final 
rule (72 FR 32526), and the December 21, 2007, final rule (72 FR 72607) 
along with the adoption of the Project Emissions Accounting Rule. 85 FR 
74890 (November 24, 2020). The District's updates to Regulation 2.04 
are intended to align its NNSR rules with EPA's current NNSR rules in 
40 CFR 51.165. As discussed below, EPA's proposed approval of the 
District's Regulation 2.04 into the Jefferson County portion of the 
Kentucky SIP is consistent with CAA section 110(l) and CAA section 193.
    EPA's national analysis in support of the 2002 NSR Reform Rules 
indicates that the non-vacated provisions of the NSR Reform Rules will 
have a neutral or beneficial impact. The three significant changes in 
the 2002 NSR Reform Rules are: (1) PALs, (2) the 2-in-10 baseline, and 
(3) the actual-to-projected-actual applicability test. EPA's 
Supplemental Environmental Analysis of the Impact of the 2002 Final NSR 
Improvement Rules (November 21, 2002) (Supplemental Analysis) \14\ 
discussed each of these three changes individually.
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    \14\ The Supplemental Analysis is available at https://www.epa.gov/sites/default/files/2015-08/documents/nsr-analysis.pdf.
---------------------------------------------------------------------------

    With regard to PALs, the Supplemental Analysis explains, ``EPA 
expects that the adoption of PAL provisions will result in a net 
environmental benefit. Our experience to date is that the emissions 
caps found in PAL-type permits result in real emissions reductions, as 
well as other benefits.'' Supplemental Analysis, pg. 6. EPA further 
explained that, while it is difficult to quantify the emissions 
reductions associated with PALs, the PAL program will likely result in 
tens of thousands of tons of reductions of VOC from source categories 
where frequent operational changes are made, where these changes are 
time sensitive, and where there are opportunities for economical air 
pollution control measures. These reductions occur because by creating 
a tons per year plantwide emissions limit for a regulated NSR 
pollutant, sources have an incentive to control existing and new units 
in order to provide room under the cap such that the source can 
undertake subsequent operational changes over the life of the PAL. 
Supplemental Analysis, pg. 7. The Supplemental Analysis, and 
particularly Appendix B, provides additional details regarding EPA's 
analysis of PALs and anticipated associated emissions decreases.
    With regard to the 2-in-10 baseline (see 40 CFR 
51.165(a)(1)(xxxv)(B)), EPA concluded that ``the environmental impact 
from the change in baseline EPA is now finalizing will not result in 
any significant change in benefits derived from the NSR program.'' 
Supplemental Analysis at 13. This is mainly because ``the number of 
sources receiving different baselines likely represents a very small 
fraction of the overall NSR permit universe, excludes new sources and 
coal fired power plants, and because the baseline may shift in either 
direction, we conclude that any overall consequences would be 
negligible.'' Supplemental Analysis, pg. 14. Additional information 
regarding the 2-in-10 baseline changes is available in the Supplemental 
Analysis, Appendix F.
    With regard to the actual-to-projected-actual test, EPA concluded, 
``We believe that the environmental impacts of the switch to the 
actual-to-projected actual test are likely to be environmentally 
beneficial. However, as with the change to the baseline, we believe the 
vast majority of sources, including new sources, new units, electric 
utility steam generating units, and units that actually increase 
emissions as a result of a change, will be unaffected by this change. 
Thus, the overall impacts of the NSR changes are likely to be 
environmentally beneficial, but only to a small extent.'' Supplemental 
Analysis, pg. 14 (see also Supplemental Analysis Appendix G). EPA has 
no reason to believe that the environmental impacts will be 
substantially different from those discussed in the Supplemental 
Analysis for the 2002 NSR Reform Rules. Therefore, adopting the NSR 
Reform provisions into the Jefferson County portion of the Kentucky SIP 
is consistent with CAA section 110(l).
    Regarding the adoption of the Project Emissions Accounting (PEA) 
Rule, as EPA noted in the response to comments document for the PEA 
Rule, ``implementation of [the PEA Rule] will not cause states to 
violate the anti-backsliding requirements of the Clean Air Act. 
Allowing for PEA is consistent with the intent of the 2002 NSR Reform 
Rule and is more consistent with the Act than implementing Step 1 
without PEA. That is because PEA would not subject a project which does 
not significantly increase emissions in and of itself, or actually 
result in a decrease [in] emissions, from being subject to NSR.'' See 
Response to Comments Document on Proposed Rule: `Prevention of 
Significant Deterioration (PSD) and Nonattainment New Source Review 
(NNSR): Project Emissions Accounting''--84 FR 39244, August 9, 2019 
(October 2020), at pg. 114. Therefore, adopting the PEA provisions into 
the Jefferson County portion of the Kentucky SIP is consistent with CAA 
section 110(l).
    Section 193 of the CAA prohibits modification of any control 
requirement in effect before November 15, 1990, in a current 
nonattainment area, unless the modification ``insures equivalent or 
greater emissions reductions.'' Section 193 does not apply here because 
the state-effective date of Louisville's Regulation 2.04 is March 17, 
1993. Additionally, EPA anticipates a neutral to positive air quality 
benefit from adoption of these rules, and therefore these rules will 
ensure ``equivalent or greater emission reductions'' of air pollution 
in accordance with CAA section 193.

III. Incorporation by Reference

    In this document, EPA is proposing to include in a final EPA rule 
regulatory text that includes incorporation by reference. In accordance 
with requirements of 1 CFR 51.5, and as discussed in Sections I and II 
of this preamble, EPA is proposing to incorporate by reference 
Jefferson County Regulation 2.04, Version 8, ``Construction or 
Modification of Major Sources in or Impacting upon Non-Attainment Areas 
(Emission Offset Requirements),'' locally effective on March 16, 2022, 
except for the ethanol production facilities exclusion in Sections 
1.4.3.20 and 5.20, which EPA is not proposing to act on at this time. 
Additionally, EPA proposes to maintain Sections 2.2.20 and 10 from 
Version 7 of Regulation 2.04, locally effective on March 17, 1993.\15\ 
EPA has made and will continue to make, these materials generally 
available through www.regulations.gov and at the EPA Region 4 Office 
(please contact the person identified in the For Further

[[Page 3619]]

Information Contact section of this preamble for more information).
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    \15\ See footnotes 11 and 12.
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IV. Proposed Action

    EPA is proposing to approve changes to the Jefferson County portion 
of the Kentucky SIP, submitted on June 13, 2022, with the exception of 
the ethanol production facilities exclusion in Regulations 1.4.3.20 and 
5.20, which EPA is not proposing to act on at this time. These 
revisions will align Jefferson County Regulation 2.04, with Federal 
NNSR regulations at 40 CFR 51.165. Additionally, EPA is proposing to 
approve Jefferson County's certification of NNSR requirements for the 
2015 8-hour ozone NAAQS for the Jefferson County portion of the 
Louisville, KY-IN 2015 ozone moderate nonattainment area which meets 
the requirements of CAA sections 172(c)(5) and 173 and 40 CFR 51.165 
and 51.1314. EPA has determined that the requested changes in 
Kentucky's June 13, 2022, SIP revision will not interfere with any 
applicable requirement concerning attainment and reasonable further 
progress, or any other applicable requirement of the CAA.

V. Statutory and Executive Order Reviews

    Under the CAA, the Administrator is required to approve a SIP 
submission that complies with the provisions of the CAA and applicable 
Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in 
reviewing SIP submissions, EPA's role is to approve state choices, 
provided that they meet the criteria of the CAA. Accordingly, this 
proposed action merely proposes to approve state law as meeting Federal 
requirements and does not impose additional requirements beyond those 
imposed by state law. For that reason, this proposed action:
    <bullet> Is not a significant regulatory action subject to review 
by the Office of Management and Budget under Executive Orders 12866 (58 
FR 51735, October 4, 1993) and 14094 (88 FR 21879, April 11, 2023);
    <bullet> Does not impose an information collection burden under the 
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
    <bullet> Is certified as not having a significant economic impact 
on a substantial number of small entities under the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.);
    <bullet> Does not contain any unfunded mandate or significantly or 
uniquely affect small governments, as described in the Unfunded 
Mandates Reform Act of 1995 (Pub. L. 104-4);
    <bullet> Does not have federalism implications as specified in 
Executive Order 13132 (64 FR 43255, August 10, 1999);
    <bullet> Is not subject to Executive Order 13045 (62 FR 19885, 
April 23, 1997) because it approves a state program;
    <bullet> Is not a significant regulatory action subject to 
Executive Order 13211 (66 FR 28355, May 22, 2001); and
    <bullet> Is not subject to requirements of section 12(d) of the 
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 
note) because application of those requirements would be inconsistent 
with the CAA.
    In addition, the SIP is not approved to apply on any Indian 
reservation land or in any other area where EPA or an Indian tribe has 
demonstrated that a tribe has jurisdiction. In those areas of Indian 
country, the rule does not have tribal implications and will not impose 
substantial direct costs on tribal governments or preempt tribal law as 
specified by Executive Order 13175 (65 FR 67249, November 9, 2000).
    Executive Order 12898 (Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations, 59 FR 7629, 
February 16, 1994) directs Federal agencies to identify and address 
``disproportionately high and adverse human health or environmental 
effects'' of their actions on minority populations and low-income 
populations to the greatest extent practicable and permitted by law. 
EPA defines environmental justice (EJ) as ``the fair treatment and 
meaningful involvement of all people regardless of race, color, 
national origin, or income with respect to the development, 
implementation, and enforcement of environmental laws, regulations, and 
policies.'' EPA further defines the term fair treatment to mean that 
``no group of people should bear a disproportionate burden of 
environmental harms and risks, including those resulting from the 
negative environmental consequences of industrial, governmental, and 
commercial operations or programs and policies.''
    Jefferson County evaluated EJ considerations as part of its SIP 
submittal even though the CAA and applicable implementing regulations 
neither prohibit nor require an evaluation. The analysis was done for 
the purpose of providing additional context and information about this 
proposed rulemaking to the public, not as a basis of the proposed 
action. EPA is proposing action under the CAA on bases independent of 
Jefferson County's evaluation of EJ. In addition, there is no 
information in the record upon which this decision is based that is 
inconsistent with the stated goal of E.O. 12898 of achieving EJ for 
people of color, low-income populations, and Indigenous peoples.

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Carbon monoxide, 
Incorporation by reference, Intergovernmental relations, Nitrogen 
dioxide, Ozone, Particulate matter, Reporting and recordkeeping 
requirements, Sulfur oxides, Volatile organic compounds.

    Authority:  42 U.S.C. 7401 et seq.

    Dated: January 16, 2024.
Jeaneanne Gettle,
Acting Regional Administrator, Region 4.
[FR Doc. 2024-01029 Filed 1-18-24; 8:45 am]
BILLING CODE 6560-50-P


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