[Federal Register Volume 89, Number 87 (Friday, May 3, 2024)]
[Proposed Rules]
[Pages 36870-36905]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-04029]



[[Page 36869]]

Vol. 89

Friday,

No. 87

May 3, 2024

Part II





Environmental Protection Agency





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40 CFR Parts 51 and 52





Prevention of Significant Deterioration (PSD) and Nonattainment New 
Source Review (NNSR): Regulations Related to Project Emissions 
Accounting; Proposed Rule

Federal Register / Vol. 89, No. 87 / Friday, May 3, 2024 / Proposed 
Rules

[[Page 36870]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51 and 52

[EPA-HQ-OAR-2022-0381; FRL-9249-01-OAR]
RIN 2060-AV62


Prevention of Significant Deterioration (PSD) and Nonattainment 
New Source Review (NNSR): Regulations Related to Project Emissions 
Accounting

AGENCY: The Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: In this action, the Environmental Protection Agency (EPA) is 
proposing revisions to the preconstruction permitting regulations that 
apply to modifications at existing major stationary sources in the New 
Source Review (NSR) program under the Clean Air Act (CAA or Act). The 
proposed revisions include revising the definition of ``project'' in 
the NSR regulations, adding additional recordkeeping and reporting 
requirements applicable to minor modifications at existing major 
stationary sources, and proposing to require that decreases accounted 
for in the Step 1 significant emissions increase calculation be 
enforceable.

DATES: Comments: Comments must be received on or before July 2, 2024.
    Public hearing: If anyone contacts the EPA requesting a public 
hearing by May 8, 2024, the EPA will hold a virtual public hearing. See 
SUPPLEMENTARY INFORMATION for information on requesting and registering 
for a public hearing.

ADDRESSES: 
    Comments: You may send comments, identified by Docket ID No. EPA-
HQ-OAR-2022-0381, by any of the following methods:
    Federal eRulemaking Portal: https://www.regulations.gov/ (our 
preferred method). Follow the online instructions for submitting 
comments.
    <bullet> Email:<a href="/cdn-cgi/l/email-protection#3a5b175b545e1748175e5559515f4e7a5f4a5b145d554c"><span class="__cf_email__" data-cfemail="61004c000f054c134c050e020a0415210411004f060e17">[email protected]</span></a>. Include Docket ID No. EPA-
HQ-OAR-2022-0381 in the subject line of the message.
    <bullet> Fax: (202) 566-9744. Attention Docket ID No. EPA-HQ-OAR-
2022-0381.
    <bullet> Mail: U.S. Environmental Protection Agency, EPA Docket 
Center, Docket ID No. EPA-HQ-OAR-2022-0381, Mail Code 28221T, 1200 
Pennsylvania Avenue NW, Washington, DC 20460.
    <bullet> Hand/courier delivery: EPA Docket Center, WJC West 
Building, Room 3334, 1301 Constitution Avenue NW, Washington, DC 20004. 
The Docket Center's hours of operation are 8:30 a.m.-4:30 p.m., Monday-
Friday (except Federal holidays).
    Instructions: All submissions received must include the Docket ID 
No. EPA-HQ-OAR-2022-0381 for this rulemaking. Comments received may be 
posted without change to https://www.regulations.gov/, including any 
personal information provided. For detailed instructions on sending 
comments and additional information on the rulemaking process, see the 
SUPPLEMENTARY INFORMATION section of this document. For further 
information on EPA Docket Center services and the current status, 
please visit us online at https://www.epa.gov/dockets. In addition, the 
EPA has a website for NSR rulemakings at: https://www.epa.gov/nsr. The 
website includes the EPA's proposed and final NSR regulations, as well 
as guidance documents and technical information related to 
preconstruction permitting.

FOR FURTHER INFORMATION CONTACT: Mr. Peter Keller, Air Quality Policy 
Division, Office of Air Quality Planning and Standards (C539-04), 
Environmental Protection Agency, Post Office Box 12055, Research 
Triangle Park, NC 27711; telephone number: (919) 541-2065; email 
address: <a href="/cdn-cgi/l/email-protection#365d535a5a53441846534253447653465718515940"><span class="__cf_email__" data-cfemail="4d26282121283f633d2839283f0d283d2c632a223b">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: 
    Public hearing. To request a virtual public hearing, contact Ms. 
Pamela Long at (919) 541- 0641 or by email at <a href="/cdn-cgi/l/email-protection#8ee2e1e0e9a0feefe3ceebfeefa0e9e1f8"><span class="__cf_email__" data-cfemail="15797a7b723b657478557065743b727a63">[email protected]</span></a>. If 
requested, the virtual hearing will be held on May 20, 2024. The 
hearing will convene at 9:00 a.m. Eastern Time (ET) and will conclude 
at 3:00 p.m. ET. The EPA may close a session 15 minutes after the last 
pre-registered speaker has testified if there are no additional 
speakers. The EPA will announce further details at https://www.epa.gov/nsr.
    Upon publication of this document in the Federal Register, the EPA 
will begin pre-registering speakers for the hearing, if a hearing is 
requested. To register to speak at the virtual hearing, please use the 
online registration form available at https://www.epa.gov/nsr or 
contact Ms. Pamela Long at (919) 541-0641 or by email at 
<a href="/cdn-cgi/l/email-protection#402c2f2e276e30212d002530216e272f36"><span class="__cf_email__" data-cfemail="44282b2a236a342529042134256a232b32">[email protected]</span></a>. The last day to pre-register to speak at the hearing 
will be May 16, 2024. Prior to the hearing, the EPA will post a general 
agenda that will list pre-registered speakers in approximate order at: 
https://www.epa.gov/nsr.
    The EPA will make every effort to follow the schedule as closely as 
possible on the day of the hearing; however, please plan for the 
hearings to run either ahead of schedule or behind schedule.
    Each commenter will have 3 minutes to provide oral testimony. The 
EPA encourages commenters to provide the EPA with a copy of their oral 
testimony electronically (via email) by emailing it to 
<a href="/cdn-cgi/l/email-protection#e08c8f8e87ce90818da0859081ce878f96"><span class="__cf_email__" data-cfemail="791516171e57091814391c0918571e160f">[email protected]</span></a>. The EPA also recommends submitting the text of your 
oral testimony as written comments to the rulemaking docket.
    The EPA may ask clarifying questions during the oral presentations 
but generally will not respond to the presentations at that time. 
Written statements and supporting information submitted during the 
comment period will be considered with the same weight as oral 
testimony and supporting information presented at the public hearing.
    Please note that any updates made to any aspect of the hearing will 
be posted online at https://www.epa.gov/nsr. While the EPA expects the 
hearing to go forward as set forth earlier, please monitor our website 
or contact Ms. Pamela Long at (919) 541-0641 or by email at 
<a href="/cdn-cgi/l/email-protection#583437363f76283935183d2839763f372e"><span class="__cf_email__" data-cfemail="462a2928216836272b0623362768212930">[email protected]</span></a> to determine if there are any updates. The EPA does 
not intend to publish a document in the Federal Register announcing 
updates. If you require the services of a translator or special 
accommodations such as audio description, please preregister for the 
hearing with Ms. Pamela Long and describe your needs by May 13, 2024. 
The EPA may not be able to arrange special accommodations without 
advanced notice.
    Docket. The EPA has established a docket for this rulemaking under 
Docket ID No. EPA-HQ-OAR-2022-0381. All documents in the docket are 
listed in the Regulations.gov index. Although listed in the index, some 
information is not publicly available, e.g., Confidential Business 
Information (CBI) or other information whose disclosure is restricted 
by statute. Certain other material, such as copyrighted material, is 
not placed on the internet and will be publicly available only in hard 
copy. Publicly available docket materials are available either 
electronically in Regulations.gov or in hard copy at the EPA Docket 
Center, Room 3334, EPA WJC West Building, 1301 Constitution Avenue NW, 
Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 
p.m., Monday through Friday, excluding legal holidays. The telephone 
number for the Public Reading Room is (202) 566-1744, and the telephone 
number for the EPA Docket Center is (202) 566-1742.
    Instructions. Direct your comments to Docket ID No. EPA-HQ-OAR-
2022-

[[Page 36871]]

0381. The EPA's policy is that all comments received will be included 
in the public docket without change and may be made available online at 
https://www.regulations.gov, including any personal information 
provided, unless the comment includes information claimed to be CBI or 
other information whose disclosure is restricted by statute. Do not 
submit information that you consider to be CBI or otherwise protected 
through https://www.regulations.gov or email. This type of information 
should be submitted by mail as discussed later.
    The EPA may publish any comment received to its public docket. 
Multimedia submissions (audio, video, 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. The 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.
    The https://www.regulations.gov website is an ``anonymous access'' 
system, which means the EPA will not know your identity or contact 
information unless you provide it in the body of your comment. If you 
send an email comment directly to the EPA without going through https://www.regulations.gov, your email address will be automatically captured 
and included as part of the comment that is placed in the public docket 
and made available on the internet. If you submit an electronic 
comment, the EPA recommends that you include your name and other 
contact information in the body of your comment and with any digital 
storage media you submit. If the EPA cannot read your comment due to 
technical difficulties and cannot contact you for clarification, the 
EPA may not be able to consider your comment. Electronic files should 
not include special characters or any form of encryption and be free of 
any defects or viruses. For additional information about the EPA's 
public docket, visit the EPA Docket Center homepage at https://www.epa.gov/dockets.
    Submitting CBI. Do not submit information containing CBI to the EPA 
through https://www.regulations.gov/. Clearly mark the part or all of 
the information that you claim to be CBI. For CBI information on any 
digital storage media that you mail to the EPA, mark the outside of the 
digital storage media as CBI and then identify electronically within 
the digital storage media the specific information that is claimed as 
CBI. In addition to one complete version of the comments that includes 
information claimed as CBI, you must submit a copy of the comments that 
does not contain the information claimed as CBI directly to the public 
docket through the procedures outlined in Instructions. If you submit 
any digital storage media that does not contain CBI, mark the outside 
of the digital storage media clearly that it does not contain CBI. 
Information not marked as CBI will be included in the public docket and 
EPA's electronic public docket without prior notice. Information marked 
as CBI will not be disclosed except in accordance with procedures set 
forth in 40 Code of Federal Regulations (CFR) part 2. Our preferred 
method to receive CBI is for it to be transmitted electronically using 
email attachments, File Transfer Protocol (FTP), or other online file 
sharing services (e.g., Dropbox, OneDrive, Google Drive). Electronic 
submissions must be transmitted directly to the OAQPS CBI Office using 
the email address, <a href="/cdn-cgi/l/email-protection#d4bbb5a5a4a7b7b6bd94b1a4b5fab3bba2"><span class="__cf_email__" data-cfemail="8fe0eefefffcecede6cfeaffeea1e8e0f9">[email protected]</span></a>, and should include clear CBI 
markings as described later. If assistance is needed with submitting 
large electronic files that exceed the file size limit for email 
attachments, and if you do not have your own file sharing service, 
please email <a href="/cdn-cgi/l/email-protection#46292737363525242f0623362768212930"><span class="__cf_email__" data-cfemail="2e414f5f5e5d4d4c476e4b5e4f00494158">[email protected]</span></a> to request a file transfer link. If 
sending CBI information through the postal service, please send it to 
the following address: OAQPS Document Control Officer (C404-02), OAQPS, 
U.S. Environmental Protection Agency, Research Triangle Park, North 
Carolina 27711, Attention Docket ID No. EPA-HQ-OAR-2023-0401. The 
mailed CBI material should be double wrapped and clearly marked. Any 
CBI markings should not show through the outer envelope.
    Preamble acronyms and abbreviations. We use multiple acronyms and 
terms in this preamble. While this list may not be exhaustive, to ease 
the reading of this preamble and for reference purposes, the EPA 
defines the following terms and acronyms here:

BACT Best Available Control Technology
CAA Clean Air Act
CBI Confidential Business Information
CFR Code of Federal Regulations
EPA Environmental Protection Agency
EUSGU Electric Utility Steam Generating Unit
FR Federal Register
LAER Lowest Achievable Emissions Rate
NSR New Source Review
NNSR Nonattainment New Source Review
PEA Project Emissions Accounting
PSD Prevention of Significant Deterioration
PTE Potential to Emit
RP Reasonable Possibility in Recordkeeping and Reporting
SER Significant Emissions Rate
SIP State Implementation Plan

    Organization of this document. The information in this preamble is 
organized as follows:

I. General Information
    A. Executive Summary
    B. Does this action apply to me?
    C. What should I consider as I prepare my comments for the EPA?
    D. Where can I get a copy of this document and other related 
information?
II. Background
    A. New Source Review Permitting Program
    B. Major Modifications Under the NSR Program
    C. Project Emissions Accounting
    D. Project Aggregation
    E. ``Reasonable Possibility'' Recordkeeping and Reporting 
Provisions
III. Proposed Definition of ``Project''
IV. Safeguard Against ``Double Counting'' of Emissions Decreases and 
Increases
V. Enforceability of Emissions Decreases
VI. ``Reasonable Possibility'' Recordkeeping and Reporting 
Regulations
    A. Clarification of Existing ``Reasonable Possibility'' 
Requirements
    B. Proposed New ``Reasonable Possibility'' Requirements
    C. Additional Considerations for Proposed Reasonable Possibility 
Revisions
VII. Revisions To Clarify Statutory Limitations on Netting in 
Nonattainment NSR
VIII. Implementation of These Proposed Revisions for Delegated and 
SIP-Approved Programs
IX. Costs, Benefits, and Other Impacts of the Proposed Rule
    A. Proposed Definition of ``Project''
    B. Enforceability of Emissions Decreases
    C. Clarifications and Revisions to the ``Reasonable 
Possibility'' (RP) in Recordkeeping and Reporting Provisions
    D. Revisions to Nonattainment Applicability Provisions
X. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review and 
Executive Order 14094: Modernizing Regulatory Review
    B. Paperwork Reduction Act (PRA)
    C. Regulatory Flexibility Act (RFA)
    D. Unfunded Mandates Reform Act (UMRA)
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination With 
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children From 
Environmental Health and Safety Risks
    H. Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act (NTTAA)

[[Page 36872]]

    J. Executive Order 12898: Federal Actions To Address 
Environmental Justice in Minority Populations and Low-Income 
Populations and Executive Order 14096: Revitalizing our Nation's 
Commitment to Environmental Justice for All
XI. Statutory Authority

I. General Information

A. Executive Summary

    The EPA is proposing several revisions to its NSR preconstruction 
permitting regulations intended to improve implementation and 
strengthen enforceability of the NSR program provisions established in 
a 2020 rulemaking titled ``Prevention of Significant Deterioration 
(PSD) and Nonattainment New Source Review (NNSR): Project Emissions 
Accounting rule'' (``project emissions accounting'' or ``2020 PEA 
rule'').\1\ The revisions proposed in this document include (1) 
revisions to the definition of the term ``project'' to include criteria 
for determining the scope of a project that may be subject to the major 
NSR regulations; (2) revisions to the monitoring, recordkeeping and 
reporting provisions in the NSR regulations to improve compliance with, 
and enforcement of, the NSR applicability process; and (3) revisions to 
require that emissions decreases included in the significant emissions 
increase determination of the NSR applicability process be enforceable.
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    \1\ Prevention of Significant Deterioration (PSD) and 
Nonattainment New Source Review (NNSR): Project Emissions 
Accounting, 85 FR 74890 (November 24, 2020).
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    The NSR regulations establish a two-step process for determining 
when a modification to an existing major stationary source is subject 
to major NSR requirements. Under Step 1, prior to beginning 
construction, the source owner or operator first assesses whether a 
project would result in a significant emissions increase. Step 2 
involves determining whether the project would also result in a 
significant net emissions increase from the major stationary source. 
Under these regulations, a project is a major modification that 
requires an NSR permit if a project results in both a significant 
emissions increase and a significant net emissions increase. The 
activities included in a ``project'' define the scope of the analysis 
under Step 1 of the NSR applicability process. In this action, the EPA 
is proposing to define the term ``project'' with greater specificity to 
ensure appropriate and consistent application of that term. The EPA is 
also proposing to improve accountability and compliance with this 
process by requiring that decreases in emissions associated with a 
project that are included in the significant emissions increase 
determination be enforceable.
    Also, to enhance owner/operator accountability and facilitate 
compliance with the NSR applicability requirements, the EPA is 
proposing revisions to the recordkeeping and reporting requirements in 
the NSR regulations' ``reasonable possibility'' provisions that apply 
to projects at major stationary sources that are evaluated using the 
actual-to-projected-actual applicability test. The ``reasonable 
possibility'' provisions apply in those circumstances where the owner/
operator determines that the project does not qualify as a major 
modification but where there is a ``reasonable possibility,'' as that 
term is defined in the regulations, that the project may nonetheless 
result in a significant emissions increase. The revisions to the 
reasonable possibility provisions in this proposal comport with the 
intent of the recordkeeping and reporting requirements as initially 
promulgated by the EPA in 2002 to improve compliance with the NSR 
applicability process by owners or operators that rely on the actual-
to-projected-actual applicability test when determining, before 
beginning actual construction, that a project does not constitute a 
major modification.\2\ The EPA is also proposing, in light of the 2020 
codification of project emissions accounting, to expand the 
applicability of the reasonable possibility provisions to all source 
owners or operators that use project emissions accounting to take 
credit for a decrease in emissions under the significant emissions 
increase determination. The EPA is proposing to require that all owners 
or operators of major stationary sources subject to the ``reasonable 
possibility'' recordkeeping and reporting requirements submit pre-
project records to the reviewing authority and is proposing to specify 
the information these pre-project records must include.
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    \2\ See 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, 
67 FR 80185 (December 31, 2002) (establishing a new procedure for 
determining ``baseline actual emissions'' and supplementing the 
existing actual-to-potential applicability test with an actual-to-
projected-actual applicability test for determining if a physical or 
operational change at an existing source will result in an emissions 
increase).
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B. Does this action apply to me?

    Entities potentially affected directly by this action include air 
pollution emissions sources in all industry categories. Entities 
potentially affected by this action also include state, local and 
tribal air pollution control agencies responsible for issuing 
preconstruction permits pursuant to the major NSR programs.

C. What should I consider as I prepare my comments for the EPA?

    When submitting comments, remember to:
    <bullet> Identify the rulemaking by docket number and other 
identifying information (subject heading, Federal Register date and 
page number).
    <bullet> Follow directions. The proposed rule may ask you to 
respond to specific questions or organize comments by referencing a 
Code of Federal Regulations (CFR) part or section number.
    <bullet> Explain why you agree or disagree, suggest alternatives 
and substitute language for your requested changes.
    <bullet> Describe any assumptions and provide any technical 
information and/or data that you used to support your comment.
    <bullet> If you estimate potential costs or burdens, explain how 
you arrived at your estimate in sufficient detail to allow for it to be 
reproduced.
    <bullet> Provide specific examples to illustrate your concerns 
wherever possible and suggest alternatives.
    <bullet> Explain your views as clearly as possible, avoiding the 
use of profanity or personal threats.
    <bullet> Make sure to submit your comments by the comment period 
deadline identified.

D. Where can I get a copy of this document and other related 
information?

    In addition to being available in the docket, an electronic copy of 
this Federal Register document will be posted at https://www.epa.gov/nsr.

II. Background

    The NSR program is a CAA program that requires certain stationary 
sources of air pollution to obtain permits prior to construction. The 
major NSR program applies to new construction and modifications of 
existing sources that emit ``regulated NSR pollutants'' over certain 
thresholds. New or modifying sources that emit regulated NSR pollutants 
in levels under those thresholds may be subject to minor NSR 
requirements or may be excluded from NSR altogether.
    In November 2020, the EPA promulgated the ``Prevention of 
Significant Deterioration (PSD) and Nonattainment New Source Review 
(NNSR): Project Emissions Accounting''

[[Page 36873]]

(PEA) rule to clarify the accounting procedures that apply when 
determining whether a physical change or a change in the method of 
operation (i.e., a project) at a major stationary source would result 
in a significant emissions increase under the major NSR preconstruction 
permitting programs.\3\ The 2020 PEA rule clarified that both increases 
and decreases in emissions resulting from a proposed project shall be 
considered in Step 1 of the NSR major modification applicability 
test.\4\ The EPA initiated this proposed rulemaking based on concerns 
raised by stakeholders on the implementation of the NSR program 
following promulgation of the 2020 PEA rule.
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    \3\ Prevention of Significant Deterioration (PSD) and 
Nonattainment New Source Review (NNSR): Project Emissions 
Accounting, 85 FR 74890 (November 24, 2020).
    \4\ While the EPA determined that the revisions to the 
regulations at 40 CFR 52.21 adopted in the 2020 PEA rule apply to 
the EPA and reviewing authorities that have been delegated federal 
authority from the EPA to issue major NSR permits on behalf of the 
EPA, for state and local air agencies that implement the NSR program 
through EPA-approved SIPs, section 116 of the CAA allows these 
states and local air agencies to adopt more stringent SIP emission 
control requirements than required by the EPA's regulations. 
Therefore, reviewing authorities that do not allow for PEA have 
applicability requirements that are at least as stringent as those 
required by the Act or the EPA's implementing regulations and, 
therefore, are not required to submit SIP revisions or stringency 
determinations to the EPA incorporating PEA. 85 FR 74904.
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    In developing this proposed rulemaking, the EPA has considered a 
petition for reconsideration it received on the 2020 PEA rule, the 
comments received on that rule's proposal, and the Agency's own 
experience in analyzing and enforcing the applicable regulatory 
provisions.\5\ The petition for reconsideration described three primary 
concerns with the PEA rule.\6\ These concerns are that (1) the final 
rule fails to ensure that offsetting emission decreases used to show 
that a ``project'' will not cause a significant emission increase in 
Step 1 of the NSR applicability analysis result from the change being 
evaluated; (2) the final rule allows a source to avoid NSR by 
offsetting emission increases resulting from a change with non-
contemporaneous emission decreases; and (3) that the EPA has not 
ensured that project emission decreases will occur and will be 
maintained. The EPA denied the petition for reconsideration on the 
grounds that the petition did not make the showing required by CAA 
section 307(d)(7)(b).\7\ However, the EPA agreed that the concerns 
raised in the petition warranted further consideration by the EPA, and 
the agency therefore initiated this rulemaking action. The EPA has 
considered these concerns as well as comments received on the proposed 
PEA rule in the development of this action.
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    \5\ Letter from Sanjay Narayan et al., to Acting Administrator 
Jane Nishida, ``Re: Petition for Reconsideration of `Prevention of 
Significant Deterioration (PSD) and Nonattainment New Source Review 
(NNSR): Project Emissions Accounting,' 85 FR 74,890 (November 24, 
2020), Docket ID No. EPA-HQ-OAR-2018-0048 and for Withdrawal of 
Guidance Memorandum titled `Project Emissions Accounting Under the 
New Source Review Preconstruction Permitting Program' (March 13, 
2018) (OAQPS-2020-683 and OAQPS-2020-223),'' January 22, 2021, 
(``Petition for Reconsideration''), available at https://www.epa.gov/system/files/documents/2021-10/final-nsr-accounting-rule-reconsideration-petition-1_22_21.pdf.
    \6\ The petition also discussed a 2018 Memorandum from the EPA 
Administrator E. Scott Pruitt, to Regional Administrators, titled, 
``Project Emissions Accounting Under the New Source Review 
Preconstruction Permitting Program,'' March 13, 2018 (``March 2018 
Memorandum'') available at: https://www.epa.gov/sites/default/files/2018-03/documents/nsr_memo_03-13-2018.pdf. The March 2018 Memorandum 
explained that ``the EPA interpreted the current NSR regulations as 
providing that emissions decreases as well as increases are to be 
considered in Step 1 of the NSR applicability process, where those 
decreases and increases are part of a single project.'' More 
specifically, in the March 2018 Memorandum, the EPA interpreted the 
pre-2020 major NSR regulations to mean that emissions increases and 
decreases could be considered in Step 1 for projects that involve 
multiple types of emissions units in the same manner as they are 
considered for projects that only involve new or only involve 
existing emissions units.
    \7\ Denial of Petition for Reconsideration and Administrative 
Stay: ``Prevention of Significant Deterioration (PSD) and 
Nonattainment New Source Review (NNSR): Project Emissions 
Accounting,'' 86 FR 57585 (October 18, 2021).
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A. New Source Review Permitting Program

    The NSR permitting program applies to sources located in an area 
where the National Ambient Air Quality Standards (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.
    Major sources locating, or located, in an area that is in 
attainment or unclassifiable for a particular regulated NSR pollutant 
must obtain a Prevention of Significant Deterioration (PSD) permit for 
that pollutant prior to constructing or undergoing a major modification 
at the source.\8\ These PSD permits may also cover pollutants for which 
there are no NAAQS.\9\ Major NSR permits for sources that are in an 
area designated nonattainment for a particular regulated NSR pollutant, 
and which emit that pollutant in excess of the specified nonattainment 
threshold for that pollutant, are referred to as nonattainment NSR 
(NNSR) permits. The CAA requires that sources subject to PSD meet 
emission limits based on Best Available Control Technology (BACT) as 
specified by CAA section 165(a)(4), and that sources subject to NNSR 
meet limits based on Lowest Achievable Emissions Rate (LAER) pursuant 
to CAA section 173(a)(2). Other requirements to obtain a major NSR 
permit vary depending on whether the permit is a PSD or NNSR permit.
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    \8\ In this action, the EPA refers to ``source'' as shorthand 
for ``source owner/operator.''
    \9\ ``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 fluorides, 
sulfuric acid mist, hydrogen sulfide, total reduced sulfur, and 
reduced sulfur compounds, including others. 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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    A stationary source is subject to major NSR requirements if (1) a 
new stationary source is proposed with a potential to emit (PTE) a 
regulated NSR pollutant at levels that will meet or exceed statutory 
emissions thresholds,\10\ such that it constitutes a ``major stationary 
source,'' or (2) an existing major stationary source proposes a project 
that constitutes a ``major modification,'' as discussed further in the 
following subsection.\11\
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    \10\ For PSD, the statute uses the term ``major emitting 
facility,'' which is defined as a stationary source that emits, or 
has a 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.
    \11\ A major stationary source includes any physical change that 
would occur at a stationary source not otherwise qualifying under 40 
CFR 52.21(b)(1) as a major stationary source, if the change would 
constitute a major stationary source by itself. See, e.g., 40 CFR 
52.21(b)(1)(i)(c).
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    Projects that do not trigger major NSR requirements may still be 
reviewed under SIP-approved preconstruction permit programs, known as 
minor NSR programs, to ensure that the NAAQS are protected. Under CAA 
section 110, the CAA Parts C and D permitting programs, of which NSR is 
a component, are part of a broader requirement to regulate the

[[Page 36874]]

construction and modification of stationary sources.\12\ The minor NSR 
program, includes permitting requirements for modifications at 
stationary sources that are not major modifications (e.g., minor 
modifications) and those requirements exist to ensure that changes at a 
stationary source that affect emissions, but are not subject to major 
source permitting, do not cause or contribute to NAAQS violations.\13\
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    \12\ Section 110(a)(2)(C) of the CAA requires that each SIP 
``include a program to provide for the . . . regulation of the 
modification and construction of any stationary source within the 
areas covered by the plan as necessary to assure that national 
ambient air quality standards are achieved, including a permit 
program as required in parts C and D.'' See 40 CFR 51.160-164.
    \13\ A minor source that undergoes a physical change that would 
itself be considered major is subject to major source requirements. 
40 CFR 52.21(b)(1)(i)(c) (``Any physical change that would occur at 
a stationary source not otherwise qualifying under paragraph (b)(1) 
of this section as a major stationary source, if the change would 
constitute a major stationary source by itself'').
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B. Major Modifications Under the NSR Program

    The EPA's regulations define ``major modification'' as any physical 
change or change in the method of operation of an existing major 
stationary source that would result in a significant emissions increase 
of a regulated NSR pollutant and a significant net emissions increase 
of that pollutant from the major stationary source.\14\ The NSR 
regulations define ``project'' as a physical change in, or change in 
the method of operation of, an existing major stationary source.\15\ 
Following from these definitions, the EPA's current implementing 
regulations establish a two-step process for determining major NSR 
applicability: a project must result in both (1) a significant 
emissions increase (referred to as ``Step 1''); and (2) a significant 
net emissions increase at the stationary source that takes into account 
emissions increases and emissions decreases attributable to other 
projects undertaken at the stationary source within a contemporaneous 
timeframe (referred to as ``Step 2,'' or ``contemporaneous netting''). 
An emissions increase of a regulated NSR pollutant is considered 
significant if the increase would be equal to or greater than any of 
the pollutant-specific Significant Emissions Rates (SERs) listed under 
the definition of ``significant'' in the applicable PSD or NNSR 
regulations.\16\ For those regulated NSR pollutants not specifically 
listed, any increase in emissions is significant for purposes of the 
PSD program.\17\ As codified in the 2002 NSR Reform Rule,\18\ Step 1 
considers the effect of the project alone, and Step 2 considers the 
effect of the project and any other emissions changes at the major 
stationary source that are contemporaneous to the project (e.g., 
generally within a 5-year period plus construction) and creditable.
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    \14\ 40 CFR 52.21(b)(2).
    \15\ 40 CFR 52.21(b)(52).
    \16\ 40 CFR 52.21(b)(23) defines when emissions of listed 
pollutants are considered significant under the federal PSD program. 
These pollutants include, but are not limited to, the following: 
pollutants for which a NAAQS has been promulgated, fluorides, and 
sulfuric acid mist. 40 CFR 51.165(a)(1)(x) defines when emissions of 
listed pollutants are considered significant under the federal NNSR 
program.
    \17\ 40 CFR 52.21(b)(23)(ii). Under NNSR, regulated NSR 
pollutants include only pollutants for which NAAQS have been 
established and precursors to those pollutants for which the area is 
designated nonattainment. See 40 CFR 51.165(a)(1)(xxxvii). The SERs 
for all these pollutants are enumerated under 40 CFR 
51.165(a)(1)(x)(A) and part 51, appendix S.II.A.10; additionally, 
per 40 CFR 52.21(b)(23)(iii), significant also means any emissions 
rate or any net emissions increase associated with a major 
stationary source or major modification, which would construct 
within 10 kilometers of a Class I area, and have an impact on such 
area equal to or greater than 1 [micro]g/m\3\ (24-hour average).
    \18\ In 2002, the EPA issued a final rule that revised the 
regulations governing the major NSR program. The agency refers 
generally to this rule as the ``NSR Reform Rule.'' As part of the 
NSR Reform Rule, the EPA revised the NSR applicability requirements 
for modifications to allow sources more flexibility to respond to 
rapidly changing markets and plan for future investments in 
pollution control and prevention technologies. 67 FR 80185 (December 
31, 2002).
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    The procedure for calculating whether a proposed project would 
result in a significant emissions increase in Step 1 depends upon the 
type of emissions unit(s) to be included in the proposed project, which 
can be new, existing, or a combination of new and existing units (i.e., 
multiple types of emissions units).\19\ A ``new emissions unit'' is 
defined as ``any emissions unit that is (or will be) newly constructed 
and that has existed for less than two years from the date such 
emission unit first operated.'' \20\ If a source undertakes a project 
that involves constructing only one or more new emissions units, it 
applies the actual-to-potential (ATP) test, under which it determines 
whether the sum of the difference between the PTE of a regulated NSR 
pollutant from each new emissions unit following completion of the 
project and the baseline actual emissions equals or exceeds the 
significant amount for that pollutant.\21\
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    \19\ 40 CFR 52.21(b)(7). There are two types of emissions units, 
new and existing. A ``replacement unit'' as defined in the NSR 
regulations is an existing emissions unit.
    \20\ 40 CFR 52.21(b)(7)(i).
    \21\ The ``significant amount,'' also known as the ``significant 
emissions rate'' for regulated NSR pollutants, can be found at 40 
CFR 52.21(b)(23).
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    If the source undertakes a project that involves only changes to 
one or more existing emissions units, the source may use the actual-to-
projected-actual (ATPA) test or the ATP test to determine the resulting 
emissions increase.\22\ Under the ATPA test, a significant emissions 
increase of a regulated NSR pollutant is projected to occur if the sum 
of the difference between the projected actual emissions and the 
baseline actual emissions for each existing emissions unit equals or 
exceeds the significant amount for that pollutant.\23\ If a source 
undertakes a project that includes both new and existing emissions 
units, it must use the ATP test to determine the emissions change for 
each new emission unit while the source can choose to use either the 
ATPA test or the ATP test for each existing unit.
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    \22\ 40 CFR 52.21(b)(41)(ii)(d). A source can also opt to use 
the actual-to-potential test for existing units.
    \23\ 40 CFR 52.21(a)(2)(iv)(c) and 40 CFR 52.21(a)(2)(iv)(f).
---------------------------------------------------------------------------

    The ``projected actual emissions'' of a unit is the maximum annual 
rate, in tpy, the existing emissions unit is projected to emit a 
regulated NSR pollutant in the future.\24\ PTE is defined as a unit's 
maximum capacity to emit a pollutant under its physical and operational 
design.\25\ The baseline actual emissions for purposes of determining 
the emissions increase that will result from the initial construction 
and operation of a new unit is zero; and thereafter, for all other 
purposes, equals the unit's PTE.\26\ Baseline actual emissions for 
existing units are determined based on the rate of actual emissions (in 
tpy) a unit has emitted in the past.\27\
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    \24\ The ``projected actual emissions'' of a unit is ``the 
maximum annual rate, in tons per year, at which an existing emission 
unit is projected to emit a regulated NSR pollutant in any one of 
the 5 years (12-month period) following the date the unit resumes 
regular operation after the project, or in any one of the 10 years 
following that date, if the project involves increasing the 
emissions unit's design capacity or its potential to emit of that 
regulated NSR pollutant and full utilization of the unit would 
result in a significant emissions increase or a significant net 
emissions increase at the major stationary source.'' 40 CFR 
52.21(b)(41)(i).
    \25\ 40 CFR 52.21(b)(4).
    \26\ 40 CFR 52.21(b)(48)(iii).
    \27\ 40 CFR 52.21(b)(48).
---------------------------------------------------------------------------

    If a source determines that a significant emissions increase would 
occur in Step 1, then the source may elect to perform the Step 2 
contemporaneous netting analysis to determine if a significant net 
emissions increase would not occur at the major source and thus 
conclude the project does not trigger major NSR permitting, or in the 
alternative, the source may elect to forgo Step 2 and assume PSD or

[[Page 36875]]

NNSR is triggered.\28\ Under Step 2, the source accounts for all other 
increases and decreases in actual emissions that are contemporaneous to 
the project and are creditable.\29\ An increase or decrease in actual 
emissions is contemporaneous if it occurs between 5 years before 
construction on the particular change commences and the date that the 
increase from the particular change occurs.\30\ To be creditable, an 
increase or decrease cannot have been previously relied upon in the 
issuance of any NSR permit by the reviewing authority; \31\ and an 
increase in actual emissions is only creditable to the extent that the 
new level of actual emissions exceeds the old level.\32\ Further, a 
decrease may be accounted for in Step 2 only to the extent that (1) the 
old level of actual emissions or the old level of allowable emissions, 
whichever is lower, exceeds the new level of actual emissions; (2) it 
is enforceable as a practical matter at and after the time that actual 
construction on the particular change begins; and (3) it has 
approximately the same qualitative significance for public health and 
welfare as that attributed to the increase from the particular 
change.\33\ In addition, in nonattainment areas, emissions reductions 
are only creditable if they have not been relied upon for demonstrating 
attainment or reasonable further progress.\34\
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    \28\ The project is not a major modification if it does not 
cause a significant emissions increase. If the project causes a 
significant emissions increase, then the project is a major 
modification only if it also results in a significant net emissions 
increase. 40 CFR 52.21(a)(2)(iv)(a).
    \29\ 40 CFR 52.21(b)(3)(i)(b).
    \30\ 40 CFR 52.21(b)(3)(ii); Permitting authorities can select 
an alternate contemporaneous period if approved in their Part D SIP 
or PSD program. See 45 FR 53676, 52680 (August 7, 1980).
    \31\ 40 CFR 52.21(b)(3)(iii)(a).
    \32\ 40 CFR 52.21(b)(3)(v).
    \33\ 40 CFR 52.21(b)(3)(i)(b); 40 CFR 52.21(b)(3)(iii); 40 CFR 
52.21(b)(3)(vi).
    \34\ 40 CFR 51.165(a)(1)(vi)(A)(2); 40 CFR 51.165(a)(1)(vi)(C); 
40 CFR 51.165(a)(1)(vi)(E).
---------------------------------------------------------------------------

    A project that results in a significant emissions increase in Step 
1 and a significant net emissions increase under Step 2 of the NSR 
major modification applicability test is considered a major 
modification and requires a major NSR permit.

C. Project Emissions Accounting

    In November 2020, the EPA promulgated the PEA rule \35\ in which 
the EPA finalized clarifications to the Step 1 provisions of the major 
modification applicability test (e.g., 40 CFR 52.21(a)(2)(iv)).\36\ The 
revised language clarified that both emissions increases and decreases 
from projects may be considered in Step 1 of the NSR major modification 
applicability test, regardless of the types of emissions units 
implicated in that project.
---------------------------------------------------------------------------

    \35\ Prevention of Significant Deterioration (PSD) and 
Nonattainment New Source Review (NNSR): Project Emissions 
Accounting, 85 FR 74890 (November 24, 2020).
    \36\ The regulations at 40 CFR 52.21 apply to the federal PSD 
program. The EPA has other NSR regulations including 40 CFR 51.165, 
51.166, and appendix S of part 51, that contain analogous 
provisions. We cite 40 CFR 52.21 in this document as illustrative, 
but we propose to revise analogous provisions as specified in the 
regulatory text below. To the extent that there are different 
provisions that apply to the other regulations, as in, for example, 
the nonattainment context, that distinction has been noted.
---------------------------------------------------------------------------

    The PEA rulemaking was preceded by a March 2018 memorandum from the 
EPA Administrator titled ``Project Emissions Accounting Under the New 
Source Review Preconstruction Permitting Program.'' \37\ In that 
memorandum, ``the EPA interpreted the . . . NSR regulations [pre-2020 
PEA rule] as providing that emissions decreases as well as increases 
are to be considered in Step 1 of the NSR applicability process, where 
those decreases and increases are part of a single project.'' \38\
---------------------------------------------------------------------------

    \37\ March 2018 Memorandum.
    \38\ Id. at 1.
---------------------------------------------------------------------------

    The 2020 PEA rule revised the NSR regulations to make the 
permissibility of this approach clearer by changing the term ``sum of 
the emissions increase'' to ``sum of the difference'' in the context of 
the hybrid test that applies to projects involving multiple types of 
emissions units. That rule also added a provision to specify that the 
term ``sum of the difference,'' as used for all types of units (new, 
existing and the combination of new and existing units), shall include 
both increases and decreases in emissions as calculated in accordance 
with those subparagraphs.\39\
---------------------------------------------------------------------------

    \39\ 40 CFR 52.21(a)(2)(iv)(g).
---------------------------------------------------------------------------

D. Project Aggregation

    In the 2020 PEA rule, the EPA also concluded that it is appropriate 
to apply its ``project aggregation'' interpretation and policy set 
forth in a 2018 final action on project aggregation \40\ in Step 1 of 
the NSR major modification applicability test for all types of 
projects, including those that involve both increases and decreases in 
emissions.\41\ The 2020 PEA rule specified that application of the 2018 
final action on project aggregation may assist sources and/or reviewing 
authorities when determining the scope of a project in order to avoid 
the over-aggregation or under-aggregation of activities that could 
subsequently be considered an effort to circumvent the NSR program. The 
2020 PEA rule did not, however, include any regulatory text to require 
application of that policy to determine the scope of a project.
---------------------------------------------------------------------------

    \40\ Prevention of Significant Deterioration (PSD) and 
Nonattainment New Source Review (NNSR): Aggregation; 
Reconsideration, 83 FR 57324 (November 15, 2018) (``the 2018 final 
action on project aggregation'' or ``the 2018 Project Aggregation 
Final Action''). This action completed the EPA's process of 
reconsidering a 2009 action on the topic of ``project aggregation.''
    \41\ 85 FR 748895.
---------------------------------------------------------------------------

    In the 2018 final action on project aggregation, the EPA explained 
that determining what constitutes a ``project'' under NSR is a case-by-
case decision that is both site-specific and fact-driven. Because there 
is no predetermined list of activities that should be aggregated for a 
given industry or industries, the EPA established criteria for 
determining when nominally separate activities are considered one 
project under NSR. These criteria included the ``substantially 
related'' standard and the three-year rebuttable presumption that were 
contained in the 2009 EPA action titled, ``Prevention of Significant 
Deterioration (PSD) and Nonattainment New Source Review (NSR): 
Aggregation and Project Netting'' (``2009 NSR Aggregation 
Action'').\42\ In articulating what substantially related means, the 
2018 final action on project aggregation reaffirmed the 2009 NSR 
Aggregation Action and stated that activities occuring in unrelated 
portions of a major stationary source (e.g., a plant that makes two 
separate products and has no equipment shared among the two processing 
lines) will not be substantially related. The guidance further 
specified that the test of a substantial relationship is based on the 
interdependence of the activities, such that substantially related 
activities are likely to be jointly planned and occur close in time and 
at components that are functionally interconnected.\43\
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    \42\ 74 FR 2376 (January 15, 2009); The EPA stayed the 2009 NSR 
Aggregation Action in response to a petition for reconsideration it 
received on the 2009 NSR Aggregation Action and, in 2010, as part of 
the reconsideration proceeding, sought comment on the 2009 NSR 
Aggregation Action.
    \43\ Id. at 2378.
---------------------------------------------------------------------------

    The 2009 NSR Aggregation Action also added the following: ``[t]o be 
`substantially related,' there should be an apparent interconnection--
either technically or economically--between the physical and/or 
operational changes, or a complementary relationship whereby a change 
at a plant may exist and operate independently, however its

[[Page 36876]]

benefit is significantly reduced without the other activity.'' \44\
---------------------------------------------------------------------------

    \44\ Id; The 2009 NSR Aggregation Action was preceded by a 2006 
proposal in which the EPA proposed language that ``projects 
occurring at the same major stationary source that are dependent on 
each other to be economically or technically viable [should be] . . 
. considered a single project.'' Prevention of Significant 
Deterioration (PSD) and Nonattainment New Source Review (NSR): 
Debottlenecking, Aggregation, and Project Netting, 71 FR 54235 
(September 14, 2006) (``2006 proposal''). The 2006 proposal sought 
to clarify policy that had been discussed in EPA guidance documents. 
See, e.g., ``Applicability of New Source Review Circumvention 
Guidance to 3M-Maplewood, Minnesota'' (June 17, 1993), https://www.epa.gov/sites/default/files/2015-07/documents/maplwood.pdf. The 
preamble language explained the proposed revisions to the regulatory 
language by stating that ``if a source or reviewing authority 
determines that a project is dependent upon another project for its 
technical or economic viability, the source or reviewing authority 
must consider the projects to be a single project and must aggregate 
all of the emissions increases for the individual projects in Step 1 
of the major NSR applicability analysis.'' 71 FR 54235, 54245 
(September 14, 2006).
---------------------------------------------------------------------------

    The 2009 NSR Aggregation Action also stated that timing could be a 
basis for not aggregating separate projects, and it established a 
rebuttable presumption against aggregating projects that occur three or 
more years apart. The EPA justified its selection of three years as the 
presumptive timeframe in part by reasoning that three years ``is long 
enough to ensure a reasonable likelihood that the presumption of 
independence will be valid, but is short enough to maintain a useful 
separation between relevant construction cycles, consistent with 
industry practice.'' \45\ However, the EPA did note that this 
presumptive timeframe may be rebutted in certain circumstances. For 
instance, the 2009 NSR Aggregation Action noted that where there is 
``evidence that a company intends to undertake a phased capital 
improvement project'' where the activities ``have a substantial 
economic relationship,'' this would likely overcome the presumption 
that those activities should not be aggregated.\46\
---------------------------------------------------------------------------

    \45\ Id.
    \46\ Id.
---------------------------------------------------------------------------

    The 2009 NSR Project Aggregation Final Action and subsequent 2018 
final action on project aggregation were developed to ensure ``that NSR 
is not circumvented through some artificial separation of activities at 
Step 1 of the NSR applicability analysis where it would be unreasonable 
for the source to consider them to be separate projects.'' \47\ Given 
this aim, the 2018 final action on project aggregation affirmed the 
example provided in the 2009 NSR Aggregation Action that phased capital 
improvement projects comprised of activities that have a substantial 
economic relationship between one another may need to overcome the 
presumption towards aggregation.\48\
---------------------------------------------------------------------------

    \47\ 83 FR 57326.
    \48\ Id. at 57327 (citing 74 FR 2380, 2380).
---------------------------------------------------------------------------

    In 2018, a different consideration arose from the EPA's effort to 
make clear that sources can account for decreases at Step 1. Commenters 
and petitioners on the 2020 PEA rule expressed concern that sources 
could over-aggregate activities in order to circumvent NSR. In other 
words, sources may be able to ``avoid NSR by grouping multiple 
activities into a `project' and only requiring NSR if the `project,' 
taken together, will produce a significant emissions increase.'' \49\ 
This concern is manifest only when some of aggregated activities 
produce quantifiable emissions decreases that are used to offset 
emissions increases from other activities, thus increasing the 
likelihood that the net emissions from the collection of activities 
would be at levels below the thresholds at which major NSR applies. The 
EPA proposes to address this concern with revisions to the language 
defining ``project'' within the NSR regulations, as explained in 
further detail in section III. of this action.
---------------------------------------------------------------------------

    \49\ Petition for Reconsideration at 5.
---------------------------------------------------------------------------

E. ``Reasonable Possibility'' Recordkeeping and Reporting Provisions

    In 2002, the EPA adopted recordkeeping and reporting requirements 
to help permitting authorities and stakeholders oversee compliance with 
NSR requirements at sources that determine a modification does not 
trigger major NSR requirements. Under those requirements, sources that 
saw no reasonable possibility that post-change emissions would prove 
higher than past actual emissions were not required to keep records. In 
2005, the D.C. Circuit Court remanded this ``reasonable possibility'' 
recordkeeping and reporting provision to the EPA, holding that the 
``EPA failed to explain how it can ensure NSR compliance without the 
relevant data'' and directed the EPA ``either to provide an acceptable 
explanation for its `reasonable possibility' standard or to devise an 
appropriately supportive alternative.'' New York v. EPA, 413 F.3d 3, 35 
(D.C. Cir. 2005). The EPA promulgated rules in 2007 to define 
``reasonable possibility,'' which the D.C. Circuit Court upheld in a 
2020 decision. New Jersey v. EPA, 989 F.3d 1038 (D.C. Cir. 2021).\50\
---------------------------------------------------------------------------

    \50\ In New Jersey v. EPA, the D.C. Circuit upheld the EPA's 
2007 reasonable possibility rule, stating that the EPA ``offered a 
rational basis for adopting the 50 percent trigger.'' 989 F.3d 1038, 
1051 (D.C. Cir. 2021). The court recognized that in the preamble of 
the 2007 reasonable possibility rule, the EPA ``strove for a balance 
between ease of enforcement and avoidance of requirements that would 
be unnecessary or unduly burdensome on reviewing authorities or the 
regulated community.'' Id. The court also recognized in its ruling 
that the EPA solicited comment on other percentage increase triggers 
and that the EPA's ``final rule accounted for variability in 
projections due to demand growth emissions and thereby addressed the 
principal objection of commenters, including [the] petitioner[s], to 
the 50 percent trigger.'' Id.
---------------------------------------------------------------------------

    In the 2020 PEA rule, the EPA concluded that the provisions at 40 
CFR 52.21(r)(6) and other locations in the NSR rules (the ``reasonable 
possibility'' or ``RP'' provisions) are adequate to ensure sufficient 
monitoring, recordkeeping and reporting of emissions for projects 
determined not to trigger major NSR, after considering both emissions 
increases and decreases from the project in Step 1 of the NSR major 
modification applicability test.\51\ The reasonable possibility 
provisions apply to projects involving existing emissions units at a 
major stationary source in circumstances where the owner or operator 
elects to use projected actual emissions in determining the emissions 
increase resulting from changes at such unit(s) and where there is a 
reasonable possibility (as defined in 40 CFR 52.21(r)(6)(vi)) that a 
project that is not considered a major modification may nevertheless 
actually result in a significant emissions increase. When the 
reasonable possibility criteria in 40 CFR 52.21 are triggered,\52\ 
specific pre- and post-project recordkeeping, monitoring, and reporting 
requirements in paragraph 40 CFR 52.21(r)(6) must be met, depending on 
the circumstances.
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    \51\ 85 FR 74890, 74895 (November 24, 2020).
    \52\ As noted earlier, this proposal refences 40 CFR 52.21 as 
one such place where the applicable regulations may be found, but 
there are other NSR regulations that contain the same language.
---------------------------------------------------------------------------

    As defined in the regulations, a reasonable possibility exists when 
the owner or operator calculates the project to result in either: (1) a 
projected actual emissions increase of at least 50 percent of the 
amount that is a ``significant emissions increase'' for the regulated 
NSR pollutant; or (2) a projected actual emissions increase that, added 
to the amount of emissions excluded, sums to at least 50 percent of the 
amount that is a ``significant emissions increase'' for the regulated 
NSR pollutant. For a project for which a reasonable possibility exists 
only under criterion (2), and not also within the meaning of criterion 
(1), the RP provisions at

[[Page 36877]]

(r)(6)(ii) through (v) do not apply to the project. Among other 
requirements, the RP provisions at (r)(6)(ii), (vi), and (v) require 
that the owner or operator of an electric utility steam generating unit 
(EUSGU) submit a copy of the information recorded under the RP 
provisions to the reviewing authority.
    Additionally, under the monitoring provisions at 40 CFR 
52.21(r)(6)(iii), as applicable, sources must calculate and maintain a 
record of annual emissions in tpy on a calendar year basis for a period 
of 5- or 10-years following resumption of regular operations after the 
change, depending on the type of change at the unit(s). Post-project 
annual reporting is required for projects involving EUSGUs, whereas for 
projects not involving EUSGUs, owners or operators need only maintain 
post-project records on-site and submit a report if certain criteria 
listed in the regulations are met.\53\ In accordance with 40 CFR 
52.21(r)(7), the information required to be documented and maintained 
pursuant to paragraph 40 CFR 52.21(r)(6) shall be available for review 
upon a request for inspection by the reviewing authority or the general 
public. The requirements of 40 CFR 52.21(r)(6) apply equally to units 
with projected increases and projected decreases in emissions, as long 
as there is a reasonable possibility that the project could result in 
significant emissions increase and those units are part of the project 
(e.g., their emissions ``could be affected'' by the project). Projects 
that do not meet the reasonable possibility criteria are not subject to 
any specific recordkeeping requirements under the Federal regulations.
---------------------------------------------------------------------------

    \53\ 40 CFR 52.21(r)(6)(iv).
---------------------------------------------------------------------------

    For projects that trigger the reasonable possibility standard for 
one or more regulated NSR pollutants, the records that the owner or 
operator must maintain include (a) a description of the project; (b) 
identification of the emissions unit(s) whose emissions of a regulated 
NSR pollutant could be affected by the project; and (c) a description 
of the applicability test used to determine that the project is not a 
major modification for any regulated NSR pollutant, including the 
baseline actual emissions, the projected actual emissions, the amount 
of emissions excluded including an explanation for why such amount was 
excluded, and any netting calculations, if applicable.\54\
---------------------------------------------------------------------------

    \54\ Under 40 CFR 52.21(b)(41)(ii)(c) sources ``shall exclude, 
in calculating any increase in emissions that results from the 
particular project, that portion of the unit's emissions following 
the project that an existing unit could have accommodated during the 
consecutive 24-month period used to establish the baseline actual 
emissions . . . and that are also unrelated to the particular 
project, including any increased utilization due to product demand 
growth.''
---------------------------------------------------------------------------

    In this action, the EPA is proposing revisions to the reasonable 
possibility standard to further clarify how the recordkeeping and 
reporting provisions are intended to apply. The EPA is also proposing 
to strengthen the standard to improve accountability in those instances 
where the PEA rule is applied. These revisions are presented in section 
VI. of this action.

III. Proposed Definition of ``Project''

    In this action, the EPA is proposing to revise the existing 
definition of ``project'' in the major NSR regulations. The term 
``project'' is currently defined as ``a physical change in, or change 
in the method of operation of, an existing major stationary source.'' 
\55\ The EPA's proposed revision would add detail to this definition in 
a manner consistent with the 2018 final action on project aggregation. 
The EPA is proposing to further define a project as ``a discrete 
physical change in, or change in the method of operation of, an 
existing major stationary source, or a discrete group of such changes 
(occurring contemporaneously at the same major stationary source) that 
are substantially related to each other. Such changes are substantially 
related if they are dependent on each other to be economically or 
technically viable.''
---------------------------------------------------------------------------

    \55\ 40 CFR 51.165(a)(1)(xxxix); 40 CFR 51.166(b)(51); 40 CFR 
part 51, appendix S II.A.33.; 40 CFR 52.21(b)(52).
---------------------------------------------------------------------------

    In comments on the 2020 PEA rule and in the petition for 
reconsideration, some stakeholders expressed a concern that the 2020 
PEA rule would enable a source to avoid NSR by grouping multiple 
activities into a ``project'' and only requiring NSR if the 
``project,'' taken together, will produce a significant emissions 
increase. The comments add that this would allow source owners/
operators to consider only emissions offsets that they selectively pair 
with the change as a part of the ``project'' and would allow source 
owners/operators to disregard an actual source-wide emissions increase 
resulting from the change being permitted.\56\
---------------------------------------------------------------------------

    \56\ Sierra Club, et al., Response to Request for Comments on 
Proposed Rule: Prevention of Significant Deterioration (PSD) and 
Nonattainment New Source Review (NNSR): Project Emissions 
Accounting, 84 FR 39244 (August 9, 2019) at 5; see also Petition for 
Reconsideration at 4; comment from Steve Odendahl, Manager Air Law 
for All, Ltd. Re: Docket ID No. EPA-R04-OAR-2022-0397 (August 25, 
2022) at page 4.
---------------------------------------------------------------------------

    In the final 2020 PEA rule, the EPA stated that ``the application 
of the `substantially related' test of the 2018 final action on project 
aggregation should be sufficient to prevent sources from arbitrarily 
grouping activities for the sole purpose of avoiding the NSR major 
modification requirements through project emissions accounting.'' \57\ 
The EPA added in that rulemaking that ``the `substantially related' 
test . . . applies to prevent aggregating into a single project those 
activities that do not represent such project, so decreases from 
activities that do not meet this test should not be considered in Step 
1.'' \58\ In the final rule, however, the EPA did not include 
regulatory text to require application of the provisions contained in 
the 2018 final action on project aggregation. The EPA is now proposing 
a definition of ``project'' that would codify a definition that is 
consistent with the 2018 final action on project aggregation.
---------------------------------------------------------------------------

    \57\ 85 FR 74890, 74898 (November 24, 2020).
    \58\ Id. at 74899.
---------------------------------------------------------------------------

    The EPA is proposing changes to the definition of ``project'' to 
address concerns raised in the petition for reconsideration and in 
comments submitted on the PEA rule. Both the petition for 
reconsideration and comments on the 2020 PEA rule argued that a more-
specific definition of a ``project'' would guard against circumvention 
of the NSR applicability process. Indeed, in their petition for 
reconsideration, petitioners argued that the EPA's 2020 PEA rule was 
flawed because it failed to ensure that emissions decreases taken in 
Step 1 to avoid NSR applicability result from the change being 
evaluated. Further petitioners noted that nothing in the final rule 
required states to use the ``substantially related'' test, and that 
EPA's statement that the ``substantially related'' would be appropriate 
for determining if decreases can be accounted for in Step 1 was 
insufficient.\59\ By introducing a definition of ``project'' that 
codifies the 2018 project aggregation guidance, the EPA hopes to 
address these concerns.
---------------------------------------------------------------------------

    \59\ Petition for Reconsideration at 6-10.
---------------------------------------------------------------------------

    The EPA agrees with commenters that a more specific regulatory 
definition of project would provide greater clarity regarding the 
activities included within the scope of a project for the purpose of 
determining whether the project constitutes a major modification under 
the NSR regulations.\60\ The EPA has recognized that some line must be 
drawn between those activities that constitute a single ``physical 
change . . . or change in the method of

[[Page 36878]]

operation'' and those changes at a source that are separate.\61\ 
Historically, the EPA developed a policy on determining the scope of a 
``project,'' which evolved largely ``from specific, case-by-case after-
the-fact inquiries related to the possible circumvention of NSR in 
existing permits.'' \62\ The subsequent issuance of final actions 
reflecting EPA interpretations and policy, while providing additional 
clarity, did not establish legal requirements and did not create 
consistency with respect to the application of Step 1 by reviewing 
authorities.\63\ Several commenters on prior EPA actions regarding 
project aggregation noted that there is evidence in the rulemaking 
record that NSR applicability decisions based upon informal guidance 
and letters creates confusion.\64\ The EPA is, therefore, proposing to 
adopt a controlling definition of ``project'' that is ``a discrete 
physical change in, or change in the method of operation of, an 
existing major stationary source, or a discrete group of such changes 
(occurring contemporaneously at the same major stationary source) that 
are substantially related to each other. Such changes are substantially 
related if they are dependent on each other to be economically or 
technically viable.''
---------------------------------------------------------------------------

    \60\ States would generally be required to update their NSR 
regulations to incorporate the new definition of project and submit 
those regulations to the EPA for approval into the SIP.
    \61\ See, e.g., 71 FR 54244, 54245 (describing the EPA's 
development of an aggregation policy ``to ensure the proper 
permitting of modifications that involve multiple projects'').
    \62\ Id.
    \63\ In the 2018 final action on project aggregation the EPA 
stated that ``We acknowledge that, by not making any changes to the 
regulatory text, as had been proposed, it may have been somewhat 
unclear to some whether state and local air agencies have to adopt 
or implement the elements of the 2009 NSR Aggregation Action, and, 
if so, how they should do so.''
    \64\ See, e.g., ``Comments of the Utility Air Regulatory Group 
on the Environmental Protection Agency's Proposed Rule Concerning 
Prevention of Significant Deterioration (PSD) and Nonattainment New 
Source Review (NSR): Aggregation; Reconsideration (April 15, 
2010),'' Docket EPA-HQ-OAR-2003-0064; ``Comments of Toyota Motor 
Engineering & Manufacturing North America (Nov. 13, 2006),'' Docket 
EPA-HQ-OAR-2003-0064; ``Comments of Chevron Corporation (November 
10, 2006),'' Docket EPA-HQ-OAR-2003-0064.
---------------------------------------------------------------------------

    Concerns of over- and under-aggregation illustrate the need for 
adding criteria to the NSR regulations for determining when nominally 
separate changes should be considered a single ``project'' for purposes 
of determining NSR applicability. The EPA has found that in some cases 
activities were not aggregated despite evidence that they were 
substantially related. In those instances, project disaggregation 
determinations were made without documentation for such a 
determination.\65\ The EPA is seeking comments on examples of under- or 
over-aggregation of activities, e.g., aggregation of activities without 
regard to technical and economic interrelatedness, and disaggregation 
of activities into multiple projects leading source to forgo major NSR 
requirements.
---------------------------------------------------------------------------

    \65\ See, e.g., In the Matter of Suncor Energy (U.S.A.), Inc. 
Commerce City Refinery, Plant 2 (East), Order on Petition Nos. VIII-
2022-13 & VIII-2022-14, pages 72-77 (July 31, 2023) (requiring that, 
in the absence of applying the EPA's 2018 Project Aggregation Final 
Action, the review authority ``must ensure that its NNSR 
applicability determination . . . including the decision not to 
aggregate . . . changes with similar changes . . . is based on 
reasonable grounds and properly supported by the permit record.''); 
see also In the Matter of Consolidated Environmental Management, 
Inc.--Nucor Steel Louisiana, Order on Petition Nos. VI-2010-02 & VI-
2011-03 (March 23, 2012) (finding that the reviewing authority ``did 
not analyze any regulatory definition of `project,' such as the 
definition in 40 CFR 52.21(b)(52), before applying that term'' and 
that ``while [the reviewing authority] suggests that [the source] 
has not attempted to split the projects to avoid PSD permitting 
because both processes were subject to PSD review . . . this 
statement does not address whether [the reviewing authority's] PSD 
review adequately addressed the full scope of the source).''
---------------------------------------------------------------------------

    Based on these concerns, the EPA therefore finds it necessary to 
establish a controlling standard in its regulations to draw a line 
between those activities that are to be considered a single ``physical 
change or change in the method of operation'' (i.e., project) and those 
that are separate. The EPA is proposing to adopt a revised definition 
of project to clarify the activities that must be considered when 
evaluating whether a project (i.e., a physical change or change in the 
method of operation or a modification) is a major modification subject 
to NSR permitting requirements.\66\
---------------------------------------------------------------------------

    \66\ CAA section 111(a)(4); CAA section 165(a)(3).
---------------------------------------------------------------------------

    Under the applicability analysis framework in the EPA's NSR 
regulations, it is important to accurately determine which activities 
should be considered part of a single project (i.e., modification). 
There are consequences to either under- or over-aggregating activities; 
namely that sources undergoing modifications may inconsistently use the 
flexibility of imprecise regulatory provisions to systematically avoid 
major source NSR.
    This potential pitfall of aggregation arises because the regulatory 
framework provides avenues to disaggregate ``projects.'' The CAA 
definition of ``modification'' as ``any physical change . . . or change 
in the method of operation'' leaves ambiguity as to what activities are 
to be included in the source ``modification'' when the source may be 
undertaking contemporaneous activities that may all increase the 
source's emissions.\67\ The EPA has previously only defined a 
``project'' as ``a physical change in, or change in the method of 
operation of, an existing major stationary source.'' \68\ A ``project'' 
is a major modification for a regulated NSR pollutant if it causes a 
significant emissions increase (as defined at 40 CFR 52.21(b)(40)) and 
a significant net emissions increase (as defined in paragraphs (b)(3) 
and (b)(23) of 40 CFR 52.21).\69\
---------------------------------------------------------------------------

    \67\ CAA section 111(a)(4).
    \68\ 40 CFR 52.21(b)(52).
    \69\ 40 CFR 52.21(a)(2).
---------------------------------------------------------------------------

    This definition may not be sufficient to guard against the 
potential for sources to selectively aggregate or disaggregate multiple 
projects such that they are able to avoid major NSR in a manner that is 
contrary to the intent of the CAA. The rule revisions proposed in this 
action aim to bring additional clarity and consistency by providing a 
controlling standard that allows reviewing authorities to identify 
situations where activities should be grouped together or separated. By 
adopting a more specific definition of ``project,'' this action, if 
finalized as proposed, would enhance the ability of reviewing 
authorities to enforce against avoidance of major NSR requirements due 
to the improper aggregation or disaggregation of activities.
    In the 2020 PEA rule, the EPA referenced the 2018 Project 
Aggregation Final Action in recognition that ``it is appropriate to 
limit the scope of emissions decreases that can be considered at Step 1 
to only the project under review and to not allow sources to attempt to 
avoid NSR by expanding the scope of decreases to those that are not 
truly part of the project.'' \70\ But the EPA did not require 
application of the 2018 Project Aggregation Final Action in the 2020 
PEA rule. The EPA responded to comments stating ``if PEA is to be 
allowed, the `substantially related' standard must be applied to the 
activities that result in emissions increases and decreases,'' by 
stating that ``applying the `substantially related' criteria on project 
aggregation for those reviewing authorities that implement PEA should 
alleviate any concerns about potential NSR circumvention as part of 
Step 1 of the major modification applicability test.'' \71\ Therefore, 
the EPA predicated finalization of the PEA rule on the basis that the 
2018 Project Aggregation Final Action, or some

[[Page 36879]]

analogous definition of project, would be applied by permitting 
authorities to prevent circumvention of the NSR program requirements 
with the application of PEA, yet did not establish such a requirement 
in that rule. The EPA is therefore proposing in this action to codify a 
definition of a project consistent with the 2018 Project Aggregation 
Final Action to alleviate the potential for NSR circumvention that it 
highlighted in the 2020 PEA rule and Response to Comments document to 
that action.\72\ The EPA is proposing this in light of evidence that 
the 2018 Project Aggregation Final Action or some similar definition of 
``project'' is, in some instances, not being applied by reviewing 
authorities.\73\
---------------------------------------------------------------------------

    \70\ 85 FR 74898.
    \71\ 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 at 73-5 (October 2020).
    \72\ 85 FR 74890, 74900.
    \73\ Supra note 67.
---------------------------------------------------------------------------

    The project definition criteria in the 2018 Project Aggregation 
Final Action are appropriate criteria for defining a project and 
comport within the purpose and language of the CAA.\74\ More 
specifically, activities that occur at the same major stationary source 
that are dependent on each other to be economically or technically 
viable should be considered a single project. If finalized, the 
proposed definition of project will enable a more consistent 
application of the aggregation criteria by both those considering the 
applicability of NSR to proposed modifications as well as for those 
conducting an after-the-fact inquiry regarding whether NSR was 
circumvented through the failure to aggregate dependent physical or 
operational changes at a source (or over-aggregation of unrelated 
activities).
---------------------------------------------------------------------------

    \74\ In the 2018 final action on projection aggregation, the EPA 
argued that the ``substantially related'' test would not result in 
the elimination of a type of physical change that Congress intended 
to cover (i.e., the change that consists of the group of nominally-
separate changes that comprise a project but do not qualify as 
`substantially related'). In that final action, the EPA reasoned 
that a ``common meaning'' of a single ``change'' would not include 
multiple changes that are not substantially related, such as changes 
that are undertaken at a source at different times, or undertaken 
for different purposes, or are otherwise related to each other. 83 
FR 57332.
---------------------------------------------------------------------------

    When considered with application of PEA, a more specific definition 
of project would help ensure that emissions decreases accounted for 
under Step 1 of the NSR applicability process are substantially related 
to other activities comprising the physical change or change in the 
method of operation (i.e., a project) at the source. Upon finalization 
of this element of this proposed action, any decrease in emissions 
accounted for under Step 1 of the NSR applicability test must be 
substantially related to the other activities involved in the project. 
Therefore, for the reasons discussed in the 2018 Project Aggregation 
Final Action, multiple changes that are ``substantially related'' would 
be considered one project for purposes of determining NSR 
applicability. Reviewing authorities that do not allow for project 
emissions accounting at Step 1 would still benefit from a codified 
definition of ``project'' as greater specificity can allow for 
identification of, and enforcement against, situations where a source 
may seek to avoid major NSR requirements by disaggregating activities 
that are ``substantially related.''
    The EPA is not proposing that this definition of project include a 
specific timeframe that defines ``occurring contemporaneously,'' such 
as the three-year rebuttable presumption from the 2018 Project 
Aggregation Final Action. Since promulgation of the 2018 Project 
Aggregation Final Action, the EPA has obtained information that 
suggests a three-year timeframe may not adequately represent the wide 
variety of projects performed across all source categories. For 
example, while the EPA has become aware of several multi-year expansion 
projects that span more than three years, the EPA does not have 
information on the percentage of projects that that involve activities 
occurring within any specific time period.\75\ Accordingly, the EPA is 
taking comment on whether a specific temporal component of the project 
aggregation criteria, i.e., the three-year rebuttable presumption 
contained in the 2018 final action on project aggregation should be 
retained. The EPA is requesting comment on this proposed definition of 
``project,'' including whether the proposed relationship-based 
aggregation criteria are appropriate and whether there would be any 
potential issues with implementing the definition for any particular 
type of project or source category.
---------------------------------------------------------------------------

    \75\ Supra note 67.
---------------------------------------------------------------------------

    In the event the EPA finalizes a temporal component to the 
definition of project, the EPA is soliciting comment on whether a 
rebuttable presumption should be retained. The EPA requests comments on 
the proposed codification of the ``substantially related'' test without 
the presumption, as well as any comments that may support, in the 
alternative, codifying a rebuttable time-based presumption of three 
years or some other period. The EPA requests that comments in support 
of a rebuttable time-based presumption provide evidence of why the 
presumption and associated time-period would be appropriate for 
purposes of NSR applicability across affected source types.
    Irrespective of the finalization of this proposal, the EPA advises 
that permitting authorities scrutinize project determinations in those 
cases where a source concurrently submits a major and minor NSR permit 
application, when the source submits multiple minor NSR permit 
applications within a short period of time, or where there is otherwise 
evidence that some or all of the activities associated with those 
permit applications may be substantially (i.e., technically and 
economically) related. The EPA would like information on the impacts 
the definition of ``project'' proposed in this action, if finalized, 
would have in safeguarding against potential over-aggregation or under-
aggregation of projects with the intent to circumvent major NSR.

IV. Safeguard Against ``Double Counting'' of Emissions Decreases and 
Increases

    The EPA is requesting comment on the potential, within a project 
emissions accounting framework, for source owners or operators to 
``double count'' emissions decreases across multiple projects, and 
whether the NSR regulations should include language to prevent 
this.\76\ The definition of projected actual emissions provides that 
the owner or operator ``[s]hall exclude, in calculating any increase in 
emissions that results from the particular project, that portion of the 
unit's emissions following the project that an existing unit could have 
accommodated during the consecutive 24-month period used to establish 
the baseline actual emissions . . . and that are also unrelated to the 
particular project, including any increased utilization due to product 
demand growth.'' \77\ However, there is no corresponding provision that 
limits eligible emissions decreases to only those that result from the 
project being evaluated (i.e., a decrease from an existing emissions 
unit is simply calculated as the difference between projected actual 
emissions and baseline actual emissions). Therefore, it seems possible 
that a decrease resulting from an earlier project (one completed after 
the selected baseline actual

[[Page 36880]]

emissions period) could be accounted for in a subsequent project being 
evaluated, even if that project had no causal relationship to the 
decrease. The EPA acknowledges that this situation can occur when 
multiple projects during the baseline actual emissions determination 
timeframe involve the same existing emissions unit, but the Agency 
believes that ``double counting'' of emissions decreases will be 
addressed by the requirement (discussed below) that any decreases be 
made enforceable in order to be eligible for consideration in the Step 
1 applicability calculation.\78\ The EPA is nonetheless requesting 
comment on adding a provision in the NSR regulations to require that 
the baseline actual emissions of a unit with a projected decrease in 
emissions be adjusted to account for any portion of that decrease in 
emissions that would not result from (i.e., is unrelated to) the 
project being evaluated, but would also like commenters to suggest 
alternatives to this language.
---------------------------------------------------------------------------

    \76\ See Virginia Department of Environmental Quality (VDEQ) 
comments on the Prevention of Significant Deterioration (PSD) and 
Nonattainment New Source Review (NNSR): Project Emissions Accounting 
(84 FR 39244) at page 3 (noting that the ability of ``existing major 
sources to engage in a nearly continuous series of projects to 
increase efficiency, reduce cost and improve product quality for 
decreases'' lends itself to a potential ``double counting'' issue).
    \77\ 40 CFR 52.21(b)(41)(ii)(c).
    \78\ Under the existing NSR regulations, baseline actual 
emissions must be adjusted downward to exclude any emissions that 
would have exceeded an emission limitation with which the source 
must currently comply, which would include any limits imposed to 
qualify decreases as part of prior step 1 applicability analyses 
involving a common unit or units.
---------------------------------------------------------------------------

    The EPA is aware that the potential also exists for ``double 
counting'' emissions increases under the existing regulations, such 
that major NSR may be triggered when a project itself would not result 
in a significant emission increase. For example, when projecting 
emissions from an affected existing emissions unit for Project A (the 
current project) a source must also consider whether any future 
separate project(s) during the required projection period (i.e., 5 or 
10 years after resuming regular operation) may affect the projected 
actual emissions from the unit, and if that affect is an increase that 
the unit could not have accommodated during the selected baseline 
period, that increase must be accounted for as part of the project 
applicability analysis for Project A. This may result in a situation 
where emissions increases are ``double counted'' in the NSR 
applicability process.
    Thus, the possibility for ``double counting,'' or imperfect 
allocation of emissions increases and decreases to a project, exists in 
limited circumstances, but revising the regulations to completely 
address any such possible situations would add significant complexity 
and it is unclear whether any such revisions are necessary or 
warranted. The EPA is requesting comment on the prevalence of either of 
these forms of ``double counting,'' specific examples, if applicable, 
of each, and whether the EPA should revise the NSR regulations to 
address one or both of these possible issues and, if so, how it should 
revise the regulations to rectify this potential issue.

V. Enforceability of Emissions Decreases

    The EPA is proposing, in a distinct and severable portion of this 
proposal, to require that decreases associated with a project under the 
Step 1 significant emissions increase determination be legally and 
practicably enforceable (i.e., enforceable as a practical matter). The 
EPA is proposing to revise the regulations accordingly by adding ``a 
decrease may only be accounted for in the significant emissions 
increase determination if it meets the requirements under 40 CFR 
52.21(b)(3)(vi)(b)'' to the ``significant emissions increase'' 
definition at 40 CFR 52.21(a)(2)(iv)(g).\79\
---------------------------------------------------------------------------

    \79\ The EPA is also proposing analogous regulatory language for 
40 CFR 51.165, 40 CFR 51.166, and appendix S to 40 CFR part 51.
---------------------------------------------------------------------------

    The EPA is proposing this change as a safeguard to ensure that 
emissions decreases that are accounted for in the NSR applicability 
process will occur and be maintained. This is consistent with the 
requirement under CAA section 110 that ``each implementation plan 
submitted by a State include enforceable emission limitations'' and 
``regulation of the modification and construction of any stationary 
source within the areas covered by the plan as necessary to assure that 
national ambient air quality standards are achieved, including a permit 
program as required in parts C and D of this subchapter.'' \80\ The EPA 
is proposing this change to address concerns raised in the petition for 
reconsideration. Petitioners argued that under the 2020 PEA rule the 
EPA lacked oversight such that it cannot ensure that projected emission 
decreases will occur, or that they will be maintained over time.\81\ A 
similar concern was expressed by commenters to the 2020 PEA rule, who 
argued the rule ``would make NSR requirements unenforceable[,]'' and 
that finalization of the 2020 PEA rule was unlawful because ``EPA fails 
to require that . . . decreases [accounted for in Step 1] be . . . 
enforceable as a practical matter.'' \82\ These commenters argued that 
enforceability is a regulatory safeguard that is required to ensure 
that any emission decreases relied upon to offset an otherwise 
emissions-increasing change are real and will remain in effect.\83\ In 
proposing enforceability of decreases accounted for in Step 1, the EPA 
hopes to provide sufficient oversight that will address petitioners and 
commenters concerns.
---------------------------------------------------------------------------

    \80\ CAA section 110(a)(2)(B) and (C).
    \81\ Petition for Reconsideration at 11-12.
    \82\ Sierra Club, et al., Response to Request for Comments on 
Proposed Rule: Prevention of Significant Deterioration (PSD) and 
Nonattainment New Source Review (NNSR): Project Emissions 
Accounting, 84 FR 39244 (August 9, 2019) at 13-24.
    \83\ Id.
---------------------------------------------------------------------------

    Under the existing NSR regulations, projected actual emissions are 
not required to be made enforceable, regardless of whether the result 
of the calculation is an emission increase or decrease. In some cases, 
a projection may be enforceable, at least in part, if it is based on 
separate CAA legal authority (e.g., NSPS, NESHAP, SIP), but there is no 
independent requirement in the NSR applicability procedures for such 
enforceability. In the 2002 NSR Reform Rule, the EPA elected not to 
require that projected actual emissions be made enforceable because 
establishing such a requirement may have ``place[d] an unmanageable 
resource burden on reviewing authorities'' and because the EPA did not 
believe at that time that it was necessary to make future projections 
enforceable in order to adequately enforce the major NSR 
requirements.\84\ However, with the more explicit recognition that 
decreases in emissions may be considered in the Step 1 significant 
emissions increase determination, there may be reason to require that 
such decreases be enforceable. Because of the predominant impact that 
one or more claimed decreases in emissions involved in a project could 
have on the determination of whether the project constitutes a major 
modification, additional safeguards are appropriate to ensure that such 
decreases actually occur and that they are maintained. The existing 
framework under the reasonable possibility provisions and the revisions 
to that framework proposed in this action may be insufficient to 
provide that assurance. While the revisions proposed to the 
``reasonable possibility'' provisions in section VI. of this action 
will allow reviewing authorities to verify that decreases accounted for 
at Step 1 by source owner or operators actually occur, they may not 
provide adequate recourse to reviewing authorities if the decreases do 
not occur as projected. While source owners or operators are required 
to submit a report to the reviewing authority when emissions differ 
from preconstruction

[[Page 36881]]

projections, this requirement only applies when actual emissions exceed 
baseline actual emissions ``by a significant amount'' for the regulated 
NSR pollutant.\85\ Consequently, source owner or operators may 
overestimate emissions decreases at Step 1 with no recourse provided 
actual emissions are not significant.
---------------------------------------------------------------------------

    \84\ 67 FR at 80204.
    \85\ 40 CFR 52.21(r)(6)(v).
---------------------------------------------------------------------------

    The EPA is thus proposing to revise the existing definition of 
``significant emissions increase'' in the major NSR regulations to add 
that a decrease can only be accounted for at Step 1 if it meets the 
creditability requirements for decreases in the existing ``significant 
net emissions increase'' definition. The EPA is taking comment on this 
proposed requirement. Specifically, the EPA is requesting input from 
commenters on the types of projects that would be impacted by a 
requirement that emission decreases accounted for under Step 1 of the 
NSR applicability process be enforceable prior to beginning actual 
construction and the effect that such a requirement would have on 
project decision-making and project outcomes. The EPA is also 
requesting comment on the following questions related to this proposal:
    <bullet> How would a requirement that emissions decreases under 
Step 1 meet the criteria currently applicable to decreases accounted 
for under Step 2 impact accountability and enforceability of emissions 
limitations?
    <bullet> How can the EPA justify a distinction with respect to 
enforceability requirements by differentiating projections resulting in 
an increase versus those projections that result in a decrease in 
emissions given that inaccuracies in projections, in either case, may 
result in improper applicability conclusions?
    <bullet> Is there a more effective regulatory revision to require 
that decreases at Step 1 are enforceable than what is being proposed in 
this action? Why would your proposed alternative be preferable to the 
revisions proposed by the EPA to the ``significant emissions increase'' 
definition?
    <bullet> Is this proposed requirement necessary for added assurance 
that decreases accounted for by a source under the project emissions 
accounting process actually occur and are maintained, or are the 
``reasonable possibility'' requirements in the recordkeeping and 
reporting provisions, including the revisions to these provisions 
described in section VI., a sufficient means of assurance?
    <bullet> Finally, the EPA is taking comment on revising the 
regulations to expressly disallow project emissions accounting such 
that only emissions increases can be considered under the Step 1 
significant emissions increase determination.

VI. ``Reasonable Possibility'' Recordkeeping and Reporting Regulations

    In this rulemaking, the EPA is proposing both clarifications to the 
existing ``Reasonable Possibility'' recordkeeping and reporting 
requirements and a strengthening of the regulations by requiring that 
all sources crediting a decrease at Step 1 maintain records and report 
information under 40 CFR 52.21(r)(6). As with the 2007 Reasonable 
Possibility (``RP'') rule, the EPA is again ``analyz[ing] the trade-off 
between compliance improvement and the burdens of data collection and 
reporting'' in this proposal.\86\
---------------------------------------------------------------------------

    \86\ New Jersey v. EPA, 989 F.3d 1038 (D.C. Cir. 2021) (citing 
New York, 413 F.3d at 44 (Williams J., concurring)).
---------------------------------------------------------------------------

A. Clarification of Existing ``Reasonable Possibility'' Requirements

    The EPA is proposing regulatory language to clarify certain 
existing RP requirements to ensure appropriate and consistent 
application of those requirements by affected sources and reviewing 
authorities. This includes clarifying (1) the emissions units that 
should be included in the project actual emissions calculation; (2) the 
calculation to be included in the description of the applicability test 
used to determine that the project is not a major modification; (3) the 
emissions units to be included in the monitoring requirement at 40 CFR 
52.21(r)(6)(iii); (4) the provisions that apply to projects that 
involve an electric utility steam generating; and (5) the emissions 
units that should be included in the ``projected actual emissions 
increase'' used to determine whether there is a ``reasonable 
possibility'' under 40 CFR 52.21(r)(6)(vi).
    The provisions of 40 CFR 52.21(r)(6) apply with respect to any 
regulated NSR pollutant emitted from projects that involve one or more 
existing emissions units in circumstances where the owner or operator 
elects to use the method specified in 40 CFR 52.21(b)(41)(ii)(a) 
through (c) for calculating projected actual emissions from any 
existing emissions unit and there is a reasonable possibility that a 
project not classified as a major modification based on those 
projections may actually result in a significant emissions increase of 
such pollutant. The existing regulations define a project as ``a 
physical change in, or change in the method of operation of, an 
existing major stationary source.'' This leaves ambiguity with respect 
to the emissions units that should be included in the projected actual 
emissions calculation. To make this clear, consistent with the EPA's 
original intent, the Agency is proposing revisions to 40 CFR 
52.21(r)(6) and corresponding sections of the regulations to replace 
the terms ``at existing emissions units'' with ``that involve one or 
more existing emissions units'' and adding at the end of that 
paragraph, the phrase ``from any existing emission unit.''
    The EPA is also proposing that the requirement under 40 CFR 
52.21(r)(6)(i)(c) that the pre-project record include ``a description 
of the applicability test used to determine that the project is not a 
major modification for any regulated NSR pollutant'' also include the 
PTE of an emissions unit, as applicable. It is important that the pre-
project NSR applicability record include all emissions units that could 
be affected by the project, including those units for which the actual-
to-potential (ATP) test applies, i.e., any new emissions unit(s) and 
any existing emissions unit(s) for which the owner or operator elects 
to use PTE in lieu of projected actual emissions as provided by 40 CFR 
52.21(b)(41)(ii)(d). To make this clear under 40 CFR 52.21(r)(6)(i)(c), 
the EPA is proposing to add ``the potential to emit, as applicable'' 
after ``the projected actual emissions'' in that subparagraph.
    The EPA is proposing to clarify that the monitoring provisions in 
40 CFR 52.21(r)(6)(iii) apply to all the emissions units identified in 
40 CFR 52.21(r)(6)(i)(b) if the project increases the design capacity 
or potential to emit of any of those emissions units. The EPA is 
proposing to revise the language at the end of this paragraph from ``if 
the project increases the design capacity or potential to emit that 
regulated NSR pollutant at such emissions unit'' to ``if the project 
increases the design capacity or potential to emit that regulated NSR 
pollutant at any existing emissions unit identified in 40 CFR 
52.21(r)(6)(i)(b).''
    The EPA is proposing to clarify that the provisions of 40 CFR 
52.21(r)(6)(iv) apply to projects that involve an electric utility 
steam generating unit, and that the provisions of 40 CFR 52.21(r)(6)(v) 
apply to projects that do not involve an electric utility steam 
generating unit. The EPA believes this clarification is appropriate to 
address the reporting requirements for projects that involve one or 
more electric utility steam generating units as well as other emissions 
units and to appropriately

[[Page 36882]]

focus the requirements on the nature of the project rather than the 
emissions unit. To make this clarification under 40 CFR 
52.21(r)(6)(iv), the EPA is proposing to revise ``if the emissions unit 
is an electric utility steam generating unit'' to read ``if the project 
involves an electric utility steam generating unit.'' To make this 
clarification under 40 CFR 52.21(r)(6)(v), the EPA is proposing to 
revise ``if the unit is a unit other than an electric utility steam 
generating unit'' to read ``if the project does not involve an electric 
utility steam generating unit.'' The EPA would like to make clear that 
the contents of the report required under 40 CFR 52.21(r)(6)(iv) for 
projects that involve an existing electric utility steam generating 
unit shall include the annual emissions from all units involved in the 
project as calculated pursuant to 40 CFR 52.21(r)(6)(iii). The EPA 
believes this clarification is appropriate to ensure that, for projects 
that involve one or more electric utility steam generating units as 
well as other emissions units, the required reports include the annual 
emissions from all emissions units involved in the project consistent 
with the requirement under 40 CFR 52.21(r)(6)(v) for projects that do 
not involve an electric utility steam generating unit. To make this 
clarification under 40 CFR 52.21(r)(6)(iv), the EPA is proposing to 
revise ``setting out the unit's annual emissions'' to read ``setting 
out the annual emissions from each affected emissions unit.''
    The ``projected actual emissions increase'' used to determine 
whether there is a ``reasonable possibility'' under 40 CFR 
52.21(r)(6)(vi) means the sum of the emissions changes of a regulated 
NSR pollutant for each emissions unit that could be affected by the 
project calculated using the appropriate procedure identified at 40 CFR 
52.21(a)(2)(iv) (i.e., the ATP test for any new emissions unit(s) and 
the ATPA applicability test for any existing emissions unit(s)). This 
includes all the emissions units identified in accordance with 40 CFR 
52.21(r)(6)(i)(b) and is not limited to existing emissions units, or to 
those existing emissions units for which the owner or operator elects 
to use projected actual emissions. A full accounting of the project 
emissions increase is needed to determine whether and how the RP 
requirements apply.
    The EPA believes these clarifications to the RP recordkeeping and 
reporting requirements would help ensure that sources consistently 
determine the applicability of the reasonable possibility requirements 
in 40 CFR 52.21(r)(6) and perform the recordkeeping, monitoring, and 
reporting needed to verify that projects determined not to constitute a 
major modification do not, after operation, result in a significant 
emissions increase. The proposed clarifications would thereby enhance 
accountability of sources relying on projected actual emission in their 
NSR applicability determinations and enforcement of the NSR provisions.
    In their petition for reconsideration, petitioners took issue with 
the EPA's ``self-reporting and self-monitoring provisions'' under 40 
CFR 52.21(r)(6) because the revisions to the ``reasonable possibility'' 
provisions the EPA took to address the D.C. Circuit's decision in New 
York v. EPA apply only to emissions increases. Petitioners stated that 
as a result of this, sources that account for an unenforceable 
emissions decrease at Step 1 such that they avoid a Step 2 netting 
analysis would not be subject to the ``reasonable possibility'' 
provisions. Petitioners add that that the lack of recordkeeping and 
reporting requirements in these instances prevent effective oversight 
and enforcement by the reviewing authority.\87\
---------------------------------------------------------------------------

    \87\ Petition for Reconsideration at 22 (citing 84 FR 39251).
---------------------------------------------------------------------------

    In the response letter to the petition for reconsideration, the EPA 
noted that it responded to similar comments in the 2020 PEA final rule. 
The EPA stated in that rule that 40 CFR 52.21(r)(6)(i)(b) requires a 
source to identify emissions units ``whose emissions of a regulated NSR 
pollutant could be affected by the project.'' The EPA stated that the 
use of ``affected'' as opposed to ``increased'' supports the EPA's view 
that the ``reasonable possibility'' test can be used to track both the 
increases and decreases from a project. The EPA added that the 
information required for collection under 40 CFR 52.21(r)(6)(i)(c) 
similarly can apply to both increases and decreases from the project. 
As a result, in that action, the EPA disagreed that the ``reasonable 
possibility'' provisions were inadequate to account for projects that 
included emissions decreases.\88\
---------------------------------------------------------------------------

    \88\ 85 FR at 74897.
---------------------------------------------------------------------------

    Although EPA continues to support this reading of the existing 
regulations, to better address the concern expressed by petitioners 
that the existing RP provisions ``do not provide an effective mechanism 
to ensure that unenforceable emission decreases . . . will . . . be 
qualitatively equivalent to the increases they purportedly offset,'' 
the EPA is proposing to revise the text of the NSR applicability 
regulations at 40 CFR 52.21(a)(2)(iv)(b) to more clearly state that the 
major modification applicability calculations must include all of the 
emissions units that could be affected by the project, consistent with 
40 CFR 52.21(r)(6)(i)(b). Affected emissions units may include new, 
modified, and non-modified affected emissions units involved in the 
project. Non-modified affected emissions units are existing emissions 
units that will not undergo a physical change or change in the method 
of operation but that could realize a change in utilization as a result 
of the project, including increases resulting from removal of a process 
bottleneck (what we often call ``de-bottlenecking''). The existing 
language under 40 CFR 52.21(a)(2)(iv)(b) states that ``[t]he procedure 
for calculating . . . whether a significant emissions increase . . . 
will occur depends upon the type of emissions units being modified,'' 
which is unclear with respect to the need to also include non-modified 
existing emissions units that could be affected by the project. The 
proposed clarification to the regulations will provide consistency 
between the applicability and RP regulations and help ensure that all 
emissions units that could be affected by a project and all 
corresponding emissions increases and decreases are included in the 
applicability calculations and post-project monitoring, recordkeeping, 
and reporting.
    Finally, the EPA proposes to clarify the meaning of the term 
``differ,'' as used in the reporting requirements for projects that do 
not involve an electric utility steam generating unit under 40 CFR 
52.21(r)(6)(v). This provision provides that a reporting obligation is 
triggered, in part, when the annual emissions, in tpy, from a project 
``differ from the preconstruction projection as documented and 
maintained pursuant to paragraph (r)(6)(i)(c) of this section.'' First, 
the EPA does not intend for a difference between post-project emissions 
and pre-project projection by itself to trigger reporting. Rather, the 
EPA intends for reporting to be triggered under 40 CFR 52.21(r)(6)(v) 
when post-project emissions differ from the preconstruction project in 
a way that indicates that the project did in fact result in a 
significant emissions increase. Second, the term ``differ'' is not 
synonymous with ``exceed,'' and that distinction is important in 
determining when reporting is required under 40 CFR 52.21(r)(6)(v). The 
EPA intends to require reporting when emissions exceed the baseline 
actual emissions by a significant amount and exceed the preconstruction 
projection, and when actual emissions monitored and recorded after a 
project in

[[Page 36883]]

accordance 40 CFR 52.21(r)(6)(iii) that do not exceed the 
preconstruction projection may nevertheless differ in a way that 
materially impacts the validity of the pre-project NSR applicability 
conclusion. For example, post-project actual emissions data may 
indicate that the portion of emissions excluded pursuant to 40 CFR 
52.21(b)(41)(ii)(c) was overestimated for one or more existing 
emissions units. Thus, while the post-project emissions calculated for 
the project may not have exceeded the pre-project projection, there may 
be evidence that the emissions increase from the project would have 
been significant had certain emissions not been erroneously excluded. 
If such evidence exists, and if the emissions from all project-affected 
emissions units exceed the baseline actual emissions by a significant 
amount, a report must be submitted in accordance with 40 CFR 
52.21(r)(6)(v). The EPA requests comment on whether we should add the 
word ``materially'' in front of the word ``differ'' or amend this 
provision in another way to achieve the result described above.

B. Proposed New ``Reasonable Possibility'' Requirements

    In addition to the clarifications described in the preceding 
section, the EPA is also proposing additional requirements to the 
``reasonable possibility'' recordkeeping and reporting provisions. 
These include (1) proposing to add a new criteria to the RP provisions 
such that a source is subject to the RP requirements whenever a 
decrease is accounted for in the Step 1 significant emissions increase 
determination; (2) removing the distinction between EUSGUs and all 
other sources with respect to the submission of pre-project records; 
and (3) adding records that must be submitted to the reviewing 
authority when the source is subject to RP for a particular project.
    The EPA is proposing to revise the RP regulations to require that 
any source accounting for a decrease at Step 1 is also subject to the 
reasonable possibility recordkeeping provisions. This proposed revision 
to the RP regulations is intended to balance compliance assurance with 
recordkeeping and reporting burdens. The express inclusion of decreases 
at Step 1 in the NSR applicability process in project emission 
accounting warrants additional recordkeeping and reporting to ensure 
that decreases that a source accounts for are appropriately considered 
as part of the project being evaluated and to provide a means to 
determine whether such decrease(s) actually occur. Stakeholders have 
raised concern that sources can use project emissions accounting to 
evade permitting requirements that they would otherwise be subject to 
and that there would be no way for permitting authorities to identify 
that the source should have been subject to NSR permitting. For 
example, the petition for reconsideration expressed concern that under 
project emissions accounting, sources may improperly account for an 
unrelated decrease at Step 1 and thereby improperly find that a permit 
is not required.\89\ If, in aggregate, the emissions increase 
determined by the source is less than the RP threshold, it may be the 
case that the source is not subject to any recordkeeping and reporting 
requirements under the existing regulatory requirements. This means 
that the reviewing authority may not be able to verify that activities 
were properly aggregated and that decreases accounted for in the NSR 
applicability process actually occur.
---------------------------------------------------------------------------

    \89\ Petition for Reconsideration at 9-10 (noting that ``in 
their comments on the proposal, Petitioners argued that the proposed 
project emissions accounting approach contravened the Clean Air 
Act's requirement that NSR apply to any change that `increases the 
amount of any pollutant emitted' by a source because, inter alia, it 
would allow a source to avoid NSR based on offsetting emission 
decreases that are not contemporaneous with the change under 
consideration'').
---------------------------------------------------------------------------

    Therefore, in this action, the EPA is proposing to require that 
projects that involve a calculated emissions decrease of a regulated 
NSR pollutant from one or more affected emissions units are subject to 
the RP provisions, including 40 CFR 52.21(r)(6)(i) through (v), as 
applicable, for that pollutant regardless of the overall estimated 
project emissions increase. The EPA is proposing this revision because 
the express inclusion of decreases under project emissions accounting 
warrants further accountability to ensure that those decreases are 
appropriately considered part of the project (i.e., physical change or 
change in the method of operation at a source) and to provide a means 
to determine whether the decreases being accounted for actually occur. 
To implement this new requirement, the EPA is proposing to revise the 
RP regulations to include another category of projects that would have 
a ``reasonable possibility'' of resulting in a significant emissions 
increase, namely any project that that includes an emissions decrease 
in PEA at Step 1. The EPA is proposing to do so by adding the following 
as a trigger to the reasonable possibility in recordkeeping and 
reporting requirements: ``The owner or operator accounts for a decrease 
in emissions from one or more emissions unit(s) in determining that the 
project is not a major modification for a regulated NSR pollutant 
regardless of the projected actual emissions increase.''
    Under the existing RP regulations, sources that trigger the 
``reasonable possibility'' criteria under 40 CFR 52.21(r)(6)(vi)(a) for 
projects that involve EUSGUs are required to submit pre-project records 
and post-project monitoring reports while sources that trigger the same 
criteria for projects that do not involve EUSGUs are not required to 
submit pre-project records and are only required to submit post-project 
reports when certain criteria are met.\90\ The EPA believes that 
restricting the pre-project reporting requirements to EUSGUs may not be 
warranted. There is currently no requirement in the Federal regulations 
that source owners or operators of projects involving non-EUSGU sources 
subject to RP notify reviewing authorities that they are maintain 
records on-site as required by RP. The EPA is revising the pre-project 
requirements to align the requirements for all project types. This 
revision is intended to provide more transparency for projects that may 
not have otherwise been reviewed under the current regulations.
---------------------------------------------------------------------------

    \90\ 40 CFR 52.21(r)(6)(ii), (iv), and (v).
---------------------------------------------------------------------------

    To address these concerns, the EPA is proposing language to remove 
the distinction between EUSGUs and non-EUSGUs in the submission of pre-
project records required under 40 CFR 52.21(r)(6)(i). The EPA is 
proposing to do so by specifying that all sources that trigger the RP 
criterion under 40 CFR 52.21(r)(6)(vi)(a) submit to the reviewing 
authority the records required to be generated in accordance with 40 
CFR 52.21(r)(6)(i). To remove the differential treatment of EUSGUs and 
all other sources with respect to pre-project reporting requirements 
under the RP regulations, the EPA is proposing to remove the language 
``if the emissions unit is an existing electric utility steam 
generating unit'' where that language is used in the reasonable 
possibility provisions for submission of pre-project records.\91\
---------------------------------------------------------------------------

    \91\ 40 CFR 52.21(r)(6)(ii).
---------------------------------------------------------------------------

    The EPA is proposing this revision to provide increased 
transparency and opportunity for review of pre-project applicability 
analyses for projects that do not involve EUSGUs, and to ensure that 
required minor NSR permit applications contain the requisite detail 
necessary to confirm compliance with the definition of project outlined 
in section III. of this action. The EPA does

[[Page 36884]]

not expect this requirement to add significant regulatory burden. Since 
non-EUSGUs subject to the ``reasonable possibility'' recordkeeping and 
reporting provisions under existing regulations are required to 
maintain pre-project records, the only additional requirement for non-
EUSGUs subject to RP would be submitting these records to the reviewing 
authority. In many cases, this submission of pre-project records would 
generally occur anyway as part of a minor NSR permitting process. Under 
circumstances that require a minor NSR permit application or other 
transaction with the reviewing authority, the pre-project records 
required by the RP provision are normally included in the submittal. 
The proposed rule is intended to avoid any gaps where such information 
is not otherwise submitted to the reviewing authority.
    When considered with the proposed expansion of ``reasonable 
possibility'' to include instances where a source considers one or more 
emissions decreases at Step 1 of the NSR applicability process, the 
proposed additional pre-project reporting requirement for non-EUSGU 
projects would create more transparency and accountability when such 
emissions decreases are considered in the project emissions accounting 
process. If these requirements are finalized as proposed, they would 
enable reviewing authorities to identify potentially improperly 
accounting for emissions decreases to avoid triggering the ``reasonable 
possibility'' criteria that a source would otherwise have been subject 
to.
    Additionally, the EPA proposes that sources be required to submit 
pre-project records to the reviewing authority for all projects that 
trigger the RP criteria, including projects that do not involve EUSGUs. 
Under the existing RP regulations, sources are only required to 
maintain the required pre-project records on site and are not required 
to notify the reviewing authority that these records are being 
maintained because RP has been triggered. If the revisions proposed in 
this action are finalized, this gap in reporting will be filled. This 
is because sources that consider a decrease at Step 1 would trigger RP 
and would be required to submit records specifying the decreases to the 
reviewing authority.
    In the alternative of requiring that all records be submitted to 
the permitting authority, the EPA is taking comment on requiring that, 
for projects that do not involve EUSGU(s), owner or operators need only 
inform the permitting authority that they are maintaining records on 
site as required by the ``reasonable possibility'' provisions.
    The EPA is also proposing to specify that the description of a 
project in these records include ``the name of the project, the 
project's intended objective(s), each physical change and/or change in 
the method of operation associated with the project objective(s), and 
estimated timeline for the project, including an estimation of when the 
project would begin actual construction and begin normal operation.'' 
When combined with the proposed definition of project, these proposed 
revisions to the RP regulations will foster greater accountability for 
applicability conclusions, including whether the source owner/operator 
is required to maintain ``reasonable possibility'' records.
    The EPA is seeking information on the potential implications of 
these proposed revisions to the RP regulations, including benefits to 
the enforceability of major NSR permitting requirements and burden on 
sources and/or the reviewing authorities that may result from the 
proposed revisions. The EPA is requesting substantiation of any 
facility expansion projects (or other projects affecting emissions) 
that did not go forward solely because the source did not want to 
maintain or submit RP records. The EPA is aware that expanding the 
``reasonable possibility'' recordkeeping and reporting requirement to 
all projects that include a decrease in their Step 1 applicability 
calculations may expand the number of sources subject to recordkeeping, 
monitoring, and reporting provisions. The EPA believes that in many 
cases these sources and the emissions units involved in a project 
subject to RP requirements will also be subject to other CAA 
recordkeeping, monitoring, and reporting requirements, including those 
associated with NSR or title V permits, other SIP provisions, and 
applicable standards such as new source performance standards (NSPS). 
Thus, much of the information required to meet the expanded RP 
requirements should already be available. The EPA would like 
information on the number and types of sources and projects that will 
be subject to the additional recordkeeping and reporting requirements 
if this proposed revision is finalized and to what extent existing 
requirements and available information can be used to meet these new 
requirements with little extra burden. Finally, the EPA would also like 
information on potential administrative costs and/or benefits of these 
proposed revisions to the recordkeeping and reporting requirements to 
reviewing authorities.

C. Additional Considerations for Proposed Reasonable Possibility 
Revisions

    The proposed revisions to the RP regulations discussed previously 
comport with the court's decision in New Jersey v. EPA in that they 
balance ``ease of enforcement with avoidance of requirements that would 
be unnecessary or unduly burdensome on reviewing authorities or the 
regulated community.'' \92\ However, the EPA is proposing regulations 
today that shift that balancing based on developments since the 
promulgation of the RP regulations considered in that case.
---------------------------------------------------------------------------

    \92\ New Jersey v. EPA, 989 F.3d 1038 (D.C. Cir. 2021) (citing 
72 FR at 72609-11).
---------------------------------------------------------------------------

    In that decision, the court did not respond to petitioner's 
concerns about the sufficiency of RP in light of the project emissions 
accounting rule, stating that ``enforcement problems stemming from 
EPA's actions following the Rule's promulgation are beyond the current 
record for judicial review.'' \93\ The EPA is now proposing, revisions 
to RP to account for potential increased risk of improper avoidance of 
NSR requirements due to the express inclusion of decreases in Step 1 
under the 2020 PEA rule.
---------------------------------------------------------------------------

    \93\ Id. at 1050.
---------------------------------------------------------------------------

    In New Jersey v. EPA, the petitioner also challenged ``EPA's 
explanation that enforcement authorities may rely on other records--
such as Title V records, minor NSR records, state and national 
emissions inventory records, and business records--to evaluate 
preconstruction NSR compliance when the Rule's recordkeeping and 
reporting requirements are not triggered.'' The petitioner argued 
``that such records lack the type of project-specific, preconstruction 
information needed to evaluate NSR compliance'' and ``that EPA failed 
to explain how enforcement authorities may draw on these records 
collectively to trace emissions increases to specific modifications.'' 
\94\ The D.C. Circuit did not find these arguments persuasive on the 
grounds the petitioners ``cite[ ] no authority to support the[ir] 
proposition.''
---------------------------------------------------------------------------

    \94\ Id. at 1051.
---------------------------------------------------------------------------

    However, it has been several years since the EPA completed the 
rulemaking that was challenged in the New Jersey case, and the record 
for that rulemaking is now several years old. The EPA has since 
received feedback regarding the sparsity of information in minor NSR 
permit applications. For example, the EPA has received comments from 
state permitting authorities and environmental groups that oftentimes 
minor NSR permit

[[Page 36885]]

records do not contain information on how the applicability analysis 
was conducted, thereby impeding verification of a source's 
determination that a major NSR permit is not required under a given 
circumstance.\95\ The EPA is thus proposing revisions to address these 
concerns.
---------------------------------------------------------------------------

    \95\ See, e.g., Sierra Club, et al., Response to Request for 
Comments on Proposed Rule: Prevention of Significant Deterioration 
(PSD) and Nonattainment New Source Review (NNSR): Project Emissions 
Accounting, 84 FR 39244 (August 9, 2019) at 21 (commenting that PEA 
``would allow sources to avoid any obligation to `retain the data 
underlying their projections, let alone send that information to 
permitting authorities,' so long as the source believes that its 
unenforceable (and potentially unidentified and undocumented) 
emission reductions will not trigger an increase in emissions.'').
---------------------------------------------------------------------------

VII. Revisions To Clarify Statutory Limitations on Netting in 
Nonattainment NSR

    The EPA is proposing revisions to the NSR nonattainment provisions 
to make the regulations consistent with CAA requirements, which limit 
netting in certain ozone non-attainment areas. The proposed revisions 
are applicable to Serious, Severe and Extreme classified ozone 
nonattainment areas and establish that for these areas, emissions 
increases over any period of 5 consecutive years should be aggregated 
when determining whether there is a significant net emissions increase, 
and in Extreme ozone nonattainment areas, project emissions accounting 
is not permissible under the CAA.\96\ This includes revisions to the 
language in 40 CFR 51.165 and appendix S to part 51 to reflect that 
sources locating in an ozone nonattainment area that is classified as 
Serious or Severe for ozone, must aggregate all net emissions increases 
that have occurred within the previous 5 consecutive calendar year 
period. The proposed revisions will also establish that netting is not 
available for sources emitting ozone precursors and locating in ozone 
nonattainment areas that are classified as Extreme.
---------------------------------------------------------------------------

    \96\ CAA section 182(c)(6); CAA section 182(e)(2).
---------------------------------------------------------------------------

    The EPA noted in the 2020 PEA rule that project emissions 
accounting would not apply to ``certain modification provisions under 
Title I, Subpart D of the CAA and the EPA nonattainment NSR regulations 
that apply to certain nonattainment area classifications. For example, 
CAA section 182(e)(2) and 40 CFR part 51, appendix S 11.A.5.(v).'' The 
EPA did not in that action, however, elaborate and clarify that project 
emissions accounting would not be available in certain nonattainment 
areas. This section addresses the application of netting and PEA in 
those situations.
    The provisions of section 182(c)(6) of the CAA apply to ozone 
nonattainment areas classified Serious or higher. The provisions state 
that any emission increases of ozone precursor emissions (VOC and 
NO<INF>X</INF>) \97\ resulting from a modification shall not be 
considered de minimis for the purposes of determining NNSR 
applicability ``unless the increases in net emissions. . .from such 
source does not exceed 25 tons when aggregated with all other net 
increases in emissions from the source over any period of 5 consecutive 
calendar years which includes the calendar year in which such increase 
occurred.'' Thus, sources locating in an area classified Serious or 
Severe for ozone cannot consider an emission increase to be de minimis 
(i.e., not significant) if it exceeds a 25 ton per year threshold of an 
ozone precursor when emissions from the project are aggregated with 
other projects that result in emissions increases over a period of 5 
consecutive calendar years.\98\ For sources locating in areas that are 
classified as Extreme for ozone, section 182(e)(2) of the CAA specifies 
that any change at a major stationary source which results in any 
increase in emissions from any discrete operation, unit, or other 
pollutant emitting activity at the source must be considered a major 
modification for NSR applicability purposes. In addition, in an Extreme 
area, the source has the option of providing offsets from other 
discrete operations, units, or activities within the source at an 
internal offset ratio of at least 1.3 to 1, rather than the required 
1.5 to 1 offset ratio.\99\ The EPA is proposing language in the 
regulations to implement this CAA language applicable to sources that 
emit ozone precursors that are locating in an area that is classified 
as Serious, Severe or Extreme for ozone.
---------------------------------------------------------------------------

    \97\ While CAA section 182(c)(6) refers only to VOC emissions, 
CAA section 182(f) extends to NO<INF>X</INF> emissions all 
requirements related to VOC emissions.
    \98\ CAA section 182(c)(6).
    \99\ CAA section 182(e)(2).
---------------------------------------------------------------------------

VIII. Implementation of These Proposed Revisions for Delegated and SIP-
Approved Programs

    The PSD program requirements in 40 CFR 52.21 are implemented by the 
EPA or reviewing authorities that have been delegated Federal authority 
from the EPA to issue PSD permits on behalf of the EPA (via a 
delegation agreement with an EPA Regional office). Thus, if these 
proposed regulatory changes are finalized, any revisions to this 
federal PSD regulation will automatically apply to the EPA and all 
permitting authorities that implement a PSD program pursuant to a 
delegation agreement that does not reference Sec.  52.21 as of a 
specific date.\100\
---------------------------------------------------------------------------

    \100\ Where the EPA has only delegated authority to implement a 
date-specific version of section CAA 52.21, the delegation agreement 
would need to be updated to incorporate the revisions in this rule.
---------------------------------------------------------------------------

    For state and local agencies that implement the NSR program through 
EPA-approved SIPs, the EPA's regulations for SIP-approved programs in 
40 CFR 51.165 and 51.166 include applicability procedures that are 
analogous to the applicability procedures at 40 CFR 52.21(a)(2)(iv) 
that have been cited in this preamble.
    If finalized, these regulations would modify the content of the 
minimum program elements of NSR. Consequently, if the EPA were to 
finalize the revisions being proposed in this rulemaking, reviewing 
authorities would need to revise their regulations and submit SIP 
revisions to adopt those revisions. Upon the effective date of any 
final revisions, EPA's implementing regulations at 40 CFR 51.166(a)(6) 
provide permitting authorities with up to 3 years to submit state 
implementation plan revisions reflecting any final EPA revisions to 
permit program regulations. If a reviewing authority's SIP-approved 
regulations already require that sources submit information consistent 
with the information required in the revisions to the reasonable 
possibility recordkeeping and reporting requirements described in 
section VI. of this action, those requirements may be considered by the 
EPA to be as stringent as that required by any final EPA regulatory 
revisions. Reviewing authorities whose SIP-approved regulations already 
require submission of regulations consistent with the proposed 
revisions in this action may submit a demonstration that their 
requirements are as stringent as those in the final action.

IX. Costs, Benefits, and Other Impacts of the Proposed Rule

    The EPA is proposing to codify a definition of project and is 
proposing revisions to the monitoring, recordkeeping and reporting 
provisions under the major NSR program regulations to improve 
compliance with, and enforcement of, the major NSR applicability 
regulations. The benefits and costs associated with the proposed 
revisions to the NSR regulations are likely to vary greatly depending 
on the source category, number and location of facilities, and the 
pollutants and potential controls involved in any future contemplated 
projects. The EPA expects

[[Page 36886]]

that the overall impacts of the proposed changes to the major NSR 
program applicability regulations will provide clarity and will also 
improve practicable enforceability and public transparency of the NSR 
program applicability requirements. However, there are numerous 
challenges to quantifying potential cost and emissions impacts of the 
proposal. The EPA lacks data on the NSR permitting process since the 
NSR program is largely implemented by state and local reviewing 
authorities. Because NSR is a pre-construction program, the EPA also 
faces the absence of information on projects that would have been 
subject to NSR permitting requirements if the revisions proposed in 
this action are finalized as proposed. This is to say that the EPA does 
not have information, with the exception of anecdotal evidence, on what 
projects would have been undertaken but for the codification of a 
definition of project, the requirements that decreases be made 
enforceable at Step 1 of the two-step NSR applicability requirements, 
or additional recordkeeping and reporting requirements. Because the EPA 
has no information on what forthcoming projects are planned and what 
impact the proposed revisions to the NSR regulations would have on 
these projects, the EPA also does not have specific information on what 
emissions impacts these projects would have had.
    For example, major source permit applications are not submitted to 
the EPA, but to state and local reviewing authorities. There is 
currently no centralized database for NSR permit applications due 
primarily to potential federalism concerns. Minor source permitting is 
performed at the state and local levels (with the exception of Indian 
country), and there is significant variation in how state and local 
authorities design and implement minor source permit programs. 
Additionally, there are currently instances where a source may trigger 
the reasonable possibility recordkeeping and reporting requirements but 
not any NSR permitting requirements. If the source is not an EUSGU, 
then that source (under the EPA's Federal regulations) does not need to 
notify the reviewing authority or the public that these requirements 
were triggered.
    In a separate effort, the EPA has been scoping the development of 
an economic model appropriate to evaluate NSR applicability. Assuming 
the availability of appropriate permitting data as described earlier, 
the model could potentially be used to evaluate how proposed changes to 
the NSR regulations might impact permitting costs to industry and 
agencies, economic activities, and emissions.
    In absence of a quantitative analysis for this action, the 
following discussion presents a qualitative assessment of the potential 
benefits and costs of the major clarifications and revisions included 
in this proposal.

A. Proposed Definition of ``Project''

    The EPA expects the proposed revisions to the regulatory definition 
of ``project'' will not impose additional direct regulatory costs on 
reviewing authorities and regulated entities, but will benefit 
permitting authorities and the public by systemizing application of the 
NSR applicability process to focus on a ``project'' under a 
consistently interpreted definition. Since this would codify pre-
existing EPA guidance--the 2018 Project Aggregation Final Action that 
affirmed a prior 2009 interpretation--the EPA expects it will not 
impose additional direct regulatory costs. In the 2020 PEA rulemaking, 
the EPA stated that ``it is appropriate to apply its `project 
aggregation' interpretation and policy, set forth in the 2018 final 
action that completed reconsideration of a 2009 action on this topic to 
Step 1 of the NSR major modification applicability test for projects 
that involve both increases and decreases in emissions.'' \101\ This 
was reiterated in the Response to Comments document on the PEA rule, 
which stated that ``the EPA is affirming that the criteria in the 
November 2018 final action on project aggregation apply universally to 
defining a project for purposes of major NSR, i.e., both in the context 
of under- and over-aggregation of activities into a project and the 
associated potential circumvention of NSR.'' \102\ While the EPA 
repeatedly pointed to the 2018 Project Aggregation Final Action as the 
interpretation sources and permitting authorities should be 
implementing, it did not codify this interpretation. Therefore, the 
proposed codification of a definition for project is consistent with 
how the EPA presumed ``project'' would be defined in the 2020 PEA rule 
and should impose no additional obligations on regulated entities and 
permitting authorities.
---------------------------------------------------------------------------

    \101\ 85 FR at 74895.
    \102\ 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, at 58 (October 2020).
---------------------------------------------------------------------------

    Consistent with the EPA's statements in the 2018 Project 
Aggregation Final Action, we anticipate the EPA's efforts to clarify 
``project'' through this rulemaking ``will streamline NSR permitting by 
reducing the time needed to assess whether nominally-separate physical 
and operational changes should be aggregated for NSR applicability 
purposes.'' \103\ As explained in section III. of this preamble, this 
definition will provide guardrails that will ensure that decreases that 
a source accounts for are actually part of the project being considered 
in the NSR applicability process.
---------------------------------------------------------------------------

    \103\ 83 FR 57324 (November 15, 2018).
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B. Enforceability of Emissions Decreases

    In this action, the EPA is proposing to require that decreases 
accounted for in Step 1 of the NSR applicability process be made 
enforceable. In this action the EPA is requesting information on the 
costs to reviewing authorities and to sources associated with proposing 
that decreases be made enforceable. As explained in section V. of this 
action, the EPA is proposing to make decreases enforceable due to 
concerns that PEA will allow sources to include decreases in the 
project-related NSR applicability analysis without any assurance that 
those decreases will actually occur.

C. Clarifications and Revisions to the ``Reasonable Possibility'' (RP) 
in Recordkeeping and Reporting Provisions

    The EPA is proposing to clarify certain existing RP requirements as 
follows to ensure appropriate and consistent application of those 
requirements by affected sources and reviewing authorities. The EPA is 
proposing to clarify that the provisions of 40 CFR 52.21(r)(6) apply 
with respect to any regulated NSR pollutant emitted from projects that 
involve one or more existing emissions units in circumstances 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 ATPA method 
for calculating projected actual emissions from any existing emissions 
unit. As with the codification of a definition of project, this 
clarification will allow for more consistent application of the 
reasonable possibility and recordkeeping provisions across the nation 
as those regulations were intended to apply.
    Additionally, the EPA is expanding the applicability of the RP 
regulations due to PEA. The EPA believes that the inclusion of 
decreases at Step 1 in the NSR applicability process (i.e., project 
emission accounting) may warrant additional recordkeeping and reporting 
to ensure that decreases that a source accounts for are appropriately

[[Page 36887]]

considered as part of the project being evaluated and that such 
decrease(s) actually occur following the project. In order to determine 
whether they are subject to permitting requirements, all sources are 
required to undertake the calculation that is part of the NSR 
applicability process. Under the current regulations, sources that 
conduct the applicability analysis are not required to submit any 
information indicating that they are not subject to the NSR permitting 
requirements nor are they required to notify the reviewing authority 
that they are subject to the RP recordkeeping and reporting 
requirements.\104\ This proposal would not result in a substantial 
increase in costs because it would only require that sources submit 
records they are already required to produce and, in some cases, 
maintain on-site.
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    \104\ For projects that involve one or more EUSGUs, owners or 
operators are required to submit records under the RP regulations, 
but for all other projects, owners or operators must only maintain 
records on-site and are not currently required to notify the 
reviewing authority that they are maintaining RP records on-site.
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    Following promulgation of the PEA rule, sources accounting for a 
decrease associated with a project in Step 1 in the NSR applicability 
process may evade all recordkeeping requirements if the sum of that 
decrease and any increase from the same project is under 50 percent of 
the SER.\105\ Therefore, if a source impermissibly undertakes a project 
that requires a permit and where that source claims a decrease in 
emissions associated with the project such that the emissions projected 
for the project is under 50 percent of the SER, there is no means of 
verifying whether that project was appropriately defined. There is, in 
fact, no means for the reviewing authority or the public to know that 
such project that would otherwise have required a permit but for 
emissions decrease purportedly associated with the project, is 
occurring. There is therefore no way under the currently regulatory 
scheme which allows for PEA, for the public or for permitting 
authorities to ensure that decreases that were used by a source to 
forgo permitting requirements are actually occurring. The EPA believes 
these shields are an impediment to practical enforceability of the 
applicability process and that it may be warranted to require greater 
accountability for projects that account for project-related decreases 
in their ``significant emissions increase'' calculation. The EPA is 
therefore proposing to require that these sources submit any required 
pre-project records to the reviewing authority as required by the NSR 
regulations.
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    \105\ 40 CFR 52.21(r)(6)(vi).
---------------------------------------------------------------------------

D. Revisions to Nonattainment Applicability Provisions

    The proposed revisions to the nonattainment provisions applicable 
to Serious, Severe and Extreme classified ozone nonattainment areas do 
not impose new costs on sources, reviewing authorities, or the public. 
Rather, they merely establish in regulations requirements that sources 
are already required to adhere to in the CAA. This includes that for 
these areas, source-wide netting is not permissible, and in extreme 
ozone nonattainment areas project emissions accounting is not 
permissible under the CAA. Accordingly, in this action, the EPA is not 
proposing new requirements but is only proposing revisions to the 
regulations in 40 CFR 51.165 and appendix S to part 51 to reflect that 
sources locating in an area that is classified as Serious or Severe for 
ozone, must aggregate all net emissions increases that have occurred 
within the previous 5 consecutive calendar year period. These revisions 
mirror CAA language and do not reflect new requirements imposed upon 
sources or reviewing authorities. Consequently, these revisions will 
not change any pre-existing requirements for sources locating in ozone 
nonattainment areas or reviewing authorities.

X. Statutory and Executive Order Reviews

    Additional information about these statutes and Executive Orders 
(``E.O.'') can be found at http://www2.epa.gov/laws-regulations/laws-and-executive-orders.

A. Executive Order 12866: Regulatory Planning and Review and Executive 
Order 14904: Modernizing Regulatory Review

    This action is not a significant regulatory action as defined in 
Executive Order 12866, as amended by Executive Order 14094, and was, 
therefore, not subject to a requirement for Executive Order 12866 
review.

B. Paperwork Reduction Act (PRA)

    This action does not impose any new information collection burden 
under the PRA. OMB has previously approved the information collection 
activities contained in the existing regulations and has assigned OMB 
control numbers 2060-0003 for the PSD and NNSR permit programs. The 
burden associated with obtaining an NSR permit for a major stationary 
source undergoing a major modification is already accounted for under 
the approved information collection requests.

C. Regulatory Flexibility Act (RFA)

    I certify that this action will not have a significant economic 
impact on a substantial number of small entities under the RFA. This 
action will not impose any requirements on small entities. This 
proposed rule will strengthen the reasonable possibility in current 
recordkeeping and reporting provisions by requiring that any source 
wishing to account for a decrease in the significant emissions increase 
determination in the NSR applicability process be subject to those 
recordkeeping and reporting provisions. This proposed rule, if 
finalized, may therefore increase the recordkeeping and reporting 
burdens of sources that may have otherwise not been subject to these 
requirements. The EPA is soliciting feedback on the number of sources 
that may be subject to recordkeeping and reporting requirements because 
of this proposed revision and is also soliciting information on the 
cost of compliance to these sources. The EPA does not anticipate, 
however, that the economic impact of this revision will be significant 
since most sources that undertake an emissions-decreasing activity 
would likely have been subject to recordkeeping and reporting 
requirements in the absence of the proposed revision. Consequently, a 
substantial number of small entities are unlikely to be impacted should 
this proposed revision be finalized. Furthermore, with respect to 
proposed revisions to reporting requirements, the EPA does not 
anticipate that this would result in a significant economic impact on a 
substantial number of small entities because under existing 
regulations, all sources are required to maintain records. The EPA does 
not believe that the additional requirement of submitting these 
records, which are already required to be produced, will result in a 
significant economic impact on a substantial number of small entities.

D. Unfunded Mandates Reform Act (UMRA)

    This proposed action does not contain an unfunded mandate of $100 
million or more as described in UMRA, 2 U.S.C. 1531-1538, and does not 
significantly or uniquely affect small governments. This action imposes 
no enforceable duty on any state, local or tribal governments or the 
private sector. Nonetheless, if this rule is finalized as proposed, it 
is possible that some state and local air

[[Page 36888]]

agencies will need to submit a one-time revision to their SIP.

E. Executive Order 13132: Federalism

    This action does not have federalism implications. It will not have 
substantial direct effects on the states, on the relationship between 
the national government and the states, or on the distribution of power 
and responsibilities among the various levels of government.

F. Executive Order 13175: Consultation and Coordination With Indian 
Tribal Governments

    This action does not have tribal implications as specified in 
Executive Order 13175 in that this action would neither impose 
substantial direct compliance costs on federally recognized tribal 
governments, nor preempt tribal law. The EPA is currently the reviewing 
authority for PSD and NNSR permits issued in tribal lands and, as such, 
the revisions being proposed will not impose direct burdens on tribal 
authorities. Thus, Executive Order 13175 does not apply to this action.

G. Executive Order 13045: Protection of Children From Environmental 
Health and Safety Risks

    The EPA interprets Executive Order 13045 as applying only to those 
regulatory actions that concern environmental health or safety risks 
that the EPA has reason to believe may disproportionately affect 
children, per the definition of ``covered regulatory action'' in 
section 2-202 of the Executive Order. This action is not subject to 
Executive Order 13045 because it does not concern an environmental 
health risk or safety risk.

H. Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use

    This action is not a ``significant energy action'' because it is 
not likely to have a significant adverse effect on the supply, 
distribution or use of energy. This proposed rule will impact the NSR 
applicability process, and the recordkeeping and reporting provisions 
associated with that process. As such, it is not likely to 
significantly impact the number of sources subject to permitting 
requirements but will only facilitate transparency and accountability 
for those sources that would otherwise have been subject to permitting 
requirements.

I. National Technology Transfer and Advancement Act (NTTAA)

    This rulemaking does not involve technical standards.

J. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations and 
Executive Order 14096: Revitalizing Our Nation's Commitment to 
Environmental Justice for All

    The EPA believes that it is not practicable to assess whether the 
human health or environmental conditions that exist prior to this 
action result in disproportionate and adverse effects on communities 
with environmental justice concerns. This is due to the lack of 
permitting data necessary for the EPA to evaluate the number of sources 
likely to be impacted by this action. Additionally, the impacts of the 
proposal on the benefits and costs of the NSR program are likely to 
vary greatly depending on the source category, number and location of 
facilities, and the pollutants and potential controls addressed. The 
NSR program is largely implemented by state and local permitting 
authorities. These programs vary with respect to whether they implement 
PEA,\106\ whether their applicability process allows for source-wide 
netting, and what information they require from sources applying for a 
permit.\107\
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    \106\ In an informal survey, the EPA identified 34 out of 79 
permit authorities that allow the use of PEA in their PSD programs. 
Of these, 8 are delegated authorities and in three, EPA is the 
reviewing authority. Additionally, seven incorporate the federal 
rules by reference, three have a rulemaking underway to adopt the 
federal rule, 16 interpret their pre-2020 PEA rule regulations to 
allow for PEA by adopting the interpretation in the 2018 Memo or 
another equivalent interpretation, and two have revised their 
regulations to implement PEA and submitted a SIP to the EPA for 
approval. For 13 of these authorities, it is unclear whether they 
interpret their regulations to allow for PEA.
    \107\ E.g., Washington has adopted regulations consistent with 
those proposed in this action in WAC 173-400-720(4)(b)(iii)(D); N.J. 
Stat. section 26:2C-9.2(i) provides that ``the department may 
require the reporting and evaluation of emissions information for 
any air contaminant.''
---------------------------------------------------------------------------

    However, there are numerous challenges to quantifying potential 
cost and emissions impacts of the proposal. The EPA lacks systematic 
data on the permitting process because the NSR program is largely 
implemented by state and local permitting authorities. The EPA also 
faces the absence of information on projects that do not engage with 
NSR under requirements in the baseline but might under the proposed 
provisions.
    For example, major source permits are not submitted to the EPA, but 
to state and local permitting authorities. There is currently no 
centralized database where this permitting information is maintained. 
Minor source permitting is generally performed at the state and local 
levels, and there is a high degree of variation with respect to how 
state and local authorities permit non-major sources. Additionally, 
there are currently instances where a source may trigger the reasonable 
possibility recordkeeping and reporting requirements but not any other 
permitting requirements. If the source does not include an electric 
utility steam generating unit, then that source (under our current 
Federal regulations) does not need to notify anyone that these 
requirements were triggered. In these cases, under the current 
regulations, the reviewing authority and the public are not provided 
notification that records are being maintained as required by the 
reasonable possibility in recordkeeping provisions.
    The EPA is proposing this rulemaking to fill some of these gaps 
identified in permitting information that is collected. For example, if 
finalized, this rule would require that sources inform the reviewing 
authority that records were maintained in compliance with the 
reasonable possibility requirements. The reviewing authority is then 
required to inform the public that these records are available for 
public review, if such review is requested. The EPA is additionally 
exploring the potential development of a database to collect permitting 
information and other recordkeeping and reporting information.
    Despite the difficulties associated with quantitatively estimating 
the impacts of this proposal, the EPA believes that this action does 
not have disproportionate and adverse human health or environmental 
effects on communities with environmental justice concerns. Rather, the 
EPA expects that the overall impacts of the implementation of the 
proposed changes to the NSR program will improve the implementation, 
enforcement, and public transparency of the NSR program that may result 
in benefits to all communities including those with environmental 
justice concerns.
    The proposed revisions to the recordkeeping and reporting 
requirements are likely to improve public transparency of permit terms 
and conditions. In this way, there may be benefits to populations with 
environmental justice concerns that are more likely to be impacted by 
the emissions of sources subject to the ``reasonable possibility'' in

[[Page 36889]]

recordkeeping and reporting provisions. Additionally, the requirement 
that decreases accounted for in the NSR applicability process be made 
enforceable would improve the enforceability of emissions estimates 
used in the NSR applicability process. This improved enforcement, will 
ensure that decreases accounted for in the project emissions accounting 
process occur as projected. The revisions proposed in this action to 
both the recordkeeping and reporting provisions as well as the 
enforceability of calculations used in the NSR applicability process 
will reduce the barriers to public participation in the permitting 
process by providing the public and permitting authorities more 
information on the project and the emissions associated with that 
project.
    The EPA conducted outreach during the development of this proposed 
rulemaking to environmental nonprofit groups that petitioned the EPA on 
the project emissions accounting rule, as well as to state permitting 
authority associations, industry groups, and Tribal groups. 
Additionally, as part of other ongoing policy reviews of minor NSR 
programs, the EPA has conducted outreach that, among other topics, 
considered public notification requirements for minor modifications at 
major sources. Those outreach sessions were provided to the same 
environmental nonprofit groups the EPA met with for this action as well 
as with industry, state permitting authorities, and other environmental 
justice groups. The feedback obtained from those sessions informed 
aspects of this action as pertains to the revisions to the reasonable 
possibility in recordkeeping and reporting provisions and will inform 
public notice requirements that will be proposed as part of a 
subsequent action.

XI. Statutory Authority

    The statutory authority for this action is provided by 42 U.S.C. 
7401, et seq.

List of Subjects in 40 CFR Parts 51 and 52

    Environmental protection, Air pollution control.

Michael S. Regan,
Administrator.

    For the reasons stated in the preamble, title 40, chapter I of the 
Code of Federal Regulations is proposed to be amended as follows:

PART 51--REQUIREMENTS FOR PREPARATION, ADOPTION, AND SUBMITTAL OF 
IMPLEMENTATION PLAN

0
1. The authority citation for part 51 continues to read as follows:

    Authority: 23 U.S.C. 101; 42 U.S.C. 7401-7671 q.

Subpart I--Review of New Sources and Modifications


Sec.  51.165  [Amended]

0
2. Amend Sec.  51.165 by revising and republishing paragraphs (a)(1), 
(2), and (6) to read as follows:


Sec.  51.165  Permit requirements.

    (a) State Implementation Plan and Tribal Implementation Plan 
provisions satisfying sections 172(c)(5) and 173 of the Act shall meet 
the following conditions:
    (1) All such plans shall use the specific definitions. Deviations 
from the following wording will be approved only if the State 
specifically demonstrates that the submitted definition is more 
stringent, or at least as stringent, in all respects as the 
corresponding definition below:
    (i) Stationary source means any building, structure, facility, or 
installation which emits or may emit a regulated NSR pollutant.
    (ii)(A) Building, structure, facility, or installation means all of 
the pollutant-emitting activities which belong to the same industrial 
grouping, are located on one or more contiguous or adjacent properties, 
and are under the control of the same person (or persons under common 
control) except the activities of any vessel. Pollutant emitting 
activities shall be considered as part of the same industrial grouping 
if they belong to the same Major Group (i.e., which have the same two-
digit code) as described in the Standard Industrial Classification 
Manual, 1972, as amended by the 1977 Supplement (U.S. Government 
Printing Office stock numbers 4101-0065 and 003-005-00176-0, 
respectively).
    (B) The plan may include the following provision: Notwithstanding 
the provisions of paragraph (a)(1)(ii)(A) of this section, building, 
structure, facility, or installation means, for onshore activities 
under Standard Industrial Classification (SIC) Major Group 13: Oil and 
Gas Extraction, all of the pollutant-emitting activities included in 
Major Group 13 that are located on one or more contiguous or adjacent 
properties, and are under the control of the same person (or persons 
under common control). Pollutant emitting activities shall be 
considered adjacent if they are located on the same surface site; or if 
they are located on surface sites that are located within 1/4 mile of 
one another (measured from the center of the equipment on the surface 
site) and they share equipment. Shared equipment includes, but is not 
limited to, produced fluids storage tanks, phase separators, natural 
gas dehydrators or emissions control devices. Surface site, as used in 
this paragraph (a)(1)(ii)(B), has the same meaning as in 40 CFR 63.761.
    (iii) Potential to emit means the maximum capacity of a stationary 
source to emit a pollutant under its physical and operational design. 
Any physical or operational limitation on the capacity of the source to 
emit a pollutant, including air pollution control equipment and 
restrictions on hours of operation or on the type or amount of material 
combusted, stored, or processed, shall be treated as part of its design 
only if the limitation or the effect it would have on emissions is 
federally enforceable. Secondary emissions do not count in determining 
the potential to emit of a stationary source.
    (iv) (A) Major stationary source means:
    (1) Any stationary source of air pollutants that emits, or has the 
potential to emit, 100 tons per year or more of any regulated NSR 
pollutant (as defined in paragraph (a)(1)(xxxvii) of this section), 
except that lower emissions thresholds shall apply in areas subject to 
subpart 2, subpart 3, or subpart 4 of part D, title I of the Act, 
according to paragraphs (a)(1)(iv)(A)(1)(i) through (viii) of this 
section.
    (i) 50 tons per year of Volatile organic compounds in any serious 
ozone nonattainment area.
    (ii) 50 tons per year of Volatile organic compounds in an area 
within an ozone transport region, except for any severe or extreme 
ozone nonattainment area.
    (iii) 25 tons per year of Volatile organic compounds in any severe 
ozone nonattainment area.
    (iv) 10 tons per year of Volatile organic compounds in any extreme 
ozone nonattainment area.
    (v) 50 tons per year of Carbon monoxide in any serious 
nonattainment area for carbon monoxide, where stationary sources 
contribute significantly to Carbon monoxide levels in the area (as 
determined under rules issued by the Administrator).
    (vi) 70 tons per year of PM<INF>10</INF> in any serious 
nonattainment area for PM<INF>10.</INF>
    (vii) 70 tons per year of PM<INF>2.5</INF> in any serious 
nonattainment area for PM<INF>2.5.</INF>

[[Page 36890]]

    (viii) 70 tons per year of any individual precursor for 
PM<INF>2.5</INF> (as defined in paragraph (a)(1)(xxxvii) of this 
section), in any serious nonattainment area for PM<INF>2.5.</INF>
    (2) For the purposes of applying the requirements of paragraph 
(a)(8) of this section to stationary sources of nitrogen oxides located 
in an ozone nonattainment area or in an ozone transport region, any 
stationary source which emits, or has the potential to emit, 100 tons 
per year or more of nitrogen oxides emissions, except that the emission 
thresholds in paragraphs (a)(1)(iv)(A)(2)(i) through (vi) of this 
section shall apply in areas subject to subpart 2 of part D, title I of 
the Act.
    (i) 100 tons per year or more of nitrogen oxides in any ozone 
nonattainment area classified as marginal or moderate.
    (ii) 100 tons per year or more of nitrogen oxides in any ozone 
nonattainment area classified as a transitional, submarginal, or 
incomplete or no data area, when such area is located in an ozone 
transport region.
    (iii) 100 tons per year or more of nitrogen oxides in any area 
designated under section 107(d) of the Act as attainment or 
unclassifiable for ozone that is located in an ozone transport region.
    (iv) 50 tons per year or more of nitrogen oxides in any serious 
nonattainment area for ozone.
    (v) 25 tons per year or more of nitrogen oxides in any severe 
nonattainment area for ozone.
    (vi) 10 tons per year or more of nitrogen oxides in any extreme 
nonattainment area for ozone; or
    (3) Any physical change that would occur at a stationary source not 
qualifying under paragraphs (a)(1)(iv)(A)(1) or (2) of this section as 
a major stationary source, if the change would constitute a major 
stationary source by itself.
    (B) A major stationary source that is major for volatile organic 
compounds shall be considered major for ozone
    (C) The fugitive emissions of a stationary source shall not be 
included in determining for any of the purposes of this paragraph 
whether it is a major stationary source, unless the source belongs to 
one of the following categories of stationary sources:
    (1) Coal cleaning plants (with thermal dryers);
    (2) Kraft pulp mills;
    (3) Portland cement plants;
    (4) Primary zinc smelters;
    (5) Iron and steel mills;
    (6) Primary aluminum ore reduction plants;
    (7) Primary copper smelters;
    (8) Municipal incinerators capable of charging more than 50 tons of 
refuse per day;
    (9) Hydrofluoric, sulfuric, or nitric acid plants;
    (10) Petroleum refineries;
    (11) Lime plants;
    (12) Phosphate rock processing plants;
    (13) Coke oven batteries;
    (14) Sulfur recovery plants;
    (15) Carbon black plants (furnace process); (16) Primary lead 
smelters;
    (17) Fuel conversion plants;
    (18) Sintering plants;
    (19) Secondary metal production plants;
    (20) Chemical process plants--The term chemical processing plant 
shall not include ethanol production facilities that produce ethanol by 
natural fermentation included in NAICS codes 325193 or 312140;
    (21) Fossil-fuel boilers (or combination thereof) totaling more 
than 250 million British thermal units per hour heat input;
    (22) Petroleum storage and transfer units with a total storage 
capacity exceeding 300,000 barrels;
    (23) Taconite ore processing plants;
    (24) Glass fiber processing plants;
    (25) Charcoal production plants;
    (26) Fossil fuel-fired steam electric plants of more than 250 
million British thermal units per hour heat input; and
    (27) Any other stationary source category which, as of August 7, 
1980, is being regulated under section 111 or 112 of the Act.
    (v)(A) Major modification means any physical change in or change in 
the method of operation of a major stationary source that would result 
in:
    (1) A significant emissions increase of a regulated NSR pollutant 
(as defined in paragraph (a)(1)(xxxvii) of this section); and
    (2) A significant net emissions increase of that pollutant from the 
major stationary source.
    (B) Any significant emissions increase (as defined in paragraph 
(a)(1)(xxvii) of this section) from any emissions units or net 
emissions increase (as defined in paragraph (a)(1)(vi) of this section) 
at a major stationary source that is significant for volatile organic 
compounds shall be considered significant for ozone.
    (C) A physical change or change in the method of operation shall 
not include:
    (1) Routine maintenance, repair and replacement;
    (2) Use of an alternative fuel or raw material by reason of an 
order under sections 2 (a) and (b) of the Energy Supply and 
Environmental Coordination Act of 1974 (or any superseding legislation) 
or by reason of a natural gas curtailment plan pursuant to the Federal 
Power Act;
    (3) Use of an alternative fuel by reason of an order or rule 
section 125 of the Act;
    (4) Use of an alternative fuel at a steam generating unit to the 
extent that the fuel is generated from municipal solid waste;
    (5) Use of an alternative fuel or raw material by a stationary 
source which;
    (i) The source was capable of accommodating before December 21, 
1976, unless such change would be prohibited under any federally 
enforceable permit condition which was established after December 12, 
1976, pursuant to 40 CFR 52.21 or under regulations approved pursuant 
to 40 CFR part 51, subpart I.
    (ii) The source is approved to use under any permit issued under 
regulations approved pursuant to this section;
    (6) An increase in the hours of operation or in the production 
rate, unless such change is prohibited under any federally enforceable 
permit condition which was established after December 21, 1976, 
pursuant to 40 CFR 52.21 or regulations approved pursuant to 40 CFR 
part 51, subpart I.
    (7) Any change in ownership at a stationary source.
    (8) [Reserved]
    (9) The installation, operation, cessation, or removal of a 
temporary clean coal technology demonstration project, provided that 
the project complies with:
    (i) The State Implementation Plan for the State in which the 
project is located, and
    (ii) Other requirements necessary to attain and maintain the 
national ambient air quality standard during the project and after it 
is terminated.
    (D) This definition shall not apply with respect to a particular 
regulated NSR pollutant when the major stationary source is complying 
with the requirements under paragraph (f) of this section for a PAL for 
that pollutant. Instead, the definition at paragraph (f)(2)(viii) of 
this section shall apply.
    (E) For the purpose of applying the requirements of paragraph 
(a)(8) of this section to modifications at major stationary sources of 
nitrogen oxides located in ozone nonattainment areas or in ozone 
transport regions, whether or not subject to subpart 2, part D, title I 
of the Act, any significant net emissions increase of nitrogen oxides 
is considered significant for ozone.
    (F) Any physical change in, or change in the method of operation 
of, a major stationary source of volatile organic

[[Page 36891]]

compounds that results in any increase in emissions of volatile organic 
compounds from any discrete operation, emissions unit, or other 
pollutant emitting activity at the source shall be considered a 
significant net emissions increase and a major modification for ozone, 
if the major stationary source is located in an extreme ozone 
nonattainment area. A reduction in emissions of volatile organic 
compounds may not be used to determine if a modification will result in 
a major modification.
    (G) Fugitive emissions shall not be included in determining for any 
of the purposes of this section whether a physical change in or change 
in the method of operation of a major stationary source is a major 
modification, unless the source belongs to one of the source categories 
listed in paragraph (a)(1)(iv)(C) of this section.
    (vi) (A) Net emissions increase means, with respect to any 
regulated NSR pollutant emitted by a major stationary source, the 
amount by which the sum of the following exceeds zero:
    (1) The increase in emissions from a particular physical change or 
change in the method of operation at a stationary source as calculated 
pursuant to paragraph (a)(2)(ii) of this section; and
    (2) Any other increases and decreases in actual emissions at the 
major stationary source that are contemporaneous with the particular 
change and are otherwise creditable. Baseline actual emissions for 
calculating increases and decreases under this paragraph 
(a)(1)(vi)(A)(2) shall be determined as provided in paragraph 
(a)(1)(xxxv) of this section, except that paragraphs (a)(1)(xxxv)(A)(3) 
and (a)(1)(xxxv)(B)(4) of this section shall not apply.
    (B) An increase or decrease in actual emissions is contemporaneous 
with the increase from the particular change only if it occurs before 
the date that the increase from the particular change occurs;
    (C) An increase or decrease in actual emissions is creditable only 
if:
    (1) It occurs within a reasonable period to be specified by the 
reviewing authority; and
    (2) The reviewing authority has not relied on it in issuing a 
permit for the source under regulations approved pursuant to this 
section, which permit is in effect when the increase in actual 
emissions from the particular change occurs; and
    (3) As it pertains to an increase or decrease in fugitive emissions 
(to the extent quantifiable), it occurs at an emissions unit that is 
part of one of the source categories listed in paragraph (a)(1)(iv)(C) 
of this section or it occurs at an emissions unit that is located at a 
major stationary source that belongs to one of the listed source 
categories. Fugitive emission increases or decreases are not creditable 
for those emissions units located at a facility whose primary activity 
is not represented by one of the source categories listed in paragraph 
(a)(1)(iv)(C) of this section and that are not, by themselves, part of 
a listed source category.
    (D) An increase in actual emissions is creditable only to the 
extent that the new level of actual emissions exceeds the old level.
    (E) A decrease in actual emissions is creditable only to the extent 
that:
    (1) The old level of actual emission or the old level of allowable 
emissions whichever is lower, exceeds the new level of actual 
emissions;
    (2) It is enforceable as a practical matter at and after the time 
that actual construction on the particular change begins; and
    (3) The reviewing authority has not relied on it in issuing any 
permit under regulations approved pursuant to 40 CFR part 51 subpart or 
the State has not relied on it in demonstrating attainment or 
reasonable further progress;
    (4) It has approximately the same qualitative significance for 
public health and welfare as that attributed to the increase from the 
particular change; and
    (F) An increase that results from a physical change at a source 
occurs when the emissions unit on which construction occurred becomes 
operational and begins to emit a particular pollutant. Any replacement 
unit that requires shakedown becomes operational only after a 
reasonable shakedown period, not to exceed 180 days.
    (G) Paragraph (a)(1)(xii)(B) of this section shall not apply for 
determining creditable increases and decreases or after a change.
    (vii) Emissions unit means any part of a stationary source that 
emits or would have the potential to emit any regulated NSR pollutant 
and includes an electric steam generating unit as defined in paragraph 
(a)(1)(xx) of this section. For purposes of this section, there are two 
types of emissions units as described in paragraphs (a)(1)(vii)(A) and 
(B) of this section.
    (A) A new emissions unit is any emissions unit which is (or will 
be) newly constructed and which has existed for less than 2 years from 
the date such emissions unit first operated.
    (B) An existing emissions unit is any emissions unit that does not 
meet the requirements in paragraph (a)(1)(vii)(A) of this section. A 
replacement unit, as defined in paragraph (a)(1)(xxi) of this section, 
is an existing emissions unit.
    (viii) Secondary emissions means emissions which would occur as a 
result of the construction or operation of a major stationary source or 
major modification, but do not come from the major stationary source or 
major modification itself. For the purpose of this section, secondary 
emissions must be specific, well defined, quantifiable, and impact the 
same general area as the stationary source or modification which causes 
the secondary emissions. Secondary emissions include emissions from any 
offsite support facility which would not be constructed or increase its 
emissions except as a result of the construction or operation of the 
major stationary source or major modification. Secondary emissions do 
not include any emissions which come directly from a mobile source, 
such as emissions from the tailpipe of a motor vehicle, from a train, 
or from a vessel.
    (ix) Fugitive emissions means those emissions which could not 
reasonably pass through a stack, chimney, vent or other functionally 
equivalent opening.
    (x)(A) Significant means, in reference to a net emissions increase 
or the potential of a source to emit any of the following pollutants, a 
rate of emissions that would equal or exceed any of the following 
rates:

Pollutant Emission Rate
    Carbon monoxide: 100 tons per year (tpy)
    Nitrogen oxides: 40 tpy
    Sulfur dioxide: 40 tpy
    Ozone: 40 tpy of Volatile organic compounds or Nitrogen oxides
    Lead: 0.6 tpy
    PM<INF>10</INF>: 15 tpy
    PM<INF>2.5</INF>: 10 tpy of direct PM<INF>2.5</INF> emissions; 
40 tpy of Sulfur dioxide emissions, 40 tpy of Nitrogen oxide 
emissions, or 40 tpy of VOC emissions, to the extent that any such 
pollutant is defined as a precursor for PM<INF>2.5</INF> in 
paragraph (a)(1)(xxxvii) of this section.

    (B) Notwithstanding the significant emissions rate for ozone in 
paragraph (a)(1)(x)(A) of this section, significant means, in reference 
to an emissions increase or a net emissions increase, any increase in 
actual emissions of volatile organic compounds that would result from 
any physical change in, or change in the method of operation of, a 
major stationary source locating in a serious or severe ozone 
nonattainment area, if such emissions increase of volatile organic 
compounds exceeds 25 tons per year when aggregated with all other net 
increases in emissions from the source over any period of 5 consecutive 
calendar years which includes the calendar year in which such increase 
occurred.

[[Page 36892]]

    (C) For the purposes of applying the requirements of paragraph 
(a)(8) of this section to modifications at major stationary sources of 
nitrogen oxides located in an ozone nonattainment area or in an ozone 
transport region, the significant emission rates and other requirements 
for volatile organic compounds in paragraphs (a)(1)(x)(A), (B), and (E) 
of this section shall apply to nitrogen oxides emissions.
    (D) Notwithstanding the significant emissions rate for carbon 
monoxide under paragraph (a)(1)(x)(A) of this section, significant 
means, in reference to an emissions increase or a net emissions 
increase, any increase in actual emissions of carbon monoxide that 
would result from any physical change in, or change in the method of 
operation of, a major stationary source in a serious nonattainment area 
for carbon monoxide if such increase equals or exceeds 50 tons per 
year, provided the Administrator has determined that stationary sources 
contribute significantly to carbon monoxide levels in that area.
    (E) Notwithstanding the significant emissions rates for ozone under 
paragraphs (a)(1)(x)(A) and (B) of this section, any increase in actual 
emissions of volatile organic compounds from any emissions unit at a 
major stationary source of volatile organic compounds located in an 
extreme ozone nonattainment area shall be considered a significant net 
emissions increase. A reduction in emissions of volatile organic 
compounds from discrete operations, units, or activities within the 
source may not be used to determine if a modification will result in a 
major modification.
    (F) For the purposes of applying the requirements of paragraph 
(a)(13) of this section to modifications at existing major stationary 
sources of Ammonia located in a PM<INF>2.5</INF> nonattainment area, if 
the plan requires that the control requirements of this section apply 
to major stationary sources and major modifications of Ammonia as a 
regulated NSR pollutant (as a PM<INF>2.5</INF> precursor), the plan 
shall also define ``significant'' for Ammonia for that area, subject to 
the approval of the Administrator.
    (xi) Allowable emissions means the emissions rate of a stationary 
source calculated using the maximum rated capacity of the source 
(unless the source is subject to federally enforceable limits which 
restrict the operating rate, or hours of operation, or both) and the 
most stringent of the following:
    (A) The applicable standards set forth in 40 CFR part 60 or 61;
    (B) Any applicable State Implementation Plan emissions limitation 
including those with a future compliance date; or
    (C) The emissions rate specified as a federally enforceable permit 
condition, including those with a future compliance date.
    (xii) (A) Actual emissions means the actual rate of emissions of a 
regulated NSR pollutant from an emissions unit, as determined in 
accordance with paragraphs (a)(1)(xii)(B) through (D) of this section, 
except that this definition shall not apply for calculating whether a 
significant emissions increase has occurred, or for establishing a PAL 
under paragraph (f) of this section. Instead, paragraphs (a)(1)(xxviii) 
and (xxxv) of this section shall apply for those purposes.
    (B) In general, actual emissions as of a particular date shall 
equal the average rate, in tons per year, at which the unit actually 
emitted the pollutant during a consecutive 24-month period which 
precedes the particular date and which is representative of normal 
source operation. The reviewing authority shall allow the use of a 
different time period upon a determination that it is more 
representative of normal source operation. Actual emissions shall be 
calculated using the unit's actual operating hours, production rates, 
and types of materials processed, stored, or combusted during the 
selected time period.
    (C) The reviewing authority may presume that source-specific 
allowable emissions for the unit are equivalent to the actual emissions 
of the unit.
    (D) For any emissions unit that has not begun normal operations on 
the particular date, actual emissions shall equal the potential to emit 
of the unit on that date.
    (xiii) Lowest achievable emission rate (LAER) means, for any 
source, the more stringent rate of emissions based on the following:
    (A) The most stringent emissions limitation which is contained in 
the implementation plan of any State for such class or category of 
stationary source, unless the owner or operator of the proposed 
stationary source demonstrates that such limitations are not 
achievable; or
    (B) The most stringent emissions limitation which is achieved in 
practice by such class or category of stationary sources. This 
limitation, when applied to a modification, means the lowest achievable 
emissions rate for the new or modified emissions units within or 
stationary source. In no event shall the application of the term permit 
a proposed new or modified stationary source to emit any pollutant in 
excess of the amount allowable under an applicable new source standard 
of performance.
    (xiv) Federally enforceable means all limitations and conditions 
which are enforceable by the Administrator, including those 
requirements developed pursuant to 40 CFR parts 60 and 61, requirements 
within any applicable State implementation plan, any permit 
requirements established pursuant to 40 CFR 52.21 or under regulations 
approved pursuant to 40 CFR part 51, subpart I, including operating 
permits issued under an EPA-approved program that is incorporated into 
the State implementation plan and expressly requires adherence to any 
permit issued under such program.
    (xv) Begin actual construction means in general, initiation of 
physical on-site construction activities on an emissions unit which are 
of a permanent nature. Such activities include, but are not limited to, 
installation of building supports and foundations, laying of 
underground pipework, and construction of permanent storage structures. 
With respect to a change in method of operating this term refers to 
those on-site activities other than preparatory activities which mark 
the initiation of the change.
    (xvi) Commence as applied to construction of a major stationary 
source or major modification means that the owner or operator has all 
necessary preconstruction approvals or permits and either has:
    (A) Begun, or caused to begin, a continuous program of actual on-
site construction of the source, to be completed within a reasonable 
time; or
    (B) Entered into binding agreements or contractual obligations, 
which cannot be canceled or modified without substantial loss to the 
owner or operator, to undertake a program of actual construction of the 
source to be completed within a reasonable time.
    (xvii) Necessary preconstruction approvals or permits means those 
Federal air quality control laws and regulations and those air quality 
control laws and regulations which are part of the applicable State 
Implementation Plan.
    (xviii) Construction means any physical change or change in the 
method of operation (including fabrication, erection, installation, 
demolition, or modification of an emissions unit) that would result in 
a change in emissions.
    (xix) Volatile organic compounds (VOC) is as defined in Sec.  
51.100(s) of this part.

[[Page 36893]]

    (xx) Electric utility steam generating unit means any steam 
electric generating unit that is constructed for the purpose of 
supplying more than one-third of its potential electric output capacity 
and more than 25 MW electrical output to any utility power distribution 
system for sale. Any steam supplied to a steam distribution system for 
the purpose of providing steam to a steam-electric generator that would 
produce electrical energy for sale is also considered in determining 
the electrical energy output capacity of the affected facility.
    (xxi) Replacement unit means an emissions unit for which all the 
criteria listed in paragraphs (a)(1)(xxi)(A) through (D) of this 
section are met. No creditable emission reductions shall be generated 
from shutting down the existing emissions unit that is replaced.
    (A) The emissions unit is a reconstructed unit within the meaning 
of Sec.  60.15(b)(1) of this chapter, or the emissions unit completely 
takes the place of an existing emissions unit;
    (B) The emissions unit is identical to or functionally equivalent 
to the replaced emissions unit;
    (C) The replacement does not alter the basic design parameters of 
the process unit; and
    (D) The replaced emissions unit is permanently removed from the 
major stationary source, otherwise permanently disabled, or permanently 
barred from operation by a permit that is enforceable as a practical 
matter. If the replaced emissions unit is brought back into operation, 
it shall constitute a new emissions unit.
    (xxii) Temporary clean coal technology demonstration project means 
a clean coal technology demonstration project that is operated for a 
period of 5 years or less, and which complies with the State 
Implementation Plan for the State in which the project is located and 
other requirements necessary to attain and maintain the national 
ambient air quality standards during the project and after it is 
terminated.
    (xxiii) Clean coal technology means any technology, including 
technologies applied at the precombustion, combustion, or post 
combustion stage, at a new or existing facility which will achieve 
significant reductions in air emissions of sulfur dioxide or oxides of 
nitrogen associated with the utilization of coal in the generation of 
electricity, or process steam which was not in widespread use as of 
November 15, 1990.
    (xxiv) Clean coal technology demonstration project means a project 
using funds appropriated under the heading ``Department of Energy-Clean 
Coal Technology,'' up to a total amount of $2,500,000,000 for 
commercial demonstration of clean coal technology, or similar projects 
funded through appropriations for the Environmental Protection Agency. 
The Federal contribution for a qualifying project shall be at least 20 
percent of the total cost of the demonstration project.
    (xxv) [Reserved]
    (xxvi) Pollution prevention means any activity that through process 
changes, product reformulation or redesign, or substitution of less 
polluting raw materials, eliminates or reduces the release of air 
pollutants (including fugitive emissions) and other pollutants to the 
environment prior to recycling, treatment, or disposal; it does not 
mean recycling (other than certain ``in-process recycling'' practices), 
energy recovery, treatment, or disposal.
    (xxvii) Significant emissions increase means, for a regulated NSR 
pollutant, an increase in emissions that is significant (as defined in 
paragraph (a)(1)(x) of this section) for that pollutant.
    (xxviii)(A) Projected actual emissions means, the maximum annual 
rate, in tons per year, at which an existing emissions unit is 
projected to emit a regulated NSR pollutant in any one of the 5 years 
(12-month period) following the date the unit resumes regular operation 
after the project, or in any one of the 10 years following that date, 
if the project involves increasing the emissions unit's design capacity 
or its potential to emit of that regulated NSR pollutant and full 
utilization of the unit would result in a significant emissions 
increase or a significant net emissions increase at the major 
stationary source.
    (B) In determining the projected actual emissions under paragraph 
(a)(1)(xxviii)(A) of this section before beginning actual construction, 
the owner or operator of the major stationary source:
    (1) Shall consider all relevant information, including but not 
limited to, historical operational data, the company's own 
representations, the company's expected business activity and the 
company's highest projections of business activity, the company's 
filings with the State or Federal regulatory authorities, and 
compliance plans under the approved plan; and
    (2) Shall include fugitive emissions to the extent quantifiable, 
and emissions associated with startups, shutdowns, and malfunctions; 
and
    (3) Shall exclude, in calculating any increase in emissions that 
results from the particular project, that portion of the unit's 
emissions following the project that an existing unit could have 
accommodated during the consecutive 24-month period used to establish 
the baseline actual emissions under paragraph (a)(1)(xxxv) of this 
section and that are also unrelated to the particular project, 
including any increased utilization due to product demand growth; or,
    (4) In lieu of using the method set out in paragraphs 
(a)(1)(xxviii)(B)(1) through (3) of this section, may elect to use the 
emissions unit's potential to emit, in tons per year, as defined under 
paragraph (a)(1)(iii) of this section.
    (xxix) [Reserved]
    (xxx) Nonattainment major new source review (NSR) program means a 
major source preconstruction permit program that has been approved by 
the Administrator and incorporated into the plan to implement the 
requirements of this section, or a program that implements part 51, 
appendix S, Sections I through VI of this chapter. Any permit issued 
under such a program is a major NSR permit.
    (xxxi) Continuous emissions monitoring system (CEMS) means all of 
the equipment that may be required to meet the data acquisition and 
availability requirements of this section, to sample, condition (if 
applicable), analyze, and provide a record of emissions on a continuous 
basis.
    (xxxii) Predictive emissions monitoring system (PEMS) means all of 
the equipment necessary to monitor process and control device 
operational parameters (for example, control device secondary voltages 
and electric currents) and other information (for example, gas flow 
rate, O<INF>2</INF> or CO<INF>2</INF> concentrations), and calculate 
and record the mass emissions rate (for example, lb/hr) on a continuous 
basis.
    (xxxiii) Continuous parameter monitoring system (CPMS) means all of 
the equipment necessary to meet the data acquisition and availability 
requirements of this section, to monitor process and control device 
operational parameters (for example, control device secondary voltages 
and electric currents) and other information (for example, gas flow 
rate, O<INF>2</INF> or CO<INF>2</INF> concentrations), and to record 
average operational parameter value(s) on a continuous basis.
    (xxxiv) Continuous emissions rate monitoring system (CERMS) means 
the total equipment required for the determination and recording of the 
pollutant mass emissions rate (in terms of mass per unit of time).
    (xxxv) Baseline actual emissions means the rate of emissions, in 
tons per year, of a regulated NSR pollutant, as determined in 
accordance with paragraphs (a)(1)(xxxv)(A) through (D) of this section.

[[Page 36894]]

    (A) For any existing electric utility steam generating unit, 
baseline actual emissions means the average rate, in tons per year, at 
which the unit actually emitted the pollutant during any consecutive 
24-month period selected by the owner or operator within the 5-year 
period immediately preceding when the owner or operator begins actual 
construction of the project. The reviewing authority shall allow the 
use of a different time period upon a determination that it is more 
representative of normal source operation.
    (1) The average rate shall include fugitive emissions to the extent 
quantifiable, and emissions associated with startups, shutdowns, and 
malfunctions.
    (2) The average rate shall be adjusted downward to exclude any non-
compliant emissions that occurred while the source was operating above 
any emission limitation that was legally enforceable during the 
consecutive 24-month period.
    (3) For a regulated NSR pollutant, when a project involves multiple 
emissions units, only one consecutive 24-month period must be used to 
determine the baseline actual emissions for the emissions units being 
changed. A different consecutive 24-month period can be used for each 
regulated NSR pollutant.
    (4) The average rate shall not be based on any consecutive 24-month 
period for which there is inadequate information for determining annual 
emissions, in tons per year, and for adjusting this amount if required 
by paragraph (a)(1)(xxxv)(A)(2) of this section.
    (B) For an existing emissions unit (other than an electric utility 
steam generating unit), baseline actual emissions means the average 
rate, in tons per year, at which the emissions unit actually emitted 
the pollutant during any consecutive 24-month period selected by the 
owner or operator within the 10-year period immediately preceding 
either the date the owner or operator begins actual construction of the 
project, or the date a complete permit application is received by the 
reviewing authority for a permit required either under this section or 
under a plan approved by the Administrator, whichever is earlier, 
except that the 10-year period shall not include any period earlier 
than November 15, 1990.
    (1) The average rate shall include fugitive emissions to the extent 
quantifiable, and emissions associated with startups, shutdowns, and 
malfunctions.
    (2) The average rate shall be adjusted downward to exclude any non-
compliant emissions that occurred while the source was operating above 
an emission limitation that was legally enforceable during the 
consecutive 24-month period.
    (3) The average rate shall be adjusted downward to exclude any 
emissions that would have exceeded an emission limitation with which 
the major stationary source must currently comply, had such major 
stationary source been required to comply with such limitations during 
the consecutive 24-month period. However, if an emission limitation is 
part of a maximum achievable control technology standard that the 
Administrator proposed or promulgated under part 63 of this chapter, 
the baseline actual emissions need only be adjusted if the State has 
taken credit for such emissions reductions in an attainment 
demonstration or maintenance plan consistent with the requirements of 
paragraph (a)(3)(ii)(G) of this section.
    (4) For a regulated NSR pollutant, when a project involves multiple 
emissions units, only one consecutive 24-month period must be used to 
determine the baseline actual emissions for the emissions units being 
changed. A different consecutive 24-month period can be used. For each 
regulated NSR pollutant.
    (5) The average rate shall not be based on any consecutive 24-month 
period for which there is inadequate information for determining annual 
emissions, in tons per year, and for adjusting this amount if required 
by paragraphs (a)(1)(xxxv)(B)(2) and (3) of this section.
    (C) For a new emissions unit, the baseline actual emissions for 
purposes of determining the emissions increase that will result from 
the initial construction and operation of such unit shall equal zero; 
and thereafter, for all other purposes, shall equal the unit's 
potential to emit.
    (D) For a PAL for a major stationary source, the baseline actual 
emissions shall be calculated for existing electric utility steam 
generating units in accordance with the procedures contained in 
paragraph (a)(1)(xxxv)(A) of this section, for other existing emissions 
units in accordance with the procedures contained in paragraph 
(a)(1)(xxxv)(B) of this section, and for a new emissions unit in 
accordance with the procedures contained in paragraph (a)(1)(xxxv)(C) 
of this section.
    (xxxvi) [Reserved]
    (xxxvii) Regulated NSR pollutant, for purposes of this section, 
means the following:
    (A) Nitrogen oxides or any volatile organic compounds;
    (B) Any pollutant for which a national ambient air quality standard 
has been promulgated;
    (C) Any pollutant that is identified under this paragraph 
(a)(1)(xxxvii)(C) as a constituent or precursor of a general pollutant 
listed under paragraph (a)(1)(xxxvii)(A) or (B) of this section, 
provided that such constituent or precursor pollutant may only be 
regulated under NSR as part of regulation of the general pollutant. 
Precursors identified by the Administrator for purposes of NSR are the 
following:
    (1) Volatile organic compounds and nitrogen oxides are precursors 
to ozone in all ozone nonattainment areas.
    (2) Sulfur dioxide, Nitrogen oxides, Volatile organic compounds and 
Ammonia are precursors to PM<INF>2.5</INF> in any PM<INF>2.5</INF> 
nonattainment area.
    (D) PM<INF>2.5</INF> emissions and PM<INF>10</INF> emissions shall 
include gaseous emissions from a source or activity which condense to 
form particulate matter at ambient temperatures. On or after January 1, 
2011 (or any earlier date established in the upcoming rulemaking 
codifying test methods), such condensable particulate matter shall be 
accounted for in applicability determinations and in establishing 
emissions limitations for PM<INF>2.5</INF> and PM<INF>10</INF> in 
nonattainment major NSR permits. Compliance with emissions limitations 
for PM<INF>2.5</INF> and PM<INF>10</INF> issued prior to this date 
shall not be based on condensable particulate matter unless required by 
the terms and conditions of the permit or the applicable implementation 
plan. Applicability determinations made prior to this date without 
accounting for condensable particulate matter shall not be considered 
in violation of this section unless the applicable implementation plan 
required condensable particulate matter to be included.
    (xxxviii) Reviewing authority means the State air pollution control 
agency, local agency, other State agency, Indian tribe, or other agency 
authorized by the Administrator to carry out a permit program under 
this section and Sec.  51.166, or the Administrator in the case of EPA-
implemented permit programs under Sec.  52.21. (xxxix) Project means a 
discrete physical change in, or change in the method of operation of, 
an existing major stationary source, or a discrete group of such 
changes (occurring contemporaneously at the same major stationary 
source) that are substantially related to each other. Such changes are 
substantially related if they are dependent on each other to be

[[Page 36895]]

economically or technically viable. In an extreme ozone nonattainment 
area, a ``project'' means each discrete operation, emissions unit, or 
other pollutant-emitting activity.
    (xl) Best available control technology (BACT) means an emissions 
limitation (including a visible emissions standard) based on the 
maximum degree of reduction for each regulated NSR pollutant which 
would be emitted from any proposed major stationary source or major 
modification which the reviewing authority, on a case-by-case basis, 
taking into account energy, environmental, and economic impacts and 
other costs, determines is achievable for such source or modification 
through application of production processes or available methods, 
systems, and techniques, including fuel cleaning or treatment or 
innovative fuel combustion techniques for control of such pollutant. In 
no event shall application of best available control technology result 
in emissions of any pollutant which would exceed the emissions allowed 
by any applicable standard under 40 CFR part 60, 61, or 63. If the 
reviewing authority determines that technological or economic 
limitations on the application of measurement methodology to a 
particular emissions unit would make the imposition of an emissions 
standard infeasible, a design, equipment, work practice, operational 
standard, or combination thereof, may be prescribed instead to satisfy 
the requirement for the application of BACT. Such standard shall, to 
the degree possible, set forth the emissions reduction achievable by 
implementation of such design, equipment, work practice or operation, 
and shall provide for compliance by means which achieve equivalent 
results.
    (xli) Prevention of Significant Deterioration (PSD) permit means 
any permit that is issued under a major source preconstruction permit 
program that has been approved by the Administrator and incorporated 
into the plan to implement the requirements of Sec.  51.166 of this 
chapter, or under the program in Sec.  52.21 of this chapter.
    (xlii) Federal Land Manager means, with respect to any lands in the 
United States, the Secretary of the department with authority over such 
lands.
    (2) Applicability procedures. (i) Each plan shall adopt a 
preconstruction review program to satisfy the requirements of sections 
172(c)(5) and 173 of the Act for any area designated nonattainment for 
any national ambient air quality standard under subpart C of 40 CFR 
part 81. Such a program shall apply to any new major stationary source 
or major modification that is major for the pollutant for which the 
area is designated nonattainment under section 107(d)(1)(A)(i) of the 
Act, if the stationary source or modification would locate anywhere in 
the designated nonattainment area. Different pollutants, including 
individual precursors, are not summed to determine applicability of a 
major stationary source or major modification.
    (ii) Each plan shall use the specific provisions of paragraphs 
(a)(2)(ii)(A) through (G) of this section. Deviations from these 
provisions will be approved only if the State specifically demonstrates 
that the submitted provisions are more stringent than or at least as 
stringent in all respects as the corresponding provisions in paragraphs 
(a)(2)(ii)(A) through (G) of this section.
    (A) Except as otherwise provided in paragraph (a)(2)(iii) of this 
section, and consistent with the definition of major modification 
contained in paragraph (a)(1)(v)(A) of this section, a project is a 
major modification for a regulated NSR pollutant (as defined in 
paragraph (a)(1)(xxxvii) of this section) if it causes two types of 
emissions increases--a significant emissions increase (as defined in 
paragraph (a)(1)(xxvii) of this section) and a significant net 
emissions increase (as defined in paragraphs (a)(1)(vi) and (x) of this 
section). The project is not a major modification if it does not cause 
a significant emissions increase. If the project causes a significant 
emissions increase, then the project is a major modification only if it 
also results in a significant net emissions increase. (B) The procedure 
for calculating (before beginning actual construction) whether a 
significant emissions increase (i.e., the first step of the process) 
will occur depends upon the type(s) of emissions units that could be 
affected by the project, according to paragraphs (a)(2)(ii)(C) through 
(G) of this section. The procedure for calculating (before beginning 
actual construction) whether a significant net emissions increase will 
occur at the major stationary source (i.e., the second step of the 
process) is contained in the definition in paragraph (a)(1)(vi) of this 
section. Regardless of any such preconstruction projections, a major 
modification results if the project causes a significant emissions 
increase and a significant net emissions increase.
    (C) Actual-to-projected-actual applicability test for projects that 
only involve existing emissions units. A significant emissions increase 
of a regulated NSR pollutant is projected to occur if the sum of the 
difference between the projected actual emissions (as defined in 
paragraph (a)(1)(xxviii) of this section) and the baseline actual 
emissions (as defined in paragraphs (a)(1)(xxxv)(A) and (B) of this 
section, as applicable), for each existing emissions unit, equals or 
exceeds the significant amount for that pollutant (as defined in 
paragraph (a)(1)(x) of this section).
    (D) Actual-to-potential test for projects that only involve 
construction of a new emissions unit(s). A significant emissions 
increase of a regulated NSR pollutant is projected to occur if the sum 
of the difference between the potential to emit (as defined in 
paragraph (a)(1)(iii) of this section) from each new emissions unit 
following completion of the project and the baseline actual emissions 
(as defined in paragraph (a)(1)(xxxv)(C) of this section) of these 
units before the project equals or exceeds the significant amount for 
that pollutant (as defined in paragraph (a)(1)(x) of this section).
    (E) [Reserved]
    (F) Hybrid test for projects that involve multiple types of 
emissions units. A significant emissions increase of a regulated NSR 
pollutant is projected to occur if the sum of the difference for all 
emissions units, using the method specified in paragraphs (a)(2)(ii)(C) 
through (D) of this section as applicable with respect to each 
emissions unit, equals or exceeds the significant amount for that 
pollutant (as defined in paragraph (a)(1)(x) of this section).
    (G) The ``sum of the difference'' as used in paragraphs 
(a)(2)(ii)(C), (D) and (F) of this section shall include both increases 
and decreases in emissions calculated in accordance with those 
paragraphs. A decrease may only be accounted for in the significant 
emissions increase determination if it meets the requirements under 40 
CFR 51.165(a)(1)(vi)(E)(2).
    (iii) The plan shall require that for any major stationary source 
with a PAL for a regulated NSR pollutant, the major stationary source 
shall comply with requirements under paragraph (f) of this section.
* * * * *
    (6) Each plan shall provide that, except as otherwise provided in 
paragraph (a)(6)(vi) of this section, the following specific provisions 
apply with respect to any regulated NSR pollutant emitted from projects 
that involve one or more existing emissions units at a major stationary 
source (other than projects at a source with a PAL) in circumstances 
where there is a reasonable possibility, within the meaning of 
paragraph (a)(6)(vi) of this section, 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 method 
specified in

[[Page 36896]]

paragraphs (a)(1)(xxviii)(B)(1) through (3) of this section for 
calculating projected actual emissions from any existing emissions 
unit. Deviations from these provisions will be approved only if the 
State specifically demonstrates that the submitted provisions are more 
stringent than or at least as stringent in all respects as the 
corresponding provisions in paragraphs (a)(6)(i) through (vi) of this 
section.
    (i) Before beginning actual construction of the project, the owner 
or operator shall document and maintain a record of the following 
information:
    (A) A description of the project that includes: the name of the 
project, the project's intended objective(s), each physical change and/
or change in the method of operation associated with the project 
objective(s), and estimated timeline for the project, including an 
estimation of when the project would begin actual construction and 
begin regular operation;
    (B) Identification of the emissions unit(s) whose emissions of a 
regulated NSR pollutant could be affected by the project; and (C) A 
description of the applicability test used to determine that the 
project is not a major modification for any regulated NSR pollutant, 
including the baseline actual emissions, the projected actual 
emissions, the amount of emissions excluded under paragraph 
(a)(1)(xxviii)(B)(3) of this section and an explanation for why such 
amount was excluded, the potential to emit, as applicable, and any 
netting calculations, if applicable.
    (ii) Before beginning actual construction, the owner or operator 
shall provide a copy of the information set out in paragraph (a)(6)(i) 
of this section to the reviewing authority. Nothing in this paragraph 
(a)(6)(ii) shall be construed to require the owner or operator of such 
a unit to obtain any determination from the reviewing authority before 
beginning actual construction.
    (iii) The owner or operator shall monitor the emissions of any 
regulated NSR pollutant that could increase as a result of the project 
and that is emitted by any emissions units identified in paragraph 
(a)(6)(i)(B) of this section; and calculate and maintain a record of 
the annual emissions, in tons per year on a calendar year basis, for a 
period of 5 years following resumption of regular operations after the 
change, or for a period of 10 years following resumption of regular 
operations after the change if the project increases the design 
capacity or potential to emit of that regulated NSR pollutant at any 
existing emissions unit identified in 40 CFR 51.165(a)(6)(i)(B).
    (iv) If the project involves an existing electric utility steam 
generating unit, the owner or operator shall submit a report to the 
reviewing authority within 60 days after the end of each year during 
which records must be generated under paragraph (a)(6)(iii) of this 
section setting out the annual emissions from each affected emissions 
unit during the calendar year that preceded submission of the report.
    (v) If the project does not involve an existing electric utility 
steam generating unit, the owner or operator shall submit a report to 
the reviewing authority if the annual emissions, in tons per year, from 
the project identified in paragraph (a)(6)(i) of this section, exceed 
the baseline actual emissions (as documented and maintained pursuant to 
paragraph (a)(6)(i)(C) of this section, by a significant amount (as 
defined in paragraph (a)(1)(x) of this section) for that regulated NSR 
pollutant, and if such emissions differ from the preconstruction 
projection as documented and maintained pursuant to paragraph 
(a)(6)(i)(C) of this section. Such report shall be submitted to the 
reviewing authority within 60 days after the end of such year. The 
report shall contain the following:
    (A) The name, address and telephone number of the major stationary 
source;
    (B) The annual emissions as calculated pursuant to paragraph 
(a)(6)(iii) of this section; and
    (C) Any other information that the owner or operator wishes to 
include in the report (e.g., an explanation as to why the emissions 
differ from the preconstruction projection).
    (vi) A ``reasonable possibility'' under paragraph (a)(6) of this 
section occurs when the owner or operator calculates the project to 
result in either:
    (A) A projected actual emissions increase of at least 50 percent of 
the amount that is a ``significant emissions increase,'' as defined 
under paragraph (a)(1)(xxvii) of this section (without reference to the 
amount that is a significant net emissions increase), for the regulated 
NSR pollutant; or
    (B) A projected actual emissions increase that, added to the amount 
of emissions excluded under paragraph (a)(1)(xxviii)(B)(3), sums to at 
least 50 percent of the amount that is a ``significant emissions 
increase,'' as defined under paragraph (a)(1)(xxvii) of this section 
(without reference to the amount that is a significant net emissions 
increase), for the regulated NSR pollutant. For a project for which a 
reasonable possibility occurs only within the meaning of paragraph 
(a)(6)(vi)(B) of this section, and not also within the meaning of 
paragraph (a)(6)(vi)(A) of this section, then provisions (a)(6)(ii) 
through (v) do not apply to the project; or
    (C) The owner or operator accounts for a decrease in emissions from 
one or more emissions unit(s) in determining that the project is not a 
major modification for a regulated NSR pollutant regardless of the 
projected actual emissions increase.
* * * * *
0
3. Amend Sec.  51.166 by:
0
a. Revising and republishing paragraph (a)(7);
0
b. Revising paragraph (b)(51); and
0
c. Revising and republishing paragraph (r)(6).
    The revisions and republications read as follows:


Sec.  51.166  Prevention of significant deterioration of air quality.

    (a) * * *
    (7) Applicability. Each plan shall contain procedures that 
incorporate the requirements in paragraphs (a)(7)(i) through (v) of 
this section.
    (i) The requirements of this section apply to the construction of 
any new major stationary source (as defined in paragraph (b)(1) of this 
section) or any project at an existing major stationary source in an 
area designated as attainment or unclassifiable under sections 
107(d)(1)(A)(ii) or (iii) of the Act.
    (ii) The requirements of paragraphs (j) through (r) of this section 
apply to the construction of any new major stationary source or the 
major modification of any existing major stationary source, except as 
this section otherwise provides.
    (iii) No new major stationary source or major modification to which 
the requirements of paragraphs (j) through (r)(5) of this section apply 
shall begin actual construction without a permit that states that the 
major stationary source or major modification will meet those 
requirements.
    (iv) Each plan shall use the specific provisions of paragraphs 
(a)(7)(iv)(a) through (g) of this section. Deviations from these 
provisions will be approved only if the State specifically demonstrates 
that the submitted provisions are more stringent than or at least as 
stringent in all respects as the corresponding provisions in paragraphs 
(a)(7)(iv)(a) through (g) of this section.
    (a) Except as otherwise provided in paragraph (a)(7)(v) of this 
section, and consistent with the definition of major modification 
contained in paragraph (b)(2) of this section, a project is a major 
modification for a regulated NSR pollutant if it causes two types of 
emissions increases--a significant

[[Page 36897]]

emissions increase (as defined in paragraph (b)(39) of this section), 
and a significant net emissions increase (as defined in paragraphs 
(b)(3) and (23) of this section). The project is not a major 
modification if it does not cause a significant emissions increase. If 
the project causes a significant emissions increase, then the project 
is a major modification only if it also results in a significant net 
emissions increase. (b) The procedure for calculating (before beginning 
actual construction) whether a significant emissions increase (i.e., 
the first step of the process) will occur depends upon the type(s) of 
emissions units that could be affected by a project, according to 
paragraphs (a)(7)(iv)(c) through (g) of this section. The procedure for 
calculating (before beginning actual construction) whether a 
significant net emissions increase will occur at the major stationary 
source (i.e., the second step of the process) is contained in the 
definition in paragraph (b)(3) of this section. Regardless of any such 
preconstruction projections, a major modification results if the 
project causes a significant emissions increase and a significant net 
emissions increase.
    (c) Actual-to-projected-actual applicability test for projects that 
only involve existing emissions units. A significant emissions increase 
of a regulated NSR pollutant is projected to occur if the sum of the 
difference between the projected actual emissions (as defined in 
paragraph (b)(40) of this section) and the baseline actual emissions 
(as defined in paragraphs (b)(47)(i) and (ii) of this section) for each 
existing emissions unit, equals or exceeds the significant amount for 
that pollutant (as defined in paragraph (b)(23) of this section).
    (d) Actual-to-potential test for projects that only involve 
construction of a new emissions unit(s). A significant emissions 
increase of a regulated NSR pollutant is projected to occur if the sum 
of the difference between the potential to emit (as defined in 
paragraph (b)(4) of this section) from each new emissions unit 
following completion of the project and the baseline actual emissions 
(as defined in paragraph (b)(47)(iii) of this section) of these units 
before the project equals or exceeds the significant amount for that 
pollutant (as defined in paragraph (b)(23) of this section).
    (e) [Reserved]
    (f) Hybrid test for projects that involve multiple types of 
emissions units. A significant emissions increase of a regulated NSR 
pollutant is projected to occur if the sum of the difference for all 
emissions units, using the method specified in paragraphs (a)(7)(iv)(c) 
through (d) of this section as applicable with respect to each 
emissions unit, equals or exceeds the significant amount for that 
pollutant (as defined in paragraph (b)(23) of this section).
    (g) The ``sum of the difference'' as used in paragraphs 
(a)(7)(iv)(c), (d) and (f) of this section shall include both increases 
and decreases in emissions calculated in accordance with those 
paragraphs. A decrease may only be accounted for in the significant 
emissions increase determination if it meets the requirements under 40 
CFR 51.166(b)(3)(vi)(b).
    (v) The plan shall require that for any major stationary source 
with a PAL for a regulated NSR pollutant, the major stationary source 
shall comply with requirements under paragraph (w) of this section.
    (b) * * * (51) Project means a discrete physical change in, or 
change in the method of operation of, an existing major stationary 
source, or a discrete group of such changes (occurring 
contemporaneously at the same major stationary source) that are 
substantially related to each other. Such changes are substantially 
related if they are dependent on each other to be economically or 
technically viable.
* * * * *
    (r) * * *
    (6) Each plan shall provide that, except as otherwise provided in 
paragraph (r)(6)(vi) of this section, the following specific provisions 
apply with respect to any regulated NSR pollutant emitted from projects 
that involve one or more existing emissions units at a major stationary 
source (other than projects at a source with a PAL) in circumstances 
where there is a reasonable possibility, within the meaning of 
paragraph (r)(6)(vi) of this section, 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 method 
specified in paragraphs (b)(40)(ii)(a) through (c) of this section for 
calculating projected actual emissions from any existing emissions 
unit. Deviations from these provisions will be approved only if the 
State specifically demonstrates that the submitted provisions are more 
stringent than or at least as stringent in all respects as the 
corresponding provisions in paragraphs (r)(6)(i) through (vi) of this 
section.
    (i) Before beginning actual construction of the project, the owner 
or operator shall document and maintain a record of the following 
information: (a) A description of the project that includes: the name 
of the project, the project's intended objective(s), each physical 
change and/or change in the method of operation associated with the 
project objective(s), and estimated timeline for the project, including 
an estimation of when the project would begin actual construction and 
begin regular operation;
    (b) Identification of the emissions unit(s) whose emissions of a 
regulated NSR pollutant could be affected by the project; and
    (c) A description of the applicability test used to determine that 
the project is not a major modification for any regulated NSR 
pollutant, including the baseline actual emissions, the projected 
actual emissions, the amount of emissions excluded under paragraph 
(b)(40)(ii)(c) of this section and an explanation for why such amount 
was excluded, the potential to emit, as applicable, and any netting 
calculations, if applicable.
    (ii) Before beginning actual construction, the owner or operator 
shall provide a copy of the information set out in paragraph (r)(6)(i) 
of this section to the reviewing authority. Nothing in this paragraph 
(r)(6)(ii) shall be construed to require the owner or operator of such 
a unit to obtain any determination from the reviewing authority before 
beginning actual construction.
    (iii) The owner or operator shall monitor the emissions of any 
regulated NSR pollutant that could increase as a result of the project 
and that is emitted by any emissions unit identified in paragraph 
(r)(6)(i)(B) of this section; and calculate and maintain a record of 
the annual emissions, in tons per year on a calendar year basis, for a 
period of 5 years following resumption of regular operations after the 
change, or for a period of 10 years following resumption of regular 
operations after the change if the project increases the design 
capacity or potential to emit of that regulated NSR pollutant at any 
existing emissions unit identified in 40 CFR 51.166(r)(6)(i)(b). (iv) 
If the project involves an existing electric utility steam generating 
unit, the owner or operator shall submit a report to the reviewing 
authority within 60 days after the end of each year during which 
records must be generated under paragraph (r)(6)(iii) of this section 
setting out the annual emissions from each affected emissions unit 
during the calendar year that preceded submission of the report.
    (v) If the project does not involve an existing electric utility 
steam generating unit, the owner or operator shall submit a report to 
the reviewing authority if the annual emissions, in tons per year, from

[[Page 36898]]

the project identified in paragraph (r)(6)(i) of this section, exceed 
the baseline actual emissions (as documented and maintained pursuant to 
paragraph (r)(6)(i)(c) of this section) by a significant amount (as 
defined in paragraph (b)(23) of this section) for that regulated NSR 
pollutant, and if such emissions differ from the preconstruction 
projection as documented and maintained pursuant to paragraph 
(r)(6)(i)(c) of this section. Such report shall be submitted to the 
reviewing authority within 60 days after the end of such year. The 
report shall contain the following:
    (a) The name, address and telephone number of the major stationary 
source;
    (b) The annual emissions as calculated pursuant to paragraph 
(r)(6)(iii) of this section; and
    (c) Any other information that the owner or operator wishes to 
include in the report (e.g., an explanation as to why the emissions 
differ from the preconstruction projection).
    (vi) A ``reasonable possibility'' under paragraph (r)(6) of this 
section occurs when the owner or operator calculates the project to 
result in either:
    (a) A projected actual emissions increase of at least 50 percent of 
the amount that is a ``significant emissions increase,'' as defined 
under paragraph (b)(39) of this section (without reference to the 
amount that is a significant net emissions increase), for the regulated 
NSR pollutant; or
    (b) A projected actual emissions increase that, added to the amount 
of emissions excluded under paragraph (b)(40)(ii)(c) of this section, 
sums to at least 50 percent of the amount that is a ``significant 
emissions increase,'' as defined under paragraph (b)(39) of this 
section (without reference to the amount that is a significant net 
emissions increase), for the regulated NSR pollutant. For a project for 
which a reasonable possibility occurs only within the meaning of 
paragraph (r)(6)(vi)(b) of this section, and not also within the 
meaning of paragraph (r)(6)(vi)(a) of this section, then the provisions 
under paragraphs (r)(6)(ii) through (v) of this section do not apply to 
the project; or
    (c) The owner or operator accounts for a decrease in emissions from 
one or more emissions unit(s) in determining that the project is not a 
major modification for a regulated NSR pollutant regardless of the 
projected actual emissions increase.
* * * * *

Appendix S to Part 51--Emission Offset Interpretative Ruling

0
4. Amend appendix S to part 51 by revising and republishing paragraphs 
II.A, IV.I, and IV.J to read as follows:

Appendix S to Part 51--Emission Offset Interpretative Ruling

* * * * *

II. Initial Screening Analyses and Determination of Applicable 
Requirements

    A. Definitions--For the purposes of this Ruling:
    1. Stationary source means any building, structure, facility, or 
installation which emits or may emit a regulated NSR pollutant.
    2. (i) Building, structure, facility or installation means all 
of the pollutant-emitting activities which belong to the same 
industrial grouping, are located on one or more contiguous or 
adjacent properties, and are under the control of the same person 
(or persons under common control) except the activities of any 
vessel. Pollutant-emitting activities shall be considered as part of 
the same industrial grouping if they belong to the same ``Major 
Group'' (i.e., which have the same two digit code) as described in 
the Standard Industrial Classification Manual, 1972, as amended by 
the 1977 Supplement (U.S. Government Printing Office stock numbers 
4101-0066 and 003-005-00176-0, respectively).
    (ii) Notwithstanding the provisions of paragraph II.A.2(i) of 
this section, building, structure, facility or installation means, 
for onshore activities under SIC Major Group 13: Oil and Gas 
Extraction, all of the pollutant-emitting activities included in 
Major Group 13 that are located on one or more contiguous or 
adjacent properties, and are under the control of the same person 
(or persons under common control). Pollutant emitting activities 
shall be considered adjacent if they are located on the same surface 
site; or if they are located on surface sites that are located 
within 1/4 mile of one another (measured from the center of the 
equipment on the surface site) and they share equipment. Shared 
equipment includes, but is not limited to, produced fluids storage 
tanks, phase separators, natural gas dehydrators or emissions 
control devices. Surface site, as used in this paragraph II.A.2(ii), 
has the same meaning as in 40 CFR 63.761.
    3. Potential to emit means the maximum capacity of a stationary 
source to emit a pollutant under its physical and operational 
design. Any physical or operational limitation on the capacity of 
the source to emit a pollutant, including air pollution control 
equipment and restrictions on hours of operation or on the type or 
amount of material combusted, stored, or processed, shall be treated 
as part of its design only if the limitation or the effect it would 
have on emissions is federally enforceable. Secondary emissions do 
not count in determining the potential to emit of a stationary 
source.
    4. (i) Major stationary source means:
    (a) Any stationary source of air pollutants which emits, or has 
the potential to emit, 100 tons per year or more of a regulated NSR 
pollutant (as defined in paragraph II.A.31 of this Ruling), except 
that lower emissions thresholds shall apply in areas subject to 
subpart 2, subpart 3, or subpart 4 of part D, title I of the Act, 
according to paragraphs II.A.4(i)(a)(1) through (8) of this Ruling.
    (1) 50 tons per year of volatile organic compounds in any 
serious ozone nonattainment area.
    (2) 50 tons per year of volatile organic compounds in an area 
within an ozone transport region, except for any severe or extreme 
ozone nonattainment area.
    (3) 25 tons per year of volatile organic compounds in any severe 
ozone nonattainment area.
    (4) 10 tons per year of volatile organic compounds in any 
extreme ozone nonattainment area.
    (5) 50 tons per year of carbon monoxide in any serious 
nonattainment area for carbon monoxide, where stationary sources 
contribute significantly to carbon monoxide levels in the area (as 
determined under rules issued by the Administrator).
    (6) 70 tons per year of PM-10 in any serious nonattainment area 
for PM<INF>10.</INF>
    (7) 70 tons per year of PM<INF>2.5</INF> in any serious 
nonattainment area for PM<INF>2.5.</INF>
    (8) 70 tons per year of any individual PM<INF>2.5</INF> 
precursor (as defined in paragraph II.A.31 of this Ruling) in any 
Serious nonattainment area for PM<INF>2.5.</INF>
    (b) For the purposes of applying the requirements of paragraph 
IV. H of this Ruling to stationary sources of nitrogen oxides 
located in an ozone nonattainment area or in an ozone transport 
region, any stationary source which emits, or has the potential to 
emit, 100 tons per year or more of nitrogen oxides emissions, except 
that the emission thresholds in paragraphs II.A.4(i)(b)(1) through 
(6) of this Ruling apply in areas subject to subpart 2 of part D, 
title I of the Act.
    (1) 100 tons per year or more of nitrogen oxides in any ozone 
nonattainment area classified as marginal or moderate.
    (2) 100 tons per year or more of nitrogen oxides in any ozone 
nonattainment area classified as a transitional, submarginal, or 
incomplete or no data area, when such area is located in an ozone 
transport region.
    (3) 100 tons per year or more of nitrogen oxides in any area 
designated under section 107(d) of the Act as attainment or 
unclassifiable for ozone that is located in an ozone transport 
region.
    (4) 50 tons per year or more of nitrogen oxides in any serious 
nonattainment area for ozone.
    (5) 25 tons per year or more of nitrogen oxides in any severe 
nonattainment area for ozone.
    (6) 10 tons per year or more of nitrogen oxides in any extreme 
nonattainment area for ozone; or
    (c) Any physical change that would occur at a stationary source 
not qualifying under paragraph II.A.4(i)(a) or (b) of this Ruling as 
a major stationary source, if the change would constitute a major 
stationary source by itself.
    (ii) A major stationary source that is major for volatile 
organic compounds or nitrogen oxides is major for ozone.
    (iii) The fugitive emissions of a stationary source shall not be 
included in determining

[[Page 36899]]

for any of the purposes of this Ruling whether it is a major 
stationary source, unless the source belongs to one of the following 
categories of stationary sources:
    (a) Coal cleaning plants (with thermal dryers);
    (b) Kraft pulp mills;
    (c) Portland cement plants;
    (d) Primary zinc smelters;
    (e) Iron and steel mills;
    (f) Primary aluminum ore reduction plants;
    (g) Primary copper smelters;
    (h) Municipal incinerators capable of charging more than 50 tons 
of refuse per day;
    (i) Hydrofluoric, sulfuric, or nitric acid plants;
    (j) Petroleum refineries;
    (k) Lime plants;
    (l) Phosphate rock processing plants;
    (m) Coke oven batteries;
    (n) Sulfur recovery plants;
    (o) Carbon black plants (furnace process);
    (p) Primary lead smelters;
    (q) Fuel conversion plants;
    (r) Sintering plants;
    (s) Secondary metal production plants;
    (t) Chemical process plants--The term chemical processing plant 
shall not include ethanol production facilities that produce ethanol 
by natural fermentation included in NAICS codes 325193 or 312140;
    (u) Fossil-fuel boilers (or combination thereof) totaling more 
than 250 million British thermal units per hour heat input;
    (v) Petroleum storage and transfer units with a total storage 
capacity exceeding 300,000 barrels;
    (w) Taconite ore processing plants;
    (x) Glass fiber processing plants;
    (y) Charcoal production plants;
    (z) Fossil fuel-fired steam electric plants of more than 250 
million British thermal units per hour heat input;
    (aa) Any other stationary source category which, as of August 7, 
1980, is being regulated under section 111 or 112 of the Act.
    5. (i) Major modification means any physical change in or change 
in the method of operation of a major stationary source that would 
result in:
    (a) A significant emissions increase of a regulated NSR 
pollutant (as defined in paragraph II.A.31 of this Ruling); and
    (b) A significant net emissions increase of that pollutant from 
the major stationary source.
    (ii) Any significant emissions increase (as defined in paragraph 
II.A.23 of this Ruling) from any emissions units or net emissions 
increase (as defined in paragraph II.A.6 of this Ruling) at a major 
stationary source that is significant for volatile organic compounds 
shall be considered significant for ozone.
    (iii) A physical change or change in the method of operation 
shall not include:
    (a) Routine maintenance, repair, and replacement;
    (b) Use of an alternative fuel or raw material by reason of an 
order under section 2 (a) and (b) of the Energy Supply and 
Environmental Coordination Act of 1974 (or any superseding 
legislation) or by reason of a natural gas curtailment plan pursuant 
to the Federal Power Act;
    (c) Use of an alternative fuel by reason of an order or rule 
under section 125 of the Act;
    (d) Use of an alternative fuel at a steam generating unit to the 
extent that the fuel is generated from municipal solid waste;
    (e) Use of an alternative fuel or raw material by a stationary 
source which:
    (1) The source was capable of accommodating before December 21, 
1976, unless such change would be prohibited under any federally 
enforceable permit condition which was established after December 
21, 1976, pursuant to 40 CFR 52.21 or under regulations approved 
pursuant to 40 CFR part 51, subpart I; or
    (2) The source is approved to use under any permit issued under 
this Ruling;
    (f) An increase in the hours of operation or in the production 
rate, unless such change is prohibited under any federally 
enforceable permit condition which was established after December 
21, 1976, pursuant to 40 CFR 52.21 or under regulations approved 
pursuant to 40 CFR part 51, subpart I;
    (g) Any change in ownership at a stationary source.
    (iv) For the purpose of applying the requirements of paragraph 
IV.H of this Ruling to modifications at major stationary sources of 
nitrogen oxides located in ozone nonattainment areas or in ozone 
transport regions, whether or not subject with respect to ozone to 
subpart 2, part D, title I of the Act, any significant net emissions 
increase of nitrogen oxides is considered significant for ozone. (v) 
Any physical change in, or change in the method of operation of, a 
major stationary source of volatile organic compounds that results 
in any increase in emissions of volatile organic compounds from any 
discrete operation, emissions unit, or other pollutant emitting 
activity at the source shall be considered a significant net 
emissions increase and a major modification for ozone, if the major 
stationary source is located in an extreme ozone nonattainment area. 
A reduction in emissions of volatile organic compounds may not be 
used to determine if a modification will result in a major 
modification.
    (vi) This definition shall not apply with respect to a 
particular regulated NSR pollutant when the major stationary source 
is complying with the requirements under paragraph IV.K of this 
ruling for a PAL for that pollutant. Instead, the definition at 
paragraph IV.K.2(viii) of this Ruling shall apply.
    (vii) Fugitive emissions shall not be included in determining 
for any of the purposes of this Ruling whether a physical change in 
or change in the method of operation of a major stationary source is 
a major modification, unless the source belongs to one of the source 
categories listed in paragraph II.A.4(iii) of this Ruling.
    6. (i) Net emissions increase means, with respect to any 
regulated NSR pollutant emitted by a major stationary source, the 
amount by which the sum of the following exceeds zero:
    (a) The increase in emissions from a particular physical change 
or change in the method of operation at a stationary source as 
calculated pursuant to paragraph IV.J of this Ruling; and
    (b) Any other increases and decreases in actual emissions at the 
major stationary source that are contemporaneous with the particular 
change and are otherwise creditable. Baseline actual emissions for 
calculating increases and decreases under this paragraph 
II.A.6(i)(b) shall be determined as provided in paragraph II.A.30 of 
this Ruling, except that paragraphs II.A.30(i)(c) and II.A.30(ii)(d) 
of this Ruling shall not apply.
    (ii) An increase or decrease in actual emissions is 
contemporaneous with the increase from the particular change only if 
it occurs between:
    (a) The date five years before construction on the particular 
change commences and
    (b) The date that the increase from the particular change 
occurs.
    (iii) An increase or decrease in actual emissions is creditable 
only if the reviewing authority has not relied on it in issuing a 
permit for the source under this Ruling, which permit is in effect 
when the increase in actual emissions from the particular change 
occurs.
    (iv) An increase in actual emissions is creditable only to the 
extent that the new level of actual emissions exceeds the old level.
    (v) A decrease in actual emissions is creditable only to the 
extent that:
    (a) The old level of actual emissions or the old level of 
allowable emissions, whichever is lower, exceeds the new level of 
actual emissions;
    (b) It is enforceable as a practical matter at and after the 
time that actual construction on the particular change begins;
    (c) The reviewing authority has not relied on it in issuing any 
permit under regulations approved pursuant to 40 CFR 51.165; and
    (d) It has approximately the same qualitative significance for 
public health and welfare as that attributed to the increase from 
the particular change.
    (vi) An increase that results from a physical change at a source 
occurs when the emissions unit on which construction occurred 
becomes operational and begins to emit a particular pollutant. Any 
replacement unit that requires shakedown becomes operational only 
after a reasonable shakedown period, not to exceed 180 days.
    (vii) Paragraph II.A.13(ii) of this Ruling shall not apply for 
determining creditable increases and decreases or after a change.
    7. Emissions unit means any part of a stationary source that 
emits or would have the potential to emit any regulated NSR 
pollutant and includes an electric utility steam generating unit as 
defined in paragraph II.A.21 of this Ruling. For purposes of this 
Ruling, there are two types of emissions units as described in 
paragraphs II.A.7(i) and (ii) of this Ruling.
    (i) A new emissions unit is any emissions unit which is (or will 
be) newly constructed and which has existed for less than 2 years 
from the date such emissions unit first operated.
    (ii) An existing emissions unit is any emissions unit that does 
not meet the requirements in paragraph II.A.7(i) of this Ruling. A 
replacement unit, as defined in paragraph II.A.37 of this Ruling, is 
an existing emissions unit.
    8. Secondary emissions means emissions which would occur as a 
result of the

[[Page 36900]]

construction or operation of a major stationary source or major 
modification, but do not come from the major stationary source or 
major modification itself. For the purpose of this Ruling, secondary 
emissions must be specific, well defined, quantifiable, and impact 
the same general area as the stationary source or modification which 
causes the secondary emissions. Secondary emissions include 
emissions from any offsite support facility which would not be 
constructed or increase its emissions except as a result of the 
construction or operation of the major stationary source or major 
modification. Secondary emissions do not include any emissions which 
come directly from a mobile source, such as emissions from the 
tailpipe of a motor vehicle, from a train, or from a vessel.
    9. Fugitive emissions means those emissions which could not 
reasonably pass through a stack, chimney, vent, or other 
functionally equivalent opening.
    10. (i) Significant means, in reference to a net emissions 
increase or the potential of a source to emit any of the following 
pollutants, a rate of emissions that would equal or exceed any of 
the following rates:

Pollutant and Emissions Rate
    Carbon monoxide: 100 tons per year (tpy)
    Nitrogen oxides: 40 tpy
    Sulfur dioxide: 40 tpy
    Ozone: 40 tpy of Volatile organic compounds or Nitrogen oxides
    Lead: 0.6 tpy
    Particulate matter: 25 tpy of Particulate matter emissions
    PM<INF>10</INF>: 15 tpy
    PM<INF>2.5</INF>: 10 tpy of direct PM<INF>2.5</INF> emissions; 
40 tpy of Sulfur dioxide emissions, 40 tpy of Nitrogen oxides 
emissions, or 40 tpy of Volatile organic compound emissions, to the 
extent that any such pollutant is defined as a precursor for 
PM<INF>2.5</INF> in paragraph II.A.31 of this Ruling.

    (ii) Notwithstanding the significant emissions rate for ozone in 
paragraph II.A.10(i) of this Ruling, significant means, in reference 
to an emissions increase or a net emissions increase, any increase 
in actual emissions of volatile organic compounds that would result 
from any physical change in, or change in the method of operation 
of, a major stationary source locating in a serious or severe ozone 
nonattainment area, if such emissions increase of volatile organic 
compounds exceeds 25 tons per year when aggregated with all other 
net increases in emissions from the source over any period of 5 
consecutive calendar years which includes the calendar year in which 
such increase occurred.
    (iii) For the purposes of applying the requirements of paragraph 
IV.H of this Ruling to modifications at major stationary sources of 
nitrogen oxides located in an ozone nonattainment area or in an 
ozone transport region, the significant emission rates and other 
requirements for volatile organic compounds in paragraphs 
II.A.10(i), (ii), and (v) of this Ruling shall apply to nitrogen 
oxides emissions.
    (iv) Notwithstanding the significant emissions rate for carbon 
monoxide under paragraph II.A.10(i) of this Ruling, significant 
means, in reference to an emissions increase or a net emissions 
increase, any increase in actual emissions of carbon monoxide that 
would result from any physical change in, or change in the method of 
operation of, a major stationary source in a serious nonattainment 
area for carbon monoxide if such increase equals or exceeds 50 tons 
per year, provided the Administrator has determined that stationary 
sources contribute significantly to carbon monoxide levels in that 
area.
    (v) Notwithstanding the significant emissions rates for ozone 
under paragraphs II.A.10(i) and (ii) of this Ruling, any increase in 
actual emissions of volatile organic compounds from any emissions 
unit at a major stationary source of volatile organic compounds 
located in an extreme ozone nonattainment area shall be considered a 
significant net emissions increase. A reduction in emissions of 
volatile organic compounds from discrete operations, units, or 
activities within the source may not be used to determine if a 
modification will result in a major modification.
    (vi) In any nonattainment area for PM<INF>2.5</INF> in which a 
state must regulate Ammonia as a regulated NSR pollutant (as a 
PM<INF>2.5</INF> precursor) as defined in paragraph II.A.31 of this 
Ruling, the reviewing authority shall define ``significant'' for 
Ammonia for that area and establish a record to document its 
supporting basis. All sources with modification projects with 
increases in Ammonia emissions that are not subject to Section IV of 
this Ruling must maintain records of the non-applicability of 
Section IV that reference the definition of ``significant'' for 
Ammonia that is established by the reviewing authority in the 
nonattainment area where the source is located.
    11. Allowable emissions means the emissions rate calculated 
using the maximum rated capacity of the source (unless the source is 
subject to federally enforceable limits which restrict the operating 
rate, or hours of operation, or both) and the most stringent of the 
following:
    (i) Applicable standards as set forth in 40 CFR parts 60 and 61;
    (ii) Any applicable State Implementation Plan emissions 
limitation, including those with a future compliance date; or
    (iii) The emissions rate specified as a federally enforceable 
permit condition, including those with a future compliance date.
    12. Federally enforceable means all limitations and conditions 
which are enforceable by the Administrator, including those 
requirements developed pursuant to 40 CFR parts 60 and 61, 
requirements within any applicable State implementation plan, any 
permit requirements established pursuant to 40 CFR 52.21 or under 
regulations approved pursuant to 40 CFR part 51, subpart I, 
including operating permits issued under an EPA-approved program 
that is incorporated into the State implementation plan and 
expressly requires adherence to any permit issued under such 
program.
    13. (i) Actual emissions means the actual rate of emissions of a 
regulated NSR pollutant from an emissions unit, as determined in 
accordance with paragraphs II.A.13(ii) through (iv) of this Ruling, 
except that this definition shall not apply for calculating whether 
a significant emissions increase has occurred, or for establishing a 
PAL under paragraph IV.K of this Ruling. Instead, paragraphs II.A.24 
and 30 of this Ruling shall apply for those purposes.
    (ii) In general, actual emissions as of a particular date shall 
equal the average rate, in tons per year, at which the unit actually 
emitted the pollutant during a consecutive 24-month period which 
precedes the particular date and which is representative of normal 
source operation. The reviewing authority shall allow the use of a 
different time period upon a determination that it is more 
representative of normal source operation. Actual emissions shall be 
calculated using the unit's actual operating hours, production 
rates, and types of materials processed, stored, or combusted during 
the selected time period.
    (iii) The reviewing authority may presume that source-specific 
allowable emissions for the unit are equivalent to the actual 
emissions of the unit.
    (iv) For any emissions unit that has not begun normal operations 
on the particular date, actual emissions shall equal the potential 
to emit of the unit on that date.
    14. Construction means any physical change or change in the 
method of operation (including fabrication, erection, installation, 
demolition, or modification of an emissions unit) that would result 
in a change in emissions.
    15. Commence as applied to construction of a major stationary 
source or major modification means that the owner or operator has 
all necessary preconstruction approvals or permits and either has:
    (i) Begun, or caused to begin, a continuous program of actual 
on-site construction of the source, to be completed within a 
reasonable time; or
    (ii) Entered into binding agreements or contractual obligations, 
which cannot be cancelled or modified without substantial loss to 
the owner or operator, to undertake a program of actual construction 
of the source to be completed within a reasonable time.
    16. Necessary preconstruction approvals or permits means those 
permits or approvals required under Federal air quality control laws 
and regulations and those air quality control laws and regulations 
which are part of the applicable State Implementation Plan.
    17. Begin actual construction means, in general, initiation of 
physical on-site construction activities on an emissions unit which 
are of a permanent nature. Such activities include, but are not 
limited to, installation of building supports and foundations, 
laying of underground pipework, and construction of permanent 
storage structures. With respect to a change in method of operating 
this term refers to those on-site activities other than preparatory 
activities which mark the initiation of the change.
    18. Lowest achievable emission rate (LAER) means, for any 
source, the more stringent rate of emissions based on the following:
    (i) The most stringent emissions limitation which is contained 
in the implementation plan of any State for such class or category 
of stationary source, unless the owner or

[[Page 36901]]

operator of the proposed stationary source demonstrates that such 
limitations are not achievable; or
    (ii) The most stringent emissions limitation which is achieved 
in practice by such class or category of stationary source. This 
limitation, when applied to a modification, means the lowest 
achievable emissions rate for the new or modified emissions units 
within the stationary source. In no event shall the application of 
this term permit a proposed new or modified stationary source to 
emit any pollutant in excess of the amount allowable under 
applicable new source standards of performance.
    19. Resource recovery facility means any facility at which solid 
waste is processed for the purpose of extracting, converting to 
energy, or otherwise separating and preparing solid waste for reuse. 
Energy conversion facilities must utilize solid waste to provide 
more than 50 percent of the heat input to be considered a resource 
recovery facility under this Ruling.
    20. Volatile organic compounds (VOC) is as defined in Sec.  
51.100(s) of this part.
    21. Electric utility steam generating unit means any steam 
electric generating unit that is constructed for the purpose of 
supplying more than one-third of its potential electric output 
capacity and more than 25 MW electrical output to any utility power 
distribution system for sale. Any steam supplied to a steam 
distribution system for the purpose of providing steam to a steam-
electric generator that would produce electrical energy for sale is 
also considered in determining the electrical energy output capacity 
of the affected facility.
    22. Pollution prevention means any activity that through process 
changes, product reformulation or redesign, or substitution of less 
polluting raw materials, eliminates or reduces the release of air 
pollutants (including fugitive emissions) and other pollutants to 
the environment prior to recycling, treatment, or disposal; it does 
not mean recycling (other than certain ``in-process recycling'' 
practices), energy recovery, treatment, or disposal.
    23. Significant emissions increase means, for a regulated NSR 
pollutant, an increase in emissions that is significant (as defined 
in paragraph II.A.10 of this Ruling) for that pollutant.
    24. (i) Projected actual emissions means, the maximum annual 
rate, in tons per year, at which an existing emissions unit is 
projected to emit a regulated NSR pollutant in any one of the 5 
years (12-month period) following the date the unit resumes regular 
operation after the project, or in any one of the 10 years following 
that date, if the project involves increasing the emissions unit's 
design capacity or its potential to emit of that regulated NSR 
pollutant and full utilization of the unit would result in a 
significant emissions increase or a significant net emissions 
increase at the major stationary source.
    (ii) In determining the projected actual emissions under 
paragraph II.A.24(i) of this Ruling before beginning actual 
construction, the owner or operator of the major stationary source:
    (a) Shall consider all relevant information, including but not 
limited to, historical operational data, the company's own 
representations, the company's expected business activity and the 
company's highest projections of business activity, the company's 
filings with the State or Federal regulatory authorities, and 
compliance plans under the approved plan; and
    (b) Shall include fugitive emissions to the extent quantifiable, 
and emissions associated with startups, shutdowns, and malfunctions; 
and
    (c) Shall exclude, in calculating any increase in emissions that 
results from the particular project, that portion of the unit's 
emissions following the project that an existing unit could have 
accommodated during the consecutive 24-month period used to 
establish the baseline actual emissions under paragraph II.A.30 of 
this Ruling and that are also unrelated to the particular project, 
including any increased utilization due to product demand growth; 
or,
    (d) In lieu of using the method set out in paragraphs 
II.A.24(ii)(a) through (c) of this Ruling, may elect to use the 
emissions unit's potential to emit, in tons per year, as defined 
under paragraph II.A.3 of this Ruling.
    25. Nonattainment major new source review (NSR) program means a 
major source preconstruction permit program that implements Sections 
I through VI of this Ruling, or a program that has been approved by 
the Administrator and incorporated into the plan to implement the 
requirements of Sec.  51.165 of this part. Any permit issued under 
such a program is a major NSR permit.
    26. Continuous emissions monitoring system (CEMS) means all of 
the equipment that may be required to meet the data acquisition and 
availability requirements of this Ruling, to sample, condition (if 
applicable), analyze, and provide a record of emissions on a 
continuous basis.
    27. Predictive emissions monitoring system (PEMS) means all of 
the equipment necessary to monitor process and control device 
operational parameters (for example, control device secondary 
voltages and electric currents) and other information (for example, 
gas flow rate, O<INF>2</INF> or CO<INF>2</INF> concentrations), and 
calculate and record the mass emissions rate (for example, lb/hr) on 
a continuous basis.
    28. Continuous parameter monitoring system (CPMS) means all of 
the equipment necessary to meet the data acquisition and 
availability requirements of this Ruling, to monitor process and 
control device operational parameters (for example, control device 
secondary voltages and electric currents) and other information (for 
example, gas flow rate, O<INF>2</INF> or CO<INF>2</INF> 
concentrations), and to record average operational parameter 
value(s) on a continuous basis.
    29. Continuous emissions rate monitoring system (CERMS) means 
the total equipment required for the determination and recording of 
the pollutant mass emissions rate (in terms of mass per unit of 
time).
    30. Baseline actual emissions means the rate of emissions, in 
tons per year, of a regulated NSR pollutant, as determined in 
accordance with paragraphs II.A.30(i) through (iv) of this Ruling.
    (i) For any existing electric utility steam generating unit, 
baseline actual emissions means the average rate, in tons per year, 
at which the unit actually emitted the pollutant during any 
consecutive 24-month period selected by the owner or operator within 
the 5-year period immediately preceding when the owner or operator 
begins actual construction of the project. The reviewing authority 
shall allow the use of a different time period upon a determination 
that it is more representative of normal source operation.
    (a) The average rate shall include fugitive emissions to the 
extent quantifiable, and emissions associated with startups, 
shutdowns, and malfunctions.
    (b) The average rate shall be adjusted downward to exclude any 
non-compliant emissions that occurred while the source was operating 
above any emission limitation that was legally enforceable during 
the consecutive 24-month period.
    (c) For a regulated NSR pollutant, when a project involves 
multiple emissions units, only one consecutive 24-month period must 
be used to determine the baseline actual emissions for the emissions 
units being changed. A different consecutive 24-month period can be 
used for each regulated NSR pollutant.
    (d) The average rate shall not be based on any consecutive 24-
month period for which there is inadequate information for 
determining annual emissions, in tons per year, and for adjusting 
this amount if required by paragraph II.A.30(i)(b) of this Ruling.
    (ii) For an existing emissions unit (other than an electric 
utility steam generating unit), baseline actual emissions means the 
average rate, in tons per year, at which the emissions unit actually 
emitted the pollutant during any consecutive 24-month period 
selected by the owner or operator within the 10-year period 
immediately preceding either the date the owner or operator begins 
actual construction of the project, or the date a complete permit 
application is received by the reviewing authority for a permit 
required either under this Ruling or under a plan approved by the 
Administrator, whichever is earlier, except that the 10-year period 
shall not include any period earlier than November 15, 1990.
    (a) The average rate shall include fugitive emissions to the 
extent quantifiable, and emissions associated with startups, 
shutdowns, and malfunctions.
    (b) The average rate shall be adjusted downward to exclude any 
non-compliant emissions that occurred while the source was operating 
above an emission limitation that was legally enforceable during the 
consecutive 24-month period.
    (c) The average rate shall be adjusted downward to exclude any 
emissions that would have exceeded an emission limitation with which 
the major stationary source must currently comply, had such major 
stationary source been required to comply with such limitations 
during the consecutive 24-month period. However, if an emission 
limitation is part of a maximum achievable control technology 
standard that the Administrator proposed or promulgated under part 
63 of this chapter, the baseline actual emissions need only be 
adjusted if the State has taken credit for such emissions reductions 
in an

[[Page 36902]]

attainment demonstration or maintenance plan.
    (d) For a regulated NSR pollutant, when a project involves 
multiple emissions units, only one consecutive 24-month period must 
be used to determine the baseline actual emissions for the emissions 
units being changed. A different consecutive 24-month period can be 
used for each regulated NSR pollutant.
    (e) The average rate shall not be based on any consecutive 24-
month period for which there is inadequate information for 
determining annual emissions, in tons per year, and for adjusting 
this amount if required by paragraphs II.A.30(ii)(b) and (c) of this 
Ruling.
    (iii) For a new emissions unit, the baseline actual emissions 
for purposes of determining the emissions increase that will result 
from the initial construction and operation of such unit shall equal 
zero; and thereafter, for all other purposes, shall equal the unit's 
potential to emit.
    (iv) For a PAL for a major stationary source, the baseline 
actual emissions shall be calculated for existing electric utility 
steam generating units in accordance with the procedures contained 
in paragraph II.A.30(i) of this Ruling, for other existing emissions 
units in accordance with the procedures contained in paragraph 
II.A.30(ii) of this Ruling, and for a new emissions unit in 
accordance with the procedures contained in paragraph II.A.30(iii) 
of this Ruling.
    31. Regulated NSR pollutant, for purposes of this Ruling, means 
the following:
    (i) Nitrogen oxides or any volatile organic compounds;
    (ii) Any pollutant for which a national ambient air quality 
standard has been promulgated. This includes, but is not limited to, 
the following:
    (a) PM<INF>2.5</INF> emissions and PM<INF>10</INF> emissions 
shall include gaseous emissions from a source or activity, which 
condense to form particulate matter at ambient temperatures. On or 
after January 1, 2011, such condensable particulate matter shall be 
accounted for in applicability determinations and in establishing 
emissions limitations for PM<INF>2.5</INF> and PM<INF>10</INF> in 
permits issued under this ruling. Compliance with emissions 
limitations for PM<INF>2.5</INF> and PM<INF>10</INF> issued prior to 
this date shall not be based on condensable particulate matter 
unless required by the terms and conditions of the permit or the 
applicable implementation plan. Applicability determinations made 
prior to this date without accounting for condensable particulate 
matter shall not be considered in violation of this section unless 
the applicable implementation plan required condensable particulate 
matter to be included.
    (b) Any pollutant that is identified under this paragraph 
II.A.31(ii)(2) as a constituent or precursor of a general pollutant 
listed under paragraph II.A.31(i) or (ii) of this Ruling, provided 
that such constituent or precursor pollutant may only be regulated 
under NSR as part of regulation of the general pollutant. Precursors 
identified by the Administrator for purposes of NSR are the 
following:
    (1) Volatile organic compounds and nitrogen oxides are 
precursors to ozone in all ozone nonattainment areas.
    (2) Sulfur dioxide and Nitrogen oxides are regulated as 
precursors to PM<INF>2.5</INF> in all PM<INF>2.5</INF> nonattainment 
areas.
    (3) For any area that was designated nonattainment for 
PM<INF>2.5</INF> on or before April 15, 2015, Volatile organic 
compounds and Ammonia shall be regulated as precursors to 
PM<INF>2.5</INF> beginning on April 15, 2017, with respect to any 
permit issued for PM<INF>2.5,</INF> unless the following conditions 
are met: The state submits a SIP for the Administrator's review 
containing the state's preconstruction review provisions for 
PM<INF>2.5</INF> consistent with Sec.  51.165 and a complete NNSR 
precursor demonstration consistent with Sec.  51.1006(a)(3); and 
such SIP is determined to be complete by the Administrator or deemed 
to be complete by operation of law in accordance with section 
110(k)(1)(B) of the Act by April 15, 2017. If these conditions are 
met, the precursor(s) addressed by the NNSR precursor demonstration 
(Volatile organic compounds, Ammonia, or both) shall not be 
regulated as a precursor to PM<INF>2.5</INF> in such area. If the 
Administrator subsequently disapproves the state's preconstruction 
review provisions for PM<INF>2.5</INF> and the NNSR precursor 
demonstration, the precursor(s) addressed by the NNSR precursor 
demonstration shall be regulated as a precursor to PM<INF>2.5</INF> 
under this Ruling in such area as of April 15, 2017, or the 
effective date of the disapproval, whichever date is later.
    (4) For any area that is designated nonattainment for 
PM<INF>2.5</INF> after April 15, 2015, and was not already 
designated nonattainment for PM<INF>2.5</INF> on or immediately 
prior to such date, Volatile organic compounds and Ammonia shall be 
regulated as precursors to PM<INF>2.5</INF> under this Ruling 
beginning 24 months from the date of designation as nonattainment 
for PM<INF>2.5</INF> with respect to any permit issued for 
PM<INF>2.5</INF>, unless the following conditions are met: the state 
submits a SIP for the Administrator's review which contains the 
state's preconstruction review provisions for PM<INF>2.5</INF> 
consistent with Sec.  51.165 and a complete NNSR precursor 
demonstration consistent with Sec.  51.1006(a)(3); and such SIP is 
determined to be complete by the Administrator or deemed to be 
complete by operation of law in accordance with section 110(k)(1)(B) 
of the Act by the date 24 months from the date of designation. If 
these conditions are met, the precursor(s) addressed by the NNSR 
precursor demonstration (Volatile organic compounds, Ammonia, or 
both) shall not be regulated as a precursor to PM<INF>2.5</INF> in 
such area. If the Administrator subsequently disapproves the state's 
preconstruction review provisions for PM<INF>2.5</INF> and the NNSR 
precursor demonstration, the precursor(s) addressed by the NNSR 
precursor demonstration shall be regulated as a precursor to 
PM<INF>2.5</INF> under this Ruling in such area as of the date 24 
months from the date of designation, or the effective date of the 
disapproval, whichever date is later.
    32. Reviewing authority means the State air pollution control 
agency, local agency, other State agency, Indian tribe, or other 
agency issuing permits under this Ruling or authorized by the 
Administrator to carry out a permit program under Sec. Sec.  51.165 
and 51.166 of this part, or the Administrator in the case of EPA-
implemented permit programs under this Ruling or under Sec.  52.21 
of this chapter.
    33. Project means a discrete physical change in, or change in 
the method of operation of, an existing major stationary source, or 
a discrete group of such changes (occurring contemporaneously at the 
same major stationary source) that are substantially related to each 
other. Such changes are substantially related if they are dependent 
on each other to be economically or technically viable. In an 
extreme ozone nonattainment area, a ``project'' means each discrete 
operation, emissions unit, or other pollutant-emitting activity.
    34. Best available control technology (BACT) means an emissions 
limitation (including a visible emissions standard) based on the 
maximum degree of reduction for each regulated NSR pollutant which 
would be emitted from any proposed major stationary source or major 
modification which the reviewing authority, on a case-by-case basis, 
taking into account energy, environmental, and economic impacts and 
other costs, determines is achievable for such source or 
modification through application of production processes or 
available methods, systems, and techniques, including fuel cleaning 
or treatment or innovative fuel combustion techniques for control of 
such pollutant. In no event shall application of best available 
control technology result in emissions of any pollutant which would 
exceed the emissions allowed by any applicable standard under 40 CFR 
part 60, 61, or 63. If the reviewing authority determines that 
technological or economic limitations on the application of 
measurement methodology to a particular emissions unit would make 
the imposition of an emissions standard infeasible, a design, 
equipment, work practice, operational standard, or combination 
thereof, may be prescribed instead to satisfy the requirement for 
the application of BACT. Such standard shall, to the degree 
possible, set forth the emissions reduction achievable by 
implementation of such design, equipment, work practice or 
operation, and shall provide for compliance by means which achieve 
equivalent results.
    35. Prevention of Significant Deterioration (PSD) permit means 
any permit that is issued under a major source preconstruction 
permit program that has been approved by the Administrator and 
incorporated into the plan to implement the requirements of Sec.  
51.166, or under the program in Sec.  52.21 of this chapter.
    36. Federal Land Manager means, with respect to any lands in the 
United States, the Secretary of the department with authority over 
such lands.
    37. Replacement unit means an emissions unit for which all the 
criteria listed in paragraphs II.A.37(i) through (iv) of this Ruling 
are met. No creditable emission reductions shall be generated from 
shutting down the existing emissions unit that is replaced.
    (i) The emissions unit is a reconstructed unit within the 
meaning of Sec.  60.15(b)(1) of this chapter, or the emissions unit

[[Page 36903]]

completely takes the place of an existing emissions unit;
    (ii) The emissions unit is identical to or functionally 
equivalent to the replaced emissions unit;
    (iii) The replacement does not alter the basic design parameters 
of the process unit; and
    (iv) The replaced emissions unit is permanently removed from the 
major stationary source, otherwise permanently disabled, or 
permanently barred from operation by a permit that is enforceable as 
a practical matter. If the replaced emissions unit is brought back 
into operation, it shall constitute a new emissions unit.

IV. Sources That Would Locate in a Designated Nonattainment Area

* * * * *
    I. Applicability procedures.
    1. To determine whether a project constitutes a major 
modification, the reviewing authority shall apply the principles set 
out in paragraphs IV.I.1(i) through (vi) of this Ruling.
    (i) Except as otherwise provided in paragraph IV.I.2 of this 
Ruling, and consistent with the definition of major modification 
contained in paragraph II.A.5 of this Ruling, a project is a major 
modification for a regulated NSR pollutant if it causes two types of 
emissions increases--a significant emissions increase (as defined in 
paragraph II.A.23 of this Ruling), and a significant net emissions 
increase (as defined in paragraphs II.A.6 and 10 of this Ruling). 
The project is not a major modification if it does not cause a 
significant emissions increase. If the project causes a significant 
emissions increase, then the project is a major modification only if 
it also results in a significant net emissions increase.
    (ii) The procedure for calculating (before beginning actual 
construction) whether a significant emissions increase (i.e., the 
first step of the process) will occur depends upon the type(s) of 
emissions units that could be affected by the project, according to 
paragraphs IV.I.1(iii) through (vi) of this Ruling. The procedure 
for calculating (before beginning actual construction) whether a 
significant net emissions increase will occur at the major 
stationary source (i.e., the second step of the process) is 
contained in the definition in paragraph II.A.6 of this Ruling. 
Regardless of any such preconstruction projections, a major 
modification results if the project causes a significant emissions 
increase and a significant net emissions increase.
    (iii) Actual-to-projected-actual applicability test for projects 
that only involve existing emissions units. A significant emissions 
increase of a regulated NSR pollutant is projected to occur if the 
sum of the difference between the projected actual emissions (as 
defined in paragraph II.A.24 of this Ruling) and the baseline actual 
emissions (as defined in paragraphs II.A.30(i) and (ii) of this 
Ruling, as applicable), for each existing emissions unit, equals or 
exceeds the significant amount for that pollutant (as defined in 
paragraph II.A.10 of this Ruling).
    (iv) Actual-to-potential test for projects that only involve 
construction of a new emissions unit(s). A significant emissions 
increase of a regulated NSR pollutant is projected to occur if the 
sum of the difference between the potential to emit (as defined in 
paragraph II.A.3 of this Ruling) from each new emissions unit 
following completion of the project and the baseline actual 
emissions (as defined in paragraph II.A.30(iii) of this Ruling) of 
these units before the project equals or exceeds the significant 
amount for that pollutant (as defined in paragraph II.A.10 of this 
Ruling).
    (v) Hybrid test for projects that involve multiple types of 
emissions units. A significant emissions increase of a regulated NSR 
pollutant is projected to occur if the sum of the difference for all 
emissions units, using the method specified in paragraphs 
IV.I.1(iii) through (iv) of this Ruling as applicable with respect 
to each emissions unit, equals or exceeds the significant amount for 
that pollutant (as defined in paragraph II.A.10 of this Ruling).
    (vi) The ``sum of the difference'' as used in paragraphs 
IV.I.1(iii), (iv) and (v) of this Ruling shall include both 
increases and decreases in emissions calculated in accordance with 
those paragraphs. A decrease may only be accounted for in the 
significant emissions increase determination if it meets the 
requirements under paragraph II.A.6(v)(b) of this Ruling.
    2. For any major stationary source with a PAL for a regulated 
NSR pollutant, the major stationary source shall comply with 
requirements under paragraph IV.K of this Ruling. J.
    Provisions for projected actual emissions. Except as otherwise 
provided in paragraph IV.J.6(ii) of this Ruling, the provisions of 
this paragraph IV.J apply with respect to any regulated NSR 
pollutant emitted from projects that involve one or more existing 
emissions units at a major stationary source (other than projects at 
a source with a PAL) in circumstances where there is a reasonable 
possibility, within the meaning of paragraph IV.J.6 of this Ruling, 
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 method specified in paragraphs 
II.A.24(ii)(a) through (c) of this Ruling for calculating projected 
actual emissions from any existing emissions unit.
    1. Before beginning actual construction of the project, the 
owner or operator shall document and maintain a record of the 
following information: (i) A description of the project that 
includes: the name of the project, the project's intended 
objective(s), each physical change and/or change in the method of 
operation associated with the project objective(s), and estimated 
timeline for the project, including an estimation of when the 
project would begin actual construction and begin regular operation;
    (ii) Identification of the emissions unit(s) whose emissions of 
a regulated NSR pollutant could be affected by the project; and 
(iii) A description of the applicability test used to determine that 
the project is not a major modification for any regulated NSR 
pollutant, including the baseline actual emissions, the projected 
actual emissions, the amount of emissions excluded under paragraph 
II.A.24(ii)(c) of this Ruling and an explanation for why such amount 
was excluded, and the potential to emit, as applicable, and any 
netting calculations, if applicable.
    2. Before beginning actual construction, the owner or operator 
shall provide a copy of the information set out in paragraph IV.J.1 
of this Ruling to the reviewing authority. Nothing in this paragraph 
IV.J.2 shall be construed to require the owner or operator of such a 
unit to obtain any determination from the reviewing authority before 
beginning actual construction.
    3. The owner or operator shall monitor the emissions of any 
regulated NSR pollutant that could increase as a result of the 
project and that is emitted by any emissions units identified in 
paragraph IV.J.1(ii) of this Ruling; and calculate and maintain a 
record of the annual emissions, in tons per year on a calendar year 
basis, for a period of 5 years following resumption of regular 
operations after the change, or for a period of 10 years following 
resumption of regular operations after the change if the project 
increases the design capacity or potential to emit of that regulated 
NSR pollutant at any existing emissions unit identified in paragraph 
IV.J.1(ii) of this Ruling.
    4. If the project involves an existing electric utility steam 
generating unit, the owner or operator shall submit a report to the 
reviewing authority within 60 days after the end of each year, 
during which records must be generated under paragraph IV.J.3 of 
this Ruling setting out the annual emissions from each affected 
emissions unit during the calendar year that preceded submission of 
the report.
    5. If the project does not involve an existing electric utility 
steam generating unit, the owner or operator shall submit a report 
to the reviewing authority if the annual emissions, in tons per 
year, from the project identified in paragraph IV.J.1 of this 
Ruling, exceed the baseline actual emissions (as documented and 
maintained pursuant to paragraph IV.J.1(iii) of this Ruling) by a 
significant amount (as defined in paragraph II.A.10 of this Ruling) 
for that regulated NSR pollutant, and if such emissions differ from 
the preconstruction projection as documented and maintained pursuant 
to paragraph IV.J.1(iii) of this Ruling. Such report shall be 
submitted to the reviewing authority within 60 days after the end of 
such year. The report shall contain the following:
    (i) The name, address and telephone number of the major 
stationary source;
    (ii) The annual emissions as calculated pursuant to paragraph 
IV.J.3 of this Ruling; and
    (iii) Any other information that the owner or operator wishes to 
include in the report (e.g., an explanation as to why the emissions 
differ from the preconstruction projection).
    6. A ``reasonable possibility'' under paragraph IV.J of this 
Ruling occurs when the owner or operator calculates the project to 
result in either:
    (i) A projected actual emissions increase of at least 50 percent 
of the amount that is a ``significant emissions increase,'' as 
defined under paragraph II.A.23 of this Ruling (without reference to 
the amount that is a

[[Page 36904]]

significant net emissions increase), for the regulated NSR 
pollutant; or
    (ii) A projected actual emissions increase that, added to the 
amount of emissions excluded under paragraph II.A.24(ii)(c) of this 
Ruling, sums to at least 50 percent of the amount that is a 
``significant emissions increase,'' as defined under paragraph 
II.A.23 of this Ruling (without reference to the amount that is a 
significant net emissions increase), for the regulated NSR 
pollutant. For a project for which a reasonable possibility occurs 
only within the meaning of paragraph IV.J.6(ii) of this Ruling, and 
not also within the meaning of paragraph IV.J.6(i) of this Ruling, 
then provisions in paragraphs IV.J.2 through IV.J.5 of this Ruling 
do not apply to the project; or
    (iii) The owner or operator accounts for a decrease in emissions 
from one or more emissions unit(s) in determining that the project 
is not a major modification for a regulated NSR pollutant regardless 
of the projected actual emissions increase.
    7. The owner or operator of the source shall make the 
information required to be documented and maintained pursuant to 
this paragraph IV.J of this Ruling available for review upon a 
request for inspection by the reviewing authority or the general 
public pursuant to the requirements contained in Sec.  
70.4(b)(3)(viii) of this chapter.

PART 52--APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS

0
5. The authority citation for part 52 continues to read as follows:

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

Subpart A--General Provisions


Sec.  52.21  [Amended]

0
6. Amend Sec.  52.21 by:
0
a. Revising and republishing paragraph (a)(2);
0
b. Revising paragraph (b)(52); and
0
c. Revising and republishing paragraph (r)(6).
    The revisions and republications read as follows:


Sec.  52.21  Prevention of significant deterioration of air quality.

    (a) * * *
    (2) Applicability procedures. (i) The requirements of this section 
apply to the construction of any new major stationary source (as 
defined in paragraph (b)(1) of this section) or any project at an 
existing major stationary source in an area designated as attainment or 
unclassifiable under sections 107(d)(1)(A)(ii) or (iii) of the Act.
    (ii) The requirements of paragraphs (j) through (r) of this section 
apply to the construction of any new major stationary source or the 
major modification of any existing major stationary source, except as 
this section otherwise provides.
    (iii) No new major stationary source or major modification to which 
the requirements of paragraphs (j) through (r)(5) of this section apply 
shall begin actual construction without a permit that states that the 
major stationary source or major modification will meet those 
requirements. The Administrator has authority to issue any such permit.
    (iv) The requirements of the program will be applied in accordance 
with the principles set out in paragraphs (a)(2)(iv)(a) through (g) of 
this section.
    (a) Except as otherwise provided in paragraph (a)(2)(v) of this 
section, and consistent with the definition of major modification 
contained in paragraph (b)(2) of this section, a project is a major 
modification for a regulated NSR pollutant if it causes two types of 
emissions increases--a significant emissions increase (as defined in 
paragraph (b)(40) of this section) and a significant net emissions 
increase (as defined in paragraphs (b)(3) and (23) of this section). 
The project is not a major modification if it does not cause a 
significant emissions increase. If the project causes a significant 
emissions increase, then the project is a major modification only if it 
also results in a significant net emissions increase.
    (b) The procedure for calculating (before beginning actual 
construction) whether a significant emissions increase (i.e., the first 
step of the process) will occur depends upon the type(s) of emissions 
units that could be affected by the project, according to paragraphs 
(a)(2)(iv)(c) through (g) of this section. The procedure for 
calculating (before beginning actual construction) whether a 
significant net emissions increase will occur at the major stationary 
source (i.e., the second step of the process) is contained in the 
definition in paragraph (b)(3) of this section. Regardless of any such 
preconstruction projections, a major modification results if the 
project causes a significant emissions increase and a significant net 
emissions increase.
    (c) Actual-to-projected-actual applicability test for projects that 
only involve existing emissions units. A significant emissions increase 
of a regulated NSR pollutant is projected to occur if the sum of the 
difference between the projected actual emissions (as defined in 
paragraph (b)(41) of this section) and the baseline actual emissions 
(as defined in paragraphs (b)(48)(i) and (ii) of this section), for 
each existing emissions unit, equals or exceeds the significant amount 
for that pollutant (as defined in paragraph (b)(23) of this section).
    (d) Actual-to-potential test for projects that only involve 
construction of a new emissions unit(s). A significant emissions 
increase of a regulated NSR pollutant is projected to occur if the sum 
of the difference between the potential to emit (as defined in 
paragraph (b)(4) of this section) from each new emissions unit 
following completion of the project and the baseline actual emissions 
(as defined in paragraph (b)(48)(iii) of this section) of these units 
before the project equals or exceeds the significant amount for that 
pollutant (as defined in paragraph (b)(23) of this section).
    (e) [Reserved]
    (f) Hybrid test for projects that involve multiple types of 
emissions units. A significant emissions increase of a regulated NSR 
pollutant is projected to occur if the sum of the difference for all 
emissions units, using the method specified in paragraphs (a)(2)(iv)(c) 
and (d) of this section as applicable with respect to each emissions 
unit, equals or exceeds the significant amount for that pollutant (as 
defined in paragraph (b)(23) of this section).
    (g) The ``sum of the difference'' as used in paragraphs 
(a)(2)(iv)(c), (d) and (f) of this section shall include both increases 
and decreases in emissions calculated in accordance with those 
paragraphs. A decrease may only be accounted for in the significant 
emissions increase determination if it meets the requirements under 40 
CFR 52.21(b)(3)(vi)(b).
    (v) For any major stationary source for a PAL for a regulated NSR 
pollutant, the major stationary source shall comply with the 
requirements under paragraph (aa) of this section.
    (b) * * *
    (52) Project means a discrete physical change in, or change in the 
method of operation of, an existing major stationary source, or a 
discrete group of such changes (occurring contemporaneously at the same 
major stationary source) that are substantially related to each other. 
Such changes are substantially related if they are dependent on each 
other to be economically or technically viable.
* * * * *
    (r) * * *
    (6) Except as otherwise provided in paragraph (r)(6)(vi)(b) of this 
section, the provisions of this paragraph (r)(6) apply with respect to 
any regulated NSR pollutant emitted from projects that involve one or 
more existing emissions units at a major stationary source (other than 
projects at a source with a PAL) in circumstances where there is a 
reasonable possibility, within the meaning of paragraph (r)(6)(vi) of 
this section, that a project that is not a part of a major modification 
may result in a

[[Page 36905]]

significant emissions increase of such pollutant, and the owner or 
operator elects to use the method specified in paragraphs 
(b)(41)(ii)(a) through (c) of this section for calculating projected 
actual emissions from any existing emissions unit.
    (i) Before beginning actual construction of the project, the owner 
or operator shall document and maintain a record of the following 
information: (a) A description of the project that includes: the name 
of the project, the project's intended objective(s), each physical 
change and/or change in the method of operation associated with the 
project objective(s), and estimated timeline for the project, including 
an estimation of when the project would begin actual construction and 
begin regular operation;
    (b) Identification of the emissions unit(s) whose emissions of a 
regulated NSR pollutant could be affected by the project; and (c) A 
description of the applicability test used to determine that the 
project is not a major modification for any regulated NSR pollutant, 
including the baseline actual emissions, the projected actual 
emissions, the amount of emissions excluded under paragraph 
(b)(41)(ii)(c) of this section and an explanation for why such amount 
was excluded, the potential to emit, as applicable, and any netting 
calculations, if applicable.
    (ii) Before beginning actual construction, the owner or operator 
shall provide a copy of the information set out in paragraph (r)(6)(i) 
of this section to the reviewing authority. Nothing in this paragraph 
(r)(6)(ii) shall be construed to require the owner or operator of such 
a unit to obtain any determination from the reviewing authority before 
beginning actual construction.
    (iii) The owner or operator shall monitor the emissions of any 
regulated NSR pollutant that could increase as a result of the project 
and that is emitted by any emissions unit identified in paragraph 
(r)(6)(i)(b) of this section; and calculate and maintain a record of 
the annual emissions, in tons per year on a calendar year basis, for a 
period of 5 years following resumption of regular operations after the 
change, or for a period of 10 years following resumption of regular 
operations after the change if the project increases the design 
capacity or potential to emit that regulated NSR pollutant at any 
existing emissions unit identified in 40 CFR 52.21(r)(6)(i)(b).
    (iv) If the project involves an existing electric utility steam 
generating unit, the owner or operator shall submit a report to the 
Administrator within 60 days after the end of each year during which 
records must be generated under paragraph (r)(6)(iii) of this section 
setting out the annual emissions from each affected emissions unit 
during the calendar year that preceded submission of the report.
    (v) If the project does not involve an existing electric utility 
steam generating unit, the owner or operator shall submit a report to 
the Administrator if the annual emissions, in tons per year, from the 
project identified in paragraph (r)(6)(i) of this section, exceed the 
baseline actual emissions (as documented and maintained pursuant to 
paragraph (r)(6)(i)(c) of this section), by a significant amount (as 
defined in paragraph (b)(23) of this section) for that regulated NSR 
pollutant, and if such emissions differ from the preconstruction 
projection as documented and maintained pursuant to paragraph 
(r)(6)(i)(c) of this section. Such report shall be submitted to the 
Administrator within 60 days after the end of such year. The report 
shall contain the following:
    (a) The name, address and telephone number of the major stationary 
source;
    (b) The annual emissions as calculated pursuant to paragraph 
(r)(6)(iii) of this section; and
    (c) Any other information that the owner or operator wishes to 
include in the report (e.g., an explanation as to why the emissions 
differ from the preconstruction projection).
    (vi) A ``reasonable possibility'' under paragraph (r)(6) of this 
section occurs when the owner or operator calculates the project to 
result in either:
    (a) A projected actual emissions increase of at least 50 percent of 
the amount that is a ``significant emissions increase,'' as defined 
under paragraph (b)(40) of this section (without reference to the 
amount that is a significant net emissions increase), for the regulated 
NSR pollutant; or
    (b) A projected actual emissions increase that, added to the amount 
of emissions excluded under paragraph (b)(41)(ii)(c) of this section, 
sums to at least 50 percent of the amount that is a ``significant 
emissions increase,'' as defined under paragraph (b)(40) of this 
section (without reference to the amount that is a significant net 
emissions increase), for the regulated NSR pollutant. For a project for 
which a reasonable possibility occurs only within the meaning of 
paragraph (r)(6)(vi)(b) of this section, and not also within the 
meaning of paragraph (r)(6)(vi)(a) of this section, then provisions 
(r)(6)(ii) through (v) do not apply to the project; or
    (c) The owner or operator accounts for a decrease in emissions from 
one or more emissions unit(s) in determining that the project is not a 
major modification for a regulated NSR pollutant regardless of the 
projected actual emissions increase.
* * * * *
[FR Doc. 2024-04029 Filed 5-2-24; 8:45 am]
BILLING CODE 6560-50-P


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