```

[Federal Register Volume 77, Number 112 (Monday, June 11, 2012)]
[Proposed Rules]
[Pages 34302-34306]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-14106]

[[Page 34302]]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R04-OAR-2012-0080; FRL-9684-1]

Approval and Promulgation of Implementation Plans; Tennessee: 
Prevention of Significant Deterioration and Nonattainment New Source 
Review; Fine Particulate Matter

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The U.S. Environmental Protection Agency (EPA) is proposing to 
approve changes to the Tennessee State Implementation Plan (SIP), 
submitted by the Tennessee Department of Environment and Conservation 
(TDEC) through the Division of Air Pollution Control to EPA on July 29, 
2011. The July 29, 2011, SIP revision modifies Tennessee's New Source 
Review (NSR) Prevention of Significant Deterioration (PSD) and 
Nonattainment New Source Review (NNSR) programs. Tennessee's July 29, 
2011, SIP revision proposes to incorporate, into the Tennessee SIP, NSR 
provisions for fine particulate matter (also known as PM2.5) 
as amended in EPA's 2008 NSR PM2.5 Implementation Rule 
(hereafter referred to as the ``NSR PM2.5 Rule''). EPA is 
proposing approval of the July 29, 2011, SIP revision because the 
Agency has preliminarily determined that the revision is consistent 
with the Clean Air Act (CAA or Act) and EPA regulations regarding NSR 
permitting.

DATES: Comments must be received on or before July 11, 2012.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R04-
OAR-2012-0080 by one of the following methods:
    1. www.regulations.gov: Follow the on-line instructions for 
submitting comments.
    2. Email: R4-RDS@epa.gov.
    3. Fax: (404) 562-9019.
    4. Mail: EPA-R04-OAR-2012-0080, Regulatory Development Section, Air 
Planning Branch, Air, Pesticides and Toxics Management Division, U.S. 
Environmental Protection Agency, Region 4, 61 Forsyth Street SW., 
Atlanta, Georgia 30303-8960.
    5. Hand Delivery or Courier: Ms. Lynorae Benjamin, Chief, 
Regulatory Development Section, Air Planning Branch, Air, Pesticides 
and Toxics Management Division, U.S. Environmental Protection Agency, 
Region 4, 61 Forsyth Street SW., Atlanta, Georgia 30303-8960. Such 
deliveries are only accepted during the Regional Office's normal hours 
of operation. The Regional Office's official hours of business are 
Monday through Friday, 8:30 to 4:30, excluding federal holidays.
    Instructions: Direct your comments to Docket ID No. ``EPA-R04-OAR-
2012-0080.'' EPA's policy is that all comments received will be 
included in the public docket without change and may be made available 
online at www.regulations.gov, including any personal information 
provided, unless the comment includes information claimed to be 
Confidential Business Information (CBI) or other information whose 
disclosure is restricted by statute. Do not submit through 
www.regulations.gov or email, information that you consider to be CBI 
or otherwise protected. The www.regulations.gov Web site is an 
``anonymous access'' system, which means 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 EPA without 
going through 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, EPA recommends that you include your name 
and other contact information in the body of your comment and with any 
disk or CD-ROM you submit. If EPA cannot read your comment due to 
technical difficulties and cannot contact you for clarification, EPA 
may not be able to consider your comment. Electronic files should avoid 
the use of special characters, any form of encryption, and be free of 
any defects or viruses. For additional information about EPA's public 
docket visit the EPA Docket Center homepage at http://www.epa.gov/epahome/dockets.htm.
    Docket: All documents in the electronic docket are listed in the 
www.regulations.gov index. Although listed in the index, some 
information is not publicly available, i.e., 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 form. Publicly available docket 
materials are available either electronically in www.regulations.gov or 
in hard copy at the Regulatory Development Section, Air Planning 
Branch, Air, Pesticides and Toxics Management Division, U.S. 
Environmental Protection Agency, Region 4, 61 Forsyth Street SW., 
Atlanta, Georgia 30303-8960. EPA requests that if at all possible, you 
contact the person listed in the FOR FURTHER INFORMATION CONTACT 
section to schedule your inspection. The Regional Office's official 
hours of business are Monday through Friday, 8:30 to 4:30, excluding 
federal holidays.

FOR FURTHER INFORMATION CONTACT: For information regarding the 
Tennessee SIP, contact Ms. Twunjala Bradley, Regulatory Development 
Section, Air Planning Branch, Air, Pesticides and Toxics Management 
Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth 
Street SW., Atlanta, Georgia 30303-8960. Ms. Bradley's telephone number 
is (404) 562-9352; email address: bradley.twunjala@epa.gov. For 
information regarding NSR, contact Ms. Yolanda Adams, Air Permits 
Section, at the same address above. Ms. Adams' telephone number is 
(404) 562-9241; email address: adams.yolanda@epa.gov. For information 
regarding the PM2.5 national ambient air quality standards 
(NAAQS), contact Mr. Joel Huey, Regulatory Development Section, at the 
same address above. Mr. Huey's telephone number is (404) 562-9104; 
email address: huey.joel@epa.gov.

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. What action is EPA proposing?
II. What is the background for EPA's proposed action?
III. What is EPA's analysis of Tennessee's SIP revision?
IV. Proposed Action
V. Statutory and Executive Order Reviews

I. What action is EPA proposing?

    On July 29, 2011, TDEC submitted a SIP revision to EPA for approval 
into the Tennessee SIP to adopt rules equivalent to federal 
requirements for NSR permitting.\1\ Tennessee's July 29, 2011, SIP 
revision includes changes to Tennessee's Air Quality Regulations, 
Chapter 1200-03-09--Construction and Operating Permits, Rule Number 
.01--Construction Permits, to adopt PSD and NNSR requirements related 
to the implementation of the NSR PM2.5 Rule. The rule 
changes adopted required federal PSD and NNSR permitting provisions 
governing the implementation of the NSR program for the 
PM2.5 NAAQS promulgated in the NSR PM2.5 Rule. 
Also, Tennessee's July 29, 2011, SIP revision includes

[[Page 34303]]

clarifying changes to rule 1200-03-09--.01. Pursuant to section 110 of 
the CAA, EPA is proposing to approve these changes into the Tennessee 
SIP.
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    \1\ Tennessee's July 29, 2011, submittal also contains changes 
to Tennessee Chapter 1200-03-26--Administrative Fees Schedule 
provisions. EPA is not proposing action on this part of the 
submittal as these provisions are not part of the federally-approved 
Tennessee SIP.
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    Additionally, EPA is not taking action to approve a portion of 
Tennessee's July 29, 2011, SIP revision regarding the applicability of 
the term ``particulate matter emissions'' when accounting for 
condensable particles in applicability determinations and in 
establishing emissions limitations in PSD permits. More details are 
provided in Sections II and III below.

II. What is the background for EPA's proposed action?

    Today's proposed action to revise the Tennessee SIP relates to 
EPA's ``Implementation of the New Source Review Program for Particulate 
Matter Less than 2.5 Micrometers,'' Final Rule, 73 FR 28321 (May 16, 
2008) (the ``NSR PM2.5 Rule''). In the NSR PM2.5 
Rule, EPA finalized regulations to implement the NSR program for the 
PM2.5 NAAQS. As a result of EPA's final NSR PM2.5 
Rule, states were required to provide SIP submissions no later than May 
16, 2011, to address these requirements for both the PSD and NNSR 
programs. Tennessee's July 29, 2011, SIP revision addresses the PSD and 
NNSR requirements for the PM2.5 NAAQS. More detail on the 
NSR PM2.5 Rule can be found in EPA's May 16, 2008, final 
rule and is summarized below.

A. Fine Particulate Matter and the NAAQS

    Fine particles in the atmosphere are made up of a complex mixture 
of components. Common constituents include sulfate; nitrate; ammonium; 
elemental carbon; a great variety of organic compounds; and inorganic 
material (including metals, dust, sea salt, and other trace elements) 
generally referred to as ``crustal'' material, although it may contain 
material from other sources. Airborne particulate matter (PM) with a 
nominal aerodynamic diameter of 2.5 micrometers or less (a micrometer 
is one-millionth of a meter, and 2.5 micrometers is less than one-
seventh the average width of a human hair) are considered to be ``fine 
particles'' and are also known as PM2.5. ``Primary'' 
particles are emitted directly into the air as a solid or liquid 
particle (e.g., elemental carbon from diesel engines or fire 
activities, or condensable organic particles from gasoline engines). 
``Secondary'' particles (e.g., sulfate and nitrate) form in the 
atmosphere as a result of various chemical reactions.
    The health effects associated with exposure to PM2.5 
include potential aggravation of respiratory and cardiovascular disease 
(i.e., lung disease, decreased lung function asthma attacks and certain 
cardiovascular issues). Epidemiological studies have indicated a 
correlation between elevated PM2.5 levels and premature 
mortality. Groups considered especially sensitive to PM2.5 
exposure include older adults, children, and individuals with heart and 
lung diseases. For more details regarding health effects and 
PM2.5 see EPA's Web Site at http://www.epa.gov/oar/particlepollution/ (See heading ``Health and Welfare'').
    On July 18, 1997, EPA revised the NAAQS for PM to add new standards 
for fine particles, using PM2.5 as the indicator. 
Previously, EPA used PM10 (inhalable particles smaller than 
or equal to 10 micrometers in diameter) as the indicator for the PM 
NAAQS. EPA established health-based (primary) annual and 24-hour 
standards for PM2.5, setting an annual standard at a level 
of 15.0 micrograms per cubic meter ([mu]g/m\3\) and a 24-hour standard 
at a level of 65 [mu]g/m\3\. See 62 FR 38652. At the time the 1997 
primary standards were established, EPA also established welfare-based 
(secondary) standards identical to the primary standards. The secondary 
standards are designed to protect against major environmental effects 
of PM2.5, such as visibility impairment, soiling, and 
materials damage. On October 17, 2006, EPA revised the primary and 
secondary 24-hour NAAQS for PM2.5 to 35 [mu]g/m\3\ and 
retained the existing annual PM2.5 NAAQS of 15.0 [mu]g/m\3\. 
See 71 FR 61236.

B. What is the NSR program?

    The CAA NSR program is a preconstruction review and permitting 
program applicable to certain new and modified stationary sources of 
air pollutants regulated under the CAA. The program includes a 
combination of air quality planning and air pollution control 
technology requirements. The CAA NSR program is composed of three 
separate programs: PSD, NNSR, and Minor NSR. PSD is established in part 
C of title I of the CAA and applies in areas that meet the NAAQS--
``attainment areas''--as well as areas where there is insufficient 
information to determine if the area meets the NAAQS--``unclassifiable 
areas.'' The NNSR program is established in part D of title I of the 
CAA and applies in areas that are not in attainment of the NAAQS--
``nonattainment areas.'' The Minor NSR program addresses construction 
or modification activities that do not qualify as ``major'' and applies 
regardless of the designation of the area in which a source is located. 
Together, these programs are referred to as NSR programs. EPA 
regulations governing the implementation of these programs are 
contained in 40 CFR sections 51.160-.166; 52.21, .24; and part 51, 
Appendix S.
    Section 109 of the CAA requires EPA to promulgate a primary NAAQS 
to protect public health and a secondary NAAQS to protect public 
welfare. Once EPA sets those standards, states must develop, adopt, and 
submit a SIP to EPA for approval that includes emission limitations and 
other control measures to attain and maintain the NAAQS. See CAA Sec.  
110. Each SIP is also required to include a preconstruction review 
program for the construction and modification of any stationary source 
of air pollution to assure the maintenance of the NAAQS. The July 29, 
2011, SIP revision revises Tennessee's PSD and NNSR programs.

C. Implementation of NSR Requirements for PM2.5

    On May 16, 2008, EPA finalized the NSR PM2.5 Rule to 
implement the PM2.5 NAAQS, including changes to the NSR 
program. See 73 FR 28321. The NSR PM2.5 Rule revised the 
federal NSR program requirements to establish the framework for 
implementing preconstruction permit review for the PM2.5 
NAAQS in both attainment and nonattainment areas. Specifically, the NSR 
PM2.5 Rule established the following NSR requirements to 
implement the PM2.5 NAAQS: (1) Require NSR permits to 
address directly emitted PM2.5 and precursor pollutants; (2) 
establish significant emission rates for direct PM2.5 and 
precursor pollutants (including sulfur dioxide (SO2) and 
nitrogen oxides (NOX)); (3) establish PM2.5 
emission offsets; (4) provide exceptions to PM10 grandfather 
policy; and (5) require states to account for gases that condense to 
form particles (``condensables'') in PM2.5 and 
PM10 emission limits in PSD or nonattainment NSR permits. 
Additionally, the NSR PM2.5 Rule authorized states to adopt 
provisions in their nonattainment NSR rules that would allow 
interpollutant offset trading. Tennessee's July 29, 2011, SIP revision 
addresses the PSD and NNSR requirements related to EPA's May 16, 2008, 
NSR PM2.5 Rule. A few key issues described in greater detail 
below include: the PM10 surrogate and grandfathering policy, 
condensable provision and interpollutant offset trading provision.

[[Page 34304]]

1. PM10 Surrogate and Grandfathering Policy
    After EPA promulgated the NAAQS for PM2.5 in 1997, the 
Agency issued a guidance document entitled ``Interim Implementation of 
New Source Review Requirements for PM2.5.'' John S. Seitz, 
EPA, October 23, 1997 (the ``Seitz memo''). The Seitz memo was designed 
to help states implement NSR requirements pertaining to the new 
PM2.5 NAAQS in light of technical difficulties posed by 
PM2.5 at that time. Specifically, the Seitz memo stated: 
``PM-10 may properly be used as a surrogate for PM-2.5 in meeting NSR 
requirements until these difficulties are resolved.'' EPA also issued a 
guidance document entitled ``Implementation of New Source Review 
Requirements in PM-2.5 Nonattainment Areas'' (the ``2005 
PM2.5 Nonattainment NSR Guidance''), on April 5, 2005, the 
date that EPA's PM2.5 nonattainment area designations became 
effective for the 1997 NAAQS. This memorandum provided guidance on the 
implementation of the nonattainment major NSR provisions in 
PM2.5 nonattainment areas in the interim period between the 
effective date of the PM2.5 nonattainment area designations 
(April 5, 2005) and EPA's promulgation of final PM2.5 NNSR 
regulations. Besides re-affirming the continuation of the 
PM10 Surrogate Policy for PM2.5 attainment areas 
set forth in the Seitz memo, the 2005 PM2.5 NNSR Guidance 
recommended that until EPA promulgated the PM2.5 major NSR 
regulations, ``States should use a PM10 nonattainment major 
NSR program as a surrogate to address the requirements of nonattainment 
major NSR for the PM2.5 NAAQS.''
    In the NSR PM2.5 Rule, EPA required that major 
stationary sources seeking permits must begin directly satisfying the 
PM2.5 requirements, as of the effective date of the rule, 
rather than relying on PM10 as a surrogate, with two 
exceptions. The first exception is a ``grandfathering'' provision in 
the federal PSD program at 40 CFR 52.21(i)(1)(xi). This grandfathering 
provision applied to sources that had applied for, but had not yet 
received, a final and effective PSD permit before the July 15, 2008, 
effective date of the May 2008 final rule. The second exception was 
that states with SIP-approved PSD programs could continue to implement 
the Seitz Memo's PM10 Surrogate Policy for up to three years 
(until May 2011) or until the individual revised state PSD programs for 
PM2.5 are approved by EPA, whichever comes first. For 
additional information on the NSR PM2.5 Rule, see 73 FR 
28321.\2\
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    \2\ Additional information on this issue can also be found in an 
August 12, 2009, final order on a title V petition describing the 
use of PM10 as a surrogate for PM2.5. In the 
Matter of Louisville Gas & Electric Company, Petition No. IV-2008-3, 
Order on Petition (August 12, 2009).
---------------------------------------------------------------------------

    On February 11, 2010, EPA proposed to repeal the grandfathering 
provision for PM2.5 contained in the federal PSD program at 
40 CFR 52.21(i)(1)(xi) and to end early the PM10 Surrogate 
Policy applicable in states that have a SIP-approved PSD program. See 
75 FR 6827. In support of this proposal, EPA explained that the 
PM2.5 implementation issues that led to the adoption of the 
PM10 Surrogate Policy in 1997 have been largely resolved to 
a degree sufficient for sources and permitting authorities to conduct 
meaningful permit-related PM2.5 analyses.
    On May 18, 2011 (76 FR 28646), EPA took final action to repeal the 
PM2.5 grandfathering provision at 40 CFR 52.21(i)(1)(xi). 
This final action ended the use of the 1997 PM10 Surrogate 
Policy for PSD permits under the federal PSD program at 40 CFR 52.21. 
In effect, any PSD permit applicant previously covered by the 
grandfathering provision (for sources that completed and submitted a 
permit application before July 15, 2008) \3\ that did not have a final 
and effective PSD permit before the effective date of the repeal will 
not be able to rely on the 1997 PM10 Surrogate Policy to 
satisfy the PSD requirements for PM2.5 unless the 
application includes a valid surrogacy demonstration. See 76 FR 28646. 
In its July 29, 2011, SIP revision, Tennessee elected not to adopt the 
grandfathering provision at 40 CFR 52.21(i)(1)(xi), into its PSD 
regulations. Therefore, Tennessee's July 29, 2011, SIP revision is 
consistent with federal regulations since it does not contain the 
repealed grandfathering provision.
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    \3\ Sources that applied for a PSD permit under the federal PSD 
program on or after July 15, 2008, are already excluded from using 
the 1997 PM10 Surrogate Policy as a means of satisfying 
the PSD requirements for PM2.5. See 76 FR 28321.
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2. ``Condensable'' Provision
    In the NSR PM2.5 Rule, EPA revised the definition of 
``regulated NSR pollutant'' for PSD and NNSR to add a paragraph 
providing that ``particulate matter (PM) emissions, PM2.5 
emissions and PM10 emissions'' shall include gaseous 
emissions from a source or activity which condense to form particulate 
matter at ambient temperatures and that on or after January 1, 2011, 
such condensable particulate matter shall be accounted for in 
applicability determinations and in establishing emissions limitations 
for PM, PM2.5 and PM10 in permits issued. See 40 
CFR 51.166(b)(49)(vi), 52.21(b)(50)(vi) and ``Emissions Offset 
Interpretative Ruling'' (40 CFR Part 51, Appendix S). A similar 
paragraph added to the NNSR rule does not include ``particulate matter 
(PM) emissions.'' See 40 CFR 51.165(a)(1)(xxxvii)(D).
    On March 12, 2012, EPA proposed a rulemaking to amend the 
definition of ``regulated NSR pollutant'' promulgated in the 2008 NSR 
PM2.5 Rule regarding the PM condensable provision at 40 CFR 
51.166(b)(49)(vi), 52.21(b)(50)(i) and EPA's Emissions Offset 
Interpretative Ruling. See 77 FR 15656. The rulemaking proposes to 
remove the inadvertent requirement in the NSR PM2.5 Rule 
that the measurement of condensable ``particulate matter emissions'' be 
included as part of the measurement and regulation of ``particulate 
matter emissions.'' The term ``particulate matter emissions'' includes 
particles that are larger than PM2.5 and PM10 and 
is an indicator measured under various New Source Performance Standards 
(NSPS) (40 CFR part 60).\4\ Tennessee's July 29, 2011, SIP revision 
adopts EPA's definition for regulated NSR pollutant for condensables 
(at 40 CFR 51.166(b)(49)(vi)), including the term ``particulate matter 
emissions,'' as promulgated in the NSR PM2.5 Rule. EPA's 
review of Tennessee's July 29, 2011, SIP revision with regards to the 
NSR PM2.5 Rule condensable provision is provided below in 
Section III.
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    \4\ In addition to the NSPS for PM, it is noted that states 
regulated ``particulate matter emissions'' for many years in their 
SIPs for PM, and the same indicator has been used as a surrogate for 
determining compliance with certain standards contained in 40 CFR 
part 63, regarding National Emission Standards for Hazardous Air 
Pollutants.
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3. Interpollutant Trading Provision
    The NSR PM2.5 final Rule authorized states to adopt 
provisions in their NNSR rules that would allow major stationary 
sources and major modifications locating in areas designated 
nonattainment for PM2.5 to offset emissions increases of 
direct PM2.5 emissions or PM2.5 precursors with 
reductions of either direct PM2.5 emissions or 
PM2.5 precursors in accordance with offset ratios contained 
in the approved SIP for the applicable nonattainment area. The 
inclusion, in whole or in part, of the interpollutant trading offset 
provisions for PM2.5 is discretionary on the part of the 
states. In the preamble to the NSR PM2.5 Rule, EPA included 
preferred or presumptive offset ratios, applicable to specific 
PM2.5

[[Page 34305]]

precursors that states may adopt in conjunction with the new 
interpollutant trading offset provisions for PM2.5, and for 
which the state could rely on the EPA's technical work to demonstrate 
the adequacy of the ratios for use in any PM2.5 
nonattainment area. Alternatively, the preamble indicated that states 
may adopt their own ratios, subject to the EPA's approval, that would 
have to be substantiated by modeling or other technical demonstrations 
of the net air quality benefit for ambient PM2.5 
concentrations.
    The preferred ratios were subsequently the subject of a petition 
for reconsideration which the EPA Administrator granted in 2009. As a 
result of the reconsideration, on July 21, 2011, EPA issued a 
memorandum entitled ``Revised Policy to Address Reconsideration of 
Interpollutant Trading Provisions for Fine Particles 
(PM2.5)'' (hereafter referred to as the ``Interpollutant 
Trading Memorandum''). The Interpollutant Trading Memorandum indicated 
that the existing preferred offset ratios are no longer considered 
presumptively approvable and that any precursor offset ratio submitted 
as part of the NSR SIP for a PM2.5 nonattainment area must 
be accompanied by a technical demonstration showing the net air quality 
benefits of such ratio for the PM2.5 nonattainment area in 
which it will be applied. Tennessee's July 29, 2011, SIP revision 
adopts the interpollutant policy but not the preferred trading ratios. 
EPA's analysis of Tennessee's July 29, 2011, SIP revision regarding 
interpollutant trading is provided below in Section III.

III. What is EPA's analysis of Tennessee's SIP revision?

    Tennessee currently has a SIP-approved NSR program for new and 
modified stationary sources. TDEC's PSD preconstruction rules are found 
at rule 1200-3-9-.01(4) and apply to major stationary sources or 
modifications constructed in areas designated attainment as required 
under part C of title I of the CAA with respect to the NAAQS. TDEC's 
rule 1200-3-9-.01(5) includes permitting requirements for sources in 
and impacting nonattainment areas. Today, EPA is proposing to approve 
changes to Tennessee's rules at 1200-3-9-.01(4) and at 1200-3-9-.01(5) 
to update the State's existing NSR program to be consistent with 
federal NSR regulations, amended in the NSR PM2.5 Rule (at 
40 CFR 51.165 and 51.166).
    Tennessee's July 29, 2011, SIP revision adopts the following NSR 
PM2.5 Rule provisions into the Tennessee SIP at Chapter 
12000-03-09: (1) Requirement for NSR permits to address directly 
emitted PM2.5 and precursor pollutants; (2) significant 
emission rates for direct PM2.5 and precursor pollutants 
(SO2 and NOX); (3) PSD and NNSR requirements of 
states to address condensable PM in establishing enforceable emission 
limits for PM10 or PM2.5; (4) PM2.5 
emission offsets; and (5) optional interpollutant trading provision set 
forth at 40 CFR 51.165(a)(11).
    These amendments to the Tennessee rules became state-effective June 
27, 2011. Specifically, the rules included in the July 29, 2011, SIP 
revision establish that the State's existing NSR permitting program 
requirements for PSD and NNSR apply to the PM2.5 NAAQS and 
its precursors; revise the definitions of ``significant'' at 1200-03-
09-.01(4)(b)24(i) and (5)((b)1(x)(I) to establish significant emission 
rates for direct PM2.5 and PM2.5 precursors for 
major modifications at existing sources (as amended at 40 CFR 
51.165(a)(1)(x)(A) and 51.166(b)(23)(i)); revise the term ``regulated 
NSR pollutant'' at 1200-03-09-.01(4)(b)47 and (5)(b)1(xlix) to include 
PM2.5, recognize PM2.5 precursors and include the 
requirement that condensable emissions be accounted for in 
applicability determinations and in establishing emissions limitations 
for PM (as amended at 40 CFR 51.165(a)(1)(xxxvii(C) and 51.166(b)(49); 
and adopt NNSR emission offsets (a ratio of 1:1) for direct 
PM2.5 at 1200-03-09-.01(5)2(v) (as amended at 40 CFR 
51.165(a)(9)). Additionally, Tennessee's SIP revision includes the 
interpollutant trading policy at rule 1200-03-09-.01(5)(b)2(v)(XV) (as 
amended at 40 CFR 51.165(a)(11)). These changes result in the Tennessee 
rules being equivalent to federal changes promulgated in the NSR 
PM2.5 Rule.
    EPA's May 18, 2011, final rulemaking repealed the PM10 
``grandfathering'' provision, as noted in Section II.C above. 
Tennessee's July 29, 2011, SIP revision does not include the 
grandfathering provision at 40 CFR 52.21(i)(1)(ix) promulgated in the 
NSR PM2.5 Rule. Therefore, Tennessee's July 29, 2011, SIP 
submission is consistent with federal regulations.
    Further, Tennessee's July 29, 2011, SIP revision adopts the 
elective interpollutant trading provision policy at 1200-03-
09(5)(b)2.(v)(XV) set forth at 40 CFR 51.165(a)(11) for the purpose of 
offsets under the PM2.5 NNSR program. However, the July 29, 
2011, SIP revision does not adopt, into the Tennessee SIP, any trading 
ratios associated with the interpollutant trading policy established in 
the NSR PM2.5 Rule. As set forth in EPA's July 21, 2011, 
Interpollutant Trading Memorandum, the preferred precursor offset 
ratios included in the preamble to the NSR PM2.5 Rule are no 
longer considered presumptively approvable. Therefore any precursor 
offset ratio submitted, to EPA for approval, as part of the NSR SIP for 
a PM2.5 nonattainment area must be accompanied by a 
technical demonstration showing the suitability of the ratios for that 
particular nonattainment area. Consequently, if a major stationary 
source or source with a major modification in Tennessee requests to 
obtain offsets through interpollutant trading, the State of Tennessee 
would first be required, consistent with the requirements of section 
51.165(a)(11), to revise its SIP to adopt appropriate trading ratios. 
Tennessee would need to submit to EPA a technical demonstration showing 
how either the preferred ratios established in the NSR PM2.5 
Rule or the State's own ratios are appropriate for the state's 
particular PM2.5 nonattainment as well as a revision to the 
NSR program adopting the ratios into the SIP. EPA would then have to 
approve the demonstration and ratios into the Tennessee SIP prior to 
any major stationary source or major modification obtaining offsets 
through the interpollutant trading policy.
    EPA continues to support the basic policy that sources may offset 
increases in emissions of direct PM2.5 or of any 
PM2.5 precursor in a PM2.5 nonattainment area 
with actual emissions reductions in direct PM2.5 or 
PM2.5 precursor, respectively, in accordance with offset 
ratios as approved in the SIP for the applicable nonattainment area. 
Tennessee's adoption of the interpollutant trading policy without 
trading ratios does not in any way allow a major stationary source or 
major modification in the state to obtain offsets through 
interpollutant trading, nor does it affect the approvability of 
Tennessee's July 29, 2010, SIP revision.
    As mentioned above, Tennessee's July 29, 2011, SIP revision also 
adopts into the State's PSD regulations the requirement to address 
condensable PM in applicability determinations and in establishing 
enforceable emission limits in PSD and NNSR permits, as established in 
the NSR PM2.5 Rule. As discussed in Section II.C.2, under a 
separate action, EPA has proposed to correct the inadvertent inclusion 
of ``particulate matter emissions'' in the definition of ``regulated 
NSR pollutant'' as an indicator for which condensable emissions must be 
addressed. See 77 FR

[[Page 34306]]

75656 (March 16, 2012). Further, on May 1, 2012, the State of Tennessee 
provided a letter to EPA with clarification of the State's intent in 
light of EPA's March 12, 2012, proposed rulemaking. Specifically, in 
that letter, the State of Tennessee requested that EPA not approve the 
term ``particulate matter emissions'' (at rule 1200-03-
09-.01(4)(b)47(vi)) as part of the definition for ``regulated NSR 
pollutant'' regarding the inclusion of t condensable emissions in 
applicability determinations and in establishing emissions limitations 
for PM. Therefore given the State's request and EPA's intention to 
amend the definition of ``regulated NSR pollutant,'' EPA is not 
proposing action to approve the terminology ``particulate matter 
emissions'' into the Tennessee SIP (at 1200-03-09-.01(4)(b)47(vi)) for 
the condensable provision in the definition of ``regulated NSR 
pollutant.'' EPA is, however, proposing to approve into the Tennessee 
SIP at 1200-03-09-.01(4)(b)47(vi) the remaining condensable requirement 
at 40 CFR 51.166(b)(49)(vi), which requires that condensable emissions 
be accounted for in applicability determinations and in establishing 
emissions limitations for PM2.5 and PM10.
    In addition to the adoption of the NSR PM2.5 Rule 
mentioned above, TDEC's July 29, 2011, SIP revision makes an 
administrative change to Chapter 1200-03-09 for PSD and NNSR. On June 
13, 2007, EPA took final action to revise the 2002 NSR Reform Rules \5\ 
to remove from federal law all provisions pertaining to clean units and 
the pollution control projects exemption that were vacated by the 
United States Court of Appeals for the District of Columbia Rule. New 
York v. United States, 413 F.3d 3 (D.C. Cir. 2005). See 72 FR 32526. 
EPA's efforts to remove the vacated provisions included removing the 
following language from the hybrid test applicability provision at 40 
CFR 51.166(a)(7)(iv)(f), 51.165(f)(6) and 52.21(a)(2)(iv)(f): ``For 
example, if a project involves both an existing emissions unit and a 
Clean Unit, the projected increase is determined by summing the values 
determined using the method specified in paragraph (a)(7)(iv)(c) of 
this section for the existing unit and determined using the method 
specified in paragraph (a)(7)(iv)(e) of this section for the Clean 
Unit.''
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    \5\ On December 31, 2002 (67 FR 80186), EPA published final rule 
changes to 40 CFR parts 51 and 52 regarding the CAA's PSD and NNSR 
programs. On November 7, 2003 (68 FR 63021), EPA published a notice 
of final action on the reconsideration of the December 31, 2002, 
final rule changes. The December 31, 2002, and the November 7, 2003, 
final actions are collectively referred to as the ``2002 NSR Reform 
Rules.''
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    Tennessee's July 29, 2011, submission removes the above language 
from its hybrid test applicability provision at 1200-03-
09-.01(4)(c)4(vi) and 1200-03-09-.01(5)(b)2(xvii) (PSD and NNSR 
regulations respectively) to be consistent with federal language 
amended in the June 13, 2007, final rulemaking regarding the vacated 
portions of the 2002 NSR Reform Rule. EPA is proposing to approve the 
NSR PM2.5 requirements and administrative changes mentioned 
above into the Tennessee SIP because EPA has made the preliminary 
determination that this change is consistent with federal regulations 
and the CAA.

IV. Proposed Action

    EPA is proposing to approve Tennessee's July 29, 2011, SIP 
revision, which includes rules that modify Tennessee's PSD and NNSR 
programs to adopt federal regulations amended in the NSR 
PM2.5 Rule. EPA has made the preliminary determination that 
this SIP revision is approvable because it is in consistent with the 
CAA and EPA regulations regarding NSR permitting.

V. Statutory and Executive Order Reviews

    Under the CAA, the Administrator is required to approve a SIP 
submission that complies with the provisions of the Act and applicable 
federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in 
reviewing SIP submissions, EPA's role is to approve state choices, 
provided that they meet the criteria of the CAA. Accordingly, this 
proposed action merely approves state law as meeting federal 
requirements and does not impose additional requirements beyond those 
imposed by state law. For that reason, this proposed action:
     Is not a ``significant regulatory action'' subject to 
review by the Office of Management and Budget under Executive Order 
12866 (58 FR 51735, October 4, 1993);
     Does not impose an information collection burden under the 
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     Is certified as not having a significant economic impact 
on a substantial number of small entities under the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.);
     Does not contain any unfunded mandate or significantly or 
uniquely affect small governments, as described in the Unfunded 
Mandates Reform Act of 1995 (Pub. L. 104-4);
     Does not have Federalism implications as specified in 
Executive Order 13132 (64 FR 43255, August 10, 1999);
     Is not an economically significant regulatory action based 
on health or safety risks subject to Executive Order 13045 (62 FR 
19885, April 23, 1997);
     Is not a significant regulatory action subject to 
Executive Order 13211 (66 FR 28355, May 22, 2001);
     Is not subject to requirements of Section 12(d) of the 
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 
note) because application of those requirements would be inconsistent 
with the CAA; and
     Does not provide EPA with the discretionary authority to 
address, as appropriate, disproportionate human health or environmental 
effects, using practicable and legally permissible methods, under 
Executive Order 12898 (59 FR 7629, February 16, 1994).
    In addition, this proposed rule does not have tribal implications 
as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), 
because the SIP is not approved to apply in Indian country located in 
the State, and EPA notes that it will not impose substantial direct 
costs on tribal governments or preempt tribal law.

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Intergovernmental 
relations, Nitrogen oxides, Ozone, Particulate matter, Reporting and 
recordkeeping requirements.

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

    Dated: May 31, 2012.
A. Stanley Meiburg,
Acting Regional Administrator, Region 4.
[FR Doc. 2012-14106 Filed 6-8-12; 8:45 am]
BILLING CODE 6560-50-P
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