```

[Federal Register Volume 77, Number 109 (Wednesday, June 6, 2012)]
[Proposed Rules]
[Pages 33363-33372]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-13694]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R04-OAR-2011-0227; FRL-9681-7]

Approval and Promulgation of Implementation Plans; Kentucky; 
Approval of Revisions to the Jefferson County Portion of the Kentucky 
SIP; New Source Review; Prevention of Significant Deterioration

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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[[Page 33364]]

SUMMARY: EPA is proposing to approve multiple revisions to the 
Jefferson County portion of the Kentucky State Implementation Plan 
(SIP), submitted by the Commonwealth of Kentucky, through the Kentucky 
Division for Air Quality (KDAQ), to EPA in two submittals dated June 1, 
2009, and February 8, 2011. These proposed revisions were submitted by 
KDAQ on behalf of the Louisville Metro Air Pollution Control District 
(LMAPCD), (also referred to as Jefferson County) and modifies the 
LMAPCD New Source Review (NSR) Prevention of Significant Deterioration 
(PSD) permitting regulations. The proposed revisions incorporate by 
reference (IBR) federal NSR PSD requirements promulgated in the 
Greenhouse Gas (GHG) Tailoring Rule (hereafter referred to as the ``GHG 
Tailoring Rule''), requirements for the fine particulate matter (also 
known as PM2.5) national ambient air quality standards 
(NAAQS) as amended in EPA's 2008 NSR PM2.5 Implementation 
Rule (hereafter referred to as the ``NSR PM2.5 Rule''), the 
1997 8-Hour Ozone NAAQS Implementation Rule NSR Update Phase II 
(hereafter referred to as the ``Phase II Rule''), and the 2002 NSR 
Reform Rule, into the Jefferson County portion of the Kentucky SIP. EPA 
is proposing approval of Jefferson County's June 1, 2009, and February 
8, 2011, SIP revisions because the Agency has determined that these SIP 
revisions are in accordance with the Clean Air Act (CAA or Act) and EPA 
regulations regarding the PSD permitting program.

DATES: Comments must be received on or before July 6, 2012.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R04-
OAR-2011-0227 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-2011-0227, 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: 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-
2011-0227.'' 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 
Jefferson County portion of the Kentucky 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 the GHG 
Tailoring Rule, 2002 NSR Reform and NSR PM2.5 Rule, contact 
Yolanda Adams, Air Permits Section, at the same address above. Ms. 
Adams' telephone number is (404) 562-9214; email address: 
adams.yolanda@epa.gov. For information regarding the Phase II Rule and 
ozone NAAQS, contact Jane Spann, Regulatory Development Section, at the 
same address above. Ms. Spann's telephone number is (404) 562-9029; 
email address: spann.jane@epa.gov. For information regarding the 
PM2.5 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 actions are proposed in this notice?
    II. What is EPA's proposed action for GHG-emitting sources?
    III. What is EPA's proposed action for the NSR PM2.5 
Rule?
    IV. What is EPA's proposed action for the Phase II Rule?
    V. What are EPA's proposed actions for NSR Reform and Reasonable 
Possibility?
    VI. What is EPA's proposed action for the automatic rescission 
clause?
    VII. Proposed Actions
    VIII. Statutory and Executive Order Reviews

I. What actions are proposed in this notice?

    On June 1, 2009, and February 8, 2011, the Commonwealth of Kentucky 
through the KDAQ (and on behalf of LMAPCD) submitted two SIP revisions 
to EPA for approval into the Jefferson County portion of the Kentucky 
SIP to adopt federal NSR PSD permitting requirements. The SIP revisions 
consist of changes to the LMAPCD Air Quality Regulations, Regulation 2 
Permit Requirements: Regulation 2.05--Prevention of Significant 
Deterioration

[[Page 33365]]

of Air Quality and address several NSR PSD permitting requirements 
promulgated at 40 CFR 52.21. Specifically, the June 1, 2009, SIP 
revision: (1) Incorporates provisions for implementing the PSD program 
for the PM2.5 NAAQS as promulgated in the NSR 
PM2.5 Rule,\1\ 73 FR 28321 (May 16, 2008); (2) adopts PSD 
provisions related to the implementation of the 1997 8-hour ozone Phase 
II Rule including nitrogen oxides (NOX) as a precursor to 
ozone, 70 FR 71612 (November 29, 2005); and (3) adopts federal PSD 
regulations established in the 2002 NSR Reform Rules, 67 FR 80186 
(December 31, 2002) and the NSR Reasonable Possibility Rule, 72 FR 
72607 (December 21, 2007). These PSD permitting provisions became 
effective in Jefferson County on May 20, 2009. The February 8, 2011, 
SIP revision provides Jefferson County with the authority to regulate 
GHG under its PSD program and establishes appropriate emission 
thresholds for determining which new stationary sources and 
modification projects become subject to LMAPCD's PSD permitting 
requirements for their GHG emissions as promulgated in the GHG 
Tailoring Rule, 75 FR 31514 (June 3, 2010). These GHG PSD applicability 
provisions became effective in Jefferson County on November 17, 2010. 
In addition, the February 8, 2011, submittal adopts a provision that 
would automatically render Jefferson County's Regulation 2.05 or a 
portion thereof invalid in the wake of certain court decisions or other 
events (the ``automatic rescission clause''). Approval of Jefferson 
County's GHG permitting regulations also includes a proposal to 
simultaneously rescind the federal implementation plan (FIP) that EPA 
promulgated on January 14, 2011. See 76 FR 2581. For more information 
on the Jefferson County FIP see Section II of this rulemaking. Pursuant 
to section 110 of the CAA, EPA is proposing to approve these changes 
into the Jefferson County portion of the Kentucky SIP.
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    \1\ With respect to the NSR PM2.5 Rule, Phase II Rule 
and NSR Reform, Jefferson County's SIP revisions only address PSD 
requirements at Regulation 2.05. The nonattainment NSR (NNSR) 
provisions for Jefferson County (Regulation 2.04) for these 
provisions are still under development by LMAPCD.
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    In addition to incorporating the changes discussed above, Jefferson 
County's SIP revisions also include PSD permitting provisions that: (1) 
Exclude facilities that produce ethanol through a natural fermentation 
process from the definition of ``chemical process plants'' in the major 
NSR source permitting program as amended in the Ethanol Rule, 72 FR 
24060 (May 1, 2007); and (2) IBR changes pursuant to EPA's Fugitive 
Emissions Rule, 73 FR 77882 (December 19, 2008).\2\ In today's proposed 
rulemaking, EPA is not proposing to take action on LMAPCD's changes to 
its PSD regulations to adopt provisions promulgated in the Ethanol Rule 
nor is EPA proposing to take action on LMAPCD's changes to incorporate 
the provisions of the Fugitive Emission Rule.
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    \2\ On March 31, 2010, EPA stayed the Fugitive Emissions Rule 
(73 FR 77882) for 18 months to October 3, 2011, to allow the Agency 
time to propose, take comment and issue a final action regarding the 
inclusion of fugitive emissions in NSR applicability determinations. 
This stay was established as a result of EPA granting the Natural 
Resource Defense Council's petition for reconsideration on the 
original Fugitive Emissions Rule. See 73 FR 77882 (December 19, 
2008). On March 30, 2011 (76 FR 17548), EPA proposed an interim rule 
which superseded the March 31, 2010, stay and clarified and extended 
the stay of the Fugitive Emission Rule until EPA completes its 
reconsideration. The interim rule simply reverts the CFR text back 
to the language that existed prior to the Fugitive Emissions Rule 
changes in the December 19, 2008, rulemaking. EPA plans to issue a 
final rule affirming the interim rule as final. The final rule will 
remain in effect until EPA completes its reconsideration.
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    LMAPCD IBR the federal PSD permitting requirements found at 40 CFR 
52.21 to update its permitting program at Regulation 2.05. Jefferson 
County's practice for revising its PSD regulations is to IBR into its 
SIP the version of the Code of Federal Regulations (at 40 CFR 52.21) 
that is in effect as of a specified date. LMAPCD's Regulation 2.05 
contains the preconstruction review program that provides for the 
prevention of significant deterioration of ambient air quality as 
required under part C of title I of the CAA (the PSD program). 
Jefferson County's June 1, 2009, SIP revision, which provided version 9 
of LMAPCD's Regulation 2.05, IBR the federal PSD regulations as set 
forth at 40 CFR 52.21, and as amended as of July 1, 2008. Subsequently, 
the February 8, 2011, SIP revision, which provided version 10 of 
LMAPCD's Regulation 2.05, IBR federal PSD regulations as set forth at 
40 CFR 52.21, and as amended as of July 1, 2010, thereby superseding 
version 9 of Regulation 2.05. Throughout this rulemaking, EPA will 
refer to the June 1, 2009, and February 8, 2011, SIP revisions as the 
``Jefferson County's SIP revisions.''

II. What is EPA's proposed action for GHG-emitting sources?

    On February 8, 2011, KDAQ submitted a request to EPA to approve 
changes to the Jefferson County portion of the Kentucky SIP to 
incorporate federal requirements for NSR PSD permitting. These adopted 
rules became effective in Jefferson County on November 17, 2010. These 
amendments provide Jefferson County with the authority to regulate GHG 
under its PSD program and establish PSD applicability thresholds for 
GHG emissions in LMAPCD's PSD regulations at the same emissions 
thresholds and in the same timeframes as those specified by EPA in the 
GHG Tailoring Rule. By incorporating the GHG Tailoring Rule thresholds 
into the Jefferson County portion of the Kentucky SIP, KDAQ is ensuring 
that smaller GHG sources emitting less than these thresholds will not 
be subject to PSD permitting requirements for their GHG emissions. In 
today's action, pursuant to section 110 of the CAA, EPA is proposing to 
approve these changes into the Jefferson County portion of the Kentucky 
SIP.\3\ Approval of Jefferson County's GHG permitting regulations also 
includes a proposal to simultaneously rescind the FIP that EPA 
promulgated on January 14, 2011. See 76 FR 2581. More information 
regarding Jefferson County's FIP is summarized below. This section 
briefly summarizes EPA's GHG-related actions that provide the 
background for today's proposed action. More detailed discussion of the 
background is found in the preambles for those actions cited herein.
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    \3\ The GHG Tailoring Rule also applies to the title V program, 
which requires operating permits for existing sources. However, 
today's action does not affect LMAPCD's title V program.
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A. Background

    EPA has recently undertaken a series of actions pertaining to the 
regulation of GHGs that, although for the most part are distinct from 
one another, establish the overall framework for today's final action 
on the Jefferson County portion of the Kentucky SIP. Four of these 
actions include, as they are commonly called, the ``Endangerment 
Finding'' and ``Cause or Contribute Finding,'' \4\ which EPA issued in 
a single final action; the ``Johnson Memo Reconsideration;'' \5\ the 
``Light-Duty Vehicle Rule;'' \6\ and the ``Tailoring Rule.'' Taken 
together and in conjunction with the CAA, these actions established 
regulatory requirements for GHGs emitted from new motor vehicles and 
new motor vehicle engines;

[[Page 33366]]

determined that such regulations, when they took effect on January 2, 
2011, subjected GHGs emitted from stationary sources to PSD 
requirements; and limited the applicability of PSD requirements to GHG 
sources on a phased-in basis. EPA took this last action in the GHG 
Tailoring Rule, which, more specifically, established appropriate GHG 
emission thresholds for determining the applicability of PSD 
requirements to GHG-emitting sources. In the GHG Tailoring Rule, EPA 
tailored the applicability criteria that determine which GHG emission 
sources become subject to the PSD program of the CAA to relieve 
overwhelming permitting burdens that would, in the absence of the rule, 
fall on permitting authorities and sources. See 75 FR 31514, (June 3, 
2010). As EPA explained in the GHG Tailoring Rule, the threshold 
limitations are necessary because without them PSD would apply to all 
stationary sources that emit or have the potential to emit more than 
100 or 250 tons of GHG per year as of January 2, 2011. January 2, 2011, 
was the date when EPA's Light-Duty Vehicle Rule took effect, imposing 
control requirements for the first time on carbon dioxide and other 
GHGs. EPA asked permitting authorities to confirm that they would 
follow this implementation approach for their programs, and if they 
could not, to notify EPA so that the Agency could take appropriate 
follow-up action to narrow \7\ federal approval of their programs 
before GHGs became subject to PSD permitting on January 2, 2011. See 75 
FR at 31518.
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    \4\ ``Endangerment and Cause or Contribute Finding for 
Greenhouse Gases Under Section 202(a) of the Clean Air Act.'' 74 FR 
66496 (December 15, 2009).
    \5\ ``Interpretation of Regulations that Determine Pollutants 
Covered by Clean Air Act Permitting Programs.'' 75 FR 17004 (April 
2, 2010).
    \6\ ``Light-Duty Vehicle Greenhouse Gas Emission Standards and 
Corporate Average Fuel Economy Standards; Final Rule.'' 75 FR 25324 
(May 7, 2010).
    \7\ On December 30, 2010, (75 FR 82536) EPA promulgated the rule 
entitled ``Limitation of Approval of Prevention of Significant 
Deterioration Provisions Concerning Greenhouse Gas Emitting-Sources 
in State Implementation Plans; Final Rule; (the ``Narrowing Rule''). 
In the Narrowing Rule, EPA explained that by ``narrowing'' its prior 
approval of a SIP-approved PSD program, EPA could ensure that for 
federal purposes, GHG sources below the Tailoring Rule's thresholds 
would not be obligated to hold PSD permits until the state develops 
and submits a revised PSD program that EPA approves, either because 
the state adopts the Tailoring Rule thresholds or because the state 
demonstrates that it has adequate resources to administer a program 
covering GHGs at lower applicability thresholds. See 75 FR at 31518. 
However, as discussed later in this section, EPA issued a SIP call 
and FIP for the Jefferson County jurisdiction, and therefore did not 
narrow federal approval of LMAPCD's PSD program.
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    Recognizing that some states had SIP-approved PSD programs that did 
not apply PSD to GHGs, EPA issued a SIP call and, for some of these 
states, a FIP. On December 13, 2010, EPA finalized the rulemaking 
entitled ``Action to Ensure Authority to Issue Permits Under the 
Prevention of Significant Deterioration Program to Sources of 
Greenhouse Gas Emissions: Finding of Substantial Inadequacy and SIP 
Call,'' Final Rule (hereafter referred to as the ``SIP call'').  See 75 
FR 77698. The rule finalized findings of substantial inadequacy and SIP 
call for 15 state and local permitting authorities (including Jefferson 
County) where the existing SIP-approved PSD program did not provide 
authority to regulate GHGs. EPA explained that if a state identified in 
the SIP call failed to submit the required corrective SIP revision by 
the applicable deadline, EPA would promulgate a FIP under CAA section 
110(c)(1)(A) for that state to govern PSD permitting for GHGs. LMAPCD 
requested a SIP call deadline of January 1, 2011, to provide its 
corrective SIP with the understanding that EPA would put a FIP in place 
for Jefferson County soon after that date if a SIP revision was not 
provided. On January 14, 2011, EPA finalized a FIP for Jefferson County 
in the rulemaking ``Action to Ensure Authority to Issue Permits Under 
the Prevention of Significant Deterioration Program to Sources of 
Greenhouse Gas Emissions: Federal Implementation Plan for Jefferson 
County, KY,'' Final Rule (hereafter referred to as ``Jefferson County 
GHG FIP''). See 76 FR 2581. This rulemaking established a FIP for 
Jefferson County because LMAPCD, through KDAQ, was unable to submit, by 
its January 1, 2011, deadline, the corrective SIP revision to apply its 
PSD program to sources of GHG.\8\ The FIP was put in place to ensure 
that a permitting authority (i.e., EPA) would be available to issue 
preconstruction PSD permits to GHG-emitting sources in Jefferson 
County, if necessary.
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    \8\ EPA's action on January 14, 2011, to put a FIP in place for 
Jefferson County, Kentucky does not relate to the rest of Kentucky, 
as the Commonwealth, through KDAQ submitted a corrective SIP 
revision to address the remainder of Kentucky on December 13, 2010. 
KDAQ's SIP revision to adopt the GHG Tailoring Rule thresholds for 
all portions of Kentucky, except Jefferson County, was approved by 
EPA on December 29, 2010 (75 FR 81868).
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B. Jefferson County's Actions

    In response to EPA's request in the GHG Tailoring Rule that 
permitting authorities confirm whether their SIPs provide authority to 
implement the GHG Tailoring Rule thresholds, LMAPCD provided a letter 
(commonly referred to as the 60-day letter) to EPA on August 2, 2010, 
explaining that LMAPCD * * * ``[i]s authorized in its existing SIP to 
apply the meaning of the term ``subject to regulation'' established by 
EPA in the GHG Tailoring Rule in both the PSD and title V permitting 
programs.'' LMAPCD further explained that it would need to amend its 
SIP for Jefferson County to enable it to implement the GHG Tailoring 
Rule thresholds. See the docket for this proposed rulemaking for a copy 
of LMAPCD's 60-day letter.
    However, on October 4, 2010, in response to EPA's request in the 
September 2, 2010, proposed SIP call Rule, LMAPCD submitted a letter to 
EPA changing its view of whether Jefferson County's SIP-approved PSD 
regulations provided authority to regulate GHGs (referred to as the 30-
day letter). Jefferson County's 30-day letter acknowledged that while 
its existing SIP could be interpreted as providing the Agency authority 
to issue PSD permits to GHG-emitting sources, this interpretation would 
be a departure from its past practice of utilizing rulemaking 
procedures to update the SIP to incorporate revised EPA regulations.'' 
See Docket ID: EPA-R04-OAR-2011-0227 for LMAPCD's October 4, 2010, 30-
day letter. In a follow-up letter dated October 19, 2010, LMAPCD 
reiterated its position that it did not have the authority, under its 
existing SIP, to issue PSD permits to regulate GHG-emitting sources 
without going through rulemaking. See DOCKET ID: EPA-R04-OAR-2011-0227 
for LMAPCD's October 19, 2010, follow-up letter.
    With the final GHG SIP call (75 FR 77698) and the Jefferson County 
GHG FIP rulemaking (76 FR 2581), EPA took steps to ensure that LMAPCD, 
which did not interpret its exiting SIP-approved PSD program to provide 
authority to issue PSD permits to GHG-emitting sources, would not be at 
risk for permitting interruptions related to GHG by either having EPA 
issue permits for GHG through a FIP or be in a position for EPA to use 
delegation to allow LMAPCD to issue permits related to GHGs. More 
detail regarding EPA's analysis of the proposed changes to the 
Jefferson County portion of the Kentucky SIP (as provided in the 
February 8, 2011, revision) is provided below.

C. EPA's Analysis of Jefferson County's SIP Revision To Adopt the GHG 
Tailoring Rule

    On February 8, 2011, KDAQ, on behalf of LMAPCD, submitted to EPA a 
revision to the Jefferson County portion of Kentucky's SIP to IBR NSR 
PSD requirements for GHG. Specifically, the February 8, 2011, SIP 
revision includes changes to LMAPCD's Regulation 2.05--Prevention of 
Significant Deterioration of Air Quality (version 10) to provide 
authority to LMAPCD to regulate GHG under the PSD program; and 
establish appropriate PSD applicability

[[Page 33367]]

thresholds for GHGs, consistent with EPA's Tailoring Rule.
    LMAPCD is currently the SIP-approved permitting authority for the 
PSD program in Jefferson County, Kentucky. As mentioned above, LMAPCD 
does not interpret the current SIP-approved version of its PSD 
regulations at Regulation 2.05 (i.e., version 9), which IBR the federal 
PSD regulations, to be applicable to GHG. In correspondences dated 
October 4, 2010, and October 19, 2010, LMAPCD notified EPA that it did 
not have the authority to regulate GHG under the PSD program, and thus 
was in the process of revising its regulations (the subject of this 
proposed action) to provide LMAPCD with this authority. The February 8, 
2011 SIP revision IBR the federal PSD regulations at 40 CFR 52.21 as of 
July 2010 into Jefferson County Regulation 2.05 to include the relevant 
federal GHG Tailoring Rule revisions that provide LMAPCD with the 
authority to regulate GHG under the PSD program and establish the 
thresholds for GHG permitting applicability. The GHG Tailoring Rule 
changes that this proposed action would incorporate into the Jefferson 
County portion of Kentucky's SIP define the term ``subject to 
regulation'' for the PSD program and define ``greenhouse gases'' and 
``tons per year (tpy) carbon dioxide equivalent emissions'' 
(CO2e). Additionally, the changes specify the methodology 
for calculating an emissions increase for GHG, the applicable 
thresholds for GHG emissions subject to PSD, and the schedule for when 
the applicability thresholds take effect. See 75 FR at 31606-31607. EPA 
has preliminarily determined that these provisions, which provide 
LMAPCD with the authority to regulate GHG under the PSD program and 
establish the thresholds for GHG permitting applicability, are 
consistent with EPA's PSD regulations for GHG emitting sources as 
promulgated in the GHG Tailoring Rule and section 110 of the CAA. 
Therefore, EPA is proposing to approve the GHG PSD permitting revision 
into the Jefferson County portion of Kentucky's SIP. See GHG Tailoring 
Rule, 75 FR at 31561. In addition, EPA is proposing to rescind the FIP 
promulgated January 14, 2011, codified in 40 CFR 52.37(b)(7), that 
ensures the availability of a PSD-permitting authority for GHG-emitting 
sources in Jefferson County, Kentucky. This FIP will no longer be 
required once the proposed GHG PSD permitting revision has been 
approved into the Jefferson County portion of Kentucky's SIP.

III. What is EPA's proposed action for the NSR PM2.5 Rule?

A. Background on Fine Particulate Matter

    Today's proposed action to revise the Jefferson County portion of 
the Kentucky SIP also regards EPA's ``Implementation of the New Source 
Review (NSR) Program for Particulate Matter Less than 2.5 Micrometers 
(PM2.5),'' Final Rule (NSR PM2.5 Rule), 73 FR 
28321 (May 16, 2008). 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 revisions no later than May 16, 2011, to 
address these requirements for both the PSD and NNSR programs. 
Jefferson County's June 1, 2009, and February 8, 2011, SIP revisions 
both address the PSD 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.
    Fine particles in the atmosphere are made up of a complex mixture 
of components. Common constituents include sulfate (SO4); 
nitrate (NO3); 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., SO4 
and NO3) 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/air/urbanair/pm/index.html (See heading ``Health'').
    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. Implementation of NSR for the PM2.5 NAAQS

    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'' (the 
PM10 Surrogate Policy).
    EPA also issued a guidance document entitled ``Implementation of 
New Source Review Requirements in PM2.5 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 Nonattainment NSR Guidance recommended that until EPA 
promulgated the PM2.5 major NSR

[[Page 33368]]

regulations, ``[s]tates should use a PM10 nonattainment 
major NSR program as a surrogate to address the requirements of 
nonattainment major NSR for the PM2.5 NAAQS.''
    On May 16, 2008, EPA finalized a rule to implement the 1997 
PM2.5 NAAQS, including changes to the NSR program. See 73 FR 
28321. The 2008 NSR PM2.5 Rule revised the NSR program 
requirements to establish the framework for implementing 
preconstruction permit review for the PM2.5 NAAQS in both 
attainment and nonattainment areas. The 2008 NSR PM2.5 Rule 
requires 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.\9\
---------------------------------------------------------------------------

    \9\ 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) (available at http://www.epa.gov/region07/air/title5/petitiondb/petitions/lg_e_2nddecision2006.pdf).
---------------------------------------------------------------------------

    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 had been largely resolved to a 
degree sufficient for sources and permitting authorities to conduct 
meaningful permit-related PM2.5 analyses. On May 18, 2011, 
EPA took final action to repeal the PM2.5 grandfathering 
provision at 40 CFR 52.21(i)(1)(xi). See 76 FR 28646. 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) \10\ 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 the February 8, 2011, SIP revision, 
LMAPCD elected to IBR the grandfathering provision at 40 CFR 
52.21(i)(1)(xi) in its PSD regulations at Regulation 2.05. However, 
since the rule is repealed, EPA is not taking action to approve this 
provision into the Jefferson County portion of the Kentucky SIP.
---------------------------------------------------------------------------

    \10\ 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 73 FR 28321.
---------------------------------------------------------------------------

    The NSR PM2.5 Rule also 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 NOX); (3) establish PM2.5 
emission offsets; and (4) 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. In 
addition, the NNSR PM2.5 Rule gives states the option of 
allowing interpollutant trading for the purpose of precursor offsets 
under the PM2.5 NNSR program.\11\ Jefferson County's June 1, 
2009, and February 8, 2011, SIP revisions address only the PSD 
requirements related to EPA's May 16, 2008, NSR PM2.5 Rule.
---------------------------------------------------------------------------

    \11\ On July 21, 2011, as a result of reconsidering the 
interpollutant (IPT) policy, EPA issued a memorandum indicating that 
the existing preferred precursor offset ratios associated with the 
IPT policy and promulgated in the NSR PM2.5 Rule were no 
longer considered approvable. The memorandum stated that any 
PM2.5 precursor offset ratio submitted as part of the NSR 
SIP for PM2.5 nonattainment areas would need to be 
accompanied by a technical demonstration exhibiting how the ratios 
are suitable for that particular nonattainment area. See Memorandum 
from Gina McCarthy to Regional Air Division Directors, ``Revised 
Policy to Address Reconsideration of Interpollutant Trading 
Provisions for Fine Particles (PM2.5)'' (July 21, 2011) 
(available at http://www.epa.gov/nsr/documents/20110721PM25InterpollutantTradingPolicy.pdf.
---------------------------------------------------------------------------

    In the NSR PM2.5 Rule, EPA also 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).\12\ Jefferson County's February 11, 2011, SIP 
revision IBR EPA's definition for regulated NSR pollutant for 
condensables (at 40 CFR 52.21(b)(50)(vi)), including the term 
``particulate matter emissions'', as promulgated in the NSR 
PM2.5 Rule. EPA's review of Jefferson County's February 11, 
2011, SIP revision with regards to the NSR PM2.5 Rule 
condensable provision is provided below in Section III.
---------------------------------------------------------------------------

    \12\ 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.
---------------------------------------------------------------------------

C. EPA's Analysis of Jefferson County's SIP Revision To Adopt the NSR 
PM2.5 PSD Permitting Requirements

    Jefferson County's Regulation 2.05--Prevention of Significant 
Deterioration of Air Quality IBR the provisions at 40 CFR 52.21, as 
amended in the NSR PM2.5 Rule for PSD. Specifically, 
Jefferson County's June 1, 2009, and February 8, 2011, proposed SIP 
revisions IBR the following NSR PM2.5 provisions for PSD: 
(1) Requirement for NSR permits to address directly emitted 
PM2.5 and precursor pollutants; (2) significant emission 
rates for direct

[[Page 33369]]

PM2.5 and precursor pollutants (SO2 and 
NOX); (3) PSD and NNSR requirement of states to address 
condensable PM in establishing enforceable emission limits for 
PM10 or PM2.5; and (4) PM2.5 emission 
offsets Regarding the PM10 ``grandfathering'' provision, 
Jefferson County's SIP revisions include the provision at 40 CFR 
52.21(i)(1)(ix) promulgated in the NSR PM2.5 Rule. As 
mentioned in Section III.B, EPA took final action to repeal the 
PM10 grandfathering provision on May 18, 2011. See 76 FR 
28646. Therefore, EPA is not taking action to approve this provision 
into the Jefferson County portion of the Kentucky SIP. Jefferson County 
will need to update its PSD provisions to reflect the repeal of the 
PM10 grandfathering provision in federal regulations at 40 
CFR 52.21. At this time Jefferson County's PSD regulations are 
approvable because they are at least as stringent as the current 
federal regulations, and are consistent with section 110 of the CAA.
    Jefferson County's February 11, 2011 SIP revision also IBR, into 
the Jefferson County portion of the Kentucky SIP, PSD regulations 
regarding 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 above in Section III.B, 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 
75656 (March 16, 2012). Further, on May 14, 2012, the State of 
Kentucky, on behalf of LMAPCD, provided a letter to EPA with 
clarification of Jefferson County's intent in light of EPA's March 12, 
2012, proposed rulemaking. Specifically, in the letter, the State of 
Kentucky requested that EPA not approve (into the Jefferson County 
portion of the SIP) the term ``particulate matter emissions'' (at 
Regulation 2.05) as part of the definition for ``regulated NSR 
pollutant'' that condensable emissions be accounted for in 
applicability determinations and in establishing emissions limitations 
for PM. Therefore given the state's and LMAPCD'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 Jefferson County portion of the Kentucky SIP (at 
Regulation 2.05) for the condensable provision at the definition of 
``regulated NSR pollutant.'' EPA is, however, proposing to approve into 
the SIP at Regulation 2.05 the remaining condensable requirement at 40 
CFR 51.166(b)(49)(vi) that condensable emissions be accounted for in 
applicability determinations and in establishing emissions limitations 
for PM2.5 and PM10. EPA has preliminarily 
determined that Jefferson County's June 1, 2009, and February 8, 2011, 
SIP revisions are consistent with the NSR PM2.5 Rule for PSD 
and with section 110 of the CAA. See NSR PM2.5 Rule, 75 FR 
31514.

IV. What is EPA's proposed action for the Phase II Rule?

A. Background

    Today's proposed action on Jefferson County's portion of the 
Kentucky SIP also relates to EPA's November 29, 2005, Phase II Rule. 
See 70 FR 71612. In the Phase II Rule, EPA made a number of changes to 
the NSR rules including: recognizing NOX as an ozone 
precursor for PSD purposes; changing the NNSR rules that establish 
major stationary thresholds (marginal, moderate, serious, severe, and 
extreme nonattainment area classifications) and significant emission 
rates for the 8-hour ozone, PM10 and carbon monoxide NAAQS; 
revising the criteria for crediting emission reductions credits from 
operation shutdowns and curtailments as offsets, and changing offset 
ratios for marginal, moderate, serious, severe, and extreme ozone 
nonattainment areas. The following provides the background for the 
Phase II Rule requirements for NOX as an ozone precursor.
    On July 18, 1997, EPA promulgated a revised 8-hour ozone NAAQS of 
0.08 parts per million--also referred to as the 1997 8-hour ozone 
NAAQS. On April 30, 2004, EPA designated areas as attainment, 
nonattainment and unclassifiable for the 1997 8-hour ozone NAAQS. In 
addition, as part of the framework to implement the 1997 8-hour ozone 
NAAQS, EPA promulgated an implementation rule in two phases (Phase I 
and II). The Phase I Rule (effective on June 15, 2004) provided the 
implementation requirements for designating areas under subpart 1 and 
subpart 2 of the CAA. See 69 FR 23951 (April 30, 2004).
    On November 29, 2005, EPA promulgated the second phase for 
implementation provisions related to the 1997 8-hour ozone NAAQS--also 
known as the Phase II Rule. See 70 FR 71612. The Phase II Rule 
addressed control and planning requirements as they applied to areas 
designated nonattainment for the 1997 8-hour ozone NAAQS, such as 
reasonably available control technology, reasonably available control 
measures, reasonable further progress, modeling and attainment 
demonstrations, NSR, and the impact to reformulated gas for the 1997 8-
hour ozone NAAQS transition. The Phase II Rule NSR requirements 
include, among other changes, a provision stating that NOX 
is an ozone precursor. See 70 FR at 71679. In the Phase II Rule, EPA 
stated as follows:

    The EPA has recognized NOX as an ozone precursor in 
several national rules because of its contribution to ozone 
transport and the ozone nonattainment problem. The EPA's recognition 
of NOX as an ozone precursor is supported by scientific 
studies, which have long recognized the role of NOX in 
ozone formation and transport. Such formation and transport is not 
limited to nonattainment areas. Therefore, we believe NOX 
should be treated consistently as an ozone precursor in both our PSD 
and nonattainment NSR regulations. For these reasons, we have 
promulgated final regulations providing that NOX is an 
ozone precursor in attainment areas.

    The Phase II Rule made changes to federal regulations 40 CFR 
51.165, 51.166 and 52.21 (which governs the NNSR and PSD permitting 
programs respectively). Pursuant to these requirements, states were 
required to submit SIP revisions adopting the federal requirements of 
the Phase II Rule (at 40 CFR 51.165, 51.166 and 52.21) into their SIP 
no later than June 15, 2007. Jefferson County's June 1, 2009, and 
February 8, 2011, SIP revisions both address the federal PSD-only 
provisions requirements promulgated in the Phase II rule recognizing 
NOX as an ozone precursor (at 40 CFR 52.21).\13\
---------------------------------------------------------------------------

    \13\ Jefferson County's SIP submittals proposed for approval in 
this rulemaking do not include NNSR provisions for the Phase II 
Rule. These permitting requirements (at Regulation 2.04) are still 
under development by LMAPCD.
---------------------------------------------------------------------------

B. EPA's Analysis of Jefferson County's SIP Revisions To Adopt the 
Phase II Rule

    Jefferson County's June 1, 2009, SIP revision updated LMAPCD's PSD 
program to include NOX as an ozone precursor for PSD 
permitting, consistent with changes to the federal regulations set 
forth in the Phase II Rule at 40 CFR 52.21. Subsequently, on February 
8, 2011, KDAQ, submitted a SIP revision which included the June 1, 
2009, changes in addition to other federal PSD permitting updates to 
the Jefferson County portion of the Kentucky SIP. Jefferson County's 
SIP revisions IBR the federal PSD regulations (at 40 CFR 52.21) to 
include the NOX as a precursor PSD-only permitting 
provisions

[[Page 33370]]

promulgated in the Phase II Rule into the Jefferson County portion of 
the Kentucky SIP at Regulation 2.05--Prevention of Significant 
Deterioration of Air Quality (version 10) as of July 1, 2010. EPA has 
preliminarily determined that Jefferson County's SIP revisions are 
consistent with the PSD Phase II Rule permitting requirements and 
section 110 of the CAA.

V. What are EPA's Proposed Actions for NSR Reform and Reasonable 
Possibility?

A. Background

    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.'' 
The 2002 NSR Reform Rules are part of EPA's implementation of parts C 
and D of title I of the CAA, 42 U.S.C. 7470-7515. Part C of title I of 
the CAA, 42 U.S.C. 7470-7492, consists of the PSD program and applies 
to attainment and unclassifiable areas. Part D of title I of the CAA, 
42 U.S.C. 7501-7515, includes the NNSR program and applies in 
nonattainment areas. Collectively, the PSD and NNSR programs are 
referred to as the ``New Source Review'' or NSR programs.
    The 2002 NSR Reform Rules made changes to five areas of the NSR 
programs. In summary, the 2002 NSR Reform Rules: (1) Provide a new 
method for determining baseline actual emissions; (2) adopt an actual-
to-projected-actual methodology for determining whether a major 
modification has occurred; (3) allow major stationary sources to comply 
with plant-wide applicability limits (PALs) to avoid having a 
significant emissions increase that triggers the requirements of the 
major NSR program; (4) provide a new applicability provision for 
emissions units that are designated clean units; and (5) exclude 
pollution control projects (PCPs) from the definition of ``physical 
change or change in the method of operation.'' On November 7, 2003 (68 
FR 63021), EPA published a notice of final action on its 
reconsideration of the 2002 NSR Reform Rules, which added a definition 
for ``replacement unit'' and clarified an issue regarding PALs. For 
additional information on the 2002 NSR Reform Rules, see 67 FR 80186 
(December 31, 2002) and http://www.epa.gov/nsr.
    After the 2002 NSR Reform Rules were finalized and effective (March 
3, 2003), industry, state, and environmental petitioners challenged 
numerous aspects of the 2002 NSR Reform Rules, along with portions of 
EPA's 1980 NSR Rules, 45 FR 52676 (August 7, 1980). On June 24, 2005, 
the United States Court of Appeals for the District of Columbia (D.C. 
Circuit Court) issued a decision on the challenges to the 2002 NSR 
Reform Rules. New York v. U.S. EPA, 413 F.3d 3 (D.C. Cir. 2005). In 
summary, the D.C. Circuit Court vacated portions of the rules 
pertaining to clean units and PCPs, remanded a portion of the rules 
regarding recordkeeping and the term ``reasonable possibility'' found 
in 40 CFR 52.21(r)(6) and 40 CFR 51.165(a)(6) and 51.166(r)(6), and 
either upheld or did not comment on the other provisions included as 
part of the 2002 NSR Reform Rules. On June 13, 2007 (72 FR 32526), EPA 
took final action to revise the 2002 NSR Reform Rules to remove from 
federal law all provisions pertaining to clean units and the PCPs 
exemption that were vacated by the D.C. Circuit Court.
    The 2002 NSR Reform Rules required that state agencies adopt and 
submit revisions to their SIP permitting programs implementing the 
minimum program elements of the 2002 NSR Reform Rules no later than 
January 2, 2006. State agencies may meet the requirements of 40 CFR 51 
and the 2002 NSR Reform Rules with different but equivalent 
regulations.
    With regard to the remanded portions of the 2002 NSR Reform Rules 
related to recordkeeping, the U.S. Court of Appeals remanded to EPA 
either to provide an acceptable explanation for its ``reasonable 
possibility'' standard or devise an appropriate alternative. To satisfy 
the courts, on December 21, 2007, EPA took final action to clarify that 
a ``reasonable possibility'' applies where source emissions equal or 
exceed 50 percent of the CAA NSR significance levels for any pollutant. 
See ``Prevention of Significant Deterioration and Nonattainment New 
Source Review: Reasonable Possibility in Recordkeeping:'' Final Rule, 
72 FR 72607 (December 21, 2007) (the Reasonable Possibility Rule). The 
``reasonable possibility'' provision identifies for sources and 
reviewing authorities the circumstances under which a major stationary 
source undergoing a modification that does not trigger major NSR must 
keep records. EPA's December 21, 2007, final rule on the recordkeeping 
and reporting provisions also explains state obligations with regard to 
the reasonable possibility related rule changes.\14\ See 72 FR at 
72613-72614. The final rule gave states and local permitting 
authorities three years from publication to submit revisions to 
incorporate the reasonable possibility provisions or to submit notice 
to EPA that their regulations fulfill these requirements.
---------------------------------------------------------------------------

    \14\ On January 14, 2009, EPA denied a petition by the State of 
New Jersey (submitted February 8, 2008) for reconsideration and stay 
of the December 21, 2007, final rule for ``reasonable possibility.'' 
However, on March 11, 2009, New Jersey reiterated its request for 
reconsideration, which EPA granted on April 24, 2009. EPA has not 
taken action on the reconsideration therefore, the current 
recordkeeping rules established in the December 21, 2007, final rule 
are approvable.
---------------------------------------------------------------------------

    On June 1, 2009, and February 8, 2011, KDAQ, on behalf of LMAPCD, 
submitted to EPA revisions to the Jefferson County portion of 
Kentucky's SIP to IBR the federal PSD permitting regulations 
promulgated in the 2002 NSR Reform Rule and the Reasonable Possibility 
Rule. EPA is now proposing to approve these SIP revisions consistent 
with section 110 of the CAA.

B. EPA's Analysis of Jefferson County's SIP Revision To Adopt the NSR 
Reform and Reasonable Possibility

    As mentioned in Section I, LMAPCD's PSD Program at Regulation 
2.05--Prevention of Significant Deterioration for Air Quality 
establishes the preconstruction review program as required under part C 
of title I of the CAA. The changes to LMAPCD's PSD rules, which EPA is 
now proposing to approve into the Jefferson County portion of the 
Kentucky SIP, were established to update the existing PSD Program to 
meet the requirements of the 2002 NSR Reform Rules. Jefferson County's 
SIP revisions IBR the 2002 NSR Reform PSD changes regarding baseline 
actual emissions, actual-to-projected-actual applicability tests, and 
PAL provisions. Jefferson County's June 1, 2009, and February 8, 2011, 
SIP revisions both address the federal PSD requirements promulgated in 
the 2002 NSR Reform rules. The proposed revisions explicitly exclude 
the PCPs and clean unit portions of the 2002 NSR Reform Rules that were 
vacated as part of the DC Circuit Court's June 2005 decision.
    With regard to the remanded portions of the 2002 NSR Reform Rules 
related to recordkeeping and EPA's December 21, 2007, clarifications of 
the term ``reasonable possibility'' (72 FR 72607), Jefferson County's 
SIP revisions IBR the federal revised ``reasonable possibility'' 
provisions at 40 CFR 52.21(r)(6). Thus, LMAPCD's recordkeeping and 
reporting provisions are the same as the federal

[[Page 33371]]

requirements promulgated in EPA's December 21, 2007, final action.
    In addition to incorporating the federal PSD regulations, Jefferson 
County's February 8, 2011, SIP revision includes a technical support 
document (TSD), which assesses the impact of adopting the 2002 NSR 
Reform provisions into Jefferson County's PSD permitting program and 
the air quality impacts. As mentioned above, LMAPCD has a SIP-approved 
PSD program. However, due to the limited number of sources in Jefferson 
County, the permitting program does not assess many major PSD permits. 
In fact, in nearly ten years, LMAPCD has only analyzed two projects 
under PSD. Most sources in Jefferson County are permitted through 
LMAPCD's minor source program, which allows sources to take emission 
limits to avoid PSD permitting. Additionally, regarding criteria 
pollutants, the TSD explains that sources typically subject to PSD 
permitting (i.e. point sources) have not been the primary driver for 
past or current nonattainment NAAQS designations in Jefferson County. 
See the TSD in the Docket ID No. EPA-R04-OAR-2011-0227.
    LMAPCD's TSD concluded that adoption of the 2002 NSR Reform 
improvements would not impede the LMAPCD's ability to comply with the 
NAAQS or any reasonable progress towards continued maintenance. After 
evaluating Jefferson County's SIP revision, and the TSD provided with 
the February 8, 2011, SIP revision, EPA has determined that the 
proposed SIP revisions to adopt NSR Reform and reasonable possibility 
provisions are consistent with the federal program requirements for the 
preparation, adoption and submittal of implementation plans for the PSD 
of air quality, set forth at 40 CFR 52.21, and the 2002 NSR Reform 
Rule.

VI. What is EPA's proposed action for the automatic rescission clause?

A. Jefferson County's Proposed Automatic Rescission Clause

    Jefferson County's February 8, 2011, proposed SIP revision adds a 
new section to Regulation 2.05, Section 2--Effect of Stay, Vacatur, or 
Withdrawal, also known as an automatic rescission clause. This clause 
provides that in the event that EPA or a federal court stays, vacates, 
or withdraws any section or subsection of 40 CFR 52.21, that section or 
subsection shall automatically be deemed stayed, vacated or withdrawn 
from Jefferson County's SIP-approved PSD program at Regulation 2.05. 
The period of delay resulting from a stay would begin and end for 
purposes of Jefferson County's SIP on the date specified by EPA in a 
Federal Register notice announcing the stay. Likewise, any provision 
that is vacated or withdrawn shall be null and void for purposes of 
Jefferson County's SIP as of the date specified in the notice of 
vacatur or withdrawal published by EPA in a Federal Register notice.

B. EPA's analysis of the approvability of Jefferson County's automatic 
rescission clause

    EPA has preliminarily concluded that Jefferson County's automatic 
rescission clause is approvable. In assessing the approvability of this 
provision, EPA considered two key factors: (1) Whether the public will 
be given reasonable notice of any change to the SIP that occurs as a 
result of the automatic rescission clause, and (2) whether any future 
change to the SIP that occurs as a result of the automatic rescission 
clause would be consistent with EPA's interpretation of the effect of 
the triggering EPA or federal court action (e.g., the extent of an 
administrative or judicial stay). These criteria are derived from the 
SIP revision procedures set forth in the CAA and federal regulations.
    Regarding public notice, CAA section 110(l) provides that any 
revision to a SIP submitted by a state to EPA for approval ``shall be 
adopted by such State after reasonable notice and public hearing.'' In 
accordance with CAA section 110(l), the LMAPCD followed applicable 
notice-and-comment procedures prior to adopting the automatic 
rescission clause. Thus, the public is on notice that the Jefferson 
County portion of the Kentucky SIP will automatically update to reflect 
any EPA or federal action that stays, withdraws, or vacates any portion 
of 40 CFR 52.21. In addition, the automatic rescission clause provides 
that no change to the SIP will occur until EPA publishes a Federal 
Register notice announcing that a portion of 40 CFR 52.21 has been 
stayed, vacated, or withdrawn. Thus, the timing and extent of any 
future SIP change resulting from the automatic rescission clause will 
be clear to both the regulated community and the general public.
    EPA's consideration of whether any SIP change resulting from the 
proposed automatic rescission clause would be consistent with EPA's 
interpretation of the effect of the triggering action on federal 
regulations is based on 40 CFR 51.105. Under 40 CFR 51.105, 
``[r]evisions of a plan, or any portion thereof, will not be considered 
part of an applicable plan until such revisions have been approved by 
the Administrator in accordance with this part.'' See 40 CFR 51.105. 
While EPA is approving the automatic updating of the Jefferson County 
portion of the Kentucky SIP to reflect the stay, withdrawal or vacatur 
of any section or subsection of 40 CFR 52.21, there could be varying 
interpretations of the timing and extent of changes to 40 CFR 52.21 
resulting from a given EPA or federal court action. By tying the 
automatic updating of the SIP to EPA's publication of a Federal 
Register notice announcing the change to 40 CFR 52.21, the proposed 
automatic rescission clause ensures that any change to the SIP will be 
consistent with EPA's interpretation of the triggering action.

VII. Proposed Actions

    EPA is proposing to approve Jefferson County's June 1, 2009, and 
February 8, 2011, SIP revisions which adopt federal requirements for 
NSR PSD permitting. Jefferson County's SIP revisions consist of changes 
to the LMAPCD Air Quality Regulation 2.05--Prevention of Significant 
Deterioration of Air Quality and address several NSR PSD permitting 
requirements promulgated at 40 CFR 52.21. Specifically, Jefferson 
County's June 1, 2009, SIP revision adopts federal regulations relating 
to PSD requirements for the NSR PM2.5 Rule, the Phase II 
Rule, the 2002 NSR Reform Rule, and the NSR Reasonable Possibility Rule 
into the Jefferson County portion of the Kentucky SIP. Jefferson 
County's February 8, 2011, proposed SIP revision includes all of the 
aforementioned updates to LMAPCD's PSD regulations but also provides 
Jefferson County with the authority to regulate GHGs under its PSD 
program, establishes appropriate emissions thresholds for determining 
PSD applicability with respect to new and modified GHG-emitting sources 
(in accordance with EPA's Tailoring Rule), and incorporates an 
automatic rescission clause for 40 CFR 52.21 regulations. EPA has 
preliminarily determined that these SIP revisions are approvable 
because they are in accordance with the CAA and EPA regulations 
regarding PSD permitting. In addition, EPA is proposing to rescind the 
FIP promulgated on January 14, 2011 at 40 CFR 52.37(b)(7) once the 
proposed GHG PSD permitting revision has been approved into the 
Jefferson County portion of the Kentucky SIP.

VIII. 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.

[[Page 33372]]

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, these proposed actions merely approve 
state law as meeting federal requirements and do not impose additional 
requirements beyond those imposed by state law. For that reason, these 
proposed actions:
     Are 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);
     Do not impose an information collection burden under the 
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     Are 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.);
     Do 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);
     Do not have Federalism implications as specified in 
Executive Order 13132 (64 FR 43255, August 10, 1999);
     Are not an economically significant regulatory action 
based on health or safety risks subject to Executive Order 13045 (62 FR 
19885, April 23, 1997);
     Are not a significant regulatory action subject to 
Executive Order 13211 (66 FR 28355, May 22, 2001);
     Are 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
     Do 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 Commonwealth, and 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, Greenhouse Gas, 
Intergovernmental relations, Nitrogen dioxide, Ozone, Particulate 
matter, Reporting and recordkeeping requirements, Sulfur oxides, 
Volatile organic compounds.

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

    Dated: May 24, 2012.
A. Stanley Meiburg,
Acting Regional Administrator, Region 4.
[FR Doc. 2012-13694 Filed 6-5-12; 8:45 am]
BILLING CODE 6560-50-P
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