REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT 

Administrative Regulation #: 401 KAR 51 :017 

Contact person: Laura Lund, Environmental Technologist II 

(1) Provide a brief summary of: 

What this administrative regulation does: This administrative regulation 

provides for the prevention of significant deterioration (PSD) of ambient air 

quality, and applies to major stationary sources and major modifications 

constructing in areas designated as either attainment or unclassified. 

The necessity of this administrative regulation: This administrative 

regulation is necessary in order to continue to receive full delegation of 

authority for the federal PSD program in Kentucky. 

How this administrative regulation conforms to the content of the 

authorizing statutes: KRS 224.10-100 authorizes the cabinet to 

promulgate administrative regulations for the prevention, abatement, and 

control of air pollution. KRS 224.10-1 OO(26) mandates the preservation of 

clean air resources while ensuring economic growth. This regulation 

conforms to the statutes because it is no more stringent than the federal 

mandate. 

How this administrative regulation currently assists or will assist in 

the effective administration of the statutes: This administrative 

regulation is no more stringent than the federal mandate, codified in 40 

C.F.R. 51.166. 

(2) If this is an amendment to an existing administrative regulation, provide a 

brief summary of: 

How the amendment will change this existing administrative 

regulation: This amendment revises the list of exempted major stationary 

sources codified in 40 C.F.R Part 51, and the list of major sources codified 

in 40 C.F.R. Part 70, as they relate to PSD, NSR, and Title V applicability. 

The amendment removes the existing standards and requirements for 

clean units (CU) and pollution control projects (PCP) that have been 

vacated at the federal level in a D.C. Court of Appeals decision. This 

amendment requires major sources emitting more than 100 tons per year 

of nitrogen oxides (NOx) to conduct an ambient air quality analysis for 

ozone. Amendments in formatting and grammar were also necessary in 

order to comply with KRS Chapter 13A. 

The necessity of the amendment to this administrative regulation: 

These regulatory revisions are necessary in order to implement changes 

in the KY State Implementation Plane (SIP) in response to changes in the 

federal rules and to provide the applicable sources with the appropriate 

regulatory mechanism to submit an ozone air quality analysis. 

How the amendment conforms to the content of the authorizing 

statutes: Kentucky's federally-approved PSD SIP provides the permitting 

and enforcement authority delegated from the U.S. EPA to the 
Commonwealth. 

(d) How the amendment will assist in the effective administration of 

statutes: This administrative regulation amendment is modeled after the 

federal regulations. 

List the type and number of individuals, businesses, organizations, or state 

and local governments affected by this administrative regulation. The 

amendment revises the applicability of major sources by specifically excluding 

"chemical process plants1' that produce ethanol through a natural fermentation 

process. In addition, sources meeting standards and requirements for CU and 

PCP, and sources emitting more than 100 tons per year of NOx, are affected by 

this administrative regulation. 

Provide an assessment of how the entities identified in question (3) will be 

impacted by either the implementation of this administrative regulation, if 

new, or by the change if it is an amendment: 

List the actions that each of the regulated entities identified in 

question (3) will have to take to comply with this administrative 

regulation or amendment: Regulated entities shall continue to comply 

with this administrative regulation. This regulation includes an 

amendment that affects existing or proposed facilities that produce ethanol 

through a natural fermentation process as it specifically excludes them, 

under the component term "chemical process plants," from having to 

comply with the PSDINSR requirements. Sources will no longer be 

required to meet standards and requirements for CU and PCP. In 

addition, major sources emitting more than 100 tons per year of NOx will 

be required to conduct an ambient air quality analysis for ozone. 

In complying with this administrative regulation or amendment, how 

much will it cost each of the entities identified in question (3): There 

are no additional costs involved in compliance with this regulation. 

As a result of compliance, what benefits will accrue to the entities 

identified in question (3): Ethanol facilities, as defined in C.F.R. 51.166 

and this administrative regulation, are no longer included under the 100 

tons per year PTE limit for major source categories under the PSDINSR 

rules. As a result of not having to apply additional emission controls, 

growth of the ethanol industry will increase. 

Provide an estimate of how much it will cost the administrative body to 

implement this administrative regulation: 

(a) Initially: The Cabinet will not incur any additional costs for the 

implementation of this regulation. 

(b) On a continuing basis: There will not be any additional continuing costs 

for the implementation of this regulation. 

What is the source of the funding to be used for the implementation and 

enforcement of this administrative regulation: The Cabinet's current 
operating budget will be used for the implementation and enforcement of this 

regulation. 

(7) Provide an assessment of whether an increase in fees or funding will be 

necessary to implement this administrative regulation, if new, or by the 

change if it is an amendment. No increase in fees or funding is necessary to 

implement this regulation. 

(8) State whether or not this administrative regulation established any fees or 

directly or indirectly increased any fees. This regulation does not establish, 

nor does it directly or indirectly increase any fees. 

(9) TIERING: Is tiering applied? Yes. The applicability and compliance 

requirements that are tiered in this administrative regulation are modeled after 

the federal PSD and NSR rules. 
FEDERAL MANDATE ANALYSIS COMPARISON 

1. Federal statute or regulation constituting the federal mandate. 42 U.S.C. 7401 - 

7671q provides the statutory mandate codified in 40 C.F.R. Part 51.166, as 

amended in 72 Fed. Reg. 24077, May 1,2007, and in 72 Fed. Reg. 32528, June 13, 

2007. 

2. State compliance standards. The state compliance standards are found in KRS 

224.1 0-1 OO(5). 

3. Minimum or uniform standards contained in the federal mandate. The federal 

PSD mandate requires sources described in Section 1 of this administrative 

regulation to demonstrate that any construction or modification will not cause 

emissions to increase by specific incremental amounts; that the source's emissions 

will not cause or contribute to a violation of the National Ambient Air Quality 

Standards (NAAQS); and that the source will use best available control technology 

(BACT) to control emissions. 

The amendment to this administrative regulation excludes "chemical process plants" 

that produce ethanol by a natural fermentation process in the revised definition of 

major stationary source. Further revisions include the removal of clean unit (CU) 

and pollution control project (PCP) requirements because they have been vacated at 

the federal level by a decision from the D.C. Court of Appeals. This amendment 

requires major sources emitting more than 100 tons per year of nitrogen oxides 

(NOx) to conduct an ambient air quality analysis for ozone. 

4. Will this administrative regulation impose stricter requirements, or additional 

or different responsibilities or requirements, than those required by the federal 

mandate? No. This regulation is modeled after the federal regulations. 

5. Justification for the imposition of the stricter standard, or additional or 

different responsibilities or requirements. Stricter standards and requirements 

are not imposed. 
FISCAL NOTE ON STATE OR LOCAL GOVERNMENT 

Administrative Regulation #: 401 KAR 51 :017 

Contact person: Laura Lund, Environmental Technologist II 

Does this administrative regulation relate to any program, service, or 

requirements of a state or local government (including cities, counties, fire 

departments, or school districts)? Yes. 

What units, parts or divisions of state or local government (including cities, 

counties, fire departments, or school districts) will be impacted by this 

administrative regulation? The Division for Air Quality will continue to 

implement and enforce the Prevention of Significant Deterioration (PSD) program 

in the Commonwealth. 

Identify each state or federal statute or federal regulation that requires or 

authorizes the action taken by the administrative regulation. KRS 224.10- 

100(5), 42 U.S.C. 7401 -7671 q. 

Estimate the effect of this administrative regulation on the expenditures 

and revenues of a state or local government agency (including cities, 

counties, fire departments, or school districts) for the first full year the 

administrative regulation is to be in effect. 

(a) How much revenue will this administrative regulation generate for 

the state or local government (including cities, counties, fire 

departments, or school districts) for the first year? This regulation 

generates no revenues. 

(b) How much revenue will this administrative regulation generate for 

the state or local government (including cities, counties, fire 

departments, or school districts) for subsequent years? This 

regulation generates no revenues. 

(c) How much will it cost to administer this program for the first year? 

The Cabinet's existing operating budget continues as the source of 

funding for the implementation of this program. 

(d) How much will it cost to administer this program for subsequent 

years? There will be no additional costs for administering the program in 

subsequent years. 

Note: If specific dollar estimates cannot be determined, provide a 

brief narrative to explain the fiscal impact of the administrative 

regulation. 

Revenues (+I-): There is no known effect on current revenues. 

Expenditures (+I-): There is no known effect on current expenditures. 

Other Explanation: There is no further explanation. 
ENERGY AND ENVIRONMENT CABINET 

Department for Environmental Protection 

Division for Air Quality 

(Amended After Comments) 

401 KAR 51 :052. Review of new sources in or impacting upon nonattainment areas. 

RELATES TO: KRS 224.20-1 00(!jJ, 224.20-1 10, 224.20-1 20, 40 C.F.R. Part 51 

A1 [? 

Cc) 31 y V-.-mt -1, 81, Subpart D, 81.318, 42 

U.S.C. 7401 -7671 a, EO 2009-538 [W? 77 . a. ... 1 1 1 

STATUTORY AUTHORITY: KRS 224.10-1 00(5), [4(! C.F.!?. -1 42 U.S.C. 

740 1 -767 1 4, EO 2009-538 1-1 

NECESSITY, FUNCTION, AND CONFORMITY: KRS 224.10-1 00 authorizes 

[equks] the cabinet [- Pa-] to promulgate 

administrative regulations for the prevention, abatement, and control of air pollution. 

2009-538, effective June 12, 2009, establishes the Enemy and Environment Cabinet. 

This administrative regulation establishes requirements for the constwction or 

modification of stationary sources within, or impacting upon, areas where the national 

ambient air quality standards have not been attained. The provisions of this 

administrative regulation are neither different nor more stringent than the federal 

regulation 40 C.F.R. 51 .I 65. 

Section 1. Applicability. This administrative regulation shall apply to the 
1 construction of a new major stationary soyrce or a [wy] project that is a major 

2 modification at an existing major stationary source, which commences construction after 

3 September 22, 1982, and locates in or impacts upon an area designated nonattainment 

4 under 42 U.S.C. 7407(d)(l)(A)(i). 

5 (I) The provisions of this administrative regulation relating to visibility protection 

6 shall also apply to major sources or major modifications in nonattainment areas that 

7 potentially have an impact on visibility in a mandatory Class I federal area. 

8 (2) Applicability tests for projects. Except as provided in subsection (3) 

9 [-I of this section, a project shall be a major modification for a 

10 regulated NSR pollutant only if the project causes a significant emissions increase and 

11 a significant net emissions increase, as provided in paragraphs (a) and (b) of this 

12 subsection. 

13 (a) Prior to beginning actual construction, the owner or operator shall first 

14 determine if a significant emissions increase will occur for the applicable type of unit 

15 beihg canstructed or modified according to subparagraphs 1 to 3 [4] of this paragraph. 

16 1. Actual-to-projected actual applicability test for projects that only involve 

17 existing emissions units. A significant emissions increase of a regulated NSR pollutant 

18 shall be projected to occur if the sum of the difference between the projected actual 

19 emissions and the baseline actual emissions for each existing emissions unit equals or 

20 exceeds the significant amount for that pollutant. 

21 2. Actual-to-potential test for projects that involve only construction of new 

22 emissions units. A significant emissions increase of a regulated NSR pollutant shall be 

23 projected to occur if the sum of the potential to emit from each new emissions unit 
1 following completion of the project equals or exceeds the significant amount for that 

2 pollutant. 

3 3- [ir . . 2 7 

4 *2fie??A!2cf* 

5 * . . 

6 

7 4.1 Hybrid test for projects that involve multiple types of emissions units. A 

8 significant emissions increase of a regulated NSR pollutant shall be projected to occur if 

9 the sum of the emissions increases for each emissions unit, using the methods 

10 specified in subparagraphs 1 and 2 [MI of this paragraph as applicable for each 

11 emissions unit, equals or exceeds the significant amount for that pollutant. 

12 (b) Prior to beginning actual construction and after completing the applicable test 

13 in paragraph (a) of this subsection, the owner or operator shall determine for each 

14 regulated NSR pollutant if a significant net emissions increase will occur pursuant to 

15 401 KAR 51 :001, Section l(l44) and (218). [4&MQ-] 

16 (3) For a plant-wide applicability limit (PAL) for a regulated NSR pollutant at a 

17 major stationary source, the owner or operator of the major stationary source shall 

18 comply with the applicable requirements of Section 11 [U] of this administrative 

. 19 regulation. 

20 [PW 

21 . . -1 

22 Section 2. Initial Screening Analyses and Determination of Applicable 

23 Requirements. (1) Review of all sources for emissions limitation compliance. 
(a) The cabinet shall examine each proposed major new source and proposed 

major modification to determine if the source or modification will meet all applicable 

emissions requirements in the Kentucky State Implementation Plan (SIP) and 40 C.F.R. 

Parts 60 and 61. 

(b) If the cabinet determines from the application and all other available 

information that the proposed source or modification will not meet the applicable 

emissions requirements, the permit to construct shall be denied. 

(2) Review of specified sources of air quality impact. 

(a) The cabinet shall determine if a proposed major stationary source or major 

modification will be constructed in an area designated as nonattainment pursuant to 42 

U.S.C. 7407(d)(l)(A)(i) for a pollutant for which the stationary source or modification is 

major. 

(b) If a designated nonattainment area is projected to be an attainment area as 

part of an approved control strategy by the new source start-up date, offsets shall not be 

required if the new source will not cause a new violation. 

(3) Fugitive emissions sources. Sections 4 and 10 of this administrative 

regulation shall not apply to a source or modification that will be a major stationary 

source or major modification only if fugitive emissions, to the extent quantifiable, are 

considered in calculating the potential to emit of the stationary source or modification 

and the source does not belong to one (1) of the following categories: 

(a) Coal cleaning plants with thermal dryers; 

(b) Kraft pulp mills; 

(c) Portland cement plants; 
1 (d) Primary zinc smelters; 

2 (e) Iron and steel mills; 

3 (f) Primary aluminum ore reduction plants; 

4 (g) Primary copper smelters; 

5 (h) Municipal incinerators capable of charging more than 250 tons of refuse per 

.6 day; 

7 (i) Hydrofluoric, sulfuric, or nitric acid plants; 

8 (j) Petroleum refineries; 

9 (k) Lime plants; 

10 (I) Phosphate rock processing plants; 

11 (m) Coke oven batteries; 

12 (n) Sulfur recovery plants; 

13 (0) Carbon black plants, furnace process; 

14 (p) Primary lead smelters; 

15 (q) Fuel conversion plants; 

16 (r) Sintering plants; 

17 (s) Secondary metal production plants; 

18 (t) Chemical process plants, except ethanol production facilities producinq 

19 ethanol by natural fermentation under the North American lndustw Classification 

20 System (NAICS) codes 3251 93 or 31 21 40; [m] 

2 1 (u) Fossil-fuel boilers, or combination of fossil-fuel boilers, totaling more than 250 

22 million BTUs per hour heat input; 

23 (v) Petroleum storage and transfer units with a total storage capacity exceeding 
1 300,000 barrels; 

2 (w) Taconite ore processing plants; 

3 (x) Glass fiber processing plants; 

4 (y) Charcoal production plants; 

5 (z) Fossil fuel-fired steam electric plants of more than 250 million BTUs per hour 

6 heat input; or 

7 (aa) Another stationary source category that [whish], as of August 7, 1980, is 

8 being regulated under 42 U.S.C. 741 1 or 7412. 

9 Section 3. Sources Locating in Designated Attainment or Unclassifiable Areas 

10 that Will Cause or Contribute to a Violation of a National Ambient Air Quality Standard. 

11 (1) This section shall apply only to new major stationary sources or new major 

12 modifications that will locate in designated attainment or unclassifiable areas, pursuant 

13 to 42 U.S.C. 7407(d)(l)(A)(ii) or (iii), if the source or modification will cause impacts that 

14 exceed the significance levels, as listed in the table in this subsection, at a locality that 

15 does not or will not meet the national ambient air quality standards 

1 ~ollutant 1 Annual I Averaging Time I 
(2) Sources to which this section applies shall meet the requirements in Section 

4(1), (2) and (4) of this administrative regulation and may be exempt from Section 4(3) 

of this administrative regulation. 

(3) For sources of sulfur dioxide (SO2), particulate matter, and carbon monoxide 

(CO), the determination that a new major source or major modification will cause or 

contribute to a violation of a national ambient air quality standard shall be made on a 

case-by-case basis using the source's allowable emissions in an approved atmospheric 

simulation model listed in 40 C.F.R. Part 51, Appendix [appwk] W, "Guideline on Air 

Quality Models". 

(4) For sources of NOx, the initial determination that a new major source or major 

modification will cause or contribute to a violation of the national ambient air quality 

standard for nitrogen dioxide (NO2) shall be made using an approved atmospheric 

simulation model assuming all the nitric oxide emitted is oxidized to NO2 by the time the 

plume reaches ground level. The initial concentration estimates may be adjusted if 

adequate data are available to account for the expected oxidation rate. 

(5) For ozone, sources of VOCs or NOx locating outside a designated ozone 

nonattainment area shall be presumed to not have a {lxwe-m] significant impact on the 

designated nonattainment area. If ambient monitoring indicates that the area of source 

location is in fact nonattainment, the source shall be permitted pursuant to [u+x&-th 

. . this administrative regulation and 401 KAR 52:020 until the 

area is designated nonattainment pursuant to 42 U.S.C. 7407(d)(l)(A)(i). 

(6) The determination that a new major source or major modification will cause or 
contribute to a violation of a national ambient air quality standard shall be made as of 

the start-up date. 

(7) Applications for major new sources and major modifiations locating in 

attainment or unclassifiable areas, the operation of which will cause a new violation of a 

national ambient air quality standard but will not contribute to an existing violation, may 

be approved only if the following conditions are met: 

(a) The new source shall: 

1. Meet an emissions limitation; 

2. Meet a design, operational, or [w] equipment standard; or 

3. Control existing sources so that the new source will not cause a violation of a 

national ambient air quality standard. 

(b) The new emissions limitations for the new and existing sources affected shall 

be state and federally enforceable in accordance with Section 6 of this administrative 

regulation. 

Section 4. Sources Locating in a Designated Nonattainment Area. This section 

shall apply to a new major stationary source or major modification that will be 

constructed in an area designated as nonattainment pursuant to 42 U.S.C. 

7407(d)(l)(A)(i) for a pollutant for which the stationary source or modification is major. 

Approval to construct may be granted only if the conditions of this section are met. 

(1) The new major source or major modification shall be required to meet an 

emissions limitation that specifies the lowest achievable emissions rate (LAER) for the 

source. 

(2) The applicant shall demonstrate that all existing major sources owned or 
operated by the applicant, or an entity controlling, controlled by, or under common 

control with the applicant, in the Commonwealth of Kentucky are in compliance with all 

applicable emissions limitations and standards specified in Title 401, Chapters 50 to 65, 

[el and 40 C.F.R. Parts 60 and 61 and 42 U.S.C. 7401-7626, or are in compliance 

with an expeditious state and federally enforceable compliance schedule or a court 

decree establishing a compliance schedule. 

(3)(a) Except for VOCs or NOx emissions, emissions from existing sources in the 

affected area of the proposed new major source or modification, whether or not under 

the same ownership, shall be reduced or [re&w&w] offset, so that there will be 

reasonable further progress toward attainment of the applicable national ambient air 

quality standard (NAAQS). Only those transactions in which the emissions being offset 

are from the same criteria pollutant category shall be accepted. 

(b) The ratio of total emissions reductions of VOCs or NOx to total increased 

emissions of the same air pollutant shall be at least the ratio indicated for the following 

ozone nonattainment area classifications: 

, 1. For marginal nonattainment areas, at least 1 .I to 1; 

2. For moderate nonattainment areas, at least 1.1 5 to 1 ; 

3. For serious nonattainment areas, at least 1.2 to 1 ; 

4. For severe nonattainment areas, at least 1 -3 to I ;and 

5. For extreme nonattainment areas, at least 1.5 to 1. 

(4) The emissions reductions shall provide a positive net air quality benefit in the 

affected area. 

(a) Atmospheric simulation modeling shall not be required for VOCs and NOx. 
(b) Except as provided in Section 3(5) of this administrative regulation, 

compliance with subsection (3) of this section and Section 5(3)(e) of this administrative 

regulation shall be adequate to meet this condition. 

(5) The proposed major stationary source or major modification shall include in 

the application for a construction permit an analysis of the alternative sites, sizes, 

production processes, and environmental control techniques for the proposed source, 

which demonstrates that benefits of the proposed source significantly outweigh the 

environmental and social costs imposed as a result of its location, construction, or 

modification. 

Section 5. Determining Credit for Emissions Offsets. (1) The baseline for 

determining credit for emissions reductions or offsets shall be, where baseline actual 

emissions as defined in 401 KAR 51:001. Section l(201. shall not be used for 

(a) The emissions limitations in effect when [a4-&Ahe] the application to 

construct or modify a source is filed; or 

(b) The actual emissions of the source from which offset credit is attained if: 

1. The demonstration of reasonable further progress and attainment of ambient 

air quality standards for the SIP was based on actual emissions; or 

2. The SIP does not contain an emissions limitation for that source or source 

category. 

(2) Credit for emissions offsets. Credit for emissions offset pumses may be 
1 allowed for existing control if the existina control [W] goes beyond the control 

2 required under 401 KAR Chapters 50 to 65 [@I and applicable [ex~stmg] federal 

3 regulations. 

4 (3) General provisions for calculating offset values. 

5 (a) Offset calculations shall be made on a pound-per-hour basis if all facilities 

6 involved in the emissions offset calculations are operating at their maximum or allowed 

7 production rate. 

8 (b) Offsets may be calculated on a tons-per-year basis if baseline emissions for 

9 existing sources providing the offsets are calculated using the actual annual operating 

10 hours for the previous two (2) year period. 

11 (c) If the cabinet requires certain hardware controls instead of an emissions 

12 limitation, baseline allowable emissions shall be based on actual operating conditions 

13 for the previous two (2) year period in conjunction with the required hardware controls. 

14 (d) If the emissions limitations required by the cabinet allow greater emissions 

15 than the uncontrolled emissions rate of the source, emissions offset credit shall be 

16 allowed only for control below the uncontrolled emissions rate. 

17 (e) The owner or operator of a new or modified major stationary source shall 

18 comply with any offset requirement in effect under this administrative regulation to 

19 increase emissions of an air pollutant by: 

20 1. Obtaining emissions reductions of the air pollutant from the same source or 

21 other sources in the same nonattainment area; or 

22 2. From sources in another nonattainment area if: 

23 a. The other area has an equal or higher nonattainment classification than the 
1 area in which the source is located; and 

2 b. Emissions from the other area contribute to a violation of the national ambient 

3 air quality standard in the nonattainment area in which the source is located. 

4 (4) Calculating offsets if an [w] applicable emissions limitation does not exist. 

5 If the Kentucky SIP does not contain an emissions limitation for a source or 

6 source category, the emissions offset baseline involving the source shall be actual 

7 emissions determined under actual operating conditions for the previous two (2) year 

8 period. 

9 (5) Calculating offsets for existing fuel combustion sources. 

10 (a) The emissions for determining emissions offset credit involving an existing 

11 fuel combustion source shall be the allowable emissions under the emissions limitation 

I2 requirements of the cabinet for the type of fuel being burned when [a#he-&w] the new 

13 major source or major modification application is filed. 

14 (b) If the existing source has switched to a different type of fuel at some earlier 

15 date, a resulting emissions reduction, either actual or allowable, shall not be used for 

16 emissions offset credit. 

17 (c) If the existing source commits to switch to a cleaner fuel at some future date, 

18 emissions offset credit based on the allowable emissions for the fuels involved shall not 

19 be allowed unless the permit is conditioned to require the use of a specified alternative 

20 control measure that will achieve the same degree of emissions reduction if the source 

21 switches back to a dirtier fuel at some later date. 

22 (6) Calculating offsets for operating hours and source shutdowns. 

23 (a) A source may be credited with emissions reductions achieved by shutting 
down an existing source or permanently curtailing production or operating hours below 

baseline levels if the work force to be affected has been notified in writing of the 

proposed shutdown or curtailment. 

(b) Source shutdowns and curtailments in production or operating hours 

occurring prior to the date the new source application is filed shall not be used for 

emissions offset credit. 

(c) If an applicant can establish that it shut down or curtailed production after 

August 7, 1977, or less than one (1) year prior to the date of permit application, 

whichever is earlier, and the proposed new source is a replacement for the shutdown or 

curtailment, credit for the [W] shutdown or curtailment may be applied to offset 

emissions from the new source. 

(7) Calculating offsets for hydrocarbon substitution. Wn emissions offset credit 

shall be allowed for replacing one volatile organic compound with another of lesser 

photochemical reactivity, unless the replacement compound is methane, ethane, 1 ,I .Itrichloroethane, or [? ,? ,? -] trichlorofluoroethane. 

(8) Banking of emissions offset credit. 

(a) New sources obtaining permits by applying offsets after the effective date of 

this administrative regulation may bank offsets that exceed the requirements of Section 

5(3) of this administrative regulation. 

(b) An owner or operator of an existing source that reduces its own emissions 

may bank a resulting reduction beyond those required by regulation for use under this 

administrative regulation, even if the offsets are applied immediately to a new source 

permit. 
(c) Banked emissions offsets may be used under the preconstruction review 

program required in 42 U.S.C. 7401 to 7626, as long as these banked emissions are 

identified and accounted for in Kentucky's control strategy. 

(9) Offset wedit for meeting NSPS or NESHAPS. 

(a) If a source is subject to an emissions limitation established in a New Source 

Performance Standard (NSPS) or a National Emissions Standard for Hazardous Air 

Pollutants (NESHAPS) and a different emissions limitation is required by the cabinet, 

the more stringent limitation shall be used as the baseline for determining credit for 

emissions offsets. 

(b) The difference in emissions between NSPS or NESHAPS and other 

emissions limitations shall [may] not be used as offset credit. 

Section 6. Administrative Procedures for Emissions Offsets. (1) Emission 

reductions shall be enforceable by the cabinet and the US. EPA, and shall be 

accomplished by the start-up date of the new source. 

(a) If emissions reductions are to be obtained in a state that neighbors the 

Commonwealth for a new source to be located in the Commonwealth, the emissions 

reductions shall be enforceable by the neighboring state or local agencies and the U.S. 

EPA. 

(b) The necessary emissions offsets may be pmposed by the owner of the 

proposed source or by the cabinet. 

(2) Source initiated emissions offsets. 

(a) The owner or operator of a source may propose: 

1. Internal emissions offsets, which involve reductions from sources controlled by 
the owner; or 

2. External emissions offsets, which involve reductions from other sources, if the 

emissions offsets meet the requirements of this section and Section 4(3) of this 

administrative regulation. 

(b) An internal emissions offset shall be included and made enforceable as a 

condition of the source's permit. 

(c) An external emissions offset shall only be accepted if the cabinet requires the 

affected source to comply with a new emissions limitation to ensure that its emissions 

shall be reduced by a specified amount in a specified time; and the new emissions 

limitation shall be enforceable by the cabinet and the U.S. EPA. 

(3) Cabinet initiated emissions offsets. 

(a) The cabinet may commit to reducing emissions from mobile sources and 

other existing sources to provide a net air quality benefit in the impact area of a 

proposed new source to accommodate the proposed new source. 

(b) This emissions reduction commitment shall be reflected in the emissions 

limitation requirements for the new and existing sources as required by this section. 

Section 7. Source Obligation. (1) An owner or operator of a source or 

modification subject to this administrative regulation shall construct and operate the 

source or modification in accordance with the application submitted to the cabinet under 

this administrative regulation and 401 KAR 52:020 or under the terms of an approval to 

construct. 

(2)(a) Approval to construct shall become invalid if construction: 

1. Is not commenced within eighteen (1 8) months after receipt of the appmval; 
1 2. Is discontinued for a period of eighteen (18) months or more; or 

2 3. Is not completed within a reasonable time. 

3 (b) The cabinet may extend the eighteen (18) month period upon a satisfactory 

4 demonstration [64wwg] that an extension is justified. 

5 1. An extension shall not apply to the time period between construction of the 

6 approved phases of a phased construction project; and 

7 2. Each phase shall commence construction within eighteen (18) months of the 

8 projected and approved commencement dale. 

9 (3) Approval to construct shall not relieve an owner or operator of the 

10 responsibility to comply fully with applicable provisions of 401 KAR Chapters 50 to 65 

11 [a] and [w] other applicable requirements under local, state, or federal law. 

12 (4) If a particular source or modification becomes a major stationary source or 

13 major modification solely by virtue of a relaxation in an enforceable limitation which was 

14 established after August 7, 1980, on the capacity of the source or modification 

15 otherwise to emit a pollutant, the requirements of this administrative regulation shall 

apply to the source or modification as though construction had not yet commenced on 

the source or modification. 

(5)(a) The provisions of this subsection shall apply to projects at existing 

emissions units at a major stationary source other than projects at [-]a 

source with a PAL, if: 

1. There is a reasonable possibility that a project that is not part of a major 

modification may result in a significant emissions increase; and 

2. The owner or operator uses the method.specified in 401 KAR 51:001, Section 
1 1{199)(b)[o@j] to calculate projected actual emissions. 

2 (b) Before beginning actual construction of a project specified in paragraph (a) of 

3 this subsection, the owner or operator shall document and maintain a record of the 

- 4 following information: 

5 1. A description of the project; 

6 2. Identification of the emissions units for which emissions of a regulated NSR 

7 pollutant may be affected by the project; and 

8 3. A description of the applicability test used to determine that the project is not a 

9 major modification for any regulated NSR pollutant, including: 

10 a. Baseline actual emissions; 

11 b. Projected actual emissions; 

12 c. Amount of-emissions excluded in calculating projected actual emissions and 

13 an explanation for why that amount was excluded; and 

14 d. Any applicable netting calculations. 

15 (c) For a project specified in paragraph (a) of this subsection, the owner or 

16 operator shall: 

17 1. Monitor the emissions of any regulated NSR pollutant that could increase as a 

18 result of the project and that are emitted by an emissions unit identified in paragraph 

19 (a)2 of this subsection; and 

20 2. Calculate and maintain a record of the annual emissions, in tons per year on a 

21 calendar year basis, for: 

22 a. Five (5) years following resumption of regular operations after the change; or 

, 23 b. Ten (10) years if the project increases the design capacity of or potential to 
1 emit for that regulated NSR pollutant at the emissions unit. 

2 (d) If the unit is an existing EUSGU, before beginning actual construction, the 

3 owner or operator: 

4 1. Shall provide a copy of the information in paragraph (b) of this subsectio~ to 

5 the cabinet; and 

2. Shall not be required to obtain a determination from the cabinet before 

beginning actual construction; and 

3. Shall submit a report to the cabinet within sixty (60) days after the end of each 

year during which records are required to be generated under paragraph (b) of this 

subsection that contains the unit's annual emissions during the calendar year preceding 

report submittal. 

(e)l. For an existing unit other than an EUSGU, the owner or operator shall 

submit a report to the cabinet if: 

a. The annual emissions, in tons per year, from a project identified in paragraph 

(a) of this subsection exceed the baseline actual emissions, as documented and 

16 maintained pursuant to paragraph (b)3 of this subsection, by a significant amount for . . 

17 that regulated NSR pollutant; and 

18 b. The emissions differ from the preconstruction projection as documented and 

19 maintained pursuant to paragraph (b)3 of this subsection. 

20 2. The report shall be submitted to the cabinet within sixty (60) days after the end 

21 of the year during which records are required to be generated under paragraph (b) of 

22 this subsection and shall contain the following: 

23 a. The name, address, and telephone number of the major stationary source; 
b. The annual emissions as calculated pursuant to paragraph (c) of this 

subsection; and 

c. Any other information that the owner or operator wishes to include in the 

report. 

(f) The owner or operator of the source shall make the information required to be 

documented and maintained under this subsection available for review upon request for 

inspection by the cabinet or the general public pursuant to 401 KAR 52:100. 

Section 8. Permit Condition Rescission. (1) An owner or operator holding a 

permit for a stationary source or modification that [W] was issued pursuant to 401 

KAR 51 :050 or [MI 51 :051 E may request that the cabinet rescind the applicable 

conditions. 

(2) The cabinet shall rescind a permit condition if the owner or operator: 

(a) Requests and [[I demonstrates to the 

satisfaction of the cabinet that this administrative regulation does not apply to the 

source or modification or to a portion of the source or modification if construction will 

have commenced after September 22,1982; and 

/b) Demonstrates [- if: that the 

rescission will not violate the requirements of Sections 4(3) and 7 of this administrative 

regulation. 

Section 9. Class I Areas. (1) The following areas, [atws] which were in 

existence on August 7, 1977, shall be Class 1 areas and shall not be designated: 

(a) International parks; 

- (b) National wilderness areas and national memorial parks which exceed 5,000 
acres in size; and 

(c) National parks that exceed 6,000 acres in size. 

(2) Any other area, unless otherwise specified in the legislation creating the area, 

is designated Class II but may be redesignated as provided in 40 C.F.R. 51.166(g). 

(3) The visibility protection requirements of this administrative regulation shall 

apply only to sources that may impact a mandatory Class I federal area. 

(4) The following areas may be redesignated only as Class I or II: 

(a) An area which as of August 7, 1977, exceeded 10,000 acres in size and was 

a national monument, a national primitive area, a national preserve, a national 

recreational area, a national wild and scenic river, a national wildlife refuge, a national 

lakeshore or seashore; and 

(b) A national park or national wilderness area established after August 7, 1977, 

which exceeds 10,000 acres in size. 

Section 10. Protection of Visibility. (1) New source review; [wvkv-] applicability 

and exemptions. 

(a) A stationary source or modification to which this section applies shall not 

begin actual construction without a permit that states the stationary source or 

modification shall meet the requirements of this section. 

(b) This section shall apply to construction of a new major stationary source or 

major modification that will be constructed in an area designated as nonattainment 

under 42 U.S.C. 7407(d)(I)(AXi) and potentially have an impact on visibility in a Class 1 

area. 

(c) f his section shall apply to a major stationary source or major modification for 

. 
each pollutant subject to regulation under 42 U.S.C. 7401 to 7626 that it will emit, 

except as provided in paragraphs (d) and (e) of this subsection. 

(d) This section shall not apply to a particular major stationary source or major 

modification if: 

1. The source or modification is a nonprofit health or nonprofit educational 

institution[,] or a major modification will occur at the institution, and the Governor of the 

Commonwealth requests that it be exempt from the requirements of this section; and 

2. The source is a portable stationary source that has previously received a 

permit under this section and will be temporarily relocated; and: 

I0 a. [feIwa&&] The emissions from the source will not exceed the allowable 

11 emissions; 

12 b. The emissions from the source will not impact a Class I area or an area where 

, 13 an applicable increment is known to be violated; and 

14 c. Reasonable notice is given to the cabinet prior to the relocation, identifying the 

/ 

15 proposed new location and the probable duration of operation at the new location. The 

16 notice shall be given to the cabinet not less than ten (10) days in advance of the 

17 proposed relocation unless a different time duration is previously approved by the 

18 cabinet pursuant to this section. [wbhek] 

19 (e) This section shall not apply to a major stationary source or major modification 

20 with respect to a particular pollutant, if the allowable emissions of that pollutant from the 

21 source, or the net emissions increase of that pollutant from the modification: 

22 1. Will not impad a Class I area; 

23 2. Will not impact an area where an applicable increment is known to be violated; 
and 

3. Will be temporary. 

(2) Visibility impact analyses. The owner or operator of a source shall provide an 

analysis of the impairment to visibility that will occur in a Class I area as a result of the 

source or modification and general commercial, residential, industrial, and [iff$t;tffFji)J 

a&] other growth associated with the source or modification. 

(3) Federal land manager notification. 

(a) The federal land manager and the federal official charged with direct 

responsibility for management of Class I areas shall have an affirmative responsibility to 

protect the visibility and other air quality related values of the Class I lands and to 

consider, in consultation with the cabinet, if a proposed source or modification will have 

an adverse impact on these values. 

(b) The cabinet shall provide written notification to all affected federal land 

managers and to the federal official charged with direct responsibility for management 

of lands within the Class I area of a permit application or an advanced notice of a permit 

application for a proposed new major stationary source or major modification that may ' 

affect visibility in a Class 1 area. The notification shall: 

1, Include a copy of all information relevant to the permit application; 

2. Be submitted pursuant to paragraph [-] within thirty 

(30) days of receipt of the permit application or advanced notice of permit application 

and at least sixty (60) days prior to a public hearing on the application for a permit to 

construct; and 

3. Include [iwk#e] an analysis of the proposed source's anticipated impacts on 
1 visibility in a Class 1 area. 

2 (c)l. The cabinet shall consider an analysis by the federal land manager, 

3 provided within thirty (30) days of the notification and analysis required by paragraph (b) 

4 of this subsection, that the proposed new major stationary source or major modification 

5 may have an adverse impact on visibility in a Class 1 area. 

6 2. If the cabinet finds that the analysis does not demonstrate, to the satisfaction 

7 of the cabinet, that an adverse impact on visibility will result in the Class I area, the 

8 cabinet shall, in the public hearing notice required in 401 KAR 52:100, either explain 

9 that decision or give notice as to where the explanation can be obtained. 

10 (d) Adverse impact on visibility as it applies to paragraph (c) of this subsection 

11 shall be determined on a case-by-case basis, taking into account the geographic extent, 

12 intensity, duration, frequency, and time of visibility impairments, and how these factors 

13 correlate with the times of visitor use of the Class I area, and the frequency and time of 

14 natural conditions that reduce visibility. 

15 (4) Public participation. The cabinet shall follow the applicable procedures of 401 

16 KAR 52:100 in processing applications under this section and 1-1 

17 shall follow the procedures at 40 C.F.R. 52.21(r), effective 1-1 July 

18 1,2009 [2OW], to the extent that the procedures of 401 KAR 52:100 do not apply. 

19 (5) National visibility goal. 

20 (a) The cabinet shall only issue permits to those sources for which emissions will 

21 be consistent with making reasonable progress toward the national goal of preventing 

22 future, and remedying existing, impairment of visibility in Class I areas which impairment 

23 results from manmade air pollution. 
1 (b) In making the decision to issue a permit, the cabinet shall consider [may 

2 

3 1. The costs [&I of compliance; 

4 2. The time necessary for compliance; 

5 3. The energy and non-air [mxmk] quality environmental impacts of compliance; 

6 and 

7 4. The useful life of the source. 

(6) Monitoring. 

(a) The cabinet may require monitoring of visibility in a Class I area near the 

proposed new stationary source or major modification using human observations, 

teleradiometers, photographic cameras, nephelometers, fine particulate monitors, or 

other appropriate methods as specified by the U.S. EPA. 

(b) The monitoring method selected shall be determined on a case-by-case basis 

by the cabinet. 

(c) The cabinet shall not undertake visibility monitoring in a Class 1 area without 

the approval of the federal land manager. 

(d) Data obtained from visibility monitoring shall be made available to the cabinet, 

the federal land manager, and the U.S. €PA, upon request. 

TI . . 


I I C CDA V.V. .-u . \ 
2 3 Thn n 


















CI 

Section a[%] Plant-wide Applicability Limit Provisions. The cabinet may 

approve the use of an actuals PAL (PAL) for an existing major stationary source if the 

PAL meets the requirements of this section. 

(1 ) General provisions. 

(a) An owner or operator may execute a project without triggering major NSR, if 

the source maintains its total source-wide emissions below the PAL level, meets the 

requirements in this section, and complies with the PAL permit. If these conditions are 

met, a project: 

1. Shall not be considered a major modification for the PAL pollutant; 

2. Shall not have to be approved through Kentucky's major NSR program; and 

3. Shall not be subject to the provisions of Section 7(4) of this administrative 

regulation concerning restrictions on relaxing enforceable emissions limitations that the 

major stationary source used to avoid applicability of the major NSR program. 

(b) Except as provided under subparagraph (l)(a)3 of this section, the major 

stationary source shall continue to comply with all applicable federal or state 

requirements, emissions limitations, and work practice requirements that were 

established prior to the effective date of the PAL. 

(c) The cabinet shall not allow a PAL for VOC or NOx for any major stationary 

source located in an extreme ozone nonattainment area. 

(2) Permit application requirements. The owner or operator of a major stationary 

soume shall submit the following infomation to the cabinet for approval as part of an 

application for a permit or permit revision requesting a PAL: 
1 (a) A list of all emissions units at the source designated as small, significant or 

2 major, based on their potential to emit; > 

3 (b) Identification of the federal and state applicable requirements, emissions 

4 limitations, and work practice requirements that apply to each emissions unit; 

5 (c) Calculations of the baseline actual emissions for the emissions units with 

6 supporting documentation; and 

7 (d) The calculation procedures the owner or operator proposes to use to convert 

8 the monitoring system data to monthly emissions and annual emissions based on a 

9 twelve (12) month rolling total for each month as required by subsection (12)(a) of this 

10 section. 

11 (3) Establishing a PAL. The cabinet shall establish a PAL at a major stationary 

12 source in a federally enforceable permit pursuant to the requirements of this section. 

13 (a) The PAL shall impose an annual emissions limitation in tons per year that is 

14 enforceable as a practical matter for the entire major stationary source, in which: 

16 1. For each month during the PAL effective period after the first twelve (12) 

A 7 % months of establishing a PAL, the owner or operator shall demonstrate [show] that the 

18 sum of the monthly emissions from each emissions unit under the PAL for the previous 

19 twelve (12) consecutive months is less than the PAL as a twelve (12) month average, 

20 rolled monthly; and 

2 1 2. For each month during the first eleven (11) months from the PAL effective 

22 date, the owner or operator shall demonstrate [ebmv] that the sum of the preceding 

23 monthly emissions from the PAL effective date for each emissions unit under the PAL is 
less than the PAL; 

(b) The PAL shall be established in a PAL permit that: 

1. Meets the public participation requirements in subsection (4) of this section; 

and 

2. Contains all the requirements of subsection (6) of this section; 

(c) A PAL shall include fugitive emissions, to the extent quantifiable, from all 

emissions units that emit or have the potential to emit the PAL pollutant at the major 

stationary source; 

(d) Each PAL shall regulate emissions of only one (1) pollutant; 

(e) Each PAL shall have a PAL effective period of ten (10) years; 

(f) The owner or operator of a major stationary source with a PAL shall comply 

with the monitoring, recordkeeping, and reporting requirements of subsections (1 1) to 

(13) of this section for each emissions unit under the PAL through the PAL effective 

period; and 

(g) Emissions reductions of a PAL pollutant that occur during the PAL effective 

period shall not be creditable as decreases for offsets under 40 C.F.R. 51.165(a)(3)(ii), 

unless: 

1. The level of the PAL is reduced by the amount of [st&] emissions 

reductions; and 

2. The reductions would be creditable in the absence of the PAL. 

(4) Public participation requirements. PALS for existing major stationary sources 

shall be established, renewed, or increased pursuant to this subsection and the 

applicable pmcedures of 401 KAR 52:100 for issuing permits or permit revisions. The 
1 cabinet shall: 

2 (a) Provide the public with notice of the proposed approval of a PAL permit with 

3 at least a thirty (30) day period for submittal of public comment; and 

4 (b) Address all material comments before taking final action on a PAL permit or 

5 permit revision. 

6 (5) Setting the ten (10) year PAL level. 

7 (a) The PAL level for a major stationary source shall be the sum of the baseline 

8 actual emissions of the PAL pollutant for each emissions unit at the source during the 

9 chosen twenty-four (24) month period plus the applicable significant level for the PAL 

10 pollutant under the definition for "significant" in 401 KAR 51 :001, Section I [o] or 

11 under 42 U.S.C. 7401-7671q, [theAc&] whichever is lower 

12 (b) In establishing a PAL level for a PAL pollutant, only one (1) consecutive 

13 twenty-four (24) month period shall be used to determine the baseline actual emissions 

14 for all existing emissions units. 

15 (c) A different consecutive twenty-four (24) month period may be used for each 

16 different PAL pollutant. 

17 (d) Emissions associated with units that were permanently shutdown after the 

18 chosen twenty-four (24) month period shall be subtracted from the PAL level. 

19 (e) Emissions from units for which actual construction began after the twenty-four 

20 (24) month period shall be added to the PAL level in an amount equal to the potential to 

21 emit of the units. 

22 (f) The cabinet shall spew a reduced PAL level in the PAL permit to become 

23 effective on the future compliance date of any applicable federal or state regulatory 
1 requirement that the cabinet is aware of prior to issuance of the PAL permit. 

2 (6) Contents of the PAL permit. The PAL permit shall contain the following 

3 information: 

4 (a) The PAL pollutant and the applicable source-wide emissions limitation in tons 

5 per year; 

6 (b) The PAL permit effective date and the expiration date of the PAL or PAL 

7 effective period; 

8 (c) Specification in the PAL permit that if a major stationary source owner or 

9 operator applies to renew a PAL under subsection (9) of this section before the end of 

10 the PAL effective period, the PAL shall remain in effect until a revised PAL permit is 

11 issued by the cabinet; 

12 (d) A requirement that emissions calculations for compliance purposes include 

13 emissions from startups, shutdowns, and [w] malfunctions; 

14 (e) A requirement that, once the PAL expires, the major stationary source shall 

15 & [is] subject to the requirements of subsection (8) of this section; 

16 (f) The calculation procedures that the major stationary source owner or operator 

17 shall use to convert the monitoring system data to monthly emissions and annual 

18 emissions based on a twelve (12) month rolling total for each month as required by 

19 subsection (1 2)(a) of this section; 

20 (g) A requirement that the major stationary source owner or operator shall 

21 monitor all emissions units in accordance with the provisions in subsection (12) of this 

22 section; 

23 (h) A requirement that the owner or operator shall retain the records required 
under subsection (12) of this section on site. Records may be retained in an electronic 

format [[I

(i) A requirement for the owner or operator to submit, by the reports required 

under subsection (1 3) of this section by the required deadlines; and 

(j) Any [€Mw] requirements necessary to implement and enforce the PAL. 

(7) PAL effective period and reopening of a PAL permit. 

(a) A PAL effective period shall be ten (10) years. 

(b) The cabinet shall reopen a PAL permit to: 

1. Correct typographical or calculation errors made in setting the PAL; 

2. Reflect a more accurate determination of emissions used to establish the PAL; 

3. Reduce the PAL if the owner or operator of the major stationary source 

12 creates creditable emissions reductions for use as offsets under 40 C.F.R. 

1 3 51 .165(a)(3)(ii); or 

14 4. Revise the PAL to reflect an increase in the PAL according to subsection (10) 

15 of this section. 

16 (c) The cabinet may reopen the PAL permit, during the PAL effective period, to: 

17 1. Reduce the PAL to reflect newly applicable federal requirements with 

18 compliance dates after the PAL effective date; 

19 2. Reduce the PAL consistent with any other requirement: 

20 a. That is enforceable as a practical matter; and 

2 1 b. That may be imposed on the major stationary source under the SIP; and 

22 3. Reduce the PAL if the cabinet determines that a reduction is necessary to 

23 avoid causing or contributing to: 
1 a. A National Ambient Air Quality Standard (NAAQS) or PSD increment violation; 

2 or 

3 b. An adverse impact on visibility or another air quality related value that has 

4 been identified for a federal Class I area by a federal land manager and for which 

5 information is available to the general public. 

6 (d) All permit reopenings shall be carried out under the public participation 

7 requirements of subsection (4) of this section except for permit reopenings to correct 

8 typographical or calculation of errors that do not increase the PAL level. 

9 (8) Expiration of a PAL. A PAL that is not renewed shall expire at the end of the 

10 PAL effective period and the requirements of this subsection shall then apply. 

11 (a) Each emissions unit, or each group of emissions units, that existed under the 

12 PAL shall comply with an allowable emissions limitation under a revised permit 

13 established as follows: 

14 1. An owner or operator of a major stationary source using a PAL shall submit a 1 

15 proposed allowable emissions limitation for each emissions unit, or each group of 

16 emissions units, by distributing the PAL allowable emissions for the major stationary 

17 source among each of the emissions units that existed under the PAL. 

18 a. This proposal shall be submitted to the cabinet at least six (6) months before 

19 the expiration of the PAL permit but not sooner than eighteen (18) months before permit 

20 expiration. 

21 b. If the PAL has not yet been adjusted for an applicable requirement that 

22 became effective during the PAL effective period, as required under subsection (9Xe) of 

23 this section, distribution of allowable emissions shall be made as if the PAL has been 
1 adjusted. 

2 2. The cabinet shall provide [&xi&] the date and procedure the owner or 

3 operator shall use to distribute the PAL allowable emissions. 

4 3. The cabinet shall issue a revised permit incorporating allowable limits for each 

5 emissions unit, or each group of emissions units, as the cabinet determines is 

6 appropriate. 

7 (b) Each emissions unit shall comply with the allowable emissions limitation on a 

8 twelve (I 2) month rolling basis. The cabinet may approve the use of monitoring systems 

9 other than CEMS, CERMS, PEMS, or [IWvS-ef] CPMS if the alternate monitoring 

10 svstem demonstrates [-] compliance with the allowable emissions 

11 limitation. 

12 (c) The source shall continue to comply with a source-wide, multiunit emissions 

13 cap equivalent to the level of the PAL emissions limitation until the cabinet issues the 

14 revised permit incorporating allowable limits for each emissions unit or each group of 

15 emissions units. 

16 (d) A major modification at the major stationary source shall be subject to major 

17 NSR requirements. 

18 (e) The major stationary source owner or operator shall continue to comply with 

19 any state or federal applicable requirements eliminated by the PAL that applied during 

20 or before the PAL effective period, except for those emissions limitations established 

21 pursuant to Section 7(4) of this administrative regulation. 

,- 4 

22 (9) Renewal of a PAL. 

23 (a) Public participation requirements. 
1 I. The cabinet shall follow the public participation procedures specified in 

2 subsection (4) of this section in approving a request to renew a PAL for a major 

3 stationary source. 

4 2. The cabinet shall provide a written rationale for the proposed PAL level for 

5 public review and comment. 

6 3. Any person may propose a PAL level for the source for consideration by the 

7 cabinet during the public review period. 

8 (b) Application deadline. 

9 1. A major stationary source owner or operator shall submit an application for 

10 renewal of a PAL at least six (6) months before the date of permit expiration but not 

11 earlier than eighteen (18) months before permit expiration. 

12 2. The deadline for application submittal shall ensure that the permit shall not 

13 expire before the permit is renewed. 

\ 14 3. If a complete application for renewal is submitted within the timeframe 

15 specified in subparagraph 'I of this paragraph, the PAL shall continue to be effective 

16 until the revised permit with the renewed PAL is issued. 

17 (c) Application requirements. The application to renew a PAL permit Shall 

18 contain: 

19 1. The information required in subsection (2) of this section; 

20 2. A proposed PAL level; 

2 1 3. The sum of the potential to emit of all emissions units under the PAL with 

22 supporting documentation; and 

23 4. Any other information the owner or operator wishes the cabinet to consider in 
determining the appropriate level to renew the PAL. 

(d) PAL adjustment. 

1. A PAL shall not exceed the source's potential to emit. The cabinet shall-adjust 

the PAL downward to a level not [w] greater than the potential to emit if a source's 

potential to emit has declined below the PAL level. 

2. The cabinet may renew the PAL at the same level as the current PAL without 

considering the factors specified in subparagraph 3 of this section, if the emissions level 

calculated according to subsection (5) of this section is equal to or greater than eighty 

(80) percent of the PAL level; or 

3. The cabinet may set the PAL at a level that is determined to be: 

a. More representative of the source's baseline actual emissions; or 

b. Appropriate considering the following factors: 

(i) Air quality needs; 

(ii) Advances in control technology; 

(iii) Anticipated economic growth in the area of the source; 

(iv) The cabinet's goal of promoting voluntary emissions reductions; ar [&I 

(v) Other factors as specifically identified by the cabinet in its written rationale for 

setting the PAL level. 

4. The cabinet shall not approve a renewed PAL level higher than the current 

PAL, unless the major stationary source has complied with the provisions of subsection 

(1 0) of this section. 

(e) The PAL shall be adjusted in coniundion with the [w PAL permit 

renewal or Title V permit renewal, whichever comes first. if: 

56 
1. The compliance date for a state or federal applicable requirement that applies 

to the PAL source occurs during the PAL effective period; and 

2. The cabinet has not already adjusted for the [W] requirement. 

(10) Increasing a PAL during the PAL effective period. The cabinet may increase 

a PAL emissions limitation during the PAL effective period if the major stationary source 

complies with the provisions of this subsection. 

(a) Application procedures. To request an increase in the PAL limit for a PAL 

major modification, the owner or operator of the major stationary source shall submit a 

complete application, which shall include: 

I. Identification of the emissions units contributing to the increase in emissions 

for the PAL major modification; 

2. Demonstration that increased PAL, as calculated in paragraph (c) of this 

13 subsection exceeds the PAL, and: 

14 a. The level of control that results from BACT equivalent controls on each 

significant or major emissions unit shall be determined by conducting a new BACT 

analysis when [~#-#M&w] the application is submitted, unless the emissions unit is 

currently required to comply with a BACT or LAER requirement that was established 

within the preceding ten (10) years. 

b. If an emissions unit currently complies with' BACT or LAER, the assumed 

control level for that emissions unit shall be equal to the current level of BACT or LAER 

for that emissions unit;,and 

3. A statement that the increased PAL level shall be effective on the day any 

23 emissions unit that is part of the PAL major modification becomes operational and 
1 begins to emit the PAL pollutant. 

2 (b) NSR permit and compliance requirement. The owner or operator shall obtain 

3 a major NSR permit for all emissions units contributing to the increase in emissions for 

4 thePALmajormodification. 

5 1. A significant level shall not apply in deciding for which emissions units a major 

6 NSR permit shall be obtained; and 

7 2. Emissions units that obtain a major NSR permit shall comply with any 

8 emissions requirements resulting from the major NSR process, even though the units 

shall also become subject to the PAL or shall continue to be subject to the PAL. 

(c) Calculation of increased PAL. The cabinet shall calculate the new PAL as the 

sum of the allowable emissions for each modified or new emissions unit, plus the sum 

of the baseline actual emissions of the significant and major emissions units assuming 

application of BACT equivalent controls, plus the sum of the baseline actual emissions 

of the small emissions units. 

(d) Public notice requirement. The public notice requirements of subsection (4) of 

this section shall be followed during PAL permit revision for an increased PAL level. 

(1 1) Monitoring requirements for PALS. 

18 (a) General requirements. 

19 1. Each PAL permit shall contain enforceable requirements for the chosen 

20 monitoring system that accurately determines plant-wide emissions of the PAL pollutant 

21 in terms of mass per unit of time; 

22 2. A monitoring system authorized for use in the PAL permit shall be: 

23 a. Approved by the cabinet pursuant to this subsection; [cab&&] and 
b. Based on sound science and meet generally-acceptable scientific procedures 

for data quality and manipulation; 

3. The data generated by a monitoring system shall meet minimum legal 

requirements for admissibility in a judicial proceeding to enforce the PAL permit; 

4. The PAL monitoring system shall employ one (1) or more of the four (4) 

general monitoring approaches meeting the minimum requirements set forth in 

paragraph (b) of this subsection; 

5. The cabinet may approve an alternative monitoring approach that meets the 

requirements of subparagraphs 1 to 3 of this paragraph; and 

6. Failure to use a monitoring system that meets the requirements of this section 

shall render the PAL invalid. 

(b) Minimum performance requirements for approved monitoring approaches. If 

conducted in accordance with the minimum requirements in paragraphs (c) to (i) of this 

subsection, the following shall be acceptable monitoring approaches: 

I. Mass balance calculations for activities using coatings or solvents; 

2. CEMS; 

3. CPMS or PEMS; and 

4. Emissions factors. 

(c) Mass balance calculations. An owner or operator using mass balance 

calculations to monitor PAL pollutant emissions from activities using coatings or 

solvents shall: 

1. Provide a demonstrated means of validating the published content of the PAL 

pollutant [#hat&] contained in or created by all materials used-in or at the emissions 
unit; 

2. If it cannot be accounted for in the process, assume that the emissions unit 

emits all of the PAL pollutant [ht-is] contained in or created by any raw material or fuel 

used in or at the emissions unit; and 

3. If the vendor of the material or fuel from which the pollutant originates 

publishes a range, use the highest value of the published range of pollutant content to 

calculate the PAL pollutant emissions, unless the cabinet determines there is sitespecific data or a site-specific monitoring program to support another pollutant content 

within the range. 

(d) CEMS. An owner or operator using CEMS to monitor PAL pollutant emissions 

shall meet the following requirements: 

1. GEMS shall comply with applicable Performance Specifications found in 40 

C.F.R. Part 60, Appendix A; [AppmcW&] and 

2. CEMS1 shall sample, analyze, and record data at least every fifteen (15) 

minutes while the emissions unit is operating. 

(e) CPMS or PEMS. An owner or operator using CPMS or PEMS to monitor PAL 

pollutant emissions shall meet the following requirements: 

1. The CPMS or the PEMS shall be based on current site-specific data 

demonstrating a correlation between the monitored parameter and the PAL pollutant 

emissions across the range of operation of the emissions unit; and 

2. While the unit is operating, each CPMS or PEMS shall sample, analyze, and 

record data at least every ffieen (15) minutes, or at another less frequent interval 

. approved by the cabinet. 
(f) Emissions factors. An owner or operator using emissions factors to monitor 

PAL pollutant emissions shall meet the following requirements: 

1. All emissions factors shall be adjusted, if appropriate, to account for the 

degree of uncertainty or limitations in the factors' development; 

2. The emissions unit shall operate within the designated range of use for the 

emissions factor, if applicable; and 

3. The [[I owner or operator of a significant 

emissions unit that relies on an emissions factor to calculate PAL pollutant emissions 

shall conduct validation testing to determine a site-specific emissions factor within six 

(6) months of PAL permit issuance if the cabinet determines that the testing is 

(g) A source owner or operator shall record and report maximum potential 

emissions without considering enforceable emissions limitations or operational 

restrictions for an emissions unit during any period of time there is no monitoring data, 

unless another method for determining emissions during t& [W] periods is specified 

in the PAL permit. 

(h) If an owner or operator of an emissions unit cannot demonstrate a correlation I 

between the monitored parameters and the PAL pollutant emissions rate at all operating 

points of the emissions unit, as an alternative to the requirements in paragraphs (c) to 

(g) of this subsection, in coniunction with [w permit issuance the cabinet 

shall: 

1. Establish default values for determining compliance with the PAL based on the 
1 highest potential emissions reasonably estimated at operating points if a correlation 

2 cannot be demonstrated; or 

3 2. If there is not a [rte] correlation between monitored parameters and the PAL 

4 pollutant emissions, determine that operation of the emissions unit during operating 

5 conditions is a violation of the PAL. 

6 (i) Revalidation. All data used to establish the PAL pollutant shall be revalidated 

. .. 7 through performance testing or other scientificallv valid [y

means 

8 approved by the cabinet. Validation testing shall occur at least once every five (5) years 

9 after issuance of the PAL. 

10 (1 2) Record keeping requirements. 

11 (a) The PAL permit shall require an owner or operator to retain a copy of all 

12 records necessary to determine compliance with any requirement of this section and of 

13 the PAL, including a determination of each emissions unit's twelve (12) month rolling 

14 total emissions for five (5) years from the date of the determination. 

15 (b) The PAL permit shall require an owner or operator to retain a copy of the 

16 following records for the duration of the PAL effective period plus five (5) years: 

17 1. A copy of the PAL permit application and any applications for revisions to the 

18 PAL; and \ 

19 2. Each annual certification of compliance pursuant to Title V and the data used 

. 20 to certify the compliance. 

2 1 (13) Reporting and notification requirements. The owner or operator shall submit 

22 semi-annual monitoring reports and prompt deviation reports to the cabinet in 

23 accordance with 401 KAR Chapter 52 that meet the following requirements: 
1 (a) Semiannual report. The semiannual report shall be submitted to the cabinet 

2 within thirty (30) days of the end of each reporting period and shall contain: 

3 1. The identification of owner and operator and the permit number; 

4 2. Total annual emissions, in tpy, based on a twelve (12) month rolling total for 

5 each month in the reporting period recorded pursuant to subsection (12)(a) of this 

6 section; 

7 3. All data used in calculating the monthly and annual PAL pollutant emissions, 

8 including any quality assurance or quality control data; 

9 4. A list of any emissions units modified or added to the major stationary source 

--- - ________- _ - 

7 dur7ngthe preceding si-6) month period; 

11 5. The number, duration, and cause of any deviations or monitoring malfunctions, 

12 other than the time associated with zero and span calibration checks, and any 

13 corrective action following a deviation; 

14 6. A notification of permanent or temporary shutdown of any monitoring system 

15 including: 

16 a. The reason for the shutdown; 

17 b. The anticipated date that the monitoring system shall be fully operational or 

18 shall be replaced with another monitoring system; 

19 c. If applicable, a statement that the emissions unit monitored by the monitoring 

20 system continued to operate without the monitoring system; and 

21 d. The calculation of the emissions of the pollutant or the number determined 

22 according to subsection (1 1 Xg) of this section that is included in the permit; and 

23 7. A signed statement by the responsible official, as defined by 401 KAR 51 :001, 

63 
1 Section 1(210), [52@3%] certifying the truth, accuracy, and completeness of the 

2 information provided in the semiannual report. 

3 (b) Deviation report. The major stationary source owner or operator shall submit 

reports of any deviation or exceedance of the PAL requirements, including periods 

monitoring is unavailable. 

1. A report submitted pursuant to 40 C.F.R. 70.6(a)(3)(iii)(B) shall satisfy this 

deviation reporting requirement; 

2. The deviation report shall be submitted within the time limits prescribed by the 

applicable program implementing 40 C.F.R. 70.6(a)(3)(iii)(B); 

3. The deviation report shall contain the following information: 

a. The identification of the owner, the operator, and [w] the permit 

number; 

b. The PAL requirement that experienced the deviation or that was exceeded; 

c. Emissions resulting from the deviation or the exceedance; and 

d. A signed statement by the .responsible official, as defined by 401 KAR 51 :001, 

Section 1(210), [52@&] certifying the truth, accuracy, and completeness of the 

information provided in the report. 

(c) Revalidation results. The owner or operator shall submit to the cabinet the 

results of any revalidation test or method within three (3) months after completion of the 

test or method. 

(1 4) Transition requirements. 

(a) After the U.S. EPA approves the Kentucky SIP revisions for the PAL 

provisions published at 67 Fed. Reg. 80186, December 31, 2002, the cabinet shall only 
1 issue a PAL that complies with the requirements of this section. 

2 (b) The cabinet may supersede a PAL that was established before August 10, 

3 2006, [t%4&-h L' EPA rz-2 P,4 . . .". 

4 vA%G&@WW6, F=ar( Qn!, 31,W . . ,] with a PAL that 

5 complies with the requirements of this administrative re~ulation. [-] 
Date Leonard K. Peters, Secretary 

Energy and Environment Cabinet 
REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT 

Administrative Regulation #: 401 KAR 51 :052 

Contact person: Laura Lund, Environmental Technologist II 

(1) Provide a brief summary of: 

(a) What this administrative regulation does: This administrative regulation 

provides for the nonattainment new source review (NSR) and applies to 

new construction or modification of major stationary sources in areas 

designated nonattainment for a specified pollutant. 

(b) The necessity of this administrative regulation: This administrative 

regulation is necessary in order to continue to receive full delegation of 

authority for the federal NSR program in Kentucky. 

(c) How this administrative regulation conforms to the content of the 

authorizing statutes: KRS 224.10-1 00 authorizes the Cabinet to 

promulgate administrative regulations for the prevention, abatement, and 

control of air pollution. KRS 224.1 0-lOO(26) mandates the preservation of 

clean air resources while ensuring economic growth. This regulation 

conforms to the statutes because it is no more stringent than the federal 

mandate. 

(d) How this administrative regulation currently assists or will assist in 

the effective administration of the statutes: This administrative 

regulation is no more stringent than the federal mandate, codified in 40 

C.F.R. 51.165. 

(2) If this is an amendment to an existing administrative regulation, provide a 

brief summary of: 

(a) How the amendment will change this existing administrative 

regulation: This amendment revises the list of exempted major stationary 

sources codified in 40 C.F.R. Part 51, and the list of major sources 

codified in 40 C.F.R. Part 70, as they relate to PSD, NSR, and Title V 

applicability. The amendment removes the existing standards and 

requirements for clean units (CU) and pollution control projects (PCP) that 

have been vacated at the federal level in a D.C. Court of Appeals 

decision. This amendment includes nitrogen oxides (NOx) as a precursor 

for ozone. Amendments in formatting and grammar were also necessary 

in order to comply with KRS Chapter 13A. 

(b) The necessity of the amendment to this administrative regulation: 

These regulatory revisions are necessary in order to implement changes 

in the KY State Implementation Plan (SIP) in response to changes in the 

federal rules 

(c) How the amendment conforms to the content of the authorizing 

statutes: Kentucky's federally-approved NSR SIP provides the permitting 

and enforcement authority delegated from the US. €PA to the 

Commonwealth. 
(d) How the amendment will assist in the effective administration of 

statutes: This administrative regulation amendment is modeled after the 

federal regulations. 

(3) List the type and number of individuals, businesses, organizations, or state 

and local governments affected by this administrative regulation. The 

amendment revises the applicability of major sources by specifically excluding 

"chemical process plants" that produce ethanol through a natural fermentation 

process. In addition, sources meeting standards and requirements for CU and 

PCP, and sources emitting NOx in an area designated as nonattainment for 

ozone, are affected by this administrative regulation. 

(4) Provide an assessment of how the entities identified in question (3) will be 

impacted by either the implementation of this administrative regulation, if 

new, or by the change if it is an amendment: 

(a) List the actions that each of the regulated entities identified in 

question (3) will have to take to comply with this administrative 

regulation or amendment: Regulated entities shall continue to comply 

with this administrative regulation. This amendment affects existing or 

proposed facilities that produce ethanol through a natural fermentation 

process as it specifically excludes them, under the component term 

"chemical process plants," from having to comply with the PSDINSR 

requirements. Sources will no longer be required to meet standards and 

requirements for CU and PCP. In addition, sources emitting NOx in an 

area designated as nonattainment for ozone will be subject to permitting 

as volatile organic compounds have been. 

(b) In complying with this administrative regulation or amendment, how 

.much will it cost each of the entities identified in question (3): There 

are no additional costs involved in compliance with this regulation. 

(c) As a result of compliance, what benefits will accrue to the entities 

identified in question (3): Ethanol facilities, as defined in C.F.R. 51.166 

and this administrative regulation are no longer included under the 100 

tons per year PTE limit for major source categories under the PSDINSR 

rules. As a result of not having to apply additional emission controls, 

growth of the ethanol industry will increase. 

(5) Provide an estimate of how much it will cost the administrative body to 

implement this administrative regulation: 

(a) Initially: The Cabinet will not incur any additional costs for the 

implementation of this regulation. 

(b) On a continuing basis: There will not be any additional continuing costs 

for the implementation of this regulation. 

(6) What is the source of the funding to be used for the implementation and 

enforcement of this administrative regulation: The Cabinet's current 

operating budget will be used for the implementation and enforcement of this 
regulation. 

(7) Provide an assessment of whether an increase in fees or funding will be 

necessary to implement this administrative regulation, if new, or by the 

change if it is an amendment. No increase in fees or funding is necessary to 

implement this regulation. 

(8) State whether or not this administrative regulation established any fees or 

directly or indirectly increased any fees. This regulation does not establish, 

nor does it directly or indirectly increase any fees. 

(9) TIERING: Is tiering applied? Yes. The applicability and compliance 

requirements that are tiered in this administrative regulation are modeled after 

the federal PSD and NSR rules. 
FEDERAL MANDATE ANALYSIS COMPARISON 

1. Federal statute or regulation constituting the federal mandate. 42 U.S.C. 7401- 

7671q; 42 U.S.C. 7401-7626, 7407(d)(I)(A)(i), (ii), and (iii), 7410, provides the 

statutory mandate codified in 40 C.F.R. Part 52.21, as amended in 72 Fed. Reg. 

24077, May 1,2007, and in 72 Fed. Reg. 32528, June 13,2007. 

2. State compliance standards. The state compliance standards are found in KRS 

224.1 0-1 OO(5). 

3. Minimum or uniform standards contained in the federal mandate. The federal 

NSR mandate requires sources described in Section 1 of this administrative 

regulation to demonstrate that any construction or modification of the source will not 

cause a net increase in pollution; neither will the source create a delay in attainment 

of the NAAQS; and that the source will install and use control technology that 

achieves the lowest achievable emissions rate (LAER). 

The amendment to this administrative regulation excludes "chemical process plants" 

that produce ethanol by a natural fermentation process in the revised definition of 

major stationary source. Further revisions include the removal of clean unit (CU) 

and pollution control project (PCP) requirements because they have been vacated at 

the federal level by a decision from the D.C. Court of Appeals. This amendment 

requires sources emitting NOx in an area designated as nonattainment for ozone to 

be subject to permitting as volatile organic compounds have been. 

4. Will this administrative regulation impose stricter requirements, or additional 

or different responsibilities or requirements, than those required by the federal 

mandate? No. This regulation is modeled after federal regulations. 

5. Justification for the imposition of the stricter standard, or additional or 

different responsibilities or requirements. Stricter standards and requirements 

are not imposed. 
FISCAL NOTE ON STATE OR LOCAL GOVERNMENT 

Administrative Regulation #: 401 KAR 51:052 

Contact person: Laura Lund, Environmental Technologist II 

I. Does this administrative regulation relate to any program, service, or 

requirements of a state or local government (including cities, counties, fire 

departments, or school districts)? Yes. 

2. What units, parts or divisions of state or local government (including cities, 

counties, fire departments, or school districts) will be impacted by this 

administrative regulation? The Division for Air Quality will continue to 

implement and enforce the New Source Review (NSR) program in the 

Commonwealth. 

3. Identify each state or federal statute or federal regulation that requires or 

authorizes the action taken by the administrative regulation. KRS 224.10- 

I OO(5), 42 U.S.C. 7404-7671 q. 

4. Estimate the effect of this administrative regulation on the expenditures 

and revenues of a state or local government agency (including cities, 

counties, fire departments, or school districts) for the first full year the 

administrative regulation is to be in effect. 

(a) How much revenue will this administrative regulation generate for the state 

or local government (including cities, counties, fire departments, or school 

districts) for the first year? This regulation generates no revenues. 

(b) How much revenue will this administrative regulation generate for the state 

or local government (including cities, counties, fire departments, or school 

districts) for subsequent years? This regulation generates no revenues. 

(c) How much will it cost to administer this program for the first year? The 

Cabinet's existing operating budget continues as the source of funding for the 

implementation of this program. 

(d) How much will it cost to administer this program for subsequent years? 

There will be no additional costs for administering the program in subsequent 

years. 

Note: If specific dollar estimates cannot be determined, provide a brief 

narrative to explain the fiscal impact of the administrative regulation. 

Revenues (+I-): There is no known effect on current revenues. 

Expenditures (+I-): There is no known effect on current expenditures. 

Other Explanation: There is no further explanation.