### REGULATORY IMPACTANALYSIS AND TIERING STATEMENT Administrative Regulation#: 401 KAR 51:017 Contact person: Laura Lund, Environmental Technologist 

### II (1) Providea briefsummary of: What this administrative regulationdoes: This administrative regulation providesfor the preventionof significant deterioration (PSD) of ambient air quality, and applies to major stationary sources and major modifications constructing inareas designatedas either attainment or unclassified. The necessity of this administrative regulation: This administrative regulation is necessary in order to continue to receive full delegation of authorityfor 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 controlof air pollution. KRS 224.10-1OO(26) mandates the preservationof 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 briefsummary of: How the amendment will change this existing administrative regulation: This amendment revisesthe list of exempted major stationary sources codified in40 C.F.R Part 51, and the listof major sources codified in40 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 orderto complywith KRS Chapter 13A. The necessityof the amendmentto this administrative regulation: These regulatory revisions are necessary in order to implement changes inthe KY State Implementation Plane (SIP) in responseto changes inthe federal 

### rules and to provide the applicable sources with the appropriate regulatory mechanismto submit an ozone airqualityanalysis. 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. Listthe 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 100tons 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 bythe 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 amendmentthat affects existing or proposedfacilities 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 requiredto conduct an ambient air quality analysisfor ozone. In complying with this administrative regulation or amendment, how muchwill it 

### cost each of the entities identified inquestion (3): 

### There are no additional costs involved incompliancewith 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, growthof the ethanol industry will increase. Provide an estimate of how much it 

### will cost the administrative body to implementthis administrative regulation: (a) Initially: The Cabinet will not incur any additional costs for the implementationof 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 implementthis 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 itdirectly or indirectlyincrease any fees. (9) 

### TIERING: Is tiering applied? Yes. The applicability and compliance requirements that are tiered in this administrative regulation are modeled after thefederal PSD

### and 

### NSR rules.

### FEDERAL MANDATE ANALYSIS COMPARISON 1. Federalstatute or regulationconstituting 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 224.10-1 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 amendmentto 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 becausethey have beenvacated 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 analysisfor ozone. 4. 

### Will this administrative regulation impose stricter requirements, or additional or different responsibilitiesor requirements, than those required bythe federal mandate? No. This regulation is modeled afterthe 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, orschool districts)? Yes. What units, parts or divisions ofstate or local government (includingcities, counties, fire departments, or school districts) will be impacted by this administrative regulation? The Division for Air Quality will continue to implementand enforcethe Preventionof Significant Deterioration (PSD) program inthe 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 

### ineffect. (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 regulationgenerates 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 implementationofthis 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 subsequentyears. 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 knowneffect on current revenues. Expenditures 

### (+I-):There is no knowneffecton current expenditures. Other Explanation:There is nofurther explanation.ENERGYAND ENVIRONMENT CABINET Departmentfor Environmental Protection Divisionfor Air Quality (Amended After Comments) 401 KAR 51:052. Reviewof new sources in or impacting upon nonattainment areas. RELATES TO: KRS 224.20-100(!jJ, 224.20-1 10, 224.20-120, 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 224.10-100(5), [4(! C.F.!?. 

## -1 42 U.S.C. 7401 -7671 4,EO2009-538 

### 1-1 NECESSITY, FUNCTION, AND CONFORMITY: KRS 224.10-100 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 regulation40 

### C.F.R. 51 

### .I 

### 65. Section 

### 1. Applicability. This administrative regulation shall apply to the1 construction of a new major stationary soyrce or 

## a [wy] project that is a major 2 modificationat an existing majorstationary 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 ina mandatoryClass Ifederal 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 beihgcanstructedor modified accordingto subparagraphs 1to 

### 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 exceedsthe significant amount forthat 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 unit1 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 increaseof a regulated NSR pollutant shall be projectedto occur if 

### 9 the sum of the emissions increases for each emissions unit, using the methods 10 specified in subparagraphs 1 and 2 

## [MIof this paragraph as applicable for each 11 emissions unit, equals or exceedsthe significantamountfor that pollutant. 12 

### (b) Priorto 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 

## [I 

## PW 21 

## . . 

## -1 22 Section 

### 2. Initial Screening Analyses and Determination of Applicable 

### 23 Requirements. (1) Reviewof allsourcesfor emissions limitationcompliance.(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 inthe KentuckyState Implementation Plan (SIP) and 

### 40 

### C.F.R. Parts60 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 permitto construct shall be denied. (2) Reviewof specified sources of airquality impact. (a) The cabinet shall determine if a proposed major stationary source or major modificationwill be constructed in an area designated as nonattainment pursuant to 42 U.S.C. 7407(d)(l)(A)(i)for a pollutantfor 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 bythe new source start-up date, offsets shall not be required ifthe newsourcewill not cause a newviolation. (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 andthe source does not belongto one (1) of thefollowing categories: (a) Coalcleaning plantswith thermaldryers; 

### (b) Kraft pulp mills; 

### (c) Portlandcement 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 leadsmelters; 15 (q) Fuelconversion 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 312140; 

# [m]

2

1 (u) Fossil-fuel boilers, or combination of fossil-fuel boilers, totaling morethan 250 22 million BTUs per hourheat input; 

### 23 (v) Petroleum storage and transfer unitswith a total storage capacity exceeding1 300,000 barrels; 2 

### (w)Taconite ore processing plants; 

### 3 (x) Glassfiber 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. 7411 or 7412. 9 Section 3. Sources Locating in Designated Attainment or Unclassifiable Areas 10 that Will Cause or Contributeto a Violation of a NationalAmbient Air Quality Standard. 11 (1) This section shall apply only to new major stationary sources or new major 12 modificationsthat will locate in designated attainment or unclassifiable areas, pursuant 13 to 42 U.S.C. 7407(d)(l)(A)(ii) or (iii), ifthe source or modificationwill cause impactsthat 14 exceed the significance levels, as listed inthe table inthis subsection, at a localitythat 15 does notor will not meetthe nationalambient air qualitystandards 

## 1~ollutant 

## 1 Annual 

# I AveragingTime 

## I(2) Sources to which this section applies shall meet the requirements in Section 

### 4(1), 

### (2) and (4) of this administrative regulationand may be exempt from Section 4(3) of this administrativeregulation. (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 usingthe 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 initialdetermination 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 isoxidizedto NO2bythe timethe plume reaches ground level. The initial concentration estimates may be adjusted if adequate data are availableto accountfor the expected oxidation rate. (5) For ozone, sources of VOCs or NOx locating outside a designated ozone nonattainmentarea 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 isdesignated nonattainment pursuant to 42 

### U.S.C. 7407(d)(l)(A)(i). 

### (6) The determinationthat a new major sourceor major modificationwill cause orcontributeto 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 unclassifiableareas, the operation of which will cause a newviolation of a national ambient air quality standard but will not contribute to an existing violation, may be approved only ifthe following conditionsare met: (a) The newsource shall: 1. Meet an emissions limitation; 2. Meeta design, operational, or 

# [w] equipment standard; or 3. Control existing sources so that the new source will not cause a violation of a nationalambient 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 NonattainmentArea. 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. Approvalto construct may begranted only ifthe conditionsofthis sectionare met. (1) The new major source or major modification shall be required to meet an emissions limitationthat specifies the lowest achievable emissions rate 

### (LAER) for the

source. (2) The applicant shall demonstrate that all existing major 

### sources owned oroperated 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 applicableemissions limitationsand standards specified in Title 401, Chapters 50 to 

### 65, 

## [eland 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 decreeestablishing

### a compliance schedule. (3)(a) Exceptfor VOCs or NOx emissions, emissions from existing sources inthe 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 beaccepted. (b) The ratio of total emissions reductions of VOCs or NOx to total increased emissions of the same air pollutantshall be at least the ratio indicated for the following ozone nonattainmentarea classifications:

, 1. For marginal nonattainmentareas, at least 1 .I to 1; 2. For moderate nonattainmentareas, at least 1.15to 1; 3. For serious nonattainmentareas, at least 1.2 to 1; 4. Forsevere nonattainmentareas, at least 1 

### -3 to I ;

## and 5. Forextreme nonattainmentareas, at least 1.5 to 1. 

### (4) The emissions reductions

### shall provide a positive net 

### air quality benefit inthe affectedarea. 

### (a) Atmospheric simulation modelingshallnotbe requiredforVOCs 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 regulationshall be adequateto meetthis 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 constructor modifya source isfiled; 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 SIPwas basedonactual 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 offsetvalues. 

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

### 6 involved inthe 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 hoursfor the previoustwo (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 previoustwo (2)year period in conjunctionwith 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 onlyfor control belowthe 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 increaseemissionsof an air pollutant by: 

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

### 21 other sources inthe same nonattainmentarea; or 

### 22 2. 

### From sources inanother nonattainmentarea 

### if: 

### 23 a. The other area has an equal or higher nonattainment classification than the

### 1 area inwhich the source is located; and 

### 2 b. Emissionsfrom the other area contributeto a violation of the national ambient 

### 3 air quality standard inthe nonattainment area inwhich 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 existingfuel 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 requirementsof the cabinet for the type of fuel being burnedwhen 

### [a#he-&w] the new 13 major source or major modification application isfiled. 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) Ifthe existing source commitsto switch to 

### a cleanerfuel at some future date, 18 emissions offset credit based on the allowable emissionsfor the fuels involved shall not 19 be allowed unlessthe permit is conditioned to requirethe use of a specified alternative 

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

### 21 switches backto a dirtierfuel at some laterdate. 

### 22 (6) Calculatingoffsets for operating hours and 

### source shutdowns. 

### 23 (a) 

### A source may be credited with emissions reductions achieved by shuttingdown an existing source or permanentlycurtailing production or operating hours below baseline levels if the work force to be affected has been notified in writing of the proposedshutdown 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 emissionsoffset 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 shutdownor curtailment, credit for 

## the [W] shutdown or curtailment may be applied to offset emissionsfrom 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) Bankingof 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) ofthis 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 regulationfor use underthis administrative regulation, even 

### if the offsets are applied immediatelyto 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 identifiedand accountedfor in Kentucky's control strategy. 

### (9) Offset wedit for meeting 

### NSPSor 

### NESHAPS. (a) If a source is subject to an emissions limitation established ina 

### 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 emissionsoffsets. (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 bythe 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 bythe 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 bythe cabinet. 

### (2)Source initiated emissionsoffsets. 

### (a) The owneroroperator

### of asource 

### may propose: 1. Internalemissions offsets, which involve reductions

### from sources controlled bythe 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 limitationshall be enforceable by the cabinet andthe 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 sourceto accommodatethe proposednew source. (b) This emissions reduction commitment shall be reflected in the emissions limitationrequirements for the new and existing sources as required bythis 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

sourceor modification inaccordancewiththe applicationsubmittedto the cabinet under this administrative regulation and 401 

### KAR 52:020 or underthe terms of an approvalto construct. (2)(a) Approval

### to constructshall becomeinvalid 

### ifconstruction: 1. Isnot commencedwithin eighteen (1 

### 8) monthsafter receipt of the appmval;1 2. Isdiscontinuedfor a periodof eighteen (18) monthsor more; or 2 

### 3. Is not completed within a reasonabletime. 

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

### 4 demonstration[64wwg] that an extension isjustified. 

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

### 6 approved phasesof a phased constructionproject; and 

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

### 8 projected and approved commencementdale. 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 requirementsunder local, state, orfederal law. 12 (4) If a particular source or modification becomes a major stationary source or 13 major modificationsolely by virtue of a relaxationinan enforceable limitationwhich 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 ina significant emissions increase; and 

### 2. The owner or operator usesthe method.specified in

### 401 

### KAR 51:001, Section1 1{199)(b)[o@j] to calculate projectedactual 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 descriptionof the project; 

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

### NSR 7 pollutant may be affected bythe project; and 8 3. 

### A description of the applicabilitytest usedto determinethat the project is not a 9 major modification for any regulated NSR pollutant,including: 10 a. Baselineactual emissions; 11 b. Projectedactual emissions; 12 c. Amount of-emissionsexcluded in calculating projected actual emissions and 13 an explanation forwhy that amountwas 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. Monitorthe 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 ofthis subsection; and 

### 20 2. Calculate and maintaina 

### recordof the annual emissions, intons per year on a 

### 21 calendaryear basis, for: 

### 22 a. Five

### (5) yearsfollowing resumptionof regularoperations afterthe change; or

, 

### 23 b. Ten (10) 

### years 

### if the project increases the design capacity of or potential to1 emitforthat regulated NSR pollutantatthe 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 emissionsduring the calendar year preceding report submittal. (e)l. For an existing unit other than an EUSGU, the owner or operator shall submit a reportto 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 maintainedpursuantto paragraph(b)3 ofthis subsection. 20 2. The reportshall 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 subsectionand shallcontain the following: 

### 23 a. The name, address, and telephone numberof the majorstationarysource;

### 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 operatorof the source shall makethe information required to be documented and maintained underthis subsection available for review upon requestfor inspection bythe cabinet or the general public pursuantto 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 requestthat the cabinet rescind the applicable conditions. (2)The cabinetshall rescind a permit condition ifthe 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 commencedafter September22,1982; 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 onAugust 

### 7, 1977, shall beClass 

### 1 areas and shall not 

### be designated: (a) Internationalparks;



## -(b) Nationalwilderness areas and national memorial parks which exceed 

### 5,000acres in size; and (c) National parks that exceed 6,000 acres in size. (2) Any other area, unless otherwise specified inthe legislation creating the area, isdesignated Class II but may be redesignated as provided in40 C.F.R. 51.166(g). (3) The visibility protection requirements of this administrative regulation shall apply onlyto sources that may impact a mandatory Class 

### Ifederal area. (4)The followingareas may be redesignated only as Class Ior 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 nationalwild and scenic river, a national wildlife refuge, a national lakeshoreor seashore; and (b) A national park or national wilderness area establishedafter August 7, 1977, which exceeds 10,000 acres in size. Section 10. Protectionof Visibility. (1) Newsource 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 meetthe requirementsofthis 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 potentiallyhave an impactonvisibility 

### in a Class 

### 1

area. 

### (c) 

### fhis section shall applyto a 

### majorstationary 

### source or 

### majormodificationfor



# .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 modificationif: 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 requirementsof this section; and 2. The source is a portable stationary source that has previously received a permitunderthis section andwill betemporarily relocated; and: I0 a. [feIwa&&] The emissions from the source will not exceed the allowable 11 emissions; 12 b. The emissionsfrom the source will not impact a Class Iarea or an area where

, 13 an applicable increment is knownto beviolated; and 14 

### c. Reasonable notice is givento the cabinet priorto the relocation, identifyingthe / 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 pursuantto this section. [wbhek] 19 (e)This section shall not applyto a major stationary source or major modification 

### 20 with respectto a particularpollutant, 

### ifthe allowable emissions of that pollutant from the 

### 21 source, orthe net emissions increaseofthat pollutantfromthe modification: 

### 22 1.Will not impada Class 

### Iarea; 

### 23 2. Will not impactan areawhere an applicable increment is knownto be violated;and 

### 3. Will be temporary. 

### (2)Visibility impact analyses. The owner or operator of a source shall provide an analysis of the impairmentto visibility that will occur in 

### a Class 

### Iarea as a result of the

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

### a&] other growth associatedwith the source or modification. (3) Federal land manager notification. (a) The federal land manager and the federal official charged with direct responsibilityfor managementof Class Iareas shall have an affirmative responsibilityto 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 modificationwill 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 responsibilityfor management of lands within the Class Iarea of a permit application or anadvanced noticeof a permit application for a proposed new major stationary source or major modificationthat may ' affectvisibility in a Class 1 area. The notificationshall: 

### 1, Include a copyof all information relevantto 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 on1 visibility ina Class 

### 1area. 

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

### 3 provided within thirty 

### (30)days of the notificationand analysis required by paragraph (b) 

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

### 5 

### may have an adverse impactonvisibility ina Class 

### 1area. 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 noticeas 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 correlatewith the times of visitor use of the Class Iarea, and the frequency andtime of 14 natural conditions that reducevisibility. 

### 15 (4) Public participation. The cabinet shall followthe applicable proceduresof 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 proceduresof401 

### KAR 52:100 do notapply. 19 (5) National visibility goal. 20 (a) The cabinet shall only issue permitstothose sourcesfor which emissionswill 

### 21 be consistent with making reasonable progresstoward the national goal of preventing 

### 22 future, and remedying existing, impairment of visibility inClass 

### Iareaswhich impairment 

### 23 resultsfrom manmadeair 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 necessaryfor 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 determinedon a case-by-case basis bythe 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 availableto the cabinet, thefederal 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 meetsthe 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 modificationfor the PAL pollutant; 2. Shall not have to be approvedthrough Kentucky's major NSR program; and 3. Shall not be subject to the provisions of Section 7(4) of this administrative regulation concerning restrictionson relaxing enforceable emissions limitations that the major stationary source used to avoid applicabilityof 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 priorto the effectivedateofthe PAL. (c) The cabinet shall not allow a PAL for VOC or 

### NOx for any major stationary

source located inan extreme ozone nonattainmentarea. (2) Permit application requirements. The owner or operator of a major stationary

soume shall submit 

### the following infomationto 

### the cabinet for approval as part of an applicationfor a permitor 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 potentialto emit;

> 

### 3 (b) Identification of the federal and state applicable requirements, emissions 4 limitations,and work practice requirements that applyto each emissions unit; 

### 5 (c) Calculations of the baseline actual emissions for the emissions units with 6 supporting documentation; and 

### 7 (d) The calculation proceduresthe owner or operator proposesto 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 inafederallyenforceable permit pursuantto the requirementsof this section. 13 (a) The PAL shall impose an annual emissions limitation intons 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 underthe PALfor the previous 19 twelve (12) consecutive months is less than the PAL as a twelve (12) month average, 

### 20 rolled monthly; and 

### 21 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 monthlyemissionsfrom the PAL effective datefor each emissions unit underthe PAL islessthan the PAL; (b)The PAL shall be established ina PAL permit that: 

### 1. Meets the public participation requirements in subsection (4) of this section; and 2. Contains allthe requirements of subsection 

### (6) ofthis 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 stationarysource; (d) Each PALshall regulateemissions of only one (1) pollutant; (e) Each PALshall 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 inthe absenceofthe PAL. (4) Public participation requirements. PALSfor 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 periodfor submittalof publiccomment; 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 pollutantfor 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 chosentwenty-four (24) month period shall 

### be subtractedfrom

### the PAL level. 19 (e) Emissions from unitsforwhich actual construction began afterthe twenty-four 

### 20 (24) month period shall be added to the 

### PAL level inan amount equal to the potential to 

### 21 emitof the units. 22 

### (f)The cabinet shall spewa 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 thatthe cabinet isaware of priorto issuanceof 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 intons 5 peryear; 

### 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 bythe cabinet; 12 (d) A requirement that emissions calculations for compliance purposes include 13 emissionsfrom startups, shutdowns, and 

## [w] malfunctions; 14 (e) A requirement that, once the PAL expires, the major stationary source shall 15 

### & [is]subject to the requirementsof 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 accordancewith the provisions 

### in subsection 

### (12) of this 

### 22 section; 

### 23 (h) 

### A requirement that the owner or operator 

### shall retain the records requiredunder 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 thissection bythe required deadlines; and 

### (j)Any 

### [€Mw]requirements necessaryto implementand enforcethe PAL. (7) PALeffective period and reopeningof a PAL permit. (a)A PALeffective periodshall beten (10) years. (b)The cabinetshall reopen a PAL permitto: 1. Correcttypographical or calculation errors made in setting the PAL; 2. Reflect a more accurate determinationof emissions usedto establishthe 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. Revisethe PAL to reflect an increase inthe PAL according to subsection (10) 15 of this section. 16 (c)The cabinet may reopenthe PAL permit, duringthe PALeffective period, to: 17 1. Reduce the PAL to reflect newly applicable federal requirements with 18 compliance dates afterthe PAL effectivedate; 

### 19 2. Reducethe PAL consistent with any other requirement: 

### 20 a. That isenforceableas a practicalmatter; and 

### 21 b. That may 

### be 

### imposedonthe major stationary source underthe SIP; and 

### 22 3. Reduce the 

### PAL if the cabinet determines that a reduction is necessary to 

### 23 avoid causingor contributingto:1 

### a. A NationalAmbient 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 isavailableto 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 typographicalor calculationof errors that do not increasethe PAL level. 9 (8) Expiration of a PAL. A PALthat is not renewed shall expire at the end of the 10 PAL effective period and the requirementsof this subsection shall then apply. 11 (a) Each emissions unit, or each group of emissions units,that existed underthe 12 PAL shall comply with an allowable emissions limitation under a revised permit 13 establishedas 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 unitsthat existed underthe PAL. 18 

### a. This proposal shall be submittedto the cabinet at least six 

### (6) months before 19 the expirationof the PAL permit but not soonerthan 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 duringthe PAL effective period, as required undersubsection (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 useto distributethe 

### PAL allowableemissions. 

### 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 complywith the allowable emissions limitationon a 

### 8 twelve (I 2) month rolling basis. The cabinet mayapprovethe 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 modificationat 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 pursuantto Section7(4) of 

### this administrative regulation.

,- 4

22 

### (9) Renewalof 

### 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 stationarysource. 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 beforethe 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 untilthe revised permitwiththe renewed PAL is issued. 17 

### (c) Application requirements. The application to renew a PAL permit Shall 18 contain: 19 1. The information required insubsection (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 supportingdocumentation; and 

### 23 4. Any other information the owner or operator wishes the cabinet to consider indeterminingthe appropriate level to renewthe 

### PAL. (d) 

### PAL adjustment. 

### 1. A 

### PAL shall not exceed the source's potentialto emit. The cabinet shall-adjust the 

### PAL downward to a level

## not [w] greater than the potential to emit if a source's potentialto emit has declined belowthe 

### PAL level. 2. The cabinet may renewthe 

### PAL at the same level as the current 

### PALwithout consideringthe factors specified in subparagraph 3 of this section, ifthe emissions level calculated according to subsection (5) of this section is equal to or greater than eighty (80) percentof the 

### PAL level; or 3. The cabinet may set the 

### PAL at a levelthat isdetermined to be:

a. More representativeof the source's baseline actual emissions; or b. Appropriate consideringthefollowingfactors: (i)Air quality needs; (ii)Advances incontroltechnology; (iii)Anticipated economicgrowth inthe areaof the source; (iv) The cabinet's goalof promoting voluntary emissions reductions;

# ar[&I (v) Other factors as specifically identified bythe cabinet in itswritten rationalefor settingthe 

### 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 provisionsof subsection 

### (10) ofthis section. 

### (e) The 

### PAL shall be adjusted in coniundionwith the 

# [w PAL permit renewal

### orTitle 

### V permit renewal, whichever 

### comes

### first. if:

561. The compliance date for a state or federal applicable requirementthat applies to the PALsource occurs duringthe PAL effective period; and 2. The cabinet has notalreadyadjusted for

## the [W] requirement. (10) Increasinga PAL during the PAL effective period. The cabinet may increase

a PAL emissions limitation during the PAL effective period 

### ifthe majorstationarysource complieswith 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 subsectionexceeds 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 levelfor that emissions unit shall be equal tothe current level of 

### BACT or 

### LAER forthat 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 and1 beginsto 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 contributingto the increase in emissions for 

### 4 thePALmajormodification. 

### 5 1. A significant levelshall not apply indeciding 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 subjectto the PALor shall continueto be subjecttothe 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 requirementsof subsection (4) of this sectionshall befollowed during PAL permit revisionfor an increased PAL level. (11) 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 emissionsof the 

### PAL pollutant 21 intermsof mass per unit of time; 

### 22 2. A monitoring system authorizedfor use inthe 

### PAL permitshall be: 

### 23 a. Approved bythe cabinet pursuanttothissubsection;

### [cab&&] andb. 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 requirementsfor admissibility in ajudicial proceeding to enforcethe 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 requirementsof subparagraphs 1to 3 of this paragraph; and 6. Failureto use a monitoringsystem that meets the requirements of this section shall render the PAL invalid. (b) Minimum performance requirements for approved monitoring approaches. If conducted in accordancewith the minimum requirements in paragraphs (c)to (i) of this subsection,thefollowing shall beacceptable monitoringapproaches: I. Mass balancecalculationsfor activities using coatings or solvents; 2. CEMS; 3. CPMS or PEMS; and 4. Emissionsfactors. (c) Mass balance calculations. An owner or operator using mass balance calculations to monitor 

### PAL pollutant emissions from activities using coatings or solventsshall: 

### 1. Provide 

### a demonstrated 

### means

### of validatingthe published content of the 

### PAL pollutant 

### [#hat&] contained 

### in or created 

### by all materials used-inor at 

### the emissionsunit; 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 materialor 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 highestvalue 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 withinthe range. (d) CEMS. An owner or operator using CEMSto monitor PAL pollutant emissions shall meetthefollowing requirements: 1. GEMS shall comply with applicable Performance Specifications found in 40 C.F.R. Part60, Appendix A; [AppmcW&] and 2. CEMS1 shall sample, analyze, and record data at least every fifteen (15) minuteswhile the emissions unit isoperating. (e) CPMS or PEMS. An owner or operator using CPMS or PEMSto monitor PAL pollutantemissions shall meetthe 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 acrossthe rangeof operation ofthe 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 bythe cabinet.(f) Emissions factors. An owner or operator using emissions factors to monitor 

### PAL pollutantemissions shall meetthefollowing requirements: 

### 1. All emissions factors shall be adjusted, if appropriate, to account for the degree of uncertaintyor limitations inthefactors' development; 2. The emissions unit shall operate within the designated range of use for the emissionsfactor, 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 restrictionsfor 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 inthe 

### PAL permit. (h) If an owner or operator of an emissions unit cannot demonstratea correlation

I betweenthe 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 determiningcompliancewith the 

### PAL based onthe

### 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 isa violationof 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 bythe cabinet. Validation testing shall occur at least once everyfive (5) years 9 after issuanceof 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 necessaryto 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 fromthe date of the determination. 

### 15 (b) The 

### PAL permit shall require an owner or operator to retain 

### a copy of the 16 following recordsfor the durationofthe PALeffective period plusfive (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 certifythecompliance. 

### 2

1 (13) Reporting and notificationrequirements. The owner or operatorshall submit 22 semi-annual monitoring reports and prompt deviation reports to the cabinet in 

### 23 accordancewith 401 KAR Chapter52that meetthefollowing 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 identificationof owner and operatorand 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 assuranceor quality controldata; 

### 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 actionfollowing a deviation; 14 6. A notification of permanent or temporary shutdown of any monitoring system 15 including: 16 a. The reasonfor the shutdown; 

### 17 b. The anticipated date that the monitoring system shall be fully operational or 18 shall be replacedwith another monitoringsystem; 19 c. If applicable, a statement that the emissions unit monitored by the monitoring 

### 20 system continuedto operate withoutthe monitoringsystem; and 

### 21 

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

### 22 accordingto subsection 

### (11 Xg) of this sectionthat isincluded inthe permit; and 

### 23 

### 7. A signed statement bythe responsible official, as defined by401 

### KAR 51:001,



### 631 Section 1(210), 

### [52@3%] certifying the truth, accuracy, and completeness of the 

### 2 informationprovided inthe 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 bythe applicable program implementing40 C.F.R. 70.6(a)(3)(iii)(B); 3. The deviation reportshall contain the following information:

a. The identification of the owner, the operator, and 

# [w] the permit number; b. The PAL requirementthat experienced the deviation or that was exceeded;

c. Emissions resulting from the deviationorthe exceedance; and d. A signed statement bythe.responsible official, as defined by 401 KAR 

### 51:001, Section 1(210), 

### [52@&] certifying the truth, accuracy, and completeness of the informationprovided inthe report. (c) Revalidation results. The owner or operator shall submit to the cabinet the results of any revalidationtest 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 publishedat 67 

### Fed. 

### Reg. 80186, December31, 2002, the cabinet shall only1 

### issuea PAL that complieswiththe 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 complieswith the requirementsof this administrativere~ulation. [-]

### Date Leonard K. 

### Peters, Secretary Energy and Environment Cabinet

### REGULATORY IMPACTANALYSIS AND TIERING STATEMENT Administrative Regulation#: 401 KAR 51:052 Contact person: Laura Lund, EnvironmentalTechnologist 

### 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 nonattainmentfor a specified pollutant. (b) The necessity of this administrative regulation: This administrative regulation is necessary in order to continue to receive full delegation of authorityfor the federal NSR program in Kentucky. (c) 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-lOO(26) mandatesthe preservationof 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 briefsummary of: (a) How the amendment will change this existing administrative regulation: This amendment revisesthe 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 requirementsfor clean units (CU) and pollutioncontrol 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 informatting and grammar were also necessary in orderto complywith KRS Chapter 

### 13A. (b) The necessityofthe amendmenttothis administrative regulation: These regulatory revisions are necessary in order to implement changes 

### in the KY State Implementation Plan (SIP) in response to changes inthe federal rules (c) How the amendment conforms to the content of the authorizing statutes: Kentucky's federally-approved NSR

### SIP providesthe 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) Listthe type and numberof 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 implementationof this administrative regulation, if new, or bythe change ifit isan 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 .muchwill it cost each of the entities identified inquestion (3): There are no additional costs involved incompliance 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 implementthis administrative regulation: (a) Initially: The Cabinet 

### will not incur any additional costs for the implementationof this regulation. (b) On 

### a continuing basis: There 

### will not be any additional continuing costs for the implementationof 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 thisregulation. 

### (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 implementthis regulation. (8) 

### State whether or not this administrative regulation established any fees or directly or indirectly increased any fees. This regulation does not establish, nordoes itdirectlyor indirectlyincrease anyfees. (9) 

### TIERING: Is tiering applied? Yes. The applicability and compliance requirements that are tiered in this administrative regulation are modeled after the federal PSDand NSR rules.FEDERAL MANDATE ANALYSIS COMPARISON 1. Federalstatute or regulationconstitutingthe 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 224.10-1 OO(5). 3. Minimum or uniform standards contained inthe 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 pollutioncontrol project (PCP) requirements becausethey 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 nonattainmentfor ozone to be subject to permittingas volatile organic compounds have been. 4. Will this administrative regulation impose stricter requirements, or additional or different responsibilitiesor requirements,than those required bythe federal mandate? No. This regulation is modeled afterfederal 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, EnvironmentalTechnologist II I. Does this administrative regulation relate to any program, service, or requirements of a state or local government (including cities, counties, fire departments, orschool districts)? Yes. 2. What units, parts or divisions of state or local government (includingcities, 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 ineffect. (a) How much revenue will this administrative regulationgeneratefor the state or local government (includingcities, counties, fire departments, or school districts) for the firstyear? This regulation generates no revenues. 

### (b) How much revenue willthis administrative regulationgeneratefor the state or local government (includingcities, counties, fire departments, or school districts) for subsequent years? This regulationgenerates 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 implementationof 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 explainthefiscal impactofthe administrative regulation. Revenues 

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

### (+I-): There is no knowneffect on current expenditures. Other Explanation: There is nofurther explanation.