[Federal Register Volume 60, Number 28 (Friday, February 10, 1995)]
[Rules and Regulations]
[Pages 7913-7917]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-3332]



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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[TN-139-1-6667a; FRL-5140-9]


Approval and Promulgation of Air Quality Implementation Plans; 
Tennessee; Revision to New Source Review, Construction and Operating 
Permit Requirements

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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SUMMARY: In this document, EPA is approving revisions to the State 
Implementation Plan (SIP) submitted by the State of Tennessee through 
the Tennessee Department of Environment and Conservation on August 17, 
1994. The submittal included revisions to the State's new source review 
(NSR) regulations, which were promulgated to bring the State's 
regulations into compliance with the 1990 amendments to the Clean Air 
Act and the Federal regulations. EPA finds that the revised State rules 
meet the Federal nonattainment NSR permitting requirements of the Clean 
Air Act as amended in 1990 (CAA) for the State's ozone (O<INF>3) 
nonattainment areas.
    On January 15, 1993, in a letter from Patrick M. Tobin to Governor 
Ned McWherter, EPA notified the State of Tennessee that EPA had made a 
finding of failure to submit required programs for the nonattainment 
area. The revised State NSR rules satisfy those requirements for this 
area. Therefore, the sanctions clock was stopped by the complete 
submittal and the Federal implementation plan clock will be stopped at 
the time of this approval.
DATES: This final rule will be effective April 11, 1995 unless adverse 
or critical comments are received by March 13, 1995. If the effective 
date is delayed, timely notice will be published in the Federal 
Register.

ADDRESSES: Written comments should be addressed to: Ms. Karen Borel, at 
the Regional Office Address listed.
    Copies of the material submitted by the State of Tennessee may be 
examined during normal business hours at the following locations:

    Air and Radiation Docket and Information Center (Air Docket 6102), 
U.S. Environmental Protection Agency, 401 M Street, SW., Washington, DC 
20460.
    Environmental Protection Agency, Region 4 Air Programs Branch, 345 
Courtland Street, NE., Atlanta, Georgia 30365. [[Page 7914]] 
    Tennessee Division of Air Pollution Control, 701 Broadway, Customs 
House, 4th Floor, Nashville, Tennessee 37247-1531.

FOR FURTHER INFORMATION CONTACT: Ms. Karen Borel, Regulatory Planning 
and Development Section, Air Programs Branch, Air, Pesticides & Toxics 
Management Division, Region 4 Environmental Protection Agency, 345 
Courtland Street, NE., Atlanta, Georgia 30365. The telephone number is 
404/347-3555, x4197. Reference file TN-139-1-6667a.

SUPPLEMENTARY INFORMATION:

A. Nonattainment NSR Requirements of the Amended Act

    The air quality planning requirements for nonattainment NSR are set 
out in part D of title I of the CAA. EPA has issued a ``General 
Preamble'' describing EPA's preliminary views on how EPA intends to 
review SIPs and SIP revisions submitted under part D, including those 
state submittals containing nonattainment area NSR SIP requirements 
(see 57 FR 13498 (April 16, 1992) and 57 FR 18070 (April 28, 1992)). 
Because EPA is describing its interpretations here only in broad terms, 
the reader should refer to the General Preamble for a more detailed 
discussion of the interpretations of part D advanced in this document 
and the supporting rationale. A brief discussion of the specific 
elements required in a state's NSR program also is included in section 
II.B. of this document.
    EPA is currently developing rule revisions to implement the changes 
under the 1990 Clean Air Act Amendments in the NSR provisions of parts 
C and D of title I of the CAA. EPA anticipates that the proposed rule 
will be published for public comment in the spring of 1995. If EPA has 
not taken final action on states' NSR submittals by that time, EPA may 
generally refer to the proposed rule as the most authoritative guidance 
available regarding the approvability of the submittals. EPA expects to 
take final action to promulgate the rule revisions to implement the 
part C and D changes in early 1996. Upon promulgation of those revised 
regulations, EPA will review NSR SIPs to determine whether additional 
SIP revisions are necessary to satisfy the requirements of the 
rulemaking.
    Prior to EPA approval of the State's NSR SIP submission, the State 
may continue permitting only in accordance with the new statutory 
requirements for permit applications completed after the relevant SIP 
submittal date. This policy was explained in transition guidance 
memoranda from John Seitz dated March 11, 1991, and September 3, 1992.
    As explained in the March 11, 1991, memorandum, EPA does not 
believe Congress intended to mandate the more stringent title I NSR 
requirements during the time provided for SIP development. States were 
thus allowed to continue to issue permits consistent with requirements 
in their current NSR SIPs during that period, or to apply 40 CFR part 
51, appendix S for newly designated areas that did not previously have 
NSR SIP requirements.
    The September 3, 1992, memorandum addressed the situation where 
states did not submit the part D NSR SIP revisions by the applicable 
statutory deadline. For permit applications complete by the SIP 
submittal deadline, states may issue final permits under the prior NSR 
rules, assuming certain conditions in the September 3, 1992, memorandum 
are met. However, for applications completed after the SIP submittal 
deadline, EPA will consider the source to be in compliance with the CAA 
where the source obtains, from the state, a permit that is consistent 
with the substantive new NSR part D provisions in the CAA. EPA believes 
this guidance continues to apply to permitting pending final action on 
Tennessee's NSR SIP submittal.
    For O<INF>3 nonattainment areas, section 182(a)(2)(C) of the CAA 
requires the states to submit to EPA by November 15, 1992, new or 
augmented NSR rules that meet the provisions of part D of title I of 
the CAA. The part D NSR permitting provisions applicable in O<INF>3 
nonattainment areas are generally in sections 172(c)(5), 173, 182, and 
184 of the CAA. The State of Tennessee adopted regulatory revisions 
necessary to bring the State's NSR regulations in compliance with the 
CAA and amended Federal regulations, and submitted those revisions on 
August 17, 1994. The State also submitted revisions to the Nashville/
Davidson County portion of the Tennessee SIP on September 27, 1994. The 
only rule revisions being approved in this action are the revised 
statewide rules submitted on August 17, 1994. The EPA will take action 
on the Nashville/Davidson County rule revisions in a separate Federal 
Register document.

B. Federal Implementation Plan (FIP) Clock

    On January 15, 1993, in a letter from Patrick M. Tobin to Governor 
Ned McWherter, EPA notified the State of Tennessee that EPA had made a 
finding of failure to submit required programs for the nonattainment 
area. The revised State NSR rules satisfy those requirements for this 
area. Therefore, the sanctions clock was stopped by the complete 
submittal and the FIP clock will be stopped at the time of this 
approval.

C. Procedural Background

    Section 110(k) of the CAA sets out provisions governing EPA's 
review of SIP submittals (see 57 FR 13565).
    The State of Tennessee held a public hearing on February 22, 1994, 
on the proposed revisions to the SIP. Following the public hearing, the 
plan was adopted by the State and submitted by the Tennessee Department 
of Environment and Conservation on August 17, 1994, as a revision to 
the SIP.
    Specifically, the State submitted revisions to its NSR permitting 
regulations in Tennessee's Chapter 1200-3 by submitting revised 
Paragraph 1200-3-9-.01(5) entitled Growth Policy. The revisions to the 
State's NSR regulations were made to bring the State's rules into 
compliance with the CAA, as amended in 1990, and Federal regulations.
    The SIP revision was reviewed by EPA to determine completeness, and 
a letter of completeness, dated August 18, 1994, was forwarded to the 
State of Tennessee. EPA finds that the revisions provide for 
consistency with the CAA and corresponding Federal regulations, and 
that the revisions meet the new nonattainment NSR provisions for ozone 
nonattainment areas.

D. Nonattainment NSR Requirements of the CAA

    The general statutory requirements for nonattainment NSR SIPs and 
permitting as amended by the 1990 Amendments are found in sections 172 
and 173 of the CAA. Tennessee currently has nonattainment areas for 
O<INF>3, sulfur dioxide, and lead. These requirements apply in all 
nonattainment areas. The State of Tennessee's nonattainment NSR 
regulations, which had been approved prior to the 1990 Amendments, were 
written to be nonattainment area-specific. The NSR permitting 
requirements applied to new or modified sources proposing to locate in 
any nonattainment area in the State, including those designated 
pursuant to enactment of the 1990 Amendments. Thus, in order to meet 
the nonattainment NSR program submittal requirements, the State needed 
to address the new NSR requirements of the amended CAA.
    Many of the revisions to sections 172 and 173 of the CAA as 
discussed in the General Preamble clarified previously existing Federal 
regulations and policy. [[Page 7915]] The following represents EPA's 
review of the State's submitted regulations for meeting the 
requirements of the amended CAA:

    (1) The CAA repealed the construction ban provisions previously 
found in section 110(a)(2)(I) with certain exceptions. No construction 
bans are currently imposed in Tennessee, so this provision is not 
applicable.
    (2) Section 173(a)(1)(A) of the CAA requires a demonstration for 
permit issuance that the new source growth does not interfere with 
reasonable further progress (RFP) for the area (e.g., greater than 1:1 
emission offsets should insure no interference with RFP). In addition, 
calculations of emissions offsets must be based on the same emissions 
baseline used in the demonstration of RFP. In Section 1200-3-9-
.01(5)(b)(2)(iv) the State has established provisions that adequately 
address the requirements of section 173(a)(1).
    (3) Section 173(c)(1) of the CAA requires that offsets must 
generally be obtained by the same source or other sources in the same 
nonattainment area. However, offsets may be obtained from other 
nonattainment areas if the following conditions are met: the area in 
which the offsets are obtained has an equal or higher nonattainment 
classification; and emissions from the nonattainment area in which the 
offsets are obtained contribute to a national ambient air quality 
standard (NAAQS) violation in the area in which the source would 
construct. In Chapter 1200-3-9-.01(5)(b)(2)(v)(1), the State has 
established provisions that adequately meet these requirements of 
section 173(c)(1).
    (4) Section 173(c)(1) of the CAA requires that any emissions 
offsets obtained in conjunction with the issuance of a permit to a new 
or modified source must be in effect and enforceable by the time the 
new or modified source commences operation and that any emission 
increases from new or modified major stationary sources must be offset 
by reductions in actual emissions. In Chapter 1200-3-9-.01(5)(b)(2)(v), 
the State has established provisions that adequately meet these 
requirements of section 173(c)(1).
    (5) Section 173(c)(2) of the CAA prohibits emissions reductions 
otherwise required by the CAA from being credited for purposes of 
satisfying the part D offset requirements. In Chapter 1200-3-9-
.01(5)(b)(2)(v)(VII), the State has established provisions that 
adequately meet the requirements of section 173(c)(2).
    (6) Revised sections 172(c)(4), 173(a)(1)(B), and 173(b) of the CAA 
limit or invalidate use of certain growth allowances in nonattainment 
areas. In Chapter 1200-3-9-.01(5)(b)(2)(iv)(1), the State has 
established provisions that adequately meet the requirements of 
sections 172(c)(4), 173(a)(1)(B), and 173(b).
    (7) Revised section 173(a)(5) of the CAA requires that, as a 
prerequisite to issuing any part D permit, an analysis of alternative 
sites, sizes, production processes, and environmental control 
techniques for a proposed source must be completed, which demonstrates 
that the benefits of the proposed source significantly outweigh the 
environmental and social costs imposed as a result of its location, 
construction, or modification. In Chapter 1200-3-9-.01(5)(b)(2)(vi), 
the State has established provisions that adequately meet the 
requirements of section 173(a)(5).
    (8) Section 173(d) of the CAA requires States to submit control 
technology information from permits to EPA for the purposes of making 
such information available through the RACT/BACT/LAER clearinghouse. In 
Chapter 1200-3-9-.01 (5)(b)(2)(iii)(V), the State has established 
provisions that adequately meet the requirements of section 173.
    (9) In Chapter 1200-3-9-.01(5)(b)(xviii) the State has submitted a 
revised definition for the lowest achievable emission rate (LAER). In 
the previously approved SIP, LAER is defined for the prevention of 
significant deterioration (PSD) in subparagraph 1200-3-9-
.01(4)(o)(5)(b)(3), and for new sources in subparagraph 1200-3-9-
.01(5)(b)(3). The same definition is used in both places. LAER is 
defined as that rate of emissions which reflects the most stringent 
emission limitation which is achieved in practice by such class or 
category of sources. In no event shall a new or modified source emit 
any pollutant in excess of the applicable New Source Performance 
Standards (NSPS).

    Revisions to Tennessee's PSD regulations, which have been submitted 
to EPA, but not yet acted upon, delete the definition of LAER from 
paragraph 1200-3-9-.01(4) and add it to the general definitions for the 
issuance of construction permits, which will be found in subparagraph 
1200-3-9-.01(2)(e). This section defines LAER, for any major stationary 
source or major modifications, as the more stringent rate of emissions 
based on the following: (1) The most stringent emissions limitation 
which is contained in the applicable standards under this Division 
1200-3, or in any SIP for such class or category of stationary source, 
unless the owner or operator of the proposed source demonstrates that 
such limitations are not achievable; or (2) The most stringent 
emissions limitation which is achieved in practice by such class or 
category of stationary source. This limitation, when applied to a 
modification, means the lowest achievable emissions rate for the new or 
modified emissions units within the stationary source. In no event 
shall the application of this term permit a proposed new or modified 
stationary source to emit any air contaminant in excess of the amount 
allowable under applicable new source standards of performance.
    The State previously submitted revisions to their volatile organic 
compound (VOC) regulations on June 22, 1993, which included a request 
for the deletion of rule 1200-3-18-.03 Standard for New Sources. This 
rule includes a definition of LAER which means for any source, that 
rate of emissions which reflects the most stringent emission limitation 
which is achieved in practice by such class or category of source. In 
no event shall a new or modified source emit any pollutant in excess of 
the applicable NSPS. This deletion was previously disapproved by EPA 
(see 59 FR 18310) because Tennessee did not have federally approved NSR 
regulations which would apply to some of the sources covered by that 
chapter. In 59 FR 18310 EPA recommended that Tennessee submit the 
deletion of this rule with the submittal of their revised NSR 
regulations.
    The revised NSR rules define LAER as the more stringent rate of 
emissions of the most stringent emissions limitation contained in 
Division 1200-3 of the state rules or in any SIP for such class or 
category of source. In no event may LAER be in excess of the applicable 
NSPS. This revised definition closely parallels the statutory 
definition of LAER in section 171(3) of the CAA and eliminates the 
previous discrepancy between the state definition and the statutory, 
and EPA approves the revision as satisfying part D requirements.
    In addition to all of the general nonattainment NSR provisions 
mentioned above, there are also nonattainment area-specific NSR 
provisions in subparts 2, 3, and 4 of part D of the CAA, some of which 
supersede general NSR provisions. The following provisions are 
additional NSR provisions that apply in Tennessee's nonattainment 
areas.

1. Ozone Nonattainment Areas

    The State has adopted the appropriate major source threshold in 
Rule 1200-3-9-.01(5)(b)(1)(iv), 100 tons per year (tpy), 
[[Page 7916]] for the nonattainment areas in the state, including the 
ozone nonattainment areas, which are currently classified as marginal 
and moderate ozone nonattainment areas. Because it has not adopted the 
applicable lower major thresholds for serious, severe, and extreme 
ozone nonattainment areas, the State would be required to revise its 
rules if an ozone nonattainment area becomes classified as serious, 
severe, or extreme. In accordance with section 182 of the CAA, the 
State has adopted the applicable emissions offset ratios for increases 
in emissions of VOCs or NO<INF>x in section 1200-3-9-
.01(5)(b)(2)(v)(III), namely: marginal-at least 1.1 to 1, moderate-at 
least 1.15 to 1, serious-at least 1.2 to 1, severe-at least 1.3 to 1, 
and extreme-at least 1.5 to 1. The State has adopted provisions in Rule 
1200-3-9-.01(5)(b)(1)(iv-v, x, and xxxiii) to ensure that any new or 
modified major source of NO<INF>x satisfies the requirements applicable 
to any major source of VOCs, unless a special exemption is granted by 
the Administrator under section 182(f).

2. Carbon Monoxide Nonattainment Areas

    The State of Tennessee had one carbon monoxide (CO) nonattainment 
area, which was designated as low moderate; this was the Memphis-Shelby 
County area. (See 40 CFR 81.343 for Tennessee's CO nonattainment area 
designations). However, this area was redesignated as an attainment 
area on August 31, 1994 (59 FR 44938); NSR is not required for the CO 
maintenance plan.

3. Other Revisions to NSR Regulations

    Other revisions to the State's regulations were made to bring the 
State's regulations into compliance with the CAA as amended in 1990. 
EPA is approving these revisions because they provide for clarity and 
consistency with the Federal requirements in the CAA and 40 CFR 51.165 
and 51.166. For further information on the revisions addressed in this 
submittal, please see the Technical Support Document (TSD) accompanying 
this document.

4. Deletion of Previous Disapproval to Delete Rule 1200-3-18-.03

    The State previously submitted revisions to their VOC regulations 
on June 22, 1993, which included a request for the deletion of rule 
1200-3-18-.03 Standard for New Sources. This deletion was disapproved 
by EPA (see 59 FR 18310) because Tennessee did not have federally 
approved NSR regulations that would apply to some of the sources 
covered by that rule. As recommended by EPA, Tennessee resubmitted the 
deletion of this rule together with their revised NSR regulations (see 
59 FR 18310). The deletion of Rule 1200-3-18-.03 is approved, and the 
earlier EPA disapproval is deleted, in conjunction with the approval of 
the State's revised NSR regulations.
    Rule 1200-3-18-.03 provided that: new or modified sources anywhere 
in the State which emit or have the potential to emit 100 tpy or more 
of VOCs must utilize LAER, as then defined; new or modified sources in 
Davidson, Shelby, and Hamilton Counties with the potential to emit less 
than 100 tpy must utilize BACT; and new or modified sources in other 
counties with the potential to emit less than 100 tpy must utilize 
reasonable and proper controls. The revised NSR rules for VOC sources, 
which would replace Rule 1200-3-18-.03, provides that: in ozone 
nonattainment areas, new or major modifications of sources which emit 
or have the potential to emit 100 tpy must utilize LAER, as defined in 
a revised definition; in ozone nonattainment areas, new or modified 
sources which have the potential to emit less than 100 tpy must utilize 
BACT; and in ozone attainment areas, the PSD rules, rather than the 
nonattainment NSR rules, apply.
    Tennessee's revised NSR rules closely follow the statutory NSR 
requirements of part D, and provide additional protection in 
nonattainment areas by requiring BACT for minor sources and minor 
modifications. As discussed above, the revised definition of LAER also 
follows the CAA. Although the State will no longer impose a 100 tpy 
major source threshold for all source categories or require LAER in 
ozone attainment areas, based on a review of the deletion of rule 1200-
3-18-.03 and the revised NSR rules, EPA concludes that the revisions 
satisfy the requirements of part D and the General Savings Clause in 
section 193 of the CAA. However, sources that were permitted under rule 
1200-3-18-.03 will remain under the controls previously specified in 
their permits pursuant to that rule. Additionally, all sources located 
in attainment areas with the potential to emit 100 tpy or greater 
uncontrolled are required to implement Reasonably Available Control 
Technology (RACT).

Final Action

    EPA is approving the revised Tennessee Chapter 1200-3-9-.01(5) 
Growth Policy, which is a replacement for the State's current federally 
approved Chapter 1200-3-9-.01(5). Specifically, EPA is approving the 
State's submittal as meeting the NSR requirements of the CAA as amended 
in 1990 for the State's ozone nonattainment areas. EPA is also 
rescinding the previous disapproval (59 FR 18310) of the deletion of 
rule 1200-3-18-.03 Standard for New Sources and is approving the 
deletion.
    EPA is publishing this action without prior proposal because the 
Agency views this as a noncontroversial action and anticipates no 
adverse comments. However, in a separate document in this Federal 
Register publication, EPA is proposing to approve the SIP revision 
should adverse or critical comments be submitted. This action will be 
effective on April 11, 1995 unless, by March 13, 1995, adverse or 
critical comments are received.
    If EPA receives such comments, this action will be withdrawn before 
the effective date by publishing a subsequent document that will 
withdraw the final action. All public comments received will then be 
addressed in a subsequent final rule based on this action serving as a 
proposed rule. EPA will not institute a second comment period on this 
action. Any parties interested in commenting on this action should do 
so at this time. If no such comments are received, the public is 
advised that this action will be effective on April 11, 1995.
    Under section 307(b)(1) of the CAA, 42 U.S.C. 7607 (b)(1), 
petitions for judicial review of this action must be filed in the 
United States Court of Appeals for the appropriate circuit by April 11, 
1995. Filing a petition for reconsideration by the Administrator of 
this final rule does not affect the finality of this rule for the 
purposes of judicial review nor does it extend the time within which a 
petition for judicial review may be filed, and shall not postpone the 
effectiveness of such rule or action. This action may not be challenged 
later in proceedings to enforce its requirements. (See section 
307(b)(2) of the CAA, 42 U.S.C. 7607 (b)(2)).
    The Office of Management and Budget (OMB) has exempted these 
actions from review under Executive Order 12866.
    Nothing in this action should be construed as permitting or 
allowing or establishing a precedent for any future request for 
revision to any SIP. Each request for revision to any SIP shall be 
considered separately in light of specific technical, economic, and 
environmental factors and in relation to relevant statutory and 
regulatory requirements.
    Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., EPA 
must prepare a regulatory flexibility analysis assessing the impact of 
any proposed or final rule on small entities. 5 U.S.C. 603 
[[Page 7917]] and 604. Alternatively, EPA may certify that the rule 
will not have a significant economic impact on a substantial number of 
small entities. Small entities include small business, small not-for-
profit enterprises, and government entities with jurisdiction over 
populations of less than 50,000.
    SIP approvals under section 110 and subchapter I, part D of the CAA 
do not create any new requirements, but simply approve requirements 
that the State is already imposing. Therefore, because the Federal SIP-
approval does not impose any new requirements, I certify that it does 
not have a significant impact on any small entities affected. Moreover, 
due to the nature of the Federal-state relationship under the CAA, 
preparation of a regulatory flexibility analysis would constitute 
Federal inquiry into the economic reasonableness of state action. The 
CAA forbids EPA to base its actions concerning SIPs on such grounds. 
Union Electric Co. v. E.P.A., 427 U.S. 246, 256-66 (S.Ct. 1976); 42 
U.S.C. 7410(a)(2).

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Carbon monoxide, 
Hydrocarbons, Incorporation by reference, Nitrogen dioxide, Ozone, 
Particulate matter, Reporting and recordkeeping requirements.

    Dated: January 9, 1995.
Patrick M. Tobin,
Acting Regional Administrator.

    Part 52, of chapter I, title 40, Code of Federal Regulations, is 
amended as follows:

PART 52--[AMENDED]

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

    Authority: 42 U.S.C. 7401-7671q.

Subpart RR--Tennessee

    2. Section 52.2220 is amended by adding paragraph (c)(124) to read 
as follows:


Sec. 52.2220  Identification of plan.

* * * * *
    (c) * * *
    (124) On August 17, 1994, the Tennessee Department of Environment 
and Conservation submitted revisions to the new source review 
requirements in the Tennessee Division of Air Pollution Control 
Regulations. These revisions incorporate changes to Chapter 1200-3-9 by 
substituting for the present paragraph 1200-3-9-.01(5) of the Tennessee 
SIP with new requirements, which are required in the Clean Air Act as 
amended in 1990 and 40 CFR part 51, subpart I.
    (i) Incorporation by reference. Tennessee Division of Air Pollution 
Control Regulations, Chapter 1200-3-9-.01(5) Growth Policy, effective 
August 15, 1994.
    (ii) Other material. None.
    3. Section 52.2228 is amended by adding a new paragraph (f) to read 
as follows:


Sec. 52.2228  Review of new sources and modifications.

* * * * *
    (f) The State of Tennessee proposed to delete rule 1200-3-18-.03 
``Standard for New Sources'' from the Tennessee State Implementation 
Plan (SIP). In paragraph (e) of this section, EPA disapproved the 
deletion of this rule because Tennessee did not have federally approved 
New Source Review (NSR) regulations that applied to some of the sources 
in this chapter. EPA is hereby approving the deletion of section 1200-
3-18-.03 of the Tennessee SIP, and is deleting EPA's earlier 
disapproval in paragraph (e) of this section.
[FR Doc. 95-3332 Filed 2-9-95; 8:45 am]
BILLING CODE 6560-50-F